Eurofins Scientific SE · EURONEXT:ERF
Eurofins Scientific — Debt Investor Presentation (January 2015)
56 slides from Eurofins Scientific's debt investor presentation, January 2015
Slide 1: Eurofins Debt Investor Presentation January 2015
Eurofins A global leader in bioanalytical testing in the food, environment and pharmaceutical sectors Debt Investor Presentation January 2015 Title: Eurofins Corporate Presentation H1 2014 Document name: H1 2014.ppt EDR: 1-C-IR-PRE-01187643 Document owner: Pamela Antay www.eurofins.com1
Slide 2: Disclaimer
Disclaimer The statements made during this presentation or as response to questions during the Question & Answers period that are not historical facts are forward looking statements. Furthermore, estimates and judgements may be made based on market and competitive information available at a certain
Slide 3: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Transaction Overview Summary Appendix Source presentation EDR: 1-C-IR-PRE-01187643 Source modification date: 07/08/2014 Title: Eurofins Corporate Presentation H1 2014 Document name: H1 2014.ppt EDR: 1-C-IR-PRE-01187643 Document o
Slide 4: Eurofins' Mission is to contribute to global Health, Safety & Environment
Eurofins’ Mission is to contribute to global Health, Safety & Environment with the best in bioanalysis Eurofins provides testing Founded in 1987 services in three main areas IPO in 1997 in Paris at EUR 1.83 per share that have a strong impact on Network of more than 200 laboratories in human health:
Slide 5: Leading global and local market positions
Leading global and local market positions N°1* N°1 to N°3* N°1* worldwide worldwide worldwide Food & Testing for Feed Pharma/ Environment Testing Biotech Testing Market size ~ EUR 2.0bn ~ EUR 5bn ~ EUR 4bn estimate Eurofins N° 1 in Europe N° 1 Worldwide in Pharma N° 1 in Europe ranking N° 1 in Germa
Slide 6: Drivers for long-term market growth
Drivers for long-term market growth Secular Underlying Fundamentals General Market Drivers Laboratory Market Drivers Consumer Demand for safe Increasing wealth expectations for pharmaceuticals, quality food and quality of Life protection and clean environment Consolidation of the fragmented laborato
Slide 7: International network of world class laboratories
An international network of world class, standardised laboratories is attractive for our customers H1 2014 revenue split : N. America 22.7% Germany 17.5% France 17.0% Others 14.6% Nordic Region 11.9% Benelux 10.9% UK & Ireland 5.4% Entry into high-growth markets with start ups & acquisitions 80% of
Slide 8: Revenues EUR m
Strong growth fueled by market growth, share gains and acquisitions 2,000 1,800 1,600 CAGR 5yrs 14% 1,400 REVENUES EUR m 1,200 1,000 CAGR 10yrs 22% 800 600 400 200 - 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2017* * Company objective Source presentati
Slide 9: On track towards 2017 objectives
On track towards 2017 objectives Eurofins 5 year Report Card: 2008-2013 CAGR 2014: second year of our 5-year journey Achievements in 2013 9M 2014 Over 6.5% organic growth versus 5% objective 18.6% revenue increase in Q3 to EUR 370m 24% increase in adjusted EBITDA brings revenues for 9M 2014 to over
Slide 10: Strategy aims at building long lasting competitive advantages
Eurofins’ strategy aims at building long lasting competitive advantages Leading technology Quality of customer service Competence Centres & R&D activities Extensive expertise in local regulations for all major markets, and one-stop contact for Proprietary technologies for proof of compliance in mult
Slide 11: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Transaction Overview Summary Appendix Source presentation EDR: 1-C-IR-PRE-01187643 Source modification date: 07/08/2014 Title: Eurofins Corporate Presentation H1 2014 Document name: H1 2014.ppt EDR: 1-C-IR-PRE-01187643 Document o
Slide 12: The Food testing market has robust growth drivers
