TT Electronics plc · LSE:TTG
TT Electronics — FY2009 Earnings Presentation
32 slides from TT Electronics's earnings presentation, Mar 15, 2010
Slide 1: Full Year Results Presentation
Business Group Strategy Review TT electronics 14thplc November 2008 Full Year Results Presentation Year Ended 31 December 2009 15 March 2010 1
Slide 2: Agenda
Agenda • 2009 Summary • Group Strategy • Group Profile • Divisional Review • Financial Summary • 2010 Priorities • Outlook • Conclusion • Q&A 2
Slide 3: 2009 Summary
2009 Summary • Creditable performance in challenging market conditions • Group revenue down 14.5% to £499.6m (2008: £584.3m); after adjusting for FX, the underlying reduction was 22% • Profit before tax and exceptional items of £0.8m (2008: £21.1m), in line with expectations • Strong level of underl
Slide 4: Group Strategy Summary
Group Strategy Summary “STRATEGIC FOCUS” “DEVELOPMENT” “RUN FOR VALUE” Heartland to the brand / group Scalable Opportunities Value Businesses Components/Connectors IMS Secure Power General Industrial • Major driver of shareholder • Have potential to deliver AEI Compounds BAS Components value materia
Slide 5: Group Strategy Summary
Group Strategy Summary • Focus on higher growth and higher margin markets including medical and defence and aerospace • Withdrawal from low growth, unprofitable areas • Substantially improve execution, margins and organic growth • Targeting 100% operating cash flow conversion, with sustained reducti
Slide 6: Group Strategy Implementation
Group Strategy Implementation • Increased accountability and greater emphasis on pro-actively managing the business • Strengthened senior management team • Unified approach to customers through key account management • Market focused virtual teams introduced • Significant restructuring across the Gr
Slide 7: Group Profile: Revenue by Division
Group Profile Revenue by Division FY 2008 FY 2009 General General Industrial Industrial Sensors Sensors £97.0m Secure Power Secure Power £69.2m £125.9m & Industrial £105.4m & Industrial (17%) (14%) (22%) Secure £146.5m (25%) (21%) Secure £146.5m (25%) Power Power £59.1m (12%) £65.9m (11%) EMS Compon
Slide 8: Group Profile: Operating Profit/Loss by Division
Group Profile Operating Profit/Loss by Division* FY 2009 FY 2008 £m £m Components 5.9 9.7 Sensors (3.9) 1.1 IMS 2.4 6.0 Secure Secure Power 4.8 Power 7.8 £2.8m General Industrial (29%) - AB Automotive (2.9) (2.5) - Other 0.2 4.9 Total 6.5 27.0 * before exceptional items 8
Slide 9: Group Profile: Revenue by Destination and Market
Group Profile Revenue by Destination Revenue by Market 16% (18%) 13% (11%) 18% (19%) 36% (40%) 27% (26%) 39% (34%) 39% (37%) 9% (13%) 3% (2%) UK Rest of Europe Automotive Telecom & Computer NA ROW Medical Industrial Defence & Aerospace 9
Slide 10: Divisional Review: Components
Divisional Review Components 2009 2008 £m £m Revenue 190.8 192.1 Operating Profit 5.9 9.7 Operating Profit Margin 3.1% 5.0% • Underlying revenue (excluding FX) down by 12% • The reduction in operating profit is due to volume change offset partly by cost reductions • Redundancy costs of £1.3m charged
Slide 11: Divisional Review: Sensors
Divisional Review Sensors 2009 2008 £m £m Revenue 105.4 125.9 Operating Profit (3.9) 1.1 Operating Profit Margin (3.7)% 0.9% • Underlying revenue (excluding FX) has fallen significantly by 25% • Major restructuring implemented in Germany at a total cost of £7.4m, with annualised savings of £8.2m • E
Slide 12: Divisional Review: IMS
Divisional Review IMS 2009 2008 £m £m Revenue 75.1 103.4 Operating Profit 2.4 6.0 Operating Profit Margin 3.2% 5.8% • Underlying revenue down 36% (excluding FX) • Exceptional cost of £1.2m arising from the restructuring in the UK resulting in the closure of the Aylesbury plant • Unified strategy in
Slide 13: Divisional Review: Secure Power
Divisional Review Secure Power 2009 2008 £m £m Revenue 59.1 65.9 Operating Profit 4.8 7.8 Operating Profit Margin 8.1% 11.8% • Underlying revenue (excluding FX) down by 9% • Solid performance despite difficult market conditions. Operating profit reduced due to lower volumes and FX gain in 2008 arisi
Slide 14: Divisional Review: General Industrial
Divisional Review General Industrial 2009 2008 £m £m Revenue 69.2 97.0 Operating Profit (2.7) 2.4 Operating Profit Margin (3.9)% 2.5% • Climate control business of AB Automotive closed in the year; business made an operating loss of £2.9m in year (2008: loss £2.5m) • Other businesses affected by an
Slide 15: Financial Summary: Highlights
Financial Summary Highlights • Group traded profitably in second half due to cost reduction programme, with full year operating profit of £6.5m in line with expectations • Restructuring programme largely complete which will result in an annualised cost reduction of over £31m • Significant reductions
Slide 16: Financial Summary
Financial Summary 2009 2008 £m £m Revenue 499.6 584.3 Operating profit 6.5 27.0 Net interest payable (3.4) (4.1) Net finance cost on pension schemes (2.3) (1.8) Profit before taxation and exceptional items 0.8 21.1 Exceptional items - Restructuring (14.2) (3.8) - Goodwill impairment (3.8) - Taxation
