Source - RNS
RNS Number : 1510L
TI Fluid Systems
29 September 2016
 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT

This announcement is an advertisement for the purposes of the Prospectus Rules of the Financial Conduct Authority and not a prospectus and not an offer of securities for sale in any jurisdiction, including in or into the United States, Australia, Canada or Japan. Neither this announcement nor anything contained herein shall form the basis of, or be relied upon in connection with any offer or commitment whatsoever in any jurisdiction. Investors should not purchase or subscribe for any shares referred to in this announcement except on the basis of information included in the prospectus expected to be published by TI Fluid Systems Limited in due course in connection with the proposed admission of its ordinary shares to the premium listing segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of the London Stock Exchange plc. A copy of the prospectus will, following its publication, be available from the Company's website and at the Company's registered office at 4650 Kingsgate, Oxford Business Park South, Cascade Way, Oxford OX4 2SU, United Kingdom, subject to applicable securities laws.

29 September 2016

 

TI Fluid Systems Limited

(to be re-registered as TI Fluid Systems plc)

 

Intention to Float on the London Stock Exchange

TI Fluid Systems Limited (the "Company" and together with its subsidiary undertakings, the "Group"), a leading global manufacturer of automotive fluid storage, carrying and delivery systems, today announces its intention to proceed with an initial public offering (the "Global Offer"). The Company intends to apply for admission of its ordinary shares, issued and to be issued ordinary shares (the "Shares"), to the premium listing segment of the Official List (the "Official List") of the Financial Conduct Authority (the "FCA") and to trading on the London Stock Exchange plc's (the "London Stock Exchange") main market for listed securities (together, "Admission").

BUSINESS OVERVIEW

·      Leading global supplier of automotive fluid storage, carrying and delivery systems, primarily for light vehicles

·      Strong market positions across all key products

·      Award-winning technologies and products aligned with automotive megatrends, including specific product offerings designed for hybrid electric vehicle ("HEV") and electric vehicle ("EV") applications

·      Diversified revenue across a broad customer base and multiple geographies supplying to all of the major global automotive original equipment manufacturers ("OEMs") in 2015

·      Manufacturing facilities positioned close to OEM assembly plants in 120 locations across 28 countries with approximately 27,000 employees

·      Extensive and long-established presence serving global and local OEMs in emerging markets, including wholly-owned operations in 18 locations in China

·      Revenue in 2015 was €3.1 billion and Adjusted EBIT was €316.9 million; for the six months ended 30 June 2016, revenue was €1.6 billion and Adjusted EBIT was €185.6 million, with increases of 4.9% and 7.4%, respectively, compared to the six months ended 30 June 2015

 

KEY HIGHLIGHTS

·      Global market leader with a diversified base of customers, vehicle platforms and geographies

Leading supplier of brake and fuel lines and bundles, with 35% of the global brake and fuel line market in 2015, and a leading supplier of plastic fuel tanks, with 15% of the global plastic fuel tank market in 2015[1]

#1 supplier of brake and fuel lines in all key regions globally including North America, Europe, Asia-Pacific, China and Latin America [1]

·      Award-winning product innovations and technologies aligned with several key automotive industry megatrends contributing to engineering relationships with OEM customers

Specialised in fluid delivery systems for almost a century, having introduced a number of first-to-market technologies

Aligned to automotive industry megatrends and government regulations requiring reduced emissions and improved fuel economy

Well-positioned to capitalise on HEV and EV growth

·      Strong revenue from customers in emerging markets with 18% of 2015 revenue from operations in China where the Group has operated for over 30 years, supplying both global and local OEMs

·      Global manufacturing footprint and competitive cost structure

Approximately 72% of revenue[2]  generated from global platforms with industry global OEM platforms (platforms produced in three or more regions) making up 57% of total light vehicle[3] production in 2015[4]

Well-positioned through the Group's global manufacturing footprint to continue to expand global platform-related revenue[1]

Extensive manufacturing presence in emerging markets and flexible cost structure, with approximately 66% of the Group's employees located in low-cost countries

·      Enhanced value creation and competitive advantages through strong OEM customer relationships

Highly diversified OEM customer base

Trusted relationships established over many decades with major OEMs

·      Strong revenue growth, profitability and cash flow generation

From 2013 to 2015, the Group delivered 10.9% revenue CAGR, 15.4% Adjusted EBIT CAGR, and Adjusted EBIT margin increased from 9.5% to 10.2%

Attractive financial performance and strong cash flow generation partially due to its: 

§ Focus on achieving leading returns and financial metrics with strict fixed cost management

§ Working capital, capital expenditure and research and development discipline

§ Disciplined approach to quoting new contracts and capital allocation

§ Continuous focus on business improvement efficiencies

·      Experienced management team with a long track record of success in the automotive industry

Chief Executive Officer and President, William L. Kozyra, and Chief Financial Officer, Timothy Knutson, both joined the Group in 2008 and together have over 65 years of automotive industry experience

William L. Kozyra, Chief Executive Officer and President, said:

"The Group is a recognised leading global automotive supplier in fluid handling systems with unique customer and geographic diversification. We have a history of demonstrated financial success, and our team is committed to enhancing our outstanding relationships with customers throughout the world with our award-winning technologies, competitive global footprint and product strengths. We are already well-positioned to capitalise on the automotive megatrends of reduced emissions and improved fuel economy. We look forward to beginning the next stage of our growth and success as a public company listed on the London Stock Exchange."

