Royal Wessanen

What Was Sowed Was Not Reaped

Wessanen is currently trying to expand in the organic food market. In the past it has had bad results
due to internal factors, like bad performance from their subsidiaries, and external factors like 2009
crisis. In recent years it has been able to turn these results around by making selective acquisitions,
Sell
following their strategy to focus on the European market, lowering their debt and overall being more Target: EUR
profitable. However, a discounted OFCF valuation model gave us an intrinsic value of the stock of 14.36
€14.36, meaning it is currently overvalued. Also taking into consideration the volatility of their Price:
revenues in the past, their dividend payment to investors is low and doesn’t compensate for this risk. EUR 17.29
We therefore we advise to SELL the stock. Potential: 16.94%

Wessanen’s mission is to produce healthier food, healthier people and a healthier planet as a European leader in the sustainable food market.
Let’s see if they are able to produce healthy financial results as well.

European market:

We can see Wessanen has had a turbulent past, affected by divestments of their
subsidiary and a fraud case and also by the economic crisis. Nevertheless, Wessanen is
stabilizing and even showing positive results, with revenues increasing up to 9.8% in
2017. This growth is also boosted current trend of high growing rate of the organic
European food market. Students

However, upon further analysis we found some red flags that warn us against investing Jesper Heslenfeld
in the company:
ID1 500682690
Low dividend yield:
Wee Lin Tan
Even when Wessanen has been outperforming and improving their results, this increase
ID2 500792513
in net income has not yet trickled down to their investors.
Berenice Martínez
Intrinsic value:
García
Using a discounted operating free cash flow model, we found that the current intrinsic
ID3 500792929
value of the stock is €14.36, while their market price is currently €17.29. Meaning that
the stock is overvalued, and the price will eventually drop to reflect the company’s true Fernando Valdés Uribe
intrinsic value
ID4 500792932

Date: May 20th, 2018.

Table of contents

1. 3
1.1 Report writing guidelines: 3
2. 10
3. 16
4. 26
Financial tables 7
Appendices 9
Bibliography 9

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 1. Company and Market
Current Situation
Wessanen, multinational food company with a focus in organic food, has many of leading
brands in their portfolio and has its operations based in the Europe, making it one of the key
players in the European organic food industry. Over the years, Wessanen has been showing
relatively positive results in terms of their financial performance. Hence, in this section, we will
make use of SWOT analysis framework to further analyze how the external and internal factors
have played a part in Wessanen’s past financial performance.

SWOT analysis
Strengths
Analyzing the internal environment of Wessanen reveals some strengths that can bring
Wessanen profit and an advantage in comparison to its competitors.

Portfolio of leading organic brands

The portfolio of brands of Wessanen consists of many leading brands which are holding
number 1 or 2 positions across key European markets. Having strong brands as Zonnatura,
Bonneterre and Allos, gives Wessanen a strong position and more certainty, different from a
company who has a portfolio that consists of brands that still have to develop and grow. This
strong portfolio gives Wessanen more power and certainty in comparison to competitors with a
portfolio with fewer or less strong brands.

Recovering financial performance

First of all, we can see that the financial performance of Wessanen has improved since 2014
after some difficult and disappointing years. Due to these positive financial results, Wessanen
has more possibilities to invest in new brands and companies that fit in the strategy and can add
scale in the core categories. Also, the probability that investors are willing to invest in Wessanen
is increasing when financial results are improving.

Speed to market
As mentioned in the annual report of 2017, another strength of Wessanen is its speed to
market. Innovation is very important for Wessanen to keep being in front of their competitors
and maintaining their leading position. When there is a lot of effort in innovation, speed to

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market is very important to be able to add new products to the market really quickly and not to
miss any sales.

Sales Operating Margins Earnings

● In general, leading The operating margin of ● Due to a portfolio

brands will sell more Wessanen with a portfolio of of leading organic
and in a more stable leading brands, is generally brands, the
trend in comparison higher than a competitor that has earnings will
to a portfolio that brands that still have to develop increase because
consists of brands themselves. This is due to the sales are high
which are relatively relatively more promotion costs as explained under
new for a company with a portfolio of ‘Sales’.
● Recovering financial relatively new brands. Leading ● Earnings will
performance does brands will gain more revenues increase when
not influence the as well. investing in brands
sales directly, but Stable financial performance that fit in the
investing in gives room to invest in new strategy of
successful new brands and gives chance to Wessanen.
brands can increase improve (operating) margins ● Speed to market
sales will increase
● Bringing new earnings due to
products and the increase in
innovations fast to sales
the market will
increase sales

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Weaknesses
After analyzing the internal environment of Wessanen, a few weaknesses can be noticed as
well. Wessanen has to look at these weaknesses and try to eliminate them.

Long-term unstable financial results

When looking at the financial results of Wessanen on the long term, we can see that the
financial results are very unstable and fluctuating over the years. This will probably discourage
investors from investing in Wessanen as a lot of investors are looking for stable companies
which are normally less risky. Other stakeholders, for instance suppliers, will take less risk in
contracts and decisions that are dependent of the financial performance of Wessanen. This
gives Wessanen disadvantage when negotiating about for instance contract terms.

Relatively new strategy

As we explained earlier in this report, Wessanen has changed its strategy to improve their
disappointing results. Despite the improving results of the last couple of years there will still be
some investors and other stakeholders who are very cautious because of the uncertainty
whether the relatively new strategy will function on the long-term, having the fluctuating results
from the years before still in mind. In addition, implementing a new strategy will take time.

Limited position outside Europe

Due to the new strategy, Wessanen focuses only on the European organic market instead of
having subsidiaries in the UK and the US as before. Result of this focus strategy means more
dependency in one market instead of dividing it’s focus over several markets. This is riskier,
because if the European market collapses due to a certain event, Wessanen will be hit madly as
one of the leading companies in this market. Companies that have spread their portfolio of
brands of different markets or different parts of the world, won’t face this risk. Same as the
weaknesses above, this could scare investors from investing in Wessanen.

Sales Operating Margins Earnings

● Only focusing on ● New strategy can ● In first instance the

the European decrease operating new strategy will
market will margins when cause a decrease in
decrease sales in disposing subsidiaries earnings due to the

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 first instance. in markets that have disposals of
However, on the good results. subsidiaries.
long term it can ● Unstable financial
increase sales results will decrease
when having a margins as it will take
bigger market effort and cost to
share. increase those results.

Opportunities
Continued strong growth in the organic food industry
According to Rabobank Research report, the European organic food industry is expected to
continue its strong growth.

