Symphony Limited · NSE:SYMPHONY
Symphony — Merger or Acquisition (June 2018)
29 slides from Symphony's merger presentation, June 2018
Slide 1: Announcement
Announcement Symphony signed an agreement to purchase effectively 95% equity stake in Climate Technologies Pty Limited Acquisition to be executed at an Enterprise Value of INR 2bn (A$ 40 mn). The maximum valuation would be A$ 44 mn based on the achievement of promised EBITDA A$ to INR exchange rate
Slide 2: Transaction
Investor presentation June 2018 Transaction Acquisition to be executed at an Enterprise Value of INR 2bn (A$ 40 million)* 100% cash offer Financed through an optimal combination of debt ~A$ 24 mn (~INR 121 cr) and internal cash accruals ~A$ 15.2 mn (~INR 76 cr) The maximum valuation is A$ 44 mn base
Slide 3: Coming together of…
Investor presentation June 2018 Coming together of… Symphony: The world’s largest air cooler manufacturer Climate Technologies Pty Limited: Australia’s leading manufacturer of cooling and heating appliances 3
Slide 4: Aspiration
Investor presentation June 2018 Aspiration In line with Symphony’s conscious 3.0 positioning Building blocks (products and geographies) coming together India + China + Mexico + Australia + US Cross-knowledge sharing Desire to build value larger than constituents 4
Slide 5: Acquisition upsides
Investor presentation June 2018 Acquisition • Immediately revenue and value accretive (no upsides gestation) • Reasonable valuation • Complementary product segments • Mutually exclusive product mix • Tariff-neutral US strategy (local manufacture) • Attractive combined ROCE & RNW • Room to increase a
Slide 6: Funding through debt
Investor presentation June 2018 Funding through debt Symphony: INR 422 cr of cash, 31 March 2018 Debt-equity ratio: Nil Acquisition cost covered by Symphony cash resources 0.48x Not stretching Symphony Balance Sheet 6
Slide 7: Acquisition funded by debt
Investor presentation June 2018 Acquisition funded by debt • About INR 121 cr (A$ 24 mn) acquisition funded by debt • Debt cost below AAA / Liquid mutual fund return (net incremental treasury income) • Debt mobilised to optimise financial efficiency, international taxation and operational discipline
Slide 8: Symphony's third acquisition
Investor presentation June 2018 Symphony’s The largest acquisition by third Symphony (~ INR 201 cr) acquisition in 10 years: What is First time Symphony has different acquired a profit-making this time company with scale 8
Slide 9: Attractively priced acquisition
Investor presentation June 2018 Attractively Acquisition at 7.33 times EBIDTA multiple and priced 0.70 sales multiple acquisition Estimated PAT for 30th June 2018 INR 23 cr (A$ 4.5 mn) RONW 30%-plus and ROCE 18% for 2018-19 (estimate) Enterprise Value can rise upto INR 221 cr (A$ 44 mn) if audited E
Slide 10: Overview of Symphony Limited
Investor presentation June 2018 Overview of Symphony Limited • World’s largest air coolers company (B2C); also engaged in industrial cooling solutions (B2B) • Global company headquartered in Ahmedabad, India • Successful acquisition of IMPCO (Mexico) and Guangdong Symphony Keruilai Air Coolers Co. L
Slide 11: Overview of Climate Technologies
Investor presentation June 2018 Overview of Climate Technologies • Headquartered in Adelaide, South Australia • Manufactures and markets evaporative air coolers, ducted gas heaters and other cooling products • Manufacturing facility in Salisbury (South Australia) and assembly operation in Las Vegas
Slide 12: Climate Technologies' revenue outlook
Investor presentation June 2018 Climate Amount (A$ mn) Technologies’ revenue 90 82 74 outlook 80 70 65 60 55 52 50 47 43 40 30 20 10 0 FY15 FY16 FY17 FY18E FY19 E FY20E FY21E E: Estimate 12
Slide 13: Internationalisation of Symphony's revenues
Investor presentation June 2018 Internationalisation of Symphony’s revenues Symphony FY18 Symphony + CT FY18 22 42 58 78 India ROW India ROW 13
Slide 14: What Symphony has bought into
Investor presentation June 2018 What Symphony has bought into The tangibles The intangibles • Dynamic management; • Iconic brands like Bonaire (64 years) and Celair (46 years) profitable company • 30% and 25% market share of the domestic Australian evaporative air • Profitable growth: coolers and du
Slide 15: Acquisition impact
Investor presentation June 2018 Acquisition impact Immediate: Accretive for revenues, earnings and return on capital employed Prospective: Significant long-term synergies; business-strengthening 15
