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October 2014
2 0 1 4 Interim results
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2
LIMITATION OF LIABILITY
Forward-looking statement (Safe Harbour)
This presentation contains forward-looking statements (made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995), which by their nature, involve a degree of risk and uncertainty. Forward-looking statements represent the company’s judgement regarding future events, and are based on currently available information. Consequently the company cannot guarantee their accuracy and their completeness. Actual results may differ materially from those the company anticipated due to a number of uncertainties, many of which the company is not aware of. For additional factors that may cause the company’s actual results to differ materially from expectations and underlying assumptions, please refer to the reports filed by the company with the Autorité des Marchés Financiers (French financial markets authority - AMF).
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3
Agenda
Introduction
H1 2014 financial statements
Update on Neopost ongoing transformation
Towards a new identity
Outlook
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4
INTRODUCTION
2014 interim results
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5
FIRST-HALF 2014 HIGHLIGHTS
Communication & Shipping Solutions
Mail Solutions
Back to almost stable equipment sales in Q2
Results held up well in Europe (outside France) especially in the United Kingdom, Germany and the Nordic countries
Launch of the IN range (mailing systems) in Germany
Launch of new DS-90i folder/inserter
Success of the GMC offering (Customer Communication Management)
Accelerated synergies with the NIO network
Good integration of DMTI Spatial (Data Quality)
Promising acquisition of ProShip (Shipping Solutions)
Preparation for the roll-out of Packcity
Continued investments in SaaS line-up
Resilient performance in Mail Solutions Dynamism in CSS activities
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RETURN TO ORGANIC GROWTH IN THE SECOND QUARTER
+2.7% in 2013
+2.6%
+2.1%
+3.0% +3.1%
+2.6%
-0.4%
+1.2%
6
+1 to +3% in 2014
Organic growth compared with the same period last year
Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014
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TRANSFORMATION IN PROGRESS
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CSS: Communication & Shipping Solutions
MS: Mail Solutions
2011 sales: €1,003m
H1 2014 sales: €531m
Note: €/$ 2014 = 1.37; 2011 = 1.39; €/£ 2014 = 0.82; 2011 = 0.87
CSS = 20% of sales in Q2 2014
CSS
MS
8%
92%
CSS
19%
MS
81%
2011 H1 2014
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8
H1 2014 FINANCIAL STATEMENTS
2014 interim results
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9 9
H1 2014 SALES
530.7 +2.2
-12.3**
533.7
Sales € millions
H1 2013 H1 2014 Scope effect*
Currency effects
+7.1
Organic growth
+0.4% organic growth in the first half +1.2% organic growth in the second quarter
Change: -0.6%
Growth excluding currency effects: +1.7%
Scope effect: +1.3%
Organic growth: +0.4%
* Impact of acquisitions: total amount of €7.1 million for DMTI (6 months), ProShip (3 months) and DCS (3 months) ** €/$ 2014 = 1.37; 2013 = 1.31; €/£ 2014 = 0.82; 2013 = 0.86
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81%
19%
-1.5%
+18.2%
H1 2014 sales: €530.7m H1 2014 / 2013 *
Mail Solutions
H1 2014 SALES BY BUSINESS LINE
10
Communication & Shipping Solutions
Communication & Shipping Solutions
Mail Solutions
Resilient performance in Mail Solutions and dynamism in CSS
+1.7% Total growth excl. currency effect
*At constant exchange rates **Organic growth, stripping out the impact of automated parcel lockers for Australia Post: + 12.8%
CSS organic growth: +9.3%**
Organic growth: +0.4%
MS organic growth: -1.5%
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Europe 55%
North America 39%
Asia-Pacific 6%
H1 2014 SALES BY REGION
11
+2.2%
+2.1%
-1.8%
-4.1%
+1.7%
North America
Europe
o/w, France
Asia-Pacific
Total growth excl. currency effect
Growth in North America and Europe Unfavourable comparison base in Asia-Pacific region
* Excluding currency effects
H1 2014 sales: €530.7m H1 2014 / 2013 *
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41%
33%
26%
+0.8%
+3.7%
Recurring revenue
Sales of equipment & licences
H1 2014 SALES BY REVENUE TYPE
12
Rental & leasing
Sales of equipment &
licences
Services & supplies
67% of recurring revenue
* Excluding currency effects
+1.7% Total growth excl. currency effect
H1 2014 Sales: €530.7m H1 2014 / 2013 *
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Current operating margin (before acquisition-related expenses) in line with 2014 targets
€ millions
Sales 534 531
