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Research: TMT
discoverIE’s H1 results confirm it is making continued good progress with its strategy to build its design and manufacturing (D&M) business. Underlying organic group revenue growth of 5% was boosted by higher margin acquisitions and the group is fast approaching its mid-term operating margin target. Targeting higher growth markets within D&M and focusing on efficiency in Custom Supply supports ongoing growth in revenues and profitability.
discoverIE Group |
Focus on growth markets paying off |
H120 results |
Electronic & |
9 December 2019 |
Share price performance
Business description
Next events
Analyst
discoverIE Group is a research client of Edison Investment Research Limited |
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discoverIE’s H1 results confirm it is making continued good progress with its strategy to build its design and manufacturing (D&M) business. Underlying organic group revenue growth of 5% was boosted by higher margin acquisitions and the group is fast approaching its mid-term operating margin target. Targeting higher growth markets within D&M and focusing on efficiency in Custom Supply supports ongoing growth in revenues and profitability.
Year end |
Revenue (£m) |
PBT* |
Diluted EPS* |
DPS |
P/E |
Yield |
03/18 |
387.9 |
22.6 |
23.0 |
9.0 |
23.4 |
1.7 |
03/19 |
438.9 |
28.4 |
28.4 |
9.6 |
18.9 |
1.8 |
03/20e |
475.4 |
33.7 |
29.4 |
10.0 |
18.3 |
1.9 |
03/21e |
498.5 |
37.6 |
31.1 |
10.4 |
17.3 |
1.9 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Revenue and margin growth; strong cash generation
In H120 discoverIE generated 5% organic constant exchange rate (CER) revenue growth, with a 4% contribution from acquisitions and a further 1% boost from currency. The Design & Manufacturing (D&M) business was the driver of organic revenue growth (+7% CER) and this, combined with higher margin acquisitions, helped lift the group underlying operating margin by 0.8pp y-o-y. Despite flat underlying demand in Custom Supply (CS), the division managed to expand its operating margin by 0.2pp y-o-y. Cash generation was strong, with 101% cash conversion of underlying operating profit in H1 and free cash flow (after dividends) of £19m over the last 12 months. While our underlying estimates are substantially unchanged, we have revised our forecasts to reflect the application of IFRS 16.
Buy-and-build strategy drives strong performance
Since 2011, the company has made 15 D&M acquisitions and this division contributed 63% of revenues and 81% of operating profit in H120. The focus on higher growth target markets is helping the group to grow at rates ahead of GDP and the group is very close to hitting medium-term profitability targets. discoverIE has a well-established process for targeting and integrating higher margin custom electronics companies, enabling them to retain their entrepreneurial spirit while taking advantage of the group’s central functions and balance sheet. We expect further D&M acquisitions, with a focus on expanding international reach.
Valuation: D&M focus supports upside
Since the placing at 415p per share in October, the stock has gained 30% and now trades at a small discount to the peer group average on a P/E and EV/EBIT basis. Further progress in increasing the weighting of business towards the higher growth and margin D&M business, combined with maintaining the profitability of the Custom Supply business, should help to further reduce the discount. The stock is supported by a dividend yield approaching 2%.
Review of H120 results
Exhibit 1: H120 results highlights
£m |
H120 |
H119 |
y-o-y |
Revenues |
232.0 |
211.7 |
9.6% |
Custom supply |
85.4 |
83.9 |
1.8% |
Design & manufacturing |
146.6 |
127.8 |
14.7% |
Gross profit |
77.4 |
69.9 |
10.7% |
Gross margin |
33.4% |
33.0% |
0.3% |
Normalised operating profit |
|||
Custom supply |
4.1 |
3.9 |
5.1% |
Design & manufacturing |
17.6 |
14.2 |
23.9% |
Central costs |
(3.4) |
(3.1) |
9.7% |
Total normalised operating profit |
18.3 |
15.0 |
22.0% |
Normalised operating margin (%) |
|||
Custom supply |
4.8% |
4.6% |
0.2% |
Design & manufacturing |
12.0% |
11.1% |
0.9% |
Total normalised operating margin (%) |
7.9% |
7.1% |
0.8% |
discoverIE underlying* operating profit |
17.7 |
14.5 |
22.1% |
discoverIE underlying operating margin |
7.6% |
6.8% |
0.8% |
Reported operating profit |
12.6 |
9.5 |
32.6% |
Reported operating margin |
5.4% |
4.5% |
0.9% |
Normalised PBT |
16.1 |
13.3 |
21.1% |
Normalised net income |
12.3 |
10.0 |
22.8% |
Normalised diluted EPS (p) |
14.8 |
13.4 |
10.9% |
Underlying diluted EPS (p) |
14.4 |
13.0 |
10.8% |
Reported diluted EPS (p) |
14.4 |
7.1 |
102.8% |
Dividend (p) |
2.97 |
2.80 |
6.1% |
Net cash/(debt) excluding lease liabilities |
(55.4) |
(62.6) |
(11.5%) |
Source: discoverIE, Edison Investment Research. Note: *Underlying operating profit excludes amortisation of acquired intangibles and exceptional items.
