ANNOUNCEMENT OF HALF-YEAR RESULTS

Transcription

1 ANNOUNCEMENT OF HALF-YEAR RESULTS HALF YEAR ENDED 30 SEPTEMBER NOVEMBER 2013

2 Agenda Overview and current trading Ian Mason Financial performance Simon Boddie Business and strategy update Ian Mason Global Sales Klaus Goeldenbot Q&A All 2

3 Key themes H1 FY14 sales growth of 1% was consistent with H2 FY13 Improvement in sales trends in both September and October to 4% growth ecommerce sales growth of 6% in H1, share up 3% pts to 57% H1 FY14 financial performance benefitted from stable gross margin and cost control Good strategic progress made in period and winning more customers Targeting higher structural growth through the cycle 3

4 Financial highlights 1% underlying sales growth International +3%, UK -3% Operating margin growth 0.5% point increase to 7.4% Headline PBT growth +14% to 44.6m Headline free cash flow growth +50% growth, 36.0m Strong balance sheet 1.1x net debt:ebitda Maintained interim dividend 5.0p Operating margin growth, strong balance sheet 4

5 Current trading Underlying sales growth (1) FY13 Q1 Q2 H1 October Continental Europe 3% 4% 3% 6% North America 3% 3% 3% 8% Asia Pacific (1)% 1% 0% 0% International 2% 3% 3% 5% UK (3)% (2)% (3)% (2) (1)% (2) Group 1% 1% 1% 4% 4% sales growth in both September and October (1) Adjusted for currency movements and trading days (2) UK sales growth excluding Raspberry Pi: 2% sales decline in H1 and flat sales growth in October 5

6 Agenda Overview and current trading Ian Mason Financial performance Simon Boddie Business and strategy update Ian Mason Global Sales Klaus Goeldenbot Q&A All 6

7 Basis of preparation Unless otherwise stated: Figures have been prepared using International Financial Reporting Standards (IFRS) All figures are restated for the changes in IAS19R Employee Benefits (see appendix) Changes in sales are adjusted for currency movements and for the number of trading days ( underlying sales growth/decline ) Changes in profit, cash flow, debt and share related measures such as earnings per share are, unless otherwise stated, at reported exchange rates Key performance measures such as return on sales use headline profit figures Sign conventions: % changes in sales and costs are disclosed as positive if improving profit and negative if reducing profit In H1 2012/13 net expenses of 2.5m were reported in the half year for items excluded from headline profit before tax 7

8 Profit and loss account m H1 2013/14 H1 Reported 2012/13 (1) Change Sales % (2) Gross margin 45.4% 45.5% (0.1)% points Headline operating costs (1.3)% (2) Headline operating profit % Interest (2.6) (2.8) 7% Headline profit before tax % Additional trading days and favourable currency movements increased headline PBT by c. 4m Excluding these factors headline profit before tax increased by around 4% Headline profit before tax up by 14% (1) Restated for the changes in IAS19R Employee benefits (2) Adjusted for currency movements; sales also adjusted for trading days 8

9 Group headline profit before tax movement Change (1) 10% 3% (7)% 1.4m (5.7)m m 9.5m 0.2m 44.6m 39.2m (2) H1 2012/13 International UK Processes Interest H1 2013/14 International driving contribution increase (1) Adjusted for currency movements (2) Restated for the changes in IAS19R Employee benefits 9

10 International contribution m H1 2013/14 H1 2012/13 (1) Change (2) Underlying Sales % Gross margin 43.5% 44.2% (0.7)% points Operating costs (125.4) (124.8) 2% Contribution % Contribution % 15.7% 14.5% 1.2% points International contribution up by 10% (2) (1) Restated for the changes in IAS19R Employee benefits (2) Adjusted for currency movements; sales also adjusted for trading days 10

11 International contribution components Change (1) 14% 2% 8% 0.8m 0.1m 8.6m m 61.0m 70.5m H1 2012/13 Continental Europe North America Asia Pacific H1 2013/14 Strong performance from Continental Europe (1) Adjusted for currency movements 11

12 UK contribution m H1 2013/14 H1 2012/13 (1) Change (2) Underlying Sales (2.5)% (3) Gross margin 49.9% 48.6% 1.3% points Operating costs (39.9) (39.2) (2)% Contribution % Contribution % 28.3% 27.5% 0.8% points Strong contribution margin above 28% (1) Restated for the changes in IAS19R Employee benefits (2) Sales also adjusted for trading days (3) Excluding sales of Raspberry Pi UK sales decline was 1.7% 12

13 Gross margin % Gross margin Change (0.1)% pt 0.0% pt (0.2)% pt 0.2% pt 45.5% 45.4% H1 2012/13 Geographic mix Product mix Currency movements Price & Discounts H1 2013/14 Stable Group gross margin 13

