Full year results for the year ended 31 March 2016
Delivering ‘Our vision, our future’
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These statements are based on current information, forecasts, expectation and belief and will be subject tovariations in these factors as they involve elements of risk and uncertainty. These risks and uncertainties arediscussed in detail in e2v’s Annual Report & Financial Statements, announcements to the market andpresentations 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 ande2v undertakes no obligation to revise or update forward looking statements to reflect subsequent events orcircumstances, except as may be required by applicable law and regulation (including Listing Rules). Nostatement in this presentation is intended to be a profit forecast or be relied upon as a guide to futureperformance.
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Agenda
Highlights Steve Blair, Group CEO
Finance review Charles Hindson, Group FD
Business update & outlook Steve Blair, Group CEO
Q&A
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FY16 highlights
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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
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
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 per share 14.59p 13.68p 6.7%
Dividend 5.4p 5.1p 5.9%
Net borrowings (£21.1m) (£5.2m) (£15.9m)
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Finance review – revenue bridge
Organic revenue 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%
FY16 revenue (£m) – growth of 5.1%
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Organic £3.2m Net M&A £2.6m
Finance review – operating profit bridge
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)
FY16 adjusted operating profit of £42.0m ‐ growth of 4.7%
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Growth (£5.1m): Imaging inventory (£3.0m) Trade receivables (£2.1m)
Reorganisation and cost flex (£6.5m) Customer focus (£5.2m):
Securing supply chains for customers (£1.9m) Support Q4 deliveries (£0.6m) Delivery on programmes (£2.7m)
Finance review ‐ cash flow bridgeFY16 profile
Operating cash generation £20.9m Financing (£27.8m)
Adjusted operating profit
Working capital
Interest, tax & other
Dividend Increase in net borrowings
Net M&A (£9.0m)
M&A net of disposals
Depn, amort
less CAPEX
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CAPEX reduced in Q4 Acquisition(£13.0m):
Net M&A (£9.0m) Product line acquisitions (£4.0m)
Other Purchase of own shares (£3.7m)
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FY17 selected guidance
c.£14m CAPEX > c.£11m depreciation Effective tax rate c.29% Re‐classification of R&D tax credits
CAPEX & tax
FX
Profile
Outlook based on March 2016 rates 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 Improve working capital Available debt capacity for acquisitions (up to 1.5x) FY17 outlook unchanged
Financial metric Objective FY16 FY15
Revenue growthGDP + specialist sector and new product growthExecute on organic growth programmesAccelerate with targeted acquisitions in divisions
5.1% 3.3%
Margins Manage to mid teens operating profit margin over the cycleBuild margins once effectiveness established 17.8% 17.8%
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%
Key metrics
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Revenue driven growth, trusted expert partner, resilient financial profile
StatusH2 FY16 objectives
Professional Gained traction from new products in industrial vision and data collection systems AnaFocus grew revenue from new products and custom programmes
Space Stepped up delivery on existing programmes Delivered operational improvement Secured specific programmes for FY17
FY17 objectives
Professional Grow revenue from new products and markets in industrial vision and sensors AnaFocus continue to grow custom design programmes and sensor sales
Space Continue to focus on operational improvement Secure follow‐on orders for specific programmes for FY17 delivery
Imaging
11Growth focus: Industrial Imaging and Space
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
StatusH2 FY16 objectives
Radiotherapy renewed customer contract in Q4 Completed the current defence reorganisation Delivered against specific defence programmes
FY17 objectives
Continue to support our radiotherapy OEMs Ongoing reorganisation of Chelmsford site Grow Lincoln defence activities from existing programmes Secure specific defence programmes
RF Power
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Growth focus: Radiotherapy
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
StatusH2 FY16 objectives
Completed acquisition of SP Devices and partnership with Peregrine Secured orders for H2 delivery Engaged with customers as a key partner Built order book for FY17
FY17objectives
Secure orders for within year delivery Grow revenue from Peregrine and other product line acquisitions Microprocessors higher revenue in H2, underpinned by last time buy Integrate SP Devices and delivery of first year plan
Semiconductors
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Growth focus: Modules, signal path, IP partners
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
Focus on our foundations
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Customer Focus
• Listening to customers to drive innovation
OperationalExcellence
Simplification
People
Financial
• Key customers trusting us as partners
• Improved customer ratings and feedback
Next steps
• Increase customer intimacy
• Broaden strategic customer base
• Improved delivery performance
• Margin improvement in all three divisions
• Ongoing operational improvement in Space
• Focus on process effectiveness• Reduce inventory cycle time
• Clarity of communication and consistency of message
• Reducing complexity and simplified approvals
• Divisions with end to end P&L responsibility
• Portfolio optionality
• Refreshed leadership team, strengthened management
• Developing talent • Leverage best practice and team work across Group
• Acquisition and integration of AnaFocus
• Acquisition of SP Devices
• Good financial performance in challenging markets
• Continue to build acquisition pipeline
Progress in first year Progress in second year
In all that we do: “Does this drive growth?”
