Tt Electronics Plc · LSE:TTG
Tt Electronics — FY2010 Earnings Presentation
40 slides from Tt Electronics's earnings presentation, Mar 17, 2011
Slide 1: TT electronics plc Results Presentation
17 March 2011 Business Group Strategy Review TT electronics plc th 14 November 2008 Results Presentation Year ended 31 December 2010 Creating value for our customers through the innovative application of our technology combined with excellence in customer service and delivery from world class manufa
Slide 2: 2010 Summary
2010 Summary • Significant progress in delivery of the Group‟s strategy • Good financial performance, ahead of strategic plan due to actions taken to reposition the business, assisted by the market recovery • Group revenue increased by 23.3% with operating profit margin improving from 1.4% to 4.4% •
Slide 3: Group Strategy Portfolio
Group Strategy Portfolio “STRATEGIC FOCUS” “DEVELOPMENT” “RUN FOR VALUE” Heartland to the brand / group Scalable Opportunities Value Businesses Components / Sensors IMS Secure Power General Industrial • Major driver of shareholder • Have potential to deliver • Consisted of AEI Compounds value materi
Slide 4: Group Strategy Our Goals
Group Strategy Our Goals People Building • Develop management strength in depth a global platform • Employee engagement • Cultures and values for sustainable growth and Operational Excellence improved • Customer focus performance • Product innovation • Manufacturing with technology leadership Decemb
Slide 5: Key Financials
Financial Summary Key Financials 2010 2009 Continuing operations £m £m Revenue 571.3 463.5 Operating profit* 25.2 6.4 Operating profit margin 4.4% 1.4% Profit before tax* 20.7 0.8 Earnings per share (pence)* 9.0p (1.2)p Underlying operating cash flow* 60.2 83.9 Net debt 9.9 56.9 * before exceptional
Slide 6: Revenue by Destination
Financial Summary Revenue by Destination Proportion of Region Change in revenue vs 2009 (%)* 2010 sales United Kingdom 23% 17% Rest of Europe 21% 40% North America 19% 18% Central & South America 17% 10% Rest of World 20% 2% Asia 49% 13% * At constant exchange rates December 2010: Full Year Results
Slide 7: Revenue by Market
Financial Summary Revenue by Market Proportion of Market Change in revenue vs 2009 (%)* 2010 sales Defence and aerospace (0.6%) 11% Telecom and computer 5% 8% Passenger car 19% 32% Industrial 33% 23% Power generation 29% 15% Medical 76% 5% Other transportation 83% 6% * At constant exchange rates Dec
Slide 8: Income Statement
Financial Summary Income Statement 2010 2009 Continuing Operations £m £m Revenue 571.3 463.5 Operating profit 25.2 6.4 Net interest payable (4.0) (3.3) Net finance cost on pension schemes (0.5) (2.3) Profit before taxation and exceptional items 20.7 0.8 Exceptional items 4.5 (17.4) Taxation (6.7) (2
Slide 9: Group Cash Flow 2010
Financial Summary Group Cash Flow 2010 £m 60 50 47.0 12.2 4.0 40 21.2 5.0 3.2 21.7 30 25.2 5.0 9.7 20 10 0 Operating Working Depreciation Capital Exceptional Pension fund Tax and Business Other Net debt profit capital investment restructuring payment interest disposals movements reduction December 2
Slide 10: Working Capital
Financial Summary Working Capital Total Trade Working Capital Working Capital / Sales £m Percent 200 30% 25% 150 20% 100 15% 10% 50 5% 0 0% December June December June December 2008 2009 2009 2010 2010 December 2010: Full Year Results 10
Slide 11: Pensions
Financial Summary Pensions 2010 2009 IAS 19 Valuation £m £m Fair value of assets 338.1 306.5 Liabilities (379.3) (350.2) Deficit (41.2) (43.7) • UK pension scheme closed to future accrual in April 2010 • Triennial actuarial valuation at April 2010 showed a deficit of £39.8m (April 2007: £59.4m) • De
Slide 12: Dividends – 2010
Financial Summary Dividends – 2010 Pence per £m share Interim – paid 0.8 1.2 Final – recommended 2.0 3.1 Total 2.8 4.3 Dividend cover (times) 3.2 • As stated previously, policy is to increase dividends progressively whilst maintaining dividend cover of at least two times underlying EPS December 2010
Slide 13: Implementing the Strategy
Implementing the Strategy • Alignment of organisation with strategic objectives • Investment in human resources and employee engagement • Deeper relationships with key customers • Focusing resources where we can create a differentiated position based on our technology and engineering expertise • Dev
