ACQUISITION OF SCHIRM ACQUISITION OF SCHIRM DATE Replace pic/ - - PowerPoint PPT Presentation
ACQUISITION OF SCHIRM ACQUISITION OF SCHIRM DATE Replace pic/ use one of factory NOVEMBER 2017 30 October 2017 AGENDA 1. CONTEXT AND INVESTMENT SUMMARY 2. ABOUT SCHIRM 3. FINANCIAL INFORMATION Investment highlights 4.
DATE
NOVEMBER 2017
30 October 2017
› Investment highlights
› 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 However:
» Good opportunities in Water » Agriculture and Food businesses seasonal – stronger 2H historically » Rainfall patterns will affect agricultural sector performance
› Pursue further footprint and market expansion › Strong pipeline of acquisitions › Focus on working capital and capex management, and costs › Accelerate growth through Innovation projects, including AECI.GO
Schirm is a contract manufacturer of agro and fine chemicals with a European and US footprint Largest provider of external agrochemical formulation services in Europe AECI’s first major acquisition in Europe Geographic diversification Earnings diversification Integrated
synthesis, formulation and packaging Total production volume of 165 000tpa 4 synthesis units 55 formulation units 81 packaging units 800 permanent employees
Supply chain
Market leader in provision of formulation services for agrochemicals in Europe Long-standing relationships with blue-chip customer base Substantial investment in capex over past two years to deliver growth Extension of Schirm’s manufacturing and distribution expertise Enhanced geographic and product diversity Seasonal benefits Currency diversification in earnings
5
Ennis (Texas, USA)
1 2 3 4 5
Wolfenbüttel Lübeck Schӧnebeck Baar-Ebenhausen
USA GERMANY
› Other milestones
» ’13: new extrusion facility, Wolfenbüttel » ’15: new blending and repacking facility, Baar-Ebenhausen » ’16: new fungicide formulation centre, Schӧnebeck » ’17: new synthesis capacity, Schӧnebeck » ’17: new Henkel plant, Wolfenbüttel
Schirm established
repacking services Agrochemicals formulations Acquired by Lehnkering 2000: acquisition
plant, Ennis Imperial acquires Lehnkering and all subsidiaries, incl. Schirm Agrochemicals packaging Acquired Schӧnebeck site 2002: first MPP synthesis plant in Schӧnebeck 2008: acquisition of Wolfenbüttel business
1957 1972 1975 1992 2000 - 2008 2011
Baar-Ebenhausen Formulation units: 11 Packaging units: 22 Production volume: 11 000t Wolfenbüttel Formulation units: 6 Packaging units: 12 Production volume: 32 000t Ennis/Texas Formulation units: 26 Packaging units: 16 Distribution storage: 28 000m2 Production volume: 77 000t Schönebeck Synthesis units: 4 Formulation units: 7 Packaging units: 16 Production volume: 33 000t Lübeck Formulation units: 5 Packaging units: 15 Production volume: 12 000t
COMPETITIVE ADVANTAGE AND ENHANCED FINANCIAL STABILITY - ENTIRE VALUE CHAIN
Synthesis Formulation Packaging
› Process engineering, scale-up and synthesis
› Broad range of reaction types › Formulation of active ingredients › Wide range of technical capabilities › Packaging and labeling of liquid and solid products in all pack sizes › Services include hazardous substances 4 55 81
Description
Production Volume (tpa)
Current: 2 400t Expanded: 5 400t – 6 400t 98 500t 63 100t
BY END-MARKET APPLICATION
Agrochemicals 80% Fine chemicals 20%
BY PRODUCTION SERVICE
Synthesis 7% Formulation 53% Packaging 40%
FOCUSED ON END MARKETS WITH ATTRACTIVE GROWTH RATES, SUPPORTED BY GLOBAL MEGATRENDS PRODUCT SPILT KEY PRODUCT CATE TEGORI ORIES ES (~ %) KEY CUSTOMERS
Revenue: €91m
Agrochemicals 80% Herbicides Fungicides Insecticides Other
50 25 10 15
Mid-term market growth (~ %) 3 4 2
FOCUSED ON END MARKETS WITH ATTRACTIVE GROWTH RATES, SUPPORTED BY GLOBAL MEGATRENDS
PRODUCT SPILT KEY PRODUCT CATEGORIES(~ %)
KEY CUSTOMERS
Revenue: €21m
Biocides Personal care Adhesives Rubber
20 10 15
Other
35 20
Mid-term market growth (~%)
Fine chemicals 20%
5 6 4 4
Schönebeck Baar- Ebenhausen Lübeck Wolfenbüttel Ennis/Texas
Revenue (€m) % of total revenue 44,239 15,013 19,417 14,513 19,517 Product split (%) Agrochemicals Fine chemicals Utilisation (%) 62 38 63 51 71 Synthesis
Formulation
Packaging
Distribution storage
Highlights
State-of-the-art synthesis facility, including pilot plant
Development department
Competence centre for fine chemicals formulation
Small fillings
Competence centre for granulation