Exhibit 1a: Infographics on the growth in the EU’s organic market

(European Parliament, 2018)

Organic food sales in Europe has increased from €20.8 billion to €30.7 billion from 2012 to 2016
as seen in Exhibit 1 and it is forecasted to grow further by 6.7% until year 2025. With a growing
awareness of the various health benefits of organic food products, there has been a rising
consumption of organic food for the past few years. Consumers are more willing to pay a premium
for the superior quality and the taste of organic food products as well as their certified ‘safeness’.
This then drives the demand for organic food products, presenting more business opportunities
for Wessanen

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Innovation leading to wider variety of products
For a company to remain sustainable, having a strong and stable long-term growth is really
crucial. In order to realize long-term growth, there is a need for product improvement projects and
product innovations to create revenue growth. Wessanen, being in a competitive market, has
been consistently launching new innovations into the market for their brands such as Bjorg and
Clipper. For innovations that were not successful, Innovation Boards in Wessanen is responsible
to analyze the root causes for future developments of the products. With a larger variety of
products, Wessanen will be able to attract consumers of a different target group, expanding its
range of target audience, bringing about more business opportunities for itself.

Increased government support in the organic food industry

Besides having strong demand for organic food, the presence of government support for the
organic food industry adds as a bonus as well. The Dutch government’s food policy aimed to
promote healthy, certified and sustainable food. It encourages the food industry to produce food
that is of less salt, fat and sugar which is in line with Wessanen’s mission: Healthier Food,
Healthier People, Healthier Planet. With this conscious effort to encourage people to consume
healthier food, it is a matter of time that people will start to turn towards organic food.
The combined effect of these factors can possibly affect each component of Wessanen’s
financial performance in the following manner:

Sales Operating Margins Earnings

● Sales revenue will ● Operating margins ● Assuming that the amount

show positive might not increase of expenditures remains
results with the as much as the about the same, the
increase in growth in sales due earnings of Wessanen will
business to possible increase increase as well, showing
opportunities in operating costs for positive results on the
innovation of financial performance of
products Wessanen

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Threats
Besides having increasing business opportunities, Wessanen also faces certain key risk factors.

Increased competition from new entrants and other private labels

Increasing number of conventional food companies, private labels and even new entrants are
entering the organic food industry. The profitability and potential of this market has therefore
attracted many companies. While the entry of more competitors would garner more attention to
this industry, but this would also mean that there might be increased pressure on Wessanen as it
will decrease their market share and potentially affect their sales revenue and margins as well.
Currently, Wessanen faces strong competition from companies such as Nestle, United National
Food and Hain Celestial.

Short supply of organic raw materials

With more business opportunities, there will definitely be a surge in demand for organic food
products. However, in reality, the amount of organic food products that are produced is unable to
match up to the rising demand of organic food products. In the long run, the availability and
sustainability of organic raw materials will be a concern for many producers. Also, climate change
is a risk for some sensitive crops such as cocoa which will affect the production of organic food
products that requires these crops as a form of raw materials.

Possibility of fraud, food safety and quality in the supply chain

Being in the organic food industry, a good or even flawless reputation is of utmost importance.
This is especially so for food safety and quality issues as it directly affects consumers’
purchasing decisions. Any possibilities of production failure, product quality issues or even fraud
risks should be prevented by putting up effective preventive controls, otherwise this might have
a significant impact on Wessanen’s financial position especially revenue.
With the presence of these threat factors, it might affect Wessanen’s financial performance
negatively in the long term in the following manner:

Sales Operating Margins Earnings

● Decrease in sales revenue ● There will be an ● Assuming that

increase in expenditures

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 o Increased in operating costs remain
competition will result as prices of the approximately the
in smaller market raw materials will same, earnings of
share which spike given the Wessanen will
decreases the short supply of decrease
consumption level of raw materials
Wessanen’s products, ● With the
hence lower sales increase in
revenue operating costs
o Short supply of raw and the
materials will lead to decrease in
lower production sales revenue,
efficiency and also the the operating
low supply cannot margin will
match up to the high therefore
demand, hence lower decrease as well
revenue
o Food safety issues will
lead to the loss of
consumer confidence
in Wessanen’s food
products, resulting to
lower consumption
level and hence lower
revenue

After looking at the different factors that has played a part in shaping Wessanen to its current
situation and affecting its future prospects, we shall further analyze about Wessanen’s past
financial performance.

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 2. Historical financial analysis
This chapter in the report analyzes the financial health of the food company Wessanen. Data
from the years 2008 to 2017 were used to present a summary of the profitability, cash flow,
liquidity and leverage scores of the company, as well as trends found during the aforementioned
time period.

To begin, we will see the overview of Wessanen using exhibit 1b.

Exhibit 1b: Wessanen Overview.

Revenues remain stable until 2011. In 2012, the company suffered a 26.3% decrease in
revenues due to its subsidiaries IZICO, Natudis, and Bio-Distrifrais became discontinued
operations, so the company had to restate its revenues. Since 2014, revenues have been
recovering, because of several actions:
● New segmentation of the subsidiaries Grocery and HFS, now called Branded,
● The divestment of ABC
● Revenues added by some subsidiaries like Alter Eco, Clipper, and Abafoods,
among others.
In the case of EBITDA and Net Income, 2009 was the most difficult year for the company,
reducing 71.4% and 851.2%, respectively. EBITDA was affected by an increase in operating
expenses. In addition to this, the company had to face many losses, affecting the net income.

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Among the most significant are impairment losses incurred at Wessanen Europe, Frozen Foods
and ABC; restructuring Wessanen Benelux and Wessanen Germany, and many other costs
incurred.
However, after that difficult year, Wessanen improved its net income, almost reaching the
breakeven point. This was due to a new strategy implemented by the new CEO, who gave
priority to strengthening the core that is Wessanen Europe. In 2014 the company finally
recovered, since then, it has presented a positive trend.
As we can see in exhibit 1, there is a large gap between revenues with EBITDA and net income.
To better understand the gap, we will use the profit margin in exhibit 2.

Exhibit 2b. Operating margin.

During 2009 and until 2012 the operating margin of the company showed negative margins
(except in 2010), mainly due to impairment and additional recognized losses, as mentioned
above. Since 2013, the company shows positive operating margins, these have followed a
positive trend, which is good for Wessanen, as it tells us that every year the company has been
making more profit, for every euro of sales, before interest and taxes.
On the other hand, to see if these operating margins are good, we need to compare them with
their direct competition.

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Exhibit 3b. Operating margin of competitors.

As Exhibit 3 shows, Wessanen performed better than two of its competitors last year. To explain
why, we can use a comparison of the sales growth of the companies, shown in exhibit 4. Hain
Celestial decreased its revenues by 1.12%, what made its margin decrease; and, even though
UNF grew more than Wessanen, by looking at its historical operating margin, we can assume
that its cost management needs to reduce its operating expenses. This shows that Wessanen
have been improving its operating cost management.

Exhibit 4b. Sales Growth

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 The reason why Wessanen is outperforming can be described using DuPont analysis for
the historical data, shown in Exhibit 5b.

