must advise you the call is being recorded today on Friday the 5th of March, 2021. Your first speaker for today is Paul Forman. Please go ahead. A very good morning, ladies and gentlemen, and welcome to the Essentra PLC 2020 full year results presentation. I am Paul Forman, the CEO, and today I'm joined by Lily Liu, the CFO of Essentra. We've entitled this presentation Building for the Future. This time last year, when I presented the results, I talked about entering chapter three of the Essentra journey since the start of 2017. We'd stabilized the business, we'd cemented customer relations, we'd focused on good cash generation, and we had simplified our portfolio. We then had three global divisional structures that were characterized by growth potential and also by market leadership. I would say as far as it's possible, that 2020 was a good year. Chapter three clearly did not play out in the way that we envisioned it would in January or February. Having said that, I think our foundations are even stronger. As we'll hopefully demonstrate by looking as much about 2021 and beyond as what has happened in 2020 through a combination of self-help measures and the underlying resilience of the market, I think we have a really good opportunity to continue that third chapter. If we look briefly at the agenda, I'll give an overview of the group, then talk about legs one and two, safeguarding our people and safeguarding our customers, the two pillars that we've really focused on throughout the pandemic. Lily will then touch upon the third, which was about preserving our cash position, and then, as I mentioned, I'll take a reasonable amount of the presentation to focus on building for the future. If we go on to the next slide, in summary, in Q4, as we mentioned in the trading update, we're having a good recovery. The quarter for like for like was minus one. I will give a sense of the actual progression. Components in conjunction with both the recovery in industrial production volumes, but also through share gain, has having a consistently upward trend since the onset of the pandemic when it was down year-on-year in the mid-20s. Packaging, we highlighted that the underlying market was impacted by pressures on both elective surgery and prescriptions in the broader healthcare system across Europe and North America. Much improved in Q4. Filters actually had reasonable underlying demand. There was an initial supply and demand shock. The demand shock being obviously as people were no longer able to socialize in collective places. I'm pleased to tell all of our people on this call that we returned to some marginal growth in H2 and look well set to increase that trend in H1 of this year. If those are the underlying sales metrics, what are the more qualitative factors that really are the highlights? I've mentioned and illustrated at the half year that notwithstanding the pandemic, we have achieved the record levels of quality and service across all three divisions since they've been part of Essentra group. That in turn has led to market share gain and deeper customer franchise, and we'll give some illustrations of that. We talked about the fourth leg building for the future, and probably the most specific and concrete example of our confidence in the stability of our foundations, but also our determination to pursue our strategic agendas and our growth agenda was what I described as the strategic bullseye of 3C! Packaging. I'll give you an update later on how that's gone. Allied to that, we took the opportunity to really carefully assess what strategic initiatives we could do to drive further efficiency from our cost structure, which in turn underpins our future profitability. Sustainability is one of our three [uncertain] goals, to have class leading sustainability. We've made good progress on that. At the half year, we announced environmental targets. I'm pleased to say that in the last six months we've made good progress against that. The strength of our balance sheet was obviously something that was hugely important. Liquidity effectively hasn't been an issue, but what we wanted to do was to make sure that we operate within this 1x-2x net debt to EBITDA. As you can see on our pre-IFRS, we're slap bang in the middle of that, and that gives us strategic optionality. As a consequence of the strength of free cash flow, and Lily will illustrate that, and also our confidence in the growth prospects and the cash generation of the group in 2021 and beyond, the board has agreed that the full year dividend would be resumed at the level of 3.3p. If I then deep dive it somewhat into the four legs and start with leg one, which is safeguarding our people. We're on slide five now. This has been at the core, just as a safe, respectful, and diverse working environment for our people is at the core of everything we do and their engagement. When it came to our COVID plan, our COVID course of action, the number one priority, and it's there for a reason, was protecting and safeguarding our people and ensuring their physical, but very quickly, their emotional and financial wellbeing as well. I'm delighted to say that we got an over 90% participation in our employee survey, which speaks, I think, to the level of engagement, and it was really encouraging that the best score of all of the 50 plus metrics, where we were close to having as good a score as it's almost possible to be, was the fact that our employees felt that we had looked after them and done everything we could for them in these terribly demanding times. We have introduced, where necessary, COVID-19 testing, clearly on a voluntary but encouraged basis, where we've seen spikes. We've recognized, I think, that the communications is hugely important, and I and my senior colleagues have, I hope, been regarded by our team at the Essentra family as stepping up one or two levels in terms of visibility and communication. We have regular team meetings, both at the senior level, but then, for instance, I will do virtual cafes for operators, local finance people, et cetera, on a twice a week basis across the world. The recognition of excellence is an important part of creating our culture and making people feel even more of a family. Our Make It Work awards are our internal scheme, which was only launched three years ago, to recognize on a peer nomination basis, people who have lived our values or brought our values to life. We had over 500 nominations. That's up from about 250 the previous year. As I say, the program was only launched three years ago. I think that speaks to the embedding of our values in the organization. I referred