Slides
Page 1
ACQUISITION OF SYNTHESIA NITROCELLULOSE BY COLT CZ ANALYST CALL August 29, 2025
Page 2
2 LEGAL DISCLAIMER This presentation (the “Presentation”) has been prepared by Colt CZ Group SE, with its registered office at náměstí Republiky 2090/3a, Nové Město, 110 00 Praha 1, Identification Number 291 51 961, registered in the Commercial Register maintained by the Municipal Court in Prague, Section H, Insert 962 (the “Colt CZ”). By attending the meeting where this Presentation is made or by reading the Presentation document, you agree to be bound by the following terms and conditions. The Presentation has been prepared with due care. However, certain inconsistencies or omissions might have appeared herein. T herefore, it is recommended that any person intending to undertake any investment decision on any security issued by Colt CZ or any member of its group (the “ Group”) shall only rely on information released as an official communication by Colt CZ in accordance with the legal and regulatory provisions that are binding for Colt CZ. Past performance can not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance. Colt CZ does not (i) warrant that the assumptions underlying the forward- looking statements in this Presentation are free from errors, (ii) accept any responsibility for the future accuracy of the opinions expressed in this Presentation, or (iii) undertake any obligation to u pdate the statements in this Presentation to reflect subsequent events. The forward-looking statements in this Presentation are made only as of the date hereof. Neither delivery of this Presentation nor any further discussions between Colt CZ and you shall, under any circumstances, result in any implication that there has been no change in Colt CZ af fairs since such date. Forward-looking statements, including statements relating to expectations regarding future financial results, give no guarantee or assurance that such results will be achieved. Expectations of the Colt CZ management are based on present knowledge, awareness and/or views of the management members and a re dependent on many factors, which may cause the actual results that Colt CZ will achieve may differ materially from those discussed in this Presentation. Many such factors are beyond the present knowledge, awareness and/or control of Colt CZ, or cannot be predicted. None of the Group, Colt CZ or its directors, managers , advisers or representatives of such persons makes any representation or warranty, expressed or implied, as to (i) the fairness, accuracy, completeness or correctness of this Presentation, (ii) the sufficiency of this Presentation for your purposes. or (iii) the appropriateness of this Presentation for any purpose other than that for which i t was intended. Nothing contained herein is or should be relied upon as a promise or representation, whether as to the past or the future. This Presentation should not be construed as legal, regulatory, tax, accounting, investment or other advice. Nothing containe d herein shall constitute any representation or warranty as to the future performance of any security, credit, currency, rate or other market or economic measure. No reliance m ay be placed for any purpose whatsoever on this Presentation. This Presentation was prepared for information purposes only and is neither a purchase nor sale offer nor a solicitation of a n offer to purchase or sell any securities or financial instruments or an invitation to participate in any commercial venture. This Presentation is neither an offer nor an invitatio n to purchase or subscribe for any securities in any jurisdiction, and no statements contained herein may serve as a basis for any agreement, commitment or investment decision, o r may be relied upon in connection with any agreement, commitment or investment decision. IMPORTANT – YOU MUST READ THE FOLLOWING BEFORE CONTINUING
Page 3
3 TODAY'S PRESENTERSTODAY'S PRESENTERS JAN DRAHOTA Chairman of the Board of Directors Colt CZ Group SE JANA MATOUŠKOVÁ Head of Group Finance Colt CZ Group SE ONDŘEJ PALÁT Head of M&A Colt CZ Group SE
Page 4
4 TRANSACTION SUMMARY On 28/8/2025, Colt CZ signed share purchase agreement for acquisition of 51% stake in Synthesia Nitrocellulose, a.s. (SNC) from Synthesia, a.s., with the remaining 49% to be acquired under already agreed terms over the medium term. Main parameters of transaction: Enterprise value 11.22bn CZK for 51% stake Corresponds to 8.2x 2025B EBITDA The transaction will be paid by combination of 5.5bn CZK in cash and a certain number of newly issued common shares As a result, Kaprain Chemical, the owner of Synthesia, a.s., will become 3rd largest shareholder in Colt CZ Group, with a stake between 5-10% The transaction includes the Energy business of Synthesia, a.s., which supplies power, steam and other utilities to the whole industrial site The Energy business will be demerged from Synthesia, a.s., closing is expected in H1 2026 Synthesia, a.s. will keep its businesses not related to defense sector (pigments and dyes and custom organic synthesis) Synthesia, a.s. is committed to stay in SNC as 49% stakeholder for at least 2 years after Colt CZ entry A call /put option starting 2028 has been agreed at same enterprise value as the initial stake payable in combination of cash and Colt CZ common shares EXPECTED TIMING Signing 8/2025 Both NC and Energy business SPAs signed Regulatory approvals Closing 11/2025 – Q1 2026 Carve-out of energy business into a separate company Acquisition of 51% in energy business by H1 2026 Acquisition of remaining 49% in SNC and energy business, 2028-2032 Starting 2028, put / call option structure with fixed valuation
