Q1 FY17/18 Noteholder Presentation 27 February 2018 Disclaimer - - PowerPoint PPT Presentation
Q1 FY17/18 Noteholder Presentation 27 February 2018 Disclaimer - - PowerPoint PPT Presentation
Q1 FY17/18 Noteholder Presentation 27 February 2018 Disclaimer The informat ion cont ained herein does not constit ute investment , legal, account ing, THIS PRES ENTATION IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR regulatory, t
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Disclaimer
Content
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1. Company Overview 2. Key Messages 3. S trategic Initiatives 4. S ynergies 5. Financial Results– Full Y ear
Content
4
1. Company Overview 2. Key Messages 3. S trategic Initiatives 4. S ynergies 5. Financial Results– Full Y ear
Wide breadt h of product and service port folios across market s wit h densit y advant ages drives rout e opt imizat ion, operat ional excellence and sales-force product ivit y
1 Pro Forma analysis excludes subsidiary held for sale (S
elect a Finland)
Workplace On-the-Go FY17 PF Revenue Breakdown1
Examples of Selecta Customers by Segment With the acquisitions of Pelican Rouge and Argenta, S electa is the Leading Unattended S elf-S ervice Coffee and Convenience Food Provider in Europe
- 16 countries across Europe
- No. 1 or 2 positions in 10 markets
- c.475k vending & coffee machines throughout Europe
- 10 Million consumers served per day
France 19% UK 14% BENE 15% DACH 19% Spain 8% North 10% Italy 15%
Russia Estonia Latvia Lithuania Denmark Norway Sweden Finland Iceland Austria Croatia Turkey Romania Bulgaria Moldova Ukraine Hungary Czech Rep. Poland Belarus Serbia Italy France Switzerland FYR Germany Nether- lands Luxembourg Belgium Spain Portugal Ireland Greece Cyprus Malta UK
Selecta – new profile post Argenta acquisition
5
Selecta – new profile post Argenta acquisition
Comprehensive Offerings across “ Workplace” and “ On-the-Go”
6
Not e: Ot her segment s (t rade machines, t rade ingredient s, t echnical services, rent al services, ot her (which includes roast er export sales)) not shown.
1 represent s indicat ive revenue breakdown (based on gross revenue)
Global Brands Local Specialties New Concepts New Channels … and Inherent Flexibility of Product Portfolio Enabling Selecta to Swiftly Adjust to New Market Trends
Micro Market s
Workplace (~50%
- f revenue1)
On-the-Go (~35%
- f revenue1)
Vending (~40%
- f revenue1)
- Locat ed in privat e
businesses servicing employees
- Coffee and snacks
OCS (~10%
- f revenue1)
- Locat ed in privat e
businesses, servicing employees
- Coffee
Public (~20%
- f revenue1)
- Locat ed in t rain st at ions,
gas st at ions, met ro, airport s et c.
- Most ly sweet s, soft drinks
somet imes sandwiches / fresh
Semi Public (~15%
- f revenue1)
- Locat ed in hospit als, public
schools, ent ert ainment venues et c.