discoverIE reported H120 revenue growth of 9.6% year-on-year, or 5% on an organic, constant exchange rate basis. Acquisitions contributed 4% to growth and currency 1%.
Gross profit increased at a slightly higher rate, reflecting the increased proportion of higher margin D&M revenues. Normalised operating profit increased 22% y-o-y, mainly due to the 24% increase in D&M operating profit, again reflecting higher margin acquisitions. After taking account of share-based payments, underlying operating profit increased 22% y-o-y resulting in an underlying operating margin of 7.6%, up from 6.8% a year ago.
The company applied IFRS 16 for the first time from 1 April 2019. The removal of lease payments of £3.3m from operating expenses was offset by a £3.1m depreciation charge for right-of-use assets. Finance costs included £0.3m of interest charges relating to lease liabilities. This resulted in a £0.1m negative impact at the PBT level. At the end of H120, the company reported right-of-use assets with a net book value of £17.8m and lease liabilities of £17.9m.
The company incurred tax at a rate of 28% on reported PBT and 24% on underlying PBT. After taking into account shares issued in the placing to fund the Hobart and Positek acquisitions, normalised EPS was 10.9% higher year-on-year.
The company announced an interim dividend of 2.97p, +6% y-o-y.
At the period end, net debt had reduced to £55.4m from £62.6m a year ago and £63.3m at the end of FY19. The company delivered an increase in operating cash of 48% over the last 12 months, and in H120 converted 101% of underlying operating profit to operating cash, well ahead of its 85% target. This cash generation reduced gearing at the period end to 1.3x, with pro forma gearing of 1.6x including the recent Sens-Tech acquisition.
Exhibit 2: Divisional performance
(£m) |
H120 |
H119 |
H119 CER |
Reported y-o-y |
CER y-o-y |
Like-for-like |
Revenues |
||||||
Design & manufacturing |
146.6 |
127.8 |
128.2 |
15% |
14% |
7% |
Custom Supply |
85.4 |
83.9 |
83.9 |
2% |
2% |
0% |
Total revenues |
232.0 |
211.7 |
212.1 |
10% |
9% |
5% |
Underlying operating profit |
||||||
Design & manufacturing |
17.6 |
14.2 |
14.2 |
24% |
24% |
|
Custom Supply |
4.1 |
3.9 |
3.9 |
5% |
5% |
|
Unallocated |
(4.0) |
(3.6) |
(3.6) |
11% |
11% |
|
Total underlying operating profit |
17.7 |
14.5 |
14.5 |
22% |
22% |
|
Underlying operating margin (%) |
||||||
Design & manufacturing |
12.0% |
11.1% |
11.1% |
0.9% |
0.9% |
|
Custom Supply |
4.8% |
4.6% |
4.6% |
0.2% |
0.2% |
|
Total underlying operating margin |
7.6% |
6.8% |
6.8% |
0.8% |
0.8% |
Source: discoverIE
Design & Manufacturing benefits from targeting key markets
D&M revenues were 14.7% higher year-on-year and 7% higher on an organic CER basis. Acquisitions contributed growth of 7% and currency 1%. Underlying operating profit increased 24% yoy driving the operating margin up by 0.9pp over the year to 12.0%.
On a quarterly basis, Q1 revenues were 4% higher on an organic basis, jumping to +11% in Q2. In Q119 the company signed a large contract with Bombardier, creating a tough comparison for Q120.
On a geographic basis, performance was mixed. Germany and the Nordic region saw 9% growth and Asia 28% growth. The UK (-7% y-o-y) and US (+3%) felt the impact of inventory corrections – the UK from Q1 and the US from Q2.
