ENGINEERING SOLUTIONS FOR THE GLOBAL ENERGY SECTOR. Presentation of results for the year ended 31 March 2014

Transcription

1 ENGINEERING SOLUTIONS FOR THE GLOBAL ENERGY SECTOR Presentation of results for the year ended 31 March 2014 Ewan Lloyd-Baker, CEO & Nick Flanagan, CFO Hayward Tyler Group PLC 2014 (

2 FINANCIAL HIGHLIGHTS Strong revenue growth to 43.2 million up 33% on a pro rata basis (15 months to 31 March 2013: 40.5 million) Significantly increased profit of 2.3 million up 2.2million on a pro rata basis (15 months to 31 March 2013: 0.1million) Trading* earnings per share of 6.51 pence up 121% on a pro rata basis (15 months to 31 March 2013: 3.68 pence) Net debt of 8.3million (2013: 8.5million), a significant improvement in net debt to trading EBITDA ratio 1.5:1 at 31 March 2014 from 2.6:1 on a pro rata basis at 31 March 2013 New committed UK banking and borrowing facilities of 14.2 million increased headroom extended debt maturity profile lower cost The new borrowing facilities provide a springboard for the.group Nick Flanagan, CFO Hayward Tyler Group PLC 2014 ( 2

3 KEY MESSAGES Outlook in our end markets remains positive: Broad spread (geography & sector) Order intake up 16% on a pro rata basis Order book at 28.8m (despite revenue growth of 33%) Continued operational benefits delivered through continuous improvement: Gross margin of 37.7% (15 months to 31 March 2013: 34.6%) Against KPI target of >35% Operating margin of 10.8% Into KPI target range of 10-15% Changing mix moving towards OE 41% vs 30% for the 15 month period to 31 March 2013 Paid inaugural interim dividend of 0.5 pence per share and proposal to pay a full year dividend of 0.75 pence per share a year of significant growth with more to come Ewan Lloyd-Baker, CEO Hayward Tyler Group PLC 2014 ( 3

4 OUR MISSION: What do we do? Design, engineer, manufacture & service electric motors for mission critical applications How do we deliver it? Through: Continuous improvement Our people Our processes TO BE OUR CUSTOMERS NUMBER ONE CHOICE FOR THE PROVISION OF MISSION CRITICAL ELECTRIC MOTORS How do we do it? Innovative product/ service offering Who do we do it for? Market led: Energy sector Global customers Local service Hayward Tyler Group PLC 2014 ( 4

5 OUR STRATEGY: Continuous Improvement a mindset Our People we are creating a dynamic, opportunistic environment for our employees to develop and grow Our Processes we are driving operating efficiencies both internally and externally through our supply chain Our Products we are promoting engineering innovation through investment in research and technical development Value to ensure the long term strength of our business through increased profitability that enables us to deliver a good shareholder return Hayward Tyler Group PLC 2014 ( 5

6 OUR KEY MARKETS POWER GENERATION Positive long term outlook Hayward Tyler has the largest installed base of boiler circulating pumps (BCPs) globally: >2,300 units Move towards the next generation of supercritical and ultrasupercritical boiler designs driving BCP demand and design: 1,199 coal fired power stations proposed >75% proposed in China and India Global boiler market expected to double in China to over $21.5bn by 2020** For the 12 month period to 31 March 2014 power represented: 57% of order intake 51% of revenue Source: *World Resources Institute (November 2012) ** Power Engineering International (January 2014) Hayward Tyler Group PLC 2014 ( 6

7 OUR KEY MARKETS OIL & GAS Positive long term outlook topside & subsea Hayward Tyler has a complete range of seawater lift and firewater motors: Topside pump market growing at 12% pa* Number of offshore oil fields expected to double by 2020 Strategic partnership with Eureka Pumps A/S and over 5million worth of orders Hayward Tyler has an enviable reference list providing subsea motors to the likes of GE and Aker: Subsea market to grow by 12% pa** Transforming economics of oil recovery For the 12 month period to 31 March 2014 oil and gas represented: 12% of order intake 18% of revenue *Source: Rystad Energy Analysis (October 2011) **Morgan Stanley research note (May 2014) Hayward Tyler Group PLC 2014 ( 7

