23. Dezember 2013 Information analysis Analysts Dr. Roger Becker, CEFA David Szabadvari +49 69 71 91 838-46, -48 roger.becker@bankm.de, david.szabadvari@bankm.de Valuation Result TEMPORARILY NO VALUATION (previous: not rated) Fair Value n.a. Restructuring in Phase 2 - Focus on securing Liquidity Sector WKN Special Chemistry 760860 In line with our expectation, the operating result at the end of Q3 is still weak. Given the short time for implementation, first positive results emerging from the restructuring process will materialize not until the end of the year. Key elements of the already initiated restructuring program are the realization of cost saving potentials e.g. by means of consolidation of locations as well as through a focus on market segments characterized by above-average growth such as private label and liquid detergents. Still, the liquidity situation is a matter of concern which is being clearly identified by the Company s management in the context of its quarterly report. More specifically, it is the method of financing through short term credit lines which are currently compensating for the negative operating cash flow. Therefore, a moratorium with the financial institutions has been put in place until the end of the fiscal year providing scope for negotiations of a sustainable financing concept. The amount outstanding in the context of the capital increase in June 2013, which was completely subscribed for by the principal shareholder, was fully paid in during Q3; this entailed a strengthening of the equity base during the 9M reporting period by 10 mln and resulted in an equity ratio of 22.7%. ISIN Bloomberg/Reuters Accounting standard Financial year Financial reporting 2013 DE0007608606 H4G GY/H4GG.DE IFRS Dec 31 Apr 30, 2014 Market segment Transparency standard Regulated Market Prime Standard Financial ratios 2010a 2011a 2012a EV/Sales 0.7 0.6 0.6 EV/EBITDA 11.2 8.7 9.2 EVEBIT 23.7 18.1 35.7 P/E adj. 55.5 17.8 126.2 Price/Bookvalue 1.9 1.5 1.5 Price/FCF neg. neg. neg. ROE (in %) 0.9 2.2 0.3 Dividend yield (in %) 0.0 3.1 0.0 Number of shares outs. (in ths) 51.5 MarketCap / EV (in mln) 74,1 / 183,2 Given the still continuing restructuring measures, we continue to refrain from a valuation of the stock. Free float (in %) 60,0 Ø daily trading vol. (3m, in ) 32,597 12 months high/low (in ; XETRA-close) 3,55 / 1,06 Price Dec 20, 2013 (in ; XETRA-close) 1.44 Key Earnings Figures Year Sales EBITDA EBIT EBT Net Profit EPS ( ) DPS ( ) EBIT- Margin Net- Margin 2010a 356.1 21.6 10.2 5.8 3.3 0.07 0.00 2.9% 0.9% 2011a 383.5 25.6 12.2 6.4 4.2 0.18 0.10 3.2% 1.1% 2012a 398.8 26.3 6.7 1.1 1.1 0.02 0.00 1.7% 0.3% 9M2013a 250.9-3.8-13.6-18.4-18.1-0.35 0.00 neg. neg. Source: HANSA GROUP AG, BankM Research Performance 1M 6M 12M absolute (in %) -7.2-53.4-45.5 relative (in %) -9.6-59.4-55.0 Benchmark index Daxsubsec. All Chemicals Specialty HANSA GROUP AG (red/light), Performance 1 year vs. Daxsubsec. All Chemicals, Specialty Performance (black/dark) Source: Bloomberg This document has been prepared due to a service agreement with the respective issuer. BankM Repräsentanz der biw AG is the designated sponsor of the company s stock and in this function as a designated sponsor regularly holds a trading stock or long or short positions in the company s stock. Equity investments generally involve high risks. Potential investors should take into account that share prices may fall and rise and that income from an investment may fluctuate considerably. Investors may lose some or all of the money invested. Investors make their decisions at their own risk. biw Bank für Investments und Wertpapiere AG, Willich, is responsible for the preparation of this document.