to the importance of emotional wellbeing. It's something which probably in as early as April, we focused on, and one key part was the EAP or the Essentra Assistance Program, which is being rolled out globally, that provides multiple language support and advice to anybody who wants it in the 8,000 Essentra family. the third aspect which we undertook was that whilst we took no U.K. government support, in countries like India and Paraguay where people were mandated to furlough, we mirrored the arrangements that they would have got if, for instance, they had been in the U.K. I think we have walked the talk there and I think our employees have fed back to us that things have not been clearly easy, but we've tried to make the best of it. The fact that we have been, if you like, rewarded by them with class leading customer service is a good reflection on, A, us living our values, B, the merit in investing in that way. That neatly takes us on to slide seven, the supporting our customers. We've highlighted that while doing everything safely is paramount, the two key measures that we focused on a consistent basis are service and quality. Across the global network, we have had all 72 manufacturing and distribution sites fully operational since May. We have closed one or two sites, either for a spike or because the government has told us that we have no choice. Broadly, all businesses have been deemed essential and have therefore been able to keep going. Sometimes, even when there is a local spike in COVID cases, our people have responded magnificently and turned up when they were safe to do so. The two charts there, the on time in full, so right product, right place, right time. You can see the three trends going back. In 2020, components had a strong H1. 2020 H2 was affected by the very major undertaking of a state-of-the-art warehouse on the German-Dutch border in Nettetal, that had a temporary impact on time in full, but I am pleased to say that that is now functioning well. If you take quality, again, we've got the sequence going back to 2016 in terms of incident rates. Obviously, going down is a good thing in this instance. You can see again a consistent downward trend. Feels it's flattening out. To put that in context, this quality rate is about two issue rates about two parts per billion, two to 2.5, so it's pretty difficult to improve upon that. That is world-class, truly world-class. The reason Packaging only has a sequence of two is that we actually upped the standards and raised the bar in 2018. If you were to extrapolate that standard or that level back, you'd see the same trend. I think good support. We do not simply, if you like, look at our own internal performance metrics and form our own view, but we have annual customer surveys in both Components and Packaging, and they again showed that the scores were high, and I'll put some parameters around that later on. The third leg was all about conserving cash and making sure that in these times, that we maintained our liquidity while also protecting the profit margins as best as possible, notwithstanding the operating leverage. To give you a deep dive into that, I will hand over to Lily. Thank you, Paul. Good morning, ladies and gentlemen. I hope you're keeping safe and well. I continue to be inspired by our team's achievement during this unprecedented time. Now, in this section, as Paul mentioned, I'll take you through our resilient financial performance. I'm now onto slide nine. Let me start by sharing with you some key highlights. We delivered an adjusted operating cash flow of GBP 76 million, which was around 6% higher than the 2019 level, with a cash conversion of 123%, substantially higher than our average ratio about 90% in normal times. We achieved this result from the resilient trading, as well as our responsible and proactive cost actions. Some are listed on the slide, such as discretionary cost control, senior leaders voluntary pay reduction, and not taking U.K. government furlough support, excellent cash collection, and also balanced against selective investment to support future growth. Our net debt to EBITDA ratio decreased to 1.5x Pre-IFRS 16x and 1.8x post, right in the middle of our one to two times target range. With an underlying liquidity of GBP 287 million. A nearly GBP 60 million improvement from March 2020. The strong balance sheet provide us with firepower to support organic and inorganic growth. We recently agreed with our banks to extend a tranche of GBP 225 million RCFs by one year to November 2023. We used the equity raised in September 2020 to fund the compelling acquisition of 3C! Packaging, and also paying and canceling GBP 50 million bridge facility. In the half year result presentation, I state that OFAC and the U.S. Treasury was in the process of reviewing a small subset of transactions we self-reported. I'm pleased to report that review was completed and concluded no further enforcement actions. We continue to focus on strengthening our compliance process and compliance culture. Turning onto the next slide, into our P&L measures. I draw your attention to the chart in the bubble. The line represents our like-for-like revenue progression by quarter. You can see our business recovered well from a 10% decline in Q2 to a 1% decline in Q4. Adjusted operating profit down by GBP 27.9 million, 27.9% to GBP 62 million. Adjusted operating margin at 6.9%, a 200 basis points reduction on the constant currency basis. The OP reduction was a reflection of negative volume from COVID-19 and business disposals completed during 2019, offset by aforementioned cost actions and pricing actions. Reported operating profit was GBP 22 million versus GBP 18 million in 2019. In addition to the reasons mentioned already, more than half of the drop was driven by the adjusting items movement, that in 2019 we saw gains on disposals and in 2020 we saw costs largely driven by provision created for strategic initiatives that I shall provide more detail a bit later. Adjusted EPS at 13.1p, 37% down, and reported EPS at 1.7p. Now turning onto slide 11. Moving on to our income statement. Group revenue GBP 897 million on a like-for-like and constant currency basis, down 6.3%. Operating profit GBP 62 million, margin 6.9%. I would call out the second half operating margin was 7.4%, which was an improvement of 90 days from first half, driven by improved trading as the year progressed. Adjusted earnings at GBP 35.6 million, with adjusted EPS at 13.1p. Slide 12 gives a bit more color on revenue by division. Components reported revenue of GBP 255 million, a like-for-like decline of 10% year- on- year. The business saw the hardest hit from COVID in Q2, with revenue decline around 20%. Things then recovered well and exit the year with a decline of 0.4% in Q4. We observed green shoot growth in sectors like electronic vehicles, telecom, and lately, automotive. Our new website enables greater access to customers throughout the pandemic. packaging delivered a revenue of GBP 363 million. A 4% like-for-like decline. As Paul mentioned in the beginning, the business experienced some market-driven top-line decline in Q3 at about 8.5% from COVID. Things then recovered to a modest 1.3% decline in Q4. As a result of the very high level customer satisfaction, we won new businesses with annualized value of $5 million. 