Rs Group Plc · LSE:RS1
Rs — H1 2021 Earnings Presentation
32 slides from Rs's earnings presentation, Nov 10, 2020
Slide 1: Electrocomponents 2021 half-year financial results
Internal ELECTROCOMPONENTS 2021 half-year financial results 2021 Half-year Results 10 November 2020
Slide 2: Safe Harbour
Internal SAFE HARBOUR This presentation contains certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plan
Slide 3: Introduction and Overview
Internal INTRODUCTION AND OVERVIEW Lindsley Ruth - CEO 2021 Half-year Results
Slide 4: Key Messages
Internal KEY MESSAGES > Repositioning our business over the past five years has created the resilience evident in H1 > Differentiated offer: omni-channel, value-added solutions, own-brand range, customer service > COVID-19 has fast tracked market trends towards our proposition > RISE will make us a
Slide 5: We are a higher quality, more profitable business today
Internal WE ARE A HIGHER QUALITY, MORE PROFITABLE BUSINESS TODAY We have achieved over the last 5 years to March 20: Investment into 49.1 55.7 £277k £203k £1,953.8m our operating Customer NPS up 13% £1,266.2m Revenue up 54% Revenue per employee model has driven up 37% growth and FY17 FY20 FY15 FY20
Slide 6: Differentiated model: omni-channel approach
Internal DIFFERENTIATED MODEL: OMNI-CHANNEL APPROACH We deliver whichever way customers want Local sales > Customers want more convenience, speed and service Mobile support and trade counters Inventory > Greater focus on customer Life Time Value (LTV) and customer behaviour solutions Omni- > Redirec
Slide 7: Differentiated model: value-added solutions
Internal DIFFERENTIATED MODEL: VALUE-ADDED SOLUTIONS VAS reinforces our moat Our solutions ◼ Customers increasingly want: ◼ DesignSpark: software design Design tools, technical data, • Solutions to their procurement development resources problems ◼ OKdo: end-to-end support for • Leaner, more conveni
Slide 8: COVID-19 has fast-tracked trends towards our proposition
Internal COVID-19 HAS FAST-TRACKED TRENDS TOWARDS OUR PROPOSITION Accelerated shift to working digitally Digital shift Increased use of digital purchasing systems and eProcurement Procurement teams increasingly part of strategy and solving problems Supply chain focus Supply chains are being rethough
Slide 9: The next phase of the journey
Internal THE NEXT PHASE OF THE JOURNEY Phase 1: Building blocks in place Phase 2: Accelerate execution of our growth strategy Give customers what they want Drive decisions faster Adding value to the customer Differentiate further Delivering through whichever channel Leverage our scale they want We a
Slide 10: RISE allows us to be bolder in our pursuit of outperformance
Internal RISE ALLOWS US TO BE BOLDER IN OUR PURSUIT OF OUTPERFORMANCE Simplify the way we operate ◼ A more consistent go-to-market approach Superior at increased regionally performance speed ◼ Flatten the structure in EMEA ◼ Integrate Group and local teams in Marketing, > Digital, Innovation and Pro
Slide 11: We are well positioned for future growth opportunities
Internal WE ARE WELL POSITIONED FOR FUTURE GROWTH OPPORTUNITIES > Momentum is building • We are accelerating > We are simplifying our business further to increase agility our growth > Our diverse customer base is growing strategy from strong > Industry-leading digital offer, 62% of Group revenue fou
Slide 12: Financial Results
Internal FINANCIAL RESULTS David Egan - CFO 2021 Half-year Results
Slide 13: Financial Highlights
Internal FINANCIAL HIGHLIGHTS Resilient top line performance > Strong financial returns > Increased confidence in business model > Like-for-like(1) revenue growth (%) Adjusted(2) operating profit margin(%) Adjusted(2) free cash flow (£m) 10.8 85.0 8.5 2.3 13.9 (7.4) (7.3) RS PRO Digital Group H1 202
Slide 14: Summary Income Statement
Internal SUMMARY INCOME STATEMENT Highlights ◼ Revenue saw a negative impact from Like-for-like(1) £m H1 2021 H1 2020 Change currency (£1.7 million) and a positive change impact from extra trading days Revenue 908.9 978.7 (7.1)% (7.3)% (£3.7 million) Gross margin (%) 43.2% 43.7% (0.5) pts (0.5) pts
Slide 15: Regional Performance
Internal REGIONAL PERFORMANCE Adjusted(2) operating Adjusted(2) operating Revenue (£m) Highlights profit (£m) profit margin (%) Like-for-like(1) Like-for-like(1) Like-for-like(1) H1 2021 change H1 2021 change H1 2021 change ◼ Like-for-like revenue decline of 8.0% (H1 2020: growth of 5.4%) EMEA 567.5
Slide 16: Cash Flow
Internal CASH FLOW Highlights ◼ Actions taken to conserve cash, leading to £m H1 2021 H1 2020 higher cash generated from operations and EBITDA 86.0 115.7 free cash flow Movement in working capital 23.5 (38.2) ◼ Smaller investment in inventories were more than offset by improvements in other Movement
