Full-Year 2015 results - Sequana...(1) Technology for printing small runs and customising documents...

Full-Year 2015 results

29 February 2016

2 Full-Year 2015 results

CONTENTS

1. Introduction

2. FY 2015 financial statements

3. Review of Antalis & Arjowiggins

4. Outlook

5. Q & A

Appendix: Key financial data by business

1. Introduction

2. Consolidated income statement and statement of financial position

3. Activities of subsidiaries

4. Strategy and Outlook

CONTENTS

Présentation PowerPoint1. Introduction

Pascal Lebard – Chairman and Chief Executive Officer

3 Full-Year 2015 results

4

Strategic repositioning of the Group

We have achieved the initial objectives of our strategic plan Streamlined financial structure Refocusing Arjowiggins on specialty markets Continuing Antalis' selective acquisitions policy

Antalis policy of diversifying into high-potential markets has born fruit: Packaging and Visual Communication now contribute 36% of its gross margin

The Group's operational and financial restructuring plan has been finalised Arjowiggins: reduction of debt and refocus on specialty markets

Repayment in full of the €125 million syndicated credit facility and stronger financing capacity thanks to €53 million worth of sale & leaseback financing arrangements

Streamlined scope focused on businesses with positive EBITDA in Q4 2015 Sequana: restructuring of capital

Early redemption of ORNANE and ORA bonds meaning less dilution for shareholders Impala became a Sequana’s shareholder with a 20% stake


5

Operating results close to our expectations

Operating performances were buoyed by Antalis but adversely affected in H2 by production difficulties related to Arjowiggins' capacity reduction measures

Sales down 2,0% to €3.3 billion (down 5.6% at constant exchange rates) Antalis: positive impact of new acquisitions, consolidation of the paper distribution market

and favourable forex impact Arjowiggins: negative impact of decline in printing volumes (closure of Wizernes and

Charavines), exacerbated by difficulties encountered in H2 when transferring production

EBITDA up 1.5% to €126 million; EBITDA margin up 0.1 point to 3.8% Enhanced product mix both in distribution and production Favourable impact of lower overheads on both sides of the business

Net loss of €67 million due to the additional costs of restructuring measures deployed in 2015 and asset write-downs amounting to €32 million taken in Q4

Net debt stands at €235 million (an improvement of €76 million) and the consolidated Net debt/EBITDA ratio stands at 1.9 (2.5 in 2014) Thanks notably to the positive impact of disposals (€158 million), partially offset by

restructuring costs and non-recurring expenses (€92 million)


At the AGM, the Board will recommend not paying any dividend for 2015

Sequana: strategic positioning in its two businesses

Business segments Growth drivers

• Historical businesses Print Office

Leading position in mature markets that generate cash flowPotential for growth in the digital and recycled paper segments Innovation in services

• Complementary markets Packaging Visual Communication

Selective acquisitionsGrowing, higher-margin markets

Development of cross selling (1)

• Graphic Recycled papers Specialty papers

High potential of recycled paper segmentExpanding into non-paper markets (graphic board)Presence in niche growth markets (transfer, laminatedand tissue segments)

• Creative papers Fine papers Specialty papers

Leading positionUpgraded production facilitiesDevelopment of new product applications

• Security Banknote paper Synthetic papers

No. 2 in the accessible banknote paper marketHigh value added papers incorporating security features

(1) Selling packaging and visual communication media to printers and companies who are already Group customers for print & office paper

Full-Year 2015 results6

7

Recomposition of ownership structure


Impala Group became a Sequana shareholder in late June 2015

Ownership structure Voting rightsat 31 December 2015 at 31 December 2015

Impala Group20.00%

Bpifrance Participations 15.42%

Free float64.58% Impala Group

19.86%

Bpifrance Participations 15.31%

Free float64.83%

88

1. Introduction




CONTENTS

Présentation PowerPoint2. FY 2015 financial statements

Xavier Roy-Contancin – Chief Financial Officer


Net income (loss) attributable to owners (67) 117 -

99

Consolidated income statement

(*) Percentage changes and margins are based on figures rounded out to one decimal place.

