Senior plc

Welcome to Senior PLC's 2025 full-year results presentation. And thank you for making the effort to get here. And thanks also go to Dodge and Umus for hosting us here at their facility. And a warm welcome to you for those of you joining remotely. Before we present our results, can I just address the elephant in the room? I'm sure that everyone saw our announcement last Friday regarding discussions with potential offerors. As you will appreciate, it is not appropriate to comment further here, other than to remind everyone that there can be no certainty that any offer will be made, nor as to the terms on which any firm offer might be made. Please refer to the full statement issued on Friday and restrain yourselves when we get to the Q&A from asking questions that you know we will not be able to answer. In terms of our agenda this morning, I will briefly cover the highlights. Altna will run through and comment on the results. And then I will give an update on markets, investment proposition and outlook. 2025 was a pivotal year for Senior. We successfully completed the sale of our air structures business to Sullivan Street Partners on the 31st of December 2025. crucial element in delivering on our strategy to be a market-leading fluid conveyance and thermal management company supplying highly engineered products and systems. As Alpna will show in a few minutes, we had a strong financial performance with both divisions contributing well and our balance sheet is in great shape. That has allowed us to increase our total dividend to three pence per share an increase of 25% compared to 2024. Trading in the first two months of 2026 has started well, and the Board's expectations are unchanged for 2026. And looking ahead, we are on track to achieve the medium-term targets we set out last year, which again, ALPNA will demonstrate. So before I talk about markets and outlook, I'll hand over to Altona to take us through the financial results.

Thank you, David, and good morning, everyone. I'm pleased to take you through seniors' financial results for the 2025 financial year. It has been a year of strong financial performance across the group. with continued momentum in both divisions and meaningful progress towards our medium-term financial targets. With that, turning to some of the key financial highlights. Revenue increased to £738 million, up 6% at constant currency. Adjusted operating profit rose 22% at constant FX to £63.6 million. and adjusted operating profit margin expanded by 110 basis points to 8.6% reflecting pricing, volume, increased commercial activity and operational improvements. Adjusted profit before tax was 51.2 million, up 24% at constant currency. And adjusted EPS grew 9% to 9.65 pence, demonstrating strong underlying earnings momentum. I'm pleased to say return on capital employed increased 140 basis points to 13.1%, reflecting higher earnings. We also achieved cash conversion of 90%, up 400 basis points on the prior year. We have proposed a total dividend of 3 pence per share for 2025, an increase of 25% year on year. So this slide covers the revenue bridge. On a reported basis, revenue grew 4% to $700. currency headwinds of roughly 10 million. On a constant currency basis, revenue was up 6%. Looking at divisional performance at constant FX, aerospace revenue increased 10% to 426 million pounds. Civil aerospace revenue increased 9% year over year, largely driven by positive pricing and volume. Defence also had strong growth, up 12%, as we continue to see increased volumes for the F-35, the C-130 and other military programmes, and higher pricing. Revenue from adjusted markets increased 14%, largely driven by demand from the semiconductor equipment market. And in flexonics, revenue was broadly flat at constant FX. 2025 saw a softening in the North American and European heavy-duty truck market. But despite this, our land vehicle revenue increased 1.6%, with a ramp-up of new programmes. David will expand on this later. Revenue from power and energy markets decreased by 2%. Higher demand in our downstream oil and gas and nuclear business was offset by lower revenue in upstream oil and gas and other industrial sectors. Moving to the adjusted operating profit bridge. Adjusted operating profit increased 20% despite a modest 1 million FX headwind. starting with 2024 on the left hand side of 53 million aerospace delivered the largest uplift of 12 million pounds benefiting from increased pricing volume drop through mix and commercial settlements as well as strong operational execution flexonics also contributed positively supported by strong aftermarket sales in our downstream oil and gas and nuclear business, as well as restructuring initiatives. In addition, the contribution from our China joint venture was significantly higher year over year. Lastly, performance-related incentives associated with the group's improved results were