- 2/8 - Financial Analysis 23. Dezember 2013 Financial Analysis - First 9 months of 2013 - The group of companies included in the consolidated financial statements of the Hansa Group comprises HANSA GROUP AG, Genthin, Chemische Fabrik WIBARCO GmbH (since 2007), Waschmittelwerk Genthin GmbH (since 2009) and Luhns GmbH (since 2010). Sale of the commercial segment and Schlecker insolvency have pushed down sales Income Statement Following the sale of the commercial division, the business activities of HANSA GROUP AG are now divided into the two operating segments 1. Consumer Products (laundry detergents, cleaning agents, personal care products) 2. Chemicals (surfactants and precursors and intermediate products thereof) In the first nine months of the current financial year, sales at the Group level fell by 22.8% from 325.0 mln to 250.9 mln. This fall was largely attributable to the loss of the trading segment. The earnings before interest and taxes (EBIT) amounted to -13.6 mln and was thus significantly lower than in the previous year ( 11.9 mln). However, comparability is limited due to the sale of the trading segment last year which entailed an extraordinary gain. The earnings after taxes amounted to -18.1 mln, or -0.35 per share (previous year: 0.12 per share). Segment analysis During the reporting period, 44% ( 110.1 mln) of total consolidated sales were generated by the Consumer Products segment, and 56% ( 140.9 mln) by the Chemicals segment, with the share of total sales represented by retail products increasing significantly by 10% ppts. - at the expense of the Chemicals segment - as compared to the previous year. The majority of the Group s sales are generated in Germany and the European Community; Other foreign countries, with a 15% share of overall sales, have assumed more of a backseat role as a result of the sale of the trading division with its more international focus. Geographical Distribution of Segment Sales Others 15% Europ. Union (ex D) 36% Germany 49% Source: HANSA GROUP AG
23. Dezember 2013 Financial Analysis - 3/8 - Income Statement Fiscal Year 31.12 (IFRS) 2010a 2011a 2012a 9M/2012 9M/2013 in T Total Sales 356,140 383,459 398,801 325,010 250,946 Other operating income 14,475 4,085 31,265 6,652 3,608 Changes in inventory 1,136 3,122-6,932 2,480-1,583 Other own work capitalized 757 1,842 426 422 2 Cost of materials 269,258 274,500 301,587 232,689 191,222 in % of total sales 75.6 71.6 75.6 71.6 76.2 Personnel expenses 30,828 34,972 33,319 25,897 24,060 in % of total sales 8.7 9.1 8.4 8.0 9.6 Other operating expenses 50,851 57,485 62,366 48,779 41,449 EBITDA 21,570 25,551 26,287 27,199-3,757 in % of total sales 6.1 6.7 6.6 8.4-1.5 Depreciation and amortization 11,355 13,320 19,539 15,290 9,849 in % of total sales 3.2 3.5 4.9 4.7 3.9 EBIT 10,215 12,232 6,748 11,910-13,607 in % of total sales 2.9 3.2 1.7 3.7-5.4 Interest income 1,316 98 733 64 929 Interest expense 5,699 5,763 6,342 4,144 5,686 Writedowns on financial assets 0 130 0 0 0 EBT 5,832 6,436 1,139 7,829-18,363 in % of total sales 1.6 1.7 0.3 2.4-7.3 Taxes on Income (Exp.+/Inc.-) 2,581 2,208-4 2,228-264 Net profit 3,251 4,228 1,143 5,602-18,099 in % of total sales 0.9 1.1 0.3 1.7-7.2 Adjustements 0.0 4,216.0 0.0 0.0 0.0 Adjusted net profit 3,251 8,444 1,143 5,602-18,099 in % of total sales 0.9 2.2 0.3 1.7-7.2 No. of shares (Ø outstanding) 48,078 48,078 48,078 48,078 51,503 Net profit / share (EPS) 0.07 0.09 0.02 0.12-0.35 Adj. net profit / share (adj. EPS) 0.07 0.18 0.02 0.12-0.35 Source: HANSA GROUP AG, BankM Research Cash Flow Statement Changes in cash and cash equivalents having an effect on cash flow amounted to -11.5 mln as of the balance sheet date (September 30, 2013). These primarily related to negative operating cash flow in the amount of -13.9 mln and the repayment of loans in the amount of 7.0 mln, which could be serviced as a result of the capital increase. The proceeds from the capital increase are now fully paid in at the amount of 10 mln, hence the account receivable of 4.8 mln, still outstanding at the end of Q2, was released. Total cash and cash equivalents amounted to -29.1 mln as of the end of the first nine months of 2013. Liquidity is ensured by means of cash inflows from advance financing of liabilities (reverse factoring), structured ABS products and drawdowns on overdraft facilities. The Company has credit lines in the amount of 36.6 mln at its disposal, the Company s available liquidity amounts to 7.6 mln as of September 30, 2013. We would like to point out that payment of the overdrafts could fall due on short notice and thus give rise to a strain on liquidity. On the whole, we do not consider Cash and cash equivalents 9M2013: -29.1 mln; available liquidity: 7.6 mln
