Ig Design Group Plc · LSE:IGR
Ig Design — H1 2020 Earnings Presentation
27 slides from Ig Design's earnings presentation, November 2019
Slide 1: Half Year Results Presentation 2019
Half Year Results Presentation 2019 Presented by Paul Fineman, CEO and Giles Willits, CFO
Slide 2: Half Year Highlights
HALF YEAR HIGHLIGHTS Strong first Profit growth half financial across our performance, in largest territories line to deliver full with Australia year expectations as previously signalled Focus on Exciting creating value pipeline of M&A for shareholders opportunities through growth opportunities acr
Slide 3: Helping the world celebrate life's special occasions
HELPING THE WORLD CELEBRATE LIFE'S SPECIAL OCCASIONS We operate in the following core product categories: Celebrations Stationery & Gifting 'Not-for-resale' Creative Play Consumables 77% 11% 9% 3% of revenue of revenue of revenue of revenue £188.7m £27.9m £23.2m £8.6m (H1 2019: 77%, £157.3m) (H1 201
Slide 4: Global scale supported by world class manufacturing/sourcing
GLOBAL SCALE SUPPORTED BY WORLD CLASS MANUFACTURING/SOURCING Revenues by: £150.8m Customer destination £46.5m £28.8m £16.7m £5.6m USA UK Europe Australia ROW 61% 19% 12% 7% 1% £185.0m £150.5m Source Season £88.3m £63.4m £9.6m Sourced Manufactured in-house Christmas Everyday Minor seasons 74% 26% 60%
Slide 5: Financial overview
Financial overview IG Design Group plc HALF YEAR RESULTS PRESENTATION 2019 5
Slide 6: Summary half year financial results
SUMMARY HALF YEAR FINANCIAL RESULTS Revenue Adjusted profit Delivering growth Improving returns (£m) (£m)(a) Adjusted EPS (pence)(b) Dividend (pence) 248.4 21.5 20.1 TBA 19.7 18.9 205.2 6.00 166.5 145.5 11.1 4.00 10.6 9.7 8.3 2.75 3.00 2.50 2.00 1.75 H1 2017 H1 2018 H1 2019 H1 2020 H1 2017 H1 2018 H
Slide 7: Strong revenue and profit growth
STRONG REVENUE AND PROFIT GROWTH 30 Sep 2019 30 Sep 2018 % £m £m change Revenue 248.4 205.2 21 Gross profit 51.3 44.2 Overheads (27.7) (24.8) Adjusted operating profit 23.6 19.4 21 Adjusted operating margin % 9.5% 9.5% Finance charge (2.1) (0.5) Adjusted profit before tax 21.5 18.9 14 Exceptional it
Slide 8: Profit growth in key territories
PROFIT GROWTH IN KEY TERRITORIES Segmental revenue Adjusted operating profit (a) Adjusted margin H1 2020 H1 2019 Growth H1 2020 H1 2019 Growth H1 2020 H1 2019 60% Americas $m 183.8 131.6 40% 17.6 13.9 27% 9.6% 10.6% 22% UK £m 58.3 60.6 (4)% 5.4 4.9 9% 9.2% 8.1% 12% Europe €m 32.3 30.7 5% 4.3 3.8 13%
Slide 9: Cash flow in line with seasonal working capital cycle
CASH FLOW IN LINE WITH SEASONAL WORKING CAPITAL CYCLE As at As at 30 Sep 2019 30 Sep 2018 Working capital analysis £m £m Adjusted EBITDA H1 2020 H1 2019 30.4 22.1 Impact Existing Impact Existing Change in trade and other receivables £m £m £m £m (116.2) (108.5) Change in inventory Receivables (30.1)
Slide 10: Balance sheet reflects adoption of IFRS 16
BALANCE SHEET REFLECTS ADOPTION OF IFRS 16 As at Restated as at 30 Sep 2019 30 Sep 2018 £m £m Intangibles 86.6 80.5 Fixed assets 41.3 45.2 Right‑of‑use assets 35.6 — Stock 128.2 110.2 Trade and other receivables 163.6 183.9 Net cash (86.2) (100.0) Trade and other payables (138.0) (139.8) Deferred in
Slide 11: New facilities to support organic and M&A growth
NEW FACILITIES TO SUPPORT ORGANIC AND M&A GROWTH Lender Renewal Facility Margin Covenant Club facilities Corporate revolving credit facility and overdraft 2022 $80m 1.05% Leverage Working capital revolving credit facility 2022 £85m 1.05% Stock and unfunded debtors HSBC Asia receivables financing 202
Slide 12: Managing our challenges
MANAGING OUR CHALLENGES Brexit US-China tariffs • No significant trading flows with European • Negotiating terms with suppliers and customers customers or suppliers • Redirecting the supply of goods from other • Mitigating potential impact through: countries, such as Vietnam, Indonesia, India • movi
Slide 13: Future targets
FUTURE TARGETS Financial KPI targets Strategic drivers Annual organic Shareholder commitments revenue growth 3-5% EPS Working with the Three-year CAGR winners double digit growth EBITDA Growth of 8-10% Leverage Design & innovation 1-2x average debt Operating cash conversion in excess of 75% Dividend
