discoverIE Group — New name reflects ambitious growth strategy

discoverIE Group (LSE: DSCV)

Last close As at 20/06/2024

GBP6.87

−10.00 (−1.43%)

Market capitalisation

GBP662m

More on this equity

Research: TMT

discoverIE Group — New name reflects ambitious growth strategy

discoverIE (previously called Acal) reported strong interims, proving that its strategy to grow the design and manufacturing (D&M) side of the business is bearing fruit. Organic revenue growth of 9% drove improved operating margins and EPS, while growth in orders and design wins position discoverIE for sustained growth. Management continues to seek out suitable acquisitions to accelerate growth of D&M – based on a similar profile to previous deals, we estimate that using existing credit facilities to make £50m worth of acquisitions could add 20-25% to FY19e EPS.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

discoverIE Group

New name reflects ambitious growth strategy

H118 results

Electronic & electrical equipment

7 December 2017

Price

355.0p

Market cap

£251m

€1.12/NOK10.87/£

Net debt (£m) at end H118

37.6

Shares in issue

70.7m

Free float

96%

Code

DSCV

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

4.8

13.7

52.0

Rel (local)

7.4

15.3

39.1

52-week high/low

355.0p

212.5p

Business description

discoverIE is a leading international supplier of customised electronics to industry. It designs, manufactures and distributes customer-specific electronic products and solutions to 25,000 industrial manufacturers.

Next events

Q3 trading update

January 2018

Analysts

Katherine Thompson

+44 (0)20 3077 5730

Dan Ridsdale

+44 (0)20 3077 5729

discoverIE Group is a research client of Edison Investment Research Limited

discoverIE (previously called Acal) reported strong interims, proving that its strategy to grow the design and manufacturing (D&M) side of the business is bearing fruit. Organic revenue growth of 9% drove improved operating margins and EPS, while growth in orders and design wins position discoverIE for sustained growth. Management continues to seek out suitable acquisitions to accelerate growth of D&M – based on a similar profile to previous deals, we estimate that using existing credit facilities to make £50m worth of acquisitions could add 20-25% to FY19e EPS.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

03/16

287.7

15.2

17.8

8.1

19.9

2.3

03/17

338.2

17.8

19.9

8.5

17.9

2.4

03/18e

388.0

21.6

21.6

9.0

16.4

2.5

03/19e

402.6

22.9

22.6

9.5

15.7

2.7

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

H118 results reflect strong trading environment

The company generated strong organic revenue growth in H118, resulting in underlying operating profit growth of 34% y-o-y (+23% CER) and margin expansion of 0.6 percentage points to 6.2%. Underlying EPS increased 24% y-o-y and the interim dividend was 8% higher than a year ago. Strong order intake during H1 provides support to our forecasts – we make minor changes to reflect H1 results, with normalised EPS up 0.8% in FY18e and up 0.1% in FY19e.

Strategy on track – growing design & manufacturing

The company doubled revenues and EPS over the last five years and management confirmed its target to repeat this performance over the next five years to generate shareholder returns of 15-20% pa and fund a progressive dividend. As well as the strong organic growth currently being generated, the company is keen to acquire D&M businesses to accelerate growth towards the target of 75% of group revenues (57% in H118). Using average price/PBT multiples and average PBT margins from previous deals, we estimate that spending £50m on acquisitions could add 20-25% to FY19e EPS (on an annualised basis), while remaining within the company’s target net debt/EBITDA range of 1.5-2.0x.

Valuation: Discount persists despite positive outlook

On an FY18e P/E of 16.4x and FY18e EV/EBITDA of 9.8x, the stock is trading at a c 27% discount to the peer group average for both multiples. The share was recently reclassified from Industrial Support Services to the Electronic & Electrical Equipment sector, and is trading at a 37% discount to the new sector P/E. The strong order book, combined with good progress in the strategy to grow the D&M side of the business, provides confidence in both the near-term and longer-term outlook for the company. Continued growth in the proportion of revenue generated from design and manufacturing should support operating margin expansion, and should help to reduce the valuation discount. The stock is also supported by a dividend yield close to 3%.