The Food testing market has robust growth drivers Food scares and Globalisation: Raw Consumers’ Outsourcing of crises, widely materials sourced increasing awareness industry’s covered in the from countries and demand for safe internal or state- media with different QC and high quality food owned pra
Slide 13: Food & Feed testing offering is the most comprehensive
Eurofins’ Food & Feed testing offering is the most comprehensive in the market Agricultural production, product Production Retail & Distribution development Microbiology Sensorial Dioxins Veterinary drug Vitamins Quality Control residues Authenticity Pesticides Organic residues POPs Labelling GMO My
Slide 14: High profile food scares have expensive consequences
High profile food scares have expensive consequences for producers… Year Brand/ Contamination Impact Cost Country 2008 North Salmonella About 1,500 people sick throughout US ~ USD 100- America/ in tomatoes & Canada – pulling of products from 250m Mexico and peppers shops & restaurants FreshPlaza 200
Slide 15: ...and destroy market value
…and destroy market value 2007 example: Menu Foods is the largest maker of wet cat and dog food in N. America Contamination Direct impact Indirect impact Melamine contamination of pet 48% drop in share price in first week. Tens, possibly foods due to illegal use of a plasticiser hundreds of Threat o
Slide 16: Horsegate: A reminder of the need for systematic testing
Horsegate: A reminder of the need for more systematic testing Horsegate Timeline Eurofins’ response to aid the industry Dec 2012 Irish authorities become aware of the Rapid capacity scale-up by allocating more of adulteration in ABP Food Group its DNA-testing resources to food analysis, burgers with
Slide 17: Eurofins is meeting the demands of global players
Eurofins is meeting the demands of global players The largest global food & beverage producers and retailers are clients of Eurofins 2013 Sales in 2013 Sales in Food and Beverage EUR billion Retailers EUR billion Nestlé Switzerland 74.9 Wal-Mart Stores USA 347.6 Unilever UK /Netherlands 49.8 Carrefo
Slide 18: The Pharma testing market is healthy and full of potential
The Pharma testing market is both healthy and full of potential Need for big pharma Rapid technological change & companies to expand increasing complexity in testing new drugs pipelines require ongoing investment in technology & expertise The increasing complexity of clinical trials leads to increas
Slide 19: Underlying trends are intact for continued growth
Underlying trends are in tact for continued growth Global Drug R&D Spending (US$ bn) Large pharmas need to refill their product pipeline as the ‘blockbusters’ start to come off patent Drug development expenditures have increased substantially in recent years Total R&D is over USD 120bn and is expect
Slide 20: Eurofins Pharma Services activity groups
Eurofins Pharma Services: 6 activity groups Spanning the entire drug development cycle Genomics Discovery Pre-clinical / Clinical Registration Pharma Pharmacology Early (Central Products Development Laboratory) Testing / cGMP QC Sequencing High-throughput- Pharmacology Biomarkers Regulatory/Biocides
Slide 21: Top 10 global pharmaceutical companies are clients
The Top 10 largest global pharmaceutical companies are all clients of Eurofins Top 10 pharma companies Country Pfizer USA Global CRO Market Sanofi Aventis France Market GlaxoSmithKline UK Breakdown CAGR* Novartis Switzerland USA 60% 12% AstraZeneca UK Europe 20% 9% Merck & Co USA Japan 8% 18% Rest o
Slide 22: The Environmental testing market continues to grow
The Environmental testing market continues to grow Rise in Progress in epidemiology contamination & & medicine has identified pollution issues more compounds as toxic Increasing demand by citizens for a clean environment EU expanding regulation (e.g. REACH) Increasingly long list of products identif
Slide 23: Eurofins serves all the main environmental testing markets
