Delivering Our vision, our future Full year results for the year - - PowerPoint PPT Presentation

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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


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Full year results for the year ended 31 March 2016

Delivering ‘Our vision, our future’

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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

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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

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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

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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

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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

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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

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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

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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?”

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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

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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

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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

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Q&A

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Appendices

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‘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

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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)

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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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