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From melting steel to 3D-printing: investing in the technology-driven German “Mittelstand”
as at 28 February 2017
Long-terminvestments
1holding
company
1. Business model highlights
2
~500€m sales
2,500staff
28years of
experience
Technologymade in Germanyfor the world markets
(direct or indirect export)
Alwaysin search of new
“hidden champions”
M&Ais an ongoing process
Succession issues
100% takeovers
New management acquires
10% to 20%
~100,000 German SMEsface succession in the years ahead
4divisions
GESCO – a Group in acceleration
Active portfolio management: one loss-maker to be sold, one “Hidden Champion” acquired Divestment: restructuring case Protomaster put for sale Acquisition: Pickhardt & Gerlach joins GESCO Group Portfolio becomes stronger and more robust
Active ownership: new impetus for profitable growth A new portfolio strategy
4 segments higher transparency, new framework for acquisitions Systematic benchmarking Optimisation projects for individual subsidiaries
A more active role of GESCO AG in terms of consulting and support for its companies
A stronger focus on free cash flow (working capital, investments)
Active M&A approach: access to entrepreneurs Continuously attractive deal flow via M&A network New portfolio strategy widens horizon for attractive targets In addition: proactive direct contact with business owners
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1. Business model
GESCO – current situation and outlook
From an operating point of view, 2016/2017 turns out to be betterthan expected in Nov. 2016
Exit of loss-maker burdens 2016/2017 accounts, but reduces future risks
Newly aquired PGW will provide external growth All in all, our portfolio has been strengthened
New financial year 2017/2018 should generategrowth in sales and earnings on an organic basis
Optimisation projects have been identified in FY 2016/2017, will be implemented in FY 2017/2018 and generate impact in FY 2018/2019
We expect to start into the new FY with a strengthened, more robust portfolio and good perspectivesfor profitable organic as well as external growth
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1. Business model
1. Business model
Our industryB-to-B and investment goods. From melting steel to 3D printing.
Our mission Being successful by supporting our customers’ success
with products and services made in Germany.
Our divisionsRepresenting strategically attractive end customer markets:
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Production process technology
Resource technology
Health and infrastructure
technology
Mobility technology
Production processtechnology
(Share of Group salesapprox. 15 %)
Features: Dynamically growing markets, high degree of innovation, automation, trend towards “batch size 1”
Products / services:
Robotics and automation solutions in machine and plant construction, technology-intensivemanufacturing services
End customers:
Serial producers, e.g. in automotive, steel and consumer goods industries
Products/services(examples):
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1. Business model: our divisions
3D printing(semi)automatic assembly lines
straighteningmachines
ResourceTechnology
(Share of Group salesapprox. 45 %)
Features: Consolidating markets, focus on niches and customer service
Products / services:
Customised preparation of primary materials, e.g. materials supply, transport and loading technology
End customers:
Material-intensive industrial companies, globally distributed production structures, broadly diversified
Products/services(examples):
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1. Business model: our divisions
coating andhardening
high-alloyed tool steel
loading arms forgases and liquids
Health andinfrastructure
technology
(Share of Group salesapprox. 25 %)
Features: Close to end consumers, not very cyclical, relatively resilient to economic fluctuation
Products / services:
Components, modules and primary products
End customers:
Providers for mass markets close to end consumers(construction, sanitary equipment, food, hygiene, medicine)
Products/services(examples):
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1. Business model: our divisions
paper sticks forhygiene and
sweets industry
arms for medtech spareparts for agri-cultural technology
Mobility technology
(Share of Group salesapprox. 15 %)
Features: Cyclical automotive market, positive outlook driven by technological leaps, e.g. electromobility
Products / services:
Tools and moulds, components, parts
End customers:
Vehicle industry, e.g. car, commercial vehicle and rail
Products/services(examples):
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1. Business model: our divisions
tools forcar body parts
vibration damper moulds foraluminium die cast
Please note:
FY subsidiaries = calendar year
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2. Financial year 2016/2017
1 January 31 December
31 March 1 April
FY GESCO AG / GESCO Group = 1 April to 31 March
2. Financial year 2016/2017 – Q1 to Q3 (Jan. to Sept. 2016 at subsidiaries)
Q1-Q32015/2016
Q1-Q32016/2017 Change
Order intake €m 378.1 376.4 -0.4 %
Group sales €m 369.2 357.5 -3.2 %
EBITDA €m 40.5 35.7 -11.8 %EBIT €m 25.3 19.9 -21.0 %Group net income after minority interest €m 13.0 9.7 -25.0 %
Earnings per share acc. to IFRS 1) € 1.30 0.98 -25.0 %
Cashflow from operating activities €m 16.6 30.7 85.8 %1) Based on new no. of shares after share split 1:3 on 22.12.2016
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The first nine months: General environment for capital goods still dampened Q1/Q2: comparatively weak, additionally burdened because
customers postponed deliveries of major orders to H2 Q3: significantly better, large orders delivered,
improvement in sales and margins Q1 to Q3: order intake stable, sales and earnings below prev. year’s figures Cash flow significantly improved
2. Financial year 2016/2017 – Division development Q1-Q3
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€m Q1-Q32015/2016
Q1-Q32016/2017
Remarks
Production Process Technology
SalesEBIT
51.21.8
45.21.4
Numerous machines will be delivered in Q4. Full FY expectation: sales slightly under, earnings clearly above previous FY.
