Interim Results 2012 - Laird · PDF file• David LockwoodLockwood joinsjoins thethe...
Transcript of Interim Results 2012 - Laird · PDF file• David LockwoodLockwood joinsjoins thethe...
26 July 2012
Interim Results 2012
Agenda
1. Highlights – Nigel Keen
2 Fi i l i J th Sil2. Financial review – Jonathan Silver
3. Business review – Nigel Keeng
2
Results highlights
• Revenue of £249.6 million (2011: £243.1 million)
• Pick‐up in revenue in the second quarter, over the first quarter
• Underlying* operating margin of 12.4% (2011: 11.7%)
• Underlying* profit before tax up by 7% to £27.3 million
• Earnings per share of 8 6p up 9% on prior year• Earnings per share of 8.6p, up 9% on prior year
• Interim dividend declared of 3.4 pence (2011: 2.7 pence), up 26% on 2011
• Strong cash conversiong
• Expansion of capacity proceeding to plan
• New product launches on track for the second half of the year
• Integration of recent acquisitions, Emerson & Cuming and Summit, progressing according to plan
• David Lockwood joins the Board as Chief Executive on 13 August 2012• David Lockwood joins the Board as Chief Executive on 13 August 2012
* before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, deferred tax on acquired intangible assets and goodwill, fair valuing of financial instruments and acquisition transaction costs
3
Financial ReviewJonathan SilverJonathan Silver
4
Revenue & Profit
£m Half Year to 30 June Full Year
2012 2011 2011
Revenue 249.6 243.1 491.3
Operating profit 31.0 28.5 58.4
Finance costs (3.7) (3.1) (6.7)
+9%
( ) ( ) ( )
Profit before tax† 27.3 25.4 51.7+7%
• Margin improvement delivers increase in profitsMargin improvement delivers increase in profits
5
† before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, deferred tax on acquired intangible assets and goodwill, fair valuing of financial instruments and acquisition transaction costs
Segmental Analysis ‐ Half Year to 30 June
Actual2012£m
Actual2011£m
%Δ
Actual2012US$m
Actual2011US$m
%Δ
Performance Materials (PM)
Revenue 152.2 150.4 +1% 240.0 243.4 (1)%
Operating profit† 21.7 21.4 +1% 34.2 34.6 (1)%
Wireless Systems (WS)
Revenue 97 4 92 7 +5% 153 6 149 9 +2%Revenue 97.4 92.7 +5% 153.6 149.9 +2%
Operating profit† 12.6 10.9 +16% 19.8 17.7 +12%
Unallocated costs (3.3) (3.8) (5.2) (6.2)
Total continuing
Revenue 249.6 243.1 +3% 393.6 393.3 ‐
Operating profit† 31.0 28.5 +9% 48.8 46.1 +6%
6
† before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, deferred tax on acquired intangible assets and goodwill, fair valuing of financial instruments and acquisition transaction costs
Margin performance and results translated in US$m
Performance Materials & Wireless Systems
Half Year to 30 June 2012
Half Year to 30 June 2011
US$m US$m
Revenue 393.6 393.3
Cost of sales (240.7) (244.4)
Gross margin 152.9 148.938.8% 37.9%
SG&A (80.9) (80.2)
Gross R&D (26.8) (24.9)
Net capitalised development 3.6 2.3
Operating profit† 48.8 46.112.4% 11.7%
7
† before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, deferred tax on acquired intangible assets and goodwill, fair valuing of financial instruments and acquisition transaction costs
200
Performance Materials Division – revenue bridge US$m$m H1 revenue
$243m ‐2%* 100
200
EMI
$(2)m
EMI$240m
‐16%*
$(9)m
Thermal
02009 2010 2011 2012
$m1%* $3 9m
Thermal
†Acquired
$8m
SIP
40
60
80 Thermal
$m+1%*
$3.7mEMI
$3.9mThermal
EMI
0
20
40
2009 2010 2011 2012
20
30• Revenue 5% lower on an organic basis
• Shielding for smartphones, tablets and laptops growing in EMI
Signal Integrity Products
$m
0
10
g p , p p g g
• Reduction in EMI shielding for plasma display panel TVs
• Weaker telecom market impact on both EMI and Thermal2009 2010 2011 2012
8* year on year growth in US$ including organic growth of acquired businesses† 2012 revenue from acquisitions
Performance Materials Division US$m
2012 2011
US$m H1 H1 FY
Revenue 240.0 243.4 489.5‐1%
Operating profit† 34.2 34.6 69.0‐1%
Return on sales 14.3% 14.2% 14.1%
• Improvement in EMI margins offsets reduction in Thermal to hold margins flatImprovement in EMI margins offsets reduction in Thermal to hold margins flat