Manfred Wennemer, proposed Chairman, said:

"I am delighted to join the Board of the Company. I have known the Group for many years and watched it follow a clear and successful strategy to build a global business with sustained growth, strong profitability and cash flow generation. Led by an experienced and well-respected management team, with a clear understanding of the market, I believe the Group has exciting prospects, and I look forward to contributing to the next chapter of the Company's growth as a listed company."

FINANCIAL HIGHLIGHTS

The Group's experienced management team has a proven track record of consistently delivering strong revenue growth, profitability and cash flow generation. In the period from 2013 to 2015, global light vehicle production increased at a CAGR of 2.3%[5], while the Group's revenue grew at a CAGR of 10.9%. Furthermore, over the same period, Adjusted EBIT and Free Cash Flow grew at CAGRs of 15.4% and 28.2%, respectively, whilst Adjusted EBIT margin increased from 9.5% to 10.2%.

 

FY 2013-2015 / H1 2015-2016 (€ millions):


FY 2013

FY 2014

FY 2015

H1 2015

H1 2016

CAGR
2013 - 2015

Revenue

2,515.3

2,696.3

3,095.2

1,557.2

1,632.8

10.9%

% Growth


7.2%

14.8%


4.9%


Adjusted EBIT

238.0

259.7

316.9

172.8

185.6

15.4%

% Margin

9.5%

9.6%

10.2%

11.1%

11.4%


Free Cash Flow

173.1

153.9

284.4

123.6

100.1

28.2%

For FY 2016, the Directors forecast that the Group's Adjusted EBIT will be greater than €350 million (the "Profit Forecast")[6].

 

BOARD OF DIRECTORS

The members of the board of directors of the Company (the "Board") at Admission are expected to be:

Name

Position

Manfred Wennemer

Chairman

William L. Kozyra

Chief Executive Officer and President

Timothy Knutson

Chief Financial Officer

Neil Carson

Deputy Chairman and Senior Independent Director

Todd Cook

Non-Executive Director

Paul Edgerley

Non-Executive Director

John Smith

Independent Non-Executive Director

Stephen Thomas

Non-Executive Director

 

OVERVIEW OF THE GLOBAL OFFER

·      The Company intends to list on the premium listing segment of the Official List and to trade on the main market for listed securities of the London Stock Exchange

·      The total gross primary proceeds receivable by the Company from the Global Offer are estimated to be approximately €600 million. The Company intends to use the net primary proceeds it receives from the Global Offer in order to reduce financial leverage (to approximately 2.0x net debt to Adjusted EBITDA by the end of FY 2016) and accordingly to reduce the cost of financing

·      In addition, the Global Offer will include a partial sale of Shares held by funds advised by Bain Capital Private Equity, LP (the "Institutional Selling Shareholders"), members of the management team and other individual shareholders (the "Individual Selling Shareholders" and together with the Institutional Selling Shareholders, the "Selling Shareholders"). The sale of the Shares will provide the Selling Shareholders with an opportunity for a partial realisation of their respective investments in the Group

·      The Company expects to have a free float following the Global Offer of at least 25%

·      Each of the Company, the Institutional Selling Shareholders, senior management and other shareholders will agree to customary lock-up arrangements with respect to their shareholdings for specific periods of time following Admission. It is currently expected that the Company, the Institutional Selling Shareholders and Individual Selling Shareholders will enter into 180 day lock-up arrangements and the directors of the Company (the "Directors") and senior managers will enter into at least 365 day lock-up arrangements, each subject to certain exceptions

·      It is intended that an over-allotment option of up to 15% of the total offer size will be made available

·      Shares in the Global Offer will be offered to certain institutional and professional investors in the United Kingdom and elsewhere outside the United States in reliance on Regulation S under the US Securities Act of 1933, as amended (the "US Securities Act") and in the United States to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the US Securities Act, or another exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act

·      Full details of the Global Offer will be included in the prospectus expected to be published by the Company in the coming weeks (the "Prospectus"). It is expected that Admission will take place in November 2016 and that, following Admission, the Company will become eligible for inclusion in the FTSE UK Index Series

·      In relation to the Global Offer and Admission, Deutsche Bank AG, London Branch ("Deutsche Bank"), Goldman Sachs International ("Goldman Sachs") and J.P. Morgan Securities plc (which conducts its UK investment banking activities as J.P. Morgan Cazenove) ("J.P. Morgan") are acting as Joint Global Co-ordinators and Joint Bookrunners, Citigroup Global Markets Limited ("Citigroup") is acting as Joint Bookrunner and HSBC Bank plc ("HSBC") is acting as Lead Manager. Lazard & Co., Limited ("Lazard") is acting as Financial Adviser to the Company. J.P. Morgan is also acting as sole sponsor

ENQUIRIES

Joint Global Coordinators:


