Delivering Our vision, our future Full year results for the year - - PowerPoint PPT Presentation
Delivering Our vision, our future Full year results for the year - - PowerPoint PPT Presentation
Delivering Our vision, our future Full year results for the year ended 31 March 2016 Safe harbour statement The information contained in this presentation may include forward looking statements about e2vs financial and operational
Safe harbour statement
The information contained in this presentation may include forward looking statements about e2v’s financial and operational performance and results and the markets in which it operates. These statements can be identified by terminology that includes, without limitation, ‘estimates’, ‘believes’, ‘anticipates’, ‘intends’, ‘expects’, ‘plans’, ‘targets’ and ‘predicts’ and all similar words and statements of a predictive nature. By their very nature, all forward looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of e2v. These statements are based on current information, forecasts, expectation and belief and will be subject to variations in these factors as they involve elements of risk and uncertainty. These risks and uncertainties are discussed in detail in e2v’s Annual Report & Financial Statements, announcements to the market and presentations to analysts and investors. Consequently, these variations could cause the actual performance, results and markets to be materially different than those predicted in the forward looking statements. The forward looking statements in this presentation are accurate only as at the date of this presentation and e2v undertakes no obligation to revise or update forward looking statements to reflect subsequent events or circumstances, except as may be required by applicable law and regulation (including Listing Rules). No statement in this presentation is intended to be a profit forecast or be relied upon as a guide to future performance.
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Agenda
Highlights Steve Blair, Group CEO Finance review Charles Hindson, Group FD Business update & outlook Steve Blair, Group CEO Q&A
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FY16 highlights
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FY16 ‐ good financial performance
revenue growth 5.1% adjusted operating profit up 4.7%, despite FX headwind
Dividend up 5.9% Progress on ‘Our vision, our future’ Solid platform for growth
Revenue driven growth, trusted expert partner, resilient financial profile
Basis of preparation: *Adjusted operating profit is before specific items **Adjusted earnings per share (EPS) is before specific items less tax where applicable *** Revenue at FY15 rates, adjusted operating profit at FY15 rates before FX gains and losses
Financial summary
Year ended 31 March Reported At constant FX*** FY16 FY15 Change FY16 FY15 Change Reported revenue £236.4m £224.9m 5.1% £230.6m £224.9m 2.5% Adjusted* operating profit £42.0m £40.1m 4.7% £44.7m £36.7m 21.8% Adjusted* operating margin 17.8% 17.8% ‐ 19.4% 16.3% 310bps Adjusted* profit before tax £40.8m £39.0m 4.6% Adjusted** earnings per share 14.59p 13.68p 6.7% Dividend 5.4p 5.1p 5.9% Net borrowings (£21.1m) (£5.2m) (£15.9m)
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Finance review – revenue bridge
Organic revenue
Growth:
Industrial vision
Space
Radiotherapy
Lower activity:
RF defence
Semiconductors
Net acquisitions:
AnaFocus + £4.4m
SP Devices + £0.6m
Thermal imaging ‐ £2.4m
FX benefit of 2.4%
FY16 revenue (£m) – growth of 5.1%
6 Organic £3.2m Net M&A £2.6m
Finance review – operating profit bridge
Organic growth contribution Cost profile discipline
Good cost control
Used flexibility
Benefit of reorganisations AnaFocus met earn‐out targets FX swing £5.5m
FX losses £2.1m (FY15 gain £3.4m)
FY16 adjusted operating profit of £42.0m ‐ growth of 4.7%
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Growth (£5.1m):
Imaging inventory (£3.0m)
Trade receivables (£2.1m)
Reorganisation and cost flex (£6.5m)
Customer focus (£5.2m):
Securing supply chains for customers (£1.9m)
Support Q4 deliveries (£0.6m)
Delivery on programmes (£2.7m)
Finance review ‐ cash flow bridge
FY16 profile
Operating cash generation £20.9m Financing (£27.8m)
Adjusted
- perating
profit Working capital Interest, tax &
- ther
Dividend Increase in net borrowings
Net M&A (£9.0m)
M&A net of disposals Depn, amort less CAPEX
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CAPEX reduced in Q4
Acquisition(£13.0m):
