Essentra (LSE:ESNT) — Annual General Meeting

0:00 Welcome to the ESNTRA PLC Annual General Meeting Proceedings. Perhaps recorded meeting attendees will be in listen only mode. Questions can be submitted via the Q and A tab situated on the right hand corner of the screen. Simply type in your question and press send. Company may not be in a position to answer every question received during the meeting itself. Have a group of your questions submitted today and published responses where appropriate to do so. I'd now like to hand over to the Board of ESSENTRA PLC. Good afternoon. Hello, and welcome to ESSENTRA's twenty twenty six Annual General Meeting. I am Steve Goode, Chairman of your Board. It's my pleasure to chair this Annual General Meeting. It's now 1PM. We have a quorum present, so I declare the meeting open. I'm joined by my board colleagues, Scott Fawcett, Rowan Baker, Mary Riley, Senior Independent Director and Chair of Audit and Risk Committee, Kathy Rand, Chair of Remuneration Committee and Non Executive Directors, Adrian Peace and Claus Gouldenbott.

0:57 Claus joined the Board in September 2025 and was recently appointed Chair of the ESG Committee. The format for today's meeting is that we'll first deal with the formal business, then our Chief Executive, Scott Fawcett will provide a business update. Once this meeting concludes, please join us for a buffet lunch. Before going any further, however, I have to hand over to my colleague, Chris Butler, our Operations Director, who will brief you on what we have to do in the event of a fire or the safety matter. Chris, over to you. Thank you, Steve. Welcome, everybody. So the most important thing today while you're on-site is your welfare and health and safety. So just a couple of things for you all. Hopefully everybody has a visitor's badge, so I can remind you all when you leave site today if you could please return your badge to reception.

1:49 The other thing is there are no planned fire roll calls today. So in the unlikely event of the fire alarm sounding, please stay calm. Myself and my colleague at the back there, Mr. Ricky Neal, will be here to escort you via the two fire exits safely to the nearest fire muster point. Thank you very much for listening and I'll hand back to Steve. Thank you, Chris. I will now hand over to the Deputy Company Secretary, Tim George, who will explain how voting and questions will work today. Thank you, Steve. First, you will be aware that this meeting is also being broadcast, so we have shareholders who are accessing this AGM online. However, those shareholders cannot vote or speak online, but can submit questions online, which we will endeavor to answer during the meeting.

2:35 With regards to the resolutions, voting will be taken on a poll to reflect the number of shares held by each shareholder of the company. More than 50% of votes in favor are required for resolutions one to 13 to be passed and 75% of votes in favor are required for Resolutions 14 to 17. If there are shareholders present who have already submitted a proxy form, which appoints the chair to vote on their behalf and they do not wish to change their vote, then Steve will vote as you have instructed. Shareholders or nominated proxies present who have not yet voted will be given a poll card when registering for the meeting. The poll card can be found on the reverse of the attendance card. If you are unable to locate your poll card or require assistance in completing the card, please raise your hand and one of the staff from Computershare, our registrars, will help you.

3:24 Please note that all poll cards need to be completed and signed and placed in the black poll box, which is with our registrar. Please note that if you do not sign your poll card, it will be treated as invalid. The figures that we will refer to during the meeting are provisional figures taken from the record of proxy votes cast by 1PM on Monday, May 18. We will confirm the final figures for the result of the poll later today and will announce this to the stock exchange as soon as possible. I will now hand back to Steve. Thanks, Tim. Before I move to the formal business, I would first like to thank all employees of the ESSENTRA Group and my colleagues on the board for their commitment, loyalty, hard work for the company. Your efforts and commitment are greatly appreciated.

4:12 I would also like to express the gratitude of the Board and the company for our former non executive director, Dupsy Abiola, who has stood down from the Board and whom provided wise counsel and great support to the Board and the company over a number of years. We wish you well for the future, Dupse. We'll now start the formal business of the meeting. Shareholders were sent a notice of this meeting on the 03/30/2026. And as all of the agenda items are fully expended notice, I propose that we take the notice of meeting as read. Thank you. Resolutions will be taken in groups. Resolution six, which deals with my reelection will be proposed by Mary. All resolutions are proposed for approval. Many shareholders will point to me to vote on their behalf and I will of course vote as they have instructed me.

5:00 The ordinary resolutions one to 13 are proposed as ordinary resolutions and will require a simple majority over 50% to be passed. Resolution one is to receive and adopt the annual report and accounts for the year ended 12/31/2025. This is passed by 99.99% of votes. Resolution two seeks approval of the Remuneration Committee's Chair's letter and the Annual Report on Remuneration for the year ended 12/31/2025. This has passed by 99.92% of votes. Resolution three seeks the approval of the final dividend for the financial year ended 12/31/2025 of 1.2p per ordinary share.

5:47 This is passed by 99.93 of votes. Resolutions four to 10 deal with the election or reelection of directors. I will now hand over to Mary to propose Resolution six, which is my election. Thank you, Steve. Resolution six is the election of our Chair, Steve Good. This resolution has passed by 99.35% of votes. The full results are shown on the slide. I will now pass back to Steve. Thank you, Mary. Resolutions four to 10 have passed by over 96% of votes for each resolution. Resolution 11 is to appoint PWC as auditors until the end of the next general meeting. This resolution is passed by 99.98% of votes.