Deutsche Bank

Lorcan O'Shea

Thomas Maloney

Neil Collingridge

 

Tel: +44 (0) 20 7545 8000

Goldman Sachs

Richard Cormack

Axel Hoefer

Duncan Stewart

 

Tel: +44 (0) 20 7774 1000

J.P. Morgan

Nicholas Hall

David Walker

Charles Pretzlik

 

Tel: +44 (0) 20 7742 4000

Joint Bookrunner:


Citigroup

Phil Drury

Alex Carter

Koen Van Velsen

 

Tel: +44 (0) 20 7986 4000

Lead Manager:


HSBC

Nick Donald

 

Tel: +44 (0) 20 7991 8888

Financial Adviser:


Lazard

Charlie Foreman

Robert Brownell

 

Tel: +44 (0) 20 7187 2000

Media enquiries:


FTI Consulting

Richard Mountain

Tel: +44 (0) 20 3727 1340

Nick Hasell


 



 

BUSINESS OVERVIEW

The Group is a leading global manufacturer of automotive fluid storage, carrying and delivery systems, primarily providing products and services for light vehicles. The Group has strong market positions with respect to all of its key products globally. Based on production volume, the Directors believe that the Group is the leading supplier of brake and fuel lines and bundles, with 35% of the global brake and fuel line market in 2015 and that the Group is also a leading supplier of plastic fuel tanks, with 15% of the global plastic fuel tank market in 2015.

With a rich heritage that represents almost 100 years of automotive fluid systems experience, the Group has developed long-term engineering, development and purchasing relationships with its OEM customers and enjoys a reputation as a valued Tier 1 global supplier of high quality, performance-critical components and systems. The Group's revenue is diversified across a broad customer base and multiple geographic regions which enabled it to supply all of the major global OEMs in 2015.

The Group has manufacturing facilities near (or, in some cases, co-located within) OEM assembly plants in 120 locations across 28 countries with approximately 27,000 employees. This global and flexible manufacturing footprint not only allows the Group to efficiently serve its customers in multiple geographic regions but also positions the Group as a supplier of choice for major OEMs that are increasingly moving towards sourcing common vehicle platforms and engine variants on a global basis. In addition, the Group has an extensive and long-established presence serving global and local OEMs in emerging markets, including wholly-owned operations in 18 locations in China.

The Group's advanced products and technologies align closely with automotive industry megatrends and government regulations that are driving OEMs steadily towards the production of vehicles that have advanced systems and powertrains to reduce emissions and improve fuel economy, such as HEVs and EVs. Many products are key components for vehicles with reduced emissions and/or enhanced fuel economy specifications, such as gasoline direct injection ("GDI") fuel rails and tubes, turbocharger lines, HEV and EV thermal loops and integrated heat exchanger lines. Additionally, the Group has introduced a number of advanced tank designs and process technologies, including partial zero emissions vehicles, pressurised tanks and double-moulded tanks, which reduce evaporative emissions and also meet the requirements for use in HEVs.

The Group serves its customers through two operating divisions:

·      Fluid Carrying Systems ("FCS"): The FCS division manufactures brake and fuel lines and bundles, powertrain products and heating, ventilation and air conditioning ("HVAC") thermal products that transport fluid throughout a vehicle.

·      Fuel Tank and Delivery Systems ("FTDS"): The FTDS division produces fuel tank and fuel delivery products.

KEY HIGHLIGHTS

Global market leader with a diversified base of customers, vehicle platforms and geographies

·      Leading supplier of brake and fuel lines and bundles, with 35% of the global brake and fuel line market in 2015, and a leading supplier of plastic fuel tanks, with 15% of the global plastic fuel tank market in 2015[7]

·      GDI fuel rail business has a global market share of 17% based on production volume7 which the Directors estimate puts the Group in the number two position globally and number one position in North America

·      Trusted relationships established over many decades with major OEMs by leveraging its strong technical capabilities, global manufacturing footprint, local management teams and long history as a leading provider of automotive fluid systems

·      Reputation for engineering and manufacturing reliable, high quality, performance-critical products for top global OEMs has supported strong local OEM relationships in numerous locations around the globe, resulting in a highly diversified customer base of global and local OEMs. The Group supplied all major global OEMs in 2015

Award-winning product innovations and technologies aligned with several key automotive industry megatrends contributing to engineering relationships with OEM customers

 

·      Specialised in fluid systems for almost a century with twelve advanced technology development centres and regional application engineering centres focused on research, development and application engineering

·      Deep knowledge of automotive fluid components and systems provides OEM customers with more advanced designs and innovative products to help them meet consumer expectations and regulatory requirements for reduced emissions and improved fuel economy

·      Introduced a number of first-to-market technologies and received various customer and industry awards

·      The Group has expanded its fluid management portfolio with additional advanced fluid system products designed to reduce emissions and/or improve fuel economy in vehicles. The Directors believe that the increased use of, and demand for, these products will provide opportunities to achieve sustained revenue growth in excess of vehicle production growth rates

·      Well-positioned to be awarded new and replacement business as the demand grows for performance-critical products with advanced technologies, given the Group's long-standing and collaborative engineering and co-development relationships with OEMs and reputation for developing high-quality products and innovative technologies that meet OEM specifications and industry requirements

