Annual Report & Accounts 2024
Delivering our
expertise with
every part
Our business model delivers a
broad range of diverse product
offerings to a wide range of
end-markets, supported by
our global footprint, enabling
our hassle-free customer
proposition.”
Scott Fawcett
Chief Executive
We are Essentra
Essentra plc is a leading global provider and manufacturer
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 and includes c.3,000 employees,
14 manufacturing facilities, 26 distribution centres and 37 sales
and service centres.
We serve 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.
Our vision
To be the world’s leading
responsible hassle-free
supplier of essential
industrial components
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
About Essentra
A global manufacturing and distribution footprint,
balancing local customer service with operational scale.
STRATEGIC REPORT
Essentra at a glance
1
Our business model
3
Chair’s statement
4
Chief Executive’s review
6
Investment case
8
Market trends
9
Operational review
10
Key performance indicators
14
Financial review
16
Alternative Performance Measures
19
Environment, Social and Governance
21
S172 Stakeholder engagement
38
Climate and Nature Related
Financial Disclosures
40
Risk management report
50
Group Executive Committee
58
DIRECTORS’ REPORT
Chair’s Corporate Governance statement
61
Board of Directors
62
Corporate Governance report
64
ESG Committee report
77
Nomination Committee report
80
Chair of the Audit and Risk Committee’s letter
85
Report of the Audit and Risk Committee
87
Chair of the Remuneration Committee’s letter
93
Remuneration at a glance
96
Annual Report on Remuneration
97
The Director’s Remuneration Policy Report
109
Other statutory information
114
Statement of Directors’ Responsibilities
in respect of the Financial Statements
119
Independent Limited Assurance Report to
Essentra plc
120
FINANCIAL STATEMENTS
Consolidated Income Statement
123
Consolidated Statement of
Comprehensive Income
124
Consolidated Balance Sheet
125
Consolidated Statement of Changes in Equity
126
Consolidated Statement of Cash Flows
127
Basis of Preparation and Principal
Accounting Policies
128
Critical Accounting Judgements and Estimates
137
Notes to the Consolidated Financial Statements 140
Company Balance Sheet
177
Company Statement of Changes in Equity
178
Notes to the Company Financial Statements
179
Independent Auditors’ report to the members
of Essentra plc
186
AT A GLANCE
CONTENTS
EMEA
54%
of revenue
Americas
33%
of revenue
APAC
13%
of revenue
14
manufacturing sites
26
distribution sites
37
sales and service
locations
c.3,000
employees worldwide
c.64k
customers
c.60m
parts produced
per week
c.2bn
parts in stock
ESSENTRA PLC ANNUAL REPORT 2024
1
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
AT A GLANCE CONTINUED
Operational highlights
Financial highlights
Navigating challenging
market conditions whilst
remaining focused on the
elements within our control
Customer satisfaction
remains strong, reflecting
the strengthening of our
“hassle-free” service
proposition
Gross margin expansion
across all three
georgraphies
Industry leading employee
engagement score of 85%
Efficiencies delivered
through a disciplined
approach to cost control,
flexibility within operations
and focus on procurement
activities
Agile approach to
operations across our
global footprint providing
optionality to respond to
macroeconomic changes
Excellent adjusted
operating cashflow
conversion in excess
of 90%
Continued investment in
operational capabilities,
attracting new commercial
opportunities
Strong balance sheet,
enabling investment in
organic and inorganic
growth, through disciplined
bolt-on M&A
Continued significant
progress towards the
Group’s sustainability
goals, following SBTi
verification of Essentra’s
net-zero target by 2050
Revenue
£302.4m
(2023: £316.3m)
Adjusted operating profit
£40.1m
(2023: £43.2m)
The numbers presented in this Strategic Report
reflect the continuing operations of the Company
unless otherwise stated.
Adjusted measures
Adjusted results exclude certain items because, if
included, these items could distort the understanding
of Essentra’s performance for the year and the
comparability between periods. In management’s
view, such alternative performance measures
(“APMs”) reflect the underlying performance of the
business and provide a more meaningful comparison
of how the business is managed and measured on
a periodic basis. Our APMs and Key Performance
Indicators (“KPIs”) are aligned to our strategy and
business segments, and are used to measure the
performance of the Company and form the basis
of the performance measures for remuneration.
See pages 14 and 15 for KPIs and pages 19 and 20
for APMs.
Cautionary forward-looking statement
This Annual Report contains forward-looking
statements based on current expectations and
assumptions. Various known and unknown risks,
uncertainties and other factors may cause actual
results to differ from any future results or
developments expressed or implied by the
forward-looking statement. Each forward-looking
statement speaks only as of the date of this Annual
Report. The Company accepts no obligation to revise
or publicly 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.
Adjusted operating
margin
13.3%
(2023: 13.7%)
Reported operating profit
£14.6m
(2023: £10.9m)
Adjusted operating cash
conversion
90.8%
(2023: 111.6%)
Reported profit per share
4.0p
(2023: 2.0p)
Adjusted basic earnings
per share
8.5p
(2023: 10.6p)
Dividend per share
2.8p
(2023: 3.6p)
Net debt ratio
pre-IFRS 161
1.3x
(2023: 0.5x)
Return on invested capital2
11.1%
(2023: 12.4%)
Notes:
1
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).
2
Return on Invested Capital has been adjusted for acquisitions in the year.
ESSENTRA PLC ANNUAL REPORT 2024
2
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
BUSINESS MODEL
Our purpose
Our values
Who we serve
What we do
Our products
Our vision
Our model is unique in the market. We combine the expertise and flexibility of
a manufacturer with the service and range of a distributor.
Our business model
Our purpose is to
help customers build
a sustainable future
Our vision is to be
the world’s leading
responsible hassle-free
supplier of essential
industrial components
Protective caps and plugs
Access hardware
Cable management
Plastic fasteners
Electronics hardware
Other hardware
Security seals
Other
Automotive and EV charging
Renewable energy
Medical devices
Construction and agriculture
Automation
Telecoms
Consumer equipment
Other industrial equipment
We care about
our customers
We care about
each other
We deliver
We are an
effective team
We manufacture
We have the capacity and expertise to
manufacture a wide range of products
14
manufacturing
sites globally
c.60m
parts produced
per week
We distribute
Our global scale and market knowledge
means that we are able to anticipate
and meet the needs of our customers,
whether large or small, in a wide variety
of end-markets and geographies
26
distribution centres
c.2bn
parts in stock
We support
Our customers are manufacturers and our
products are a small but critical part of
their manufacturing bill of materials
37
sales and service
locations
c.64k
customers
ESSENTRA PLC ANNUAL REPORT 2024
3
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Chair’s statement
This has been my first year as Chair of the Board, having joined
in July and then taking over as Chair in November. It has been a
challenging year for Essentra as it continued to navigate its way
through a difficult economic environment.
CHAIR’S STATEMENT
I have spent time travelling
to sites to learn more about
the manufacturing processes,
meeting with employees,
getting to know customers
and our end-markets.”
Steve Good
Non-Executive Chair
The downturn in markets, particularly in
Europe, has been deeper and lasted longer
than we and many of our industrial peers
anticipated. We have nevertheless delivered
results in line with expectations, which were
lowered in September as a result of the
continuing weakness in end-markets, and
maintained regional operating margins
through a focus on operating efficiencies
and cost control. Essentra remains a healthy,
profitable business and the Essentra team,
against this difficult backdrop, have
continued to demonstrate their resilience in
addition to the quality and depth of their
knowledge of our customers, products and
the markets they operate in.
Clear strategy & targets
Essentra’s vision is to be the world’s leading
responsible, hassle-free supplier of essential
industrial components. We aim to deliver
this through a focused organic growth and
market share gain agenda. Our strategy is
underpinned by digitalisation and
sustainability which ensure our customers
receive exceptional service, expert advice
and a broad and relevant product offer.
We deploy value enhancing strategic
acquisitions which offer new product
capabilities to augment our organic
growth initiatives.
ESSENTRA PLC ANNUAL REPORT 2024
4
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CHAIR’S STATEMENT CONTINUED
Dividend
For the year ended 31 December 2024, the
Board is recommending a final dividend of
1.55p (2023: 2.4p) per share. When combined
with the interim dividend of 1.25p (2023: 1.2p)
per share, which was paid on 25 October 2024,
this will make a total dividend for the year of
2.8p (2023: 3.6p) per share, maintaining the
same level of dividend cover.
During the year our on-going Share Buyback
programme purchased 3,022,914 shares for
cash consideration of £4,924,275.
People & safety
Of fundamental importance to Essentra is
the need to keep our people safe. Working
in safe environments, both physically and
mentally, is essential and at the heart of
everything we do.
I had the opportunity during my extensive
induction process to visit all of our regions,
tour many of our sites, and meet a large cross
section of people who contribute to the
success of Essentra. I experienced a positive
and healthy culture, one in which people are
valued, communications are strong and
health and safety is of utmost importance.
Our headline health and safety metric
remained static at 10 Lost Time Incidents
(“LTIs”) (2023: 10 LTIs). Whilst there is always
room to improve, we have a strong base to
work from. During the year, engagement
improved again, to 85% (2023: 82%) which
is above industry norms. On behalf of the
Board, I would also like to thank all of our
people for their continued dedication and
contribution in delivering this resilient
performance in what has been a really
challenging year.
Board changes
I formally took over the Chair role at
the start of November, following a very
comprehensive handover process with Paul
Lester. Paul had chaired the Board since 2015
and steered Essentra through a period of
significant change, resulting in Essentra
becoming a pure-play components business.
All of the Board, and the employees of
Essentra, would like to thank Paul for his
leadership, insight and his significant
contribution to the business and the
legacy that he has left.
During the year, we announced that Jack
Clarke, Chief Financial Officer (“CFO”), had
decided to step down from the Board to
embark on a plural career. That change took
place at the very end of the year, and we
welcomed Rowan Baker, our new CFO at the
start of November. The Board thank Jack for
his contribution and guidance during a
period of significant change.
At the start of 2025, we also announced
the resignation of Ralf K. Wunderlich,
Non-Executive Director and Chair of the
ESG Committee (“ESGC”). Ralf joined
Essentra in 2017, and during that time had
also chaired the Remuneration Committee.
Ralf’s contribution, knowledge and
enthusiasm for the business has been greatly
appreciated by the Board and those within
the business. The Board and I wish him all
the very best in his new role.
The membership of the Board will be
refreshed during the course of 2025 as NEDs
meet the full tenure of their terms, and we
ensure the skills of the Board best serve the
business. The first phase of this is well
advanced. We will make further
announcements in due course.
AGM
Our AGM this year will be held on 21 May
2025 at our Kidlington site, just outside of
Oxford in the UK. Please do take the time
to join us, whether virtually or in person.
Steve Good
Non-Executive Director & Chair
18 March 2025
ESSENTRA PLC ANNUAL REPORT 2024
5
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CHIEF EXECUTIVE’S REVIEW
Chief Executive’s review
Whilst end-market conditions throughout the year have been
mixed, we remain focused on continuing to deliver on the elements
that remain within our control, and our commitment to our
“hassle-free” customer proposition.
2024 has seen a challenging operating
environment, with end-markets being
suppressed throughout the year. However,
I am proud of our people across the business
for demonstrating their ongoing commitment
to serving our customers, and for delivering
results that are in line with our revised
operating profit guidance, shared in
September 2024.
Our team has worked hard to identify
clear priorities and levers for growth while
retaining cost discipline. We will deliver our
strategy through a selection of accelerators
that focus on technology, service, expert
advice and product offer, whilst we continue
to develop our people, and enter new
markets and geographies.
I am confident that we are set up well
for the success required to deliver our
medium-term targets but recognise that
the market conditions lengthen the time
frame for delivery.
Our team
During 2024, at an executive level, we
were pleased to be joined by Chris Brooks,
Managing Director for the Americas region,
and Richard Sederman, who was promoted
internally to Managing Director for the
APAC region.
Chris and Richard both bring strength
to the Executive team. Chris has a strong
background in the global industrial sector,
whilst Richard, who joined Essentra as a
graduate over 20 years ago, knows our
business model extremely well and has played
a leading role in Essentra’s M&A strategy in
recent years. Richard also has prior experience
of living and working in Asia when leading a
previous acquisition integration.
These regional executive roles are key
positions within our structure that drive
accountability into each region to deliver
growth targets, defining the right end-
markets for the regions they lead, managing
the service proposition to deliver revenue
and growth and consider potential
extensions of their existing geographies
as well as developing relationships with
potential M&A targets.
Our regional approach and strengths of each
of our regional teams supports agility within
our business to ensure we are taking the right
opportunities and approaching them in a way
that works for our end-markets. By operating
on a regional basis, whilst embedding the
values of being one team, we are well-
positioned to respond to changes within
the external demand environment.
We will deliver our strategy
through a selection of
accelerators that focus on
technology, service, expert
advice and product offer, whilst
we continue to develop our
people, and enter new markets
and geographies.”
Scott Fawcett
Chief Executive
ESSENTRA PLC ANNUAL REPORT 2024
6
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CHIEF EXECUTIVE’S REVIEW CONTINUED
Strategically positioned for
sustainable growth
We are taking a cautious view for 2025
and expect the timing of any material
improvement in end-market conditions to be
differentiated by region. Over the last year,
we have remained focused on continuing to
deliver on the elements that remain within
our control. Each region managed costs well,
and managed operational headcount in line
with expected volumes. The Group also took
the opportunity to reduce central costs
further, and operate a lean but agile model.
This approach has protected margins in the
short term, whilst also ensuring we remain
well-positioned to take advantage of
market recoveries when they occur.
We will continue to support this approach
to cost control, drive operational excellence
and optimise efficiencies to deliver a
“hassle-free” service to our customers, whilst
investing selectively, with returns discipline,
for growth.
Recognising the differences in regional
market conditions, we are pursuing a
number of opportunities, such as growing
our access hardware business in each region
by targeting growth markets such as energy
transition and automation. We have, and
continue to, put in place the pillars needed
to support growth by investing in our sales
teams to empower them to offer expert
advice to our customers.
Throughout 2024, we continued to support
future growth and efficiencies by embedding
enabling technology. We deployed the
Microsoft Dynamics ERP platform to a total
of eight sites during the year, and in 2025,
we expect to continue the deployment
across EMEA. In addition, we have invested
in a new connected planning platform, that
is already live and brings increased oversight
across our sites benefitting our customers, as
each region enhances its service proposition.
Over the last year, we revitalised our product
management focus and are developing new
capabilities that will help to ensure we
continue to lead in the provision of
sustainable products required by our existing
and new customers. We remain committed
to increasing our range of sustainable
products, with support from the sustainability
Centre of Excellence in Kidlington, UK, and
believe this is both a responsible but also
commercially differentiated strategy for
the business.
Inorganic growth remains a key element
of our strategy and we maintain a
disciplined capital allocation policy. This
approach has helped to ensure we delivered
the expected synergies from our acquisition
of BMP TAPPI in 2023 and Wixroyd in 2022,
predominantly through cross-selling to our
existing customers.
Looking ahead: well-positioned to
benefit from market recovery
With the building blocks in place, and by
taking a selective returns-based approach
to where and how to invest, we are confident
that we are ready to take advantage when
markets change. In the meantime, we will
continue to develop and focus on winning
new business across our chosen
end-markets.
This approach is underpinned and
demonstrated by ongoing improvements
in our employee engagement score, which
is now at 85% (2023: 82%), in part driving
our net promoter score to 43, a three point
improvement compared to 2023.
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 bolt-on 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.
Our 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.
I am looking forward to the coming year,
continuing to drive the business to take
advantage of the opportunities in the market,
and to respond to new challenges that may
arise, enabling us to deliver results that we
can be proud of, benefitting all stakeholders.
Scott Fawcett
Chief Executive
18 March 2025
Group strategy and medium-term targets
ESSENTRA PLC ANNUAL REPORT 2024
7
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
INVESTMENT CASE
Investment case
Our vision is to be the world’s leading responsible hassle-free supplier
of essential industrial components
1
2
3
4
Market leader with
a unique proposition
in a large and
fragmented market
Clear strategy to drive
organic growth and
market share gains
supported by
digitalisation and
sustainability
High margin business
with scope to expand
Strong returns and cash
conversion enabling
value enhancing M&A
Essentra’s unique model combines
the expertise and flexibility of a
manufacturer with the service and range
of a distributor. We operate in a highly
fragmented £8-£10bn addressable market,
with over one million potential customers.
The breadth and depth of our offer is also
unique, and enables us to serve a broad
range of industrial customers, whilst our
global manufacturing and distribution
footprint balances local customer service
with operational scale. Our committed
and engaged employees, extensive
network, deep industry expertise
and strong focus on innovation and
sustainability are our key differentiators.
Our hassle-free approach is supported
by our range, availability and continued
investment in our digital offering to
support the customer experience.
The implementation of Customer
Relationship Management (“CRM”)
solutions, AI prompts and the upskilling of
our commercial teams enables Essentra to
drive cross-selling opportunities. Essentra’s
focus on sustainability is a source of
competitive advantage; by focusing on the
sustainability of our own operations and
the components we manufacture, we will
be able to support our customers to
achieve their own sustainability goals.
Essentra has significant margin expansion
opportunities driven through scale
efficiencies, operational effectiveness and
pricing. We continue to optimise our global
footprint for growth, balancing our costs
with our commitment to service. Our scale
also allows us to focus on buying better
and operating efficiently. We are
transforming our sourcing and purchasing
capabilities and improving our processes
and technology, underpinned by an
improved ERP platform to drive efficiencies
and support margin expansion. Essentra
continues to deliver pricing, procurement
and cost control actions which enable us
to protect our strong margins.
A strong financial framework and healthy
balance sheet provides Essentra with
significant scope to pursue value creating
opportunities. Our medium-term targeted
gearing range of <1.5x net debt to
adjusted EBITDA, provides a platform
from which we can explore and drive
further strategic opportunities. The
strength of our balance sheet means we
are well positioned to invest in organic
development such as accelerating
digitalisation and expanding our
sustainable product offering.
We continue to develop our healthy
pipeline of opportunities and to look
for value enhancing and strategic
acquisitions, whilst retaining capital
allocation discipline, as well as developing
new product capabilities to support our
organic growth initiatives.
ESSENTRA PLC ANNUAL REPORT 2024
8
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
MARKET TRENDS
Market trends
Understanding and responding to our geographical and customer
end-markets is a fundamental part of our business. Developing this
understanding allows us to serve our customers with the product they
need and when they need it, helping them build a sustainable future.
Essentra sells a broad range of products –
including caps, plugs, cable management,
fasteners, security seals and access hardware
– across a wide range of customer end-
markets. These include automotive and
consumer equipment manufacturers,
telecoms, industrial electronics, construction,
agriculture, renewable energy, EV charging,
medical equipment and other industrial
equipment. Each of these end-markets has
differing trends and drivers and, often,
differing economic and geopolitical
dimensions in our geographical markets.
We look to a number of sources to gather
information on these diverse end-markets
and broader economic landscapes. Most
importantly, we work with our customers to
understand their challenges and how we can
help solve them. In doing so, we are able to
better understand our markets, develop the
quality of our business planning and ensure
our global supply chains are configured for
the markets they serve.
2024 was notable for the large number
of democratic elections across the globe.
Around four billion people, approximately
half the world’s population, were eligible
to vote in elections in the year. This level
of potential change created uncertainty in
many of our geographical end-markets and
with it, adverse trading conditions. Whilst
2025 might see some political certainty, we
anticipate continuing economic uncertainty
as new economic policies are introduced.
We are encouraged to hear our customers
continue to be focused on their supply chain
resilience, community and environmental
matters and want opportunities to source
products and partner with suppliers that
place importance on these topics.
Our geographical breadth means we remain
well placed to deliver on these opportunities,
and can provide a degree of in-built resilience,
along with our focused approach of
manufacturing from sustainable materials.
We continue to review our operational
footprint with a view to optimising it to meet
emerging market needs.
Regional dynamics
In APAC, we saw a slight but continuing
improvement in China during the year.
The Chinese domestic market still remains
relatively soft with exports improving more
prominently, notably in our access hardware
business, Hengzhu. The rest of Asia has also
seen markets gradually improve during 2024.
We continue to focus on the development of
our access hardware business in China and
on increasing our presence in high-growth
Asian economies, notably Vietnam and India.
The economic outlook in EMEA has
deteriorated during the year. The Purchasing
Managers’ Index (“PMI”) score for the
majority of countries in the region has
indicated continuing trends of reduced
activity. Employment levels in the
manufacturing sector across the region have
also continued to decline, extending the
period of job contraction to approximately
18 months. We continue to focus our efforts
on growth end-markets and maintain a focus
on controlling costs until growth returns.
The Americas region has also seen a
negative, and declining, PMI in the second
half of the year. Feedback from our own
customers indicate that this is largely a
hesitancy to invest before the policy
decisions of the new US administration are
known early in 2025. The broad consensus
is that the PMI, and with it the economic
outlook, will improve throughout 2025.
We continue to review global opportunities
across the breadth of our product range.
Whilst our traditional cap, plug and seal
product ranges will continue to remain as
a core part of our business, we continue to
focus on the development of our access
hardware range and the opportunities it
presents for expansion in some of our
high-growth end-markets.
Essentra’s global operations continued to
support business resilience by allowing us to
navigate disruption caused by conflict and
political unrest enabling us to serve our
customers in their local markets with strong
service levels.
Our geographical breadth
means we remain well placed
to deliver on opportunities and
have a degree of in-built
resilience, along with our
focused approach of
manufacturing from
sustainable materials.”
ESSENTRA PLC ANNUAL REPORT 2024
9
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
OPERATIONAL REVIEW
Operational review
We are a leading global provider of
essential components and solutions,
focusing on the manufacture and
distribution of a comprehensive range of
components, used in a diverse range of
industrial applications and end-markets.
Who we are
Revenue by region
Industrial
manufacturers
69%
Larger
consumer
manufacturers
19%
Renewable energy
6%
Auto
9%
Construction
and agriculture
5%
Automation
7%
Other industrial
equipment
53%
Medical devices
2%
Telecoms
10%
SME /
Consumers
12%
Revenue by customer segment
Revenue by channel
Markets we serve
Consumer
electronics
8%
EMEA
54%
End customers
71%
Americas
33%
Distributors
29%
APAC
13%
ESSENTRA PLC ANNUAL REPORT 2024
10
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Financial performance
Revenue
£163.3m
(2023: £170.8m)
Gross profit
£84.0m
(2023: £87.5m)
Gross margin
51.4%
(2023: 51.2%)
Operational highlights
Lost-time incidents
4
(2023: 7)
On-time-in-full
80.5%
(2023: 83.5%)
Net Promoter Score
43
(2023: 40)
Like-for-like excludes the impacts of acquisitions and foreign exchange.
See Note 1 of the Consolidated Financial Statements on pages 140 and 141 for further detail on segmental reporting.
2024 performance summary
EMEA
OPERATIONAL REVIEW CONTINUED
Financial performance
The region reported revenue of £163.3m
(2023: £170.8m), a 1.5% increase on a
constant currency basis, compared to the
prior year. The region benefitted from the
acquisition of BMP TAPPI in October 2023
contributing 5.7% to growth year-on-year,
with the like-for-like (“LFL”) business reporting
4.2% decline compared to the prior year.
Trading conditions through the year were
mixed, underpinned by a challenging market
back drop, particularly through the latter
part of the year. Performance in H1 was
broadly stable compared to 2023, reporting
0.1% decline on a LFL basis. H2 saw market
conditions soften, reflective of wider
industrial trends and indicators, reporting
a 8.7% decline on a LFL basis.
Gross margins remained strong at 51.4%
(2023: 51.2%), an improvement of 20bps.
The region has selectively adjusted capacity
at regional manufacturing and distribution
facilities to meet demand, whilst placing
a greater level of focus on internal
manufacturing efficiencies and procurement
savings to protect gross margin in year.
Operational performance
The EMEA region navigated challenging
market conditions throughout 2024,
particularly within the Eurozone where
manufacturing PMI remained below 50.
Whilst demand in the Middle East remained
strong, weakness in end-markets across
Germany and France saw trading conditions
soften materially through H2. Performance
into the latter part of the year was adversely
impacted by the appreciation of the Turkish
Lira, which led to adverse trading conditions
in Turkey and therefore impacting
competitiveness for the end-customer
base when exporting into Europe.
The construction and agriculture sector
remained suppressed through 2024,
impacting suppliers within the HVAC and
metal fabricator markets. Industries with less
exposure to industrial cycles continued to
perform well, with energy, data centres and
telecoms remaining resilient.
BMP TAPPI, acquired in October 2023, has
performed in line with expectations. Over
1,000 standard products from their extensive
range of protective caps and plugs were
launched into the Essentra range, with
inventory held in the two EMEA distribution
hubs to drive commercial activities. The sales
opportunity pipeline has built gradually
demonstrating commercial synergies, with
cross-sell success across specialist vehicles
and construction agriculture end-markets.
Customer satisfaction remains strong.
In 2024, Net Promotor Score (“NPS”)
improved by three points to 43. Whilst these
metrics saw initial disruption linked to ERP
implementation, progress on customer
satisfaction was seen across the region,
reflecting the strengthening of our service
proposition, enhanced complaint resolution
and, as mostly cited by our customers,
Essentra’s broad range of products.
Our people remain core to what we do and
we are pleased to have achieved a industry
leading employee engagement score of 83
in the 2024 Employee Survey (2023: 77). The
region reported four Lost Time Incidents
(“LTIs”), compared to seven in 2023. The core
manufacturing facilities in Turkey and the
UK recorded zero LTIs in 2024, and the West
Europe distribution hub in Germany crossed
the 1,000 days free LTI milestone in December.
We continue our journey towards increasing
our sustainable product and proposition
offer, supporting our customers with their
own sustainability goals. Progress includes
the conversion of product ranges to fully
recycled material and the use of re-usable
packaging for deliveries.
The ERP programme was deployed in two
tranches through 2024, costing c.£9.0m, in
line with guidance. Firstly, the deployment
across Eastern Europe in January 2024 and
secondly, the cluster of Germany, Austria,
and Benelux in December 2024. As each
deployment has taken place, the business
has built efficiencies and improvements, and
is therefore well-positioned to progress the
programme of deployment at a greater
pace in 2025.
% of Group revenue
54%
ESSENTRA PLC ANNUAL REPORT 2024
11
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Financial performance
Revenue
£98.8m
(2023: £106.2m)
Gross profit
£38.0m
(2023: £40.3m)
Gross margin
38.5%
(2023: 37.9%)
Operational highlights
Lost-time incidents
3
(2023: 1)
On-time-in-full
80.3%
(2023: 75.8%)
Net Promoter Score
49
(2023: 46)
See Note 1 of the Consolidated Financial Statements on pages 140 and 141 for further detail on segmental reporting.
2024 performance summary
Americas
OPERATIONAL REVIEW CONTINUED
% of Group revenue
33%
Financial performance
The Americas region reported revenue of
£98.8m (2023: £106.2m), a 3.9% reduction on
a constant currency basis, compared to the
prior year.
Trading conditions through 2024 were
suppressed, although the region saw greater
levels of stability within end-markets as the
year progressed, with low levels of recovery
in the second half. Whilst some of the
improvement in performance was a result
of easing comparatives, the region saw
distributor demand stabilise as the year
progressed, with no further restocking, or
destocking. 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.
The fourth quarter of 2024 provided an
encouraging trend of new order intake
improvements when compared to the
prior year period.
Gross margins remained strong at 38.5%,
expanding by 60bps in the year (2023:
37.9%). The region implemented a selective
approach to sales price increases, as rates
of inflation slowed marginally from the prior
year. To protect margins through the year,
management focus was on realignment
of the cost base in line with demand,
whilst delivering operational efficiencies
and procurement initiatives including
raw materials.
Operational performance
Overarching declining PMI trends weakened
end user demand through 2024. Whilst
Canada recognised a slight improvement
through the year, overall, the Americas
region saw constrained demand across
end-markets.
Sectors that saw a more positive market
in the year included industrial equipment,
metal fabrication, pneumatics and
industrial electronics.
Through 2024, the region regained some
customers lost during the post-COVID-19
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
(2023: 46) and OTIF significant improvement
from 75.8% in 2023 to 80.3% in 2024.
Given the soft economic environment, it was
encouraging to see employee engagement
increase by one point to 78 (2023: 77).
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, they also support wider
sustainability goals in reducing waste to
landfill and emissions. Health and safety
remains a focus and the region continues
to roll out site safety culture assessments.
Three LTIs were reported in 2024, compared
to one in 2023.
The Americas continues to invest in its
hassle-free customer proposition, and was
pleased to see commercial success within
its sustainable product offer in the year.
Through Essentra’s initiative to increase the
use of recycled content, the Americas was
able to support a large automotive OEM in
converting high-volume parts to recycled
plastic resin, allowing them to achieve their
own sustainability goals. The marketing and
sales teams look forward to leveraging this
success with the aim of capturing commercial
opportunities with customers that have
positively stated sustainability goals.
ESSENTRA PLC ANNUAL REPORT 2024
12
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Financial performance
Revenue
£40.3m
(2023: £39.3m)
Gross profit
£15.1m
(2023: £14.0m)
Gross margin
37.5%
(2023: 35.6%)
Operational highlights
Lost-time incidents
3
(2023: 2)
On-time-in-full
96.2%
(2023: 96.0%)
Net Promoter Score (China)
57
(2023: 51)
See Note 1 of the Consolidated Financial Statements on pages 140 and 141 for further detail on segmental reporting
2024 performance summary
APAC
OPERATIONAL REVIEW CONTINUED
% of Group revenue
13%
Financial performance
The APAC region reported revenue of £40.3m
(2023: £39.3m), a 7.0% improvement on a
constant currency basis, compared to the
prior year.
The region saw a year of quarterly sequential
improvements. H1 performance reported
1.8% growth on a constant currency basis
compared to the prior year, improving to
12.1% growth in H2.
Gross margins of 37.5% improved by 190bps
(2023: 35.6%). A low inflation environment,
particularly in China, increased focus towards
driving cost efficiencies in year, benefitting
margin. The region successfully controlled the
cost base, driving manufacturing efficiencies,
whilst recognising the benefits of operational
leverage from top line growth.
Operational performance
As seen in previous years, 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 suppressed 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
driven 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 footprint was further reviewed in 2024,
following the closure of Perth, Australia,
operations in 2023. The business took the
decision 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.
Dip moulding manufacturing capabilities
across Essentra have been expanded, with
new machine capital investment in Ningbo,
China. The new dip moulding machinery will
service existing demand in the APAC region,
securing supply and enhancing the product
range, attracting new commercial
opportunities to the region. Further, new
machinery has been added to Rayong,
Thailand to support the broadening of the
product mix of components enabling cost
savings through insourcing, and developing
growth opportunity in South East Asia.
Focus on the ability to in-source
manufacturing for key projects has further
driven margin improvements in the region,
specifically within the renewable energy
sector, enabling additional business wins
with new internal capability.
Investment in tool replacement programmes
continue to progress, with die-casting and
machine replacement programmes in the
Hengzhu business as well as in Ningbo,
driving process efficiencies and allowing
insourcing opportunities to be explored,
securing supply and enhancing gross margin.
Health and safety culture remains a focus.
We are disappointed that the region
recorded three lost time incidents (2023:
two) and that these were recorded within
the Henzghu business. Essentra’s wider
safety playbook will play a crucial role in
2025, helping to align the safety plan
globally across our sites, and guiding the
integration of any new sites into the business.
Customer satisfaction scores in year saw
a six point improvement to 57 (2023: 51).
Investment in standard offer group product
availability and low levels of supply chain
disruption, have improved stock availability
and reduced order fulfilment lead times to
end-customers.
ESSENTRA PLC ANNUAL REPORT 2024
13
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Key performance indicators
KEY PERFORMANCE INDICATORS
The delivery of Essentra’s strategic priorities is underpinned
by a focus on Key Performance Indicators (“KPIs”) which
measure Essentra’s progress in the delivery of value.
How we measure it
Operating profit excluding the impact of
acquired intangible assets and adjusting items.
Why this is important
Measures the profitability of the Company.
How we measure it
Revenue at constant exchange rates, excluding
acquisitions and disposals.
Why this is important
Measures the ability of the Company to grow
sales by operating in selected geographies and
categories, and offering differentiated,
cost-competitive products and services.
How we measure it
Average net working capital2 per month,
as a % of revenue.
Why this is important
Measures the ability of the Company
to finance its expansion and release
cash from working capital.
How we measure it
Adjusted operating profit1 less non-cash items,
net working capital2 and net capital expenditure.
Why this is important
Measures the cash generation
capability of the Company.
Adjusted operating
profit1
£40.1m
(2023: £43.2m)
Adjusted operating
cash conversion1,3
91%
(2023: 112%)
Dividend per share
2.8p
(2023: 3.6p)
Alignment of KPIs to executive remuneration
Performance measures for the executive Annual Bonus Plan
1
Excluding impact of amortisation of acquired intangible assets and adjusting items.
2
As defined in the Financial review on pages 16 to 18.
3
As defined in the Alternative Performance Measures on pages 19 to 20.
Like-for-like revenue growth (%)
Net working capital2 ratio (%)
Adjusted operating profit1 (£m)
Adjusted operating cash flow,3 (£m)
2024 was a challenging
year with decline across
our end-markets, which has
impacted our KPIs. More
information can be found
in the CEO statement on
pages 6 to 7.
2024
2023
2022
43.2
40.1
25.1
-8.2
6.5
-2.7
2024
2023
2022
18.4
15.9
23.0
2024
2023
2022
36.4
20.2
48.2
2024
2023
2022
ESSENTRA PLC ANNUAL REPORT 2024
14
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
KEY PERFORMANCE INDICATORS CONTINUED
How we measure it
Earnings per share, excluding the impact
of amortisation of acquired intangible assets
and adjusting items.
Why this is important
Measures the benefits generated for
shareholders from the Company’s
overall performance.
How we measure it
Adjusted operating cash flow3 as a percentage
of adjusted operating profit1.
Why this is important
Measures how the Company converts its profit
into cash/quality of the Company’s earnings.
How we measure it
Total dividends paid divided by the number
of relevant shares in issue.
Why this is important
Measures the amount of cash per share which
the Company returns to shareholders.
How we measure it
Total annual increase in value. Based on
the increase in share price and the dividend
paid to shareholders.
Why this is important
Measures the Company’s ability to generate
long-term value.
How we measure it
Adjusted operating profit1, including an
allocation of central service costs, divided by
tangible fixed assets and net working capital2.
Why this is important
Measures how effectively the Company uses its
operational assets.
How we measure it
Adjusted operating profit1 after tax, including an
allocation of central service costs, divided by
capital employed plus intangible assets.
Why this is important
Measures the Company’s ability to effectively
deploy capital.
Alignment of KPIs to executive remuneration
Performance measures for the executive
Annual Bonus Plan
1
Excluding impact of amortisation of acquired intangible
assets and adjusting items.
2
As defined in the Financial review on page 16 to 18.
3
As defined in the Alternative Performance Measures on
page 19 to 20.
4
Includes an allocation of central service costs
to Components division in 2022.
5
Adjusted for acquisitions in the year.
Total Shareholder Return (%)
Dividend per share (p)
Adjusted operating cash conversion1 (%)
Adjusted basic earnings per share1,3 (p)
Return on Invested Capital4,5 (%)
Return on Capital Employed4,5 (%)
2.8
3.3
3.6
2024
2023
2022
-15.6
-19.9
-29.8
2024
2023
2022
2024
2023
2022
8.5
10.6
1.9
80
112
91
2024
2023
2022
28.3
29.5
23.4
2024
2023
2022
12.4
11.1
13.3
2024
2023
2022
ESSENTRA PLC ANNUAL REPORT 2024
15
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Financial review
Through 2024, the Group retained its disciplined
approach to cost control whilst selectively investing
for future growth.
FINANCIAL REVIEW CONTINUED
The Group achieved revenue of £302.4m in
2024, 0.3% growth on a constant currency
basis. Revenue growth from the acquisition
of BMP s.r.l (“BMP TAPPI”) increased revenue
by 3.0% year-on-year, offset by a 2.7%
reduction in organic like-for-like (“LFL”)
revenue, reflecting mixed end-market
conditions, including a softening in EMEA
end-markets in the latter part of the year.
Foreign exchange impacted Group revenue
by 4.7%, with reported Group revenue 4.4%
below the prior year (2023: £316.3m).
Regional gross margins remained strong, at
45.3% (2023: 44.8%) with manufacturing
and distribution facilities adjusting capacity
to reflect demand, demonstrating the
strength and agility of our differentiated
business model.
The Group has retained its disciplined
approach to cost control whilst selectively
investing for future growth. Adjusted
operating profits reduced to £40.1m in 2024
(2023: £43.2m) with the Group retaining
strong adjusted operating profit margins
of 13.3% (2023: 13.7%).
Adjusting items in 2024 reduced to £14.0m
(2023: £21.0m). A large portion of adjusting
items related to customisation and
configuration costs of significant ‘Software as
a Service’ (“SaaS”) arrangements (£9.6m) and
acquisitions and integration costs (£1.0m). Also
reported within adjusting items are £4.9m of
costs related to legacy items within the Group.
A net credit of £1.5m has been recognised
relating to investment property activities,
including a reversal of impairment of
investment property to market value.
After adjusting items and amortisation
of acquired intangible assets, the Group
reported operating profit improved to
£14.6m (2023: £10.9m).
Rowan Baker
Chief Financial Officer
Adjusted Operating
Cash Conversion
90.8%
(2023: 111.6%)
Adjusted Operating
Profit
£40.1m
(2023: £43.2m)
Gross margins remain strong,
demonstrating the strength and
agility of our differentiated
business model.”
Read more about our financial
performance measures on pages
14 and 15
ESSENTRA PLC ANNUAL REPORT 2024
16
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
FINANCIAL REVIEW CONTINUED
The Group saw an increase in net
working capital to £65.0m (2023: £57.8m),
predominately driven by an increase in
inventory through the first part of the year,
and also lower accruals held at the end of
2024 for employee incentives following the
profits warning in 2024.
The average net working capital ratio of
23.0% increased compared to 2023 (18.4%),
with the majority of this increase seen
through H1 (20.5%) due to the increase in
inventory through the first half of 2024 to
strengthen the Group's product offer and
enhance service.
Operating cash flow
The Group continued to see strong adjusted
operating cash flow and free cash flow in 2024.
Adjusted operating cash flow from continuing
operations was £36.4m (2023: £48.2m),
equating to operating cash flow conversion
of 90.8%, ahead of our 85% guidance.
This includes an outflow of net working
capital for the year of £9.9m (2023: £2.6m)
and net capital expenditure of £12.8m
(2023: £13.2m). This net capital expenditure
equated to 4.2% of revenues in 2024, in line
with medium-term guidance, and reflects
110.3% (2023: 94.3%) of the depreciation
charge (including amortisation of non-
acquired intangible assets) for the year
of £11.6m (2023: £14.0m).
Net interest paid was £8.1m (2023: £6.4m)
and total Group net tax outflow £5.1m
(2023: £4.5m). Free cash flow of £22.5m
compared to a free cash flow of £37.3m in
2023. An adjusted cash flow reconciliation
can be found on page 20, Alternative
Performance Measures.
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 in 2024 was a result of
accounting for previously unrecognised
deferred tax assets which results 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
Pensions
As at 31 December 2024, the Company’s
IAS 19 net pension liability was £2.0m
(2023: £9.6m). The reduction was a result
of actuarial gains on financial and
demographic assumptions in 2024. Further
information can be found in Note 18 to
the Consolidated Financial Statements.
Net debt
Net debt at the end of the period, including
lease liabilities, was £97.1m (2023: £62.5m).
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 totalling
£24.8m. This has been partly offset by
receipt of deferred consideration relating to
the Filters business of £10.0m.
Banking 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.
Acquisitions
In October 2023, Essentra announced
the completion of BMP TAPPI, a strategically
aligned, bolt-on acquisition. In 2024, BMP
TAPPI has been removed from the Group LFL
performance. The Consolidated Financial
Statements include £10.7m of revenue and
£2.8m of adjusted operating profit in 2024.
Central corporate costs
In 2024, the Group recognised £10.9m
of central corporate costs (2023: £11.6m).
These costs remain well-managed and below
the initial run-rate guidance of £13.0m.
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 towards the end of
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).
On an adjusted basis, the Group saw
net income of £27.6m and adjusted basic
earnings per share of 8.5p. Including losses
on discontinued operations, the total
reported net profit was £10.6m.
Net working capital
Net working capital is defined as inventories
plus trade and other receivables less trade and
other payables, adjusted to exclude deferred
consideration payable and receivable, interest
accruals and capital payables.
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 also holds $102.5m of long
dated US private placement debt (“USPP”)
at an average coupon rate of 3.8%.
Type
Amount
Interest
rate
exposure
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
Balance sheet
At the end of 2024, the Company had
shareholders’ funds attributable to Essentra
equity holders of £270.8m (2023: £273.2m).
Total capital invested in the business was
£362.8m (2023: £372.1m). This finances
non-current assets of £328.7m (2023:
£348.7m), of which £68.6m (2023: £71.4m)
is tangible fixed assets, the remainder
being intangible assets, right-of-use assets,
deferred tax assets, retirement benefit assets,
derivative assets, and long-term receivables.
ESSENTRA PLC ANNUAL REPORT 2024
17
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
recognition of deferred tax assets. The Board
remains committed to maintaining dividend
cover in the order of three times.
Treasury policies 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.
Rowan Baker
Chief Financial Officer
18 March 2025
Shareholder returns and
ordinary dividend
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.
The Board of Directors recommend a final
ordinary dividend of 1.55p and therefore
a total 2024 dividend of 2.8p. (2023: final
2.4p, total 3.6p). The full year dividend
maintains dividend cover in the order of
three times adjusted earnings, in line with
guidance, after adjusting for the one-off
An unchanged capital allocation policy
FINANCIAL REVIEW CONTINUED
Organic
Capital
investment
remains core
to strategic
growth
Capex
expected to
be maintained
between 4–5%
of sales
Innovation
Sustainable
new product
development
and
propositions
Digitalising
the customer
experience
drives cross-
sell and
customer
acquisition
Acquisitions
Strong pipeline
of potential
acquisitions
Addition
of product
adjacencies
enables higher
organic growth
through
cross-sell
Shareholder returns
Maintaining
dividend cover
in the order of
three times
The pace of the
share buyback
programme is
dependent on
other capital
allocation
opportunities,
particularly
the availability
of earnings
accretive
bolt-on M&A
ESSENTRA PLC ANNUAL REPORT 2024
18
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Alternative Performance
Measures
Management use a number of measures of financial
performance, financial position and cash flows which
are not defined or specified in accordance with relevant
financial reporting standards.
In Management’s view, these Alternative Performance Measures
reflect the underlying performance of the Company and provide
a more meaningful comparison of how the business is managed
and measured on a periodic basis.
ALTERNATIVE PERFORMANCE MEASURES
FY 2024 results at a glance
FY 2024
£m
FY 2023
£m
% change
Actual FX
% change
Constant FX
Revenue
302.4
316.3
(4.4)
+0.3
Adjusted operating profit
40.1
43.2
(7.2)
+2.3
Adjusted pre-tax profit
31.2
40.7
(23.3)
(15.9)
Adjusted net income
27.6
31.1
(11.3)
(2.7)
Adjusted basic earnings per share
8.5p
10.6p
(19.8)
(11.9)
Dividend per share
2.8p
3.6p
(22.2)
–
Adjusted 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 from continuing operations
11.6
5.8
100.0
–
Reported basic earnings per share
4.0p
2.0p
100.0
–
Reported net cash flow from operating activities
25.7
33.3
(22.8)
–
The financial information in this 2024
Annual Report is prepared in accordance
with UK-adopted International Accounting
Standards and with the requirements of
the Companies Act 2006, and with the
accounting policies section starting
on page 128 of the Consolidated
Financial Statements.
Alternative performance measures are not
considered to be a substitute for, or superior
to, UK-adopted International Accounting
Standards measures. These are detailed in
Note 28 to the Consolidated Financial
Statements.
Basis of preparation
Continuing and
Discontinued operations
In accordance with IFRS 5, Non-current
Assets Held for Sale and Discontinued
Operations, Continuing and Discontinuing
operations are presented as GAAP numbers.
The numbers presented in this Strategic
Report reflect the continuing operations of
the Group unless otherwise stated.
Non-GAAP measures
Throughout this 2024 Annual Report,
the following terms are used to describe
Essentra’s financial performance.
Constant exchange rates
Movements in exchange rates relative to
sterling affect actual results as reported.
The constant exchange rate basis adjusts
the comparative to exclude such
movements, to show the underlying
performance of the Company.
For the principal exchange rates for Essentra
for the year ended 31 December 2024 (“FY24”),
see the table below. Re-translating the FY23
actual results at FY24 average exchange rates
reduces the prior year revenue by £14.9m,
reduces prior year gross profit by £6.5m and
reduces prior year operating profit by £4.1m.
Principal exchange rates
US$:£
€:£
Average
FY24
1.28
1.18
FY23
1.25
1.15
Closing
FY24
1.25
1.21
FY23
1.27
1.15
Like-for-like basis (“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 FY 2024 LFL results are adjusted
for the acquisition of BMP TAPPI on
26 October 2023.
ESSENTRA PLC ANNUAL REPORT 2024
19
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ALTERNATIVE PERFORMANCE MEASURES CONTINUED
Return on Invested Capital and Return
of Capital Employed
Return on Invested Capital and Return on
Capital Employed have been adjusted for
acquisitions in the period.
Adjusted operating cash flow
Adjusted operating cash flow is net cash
flow from operating activities, excluding
income tax paid, pensions adjustments,
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.
Adjusted Operating Cash Conversion
Adjusted operating cash conversion is
presented as adjusted operating cash flow
as a percentage of adjusted operating profit.
Reconciliation of GAAP to
non-GAAP measures
The following tables are presented by
way of reconciling the metrics which
management uses to evaluate the
Essentra Group to GAAP measures.
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).
Adjusting items are separately presented
from other items of financial performance
as this enables management to reflect the
underlying performance of the continuing
operations of the Group.
Further details of adjusting items are shown
in Note 2 to the Consolidated Financial
Statements.
Constant exchange, like-for-like and
adjusted measures are provided to reflect
the underlying performance of Essentra.
For further details of the performance
metrics used by Essentra, please refer
to pages 14 and 15.
Adjusted basic earnings per share
Adjusted earnings per share has been
amended to remove the effect of material
movements in the Company's deferred tax
position that are not driven by the
underlying performance of the business.
Free cashflow
Free cashflow is defined as adjusted
operating cashflow from continuing
operations less underlying tax paid, less net
interest paid. A full reconciliation is in Note
28 to the Consolidated Financial Statements.
Net income
£m
FY 2024
FY 2023
Adjusted net income
27.6
31.1
Amortisation of acquired intangible assets
(11.5)
(11.3)
Adjusting items
(14.0)
(21.0)
Tax on adjustments
9.5
7.0
Profit after tax
11.6
5.8
Adjusted operating cash flow from continuing operations
£m
FY 2024
FY 2023
Adjusted operating profit on continuing operations
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
Tax¹
(5.8)
(4.5)
Cash outflow in respect of adjusting items1,2
(17.7)
(23.6)
Add back: net capital expenditure (excluding disposal proceeds relating to
adjusting items)
12.8
13.2
Net cash inflow from continuing operating activities
25.7
33.3
Adjusted operating cash flow
36.4
48.2
Tax¹
(5.8)
(4.5)
Net interest paid
(8.1)
(6.4)
Free cash flow
22.5
37.3
1
In 2024, 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: £3.8m).
ESSENTRA PLC ANNUAL REPORT 2024
20
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Environmental,
Social and
Governance
IN THIS SECTION
Introduction and background
22
Non-Financial and Sustainability Information Statement
24
Our progress and environmental data table
25
Our planet
27
Our components
29
Our culture
31
Our communities
34
Our customers
36
ESSENTRA PLC ANNUAL REPORT 2024
21
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
STRATEGIC REPORT
For more information on our ESG
strategy, our Climate Transition Plan
and our methodology for collecting
and calculating ESG data, go to:
essentraplc.com responsibility/
reporting-centre
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
Building a sustainable future
Our purpose, to help customers build a sustainable future, conveys
our intent to provide a sustainable service to customers from
design to delivery, whilst delivering on our targets for our people,
planet, investors and the communities we operate in.
We continue to make good progress across
each pillar in our ESG strategy. These pillars
are aligned to the United Nations (“UN”)
Sustainable Development Goals, with nine
goals having a direct link to how we operate
and the work we do.
In this report we set out our progress against
our five pillars during 2024, and what we
have planned for 2025.
In 2024, we published our first Climate
Transition Plan, underpinned with approved
science-based targets, which gained an
97.6% approval from shareholders via an
advisory vote at our 2024 Annual General
Meeting. Within this report, we have
provided an update on our progress against
this plan, outlined in each of the relevant
targets in our ESG pillars.
This year, we have also advanced our
assessment and disclosure of nature-related
risks and impacts, using guidance provided
by the Taskforce on Nature-related Financial
Disclosure (“TNFD”). This information is
provided alongside our Taskforce for
Climate-related Financial Disclosure
(“TCFD”) report on pages 40 to 49.
Our ESG pillars and related UN Sustainable Development Goals
Our planet
Driving resource and energy
efficiency, reducing emissions
and embracing renewables.
Our components
Developing innovative products
using renewables, recyclables,
reusables and biodegradables.
Our culture
A safe, supportive work
environment that champions
equality and celebrates diversity.
Our communities
Working with suppliers to ensure
ethical practices and contribute
to equitable economies.
Volunteering our time and
supporting good causes.
Our customers
Providing a hassle-free service
that helps customers achieve
their sustainability goals.
Jennifer Spence
ESG Director
Our first Climate Transition Plan,
gained an 97.6% advisory vote
approval from shareholders at our
2024 Annual General Meeting.”
ESSENTRA PLC ANNUAL REPORT 2024
22
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Importance to Essentra
Perceived importance to stakeholders
17
15
19
16
18
14
11
13
12
10
8
7
9
6
3
5
2
1
4
Moderate
Moderate
Major
Major
Critical
Critical
Minor
Minor
Significant
Significant
Sustainability priority topics
2024 ESG ratings
External frameworks we align to
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
Our culture
Our communities
Our components
Our planet
1 Physical pollution and end
of life disposal
2 Changes in legislation
on material use
and environment
3 Rejection of
single-use plastics
4 Greenhouse gases
5 Mental and physical health,
safety and wellbeing
6 Circular economy principles
7 Manufacturing
waste streams
8 Natural environment,
including marine ecosystems
9 Resource efficiency
10 Diversity, equity
and inclusion
11 Transparency
12 Impact of extreme weather
and climate action failure
13 Ethical supply chain
14 Use of renewable energy
15 Access to sufficient
clean water
16 Atmospheric pollution
17 Product traceability, origin
and conflict materials
18 Availability of raw materials
19 Community relations
Materiality assessment
Understanding the material risks and
opportunities for our business is vital to form
a comprehensive and effective ESG strategy.
We have identified 19 material topics, that
vary in priority according to both our own
and our stakeholders’ perspective. These
risks and opportunities are also considered
as part of our approach to risk management.
More information on ESG risks is available
on pages 50 to 57.
Our materiality assessment, our alignment
to global reporting requirements and the UN
Sustainable Development Goals, provides us
with a clear set of focus areas and priorities
from which we have built out our targets
and reporting. In order to ensure our
materiality assessment remains relevant, we
review and update this assessment at least
annually to incorporate any emerging topics
and update existing topics as necessary.
CDP 2024 ratings:
A–
Climate Change
B
Water Security
B–
Forests
MSCI
AA
Rating 2024
Task Force on
Climate-Related
Financial Disclosures
Science Based
Targets initiative
UN Sustainable
Development Goals
UN Global Compact
ESSENTRA PLC ANNUAL REPORT 2024
23
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
Non-Financial and Sustainability
Information Statement
Essentra’s strategic priorities and progress are measured
with KPIs against stated priorities in terms of the environment,
our customers, communities and people.
This table follows the requirements of Companies Act 2016 Sections 414C(7), 414CA and 414CB and is intended to help stakeholders
understand our position on key non-financial matters. We have a number of Group policies and standards which govern our approach to
these matters. These are detailed in this report in the sections shown.
Reporting requirement
Related policies and guidance
Relevant risks and where
to read more
Pages
CA 414CB
Business model
Strategy and business model
3 to 8
CA s414CB 2(a)
Non financial KPIs
ESG report
21 to 37
CA s414CB 2(e)
Environmental matters
Sustainability Policy
ESG report
21 to 37
CA s414CB 1(a)
Health, Safety and Environment Policy
TCFD and TNFD report
40 to 49
CA s414CB 2A(a-h)
Our Climate Transition Plan
Principal risk – environment
50 to 57
CA s414CB 2(d)
Employees
Our Ethics Code
ESG report
21 to 37
CA s414CB 1(b)
CA s414CB 2(d)
Health, Safety and Environment Policy
Principal risk – health and safety, leadership 50 to 57
Diversity and Inclusion Policy
Human Rights
Modern Slavery statement
ESG report
21 to 37
CA s414CB 1(d)
CA s414CB 2(d)
Supplier Code of Conduct
Principal Risk – legal and regulatory
50 to 57
Our Ethics Code
Social Matters
Diversity and Inclusion Policy
ESG report
21 to 37
CA s414CB 1(c)
CA s414CB 2(d)
Community Engagement Policy
Stakeholder engagement S172
38 to 39
Principal Risk – talent
50 to 57
Anti Bribery and Corruption
Anti Bribery and Corruption
Principal Risk – legal and regulatory
50 to 57
CA s414CB 1(e)
Right to Speak Policy
ESSENTRA PLC ANNUAL REPORT 2024
24
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
Our ESG strategy
On track
Slightly behind target
Behind target
ESG framework
Our focus and targets
Our progress
Status Performance highlight
Read more
Our
planet
Reduce absolute scope one and two GHG emissions by
50% by 2030 from a 2019 base year.*
Scope one and two emissions have reduced by 49%
since 2019.
49%
reduction in scope
one and two emissions
since 2019.
See pages
27 to 29
Reduce our scope three GHG emissions intensity from
purchased goods and services, and upstream transportation
and distribution by 55% per GBP of value added by 2030.*
Scope three emissions intensity has reduced by 16% since
2022.
All sites to achieve zero waste to landfill by 2030.*
20 sites achieved zero waste to landfill in 2024.
Reduce overall waste volumes by 50% by 2030.*
Waste intensity has reduced 42% against 2019 baseline.
Our
components
50% of materials from sustainable sources by 2030 across
our manufactured polymer ranges.*
18.4% of our manufactured polymer ranges used
sustainable materials.
33%
of our general protection and
security seals ranges used
sustainable materials in 2024
See pages
29 to 30
100% of materials from sustainable sources in our general
protection and security seals ranges by 2030.
Sustainable materials made up 33% of these product
ranges in 2024.
100% of our packaging is reusable, recyclable or
compostable by 2030.*
48% of our packaging is recyclable, or compostable.
50% recycled content in our packaging materials by 2030.*
29% of packaging materials contain recycled content.
Our
customers
Increasing the number of products introduced with
sustainability criteria.*
6,846 products across our ranges now have
sustainability attributes, 1,428 were introduced in 2024.
6,846
total sustainable products.
See page
36 to 37
Our
culture
Zero accidents for our people and visitors.
10 lost time incidents in 2024.
92%
of our sites took part in
healthy lifestyles activities in
2024
See pages
31 to 34
100% of employees trained on Ethics Code biannually.
99.6% of employees were trained on Ethics Code in 2024.
Healthy lifestyles campaigns at 50% of sites by 2025.
92% of our sites participated in activities in 2024.
Mental health training to 80% of leaders by end 2024.
84% of leaders have received mental health training.
40% women in our leadership team by 2025.
33% women in 2024 leadership team, 57% on the Board.
Our
communities
100% of suppliers over a £100k spend threshold sign up to
our Supplier Code of Conduct.*
37% of targeted suppliers have signed up to this code.
14%
of employees took a
community engagement
day in 2024.
See pages
34 to 35
70% of suppliers over £100k spend actively risk monitored.
90% of suppliers actively risk monitored.
A community engagement day taken by 25% of employees
Volunteer days taken by 14% of employees in 2024.
*
ERM CVS has assured a selection of our environmental, social and governance metrics for 2024. Full details of the scope, activities, limitations and conclusions of the assurance engagement are included in the Assurance Report on pages 120 to 121. Further details on our
basis for reporting can be found at www.essentraplc.com/responsibility.
ESSENTRA PLC ANNUAL REPORT 2024
25
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
2024 environmental data
Materials from sustainable sources
2019
2023
2024
Percentage of polymers from sustainable sources*
2%
20.7%
18.4%
Percentage by spend of recycled content in packaging materials*
–
28%
29%
Percentage by spend of packaging that is recyclable or compostable
–
58%
48%
Energy (MWh)*
2019
2023
2024
TCO2e
2024
Total electricity
procured
UK
8,055
6,034
5,629
28
Global
48,729
38,873
41,237
8,283
Renewable electricity
procured and generated
UK
7,896
5,973
5,564
–
Global
7,896
16,967
23,432
–
Natural gas
UK
14
367
353
64
Global
14,318
12,145
11,179
2,031
Fuels
UK
691
409
328
88
Global
2,206
2,944
3,103
738
Solid hazardous and
non-hazardous waste
destinations (tonnes)*
20191
2023
2024
Liquid hazardous and
non-hazardous waste
destinations (tonnes)*
2020
2023
2024
Recycling
1,374
2,709
2,006
Recycling
66
57
98
Recovery
161
330
351
Recovery
198
26
25
Incineration
66
80
80
Incineration
4
12
15
Landfill
2,787
204
135
Landfill
3
–
6
Total solid waste
4,388
3,323
2,572
Total liquid waste
271
95
144
% solid waste
diverted from landfill
36%
94%
95%
% liquid waste
diverted from landfill
99%
100%
96%
Water (cubic metres)*
2020
2023
2024
% change
2024/23
Water usage
135,015
171,145
180,125
5%
The organisational boundary for this data is determined using an operational control approach. All comparatives from 2019 to 2022
were restated in 2022, to reflect the divestment of our Filters and Packaging businesses. The 2019 to 2022 reporting periods are January
to December. The 2023 and 2024 reporting period is January to December, for all data except for spend-based calculations in scope
three categories one, two and four, where the reporting period is January to September of the current year, and October to November
of the preceding year. Excluded categories were determined via a materiality threshold assessment to be inapplicable due to no related
activity. This is periodically reviewed.
*
ERM CVS assured metric. Details of the scope, activities, limitations and conclusions of the assurance are on pages 120 to 121.
1
Upstream transportation includes intra-company transport and products to customers. Downstream transportation is captured in
category one as part of our spend on materials and services.
2
2022 and 2023 business travel emissions is based on a 2022 data study. 2024 is activity data from US and UK based employees only
3
2022 end of life treatment of sold products has been restated due to an amendment to include our goods for resale.
4
Total scope 3 emissions has been restated for 2022 to include all emissions within Essentra’s Scope 3 emissions inventory which forms
the SBTi approved near- and long-term target baseline.
5
Excludes Wixroyd and BMP TAPPI as no data available.
Scope one and two GHG emissions (tonnes CO2e)*
2019
2023
2024
% change
2024/2019
Stationary fuel combustion
3,050
2,323
2,127
-30%
Mobile fuel combustion
372
604
640
72%
Fugitive emissions
–
247
16
–
Total scope one emissions
3,422
3,174
2,783
-19%
Electricity – location based
22,587
15,303
15,151
-33%
Electricity – market based
18,814
10,498
8,275
-56%
Off-site electric vehicle charging – location based
–
2
5
–
Off-site electric vehicle charging – market based
–
4
8
–
Purchased heating and cooling
–
89
187
–
Total scope two – location
22,587
15,394
15,343
-32%
Total scope two – market
18,814
10,591
8,470
-55%
Total scope one and two emissions location
26,009
18,568
18,126
-30%
Total scope one and two emissions market
22,236
13,765
11,253
-49%
GHG intensity (total scope one and market-based
two emissions per £m revenue)
74.2
43.5
37.2
-50%
Scope three emissions by category number (tonnes CO2e)
2022
2023
2024
% change
2024/2022
1. Purchased goods and services*
98,789
66,557
67,735
-31%
2. Capital goods*
1,161
141
120
-90%
3. Fuel and energy-related activities*
5,215
4,344
4,308
-17%
4. Upstream transportation and distribution*1
44,756
29,806
22,106
-51%
5. Waste generated in operations*
479
175
85
-82%
6. Business travel*2
809
809
901
11%
7. Employee commuting*
6,741
6,433
5,208
-23%
8. Upstream leased assets*
–
–
463
–
10. Processing of sold products
29,859
23,141
22,646
-24%
12. End of life treatment of sold products5
2913
244
341
17%
13. Downstream leased assets
84
84
146
74%
Near-term target total (categories 1 and 4)*
143,545
96,363
89,841
-37%
Near-term GHG intensity (kgs/£ of value added)*
1.80
1.27
1.52
-16%
Total scope three emissions
188,1844
131,733
124,059
-34%
Zero waste to landfill*
2019
2023
2024
Number of sites at zwtl
2
14
20
ESSENTRA PLC ANNUAL REPORT 2024
26
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
We are committed to continuing to
decarbonise our operations. Since 2019, we
have reduced our total scope one and two
CO2e emissions by 49%, and indexed to
revenue, emissions intensity has declined
by 50%.
Total scope one and two emissions
reduced in the year due to our continuing
transition to renewable electricity and our
focus on energy management programmes.
Renewable electricity now accounts for 57%
of total electricity usage, an increase of 13%
compared to 2023. In 2024, our teams in
APAC and EMEA signed agreements for two
more solar arrays, at our Kidlington head
office, and our Ningbo manufacturing
facility, both due for completion by Q2 2025.
Renewable energy generated on site is now
5% of our total usage.
In 2023, we submitted our scope one, two
and three near-term and net-zero targets
to the SBTi for validation, and these targets
were approved in February 2024. To support
our targets, in 2023, we developed our
inaugural climate transition plan, which
received 97.6% approval from shareholders via
an advisory vote at our 2024 AGM. This plan
details the key initiatives we will be focusing on
to reduce our emissions further and meet our
targets across our scope one, two and three
emissions, and is available at essentraplc.com/
responsibility/reporting-centre.