14 Operating costs Growth (1) 1.5% 0.5% (1)% (2)% (1)% m 238m (1) 241m H1 2012/13 Reorganisation efficiencies Lower stock provisions Additional depreciation Cost inflation Other H1 2013/14 H2 FY14 cost considerations: Cost inflation, additional depreciation, investment in strategy 1% constant currency cost growth (1) Restated for the changes in IAS19R Employee benefits; also adjusted for currency movements 14

15 Headline earnings per share m H1 2013/14 H1 2012/13 (1) Change Headline profit before tax % Reorganisation costs 0.0 (2.5) Reported profit before tax % Effective tax rate (29)% (30)% 1% point Per share amounts: Headline earnings 7.2p 6.2p 16% Interim dividend 5.0p 5.0p - Headline EPS growth of 16% (1) Restated for the changes in IAS19R Employee benefits 15

16 Net debt Movement in net debt H1 m 2013/14 Net debt as at 1 April 2013 (159.7) Free cash flow 35.4 Dividends paid (29.5) New shares issued 1.2 Own shares acquired (0.2) Translation differences 4.3 Net debt as at 30 September 2013 (148.5) Facilities & covenants H1 m 2013/14 Committed facilities Used facilities (147.9) Unused facilities H1 2013/14 Covenant Net debt / EBITDA 1.1x <3.25x EBITA net interest cover 22.2x >3x Pension deficit 33.6m (March m) - New census data re triennial valuation - Lower asset returns - Triennial valuation underway, to be completed by June 2014 Strong balance sheet 16

17 Cash flow H1 H1 m 2013/ /13 Profit before tax Depreciation & amortisation Employee share options / non-cash mvts Finance expense (net) Working capital 0.5 (4.5) Cash generated from operations Interest paid (net) (2.6) (2.8) Tax paid (13.0) (11.3) Net capital expenditure (11.3) (10.1) Reported free cash flow Add back: reorganisation cash flows Headline free cash flow Comments +22% Improved working capital management +50% FY14 cash considerations: Maintained guidance for stock turns 2.5x, net capex c. 40m (vs. 27m in FY13) Headline free cash flow up by 50% 17

18 Agenda Overview and current trading Ian Mason Financial performance Simon Boddie Business and strategy update Ian Mason Global Sales Klaus Goeldenbot Q&A All 18

19 Business portfolio H1 FY13/14 m Underlying sales growth % of Group sales Contribution margin Market position Continental Europe 3% 35% 21% No.1 North America 3% 23% 13% No. 3 Asia Pacific 0% 13% 6% No. 1 International 2% 71% 16% No. 1 UK (3)% 29% 28% No.1 Group 1% 100% 19% No. 1 Opportunity to improve International margin 19

20 Global strategy in place Focused on implementation 20

21 Continental Europe ecommerce with a human touch 3% sales growth (1), all markets in growth Europe ecommerce share 70% 65% Outperforming in our smaller markets 60% 55% 50% 7% ecommerce sales growth, 68% share eprocurement solutions driving expansion of corporate accounts portfolio 45% 40% 35% 30% H1 FY09 H2 FY09 H1 FY10 H2 FY10 H1 FY11 H2 FY11 H1 FY12 Enhanced search functionality Live Chat service H2 FY12 Increased investment in internal sales See rswww.com H1 FY13 H2 FY13 H1 FY14 ecommerce driving growth (1) Adjusted for currency and trading days 21

22 North America One global offer 3% sales growth (1) System giving new capabilities Famous For range (2) outperforming, driven by automation & control Allied Famous For sales growth of 5% Allied automation & control growth of >10% Majority of New Product Introduction is in Famous For categories 22% ecommerce sales growth, 37% share RS & Allied Globalise the Range Good growth from non-government sectors TE Connectivity pilot completed in H1 Will industrialise process in H2 and beyond Targeting 75% - 85% of range consistent globally Systems investment now enabling growth (1) Adjusted for currency and trading days (2) Our Famous For range comprises electronics and automation & control product categories 22

23 Asia Pacific World Class Systems & Business Insight Flat sales growth (1) APAC system roll-out China growing, Japan recovering, ANZ weak ANZ went live in H2 FY13 & is working well South East Asia has gone live in H1 China & Japan implementation over next year 3% ecommerce sales growth, 49% share Adding corporate accounts across the region Enhanced business insight SAP HANA just gone live Dramatically faster data processing capability Improving our product data analysis and insight Investing for future growth (1) Adjusted for currency and trading days 23

24 UK Value for money 3% sales decline (1), 2% decline ex-raspberry Pi Improving customer s perception of our value Sales trends improved as H1 progressed 1% ecommerce sales decline, 62% share Corporate accounts outperforming Roll-out of price differentiation strategy Customer Investment Manager application driving better decision-making Increased gross margin driving 3% contribution growth (1) Adjusted for trading days 24

25 Downloads Growing our target customers Successful launch of DesignSpark Mechanical, our latest design tool for engineers Search engine marketing 120, ,000 Downloads of DesignSpark Applications 80,000 Global nursery programme 60,000 40,000 Design tools & software for engineers 20, Days following launch DesignSpark PCB DesignSpark Mechanical 5% increase in customer numbers in H1 25