Exhibit 5b. DuPont Analysis

As we can see, Wessanen's ROE has increased significantly. This increase is due to the
fact that the company has efficiently used its assets to generate more revenues, and has
remained considerably stable, as shown by the profit margin and asset turnover accounts, after
2014. We can also conclude that this increase is not thanks to financial leverage, because when
the company was more leveraged (2009) it resulted in the lowest ROE, on the contrary, we can
assume that it has known how to manage its debt.
Continuing with the cash flow analysis, we will first look at the EBIT margin. We can observe
from Exhibit 6b that the EBIT margin has been increasing over the past 10 years, especially in
the recent 5 years.

Exhibit 6b. EBIT Margin from 2008 to 2017

Next, operating cash flow ratio can be derived by taking cash flow from operations over current
liabilities. With this ratio analysis, investors can be more well-informed on Wessanen’s liquidity
in the short term. By looking at the operating cash flow ratio from 2009 to 2017 in Exhibit 7, we
can observe that the operating cash flow ratio for each year indicates a ratio of less than 1. This
suggest that Wessanen has been generating less cash in the period than it needs to pay off its
current liabilities. Also, the ratio has been relatively low, around 0.10 except for 2010.

Exhibit 7b. Operating Cash Flow Ratio from 2009 to 2017

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This is arguably due to the reduction in debt financing in 2010 resulting from debt payment with
proceeds of the divestments, 190 million USD in total, of Tree of Life, Inc. and PANOS Brands.
With this the debt to equity percentage went from 107.26% in 2009 to 15.13% in 2010. With the
reduced reliance on debt financing and more reliance on equity financing, borrowings will
decrease and therefore current liabilities. This gives a rise in operating cash flow ratio with a
higher operating cash flow in 2010. However, in 2011 and 2012, the ratio drops due to
significant decrease in operating cash flows. This decrease might be due to the unstable
economy which lowered consumer confidence.
For the financial leverage analysis, the following ratios (Exhibit 8b) were used to measure
Wessanen’s solvency.

Exhibit 8b: Ratios

As mentioned before, in terms of debt to equity ratio we can see that in 2009 Wessanen was
highly leveraged. Also, the debt to assets ratio had its highest value in 2009, mainly due to the
financial crisis.
After 2009 Wessanen becomes less leveraged as they payed their debt financing with the
proceeds from the divestment of their US subsidiaries. With the payment of the loans,
Wessanen continued to grow strong in terms of its capacity to pay the interest-bearing debts.
This is reflected in the interest coverage ratio which has been increasing up to a ratio of 30.8
nowadays, meaning that Wessanen could pay around 30 times its interest debt with revenues.
Also, with a lower leverage ratio after 2010, Wessanen had the opportunity to grow and expand
through acquisitions, maintaining focus in the European organic food market. Some of the most
important acquisitions are Clipper Teas in 2012; France Alter Eco in 2013; Abafoods in 2014;
and the most recent ones Mrs. Crimble's, IneoBio, Biogran and Piramide tea in 2016. These last
recent acquisitions added 8.6% of 2017 total revenues or €49 millions.
So, overall Wessanen’s leverage ratio has been decreasing, the latest increase is mainly due to
acquisitions which are expected to provide future revenues and have a good performance as
they have done with their most recent ones.

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Next, an analysis of the liquidity of Wessanen will be carried out using the following ratios:
Current ratio, Quick ratio and Days in Inventory.

Exhibit 9b. Current ratio, Quick ratio and Days in Inventory

As seen from Exhibit 9b, we can observe that the company is rather efficient in paying off its
short-term obligations with its current assets. By looking at the current ratio, Wessanen’s ability
to pay back its short-term liabilities was better in 2008 and 2009 as compared to the subsequent
years. Wessanen has experienced a larger decrease in current assets as compared to current
liabilities in 2010 when the current ratio decreases from 1.7 to 1.2. In comparison, the quick ratio
remains relatively consistent.
There are more fluctuations in current ratio as compared to the quick ratio, which are caused by
the problem in inventory management. This can be further substantiated by the Days in
Inventory (DII) where in 2009, Wessanen held onto their inventories much longer than their
usual DII.
Finally, we will look at its dividends in Exhibit 10b, to see how generous the company is
regarding its shareholders.

Exhibit 10b: Dividends Yield.

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 As we can see above, the company’s dividends have been volatile in the past 10 years,
and the return in investment is not appealing to the investor since the payout ratio shows the
low portion of earnings given in comparison to the company’s earnings.
Overall, even though Wessanen suffered high losses the first years of this time period frame, it
has been getting solid fundamentals over time, its profitability and debt have been improving.
Certainly, Wessanen has improved its used of capital, and it reliance on debt decreased
significantly, as the Dupont analysis showed. However, its growth has been very volatile, last
year earnings growth is less than its 5-year average, and the return for the investors is
considerably low taking into account the volatility risk.

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 3. Financial forecasts
In this section, we will be forecasting the growth rates of the revenues and EBIT from 2018-
2027 based on Wessanen past performance to determine its potential. There are 4 factors in
the current internal and external environment of Wessanen that drive the company the most.
Internal factors
● Focus strategy implemented in 2010
External factors
● Economic situation (growth in GDP)
● Awareness of benefits of healthy, organic products
● Inflation rate

Internal factors
Strategy implemented
This strategy was implemented after facing the economic recession, it focuses on the
European organic and healthy food market. The priority is to generate sales growth and build
market share in core categories and brands. As shown by the historical financial analysis, the
financial conditions within Wessanen have indeed improved in recent years.

External factors
Economic situation and GDP
The economy is recovering after the 2008 financial crisis, improving the purchasing power of
the consumers as seen from Exhibit 1c and 2c.

Exhibit 1c. EU-GDP per capita growth rates for 2016-2020.

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Exhibit 2c. EU-GDP per capita 2008-2018.

As seen from Exhibit 1c, the GDP per capita growth rates are expected to remain relatively
positive for the next few years given that the GDP per capita for the countries in the European
Union is forecasted to be increasing according to Exhibit 2c. This indicates the improvement in
consumers’ purchasing power, consumers are more willing to purchase organic food products
which are relatively more expensive.

Rising awareness of benefits of healthy, organic products

With growing awareness of the various health benefits of organic food products, there has
been rising consumption of organic food for the past few years. This rising consumption is also
shown in the presence of growing organic market. According to a market study of Technavio,
the European industry of organic food and beverages is expected to grow at a CAGR of close to
7% in the period 2016-2020 (Business Wire, 2016).

Inflation rate
The level of inflation does affect the commodity prices especially for the organic food industry
where cost of production is easily affected by it.

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Exhibit 3c. EU forecasted inflation rates

From Exhibit 3c, it can be observed that the inflation rate has been decreasing for the past 10
years and is coming to a plateau of approximately 2. Hence, with the inflation rate being
relatively constant, we will assume that the effect on the growth in sales revenue is negligible.
(Trading Economics, n.d.)

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Base-case scenario
The base-case scenario is the scenario which is most likely to occur. With the factors above,
we have concluded the effects of each factor on the sales growth percentage in the table below.