Alongside decarbonising our energy usage,
part of our plan includes increasing our
energy efficiency, and we have continued to
implement energy efficiency projects across
the Company. In 2024, we completed 10
projects across five sites. These include
installation of new energy efficient material
Our planet
We want to transition to net-zero in our direct operations and
value chain, reducing absolute emissions, whilst protecting
natural resources by improving our resource efficiency and
minimising our impacts on nature.
Our targets
Reduce our scope one and two GHG
emissions by
50%
by 2030 from a 2019 baseline, and reach
net-zero by 2040 at the latest.
Reduce our scope three GHG emissions
intensity, from purchased goods and
services, and upstream transportation
and distribution by
55%
per GBP of value added by 2030 from a
2022 baseline, and reach net-zero by 2050
at the latest.
Our progress
49%
Reduction in scope one and two GHG
emissions since 2019.
16%
Reduction in scope three GHG emissions
intensity since 2022.
Reducing emissions
loaders in Erie, a high efficiency compressor
installation in Flippin, new chiller equipment
in Rayong, and the upgrade of injection
moulding machines in Barcelona and Yichun.
In 2024, our absolute scope three emissions
have reduced by 34% and our emissions
intensity has reduced by 16% compared to
our 2022 baseline. However our intensity has
increased 20% since 2023, due to the market
downturn having an impact on our 2024
gross economic value added. We are still on
track for our 2030 target, but are mindful we
need to renew focus on our scope three
emissions hotspots in our value chain, and
gain a better understanding of our product
carbon footprints to ensure we stay on track.
The largest areas of our scope three
emissions are the goods and services we
purchase, and the transport we use both
upstream with our suppliers and
downstream to our customers. During 2024,
we have engaged with our metal and goods
for resale suppliers to better understand
their product carbon footprints and their
decarbonisation plans. We will be continuing
this in 2025, and expanding to incorporate
more suppliers across our value chain.
Within our product transportation, we
are working with our supply chain to track
each shipment’s route and distance, which
allows us to optimise the route and travel
mode, reducing emissions by ensuring each
shipment is using the most efficient
methods available. In addition, we are
continuing to engage our transport providers
to decarbonise their operations and
implement lower carbon equipment such
as sustainable fuels, and electric vehicles.
ESSENTRA PLC ANNUAL REPORT 2024
27
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Our pathway to net-zero
We aim to dispose of zero waste to landfill
across our operations, as well as minimising
the waste we generate across the product
lifecycle. We recognise that waste, in
particular plastic waste, is a key global
challenge and reducing our waste
generation alongside increasing reuse and
recycling will provide us with cost and
resource savings. In 2024, six additional sites
achieved zero waste to landfill, taking our
total to 20, or 67% of all sites in scope.
Of the 10 sites we have remaining, six have
already achieved three months of zero waste
to landfill in 2024, and are aiming to progress
to meeting the target fully in 2025. The
remaining four sites will be assessed in 2025.
Overall, 95% of solid waste was diverted
from landfill across our operations in 2024,
and our waste intensity has reduced by 42%
against our 2019 baseline. This performance
has been driven by including waste reduction
targets as an element of reward for many of
our site teams, 45% of all employees had a
waste reduction measure as part of their
bonus objectives in 2024, and we will be
continuing this into 2025. This focus has
resulted in many waste prevention projects
across the Company globally, reusing waste
across all aspects of our manufacturing and
operations process.
At our Kidlington site in the UK, by investing
in equipment to reprocess and reuse polymer
material left over after the manufacturing
process, we have reused over 50 tonnes of
material in 2024, reducing cost, waste and
material transportation emissions.
At our Houston and Flippin sites in the USA,
and our Chichester, UK site, they have
implemented composting of their organic
waste, which can then be reused on site for
gardening, or if not needed, donated to a
local garden in their area.
Our targets
All sites to achieve
zero waste to landfill
by 2030 at the latest.
Reduce waste intensity by
50%
by 2030 from a 2019 baseline.
Our progress
20 sites
achieved zero waste to landfill in
2024, and 95% of waste is diverted from
landfill across all our operations.
Waste intensity has reduced
42%
from our 2019 baseline.
Waste
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
0
5,000
10,000
15,000
20,000
25,000
-100
-80
-60
-40
-20
0
Scope one and two GHG emissions (tCO2e)
% emissions reduction
Target
Year
2022
2023
2024
2025
2026
2027
2028
2029
2030
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
-100
-90
-80
-70
-60
-50
-40
-30
-20
-10
0
Scope three near-term GEVA (kg CO2e per £ of value add)
% reduction
Target
Year
Scope one and two emissions
Scope three emissions
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
ESSENTRA PLC ANNUAL REPORT 2024
28
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
This year, we have made progress in
adopting the recommendations of the
Taskforce for Nature related Financial
Disclosures (“TNFD”), and on pages 40 to 49
have provided our first TNFD assessment of
our nature-related risks and opportunities at
our manufacturing and distribution sites in
line with the TNFD guidance.
Across our sites globally in 2024, we have
participated in many initiatives that benefit
the local natural environment. Highlights
included beach cleans, litter picking in our
areas local to our sites, and adopting a local
park to look after.
Environmental Compliance
In 2024, 10 of our manufacturing sites,
equating to 85% of our production, are
covered by ISO 14001 certifications.
We monitor any site where we have water
discharge consents to ensure compliance.
In 2024, two sites, Yichun in China and
Rayong in Thailand, had consents to
discharge water and there were no
incidents of non-compliance.
There were no reportable spillages or
environmental incidents at any of our sites
during the year, nor were there any fines or
penalties related to environmental incidents.
Our components
We will strive to design new products through the use of
innovative and circular materials. We have a Centre of Excellence
where we can showcase products to our customers, and provide
a space for ideas to flourish into new products.
In 2024, we have increased the number of
sites that have transitioned to using recycled
content in our polymer ranges. We now have
10 manufacturing sites globally where
recycled material is used as standard, an
increase of three from 2023, across a range
of over 6,000 products. Due to the overall
slowdown in demand in 2024, and a
variation in the product types we provided
Our focus and targets
50%
of raw materials from sustainable sources
by 2030 across our polymer ranges.
100%
of raw materials from sustainable sources
by 2030 across our general protection and
security seal ranges.
Our progress
In 2024
18.4%
of sustainable materials in our
polymer ranges.
33%
of raw materials from sustainable sources
by 2030 across our general protection and
security seal ranges.
Transitioning to more sustainable materials
to customers throughout the year, we have
seen a slight reduction in our overall
percentage of sustainable materials, which
has dropped by 2.3% to 18.4%. For the first
time, we are also reporting on the target
we developed in late 2023 to increase the
percentage of sustainable materials (which
includes recycled materials and bio-
polymers) within our general protection and
Water use and our wider impacts
on nature
Our polymer manufacturing operations
predominantly use water in closed loop
systems, and consequently our most
material water usage globally is a result of
metal manufacturing sites. We are mindful
that water is of great importance in the
communities we operate in, and therefore
ensure that we monitor our water
consumption and track any reduction
initiatives at our sites. In 2024, our water
use has increased by 5% compared to 2023,
due to an increase in water use at our
Yichun site in China, due to an increase in
products being manufactured with higher
water intensity.
Yichun is our site with our biggest water
usage, and accounts for around 50% of
our total. The site has a detailed water
management plan, and in 2024, they
invested in improvements to the water
treatment and management processes on
site. Water quality is continuously monitored,
and the readings are sent automatically to
the local regulatory authority.
We monitor water stress across all of our
sites globally on at least an annual basis.
We have three sites that are in high water
stressed regions, Barcelona, Spain and
Monterrey, Mexico, which manufacture
plastic components, and Johannesburg in
South Africa which is a distribution site.
These sites have a low water consumption,
making up only 1% of our total water usage
in 2024.
ESSENTRA PLC ANNUAL REPORT 2024
29
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
security seals ranges. At 33%, this higher
percentage reflects our prioritisation to date
on these high volume, product ranges.
We remain committed to increasing our
range of sustainable products, and during
2024 we revitalised our product
management focus, supported by research
in our Centre of Excellence to develop new
product offerings and material types to
support our continued transition. In 2025,
we have a planned roll out of a new post-
consumer recycled material within our caps
and plugs ranges, as well as continued
investment into our Centre of Excellence to
work on finding alternative materials for our
other product ranges and polymer types.
Packaging is an important part of our
resource usage and is key to ensuring our
products are delivered damage and hassle-
free to our customers. In 2024, At the
end of the year, we reached 29% recycled
content across all of our packaging spend, a
small increase of 1% compared to 2023, and
48% of our packaging spend is deemed to
be widely recyclable or compostable. This is
a decrease of 10% compared to 2023, which
we believe is down to an increase in the
reuse of pallets across the Company, which
currently is not monitored. We will be looking
into methods to incorporate this reuse into
our target in 2025.
In 2024, we implemented more recycled
and reusable content into our packaging
across our sites globally. At our Chichester
site in the UK, pallets that are no longer
needed are donated to a local charity to
reuse in local community projects. Our
Brazil site has invested in reusable pallet
wrap, reducing the amount of single use
packaging they use on site. And in the USA,
at our Louisville site, they initiated a new
process for products that eliminated the
need for over 100,000 labels annually,
saving both resources and time.
In 2025, we will be continuing to engage
with our packaging suppliers to share best
practice and increase recycled content.
Our focus and targets
Support a circular economy by ensuring
100%
of our packaging is reusable, recyclable or
compostable by 2030.
50%
recycled content in our packaging
materials by 2030.
Our progress
48%
of our packaging spend is reusable, widely
recyclable or compostable.
29%
recycled content in our packaging spend.
Our packaging
Innovating with new materials at
our Centre of Excellence
At our manufacturing and distribution
centre in Kidlington, in the UK, we
have been operating our Centre of
Excellence since 2023.
Working closely with existing suppliers,
and forging relationships with new
suppliers developing innovative new
bioplastics. During 2024, we conducted
46 trials on a variety of different
materials, including recycled materials
and bio-plastics.
A particularly exciting innovation is the
ongoing trials utilising seaweed bio-
plastics. Working with these emerging
materials, our Centre of Excellence has
been testing these flexible, seaweed-
derived bioplastics to substitute into our
existing fossil based polymer ranges,
as well as for consideration in our
product pipelines.
Other materials being tested are different
types of bio-woods, post-industrial
recycled (“PIR”) nylons, and a variety of
different Low Density Polyethylene
(“LDPE”) products from both PIR and
post-consumer recycled (“PCR”) sources.
We are also trialling materials using
industrial and consumer products that
have already been recycled once, thus
extending the life and increasing the
circularity of a material.
ESSENTRA PLC ANNUAL REPORT 2024
30
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
In 2024, our lost time incidents remained
the same as 2023, however, the severity
rate increased. In 2025, we plan to ensure
sites have a stronger focus on safety via
our safety committees, and our improved
management platform will offer sites better
tools to report and manage incidents.
• development of our incident reporting
platform, providing an auto-generated
notification system, and an interactive
incident dashboard
• the introduction of a improved safety
culture assessment, leading to the
development of an annual plan that
targets key priorities identified through
the assessment
• embedding the Safety Commitment, a
site-wide engagement initiative where
teams sign a visible commitment to
safety on posters, reinforcing collective
responsibility for safety.
In 2024, the focus was on developing global
safety tools and frameworks to strengthen
our safety initiatives. The Essentra Safety
Programme establishes clear safety
expectations for all employees, structured
around three key pillars: leadership at every
level, active participation, and strong
compliance. In 2024, we completed four
assessments, supporting sites in identifying,
and understanding their position on the
safety culture scale, while helping them
create a focused annual plan.
In 2025, safety culture assessments
will continue, with the primary goal of
completing assessments at all focus sites and
establishing a baseline for Essentra’s overall
safety culture, alongside a strategic plan for
the next three years. Our safety playbook will
play a crucial role in 2025, helping to align the
safety plan globally across our sites, and
guiding the integration of any new sites into
the business. Additionally, a training aid will be
developed to support the implementation of
our safety playbook.
Our culture
This pillar focuses on creating a safe, supportive work
environment that champions equality and celebrates diversity.
Health, safety and wellbeing
Our focus and targets
Zero accidents
for our people and visitors.
Mental health training to
80%
of leaders by end of 2024.
Healthy lifestyles campaigns at
50%
of sites by 2025.
Our progress
Lost time incidents
10
in 2024.
84%
of leaders have received mental
health training.
Healthy lifestyles campaigns at
92%
of sites.
As well as physical health and safety, we
recognise the importance of our people’s
mental health and wellbeing. In 2024, we
rolled out mental health training for all of
our senior leadership team, ensuring a
consistent approach to mental health
and wellbeing across the business.
We provide all of our people with access
to our Employee Assistance Programme,
providing them and their families with 24/7
access via a confidential phone line to
support on any financial, legal or family
topics. This is backed up with access to
online health and wellbeing resources.
We also commenced our healthy lifestyle
campaigns last year, with a rolling
programme of monthly activities throughout
the year ranging from team sports and
walking challenges, to a nature photography
competition and a focus on employee
mental health. These activities are promoted
globally for all employees to participate in,
and we know at least 92% of our sites have
participated in at least one activity.
2023
2024
%
change
Lost time incidents
(“LTIs”)
10
10
–
LTI rate per
200,000 hours
0.42
0.43
2%
Days lost
128
333
160%
Severity rate
(days lost per
200,000 hours)
5.41
13.95
158%
Fatalities
0
0
–
Safety performance 2024
Our safety commitment is centred around
developing and implementing four key
global safety strategic initiatives:
• implementation of a safety playbook,
providing a comprehensive guide outlining
our safety expectations in compliance,
leadership, and participation
ESSENTRA PLC ANNUAL REPORT 2024
31
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
• “My company is an environmentally
responsible company” – at 90% this
increased by 5% from 2022, 8% above
the industry benchmark.
In comparison, the main areas where we
want to continue to make improvements
are:
• good communication between
departments – this question scored 60%,
which is an increase of 4% against 2022
but still the lowest scored question
• similarly, when asked if there was little
wasted time and effort only 66% of
respondents agreed.
To implement improvements, every site
and functional area of the business will be
reviewing their 2024 engagement action
plans, and building a 2025 plan to drive
improvements in their area related to the
feedback provided.
As well as some very positive engagement
scores, in January 2025 we were pleased to
be notified we have been selected as one of
the UK’s Best Employers, as determined by
the Financial Times and Statista. This was
based on a survey of more than 20,000
people in the UK in which participants were
asked to rate their employers on various
factors in their workplace, and means we
stood out as one of the most highly
recommended employers in the UK.
We believe that Diversity, Equity and
Inclusion (“DEI”) are essential to our success
as a global organisation, and we are
dedicated to fostering a safe supportive
work environment, where every individual
feels valued and empowered. We are
committed to offering equal opportunities
to potential and current employees.
We maintain a flexible position to best
manage disabilities, making adjustments in
a range of ways to best meet the needs of
future and current employees.
In 2022, we set a target to have 40% of
women in our leadership teams and our
Board, by 2025. At the end of 2024, in our
senior leadership team this was at 33%, an
increase of 2% from 2023. At Board level,
composition increased to 57% women, with
the appointment of Rowan Baker as our CFO,
and the departure of Ralf K. Wunderlich. In
addition, we have continued to collect
information on the ethnic diversity of our
senior leadership team, and found that
19% of employees in the team identify as
ethnically diverse, an increase of 2% from
2023. At the Board, our percentage
increased from 25% to 28%, due to the
Board reducing size to seven members.
In 2024, we carried out a review of our DEI
actions, supported by external consultants.
This provided us with key insights to
strengthen and embed DEI throughout the
organisation. Using these findings, we
developed a DEI action plan, which was
approved by the ESG Committee in
December 2024. This global action plan
provides a roadmap to support our targets,
whilst acknowledging we have different
requirements and opportunities within each
region we operate in, and will be rolled out
in 2025.
Our overall DEI goals are supported
by a series of campaigns that we run
throughout the year, organised by a
cross-functional team of our people that
forms the DE&I team across Essentra. This
team ran a series of campaigns across 2024
related to various topics, including Pride,
Black History Month, International
Women’s Day and International Men’s Day.
In 2025, we are building on these
campaigns by showcasing and celebrating
the diversity we have in our workforce. We
are also increasing the focus on attracting
and recruiting individuals who reflect our
countries of operation and customer base.
Championing equality and celebrating diversity
Our focus and targets
40%
women in our Board and leadership
teams by 2025.
25%
of leaders identify as ethnically
diverse by 2030, 20% by 2027.
Our progress
33%
of women in leadership teams at
end of 2024, 57% on our Board.
19%
of leaders identify as ethnically diverse
in 2024, 28% on our Board.
Employee engagement (%)
2022
2023
2024
85
83
82
Why this is important
The happiness and fulfilment of our people is a
key priority. Having more engaged employees
reduces staff turnover, improves productivity
and helps us serve and retain customers.
Employee engagement
and recognition
Employee engagement is one of the most
important indicators of the health of our
business, as we believe that higher rates
of employee engagement generate higher
levels of customer satisfaction.
In 2024, 93% of employees responded to the
survey, meaning that the findings are a
true representation of the employee voice
at Essentra. The results of our 2024 survey
show we have an overall engagement across
the business of 85%. This is up by 2% in
comparison to 2023, and exceeds the
industry benchmark by 10%.
Across the 52 questions asked, we have seen
positive increases compared to our last full
survey in 2022, and we also exceed industry
benchmarks, in three key areas:
• “My company is a safe place to work” – at
92% this has improved by 3% since 2022
and is 8% above the industry benchmark
• “I would like to be working for Essentra 12
months from now” – at 88% this has risen
by two points since 2022, and is 15% above
the industry benchmark
ESSENTRA PLC ANNUAL REPORT 2024
32
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Why this is important
At Essentra we are committed to progress in terms of the diversity of our leadership community.
We believe this diversity brings a range of outlooks to decision-making and problem-solving,
ensures representation of our employee base and the communities in which we operate. We also
report this information to meet FCA reporting requirements and we aim to meet all FCA targets:
we currently have 57% women on the Board and ensure diversity is considered in our recruitment
processes, our Senior Independent Director is a women and we have two Board members from an
ethnic minority background.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
Gender
(%)
Permanent/Contractor
split (%)
Ethnicity
(%)
All employees
Employees: 96% (2,880)
Agency/Contractors: 4% (112)
Total: 2,992
Leadership team
Employees: 97% (67)
Agency/Contractors: 3% (2)
Total: 69
All employees
Women: 43% (1,295)
Men: 57% (1,697)
Leadership team
Women: 33% (23)
Men: 67% (46)
Board of Directors2
Women: 57% (4)
Men: 43% (3)
All employees1
Ethnically diverse: 26% (681)
White: 30% (804)
N/A or no response: 44% (1,177)
Leadership team
Ethnically diverse: 19% (13)
White: 45% (31)
N/A or no response: 36% (25)
Board of Directors2
Ethnically diverse: 28% (2)
White: 72% (5)
1
Ethnic diversity of employees responding to the 2024 Employee survey (2,662 employees)
2
Ethnic and gender diversity of the Board of Directors is reported as at 8th January 2025
These policies are made available to all
employees and specifically issued for
affirmation to senior leaders and other
employees who hold positions where such
polices are relevant to ensure best practice.
Our Right to Speak Policy, which meets our
obligations with regards to whistleblowing
across the jurisdictions in which we operate,
is well established and enables any
employee, customer, supplier or individual
otherwise connected to the business, to
report circumstances where they believe
that the standards of our Ethics Code, or our
wider policies and guidance, are not being
upheld. We are committed to ensuring
employees feel able to raise any concerns in
good faith, without fear of victimisation or
retaliation and with our support. Employees
can report any concerns on a confidential
basis online or by telephone. During 2024,
our Audit and Risk Committee received
updates at each of its meetings on all Right
to Speak issues raised and sought assurance
from management on the issues and the
response. The issues raised mainly related to
employment practices that were
investigated in full under HR policies and gift
disclosures. More information can also be
found in the Audit and Risk Committee
Report on page 89.
Our Ethics Code is the core foundation of
our compliance strategy and is issued to
all employees globally. It is supported by
a comprehensive training schedule, both
online, virtual face to face and in person
training that is delivered by our in house
team. In 2024, 99.6% of employees who
were assigned to receive Ethics Code
training completed it. Management
followed up with those who did not
complete on time to understand why, and
ensure there was a thorough understanding
of the subject matter and the importance
that is placed on compliance with the Ethics
Code. The Ethics Code is available in all
Essentra languages both in hard copy for
colleagues working in factories, and online,
so that employees are able to access it
easily. An ethics decision tree helps guide
employees on making the right decision. In
addition, we have specific policies relating
to Sanctions, Anti-Bribery and Corruption,
Anti–Money Laundering, Anti-Trust and
Competition and Third-Party Due Diligence.
Our commitment to being an ethical employer
Our focus and targets
100%
of employees trained on Ethics
Code biannually.
Our progress
99.6%
of employees trained on Ethics Code.
Our employee diversity
ESSENTRA PLC ANNUAL REPORT 2024
33
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
Throughout our international operations,
we support and endorse human rights – as
set down by the United Nations Declaration
and its applicable International Labour
Organisation conventions – through the
active demonstration of our employment
policies, our supply chain and the responsible
provision of our products and services.
This commitment includes a mandatory
requirement at all our sites to prevent the
employment of children, as well as a
commitment to the prevention of slavery
and human trafficking. Each of our websites
includes a statement on Anti Modern
Slavery. This statement is reviewed each
year by management and then assurances
provided as appropriate to the Board, prior
to being agreed.
We are proud that in 2023, we joined the
United Nations (“UN”) Global Compact
initiative, confirming our commitment to
responsible business practices, human rights
and our support of the UN Sustainable
Development Goals. The UN Global
Compact is a voluntary leadership platform
for the development, implementation and
disclosure of responsible business practices.
In 2024, we continued our membership and
also participated in their 9th European Peer
Learning Group on Business and Human
Rights. This allowed us to gain insights and
assurance on our current ethics practices,
as well as providing a great opportunity to
share best practices in this area.
Our communities
We work with our suppliers, local communities and wider
family to ensure our values, ethical practices and processes
provide equitable outcomes, as well as volunteering our time
supporting good causes.
We are committed to conducting our
business in a responsible and ethical
manner. We recognise that our suppliers
play a crucial role in our value chain and
share in our commitment to upholding high
standards of integrity, sustainability, and
social responsibility. We have over 1,500 raw
material and goods for resale suppliers who
provide over 50,000 products. Our supply
chain is a core component of our business.
We recognise that local laws and
regulations may differ across the regions
in which we operate. However, our universal
Supplier Code framework guides our
suppliers’ behaviour and encourages best
practices, irrespective of legal requirements.
We expect our suppliers to not only comply
with applicable laws but also embrace these
principles and work towards continuous
improvement. The Supplier Code is split
into three distinct areas:
• health, safety and the environment
• respecting human and labour rights
• acting with integrity, ethics and
compliance.
We believe that our suppliers are integral
partners in achieving our ESG goals. By
agreeing to operate to our Supplier Code,
suppliers demonstrate their commitment to
these principles and their willingness to work in
collaboration with us towards a more
sustainable and responsible future. Our
Supplier Development Programme includes
levels of requirements which are tailored to
suppliers based on our assessment of criticality
and spend. In 2024, 90% of suppliers over a
£100k spend were actively risk monitored to
ensure compliance with relevant legislation,
and flag any regulatory or reputational
concerns for further investigation.
Developing an ethical supply chain
Our targets
100%
of suppliers over a £100k spend threshold
signed up to our Supplier Code.
70%
of suppliers by spend actively
risk monitored.
Our progress
37%
of suppliers targeted have agreed to our
Supplier Code.
90%
of suppliers over a £100k spend threshold
actively risk monitored.
ESSENTRA PLC ANNUAL REPORT 2024
34
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
Supplier development pyramid
We actively manage our supply chain to minimise risk and improve performance.
Level 4
• Planned and reactive on-site audits
• Compliance and quality driven audits
• Remote audit assessment
Level 3
• Supplier relationship management
• Supplier performance reviews
• Supplier self-assessment
Level 2
• ESG questionnaire
• Quality assurance questionnaires
Level 1
• Enhanced onboarding
• Onboarding monitoring:
– Modern slavery
– Reputation
– Sanctions
Specialist
questionnaires
Onboarding and
ongoing monitoring
Audit
Supplier
reviews
Since its launch in October 2023, 37% of
targeted suppliers have signed up to our
Supplier Code. Whilst this has more than
doubled from the 18% we reported at the
end of 2023, we would like to see more
progress in this area. In 2025, we will be
focusing on continuing engagement within
our raw material and goods for resale
suppliers to increase responses. This will be
further supplemented under the Supplier
Development Programme, where audit
activity will be undertaken across a number
of critical suppliers, ensuring compliance to
the Supplier Code as part of a wider review
of their processes and policies associated
with quality and performance.
In 2025, we will continue to work with our
key partners to drive sustainable solutions.
We have set additional targets to conduct
supplier audits for tier one suppliers, based
on the criticality of those suppliers, and to
increase the percentage of spend actively risk
monitored. We will also continue to monitor
our supplier’s emissions reduction targets and
alignment to science-based targets.
We engage with our local communities to
create a positive impact through initiatives
that positively impact those in need,
improving their lives, the community
and the local economy. We have a
Community Engagement Policy that offers
every employee one day of paid leave each
year to volunteer, and provides guidance to
all of our employees on how they could
spend their time.
In 2024, over 2,000 hours of volunteering
were recorded by 424 of our employees
around the world. Our employees
volunteered to support a wide variety of
good causes globally, illustrating
the wide range of local communities our
employees work and live in. Some examples
include litter picking in local neighbourhoods,
beach cleans, and volunteering to spend
time with community charities in activities
from painting to sport to planting a forest.
Whilst participation in volunteering activities
has increased slightly by 1% from 2023, we
Supporting good causes
Our targets
Community engagement days taken by
25%
of employees.
Our progress
14%
of employees took a community
engagement day in 2024.
know we still have some work to do to
encourage our employees to use the time
available to them to support their local
communities. We will continue to promote
activities across the regions we operate as
part of our annual sustainability week, and
as part of our healthy lifestyle campaigns
we run throughout the year.
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STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
Our customers
This pillar focuses on supporting our customers to achieve
their sustainability goals. As a global manufacturer and
distributor, we are in a leading position to assist customers by
providing products and services that have been developed to
provide a hassle-free sustainable choice.
Sustainable products and services
Our purpose is to help customers build a
sustainable future, and therefore working
with them on their approach to
sustainability is a key area of activity.
We are committed to continuing to invest
in developing new products with improved
sustainability performance and lower
lifecycle emissions, and providing our
customers with expert advice on the
most sustainable choice for their needs.
In 2024, we introduced 1,428 new products
that provide a sustainability benefit. This
includes lower GHG emissions, increased
recycled content or biomaterials, and
improved circularity.
Our total products with sustainability
features is now 6,846, this is a decrease
in total against 2023, due to the
discontinuation of some obsolete product
lines in EMEA. When we look at revenue
however, we have increased total revenue
globally from all of our sustainable product
ranges by 0.7% from 4.8% to 5.5%.
Our targets
Increasing the number of products
introduced with sustainability criteria.
Our progress
1,428
products in 2024 introduced with
sustainability criteria.
Alongside sustainable products, we are
in a leading position to assist customers
in defining, and reducing their scope three
emissions. As a market leader with the unique
proposition of offering manufacturing and
distribution of our products in an otherwise
fragmented market, we can provide clarity
to our customers of our products emissions
across its lifecycle. As detailed in our climate
transition plan, we intend to reduce our
emissions to net-zero across the manufacture
and distribution of our products to customers,
delivering a low-carbon service to our
customers from product design through
to delivery. We provide product carbon
footprints and material circularity information
to our customers, providing transparency and
expertise to help our customers when looking
for solutions.
Product governance
We are committed to achieving the highest
standards of product quality, reliability and
safety. We have comprehensive product
design and development procedures to
ensure precise delivery to specifications,
and are constantly seeking opportunities to
enhance quality and safety performance.
In 2024, 10 of our manufacturing sites,
equivalent to 93% of products we
manufacture, were certified to a recognised
international quality management standard
of ISO 9001 or ISO/IATF 16949.
Our Customer KPIs
Active customers
Why this is important
This reflects marketing effectiveness and
measures the potential population for further
growth opportunities. Customer numbers
fluctuate yearly, for example, due to strategic
focus on mid-size accounts and digital
marketing strategy.
Net Promoter Score
Why this is important
Reflects our customers’ overall satisfaction
with our products and service, as well as loyalty
to our brand.
On Time In Full%
Why this is important
Our ability to deliver quality products on time
and in full demonstrates our ability to meet
our customers’ delivery demands.
64k
69k
74k
2024
2023
2022
43
40
34
2024
2023
2022
82.2
78.2
81.7
2024
2023
2022
ESSENTRA PLC ANNUAL REPORT 2024
36
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONTINUED
Sustainable economies
In addition to supporting our customers
with low carbon and circular products, we
are also actively increasing our abilities and
product offerings that serve the new and
emerging markets that will be required in a
low-carbon world. Our category teams are
focused on identifying opportunities in
high-growth, low-carbon markets such as
renewables, electric vehicles, automation
and electrical heating and cooling.
Within the heating and cooling markets,
we have developed new relationships with
customers who are leading the way with
innovative new technology, with our diverse
product ranges supporting a range of
requirements from electrical components
to access hardware.
We are ensuring we support our
automotive customers in their transition
to electric vehicles (“EV”) and also providing
the components needed for the supporting
charging infrastructure. Our components
are used throughout EV charging from
the enclosure hardware to the
electrical components.
Our sustainable product focus areas
Low-carbon
manufacture
Material
innovation
Responsible
sourcing
Circular
packaging and
end of life
Sustainable
design
Sustainable design
Adopt circular economy principles to reduce material use per
product and per process cycle. Maximise resource efficiency and
design out waste.
Material innovation
Transition to more sustainable materials and increase recycled
content across our product ranges.
Responsible sourcing
Embed environmental and social objectives and targets into
our supply chain, and engagement to identify decarbonisation
opportunities.
Low-carbon manufacture
Reduce the emissions intensity of our products by decarbonising
our energy usage, increase our energy efficiency through new
technologies, and reduce waste through employee engagement
and improved tooling.
Circular packaging and end of life
Increase the circularity of our packaging through initiatives like
increasing recycled content and ensuring reuse, recyclability or
compostability at end of life.
ESSENTRA PLC ANNUAL REPORT 2024
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STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
S172 STAKEHOLDER ENGAGEMENT
The Board, and the Group Executive Committee (“GEC”),
carefully consider their duties as directors, taking into
account the long-term impact, the interests of employees,
how a decision may impact shareholders, suppliers and
customers, the community and the environment in which
the business operates, and the impact on the Company’s
reputation as well as the perception of shareholders and
the public as a result. On a day-to-day basis, the GEC give
consideration to all these factors when managing the
business, with the support of the Board who take into
account these matters during their meetings and when
reviewing performance and making decisions.
Investors
Why we engage
• To understand our shareholders views
• To update shareholders on how the capital markets commitments have
been progressed
• To provide updates on the progress made since the transition to a pure-
play components business
• To continue to access capital for Essentra’s long-term success and to
understand the nature of returns our shareholders expect
What we discuss
• Investor buy-in to our strategic objectives and execution of them
• Long-term interest in Essentra which provides us with a secure base for
our growth
• General updates on strategy, governance and performance
• Ongoing views for the Share Buyback Programme
• Future inorganic growth opportunities and the timing and scale of
those acquisitions
• Investors’ knowledge of the business model, strategy and management
team to support a deeper understanding of the direction of growth for
the business
How we engage
• AGM
• Full year and half year presentations
• One-on-one meetings with the Chair, Chief Executive, CFO, Senior
Independent Director and Remuneration Committee Chair and other
NEDs as appropriate
• Subject specific meetings with senior leaders
KPIs we share
• Earnings Per Share (“EPS”)
• Total dividends paid
• Total Shareholder Return (“TSR”)
• Dividend yield and cover
Impact of engagement
• Ongoing communication has provided the Chief Executive and executive
management team with the support needed to continue to make
changes within the business as they continue to establish themselves
• Deepening our understanding of investors and their priorities for the
business which has, amongst other things, supported the executive’s
choices in agreeing a focused pathway for completion of the ERP system
Customers
Why we engage
• To establish and maintain long-term, trusted business relationships,
which provide depth of knowledge of our customers’ requirements
• To understand the type of products that our customers require which in
turn allows us to plan our for new product innovation and production
• To support our plans for growth through cross-sell of other products
• To identify custom solutions where there is a specific design requirement
and provide technical expertise for our products
• To share our knowledge and approach for using sustainable
materials within our products and our approach to sustainability
within our operations
What we discuss
• Ways to support our customers, which includes opportunities to work
closely with customers to produce innovative products, including
products that meet their sustainability requirements, or to provide
bespoke parts needed to fit their own designs
• Updates on how we are meeting our hassle-free promise, business
continuity and supply chain challenges
How we engage
• Country based teams manage relationships with our broad range of
customers globally
• Key account managers also establish relationships with larger
strategic customers
• More formal and regular feedback gathered through Net Promoter
Score (“NPS”) surveys
KPIs we share
• On Time and In Full (“OTIF”)
• Quality/complaints
• NPS
Impact of engagement
• Long-term relationships in which customers are carefully listened to,
heard and feedback has resulted in changes to specific products and
lead times that they require
• Customer requirement for speed and reliable service has contributed
to the Company’s decision to focus on building the tools, for example,
the implementation of an ERP system, which the Board receive regular
updates on
• Cross-sell goals have been achieved which brings a result for the
customer who often prefers to source from one supplier for small bill
of parts
S172 Stakeholder
engagement
The Board has disclosed in the report that
follows, how it has regard to S172(1) (a) to
(f), and this also forms the Directors’
statement required under Section 414CZA
of the Companies Act 2006.
ESSENTRA PLC ANNUAL REPORT 2024
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STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
S172 STAKEHOLDER ENGAGEMENT CONTINUED
Government & Regulators
Why we engage
• To create strong and transparent dialogue with government and
regulatory agencies in the international jurisdictions that Essentra
operates, as well as in other jurisdictions where Essentra may wish
to operate
• To ensure our approach to compliance with legislation is effective
and to ensure that we are working to meet future legislation or
regulatory requirements
• To create opportunities to influence and input thought leadership to the
development of regulatory governance requirements that will impact
Essentra’s operations
• In accordance with our Ethics Code, Essentra does not make financial
contributions to political parties and lobby groups
What we discuss
• Our approach to compliance, including our Ethics Code, which sets our
expectations for how we conduct business
• Essentra’s strategic outlook and plans for development of its business,
permissions that may be required as well as the infrastructure and
support to set up business in a new geographical location
• Our commitment to working with government bodies at national and
regional level to create strong and transparent relationships
How we engage
• Relationships are managed both within the country as well as centrally
on behalf of the business as a UK listed plc
• A range of key employees have roles in engagement, including country
General Managers and Finance Directors, Regional MDs, the Company
Secretary, Chief Executive and CFO
KPIs we share
• Revenue
• Operating Profit
• Numbers of employees and locations of sites
• Sustainability metrics
Impact of engagement
• Better understanding of our plans for investment in new sites and the
scale of our operations in specific countries
• Provision of local government support for our sites and the investment
that a country may make in the infrastructure required for Essentra to
grow its operations
• Provision of licences and permissions required to operate
Suppliers
Why we engage
• Ensuring we have reliable and high quality raw materials is a key
requirement for the timely operational and manufacturing of our
components and timely fulfilment of orders to our customers
• Careful management of our extensive supplier base is a critical way to
improve our operational efficiencies
• Deepening our knowledge of our suppliers is key to ensuring we meet
due diligence requirements and can attest to the credibility of our
supply chain for our customers and other key stakeholders, including
our ongoing commitment to anti-modern slavery and ethical supply
chain essentials
What we discuss
• Terms of supply to ensure we can maintain reliable supply chains
• Impacts to our supply chain, including global events, such as the tariffs
and changes in local sanctions
How we engage
• Our Procurement team engage with a broad range of suppliers on a
global and regional level
• Engagement occurs across a range of mediums to share our Supplier
Code and Modern Slavery Statement to provide assurance to all
our stakeholders
• Supplier audits are conducted to provide assurance on the materials and
services, in accordance with our Supplier Code
• Initial engagement is often through a tender process, with the internal
relationship owner taking responsibility for ongoing maintenance of the
relationship with the supplier
KPIs we share
• Revenue
• Operating profit
• Number of employees
• Location of sites
• Sustainability metrics
Impact of engagement
• Engagement ensures our suppliers have clarity on our requirements and
are able to respond in the timeframes we need to guarantee our supply
chains, which includes raw materials for our products, which is critical to
our customers
• Ongoing engagement supports continuous upward trajectory to meet
and improve our sustainability targets. This creates greater emphasis
for suppliers and ourselves to successfully source reliable supplies of
raw materials
• For non-materials, engagement with suppliers improves relationships
and provides an opportunity for transparent feedback in respect of
areas for improvement both for Essentra as well as suppliers
Employees
Why we engage
• To hear how our employees feel about working at Essentra
• To understand how strategic choices are impacting them and to
ensure Board and GEC choices are providing the benefits that our
employees need
• To understand whether our employees are satisfied and what other
activity will support the business to drive higher employee engagement
• The Board and GEC believe that high employee engagement leads to
higher customer satisfaction and better outcomes for both stakeholders
What we discuss
• The culture at a site and how that compares to other sites and
whether that reflects the culture that the Board and GEC have set
for the business
• We discuss the strategic focus with our employees to understand their
views and the impact of Board’s decision-making on their working day
• The effectiveness of people related strategies and opportunities for
continuous improvement
How we engage
• Small focus groups under the Voice of the Employee initiative, with
employees meeting with one of our three Board Champions
• Through virtual meetings where sites are remote or small
• During 2024, site visits and site events were arranged, such as the
Make It Work Awards at Silivri, Turkey and Board Champion visits to
Monterrey, Mexico and Yichin and Ningbo, China, Kidlington, Chichester
and Jarrow, UK
KPIs we share
• Employee engagement score for the whole Company and for the site
Impact of engagement
• Speaking directly to our employees allows them to raise concerns
directly with our Board. Through this process, during 2024, we identified
some concerns that led to a change in management at one of our sites
• Engagement with our employees has led to opportunities for
improvement of facilities and ways of working for people working at
site, for instance, the re-introduction of site wide exercise opportunities,
which promotes wellbeing as well as reducing the likelihood of LTIs
through repetitive strain injuries
• Engagement with site based employees to understand the impact of the
roll out of the ERP system, the benefits and the pain points, which has
provided the Board with first-hand insights into the strategic focus and
importance of rolling out the ERP system in a carefully planned manner
ESSENTRA PLC ANNUAL REPORT 2024
39
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CLIMATE AND NATURE RELATED FINANCIAL DISCLOSURES
Climate and Nature Related
Financial Disclosures
We acknowledge the important role of the Task Force on Climate-
Related Financial Disclosures (“TCFD”) in improving transparency
and driving improvements across industry.
This report details our climate-related
financial disclosures, that are consistent
with the requirements of Listing Rule 9.8.6R,
the TCFD Recommendations and the TCFD
All Sector Guidance and Annexes (October
2021). This is our fourth report based on the
TCFD Recommendations, and the assessments,
findings and conclusions within this report
supersede earlier ones.
In addition, the Task Force on Nature-related
Financial Disclosures (“TNFD”) has developed
a nature-related financial disclosure
framework based on the approach
developed by the TCFD and published the
“Recommendations of the Taskforce on
Nature-related Financial Disclosures”
(hereinafter referred to as TNFD
Recommendations) in September 2023.
Since climate and nature issues are closely
related to each other, we believe that we
should tackle these issues in an integrated
manner. In addition, the importance of
integrating climate related financial
disclosures and nature-related financial
disclosures is also mentioned in the
TNFD Recommendations.
Based on these, in the following information
we provide integrated disclosures on the
efforts that we have made and plan to
make hereafter to manage climate and
nature related risks and opportunities.
Climate change and nature is addressed
collectively across our Company Board
Committees, providing robust governance
and alignment to all aspects of Company
strategy. We manage ESG risks and
opportunities, including climate change
and nature, through a range of different
processes, including the Audit and Risk
Committee (“ARC”), the ESG Committee
(“ESGC”), Group Executive Committee
(“GEC”) and operational management
processes. These approaches address
many of the recommendations of TCFD.
Climate change and nature is
addressed collectively across our
Company Board Committees,
providing robust governance
and alignment to all aspects
of Company strategy.”
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
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40
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CLIMATE AND NATURE RELATED FINANCIAL DISCLOSURES CONTINUED
Governance
NFSIS, TCFD, TNFD Disclosure
NFSIS, TCFD, TNFD Disclosure
Essentra assesses climate and nature risk in the same framework as other company risks. The overall
risk, including climate and nature risk, is summarised in our principal risk of Environmental, and a risk
assessment is carried out by the Group Executive Committee (“GEC”) and the Board twice a year.
Our risk management framework and governance approach is provided on pages 50 to 54. The Board
has strategic oversight of the Company’s Principal Risks, which incorporate our climate and nature
related risks and opportunities as detailed on pages 54 to 57.
The Board level Environmental, Social and Governance Committee (“ESGC”) has oversight of our ESG
risks and opportunities, action plans and progress, ESG strategy and metrics. The Committee meets four
times per year and climate and nature related topics are discussed at every meeting. Further details of
the responsibilities, composition, remit and meeting frequency of the Committee are provided on
pages 77 to 79. The Committee member’s expertise in ESG related topics, is detailed on pages 62
to 63.In addition, the Committee invites input from third parties, on a regular basis, to improve its
understanding of ESG matters – recent speakers have come from leading industrial companies,
global management consultancies and City institutions.
The GEC approves and manages the progress of the Company’s mid- and long-term strategies, targets
and action plans, including our ESG strategy and climate transition planning. The GEC is supported by the
ESG Steering Committee, which meets at least quarterly and includes members of the leadership team
and senior leaders from across the business. The Steering Committee review the quantitative and
qualitative modelling of our climate and nature risks and opportunities, conduct climate scenario analysis
and manages ESG action and disclosure plans.
ESG is also included in the due diligence and integration stage of any new acquisitions, such as BMP TAPPI
in 2023, to establish ESG processes and reporting, determine the impact of the acquisition on our ESG
strategy, and evaluate incorporation into our overall disclosures.
The Audit and Risk Committee (“ARC”) has responsibility for reviewing our risks and opportunities,
quantitative modelling and assessing the content of our disclosures against TCFD and TNFD
recommendations. Details of the ARC and its activities are provided from pages 85 to 92.
The Remuneration Committee is responsible for determining remuneration policy, including how ESG
risks and opportunities are taken into account in determining rewards and incentives, and agreeing any
climate and nature related KPIs that form employee rewards. Details of this can be found in the Chair of
the Remuneration Committee’s letter from pages 93 to 95.
The Nomination Committee is responsible for Board appointments and succession planning and takes
account of experience in ESG and climate and nature related matters in fulfilling its responsibilities.
Details of the Nomination Committee and its activities are provided from pages 80 to 84.
Our risk governance approach, including how the Board and management interact is provided on pages
50 to 54. The GEC is responsible for our approach to identifying and assessing key risks and opportunities,
managing them; and conducts quarterly deep-dives which incorporates sessions on TCFD and TNFD to
assess our overall approach.
Board of Directors’ oversight of dependencies, impacts, risks and opportunities
Management’s role in assessing and managing dependencies, impacts, risks and opportunities
ESSENTRA PLC ANNUAL REPORT 2024
41
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CLIMATE AND NATURE RELATED FINANCIAL DISCLOSURES CONTINUED
Governance continued
Strategy
NFSIS, TNFD Disclosure
NFSIS, TCFD, TNFD Disclosure
We comprehensively assess and manage our dependencies and impacts on climate and nature, and the
associated risks and opportunities that arise from climate and nature. We have a materiality matrix
available on page 23, that identifies ESG priorities from both a Company and stakeholder perspective,
which we monitor and review on a periodic basis to ensure it remains relevant and complete. This matrix
identifies the relevant climate and nature related dependencies listed below. The climate and nature
related impacts and dependencies relevant to our material risks and opportunities are detailed in the
table on pages 43 to 44.
Dependencies
• Dependency on water in the raw material procurement stage, as well as metal and plastic
component production processes
• Availability of raw materials and energy for manufacturing of products and packaging
• Reliance on climate and ecosystems
Throughout our international operations, we support and endorse human rights – as set down by the
United Nations Declaration and its applicable International Labour Organisation conventions – through
the active demonstration of our employment policies, our Ethics Code, our supply chain processes and the
responsible provision of our products and services. This commitment includes a mandatory requirement
at all our sites to prevent the employment of children, as well as a commitment to the prevention of
slavery and human trafficking. Each of our websites includes a statement on Anti Modern Slavery, this
statement is reviewed each year by management and then assurances provided as appropriate to the
Board, prior to being agreed. We are proud that in 2023, we joined the United Nations (“UN”) Global
Compact initiative, confirming our commitment to responsible business practices, human rights and our
support of the UN Sustainable Development Goals.
Our approach to stakeholder engagement is detailed on pages 38 to 39. Internally, our designated Board
Champions conduct regular site visits to hold Voice of the Employee sessions, and promote our employee
communication and feedback channels.
Impacts
• Impact of water usage during production
• Waste generation during manufacturing and end of life disposal
• Greenhouse gases emitted in direct operations
• Impact of land use in value chain due to transition from fossil fuel feedstocks to bio-based polymers
• Impact of greenhouse gas emissions, water resource usage, emissions to air, water and soil and
waste generation throughout the value chain
Human rights policies and engagement activities, and oversight by the Board of Directors and management, with
respect to indigenous peoples, local communities and affected stakeholders (TNFD recommended disclosure)
Dependencies, and impacts on nature and climate
Externally, we recognise that our suppliers play a crucial role in our value chain and share in our
commitment to upholding high standards of integrity, sustainability, and social responsibility. We
recognise that local laws and regulations may differ across the regions in which we operate. However,
our universal Supplier Code framework guides our suppliers’ behaviour and encourage best practices,
irrespective of legal requirements. We expect our suppliers to not only comply with applicable laws but
also embrace these principles and work towards continuous improvement. The Supplier Code is split into
three distinct areas:
• health, safety and the environment
• respecting human and labour rights
• acting with integrity, ethics and compliance.
The GEC approves and manages all policies and our codes, including respect for human rights, which are
reviewed by the Board of Directors.
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
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FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CLIMATE AND NATURE RELATED FINANCIAL DISCLOSURES CONTINUED
Strategy continued
NFSIS, TCFD, TNFD Disclosure
Addressing climate and natural capital risks and opportunities is integral to our purpose, strategy and
transition plan. We have identified seven material climate-related risks and opportunities and quantified
these across three time horizons, and our three climate scenarios as detailed on page 45. A range of
management approaches are then identified, many of which the Company has in place already, to
mitigate these risks and capture opportunities. The table below maps approaches to risks and
opportunities, as well as potential unmitigated profit impact or opportunity, in all three scenarios.
Describe the risks and opportunities over the short, medium and long term
Risk
Low
(<£1m)
Medium
(£1m–£10m)
High
(>£10m)
Opportunity
Low
(<£1m)
Medium
(£1m–£10m)
High
(>£10m)
Risk/Opportunity category
Dependencies and Impacts
Risk management and 2024 progress
Potential unmitigated profit impact
Metrics and targets
Physical Risk
Short term
Medium term
Longer term
Impact of extreme weather.
Damage to physical assets and
disruption at sites due to
high-speed wind, increased
precipitation and flooding.
Dependencies
Reliance on climate and ecosystems
Impacts
Greenhouse gas emissions
• Site activities are based on risk assessments to reduce exposure to natural hazards
• Business continuity and emergency plans in place at all sites, to respond to extreme
weather events, including appropriate mitigation plans, such as transferring operations
across manufacturing and distribution sites
• Expansion of global footprint builds resiliency
BAU
MR
LC
BAU
MR
LC
BAU
MR
LC
• All sites within operational
control to have a business
continuity plan1
• Insurance costs1
Transition risks
Fluctuations in fossil fuel price.
Dependencies
Availability of energy sources
Impacts
Greenhouse gas emissions
• Ongoing plans to transition from fossil fuel resins and films to sustainable alternatives
• Continuing our initiatives to source and manufacture products close to our customers,
taking advantage of our global presence
• Continuing to reduce reliance on fossil fuels in operations (see page 27)
• Commenced planning of decarbonisation of logistics by switching to low and zero
emission transport, as detailed in our climate transition plan
BAU
MR
LC
BAU
MR
LC
BAU
MR
LC
• Percentage of materials
from sustainable sources2
• GHG emissions reduction
targets2
• Emissions intensity2
• Freight costs1
• Freight emissions2
Increased expenditure on resources
due to carbon pricing.
Dependencies
Availability of raw materials and
energy sources
Impacts
Greenhouse gas emissions
• Scope one, two and three emissions have reduced annually since 2019, and our targets
were approved by the Science Based Targets initiative in 2024 as being aligned to a 1.5
degrees pathway
• The European Union Carbon Border Adjustment Mechanism was introduced in 2023,
with a carbon levy due from 2026. As some of our metal products are currently in scope
we have introduced the potential financial impacts into our model from 2026 onward,
and are monitoring developments in this evolving legislation, and evaluating how to
reduce our exposure
BAU
MR
LC
BAU
MR
LC
BAU
MR
LC
• GHG emissions reduction
targets2
• Total energy usage2
• Emissions intensity2
Changing revenue from
components specific to
conventional fuel automobiles.
Dependencies
Availability of raw materials and
energy sources
Impacts
Land use impact when transitioning to
bio-based materials
• Customer proposition for new and existing customers to support transition to low-
carbon vehicle components
• Annual market analysis to prepare for market changes, such as speed of price parity for
electric vehicles; charging maturity; non-ICE vehicle penetration
BAU
MR
LC
BAU
MR
LC
BAU
MR
LC
• Increasing revenue from
customer segments within
low carbon industries2
• Revenue from
ICE components1
1 Metrics internally monitored by the relevant functional management teams.
2
These targets and progress are detailed in our ESG update pages 21 to 37.
BAU Business as usual
MR
Middle of the road
LC
Low carbon
ESSENTRA PLC ANNUAL REPORT 2024
43
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FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CLIMATE AND NATURE RELATED FINANCIAL DISCLOSURES CONTINUED
Strategy continued
NFSIS, TCFD, TNFD Disclosure
Describe the risks and opportunities over the short, medium and long term (continued)
Risk
Low
(<£1m)
Medium
(£1m–£10m)
High
(>£10m)
Opportunity
Low
(<£1m)
Medium
(£1m–£10m)
High
(>£10m)
Risk/Opportunity
category
Dependencies and
impacts
Risk management and 2024 progress
Potential unmitigated profit impact
Metrics and targets
Transition risk
Short term
Medium term
Longer term
Increased costs due
to transition from
petrochemical feedstocks
and non-biodegradable
materials.
Dependencies
Availability of raw materials
and energy sources
Impacts
Land use impact when
transitioning to bio-based
materials
• Our Centre of Excellence opened in 2023, to trial and bring to market alternative materials
• Continued close collaboration with supply chain to explore alternative material options
• Continuous monitoring of evolving legislation on material use and labelling
BAU
MR
LC
BAU
MR
LC
BAU
MR
LC
• 50% of materials from sustainable
sources by 20302
Transition opportunity
Increased revenue from
products that enable a
low carbon economy.
Dependencies
Availability of raw materials
and energy sources
Impacts
Greenhouse gas emissions
• Continued business development activity within customer segments in low carbon industries and
services
• Continuous development of service and product offering for this growth market
BAU
MR
LC
BAU
MR
LC
BAU
MR
LC
• Increasing revenue from customer
segments within low carbon
industries2
Reduced energy costs
through implementation
of renewable energy
and adoption of energy
efficiency measures.
Dependencies
Availability of raw materials
and energy sources
Impacts
Greenhouse gas emissions
• In 2024, we have commissioned a further two on-site solar systems, bringing the total to five across our
estate. These projects provide a reduction in electricity costs.
• Our machine replacement programme is ongoing, providing efficiency savings
BAU
MR
LC
BAU
MR
LC
BAU
MR
LC
• Percentage of energy use from on-
site generation2
• Reduction in energy costs1
• Total energy usage2
BAU Business as usual
MR
Middle of the road
LC
Low carbon
1 Metrics internally monitored by the relevant functional management teams.
2
These targets and progress are detailed in our ESG update pages 21 to 37.
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
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CLIMATE AND NATURE RELATED FINANCIAL DISCLOSURES CONTINUED
Strategy continued
NFSIS, TCFD, TNFD Disclosure
Resilience of the organisation’s strategy, taking into consideration different scenarios
Our qualitative and quantitative analysis of climate and nature related risk and opportunities, looks at
three scenarios. These scenarios draw on publicly available and widely accepted third-party scenarios
from the Intergovernmental Panel on Climate Change’s (“IPCC”), the International Energy Agency (“IEA”),
and the WWF Risk Filter Suite 2.0, which we review and incorporate any updates as necessary on an
annual basis. These reference scenarios are outlined in the table below.
Physical
Transition
Scenarios
Warming by 2100
Future
emissions
Energy source
Scenario narrative
Reference scenarios
Business as usual
(“BAU”)
>5ºC
High
Mostly fossil fuels
Without additional efforts to reduce emissions and a continued trajectory of slow and limited ambition climate policy,
operating practices remain as they are at present and emissions continue to rise at current rates. This results in a severe
increase of frequency and intensity of devastating extreme weather, resulting increases in insurance premiums and
economic pressure in worst hit regions where assets are uninsurable. Global ecosystems suffer irreversible changes and
significant loss of biodiversity.
IPCC AR6 5-8.5 “Fossil-fuelled Development”
IEA World Energy Outlook 2024 “Stated Policies
Scenario (STEPS)”
WWF (2024) WWF Risk Filter Suite version 2.0,
Water Risk Filter “Pessimistic pathway”
Middle of the road
(“MR”)
Approx. 2.7ºC
Medium
A mix fossil fuels
and renewables
The world continues to decarbonise and achievement of nationally determined contributions under the Paris Agreement and
other policy commitments. As a result of the eventual albeit unco-ordinated approach to address climate change, there
is a major increase in frequency and severity of weather events. Parts of global ecosystems suffer abrupt and irreversible
changes and loss of biodiversity.
IPCC AR6 SSP 2-4.5 “Middle of the Road”
IEA World Energy Outlook 2024 “Announced
Pledges Scenario”
WWF (2024) WWF Risk Filter Suite version 2.0,
Water Risk Filter “Current trend pathway”
Low carbon (“LC”)
1.5ºC
Low
Mostly renewables
and low-carbon
fuels
Ambitious and co-ordinated climate policies globally leads to transformation of the energy system. The global energy sector
reaches net-zero emissions by 2050, with advanced economies achieving net-zero earlier. There is a significant increase in
frequency and severity of extreme weather, which stabilises towards the latter half of the century. There remains a high risk
for vulnerable ecosystems such as coral reefs and Arctic sea ice.
IPCC AR6 SSP 1-2.6 “Sustainable”;
IEA World Energy Outlook 2024 “Net Zero
Emissions by 2050 Scenario (NZE)”
WWF (2024) WWF Risk Filter Suite version 2.0,
Water Risk Filter “Optimistic pathway”
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CLIMATE AND NATURE RELATED FINANCIAL DISCLOSURES CONTINUED
Strategy continued
NFSIS, TCFD, TNFD Disclosure
Resilience of the organisation’s strategy, taking into consideration different scenarios (continued)
We have assessed our overall strategy against the risks, opportunities, impacts and dependencies
identified, across the climate and nature related scenarios used in our assessment, and consider it to be
resilient. The impact of unmitigated impact of risks on profit, is less than 1% of 2024 adjusted operating
profit in the short term, across all climate scenarios. In the medium term, the highest impact is within the
low-carbon scenario, where there is a potential unmitigated profit impact representing 1.3% of 2024
adjusted operating profit. Physical risks to sites from increased flooding and wind speeds, are broadly
consistent across all three scenarios.
Whilst the cost impact of fossil fuel prices is greater in the short term under the business as usual and
middle of the road scenarios, it becomes a possible opportunity for cost savings in the medium term
when considering a low-carbon scenario, and in the long term due to a forecast in peak oil demand by
2030, coupled with the decarbonisation of heating and transport and the transition to more sustainable
materials. The impact of carbon pricing is greatest in the long term when considering a low-carbon
scenario, reflecting the emerging requirements in Europe, the UK and the USA, to consider the carbon
intensity of products, and impose a carbon tariff on imports.
The opportunities of increased revenues in high-growth and low-carbon markets such as electric
vehicles and renewable energy are both highest in the low-carbon scenario, when taking a medium
and long term view.
The cost reduction opportunity from energy efficiency and implementation of renewable energy
also increases in the medium and long term scenarios. We have considered our assessment of the
unmitigated, profit impacts of the identified risks and opportunities, together with existing and proposed
mitigation actions, as inputs to our Long Term Viability Statement and impairment reviews. On the basis
of our current analysis, we have concluded that the aggregate impact of the identified risks and
opportunities in the medium term, in a middle of the road scenario represents less than 1% of adjusted
operating profit and consequently is not material. We will continue to review our assessment of both the
individual risks and opportunities and the aggregate impact as part of our regular risk management
practices and with regard to future reporting and disclosure requirements in relation to climate change.
Our diverse product ranges and services allow us to respond quickly to changing customer needs, our
global manufacturing and distribution capabilities means we have an inherent operational resilience
with an ability to quickly move production to another site if needed, and our focus on high-growth,
low-emission markets such as renewables and electric vehicles provides the business with good
growth opportunities. Further information is detailed in our ESG update on pages 21 to 37.
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Risk management
NFSIS, TNFD Disclosure
NFSIS, TCFD, TNFD Disclosure
In 2024, we have focused on nature based risks and opportunities within our direct operations. We have
assessed biodiversity risk and water risks across our manufacturing and distribution sites globally.
On analysis of biodiversity risk we found that none of our sites sit within protected areas. We have one
site, our Houston distribution site which sits in a high area of physical risk due to high air pollution and
significant loss of biodiversity in the area. However, when operational risk is overlaid onto this inherent
geographical risk, the overall risk profile is low.
For climate risks, in 2024, we reviewed and built on the comprehensive database which was established
in 2021, and redefined in 2022 to focus on our new business model. Our assessment covers a large
geographic scope, including all manufacturing and distribution centres alongside strategic offices. We
have incorporated all new sites we have acquired since 2022, such as the Wixroyd site in Chichester in the
UK, into the model. The time horizons used in our analysis and disclosures for 2023 are short term (2027),
medium term (2030) and long term (2040). The long-term time frame of 2040 is aligned with Essentra’s
target of reaching net-zero in our scope one and two emissions by 2040. The short- and medium-term
time frames are aligned with our business continuity planning. Using a long list of 32 risks and
opportunities established in 2021, we use a bespoke scoring system where vulnerability and advantage
of each item is assessed to determine the most material impacts.
Vulnerability is used to assess climate risks and is defined as the degree to which the business is
susceptible to, and able to deal with, the impacts of climate change. Advantage is used to assess climate
opportunities and is defined as the degree to which the business is able to capture the potential value
from the transition opportunity. Physical impacts were assessed based on the analysis of our insurance
partners, and third-party climate risk data for all Essentra sites, and 12 key suppliers’ sites.
Disclose the locations of assets and/or activities in the organisation’s direct operations and, where possible, upstream and downstream value chain(s) that meet the criteria for
priority locations such as locations with high integrity ecosystems and or/areas of decline in integrity, areas where biodiversity is of high importance or water stress areas
Describe the organisation’s processes for identifying and assessing climate and nature related risks, opportunities, dependencies and impacts
In terms of water risk, we regularly monitor our production sites water consumption and assess for
areas of high water stress. Our Yichun site accounts for c.50% of our total consumption, followed by
our Silivri, and Flippin sites. In terms of water stress, we have three sites located in areas of high water
stress, these sites, Barcelona, Johannesburg and Monterrey, account for less than 1% of our total annual
water consumption.
We then conducted a quantitative financial analysis on the nine material risks and opportunities,
modelled across our three scenarios. The potential unmitigated impact on profit is shown as a range of
low (<£1m), medium (£1m–£10m) or high (>£10m), for both risks and opportunities, across each time
horizon in each scenario.
For nature risks, in 2024, we commenced analysis in our direct operations, focusing on biodiversity and
water based risks. Our assessment includes all of our manufacturing and distribution sites, alongside
strategic offices. To carry out our analysis, we used the WWF (2024) WWF Risk Filter Suite version 2.0
(WWF RFS). This tool provides location-specific and industry-specific assessments of biodiversity and
water-related physical, regulatory and reputational risks. The water risk filter, looks at three scenarios,
aligned to our climate scenarios detailed on page 45, across two time horizons of 2030 and 2050.
The biodiversity risk filter assesses risk at a point in time, based on the underlying dataset being used.
The climate and nature related risks we identify are, where relevant, incorporated into our Principal Risks,
managed and discussed at the Board and the ARC, in accordance with our risk management processes.
The risks are fed into the relevant Principal Risks on at least an annual basis. Descriptions of each of our
Principal Risks are provided within our risk management report on pages 50 to 57. Details of our risk
management framework and governance structure is provided on pages 50 to 54. Operational
management teams identify and discuss site and region specific risks and opportunities in strategy
reviews during the year. The ESGC considers ESG risks and opportunities for the Company as a whole.
Details of the ESGC and its activities is on pages 77 to 79. Company-wide and specific regional risks and
opportunities are also discussed at GEC.
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NFSIS, TCFD, TNFD Disclosure
Risks and opportunities are identified and managed in accordance with the Company’s risk management
processes. Each has an owner, rating, mitigation plan and metric(s) which are monitored and reported
against at least quarterly. Our internal risk team monitor the process and controls for our risks.
Describe the organisation’s processes for managing climate and nature related risks
Business-wide activities are undertaken and managed centrally via the ESG team, working across the
Company. For example, to reduce our GHG emissions, management of solar PV projects is done centrally
to facilitate and accelerate activity, working with sites across the Company. Progress is subject to regular
review by the ESGC, ARC and GEC.
