Slide 1: Acquisition of Schirm
ACQUISITION OF SCHIRM ACQUISITION OF SCHIRM DATE Replace pic/ use one of factory NOVEMBER 2017 30 October 2017
Slide 2: Agenda
AGENDA 1. CONTEXT AND INVESTMENT SUMMARY 2. ABOUT SCHIRM 3. FINANCIAL INFORMATION 4. OPPORTUNITIES › Investment highlights 5. INCORPORATION INTO AECI
Slide 3: Context and Investment Summary
1 CONTEXT AND INVESTMENT SUMMARY
Slide 4: Context: 1H17 Results Presentation
3 CONTEXT: 1H17 RESULTS PRESENTATION › Global mining activity gaining momentum » Positive for Group’s Mining pillar » New contracts and increased market share » Footprint expanded » Good order book for mining chemicals › No significant improvement in SA manufacturing sector anticipated to year-end H
Slide 5: 4 Strategic Pillars
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Slide 6: Investment Summary
5 INVESTMENT SUMMARY Largest provider of Total production volume of Schirm is a external 165 000tpa contract agrochemical 4 synthesis units manufacturer of formulation services agro and fine 55 formulation units in Europe chemicals with a European and US 81 packaging units footprint 800 permanent em
Slide 7: Investment Case
6 INVESTMENT CASE Market leader Extension of Long-standing in provision of Schirm’s relationships with formulation manufacturing blue-chip customer services for and distribution base agrochemicals expertise in Europe Substantial investment in capex over past two years to deliver growth Enhanced Supp
Slide 8: Geographic Footprint
7 GEOGRAPHIC FOOTPRINT USA GERMANY Lübeck 1 Wolfenbüttel Ennis (Texas, USA) Schӧnebeck 5 2 3 5 Baar-Ebenhausen 4
Slide 9: About Schirm
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Slide 10: Schirm's History: Expansion of Value Chain and Footprint
9 SCHIRM’S HISTORY: EXPANSION OF VALUE CHAIN AND FOOTPRINT Schirm established Agrochemicals Acquired by 2000: acquisition Imperial acquires - focus on pharma formulations Lehnkering of formulation Lehnkering and all repacking services plant, Ennis subsidiaries, incl. Schirm 1957 1972 1975 1992 2000
Slide 11: Schirm Footprint Details
10 SCHIRM FOOTPRINT DETAILS Lübeck Schönebeck Formulation units: 5 Synthesis units: 4 Packaging units: 15 Formulation units: 7 Production volume: 12 000t Packaging units: 16 Production volume: 33 000t Ennis/Texas Formulation units: 26 Packaging units: 16 Distribution storage: 28 000m2 Production vol
Slide 12: Value Chain
11 VALUE CHAIN COMPETITIVE ADVANTAGE AND ENHANCED FINANCIAL STABILITY - ENTIRE VALUE CHAIN Synthesis Formulation Packaging › Process engineering, › Formulation of active › Packaging and labeling of scale-up and synthesis ingredients liquid and solid products of organic compounds › Wide range of in a
Slide 13: Revenue and Service Split
12 REVENUE AND SERVICE SPLIT BY END-MARKET APPLICATION BY PRODUCTION SERVICE Agrochemicals 80% Fine chemicals 20% Synthesis 7% Formulation 53% Packaging 40%
Slide 14: Customers: Long-Standing Relationships (Agrochemicals)
13 CUSTOMERS: LONG-STANDING RELATIONSHIPS FOCUSED ON END MARKETS WITH ATTRACTIVE GROWTH RATES, SUPPORTED BY GLOBAL MEGATRENDS PRODUCT SPILT KEY PRODUCT CATEGORIES (~ %) Mid-term market growth (~ %) Revenue: €91m Herbicides 50 3 Fungicides 25 4 Insecticides 10 2 Other 15 Agrochemicals 80% KEY CUSTOME
Slide 15: Customers: Long-Standing Relationships (Fine Chemicals)
14 CUSTOMERS: LONG-STANDING RELATIONSHIPS FOCUSED ON END MARKETS WITH ATTRACTIVE GROWTH RATES, SUPPORTED BY GLOBAL MEGATRENDS PRODUCT SPILT KEY PRODUCT CATEGORIES(~ %) Mid-term market growth (~%) Revenue: €21m Biocides 20 5 Personal care 20 6 Adhesives 15 4 Rubber 10 4 Other 35 Fine chemicals 20% KE
Slide 16: Production Footprint by Site
15 PRODUCTION FOOTPRINT BY SITE Schönebeck Baar- Lübeck Wolfenbüttel Ennis/Texas Ebenhausen Revenue (€m) 44,239 15,013 19,417 14,513 19,517 % of total revenue 1 4 5 27 Product split (%) 47 53 Agrochemicals Fine chemicals 73 96 99 95 Utilisation (%) 62 38 63 51 71 Synthesis Formulation
Slide 17: Lübeck
16 LÜBECK KEY FACTS 7 573m2 21 383m2 Property size Production area 121 63% Employees Capacity utilisation 12 000t 5 Production volume Formulation units: in 2015/16 3 solid, 2 liquid
Slide 18: Wolfenbüttel
17 WOLFENBÜTTEL KEY FACTS 21 750m2 10 750m2 Property size Production area 150 51% Employees Capacity utilisation 32 000t 6 Production volume Formulation units: in 2015/16 2 solid, 4 liquid
Slide 19: Schönebeck