8 OUR KEY MARKETS NUCLEAR Positive long term outlook Hayward Tyler has operated in the nuclear sector for nearly 60 years. We have over 1,000 pumps in active service globally, installed equipment in over 60% of all nuclear power stations in North America and our N stamp means we are well positioned for both AM and OE growth. 490 nuclear power stations planned or ordered by 2030* Over half of the existing power stations are >25 years old Global nuclear capacity forecast to increase by 55% from 371 gigawatts to 578 gigawatts by 2035** For the 12 month period to 31 March 2014 nuclear represented: 15% of order intake 16% of revenue *Source: World Nuclear Association (April 2010 **EIC Nuclear Insight Report Apr 14) Hayward Tyler Group PLC 2014 ( 8

9 FINANCIAL OVERVIEW INCOME STATEMENT* Year to 31 March 2014 million 15 months to 31 March 2013 million Revenue Gross profit Gross profit % Operating charges 38% (11.6) 35% (10.7) Operating profit Finance costs (0.7) (0.9) Profit before tax Tax (1.0) (0.8) Net profit Basic EPS (pence) Revenue 43.2m Up 33% Strong revenue growth to 43.2m up 33% on a pro rata basis Earnings per share 6.51p Up 121% Trading earnings per share of 6.51p up 121% on a pro rata basis Profit before tax 4.0m Up 111% Significantly increased trading profit before tax of 4.0m up 111% on a pro rata basis Strong increase in Gross Profit margin to 38% No non-trading operating items in the year Tax charge includes non-cash deferred tax charge on profits generated in UK of 0.3m * On a trading basis (i.e. recurring business. For non-recurring items see Appendices). In the year under review nontrading items were limited to re-banking costs ( 0.2m) and a non-cash deferred tax charge ( 0.5m). Hayward Tyler Group PLC 2014 ( 9

10 FINANCIAL OVERVIEW SEGMENTAL SPLIT Segments Revenue million Year to 31 Mar months to 31 Mar 13 Gross Profit Margin % Operating profit million Revenue million Gross Profit Margin % Operating profit million OE % % (1.6) AM % % 6.8 Nonsegment costs Site FX Pension PLC Trading operating profit* (0.2) (0.3) (0.2) (1.3) - (0.1) (0.2) (1.6) % % 3.3 Trading Operating Profit Bridge 2013* to 2014 Increased profitability driven by: Elimination of losses in OE Strong revenue and margins in AM * On a trading basis (i.e. recurring business. For non-recurring items see Appendices). In the year under review non-trading items were limited to re-banking costs and a non-cash deferred tax charge. Hayward Tyler Group PLC 2014 ( 10

11 FINANCIAL OVERVIEW DEBT Net Debt:EBITDA 1.5x Significant improvement in net debt to EBITDA* ratio to 1.5:1 at 31 March 2014 from 2.6:1 on a pro rata basis at 31 March 2013 New banking facilities 14.2m Movement in net debt 2013 to 2014 Net debt reduced in spite of 33% growth in revenue Up 1.3m The borrowing facilities are committed, extend debt maturity profile to an average of 4 years, increase headroom & lower annual interest costs by c.20% * On a trading basis (i.e. recurring business. For non-recurring items see Appendices). In the year under review non-trading items were limited to re-banking costs and a non-cash deferred tax charge. Hayward Tyler Group PLC 2014 ( 11

12 KPIs Strategic Objective To ensure the strength of our business To ensure the strength of our business To ensure the strength of our business Hayward Tyler Group PLC 2014 ( 12

13 KPIs continued Strategic Objective To increase profitability To increase profitability To generate positive shareholder return Hayward Tyler Group PLC 2014 ( 13

14 THE FUTURE Positive outlook with additional upside from game-changers Further scope for margin growth through continuous improvement Solid financial platform enabling more strategic focus Participation in the Regional Growth Fund and Civil Nuclear Sharing in Growth programmes Opportunity for selective M&A Progressive dividend policy We look forward to the continued growth of the business in the current year and beyond Ewan Lloyd-Baker, CEO Hayward Tyler Group PLC 2014 ( 14

