Trajan Group Holdings Ltd · ASX:TRJ
Trajan — Merger or Acquisition (June 2022)
43 slides from Trajan's merger presentation, Jun 17, 2022
Slide 1: Accelerating growth through the next phase of M&A
Accelerating growth through the next phase of M&A Stephen Tomisich CEO and Managing Director June 2022 Science that benefits people
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer Science that benefits people This presentation is dated 17 June 2022 and has been prepared by Trajan Group Holdings Limited (ACN 152 617 706) (Company or Trajan) in connection with (a) Trajan’s proposed acquisition of Chromatography Research Supplies, Inc. (CRS) (Acqu
Slide 3: Important Notice and Disclaimer
Important Notice and Disclaimer Science that benefits people Joint Lead Managers’ disclaimer The Joint Lead Managers of the Placement, together with each of their respective related bodies corporate, shareholders or affiliates and each of their respective officers, directors, employees, affiliates,
Slide 4: Important Notice and Disclaimer
Important Notice and Disclaimer Science that benefits people All currency amounts are in Australian Dollars unless otherwise noted. All references starting with “FY” refer to the relevant financial year for the Company, being the relevant 12 month period ending 30 June. All references starting with
Slide 5: The Trajan Journey is Accelerating
The Trajan Journey is Accelerating Science that benefits people From the individual to the sample, from the automated laboratory analysis to actionable information, Trajan is building the capabilities to deliver its vision: personalised, preventative, data-based healthcare. 5
Slide 6: The Trajan Journey
The Trajan Journey Science that benefits people Delivering on results and the strategy since IPO Commercialisation of technology portfolio of solutions and devices Journey to date Recurring income from Development of next gen • Work with customers to maximise At IPO commercialisation outcomes. speci
Slide 7: Compelling M&A model delivering Impact
Compelling M&A model delivering Impact Science that benefits people 2011 and 2014: Entered through Grale Scientific and then built through HD Scientific the Acquisition characteristics foundation of today’s successful pathology business Collaborative process working alongside the 2013: Entered throu
Slide 8: Building and Extending in the Analytical Workflow
Building and Extending in the Analytical Workflow Science that benefits people Through both internal developments and M&A we are: • Building • Adding critical mass to existing product areas and striving to be industry best practice in specialised areas that impact data quality and productivity • Ext
Slide 9: Acquisition Overview: Chromatography Research Supplies
Acquisition Overview: Chromatography Research Supplies Science that benefits people • Trajan to acquire Chromatography Research Supplies, Inc. (“CRS”), a leading global chromatography consumables and tools business based in Kentucky USA, with FY22F revenues of US$14.1 million (A$20.1 million 1) and
Slide 10: Acquisition Overview: Extending Trajan’s Portfolio
Acquisition Overview: Extending Trajan’s Portfolio Science that benefits people • Also extends on Trajan’s portfolio via CRS’ other main product lines; − Tools that relate to sealing sample vials are strongly complementary to the Trajan Soltec business acquired in late 2018 − Coating technologies th
Slide 11: Acquisition Overview: Consideration
Acquisition Overview: Consideration Science that benefits people • Trajan will acquire 100% of CRS for total upfront consideration of US$43.3 million (A$61.9 million) 1 with no deferred component − The consideration will be funded via: − A$28.52 million by way of a fully underwritten institutional p
Slide 12: CRS Strategic Rationale
CRS Strategic Rationale Science that benefits people Creating a market leading • Trajan currently holds a key market position in components required for GC sample introduction position across the GC • CRS will extend that position across the septa and ferrules product lines, building a strong positi
Slide 13: CRS’ Financial Performance
CRS’ Financial Performance Science that benefits people Consistent profitable growth • Track record of single digit revenue growth and consistent improvement of gross profit margins aligning with Trajan’s historical revenue growth and gross margin expansion profile • Revenue growth in CY21 driven by
Slide 14: CRS’ Product Mix
CRS’ Product Mix Science that benefits people Driving gross margin uplift across multiple product lines CY211 Product Mix by Revenue Product Line A: CRS is Trajan’s current sole supplier. Integration Current CRS Pro forma breakdown of the two is expected to drive gross profit margin expansion and Pr