The company noted that the majority (70%) of D&M H1 revenues were from target markets, generating organic growth at a rate of 9%, compared to non-target markets generating revenue growth of 3%. Target markets are renewable energy, transportation, medical and industrial and connectivity, all of which offer structural long-term growth.
The business completed the expansion of its China facility during H120 and is investing to expand the Bangalore facility. During H120, of the £22m of revenues generated in the US, £2.8m were subject to US tariffs on goods manufactured in China. The company managed to pass through the cost of the tariffs to customers, but also gave them the option to have their product manufactured in India rather than China. Around half of the volumes affected by tariffs are being shifted to the India facility.
The division is also investing in management development and succession as well as upgrading IT systems used by the various businesses.
Custom Supply focused on efficiency
Custom Supply revenues were 2% higher y-o-y on a reported and CER basis. During H120, the company shifted the RSG business from D&M to CS, reflecting the high level of distribution business. Excluding this transfer, CS revenues were flat year-on-year. Geographically, the division saw strong growth in Benelux and Italy while revenues in the UK and Germany declined.
As this division has less exposure to target markets and has suffered from weakness in the German automotive market, management is focused on making the business as efficient as possible in the face of lacklustre demand. Underlying operating profit was 5% higher year-on-year lifting the operating margin by 0.2pp.
Performance against KPIs
Exhibit 3: Key strategic and performance indicators, FY14–H120
FY14 |
FY15 |
FY16 |
FY17 |
FY18 |
FY19 |
H120 |
Mid-term target* |
Long-term ambition |
|
Key Strategic Indicator (KSI) |
|||||||||
Increase D&M revenue |
18% |
37% |
48% |
52% |
57% |
61% |
63% |
75% |
85% |
Increase underlying op. margin |
3.4% |
4.9% |
5.7% |
5.9% |
6.3% |
7.0% |
7.6% |
8.5% |
10.0% |
Build sales beyond Europe |
5% |
12% |
17% |
19% |
23% |
21% |
24% |
30% |
40% |
Key performance indicators (KPI) |
Three-year target (FY20) |
||||||||
Sales growth: CER |
17% |
36% |
14% |
6% |
11% |
14% |
9% |
||
Sales growth: organic |
2% |
3% |
3% |
-1% |
6% |
8% |
5% |
Well ahead of GDP |
|
Increase cross-selling |
£0.3m |
£0.9m |
£3.0m |
£4.6m |
£8.8m |
£9.7m |
£10.8m |
£12m pa (up from £10m) |
|
Underlying EPS growth |
20% |
31% |
10% |
13% |
16% |
22% |
11% |
>10% |
|
Dividend growth |
10% |
11% |
6% |
6% |
6% |
6% |
6% |
Progressive |
|
ROCE |
15.2% |
12.0% |
11.6% |
13.0% |
13.5% |
15.4% |
15.8% |
>15% |
|
Operating cash flow generation |
100% |
104% |
100% |
136% |
85% |
93% |
101% |
>85% of underlying profit |
|
Source: discoverIE. Note: *Three to five years from November 2016.
The company continues to make progress against its KSIs and KPIs. Since the acquisition of Sens-Tech, the company is close to hitting its mid-term operating margin target. DiscoverIE estimates that it is generating a pro forma underlying operating margin of 8.4%, almost at the mid-term target. To meet the target of 75% of revenues generated by the D&M business by November 2021 will be more difficult, as each D&M business acquired also increases the size of the denominator. Even if the company misses this target, it is moving in the right direction and is likely to achieve the more important operating margin target on a lower proportion of D&M revenues.
Outlook and changes to forecasts
In the short term, order intake provides a good indicator of revenue performance – the company typically has roughly four months of sales in its backlog. In the longer term, design win activity is a lead indicator of future order wins. Management highlighted that it tasks each business with generating design wins worth 20% of current business, in order to develop a pipeline of business for future volume shipments. Even while the company is seeing an element of inventory destocking in various countries, it is keen to be included in customer plans for future product introductions so that when demand recovers, it is well positioned for volume orders.
■
Order intake: group order intake was 9% higher than a year ago and 4% higher on an organic CER basis. D&M orders were 8% higher on an organic CER basis.
■
Order book: at the end of H120, the order book was 15% higher than a year ago and was 11% higher on an organic basis.
■
Design win activity: in H120, the company was designed into £134m of new projects (estimated lifetime value), +6% y-o-y. 80% of design wins were in target markets at a group level and 90% for D&M.