3C! packaging performed well and contributed around GBP 9 million to the division's top line. Filters reported a revenue of GBP 278 million, 5.6% reduction year- on- year. This decline was all from first half, and the business posted a marginal growth in the second half from the delivery of the two outsourcing contracts and the BCP volume awarded by our customers. A good recognition of our service level and the robust supply chain. Now overall group revenue down by 6.3% with improving trend, which is a good reflection of the resilience of our diversified end market and our excellent customer service levels, as Paul highlighted. Now moving on to slide 13. Before I provide more details on each of the divisional profitability, let me highlight that all our divisions and all our functions enacted strict control on discretionary spend, notwithstanding the incremental cost associated with COVID-related PPE, deep cleaning, and new working patterns to satisfy social distancing rules. The responsible cost actions were partially offsetting the volume reduction and the temporary manufacturing inefficiencies caused by COVID. These are applicable to the entire group, so I would not repeat the same message. Rather, I will call out division-specific factors and actions. Components posted a operating profit of GBP 45.5 million, a decline of 23.4% against prior year. However, still a very healthy margin of 17.8%. Specifically, I'll call out the effective price increase of 2% realized by the division. Packaging reported a profit of GBP 13.8 million, 3.8% margin of 50 basis points reduction from 2019. 3C! packaging performed to plan. Filters OP was GBP 25.2 million, with a margin of 9.1%, a reduction of 300 basis points. The business experienced less NPI project commissioned by customers due to COVID. That resulted into adverse mix. I will call out that the second half margin was around 10%, a 200 basis points improvement from the first half. The reported GBP 22 million central cost was favorable to 2019 by about GBP 6 million or 22%, reflected both the cost control and the one-off credit from LT accrual release. Looking into 2021, I expect we continue to manage our costs closely. However, central costs should go up to reflect an appropriate level of performance with the variable remediation cost. Moving down the P&L onto slide 14. Net finance charge was GBP 15.7 million, higher than 2019 level by GBP 1.3 million. A lower interest charge from reduced net debt level was more than offset by the adverse forex movement from the property lease under IFRS 16. Our effective tax rate was 19.2% versus 19.9% in 2019, in line with our guidance of 19%-20%. Our guidance remains the same for 2021, barring any material change on rate from significant trading countries. Minority interest for 2020 was GBP 1.8 million from our India JV. Now going forward, our MI would also include our China JV which progressed well despite the COVID disruption. As we set up the business in 2021, we expect to see an operating loss around GBP 2 million at the consolidation level. Before I move out from the income statement, let me spend a moment on Forex. As always, we included in the appendix the Forex sensitivity table. Now, looking into 2021. For one cent movement on US dollar, we estimate the translation effect around GBP 2.5 million on revenue and GBP 3 million on profit. For one cent movement on euro, the estimated impact is around GBP 2 million on revenue and GBP 4 million on profit. Again, all on translation. Despite the translation headwind of a stronger pound, I still emphasize that we're confident with the underlying business improvement on a constant currency basis. Slide 15. As Paul mentioned, we conducted a careful footprint review and announced closure of certain manufacturing and distribution sites in the U.K., Europe, and U.S. in both components and packaging. The estimated cost is around GBP 17 million and GBP 12.7 million were booked in 2020. We recognize the scope of change was significant and therefore we appointed professional program director to each project, overall governed by the group program management office, to safeguard the execution of these initiatives. I'm pleased to say that all projects are progressing well to date. The expected savings are around GBP 13 million, starting from 2021 and with annual savings from 2022 onwards. The savings will help to underpin the profitability of the business. More details on the adjusting items can be found in the appendix. Moving on to the next slide. I'm really proud to present our cash flow performance, which was enabled by our cross-functional collaboration to provide the highest level of customer services. Operating cash conversion at 123%. I already mentioned that was significantly higher than the average of 90%, and the operating cash flow of GBP 76 million was after we spent around GBP 45 million on CapEx. We continue to progress on our selective investment to support forward-looking initiatives such as BPR, digital, and certain machine capacities. I expect 2021 overall CapEx to be around GBP 50 million. In addition to the themes of 2020, we are investing in our China JV, with expected CapEx around GBP 8 million in 2021, funded by all partners, but we consolidate. The net working capital improvement reflected good collection and good inventory management with responsible payable actions. After paying interest and tax, our free cash flow was GBP 57 million, GBP 60 million higher than 2019. Slide 17. Our net debt to EBITDA ratio pre-IFRS 16 was 1.5 times, right in the middle of our target range. You can see on the table, our net debt was down by around GBP 100 million from free cash flow generation of GBP 57 million and the equity raised which half funded the 3C! acquisition. IFRS 16 lease liability increased by about GBP 22 million due to new German warehouse lease and the timing of lease renewals for some of our existing