CLIMATE AND NATURE RELATED FINANCIAL DISCLOSURES CONTINUED
Risk management continued
NFSIS, TCFD, TNFD Disclosure
Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s overall risk management
ESG risks are Principal Risks for Essentra, managed and discussed at ARC in accordance with Essentra risk
management processes. Description of our Principal and Emerging Risks are provided on pages 54 to 57.
Details of the ARC and Essentra’s risk management processes are provided on pages 50 to 54.
Operational management teams consider site specific climate-related risks and opportunities and report
them as appropriate to the ESGC, ARC and GEC. These risks are then incorporated into TCFD modelling as
appropriate. The ESGC considers climate related risks and opportunities for the Company as a whole and
reports them as appropriate to the ARC and GEC. Details of the ESGC and its activities are provided from
pages 77 to 79.
Risks and opportunities identified as part of TCFD activity are integrated into the Principal Risk coverage,
and Principal Risk reviews include a review and update of activity related to these areas.
Company-wide or specific regional risks and opportunities are discussed by the ARC, GEC and ESGC.
STRATEGIC REPORT
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Metrics and Targets
NFSIS, TCFD, TNFD Disclosure
NFSIS, TCFD, TNFD Disclosure
Describe the metrics used by the organisation to assess risks and opportunities in line with its strategy and risk management process
Describe the targets used by the organisation to manage risks and opportunities and performance against targets
We use several metrics to monitor our climate-related risks and opportunities:
• absolute scope one, two and three GHG emissions
• energy usage
• GHG intensity (per million GBP of revenue and per GBP of value added)
• revenue from low-carbon industries
• transportation and fuel costs
• carbon pricing
• percentage of materials from sustainable sources
• percentage of energy from renewable sources.
Relevant metrics are linked to our risks and opportunities detailed on pages 43 to 44. We also monitor
our preparedness and capability to respond to physical risks to our assets and operations through the
preparation and regular review of business continuity plans.
Our near-term and net-zero targets for scope one, two and three GHG emissions have been approved by
the Science Based Targets initiative (“SBTi”). As per the SBTi Net-Zero Standard, we have committed to
reduce our scope one and two GHG emissions by 90% by 2040 from a 2019 baseline, and our scope three
emissions by 90% by 2050 from a 2022 baseline.
Progress on our emissions reduction can be found on pages 26 to 28.
Our nature related targets are:
• 50% reduction in waste intensity by 2030
• all sites in operational control to achieve zero waste to landfill by 2030
• 50% of materials from sustainable sources across our polymer ranges by 2030
• 100% of our general protection and security seals ranges. Progress on our sustainable materials
metrics can be found on pages 29 to 30.
We use several metrics to monitor our nature-related risk:
• waste intensity
• waste management by type and end destination
• water usage
• use of sustainable materials (including recycled and biomaterials).
Relevant metrics are linked to our risks and opportunities detailed on pages 43 to 44.
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Risk management report
Risk management is integral to proactively supporting
business resilience and the successful delivery of the
Company’s strategic objectives.
RISK MANAGEMENT REPORT
Navigating geopolitical tension and
economic uncertainty in 2024
During 2023, the Company sought to
navigate both the internal disruption
caused by the divestment of the Filters
and Packaging businesses and increasing
geopolitical tensions. Whilst 2024 has seen
increased internal stability, the prevailing
global economic and geopolitical
environments have resulted in
continued disruption.
Our risk framework was refreshed during the
Strategic Review in 2022 and aligned to the
needs of the Company as a smaller, more
agile pure-play global Components business.
The framework seeks to promote a positive
risk culture and is applied at both a strategic
and an operational level with a view to
improving business resilience and commercial
outcomes over the short- to long-term.
In 2025, we anticipate that the geopolitical
uncertainty, resulting from various global
elections, seen in 2024 might recede.
However, the near-to medium-term
economic outlook remains volatile in a
number of our end-markets. The Company’s
geographical breadth coupled with our
ability to flex operating models with a high
degree of agility means we are well placed
to maintain customer service levels whilst
managing the threats to our operations and
the wellbeing of our people. Additionally, our
risk management framework means we
remain well placed to deal with ongoing
uncertainty in a manner that protects
profitability efficiently and effectively.
EXTERNAL
STRATEGIC
OPERATIONAL
DISRUPTIVE
Risks relating to the macroeconomic
climate, political events, competitive
pressures or regulatory issues.
Internal risks that may impede
achievement of strategic goals.
Risks that could impact day-to-day
operations and prevent business-as-
usual activities.
Risks that could impact the
business model or viability of the
Company.
Risk categories
The Company has considered the risks it is facing under the following four
risk category headings and has identified 10 Principal Risks.
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RISK MANAGEMENT REPORT CONTINUED
Risk management framework
The framework was developed to support
the Company in identifying and managing
risk within defined appetite levels, at both
a strategic and an operational level. The
current framework was designed to provide
the GEC and the Board with a clear line of
sight over risk, to enable informed decision-
making through promoting a positive risk
culture and to deliver improved resilience.
Our risk management framework continues
to evolve to ensure that it supports the
Company’s growth and strategic objectives.
A robust, but flexible, approach to the
management of risk is fundamental to the
continued success of the Company. In 2024,
the challenges the Company faced included
supply chain disruption, and volatile supply
and demand, driven by economic
uncertainty in many of our end-markets.
A clear focus continued to be placed on
ensuring the continued operation of our risk
management framework in this dynamic
and disruptive environment.
Risk management approach
We are committed to managing risks in a
proactive, efficient and effective manner
to protect and enhance value through the
development of a positive risk culture,
seeking to both manage downside risk and
leverage upside opportunity and provide
assurance to the Board and our stakeholders.
The Risk Assurance team continues to
support regional and functional leadership
teams in the management of their risk
processes. The Company’s risk landscape
continues to evolve and the supporting
framework is designed to adapt to meet
prevailing risk requirements.
The Essentra risk framework
STRATEGY AND CULTURE
• Strategic
objectives
& planning
• Risk appetite
• Capital
allocation
• Business model
• Risk culture
GOVERNANCE
• Board risk governance
• GEC – ToR in respect of risk
• Risk taxonomy
• Assurance mapping
IDENTIFY AND ASSESS
• Risk/opportunity
identification
• Profiling and
categorisation
• Risk quantification
• Risk velocity
• Top-down vs. bottom-up
RESPOND AND MANAGE
• Response decision
• Thematic analysis
• Action tracking
• Review & revise
CONTINUITY
MANAGEMENT
• Scenario plan
• Testing
• Respond
• Learn
RISK LANDSCAPE
• Strategic risk
• Risk networks
• Individual vs. Portfolio
• Risk blind spots
• High impact, low
probability
• Emerging Risks
RESILIENCE
• Resilience strategy
• Resilience planning &
execution
• Disruptive risks
Strategic
layer
Operational
layer
Continuous improvement
Risk
smart
Risk
aware
Monitoring
& reporting
Regions &
functions
Individuals
GEC
Sites
Board
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Facilitators
Risk Assurance
Board
Overall responsibility for assessing the Company’s Principal Risks,
setting risk appetite and monitoring risk management performance
and the framework.
Group Executive Committee (“GEC”)
Chaired by the Chief Executive and comprised of the Company’s
executive leadership team. The GEC meets on a monthly basis and
discusses risk in the normal course of business with quarterly risk
deep-dive reviews into Principal Risks also scheduled. In this context,
the GEC is responsible for monitoring key risks and ensuring the
effectiveness of regional and functional risk management.
Site Management Teams
Sites are responsible for managing their own risks and in defining risk and
action owners. Management are responsible for managing local level risk and
reporting to the respective leadership teams.
Audit and Risk
Committee (“ARC”)
Responsible for
reviewing the
effectiveness of the risk
management systems
and processes.
Regional and Functional Leadership Teams
Each leadership team is responsible for ensuring their risks
are captured and are being effectively mitigated within
business-as-usual processes. Risk management is a regular
agenda item for leadership team meetings.
ESG Committee (“ESGC”)
The ESGC oversees the Company’s response
to emerging ESG related concerns, risks,
opportunities, laws and regulations and
comprises representatives from the Board,
GEC and regional and functional leadership.
• Direct and
monitor
• Report
Our risk governance structure
Risk governance structure
and oversight
The Board has established a risk and internal
control structure designed to manage the
delivery of the Company’s strategic
objectives. The Risk Assurance team,
independent of management, enables and
facilitates the risk management process
across the Company and acts as the
custodian of the Company’s risk framework
and supports risk management activities.
The GEC is responsible for the delivery of risk
management activities across the Company
and for facilitating the appropriate
identification, evaluation, mitigation and
management of all key business risks. In
addition, the GEC reviews the risk appetite
and ongoing risk management approach
and makes recommendations on risk
appetite to the Board and actions required
to ensure adequate controls and mitigating
actions are in place against identified risks.
The Board considers the nature and extent
of the Principal Risks it is prepared to take in
achieving its strategic objectives – its risk
appetite – annually by evaluating these risks
against a three-point scale from “risk-
averse” to “risk-neutral” to “risk-tolerant”.
This informs the development and focus of
mitigating actions for each of the Principal
Risks, and those risks that sit beneath them,
with a particular focus on risks that are
assessed to be outside the agreed appetite.
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At a strategic level, our risk management
objectives are to:
• identify the Company’s significant 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 appetite in line with the
agreed appetite
• ensure that growth plans are properly
supported by an effective risk
management framework
• help management teams to improve
the control and co-ordination of risk-
taking across the Company through the
promotion of a positive risk culture.
As an important part of fulfilling its
responsibilities, the Board receives regular
reporting from the Chief Executive in relation
to risk to enable the Board to challenge and
review the GEC’s views on key risks.
The ARC, with assistance from Risk
Assurance, oversees compliance with risk
management processes and the adequacy
of risk management activities related to the
Company’s operations.
The regional and functional leadership
teams undertake reviews during the course
of the year and engage in facilitated
discussions with Risk Assurance to consider
the risk environment for their particular
functional or geographic area of
responsibility and how these could impact
on the achievement of the Company’s
strategic objectives.
Principal Risks
The GEC has responsibility for enabling the
identification and management of
Essentra’s Principal Risks.
The output from these considerations were
presented to the Board, a recommendation
of Principal Risks to be included in long-term
viability modelling and overall approval.
The Board believes the Principal Risks are
specific to Essentra and reflect the risk
profile of the Company at the current time.
The Company seeks to ensure that all
Principal Risks are managed within their
individual risk appetite.
The Board and GEC evaluate the potential
effects of Principal Risks materialising over a
three-year period to understand how they
could impact the Company’s long-term
viability. The evaluation is based on plausible
worst-case scenarios.
To make this evaluation, the estimated financial
impact of each Principal Risk crystallising was
considered. The Board and GEC assessed the
potential impact on the Company’s viability,
based on selected severe but plausible risk
scenarios. These were developed in conjunction
with senior management.
The Principal Risks that were considered to
have a potentially significant impact on the
Company’s viability are included in our
Long-Term Viability Statement.
In addition to the Principal Risks, Emerging
Risks and wider key risks have been identified
and are being monitored by the Company.
Mitigation actions in response to such risks
are an important part of the regional and
functional risk reporting to the GEC and Board.
Emerging Risks
We define an Emerging Risk as a changing
risk or a novel combination of risks for which
there is no track record or previous
experience by which the impact, likelihood or
costs can be understood. Its potential
impact is viewed as being two years or more
in the future.
We strongly believe that the identification
and appropriate planning to manage or
mitigate Emerging Risks is critical to our
long-term success.
Emerging Risks have the potential to
increase in significance and affect the
performance of the Company and as such
are continually monitored through our
existing risk management processes. Many
Emerging Risks evolve into existing or new
Principal Risks as their impact becomes
clearer, as has been the case in 2024.
Our risk management process ensures
Emerging Risks are identified and aids the
GEC and the Board’s assessment of whether
the Company is adequately prepared for
the potential opportunities and threats
they present.
The process enables new and changing risks
to be identified at an early stage so we can
analyse them thoroughly and assess any
potential exposure.
Emerging Risks and wider key risks have
been identified and are being monitored by
the Company. Mitigation actions in response
to such risks are an important part of the
Company’s risk reporting to the GEC and
the Board.
The Board can confirm that it has completed
a robust assessment of the Company’s
Principal and Emerging Risks. The Company
continues to focus on ensuring the adequate
mitigation of risks faced by the Company to
ensure alignment with the Board-approved
risk appetite.
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External Risk
Legal and regulatory
Strategic Risk
Environmental
RISK MANAGEMENT REPORT CONTINUED
Change in net risk level
Unchanged
Risk velocity
Slow
Ownership
Company Secretary
Relevance
Industry general
Description
This risk relates to the impact current and
emerging regulations have on our ability to
conduct business efficiently, and in compliance
with applicable requirements, across the broad
range of jurisdictions in which we operate.
Mitigation
The regions and functions work together, and
engage with external advisers, to horizon scan
for regulatory and legal changes and ensure
the requirements are embedded into our
working practices.
Key changes during the year
At the half year we disclosed that there
had been one change to the Company’s
Principal and Emerging Risks since the
publication of our 2023 Annual Report and
Accounts. This change was the removal of
our Principal Risk relating to the social
impact of our operations following a
reduction in the exposure level. Additionally,
difficult macroeconomic and geopolitical
environments continued, resulting in
trading conditions being below
expectation. The Company remained
confident that the mitigations already in
place were sufficient to manage the risk
within the previously agreed risk appetite.
Since our half year disclosure, we continued
our review of our Principal and Emerging Risk
landscape. The following key changes have
been made as a result of this ongoing review.
Changes to Principal Risks
• ‘Governance’ risk has been extended to
include all legal and regulatory matters
and has been renamed as such
• ‘Execution of strategic plan’ risk has
evolved to reflect a change in focus
towards delivering our growth ambitions
in our regions, and has been renamed as
‘Delivery of key growth initiatives’
• The effect of organisational culture on
our ability to deliver on our objectives
has been included within our ‘Leadership,
talent and capability’ Principal Risk
New Emerging Risk
• ‘Plastic free world’ Emerging Risk has been
added to reflect the potential effect on
the business as a result of a regulatory and
legislative change towards the elimination
of plastic products
Changes to Emerging Risks
• ’Artificial intelligence’ Emerging Risk has
been added to our ‘Digital transformation’
Principal Risk
• ’Legal and regulatory change’ risk has been
added to our ‘Governance’ Principal Risk
• ‘China plus one’ Emerging Risk has been
re-framed as ‘Exposure to low-growth
economies’
All other risks have been reviewed and
updated to reflect the current nature of
the risk and mitigating activities.
Change in net risk level
Up
Risk velocity
Medium
Ownership
Chief Operations Officer
Relevance
Industry general
Description
This risk considers evolving customer and
regulatory sentiment towards plastics and
sustainability, and climate and nature-related
physical and transition risks. Specifically,
it concerns the impact of the Company’s
operations on the environment, the impact of
climate change and reliance on nature in our
operations, and the long-term demand for single
use plastic (see also our “Plastic free world”
Emerging Risk).
Mitigation
The Company sets SBTi aligned decarbonisation
targets, as well as targets for waste reduction
and material circularity, and tracks progress
through the ESG Committee. Focus areas
include recycled content, renewable energy
and an investment in and move towards more
sustainable products.
EXTERNAL
STRATEGIC
OPERATIONAL
DISRUPTIVE
Risks relating to the
macroeconomic
climate, political
events, competitive
pressures or
regulatory issues.
Internal risks that
may impede
achievement of
strategic goals.
Risks that could
impact day-to-day
operations and
prevent business-as-
usual activities.
Risks that could
impact the business
model or viability of
the Company.
Risk categories
The Company has
considered the risks
it is facing under the
following four risk
category headings
and has identified
10 Principal Risks.
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Strategic Risk
Digital Transformation
Disruptive Risk
Operational and supply chain disruption
Strategic Risk
Leadership, talent and capability
Strategic Risk
M&A execution and integration
RISK MANAGEMENT REPORT CONTINUED
Change in net risk level
Down
Risk velocity
Medium
Ownership
Chief Digital Information Officer
Relevance
Company specific
Description
The Company’s digital transformation is a
foundation for its future strategy. The programme
presents three inter-related risk areas:
• the delivery of the D365 platform across EMEA
• development of the Company’s website and
e-Commerce platforms
• failure to leverage the opportunity presented
by the Company’s data.
Mitigation
The D365 template has now been defined for
our European sites and a robust implementation
methodology is in place to support its
repeatable deployment. The e-Commerce
platform is supported by a hybrid of internal and
external specialists in a balanced risk approach,
with developments for continuous improvement
following an agile approach.
The Company has commenced a programme of
work to focus on data with a view to managing
it more effectively and better understand the
operational effectiveness and commercial
growth opportunities that may be presented by
artificial intelligence technologies.
Change in net risk level
Unchanged
Risk velocity
Fast
Ownership
Chief Operations Officer
Relevance
Industry general
Description
This risk covers the impact of disruptive events
on the Company’s operating model. These
might include, inter alia, extreme weather, other
natural disasters, price inflation, political events
and material shortages. Our geographical
breadth both increases the risk of exposure and
provides a degree of natural resilience.
Mitigation
The Company continues to invest in technology
platforms to support operational planning and
footprint optimisation.
Decisions on regional near-shoring and efforts
to limit over-reliance on individual sites support
the mitigation of this risk. The Company
continues to consider the risks and opportunities
in relation to supply chain disruption presented
by its M&A pipeline.
Change in net risk level
Unchanged
Risk velocity
Fast
Ownership
Chief People Officer
Relevance
Company specific
Description
The talent and capability of our leadership is
fundamental to the delivery of our strategy.
To retain and attract talent in an increasingly
competitive market, we need a culture which
provides both the motivation and incentive to
succeed. The current economic environment
means that our leaders remain vigilant to the
stretch on our “top talent”. We remain focused
on providing support and ongoing development
opportunities that balance managing workload
and future development in role.
Mitigation
We have a comprehensive review of talent
and succession planning scheduled for 2025
to identify and support our next generation
of leaders.
As we navigate the current economic climate,
our latest leadership metrics reflect a stable and
encouraging position. Our focus on retention
has resulted in attrition rates remaining stable.
Importantly, our Employee Engagement
Score (“EES”) continues to trend upwards,
demonstrating the positive impact of our
ongoing efforts to retain talent, despite
the economic environment.
Change in net risk level
Unchanged
Risk velocity
Medium
Ownership
Chief Financial Officer
Relevance
Company specific
Description
M&A is a key part of the Company’s growth
strategy. In 2024, the Company experienced
an improvement in the availability of existing
pipeline targets and in the number of
inbound opportunities received. Despite this
improvement, the Company did not identify
a suitable target for completion in the year.
There is a risk that with the current market
environment and with it, considerations as to
the best use of capital, there are insufficient
financial and other resources available to
execute transactions.
There remains a risk that the Company is unable
to successfully implement its post-acquisition
integration strategy.
Mitigation
The Company continues to maintain an
active M&A pipeline, focused on its strategic
imperatives, and continues to assess the level
of resource necessary to successfully integrate
acquisitions into the wider business.
The Company has a solid track record of
successfully acquiring and integrating businesses
in line with its strategy.
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55
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Strategic Risk
Delivery of key growth initiatives
Operational Risk
Health and safety performance
External Risk
Cyber events
External Risk
Macroeconomic environment
RISK MANAGEMENT REPORT CONTINUED
Change in net risk level
Unchanged
Risk velocity
Slow
Ownership
Chief Financial Officer/Regional Managing
Directors
Relevance
Company specific
Description
At the start of 2024, the Company reorganised
its operations to improve the focus around
the delivery of strategic initiatives within the
regions rather than at the centre. This regional
empowerment moves ownership of the
Company’s operations, and execution of its
strategic initiatives, closer to its end-markets
and customers. The change was also made to
improve organisational effectiveness, improve
levels of focus and embed a culture of delivery.
There is a risk that each of our regional operations
fails to grow market share in existing end-markets
and does not leverage the opportunities
presented by high-growth end-markets.
Mitigation
The new organisational design, with its pivot to
regional accountability, will support focus on
frontline execution, increased agility, enhanced
innovation and better market alignment.
Increased governance and rigour around project
delivery and resourcing is a key mitigation
oversight anchored in the Regional Leadership
Teams and GEC.
The Company reviews its five-year strategic plan
on an annual basis. This review seeks to monitor
the execution of regional and Company-wide
initiatives and ensure they are appropriately
prioritised and aligned to our mid-term guidance.
Change in net risk level
Unchanged
Risk velocity
Fast
Ownership
Chief Operations Officer
Relevance
Industry general
Description
This risk recognises the impact of physical injury,
or fatality, to our people and our reputation as
a result of a significant impact event such as a
workplace accident, war, fire, flood, or severe
weather. It also recognises the impact of our
people’s mental wellbeing. Given our operational
environment, this risk is focused largely on our
manufacturing and distribution operations, but it
also covers our office locations and environments.
Mitigation
The business aims to instil a zero-accident
culture that embodies our commitment to
caring for one another. In 2024, to promote
consistency across our sites, we launched
a safety toolbox as a self-service resource
for safety documents, best practices, and
templates, along with a safety playbook that
serves as a “how-to” guide for embedding
safety at Essentra. We also introduced an
internal incident notification platform to
ensure all incident investigations are accessible.
Additionally, a safety culture assessment,
covering 24 capabilities, was introduced to be
completed in 2025.
Change in net risk level
Up
Risk velocity
Fast
Ownership
Chief Digital Information Officer
Relevance
Industry general
Description
The Company’s IT systems and data are
fundamental to both its day-to-day operations
and long-term strategy. The unavailability of
data, sites or systems could result in the loss of
confidential or valuable data and/or the disruption
to ongoing business activities with customers,
suppliers and employees. This includes the loss of
data through an action by an employee or third-
party contractors. The risk profile is also driven by
ongoing geopolitical events and the emergence
of generative AI technologies and the internal and
external risks and opportunities that they present.
Mitigation
There are four core components to the
Company’s mitigation approach:
• ongoing understanding and monitoring of the
external and internal environments to identify,
understand and eliminate potential risks
• application of governance and compliance
to systems, processes and data along with
awareness and training programmes for
employees and third parties
• continued investment in services, tools
and people to monitor, detect and prevent
malicious attempts to penetrate the Essentra
IT environment
• alignment of Essentra’s Cyber Security
programme to the National Institute of
Standards and Technology (“NIST”) Cyber
Security Framework (“CSF”). The framework
will be used to prioritise investments and
mitigation of risks.
Change in net risk level
Up
Risk velocity
Medium
Ownership
Chief Financial Officer
Relevance
Industry general
Description
The Company operates across a broad range
of global and geographic markets, many of
which have their own underlying fundamentals.
This breadth of operation provides a degree
of macroeconomic risk mitigation through
geographical diversification. The current
macroeconomic and geopolitical environment
has resulted in downturns in industrial
production in many of our end-markets.
Over the last two to three years, the Company
has noticed increased levels of cyclicality, a
prolonged downturn, input price inflation and a
continuing unstable geopolitical environment.
Whilst the Company is well positioned to
navigate the effects of fluctuating industrial
demand, there remains a risk that concurrent
downturns occur for which mitigating actions
are insufficient.
Mitigation
Whilst the broad economic environment
continues to be difficult, notably in relation to
industrial production levels, with low growth
rates in many of our end-markets, the Company
continues to manage its cost base so as to
minimise the impact on operating margins.
Additionally, the Company has strict controls in
place over its foreign currency exposure and the
activities of its Treasury function. The Company
also has a strong focus on its balance sheet and
actively seeks to maintain its strength.
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56
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
RISK MANAGEMENT REPORT CONTINUED
Risk name
Risk name
Plastic free world
Exposure to low-growth economies
Owner
Owner
Chief Operations Officer
Regional MDs
Description
Description
Whilst we have always considered the global
sentiment towards plastic products within our
Principal and Emerging Risks, we have noted
a recent movement towards the elimination
of plastic products in their entirety. Should
this movement be ultimately supported
by Government sentiment and legislative
change, it might present a substantial risk to a
significant proportion of our product portfolio.
As economies emerge from the current
downturn, there is a potential risk that they do
so with differing underlying growth rates. It is
possible that there might be a misalignment
between Essentra’s existing footprint and these
higher-growth economies.
Whilst the changes made to the Company’s
organisational design in 2024 support the
business’ ability to make agile decisions close
to our end-markets, significant misalignment
might have a long lead-time to resolution.
Mitigation
Mitigation
In 2024, we launched a Sustainability Centre of
Excellence at our site in Kidlington in the UK.
Amongst other initiatives, the Sustainability
Centre of Excellence is looking at alternative
materials which might be used in the place
of plastics. Whilst at an early stage, we have
already seen a number of small commercial
successes with such materials. We continue to
invest in alternative materials, products and
solutions to support our customers’ needs.
As noted in our “Delivery of key growth
initiatives” Principal Risk, our new regional focus
allows us to quickly understand our geographical
end-markets and change our focus accordingly.
Additionally, the Company uses the Purchasing
Managers Index (“PMI”), amongst other market
data points, as a leading indicator for our end-
markets. Continuing focus on this data supports
our ability to plan our operations over the
medium term.
Emerging Risks
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57
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
More information on the background
and experience held by our Group Executive
Committee can be found in the Notice of
our Annual General Meeting
www.essentraplc.com/investors/
shareholder-services/general-meetings
GROUP EXECUTIVE COMMITTEE
Group Executive
Committee
Scott Fawcett
Chief Executive
Emma Reid
Company Secretary
Rowan Baker
Chief Financial Officer
Rob Baker
Chief Operating Officer
Scott was appointed as Chief
Executive in January 2023,
having joined Essentra in 2010
as Managing Director of the
Components European business
and subsequently joined the
former executive committee
in January 2014 leading the
Components business. Prior to
joining Essentra, Scott was Head
of e-Commerce at RS Group
(formerly Electrocomponents
plc), where he held a variety
of increasingly senior sales,
marketing and e-Commerce
positions during his 17-year
career there.
Emma joined Essentra in 2020,
and was appointed as Company
Secretary in 2023. Prior to
becoming Company Secretary,
Emma was Head of Governance,
and previously worked for Which?
and Imagination Technologies
plc. Emma has extensive
governance, legal and DE&I
experience at board level. Emma
is a qualified company secretary.
Rowan was appointed to the GEC
and became a director of the
Board in November 2024. Rowan
was previously CFO at Laing
O’Rourke and CFO at McCarthy
Stone plc, prior to which she
worked for Barclays Bank and
PwC. Rowan is a qualified
chartered accountant and
chartered tax adviser.
Rob joined Essentra in 2021 as
Supply Chain Director of the
Components business. Rob has
over 25 years of supply chain
experience covering end-to-
end supply chain across both
industrial products and consumer
goods sectors. Prior to joining
Essentra, Rob’s background
combined both senior operational
leadership roles with business
consulting, with a focus on
operational transformation,
performance improvement and
sustainable procurement.
Appointed to the Group
Executive Committee:
January 2023
Joined Essentra
December 2010
Appointed to the Group
Executive Committee:
January 2023
Joined Essentra:
January 2020
Appointed to the Group
Executive Committee:
November 2024
Joined Essentra
November 2024
Appointed to the Group
Executive Committee:
January 2023
Joined Essentra:
October 2021
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STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
GROUP EXECUTIVE COMMITTEE CONTINUED
Hugues Delcourt
Managing Director, EMEA
Richard Sederman
Managing Director, APAC
Sam Edwards
Chief Digital Information Officer
Chris Brooks
Managing Director, Americas
Hugues joined Essentra in 2019
as Managing Director of the
Components European business
and was appointed to his current
role in July 2022. Prior to joining
Essentra, Hugues was Global
Commercial Director at Coats,
where he held a variety of
increasingly senior Commercial
and P&L management positions
during his 16-year career there.
Hugues started his career at
Moss Plastic Parts and Alliance
Plastics, which later formed part
of Essentra.
Richard joined Essentra in 2003 as
part of the graduate programme
and was promoted to Managing
Director, APAC in January 2024.
During his time with Essentra,
Richard has held several roles
within Product and Marketing of
increasing seniority. Richard has
also been instrumental in several
acquisitions, and in developing
our sustainable materials
expertise and initiatives. Richard
brings a strong commercial
background with previous
experience of having run and
integrated the APAC based Abric
Security Seals acquisition.
Sam joined Essentra in 2014 and
during his time with Essentra
has been primarily responsible
for digital and hassle-free
strategic programmes along
with embedding digital and data
into the business globally. Prior
to joining Essentra, Sam spent
11 years at RS Components in a
number of increasingly senior
digital and commercial roles.
Chris Brooks joined Essentra
in February 2024 as President,
Americas. Prior to joining
Essentra, Chris was President
of X-Rite, a former Danaher
operating company. Chris brings
a wealth of experience with a
diverse industrial manufacturing
background. He has more
than 20 years of experience as
a general manager of global
operations and various functional
enterprise disciplines.
Appointed to the Group
Executive Committee:
January 2023
Joined Essentra:
July 2019
Appointed to the Group
Executive Committee:
January 2024
Joined Essentra:
September 2003
Appointed to the Group
Executive Committee:
January 2023
Joined Essentra:
June 2014
Appointed to the Group
Executive Committee:
February 2024
Joined Essentra:
February 2024
Regional MDs hold key roles
in our regional structure that
drive accountability into
each region to deliver on
their growth targets.”
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STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Directors’
Report
IN THIS SECTION
Chair’s Corporate Governance statement
61
Board of Directors
62
Corporate Governance report
64
ESG Committee report
77
Nomination Committee report
80
Chair of the Audit and Risk Committee’s letter
85
Report of the Audit and Risk Committee
87
Chair of the Remuneration Committee’s letter
93
Remuneration at a glance
96
Annual Report on Remuneration
97
The Directors’ Remuneration Policy Report – summary
109
Other statutory information
114
Statement of Directors’ Responsibilities
in respect of the Financial Statements
119
Independent Limited Assurance Report to Essentra plc
120
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60
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CHAIR’S CORPORATE GOVERNANCE STATEMENT
Board oversight and
governance
Steve Good
Non-Executive Chair
Throughout the year, the Board
oversaw performance of the
business, and also held an
in-depth session with the GEC
to consider its strategy plans.”
Dear Shareholder,
The 2024 Corporate Governance statement
and report provides you with a more detailed
look into how we approach Corporate
Governance at Essentra and how it supports
our purpose and strategy.
We have reported on activity over the last year
and where relevant we have included forward-
looking information, to provide you with the
fullest picture of our approach to Corporate
Governance and how the business operates in
practice against our governance framework.
Governance
The Board has the highest regard for good
governance and is mindful that all its
discussions and decisions should consider
the principles of the 2018 UK Corporate
Governance Code (“2018 Code”) as well
as the 2024 UK Corporate Governance
Code (“2024 Code”) which will apply from
1 January 2025, and be reported on from
2026. The Board keeps under review the way
it operates and responds to changes in the
business and external environment.
The Board is pleased to confirm that from
1 January 2024, it was, and remains, in full
compliance with all aspects of the 2018
Code, and applies the principles of the 2018
Code to its discussions and decision making.
The Board note that following Ralf K.
Wunderlich’s resignation, for a short period
from 8 January 2025 until 11 March 2025, the
ARC had two members only although the
ARC did not meet during that period. The
Corporate Governance report that follows
sets out in more detail how the Board has
observed and applied the 2018 Code, what
action was taken to achieve this and the
outcomes which support the Company’s
long-term success. Additional information
has been provided where this will better
inform stakeholders. Information required to
be reported under the Directors’ Report is
reported here and within the Strategic
Report. The ESG report contains additional
disclosures and we have included cross-
references throughout for ease.
Stakeholders
Our Section 172 Statement can be found on
page 38. This includes reporting on all
stakeholder engagement and gives a sense
for the matters that the Board considers
during the year. More information can be
found on pages 71 to 72.
Board changes
The Board considered its own composition,
and following the annual board evaluation
and my appointment as incoming Chair of
the Board, we decided that the composition
required refreshing. More information can be
found on this on page 80 of the Nomination
Committee report.
Diversity
During the year, the Board’s gender balance
has moved positively, and at 31 December
2024, was 50%. This exceeds the target set by
the FTSE Women Leaders and the Financial
Conduct Authority. On 8 January 2025, Ralf
K. Wunderlich resigned, and as a result board
gender balance is now 57% female.
Strategy and oversight
Throughout the year, the Board oversaw
performance of the businesses, and also
held an in-depth session with the GEC to
consider its strategy plans. The Board and its
Committees continued to receive regular
reports in key areas, such as health and
safety and the environment, compliance,
controls and risk management. The Board
reviewed risks and mitigations several times
as well as considered its risk appetite and we
report in full on the work of the Audit and
Risk Committee on pages 85 to 92.
Values and culture
The Board assesses the culture of the
business through a formal and informal
process. Three NEDs were appointed to
support the business in this capacity and
over the course of the year, each of those
NEDs visited sites to listen to employees and
assess culture. We have reported on this in
more detail on page 70.
Conclusion
After the first nine months at Essentra, I am
pleased that the governance structures and
framework that are in place are robust and I
believe the information within this report
provides useful insights into how the business
operates and how it applies the 2018 Code.
Steve Good
Chair
18 March 2025
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61
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
The Board of Directors during the financial
year is set out here. More information on
the background and experience held
by our Board can be found in the Notice
of our Annual General Meeting
www.essentraplc.com/investors/
shareholder-services/general-meetings
BOARD OF DIRECTORS
Experienced,
effective and
diverse leadership
A Audit and Risk Committee
N Nomination Committee
R Remuneration Committee
E ESG Committee
Committee Chair
Independent on appointment
N E
Appointed to the Board:
1 July 2024
Skills and experience:
Steve has strong and relevant
international experience in industrial
businesses, manufacturing and
B2B markets. He has extensive
experience as a Non-Executive
Director having served on a number
of boards and board committees. In
his executive career, Steve was Chief
Executive of Low & Bonar plc from
2009 to 2014. Prior to joining Low &
Bonar, he spent 10 years with BTP plc
(now part of Clariant) in a variety
of leadership positions managing
international speciality chemicals
businesses.
Other current appointments:
• Non-Executive Director and
Chair, Chair of the Nomination
Committee, Norcros plc
E
Appointed to the Board:
1 January 2023
Skills and experience:
Scott was appointed as Chief
Executive in January 2023, having
joined the Group Executive
Committee in January 2014 as the
Managing Director for the former
Components division. Previously,
Scott was Head of e-Commerce
at RS Group plc and during a
17-year career held a variety of
increasingly senior sales, marketing
and e-Commerce positions. Scott
has an excellent track record within
the components industry and
has proven experience in creating
strong organisational purpose,
and employee engagement. He is
customer focused and continues to
be a well respected Chief Executive
across the business.
Other current appointments:
• None
Independent on appointment
Appointed to the Board:
5 November 2024
Skills and experience:
Rowan was previously Group Chief
Financial Officer of Laing O’Rourke
and, from 2017 to 2020, was the
Chief Financial Officer of McCarthy
Stone plc. Prior to joining McCarthy
& Stone in 2012, she worked in
finance for Barclays Bank plc and
professional services for PwC.
Rowan has a master’s degree in law
from Cambridge University and is a
qualified chartered accountant and
chartered tax adviser.
Rowan has extensive financial,
commercial and international
experience, and brings a sharp focus
on working capital, efficiency and
cost control.
Other current appointments:
• Non-executive Director, Chair
of the Audit Committee,
member of the Nomination and
Remuneration Committees,
Vistry Group plc
Independent on appointment
A N E R
Appointed to the Board:
1 July 2017
Skills and experience:
Mary was appointed as the Senior
Independent Director in May 2021,
and is also a Board Champion,
responsible for bringing the “Voice
of the Employee” to the Boardroom.
Mary is currently Non-Executive
Director for a range of businesses
and brings a wealth of finance and
international experience to Essentra,
having previously been a Partner of
Deloitte LLP for more than 20 years,
as well as serving on a number of
Boards in a Non-Executive capacity
since 2000. She also serves as a
trustee on a range of charities.
Other current appointments:
• Non-Executive Director, Chair of
Audit Committee, member of
Nomination Committee, Mitie plc
• Non-Executive Director,
Gemfields Group Limited
• Non-Executive Director, Mar
HoldCo Sarl
Steve Good
Chair & Non-Executive
Director
Scott Fawcett
Chief Executive &
Executive Director
Rowan Baker
Chief Financial Officer &
Executive Director
Mary Reilly
Senior Independent
Director
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62
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
BOARD OF DIRECTORS CONTINUED
Non-Executive
Directors bring
experience and
expertise to the
Company, which
is called upon to
provide relevant
skills and knowledge
on each committee.”
Former directors
Paul Lester
Chair & Non-Executive
Director
Paul Lester served as
Non-Executive Director and
Chair of the Board from 2015
until November 2024. Paul
was Chair of the Nomination
Committee. He resigned from
the Board having served the
full tenure permitted under
the Code.
Ralf K. Wunderlich
Non-Executive Director
Ralf K. Wunderlich served as
an independent Non-Executive
Director from June 2017 until
his resignation from the Board
on in January 2025. Ralf was
Chair of the ESGC and a Board
Champion. Ralf has joined
Huhtamaki Oyj as President
and CEO.
Jack Clarke
Chief Financial Officer
& Executive Director
Jack was appointed to the Board
in May 2022 and served as CFO. He
resigned to pursue a plural career
at the end of December 2024.
Independent on appointment
R N E
Appointed to the Board:
18 March 2022
Skills and experience:
Dupsy is an experienced senior
executive and tech leader
specialising in digital transformation
and innovation. She has worked
in an advisory and professional
capacity across a range of sectors.
Her past roles include Vice President,
Chief of Staff at Monzo, the UK’s
leading digital bank and Head of
Global Innovation at IAG plc. She
is also a former commercial lawyer
and has been an advisor for the
World Economic Forum. Her career
has centred on leading impactful
strategic projects and programs
that implement and invest in
emerging technologies such as
artificial intelligence, automation,
and climate technology.
Other current appointments:
• Director, Alphathinx Limited
Independent on appointment
R N E A
Appointed to the Board:
3 January 2023
Skills and experience:
Kath has more than 30 years’
human resources experience, with
a strong operational and strategic
track record, gained at several large
global manufacturing companies. As
well as working at GlaxoSmithKline
plc and AstraZeneca plc she has
served as the Group Human
Resources Director of Rolls-Royce
plc, and was most recently Group
HR Director of Ferguson plc and
Chief HR Officer of CRH plc.
Other current appointments:
• Non-Executive Director, Senior
Independent Director and Chair
of the Remuneration Committee,
SIG plc
• Non-Executive Director, Chair of
the Remuneration Committee,
Anglian Water Services Limited
Independent on appointment
A N E
Appointed to the Board:
28 June 2021
Skills and experience:
Adrian is a Board Champion,
responsible for employee
engagement. Adrian is the former
President, Performance Technologies
at Modine Manufacturing Company.
He has experience of leading full
P&Ls, digitising businesses and
driving operational efficiencies that
have transformed the businesses
he has worked in. Adrian has also
worked with WW Grainger and
then Republic Services as Senior
Vice President, Emerging Business
Operations, where he led Republic’s
sustainability initiatives, driving
forward Environmental Social and
Governance issues.
Other current appointments:
• Independent Strategy Adviser
& Director, AIP LLC
• Former President, Performance
Technologies Modine
Manufacturing Company
Appointed to the Board:
Secretary to the Board on
1 January 2023
Skills and experience:
Emma joined Essentra in 2020,
and was appointed as Company
Secretary in 2023. Prior to becoming
Company Secretary, Emma was
Head of Governance, and previously
worked for Which? and Imagination
Technologies. Emma has extensive
governance, legal and DE&I
experience at board level. Emma
is a qualified company secretary.
Dupsy Abiola
Non-Executive Director
Kath Durrant
Non-Executive Director
Adrian I. Peace
Non-Executive Director
Emma Reid
Company Secretary
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63
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CORPORATE GOVERNANCE REPORT
Board meetings during the year
Paul Lester
Chair
6 (6)
Steve Good
Chair
3 (3)
Scott Fawcett
Chief Executive
7 (7)
Jack Clarke
Chief Financial Officer
7 (7)
Rowan Baker
Chief Financial Officer
1 (1)
Mary Reilly
Senior Independent Director
7 (7)
Dupsy Abiola
Non-Executive Director
7 (7)
Kath Durrant
Non-Executive Director
7 (7)
Adrian I. Peace
Non-Executive Director
7 (7)
Ralf K. Wunderlich
Non-Executive Director
7 (7)
Figures in brackets denote the number of meetings
a director could have attended during the year since
the date of their appointment.
In addition to the directors, the Company Secretary
attended all meetings.
Corporate Governance report
Governance at Essentra supports good decision making and is
key to ensuring information flows up and down the organisation
efficiently. Our governance framework is intended to support swift
decision making and be proportionate to the size of our business
whilst ensuring that we consider all decisions taken, the impact
and the outcomes to ensure they support our growth plans in a
responsible and sustainable manner.
Board membership and attendance
Corporate Governance Key Topics
The Board confirms that during 2024, it has
applied and complied with all of the Principles
of the 2018 Code. The Board note that
following Ralf K. Wunderlich’s resignation,
for a short period from 8 January 2025 until
11 March 2025, the ARC had two members
although the ARC did not meet during that
period. Kath Durrant was appointed as a
member of ARC on 11 March 2025.
From 1 January 2025, the 2024 Code applies
and the Board has reviewed the Code over
the past year, and will continue to do so, to
ensure it operates in compliance with the
2024 Code.
The following Corporate Governance report
addresses each of the pillars of the Code and
provides an explanation to our stakeholders
of how we have approached compliance
with the Code. Some of the information that
we are required to report on under the Code
is included in the Strategic Report and where
that is the case we have provided a cross-
reference to avoid duplication. In all
instances, we have provided additional
relevant information to provide the fullest
picture to stakeholders.
Board leadership and purpose
The Board of Directors are appointed by
shareholders, the owners of the Company,
annually at the Annual General Meeting.
The Board’s primary role and responsibility
is to provide effective and entrepreneurial
leadership, to promote the long-term
sustainable success of the Company and
to generate value for shareholders as well
as to ensure the Company contributes to
wider society.
In practice, the Board achieves this through
its regular meeting cycle, which includes a
range of committee meetings and other
events, such as opportunities to meet
employees and strategy planning sessions.
In these sessions, attendance at the Board
focuses on discussions that cover a broad
range of topics, including understanding and
ensuring that the activity that underpins the
Company’s strategy, aligns with the
Company’s purpose and values. The Chief
Executive, with the support of the Group
Executive Committee (the “GEC”), provide
the Board the support that is required to do
this, and through this structure, the Board
are able to achieve their role in setting
long-term sustainable objectives, and
demonstrate effective oversight through
regular review of the Company’s
performance, which also has regard to short
and long-term risks and opportunities that
the Company face in achieving its strategy.
This includes oversight of all operations
which the Executive Committee report to
the Board on and extends to overseas
trading through subsidiary entities and
branches that are registered outside of
the UK.
During the year, and when considering any
new initiatives, the Board always considers
the risks and opportunities, and this is
supplemented by dedicated risk review
sessions at which Principal and Emerging
risks are considered in detail. More
information on how the Board reviews risks
and opportunities to the Company’s
strategy can be found on page 50.
3
Business model
31
People and culture
38
Stakeholder engagement and Section 172
responsibilities
69
Company purpose, values and culture
73
Division of responsibilities
83
Composition, succession and Board
evaluation
85
Audit, risk and internal control
93
Remuneration
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The schedule of matters reserved to the
Board, which is available on the Essentra plc
website, sets out the authority for matters
that the Board has retained and those which
it delegates to the Chief Executive, CFO and
GEC. Below the schedule of matters
reserved, the Company maintains a schedule
of authority that provides members of the
GEC and their teams with levels of authority
for decision making, that operates within
the level of the parameters of the schedule
of matters reserved and the plan for any
given year.
The Board meet with management
throughout the year, formally and informally,
to learn how relevant areas of the strategy
are formed, resourced and assessed,
including reviewing of metrics for progress,
which supports the Board’s duties. The Board
has in place a schedule of matters it will
discuss at each meeting which is aligned to
the strategy plans for the Company. This is
in turn is reflected in the way in which the
GEC organises itself so that flows of
information up from the business to the
Board are thoroughly debated and
validated. The schedule of agenda items
covers a wide range of topics in addition to
the core strategy plans and by adopting a
varied approach, the Board is able to assess
the culture within Essentra and observe its
approach to the Company’s values and
whether or not these are aligned to the
Company’s purpose and strategy. The Board,
through the Audit and Risk Committee (the
“ARC”) also receives reports from the Risk
Assurance team, which carry out internal
audit reviews on agreed areas of the
business. These reviews provide the Board
with insights into how the values operate
across a range of sites over a range of
territories. The Board, through the ARC and
its Chair, Mary Reilly, where necessary,
deploy the Risk Assurance team to identify
and support the business in taking corrective
action, who work closely with the
Compliance function to ensure changes
are effective.
To ensure values are upheld, a
whistleblowing system is in place and
regular reports are provided on any cases
raised and the outcomes. The Board expect
any corrective action to be reported on
and seek continual improvements and
information on these matters through
the robust governance framework it has
adopted. More information on this is
available in the ARC report on page 87.
As well as the formal framework, the Board
takes the opportunity to see for itself and
meet with employees beyond the GEC, to
consider the way in which the Chief
Executive and his team have adopted and
demonstrated the Company’s values, and
how these have in turn been adopted by
other leaders, and the impact this has on
employees. All of the Board have
opportunities to meet employees during the
year, and during 2024, as in previous years,
this was further supplemented by three
Non-Executive Directors who are appointed
as Board Champions and hold Voice of the
Employee sessions with employees across
our global sites. In 2025, the Board have
agreed to move to a different approach so
that the Board will meet employees at the
same time and use virtual sessions to ensure
they reach employees at smaller sites. More
information on the Voice of the Employee
can be found on page 70.
During the year, there was a change in the
Chair of the Board, so that for a period the
outgoing Chair, Paul Lester, and incoming
Chair, Steve Good, both had opportunities to
meet with shareholders. During the
incoming Chair’s induction phase, which ran
from July to November, Paul Lester had
primary responsibility for shareholder
engagement. The Chair of the Board met
regularly to engage with the Company’s
shareholders outside of the formal Annual
General Meeting. The Chair meets with
shareholders to understand their views on
the Company’s performance and its strategy
and this is fed back regularly at each Board
meeting, and is supplemented by the
Committee Chair’s providing information on
shareholders, as well as the Chief Executive,
CFO and Investor Relations Manager’s view
on shareholder’s perspectives. These views
are taken into consideration when the Board
is reviewing performance and developing
strategy. During 2024, discussion and
feedback from shareholders provided the
Board with guidance on the characteristics
that they would value in an incoming Board
Chair and incoming CFO. The Board and
management are very supportive of this
reciprocal relationship and the support that
shareholders continue to provide for the
long-term growth of the Company. In
addition to shareholder and employee views,
the Board also takes into consideration views
of a range of stakeholders, including
customers, advisers and external influences
and movements in sentiment, and always
seek to respond to these in a manner that
best suits the Company’s strategy.
More information on how the Board
considers and engages with the Company’s
stakeholders can be found in the s172
Stakeholder Engagement report on pages
38 and 39.
The Board, through the Remuneration
Committee, and the Reward Director,
give significant consideration to how the
Company’s employees are rewarded and
the investment made in our people. A new
bonus scheme was introduced in 2023, and
effective in 2024. The financial performance
of the business during 2024 meant that the
gate for the outturn of the bonus scheme
was not met and a bonus will not be paid.
More information on the bonus scheme and
targets can be found on page 99.
At each Board meeting, the Board review a
schedule of any potential conflicts of interest,
both in terms of the other outside roles held
by the Board members, and the percentage
of their shareholding in the Company, to
consider the impact that this may have on
the discussions and outcome of any decision.
The Board are asked to declare any new
interests at each Board meeting, however,
during the year there has not been any need
for a declaration to be made.
CORPORATE GOVERNANCE REPORT CONTINUED
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Terms of Reference for the Board committees
and the matters reserved to the Board are
available on the Essentra plc website
www.essentraplc.com
Essentra Board and Executive governance structure
Structure
A similar structure to other listed businesses
operates throughout Essentra and below the
Board, there are a series of committees as
follows: ESGC, the Audit and Risk
Committee, the Remuneration Committee
and the Nomination Committee.
Supporting the Board and its committees,
the GEC operates, with delegated authority
from the Chief Executive, and where
considered necessary the GEC are supported
by other forums that ensures issues are
shaped in consultation with relevant
stakeholders from across the business.
This helps ensure that group wide global
initiatives are practical and can be applied
to all regions, where there can often be
cultural or operational differences to take
into account. These forums are often short
life in nature, reflecting that an agile
approach supports delivery, and are
convened to address particular areas of
priority, for example during 2024, at
management level, a dedicated Social
Steering Committee was established to
move forward the Social workstream of the
ESG strategy. This resulted in the delivery of
a Diversity, Equity and Inclusion (“DEI”)
strategy during the year and as a result, the
Social Steering Committee has now closed.
In this example, DEI is furthered on a
day-to-day basis by an employee
community DEI forum and regional HR
directors who have the responsibility for
implementing the DEI strategy at sites and
reporting progress back up the organisation.
Disclosures
Disclosures within Essentra are managed by
the Chief Executive, CFO and the Company
Secretary, who are responsible for the
identification and disclosure of inside
information and ensuring that
announcements comply with applicable
regulatory requirements.
Essentra plc Board (the “Board”)
In fulfilling its role, the Board:
• establishes the Company’s purpose, values
and strategy and has satisfied itself that
these and its culture are aligned
• sets, continually reviews and tests the
Company’s strategic aims
• determines the nature and extent
of acceptable risks in achieving the
Company’s strategic objectives,
including its approach to managing
climate related matters
• assesses shareholder and stakeholder
interests from the perspective of the long-
term sustainable success of the Company
• oversees the establishment of formal
and transparent arrangements for the
application of corporate reporting,
risk management and internal control
requirements and principles
• ensures that the necessary financial and
human resources are in place for the
Company to meet its objectives
• reviews the performance of the
Company’s executive management
• presents a fair, balanced and
understandable assessment of the
Company’s position and prospects to
its shareholders.
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Essentra plc
Board
Treasury
Committee
Steering
Groups and
Forums
Investment
Committee
Audit and
Risk
Committee
Remuneration
Committee
Nomination
Committee
Group
Executive
Committee
ESG
Committee
Audit and Risk Committee (“ARC”)
The ARC supports the Board and is
responsible for:
• monitoring the integrity of the Company’s
Financial Statements
• reviewing, challenging and approving its
accounting policies
• scrutinising the effectiveness of the
internal and external auditors and the
Company’s internal control and risk
management systems.
Remuneration Committee
The Remuneration Committee is established
by the Board and is responsible for setting a
remuneration policy for Directors and senior
executives. This policy is designed to promote
the long-term success of the Company,
taking into consideration the reward,
incentives and conditions available to the
Company’s workforce, shareholders and
other stakeholders. The Remuneration
Committee determines an appropriate
balance between fixed and performance-
related and immediate and deferred
remuneration. The Remuneration
Committee is also responsible for setting
the fees of the Chair.
Nomination Committee
The Nomination Committee is responsible
for regularly reviewing the structure, size and
composition of the Board for any changes
that it considers to be appropriate. The
Nomination Committee will lead the process
for Board appointments and make
recommendations to the Board taking into
account the Company’s strategic priorities,
the main trends and factors affecting the
long-term success and future viability of the
Company and consider candidates in
accordance with the Board Diversity Policy.
ESG Committee (“ESGC”)
The ESGC was established in 2023 with
oversight delegated to it by the Board for
determining the ESG strategy and approach
to ESG affairs. The ESGC is responsible for
scrutinising the ongoing performance against
sustainability targets and measuring progress
of the ESG strategy and providing feedback
where appropriate to other committees,
including the Remuneration Committee for
ESG measures that are incorporated into
bonusable targets.
Group Executive Committee (“GEC”)
The GEC provides general executive
management of the business and operates
within the delegated authority limits
determined by the Board. The GEC supports
the Chief Executive in achieving Essentra’s
values and goals through the execution of
the businesses strategic priorities.
Membership of the GEC is set out on pages
58 and 59.
The GEC is responsible for monitoring
Principal and Emerging Risks, and ensuring
the effectiveness of business and functional
risk management and formally reviews its
approach to risk four times a year. During
the coming year, this will be supported by
regular deep dives, on a monthly basis, into
the business’ strategic priorities which are
connected to our Principal Risks and also
supports the introduction of the changes
in the 2024 Code by providing a regular
opportunity to review material controls
of Principal Risks. Further details of the
Company’s risk management framework
can be found on page 50.
The Board are appointed for terms of three
years, and each Non-Executive Director may
serve up to a maximum of nine years. Each
Director of the Board stands for election or
re-election each year as appropriate.
The Board has considered which of the
Non-Executive Directors are considered to
be experts in specific fields as shown below.
Further information on the background and
experience of our Board can be found on
pages 62 and 63 and in the Notice of
Annual General Meeting.
• Risk management
Steve Good, Adrian I. Peace, Mary Reilly
• Investor Relations
Steve Good, Kath Durrant
• Recent Audit and Financial
Mary Reilly, Steve Good
• Remuneration
Kath Durrant, Steve Good
• People and social
Kath Durrant, Adrian I. Peace
• Innovation
Dupsy Abiola, Adrian I. Peace
• Technology
Dupsy Abiola, Adrian I. Peace
• Industry Expert
Adrian Peace, Steve Good
• Sustainability
Kath Durrant, Adrian I. Peace, Steve
Good
• Regulatory & Governance
Dupsy Abiola, Kath Durrant, Steve Good,
Mary Reilly
Tenure
Independence
As at the year-end, there was a total of eight
Board members, seven were considered to
be independent as deemed by the Code
(90%). More information can be found on
pages 62 and 63.
Board composition
Executive
25%
Non-Executive
75%
Tenure – Non Executive
Up to 3 years
62%
3–6 years
13%
6–9 years
25%
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The GEC is responsible for overseeing the
implementation of compliance programmes,
policies and procedures that are required
both to meet local compliance and
regulatory requirements, and to meet
Essentra’s own values and norms. The GEC
monitors the effectiveness and completion
rates of training to ensure the importance
of compliance across the business is clearly
articulated, and the GEC support an IT
lockout system, which escalates to the
disciplinary process, for non-completion
of training.
The GEC is directly responsible for ESG
matters and receives regular reports on
progress of its environmental sustainability
and social initiatives and targets.
Treasury Committee
The Treasury Committee operates as a
sub-committee of the GEC and reports on
treasury and financial operating risks to the
GEC, CFO and the ARC as may be
appropriate. The Treasury Committee sets
Treasury Policy for approval by the Board
and reports on any treasury related risks to
the GEC, which is escalated to the ARC as
part of the regular reporting process to
ensure the ARC is able to maintain an
effective process for managing those risks.
Investment Committee
During 2024, the Investment Committee,
which is a sub-committee of the GEC, and
was supported by the CFO, met to consider,
control and challenge decisions relating to
major capital expenditure in excess of limits
set under the Schedule of Authority and the
Delegated Authority.
Fair, balanced and understandable
One of the key requirements is for the Annual
Report to be fair, balanced and
understandable. In coming to a conclusion
that the Annual Report is fair, balanced and
understandable the Board is supported by the
ARC, which makes recommendations to it on
this and also considers the process adopted
by the organisation in drafting the Annual
Report, which requires Company-wide
co-ordination and review. That process runs
alongside the formal audit of the Financial
Statements conducted by the External
Auditor. The Board further takes into account
representations made by management and
the views of the internal and external auditors
as to the integrity of the narrative and
financial statements. The comprehensive
review process is carried out with appropriate
scrutiny, assessment and reporting from the
ARC to the Board. This is followed by further
critical review by the Board as a whole, prior
to the Board making its determination that
the 2024 Annual Report, taken as a whole,
presents a fair, balanced and understandable
position and provides shareholders with the
information necessary to assess the
performance, strategy and the business
model of the Company.
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Essentra purpose, values
and culture
Essentra renewed its purpose at the start of 2023 to align
with its business model and during 2024 this continued to be
communicated and embedded.
OUR PURPOSE, VALUES AND CULTURE
To be the world’s
leading responsible,
hassle-free supplier
of essential
components
Focused delivery on:
• technology
• service
• expert advice
• product offer
• people
Our purpose
Our vision
Our goals
Our accelerators
Living our values
Our purpose, values and culture reflect our
strategic aim to be a trusted global provider of
essential components, delivering solutions that
are beneficial for our customers, our people
and the planet. On a day-to-day basis, we
manufacture small but vital parts that are
often unseen, but crucial to our customers’
needs. Delivering parts to our customers on
time, in full and supported by our technical
expertise, is essential to our vision to be the
world’s leading responsible, hassle-free supplier
of essential components. Our comprehensive
ESG strategy supports our purpose and
ensures we will support our customers in their
sustainability goals whilst delivering long-term
value to our stakeholders.
Our values are four principles that set out
how our people work together to support
our customers, the business and each other.
Together the values support our teams in
delivering on our purpose and strategy by
embedding consistent behaviours within
our culture, across our global business.
• Market leader with a unique proposition
in a fragmented £8–10bn market
• Clear strategy to drive organic growth
and market share gains supported by
digitalisation and sustainability
• High margin business with scope to
expand through scale efficiencies,
operational effectiveness and pricing
• Strong returns and cash conversion,
enabling value enhancing M&A
We care about
our customers
We care about
each other
We deliver
We are an
effective team
We help
customers build
a sustainable
future
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We care about our customers
By caring about our customers, every
employee strives to provide the best service
they can, going above and beyond to
provide a hassle-free experience.
We care about each other
Sharing knowledge and giving support,
looking out for colleagues and actively
listening and respecting diverse perspectives.
We deliver
To meet our purpose, it is essential that we
deliver our products, whilst embracing change,
challenging the status quo and driving
innovation through continuous improvement.
We are an effective team
Prioritising communication and
collaborating effectively with others
to create positive outcomes across the
organisation. All teams work together
as one winning team – Team Essentra.
Board Employee Engagement
The Board believes employee engagement
is a measure of success of the business.
Engaged employees drive better results for
the business and our customers. The Board
value meeting employees from across the
business, to find out what they think about
their work, the strategic direction that the
Board have set for the business and how this
impacts their day-to-day work. Discussions
also include the opportunity for employees
to discuss their remuneration arrangements
and those of the GEC, including the CEO and
CFO. During 2024, no specific matters were
raised in relation to the pay of either of the
Executive Directors.
OUR PURPOSE, VALUES AND CULTURE CONTINUED
During the last year, the board have fulfilled
this requirement set under the 2018 Code
through the appointment of three Non-
Executive Directors (“NED”) as Board
Employee Champions. Each Board Champion
held Voice of the Employee (“VoE”) sessions
with employees at sites in all three regions
that the Company operates. Each NED has
responsibility for different regions based on
their areas of expertise and knowledge.
Broadly, Mary Reilly covers enabling functions
based in the UK, as well commercial and
operational sites in the UK and across West
EMEA. Ralf K. Wunderlich was responsible for
Germany and East EMEA, including Turkey
and APAC. Adrian I. Peace was responsible for
the Americas region.
In 2024, the Board Champions held VoE
sessions, that were closed to management,
at the following sites and met colleagues
across a range of functions and roles:
Mary Reilly
• Kidlington, UK
• Jarrow, UK
• Chichester, UK
Ralf K. Wunderlich
• Łódź, Poland
• Ningbo & Yichun, China
Adrian I. Peace
• Monterrey, Mexico
Each Board Champion reported back at the
subsequent Board meeting, and amongst
the matters reported to the Board were:
• health and safety matters, including
emotional wellbeing
• understanding of values and norms
across sites and whether the Company’s
approach to ethics and compliance was
embedded.
Following the visits, guidance was provided
by the Board that subsequently resulted in
changes at two of the sites in respect of
ways of working. The remainder of the visits
influenced and added to NEDs knowledge of
the Company’s operating model and also
contributed to the quality and depth of
discussions during the strategy session held
between the GEC and the Board.
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MATTERS CONSIDERED BY THE BOARD IN 2024
Matters considered
by the Board in 2024
The Board’s agenda is set by the Chair and carefully
planned against the strategy to ensure that
appropriate time is given to managing the affairs of
the Company. This ensures focus on the Company’s
strategic activities and key monitoring activities, as
well as reviewing significant issues so that matters
are considered in line with the schedule of reserved
matters. An annual cycle of agenda items is in place
to support the work of the Board which ensures that
each member of the GEC attends a Board meeting to
present on the progress made against their priorities.
During 2024, the Board held seven scheduled
meetings with additional sub-committee meetings
and informal preparatory sessions in advance of key
decisions being taken to support their understanding,
rationale and the process used to reach the decision.