2015

Non-recurring items (76) 119Net financial expense (41) (56)Income taxes (23) (11)Net income (loss) from discontinued operations - (8)Associates and non-controlling interests - -

Sales 3,300 3,369 - 2.0%

EBITDA 126 124 + 1.5%

EBITDA margin (%) 3.8% 3.7% + 0.1 point

Recurring operating income 73 72 0.7% Operating margin (%) 2.2% 2.1% + 0.1 point

Change*2015/20142014

down 5.6% at constant exchange rates

€ millions


1010

Breakdown of non-recurring items

119Non-recurring items

(107)

(17)

(17)

260

Restructuring costs

Disposal gains

Impairment of goodwill and other assets

Other non-recurring items

Impact of 2014 refinancing programme

(45)

2014€ millions, at 31 December

Arjowiggins: €(28)mAntalis: €(4)m


(76)

6-

(32)

(5)

2015

Sales of Arjo Wiggins Ltda& the Security Solutions

businesses (incl. derecognition of previously recognised

goodwill of €82m )

Arjowiggins: €(25)mAntalis: €(20)m

Arjowiggins: €170mORNANE : €90m

1111

Consolidated statement of financial position

€ millions31 Dec.

2015

GoodwillProperty, plant & equipment and intangible assetsOther fixed assets

Operating WCROther current assets (liabilities)Assets (liabilities) held for sale

Total assets

Shareholders' equityNon-controlling interestsProvisionsNet debt

Total equity and liabilities

301244190

269(116)

4

468-

189235

892

892

31 Dec. 2014

378295219

296(142)

79

588-

226311

1,125

1,125


Impact of derecognition of

goodwill previously recognised on

Security business (€82m) and asset

write-downs

Pensions:Impact of IAS 19

1212

Breakdown of provisions

€ millions, at 31 December 2015

Pension provisionsRestructuring provisionsOther risk and contingency provisions

1035729

Total 189

2014

1018243

226

Antalis: €5mArjowiggins: €52m


1313

Change in net debt

€ millions 2015

Consolidated net debt - 1 January (311)

EBITDAChange in WCR of businessesCAPEXAsset disposalsOperating cash flow

Net finance costsIncome taxes expense

Restructuring costs

Disposals/acquisitions

Capital increaseFinancial restructuring programCash flow from (used in) discontinued operationsCurrency impact

Other items

1268

(49)1499

(35)(12)

(93)

135

-(6)

-1

(13)

Consolidated net debt - 31 December (235)

Antalis: €(36)mArjowiggins: €(57)m

2014

(537)

124(76)(43)

1116

(46)(5)

(62)

5

64294(20)

(3)

(17)

(311)


Arjowiggins: €158mAntalis: €(24)m

1414

Consolidated net debt

Consolidated net debt of €235 million vs. €311 million at 31 Dec. 2014 Antalis: €(232) million Arjowiggins: €(1) million

Financial ratios (covenants) at 31 December 2015

Antalis Net debt/EBITDA = 2.44 (< 3.60) Recurring operating income/net finance costs = 3.84 (≥ 2.10)


Enhanced consolidated Net debt/EBITDA ratio1.9 at 31 December 2015

(2.5 at 31 December 2014)

1515

1. Introduction




CONTENTS

Présentation PowerPoint3. Review of Antalis & Arjowiggins


1616

Business review

Hervé Poncin – Chief Operating Officer of Antalis


17

Business environment

Major change in the competitive landscape on the European printing papermarket in 2015 Consolidation of the European paper distribution market following the demise

of PaperlinX, one of Antalis main competitors Direct sales development by certain paper producers in a number of markets

Contrasting performances between different segments and regions Continued decline in European printing volumes of around 2.5% Packaging and Visual Communication markets grew by approximately 2%

Currency fluctuations and currency depreciation against the US dollar and the euro in a number of countries


18

2015 highlights

Favourable impact of PaperlinX’s demise on Antalis' European business, especiallyin the UK and Benelux

Strategic development in Packaging and Visual Communication No. 1 in the European Packaging market with annualised sales of around €450 million

Acquisitions in the UK, Denmark, Sweden and Estonia representing approximately€130 million in full-year sales and an enterprise value totalling €24 million

Significant market share increases in Visual Communication, especially in Nordic countries Packaging and Visual Communication now contribute 36% of Antalis' gross margin,

up by 4 points compared to 2014

Continued restructuring of the supply chain (Germany, Austria and France)

Antalis financing programme completed and secured through 2018 by setting up a €200 million factoring programme


19

Operational and commercial progress in 2015

Further expansion in the fast-growing digital printing market (1)