facilities. Overall net debt reduced by GBP 78 million and this strengthened balance sheet will support organic and inorganic growth. Moving on to slide 18, putting the balance sheet and P&L together. Our ROIC, return on invested capital, was 6.7%, a 250 basis points reduction from 2019 against the backdrop of a global pandemic, a 28% year-on-year reduction of adjusted operating profit, and the timing of our 3C! acquisition. We continue to focus on ROIC as a key financial measure. Our rigorous capital allocation policy is the underpinning. Now, moving on to the next slide. Paul has already mentioned this. The resilient performance, excellent cash flow generation, and an encouraging outlook enabled the board to resume a dividend at 3.3p per share, total GBP 10 million payable, fully funded by the cash flow generated by the business in 2020. The dividend policy will be a progressive one. Let me summarize this section. We posted resilient 2020 financial results with improving trends on revenue and orders, strong cash flow generation that enabled the resumption of dividend. Thank you. With that, I'll hand over to Paul to talk about building for the future. Paul, over to you. Thanks a lot, Lily. I think it appropriate Lily just referred to the strength of the underlying cash flow and I think that speaks to the properties of the group, but also the confidence in the future that we have announced the resumption of a dividend. Perhaps, I'd like to just spend a little bit of time sharing what we see as the opportunities for each of the divisions and why we're extremely confident about our ability to progress strongly from this base. If we start with components, just to remind you, the market that we address is some eight billion, and although we're the market leader, we probably only have about 4% of that market. There is scope even without expanding into other sectors to grow organically and inorganically without even touching the sides. I mentioned about the positive customer reaction and our belief in share gain, so our net promoter score was up four points due to this excellent customer service. We kept going, not all of our competition did. The score is north of 40, which would be consistent normally with share gain. As I mentioned, we have now commenced operations towards the end of the year at our state-of-the-art, mostly leased out German hub warehouse. It provides us the opportunity to have a wider product range in mainland Europe, thereby enhancing service. Clearly, also, the automation enhances still further accuracy, and it also balances the supply of product more away from our major site in Oxford, where we have both our largest European production but also the largest European warehouse. Nettetal and Oxford are now broadly balanced, and clearly, that also helps in the context of Brexit. Lily's already referred to the strategic footprint initiative, and that will help underpin the profitability there. Referring to that profitability, you can see that we went from 21.3 to 17.8. I was just reflecting on it and comparing it, and the 10% revenue drop with a 350 bps margin erosion is almost exactly what happened in 2008, 2009 in the global financial crisis. It then rebounded strongly to pre-GFC levels. I think it speaks through two data points now to the fundamental resilience. Throughout the year, as the volumes came back, we did see the operating margin go back encouragingly. For us, given we already have tons, tens and tens of thousands of customers often taking one or two of our core product categories, cross-selling, selling more product categories to the same customers is a very leveraged way for us of growing organically and building on those market share gains. We'll talk a bit more about the electronic digital progression in a minute. We have enhanced our e-commerce offering. I'll illustrate that. To manage this huge complexity of transactions of customers and of product SKUs, we've already launched the Microsoft Dynamics for our ERP system customer management platform. In addition to these commercial initiatives, something that we've been introducing towards the second half of the year is an additional focus on category. Whereas historically we have focused very much on pushing product to individual customers in a high-quality, user-friendly way, this represents a 180-degree pivot whilst keeping that focus on product push, and effectively what we have been doing in certain areas is experimenting with a category pull focus. We will try and understand the needs of sectors ranging from automotive through to agriculture through to railway manufacturers. By deeply understanding their needs, their emerging market needs, we are effectively saying, "What can we do to anticipate trends, and what can we do in terms of product ranges to become totally indispensable, invaluable to them as customer categories?" As well as those electronic initiatives, clearly there's still a lot of, and we welcome it, human interfaces, our team. There's been intense focus on cross-selling training, as I mentioned before, the biggest single lever we have to grow our top line. The priorities there about this digital experience, sustainable products, packaging tech. Sorry, beg your pardon. Components technically is not really that much affected by single-use plastics because our plastics are not single-use in the vast majority of instances. Nonetheless, it is the right thing to do for our sustainability agenda, even if they are constant-use products, to rebalance towards more sustainable or recycled or recyclable products offerings. That's something which we're doing, and I'll talk about that when I come to talk about sustainability. We've talked about the European supply chain and really leveraging the capabilities in Nettetal and looking at the optimal manufacturing footprint. The ERP platform with components leading the way will be a real game changer for us over the next 12 to 18 months and put some more clear blue water between us and the smaller national, probably single product category competitors that we mostly feel. I mentioned the digital. If we carry on here, just to give you some examples, because digital is so fundamental to this business. The websites, 18 months ago, launched some much more user-friendly, intuitive websites. You can see an example on the right-hand side. Allied to that, given the myriad of transactions, customers, et cetera, we've been working with a business partner called Peak. In the first instance, using artificial intelligence to look at patterns of what products could naturally be sold with other products, and that generates