Resource Technology
SalesEBIT
165.814.9
166.413.7
Oil and chemical industry still reluctant to invest. Margin improvement in Q4. Full FY expectation: sales and earningsslightly above previous FY.
Healthcare /Infrastructure Technology
SalesEBIT
87.68.1
87.88.7
Very robust; profitable growth. Full FY expectation: sales slightly, earnings clearly above previous FY.
Mobility Technology 1)
SalesEBIT
64.97.6
59.73.5
Parts for series production and large tools develop lively, other sections suffer from car manufacturers’ reluctance to invest. Full FY expectation: sales and earnings clearly under previous FY.
1) Division includes restructuring caseProtomaster GmbH, which is put for sale.
2. Financial year 2016/2017 – Q4 (Oct. to Dec. 2016 at subsidiaries)
Preliminary figures for the fourth quarter
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Q4 order intake ~ € 122 m: +16 % yoy
─ Order intake (€‘000)─ Sales (€‘000)
Numerous machines delivered, margins better than expected In full FY book-to-bill > 1, order backlog € 188 m (+10%)
Q4 sales ~ € 125 m: stable yoy
2. Financial year 2016/2017 outlook and first view on 2017/2018
Target figures for Group net income after minority interest
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2016/2017GuidanceNov. 2016
€ 11.5 m to
€ 12.5 m
2016/2017GuidanceFeb. 2017
€ 12.5 m to
€ 13.5 m
€ 6 m to
€ 7 m}€ 6.5 m
negativeone-off effect
Q4 better than expected, operating
outlook raised…
2016/2017OperatingguidanceFeb. 2017
...but decision to sell Protomaster will burden earnings
Target figures for Group sales
2016/2017GuidanceNov. 2016
€ 480 mat best
2016/2017GuidanceFeb. 2017
€ 480 m
2017/2018First indication
2017/2018First indication
For new FY growth in sales expected
For new FY growth in earnings expected
More active approach towards M&A
Market still characterized by strong demand and a limited number of companies offered
Focus on 4 end customer segments
GESCO continuously generates high deal flow
GESCO has intensified its activities, aims to generate direct contact with entrepreneurs / business owners, which has already led to a number of personal meetings
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3. M&A and Portfolio Development
Recent acquisition: Pickhardt & Gerlach Group (PGW)
Leading supplier of refined cold rolled strip steel Products: nickel-, copper-, brass- or zinc-coated strip steel Customer sectors: electro-technic industry, automotive,
decorative articles, sporting equipment, office supply Product examples: electronic circuit breakers,
file folders, windscreen wipers… Highly automated production systems
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3. M&A and Portfolio Development
Recent acquisition: Pickhardt & Gerlach Group (PGW)
Family business, founded 1902, taken over by Hekhorn family in 1990 GESCO acquired 100% of the shares from Hekhorn family as part of a
succession planning process Signing Dec. 2016, approval of antitrust authorities in Jan. 2017 Managing Director of technology will continue to work for PGW Will be integrated in the Resource Technology division Approx. € 30 million sales, 40 employees
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3. M&A and Portfolio Development
Decision to sell Protomaster GmbH
Communicated as a restructuring case since FY 2014/2015 Generated operating losses in FYs 2014, 2015 and 2016 GESCO supported Protomaster strongly over the last years On 2 Feb. 2017 decision to put Protomaster for sale Sales process started immediately Exit decision expected to burden Group net income after
minority interest in FY 2016/2017 with a one-off effect of ~ € 6.5 m Risks from that investment will be taken into account as far as recognisable
GESCO overall strategy unchanged: exit is and will continue to be „last resort “ and certainly an exception
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3. M&A and Portfolio Development
4. GESCO share vs. SDAX and DAX 1 Year in % (total shareholder return)
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Pleas note: Share split 1:3 was
implemented on 22 Dec. 2016
4. GESCO share vs. SDAX and DAX 10 Years in % (total shareholder return)
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Pleas note: Share split 1:3 was
implemented on 22 Dec. 2016
4. The GESCO share – shareholder structure
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Free float: 85.1%
14.9 % Stefan Heimöller (entrepreneur, member of supervisory board,private investor)
13.9 % Investmentaktiengesellschaft für langfristige Investoren TGV(institutional investor)
approx. 40.0 % other private investors
approx. 31.2 % otherinstitutional investors
Directors‘ Dealings: In current FY purchases by members of supervisory and executive board.