Gross margin 415 413
% of sales 77.8% 77.9%
Gross operating profit 159 153
% of sales 29.8% 28.8%
Current operating income (before acquisition-related expenses) 126 119
% of sales
23.6%
22.4%
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CURRENT OPERATING INCOME
H1 2014 H1 2013
€/$ 2014 = 1.37; 2013 = 1.31; €/£ 2014 = 0.82; 2013 = 0.86
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14
OPERATING MARGIN BY SEGMENT
Total H1
2013
CSS DU
Elimi- nations
€ millions
NIO
45
50 534
87
447
-8
-
-8
50
-
492
447
11.0% 23.6% 24.5%
Communication & Shipping solutions
Mail Solutions
Total sales
Current operating margin (before acquisition-
related expenses)
Impact of spending related to the development of CSS and acquisitions on margin ratios
NIO
60 531
99
432
-10
-
-10
60
-
481
432
10.0% 22.4% 23.5%
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€/$ 2014 = 1.37; 2013 = 1.31; €/£ 2014 = 0.82; 2013 = 0.86
Total H1
2014
CSS DU
Elimi- nations
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€ millions
Current operating income (before acquisition-related expenses)
126 126 119
Current operating income 122 122 113
Acquisition-related income 13 0 0
Optimisation expense -13 0 0
Operating income 122 122 113
Financial income/(expense) -19 -19 -17
Taxes -23 -29 -27
Net attributable income
Net margin as % of sales
EPS
Fully diluted EPS
80
15.0%
2.34
2.22
74
13.9%
2.16
2.06
69
13.0%
2.01
1.92
NET INCOME
15
H1 2014 H1 2013
Cost of debt remained stable Exceptionally low level of taxes in H1 2013
€/$ 2014 = 1.37; 2013 = 1.31; €/£ 2014 = 0.82; 2013 = 0.86 *Before non-recurring income and expense. 28% normative tax rate
H1 2013 restated*
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Lower operating cash flows primarily due to higher tax payment in H1 2014
Change from 31 January € millions
EBITDA 159 153
Other items -4 -5
Cash flow* 155 148
Change in WCR -42 -42
Change in lease receivables -5 -7
Interest and income tax paid -32 -53
Cash flow from operations 76 46
Capital expenditures -50 -45
Acquisitions -40 -52
Cash flow after capex & acquisitions -14 -51
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CASH FLOW GENERATION
H1 2014 H1 2013
*Before cost of net debt and taxes €/$ 2014 = 1.37; 2013 = 1.31; €/£ 2014 = 0.82; 2013 = 0.86
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€ millions
Financial debt 960 995 1,057 1,280
Cash and marketable securities -152 -187 -187 -367
Net financial debt 808 808 870 913
Shareholders' equity 750 770 770 780
Net debt / shareholders' equity
108% 105% 113% 117%
Net debt / Gross operating profit ratio
2.4 2.4 2.6 2.8
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FINANCIAL STRUCTURE
31/01 2014
31/01/14 restated *
31/07 2014
Change in net debt in line with acquisitions completed in 2014 and the end of the GMC payment
Covenants: minimum shareholders' equity of €525 million and net debt/EBITDA ratio below 3.25
31/07 2013
* Restated for the impact of the interim dividend paid in February 2014 Closing €/$ rate: 1.33 at 31/07/2013; 1.35 at 31/01/2014; 1.34 at 31/07/2014
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NEOPOST'S SOLID BALANCE SHEET
Shareholders' equity: €780 million at end-July 2014
Future leasing and rental flows in excess of €900 million
Leasing portfolio at 31 July 2014: €688 million
Up 5% on 31 July 2013*
Rental
Net present value of future rental flows in the range of €300 million
Net debt: €913 million at end-July 2014
* Excluding currency effects
Future leasing and rental cash flows in excess of net debt
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Objectives
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CHANGE IN NEOPOST'S DEBT
Neopost carried out two new refinancing operations since early 2014:
Inaugural public bond (June 2014)
Nominal amount: €350 million
Fixed annual coupon: 2.50%
Maturity: 7 years
US private placement (September 2014)
Nominal amount: US$90 million
Variable annual coupon: Libor +1.75%
Maturity: 8 years (redeemable from year 6)
Transactions completed
* At constant debt, relative to estimated financial expense for 2014
Carrying costs of €2 million in H2 2014
€6 million reduction in financial expense in 2015 *
Convertible bond (OCEANE) refinancing
Nominal amount: €300 million
Fixed annual coupon: 3.75% (4.88% under IFRS)
Maturity: 1 February 2015
Early redemption of the Schuldschein in USD
Nominal amount: US$ 90 million
Variable annual coupon: Libor +2.50%
Residual term: 2 years
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0
100
200
300
400
500
600
700
800
2015 2016 2017 2018 2019 2020 2021 2022
USPP 90 M$
Obligation 2,5%
Disponibilité sur la ligne Revolving
Obligation 3,5%
Schuldschein en $
Schuldschein en €
Placements Privés Français
USPP 175 M$
USPP 50 M$
OCEANE
In € millions
€500 million
