Investor Presentation 17.02.2020 IPO & Use of IPO Revenue - - PowerPoint PPT Presentation

Investor Presentation

17.02.2020

2 Investor Presentation l 2019 l

IPO & Use of IPO Revenue

Investment Finance & Machinery Purchases

30%

Strengthening Working Capital

40%

Payment of Financial Debt

30%

Use of IPO Revenue Targets

Two New Products Development Initiation of Export Operations Machinery Procurement & Capacity Increase Financing Domestic Growing Sales Low or No Bank Loans

14.11.2019 Dated IPO Revenues = TL 69,174,000 All Through Capital Increase

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2019 Outlook

• IPO took place
• 69,174,000 TL IPO revenues generated
• 37.9% Revenue Increase
• Growing market share despite economic turmoil
• Revenue increase 5.5% above PDR* Expectations
• 28% growth in Revenue per Ton
• Fixed Property Sold
• TL 33,440,000 revenue registered
• 22% above appraisal report value
• Leading to approx. TL 25 M additional income in Tax

Procedure Law financials

* Price Detection Report

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Processes Realized (I/II)

IPO Cash Injection TL 69,174,000 Net Cash Injection TL 65,381,783 Bank loans paid off Positive Contribution to Net Profitability Investor Relations Department established Increase in Coverage

• Growing volume
• Enhanced investor interaction

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Processes Realized (II/II)

Consignment Raw Material Procurement TL 32.5 Million Additional Working Capital

• Revenue Increase
• EBITDA Increase

Machinery Purchases Made / Being Made

• Improved Quality
• Increased Capacity
• Better Production Speed
• Amortization Expense

Two New Products (New Market) Trademark and Patent Applications Made and Products Launched

• Positive Impact on Q3 +

Q4 2020 results

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Realized Process = Tuzla Fixed Property Sale

Sale of Tuzla factory building and land with

TL 27,465,000

appraisal value completed in December

TL 33,440,000

Sales revenue obtained. This will be utilized as additional working capital.

Sold %22 above appraisal value &

• Approx. TL 25 M additional

income as per TPL*

* Tax Procedure Law

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Targets

General Assembly → Planned to be held during the first half of 2020 Positive contribution of two new products to revenue Positive contribution of consignment raw material procurement on net profit Cash injection from fixed property sale → Net Profitability increase thanks to additional revenue and net cash position Initiation of export operations (export office rental agreenent made + Export Department will be opened in July 2020) Sectoral expansion

• Domestic car
• Automotive supply industry

capacity increase

• Defense industry capacity

increase

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Outcomes

Financial Debt

2019

TL 16.9 M

Net Debt

2019

TL (16.9) M

Revenue & EBITDA Increase

TL M 2016 2017 2018 2019

2020E* 2021E*

Revenue 52.6 98.1 123.7 170.7 216.4 282.7 EBITDA 4.6 16.5 33.0 25.5 49.4 63.4

* Figures stated in the valuation report published in KAP on 25.10.2019.

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Sector & Product Information

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Sector Size & Our Market Share

Turkish Steel Market

(2018)

37,311,000 tons

Mold Steel Market

(2018)

70,000 tons

0.2%

Total Mold Steel Market

70K Tons Market Size

14%

Yükselen Other

(High) Alloy Steel Market

35K Tons Market Size

18%

Yükselen Other

Tool Steel Market

35K Tons Market Size

10%

Yükselen Other

Source: TÜİK, TÇÜD, UKUB and Company Data

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Steel Sector Sub-segments

Based on Chemical Composition

Construction Steel Structural Steel Stainless Steel Special Steel

Based on Shape & Production Type

Flat Product Long Rolled

Long Forged

Steel Definition of Mold Steel

Steels used in the production of molds, which are available in all kinds of manufacturing industries, consisting of tool steel and special alloy steel.



Niche-market



Value-added



High growth potential

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Growth Potential of Sector

Steel Consumption per Person (kg)

Source: World Steel – 2018 data

Turkey South Korea

1.110 400 Mold Steel Sector Share

Turkey World

0.2% 4.2%

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Products’ Fields of Usage

Target Sectors

 Mold Producers  Automotive Supply Industry  Machinery Industry  Defense Industry  Other Manufacturing Ind.

