CIECH – a modern, diversified chemical group on a stable path of growth
Presentation of the CIECH Group
The CIECH Capital Group
Who are we and what do we do?
The CIECH Capital Group
Who are we and what do we do?
3
We are one of the leaders of the Polish chemical market
70 yearsin world markets
8production plants
more than 3.7 thousand employees
in the Group
more than
10 yearsat the Warsaw Stock
Exchange (GPW)
and an important player in the European market.
The CIECH Group
4
We are supported by a stable, strategic shareholder
KI Chemistry
Open Pension Fund (OFE) Nationale-Nederlanden
Others (including Investment Fund
Companies (TFI), Open Pension Funds(OFE), Asset Management companies, the Government of Norway, individual investors)
52,699,909shares
=52,699,909
votes
Since 9 June 2014, KI Chemistry (a company
from the Kulczyk Investments group)
has been the majority shareholder
of CIECH
9%51%
40%
As of 16 May 2016
The CIECH Group
KI confirms its long-term involvement in the
process of building the company’s market value. With
particular emphasis on its intention of transforming
CIECH into one of the leading chemical companies in the world.
5
Our business model is diversified
Soda segment
PLN 2,241 million of revenues
PLN 656million of EBITDA (Adj.)
Silicates and glass segment
PLN 175 million of revenues
PLN 33 million of EBITDA (Adj.)
Organic segment
PLN 770 million of revenues
PLN 85million of EBITDA (Adj.)
Transport Segment
PLN 123 million of revenues
PLN 13 million of EBITDA (Adj.)
PLN 3,273 million of revenues
PLN 748million of EBITDA (Adj.)
Data for 2015
EBITDA (Adj.) – adjusted EBITDA; the Group also reports the Other segment which covers consolidation exclusions and corporate functions
The CIECH Group
Segment
6Soda segment
Strong market position and diversification inside the segment
Soda ash Baking soda Salt
Used mainly to produce glass and granular detergents
Used mainly to produce animal feed and food
Used mainly in chemical and food industries and in water treatment
processes
Segment
7
Dynamic development and market expansion
Plant protection products Polyurethane foamsResins
Used mainly by farmers (herbicides, fungicides, insecticides)
Used mainly in production of upholstery furniture
Used mainly to produce powder coating, varnishes, as well as in
construction and transport industries
Organic segment
Segment
8
Stable position and continued growth
Glass products Silicates
Used in niche markets: ornamental lanterns for candles, jars with glass tops and twist-off jars for food products
Used for production of precipitated silica (applied mainly in the tyre industry), detergents, various types of seals,
coatings and waterproof layers
Silicates and glass segment
Segment
9
Concentration on services inside the Group
Logistics inside the GroupRail transportTransshipment
Transport Segment
10
Advantage connected with location of plants
CIECH Soda PolskaInowrocław, Janikowo
CIECH Vitrosilicon
Żary, Iłowa
CIECH RomaniaRamnicu Valcea
CIECH Soda DeutschlandStassfurt
CIECH SarzynaNowa Sarzyna
CIECH PiankiBydgoszcz
Soda segment
Organic segment
Silicates and glass segment
We have 8 production plants located in Poland, Germany and Romania.