effectively, you can see on the right-hand side, what I call the Amazon functionality. If one takes grease nipple caps, then there is a good probability that you would want those things under the frequently bought. It's really again, using data, artificial intelligence, to leverage that cross-selling opportunity. Obviously, also, when you have so many transactions to so many customers, CRM, the ability to have a digital insight into who they are, what the opportunities, and what the pipeline is very important. That's a lot of the finance, the first module that we've already put in and will integrate into the broader ERP capabilities that we have. It's exciting to comment that within the next month, maybe six weeks, we will be going live with the finance and operations aspect in Spain. That's components. Packaging, if we look, the market was tough in Q3 and remained tough, but less so in Q4. Just to remind you of the two main reasons, one of which is elective surgeries were markedly down anything between 20% and 25%. Also with people less willing or less able to go to their medical providers and get prescriptions, that also had an impact. Clearly, as the situation eases and pressure on healthcare providers in the Western world, in particular because that's our target market, eases. We will see, I think, a return to normality in H2 as some of that backlog seeks to get eroded. Financially, notwithstanding a 4% revenue decline, and this business has quite a high fixed manufacturing cost base, so it is quite sensitive to operational gearing. Cost actions maintained the margins at just under the 4%. I'm pleased to inform all of you on the call that 3C!, and we'll talk a bit about it more, has gone well. We mentioned about improved service and quality, and one can see that our survey score satisfaction is now 81%, which is way above industry average and a good move in difficult circumstances from 2019, and that has underpinned the new business wins. again, the self-help theme continues with the restructuring projects that Lily's already talked about which enables us, I think, to have confidence with the possible acceleration of a COVID impact being the one thing which might continue to depress H2. Our target remains that by the end of the year, in the final quarter, we will be on a run rate basis into that in-line margin target, which is the bottom right-hand bullet point there. I mentioned that we got onto the front foot in a fairly sizable way in September of 2020, and that was through the acquisition, which we see on the next slide of 3C!. 3C! I described as a strategic bullseye. It's a pure play into the health and personal care, and it's one of the few single-site operations that have the full range of products, labels, literature, and cartons for that market. We now have got the really exciting opportunity between that, our Charlotte and our Greensboro operations of creating a real center of excellence with the largest and broadest range of capabilities and scale in the Carolinas, which is the biggest and the fastest-growing and the hub of the North American pharma market. It does bring this additional benefits in terms of ClearCode technology, which has proven benefits, which we now leverage across our global customer base in terms of serialization and coding. It makes it easier, but critically, it makes it such that the customers can print at a faster rate. They don't have to slow down their machines to serialize to the same level. Happy to report that against the first three and then six-month targets, we look on track to either meet or beat those. I think the really exciting opportunity as well is to leverage their knowhow to achieve even higher growth. They've averaged 10% CAGR over the last five years with their customers, and that commercial knowhow is something which we're already seeing, and there is real positive chemistry between the two sides. We've been privileged at Next Page to be involved in the fight against this scourge that's visited our planet. We have partnered with one of the leading antiviral drug manufacturers, but also now with two of the main leading manufacturers for COVID-19 vaccine. Clearly, we are honored to be able to play a small part in that. Ultimately also the benefit for us in normalizing the healthcare industry as soon as possible, as well as the huge privilege of being able to be a small part of saving so many lives and freeing up so many healthcare systems. That makes us extremely proud. If we then turn on to filters. Filters has had a very clear strategy, which I communicated to our investors way back in the second half of 2017, where we would get the foundations right based around world-class operations, and I've demonstrated that innovation and we've beginning to demonstrate that and perhaps we will talk about what perhaps will be the biggest potential opportunity in innovation. Also these key account management working with particularly the big MNCs, multinationals and with independents. We then have the game changers. We are looking good to go live with manufacturing either period 6th June or July in China. We have exceeded the forecast value and volume of the two larger outsourcing contracts we informed people about this time last year. We have continued to expand our next generation product offering, so the heat not burn or certainly the product market, which is growing. We have a very high quality product offering and the vortex filter, which is one of our product offerings, which as you can see, looks pretty complicated, with gaps, with capsules, with tubes, is expanding our offering. I'll talk about it again in a minute or so, our proprietary sustainable filters. The tape business is also making good progress, in product innovation and looking to expand beyond its traditional core in the tobacco into things like the Amazon product where you open the cardboard box, et cetera, with the ripper tape. From a green point of view, we've got the world's first really green product. It's got 70% post-consumer recycled product as its key raw material. In terms of margin, 9% for the year, but as Lily said, that's effectively 8% in H1 and 10% in H2 as we clearly see the benefit of volume going through. The priorities for that business, China JV, it will represent a huge increase in the size of our addressable market, and we do it in partnership with a number of the key market providers, but also with the blessing of the state monopoly. Environmentally friendly products are both a commercial and a values-based opportunity for us. As I mentioned, the key account approach into Tear Tapes will help them expand. Really