Download Neopost. FY 2002 results...
Neopost FY 2002 results
April 2003
2002: an eventful year External growth - Finalisation of the acquisition and integration of Ascom Hasler - Acquisition of Stielow
Our own achievements - New products - New contracts - New organisation
A new dimension
Three strategic priorities - Technological innovation - Market coverage - Productivity 2
A record performance 2002 vs. 2001
Net income +83% EBIT +60% Sales +32%
€761m
€133m
€70m
Strong growth and record increase in profitability 3
A new dimension
Pro-forma 2002 sales of more than €800m 5,000 employees Global market share gains – From 15% to 26% of the global franking machines market – More than 56% of the global folder / inserter market
Consolidated leadership positions #1 in Europe #2 worldwide Canada : #2 (22%)
UK : #2 (40%) Germany: #2 (21%)
USA : #2 (17%) France : #1 (65%)
Switzerland: #1 (56%)
Italy: #1 (27%) (as a % of the installed base of franking machines)
4
Many new developments
A broader product range – 2002: IJ35, IJ45, IJ85 and IJ105 franking machines SI92 folder / inserter – 2003: Dynamic scale, SI30 folder / inserter, Cyberstation
Exciting R&D projects (online and traceability): kiosks, RF Tags, etc.
Major commercial success (Hallmark + USPS, General Motors Spare Parts, Cisco, etc.)
Expanding subcontracting in China A broader offering and enhanced competitiveness 5
Agenda
Integration of Ascom Hasler
Acquisition of Stielow
FY 2002 results
Dollar exposure
Outlook
Neopost prepares for the future 6
Integration of Ascom Hasler A success
Chronology of events
2 October 2001: announcement of the acquisition of Ascom Hasler
28 February 2002: finalisation of the acquisition of “Ascom Hasler North America” after the Federal Trade Commission approval in US
31 May 2002: finalisation of the acquisition of “Ascom Hasler Rest of the World” after the UK government’s clearance
8
Ascom Hasler integration process Achieved
Ongoing
Manufacturing
Closure of the Berne site (Switzerland)
R&D
Reorganisation of the Group’s R&D
Merger of Ascom Hasler and Neopost distribution networks in Europe and in Canada
Hasler Inc. repair centre transferred to Mexico Merger of back offices in Europe
Sales and Marketing
Back office & maintenance
Development of commercial synergies Extension of the Leasing offering to Hasler Inc. Merger of Neopost Inc. and Hasler Inc. logistics platforms in Memphis Synergies in the US back offices
9
A more rational organisation Manufacturing
Three plants: France - the Netherlands - China
R&D
Franking machines : Shelton (Connecticut) and Bagneux (France) Document systems: Drachten (the Netherlands)
Marketing
Management
Unified networks in Europe and in Canada Two separate networks in the United States Integrated teams Unified reporting system Shared culture and common set of values
A successful integration 10
Extracting synergies
Cost synergies – Around €22m of savings expected in FY 2004 – More than half of these savings will be delivered in 2003
Commercial synergies from 2003
Merger benefits completely in line with the company's targets 11
Acquisition of Stielow Integration process well on track
Stielow:
Stielow: a strategic acquisition in a major market
– A private German Group specialised in mailroom equipment – Distributor of Neopost equipment in Germany for the last 30 years
Acquisition signed on 18 July 2002 and finalised on 31 August 2002
Acquisition price: €39.5m, brought down to €34m after adjustments In Germany, Neopost becomes the leading supplier of folders/inserters (50%) and the #2 supplier of franking machines (21%) 13
Stielow
Two business lines: – Mailing solutions: mailing systems, folders / inserters, letter openers / extractors – Non-core businesses: print finishing, label printing equipment, parcel preparation
Pro-forma 2002 sales: 65 million euros – 38.8 million euros in the mail processing business – 26.2 million euros in the non-core businesses
Level of sales in line with Neopost's expectations when it acquired Stielow 14
2003 integration plan
Decision to sell Stielow’s non-core businesses during the year
Transfer of letter opener/extractor manufacturing and R&D to the Drachten, Netherlands, site
Merger of the Stielow and Neopost GmbH back-offices
Confirmation of operating margin of 10-15% in Germany by end 2003 15
FY 2002 results Record growth in sales and profitability
2002 financial accounts
First-time consolidation of Ascom Hasler and Stielow: – “Ascom Hasler North America” consolidated for 11 months – “Ascom Hasler Rest of the World” consolidated for 8 months – Stielow consolidated for 5 months
Pro-forma accounts – Ascom Hasler and Stielow consolidated over all of 2001 and 2002
Accounts impacted by: – The dollar’s depreciation – The last Neopost Online losses
17
A change in dimension
(Euro millions)
+ 32%
761*
831*
575
+ 12% per year
365
1997
1998
1999
2000
2001
2002
2002 pro-forma
Consistent organic growth, boosted by acquisitions in 2002 * Including Stielow's non-core businesses in 2002 : €11m reported and €26.2m on a pro-forma basis
18
Sales: organic growth & acquisitions 2001
+ 32.3%
575.0 million euros
+ 37.6%
on a constant exchange rate basis
N. America France U.K. Germany ROTW
2002 761.0 million euros
+ 42.1% + 1.0% + 42.1% + 225.4% + 54.3% 19
Sales by geographical area 2002 pro-forma
2001 575.0 million euros ROW France
9%
36%
830.8 million euros Germany
10%
ROW
9%
France
25% U.K.
