Investor Presentation - ulusoyelektrik.com.tr 2017 Investor Presentation Ulusoy Electric at a Glance ... Company ” Turkey (2 ... New Transformer Facility Ensured

Ulusoy Electric Investor Presentation

March 2017

Table of

Contents

Company Snapshot

Business Overview

Growth & Prospects

Financials

3

7

22

26

Company Snapshot

March 2017 Investor Presentation

Ulusoy Electric at a Glance

Tailor-Made Based on Market Requirements

Domestic Market Leader

Exporting to >50 Countries

Established in

1985

‘’0’’ debt Strong financial Structure

Production & Design Capabilities

Vertically Integrated In-House

Flexible

Operations

in 3 Countries

Production Facility

Indoor area of 62K m² built on a area of 75K m² in 3 factories

Turkey│Indonesia│Algeria

Design

25% min. Dividend Payment Policy

585 Employees 3 Main Customer Segments

Above 10% High-Caliber Engineers Electricity Distribution Comp.

- Electrical Products Distributors

- End users

(including EPC contractors)

‟Turkey’s Leader Switchgear Producer

Operating as Electromechanical

Industrial Engineering and

Production Company”

Turkey (2)│Indonesia (1)

4

Over the past decade


Key Milestones

1985

31-year story of Ulusoy Electric started.

The Company founded by

Mr. Sait Ulusoy

1986

•Contracting activities started (Urban Networks, Airport Electrification, 154 kV Power Cables etc.).

•Manufacturing activities started with 36 kV outdoor switch disconnectors.

1995

The Company was listed in the first 50

companies in Turkey to qualify for ISO-9000 standards

1997

First domestic

Monoblock Substation

Kiosk production

1999

First domestic MV cable

termination production using liquid

silicon injection

2006

First domestic production of overhead line recloser and sectionalizers

2007

The Company was listed in

the TOP 1,000 biggest

industrial companies in

Turkey

2013

Entered into Indonesia market with a new office

Company’s own design cantilever

insulators was developed

2015

New 31,750 m² manufacturing

facility investment for

distribution transformers and concrete

substation kiosk was completed

2014

Launched its IPO and was listed on the

Borsa Istanbul

2008

Algeria office was established

Company’s own design vacuum circuit breaker and

underground substation kiosks was

developed

5


Shareholder Structure

48,2%

18,4%

11,9%

12,3%

9,0%

(2)

(3)

(4)

(5)

(1)

28,6%

18,4%

11,5%

11,5%

30,0%

(2)

(3)

(4)

(5) (1)

53,0%

18,4%

14,3%

14,3%

(2)

(3)

(4)

(1)

Pre IPO Post IPO Current

6

Sait Ulusoy: Founding shareholder Akgül Ulusoy: Mr. Sait Ulusoy’s wife Kubilay Hakki Ulusoy: Mr. Sait Ulusoy’s son

Enis Ulusoy: Mr. Sait Ulusoy’s son Free Float

Business Overview


Our Business Model Overview

8


What We Produce

9


Manufacturing Facilities (I/II)

Headoffice & Main Production Facility

• Located in Ankara

• Completed in 2004

• 26,000 m² indoor area

Capacity per shift

33,750 air insulated switchgears

1,400 substation kiosks

15.000 gas insulated switchgears

10


Manufacturing Facilities (II/II)

11

New Transformer Facility Ensured

• Enterance into a new business line

• Completion of vertical integration

• Enhancement in competitive edge

• Diversification in revenue stream

• Improvement in sustainability of revenue

• Located in Ankara

• Completed in 2015

• 31,750 m² indoor area

• 6,000 annual transformer capacity

• US$10.7mn total investment

• US$4,200 transformer avg. Price* 863 transformers delivered in 2016

Generated USD 3.6M revenue 2017 target : 2,500 transformers

*Varies on ratings and types


Customer Segments & Distribution Channels

Electricity Distribution Companies

End Users (including EPC contractors)

24%

Domestic Export

One of the most efficient sales channels for the Company

12 main distributors in domestic market

13 main distributors in export market

They supply products to end-users mainly in private projects

Electrical Products Distributors

30% 24%

Domestic Export

Ulusoy Electric is participating in the tenders or invitations to direct bidding of Electricity Distribution Companies for:

• Supply of substations&swgrs

• Continuous contracts with major distribution companies in Turkey and selected Countries

• 6 of the largest 10 customers in 2016 were electricity distribution companies

46%

Domestic Export

End Users:

• Private customers that establish new substations or upgrade existing ones

• MV consumers ; Industrial plants, hospitals, hotels, malls, energy generation companies etc

Utility Contracting/Construction Firms:

Companies which make procurement for the switchgear products requriements of the projects awarded by distribution companies and other end users