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Products

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Sector Chain & Position of Yükselen

Steelmelting Mill

Produces billets or ingots or similar liquid steel

Rolling Mill

Shaping billets by rolling

Forging Mill

Shaping ingots by forging

Steel Service Center

By doing vertical cutting, horizontal cutting, slitting, shaping, sizing, drilling, coring out, surface treatment, mechanical processing and similar transactions, we create value added and turn steel into final mold steel.

Wholesaler & Distributor

In addition to

• ur own

products, we sell the products of

• ther companies

as their distributor.

Trademark & Designer

We design our

• wn products

by branding in the steel industry.

Additional Services

Heat treatment etc.

End User (Industrialist) & Retail Merchant

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Revenue Breakdown by Amount of Products

Revenue Breakdown by Amount of Products (Annual)

Toplam

2016 2017 2018 2019 Carbon Steel Alloy Steel Tool Steel 77% 17% 6% 71% 20% 9% 60% 26% 15% 58% 22% 21%

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Revenue Breakdown in TL

62,7% 19,3% 16,8% 1,2%

2016

C A T O 54,8% 20,8% 24,0% 0,4%

2017

C A T O 44,3% 25,5% 29,8% 0,4%

2018

C A T O %40,5 %19,4 %40,0 %0,1

2019

C A T O

Increase in revenue from high value added special steel products;

such as Alloy Steel and Tool Steel

C: Carbon Steel A: Alloy Steel T: Tool Steel

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Entry Barriers

Product development, know-how, patent development process Seasonality & efficient stock management experience Familiarity with trading culture in Turkey Establishment of raw material supplier network Establishment of collection risk management systems

• Min. TL 30 mn

initial investment Building local market reputation, trust and credibility Distribution channels and sub-servicing system 1 2 3 4 5 6 7 8

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Competitors & Competitive Edge

Competitors

 Böhler Uddeholm Çelik San. Ve Tic. A.Ş.  Schmolz + Bickenbach (SteelTech Çelik A.Ş.)  Gröditz Çelik End. Malz. San. Tic. A.Ş.  Kind Çelik End. Malz. San. Tic. A.Ş.

• 1914
• 1842
• 1779
• 1888

Established

Advantages of Know-How

 Main shareholders, managing the business directly

with deep sector experience

 Unfamiliarity to the local market dynamics of most

• f the competitors, due to their foreign origins

 More than 40 years market experience, product and

market know-how

 Risk management systems built with the advantage

• f experience

 Long-lasting cooperation with suppliers

Advantages from Production

 Patented products designed by the company  Machine and processing capacity  Vast stock variety  Special steel chemical composition prescriptions

exclusive for more than 80 companies

 Distributorship of three worldwide well-known

brands in Turkey

 40 years of commercial cooperation with Regional

Merchants

 Flexible and solution oriented business model

Succeeded to become a 100% domestic pioneer company, with its long years of family experience and product diversity,

in a sector where branding and trust have top priority

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Company Information

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History

Göktürk Family, who moved to İstanbul from Sivas, started the iron and steel trade in Göktürkler Kollektif company in Perşembe Pazarı.

1954

Yüksel Göktürk, started to work in the family-run company (iron and steel industry). Specialized in the supply of flat steel in Perşembe Pazarı.

1968 – 1976

Moved to the new headquarter and facility in Kıraç, Esenyurt, owned by Yüksel Göktürk, which is 5,000 m² in

• size. In the same

year a distributorship agreement was signed with the DDS factory, which has been manufacturing special steel in Ukraine since 1932.

2009

The Company moved from Perşembe Pazarı to Zeytinburnu Demirciler Sitesi.

1986

Chairman of the Board of Directors, Yüksel Göktürk, was elected as a member of the Istanbul Chamber of Commerce and Chairman of the Iron and Steel Committee in 2005 and 2009 for 8 consecutive terms.

2005 – 2009

Yükselen Çelik became the patent holder of Toolgo trademark and Turkey distributor.

2010

Became Energietechnik’s, the German steel manufacturer, distributer in Turkey. Thus, Turkey first met with nitrogen

• steel. Acquired the

assets of its closest competitor, Ramateks, from Russian Mechel

• Group. Some of the

staffs of Ramateks and its brand have been legally moved to Yükselen Çelik.

2013

Yükselen Çelik signed distributorship agreement with Czech- based, Europe’s valuable tool, stainless steel and alloyed crude steel producer, Poldi.

