Company presentation Full year 2016

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Jonas Peters
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1 Company presentation Full year 2016

2 SOL Group at a glance Founded in 1927, is an Italian based multinational company present in 28 countries with more of 3,200 people employed. Two core, separated but integrated and synergic business areas: Technical Gas sector (production, applied research and marketing of pure, medical and industrial gases) and Home-Care service sector (supply of medical products and medical assistance services as well as equipment for home care therapy). Two recent businesses: Hydro Energy and Biotechnology. Strong results and sound balance sheet: Over 703 millions of Total Group revenues in FY2016 (+4.3% FY2015); Over 52% of international revenues in 2016 (vs 23.7% in 2000) 6.0% sales CAGR in the last 10 years; 23.8% of EBITDA margin in 2016; of Debt/Equity ratio; Dividend policy: 29% average dividend pay out ratio over the last 10 years. 2

3 SOL Group Geographic Presence SOL Group is present in 28 countries 3

4 The Technical Gases Business 4

5 The Technical Gases Business SOL Group operates in the technical gases business throughout the brand SOL Production and distribution of Gases A complete range of industrial gas (both atmospheric and non-atmospheric): medicinal, pure and special gases. Oxygen Nitrogen Argon Hydrogen Carbon dioxide Acetylene Nitrous oxide Gas mixtures Ultra high purity gases Medical gases Gaseous helium Liquid helium Refrigerating gases Electronics gases Ammonia Combustible gases Supply of plants, equipments, services and consultancy Research, design, and construction of: Industrial gas production facilities, Plant and equipment for gas utilization Services and consultancy Equipment for medical applications Equipment for cryogenic applications Deep freezing tunnels Oxygen burners Ozonisers Medical air plants On-site plants Welding machines and equipment 5

Technical Gases Business Technical gases business (M ) Sales FY2016 FY2015 YoY 373 364 + 2.6% SOL Group 2016 Total revenues EBITDA 76 68 + 12.2% EBITDA % 20.3% 18.6% + 1.7% Technical Gases 48.

6 Technical Gases Business Technical gases business (M ) Sales FY2016 FY2015 YoY % SOL Group 2016 Total revenues EBITDA % EBITDA % 20.3% 18.6% + 1.7% Technical Gases 48.9% Investments % In 2016 the division invested over the 15% of its revenues. 2.8% sales CAGR over the last 10 ys years Sales in Technical Gases Millions Euro ,5 296,3 313,5 296,3 325,1 340,6 344,9 341,8 351,7 363,6 373,

7 Technical Gases business Market characteristics SOL Resilient and growing market Margin protected thanks to high entry barriers Limited economic cycle demand dependence of each sales area Broad variety and diversification of end-markets and applications Medium/long term contracts Local presence as a key factor High diversification of sales area: More than 50,000 clients served; More than 90 different applications for technical gases Long term contracts with customers: Gas pipeline: up to 15 years; Compressed gases: up to 5 years; Cryogenic liquid gases: up to 3 years Strong local presence: 25 countries, 38 primary transformation plants, 56 secondary transformation plants. Resilience + Growth + Demand stability + Low risk level 7

8 Technical Gases Business Specialty and medicinal gases and services The uses of specialty gases are expanding in many different context. The market need for maximum accuracy finds its answer in the world of gases: Universities and research centers: highly purified gas carriers for gas chromatography, calibration equipment and gaseous compounds used as precursors for chemical synthesis; Chemical and pharmaceutical carrier gases and calibration gases in many activities related to process control; Hospitals: medicinal gases for pharmaceutical use, pure products and mixtures for laboratory and analytical activities as a support to diagnostic processes, cryomangement services; High-tech industry sectors (such as electronics, automotive and renewable energies) where the use of gases is vital to the innovation of production processes. 8

9 Primary Production Sites (ASU, ) AIR SEPARATION / LIQUEFACTION - OXYGEN, NITROGEN, ARGON HYDROGEN - H2 CARBON DIOXYDE - CO2 ACETYLENE - C2H2 NITROUS OXYDE - N2O 39 primary production sites: units that produce gases from row materials (electric energy, atmospheric air, natural gas, calcium carbide and ammonium nitrate). Max reach-in area is 400 km. EIRE India Morocco 9