Review of H118 results

Exhibit 1: Half-year results highlights

£m

H117

H118

y-o-y

Revenues

156.7

190.2

21.4%

Design & manufacturing

81.8

108.2

32.3%

Custom Supply

74.9

82.0

9.5%

Gross profit

51.7

61.2

18.4%

Gross margin

33.0%

32.2%

(0.8%)

Normalised operating profit

Design & manufacturing

10.0

11.8

18.0%

Custom Supply

1.6

3.3

106.3%

Central costs

(2.5)

(3.0)

20.0%

Total normalised operating profit

9.1

12.1

33.0%

Normalised operating margin

Custom distribution

2.1%

4.0%

1.9%

Design & manufacturing

12.2%

10.9%

(1.3%)

Total normalised operating margin

5.8%

6.4%

0.6%

discoverIE underlying* operating profit

8.8

11.8

34.1%

discoverIE underlying operating margin

5.6%

6.2%

0.6%

Reported operating profit

3.4

8.5

150.0%

Reported op. margin

2.2%

4.5%

2.3%

Normalised PBT

7.6

10.6

39.5%

Normalised net income

5.9

8.0

35.4%

discoverIE underlying EPS (dil) - p

8.5

10.5

23.5%

Normalised EPS (dil) - p

8.8

10.7

21.5%

Reported EPS (dil) - p

1.8

6.5

261.1%

Dividend - p

2.45

2.65

8.2%

Net debt

41.1

37.6

(8.5%)

Source: discoverIE, Edison Investment Research. Note: *discoverIE underlying profit includes share-based payments.

discoverIE (previously known as Acal) reported strong interims. Reported revenues grew 21% year-on-year, including a 6% benefit from currency and a further 6% contribution from the Variohm acquisition (completed January 2017), resulting in 9% organic growth at group level. Gross margin declined compared to H117, mainly due to the already flagged currency impact on UK imports. Underlying operating profit increased 34% y-o-y boosting the underlying operating margin by 0.6pp. The company saw a reported tax rate of 29% (as earnout accruals were not allowable for tax purposes), with an underlying effective tax rate of 24%. The higher tax rate combined with the higher share count from the Variohm acquisition resulted in a normalised EPS increase of 21.5% y-o-y. The company announced an interim dividend of 2.65p per share, higher than our 2.55p forecast and 8% higher than last year’s interim payout. Net debt at end H118 of £37.6m was £3.5m lower than a year ago.

Exhibit 2 details performance by division. Design & Manufacturing (D&M) grew 32% on a reported basis – excluding the Variohm contribution and positive currency effect, organic growth was 11% year-on-year. The underlying operating margin declined y-o-y, mainly due to the impact of increased import costs for UK businesses. Custom Supply (previously Custom Distribution) grew 9% on a reported basis, with organic growth of 7% y-o-y. Organic growth excludes the Spanish business, which was discontinued last year. With the benefit of recent restructuring coming through, combined with the strong volume growth, underlying operating margin increased from 2.1% to 4.0% over the year (broadly in line with the 4.1% reported for H217). Although central costs increased by £0.5m over the year (linked to the 40% share price increase in the period), underlying group operating margin increased by 0.6 percentage points y-o-y to 6.2%.

