Investor Presentation • Sep 1, 2021
Investor Presentation
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ANALYST PRESENTATION
DRAFT V6
Investor Presentation – September 2021
Rolf Unterberger CEO
Bernd Wagner CFO & COO
Source: Figures for fiscal year ending December 31, 2020 and six-month periods ending June 30, 2021 and to the consolidation scope of the former holding company of Cherry Group, Cherry Holding GmbH, which Cherry AG acquired with effect as of September 30, 2020. 1. As of March 2021
1 Established number one global market position for mechanical gaming keyboard switches
Innovation and quality leader with a track record of successful new product development
Leading brand recognition and pricing power in our core markets
Growth driven by multiple secular growth trends and underlying markets with strong growth
Global distribution and scalable manufacturing footprint with highly automated state-of-the-art production facilities
6 Blue chip customer base subject to high switching costs
7 Impressive financial profile with high margins and attractive cash conversion
" As in other sports, specialized high-performance gear, such as gaming keyboards, mice, headsets and performance controllers, allow digital athletes to perform their best. Modern video games reward the speed and precision of user inputs, driving demand for powerful gaming components and systems."
1. Upper Housing is a CAD high precision component made of plastic polymer ensuring precise movement of stem
is at the heart of every CHERRY MX key switch providing incredible reliability and durability through gold's selfcleaning and corrosion-resistant characteristics
High-density molecular structure, made of metal alloy defines pressure characteristics and operating force for each switch type
made of plastic polymer and glass fibre provides dualfunctionality with inner base for switch mechanism and outer base for mounting on keyboard
AW410K RGB Mechanical Gaming Keyboard, Alienware
Encoder Gaming Keyboard, OMEN
"CHERRY INSIDE"
Distinguishes customer products to
achieve premium pricing
ROG Strix Scope RGB Mechanical Keyboard, Asus
K70 RGB Mechanical Keyboard, Corsair
Source: Company
| Criteria | |||||
|---|---|---|---|---|---|
| Gaming focus | ✓✓✓ | ✓ | ✓ | ✓ | |
| Workmanship | ✓✓✓ | ✓ | ✓✓✓ | ✓ | |
| Reliance | ✓✓✓ | ✓✓ | ✓✓ | ✓ | |
| Responsiveness | ✓✓✓ | ✓✓ | ✓✓ | ✓✓ | |
| Reputation | ✓✓✓ | ✓ | ✓✓ | ✓ | |
| Innovation | ✓✓✓ | ✓ | ✓✓ | ✓✓ | |
| Made in Germany | ✓✓✓ |
Company Assessment(1) Price of gaming keyboards(in €)(2)
1. Sources: Company. Based on selected categories, March 2021
2. Source: Company web crawling, company analysis, April 2021
3. Based on retail prices (incl. VAT) in Germany, not weighted to account for number of sales for each keyboard
4. Source: Company, April 2021. Detailed information on price position of Omron and TTC is not available due to white labeling.
| Price category |
by | by | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Premium Laptops >€1,500 |
|||||||||
| D R A O B Y E K G N MI A G F O E C RI P |
Premium ~€120–€300 |
GX Series by | |||||||
| High ~€80–€120 |
Romer-G by | By (white label) |
|||||||
| Medium ~€40–€80 |
Niche keyboards | ||||||||
| Low ~€0–€40 |
source NEVER dual/multi-sourced |
Keyboards ALWAYS sole and specified in |
Keyboards ALWAYS co-branded "Cherry Inside" - |
NEVER white labelled |
by
"With this model, the German-based company once again achieves a milestone in the development of switches."
- Techpowerup
Dave2D: "This is by FAR the best laptop keyboard ever made with mechanical switches"
Tom's Hardware: "Using Cherry MX Ultra Low Profile switches really takes the everyday typing experience to the next level"
Linus Tech Tips: "I would absolutely take these first. Cherry always impresses me with their attention to detail"
G80-3000N RGB TKL - launched 24.08.2021 -
The original updated: Classic keys, but with state-of-the-art electronics and in a space-saving housing.
STREAM KEYBOARD WIRELESS - launched 17.08.2021 -
The best STREAM ever as a wireless keyboard.
