interim results 2012 - laird · pdf file• david lockwoodlockwood joinsjoins thethe...

26 July 2012

Interim Results 2012

Agenda

1. Highlights – Nigel Keen

2 Fi i l i J th Sil2. Financial review – Jonathan Silver

3. Business review – Nigel Keeng

2

Results highlights

• Revenue of £249.6 million (2011: £243.1 million)

• Pick‐up in revenue in the second quarter, over the first quarter

• Underlying* operating margin of 12.4% (2011: 11.7%)

• Underlying* profit before tax up by 7% to £27.3 million

• Earnings per share of 8 6p up 9% on prior year• Earnings per share of 8.6p, up 9% on prior year

• Interim dividend declared of 3.4 pence (2011: 2.7 pence), up 26% on 2011

• Strong cash conversiong

• Expansion of capacity proceeding to plan

• New product launches on track for the second half of the year

• Integration of recent acquisitions, Emerson & Cuming and Summit, progressing according to plan

• David Lockwood joins the Board as Chief Executive on 13 August 2012• David Lockwood joins the Board as Chief Executive on 13 August 2012

* 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

3

Financial ReviewJonathan SilverJonathan Silver

4

Revenue & Profit

£m Half Year to 30 June Full Year

2012 2011 2011

Revenue 249.6 243.1 491.3

Operating profit 31.0 28.5 58.4

Finance costs (3.7) (3.1) (6.7)

+9%

( ) ( ) ( )

Profit before tax† 27.3 25.4 51.7+7%

• Margin improvement delivers increase in profitsMargin improvement delivers increase in profits

5

† 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

Segmental Analysis ‐ Half Year to 30 June

Actual2012£m

Actual2011£m

%Δ

Actual2012US$m

Actual2011US$m

%Δ

Performance Materials (PM)

Revenue 152.2 150.4 +1% 240.0 243.4 (1)%

Operating profit† 21.7 21.4 +1% 34.2 34.6 (1)%

Wireless Systems (WS)

Revenue 97 4 92 7 +5% 153 6 149 9 +2%Revenue 97.4 92.7 +5% 153.6 149.9 +2%

Operating profit† 12.6 10.9 +16% 19.8 17.7 +12%

Unallocated costs (3.3) (3.8) (5.2) (6.2)

Total continuing

Revenue 249.6 243.1 +3% 393.6 393.3 ‐

Operating profit† 31.0 28.5 +9% 48.8 46.1 +6%

6


Margin performance and results translated in US$m

Performance Materials & Wireless Systems

Half Year to 30 June 2012

Half Year to 30 June 2011

US$m US$m

Revenue 393.6 393.3

Cost of sales (240.7) (244.4)

Gross margin 152.9 148.938.8% 37.9%

SG&A (80.9) (80.2)

Gross R&D (26.8) (24.9)

Net capitalised development 3.6 2.3

Operating profit† 48.8 46.112.4% 11.7%

7


200

Performance Materials Division – revenue bridge US$m$m H1 revenue

$243m ‐2%* 100

200

EMI

$(2)m

EMI$240m

‐16%*

$(9)m

Thermal

02009 2010 2011 2012

$m1%* $3 9m

Thermal

†Acquired

$8m

SIP

40

60

80 Thermal

$m+1%*

$3.7mEMI

$3.9mThermal

EMI

0

20

40

2009 2010 2011 2012

20

30• Revenue 5% lower on an organic basis

• Shielding for smartphones, tablets and laptops growing in EMI

Signal Integrity Products

$m

0

10

g p , p p g g

• Reduction in EMI shielding for plasma display panel TVs

• Weaker telecom market impact on both EMI and Thermal2009 2010 2011 2012

8* year on year growth in US$ including organic growth of acquired businesses† 2012 revenue from acquisitions

Performance Materials Division US$m

2012 2011

US$m H1 H1 FY

Revenue 240.0 243.4 489.5‐1%

Operating profit† 34.2 34.6 69.0‐1%

Return on sales 14.3% 14.2% 14.1%

• Improvement in EMI margins offsets reduction in Thermal to hold margins flatImprovement in EMI margins offsets reduction in Thermal to hold margins flat