Eurofins serves all the main environmental testing markets Eurofins is the No.1 environmental testing service provider in the world* Lancaster Environmental Consulting and Testing is the laboratory sampling companies of choice for Fortune 500 are natural partners companies in the USA WATER AIR SOIL
Slide 24: Global trends in regulation support the business
Global trends in regulation support the business Strong regulated markets (EU, USA) are still amending and adding regulations Eastern European rules catching up with EU Fast development of regulation in Asia Regulation used for support of trading blocks (e.g. EU, NAFTA, ASEAN) Major pieces of legisl
Slide 25: EU regulations a key driver – e.g. REACH directive
EU regulations a key driver for the testing industry – e.g. REACH directive Objectives Examples of affected products or industries Listing and assessing the safety of 30,000 Metals, resins, acids, solvents, oils, fibres in textile, car chemical substances used by industries in components, toys, cosm
Slide 26: Outsourcing adds to market growth
Outsourcing adds to market growth Examples of laboratories outsourced to Eurofins Company Outsourced Activity Country Danish Hydrology Inst. Official water reference lab Scandinavia Suez/Sita Envirolab The Netherlands Danish farmers association Steins’ water/environment laboratory Denmark Southern W
Slide 27: Laboratory Network Investments (1/2): Greenfield projects
Laboratory Network Investments (1/2): Greenfield projects in high-growth markets Country Market Operational achievements China Food, Pharma India: Food Lab profitable in year 2 of Asia India Pharma, Food start-up Japan Food, Pharma Japan: Radioactivity lab set up; and profitable in year of establish
Slide 28: Laboratory Network Investments (2/2): Expand / modernise sites
Laboratory Network Investments (2/2): Expand / modernise laboratory sites 80 new/expanded modern state-of-the-art sites to enable consolidation / closure of smaller or old sites Total of ca. 240,000 m2 added or brought to most modern standards between 2005 – 2013 (40,000 m2 in 2013 alone) 100,000 m2
Slide 29: Market Share: Eurofins is the leader in its industry
Market Share: Eurofins is the leader in its industry – and we continue to reach new market leadership positions New Markets 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 X = Market Entry Denmark: Food and Env. X No 1 Brazil: Food Testing X No 1 France Environment X No 1 USA:
Slide 30: Eurofins' strategy builds high Barriers to Entry
Eurofins’ strategy builds high Barriers to Entry Offering a premium quality service … ... and leveraging internal efficiencies Portfolio: over 100,000 reliable methods – Industrialising the laboratory process: unique in the world and ahead of rationalisation of sites and personnel competition Compet
Slide 31: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Transaction Overview Summary Appendix Source presentation EDR: 1-C-IR-PRE-01187643 Source modification date: 07/08/2014 Title: Eurofins Corporate Presentation H1 2014 Document name: H1 2014.ppt EDR: 1-C-IR-PRE-01187643 Document o
Slide 32: Heavy investment in new markets and resources
Heavy investment in new markets and resources for future profits Building corporate Bringing recently Under development resource for future size acquired labs to group perimeter and growth standards Start-ups: 17 start ups Recruitment of top Deploy IT systems between 2006 and 2010 leadership eLIMS,
Slide 33: Selective acquisitions to consolidate leadership
Selective acquisitions to consolidate and secure leadership of our markets Selected recent transactions Rationale/impact Lancaster Laboratories (US, Europe, 2011) Global market leadership in pharma products testing IPL (France, 2011) Leading position in water testing in France Nihon Kankyo (Japan, 2
Slide 34: Positive trends drive solid operating results
