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INVESTOR PRESENTATION July 2016
2 INVESTOR PRESENTATION│ July 2016
Introduction to Acal
Acal is a specialist electronics company
Designing, manufacturing & distributing customised electronic components
Supplying growth markets
Revenues of £290m, operating profit of £16.3m
Operating internationally – 23 countries
High margin, differentiated products
Niche products with limited competition
Acquisitive
12 acquisitions since December 2009
Generating significant shareholder returns
TSR growth of 62% in the 3 years (to e/March ‘16)
Group revenue & operating profit
-5
0
5
10
15
20
0
50
100
150
200
250
300
350
FY10 FY14 FY15 FY16
Revenue (£m)- LHS
Underlyingoperating profit(£m) - RHS
3 INVESTOR PRESENTATION│ July 2016
Brexit implications
Acal is not fundamentally affected by the EU referendum result
Very little cross border trading between Acal UK & EU, & vice versa
Existing currency hedging protects against stronger raw material purchase currencies (eg USD)
UK accounts for only 18% of sales
High proportion of our customers export internationally
Will benefit from weaker £ and €
Translation of reported results into weaker £
Will benefit our reported profits & earnings
Backdrop of improving global market conditions
4 INVESTOR PRESENTATION│ July 2016
Building a leader in custom electronics
Strategy that is transforming the Group
Clear priorities are building a high quality, international business
Increasing the proportion of own products designed & manufactured by Acal
Increased operating margins
Generating strong & stable cash flows
Supplying growth markets with excellent long term prospects
Acquiring high quality D&M businesses
‘Platforms’ – bigger & that establish a position (eg Noratel)
‘Bolt-ons’ – smaller & that integrate into existing businesses (eg Plitron)
Retain entrepreneurial culture
Internationalising
Building position in North America & Asia
5 INVESTOR PRESENTATION│ July 2016
Connectivity
Smart metering,
communication, industrial
control, ‘Internet of Things’
Industrial semiconductors
forecast to grow 10% CAGR
2014-19(6)
We supply essential technologies to growth markets
We focus on specialised markets with excellent fundamentals
where we have real expertise
Growing markets driven by long term fundamental needs
Increasing proliferation of and dependence on electronics
Estimated £12bn market worldwide
Medical
Control, monitoring &
diagnostic
Medical semiconductors
forecast to grow 12% CAGR
2012-18(5)
Renewable energy
Wind, solar, tidal
Wind turbine power
expected to account for 50%
of incremental power
generated 2014-30(3)
Transportation
Road, rail, air
Automotive electronics
forecast to grow 8% CAGR
2014-19(4)
Macro drivers
Population growth >30% by 2050(1)
GDP growth 3% globally 2016-30(2)
4.5% emerging, 2%
developed world
Key macro trends
Growing middle class
Growing affluent older population
Growing green energy
Reducing cost of technology
End market drivers
Growth in travel
Growth in medical spending
Shift to renewable energy
Growth in device connectivity
1. Source: United Nations 2015
2. Source: World Bank, IMF, IHS global insight
3. Source: International Energy Outlook 2015
4. Source: Gartner, PWC, Eden McCallum
5. Source: IC insights
6. Source; Gartner, PWC, Eden McCallum
Our technologies
Magnetics & Power
Communications & Microsystems
Electromechanical & Optical
6 INVESTOR PRESENTATION│ July 2016
Examples of our customers
Cable & housing unit
5 year revenue lifecycle
c. £200k revenue / year
Telematics unit to monitor & communicate
temperature throughout journey
5+ year revenue lifecycle
c. £3 - 4m revenue / year
Transformer and wireless communication for
smart meters
5 year revenue lifecycle
c. £3 - 4m revenue / year
Transformer for higher speed battery charging
5+ year revenue lifecycle
c. £2m revenue / year
Eye
(Glaucoma)
treatment
Smart
energy
meter
Electric
Vehicles
Refrigerated
transportation
Designed and manufactured by Acal
7 INVESTOR PRESENTATION│ July 2016
Building an international business
Common strategy
Local implementation
Stable revenues & margins
Largest customer <5% of Group revenue
Our products are a low proportion of total
customer spend
UK 30%
Eurozone 70%
FY 2010
UK 18%
Scandinavia 21%
International 17%
Eurozone 44%
FY 2016
Revenue – c.£120m* Revenue - £290m
* - Ongoing revenue excluding non core disposals
International +£61m
Scandinavia +£50m
Eurozone +£44m
UK +£16m
8 INVESTOR PRESENTATION│ July 2016
(1) Annualised for acquisitions
(2) As a proportion of group revenue.
