Sequana overview. June 2015

Sequana overview

A Group focused on the paper market

Production

B2B distribution



€ 2.6bn

in sales



#1 in Europe, #2 worldwide



Operations in

44 countries



1.8 million tonnes

of paper distributed

in 2014



118

distribution centres



More than

5,500

employees



€ 1 bn

in sales



World leader

in technical and

creative papers



High-profile brands

including

Conqueror, Satimat green, Cyclus,

Cocoon, Rives



670,000 tonnes

of paper produced

in 2014



18

production and converting facilities



Nearly

4,000 employees

€3.4 bn sales in 2014

~ 1/4

~ 3/4

A unique positioning in the paper industry



A differentiated positioning on the industry value chain



Optimizing synergies between Arjowiggins and Antalis

 Recycled pulp producers  Not involved in virgin pulp production  Specialty papers (incl. recycled)  Graphic papers  Paper merchants

Raw materials Pulp production

Paper production

Distribution/

converting Printing End users

 Supply chain optimization

 Breadth of product offering

 Enhanced service quality

 Lead time and working capital

 Capacity optimization

 Planning and commercial efficiency

 Insight of end-markets to adapt Arjowiggins’ offering

€1 bn sales

1/4 of group’s sales 3/4 of group’s sales €2.6 bn sales

€ 0.2 bn sales The only integrated recycled pulp and

Arjowiggins – 2014 Sales

Antalis – 2014 Sales

A diversified profile in terms of geographies

and business mix

Balanced portfolio

(excl. France & UK) 34 % Asia 20 % Rest of the world 12 %

Western Europe (excl.France

& UK) 41%

Rest of the world

9 % Eastern Europe 12 % UK 25 % France 13 % Print 60 % Packaging 12 % Office 22 % By region Visual Com. 6 % 

Present in 44 countries

on four continents

Broad product offering

More than 120,000 clients



19 production

and converting

facilities in Europe, Asia, US

and LatAm



Large spectrum of businesses

with different dynamic and

end-market

(1) Including Arjo Wiggins Ltda (Brazil) sold to Fedrigoni Group

Antalis Overview

A distribution group leader in its markets

(1) Source: Company estimates

Key Products FY2014 Sales (% of total)

Market Position (1)

(Europe)

Print

 Coated and uncoated papers

 Specialty and creative papers

 Envelopes

 Graphic supplies

€1,540m

(60%) #1

Office  Paper and envelopes €580m

(22%) #1 Visual Communication  Board  Plastics / Adhesives  Paper €166m (6%) One of the leading distributors in Signage and POS segment Packaging  Consumables  Machines  Bespoke solutions €298m (12%) #2

Global reach



Present in 44 countries, including 28 in Europe



1.8 million tonnes of paper sold in 2014



Close to 14,000 deliveries per day worldwide

2014 sales breakdown

by geographic area

9%

France 13%

Western Europe (excl. France & UK)

41%

UK 25%

#2 #2 #1 #1 #4 #1 #1 #2 #3 #1 #2 #2 #2 #1 #2 #1 #2 #2 #1 #2 #4 #3 #1 #1 #2



Critical mass in Europe



Present in 28 European countries



Approximately 20% market shares

in Europe

European leader

*

Arjowiggins overview

A global leader in specialty papers

Key Products Market position(3) FY2014 Sales

(% of total)

Graphic

 Recycled pulp and papers

 Specialty products (transfer, laminated, tissue, sterilisation packaging..)

 Standard coated and uncoated papers

#1 European recycled graphic paper

#1 worldwide in medical and hospital papers

€499m (49%)

Security

 Banknote paper Europe & Brazil (1)

 Identity and access control solutions (2)

 Brand protection and product traceability solutions (2)

#1 globally in banknote paper #3 globally in synthetic paper

(Arjobex)

€272m (27%)

Creative Papers

 Premium fine papers

 Paper for specialty applications (tracing papers, priplak)

 Papers for printed electronics

 Secure payment solutions ( cheques, vouchers,...)