15 APPENDICES Hayward Tyler Group PLC 2014 ( 15

16 FINANCIAL OVERVIEW BALANCE SHEET Property, plant & equipment Intangible assets Deferred tax asset Non-current assets At 31 March 2014 million At 31 March 2013 million Current assets excluding cash Cash Current borrowings Non-current borrowings Net debt Payments on account Other current liabilities Current liabilities excluding borrowings 1.7 (5.1) (4.9) (8.3) (5.5) (9.8) (15.3) 0.6 (6.1) (3.0) (8.5) (5.3) (6.0) (11.3) Pension scheme deficit (1.5) (1.6) Net assets Non-current assets Investment in plant & equipment Reduction in deferred tax asset from profit in UK ( 0.3m) and change in UK CT rate ( 0.5m) Current assets & liabilities Increase in inventory, trade receivables and payables reflects high activity levels Net current assets increased by only 1m in spite of 33% growth in revenue on a pro rata basis Working capital management remains a key focus Net debt Headroom improved by 0.6m to 3.8m in spite of high activity levels See Debt slide Stronger balance sheet with net assets increasing by 1.4m (14%) Hayward Tyler Group PLC 2014 ( 16

17 FINANCIAL OVERVIEW NON-TRADING ITEMS Operating charges Recovery of doubtful debts Restructuring costs Finance costs Re-banking costs Fair value of derivatives Year to 31 March 2014 million (0.2) (0.2) 15 months to 31 March 2013 million 0.2 (1.1) (0.9) (0.5) 0.5 Taxation Deferred tax (0.5) (0.5) Total non-trading (0.7) (1.4) Non-trading items represent non-recurring income/charges No non-trading operating charges in the year Re-banking costs of 0.2m relate to one-off cost of expensing re-banking fees that were being amortised over the life of loans that were replaced in the year The deferred tax charge is non-cash and relates to the revaluation of the deferred tax asset following the announcement that UK corporation tax rates will be reduced from 23% to 20% Hayward Tyler Group PLC 2014 ( 17

18 CUSTOMERS Hayward Tyler Group PLC 2014 ( 18

19 WHERE WE ARE: As at 31/3/14 1 Luton, UK 2 Glasgow, UK 3 Vermont, USA 4 Delhi, India 5 Kunshan, China Hayward Tyler Group PLC 2014 ( 19

20 LUTON THE FUTURE TO BE OUR CUSTOMERS NUMBER ONE CHOICE FOR THE PROVISION OF MISSION CRITICAL ELECTRIC MOTORS Hayward Tyler Group PLC 2014 ( 20

21 BOARD OF DIRECTORS Ewan Lloyd-Baker (a) Chief Executive Officer Ewan began his career at Arthur Andersen working in corporate recovery and corporate turnaround with a number of privately owned and publicly listed companies, particularly in the capital goods sector. Ewan led the acquisition of Hayward Tyler from a private equity firm in 2006, the reverse into an AIM plc, subsequent placing and fundraising, re-banking, the turnaround of the main manufacturing operations and managing the subsequent growth. He is responsible for the Group from a strategic and operational perspective. Nicholas Flanagan (b) Chief Financial Officer Nick is a graduate engineer from Imperial College and a chartered accountant having qualified with Coopers & Lybrand. Before joining Hayward Tyler in 2008, he spent the previous 14 years in the engineering and manufacturing sectors. Nick s experience includes financial planning and development, commercial and operational support, capital raising, change management, reporting, mergers and acquisitions and all aspects of treasury management including foreign exchange. John May (c) Non-executive Chairman John is a principal of a boutique chartered accountancy practice. He was previously a senior partner at Crowe Clark Whitehill. John is the Chairman of the Small Business Bureau Limited and the Genesis Initiative Ltd, which are lobbying groups to Government on behalf of small businesses. He is also chairman of Red Leopard Holdings PLC, a mining company listed on AIM, and is a Conservative Borough Councillor and past Mayor of the Borough of Surrey Heath. Maurice Critchley (d) Non-executive Director Maurice spent the early part of his career working for Spillers PLC and then as General Manager of the Fine Chemicals division of Mallinckrodt Inc, a large listed US Corporation. In 1989 Maurice bought a control valve company and since has continued to grow the business organically and through acquisition into Severn Glocon Group PLC. The Group of which he is CEO serves the international oil and gas market, LNG and power industries, has sales of 140 million and employs 860 people globally... Other: To be appointed Hayward Tyler Group PLC 2014 ( 21 (a) (c) (b) (d)

22 SHAREHOLDER INFORMATION Strong fundamentals underpinning growth Share price graph (pence) Jun 12-Jun 14 Solid shareholder base Financial institutions c.60% Board and Management c.20% Other c.20% No options issued or outstanding Shares not held in public hands: 9.82% Number of ordinary shares in issue: 45,507,404 Shareholder resolutions seeking disapplication of pre-emption rights: General up to 10% Employee related up to 10% Hayward Tyler Group PLC 2014 ( 22