Delivering Our vision, our future Full year results for the year - PowerPoint PPT Presentation

Delivering ‘Our vision, our future’ Full year results for the year ended 31 March 2016

Safe harbour statement The information contained in this presentation may include forward looking statements about e2v’s financial and operational performance and results and the markets in which it operates. These statements can be identified by terminology that includes, without limitation, ‘estimates’, ‘believes’, ‘anticipates’, ‘intends’, ‘expects’, ‘plans’, ‘targets’ and ‘predicts’ and all similar words and statements of a predictive nature. By their very nature, all forward looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of e2v. These statements are based on current information, forecasts, expectation and belief and will be subject to variations in these factors as they involve elements of risk and uncertainty. These risks and uncertainties are discussed in detail in e2v’s Annual Report & Financial Statements, announcements to the market and presentations to analysts and investors. Consequently, these variations could cause the actual performance, results and markets to be materially different than those predicted in the forward looking statements. The forward looking statements in this presentation are accurate only as at the date of this presentation and e2v undertakes no obligation to revise or update forward looking statements to reflect subsequent events or circumstances, except as may be required by applicable law and regulation (including Listing Rules). No statement in this presentation is intended to be a profit forecast or be relied upon as a guide to future performance. 2

Agenda Highlights Steve Blair, Group CEO Finance review Charles Hindson, Group FD Business update & outlook Steve Blair, Group CEO Q&A 3

FY16 highlights FY16 ‐ good financial performance  revenue growth 5.1%  adjusted operating profit up 4.7%, despite FX headwind Dividend up 5.9% Progress on ‘Our vision, our future’ Solid platform for growth Revenue driven growth, trusted expert partner, resilient financial profile 4

Financial summary Year ended 31 March Reported At constant FX*** FY16 FY15 Change FY16 FY15 Change Reported revenue £236.4m £224.9m 5.1% £230.6m £224.9m 2.5% Adjusted* operating profit £42.0m £40.1m 4.7% £44.7m £36.7m 21.8% Adjusted* operating margin 17.8% 17.8% ‐ 19.4% 16.3% 310bps Adjusted* profit before tax £40.8m £39.0m 4.6% Adjusted** earnings 14.59p 13.68p 6.7% per share Dividend 5.4p 5.1p 5.9% Net borrowings (£21.1m) (£5.2m) (£15.9m) Basis of preparation: *Adjusted operating profit is before specific items **Adjusted earnings per share (EPS) is before specific items less tax where applicable *** Revenue at FY15 rates, adjusted operating profit at FY15 rates before FX gains and losses 5

Finance review – revenue bridge FY16 revenue (£m) – growth of 5.1%  Organic revenue Organic £3.2m Net M&A £2.6m Growth:  Industrial vision  Space  Radiotherapy  Lower activity:  RF defence  Semiconductors   Net acquisitions: AnaFocus + £4.4m  SP Devices + £0.6m  Thermal imaging ‐ £2.4m   FX benefit of 2.4% 6

Finance review – operating profit bridge FY16 adjusted operating profit of £42.0m ‐ growth of 4.7%  Organic growth contribution  Cost profile discipline  Good cost control Used flexibility  Benefit of reorganisations   AnaFocus met earn ‐ out targets  FX swing £5.5m FX losses £2.1m (FY15 gain £3.4m)  7

Finance review ‐ cash flow bridge FY16 profile Net M&A Financing (£27.8m) Operating cash generation £20.9m (£9.0m) M&A net of Dep n , amort Working Interest, Increase in net Adjusted Dividend disposals capital tax & borrowings operating less CAPEX other profit Growth (£5.1m): CAPEX reduced in Q4   Imaging inventory (£3.0m)  Acquisition(£13.0m):  Trade receivables (£2.1m)  Net M&A (£9.0m)  Reorganisation and cost flex (£6.5m)  Product line acquisitions (£4.0m)  Customer focus (£5.2m): Other   Securing supply chains for customers (£1.9m) Purchase of own shares (£3.7m)   Support Q4 deliveries (£0.6m)  Delivery on programmes (£2.7m)  8

FY17 selected guidance  c.£14m CAPEX > c.£11m depreciation CAPEX & tax  Effective tax rate c.29%  Re ‐ classification of R&D tax credits  Outlook based on March 2016 rates FX  FX revenue tailwind of c.7%, adjusted profit tailwind of c.4%  H1/H2 split expected to be in line with FY16  Rebuild flexibility and benefit of reorganisation Profile  Improve working capital  Available debt capacity for acquisitions (up to 1.5x)  FY17 outlook unchanged 9

