GESCO AG - Small Cap Conference, Frankfurt/Main, 31 Aug. / 1 Sept. 2015

From melting steel to 3D-printing: investing in the

technology-driven German “Mittelstand” Small Cap Conference, Frankfurt/Main, 31 Aug. / 1 Sept. 2015

GESCO Group – an association of industrial SMEs with market and technology leaders

Segments tool manufacture / mechanical engineering and plastics technology

Currently 17 operating subsidiaries under the roof of GESCO AG as a holding company

We think and act in a sustainable and entrepreneurial manner

We do business in established sectors with innovative technologies

We provide technology “made in Germany” for global markets

GESCO is comprised of adaptable, independent operating units that benefit from being part of a strong group

GESCO AG – a long term investor and a safe haven for succession issues

We acquire and develop industrial SMEs an a long-term basis – exit is not part of the business model

We take over majorities, almost always 100 %

Most takeovers are part of succession planning

The new managing directors invest up to 20 % in the company they run (“entrepreneur companies”)

1. Business model

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The GESCO share offers a focussed portfolio of 17 “Hidden Champions” serving broadly diversified customer sectors

1. GESCO Group

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3%

5% 6% 6%

12%

15%

15%

25%

4%

Passenger and commercial vehicles

Other

Agricultural engineering

Machine and plant construction

Foundries and roller mills Consumer goods industry

Iron, plate and metal processing, tool construction

Energy Chemical and petrochemical industry Electrical, medical technology, household goods

Construction, air conditioning, sanitary industry 4%

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1. The 4 biggest companies (sales and staff: FY 2014)

Dörrenberg Edelstahl GmbH

• Leading European specialist for tool steel

• Steel mill, trading, mould castings and surface technology

• Strong internationalization

• Sales € 172 m, staff 501

SVT GmbH

• Systems for (un)loading liquids and gases

• Specialty LNG: No. 2 worldwide

• Export ratio: 80 %


MAE Maschinen- und Apparatebau Götzen GmbH

• World market leader for straightening machines and wheel set presses

• Highly innovative

• Acquired US competitor in Jan. 2014


Frank Walz- und Schmiedetechnik Group

• Europe‘s leading forge for wearparts for the agricultural industry

• 70 % of sales to OEMs, 30 % to wholesale and farmers


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1. Two very special companies (sales and staff: FY 2014)

Setter Group

• Paper and plastic sticks for the sweets and hygienic industries, world market leader for paper sticks

• 90 % export ratio

• 20 bn sticks produced in Germany each year

• Acquired US-based Setterstix Inc. in Jan. 2015


C.F.K. CNC-Fertigungs- technik Kriftel GmbH

• Leading centre in high- precision wire erosion and die sinking

• Cutting-edge production line, 45 machines

• Advanced laser melting systems (3D printing) for functional prototypes, medical implants etc.


Please keep in mind:

GESCO AG and GESCO Group financial year = 1 April to 31 March

Subsidiaries’ financial year = calendar year

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2. Financial year 2015/2016


Initial situation and expectations (as at annual accounts press conference on 25 June 2015)

Economic forecasts indicate growth (GDP:+2.1 %, VDMA: Increase in production +2 %, GKV: Sales +2.6 %)

Frank Walz- und Schmiedetechnik GmbH: continued weakness in the agricultural technology sector due to Russia/Ukraine etc.

SVT GmbH: low energy prices lead to restraint in investments of the oil industry decreasing demand for SVT GmbH’s loading arms

Tool manufacturers are expecting decreases in results, partly due to cyclical effects

Restructuring measures at two companies continue to have a negative effect on earnings

Among others, Dörrenberg, Setter, Haseke and CFK are operating at a satisfactory level

Overall sales within the GESCO Group should increase organically, further inorganic growth will be contributed by Setterstix, but margins continue to be far too low

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2014/2015 Actual figures

2015/2016 Target

Change

Group sales € million 451.4 480 to 490 6.3 % to 8.5 %

Group net income for the year after minority interest

€ million 12.4 12.5 to 14.0 1.2 % to 13.4 %

Earnings per share acc. to IFRS

€ 3.72 3.76 to 4.21 1.2 % to 13.4 %

Target figures

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2. Financial year 2015/2016 – Q1

Q1: lively business

Includes operating months January to March 2015 at subsidiaries

Incoming orders show strong growth in first quarter; exceptionally high figure, including large orders which will partly impact sales and earnings only in the next FY

Sales are also up, but earnings continue to be weighed down

Restructuring measures at two subsidiaries make progress, should be largely completed by end of FY

Guidance for full FY confirmed

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Q1 2014/2015

Q1 2015/2016

Change

Order intake € million 126.7 146.1 15.3 %

Sales € million 109.5 118.7 8.4 % EBITDA € million 11.4 11.6 2.0 % EBIT € million 6.9 6.6 -3.3 % Group net income after minority interest

€ million

3.7

3.2

-15.4 %

EPS acc. to IFRS € 1.13

31.03.2015

0.95

30.06.2015

-15.4 %

Equity € million 182.8 184.5 0.9 % Equity ratio % 45.3 43.2 - Liquid funds € million 35.3 30.7 -12.9 %

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Q2: customer demand still on a satisfactory level

Includes operating months April to June 2015 at subsidiaries

Order intake approx. € 112 million, +12 % yoy

Sales approx. € 117 million, +6 % yoy

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General current situation

Customers’ willingness to invest suffers from general uncertainty

In July 2015 VDMA cut outlook for production from +2 % to zero growth

How about China?!