Exhibit 2: Divisional performance

£m

H118

H117

H117
CER*

Reported
y-o-y

CER
y-o-y

Like-for-like
y-o-y

Revenues

Design & manufacturing

108.2

81.8

86.7

32%

25%

11%

Custom Supply

82.0

74.9

79.1

9%

4%

7%

Total revenues

190.2

156.7

165.8

21%

15%

9%

Underlying operating profit

Design & manufacturing

11.8

10.0

10.5

18.0%

12.4%

Custom Supply

3.3

1.6

1.9

106.3%

73.7%

Unallocated

(3.3)

(2.8)

(2.8)

17.9%

17.9%

Total underlying operating profit

11.8

8.8

9.6

34.1%

22.9%

Underlying operating margin

Design & manufacturing

10.9%

12.2%

12.2%

(1.3%)

(1.3%)

Custom distribution

4.0%

2.1%

2.4%

1.9%

1.6%

Total underlying operating margin

6.2%

5.6%

5.8%

0.6%

0.4%

Source: discoverIE. Note: *CER: constant exchange rates.

Bookings intake strong

The company saw order growth of 10% y-o-y in H118, resulting in an order backlog of £111m at the end of H118 (+16% CER y-o-y, +11% organic). The company also noted that it received new design wins with a lifetime contract value of more than £90m, which was 30% higher than in H117. Whereas the company typically sees lower design win activity when sales volumes are strong, as customers concentrate on meeting demand from their end-customers for existing projects, in H118 management saw both high sales volumes and higher design win activity, which bodes well for future trading.

Business update

Name change reflects the evolution of the business

The company announced that it has changed its name from Acal to discoverIE Group. The company has made substantial progress with its strategy to shift the focus of the business from distribution of electronics to designing, manufacturing and supplying custom electronics, as evidenced by the 78% contribution to operating profit from the D&M division in H1, versus 40% in FY14. Management wanted to change the company name to better reflect the nature of the business, which enables customers to “discover innovative electronics”. At the same time, the company has changed the name of the Custom Distribution division to Custom Supply, to more accurately reflect the nature of the division’s business. For more detail on the rationale for the changes see: “DiscoverIE is the new Acal”.

Making good progress against KSIs and KPIs

The company gave an update on progress against its key strategic and performance indicators. It continues to make good progress towards its targets. To reach the target for D&M revenues would require acquisitions as well as organic growth, and the company commented that it has two potential deals in the pipeline. The growth in international sales was despite the addition of Variohm, which has only Europe-based sales – organic growth from North America and Asia was 20% in H118. Management was pleased with the strength of cross-selling in the period, with demand from across the business. Management estimates that it takes roughly three years after being acquired for a new business to start to generate revenues from cross-selling (mainly due to design win cycles) – this implies there are still five acquisitions with the potential to start contributing more materially.

Exhibit 3: Progress against key strategic and performance indicators

FY14

FY15

FY16

FY17

H118

Targets

Key Strategic Indicators

Mid-term*

Increase Design & Manufacturing revenue

18%

37%

48%

52%

57%

75%

Increase underlying operating margin

3.4%

4.9%

5.7%

5.9%

6.2%

8.5%

Build sales beyond Europe

5%

12%

17%

19%

20%

30%

Key Performance Indicators

By FY20

Sales growth: CER

17%

36%

14%

6%

15%

Sales growth: organic

2%

3%

3%

(1%)

9%

Well ahead of GDP

Increase cross-selling

£0.3m

£0.9m

£3.0m

£4.6m

£8.4m**

£10m pa

Underlying EPS growth

20%

31%

10%

13%

24%

>10%

Dividend growth

10%

11%

6%

6%

8%

Progressive

ROCE*

15.2%

12.0%

11.6%

13.0%

14.5%

>15%

Operating cash flow generation

100%

104%

100%

136%

95%

>85% of underlying profit

Source: discoverIE. Note: *Mid-term = three to five years from November 2016. **Annualised.

Investing in manufacturing capacity

discoverIE’s manufacturing strategy consists of making the majority of product in-house (c 80%) at manufacturing facilities in China, India, Poland, Sri Lanka and Thailand. The remaining products are made by third-party contractors. The preference is to have a variety of smaller facilities in order to provide flexibility and reduce currency and country risk. Capital expenditure remains low at less than 1% of revenue. The company recently expanded electromagnetic shielding production capacity in Korea and is currently investing in capacity expansion at three other sites:

Slovakia: increasing fibre optic production capacity – operational by end FY18.