- 4/8 - Financial Analysis 23. December 2013 this form of external financing to be efficient in the long term and thus assume that the Company s management board will in the medium term endeavor to reduce the amount of the overdrafts, possibly by means of further equity financing measures and/or medium- to long-term debt instruments, with a view to managing potential liquidity shortages. Therefore, a moratorium with the financial institutions has been put in place until the end of the fiscal year providing scope for negotiations of a sustainable financing concept. We believe that the restructuring measures will bring about improvements in the Company s cost structures, which will in turn boost its liquidity. Cash Flow Statement Fiscal Year 31.12 (IFRS) 2010a 2011a 2012a 9M/2012 9M/2013 in T Net profit 3,251 4,228 1,143 5,602-18,099 + Depreciation and amortization 11,355 13,320 19,539 15,290 9,849 + Chg. in long-term provisions 2,268-1,341-1,540 3,179-1,902 = Cash Earnings 16,874 16,206 19,142 24,070-10,152 +/- Other non-cash items -9,255-1,639-37,245-111 -1,091 - Chg. in net working capital -22,312 2,741 323 38,196 4,319 - taxes paid 0 11,053 2,392-2,220 480 = Operating Cash Flow 29,931 775-20,817-11,795-13,861 - Capex 31,866 21,216 4,544-1,133 663 = Free Cash Flow -1,934-20,442-25,361-10,662-14,524 + Other net items 0 11,355 5,000-6,355 0 - Dividends (previous year) 0 0 4,808 4,808 0 + Increase in share capital 0 0 0 0 10,000 +/- Bank loans 28,494 3,371-2,166-9,481-6,977 = Incr. in Cash (+)/Decr. in Cash (-) 26,560-5,716-27,335-31,305-11,500 Source: HANSA GROUP AG, BankM Research Fall in balance sheet total to 372 mln, insufficient equity-tofixed-assets ratio Balance Sheet The balance sheet total fell by 8% from 405 mln to 372 mln. The equity-tofixed-assets ratio is insufficient: only 73% of the non-current fixed assets is covered by long-term capital. This makes it necessary to further strengthen the equity base and, preferably, to replace very short-term financing instruments with longer-term debt. Equity ratio of 22.7% The equity ratio has fallen from 23.1% to 22.7% and as such is significantly below the industry average, which in recent years has consistently been between 31.7% (2010) and 35.0% (2011). The abovementioned restructuring measures could contribute to improving the balance sheet performance.
23. Dezember 2013 Financial Analysis - 5/8 - Balance Sheet Fiscal Year 31.12 (IFRS) 2010a 2011a 2012a 31.12.2013 9M/2013 in T Assets Tangible assets 208,209 217,325 202,823 202,823 195,138 Intangible assets 45,556 43,105 39,839 39,839 38,343 Deferred tax 931 2,148 540 540 512 Other fixed assets 1,294 1,308 28,422 28,422 28,909 Total Fixed Assets 255,990 263,886 271,623 271,623 262,900 Inventories 42,115 41,396 31,680 31,680 27,517 Accounts receivable 23,595 36,613 44,083 44,083 46,680 Total liquid funds 27,045 34,125 22,126 22,126 7,640 Other current assets 22,864 29,744 35,546 35,546 26,982 Total Current Assets 115,620 141,878 133,435 133,435 108,819 Balance Sheet Total 371,611 405,764 405,058 405,058 371,720 Shareholder's Equity / Liabilities Subscribed capital 48,078 48,078 48,078 48,078 51,503 Share premium 6,532 6,532 6,532 6,532 13,107 Retaine earnings 39,367 43,864 38,850 38,850 19,738 Shareholders Equity 93,976 98,474 93,460 93,460 84,348 Long term liabilities 97,291 104,431 107,077 116,050 117,552 t/o Provisions 8,689 8,434 10,300 10,300 11,976 t/o Pension provisions 6,988 7,024 8,973 8,973 10,598 t/o Interest bearing 41,482 52,082 54,947 62,070 61,237 t/o Deferred tax 47,120 43,915 34,706 34,706 33,740 t/o other 0 0 7,123 0 0 ST Liab. < 1 year 180,343 202,859 204,523 204,522 180,418 t/o Acc. payable & pre-paymts. 72,384 98,695 106,644 106,644 102,308 t/o Tax payable 7,810 6,124 8,568 8,568 5,035 t/o Bank loans 48,373 53,063 63,429 63,522 59,601 t/o other current liabilties 51,776 44,977 25,882 25,789 13,475 Total Liabilities 277,634 307,290 311,599 311,599 287,372 Balance Sheet Total 371,611 405,764 405,058 405,058 371,720 Source: HANSA GROUP AG, BankM Research