#1 globally in premium fine paper #1 globally in tracing paper

€249m (24%)

(1) Brazil (Sales: €70 M): sold to Fedrigoni Group in May 2015

(2) 85% of Arjo Systems and Arjowiggins Solutions (Sales: €54 M) currently being sold to Impala Group

18 production and converting facilities

Coated & specialty Deinked pulp (DIP)

Quzhou Security Creative Paper Crèvecoeur Apeldoorn Clacton (Arjobex)

Rives (Arjobex) &Charavines Brno Palalda Bessé Wizernes Le Bourray Château Thierry Stoneywood Chartham Priplak Gelida

Arjowiggins overview

A global leader in specialty papers

Rest of the World

12%

USA

5%

France

16%

UK

13%

Europe

(excl. France & UK)

34%

Asia

20%

Sales by division

Sales by geographic area

Coated 28% Green 38% Speciality 34% Creative Papers 24% Security 27% Graphic 49%

Group restructuring plan announced on

10 April 2014

Arjowiggins

•

Refocusing on speciality segments

with leadership positions

•

Exit from loss-making businesses and

simplification of industrial footprint

•

Back to positive cash flow generation

Antalis

Sequana

•

Continued acquisition plan in high

growth segments and geographic

areas

Strategic & industrial pillar

The group’s industrial and financial plan enables it to pursue its long term development

by repositioning it on promising segments and strengthening its financial structure

•

Credit facility restructuring from €400m

down to €125m

•

Maturity extension of reinstated debt

until end 2020

•

Rescheduling of repayments and

lighter covenants

•

Debt maturity extended to end 2018

•

Significantly improved financial

flexibility (maturities, covenants and

acquisition baskets)

•

Partial refinancing through a factoring

programme (€200m out of €520m)

•

€64m rights issue

•

Reduction of credit facilities from €26m

down to €10m

Financial pillar

Sustainability

secured by a

refocused business

and a stronger

balance sheet

Continued growth

potential and

diversified sources

of financing

Lighter financial

structure

Outcome

Strategic plan in line with the Group’s targets

Industrial &

financial

restructuring

•

Disposal of Appleton Coated (US)



•

Disposal/closure of Wizernes and Charavines mills



•

Factoring programme at Antalis for €200 M



•

Disposal of Arjo Wiggins Ltda



Continued

deleveraging

•

Reimbursement of Arjowiggins’ syndicated loan of €125 M:





Sale of 85% of Arjo Systems and Arjowiggins Solutions to Impala



In compensation for a debt write-off of €110 M and

cash repayment of the balance

•

Change in Sequana’s financial structure:





Reimbursement of the Holding’s reinstated debt of €10 M



Proposal to the next AGM for early equity conversion of ORNANE

and ORA notes respectively entitling to 20.0% and 1.67% of the share

capital post redemption

A stronger balance sheet

€ millions

31 Dec.

2014

Goodwill

Property, plant & equipment and intangible assets

Other fixed assets

Operating WCR

Other current assets (liabilities)

Assets (liabilities) held for sale

Total assets

Shareholders’ equity

Non-controlling interests

Provisions

Net debt

Total equity and liabilities

378

295

219

296

(142)

79

588

-

226

311

1,125

1,125

31 Dec.

2013

438

321

130

261

(139)

20

321

-

173

537

1,031

1,031

Impact of

refinancing

Reduction in net debt

Reduction in leverage ratio (net debt/EBITDA)

Reduction in gearing ratio (net debt/equity)

Enhanced financial structure

Consolidated net debt at 31 December 2013 Consolidated leverage at 31 December 2013 Consolidated gearing at 31 December 2013

€537m

1.7x

4.6x

Consolidated net debt at 31 December 2014

€311m

2.5x

0.5x

Green 38% Coated 28% Specialty 34%

Distribution of paper and packaging products

(Antalis)

No. 1 in Europe and no. 2 worldwide

Antalis sales by division

(€2,585m)



No. 1 in printing papers in Europe

No. 1 in office papers in Europe



No. 2 in distribution of packaging products

Sequana: a stronger profile

Production

(Arjowiggins)

World leader in technical and creative papers

Arjowiggins sales by division

(€1,020m)



