Gener al ov er v iew f or inv est or s in Hungar y ’s Manuf ac t ur ing sec t or
WHY INVEST IN THE HUNGARIAN MANUFACTURING SECTOR? Over recent years, hundreds of new industrial investments have been implemented in Hungary by Audi, Opel, Mercedes, Bosch, Knorr Bremse, Magna Automotive, LuK, Grundfos, Lego, Apollo Tyres, Rehau and Nestlé, to name just a few of the international brands that have opened or expanded factories in Hungary. The volume of output in the manufacturing industry has been constantly growing since 2013: by 7.6% in 2014 and by 6.7% in the first nine months of 2015. In addition to a stable economy and government support, Hungary provides unique competitive advantages to companies, even compared to other CEE countries: • Great Central European location; logistically ideal for supplying the whole European market. • Stable political environment. • Developed transportation systems; extensive highway and road networks. • Developed and stable utility networks; moderate and regulated energy prices. • Rapidly growing economy (real GDP growth of 3.7% in 2014). • Development of the manufacturing sector in the focus of the economic development strategy. • Developed and active industrial property market. • Low-cost and trained labour. • Great opportunities for supply agreements with already established companies. • Wide range of local, national and EU grants available for investors.
MANUFACTURING SECTOR OVERVIEW GROWTH OF MANUFACTURING SECTOR 2012-2015 (% compared to the same month of the previous year) 20 15 10 5 0 -5 -10 -15 2012
2013
2014
2015
Source: HCSO*
The development of the manufacturing sector is a strategic objective of the Hungarian Government. Consequently, Hungary is always open to support local and international investors, and to strategic cooperation with international brands.
*Hungarian Central Statistics Office
CUMULATED SHARE OF INDUSTRY SEGMENTS IN 2015 Q1-Q3
Other Automotive Machine Electronic ICT Metal Plastic Pharma Chemical Oil Paper Textile Food
0
5
10
15
20
25
30
35
Source: HCSO
In 2014, manufacturing provided 26% of the total GDP in Hungary. The automotive sector has the highest share (30%) and the highest growth rate within the sector (21% in 2014), followed by ICT (11%). Other growing sectors include the food industry (10%), electronics, pharmaceuticals and medical technology. In 2014, the share of workers employed in the manufacturing sector equalled 23% of the total workforce employed in the economic sector, and 34% of the total workforce in the private sector.
80
Automotive
60
% grwoth
40
ICT
20 0 -20 -40 2012
2013
2014
2015
IIn general, the recovery of local manufacturing was slow after the 2008-2009 financial crisis, but after 2012, all manufacturing indicators clearly reveal an upward trend. The manufacturing sector has grown by 20% since 2013 and by 7.6% in 2014.
MANUFACTURING SECTOR’S SHARE OF GDP IN EU COUNTRIES. (AS % OF GDP IN 2014) Cyprus Malta Greece France United Kingdom Belgium Denmark Netherlends Portugal Italy Latvia Spain
Hungary a is among the top 7 EU E countries with regard d to GDP generated by thee manufacturing sector..
Croatia Ireland Finland Lithuania Slovenia Austria Estonia Germany Hungary Bulgaria Poland Sweden Romania Slovakia Czech Republic
0
5
10
15
20
25
30
35
40
Source: Eurostat
Strategic cooperation between international brands and the government has led to increased production and more jobs. According to the forecast of the National Bank of Hungary, the future rate of inflation is expected to move within the 2-3 percent range by 2016, ensuring price stability and creating a safe investment environment. The growth of the manufacturing sector in the past 20 years was driven by export sales. Revenues from exports increased by 10% in 2014, while export prices grew as a result of better terms of trade. In 2014, the share of export sales in total industrial production sales was 61%. In the 2015 Q1-Q3 period, export sales increased by 8.9%, while domestic sales increased by 2.6%. A sustained investment boom has unfolded between 2014 and 2015. Investment trends in the manufacturing sector are an indicator of the manufacturing sector’s reliable growth. The investment index similarly shows a clear upward trend from 2012. In 2014, the volume of total investments in the manufacturing sector increased by 12% compared to the previous year.
QUARTERLY INVESTMENT INDEX FOR THE MANUFACTURING SECTOR. (INDEX COMPARED TO THE SAME QUARTER OF THE PREVIOUS YEAR) 20 15 10 5 0 -5 -10 -15 2011
2012
2013
2014
2015
Source: HCSO
COST EFFECTIVE LABOUR MARKET Overall, Hungarian employment statistics are in the middle range on the European employment map. The unemployment rate shows a slight decline at around 6%, with a wide variation by region. Investors in regions with a higher unemployment rate receive additional support.
QUARTERLY INVESTMENT INDEX FOR THE MANUFACTURING SECTOR. (INDEX COMPARED TO THE SAME QUARTER OF THE PREVIOUS YEAR) 14 12 10 8 %
6 4 2 0 2010
2011
2012
2013
2014
2015
Source: HCSO
In a regional comparison, the Hungarian labour market still has a sufficient and skilled workforce that provides the best value-for-money in the EU: the Hungarian average wage is almost the lowest in the EU (6th lowest average salary in the EU), combined with a solid overall level of education. Based on the average labour cost / productivity ratio, Hungary is still one of the best locations. The official minimum wage is also one of the lowest in the EU (circa 300 euro/ month). Trained employees: almost 90% of employees leave school at 18 with at least a medium level final examination (this indicator is among the best within the EU), and over a quarter have a university level degree. Educational institutions are flexible and ready to cooperate with companies (e.g. Audi and Mercedes have set up dual training cooperation initiatives with local universities).
SUCCESS STORIES FROM THE MANUFACTURING SECTOR The automotive industry is the most dynamic segment of the manufacturing sector. Automotive production accounts for almost a quarter of Hungarian manufacturing. Ninety-three per cent (93%) of automotive sales are export sales, which represents 35% of total industrial export sales. Over 700 companies work in this segment, with the top four (Audi, Mercedes, Opel, Suzuki) companies employing over 17,000 people of the 118,000 people employed in the automotive sector.
SUZUKI: One of the first international car brands to open a Hungarian plant. It was founded in 1991; manufacturing started in 1992. Until the financial crisis of 2009, the company was the domestic market leader with a 20% market share. It is still one of the biggest car producers with an annual production of circa 150 000 vehicles.
Audi Motor Hungaria: AUDI AG founded the Hungarian engine manufacturing plant in 1993 with a total investment of 4 billion euro to date. Today it is the biggest engine factory in the world. From 1998, different car models are also produced here like the Audi TT, TT Coupe, TT Roadster, A3, S3 and A3 Cabriolet. Engine production has grown by 2.5% (to 1,925,636 engines) and vehicle production has grown by 215.6% (to 42,851) in 2014.
