Presentation for Ocado · This presentation comprises information which is already in the public...

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Final Results for the full year ended 30 June 2013.

Transcript of Presentation for Ocado · This presentation comprises information which is already in the public...

Final Results for the full year ended 30 June 2013.

This presentation, which has been prepared by Regenersis PLC (“the Company”), includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “foresees”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts and include statements regarding the Company’s intentions, beliefs or current expectations. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward looking statements. Any forward-looking statements in this presentation reflect the Company’s view with respect to future events and other risks, uncertainties and assumptions relating to the Company’s operations, results of operations, growth strategy and liquidity. The Company undertakes no obligation publicly to release the results of any revisions or up-dates to any forward-looking statements in this presentation that may occur due to change in its expectations or to reflect events or circumstances after the date of this presentation. This presentation comprises information which is already in the public domain. No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness. None of the Company, its advisers, or any other party is under any duty to update or inform you of any changes to the information contained in this presentation.

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Contents.

Corporate actions

Financial review

Executive summary

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Strategy update and outlook

£2.9m £1.9m

FY12 FY13

£7.8m £9.5m

FY12 FY13

£5.9m

£11.0m

FY12 FY13

£139.9m £179.7m

FY12 FY13

Financial highlights. 28% revenue growth (13% FY12)

Revenue growth

Adjusted EPS

Headline operating profit*

Headline operating cash flow**

22% profit growth (24% FY12)

Profit conversion 116% (75% FY12)

Net debt

(*) Headline operating profit excludes exceptional restructuring costs, acquisition costs, amortisation or impairment of acquired intangible assets, share-based payments and share of results of jointly controlled entities. (**)Headline operating cash flow excludes tax and interest payments.

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13.85p 16.80p

FY12 FY13

20% growth (13% FY12)

Contents.

Corporate actions

Financial review

Executive summary

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Strategy update and outlook

Executive summary (1 of 3).

Financial performance well on track Accelerated our high level of growth With superior levels of cash generation, supporting

an increased dividend Profit driven by Emerging Markets and Advanced

Solutions (81% of HOP) Whilst we additionally absorbed pressures Funded investment in management strength and new lines of business Impact of stronger pound on our foreign earnings Volume reductions from certain large mobile OEM clients And stepped up the pace of corporate activity Landela – market leader in set-top box repair in South Africa Digicomp – market leader in repair in India Regenersis Refurbishment – partnership with EcoAsia Xcaliber – technical leader in mobile diagnostic applications

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Entry to the Indian market, and launch of a mobile diagnostic business – like IFT for smartphones

Growth in our target areas

Executive summary (2 of 3).

We continued to develop and improve operationally Successful integration of HDM, Anovo Nordics and

Landela acquisitions Senior appointments: COO, MD Renew and Group Sales

& Marketing Director Many further new recruits throughout the team 3 separate sales regions created (APAC, EMEA, and

Americas) Creation of new Renew division

Focus on sales began to bear fruit in H2

Europe-wide mobile repair contract for major OEM Device refurbishment partner for several new insurance

clients, including Telefonica Insurance (Spain) Repair and reverse logistics supplier to a major Spanish

mobile operator Digital Care and Recommerce supplier to market-leading

Polish mobile operator New repair clients in South Africa, Mexico and Sweden

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Winning new business synergistically

Reshaping the top management team

Investment in Global Sales Team and new capabilities starting to pay back

UK

Germ

any

Poland

Rom

ania

Russia

Nordics

USA

Turkey

South Africa

Spain

Mexico

Argentina

India

Mobile

Repair X X X X X X X X X X Vendor

Management Outsourcing/

BPO X X X X

Media & Entertainment

STB Repair X X X TVs, Sat Nav,

Laptops X X X X X

B2B niche products

Cash and payment X X X X

Medical and Industrial X X X

Advanced solutions

Recommerce X X X X X X X Digital Care X X

Remote Diagnostics X X

Refurbishment X X X X X

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Executive summary (3 of 3).

Progress in the last 6 months

Contents.

Corporate actions

Financial review

Executive summary

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Strategy update and outlook

Financial review.

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Income Statement £million FY13 FY12 Revenue 179.7 139.9 Headline operating profit 9.5 7.8

Exceptional restructuring costs - (4.9) Acquisition costs (1.9) - Amort'n of acquired int assets (0.1) (0.2) Share based payments and JV (0.4) (0.5) Other income - (0.1)

Operating profit 7.1 2.1 Net finance charge (1.4) (0.4) Profit before tax 5.7 1.7

Tax (1.0) (0.3) Profit after tax 4.7 1.4

28% revenue growth 22% Headline operating

profit growth Finance charge

increased due to £0.7 million unwind of discount factor on deferred consideration

17% effective tax rate

falling to 15.5% in H2 2013

£million FY13 FY12 Non current assets

Goodwill and investments (legacy) 27.0 27.0 Goodwill and investments (new) 13.4 - Tangible assets * 4.4 3.4 Intangible assets 4.6 1.6 Deferred tax 3.5 1.6

52.9 33.6 Current assets

Stock * 7.9 6.6 Debtors * 26.1 18.4 Creditors * (32.7) (20.9) VAT* (0.7) 0.2 Other net current liabilities (0.9) (0.8)

(0.3) 3.5 Net Debt (1.9) (2.9) Non current liabilities (11.3) (3.3) Net assets 39.4 30.9

Capital Employed (*) 5.0 7.7

ROCE (HOP / Capital employed) 190% 101%

Balance sheet.