Slide 17: Robust Balance Sheet
Internal ROBUST BALANCE SHEET Our balance sheet has ◼ Net debt on 30 September was £114.8 million (31 March 2020: £189.8 million) strengthened and we ◼ The Group’s financial metrics remain strong, with net debt to adjusted EBITDA of 0.5x and EBITA to interest of 25.3x have significant ◼ This leaves
Slide 18: Current Trading
Internal CURRENT TRADING > Over the first five weeks of H2 we have continued to see momentum across all regions > We are analysing all areas of our business to simplify and reduce unnecessary costs Further lockdown restrictions in some of our key markets mean COVID-19 related costs unlikely to > eas
Slide 19: Summary
Internal SUMMARY Lindsley Ruth 2021 Half-year Results
Slide 20: We are ready
Internal WE ARE READY We want to move faster with scale to > Our model is generating outperformance deliver more value-added solutions to > We deliver what customers and suppliers increasingly want more customers > We have the right team in place to accelerate our strategy We are emerging stronger a
Slide 21: Q&A
Internal Q&A Thank you for your continued interest in Electrocomponents 2021 Half-year Results
Slide 22: Appendix
Internal APPENDIX 2021 Half-year Results
Slide 23: RISE: Phasing of Benefits and Costs
Internal RISE: PHASING OF BENEFITS AND COSTS RISE will: RISE phasing of benefits and costs ◼ Simplify the way we operate ◼ Operating the simpler model should generate c.£25 million of net benefits phased: ◼ Improve the gross margin • £7m in FY21E ◼ Improve efficiencies • £15m in FY22E • £3m in FY23E
Slide 24: Basis of Preparation
Internal BASIS OF PREPARATION Unless otherwise stated: ◼ Figures have been prepared using International Financial Reporting Standards as adopted by the European Union ◼ Adjusted measures of profitability and cash flow exclude amortisation of intangible assets arising on acquisition of businesses, su
Slide 25: Guidance Points
Internal GUIDANCE POINTS Trading days Foreign exchange ◼ Expect around £2.8 million negative impact on revenue from fewer ◼ Currency movements decreased H1 2021 adjusted profit before tax by trading days in the year to March £0.1 million 2021 ◼ If November rates persist we would expect around a £3.4
Slide 26: Operating Cost Bridge
Internal OPERATING COST BRIDGE Operating cost ratio hit by lower revenue and COVID-19 related costs ◼ Adjusted operating costs decreased by 2.1% on a like-for-like basis ◼ Project RISE will simplify our business further, accelerate efficiency gains and deliver significant cost savings, some of which
Slide 27: Financial Key Performance Indicators
Internal FINANCIAL KEY PERFORMANCE INDICATORS H1 2021 H1 2020 Change Like-for-like revenue change (%) (7.3) 4.5 Adjusted operating profit conversion (%) 19.8 24.7 (4.9) pts Adjusted operating profit margin (%) 8.5 10.8 (2.3) pts Adjusted EPS (p) 12.8 17.8 (28.1)% Return on capital employed (%) 20.7
Slide 28: Liquidity and Cash
Internal LIQUIDITY AND CASH We are highly focused Debt covenants and liquidity requirements comfortably met under stress testing on managing cash ◼ Monthly models for 2021 now include 2022 and are regularly updated for latest trends and assumptions. Main scenario assumes increasing restrictions and
Slide 29: Net Debt Movements
Internal NET DEBT MOVEMENTS Strong balance sheet £m H1 2021 H1 2020 ◼ Net debt (including lease liabilities) Net debt at 1 April (189.8) (175.7) reduced to £114.8 million due to Adjusted free cash flow(1) 85.0 13.9 improved free cash flow and no final Acquisition of businesses - (0.2) dividend being
Slide 30: Impact of Foreign Exchange
Internal IMPACT OF FOREIGN EXCHANGE Translation Exposure Euro and USD movements to Sterling € to £ $ to £ ◼ Reported annual profit before tax sensitivity to a one cent movement 1.40 in: 1.30 – Euro: £1.4 million 1.20 – USD: £0.5 million 1.10 1.00 Transaction Exposure ◼ Group treasury maintains 3-7 m
Slide 31: Brexit Ready
Internal BREXIT READY We continue to assess Brexit plans and plan to mitigate ◼ Brexit working group of representatives the key business risks ◼ Working closely with customers and suppliers ◼ Increasing level of inventory by c. £15 million as a business continuity plan but this will have been largel
Slide 32: Our ESG plan is embedded in all we do
Internal OUR ESG PLAN IS EMBEDDED IN ALL WE DO ESG embedded throughout ◼ ESG is integral to our Destination 2025 strategy through our 4 ESG pillars ◼ CEO responsible for all ESG matters ◼ Group-wide ESG team led by President, Global Supply Chain People and Environment ◼ Targets and non-financial KPI