Management is confident that it will meet its expectations for FY20. We have made changes to our forecasts to reflect H1 performance and the application of IFRS 16 for the first time. The company continues to target gearing in the range 1.5–2.0x EBITDA (calculated on a pre-IFRS 16 basis).
Exhibit 4: Changes to forecasts
Year end 31 March (£m) |
FY20e old |
FY20e new |
% change |
% y-o-y |
FY21e old |
FY21e new |
% change |
% y-o-y |
Revenues |
472.8 |
475.4 |
0.6% |
8.3% |
495.7 |
498.5 |
0.6% |
4.8% |
Custom supply |
174.4 |
173.3 |
(0.6%) |
0.4% |
176.2 |
175.0 |
(0.6%) |
1.0% |
Design & manufacturing |
298.3 |
302.1 |
1.3% |
13.5% |
319.5 |
323.4 |
1.2% |
7.1% |
Gross margin |
33.2% |
33.3% |
0.2% |
0.3% |
33.3% |
33.3% |
0.0% |
(0.0%) |
EBITDA |
43.5 |
50.4 |
16.0% |
36.3% |
48.1 |
54.4 |
13.3% |
8.0% |
EBITDA margin |
9.2% |
10.6% |
1.4% |
2.2% |
9.7% |
10.9% |
1.2% |
0.3% |
Underlying operating profit |
36.8 |
37.2 |
1.2% |
21.7% |
41.2 |
41.4 |
0.7% |
11.3% |
Underlying operating profit margin |
7.8% |
7.8% |
0.1% |
0.9% |
8.3% |
8.3% |
0.0% |
0.5% |
Normalised operating profit |
38.1 |
38.4 |
0.9% |
20.9% |
42.5 |
42.6 |
0.4% |
11.0% |
Normalised operating margin |
8.1% |
8.1% |
0.0% |
0.8% |
8.6% |
8.6% |
(0.0%) |
0.5% |
Normalised PBT |
33.9 |
33.7 |
(0.4%) |
18.7% |
37.9 |
37.6 |
(0.8%) |
11.4% |
Normalised net income |
25.5 |
25.4 |
(0.5%) |
18.3% |
28.6 |
28.3 |
(0.9%) |
11.7% |
Normalised diluted EPS (p) |
29.5 |
29.4 |
(0.5%) |
3.3% |
31.4 |
31.1 |
(0.9%) |
5.8% |
Reported basic EPS (p) |
19.1 |
19.5 |
2.2% |
(2.6%) |
21.5 |
21.3 |
(0.9%) |
9.4% |
Net (debt)/cash |
(77.3) |
(77.1) |
(0.1%) |
21.9% |
(68.4) |
(69.1) |
1.0% |
(10.4%) |
Net debt/EBITDA (x) |
1.7 |
1.8 |
1.4 |
1.4 |
Source: Edison Investment Research
Valuation
Since the placing at 415p per share in October, the stock has gained 30% and now trades at a small discount to the peer group average on a P/E and EV/EBIT basis. Further progress in increasing the weighting of business towards the higher growth and margin D&M business, combined with maintaining the profitability of the Custom Supply business, should help to further reduce the discount. The stock is supported by a dividend yield approaching 2%.