excitingly, I think on the next slide we see three products, Cavitex and Cavitex Filtration. These are three products that we launched and they are intended to meet the legal requirements of the Single-Use Plastics Directive to really drive both plastic free and biodegradable solutions. I think not only will it or is it intended to help meet the legal requirements on behalf of our customers, but it really does offer an exciting environmental opportunity. Whilst we have probably been quite cautious as to how quickly this could, A, come to light fruition and B, get launched. Pleased to say that, as you can see on the right-hand side, we're talking to eight customers, including virtually every multinational, and they've got 21 projects all under NDAs within the first full month of launch. There is at least an intellectual curiosity, but there's also going to be, I think, an increasing legal but also environmentally driven, desired by customers, and it's our anticipation that within the next six months, at least one of those multinationals will do a market testing somewhere in mainland Europe. That's one great example of our sustainability journey, because we're focusing it on both the products but also then the sustainable credentials of our production methodologies. If we turn on, we can see there and remind you of the four KPIs that we have. Sustainable materials, this is specifically around components for the reasons I explained before. We want to see 20% of all material being recycled content, and I think early signs are we are on track to that. Zero waste to landfill. 20 of our 71 manufacturing sites are now certified as that. You can see good progress made, and our target is to have every single site done by 2030. We already have good plans underway for 2021, and I think we'll continue to be at least on track to hit that 2030 target. In terms of greenhouse gases, we have stated that we want to be carbon neutral by 2040, and from a 2019 base, we are targeting a 25% reduction. In six years, we've reduced by 5.5%, so hitting that target. In terms of waste volumes, we've got the ambitious target of 20% reduction there by 2030. All of our sites are now required to have a waste reduction plan, and we have a central capability and sustainability to review the overall progress and provide advice and encouragement. The other big group wide initiative, which we see on the next phase, is our business process redesign program, which was launched two years ago. We went live in July with the finance and procurement in the headquarters. As I mentioned, we also have the customer management system live in components. The proposal now and the plan is within the next six to eight weeks to go live in Spain and then France and Germany, and then cover the whole of Europe, basically through the balance of this year. We will then commence our rollout into North America and probably commence also the planning phase, the high level design and scoping phase with a second division. That's going well. To put it in context, we are now two years, three months in. That is on budget and within two weeks out of 120 weeks of being exactly on time. Just finally, in terms of looking ahead. On the left-hand side, we've tried to follow our three basics of safeguarding our people, supporting our customers, and strengthening our finance. Hopefully, we've demonstrated that in the last 12 months, those three pillars of our COVID strategy have been delivered, and as a consequence, we do have solid, resilient foundations and have made progress on our fourth leg of building for the future. If we look at that and the self-help levers, we think there are three categories. There's efficiency. We've given you examples there, and BPR will help drive that, as will the full year impact of the strategic initiatives that Lily shared in detail. The organic growth, which is based around market share gain, pricing ability, and then as and when it returns, underlying market growth, driven through a range of customer propositions within components, digital offering, and cross-selling. particularly within filters, innovation in products, but equally, we are doing many activities in components and in packaging. in particular, our components and packaging, we'll be looking to expand their geographic reach. Filters will as well, but as a more global business already, it's really only a question of China. we continue to build our M&A pipeline. We mentioned that our net debt EBITDA position gives us some optionality, and we have got identified and some discussions going for accretive, strategically compelling acquisition opportunities. finally, to conclude, before we take questions. The outlook. Clearly, it would be a very brave person or a very silly person to say we can tell you exactly what the world is going to look like in six or 12 months. We believe that the actions we're taking, the strength of the customer franchise, and the comparative resilience of our end markets does give us, if you like, narrows the parameters of outcome for 2021. We haven't talked about Brexit. Brexit, we have planned a long time in advance. I personally do not see Brexit having a demand-side impact, beg your pardon, but it does have short-term supply-side impact, and the most obvious, which you'll be familiar with in any business that is shoving goods from one side of the channel to the other, is the incremental time. Things are not getting worse, so we can change our supply chain algorithms to cope with a 10-day journey as opposed to a two-day journey. There is some additional administrative cost. We do not consider that there is a material direct impact to us. We are seeing some impact in the short term in extended lead times and some incremental costs. Looking ahead qualitatively, we see that components should see a continuation in the improvement of like-for-like trends. If I look at PMIs, that would support that view. Our order book through Q1 continues to strengthen into positive year-on-year territory. Talking to Iain Percival, the divisional MD, he was at a conference with many other packaging suppliers and their customers, the pharma companies. I think the most commonly held view would be that, particularly as we see these vaccines really have a big impact on hospitalization, that towards the end of Q2 and into H2, we should see some rebound there as we eat into people trying to eat into that backlog of prescriptions, but elective surgeries in particular. filters, we can see a fundamentally stable demand pattern, no material up or down in underlying demand. because we are in the specialist filter market, which