2015

Barış Göktürk, the next generation of the Göktürk Family, joined the company and expanded its activities in the fields of Tool Steel and Alloy

• Steel. The

company was also more active in the fields of foreign trade, institutionalizatio n, and wholesale trade.

2005

The new steel and pipe warehouse of 1,000 m² in Kıraç went into

• peration. The

warehouse,

• wned by Yüksel

Göktürk, was leased by the Company.

2001

In order to meet growing stock and sales volumes, in addition to its existing facilities, Yükselen Çelik has opened an additional warehouse by renting in Demirciler Sitesi.

1991

Yüksel Göktürk established the private company named "Yüksel Ticaret-Yüksel Göktürk". The company was named as Yükselen Çelik Ticaret Limited Şirketi in 1989. It has changed its main activity to long steel from flat steel.

1976

İstanbul Anatolian Side Branch was

• pened in

Dudullu, Ümraniye.

2016

Aegean Region Branch was

• pened

in Çiğli, İzmir.

2017

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Shareholder Structure

33,1% 21,1% 14,1% 2,1%

29,6%

Yüksel Göktürk Barış Göktürk Burak Göktürk Ferhan Göktürk

Free Float

Shareholder Structure Post-IPO TL 43.31 M Paid-in Capital

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Growth Performance Track Record

New Industrial Investments Technological Transformation Growth

&

→

* Unaudited figures. * Unaudited figures.

Annual Revenue (TL M)

2,4 52,6 123,7 170,7 20 40 60 80 100 120 140 160 180 2004* 2016 2018 2019

Annual Revenue (US$ M)

1,7 17,4 25,7 28,7 0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 2004* 2016 2018 2019

33% CAGR

(‘04-’19)

21% CAGR

(‘04-’19)

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Customer Breakdown

13% 8% 8% 8% 7% 6% 6% 44%

Customer Breakdown by Sector

Company’s products are sold to

19 Sectors 29%

Top-3 sector’s share

Well-Distributed

Sector and Customer Breakdown Enhanced distribution over the years

2018

Top-10 Customer’s Revenue Share 2010 60% 2018 30% Top-20 Customer’s Revenue Share 2010 75% 2018 40%

Mold Manufacturing Industry Machinery Sector Automotive Supply Industry Press Manufacturing Forging Industry Aluminum Extrusion Gear & Gearbox Manufacturing Other

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Customer Satisfaction Policy

Number of Customers

2004

2018

725

150

11%

CAGR

Customer Loyalty

2013 2018 88 Continuing Customers Top-100 Customers

98%

Customer Satisfaction 10 of the 12 lost customers have changed their field

• f business

100% Return Guaranteed Sales

As the first and only treatment in the sector, the customer is provided with the right to return within 180 days

Less than 0.1% Return Rate

Indicates the customer satisfaction

Delivery in 12 Hours Max.

Provided that the order requires no mechanic transaction and available in the inventories

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Risk Management

Collection Risk

Thanks to instruments utilized during the last two years; such as "Loan Insurance" and "Direct Debiting System" almost

No Collection Problem No new doubtful trade receivables registered during the last 2 years

Direct Debiting System (DDS)

 Yükselen Çelik sells goods and services to the

customer

 The receivables from the customer are guaranteed

by the bank, up to the loan limit allocated in favor of the customer

 The receivable is automatically transferred from the

customer’s account to Yükselen Çelik’s account

 Yükselen Çelik has DDS agreement and operation in

9 national banks that guarantee its customers

Currently With 9 Banks

"Direct Debiting System"

Euler Hermes Sigorta

"Credit Insurance" Receivables from sales are secured partially

Credit Insurance

 Receivables of Yükselen Çelik are guaranteed in

• rder to protect its cash flow

 Compensates for losses incurred due to default of a

receivable

 The company is protected against large-scale losses  Compensation is paid in case of bankruptcy or

default of customers

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FX Position

Annual FX Position (TL M Amount) Net Position

TL 4.9 M

Short Position As of 2019 1,1 0,0 1,4 1,2 8,8 11,6 1,4 6,1 2016 2017 2018 2019 Assets Liabilities

(7.7)

• (11.6)

(4.9)

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Why Yükselen Çelik?

