FULL YEAR RESULTS 2017 26 FEBRUARY 2018
KEY POINTS 2017 OPERATIONAL ACTIONS STABILISE CHALLENGES UNDERWAY OPERATIONS COMPLETE FOCUS ON DELIVERING A ROBUST OPERATIONAL PLATFORM Private and confidential 2
OUR PRIORITIES REINFORCE OUR STRENGHTENING CREATE AND FOUNDATIONS OUR CAPABILITIES CAPTURE VALUE Private and confidential 3
FINANCIAL REVIEW FARIYAL KHANBABI Private and confidential
FINANCIAL SUMMARY Revenue Underlying EBIT Net cash £13.1m £182.2m £12.8m £181.0m £9.7m £8.0m 2016 2017 2016 2017 2016 2017 17.9p 37% £9.4m Underlying Underlying Underlying profit gross margin EPS before tax Private and confidential 5
EBIT BRIDGE (£0.4m) Revenue decrease (£2.4m) Freight costs to expedite £13.1m (£1.6m) £1.0m £9.7m Investing in sales Operating costs 2016 2017 Private and confidential 6
LIGHTING REVENUE The Americas 2017 2016 2017: £103m Obstruction 14% 12% 2016: £100m Food & Beverage 7% 8% Heavy industrial 14% 16% Mining 10% 9% Oil & Gas 18% 16% EMEA Power 10% 10% 2017: £20m Pulp & Paper 11% 7% 2016: £23m Other industrials 16% 22% 100% 100% APAC 2017: £15m 2016: £14m Private and confidential 7
SEGMENTAL RESULTS LIGHTING GHTING SIGNAL ALS & CO COMPONE ONENTS TS £137.5m £136.6m Revenue Revenue £43.5m £45.6m 2016 2017 2016 2017 Operating profit Operating profit £13.5m £11.2m £4.9m £3.9m 2016 2017 2016 2017 Private and confidential 8
NON-UNDERLYING COSTS £m 2017 2016 Employee severance and restructuring costs (0.3) 5.3 Intangible asset impairment 1.2 5.1 Tangible asset impairment and disposals 0.9 (0.2) Inventory write down - 3.7 Production transfer costs 4.6 2.4 Other - 0.1 Non-underlying costs 6.4 16.4 Total cash impact 5.2 4.9 Private and confidential 9
CASH £m 2017 Working Net cash at 31 December 2016 8.0 capital EBITDA (underlying) 13.6 reduced by 14 days Net working capital 5.9 Capex (4.9) Non-underlying (5.2) Taxes & other (3.7) Foreign exchange impact (0.9) Net cash at 31 December 2017 12.8 £31.4m £24.6m Cash conversion 143% £7.4 £8.7m m 2016 2017 Inventory Net receivables Private and confidential 10
2018 PLANNING ASSUMPTIONS c.23% £1m - £2m c.£6m Group tax rate Savings in cash tax costs Capital investment Net interest Broadly in line with 2017 INCOME STATEMENT Tax rate c23% c.£6m for plant upgrades, IT Capex & product development CASH FLOW Working capital Broadly in line with 2017 Private and confidential 11
BUSINESS REVIEW MARTY RAPP Private and confidential
SHORT TERM PRIORITIES STABILISE Build a more robust Ensure highly efficient Return to normal on- component supply base manufacturing process time-delivery Private and confidential 13
CURRENT MANUFACTURING ISSUES Materials • Planning and forecasting • Supply chain agility • Industry shortages Production • Cycle of learning • Small batch size • “Tribal knowledge” Private and confidential 14
CURRENT MANUFACTURING ACTIONS PEOPLE IMPROVEMENTS • Additional Dialight resources; to manage material requirements and production planning PROCESS • Complex and lower volume products returned to in house manufacturing Private and confidential 15
RECOVERY INDICATORS – LIGHTING ONLY On time delivery Gross margin Order growth £151m 74% £145m 42% 40% 48% 2016 2017 2016 2017 2016 2017 2017: (4%) 2017: (200bps) 2017: (26%) Private and confidential 16
OPERATIONS Increase production capacity and geographic footprint Reduce cost of Reduce goods sold operational risk Optimise inventory Improve forecast and working capital accuracy IMPROVE ON TIME DELIVERY AND LEAD TIME Private and confidential 17