(3) FY16 growth is ongoing sales.
(4) Return on trading capital employed excludes goodwill.
(5) Free cash is the net cash flow before payment of exceptional items, payment to the legacy defined benefit pension scheme, dividends, net proceeds from equity fund raising and costs of acquisitions.
(6) Growth in TSR over the last 3 years.
Strategic and performance targets
Targets established in Nov 14 with ‘mid-term’ defined as 3-5 years
Operating margin target increased from 6% to 7%
Key Strategic Indicators Mid term
target
1. Increase share of group revenue from D&M c. 5% 18% 37% 51%(1)
65%
2. Increase cross-selling sales(2)
0% 3% 4% 5% 4-5%
3. Build sales beyond Europe(2)
0% 5% 12% 17% 20%
Key Performance Indicators 3 yr 3 yr target
average (H1 18)
1. Organic sales growth -16% 2% 3% 3%(3)
2.7%
2. Increase underlying operating margin -0.3% 3.4% 4.9% 5.7% n/a 7%
3. Attractive ROTCE(4)
- 24% 24% 23% 23.3% >25%
4 Generate strong free cash flow (FCF)(5)
- 86% 76% 70% 77% >75% PBT
5 Generate long term value for shareholders -
- 3 year TSR(6) +5% +101% +62% n/a
- percentile v FTSE small cap index - 71st percentile 20th percentile 22nd percentile
FY16FY14
FY14 FY16
Well ahead
of GDP
Upper
quartile
FY15
FY15
FY10
FY10
9 INVESTOR PRESENTATION│ July 2016
1.69p 1.69p 1.82p 1.82p 1.82p 2.20p 2.33p
3.40p 3.74p 3.99p 4.36p4.98p
5.40p5.72p
5.09p5.43p
5.81p6.18p
6.80p
7.60p8.05p
FY10 FY11 FY12 FY13 FY14 FY15 FY16
Dividends and future growth
Dividend
58% dividend increase in 6 years
Progressive dividend policy
Outlook
Earnings growth expected to continue
*Consensus of analysts as of May 2016
Dividend history
Analysis Reported
Consensus Growth
FY 17* FY 16 %
Operating profit 19.6 16.3 20%
Operating margin 6.2% 5.7% 0.5ppts
Profit before tax 16.7 14.5 15%
Fully diluted EPS 18.4p 17.0p 8%
Actual
Market expectations vs last year’s
results
Latest recommendation Previous
Peel Hunt Jun-16 Buy 315p Unchanged
FinnCap Jun-16 Buy 339p Unchanged
Stiefel Jun-16 Buy 290p From Hold 265p
10 INVESTOR PRESENTATION│ July 2016
Summary
We are building a global specialist in custom electronics
Compelling market opportunity
Structural trends in target markets
Attractive business model, unique market position
High quality, recurring revenues with rising operating margins
Long term growth prospects
Growth markets that are dependent on electronics
Fragmented market ideal for acquisitions
Track record of delivery
Successful turnaround
12 successful acquisitions and integrations
APPENDIX
12 INVESTOR PRESENTATION│ July 2016
Power &
Magnetics
Electro-
mechanical
Microsystems &
Displays
Communications
& Sensors
Imaging &
Photonics
20,000 customers
Acal today
Design & Manufacturing
Own products, highly differentiated, c.5000 customers
c.75% customised
Higher margins
Custom distribution
Market reach – 20,000 customers, 12 geographies
Sales & engineering capability – 560 employees
Web platform – lead generation
Operating companies
Share customer opportunities
Achieve synergies