Exhibit 4c. Impact factors

Growth in Sales Revenue

Wessanen has been showing positive growth in their sales revenue after 2011 with the
exception of 2012 and 2013 whereby the decrease in sales is due to the discontinued
operations as seen from Exhibit 5c. Since the growth rates are unable to fully depict the actual
performance of the company’s sales revenue, we will be focusing on the industry’s growth rates
and GDP per capita to carry out the forecast.
According to Wessanen’s 2017 Annual Report, it was stated that the organic food and
beverage market in Europe has been growing at 5% to 7% and is expected to continue growing
at this rate for the next few years.

Exhibit 5c. Growth rates of sales revenue.

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 Assuming that the inflation rate and prices of the raw materials remain relatively constant over
the years, an estimate of the growth rates would be 7.5%, 8.0% and 8.5% for year 2018, 2019
and 2020 respectively. We believe that for the next 3 years, Wessanen will demonstrate positive
growth in revenue with the effectiveness of the focus strategy and favorable macroeconomic
conditions.

Exhibit 6c. Forecasted growth rates for sales revenue and sales revenue

Furthermore, we have to take into consideration that Wessanen’s growth rate has been quite
volatile for the past few years, there is a possibility of lower growth rates in the future. Hence for
2021 to 2027, we will be expecting a slower growth in revenue with a constant growth rate of
6.5% as shown in Exhibit 6c.

Earnings per share (EPS)

Given the forecasted EBIT margin and sales revenue mentioned above, the estimated
earnings per share can be derived accordingly as shown in Exhibit 7c. The growth in EPS is not
proportionate to the growth in sales due to the larger increase in operating costs than the
increase in sales revenue.

Exhibit 7c. EPS reported

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Positive scenario

Organic industry potential growth

Growing health concerns and increasing awareness regarding the benefits of organic food will
bring a huge increase in market demand. Consequently, the organic food market has a lot of
growth potential in the long term. It is actually expected that the growth rate of the global organic
food industry will be of 14% by 2021.
Focus strategy
Wessanen’s 2016 acquisitions have yielded good results in 2017. They added a total of 8.6%
to the total revenues of that year. If they continue to make selective acquisitions of companies
that have growth potential and good performance for the subsequent years, the acquisitions will
have positive impact on Wessanen’s sales and therefore increase the EBIT margin of the
coming years.
Therefore, assuming that Wessanen will be affected positively by the overall growth of the
industry and taking into account that in 2017 the revenues grew at a rate of 9.8%, the
forecasted expected growth rate is 10.5% in 2018 which would keep growing continuously until
reaching a constant growth of 13%.
With the above factors, we have concluded the effects of each factor on the sales growth
percentage in the table below.

Exhibit 8c. Impact factors

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Negative scenario

In addition to the aforementioned drivers, GDP per capita and organic market growth, we are
going to also consider the following factors, which are part of the Wessanen operations, to
explain the worst-case scenario:
● Company's strategy outcome
● Commodity risk: dependence on raw materials
Company’s strategy outcome
In order to maintain focus on the European market, Wessanen made new acquisitions of
European brands. If these acquisitions have growing revenues and good performance, they can
enhance Wessanen future revenue.
However, in previous years Wessanen has had negative results with their acquisitions. In 2009,
Wessanen’s revenues decreased 2.5% due to losses of its subsidiary Frozen Foods, and 12%
due to ABC. This subsidiary not only performed badly, but also committed a fraud, it overstated
Wessanen equity by about €10 million, resulting in a sharply fall of Wessanen shares of 9.8% at
€2.9. (New York Times, Dealbook, 2009)

Commodity risk
Wessanen requires a wide range of agricultural and other commodities for its products. An
increase in commodities prices may lead to a reduction in gross margin and net income. Also,
the organic food industry is growing, but the production of organic products is not growing as
fast since the availability of arable crops is Europe is reduced. In 2014, the organic market grew
7.6% while the organic agricultural sector only increased by 2.3%.
If the gap between production and the demand for those products continues to increase or the
arable crops are affected, the costs of production would increase, but Wessanen wouldn’t be
able to increase the prices to completely cover their costs.
Assuming there will be an increase in prices and that one of the subsidiary will perform poorly
Wessanen would have the following growth rates (Exhibit 9c). Hence, these factors contribute to
a lower growth rate, which is compensated with the stable economic situation and growing
organic market.

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Exhibit 9c. Impact factors

The probability of this scenario happening is very low as Wessanen is working on strategies to
mitigate the effect of the previously mentioned risks.

Exhibit 10c. Revenues and EBIT of three scenarios.

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 To conclude, we can see how the company, despite the different risk factors, is not completely
exposed, so in the different scenarios there is still positive growth. Its risk management and
strategy have helped the company overcome difficult situations in the past, and to avoid falling
into it again. Exhibit 10c shows the income of the company's revenues and EBIT, in different
situations, with the base case scenario being the most likely to occur.

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 4. Valuation
In order to obtain the intrinsic value of Wessanen stock and determine if it is over or
undervalued when comparing it to the market price, the present value of the Operating Free
cash flow model was used. Below we will explain the values used for the model and the results
obtained

Tax
The weighted average statutory income tax rate is approximately of 30%. This rate may vary
each year as it is affected by changes in the tax rates of the countries where Wessanen has
operations, for example, on 2017 Wessanen payed a tax a rate of 23% due to changes in
income tax rate in France, Italy and Germany.

Depreciation & Amortization

Depreciation and amortization are calculated on a straight-line basis on the estimated useful
life of the tangible assets. Depreciation is charged each year on the company's tangible fixed
assets. The estimated useful life of these assets is the following:

In the other hand, Items such as goodwill, capitalized brands, customer lists and development
expenditure acquired through business acquisitions are amortized.
As Wessanen is a business in the retail sector, the amount spent on average on acquisition of
property, plant and equipment does not comprise a large percentage of the revenue.

Capex
In terms of capital expenditure Wessanen expenditure on property, plant and equipment
doesn’t represent a large amount of the revenues, as mentioned before. On average on the last
5 years capex has represented 1.04% of revenues.
Since Wessanen’s main focus is to keep growing and expanding in the European food market,
for our forecast we expect that the company will keep investing in tangible assets in the future
years in order to achieve this goal. This assumption of increasing investment in tangible assets
gives us an increasing capex for the following years.

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Working Capital
Working capital for the following years after 2018 results in a negative change since the
current liabilities exceeds the current assets (without taking the inventories into consideration).
This account shows that the company has not enough short-term assets to cover its short-term
debt. The Group has an €125 revolving credit facility in place, to pay short term liabilities,
provided by ABN AMRO and ING. In April 2017, the initial termination date of the credit facility
was extended for an additional period of two years, that is to July 2022. The company is
currently working on developing long-term relationship with its suppliers. They do not specify
why, but we assume they try to get a deal with its suppliers, so they could pay them in credit to
a lower interest rate than the bank. However, with the current information the company shows
potential liquidity problems.

