Slide 1: Q2 2017 presentation
Q2 2017 presentation 23 August 2017 Nordic market leader in chicken products 0
Slide 2: Highlights Q2 2017
Highlights Q2 2017 • 8% sales growth MSEK Q2 2017 Q2 2016 Change • All countries contributed Net sales 1,621.8 1,503.5 8% Adj. EBITDA 123.9 123.4 0% • Adj. EBIT SEK 70m Adj. EBIT 70.0 74.3 -6% • Improved underlying performance Non comparable items -7.8 - - • SEK 13m in bird flu effect included in ad
Slide 3: Bird flu issues continuing in Sweden
Bird flu issues continuing in Sweden • Reduced impact from bird flu • SEK 13m in the quarter compared to SEK 40m (Q4) and SEK 18m (Q1) • Expecting EBIT effect of SEK 3-5m per month in Q3 2017 • Diminishing effects thereafter • Recent events • Denmark declared bird flu free at the end of Q1 2017 • 4
Slide 4: Sweden – Margins under pressure
Sweden – Margins under pressure • Net sales up 3% • 2% decline in chilled products • 8 % increase in frozen products • Negative earnings development • Bird flu effects estimated to SEK 11m • Adverse product mix and high volatility in demand due to campylobacter issue • Normal campylobacter levels su
Slide 5: Denmark – Strong margin improvement
Denmark – Strong margin improvement • Net sales growth of 5% • Strong margin improvement • Mainly driven by increased export prices • Launch of new premium product range • Bird flu effects reduced to SEK 2m • Margins expected to remain impacted by strong competitive environment MSEK Q2 2017 Q2 2016
Slide 6: Norway – Strong quarter
Norway – Strong quarter • Net sales up 6% • Increased positions with NorgesGruppen and Coop during recent quarters • Lower top line growth estimated going forward • 8.8% EBIT margin • Continued positive contribution from premium products • Margin contribution from investments in plant specialisation
Slide 7: Finland – gradual improvements
Finland – gradual improvements • Continued growth in net sales • 157% vs Q2 2016 • EBIT improvement vs. Q1 2017 • Increased packaging capacity successfully installed • Important debottlenecking initiative • Change in local management, continued strong margin focus • Gradual improvements expected MSE
Slide 8: Income statement
Income statement MSEK Group Q2 2017 Q2 2016 LTM 2016 Net sales 1,621.8 1,503.5 6,293.1 5,967.4 Adj. EBITDA 123.9 123.4 449.9 451.6 Depreciation -48.6 -44.6 -201.2 -192.2 Amortisation -5.3 -4.4 -11.0 -9.2 Income from associates 0.0 -0.1 0.5 1.3 Adj. EBIT 70.0 74.3 238.3 251.6 Non comparable items -7.
Slide 9: Cash flow
Cash flow MSEK Q2 2017 Q2 2016 LTM 2016 Opening balance NIBD -1,520.8 -1,350.6 -1,487.7 -1,313.0 EBITDA 116.2 123.4 428.7 438.2 Change in working capital -68.9 3.5 -163.0 -60.1 Capital expenditure -52.6 -93.8 -228.3 -265.4 Operating cashflow -5.3 33.1 37.4 112.7 Paid interest -14.6 -18.6 -59.6 -59.3
Slide 10: Working capital and equity
Working capital and equity MSEK 30 June 2017 30 June 2016 Inventory 680.3 532.0 Receivables 691.5 546.3 Payables -916.3 -768.8 NWC 455.5 309.5 as % of sales 7.2% 5.6% Equity 941.3 907.9 Equity/assets ratio 25.0% 27.3% • Working capital was 7.2% (5.5) of net sales (LTM) • Working capital measures imp
Slide 11: Acquisition of Manor Farm
Acquisition of Manor Farm • Largest chicken processor in the Republic of Ireland • 2016 Net revenues of EUR 164 million, EBITDA of EUR 13 million (*) • Enterprise value EUR 94m(**) with settlement in; • 6m Scandi Standard shares (9.99% of current share capital) (34%) • Earn out mechanism (27%) • Cas
Slide 12: Irish poultry market
Irish poultry market • Dynamics very similar to those in the Nordic markets • Well consolidated with three domestic players of scale • Market share of about 50% • Fresh chicken products sold through retail in Ireland. • Fresh segment is well developed • Similarities to existing Nordic markets • Stro
Slide 13: About Manor Farm
About Manor Farm • Sources and processes approximately • 50% of all fresh chicken sold in the Irish retail market • 25% of all chicken consumed in Ireland • Employs approximately 850 people • Diversified customer base • Processing plant in Shercock in County Cavan • ~130 farmers contracted as grower
Slide 14: Manor Farm - Strong management
Manor Farm - Strong management • Very experienced management team with a strong track record • Five members of the management team currently own 100% of Manor Farm • Will continue to lead and develop the business in alignment with the rest of the Group • Vincent Carton and Justin Carton currently ho