India: expanding magnetics capacity – operational from the beginning of FY19.

China: expanding magnetics capacity – operational by end FY19.

Acquisition strategy – expect more of the same

The company reiterated its plans to acquire design and manufacturing businesses, with the goal of generating 75% of revenues from D&M in the medium term (three to five years). We have analysed acquisitions made since 2011 to arrive at an average price multiple based on trailing PBT. We have used this analysis to calculate an average trailing PBT margin. Based on the company’s credit facility and stated net debt/EBITDA targets, we have estimated the impact on group revenues, PBT, EPS and net debt of making acquisitions in the D&M space. Assumptions used include:

We use our revised FY19 forecasts for revenue, EBITDA, PBT and net income. For Custom Distribution this assumes 2.2% revenue growth and an operating margin of 4.0%; for Design & Manufacturing this assumes 5.0% revenue growth and an operating margin of 10.9%.

We use an average price/trailing PBT multiple of 6.7x, and also provide a scenario analysis based on varying this multiple.

We use an average PBT margin of 11.7%, and assume that the EBITDA margin would be 1% higher than this.

We have calculated the impact of spending £25m and £50m as if all acquisitions are made on 1 April 2018 (ie include annualised contributions from acquisitions).

We assume a rate of 4% on the debt used to fund the deals.

We use a 26% corporate tax rate (higher than the UK rate due to profits generated in higher tax jurisdictions).

Exhibit 4: Impact on valuation and EPS of potential D&M acquisitions

Amount spent

PBT multiple

PBT margin

EBITDA margin

EPS accretion FY19e

Net debt/EBITDA end FY19e

D&M/total revs FY19e

New P/E FY19e

£50m

6.7x

11.7%

12.7%

22.5%

2.0

63%

12.9

£25m

6.7x

11.7%

12.7%

10.7%

1.5

60%

14.2

Source: Edison Investment Research

Exhibit 5: Variation of FY19e EPS accretion with multiple paid for acquisitions

Value of deals

PBT multiple (x)

5

5.5

6

6.5

7

7.5

8

8.5

9

£50m

33.4%

29.5%

26.2%

23.5%

21.1%

19.0%

17.2%

15.7%

14.2%

£25m

16.2%

14.2%

12.6%

11.2%

10.0%

9.0%

8.1%

7.3%

6.6%

Source: Edison Investment Research

We note that these assumptions do not factor in any uplift in margins from economies of scale or any cross-selling. As we have used trailing multiples (which in some cases were more than a year old), the calculations do not factor in any PBT growth in the acquired companies in FY19.

We also perform the same calculations excluding Noratel from the historic averages. At a cost of £73.5m, this was a platform acquisition and therefore attracted a higher multiple. If we assume that up to £50m is spent on bolt-on acquisitions at the trailing average PBT multiple of 6.4x and trailing PBT margin 11.9%, we arrive at the following outcomes.

Exhibit 6: Impact on valuation and EPS of potential D&M acquisitions

Amount spent

PBT multiple

PBT margin

EBITDA margin

EPS accretion FY19e

Net debt/EBITDA end FY19e

D&M/total revs FY19e

New P/E FY19e

£50m

6.4x

11.9%

12.9%

24.0%

1.9

63%

12.7

£25m

6.4x

11.9%

12.9%

11.4%

1.5

60%

14.1

Source: Edison Investment Research

Changes to forecasts

We have made minor changes to our estimates to reflect divisional performance and the slightly higher capex in FY18. We have also increased our dividend forecasts for both years – we estimate that this will result in dividend cover towards the lower end of the company’s target 2-3x range.