charged through central costs, largely driving the increase there. We ended 2025 with adjusted operating profit of 63.6 million, an increase of 22% on a constant FX basis. So turning to divisional performance, Aerospace had an excellent year. Book-to-bill increased from 1.17 to 1.21, driven by increasing demand and build rates. At constant FX, revenue was up 10.4%. Adjusted operating profit increased 32.5%, resulting in margin expansion of 190 basis points, reaching 11.4%. The Aerospace Division delivered on a number of fronts, including positive price increases, closing out a number of commercial settlements, as well as achieving operational efficiencies. Demand was strong across civil defence and adjacent markets, with Spencer, our US hydraulic fluid fittings business, delivering outstanding growth of 32% year over year, further demonstrating our ability to integrate value-enhancing bolt-on acquisitions. During the year, the Aerospace Division was awarded new contracts, as well as extensions of existing contracts. For example, we secured a multi-year contract for highly engineered aerospace standard parts from Airbus to be manufactured in Europe. And we were also awarded a three-year contract from an industry-leading distributor for high-pressure hydraulic fittings. Now on to Flexonics, where we delivered a resilient result in softer end-market conditions. Book to bill went from 1.01 to 0.93, given softer conditions in the heavy-duty truck market, but also due to higher prior comparative, where we had a large project for expansion joints related to a new catefin plant in India. In addition, our aftermarket business in downstream oil and gas tends to have relatively short lead times, and therefore order flow can be lumpy. At ConstantFX, revenue increased marginally and adjusted operating margins rose to 11.2% and to 12.1% when including the contribution from our China JV. We benefited from favorable aftermarket mix, particularly in our pathway business, as well as successful execution of restructuring and selected operations across North America and Europe. The China JV performed especially well, with our share of profit rising to £3 million from £1.2 million last year. The Flexonics division was awarded a number of important contracts this year. We were awarded the supply of fluid conveyance assemblies for multiple light vehicles across diesel, gasoline and hybrid platforms by a global supplier. In addition, Flexonics was awarded exhaust gas recirculation callers on a new engine type to be used on multiple platforms by a leading global manufacturer of heavy-duty trucks. Slide 10 shows the reconciliation of adjusted operating profit to the statutory reported profit for the period for the continuing business. It also highlights our interest and tax charges Net finance costs increased by 1.3 million due to higher interest rates on variable rate debt and higher average net debt in comparison to the prior year. IFRS 16 interest charge and lease liabilities increased by 0.4 million and we had net finance income from our pension plans of 2.1 million. A tax charge of 11.3 million was recognised on our adjusted profit before tax. We expect the effective tax rate of 20-22% for the full year 2025. In terms of reconciling adjusted profit to statutory profit, we had just under 1.6 million of amortisation, which was non-cash, related to acquisitions. Site relocation costs of 2.4 million for the transfer of manufacturing from our US to our cost competitive facility in Mexico, as well as costs related to the relocation of our UK Innovation Centre in Wales. We had 7.3 million of pension benefit clarifications. These relate to the UK defined benefit pension scheme buy-in, which took place in September 2025. As part of the due diligence work undertaken for the buy-in, some historical benefit clarifications were identified. Most of these have already been funded through the pension buy-in process. The remainder will be funded from the £23 million actuarial surplus. We had 5 million of restructuring initiatives, largely related to headcount reductions in flexonics across North America and Europe, as well as a result of softer end market conditions in the heavy duty truck market. We had 0.8 million related to the fair value change on contingent consideration and other related costs for the Spencer acquisition, and a 4.5 million pound tax benefit on adjusting items. After these adjustments, reported profit for the year was £27.3 million. Moving to cash flow generation. Free cash flow increased 37% year-over-year to £36 million. We can see the key drivers here of adjusted operating profit to free cash flow. Starting from the left, we have our adjusted operating profit of £64 million. add-back of depreciation and amortisation of £29 million, and just over £6 million of other items. Working cattle outflow was £8 million, of which five related to inventory build to support