Change in Other Assets

The historical Wessanen's Other Current Assets were mainly amounts based on the
discontinued operation of the company. In years like 2009, 2013 and 2014 the company had
larger amounts due to the divestment of many subsidiaries. For the valuation, we assumed
there are not going to be more acquisition in the near future since Wessanen just acquired four
subsidiaries in 2016 and have not fully integrated them. Due to this assumption, forecasted
intangible assets are zero since there is no goodwill to consider, and the financial fixed assets
are the only value to consider for the other current assets.

Exhibit 1d: Outflows

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Cost of Capital
Wessanen is financed through equity and debt. It currently has a long-term debt of 61.1 M. and
has a capital market of 1310 M, for which its weighted equity is 95.54%, and weighted debt of
4.56%.
The cost of Debt before tax was calculated by means of the average of the effective rate
of the last 10 years as shown by exhibit 2c.

Exhibit 2d: Cost of Debt

We can see how in 2014 the company's debt was reduced almost to zero, so this year was not
taken into account for the average. In the following years, it again leveraged to be able to
acquire new subsidiaries, but compared to its capital market, this leverage is minimal. The
average resulted in 10.81% to which we applied the tax of 23% to obtain a cost of debt after tax
of 8.3%.
The cost of equity was obtained through the CAPM formula, resulting in 7.4%. This result is
based on the information of the last 5 years of:
● Returns of the action (Wessanen),
● Returns of the index (AEX),
● The Netherlands 30-Year Bond Yield used as the risk-free rate, and
● The MSCI market yield as the equity market return.

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 Once we obtained the variance of the market, and covariance of the stock and the
market, we ended up with a beta of 0.657. Comparing our beta with that of Yahoo Finance (.80)
we see that our beta is more conservative, but when compared to Reuters (.40) it tells us that
our beta reflects more risk. Being this result a midpoint between the two, we consider it a good
indicator of the current risk that the stock has with respect to the market. Finally, we obtained a
Weighted-average cost of capital of 7.4%.

Exhibit 3d: WACC calculation

Once we obtained the discount factor, we arrived at the result that the company's fair
enterprise value is 1,143.7 M., and by removing the value of net debt, it is 1,902.6 (an
unfavorable result compared to its market cap of 1301 M.), so when we divide it by the
outstanding number of shares we obtain that the fair value per share is 14.36.
Before making the decision to invest, or to add this stock to a portfolio, here is an insight of the
stock's statistical risks. This security offers a beta of 0.657, meaning it is significantly less
volatile than the benchmark AEX index. Its R-squared value is 0.13, which indicates low
correlation with the benchmark. The stock's standard deviation is .0175. This means investors
can expect the returns of the fund to vary 1.75% from its 5 years average return of 9.25%.

Exhibit 4d: Risk Measures.

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Taking the above into consideration, as well as the internal and external factors of risk
mentioned in the forecast part, a VaR model was made, in exhibit 5c, we try to give an idea of
how risky and how much the investor can lose with this stock. Assuming an investment of
€100.000 and using a historical data of 5 years, the maximum daily loss that the investor can
suffer, at a 95% confidence level, is €2,282.45.

Exhibit 5d: VaR results

To conclude, taking into account the information provided by this chapter we advise selling the
action. We believe that the true value of the company is indeed lower than the current market
since the company has not had a steady flow of revenues coming in in the past, so considering
its volatility, the forecast EBIT agreed was not as high. In addition, the forecasted generated
cash flow reduces due to the expected higher future investment in assets because of the past
under-investing, and due to the expected expenses in financial fixed assets such as derivatives
to hedge its exposure to foreign exchange, interest rate, and commodity risks. This reduction
gives us a weaker operating free cash flow that, once it is being discounted and accounted to
the present, reflects a stock overvalued.

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Financial tables

Income statement 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Revenues 725.4 702.5 712.2 706.0 520.1 407.3 430.6 523.0 570.0 625.8 672.7 726.6 788.3
Cost of revenues -433.3 -429.8 -449.7 -442.4 -328.1 -245.1 -257.5 -308.6 -335.6 -365.9 -398.7 -430.6 -467.2
Gross margin 292.1 272.7 262.5 263.6 192.0 162.2 173.1 214.4 234.4 259.9 -398.7 296.0 321.1
Operating expenses (excluding DA) -244.2 -259.3 -234.3 -229.3 -173.9 -140.4 -146.1 -171.1 -192.3 -201.3 -204.5 -220.9 -239.7
EBITDA 49.7 14.2 28.2 34.3 18.1 21.8 27.0 43.3 42.1 58.6 69.5 75.1 81.4
Depreciation -15.7 -14.8 -12.3 -11.4 -11.5 -5.7 -6.0 -5.6 -5.7 -6.4 -7.9 -8.6 -9.3
Amortisation -2.4 -2.4 -1.6 -2.3 -2.5 -2.9 -2.9 -2.4 -1.9 -2.6 -3.5 -3.8 -4.1
EBIT 37.1 -44.4 5.3 -19.0 -30.8 13.2 20.6 34.6 34.3 48.7 58.1 62.7 68.1
Financial expenses -9.8 -19.9 -8.3 -3.5 -2.2 -1.8 -1.6 -2.3 -1.8 -1.9 -0.2 -0.2 -0.3
EBT 27.3 -64.3 -3.0 -22.5 -33.0 11.4 19.0 32.3 32.5 46.8 57.9 62.5 67.8
Taxes -8.2 -69.0 -0.2 1.5 -3.8 -10.0 -7.6 -4.5 -9.7 -10.8 -1.0 -1.1 -1.2
Net income 29.5 -221.6 -5.0 -21.0 -52.9 -0.1 45.3 37.3 22.8 36.0 56.9 61.4 66.7
Result from participations 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net income including participations 29.5 -221.6 -5.0 -21.0 -52.9 -0.1 45.3 37.3 22.8 36.0 56.9 61.4 66.7
Minority interests 0.1 -1.9 1.1 -3.9 -0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net income attributable to shareholders 29.6 -223.5 -3.9 -24.9 -53.2 -0.1 45.3 37.3 22.8 36.0 56.9 61.4 66.7
Balance sheet 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Intangible fixed assets 187.7 130.4 126.1 90.6 66.8 65.6 64.7 97.5 203.3 206.6 176.8 190.9 207.1
Financial fixed assets 119.1 7.5 5.3 9.8 10.3 5.0 4.0 9.2 9.4 7.2 9.3 10.0 10.9
Tangible fixed assets 122.0 88.3 85.8 86.4 77.4 47.4 22.7 43.8 51.2 58.4 59.4 64.1 69.6
Inventories 215.7 68.9 63.4 67.5 72.3 51.9 49.9 59.0 68.5 76.5 92.7 100.1 108.7
Debtors 216.8 89.3 86.5 103.3 101.4 79.6 82.4 108.8 116.5 113.7 140.9 152.2 165.1
Other current assets 0.4 209.2 16.5 2.2 64.9 42.2 0.1 0.4 0.8 3.9 4.2 4.5
Cash and equivalents 44.8 44.3 8.7 8.2 9.7 23.3 29.8 24.7 9.4 13.8 29.9 32.3 35.0
Total assets 906.5 637.9 392.3 368.0 337.9 337.7 295.7 343.1 458.7 477.0 512.8 553.8 600.9

