TT Electronics plc · LSE:TTG
TT Electronics — FY2011 Earnings Presentation
35 slides from TT Electronics's earnings presentation, Mar 15, 2012
Slide 1: Embedding innovation
Embedding innovation 15 March 2012 ©2012 TT electronics plc 1
Slide 2: Embedding innovation
Embedding innovation • Significant progress over last three years • On track to deliver target operating profit margins • Focused on performance critical electronics • Targeting higher growth market segments where use of complex electronics is increasing • Strategy in place and platform to create va
Slide 3: Performance
Performance1 Revenue (£m) Operating Net cash (£m) profit margin2 446.4 555.5 591.3 1.4% 4.5% 5.8% (56.9) (9.9) 15.2 2009 2010 2011 2009 2010 2011 2009 2010 2011 1 continuing operations 2 before exceptional items December 2011: Full Year Results ©2012 TT electronics plc 3
Slide 4: Balance: Global Reach and Growth Markets
Balance Global Reach Growth Markets Defence and Telecom and Rest of World computer Asia aerospace Central & South America Other 2 transportation 11% 6% 12% 8% United 8% Kingdom North America 17% 19% Medical 6% 34% Passenger car 12% Power generation 42% 23% Rest of Europe Industrial Revenue by geogra
Slide 5: Financial Summary: Key Financials
Financial Summary Key Financials 2011 2010 Continuing operations £m £m Change Revenue 591.3 555.5 7.2%1 Operating profit2 34.2 24.9 37.3% Operating profit margin 5.8% 4.5% 130 bps Profit before tax2 29.5 20.6 43.2% Earnings per share (pence)2 13.3p 9.0p 47.8% Underlying operating cash flow2 63.0 60.
Slide 6: Financial Summary: Operating Profit Before Exceptionals
Financial Summary Operating Profit Before Exceptionals £36.0m 3.1 34.2 6.0 £30.0m 7.1 24.9 0.7 £24.0m £18.0m 2.4 £12.0m £6.0m £0m Operating Foreign Sales Mix, margin Inflation Operating profit 2010 exchange change & efficiency on SG&A profit 2011 December 2011: Full Year Results ©2012 TT electronics
Slide 7: Financial Summary: Divisional performance
Financial Summary Divisional performance Components Sensors IMS Secure Power £ million 2011 2010 2011 2010 2011 2010 2011 2010 Revenue 242.7 234.6 166.9 143.5 100.0 92.2 81.7 85.2 Change1 4.9% 14.9% 9.7% (2.3)% Operating profit2 14.8 10.7 8.8 3.9 5.1 4.1 5.5 6.2 Operating profit margin2 6.1% 4.6% 5.
Slide 8: Financial Summary: Exceptional Items
Financial Summary Exceptional Items 2011 2010 Full Year Full Year £m £m Reduction in UK pension liabilities 7.5 – Restructuring costs (5.2) – Pension curtailment gain from scheme closure – 4.3 Profit on sale of property interest – 1.0 Onerous property leases – (0.8) Total 2.3 4.5 December 2011: Full
Slide 9: Financial Summary: Working Capital
Financial Summary Working Capital £180m 30% £160m 25% £140m £120m 20% £100m 15% £80m £60m 10% £40m 5% £20m £0m 0% December December December December 2008 2009 2010 2011 Total Trade Working Capital Working Capital/Sales December 2011: Full Year Results ©2012 TT electronics plc 9
Slide 10: Financial Summary: Group Cash Flow 2011
Financial Summary Group Cash Flow 2011 8.3 21.6 £60m 16.9 £50m 2.2 £40m 3.5 5.4 34.2 10.0 £30m 5.0 25.1 2.6 £20m £10m £0m Operating Working Depreciation Business Capital Exceptional Pension fund Tax and Dividend Other Net debt profit capital disposals investment restructuring payment interest moveme
Slide 11: Vision and business model
Vision and business model Vision To be the preferred and most Drivers trusted provider of performance Strategy critical technology solutions to world leading manufacturers, Execution embedding innovation in everything we do. KPIs Vision December 2011: Full Year Results ©2012 TT electronics plc 11
Slide 12: Drivers: Demand in target markets driven by common factors