9


120

Wireless Systems Division – revenue bridge US$m$m

H1 revenue

80

120Telematics/M2M

$

$153m

$

† Acquired

0

40

2009 2010 2011 2012

$m

$(6)mTELE/M2M

$150m ‐7%* +20%*$(1)m

WACS$5m

IAS

‐4%*$5m

TELE/M2M

20

30

40 Infrastructure Antennae

IAS

0

10

2009 2010 2011 2012

• Re en e 2% lo er on an organic basis

40Wireless Automation & Control Solutions

$m

• Revenue 2% lower on an organic basis

• Rationalisation of low margin tracking range reducing Telematics

• Robust auto demand in Telematics

0

20

Robust auto demand in Telematics

• Increase in demand for IAS solutions in public safety market and gaming

• Deferred industrial and railroad spend impacting WACS business0

2009 2010 2011 2012

* year on year growth in US$ including growth of acquired business† 2012 revenue from acquisitions10

p p g

Wireless Systems Division US$m

2012 2011

US$m H1 H1 FYUS$

Revenue 153.6 149.9 299.1+2%

Operating profit† 19.8 17.7 36.4

Return on sales 12.9% 11.8% 12.2%

+12%

57PM• ROS increases to 12.9% from 11.8%

• Vertical integration contributes to Telematics margin improvement

11


Discontinued Operations US$m

2012 2011

US$m H1 H1 FY

Revenue 29.5 73.0 152.0

Operating profit† 5.4 (5.1) 1.6

• Overheads substantially reduced to bring business back to profit in exit phase

12


Operating Cash Flowlf lf ll£m Half Year to 30 June 2012

Half Year to 30 June2011

Full Year to31 December

2011

Discontinued Continuing Total Total

Operating profit 3.4 31.0 25.4 59.4

Depreciation ‐ 6.8 9.3 17.0p

Amortisation of capitalised development ‐ 1.8 4.0 6.4

Other and non‐cash ‐ 1.0 0.7 1.3

3 4 40 6 39 4 84 13.4 40.6 39.4 84.1

Decrease in working capital 6.4 5.3 (1.0) (0.3)

Capitalised development (4 1) (4 5) (9 1)Capitalised development ‐ (4.1) (4.5) (9.1)

Capital expenditure (0.3) (5.6) (7.7) (12.0)

Operating cash flow 9.5 36.2 26.2 62.7

St ti h i f 117% f ti i ti

Total 45.7 26.2 62.7

• Strong operating cash conversion of 117% from continuing operations

13

Cash Flow

£m Half Year to 30 June Full Year

2012 2011 2011

Operating cash flow 45 7 26 2 62 7Operating cash flow 45.7 26.2 62.7

Finance costs (3.6) (3.3) (7.0)

Tax (5 6) (5 9) (9 5)Tax (5.6) (5.9) (9.5)

Trading cash flow 36.5 17.0 46.2

Dividends (14.1) (11.2) (18.4)

Acquisitions / disposals (31.1) (20.8) (21.0)

Exceptionals (8.7) (6.6) (22.6)

Other 0.3 ‐ ‐

(17.1) (21.6) (15.8)

Exchange on cash and borrowings (0.3) 2.5 1.7

Increase in net borrowings (17.4) (19.1) (14.1)

14

Balance Sheet

£m 30 June 31 December

2012 20112012 2011

Shareholders’ equity 442.2 443.8

Net borrowings 135 1 117 7Net borrowings 135.1 117.7

Capital employed 577.3 558.1

Interest cover (covenant basis) † 10.0 10.0

Net borrowings / EBITDA†† 1.5 1.4

• Healthy financial position

Net borrowings / EBITDA

• Healthy financial position

† minimum of 3.0 times required by Group’s loan facilities†† maximum of 3.5 times required by Group’s loan facilities

15

Earnings, Tax & Dividend

Pence per share Half Year to 30 June 31 Dec

2012 2011 2011

Earnings per share† 8.6 7.9 16.2

Underlying tax rate 16.5% 17.5% 17.1%

Dividend per share 3 4 2 7 8 0Dividend per share 3.4 2.7 8.0

Average number of shares (million) 265.7 265.4 265.4

• Dividend increased by 26%• Low tax rate maintained• Full year 2012 dividend of 10 pence to be recommended

16


Business ReviewNigel KeenNigel Keen

17

Performance Materials Division benefiting from strength in key markets

BY PRODUCT SEGMENT*

• Revenue up 1% YoY

in key markets

EMI Shielding$ 161m£102m• Revenue up 1% YoY

• Good demand from IT, smartphone, tablet and automotive customers offset by lower demand in telecoms

• Capacity expansion well underway to support growth• Emerson & Cuming integration proceeding well67%

