Senior (SNR) Investor Update summary

Strategic Focus and Business Transformation

• Transitioning to a pure-play fluid conveyance and thermal management (FCTM) business, with the sale of the Aerostructures division at an advanced stage and expected to complete soon, representing 28% of 2024 group sales.

• Streamlined operations from 35 businesses in 2015 to 19 FCTM-focused sites, with 18 businesses sold, closed, or merged since 2015 to maximize returns and strategic focus.

• FCTM businesses demonstrate higher margins and cash generation, focusing on bespoke, high-reliability products for aerospace, defense, heavy-duty vehicles, power, and energy markets.

• Strong global presence with manufacturing and design capabilities in 10-12 countries, including the US, Europe, India, China, and Mexico.

• Embedded across major civil aerospace and defense platforms, with a diverse customer base including Airbus, Boeing, and Lockheed Martin.

Financial Targets and Capital Allocation

• New medium-term targets: double-digit group operating margins, aerospace margins to mid-teens, Flexonics to 10%-12%, and ROCE raised to 15%-20%.

• Expectation of mid-single-digit organic revenue growth, aiming to outgrow key end markets by 50% through the cycle.

• Operating cash conversion targeted above 85%, with disciplined capital investment at 1.1x depreciation and R&D at 2%-3% of revenue.

• Progressive dividend policy and leverage target of net debt/EBITDA between 0.5x-1.5x, with optionality for shareholder returns and value-accretive M&A.

• 2024 revenue (excluding Aerostructures) reached £707.4m, with adjusted operating profit of £53.0m and group margin at 7.5%.

Margin Expansion and Operational Efficiency

• Margin improvement driven by better pricing (much already contractually agreed), volume growth, and operational efficiency through the Senior Operating System (SOS) and lean manufacturing.

• Continuous improvement and automation initiatives, with five of seven aerospace FCTM businesses already at double-digit margins.

• Flexonics division maintains double-digit margins even in downturns, supported by cost flexibility, geographic diversification, and divestment of underperforming units.

• Central costs aligned to revenue, with a focus on maintaining overheads at 2%-2.5% of revenue.

• Lean manufacturing and cost-competitive locations underpin operational efficiency and margin improvement.