John Menzies plc Final Results Presentation. 11 March 2008

Transcription

1 John Menzies plc Final Results Presentation 11 March 2008

2 Agenda Group Highlights and Financial Review Business Review Menzies Aviation Business Review Menzies Distribution Summary Questions 2

3 John Menzies plc 2007 Overview Preliminary results exceed our expectations Menzies Aviation delivering growth Fourth consecutive year of profit growth in excess of 20% Excellent organic expansion Selective acquisition strategy Menzies Distribution stabilised Cost and productivity initiatives delivering benefits Stability returned to core marketplace Acquisitions secure additional revenues Achieving objectives 3

4 John Menzies plc Financial Highlights m Growth Revenue 1, , % Underlying profit before tax % Free cash flow % Underlying earnings per share 47.9 p 46.9 p 2% Final proposed dividend 18.4 p 14.4 p 28% 4

5 Segmental Operating Profit m Growth Aviation % Distribution % Corporate (3.0) (3.4) 12% % Interest * (3.0) (1.1) Underlying profit before tax % Tax (9.7) (8.3) Underlying profit after tax % Tax rate 25% 23% * Interest charge is net of IAS 19 credit of 3.4m (2006: 2.4m), resulting from strong pension asset performance; and 0.6m benefit (2006: nil) from a low cost financing transaction in the year. The exchange loss on the low cost financing transaction at the date of maturity was 2.1m. This is excluded from the interest figure as it is fully offset in the tax line. 5

6 Profit Before Tax Reconciliation m Underlying profit before tax 38.0 Exceptionals Gain on disposal 2.5 Termination of onerous lease (2.4) 0.1 Foreign currency loss on cross currency basis swaps (2.1) Joint venture and associate taxation (1.4) Contract amortisation (1.0) Goodwill (1.8) Profit before tax

7 Aviation m Growth Turnover * % Underlying operating profit % Operating margin 4.8 % 4.9 % Net assets * Turnover includes 31.3m attributable to JVs and associates (2006: 18.1m) 7

8 Aviation Profit Bridge 2006 operating profit FX Start up costs Underlying Net contract gains New stations Acquisitions Mgt 2007 infrastructure operating profit (1.9) 20.6 Operating profit m (1.0) (0.7)

9 Distribution m Growth Turnover * 1, , % Underlying operating profit % Operating margin 2.0 % 2.1 % Net assets * Turnover includes 43.0m attributable to JVs and associates (2006: 2.4m) 9

10 Distribution Operating Profit 2006 Operating profit Terms Monthlies Weeklies Newspapers Partworks & stickers Other Inflation Cost New 2007 savings business Operating profit (0.2) (0.3) (0.2) (0.9) (3.5) Operating profit m

11 Cash Flow Operating cash flow 56.8 Tax & interest Capex Dividends Additional Other pension Acquisitions & investment in JVs m Aviation Distribution 31.3 Free cash flow Net cash outflow (34.3) -20 Aviation -30 Distribution Net debt increased from 77.0m to 111.3m including forex translation 11

12 Balance Sheet m Tangible fixed assets & investments Goodwill, intangibles & other assets Other Working capital & other creditors (43.0) (40.1) Net debt (111.3) (77.0) Creditors >1 year (11.2) (11.1) Pension surplus Equity shareholders funds Minority interest

13 Business Review Menzies Aviation Craig Smyth, MD

14 Menzies Aviation Overview 24% increase in profits 4 th year of over 20% profit growth Market leading performance m Structured Growth Organic, underlying Organic, contract wins New airports, existing markets Selective acquisitions Operating Profit Investment in infrastructure Further growth delivered 14

15 Aviation Growth Excellent organic growth performance Significant contract wins Both existing and new customers Growth into new airports Existing markets New markets Acquisitions Selective policy continues - right fit at the right price Entry into Scandinavian market via Northport acquisition UAC bolted onto existing AMI business Extending geographical reach 15

16 Aviation - Growth Attractive customer in existing market LGW hub started in May GLA & EMA also gained LTN renewed for five years Acquisition of NORTHPORT Entry into new attractive market Regional density opportunity Attractive new customer in existing market Expansion of low cost carrier specialisation INDIA Ground and Cargo handling One of two licence holders Attractive new market Existing & new attractive customers Regional density opportunity SPAIN Existing attractive market Existing & new attractive customers Regional density created 16 SOUTH AFRICA One of three licence holders Attractive new market Existing & new attractive customers Regional density created

19 Aviation - Growth Attractive customer in existing market LGW hub started in May GLA & EMA also gained LTN renewed for five years Acquisition of NORTHPORT Entry into new attractive market Regional density opportunity Attractive new customer in existing market Expansion of low cost carrier specialisation SPAIN Existing attractive market Existing & new attractive customers Regional density created 19 SOUTH AFRICA One of three licence holders Attractive new market Existing & new attractive customers Regional density created INDIA Ground and Cargo handling One of two licence holders Attractive new market Existing & new attractive customers Regional density opportunity

21 Aviation - Growth Attractive customer in existing market LGW hub started in May GLA & EMA also gained LTN renewed for five years Acquisition of NORTHPORT Entry into new attractive market Regional density opportunity Attractive new customer in existing market Expansion of low cost carrier specialisation SPAIN Existing attractive market Existing & new attractive customers Regional density created 21 INDIA Ground and Cargo handling One of two licence holders Attractive new market SOUTH AFRICA One of three licence holders Attractive new market Existing & new attractive customers Regional density created Existing & new attractive customers Regional density opportunity