Retain an entrepreneurial culture
Head Office
Custom Distribution
Design & Manufacturing
Key:
Revenue Profit
Design & Manufacturing
48%
Custom Distribution
52% Design &
Manufacturing78%
Custom Distribution
22%
13 INVESTOR PRESENTATION│ July 2016
Technology capabilities
Medical
Power & Magnetics
Communications & Sensors
Photonics & Imaging
Electromechanical & Shielding
Shielding
Microsystems
Keyboards
14 INVESTOR PRESENTATION│ July 2016
1994
History since incorporation
Acquisition of
Myrra (£8m)
Acquisitions of
Compotron,
Hectronic, MTC
(total £9m)
Acquisition of
BFi Optilas
SAS (£13m)
Admission to the
official list of the
London Stock
Exchange
1986 2009 2011
Jan
2013
Aug
2013
Sale of ATM
Parts
Incorporation
New management:
NJ joins as CEO
SG joins as CFO
(July 10)
Jan
2009 2010
Sale of UK
Parts
Apr
2013
Acquisition of
YEG (£2m)
Acquisition of
RSG (£3m)
Nov
2013
Sale of EAF
Parts
Acquisition of
Noratel
(£71m)
Acquisition of
Foss (£8m)
Acquisition of
Flux (£3m)
Acquisition of
Contour
(£17m) and
Plitron (£2m)
£6m placing £55m rights
issue
Sale of AES
(completes
exit from IT
Supply Chain
£12m total)
Jun
2014
Jul
2014
Jan
2015
Nov
2015
Jan/Feb
2016
15 INVESTOR PRESENTATION│ July 2016
7.1
13.9
16.3
100%
104%
100%
FY14 FY15 FY16
Free operating cash flow % op profit
Operating cash flow (£m)
FY 16 Performance Metrics
EPS (p)
Gross Profit (£m) Sales (£m) & GM% Operating profit / margin%
189
253
288+34%
+14%
29.8%
31.1%
32.2%
FY14 FY15 FY16
189
253
288
29.8%
31.1%
32.2%
FY14 FY15 FY16
Revenue Gross Margin
56.5
78.6
92.6+39%
+18%
FY14 FY15 FY162.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
0.0
3.0
6.0
9.0
12.0
15.0
18.0
FY 14 FY 15 FY 16
Operating profit (CER) Operating margin (CER)
11.8p
15.4p
17.0p
FY14 FY15 FY16
16 INVESTOR PRESENTATION│ July 2016
Board of Directors
R J Moon - Non-Executive Chairman
Richard joined the Board in September 2004 and became
Chairman in April 2005. Formerly a Director of Racal Electronics
plc and Chief Executive of Thales plc, he is Non-Executive
Chairman of Seven Technologies Holdings Limited, Ketech
Enterprises Limited and PixelPin Limited and is Chairman of
Synergie Global Limited and Advetec Holdings Limited.
R J Brooman MA FCA FCMI - Senior Non-Executive Director
Richard, a Chartered Accountant, became a Non-Executive
Director in January 2013. He is a Non-Executive Director, and
Chairman of the Audit Committees, at Hg Capital Trust plc and
Invesco Perpetual UK Smaller Companies Investment Trust plc.
He is also a Non-Executive Director of Camden & Islington NHS
Foundation Trust. During his executive career he was Group
Finance Director of Sherwood International Plc and VCI Plc.
H E Marsh MBA MA - Non-Executive Director
Henrietta (Het) was appointed a Non-Executive Director in May
2013. She is also a Non-Executive Director of Electric Word plc
and of Alternative Networks plc, and a member of the London
Stock Exchange's AIM Advisory Group. Previously, she was a
Fund Manager at Living Bridge EP LLP and a Director of 3i plc.