Key metrics Financial metric Objective FY16 FY15 GDP + specialist sector and new product growth Revenue growth Execute on organic growth programmes 5.1% 3.3% Accelerate with targeted acquisitions in divisions Manage to mid teens operating profit margin over the cycle Margins 17.8% 17.8% Build margins once effectiveness established R&D 90% of R&D customer aligned 87% 86% Cash conversion >80% adjusted operating profit ‐ 2 year recapitalisation phase 50% 99% Use of capital Mid 20% ROCE 20% 23% Net debt Net borrowings/EBITDA ≤ 1.5x through acquisition cycle 0.40x 0.10x Dividends Adjusted earnings cover: c.2.5x 2.7.x 2.7x Acquisitions 3 year Cash Flow Return on Investment > 10% Revenue driven growth, trusted expert partner, resilient financial profile 10

Imaging FY16 FY15 Change Revenue £103.5m £88.7m 16.7% Operating profit £15.7m £9.3m 68.8% Operating margin 15.2% 10.5% 470bps Professional  Gained traction from new products in industrial vision and data collection systems  Status AnaFocus grew revenue from new products and custom programmes  H2 FY16 Space  objectives Stepped up delivery on existing programmes  Delivered operational improvement  Secured specific programmes for FY17  Professional  Grow revenue from new products and markets in industrial vision and sensors  FY17 AnaFocus continue to grow custom design programmes and sensor sales  objectives Space  Continue to focus on operational improvement  Secure follow ‐ on orders for specific programmes for FY17 delivery  Growth focus: Industrial Imaging and Space 11

RF Power FY16 FY15 Change Revenue £80.5m £84.2m ‐ 4.4% Operating profit £18.7m £19.4m ‐ 3.6% Operating margin 23.2% 23.0% 20bps Status Radiotherapy renewed customer contract in Q4  H2 FY16 Completed the current defence reorganisation  objectives Delivered against specific defence programmes  Continue to support our radiotherapy OEMs  Ongoing reorganisation of Chelmsford site  FY17 Grow Lincoln defence activities from existing programmes  objectives Secure specific defence programmes  Growth focus: Radiotherapy 12

Semiconductors FY16 FY15 Change Revenue £52.4m £52.0m 0.8% Operating profit £14.2m £11.9m 19.3% Operating margin 27.1% 22.9% 420bps Completed acquisition of SP Devices and partnership with Peregrine  Status Secured orders for H2 delivery  H2 FY16 Engaged with customers as a key partner  objectives Built order book for FY17  Secure orders for within year delivery  FY17 Grow revenue from Peregrine and other product line acquisitions  objectives Microprocessors higher revenue in H2, underpinned by last time buy  Integrate SP Devices and delivery of first year plan  Growth focus: Modules, signal path, IP partners 13

Focus on our foundations Progress in second year Progress in first year Next steps • • • Listening to customers to Key customers trusting us as Increase customer intimacy drive innovation partners Customer Focus • Broaden strategic customer base • Improved customer ratings and feedback • • • Ongoing operational Improved delivery Margin improvement in all three Operational improvement in Space performance divisions • Focus on process effectiveness Excellence • Reduce inventory cycle time • • • Clarity of communication Divisions with end to end P&L Portfolio optionality and consistency of message responsibility Simplification • Reducing complexity and simplified approvals • • • Refreshed leadership team, Developing talent Leverage best practice and team People strengthened management work across Group • • • Acquisition and integration Acquisition of SP Devices Continue to build acquisition of AnaFocus pipeline Financial • Good financial performance in challenging markets In all that we do: “Does this drive growth?” 14

Investment priorities to drive growth – 79% Group revenues (FY14: 72%) Divisions Imaging RF Power Semiconductors Industrial Vision Space Radiotherapy Modules & ADC, IP partners and distributors Discretionary R&D Investment (% sector 8% 4% 5% 11% revenue) Acquisitions AnaFocus SP Devices/PLAs* Four areas of focus  89% of Group R&D focused in chosen areas delivering growth  Two acquisitions completed in Industrial Vision and Semiconductors  Driven by customers, markets and opportunities 15 *Product Line Acquisitions