2016 Interim Results For the 6 months ended 30 June 2016
Agenda • CEO appointment • Overview • Operational Priorities • Financial Highlights • Vending Update • Outlook 2
CEO appointment • Meinie Oldersma appointed as CEO with effect from 1 August 2016 • Extensive experience of European and international markets ― 2008 to 2014 CEO of 20:20 Mobile Group – telecom distributor - £1bn revenue ― 1993 to 2008 various roles in $46bn revenue Ingram Micro, largest technology distributor in the world, including CEO of $1.8bn revenue China region • Non-Executive director of Bunzl plc until 22 August 2016 • Business review initiated, with conclusions to be announced in Q4 • Actions to improve operational and financial performance • Appropriate capital structure to support future development 3
Overview • Group revenue up 1.8% at reported rates, down 1.3% at constant currency • Gross margin down 1 percentage point to 29.5% due to impact of lower supplier rebates arising from the stock reduction programme • Adjusted profit before tax* of £5.0 million, reported loss before tax of £13.9 million after non cash Nordic goodwill impairment of £16.9 million • Turnaround plan now being implemented in the UK • Adjusted operating cash generation of £24.7 million reflects approx. £14 million cash generated from on-going stock reduction programme • Net debt of £107.7 million reflecting £13.5 million adverse exchange movement offsetting effect of stock reduction programme. Net debt to EBITDA ratio of 2.8x is within financial covenant of 3.0x • No interim dividend declared * before amortisation of acquired intangibles, goodwill 4 impairment, acquisition related costs and exceptional items
2016 SPWD at CER YTD UK Germany 564 566 1,114 1,115 536 536 531 1,087 1,091 1,072 516 1,063 501 1,016 0% 4% 8% 2% -3% 3% 0% -1% -6% -4% -7% -8% -7% -9% Jan Feb Mar Apr May Jun Jul Jan Feb Mar Apr May Jun Jul 5 SPWD in £’000 at € 1.286:£1. Growth rates represent year on year changes
2016 SPWD at CER YTD France Other Territories 842 390 388 372 385 822 833 804 814 368 373 779 781 354 1% 4% 5% 6% 0% 2% 0% 1% 5% 3% -1% -2% -4% -7% Jan Feb Mar Apr May Jun Jul Jan Feb Mar Apr May Jun Jul 6 SPWD in £’000 at € 1.286:£1. Growth rates represent year on year changes
2016 SPWD at CER YTD Nordics Group 194 3,052 3,009 3,010 2,991 188 2,948 2,889 2,872 172 165 156 142 145 16% 0% 0% -2% -3% -14% -2% -4% -4% -3% -20% -23% -24% -24% Jan Feb Mar Apr May Jun Jul Jan Feb Mar Apr May Jun Jul 7 SPWD in £’000 at € 1.286:£1. Growth rates represent year on year changes
2016 Operational Priorities
Reduction in net debt • Net debt at £107.7m (December 2015: £104.3m) representing net debt/EBITDA of 2.8x (December 2015: 2.4x) within 3.0x financial covenant limit • Underlying net debt reduction of £10.1m offset by £13.5m adverse exchange impact reflecting stock reduction plan and other actions • Continued focus on cash generation, reducing debt and improving working capital efficiency to reduce net debt during H2 • Business review will address capital structure HY FY HY FY H1 2014 2014 2015 2015 2016 Net debt/EBITDA* 1.4x 1.8x 2.1x 2.4x 2.8x * The ratio of Consolidated Total Net Borrowings to Consolidated EBITDA in relation to the trailing 9 12 month period, calculated using the average exchange rates for the trailing 12 month period
Stock reduction programme Working H1 • Good progress with stock reduction Capital Days 2011 2012 2013 2014 2015 2016 programme Receivables 52.8 52.9 50.4 51.4 46.3 44.4 Inventories 77.0 83.0 85.0 97.0 107.0 88.0 • Stock down £14.1 million overall, and Payables (64.4) (60.6) (65.9) (66.0) (58.6) (57.5) £26.4 million reduction at constant currency Total 65.4 75.3 69.5 82.4 94.7 74.9 4.7x 4.4x 4.3x 3.8x 3.4x 4.2x • On target to achieve £30m target by September Dec FX Dec Change* June Inventory 2015 2015* 2016 • Targeting sustainable stock turns of at Total 142.2 12.3 154.5 26.4 128.1 least 4.5x 10 * £m at constant currency € 1.203:£1
UK H1 performance • Buck & Hickman main contributor to overall decline, principally driven by UK SPWD Jan Feb Mar Apr May Jun large drops in small number of B&H 323 351 356 359 355 330 customers SPWD (20)% (18)% (22)% (7)% (6)% (17)% change • Brammer UK* performance better, Brammer UK* 693 736 758 756 736 742 however significant drop in May, and SPWD only partially recovered in June (2)% (1)% 4% (1)% (6)% (3)% change Total UK 1,016 1,087 1,114 1,115 1,091 1,072 SPWD (9)% (7)% (7)% (3)% (6)% (8)% change 11 *Brammer UK includes Brammer UK, Ireland and Iceland