customer demand, and the balance being a movement in receivables of £14 million and payables of £10 million. Working capital was circa 14% of sales in 2025, partly driven by the timing of customer collections at the year end. For 2026, we currently expect it to be 18% of sales to support customer demand, predominantly in aerospace. CapEx of £32 million equates to 1.5 times depreciation, excluding the impact of IFRS 16 depreciation. For 2026, CapEx is expected to be lower at 1.3 times as we continue to support growth in both divisions. Operating cash flow amounted to £57 million. We paid interest of £14 million and tax of £7.5 million, giving us £36 million of free cash flow. Our 2025 performance reflects higher profits, strong working capital discipline and CapEx investment to support growth. We remain focused on maintaining excellent cash generation as a core enabler of investment, shareholder returns and balance sheet strength. So what does that mean in terms of net debt? Well, net debt, including IFRS 16 leases, reduced significantly to £117 million at the year end, a reduction of over £110 million. Strong free cash flow proceeds from the aero structures disposal and disciplined capital allocation contributed to this outcome. You see the opening net debt balance of 230 million on the left-hand side. The free cash flow I talked about of 36 million pounds. We then see 3 million of free cash outflow for discontinued operations. Dividends paid of 10 million. Share purchases for the employee benefit trust of 7.4 million. Joint venture dividends received of £1 million, proceeds from the disposal of aerostructures and Spencer Aerospace contingent consideration of £108 million, as well as other items of £12 million, predominantly leases, and finally FX giving us our closing position of £117 million. Leverage ended the year at 0.9 times, placing us in a strong financial position as we moved into 2026. Moving on to our financing position, which remained strong. We had 294 million of committed facilities diversified across US private placement notes and bank credit facilities during the year. We issued a new private placement note of 40 million US dollars. We repaid US private placement maturities totalling 60 million US dollars and 27 million pounds. And in January 2026, we repaid the 30 million pound term loan used as a bridge to the Aerostructures disposal. Our balance sheet is strong, liquid and well structured with ample headroom to support growth and discipline capital deployment. So our 2025 performance demonstrates clear progress towards our medium term financial targets across margin, cash conversion and return on capital employed. Group operating profit margin of 8.6% continues to trend upwards. Aerospace margin reached 11.4%, progressing towards our mid-teens target. Flexonics margin of 11.2%, excluding the JV, sits well within our expected 10-12% range. We said we would achieve at least 10% even in a down year, and 2025 was a test for this given the softer conditions in the heavy-duty truck market. If we include the JV, the margin was 12.1%, which exceeds the range. Return on capital employed of 13.1%, steadily advancing towards the 15% to 20%. Cash conversion exceeded the 85% target, delivering 90% in 2025. As you can see, we remain firmly on track to deliver against these targets. We underpin the targets with a strong balance sheet. We were comfortably within our target leverage of 0.5 times to 1.5 times. Our leverage was at 0.9 times at the year end of 2025. Revenue growth of 6% at constant FX in 2025 was in line with our expectation of mid single digit organic revenue growth through the cycle. Now turning to slide 15, capital allocation. Our capital allocation framework remains unchanged, disciplined, returns focused and aligned with shareholder value creation. In 2025, we invested £32.6 million in CapEx to support business growth. This equated to 1.5 times. We expect this to trend down to 1.3 times in 2026. and our medium-term expectation continues to be 1.1 times. We invested 2.1% of revenue in research and development in 2025, consistent with our 2-3% of revenue target. Dividends of £12.3 million reflects our progressive dividend policy. We are proposing a total dividend of three pence per share in 2025, which is a 25% increase on the prior year and equates to an earnings cover of 3.2 times. As stated previously, leverage remains comfortably within our target range. We continue to explore value-creative bolt-on M&A aligned with our core capabilities. Finally, in view of the 2.4 announcement last week, we have postponed the start of the £40 million share buyback programme, which had been due to commence following publication of the four-year results. This will be kept under review, and we will make a further announcement as necessary. And with that, I will hand back to David, who will take us through the markets and strategy section.