Slide 17: Financial Summary: Restructuring
Financial Summary Restructuring Costs Costs Annualised 2009 2008 Cost Reduction £m £m £m AB Automotive – climate control exit 3.2 2.7 4.0 Sensors – European restructuring 7.4 - 8.2 Sensors – Romford closure 0.4 1.1 1.6 IMS – UK consolidation 1.2 - 1.9 BI SMT – closure of manufacturing 1.0 - 0.8 Gene
Slide 18: Financial Summary: Exceptional Items
Financial Summary Exceptional Items 2009 2008 £m £m Restructuring 14.2 3.8 Impairment of goodwill 3.8 - TOTAL 18.0 3.8 • Goodwill impairment arises from review of future cash flows of Optek Technology compared with goodwill on acquisition of £21.8m • Optek suffered a drop in sales of 26% in 2009 and
Slide 19: Group Cash Flow - 2009
) m .3 56 Financial Summary (£ n io ct du t re d eb et ) N 9m 3. (£ ts en em ov m er th O ) 1m 9. (£ st re te In ) & m x .2 Ta £2 t( en ym pa nd fu ) on 6m ns i 9. (£ Pe g r in c tu tru es lr na 19 io pt ce Ex ) 2m 7. £4 l( ta pi ca m ) ng .6 ki 19 or (£ W x pe ca ss Group Cash Flow - 2009 le n tio
Slide 20: Financial Summary: Operating Cash Flow
Financial Summary Operating Cash Flow 2009 2008 £m £m Operating profit 6.5 27.0 Depreciation 24.1 23.4 Amortisation of intangible assets 11.8 10.9 Working capital 47.2 (5.6) Other (5.7) (5.6) Underlying operating cash flow 83.9 50.1 Exceptional costs (9.6) (1.7) Special pension fund payment (2.2) (2
Slide 21: Financial Summary: Net Cash Flow
Financial Summary Net Cash Flow 2009 2008 £m £m Cash generated from operations 72.1 46.2 Tax and interest (9.1) (7.4) Capital expenditure (9.4) (21.9) Development expenditure (6.9) (10.9) Proceeds of sale from fixed assets 5.7 5.1 Acquisitions (1.0) (13.9) Disposals - 0.9 Dividends - (15.6) Other -
Slide 22: Financial Summary: Net Debt
Financial Summary Net Debt 130 110 2008 90 £m 2009 70 50 ay ar r g ct n n ov b p l ec Ap Ju Au Ja Ju Fe Se O M M N D 22
Slide 23: Financial Summary: Banking Facilities
Financial Summary Banking Facilities • Facilities: - Total facilities available of £131m, of which £32m is working capital - Main term loan of £70m is with HSBC and extends to 2011 • Loan covenants with HSBC: Term December 2009 - Gross debt / EBITDA (before exceptional items) <3 1.9 - EBITDA (before
Slide 24: Financial Summary: Pensions
Financial Summary Pensions 2009 2008 £m £m Fair value of assets 306.5 283.1 Liabilities (350.2) (301.7) Deficit (43.7) (18.6) • Increase in liabilities arising from reduction in discount rate, offset to some extent by higher asset values • Decision taken to close the UK Defined Benefit Pension Schem
Slide 25: Financial Summary: Group Balance Sheet
Financial Summary Group Balance Sheet 2009 2008 £m £m Tangible and intangible assets 194.8 235.5 Deferred tax asset 4.9 5.5 Total non-current assets 199.7 241.0 Inventories 83.9 120.0 Trade and other receivables 85.4 111.5 Cash and cash equivalents 24.7 10.1 Total current assets 194.0 241.6 Current
Slide 26: Key Performance Indicators and Targets
Financial Highlights Key Performance Indicators and Targets • Organic Revenue Growth: Mid to high single digits for the next five years • Operating Profit Margin: Components 10% in the medium term Sensors 10% in the longer term IMS 6-8% in the medium term Secure Power 10% in the short term Group 8-1
Slide 27: 2010 Priorities: Framework for Priorities
2010 Priorities Framework for Priorities Phase I Phase II Phase III 2009-2010 2010-2011 2011 • Complete strategy review and • Execution announce to market - People development - Focus on “Operational • Reorganise Divisional structures Excellence” • Core Business “Fit for Purpose” Customer Focus •
Slide 28: 2010 Priorities: Framework for Priorities
2010 Priorities Framework for Priorities Phase I Phase II Phase III 2009-2010 2010-2011 2011 • Complete strategy review and • Execution announce to market - People development - Focus on “Operational • Reorganise Divisional structures Excellence” • Core Business “Fit for Purpose” Customer Focus •
Slide 29: 2010 Priorities: Framework for Priorities
2010 Priorities Framework for Priorities Phase I Phase II Phase III 2009-2010 2010-2011 2011 • Complete strategy review and • Execution announce to market - People development - Focus on “Operational • Reorganise Divisional structures Excellence” • Core Business “Fit for Purpose” Customer Focus •
Slide 30: Outlook
Outlook • Demand improved in the last quarter of 2009 in most of our markets • This improvement continued in the first two months of 2010 • The shape and timing of the global economic recovery is difficult to predict • However, there is now greater visibility for the first half of the year and we ar
Slide 31: Conclusion
Conclusion • Good progress made in 2009 against priorities • Clear consistent strategy in place backed up by detailed plans to deliver • Organisation structure and leadership team now in place • Focus to create platform for sustainable growth – People – Operational Excellence – Clear Communication 2
Slide 32: 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