Attractive and growing emerging market exposure with a strong presence in China

·      18% of the Group's revenue comes from operations in China where the Directors believe the Group has the number one market position in brake and fuel lines

·      Operating in China for over 30 years, supplying both global and local OEMs. Over the past three financial years, the Group has continued to grow its business with global OEMs in China as well as win additional business with local Chinese OEMs, all of which has supported strong revenue growth in excess of Chinese vehicle production growth

·      The Group's considerable manufacturing footprint in China with wholly-owned operations in 18 locations has also been the cornerstone of several significant global business wins

Global manufacturing footprint and competitive cost structure

·      Global manufacturing footprint with approximately 72% of revenue[8] generated from global platforms with industry global OEM vehicle platforms (platforms produced in three or more regions)

·      Directors believe that the Group is well-positioned through its global manufacturing footprint to continue to expand global platform-related revenue, which made up 57%[9] of total light vehicle production across the industry in 2015

·      Extensive global manufacturing presence provides a competitive advantage in winning replacement and new business while achieving a low-cost manufacturing model

Manufacturing facilities near (or, in some cases, co-located within) OEM assembly plants in 120 locations across 28 countries on six continents, allows the Group to provide customers with efficient just-in-time delivery and significant savings in transportation costs

·      Also able to realise cost savings through economies of scale with respect to its manufacturing facilities and employees in each region

In many cases, the Group is able to leverage its existing manufacturing locations to win new business by being in a position to reduce launch timing and complexities, achieve strict programme timing, avoid significant incremental infrastructure costs and utilise an existing local supply base

·      Extensive manufacturing presence in emerging markets and competitive cost structure, with approximately 66% of the Group's employees located in low-cost countries

·      Vertical integration in many product areas contributes to the Group's competitive cost structure, including producing its own specialised rigid and flexible tubes from raw materials at process plants in various regions which are then further manufactured into brake and fuel lines at plants close to the Group's OEM customers

Strong revenue growth, profitability and cash flow generation

·      Since 2009, the business has demonstrated strong and consistent financial performance with solid revenue growth, profitability and cash flow generation. In the period from 2013 to 2015, the Group experienced a CAGR of 10.9% in revenue, a CAGR of 15.4% in Adjusted EBIT and a CAGR of 28.2% in Free Cash Flow generation

·      The attractive financial performance and strong cash flow generation is due (amongst other factors) to its:

Focus on achieving leading returns and financial metrics with strict fixed cost management

Working capital, capital expenditure and research and development discipline

Disciplined approach to quoting on new contracts and capital allocation

Continuous focus on business improvement efficiencies

Experienced management team with a long automotive track record of success

·      Well-respected management team within the industry for their significant automotive component and system-related experience, successful implementation of operational productivity improvement plans and delivery of stakeholder value through profitability growth and cash flow generation

STRATEGY

Core strategy is to enhance the Group's position as a leading global manufacturer of automotive fluid systems with a view to continuing to deliver revenue growth in excess of vehicle production growth together with strong profitability and cash flow generation.

·      Strengthen the Group's position as a leading manufacturer and advanced technology leader in automotive fluid systems, including:

Continue to invest in research and development to develop products that help OEMs meet regulated emissions and fuel economy requirements

Leveraging the Group's significant engineering resources and technology for future global expansion in GDI rails

Pursuing content expansion in HEVs and EVs, where the Directors believe that advanced components and systems have the potential to increase the Group's fluid handling content compared to the content on more traditional internal combustion vehicles

·      Capitalise on the Group's scale, global manufacturing footprint and established position in China and other emerging markets to be the provider of choice on OEMs' global platforms

·      Pursue bolt-on strategic acquisitions to extend market leadership and expand the Group's products and technology portfolio

·      Continue to deliver strong growth, profitability and cash flow generation

HISTORY

The Group traces its heritage back to the Bundy Corporation founded in Detroit, Michigan in 1922, which supplied innovative fuel lines for the Ford Model T. The Group's brake and fuel tubing business grew with the automotive industry, and in 1987 the Group was acquired by TI Group plc.

In 2000, TI Group plc and Smiths Industries Plc merged to form Smiths Group plc. TI Automotive Limited ("TIAL") was incorporated in October 2000 and began operating as an independent company in July 2001 when it acquired the automotive business of Smiths Group Plc in a demerger transaction.

In 2007, TIAL was acquired by several private equity firms. In 2009, as a result of the global economic downturn, TIAL was restructured and recapitalised through a scheme of arrangement whereby most of its existing debt was converted to equity. In June 2015, the TI Group was acquired by Omega Acquisition Bidco Limited, a wholly-owned subsidiary of the Company controlled by the Institutional Selling Shareholders.

Today, the Group continues to design, develop, manufacture and supply automotive fluid storage, carrying and delivery systems to the world's leading OEMs.

DIVIDEND POLICY

The Company intends to adopt a dividend policy based on a payout ratio of approximately 30% of the Group's consolidated Reported Net Income (with certain adjustments for costs of the Global Offer and one-time expenses). This dividend policy will reflect the underlying growth, earnings and cash flow of the business. Assuming that there are sufficient distributable reserves available at the time, the Directors intend that the Company will pay an interim dividend and a final dividend in respect of each financial year.

