Sims Ltd. · ASX:SGM
Sims — Merger or Acquisition (September 2007)
31 slides from Sims's merger presentation, Sep 25, 2007
Slide 1: Merger of Sims and Metal Management
For personal use only Merger of Sims and Metal Management building the world’s leading recycling company . . . September 2007
Slide 2: Agenda
Agenda For personal use only Merger overview Strategic rationale The combined group Timetable Appendix: Metal Management overview 2
Slide 3: Disclaimer
Disclaimer For personal use only This presentation for Sims Group Limited is designed to provide a high level overview of aspects of the operations of Sims Group Limited. The material set out in the presentation is current as at 25 September 2007. The presentation may contain forward looking stateme
Slide 4: Merger overview
For personal use only building the world’s leading recycling company . . . Merger overview
Slide 5: Merger overview
Merger overview For personal use only Merger of Sims Group (Sims) and Metal Management, Inc. (Metal Management), a leading Proposal US metal recycling group listed on the New York Stock Exchange (NYSE) Stock for stock merger subject to Metal Management stockholder approval (and other conditions)
Slide 6: Merger overview
Merger overview For personal use only Sims Metal Management—to be proposed at the first AGM of the merged group Name Sims Metal Management will remain incorporated in Australia Domicile Sims’ ordinary shares will continue to be listed on ASX ADR listing Sims will establish a NYSE listing of
Slide 7: Key financial terms
Key financial terms For personal use only Metal Management stockholders receive 2.05 Sims Metal Management ADRs for each Metal Management share held – Each ADR represents one ordinary share in Sims Metal Management – Approximately 54 million ADRs issued Exchange ratio represents a premium to Met
Slide 8: Strategic rationale
For personal use only building the world’s leading recycling company . . . Strategic rationale
Slide 9: Strategic rationale
Strategic rationale For personal use only Consistent with Sims’ goal to “grow its core metal recycling division while also developing an innovative recycling solutions division” Creates significant value for both Sims and Metal Management shareholders through both asset combination and managemen
Slide 10: Strategic rationale
Strategic rationale For personal use only Transaction criteria Consistent? 1 Metal Management has 53 recycling facilities in 17 states Holds strong market position Combined group will be the largest metal recycler in the US 2 Domestic or Metal Management’s predominantly domestic focus (with so
Slide 11: The combined group
For personal use only building the world’s leading recycling company . . . The combined group
Slide 12: Combined group profile
Combined group profile For personal use only The combined group will be the largest listed metal recycler with an estimated market capitalisation of approximately A$5.6 billion Operations at over 200 locations globally Strong financial profile with capacity for expansion through organic growth
Slide 13: Experienced and effective management team
Experienced and effective management team For personal use only Jeremy Sutcliffe to continue as an Executive Director reporting to the new Board until at least October 2009 and will Chair Sims’ metals recycling operations in Australasia and Europe as well as Sims Recycling Solutions globally Dan
Slide 14: Combined group's North American profile
Combined group’s North American profile The combined business will be the leader in the North American metal recycling business For personal use only Sims Metal Management will have operations across 19 states in the US, including strong positions on the East and West coasts, the Mid-West and al
Slide 15: EBIT by geography
EBIT by geography For personal use only The merger significantly increases Sims’ North American earnings – North American EBIT constitutes 62% of pro forma combined group EBIT EBIT by geography Sims Sims Metal 17% Management 12% 26% 38% 45% 62% Australia & New Zealand North America Europe Note: Ba
Slide 16: Revenue by product
Revenue by product For personal use only Equivalent contribution for ferrous, but higher non ferrous contribution Ferrous trading footprint provides broader opportunities to roll out recycling solutions business in new geographies Revenue by product (year to 30 June 07) Sims Group Sims Metal Man
Slide 17: Destination of sales