Positive trends drive solid operating results HY 2014 HY 2013 Adjusted Separately Statutory Adjusted Separately Statutory +/- % Results disclosed Results Results disclosed Results Adjusted EURm Results items items Revenues 643.5 643.5 570.3 570.3 12.8% EBITDA 109.0 -18.0 91.0 93.1 -14.8 78.2 17.1% E
Slide 35: Growth and Profitability are critical objectives
Growth and Profitability are critical objectives Group Profitability Objectives++ 3-tiered margin support towards mid-term profitability objective 2,500 22% 1. Start of profit contribution from Group Adjusted EBITDA margin % 20% start-ups 2,000 2. Proportion of companies in Group Revenues 18% 1,500
Slide 36: Solid Balance Sheet
Solid Balance Sheet OBSAAR Jun’14 Dec’13 Maximum issued June 2010 Net Debt/ LTM Adjusted 2.07 x 1.76 x 3.5 x maturity: EUR 176m across June 2015, 2016, 2017 EBITDA Schuldschein Net Debt (EUR m) 485.7 386.8 EUR 170m issued in July 2011 Total Equity (EUR m) 404.3 394.7 5-7 year maturity; mid-swap or E
Slide 37: High Degree of Financial Flexibility
High Degree of Financial Flexibility Substantial headroom in the balance sheet Debt ratios remain well below covenant limits* Net Debt/ LTM Adjusted EBITDA: max 3.5x despite EUR 147m** cash invested in the business 3.50 x in H1 2014 (EUR 215m cash in 2013). Largely capex and acquisitions which did n
Slide 38: Financing facility overview as of 30 June 2014
Financing facility overview as of 30 June 2014 EUR 864m of gross senior debt as of 30 June 2014 (net debt of EUR 485.7m) More than 95% of senior debt located in Eurofins Scientific SE (holding level) Main facilities in Eurofins Scientific SE: OBSAAR bonds (issued in June 2010) : EUR 176m Schuldschei
Slide 39: Maturity profile of senior debt at Holding level
Maturity profile of senior debt at Holding level as of 30 June 2014 Senior debt in Eurofins Scientific SE (EURm) 495.1 500.0 450.0 400.0 350.0 300.0 300.0 250.0 221.7 200.0 108.0 62.0 150.0 100.0 58.7 133.1 50.0 58.7 55.0 58.7 0.0 2015 2016 2017 2018 Bilateral credit lines (drawn) OBSAAR Schuldschei
Slide 40: Tangible Commitment from Internal Stakeholders
Tangible Commitment from Internal Stakeholders Upside/Downside for warrant holders In July 2014, Eurofins issued 118,820 warrants exclusively to its leaders Exercise Price €281.58 Purchase Price €18.15 Break-even Price €299.73 (in the money starting at €300) The warrants are not listed but gives acc
Slide 41: Outlook: becoming the world leader in bioanalytical testing
Outlook: becoming the world leader in the bioanalytical testing market Sustainable Market Growth Drivers + Key Success Factors = Solid Outlook Food safety & contamination issues Unique technological portfolio of over 100,000 methods New regulations (e.g. FSMA, REACH) Outsourcing trend Volume scale a
Slide 42: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Transaction Overview Summary Appendix Source presentation EDR: 1-C-IR-PRE-01187643 Source modification date: 07/08/2014 Title: Eurofins Corporate Presentation H1 2014 Document name: H1 2014.ppt EDR: 1-C-IR-PRE-01187643 Document o
Slide 43: Terms & Conditions of the contemplated bond issue
Terms & Conditions of the contemplated bond issue Issuer: Eurofins Scientific S.E. Issue Rating: Not rated Issue Size: EUR [300 m] minimum Currency EUR Maturity [7] years Denomination: EUR100k+1k Listing: Luxembourg Stock Exchange Type: Senior Unsecured Documentation: Standalone / Change of Control
Slide 44: Contents
Contents Introduction Market & Strategic Positioning Finance & Outlook Transaction Overview Summary Appendix Source presentation EDR: 1-C-IR-PRE-01187643 Source modification date: 07/08/2014 Title: Eurofins Corporate Presentation H1 2014 Document name: H1 2014.ppt EDR: 1-C-IR-PRE-01187643 Document o
Slide 45: Conclusion: our sustainable competitive advantage
Conclusion: our sustainable competitive advantage Best in class technology and quality give best brand High-growth, non-cyclical markets driven by secular protection mega-trends No. 1 or 2 worldwide in most business lines Advancing globalisation but with very few global Strong international presence