Exhibit 7: Changes to estimates

£m

FY18e old

FY18e new

Change

y-o-y

FY19e old

FY19e new

Change

y-o-y

Revenues

392.0

388.0

(1.0%)

14.7%

406.7

402.6

(1.0%)

3.8%

Custom supply

172.8

170.8

(1.2%)

5.1%

176.7

174.6

(1.1%)

2.2%

Design & manufacturing

219.1

217.1

(0.9%)

23.7%

230.1

228.0

(0.9%)

5.0%

Gross margin

32.3%

32.2%

(0.0%)

(0.6%)

32.4%

32.4%

0.0%

0.2%

EBITDA

28.2

28.6

1.2%

17.6%

29.7

29.9

0.7%

4.6%

EBITDA margin

7.2%

7.4%

0.2%

0.2%

7.3%

7.4%

0.1%

0.1%

Underlying operating profit

23.6

23.9

1.5%

19.6%

24.8

24.9

0.4%

4.0%

Underlying operating profit margin

6.0%

6.2%

0.2%

0.3%

6.1%

6.2%

0.1%

0.0%

Normalised operating profit

24.4

24.5

0.6%

19.1%

25.7

25.7

0.0%

4.8%

Normalised operating margin

6.2%

6.3%

0.1%

0.2%

6.3%

6.4%

0.1%

0.1%

Normalised PBT

21.5

21.6

0.7%

21.5%

22.9

22.9

0.0%

5.9%

Normalised net income

16.1

16.2

0.8%

19.5%

17.1

17.1

0.1%

5.8%

Normalised EPS (p)

21.4

21.6

0.8%

8.7%

22.5

22.6

0.1%

4.4%

Reported EPS (p)

13.0

13.6

5.2%

155.0%

17.4

17.7

1.9%

29.7%

Net (debt)/cash

(29.9)

(29.9)

(0.1%)

(0.4%)

(25.4)

(24.4)

(4.1%)

(18.4%)

Net debt/EBITDA (x)

1.1

1.0

0.9

0.8

Source: Edison Investment Research

Valuation

Exhibit 8 shows valuation metrics for discoverIE’s peer group and Exhibit 9 shows their financial performances. The stock continues to trade at a discount to the peer group average on EV/EBITDA and P/E multiples. As discoverIE increases the proportion of revenues generated from D&M, we would expect to see meaningful increases in operating margins, which should flow through to the earnings level. D&M made up 52% of FY17 revenues; absent any acquisitions, we forecast that this will increase to 56% in FY18 and the company is targeting this to reach 75% over the next three to five years.

Exhibit 8: Peer group valuation metrics

 

EV/Sales (x)

EV/EBITDA (x)

P/E (x)

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

0.8

0.7

0.7

11.6

9.8

9.4

17.9

16.4

15.7

2.4%

2.5%

2.7%

Design & manufacturing

Gooch & Housego

3.0

2.9

2.8

16.8

14.8

14.1

30.0

26.6

25.4

0.7%

0.8%

0.8%

TT Electronics

0.8

1.2

1.2

8.1

12.1

11.2

19.2

23.7

20.2

2.4%

2.5%

2.6%

XP Power

5.1

3.9

3.7

19.9

16.0

14.7

30.0

24.2

23.4

2.1%

2.2%

2.3%

Specialist distributors

Diploma

2.8

2.7

2.6

15.3

14.4

14.0

22.8

21.4

20.3

2.0%

2.2%

2.4%

Solid State

0.9

0.8

0.8

9.7

9.6

8.7

13.3

13.8

12.6

2.8%

2.8%

2.9%

High service & commodity distributors

Electrocomponents

1.9

1.7

1.6

17.9

14.6

13.4

29.9

23.7

21.5

2.0%

2.1%

2.2%

Average

2.4

2.2

2.1

14.6

13.6

12.7

24.6

22.6

20.9

2.0%

2.1%

2.2%

Versus peer group

(28%)

(26%)

(26%)

(24%)

