Interim Results July 2014

Transcription

1 Interim Results July

2 Agenda 1. Overview & Outlook David Lockwood 2. Financial Review Jonathan Silver 3. Strategic Progress David Lockwood 2

3 H1 revenue summary: 10% Y-o-Y organic growth in H1 4% reported growth after currency headwinds 3

4 H1 profit summary: 21% Y-o-Y PBIT growth in H1 ($) 14% reported PBT growth after currency headwinds ( ) 4

5 Growth achieved over last 12 months H1 2013: Margins of 8.6% H1 2014: Margins of 9.3% 2013 achieved a strong H2 uplift 2014 requires an uplift, but from a starting point of growth 12 months of growth puts us in a strong position to achieve Full year expectations 5

6 Benefitting from strategic actions taken Growth across all our businesses Customer diversification benefitting businesses Broadened geographic presence through Vietnam facility, Korean design centre and Model Solution Strength of customer relationships and reliable fulfilment recognised by customer awards 6

7 Financial Performance Jonathan Silver 7

8 Continuing operations revenue & profit m Half Year to 30 June Full Year Revenue Operating profit Finance costs (3.7) (3.7) (7.1) +14% Profit before tax before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, deferred tax on acquired intangible assets and goodwill, fair valuing of financial instruments and acquisition transaction costs

9 Segmental Analysis Half Year to 30 June Actual 2014 m Actual 2013 m % Δ Actual 2014 US$m Actual 2013 US$m % Δ Performance Materials Revenue % % Operating profit % % Wireless Systems Revenue % Operating profit % % Unallocated costs (3.3) (3.4) (5.5) (5.3) Total continuing Revenue % % Operating profit % % 9 before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses and acquisition transaction costs

10 Revenue bridge Revenue Performance Materials $m Wireless Systems $m Total $m 2014 Total Acquisitions Base net of acquisitions % 2013 Total Net of acquisitions, revenue up $38.5m 10

11 Underlying Operating Profit bridge US$m $32.4m $(5.8)m Net R&D $(4.3)m SG&A $(0.3) Acquisition $39.2m $17.2m Margin dropthrough before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, fair valuing of financial instruments and acquisition transaction costs margin drop through on increase in organic revenue, year on year 11

12 Margin performance and results translated in US$m Performance Materials & Wireless Systems Half Year to 30 June 2014 US$m Half Year to 30 June 2013 US$m Revenue Cost of sales (256.8) (230.0) Gross profit % % SG&A (90.9) 21.6% (85.7) 22.8% Gross R&D (40.6) 9.6% (34.2) Net capitalised development % Operating profit % % 12 before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, fair valuing of financial instruments and acquisition transaction costs

13 Performance Materials Division revenue bridge US$m Acquired +18%* $262m EMI H1 revenue 13 $229m +12%* $17m EMI $10m Thermal Revenue 12% higher on an organic basis * Organic growth in US$ 2014 additional revenue from acquisitions $0m SIP Strong demand from major smartphone customers $6m MS Mobile infrastructure market expansion for LTE (4G) drivers of EMI and Thermal growth Less innovation in more competitive tablet market Demand from gaming console benefitting all businesses Thermal Signal Integrity Products

14 Performance Materials Division US$m US$m H1 H1 FY +15% Revenue % Operating profit Return on sales 10.9% 10.2% 15.0% Strong markets and market share gains boosted revenue 14 before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, deferred tax on acquired intangible assets and goodwill, fair valuing of financial instruments and acquisition transaction costs

15 Wireless Systems Division revenue bridge US$m H1 revenue Telematics/M2M $148m 7%* 14%* $4m IAS 3%* $1m WACS $13m IAS $159m Infrastructure Antennae Systems $6m TELEMATICS/ M2M Revenue 8% higher on an organic basis Growth across all business units Rising demand from WACS industrial and rail markets Wireless Automation & Control Solutions Antennae installation demand in IAS from LTE (4G) rollout * Organic growth in US$ 15