Thank you, Altna. So let's turn our attention to markets. So in 2025, aerospace represented 58% of the group's revenues and taxonics was 42%. And as Altna has mentioned, aerospace division sales grew 10% on a constant currency basis and taxonics grew marginally despite softer land vehicle markets. Aerospace and defence is now 48% of the group. with civil airspace being around two thirds of that and defence one third, which represents a good growth opportunity. Sales to adjacent markets from our airspace business was 10% in the full year, with revenues from semiconductor equipment customers increasing. Our business is facing into land vehicle, at 25% of group revenues and power and energy 17% continued to perform well against a mixed market backdrop. Civil airspace was 32% of groups revenue in 2025. This includes both large commercial, regional and business jet sectors. Growth in the end market measured in revenue past year kilometres or RPKs was healthy at around 5%. And we expect long-term civil aerospace market growth of 3 to 4%, driven by the growing middle classes in Asia, as well as fleet modernization and aircraft replacement. We have very good positions on all single aisle and wide body platforms, as well as most regional and large business jet programs. In 2025, Our civil airspace sales grew 10% at constant FX, driven by improved pricing and higher build rates. Both Airbus and Boeing have record order books, with single aisle and wide body rates set to increase further this year and beyond, which will drive further growth for senior. You beware that many countries are committing to higher defence spending, Senior has good content on key US and European military aircraft platforms. In 2025, our defence sales grew strongly, 12% year on year. And that was driven by higher sales to C-130, F-35 and strong military aftermarket demand. Turning now to Flexonics, we had a strong performance in 2025 relative to end markets. In land vehicles, the new contracts we've won over the last couple of years reached peak production, which is why our passenger vehicle sales growth is 31% year over year compared to market growth of just 1%. And while truck markets were slower in 2025 compared to 2024, particularly in the second half of the year, We did outperform the market in North America with our sales down 18% when the market declined 25%. Our European truck sales reduced by 1% in line with the market. ACT Research are expecting truck markets to continue to be weak in the first half of 20-6 before starting to recover in the second half of the year. In power and energy, a really strong performance at our pathway business in Texas led to strong downstream oil and gas and nuclear sales, while upstream oil and gas sales continue to be subdued as we continue to reduce our exposure to commoditized products. At last year's capital markets event in March and at our half-year results presentation in August, we went through our fluid conveyance and thermal management strategy in detail. I won't repeat everything we discussed then, but we have included relevant material in the appendices to enable more detailed discussions on a one-to-one basis. We believe we have a compelling investment proposition. With a century of relevant experience, we can genuinely claim to be experts in fluid conveyance and thermal management. We have truly differentiated products with rich background and foreground intellectual property, coupled with expert design and manufacturing know-how. We operate in attractive and structurally resilient end markets and are well positioned to take advantage of that over the medium term. and we have long-lasting relationships with our customers and are trusted by them to deliver excellent products and to respond with agility when they need our support. Our senior operating system is driving operational excellence and efficiency across the group, and our global footprint with a strong presence in our home markets and world-class facilities in cost-competitive countries is a real advantage. And finally, as these 2025 results have demonstrated, our financial strength with improved performance, strong cash flow generation and low leverage supports investment and shareholder returns. So let me finish by talking about the outlook for Senior. Trading in the first two months of 2026 has started well and the Board's expectations are unchanged for 2026. In aerospace, growth in civil aircraft build rates and increased demand across its other markets is expected to drive further good progress in 2026 and beyond. Flexonics expectations for 2026 are unchanged, with robust double-digit margins being maintained when including the JV, notwithstanding the softer conditions in certain end markets. Looking ahead, we're confident of delivering enhanced shareholder value as we execute on our strategy and continue to strengthen our financial performance in line with our medium term financial targets. So with that, we'll open the floor for any questions, which Upt and I will be delighted to answer. Any questions? Yes, Tom.