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Improved working capital management

Improvement in ROCE

to 190%

Cash flow.

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£4.3m capital expenditure and R&D investment

Reduction in working capital whilst growing revenue by 28%

(£2.9m)

£9.5m

£2.4m

£6.5m £1.4m (£0.8m) (£0.4m) (£0.8m)

(£0.6m) (£4.3m)

(£2.6m)

(£2.4m)

(£5.2m)

(£1.5m)

(£1.9m) (5.0)

0.0

5.0

10.0

15.0

20.0

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116% profit to cash conversion

Divisional performance.

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£m Revenue OP OM % FY13 FY12 FY13 FY12 FY13 FY12 Emerging Markets 55.4 41.3 5.9 4.6 10.6% 11.1% Western Europe 96.1 79.7 2.2 2.1 2.3% 2.6% Depot Solutions 151.5 121.1 8.1 6.7 5.3% 5.5% Advanced Solutions 28.2 18.8 3.6 2.9 12.8% 15.4% Total 179.7 139.9 11.7 9.6 6.5% 6.9%

Corporate costs - - (2.2) (1.8) - - Group 179.7 139.9 9.5 7.8 5.3% 5.6%

Emerging markets – double digit growth on improving margins – in spite of volume pressures at large clients

Western Europe – revenue growth but margin pressure in a consolidating market

Advanced solutions - 50% growth in revenue. Digital Care start up costs of £0.6 million suppressed operating margin from 14.9% to 12.8%

81% of HOP in Advanced Solutions and Emerging Markets

Underlying operating margin of 5.6% after add back of Digital Care start up costs

Contents.

Corporate actions

Financial review

Executive summary

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Strategy update and outlook

M&A matrix progress

X = acquired X = synergy

Nordics

Spain

Mexico

Argentina

India

Repair X X X X

VMO/ BPO X

CE Repair X X

Recommerce X X X

Digital Care X

Refurbishment X X X

Corporate Actions.

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Platforms for growth acquired at lower multiples HDM Anovo Nordic Proving the

synergies

Increasing share price and rating

M&A team and pipeline bulked up

Partnerships and Venture Investing

Growing pipeline of earnings-accretive acquisitions

How to deal with early-stage technology acquisitions?

EcoAsia Xcaliber

Landela Digicomp

Example synergy contracts:

• HTC - Spain • Telefonica Insurance • Spain mobile operator

– repair and logistics • Global OEM – parts

refurbishment • Sweden -

refurbishment clients

• Partners want access to our global distribution

• Large economic share without large cheque & risk

• Strengthen our core (win more repair contracts)

M&A team put in place

2011

2012

2013

Digicomp. Digicomp Complete Solutions Limited India market leader in laptop repair One main depot in Bangalore and 92 owned and

franchised stores in major Indian cities. Customers include including Dell, HP, Lenovo and Acer Laptop recovery offering, similar to Recommerce

business. Completed 10 September 2013 INR 451m (£4.5m) consideration with earn-out in March

2015 and September 2016 £7 million revenue (FY 31March 2013) Growing at 25%-40% per annum over the last three

years

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“It is not always easy to find genuinely high-quality businesses in Emerging Markets. India is a hugely exciting market for us and Digicomp ticks all of our boxes in terms of management, client relationships and quality of operations.”

Xcaliber. Xcaliber Technologies LLC Mobile diagnostics software developer 60 employees Smartcheck product

Android, iOS and Window Mobile Deployable in all service channels (online, retail

and telephone) 70 diagnostic tests

Investment of USD 1.2m (£0.75m) for 15% stake (plus the option to acquire a further 10%)

Sales commission agreement (share of value significantly in excess of our equity stake)

Exchanged on 17 September 2013 Regenersis will become Xcaliber’s route to markets

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“Repair Avoidance is the trending topic in our sector. Xcaliber is the technology leader in on-device diagnostic applications for improving customer service and reducing reverse supply chain costs.”

Equivalent of Infield Tester for smartphones

Video.

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Contents.

Corporate actions

Financial review

Executive summary

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Strategy update and outlook

Strategy update.