9
† before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, deferred tax on acquired intangible assets and goodwill, fair valuing of financial instruments and acquisition transaction costs
120
Wireless Systems Division – revenue bridge US$m$m
H1 revenue
80
120Telematics/M2M
$
$153m
$
† Acquired
0
40
2009 2010 2011 2012
$m
$(6)mTELE/M2M
$150m ‐7%* +20%*$(1)m
WACS$5m
IAS
‐4%*$5m
TELE/M2M
20
30
40 Infrastructure Antennae
IAS
0
10
2009 2010 2011 2012
• Re en e 2% lo er on an organic basis
40Wireless Automation & Control Solutions
$m
• Revenue 2% lower on an organic basis
• Rationalisation of low margin tracking range reducing Telematics
• Robust auto demand in Telematics
0
20
Robust auto demand in Telematics
• Increase in demand for IAS solutions in public safety market and gaming
• Deferred industrial and railroad spend impacting WACS business0
2009 2010 2011 2012
* year on year growth in US$ including growth of acquired business† 2012 revenue from acquisitions10
p p g
Wireless Systems Division US$m
2012 2011
US$m H1 H1 FYUS$
Revenue 153.6 149.9 299.1+2%
Operating profit† 19.8 17.7 36.4
Return on sales 12.9% 11.8% 12.2%
+12%
57PM• ROS increases to 12.9% from 11.8%
• Vertical integration contributes to Telematics margin improvement
11
† before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, deferred tax on acquired intangible assets and goodwill, fair valuing of financial instruments and acquisition transaction costs
Discontinued Operations US$m
2012 2011
US$m H1 H1 FY
Revenue 29.5 73.0 152.0
Operating profit† 5.4 (5.1) 1.6
• Overheads substantially reduced to bring business back to profit in exit phase
12
† before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, deferred tax on acquired intangible assets and goodwill, fair valuing of financial instruments and acquisition transaction costs
Operating Cash Flowlf lf ll£m Half Year to 30 June 2012
Half Year to 30 June2011
Full Year to31 December
2011
Discontinued Continuing Total Total
Operating profit 3.4 31.0 25.4 59.4
Depreciation ‐ 6.8 9.3 17.0p
Amortisation of capitalised development ‐ 1.8 4.0 6.4
Other and non‐cash ‐ 1.0 0.7 1.3
3 4 40 6 39 4 84 13.4 40.6 39.4 84.1
Decrease in working capital 6.4 5.3 (1.0) (0.3)
Capitalised development (4 1) (4 5) (9 1)Capitalised development ‐ (4.1) (4.5) (9.1)
Capital expenditure (0.3) (5.6) (7.7) (12.0)
Operating cash flow 9.5 36.2 26.2 62.7
St ti h i f 117% f ti i ti
Total 45.7 26.2 62.7
• Strong operating cash conversion of 117% from continuing operations
13
Cash Flow
£m Half Year to 30 June Full Year
2012 2011 2011
Operating cash flow 45 7 26 2 62 7Operating cash flow 45.7 26.2 62.7
Finance costs (3.6) (3.3) (7.0)
Tax (5 6) (5 9) (9 5)Tax (5.6) (5.9) (9.5)
Trading cash flow 36.5 17.0 46.2
Dividends (14.1) (11.2) (18.4)
Acquisitions / disposals (31.1) (20.8) (21.0)
Exceptionals (8.7) (6.6) (22.6)
Other 0.3 ‐ ‐
(17.1) (21.6) (15.8)
Exchange on cash and borrowings (0.3) 2.5 1.7
Increase in net borrowings (17.4) (19.1) (14.1)
14
Balance Sheet
£m 30 June 31 December
2012 20112012 2011
Shareholders’ equity 442.2 443.8
Net borrowings 135 1 117 7Net borrowings 135.1 117.7
Capital employed 577.3 558.1
Interest cover (covenant basis) † 10.0 10.0
Net borrowings / EBITDA†† 1.5 1.4
• Healthy financial position
Net borrowings / EBITDA
• Healthy financial position
† minimum of 3.0 times required by Group’s loan facilities†† maximum of 3.5 times required by Group’s loan facilities
15
Earnings, Tax & Dividend
Pence per share Half Year to 30 June 31 Dec
2012 2011 2011
Earnings per share† 8.6 7.9 16.2
Underlying tax rate 16.5% 17.5% 17.1%
Dividend per share 3 4 2 7 8 0Dividend per share 3.4 2.7 8.0
Average number of shares (million) 265.7 265.4 265.4
• Dividend increased by 26%• Low tax rate maintained• Full year 2012 dividend of 10 pence to be recommended
16
† before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, deferred tax on acquired intangible assets and goodwill, fair valuing of financial instruments and acquisition transaction costs