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Domestic Growth, Export & Capacity Increase

Niche & Growing Market 66-Year Sector Experience Innovative New Generation Corporate Investor Relations Attractive Dividend Policy Growth Target in Export Markets Penetration into New Markets through Two New Products Boosting Domestic Value-Added Steel Consumption Solid Capital Structure & Low Indebtness Efficient Collection & Inventories Management Diversified Customer Portfolio Significant Capacity Increase Quality & Speed Increase through New Investments High Profitability & EBITDA

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Capex Development

Annual Capital Expenditures (TL M)

0,6 1,2 0,2 5,2 2016 2017 2018 2019

0.1%

Capex/Revenues

1.2% 0.1%

TL 20.0 M Capex Planned

To be completed in short term Business model with no capex requirement in medium and long term

3.1%

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Financials

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Revenue Development

Annual (TL M)

52,6 98,1 123,7 170,7 2016 2017 2018 2019

%48 CAGR

(‘16-’19)

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Revenue per Ton Development

Revenue per Ton – Annual (TL/ton)

1.981 2.935 4.952 6.399 2016 2017 2018 2019

%48 YBBO

(‘16-’19)

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Balance Sheet Composition

TL 208.6 M Balance Sheet Size as of 2019

Other Non-Current Assets

Assets Liabilities & Equity

Assets Held for Sale Trade Receivables 38.6% Equity L.T. Financial Liabilities 2.3% Trade Payables Other Current Assets Inventories Cash & Cash Equivalents Other S.T. Liabilities Other L.T. Liabilities S.T. Financial Liabilities 16.2% 38.1% 2.8% 2.9% 1.4% 6.3% 2.0% 1.8% 67.6% 20.0%

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Financial Debt

Debt Profile as of 2019 (TL M) Maturity Breakdown

28,1 15,7 43,1 S.T. Financial Debt L.T. Financial Debt Cash & Cash Equivalents Net Debt

Debt Profile as of 2018 (TL M)

Potential to utilize the new

• pportunities thanks to its solid

market reputation & bank credibility 100% TL-Based

Financial Debt S.T. Financial Debt utilized for

Working Capital Requirements TL 260.0 M Loan Limits

Available to utilize

(0,7) 13,1 3,8 S.T. Financial Debt L.T. Financial Debt Cash & Cash Equivalents Net Debt (33,8) (16,9) %31,4 %46,0 %22,6 0-3 Months 4-12 Months 1-5 Years

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Net Operational Working Capital

31,2 58,0 40,4 80,4 1,6 9,5 0,8 2,2 24,5 35,4 59,7 79,5

• 10,1
• 33,8
• 15,2
• 41,7
• 6,5
• 0,3
• 0,5
• 0,4

2016 2017 2018 2019 Trade Receivables (+) Prepaid Expenses (+) Inventories (+) Trade Payables (-) Deferred Income (-)

40.8 68.9

(TL M)

120.1 85.2

Days 2016 2017 2018 2019 Average Receivables Period 209 164 143 127 Average Days in Inventory 221 140 203 182 Average Payables Period 95 102 105 74 Cash Cycle 335 202 241 235

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Summary of Financial Statements

TL M 2016 2017 2018 2019 Revenues 52.6 98.1 123,7 170,7 Gross Profit 9.1 21.0 39,4 33,5 Operating Profit 1.5 17.8 40,9 27,4 EBITDA 4.6 16.5 33,0 25,5 Net Income

• 3.6

9.5 24,2 18,0 Gross Margin 17.3% 21.4% 31.9% 19.6% Operating Margin 2.8% 18.2% 33.1% 16.1% EBITDA Margin 8.7% 16.8% 26.7% 15.0% Net Margin

• 6.9%

9.7% 19.5% 10.6% TL M 2016 2017 2018 2019 Cash and Cash Equivalents 0.2 0.3 0.7 33.8 Total Assets 81.0 126.3 129.8 208.6 Current Assets 58.0 103.7 101.7 199.5 Non-Current Assets 22.9 22.6 28.1 9.1 Total Liabilities 53.4 89.5 69.3 67.5 ST Liabilities 46.5 84.9 49.0 59.0 LT Liabilities 6.9 4.6 20.3 8.5 Shareholders' Equity 27.6 36.8 60.5 141.1

Thank You

For further information please e-mail invest@yukselen.com