Apollo Tyres: The large Indian tyre manufacturing company chose Hungary to expand its operations and to build a new factory - an investment of EUR 600 million. Hesitant between selecting Hungary or Slovakia, Apollo’s decision was greatly influenced by a EUR 97 million support from the Hungarian government. As a result of Apollo’s decision to expand and a similar recent investment of Hankook Tyres, Hungary will have a share of 2% of the world’s total tyre production.
Bosch: The German multinational engineering and electronics company completed a EUR 7 million investment in November 2015 aimed at developing electronic handheld power tools in its factory located in North-East Hungary. “Bosch plans long-term cooperation with Hungary, its strategically important centre for global innovation, research and developmental aspirations,” said Javier González Pareja, leader of the Hungarian Bosch group. Bosch launched its operations in Hungary in 1899. Today, it is the largest industrial employer of the country. The volume of its transactions in Hungary – excluding interdepartmental transactions – has reached EUR 590 million in 2014. The Hungarian Bosch group employed 10,500 people on 1 April 2015.
Festo: The German industrial control and automation company opened a new production hall in Hungary in October 2015, in order to enhance its production of large cylinders, an investment worth EUR 13 million. Festo has so far invested EUR 100 million in Hungary and the number of its employees exceeds 1,000 in the country. The new production hall employs an additional 170 workers. The company spends 9% of its annual revenue on R&D, which is double the industry average.
Magyar Cukor: The Hungarian sugar manufacturer, belonging to the Austrian Agrana group, expanded its sugar packaging plant and invested in biogas cleaning equipment in South-West Hungary in September 2015. As a result of the new biogas cleaning investment, Magyar Cukor’s beet sugar factory will be the first in the world to cover its total energy needs through its own biogas production. The production capacity in the plant is 125 tonnes a year, well over the prescribed international quota, and it employs 300 people.
BASIC PROJECT DATA
Slopmax - Zer o w ast e t echnology f or cleaner dr illing
Sector Project owner Location Implementation period Overall Budget of the Project
I.
SHORT DESCRIPTION The project owner has developed a superior new technology for cleaning drilling slops from oil well drilling. The patented technology has been tested in England for 18 months. The project owner is looking for an investor for a production factory to produce the machine.
Funding requirement
EUR
9.8 M
Energy, environmental safety Slopmax Ltd. Hungary The factory could be approved and developed by the end of 2015. EUR 9.8 million
PROJECT BACKGROUND
Short background Our main energy source is still underground fossil oil, and gas. The number of oil drillings per year is heavily increasing, and it is getting harder to find further oil fields. Not only the number of oil rigs, but the average drilling depth is also increasing. This results an extreme amount of untreated oil drilling waste. The project owner has developed a technology to answer the environmental challenges presented by the oil drilling waste material. The prototype of the technology (MUDMAX) has been tested in England (Aberdeen) for 1 and 1/2 years. Based on the testing, the project owner developed the SLOPMAX technology. SLOPMAX is the only ZERO WASTE method for treating the hazardous slop waste. Definition of slop: the slop (or sludge) is the remains from the oil well drilling and washing of the drilling equipment. It contains 15-30% dry matter and 0-15% drilling oil (drilling oil is extremely expensive).
General background of the management Dénes István (MD of the company): Electrical Engineer. High level industry experience in multinational companies (Siemens, Elin, Fabrikom,). Leader of the MUD and SLOP technology testing in the UK. Multilinguist (including English and mid-level Arabic). Pinczés Imre ('Father of the Technology): Chemical Automation Engineer. Well known expert of green technologies, number of own patents: cold plasma technology, catalytic oxidation technology, slopmax, etc.
II. PROJECT DESCRIPTION The project has three main phases: 1. After the long development procedure (incorporated the learnings from the test operation), the final machine has been built. The machine has to be transported to Scotland. It will take six months of operation, testing and laboratory tests to achieve the Best Available Technology qualification. 2. Parallel with the final testing, the machine production factory has to be authorized, built, and equipped (by the end of 2015). 3. The standardised production of the device could start by the end of 2015.
Photo of the final machine ready to transport and test.
WHY INVEST? • The technology has international patent protection. • The technology is proved to be most cost efficient among the competitors. • SLOPMAX is the ONLY ZERO WASTE TECHNOLOGY on the slop treatment market. • The technology has been tested for 18 months prior to the production of the final device. • The project IRR is 194%.
Competitive advantages There are several technologies to handle the drilling waste material. Compared with the main competitors, it excels both environmentally and financially. Slopmax is the leading technology: Competitors
TCC
Rotamil
Westfalia
Slopmax
Technology
Thermic desorption
Thermic desorption
Emulsion separation with poli-electrolytes additive
Electrolytic emulsion separation
Capacity
100 t / day
100 t / day
100 t / day
100 t / day
Contamination level of the output
> 500 ppm
> 500 ppm
> 500 ppm + contaminated additives
< 50 ppm
Price / device
EUR 3.8 million
EUR 3 million
n.a.
EUR 3.9 million
How many devices sold so far?
35
19
10
0
Operating cost, description of the residue
Extremely high energy cost. The remaining dry residue (100 kg / tonne) is hazardous waste.
High energy cost. The remaining dry residue (100 kg / tonne) is hazardous waste.
New technology, lower energy consumption, higher labour cost. The remaining cleaning additive (polielectrolytes) is also a hazardous waste.
Lower energy consumption, higher labour cost. The only ZERO WASTE technology (if no heavy metal contamination in soil).
Neutralisation of 1 tonne of slop (desposal cost included, if the residue is contaminated)
150-200 €/t Depends on water content. No totally neutralised end product
60-75 € No totally neutralised end product
66 €/t No totally neutralised end product
18€/t Totally neutral end product
Property rights, licenses, certifications The technology is patent protected: PCT/HU2010/000142 “Method and apparatus for handling drilling mud contains oil / water emulsion.” The patent and all rights 100% held by Slopmax Ltd.
Current position in the market – expected share The Slopmax machine has not yet been put on the market. It has been presented to many market players, and earned attention from most of them.
Target groups The potential customers for the device are the drilling service provider companies and waste management companies of the oil drilling market. Because of the environmental regulations, most of the potential customers are from Europe and North America. The project owner contacted most of the potential partners, in line with the test of the technology: • Baker Hughes: third global waste disposal company of the oil sector. • Haliburton: the second largest global waste disposal company of the oil sector. • MI Swaco: world leading waste disposal company of the oil sector. • TWMA: already visited the Hungarian company. • Taylors: A local waste management company in Aberdeen.
Short market description, main competitors The volume of the slop produced by the industry is increasing exponentially. Although the number of drillings were stable around 2000-2010, the number has dramatically increased since (doubled in recent years). Since 1990, the average depth of the oil wells has also increased by 40%. The slop volume from oil drilling was 64 million tonnes per year in 2010, and the volume is increasing as are the environmental regulation levels.
