TT Electronics plc · LSE:TTG
TT Electronics — H1 2011 Earnings Presentation
39 slides from TT Electronics's earnings presentation, Aug 24, 2011
Slide 1: Half Year Results Presentation
Business Group Strategy Review 14th November 2008 Half Year Results Presentation 6 months ended 30 June 2011 24 August 2011 Geraint Anderson, Group Chief Executive Shatish Dasani, Group Finance Director 1
Slide 2: Agenda
Agenda 1. First Half Summary 2. Group Profile 3. Financial Summary 4. Divisional Review 5. Key Performance Indicators 6. Outlook 7. Conclusion 8. Q&A August 2011: Half Year Results 2
Slide 3: First Half Summary
First Half Summary • Group revenue up 12.2% to £294.6m (2010: £262.5m). On an underlying basis, excluding the impact of FX, Group revenue increased by 14.1% • Group operating profit margin was 5.4% (2010: 4.1%) • Profit before tax and exceptional items of £14.1m (2010: £8.9m) with headline earnings
Slide 4: First Half Summary
First Half Summary • Continuing improvement in performance in the first half of 2011 • Results evidence progress in delivering sustainable profitable growth • Benefits from emerging economies and growth markets • Good progress in Components, Sensors and IMS divisions with increased opportunities for
Slide 5: Group Profile: Revenue and Operating Profit by Division
Group Profile Revenue by Division Operating Profit by Division (H1 2011) (H1 2011) Components Components 42.1% 44.4% 17.6% IMS 18.1% IMS 11.2% 9.4% Secure Power 29.1% 28.1% Secure Power Sensors Sensors August 2011: Half Year Results 5
Slide 6: Group Profile: Key Financials
Group Profile Key Financials 2011 2010 Continuing operations 1st Half 1st Half Change £m £m % Revenue 294.6 262.5 +12.2% Operating profit* 16.0 10.8 +48.1% Operating profit margin* 5.4% 4.1% +1.3% points Profit before tax* 14.1 8.9 +58.4% Earnings per share (pence)* 6.2p 3.7p +67.6% Underlying opera
Slide 7: Group Profile: Revenue by Destination
Group Profile Revenue by Destination Proportion of Region Change in revenue vs HY 2010 (%)* H1 2011 sales United Kingdom 16% 17% Rest of Europe 21% 43% North America 16% 19% Central & South America (26%) 7% Rest of World 3% 1% Asia 20% 13% * At constant exchange rates August 2011: Half Year Results
Slide 8: Group Profile: Revenue by Market
Group Profile Revenue by Market Proportion of Market Change in revenue vs HY 2010 (%)* H1 2011 sales Power Generation (11%) 10% Defence and Aerospace 3% 11% Industrial 5% 22% Telecom and Computer 14% 8% Passenger Car 23% 36% Medical 46% 5% Other Transportation 52% 8% * At constant exchange rates Aug
Slide 9: Financial Summary: Income Statement
Financial Summary Income Statement 2011 2010 2010 1st Half 1st Half Full Year Continuing operations £m £m £m Revenue 294.6 262.5 555.5 Gross profit margin 20.3% 17.7% 17.8% Operating profit before exceptional items 16.0 10.8 24.9 Net interest payable (1.5) (1.6) (3.8) Net finance cost on pension sch
Slide 10: Financial Summary: Exceptional Items
Financial Summary Exceptional Items 2010 2010 2011 1st Half 1st Half Full Year £m £m £m Reduction in UK pension liabilities 7.5 - - Pension curtailment gain from scheme closure - 4.3 4.3 Profit on sale of property interest - 1.0 1.0 Onerous property leases - (0.8) (0.8) TOTAL 7.5 4.5 4.5 August 2011
Slide 11: Financial Summary: Group Cash Flow First Half 2011
Financial Summary Group Cash Flow First Half 2011 £m 30 0.8 20 9.6 23.3 10 16.0 0 0.0 8.0 1.8 14.3 (10) 6.1 1.6 3.1 (20) Operating Depreciation Disposals Working Capital Pension fund Tax and Dividends Other Net debt profit capital investment payment interest paid movements increase August 2011: Half
Slide 12: Financial Summary: Working Capital
Financial Summary Working Capital Total Trade Working Capital Working Capital / Sales £m Percent 200 30% 25% 150 20% 100 15% 10% 50 5% 0 0% December June December June December June 2008 2009 2009 2010 2010 2011 August 2011: Half Year Results 12
Slide 13: Divisional Review: Components