Strategy
Financial
Operational and risk
Governance and ethics
Leadership and people
• Approved the appointment
of Steve Good, as Chair of
the Company
• Approved the appointment
of Rowan Baker as CFO of
the Company
• Held a strategy session with the
GEC to consider areas of focus to
accelerate growth
• Received regular updates on the
performance of each of the regions
• Considered updates on the
strategic footprint
• Received updates on the
completion accounts for the sale of
the Filters and Packaging businesses
• Approved the Company’s trading
statements, 2023 full year and
2024 half year results and quarterly
trading statements for the
financial year 2023 and 2024
• Reviewed the Company’s
performance for 2024 and
approved the release of a trading
statement that updated the
market and shareholders that
operating profit for the full year
2024 had been adjusted to be in
the range of £40m-£42m
• Approved dividend payments for
the 2023 final year dividend of
2.4p per share, giving a full year
dividend for 2023 of 3.6p per share
and interim dividend for 2024 of
1.25p per share
• Received regular reports from the
Chief Executive and the CFO
• Received detailed presentations
from senior management across
the businesses and considered
reports from functional
management about matters
of material importance to the
Company
• Reviewed the impact of the global
economic slow down on the
business, arising from the war in
Ukraine and political tensions and
conflicts in other regions
• Undertook in-depth reviews of
each Principal Risk and Emerging
Risk, the mitigations and how
these aligned with the strategic
priorities. Subsequently, following
a further review, considered and
approved the Principal Risks for the
half year, and approved a refreshed
set of Principal and Emerging Risks
for the year-end
• Received regular updates on
progress of the Business Process
Review (D365 implementation)
project
• Continued consideration of Cyber
Security risk
• Considered and reviewed the
impact of the changes from the
2024 Code and the ways in which
the Company intended to provide
assurance to the Board that the
business was operating in line with
the requirements
• Received training on a range of
topics, including the 2024 UK
Corporate Governance Code
provisions, insider information and
the Markets Abuse Regulations and
Cyber Security
• Received updates from the Board
Employee Champions following
in-person visits to sites with
insights on whether management
were operating in line with the
Company’s culture and values
• Participated in an internally
facilitated Board evaluation, review
of the conclusions and agreement
on subsequent action plans
• Reviewed and approved the annual
Modern Slavery Statement
• Received updates from Board
committees on their respective
meetings
• Received regular updates on the
safety and wellbeing of our people
• Monitored performance and
continued development of health
and safety risk and at each
meeting assessed health and
safety performance
• Monitored performance and
received regular updates on the
performance of the GEC
• Received updates on the Parker
Review ethnicity target
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MATTERS CONSIDERED BY THE BOARD IN 2024 CONTINUED
Principal decision 1
Adjustment of operating profit to be in the range of
£40-£42m
• At very early stages in September, following a review of
the wider external market conditions, and on the basis
that key assumptions around wider market recovery
in the second half of the year had not materialised,
considered the likelihood of the business meeting the
adjusted operating profit consensus held by the market
and shareholders
• In light of increasing inflationary pressures, and ongoing
global political uncertainty and anticipated trading
tensions that this was causing, the Board agreed there
was a significantly decreased probability that the
business would perform in line with market consensus
• Reviewed updates from the CFO on a range of outcomes
based on different scenarios and key events and timings
that would provide the certainty required to solidify a
decision on the likely full year operating range
• Challenged the reliability of the data presented in those
scenarios to ensure that the most likely scenario and
operating profit range could be delivered
• Considered the way in which the market and
shareholders would react, as well as that of employees,
customers and suppliers, to gauge the level of confidence
that would remain in the management team to deliver in
line with a revised operating profit
• Approved the release of a trading update that adjusted
operating profit to a range of £40-£42m
Principal decision 2
Appointment of the Board Chair and CFO
• As the previous Chair, Paul Lester, was nearing his full
term, the Board had initiated a search for a new Chair
and during the course of the year, this search was led by
Mary Reilly in her capacity as SID
• On a similar timeframe, the CFO, Jack Clarke, had also
indicated that he intended to retire from the Board to
pursue other interests. Accordingly a search for a new
CFO started during the year, with similar activity to that
of the Chair search, to ensure the skills of a new CFO
matched the business need
• On the recommendation of the Nomination Committee,
the Inzito Partnership were appointed to support both
searches
• The SID engaged with major shareholders to consider
their views on the skills they would want from an
incoming Chair
• A range of candidates were identified for both roles,
and a short list of suitable candidates for both roles
were presented to the Nomination Committee (the
composition of which is made up of all the NEDs)
• For both roles, Board members met in smaller groups
and one to one, with potential candidates, to consider
their suitability, assess their skills, synergy and their
energy to drive the business forward. Following this
process, they agreed on short lists.
• Upon recommendation from the Nomination
Committee, and with guidance from the SID, and
agreement from the Chief Executive, the Board approved
the appointment of Steve Good as Chair
• Upon recommendation from the Nomination
Committee, and with support from the ARC Chair,
the Board approved the appointment of Rowan Baker
as CFO
Principal decision 3
Renewal of the Revolving Credit Facility (“RCF”)
• The Company’s RCF was due for renewal in October
2026, and under the advice of the Company’s Treasurer,
an opportunity had been identified to renew the
RCF ahead of time which would be beneficial for
the Company
• Following discussions with advisors and the existing
syndicate banks, the Company was able to secure
refinancing ahead of the original maturity date, on terms
that maintained the existing covenants and secured
favourable pricing terms
• The proposed renewal to refinance the RCF included an
extension to the maturity date to July 2029. During the
Board’s discussions, they noted the key benefits to the
Company included provision of a longer-term financing
solution that offered greater stability with greater
liquidity. This would provide support for the Company’s
operational and strategic initiatives, and reduce the need
for frequent refinancing activities, saving management
time and professional fees
• In July 2024, the Board approved the renewal of the RCF,
based on the same terms as the original, and is provided
by a syndicate of five banks, four of whom were party to
the original RCF facility
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STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
DIVISION OF RESPONSIBILITIES
Division of
responsibilities
The Chair leads the Board and ensures its
effectiveness. The Chief Executive is
responsible for the executive management
and performance of Essentra’s operations.
The Board considers that, for the year-ended
31 December 2024, each of the Non-
Executive Directors were independent. In
making this assessment of independence,
the Board considers that the Chair and
Non-Executive Directors are independent of
management, and free from business and
other relationships which could interfere with
the exercise of independent judgement now
and in the future. In the Annual Report and
Accounts for the year-ended 31 December
2023, we noted a potential risk to the former
Chair’s independence resulting from his long
tenure. As noted at that time, a replacement
exercise has been concluded with a new
Chair appointed on 1 November 2024.
The Board believes that any shareholdings of
the Chair and Non-Executive Directors serve to
align their interests with those of shareholders.
The Board considers that the Non-Executive
Directors provide an independent view in
Board discussions and in the development of
the Company’s strategy. Non-Executive
Directors ensure a sound basis for good
corporate governance for the Company,
challenging management’s performance and,
in conjunction with the Executive Directors,
ensuring that rigorous financial controls and
systems of risk management are maintained
as appropriate to the needs of the businesses
within Essentra.
The Senior Independent Director (“SID”) can
be contacted via the Company Secretary
and through the Company’s registered
office. During the year, this role was held
by Mary Reilly. The SID is available to
shareholders to discuss and develop an
understanding of their issues and any
concerns which cannot be resolved by
discussions with the Chair, the Chief
Executive or Chief Financial Officer, or
where such contact is inappropriate.
External commitments
The Board is fully aware of current external
commitments for all of the Non-Executive
Directors and is satisfied these do not
distract from the time committed to
Essentra. Non-Executive Directors are also
required to discuss any additional external
appointments with the Chair prior to their
acceptance. In addition, the time
commitments of the Chair are the subject of
review by the SID, in conjunction with the
other Non-Executive Directors. The Conflicts
of Interest register is reviewed at each Board
meeting. All of the Board have attended all
Board and Committee meetings this year
and with their commitment to their roles
clear, the Board is content that the Non-
Executive Directors devote sufficient time to
the business of Essentra. Executive Directors
may accept outside appointments, provided
that such appointments do not in any way
prejudice the ability to perform their duties
on behalf of Essentra.
The Chief Executive, Scott Fawcett, does not
hold any Non-Executive positions. The CFO,
Rowan Baker, is a Non-Executive Director of
Vistry PLC. The letters of appointment for
Non-Executive Directors are available for
review at the Company’s registered office
and prior to the Annual General Meeting.
Directors’ elections
The Company’s Articles of Association
require that all new Directors seek election
to the Board at the AGM following their
appointment. In compliance with the 2018
Code, all eligible Directors will put themselves
forward for re-election on an annual basis.
The Board, including the Chair, is satisfied that
each of the Directors being put forward for
re-election continues to be independent and
effective and that their ongoing commitment
to the role is undiminished.
The Company announced on 1 July 2024,
that a new Chair, Steve Good, had been
appointed, and Steve will stand for election
as a Director at the Annual General Meeting
to be held on 21 May 2025.
Steve has strong and relevant international
experience in industrial businesses,
manufacturing and B2B markets. He has
extensive experience as a Non-Executive
Director having served on a number of
boards and board committees.
All other Directors will stand for re-election
at the Annual General Meeting. The Notice
of Annual General Meeting includes more
detailed information on the background and
experience of all Directors and sets out the
reasons and rationale that the Board
support their election or re-election.
The conduct of Board matters
During the year, there were eight scheduled
Board meetings. In addition to these
scheduled formal meetings, the Board met
on further occasions, with sub-committee
meetings held to receive updates and agree
final approvals for key decisions as the Board
considered appropriate.
The roles of the Chair and the
Chief Executive are separate
and clearly defined so as to
ensure a clear separation of
responsibilities which are set
out in writing and agreed by
the Board.
The Board considers that, for the year
ended 31 December 2024, each of the
Non-Executive Directors were
independent.
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FINANCIAL STATEMENTS
DIRECTORS’ REPORT
DIVISION OF RESPONSIBILITIES CONTINUED
Informal discussions are also held between
the Chair and the Non-Executive Directors
on a regular basis and additionally prior to
or post each scheduled Board meeting.
Frequent contact is also maintained with the
Chief Executive and with members of the
Group Executive Committee (“GEC”) and
during the year mentor style meetings
between the GEC and the Board were
initiated. The SID has also held meetings
with Non-Executive Directors without the
Chair present.
The Board is supported in its role by Board
Committees and whilst they are a valuable
part of the Company’s corporate
governance structure, the Board, as a whole,
maintains oversight of important matters
and, after each Committee meeting, the
Chairs of the Committees report on the
matters which have been reviewed. In
particular, the Board looks to the Audit and
Risk Committee to undertake the majority
of the work involved in monitoring and
seeking assurance as to compliance with
the internal controls and risk management
practices within this structure. Other specific
responsibilities are delegated to the
Remuneration, Nomination and ESG
Committees. The Board believes that it,
and its Committees, have the appropriate
composition to discharge their respective
duties effectively with the appropriate level
of challenge and independence, and that
the members of the Board in conjunction
with the senior executive teams are well
equipped to drive and deliver the Company’s
strategic objectives.
The Board is of the view that it has a highly
competent Chair who, together with each of
the other Non-Executive Directors, has
considerable international experience at a
senior level in the management of activities
broadly similar to those carried out by
Essentra and the material issues likely to
arise for the Company.
Operational matters and the responsibility
for the day-to-day management of the
business is delegated to the Chief Executive,
supported by members of senior executive
management as appropriate, within
delegated authority limits and supported
by a Schedule of Authority that ensures a
strong culture towards control is in place.
The support of the GEC ensures a strong
link between Essentra’s overall corporate
strategy and its implementation within an
effective internal control environment and
robust risk management.
The GEC is the executive committee who
meet on a weekly basis for a shorter
catch-up style meeting, which is supported
by a longer monthly meeting, which is
usually held in person. Full details of the
membership of the GEC can be found on
page 58.
The GEC has adopted a clear governance
framework: agendas are set according to
the framework and all matters arising are
addressed. Papers are circulated in advance
of the meetings, take account of a broad
range of views, are validated and provide
sufficient information for the GEC or Board
to make decisions.
Board papers
To improve the quality and timeliness of
Board reporting, the GEC enjoyed a refresh
session with Board Intelligence in January
2024, to further support the provision of
high-quality papers. The Chair, CEO and
Company Secretary have implemented a
strict approach to the preparation and
circulation of Board papers.
Applying Essentra’s corporate
responsibility principles
The Chief Operating Officer is responsible for
co-ordinating the operation of policies on
health and safety and sustainability; the
Company Secretary is responsible for
co-ordinating policies on Ethics. Further
details can be found in the ESG report on
pages 21 to 37.
Diversity
The Board, GEC and senior management are
committed to ensuring ethnic and gender
balance across the business to reflect the
communities in which we operate and
consider it as critical to the business’s
success. The Board were pleased to
voluntarily report on its ethnicity.
Furthermore, the Board also reported on
gender during 2024 in compliance with the
Companies Act and the 2018 Code.
The Board continues to confirm a strong
commitment to diversity, including, but not
limited to, gender diversity at all levels of the
Company, and considers its own
composition provides a reasonable
indication of its approach to this
commitment. The Board Diversity Policy
continues to serve to ensure that all
candidates for Board appointments are
considered in accordance with the Policy
during the nomination process.
As Senior Independent Director,
Mary Reilly is available to shareholders to
discuss and develop an understanding of
their issues, and any concerns which
cannot be resolved by discussions with
the Chair, Chief Executive or CFO.
57%
of the Board were women
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74
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
DIVISION OF RESPONSIBILITIES CONTINUED
Further information on diversity can be
found on pages 32 to 33.
Conflicts of interest
Directors have a statutory duty to avoid
actual or potential conflicts of interest. The
Company’s Articles of Association permit
the Board to consider and, if it sees fit, to
authorise situations where a Director has
an interest that conflicts, or may possibly
conflict, with the interests of the Company.
The decision to authorise a conflict of
interest can only be made by non-conflicted
Directors. A register of Directors’ Interests is
maintained so that any potential concerns
are addressed before any material issues
may arise. The Conflicts of Interest register
and the schedule of Directors’ Interests is
reviewed at each Board meeting. During the
course of the year, there was one potential
conflict and accordingly, that Director
removed himself from the meeting returning
only when authorised to do so by the Chair.
The conflict subsequently fell away with the
progression of events and there were no
other material conflicts of interest impacting
on the conduct of the Board’s activities.
Information and professional
development
The Chair, supported by the Company
Secretary, takes responsibility for ensuring
that the Directors receive accurate, timely
and clear information. On appointment, an
induction programme tailored to their
individual needs is available to Directors
and is designed to assist them in their
understanding of Essentra and its operations.
Throughout a Director’s tenure, they are
encouraged to develop their knowledge of
the Company through meetings with senior
management and site visits. Directors are
also provided with updates, as appropriate,
on matters such as fiduciary duties,
Companies Act requirements, share dealing
restrictions and corporate governance
matters. All Directors have access to the
advice and services of the Company
Secretary. In the furtherance of their duties,
there are agreed procedures for the Directors
to take independent professional advice, if
necessary, at the Company’s expense. No
Director took independent professional advice
during the year in respect of Board matters.
Shareholder communications
The Board recognises the importance of
effective communication, and seeks to
maintain open and transparent relationships
with its shareholders and other stakeholders,
including providers of finance, customers and
suppliers. This is achieved by regular updates
through public announcements, the corporate
website and other published material. All
shareholders can meet any of the Directors
of the Company should they so wish. In
particular, the SID is available to shareholders
should they have concerns or wish to share
their views. Feedback from meetings with
shareholders is provided regularly to the Board
so they are aware of any issues or concerns,
and this ensures that the Board has a
balanced view from major investors.
Since 2020, the Board have held General
Meetings both as hybrid, in person only and
online only. As the Board are keen to
encourage shareholders to participate in the
General Meeting, it is the intention to hold a
hybrid style meeting so that shareholders
can join virtually. This is balanced against
the prior experience that whilst offering this,
there may be few shareholders who take up
this option, and as a result the Board have
decided that the most efficient use of
resources is to share a link to join the
meeting virtually, rather than offering
a full virtual and online real time voting
mechanism. The Board would ask
shareholders to email the Company
Secretary in advance of the meeting if they
wish to join this way, and to also email in
advance if they have any questions they wish
to put to the Board on the day of the AGM,
which the Chair and Company Secretary will
ensure are addressed.
In May 2023, the Board agreed to sign up to
The Engagement Appeal (“TEA”), which aims
to increase all shareholder participation with
their investments, and the Board believe this
approach to the 2024 AGM strikes a happy
medium in line with the aims of TEA.
At the AGM, the level of proxy votes lodged on
each resolution is made available, both at the
meeting and subsequently on the Company’s
website. Each substantially separate issue is
presented as a separate resolution, and the
Chairs of the Audit and Risk, Nomination,
Remuneration and ESGC are available to
answer questions from shareholders.
The Company communicates and engages
regularly with its major institutional
shareholders and ensures that the Board
understand the views and concerns of major
shareholders in relation specifically to their
views on governance and performance of the
Company against strategy. The Chief
Executive, CFO and Investor Relations
Manager have primary responsibility for
investor relations. Virtual presentations for
analysts and shareholders were held during
the year, and virtual meetings were also
undertaken with key institutional investors to
discuss strategy, financial performance and
investment activities. Slide presentations are
made immediately available after the full year
and half year results and are also available on
the Company’s website to view and download.
The Company ensures that any price-
sensitive information is released to all
shareholders at the same time, in
accordance with regulatory requirements.
During the year, the Board Chair, Chair of
the Remuneration Committee and Chair of
the ESGC have held independent meetings
with shareholders and additionally, the Chair
has attended meetings with the Chief
Executive and the CFO. At each Board
meeting reports are presented detailing the
engagements with shareholders to ensure
that the Board as a whole has a clear
understanding of the views of shareholders.
Financial reporting
The Directors have acknowledged, in the
Statement of Directors’ Responsibilities set
out on page 119, their responsibility for
preparing the Financial Statements of the
Company. The Directors are responsible for
preparing the Annual Report and Accounts,
and they consider that the Annual Report
and Accounts taken as a whole are fair,
balanced and understandable. The External
Auditor has included a statement about
their reporting responsibilities in the
Independent Auditors‘ Report, set out on
pages 186 to 192.
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STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
DIVISION OF RESPONSIBILITIES CONTINUED
Directors understand the views and
concerns of major shareholders in relation
to financial reporting and to their views on
environmental, social and governance issues
and the way in which they are embedded in
strategy and measured in the performance
of the Company against the strategy.
The Directors are also responsible for the
publication of half year results, as required
by the Disclosure and Transparency Rules
of the Financial Conduct Authority. This
provides a general description of the
financial position and performance of the
Company during the relevant period. In
accordance with the 2018 Code, the Board
acknowledges its overall responsibility to
shareholders to ensure that an adequate
system of risk management and internal
control is in place. The Board believe that the
Risk Assurance team continues to provide a
clear indication of, and commitment to this,
and the Board are satisfied with the strength
and depth of knowledge held by the Risk
Assurance team.
Internal controls
In accordance with the 2018 Code, the Board
acknowledges its overall responsibility to
shareholders to ensure that an adequate
system of risk management and internal
control is in place and for reviewing the
effectiveness of this system. Such a system
can only be designed to mitigate, rather
than eliminate, the risk of failure to achieve
business objectives, and can therefore only
provide reasonable, and not absolute,
assurance against material misstatement or
loss. This is essential for reliable financial
reporting and also for the effective
management of the Company. The internal
control and risk management process for
financial reporting processes is documented
The Board acknowledge
its overall responsibility to
shareholders to ensure that
an adequate system of risk
management and control is
in place and for reviewing the
effectiveness of this system.”
within the Essentra Accounting Manual
(the “Manual”) that is updated as required.
The Manual sets out the procedures and
processes established for internal and
external financial reporting and incorporates
accounting policies that are adopted by the
Company, as well as processes and controls
relating to tax and treasury matters. The
Manual sets out clear processes that cover,
amongst other matters, segregation of
duties, reporting responsibilities and review
and approval requirements. The Manual
prohibits management overrides and the
processes set out within the Manual are also
reflected within financial reporting systems
and the framework for financial controls
within the Company. A Delegation of
Authority is in place, that is also reviewed
and updated on a regular basis, which
identifies approval processes for different
matters. The Manual is applied across the
entire Company and supported by twice-
yearly confirmations from management in
relation to adherence to the Company’s
accounting policies.
The Board acknowledge the publication
of the updated 2024 Code, and with
management’s support, it is the Board’s
intention to ensure the 2024 Code is
implemented in full as may be appropriate
for the Company so that the Board will
extend its responsibility for establishing
and maintaining internal controls and the
effectiveness of the risk management and
internal control framework. The ARC has
initiated a programme of work during 2024
that will strengthen and embed existing
processes towards supporting the ARC,
and the Board’s responsibility for the
effectiveness of risk management and the
internal control framework.
More information on this has been included in
the ARC report on page 89, whilst further
details on the Company’s risk management
system can be found on page 50.
The following currently enables the Board
to review the effectiveness of the system
of internal control and the financial
reporting processes:
• the ARC meets regularly and reports to
the Board, no less frequently than at every
Board meeting following an ARC meeting
• the terms of reference provide a
framework for the ARC to review
and oversee the quality, integrity,
appropriateness and effectiveness of the
Company’s internal control framework
• the Board received updates from the CEO
with additional reporting provided from
GEC members, with regular updates on
Compliance from the Global Compliance
and Controls Officer
• during the period, certificates were
required from each region to confirm
compliance with the Company’s policies
(including financial) and procedures at
both the half year and full year.
Directors’ and Officers’ insurance
In accordance with the Company’s Articles
of Association, and to the extent permitted
by the laws of England and Wales, the
Directors are granted an indemnity from the
Company in respect of those liabilities
incurred as a result of their office. In respect
of those matters for which the Directors
may not be indemnified, the Company
maintained a Directors’ and Officers’
Liability Insurance Policy throughout the
year. It is anticipated this policy will be
renewed. Neither the Company’s indemnity,
nor the insurance policy provide cover, to the
extent that a Director is proven to have
acted dishonestly or fraudulently.
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76
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ESG COMMITTEE REPORT
Meetings during the year
Ralf K. Wunderlich
ESG Committee Chair
Resigned from the Board on 8 January 2025
4 (4)
Steve Good
ESG Committee Chair
Appointed as interim Chair on 8 January 2025
2 (2)
Dupsy Abiola
4 (4)
Kath Durrant
4 (4)
Scott Fawcett
4 (4)
Adrian I. Peace
4 (4)
Mary Reilly
4 (4)
Figures in brackets denote the total number of meetings a
Director could attend.
Other Attendees
During 2024, Paul Lester, outgoing Chair of the Board,
attended every meeting until his departure on 1 November
2024. Jennifer Spence, ESG Director, and Emma Reid,
Company Secretary, have a standing invitation to attend
every meeting, reflecting their day-to-day responsibility for
the overall ESG strategy.
The ESG Committee (“ESGC”) extends an invite to all Board
members to all meetings, and the GEC are invited to join
meetings when guest speakers are present or when specific
topics are discussed of relevance. Subject experts from across
the business are also invited to present on their individual
specialisms. The Terms of Reference, which are reviewed
annually for the ESGC, are available on our website www.
essentraplc.com
Membership and attendance
Roles and responsibilities
• Overseeing the Company’s approach
to ESG and ensuring it aligns with the
Company’s overall strategic plan to
promote the Company’s long-term
sustainable success
• Providing advice and assurance to the
Group Executive Committee (“GEC”) and
other Board Committees on developing
ESG strategy and targets, and monitoring
the Company’s progress towards the
achievement of these targets
• Reviewing and advising on the
recommendations of the Task Force on
Climate-related Financial Disclosures
(“TCFD”) and the Taskforce on Nature-
related Financial Disclosures (“TNFD”)
• Ensuring policies and plans relating to
ESG matters are in place with onward
recommendation to other Board
committees as necessary
• Working with other Board Committees
and the Board to support the Board’s
responsibility for ESG
• Advising the Audit and Risk Committee
of any climate, nature or governance
related risks identified which are of
relevance to the role of the Audit and
Risk Committee
• Reporting to the Remuneration
Committee on progress of any ESG
targets or metrics used for determining
remuneration awards
• Reviewing and approving for submission
to the Board, reports for inclusion in the
Annual Report arising from a regulatory
requirement to do so, including TCFD
and gender pay reporting
ESG Committee report
Our overall approach to ESG stems from our ambition to make real change. The Company
believes that ESG provides opportunities to demonstrate our competitive advantage
through reducing our impacts on nature and climate, whilst ensuring our people are
valued and the communities we work within benefit from our presence.
Steve Good
Committee Chair (Interim)
The overall approach to ESG
adopted across the business
arises out of our commitment
to continue to place ESG as
a strategic focus area for
the business.”
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77
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Our progress
The overall approach to ESG arises out of our
commitment to ESG as a strategic focus
area for the business.
The targets selected are chosen to provide
a positive and measurable impact across
our environmental, social and governance
impacts, selected through a double
materiality matrix, allowing the ESG
Committee to align ESG progress to the
Company’s strategic focus.
During the year, the ESG Committee
continued to review progress made towards
meeting our ESG targets, and considered
and endorsed, if appropriate, any new
targets set in the year to ensure alignment
with the shareholder-approved climate
transition plan. The ESG Committee worked
with management to assess progress, and
the suitability of plans to meet mid- and
long-term targets. An overview of our ESG
progress can be found on pages 21 to 37.
Guest speakers
The ESG Committee was pleased to continue
its practice of inviting guest speakers to join
meetings, recognising that ESG requirements
are constantly evolving, and collaboration is
key to making progress on our own journey.
Invites were extended to two guest speakers
in 2024.
The first guest speaker, representing an
organisation which supported the refresh
of our DEI strategy, was invited to share
their findings. The ESG Committee was
particularly interested to learn more about
regional variances in perception when
discussing DEI topics, and how to harness
regional cultural differences to drive
commercial success.
ESG COMMITTEE REPORT CONTINUED
Key activities 2024
In 2024, the ESG Committee operated with
the remit of environmental, social and
governance oversight, and the following
activities demonstrate the breadth of
subject matters covered:
• shared Essentra’s inaugural climate
transition plan with shareholders, gaining
97.6% approval at the 2024 Annual
General Meeting
• oversight of ESG targets. This
included monitoring progress made
on environmental targets, including
waste, materials and emissions; and
reviewed social targets including safety
and wellbeing, diversity, equality
and inclusion, our supply chain and
customers; and governance targets on
ethics training and compliance
• where targets were met, endorsed new
targets to 2030 for the sustainable
sourcing of materials
• provided oversight to the Company’s
Centre of Excellence research centre,
recognising that research into innovative
sustainable materials is a key part of
our product innovation and emissions
reduction strategy
• led deep dives into a selection of our
ESG targets via a defined rotation of
topics throughout the year across our
environment, social and governance
targets, to ensure that each remained
on track and relevant to the Company,
and to understand the longer-term
trajectories required to meet our goals
• reviewed engagement with the value
chain to foster information sharing from
suppliers on product level emissions
and to customers by providing product
lifecycle assessments
• provided insights into the Company’s
Diversity, Equity and Inclusion research
and endorsed the refreshed DEI strategy
• reviewed and expanded ESG criteria
when considering potential acquisitions
during the due diligence and acquisition
phase, to include carbon pricing and
climate and nature related risks
• approved ESG reporting within the 2023
Annual Report, and agreed the reporting
approach for the 2024 Annual Report
• evaluated the materiality of various
ESG issues, risks and opportunities for
TCFD and TNFD reporting. Assessed the
methodology and risk management
approach as well as the internal controls.
The ESG Committee reviewed all TCFD
and TNFD disclosures in detail, including
the progress made on quantifying risk
and how this impacted the Long-Term
Viability Statement, with reporting on
this shared with the Audit and Risk
Committee
• recommended incorporation of climate
and nature related risks into ESG criteria
for acquisitions
• assessed existing and upcoming ESG
related regulatory disclosures and
assessed ways in which they can be
integrated into the business to bring
about greater impact
• considered the Company’s approach
to external ESG benchmarking and
voluntary disclosures
• collaboration with the Nomination
Committee to recommend they approve
the current Diversity, Equality and
Inclusion policy
• reviewed all proposed short and long-
term ESG-related remuneration targets
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78
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ESG COMMITTEE REPORT CONTINUED
Alongside this, following our recent
endorsement of our DEI strategy, we will
continue to embed our approach to DEI. We
also recognise, as we begin to enhance our
understanding and response to the pressures
on nature and biodiversity, that protecting
nature is a requirement for successful
climate change mitigation, and we will
continue to develop our strategy and
response to this topic.
Steve Good
ESG Committee Chair
18 March 2025
The second guest speaker, was a
representative of an asset management
firm, and shareholder, which integrates ESG
considerations into its investment research
and stewardship, reflecting a commitment to
responsible investment. It was an opportunity
to engage in constructive dialogue to discuss
the Company’s management of ESG issues
and understand where value can be added.
Outlook to 2025
Given the fast-evolving pace of the ESG
agenda, the ESG Committee recognises
that it needs to be focused on future
developments and if necessary evolve its
priorities to maintain oversight of existing
initiatives and capturing new opportunities.
During 2025, the ESG Committee will
continue to champion and to provide the
business with the focus required to ensure
that ESG related opportunities drive the
business forward towards long-term
sustainable success. Our focus will remain
on continuing to decarbonise in line with our
climate transition plan and targets, and the
Committee will continue to closely monitor
the Company’s progress on its net-zero
pathway. Supporting our transition plan, we
recognise the strategic focus of the business
on new product innovation will be a key part
of Committee activity in the coming year.
To learn more about our full ESG
strategy, our goals and progress,
refer to pages 21 to 37.
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79
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FINANCIAL STATEMENTS
DIRECTORS’ REPORT
NOMINATION COMMITTEE REPORT
Nomination
Committee report
Our commitment to diversity, equity and inclusion (“DEI”) remains
ongoing and we firmly believe that DEI supports a better business
by bringing different perspectives and experiences.
Meetings during the year
Paul Lester
Chair
Retired from the Board on
1 November 2024
3 (3)
Steve Good
Chair
Appointed as Group Chair Designate on
1 July 2024 and as Chair of the Committee
on 1 November 2024
1 (1)
Dupsy Abiola
Non-Executive Director
4 (4)
Kath Durrant
Non-Executive Director
4 (4)
Adrian I. Peace
Non-Executive Director
4 (4)
Mary Reilly
Senior Independent Director
4 (4)
Ralf K. Wunderlich
Non-Executive Director
4 (4)
Figures in brackets denote the total number of
meetings a Director could attend.
Other attendees
During the year, as deemed appropriate, the Chief
Executive, Scott Fawcett, attended the meetings.
The Company Secretary attended all meetings.
Membership and attendance
Roles and responsibilities
• Leading the process for appointments
to the Board and senior management
roles, using an established, rigorous and
transparent procedure that meets the
Board DEI Policy
• Reviewing the skills of the Board to
ensure their combined skills meet
the needs and support the long term
strategic objectives of the business
• Reviewing the independence and time
commitment of the Non-Executive
Directors in discharging their duties
• Reviewing and making
recommendations on the composition
of the Board
• Oversight of a diverse succession
pipeline for Board and senior
management roles
• Arranging the annual evaluation of the
Board and Committees’ effectiveness
• Evaluating the effectiveness of the
Company’s policy on DEI
• Reviewing the Company’s approach to
gender and ethnicity diversity of the
Board and senior management
• Reviewing and agreeing the induction
for new Directors and the training needs
for each Director and the Board as
a whole
Steve Good
Committee Chair
We continue to exceed
targets set by the Parker
Review for ethnicity; this is
further supported by setting
a voluntary Ethnicity Target of
20% by 2027. As at 1 January
2025, the Company’s ethnicity
is 26%.”
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FINANCIAL STATEMENTS
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The Inzito Partnership provided an approach
that included the use of a fully integrated
assessment of the current Chair and, the
existing Non-Executive Directors, in order to
establish a team benchmark. The team
benchmark was then used to ensure that
potential candidates would meet the role
specification and would be able to work with
the existing Board and thus ensure the
candidate placed was likely to be successful
over a longer-term period. In addition, Mary
Reilly met with all Directors, to consider the
key traits they were looking for in the
incoming Chair.
Following the initial briefing and research
phase, a list was presented to the
Nomination Committee for consideration,
with a subsequent short list being agreed.
Those candidates were then approached for
the interview process, with an extensive
referencing process observed. Finally, the
Committee considered the outcome of the
short list interview process and reached
agreement on their preferred candidate.
The Nomination Committee, under Mary’s
leadership as the Senior Independent
Director, was pleased to recommend that
the Board appoint Steve Good as Chair
Designate with effect from 1 July 2024. Steve
and Paul thereafter worked together to
ensure a smooth handover to 1 November
2024 when Paul retired as Chair (and from
the Board) with Steve succeeding as
Independent Non-Executive Chair.
Key activities 2024
Key activities for 2025
• Agreed the approach and oversaw the
recruitment of the Chair of the Board
• Agreed the approach for the recruitment
and appointment of the CFO, and the
related induction programme
• Reviewed and recommended the
appointment of Kath Durrant as Chair of
the Remuneration Committee effective
from the close of the 2024 AGM
• Kept under review the size and
composition of the GEC and other key
senior leadership roles to ensure the
business was appropriately resourced
and supported
• Kept under review the secondment of
future leaders
• Oversaw the Annual Board and
Committee’s evaluation process
• Reviewed the gender and ethnicity
targets and reporting as part of the
Committee’s duty for the DEI strategy
and for the voluntary target setting
under the Parker Review
• Reviewed the Employee Engagement
survey results
• Reviewed and approved an updated DEI
Policy for the Company
• Reviewed and approved the Nomination
Committee Report for inclusion in the
2023 Annual Report
• Reviewed and agreed the revised
Terms of Reference for the Nomination
Committee
• Continue to progress the Board refresh
and assess the evolving skills of the Board
as the composition changes
• Continue to review senior management
succession and future leader talent
pipelines
• Oversee ongoing training for Board
members to support and develop their
skills and experience
• Keep under review the Group’s
gender and ethnicity targets and
implementation thereof
• Provide guidance on the ongoing
development of the DEI strategy
During 2024, the Committee has overseen
the appointment of a new Chair, Steve
Good, in succession to Paul Lester, and the
appointment of Rowan Baker as CFO
following the retirement of Jack Clarke.
All of the disclosures above also ensure we
meet reporting requirements.
Chair of the Board Recruitment
Paul Lester was appointed to the Board in
December 2015, and reached his nine-year
tenure at the end of 2024. In line with
Provision 19 of the FRC’s 2018 UK Corporate
Governance Code, the Committee and Paul,
acknowledged that it was appropriate to
commence the recruitment and selection
process to appoint his successor.
Mary Reilly, as Senior Independent Director,
led the process. A proposal was put
to the Committee, aligned to the existing
Non-Executive Director recruitment process,
that ensured a robust, transparent and
staged recruitment process would take
place. The Committee agreed with the
approach, and the initial phase, which
involved a tender process for the selection
of a headhunter, resulted in the Inzito
Partnership being successfully appointed.
The Company had worked with the Inzito
Partnership previously to place other key
senior leaders, and they had a good
understanding of the business and its
requirements in order to successfully place
a candidate, but otherwise has no other
connection with the Company or individual
Directors. The Inzito Partnership are also
committed to providing a diverse range
of candidates in line with our Board
Diversity Policy.
NOMINATION COMMITTEE REPORT CONTINUED
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DIRECTORS’ REPORT
NOMINATION COMMITTEE REPORT CONTINUED
As stated in the Board of Directors’
biographies on page 62, Rowan was
previously Group Chief Financial Officer of
Laing O’Rourke and, from 2017 to 2020, was
the Chief Financial Officer of McCarthy
Stone plc. Prior to joining McCarthy & Stone
in 2012, she worked in finance for Barclays
Bank plc and professional services for PwC.
Rowan is also a Non-Executive Director at
Vistry Group plc where she is Chair of the
Audit Committee and a member of the
Nomination and Remuneration Committees.
Rowan has a master’s degree in law from
Cambridge University and is a qualified
chartered accountant and chartered
tax adviser.
Rowan has extensive financial, commercial
and international experience, and brings a
sharp focus on working capital, efficiency and
cost control.
Rowan’s induction was planned to take
account of key corporate events so that she
can establish herself and get to know her core
team, whilst also visiting strategic sites within
each region over the coming year. Rowan has
additionally met external stakeholders and
shareholders since her appointment.
Regional Structure
During late 2023, the GEC restructured the
business by region and accordingly the GEC
composition was amended to reflect this.
This also resulted in changes to the senior
leadership team which is composed of
individuals that report directly into the GEC.
Three regional leaders were appointed and
have subsequently led the EMEA, APAC and
the Americas regions. The Committee
Steve went through an extensive and
in-depth induction process, which included
site visits within all three regions and meeting
key employees. In addition, Steve met with
employees from enabling functions, including
Finance, IT, Legal, Sustainability, Risk, HR,
Reward, Supply Chain and Operations. Steve
continued his induction phase and held
introductory meetings with shareholders and
other key external stakeholders.
Chief Financial Officer Recruitment
The Inzito Partnership were also appointed
to oversee the recruitment of a new CFO
following Jack Clarke’s announcement of his
retirement which would follow a handover
period to the new appointee.
The same detailed recruitment process was
followed as for the appointment of the new
Chair, with a briefing and research phase
followed by a list of candidates reviewed by
the Nomination Committee with a
subsequent short list being agreed. Those
short-listed candidates were approached for
the interview with references requested and
reviewed. Finally, the Committee considered
the outcome of the short list interview process
and reached agreement on their preferred
candidate, Rowan Baker, whose appointment
as CFO was recommended to the Board by
the Committee. Rowan was appointed a
Director with effect from 5 November 2024
in succession to Jack Clarke.
continues to support the three Regional
Managing Directors to both develop their
roles and support their work towards
strategic objectives.
The Committee regularly reviews the
succession planning relating to the senior
leadership team together with the
development of future leader talent
within the Group.
Board Training
As reported within the Corporate
Governance Report on page 64, the
Committee ensures the Board received
appropriate training. A formal training
session on Inside Information and the Market
Abuse Regulations, UK Listing Regime
Reforms, Cyber Security and the 2024 UK
Corporate Governance Code Provision 29
regarding risk frameworks was provided by
Slaughter and May during the year. The
Board were also provided with opportunities
to gain further insights into corporate
related matters during the year with
opportunities to speak to experts on
the relevant matter.
Finally, the Board as individual Non-
Executive Directors considered their own
ongoing training needs to ensure they were
keeping abreast of relevant matters.
The Nomination Committee also benefitted
from the ESG Committee which continued
to provide opportunities to gain new
sustainability insights with the inclusion
of guest speakers on its agendas.
Diversity, Equity and Inclusion
During the year, the Nomination Committee
considered its role in driving DEI forward. The
Committee and the Board continue to
believe and support recruitment that creates
a diverse, inclusive and equal workplace. This
is further championed by both the Chief
Executive and the GEC who believe that the
strongest and best in class businesses are
built on strong diverse foundations and is
restated through both a Board Diversity
Policy and the Company-wide DEI policy
which was subject to a further review in
2024. More information on the output of the
application of the Company wide policy can
be found in the ESG report on page 77,
where we explain more about our
Company’s overall diversity.
As part of the Company’s launch as a
pure-play components business, a new ESG
strategy was launched in late 2022, with five
pillars, two of which relate directly to DEI –
our Culture and Our Communities. These
two pillars are underpinned by longer-term
plans and activity that places greater
emphasis on increasing DEI within the
business and creates opportunities for
communities, including vendors, that are
owned or operated by minority groups, to
receive equal opportunities. Details can be
found on pages 32 to 33.
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FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Board Evaluation
NOMINATION COMMITTEE REPORT CONTINUED
Following the externally facilitated Board evaluation in
2023, the Board evaluation for 2024 was internally
facilitated. Key themes identified and which will be
addressed in 2025 are outlined below.
1. Board Refresh
Carry out a Board refresh so that the composition and skills of
Board members aligns to the current business
2. Board Pack
The financial reporting element of the Board pack should be
refreshed to drive further insight for the Board, derived from
existing management information. This should be accompanied
by materials that provide the Board an opportunity to understand
drivers for performance
3. Strategy Challenge
The 2025 strategy session will include an in depth review of the
assumptions that underpin the current strategy
4. Talent Assessment
To support the ongoing development of management, and to
ensure management skills evolve and develop in line with the
business need, a refreshed approach to talent assessment and
development should be undertaken
5. Stakeholder Management
i) Additional time should be spent by the Board on understanding
the Annual Customer Survey results and regional/customer
analysis
ii) An outcomes-based approach should be taken to Board
Employee Engagement to ensure engagement is effective and
meets Code requirements
The internal Board Evaluation carried out in 2023, identified six areas of focus and agreed to six subsequent actions
to be taken. The Committee consider that satisfactory progress has been made on each of the agreed actions, as
outlined below.
Mechanism
Progress made
Action 1
Annual strategy planning process
Review the annual strategy planning process and
agreement of priorities of focus for short, medium- and
long-term plans
• Completed
Action 2
Quality of information provided to the Board
Improvements to the quality of information provided to
the Board, with deep dives provided on a regular cadence
and opportunities for regional performance review,
supported by timely good quality papers
• A forward agenda that reflects the Strategy and Business Plan
for 2025 has been agreed that ensures regular reports on key
topics are considered by the Board
Action 3
Board skills & composition
Review the skills of the Board in view of impending
changes to the composition of the Board, through the
Nomination Committee extending its regular review of the
composition to take account of the changes at Board level
and future requirements of the new Essentra plc business
• This will require further consideration by the Chair
and will also take account of the output from the Board
Effectiveness review
Action 4
Mentoring between Board and GEC
Continue mentoring between the Board and the
GEC to deepen the Board and GEC’s knowledge and
understanding of each other’s roles and to provide greater
knowledge of the business
• Completed and to be continued
Action 5
Investor Relations
Review the process for investor meetings once a new
Chair has been onboarded
• Chair to consider if Non-Executive Directors to be involved in
investor meetings
Action 6
Employee Engagement
Monitor the Voice of the Employee (“VoE”) process to
ensure outputs provide useful insights for the business, and
are reported on at each Board meeting and a feedback
loop closed with attendees
• Completed. VoE sessions were held during the year. See page 70
• It was agreed that VoE provided excellent social capital for
the Board
Updates on the 2023 Board Evaluation
2024 Board Evaluation
ESSENTRA PLC ANNUAL REPORT 2024
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FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Board Diversity
The Board’s commitment to its own diversity
is currently at 57% with four female and three
male directors. The Board continue to be well
represented ethnically, with two members
meeting the original Parker Review target.
Group Executive Committee Diversity
Within the GEC, the overall diversity for
gender is 25% female and 75% male, whilst
ethnicity is at 12.5%. There is unlikely to be
significant movement in the GEC
composition in the near future, although
there is an expectation that the broader
senior leadership team will increase its
gender and ethnicity representation.
The Senior Leadership Team, being those
who report directly to the GEC, have the
following gender balance ratio: 67% male to
33% female. The target for this group is to
achieve 60% male and 40% female. Given
the changes seen since the last Annual
Report, and the closeness to this target,
it is expected that natural attrition and a
continuation of the existing recruitment
approach will provide a steady increase
towards this target being met although
this will be supported by a refreshed
approach to recruitment following the
adoption of a DEI strategy.
The Board have also agreed, as requested by
the Parker Review, an overall target of 20%
by 2027 and 25% by 2030 to increase the
ethnicity within the leadership team. More
information can be found about this target
and the refreshed DEI strategy on page 33
of the ESG Report.
Steve Good
Nomination Committee Chair
18 March 2025
NOMINATION COMMITTEE REPORT CONTINUED
Gender
Ethnicity
Number
of Board
members
Percentage
of the
Board
members
Number
of senior
positions on
the Board
Number
in executive
management
Percentage
of executive
management
Men
3
43%
1
1
50%
Women
4
57%
1
1
50%
Other
–
–
–
–
–
Not specified
–
–
–
–
–
Number
of Board
members
Percentage
of the
Board
members
Number
of senior
positions on
the Board
Number
in executive
management
Percentage
of executive
management
White British or other White
5
72%
2
2
100%
Mixed/Multiple Ethnic Groups
1
14%
–
–
–
Asian/Asian British
–
–
–
–
–
Black/African/Caribbean/Black British
1
14%
–
–
–
Other Ethnic Group
–
–
–
–
–
Not specified
–
–
–
–
–
Board gender and ethnicity
ESSENTRA PLC ANNUAL REPORT 2024
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DIRECTORS’ REPORT
CHAIR OF THE AUDIT AND RISK COMMITTEE’S LETTER
Chair of the Audit and
Risk Committee’s letter
During the year, the Audit and Risk Committee assisted the Board in fulfilling
its oversight responsibilities in relation to external audit, internal audit, risk
management and internal control. The Committee monitored and challenged
the integrity of the Company’s financial reporting; reviewed and challenged
the use and application of accounting policies, scrutinised the systems of
internal control and the risk management framework.
Meetings during the year
Mary Reilly
Chair
4 (4)
Ralf K. Wunderlich
4 (4)
Adrian I. Peace
4 (4)
Figures in brackets denote the number of meetings
that could have been attended.
Other attendees
The External Auditor, Chair of the Board, other
Non-Executive Directors, Chief Executive, CFO,
Head of Risk Assurance, Finance Director, Financial
Controller, Global Compliance and Controls Officer
and members of the GEC attended meetings by
invitations, as appropriate. During the year, the ARC
met the External Auditor, PricewaterhouseCoopers
LLP (“PwC”), and the Head of Risk Assurance without
the Executive Directors being present.
The ARC received presentations from the Chief
Executive, the CFO, Finance Director, Financial
Controller, Head of Risk Assurance, Head of Tax,
Treasurer, the Head of Cyber Security and the Chief
Digital Information Officer.
The Company Secretary attended all meetings.
Membership and attendance
Roles and responsibilities
• Ensuring the interests of shareholders
are properly protected in relation to
financial reporting, risk management
and internal controls
• Monitoring the integrity of the
financial statements and any formal
announcements relating to financial
performance
• Reviewing and challenging the
accounting policies presented to the
Board for approval
• Reviewing the internal control and risk
management systems for effectiveness
• Monitoring and reviewing
the effectiveness of the Risk
Assurance function
• Reviewing and making
recommendations to the Board in
relation to the appointment, terms
of engagement and remuneration,
independence and effectiveness of
the External Auditor
• Challenging significant accounting
judgements
• Agreeing the annual Risk Assurance
internal audit plan and monitoring
its delivery
• Monitoring the Right to Speak process and
the assessment and investigation of any
claims made through this mechanism
• Monitoring the effectiveness of the
compliance function and delivery of the
compliance plan
• Monitoring the engagement policy
of the External Auditor to supply
non-audit services
• Reviewing and discussing reports
presented by the external auditor at
each meeting
Mary Reilly
Committee Chair
During the year, the ARC
continued to assist the Board
in fulfilling its oversight
responsibilities by monitoring
and robustly challenging the
integrity of the Company’s
financial reporting.”
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DIRECTORS’ REPORT
Dear Shareholder
As Chair of the Essentra plc Audit and
Risk Committee (“ARC”), I am pleased to
present my report for the year ended
31 December 2024.
During the year, the ARC continued to
assist the Board in fulfilling its oversight
responsibilities by monitoring and robustly
challenging the integrity of the Company’s
financial reporting, its risk management
framework and the supporting systems of
internal control. This report gives an overview
of the activities undertaken and overseen
during the year and explains how the ARC
has met the requirements placed on audit
committees by the 2018 Code and applicable
guidance, laws and regulations. In carrying
out its duties, the ARC also operated in
accordance with recommendations set out
in the FRC Guidance on Audit Committees
which was published in April 2016 and
remains cognisant of updated FRC guidance,
letters and reports that are relevant to the
work of the ARC. The ARC’s activities
comprise a structured programme of work,
much of which is recurring.
The 2024 internal audit plan was presented
to the ARC at the end of 2023. The focus of
the 2024 plan was a blend of strategic,
risk-based reviews and a series of site-based
reviews covering financial and operational
controls. These include the Company’s
response to evolving Cyber Security threats,
the controls in place in the Germany
warehouse and the extent to which the
Wixroyd control environment has been
integrated post-acquisition. The plan also
sought to ensure sufficient resource flexibility
to respond to ad-hoc concerns. Of the 11
Principal Risks presented in our 2023 Annual
Report and Accounts, the internal audit plan
specifically focused on five of those areas,
with general coverage of the remainder
through site-based controls assurance.
The Principal Risk areas specifically covered
during 2024 were: Governance, Digital
Transformation, M&A Execution and
Integration, Cyber Events and Execution of
the Strategic plan. Additional Principal Risks
were covered, in part, during site visits.
Members of the Risk Assurance team also
support the wider business by providing
independent assurance and advice to key
initiatives and issues as and when they arise.
In 2024, these have included the investigation
of “Right to Speak” cases and advice and
support given to the project team
implementing the changes required to
comply with the new UK Governance Code.
A key role of the ARC is to support the
Board in its assessment of the Principal
and Emerging Risks and effectiveness of
mitigation plans. The ARC considered the
profile of a selection of the Company’s
Principal Risks which changed throughout
the year reflecting both the changing
shape of the Company and the evolving
macroeconomic and geopolitical
environments. In December 2024, the ARC
agreed to recommend to the Board updates
to the Principal and Emerging Risks that
were relevant to the business and reflected
its ongoing goals and ambitions.
The ARC continued to receive regular reports
on the Company’s Compliance Programme
and the outcome of “Right to Speak”
whistleblowing cases. The ARC noted that
the business had continued to enhance its
capabilities around customer due diligence
along with a continuing focus on ensuring
the workforce is adequately trained on
compliance matters.
Finally, as Chair of the ARC, I am pleased to
engage with shareholders and continue to
be available to meet if asked.
Mary Reilly
Audit and Risk Committee Chair
18 March 2025
A key role of the ARC is
to support the Board in
its assessment of the
Principal and Emerging
Risks and effectiveness
of mitigation plans.”
CHAIR OF THE AUDIT AND RISK COMMITTEE’S LETTER CONTINUED
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STRATEGIC REPORT
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DIRECTORS’ REPORT
The Terms of Reference
provide a framework
for the ARC’s work to review
and oversee the quality,
integrity, appropriateness
and effectiveness of the activities
listed below.
The current Terms of Reference
for the ARC are available at
www.essentraplc.com
Governance
Financial Statements and external
financial reporting
All the ARC members are independent
Non-Executive Directors and have financial,
risk management or related business
experience gained in senior positions at
other large diverse organisations.
Mary Reilly has been the Chair of the ARC
since April 2018, and the Board remains
satisfied that Mary has recent and relevant
financial, risk and control experience. Mary
spent the majority of her career at Deloitte
and is experienced as an audit committee chair.
Other ARC members also have relevant
experience. Biographies of the ARC members
can be found on pages 62 and 63 and in the
Notice of Annual General Meeting. As a
whole, the Board believes that the members
of the ARC are competent in the business
sector within which Essentra operates. The
ARC supports the Board and reports to it
following each of its meetings. No member
of the ARC has a connection with the
current External Auditor.
The ARC has independent access to both
the Head of Risk Assurance, who leads the
Internal Audit team, and the External
Auditors and may obtain outside
professional advice if required. Risk
Assurance and the External Auditor have
direct access to the Chair of the ARC who
held a number of meetings with the Head
of Risk Assurance and the External Auditor
during the year outside formal ARC
meetings. The Chair of the ARC also liaises
with the CFO, and other senior members of
the finance function, as well as the
Company Secretary as necessary, to ensure
there is robust oversight and challenge in
relation to financial control, risk
management and compliance.
An internal evaluation of the ARC is carried
out on an annual basis, the last review being
performed in 2024 and concluding that the
ARC continued to be a well-run committee,
operating in line with the 2018 Code and
with the opportunity for all members to
contribute and consider issues properly.
Ensuring the integrity of
the Financial Statements and
associated announcements is
a fundamental responsibility
of the ARC.”
• Financial statements and external
financial reporting
• Internal controls
• Significant financial judgements
• Tax and Treasury function
• Cyber security response
• The compliance programme
• The efficacy of the Risk Assurance
(Internal Audit) function
• The risk management processes
and practice
• The relationship with, and performance
of, the External Auditor
Report of the Audit
and Risk Committee
REPORT OF THE AUDIT AND RISK COMMITTEE
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87
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Additional details on the Group Tax
Strategy can be found at
www.essentraplc.com
REPORT OF THE AUDIT AND RISK COMMITTEE CONTINUED
The ARC agenda covers an annual cycle of
items that addresses the requirements of
the external audit and any other relevant
matters, as detailed in the ARC’s Terms of
Reference. The agenda cycle is reviewed
annually to ensure that the ARC remains
proactive and relevant. Ensuring the integrity
of the Financial Statements and associated
announcements is a fundamental
responsibility of the ARC. In recommending
to the Board, with regard to the approval of
the 31 December 2023 Annual Report and
the 30 June 2024 Half Year Report, the ARC
reviewed, examined and challenged the CFO
and External Auditor on their respective
assessments on such items as:
• the estimate and disclosure of final
disposal consideration for the Filters
business
• the adequacy and appropriateness of
inventory provisioning calculations
• the accounting treatment for the
acquisition of BMP TAPPI and the
finalisation of the valuation for the
acquisition of Wixroyd Group
• the valuation of certain investment
properties
• the modelling and review of impairment
for the Company’s investments in
subsidiaries and certain intangible assets
in APAC
• hyperinflationary accounting for the
business in Turkey
• the presentation of discontinued
operations and adjusting items in the
financial statements
• the appropriateness of disclosures to
ensure the financial statements are fair,
balanced and understandable.
The ARC also challenged the External
Auditor on the appropriateness of their audit
coverage and their measure of materiality.
As part of the process for the year ended
31 December 2024, the ARC reported on its
assessment of the Financial Statements so
that the Remuneration Committee could
consider whether it needed to exercise its
discretion when considering the outturns
for 2024.
During the year, the ARC also considered
the adequacy of the Group’s Long-Term
Viability Statement and going concern,
and challenged the risk scenarios, the range
of sensitivities applied and the potential
impacts considered in line with FRC
guidance. The risk scenarios used for the
year-end 2024 reflected the need to deliver
complex strategic initiatives and
sustainability improvements in the
challenging global macroeconomic
environment in which the Company
operates, alongside areas regularly
monitored by the business, such as
operational and supply chain disruption,
which remained common concerns across
our three regions.
Following consideration of these
assessments, the ARC confirmed that the
application of the going concern basis for
the preparation of the Financial Statements
continued to be appropriate.
Tax and Treasury
During the year, presentations were made to
the ARC on the subjects of Tax and Treasury.
Particular attention in the presentations was
drawn to:
• the Company’s underlying tax rate. for
the year ended 31 December 2023, was
23.6% (represented for continuing group)
and the assumptions and judgements used
to forecast the effective tax rate during
the year
• the underlying tax rate of 25.7% at half
year 2024 (again represented for the
continuing group)
• the status of tax assets and liabilities held
on the balance sheet
• the provisions in place for uncertain and
central tax items
• the project to refinance the Company’s
revolving credit facility
• the status of pooling cash in EMEA and the
Americas
• a review of FX exposures which confirmed
the business was operating in line with the
Treasury Policy.
The ARC considered the matters presented
and were satisfied with the approach
being taken.
Compliance
The Company’s commitment to conducting
its business activities in accordance with all
applicable laws and regulations remains a
core priority. The delivery of the Company’s
Compliance programme is a fundamental
part of this commitment.
A focus on awareness and training for
key compliance and regulatory matters
continues to be a core element of the
plan with specific additional emphasis
on regulatory and sanctions compliance,
third-party due diligence, insider dealing
and data privacy.
The GEC received regular reports monitoring
compliance training whilst the ARC
continued to receive broad compliance
reports from the Global Compliance &
Controls Officer on key compliance risks and
the status of the programme of activities
designed to mitigate exposure.
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REPORT OF THE AUDIT AND RISK COMMITTEE CONTINUED
ESG
In 2024, the Committee continued to
operate with its expanded remit with respect
to environmental, social and governance
oversight. The ARC received information on
the processes used to model risks for TCFD
and ESG related risks in relation to the year
ended 31 December 2023.
For the year ended December 2024, the ARC
added to this by examining the process and
modelling deployed to report on TNFD as
well as TCFD and ESG related risks.
The ARC worked closely with the ESG
Committee to understand their approach to
exercising oversight for ESG targets who
reported that they were satisfied. The ARC
further noted that the ESG Committee also
provided assurance to the Remuneration
Committee where targets were connected
to bonusable objectives.
Right to speak and whistleblowing
The Company’s “Right to Speak”
whistleblowing process is a fundamental
component of its compliance programme.
The ARC received updates at each of its
meetings on any Right to Speak issues raised
and sought assurance from management on
the nature of these issues and the
Company’s response.
The ARC noted that the Company has
responded to each report received through
the Ethics Point reporting system, and carried
out an investigation, using internal or external
resources depending on the nature of the
report, or by referring the case for resolution
pursuant to HR grievance protocols.
During the year, the issues raised related
predominantly to specific HR concerns and
where there were particular concerns
expressed, the ARC had oversight of the
actions taken in response, which it found to
be appropriate.
Internal audit
The ARC is supported in its work by the
Risk Assurance team, who are responsible
for internal audits and are independent
of management.
In 2024, the Risk Assurance Team continued
its approach to providing effective assurance
by partnering with the business to provide
insightful, value-adding observations and
reports. The ARC supports the Risk Assurance
function in continuing with its agile and
adaptable mindset with reviews prioritised
against current risk exposures and alignment
with longer-term strategic objectives.
This approach continues to ensure that Risk
Assurance meets its core responsibilities as
well as providing support to the Company
where it was needed the most. It
accomplishes these objectives through a
systematic and disciplined approach to the
evaluation, assurance and improvement in
the effectiveness of the organisation’s risk
management, internal control and
governance processes. It provided
independent assessments of key processes
and controls across the Company in support
of its business objectives and strategies.
In order to achieve this, the ARC reviewed:
• the internal audit plan and its
achievement of the approved internal
audit plan’s activities
• the level and skills of the resource available
to the Risk Assurance function in line with
the budget
• the effectiveness of the Risk Assurance
function, including its structure and how it
was supporting the business
• internal audit activities with a focus on
unsatisfactory audit results
• the adequacy of management’s response
and the necessary actions taken to
address and rectify any weaknesses
identified in a timely manner.
At the ARC meetings, Risk Assurance
provided a report on the latest position with
regards to the Company’s systems of internal
control, its effectiveness in managing
Principal Risks and identifying any control
failings or weaknesses. This report also
considered the resourcing of the function.
The 2025 internal Audit Plan comprises a
blend of audits focused on Principal Risks,
strategic initiatives and more traditional
site-based controls audits.
Internal controls
During the year, the Company initiated an
internal controls project which is driving
focus across the business to ensure the
Company will comply with key elements of
the new UK Governance Code, in particular
the need for the Board to make a
declaration on the effectiveness of the
Company’s material internal controls for the
year ending 31 December 2026.
The project is developing the Company’s
existing Minimum Control Standards to meet
the new requirements and ensure the
framework is linked to risk management
processes. The ARC will monitor the delivery
of this project.
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Assessment of the External Auditor
The ARC is dedicated to ensuring that the
Company receives a high quality and
effective external audit. Throughout the year,
the ARC is provided with reports, reviews,
information and advice, as set out in the
terms of the External Auditor’s engagement
and performance is formally assessed by the
ARC in conjunction with the GEC. The ARC
assesses the External Auditor’s independence
annually and remains satisfied that the
External Auditor is effective and provided
appropriate independent challenge to the
Company’s management.
Independence of the External Auditor
The ARC believes that it is important to
maintain the objectivity and independence
of the External Auditor by minimising their
involvement in projects of a non-audit
nature. The Company policy complies with
the FRC Revised Ethical Standard 2019 which
provides an allowed list of services which
may be provided to public interest entities
and reflects best practice in relation to the
engagement of the External Auditor to
supply non-audit services in compliance with
the allowed list, with defined parameters
and approval requirements.
The ARC Chair, without the approval of the
ARC, is authorised by the Company to engage
the External Auditor on non-audit related work
where the service is in compliance with the
allowed list of services under the Revised
Ethical Standard 2019, and the fees per project
are not considered to be significant, provided
that the annual aggregate of non-audit
related fees shall not exceed 70% of the
average of the audit fees paid in the last three
consecutive financial years.
Risk management
The ARC’s discussions and considerations
and oversight of the risk management
process continued throughout the year
working closely with the GEC and the Risk
Assurance function.
In 2024, the focus was on ensuring that
the Company’s Principal and Emerging
Risks remained appropriate in the light
of a worsening macroeconomic and
geopolitical climate.
In addition to considering the adequacy of
Principal and Emerging Risks, the existing
risk management process continued to
enable the ARC to assess the quality of
existing practices and processes used to
identify, assess and mitigate responses to
existing and evolving risks to the Company
achieving its long-term strategic objectives.
This approach, combined with the risk
management approach supported the
ARC’s challenge of the effectiveness of the
Company’s response, its actions and the
process used to consider the effectiveness
of the mitigations.
The ARC concluded that the process had
been very thorough and remained fit for
purpose and that the risks had been
reviewed and challenged thoroughly, with
appropriate resilience testing of assumptions
also having been undertaken. The ARC’s
work in turn supported the Board by
providing it with the assurance it needed as
to the robust nature of the process used by
the Company to identify risk.
The ARC concluded at half year 2024 that,
following the removal of the “Social” risk, the
Principal and Emerging risks were
appropriate. The ARC also concluded that
the changes proposed to the narrative and
mitigation of certain Principal Risks and the
addition a new Emerging Risk at the full year
were appropriate.
More information on Principal and Emerging
Risks can be found on pages 53 to 57,
the Long-Term Viability Statement on page
117 and the Risk management process on
page 50.
External auditor
During the year the ARC:
• performed a debrief on the 2023 external
audit process with PwC
• agreed the terms of engagement and fees
to be paid to the External Auditor
• reviewed and agreed the scope of the
audit work to be undertaken, with
changes to sites in scope reflecting the
change in the shape of the Company
• reviewed the qualifications, resources and
independence of the External Auditor and
assessed its performance with particular
regard to the overall quality of the external
audit, and
• reviewed the level of non-audit work
carried out by the External Auditor
which, during 2024, was limited to an
interim review of the half year financial
statements and subscription to access
PwC’s accounting and corporate
reporting guidance.
The Chair of the ARC met with the External
Audit partner frequently outside of the
meeting schedule.
REPORT OF THE AUDIT AND RISK COMMITTEE CONTINUED
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REPORT OF THE AUDIT AND RISK COMMITTEE CONTINUED
Following the substantial reduction in
non-audit services following the conclusion
of the strategic reviews in 2022, fees were
expected to be comfortably within the 70%
fee cap (calculated based on the average of
the last three years’ audit fees).
Details of the fees paid to PwC up to
31 December 2024 can be found in Note 2
of the Notes to the Consolidated Financial
Statements, which includes fees paid to the
External Auditor and its network firms for
audit services, audit-related services and
non-audit services. PwC provided a letter
confirming that it believes it remains
independent within the meaning of the
regulations on this matter and in accordance
with their professional standards.
The ARC formally reviewed the letter which
describes arrangements in place to identify,
report, and manage any conflicts of interests
and policies and procedures, including the
extent of non-audit services, to maintain
independence and the subsequent monitoring.
Effectiveness of the External Auditor
The ARC assessed the effectiveness of the
External Auditor by reviewing:
• the External Auditor’s fulfilment of the
agreed audit plan and the quality of their
work including the depth and appropriate
challenges of management
• feedback highlighting the major issues
that arose during the course of the audit
• feedback from the businesses and
management evaluating the performance
of each assigned audit team.