Drivers Strategy Drivers Execution KPIs Demand in target markets driven by common factors Performance Regulation Growth and prosperity • Sophisticated products • Emissions legislation and • Rising living standards and incorporating more complex requirements for greater increasing disposable income,
Slide 13: Strategy: Clear strategy to create value for all stakeholders
Drivers Strategy Strategy Execution KPIs Clear strategy to create value for all stakeholders Focus Innovation Globalisation • Higher growth markets • Delivering high value critical • Positioned to support our • Partnering with leading technology solutions for customers worldwide manufacturers challe
Slide 14: Focus – Markets: Transportation, Industrial, Energy, Medical
Drivers Strategy Strategy Execution KPIs Focus – Markets Drivers Transportation • Increasing growth, particularly in emerging regions • Improvements in performance, efficiency and safety required by regulation and consumers Industrial • Investment in automation and more complex equipment • Drive to
Slide 15: Focus – Markets: Defence and Aerospace
Drivers Strategy Strategy Execution KPIs Focus – Markets Drivers Defence • Reduction in defence spending overall • Focus on smaller, more agile forces supported by technology Aerospace • Prosperity and globalisation leading to increased air travel • Requirements to improve fuel efficiency • Demand f
Slide 16: Strategy: Focus – Customers
Drivers Strategy Strategy Execution KPIs Focus – Customers • Strong partnerships with leading manufacturers in all target markets • Continued focus on key account management, c. 11% growth in 2011 • Resources in place to support customers globally “ We really value the aerospace expertise and techno
Slide 17: Strategy: Innovation
Drivers Strategy Strategy Execution KPIs Innovation • Creating high value differentiated solutions for challenging applications • ‘trusted partner’ status with major customers providing early engagement Action Effect • Business unit/product managers appointed • Focused research and development resou
Slide 18: Strategy: Globalisation
Drivers Strategy Strategy Execution KPIs Globalisation • Well positioned to benefit from globalisation and capture demand in major markets • Accelerating investment to support growth Actions Effect Global structure implemented: • Ability to support customers worldwide • Sales teams in all major regi
Slide 19: Investments for growth
Investments for growth Organic • Embedding key values and investing in teams at all levels in the organisation • Scaling presence in China and Mexico to fulfill contracts secured and service new business • Investing in operations to align manufacturing footprint with requirements • Upgrading IT syst
Slide 20: Summary and outlook
Summary and outlook • Focused on providing critical technology to markets with strong fundamental growth dynamics • Investing to improve the Group’s competitive position, key projects beginning to have a positive impact in the second half • 2012 performance expected to be more weighted towards the s
Slide 21: Q&A
Q&A ©2012 TT electronics plc 21
Slide 22: Disclaimer: Important Information
Disclaimer Important Information • For the purposes of the following disclaimers, references to this against or which affect the TT electronics group; technological “document” shall be deemed to include references to the presenters’ developments; and changes in interest and exchange rates. All speec
Slide 23: Appendix
Appendix ©2012 TT electronics plc 23
Slide 24: Key Performance Indicators: Group Measures
Key Performance Indicators Group Measures (per cent) Organic revenue Group operating Operating cash growth* profit margin conversion Target: Target: Target: Mid to high single digits for 8%-10% in medium term 100% conversion of operating each year, 2010 to 2014 profit to operating cash flow after ca
