Slide 1: 2020 Interim Results Presentation
IMPRO PRECISION INDUSTRIES LIMITED (01286.HK) 2020 INTERIM RESULTS PRESENTATION 13 August 2020
Slide 2: Disclaimer
Disclaimer The information set forth in this presentation is relating to the business of Impro Precision Industries Limited (the “Company” which, together with its subsidiaries, the “Group”) for the six months ended 30 June 2020. This presentation is intended to provide updated information on the Gr
Slide 3: Response to COVID-19
Response to COVID-19 Staff Customers • Implement stringent hygiene and safety measures to • Leverage global production facilities and prioritize protect our staff critical shipments to meet customers’ demand • Preserve jobs of critical positions, optimize process flow • Extend long-term contract, in
Slide 4: 1H 2020 Financial Highlights & Sales Update
1H 2020 Financial Highlights & Sales Update 4
Slide 5: 1H 2020 Financial Highlights
1H 2020 Financial Highlights HK$ mil HK$ mil Adj. EBITDA & Adj. EBITDA Margin Total Revenue 2,000.0 800.0 35.0% 31.8% 29.9% 30.0% 1,500.0 600.0 25.0% 20.0% 1,000.0 1,911.1 400.0 15.0% 1,368.6 607.5 10.0% 500.0 200.0 409.8 5.0% - - 0.0% 1H 2019 1H 2020 1H 2019 1H 2020 HK$ mil HK cents Free Cash Flow
Slide 6: Revenue by Business Segment
Revenue by Business Segment 1H 2019 1H 2020 1H 2019 1H 2020 Change HK$ mil % HK$ mil % HK$ mil % Investment Casting 862.5 45.1% 661.1 48.3% (201.4) -23.4% Precision Machining 624.3 32.7% 390.4 28.5% (233.9) -37.5% Sand Casting 296.3 15.5% 216.7 15.8% (79.6) -26.9% Surface Treatment 128.0 6.7% 100.4
Slide 7: Revenue by End Markets
Revenue by End Markets 1H 2019 1H 2020 1H 2019 1H 2020 Change HK$ mil % HK$ mil % HK$ mil % Automotive 870.7 45.5% 596.7 43.6% (274.0) -31.5% Industrial & Others 825.3 43.2% 614.9 44.9% (210.4) -25.5% Aerospace & Medical 215.1 11.3% 157.0 11.5% (58.1) -27.0% Total 1,911.1 100.0% 1,368.6 100.0% (542.
Slide 8: Revenue by End Markets
Revenue by End Markets 1H 2019 1H 2020 Change HK$ mil % HK$ mil % HK$ mil % Automotive 870.7 45.5% 596.7 43.6% (274.0) -31.5% - Passenger Car 572.9 30.0% 394.8 28.8% (178.1) -31.1% - Commercial Vehicle 297.8 15.5% 201.9 14.8% (95.9) -32.2% Industrial & Others 825.3 43.2% 614.9 44.9% (210.4) -25.5% -
Slide 9: Revenue by Geographical Area
Revenue by Geographical Area 1H 2019 1H 2020 1H 2019 1H 2020 Change HK$ mil % HK$ mil % HK$ mil % Americas 835.0 43.7% 570.2 41.6% (264.8) -31.7% - United States 779.0 40.8% 528.6 38.6% (250.4) -32.1% - Others 56.0 2.9% 41.6 3.0% (14.4) -25.7% Europe 648.7 33.9% 428.0 31.3% (220.7) -34.0% Asia 427.4
Slide 10: 1H 2020 Financial Review
1H 2020 Financial Review 10
Slide 11: 1H 2020 Financial Review
1H 2020 Financial Review 1H 2019 1H 2020 Change Financial Highlights HK$ mil HK$ mil % Revenue① 1,911.1 1,368.6 -28.4% Gross Profit 612.4 365.9 -40.3% Gross Profit Margin 32.0% 26.7% -5.3% Impairment loss of goodwill & other assets - (445.2) N/A Operating expenses (OPEX) (233.8) (178.0) -23.9% Adjus
Slide 12: Gross Profit