Slide 14: Components 2010 Financials
Divisional Review Components 2010 Financials 2010 2009 Change Constant £m £m Currency Revenue 234.6 190.8 23.0% 23.2% Operating Profit 10.7 5.9 81.4% 83.1% Operating Profit Margin 4.6% 3.1% • Revenue growth due to market recovery and success of key account programme • Significant increase in operati
Slide 15: Components – Actions and Benefits
Divisional Review Components – Actions and Benefits Align Organisation with Strategic Objectives • Division now run as a global business • Ability to serve customers across regions • New business unit structure • Unified product roadmaps and engineering teams aligned to technologies/markets Deeper R
Slide 16: Case Study – Medical Market Growth
Divisional Review Components Case Study – Medical Market Growth • Focus on component solutions for medical equipment including diagnostic, monitoring, and therapeutic devices • Strong revenue growth in 2010 • Customer engagement throughout the world in North America, Europe and Asia • Key wins inclu
Slide 17: Sensors 2010 Financials
Divisional Review Sensors 2010 Financials 2010 2009 Change Constant £m £m Currency Revenue 143.5 105.4 36.1% 41.5% Operating Profit 3.9 (3.9) Operating Profit Margin 2.7% (3.7)% • Revenue growth from: - new programmes and platform wins - emerging markets demand for premium cars and general economic
Slide 18: Sensors – Actions and Benefits
Divisional Review Sensors – Actions and Benefits Growth in Broader Transportation • Programme wins outside passenger car • Additional source of growth including truck and off-road vehicles • Diversification of customer base • Improved margins Align Organisation with Strategic Objectives • Division r
Slide 19: Case Study – Emerging Markets
Divisional Review Sensors Case Study – Emerging Markets • Increased revenue from emerging markets at improved margins • Investment in China facility, audited by BMW, Daimler, GM and Bitron/Fiat • Growth in India with Hero Honda, Tata and Mahindra • Recognised as a strategic global partner by major c
Slide 20: IMS 2010 Financials
Divisional Review IMS 2010 Financials 2010 2009 Change Constant £m £m Currency Revenue 91.4 75.1 21.7% 20.8% Operating Profit 4.3 2.4 79.2% 75.0% Operating Profit Margin 4.7% 3.2% • Underlying revenue growth despite shortage of components • Improvement in operating margin resulting from: - increased
Slide 21: IMS – Actions and Benefits
Divisional Review IMS – Actions and Benefits Win New „high mix/low volume‟ Business in Target Market Segments • Clear focus communicated throughout division • Improved margins as mix of „good‟ business • 10 new accounts won in 2010 increases • „Balance‟ in terms of customers and end markets Differen
Slide 22: Secure Power 2010 Financials
Divisional Review Secure Power 2010 Financials 2010 2009 Change Constant £m £m Currency Revenue 85.2 59.1 44.2% 37.4% Operating Profit 6.2 4.8 29.2% 22.9% Operating Profit Margin 7.3% 8.1% • Strong revenue growth - export sales grew by >75%, benefiting from investments made in Latin America and stro
Slide 23: Secure Power – Actions and Benefits
Divisional Review Secure Power – Actions and Benefits Growth from Export Markets • Further investment in Brazil • Revenue growth from new markets • More structured approach to Latin America • Reduce reliance on traditional markets in UK sales channels and Mexico Improve Breadth and Quality of Produc
Slide 24: Key Performance Indicators: Group Measures
Key Performance Indicators Group Measures Organic revenue growth Group operating profit margin Operating cash conversion (per cent)* (per cent) (per cent) Target: Mid to high single digits for Target: 8%-10% in medium term Target: 100% conversion of operating each year, 2010 to 2014 profit to operat
Slide 25: Divisional Operating Profit Margins
Key Performance Indicators Divisional Operating Profit Margins Components Sensors IMS Secure Power Target: 10% medium term Target: 10% longer term Target: 6-8% medium term Target: 10% short term 8.1 7.3 4.6 4.7 3.1 3.2 2.7 (3.7) FY 2009 FY 2010 FY 2009 FY 2010 FY 2009 FY 2010 FY 2009 FY 2010 Decembe
Slide 26: Conclusion: Performance Drivers