Sales up 8% year on year Expanded product range

in office printing around 3 strong recognised brands (Image®, Xerox® and Data Copy®

acquired in 2015) in commercial printing (Superfine i-Tone®)

Innovative approach to marketing eco-friendly and recycled papers Green Star System (for evaluating the "greenness" of a product) Guaranteed product traceability with Antrak (on-line supplier platform)

200 listed suppliers covering almost 80% of purchasing volumes Solid commitment as official partner to COP21

Investments in customer-focused IT systems begin to bear fruit Continued deployment of CRM and e-commerce solutions Sustained growth in e-commerce: 26% of stock orders now placed on-line, i.e., a four point

year-on-year increase in the sales penetration rate

(1) Technology for printing small runs and customising documents by incorporating variable data (text, image, data) and enhancing print quality using variousdifferent techniques (hot stamping, laser-cutting, etc.).


20

Enhanced operating performances

Sales up 1.5 % to €2,625 million (down 2.2 % at constant exchange rates) Sustained growth in the Packaging (up 24 %) and Visual Communication (up 11%) businesses

Acquisitions contributed sales of around €77 million Continued growth in cross selling

Decline in printing volumes Exacerbated by proactive customer risk management and supplier and brand portfolio

reorganisation Partly offset by continued good growth on the back of the market consolidation, especially

in the UK and Benelux Higher selling prices in the stock business Favourable forex impact, mainly attributable to fluctuations in sterling and the Swiss franc

EBITDA grew 16.7% to €94 million year on year (2014: €80 million); EBITDA margin rose by 0.5 points to 3.6% Buoyed by a favourable forex impact and the positive contribution of new acquisitions completed

in Packaging and Visual Communication Improved product mix The positive impact of lower overheads, particularly across the supply chain

Recurring operating income up 23.9% to €68m vs. €55m in 2014

Debt stands at €232 million, an improvement of €18 million, thanks to good working capital management despite higher levels of business due to the demise of PaperlinX and acquisition financing requirements (€24 million)


21

Key income statement items

down 2.2% at constant exchange

rates

€ millions, year ended 31 December

Sales 2,585 + 1.5%

EBITDAEBITDA margin (%)

803.1%

+16.7%+0.5 points

Recurring operating incomeOperating margin (%)

552.1%

+ 23.9%+0.5 points

Capital employedROCE

47911.5%

2,625

943.6%

682.6%

44215.4%

H1 2015Pro forma

**

H1 2015Pro forma

IFRS2015 2014 Change

2015/2014


Including €77 million related to

acquisitions

22

EBITDA trends

2014 EBITDA

Forex impact Inflation Overheads Bad debts 2015 EBITDA

Margins/Mix/Volumes

Variable costs


Acquisitions

Mainly GBP and CHF

Impact of packaging acquisitions

23

Key cash flow items

€ millions, at 31 December

EBITDA 94

Change in WCRCapex

Disposals of fixed assets

41

(17)

11

Operating cash flow 129

Net debt 232

2015

80

(21)

(14)

3

250

2014

48


24

Breakdown of sales and EBITDA

2015 sales by region 2015 EBITDA by region 2015 sales by business

Office22%

Visual Comm7%

Packaging14%

Western Europe 78%

Eastern Europe12%

Eastern Europe12%

Rest of the world9%

France11%

Western Europe (excl. France & UK)

40%

UK28% Print

57%

Rest of the world10 %

Packaging & Visual Comm.

21%


25

Business review

Pascal Lebard – Chief Executive Officer


26

2015 highlights€125 million related to the outstanding balance on Arjowiggins' syndicated credit facility has been cleared in full Sale of 85% of Arjo Systems and Arjowiggins Solutions to Impala group in June 2015 In exchange for a debt waiver of €110 million and payment of the balance in cash

Strengthening of Arjowiggin's balance sheet Sale of Arjo Wiggins Ltda (Brazil) in May based on an enterprise value of €85 million €53 million worth of sale & leaseback financing set up in Q4 based on several industrial

assets

Wizernes and Charavines mills closed at the end of June Industrial problems encountered after transferring production from the two sites Redundancy procedures have been finalised, with the exception of those concerning

protected workers at Wizernes mill Search for a buyer for the sites

Exclusive agreement with Global Hygiène for sale of the Charavines site. The sale should be finalised in Q2 2016