18 SCHÖNEBECK KEY FACTS 150 000m2 15 000m2 Property size Production area 256 62% Employees Capacity utilisation 33 000t 173m3 Production volume Reactor volume in 2015/16 (synthesis) 7 4 Formulation units: Synthesis plants, 3 solid, 4 liquid including 1 pilot plant
Slide 20: Baar-Ebenhaussen
19 BAAR-EBENHAUSSEN KEY FACTS 35 000m2 21 400m2 Property size Production area 126 38% Employees Capacity utilisation 11 000t 11 Production volume Formulation units: in 2015/16 10 solid, 1 liquid
Slide 21: Ennis, Texas
20 ENNIS, TEXAS KEY FACTS 169 036m2 52 405m2 Property size Production area 213 27 870m2 Employees Distribution warehouse 77 000t 71% Production volume Capacity utilisation in 2015/16 26 Formulation units: 13 solid, 13 liquid
Slide 22: Leadership Team
21 LEADERSHIP TEAM Dirk Unterstenhӧfer Alfred Ludorf Dr. Karsten Mielke Senior Manager CEO CFO Business Development › Years in industry: 22 › Years in industry: 23 › Years in industry: 19 › Joined Schirm in ’95, re- › Joined Schirm in ’92, › Joined Schirm in ’12 joined in ’14 re-joined in ’09 › Prev
Slide 23: Financial Information
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Slide 24: Purchase Consideration
23 PURCHASE CONSIDERATION › Purchase consideration of €110,5m (incl. cash of €6,5m) Purchase Consideration Equity 53 544 Loan 49 390 Cash 6 516 Wolfenbuttel Business (CMS) 396 Wolfenbuttel Property 670 110 516
Slide 25: Transaction Considerations
24 TRANSACTION CONSIDERATIONS › Imperial to retain certain warehousing and distribution operations on Schӧnebeck and Wolfenbüttel sites » AECI has entered into a separate agreement to lease warehouse space » AECI retains the option to acquire the warehouse campus in Schönebeck for a maximum amount o
Slide 26: Financial Position at 30 June '17
25 FINANCIAL POSITION AT 30 JUNE ’17 Fixed assets 54 365 Net working capital 18 033 Cash 6 516 Other liabilities 15 125 - 63 790 Less: Loan - ICL 49 390 Net Assets per SENS 14 400 › Fixed assets include €25m expansion capex › Other large liabilities comprise mostly pension liabilities
Slide 27: Recent Financial Performance
26 RECENT FINANCIAL PERFORMANCE JUNE YE 2015 2016 2017 Revenue 105 113 113 EBITDA 14 14 14 EBITDA% 13,5% 12,8% 12,3% › Plants largely seasonally-utilised, hence strategic capex in ’16 and ’17 › Majority of earnings typically generated January to June » Objective: create July to December season - fin
Slide 28: Capital Expenditure
27 CAPITAL EXPENDITURE › Capex in FY16 and FY17 expected to deliver future earnings growth » Synthesis plant, Schönebeck » Fungicide formulation centre, Schönebeck » Formulation plant, Wolfenbüttel › Maintenance capex €3m to €4m p.a Capex (€m) 4,3 2,2 8,1 1,0 12,1 5,6 1,5 0,6 6,6 2,8 2,2 2,3 13 / 14
Slide 29: Enterprise Value
28 ENTERPRISE VALUE EBITDA - June Enterprise Value Multiple 2017 Historic earnings 100 13,8 7,2 New expansion capital expenditure 25 TOTAL 125 13,8 9,1 › Target Euro IRR for new capital expenditure between 15% and 18% › AECI’s gearing projected to 60% post two acquisitions › Acquisition expected to
Slide 30: Conditions Precedent and Timing
30 CONDITIONS PRECEDENT AND TIMING › Approval by German Federal Cartel Office (national competition regulator) › Approval by German Federal Ministry of Economics and Energy › Approval by the SARB › Registration iro transfer of Wolfenbüttel property and municipal authority waiving its statutory right
Slide 31: Current Ownership Structure
31 CURRENT OWNERSHIP STRUCTURE 100% Wolfenbüttel Contract Schirm GmbH Schirm USA Manufacturing Business Baar- Wolfenbuttel Lübeck Schӧnebeck Ennis/Texas Ebenhausen
Slide 32: Post-Acquisition Ownership Structure
32 POST-ACQUISITION OWNERSHIP STRUCTURE 100% AECI Mauritius 100% Schirm USA Baar- Wolfenbüettel Lübeck Schӧnebeck Ennis/Texas Ebenhausen Wolfenbüettel Contract Manufacturing Business
Slide 33: Opportunities
4 OPPORTUNITIES
Slide 34: Opportunities
34 OPPORTUNITIES › AECI Group already sells key products to European market › Formulation in Germany (vs shipping directly from SA) could deliver Step-out in Europe efficiencies, savings and US › Schirm’s knowledge and resources in dealing with complexities of the REACH and European agrochemical reg
Slide 35: Incorporation into AECI
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Slide 36: AECI Organogram: Post-Transaction
36 AECI ORGANOGRAM: POST-TRANSACTION
Slide 37: Strategic Pillars
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Slide 38: Thank You
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