Shareholders' equity 357.0 155.6 183.8 179.7 110.8 105.4 154.2 183.4 191.2 227.7 232.0 250.6 271.9
Minority interests 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Provisions 3.7 2.9 2.5 2.5 1.7 1.2 3.3 3.9 3.0 2.3 14.1 15.2 16.5
Long-term interest-bearing debt 227.1 5.8 35.9 37.4 60.7 64.1 0.0 1.5 81.2 61.1 51.2 55.3 60.0
Other long-term liabilities 26.9 24.2 24.0 11.8 18.6 7.2 9.1 13.7 18.6 21.0 23.2 25.1 27.2
Current liabilities 278.3 244.0 145.5 136.5 143.6 159.3 129.1 136.4 161.7 161.1 189.3 204.5 221.9
Short-term interest-bearing debt 13.5 205.4 0.6 0.1 2.5 0.5 0.0 4.2 3.0 3.8 2.9 3.1 3.4
Total liabilities and owner's equity 906.5 637.9 392.3 368.0 337.9 337.7 295.7 343.1 458.7 477.0 512.8 553.8 600.9

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Statement of cash flows 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Net income including participations -221.6 -5.0 -21.0 -52.9 -0.1 45.3 37.3 22.8 36.0 61.4 66.7 71.0
Depreciation and amortisation 17.2 13.9 13.7 14.0 8.6 8.9 8.0 7.6 9.0 12.3 13.4 14.2
Change in inventories 146.8 5.5 -4.1 -4.8 20.4 2.0 -9.1 -9.5 -8.0 -7.4 -8.5 -7.1
Change in debtors 127.5 2.8 -16.8 1.9 21.8 -2.8 -26.4 -7.7 2.8 -11.3 -12.9 -10.7
Change in other current assets -208.8 192.7 14.3 2.2 -64.9 22.7 42.1 -0.3 -0.4 -0.3 -0.4 -0.3
Change in current liabilities -34.3 -98.5 -9.0 7.1 15.7 -30.2 7.3 25.3 -0.6 15.1 17.4 14.4
Cash flow from operating activities -190.4 97.5 -36.6 -46.5 -7.1 37.0 51.2 30.6 29.8 69.9 75.6 81.6

Investment in intangible fixed assets 54.9 2.7 33.2 21.3 -1.7 -2.0 -35.2 -107.7 -5.9 0.0 0.0 0.0
Investment in financial fixed assets 111.6 2.2 -4.5 -0.5 5.3 1.0 -5.2 -0.2 2.2 -0.7 -0.9 -0.7
Investment in tangible fixed assets 18.9 -9.8 -12.0 -2.5 24.3 18.7 -26.7 -13.1 -13.6 -13.3 -14.7 -14.4
Cash flow from investing activities 185.4 -4.9 16.7 18.3 27.9 17.7 -67.1 -121.0 -17.3 -14.0 -15.6 -15.1

Change in provisions -0.8 -0.4 0.0 -0.8 -0.5 2.1 0.6 -0.9 -0.7 1.1 1.3 1.1
Change in long-term interest-bearing debt -221.3 30.1 1.5 23.3 3.4 -64.1 1.5 79.7 -20.1 4.1 4.7 3.9
Change in other long-term liabilities -2.7 -0.2 -12.2 6.8 -11.4 1.9 4.6 4.9 2.4 1.9 2.1 1.8
Change in short-term interest-bearing debt 191.9 -204.8 -0.5 2.4 -2.0 -0.5 4.2 -1.2 0.8 4.1 4.7 3.9
Dividend payments 0.0 -3.7 -6.1 -3.8 -3.8 -7.6 -8.3 -9.1 -9.9 -11.5 -12.4 -13.3
Result from share offerings 22.1 35.8 26.9 -11.9 -1.5 11.1 0.2 -5.9 10.4 -31.4 -33.0 -40.0
Change in minority interests -1.9 1.1 -3.9 -0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Cash flow from financing activities -12.7 -142.1 5.7 15.7 -15.8 -57.1 2.8 67.5 -17.1 -31.7 -32.5 -42.7

Total cash flow -17.7 -49.5 -14.2 -12.5 5.0 -2.4 -13.1 -22.9 -4.6 24.2 27.5 23.8
Beginning cash and equivalents 44.8 44.3 8.7 8.2 9.7 23.3 29.8 24.7 9.4 29.9 32.3 35.0
Ending cash and equivalents 44.3 8.7 8.2 9.7 23.3 29.8 24.7 9.4 13.8 32.3 35.0 37.3
Share data 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Outstanding # shares per year-end 67.6 67.6 74.8 75.7 75.7 75.7 76.0 75.5 75.5 76.1 77.1 78.2 79.2
Share price per year-end 4.65 4.19 2.96 2.83 2.20 2.84 5.25 9.35 13.31 17.18 17.23 17.23 17.23
EPS reported 0.44 -3.31 -0.05 -0.33 -0.70 0.00 0.60 0.49 0.30 0.47 0.74 0.79 0.85
DPS reported 0.20 0.00 0.05 0.08 0.05 0.05 0.10 0.11 0.12 0.13 0.14 0.15 0.16

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Horizontal
analysis 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Revenues -3.2% 1.4% -0.9% -26.3% -21.7% 5.7% 21.5% 9.0% 9.8% 7.5% 8.0% 8.5%
Cost of
revenues -0.8% 4.6% -1.6% -25.8% -25.3% 5.1% 19.8% 8.7% 9.0% 9.0% 8.0% 8.5%
Gross
margin -6.6% -3.7% 0.4% -27.2% -15.5% 6.7% 23.9% 9.3% 10.9% -253.4% -174.2% 8.5%
Operating
expenses
(excluding
DA) 6.2% -9.6% -2.1% -24.2% -19.3% 4.1% 17.1% 12.4% 4.7% 1.6% 8.0% 8.5%

EBITDA -71.4% 98.6% 21.6% -47.2% 20.4% 23.9% 60.4% -2.8% 39.2% 18.6% 8.0% 8.5%

Depreciation -5.7% -16.9% -7.3% 0.9% -50.4% 5.3% -6.7% 1.8% 12.3% 23.7% 8.0% 8.5%

Amortisation 0.0% -33.3% 43.8% 8.7% 16.0% 0.0% -17.2% -20.8% 36.8% 34.2% 8.0% 8.5%