Net M&A (£9.0m)
Product line acquisitions (£4.0m)
Other
Purchase of own shares (£3.7m)
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FY17 selected guidance
c.£14m CAPEX > c.£11m depreciation Effective tax rate c.29% Re‐classification of R&D tax credits
CAPEX & tax FX Profile
Outlook based on March 2016 rates FX revenue tailwind of c.7%, adjusted profit tailwind of c.4% H1/H2 split expected to be in line with FY16 Rebuild flexibility and benefit of reorganisation Improve working capital Available debt capacity for acquisitions (up to 1.5x) FY17 outlook unchanged
Financial metric Objective FY16 FY15
Revenue growth GDP + specialist sector and new product growth Execute on organic growth programmes Accelerate with targeted acquisitions in divisions 5.1% 3.3% Margins Manage to mid teens operating profit margin over the cycle Build margins once effectiveness established 17.8% 17.8% R&D 90% of R&D customer aligned 87% 86% Cash conversion >80% adjusted operating profit ‐ 2 year recapitalisation phase 50% 99% Use of capital Mid 20% ROCE 20% 23% Net debt Net borrowings/EBITDA ≤ 1.5x through acquisition cycle 0.40x 0.10x Dividends Adjusted earnings cover: c.2.5x 2.7.x 2.7x Acquisitions 3 year Cash Flow Return on Investment > 10%
Key metrics
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Revenue driven growth, trusted expert partner, resilient financial profile
Status H2 FY16
- bjectives
Professional
Gained traction from new products in industrial vision and data collection systems
AnaFocus grew revenue from new products and custom programmes
Space
Stepped up delivery on existing programmes
Delivered operational improvement
Secured specific programmes for FY17
FY17
- bjectives
Professional
Grow revenue from new products and markets in industrial vision and sensors
AnaFocus continue to grow custom design programmes and sensor sales
Space
Continue to focus on operational improvement
Secure follow‐on orders for specific programmes for FY17 delivery
Imaging
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Growth focus: Industrial Imaging and Space
FY16 FY15 Change Revenue £103.5m £88.7m 16.7% Operating profit £15.7m £9.3m 68.8% Operating margin 15.2% 10.5% 470bps
Status H2 FY16
- bjectives
Radiotherapy renewed customer contract in Q4
Completed the current defence reorganisation
Delivered against specific defence programmes
FY17
- bjectives
Continue to support our radiotherapy OEMs
Ongoing reorganisation of Chelmsford site
Grow Lincoln defence activities from existing programmes
Secure specific defence programmes
RF Power
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Growth focus: Radiotherapy
FY16 FY15 Change Revenue £80.5m £84.2m ‐4.4% Operating profit £18.7m £19.4m ‐3.6% Operating margin 23.2% 23.0% 20bps
Status H2 FY16
- bjectives
Completed acquisition of SP Devices and partnership with Peregrine
Secured orders for H2 delivery
Engaged with customers as a key partner
Built order book for FY17
FY17
- bjectives
Secure orders for within year delivery
Grow revenue from Peregrine and other product line acquisitions
Microprocessors higher revenue in H2, underpinned by last time buy
Integrate SP Devices and delivery of first year plan
Semiconductors
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Growth focus: Modules, signal path, IP partners
FY16 FY15 Change Revenue £52.4m £52.0m 0.8% Operating profit £14.2m £11.9m 19.3% Operating margin 27.1% 22.9% 420bps
Focus on our foundations
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Customer Focus
- Listening to customers to
drive innovation
Operational Excellence Simplification People Financial
- Key customers trusting us as
partners
- Improved customer ratings and
feedback
Next steps
- Increase customer intimacy
- Broaden strategic customer base
- Improved delivery
performance
- Margin improvement in all three
divisions
- Ongoing operational
improvement in Space
- Focus on process effectiveness
- Reduce inventory cycle time
- Clarity of communication
and consistency of message
- Reducing complexity and
simplified approvals
- Divisions with end to end P&L
responsibility
- Portfolio optionality
- Refreshed leadership team,
strengthened management
- Developing talent
- Leverage best practice and team
work across Group
- Acquisition and integration
- f AnaFocus
- Acquisition of SP Devices
- Good financial performance in
challenging markets
- Continue to build acquisition
pipeline
Progress in first year Progress in second year
In all that we do: “Does this drive growth?”