12%
North America
43%
U.K.
13%
North America
43%
A balanced split versus the market 20
Sales by business 2001 575.0 million euros Document & Logistics Systems
2002 pro-forma 830.8 million euros Document & Logistics Systems
31%
32%
Mailing Systems
Mailing Systems
69%
68%
An unchanged breakdown 21
Sales by revenue type 2001 Recurring revenues
575.0 million euros Rental & leasing
39%
2002 pro-forma 830.8 million euros
Rental & leasing
Services & other
Services & other
36%
20%
22%
Equipment sales
Equipment sales
41%
42%
A high proportion of recurring revenues 22
Strong growth in profitability Pro-forma
Reported Euro millions
Chg. %
2002
575
761
+32.3%
853
831
(2.6%)
Gross margin As a % of sales
413 71.8%
525 69.0%
+27.1%
577 67.6%
568 68.4%
(1.5%)
EBITDA As a % of sales
129 22.4%
199 26.2%
+54.7%
185 21.7%
207 24.9%
+11.9%
EBIT As a % of sales
83 14.5%
133 17.5%
+59.5%
107 12.5%
137 16.5%
+28.2%
Sales
Exchange rates Euro / GBP Euro / USD
2001 0.62 0.89
2002 0.63 0.96
2001
2002
Chg. %
2001
23
Strong earnings growth 2001
2002
Sales
575
761
EBIT Net financial charges Goodwill amortisation Extraordinary income Tax
83 (19) (4) (1) (21)
133 (25) (6) 1 (33)
38 6.6%
70 9.2%
Euro millions
Net income Net margin
Chg. % +32.3%
2002 pro-forma 831 137 (27) (6) 1 (34)
+82.9%
71 8.5%
Controlled financial charges and tax charges optimised thanks to acquisitions
24
Working capital requirement inflated by acquisitions Euro millions
Inventories
2001
2002
34
71
141
186
Prepaid income
(122)
(142)
Other pay. and receivables
(148)
(160)
(95)
(45)
Trade receivables
Total*
Bringing Ascom Hasler & Stielow in conformity with Neopost's standards: an opportunity to generate cash * Excluding leasing
25
Strong cash generation 2002
Euro millions
Change in net debt incl. leasing Change related to forex Acquisition of Ascom Hasler
173 30 (217)
Acquisition of Stielow
(34)
Acquisition costs
(10)
Cash cost of restructuring in 2002
(22)
Cash from operations
80
Easier funding of acquisitions 26
A healthy financial structure (1) Euro millions
2001
2002
Financial debt excluding leasing Cash & marketable securities Short-term loans for leasing
303 (112) (28)
441 (98) (6)
Net financial debt excluding leasing
163
337
Leasing debt Short-term leasing debt from operations Total leasing debt
103 28 131
124 6 130
Net financial debt
294
467
Shareholders' equity
253
316
Net debt / equity
1.2
1.5
A gearing ratio linked with rental and leasing businesses 27
A healthy financial structure (2)
2002 pro-forma
2001
2002
Debt / EBITDA ratio
2.3
2.4
2.3
Interest cover: EBITDA / interest expense
6.9
8.0
7.8
Euro millions
Comfortable ratios 28
A healthy financial structure (3)
Implementation of a dividend pay-out policy
Proposal to pay out a dividend of €30.3m in 2003, which equates to €1 per share and 43.5% of 2002 net income
Proposal submitted for shareholder approval at the next AGM A 5.8%* yield including the tax credit
* Yield based on the closing share price on 31 March 2003
29
Dollar exposure
Dollar exposure under control (1)
% in dollars
2003 Budget
Sales
43%
Cost of sales
44%
Expenses
40%
Debt
40%
Maintained margins
In 2003, 100% of $ / € cash requirements covered at a rate below 1.05 31
Dollar exposure under control (2) Impact of a euro at $1.10 vs. $1.05 assumed in the budget
Euro millions
Before forex hedging
After forex hedging
Sales
(16)
(16)
EBIT
(5)
(3)
Net income
(3)
(1)
Marginal impact on net income 32
Outlook
Outlook
Innovation - R&D: – A sustained drive focused on core businesses and attractive opportunities
Market coverage: – – – –
Active participation in the industry’s consolidation Directly: new branches, expanding sales team Acquisition of distributors Focus on Germany, the United States and new countries
Productivity: – Ongoing projects, including: • Implementation of CRM software • Enhancing efficiency in back-offices
Strong sales growth potential and scope for improved profitability
34
Outlook