Gross Profit HK$ mil 800.0 35.0% 32.0% 30.0% 612.4 26.7% 600.0 37.7 29.4% 25.0% 98.9 33.4% 20.0% 400.0 365.9 185.7 29.7% 26.2% 26.3 15.0% 57.2 26.4% 78.8 20.2% 10.0% 200.0 290.1 33.6% 30.8% 5.0% 203.6 - 0.0% 1H 2019 1H 2020 Investment Casting Precision Machining Sand Casting Surface Treatment Gross
Slide 13: Cost of Sales Analysis
Cost of Sales Analysis HK$ mil 1,500.0 1,298.7 1,200.0 236.2 18.2% 1,002.7 97.6 7.5% 900.0 115.5 210.9 21.0% 8.9% 68.1 6.8% 348.3 26.8% 115.8 11.6% 600.0 263.7 26.3% 300.0 501.0 38.6% 344.2 34.3% - 1H 2019 1H 2020 Cost of RM and consumables used Staff Costs Depreciation Fuel Expenses and Utilities O
Slide 14: Operating Expenses Analysis
Operating Expenses Analysis HK$ mil Selling and Distribution Expenses HK$ mil Administrative and Other Operating Expenses 120.0 5.0% 240.0 10.0% 4.3% 4.3% 9.0% 8.7% 4.0% 7.9% 8.0% 90.0 180.0 82.0 7.0% 151.8 3.0% 6.0% 58.7 119.3 60.0 120.0 5.0% 2.0% 4.0% 3.0% 30.0 60.0 1.0% 2.0% 1.0% - 0.0% - 0.0% 1H
Slide 15: Capital Expenditure
Capital Expenditure HK$ mil Incurred and Estimated Capex in 2019-2020 1,000.0 1000 8.9% 8.0% 800.0 800 688.4 600.0 600 457.9 400.0 2H - 516.3 400 339.3 247.5 200.0 200 2H - 177.7 1H - 172.1 1H - 69.8 0.0 0 FY2019 FY2019 FY2020 FY2020 (Group) (Ex. Mexico) (Group) (Ex. Mexico) Incurred Capex Estimated
Slide 16: Free Cash Flow from Operations
Free Cash Flow from Operations HK$ mil 400.0 154.4% 150.0% 100.0% 300.0 54.8% 50.0% 200.0 0.0% 284.8 100.0 180.1 -50.0% - -100.0% 1H 2019 1H 2020 Free cash flow Free cash flow / Adjusted NPAT 16
Slide 17: Use of Proceeds from Global Offering
Use of Proceeds from Global Offering HK$ mil 1,200.0 1,031.5 103.5 - 103.5 - 900.0 219.0 - 271.1 600.0 271.1 - 349.8 307.1 300.0 437.9 219.0 88.1 - Actual amount of the Working capital and Acquisition of Repayment of Capital expenditures for Unutilised proceeds net proceeds general corporate busines
Slide 18: Key Financial Ratios
Key Financial Ratios HK$ mil Inventory Turnover Days (Average) Days HK$ mil Trade and Bills Receivable Turnover Days (Average) Days 1,500 150 1,400 90 100 100 149 83 118 1,200 1,200 120 80 105 919.5 1,000 816.0 900 738.4 785.8 743.6 90 800 60 637.3 600 60 600 40 400 300 30 20 200 - - 0 - 12/31/2018
Slide 19: Key Financial Ratios
Key Financial Ratios Adjusted Return on Equity Net Gearing Ratio 30.0% 80.0% 23.9% 63.1% 60.0% 20.0% 17.2% 40.0% 11.3% 10.0% 20.0% 12.6% 9.6% 0.0% 0.0% FY 2018 FY 2019 1H 2020 (Annualized) FY 2018 FY 2019 1H 2020 (Annualized) X Net Debt / Adj. EBITDA X Interest Coverage Ratio 2.0 12.0 10.0 1.5 9.2 1
Slide 20: Business Outlook
Business Outlook 20
Slide 21: Market/Business trend update
Market/Business trend update COVID-19 impact on various end-markets will continue in 2H 2020 though demand stabilized in June and July 2020 Aerospace end-market demand not expected to pick up until late 2021 China customers demand shows increasing trend, particularly in industrial end- markets
Slide 22: Mexico Developments Update
Mexico Developments Update Mexico SLP Campus Phase 1 Total Building Estimated Status construction Area Completion Date Precision Machining (PM) and Construction underway 53,000 m2 End 2020 Sand Casting (SC) plants Investment Casting (IC) plant Signed construction 29,000 m2 Mid 2021 contract in July
