Tt Electronics Plc · LSE:TTG
Tt Electronics — H1 2009 Earnings Presentation
32 slides from Tt Electronics's earnings presentation, Aug 20, 2009
Slide 1: Half year Results Presentation
Half year Results Presentation 6 months ended 30 June 2009 20 August 2009 Geraint Anderson, Group Chief Executive Shatish Dasani, Group Finance Director 1
Slide 2: Disclaimer
Disclaimer • IMPORTANT INFORMATION • For the purposes of the following disclaimers, references to this “document” shall be deemed to include references to the presenters’ speeches, the question and answer session and any other related verbal or written communications. • This document contains certai
Slide 3: Overview
Overview • On track after the first six months, despite continuing challenging economic conditions • Overall trading for the full year expected to remain in line with previous expectations • Cost reduction plans accelerated in light of market conditions • Re-structuring programme nearing completion
Slide 4: Agenda
Agenda • First Half Summary • Strategy Implementation Update • Group Profile • Divisional Review • Financial Highlights • Current Trading and Outlook • Q and A 4
Slide 5: First Half Summary
First Half Summary • Group revenue down 19% to £237m (2008: £292m). On an underlying basis, excluding the impact of FX, Group revenue was down 29% • Loss before tax and exceptional items of £3.9m (2008 profit: £15.0m) • No interim dividend for 2009 in line with dividend policy • Strong level of unde
Slide 6: Strategic Review
Strategic Review “STRATEGIC FOCUS” “DEVELOPMENT” “RUN FOR VALUE” Heartland to the brand / Scalable Opportunities Value Businesses group Components/Connectors IMS/Secure General Industrial Power • Major driver of shareholder value AEI Compounds AB Automotive • Have potential to deliver material • Ret
Slide 7: Strategy Summary
Strategy Summary • Continued progress against initiatives identified in the Strategic Review announced on 21 January 2009 • New leaders brought in with operational experience to run Sensors and General Industrial • Revised divisional structure enabling clear focus on delivery of strategic objectives
Slide 8: Implementation Update
Implementation Update • Interdivisional Opportunities – Key account management programme progressing – CRM being applied to top 8 accounts initially and will be broadened to top 14 by year end: already receiving positive feedback from customers – Virtual market teams established: • Aerospace & Defen
Slide 9: Group Profile: Revenue by Division
Group Profile Revenue by Division H1 2008 H1 2009 General General Industrial Industrial £31.4mPower Secure (13%) Sensors Secure Power Sensors £50.7m (17%) & Industrial £46.8m (20%) & Industrial £69.6m (24%) Secure £146.5m (25%) £146.5m (25%) Power Secure Power £26.4m (11%) £28.0m (10%) EMS IMSEMS Co
Slide 10: Group Profile: Operating Profit/Loss by Division
Group Profile Operating Profit/Loss by Division* H1 2009 H1 2008 £m £m Components 2.4 4.8 Sensors (4.3) 3.3 IMS 1.5 3.7 Secure Power 2.0 Secure 2.3 General Industrial (2.2) Power 3.1 £2.8m Total (0.6) (29%) 17.2 (* before exceptional items) 10
Slide 11: Group Profile: Revenue by Market H1 2009
Group Profile Revenue by Market H1 2009 13% (9 %) Automotive 33% (43 %) Telecom & Computer 43% (35 %) Industrial 11% (13 %) Defence & Aerospace • Reduction in Automotive to 33% due to significant reduction in demand and also implementation of strategy through exit from climate control • Growth in De
Slide 12: Divisional Review: Components
Divisional Review 2009 2008 2008 Components 1st Half 1st Half Full Year £m £m £m Revenue 93.9 91.7 192.1 Operating Profit 2.4 4.8 9.7 Operating Profit Margin 2.6% 5.2% 5.0% • Underlying revenue (excluding FX and acquisitions) down by 24% • Gross margins have held up; reduction in operating profit is
Slide 13: Divisional Review: Sensors
Divisional Review 2009 2008 2008 Sensors 1st Half 1st Half Full Year £m £m £m Revenue 46.8 69.6 125.9 Operating Profit (4.3) 3.3 1.1 Operating Profit Margin - 4.7% 0.9% • Underlying revenue (excluding FX) has fallen significantly by 42% • Major restructuring implemented in Germany with a headcount r
Slide 14: Divisional Review: IMS
Divisional Review 2009 2008 2008 IMS 1st Half 1st Half Full Year £m £m £m Revenue 38.5 52.0 103.4 Operating Profit 1.5 3.7 6.0 Operating Profit Margin 3.9% 7.1% 5.8% • Underlying revenue down 39% (excluding FX) • Headcount reduced by 130 people in the first half • Exceptional cost of £0.7m in the fi
Slide 15: Divisional Review: Secure Power
Divisional Review 2009 2008 2008 Secure Power 1st Half 1st Half Full Year £m £m £m Revenue 26.4 28.0 65.9 Operating Profit 2.0 2.3 7.8 Operating Profit Margin 7.6% 8.2% 11.8% • Underlying revenue (excluding FX) down by 7% • Good performance by Dale Power Solutions in the UK with an increase in sales
Slide 16: Divisional Review: General Industrial
Divisional Review 2009 2008 2008 General Industrial 1st Half 1st Half Full Year £m £m £m Revenue 31.4 50.7 97.0 Operating Profit (2.2) 3.1 2.4 Operating Profit Margin - 6.1% 2.5% • Closure of Climate Control business of AB Automotive on track; business made a loss of £2.2m in H1 • Other businesses a
Slide 17: Financial Highlights
Financial Highlights • Target annualised cost reduction of £30.5m (£6.0m higher than originally indicated), of which around 70% is coming through in 2009 • Group overall has been trading profitably since May as benefits offset reduction in sales • Significant reduction in working capital of £13.1m,
Slide 18: Profit & Loss Account
Profit & Loss Account 2009 2008 2008 1st Half 1st Half Full Year £m £m £m Revenue 237.0 292.0 584.3 Operating Profit (0.6) 17.2 27.0 Net interest payable (2.2) (1.8) (4.1) Net finance cost on pension schemes (1.1) (0.4) (1.8) Profit before taxation and exceptional items (3.9) 15.0 21.1 Exceptional i
Slide 19: Exceptional items
Exceptional items 2009 2008 1st Half Full Year £m £m Sensors - Closure of Romford - (1.1) - German restructuring (6.4) - AB Automotive – climate control exit - Exit costs (4.2) (2.7) - Profit on sale of Cardiff site 0.9 - UK IMS business - Consolidation phase 1 (0.7) - Other restructuring (0.2) - TO
Slide 20: Restructuring Summary
Restructuring Summary Costs Estimated Annualised 2008 Costs 2009 Cost Reduction £m £m £m AB Automotive – climate control exit 2.7 3.3 4.0 Sensors – European restructuring - 7.5 8.2 Sensors – Romford closure 1.1 - 1.2 IMS – UK consolidation - 1.2 1.8 Other restructuring - 2.0 2.2 Total exceptional 3.