Powder and granule fillings
Competence centre for liquid formulation
Liquid fillings
Full range of formulation and filling portfolio
Optimally located to capture southern US market 27 73 53 47 1 99 96 4 95 5
KEY FACTS
7 573m2 Property size 21 383m2 Production area 121 Employees 63% Capacity utilisation 12 000t Production volume in 2015/16 5 Formulation units: 3 solid, 2 liquid
KEY FACTS
21 750m2 Property size 10 750m2 Production area 150 Employees 51% Capacity utilisation 32 000t Production volume in 2015/16 6 Formulation units: 2 solid, 4 liquid
KEY FACTS
150 000m2 Property size 15 000m2 Production area 256 Employees 62% Capacity utilisation 33 000t Production volume in 2015/16 173m3 Reactor volume (synthesis) 7 Formulation units: 3 solid, 4 liquid 4 Synthesis plants, including 1 pilot plant
KEY FACTS
38% Capacity utilisation 11 000t Production volume in 2015/16 11 Formulation units: 10 solid, 1 liquid 35 000m2 Property size 126 Employees 21 400m2 Production area
KEY FACTS
169 036m2 Property size 52 405m2 Production area 213 Employees 77 000t Production volume in 2015/16 71% Capacity utilisation 27 870m2 Distribution warehouse 26 Formulation units: 13 solid, 13 liquid
Dirk Unterstenhӧfer Alfred Ludorf
CEO CFO Senior Manager Business Development
› Years in industry: 22 › Joined Schirm in ’95, re- joined in ’14 › Previously Head of Supply Chain at Cheminova Germany (’13 – ’14) and Commericial Director at StӓhlerTec Germany (’09 – ’12) › Years in industry: 23 › Joined Schirm in ’92, re-joined in ’09 › Previously Controller at Lehnkering (’89 – ’92) and Head of Controlling at Hellweg (’05 –’09) › Years in industry: 19 › Joined Schirm in ’12 › Previously Senior Business Manager at CBW Chemie (’98 – ’11)
› Purchase consideration of €110,5m (incl. cash of €6,5m)
› 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 of €9m » Entered into 25-year lease on Wolfenbüttel property ~ AECI to pay Imperial a pre-payment fee of €3,5m
› Transaction structured as a “locked-box”
» Effective date of 30 June ’17 » Subject to a separate trade working capital adjustment mechanism » Trade working capital pegged at €25m (€21m at 1 July ’17)
› Fixed assets include €25m expansion capex › Other large liabilities comprise mostly pension liabilities
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
› 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 - fine chemicals and other geographies
› Favourable finished goods storage contracts negotiated with Imperial › Enhanced earnings derived from the rental prepayment of €3,5m
Revenue 105 113 113 EBITDA 14 14 14 EBITDA% 13,5% 12,8% 12,3%
› 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
2,8 2,2 2,3 6,6 0,6 5,6 12,1 8,1 1,5 1,0 2,2 4,3
13 / 14A 14 / 15A 15 / 16A 16 / 17E
Capex (€m)
Maintenance Schonebeck Expansion Other expansion capex
› Target Euro IRR for new capital expenditure between 15% and 18% › AECI’s gearing projected to 60% post two acquisitions › Acquisition expected to be earnings accretive to AECI from FY18 › Marginal negative impact on RONA initially
Historic earnings New expansion capital expenditure
100 13,8 7,2 25 125 13,8 9,1
› 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 rights of pre-emption › Transaction expected to close in 1Q18
Schirm GmbH Schirm USA Wolfenbüttel Contract Manufacturing Business Ennis/Texas Baar- Ebenhausen Schӧnebeck Wolfenbuttel Lübeck
100%
Schirm USA Wolfenbüettel Contract Manufacturing Business Ennis/Texas Baar- Ebenhausen Schӧnebeck Wolfenbüettel Lübeck AECI Mauritius
100% 100%
Step-out in Europe and US › AECI Group already sells key products to European market › Formulation in Germany (vs shipping directly from SA) could deliver efficiencies, savings › Schirm’s knowledge and resources in dealing with complexities of the REACH and European agrochemical regulations may be beneficial Supply to North Africa › Potential efficiencies - supply formulated product via Germany (vs SA) Formulation expertise › Schirm expertise to optimise current formulations › Greater product efficacy, cost advantages › Import replacement for AECI › Beneficial seasonal effects on capacity Relationships with multinationals › Leverage Schirm’s relationships with key multinational customers › Secure favourable distribution terms for Africa Expand current agrochemical portfolio › Existing range of AECI products and services could be expanded into Europe