Divisions Imaging RF Power Semiconductors Industrial Vision Space Radiotherapy Modules & ADC, IP partners and distributors Discretionary R&D (% sector revenue) 8% 4% 5% 11% Acquisitions AnaFocus SP Devices/PLAs*
Investment priorities to drive growth – 79% Group revenues (FY14: 72%)
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Driven by customers, markets and opportunities
Investment
*Product Line Acquisitions
Four areas of focus
89% of Group R&D focused in chosen areas delivering growth
Two acquisitions completed in Industrial Vision and Semiconductors
20 40 60 Environment Discovery Safety Communications Healthcare Automation FY16 FY15
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FY16 & FY15 revenues by key global end‐markets High High Medium Low Medium High
e2v medium term growth potential
Current profile Challenging markets:
Taking market share through innovation/service
Making new markets through new product introductions
Continuing corporate change
Increased focus on acquisitions
Global end market focus
Principal end market drivers by division:
Imaging – automation, healthcare, environment & discovery
RF Power – healthcare, automation, safety & communications
Semiconductors – communications & safety
£m
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Geographic reach
FY16 revenues by geography £m FY15 revenues by geography £m
Growth coming from Asia Pacific (20%)
£32.9 £63.6 £77.1 £47.4 £3.9 £32.4 £64.4 £77.1 £56.9 £5.5 United Kingdom Europe North America Asia Pacific Rest of world
Growth 5.1%
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FY17 Divisional overview
Imaging
Professional imaging growth: make new markets, take
market share. Focus on key market leaders/OEMS
Space: embed operational improvement, with ongoing
margin improvement
RF Power
Gradual growth in Radiotherapy, OEM customers
focused on value
Semiconductors
Product line acquisitions and micro last time buys Cards, subsystems and IP moving up the value chain
FY17 view Good growth Steady Step‐up
Summary & outlook
FY17 outlook unchanged 19
Revenue driven growth, trusted expert partner, resilient financial profile
Performance Growth Outlook
FY16 performance:
Reported revenue growth of 5.1%
Adjusted operating profit up 4.7%
Full year dividend up 5.9%
Platform for growth:
Focus on take/make market in challenging markets
Investment in R&D in areas of focus
Cost profile discipline and benefit of reorganisations
SP Devices and building acquisition pipeline
Q&A
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Appendices
‘Our vision, our future’
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Our three divisions
Imaging FY16 revenues: 44%
We add value to our customers through our technology platforms, innovative product development and space qualified manufacturing capability.
RF Power FY16 revenues: 34%
We add value to our customers through consistently supplying reliable application specific products, addressing difficult engineering challenges and providing long‐term continuity support.
Semiconductors FY16 revenues: 22%
We add value to our customers through our market leading design, packaging and screening technology to meet the demanding specifications that our aerospace and defence customers require, with security of supply.
Selected customers
Accuray, Elekta, Varian, BAE Systems, Furuno, Airbus, Raytheon, Selex Galileo, Thales
Selected customers
Canon, Carl Zeiss Meditec, Optopol, Orbotech, Basler, ESA, NASA, CNES, CAST, Astrium, Ball Aerospace, Lockheed Martin, Thales, Oxford Instruments, Hamamatsu, Roper
Strategic partnerships
Freescale, Everspin, Maxim, Micron, Peregrine
Selected customers
Arrow, Avnet, Boeing, Thales, Raytheon, Airbus
Eliixa + cameras for industrial inspection systems RF Power components and systems for Elekta cancer radiotherapy equipment Space qualified data convertors for satellite communications Hi reliability semiconductors for safety critical civil aerospace systems
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Marine radar to avoid collisions at sea
c.1,750 employees across 9 engineering locations and 6 sales offices
Picture of the Churyumov‐Gerasimenko comet taken from our image sensors on Rosetta
Summary divisional performance
Imaging RF Power Semiconductors Total FY16 FY15 FY16 FY15 FY16 FY15 FY16 FY15
Revenue
£103.5m £88.7m £80.5m £84.2m £52.4m £52.0m £236.4m £224.9m
Revenue growth
16.7% ‐4.4% 1.0% 5.1%
Adjusted
- perating profit
£15.7m £9.3m £18.7m £19.4m £14.2m £11.9m £42.0m* £40.1m*
Adjusted
- perating profit
margin
15.2% 10.5% 23.2% 23.0% 27.1% 22.9% 17.8%* 17.8%*
Group revenues
44% 40% 34% 37% 22% 23%
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*Includes Corporate centre costs of £4.5m (FY15: £4.0m) and FX losses of £ 2.1m (FY15 gains £3.4m)
Platform for further expansion Making it real Embed new culture Operational excellence
Group Imaging RF Power Semiconductors
2015 2016 2017 2018 2019 2020
Industrial product introductions Space project activity Sub‐systems growth Partners & modules
Goal x2 2020
Key priorities
Our journey from November 2014
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