The current intention of the Board is that the first dividend to be declared by the Company following Admission will be the final dividend in respect of FY 2016, which is expected to be paid in the second quarter of FY 2017 on a pro rata basis for the post-Admission period in FY 2016.

FINANCIAL HIGHLIGHTS

The Group's experienced management team has a proven track record of consistently delivering strong revenue growth, profitability and cash flow generation. In the period from 2013 to 2015, global light vehicle production volume increased at a CAGR of 2.3%[10] while the Group's revenue grew at a CAGR of 10.9%. Furthermore, over the same period Adjusted EBIT and Free Cash Flow grew at CAGRs of 15.4% and 28.2%, respectively, whilst Adjusted EBIT margin increased from 9.5% to 10.2%.

 

FY 2013 - 2015 / H1 2015 - 2016 (€ millions):


FY 2013

FY 2014

FY 2015

H1 2015

H1 2016

CAGR
2013 - 2015

Revenue

2,515.3

2,696.3

3,095.2

1,557.2

1,632.8

10.9%

% Growth


7.2%

14.8%


4.9%


Adjusted EBIT

238.0

259.7

316.9

172.8

185.6

15.4%

% Margin

9.5%

9.6%

10.2%

11.1%

11.4%


Free Cash Flow

173.1

153.9

284.4

123.6

100.1

28.2%

 

For FY 2016, the Directors forecast that the Group's Adjusted EBIT will be greater than €350 million[11].

BOARD OF DIRECTORS

On Admission, the Board is expected to comprise eight directors, including the Independent Non-Executive Chairman, the Senior Independent Director, two Executive Directors, one Independent Non-Executive Director and three Non-Executive Directors. Todd Cook, Paul Edgerley and Stephen Thomas, all Non-Executive Directors, are not considered to be independent for the purposes of the UK Corporate Governance Code as a result of being Directors appointed by the Institutional Selling Shareholders. Accordingly, the Company will not comply with the requirements of the UK Corporate Governance Code in respect of the composition of the Board at Admission. However, the Company intends to appoint additional independent Non-Executive Directors within a reasonable period of time following Admission to comply with the requirements of the UK Corporate Governance Code.

The members of the Board at Admission are expected to be:

Name

Position

Manfred Wennemer

Chairman

William L. Kozyra

Chief Executive Officer and President

Timothy Knutson

Chief Financial Officer

Neil Carson

Deputy Chairman and Senior Independent Director

Todd Cook

Non-Executive Director

Paul Edgerley

Non-Executive Director

John Smith

Independent Non-Executive Director

Stephen Thomas

Non-Executive Director


DIRECTORS' BIOGRAPHIES

Manfred Wennemer (proposed Chairman)

Manfred Wennemer joined the Company in September 2016 as a non-executive director, and will, upon Admission, be Chairman. As part of his executive career, Mr. Wennemer held a variety of positions at Continental, including as Chief Executive Officer and Chairman, Board Member and Managing Director of ContiTech. He started his career as a Project Manager and System Analyst at Proctor & Gamble in 1976. Mr. Wennemer holds a Master of Science degree in Mathematics from the University of Münster in Germany and a Master of Business Administration degree from INSEAD Business School.

William L. Kozyra (Chief Executive Officer and President)

William (Bill) L. Kozyra has been the Chief Executive Officer and President of the Group since 1 June 2008. Prior to joining the Group, Mr. Kozyra spent 10 years as President and Chief Executive Officer of Continental AG North America. Mr. Kozyra was also a member of the Executive Board of Continental AG (DAX), Hanover, Germany with responsibility for Continental AG's NAFTA businesses. Prior to his service with Continental, Mr. Kozyra was with ITT Automotive where he served as Vice President and General Manager Brake and Chassis Systems North America. Prior to his tenure at ITT Automotive, he was Vice President and General Manager of Bosch Braking Systems' Brake Products division. Mr. Kozyra began his career with the Budd Company as a Project Engineer, advanced to a Chief Engineer position, and later became President of its Wheel and Brake division. Mr. Kozyra holds a Bachelor of Mechanical Engineering from the University of Detroit and a Master of Business Administration degree from Michigan State University.

Timothy Knutson (Chief Financial Officer)

Timothy Knutson joined the Group on 5 November 2008 and has served as the Group's Chief Financial Officer. Prior to joining the Group, Mr. Knutson spent three years at Meridian Automotive Systems, Inc., an automotive supplier of metals, thermoplastics and composite products, as Executive Vice President and Chief Financial Officer. Prior to this position, Mr. Knutson was at Delphi Corporation for six years where he served in numerous senior financial positions in both the United States and Europe including Business Unit Finance Director in France and Corporate Assistant Treasurer. He began his career at General Motors ("GM") in 1989 serving in various finance areas including roles in GM's New York Treasurer's Office. Mr. Knutson holds a Bachelor of Arts in Business Administration from Michigan State University and a Master of Business Administration degree from the University of Chicago.