Number of Elements
MONTHLY U.S. CRUDE OIL ROTARY RINGS IN OPERATION 1.600 1.400 1.200 1.000 800 600 400 200 0 1975
1980
1985
1990
1995
2000
2005
2010
ANNUAL U.S. AVEREGE DEPTH OF CRUDE OIL EXPLORATORY WELLS DRILLED
Feel per Well
9000 8000 7000 6000 5000 4000 1950
1960
1970
1980
1990
2000
Key strategic partners The project owner contacted and interviewed all the potential partners (see “target group” chapter). The final machine was developed, based on their feedback, operational experience of the prototype and laboratory tests. The technology and the documentation of the machine are under evaluation of a leading European oil company from late 2014.
Access to foreign markets, export markets, description of key risks and measures to prevent risks The technology would be marketed to the main players of the oil waste disposal market. The project owner presented the technology to the main players. Key risk elements: • Elongated qualification procedures: this risk could be managed by appropriate timing of the investment (if all the financial resources are set up for the testing). • Lobbying by the current technologies “against” the new market player: testing in Scotland (EU country, strict environmental regulations) accelerates the qualification; the qualified device cannot be put out of market.
III. FINANCIAL INDICATORS Justification of the revenue plan The revenue plan was conservatively calculated. Only the sale of the machines is calculated as an income; the maintenance of the device, or own waste disposal activity has not been included in the financial plans. The unit price is set to the market level, which is also conservative compared to the advanced technology. The plan calculates with a 10% market share in five years on the newly produced slop cleaning market (64 million tonnes / year, 20% of slop contains drilling oil). This could be managed by 28-32 machines (100 tonnes per day capacity each). The factory is planned to build four machines at the same time. As the average building time is six months, the capacity is planned to be eight devices a year.
P&L, financial indicators (summary of the investment plan, and the P&L) investment figures in 000 Euro
2013
bat
0
1
2
3
4
2014
2015
2016
2017
2018
factory
- 400
- 1 333
production
- 1 33 - 8 000
total investment
revenue
sum 2014-2018
- 400
-
2013
-1 733
2014
solid machines unit price
- 8 000
- 8 000
2015
-
-
2016
-
2017
- 9 733
2018
sum 2014-2018
8
8
8
6
3900
3900
3900
3900
revenue
31200
31200
31200
23400
material
-10667
-10667
-10667
-8000
wages
-5333
-5333
-5333
-4000
services
-2667
-2667
-2667
-2667
30 117 000
depreciacion
-1533
-1533
-1533
-1533
total cost
-20200
-20200
-20200
-16200
-76800
11000
11000
11000
7200
40200
EBIT
Quantitative and Qualitative Indicators QUANTITATIVE INDICATORS Revenues / year 2015
-
Mid-term revenues/year expectation
EUR 31.2 million
Mid-term market penetration expectation (%)
maximum 10% of new slops (1-5 % total market)
Available owner’s resources /available funds
The project owner would provide the technology, full project management, patent, technical supervisory.
IV.
INVESTMENT OFFER
Required amount of investment
EUR 9.8 million
Form of investment
Capital investment
Proposed capital/equity structure The project owner offers a majority share of 51-75% in the new project company to the financial or strategic investor. Share composition is subject to negotiation, depends on the business construction.
Investment schedule The first phase of the investment is EUR 1.8 million (BAT + construction) and will be carried out in 2015. The rest of the capital increase (EUR 8.0 million) would be used in year 2016, as the financing of the first year of production.
Proposed exit policy Although no exit policy has been established by the project owner, Slopmax Ltd. is ready to cooperate with a financial investor and setup an exit strategy, if required.
CONTACT DETAILS MR. ISTVÁN DÉNES, CEO +36 20 999 9154
[email protected] MR. LÁSZLÓ BARTUCZ +36 20 940 2700
[email protected]
BASIC PROJECT DATA
Dispomedicor - Cannula and needle pr oduct ion
Sector Project owner Location Implementation period Overall Budget of the Project Funding requirement
I.
SHORT DESCRIPTION To set up a factory producing 55 million pcs of cannula/month.
Funding requirement
EUR
12.6 M
Health Care Dispomedicor Zrt. Eastern Region of Hungary 2014-2018 EUR 42 million 30% - 50% of the overall budget
PROJECT BACKGROUND
Short background Single use medical devices, wound care dressings, feminine hygiene care products, injection moulds, machinery, robotics manufacturer.
Organisation Dispomedicor has been a basic health care supplier for the Hungarian domestic market since 1950.
Subsidiaries: S.C. Dispomedicor Steril Srl, Romania S.C. Pharmico Srl, Romania DispoAmecor Arab Hungarian Medical Equipments Co. Ltd., Egypt - 100% ownership - 100% ownership - 60% ownership
General background of the management (including partner companies and relations) General Manager, Mr. Antal Nagy. • Vice President of the Hungarian-Arab Committee of the Hungarian Chamber of Commerce and Industry • Co-Chairman of the Hungarian Medical Cluster companies • Business diplomat • Chairman of Dispomedicor Zrt. • Chairman of DispoAmecor Co. Ltd. Egypt
II.
PROJECT DESCRIPTION
We plan to build up a cannula drawing and grinding factory in the eastern region of Hungary, which will produce 55 Million cannula / month of products. These cannula would be further processed on totally automatic product lines to be production lines by Dispomedicor Zrt., manufacturing first quality AVF needles, SVS needles, safety and normal hypodermic needles and special cannula. Dispomedicor shall be the main supplier of the manufacturing machinery and equipment. One part of the cannula production will be used in-house and the remaining capacity will be sold to export markets. Type of item
Annually quantity
AVF needle 13.7 Million pcs SVS needle 27.3 Million pcs Normal hypodermic needle 291.6 Million pcs Safety hypodermic needle 97.2 Million pcs Other special cannula 175.1 Million pcs The automated equipment requires minimal maintenance, according to this we calculated with 15 minutes of maintenance per shift. The realization of this investment is based on three shifts. The planned project's expenses are EUR 42 million. The investment project will be returned in 5.87 years.
WHY INVEST? • Asian producers are the main competitors on this mass market. A European-based factory could be utilised thanks to the favourable logistical advantage of the factory location. • With local production, the European, North American, African and South American markets can be totally covered, and thanks to the automated equipment, these components can be produced profitably. • This facility would be the largest unique European manufacturer for cannula drawing, grinding and different types of needles. • The new joint company will create new workplaces for 92 people in Hungary. • The European production is combined with high level automation and could be delivered by Dispomedicor Zrt.’s own transport vehicle fleet.