Production activity
Our activities are set by the Strategy
adopted in 2014
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Maximization of the CIECH’s value through organic development
Strategy of the CIECH Group for 2014-2019**
1. Growth of revenues in the soda segment
2. Twofold increase of the share in the Polish market of plant protection products
3. Growth of adjusted EBITDA
4. Growth of the Company’s market value
approx. PLN 3.8 billion
average annual revenues from sale*
approx. PLN 660 million
average annual adjusted EBITDA*
approx. 17%
average annual adjusted EBITDA margin*
<1
Net debt to EBITDA ratio in 2019
* 2014 – 2019 **Strategy of the CIECH Chemical Group for 2014-2019” approved on 3 November 2014 by the Supervisory Board of CIECH
Development of the CIECH Group
Previous years brought effective optimization activities and significant investments
14
We constantly generate higher profits and margins
4 378
3 5013 244 3 273
2012 2013 2014 2015
423 446514
748
2012 2013 2014 2015
9,7%12,7%
15,8%
22,9%
2012 2013 2014 2015
Revenues [mPLN] EBITDA (Adj.) [mPLN]
EBITDA (Adj.) – adjusted EBITDA (adjusted by non-typical one-off events); data reported in the statement for a given year, also covers discontinued activity
EBITDA Margin (Adj.) [mPLN]
282
526
684
838
2012 2013 2014 2015
Result on sale [mPLN]
Financial situation
15
The most important implemented projectsDevelopment of the CIECH Group
Soda +200 Projectincrease of the soda production capacity by
additional 200 thousand tonnes per year
Extension of plastics production installation
increase of the production capacity of saturated polyester resins by 100%
MCPA installationstate-of-art installation for manufacture of an active
substance for production of plant protection products
Modernization of the salt production installation
intensification of dry salt production
New calcinatorat the plantin Romania
increase of the production capacity
16
Significant decrease in financial costs
* HY bond interest
Moody's rating:
Ba3 / positive perspectiveStandard & Poor’s rating:
BB- / stable perspective
Financial situation
Refinancing of the debt in 4Q2015
Was
9.5%*
double-currency credit in PLN and EUR (of up to PLN 1.34 million)
and revolving credit (of up to PLN 250 million)
High Yield bonds of EUR 245 millionrevolving credit of up to PLN 100 millionother credit facilities
Is
<2%Savings at the level of
PLN 70 milion per year
In 1Q 2016, continuation of very good financial
results
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Rekord EBITDA (Adj.)
[PLN million] 1Q16 1Q15 yoy1Q16
consensus1Q16
forecasted range
Revenue 826 817 1.1% 855 815 – 914
Gross sales profit 244 214 14.0% - -
Gross sales margin 29.5% 26.1% 3.4 p.p. - -
EBIT 150 117 28,4% 146 138 – 156
EBIT margin 18.2% 14.3% 3.9 p.p. 17.0% 15.6% - 18.8%
EBITDA 204 173 17,6% 204 195 – 212
EBITDA margin 24.6% 21.2% 3.4 p.p. 23.8% 21.9% - 25.5%
Adjusted EBITDA 206 193 7,0% 204 195 – 212
Adjusted EBITDA margin 25.0% 23.6% 1.4 p.p. 23.8% 21.9% - 25.5%
Net result 102 53 92,1% 105 84 – 118
Net margin 12.4% 6.5% 5.9 p.p. 12.3% 9.2% - 14.2%
Financial results for 1Q16
EBITDA (Adj.) – adjusted EBITDA (adjusted by unusual one-off events, in 1Q2016, mainly a change in the level of provisions PLN -2.7 million); PAP consensus of 10 May of the current year, based on forecasts from 11 brokerage houses
59% 62% 61%71% 66% 66% 72% 71% 71%
27% 27%24%
19% 27% 25% 19% 22% 22%
13% 10%12% 9%
5% 6%6%
5% 5%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
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Revenue
2014
845 814 799 786 817 841 801 814 826
2015 2016
Financial results for 1Q16
Organic segment Glass and silicates segment Transport segment OtherSoda segment
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EBITDA (Adj.)
77%
82% 86%
101%
82% 84%
93%
92%
89%
22%
15%11%
17%9%
5%
15%
9%
7%7%
9%
4%
6%
5%
3%
3%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
EBITDA (Adj.) – adjusted EBITDA (adjusted by unusual one-off events, in 1Q2016, mainly a change in the level of provisions PLN -2.7 million)
2014 2015 2016
119 154 143 95 193 188 199 168 206
Financial results for 1Q16
Organic segment Glass and silicates segment Transport segment OtherSoda segment
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Debt
1 2611 479
1 213 1 182
1 3611 447
3.9
3.5
2.72.3
1.8 1.9
2011 2012 2013 2014 2015 1Q2016
Net debt Net debt / EBITDA (Adj.)