is more resilient, and because we see opportunities in China in annualized outsourcing, we think that it is set for growth through the balance of the year. thank you for your attention. I think it now appropriate that we open the floor to questions. Thank you very much, sir. Ladies and gentlemen, if you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced. If you find your question has already been answered, you can remove yourself by pressing the hash key. So again, that's star one if you wish to ask a question. Our first question is from the line of Andrew Douglas from Jefferies. Please go ahead. Good morning, Paul. Good morning, Lily. Three questions from me, please. On the biodegradable filter, I appreciate you don't want to get too excited too soon, but I was just wondering if you can give us a bit more color from the potential uptake from the customers. Is this something that you're pushing onto them as an opportunity that you guys have developed, or are they coming to you wanting you to run as quickly as possible? You say it's a potential rollout into Europe, could we then start to see your rollouts of potential pilot opportunities in North America, Asia, et cetera? Is it kind of, let's see where the first one goes and then we'll worry about the next one, I guess the next step after that? Secondly is on 3C! Packaging. You said that integration is good, which is nice to see. Can you talk about the next steps there for what you want to do with that business from not only from an integration and efficiency perspective, but from a growth perspective? With regards to the e-commerce rollout, just want to make sure that that's all going to plan in terms of how your customers are responding. We've seen one or two companies who've fallen over with an e-commerce platform. I just want to make sure everything's going to plan there. We've got, I think, Asia to come, I think, next year. Just checking that. Thank you. Thanks. Morning, Andy. Can you hear me okay there? Morning. Good. Okay. Filters biodegradable is a combination. Clearly, there's a legislative-driven push through Single-Use Plastics Directive within Europe. Also there is clearly the whole green consumer awareness. When you think there are 3.5 trillion bits of non-easily biodegradable stuff thrown onto the planet every year, there's a clear environmental-driven force behind it. We've been working on this, Andy, for about two years, and in two ways. One of which is we are the hub for the creation initiative to create European-wide standards. Also we've been developing products ourselves, and we have the most comprehensive range. I think it's both push and pull. As we speak, we have conversations with eight different cigarette manufacturers covering. We've got 21 NDAs, so multiple conversations with a large number, including most of the MNCs. We are working with one MNC who is intending to trial in Europe a product in the middle of the year. To give you some idea of scale, it's probably about 20 million-ish as an initial order, so that's about 1 million packs. The way it'll work is they will launch it, test consumer appetite, et cetera. It's really difficult to scale it at the moment, Andy. When investors talk to me, I really helpfully say it could be just a couple of million, or it could be a couple of hundred million. The interesting and the really exciting thing other than the benefit it does to the planet is that this is a case where we would be the primary supplier rather than, if you like, an overspill provider, and we own the intellectual property. Exciting times. It could really live up to the name game changer as well as benefiting the planet. Very major strategic optionality around it and probably the most exciting development in the tobacco industry alongside NGPs in the last 30, 40 years. You know I tend to understate things rather than the other way around. If I turn to 3C!, fundamentally, we have had no nasty surprises. If you take the specific benefits like procurement, we've probably doubled the target savings there. The chemistry between the two sites has been fantastic, and that's hugely important. They do really feel and are contributing passionately, so it isn't a question of who's winning or who's claiming credit. How do I see that evolving? We're already talking to, for instance, some of the European arms of their U.S. clients. We are jointly going for a large tender, which their capability alone wouldn't have been enough to deliver. I think commercially very, very encouraging. We are beginning to have conversations about their clear code technology with our customers and also with the announcement about the Moorestown facility. We're really focusing on creating this cluster between the two legacy businesses in Greensboro and Charlotte and then obviously with 3C!. You will have the biggest concentration of HPC secondary packaging capability in the largest and fastest part of the U.S. pharma market. In terms of the e-commerce rollout, I suppose I'm not sure which particular aspect. BPR is on track, as I said, two weeks in two and a half years, but is in the second round of user acceptance testing and will go live next month. The website is going very well. We measure metrics like hit rate and stuff like that, and they're going well. We're in a very rapid cadence. We tend to bring out new versions with enhanced functionality every three to four weeks. As you know, for us, particularly being an OE supplier and providing that advice, we wouldn't want it to become the main sole conduit. I think all of the metrics that we set ourselves are looking positive. I'm comfortable with both BPR and e-commerce, and we are, for all intents and purposes, on track or maybe marginally ahead. Good man. Thank you very much. Cheers, Andy. Our next question is on the line of James Beard from Numis. Please go ahead. Thanks. Morning, all. I've got a couple of questions. Firstly, on the cost savings that you're proposing from the site closure program that you're going to enact, how much of that do you expect to actually drop through to the bottom line from, well, certainly in 2022 and even in 2021? Secondly, just on filters. I know that last year we had the settlement agreement with the DOJ for the sanctions non-compliance. I just wanted to check whether there's any sort of tail risk there, and whether potential for sort of further settlements or penalties further down the line. Morning, James. I'll take the second question then I'll hand over to Lily for the first one. The DOJ, yes, that was finished, and we've recently heard from OFAC in response to the second matter, and they also