Competitive advantages Dispomedicor Co. possesses all medical device related commercial information including technologies related to product manufacturing. The machines delivered by Dispomedicor Zrt are tested, computer- controlled and are suitable for immediate industrial production. No timewasting procedures! The project is supplied with a complete design to production package: • Design of the production technology
• List of ‘composed’ materials • Help in purchasing raw materials • Prototyping of the product • Layout planning of the building 31 Dispomedicor Zrt. can replace 10 sub-contractors, i.e. product designer, market research and marketing (company), patent agent, Permission Authorization, a company dealing with quality assurance and clinical tests, logistics, injection mould, and machine, etc.
Property rights, licenses, certifications Safety needle patent of Dispomedicor Zrt. The factory will be certified by SGS United Kingdom for ISO 9001; ISO 13485; ISO 14001 and CE mark.
Target groups Manufacturers and distributors of single use medical devices mainly in Europe, Russia, the Balkan Region and MENA Countries.
Short market description, main competitors Main manufacturers in Europe: Chirana T Injecta Slovakia, Handle S.A. France, KD Medical Germany and Nipro Japan.
Key strategic partners • Islamic Development Bank (IDB) • European Bank for Reconstruction and Development (EBRD) • Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC)
Access to foreign market, export market • Dispomedicor Zrt. has maintained a strong market position not only in the domestic market of Hungary but also in export markets like Europe, America, Africa and Asia. • Dispomedicor Zrt. intends to regain the lost markets of South America and Russia and to provide stable supply and good quality hypodermic needles at competitive prices. • The Joint Venture could be the registered as leading supplier of Fresenius Medical Care, Germany, who is ready to change its Asian supplier to a unique European one for an annual quantity of 17,000,000 pieces of AVF needles. The complete manufacturing process is held by the project owner, the critical processes and the final assembly are assured by own capacities. Only a few components are made by suppliers and partners. Based on this manufacturing model, the project owner can ensure both the appropriate quality and the low manufacturing costs.
III. FINANCIAL INDICATORS Assumptions and main indicators The calculation includes 81% of indirect costs, which originate from Dispomedicor amortization data for the machinery. In this respect, the capacity utilization of the line is 89-90 %.
Basic P&L plan (in EUR 1000)
2014
2015
2016
2017
2018
2019
2020
0
16856
17531
18232
18961
19719
20508
0
16856
17531
18232
18961
19719
20508
Revenues and Other Income 1.)Sales and other operating revenues 2.)Income from equity affiliate 3.)Other income
I.Total Revenues and Other Income (I.=1+2+3 row)
2021
2022
2023
2024
2025
21329
23003
23923
24880
25875
21329
23003
23923
24880
25875
Costs and Other Deductions 4.) Raw Material 5.) Operating expenses License Fees
0
4245
4287
4330
4374
4417
4461
4506
4551
4597
4643
4689
1679
2180
2202
2224
2246
2269
2291
2314
2337
2361
2384
2408
500
88
89
89
90
91
92
93
94
95
96
97
Utilities
0
624
630
637
643
649
656
662
669
676
682
689
Travel Expenses
0
0
0
0
0
0
0
0
0
0
0
0
Repair and maintaenance costs
0
474
478
483
488
493
503
508
513
518
523
Vehicle Expense
0
0
0
0
0
0
0
0
0
0
0
0
Leasing Commissions
0
0
0
0
0
0
0
0
0
0
0
0
379
623
629
635
642
648
655
661668
674
681
688
Salary and Wages Other (i.e. legal fees, auditing, R+D etc.) 6.) Selling, general and administrative expenses
800
372
376
379
383
387
391
395
399
403
407
411
1000
1283
1296
1309
1322
1335
1348
1362
1376
1389
1403
1417
Marketing
0
0
0
0
0
0
0
0
0
0
0
7.) Depreciation, depletion and amortization
0
3925
3964
4004
4085
4125
4167
4208
4250
4293
4336
8.)Taxes other than on income
0
0
0
0
0
0
0
0
0
0
0
9.) Interest and debt expense
0
314
317
320
323
326
330
333
336
340
343
346
2679
11947
12066
12187
12309
12432
12556
12682
12809
12937
13066
13197
-2679
4909
5464
6045
6652
7287
7952
8647
10194
10986
11814
12678
II. Total Costs and Other Deductions (II.=4+5+6+7+8+9 row) III.Income Before Income Tax Expense (III.=I.-II. row)
0
123
137
151
166
182
199
216
255
275
295
317
V.Net Income (V.=III.-IV. row)
-2679
4787
5328
5894
6486
7105
7753
8431
9939
10711
11518
12361
VI.Cumulated net income
-2679
2107
7435
13329
19814
26920
34673
43103
53043
63754
75272
87633
0
0
2131
2357
2594
2842
3101
3372
3967
4285
4607
4944
VIII.Retained earnings (VIII.=VI.-VII. row)
-2679
4787
3197
3536
3891
4263
4652
5058
5964
6427
6911
7417
Cumulated retained earnings
-2679
2107
5304
8840
12732
16995
21647
26705
32669
39095
46006
53423
IV.Income Tax Expense
VII.Dividend
EBITDA, KPIs 2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
ROE
-6.1%
10.1%
10.5%
10.8%
11.0%
11.2%
11.3%
11.3%
12.3%
12.2%
13.1%
ROA
-115%
8%
9%
10%
11%
11%
11%
11%
12%
12%
12%
EBIDTA
-2,679
8,835
9,429
10,049
10,696
11,372
12,077
12,813
14,402
15,237
16,107
Quantitative and Qualitative Indicators QUANTITATIVE INDICATORS Revenues / year 2015
EUR 16,856,000
Mid-term revenues/year expectation
EUR 20,508,000 (Y2020)
Available owner’s resources /available funds
Dispomedicor Zrt. will support the project to obtain the financial resources from the EU OECD funds and to apply for EU and Hungarian Government funding. The rest of the investment would be financed by an advanced loan also from the Hungarian Government or could be financed by the investor partner.
IV.
INVESTMENT OFFER
Funding requirement
EUR 42 million
Form of investment
Joint Venture Company
Proposed capital/equity structure 60% Hungarian share 40% Saudi Arabian share
Investment schedule The preparation could start in 2014 Q1. The permission and construction phase could start in 2014 Q2.
CONTACT DETAILS MR. ANTAL NAGY, CEO +36 30 749 7624
[email protected] www.dispomedicor.hu
BASIC PROJECT DATA
Pir olisis Pr oject - Wast e t y r e r ecy cling
Sector Project owner Location Implementation period
Overall Budget of the Project
I.
SHORT DESCRIPTION The project owner has developed a superior new technology for rubber waste pyrolysis. The technology is international patent protected, and proven on an industrial level (already working factory). Five new factories are planned to be opened in five years (as the start of the worldwide spread of the novel technology).