No concrete viable offers for the Wizernes site These closures are expected to have a positive impact of around €19 million in 2016

due to lower full-year overheads and the absence of the costs involved in transferring production that weighed on EBITDA in the second-half of 2015


27

Results hit by industrial issues related to theoperational restructuring planSales down 11.2% to €905 million (down 14.7% at constant exchange rates) Decline in printing volumes amplified by

Production capacity cuts in the standard coated paper segment (closure of Wizernes) Difficulties encountered in H2 by the Graphic and Creative Papers divisions when transferring

production Impact of divestments in H1 (Arjo Systems, Arjowiggins Solutions, Arjo Wiggins Ltda) Negative impact on volumes of downtime on a machine in the banknote paper business Business in the other specialty businesses held up well, particularly in the Healthcare business

EBITDA down 17.4% to €45m vs. €54m in 2014 Positive impact of lower overheads following the closure of the Wizernes and Charavines

mills Offset by the decline in printing volumes and divestments Negative impact of higher raw material prices (essentially pulp) due to the fall in the euro against

the US dollar Recurring operating income of €18 million compared to €28 million in 2014

NB: in H1 2015, disposals represented sales of €62 million and EBITDA of €14 million For full-year 2014, they represented sales of €123 million and EBITDA of €18 million


28

Key income statement items

€ millions, year ended 31 December 2015

Sales 905

EBITDA 45 54 - 17.4%EBITDA margin (%) 4.9 % 5.3% - 0.4 point

Recurring operating income 18 28 - 35.0%Operating margin (%) 2.0% 2.7% - 0.7 point

Capital employed 194 248

ROCE 9.4% 11.3%

Change 2015/2014

-11.2%

2014

1,020down 14.7% at

constant exchange rates


29

EBITDA trends


Volumes down11% on 2014

of which, €(33)mforex impact (mainly pulp)

of which, €31mforex impact

of which, €(8)mforex impact

Arjo Wiggins Ltda, Arjo Systems & Arjowiggins Solutions and

closure of Wizernes and Charavines

30

Pro forma EBITDA


Impact of disposals on 2015: Arjo Wiggins Ltda, ArjoSystems & Arjowiggins

Solutions

Closure of Wizernes and Charavines:Reduction in full-year overheads and impact of additional costs involved in

transferring production in H2 2015

(13)

19

45

31

50

0

10

20

30

40

50

2015 EBITDA 2015 Scope impact Continued activitiesEBITDA

Wizernes & Charavines 2015 pro forma EBITDA

31

Key cash flow items

EBITDA

Change in WCR

Capex

Disposals

(31)

(32)

3

Operating cash flow

Net debt (1)

2015

5445

€ millions, year ended 31 December

(15)

(48)

(28)

5

(17)

67

2014


32

Results by division

Impact of Wizernes closureon volumes Significant reduction in

production capacity in the standard coated paper segment

Blockade of buffer stock built up in preparation for transferring production

Production difficulties in H2 2015 at Bessé-sur-Braye

Reduction in overheads Growth in most specialty businesses,

especially Healthcare, laminated, transfer and tissue segments

446499

2015

59

2015 20142014

Graphic

Sales (€ millions) EBITDA (€ millions)

237 249

2015

17 21

2015 20142014

Creative papers

Sales (€ millions) Impact of Charavines closure on fine papervolumes Difficulties encountered in H2 when

transferring production to Stoneywood

Reduction in overheads Resilient performances in the luxury

packaging, bookbinding and tracing paper businesses

EBITDA (€ millions)


- 4.6%

- 18.8%

- 10.7 %

- 46.8 %

33

Results by division

Decline in volumes in the banknote paper business due to the temporary shutdown of a machine

Impact of divestments (Security Solutions businesses, Brazilian banknote business)

Sustained growth in the Secure documents business

23

2015 2014

223

272

2015 2014

Security


24- 18.2%-5.4%


10

2015 2014

161

173

2015 2014


8-6.6% +24.4%

Reported figures

Excluding disposals

34

Breakdown of sales and EBITDA

Creative Papers26%

Security25%

Graphic49%

Rest of the world11%

US7%

France20%

UK9%

Europe(excl. France and UK)

35%

Asia18%

2015 sales by region2015 sales by division 2015 EBITDA by division

Graphic11%

Security51%

Creative Papers38%


Coated20%

Green39%

Specialty41%

35

1. Introduction




CONTENTS

Présentation PowerPoint4. Outlook

Pascal Lebard – Chairman and Chief Executive Officer


36

Outlook

In a complex business environment, 2016 looks set to be an uncertain year in our different markets