confirmed that that is closed. The short answer is, there is no tail risk. Okay. Lily, you want to unmute? Hi, Paul. Can you hear me now? Yes, I can now. Thank you for reminding me. Hi, James. Good morning. With regarding to your first question of our strategic initiatives, how much is dropping? As I said, it's about GBP 13 million cost savings. We expect that to be realized starting sometime later this year, full year savings will be realized from 2022 onwards. We also said it would support the future profitability of the business. Okay. that implies that not all of that is going to hit the bottom line, though there'll be some of that reinvested or- Yes otherwise- Yes ...not bottom line. Exactly, James. For instance, we would be reinvesting in accelerating the digital journey and components to move IP plus 4% up to IP plus 5% or 6%. Clearly, there's some cost in the China JV, start-up costs as a couple of examples. Yes, it will underpin, and even, I think, in less straightforward markets that we have at the moment, I think it just underpins that very material earnings growth that we're seeing in '21 and take it forward to '22. You're spot on, yes. Thanks. Perfect. If there are any further questions, please press star one on your telephone keypad. Our next question is from Charles Hall from Peel Hunt. Please go ahead. Morning, Paul. Morning, Lily. Hey, Charles. First question, could you just provide a bit more color on trading year-t o- date? Obviously, you've got two months under your belt and just run through each division, particularly important obviously as we're coming up against easier comps, just to get a feel of how things are going. Yes. Is that your sole question, Charles, or are there any others? That's the first question. I'll leave the other one for later. Oh, right. Okay. Well, obviously this is based on two periods plus our take on order book and best guess or best estimate, sorry. Components, bear in mind, Charles, that we've got two less trading days so far, and that's about 3% less. We think probably that we'll be flat to marginally growing in absolute terms and kind of low single digit on the sales per working day basis for the quarter. Again, a continued uptick and into more positive territory. Packaging had a tough P1 because we had a combination of, for instance, our Madrid site was closed due to winter weather, which is literally a once in a generation event. We had some Brexit shenanigans and then obviously that was when the real kind of COVID absenteeism impact was at its worst. P1 was tough, but P2 and P3 will be I think stable year- on- year, which will be yet again an improvement. The comps don't get tougher in that business until probably Q3-ish because the market didn't batten down the hatches until towards the middle of the year. with filters, we're expecting mid to high single digit year- on- year growth, partly because of the comps, because the first impact we had was cigarette manufacturers not coming back from Chinese New Year in Feb. also with things like the outsourcing deals. That business is just inherently growing. I would say stability year- on- year in packaging in for two of the three months. Components into low single digit growth on the SPWD basis and filters growing well, mid to high single digits. Brilliant. That's helpful. Thanks. Second question on packaging margins. Obviously, you're talking about getting to the 8%-10% margin in Q4. I guess part of that is the cost savings that you'll start to get from the two site closures. Is there anything else that needs to happen barring those and an improving trend post-COVID, for you to hit that 8%-10% margin target? No, I mean, broadly, we've taken all of the actions that we need, Charles. We need a normalization of healthcare provision in H2. That would give us the growth, and therefore the operational gearing through our factories. It's probably our most operationally geared business. Yeah ..those are the two factors. Perfect. Thirdly, just following on from Andy's questions on biodegradable. What's your customer's likely route to market? Are they going to introduce a new brand that is designed to look totally different, and be sort of packaged as sustainable, or will it be an existing brand reformulated? Have you got any feel for that at this stage? They haven't yet decided on branding, but they will definitely be touting the virtues of its greenness, so it will be marketed as an eco-friendly, biodegradable product. Perfect. A question for Lily. Obviously, brilliant cash performance last year, given the circumstances. Do you see much of that as one-off, or have you been able to tighten things across the board, and much of that is going to stick, and it's going to be just back to normal in the current year? Yeah. If you're very politely saying, are we going to have an unwind and go way below our average? No. Thank you for being polite. I actually think we're better, and we're more focused at managing cash now. We manage our inventory more tightly. Our overdues came down. We paid all our suppliers on time, in some cases early, if they were small companies and asked it. I think we're just more in tune with it. That's one example, Charles, where I think we are actually a better business than we were 12 months ago. Being blunt. Yep. One last question, if you'll allow me. Lots of companies talking about higher freight costs at the moment. Yeah. Is that a feature that you're seeing, and is it something that you're able to deal with? I would say it's not just higher freight costs, it's more disruption to the supply chain around Asia. We are, in some cases, resorting to air freight. Yes, container costs have gone up, and we have, particularly filters, which kind of shifts, stuff around Asia quite a lot, Charles. We have had some supply chain disruption, but notwithstanding that, we're still anticipating, as I say, mid to high single-digit growth in filters in Q1. Yes, we're dealing with it. It is not plain sailing, no pun intended, but there is an impact. It is not material. Got it. Very good. That's all my questions. Thank you very much. Thank you, Charles. Thank you very much. There are no further questions waiting. Okay. Well, in that case, may I thank you all for listening on behalf of myself and Lily, and I hope you all remain safe and well, and for those of you who will be doing so, we look forward to having conversations in the coming week or two. Thank you very much indeed, and have a good day, all of you. Bye-bye. Thank you very much, sir. Ladies and gentlemen, that does conclude the call for today. Thank you all for joining. You may now disconnect.