No. 1 in creative papers worldwide

No. 1 in banknote papers worldwide

No. 1 in recycled papers in Europe

Two businesses

Sequana: a stronger profile

Antalis

Traditional markets

(print and office papers)

:



Active player in consolidating an industry where

Antalis is already leader, in order to strengthen its

market positions



The acquisition of Xerox’s distribution business

has strengthened Antalis’ leadership in office

papers and digital print media

Fast-growing, more profitable markets and

regions

(Packaging, Visual Communications, emerging

markets)

:



Growth based on targeted acquisitions



Packaging and Visual Communications

accounted for 32% of Antalis’ gross margin in

2014



Increased profitability in emerging markets

Arjowiggins

Printing and writing paper businesses

refocused on specialty activities



Focus on recycled papers where the Group is the

European leader



Leadership strengthened in creative papers

thanks to the new-look business model and leaner

manufacturing facilities

A group focused on profitable markets



On a pro forma basis, once the transformation plan

has been completed, around 95% of sales will be

delivered by the specialty businesses

Ownership structure

Voting rights

Ownership structure as of 30 April 2015

DLMD

(incl. Pascal Lebard)

3.28%

8.06%

19.68%

0.19%

68.79%

(incl. Pascal Lebard)

4.78%

8.64%

19.08%

67.50%

Ownership structure as of 30 April 2015

Capital stake acquisition by Impala Group



Amended terms of ORA and ORNANE notes submitted for approval to the

Shareholders General Meeting of June 2015



Capital dilution reduced from over 30% down to 20% for the benefit of shareholders



The Impala Group would become one of the main shareholders with a long-term

equity stake of 10% minimum in Sequana’s share capital

Pre-transformation

Post-transformation

Number of shares in % of post-redemptioncapital in % of issued capital Number of shares in % of post-redemptioncapital in % of issued capital Share capital at 30 July 2014 51,060,304 66.50% 51,060,304 78.33%

ORA 1,979,040 2.58% 3.88% 1,086,377 1.67% 2.13%

ORNANE 23,748,750 30.93% 46.51% 13,036,670 20.00% 25.53%

1.

Introduction

2.

Résultat et Bilan Consolidés

3.

Activité des Filiales

4.

Stratégie et Perspectives

Sommaire

Présentation

PowerPoint

Appendix

Steady market deterioration since 2008

The printing & writing paper market, Arjowiggins’ main market segment in volume,

has been deteriorating steadily since 2008



The printing & writing market has been structurally declining (internet, digital media)



Volume drop ca. 8% per annum in Europe since 2008



The economic crisis has accelerated the decline in volumes and leads to a

deterioration of our product mix and margins in the fine paper segment.



Raw material prices (pulp, chemicals, energy) remain high, thereby pressuring

margins



Overcapacities on the market

(15-20%) are causing strong pressures on selling

prices

The pace of volume decline has accelerated in 2013



Decline in volumes sharper than expected by the various market operators

Key milestones of the Group’s strategy

Consolidation of

Map into Antalis

Divestment of non strategic assets

& contribution to

market consolidation

process

- Promotional

Products - Office Supplies

- Decor / Abrasive - Moulin du Roy - B. Dumas - Decor Paper Asia

- Carbonless - AWA Ltd (exit Fox

River envir. claim) - Antonin _Rodet • Greater Autonomy of

Branches, Corporate downsizing • Restructuring of

Carbonless

Strategic Plan roll-out and cost-cutting measures driven by fall in demand • Arjowiggins: Capacity cuts

• Antalis: cost reduction plans stepped-up

•Closures – Witcel (1 machine - Argentina), Rives (France) •Shorter working time

arrangements, etc.