Slide 25: Key Performance Indicators: Divisional Operating Profit Margins
Key Performance Indicators Divisional Operating Profit Margins (per cent) Components Sensors IMS Secure Power Target: Target: Target: Target: 10% medium term 10% longer term 6-8% medium term 10% short term 6.1 5.3 5.1 7.3 4.7 6.7 4.6 2.7 FY 2010 FY 2011 FY 2010 FY 2011 FY 2010 FY 2011 FY 2010 FY 201
Slide 26: Income Statement
Appendix Income Statement 2011 2010 Continuing operations £m £m Revenue 591.3 555.5 Operating profit 34.2 24.9 Net interest payable (3.7) (3.8) Net finance cost on pension schemes (1.0) (0.5) Profit before taxation and exceptional items 29.5 20.6 Exceptional items 2.3 4.5 Taxation (7.3) (6.7) Profit
Slide 27: Taxation
Appendix Taxation 2011 2010 Full Year Full Year £m £m Tax charge Underlying 8.9 6.7 Exceptional items (1.6) – 7.3 6.7 Effective tax rate Underlying 30.2% 32.4% • Tax charge arises from profits generated from overseas countries, in particular USA, Mexico, China and India • Minimal tax payable in UK a
Slide 28: Earnings Per Share
Appendix Earnings Per Share 2011 2010 £m £m Profit before tax and exceptional items 29.5 20.6 Tax (8.9) (6.7) Underlying earnings 20.6 13.9 Average number of shares (million) 154.9 154.8 Headline earnings per share (pence) 13.3p 9.0p Basic earnings per share (pence) Continuing operations 15.8p 11.9p
Slide 29: Dividends
Appendix Dividends 2011 2010 Pence per share Pence per share Interim – paid 1.2 0.8 Final – recommended 3.2 2.0 Total (pence per share) 4.4 2.8 Total (£m) £6.8m £4.3m Dividend cover (times) 3.0 3.2 December 2011: Full Year Results ©2012 TT electronics plc 29
Slide 30: Operating Cash Flow
Appendix Operating Cash Flow 2011 2010 £m £m Operating profit 34.2 24.9 Depreciation 16.9 21.2 Amortisation of intangible assets 8.2 9.6 Working Capital 5.4 5.0 Other (1.7) (0.5) Underlying operating cash flow 63.0 60.2 Exceptional costs (2.2) (5.0) Special pension fund payment (3.5) (3.2) Cash gene
Slide 31: Net Cash Flow
Appendix Net Cash Flow 2011 2010 £m £m Cash generated from operations 57.3 52.0 Tax and interest (10.0) (9.7) Capital expenditure (including software) (21.6) (12.2) Development expenditure (5.3) (6.0) Proceeds of sale from fixed assets 2.0 1.7 Disposals 8.3 21.7 Dividends (5.0) (1.2) Other 0.1 0.3 N
Slide 32: Banking Facilities
Appendix Banking Facilities • Facilities: – Committed facility of £60m to May 2013 with a club of four banks – Total facilities available of more than £100 million • Loan covenants on new facility (tested quarterly on rolling 12 month basis): December Covenant 2011 – Net debt / EBITDA (before except
Slide 33: Group Balance Sheet
Appendix Group Balance Sheet 2011 2010 £m £m Tangible and intangible assets 170.0 175.1 Deferred tax asset 21.0 20.1 Total non-current assets 191.0 195.2 Inventories 83.4 81.4 Trade and other receivables 86.1 93.1 Cash and cash equivalents 69.5 44.8 Total current assets 239.0 219.3 Current payables
Slide 34: Pensions
Appendix Pensions 2011 2010 IAS 19 Valuation £m £m Fair value of assets 378.0 338.1 Liabilities (413.5) (379.3) Deficit (35.5) (41.2) • UK pension scheme closed to future accrual in 2010, with all members moved to a DC scheme • Deficit recovery plan in place: contributions of £3.5m in 2011, increasi
Slide 35: Discontinued Operations
Appendix Discontinued Operations 2011 2010 £m £m Sales 12.4 44.2 Operating profit – 1.0 Profit before tax – 0.8 Profit on disposal 0.5 7.1 Cash proceeds from disposals 8.3 21.7 • AEI Compounds disposed of in 2011 • Results treated as discontinued and 2010 comparatives re-presented • Proceeds from di