Neil Carson (proposed Deputy Chairman / Senior Independent Director)

Neil Carson joined the Company in September 2016 as a Non-Executive Director, and will, upon Admission, be Deputy Chairman and Senior Independent Director. Mr. Carson started his career with Johnson Matthey as a graduate trainee, advancing to become the Sales and Marketing Director of the Environment Catalysts and Technologies division in 1993, and later serving as the Group Chief Executive Officer from 2004 to 2014. He currently serves as Honorary President of the Society for Chemical Industry and co-Chair of the Chemistry Growth Partnership and was awarded an OBE for services to the Chemical Industry in June 2016. Mr. Carson holds a Bachelor of Science degree in Mechanical Engineering from Coventry University.

Todd Cook (Non-Executive Director)

Todd Cook joined the Company in July 2015 as a director. Mr. Cook joined Bain Capital in 1996 and has been a Managing Director since 2009. Previously, Mr. Cook was a consultant at Bain & Company. Mr. Cook received a Master of Business Administration degree from Stanford University Graduate School of Business, where he was an Arjay Miller Scholar. He graduated, summa cum laude, with a Bachelor of Engineering degree in Electrical Engineering and a Bachelor of Arts degree in Economics from Dartmouth College.

Paul Edgerley (Non-Executive Director)

Paul Edgerley joined the Company in July 2015 as a director. Mr. Edgerley joined Bain Capital in 1988 and was a Managing Director from 1990 to 2016. He is now a Senior Advisor to the firm. Prior to joining Bain Capital, he spent five years at Bain & Company, where he served as a Consultant and a Manager in the healthcare, information services, retail, and automobile industries. Mr. Edgerley received a Master of Business Administration degree with Distinction from Harvard Business School in 1983 and a Bachelor of Science degree from Kansas State University in 1978, with emphasis on Accounting.

John Smith (Independent Non-Executive Director)

John F. Smith joined the Company in September 2016 as a Non-Executive Director. Mr. Smith has over 48 years of experience in the automotive industry. He spent over 42 years working with GM in developing new technologies, in particular GM's first hybrid driveline while serving as President of Allison Transmission, and advanced to the position of Group Vice President for Global Product Planning and, ultimately, Corporate Planning and Alliances. During his career, Mr. Smith spent four and a half years in GM's European operations, and also worked closely with GM's Japanese, Korean and Chinese partners. Mr. Smith holds a Bachelor of Science degree in Industrial Engineering from Kettering University and a Master of Business Administration degree from Harvard Business School.

Stephen Thomas (Non-Executive Director)

Stephen Thomas joined the Company in July 2015 as a director. Mr. Thomas joined Bain Capital in 2007 and has been a Managing Director since 2015. Previously, Mr. Thomas was a Manager at Bain & Company, where he consulted for the media, telecom, consumer, financial services and private equity industries. He received a Master of Business Administration degree from Harvard Business School and graduated, cum laude, with a Bachelor of Arts degree in Economics from Princeton University.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

The Company defines FY 2013, FY 2014, FY 2015, FY 2016 and FY 2017 as the financial years ending 31 December 2013, 31 December 2014, 31 December 2015, 31 December 2016 and 31 December 2017, respectively.

The Company defines EBIT as earnings before interest and taxation that is calculated as profit for the period adjusted for income tax expense (including exceptional items) and net finance expense (including exceptional items).

The Company defines EBITDA as profit for the period before income tax expense (including exceptional items), net finance expense (including exceptional items), depreciation (including property, plant & equipment impairment) and amortisation (including intangible impairment).

The Company defines Adjusted EBITDA as EBITDA further adjusted for exceptional administrative expenses, other losses and (gains) and other reconciling adjustments. Included within other reconciling adjustments are restructuring charges, the Bain management fee, adjustment for associate income not received in cash and the reversal of purchase price adjustments arising on acquisitions.

The Company defines Adjusted EBIT as Adjusted EBITDA less depreciation (including property, plant & equipment impairment) and amortisation (including intangible impairment) arising on tangible and intangible assets before adjusting for any purchase price adjustments to fair values arising on acquisitions.

The Company defines Reported Net Income as the profit for the period.

The Company defines Free Cash Flow as net cash generated from/(used in) operating and investing activities adjusted for interest paid, income tax paid, exceptional and non-trading items, cost of acquisitions, movement in financial assets and interest received.

The Company defines Adjusted Net Income as Adjusted EBIT less net finance expense (including exceptional items) and income tax expense (including exceptional items).

This announcement contains historical market data that has been obtained from industry publications, market research and other publicly available information. Certain information regarding market size, market share, market position, growth rate and other industry data pertaining to the Company and its business contained in this announcement consist of Directors' estimates and conclusions based on their review of internal Company data, external third-party data, reports compiled by professional organisations and other sources.