Business ReviewNigel KeenNigel Keen
17
Performance Materials Division benefiting from strength in key markets
BY PRODUCT SEGMENT*
• Revenue up 1% YoY
in key markets
EMI Shielding$ 161m£102m• Revenue up 1% YoY
• Good demand from IT, smartphone, tablet and automotive customers offset by lower demand in telecoms
• Capacity expansion well underway to support growth• Emerson & Cuming integration proceeding well67%
24%
9%EMI
Thermal
Signal Integrity
$ 161m£102m
Supplying the IT, telecoms, consumer, automotive and military sectors
H1 2012 REVENUE £152 2 • Revenue down 9% YoY
Thermal Solutions$ 57m£36m
BY MARKET SEGMENT*
H1 2012 REVENUE £152.2m Revenue down 9% YoY• Telecoms infrastructure sales remain subdued• IT market showing signs of improvement• ‘Green’, energy & medical markets held up
Supplying the IT telecoms automotive consumer medical & military sectors
$ 57m£36m
Supplying the IT, telecoms, automotive, consumer, medical & military sectors
• Revenue up 1% YoY
Signal Integrity41%
34%
IT/Datacom
Handset
$ 22m£14mp• Good level of demand from IT markets
Supplying the IT, consumer & automotive sectors19%6%
Consumer
Other
$
* excluding Handset Antennae and Mechanisms
18
Ongoing growth drivers for our Performance Materials solutions
iSUPPLI FORECASTING:
solutions
PERFORMANCE MATERIALS GROWTH DRIVERS: iSUPPLI MARKET GROWTH FORECASTS:
2012‐2016 CAGR:
Media tablets 20%
Positioned in structural growth markets
Increased electronic content in devices
Faster and more compact models require more
FORECASTS:
Smartphones 14%
Telecoms 5%
Auto 5%
Faster and more compact models require more connectivity and heat solutions
Increasing bandwidth capacity requirements
Auto 5%
Notebook/PCs 5%“Green” markets e.g., electric vehicles & charging components, LED lighting, smart metering
ORGANIC REVENUE
• Market growth• Increasing intensity of product
ORGANIC REVENUE GROWTH DRIVEN BY:
• Increasing intensity of product usage
• Expansion of customer base• Market share gains• New applications• New applications
19
Continued growth in the Wireless Systems Division
• Revenue flat YoY• Strong demand from automotive market in N America N l t b i ith t t21%
Telematics & "M2M"
WACS
BY PRODUCT SEGMENT* Telematics / M2M$ 89m£56m
• New long‐term business won with auto customers• Lower asset tracking sales reflecting move to exit lower margin products• Bluetooth held up despite lower demand from European customers• Summit integration proceeding wellSupplying the automotive, infrastructure & retail sectors
58%21%
WACS
Infrastructure & other antennae
• Revenue down 4% YoYH1 2012 REVENUE £97 4
Wireless Automation & Control Solutions$ 33m£21m
• Industrial and rail market spend being deferred• After‐sales service strong
Supplying the rail, industrial & mining sectors
H1 2012 REVENUE £97.4m $
• Revenue up 20% YoY• Continued demand for portable radio solutions from public safety
15%6% Automotive
BY MARKET SEGMENT*Infrastructure Antennae
$ 32m£20m• Continued demand for portable radio solutions from public safety market
• Good consumer demand for gaming consoles antennae systems
S l i h i f i i l l /d & i
49%
30%
Industrial
IT/Datacom
Other
Supplying the infrastructure, municipal, telecoms/data & security sectors
* excluding Handset Antennae and Mechanisms
20
Increasing demand for connectivity, requiring our Wireless Systems solutionsWIRELESS SYSTEMS GROWTH DRIVERS:
I i d f i l ti it b t l
Systems solutionsiSUPPLI MARKET GROWTH FORECASTS:
2012‐2016 CAGR:
Telematics/Infotainment 9%
Increasing need for wireless connectivity between people and devices
Opportunities from:
i t lli t t t ti t & i i f t i tIndustrial 6%
Medical devices 6%
‐ intelligent transportation systems & in‐car infotainment‐ public infrastructure & safety‐ wireless M2M: medical, industrial & energy
Increasing demand for two‐way data, combined hardware WLAN 3%and software e.g., smart meters
More compact, integrated solutions from auto, medical, industrial markets requiring our solutions and services ORGANIC REVENUE
• Market growth• Increasing intensity of product