Funding requirement
EUR
25 M
Waste processing, recycling, energy Pirolisis Project Ltd. Hungary The first factory to be opened in 15 months. In the following four years, the remaining four factories could be opened. The opening speed could modified in line with the final investor strategy. EUR 25 million
PROJECT BACKGROUND
Short background For the last seven years, a group of Hungarian researchers, engineers and businessmen, with support from a regional development company of the Hungarian Government, has developed a groundbreaking new rubber and tyre pyrolysing technology that is ready to be deployed worldwide. A complete pilot factory with a capacity of 1200 tonnes per year has been built and operated successfully at an industrial scale by Pirolisis Project Limited (PP Ltd.), the company established by the project leaders and financiers. The technology is proved to be capable of profitably solving the global issue of waste tyre and rubber management problems. The owners of the international patent are seeking financial or professional investors to establish a joint venture for the utilization of the technology and to build large-scale factories worldwide.
Organisation The current management (see below) taking care of the operation of the already working factory, managing the patent, and searching for investors for the new factories.
General background of the management KEY MEMBERS OF THE MANAGEMENT
Name
Status
Age, Qualification, references
Péter Nagy László Nagy Péter Varga Dr. András Bálint
Managing Director Technical Manager owner Head of Research
Sándor Demeter
Technologist
41, CEO, Authorized signatory 64, Mechanical and Organizing, Engineer 46, Agrarian Mechanical Engineer, Entrepreneur 70, Mechanical Engineer of the Chemical Industry, Academic 71, Chemical Engineer
II.
PROJECT DESCRIPTION
Project scope: to open five rubber pyrolysing factories of 10,000 tonnes capacity / year each over five years. According to a detailed business plan and financial forecasts, which calculate on the basis of only five factories, approximately HUF 7.2 bn (EUR 25 million) equity investment is required. The size of the investment is scalable to the unique strategy of the potential investors regarding their envisaged speed of spreading the technology worldwide. The internal rate of return of the investment, based on our cautious assumptions, is over 21% without considering many potential upsides.
WHY INVEST? • The technology has an international patent protection. The technology is proved to be more effective than competitors (more working hours; lower energy consumption; can also manage metal textured rubber, etc.). • There is a substantial demand for a suitable waste tyre and rubber management solution globally (with up to 15 m tonnes of waste tyre to handle annually). • Marketable products: the system decomposes waste rubber and tyres into pyrogas, pyrolysis oil and carbon black; all of which are easily marketable. • The technology can be operated profitably without direct government support, except for a product fee available for all market players. • The technology has been tested at industry level; the current factory (1,200 tonnes per year capacity) has been working for years.
Competitive advantages • stationary aggregate, no stirring in the reactor unit • excellent heat transition, therefore low energy consumption • multi-phase heating process with the pre-heating stage using waste energy • almost continuous operation • controllable decomposition reaction by parameters such as temperature • mainly standard equipment and robust machinery with a limited number of moving parts therefore less maintenance • already proven on an industrial scale (ca. 1,200 t/year) • mostly automatic, cost- efficient operation • low labour requirement • potentially further development, larger factories and plastic pyrolysis
Property rights, licenses, certifications Patent No. P 06 00661 titled as ‘Reactor and equipment for pyrolysing waste, especially tyres’ has been registered following an affirmative decision by the European Patent Office. The technology is also patented by the U.S. Patent Office and the Canadian Patent Office.
Current position in the market – expected share The current factory is only processing 1200 tonnes of tyres per year. In the EU, a minimum of 2.5 million tonnes of waste tyre is “produced” every year (97% of is managed by deposing). The planned full capacity would cover only 2% of the European yearly waste tyre production (not calculating with the deposed quantities).
Target groups The raw material side partners are all of the waste management companies. The output of the factory is marketable to the chemical and energy industry.
Short market description, main competitors Today many companies and technologies are trying to handle the waste rubber problem. None of the technologies have achieved the effectiveness of PP Ltd. The following is a comparison with several competitor technologies.
COMPARISON OF ALTERNATIVE METHODS AND TECHNOLOGIES TO MANAGE WASTE RUBBER AND TIRE
Selection criteria/Methods&technologies
Deep
Inceneration
Cement production
Grindling, rubber shape production
Pyrolysis (heated jacket, blades)
Plazma pyrolysis
Pyrolysis (PP Ltd.)
Final solution for waste rubber issue
no
yes
yes
no
yes
yes
yes
Final solution for waste tire tissue
no
no
no
no
no
yes
yes
Enviromentally firendly solution
no
no
no
no
yes
yes
yes
Over the laboratory phase
yes
yes
yes
yes
yes
yes
no
Proved to be feasible at industrial scale
yes
yes
yes
yes
yes
yes
no
Can be applied in the future without growing regulatory restrictions
no
no
yes
no
yes
yes
yes
Large volume can be handled
yes
no
no
no
no
yes
no
Can operate efficiently and persistently
yes
no
no
no
no
no
III. FINANCIAL INDICATORS Assumptions and main indicators Justification of the revenue plan The planned first phase capacity only covers 2% of EU demand. There is no competitive pyrolysing technology available on the market compared to PP Ltd. The trend for environmental fees is only likely to be upward. The output materials unit price calculation is based on real market price.
P&L, financial indicators FINANCIAL HIGHLIGHT OF THE JOINT VENTURE, FULL PLAN, ALL 5 FACTORIES AND HEADQUARTERS EUR million
Y1
Y2
Y3
Y4
Y5
Y6
Y7
Y8
Y9
Y10
Net sales
0.0
0.0
3.9
4.0
8.3
10.7
15.3
22.5
23.2
23.9 13.0
Operating profit (loss)
-3.1
-1.8
-1.8
-0.6
0.2
0.4
5.7
10.7
12.8
Financial result
0.0
0.6
0.5
0.4
0.2
-0.1
-0.5
-0.9
-1.1
-1.1
Pre-tax profit
-3.1
-1.2
-1.3
-0.2
0.3
0.3
5.2
9.8
11.6
11.8
After-tax profit
-3.1
-1.2
-1.3
-0.2
0.3
0.3
5.2
7.9
9.4
9.6
Dividend
0.0
0.0
0.0
0.0
0.0
0.0
4.1
7.1
8.5
8.6
Total assets
21.8
20.4
19.9
20.8
23.6
26.6
32.2
36.9
39.0
40.9
Shareholders equity
21.6
20.4
19.1
18.8
19.2
19.5
20.6
21.4
22.3
23.3
Debt/Equity
0.0%
0.0%
0.0%
4.3%
11.6%
21.6%
37.2%
47.4%
47.3%
47.3%
ROA
-14.1%
-5.9%
-6.7%
-1.0%
1.4%
1.1%
16.1%
21.5%
24.1%
23.4%
ROE
-14.1%
-5.9%
-7.0%
-1.1%
1.7%
1.5%
25.2%
37.1%
42.1%
41.2%
Quantitative and Qualitative Indicators QUANTITATIVE INDICATORS Revenues / year 2017
EUR 3.9 million
Mid-term revenues/year expectation
EUR 22.5 million
Mid-term market penetration expectation (%)
2%
Available owner’s resources /available funds
The project owner would provide the technology, full project management, patent, technical supervisory. No financial funding is planned from PP Ltd.