PROFIT FORECAST

The Profit Forecast is based on:

·      the audited consolidated financial results of the Group for the six months ended 30 June 2016

·      the unaudited management accounts of the Group for the two months ended 31 August 2016

·      the Directors' forecast for the four months ending 31 December 2016

The Profit Forecast has been compiled on the basis of the following assumptions:

·      Assumptions which are outside the influence or control of the Directors:

there will be no material change in the economic or political environment that would materially affect the Group during the four-month forecast period to 31 December 2016

there will be no material changes in market conditions over the four-month forecast period to 31 December 2016 in relation to either OEM customer production, consumer demand or competitive environment

there will be no material customer, supply chain, manufacturing or distribution disruptions or other business interruptions, including natural disasters or industrial disputes

there will be no changes in foreign currency exchange rates from the rates as at 31 August 2016 that have been used to prepare the forecast for the four-month forecast period to 31 December 2016

there will be no significant event or adverse publicity that would materially damage the reputation of the Group and have a material impact on the results

there will be no material change in the Group's labour costs, including medical and pension and other post-retirement benefits driven by external parties or regulations

there will be no material changes to the prices of raw materials, commodities or components from those currently prevailing and/or anticipated by the Directors

there will be no material impact on the Group of litigation, product liability claims or warranty claims

there will be no material change in legislation or regulatory requirements impacting the Group's operations

there will be no material change in the control of the Group

·      Assumptions which are within the influence or control of the Directors:

there will be no major acquisitions or disposals prior to 31 December 2016

there will be no material change in the operational strategy or current management of the Group during FY 2016

there will be no major manufacturing facility closures or rationalisation during the four-month forecast period to 31 December 2016



DISCLAIMER / FORWARD-LOOKING STATEMENTS

Important notice

The contents of this announcement, which has been prepared by and is the sole responsibility of the Company, have been approved by Deutsche Bank, Goldman Sachs and J.P. Morgan solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000, as amended ("FSMA").

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy, fairness or completeness.

Neither this announcement nor the information contained herein is for publication, distribution or release, in whole or in part, directly or indirectly, in or into the United States (including its territories and possessions), Australia, Canada, Japan or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. The Global Offer and the distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, the securities referred to herein to any person in any jurisdiction, including the United States, Australia, Canada or Japan, to whom or in which such offer or solicitation is unlawful.

The securities to which this announcement relates have not been and will not be registered under the U.S. Securities Act or with any regulatory authority or under any applicable securities laws of any state or other jurisdiction of the United States, and may not be offered or sold within the United States unless registered under the U.S. Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with applicable state law. There will be no public offer of the securities in the United States.

The securities referred to herein have not been registered under the applicable securities laws of Australia, Canada, or Japan and, subject to certain exceptions, may not be offered or sold within Australia, Canada or Japan or to any national, resident or citizen of Australia, Canada or Japan.

In any member state of the European Economic Area that has implemented Directive 2003/71/EC (together with any amendments thereto and applicable implementing measures in any Member State, the "Prospectus Directive") other than the United Kingdom, this announcement is only addressed to and is only directed at "qualified investors" within the meaning of the Prospectus Directive ("Qualified Investors"). Any investment or investment activity to which this announcement relates is available only to Qualified Investors in any member state of the European Economic Area other than the United Kingdom and will be engaged in only with such persons. Other persons should not rely or act upon this announcement or any of its contents.

This announcement contains statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. The forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth and strategies. The forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance.

By their nature, forward-looking statements are based upon a number of estimates and assumptions that, while considered reasonable by the Company are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those indicated, expressed or implied in such forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to certain risks relating to future events and other risks, uncertainties and assumptions, including but not limited to, the cyclical nature of automotive sales and production, demand for the Company's products and uncertain success of significant vehicle platforms.

Each of the Company, the Banks (as defined below) and their respective affiliates expressly disclaim any obligation or undertaking to update, review or revise any of the forward-looking statements contained in this announcement whether as a result of new information, future developments or otherwise, subject, in the case of the Company and its affiliates, to the requirements of the Prospectus Rules, the Disclosure Guidance and Transparency Rules and the Listing Rules made by the FCA under Part VI of FSMA, Regulation (EU) No 596/2014 on market abuse or applicable law.

This announcement is an advertisement and not a prospectus for the purposes of the Prospectus Rules of the FCA. Investors should not subscribe for or purchase any transferable securities referred to in this announcement except on the basis of information in the Prospectus intended to be published by the Company in due course in connection with the proposed admission of its Shares to the premium listing segment of the Official List of the FCA and to trading on the main market for listed securities of the London Stock Exchange. Copies of the Prospectus will, following publication, be available from the Company's website and at the Company's registered office, subject to applicable securities laws. Any purchase of Shares in the proposed Global Offer should be made solely on the basis of the information contained in the final Prospectus to be issued by the Company in connection with the Global Offer and Admission. Before subscribing for or purchasing any Shares, persons viewing this announcement should ensure that they fully understand and accept the risks which will be set out in the Prospectus when published. The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any Shares or any other securities nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor. The information in this announcement is subject to change.

The Global Offer timetable, including the date of Admission, may be influenced by a range of circumstances such as market conditions. There is no guarantee that the Global Offer will proceed and that Admission will occur and you should not base your financial decisions on the Company's intentions in relation to the Global Offer and Admission at this stage. Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all or part of the amount invested. Persons considering making such an investment should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning the Global Offer. The value of Shares can decrease as well as increase. Potential investors should consult a professional adviser as to the suitability of the Global Offer for the person concerned.