Slide 15: Manor Farm - Transaction rationale
Manor Farm - Transaction rationale • Profitable and well-run operations • Clear leader in a market with strong preference for local produce • Capable and experienced management team with a strong track record • Tangible best practice opportunities identified • Significant EPS accretion • Attractive
Slide 16: Q2 2017 Summary
Q2 2017 Summary • Improved underlying EBIT performance • Expected bird flu effects during Q3 SEK 3-5m/month • Swedish demand expected to gradually recover during 2H 2017 • Successive improvements in Finland expected to continue • Improved cash flow anticipated during 2H • Manor Farm to be consolidat
Slide 17: Kronfagel Danpo ee
Kronfagel Danpo ee ‘S Scandi Standard
Slide 18: Appendix 1: Segment information by quarter and non comparable items
Appendix 1: Segment information by quarter and non comparable items 17 18
Slide 19: Segment information by quarter
Segment information by quarter Group (MSEK) Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Sales 1,302.9 1,358.9 1,252.0 1,309.6 1,341.3 1,396.1 1,376.0 1,386.3 1,503.5 1,569.9 1,507.6 1,593.8 Sales growth 1% 3% -4% -3% 3% 3% 10% 6% 12% 12.0% 10% 15%
Slide 20: Non-comparable items
Non-comparable items Non-comparable items Non-comparable items in EBITDA and operating income Q2 2017 Q2 2016 LTM 2016 Staff reduction cost * - - -4.5 -4.5 Write down of inventory ** - - -6.7 -6.7 Transaction costs *** -7.8 - -10.1 -2.2 Total -7.8 - -21.3 -13.4 Non-comparable items in finance net an
Slide 21: Appendix 2: Acquisition of Manor Farm
Appendix 2: Acquisition of Manor Farm Note: Appendix includes slides made public in relation to the announcement of the Manor Farm transaction 27 June 2017 20 21
Slide 22: The transaction
The transaction • The deal values Manor Farm at EUR 94 million(*) (Enterprise Value) • Settlement is agreed to consist of – the Consideration Shares, equivalent to 9.99% of the current share capital of Scandi Standard; – four earn-out tranches which have a nominal aggregate base amount of EUR 25.4 m
Slide 23: Earn-out mechanism
Earn-out mechanism • The first earn-out tranche of EUR 0.4 million will be paid if 2017 EBITDA exceeds EUR 13 million • The three later earn-out tranches – Nominal aggregate base amount of EUR 25 million – Subject to adjustment based on the actual EBITDA performance in each of the earn- out years 20
Slide 24: Proforma figures
Proforma figures INDICATIVE PROFORMA FIGURES (SEK million) 2016 2015 Scandi Standard Manor Farm Proforma Scandi Standard Manor Farm Proforma Feed revenues - 829 829 - 765 765 Processing revenues 5,967 1,558 7,526 5,423 1,430 6,853 Net sales 5,967 1,558 7,526 5,423 1,430 6,853 Adjusted EBITDA (2) 452
Slide 25: Proforma figures
Proforma figures INDICATIVE PROFORMA FIGURES (SEK million) 2016 Scandi Standard Proforma Non current assets 2,310 3,116 Current assets 1,187 1,593 Total assets 3,497 4,709 Note (1) The indicative pro-forma balance sheet has been prepared based on the following assumptions: (a) The Scandi balance she
Slide 26: Accounting issues
Accounting issues • Transaction costs are estimated to a little over 2% of EV – Including 1% stamp duty • Identified improvement potential is partly reliant on – Capital expenditures – Certain measures to align operations with industry best practice • The phasing of such investments and measures wil
Slide 27: Manor Farm history
Manor Farm history • Manor Farm is one of the oldest family businesses in Ireland – Tracing its origin to 1775 – Carton family have continued the business since the inception – Moved their business from Dublin to a new custom-built processing plant in 1970 – Expanded and upgraded continually since t
Slide 28: Divestment rationale
Divestment rationale • Next generation of Cartons have chosen to pursue other business interests • Vendors determined to find partner able to Build on the strong relationships – Customers – Employees – Suppliers – The broader communities in which Manor Farm operate • Set out to find a partner with h
Slide 29: Disclaimer
Disclaimer This presentation contains various forward-looking statements that reflect management’s current views with respect to future events and financial and operational performance. The words “believe,” “expect,” “anticipate,” “intend,” “may,” “plan,” “estimate,” “should,” “could,” “aim,” “targe