METALAC - AII Data Processing

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May 14, 2013 Metalac - Serbia - Manufacturing Semi-annual update SWOT & PEST SWOT Analysis Sinks. Metalac Inko produces stainless steel and enameled sinks from high quality steel for 15 years, and is currently the only producer of sinks in Serbia. Metalac making single and double bowl, inserted and mounted sinks, made from polished or relief stainless steel and from composite materials – xGranit. Granmatrix. It is a composite material – a blend of polyester/acrylic alloys and fillers. Filler is a structural material which gives solidity, electrical and thermal resistance. Granmatrix is stain-resistant, easy to clean and completely renewable. It sustains thermo-formable quality, offering you wide variety of creative possibilities. Water Heaters. Metalac Bojler produces accumulation water heaters from 30 to 120 liters, with enameled or stainless steel tank, and small capacity water heaters of 5 and 10 liters, for low and high installation. 50 years of experience in enameling and 30 years of experience in production of water heater tanks insure the quality of company’s products, which is proved by the longest warranty period in domestic market – 15 years for stainless steel tank and 11 years for enameled tank. The products are provided with safety device and we offer technical service for our customers in over 40 centers in Serbia, Montenegro and Bosnia and Herzegovina. Packing Material. Metalac also produces transport and luxurious cardboard packing materials. Stable quality, on-time delivery, possibility to produce larger boxes (B0 format), and qualified graphic designers are the main advantages embedded in the Metalac’s offer of products in this field. SunChef. The products in this line cook every kind of food with the power of the sun all year around. Reaches temperature up to 400 °F / 205 °C with portable dimension. Strengths Weakness - large spectar of quality products - rise in export - leader with strong retail net in the Serbian market - diversified markets - brand on domestic market - very good geographical location – centre of the Balkans, - management in shareholding structure - listed on standard listing - solid level of transparency and corporate governance - solid dividend Opportunities Threats - growing export to world markets - products with renewable energy - prime listing Sinteza Research - exposure to currency risk - sensitivity on technical changes - undeveloped stock market - not quite impressive efficiency - product substitution - unpredictable FX - decline in the standard of living - slow economic growth - increase of competitions SINTEZA INVEST GROUP | MTLC 2012 4
May 14, 2013 Metalac - Serbia - Manufacturing Semi-annual update PEST Analysis Factor Influence Weight -5 do 5 1-5 world markets 4 5 20 products with renewable energy 2 4 8 prime listing 1 1 1 product substitution 1 4 4 unpredictable FX -1 1 -1 decline in the standard of living -3 2 -6 slow economic growth -4 3 -12 increase of competitions. -1 3 -3 Total score - - 11 Sinteza Research Score Total current score for the Company’s outer factors is 11, which means that the outlook is positive and there are more favorable than negative possibilities for growth in next 12 months. From current perspective, the maximum or the highest possible score on these factors is 70, which indicates that although there is a positive trend, it is not so high and there is a lot of space for growth in next years. This is also showing that Metalac is using only 16% of its all current potential or that it can grow by near 7x higher pace than now if all outer factors will be at their maximum favorable level from the company’s angle (this is not necessary related to the share price). On the opposite side, the lowest grade is -45, which indicates that there is still plenty of risk for future development. This means if all negative factors reach their maximum, Metalac can see a significant fall in business operations. Still, this level is quite lower compared to maximum growth grade, so it can be concluded that the rise is worth risk. In order to achieve the maximum growth and use its full potential, the Company needs to continue to operate as it was until now (as management also removed many weakness and threats until now) and as predictions for this year are better compared to previous, we are sure that Metalac will follow existing positive trend. In support of this, management is already focusing on the most important factors for future development: products that use renewable energy and expansion on many foreign markets, in Europe and abroad. Financial Performance Metalac saw an increase in sales during 2012 primarily due to export jump and higher market share. Export increase mostly because of the sales in Russian market, which had the largest share in export in all foreign markets. Sales surged by 22% which is higher growth than 2-year average of 17%, and lifted the EBIT by 30%. The company is planning to see the rise by 5% in 2013 in euros. On the balance sheet account, inventories rose solid 22% and participate for nearly one third of total assets, but similar scenario was seen during last 3 years. The average participation during that period of this position was 26%. Similar to inventories, receivables also saw rising trend but its stake stayed at one fifth compared to total assets. Almost the same level of participation receivables had in sales. On the other side of the balance sheet, long term borrowings jumped 5x, but theirs stake in total source of assets stood at 9% at the end of 2012, which is quite tolerably. Short term borrowings fell for a third in 2012, while accounts payable soared nearly the same, which should be a good exchange. Operating cash flow increased thanks to higher sales, and payments in advance, but, net inflow was negative mostly due to investing activities as Metalac invested in further expansion on foreign markets, as well as in production and retail. SINTEZA INVEST GROUP | MTLC 2012 5
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