TL-based revenue breakdown

12

58%

22%


Local Market

Local Sales & Marketing Network

• Regional Offices enhance HQ’s S&M activites in the region

• A sales team of 5 people focused on managing relations with elect. products distributors

• A sales team of 4 people focused on generating sales for distribution companies

• A team of 4 people covering large projects directly

• 12 distributors across Turkey

13

• Electricity consumption growth potential (CAGR of 4,7%)

• Doubled capex investments on third operation period

(2016-2020) at electricity distribution companies

• Higher pace in urbanization & industrialization

• Continuous Infrastructure investments

• Stronger market leader position with weaker competition 0

2

4

6

8

10

12

14

TURKEY EUROZONE

OECD USA

Kişi başına elektrik tüketimi(mWh)


Local & Int’l Competition

14

Local Players

Global Players

Ormazabal

HQ in Spain

Family-run business

Region: Global,

Specifically LATAM,

Elko (recently bankrupted)

Family-run business

HQ in Ankara

Region: Turkey, Turkmenistan, Iraq

~20% Market Share

Elimsan

Owned by Saudi Cable Group

HQ in Kocaeli

Region: Turkey, Qatar

~15% Market Share

Schneider

HQ in France

Publicly listed

Region: Global

Siemens

HQ in Germany

Publicly listed

Region: Global

ABB

HQ in Switzerland

Publicly listed

Region: Global

Ulusoy Electric

DOMESTIC MARKET SHARE

OF 50%

Lucy Electric

HQ in UK

Family-run business

Region: Gulf, KSA


Local & Int’l Competition

15

ABB,SIEMENS,SCHNEIDER, GE

LUCY (UK), ORMAZABAL

(SPAIN)

ULUSOY, ELIMSAN, SAREL, TAMCO, DREISCHER, SEL, ZPUE

BIG FOUR

GLOBAL

MULTINATIONALS

+ BILLION EURO/USD

TURNOVER

FOLLOWERS

TRYING TO BECOME

MULTINATIONAL

300-500M EURO

TURNOVER

REGIONAL LEADERS

50-100M EURO

TURNOVER

http://www.ulusoyelektrik.com.tr/


Competitive-Edge in Production

Efficienct Production

Capable to Compete with Global Players

16

Newly Completed Transformer Facility enables to be one-step ahead of competitiors

via vertical integration

│Switchgear│ │Transformer│ │Substation Kiosk│

Natural Entry Barrier in the sector

market players need to hold & make

│Know-How│ │Licensing│ │Type Test│

Production Capabilities & Distinctions

In-House Flexible Quality-Oriented Vertically-Integrated

Management know-how Economies of Scale


International Market

Global Distributor Network

• 12 distributors across Northern Africa, Middle East and CIS

• Easy access to markets via local

partners (distributors)

• Sales offices in Istanbul, Algeria,

Jakarta and Dusseldorf

• Enhanced sales and marketing thru

local presence w/ sales offices

• 8 seasoned sales professionals dedicated to export sales and marketing

• Payments thru cash/letters of credit

17

ASIA & MIDDLE EAST

AFRICA

SPAIN & LATAM

Russia

Kazakhstan

Palestine

Iraq

Turkmenistan

Jordan

Yemen

Qatar

UAE

KSA

Algeria

Morocco

Tunisia

Sudan

Peru

Colombia

Uruguay

Spain

• Diversified Export Breakdown

• Developing Relations with Spain and Scandinavia

• Exposure to expand in Europe going forward

Indonesia Investment • New assembly plant.

• Ulusoy is in the final stage of

the local licensing process.

• Entry and positioning right

into the rapidly growing

Indonesian market.


21%

11%

10%

10%

47%

Ethiopia SpainTunisia IndonesiaOther 29 Countries

87%

4% 3%

6%

Algeria IraqTurkmenistan Other 26 Countries

74%

13%

4% 3% 6%

Algeria TurkmenistanFrance IraqOther 14 Countries

65%

11%

5%

18%

Algeria Kirghizstan

Iraq Other 29 Countries

Country Breakdown of Export 2012 2011 2013

2014 2015

18

70%

16%

5% 4%

6%

Algeria JordanTurkmenistan IraqOther 16 Countries

20%

17%

9% 9%

8%

5%

4%

4%

3%

3%

18%

Iraq Tunusia FinlandPalastine Uruguay AlgeriaLithuania Kazakhstan MoroccoSpain Other 23 Countries

2016


TOP-10 Clients

Customer Name Domestic/ Export

Type Amount (TL mn)