IV.
INVESTMENT OFFER
Required amount of investment
EUR 25 million
Form of investment
Capital
Proposed capital/equity structure The project owner offers a majority share in the new project company to the financial or strategic investor. Precise share composition is subject to negotiation with the project owner and the 1st phase investor.
Investment schedule First phase (first factory, up to full operation): EUR 6.0 million within 15 months. Second phase (the next four factories): EUR 19.0 million within the next four years.
Proposed exit policy Although no exit policy is established, Pirolisis Project Ltd. opened for cooperation with a financial investor. In this case, the exit policy has to be discussed and set up.
CONTACT DETAILS MR. PÉTER NAGY, CEO +36 30 373 3406
[email protected] MR. LÁSZLÓ BARTUCZ +36 20 940 2700
[email protected]
BASIC PROJECT DATA
Medical dev ice
Sector Location Overall Budget of the Project
I.
SHORT DESCRIPTION Sale of 76% of the shares of a developer, producer and trader of ECG and blood pressure devices as well as related integrated analysis systems. 24% of the shares will be distributed to the management team as a motivational scheme.
Funding requirement
EUR
4 .4 M
Medical equipment manufacturing Debrecen, Hungary EUR 4.4 million
PROJECT BACKGROUND
Project owner The managing director is the sole owner of the company. The management team consists of 3 professionals responsible for the top level management, sales, development and manufacturing activity with outstanding expertise in the field of medical equipment and the healthcare market.
II.
PROJECT DESCRIPTION
The company is a well-known developer and producer of medical devices for hospitals, cardiology clinics and general practitioners. Key products include ambulatory ECG Holter monitors, blood pressure monitors, resting and stress ECGs, as well as related devices and a unique software which performs high-quality analysis and evaluation of test results. The company’s product portfolio covers an extensive range of cardiology devices. Nevertheless, continuous product development activity resulted in top-notch, unique products targeting the steadily growing niche healthcare sector of telemedicine which allows for the fast and easy transmission and remote analysis of data. Product parts are manufactured by local co-operating partners based on the company’s know-how, while design, assembly and testing is executed within its own capacity. The equipment is jointly developed with local universities acknowledged in the field of healthcare and medical devices. 85% of the revenue of the company - which is in possession of all the necessary product certifications - is generated from 40 different export markets through its distribution partners. The main areas of operation include Western and Eastern European countries, Japan, China, Korea, and Turkey coupled with advanced stage negotiations on commercial co-operation with leading manufacturers in the United States. Along with the increase of the current product segments, the new target sector of telemedicine ensures a high growth potential for the company in the upcoming years supported by recent client acquisitions as well as a rapidly growing demand in the Far Eastern region. The fiercely competitive international market of ambulatory ECG Holter monitors, resting/stress ECGs and blood pressure devices are worth EUR 3 billion. Main players include international bluechip companies, yet with its highly integrated systems and related unique analysis software, the company managed to produce steady growth in its key countries. Furthermore, recently developed telemedicine solutions provide the company with a competitive advantage on a market of outstanding growth potential.
III. FINANCIAL INDICATORS Assumptions and main indicators Based on the information above, the management forecasts promising opportunities for growth, particularly in the field of telemedicine, with an expected stable increase of the ambulatory ECG and Stress ECG product line. Key financial data (EUR 1000)
2013
2014
2015
2016
2017
2018
2019
Export revenue
892
682
920
1,400
1,900
2,400
2,900
Domestic revenue
134
93
80
90
100
100
100
EBIT
311
245
250
350
450
550
650
The crisis in The Ukraine affected the export revenue of 2014, although revenue generated in the country is expected to catch-up in the near future.
IV.
INVESTMENT OFFER
Investment opportunity
Acquisition of 76% stake
Price expectations
EUR 4.4 million
Subsequent to preliminary discussions and negotiations, potentially interested buyers are expected to submit an offer. Following the acceptance of the offer, the investor will be invited to the data room to undergo an in-depth due diligence assessment of financial, tax, legal and technical matters.
CONTACT DETAILS HUNGARIAN INVESTMENT PROMOTION AGENCY +36 1 872 6584
[email protected] www.hipa.hu
BASIC PROJECT DATA
Concr et e Pipe
Sector Location Overall Budget of the Project
I.
SHORT DESCRIPTION Sale of 100% ownership of the Company preferably to a strategic investor
Funding requirement
EUR
3.3 M
Reinforced Concrete Product Manufacturing Monor, Hungary EUR 3.3 million
PROJECT BACKGROUND
Project owner The Company is owned by its founder (90% share) and his son (10% share). The founder is the managing director of the Company and is planning retirement from the business due to his age.
II.
PROJECT DESCRIPTION
The Company produces prefabricated reinforced concrete product parts mainly used in civil engineering. The Company’s leading products: reinforced concrete ROCLA tubes of a large diameter, reinforced concrete tubes with glass fibre reinforced polyester lining, water tower parts and reinforced concrete telecommunication transmission towers. In addition, the Company carries out precision welding for Western European customers through its German and French branch offices. The technology of manufacturing reinforced concrete tubes with glass fibre reinforced polyester lining is patented by the Company. In comparison to other anti-corrosion solutions, the Company’s glass fibre reinforced polyester lining provides permanent protection. The Company also owns patents for other technological solutions it had developed. The technical quality of the Company’s products is outstanding; the number of customer complaints is significantly lower than those of the Company’s competitors. No other manufacturers offer highfunctionality products of similar quality in the regional market. The Company’s customers in the segment of concrete product manufacturing are primarily civil engineering contractors. The Company receives project-based orders, acting as a subcontractor. In addition to production, the Company also regularly provides construction and installation services in connection with its products. Over the two decades of its operation, the Company has provided its services to a number of clients, and its products are widely used in the Hungarian water supply, water storage and sewerage systems. The Company’s telecommunication transmission towers have been installed in a number of countries around the world.
The large-scale sewerage and water supply system development projects in Hungary (to be completed by 2020) offer the Company a significant opportunity for growth. The relatively underdeveloped sewerage systems in the neighbouring countries of Central Eastern Europe offer potential for international expansion. Management believes that a strategic investor with experience in international sales could make a significant contribution to the growth of the Company. The Company’s premises are located close to Budapest, Hungary. The premises and the equipment are owned by the Company. The Company has a staff of approximately 65 people.