EBIT -219.7% -111.9% -458.5% 62.1% -142.9% 56.1% 68.0% -0.9% 42.0% 19.3% 8.0% 8.5%
Financial
expenses 103.1% -58.3% -57.8% -37.1% -18.2% -11.1% 43.8% -21.7% 5.6% -88.5% 8.0% 8.5%

EBT -335.5% -95.3% 650.0% 46.7% -134.5% 66.7% 70.0% 0.6% 44.0% 23.7% 8.0% 8.5%

Taxes 741.5% -99.7% -850.0% -353.3% 163.2% -24.0% -40.8% 115.6% 11.3% -90.9% 8.0% 8.5%
-
Net income -851.2% -97.7% 320.0% 151.9% -99.8% 45400.0% -17.7% -38.9% 57.9% 58.0% 8.0% 8.5%
Result from
participation
s - - - - - - - - - - - -
Net income
including
participation -
s -851.2% -97.7% 320.0% 151.9% -99.8% 45400.0% -17.7% -38.9% 57.9% 58.0% 8.0% 8.5%
Minority
interests -2000.0% -157.9% -454.5% -92.3% -100.0% - - - - - - -
Net income
attributable
to
shareholder -
s -855.1% -98.3% 538.5% 113.7% -99.8% 45400.0% -17.7% -38.9% 57.9% 58.0% 8.0% 8.5%

Intangible
fixed assets -30.5% -3.3% -28.2% -26.3% -1.8% -1.4% 50.7% 108.5% 1.6% -14.4% 8.0% 8.5%
Financial
fixed assets -93.7% -29.3% 84.9% 5.1% -51.5% -20.0% 130.0% 2.2% -23.4% 29.2% 8.0% 8.5%
Tangible
fixed assets -27.6% -2.8% 0.7% -10.4% -38.8% -52.1% 93.0% 16.9% 14.1% 1.6% 8.0% 8.5%

Inventories -68.1% -8.0% 6.5% 7.1% -28.2% -3.9% 18.2% 16.1% 11.7% 21.2% 8.0% 8.5%

Debtors -58.8% -3.1% 19.4% -1.8% -21.5% 3.5% 32.0% 7.1% -2.4% 23.9% 8.0% 8.5%
Other
current
assets 52200.0% -92.1% -86.7% -100.0% #¡DIV/0! -35.0% -99.8% 300.0% 100.0% 383.7% 8.0% 8.5%
Cash and
equivalents -1.1% -80.4% -5.7% 18.3% 140.2% 27.9% -17.1% -61.9% 46.8% 116.4% 8.0% 8.5%

Total assets -29.6% -38.5% -6.2% -8.2% -0.1% -12.4% 16.0% 33.7% 4.0% 7.5% 8.0% 8.5%

Shareholder
s' equity -56.4% 18.1% -2.2% -38.3% -4.9% 46.3% 18.9% 4.3% 19.1% 1.9% 8.0% 8.5%
Minority
interests - - . - - - - - - - - -

Provisions -21.6% -13.8% 0.0% -32.0% -29.4% 175.0% 18.2% -23.1% -23.3% 512.8% 8.0% 8.5%
Long-term
interest-
bearing debt -97.4% 519.0% 4.2% 62.3% 5.6% -100.0% - 5313.3% -24.8% -16.2% 8.0% 8.5%
Other long-
term
liabilities -10.0% -0.8% -50.8% 57.6% -61.3% 26.4% 50.5% 35.8% 12.9% 10.7% 8.0% 8.5%
Current
liabilities -12.3% -40.4% -6.2% 5.2% 10.9% -19.0% 5.7% 18.5% -0.4% 17.5% 8.0% 8.5%
Short-term
interest-
bearing debt 1421.5% -99.7% -83.3% 2400.0% -80.0% -100.0% - -28.6% 26.7% -23.8% 8.0% 8.5%
Total
liabilities and
owner's
equity -29.6% -38.5% -6.2% -8.2% -0.1% -12.4% 16.0% 33.7% 4.0% 7.5% 8.0% 8.5%

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Outstanding
# shares per
year-end 0.0% 10.7% 1.1% 0.0% 0.1% 0.3% -0.7% 0.1% 0.7% 1.4% 1.4% 1.4%
EPS -
reported -854.8% -98.4% 520.5% 112.7% -99.8% 45293.8% -17.3% -38.9% 57.5% 56.0% 6.6% 7.1%
DPS
reported -100.0% -% 60.0% -37.5% 0.0% 100.0% 10.0% 9.1% 8.3% 6.2% 6.2% 6.2%
Vertical
analysis 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
100.0
Revenues % 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of
revenues -59.7% -61.2% -63.1% -62.7% -63.1% -60.2% -59.8% -59.0% -58.9% -58.5% -59.3% -59.3% -59.3%
Gross
margin 40.3% 38.8% 36.9% 37.3% 36.9% 39.8% 40.2% 41.0% 41.1% 41.5% -59.3% 40.7% 40.7%
Operating
expenses
(excluding
DA) -33.7% -36.9% -32.9% -32.5% -33.4% -34.5% -33.9% -32.7% -33.7% -32.2% -30.4% -30.4% -30.4%

EBITDA 6.9% 2.0% 4.0% 4.9% 3.5% 5.4% 6.3% 8.3% 7.4% 9.4% 10.3% 10.3% 10.3%

Depreciation -2.2% -2.1% -1.7% -1.6% -2.2% -1.4% -1.4% -1.1% -1.0% -1.0% -1.2% -1.2% -1.2%

Amortisation -0.3% -0.3% -0.2% -0.3% -0.5% -0.7% -0.7% -0.5% -0.3% -0.4% -0.5% -0.5% -0.5%

EBIT 5.1% -6.3% 0.7% -2.7% -5.9% 3.2% 4.8% 6.6% 6.0% 7.8% 8.6% 8.6% 8.6%
Financial
expenses -1.4% -2.8% -1.2% -0.5% -0.4% -0.4% -0.4% -0.4% -0.3% -0.3% 0.0% 0.0% 0.0%

EBT 3.8% -9.2% -0.4% -3.2% -6.3% 2.8% 4.4% 6.2% 5.7% 7.5% 8.6% 8.6% 8.6%

Taxes -1.1% -9.8% 0.0% 0.2% -0.7% -2.5% -1.8% -0.9% -1.7% -1.7% -0.1% -0.1% -0.1%

Net income 4.1% -31.5% -0.7% -3.0% -10.2% 0.0% 10.5% 7.1% 4.0% 5.8% 8.5% 8.5% 8.5%
Result from
participation
s 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Net income
including
participation
s 4.1% -31.5% -0.7% -3.0% -10.2% 0.0% 10.5% 7.1% 4.0% 5.8% 8.5% 8.5% 8.5%
Minority
interests 0.0% -0.3% 0.2% -0.6% -0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Net income
attributable
to
shareholder
s 4.1% -31.8% -0.5% -3.5% -10.2% 0.0% 10.5% 7.1% 4.0% 5.8% 8.5% 8.5% 8.5%