Sales: – In 2003, full impact of the acquisitions made in 2002 – First half of 2003: growth comparison impacted by high level of 2002 with the euro conversion and a postal rate change in the US – Second half of 2003: moderate growth expected – Material impact of the dollar’s depreciation
Profitability: – We confirm our target of growing EBIT margin from 20% to 22% in 2004, even with a weak dollar
35
Neopost is preparing for the future From postage meter impression to information flow management
Franking, Neopost’s core business
Neopost Folders/inserters Certification
Post Offices
Secure payments or information about payments
Franking machines (+ maintenance & financing)
Senders
Payment of postage
Secure invoicing Ease of use 37
Neopost’s market drivers
Volume of mail………………………………... Growth in direct marketing ………………... Volume of parcels…………………………….. Mail automation……………………………….. Restructuring of the industry………………. Rate changes………………...………………... Postal deregulation ………………………….. Technology……………………………………..
38
Customers and partners’ requirements Post Offices and carriers
Senders and receivers
Secure payments Real-time information CRM / customised prices Confirmation and proof of delivery / traceability Identification of sender / security Stamp replacement
Secure invoicing Cost accounting Ease of use Delivery (confirmation and proof) / traceability Integrated marketing Notice of reply mail Disappearance of stamps
Moving toward intelligent mail
39
From postage impression to information flow management (1) Neopost Folders/inserters Certification Specialised terminals and on line services
Post Offices & carriers
Secure information flows
Senders and receivers 40
A few examples of Neopost initiatives
Development of Neopost Logistic Systems – Online shipping, proof of delivery, traceability (contracts with General Motors Spare Parts, Cisco and key French transportation companies)
First postal CRM with the French Post Office
Successful new projects for stamp users (Hallmark, TPmac, Zeropremium, Kiosks)
Development of “NBG” RF Tags
A renewal of the infrastructure for “networked franking machines”
An operational offering of on line services 41
From postage impression to information flow management (2) ……“Intelligent” mail ….. ……End of “non-digital / IBIP”….. ..End of “non-connected”… End of “mechanical” ……..
2000
2001
2002
2003
2004
2005
2006
2007
2008
42
Neopost at the heart of the mail and parcel shipping chain
A growing customer base – From the current customers toward users of postal contracts, stamp users, transportation companies and national Post Offices
Increasingly sophisticated machines – Shortening product life
A wider range of premium services – From printing postage to “intelligent mail” and on line services (on line : franking, shipping, tracing, postage…)
- Strong leverage for growth - Neopost, a pre-eminent player
43
Appendices
A unified and very competitive product range Franking machines IJ 105 IJ 75 IJ 35
IJ 45
IJ 25
SOHO
IJ 85
OFFICE
MAILROOM
MAIL CENTERS 45
A unified and very competitive product range Folders/inserters
SI 68 SI 92 SI 60 SI 30
SI 76
OFFICE
MAILROOM
LARGE MAILROOM
46
Consolidated balance sheets Assets Euro millions
2000
2001
2002
Goodwill Fixed intangible assets Fixed tangible assets Financial investments Leasing receivables Long-term deferred tax assets Inventories Receivables Cash & marketable securities Other short-term assets
139 185 124 7 147 4 37 131 79 25
160 184 140 5 187 7 34 141 112 26
229 276 165 4 198 41 71 186 98 57
Total
878
996
1,325 47
Consolidated balance sheets (cont’d) Shareholders’ equity & liabilities 2000
2001
2002
219
253
316
12
28
69
Financial debt
301
303
441
Leasing debt
77
103
124
Long-term deferred tax liabilities
11
13
16
Deferred revenues
114
122
142
Other short-term liabilities
144
174
217
Total
878
996
1,325
Euro millions
Shareholders' equity Provisions
48
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