Destination of sales For personal use only The merger increases the portion of domestic sales, particularly in North America Sales by destination (FY07)1 Sims Group Sims Metal Management 9% 9% 29% 9% 13% 40% 11% 17% 13% 19% 13% 18% Domestic2 Europe China & Hong Kong SE Asia & Oceania NE Asia Other
Slide 18: Destination of sales—North America
Destination of sales—North America For personal use only The merger will create a greater balance between domestic sales and export sales in North America North American revenue (FY07)1 Sims Sims Metal Management 18% 40% 60% 82% Export Domestic Notes: 1. Sims revenue for year to 30 June 2007. Meta
Slide 19: Extensive potential synergies identified
Extensive potential synergies identified For personal use only Administration Chartering, loading ASR waste disposal Total c.US$35 million per Corporate office annum to be achieved in the first full financial year following Stevedoring the merger Non–trade group purchasing Export market related 19
Slide 20: Pro forma financial effects
Pro forma financial effects For personal use only Mildly accretive on a “cash” EPS2 basis (pre synergies) for the historical year to 30 June 2007 Financial effects based on actual FY07 financials Year to 30 Jun 2007 A$ million, unless otherwise stated Sims Metal Management Sims Metal Management Sa
Slide 21: NYSE listing
NYSE listing For personal use only Sims will retain ASX listing of ordinary shares Under the merger, Sims will issue ADRs to Metal Management shareholders – 1 ADR equivalent to 1 ordinary share in Sims Metal Management ADRs will trade on the NYSE – Unique investment offering for investors – Pr
Slide 22: Dividend policy
Dividend policy For personal use only Higher earnings base from outside Australia reduces Sims’ capacity to frank future dividends Regarding capital management, the company will evaluate the most effective means to provide returns to shareholders – Dividends – Share buy-backs – Other capital man
Slide 23: Timetable
For personal use only building the world’s leading recycling company . . . Timetable
Slide 24: Key dates
Key dates For personal use only Event Date Announcement 24/25 September 2007 Metal Management stockholder vote Q1 CY08 Completion date Q1 CY08 ADRs commence trading Q1 CY08 Note: Timetable is indicative and subject to change and satisfaction of conditions precedent 24
Slide 25: Appendix—Metal Management overview
For personal use only building the world’s leading recycling company . . . Appendix—Metal Management overview
Slide 26: Metal Management overview
Metal Management overview For personal use only Metal Management is one of the largest full service metal recyclers in the US – 53 metal recycling facilities across 17 states in the US – Well-established positions in many metropolitan areas including Birmingham, Chicago, Cleveland, Denver, Detroit
Slide 27: Metal Management operations
Metal Management operations For personal use only 53 operations across 17 states Illinois Indiana Michigan Connecticut Lake Bluff Joliet East Detroit Hartford Bedford Park Kankakee Chicago (2) New Haven Chicago (8) North Haven Ohio Cleveland Defiance Toledo New Jersey New York Utah Newark (4) Bron
Slide 28: Metal Management overview
Metal Management overview For personal use only Metal Management has delivered solid growth in volumes and profitability 2006 result impacted by low ferrous scrap prices, particularly in the US domestic market Sales tonnes 2003–20071 EBITDA 2003–20072 6.0 200 176 187 5.6 5.5 150 Million tonnes 5
Slide 29: Metal Management overview
Metal Management overview For personal use only Metal Management has also delivered strong returns to its shareholders Metal Management share price performance Metal Management return on net assets 50 40% 30% 40 30% 26% 25% 25% RONA (%) 30 US$ 20% 16% 20 10% 10 0 0% 2003 2004 2005 2006 2007 2003 2
Slide 30: Growth opportunities
Growth opportunities For personal use only National footprint provides ability to pursue regional bolt-on acquisitions – May 2007 acquisition of Mars Industries – February 2007 acquisition of TIMCO Scrap Processing – May 2006 acquisition of East Chicago recycling yard Recent capital investments
Slide 31: Environmental management and health and safety
Environmental management and health and safety For personal use only Metal Management has a commitment to high standards to improve the safety and health of their employees and to protect the environment Metal Management spends significant amounts of capital on pollution control and environmenta