Appendix – GESCO management
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Robert Spartmann* 1960
Board member since 2001. Financials, legal, HR,
M&A, advising holdings. Tax advisor and auditor.
Many years of experience in SME sector. From 1995 to 2000 external advisor
for GESCO Group.
Dr Eric Bernhard * 1972
Board member since Jan. 2016, CEO since July 2016. Portfolio strategy. Strategic
and operational development of subsidiaries. Investor Relations. Many years of
management experience in consulting and various
industries.
Executive Board
Appendix – GESCO management
Supervisory Board
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Klaus MöllerfriedrichChairman
* 1947 Co-founder of GESCO.
Board member since 1989. Tax advisor, auditor,
consultant.
Stefan HeimöllerDeputy Chairman
* 1963Board member since 2013.
Business owner / entrepreneur.
Dr Nanna Rapp
* 1969 Board member since 2015.
MD of E.ON InhouseConsulting GmbH.
Appendix – GESCO Group overviewCompany Sales 2015
€‘000Staff as at31/12/2015
GESCO AGshareholding
AstroPlast Kunststofftechnik GmbH & Co. KG 16,262 92 100%
Paul Beier GmbH Werkzeug- und Maschinenbau & Co. KG 12,117 117 100%
C.F.K. CNC-Fertigungstechnik Kriftel GmbH 9,708 66 80%
Dömer GmbH & Co. KG Stanz- und Umformtechnologie 15,661 104 100%
Dörrenberg Edelstahl GmbH 179,243 509 90%
Frank Group 27,629 258 90%
Franz Funke Zerspanungstechnik GmbH & Co. KG 15,383 80 80%
Haseke GmbH & Co. KG 12,969 64 80%
Hubl GmbH 12,775 106 80%
Georg Kesel GmbH und Co. KG 11,239 60 90%
MAE Group 44,359 222 100%
Modell Technik Formenbau GmbH 13,961 115 100%
Pickhardt & Gerlach GmbH & Co. KG (Acquired in Dec. 2016) approx. 30,000 approx. 40 100%
Protomaster GmbH 17,688 123 82.17%
Setter Group 26,984 98 100%
SVT GmbH 33,464 186 90%
VWH GmbH 11,421 109 80%
Werkzeugbau Laichingen Group 26,594 177 100%
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Founded: 1989Share capital: € 9,975,000Shares: 9,975,000 registered sharesFree float: 85.1%Stock markets: Xetra; Frankfurt (regulated market);
Berlin, Düsseldorf, Hamburg, Hanover, Munich, Stuttgart (open market)
Sec. identification number: A1K020ISIN: DE000A1K0201IPO: 24/03/1998 End of financial year: 31 MarchDesignated sponsors: equinet Bank AG
Oddo Seydler Bank AG
Appendix – Facts and figures for GESCO AG
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Appendix – Financial calendar
Financial calendar
29 June 2017 Annual Accounts Press Conference / Analysts‘ Meeting
Aug. 2017 Q1 figures
31 Aug. 2017 Annual General Meeting, Wuppertal
Nov. 2017 Q2 figures
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Appendix – Investor relations contact
Investor RelationsGESCO AG Phone: +49 202 24820-18 Investor Relations Fax: +49 202 24820-49Oliver Vollbrecht Email: [email protected] 7 Internet: www.gesco.de 42103 WuppertalGermany
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Anything else you’d like to know?
Contact: Oliver Vollbrecht, Head of IR
Phone: +49 202 2482018
Email: [email protected]