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“Year 3”: focus on Emerging Markets and Advanced Solutions (and populating the resulting services/territory matrix) is working well

Accelerated by M&A

Helping the traditional repair business with attractive multi-service/multi-geography offering

Three new ‘Game Changers’ now in focus Quality of our people One Regenersis – globalisation and integration M&A – methodically consolidating “Value” by acquisition, while

partnering with “Ingenuity”

Our Game Changers both reflect and enable success and momentum – it is a virtuous circle

• Mobile diagnostics alongside IFT

• Parts refurbishment alongside Recommerce

• Entering Mexico, Argentina and India

The stand-out team in the sector, working together in a consistent way across the world

Contracts such as with a major OEM and Telefonica Insurance

Sustainable competitive advantage

Redoubling efforts in a risk-balanced way

Conclusions and outlook. Current trading is in line with market expectations New business wins have progressed very well and are significantly ahead of the run rate at this

stage for last year Opportunities for global growth, both organically and by acquisition, remain strong Continued strong growth is expected from Emerging Markets and Advanced Solutions Investment in capital expenditure and head office cost growth to further strengthen the

management team will continue throughout the business, in order to deliver efficiencies and further growth in 2015 and beyond

Proposed final dividend of 1.83 pence per share (total dividend of 2.50 pence per share) reflects the board’s confidence

Our performance over the last 2-3 years shows that the aftermarket services sector offers outstanding opportunities to innovative businesses

We are demonstrably on track (financially, operationally, strategically and in M&A) to continue to target double-digit growth in revenue and profitability for the foreseeable future.

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Appendices. 22

Regenersis overview.

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Products Customers

21 depot sites 105 owned or franchised “retail units” 13 countries 3,751 full time equivalent employees £120m market capitalisation

Facts

Mobile 50% M&E 25% B2B 25% Mobile M&E B2B

40 50 60 70 80 90

100 110 120 130 140 150 160 170 180 190 200 210 220 230 240

2012 Nov. 2010 - 2011

Timeline.

Regenersis plc:

an underperforming

but well-positioned

business (~ 45

pence per share).

Hanover announces

14% stake

New board appointed.

Introduction of new

strategy and geographic

P&L reporting, showing

>50% of profits from

Emerging Markets.

Full year results showing

first operating

improvements.

Acquisition of HDM,

bringing Spain / Mexico /

Argentina.

Hanover

announces stake

increased to 23%.

Release of

2012 final

results

2013 Share price graph.

Trading

update H1

FY 2013

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Trading

update H2

FY 2013 Acquisition

of Digicomp

Hanover Investors.

Founded 2002

Public market turnaround specialist

Selected public transactions shown opposite

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Selected Public Transactions

Company Year Return

4Imprint Plc 2003 2.8x Elementis Plc 2005 2.5x Spirent Plc 2006 2.1x Fairpoint Plc 2009 2.0x Regenersis Plc 2011 4.0x

Turnaround Milestones.

2012 2013 2011

South Africa New Site Turkey New

Site

New CFO appointed

Digital Care rollout

commenced

Close down of Glasgow commenced

Global rollout of

B2B commenced

Acquisition of Spain &

LATAM

Recommerce rollout

commenced

Virgin Media

IFT rollout commences

First Global Mobile

Customer Secured

Group Sales & Marketing

Director Appointed

USA New Site

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Acquisition of Landela

Remote Diagnostics

division created

Renew division

created & formation of partnership

with EcoAsia

Acquisition of Digicomp

Renew MD Appointed

Investment in Xcaliber

C.O.O. Appointed

Operational development.

Executive Chairman

COO Depot

Solutions

CFO

Global Sales

Renew Division

Strategy M&A

Refurbish-ment

Re-commerce

Digital Care

Emerging Markets

W. Europe & Americas

Integration and Cont.

Impr.

IT

IT

3. New senior management • Bryce Boothby • Pritpal

Matharu • Simon Harper

M&E and B2B

6. Separate IT approach to Renew

5. Scale up of new divisions and several new contracts

4. Integration of HDM, Anovo Nordics and Landela

2. Scale up of M&A team

1. Scale up of sales team

7. EcoAsia partnership

8. Renew division

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Competitive landscape.

Competitive Building Blocks

Category Examples Financial strength and performance

Repair and reverse capability

Focus on Emerging Markets

Focus on Beyond Repair

Regenersis

Pureplays SBE, Anovo Local specialists

Cordon, Bitronic

EMS repair operations

Jabil, Flextronic () ()

Large logistics and distribution

DHL, Arvato, Brightpoint, ()

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Investment proposition. Proposition Highlights

Play on emerging middle classes in emerging markets

Good organic growth & continuing M&A opportunities

Growing markets with resilience in down turn

5th consecutive year of revenue and profit growth 2009-2013 and on track to deliver consensus for 2014.

Exposure to strategic shake out Continuing M&A activity in the

sector - and for Regenersis

New high growth business ‘Beyond Repair’ in the Advanced Solutions area

IFT UK: completed and other countries being pursued

New Services: Renew (Digital Care, ReCommerce & Refurbishment) and Remote Mobile Diagnostics

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