6:37 Resolution 12 authorizes directors to agree PWC's remuneration and this resolution has passed by 99.98% of votes. And Resolution 13 authorizes the Board to allot shares in the company and has been passed by 93.5% of votes. We have now dealt with all of the ordinary resolutions. Moving on to Resolutions 14 to 17, this set of resolutions are special resolutions and require a 75% majority vote in favor to be passed. Resolution fourteen and fifteen require Resolution 13 to have been passed. As Resolution 13 has been passed, I now propose Resolutions fourteen and fifteen together. Resolution 14 is similar to previous years and seeks authority to disapply preemption on the allotment of shares for up to an aggregate amount of 10% of the share capital.

7:30 Resolution 14 has passed with 96.88% of the votes. Resolution 15 gives the company flexibility to make non preemptive issues of shares in connection with acquisitions and other capital investments. This is sought for 10% of the share capital and is in addition to that sought in Resolution 14. We have currently no intention to exercise these powers, but believe it's important that ESSENTRA has the flexibility that this provides in order to pursue its growth strategy. Resolution 15 has passed with 94.91 of votes. Resolution 16 seeks authority to buy back the company's own shares up to 10% to share capital as the shareholders will be aware we operate a share buyback program and this resolution allows the continuation of that commitment.

8:19 Resolution 16 has passed with 99.98% of votes. Resolution 17 allows general meeting to be called on not less than fourteen days notice and has passed with 95.81% of votes. That completes all today's formal business and I'm pleased to declare that the resolutions are carried. And thank you for your support. I will now hand to Scott who will provide us with the trading update. Thank you, Steve. So many of you have seen the trading update we published this morning just to give you the highlights from that. So group revenues increased by 7.2% in the first four months of the year on a constant currency and trading day adjusted basis. Like for like sales within that were up 5.2%, reflecting both the combination of pricing and volume growth.

9:08 And then in addition, we had two percent inorganic growth from the acquisition of Device Technologies, which we completed in December last year. Encouragingly, order intake momentum is maintained and is ahead of sales, so continues to drive good performance. And we are continuing to focus on growing in the market sectors, which we believe have structural opportunities. And we're seeing still good levels of growth in areas like digital infrastructure and energy transformation. And they are offsetting some of the softness in more traditional areas such as automotive sector, which continues to be more challenged. Across the three regions, EMEA has had a good start to the year with high single digit growth driven by both volume and pricing and early modest signs of recovery amongst Western Europe, which we know has had a particularly difficult trading period in recent years, supported by the continued strength of our Turkish operations.

10:06 Americas in line with trading towards end of last year has continued with low single digit growth and again heavily driven from pricing and APAC trading was broadly flat compared to the prior year. Again that is as expected and a slight improvement from how we exited the year as we have some tougher comps. But generally pleasing to see all three regions performing well and at least in line with our expectations. Having said that, we remain really focused on operation efficiencies, automation and cost control, recognizing it is somewhat of an uncertain macroeconomic environment at this point still. And particularly obviously the conflicts in The Middle East is driving concerns to be clear in terms of the impact on ESNTRA. We have very little direct trade in The Middle East, so very little direct revenue impact. And the breadth of our customer base and the fact that we're predominantly manufacturing locally does protect us from some of the supply chain disruptions that are happening as a result.

11:04 We are seeing some cost inflation through the business as a result of the inflated oil price. That's coming through raw materials, through energy and through freight. But given our strong pricing capabilities, we've been able to offset that with pricing agility and managing to protect margins as a result. So bringing all that together, we remain conscious of the external geopolitical events, but think we're well positioned to continue to deliver in line with expectations for twenty twenty five twenty twenty six, sorry. Balance sheet remains robust. Net debt at the half year is expected to be around 1.6 times. And that obviously is including the acquisition that we've announced this morning, which we expect to complete before the half year. At this point, we a signed agreement with some pre close completion activities undertaken in the next few weeks.

11:57 So we continue to be in a good position to drive progress through the year and maintain momentum to those midterm targets as well. Just to quickly talk about Bateco as the acquisition that we've made today. This is a business we know very well. It's a business we have had a level of dialogue with for seven or eight years in terms of looking at the potential opportunity for us to acquire the business. Over the last twelve months, we've been actively engaged in that dialogue and conducting our diligence and getting to know the business and the leadership team even more closely. They are an existing supplier of ours. So we do already have a trading relationship and sell some of their products. But they also have a much broader range of products that we can now start to bring into the ESSENTRA offer.

12:43 It's very well positioned to support our machine and automation product and market sectors and really adds a strong set of manufacturing capabilities to the European region. So it's in line with our disciplined approach. So taking that product expertise, helping us drive manufacturing capabilities, we believe there are strong both revenue synergies and in sourcing gross margin opportunities for us as well. And we do expect it to be accretive in the first full year of ownership. The initial consideration was €7,400,000 and there is a deferred consideration based upon performance over the next twenty months effectively. And that has been paid for on so that is on a cash free and debt free basis. The multiple was 6.5 times EBITDA based upon the performance we've got at the end of last year, and it will generate a 15% return on invested capital in the third year, which is our typical hurdle rate for acquired businesses.

13:40 So we have some small number of pre close conditions to meet in the coming weeks, but we expect the acquisition to complete before the half year. And we'll start the integration activities and welcoming the business into the wider ESSENTRA family at the start of the half year. So that's it for me. I will hand you back over to Steve. Thank you, Scott. Tim, if there are any questions from shareholders. No questions, Steve. So if anyone in the room would like to ask a question, please raise your hand and let me know who you are. Okay, That's the end of question time. As there is no further business, I will now call the meeting to a close. And for those able, please do donuts for lunch.

14:33 Thank you. That concludes the formal business of the meeting, and I declare the twenty twenty six AGM closed, and thank you for joining us today. Thank you for updating us on news today. I'm ESNTRA PLC. I'd like to thank you for attending today's General Meeting. Good afternoon to you.