M M Diamond MBE - Non-Executive Director
Malcolm was appointed a Non-Executive Director in November
2015. He is also Executive Chairman of Trifast Plc and Non-
Executive Chairman of Flowtech Fluidpower PLC. Prior to being
appointed Executive Chairman, Malcolm was Managing Director of
Trifast Plc and, among other previous appointments, was Senior
Non-Executive Director of Dechra Pharmaceuticals Plc and a Non-
Executive Director of Unicorn AIM VCT plc.
T Graham - Non-Executive Director
Tracey joined the Board as a Non-Executive Director in
November 2015. She is also a Non-Executive Director at
Ibstock plc, Royal London Mutual Building Society and Link
Scheme Limited. Among other previous appointments, she
was a non-Executive Director at RPS Group PLC. During her
executive career, she was Chief Executive of Talaris Limited
and Managing Director of De La Rue Cash Systems.
N J Jefferies – Group Chief Executive
Nick joined Acal as Group Chief Executive in January 2009. His
experience of electronics and the components industry comes
from holding senior positions for over 15 years with leading
international distributors of electronic components and computer
products, such as Electrocomponents plc and Arrow Electronics.
Nick originally trained as an Electronics Design Engineer with
Racal Defence (now part of Thales plc)
S M Gibbins – Group Finance Director
Simon was appointed as Group Finance Director in July 2010. A
Chartered Accountant, he was previously Global Head of
Finance and Deputy CFO at Shire plc. Prior to joining Shire in
2000, he spent 6 years with ICI plc in various senior finance
roles, both in the UK and overseas. His earlier career was spent
with Coopers & Lybrand in London
17 INVESTOR PRESENTATION│ July 2016
Acal – Senior Management
N J Jefferies – Group Chief Executive*
Nick joined Acal as Group Chief Executive in January 2009. His
experience of electronics and the components industry comes
from holding senior positions for over 15 years with leading
international distributors of electronic components and computer
products, such as Electrocomponents plc and Arrow Electronics.
Nick originally trained as an Electronics Design Engineer with
Racal Defence (now part of Thales plc)
S M Gibbins – Group Finance Director*
Simon was appointed as Group Finance Director in July 2010. A
Chartered Accountant, he was previously Global Head of
Finance and Deputy CFO at Shire plc. Prior to joining Shire in
2000, he spent 6 years with ICI plc in various senior finance
roles, both in the UK and overseas. His earlier career was spent
with Coopers & Lybrand in London
P H Neville ACA - Group Commercial Director
Paul was appointed Group Commercial Director in March 2009. A
Chartered Accountant, he has over 15 years experience of
working in senior management positions for listed public
companies, including Wincanton plc and Uniq plc. Prior to joining
Acal, he was Group Chief Executive of an AIM listed software
development company.
M F Pangels - Group Strategy and Development Director
Martin is Group Strategy and Development Director. He joined Acal
in July 2010 after working as an advisor to the business. Prior to
joining Acal, Martin spent 9 years at Electrocomponents plc, where
he was Regional General Manager for Europe, and 6 years with
Bain & Company as a strategy consultant.
G P Shillinglaw FCIS - Group Company Secretary
Gary joined Acal as Group Company Secretary in August 2008.
A qualified Chartered Secretary, he has previously held that
position in a number of listed and non-listed public companies,
including Countryside Properties plc, B&Q plc and First Leisure
Corporation plc.
P G Webster - Group Product Management and Operations
Director
Paul joined Acal in June 2010 as Managing Director, Acal BFi
UK. He has many years experience in senior management roles,
including Head of Product Management for Electronics globally
at Electrocomponents plc. He began his career as a design
engineer for Plessey Avionics (now part of BAE Systems).
* Denotes membership of the Board