Direct sales to China (FY 2014/2015): € 27 million = 5.8 % of Group sales

Mainly SVT (€ 8.6 million), MAE (€ 7.9 million), Kesel (€ 5.5 million) and Dörrenberg (€ 3.5 million)

Plus indirect export, not exactly to be measured

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Current situation with regard to M&A On the one hand: M&A in the “good” SME sector is currently

a seller’s market A lot of available funds, low interest rates, few attractive investment

opportunities Comparably small number of interesting SMEs

On the other hand: The market continues to be strongly fragmented

at all levels (sellers, intermediaries, buyers), there are still interesting opportunities

GESCO strengthened its team in September 2014 (Christoph Borges, Head of M&A)

3. M&A

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January 2015: Setter Group acquires Setterstix Corp. / USA

Setterstix is the leading US producer of paper sticks for the confectionary industry with approx. € 10 m sales and 40 employees

GESCO subsidiary Setter is market leader for paper sticks for the hygiene industry in the US acquisition rounds off Setter’s position in the US market perfectly

The companies have common origins, but

have been separate companies for decades

3. M&A and portfolio development

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Free float: 86.4 %

Stefan Heimöller, entrepreneur, member of supervisory board: 13.6 %

Investmentaktiengesellschaft für langfristige Investoren TGV: 8.9 %

Dividend policy: payout ratio approx. 40 % of Group net income after minority interest

4. The GESCO share

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4. Share price development (in %) – 1 year

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Founded: 1989 Share capital: € 8,645,000 Shares: 3,325,000 registered shares Free float: 86.4 % Stock markets: Xetra; Frankfurt (regulated market); Berlin, Düsseldorf, Hamburg, Hanover, Munich, Stuttgart (open market) Sec. identification number: A1K020 ISIN: DE000A1K0201 IPO: 24/03/1998 Index: SDAX End of financial year: 31 March Designated sponsors: equinet Bank AG Oddo Seydler Bank AG

Facts and figures on GESCO AG

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GESCO Group overview

Company Sales 2014 €‘000

Staff 31/12/2014

GESCO AG shareholding

Astroplast Kunststofftechnik GmbH & Co. KG 16,646 92 80%

Paul Beier GmbH Werkzeug- und Maschinenbau & Co. KG 9,492 108 100%

C.F.K. CNC-Fertigungstechnik Kriftel GmbH 8,330 57 80%

Dömer GmbH & Co. KG Stanz- und Umformtechnologie 14,719 102 100%

Dörrenberg Edelstahl GmbH 171,683 501 90%

Frank Group 28,225 274 90%

Franz Funke Zerspanungstechnik GmbH & Co. KG 16,861 81 80%

Haseke GmbH & Co. KG 12,742 63 80%

Hubl GmbH 10,806 101 80%

Georg Kesel GmbH und Co. KG 12,454 69 90%

MAE Maschinen- und Apparatebau Götzen GmbH 24,768 160 100%

Modell Technik GmbH & Co. Formenbau KG 13,948 115 100%

Protomaster Riedel & Co. GmbH 8,630 110 82.17%

Setter Group 14,567 59 100%

SVT GmbH 44,104 182 90%

VWH Vorrichtungs- und Werkzeugbau Herschbach GmbH 11,151 109 80%

Werkzeugbau Laichingen Group 25,196 178 85% 18

Financial calendar

Financial calendar

1 September 2015 Small Cap Conference, Frankfurt/Main

13 November 2015 Q2 figures (01.04. to 30.09.2015)

24 November 2015 German Equity Forum, Frankfurt/Main

February 2016 Q3 figures (01.04. to 31.12.2015)

30 June 2016 Annual Accounts Press Conference and Analysts’ Meeting

August 2016 Q1 figures (01.04. to 30.06.2016)

25 August 2016 Annual General Meeting

November 2016 Q2 figures (01.04. to 30.09.2016)

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Investor relations contact

Investor Relations GESCO AG Phone: +49 202 24820-18 Investor Relations Fax: +49 202 24820-49 Oliver Vollbrecht E-mail: [email protected] Johannisberg 7 Internet: www.gesco.de 42103 Wuppertal

Germany

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GESCO AG - Small Cap Conference, Frankfurt/Main, 31 Aug. / 1 Sept. 2015

Investor Relations

Transcript of GESCO AG - Small Cap Conference, Frankfurt/Main, 31 Aug. / 1 Sept. 2015