% of Total Sales

Customer A Domestic End User 10.3 7%

Customer B Domestic End User 6.5 5%

Customer C Domestic Elect. Distrib. Comp. 6.5 5%

Customer D Domestic Elect. Distrib. Comp. 6.0 4%

Customer E Domestic End User 5.9 4%

Customer F Domestic Elect. Distrib. Comp. 5.8 4%

Customer G Domestic End User 5.5 4%

Customer H Domestic Elect. Distrib. Comp. 5.5 4%

Customer I Domestic End User 4.9 3%

Customer J Export End User 4.4 3%

Total: 61.2 43%

49% 70%

TOP-10 Clients in Total Domestic

TOP-10 Clients in Total Export

2015

58% 72%

TOP-10 Clients in Total Domestic

TOP-10 Clients in Total Export

2016

19

2015

2016

Customer Name

Domestic/ Type

Amount % of

Export (TL mn)

Total Sales

Customer A Domestic Elect. Distrib. Comp. 20.1 9%

Customer B Domestic Elect. Distrib. Comp. 16.6 7%

Customer C Domestic Elect. Distrib. Comp. 15.2 6%

Customer D Domestic Elect. Prod. Dist. 14.9 6%

Customer E Domestic Elect. Distrib. Comp. 11.0 5%

Customer F Domestic Elect. Distrib. Comp. 8.9 4%

Customer G Export Elect. Prod. Dist. 8.4 4%

Customer H Domestic Elect. Prod. Dist. 8.2 4%

Customer I Export Elect. Distrib. Comp. 7.4 3%

Customer J Domestic End User 6.4 3%

Total: 1171 50%


Production Process & Suppliers Raw Material Type Currency

Payment Term

Share in COGS

Instrument Transformers TL 90 days 6.3%

Galvanized Sheet Metal US$ 60 days 6.6%

Circut Breakers & Relays - Complex EUR 60 days 3.3%

Copper TL 15 days 3.1%

Subcontracting TL 60 days 2.3%

Grain Oriented Steel for Transformers EUR 60 dyas 2.3%

Epoxy Resine EUR - 2.2%

Relays - Basic US$ - 2.1%

TOP-10 Suppliers

• Galvanized sheet steel manufacturers

• Resin suppliers

• Electrical part and component manufacturers

• Copper suppliers

82%

12% 6%

COGS Breakdown*

2016

82%

10%

8%

Raw materials Personel expenses Others

2015

COGS

Revenue 78% 71%

20

51% FX Exposure in COGS

64% FX Exposure in Raw Materials

* Without amortization

Naturally Hedging Itself thru FX-Based Receivables


Volume & Capacity Development

21

Product

2012 2013 2014 2015 2016

Dom. Exp. Dom. Exp. Dom. Exp. Dom. Exp. Cap. Util. Dom. Exp. Cap. Util.

Air insulated switchgears

10,643 7,154 11,471 30,365 11,556 9,857 11,992 609 22% 13,779 1051 26%

Capacity 21600 46500 57500 57500 57500

Gas insulated switchgears

1,001 109 1,344 14 1,27 80 1,508 185 28% 1,943 304 37%

Capacity 1350 2750 2750 6000 6000

Substation kiosks

2,539 60 2,693 31 2,494 - 2540 46 81% 3,058 1 96%

Capacity 2400 3000 3200 3200 3200

Metal Clad Switchgears

46 107 25 193 7 202 73 150 18% 193 90 23%

Capacity 400 750 750 1250 1250

Transformers

- - - - - - 29 0,50% 478 385 14%

Capacity - - - 6000 6000

Growth &

Strategy


What We Offer Operating in a sector with

natural entry-barriers

Expanding its footprints in

developing markets

Producing and designing

in-house with its deep know-how Taking the advantage of

flexibility & agility & quality

Possesing a huge &

brand-new transformer facility Providing vertically integrated

turn-key solutions

Holding

no finalcial debt

Targeting double digit growth both in local and int’l markets

Generating steady

free cash flow

Registering net profit since inception

Offering min. 25%

dividend payment

23


Growth Prospects

Sustainable & Diversified

Revenue Stream

with

Double Digit Growth

in Local and Other

Developing Markets

Strong Investment in R&D

Apply Deep Market Expertise to the

Existing Products with Continuous R&D Activites

Sales Network & Management Know-How

Keep an Eye on Growth Opportunities

in Existing Developing Markets with Expanding Sales Network & Solid

Management Know-how

New Transformer Facility Newly-Completed Huge Transformer

Facility Enabiling the Vertical Integration & Pawing the Way for

Higher Market Share Switchgear Transformer

24


Strategy

Get the market share of

local & int’l competitors

& Stand out as a global player

We strive for:

• Expanded sales channel

• Diversified export client portfolio

• Stabilized revenue

25

We operate:

• In a sector with natural entry barriers

• As a Cost & technology leader

• Relatively less sensitive to macro risks

We hold production capabilities:

• Efficient

• Cost-Leader

• Flexible

Financials


Revenue Development

Total Revenue in TLmn

86 134

2011

260 177

144

27

58%

2015 2016

228

144

228

2012 2013 2014 2015 2016


EBITDA & EBITDA Margin

Total EBITDA in TLmn, EBITDA Margin

2011 28

182%

2015 2016

49.9

17.6

2012 2013 2014 2015 2016

11.1

%12.8

32.1 %23.9

85.2 %32.8 62.0

%35.0 17.6

%12.2

49.9

%21.9


Net Profit & Net Profit Margin

Net Income (Mn TL), Net Margin

2011 29

164%

2015 2016

35.8

13.6

2012 2013 2014 2015 2016

8.1

%9.5

24.6 %18.4

71.5 %27.6 45.2

%25.5 13.6

%9.4

35.8

%15.8


Summary of Financial Statements

30

*Tax purpose financial results

TL mn 2011 2012 2013 2014 2015 2016

Revenues 86.1 134.2 260.0 177.2 144.5 227.8

Gross Profit 17.8 41.3 95.5 73.4 29.5 63.1

Operating Profit 10.2 31.0 83.6 60.1 14.6 45.3

EBITDA 11.1 32.1 85.2 62.0 17.6 49.9

Net Profit 8.1 24.6 71.5 45.2 13.6 35.8

Gross Profit Margin 20.7% 30.8% 36.7% 41.4% 20.4% 27.7%

Operating Profit Margin

11.9% 23.1% 32.2% 33.9% 10.1% 19.9%

EBITDA Margin 12.8% 23.9% 32.8% 35.0% 12.2% 21,9%

Net Margin 9.5% 18.4% 27.6% 25.5% 9.4% 15.8%

TL mn 2011 2012 2013 2014 2015 2016

Cash and cash Equivalents

12.5 13.7 45.8 17.7 14.0 13.8

Total Assets 48.2 84.5 156.3 145.0 151.0 190.0

Current Assets 35.8 59.3 114.0 107.4 79.8 117.8

Non-Current Assets 12.3 14.4 25.8 37.6 71.2 72.2

Total Liabilities 14.3 26.0 38.5 28.3 44.2 55.1

ST Liabilities 13.3 24.9 36.0 27.2 42.5 52.6

LT Liabilities 1.0 1.1 2.5 1.1 1.7 2.5

Equity 33.9 58.5 117.8 116.8 106.8 134.9

ROE 24% 42% 61% 39% 13% 27%


Revenue Breakdown Breakdown by Product Type (TLmn)

Breakdown by Destination (TLmn)

31

9,4 16,1 15 16 17 27 0,5

13

3,9 3,9 10 11 9

10 42,9

87,7

192

118

78

110

3,9

7,8

10

13

19

30

27,4

18,7

27

20

20

41

2011 2012 2013 2014 2015 2016

Substation kiosks Transformers Metal clad switchgears Air insulated switchgears Gas insulated switchgears Other


Balance Sheet Components

TL 190,05mn Total Balance Sheet Size as of 2016

%3

%42

%1

%67

%11

32

7%

39%

14%

36%

4%

Assets

Other Fixed Assets

Tnagible Fixed Assets

Inventories

Trade Receivables

Cash and cash

Equivalents

4%

14%

10%

1%

71%

Liabilities & Equity

Equity

Long term provisions

Other ST Liabilities

ST Trade Payables

Short Term Borrowing


Capital Expenditures Pattern of Progress

33

4.1 3.9

16.6

12.6

17.0

2011 2012 2013 2014 2015

Capex for Maintenance

~TL1mn per annum

5.2

H1'15 H1'16

Heavy investment period for the new transformer facility is

already completed

2016


Shareholder Structure

1. Sait Ulusoy: Founding shareholder

2. Akgül Ulusoy: Mr. Sait Ulusoy’s spouse

3. Kubilay Hakki Ulusoy: Mr. Sait Ulusoy’s son

4. Enis Ulusoy: Mr. Sait Ulusoy’s son

5. Free Float

12mn Ulusoy Family shares

sold in IPO

30% Free Float after the IPO

34

8.2mn shares bought back

after the IPO by Ulusoy Family

Free float declined to

9.05% after the buy back

48.27%

18.4%

11.9%

12.3%

9.0%

(2)

(3)

(4)

(5)

(1)

28.6%

18.4%

11.5%

11.5%

30.0%

(2)

(3)

(4)

(5) (1)

53.0%

18.4%

14.3%

14.3%

(2)

(3)

(4)

(1)

Pre IPO Post IPO Current

Thank You For further information please e-mail

[email protected] or call Ulusoy Electric Investor Relations

at (+90 312 267 0712)

Documents

Investor Presentation - ulusoyelektrik.com.tr 2017 Investor Presentation Ulusoy Electric at a Glance ... Company ” Turkey (2 ... New Transformer Facility Ensured