Slide 15: Leveraging Improved Operating and Financial Profile
Leveraging Improved Operating and Financial Profile Science that benefits people CY21 Revenue Mix by Customer Type • Aligned customer set further embeds Trajan in 2% Strong OEM the customer workflow and strengthens Trajan’s partner network As shown by the differing market position gross profit margi
Slide 16: Fitting into the Analytical Workflow
Fitting into the Analytical Workflow Science that benefits people CRS further secures Trajan’s position across the analytical workflow Consumer Sample collection and transport interface Sample Liquid Precision Separation preparation handling fluidics science Data processing 110. Laboratory automatio
Slide 17: Identified Synergies and EPS Accretion
Identified Synergies and EPS Accretion Science that benefits people • Significant potential revenue and cost synergies identified, with Identified Potential Synergies (Pre–Tax) corporate savings realised from the date of acquisition and Annual Synergies (100% run rate)3 product line synergies expect
Slide 18: Trajan Trading Update
Trajan Trading Update Science that benefits people Highlighting the resilience in the Trajan business Operations Inflation • Year to date growth is in line with expectations across a broad range of • Trajan has implemented broad product price increases as of 1 June 2022 product groups, customers and
Slide 19: FY22 Guidance Update
FY22 Guidance Update Science that benefits people Highlighting the resilience in the Trajan business FY22 Guidance Update: Supply chain driven timing impact: • In February, Trajan provided FY22 full year revenue guidance of $104.0 • Reflecting continued strong demand for Trajan’s products, the curre
Slide 20: Executing on Trajan’s Global M&A Program
Executing on Trajan’s Global M&A Program Science that benefits people $29.7 million Institutional Placement and up to $5.0 million Share Purchase Plan • Fully underwritten Placement to raise $29.7 million • ~14.8 million New Shares will be issued under the Placement representing ~11.0% of existing s
Slide 21: Offer Details
Offer Details Science that benefits people Offer Size and • Fully underwritten $29.7 million Placement to eligible institutional, sophisticated and professional investors and non-underwritten SPP to raise up Structure to $5.0 million (“Placement” and, together with the “SPP”, the “Offer”) • All shar
Slide 22: Sources and Use of Funds
Sources and Use of Funds Science that benefits people Sources of funds Proceeds from Placement $29.7 million Proceeds from drawdown under HSBC acquisition $20.0 million financing facility Cash at bank $13.4 million Total sources of funds $63.1 million Use of funds Fund the acquisition of CRS $61.9 m
Slide 23: Offer Timetable
Offer Timetable Science that benefits people Event Date (2022) SPP Record Date 7:00pm, Thursday, 16 June 2022 Offer announcement Friday, 17 June 2022 Placement bookbuild opens Friday, 17 June 2022 Placement bookbuild closes (all jurisdictions) 2:00pm, Friday, 17 June 2022 Announce completion of Plac
Slide 24: Q&A
Science that benefits people Q&A Science that benefits people
Slide 25: Appendices
Science that benefits people Appendices Science that benefits people 25
Slide 26: Appendix 1: Key Risks
Appendix 1: Key Risks Science that benefits people There are a number of factors, specific to the Company, the Acquisition and of a general nature, which may affect the future operating and financial performance of the Company and the industry in which it operates. This section discusses some of the
Slide 27: Appendix 1: Key Risks (continued)
Appendix 1: Key Risks (continued) Science that benefits people Risks relating to the Acquisition Completion risk There is a risk that the Acquisition may not complete or be delayed due to a failure to satisfy a condition precedent or pre-completion deliverable in the agreement entered into in respec
Slide 28: Appendix 1: Key Risks (continued)
Appendix 1: Key Risks (continued) Science that benefits people Equity funding risk The Acquisition is being partially funded by the proceeds of the Placement which is underwritten. The Underwriting Agreement is subject to customary termination events summarised on slides 36 to 39 of this presentatio
Slide 29: Appendix 1: Key Risks (continued)
Appendix 1: Key Risks (continued) Science that benefits people Due diligence risk and Trajan has performed certain due diligence in respect of CRS, which relied in part on the review of financial and other information (including unaudited financial reliance on information information) concerning the