Slide 16: The strong strategic fit
Investor presentation June 2018 The strong Strategic fit for Symphony strategic fit • Complete complementary products range (EAC, 1 refrigerated cooling, commercial convection cooling and gas heating products) Coming together • Complementary seasons: when it is summer in India, it is winter in Austr
Slide 17: The strong strategic fit
Investor presentation June 2018 The strong Strategic fit for Symphony strategic fit • Leverage of Keruilai competencies (product design) 2 • Probable extension of Symphony’s IMPCO industrial cooling capability Coming together • Insights into brand building and distribution network of 2 dynamic expan
Slide 18: The strong strategic fit
Investor presentation June 2018 The strong For Climate Technologies strategic fit • Insights into Symphony’s sector-disruptive approach • Immediate access to Symphony’s distribution network (60 countries) Coming together • Complementary suite of Symphony products of 2 dynamic • Symphony’s global sup
Slide 19: CT's management dynamism
Investor presentation June 2018 CT’s • Increased builder customers from 15 to 40 in 5 years management • Commissioned Nevada (US) facility in FY17 dynamism • Profitable growth: CAGR in revenues of ~9% in three years; CAGR in EBIDTA by ~130% between FY15-18E • Tim O’Leary (CT) responsible for busines
Slide 20: Operating headroom in CT's business
Investor presentation June 2018 Operating headroom in CT’s business • Broadbase presence across other Australian states; Victoria accounts for 50% of revenues today • Nevada capacity semi-automated; explore complete automation • Room to increase Nevada utilization (60-90%) and widen offerings • Wide
Slide 21: CT is an attractive lifestyle proxy for Australia and USA
Investor presentation June 2018 CT is an attractive lifestyle proxy for Australia and USA Australia US market • Population growth • Projected increase in US population by 12% from 22.7 mn (2012) to to 360 mn (2030) projected 32.4 mn (2031) • Ideal for price-sensitive customers • Households increase
Slide 22: How CT expects to grow its business
Investor presentation June 2018 How CT • Enhanced EAC offtake (greater role of innovative expects to products) grow its • Increased EAC exports business • Growing revenues from value-added products • Optimized fixed cost; superior amortizaton • Increased throughput of US rooftop units • Launch of pr
Slide 23: How Symphony expects to grow Climate Technologies
Investor presentation June 2018 How Symphony expects to grow Climate Technologies • Retain all senior management • Focus on business continuity • CT’s senior management team (led by Tim O’ Leary) to effectively own 5% stake in CT • Extensive access to a wider global R&D base (China) • Wider products
Slide 24: More than just an acquisition
Investor presentation June 2018 Overview More than just an acquisition Sign of a company making a structural shift 24
Slide 25: Structural shift
Investor presentation June 2018 Structural • From cooler products to temperature control shift products / solutions • From India focus to global sales footprint • From largely India-centric manufacture to manufacture in five countries • From a deeper market penetration to deeper cum wider approach 2
Slide 26: Symphony 3.0 blueprint
Investor presentation June 2018 Symphony • Focus on internationalisation 3.0 blueprint • Internationalisation in sales presence, manufacturing locations, distribution networks, retail relationships, brand ownership and employees • Combine established asset-lightness and Balance Sheet strength with g
Slide 27: Symphony: Graduating from one orbit into another
Investor presentation June 2018 Symphony: Graduating from one orbit into another Version 2.0: 2007-2018 Version 3.0: 2018 onwards • Indian coolers company • Global temperature control company • Focus on residential applications • Movement to commercial/industrial coolers • Largely Symphony (modest a
Slide 28: Summing up
Investor presentation June 2018 Summing up “The Climate Technologies acquisition reinforces Symphony’s commitment to sustainable growth through the progressive broad-basing of products, technologies, employees, marketing geographies and manufacturing locations, strengthening its positioning as a dee
Slide 29: Disclaimer
Investor presentation June 2018 Disclaimer This presentation contains forward-looking statements which may be identified by their use of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or other words of similar meaning. All statements that address