Engagement of the External Auditor
The External Auditor was originally engaged
by the Company in 2017 following a
competitive tendering process. The External
Auditor is engaged to express an audit
opinion on the truth and fairness of the
Financial Statements. The external audit
includes the review of the system of internal
financial controls and the data contained in
the Financial Statements to the extent
necessary. In order to protect independence
and objectivity and provide fresh challenge
to the business, the External Auditor
periodically changes the audit partners at a
Group, regional and country level, in
accordance with professional and regulatory
standards. Katherine Birch-Evans was
welcomed as the new Group audit partner
during 2023. Such changes are carefully
planned to ensure that the Group benefits
from staff continuity without incurring
undue risk of inefficiency.
The ARC has been kept up to date with the
development of regulations concerning audit
tenure and the longevity of audit firm
relationships with companies they audit.
In 2016, a comprehensive competitive tender
was undertaken for the external audit and
subsequently the appointment of PwC to
replace the Company’s previous auditors
was approved by the shareholders at the
2017 AGM. As detailed above, the ARC is
satisfied with the External Auditor’s
effectiveness and independence and
accordingly has recommended to the Board
that PwC be reappointed as the Company’s
External Auditor at the 2025 AGM.
The Company has discussed the rotation
of the external auditor and continues to
consider, on a regular basis, any potential
benefits from tendering the audit process
having regard, in particular, to the importance
of audit quality or the continued independence
of the External Auditor. There are no
contractual obligations in place that restrict
the Company’s choice of statutory auditor.
The Company currently intends to tender
for the role of external auditor during 2025
to ensure that, if a change is deemed
appropriate, the new external auditor is able
to familiarise themselves with the business.
The Company believes this timeline will best
serve the interests of shareholders by
minimising disruption to the business.
The Company will provide an update if
this approach changes.
The Company has complied throughout the
year with the Statutory Order 2014 issued by
the Competition and Markets Authority.
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Going concern and Long-Term
Viability assessment
The ARC reviewed the assumptions applied
for going concern and long-term viability
assessment. At half year and full year 2024,
an extensive process was applied to the
going concern assessment that assessed
the outcome of a range of scenarios.
The Company has considered a downside
scenario that includes reasonably plausible
changes in macroeconomic conditions and
is considered to represent a severe but
plausible scenario.
The results of this downside 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 do not indicate any
covenant breach during the test period.
The External Auditor challenged the ARC on
the process used to make the assessment
and the outcome of the scenarios. The
ARC, on behalf of the Board, also
challenged management on the
assumptions and sensitivities used within
the scenarios to ensure they captured
sufficient macro and micro environmental
factors, as well as where judgement had
been applied, and sought an explanation
from management on this. Management
provided this assurance and explained to
the ARC that the scenarios had been
carefully calculated with dedicated
resource provided to test the range of
outcomes. The ARC was satisfied that the
process used to assess the Company’s
going concern position was appropriate
and made a recommendation to the Board
in line with this view.
More information on going concern can be
found on page 117.
The ARC reviewed the long-term viability
assessment for the period to 31 December
2027 which considered a range of scenarios
based on an assessment of four risks:
Environmental risks, Operational and Supply
Chain Disruption, Macroeconomic
Environment and Delivery of key growth
initiatives, which were selected from the
Principal Risks. The ARC considered the
process used to assess the long-term viability
against these risks and challenged
management on the assumptions. The
External Auditor in turn challenged the ARC
on the process that had been adopted and
was satisfied that the process used was
robust and thorough.
The ARC was satisfied that they could make
a recommendation to the Board on the
Group’s long-term viability. The ARC also
reviewed the information supporting the
Critical Accounting Judgments and
Estimates section of the Financial
Statements starting on page 122.
Other matters
The ARC also considered the following
significant matters during the course of
the year:
• the estimation and valuation of
contingent consideration receivable,
or earn-out, in relation to the disposal
of the Filters business for 2025
• the valuation of the Company’s deferred
tax assets
• the appropriateness and accuracy of
hyperinflationary accounting in the
Company’s business in Turkey.
REPORT OF THE AUDIT AND RISK COMMITTEE CONTINUED
Significant Accounting Matters
The ARC challenged management and the
External Auditor on their judgement and
the application of relevant financial
reporting standards for certain significant
accounting matters. These included:
Valuation of non-current assets
As required by IAS 36 Impairment of Assets,
the Company undertakes an assessment of
the carrying value of intangible assets on
an annual basis, or more frequently if there
is an indication of impairment. The details
of the work carried out and the results are
in Note 8 of the Notes to the Financial
Statements. The assumptions for 2025 and
beyond (such as the annual growth rate
and the terminal growth rate) are based on
the 2025 annual plan, management’s
mid-term financial projections and external
market data. The impairment reviews
performed by management contain a
number of significant judgements and
estimates including revenue growth, profit
margins and discount rates. A change in
these assumptions can result in material
changes in the valuation of the assets and
the eventual outcome of the impairment
assessment. The ARC evaluated and
challenged the methodology of the
impairment review and the assumptions on
which it was based, including the financial
plans approved by the Board.
The ARC discussed the current year
assessment, focusing on regional growth
rates, purchasing manager index data,
customer sentiment and the risks inherent
within the annual plan and management’s
longer term projections. Specific
consideration was given to impairment
reviews in relation to goodwill in America,
business assets in China and for the parent
company’s investments in subsidiaries.
Adjusting items
The Financial Statements include certain
items which are disclosed as adjusting
items. The nature of these items is
explained within the Group Accounting
Policy, and includes transaction costs and
gains or losses relating to acquisitions and
disposals of businesses, acquisition related
integration and restructuring costs, and
other items such as impairment losses.
Following an extensive review, the ARC is
satisfied that the Company’s definition of
adjusting items remains clear and the
appropriate level of disclosure is included.
The ARC challenged the CFO about the
appropriateness of items presented
including, costs relating to major Software-
as-a-Service (“SaaS”) projects, impairments
and acquisition/restructuring costs to ensure
they are one-off material items, rather than
incurred in the ordinary course of business,
to allow a better understanding of the
Company’s ongoing activities. Further
details can be found in Note 2 of the notes
to the Financial Statements.
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CHAIR OF THE REMUNERATION COMMITTEE’S LETTER
Dear Shareholder,
I would like to firstly give thanks to my
predecessor, Ralf K. Wunderlich, for his work
as Committee Chair and his support
throughout the handover of responsibilities
and I wish him all the best in his new role of
President and CEO of Huhtamaki Oyj. Ralf
led the Committee with diligence and skill.
I would also like to thank all of my fellow
Committee members for their insights and
valued contributions during the past year.
I am pleased to present our Remuneration
Report for the year ended 31 December 2024.
Principles
Our approach to setting executive
remuneration continues to be guided by the
following principles:
• rewarding the creation of sustainable,
long-term performance, with long-term
value creation for shareholders and pay
for performance being at the heart of our
policy and practices
• incentivising and rewarding delivery
of the business strategy, with market
competitive pay in return for performance
against our strategic objectives
• attracting and retaining the talent we
need to lead our business. This must
also reflect the complexities of a global
business, attracting and nurturing a mix
of talent with a range of backgrounds,
skills and capabilities that will enable
Essentra to thrive
• consideration of stakeholder interests.
ensuring our reward packages are
appropriate and fair in the context of
the experience of our key stakeholders,
employees, shareholders and customers
• flexible in our approach to remuneration
so that we can respond to a rapidly
changing world.
In principle, our pay policy for our wider
workforce is closely aligned with our
Directors’ Remuneration Policy (the “Policy”),
reflecting our commitment to fairness and
consistency in compensation practices
throughout the organisation. However, it is
essential to note that there are some
differences, primarily in the treatment of
variable and non-variable pay components.
This means that the variable and non-
variable pay structures for our workforce
may diverge from those of our Directors to
accommodate the diverse needs and roles
within our organisation. While our Policy may
include specific provisions tailored to the
unique roles and responsibilities of our
executive team, our strategic drivers, and
objectives flow throughout the organisation.
These key differences are carefully
considered to ensure that our pay policy
remains equitable and relevant across all
employee levels, effectively addressing the
specific requirements of each group while
adhering to the overarching principles of
fairness, performance-based incentive sand
competitive remuneration. Our ultimate
Chair of the Remuneration
Committee’s letter
Kath Durrant
Committee Chair
goal is to maintain a unified framework that
promotes a culture of fairness and inclusion
while recognising the distinctive attributes of
our various employee categories.
Business performance in 2024
As the Chief Executive outlined in his review,
end-market conditions have been
challenging throughout the year which has
created significant headwinds in delivering
the desired growth. Revised guidance was
issued regarding operating profit during the
year. Outturns for the year were within the
revised range indicated by the team at
£40.1m (adjusted operating profit). Despite
these challenges, the Company’s global
manufacturing and distribution footprint,
and operational flexibility have supported
the delivery of regional gross margin
stability. Additionally, both the 2024
employee engagement and Net Promoter
Scores have improved year-on-year despite
a challenging market backdrop, as Essentra
retains its strong market positions which
supports our confidence in our ability to
deliver progress on our strategic objectives,
and benefit from material levels of
operational gearing as market conditions
improve.
Specific performance highlights are
discussed below.
• In 2024, the Group achieved revenue of
£302.4m, reflecting a 0.3% growth on a
constant currency basis. The acquisition
of BMP TAPPI contributed 3.0% revenue
2024 was a year of challenging
end-markets, with a focus on
cost management and on
activities that will enable the
business to take advantage of
a market recovery.”
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FINANCIAL STATEMENTS
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performance and successful strategic
execution over the relevant three-year period.
Change in CFO
In March 2024, we announced Jack Clarke’s
intention to retire and step down as Chief
Financial Officer by 31 March 2025.
Subsequently, we announced Rowan Baker’s
appointment as his successor effective from
5 November 2024, with Jack remaining in
employment until the end of his notice period
on 31 March 2025 in order to provide support
during the transition period.
In relation to Jack Clarke’s outstanding
LTIP awards, the Committee exercised its
discretion and determined that he should
be treated as a ‘good leaver’ whereby his
outstanding awards will be time pro-rated
and remain subject to the original
performance conditions. The Committee
reached this conclusion having considered a
number of factors, including the fact that
Jack was retiring rather than taking another
executive role, his significant contribution to
the business including completion of the
strategic reviews that led to the successful
sale of the Company’s Packaging and Filters
businesses, and his assistance with the
smooth transfer of responsibilities to his
successor. Full details of remuneration
arrangements in relation to Jack’s departure
are set out on page 106.
Rowan Baker has been appointed on an
annual salary of £440,000 (to be next
reviewed in 2026) and pension provision of
5% of salary, in line with the UK workforce.
She will also be entitled, from 2025, to an
annual bonus opportunity of 150% of salary
and LTIP award of 150% of salary. No bonus
was payable or LTIP award granted in
respect of Rowan’s employment in 2024;
there was also no buy-out of forfeited
CHAIR OF THE REMUNERATION COMMITTEE’S LETTER CONTINUED
growth, however this was offset by a 2.7%
decline in organic like-for-like revenue
due to mixed end-market conditions,
particularly in EMEA where the impact of
FX resulted in reported revenue declining
4.4% year-on-year. Adjusted operating
profit was £40.1m as noted above.
Adjusted operating cash conversion, whilst
lower than in 2023, remained in excess
of 90%. The Group continues to retain a
disciplined approach to cost control whilst
selectively investing for future growth.
• Our regional approach, led by experienced
Managing Directors, enhances agility. Two
senior MD appointments in the year in the
Americas and in APAC complemented the
strength and experience of our European
leadership. Whilst recognising regional
market differences, the business has
focused on leveraging product categories
across the globe, such as expanding
access hardware by targeting high-growth
end-markets. We continue to build strong
foundations by investing in our sales
teams, equipping them to deliver expert
advice to customers and facilitating cross-
selling activity.
• Cost focus in 2024 was critical and
managed in line with expected volumes in
the regions, whilst central operating costs
were further reduced. This has enabled the
business to protect margins in the short
term, whilst also ensuring it remains well-
positioned to take advantage of market
recoveries when they occur. The basis
for future productivity gains continued
to be delivered through the successful
deployment of Microsoft Dynamics in
Europe, and in the development of the
Monterrey manufacturing facility
in Mexico.
• Working in safe environments, both
physically and mentally is essential
and at the heart of the Management
Team’s ethos. For 2024, the health and
safety record has remained static at 10
Lost Time Incidents (“LTIs”). This is a LTI
rate of 0.43 per 200,000 hours worked
for 2024 compared to 0.42 for 2023.
Continued focus and the deployment of
best practices around the Group will help
us drive further improvements in Safety
performance.
• A renewed focus on product
management was led during the year
and complemented by progress in driving
sustainable manufacturing processes,
using either recycled or biodegradable
materials. The Centre of Excellence,
opened at the Kidlington plant in the UK in
2023, is working methodically to test and
trial new materials.
• Colleagues across the business worked
hard through a difficult year and it was
good to see ongoing improvements in
employee engagement scores – now at
85% (2023: 82%). Similarly, customer
relationships continued to develop in all
geographies and the net promoter score
is a strong 43 for 2024, a three point
improvement on 2023.
• In 2024, we took a measured approach
to aligning our employee bonus plans
with sustainability targets across the
organisation, with greater incentives for
our Operations teams. As a result, waste
intensity has reduced by 20% compared to
2023, and 42% compared to 2019.
Linking reward to performance in 2024
2024 annual bonus
Consistent with the mixed performance
story outlined above, the formulaic outturn
of the annual bonus was 25% of maximum.
However, in order to align executive and
shareholders interests, the 2024 bonus
design included an additional ‘gate’ whereby
no bonus was payable unless the Committee
determined that the Company’s financial
performance was satisfactory. As Adjusted
Operating Profit was below the Entry
performance point, the Committee concluded
that this ‘gate’ had not been satisfied and
accordingly no bonus was payable.
Vesting of 2022 Long-Term Incentive Plan
(“LTIP”) award
As highlighted in previous Remuneration
Reports, the materiality of the Packaging and
Filters transactions during 2022 created a
number of complexities for the measurement
and assessment of performance for in-flight
LTIP awards. It also laid out the following
principles that the Remuneration Committee
would use to ensure a fair and robust
measurement and assessment process
applied for the affected awards:
• maintain consistency between the
basis on which targets are set and how
performance is measured
• ensure use of a consistent approach across
affected awards where possible
• maintain the original performance periods
• use audited data to the extent that this
is feasible.
More detail on the Remuneration
Committee’s specific application of these
principles to the 2022 LTIP award is set out
on page 102. For completeness, this
approach is wholly consistent with that
previously applied to the 2021 LTIP.
Following a performance assessment at the
end of the three-year performance period,
the 2022 LTIP award vested at 25.38% of
maximum. The Committee was satisfied
that this outturn was appropriate, having
considered financial and operational
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DIRECTORS’ REPORT
CHAIR OF THE REMUNERATION COMMITTEE’S LETTER CONTINUED
incentives as part of Rowan’s recruitment.
Whilst Rowan’s salary and bonus
opportunity are higher than her predecessor,
the Committee was satisfied that the
agreed overall remuneration package was
appropriate and necessary in order to secure
Rowan’s appointment given her extensive plc
experience and financial expertise, both of
which will be vital to support the delivery of
our growth strategy.
New Chair
After nine years on the Board and in
accordance with the 2018 UK Corporate
Governance Code, Paul Lester stood down
as Company Chair on 1 November 2024 and
was replaced by Steve Good, who had been
independent non-executive chair designate
since 1 July 2024. Following review by the
Committee, the Company Chair fee, last
altered in January 2024, remains unchanged
at £230,000.
Implementation of the Remuneration
Policy in 2025
Our new Directors’ Remuneration Policy was
approved by over 92% of shareholders at the
2024 AGM and I am very grateful for this
strong show of support. As the structure of
the Policy operated broadly as intended
during 2024, we have retained the same
performance measures for 2025, as
summarised in the table seen on this page.
The CEO will receive a 3% salary increase for
2025, in line with the wider UK workforce. His
annual bonus and LTIP opportunity will
remain unchanged from 2024. The CFO’s
remuneration arrangements are as outlined
in the “Change in CFO” section above.
Employee reward and engagement
Inflation remains a significant challenge for
global businesses like Essentra. In high-
inflation regions, such as Turkey, we have
worked proactively with two salary uplifts
during the year to ensure our employees’
salaries remain above the minimum wage.
Even in regions where inflation has eased, its
legacy impact on employees’ purchasing
power persists. As salary budgets are
inevitably constrained by both the
challenging economic environment and
mandatory minimum wage increases in a
number of countries, we have increasingly
focused on improvements to non-monetary
compensation elements such as benefits,
recognition programmes and flexible
working arrangements (where possible)
aligned with our commitment to employee
wellbeing and fairness. We are delighted at
KPI
2024
2025
Strategic rationale
Annual Bonus: one-year performance
Adjusted operating profit
50%
50%
The metrics are designed to provide a balanced
alignment with our goals of generating sustainable,
profitable growth and strong cash generation.
The ESG metric will be based on three key measures
which align with our strategy to make up the full 10%.
Introduction of carbon reporting by product, launch of
lower carbon nylon replacement material and increased
use of resin from recycled or renewable content.
Adjusted operating cash flow
20%
20%
ESG
10%
10%
Personal Objectives
20%
20%
LTIP: three-year performance
Relative TSR
30%
30%
The measures are designed to provide a balanced
alignment with our goals of delivering shareholders
a superior return on their investment and generating
sustainable, profitable growth.
The Committee has spent considerable time considering
the targets for all of these metrics, reflecting extremely
challenging market conditions that continue to prevail,
expected company plans and balancing the need for
incentivisation and reasonable expenditure. Full details
can be found on page 108.
Our Environmental targets align to SBTi standards while
the Social aspect of the ESG measure focuses on our
commitment to diversity.
Adjusted EPS
50%
50%
Environmental and Social
20%
20%
the high current level of employee
engagement and reduced levels of voluntary
attrition, and we believe that initiatives of
this nature are critical to maintaining
employee satisfaction and retention.
Our consultation with employees, which is
covered in more detail in the ESG and
Corporate Governance chapters, periodically
includes explanations of how executive
remuneration aligns with our wider company
pay policy.
During 2024, our Board Champions met with
employees, giving them the opportunity to
raise remuneration as a topic with them.
Two of the Board Champions include the
ESG Committee Chair and the Senior
Independent Director, who were both
members of the Remuneration Committee.
Conclusion
I welcome feedback at any point in time
from shareholders regarding our
remuneration arrangements. I hope that you
will find this report to be clear and helpful in
understanding our remuneration practices
and that you will support the vote on the
Annual Report on Remuneration at the
forthcoming AGM.
The Annual Report on Remuneration has
been approved by the Board of Directors and
signed on its behalf by:
Kath Durrant
Remuneration Committee Chair
18 March 2025
ESSENTRA PLC ANNUAL REPORT 2024
95
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Entry
Operating Profit
75%
100%
Operating cash flow
Personal Performance
Environmental
Target
Maximum
35.7%
0%
0%
Entry
Adjusted EPS growth
– (40% weighting)
0%
0%
51.3%
100%
Average ROIC
– (30% weighting)
Relative TSR
– (20% weighting)
Reduction in GHG Emissions
–(10% weighting)
Target
Maximum
Rowan Baker(£000)
Scott Fawcett (£000)
2024
2023
£0.5m
£0m
Jack Clarke(£000)
2024
2023
£1.0m
£1.2m
£0.5m
£0m
£1.0m
£1.2m
2024
2023
£0.5m
£0m
£1.0m
£1.2m
581
450
597
84
391
99
381
131
76
Remuneration at a glance
2024 remuneration structure for Executive Directors.
Our reward strategy is designed to drive sustainable, long-term
performance by aligning pay with value creation for shareholders.
We offer market-competitive remuneration to incentivise the
successful delivery of our business strategy and attract top
talent suited to the complexities of a global organisation.
Our approach ensures fairness and alignment with
stakeholder interests while remaining flexible to adapt
to an evolving business landscape.”
Kath Durrant
Remuneration Committee Chair
Data in these charts relates to the period that individuals were Board members.
Rowan Baker joined the Board in November 2024.
1
The formulaic outturn was 25% of maximum, however, after the application of the financial performance ‘gate’, the actual outturn
was reduced to zero as outlined in the Chair’s letter.
Fixed pay – salary, benefits and, pension allowance.
Performance pay – annual bonus and LTIPs earned
in respect of the three-year performance period.
2024 Annual bonus
Long-Term Incentive
2024 total remuneration
ESSENTRA PLC ANNUAL REPORT 2024
96
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
REMUNERATION AT A GLANCE
0%1
25.38%
Annual Report on Remuneration
This section of the
Remuneration Report will be
subject to an advisory vote
at the 2025 AGM, together
with the Annual Statement
from the Remuneration
Committee Chair
Enhancing customer service
has remained a focus,
we’re pleased to see Net
Promoter Score increase
by an additional 3 points
to 43. We remain focused
on our customers and
continue to work towards
our Net Promoter Score
target of 50.”
Meetings during the year
Kath Durrant
Non-Executive Director
5 (5)
Dupsy Abiola
Non-Executive Director
5 (5)
Mary Reilly
Non-Executive Director
5 (5)
Ralf K. Wunderlich
Non-Executive Director
5 (5)
Figures in brackets denote the number of
meetings a director could have attended during
the year since the date of their appointment.
Other attendees
In the past year, the Remuneration Committee
engaged with the Board Chair, CEO, CFO, CPO, and
Reward Director, for insights and advice. Notably,
none participated in discussions about their own
remuneration. The Company Secretary serves as the
secretary and attends all meetings.
The Committee consistently oversees the Company’s
relationships with independent advisers. Independent
advice was sought from Deloitte LLP, a member
of the Remuneration Consultants Group. Deloitte,
adhering to the Group’s Code of Conduct, provided
counsel on executive and senior staff remuneration.
The Remuneration Committee reviewed Deloitte’s
performance as part of the December RemCo
and continues to be appointed based on expertise
and experience in executive remuneration. The
Remuneration Committee appointed Deloitte
through a majority vote because of the quality of
their services and independence, and as a result they
continue to be the preferred consultant. The fees for
the year for advice to the Committee amounted to
£63,150, charged based on time and expenses.
Deloitte also offered additional tax services to the
Company in 2024.
Key activities
Membership and attendance
Q1 2024
• Approved Remuneration Report
• Approved 2023 Management Bonus Outturn
• Approved 2023 deferred bonus share awards
• Approved targets, participation and grant of the 2024 LTIP
• Approved 2024 Management Bonus targets and rules
• Approved personal objectives for GEC for 2024
• Approved SAYE invitation for UK staff
Q2 2024
• Approved appointment and remuneration for the new CFO, Rowan Baker
Q4 2024
• Approved 2025 Executive Director Personal Objectives
• Approved 2024 Executive Director Personal Objective outturns
• Approved 2025 LTIP structure, measures and targets
• Insights into Essentra Workforce Remuneration
• RemCo TOR Review
• Employee Share Purchase Plan “ESPP” for US staff
• Approved remuneration arrangements relating to retirement of outgoing CFO, Jack
Clarke
ESSENTRA PLC ANNUAL REPORT 2024
97
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ANNUAL REPORT ON REMUNERATION
Total Single Figure of Remuneration Table for 2024 (audited)
The remuneration received by Executive Directors and Non-Executive Directors for the year ended 31 December 2024 (and the 31 December 2023 comparative) was as follows:
Year
Salary and
fees for the
year or from
the date of
appointment
£000
Taxable
benefits¹
£000
Pension2
£000
Total fixed
remuneration
£000
Bonus
(cash and
deferred
shares)
£000
Long-Term
Incentive
Plan
£000
Other
£000
Total variable
remuneration
£000
Total
£000
Executive Directors
Scott Fawcett
2024
554
15
28
597
–7
848
–
84
681
2023
540
14
27
581
243
2026
59
450
1,031
Jack Clarke
2024
359
13
18
390
–7
958
39
98
488
2023
350
13
18
381
131
–
–10
131
512
Rowan Baker5
2024
70
2
3
75
–7
–
–
–
75
Non-Executive Directors
Steve Good4
2024
115
8
–
123
–
–
–
–
123
Paul Lester3
2024
192
1
–
193
–
–
–
–
193
2023
225
–
–
225
–
–
–
–
225
Mary Reilly
2024
90
2
–
92
–
–
–
–
92
2023
85
3
–
88
–
–
–
–
88
Ralf K. Wunderlich
2024
83
10
–
93
–
–
–
–
93
2023
86
14
–
100
–
–
–
–
100
Adrian I. Peace
2024
67
12
–
79
–
–
–
–
79
2023
62
20
–
82
–
–
–
–
82
Dupsy Abiola
2024
57
1
–
58
–
–
–
–
58
2023
52
–
–
52
–
–
–
–
52
Kath Durrant
2024
65
1
–
66
–
–
–
–
66
2023
52
4
–
56
–
–
–
–
56
Totals
2024
1,652
65
49
1,766
–
179
3
182
1,948
Totals
2023
1,452
68
45
1,565
374
202
5
581
2,146
Notes:
1
Taxable benefits comprise a car allowance, private medical insurance and life insurance cover for Executive Directors and for Non-Executive Directors covers travel allowance under the Travel Policy.
2
None of the Executive Directors are entitled to any benefit under the Essentra Defined Benefit Pension Scheme. The amount stated above is the employer pension contribution (either paid into the company pension scheme or paid as a pension supplement).
3
Paul Lester left the Board on 1 November 2024.
4
Steve Good joined the Board as Paul Lester’s replacement on 1 July 2024.
5
Rowan Baker joined the Board as CFO on 5 November 2024, replacing Jack Clarke who remained as an Executive Director until 31 December 2024.
6
The value has been updated to reflect the true value of the 2021 LTIP (published in the 2023 Annual Report with an approximate value of £182,000).
7
No bonuses paid or payable for 2024.
8
2022 LTIP vesting approximate value based on vesting of 25.38% and average share price over the last three months of 2024 of 146.8p. Values include £13,463 (Scott Fawcett) / £15,279 (Jack Clarke) relating to dividends accruing on vested shares since grant. The values
include zero share price appreciation since grant.
9
SAYE discount (15%).
10 Jack Clarke withdrew from the 2023 SAYE. The related benefit for the year 2023 has been updated to reflect withdrawal from the plan.
ANNUAL REPORT ON REMUNERATION CONTINUED
ESSENTRA PLC ANNUAL REPORT 2024
98
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
CEO pay ratio (unaudited)
This marks the sixth year of publishing our CEO pay ratio. We have opted for Option A in the
regulations, utilising full-time equivalent pay and benefits for all UK employees in 2024. This
choice ensures a more accurate portrayal of the Chief Executive’s compensation relative to
the broader UK workforce.
25th Percentile
50th Percentile
75th Percentile
Salary
£26,446
£36,290
£56,335
Total pay
£28,801
£39,620
£62,345
FY 2024
24:1
17:1
11:1
FY 2023
38:1
26:1
17:1
FY 2022
57:1
40:1
25:1
FY 2021
68:1
54:1
34:1
FY 2020
38:1
30:1
19:1
FY 2019
67:1
50:1
36:1
The salaries for employees at specified percentiles represent typical compensation for
operational roles, including Warehouse Operative, Maintenance Engineer, and Product
Compliance Manager. Primarily fixed, these roles have minimal performance-linked
components. Ratios are calculated using the Chief Executive’s total remuneration for 2024,
outlined in the Single Figure Table.
The day by reference to which the Company determined the date for the three percentile
employees was 31 December 2024. The Company believes the median pay ratio for the
relevant financial year is consistent with the pay, reward and progression policies for the
Company’s UK employees taken as a whole.
The CEO pay ratio for 2024, has again decreased to 17:1 at the median due to proportionate
reduction in the incentive outcome for the CEO for 2024, vs. 2023. The CEO pay ratio will vary
annually due to the Chief Executive’s higher variable remuneration tied to Essentra’s performance
and share price. Consequently, the Remuneration Committee does not set a specific target for
the CEO pay ratio. Instead, the Remuneration Committee will yearly evaluate if the ratio’s
fluctuations align with Company performance and employee reward decisions.
Annual bonus (audited)
Under the terms of the annual bonus arrangements for 2024, Scott Fawcett was potentially
entitled to a maximum bonus of up to 150% of basic salary and Jack Clarke was potentially
entitled to a maximum bonus of up to 125% of basic salary. Rowan Baker was not eligible for
any bonus in 2024. 50% of bonus earned is deferred in shares for three years and is usually
dependent on continued employment.
As outlined in last year’s Remuneration Report, the balance of the performance measures
for the 2024 annual bonus were intended to align with the Essentra growth strategy. In
particular, the metrics were designed to provide a balanced alignment with our goals of
generating sustainable, profitable growth and strong cash generation.
Irrespective of the outcome, the bonus design includes a ‘gate’ whereby no bonus is payable
unless the Remuneration Committee determines that the Company’s 2024 financial
performance is satisfactory. As the gate for financial performance of the Company was not
met, there is no bonus payable to either of the Executive Directors.
The Remuneration Committee noted that with financial and operational performance not
being as expected, no bonus outcome was appropriate and will not be applying any form of
discretion.
2024 Annual Bonus Outturn
Performance measure
Weighting
Entry
performance1
Target
performance1
Maximum
performance1
Actual
performance
% of
overall bonus
payable
Adjusted Operating Profit2
50%
£46.5m
£48.9m
£53.8m
£40.1m2
0%
Adjusted Operating Cash Flow2
20%
£39.0m
£41.1m
£43.1m
£36.4m2
0%
Environmental – Waste
reduction target
10%
2.5%
5%
7.5%
22%
10%
Other strategic objectives
20%
Details in analysis below
CEO – 15%
CFO – 15%
Total formulaic outturn
CEO – 25%
CFO – 25%
Post application of ‘gate’
CEO – 0%
CFO – 0%
Notes:
1
20%, 50% and 100% of the relevant portion of the bonus was payable for achieving Entry, on Target and Maximum performance,
respectively.
2
As in prior years, outturn was adjusted to be consistent with plan FX rates in order to align with the targets.
ANNUAL REPORT ON REMUNERATION CONTINUED
ESSENTRA PLC ANNUAL REPORT 2024
99
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ANNUAL REPORT ON REMUNERATION CONTINUED
Personal objectives 2024
2024 has been a challenging year with the lack of movement in the external market, meaning we were not able to deliver the level of growth anticipated at the start of the year. While we
are optimistic about the future, given the adjustment of the adjusted full year operating profit outturn, we remain vigilant, and focused on our strategic growth accelerators.
The following table sets out a summary of the Remuneration Committee’s assessment in each of the key areas of strategic performance identified for 2024, as well as the Committee’s
overall assessment of the outcome for each objective. As outlined above, these outcomes in combination with the outcomes from the financial metrics were further assessed by the
Remuneration Committee in the context of relevant factors, including overall Group performance, and despite some of the objectives being achieved, there will be no bonus payable.
Scott Fawcett – CEO
Strategic area and associated performance target
Weighting
Outturn
Scoring
Digitalisation of back office – Drive successful implementation of ERP to agreed plan.
8%
Eight sites were successfully launched in 2024, accompanied by substantial efforts to enhance
the programme’s long-term delivery capability. Key initiatives included restructuring the team,
achieving significant cost reductions of almost 40%, and accelerating the rollout for the next
seven legal entities throughout 2025, alongside other strategic improvements.
Fully met
Customer Satisfaction – Continue focus on Hassle Free Proposition, Net Promoter Score greater than
the 40 achieved in 2023.
1%
The Net Promoter Score “NPS” increased from 40 to 43 in 2024, surpassing the target set for 2024.
This improvement reflects enhanced customer satisfaction and loyalty. The positive trajectory of the
NPS underscores the effectiveness of ongoing efforts to strengthen relationships with our customers
and reinforces the organisation’s commitment to delivering exceptional value.
Fully met
Improved GEC team effectiveness – by hiring & onboarding new members and moving the team
operating level (as measured by the Complete Coherence model) from its current level 2 to level
4 in 2024.
5%
While we have discontinued working with Complete, progress on GEC effectiveness has evolved
well through the implementation of the regional model, recruitment of Americas and APAC MDs
as well as the successful onboarding of Rowan Baker as CFO. The Board’s year-end assessment
has been that there has been significant improvement in GEC effectiveness.
Partially met
Employee Engagement – Continue to focus on engagement and increase EE score beyond 2023
level of 82.
1%
Employee Engagement score has continued to increase with an outcome of 85 overall and a
participation rate of 92%.
Fully met
AMERS Acceleration delivery of organic revenue growth plan achieved.
5%
We are pleased to report a 2.5% increase in our ‘Category per Customer’ metric. While growth
across the entire Americas region has been mixed, this improvement aligns with our strategic
priority to drive cross-selling and expand the number of categories per customer. This progress
represents a meaningful step forward in this critical area.
Partially met
20%
Outturn prior to application of gate
.
Partially met
15% out of 20%
ESSENTRA PLC ANNUAL REPORT 2024
100
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Jack Clarke
Strategic area and associated performance target
Weighting
Outturn
Scoring
Digitalisation of back office – Drive successful implementation of ERP to agreed plan.
5%
Eight sites were successfully launched in 2024, accompanied by substantial efforts to enhance
the programme’s long-term delivery capability. Key initiatives included restructuring the team,
achieving significant cost reductions of almost 40%, and accelerating the rollout for the next
seven legal entities throughout 2025, alongside other strategic improvements.
Fully met
Investor relations – deliver new top 20 shareholders by year-end from pre-agreed target list.
5%
We are pleased to welcome a new shareholder to our top 20 list, Odyssean Capital, who was
included in our target group. Additionally, FMR (Fidelity Investments) has joined the register,
though they were not part of our original target list.
Paradice Investments and Harris Associates have also entered the top 20, collectively acquiring
nearly eight million shares this year.
Partially met
Employee Engagement – Continue to focus on engagement and increase employee engagement
score of the Finance function beyond 2023 level of 74.
5%
Employee engagement within the Finance function has continued to improve, achieving a score
of 79. However, the Remuneration Committee agreed on an outcome of ‘partially met’, reflecting
the ongoing work required to further enhance the Finance function.
Partially met
Ensure robust controls environment is established in all major change projects – target requires
satisfactory audit outcomes (where undertaken) in relevant areas.
5%
While audit follow-ups have been delayed in some areas, Eastern Europe has made notable
progress with BMP TAPPI.
Fully met
20%
Outturn prior to application of gate.
Partially met
15% out of 20%
ANNUAL REPORT ON REMUNERATION CONTINUED
ESSENTRA PLC ANNUAL REPORT 2024
101
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Equity incentives (audited)
Details of the awards granted and outstanding during the year to the Executive Directors under the LTIP, DASB and SAYE are as follows:
Date of
grant
At 1 Jan
2024
Awarded
in 2024
Exercised/
transferred
in 2024
Lapsed
in 2024
At 31 Dec
2024
Share price
at date
of grant
Earliest
vesting date
Expiry date
Scott Fawcett
LTIP1, 3
04-Oct-22
189,2104
–
–
-141,189
48,021
210.5p
04-Oct-25
04-Oct-27
LTIP1
31-Mar-23
413,687
–
–
–
413,687
195.8p
31-Mar-26
31-Mar-28
LTIP1
05-Apr-24
–
446,036
–
–
446,036
181.6p
05-Apr-27
05-Apr-29
DASB2
04-Oct-22
42,261
–
–
–
42,261
210.5p
04-Oct-25
04-Oct-25
DASB2
31-Mar-23
30,519
–
–
–
30,519
195.8p
31-Mar-26
31-Mar-26
DASB2
31-Mar-24
–
66,906
–
–
66,906
181.6p
05-Apr-27
05-Apr-29
SAYE2023
01-Jul-23
24,0425
–
–
–
24,042
169.7p
01-Jul-28
01-Jan-29
SAYE2024
01-Jul-24
–
4,8975
–
–
4,897
151.5p
01-Jul-27
01-Jan-28
Jack Clarke
LTIP1, 3
04-Oct-22
214,739
–
–
-160,238
54,501
210.5p
04-Oct-25
04-Oct-27
LTIP1
31-Mar-23
268,131
–
–
–
268,131
195.8p
31-Mar-26
31-Mar-28
LTIP1
05-Apr-24
–
289,097
–
–
289,097
181.6p
05-Apr-27
05-Apr-29
DASB2
31-Mar-23
46,011
–
–
–
46,011
195.8p
31-Mar-26
31-Mar-26
DASB2
31-Mar-24
–
36,138
–
–
36,138
181.6p
05-Apr-27
05-Apr-29
SAYE2023
01-Jul-23
10,606
–
–
-10,606
0
169.7p
01-Jul-26
01-Jan-27
SAYE2024
01-Jul-24
–
12,244
–
–
12,244
151.5p
01-Jul-27
01-Jan-28
Notes:
1
Subject to a two-year holding period post vesting and is calculated as a percentage of base salary.
2
DASB is deferred for three years from grant and not subject to any performance conditions and is calculated as 50% of annual bonus awarded.
3
LTIP was awarded with a face value at time of grant of £398k for the CEO and £452k for the CFO, and saw a total value depreciation of c30% and is vesting at 25.38%. The vesting amount includes an additional award of shares relating to accrued dividends of 9,171 shares for
the CEO and 10,408 shares for the CFO.
4
Granted prior to becoming a CEO.
5
Includes SAYE options held by spouse.
LTIP awards (audited)
Performance Conditions for LTIP awards made in 2022¹
Condition
Threshold
(25% Vesting)
Maximum
Actual
outturn
Vesting
Compound Annual Growth in Adjusted EPS (40%)
5%
13%
-6%
0%
ROIC (30%)
8.5%
14.5%
10.6%
15.38%
Relative TSR v FTSE 2502 (20%)
Median
Upper quartile
Below median
0%
Reduction in GHG Emissions3 (10%)
10%
15%
30%
10%
Overall Vesting
25.38%
1
Following the Packaging and Filters transactions, performance continued to be measured over the original three-year performance
period for the 2022 LTIP award. In order to ensure a fair and robust process, the Remuneration Committee determined that
assessment of the EPS, ROIC and GHG emissions performance measures should be a combination of Essentra Group performance
up to and including 2022 and Components performance in 2023 and 2024, in order to provide consistent year-on-year comparisons,
Essentra Group performance in 2022 included a combination of actual performance and forecast performance for the Packaging
business and the Filters business for the short period that they were no longer owned by Essentra (Packaging: October – December
2022; Filters: December 2022). The assumption of forecast performance for this purpose was considered more appropriate by the
Remuneration Committee than use of the original Plan figures which would have produced a slightly higher vesting outcome. As the
original targets assumed an assessment of Essentra Group performance over the full three-year period, the Remuneration
Committee reviewed whether any changes were required to the targets to ensure they remained consistent with the logic that
underlay them when they were originally set. Following that review, the Remuneration Committee was satisfied that the original
targets retained the required level of stretch when applied to the performance assessment process outlined above.
2. FTSE 250 excluding companies in the following industries: basic materials, energy, financial services, real estate, utilities and travel
and leisure.
3. Externally audited scope one and two GHG emissions consistent with our publicly stated commitment to be carbon neutral by 2040,
and an interim reduction of 25% by 2025 relative to a 2019 baseline.
ANNUAL REPORT ON REMUNERATION CONTINUED
ESSENTRA PLC ANNUAL REPORT 2024
102
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ANNUAL REPORT ON REMUNERATION CONTINUED
LTIP awards (audited)
Performance Conditions for LTIP awards made in 2024
Measures
Weighting
Threshold
Maximum
Adjusted EPS growth
50%
7% CAGR for 25% of the EPS
element to vest
12.5% CAGR for 100% of the EPS
element to vest
Relative TSR vs. comparator group
of the FTSE 250 index excluding the
following industries: basic materials,
energy, financial services, real estate,
utilities and travel and leisure.
30%
If median rank is achieved,
25% of the TSR element vests
If upper quartile rank is
achieved, 100% of the TSR
element vests
ESG comprised of GHG reduction
comprised of scope one and two
emissions – (10%)
Diversity of gender in our Group
Leadership team, including the
GEC – (10%)
20%
11.5% reduction for 25%
of the GHG reduction to vest
30% female representation
for 0% of the Diversity target
to vest.
17% reduction for 100% of the
GHG reduction to vest
40% female representation for
100% of the Diversity target
to vest
Share awards granted during the year (audited)
The following conditional share awards were granted to Executive Directors on 5 April 2024.
Executive
Type of
award
Number
of awards
granted
Share price
used to
determine
award
Face value
Percentage
which
vests at
threshold
Scott Fawcett
Conditional
share award1
446,036
181.6p
£810,001
(150% of salary)
25%
DASB Share
awards (50% of
prior year bonus)
66,906
181.6p
£121,501
N/A
Jack Clarke
Conditional
share award1
289,097
181.6p
£525,000
(150% of salary)
25%
DASB Share
awards (50% of
prior year bonus)
36,138
181.6p
£65,627
N/A
Note:
1
The performance period for these awards is three financial years to 31 December 2026 plus an additional two-year holding period
following vesting. The vesting takes place on the third anniversary of the grant. Rowan Baker did not receive any awards during 2024.
Note: Face value is based on the mid-market closing share price on the day preceding the grant, ie 4 April 2024.
Directors’ shareholdings (audited)
The beneficial interests of the current Directors in office and their connected persons at the
end of the year, in the issued ordinary share capital of the Company were as follows:
There have been no changes in the Directors’ interests between 31 December 2024 and the
date of this Report.
Beneficially owned1
LTIP
DASB3
SAYE Options
31 Dec 2023
31 Dec 2024
Unvested
Unvested
Unvested
Executive Directors
Scott Fawcett
53,108
123,4082
907,744
139,686
28,939
Jack Clarke
13,500
22,210
611,729
82,149
12,244
Rowan Baker
–
–
–
–
–
Non-Executive Directors
Steve Good
–
70,000
–
–
–
Paul Lester
32,546
32,546
–
–
–
Ralf K. Wunderlich
180,230
180,230
–
–
–
Mary Reilly
16,423
16,423
–
–
–
Adrian I. Peace
2,000
6,630
–
–
–
Dupsy Abiola
2,011
2,011
–
–
–
Kath Durrant
7,500
7,500
–
–
–
Notes:
1
Beneficially owned includes the vested after tax shares as at 31 Dec 2023 and 31 Dec 2024.
2
55,301 shares were sold to cover tax in 2024.
3
The DASB share awards are subject to continued service, however are not performance related, but can be counted towards the
post-employment shareholding requirements.
Scott Fawcett, Jack Clarke and Rowan Baker are required to build up a shareholding worth
300%, 200% and 200% of salary, respectively. Beneficially owned shares include the vested
DASB awards and shares held directly. The shareholding guidelines are to be achieved up by
retaining 50% of post-tax vested shares from the date of approval of this Policy. The current
holdings (which include the vested and unvested DASBs) as a percentage of salary for Scott
Fawcett is 62.6%, Jack Clarke is 38.3% and Rowan Baker is 0%.
Salary used is the prevailing annual salary for the year ended 31 December 2024.
The Executive Directors are regarded as being interested in a portion of the 64,521 ordinary
shares in Essentra plc that are held by the Essentra Employee Benefit Trust (“EBT”) as they
are, together with other Essentra employees, potential beneficiaries of the EBT.
ANNUAL REPORT ON REMUNERATION CONTINUED
ESSENTRA PLC ANNUAL REPORT 2024
103
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ANNUAL REPORT ON REMUNERATION CONTINUED
0
60
120
180
200
160
140
100
80
40
20
£
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Dec
2020
Dec
2021
Dec
2022
Dec
2023
Dec
2024
Essentra
FTSE 250 (excluding Investment Trusts) index
ANNUAL REPORT ON REMUNERATION CONTINUED
Performance graph (unaudited)
The graph represents the comparative Total Shareholder Return (“TSR”) performance
of the Company versus the FTSE 250 (excluding investment trusts) index for the last
10 years.
This index has been selected as it is considered the most appropriate published general
index in which the Company is a constituent.
This graph shows the value, by 31 December 2024, of £100 invested in Essentra on
31 December 2014, compared with the value of £100 invested in the FTSE 250 (excluding
investment trusts) index.
The other points plotted are the values at intervening financial year-ends.
Chief Executive remuneration table (unaudited)
Colin Day
Paul Forman
Scott Fawcett
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Total remuneration (£000)
2,281
876
1,267
1,420
1,296
800
1,483
1,410
1,031
681
Annual bonus (% maximum)
46.2
0
48
64.2
30.2
0
67
54.9
30
0
LTIP vesting (% maximum)
50
0
0
0
13.5
0
0
0
63.5
25.38
Colin Day retired as Chief Executive on 31 December 2016. Paul Forman was appointed as Chief Executive on 1 January 2017, and stepped down on 31 December 2022. Scott Fawcett was
appointed as Chief Executive on 1 January 2023. The total remuneration value for Scott Fawcett 2023 has been updated to reflect the true value of the 2021 LTIP (published in the 2023
Annual Report with a total remuneration of £1,011,000).
ESSENTRA PLC ANNUAL REPORT 2024
104
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Year-on-year change in pay for Directors compared to the average of employees (unaudited)
In line with the requirements in The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, which implement Articles 9a and 9b of the European
Directive 2017/828/EC1 (commonly known as the Revised Shareholder Rights Directive), the table below shows the percentage change in Directors’ remuneration and average remuneration
of employees from the year ended 31 December 2020 to the year ended 31 December 2024. Given that the Essentra plc entity has no employees, as a voluntary disclosure, data for all
employees of the Essentra Group has been included.
2024
2023
2022
2021
2020
Salary
Bonus14
Benefits
Salary
Bonus
Benefits
Salary
Bonus
Benefits
Salary
Bonus
Benefits
Salary
Bonus
Benefits
Average employee1
+1.4%
-35.6%
+0.9%
+17.6%
+2.2%
+31.0%
-6.3%
+17.6%
-7.3%
+4.6%
-7.3%
+14.6%
+1.7%
-73.3%
+4.7%
Directors
Scott Fawcett
+2.6%
-100%
+3.9%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Jack Clarke11
+2.6%
-100%
+1.4%
+34.1%
-27.2%
+34.8%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Rowan Baker12
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Paul Forman2
n/a
n/a
n/a
n/a
n/a
n/a
+3.4%
-17.3%
-0.6%
+6.3%
n/a
-9.0%
-4.3%
n/a
0%
Lily Lui3
n/a
n/a
n/a
n/a
n/a
n/a
-82.2%
n/a
-47.8%
+8.1%
n/a
-9.0%
+0.9%
n/a
-57.6%
Steve Good
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Paul Lester4, 13
-14.8%
n/a
n/a
-10%
n/a
n/a
0.0%
n/a
n/a
+4.8%
n/a
n/a
-4.8%
n/a
n/a
Dupsy Abiola5, 13
+9%
n/a
n/a
+23.8%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Ralf K. Wunderlich6, 7, 13
-3.9%
n/a
-28.6%
+7.5%
n/a
+133.3%7
+15.1%
n/a
+16.7%
+5.5%
n/a
n/a
+21%
n/a
n/a
Mary Reilly8, 13
+5.5%
n/a
-33.3%
0%
n/a
n/a
+4.7%
n/a
n/a
+12.3%
n/a
n/a
-7.8%
n/a
n/a
Kath Durrant9, 13
+24.4%
n/a
-75%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Adrian I. Peace10, 13
+7.5%
n/a
-40%
0%
n/a
+53.8%
+58.7
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Notes:
1
The average employee salary is based on all global employees. The average employee benefits and bonus are based on global employee data located in the UK and USA. The differing approach reflects the information held in global systems.
2 Paul Forman stepped down in 2022.
3 Lily Liu stepped down in 2022.
4
Paul Lester received a reduction in salary effective 1 January 2023. Paul Lester stepped down in 1 November 2024.
5 Dupsy Abiola joined in March 2022. 2023 was the first full year fees paid.
6 Ralf K. Wunderlich had an increase in fees in May 2022 as a result of taking on additional responsibility. The increase shown relates to a full year on the new fees for 2023.
7 Ralf K. Wunderlich has significant increase in travel as a Board Champion, and the benefits relate to a taxable travel allowance. Ralf stepped down as RemCo chair in May 2024.
8 Mary Reilly was paid a taxable travel allowance in 2023 which she had not previously received.
9 Kath Durrant joined in 2023, so no prior year to compare to. Kath stepped up to RemCo chair in May 2024.
10 Adrian I. Peace benefits relate to a taxable travel allowance.
11 Jack Clarke joined in 2022, so the perceived increase is due to a partial years data in 2022. Jack did not receive a pay increase in 2023.
12 Rowan Baker joined in 2024, so no prior year to compare to.
13 All NEDS received an increase in June 2024 as noted on page 132 of the 2023 Annual Report.
14 Employee bonus data reflects what was paid within the year, whereas Executive Director “ED” bonuses are reported based on the performance year they relate to. Since no bonuses will be paid for the 2024 performance year, as stated on page 99, this results in
a -100% change.
ANNUAL REPORT ON REMUNERATION CONTINUED
ESSENTRA PLC ANNUAL REPORT 2024
105
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ANNUAL REPORT ON REMUNERATION CONTINUED
Payments for loss of office (audited)
Payments have been determined by the Remuneration Committee taking into account the
Director’s contractual entitlements, the rules of the Company’s incentive plans and the
provisions of the Company’s Remuneration Policy (the “Policy”) as approved by shareholders
at the Company’s Annual General Meeting held in May 2024.
As set out in the announcement dated 10 September 2024, Jack Clarke stepped down from
his role as Chief Financial Officer of Essentra plc (the “Company”) on 5 November 2024 and
stepped down as a Director on 31 December 2024, and will cease employment at the end of
his notice period on 31 March 2025.
Basic salary and contractual benefits, including pension, continue to be paid as normal to
Jack until 31 March 2025. No subsequent termination payments will be made. He will receive
a capped contribution of £3,000 excluding VAT towards legal fees incurred in connection
with his departure.
Jack remained eligible to receive an annual bonus for the 2024 bonus year which was subject
to performance assessment in the ordinary course, consistent with the performance
framework set out at the time of the launch of the 2024 bonus programme – however, as
detailed on page 99, there will be no bonus paid out for 2024.
As he remains an employee until March, Jack remains eligible for a prorated bonus for 2025,
however, will not be eligible for an LTIP grant in 2025.
Following careful consideration, the Remuneration Committee determined that Jack
should be treated as a “good leaver” in relation to his outstanding LTIP awards. These
awards will be time pro-rated to reflect the number of days elapsed from the start of the
relevant performance period until and including 31 March 2025 as a proportion of the full
performance period and will also be subject to the assessment and degree of satisfaction
of the applicable performance targets determined by the Remuneration Committee at the
normal vesting date. Vested awards will remain subject to any applicable post-vesting
holding periods in the usual way. The Committee also agreed to treat Jack as a “good
Relative importance of spend on pay (unaudited)
2024
£m
2023
£m
%
change
Wages and salaries1
91.7
90.7
1.1
Distributions to shareholders2
10.5
6.5
61.5
Revenue – total3
302.4
316.3
-4.4
Adjusted Operating Profit – total3
40.1
43.2
-7.2
Notes:
1
Wages and salary costs are as per Note 5 of the Consolidated Financial Statements.
2
In 2023 this excludes £89.3m special dividend paid to shareholders in April 2023
3
Revenue and Adjusted Operating Profit included in this analysis as indicators of the continuing operations of the business performance
and can be found on page 123 of the Annual Report.
leaver” for the purposes of the DASB such that his outstanding awards would vest on
cessation of employment. Jack is required to comply with the Company’s post-employment
shareholding requirements in respect of shares from incentive awards that have been
released since the date of the adoption of the Policy at the 2021 AGM, or are released in
future on an after-tax basis.
Payments to past Directors (audited)
Paul Forman, in his capacity as a Chief Executive Officer of Essentra plc was awarded
Performance Shares in 2022. As of 6 October 2025, the shares are set to vest at 25.38%, with
an estimated value including dividend of £82,473 (Share price used is based on the average
share price over the last three months of the financial year).
Executive Director Contracts and NED letters of appointment
The Executive Directors have open-ended contracts containing 12 months’ notice periods
with their reappointment being confirmed annually at the AGM.
The Chair and Non-Executive Directors do not have service contracts, instead they have
letters of appointment for an initial period of three years which may be terminated at
three-months’ notice.
Implementation of Remuneration Policy for 2025 (unaudited)
When considering the implementation of the policy for 2025, the Remuneration Committee
was mindful of the 2018 Code and considers that the executive remuneration framework
appropriately addresses the following factors:
Clarity
We provide open and transparent disclosures both internally and externally in relation to our
executive remuneration arrangements.
Simplicity
Variable remuneration arrangements for our executives and our wider workforce are simple in
nature with individuals eligible for a bonus and, at more senior levels, a single long-term incentive
plan. These are well understood by both participants and shareholders.
Predictability
Our executive remuneration framework contains maximum opportunity levels for each
component of remuneration with variable incentive outcomes varying depending on the level of
performance achieved against specific measures.
Alignment to
culture
The performance measures used for annual bonus and LTIP awards are KPIs that drive behaviours
that are closely aligned to our strategy and Company values. Including a greenhouse gas
(“GHG”) emissions measure, a focus on a lower carbon nylon replacement material and recycled
or renewable content.
Proportionality
and risk
The Remuneration Committee believes that our variable pay structures provide a fair and
proportionate link between Company performance and reward. In particular, the use for
Executive Directors of annual bonus deferral, LTIP holding periods and shareholding requirements
provide a clear link to the ongoing performance of the Company and therefore long-term
alignment with stakeholders. For example, the shareholding guideline for Executive Directors
continues two years after leaving Essentra.
We are also satisfied that the variable pay structures do not encourage inappropriate risk-taking.
Notwithstanding this, the Remuneration Committee retains an overriding discretion that allows
it to adjust formulaic outcomes from incentive plans so as to guard against disproportionate out-
turns. Malus and clawback provisions also apply to both the annual bonus and LTIP.
ESSENTRA PLC ANNUAL REPORT 2024
106
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Salary
Basic salary for each Executive Director is determined by the Remuneration Committee,
taking into account the role, responsibilities, performance, experience of the individual and
market movement. Any salary change is normally effective in April each year.
We are awarding the CEO a 3% increase, in line with the wider UK workforce. Following her
recent appointment, the CFO salary remains unchanged.
Scott
Fawcett
£
Rowan
Baker1
£
Annual salary effective from 1 April 2025
575,667
440,000
Annual salary effective from 1 April 2024
558,900
–
Note:
1
Rowan Baker was hired as CFO on 5 November 2024 on a salary of £440,000.
Benefits
Executive Directors are provided with the following benefits:
• car allowance
• private medical insurance with family level cover
• life assurance cover of four times basic salary.
Pension
In line with best practice, our Executive Directors’ pension contributions are aligned with the
wider workforce at 5% of salary from appointment.
2025 Annual bonus
Under the terms of the annual bonus arrangements for 2025, the CEO & CFO are potentially
entitled to a maximum bonus of up to 150% of basic salary.
The metrics used in the 2025 annual bonus (table below) are intended to align with the strategy
of Essentra plc. In particular, the metrics are designed to provide a balanced alignment with our
goals of generating sustainable, profitable growth and strong cash generation.
Measures
2024 Weighting
(%)
2025 Weighting
(%)
Adjusted Operating Profit
50%
50%
Adjusted Operating Cash Flow
20%
20%
Strategic Objectives
20%
20%
Environmental targets
10%
10%
In 2025, a ‘gate’ will apply whereby there will be no bonus payable to the CEO and CFO in
respect of any of the financial and environmental measures unless the threshold Adjusted
Operating Profit target is met. For achieving threshold Adjusted Operating Profit and
Adjusted Operating Cash Flow, 10% of the relevant portion of the bonus will be payable.
Progress against environmental targets will be reviewed by the ESG Committee.
Targets are considered to be commercially sensitive so will be disclosed retrospectively in
next year’s Remuneration Report.
ANNUAL REPORT ON REMUNERATION CONTINUED
ESSENTRA PLC ANNUAL REPORT 2024
107
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ANNUAL REPORT ON REMUNERATION CONTINUED
2025 LTIP
An award granted under the LTIP consists of a conditional right to receive shares in the
Company, subject to satisfaction of performance conditions over a three-year period. An
additional two-year holding period applies. Malus and clawback provisions also apply to LTIP
awards for three years from vesting.
The EPS targets for 2027 have been set by the Committee at a level that is considered
appropriately challenging following an assessment of a range of relevant factors including
the three-year business plan, current consensus and the broader medium-term market
outlook. The ESG targets were set with reference to our medium-term aspirations for the
relevant metrics.
For clarity, we have chosen to express targets going forward in pence rather than as a
percentage. This target represents a CAGR of 2.5% to 8.5% EPS growth over the period, and,
when normalised for the expected reduction in EPS due to current market conditions in year
1 of the plan, represents a significant outperformance compared to previous historic LTIP
target ranges for Years 2 and 3 of the plan. In this context the Remuneration Committee is
satisfied that this is a stretching target range.
Prior to vesting, the Remuneration Committee will consider if discretion should be applied, which
would include an assessment of whether windfall gains have arisen during the vesting period.
The following LTIP awards are intended to be granted to the CEO and CFO during 2025.
Condition
Scott
Fawcett
Rowan
Baker
LTIP awards as a percentage of salary
150%
150%
Condition
Threshold4
Maximum
Adjusted EPS in 20271 (50%)
9.2p
10.9p
Relative TSR vs. FTSE 2502 (30%)
Median
Upper quartile
ESG
GHG3 – reduction in GHG emissions over the three-year LTIP (10%)
11.5%
17%
Social – Diversity of gender in our Leadership teams both GEC and the GEC – 1 (10%)
30%
40%
Notes:
1
Adjusted EPS is subject to adjustment from portfolio management/changes.
2
FTSE 250 excluding companies in the following industries: basic materials, energy, financial services, real estate, utilities and travel
and leisure.
3
Externally audited scope one and two GHG emissions consistent with our publicly stated commitment to be carbon neutral by 2040.
4
25% vests at threshold, with the exception of the Diversity measure, where 0% vests at threshold.
Non-Executive Director fees
The fees for the Chair are set by the Remuneration Committee, while fees for the Non-
Executive Directors are determined by the Chief Executive and the Chair. Fee reviews take
into account a range of relevant factors, including time commitment and responsibilities for
individual Non-Executive Director roles and relevant market data. Following the appointment
of Steve Good the Company Chair’s fee was maintained at £230,000 effective 1 June 2024
and the basic Non-Executive Director fee will remain at £60,000.
Annual fee effective
Chair
Non-
Executive
Director
Additional
fee for Senior
Independent
Director
Additional
fee for
Audit and
Remuneration
Committee
Chairs
Additional
fee for
sustainability
Committee
Chair
Additional
fee for
Employee
Champions
From 1 Jan/June 2024
£230,000
£60,000
£10,000
£13,000
£11,000
£10,000
Statement of shareholder voting (unaudited)
The results of shareholder voting in relation to the approval of the 2024 Directors’
Remuneration Policy and the Directors’ Remuneration Report at the 2024 AGM, respectively,
were as follows:
Annual Report on Directors
Remuneration excluding the Policy
(2024 AGM)
Remuneration
Policy Report
(2024 AGM)
No. of
votes
%
No. of
votes
%
Votes cast in favour
241,347,602
99.66
224,694,046
92.79
Votes cast against
816,992
0.34
17,470,356
7.21
Total votes cast
242,164,594
242,164,402
Abstentions
6,887
–
7,079
–
ESSENTRA PLC ANNUAL REPORT 2024
108
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
THE DIRECTORS’ REMUNERATION POLICY REPORT
The Directors’ Remuneration
Policy Report – Summary
The Directors’ Remuneration Policy Report (the “Policy Report”)
sets out the policies under which the Executive and Non-Executive
Directors are remunerated.
Summary of 2024 Policy Report
The Remuneration Committee structures
Executive Director remuneration in two
distinct parts: (i) fixed remuneration of
basic salary, pension and benefits; and
(ii) variable performance-related
remuneration in the form of cash
bonuses, deferred share bonuses and
long-term incentive arrangements.
Remuneration for Executive Directors is
structured so that the variable
performance related pay element forms
a significant portion of the remuneration
opportunity. The majority of total
remuneration at the maximum
performance level will derive from the
Company’s long-term incentive
arrangements. All incentives are designed
to be aligned to the delivery of Essentra’s
Strategic priorities.
The current Directors’ Remuneration Policy
was approved by our shareholders at the
AGM in 2024. The current Policy Report as
approved can be found in full in the Essentra
Annual Report 2023, a copy of which can be
downloaded from www.essentraplc.com.
The following pages contain a summary of
the Policy. This Policy Report took effect
immediately after the AGM and applied to
the 2024 financial year.
The Remuneration Committee discussed
this Policy Report over a series of meetings
which considered the strategic priorities
of the business post the strategic review
and moving to a standalone pure-play
components business, governance
requirements and evolving market practice.
Input was sought from the CEO, CFO and
members of the HR team, while ensuring
that conflicts of interests were suitably
mitigated. Consideration was given to
the wider workforce when evaluating the
approach to Directors’ remuneration.
No employees were directly consulted
on the development of the Policy.
In principle, our pay policy
for our wider workforce is
closely aligned with our Policy,
reflecting our commitment to
fairness and consistency in
compensation practices
throughout the organisation.”
ESSENTRA PLC ANNUAL REPORT 2024
109
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
THE DIRECTORS’ REMUNERATION POLICY REPORT CONTINUED
Remuneration Policy
1. Overview
The Remuneration Committee determines
and recommends to the Board the
framework for the remuneration of the
Executive Directors and the Chair of the
Board. The remuneration of the Non-
Executive Directors is the responsibility of the
Board as a whole. No Director is involved in
determining or voting on their own
remuneration.
The Chief Executive’s remuneration proposals
for the other members of the GEC, including
the Company Secretary are reviewed by the
Remuneration Committee, and the
Remuneration Committee’s
recommendations with regards to those
proposals are made to the Board.
The Remuneration Committee also takes
note of the remuneration policy as detailed
by the Chief Executive in respect of other
levels of management in the Company
and makes such recommendations to the
Chief Executive as the Remuneration
Committee deems appropriate. The
Remuneration Committee has regard to
the proposed remuneration policy for other
management and employees across the
Group, when determining recommendations
on remuneration for the Executive
Directors and other senior executives. The
Remuneration Committee places significant
focus on, and spends considerable time
reviewing the risks surrounding the
Company’s existing remuneration policies on
an annual basis and has determined that
there are currently no significant concerns
with the structure or operation of the
remuneration policy.
