Electrocomponents plc ANNOUNCEMENT OF PRELIMINARY RESULTS YEAR - PowerPoint PPT Presentation

Electrocomponents plc ANNOUNCEMENT OF PRELIMINARY RESULTS YEAR ENDED 31 MARCH 2012 24 May 2012

Agenda Overview and current trading Ian Mason 2012 performance Simon Boddie Strategy update Ian Mason  Maintenance Kevin Thompson Q&A All 2 2

Key themes  Record sales, gaining market share internationally  International growth of 9%, International > 70% of Group  Both Electronics and Maintenance grew by 7%, two strong offers  eCommerce at heart of multi-channel marketing approach, growth of 18%  UK performed well, profit now 5% above pre 2008 recession levels  Significant IT investments to further strengthen global infrastructure Leveraging competitive advantages to gain market share 3 3

Financial highlights  Broad based sales growth 7%, c. £1.3bn  Stable gross margin 47%, through year  Further cost leverage 0.3% points improvement  Continued PBT growth £122m, 7% growth  Rising return on capital employed +0.4% points, 24.6%  Increased full year dividend 2%, confidence Broad based grow th delivering record sales 4 4

Current trading Sales Sales FY12 FY12 FY13 FY13 (2) (2) (1) (1) growth growth Apr&May Apr&May H1 H1 Q3 Q3 Q4 Q4 15% 15% 5% 5% 2% 2% (1)% (1)% Continental Europe Continental Europe 14% 14% 6% 6% 1% 1% (3)% (3)% North America North America 12% 12% 11% 11% 4% 4% (3)% (3)% Asia Pacific Asia Pacific 14% 14% 6% 6% 2% 2% (2)% (2)% International International 5% 5% 2% 2% 0% 4% 4% UK UK 11% 11% 5% 5% 1% 1% 0% 0% Group Group Group sales at similar level to last year (1) seven weeks to 18 May 2012 (2) underlying sales growth adjusted for currency and trading days 5 5

Sales per day UK sales per day 1,700 1,500 1,300 Group sales per day 1,100 900 5,500 700 5,000 500 8 9 9 9 9 0 0 0 0 1 1 1 1 2 2 2 2 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y 4,500 F F F F F F F F F F F F F F F F F 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q ƒ £’000 sales per trading day (constant foreign exchange) 4,000 International sales per day 3,500 4,000 3,000 8 9 9 9 9 0 0 0 0 1 1 1 1 2 2 2 2 3,500 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y F F F F F F F F F F F F F F F F F 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 3,000 £’000 sales per trading day (constant foreign exchange) 2,500 2,000 1,500 8 9 9 9 9 0 0 0 0 1 1 1 1 2 2 2 2 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y F F F F F F F F F F F F F F F F F 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q £’000 sales per trading day (constant foreign exchange) Group sales per day 15% above 2008 levels (1) (1) constant foreign exchange 6 6

Agenda Overview and current trading Ian Mason 2012 performance Simon Boddie Strategy update Ian Mason  Maintenance Kevin Thompson Q&A All 7 7

Basis of preparation Unless otherwise stated:  Figures have been prepared using International Financial Reporting Standards (IFRS)  Changes in revenue are adjusted for exchange rates and for the number of trading days (‘underlying sales growth’)  Changes in profit, cash flow, debt and share related measures, such as earnings per share, are at reported exchange rates 8 8

Profit and loss account (£m) 2012 2011 Change 7% (1) Revenue 1,267.4 1,182.2 Gross margin 46.8% 47.1% (0.3)% points Operating costs as % of sales 36.7% 37.0% 0.3% points Operating profit (2) 128.1 119.8 7% Interest (5.8) (5.8) - Profit before tax 7% 122.3 114.0 Return on capital employed 24.6% 24.2% 0.4% points Revenue and PBT increasing by 7% (1) Underlying revenue growth adjusting for currency and trading days (2) See appendix for impact of foreign exchange on operating profit 9 9

Group pre tax profit increase Contribution 9% 4% growth (1) £4m £(11)m £15m £122m £114m £m 2011 International UK Processes 2012 Both International and UK delivering contribution grow th (1) constant foreign exchange 10 10

International contribution Underlying change (1) (£m) 2012 2011 Revenue 902.7 825.9 9% Operating costs (249.4) (235.6) (5)% Contribution 160.8 146.3 9% Contribution % 17.8% 17.7% 0.1% points 9% International contribution grow th (1) (1) adjusted for currency; revenue also adjusted for trading days 11 11