GROWTH DRIVEN BY:
usage• Expansion of customer base• Market share gains• New applications
21
T t f th di t l t f
Delivering on our targetsTargets for the medium to long‐term of:
‐ Organic revenue growth averaging 10% per annum
‐ Underlying return on sales margin of 15%Underlying return on sales margin of 15%
Organic revenue growth Return on Sales Dividend
2013 FY FY 12.0p – to be recommended
2012 FY FY 10.0p – to be recommended
2012 H1 (4)% H1 12.4% H1 3.4p= 10%
2011 FY 12% FY 11.9% FY 8.0p
p.a. from
start of 2011
Average compound growth of 24% from 2010
2011 H1 H1 11.7%
Target average 10% p.a. on a rolling basis Target 15%
to 2013
22
on a rolling basis
Well positioned for the increase in connected devices
Market improvements expected in near‐term Strong customer base
Planned new product introductions
Good improvement in margins
O i
Well positioned in str ct ral gro th
Ongoing innovation
structural growth markets
Capacity expansion progressing
23
Confident of delivering on our growth targets over time
Appendix
Well positioned in structural growth markets
500
NOTEBOOK/PCs & PRINTER SHIPMENTS
TELEMATICS/INFOTAINMENTOEM REVENUE
50
Units (m)
105
WLAN SHIPMENTSUnits (m)CAGR
NOTEBOOK/PCS 5%Notebook/PCsPrinters
Revenue ($bn)
200
300
400
500
20
30
40
50CAGR 9%
90
95
100
105NOTEBOOK/PCS 5%PRINTERS 1%
Printers
CAGR 3%
0
100
200
2012 2013 2014 2015 2016
0
10
20
2012 2013 2014 2015 2016
75
80
85
2012 2013 2014 2015 2016
MEDICAL EQUIPMENT OEM REVENUE MEDIA TABLET SHIPMENTSUnits
( )SMARTPHONE SHIPMENTSUnits
( )
Source: iSuppli, March 2012Source: iSuppli, June 2012 Source: iSuppli, June 2012
Revenue ($b )
300
400
60
80
(m)
CAGR 20%
CAGR 6%
1200
1600
(m)
CAGR 14%
($bn)
0
100
200
0
20
40
0
400
800
25
02012 2013 2014 2015 2016
02012 2013 2014 2015 2016
Source: iSuppli, June 2012 Source: iSuppli, June 2012
02012 2013 2014 2015 2016
Source: iSuppli, June 2012
Breadth is strengthH1 2012 REVENUE £249 6m
BY PRODUCT SEGMENT* (%)
H1 2012 REVENUE £249.6m
BY MARKET SEGMENT* (%)
30%
10%
5%
8%6%
30%
12%
41%8%
22%21%
14%
IT / Datacom Transportation
I d t i l/M di l/Milit H d t
23%
EMI Shielding Telematics / Wireless Modules
Th l Wi l & A t ti C t lIndustrial/Medical/Military Handsets
Other Consumer
Thermal Wireless & Automation Controls
Other Antennae Signal Integrity
* excluding Handset Antennae and Mechanisms
26
Committed facilities
£m Life
Bank Facilities
2016 235.0 3.8
Private Placement
2014 62.4 2.3
2016 27.6 4.3
Total committed facility 325.0 3.5
• Ample headroom
27
Need for increased connectivity drives our growthIT/D /T l• IT/Datacomm/Telecomm
– Connectivity for laptops, netbooks, tablets, PCs and servers– Routers for internet applications– Telecomm base stations
Requiring our EMI & Thermal solutions
• Transportation– Antennae for automotive electronics e.g. AM/FM radio,
satellite radio, cellular– Tracking devices for haulage GPS Requiring our Telematics solutionsTracking devices for haulage, GPS– Intelligent transportation systems & infotainment
• Industrial & Instrumentation– Wireless control systems Requiring our M2M products– Remote data handling
• Consumer– Electronic devices e.g. iPad, Gaming consoles
Flat screen TVs
Requiring our EMI & Thermal solutions
Requiring our M2M products
– Flat screen TVs
• Infrastructure & Medical– Public safety– Remote diagnostics
solutions
Requiring our M2M & wireless products
• Handsets– Smartphones
“ ” k
Requiring our EMI solutions
products
• “Green” markets– electric vehicles, rechargeable lithium batteries, LED lighting,
smart meters
28
Requiring our Thermal solutions
Margin trajectory model
Rev133
Economies of scale from organic revenue growth
Rev100
133ASSUMPTIONS• No change in product mix
• 70% of costs variable, 30% fixed
IOIO31
• Variable moves with revenue, fixed with inflation
N D
E X
PBIT
IO26
31
MODEL OUTPUT• Profit drop through 25% on incremental
I
PBIT12
PBIT20
Profit drop through 25% on incremental revenue
• Revenue growth >30%; PBIT growth >60%12.0% RoS 15.0%
REV: Revenue
12.0% RoS 15.0%
29
IO: Indirect overheadsPBIT: Profit before interest & tax