16 Wireless Systems Division US$m US$m H1 H1 FY +8% Revenue % Operating profit Return on sales 10.1% 9.7% 11.7% Investing in R&D and capacity expansion 16 before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, deferred tax on acquired intangible assets and goodwill, fair valuing of financial instruments and acquisition transaction costs

17 Exceptional credit m H Acquisition contingent consideration reduction 6.8 Inventory write downs (0.2) Capitalised development costs write downs (1.1) Acquisition transaction costs (1.0) Nextreme technical issues; taking longer to achieve meaningful revenue stream 17

18 Operating cash flow m Vietnam investment Half Year to 30 June 2014 (Base business) Half Year to 30 June 2013 Full Year to 31 December 2013 Operating profit Depreciation Amortisation of capitalised development Other and non-cash (Increase) / decrease in working capital (3.1) (19.0) Capitalised development - (6.0) (5.8) (11.6) Capital expenditure (3.0) (7.8) (5.7) (12.8) Operating cash flow (3.0) Total Cash conversion of 97% excluding Vietnam investment (84% including Vietnam) 18

19 Cash flow m Half Year to 30 June Full Year Operating cash flow Finance costs (3.7) (3.7) (7.1) Tax (7.6) (7.0) (13.0) Trading cash flow Dividends - (17.7) (28.6) Acquisitions / disposals (26.8) Exceptionals (6.7) (1.5) (3.2) Other (0.8) (25.8) (10.3) (5.3) Exchange on cash and borrowings 3.0 (5.8) 2.6 (Increase) in net borrowings (22.8) (16.1) (2.7) 19

20 Balance sheet m 30 June 31 December Total equity Net borrowings Capital employed Interest cover (covenant basis) Net borrowings / EBITDA 1.5 x 1.3 x Healthy balance sheet with resources to invest in R&D and our capacity expansion 20 minimum of 3.0 times required by Group s loan facilities maximum of 3.5 times required by Group s loan facilities

21 Earnings, tax & dividend Pence per share Half Year to 30 June 31 Dec Earnings per share Underlying tax rate 18.5% 17.5% 17.5% Dividend per share Average number of shares (million) before exceptionals, amortisation of acquired intangibles, gain or loss on disposal of businesses, deferred tax on acquired intangible assets, goodwill and US capitalised development costs, fair valuing of financial instruments and acquisition transaction costs

22 Dividend policy Progressive dividend policy: increasing returns to shareholders over time Takes into account underlying business profitability/cash requirements Allows us to rebuild dividend cover Funded by growth, a healthy balance sheet and a good history of cash conversion 22

23 Operational and strategic progress David Lockwood 23

24 Overall favourable market conditions/performance Demand for smartphones with high level of innovation has continued from 2013 Telecom markets a driver of demand in H1 from roll-out of LTE (4G) in China and US Telematics markets have been robust from sustained automotive growth and rise in infotainment systems 24

25 H1 achievements Achieving strategic objectives: Objectives: We wanted to penetrate an important strategic market: Korea We wanted to improve customer diversification We needed to ensure business continuity throughout Achievements: Model Solution acquisition/vietnam expansion Significant uplift in supply to customers outside of largest customer Vietnam factory up and running in <6 months 25

26 Improving customer diversification Further cementing our position as a trusted partner with Korean customers Vietnam facility up and running within six months Located where our customers (existing and prospective) need us to be Becoming a recognised local partner 26

27 Strategic market penetration: Model Solution Acquisition further penetrates an important market: Korea Allows a broader offering to customers Complements Laird s focus on innovative design and speed of response throughout the design to delivery cycle Will allow Laird to engage with customers earlier in the design cycle Model Solution specialises in prototype design/quick-turn tooling for injection moulded parts A one stop total solutions provider across a range of industries (mobile communications/computing, consumer electronics, audiovisual products, medical devices) Working from modern facilities in Seoul delivering within tight timeframes 27