Exhibit 5: Peer group valuation metrics
|
EV/sales |
EV/EBIT |
P/E |
Dividend yield |
||||||||
Last yr |
This yr |
Next yr |
Last yr |
This yr |
Next yr |
Last yr |
This yr |
Next yr |
Last yr |
This yr |
Next yr |
|
discoverIE |
1.4 |
1.2 |
1.1 |
17.0 |
14.1 |
12.7 |
18.9 |
18.3 |
17.3 |
1.8% |
1.9% |
1.9% |
Design & manufacturing |
||||||||||||
Gooch & Housego |
2.6 |
2.5 |
2.4 |
22.3 |
19.0 |
16.7 |
22.1 |
28.6 |
23.5 |
0.9% |
0.9% |
1.0% |
TT Electronics |
1.1 |
1.0 |
0.9 |
14.0 |
11.8 |
11.1 |
14.5 |
13.0 |
12.2 |
2.8% |
2.9% |
3.1% |
XP Power |
3.2 |
3.1 |
3.0 |
14.5 |
15.9 |
14.5 |
17.0 |
19.7 |
17.6 |
2.9% |
2.9% |
3.1% |
Specialist distributors |
||||||||||||
Diploma |
4.3 |
3.5 |
3.4 |
20.4 |
19.9 |
18.6 |
32.7 |
26.1 |
24.9 |
1.4% |
1.7% |
1.8% |
Solid State |
0.7 |
0.6 |
0.6 |
11.4 |
9.2 |
8.6 |
13.1 |
11.2 |
10.7 |
2.6% |
2.9% |
3.1% |
High service & commodity distributors |
||||||||||||
Electrocomponents |
1.7 |
1.6 |
1.5 |
14.3 |
13.7 |
12.7 |
17.7 |
17.1 |
15.9 |
2.3% |
2.4% |
2.6% |
Average |
2.3 |
2.0 |
2.0 |
16.1 |
14.9 |
13.7 |
19.5 |
19.3 |
17.5 |
2.1% |
2.3% |
2.4% |
Versus peer group |
(6%) |
(7%) |
(5%) |
(1%) |
||||||||
Source: Edison Investment Research, Refinitiv (as at 6 December 2019)
Exhibit 6: Financial summary
£m |
2015 |
2016 |
2017 |
2018 |
2019 |
2020e |
2021e |
||
Year end 31 March |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||||
Revenue |
|
|
271.1 |
287.7 |
338.2 |
387.9 |
438.9 |
475.4 |
498.5 |
Cost of Sales |
(186.7) |
(195.1) |
(227.2) |
(261.2) |
(293.9) |
(317.0) |
(332.5) |
||
Gross Profit |
84.4 |
92.6 |
111.0 |
126.7 |
145.0 |
158.5 |
166.0 |
||
EBITDA |
|
|
16.6 |
19.8 |
24.3 |
29.3 |
37.0 |
50.4 |
54.4 |
Operating Profit (before am, SBP and except.) |
|
14.0 |
17.0 |
20.6 |
25.2 |
31.8 |
38.4 |
42.6 |
|
Operating Profit (before am. and except.) |
|
13.4 |
16.3 |
20.0 |
24.5 |
30.6 |
37.2 |
41.4 |
|
Amortisation of acquired intangibles |
(2.1) |
(2.8) |
(3.9) |
(4.9) |
(5.9) |
(7.6) |
(8.0) |
||
Exceptionals |
(5.2) |
(2.1) |
(8.4) |
(2.3) |
(2.0) |
(3.1) |
(3.2) |
||
Share-based payments |
(0.6) |
(0.7) |
(0.6) |
(0.7) |
(1.2) |
(1.2) |
(1.2) |
||
Operating Profit |
6.1 |
11.4 |
7.7 |
17.3 |
22.7 |
26.5 |
30.2 |
||
Net Interest |
(1.6) |
(1.8) |
(2.8) |
(2.6) |
(3.4) |
(4.7) |
(5.1) |
||
Profit Before Tax (norm) |
|
|
12.4 |
15.2 |
17.8 |
22.6 |
28.4 |
33.7 |
37.6 |
Profit Before Tax (FRS 3) |
|
|
4.3 |
9.4 |
4.8 |
14.6 |
19.3 |
21.7 |
25.0 |
Tax |
(1.4) |
(2.2) |
(1.3) |
(4.0) |
(4.7) |
(5.4) |
(6.1) |
||
Profit After Tax (norm) |
10.0 |
11.8 |
13.6 |
17.1 |
21.5 |
25.4 |
28.3 |
||
Profit After Tax (FRS 3) |
2.9 |
7.2 |
3.5 |
10.6 |
14.6 |
16.3 |
18.9 |
||
Average Number of Shares Outstanding (m) |
57.6 |
63.3 |
65.4 |
70.8 |
73.0 |
83.9 |
88.7 |
||
EPS - normalised & diluted (p) |
|
|
16.4 |
17.8 |
19.9 |
23.0 |
28.4 |
29.4 |
31.1 |
EPS - IFRS basic (p) |
|
|
5.0 |
11.4 |
5.3 |
15.0 |
20.0 |
19.5 |
21.3 |
EPS - IFRS diluted (p) |
|
|
4.8 |
10.9 |
5.1 |
14.2 |
19.4 |
18.9 |
20.7 |
Dividend per share (p) |
7.6 |
8.1 |
8.5 |
9.0 |
9.6 |
10.0 |