Slide 30: Appendix 1: Key Risks (continued)
Appendix 1: Key Risks (continued) Science that benefits people Risks relating to Trajan and its Business New and existing Trajan operates in an industry in which precision products and equipment are required and customers constantly seek enhancement and refinement of these products. As competitors c
Slide 31: Appendix 1: Key Risks (continued)
Appendix 1: Key Risks (continued) Science that benefits people Loss of key customers or Trajan has a broad and global customer base which means that it is not overly reliant on any individual customer. However, Trajan’s 10 largest customers a reduction in sales to key customers currently comprise a
Slide 32: Appendix 1: Key Risks (continued)
Appendix 1: Key Risks (continued) Science that benefits people Commerciality of new There are many risks associated with the development of new technology, particularly in the health sector where regulatory and safety standards are paramount. product pipeline Developing new products and commercialis
Slide 33: Appendix 1: Key Risks (continued)
Appendix 1: Key Risks (continued) Science that benefits people Intellectual property The value of many Trajan products is dependent on granted patents, trademarks and other intellectual property rights such as licences to exploit intellectual property rights ownership and use which Trajan may have b
Slide 34: Appendix 1: Key Risks (continued)
Appendix 1: Key Risks (continued) Science that benefits people Cost of key inputs Trajan is exposed to changes to the costs of key material inputs for the fabrication of its products. Any increase in these costs will increase the cost of production for Trajan and may result in a reduction in profita
Slide 35: Appendix 1: Key Risks (continued)
Appendix 1: Key Risks (continued) Science that benefits people Litigation Legal proceedings and claims may arise from time to time in the ordinary course of the Company’s business and may result in high legal costs, adverse monetary judgements and damage to the Company’s reputation which could have
Slide 36: Appendix 2: Underwriting Agreement Terms
Appendix 2: Underwriting Agreement Terms Science that benefits people Overview Trajan has entered into an underwriting arrangement with the Joint Lead Managers to manage and fully underwrite the Placement on the terms and conditions set out in the Underwriting Agreement. The SPP is not being underwr
Slide 37: Appendix 2: Underwriting Agreement Terms
Appendix 2: Underwriting Agreement Terms Science that benefits people Termination events • The debt finance documents in respect of the debt acquisition finance to be provided by HSBC (“Finance Documents”) are terminated, rescinded, avoided, withdrawn or (continued) repudiated or rendered void, void
Slide 38: Appendix 2: Underwriting Agreement Terms
Appendix 2: Underwriting Agreement Terms Science that benefits people Termination events In addition, each Joint Lead Manager may terminate its obligations under the Underwriting Agreement if any of the following events has had, or is likely to have, a material (continued) adverse effect on the fina
Slide 39: Appendix 2: Underwriting Agreement Terms
Appendix 2: Underwriting Agreement Terms Science that benefits people Termination events • any statement in an offer document for the Placement is or becomes false, misleading or deceptive or likely to mislead or deceive or any offer document for the Placement (continued) does not contain all inform
Slide 40: Appendix 3: Foreign Selling Restrictions
Appendix 3: Foreign Selling Restrictions Science that benefits people This presentation does not constitute an offer of New Shares in the Company in any jurisdiction in which it would be unlawful. In particular, this presentation may not be distributed to any person, and the New Shares may not be of
Slide 41: Appendix 3: Foreign Selling Restrictions (continued)
Appendix 3: Foreign Selling Restrictions (continued) Science that benefits people New Zealand This presentation has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the FMC Act). The New Shares are not being offered to
Slide 42: Appendix 3: Foreign Selling Restrictions (continued)
Appendix 3: Foreign Selling Restrictions (continued) Science that benefits people Where the New Shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is: a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)), whose sole busi
Slide 43: Appendix 3: Foreign Selling Restrictions (continued)
Appendix 3: Foreign Selling Restrictions (continued) Science that benefits people United Kingdom Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of sectio
Trajan Group Holdings — Merger or Acquisition (June 2022) on 6ix