24%

9%EMI

Thermal

Signal Integrity

$ 161m£102m

Supplying the IT, telecoms, consumer, automotive and military sectors

H1 2012 REVENUE £152 2 • Revenue down 9% YoY

Thermal Solutions$ 57m£36m

BY MARKET SEGMENT*

H1 2012 REVENUE £152.2m Revenue down 9% YoY• Telecoms infrastructure sales remain subdued• IT market showing signs of improvement• ‘Green’, energy & medical markets held up

Supplying the IT telecoms automotive consumer medical & military sectors

$ 57m£36m

Supplying the IT, telecoms, automotive, consumer, medical & military sectors

• Revenue up 1% YoY

Signal Integrity41%

34%

IT/Datacom

Handset

$ 22m£14mp• Good level of demand from IT markets

Supplying the IT, consumer & automotive sectors19%6%

Consumer

Other

$

* excluding Handset Antennae and Mechanisms

18

Ongoing growth drivers for our Performance Materials solutions

iSUPPLI FORECASTING:

solutions

PERFORMANCE MATERIALS GROWTH DRIVERS: iSUPPLI MARKET GROWTH FORECASTS:

2012‐2016 CAGR:

Media tablets 20%

Positioned in structural growth markets

Increased electronic content in devices

Faster and more compact models require more

FORECASTS:

Smartphones 14%

Telecoms 5%

Auto 5%

Faster and more compact models require more connectivity and heat solutions

Increasing bandwidth capacity requirements

Auto 5%

Notebook/PCs 5%“Green” markets e.g., electric vehicles & charging components, LED lighting, smart metering

ORGANIC REVENUE

• Market growth• Increasing intensity of product

ORGANIC REVENUE GROWTH DRIVEN BY:

• Increasing intensity of product usage

• Expansion of customer base• Market share gains• New applications• New applications

19

Continued growth in the Wireless Systems Division

• Revenue flat YoY• Strong demand from automotive market in N America N l t b i ith t t21%

Telematics & "M2M"

WACS

BY PRODUCT SEGMENT* Telematics / M2M$ 89m£56m

• New long‐term business won with auto customers• Lower asset tracking sales reflecting move to exit lower margin products• Bluetooth held up despite lower demand from European customers• Summit integration proceeding wellSupplying the automotive, infrastructure & retail sectors

58%21%

WACS

Infrastructure & other antennae

• Revenue down 4% YoYH1 2012 REVENUE £97 4

Wireless Automation & Control Solutions$ 33m£21m

• Industrial and rail market spend being deferred• After‐sales service strong

Supplying the rail, industrial & mining sectors

H1 2012 REVENUE £97.4m $

• Revenue up 20% YoY• Continued demand for portable radio solutions from public safety

15%6% Automotive

BY MARKET SEGMENT*Infrastructure Antennae

$ 32m£20m• Continued demand for portable radio solutions from public safety market

• Good consumer demand for gaming consoles antennae systems

S l i h i f i i l l /d & i

49%

30%

Industrial

IT/Datacom

Other

Supplying the infrastructure, municipal, telecoms/data & security sectors


20

Increasing demand for connectivity, requiring our Wireless Systems solutionsWIRELESS SYSTEMS GROWTH DRIVERS:

I i d f i l ti it b t l

Systems solutionsiSUPPLI MARKET GROWTH FORECASTS:

2012‐2016 CAGR:

Telematics/Infotainment 9%

Increasing need for wireless connectivity between people and devices

Opportunities from:

i t lli t t t ti t & i i f t i tIndustrial 6%

Medical devices 6%

‐ intelligent transportation systems & in‐car infotainment‐ public infrastructure & safety‐ wireless M2M: medical, industrial & energy

Increasing demand for two‐way data, combined hardware WLAN 3%and software e.g., smart meters

More compact, integrated solutions from auto, medical, industrial markets requiring our solutions and services ORGANIC REVENUE

• Market growth• Increasing intensity of product

GROWTH DRIVEN BY:

usage• Expansion of customer base• Market share gains• New applications

21

T t f th di t l t f

Delivering on our targetsTargets for the medium to long‐term of:

‐ Organic revenue growth averaging 10% per annum

‐ Underlying return on sales margin of 15%Underlying return on sales margin of 15%