23 Aviation Investment in infrastructure Making all of our functions world-class remains our objective Today, the functions are at various stages of development: Getting the basics right Building strength Growing from strength People & Network Standards Commercial IT Finance Focus on Safety & training Creating a talent pool IT Infrastructure & systems Regional service centres An increasingly sustainable platform 23

24 Aviation Strategy a 3 step approach Getting the basics right safety and security satisfied employees, customers & shareholders great customer service at the right price with lean cost Well defined strong operating model integrated ground & cargo handling model strong management team organised regionally and functionally people and processes at the core Growing from strength target attractive airlines & new, attractive airport markets grow organically & by selective acquisition create station and regional market density 24 Proven track record

25 Business Review Menzies Distribution Ellis Watson, MD

26 Menzies Distribution Overview Solid full year performance Full year result broadly flat Magazine market returns to stability m Productivity and cost initiatives progressing well EBITDA New business streams delivering great promise OFT decision delayed Stability returned 26

27 Distribution Marketplace More stable marketplace during the year Magazines improve but still challenging Monthlies decline slowed Weeklies perform well Good cover price growth Newspapers remain stable Cover price rises broadly offset volume decline Market is stabilising 27

28 Distribution Cost and Productivity Initiatives Key objectives delivered Massive changes to process efficiency Reshaped operational framework Aggressively driving efficiency New packing and returns technology installed Productivity benefits realised Network structure 4 branches changed to spokes Successful new business integration Regional call centres Newspaper allocation HS packing Cost savings progressing well 28

29 Distribution New Revenues Grays of York acquired and fully integrated Remaining Chester business secured in September Leadenhall News acquired during the year Continuing to explore new business initiatives D-Cipher - working with publishers and multiple retailers Menzies Digital - virtual magazine wholesaling Ireland JVs NI JV started in April ROI JV started in January 2008 Growing the top line 29

30 Distribution Strategy a 3 step approach Drive operational cost base Drive outstanding customer service Drive aggressive top line growth Stable platform for growth Clear strategic vision 30

31 Summary Paul Dollman, Group Finance Director

32 John Menzies plc Current trading Menzies Aviation South Africa started successfully ACR acquired in Jan 08 Indian ventures ready US cargo volumes soft Continuing to secure new contracts Menzies Distribution Magazine sales remain challenging New topline initiatives delivering well Archant and Newsquest secured SAP operating system commissioned 2008 in line with expectations 32

33 John Menzies plc Summary Menzies Aviation delivering growth Excellent organic expansion Selective acquisition strategy Menzies Distribution has now stabilised Stability returned to marketplace Cost and productivity initiatives delivering benefits Delivering shareholder value 33

34 QUESTIONS

35 APPENDIX 1 ADDITIONAL FINANCIALS

36 Appendix 1: Definitions Underlying profit before tax is defined as profit before taxation, intangible amortisation, exceptional items and foreign currency loss on cross-currency basis swaps. Underlying operating profit includes each Division s share of pre-tax profit from joint ventures and associates, and excludes intangible amortisation and exceptional items. Underlying earnings per share is profit after taxation and minority interest, but before intangible amortisation and exceptional items, divided by the weighted average number or ordinary shares in issue. Free cash flow is defined as the cash generated by the business after capital investment, interest and tax, and before acquisitions, disposals, ordinary dividends, share issues and one-off pension fund contributions. Operating cash flow is cash generated from operations plus dividends received but excluding one-off pension payments. 36

37 Appendix 1: EPS and Dividends Growth EPS Earnings per share 44.2 p 46.4 p -5% Underlying earnings per share 47.9 p 46.9 p 2% Final proposed dividend 18.4 p 14.4 p 28% 37

38 APPENDIX 2 Additional Information Menzies Aviation

39 Menzies Aviation Footprint 39

40 Core & development products Our core products: Ground Handling Cargo Handling Development products: Forwarding Cargo trucking Baggage solutions Airport coaching Focused, complementary product range

41 Market growth rates : cargo Freight tonnes PRC - North America PRC - Europe Domestic USA Domestic PRC Asia - North America Europe - North America Asia - Europe North America - Europe Europe - PRC North America - Asia North America - PRC Europe - Asia Japn - North America South America - Europe South America - North Japan - Europe North America - Japan Africa - Europe Europe - Japan Europe - Africa Average annual global growth of 6.0% expected between Source: Airbus

42 Market growth rates : ground handling Passenger numbers Domestic USA Intra West Europe West Europe - USA Domestic PRC Asia - West Europe West Europe - South America Japan - USA Asia - USA Domestic India Asia - PRC West Europe - PRC West Europe - Middle East Intra Asia Domestic Asia Central Europe - West Caribbean - West Europe Africa Sub Sahara - West Canada - West Europe West Europe - Indian West Europe - North Africa Average annual global growth of 4.8% expected between Source: Airbus

43 APPENDIX 3 Additional Information Menzies Distribution

44 Distribution Market Share Menzies Distribution Footprint Menzies Menzies JV Smiths Dawson Independents 44

45 APPENDIX 4 Additional Information John Menzies plc

46 Underlying EBITDA by division Distribution Aviation Migrating to higher rated sector 46