Divisional Review Components 2011 2010 2010 1st Half 1st Half Full Year £m £m £m Revenue 124.2 112.9 234.6 Operating Profit 7.1 5.2 10.7 Operating Profit Margin 5.7% 4.6% 4.6% • Underlying revenue (excluding FX) increased by 12.9% • Good growth in all regions • Improvement in operating margin to 5.7
Slide 14: Divisional Review: Components
Divisional Review Components • Global organisation is delivering results • Increased investment in sales and applications engineering in Asia, new customer wins secured • Business unit structure enabling more focused product roadmaps and improved global support for our customers • Facility at Mexica
Slide 15: Divisional Review: Components
Divisional Review Components • Product lines will be transitioned from facility in Boone, North Carolina, to Mexicali, Mexico, and other global operations by the end of 2012 • Once transfers are completed, the Boone facility will be closed • Division remains committed to all product lines and will m
Slide 16: Divisional Review: Sensors
Divisional Review Sensors 2011 2010 2010 1st Half 1st Half Full Year £m £m £m Revenue 85.6 68.5 143.5 Operating Profit 4.5 1.1 3.9 Operating Profit Margin 5.3% 1.6% 2.7% • Underlying revenue (excluding FX) increased significantly by 25.7% • Operating profit of £4.5m due to improved volumes, operatin
Slide 17: Divisional Review: Sensors
Divisional Review Sensors • Growth with European OEMs for local and overseas markets • New wins in growth markets with both domestic OEMs and transplants • Strong global key accounts – now doing business with VW in Mexico, Europe and China • Scaling operations in China, India and Mexico • Global Ope
Slide 18: Divisional Review: IMS
Divisional Review IMS 2011 2010 2010 1st Half 1st Half Full Year £m £m £m Revenue 51.8 43.1 92.2 Operating Profit 2.9 2.0 4.1 Operating Profit Margin 5.6% 4.6% 4.4% • Underlying revenue increased by 23.0% (excluding FX) • Increased sales to target markets including medical, defence, aerospace and pr
Slide 19: Divisional Review: IMS
Divisional Review IMS • Sales team strengthened to support global customers • New programme wins remain strong • Significant new global customer secured, potential revenue for all key sites • Progress in target market segments that value our service offering • Continued good performance August 2011:
Slide 20: Divisional Review: Secure Power
Divisional Review Secure Power 2011 2010 2010 1st Half 1st Half Full Year £m £m £m Revenue 33.0 38.0 85.2 Operating Profit 1.5 2.5 6.2 Operating Profit Margin 4.5% 6.6% 7.3% • Underlying revenue (excluding FX) reduced by 13.7%, against a strong first half in 2010 • Operating profit margin reduced to
Slide 21: Divisional Review: Secure Power
Divisional Review Secure Power • Continued investment in export markets • Distributor development in Latin America • Expansion of operations in Brazil, commenced local assembly of gensets • Substantial orders received for new containerised genset product • Improved order book for second half August
Slide 22: Key Performance Indicators: Group Measures
Key Performance Indicators Group Measures Organic revenue growth Group operating profit margin Operating cash conversion (per cent)* (per cent) (per cent) Target: Mid to high single digits Target: 8% to 10% in medium term Target: 100% conversion of for each year, 2010 to 2014 operating profit to ope
Slide 23: Key Performance Indicators: Divisional Operating Profit Margins
Key Performance Indicators Divisional Operating Profit Margins Components Sensors IMS Secure Power Target: 10% medium Target: 10% longer term Target: 6 to 8% medium Target: 10% short term term term 7.3 5.7 5.6 5.3 4.6 4.5 4.4 2.7 FY 2010 H1 2011 FY 2010 H1 2011 FY 2010 H1 2011 FY 2010 H1 2011 August
Slide 24: Outlook
Outlook • Overall strong trading in first half of 2011, continued in the second half to date • Good visibility in Components, Sensors and IMS divisions • Order book in Secure Power division expected to underpin an improved second half performance • Monitoring leading indicators closely given uncerta
Slide 25: Conclusion: Performance Drivers