- Mix of food and beverage
assort ment
- Trade business
- Machine sales
- Coffee export
- S
pare part s
- Ingredient s
Other (~15%
- f revenue1)
07.09.2017 Closing: Pelican Rouge Acquisit ion 29.09.2017 S igning: Argent a Acquisit ion 15.01.2018 Refinancing: Launch 23.01.2018 S igning: S elect a Finland Disposal 02.02.2018 Refinancing: Closing 02.02.2018 Closing: Argent a Acquisit ion 27.02.2018 Call: Q1 result s
Last report ing:
- S
elect a and Pelican Rouge
- nly
- Capit al
st ruct ure prior t o closing
22.12.2017 Publicat ion: First Financial S t at ement s including Pelican Rouge
2017 2018
Transaction Timeline
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Content
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1. Company Overview 2. Key Messages 3. S trategic Initiatives 4. S ynergies 5. Financial Results– Full Y ear
Key Messages
- Q1 Growth in line with expectations
- Net revenue +1.1%
vs PY if adj usted for FX and working days
- Growth driven by S
MD
- Maj ority of Q4 2017 deals only contributing as of
Q2 2018
- Strong adjusted4 EBITDA improvement by €4.1m (9.1%
),
- r 1.1 pts as a ratio to net sales
- Underlying business benefits from productivity
initiatives implemented in 2017
- S
ynergy run rate of €11.5m achieved in Q1, contributing €2.4m to EBITDA in Q1
- Strong pipeline and recent wins underpin confidence in
2% Growth outlook
- Net gains Q1 YTD of €12m (27m gains for 15m
losses)
- Pipeline of €112m, out of which 45m secured
100%
5
- Signing Selecta Finland disposal - January 23rd 2018
- The European Commission has approved the purchaser
- f Selecta Finland on February 21st 2018
- Closing expected by end March 2018
9
1 Const ant foreign currency rat es applied: CHF/ EUR 1.15; S
EK/ EUR 9.65; GBP/ EUR 0.88. S elect a / PR adj ust ed for subsidiary held for sale (S elect a Finland)
2 Revenue gross of vending fees 3 Net capit al expendit ures is defined as capit al expendit ures less net book value of disposals of vending equipment 4 Adj ust ment s capt ure one off it ems relat ing t o synergy cost s 5 Mut ual agreement wit h client 6 Machines excluded non-revenue generat ing machines and are averaged over t he quart er, days are weight ed by t urnover per segment across t he group
Gross revenue1, 2 Adj usted EBITDA1 Margin % Adj usted EBITDA less net capex1, 3 Total average sales per machine per day6 at constant rates
1
+9.1% 321.9 325.8 Q1 2016/ 17 Q1 2017/ 18 44.7 48.8 Q1 2016/ 17 Q1 2017/ 18 15.9 22.0 Q1 2016/ 17 Q1 2017/ 18 13.9% 15.0% +1.2% +38.5% 11.9 12.2 Q1 2016/ 17 Q1 2017/ 18 +3.2%
Content
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1. Company Overview 2. Key Messages 3. S trategic Initiatives 4. S ynergies 5. Financial Results– Full Y ear
Ambition Values
Vision: Selecta is the European leader in unattended self-serve coffee and convenience food, at the workplace and on-the-go Mission: Selecta is dedicated to providing great quality coffee brands, convenience food & beverages concepts
Powered by Great People Attract talent and retain capable organization, in line with core values, for the growth and transformation of the company Operational Excellence Deliver high quality service at highest efficiency through continuous improvement, standardization and technology in order to maximize customer satisfaction, retention and profitability Self-Service Retail Experience Deliver best solutionsto consumers by offering flexible payments, loyalty programs & leveraging data to improve offering Innovation Leadership S et industry standard for innovation, leveraging the latest technologies to enhance our offering in S elf-S ervice Retail and beyond Route to Market Excellence Drive customer acquisition by selling unique concepts, opening new routes and standardizing salesprocesses, and maximize customer base value through high retention, profitability and satisfaction
Cust omer focus Teamwork & Winning at t itude Excellence in Execut ion
Strategies
1 2 3 4 5
Int egrity
Guided by our Vision & Mission Accelerate our market leadership in Europe with our customers and consumers in mind Being number 1 or 2 in every market we operate
Selecta Roadmap
11
Self-service retail excellence
Enhancing consumer experience with innovation and concepts
12
Connectivity & payments:
- S
uccessfully complet ed public accelerat ion init iative
- Equipment of public machines park wit h Telemet ry &
Cashless
- Modernizat ion of look & feel wit h facelift “ Next ”
Retail analytics and pricing:
- Analyt ical capabilities based on Big Dat a & Machine
Learning developed
- Locat ion specific pricing and assort ment s
- 2%
sales uplift t hrough opt imized pricing
- Ident ificat ion of whit e spot s & relocat ion of
underperformers Hot drinks & footprint optimization:
- Addit ion of hot drinks wit h Lavazza capsule machines
- Upgrading machines wit h hot drinks and qualit y coffee
- Opt imizat ion of machine locat ions
1
Learnings in Public segment are now being transferred into Private Segment
0.5k 1.5k 1.8k 1.8k Q2 2016/ 17 Q3 2016/ 17 Q4 2016/ 17 Q1 2017/ 18
Cashless Connected
Lavazza machines in public
9.1k 12.4k 13.7k 19.9k 7.6k 10.2k 13.6k 16.5k Q2 2016/ 17 Q3 2016/ 17 Q4 2016/ 17 Q1 2017/ 18 Q1 including Pelican Rouge
Roll-out connect ed/ cashless machines
Higher Profitability through MMI
- Analysis shows that approximately 5%
- f
revenues (>15%
- f machines) are from loss
making contracts
- Program obj ectives are to reduce
underperforming contracts to less than 2%
- f
revenues by end 2018
2 Route-to-market excellence &
People strategy
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Accelerate growth through Sales Academy
- Assessment of the S
ales community against benchmarked performance levels
- 2 Markets chosen - Assessments show the same gaps
CH – S electa only high margin UKI - S electa & PR low margin
- Roll-out of training program through eLearning
Notable Q1/2018 wins
Nordics: €9.2m/ year – CaféBar, OK, ATGA, Telenor, GKN aerospace, axfood, Municipals of Norrköping and Linköping, Møre & Romsdal State Municipal BENE: €2.7m/ year – LaPlace, Jumbo, Victoria Trading UKI: €3.4m/ year – WHITBREAD, Costa Coffee, LIQUIDLINE FR: €2.0m/ year – DECATHLON ES : €1.2m/ year – amazon, FUJITSU, Endesa DACH: €3.3m/ year – Daimler EU: €2.1m/ year
- Lidl
3
4 Operational Excellence1 Field Force Productivity and S G&A Cost Reduction (All S electa markets except Italy)
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Efficiency initiatives improved KPIs2 Efficiency FTE savings
- Field force product ivity -4.6%
(Technicians and Merchandisers) Telemet ry being implemented in public segment in all count ries Planogram re-engineering enabled reduced work force despit e growing sales Includes int egrat ion efficiencies
- S
G&A efficiency -5.7% (All remaining FTEs)
- FTEs cont inue t o decrease as efficiency and int egrat ion
programs are rolled out
- Furt her efficiency opport unities envisaged via best in
class set up at Argent a
- Pelican Rouge now fully onboarded
- New st andard KPIs implemented at t he end of 2017 for
merchandisers and field engine
- Count ry specific t arget s in place
- Average product ivit y/ qualit y t arget ed improvement s of
bet ween 5% and 15% across market s and aligned wit h synergy t arget s
1 S
elect a const ant scope adj ust ed for subsidiary held for sale (S elect a Finland). FY16/ FY/ 17 numbers are a pro forma amalgamat ion of S elect a and Pelican Rouge result s
2 Const ant foreign currency rat es applied: CHF/ EUR 1.15; S
EK/ EUR 9.65; GBP/ EUR 0.88
Content
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1. Company Overview 2. Key Messages 3. S trategic Initiatives 4. S ynergies 5. Financial Results– Full Y ear
Synergy program – Recap
Cost S ynergies of c.€52.5m across Procurement, S G&A and Based on Bottom-up Plan; S ynergy Initiatives Led by an Integration Office Reporting to the Executive Chairman
16
Procurement
- S
avings on ingredient s via in-sourcing coffee and int ernat ional t ender on raw mat erials
- Price harmonizat ion of product s
- S
avings on disposals
- S
t reamlining purchases of spare part s
- Indirect cost savings on logist ics
SG&A
- Headcount reduct ions by int egrat ing management t eams and
re-sizing sales force
- Int egrat ion of HQs
Operations
- Reduct ion of headcount in maint enance and refilling by
combining operat ions in areas wit h low machine densit y
- Applicat ion of S
elect a’ s refiller planning program in PR UK and PR France
- Increased use of t elemet ry
- Headcount reduct ions t hrough int egrat ion of cent ral funct ions
(eg. corporat e and IT)
- Foot print opt imizat ion by concent rat ing warehouses
- Eliminat ing overhead redundancies in branch management ,
call cent ers and ot her areas Argenta
- Procurement savings from bet t er purchasing t erms in It aly
- Cost savings from leveraging t elemet ry already in place
- Headcount reduct ions in Combined Group R&D
Total
- Run-rat e synergies: €52.5m