International contribution increase Contribution 8% 7% (2) 26% growth (1) £5m £161m £1m £9m £146m £m 2011 Continental Europe North America Asia Pacific 2012 All regions contributing, strong performance from Asia Pacific (1) at constant foreign exchange (2) excluding additional IT costs related to SAP implementation 12 12

UK contribution Underlying change (1) (£m) 2012 2011 Revenue 364.7 356.3 3% Operating costs (76.5) (72.8) (5)% Contribution 106.0 101.7 4% Contribution % 29.1% 28.5% 0.6% points UK contribution 5% above pre-2008 recession level (1) revenue adjusted for trading days 13 13

Gross margin  Group gross margin broadly stable  UK increase (+1.0% pts):  Price differentiation strategy  Increased discount effectiveness  Favourable foreign exchange  International decrease (-0.8% pts):  Principally Continental Europe and Asia Pacific  Large customer account wins  Larger orders  Unfavourable foreign exchange Gross margin stable through the year 14 14

Operating costs Costs : % sales Drivers of 2012 operating leverage: 2012 2011 Change  International scale benefits: International 27.6% 28.5% (0.9)% pts. - Particularly in Asia Pacific  Cost reductions: UK 20.9% 20.5% 0.4% pts. - Continuous Improvement Processes 11.0% 10.9% 0.1% pts. - Catalogue costs, notably in Europe Total 36.7% 37.0% (0.3)% pts.  Cost increases: - Inflation, stock holding costs - Investment in sales and marketing - Investment at Nuneaton 2013 cost considerations:  European catalogue/marketing costs in H1 c. £2m  APAC SAP implementation costs c. £1m  Non-cash pension charge increase c. £2m Costs reduced by 0.3% points of sales 15 15

Earnings per share (£m) 2012 2011 Change Profit before tax 122.3 114.0 7% Effective tax rate 31% 31% - Per share amounts Earnings 19.5p 18.0p 8% Full year dividend (1) 11.75p 11.5p 2% Dividend cover 1.7x 1.6x 0.1x 8% increase in headline EPS (1) 2012: includes 6.75p final proposed dividend 16 16

Dividend  Increase full year dividend by 2%, resulting in cover of 1.7 times  Significant opportunities to invest for growth at attractive returns  Intention to maintain adequate resources to take advantage of opportunities  Over time, as earnings increase, intention to pursue progressive dividend policy whilst increasing cover to around 2 times Confidence in Group’s prospects 17 17

Cash flow (£m) 2012 2011 Profit before tax 122.3 114.0 Depreciation 27.9 27.0 Employee share options / non-cash mvts 3.0 1.8 Finance expense (net) 5.8 5.8 Working capital (35.8) (41.7) Cash generated from operations 123.2 106.9 Interest paid (net) (5.8) (6.1) Tax paid (26.9) (21.5) Net capital expenditure (37.8) (21.9) Free cash flow 52.7 57.4 Over £50m of free cash flow 18 18

Investment to drive grow th CURRENT STATUS FUTURE   17 warehouses Strengthen key global warehouses   Recent investments: Enable range expansion WAREHOUSES • Allied (2007) • Shanghai (2011)  SAP in UK, Europe & Allied  Implement SAP in Asia Pacific,  2011 investments: c. £20m over 2-3 years IT SYSTEMS • UK/Europe upgrade  Exploit additional functionality in • Data centre move UK/Europe  • SAP installed in Allied Drive benefits of Allied SAP   Broad maintenance range Continue to expand electronics range, especially semiconductors  Expanded electronics offer STOCK  Drive sales worldwide  Increased local stock in Asia Pacific 2013 – capex c. £30m and stock turns c. 2.5x 19 19

Net debt (£m ) 2012 Strong balance sheet metrics: Net debt as at 1 April 2011 (160.7) 2012 2011 Free cash flow 52.7 Net debt:EBITDA 1.0x 1.1x Dividends paid (50.1) Interest cover 25x 23x New shares / finance loans 1.1 Translation differences 2.8 Successful £210m bank refinancing, maturity Nov 2015 Net debt as at 31 March 2012 (154.2) Pension net deficit £8.3m (2011: £5.4m) Net debt reduced by £7m 20 20

Financial highlights  Broad based sales growth 7%, c. £1.3bn  Stable gross margin 47%, through year  Further cost leverage 0.3% points improvement  Continued PBT growth £122m, 7% growth  Rising return on capital employed +0.4% points, 24.6%  Increased full year dividend 2%, confidence Broad based grow th delivering record sales 21 21

Agenda Overview and current trading Ian Mason 2012 performance Simon Boddie Strategy update Ian Mason  Maintenance Kevin Thompson Q&A All 22 22