Organic revenue growth Return on Sales Dividend

2013 FY FY 12.0p – to be recommended

2012 FY FY 10.0p – to be recommended

2012 H1 (4)% H1 12.4% H1 3.4p= 10%

2011 FY 12% FY 11.9% FY 8.0p

p.a. from

start of 2011

Average compound growth of 24% from 2010

2011 H1 H1 11.7%

Target average 10% p.a. on a rolling basis Target 15%

to 2013

22

on a rolling basis

Well positioned for the increase in connected devices

Market improvements expected in near‐term Strong customer base

Planned new product introductions

Good improvement in margins

O i

Well positioned in str ct ral gro th

Ongoing innovation

structural growth markets

Capacity expansion progressing

23

Confident of delivering on our growth targets over time

Appendix

Well positioned in structural growth markets

500

NOTEBOOK/PCs & PRINTER SHIPMENTS

TELEMATICS/INFOTAINMENTOEM REVENUE

50

Units (m)

105

WLAN SHIPMENTSUnits (m)CAGR

NOTEBOOK/PCS 5%Notebook/PCsPrinters

Revenue ($bn)

200

300

400

500

20

30

40

50CAGR 9%

90

95

100

105NOTEBOOK/PCS 5%PRINTERS 1%

Printers

CAGR 3%

0

100

200

2012 2013 2014 2015 2016

0

10

20

2012 2013 2014 2015 2016

75

80

85

2012 2013 2014 2015 2016

MEDICAL EQUIPMENT OEM REVENUE MEDIA TABLET SHIPMENTSUnits

( )SMARTPHONE SHIPMENTSUnits

( )

Source: iSuppli, March 2012Source: iSuppli, June 2012 Source: iSuppli, June 2012

Revenue ($b )

300

400

60

80

(m)

CAGR 20%

CAGR 6%

1200

1600

(m)

CAGR 14%

($bn)

0

100

200

0

20

40

0

400

800

25

02012 2013 2014 2015 2016

02012 2013 2014 2015 2016

Source: iSuppli, June 2012 Source: iSuppli, June 2012

02012 2013 2014 2015 2016

Source: iSuppli, June 2012

Breadth is strengthH1 2012 REVENUE £249 6m

BY PRODUCT SEGMENT* (%)

H1 2012 REVENUE £249.6m

BY MARKET SEGMENT* (%)

30%

10%

5%

8%6%

30%

12%

41%8%

22%21%

14%

IT / Datacom Transportation

I d t i l/M di l/Milit H d t

23%

EMI Shielding Telematics / Wireless Modules

Th l Wi l & A t ti C t lIndustrial/Medical/Military Handsets

Other Consumer

Thermal Wireless & Automation Controls

Other Antennae Signal Integrity


26

Committed facilities

£m Life

Bank Facilities

2016 235.0 3.8

Private Placement

2014 62.4 2.3

2016 27.6 4.3

Total committed facility 325.0 3.5

• Ample headroom

27

Need for increased connectivity drives our growthIT/D /T l• IT/Datacomm/Telecomm

– Connectivity for laptops, netbooks, tablets, PCs and servers– Routers for internet applications– Telecomm base stations

Requiring our EMI & Thermal solutions

• Transportation– Antennae for automotive electronics e.g. AM/FM radio,

satellite radio, cellular– Tracking devices for haulage GPS Requiring our Telematics solutionsTracking devices for haulage, GPS– Intelligent transportation systems & infotainment

• Industrial & Instrumentation– Wireless control systems Requiring our M2M products– Remote data handling

• Consumer– Electronic devices e.g. iPad, Gaming consoles

Flat screen TVs

Requiring our EMI & Thermal solutions

Requiring our M2M products

– Flat screen TVs

• Infrastructure & Medical– Public safety– Remote diagnostics

solutions

Requiring our M2M & wireless products

• Handsets– Smartphones

“ ” k

Requiring our EMI solutions

products

• “Green” markets– electric vehicles, rechargeable lithium batteries, LED lighting,

smart meters

28

Requiring our Thermal solutions

Margin trajectory model

Rev133

Economies of scale from organic revenue growth

Rev100

133ASSUMPTIONS• No change in product mix

• 70% of costs variable, 30% fixed

IOIO31

• Variable moves with revenue, fixed with inflation

N D

E X

PBIT

IO26

31

MODEL OUTPUT• Profit drop through 25% on incremental

I

PBIT12

PBIT20

Profit drop through 25% on incremental revenue

• Revenue growth >30%; PBIT growth >60%12.0% RoS 15.0%

REV: Revenue

12.0% RoS 15.0%

29

IO: Indirect overheadsPBIT: Profit before interest & tax

interim results 2012 - laird · pdf file• david lockwoodlockwood joinsjoins thethe...

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