UK business turnaround • UK performance continued to suffer from: ― Continued decline in T&GM spend in Aerospace, Steel and Government Sectors ― Recovering from historic operational issues • Turnaround plan identified and actions are at an early stage ― Reinvigorate sales channels ― Focus on core bearings business ― Improve service levels and operational efficiency ― Employee engagement • Improvements expected in H2 and thereafter UK Performance 2013 2014 2015 H1 2015 H1 2016 Revenue 290.2 282.1 278.1 143.5 135.6 Adjusted Operating profit 21.3 15.8 12.6 6.1 2.0 12
Goodwill impairment in Nordic region • Conditions remain very challenging Nordic H1 H1 2014 2015 Performance 2015 2016 • No significant benefit experienced in local Revenue 54.4 45.4 24.2 21.0 markets despite partial recovery in oil price Adjusted 2.3 (1.3) - (2.0) Operating profit • Actions to refocus Nordic business away from Oil SPWD change by and Gas sector continuing with: Total product and Norway Sweden Finland Denmark Nordic customer type • Large T&GM contract win in Norway Sales £m 10.2 8.1 1.2 1.5 21.0 • Key Accounts growth continuing with SPWD Key Accounts 3% 70% (36)% 46% 17% up 17%. KA now 17% of sales (2015: 12%) (21)% Base business (22)% (9)% (54)% (21)% • New Swedish MD appointed Bearings & Power (33)% Transmission • Medium term outlook updated resulting in Nordic T&GM 485% goodwill of £22.2 million written down to £5.3 Other Products 71% million Total (17)% (3)% (54)% (20)% (17)% • Resulting impairment charge £16.9 million 13 £m as reported
Gross profit • Group margins declined by 1.0 ppt to 29.5% from June 2015 • Underlying country margin improvement of 2015 HY Gross Margin % 30.5% 0.2ppt reflects better focus and commercial Underlying country margin improvement 0.2% execution Supplier rebates (0.8)% Stock reduction effect: (0.4)% • Margin erosion from stock reduction through Release of overheads from stock reduced supplier rebates from lower purchase 2016 HY Gross Margin % 29.5% volumes and increased stock turns • Continued improvements will be partially offset by effect of reduced supplier rebates in H2 2016 14
Financial highlights
Profit & Loss H1 2016 H1 2015 Change CER** Sales £365.6m +1.8% -1.3% £372.3m Adjusted* Operating profit* £17.2m -51.2% -52.0% £8.4m Profit before tax* £14.1m -64.5% -65.0% £5.0m EPS* 2.1p 8.1p -74.0% Dividend per share 3.6p - - Return on operating capital employed* 5.4% 12.1% Reported Operating (loss)/profit £(10.5)m £12.2m (Loss)/profit before tax £9.1m £(13.9)m (LPS)/EPS 5.2p (12.1)p * pre amortisation of acquired intangibles, goodwill impairment, acquisition related costs and exceptional items 16 ** Constant currency rates of € 1.286:£1
Profit & Loss H1 2015 H1 2016 H1 2015 FX* Change Reported Turnover 372.3 377.2 11.6 365.6 +1.8% Gross margin 109.8 115.0 3.5 111.5 Gross margin % 30.5% - 29.5% 30.5% Sales, Distribution and Administrative (97.5) (3.2) (101.4) (94.3) Costs Adjusted operating profit 8.4 17.5 0.3 17.2 -51.2% Return on sales % 2.3% 4.6% - 4.7% Interest (3.4) (3.2) (0.1) (3.1) Adjusted profit before tax 5.0 14.3 0.2 14.1 -64.5% * Constant currency rates of € 1.286:£1 Results are stated before amortisation of acquired intangibles, impairment of goodwill, acquisition related costs and exceptional items 17 £m
H1 SPWD by segment Q1 Q2 H1 H1 SPWD growth at constant currency £’000 Growth Growth Growth By geography: UK (7)% (5)% (6)% 1,085 Germany 3% (1)% 1% 541 France 3% 1% 2% 377 Nordics (21)% (13)% (17)% 172 Other territories 2% -% 1% 812 Total Group (3)% (3)% (3)% 2,987 By product: Bearings and Power Transmission (5)% (10)% (8)% 1,358 T&GM (3)% 1% (1)% 672 Other 1% 5% 3% 957 Total Group (3)% (3)% (3)% 2,987 By customer: Key Accounts -% (1)% -% 1,633 Base Business (6)% (5)% (6)% 1,354 Total Group (3)% (3)% (3)% 2,987 Constant currency rates of € 1.286:£1 18 Average number of working days for H1 2016 is 125 days (2015:123 days)
H1 2016 Cash generation (0.3) Receivables (14.3) Payables (1.9) Exceptional and 25.8 0.5 acquisition Share option Inventories related costs charges 4.6 22.8 Depreciation 8.4 Operating Cash Flow and Operating profit amortisation (before amortisation, impairment, acquisition costs and exceptionals) 19 £m
Recommend
More recommend