DIALIGHT DIFFERENCE Cost effective Sustainable Low maintenance integrated design, Environmentally friendly LED technology high efficiency, and an industry leading warranty Convenient Trusted Designed with no field replacement Deep expertise exclusively in LED parts for the lifespan of the fixture and lighting technology with the largest easy retro-fit kits installed base of industrial LED fixtures Intelligent Safe Controlled lighting solutions integrate Solutions designed for the world’s with existing factory automation and most demanding industrial building management systems environments Private and confidential 18
STRONG SALES PLATFORM Ford saves enough energy every year from Dialight LED lighting to power a large assembly plant. 150,000 mwh Energy (£8m) 110,000 maintenance hours (£9m) 100,000 metric tons of CO 2 19 Private and confidential
SUMMARY • Operational issues significantly improved by end of H1 2018 • Significant order backlog to reduce as delivery performance improves • Benefits starting to be realised in H2 2018 • Industrial LED market opportunity largely untapped • Compelling market proposition with sustainability benefits • Market leader in technology • Strong balance sheet and cash flow Private and confidential 20
Questions Private and confidential 21
DISCLAIMER Certain statements included or incorporated by reference within this presentation may constitute “forward -looking statements” in respect of the Group’s operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by those statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. No responsibility or obligation is accepted to update or revise any forward-looking statement resulting from new information, future events or otherwise. Nothing in this presentation should be construed as a profit forecast. This presentation does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares or other securities in the company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares and other securities of the company. Past performance cannot be relied upon as a guide to future performance and persons needing advice should consult an independent financial adviser. Statements in this presentation reflect the knowledge and information available at the time of its preparation. Liability arising from anything in this presentation shall be governed by English Law. Nothing in this presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws. Private and confidential 22
INCOME STATEMENT Variance £m Constant Reported Currency 2017 2016 Revenue 181.0 182.2 (1%) (4%) Cost of goods sold (114.3) (112.7) Gross Profit 66.7 69.5 (4%) (9%) Distribution costs (34.0) (32.7) Administrative expenses (23.0) (23.7) Underlying EBIT 9.7 13.1 (26%) (33%) Non-underlying costs (6.4) (16.4) Finance expense (0.3) (0.5) Profit/(Loss) before tax 3.0 (3.8) Tax (1.7) 1.0 Profit/(Loss) after tax 1.3 (2.8) Underlying EPS 17.9 26.9p Private and confidential 23
SEGMENTAL RESULTS Lighting £m 2017 2016 Variance Revenue 137.5 136.6 1% Direct costs (83.2) (79.2) (5%) Gross Profit 54.3 57.4 (6%) Gross margin 40% 42% (2%) Overheads (43.1) (43.9) 2% EBIT 11.2 13.5 (17%) Signal & components £m 2017 2016 Variance Revenue 43.5 45.6 (5%) Direct costs (31.1) (33.5) 7% Gross Profit 12.4 12.1 3% Gross margin 29% 27% 2% Overheads (8.5) (7.2) (18%) EBIT 3.9 4.9 (20%) Note: Segmental EBIT excludes unallocated overheads of £5.4m. 24 Private and confidential
CASE STUDY Pilkington Automotive - 17% Energy savings, dramatic visibility improvement from upgrade to Dialight LED fixtures • Existing HID fixtures provided unsatisfactory visibility and difficult to access fixtures • Controls package added complete flexibility • Delivered 17% energy cost savings • At least a decade of zero maintenance Private and confidential 25
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