[PLN million] At the end of 1Q16 At the end of 2015 change
Debt ratio 64.1% 65.7% -1.6 p.p.
Long-term debt ratio 45.7% 46.1% -0.4 p.p.
Debt to equity ratio 178.8% 191.5% -12.7 p.p.
Gross financial liabilities (PLN million) 1,579 1,564 +1.0%
Net financial liabilities (PLN million) 1,447 1,361 +6.3%
The Group systematically reduces its debt. At the end of 1Q16, the net debt / EBITDA (Adj.) ratio amounted to 1.9. According to the adopted strategy, the Group endeavours to reduce the ratio to the level below 1 in 2019.
Thanks to refinancing of the debt in 1Q 2016, the Group’s costs of debt servicing were much lower
Financial results for 1Q16
Methodology for calculating the metrics is consistent with the financial statement
Effective implementation of the strategy and strategic support of the owner translated into the growth of CIECH’s market value in recent years
23Growth of goodwill
CIECH share price – long-term growth trend
Information chart
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2Q2014Acquisition of the majority package
of CIECH shares by KI Chemistry
4Q2014Adoption of
strategy for 2014-2019
2Q2014Early redemption
of bonds
1Q2016End of the Soda +200 Project
1Q2016Marketing of the ZIEMOVIT brand
3Q2015Change in the
position of the President of
the Management
Board
4Q2015Earlier redemption of HY bonds
and refinancing of indebtedness
4Q2015New member of the Management Board
1Q2015End of investment of dry
salt intensification
4Q2014Signature of a significant contract with Solvay for
delivery of sodium silicate1Q2015The end of the 1st stage of the Soda +200 Project
Share price [PLN]
CIECH also has good prospects for the future
25
Further development of the soda segmentOutlook for future
Sales of additional soda volumesfrom expanded installations
Higher quality of products and a focus on highly processed products
Higher share of dry salt in revenue, lower exposure to weather conditions
Entry to new markets
26
Dynamic development of the organic segmentOutlook for future
Developing the plant protection chemicals portfolio, including the ZIEMOVIT product line
Higher efficiency of AGRO sector
in CIECH Sarzyna
Developing foams portfolio Focusing on high margin products
Expanding abroadfocusing on most promising
directions
27
Other investments and projectsOutlook for future
Increased innovationthrough new R&D projects
Modernisationand expansion of
the sodium silicate furnace
Transport servicesfor external clients
Continued construction of a fume treatment installation to remove
nitrogen and sulphur oxides
Why CIECH?
Modern and diversified chemical group on a stable progress path
Innovative approach to business
Diversification, also within segments
Stable increase in profits and margins since 2013 and potential for furthereffective growth in all segments
Financial backing from a strong dominant shareholder
Dynamic development of the organic segmentand increasing its share in the Group’s revenue
Extending the portfolio based on recent consumer trends
Modernised plants
30Załączniki
This document has been prepared solely for informational purposes. It includes only summary information, is not exhaustive, and may not be usedas a sole basis for any assessment or analysis. CIECH S.A. makes no guarantees (explicit or implicit) regarding information presented herein andsuch information, including forecasts, estimates and opinions, should not be unduly relied upon. CIECH S.A. does not accept any responsibility forpossible mistakes, omissions or irregularities found herein. The document is based on sources of information which CIECH S.A. deems to be reliableand accurate, however, it does not guarantee them to be exhaustive nor to fully reflect the actual situation. This document does not constitute anadvertisement or a public offer of securities. It may include forward-looking statements that involve investment risks or uncertainties and maysignificantly differ from actual results. CIECH S.A does not accept any responsibility for consequences of decisions made based on this document.The responsibility lies exclusively with the party using the document. This document is protected by the Copyright and Related Rights Act. Copying,publishing or distributing it requires prior written consent of CIECH S.A.
CONTACT FOR INVESTORS:
Joanna SiedlaczekInvestor Relations Expert
+48 669 600 [email protected]