- 6/8 - Important information, disclosures and disclaimer 23. December 2013 Important information, disclosures and disclaimer A. Important information Equity investments generally involve high risks. Investors may lose some or all of the money invested. Potential investors should take into account that share prices may fall and rise and that income from an investment may fluctuate considerably. Past performance is no guarantee for future results. Investors make their decisions at their own risk. B. Disclosures according to Section 34b of the German Securities Trading Act (WpHG) and the Ordinance on the Analysis of Financial Instruments (FinAnV): I. Information about author, company held accountable, regulatory authority: Responsible for the content of this document: biw Bank für Investments und Wertpapiere AG, Willich, Germany. Authors: Dr. Roger Becker, CEFA and David Szabadvari, Analysts Regulatory authority for biw Bank für Investments und Wertpapiere AG is the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Graurheindorfer Straße 108, 53117 Bonn, Germany and Lurgiallee 12, 60439 Frankfurt am Main, Germany. Issuer of the analyzed instruments is HANSA GROUP AG. Notice according to sec. 4. 4 N o 4 FinAnV (previous publications regarding the issuer within the last 12 months): II. Additional Information: Analysts Date Evaluation result Fair value Dr. Roger Becker, David Szabadvari November 19,.2013 no valuation n.a. 1. Sources of information: Main sources of information for the compilation of this document are publications in national and international media and information services (e.g. Reuters, VWD, Bloomberg, dpa-afx and others), financial newspapers and magazines (e.g. Börsenzeitung, Handelsblatt, Frankfurter Allgemeine Zeitung, Financial Times and others), specialist media, published statistics, rating agencies as well as publications by peer group companies and the company itself. Furthermore talks with the management of the issuer have been held. This document was made available to the issuer before publication to ensure the accuracy of the information provided. This resulted in some textual changes. 2. Summary of the valuation principles and methods used to prepare this document: BankM Repräsentanz der biw Bank für Investments und Wertpapiere AG uses a 3-tier absolute rating model. The ratings are the evaluation results and refer to a fair value pricing reflecting a time-horizon of up to 12 months. BUY: The calculated fair value of the company s stock is at least 15 % higher than the current market price at the time of the compilation of this document. NEUTRAL: The calculated fair value of the company s stock lies between 15% and +15 % of the current market price at the time of the compilation of this document. SELL: The calculated fair value of the company s stock is at least 15 % lower than the current market price at the time of the compilation of this document. The following valuation methods are being used: Multiple-based models (Price/Earnings, Price/Cash-flow, Price/Book value, EV/Sales, EV/EBIT, EV/EBITA, EV/EBITDA), peer-group comparisons, historical valuation approaches, discount models (DCF, DDM), break-up value and sum-of-the-parts-approaches, assetbased evaluation methods or a combination of the above. The used valuation models depend on macroeconomic factors, such as interest rates, exchange rates, raw materials and on basic assumptions about the economy. Additionally, market sentiment affects the valuation of companies. The valuation is also based on expectations that might change rapidly and without notice, depending on developments specific to individual industries. Rendered evaluation results and fair values derived from the models might therefore change respectively. The evaluation results in general relate to a 12-month horizon. However, evaluation results are subject to changing market conditions and represent only the situation at a given point of time. The evaluation results and fair value prices may in fact be achieved more quickly or slowly than expected by the analysts. Also, the evaluation results and fair value prices might need to be revised upward or downward. 3. Date of first publication of this document: December 23, 2013 4. Date and time of prices of the instruments quoted in this document: Closing prices of December 20, 2013 5. Updates: A specific date or time for an update of this document has not been set. The information given in this document reflects the author s judgement on the date of this publication and is subject to change without notice; it may be incomplete or condensed and it may not contain all material information concerning the company covered. It is in the sole responsibility of BankM Repräsentanz der biw Bank für Investments und Wertpapiere AG to decide on a potential update of this document. III. Disclosures about potential conflicts of interest: 1. BankM Repräsentanz der biw Bank für Investments und Wertpapiere AG s business model is based on economic relationships with issuers and equity transactions to be performed relating to the issuer s stock. BankM Repräsentanz der biw Bank für Investments und Wertpapiere AG has entered into an agreement about the preparation of this document with the issuer that is, or whose financial instruments are, the subject of this document.