Page 5
5 SYNTHESIA NITROCELLULOSE (SNC) Energetic nitrocellulose (eNC) is the key material for production of: Gunpowders for small (handguns, rifles), medium (grenade launchers, mortars) and large (tank and artillery shells) caliber ammunition Casings, combustible modules and explosives for artillery and tank shells Solid propellants for rocket engines SNC is one of largest global producers of eNC, and Top 3 in NATO While eNC makes up most revenue, SNC is also an important producer of Industrial nitrocellulose (used for e.g. paints and coatings) Oxycellulose (healthcare and pharma industry, e.g. as a hemostatic agent) Industrial salts and waste acids by-products are also a revenue stream SNC has very efficient and fully integrated eNC production The acquisition includes all nitrocellulose-related assets in the industrial Semtin Zone at Pardubice, all customer contracts and approx. 400 experienced employees in production of nitrocellulose Inhouse nitric acid, sulfuric acid and oleum preparation needed to 7 000 tons of eNC, including regeneration and waste acids processing. Steam and electricity by on-site energy source (the Energy business) Geographically diversified and reliable supplier base for cellulose MAIN eNC PRODUCERS IN EUROPE AND NORTHERN AMERICA US Army ammunition plant operated by BAE (USA), 10 000t Synthesia (CZ) 6 000t with expansion under way to >7 000t tons to meet growing demand. Manuco (Eurenco Group) France, 6 000t Rheinmetall (Switzerland, Spain..), 4 000t Nammo (Finland), 2 500t Milan Blagojevic (Serbia), 2 000t Several smaller players NITROCELLULOSE APPLICATION AND SNC POSITION Notes: Internal estimates of per year capacity Not including Asian producers not compliant with NATO requirements and production standards
Page 6
6 STRATEGIC RATIONALE FOR THE ACQUISITION Strengthening vertical integration in ammunition supply chain The acquisition of SNC fits into Colt CZ Group’s strategy to expand into medium- and large-caliber ammunition It enhances our position in a critical part of the supply chain, giving us direct access to energetic nitrocellulose, a key raw material for propellant production Ammunition segment as a platform for future integration. This move builds on the geographic and operational synergies with: Sellier&Bellot – one of largest EU producers of small-caliber ammunition SNC – leading producer of eNC in Europe and North America Mid and large caliber manufacturers, where the transaction opens avenues for production and trade partnerships Supporting Strategic Independence We are committed to further vertical integration of our ammunition and propellant production, thus supporting the strategic autonomy and supply security of the Czech Republic and NATO Allies Next Steps We will explore options to complete the production chain, including potential in-house or M&A-based propellant production STRATEGIC RATIONALE FINAL APPLICATIONS Artillery shells (105- 155mm) needs 6-7kg of eNC/round, low units of millions / year Mid-caliber (20-60mm) ammo needs ~150g/round, tens of millions rounds/ year Small-calliber ammo (up to 12.7mm) needs <1-10g/round, tens of millions rounds / year Only European and North American producers eligible as energetic nitrocellulose suppliers due to security and quality concerns
Page 7
7 KEY FINANCIAL PARAMETERS The transaction values 100% of SNC, including the energy business, at 22bn CZK The acquisition of SNC corresponds to pro–forma EV / EBITDA of 8.2x, at lower range of chemical companies, below Colt CZ trading multiple and significantly below largest propellant and explosives manufacturers Average EV/EBITDA ~ 8 - 9x for chemical other than petrochemicals and companies focused on nitrogen-based products Average EV/EBITDA ~ 25x among listed explosives and propellant producers (Rheinmetall, BAE Systems, Chemring) Net Debt/EBITDA of SNC at closing expected to be ~ 1x The transaction will be paid by available sources of Colt CZ Group, including possible bond issue in Q4 2025 SNC revenue is largely based on long–term contracts with customers in CZE and abroad. It has higher profitability than firearms and ammunition manufacturing business VALUATION AND IMPACT ON FINANCIALS PRO -FORMA IMPACT NET LEVERAGE RATIO (PRO FORMA 31/12/2025) REVENUES EBITDA 2.5x 2.7x Revenues 2025e Pro-forma revenues 2025 EBITDA 2025e Pro-forma EBITDA 2025e Net debt Net leverage ratio >45% >15%
Page 8
THANK YOU Colt CZ Group SE náměstí Republiky 2090/3a 110 00 Prague 1, Czech Republic www.coltczgroup.com info@coltczgroup.com