€180m cost savings

over 2 years (2009 vs. 2007)

Antalis RACE 2012 Program Roll-Out Packaging & Visual com. acquisitions

Arjowiggins’

Green Paper strategy

and development of

Specialty activities

-Casting

-US Coated exit

• Closures - Dalum (Denmark) Witcel (Argentina), Ivybridge (UK) Xerox DNA Initiative • Appleton US restructuring & cash protection plan 2009

Key highlights of the industrial restructuring plan

Graphic

Creative Papers

Exit from US

Coated

 Change of economic model to capture market shares and bolster leadership position

 Simplifying the product range and increasing the size of production runs

 Targeted sales and marketing effort toward emerging countries and promising sectors (e.g. labelling, luxury packaging or specialty papers)

 Improving the efficiency and competitiveness of the production equipment

 Production concentrated in a limited number of sites

 Launch of a disposal process for the Charavines mill (France) and ultimately, transfer of production from Charavines to Stoneywood (UK)

 Refocusing the Gelida mill (Spain) on the book binding market

 Optimising industrial facilities in the Tracing paper business

 178 jobs affected by the reorganisation project

 Production concentrated in a limited number of sites in France

 Launch of a disposal process for the Wizernes mill (France) and ultimately, transfer of production from Wizernes to Bessé mill

 Selective focus on the most profitable clients and countries in standard coated paper

 Boosted leadership of Arjowiggins Graphic in recycled graphic papers

 Building of a de-inking plant (€30m) at Bessé mill (France), expected to be operational in mid-2016, to make the site self-reliant in recycled pulp

 Greenfield: recycled pulp production for Arjowiggins Group and external clients

 307 jobs affected by the reorganisation project

 Disposal process for the non-core and loss-making US Coated division following a substantial savings programme conducted in Q4 2013

11%

5%

19%

27%

37%

40%

60%

80%

2013A

2013PF

Specialties

(P&W)

US standard coated

Europe standard coated

11%

5%

19%

20%

40%

80%

US standard coated

Europe standard coated

Arjowiggins: revenue split pre- and post-restructuring

Arjowiggins: Revenue breakdown pre- and post-restructuring

Arjowiggins: % of sales in standard coated

Arjowiggins: % of sales in printing & writing

Green and Recycled (Graphic), Fine, Tracing, Binding (AWCP)

31%

5%

57%

42%

The restructuring of Arjowiggins’ printing & writing activities will enable it to reduce

its exposure to standard coated paper and to focus on specialty segments where it

is a market leader



The share of commodity segments (standard coated) will go down from around 30% in 2013

(including US Coated) to around 5% pro forma



AW’s exposure to the printing & writing segment will go down from nearly 60% to around 40%

Milestones in the implementation of the

transformation plan

Industrial restructuring plan to be completed shortly



Definitive exit from the US Coated Paper market with the disposal of Appleton Coated in

December 2014



Restructuring of printing and writing paper operations in Europe being finalised:



For lack of a viable takeover project, the Wizernes and Charavines mills will cease their

production at the end of the first half-year 2015



Employment Protection Plan (“PSE”) procedures finalised at the end of April 2015

Decisive steps recently finalised in the turnaround of Arjowiggins



Disposal of Arjo Wiggins Ltda (Brazil) to the Fedrigoni Group for an enterprise value of

€85 million in May 2015



Arjo Wiggins Ltda , producing mainly banknote paper in Latin America, has annual sales of

around €70 million



Sale of 85% of Arjo Systems and Arjowiggins Solutions (brand protection and access

control solutions businesses) to the Impala Group



Debt write-off of €110 million and reimbursement of the debt balance

On completion of these transactions, Arjowiggins will be fully released of its debt and

will benefit from bolstered financing capacities.

A strategic plan that repositions the Group from

both an operational and a financial perspective

A refocused group enjoying a

robust balance sheet, competitive industrial and distribution

setup

and

the means to take part in market consolidation

Strategic /

Industrial

•

Refocusing on specialty activities

•

Strengthened leadership in recycled graphic

papers and high potential creative papers

•

Streamlined industrial footprint

Financing

Conclusions

•

Reduced debt through write-offs and

conversions into quasi-equity

•

Extended maturities and rescheduled

repayments

•

Lighter covenants

•

Refocused activity, cash generative again

•

Adequate financial structure

Arjowiggins

•

Continued growth through acquisitions in

growing segments and geographic areas

•

Set up of factoring programme

•

Extended maturities and rescheduled

repayments

•

Lighter covenants

•

Preserved resources to support growth

•

Diversification of financing sources

Antalis



+33 1 58 04 22 80



[email protected]