DEBT SCHEDULE BEFORE REFINANCING OPERATIONS IN 2014
French Private Placements
Schuldschein in €
Schuldschein in $
Revolving facility (undrawn as of 31/07/14)
Bond 3.5%
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21
0
100
200
300
400
500
600
700
800
2015 2016 2017 2018 2019 2020 2021 2022
USPP 90 M$
Obligation 2,5%
Disponibilité sur la ligne Revolving
Obligation 3,5%
Schuldschein en $
Schuldschein en €
Placements Privés Français
USPP 175 M$
USPP 50 M$
OCEANE
DEBT SCHEDULE AFTER REDEMPTION OF CB & SCHULDSCHEIN USD
In € millions
Public bond 2.5%
€500 million
USPP $US90 million
Extension of debt maturity
French Private Placements
Schuldschein in €
Bond 3.5%
Revolving facility (undrawn as of 31/07/14)
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UPDATE ON NEOPOST ONGOING TRANSFORMATION
2014 interim results
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UPDATE ON MAIL SOLUTIONS
A mature market with opportunities thanks to postal initiatives
MailmarkTM , new generation of mail barcodes in the United Kingdom
Australia: financial incentives for franked mail and option to use franking machines for parcels
Canada: financial incentives for franked mail
USA: preferential prices as of 2015 for parcels when using a franking machine
Competitiveness of Neopost’s range of products and ongoing launches
H1: launch of the DS-90i folder/inserter system and continued roll-out of the IN mailing systems range
Planned in H2: DS-150/180i to replace the DS-100/140
Neopost has the capacity to capitalise on its positioning as challenger to outperform its market
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RECAP ON CSS STRATEGY 1/2
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2013 2016-18CSS CSS
Mail Solutions Mail Solutions
17% 30-35%
83% 65-70%
Business expansion strategy:
Niche markets with sizeable growth potential
Markets in which Neopost can be or become a key player
Commercial synergies with the existing customer base and with the Neopost distribution network
Medium-term goal:
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RECAP ON CSS STRATEGY 2/2
Development of new offerings in Data Quality, Customer Communication Management and Shipping:
Neopost own initiatives, i.e. Shipping Solutions (Parcel Lockers, CVP-500 and others)
Targeted acquisitions:
Protected independence
Neopost brings them a global presence, its distribution network and its financial strength
Partnerships (GeoPost for Packcity, ...)
Technology of some offers to be adapted to meet the needs of SMEs
Objectives:
Double-digit organic growth*:
Own growth by dedicated units
Commercial synergies with the Neopost network
ROCE @ 15% in a 3 to 4 year horizon
25 Development of the CSS portfolio,
a key transformation driver for the Group
* Growth excluding currency effects
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SUCCESSFUL GMC ACQUISITION
Initial sales: CHF 42 million in 2011
28% growth* in 2012
13% growth* in 2013
Estimated growth* in 2014 > 20%
EBIT ~10% in 2011 => above 15% in H1 2014
Total acquisition cost = CHF 152 million
ROCE in line with the 15% target in 3 to 4 years
26 GMC: a new example of value creation
through a successful acquisition
* Growth excluding currency effects
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GMC: ILLUSTRATION OF NEOPOST'S STRATEGY
GMC's technological leadership (Customer Communication Management)
Ranked #1 by Forrester and #2 by Gartner
27
Consolidation of global leadership in PSP (Print Services Provider)
60% market share
The company has also successfully expanded into insurance, telecoms, utilities and other vertical markets.
+49%* versus H1 2013 in the banking sector
+98%* versus H1 2013 in insurance
40% of sales in H1 2014 already generated in non-PSP, compared with less than 10% when the acquisition was made
Synergies with the Neopost network
Reinforced GMC leadership since its acquisition by Neopost
* Growth excluding currency effects
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* Value added reseller ** H1 2014 organic growth at constant exchange rates
GMC SYNERGIES
Product synergy
OMS-500: client-server and SaaS version, replacing Print Machine
GMC, preferred partner for Neopost offers to SMB
VAR* synergies
70% organic growth** in sales generated by the NIO network
VAR programme launched in all the main Neopost subsidiaries
Very substantial synergies
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ACQUISITION OF PROSHIP IN MAY 2014
Provider of multi-carrier parcel shipping solutions In the Top 5 in the US market Ex-SPSI, renamed ProShip
$10 million in sales in 2013, double-digit growth
The fastest performing software in the market (with the capacity to process several million parcels daily)
Certified by the largest carriers: Fedex (Diamond Elite label), UPS, DHL, USPS,...