Divisions Imaging RF Power SemiconductorsIndustrial Vision Space Radiotherapy Modules & ADC, IP
partners and distributors
Discretionary R&D(% sectorrevenue)
8% 4% 5% 11%
Acquisitions AnaFocus SP Devices/PLAs*
Investment priorities to drive growth – 79% Group revenues (FY14: 72%)
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Driven by customers, markets and opportunities
Investmen
t
*Product Line Acquisitions
Four areas of focus 89% of Group R&D focused in chosen areas delivering growth Two acquisitions completed in Industrial Vision and Semiconductors
0 20 40 60
Environment
Discovery
Safety
Communications
Healthcare
Automation
FY16 FY15
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FY16 & FY15 revenues by key global end‐markets
High
High
Medium
Low
Medium
High
e2v medium term growth potential
Current profile
Challenging markets: Taking market share through
innovation/service Making new markets through new
product introductions Continuing corporate change Increased focus on acquisitions
Global end market focus
Principal end market drivers by division: Imaging – automation, healthcare, environment & discovery RF Power – healthcare, automation, safety & communications Semiconductors – communications & safety
£m
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Geographic reach
FY16 revenues by geography £mFY15 revenues by geography £m
Growth coming from Asia Pacific (20%)
£32.9
£63.6
£77.1
£47.4
£3.9
£32.4
£64.4
£77.1
£56.9
£5.5
United Kingdom Europe North America Asia Pacific Rest of world
Growth 5.1%
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FY17 Divisional overview
Imaging
Professional imaging growth: make new markets, take market share. Focus on key market leaders/OEMS
Space: embed operational improvement, with ongoing margin improvement
RF Power Gradual growth in Radiotherapy, OEM customers
focused on value
Semiconductors Product line acquisitions and micro last time buys
Cards, subsystems and IP moving up the value chain
FY17 view
Good growth
Steady
Step‐up
Summary & outlook
FY17 outlook unchanged
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Revenue driven growth, trusted expert partner, resilient financial profile
Performance
Growth
Outlook
FY16 performance:
Reported revenue growth of 5.1%
Adjusted operating profit up 4.7%
Full year dividend up 5.9%
Platform for growth: Focus on take/make market in challenging markets
Investment in R&D in areas of focus
Cost profile discipline and benefit of reorganisations
SP Devices and building acquisition pipeline
Q&A
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Appendices
‘Our vision, our future’
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Our three divisions
Imaging FY16 revenues: 44%We add value to our customers through our technology platforms, innovative product development and space qualified manufacturing capability.
RF Power FY16 revenues: 34%We add value to our customers through consistently supplying reliable application specific products, addressing difficult engineering challenges and providing long‐term continuity support.
SemiconductorsFY16 revenues: 22%We add value to our customers through our market leading design, packaging and screening technology to meet the demanding specifications that our aerospace and defence customers require, with security of supply.
Selected customersAccuray, Elekta, Varian, BAE Systems, Furuno, Airbus, Raytheon, Selex Galileo, Thales
Selected customersCanon, Carl Zeiss Meditec, Optopol, Orbotech, Basler, ESA, NASA, CNES, CAST, Astrium, Ball Aerospace, Lockheed Martin, Thales, Oxford Instruments, Hamamatsu, Roper
Strategic partnershipsFreescale, Everspin, Maxim, Micron, Peregrine
Selected customersArrow, Avnet, Boeing, Thales, Raytheon, Airbus
Eliixa + cameras for industrialinspection systems
RF Power components and systems for Elekta cancer radiotherapy equipment
Space qualified data convertors for satellite communications
Hi reliability semiconductors for safety critical civil aerospace systems
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Marine radar to avoid collisions at sea
c.1,750 employees across 9 engineering locations and 6 sales offices
Picture of the Churyumov‐Gerasimenko comet taken from our image sensors on Rosetta
Summary divisional performance
Imaging RF Power Semiconductors Total
FY16 FY15 FY16 FY15 FY16 FY15 FY16 FY15
Revenue £103.5m £88.7m £80.5m £84.2m £52.4m £52.0m £236.4m £224.9m
Revenue growth 16.7% ‐4.4% 1.0% 5.1%
Adjusted operating profit £15.7m £9.3m £18.7m £19.4m £14.2m £11.9m £42.0m* £40.1m*
Adjusted operating profit margin
15.2% 10.5% 23.2% 23.0% 27.1% 22.9% 17.8%* 17.8%*
Group revenues 44% 40% 34% 37% 22% 23%
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*Includes Corporate centre costs of £4.5m (FY15: £4.0m) and FX losses of £ 2.1m (FY15 gains £3.4m)
Platform for further expansion
Making it realEmbed new culture
Operational excellenceGroup
Imaging
RF Power
Semiconductors
2015 2016 2017 2018 2019 2020
Industrialproduct
introductions
Spaceproject activity
Sub‐systems growth
Partners & modules
Goalx2 2020
Key priorities
Our journey from November 2014
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