Source: Edison Investment Research, Bloomberg (as at 5 December)

Exhibit 9: Peer group financial metrics

 

Gross margin

EBITDA margin

EBIT margin

Revenue growth

EPS growth

Last yr

This yr

Next yr

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

32.8%

32.2%

32.4%

7.2%

7.4%

7.4%

6.1%

6.3%

6.4%

17.6%

14.7%

3.8%

11.4%

8.7%

4.4%

Design & manufacturing

Gooch & Housego

41.1%

38.7%

38.7%

18.1%

19.4%

19.7%

14.6%

16.4%

16.5%

30.2%

5.7%

3.7%

16.3%

12.8%

4.8%

TT Electronics

19.0%

N/A

N/A

9.6%

10.2%

10.7%

5.5%

6.7%

6.8%

11.8%

(36.9%)

2.6%

36.4%

(19.2%)

17.5%

XP Power

47.8%

46.6%

45.7%

25.4%

24.6%

24.9%

22.2%

21.5%

21.8%

18.3%

28.4%

7.4%

10.6%

23.9%

3.5%

Specialist distributors

Diploma

35.6%

35.8%

35.8%

18.3%

18.5%

18.2%

17.3%

16.4%

16.5%

18.1%

5.3%

4.4%

18.9%

6.2%

5.5%

Solid State

30.1%

28.4%

29.1%

9.6%

8.8%

9.3%

8.0%

7.9%

N/A

8.7%

10.5%

4.4%

2.2%

(4.1%)

10.1%

High service & commodity distributors

Electrocomponents

43.4%

35.1%

33.8%

10.7%

11.8%

12.2%

8.8%

9.9%

10.4%

17.1%

11.3%

5.4%

66.7%

26.2%

10.2%

Average

36.4%

33.1%

32.9%

12.9%

13.0%

13.3%

11.4%

11.4%

13.4%

14.6%

9.0%

4.8%

29.3%

9.5%

8.6%

Source: Edison Investment Research, Bloomberg (as at 5 December)

Exhibit 10: Financial summary

£m

2013

2014

2015

2016

2017

2018e

2019e

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

177.4

211.6

271.1

287.7

338.2

388.0

402.6

Cost of Sales

(123.0)

(148.6)

(186.7)

(195.1)

(227.2)

(262.9)

(272.2)

Gross Profit

54.4

63.0

84.4

92.6

111.0

125.1

130.5

EBITDA

 

 

7.4

9.1

16.6

19.8

24.3

28.6

29.9

Operating Profit (before am, SBP and except.)

 

6.1

7.7

14.0

17.0

20.6

24.5

25.7

Operating Profit (before am. and except.)

 

5.5

7.1

13.4

16.3

20.0

23.9

24.9

Amortisation of acquired intangibles

(0.7)

(1.0)

(2.1)

(2.8)

(3.9)

(4.4)

(4.4)

Exceptionals

(3.4)

(0.9)

(5.2)

(2.1)

(8.4)

(2.9)

(0.6)

Share-based payments

(0.6)

(0.6)

(0.6)

(0.7)

(0.6)

(0.6)

(0.8)

Operating Profit

1.4

5.2

6.1

11.4

7.7

16.7

19.9

Net Interest

(0.5)

(0.8)

(1.6)

(1.8)

(2.8)

(2.9)

(2.8)

Profit Before Tax (norm)

 

 

5.6

6.9

12.4

15.2

17.8

21.6

22.9

Profit Before Tax (FRS 3)

 

 

0.7

4.2

4.3

9.4

4.8

13.6

16.9

Tax

1.4

(0.5)

(1.4)

(2.2)

(1.3)

(3.9)

(4.4)

Profit After Tax (norm)

4.6

6.0

10.0

11.8

13.6

16.2

17.1

Profit After Tax (FRS 3)

2.1

3.7

2.9

7.2

3.5

9.6

12.5

Average Number of Shares Outstanding (m)