28 Selling more to existing customers Laird has been successful in winning contracts with large North American OEM automotive suppliers More integrated in their plans from design to production Laird has maintained its preferred supplier status Demonstrating higher share and higher content, achieved through selling integrated solutions rather than individual parts 28

29 Reliably delivering for customers Continuing to invest for sustainable growth Capex spend continuing to ensure businesses can expand to meet demand Telematics (Shanghai) and WACS businesses (Pennsylvania to Ohio) moving to larger, state-ofthe-art premises - Reflects increased capacity/projected growth - Ensures reliable fulfilment to customers 29

30 Customer awards recognise Laird s value Further cementing our position as a trusted partner with existing and future customers Recognition of Achievement in Corporate Responsibility awarded by Ford Honours suppliers who have improved customer satisfaction through customer-focused technology and corporate responsibility Quality Excellence Certification awarded by Caterpillar Recognises a supplier s overall quality system performance requirements in US and China 30

31 Innovation Performance Materials innovation for the telecom industry: Highest performing, thermal soft gap filler Cobra & Soft, electrically isolating thermal material Jupiter Wireless Systems innovation for public safety/government/ industrial markets: Industry s smallest highperformance antenna for rugged environments Ultra Phantom Wireless Systems innovation is delivering new product platforms: Software/firmware for Bluetooth and Wi-Fi platform upgrades 31

32 Strategy Score Sheet Customer diversification Differentiation Focus on innovation Market entry strategies Diversifying in growth markets: - between segments - within segments 6 customers over $25m (5 at FY) 7 customers $10- $25m (8 at FY) 63 customers $1 $10m (57 at FY) Customers recognising Laird s capabilities - Innovation of high performance small antenna - 100% on time to request reliably delivered to customers Increased investment in R&D, up $6.2m 113 new products in H1 14 (112 for FY 13) Internal Innovations level has increased to 51 from 28 (YOY). Filed patents have increased to 42 from 29 (YOY) Geographic penetration of Korean market a success Focused on opportunities in Wireless Systems: geographic penetration in China/Brazil and capturing demand in industrial/medical markets created by Internet of Things & Connected Vehicles 32

33 Outlook Strong organic growth in revenue and profit in H1 leaves us well positioned to deliver Additional volume and the effect of higher margin business sales will lead to higher operational gearing in H2 Actions taken and strategic progress underpins confidence for year as a whole Innovation coming through in Wireless Systems contracts Vietnam capacity coming on stream and Korean penetration will support Performance Materials growth Executing well on our strategy is key to sustainable growth 33

34 34 Q&A

35 35 Appendix

36 Divisional revenue by market segment H REVENUE 147.9m 27% 5% 5% 6% IT/ Telecom 37% 20% Handset Other Consumer Medical Transport PERFORMANCE MATERIALS H REVENUE 157.3m H REVENUE 95.6m 6% Transport 17% Industrial 16% 61% IT/ Telecom Other WIRELESS SYSTEMS H REVENUE 95.3m 5% 7% IT/ Telecom 8% 34% Handset 21% 3% Transport Industrial 24% 22% Other Consumer Medical Transport 16% 60% IT/ Telecom Other

37 Group revenue by market segment H REVENUE 243.5m H REVENUE 252.6m 12% 3% 4% IT/ Telecom 13% 29% 12% 27% Industrial Transport Medical Handsets Other Consumer 14% 3% 9% 6% IT/ Telecom 29% 12% 27% Industrial Transport Medical Handsets Other Consumer

38 Group revenue by product segment H REVENUE 252.6m Wireless systems 7% 8% 40% 23% Performance Materials Wireless systems 6% 16% EMI Shielding Performance Thermal Materials Signal Integrity Telematics / Wireless Modules Infrastructure Antennae Wireless Automation and Control 38