Slide 21: Operating Cash Flow
Operating Cash Flow 2009 2008 2008 1st Half 1st Half Full Year £m £m £m Operating profit (0.6) 17.2 27.0 Depreciation 12.3 11.7 23.4 Amortisation of intangibles 6.2 5.2 10.9 Working capital 13.1 (8.7) (5.6) (2.6) (1.5) (5.6) Other Underlying operating cashflow 28.4 23.9 50.1 Exceptional costs (6.3)
Slide 22: Net Cash Flow
Net Cash Flow 2009 2008 2008 1st Half 1st Half Full Year £m £m £m Cash generated from operations 22.1 23.9 46.2 Tax and interest (6.4) (3.2) (7.4) Capital expenditure (4.8) (14.2) (21.9) Development expenditure (3.7) (5.4) (10.9) Proceeds from sale of fixed assets 1.0 2.3 5.1 Acquisitions (1.0) (4.2
Slide 23: Group Balance Sheet
Group Balance Sheet 2009 2008 2008 June December June £m £m £m Tangible and Intangible assets 202.6 235.5 192.3 Deferred tax asset 9.6 5.5 5.2 Total non-current assets 212.2 241.0 197.5 Inventories 93.2 120.0 97.2 Trade and other receivables 91.3 111.5 108.8 Cash and cash equivalents 10.8 10.1 6.5 T
Slide 24: Banking Facilities
Banking Facilities • Facilities: - Total facilities available of £160m, of which £46m is working capital - Main term loan of £70m is with HSBC and extends to 2011 - Two term loans of £10m renewable in September 2009 and £18.8m in December 2009. Discussions with both banks ongoing. • Loan covenants w
Slide 25: Current Trading and Outlook
Current Trading and Outlook • Trading conditions in the first half of 2009 have been very challenging with de-stocking in many markets due to the severe economic downturn in Q1 • Whilst there are signs of some stability in recent weeks in certain markets, we have yet to see any signs of a sustained
Slide 26: Summary
Summary • Continued progress across the Group in implementing the strategic plan • Focused on meeting customers needs in key market segments • Cost reduction plans accelerated in light of market conditions, increased benefit in second half • Good level of cash generation in first half and target rev
Slide 27: Appendix
Appendix 27
Slide 28: Actions 2009
Actions 2009 2008 2009 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Strategic Review Analysis Implementation Interdivisional Opportunities Start Continuing Components Restructuring Started Jan 08 Completed Components: Reconfigure Start Completed European Sales Office C
Slide 29: Taxation
Taxation 2009 2008 2008 1st Half 1st Half Full Year £m £m £m Tax charge - Underlying 0.9 3.9 6.8 - Exceptional items - - (1.1) 0.9 3.9 5.7 Effective tax rate - Underlying 32% - After exceptional items 33% • Tax charge arises from profits generated by overseas countries, in particular Mexico and Chin
Slide 30: Earnings per share
Earnings per share 2009 2008 2008 1st Half 1st Half Full Year £m £m £m Profit before tax and exceptional items (3.9) 15.0 21.1 Tax (0.9) (3.9) (6.8) Underlying Earnings (4.8) 11.1 14.3 Average number of shares (million) 155.0 155.0 155.0 Headline earnings per share (pence) (3.1)p 7.2p 9.2p Basic ear
Slide 31: Pensions
Pensions 2009 2008 2008 June June December £m £m £m Fair value of assets 268.5 282.1 283.1 Liabilities (301.7) (302.8) (301.7) Deficit (33.2) (20.7) (18.6) • Deficit increase caused by market fall in value of assets • Pensionable salaries frozen since April 2006 and agreement to continue for a furth
Slide 32: Group Profile: Revenue by Destination H1 2009
Group Profile Revenue by Destination H1 2009 17% (19%) 19% (18%) UK Rest of Europe 26% (24%) 38% (39%) North America Rest of World • Increase in UK arising from Semelab and New Chapel acquisitions, and also good performance by Secure Power in the UK service market • Increase in North America due to