Overview of Cost Synergies by Category Cost Synergies Breakdown and Phasing (€m)
Procurement S G&A Operat ions Argent a
18.0 10.0 17.0 7.5 17.5 35.0 52.5 2018 2019 2020 # FTE 700 Synergy plan requires estimated €43.6m costs and capex to implement:
- Severance costs (€22.5m)
- One-time integration costs (€12.1m)
- Integration & implementation capex (€9.0m)
Program is cash flow positive in all years Switzerland and Sweden (key profit contributors) not impacted by integration efforts but to benefit eg. from group-wide procurement initiatives
Q1 2018 closed very positively
- Q1 actual at €2.4 million
- Q1 exit run rate at €11.5 million
- Vetted by a leading international consultancy group
Contributions from all 3 workstreams (Procurement, SG&A and Operations)
- Procurement
- Price alignment across key suppliers
- First orders placed under new group deals, such as cups and ingredients
- S
G&A
- Full integration of Group HQ functions, as well as country management
- Combination of local commercial teams
- Operations
- S
uccessful pilots of telemetry and planning tools
- Launch of route optimisations
Legal entity merger process is on track
Synergy program - Update
17
Synergy program - Upgrade
18
S electa management has upgraded the programme with expected delivery by 2020 of €60 million in comparison to last outlook of €52.5 million This confidence is underpinned by:
- Very positive start to the programme in Q1, 2018
- Country feedback following bottom-up review of
integration plans
- S
uccessful pilots completed in Q1 2018, contributing to run rate savings
- Vetted by a leading international
consultancy group Program 2018 – 2020 EBITDA contribution, € millions
Plan f or Ref inancing Upgraded Plan
17.5 35.0 52.5 17.5 40.0 60.0 10 20 30 40 50 60 70 2018 2019 2020
~+15 % ~+15 %
Content
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1. Company Overview 2. Key Messages 3. S trategic Initiatives 4. S ynergies 5. Financial Results– Full Y ear
Selecta Results
Gross revenue
- The -8.2% depreciat ion of CHF,
- 1.4% GBP and -1.1% S
EK vs prior year affect s group gross t urnover by -€5.7m.
- At const ant currency FX2 gross revenue increased +1.2%/ +€4.0m
and on a const ant days basis gross revenue increased +1.6%/ +€5.1m. Net revenue
- At const ant currency FX2 net revenue increased +0.7% /
+€2.2m and a const ant days basis net revenue increased +1.1%/ +€3.3m Net revenue by segment
- Public segment growt h cont inues, +€2.6m growt h t o €37.4m for Q1 FY17/ 18
st rongly support ed by S t arbucks on t he go in pet rol segment in key market s.
- Trade and ot her sales were also st rong wit h +€3.8m growt h t o €58.6 for Q1
FY17/ 18 driven by st rong machine sales and ot her non vending sales.
- S
t rong public, t rade and ot her revenue were offset by less privat e and semi- public t urnover, -€10.6m driven by decreased machine numbers. S ales per machine per day have increased in bot h cat egories. Adjusted EBITDA up +€2.7m on prior year (+4.1m like for like at constant rates2)
- Gross profit (net of vending rent s) showing growt h vs. prior year (+0.3pt s).
- Adj ust ed employee benefit s expense decreased by €4.6m (-4.6%
) vs prior year driven by FTE reduct ion (-414 fewer).
- Ot her operat ing expenses were roughly in line wit h prior year.
EBITDA adjustments
- €3.6m of cost s relat ed t o rest ruct uring – t wo t hirds of which relat e t o t he
full provision
- f
t he rest ruct uring plan in t he Net herlands (synergy realizat ion process).
Pro Forma P&L Summary @ Actual Rates – 3 Months Ended 31 Dec 20171
1 S
elect a const ant scope adj ust ed for subsidiary held for sale (S elect a Finland). FY16/ FY/ 17 numbers are a pro forma amalgamat ion of S elect a and Pelican Rouge result s
2 Const ant foreign currency rat es applied: CHF/ EUR 1.15; S
EK/ EUR 9.65; GBP/ EUR 0.88
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Net revenue by region3
Result by Region @ Constant Rates2 - 3 Months Ended 31 Dec 20171
1 S
elect a const ant scope adj ust ed for subsidiary held for sale (S elect a Finland). FY16/ FY/ 17 numbers are a pro forma amalgamat ion of S elect a and Pelican Rouge result s
2 Const ant foreign currency rat es applied: CHF/ EUR 1.15; S
EK/ EUR 9.65; GBP/ EUR 0.88
3 Revenue net of vending fees
Adj usted EBITDA by region Selecta Results
Constant scope net revenue +0.6% increase on prior year at constant currency FX2, Constant scope adjusted EBITDA +9.1% increase on prior year at constant currency FX2.