10.4 |
||
Gross Margin (%) |
31.1 |
32.2 |
32.8 |
32.7 |
33.0 |
33.3 |
33.3 |
||
EBITDA Margin (%) |
6.1 |
6.9 |
7.2 |
7.6 |
8.4 |
10.6 |
10.9 |
||
Operating Margin (before am, SBP and except.) (%) |
5.2 |
5.9 |
6.1 |
6.5 |
7.2 |
8.1 |
8.6 |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
88.6 |
108.4 |
122.2 |
136.4 |
149.2 |
232.9 |
219.6 |
Intangible Assets |
69.9 |
88.2 |
100.7 |
107.2 |
119.7 |
187.6 |
179.5 |
||
Tangible Assets |
13.8 |
14.7 |
16.0 |
23.4 |
24.4 |
40.2 |
35.0 |
||
Deferred tax assets |
4.9 |
5.5 |
5.5 |
5.8 |
5.1 |
5.1 |
5.1 |
||
Current Assets |
|
|
127.3 |
128.3 |
147.1 |
165.9 |
179.1 |
181.2 |
192.7 |
Stocks |
39.8 |
42.9 |
48.8 |
58.1 |
66.2 |
71.6 |
75.1 |
||
Debtors |
60.2 |
65.5 |
77.3 |
84.6 |
88.7 |
104.2 |
109.3 |
||
Cash |
26.7 |
19.9 |
21.0 |
21.9 |
22.9 |
4.1 |
7.1 |
||
Current Liabilities |
|
|
(62.1) |
(61.7) |
(78.1) |
(94.0) |
(96.0) |
(110.1) |
(113.6) |
Creditors |
(61.9) |
(60.9) |
(77.1) |
(87.6) |
(94.3) |
(101.7) |
(105.2) |
||
Lease liabilities |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
(6.7) |
(6.7) |
||
Short term borrowings |
(0.2) |
(0.8) |
(1.0) |
(6.4) |
(1.7) |
(1.7) |
(1.7) |
||
Long Term Liabilities |
|
|
(61.1) |
(73.1) |
(68.7) |
(81.5) |
(97.6) |
(100.2) |
(85.4) |
Long term borrowings |
(45.5) |
(57.2) |
(50.0) |
(67.9) |
(84.5) |
(79.5) |
(74.5) |
||
Lease liabilities |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
(7.9) |
(1.2) |
||
Other long term liabilities |
(15.6) |
(15.9) |
(18.7) |
(13.6) |
(13.1) |
(12.8) |
(9.7) |
||
Net Assets |
|
|
92.7 |
101.9 |
122.5 |
126.8 |
134.7 |
203.9 |
213.4 |
CASH FLOW |
|||||||||
Operating Cash Flow |
|
|
6.6 |
14.6 |
20.5 |
21.7 |
30.0 |
35.0 |
47.5 |
Net Interest |
(1.6) |
(1.8) |
(2.8) |
(2.6) |
(3.4) |
(4.7) |
(5.1) |
||
Tax |
(3.3) |
(4.3) |
(3.0) |
(3.7) |
(3.8) |
(8.3) |
(9.2) |
||
Capex |
(2.5) |
(2.3) |
(3.4) |
(4.3) |
(5.4) |
(6.4) |
(6.5) |
||
Acquisitions/disposals |
(37.3) |
(19.8) |
(11.8) |
(25.4) |
(22.4) |
(74.7) |
(3.0) |
||
Financing |
52.7 |
0.0 |
13.6 |
(1.5) |
0.1 |
53.9 |
(6.7) |
||
Dividends |
(3.6) |
(4.9) |
(5.2) |
(6.2) |
(6.7) |
(8.6) |
(9.0) |
||
Net Cash Flow |
11.0 |
(18.5) |
7.9 |
(22.0) |
(11.6) |
(13.8) |
8.0 |
||
Opening net cash/(debt) |
|
|
1.8 |
(19.0) |
(38.1) |
(30.0) |
(52.4) |
(63.3) |
(77.1) |
HP finance leases initiated |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(31.8) |
(0.6) |
0.2 |
(0.4) |
0.7 |
0.0 |
0.0 |
||
Closing net cash/(debt) |
|
|
(19.0) |
(38.1) |
(30.0) |
(52.4) |
(63.3) |
(77.1) |
(69.1) |
Source: discoverIE, Edison Investment Research
|
|
Bigblu’s trading statement confirmed an H2 performance in line with expectations. Actions to cleanse the customer base should yield operational benefits over time and the above consensus year-end net debt figure (£14m vs £9m) primarily reflected a Brexit-driven inventory build that should reverse in the next few months. Bigblu remains confident in FY20 consensus (see below), which implies an acceleration in revenue growth.
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