Credit Rating Report Page 1 of 16 Credit Rating Report SYSTEMS SUNLIGHT S.A. INDUSTRIAL & COMMERCIAL CO OF DEFENSIVE ENERGY ELECTR.& TELEC. SYST. &MAN. PROC. REC. MAT. & TRADE Greek Company Name ΣΥΣΤΗΜΑΤΑ SUNLIGHT Α.Β.&Ε.Ε. ΑΜΥΝΤΙΚΩΝ ΕΝΕΡΓ. ΗΛΕΚΤΡ. & ΤΗΛΕΠ. ΣΥΣΤΗΜΑΤΩΝ & ΔΙΑΧ. ΕΠΕΞ. ΑΝΑΚ. ΥΛΙΚΩΝ & ΕΜΠ. ΑΝΑΚ. ΥΛΙΚΩΝ Trade Name: SYSTEMS SUNLIGHT S.A. ICAP ID 212758 Address 2 Ermou & Nikis, 10563, Athens, Attiki Tel. 2106245400 Fax 2106245479 U.R.L. www.systems-sunlight.com E-mail [email protected] Company Identification Sector Industry (Electric - Electronic Material) Legal Form Societe Anonyme Year Established 1994 Head Office Athens, Attiki Duration Up to year 2044 Gov. Gazette No 01606/1994 Tax Registr. No 094401108 General Business Registration No 1579901000 No of the Register of Societe Anonyme 031055 /004 /Β /94 /157 Member of ATHENS CHAMBER OF COMMERCE & INDUSTRY General Reg. No. 0133626 Exports Reg. No. 0036376 Chairman, CEO Basil Ang. Billis Capital Euro 44,394,950 Owners Equity Euro 46,277,018 (31/12/2017) Net Sales Euro 222,847,726 (1/1/2017 - 31/12/2017) Net Income for the Year Before Tax Euro 9,050,257 (1/1/2017 - 31/12/2017) No of Employees 740 Business Profile file://galaxy/URANUS/LAN/DATA%20BANK/NET/RATING%20COM/ICAP%20CRE... 6/11/2018 Credit Rating Report Page 2 of 16 Financial Status Very Good Payment Record Prompt Trend Highly Upward ICAP Credit Rating ICAP Credit Rating: B (5/10/2018) The above mentioned Credit Rating has initiated at the request of the rated entity. Previous ICAP Credit Rating B, Outlook : Negative 9/5/2018 Initial Credit Rating Assignment Date 31/12/2004 Rating Analyst KALOGEROPOULOS CHRISTOS Senior Analyst Rating Supervisor KEFALAS GIORGOS Senior Manager Rating Committee Evaluation YES Company's Opinion Agree Notification ICAP Credit Rating YES Credit Rating Key Elements Presentation The company SYSTEMS SUNLIGHT SA fields of activity is: - the construction of energy storage systems for industrial, consumer and advanced applications (batteries for motive power, reserve power, submarines, torpedoes, etc.) - the construction of energy power systems (generator sets, UPS, industrial air conditioning, etc.) - the provision of energy services (advisory and technical support, maintenance, training, etc.) The company concerned was founded in 1994, went by another name (ARION SA) and had a different field of activity. It was acquired in June of 2006 by GERMANOS SA, which was controlled by the businessman Mr. Panos Germanos. During that time the company was renamed SYSTEMS SUNLIGHT SA. and absorbed GERMANOS SA's industrial and commercial battery industry. Up until October of 2014, Mr. Germanos was the sole shareholder. Until 2016, 50.12% of the share capital is held by the holding company OLYMPIA GROUP SA, 46.16% by PARAMONTE HOLDINGS LTD based in Cyprus, both interests of Mr. P. Germanos, and 3.73% by the company TRUCIBEL LTD, also based in Cyprus. Within 2017, the acquisition of 100% of the company's shares by OLYMPIA GROUP SA HOLDINGS was completed, thus becoming its sole shareholder. The company's headquarters are located in Athens and industrial facilities of considerable size are located in New Olvio in the Prefecture of Xanthi. The company's plant is the second largest in Europe and one of the most advanced in the field of industrial battery production. SYSTEMS SUNLIGHT is the parent company of the same named Group which participates in companies in Greece and abroad (Romania, Italy). At the end of 2014, a subsidiary company (SUNLIGHT RECYCLING S.A.) began to operate in the field of battery recycling, and recycled lead and alloys production, after the completion of construction of its production facilities in Komotini. The value of this investment amounted to 30 million Euros and concerns one of the most advanced battery recycling units in Europe. The above investment aims at the use of recycled lead and alloys by SYSTEMS SUNLIGHT. The company concerned also participates (with 51%), along with a well-known foreign company which specializes in the field of defence applications and systems, in a domestic company developing and producing batteries exclusively for defence applications. Moreover, SYSTEMS SUNLIGHT participates in the share capital of companies abroad which are active in the distribution and assembly of batteries. The company concerned has a wide range of clientele consisting mainly of foreign companies. Its clients are active in the field of industry, transport, telecommunications, information technology and construction. Also included in the clientele are the armed forces (Navy) of various countries. Its noted that most of the turnover (90%) comes from sales abroad. Assessment This report concerns the assessment of the parent company SYSTEMS SUNLIGHT SAs creditworthiness. The