The Remuneration Committee’s main
responsibilities are to:
• Develop the Company’s Remuneration
Policy for the Chair, Executive Directors,
the members of the GEC and other senior
executives, covering basic salary, bonus,
long-term incentives, retirement provisions
and other benefits
• Strike an appropriate balance between:
– the fixed and variable; and
– the cash and equity-
related components of total
remuneration packages.
• Review and determine the terms of
employment and remuneration of
the individual Executive Directors and
nominated senior management, including
any specific retirement or severance terms
• Determine the remuneration of the Chair
of the Board
• Establish and review the operation
of any employee share plans, including
the granting of awards, the setting and
testing of performance conditions and
exercising of any awards under long-term
incentive plans
• Review the workforce remuneration
and related policies and the alignment
of incentives and reward with the
Company culture
• Select, appoint and determine the terms
of reference for independent consultants
to advise the Remuneration Committee
on remuneration matters
In determining the policy for the Executive
Directors, the Remuneration Committee’s
key objectives are to:
• Ensure that senior executives’
remuneration is designed so as to
attract, retain and motivate high
quality executives in a manner that
aligns their remuneration with the
interests of shareholders and other
stakeholders, particularly in the design
of the performance-related elements of
their remuneration packages and their
shareholding guidelines
• Promote the achievement of both
the Company’s annual and longer-term
strategic objectives. The Remuneration
Committee considers the alignment
of Company performance and the
remuneration of its senior executives,
including the Executive Directors, to be an
important element of driving shareholder
value. It believes that senior executives
should be highly rewarded (on a market-
competitive basis) for the delivery of
stretching goals but should also receive
reduced rewards when the business does
not perform to expectations
• Encourage Executive Directors to act
in a fair and responsible manner without
unnecessary risk-taking having regard
to the long-term performance of
the Company.
The Remuneration Committee considers all
elements of the remuneration package as a
whole. It looks to ensure that an appropriate
balance is maintained between them so
that the need for both short-term success
and long-term sustainable growth is
recognised. The Remuneration Committee
also ensures that non-financial business
measures and individual objectives reflect
adequately the Company’s Environmental,
Social and Governance (“ESG”) responsibilities.
2. Summary of components of
Executive Directors’ remuneration
The Remuneration Committee structures
Executive Directors’ remuneration in two
distinct parts:
• fixed remuneration of basic salary,
pension provision and benefits; and
• variable performance-related
remuneration in the form of cash
bonuses, deferred share bonuses and
long-term incentive arrangements.
Remuneration for Executive Directors
is structured so that the variable
performance-related pay element forms
a significant portion of each package.
A significant portion of total remuneration
at the maximum performance level will
derive from the Company’s long-term
incentive arrangements. All incentives
are designed to be aligned to delivery
of Essentra’s strategic priorities.
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DIRECTORS’ REPORT
3. Policy Table
Purpose and link to strategy
To reflect the particular skills and experience of an individual and to provide a competitive basic salary.
Operation
Generally reviewed annually with any increase normally taking effect from 1 April, although
the Remuneration Committee may award increases at other times of the year if it considers
it appropriate.
The review takes into consideration a number of factors, including (but not limited to):
• The individual Director’s role, experience and performance
• Business performance
• Pay and conditions elsewhere in the Group
• Market data for comparable roles in appropriate pay comparators
• Overall external climate around the cost of living
Opportunity
No absolute maximum has been set for Executive Director base salaries.
Any annual increase in salaries is at the discretion of the Remuneration Committee taking into
account the factors stated in this table and the following principles:
• Salaries would typically be increased at a rate consistent with the average salary increase (in
percentage of salary terms) for the relevant workforce.
• Larger increases may be considered appropriate in certain circumstances (including, but not limited
to, a change in an individual’s responsibilities or in the scale of their role or in the size and complexity
of the Group).
• Larger increases may also be considered appropriate if a Director has been initially appointed to the
Board at a lower than typical salary.
Performance measure
Not applicable.
Purpose and link to strategy
To ensure the delivery of Company performance-related objectives, aid retention and to align
Directors’ interests with those of the Company’s shareholders.
Operation
One half of the total bonus is usually paid in cash shortly after the announcement of the
annual results.
The other half is usually deferred into shares in the Deferred Annual Share Bonus Plan (the “DASB”)
which will normally vest after three years subject to continued service.
Performance is assessed against measures and targets which are established by the Remuneration
Committee. As performance increases so does the percentage payable up to the maximum.
The bonus is subject to malus and clawback provisions for a period of three years following the
determination of the bonus. Circumstances in which these provisions could be applied by the
Remuneration Committee include material misstatement in the Company’s Financial Statements,
error in assessing the performance conditions, a material failure in risk management, serious
misconduct or material error by an individual, business failure or serious reputational damage
to the Company or a relevant business unit.
An additional payment (in the form of cash or shares) may be made in respect of shares which
vest under deferred awards to reflect the value of dividends which would have been paid on those
shares during the deferral period (this payment may assume that dividends had been reinvested in
Company shares on a cumulative basis).
Opportunity
150% of basic salary.
Performance measure
The bonus will be based on performance using appropriate financial, strategic and individual
performance measures.
The majority of the bonus will normally be determined by measure(s) of the Company’s financial
performance. The remainder of the bonus will be based on financial, strategic, ESG, operational or
other suitable business measures appropriate to the individual Director.
No more than 20% of each financial measure will be payable at threshold performance.
Basic salary
Bonus
THE DIRECTORS’ REMUNERATION POLICY REPORT CONTINUED
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THE DIRECTORS’ REMUNERATION POLICY REPORT CONTINUED
Purpose and link to strategy
To drive the long-term delivery of the Company’s strategic objectives, aid retention and to align
Directors’ interests with those of the Company’s shareholders.
Operation
An annual grant of performance share awards usually with a three-year performance and additional
two-year holding period.
Awards are subject to the LTIP plan rules, including malus and clawback provisions for a period of
three years following the vesting of the awards. Circumstances in which these provisions could be
applied by the Remuneration Committee include material misstatement in the Company’s Financial
Statements, error in assessing the performance conditions, a material failure in risk management
serious misconduct or material error by an individual, business failure or serious reputational
damage to the Company or a relevant business unit.
An additional payment (in the form of cash or shares) may be made in respect of shares which vest
under LTIP awards to reflect the value of dividends which would have been paid on those shares
during the period up to the release of the shares (this payment may assume that dividends had
been reinvested in Company shares on a cumulative basis).
Opportunity
An award to any Executive Director would be limited to a maximum of 300% of salary.
Performance measure
Vesting will be subject to performance conditions as determined by the Remuneration Committee
on an annual basis.
The performance conditions will usually be some combination of relative TSR, adjusted EPS, adjusted
cumulative operating cash flow, ESG and a capital return measure although the Remuneration
Committee will retain discretion to use alternative performance measures which are aligned to the
corporate strategy.
The Remuneration Committee may adjust the weightings of the performance conditions for
each award, although usually each condition would have a weighting in the range of 10% to 40%
of the award.
Performance will usually be measured over a three-year period.
Up to 25% of each element vests at threshold performance, usually rising on a straight-line basis
for performance up to the maximum level for full payment. If below threshold performance, that
element of the award will not vest.
Long-Term Incentive Plan (“LTIP”)
3. Policy Table continued
Purpose and link to strategy
To align the interests of Executive Directors and shareholders, encourage a focus on long-term
performance and risk management.
Operation
Whilst in employment, Executive Directors are expected to build up a shareholding worth 300%
of salary for the Chief Executive and 200% for the Chief Financial Officer. The shareholding is to be
built up by retaining a minimum of 50% of post-tax vested shares (subsequent to the 2021 AGM).
The Remuneration Committee will review progress towards the guidelines on an annual basis and
has the discretion to adjust the guidelines in what it feels are appropriate circumstances.
Executive Directors will also be expected to remain compliant with the above guideline for a period
of two years post-employment. This guideline applies to shares from incentive awards released
subsequent to the 2021 AGM. The Remuneration Committee would retain discretion to waive this
guideline if it is not considered appropriate in the specific circumstances.
Non-Executive Directors are encouraged to hold a minimum of 7,500 shares.
Opportunity
Not applicable.
Performance measure
Not applicable.
Purpose and link to strategy
To provide cost-effective long-term benefits comparable with similar roles in similar companies.
Operation
A contribution to a defined contribution plan or paid as a cash supplement.
Opportunity
The Executive Directors have a pension provision in line with the relevant workforce. This is currently
5% of base salary.
Performance measure
Not applicable.
Employment and Post-Employment Shareholding guideline
Pension
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DIRECTORS’ REPORT
Purpose and link to strategy
To provide cost-effective benefits comparable with similar roles in similar companies.
Operation
Other benefits include family medical expenses, life insurance, and car allowance.
The Remuneration Committee may vary these benefits from time to time to suit business needs, but
they will usually be provided on broadly similar terms to those offered to other Group employees.
Executive Directors are entitled to reimbursement of reasonable expenses plus any associated
tax thereon.
Opportunity
There is no overall maximum, as the level of benefits depends on the annual cost of providing
individual benefits in the relevant local market and the individual’s specific role.
Performance measure
Not applicable.
Purpose and link to strategy
To create alignment of employees’ interests with those of shareholders.
Operation
Under the UK Sharesave, employees (including Executive Directors) are invited to enter a savings
contract of three years or five years, whereby the proceeds can be used towards the exercise of
an option granted at the time they choose to participate. The Remuneration Committee has the
discretion to set the option price up to a 20% discount on the share price in line with HMRC legislation.
An equivalent US plan is operated under applicable US tax legislation, with options granted at up to
a 15% discount on the share price.
Opportunity
For the UK plan, shares worth up to the value of the savings an Executive Director makes over
the saving period at the previously agreed option price may be purchased. The savings amount is
subject to the HMRC limit, currently £500 per month.
The US Plan is usually limited to the monthly dollar equivalent of the UK Sharesave plan.
Performance measure
The Remuneration Committee agree the annual discount to be applied to the Sharesave schemes.
No performance conditions apply to All Employee Plans.
Employee Plans – Sharesave
Other benefits
Purpose and link to strategy
To attract a high-calibre Chair and Non-Executive Directors with the relevant experience and skills.
Operation
A basic fee is payable to the Chair and Non-Executive Directors (“NEDs”) with supplementary
fees for those NEDs with additional responsibilities, such as acting as Senior Independent Director,
chairing a Board Committee, an additional defined role such as a Board Champion or for a
significantly increased time commitment.
Additional payments may be made to NEDs for time spent travelling on Company business.
Fees are reviewed periodically with reference to market levels in companies of a comparable size,
complexity and taking account of the responsibilities and time commitment of each role.
The Chair and the NEDs do not participate in the Group’s incentive arrangements or
pension plan.
Where travel to the Company’s registered office is recognised as a taxable benefit, the
Chair or a NEDs may receive the grossed-up costs of travel as a benefit. The Company may
also meet the costs (including tax thereon) of providing tax advice and tax return assistance for
international NEDs.
The Chair and NEDs are entitled to reimbursement of reasonable expenses plus any associated
tax thereon.
Opportunity
Fees for the current year are stated in the Annual Report on Remuneration.
Fee increases may be greater than those of the wider workforce in any particular year as they reflect
changes to responsibilities and time commitments and the periodic nature of any increases.
Performance measure
Not applicable.
Chair and Non-Executive Directors – Fees
THE DIRECTORS’ REMUNERATION POLICY REPORT CONTINUED
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DIRECTORS’ REPORT
THE DIRECTORS’ REMUNERATION POLICY REPORT CONTINUED
OTHER STATUTORY INFORMATION
Other statutory
information
The Directors present their Report prepared in accordance
with the Companies Act 2006, which requires the Company
to provide a fair review of the business of the Group during the
financial year ended 31 December 2024 and audited Financial
Statements of the Company and its subsidiary undertakings for
the year ended 31 December 2024. The Company’s Registered
Office is Langford Locks, Kidlington, Oxford OX5 1HX.
In accordance with the UK Financial Conduct Authority’s Listing
Rules (LR 9.8.4C), the information to be included in the Annual
Report and Accounts, where applicable, under LR 9.8.4 is set out
in the Directors’ Report.
Results and dividends
The adjusted profit after tax of the total
Group for the year ended 31 December 2024
was £27.6m (2023: £31.1m).
Adjusted basic earnings per share from
continuing operations was 8.5p (2023: 10.6p).
As at 18 March 2025, the Company has paid
the following dividend in respect of the year
ended 31 December 2024.
Per share
p
Total
£m
Interim dividend paid
25 October 2024
1.25
3.5
The Directors recommend that a final
dividend of 1.55p (2023: 2.4p) per share be
paid, making a total dividend distribution for
the year of 2.8p (2023: 3.6p).
The final dividend, subject to shareholders
approval at the AGM, will be paid on 3 July
2025 to shareholders on the register on
16 May 2025. The ex-dividend date will be
15 May 2025.
The Company announced a Special Dividend
and Share Buyback Programme on
2 February 2023, using the proceeds of the
sale of the Filters and Packaging businesses.
The Share Buyback Programme commenced
on 29 March 2023, following the release of
the 2022 full year results for an amount of
approximately £60m, and remains ongoing.
As at 31 December 2024, the Company has
purchased 16,387,728 shares for a total
consideration of £28,909,247 and retained
3,627,057 shares in Treasury.
Directors
As at 31 December 2024 the Board of
Directors comprised:
Steve Good
Non-Executive Chair
Scott Fawcett
Chief Executive
Rowan Baker
Chief Financial Officer
Dupsy Abiola
Non-Executive Director
Kath Durrant
Non-Executive Director
Mary Reilly
Non-Executive Director
Ralf K. Wunderlich
Non-Executive Director
Adrian I. Peace
Non-Executive Director
The Company requires all Directors
appointed since the last AGM to be elected
at the following AGM and for all other
Directors to be re-elected at each AGM.
Steve Good was appointed to the Board as a
Chair Designate and Non-Executive Director
on 1 July 2024, and became Chair on 1
November 2024. Steve Good will therefore
stand for election at the AGM in 2025.
Rowan Baker was appointed to the Board on
5 November 2024 as Chief Financial Officer
and Executive Director and will therefore
stand for election at the AGM in 2025.
None of the Non-Executive Directors have
service contracts. In accordance with the
Company’s Conflict of Interests policy,
Directors are required to review their
potential conflict of interests at least on an
annual basis and to notify any changes to
the Company Secretary as soon as possible.
During 2024, the current register of
conflicts was approved at each Board
meeting. At no time during the year was a
Director considered to have a conflict with a
matter under consideration by the Board.
The Directors’ Report comprises pages
60 to 121, and where information has
been included in the Strategic Report
sections of the Annual Report this has
been incorporated by reference and as
set out as per the below:
Membership of Board during 2024
financial year
pages 62 to 63
Financial instruments and financial
risk management
pages 16 to 18
CO2 emissions
page 26
Corporate governance report
page 64
Future developments of the business
of the Group
pages 8 to 13
Employee diversity
pages 32 to 33
Stakeholder engagement and
s172 report
page 38
TCFD disclosures
pages 40 to 49
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DIRECTORS’ REPORT
OTHER STATUTORY INFORMATION CONTINUED
Significant agreements
The Company has a multicurrency
revolving credit facility (“RCF”) of which
£26.1m was drawn from a facility of £200.0m
as at 31 December 2024. During the year, the
Company agreed an extension to the RCF
for five years with a maturity date of July
2029. The RCF 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 holds $102.5m of medium-
and long-dated debt in unsecured private
placement (“USPP”) notes.
Change of control
As at 3 March 2025, Computershare Trustees
(Jersey) Limited (Computershare) was the
trustee of an Employee Benefit Trust (EBT)
for the Company’s share incentive plans.
Computershare holds shares under the trust
deed constituting the EBT. In the event of a
takeover offer which could lead to a change
of control of the Company, the trustee
would abstain from voting in line with the
Investment Association Guidelines (formerly
the ABI guidelines) and in accordance with
clause 3.3 of the trust deed.
Annual General Meeting
The AGM of the Company will be held at
Langford Locks, Kidlington, Oxford OX5 1HX
on 21 May 2025 at 13:00. The meeting will be
held in person with a virtual, non-voting link,
for shareholders who may wish to join.
Details of how to join virtually are available
in the AGM Notice.
At no time during the year has any
Director had any material interest in a
contract with the Group, being a contract
of significance in relation to the Group’s
business. A statement of Directors’ interests
in shares of the Company as at 31 December
2024 and as at the date of this Report is
shown on page 103.
Share capital
The issued share capital of the Company
is shown in Note 20 of the Notes to the
Financial Statements.
On 31 December 2024, there were
290,401,801 ordinary shares of 25p each in
issue including 3,627,057 ordinary shares
of 25p each held in treasury. The rights and
obligations attaching to the Company’s
ordinary shares, and the provisions governing
the appointment and replacement of, as well
as the powers of, the Company’s Directors,
are set out in the Company’s Articles of
Association, copies of which can be obtained
from Companies House in the UK or by
writing to the Company Secretary.
There are no restrictions on the voting
rights attaching to the Company’s ordinary
shares or on the transfer of securities in the
Company, except, in the case of transfers
of securities:
• that certain restrictions may from time to
time be imposed by laws and regulations
(for example, insider trading laws)
• whereby, pursuant to the Listing Rules of
the Financial Conduct Authority, certain
employees of the Company require
approval of the Company to deal in the
Company’s ordinary shares.
Employees
As at 31 December 2024, the Company
employed 2,992 people globally and
459 people in the UK. Information on
the Company’s policies on employee
recruitment, engagement and the
employment of disabled persons
can be found on pages 32 to 33.
Political contributions
In line with Group policy, the Company
made no political contributions (2023: £nil).
Environmental
The disclosures concerning CO2 emissions
required by law are included in ESG section
on page 26. The Company’s approach to
ESG forms a key element of its strategy.
The Company minimises its carbon footprint
where possible, which includes using public
transport and has never operated or used
private aeroplanes.
Directors’ indemnities
During the year, and as at the date of
signing of the Financial Statements and this
Report, qualifying third-party indemnities
are in force under which the Company has
agreed to indemnify the Directors and the
Company Secretary, in addition to other
senior executives who are Directors of
subsidiaries of the Company, to the extent
permitted by law and the Company’s
Articles of Association, in respect of all losses
arising out of or in connection with the
execution of their powers, duties and
responsibilities as a Director or Officer of the
Company or any of its subsidiaries, including
the pension scheme trustee companies. The
scope of the indemnities extends to include
liabilities to third parties.
No persons hold securities in the Company
carrying special rights with regard to control
of the Company. The Company is not aware
of any agreements between holders of
securities that may result in restrictions on
the transfer of securities or on voting rights.
Unless expressly specified to the contrary in
the Articles of Association of the Company,
the Company’s Articles of Association may
be amended by special resolution of the
Company’s shareholders.
Articles of Association
There are no rules relating to the
amendment of the Articles of Association
other than the usual tabling of proposed
amendments through resolutions tabled at
the AGM.
Substantial shareholders
As at 31 December 2024, the Company
was advised of the following voting rights
attaching to the Company’s shares in
accordance with the Disclosure and
Transparency Rules:
% holding
FIL Limited
12.05%
SFM UK Management LLP
9.86%
FMR LLC
5.37%
Ninety One UK Limited
4.98%
Ameriprise Financial, Inc. and its group
4.98%
M&G plc
4.97%
Standard Life
4.93%
Invesco
4.91%
Royal London Asset Management
4.90%
BlackRock, Inc
4.86%
AXA Investment Managers
4.81%
Heronbridge Investment Management
4.81%
Kames Capital
2.99%
Norges Bank
2.99%
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FINANCIAL STATEMENTS
DIRECTORS’ REPORT
OTHER STATUTORY INFORMATION CONTINUED
In addition to the ordinary business of the
AGM, resolutions in respect of the following
matters of special business are included in
the Notice of Annual General Meeting that
cover the matters that follow.
Authority to allot unissued shares
At the 2024 AGM, the Directors were granted
authority to allot relevant securities up to a
nominal amount of £23,920,086, which
expires at the end of the forthcoming AGM.
At this year’s AGM, shareholders will be
asked to grant the Directors’ authority to
allot shares or grant rights to subscribe for or
convert any security into shares: (i) up to an
aggregate nominal amount of £23,632,351
representing approximately one-third of the
Company’s issued share capital, excluding
treasury shares, at 3 March 2025 (such an
amount to be reduced by the nominal
amount allotted or granted under section
(ii) below in excess of such sum); and (ii)
comprising equity securities up to an
aggregate nominal amount of £47,264,702
representing approximately two-thirds of
the issued share capital (excluding treasury
shares) at 3 March 2025 (such an amount
to be reduced by any allotments or grants
made under section (i) above) in connection
with an offer by way of a rights issue.
The proposal conforms to the guidelines
issued by the institutional investment
protection bodies to ensure that existing
shareholders’ interests are safeguarded.
The Directors have no present intention of
exercising either of these authorities, which
will expire at the end of next year’s AGM (or,
if earlier, the close of business on 21 August
2026), except in relation to share options.
Allotment of shares for cash
At the 2024 AGM, shareholders approved
a special resolution to enable the Directors
to allot shares for cash without first offering
them to existing shareholders in proportion
to their existing shareholdings. That approval
expires at the end of the forthcoming AGM
and resolutions 14 and 15 in the Notice of
AGM seek to renew it.
Following changes in the Pre-Emption
Group’s Statement of Principles, made in
November 2022, and the updated guidance
on Share Capital Management Guidelines,
which was issued by the Investment
Association in February 2023, the Company
intends to again seek a resolution which
authorises disapplication of pre-emption
rights in respect of up to an aggregate
nominal amount of £7,161,318 (representing
28,645,274 ordinary shares).
This aggregate nominal amount represents
approximately 10% of the issued ordinary
share capital of the Company (excluding
treasury shares). The Board did not use
this authority last year.
In addition to the above Resolution,
the Company seeks a Resolution which
authorises disapplication of pre-emption
rights in respect of up to an aggregate
nominal amount of £7,161,318 (representing
28,645,274 ordinary shares) in connection
with acquisitions and other capital
investments, which is in line with the
Pre-Emption Group’s Statement of Principles
and the guidance of The Investment
Association. This aggregate nominal amount
represents an additional 10% of the issued
ordinary share capital of the Company
(excluding treasury shares).
The Board did not use this authority last
year and does not currently intend to make
use of these resolutions. The Board continues
to believe the flexibility that the increased
levels to which pre-emption rights may be
disapplied, provides the Company flexibility
for future opportunities however, the Board
intends to only issue any amount in excess
of one-third on a fully pre-emptive basis.
The Board therefore support both these
resolutions which seek authority to disapply
pre-emption rights at the amount of 10%
of the ordinary share capital (excluding
treasury shares).
These authorities will expire at the
conclusion of the following AGM or, if
earlier, on 21 August 2026. The proposal
conforms to the guidelines issued by the
institutional investment protection bodies
to ensure that existing shareholders’
interests are safeguarded.
Purchase of own shares
The Company announced on 2 February
2023, the intention to launch a share
buyback programme of approximately
£60m (“Share Buyback Programme”) which
commenced following the Company’s Full
Year results on 29 March 2023. The Share
Buyback Programme returns funds to
shareholders following the sale of the
Filters and Packaging businesses.
The purpose of the Share Buyback
Programme is to return funds to shareholders
following the divestment of the Filters and
Packaging businesses during 2022 and this
has reduced the share capital of the
Company. The Directors consider the Share
Buyback Programme to be in the best
interests of the Company and of its
shareholders generally, and it is expected
over the long term that the implementation
of the Share Buyback Programme will
enhance earnings per share.
To support the ongoing Share Buyback
Programme, the Board have proposed
a resolution which would authorise the
Company to purchase 10% (excluding any
treasury shares) of its own shares which
will be put to shareholders at the 2025 AGM.
Under the arrangements for the Share
Buyback Programme, shares once
purchased, will be cancelled or held in
treasury. The power would apply until the
end of next year’s AGM (or if earlier,
21 August 2026).
Other than the Share Buyback Programme,
the Directors have no immediate plans to
exercise this authority, but will keep under
review the need to do so in light of business
and investment opportunities. Purchases
of the Company’s own shares, where made,
would be in the best interests of the
Company and of its shareholder generally
and could generally be expected to result in
an increase in earnings per share.
In accordance with the requirements of
the Listing Rules of the Financial Conduct
Authority, the minimum price (exclusive of
expenses) which may be paid for a share is
its nominal value and the maximum price
(exclusive of expenses) for shares which may
be paid is the highest of: (i) an amount
equal to 105% of the average market value
for a share for the five business days
immediately preceding the date of the
purchase; and (ii) the higher of the price of
the last independent trade and the highest
current independent bid on the trading
venues where the purchase is carried out.
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FINANCIAL STATEMENTS
DIRECTORS’ REPORT
OTHER STATUTORY INFORMATION CONTINUED
During the financial year ending
31 December 2024, 1,412,208 ordinary shares
were transferred out of Treasury by the
Company to satisfy share options under
the Company’s share incentive plans.
No dividends have been paid on shares while
held in Treasury and no voting rights attach
to the treasury shares.
External Auditor
PricewaterhouseCoopers LLP have expressed
their willingness to continue to be appointed
as External Auditor of the Company. Upon
the recommendation of the Audit and Risk
Committee, resolutions to appoint them
as External Auditor and to authorise the
Directors to determine their remuneration
will be proposed at the AGM.
Recommendation
The Directors believe that the resolutions
in the Notice of Annual General Meeting are
in the best interests of the Company and its
shareholders as a whole, and unanimously
recommend that shareholders vote in
favour of each resolution.
Derivatives
Information related to derivatives is included
in the Accounting Policies on page 134 and
in Note 15 and Note 19 to the Notes of the
Financial Statements.
Going concern
The Directors have prepared the
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
15 months from the date of approval of
these Consolidated Financial Statements.
Information regarding the financial
position of the Group, its cash flows,
liquidity position, and borrowing facilities
are described in the Financial Review on
pages 16 to 18.
In addition, Note 19 to the Financial
Statements includes the Group’s objectives,
policies and processes for managing its
capital, its financial risk management
objectives, details of its financial instruments
and hedging activities and exposures to
credit, market and liquidity risk. Cash
balances and borrowings are detailed in
Note 22.
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.
An amount of £26.1m (2023: £15.2m)
was drawn down 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 significant
economic 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 reasonably plausible
changes in macroeconomic conditions
and is considered to represent a severe
but plausible scenario.
The results of this downside scenario
show that there is sufficient liquidity in
the business for a period of 15 months from
the date of approval of these Financial
Statements, and do not indicate any
covenant breach during the test period.
The downside scenario assumes a period
of prolonged revenue decline in 2025, and
subsequently delays, and reduces the pace
of market recovery through 2026. The
downside scenario also assumes strategic
levers to drive market share gains do not
materialise sufficiently, as well as including
unmitigated climate change transition risks
from the climate change quantitative
analysis. 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. Capital expenditure, sales
and general overheads, and working capital
will continue to be managed closely to ensure
sufficient liquidity.
The scenarios assessed 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. Based on these, and taking into
consideration the risks detailed in Note 19,
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 Consolidated Financial
Statements. This disclosure has been
prepared in accordance with the 2018 Code.
Long-term viability statement
In accordance with provision 31 of the
2018 Code, the Directors have assessed the
long-term viability of the Company over the
three-year period to December 2027.
The assessment has been based on the
Company’s strategic plan, balance sheet
and financing position, and the potential
impact of the key risks and uncertainties
described as part of the Financial
Statements. The Company strategy has
been translated into a three-year strategic
plan comprising a one-year detailed budget
and a financial forecast for the following
two years. The plan will be subject to annual
updates by management and review by the
Board. As a consequence, the Directors have
chosen a three-year time horizon for the
Long-Term Viability Statement (“LTVS”)
as being an appropriate timeframe for
assessing the viability of the Company, as
this is the period reviewed by the Board in
its strategic planning process.
The Directors believe that this presents a
reasonable degree of confidence over this
longer-term outlook, However, the Directors
have also given due consideration to any
potential significant risks beyond this
time horizon.
ESSENTRA PLC ANNUAL REPORT 2024
117
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Scenario 1
Level of severity tested
Environment, Social and
Governance (low)
Transition risks assumed, without opportunities from the climate change
quantitative analysis, and a ‘middle of the road’ scenario, leading to an increase in
operating profit of £0.3m, for 2025, 2026 and 2027.
Operational and Supply
Chain disruption (low)
N/A
Macroeconomic
environment (low)
£2.3m reduction in 2025, with a subsequent reduction in operating profit of £4.3m
in 2026 and £4.4m in 2027.
Delivery of key growth
initiatives (low)
£2.3m reduction in 2025, with a subsequent reduction in operating profit of £6.7m
in 2026 and £6.8m in 2027.
Scenario 2
Level of severity tested
Environment, Social and
Governance (severe)
Transition risks assumed, without opportunities from the climate change
quantitative analysis, and a ‘middle of the road’ scenario, leading to a reduction in
operating profit of £0.9m in 2025, 2026 and 2027.
Operational and Supply
Chain disruption (severe)
Key manufacturing and distribution sites are subject to business disruption due to
a cyber related event, causing £1.1m operating loss in 2025.
Macroeconomic
environment (low)
£2.3m reduction in 2025, with a subsequent reduction in operating profit of £4.3m
in 2026 and £4.4m in 2027.
Delivery of key growth
initiatives (low)
£2.3m reduction in 2025, with a subsequent reduction in operating profit of £6.7m
in 2026 and £6.8m in 2027.
Scenario 3
Level of severity tested
Environment, Social and
Governance (severe)
Transition risks assumed, without opportunities from the climate change
quantitative analysis, and a ‘middle of the road’ scenario, leading to a reduction in
operating profit of £0.9m in 2025, 2026 and 2027.
Operational and Supply
Chain disruption (severe)
Key manufacturing and distribution sites are subject to business disruption due to
a cyber related event, causing £1.1m operating loss in 2025.
Macroeconomic
environment (severe)
£5.9m reduction in 2025, with a subsequent reduction in operating profit of £6.9m
in 2026 and £7.2m in 2027.
Delivery of key growth
initiatives (severe)
£5.7m reduction in 2025, with a subsequent reduction in operating profit of £11.8m
in 2026 and £14.8m in 2027.
continue in operational existence and meet
its liabilities as they fall due over the period
of the assessment.
Directors’ statement as to
disclosure of information
to the External Auditor
As required by Section 418(2) of the
Companies Act 2006, the Directors who
were members of the Board at the time
of approving this Report, having made
enquiries of fellow Directors and of the
External Auditor, confirm that:
• as far as each Director is aware, there is
no relevant audit information of which the
Company’s External Auditor is unaware
• each Director has taken all reasonable
steps that they ought to have taken as
a Director to ascertain any relevant audit
information, and to ensure that the
Company’s External Auditor is aware
of that information
• the Strategic Report and Directors’ Report,
including the Report of the Remuneration
Committee, were approved by the Board
on 18 March 2025.
By order of the Board
Emma Reid
Company Secretary
18 March 2025
OTHER STATUTORY INFORMATION CONTINUED
This assessment includes the potential
financial impact of the following Principal
Risks materialising over the three-year period:
• climate change related transition risks
and opportunities
• business disruption, including operational
impacts as a result of a cyber related event
• macroeconomic environment uncertainty
• delivery of growth initiatives.
In order to support the assessment of the
viability, the Directors have considered
three realistic and plausible scenarios. The
Directors have assumed that the Principle
Risks in each scenario would all crystallise
simultaneously. In Scenario 3, the Directors
have considered the worst case events from
each of the selected Principal Risks.
In all of the scenarios assessed, there is
no indication of potential breaches of
banking covenants, and there remains
sufficient liquidity headroom from the
Group’s current borrowing facilities. In
making the assessment, the Directors have
assumed that capital markets and bank
funding will continue to be available over
the period. Furthermore, management
would be in a position to implement
effective mitigation actions to reduce
the impact a potential risk event and
to preserve cash resources.
Mitigating actions considered by
management include availability of
alternative sources of funding, cost
rationalisation measures, working capital
and capital expenditure management and
potential disposal of non-core assets.
Based on the viability assessment
undertaken, the Directors have a reasonable
expectation that the Group will be able to
ESSENTRA PLC ANNUAL REPORT 2024
118
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Statement of Directors’
Responsibilities in respect
of the Financial Statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulation.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
Company law requires the Directors to prepare
Financial Statements for each financial year.
Under that law the Directors have prepared
the Group financial statements in accordance
with UK-adopted International Accounting
Standards and the Company Financial
Statements in accordance with United
Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting
Standards, comprising FRS 101 Reduced
Disclosure Framework, and applicable law).
Under company law, Directors must not
approve the financial statements unless they
are satisfied that they give a true and fair
view of the state of affairs of the Group and
Company and of the profit or loss of the
Group for that period.
In preparing the Financial Statements, the
Directors are required to:
• select suitable accounting policies and
then apply them consistently
• state whether applicable UK-adopted
international accounting standards have
been followed for the Group financial
statements and United Kingdom
Accounting Standards, comprising
FRS 101 have been followed for the
Company financial statements, subject
to any material departures disclosed and
explained in the financial statements
• make judgements and accounting
estimates that are reasonable and
prudent; and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the Group
and Company will continue in business.
The Directors are responsible for
safeguarding the assets of the Group and
Company and hence for taking reasonable
steps for the prevention and detection of
fraud and other irregularities.
The Directors are also responsible for keeping
adequate accounting records that are
sufficient to show and explain the Group’s
and Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the Group and
Company and enable them to ensure that
the financial statements and the Directors’
Remuneration Report comply with the
Companies Act 2006.
The Directors are responsible for the
maintenance and integrity of the Company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination
of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
Each of the Directors, whose names and
functions are listed in the Directors’ Report
confirm that, to the best of their knowledge:
• the Group Financial Statements, which
have been prepared in accordance with
UK-adopted international accounting
standards, give a true and fair view of the
assets, liabilities, financial position and
profit of the Group;
• the Company Financial Statements, which
have been prepared in accordance with
United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair
view of the assets, liabilities and financial
position of the Company; and
• the Strategic Report includes a fair review
of the development and performance of
the business and the position of the Group
and Company, together with a description
of the Principal Risks and uncertainties
that it faces.
In the case of each Director in office at the
date the Directors’ report is approved:
• so far as the Director is aware, there is
no relevant audit information of which
the Group’s and Company’s auditors are
unaware; and
• they have taken all the steps that they
ought to have taken as a Director in order
to make themselves aware of any relevant
audit information and to establish that
the Group’s and Company’s auditors are
aware of that information.
Scott Fawcett
Chief Executive
Rowan Baker
Chief Financial Officer
18 March 2025
ESSENTRA PLC ANNUAL REPORT 2024
119
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Independent Limited Assurance
Report to Essentra plc
ERM Certification and Verification Services Limited (“ERM CVS”) was
engaged by Essentra plc (“Essentra”) to provide limited assurance in
relation to the Selected Information set out below and presented in
Essentra’s 2024 Annual Report (the “Report”).
INDEPENDENT LIMITED ASSURANCE REPORT TO ESSENTRA PLC
Scope of our
assurance
engagement
Whether the following Selected Information for 2024, as indicated in Essentra’s
2024 Annual Report are fairly presented, in all material respects, in accordance
with the reporting criteria.
Our assurance engagement does not extend to information in respect of
earlier periods or to any other information included in the Report.
Selected
Information
• Total Scope 1 GHG emissions [metric tonnes CO2e]
• Total Scope 2 GHG emissions (location-based) [metric tonnes CO2e]
• Total Scope 2 GHG emissions (market-based) [metric tonnes CO2e]
• Total Scope 3 GHG emissions from the following categories [metric tonnes
CO2e]:
– Category 1: Purchased goods and services
– Category 2: Capital goods
– Category 3: Fuel and energy-related activities
– Category 4: Upstream transportation and distribution
– Category 5: Waste generated in operations
– Category 6: Business travel
– Category 7: Employee commuting
– Category 8: Upstream leased assets
• Total water usage [cubic metres]
• Total solid hazardous and non-hazardous waste by destination (Recycling,
Recovery, Incineration, Landfill) [metric tonnes]
• Total liquid hazardous and non-hazardous waste by destination (Recycling,
Recovery, Incineration, Landfill) [metric tonnes]
• Zero waste to landfill sites [number]
• Percentage of raw materials from sustainable sources in polymer ranges [%]
• Percentage by spend of recycled content in packaging materials [%]
• Percentage of targeted suppliers by spend which signed up to the Essentra
Supplier Code of Conduct [%]
• Products introduced with sustainability criteria [number]
Reporting period
1st January 2024 – 31 December 2024
Reporting
criteria
• Essentra’s Basis of Reporting, definitions and methodology for the waste,
zero waste to landfill, water, raw materials, suppliers, product and packaging
metrics
• The GHG Protocol Corporate Accounting and Reporting Standard (WBCSD/
WRI Revised Edition 2015) for Scope 1 and Scope 2 GHG emissions
• GHG Protocol Scope 2 Guidance (An amendment to the GHG Protocol
Corporate Standard (WRI 2015) for Scope 2 GHG emissions
• The Corporate Value Chain (Scope 3) Accounting and Reporting Standard
(WBCSD/WRI 2011) for Scope 3 GHG emissions
Assurance
standard and
level of
assurance
We performed a limited assurance engagement, in accordance with the
International Standard on Assurance 3000 (Revised) ‘Assurance Engagements
other than Audits or Reviews of Historical Financial Information’ issued by the
International Auditing and Assurance Standards Board.
The procedures performed in a limited assurance engagement vary in nature
and timing from and are less in extent than for a reasonable assurance
engagement and consequently, the level of assurance obtained in a limited
assurance engagement is substantially lower than the assurance that would
have been obtained had a reasonable assurance engagement been performed.
Respective
responsibilities
Essentra is responsible for preparing the Report and for the collection and
presentation of the information within it, and for the designing, implementing
and maintaining of internal controls relevant to the preparation and
presentation of the Selected Information.
ERM CVS’ responsibility is to provide a conclusion to Essentra on the agreed
assurance scope based on our engagement terms with Essentra, the assurance
activities performed and exercising our professional judgement.
Engagement summary
ESSENTRA PLC ANNUAL REPORT 2024
120
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
INDEPENDENT LIMITED ASSURANCE REPORT TO ESSENTRA PLC CONTINUED
Our conclusion
Based on our activities as described below, nothing has come to our attention to indicate
that the Selected information for 2024, together with the related explanatory notes, are not
fairly presented, in all material respects, in accordance with the reporting criteria.
Our assurance activities
Considering the level of assurance and our assessment of the risk of material misstatement of
the Selected Information a multi-disciplinary team of sustainability and assurance specialists
performed a range of procedures that included, but was not restricted to, the following:
• Evaluating the appropriateness of the reporting criteria for the Selected Information;
• Interviewing management representatives responsible for managing the Selected
Information;
• Interviewing relevant staff to understand and evaluate the management systems and
processes (including internal review and control processes) used for collecting and
reporting the Selected Information;
• Reviewing of a sample of qualitative and quantitative evidence supporting the Selected
Information;
• Performing an analytical review of the year-end data submitted by locations included in
the consolidated 2024 group data for the Selected Information which included testing
the completeness and mathematical accuracy of conversions and calculations, and
consolidation in line with the stated reporting boundary;
• Conducting in-person visits to three Essentra facilities in China, Italy and the USA to review
source data and local reporting systems and controls;
• Evaluating the conversion and emission factors and assumptions used; and
• Reviewing the presentation of information in the Report to assess consistency with our
findings.
The limitations of our engagement
The reliability of the Selected Information is subject to inherent uncertainties, given the
available methods for determining, calculating or estimating the underlying information.
It is important to understand our assurance conclusions in this context.
Our independence, integrity and quality control
ERM CVS is an independent certification and verification body accredited by UKAS
to ISO 17021:2015. Accordingly, we maintain a comprehensive system of quality control,
including documented policies and procedures regarding compliance with ethical
requirements, professional standards, and applicable legal and regulatory requirements.
Our quality management system is at least as demanding as the relevant sections of
ISQM-1 and ISQM-2 (2022).
ERM CVS applies a Code of Conduct and related policies to ensure that its employees
maintain integrity, objectivity, professional competence and high ethical standards in their
work. Our processes are designed and implemented to ensure that the work we undertake
is objective, impartial and free from bias and conflict of interest. Our certified management
system covers independence and ethical requirements that are at least as demanding as
the relevant sections of the IESBA Code relating to assurance engagements.
ERM CVS has extensive experience in conducting assurance on environmental, social, ethical
and health and safety information, systems and processes, and provides no consultancy
related services to Essentra in any respect.
6 March 2025
London, United Kingdom
ERM Certification and Verification Services Limited
www.ermcvs.com | post@ermcvs.com
ESSENTRA PLC ANNUAL REPORT 2024
121
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ESSENTRA PLC ANNUAL REPORT 2024
122
Financial
Statements
IN THIS SECTION
Consolidated Income Statement
123
Consolidated Statement of Comprehensive Income
124
Consolidated Balance Sheet
125
Consolidated Statement of Changes in Equity
126
Consolidated Statement of Cash Flows
127
Basis of Preparation and Principal Accounting Policies
128
Critical Accounting Judgements and Estimates
137
Notes to the Consolidated Financial Statements
140
Company Balance Sheet
177
Company Statement of Changes in Equity
178
Notes to the Company Financial Statements
179
Independent Auditors’ report to the members of Essentra plc
186
FINANCIAL STATEMENTS
STRATEGIC REPORT
DIRECTORS’ REPORT
Consolidated Income Statement
For the year ended 31 December 2024
Note
2024
£m
2023
£m
Revenue
1
302.4
316.3
Gross profit
1
137.1
141.8
Operating profit
1
14.6
10.9
Finance income
3
3.6
11.0
Finance expense
3
(12.5)
(13.5)
Profit before tax
5.7
8.4
Income tax credit/(expense)
4
5.9
(2.6)
Profit for the year from continuing operations
11.6
5.8
Loss from discontinued operations
24
(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
6
3.7p
1.8p
Diluted
6
3.7p
1.8p
Earnings per share from continuing operations attributable
to equity holders of Essentra plc:
Basic
6
4.0p
2.0p
Diluted
6
4.0p
2.0p
Adjusted profit measure: continuing operations
Note
2024
£m
2023
£m
Operating profit
14.6
10.9
Amortisation of acquired intangible assets
1
11.5
11.3
Adjusting items2
2
14.0
21.0
Adjusted operating profit1
40.1
43.2
Notes:
1. See note 28 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).
ESSENTRA PLC ANNUAL REPORT 2024
123
CONSOLIDATED INCOME STATEMENT
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2024
Note
2024
£m
2023
£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
18
8.0
(1.3)
Deferred tax on remeasurement of defined benefit pension schemes
4,16
(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 statement
15
(0.5)
2.4
Effective portion of changes in fair value of cash flow hedges
15
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
4
(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)
ESSENTRA PLC ANNUAL REPORT 2024
124
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Consolidated Balance Sheet
At 31 December 2024
Note
31 December
2024
£m
31 December
2023
£m
Assets
Property, plant and equipment
7
68.6
68.1
Lease right-of-use asset
9
24.2
27.9
Investment properties
7
–
3.3
Intangible assets
8
205.0
215.0
Long-term receivables
19
0.5
10.1
Derivative assets
15, 19
5.8
4.2
Deferred tax assets
16
14.0
12.2
Retirement benefit assets
18
10.6
7.9
Total non-current assets
328.7
348.7
Inventories
10
67.9
64.7
Income tax receivable
2.4
1.4
Trade and other receivables
11, 19
56.2
61.5
Cash and cash equivalents
12, 19, 22
33.7
59.7
Total current assets
160.2
187.3
Assets held for sale
26
5.1
–
Total assets
494.0
536.0
Equity
Issued share capital
20
72.6
73.3
Capital redemption reserve
20
3.1
2.4
Other reserve
21
(132.8)
(132.8)
Cash flow hedging reserve
–
(0.2)
Translation reserve
(77.6)
(70.5)
Retained earnings
21
405.5
401.0
Attributable to equity holders of Essentra plc
270.8
273.2
Total equity
270.8
273.2
Note
31 December
2024
£m
31 December
2023
£m
Liabilities
Interest bearing loans and borrowings
14, 19, 22
106.7
95.5
Lease liabilities
19, 22
21.2
23.8
Retirement benefit obligations
18
12.6
17.5
Provisions
17
–
0.2
Deferred tax liabilities
16
10.2
12.4
Total non-current liabilities
150.7
149.4
Interest bearing loans and borrowings
14, 19, 22
1.0
–
Lease liabilities
19, 22
7.7
7.1
Income tax payable
7.6
12.0
Trade and other payables
13, 19
51.7
60.7
Other financial liabilities
19
0.8
28.0
Provisions
17
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
The Consolidated Financial Statements on pages 123 to 176 were approved by the Board of
Directors on 18 March 2025 and were signed on its behalf by:
Scott Fawcett
Rowan Baker
Chief Executive
Chief Financial Officer
Company registration no: 05444653
ESSENTRA PLC ANNUAL REPORT 2024
125
CONSOLIDATED BALANCE SHEET
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
2024
Note
Issued
capital
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Other
reserve
£m
Cash flow
hedging and
cost of hedging
reserves1
£m
Translation
reserve
£m
Retained
earnings
£m
Total
equity
£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 hyperinflation2
–
–
–
–
–
–
2.5
2.5
Purchase of own shares
–
–
–
–
–
–
(4.9)
(4.9)
Cancellation of shares
(0.7)
–
0.7
–
–
–
–
–
Dividends paid
25
–
–
–
–
–
–
(10.5)
(10.5)
At 31 December 2024
72.6
–
3.1
(132.8)
–
(77.6)
405.5
270.8
2023
Note
Issued
capital
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Other
reserve
£m
Cash flow
hedging and
cost of hedging
reserves1
£m
Translation
reserve
£m
Retained
earnings
£m
Total
equity
£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 hyperinflation2
–
–
–
–
–
–
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
25
–
–
–
–
–
–
(96.3)
(96.3)
At 31 December 2023
73.3
–
2.4
(132.8)
(0.2)
(70.5)
401.0
273.2
Notes:
1. See note 15 for details of hedging reserve movements in relation to derivatives.
2. The net impact on retained earnings as a result of the index-based adjustments in Turkey under IAS 29 Financial Reporting in Hyperinflationary Economies.
ESSENTRA PLC ANNUAL REPORT 2024
126
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Consolidated Statement of Cash Flows
For the year ended 31 December 2024
Note
2024
£m
2023
£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
4
(6.1)
(1.1)
Net finance expense
3
8.9
2.5
Intangible amortisation
2,8
13.5
14.2
Adjusting items
2
15.8
13.9
Loss on business disposals
24
1.2
3.7
Depreciation of property, plant and equipment
7
9.6
11.1
Lease right-of-use asset depreciation
9
6.3
5.9
(Reversal of impairment )/impairment of fixed assets
2
(1.8)
7.1
Share option expense
5,18
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
28
(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
Note
2024
£m
2023
£m
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
23
(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
25
(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
12,22
33.7
59.7
Notes:
1. In 2023 acquisition of businesses is net of cash acquired of £5.3m. See note 23.
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.
ESSENTRA PLC ANNUAL REPORT 2024
127
CONSOLIDATED STATEMENT OF CASH FLOWS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Basis of Preparation and Principal Accounting Policies
a
Basis of preparation
Essentra plc is a public company limited by shares that is incorporated and domiciled
in England and Wales (registration no 05444653). The address of its registered office is
Langford Locks, Kidlington, Oxford, OX5 1HX, United Kingdom. The Company’s ordinary
shares are publicly traded on the London Stock Exchange. For the purposes of these
consolidated financial statements “Essentra” or “the Group” means Essentra plc
(“the Company”) and its subsidiaries.
The Group’s principal activities are focused on the manufacture and distribution of a
comprehensive range of components, used in diverse industrial applications and end-markets.
The Group’s 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 consolidated financial statements are prepared under the historical cost convention
unless otherwise stated.
The Company has elected to prepare its individual company financial statements in
accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”);
these are presented on page 179.
The principal accounting policies used in the preparation of the 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 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 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 consolidated
financial statements.
Information regarding the financial position of the Group, its cash flows, liquidity position,
and borrowing facilities are described in the Financial Review on pages 16 to 18. In addition,
note 19 to the financial statements includes the Group’s objectives, policies and processes
for managing its capital, its financial risk management objectives, details of its financial
instruments and hedging activities and exposures to credit, market and liquidity risk.
Cash balances and borrowings are detailed in note 22.
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.
ESSENTRA PLC ANNUAL REPORT 2024
128
BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
a
Basis of preparation continued
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. Based on these, and
taking into consideration the risks detailed in note 19, 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 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.
Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by Essentra. Control exists when Essentra is exposed, or has
rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. The financial statements of subsidiaries are
included in the consolidated financial statements of the Group from the date that control
commences until the date that control ceases. The Group’s subsidiaries (including dormant
entities) at 31 December 2024 are set out within the Essentra plc Company Financial
Statements on pages 177 to 185.
Non-controlling interests (NCI) are measured at their proportionate share of the investee’s
identifiable net assets at the date of acquisition.
When the group loses control of a subsidiary, it derecognises the net assets of the subsidiary
together with any NCI and other related components of equity. Any resulting gain or loss
on disposal is recognised in the consolidated income statement.
(ii) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expense arising from
intragroup transactions are eliminated in preparing the consolidated financial statements.
ESSENTRA PLC ANNUAL REPORT 2024
129
BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
b
Principal accounting policies continued
Foreign currency
With the exception of the financial statements of the Group’s foreign operations in
hyperinflationary economies (see ‘Adjustments for hyperinflation’ below), items included in
the financial statements of the Group’s subsidiaries are measured using the currency of the
primary economic environment in which the subsidiary operates (“functional currency”).
The consolidated financial statements are presented in sterling (the functional currency
of the Company). On disposal of a foreign operation, the deferred cumulative amount
recognised in equity relating to that particular operation is recognised in the consolidated
income statement as part of the gain/loss on disposal.
(i) Foreign currency transactions
Transactions in foreign currencies are recorded at the rate of exchange at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies at the
balance sheet date are translated into sterling at the exchange rate ruling at that date and
recognised in the income statement unless hedge accounting criteria apply (see policy for
financial instruments).
(ii) Financial statements of foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments
arising on consolidation, are translated from their functional currency into sterling at the
exchange rate ruling at the balance sheet date. The revenues and expenses of foreign
operations are translated into sterling at average exchange rates.
(iii) Net investment in foreign operations
Exchange differences on retranslation at the closing rate of the opening balances of overseas
entities are taken to other comprehensive income, as are exchange differences arising on
related foreign currency borrowings and derivatives designated as net investment hedges,
to the extent that they are effective. Other exchange differences are taken to the income
statement. Differences arising prior to 1 January 2004 are included in retained earnings.
(iv) Adjustments for hyperinflation
The Group applies hyperinflationary accounting to the financial statements of foreign
operations that meet the requirements to be designated a hyperinflationary economy
as specified in IAS 29 Financial Reporting in Hyperinflationary Economies. In accordance
with IAS 21 The Effects of Changes in Foreign Exchange Rates, comparative amounts are
not restated.
Under IAS 29, the results and non-monetary asset and liability balances are revalued to
present value equivalent local currency amounts, based on an inflation index, before
translation to sterling at the reporting-date exchange rates. The gain or loss on net monetary
assets resulting from the application of IAS 29 is recognised in the consolidated income
statement within net finance expense. Subsequent IAS 29 equity restatement effects and the
impact of currency movements are presented under amounts arising on translation of foreign
operations within other comprehensive income.
The Group also presents the gain or loss on cash and cash equivalents as monetary items
together with the effect of inflation as operating, investing and financing cash flows in the
consolidated statement of cash flows.
The Group’s foreign operations in Turkey, whose functional currency is the Turkish Lira, were
designated as hyperinflationary during the year ended 31 December 2022. For the year ended
31 December 2024, the Turkish economy continued to be designated as hyperinflationary, and
therefore the Group has continued to apply hyperinflationary accounting using the historic
cost approach to its Turkish operations for the reporting year ended 31 December 2024.
The price index used to apply IAS 29 is the Turkish Consumer Price Index. At 31 December
2024, the price index was 2,684.55 (31 December 2023: 1,860.90, 31 December 2022: 1,128.45,
31 December 2021: 686.95).
Alternative performance measures
The consolidated financial statements provide further disclosures and measures of financial
performance, including adjusted operating profit and adjusted earnings per share, which are
not defined or specified in accordance with UK adopted International Financial Reporting
Standards. The presentation of alternative performance measures enables management to
reflect the underlying performance of the continuing operations of the Group and provides
investors with a more meaningful comparison of how the business is managed and measured
on a periodic basis.
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, costs of major Software as a Service projects,
defined benefit pension scheme charges that no longer pertain to the continuing operations
of the Group and items which are non-recurring or one-off in nature (such as impairment of
acquired intangible assets, impairment of investment property, historic indemnity claims and
the costs of fundamental strategic review and reorganisation). Operating profit before
adjusting items and acquired intangible amortisation is called adjusted operating profit,
which forms the primary basis for management’s review and assessment of the operational
performance of the Group’s businesses.
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 6).
ESSENTRA PLC ANNUAL REPORT 2024
130
BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
b
Principal accounting policies continued
(i) Costs relating to restructuring following disposals of businesses
In 2024 and 2023, Essentra incurred advisory and reorganisation costs in relation to major
restructuring activities to “right size” the continuing operations of the business following the
disposal of the Filters and Packaging businesses.
(ii) Gains and transaction costs relating to acquisition of businesses
In 2023, Essentra acquired BMP TAPPI, incurring one-off acquisition related costs
(refer to note 23).
(iii) Acquisition integration and restructuring costs
These relate to costs incurred on the integration of acquired businesses and restructuring
associated with acquisitions.
(iv) Customisation and configuration costs of significant Software as a Service
(“SaaS”) arrangements
These relate to costs incurred on implementation (customisation and configuration) of
significant “Software as a Service” (“SaaS”) arrangements. In the view of management,
these are investments to upgrade the Group’s technical capabilities, and therefore their costs
are excluded from adjusted operating profit.
(v) Defined benefit pension scheme charges (from 2022)
These relate to costs incurred in relation to defined benefit pension scheme charges which,
following the completion of the strategic review, no longer pertain to employees of the
continuing Group and are therefore excluded from adjusted operating profit.
(vi) (Reversal of impairment)/impairment of non-current assets
In 2024, this comprised a reversal of impairment of investment property following a revision
to its valuation. This was 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.
In 2023, this comprised impairment of investment property which is held in excess of the
Group’s operational requirements and impairment of intangible and other non-current assets
in Hengzhu (following an impairment review in that CGU).
(vi) Other adjusting items
In 2024, this comprised of a £1.6m provision raised relating to a historic indemnity claim as
well as £0.3m for other property related claims. In 2023 this comprised £0.8m provision
relating to this historic indemnity claim and professional fees relating to the capital reduction
completed during 2023.
Further details of the Group’s adjusting items are included in note 2. The Group has also
provided a reconciliation of its adjusted performance measures in note 28 to the consolidated
financial statements.
Discontinued operations
A disposal group qualifies as a discontinued operation if it is a component of an entity that
either has been disposed of, or is classified as held for sale, and:
• represents a separate major line of business or geographical area of operations; or
• is part of a single co-ordinated plan to dispose of a separate major line of business or
geographical area of operations; or
• is a subsidiary acquired exclusively with a view to resale.
Discontinued operations are excluded from the results of continuing operations and are
presented as a single amount as profit or loss after tax from discontinued operations in the
income statement.
Segment reporting
A segment is identified on the basis of internal reports that are regularly reviewed by the
Board of Directors (identified as the Chief Operating Decision Maker) in order to allocate
resources to the segment and assess its performance.
Revenue
Revenue from the sale of component parts is recognised in the income statement with
reference to the amount invoiced to the customer, net of expected discounts, rebates,
refunds, credits, price concessions or other similar items, when the associated performance
obligation has been satisfied, and control of the goods has been transferred to the customer.
Customer volume discounts and right to return goods purchased are calculated by
estimating the expected discount percentage that will be achieved for the contractual
period using historical data adjusted for current experience and those obligations are
included in other payables.
The substantial majority of the Group’s revenue is generated through sale of component
parts which results in revenue being recognised at a point where control has been transferred
to the customer as opposed to over a performance obligation period.
A significant part of the Group’s businesses sell goods on an ex-works basis, where the Group,
as seller, makes its goods ready for collection at its premises on an agreed upon sales date
and the buyer incurs all transportation and handling costs and bears the risks for bringing
the goods to their chosen destination.
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131
BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
b
Principal accounting policies continued
Where the Group operates non ex-works terms with customers, revenue is recognised when the
control of the goods has been transferred to the customer. These terms include consignment
stock agreements, where revenue is recognised upon the customer removing goods from
consignment stock provided the relevant conditions for revenue recognition are met. Each
customer arrangement/contract is assessed to identify the performance obligations being
provided to the customer.
Finance income and expense
Finance income is recognised in the consolidated income statement as it accrues by reference
to the principal outstanding and at the effective interest rate applicable.
Finance expense consists of interest and other expenses that are incurred in connection with
the Group’s external financing arrangements and is recognised in the consolidated income
statement as it accrues. Prepaid facility fees are amortised over the term of the related debt
financing using the effective interest method. Finance expense includes the interest portion
of lease liabilities.
Income tax
Income tax in the consolidated income statement comprises current and deferred tax.
Income tax is recognised in the income statement except to the extent that it relates
to items recognised in equity or other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year using the
applicable tax rates enacted or substantively enacted at the balance sheet date and any
adjustment to tax payable in prior years. Deferred tax is provided, using the balance sheet
liability method, on temporary differences arising between the tax bases and the carrying
amounts of assets and liabilities in the financial statements. The following temporary
differences are not provided for: goodwill not deductible for tax purposes; the initial
recognition of assets or liabilities that affect neither accounting nor taxable profit or loss;
and differences relating to investments in subsidiaries to the extent that they will not reverse
in the foreseeable future.
Deferred tax is determined using tax rates that are expected to apply when the related
deferred tax asset or liability is settled, using the applicable tax rates enacted or substantively
enacted at the balance sheet dates.
A deferred tax asset is recognised only to the extent that it is probable that future taxable
profit will be available against which the asset can be utilised. Deferred tax assets are reduced
to the extent that it is no longer probable that the related tax benefits will be realised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
current tax assets against liabilities and when they relate to income taxes levied by the same tax
authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Business combinations
Business combinations are accounted for using the acquisition method. Goodwill arising in
a business combination represents the difference between the fair value of the assets given
in consideration and the fair value of identifiable assets, liabilities and contingent liabilities
assumed of the acquiree, at the date of acquisition.
Costs attributable to acquisitions are expensed in the consolidated income statement.
Given their one-off nature, these costs are generally presented within adjusting items.
Where consideration for an acquisition includes any assets or liabilities resulting from a
contingent consideration arrangement, the contingent consideration amount is measured
at fair value at the acquisition date. Subsequent changes in the fair value of such contingent
consideration is adjusted against the cost of acquisition where they result from additional
information, obtained within one year from the acquisition date, about facts and
circumstances that existed at the acquisition date. All other subsequent changes in the
fair value of contingent consideration classified as an asset or liability are recognised in
the consolidated income statement.
Intangible assets
(i) Goodwill
Goodwill is initially recognised as an intangible asset at cost and subsequently measured at cost
less accumulated impairment. Goodwill is allocated to the cash-generating unit (“CGU”) or
group of CGUs expected to benefit from the synergies related to the business combination.
(ii) Research and development
Research costs are expensed to the income statement in the year in which they are incurred.
Development costs relating to new products are capitalised when the Group is able to
demonstrate the technical feasibility of completing the intangible asset so that it will be
available for use or sale, its intention to complete and its ability to use or sell the asset,
how the asset will generate future economic benefits, the availability of resources to
complete the asset and the ability to measure reliably the expenditure during development.
(iii) Acquired intangible assets
An intangible asset acquired in a business combination is recognised at fair value to the
extent it is probable that the expected future economic benefits attributable to the asset
will flow to the Group and that its cost can be measured reliably.
Intangible assets principally relate to customer relationships, which are valued using
discounted cash flows based on historical customer attrition rates, and developed
technology, which is valued using an income approach. The cost of intangible assets is
amortised through the income statement on a straight-line basis over their estimated
useful economic life.
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BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
b
Principal accounting policies continued
(iv) Other intangible assets
Other intangible assets which are not acquired through a business combination (“non-
acquired intangible assets”) are recognised at cost to the extent it is probable that the
expected future economic benefits attributable to the asset will flow to the Group and that
its cost can be measured reliably, and amortised on a straight-line basis over their estimated
useful economic life.
SaaS arrangements are service contracts providing the Group with the right to access the
cloud provider’s application software over the contract period. Costs incurred to configure
or customise, and the ongoing fees to obtain access to the cloud provider’s application
software, are recognised as operating expenses when the services are received. Where costs
incurred for the development of software code enhances, modifies, or creates additional
capability to existing on-premise systems and meets the definition of and recognition criteria
for an intangible asset, these costs are recognised as intangible software assets and
amortised over the useful life of the software on a straight-line basis.
Intangibles are amortised over their estimated remaining useful lives on a straight-line basis
at the following annual rates:
Customer relationships
6–12%
Other intangibles – research and development
7–20%
Other intangibles – development of e-commerce
10–20%
Other intangibles – software and software development
10–20%
Impairment
All assets are reviewed regularly to determine whether there is any indication of impairment.
Goodwill is tested for impairment annually.
An impairment loss is recognised whenever the carrying amount of a non-financial asset or
the CGU to which it belongs exceeds its recoverable amount, being the greater of value in use
and fair value less costs to sell, and is recognised in the income statement. Value in use is
estimated based on future cash flows discounted using a pre-tax discount rate based upon
the Group’s weighted average cost of capital.
Financial assets are assessed for impairment using the expected credit loss model which
requires expected credit losses and changes to expected credit losses at each reporting date
to reflect changes in credit risk since initial recognition. Changes to the expected credit loss
are recognised in the income statement.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and
impairment losses. Previously revalued properties were treated as being held at deemed
cost upon transition to adopted IFRS.