III. FINANCIAL INDICATORS Estimates and main indicators The Company has realised EUR 5.2 million of revenues in 2015, of which EUR 3.4 million is related to concrete product manufacturing and EUR 1.8 million to precision welding.
Key financial data (EUR 1000)
2012
2013
2014
Export revenue
2,814
2,675
2,410
Domestic revenue
1,859
1,424
1,614
Total Revenue
4,673
4,100
4,024
257
31
201
EBIT
IV.
INVESTMENT OFFER
Investment opportunity
Acquisition of 100% stake
Price expectations
EUR 3.3 million (after subtraction of debt)
CONTACT DETAILS KRISZTINA SZILÁGYI communication and marketing director +36-29-610460; +36-20-5292829
[email protected] www.agmbeton.hu
BASIC PROJECT DATA
MTCN
Sector Location Overall Budget of the Project
I.
SHORT DESCRIPTION Establishment of a green field alkaloid production plant. The Company seeks investment by a new investor/ prospective co-owner
Funding requirement
EUR
5M
Production of pharmaceutical raw materials (primary) Ónod, Hungary EUR 44 million
PROJECT BACKGROUND
Project owner The project owner, MTCN Magyarország Ltd., was founded by a Hungarian private individual who has been involved in the preparation of the project for several years and is managing director of the Company. Other professionals participating in the preparation will also occupy formal management positions at the Company.
II.
PROJECT DESCRIPTION
Based on several patents and poppy of high alkaloid content (Papaver Soniferum), the Company is planning to establish and operate a modern production plant employing 130-150 people. By processing 5,000 tons of poppy per year, the Company expects to produce 20-25 tons of morphine, thebaine, codeine sulphate and narcotine (alkaloids) along with c. 2,000 tons of poppy seeds annually (the latter also being suitable for the production of 750 tons of cold-pressed, refined poppy seed oil). Alkaloids are chemical compounds/intermediaries used in the production of various medicinal products (among others, for pain relief and disintoxication therapies), while poppy seed oil is widely used in cosmetics, nutrition, fine mechanical and arms industries. The establishment of the production plant requires a net capital of approx. EUR 29 million, most of which is planned to be covered from a bank loan.
Being intermediaries of basic medicines and having a strategic military significance, alkaloids belong to the group of strictly controlled drugs. Cultivation of poppies is also officially regulated. As a result of the above factors and the scarcity of similar companies in the region, market demand for alkaloids and poppy seed oil is both high and stable.
After obtaining the necessary permits and approvals, the Company will be the sole active alkaloid producer in Hungary. It plans to sell its products internationally to pharmaceutical and military enterprises, and potentially to national governments (which maintain strategic stocks of poppybased alkaloids which are regularly renewed due to their expiration). The Company has had discussions with several potential customers who indicated serious interest in a business partnership. In addition to processing poppy seed pod, the Company will also manage the organization of poppy cultivation in the surrounding area by concluding annual agreements for growing poppy with 500-1000 producers to satisfy the raw material demand without import. The project is currently in a highly developed phase. Preparation for the implementation has been ongoing for years. During this period, detailed investment and technological plans have been elaborated and advanced discussions about the terms and conditions of the investment conducted with third parties (including local governments, public and official agencies, potential business partners and financing institutions).
III. FINANCIAL INDICATORS Estimates and main indicators Due to the high cost, complexity and duration of initial investments, the project will not generate revenues in the first two years, and it is expected to reach a 100% production capacity in its 4th year of operation. Key financial data (EUR 1000)
2016
2017
2018
2019
2020
2021
2022
Export revenue
0.0
0.0
2.4
18.3
18.3
18.3
18.3
Domestic revenue
0.0
0.0
0.0
0.0
0.0
0.0
0.0
EBIT
0.0
-0.1
-0.4
5.4
4.0
3.8
3.7
Capital expenditures
3.3
12.7
12.7
-
-
-
-
IV.
INVESTMENT OFFER
Investment opportunity
Capital increase in MTCN Magyarország Ltd. in exchange for a 49% equity stake in the Company
CONTACT DETAILS HUNGARIAN INVESTMENT PROMOTION AGENCY +36 1 872 6584
[email protected] www.hipa.hu
BASIC PROJECT DATA
HandInScan – a computer-enhanced hand hygiene training and control device
Sector Project owner Location Implementation period Overall Budget of the Project Funding requirement
I.
SHORT DESCRIPTION HandInScan is an innovative health-tech company providing a technology driven, IP protected solution for the prevention of healthcare-associated infections (HAIs) and biological contamination. Its disruptive life, cost saving technology and quality-insured methods are to be extended to clean manufacturing plants, food service stations and the hospitality industry as well.
Funding requirement
EUR
5M
Health technology HandInScan Kft. Budapest, Hungary 2017-20 15 M EUR 5 M EUR
PROJECT BACKGROUND
Short background HandInScan Kft. was founded in 2012 as a spin-off of the Budapest University of Technology and Economics (BME). Original founders were private individuals from the engineering development team, aiming to create a device to control objectively hand hygiene performance of medical staff. It was named Semmelweis Scanner, following the tradition of the great physician who first recognized the importance of hand hygiene. The innovation and the technology transfer received numerous international awards, including ICPIC Innovation Academy award (Genova, 2011), the Red Dot Design Award – best concept – in Singapore (2015) and the Swedish Gran Prize (2016). After the initial successful validation with early prototypes of the Semmelweis Scanner, the application domains were significantly extended to target clean manufacturing sites, the food industry and high-end tourism. In early 2013, HandInScan received a seed investment of 540 k EUR from DBH Investment Group, a Hungarian VC investor company, to carry out further R&D, prototyping and field validation of its technology. In 2016 HandInScan closed a Series A investment round of 1.45 M EUR by Perion Investment Fund. The project was also supported by numerous R&D grants, with a total budget of 800 k EUR.
General background of the management The current management team of the company holds expertise in the key technical and financing areas. • Dr Tamás Haidegger, CEO: Ph.D. in electrical engineering, MSc in biomedical engineering. Dr Haidegger is an associate professor at Óbuda University and research area manager at ACMIT. He has been serving as the CEO/CTO in the early stage of the company, and built a vast network of collaborations with medical institutions and organizations, such as WHO. • Péter Róna, COO: received his M.Sc. degree in the ield of computer science at BME. He joined the HandInScan founders in 2011 bringing in complementary project management and innovation financing knowledge, and has been running the business operations since. • Csaba Hankó (Sales & Marketing Director): gained 12+ years of experience in medtech and health sales and marketing during different management positions (Weyergans High Care AG, 3DHISTECH Ltd.) held over the years. • Advisory board members who are also participating in the strategy: William Benkő (President of AmCham Hungary), László Ürge (CEO of ComInnex Inc).