Antalis Continuation in the early part of the year of the momentum created by PaperlinX's demise Growth in Packaging and Visual Communication business buoyed by 2015 acquisitions

Arjowiggins Positive impact of restructuring of Graphic and Creative Papers divisions finalised in 2015

Sequana Continued refocus on distribution, especially via external growth policy in the Packaging

sector

Sequana’s 2016 EBITDA should be ahead of that for 2015 and the consolidated Net debt/EBITDA ratio should remain below 2.5


37

1. Introduction




CONTENTS

Présentation PowerPoint5. Q & A

Pascal Lebard – Chairman and Chief Executive Officer of Sequana

Xavier Roy-Contancin – Chief Financial Officer

Hervé Poncin – Executive Vice-President of Sequana, Chief Operating Officer of Antalis


38

1. Introduction




CONTENTS

Présentation PowerPoint www.sequana.com

+33 1 58 04 22 80

[email protected]


39

1. Introduction




CONTENTS

Présentation PowerPointAppendix – Key financial data


404040

Breakdown by business

€ millions

Sales – Antalis Sales – ArjowigginsEliminations & holding company

2,625905

(230)

+ 1.5%- 11.2%

-

Consolidated net sales 3,300 - 2.0%

EBITDA – AntalisEBITDA – ArjowigginsEBITDA - holding company & other

9445

(13)

+ 16.7%- 17.4%

-

Consolidated EBITDA 126 + 1,5%

2015 Change* 2015/2014

Recurring operating income - Antalis Recurring operating income - ArjowigginsRecurring operating loss - holding co. & other

6818

(13)

+ 23.9%- 35%

-

Consolidated recurring operating income 137Recurring operating income 73 + 0.7%

2,5851,020(236)

3,369

8054

(10)

124

2014

5528

(11)

72

(*) Percentage changes and margins are based on figures rounded out to one decimal place.


4141

Antalis

€ millions

Sales – Europe 2,384 2,337 +2.0%

Sales – Antalis 2,625 2,585 +1.5%

EBITDA – Europe 85 69 +22.1%EBITDA – Rest of the World 9 11 -17.3%

EBITDA – Antalis 94 80 +16.7%

2015

Recurring op. income – Europe 62 47 +31.9%Recurring op. income – Rest of the World 6 8 -22.0%

Recurring operating income – Antalis 68 55 +23.9%

2014Change

2015/ 2014

Europe 2015 sales by region

Rest of the world 2015 sales by region

Asia25%

South Africa31%

South America44%

Western Europe (excl. France & UK)

44%

Eastern Europe

13%UK

31%

France12%

Sales – Rest of the World 241 248 -2.9%


4242

Results by division

Excluding disposals*

* On a full-year basis, the sales and EBITDA for the disposals amount to €123 million and €18 million, respectively

€ millions

Sales - GraphicSales - Creative Papers Sales - Security

446237223

-10.7%-4.6%

-18.2%

Sales 905 - 11.2%

EBITDA - GraphicEBITDA - Creative PapersEBITDA - Security

51723

EBITDA 45 - 17.4%

2015

Recurring op. loss - GraphicR O I - Creative PapersR O I. - Security

(6)1212

Recurring operating income 18 - 35.0%

499249272

1,020

92124

54

2014

(3)1417

28

% change2015/ 2014

- 46.8% - 18.8% - 5.4%

NA- 12.2%- 32.0%

Reported figures

€ millions

Sales - GraphicSales - Creative Papers Sales - Security

446228161

Sales 835EBITDA - GraphicEBITDA - Creative PapersEBITDA - Security

51610

EBITDA 31

2015

Recurring op. loss - GraphicR O I - Creative PapersR O I - Security

(6)12(1)

5

499225173

896

919

8

36

2014

(3)13

3

13

% change2015/ 2014

- 10.7%+1.3%- 6.6%

- 6.9%- 46.7%

-4.4%+24.4%

-14.2%

+51.4%-8.6%

NA

- 58.6%Recurring operating income


43

1. Introduction




CONTENTS

Présentation PowerPoint www.sequana.com

+33 1 58 04 22 80

[email protected]


Full-Year 2015 results - Sequana...(1) Technology for printing small runs and customising documents...

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