Where parts of an item of property, plant and equipment or other assets have different
useful lives, they are accounted for as separate items. The carrying values of property, plant
and equipment and other assets are periodically reviewed for impairment when events or
changes in circumstances indicate that the carrying values may not be recoverable.
Property, plant and equipment are depreciated over their estimated remaining useful lives
on a straight-line basis at the following annual rates:
Land and buildings – Freehold land
Not depreciated
Land and buildings – Buildings
2% or life of lease if shorter
Plant and machinery
7–20%
Fixtures, fittings and equipment
10–33%
The assets’ useful lives and residual values are reviewed, and adjusted if appropriate, at each
balance sheet date.
Inventories
Inventories are valued at the lower of standard cost and net realisable value. Costs are
assigned to individual items based on first-in first-out which is approximated using a
standard cost methodology in valuing inventory. For work-in-progress and finished goods,
standard cost includes an appropriate proportion of direct production labour costs and
overheads attributable to bringing inventory items to their present location and condition,
allocated by rates based upon a budgeted level of normal activity. Net realisable value is
based on the estimated selling price net of the expected costs to sell. Provision is made for
slow-moving, defective and obsolete items where appropriate.
Assets held-for-sale
Non-current assets classified as assets held-for-sale are measured at the lower of carrying
value and fair value less costs to sell. They are classified as held-for-sale if their carrying value
will be recovered principally through a sale transaction rather than through continuing use.
This condition is regarded as having been met only when the sale is highly probable and the
asset is available for immediate sale. Management must be committed to the sale which
should be expected to qualify for recognition as a completed sale within one year from the
date of classification.
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STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
b
Principal accounting policies continued
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and fixed term investments whose
maturities are three months or less from the date of acquisition. Bank overdrafts repayable
on demand, where there is a right to offset, form an integral part of Essentra’s cash
management and are included as part of cash and cash equivalents in the statement
of cash flows.
Loans and other borrowings
Loans and other borrowings are initially recorded at cost (which is equal to fair value at
inception plus interest cost) and are subsequently measured at amortised cost using the
effective interest method.
Trade and other receivables
Trade and other receivables are initially recognised at fair value and subsequently measured
at amortised cost, which is generally equivalent to recognition at nominal value less
impairment loss calculated using the expected loss model.
The Group applies the simplified model to recognise lifetime expected credit losses for its
trade and other receivables, including those due in greater than 12 months, by making an
accounting policy election. The expected loss rate estimated for each ageing period for trade
receivables is as follows: Current 0.2%; Overdue 1-30 days 0.5%; Overdue 31-60 days 1%;
Overdue 61-90 days 5%; Overdue 91-180 days 10%; Overdue 181-360 days 50%; and Overdue
over 360 days 100%.
Trade other payables
Trade payables are non-interest bearing and are recognised initially at fair value and
subsequently at amortised cost.
Deferred consideration
Deferred consideration is recognised and held at fair value. Changes in its fair value are
recognised in profit or loss, within adjusting items.
Financial instruments
(i) Financial assets
Financial assets comprise trade and other receivables, cash and cash equivalents, deferred
consideration receivable and derivative financial instruments.
(ii) Financial liabilities
Financial liabilities comprise trade and other payables, deferred consideration payable, and
financing liabilities.
Interest bearing loans and borrowings and other financial liabilities (excluding derivatives)
are initially measured at cost (which is equal to fair value at inception plus issuance cost)
and are subsequently measured at amortised cost using the effective interest method, unless
they are included in a hedge accounting relationship. See note 15 for separate disclosure of
hedge types.
(iii) Derivative financial instruments and hedge accounting
Derivatives are measured initially at fair value with any related transaction costs expensed as
incurred. Subsequent measurement in the financial statements depends on the classification
of the derivative as follows:
Fair value hedges
Where a derivative is used to hedge the foreign exchange exposure of a monetary asset or
liability, any gain or loss on the derivative is recognised in the income statement.
Cash flow hedges
Where a derivative is designated as a hedging instrument in a cash flow hedge, the change
in fair value is recognised in other comprehensive income to the extent that it is effective
and any ineffective portion is recognised in the income statement. Where the underlying
transaction results in a financial asset, accumulated gains and losses are recognised in
the income statement in the same period as the hedged item affects profit or loss.
Where the hedged item results in a non-financial asset the accumulated gains and losses
previously recognised in other comprehensive income are included in the initial carrying
value of the asset.
Hedges of net investment in foreign operations
The gain or loss on an instrument used to hedge a net investment in a foreign operation that
is deemed effective is recognised in other comprehensive income. Any ineffective portion is
recognised in the income statement.
Unhedged derivatives
The movements in the fair value of derivatives which are not designated as effective hedge
relationships are charged/credited to the profit or loss.
Lease liabilities and lease right of use assets
Leases greater than 12 months in length, and those not of low-value, are recognised as a lease
right-of-use asset with the associated future lease payment terms recognised as a lease
liability. The right-of-use assets and the associated lease liabilities are recognised by
discounting the future lease payments at the rate implicit to the lease or, if the rate implicit
to the lease cannot be readily determined, at the relevant incremental borrowing rate.
ESSENTRA PLC ANNUAL REPORT 2024
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BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
b
Principal accounting policies continued
Determining the incremental borrowing rate incorporates three key elements: risk-free rate
(reflecting specific country and currency); credit spread (reflecting the specific risk for each
subsidiary within the Group); and an asset class adjustment (reflecting the variation in risk
between asset categories).
The Group has leases of certain equipment (e.g. printing and photocopying machines)
that are considered of low value. Rentals associated with leases that are of low-value or
less than 12 months in length are expensed to the income statement on a straight-line
basis. The associated lease incentives are amortised in the income statement over the
life of the lease.
(i) The Group’s leasing activities
The Group leases various properties, equipment and cars. Rental contracts are typically made
for fixed periods of 1 to 20 years, but might have extension options as described below. Lease
terms are negotiated on an individual basis and contain a wide range of different terms and
conditions. The lease agreements do not impose any covenants, but leased assets cannot be
used as security for borrowing purposes.
The finance cost is charged to profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period. The right-of-
use asset is depreciated over the shorter of the right-of-use asset’s useful life and the lease
term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis.
Lease liabilities include the net present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payments that are based on an index or a rate;
• amounts expected to be payable by the lessee under residual value guarantees; and
• payments of penalties for terminating the lease, if the lease term reflects the lessee
exercising that option.
Lease right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease
incentives received;
• any initial direct costs; and
• restoration costs.
(ii) Variable lease payments
The Group has certain assets which may include variable lease payments based on usage,
although this is a small proportion of the Group’s assets. These include vehicles, with variable
lease payments based on mileage or equipment such as printers, of which the lease
payments vary based on their usage. The variable lease payments are not material for
the Group.
Any future variable payment increase that requires either speculation or an estimate is not
included. Future lease payments should then be applied only when they are known, with no
change to the discount rate.
(iii) Extension and termination options
Extension and termination options are included in a number of property and equipment
leases across the Group. These terms are used to maximise operational flexibility in terms of
managing contracts. The majority of extension and termination options held are exercisable
only by the Group and not by the respective lessor.
Provisions
A provision is recognised when there is a probable legal or constructive obligation as a
result of a past event and a reliable estimate can be made of the outflow of resources that
will be required to settle the obligation. The outflow is the present value of management’s
best estimate of the expenditure required to settle the present obligation at the balance
sheet date.
A provision for onerous contracts is recognised when the expected benefits to be derived by
the Group from a contract are lower than the unavoidable cost of meeting its obligations
under the contract. Unavoidable costs include a reasonable allocation of shared costs that
can be directly linked to fulfilling contractual obligations. The provision is calculated as the
lower of the termination costs payable for an early exit from the contract and the expected
net cost to fulfil the Group’s unavoidable contract obligations.
Retirement benefit obligations
(i) Defined contribution schemes
Obligations for contributions to defined contribution pension schemes are expensed to the
income statement as incurred.
(ii) Defined benefit schemes
The net obligations in respect of defined benefit pension schemes are calculated separately
for each scheme by estimating the amount of future benefit that employees have earned
in return for their service in the current and prior periods; that benefit is discounted to
determine its present value, and the fair value of any scheme assets is deducted.
ESSENTRA PLC ANNUAL REPORT 2024
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BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
b
Principal accounting policies continued
The discount rate is the yield at the balance sheet date on AA credit-rated bonds that have
maturity dates approximating to the terms of Essentra’s obligations. The calculation is
performed by a qualified independent actuary using the projected unit credit method.
Net interest on defined benefit assets is presented within finance income, and net interest
on defined benefit liabilities is presented within finance expense.
Actuarial gains and losses that have arisen are recognised in full in the consolidated
statement of comprehensive income.
The amounts charged to operating profit are the current service cost, past service cost
(including curtailments) and gains and losses on settlement.
The value of a net pension asset is the amount that may be recovered either through reduced
contributions or agreed refunds from the scheme.
Share-based payments
Essentra operates equity-settled, share-based incentive plans. A charge is made in the
income statement based on the fair value of option awards using the Monte Carlo or
binomial valuation models and relevant quoted share price information with a corresponding
increase in equity. The fair value is measured at grant date and spread over the period
between grant date and vesting date of the options. The amount recognised as an expense
will be adjusted to reflect the actual number of share options that vest with the exception
of options that fail to vest because market conditions are not met.
Dividends
Dividends are recognised as a liability in the period in which they are approved in a general
meeting by the shareholders of the Company (final dividend) or paid (interim dividend).
Investment in own shares
The shares held in the Essentra Employee Benefit Trust for the purpose of fulfilling obligations
in respect of share option plans are treated as belonging to the Company and are deducted
from its retained earnings. The cost of shares held directly (treasury shares) are also deducted
from retained earnings.
Net debt
Net debt is defined as cash and cash equivalents, short-term liquid investments and
derivatives hedging against placement loans, net of lease liabilities and interest bearing loans
and borrowings.
Investment properties
Properties that are either owned or leased by the Group that are held to earn rental income
or for capital appreciation, or both, are accounted for as investment properties. Investment
properties are measured initially at cost including directly related transaction costs, and
subsequently, applying the cost model.
Under the cost model, the carrying value of investment properties where the Group owns the
freehold to the properties, is stated at cost less accumulated depreciation (on a straight-line
basis) and impairment losses. The useful lives of investment properties where the Group owns
the freehold are adjusted, as appropriate, at each balance sheet date.
Where an investment property is owned through a long leasehold arrangement under which
the Group is a lessee rather than owning the freehold to the property, a right-of-use asset
is recognised at the commencement date of the lease and accounted for as an investment
property. The cost of leased investment properties recognised in right-of-use assets includes
the present value of future lease payments recognised together with lease payments made
before commencement of the lease, less any incentives received. A corresponding lease
liability is recognised on the balance sheet.
The Group transfers a property to or from its classification of investment properties only when
there is a change in use. For example, when it is the Group’s intention to end or commence
owner-occupation is the point at which the property respectively meets or ceases to meet
the definition of an investment property, the determination of which, may require the
application of management judgement.
Investment properties are classified as non-current assets in the consolidated balance sheet.
The carrying value of investment properties is periodically reviewed for impairment when
events and circumstances indicate that the carrying amount may not be recoverable.
Lessor income
Essentra lets out a small number of properties that are owned or held under a leased
contract which is in excess of the Group’s operational requirements. Lessor income from
operating leases is recognised on a straight-line basis over the term of the lease. Where the
Group is an intermediate lessor, the sublease income classification is assessed with reference
to the head lease right of use asset. The head lease right of use asset is depreciated over the
term of the sublease on a straight-line basis.
ESSENTRA PLC ANNUAL REPORT 2024
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BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Critical Accounting Judgements and Estimates
The preparation of the consolidated financial statements requires the Directors and
management to make judgements and estimates in respect of certain items where the
choice of accounting policy and assumptions applied in determining the judgement or
estimate could materially affect the Group’s financial position, results, or cash flows at
the reporting date.
Management regularly reviews the critical accounting judgements that significantly impact
the amounts recognised in the consolidated financial statements and the critical accounting
estimates that, due to their significant estimation uncertainty, may give rise to a material
adjustment in the next financial reporting period.
Although the determination of accounting estimates is based on management’s best
estimate considering its 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 and revisions to accounting estimates are recognised in the
period in which the estimate is revised and future periods if the revision affects both current
and future reporting periods.
The Group’s critical accounting judgements and estimates are detailed below.
Accounting Judgements
Adjusting items
Adjusting items are separately presented from other items of financial performance as this
enables management to reflect the underlying performance of the continuing operations of
the Group. Judgement is required to determine whether such items of financial performance
should be included within adjusting items by virtue of their nature, size or incidence.
The Group’s accounting policy concerning adjusting items is detailed under alternative
performance measures.
Adjusting items of £14.0m (2023: £21.0m) have been reported in continuing operations which
includes £1.5m of costs incurred relating to restructuring of the continuing business following
the sale of the Filters and Packaging divisions, a £1.0m of net costs relating to acquisitions of
businesses and their integration, £9.6m has been incurred in relation to the customisation
and configuration costs of significant “Software as a Service” (“SaaS”) arrangements, which,
in management’s judgement, constitute material one-off charges to upgrade the Group’s
technical capabilities and meets the Group’s policy for being categorised as adjusting items,
£1.8m in relation to legacy defined benefit pension charges, £1.6m in respect of indemnity
provisions raised for historic claims on previous acquisitions and £1.8m credit relating to the
reversal of impairment on investment property less £0.3m of related provisions.
A complete analysis of the amounts included in adjusting items is detailed in note 2.
“Software as a Service” (“SaaS”) arrangements
The recognition of customisation and configuration costs of £9.6m (2023: £10.8m)
(which are included within adjusting items) relating to SaaS arrangements involves
a number of key judgements:
• whether a software arrangement is a SaaS arrangement: management considers
the fact pattern of the software arrangement carefully to identify SaaS arrangements,
distinguishing from other arrangements such as “platform as a service” or “infrastructure
as a service”;
• whether any cost incurred in customisation and configuration results in additional code
from which the Group has the power to obtain the future economic benefits and restricts
other third parties access to those benefits: management considered whether the code
can be used in or transferred to another computing arrangement;
• whether the customisation and configuration service provided by the SaaS provider is
distinct from the regular SaaS arrangement: management considers factors such as
whether the Group can benefit from the service separately from the other elements of
deliverables from the SaaS provider;
• whether a third party providing customisation and configuration service is in effect a
subcontractor of the SaaS provider: management considers factors such as the nature
of the contractual and working relationship between the SaaS provider and the third party,
the obligations of the third party who has the primary responsibility for the services that
it provides.
Leases and lease right of use assets
A key judgement in determining the right-of-use asset and lease liability is establishing
whether it is reasonably certain that an option to extend the lease will be exercised.
Distinguishing whether a lease will be extended or otherwise could have a material impact
on the value of the right-of-use assets and lease liabilities recognised on the balance sheet,
but may not have a material impact on the income statement.
In determining the lease term, management considers all facts and circumstances that
create an economic incentive to exercise an extension option, or not exercise a termination
option. Extension options (or periods after termination options) are only included in the lease
term if the lease is reasonably certain to be extended (or not terminated).
The assessment is reviewed if a significant event or a significant change in circumstances
occurs which affects this assessment and that is within the control of the lessee.
ESSENTRA PLC ANNUAL REPORT 2024
137
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Accounting Judgements continued
Recognition of Retirement benefit assets
A key judgement when recognising a retirement benefit asset is whether the Company has
an unconditional right to a refund on such a surplus. A retirement benefit asset of £10.6m
(2023: £7.9m) has been recognised on the Group’s European pension surplus because it was
judged that the trustees cannot use trustee’s discretionary power to use this surplus to
augment member benefits.
Accounting Estimates
Taxation
Liabilities for tax contingencies require management judgements and estimates in respect of
tax audit issues and exposures in each of the jurisdictions in which it operates. Management
is also required to make an estimate of the current tax liability together with an assessment
of the temporary differences which arise as a consequence of different accounting and tax
treatments. Where Management conclude a tax position is uncertain, a current tax liability is
held for anticipated taxes that are considered probable based on the information available.
Key judgement areas for the Group include the pricing of intercompany goods and services
as well as the tax consequences arising from restructuring operations. Management may
engage with professional advisers in making their assessment and, if appropriate, will liaise
with the relevant taxation authorities to resolve the matter. The tax liability is reassessed in
each period to reflect Management’s best estimate in light of information available. If the
final outcome of these matters differs to the liability held in the financial statements, the
difference may impact the income tax charge/(credit) in the year the matter is concluded.
Uncertain tax provisions
At 31 December 2024, included in the tax payable is a liability of £3.8m (2023: £4.0m)
for transfer pricing matters and £1.7m (2023: £5.8m) for other uncertain tax positions.
The reduction in each provision is primarily due to the expiry of statute of limitations following
the passage of time, favourable agreements reached with tax authorities on previous matters
and part of the liability transferring with disposed entities. Adjustments for current year
transactions and foreign exchange movements complete the movement in the year. Of the
amount recognised at the end of the reporting period, a possible range of outcomes could
potentially see between £0.7m and £2.2m resolved in the next financial year as a result of
expiring statute of limitations and completion of tax audits.
UK Deferred tax assets
Of the total net deferred tax asset of £3.8m (2023: £0.2m liability), after offset of deferred
tax liabilities in relation to other intangible assets, £11.7m (2023: £5.7m) relates to the UK
(see note 16). This is made up primarily of tax losses and fixed asset temporary differences.
Deferred tax assets are recognised only to the extent it is probable that future taxable
profits will be available against which the assets can be utilised. A recoverability assessment
has been undertaken using the Group’s latest profit forecasts to assess the level of future
taxable profits. These profit forecasts. which take account of climate change implications
for affected markets, reflect industry growth rates and supply and demand factors
(as discussed in note 8).
The assessment takes both positive and negative evidence into account, and sensitivity
analysis has been undertaken assessing the impact of lower growth rates and levels of
operating profit. The assessment reflects the fact that, under UK tax law, the amount of
both UK capital allowances (tax depreciation) that can be claimed, and brought forward
tax losses that can be utilised are restricted.
Based on work performed, positive evidence outweighs the negative evidence and so
recognition is supported as it is probable that the UK business will generate taxable income
and tax liabilities in the future against which these losses and other tax assets can be utilised.
Any future changes in tax law or the structure of the Group could impact the use of losses
and other deductible temporary differences, including the period over which they can be
used. In view of this, and the significant estimation involved, management continually
monitors the position.
ESSENTRA PLC ANNUAL REPORT 2024
138
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Accounting Estimates continued
Retirement benefit obligations
At 31 December 2024, the net retirement benefit liability was £2.0m (2023: £9.6m), including
a retirement benefit liability of £12.6m (2023: £17.5m). The measurement of defined benefit
obligations requires the application of judgement in relation to the key assumptions used,
particularly in determining the discount rate, inflation rate, and mortality rates.
In consultation with Essentra’s actuaries, management determines the point within the range
of possible outcomes for those assumptions applied at the balance sheet date that most
appropriately reflects Essentra’s circumstances. Small changes to these assumptions can
have a material impact on the valuation and consequently reported amounts. Accordingly,
the Group performs a sensitivity analysis for the key assumptions applied in determining
post-employment costs and liabilities, as detailed in note 18.
Business combinations and intangible assets
IFRS 3 Business Combinations requires the identification of acquired intangible assets as part
of a business combination. The methods used to value such intangible assets require the use
of estimates and judgements such as customer attrition, cash flow generation from the
existing relationships with customers and returns on other assets. Future results are impacted
by the amortisation periods adopted and changes to the estimated useful lives would result
in different effects on the income statement and balance sheet.
Goodwill is not amortised but is tested annually for impairment, along with the finite-lived
intangible assets and other assets of the Group’s cash-generating units. Tests for impairment
are based on discounted cash flows and assumptions (including discount rates, timing and
growth prospects) which are inherently subjective. An estimate is also required in identifying
the events which indicate potential impairment, and in assessing fair value of individual
assets when allocating an impairment loss in a cash-generating unit or groups of cash-
generating units. The Group performs various sensitivity analyses in respect of the tests for
impairment and recognises impairments when required. The critical estimates made for the
year ended 31 December 2024 are related to all three regions, EMEA, AMERICAS and APAC,
as detailed in note 8.
The useful lives of the Group’s finite-lived intangible assets are reviewed following the tests
for impairment annually.
Estimate of inventory obsolescence
Inventories represent a material proportion of the Group’s net assets. The Group estimates
the net realisable value of inventories in order to determine the value of any provision
required. These estimations are based on recent experience and knowledge of the products
held in inventory estimations, include any impact of obsolescence including that related to
regulatory changes including climate change, are made in relation to the number of years of
sales of each product and the value recoverable from those inventories.
The Group undertakes periodic reviews of inventory levels and quality, and following those
reviews provides for all inventory that is considered obsolete. Furthermore, the Group provides
in full for unsold or slow-moving inventory.
ESSENTRA PLC ANNUAL REPORT 2024
139
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Notes to the Consolidated Financial Statements
1.
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
£m
AMERICAS
£m
APAC
£m
Unallocated
items1
£m
Continuing
operations
£m
Discontinued
operations3
£m
Total
£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
ESSENTRA PLC ANNUAL REPORT 2024
140
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
1.
Segment analysis continued
2023
EMEA
£m
AMERICAS
£m
APAC
£m
Unallocated
items1
£m
Continuing
operations
£m
Discontinued
operations3
£m
Total
£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 24) 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.
ESSENTRA PLC ANNUAL REPORT 2024
141
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
1.
Segment analysis continued
Disaggregation of revenue
% 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
£m
2023
£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
ESSENTRA PLC ANNUAL REPORT 2024
142
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
2.
Net operating expense
Note
2024
£m
2023
£m
Changes in inventories of finished goods and work-in-progress
(2.4)
(2.6)
Raw materials and consumables
82.9
90.7
Personnel expense1
5
107.6
107.9
Depreciation of property, plant and equipment
7
9.6
11.1
Depreciation of lease right-of-use assets
9
6.3
5.9
Amortisation of intangible assets3
8
13.5
14.2
Adjusting items
2
14.0
21.0
Exchange differences recognised in profit or loss
(0.2)
(1.1)
Other operating expenses2
56.5
58.3
Net operating expenses
287.8
305.4
Notes:
1. Excludes personnel expenses totalling £4.9m (2023: £2.2m) recognised within adjusting items.
2. Other operating expenses includes manufacturing, selling, general and administrative overheads.
3. Includes amortisation of non-acquired intangible assets of £2.0m (2023: £2.9m).
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
£m
2023
£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 (“SaaS”) arrangements4
9.6
10.8
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
ESSENTRA PLC ANNUAL REPORT 2024
143
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
2.
Net operating expense continued
2024
£m
2023
£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 was incurred relating to acquisitions, of which £0.6m cost relates to the acquisition of BMP TAPPI in October 2023, and a net credit of £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.
Auditor’s remuneration
Fees payable to the Company’s external auditor, PricewaterhouseCoopers LLP and its associates are analysed below:
2024
£m
2023
£m
Fees payable for the audit of the Company and the consolidated financial statements
2.0
1.9
Audit of the financial statements of the Company’s subsidiaries pursuant to legislation
0.4
0.4
Total audit fees
2.4
2.3
Audit-related assurance services1
0.1
0.1
Other assurance services
–
–
Total non-audit fees
0.1
0.1
Total fees
2.5
2.4
Notes:
1. Audit-related assurance services mainly comprises the review of the half-year financial statements and associated results announcement.
ESSENTRA PLC ANNUAL REPORT 2024
144
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
3.
Net finance expense from continuing operations
Note
2024
£m
2023
£m
Finance income
Bank deposits
0.5
3.5
Other finance income1
2.8
7.0
Net interest on pension scheme assets
18
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
18
(0.7)
(0.8)
Interest on leases
9
(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.
4.
Income tax expense/(credit)
Note
2024
£m
2023
£m
Amounts recognised in the consolidated income statement
Current tax
(0.4)
4.8
Adjustment in respect of prior years’ tax
(0.1)
(2.6)
Deferred tax
16
(4.9)
(1.2)
Adjustment in respect of prior years’ deferred tax
16
(0.7)
(2.1)
Income tax credit
(6.1)
(1.1)
Income tax expense/(credit) attributable to:
(Credit)/expense on profit/loss from continuing operations
(5.9)
2.6
Credit on loss from discontinued operations
24
(0.2)
(3.7)
Income tax credit
(6.1)
(1.1)
Amounts recognised in the consolidated statement of
comprehensive income
Tax expense/(credit) in respect of taxable foreign exchange
taxable losses
0.6
(1.7)
Tax (credit)/expense in respect of fair value hedges
(0.5)
1.1
Net Tax expense/(credit)
0.1
(0.6)
Tax expense/(credit) on remeasurement of defined benefit
pension schemes
2.1
(0.3)
Net total tax expense/(credit) through consolidated statement
of comprehensive income
2.2
(0.9)
ESSENTRA PLC ANNUAL REPORT 2024
145
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
4.
Income tax expense/(credit) continued
Factors affecting income tax for the year
The tax credit for the year ended 31 December 2024 is lower than (2023: lower than) the
standard rate of corporation tax in the UK of 25.0% (2023: 23.5%). The differences are
explained below:
Note
2024
£m
2023
£m
Profit from continuing operations before income tax
5.7
8.4
Loss from discontinued operations before income tax
24
(1.2)
(4.1)
4.5
4.3
Tax at UK statutory rate of 25.0% (2023: 23.5%)
1.1
1.0
Effects of:
Permanent disallowable items (including adjusting
items)1
(3.7)
1.1
Overseas state and local tax
0.1
–
Unrecognised tax attributes (arising)/utilised2
(0.2)
(1.3)
Adjustments in respect of prior years
(0.8)
(4.7)
Withholding tax (including on unremitted earnings)
0.8
0.6
Difference between UK and overseas tax rates
(0.1)
–
Reassessment of deferred tax recognition3
(3.3)
2.2
Income tax credit4
(6.1)
(1.1)
Notes:
1. This is in relation to permanent differences arising on non-deductible expenses and the net of the releases of uncertain tax provisions of
£4.2m (2023: 2.3m) which includes a £3.5m release of a provision following the expiration of the statute of limitations in the year.
2. See further information regarding deferred tax asset recognition in note 16.
3. This reflects a change in the expected realisation of future tax benefits due to the updated forecasts and improved projections of future
taxable profits in some jurisdictions, net of the de-recognition of deferred tax assets on tax losses and similar tax attributes where it is no
longer probable that the related tax benefits will be realised in other jurisdictions. This has been excluded from adjusted earnings per share
(note 6).
4. The income tax credit in the UK is £6.4m (2023: £2.2m charge).
5.
Personnel expense
Total personnel expense, including Directors, is analysed below:
Continuing operations
Total
2024
£m
2023
£m
2024
£m
2023
£m
Wages and salaries
91.7
90.7
91.7
90.7
Social security expense
12.3
13.0
12.3
13.0
Pension expense (note 18)
2.5
2.8
2.5
2.8
Share option expense (note 18)
1.1
1.4
1.1
1.4
Total personnel expense
107.6
107.9
107.6
107.9
Additional personnel expenses totalling £4.9m (2023: £2.2m) were included within adjusting
items, including: wages and salaries of £4.3m (2023: £1.9m); social security expense of £0.5m
(2023: £0.2m); pension contributions expense of £0.1m (2023: £0.1m); and £nil (2023: £nil)
relating to share option expense.
The Annual Report on Remuneration on pages 97 to 113 sets out information on Directors’
remuneration. For the average number of employees (including executive directors)
see note 1.
Key management remuneration
2024
£m
2023
£m
Short-term employee benefits
2.7
3.4
Post-employment benefits
0.1
0.1
Share-based payments
0.5
0.9
Termination benefits
0.1
0.1
3.4
4.5
Essentra considers key management personnel to be the Directors and the members of the
Group Management Committee. The amounts disclosed are on the same basis as those
used to determine the relevant amounts disclosed in the Annual Report on Remuneration
on pages 97 to 113.
ESSENTRA PLC ANNUAL REPORT 2024
146
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
6.
Earnings per share
Note
2024
£m
2023
£m
Earnings from continuing operations
Profit attributable to equity holders of the Company
11.6
5.8
Adjustments:
Amortisation of acquired intangible assets
1
11.5
11.3
Tax on amortisation of acquired intangible assets
(2.7)
(2.7)
Adjusting items
2
14.0
21.0
Tax on adjusting items
2
(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 losses2
(3.3)
n/a
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.
ESSENTRA PLC ANNUAL REPORT 2024
147
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
7.
Investment Properties, Property, plant and equipment
2024
2024
Note
Total
Investment
properties4
£m
Land and
buildings
£m
Plant and
machinery
£m
Fixtures, fittings
and equipment
£m
Total
Property,
plant and equipment
£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
26
(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
26
(1.9)
–
–
–
–
Reversal of impairment in year3,4
(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
ESSENTRA PLC ANNUAL REPORT 2024
148
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
7.
Investment Properties, Property, plant and equipment continued
2023
2023
Note
Total
Investment
properties4
£m
Land and
buildings
£m
Plant and
machinery
£m
Fixtures, fittings
and equipment
£m
Total
Property,
plant and
equipment
£m
Cost
Beginning of year
7.0
37.7
125.6
72.0
235.3
Acquisitions5
23
–
–
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 2).
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 2). 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).
ESSENTRA PLC ANNUAL REPORT 2024
149
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
8.
Intangible assets
2024
Goodwill
£m
Customer
Relationships5
£m
Other intangible
assets1,2,8
£m
Total
£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
ESSENTRA PLC ANNUAL REPORT 2024
150
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
8.
Intangible assets continued
2023
Goodwill
£m
Customer
Relationships5
£m
Other intangible
assets1,2,8
£m
Total
£m
Cost
Beginning of year
140.1
159.3
24.8
324.2
Acquisitions7 (note 23)
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 23).
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
£m
2023
£m
EMEA
111.3
109.3
AMERICAS
36.0
35.1
147.3
144.4
ESSENTRA PLC ANNUAL REPORT 2024
151
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
8.
Intangible assets continued
Customer relationships and other intangible assets are allocated to the businesses to which
they relate, as follows:
Business
2024
£m
2023
(re-presented)
£m
Businesses of former Moss and Skiffy
5.9
7.2
Businesses of former Richco
5.5
9.0
Business of former Mesan1
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
revenue growth
rate over five-year
Forecast period
Terminal
growth rate
from
2028 onwards
Improvement in
average operating
profit over
five-year period
Pre-tax
discount rate
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
EMEA
(Headroom)
£m
Group CGUs
AMERICAS
(Headroom)
/Impairment
£m
Hengzhu CGU
Impairment
£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
ESSENTRA PLC ANNUAL REPORT 2024
152
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
9.
Lease right-of-use asset
2024
Land and
buildings
£m
Plant and
machinery
£m
Fixtures, fittings
and equipment
£m
Total
£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
ESSENTRA PLC ANNUAL REPORT 2024
153
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
9.
Lease right-of-use asset continued
2023 (re-presented)
Land and
buildings
£m
Plant and
machinery
£m
Fixtures, fittings
and equipment
£m
Total
£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 2). 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.
ESSENTRA PLC ANNUAL REPORT 2024
154
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
9.
Lease right-of-use assets continued
The income statement includes the following amounts relating to leases:
On continuing operations
Notes
2024
£m
2023
£m
Lease right-of-use asset depreciation
2, 28
6.3
5.9
Interest expense (included in finance costs)1
3
2.6
1.8
Exchange losses (included in finance costs)
3
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 short-term leases (included in operating expenses)
0.1
0.1
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 maturity analysis on the lease liabilities has been included in note 19. The total cash
outflow for leases and analysis of movements in lease liabilities are included in note 22.
10. Inventories
2024
£m
2023
£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.
11.
Trade and other receivables
2024
£m
2023
£m
Trade receivables2
37.6
43.5
Other receivables3
14.3
14.7
Prepayments and accrued income
4.3
3.3
Total1
56.2
61.5
Notes:
1. See note 19 for further details on the credit risk disclosures relating to trade and other receivables.
2. Includes impairment charge on trade receivables of £0.6m (2023: £0.4m).
3. Other receivables include £9.6m (2023: £9.7m) of consideration for an earnout receivable (following the disposal of the Filters business
in 2022).
12. Cash and cash equivalents
2024
£m
2023
£m
Bank balances
33.7
59.7
Total
33.7
59.7
13. Trade and other payables
2024
£m
2023
£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
ESSENTRA PLC ANNUAL REPORT 2024
155
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
14. Interest bearing loans and borrowings
2024
£m
2023
£m
Current liabilities
Unsecured overdrafts
1.0
–
Total
1.0
–
Non-current liabilities
Unsecured bank loans
25.0
15.2
US Private Placement Loan Notes
81.7
80.3
Total
106.7
95.5
At 31 December 2024, the Group had £26.1m (2023: £15.2m) of unsecured bank loans drawn
in a combination of sterling, euros and US dollars at floating rates of interest set by reference
to SONIA/EURIBOR/SOFR as relevant (2023: SONIA). Essentra’s $102.5m US Private
Placement Loan Notes (“USPP”) are at a weighted average interest rate of 3.84% per annum
(2023: 3.84%).
The US Private Placement Loan Notes consist of $33m maturing July 2028, $35m maturing
July 2031 and $35m maturing July 2033.
The currency profile of the carrying and nominal values of Essentra‘s loans and borrowings is
as follows:
2024
2023
Carrying
value
£m
Nominal
value
£m
Carrying
value
£m
Nominal
value
£m
US dollar – USPP
81.7
82.0
80.3
80.7
US dollar – Unsecured bank loan
4.7
4.7
–
–
Euro – Unsecured bank loan
7.4
7.4
15.2
15.2
Sterling – Unsecured bank loan
12.9
14.0
–
–
Total
106.7
108.1
95.5
95.9
The difference between the total nominal and carrying value of loans and borrowings relates
to the amortised value of prepaid facility fees of £1.4m (2023: £0.4m).
15. Derivatives
Derivative financial instruments – cash flow hedges
The Group used derivatives to hedge its exposure to foreign exchange and interest rate risks
arising from operational, financing and investment activities. The carrying value of derivatives
designated in cash flow hedges at the balance sheet date was as follows:
2024
2023
Fair
values
£m
Contractual
or notional
amounts
£m
Change in
fair value
£m
Fair
values
£m
Contractual
or notional
amounts
£m
Change in
fair value
£m
Current assets
Forward foreign
exchange contracts
–
–
–
–
2.2
(0.2)
–
–
–
–
2.2
(0.2)
Non-current assets
Cross currency interest
rate swaps
5.8
64.0
1.6
4.2
63.0
(4.1)
5.8
64.0
1.6
4.2
63.0
(4.1)
Current liabilities
Forward foreign exchange
contracts
–
–
–
–
1.0
(1.3)
–
–
–
–
1.0
(1.3)
Cash flow hedges are hedges of the currency risk exposure to variability in cash flows.
They relate to trading transactions and interest and principal payments denominated in
foreign currencies.
The net fair value gains or losses on open forward foreign exchange contracts that
hedge foreign currency risk of anticipated future sales, purchases and interest payments
are accounted for as cash flow hedges. The fair value was transferred to profit or loss
when the forecast transactions occurred. There are currently no open forward foreign
exchange contracts.
ESSENTRA PLC ANNUAL REPORT 2024
156
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
15. Derivatives continued
At 31 December 2024, the Group has a number of cross currency interest rate swap contracts
to hedge the foreign currency risk of its US Private Placement Loan Notes with a total
notional value of $80m (2023: $80m), which are due to mature in 2028. Of these derivatives,
hedge accounting was discontinued in 2022 for a total notional value of $47m as the related
debt was repaid in that year. The hedge ratio for the remaining $33m derivatives is 1:1 and
ineffectiveness can arise due credit risk in the counterparty and in the Group. The average
rate for the cross-currency swaps in place at 31 December 2024 is $1.37 /£ (2023: $1.37 / £).
Movements in the Group‘s hedging reserves are analysed below.
2024
2023
Cost of
hedging
reserve
£m
Cash flow
hedging
reserve
£m
Total
hedging
reserve
£m
Cost of
hedging
reserve
£m
Cash flow
hedging
reserve
£m
Total
hedging
reserve
£m
Balance at the beginning of
the year
0.1
(0.3)
(0.2)
(1.1)
0.3
(0.8)
Change in fair value of forward
foreign exchange contracts
recognised in other
comprehensive income1
–
–
–
–
(0.1)
(0.1)
Change in fair value of cross
currency interest rate swaps
recognised in other
comprehensive income1
0.1
0.6
0.7
1.2
(2.9)
(1.7)
Amounts recycled to finance
(income)/expense to
offset retranslation
of hedged loans
–
(0.5)
(0.5)
–
2.4
2.4
Balance at the end of the year
0.2
(0.2)
–
0.1
(0.3)
(0.2)
Notes:
1. Amounts credited to other comprehensive income in the year totalled £0.7m (2023: £1.8m charge).
The following movements were recognised for the purpose of calculating hedge
ineffectiveness in the year:
Movement in
hedging
instrument
£m
Movement in
hedged item
£m
Ineffectiveness
recognised in
P&L
£m
Cumulative movement at 1 January 2024
10.5
(10.8)
(0.3)
Movement in year
1.6
(1.6)
–
Cumulative movement at 31 December 2024
12.1
(12.4)
(0.3)
Movement in
hedging
instrument
£m
Movement in
hedged item
£m
Ineffectiveness
recognised in
P&L
£m
Cumulative movement at 1 January 2023
14.6
(14.9)
(0.3)
Movement in year
(4.1)
4.1
–
Cumulative movement at 31 December 2023
10.5
(10.8)
(0.3)
Hedges of net investments in foreign operations
Hedges of net investments are hedges of the currency risk exposure to changes in the
carrying value of net investments in foreign operations. The hedge ratio is 1:1.
Essentra had other US dollar and euro denominated borrowings which it designated
as hedges of its net investments in subsidiary undertakings. Exchange losses of £0.4m
(2023: gains of £1.0m) on these US dollar borrowings and the gains of £0.5m (2023: losses of
£0.3m) on the euro borrowings were recognised in other comprehensive income. Cumulative
losses in respect of the net investment hedge in the currency translation reserve amount to
£57.6m (2023: £57.7m).
ESSENTRA PLC ANNUAL REPORT 2024
157
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
16. Deferred tax
Deferred tax assets and liabilities are attributable to the following:
2024
2023
Assets
£m
Liabilities
£m
Net
£m
Income
statement:
(credit)/
charge
£m
Assets
£m
Liabilities
£m
Net
£m
Income
statement:
(credit)/
charge
£m
Property, plant and
equipment1
(9.6)
3.3
(6.3)
(2.0)
(8.4)
3.8
(4.6)
(0.8)
Intangible assets2
–
13.7
13.7
(2.2)
–
16.0
16.0
(1.9)
Employee benefits3
(3.9)
2.1
(1.8)
0.4
(5.6)
1.3
(4.3)
(0.6)
Other4
(12.3)
2.9
(9.4)
(1.8)
(10.4)
3.5
(6.9)
–
Tax
(assets)/liabilities
(25.8)
22.0
(3.8)
–
(24.4)
24.6
0.2
–
Set off of tax
11.8
(11.8)
–
–
12.2
(12.2)
–
–
Net tax
(assets)/liabilities
(14.0)
10.2
(3.8)
–
(12.2)
12.4
0.2
–
Total income
statement
credit
–
–
–
(5.6)
–
–
–
(3.3)
Notes:
1. A deferred tax liability arises on property, plant and equipment as the tax value of assets is lower than the corresponding accounting value.
This arises as tax deductions are determined by the applicable tax laws in each country the Group operates in whereas accounting
depreciation is calculated in line with the Group’s accounting policy.
2. A deferred tax liability is provided on temporary differences arising on the Group‘s intangible assets as in the majority of cases the local
tax authorities do not allow deduction for amortisation of these intangible assets.
3. This represents deferred tax on the Group’s defined benefit pension schemes and share-based incentives.
4. This includes expenditure that will be deductible in future periods for tax purposes when the amounts are settled in cash, tax losses
expected to be utilised in future periods and withholding tax on overseas earnings from Group companies expected to be remitted in the
foreseeable future of £1.7m (2023: £1.6m).
Movements in the year:
2024
2023
Total
Net
£m
Total
Net
£m
Net tax liabilities/(assets) at beginning of year
0.2
(4.1)
Credit to the income statement in respect of current year
(4.9)
(1.2)
Credit to the income statement in respect of prior years
(0.7)
(2.1)
Charge/(credit) to other comprehensive income – defined
benefit pensions
2.1
(0.3)
Expense to reserves – hyperinflation (IAS 29)
–
1.0
Expense to reserves on share-based incentives
0.2
0.3
(Credit)/expense to other income in respect of fair value hedges
(0.5)
1.1
Acquisitions and disposals
–
5.1
Currency translation
(0.2)
0.4
Net tax (assets)/liabilities at end of year
(3.8)
0.2
As at 31 December 2024, it was expected that earnings from certain overseas Group
companies will be remitted and a deferred tax liability of £1.7m (2023: £1.6m) has been
recognised accordingly. This represents withholding taxes payable on the remittance
of these earnings under local tax laws. The amount of unrecognised deferred tax in respect
of unremitted earnings is £4.8m (2023: £2.5m) on gross unremited earnings of £68.2m
(2023: £37.3m).
Based on available information, management determined whether it is probable for some or
all of the deferred tax assets to be recognised. In determining this, management considered
the cumulative losses in prior years, the history of tax losses, the manner in which assets
can be used (including time limitations under local laws), future earnings potential and
expectation of future reversal of taxable temporary differences. Following management
assessment, gross deferred tax assets of £0.1m (2023: £0.1m) in respect of capital losses and
unutilised tax losses of £34.4m (2023: £57.7m) have not been recognised as their realisation
is not probable. The capital losses have an unlimited expiry date.
The income tax losses expire as follows: £4.0m within 5 years, £7.6m in 5+ years and £22.8m
with no expiry.
If future conditions change, the amount of unrecognised deferred tax assets will be reassessed.
This may impact the income tax expense/credit in the year of remeasurement.
ESSENTRA PLC ANNUAL REPORT 2024
158
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
17.
Provisions
2024
Reorganisation
£m
Contractual
obligations
£m
Onerous
contracts
£m
Other
£m
Total
£m
Beginning of year
0.5
3.4
0.5
1.4
5.8
Provisions (released)/made
during year
–
(0.3)
–
1.9
1.6
Utilised during year
(0.5)
(2.7)
(0.5)
–
(3.7)
Currency translation
–
–
–
–
–
End of year
–
0.4
–
3.3
3.7
Non-current
–
–
–
–
–
Current
–
0.4
–
3.3
3.7
End of year
–
0.4
–
3.3
3.7
2023
Reorganisation
£m
Contractual
obligations
£m
Onerous
contracts
£m
Other
£m
Total
£m
Beginning of year
3.6
5.5
1.9
0.8
11.8
Provisions made/(released)
during year
0.3
–
(0.5)
0.8
0.6
Utilised during year
(3.4)
(2.1)
(0.9)
(0.2)
(6.6)
Currency translation
–
–
–
–
–
End of year
0.5
3.4
0.5
1.4
5.8
Non-current
–
–
0.1
0.1
0.2
Current
0.5
3.4
0.4
1.3
5.6
End of year
0.5
3.4
0.5
1.4
5.8
Reorganisation
Reorganisation provisions are generally held against restructuring and redundancy costs,
primarily related to the integration of acquired businesses and restructuring associated with
acquisitions and other businesses. During the year to 31 December 2024 £nil (2023: £0.3m) of
costs associated to reorganisation provisions were recognised in adjusting items (see note 2).
Contractual obligations
The provision for contractual obligations represents amounts that the Group may be
liable to pay arising from the disposal of the Packaging and Filters businesses in 2022. At
31 December 2024, provisions for contractual obligations amounted to £0.4m (2023: £3.4m),
representing the Group’s estimate of ongoing obligations due to each of the buyers under the
respective Share Purchase Agreements.
Onerous contracts
At 31 December 2024, onerous contract provisions of £nil (2023: £0.5m) were recognised in
respect of contracts for services that are now in excess of the Group’s requirements following
the disposal of the Packaging and Filters businesses during 2022.
Other
Other provisions relate primarily to non-lease contracts on vacant properties, lease
dilapidations, regulatory claims and other claims.
18. 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.
ESSENTRA PLC ANNUAL REPORT 2024
159
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
18. Employee benefits continued
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 consolidated financial statements on a total group basis
(including discontinued operations) are as follows:
2024
£m
2023
£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 consolidated statement of comprehensive income
Return on defined benefit scheme assets excluding amounts in net finance income
10.7
(2.3)
Impact of changes in assumptions and experience to the present value of defined
benefit scheme liabilities
(18.7)
3.6
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 3) was £0.3m (2023: £0.5m).
2. Net interest expense on defined benefit scheme liabilities on a continuing basis (note 3) 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 2).
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.
ESSENTRA PLC ANNUAL REPORT 2024
160
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
18. Employee benefits continued
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.
ESSENTRA PLC ANNUAL REPORT 2024
161
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
18. Employee benefits continued
The fair value of scheme assets, which are not intended to be realised in the short term and
may be subject to significant change before they are realised, and the present value of the
pension scheme liabilities, which are derived from cash flow projections over long periods
and are therefore inherently uncertain, are:
2024
% of total
fair value of
scheme assets
Europe
£m
% of total
fair value of
scheme assets
US
£m
Total
£m
Equities
17%
22.8
54%
26.8
49.6
Bonds/LDI
62%
83.8
26%
12.6
96.4
Insureds
18%
24.4
–
–
24.4
Other (including cash)
3%
4.6
20%
9.7
14.3
Fair value of scheme assets1
135.6
49.1
184.7
Present value of scheme liabilities2
(127.5)
(58.7)
(186.2)
Net retirement benefit
assets/(obligations)3
8.1
(9.6)
(1.5)
20234
(re-presented)
% of total
fair value of
scheme assets
Europe
£m
% of total
fair value of
scheme assets
US
£m
Total
£m
Equities
22%
33.2
60%
29.1
62.3
Bonds/LDI
58%
85.5
38%
18.7
104.2
Insureds
18%
27.2
–
–
27.2
Other (including cash)
2%
3.0
2%
0.8
3.8
Fair value of scheme assets1
148.9
48.6
197.5
Present value of scheme liabilities2
(143.5)
(63.3)
(206.8)
Net retirement benefit
assets/(obligations)3
5.4
(14.7)
(9.3)
Notes:
1. The fair value of scheme assets is not intended to be realised in the short term and may be subject to significant change before they
are realised.
2. The present value of the pension scheme liabilities, which are derived from cash flow projections over long periods and are therefore
inherently uncertain.
3. In the Consolidated Balance Sheet, the retirement benefit asset of £10.6m (2023: £7.9m) relates to the UK pension scheme, and the
retirement benefit obligations of £12.6m (2023: £17.5m) relate to the US and other smaller schemes.
4. The comparative has been re-presented to present Bonds/LDI and Insureds separately.
The equity, corporate bond and government bond assets are either direct investments or
investments made via a managed fund for those asset classes. All of these assets have a
quoted market price in an active market. The other asset class relates primarily to property
and hedge funds, which are unquoted, and are valued at their net asset fair value.
No direct investment in property is held. No plan assets are invested directly in the shares
of Essentra plc.
The pension surplus in Europe is not restricted as the asset is considered realisable on the
basis of the Group’s unconditional right to a refund.
The average expected duration of the Group’s European defined benefit pension liability
at 31 December 2024 is 11.8 years (2023: 13.5 years). The average expected duration
of the Group’s US defined benefit pension liability at 31 December 2024 is 9.3 years
(2023: 10.0 years).
ESSENTRA PLC ANNUAL REPORT 2024
162
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
18. Employee benefits continued
Movement in fair value of post-employment obligations recognised during the year
2024
2023
Defined benefit pension schemes
Defined benefit pension schemes
Assets
£m
Liabilities
£m
Other1
£m
Total
£m
Assets
£m
Liabilities
£m
Other1
£m
Total
£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 2).
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
£m
US
£m
Total
£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
ESSENTRA PLC ANNUAL REPORT 2024
163
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
18. Employee benefits continued
Share-based incentives
Essentra operates equity-settled share-based incentive plans for its Executive Directors and employees. The total expense in respect of these plans during the year was £1.1m (2023: £1.4m).
Details of these plans are set out below:
Share awards/options outstanding
2024
At 1 Jan
2024
Weighted
average
exercise price
Granted
during the year
Weighted
average
exercise price
Lapsed
during the year
Weighted
average
exercise price
Exercised
during the year
Weighted
average
exercise price
At 31 Dec
2024
Weighted
average
exercise price
Exercisable
at 31 Dec
2024
Weighted
average
exercise price
LTIP Part B
3,877,704
–
2,185,082
–
(904,437)
–
(1,327,893)
–
3,830,456
–
40,799
–
DASB
146,223
–
144,181
–
(3,685)
–
(27,432)
–
259,287
–
–
–
SAYE 3-year plan
386,086
189.0p
430,520
151.5p
(336,882)
188.0p
–
–
479,724
156.1p
–
–
SAYE 5-year plan
108,435
184.2p
156,420
151.5p
(78,729)
171.0p
–
–
186,126
162.3p
–
–
US SAYE 2-year plan
5,100
266.5p
–
–
(5,100)
266.5p
–
–
–
–
–
–
Restrictive Shares
334,356
–
–
–
(28,837)
–
–
–
305,519
–
–
–
4,857,904
2,916,203
(1,357,670)
(1,355,325)
5,061,112
40,799
2023
At 1 Jan
2023
Weighted
average
exercise price
Granted
during the year
Weighted
average
exercise price
Lapsed
during the year
Weighted
average
exercise price
Exercised
during the year
Weighted
average
exercise price
At 31 Dec
2023
Weighted
average
exercise price
Exercisable
at 31 Dec
2023
Weighted
average
exercise price
LTIP Part A
66,200
692.0p
–
–
(66,200)
692.0p
–
–
–
–
–
–
LTIP Part B
2,543,804
–
1,628,540
–
(259,682)
–
(34,958)
–
3,877,704
–
–
–
DASB
435,590
–
76,530
–
–
–
(365,897)
–
146,223
–
–
–
SAYE 3-year plan
322,012
249.2p
331,917
169.7p
(267,843)
237.4p
–
–
386,086
189.0p
17,919
210.9p
SAYE 5-year plan
110,163
256.2p
93,688
169.7p
(95,416)
253.1p
–
–
108,435
184.2p
18,595
184.2p
US SAYE 2-year plan
30,825
294.3p
–
–
(25,725)
299.8p
–
–
5,100
266.5p
–
–
Restrictive Shares
419,519
–
–
–
(85,163)
–
–
–
334,356
–
–
–
3,928,113
2,130,675
(800,029)
(400,855)
4,857,904
36,514
ESSENTRA PLC ANNUAL REPORT 2024
164
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
18. Employee benefits continued
The exercise prices of options outstanding at the end of the year range from nil to 248.0p
(2023: nil to 266.5p).
The weighted average share price at the date of exercise for options exercised during the year
was 170.1p (2023: 205.2p). The following table shows the weighted average fair value at the
date of grant for options granted during the year:
LTIP
Part B
DASB
SAYE 3-year
plan
SAYE-5 year
Plan
Restrictive
Shares
Year ended 31 December 2024
150.0p
172.2p
47.9p
52.8p
n/a
Year ended 31 December 2023
163.6p
175.5p
20.3p
20.3p
n/a
Fair value model inputs for cumulative share options awarded
2024
LTIP
Part B
DASB
SAYE-3 year
plan
SAYE-5 year plan
Restrictive
Shares
Weighted average fair
value at grant
162.5p
177.9p
48.4p
54.7p
230.2p
Weighted average
share price at grant
192.3p
187.9p
178.5p
187.7p
237.0p
Weighted average
exercise price
0.0p
0.0p
156.1p
162.3p
0.0p
Weighted average
volatility
35.1%
33.25%
36.44%
35.07%
40.0%
Weighted average
dividend yield
2.02%
2.07%
1.95%
2.04%
2.50%
Weighted risk free rate
3.95%
4.02%
4.50%
3.97%
3.40%
Expected employee
retention rates
89.6%
98.7%
81.5%
82.2%
70.0%
Expected term
3.0 years
3.0 years
3.1 years
5.2 years
3.0 years
Valuation model
Monte
Carlo
Binomial
Binomial
Binomial
Binomial
2023
LTIP
Part B
DASB
SAYE 3-year
plan
SAYE 5-year
plan
Restrictive
Shares
Weighted average fair
value at grant
205.7p
174.0p
32.2p
29.6p
230.2p
Weighted average
share price at grant
243.1p
202.8p
210.5p
204.2p
237.0p
Weighted average
exercise price
0.0p
0.0p
189.0p
185.7p
0.0p
Weighted average
volatility
38.1%
40.0%
36.0%
40.9%
40.0%
Weighted average
dividend yield
2.86%
3.00%
2.93%
2.99%
2.50%
Weighted risk free rate
2.02%
3.74%
2.69%
2.98%
3.40%
Expected employee
retention rates
92.3%
100.0%
80.0%
80.2%
85.0%
Expected term
3.0
years
3.0
years
3.2
years
5.2
years
3.0
years
Valuation model
Monte
Carlo
Binomial
Binomial
Binomial
Binomial
Where relevant, market conditions are taken into account in determining the fair value of the
awards at grant date. The three-year average historic volatility at grant date has been used
as the volatility input for the LTIP Part A, LTIP Part B, DASB and SAYE 3-year awards, and the
five-year average historic volatility at grant date has been used as the volatility input for the
SAYE 5-year award.
2024 and 2023
LTIP
Part A
LTIP
Part B
DASB
SAYE
3 year
plan
SAYE
5 year
Plan
Restrictive
Shares
Contractual life
3–10 years
3–6 years
3 years
3 years
5 years
3 years
Details of the vesting conditions of the LTIP Part A, LTIP Part B and DASB share option
schemes are set out in the Report of the Remuneration Committee on pages 102 and 103.
ESSENTRA PLC ANNUAL REPORT 2024
165
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
19. Financial risk management
Essentra’s activities expose the business to a number of key financial risks which have the
potential to affect its ability to achieve its business objectives.
The Board has overall responsibility for Essentra’s system of internal control and financial risk
management and for reviewing the effectiveness of this system. Such a system can only be
designed to mitigate, rather than eliminate, the risk of failure to achieve business objectives
and can therefore only provide reasonable, and not absolute, assurance against material
misstatement or loss.
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. Essentra uses derivatives
only to manage currency and interest rate risk arising from underlying business activities.
No transactions of a speculative nature are undertaken. The Treasury function is subject
to periodic independent reviews by the Group Assurance function. 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. The following describes Essentra’s financial risk exposure and
management from a quantitative and qualitative perspective.
(i) Credit risk
Credit risk is the risk of financial loss if a customer or counterparty to a financial asset or
liability fails to meet its contractual obligations, and arises principally from trade receivables
and cash and cash equivalents. With the exception of the deferred consideration receivable of
£9.6m (2023: £19.0m) in respect of the sale of the Filters business, Essentra has no significant
individual concentrations of credit risk. The following is an overview of how Essentra manages
its credit risk exposures.
Trade and other receivables
Essentra’s exposure to credit risk is primarily driven by the profile of its customers. This is
influenced by the demographics of the customer base, including the industry and country
in which customers operate.
Trade receivables were assessed for impairment at the balance sheet date using an expected
credit loss model which measures the required allowance at an amount equal to expected
lifetime credit losses applying both a qualitative and quantitative analysis of the asset base.
The Group monitors significant customers’ credit limits and recognises a specific impairment
of trade receivables in circumstances where a customer’s credit standing has deteriorated
to the extent that a credit default is considered probable.
The Group also recognises an expected credit loss impairment of trade receivables through an
accounting policy election, whereby default losses are expected for each ageing category as
follows: Current 0.2%; Overdue 1-30 days 0.5%; Overdue 31-60 days 1%; Overdue 61-90 days
5%; Overdue 91-180 days 10%; Overdue 181-360 days 50%; and Overdue over 360 days 100%.
As at 31 December 2024, gross trade receivables were £38.6m (2023: £45.2m) of which
£10.5m (2023: £10.1m) were past due. The ageing analysis of past due trade receivables is
as follows:
2024
£m
2023
£m
1-60 days
9.0
7.5
61-180 days
0.9
1.6
181-360 days
0.2
0.6
360+ days
0.4
0.4
10.5
10.1
As at 31 December 2024, the combined specific and expected credit loss impairment of trade
receivables was of £1.0m (2023: £1.7m). The analysis of the combined impairment based on
the underlying receivables is as follows:
2024
£m
2023
£m
Current
0.1
0.3
1-60 days
0.1
0.1
61-180 days
0.2
0.3
181-360 days
0.2
0.6
360+ days
0.4
0.4
1.0
1.7
The movement in the provision for impaired receivables is as follows:
2024
£m
2023
£m
Beginning of year
1.7
1.4
Impaired receivables disposed
(0.1)
–
Impairment loss recognised1
–
0.4
Utilisation
(0.6)
(0.1)
End of year
1.0
1.7
Notes:
1. Impairment loss on a continuing basis is £nil (2023: £0.4m).
ESSENTRA PLC ANNUAL REPORT 2024
166
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
19. Financial risk management continued
On a periodic basis, the Group undertakes the sale of certain trade receivables to banks
using facilities set up by its customers. These trade receivables are factored on a non-recourse
basis, and therefore are derecognised from the Group’s balance sheet at the point of sale to
the bank. The Group does not operate its own invoice discounting or factoring facilities. As at
31 December 2024, £nil was drawn under invoice discounting facilities (2023: £nil),
representing cash collected before it was contractually due from the customer.
Other receivables of £14.3m includes deferred consideration receivable amounting to £9.6m
(2023: £19.0m) following the disposal of the Filters business, £nil (2023: £9.3m) of which is
due greater than 1 year and £9.6m (2023: £9.7m) is due less than 1 year. The consideration,
which is structured as an earn-out, has been classified as an other receivable in the
consolidated financial statements. The fair value has been determined at the balance sheet
date based on management’s best estimate of the Filters business achieving future
performance targets to which the earn-out is linked with forecast earnings being a critical
unobservable input into the fair value measurement. A credit of £0.6m (2023: £8.4m credit)
was recognised in profit and loss on business disposal (see note 24).
Derivative assets
Credit risk with respect to derivatives is controlled by limiting transactions to major banking
counterparties where internationally agreed standard form documentation exists. The credit
ratings of these counterparties are monitored regularly. The maximum exposure to credit risk
in relation to derivatives at the balance sheet date is £5.8m (2023: £4.2m) being
predominantly, the fair value of cross currency interest rate swaps (see note 15).
Cash and cash equivalents
Credit risk relating to cash and cash equivalents is monitored daily, on a counterparty by
counterparty basis. The credit limits imposed specify the maximum amount of cash which
can be invested in, or with, any single counterparty. These limits are determined by
geographic presence, expertise and credit rating. The Group regularly monitors the credit
ratings of counterparties.
The following table provides information regarding the credit risk exposure of Essentra by
classifying derivative assets, short-term investments and cash and cash equivalents
according to credit ratings of the counterparties. AAA is the highest possible rating and all of
the assets are neither impaired nor past due.
2024
AA
£m
A
£m
BBB
£m
BB
£m
B
£m
Not rated
£m
Total
£m
Non-current derivative assets
–
–
5.8
–
–
–
5.8
Cash and cash equivalents
1.2
21.8
8.8
0.2
1.6
0.1
33.7
Total
1.2
21.8
14.6
0.2
1.6
0.1
39.5
2023
AA
£m
A
£m
BBB
£m
BB
£m
B
£m
Not rated
£m
Total
£m
Non-current derivative assets
–
–
4.2
–
–
–
4.2
Cash and cash equivalents
3.5
10.0
44.5
–
1.0
0.7
59.7
Total
3.5
10.0
48.7
–
1.0
0.7
63.9
Essentra’s maximum credit risk exposure is £91.9m (2023: £131.4m) and no collateral is held
against this amount (2023: £nil).
(ii) Market price risk
Market price risk is the risk that changes in foreign exchange rates and interest rates
will affect income or the value of financial assets and liabilities. Essentra has produced a
sensitivity analysis that shows the estimated change to the income statement and equity
of a 1%, 5% or 10% weakening or strengthening in sterling against all other currencies or an
increase or decrease of 50 basis points (“bps”), 100bps and 200bps in market interest rates.
The amounts generated from the sensitivity analysis are estimates and actual results in the
future may materially differ.
Essentra is exposed to two types of market price risk: currency risk and interest rate risk.
(a) Currency risk
Essentra publishes its consolidated financial statements in sterling but conducts business
in several foreign currencies. Therefore, it is subject to currency risk due to exchange rate
movements which affect the translation of results and underlying net assets of its operations
and their transaction costs.
Hedge of net investment in foreign operations
The majority of Essentra’s net assets are in currencies other than sterling. The Company’s
normal policy is to limit 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. Essentra’s US dollar denominated assets were approximately 29%
(2023: 26%) hedged by $28m (2023: $23m) of US dollar denominated borrowings. Essentra’s
Euro denominated assets were approximately 9% (2023: 17%) hedged by €9m (2023: €18m)
of euro denominated borrowings. Hedge ineffectiveness will arise if the amount of the
investment in the foreign subsidiary becomes lower than the notional amount of the hedging
instrument.
ESSENTRA PLC ANNUAL REPORT 2024
167
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
19. Financial risk management continued
Transaction exposure hedging
Essentra does not formally define the proportion of highly probable forecast sales and
purchases to hedge, but agrees an appropriate percentage on an individual basis with
each business by reference to the Group’s risk management policies and prevailing market
conditions. The Group documents currency derivatives used to hedge its forecast transactions
as cash flow hedges. To the extent that cash flow hedges are effective, gains and losses are
recognised in other comprehensive income until the forecast transaction occurs, at which
point the gains and losses are transferred either to the income statement or to the non-
financial asset acquired.
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 forward foreign currency contracts to hedge its exposure to movements
in exchange rates on its highly probable forecast foreign currency sales and purchases over
a period of up to 18 months.
In accordance with its Treasury policy, Essentra does not hold or issue derivatives for
speculative purposes.
Hedging of foreign currency loan principal and interest payments
In July 2021, Essentra entered into a number of cross currency interest rate swap contracts to
hedge the foreign currency risk (principal and interest) of $145m of its US dollar loan notes.