Conclusion Performance Drivers 8%-10% Additional investment Growth from emerging markets Deeper relationships with key customers Growth from target market segments Investment in human resources 4.4% Alignment of organisation with strategic objectives 2010 Group Medium operating margin term target De
Slide 27: Outlook
Outlook • Trading conditions improved significantly in 2010 with good growth in the majority of our markets • Strong customer demand in January and February and the current order book provide confidence for the first half of the year • Excellent progress made to reposition the business, and actions
Slide 28: Q&A
Q&A December 2010: Full Year Results 28
Slide 29: Disclaimer
Disclaimer IMPORTANT INFORMATION • For the purposes of the following disclaimers, references to this “document” shall be deemed to include references to the presenters‟ speeches, the question and answer session and any other related verbal or written communications. • This document contains certain
Slide 30: Appendix
Appendix December 2010: Full Year Results 30
Slide 31: Revenue by Division
Appendix Revenue by Division Continuing Operations Pounds (millions) 600 £16.6m General Industrial* £85.2m Secure Power 500 Scalable £17.1m development £91.4m 32% IMS 400 £59.1m £75.1m 300 £234.6m Components Strategic 200 £190.8m focus 68% 100 £143.5m Sensors £105.4m 0 FY 2009 FY 2010 December 2010:
Slide 32: Operating Profit by Division
Appendix Operating Profit by Division Continuing Operations Pounds (millions) 30 £0.1m 25 General Industrial* £ 6.2m Scalable Secure Power 20 development 42% £ 4.3m IMS 15 £0.1m £ 4.8m 10 Group £ 10.7m Strategic Components total* £ 2.4m focus 5 58% £ 5.9m £ 3.9m Sensors 0) (£3.9m) (5) FY 2009 FY 201
Slide 33: Taxation
Appendix Taxation 2010 2009 £m £m Tax charge - Underlying (6.7) (2.6) - Exceptional items - 0.4 (6.7) (2.2) Effective tax rate - Underlying 32.4% • Tax charge arises from profits generated from overseas countries, in particular USA, Mexico and China • No tax payable in UK and Germany due to availabi
Slide 34: Earnings Per Share
Appendix Earnings Per Share 2010 2009 £m £m Profit before tax and exceptional items 20.7 0.8 Tax (6.7) (2.6) Underlying earnings 14.0 (1.8) Average number of shares (million) 155.0 155.0 Headline earnings per share (pence) 9.0p (1.2)p Basic earnings per share (pence) - Continuing operations 11.9p (1
Slide 35: Operating Cash Flow
Appendix Operating Cash Flow 2010 2009 £m £m Operating profit 25.2 6.4 Depreciation 21.2 24.1 Amortisation of intangible assets 9.6 11.8 Working capital 5.0 47.2 Other (0.8) (5.6) Underlying operating cash flow 60.2 83.9 Exceptional costs (5.0) (9.6) Special pension fund payment (3.2) (2.2) Cash gen
Slide 36: Net Cash Flow
Appendix Net Cash Flow 2010 2009 £m £m Cash generated from operations 52.0 72.1 Tax and interest (9.7) (9.1) Capital expenditure (including software) (12.2) (9.4) Development expenditure (6.0) (6.9) Proceeds of sale from fixed assets 1.7 5.7 Acquisitions - (1.0) Disposals 21.7 - Dividends (1.2) - Ot
Slide 37: Group Cash Flow – 2 Years to December 2010
Financial Summary Group Cash Flow – 2 Years to December 2010 £m 140 120 21.6 45.3 5.5 103.3 100 14.6 5.4 29.1 80 18.8 60 52.2 40 31.6 20 0 Operating Working Depreciation Capital Exceptional Pension fund Tax and Disposals Other Net debt profit capital investment restructuring payment interest movemen
Slide 38: Banking Facilities
Appendix Banking Facilities • Facilities: - New committed facility of £70m to May 2013 with a club of four banks - Total facilities available of more than £110m • Loan covenants on new facility (tested quarterly on rolling 12 month basis): Covenant December 2010 - Net debt / EBITDA (before exception
Slide 39: Group Balance Sheet
Appendix Group Balance Sheet 2010 2009 £m £m Tangible and intangible assets 175.1 194.8 Deferred tax asset 20.1 4.9 Total non-current assets 195.2 199.7 Inventories 81.4 83.9 Trade and other receivables 93.1 85.4 Cash and cash equivalents 44.8 24.7 Total current assets 219.3 194.0 Current payables a
Slide 40: Discontinued Operations
Appendix Discontinued Operations 2010 2009 £m £m Sales 28.4 36.1 Operating Profit* 0.7 0.1 Profit before tax 0.7 (0.6) Profit on disposal 7.1 - Cash proceeds from disposals 21.7 - *before exceptional items • Businesses disposed in 2010 comprise MMG Canada, Wire Systems Technology, MMG Magdev, MMG In