Slide 46: Appendix / Back up slides
Appendix / Back up slides Source presentation EDR: 1-C-IR-PRE-01187643 Source modification date: 07/08/2014 Title: Eurofins Corporate Presentation H1 2014 Document name: H1 2014.ppt EDR: 1-C-IR-PRE-01187643 Document owner: Pamela Antay 46
Slide 47: Consolidated Income Statement HY 2014 vs HY 2013
Consolidated Income Statement HY 2014 vs HY 2013 H1 2014 H1 2013 EUR million Adjusted Separately Total Adjusted Separately Total Results 1 disclosed Results 1 disclosed items 2 items 2 Revenues 643.5 643.5 570.3 570.3 Operating costs, net -534.5 -18.0 -552.5 -477.2 -14.8 -492.0 EBITDA 109.0 -18.0 91
Slide 48: Consolidated Balance Sheet HY 2014 vs HY 2013
Consolidated Balance Sheet HY 2014 vs HY 2013 EUR million H1 2014 H1 2013 EUR million H1 2014 H1 2013 Property, plant and equipment 279.8 231.1 Total shareholders' equity 404.3 360.3 Goodwill 497.6 439.0 Other intangible assets 108.9 75.2 Borrowings 790.9 438.1 Others 52.7 47.2 Others 103.1 91.6 Tot
Slide 49: Consolidated Cashflow Statement HY 2014 vs HY 2013
Consolidated Cashflow Statement HY 2014 vs HY 2013 EUR million H1 2014 H1 2013 Cash flows from operating activities Profit before income taxes 31.8 31.8 Adjustments for: Depreciation and amortisation 37.7 31.4 Change in net working capital -27.2 -5.4 Income tax paid -14.1 -14.6 Others 19.1 11.5 Net
Slide 50: Consolidated Income Statement FY 2013 vs FY 2012
Consolidated Income Statement FY 2013 vs FY 2012 2013 2012 EUR million Adjusted Separately Total Adjusted Separately Total Results 1 disclosed Results disclosed items 2 items Revenues 1,225.6 1,225.6 1,044.0 1,044.0 Operating costs, net -1,006.3 -30.2 -1,036.5 -867.5 -15.3 -882.7 EBITDA 219.3 -30.2
Slide 51: Consolidated Balance Sheet FY 2013 vs FY 2012
Consolidated Balance Sheet FY 2013 vs FY 2012 EUR million 2013 2012 EUR million 2013 2012 Restated Restated Property, plant and equipment 251.1 209.3 Total shareholders' equity 394.7 372.0 Goodwill 456.4 402.7 Other intangible assets 86.4 69.0 Borrowings 666.9 383.0 Others 54.2 43.8 Others 96.7 88.5
Slide 52: Consolidated Cashflow Statement FY 2013 vs FY 2012
Consolidated Cashflow Statement FY 2013 vs FY 2012 EUR million 2013 2012 Cash flows from operating activities Profit before income taxes 89.1 81.7 Adjustments for: Depreciation and amortisation 66.9 54.8 Change in net working capital 13.8 -11.0 Income tax paid -30.5 -12.9 Others 30.1 21.6 Net cash p
Slide 53: Eurofins has vastly outperformed the market since its IPO
Eurofins has vastly outperformed the market since its IPO and each of its 3 equity offerings (based on share price of EUR 212.05 as of 31 December 2014) Total equity raised in 4 offerings: only EUR 56m Since IPO Eurofins: +11,484% (32% CAGR) CAC 40: +54% (3% CAGR) SBF 120: +78% (3% CAGR) S&P 500: +1
Slide 54: Comparable organic growth to larger peers
In spite of its lower cyclicality, Eurofins generates comparable organic growth to its larger peers in each cycle, and higher growth when the economy slows Eurofins has generated comparable organic growth to its larger peers which have deeper footprint in fast-growing emerging markets and in cyclica
Slide 55: We have built a hard-to-replicate world-class infrastructure
We have built a hard-to-replicate world-class infrastructure Eurofins has been consistently investing more than its peers 9% 80% 8% 70% 7% 60% Excess Investment 6% 50% Capex to Sales 5% 40% 4% 30% 3% 2% 20% 1% 10% 0% 0% 00-'04 05-'08 09-'10 2010 2011 2012 2013 ERF TICS ex ERF Excess investment Sourc
Slide 56: Post acquisition and integration, sales and profits increase significantly
Post acquisition and integration into Eurofins, both sales and profits increase significantly Illustration Growth drivers post acquisition: 1) Sales increase through cross selling of Actual example of an acquired lab: Eurofins lab specialities internationally 2) Cost reduction – focus on most freque
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