10 Filling Stations 56 secondary transformation sites (filling station): units that are dedicated to filling activity, storage and distribution of gas in general. Moreover they produce ultra high purity gases and gas mixtures. EIRE The company established a 50% joint venture with an important Indian partner (that has 25% of CO2 market share) for the production and distribution of technical gases. Max reach-in area is 150km. SOL owns a company in Morocco for the production and distribution of technical gases. Morocco 10

11 The Home Care Business 11

12 The Home Care Business In the second half of the eighties, SOL seized a new market diversification opportunity by entering into the Home-Care service sector, synergical with the technical gas sector. The Group works through the VIVISOL Group, which supplies technologically advanced home care services to patients for the treatment of chronic pathologies. VIVISOL manages the complete patient care from the delivery of medical equipment and drugs, performed by specialized home care professionals, to the provision of qualified medical and nursing services, as well as tele-monitoring services and emergency management. The company operates in 12 leading % 0% countries in Europe, in Brazil and Turkey, with over 60 offices employing % 2% over employees and serving more than patients daily % 20% % 51% 0% 20% 40% 60% 80% 100% Technical Gases Home care 12

13 Home Care Business Home care respiratory assistance Respiratory home-care services concern the home delivery to patients of oxygen or enriched air and other services such as ventilation, diagnosis of pulmonary pathologies and therapy of respiratory disorders. Other home care assistance The other home-care services include telemedicine services, artificial nutrition, integrated home-care service in the respiratory framework and in monitoring child respiratory disorders. Long term oxygen therapy Mechanical ventilation therapy Assistance to patients undergoing oxygen therapy during travels (VIVITRAVEL) Diagnosis and treatment of sleep disorder conditions Home care artificial nutrition Integrated home care services Remote monitoring and diagnosis of respiration conditions Home care equipment VIVISOL markets also equipment intended for the diagnosis and therapy of the above-mentioned pathologies and its customers include hospitals, pharmacists, laboratories, clinics and doctors. Home and traveling oxygen therapy equipments Ventilation equipment Instruments and accessories for diagnosis and aerosol treatment Home aids 13

Home Care Business Hone Care business (M ) FY2016 FY2015 YoY Sales 360 340 + 5.9% Home Care 51,1 % SOL Group 2016 Total revenues EBITDA 92 81 + 13.7% EBITDA % 25.5% 23.7% + 1.7% Investments 41 39 + 5.

14 Home Care Business Hone Care business (M ) FY2016 FY2015 YoY Sales % Home Care 51,1 % SOL Group 2016 Total revenues EBITDA % EBITDA % 25.5% 23.7% + 1.7% Investments % VIVISOL was able to grow 6% years Sales in Home Care in 2016, with an EBITDA 350 margin higher than 25%. 300 The Group is continuing to invest significantly in this business. Millions Euro ,9 142,7 160,3 182,5 213,4 238,8 264,9 281,2 312,8 339,8 360,

15 Home Care Business Key growth drivers: Aging population demographics Restructuring of Health Care Systems through de-hospitalization and home care Developments in portable medical technologies Better quality of life for Patients at home Increasing of respiratory and chronic pathologies 15

16 Home Care - VIVISOL branches VIVISOL is present in 12 leading countries in Europe, Brazil and Turkey with over 60 branches. Turkey 16

17 Home Care Business VIVISOL Belgium - Lessines 17

18 The Hydro Energy Business 18 18

19 The Hydro Energy Business Leveraging on its core business development in the Eastern Europe, SOL entered into the Hydro-Energy sector. The industrial gas sector, is one of the most energy intensive one. This characteristic supported the Group decision to invest in the Hydro-Energy sector in order to enjoy synergies with its Industrial Gases Business. Currently the company owns and operates 5 hydro-electric power plants in Slovenia (about 50 Million KWh/year), 2 plants in Albania (about 25 Million KWh/year); 4 plants in Macedonia (about 35 Million KWh/year); 4 plants (one is under construction) in Bosnia (about 6 Million KWh/year). 19