evaluation covers the risk of inconsistency and/or bankruptcy by the company concerned and is based on the following: The company's Annual Financial Report for the years 2016 - 2017 and the 6-month Financail Report half of 2018. The Annual and Interim Financial Report of the Group on a consolidated basis. The company's business data regarding management, export activity, customer size, credit risk management practices etc. The assessment of the conditions and prospects of the industry in which the company operates. The assessment of the broader macroeconomic environment. file://galaxy/URANUS/LAN/DATA%20BANK/NET/RATING%20COM/ICAP%20CRE... 6/11/2018 Credit Rating Report Page 3 of 16 Business Activity The company's revenues are derived, to a large degree, from energy accumulator sales. The accumulators manufactured/marketed by the company concerned are divided into three categories: motive power batteries reserve power batteries power batteries for defence applications Motive power batteries are mainly used in forklifts. Clients are companies that use forklifts (industries, logistics, etc.) and replace existing batteries due to age, as well as businesses that market the companys products or use its products to produce their own. Clients also include well-known manufacturers of forklifts (first-time battery placement). 95% of sales from this product category are derived from exports. Reserve power batteries are used by telecom providers, power generation companies, railway networks, utilities, etc. Also, a significant part of this product categorys sales are from abroad. Power batteries for defence applications are used by the armed forces (Navy), both in Greece and abroad, in submarine vessels and weapons systems (torpedoes). Its clientele also includes foreign companies that are competitors in some of the above areas of activity. The high geographic dispersion presented by the company's activities limits the risks of dependence on specific markets and contributes positively to this evaluation. Another positive factor is the quality of titleholders clientele, which includes notable and large-scale foreign companies as well as the armed forces of states. In addition to limiting credit risk, the above are also positively assessed in terms of prospects for securing future business progress. Industry Competition Due to the field of activity and the strong export activity, the company's sales are not dependent on the course of the domestic GDP but on growth globally, which for 2017, according to official announcements (OECD) stood at 3.6%. For 2018 and 2019, an improvement of the above index (3.9%) is foreseen. Also, the course of the industry is influenced both by the development/supply of new technological products and by the total volume of replacement batteries each year due to their age. Its noted that 80% of forklifts used in the European Union are driven by motive power batteries, and in the United States the number of electrically driven forklifts is gradually increasing. Also noted is that the main volume of SYSTEMS SUNLIGHTs sales comes from replacement motive power batteries. Regarding the defence systems/applications industry, the company has already entered into agreements for the delivery of specialized accumulators of significant value in the coming years. Competition comes from companies in the same field of activity as the company concerned, which are based abroad (European Union, United States, etc.) In the field of motive power batteries, the company has a presence in 100 countries around the world, holding significant market shares such as those in Portugal, Spain and Germany. Nevertheless, there is a risk of substitution of its products due to the existence of competitors, some being sizable companies. In the field of batteries used in defensive systems and specifically in submarines, the company concerned is a world leader. Industry prospects are seen as positive. Future growth rates worldwide, the total number of electrically driven forklifts and trends for expanding their use even in markets such as the United States, investments in renewable energy sources and in telecommunications where energy accumulators are used have a positive impact on the industrys sales. Furthermore, the expected increase in the defence expenditures of European countries participating in NATO (Germany, Romania, Baltic countries) and the maintenance of the level of corresponding expenditures by other European countries, also NATO members, at current levels (2% of GDP), is a factor that can lead to an increase in future revenues of companies specialising in the manufacturing of batteries for defence systems. There are no serious institutional barriers to the entry of new companies into the industry. However, some