J.P. Morgan has been appointed as sponsor, Deutsche Bank, Goldman Sachs and J.P. Morgan have been appointed as joint global co-ordinators and joint bookrunners (together, the "Joint Global Co-ordinators"), Citigroup has been appointed as joint bookrunner (together with the Joint Global Co-ordinators, the "Joint Bookrunners"), HSBC has been appointed as lead manager (the "Lead Manager") and Lazard has been appointed as financial adviser ("Financial Adviser") (the Joint Bookrunners, the Lead Manager and the Financial Adviser together, the "Banks"). Deutsche Bank is authorised under German Banking Law (competent authority: European Central Bank) and, in the United Kingdom, by the Prudential Regulation Authority (the "PRA"). It is subject to supervision by the European Central Bank and by BaFin, Germany's Federal Financial Supervisory Authority, and is subject to limited regulation in the United Kingdom by the PRA and the FCA. Deutsche Bank is a corporation domiciled in Frankfurt am Main, Germany, operating in the United Kingdom under branch registration number BR000005, acting through its London branch. Each of Goldman Sachs, J.P. Morgan, Citigroup and HSBC is authorised by the PRA and regulated by the FCA and the PRA. Lazard is authorised and regulated by the FCA. The Banks are acting exclusively for the Company and no one else in connection with the Global Offer, will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Global Offer and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients nor for giving advice in relation to the Global Offer, Admission or any transaction or arrangement referred to in this announcement.

In connection with the Global Offer, each of the Banks and any of their respective affiliates, acting as investors for their own accounts, may purchase Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Shares and other securities of the Company or related investments in connection with the Global Offer or otherwise. Accordingly, references in the final Prospectus, once published, to the Shares being offered, subscribed, issued, acquired, sold, placed or otherwise dealt in should be read as including any offer, subscription, issue, sale, acquisition, placing or dealing in the Shares by any of the Banks and any of their affiliates acting as investors for their own accounts. In addition, certain of the Banks or their affiliates may enter into financing arrangements and swaps in connection with which they or their affiliates may from time to time acquire, hold or dispose of Shares. None of the Banks nor any of their respective affiliates intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Apart from the responsibilities and liabilities, if any, which may be imposed on any of the Banks by FSMA or the regulatory regime established thereunder, or under the regulatory regime of any jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, none of Banks or any of their respective affiliates, directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.

In connection with the Global Offer, Goldman Sachs, as stabilisation manager, or any of its agents, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot Shares or effect other transactions with a view to supporting the market price of the Shares at a higher level than that which might otherwise prevail in the open market. Goldman Sachs is not required to enter into such transactions and such transactions may be effected on any securities market, over-the-counter market, stock exchange or otherwise and may be undertaken at any time during the period commencing on the date of the commencement of conditional dealings in the Shares on the London Stock Exchange and ending no later than 30 calendar days thereafter. However, there will be no obligation on Goldman Sachs International or any of its agents to effect stabilising transactions and there is no assurance that stabilising transactions will be undertaken. Such stabilising measures, if commenced, may be discontinued at any time without prior notice. In no event will measures be taken to stabilise the market price of the Shares above the offer price. Save as required by law or regulation, neither Goldman Sachs International nor any of its agents intends to disclose the extent of any over-allotments made and/or stabilisation transactions conducted in relation to the Global Offer.

In connection with the Global Offer, Goldman Sachs, as stabilisation manager, may, for stabilisation purposes, over-allot Shares up to a maximum of 15% of the total number of Shares included in the Global Offer. For the purposes of allowing it to cover short positions resulting from any such over-allotments and/or from sales of Shares effected by it during the stabilisation period, Goldman Sachs will enter into over-allotment arrangements with certain existing shareholders pursuant to which Goldman Sachs may purchase or procure purchasers for additional Shares up to a maximum of 15% of the total number of Shares included in the Global Offer (the "Over-allotment Shares") at the offer price. The over-allotment arrangements will be exercisable in whole or in part, upon notice by Goldman Sachs, for 30 calendar days after the commencement of conditional dealings in the Shares on the London Stock Exchange. Any Over-allotment Shares sold by Goldman Sachs International will be sold on the same terms and conditions as the Shares being sold in the Global Offer and will form a single class for all purposes with the other Shares.

Certain figures contained in this document, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this document may not conform exactly with the total figure given.

 



[1]  Based on management estimates

[2]   In 2015, the Group tracked approximately 85% of its total revenue on a platform basis

[3]  Light duty (or light) vehicles means passenger cars, crossover vehicles, SUVs, vans and light trucks with a gross vehicle weight of  six US tonnes or less

[4]  IHS Markit

[5]  IHS Markit

[6]  The assumptions on which this profit forecast is based are set out in the section below entitled "Profit Forecast"

[7]  Based on management estimates

[8]   In 2015, the Group tracked approximately 85% of its total revenue on a platform basis

[9]   IHS Markit

[10]  IHS Markit

[11]  The assumptions on which this profit forecast is based are set out in the section below entitled "Profit Forecast"


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