II.
PROJECT DESCRIPTION
Problem • Healthcare-Associated Infections (HAI) are a leading cause of death even in the EU and the USA • HAI results in 1.4m cases a day globally • Causing over 250 000 unnecessary deaths a year in the western world (according to WHO), despite all current governmental campaigns and educational programs • Western hospitals still have a 10% average HAI ratio, and Hungary sees even more (undocumented cases) • Effective hand disinfection has shown to decrease HAI by at least 30%
The cost of poor hygiene • HAI is a leading cause of death both in the EU and the USA • Healthcare workers’ adherence is well below the required level • Direct costs for HAI in Europe: 9.3 bn EUR annually • An average 500 bed hospital loses 1.7 m EUR on infections annually • HAI costs 96 bn USD to the US economy yearly, including the sick days and the permanent health damage HandInScan developed an integrated system that utilizes digital imaging combined with proprietary software methodology to identify treated versus unaffected areas after regular hand rubbing. For that, an UV-dye enabled alcohol-based disinfectant is employed. Effective hand washing was shown to decrease HAI by 30%, at least. Only HandInScan ensures quality control, tackling initial training and ongoing monitoring as well. The system records each hand washing event of every person, and generates statistics to the management. HandInScan teaches the validated WHO’s 6-step hand washing protocol (part of the EN1500 and US CDC recommendation), with an order of a magnitude higher cost effectiveness than of the closest competitor. HandInScan employs state-of-the-art image processing algorithms, relying on Artificial Intelligence methods, and able to create new theoretical results, serving further product development. The usability of the system has been optimized, and there is a custom designed integrated reporting system, which is portable to any smart device or tablet. As for the hardware, it is built on industrial grade components with in-house-designed electronics, with function-driven, yet sleek exterior design.
HandInScan operates a value-added revenue model, optimized to create a sustainable business model based on recurring fees. Major revenue streams: equipment sales or rentals, hand hygiene audit and training services. HandInScan device’s distribution sales price is 7-10 k EUR and the hardware’s manufacturing cost can be signiicantly reduced with scaling.
Property rights, licences and certificates HandInScan products and technologies are protected by patents and appropriate know-how in order to secure its innovations. The Hungarian patent application was filed by Budapest University of Technology in 2010, later acquired by the company. The protection has been extended internationally with the PCT filing in 2011—national extension for the US was accepted, for Canada and Europe is in progress. Further patents have been submitted in 2016.
Current position in the market • HandInScan has started the sales process in 2015, and the company already sold close to 100 devices. • In May 2013, National University Hospital of Singapore teamed up with the HandInScan team to transact an objective evaluation for this process. During 5 days, HandInScan assessed more than 5,000 healthcare workers with the device. • Technology validation has been achieved through clinical trials in Hungarian hospitals (Bethesda Hospital, Miskolc General Hospital, etc., 2013-) . • HandInScan has been an integral part of the medical doctoral training program at Semmelweis University (2012-). • The technology has been introduced to app. 100 k people directly, mostly to potential customers and partners at the MEDICA Expo (2014, 2015), Arab Health Expo (2014, 2015, 2016), OECD Forum (2016) etc. • Currently HandInScan is in contact with over 40 potential distributors, covering global regions, the first couple of contracts have been signed. • In 2016, HandInScan has already started initial market development and sales activities in the USA.
Target groups HandInScan identified three major market segments, where improvement on hand hygiene practices brings great benefits through different measures. • Healthcare sector – hospitals, nursing homes, dentists • Hospitality industry – mostly fast food chains, restaurants, cruise lines • Clean manufacturing companies – biotechnology plants, pharmaceutical companies, food and beverage manufacturing Due to the speciicity of the market (structure of the healthcare system and local culture) Western European countries, especially German speaking countries and the USA are HandInScan’s primary target markets. In these countries, the estimated market potential is 6-700 000 devices.
Short market description, main competitors In the next ive years signiicant growth (CAGR ~20%) is expected in hand hygiene revenues based on a research by Frost and Sullivan. Automated hand hygiene monitoring devices are playing a more and more important role in preventing health associated infections. The Western European hand hygiene market earned revenue of $271.3 million in 2010 and estimates this to reach $446.9 million in 2017. Current technologies are addressing different parts of the complex problem of hygiene. No other technology provides quantitative measurement and report on hand hygiene. Related companies include: SureWash (IE), Hygreen (US), Biovigil (US) and compliance monitoring systems have been provided by e.g., Ecolab (US) via a strategic alliance with Proventix (US) and Hill-Rom (US). None of those can provide objective results on hand hygiene technique. Hygiene control in food and manufacturing industries use only manual methods.
Competitive advantages • Immediate user feedback about the hand washing technique • Reports for the management to detect risks of hand hygiene processes • Using HandInScan can generate extra credibility in infection sensible industries • Objective tool for healthcare institutes to audit employees’ and visitors’ hand hygiene status • Integration opportunity to hospital IT systems
Key strategic partners • HandInScan’s main partner in product development is Budapest University of Technology (BME), and the Austrian Centre for Medical Innovation and Technology (ACMIT). • Paul HARTMANN AG (a global hygiene company based in Germany) is a key partner and serves as an agent in many countries. • Sales distribution contracts are signed for the territories of UK, AT, RO, NL, BE, LU, US, CA, JP, KR, negotiation for another 10 countries are ongoing.
WHY TO INVEST? • Cutting edge technology with IP protection and several awards • Dynamically growing market as automatic hand hygiene compliance monitoring devices becoming standards in the next 3-5 years • Strong R&D capability and tangible results, allowing a further product development • Experienced management team (avg. 10+ years) in the ield of medtech and business operations • Growing global partnership network, further opportunities to enter new geographical markets
III.
FINANCIAL INDICATORS
Assumptions and main indicators P&L, financial indicators (summary of the investment plan, and the P&L)
EUR ‘000
2016
2017
2018
2019
2020
Revenue
685
1,042
2,017
4,335
7,699
OPEX
1,066
1,313
2,057
3,832
4,436
EBITDA
-381
-271
-40
503
3,263
Quantitative and Qualitative Indicators QUANTITATIVE INDICATORS Revenues / year 2015
110 k EUR
Mid-term revenues/year expectation
5-8 M EUR
Mid-term market penetration expectation (%) 5% Available owner’s resources / available funds
IV.
In early 2016 HandInScan closed Series A investment round of 1.45 M EUR.
INVESTMENT OFFER
Required amount of investment
5 m EUR
Form of investment
Equity
Proposed capital/equity structure Minority stake (