Slide 14: Creating value
Creating value IG Design Group plc HALF YEAR RESULTS PRESENTATION 2019 14
Slide 15: Creating value – our strategy
CREATING VALUE – OUR STRATEGY Working with the winners Design & innovation Efficiency & scale • Growth opportunities to expand • 2020 will see increased • Benefiting from investment in all across territories, regions investment in design resource our manufacturing sites including and adjacent relate
Slide 16: Creating value through our experienced decentralised team
CREATING VALUE THROUGH OUR EXPERIENCED DECENTRALISED TEAM Paul Fineman Giles Willits Group CEO Group CFO Lance Burn MD – UK & China Joost Bogers Ron Vroegindeweij MD – Europe – MD – Europe – Celebrations Gifting John Dammermann CEO – Décor Gideon Schlessinger CEO – Americas Shane Timmerman CEO – Aus
Slide 17: Creating value for customers
CREATING VALUE FOR CUSTOMERS DESIGN SUSTAINABILITY A broad portfolio Low Geographic cost diversity CUSTOMER SERVICE INNOVATION Award Strong winning offering service Audited compliance Design & Customer innovation relationships IG Design Group plc HALF YEAR RESULTS PRESENTATION 2019 17
Slide 18: Extensive opportunities by category and by geography
EXTENSIVE OPPORTUNITIES BY CATEGORY AND BY GEOGRAPHY AMERICAS EUROPE UK AUSTRALIA Wrap Crackers Décor Partyware Gift bags Ribbons/Bows etc Cards Stationery Creative Play Art & Craft Gifting 'Not-for-resale' Consumables Size of growth opportunity Medium Large Small IG Design Group plc HALF YEAR RESUL
Slide 19: Creating value for shareholders – by acquisition
CREATING VALUE FOR SHAREHOLDERS – BY ACQUISITION Key Criteria A compelling Adjacent and Tangible Demonstrably Earnings Supported and propostion for related product operational advantageous enhancing sponsored by our customers categories synergies compared Group Executive to organic alternative Ident
Slide 20: Second half focus
SECOND HALF FOCUS Fulfilling customer orders Ongoing ‘roll out’ of the new IT Continuing to progress and servicing new business in platform in the US operational and commercial 2020/21 and beyond integration of Impact Innovations within the Americas and throughout the Group Accelerating the momentum
Slide 21: Why invest?
WHY INVEST? We will continue We will enhance We will continue We will We will continue to drive organic net margins to drive discerningly to convert profit growth, through through innovation, deliver pursue M&A into cash and our diversified investment – excellent service opportunities deliver divide
Slide 22: Appendix
Appendix IG Design Group plc HALF YEAR RESULTS PRESENTATION 2019 22
Slide 23: Major investments
MAJOR INVESTMENTS July 2016 Acquisition of Lang Capital expenditure March 2018 September 2017 2nd printing press M&A operational, Netherlands June 2016 Investment bag Anker Play Products machine, UK January 2020 established, USA Printing Press, USA Paper conversion, Netherlands April 2015 2nd Bag Ma
Slide 24: Largest shareholders
LARGEST SHAREHOLDERS(a) Hedlund family(b) Octopus Liontrust BlackRock Investments Investments 27.72% 5.00% 9.98% 5.03% Schroders Plc Close Brothers AM Polar Capital Paul Fineman(c) 4.48% 4.23% 3.34% 3.22% (a) Shareholdings as at 30 September 2019. (b) In addition to the Hedlund family’s beneficial i
Slide 25: Alternative performance measures
ALTERNATIVE PERFORMANCE MEASURES A full reconciliation between our adjusted and reported results is provided below: 30 Sep 2019 30 Sep 2018 £m £m Adjusted EBITDA 30.4 22.1 Exceptional items (1.5) (3.0) LTIP charges (1.5) (1.5) EBITDA 27.4 17.6 £m £m Adjusted operating profit 23.6 19.4 Exceptional it
Slide 26: IFRS 16 – impact on financial statements
IFRS 16 – IMPACT ON FINANCIAL STATEMENTS The following table summarises the impact of adopting IFRS 16 on the Group's key metrics: Pre‑IFRS 16 Impact of As reported Sep 2019 IFRS 16 Sep 2019 Adjusted operating profit (£m) 23.0 0.6 23.6 Finance expenses (£m) 1.3 0.8 2.1 Adjusted profit before tax (£m
Slide 27: thedesigngroup.com
IG Design Group plc No 7 Water End Barns Water End Eversholt MK17 9EA T +44 (0)1525 887 310 thedesigngroup.com