OpSec Security Group plc
Annual Results
March 2015
Highlights
• Significant Board and senior management changes;
• Group revenue increased by 10% to £61.3 million;
• Group adjusted operating profit increased by 62% to £3.7 million;
• Cash inflow from operating activities of £3.8 million (2014: £1.6
million);
• Closing cash balance of £6.7 million (2014: £2.6 million).
2
Board and Management Changes
• Richard Fuller has replaced David Mahony as Chairman;
• Rich Cremona has replaced Mark Turnage as Chief Executive;
• Hazem Ben-Gacem has re-joined the Board and David Erlong has
joined the Board;
• Glenn Luk and Anand Radhakrishnan have left the Board;
• Significant changes made to the senior management team.
3
Group Revenue
Group Sales (£m)
£70
61.3
£60
55.5
51.7
£50
40.4
£40
38.3
£30
£20
£10
£0
FY11
FY12
FY13
FY14
FY15
4
Group Revenue
Note that we will be moving away from a market based organisation to a geographic/product
line sales organisation.
Government Protection
•
Revenue up by 11.4%;
•
Increased orders for thread into Asia offset decreased Eastern European orders in
EMEA;
•
New business secured in prior year benefited current year in America.
Brand Protection
•
Revenue down by 3.7%;
•
Positive impact of World Cup in EMEA in prior year;
•
Price reduction at major Asian tobacco customer;
•
Two brand protection programmes will be discontinued in current year;
•
Strong year for new customer wins which will also benefit current year.
Transaction Cards
•
Increased demand due to impact of chip and pin introduction and a series of security
issues in North America;
•
Significant impact of re-stocking at a major customer following supply chain issues in
prior year.
5
Group Revenue by Geography
Actual
Actual
Variance
Variance
FY 2014
£’000
FY 2015
£’000
FY 2014/15
£’000
FY 2014/15
%
EMEA
21,405
21,946
541
+2.5%
America
35,806
43,968
8,162
+22.8%
Inter-Company (1)
(1,685)
(4,618)
(2,933)
(174.1%)
Total Revenue
55,526
61,296
5,770
+10.4%
1.
Inter-Company sales increased due to the rationalisation of the Group’s
manufacturing facilities
6
Group Operating Profit
Actual
FY 2014
£’000
Actual
FY 2015
£’000
Variance
FY 2014/15
£’000
Variance
FY 2014/15
%
EMEA
1,811
1,201
(610)
-33.7%
America
1,767
4,383
2,616
+148.0%
479
306
(173)
-36.1%
(1,748)
(2,156)
(408)
-23.3%
2,309
3,734
1,425
+61.7%
Goodwill / SBP / Exceptionals
(4,496)
(2,720)
1,776
Operating (Loss) / Profit
(2,187)
1,014
3,201
Adjusted Operating Profit
3dcd
Corporate
Adjusted Operating Profit
7
American Operations
American Operations - Operating Profit ($’000)
$8,000
6,945
$7,000
$6,000
4,728
$5,000
$4,000
$3,000
2,871
2,577
2,533
$2,000
$1,000
$0
•
•
•
•
2011
2012
2013
2014
2015
Operating profit increased by 141.9%;
Revenue growth of $13.3 million across all markets with demand particularly strong in
Transaction Cards
Gross margin down from 35.0% to 33.6% due to product mix and duplicative expenses
related to rationalisation of production facilities;
Overheads decreased by 6.5% due to reduced marketing expenditure and lower
administrative costs.
8
EMEA Operations
EMEA Operations - Operating Profit (£’000)
£4,000
3,367
£3,500
£3,000
£2,500
2,368
1,811
£2,000
£1,500
1,201
953
£1,000
£500
£0
•
•
•
•
2011
2012
2013
2014
2015
Operating profit decreased by 33.7%;
Revenue up by £0.5 million – impact of first Transaction Card sales offset by reduction in
brand protection revenue;
Gross margin down from 38.6% to 38.1%;
Overheads increased by £0.8 million due primarily to higher sales commissions and costs
related to on-boarding Transaction Card sales.
9
3dcd
3dcd - Operating Profit ($’000)
$1,600
1,440
$1,400
$1,200
$1,000
755
$800
783
574
$600
489
$400
$200
$0
•
2011
2012
2013
2014
2015
3dcd prior year included machine sales which did not repeat.
10
Corporate Costs
Corporate Costs (£’000)
£2,500
2,239
2,156
1,922
£2,000
1,775
1,748
2013
2014
£1,500
£1,000
£500
£0
•
•
•
2011
2012
2015
Covers all centrally controlled costs including; legal, intellectual property, public company
costs and management incentive schemes;
Also covers provision for inter-company profit in inventory;
Costs higher due to impact of the management changes and provisions for management
bonuses.
11
Exceptional Costs/Goodwill Charges
•
•
•
Actual
FY 2014
£’000
Actual
FY 2015
£’000
Variance
FY 2014/15
£’000
Share based payments
(234)
545
779
Goodwill amortisation
(2,227)
(1,711)
516
Exceptional items
(2,035)
(1,554)
481
Total
(4,496)
(2,720)
1,776
Credit for share based payments reflects the credit on LTIS and MIS awards surrendered in lieu
of the new Executive Share Option Scheme;
Goodwill amortisation reflects the charge on the acquisitions of Delta and JDSUH;
Exceptional items relate to the rationalisation of manufacturing facilities and the changes to the
Board and management team.
12
Cash Flow Statement
• Net cash inflow from operating activities increased to £2.4 million
(2014: £1.3 million) due to higher operating profit;
• Purchase of subsidiaries of £0.9 million (2014: £0.4 million) related to
earn-out payments;
• Capital expenditure of £2.3 million (2014: £2.2 million);
• Net repayment of borrowings of £2.4 million (2014: £2.1 million);
• Placing and rights issue raised £6.8 million;
• Net cash at end of period of £6.7 million (2014: £2.6 million).
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Conclusion/Outlook
• Healthy order book going into FY16;
• Impact on cost structure of closing Robbinsville;
• Two Brand Protection programmes will discontinue in the current year
and Transaction Card volumes anticipated to be lower;
• New customer wins will benefit current year;
• Increased growth investment in:
•
Marketing;
•
Digital capabilities;
•
Product development.
• Move to dollar reporting.
14