26 Agenda Overview and current trading Ian Mason Financial performance Simon Boddie Business and strategy update Ian Mason Global Sales Klaus Goeldenbot Q&A All 26

27 A large, locally-based sales resource Headcount by region: Europe 830 UK 600 Asia Pacific 670 North America 400 Headcount by activity: Field sales 23% Internal sales 40% Customer services 33% Trade counters (UK) 4% Group 2,500 2,500 people providing an effortless customer experience 27

28 Customer spend / potential Global Sales central to the strategy Sales & Marketing working together to deliver single global effort across customer lifecycle Single global effort across contact lifecycle Awareness Acquisition Nursery Development Brand awareness First purchase First 4 months Beyond 4 months Contacts know who we are Build the brand Acquire contacts in both new and existing customers Drive average purchases higher Spot the winners and nurture them Drive breadth of purchase and average order frequency Human Touch ecommerce machine Grow existing customers more profitably 28

29 What our customers want from Sales Expertise in procurement and logistics in order to save time and money Competence in offering relevant solutions Capability to provide technical support Speed in replying to customers needs Effortless Customer Experience Human Touch is a real differentiator 29

30 Working globally to improve effectiveness Global Sales Apps Store Adding Value Sales Effectiveness Local best practice becomes global standard 30

31 Case study: RS Spain H1 achievements Customer qualification process allows targeted resource deployment 10% more customers Human Touch focused on adding value via: eprocurement and other e-solutions Tailored services for certain market segments Working with our strategic suppliers in the local market Creating an effortless customer experience via: Proactive customer communications Dedicated customer service resource 50% reduction in customer complaints >50% sales growth from this group of customers 10% growth in sales ecommerce sales share now > 70% c.50% eprocurement sales growth >10% Famous For sales growth Winning share from small & medium size competitors 31

32 Case study: RS Japan H1 Achievements Price repositioning in semiconductors to improve value for money 3% sales growth Targeting large accounts with eprocurement solutions ecommerce sales share > 70% eprocurement sales growth doubled Raised awareness of and expansion of our Automation & Control range, targeting relevant customer groups Double-digit Famous For sales growth Strengthening our value proposition 32

33 Key themes H1 FY14 sales growth of 1% was consistent with H2 FY13 Improvement in sales trends in both September and October to 4% growth ecommerce sales growth of 6% in H1, share up 3% pts to 57% H1 FY14 financial performance benefitted from stable gross margin and cost control Good strategic progress made in period and winning more customers Targeting higher structural growth through the cycle 33

34 Agenda Overview and current trading Ian Mason Financial performance Simon Boddie Business and strategy update Ian Mason Global Sales Klaus Goeldenbot Q&A All 34

35 Q&A CONFERENCE CALL DIAL-IN DETAILS: United Kingdom United Kingdom (local) International Password Electrocomponents 35

36 ANNOUNCEMENT OF HALF-YEAR RESULTS HALF YEAR ENDED 30 SEPTEMBER NOVEMBER 2013

37 Financial appendices 37

38 Impact of foreign exchange Headline International contribution Reported *As restated H1 2013/14 H1 2012/13 Growth Growth reported Foreign exchange adjusted m m % % Continental Europe % 14% North America % 2% Asia Pacific % 8% International % 10% Headline UK contribution % 3% Headline Group contribution % 7% Headline Process costs (75.8) (70.1) (8)% (7)% Headline Operating profit % 7% * Restated for the changes in IAS19R Employee benefits 38

39 Impact of IAS19R Employee Benefits Reported IAS 19R Restated H1 2012/13 H1 2012/13 UK contribution 52.5 (1.4) 51.1 International contribution Process costs (69.2) (0.9) (70.1) Headline operating profit 44.3 (2.3) 42.0 Interest (2.8) - (2.8) Headline profit before tax 41.5 (2.3) 39.2 Reorganisation costs (2.5) - (2.5) Tax (11.8) 0.6 (11.2) Profit after tax 27.2 (1.7)

40 Medium-term performance framework KPIs 5 year target Historic performance (1) Group sales growth (2) 5% - 8% pa 4% pa Group return on sales (3), (4) 9% - 11% 7% - 10% (5) Return on capital employed (3), (6) 20% - 30% 15% - 25% Free cash flow as a % of sales (3) 4% - 6% 3% - 8% 1. Performance between 2006 and Underlying sales growth, adjusting for trading days and currency movements 3. Headline measures of profitability and cash flow are defined as the relevant reported profit/cash flow before reorganisation costs/cash flow 4. Headline operating profit expressed as a percentage of sales 5. Reported Group return on sales adjusted to reflect a 75:25 International:UK sales mix 6. Headline operating profit expressed as a percentage of net assets plus net debt 40

41 Electrocomponents: what we do Strong Brands 800K Catalogues 57% ecommerce 2,500 Major Suppliers 500,000 Products > 1m Customers 17 Distribution Centres 44,000 Parcels Daily 90+% of World GDP The world s distributor of choice 41