The maturity profile of these match those of the underlying instruments with $20m notional
value maturing within 3 years and the remainder between 5 and 7 years. In November 2022,
$65m of these swap contracts were terminated leaving $80m notional value maturing within
5 years.
The following table shows Essentra’s sensitivity to a 1%, 5% and 10% weakening or
strengthening in sterling against all currencies. To calculate the impact on the income
statement for the year all currencies’ average rates have been increased or decreased by 1%,
5% or 10%. The translational effect on equity is limited as a proportion of US dollar and euro
exposure is hedged. Accordingly, the effect on equity is calculated by increasing or decreasing
the closing rate of all currencies with an adjustment for the movement in currency hedges.
It is assumed that all net investment and cash flow hedges will continue to be 100% effective.
The sensitivity on profit before tax is calculated by increasing or decreasing the average rate
of all currencies.
2024
Weakening in sterling
Strengthening in sterling
10%
£m
5%
£m
1%
£m
10%
£m
5%
£m
1%
£m
Impact on profit before tax –
gain/(loss)
0.1
0.1
–
(0.1)
(0.1)
–
Impact on equity – gain/(loss)
25.1
10.9
2.3
(20.5)
(10.8)
(2.3)
2023
Weakening in sterling
Strengthening in sterling
10%
£m
5%
£m
1%
£m
10%
£m
5%
£m
1%
£m
Impact on profit before tax –
gain/(loss)
2.2
1.0
0.2
(1.8)
(0.9)
(0.2)
Impact on equity – gain/(loss)
27.6
13.1
2.5
(22.6)
(11.8)
(2.5)
A 1 cent change to the US dollar rate against sterling will impact adjusted operating profit by
£nil (2023: £nil). A 1 cent change to the euro rate against sterling will impact adjusted
operating profit by £nil (2023: £nil).
(b) Interest rate risk
Essentra’s strategy is to ensure that at least 30% of the total debt with maturities of more
than one year is protected with fixed interest rates or approved interest rate derivatives.
The following table shows the Group’s sensitivity to a 50bps, 100bps and 200bps decrease
or increase in sterling, US dollar and euro interest rates. To calculate the impact on the income
statement for the year, the interest rates on all external floating rate interest bearing loans and
borrowings have been increased or decreased by 50bps, 100bps or 200bps and the resulting
increase or decrease in the net interest charge has been adjusted for the effect of Essentra’s
interest rate derivatives. See note 14 for interest rate disclosures on loans and borrowings.
2024
Decrease in interest rates
Increase in interest rates
200bps
£m
100bps
£m
50bps
£m
200bps
£m
100bps
£m
50bps
£m
Impact on the income
statement – gain/(loss)
0.6
0.3
0.2
(0.6)
(0.3)
(0.2)
2023
Decrease in interest rates
Increase in interest rates
200bps
£m
100bps
£m
50bps
£m
200bps
£m
100bps
£m
50bps
£m
Impact on the income
statement – gain/(loss)
0.3
0.2
0.1
(0.3)
(0.2)
(0.1)
ESSENTRA PLC ANNUAL REPORT 2024
168
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
19. Financial risk management continued
(iii) Liquidity risk
Liquidity risk is the risk that Essentra, although solvent, will encounter difficulties in meeting
obligations associated with financial liabilities that are settled by delivering cash or another
financial asset.
Essentra’s objective is to maintain a balance between continuity of funding and flexibility.
Essentra is primarily funded by a series of US Private Placement Loan Notes from various
financial institutions totalling US$103m (2023: US$103m) and syndicated multi-currency
5-year revolving credit facilities of £200.0m (2023: £200.0m) from its banks.
As at 31 December 2024, the amount drawn on the revolving credit facility was £26.1m
(2023: £15.2m). The Group manages liquidity by drawing down on this revolving credit facility
as and when needed throughout the year.
Amounts drawn by Essentra on its committed facilities are subject to standard banking
covenants. The financial covenants require the net debt to EBITDA ratio to be less than
3.0x and interest cover to be greater than 3.5x. There has been no covenant breach during
the year.
Essentra’s available undrawn committed facilities at 31 December were:
2024
£m
2023
£m
Expiring after two years
173.9
184.8
Any loans drawn on these facilities would bear interest at floating rates with reference
to SONIA/EURIBOR/SOFR as relevant for the currency and period of the loan.
The maturity of Essentra’s financial liabilities, including estimated interest payments,
is analysed below.
2024
Fair value
£m
Carrying
amount
£m
Undiscounted
contractual
cash flows
£m
<1 yr
£m
1-2 yrs
£m
2-5 yrs
£m
>5 yrs
£m
Unsecured bank loans
26.1
25.0
33.4
1.5
1.5
30.4
–
US Private Placement Loan Notes1
68.2
81.7
103.6
3.2
3.2
34.8
62.4
Trade and other payables2
44.8
44.8
44.8
44.8
–
–
–
Lease liabilities
28.9
28.9
48.8
9.2
8.2
16.7
14.7
Other unsecured loans
1.0
1.0
1.0
1.0
–
–
–
Other financial liabilities
0.8
0.8
0.8
0.8
–
–
–
Total
169.8
182.2
232.4
60.5
12.9
81.9
77.1
2023
Fair value
£m
Carrying
amount
£m
Undiscounted
contractual
cash flows
£m
<1 yr
£m
1-2 yrs
£m
2-5 yrs
£m
>5 yrs
£m
Unsecured bank loans
15.2
15.2
17.5
0.8
0.8
15.9
–
US Private Placement Loan Notes1
70.0
80.3
90.7
48.9
1.3
14.4
26.1
Trade and other payables2
55.3
55.3
55.3
55.3
–
–
–
Lease liabilities
30.9
30.9
49.3
8.1
7.3
15.6
18.3
Deferred contingent consideration3
5.0
5.0
5.0
5.0
–
–
–
Other financial liabilities
23.0
23.0
23.0
23.0
–
–
–
Total
199.4
209.7
240.8
141.1
9.4
45.9
44.4
Notes:
1. The fair value of the US Private Placement Loan Notes is estimated by discounting the future cash flows (interests and principal) at the
prevailing market rates.
2. Total trade and other payables carried at £51.7m (2023: £60.7m), including other taxes and social security contributions of £6.9m
(2023: £5.4m), are not financial liabilities and are therefore excluded from the above analysis. The fair value of the trade and other
payables approximate the carrying amount as they are due to be settled within six months.
3. The value of deferred contingent consideration is primarily based on the post-acquisition financial performance of the acquired business,
and reflects management’s expectation of the performance during the earn-out period.
ESSENTRA PLC ANNUAL REPORT 2024
169
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
19. Financial risk management continued
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
value
£m
Amortised
cost
£m
Total
carrying
value
£m
Fair
value
£m
Amortised
cost
£m
Total
carrying
value
£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
Derivative assets4
5.8
–
5.8
4.2
–
4.2
Level 3 of fair value hierarchy
Other financial assets5
10.1
–
10.1
19.0
–
19.0
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 24). Other current financial liabilities
also include deferred contingent consideration of £0.7m (2023: £5.0m) in respect of acquisitions.
(iv) Capital structure
Essentra defines its capital structure as its equity and non-current interest bearing loans and
borrowings, and aims to manage this to safeguard its ability to continue as a going concern,
so that it can continue to provide returns to shareholders and benefits for other stakeholders.
Essentra sets the amount of capital in proportion to risk. Essentra manages the capital
structure and makes adjustments to it in the light of changes in economic conditions and the
risk characteristics of the underlying assets. In order to maintain or adjust the capital
structure, Essentra may return capital to shareholders through dividends and share buybacks,
issue new shares or sell assets to reduce debt.
Essentra monitors its capital structure on the basis of the medium-term net debt-to-EBITDA
ratio. EBITDA is defined as operating profit before depreciation and other amounts written off
property, plant and equipment, share option expense, intangible amortisation and adjusting
items. At 31 December 2024, the net debt was £97.1m (2023: £62.5m).
Essentra’s medium-term target for net-debt to Adjusted EBITDA is 0x-1.5x.
The net debt-to-EBITDA ratios at 31 December were as follows.
Total Group
2024
£m
2023
£m
Net debt
97.1
62.5
Operating profit before intangible amortisation and adjusting items
40.1
43.2
Plus depreciation and other amounts written off property, plant and
equipment, and amortisation of non-acquired intangible assets1
17.9
19.9
Plus share option expense
1.1
1.4
Adjusted EBITDA
59.1
64.5
Net debt-to-Adjusted-EBITDA ratio
1.6
1.0
Net debt-to-Adjusted-EBITDA ratio excluding the impact of IFRS 16 Leases
1.3
0.5
Notes:
1. Includes amortisation on non-acquired intangible assets of £2.0m (2023: £2.9m).
ESSENTRA PLC ANNUAL REPORT 2024
170
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
20. Issued share capital
2024
£m
2023
£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.
21. Reserves
Within retained earnings, the Company has deducted the value of own shares purchased
for an employee trust and treasury shares held by the Company with a total cost of £7.4m
(2023: £10.1m).
Employee trust shares are ordinary shares of the Company held in an employee benefit trust.
The purpose of this trust is to hold shares in the Company for subsequent transfer to
Executive Directors and employees relating to deferred share awards and options granted
under the Company’s share-based incentive plans. Full details are set out in the Annual
Report on Remuneration on pages 97 to 113. The assets, liabilities and expenditure of the trust
have been incorporated in these financial statements. At 31 December 2024, the trust held
66,063 (2023: 9,180) shares, upon which dividends have been waived, with an aggregate
nominal value of £16,516 (2023: £2,295) and market value of £87,864 (2023: £15,569).
The other reserve balance of £132.8m debit (2023: £132.8m debit) relates to the Group
reorganisation, which took place as part of the de-merger from Bunzl plc. It represents
the difference between Essentra plc’s share capital and Essentra International Limited’s
share capital and share premium on 6 June 2005.
ESSENTRA PLC ANNUAL REPORT 2024
171
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
22. Analysis of net debt
1 January
2024
£m
Cash flow
£m
Business
disposals
£m
Business
acquisitions
£m
Lease
additions
£m
Exchange
movements
£m
Non-cash
movements1,2,3,4
£m
31 December
2024
£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
2023
£m
Cash flow
£m
Business
disposals
£m
Business
acquisitions
£m
Lease
additions
£m
Exchange
movements
£m
Non-cash
movements1,2,4
£m
31 December
2023
£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) (see note 9).
ESSENTRA PLC ANNUAL REPORT 2024
172
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
23. 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 as payable for Wixroyd at 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.
24. 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
£m
2023
£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 6.
Cash flows of discontinued operations
2024
£m
2023
£m
Net cash outflow from operating activities
–
(3.8)
ESSENTRA PLC ANNUAL REPORT 2024
173
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
25. Dividends
Per share
Total
2024
p
2023
p
2024
£m
2023
£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.
26. 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.
27. 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.
For the Group’s basis of consolidation policy, see note b within Accounting Policies.
ESSENTRA PLC ANNUAL REPORT 2024
174
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
28. 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.
For further information on alternative performance measures applied by the Group, refer to
pages 19 and 20.
The adjusted performance measures presented below cannot be derived directly from the
Group’s 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
£m
2023
£m
Operating profit
Reported statutory measure
14.6
10.9
Amortisation of acquired intangible assets Note 2
11.5
11.3
Adjusting items
Note 2
14.0
21.0
Adjusted operating profit
Adjusted performance measure
40.1
43.2
Finance income
Note 3
3.6
11.0
Finance expenses
Note 3
(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 losses1
(3.3)
n/a
Total for calculation of adjusted
earnings per share1
Note 6
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
2023
EMEA
£m
AMERICAS
£m
APAC
£m
Unallocated
operating
expenses
£m
Central
corporate
costs
£m
Continuing
operations
£m
Discontinued
operations
£m
Total
£m
EMEA
£m
AMERICAS
£m
APAC
£m
Unallocated
operating
expenses
£m
Central
corporate
costs
£m
Continuing
operations
£m
Discontinued
operations
£m
Total
£m
Operating profit/(loss)
Reported statutory measure
44.2
11.6
2.2
(32.5)
(10.9)
14.6
–
14.6
50.7
12.5
(1.7)
(39.0)
(11.6)
10.9
(0.4)
10.5
Amortisation of acquired
intangible assets
5.1
4.7
1.7
–
–
11.5
–
11.5
4.0
5.5
1.8
–
–
11.3
–
11.3
Adjusting items
Note 2
1.4
1.0
0.9
10.7
–
14.0
–
14.0
(0.8)
1.5
3.4
16.9
–
21.0
–
21.0
Adjusted operating
profit/(loss)
Adjusted performance
measure
50.7
17.3
4.8
(21.8)
(10.9)
40.1
–
40.1
53.9
19.5
3.5
(22.1)
(11.6)
43.2
(0.4)
42.8
ESSENTRA PLC ANNUAL REPORT 2024
175
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
28. Adjusted performance measures continued
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
£m
2023
£m
Cash and cash equivalents
Reported statutory measure
33.7
59.7
Debt liabilities
Note 14
(107.7)
(95.5)
Lease liabilities
Note 19
(28.9)
(30.9)
Derivative financial instruments hedging
placement loans
Note 15
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
£m
2023
£m
Net cash inflow from operating activities
Reported statutory measure
25.7
29.5
Net cash outflow from discontinued operations Note 24
–
3.8
Operating net cash inflow from continuing
activities
25.7
33.3
Cash outflow from adjusting items
Note 2
17.7
23.6
Net tax paid on continuing operations3
5.8
4.5
Net capex expenditure on continuing operations Note 1
(12.8)
(13.2)
Adjusted operating cash flow from
continuing operations
Adjusted performance measure
36.4
48.2
2024
£m
2023
£m
Adjusting operating profit from continuing
operations
Adjusted performance measure
40.1
43.2
Depreciation of property, plant and equipment Note 2
9.6
11.1
Lease right-of-use asset depreciation
Note 2
6.3
5.9
Amortisation of non-acquired intangible assets Note 2
2.0
2.9
Share option expense
Note 5
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 2
14.0
21.0
Net non-cash expenses/credits in adjusting
items2
Note 2
(1.3)
(5.9)
Tax
Note 2
(0.7)
–
Cash outflow on pension contributions
Note 2
–
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 2,17
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.
ESSENTRA PLC ANNUAL REPORT 2024
176
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Company Balance Sheet
At 31 December 2024
Note
2024
£m
2023
£m
Fixed assets
Investment in subsidiary undertaking
3
255.2
426.1
Current assets
Debtors
4
176.6
185.8
Current liabilities
Creditors: amounts falling due within one year
5
(1.4)
(1.3)
Net current assets
175.2
184.5
Non-current liabilities
Creditors: amounts falling due after more than one year
6,7
(81.7)
(80.3)
Net assets
348.7
530.3
Capital and reserves
Issued share capital
8
72.6
73.3
Capital redemption reserve
8
3.1
2.4
Profit and loss account
9
273.0
454.6
Total shareholders‘ funds
348.7
530.3
The loss attributable to the equity holders included in the financial statements of the Company is a loss of £167.3m (2023: £38.7m loss).
The Company Financial Statements on pages 177 to 185 were approved by the Board of Directors on 18 March 2025 and were signed on its behalf by:
Scott Fawcett
Rowan Baker
Chief Executive
Chief Financial Officer
ESSENTRA PLC ANNUAL REPORT 2024
177
ESSENTRA PLC COMPANY BALANCE SHEET
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Company Statement of Changes in Equity
For the year ended 31 December 2024
Profit and loss account
Issued
share capital
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Own shares
£m
Total equity
£m
1 January 2024
73.3
2.4
464.7
(10.1)
530.3
Loss for year
–
–
(167.3)
–
(167.3)
Total comprehensive loss for
the year
–
–
(167.3)
–
(167.3)
Share-based payments
–
–
1.1
–
1.1
Shares issued to satisfy employee
share option exercises
–
–
(2.7)
2.7
–
Purchase of own shares
–
–
–
(4.9)
(4.9)
Cancellation of shares
(0.7)
0.7
(4.9)
4.9
–
Reduction of capital
–
–
–
–
–
Dividends paid
–
–
(10.5)
–
(10.5)
31 December 2024
72.6
3.1
280.4
(7.4)
348.7
Profit and loss account
Issued share
capital
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Retained
earnings
£m
Own shares
£m
Total equity
£m
1 January 2023
75.6
385.2
0.1
232.5
(5.5)
687.9
Loss for year
–
–
–
(38.7)
–
(38.7)
Total comprehensive loss for
the year
–
–
–
(38.7)
–
(38.7)
Share-based payments
–
–
–
1.4
–
1.4
Shares issued to satisfy
employee share option exercises
–
–
–
(3.4)
3.4
–
Purchase of own shares
–
–
–
–
(24.0)
(24.0)
Cancellation of shares
(2.3)
–
2.3
(16.0)
16.0
–
Reduction of capital
–
(385.2)
–
385.2
–
–
Dividends paid
–
–
–
(96.3)
–
(96.3)
31 December 2023
73.3
–
2.4
464.7
(10.1)
530.3
ESSENTRA PLC ANNUAL REPORT 2024
178
ESSENTRA PLC COMPANY STATEMENT OF CHANGES IN EQUITY
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
Notes to the Company Financial Statements
1.
Basis of preparation and principal accounting policies
(a) Basis of preparation
Essentra plc (the ‘Company’) is a public limited company that is incorporated, domiciled
and has its registered office in England and Wales. The Company’s ordinary shares are
publicly traded on the London Stock Exchange and it is not under the control of any
single shareholder.
These financial statements were prepared using the historical cost convention in accordance
with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and the
Companies Act 2006. The Company financial statements have been prepared on a going
concern basis for the reasons set out on pages 128 and 129 to the consolidated financial
statements.
The profit and loss account of the Company is not presented as permitted by Section 408
of the Companies Act 2006.
In the preparation of these financial statements, the Company has applied the following
disclosure exemptions available under FRS 101, which the Company intends to maintain in
future years:
• the requirements of paragraph 45(b) and 46-52 of IFRS 2 Share-Based Payments;
• the requirements of paragraphs 62, B64(b), B64(e), B64(g), B64(h), B64(j) to B64(m),
b64(n)(ii), B64(o)(ii), B64(p), B64(q)(ii), B66 and B67 of IFRS 3 Business Combinations;
• the requirement of IFRS 7 Financial Instruments: Disclosures;
• the requirement of paragraphs 91-99 of IFRS 13 Fair Value Measurement;
• the requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present
comparative information in respect of paragraph 79(a)(iv) of IAS 1, paragraph 73(e) of IAS
16 Property, Plant and Equipment and paragraph 118(e) of IAS 38 Intangible Assets;
• the requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111
and 134-136 of IAS 1 Presentation of Financial Statements;
• the requirements of IAS 7 Statement of Cash Flows;
• the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors;
• the requirements of paragraph 17 of IAS 24 Related Party Disclosures;
• the requirements in IAS 24 Related Party Disclosures to disclose related party transactions
entered into between two or more members of a group, provided that any subsidiary
which is a party to the transaction is wholly owned by such a member; and
• the requirements of paragraphs 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment
of Assets.
The results of the Company are included in the Group’s consolidated financial statements.
Where required, equivalent disclosures are given in the consolidated financial statements.
There are no new and mandatory effective standards in the year that would have a material
impact on the financial statements.
(b)
Principal accounting policies
The following principal accounting policies have been consistently applied.
Investment in subsidiary undertaking
Investment in subsidiary undertaking is held at cost less any provision for impairment.
The Company assesses at each balance sheet date whether the investment in its subsidiary
has been impaired.
Share-based payments
The fair value of share options is measured at grant date. It is recognised as an addition
to the cost of investment in the subsidiary in which the relevant employees work over the
expected period between grant and vesting date of the options, with a corresponding
adjustment to reserves. Detailed disclosures for the share-based payment arrangements
of the Company are provided in note 18 to the consolidated financial statements.
Own shares
The shares held in the Essentra Employee Benefit Trust for the purpose of fulfilling obligations
in respect of share incentive plans are treated as belonging to the Company and are
deducted from its retained earnings. The cost of shares held directly (treasury shares)
is also deducted from retained earnings.
Dividends
Dividend distributions to the Company’s shareholders are recognised as a liability in the
period in which they are approved by the shareholders of the Company (final dividend)
or paid (interim dividend).
Dividend income is recognised when the right to receive payment is established.
Foreign currencies
Transactions in foreign currencies are recorded using the rate of exchange ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign currencies are
translated using the rate of exchange ruling at the balance sheet date and the gains or losses
on translation are included in the profit and loss account. Exchange differences arising from
movements in spot rates are included in the profit and loss account as exchange gains or
losses, while those arising from the interest differential elements of forward currency
contracts are included in external interest income or expense.
ESSENTRA PLC ANNUAL REPORT 2024
179
NOTES TO THE COMPANY FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
1.
Basis of preparation and principal accounting policies continued
Financial assets
Non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market are included in current assets, except for those with maturities greater than
12 months after the end of the reporting period which are classified as non-current assets.
The Company’s financial assets at amortised cost comprise receivables in the balance sheet.
Receivables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method, less provision for impairment. Interest income is
recognised accordingly using the effective interest method.
Financial liabilities
Interest bearing loans and borrowings and other financial liabilities (excluding derivatives) are
initially recognised at fair value net of transaction costs incurred. They are subsequently held
at amortised cost using the effective interest method. Any difference between the proceeds,
net of transaction costs, and the settlement or redemption of borrowings is recognised in
profit or loss over the term of the borrowings.
The Company holds financial instruments which hedge the net investments in the foreign
operations of its subsidiary undertakings. Gains and losses on these instruments are
recognised in the profit and loss account of the Company.
Taxation
Income tax in the profit and loss account comprises current and deferred tax. Income tax
is recognised in the profit and loss account except to the extent that it relates to items
recognised in equity or other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year using the
applicable tax rates enacted or substantively enacted at the balance sheet date and any
adjustment to tax payable in prior years.
Deferred tax is provided, using the balance sheet liability method, on temporary differences
arising between the tax bases and the carrying amounts of assets and liabilities in the
financial statements. The following temporary differences are not provided for: goodwill
not deductible for tax purposes; the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit or loss; and differences relating to investments in
subsidiaries to the extent that they will not reverse in the foreseeable future. Deferred tax is
determined using tax rates that are expected to apply when the related deferred tax asset
or liability is settled, using the applicable tax rates enacted or substantively enacted at the
balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable
profit will be available against which the asset can be utilised. Deferred tax assets are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Critical Accounting Judgements and Estimates
The preparation of the financial statements for the Company requires the Directors and
management to make judgements and estimates in respect of certain items where the
choice of accounting policy and assumptions applied in determining the judgement or
estimate could materially affect the Company’s financial position, results, or cash flows
at the reporting date.
No critical accounting judgements were required. The Company’s critical accounting
estimates are detailed below:
Investment in subsidiary undertaking
Investment in subsidiary undertakings are required to be assessed for indications of
impairment and where indications have been identified the recoverability may need to be
determined through the higher of subsidiary’s underlying cash flows and the quoted capital
market price of the Company. Where underlying cash flows are used, the methods used to
determine these require the use of estimates and judgements such as customer attrition,
cash flow generation from the existing relationships with customers and returns on other
assets. Future results are impacted by the amortisation periods adopted and changes to the
estimated useful lives.
Investment in subsidiary undertaking are tested annually for impairment, along with the
other assets within the Company such as receivables in subsidiary undertakings. Tests for
impairment are based on discounted cash flows and assumptions (including discount rates,
timing and growth prospects) which are inherently subjective. An estimate is also required in
identifying the events which indicate potential impairment, and in assessing fair value of the
investments when allocating an impairment loss. The Company performs various sensitivity
analyses in respect of the tests for impairment where applicable. The investment in subsidiary
is then reviewed following the tests for impairment annually.
2.
Net operating charges
The auditors were paid £6,000 (2023: £6,000) for the statutory audit of the Company. Fees
paid to the Company’s auditors for services other than the statutory audit of the Company
are disclosed in note 2 to the consolidated financial statements.
The Directors’ remuneration, which was paid by Essentra International Limited, is disclosed
in the Annual Report on Remuneration on pages 97 to 113. The only employees of the
Company are the seven Directors and Company Secretary.
ESSENTRA PLC ANNUAL REPORT 2024
180
NOTES TO THE COMPANY FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
3.
Investment in subsidiary undertaking
2024
£m
2023
£m
Beginning of year
426.1
469.7
Additions
1.1
1.4
Impairment
(172.0)
(45.0)
End of year
255.2
426.1
Investment in subsdiary undertakings has been assessed for impairment because there is a
decline in market capitalisation below the carrying value. Following an impairment
assessment of the carrying value of investments an impairment charge of £172.0m (2023:
£45.0m) has been expensed to the profit and loss.
The recoverable amount was determined with reference to the market capitalisation share
valuation of the Company less an estimation of cash outflows required to realise this
valuation. The Company share price as at 31 December 2024 was 133p resulting in a market
capitalisation of £381.3m.The recoverable amount of the investment is sensitive to reasonably
possible changes in the share price as well as the cash outflows required to realise the
valuation. Management have considered how these changes may impact on the impairment
assessment of Investment in subsidiary undertaking:
Reduction in
impairment
£m
Additional to
impairment
£m
5% (decrease)/increase in quoted share price
19.1
(19.1)
4.
Debtors
2024
£m
2023
£m
Amounts receivable from subsidiary undertakings
176.6
185.8
176.6
185.8
Receivables due from group companies to the Company are interest free and repayable
on demand. Receivables from group companies have been assessed for expected credit loss in
accordance with IFRS 9 Financial Instruments. As all balances are repayable on demand,
and the Company expects to be able to recover the outstanding intercompany balances if
demanded, no provision has been recognised in the year ended 31 December 2024 (2023: £nil).
5.
Creditors: amounts falling due within one year
2024
£m
2023
£m
Accruals
1.4
1.3
6.
Creditors: amounts falling due after more than one year
2024
£m
2023
£m
US Private Placement Loan Notes1
81.7
80.3
81.7
80.3
Notes:
1. Refer to note 14 of the consolidated financial statements for details of the US Private Placement Loan Notes.
7.
Maturity of financial liabilities
2024
£m
2023
£m
Debt analysed as falling due:
Between one and five years
26.1
25.7
More than five years
55.9
54.9
Less prepaid facility fees
(0.3)
(0.3)
81.7
80.3
ESSENTRA PLC ANNUAL REPORT 2024
181
NOTES TO THE COMPANY FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
8.
Issued share capital
2024
£m
2023
£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
2024
2023
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.
9.
Reserves
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of
the Company has not been separately presented in these Financial Statements. The loss
attributable to equity holders included in the financial statements of the Company is £167.3m
(2023: £38.7m).
Included in the profit and loss account are accumulated share-based payments of £55.5m
(2023: £54.4m) which are credited directly to reserves. Full details of these share-based
payments are set out in the Annual Report on Remuneration on pages 102 and 103.
10. Dividends
Per share
Total
2024
p
2023
p
2024
£m
2023
£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.
11.
Subsidiaries exempt from audit
The following UK subsidiaries will take advantage of the exemption from the requirements
under section 479A of the Companies Act 2006 relating to the audit of financial statements
for the year ended 31 December 2024. Essentra plc has given a parental guarantee in
respect of the debts and liabilities of these subsidiaries under section 479C of the Companies
Act 2006.
Company name
Company name
Essentra Components Limited
Essentra (Northampton) Ltd
ESNT Holdings (No.1) Limited
Wixroyd Holdings Limited
ESNT International Limited
Wixroyd Group Limited
Essentra International Limited
Automotion Components Ltd
Essentra Overseas Limited
Coburg Components Ltd
Essentra Pension Trustees Limited
Teknipart Limited
Essentra Finance Limited
ESSENTRA PLC ANNUAL REPORT 2024
182
NOTES TO THE COMPANY FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
12. Subsidiary undertakings
The Group’s subsidiaries (including dormant entities) at 31 December 2024, are set out below and are 100% owned directly or indirectly by the Group unless otherwise indicated. Essentra
International Limited is the only direct subsidiary of Essentra plc. The principal country in which each company operates is the country of incorporation. All subsidiaries have the same
31 December year end date as the Company.
All subsidiaries have the same year-end as the parent company of 31 December 2024. Essentra International Limited is the only direct subsidiary of Essentra plc.
Company name
Country of incorporation
Principal activity
Address of registered office
Essentra Components Limited
UK
Manufacturing
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
ESNT Holdings (No.1) Limited
UK
Holding Company
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
ESNT International Limited
UK
Holding Company
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
Essentra International Limited
UK
Holding Company
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
Essentra Overseas Limited
UK
Holding Company
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
Essentra Pension Trustees Limited
UK
Pension Trustee
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
Essentra Finance Limited
UK
Treasury activities
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
Essentra (Northampton) Ltd
UK
Non-trading
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
Filtrona Custom Moulding Limited
UK
Dormant1
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
Wixroyd Holdings Limited
UK
Trading
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
Wixroyd Group Limited
UK
Trading
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
Automotion Components Ltd
UK
Trading
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
Coburg Components Ltd
UK
Trading
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
Teknipart Limited
UK
Trading
Langford Locks, Kidlington, Oxfordshire, OX5 1HX
Essentra Plastics LLC
US
Manufacturing
Two Westbrook Corporate Center, Suite 200, Westchester IL 60154, United States
Micro Plastics, Inc.
US
Manufacturing
Two Westbrook Corporate Center, Suite 200, Westchester IL 60154, United States
Essentra Components Inc
US
Distribution
Two Westbrook Corporate Center, Suite 200, Westchester IL 60154, United States
Essentra Holdings Corp
US
Holding Company
Two Westbrook Corporate Center, Suite 200, Westchester IL 60154, United States
Essentra Components Japan Inc
US
Distribution
Two Westbrook Corporate Center, Suite 200, Westchester IL 60154, United States
Essentra Components Japan Inc – Japanese branch
Japan
Distribution
18F, Tobu Tateno Building, 2-10-27, Kitasaiwai, Nishi-ku, Yokohama-shi, Japan
Essentra Components BV
Netherlands
Distribution
Dragonder 3, 5554 GM Valkenswaard, Netherlands
Blue NewCo 1 B.V.
Netherlands
Holding Company
Dragonder 3, 5554 GM Valkenswaard, Netherlands
Blue NewCo 2 B.V.
Netherlands
Holding Company
Dragonder 3, 5554 GM Valkenswaard, Netherlands
Blue NewCo 3 B.V.
Netherlands
Holding Company
Dragonder 3, 5554 GM Valkenswaard, Netherlands
Blue NewCo 4 B.V.
Netherlands
Holding Company
Dragonder 3, 5554 GM Valkenswaard, Netherlands
ESNT Holdings Cooperatie 1 W.A.
Netherlands
Holding Company
Dragonder 3, 5554 GM Valkenswaard, Netherlands
Essentra BV
Netherlands
Holding Company
Dragonder 3, 5554 GM Valkenswaard, Netherlands
ESNT Holdings Cooperatie 2 W.A.
Netherlands
Non-trading
Dragonder 3, 5554 GM Valkenswaard, Netherlands
Essentra Components GmbH
Austria
Distribution
22, 5, Augasse, Neunkirchen, 2620, Austria
Essentra Pty Ltd
Australia
Manufacturing
503-505 Victoria Street, Wetherill Park, NSW, 2145, Australia
Essentra Industria E Commercio LTDA
Brazil
Manufacturing
Room 7, No 1000 Avenida Emilio Marconato, Centro Comercial, Chacara Primavera,
Jaguariuna, Sao Paulo, 13.916-074, Brazil
ESSENTRA PLC ANNUAL REPORT 2024
183
NOTES TO THE COMPANY FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
12. Subsidiary undertakings continued
Company name
Country of incorporation
Principal activity
Address of registered office
Essentra Limited
Canada
Manufacturing
400 – 77 King Street, Toronto, Ontario, M5K OA1, Canada
Essentra Hengzhu Precision Components Co., Ltd
China
Manufacturing
No. 12 Jingfa Avenue, Yichun, Economic and Technological, Development Zone, Yichun
City, Jiangxi Province, China
Essentra Precision Machinery Components (Ningbo) Co. Ltd.
China
Manufacturing
99 Huanghai Road, Beilun District, Ningbo, Zhejiang Province, China
Essentra Trading (Ningbo) Co. Ltd
China
Distribution
99 Huanghai Road, Beilun District, Ningbo, Zhejiang Province, China
Essentra Components International Trading (Shanghai) Co Ltd
China
Holding Company
Room 347, Xinmaolou Building, 2 Taizhong South Road, China (Shanghai) Pilot Free
Trade Zone, Pudong New Area, Shanghai, 200120, China
Essentra Plastic Trading (Ningbo) Co. Ltd
China
Holding Company
99 Huanghai Road, Beilun District, Ningbo, Zhejiang Province, China
Componentes Innovadores Limitada
Costa Rica
Manufacturing
Cartago-Cartago Parque Industrial Y Zona Franca Zeta, Cartago, Edificios, 48C3 48C4,
Costa Rica
Essentra Components sro
Czech Republic
Distribution
Vídenská 101/119, Dolní Heršpice, Brno, 619 00, Czech Republic
Essentra Components SAS
France
Distribution
280 rue de la Belle Étoile, 95700, Roissy, France
Essentra Components GmbH
Germany
Manufacturing
3, Montel-Allee, Nettetal, 41334, Germany
Essentra Components Limited – Branch Germany
Germany
Distribution
3, Montel-Allee, Nettetal, 41334, Germany
Essentra (Hong Kong) Limited
Hong Kong
Non-trading
1106-8 11F, Tai Yau Building, No. 181 Johnston Road, Wanchai, Hong Kong
Essentra Components Kft
Hungary
Distribution
1113, Nagyszolos ut 11-15, Budapest, Hungary
Essentra (India) Private Limited
India
Manufacturing
Brigade Rubix, No. 20, Unit 302, HMT Main Road, Phase-1, Jalahalli, Bengaluru, 560022,
India
ESNT Holdings SpA
Italy
Holding Company
Padulle di Sala Bolognese, Via dei Pioppi 2, Bologna, 40010, Italy
Essentra Components srl
Italy
Trading
Padulle di Sala Bolognese, Via dei Pioppi 2, Bologna, 40010, Italy
Essentra Filter Products Srl
Italy
Non-trading
Padulle di Sala Bolognese, Via dei Pioppi 2, Bologna, 40010, Italy
BMP Srl
Italy
Trading
9, Via delle Industrie, Cambiago, 20040, Italy
Abric Encode Sdn Bhd
Malaysia
Manufacturing
Unit 1110 Block A, Pusat Dagangan Phileo Damansara II, 15 Jalan 16/11 Off Jalan
Damansara, 46350 Petaling Jaya, Selangor Darul Ehsan, Malaysia
Essentra Malaysia Sdn Bhd
Malaysia
Non-trading
Unit 1110 Block A, Pusat Dagangan Phileo Damansara II, 15 Jalan 16/11 Off Jalan
Damansara, 46350 Petaling Jaya, Selangor Darul Ehsan, Malaysia
Essentra Asia Sdn Bhd
Malaysia
Non-trading
Unit D – 3A – 10, 4th Floor, Greentown Square, Jalan Dato’ Seri Ahmed Said, 30450 Ipoh,
Perak, Malaysia
Essentra Components Sdn Bhd
Malaysia
Non-trading
Unit 1108, Block A Pusat Dagangan Phileo Damansara 2, 15 Jalan 16/11 Off Jalan
Damansara, Petaling Jaya, Selangor, 46350, Malaysia
Essentra Components S. de R.L. de C.V.
Mexico
Manufacturing
Carretera a Huinala #510, Apodaca, NL 66640, Mexico
Essentra Sp. z o.o.
Poland
Distribution
104a, Maratońska, Łódź, 04-007, Poland
Essentra Components SRL
Romania
Distribution
Burcuresti Sectorul 1, Strada POLANA, Nr. 68-72, Etaj 2, Biroul NR.5, Romania
Essentra Components Products Pte Limited
Singapore
Distribution
1 Paya Lebar Link, #04-01, Paya Lebar Quarter, Singapore, 408533, Singapore
Essentra Components sro
Slovakia
Distribution
19, Einsteinova, Bratislava – mestská časť Petržalka, 851 01, Slovakia
Essentra Components (Pty) Ltd
South Africa
Distribution
71, Tsessebe Crescent, Corporate Park South, Randjisfontein Midrand, GP, 1685, South
Africa
ESSENTRA PLC ANNUAL REPORT 2024
184
NOTES TO THE COMPANY FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
12. Subsidiary undertakings continued
Company name
Country of incorporation
Principal activity
Address of registered office
ESNT Holdings S.A.U.
Spain
Holding Company
Calle Roure Gros 1-11, Poligono Industrial Mas d’En Cisa, 08181, Spain
Essentra Components S.L.U
Spain
Distribution
Calle Roure Gros 1-11, Poligono Industrial Mas d’En Cisa, 08181, Spain
Essentra Components AB
Sweden
Manufacturing
7, Bäckstensgatan, Mölndal, 431 39, Sweden
Essentra Components AB – Finland Branch
Finland
Manufacturing
2A, Tallbergsgatan, Helsinki 00180, Finland
Essentra Components Sarl
Switzerland
Non-trading
MCE Avocats, rue du Grand-Chêne 1-3, 1003 LAUSANNE, Switzerland
Essentra Eastern Limited
Thailand
Non-trading
111/5 Moo 2 Tambon Makamku, Amphur Nikom Pattana, Rayong Province, Thailand
Ban Lamai Limited
Thailand
Holding Company
o. 111/5, Moo 2, Makham Khu Sub-district, Nikhom Phatthana District,
Rayong Province, Thailand
Essentra Components (Thailand) Limited
Thailand
Trading
111/5 Moo 2 Tambon Makamku, Amphur Nikom Pattana, Rayong Province, Thailand
Apex Filters Company Limited
Thailand
Non-trading
31/2 Rama 3 Road, Chongnonsee, Yannawa, Bangkok 10120, Thailand
Mesan Kilit A.S.
Turkey
Manufacturing
Ilitelli Organzie Sanayi, , Bolgesi Metal Is San,Sit.7.Blok No24 Basaksehir, Istanbul, Turkey
Mesan Kilit Anonim Şirketi Maslak Şubesi – Digital Hub Branch
Turkey
Trading
Mimar Sinan Mah. Uluğbey Cad. Ofis İşyeri, Blok No: 5, Silivri, Istanbul, Turkey
Mesan Kilit Anonim Şirketi Silivri Şubesi – Branch
Turkey
Trading
Maslak Mahallesi, Bilim Sokak, Sun Plaza Blok No: 5A, İç Kapı No.41 Sarıyer, Istanbul,
Turkey
Essentra Components Vietnam Limited Liability Company
Vietnam
Trading
11, Bis Phan Ngu, Da Kao Ward, District 01, Ho Chi Minh city, Viet Nam
Notes:
1. Exempt from requirement to prepare individual financial statements by virtue of s394A and s448A of Companies Act 2006.
ESSENTRA PLC ANNUAL REPORT 2024
185
NOTES TO THE COMPANY FINANCIAL STATEMENTS
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ESSENTRA PLC ANNUAL REPORT 2024
186
INDEPENDENT AUDITORS’ REPORT
Independent auditors’ report to
the members of Essentra plc
Report on the audit of the financial statements
Opinion
In our opinion:
• Essentra plc’s group financial statements and company financial statements (the “financial
statements”) give a true and fair view of the state of the group’s and of the company’s affairs as at
31 December 2024 and of the group’s profit and the group’s cash flows for the year then ended;
• the group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards as applied in accordance with the provisions of the Companies
Act 2006;
• the company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 101
“Reduced Disclosure Framework”, and applicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
We have audited the financial statements, included within the Annual Report & Accounts (the “Annual
Report”), which comprise: the Consolidated Balance Sheet and Company Balance Sheet as at
31 December 2024; the Consolidated Income Statement, Consolidated Statement of Comprehensive
Income, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows,
Company Statement of Changes in Equity for the year then ended; and the Basis of Preparation and
Principal Accounting Policies, Critical Accounting Judgements and Estimates, Notes to the
Consolidated Financial Statements and Notes to the Company Financial Statements, comprising
material accounting policy information and other explanatory information.
Our opinion is consistent with our reporting to the Audit and Risk Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities
for the audit of the financial statements section of our report. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as
applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical
Standard were not provided.
Other than those disclosed in Note 2 to the consolidated financial statements, we have provided no
non-audit services to the company or its controlled undertakings in the period under audit.
Our audit approach
Context
Essentra has continued to trade profitably despite challenging economic conditions. Exposure to these
difficult trading conditions, particularly in Europe and North America, led to the issuance of a profit-
warning in September 2024. We have taken the macroeconomic environment and latest market
forecast data into consideration when performing our review of the respective impairment
assessments. Our audit scope is detailed below.
Overview
Audit scope
• Local PwC Component teams are engaged to perform full scope audit procedures for 10 reporting
units,
• PwC group audit team performed full scope audit procedures over a further 16 reporting units,
• Additional top up audit procedures performed by PwC group & other Component auditors over
certain large balances, including revenue, property, plant and equipment and inventory, within a
further 15 reporting units,
• The audit of the company financial statements was undertaken by the PwC group audit team and
included substantive procedures over all material balances and transactions.
Key audit matters
• Impairment of assets in the Hengzhu site within APAC segment (group)
• Impairment of goodwill in Americas segment (group)
• Recoverability of the parent company investment (parent)
• Presentation of adjusting items (group)
Materiality
• Overall group materiality: £3,000,000 based on 1.00% of revenue (2023: £3,000,000 based on 0.95%
of revenue).
• Overall company materiality: £4,300,000 based on 1.00% of total assets (2023: £5,300,000 based on
1.00% of net assets).
• Performance materiality: £2,250,000 (2023: £2,250,000) (group) and £3,225,000 (2023: £3,975,000)
(company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most
significance in the audit of the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) identified by the
auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Impairment of goodwill in the Americas segment is a new key audit matter this year. Otherwise, the
key audit matters below are consistent with last year.
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ESSENTRA PLC ANNUAL REPORT 2024
187
INDEPENDENT AUDITORS’ REPORT CONTINUED
Key audit matter
How our audit addressed the key audit matter
Impairment of assets in the Hengzhu site within
APAC segment (group)
The APAC segment includes various manufacturing
and distribution sites, each identified as a distinct
cash-generating unit (CGU). Since there is no
goodwill associated with the APAC segment, asset
impairment tests are conducted at a CGU level
where there are indicators of impairment. If such
indicators are present, the recoverable amounts of
the assets at each CGU are estimated to determine
any necessary impairment charges, which are then
recognized in the income statement. Due to the
macroeconomic challenges which have impacted
the APAC region, management has identified a
trigger for assessing impairment. Being the largest
CGU situated in APAC where market demand is
subdued, the Hengzhu site has been identified as
most at risk of impairment.
An impairment assessment using a VIU (value in
use) model has been prepared to determine the
recoverable amount of assets held at Hengzhu.
The VIU model is based on the Board approved plan
for FY25, relevant market data for FY26 to FY29
and assumptions for long term growth rates into
perpetuity which were discounted to the present
value. Through this assessment, management
identified that the carrying value of the assets at
Hengzhu was supported by the VIU assessment,
thus no impairment recognised. However the VIU
is highly sensitive to changes in assumptions.
We consider this area to be a key audit matter
since the VIU impairment assessment performed
by management contains a number of significant
judgements and estimates, including revenue
growth rates to FY29, operating profit margins,
long term (perpetuity) growth rates and discount
rates. As the impairment assessment is highly
sensitive, minimal changes in these assumptions
can result in materially different outcomes.
See note 8 to the group financial statements for
details of management’s impairment exercise and
the Critical Accounting Judgements and Estimates
section for management’s disclosure of this
significant accounting estimate. Also see the
Significant Accounting Matters section in the Audit
and Risk Committee report.
We obtained management’s impairment model
and assessed the methodology and mathematical
accuracy. We engaged our valuation experts to
assess the reasonableness of the discount rate and
long term growth rates applied in the model.
We challenged management to provide internal and
external market data for the key assumptions in the
model and performed our own research for further
external market data for these assumptions.
We assessed management’s assumptions against
historic results and forecasting accuracy.
We performed sensitivities over the key
assumptions used in management’s models.
We challenged the extent to which climate
change had been considered and reflected in the
future cash flows used in management’s model.
Based on these procedures, whilst sensitive to
changes in assumptions, we concluded that we
concur with management’s assessment that no
impairment has arisen over the assets at the
Hengzhu site.
We evaluated the disclosures in the financial
statements and consider these to be appropriate.
Key audit matter
How our audit addressed the key audit matter
Impairment of goodwill in Americas segment
(group)
The Group’s consolidated financial position
includes goodwill of £35.9 million allocated to the
Americas region. Under IAS 36 Impairment of
Assets, all cash generating units (CGUs)
containing goodwill and indefinite intangible
assets must be tested for impairment at least
annually. Management has prepared a value in
use (VIU) calculation to assess recoverability. The
headroom in the VIU model for the Americas
segment is limited which increases the risk of a
material impairment of the goodwill balance.
Management has conducted an impairment
assessment using a value in use (VIU) model to
determine the recoverable amount of the goodwill
in the Americas region. This model is based on the
Board-approved plan for FY25, as well as relevant
market data for FY26 to FY29, and includes
assumptions for long-term growth rates into
perpetuity, which have been discounted to their
present value. Through this assessment,
management identified that the VIU exceeds the
carrying value of the goodwill.
We consider this area to be a key audit matter since
the impairment review performed by management
contains a number of significant judgements and
estimates, including revenue growth rates to FY29,
operating profit margins, long term (perpetuity)
growth rates and discount rates. See note 8 to the
group financial statements for details of
management’s impairment exercise and the Critical
Accounting Judgements and Estimates section for
management’s disclosure of this significant
accounting estimate.
We assessed the methodology applied by
management in performing their impairment
review and tested the integrity of management’s
cash flow model for the VIU calculation.
With the support of our valuation experts, we tested
key assumptions, including the long term revenue
growth rate and discount rate. We compared
growth rates to external market data and found the
growth assumptions to be reasonable. With the
support of our valuations experts, we validated the
discount rate by recalculating the group’s weighted
average cost of capital and found the assumption
used by management to be within our reasonable
range.
We also assessed management’s assumptions
against historic results and forecasting accuracy.
We performed sensitivities over the key assumptions
used in management’s models.
We challenged the extent to which climate change
had been considered and reflected in the future
cash flows used in management’s models.
Based on these procedures, whilst sensitive to
changes in assumptions, we concluded that we
concur with management’s assessment of the VIU
and that no impairment in goodwill exists.
We evaluated the disclosures in the financial
statements and consider these to be appropriate.
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ESSENTRA PLC ANNUAL REPORT 2024
188
INDEPENDENT AUDITORS’ REPORT CONTINUED
Key audit matter
How our audit addressed the key audit matter
Recoverability of the parent company
investment (parent)
Essentra plc holds a direct investment in Essentra
International Limited, and through this entity an
indirect investment in the group as a whole. The
valuation of this investment is significant to the
company balance sheet. The value of the
investment held by the company at year end was
£255 million, following an impairment of £172
million being recognised.
Investments are tested for impairment where
indicators exist. The recoverable amounts of the
investments are estimated in order to determine
the extent of any impairment charge. An
impairment charge is recognised in the income
statement. Given the decline in market
capitalisation, an impairment trigger is deemed
to have occurred.
Accounting standards require the recoverable
amount to be calculated as the higher of fair
value less cost of disposal (FVLCD) and value in
use (VIU). Management determined that FVLCD
was higher and the investment was written down
to £255m being the FVLCD at year-end.
The market capitalisation of the group at the
balance sheet date, less reasonable costs to sell
and adjustments for debt to be settled, provides
an estimate of FVLCD.
Due to the investment’s significance and the
judgements required for impairment assessment,
this was identified as a key audit matter.
See note 3 in the Company financial statements
for details of the company’s investment in
subsidiary entities and the Critical Accounting
Judgements and Estimates section for
management’s disclosure of this significant
judgement.
We obtained management’s impairment
assessment and ensured the calculations were
mathematically accurate.
We confirmed the recoverable amount of the
investment as the higher of fair value less cost of
disposal and value in use models.
We have verified the group’s market capitalisation
as listed on the stock exchange as of 31 December
2024. With the support of our valuation experts
we have reviewed the estimated cost of disposal,
which we consider reasonable and within the
acceptable range.
Based on these procedures, we agree with
management’s assessment of the recoverable
amount, which supports the recognition of the £172
million impairment. We also reviewed the disclosures
in the company’s financial statements and found
them to be appropriate.
Key audit matter
How our audit addressed the key audit matter
Presentation of adjusting items (group)
The financial statements include certain items
which are disclosed as adjusting items. The nature
of the adjusting items is explained within the
group accounting policies and includes gains,
losses or costs arising from business acquisition
and disposal activities, significant restructuring
and closure costs, costs of major Software as a
Service (SaaS) projects, and other items such as
site closure costs and one-off projects.
In the year and consistent with the prior year,
the most significant adjusting item relates to
customisation and configuration costs of SaaS
arrangements of £9.6 million.
We identified this area as a key audit matter given
there is judgement required by the directors in
determining whether items classified as adjusting
are consistent with the group’s accounting policy.
Consistency in identifying and disclosing items as
adjusting is important to maintain comparability
of the results year on year.
See note 2 to the group financial statements
for details of adjusting items and the Critical
Accounting Judgements and Estimates section
for management’s disclosure of this significant
judgement.
We assessed the appropriateness of the group’s
accounting policy for the recognition of adjusting
items with reference to the applicable accounting
guidance.
We challenged management and considered
whether the items disclosed as adjusting items
were consistent with the accounting policy and
the approach taken in prior years, to determine
that items were appropriately classified. We did
not identify any material items which we would
expect to be reported in earnings before adjusting
items.
We have selected a sample of SaaS related
project costs and obtained supporting documents
to ensure the accuracy of the cost. We evaluated
the nature of these projects to ensure they relate
directly to SaaS arrangements. Due to the
material nature of these costs, and consistent
with prior years and the group’s accounting policy,
we agree with management’s conclusions and
presentation.
We performed sample testing over the remaining
categories included in adjusting items and verified
samples to payroll records, supporting invoices,
agreements or other evidence. The amounts
tested were classified as adjusting items in line
with the group’s accounting policy.
We evaluated the disclosures in the financial
statements and consider these to be materially
appropriate.
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ESSENTRA PLC ANNUAL REPORT 2024
189
INDEPENDENT AUDITORS’ REPORT CONTINUED
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial statements as a whole, taking into account the structure of the group and the
company, the accounting processes and controls, and the industry in which they operate.
Our scoping is based on the group’s consolidation structure. We define a component as a single reporting
unit which feeds into the group consolidation. There were 144 reporting units within the consolidation,
which included the reporting sites and other consolidation units. We identified 1 individually significant
component within the group in the US which contributes 15.2% of revenue. We determined the most
effective approach was to engage PwC local component teams to perform full scope procedures over the
10 reporting units, with the group audit team performing full scope audit work over a further 16 reporting
units. In addition, top up audit procedures were performed by PwC group & other component auditors
over certain large balances, including revenue and inventory, within a further 15 reporting units. This
approach ensures that appropriate audit coverage has been obtained over all material financial
statement line items. Where work was performed by component auditors, we determined the level of
involvement we needed to have in the audit work at those reporting units to be able to conclude whether
sufficient appropriate audit evidence had been obtained as a basis for our opinion on the consolidated
financial statements. We issued written instructions to all component auditors and had regular
communications with them throughout the audit cycle. This included a virtual clearance meeting with
each component team and review of all significant matters reported. In addition, members of the group
engagement team have reviewed working papers of all component audit teams and have performed
oversight visits to teams in the US, Germany, Poland and the UK. Based on the detailed audit work
performed across the group, we have achieved coverage of 78% of revenue.
The impact of climate risk on our audit
In planning our audit, we considered the potential impact of climate change on the group and
company financial statements. Management considers that the impact of climate change does not
give rise to a material financial statement impact. We evaluated management’s climate change risk
assessment including the identified physical and transitional risks and the assessment of the impact of
those risks on the group financial statements. The material physical and transitional risks are set out in
the Task Force on Climate-Related Financial Disclosures (TCFD) on pages 43 and 44. We performed
procedures to evaluate the appropriateness of management’s risk assessment. We considered the
group’s externally published environmental targets and understood the progress made on these targets
to date in addition to plans in place to meet these targets in the future. We challenged management
on the potential additional future costs associated with meeting these targets. We assessed that the
key financial statement line items and estimates which are more likely to be impacted by climate risks
are those associated with future cash flows, given the more notable impacts of climate change on the
business are expected to arise in the medium to long term. These included the assessment of
impairment and the long term viability assessment. However, our procedures did not identify any
further material impact on either the group or company financial statements or our key audit matters
for the year ended 31 December 2024.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative
thresholds for materiality. These, together with qualitative considerations, helped us to determine the
scope of our audit and the nature, timing and extent of our audit procedures on the individual financial
statement line items and disclosures and in evaluating the effect of misstatements, both individually
and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a
whole as follows:
Financial statements – group
Financial statements – company
Overall
materiality
£3,000,000
(2023: £3,000,000)
£4,300,000
(2023: £5,300,000)
How we
determined it
2024: 1.00% of revenue
(2023: 0.95% of revenue)
2024: 1.00% of total assets
(2023: 1.00% of net assets)
Rationale for
benchmark
applied
We determined our materiality
based on revenue as the most
appropriate benchmark.
We determined our materiality based on
total assets, which is more applicable than
a performance-related measure as the company
is an investment holding company for the group.
The higher Company materiality level was used
for the purposes of testing balances not relevant
to the group audit, such as investments in
subsidiary undertakings and intercompany
balances.
For each component in the scope of our group audit, we allocated a materiality that is less than our
overall group materiality. The range of materiality allocated across components was between £340,000
and £2,000,000. Certain components were audited to a local statutory audit materiality that was also
less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we
use performance materiality in determining the scope of our audit and the nature and extent of our
testing of account balances, classes of transactions and disclosures, for example in determining sample
sizes. Our performance materiality was 75% (2023: 75%) of overall materiality, amounting to
£2,250,000 (2023: £2,250,000) for the group financial statements and £3,225,000 (2023: £3,975,000) for
the company financial statements.
In determining the performance materiality, we considered a number of factors – the history of
misstatements, risk assessment and aggregation risk and the effectiveness of controls – and concluded
that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified
during our audit above £150,000 (group audit) (2023: £150,000) and £150,000 (company audit) (2023:
£150,000) as well as misstatements below those amounts that, in our view, warranted reporting for
qualitative reasons.
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ESSENTRA PLC ANNUAL REPORT 2024
190
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial
statements and our auditors’ report thereon. The directors are responsible for the other information.
Our opinion on the financial statements does not cover the other information and, accordingly, we do
not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form
of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material misstatement, we are required
to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures
required by the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to
report certain opinions and matters as described below.
Strategic report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the
Strategic report and Directors’ Report for the year ended 31 December 2024 is consistent with the
financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment
obtained in the course of the audit, we did not identify any material misstatements in the Strategic
report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Annual Report on Remuneration to be audited has been properly
prepared in accordance with the Companies Act 2006.
INDEPENDENT AUDITORS’ REPORT CONTINUED
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to
adopt the going concern basis of accounting included:
• obtaining and agreeing management’s going concern assessment to the board approved business
plan and ensuring that the base case scenario for the 15 month period to 30 June 2026 indicates
that sufficient cash flows are generated to meet the obligations of the business as they fall due while
complying with covenant arrangements;
• identifying revenue growth and operating margin as the key assumptions inherent in the plan and
validating these to historical precedent and market or industry forecasts;
• analysing the cash flows in the forecast models to identify unexpected trends and relationships and
ensuring the mathematical accuracy of management’s models;
• evaluating management’s severe but plausible downside scenario including the impact on the
group’s liquidity headroom and its ability to meet debt covenants; and
• assessing that climate change is expected to have a limited impact during the period of the going
concern assessment.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the group’s and the
company’s ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a
guarantee as to the group’s and the company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to in relation to the directors’ statement in the
financial statements about whether the directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described
in the relevant sections of this report.
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ESSENTRA PLC ANNUAL REPORT 2024
191
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities in respect of the Financial
Statements, the directors are responsible for the preparation of the financial statements in accordance
with the applicable framework and for being satisfied that they give a true and fair view. The directors
are also responsible for such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the group or the company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-
compliance with laws and regulations related to employment laws and regulations, health and safety
legislation, Listing Rules and import and export restrictions, and we considered the extent to which
non-compliance might have a material effect on the financial statements. We also considered those laws
and regulations that have a direct impact on the financial statements such as the Companies Act 2006 and
UK and overseas tax legislation. We evaluated management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of override of controls), and determined that
the principal risks were related to posting of journal entries to improve revenue performance or to
manipulate performance metrics relating to bank covenants, and management bias in key accounting
estimates. The group engagement team shared this risk assessment with the component auditors so that
they could include appropriate audit procedures in response to such risks in their work. Audit procedures
performed by the group engagement team and/or component auditors included:
• Review of matters reported through the group’s whistleblowing helpline and the results of
management’s investigation of such matters;
• Enquiries of management at the group, regional and local levels;
• Enquiries of the group’s legal team;
• Enquiries with component auditors;
• Evaluation of management’s controls designed to prevent and detect irregularities, in particular their
compliance procedures in respect of sanction market trading;
• Identifying and testing journal entries, in particular any journal entries posted with unusual account
combinations which result in an impact to revenue or to performance metrics relevant to banking
covenants; and
• Testing of critical accounting estimates to identify evidence of management bias.
INDEPENDENT AUDITORS’ REPORT CONTINUED
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term
viability and that part of the corporate governance statement relating to the company’s compliance
with the provisions of the UK Corporate Governance Code specified for our review. Our additional
responsibilities with respect to the corporate governance statement as other information are described
in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the corporate governance statement is materially consistent with the financial statements
and our knowledge obtained during the audit, and we have nothing material to add or draw attention
to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and
principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place
to identify emerging risks and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate
to adopt the going concern basis of accounting in preparing them, and their identification of any
material uncertainties to the group’s and company’s ability to continue to do so over a period of at
least twelve months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the group’s and company’s prospects, the period
this assessment covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the company will be
able to continue in operation and meet its liabilities as they fall due over the period of its assessment,
including any related disclosures drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group and company
was substantially less in scope than an audit and only consisted of making inquiries and considering the
directors’ process supporting their statement; checking that the statement is in alignment with the
relevant provisions of the UK Corporate Governance Code; and considering whether the statement is
consistent with the financial statements and our knowledge and understanding of the group and
company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the corporate governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced
and understandable, and provides the information necessary for the members to assess the group’s
and company’s position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and
internal control systems; and
• The section of the Annual Report describing the work of the Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement
relating to the company’s compliance with the Code does not properly disclose a departure from a
relevant provision of the Code specified under the Listing Rules for review by the auditors.
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ESSENTRA PLC ANNUAL REPORT 2024
192
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit
have not been received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the company financial statements and the part of the Annual Report on Remuneration to be audited
are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit and Risk Committee, we were appointed by the directors
on 20 April 2017 to audit the financial statements for the year ended 31 December 2017 and subsequent
financial periods. The period of total uninterrupted engagement is 8 years, covering the years ended
31 December 2017 to 31 December 2024.
Other matter
The company is required by the Financial Conduct Authority Disclosure Guidance and Transparency
Rules to include these financial statements in an annual financial report prepared under the structured
digital format required by DTR 4.1.15R – 4.1.18R and filed on the National Storage Mechanism of the
Financial Conduct Authority. This auditors’ report provides no assurance over whether the structured
digital format annual financial report has been prepared in accordance with those requirements.
Katherine Birch-Evans (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Watford
18 March 2025
INDEPENDENT AUDITORS’ REPORT CONTINUED
There are inherent limitations in the audit procedures described above. We are less likely to become
aware of instances of non-compliance with laws and regulations that are not closely related to events
and transactions reflected in the financial statements. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or
through collusion.
Our audit testing might include testing complete populations of certain transactions and balances,
possibly using data auditing techniques. However, it typically involves selecting a limited number of
items for testing, rather than testing complete populations. We will often seek to target particular
items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to
enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a
body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose.
We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
STRATEGIC REPORT
FINANCIAL STATEMENTS
DIRECTORS’ REPORT
ESSENTRA PLC ANNUAL REPORT 2024
193
SHAREHOLDER INFORMATION
Registered Office
Langford Locks, Kidlington, Oxford OX5 1HX
Registered number 05444653
Tel: 01908 359100
Company Secretary
Emma Reid
Investor Relations
investorrelations@essentra.com
Company Website
www.essentraplc.com
Registrar
Computershare Investor Services plc
The Pavilions, Bridgwater Road,
Bristol BS99 6ZY
Tel: 0370 703 6394
Shareholders can access online facilities at
www.computershare.com
Joint Stockbrokers
Jefferies International Limited
100 Bishopsgate, London EC2N 4JL
Peel Hunt LLP
100 Liverpool Street, London EC2M 2AT
Corporate PR
FTI Consulting
200 Aldersgate, Aldersgate Street,
London EC1A 4HD
Auditor
PricewaterhouseCoopers LLP
40 Clarendon Road, Watford,
Hertfordshire WD17 1JJ
Legal Adviser
Slaughter and May
One Bunhill Row, London EC1Y 8YY
Principal Bankers
Citibank N.A., London Branch
Citigroup Centre, Canada Square,
Canary Wharf, London E14 5LB
National Westminster Bank plc
250 Bishopsgate, London EC2M 4AA
BBVA
44th Floor, One Canada Square,
Canary Wharf, London E14 5AA
Santander UK plc
2 Triton Square, London NW1 3AN
Allied Irish Bank (GB)
14th Floor, 70 St Mary Axe,
London EC3A 8BE
Shareholder
information
STRATEGIC REPORT
OTHER INFORMATION
DIRECTORS’ REPORT
ESSENTRA PLC ANNUAL REPORT 2024
194
Essentra would like to thank all
of its employees and partners who
have contributed to the drafting
of the Annual Report
STRATEGIC REPORT
OTHER INFORMATION
DIRECTORS’ REPORT
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Essentra plc
essentraplc.com
Langford Locks
Kidlington
Oxford OX5 1HX
United Kingdom
Telephone: +44 (0)1908 359100
Email: enquiries@essentra.com
Registered in England No. 05444653