Slide 23: Future Opportunities
Future Opportunities Mexico new plants draw substantial customer interests setting the stage of sustainable market share gain of our Americas business in the future New AS9100 certificate of Turkey plant opens the door of diversification of end- markets in our Turkey plants Established a dedic
Slide 24: Q&A Session
Q&A Session 24
Slide 25: Appendices – Financials Summary
Appendices – Financials Summary 25
Slide 26: Reconciliation of Adjusted Profit and Adjusted EBITDA
Appendix 1 - Reconciliation of Adjusted Profit Attributable to Shareholders and Adjusted EBITDA 1H 2019 1H 2020 Change HK$ mil HK$ mil % Reconciliation to Adj. Profit Attr. to Shareholders Profit / (Loss) after tax 300.4 (268.3) Adjustments: - Listing expenses 18.7 - - Impairment loss of goodwill &
Slide 27: Consolidated Statement of Profit or Loss
Appendix 2 – Consolidated Statement of Profit or Loss 1H 2019 1H 2020 HK$ mil HK$ mil Revenue 1,911.1 1,368.6 Cost of sales (1,298.7) (1,002.7) Gross Profit 612.4 365.9 Other revenue 9.2 27.9 Other net income 6.5 2.8 Impairment loss of goodwill and other assets - (445.2) Selling and distribution exp
Slide 28: Consolidated Statement of Financial Position
Appendix 3 – Consolidated Statement of Financial Position 12/31/2019 6/30/2020 HK$ mil HK$ mil Non-current assets Property, plant and equipment 2,884.6 2,829.3 Prepayments for Property, plant and equipment 57.1 43.0 Intangible assets 69.7 62.0 Goodwill 446.4 - Deferred expenses 163.2 159.1 Other fin
Slide 29: Consolidated Statement of Financial Position
Appendix 3 – Consolidated Statement of Financial Position 12/31/2019 6/30/2020 HK$ mil HK$ mil Current liabilities Bank loans 614.4 564.4 Lease liabilities 70.0 49.8 Trade payables 284.2 197.5 Other payables and accruals 258.9 190.6 Taxation payable 74.0 32.7 1,301.5 1,035.0 Net current assets 1,007
Slide 30: Consolidated Statement of Financial Position
Appendix 3 – Consolidated Statement of Financial Position 12/31/2019 6/30/2020 HK$ mil HK$ mil Capital and reserves Share capital 188.3 188.3 Reserves 3,823.7 3,392.7 Total equity attributable to equity shareholders of the Company 4,012.0 3,581.0 Non-controlling interest 15.0 16.4 TOTAL EQUITY 4,027
Slide 31: Condensed Consolidated Cash Flow Statement
Appendix 4 – Condensed Consolidated Cash Flow Statement 1H 2019 1H 2020 HK$ mil HK$ mil Operating activities Cash generated from operations 514.0 516.1 Tax paid (33.0) (63.7) Net cash generated from operating activities 481.0 452.4 Investing activities Payment for the acquisition of PPE (266.0) (152
Slide 32: Condensed Consolidated Cash Flow Statement
Appendix 4 – Condensed Consolidated Cash Flow Statement 6/30/2020 1H 2019 12/31/2019 1H 2020 HK$ mil HK$ mil HK$ mil HK$ mil Capital andactivities Financing reserves Share capital Proceeds from issue of ordinary shares by IPO 188.3 999.9 188.3- Reserves Share issuance costs paid 3,392.7 (34.5) 3,823
Slide 33: Thank You
impro Reliable « Flexible - Global THANK YOU