- France: net revenue increased by 2.2% in the quarter driven by strong
non- recurring non vending sales and growth in the semi-public segment. EBITDA +3.4m (+97.9% ) above prior year driven saving in personnel expenses and the high non vending margin.
- UK: Net sales showed improved trend in sales evolution leading only to a slight
decline (-0.2% / -€0.1m) for the quarter which is driven by semi-public HoReCa. EBITDA +€0.2m (+4.0% ) above prior year driven by personnel savings.
- BENE: Net revenue increased by 1.3% in the quarter primarily driven by strong
growth at the Roasting facility. EBITDA +€0.4m (+3.2% ) above prior year. Increased turnover has not greatly impacted gross margin due to the sales mix. S avings in the region are seen in both personnel expenses (NL synergy realization) and other overheads.
- DACH: Net sales showing slight growth (+0.2%
/ -€0.1m) for the quarter. Decrease in private revenue (-1.7% on a constant day basis) offset by public growth in CH (Migrolino) and Germany (Deutsche Bahn / S hell). EBITDA -€0.9m (-4.6% ) below prior year. The reduced private sales, which come at a high margin, is driving the decline.
- Spain: Net sales showed strong growth in the quarter increasing by +3.2%on prior
- year. The main driver of the increase was impulse sales. EBITDA +€0.3m (+7.9%
) above prior year driven by the increased sales growth.
- North: Revenue decreased -2.0%/ -€0.8m (although the decrease was only -1.0%
- n a constant days basis). The main driver was lower private and trade machine
sales in S
- weden. EBITDA +€0.3m (+4.6%
) above prior year, with the decrease in turnover being more than offset in significant personnel expense savings.
304.3 301.0 303.0 (3.3) 1.3 (0.1) 0.8 (0.1) 0.9 (0.8)
- Q1 FY16/17
Q1 FY16/17 Constant scope UK DACH North Q1 FY17/18 Constant scope 45.2 44.7 48.8 (0.5) 3.4 0.2 0.4 (0.9) 0.3 0.3 0.3 Q1 FY16/17 Disposed entity Q1 FY16/17 Constant scope France UK BENE DACH Spain North HQ Q1 FY17/18 Constant scope
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Concept Development - 3 Months Ended 30 Dec 20171
22
Average sales per machine per day3 at constant rates2
- Private vending higher sales per machine through premiumization of current sites, and unprofitable
contract removal (+1.7% ) continues.
- Public higher sales per machine per day influenced by premium concepts (e.g. S
tarbucks) and facelifted machines.
- S
emi-public sales per machine per day increased +1.5% due to less HoReCa in the sales mix.
S electa Average S ales per Machine per Day3 at Constant Rates2
1 S
elect a const ant scope adj ust ed for subsidiary held for sale (S elect a Finland). FY16/ FY/ 17 numbers are a pro forma amalgamat ion of S elect a and Pelican Rouge result s
2 Const ant foreign currency rat es applied: CHF/ EUR 1.15; S
EK/ EUR 9.65; GBP/ EUR 0.88
3 Machines excluded non-revenue generat ing machines and are averaged over t he quart er, days are weight ed by t urnover per segment across t he group
7.3 7.4 34.3 37.0 12.1 12.3 Q1 FY16/17 Q1 FY17/18 +1.5% +8.0% +1.7% Semi-public Public Private Public Private
54.1 58.9 44.7 43.2 51.8 57.3 171.3 166.5 Q1 FY16/ 17 Q1 FY17/ 18
- 3.4%
321.9 325.8 +8.8% +10.7%
- 2.8%
Other Semi-public Public Private
+1.2% +3.2%
Gross revenue by concept at constant rates
€11.9 €12.2
Average
Selecta Results
- Net cash generat ed from operat ing act ivit ies of -€9.9m in t he 3 mont hs
ended 31 December 2017.