23. Dezember 2013 Important information, disclosures and disclaimer - 7/8 - BankM Repräsentanz der biw Bank für Investments und Wertpapiere AG (incl. subsidiaries and affiliates) as well as tied agents of biw Bank für Investments und Wertpapiere AG in connection with the activities of BankM Repräsentanz der biw Bank für Investments und Wertpapiere AG, the authors of this document as well as other persons that were involved in the compilation of this document or affiliated parties: do not have a major shareholding (shareholding exceeding 5%) of the share capital of the issuer, have not, within the past twelve months, participated in leading a consortium for the issue via public offer of the financial instruments that are, or whose issuers are, the subject of this document, have not, within the past twelve months, been party to an agreement on the provision of investment banking services with the issuer that is, or whose financial instruments are, the subject of this document, or have received services or a promise to perform under the terms of such an agreement during the same period, have no other significant economic interests relating to the issuer that is, or whose financial instruments are, the subject of this analysis. 2. In the function as a designated sponsor, BankM Repräsentanz der biw Bank für Investments und Wertpapiere AG manages the financial instruments that are, or whose issuers are, the subject of the financial analysis on a market by placing buy or sell orders and will regularly hold a trading stock or long or short positions in the issuer s stock. 3. BankM Repräsentanz der biw Bank für Investments und Wertpapiere AG s internal organization is aligned with the prevention of conflict of interests in producing and distributing research reports. Possible conflicts of interests will be treated adequately. In particular, physical and non-physical boundaries were installed to keep analysts from gaining access to information that possibly could constitute a conflict of interest for the bank. biw Bank für Investments und Wertpapiere AG keeps insider registers according to sec. 15 WpHG for employees and assignees that normally have access to inside information. These registers will be transmitted to BaFin on request. Insiders dealings according to sec. 14 WpHG categorically are prohibited. Staff members that fill a specific position and have access to inside information categorically have to disclose all dealings in financial instruments to the internal compliance department. The compliance of legal requirements and supervisory regulations is subject to continuous supervision and control of the compliance department of biw Bank für Investments und Wertpapiere AG. In this regard, the right to restrict employees dealings in financial instruments is reserved. 4. The remuneration of the analysts mentioned above is not dependent on any investment banking transactions of BankM Repräsentanz der biw Bank für Investments und Wertpapiere AG or its affiliates. The analysts that compiled this document did not receive or acquire shares in the issuer that is, or whose financial instruments are, the subject of this document at any time. 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- 8/8 - Important information, disclosures and disclaimer 23. December 2013 This document is subject to the laws of the Federal Republic of Germany. Place of jurisdiction is Frankfurt am Main, Germany. Should certain specifications of this disclaimer not be legally binding or become legally non-binding, this will have no impact on the legally binding character of this disclaimer and its other legal specifications. This document is not intended for use by persons resident in any jurisdiction that regulates access to such documents by applicable laws. Investment decisions must not be based on any statement in this document. Persons in possession of this document should inform themselves about possible legal restrictions and observe them accordingly. In case of uncertainty persons should not access and/or consider the content of this document in any decisions. This document is not intended for use by persons that are classified as US-persons under the United States Securities Act. 2013 BankM - Repräsentanz der biw Bank für Investments und Wertpapiere AG, Mainzer Landstraße 61, D-60329 Frankfurt. biw Bank für Investments und Wertpapiere AG, Hausbroicher-Straße 222, D-47877 Willich. All rights reserved. This document is a translation of the legally binding German original version of December 23, 2013.