ELECTROCOMPONENTS Full-year results for the year ended 31 March 2019 MAKE MORE POSSIBLE 21 May 2019 2019 Full-year Results
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, plans and objectives for the management of future operations of Electrocomponents plc and its subsidiaries is not warranted or guaranteed. These statements typically contain words such as "intends", "expects", "anticipates", "estimates" and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Although Electrocomponents plc believes that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors, which may be beyond the control of Electrocomponents plc, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. Other than as required by applicable law or the applicable rules of any exchange on which our securities may be listed, Electrocomponents plc has no intention or obligation to update forward-looking statements contained herein. Front cover The image on the front cover represents Hyperloop, a futuristic transport system. RS Components is a major sponsor of the University of Edinburgh’s team, HYPED, in the 2019 SpaceX Hyperloop Pod Competition to revolutionise terrestrial transportation. 2 2019 Full-year Results
OVERVIEW Above market, 8.3% like-for-like (1) Adjusted (2) 20.8% like-for-like (1) sustainable growth and revenue growth, operating profit growth in adjusted strong execution continuing to drive margin rose to profit before tax share gains in 11.7% aided by and 26.8% growth large, fragmented higher gross margin in adjusted market and cost control earnings per share Further IESA acquisition Continuing to improvement in performing well – generate attractive customer strong double-digit return on capital experience – revenue growth employed of 27.7% Group NPS (3) up and accretive to 5.1% Group margin (1) Like-for-like change excludes the impact of acquisitions and the effects of changes in exchange rates on translation of overseas operating results, with 2018 converted at 2019 average exchange rates. Revenue is also adjusted to eliminate the impact of trading days year on year. (2) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, asset write-downs, one-off pension credits or costs, significant tax rate changes and associated income tax. (3) Rolling 12-month Net Promoter Score – a measure of customer satisfaction. 3 2019 Full-year Results
AGENDA David Egan CFO 1 FINANCIAL RESULTS 2 REGIONAL PERFORMANCE Lindsley Ruth HOW WE CAN CONTINUE TO DISRUPT AND 3 CEO ACCELERATE 4 CURRENT TRADING & OUTLOOK 4 2019 Full-year Results
1 FINANCIAL RESULTS Significant progress 2019 Full-year Results 2019 Full-year Results
FINANCIAL HIGHLIGHTS > > > Strong revenue growth Improving profitability EPS and dividend growth Like-for-like (1) revenue growth (%) Adjusted (2) operating profit (£m) Adjusted (2) EPS (p) 37.0 11.6 220.3 28.4 8.9 177.1 8.3 20.8% 26.8% (1) (1) RS Pro Digital Group 2018 2019 Like-for-like change 2018 2019 Like-for-like change Adjusted (2) operating profit margin (%) Gross margin (%) Full-year dividend per share (p) (3) 14.80 44.5 13.25 44.0 11.7 10.4 0.2 pts 1.1pts 11.7% (1) (1) 2018 2019 Like-for-like change 2018 2019 Like-for-like change 2018 2019 Change Significant growth in profit and earnings per share (1) Like-for-like change excludes the impact of acquisitions and the effects of changes in exchange rates on translation of overseas operating results, with 2018 converted at 2019 average exchange rates. Revenue is also adjusted to eliminate the impact of trading days year on year. (2) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, asset write-downs, one-off pension credits or costs, significant tax rate changes and associated income tax. 6 2019 Full-year Results (3) Proposed full-year dividend to be approved at the AGM.
DRIVING OPERATIONAL EXCELLENCE – GROSS MARGIN > > Progress Going forward 0.5 percentage point improvement to 44.5% Long term our aim remains to drive stable and where possible improved gross margin to support the delivery of our target of 0.4 percentage point accretion from acquisitions – mid-teen adjusted operating profit margin: 0.1 percentage points dilution from translational foreign – Improving product mix: exchange New product introductions at RS PRO – 0.2 percentage point like-for-like improvement – Driving faster growth in single-board computing via OKdo – Like-for-like improvement driven by our own actions to: could provide offset Grow higher-margin products, strong growth at RS PRO – Controls and process – discipline on discounting Improve discount discipline – good progress at Allied – Dynamic pricing tool to be rolled out in APAC, the Americas Enhance pricing – dynamic pricing tool rolled out in EMEA – Smarter purchasing – global sourcing initiatives Continued focus on driving profitability 7 2019 Full-year Results
DRIVING OPERATIONAL EXCELLENCE – OPERATING PROFIT MARGIN Operating profit margin We are focused on driving towards a best-in-class mid-teen adjusted operating profit margin Revenue growth, higher gross margin and improvement in adjusted operating profit conversion ratio to 26.3% (2018: 23.6%) drove a 1.3 percentage point improvement in adjusted operating profit margin to 11.7% (2018: 10.4%) 10.4% 0.2% 2.4% 0.2% (0.7)% (0.6)% 0.2% (0.1)% 11.7% (0.3)% 14% 13% Adjusted operating 12% profit margin 11% 10% 9% 8% 7% 6% FY18 Acquisitions Revenue Gross Margin Inflation Digital People PIP 2 Other FY19 Growth Disciplined investment – During 2019 adjusted operating costs Revenue growth and gross margin grew at 5.7% on a like-for-like basis. 60% of the increase related to inflation and volume increases. The majority of the balance was improvement – Market growth and driven by increased investment in digital, talent and innovation market share gains, plus improving offset by the £4 million PIP 2 savings Adjusted operating costs as a product mix percentage of revenue fell to 32.8% (2018: 33.6%) 8 2019 Full-year Results
SUMMARY INCOME STATEMENT Highlights £m 2019 2018 Revenue saw a benefit from currency Adjusted (1) Reported Reported Adjustments Adjustments Adjusted (1) (£1.3 million) and extra trading days (£8.4 million) Revenue 1,884.4 - 1,884.4 1,705.3 - 1,705.3 Net finance costs increased to £6.1 million (2018: £4.0 million) Operating profit 201.0 19.3 220.3 172.6 4.5 177.1 Adjusted PBT excludes: Net finance costs (6.1) - (4.0) - (6.1) (4.0) £13.1 million primarily labour-related restructuring – costs Share of profit of JV 0.3 - 0.3 - - - – £4.4 million amortisation of intangible assets arising on acquisitions Profit before tax 195.2 19.3 214.5 168.6 4.5 173.1 – £1.8 million one-off pension costs Income tax expense (47.1) (3.6) (19.0) (28.8) (50.7) (47.8) 2019 adjusted effective tax rate of 24% (2018: 28%) Profit for the period 148.1 15.7 163.8 149.6 (24.3) 125.3 Earnings per share (p) 33.4 3.6 37.0 33.9 (5.5) 28.4 (1) Adjusted excludes amortisation of intangible assets arising on acquisition of businesses, substantial reorganisation costs, asset write-downs, one-off pension credits or costs, significant tax rate changes and associated income tax. 9 2019 Full-year Results
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