39.2

43.1

57.6

63.3

65.4

70.7

70.7

EPS - normalised & diluted (p)

 

 

11.3

13.1

16.4

17.8

19.9

21.6

22.6

EPS - IFRS basic (p)

 

 

(4.8)

3.0

5.0

11.4

5.3

13.6

17.7

EPS - IFRS diluted (p)

 

 

(4.7)

2.8

4.8

10.9

5.1

12.9

16.5

Dividend per share (p)

6.2

6.8

7.6

8.1

8.5

9.0

9.5

Gross Margin (%)

30.7

29.8

31.1

32.2

32.8

32.2

32.4

EBITDA Margin (%)

4.2

4.3

6.1

6.9

7.2

7.4

7.4

Operating Margin (before am, SBP and except.) (%)

3.4

3.6

5.2

5.9

6.1

6.3

6.4

BALANCE SHEET

Fixed Assets

 

 

30.9

33.1

88.6

108.4

122.2

117.5

112.3

Intangible Assets

24.2

25.5

69.9

88.2

100.7

96.0

91.1

Tangible Assets

3.1

3.5

13.8

14.7

16.0

16.0

15.7

Deferred tax assets

3.6

4.1

4.9

5.5

5.5

5.5

5.5

Current Assets

 

 

81.8

92.7

127.3

128.3

149.6

164.8

170.7

Stocks

19.3

19.4

39.8

42.9

50.1

57.4

59.6

Debtors

44.7

48.3

60.2

65.5

77.3

86.1

89.4

Cash

17.8

18.1

26.7

19.9

22.2

21.3

21.8

Current Liabilities

 

 

(50.9)

(58.3)

(62.1)

(61.7)

(78.4)

(94.5)

(96.1)

Creditors

(46.6)

(51.5)

(61.9)

(60.9)

(77.1)

(89.2)

(90.8)

Short term borrowings

(4.3)

(6.8)

(0.2)

(0.8)

(1.3)

(5.3)

(5.3)

Long Term Liabilities

 

 

(10.3)

(19.0)

(61.1)

(73.1)

(69.6)

(63.0)

(58.0)

Long term borrowings

(1.7)

(9.5)

(45.5)

(57.2)

(50.9)

(45.9)

(40.9)

Other long term liabilities

(8.6)

(9.5)

(15.6)

(15.9)

(18.7)

(17.1)

(17.1)

Net Assets

 

 

51.5

48.5

92.7

101.9

123.8

124.7

128.8

CASH FLOW

Operating Cash Flow

 

 

5.7

6.1

6.6

14.6

20.3

20.3

25.9

Net Interest

(0.6)

(0.8)

(1.6)

(1.8)

(2.8)

(2.9)

(2.8)

Tax

(1.4)

(0.9)

(3.3)

(4.3)

(3.0)

(5.4)

(5.8)

Capex

(1.3)

(1.4)

(2.5)

(2.3)

(3.4)

(3.7)

(3.4)

Acquisitions/disposals

(0.5)

(9.2)

(37.3)

(19.8)

(11.8)

(2.0)

(2.0)

Financing

5.7

0.1

52.7

0.0

13.6

0.0

0.0

Dividends

(2.3)

(2.7)

(3.6)

(4.9)

(5.2)

(6.1)

(6.4)

Net Cash Flow

5.3

(8.8)

11.0

(18.5)

7.7

0.1

5.4

Opening net cash/(debt)

 

 

6.3

11.8

1.8

(19.0)

(38.1)

(30.0)

(29.9)

HP finance leases initiated

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.2

(1.2)

(31.8)

(0.6)

0.4

0.0

0.0

Closing net cash/(debt)

 

 

11.8

1.8

(19.0)

(38.1)

(30.0)

(29.9)

(24.4)

Source: discoverIE, Edison Investment Research

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by discoverIE Group Group and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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