Slide 1: 2013 Full Year Presentation
2013 Full Year Presentation March 2014
Slide 2: 2013 Highlights
2013 Highlights • Good second half performance leading to increase in FY revenue and profit • Major investments and reduced volumes in Components held back margins • Sensing and Control business formed to drive growth and profitability • Operational Improvement Plan launched • Total dividend for 201
Slide 3: Summary
Summary A year of significant progress as we focus on our Sensing and Control business • Positioned in higher growth markets • Global sales, R&D and operational footprint • Major investments to drive growth and margins – Sales: increasing customer intimacy – Innovation: 64% increase in engineering c
Slide 4: Financial summary
Financial summary Key Financials 2013 2012 Continuing operations £m £m Change Revenue 532.2 476.9 4.9%1 Operating profit2 30.2 28.7 5.2% Operating profit margin2 5.7% 6.0% Profit before tax2 29.5 25.3 16.6% Earnings per share (pence)2 14.2p 11.9p 19.3% Underlying operating cash flow2 45.5 45.4 £0.1m
Slide 5: Financial summary: operating profit bridge
Financial summary Operating profit before exceptional costs (£m) 34 4.1 (2.2) 32 (0.8) 30.2 30 0.4 28.7 28 26 24 22 2020 Operating profit Foreign Sales Inflation on SG&A Productivity, mix and Operating profit 2012 exchange change ACW 2013 4 © TT Electronics plc
Slide 6: Operational Improvement Plan
Financial summary Operational Improvement Plan • USA project progressing well – will be Exceptional Projected mostly complete by end 2014 except cost annual benefit for one line to be transferred in 2015 £m £m European 25.1 6.0 • Closure of sales offices in Japan, France restructuring and Italy to b
Slide 7: Exceptional Items
Financial summary Exceptional Items 2013 2012 £m £m Operational Improvement Plan 3.1 - Other restructuring costs 5.9 1.1 Costs related to closure of Boone, USA, plant 1.2 2.1 Negative goodwill on business acquisition (0.4) (0.3) M&A costs 1.4 0.4 Total continuing operations 11.2 3.3 6 © TT Electroni
Slide 8: Group cash flow
Financial summary Group cash flow (£m) 75 21.3 (29.7) 65 30.2 (6.7) 55 45 (8.8) 35 (3.9) (3.2) 25 15 (12.4) 5 (19.8) (8.0) 1.4 -5 Operating Working Depreciation & Capital Exceptional Pension fund Tax & interest Acquisitions & Dividends Other Net cash profit capital amortisation investment costs 1 pa
Slide 9: Pensions
Financial summary Pensions 2013 2012 IAS 19 valuation £m £m Fair value of assets 394.1 387.5 Liabilities (414.6) (424.3) Deficit (20.5) (36.8) • UK defined benefit scheme closed to future accrual in 2010 • Triennial valuation at 5 April 2013 showed a deficit of £19.1m compared with a deficit of £39.
Slide 10: Our business today
Our business today Revenue (2013) Operating Profit (2013) Sensing and Control Sensing and Control 54% 57% IMS IMS 27% 29% Components Components 19% 14% Revenue by market (2013) Revenue by region (2013) Passenger Car Transportation, Rest of Europe 40% Non Pass. Car 49% 9% United Kingdom Industrial Me
Slide 11: Sensing and Control: clear strategy to deliver value
Sensing and Control Clear strategy to deliver value “We provide the best value solutions for critical sensing and control applications” Our customers trust us to: Innovate to deliver Deliver programme Supply products that work Provide global support the right solution requirements every time with th
Slide 12: Strong market dynamics
Strong market dynamics Positioned where growth drivers lead to increasing demand Industry focus Growth drivers Market size and growth1 Transportation: • Emerging economies £4.5 billion2 • Improved safety and performance passenger • Emissions reduction +8.0%3 car • More complex processes £4.1 billion
Slide 13: What we do
What we do Provide a unique portfolio to address customer needs Sensing Control Integration Customer & Converts physical Processes inputs Intelligence Systems variable into an and instructs electronic signal system • Position • Solid state • Powertrain • Speed signal/power • Process Control • Temper
Slide 14: Portfolio: Focus on innovation