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VAR* programme launched in Neopost USA
Cornerstone of Neopost's strategy in the United States for shipping solutions
* Value Added Reseller
Customer base includes traditional and e-commerce retailers, logistics operators, pharmaceutical distributors Average of 50,000 parcels per day Max > 1 million parcels per day
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France
Success and completion of the pilot phase initiated in 2013
About 15 parcel lockers installed in shopping centres, grocery shops and specialist shops
60% of parcels picked up on the same day, promising fill rate
Stakeholder satisfaction: convenient locations that are easily accessible, generation of additional footfall
Agreement signed with GeoPost in January 2014
The potential is for 3,000 parcel lockers to cover the French market in the long run
1 GeoPost dedicated network
1 network shared with a number of operators in the logistics and distribution chain
International development potential
PACKCITY DEPLOYMENT 1/2
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31
France (cont'd)
Extension of the network by the end of 2014
150 parcel lockers to be installed, in shopping centres, shops (general and specialist for click & collect) and in city centres and suburbs
2/3 of these will be GeoPost dedicated lockers
Brazil
Collaboration with the Brazilian postal service, Correios
Leader in the field for e-commerce deliveries in Brazil
6 pilot installations in 2 cities (Brasilia and Curitiba)
Neopost: facilitating parcel flows for e-commerce
PACKCITY DEPLOYMENT 2/2
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OTHER SHIPPING SOLUTIONS DEVELOPMENTS
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RFID / French Army General Headquarters (DGA)
Successful RFID pilot initiated in 2013
Deployment will start in Q4 2014
CVP-500
Continuation of the pilot phase
A first machine is operated by Doc Data, one of the largest Dutch e-commerce fulfilment providers
A second prototype is installed at another logistics operator in the Netherlands
Very promising developments in shipping solutions and e-commerce
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NEW IDENTITY
2014 interim results
33
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TAKING NEOPOST’S TRANSFORMATION TO THE NEXT LEVEL
Keeping up with changing market needs
Development of multichannel communications and e-commerce
Changes in the way organizations communicate and drive their business
Organizations needs for more responsive and more powerful customer interactions
Neopost’s transformation process well underway
New strategy deployed since beginning of 2012: extension and enrichment of the Group’s activities
Consistent offer with a wider portfolio of solutions
Hardware, software and services in the fields of mailing, shipping and digital communications
Helping organizations to create enduring interactions through relevant communications.
34 Complementary businesses, one motto:
Send. Receive. Connect.
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35
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A NEW IDENTITY
A new look and feel Bright and vivid for dynamism and optimism
Simple and recognizable
Portraying a multimedia world
Logo revisited Reinvigorated “N” of Neopost:
Symbol for mail or email, as well as the infinity symbol – symbolizing never-ending interactions
Green color:
Growth: Neopost is an evolving group
Harmony: Neopost is a company recognized for its human values
Safety: Neopost is seen as a trusted adviser and expert by its customers
Rounded typeface: close to customers
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Deployment as from February 2015 Neopost group and worldwide network
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OUTLOOK
2014 interim results
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OUTLOOK FOR 2014 CONFIRMED
2014 sales growth expected in the range +1 to +3%, excluding currency effects
2014 current operating margin before acquisition-related expenses forecast at 22.5 to 23.5%* despite the dilutive effect of recent acquisitions (DCS and ProShip)
Maintaining a high level of dividend
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* Excluding new acquisitions
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APPENDICES
2014 interim results
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40
77
7
688
2
41
132
192
1,006
182
84
2,781
366
4
68
11
654
2
43
139
172
971
174
96
2,483
152
1
Trade receivables
Inventories
Deferred tax assets
Lease receivables
Other non-current receivables
Non-current financial assets
Tangible fixed assets
Intangible fixed assets
Goodwill
Other current assets
TOTAL
Cash & cash equivalents
Current financial instruments
CONSOLIDATED BALANCE SHEET (1/2)
Assets (in € millions)
69
10
675
2
46
134
178
977
219
82
187
0
2,579
31/07
2014
31/07
2013
31/01
2014
-
41
373
177
137
321
959
18
780
0
2,781
14
2
423
180
136
85
875
20
750
1
2,483
10
3
CONSOLIDATED BALANCE SHEET (2/2)
Liabilities (€ millions)
Other current liabilities
Prepaid income
Non-current financial instruments
Deferred tax liabilities
Other non-current liabilities
Current financial debt
Non-current financial debt
Non-current provisions
Shareholders' equity
Current financial instruments
TOTAL
426
211
142
87
908
20
770
0
2,579
12
3
31/07
2014
31/07
2013
31/01
2014
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42
FRANKING MACHINES
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43
FOLDERS/INSERTERS
2011
DS-35
2012
DS-75
2010
DS-90 i
2014
2014
DS-1200 G3
2013
DS-63
2012
DS-85
2012
250
DS-200
DS-65
2012
DS-150/180
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http://neoportal.neopost.grp/Reference/Products/DS/DS-65/neo0007.jpg