Conclusion Growth from Performance Drivers emerging markets ≥8% Growth in target market segments Deeper customer relationships Additional investment 5.4% Operational improvements Investment in talent Focused portfolio H1 2011 Group Group Operating Operating Margin Margin in Q4 2013 August 2011: Half
Slide 26: Conclusion
Conclusion • Further significant progress against the Group’s strategy • Strong positions in markets and geographies with underlying structural growth drivers • Ongoing globalisation of the business providing increased exposure to emerging markets • Further benefits to come from operational excellen
Slide 27: 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 certain
Slide 28: Q&A
Q&A August 2011: Half Year Results 28
Slide 29: Appendix
Appendix August 2011: Half Year Results 29
Slide 30: Appendix: Revenue by Division
Appendix Revenue by Division Continuing Operations £ (millions) Proportion 350 of revenue (H1 2011) 300 33.0 Secure Power Scalable 250 38.0 development 29% 51.8 IMS 200 43.1 85.6 Sensors 150 68.5 Strategic 100 focus 71% 112.9 124.2 Components 50 0 H1 2010 H1 2011 August 2011: Half Year Results 30
Slide 31: Appendix: Operating Profit by Division
Appendix Operating Profit by Division Continuing Operations £ (millions) Proportion 20 of operating profit (H1 2011) 15 1.5 Secure Power Scalable development 27% 2.9 IMS 10 2.5 Sensors 4.5 2.0 Strategic 1.1 focus 73% 5 7.1 Components 5.2 0 H1 2010 H1 2011 August 2011: Half Year Results 31
Slide 32: Appendix: Taxation - Underlying
Appendix Taxation 2011 2010 2010 st 1 Half 1st Half Full Year £m £m £m Tax charge - Underlying 4.4 3.1 6.7 - Exceptional items - - - 4.4 3.1 6.7 Effective tax rate - Underlying 31.2% 33.0% 32.4% • Tax charge arises from profits generated by overseas countries, in particular USA, Mexico and China • L
Slide 33: Appendix: Earnings Per Share
Appendix 2011 2010 2010 Earnings Per Share 1st Half 1st Half Full Year £m £m £m Profit before tax and exceptional items 14.1 8.9 20.6 Tax (4.4) (3.1) (6.7) Underlying earnings 9.7 5.8 13.9 Average number of shares (million) 155.4 155.0 155.0 Headline earnings per share (pence) 6.2p 3.7p 9.0p Basic e
Slide 34: Appendix: Operating Cash Flow
Appendix Operating Cash Flow 2011 2010 2010 st 1 Half 1st Half Full Year £m £m £m Operating profit 16.0 10.8 24.9 Depreciation 9.6 10.7 21.2 Amortisation of intangibles 4.1 5.2 9.6 Working capital (23.3) (6.1) 5.0 Other 0.6 (0.1) (0.5) Underlying operating cash flow 7.0 20.5 60.2 Exceptional costs (
Slide 35: Appendix: Net Cash Flow
Appendix Net Cash Flow 2011 2010 2010 1st Half 1st Half Full Year £m £m £m Cash generated from operations 4.8 15.8 52.0 Tax and interest (6.1) (3.8) (9.7) Capital expenditure (8.0) (5.0) (12.2) Development expenditure (3.0) (3.3) (6.0) Proceeds from sale of fixed assets 0.4 1.3 1.7 Disposals 0.8 6.5
Slide 36: Appendix: Group Banking Facilities
Appendix Group Banking Facilities Facilities • £10m facility repaid in first half of 2011 • Committed facility of £60m to May 2013 with a club of four banks • Total facilities available of more than £110m Loan covenants on new facility (tested quarterly on rolling 12 month basis): Covenant June 2011
Slide 37: Appendix: Pensions
Appendix Pensions 2011 2010 2010 June June December £m £m £m Fair value of assets 347.8 317.8 338.1 Liabilities (377.8) (361.4) (379.3) Deficit (30.0) (43.6) (41.2) • Deficit reduced due to £7.5m reduction in liabilities arising from change to CPI • Triennial actuarial valuation as at April 2010 sho
Slide 38: Appendix: Group Balance Sheet
Appendix 2011 2010 2010 Group Balance Sheet June June December £m £m £m Tangible and intangible assets 170.0 185.3 175.1 Deferred tax assets 17.4 4.9 20.1 Total non-current assets 187.4 190.2 195.2 Inventories 91.0 94.9 81.4 Trade and other receivables 98.9 99.8 93.1 Cash and cash equivalents 28.3 2
Slide 39: Appendix: Discontinued Operations
Appendix Discontinued Operations 2011 2010 2010 1st Half 1st Half Full Year £m £m £m Sales 11.9 27.5 44.2 Operating Profit* 0.1 0.6 1.0 Profit before tax 0.1 0.6 0.8 Profit/(loss)on disposal - (0.7) 7.1 Cash proceeds from disposals 0.8 6.5 21.7 *before exceptional items • AEI Compounds treated as di