Intangible
fixed assets 20.7% 20.4% 32.1% 24.6% 19.8% 19.4% 21.9% 28.4% 44.3% 43.3% 34.5% 34.5% 34.5%
Financial
fixed assets 13.1% 1.2% 1.4% 2.7% 3.0% 1.5% 1.4% 2.7% 2.0% 1.5% 1.8% 1.8% 1.8%
Tangible
fixed assets 13.5% 13.8% 21.9% 23.5% 22.9% 14.0% 7.7% 12.8% 11.2% 12.2% 11.6% 11.6% 11.6%

Inventories 23.8% 10.8% 16.2% 18.3% 21.4% 15.4% 16.9% 17.2% 14.9% 16.0% 18.1% 18.1% 18.1%

Debtors 23.9% 14.0% 22.0% 28.1% 30.0% 23.6% 27.9% 31.7% 25.4% 23.8% 27.5% 27.5% 27.5%
Other
current
assets 0.0% 32.8% 4.2% 0.6% 0.0% 19.2% 14.3% 0.0% 0.1% 0.2% 0.8% 0.8% 0.8%
Cash and
equivalents 4.9% 6.9% 2.2% 2.2% 2.9% 6.9% 10.1% 7.2% 2.0% 2.9% 5.8% 5.8% 5.8%
100.0
Total assets % 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Shareholder
s' equity 39.4% 24.4% 46.9% 48.8% 32.8% 31.2% 52.1% 53.5% 41.7% 47.7% 45.2% 45.2% 45.2%
Minority
interests 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Provisions 0.4% 0.5% 0.6% 0.7% 0.5% 0.4% 1.1% 1.1% 0.7% 0.5% 2.7% 2.7% 2.7%
Long-term
interest-
bearing debt 25.1% 0.9% 9.2% 10.2% 18.0% 19.0% 0.0% 0.4% 17.7% 12.8% 10.0% 10.0% 10.0%
Other long-
term
liabilities 3.0% 3.8% 6.1% 3.2% 5.5% 2.1% 3.1% 4.0% 4.1% 4.4% 4.5% 4.5% 4.5%

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Current
liabilities 30.7% 38.3% 37.1% 37.1% 42.5% 47.2% 43.7% 39.8% 35.3% 33.8% 36.9% 36.9% 36.9%
Short-term
interest-
bearing debt 1.5% 32.2% 0.2% 0.0% 0.7% 0.1% 0.0% 1.2% 0.7% 0.8% 0.6% 0.6% 0.6%
Total
liabilities and
owner's 100.0
equity % 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Financial
ratio
analysis 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Current ratio 1.7 1.7 1.2 1.3 1.3 1.4 1.6 1.4 1.2 1.3 1.4 1.4 1.4

Quick ratio 0.9 1.4 0.8 0.8 0.8 1.1 1.2 1.0 0.8 0.8 0.9 0.9 0.9
Days
inventory on
hand 108.5 35.8 32.5 34.9 50.7 46.5 42.3 41.2 43.9 44.6 50.3 50.3 50.3
Days sales
uncollected 109.1 46.4 44.3 53.4 71.2 71.3 69.8 75.9 74.6 66.3 76.4 76.4 76.4
Days
payable 149.9 129.2 77.6 74.2 104.4 150.8 116.8 103.8 111.8 103.7 114.6 114.6 114.6
Cash
conversion
cycle 67.7 -47.0 -0.8 14.1 17.5 -33.0 -4.6 13.3 6.7 7.3 12.2 12.2 12.2

Total asset 80.02

turnover % 110.13% 181.54% 191.85% 153.92% 120.61% 145.62% 152.43% 124.26% 131.19% 131.19% 131.19% 131.19%
Operating
profit margin 5.11% -6.32% 0.74% -2.69% -5.92% 3.24% 4.78% 6.62% 6.02% 7.78% 8.63% 8.63% 8.63%
Net profit
margin 4.07% -31.54% -0.70% -2.97% -10.17% -0.02% 10.52% 7.13% 4.00% 5.75% 8.46% 8.46% 8.46%
Return on
assets 3.25% -34.74% -1.27% -5.71% -15.66% -0.03% 15.32% 10.87% 4.97% 7.55% 11.09% 11.09% 11.09%
Return on
equity 8.26% -142.42% -2.72% -11.69% -47.74% -0.09% 29.38% 20.34% 11.92% 15.81% 24.52% 24.52% 24.52%
Return on
invested
capital 4.70% -28.54% 2.67% -8.48% -20.90% 1.11% 9.94% 18.11% 9.05% 13.44% 22.28% 22.28% 22.28%
Dividend 45.67 -
payout ratio % 0.00% -93.88% -24.21% -7.11% 3786.15% 16.76% 22.29% 39.79% 27.37% 18.64% 18.58% 18.43%

Debt to 54.85
equity % 107.26% 15.13% 16.30% 48.29% 39.18% -19.33% -10.36% 39.12% 22.44% 10.45% 10.45% 10.45%
Debt to 21.60
assets % 26.16% 7.09% 7.96% 15.83% 12.23% -10.08% -5.54% 16.31% 10.71% 4.73% 4.73% 4.73%
Interest
coverage 5.1 0.7 3.4 9.8 8.2 12.1 16.9 18.8 23.4 30.8 319.4 319.4 319.4

Price/earnin
gs 10.6 -1.3 -55.6 -8.6 -3.1 -2150.5 8.8 18.9 44.1 36.2 23.3 21.8 20.4
Earnings
yield 9.42% -78.90% -1.80% -11.68% -31.95% -0.05% 11.37% 5.28% 2.27% 2.76% 4.30% 4.58% 4.91%

Price/book 0.9 1.8 1.2 1.2 1.5 2.0 2.6 3.8 5.3 5.7 5.7 5.4 5.0
Dividend
yield 0.30% 0.00% 0.07% 0.11% 0.07% 0.07% 0.13% 0.15% 0.16% 0.17% 0.18% 0.19% 0.20%

EV/EBITDA 10.3 31.7 8.8 7.1 12.2 11.8 13.7 15.9 25.7 23.2 19.5 18.3 17.1

2015 2016 2017 2018 2019 2020

Revenues 523.0 570.0 625.8 672.7 726.6 788.3

EBITDA 43.3 42.1 58.6 69.5 75.1 81.4

EBIT 34.6 34.3 48.7 58.1 62.7 68.1

EPS 0.49 0.30 0.47 0.74 0.79 0.85

P/E 18.9 44.1 36.2 23.3 21.8 20.4

EV/EBITDA 15.9 25.7 23.2 19.5 18.3 17.1

Dividend
yield 0.15% 0.16% 0.17% 0.18% 0.19% 0.20%

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Appendices
• Overview Sheet.

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