Portfolio Focus on innovation Sensing Position Temperature Pressure Speed Electronic Throttles Control E-mobility control units Intelligent customer specific power Power Modules Hybrid Microcircuits for electric traction drive modules for electrified auxiliary units Core Technologies Hall Effect | A
Slide 15: Electrification improving efficiency
Case study Responding to our marketplace Electrification improving efficiency • Efficiency is a high priority for the automotive industry • Saleri replaced a mechanical intercooling system with an intelligent, electronic solution The shift from hydraulic to electronic controls yields a 3%+ improveme
Slide 16: Delivering growth
Case study Our strategy in action Delivering growth • HVDC (high-voltage direct current) is a highly efficient alternative for transmitting electricity • The global market for renewable energy sources continues to increase • ABB's HVDC unit has selected TT Electronics Sensing and Control division as
Slide 17: Global footprint
Global footprint Expert local sales, R&D and manufacturing capabilities – managed globally Werne, Germany Cambridge, United Klingenberg, Kingdom Germany Fullerton, USA Mexicali, Carrollton, Suzhou, Mexico USA Salzburg, Timisoara, China Austria Romania Manesar, India Juarez, Mexico Bangalore, R&D/Sal
Slide 18: Divisional review: Sensing and Control
Divisional review Sensing and Control Highlights Financial Summary • Growth 2013 2012 – Revenue: 6.1%1 £m £m – China: +24% Revenue 285.2 259.6 – Industrial: +7% Operating profit 17.3 16.6 – Transportation (non pass. car): +15% – Strategic OEMs in Germany Operating profit margin 6.1% 6.4% • 22 lines
Slide 19: Divisional review: Components
Divisional review Components Highlights Financial Summary • Established four separate businesses to 2013 2012 improve focus and performance £m £m • Improved performance in second half Revenue 100.4 109.6 of year following slow start Operating profit 4.1 5.9 • Created a new, dedicated research and de
Slide 20: Divisional review: IMS
Divisional review IMS Highlights Financial Summary • Underlying growth of 15.9%1 • Operating profit margin entered target 2013 2012 range £m £m • New business growth exceeded £30m Revenue 146.6 107.7 • Expanded offering through integration Operating profit 8.8 6.2 of New Chapel Electronics and Opera
Slide 21: Outlook
Outlook • Increased investment in product innovation, sales and operational footprint • Significant step to sustainable double digit margins • Order momentum, together with the actions being taken, provide confidence as we enter 2014 Positioned for long term, sustainable growth 20 © TT Electronics p
Slide 22: Appendices
Appendices 21 © TT Electronics plc
Slide 23: Impact of FX
Impact of FX Sensing and Sales Control IMS Components Group As published 285.2 146.6 100.4 532.2 FX impact (adverse) / favourable (9.8) (2.5) (0.3) (12.6) At 2012 rates 275.4 144.1 100.1 519.6 Operating Profit As published 17.3 8.8 4.1 30.2 FX impact (adverse) / favourable (0.2) (0.2) - (0.4) At 201
Slide 24: Taxation – Continuing operations
Taxation – Continuing operations 2013 2012 £m £m Tax charge Underlying 7.1 6.7 Exceptional items (2.6) (0.8) 4.5 5.9 Effective tax rate Underlying 24.1% 26.5% • Further progress in reducing effective rate due to proactive tax planning • Cash tax paid in 2013 of £2.5m reduced by a tax refund in the U
Slide 25: Earnings per share
Earnings per share 2013 2012 £m £m Profit before tax and exceptional items 29.5 25.3 Tax (7.1) (6.7) Underlying earnings 22.4 18.6 Average number of shares (million) 157.6 156.1 Headline earnings per share (pence) 14.2p 11.9p Basic earnings per share (pence) Continuing operations 8.8p 10.3p Total 8.
Slide 26: Dividends
Dividends 2013 2012 Change Interim 1.6p 1.5p Final - Proposed 3.8p 3.5p 5.4p 5.0p 8% Underlying EPS cover 2.6x 2.4x Payout of underlying earnings 38% 42% Board pursuing a progressive dividend policy whilst maintaining a cover level of at least 2 times underlying earnings per share 25 © TT Electronic
Slide 27: Strong balance sheet
Strong balance sheet 2013 2012 £m £m Fixed assets 88.6 85.9 Goodwill and other intangibles 82.0 78.4 Net trade working capital 75.9 68.3 Retirement benefit obligations (20.5) (36.8) Other (49.6) (51.4) Capital employed 176.4 144.4 Net cash 26.9 46.7 Net assets 203.3 191.1 Return on average capital e