- Negat ive changes in working capit al are driven by t he disbursement of
acquisit ion and int egrat ion cost s relat ing t o Pelican Rouge for an est imat ed €13m, accrued as
- f
end S ept ember 2017 as well as a t radit ional det eriorat ion of working capit al in Q1 aft er a st rong delivery in Q4.
- Net cash used in invest ing act ivit ies amount ed t o €25.7m in t he 3 mont hs
ended 31 December 2017 relat ed t o capit al expendit ures t o support business growt h.
- Proceeds from borrowings amount ing t o €25.0m in t he 3 mont hs ended 31
December 2017 consist ed of t he €30m drawing on t he Group’ s revolving credit facilit y t o finance working capit al t iming differences and €5m repayment s relat ed t o recourse fact oring.
- Int erest paid amount ing t o €19.7m in t he 3 mont hs ended 31 December 2017
mainly consist ed of t he bi-annual int erest payment in relat ion t o S elect a senior not es of €350m and CHF 245m.
- Acquisit ion relat ed financing cost s of €6.7m in t he quart er relat ed t o t he
disbursement of debt issuance cost s relat ing t o t he Pelican Rouge loan of €374.8m.
1 Q1 FY16/ 17 comparat ive does not include ex. Pelican Rouge result s.
Cash Flow Statement @ Actual Rates – 3 Months Ended 31 Dec 2017
23
Net Senior Debt 31 Dec 2017 @ Actual Rates
- Cash at
bank €85.9m includes €0.8m held by Selecta Finland.
- Net senior debt €939.4m
- Revolving credit facility €30.0m at 31 December 2017 as
a result of drawings made under t he facility to finance working capital timing differences.
- The amounts outstanding under t he factoring facility
were at €5.0m at 31 December 2017, and € 7.6m for the reverse factoring facility.
- €374.8m
new loans finance t he Pelican Rouge acquisition
- Leverage ratio 4.8 at 31 December 2017
- Group’s liquidity2 is €155.9m.
As part
- f
the Pelican Rouge acquisition, t he Group has upsized its senior revolving credit facility by €50m to €100m.
- In t he last
twelve mont hs ended December 2017, the combined Proforma Run Rat e EBITDA, which includes Argenta and total synergies, was €300.6m, to be compared to €293.8m5 at end of September 2017 as present ed in the Refinancing Offering Memorandum.
- On 15 February, the combined Group cash at bank was ca.
€80m and no drawing was made under the new RCF.
Capital S tructure prior to Refinancing (excluding Argenta)
1 Dec 2017 S
elect a adj ust ed EBITDA last t welve mont hs based on pro-forma result s of 2017 S elect a and Pelican Rouge. Dec 16 adj ust ed EBITDA last t welve mont hs based on S elect a only. Bot h 2016 and 2017 last t welve mont hs adj ust ed EBITDA does not exclude t he result s of t he subsidiary held for sale (S elect a Finland)
2 Includes cash at bank and unused revolving credit facilit y 3 Cash at bank and Finance leases include S
elect a Finland balances for respect ively €0.8m and €0.4m. These balances are included in asset s and liabilit ies held for sales in t he IFRS Financial S t at ement s
4 Dec 16 comparat ive does not include ex. Pelican Rouge result s. 5 S
ep 17 included a €1.3m annualized run-rat e savings in connect ion wit h headcount reduct ions as part of a rest ruct uring program complet ed by Argent a during t he year ended S ept ember 30, 2017. In Dec 17, t he equivalent savings included in t he €300.6m combined PF RR EBITDA was €0.4m.
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Outlook for 2018 Full Year (excluding Argenta):
25
1 Const ant foreign currency rat es applied: CHF/ EUR 1.15; S
EK/ EUR 9.65; GBP/ EUR 0.88
Gross sales to increase by +2.0% at constant scope and FX rate1 Adjusted EBITDA to increase by +8.0% at constant scope and FX rate1 Synergy program to be cash neutral Tot al 2018/ 2020 synergy program upgraded t o €60m (including Argent a) Cash capex to be €95m at constant FX rate1