20 The Biotechnology Business 20 20

The Biotechnology Business SOL Group is active in supplying

and laboratories (cryobanks, cellfactories, cryomanagement,

tissue and stem cells banking and biological tissues

With the acquisition of the majority of DIATHEVA, SOL Group is

21 The Biotechnology Business SOL Group is active in supplying biotechnological equipment and services to hospitals, clinics and laboratories (cryobanks, cellfactories, cryomanagement, cryotransportation) With BIOTECHSOL is active in the area of tissue and stem cells banking and biological tissues transportation. With the acquisition of the majority of DIATHEVA, SOL Group is active in drug discovery and drug delivery (recombinant monoclonal antibodies), molecular diagnostic, GMP production of recombinant proteins 21

22 SOL Group: 30 years Deflated Turnover ( ) =703.4 (x1,5) =466.0 (x2.1) = =219.7 (x1.8)

23 SOL Group: consolidated results ( ) Sales EBITDA Millions Euro , ,2 636, ,0 595, , , ,0 462,6 427, , EBIT 10,8% 11,2% 11,5% 11,5% 90 12% 10,8% 10,7% 80 9,7% 9,7% 9,7% 9,0% 9,0% 10% 70 Millions Euro ,7% 23,8% 23,5% 23,8% ,2% 22,7% 22,7% 21,6% 22,5% 22,0% 22,1% ,6 142,9 148,4 123,6 130,4 132,2 131, ,7 97,1 99, , Cash Flow EBITDA % on Sales 19,0% ,7% 17,7% 17,8% 17,5% 16,9% 16,7% 16,7% 18,1% ,5% 15,5% % 25% 20% 15% 20% 15% % on sales Millions Euro ,2 46,0 51,5 49,9 59,6 59,6 56,5 53,6 61,9 65,6 80,9 8% 6% 4% 2% % on sales Millions Euro ,9 75,7 87,6 81,7 92,6 97,0 98,5 92,4 106,2 112,9 127,5 10% 5% % on sales 0 0% 0 0% EBIT % on Sales Cash Flow % on Sales 23

24 10 years net profit and dividend growth NET PROFIT DPS - Dividend Yield 7,8% 8% 0,150 0,160 4,5% 6,5% 6,5% 6,3% 7% 0,140 5,8% 0,120 5,6% 5,1% 6% 0,100 0,110 0,120 5,1% 4,8% 0,100 0,100 0,095 5% 0,100 0,081 0,081 0,084 3,8% 4% 0,068 0,080 Net profit CAGR % 3% DPS CAGR + 8.2% 0,060 % on sales 2% 0,040 1% 0, % ,000 10Y AVERAGE PAY-OUT RATIO 29% 24

25 International Expansion years sales outside Italy SOL is focused on its international expansion: The Group started its operations in Italy where it currently has 15 primary production sites. Millions Euro ,0 151,1 172,2 186,6 217,3 246,2 272,8 286,3 322,0 349,3 372,1 In 2016 the Group is present in 28 countries. In 2016 the non-domestic sales exceeded the Italian sales (52.9% / 47.1%) (Excluded sales in India) 25

26 Capital Expenditures ( ) 10 years of investments on sales High annual investments % The Group every year invest Millions Eu uro ,5% 53,3 16,2% 16,1% 74,3 69,2 15,2% 14,7% 15,4% 14,8% 13,7% 14,0% 12,6% 12,0% 91,8 94,5 98,4 84,7 85,4 84,7 63,4 62,1 20% 15% 10% 5% % on sale es about 15% of its revenues; The Sol business require a high level of investments for long term growth options; In 2016 almost the 50% of the Group investments was made 0 0% outside Italy Capex % on sales 26

Shareholding information and market price Outstanding Shares 90.700.

Fumagalli and Annoni families 60% Source: Borsa Italiana Main

27 Shareholding information and market price Outstanding Shares ordinary shares par value: 0,52 Shareholding Structure Fumagalli and Annoni families 60% Source: Borsa Italiana Main Institutional Investors: Tweedy Brown 7,346% J O Hambro 5,072% Allianz 5,072% 27

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Company presentation Full year 2017

Company presentation Full year 2017 SOL Group at a glance Founded in 1927, is an Italian based multinational company present in 28 countries with more of 3,500 people employed. Two core, separated but