DW 9100 SLIM - launched 28.07.2021 -
Rechargeable designer desktop with many extra features.
Wired mechanical keyboard without number pad
Compact housing to help increase desk space
CHERRY MX technology – All keys are precision, Gold Crosspoint switches "Made in Germany"
Maximum productivity: Super silent keystroke, unbeatable typing feel
Highest quality: Durable key labels, our own SX scissor mechanism
Optimum operating comfort: 3 integrated status indicators, non-slip rubber feet, 10 office & multimedia keys
Optionally connected using Bluetooth® or a 2.4 GHz wireless unit – both with AES-128 encryption
6 button mouse with optical sensor and switchable resolution (600/1000/1600 dpi)
Lithium batteries in the mouse and keyboard can be recharged using USB-C
For reception counters in
Additional sectors will follow
can be operated without a power supply via Power-Over-Ethernet
prepared for reading contactless cards by NFC interface
1. TechNavio, 2021, Conversion from USD to € performed by the Company using a fixed rate of USD 1 = € 0.85.
2. The former holding company of Cherry Group was Cherry Holding GmbH. Cherry Holding GmbH was acquired with effect of September 30, 2020 by Cherry AcquiCo GmbH (now Cherry AG). Cherry Holding GmbH was merged in April
with and into Cherry AcquiCo GmbH (now Cherry AG) and Cherry AcquiCo GmbH (now Cherry AG) assumed the name of Cherry Holding GmbH. In June 2021, Cherry Holding GmbH (former Cherry AcquiCo GmbH) was converted into Cherry AG
Margins (in %)
Innovative Leadership
Retain Premium Position
• Through continued quality leadership
Organic Growth
Geographic Expansion
Europe (Nordic & CEE)
Complement product portfolio
Focus on existing 4 verticals
First discussions with potential targets initiated
Expect to acquire 1-2 targets until mid 2022
3 ▪ THEOBROMA – OCTOBER 2020
European developer & manufacturer with expertise in IoT, Industry 4.0 and Software Engineering
European manufacturer of hygienic, anti-dust, washable keyboards & mice
" ESG compliance is at the heart of our Company and forms the basis for respectful, reliable, trustful and long-term partnership with our business partners and associates."
Bernd Wagner CFO of Cherry Group
Preparation of exchanging plastic bowl against Bio bowls to avoid plastic (role-out in 2021)
Compliance with all relevant local labour laws, standards and regulations as well as international conventions on human rights
76 Trainings from EHS rolled out to staff in 2020
Compliance with local legislation, international standards and regulation regarding anti-trust and corruption, see Cherry compliance policy
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA, THE "UNITED STATES"), AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL.
By attending this presentation and/or accepting or reading a copy of this document, you agree to be bound by the following limitations and conditions:
This document has been prepared by Cherry AG (the "Company"), is strictly confidential, is intended only for persons invited to attend it, and may not be disclosed to any third party. It does not, and is not intended to, constitute or form part of, and should not be construed as, an offer to sell, or a solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities of the Company, nor shall it or any part of it form the basis of or be relied upon in connection with or act as any inducement or recommendation to enter into any contract or commitment or investment decision whatsoever. This document is not directed at, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. Accordingly, the document may not be reproduced, distributed, published or passed on, directly or indirectly, in or into the United States, Australia, Canada, Japan or any other jurisdiction in which the distribution or release would be unlawful. Persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Any investment decision to purchase or subscribe for shares of the Company should be made solely on the basis of the information contained in the prospectus approved by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht –BaFin).
All material contained in this document and information presented is for information purposes only and must not be relied upon for any purpose and does not purport to be a full or complete description of the Company or its business. This document does not, and is not intended to, constitute or form part of, and should not be construed as, an offer to sell, or a solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities of the Company, nor shall it or any part of it form the basis of or be relied upon in connection with or act as any inducement or recommendation to enter into any contract or commitment or investment decision whatsoever.
This document is not an offer of securities for sale in the United States of America (including its territories and possessions, any state of the United States and the District of Columbia, the "United States"). Any securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state or other jurisdiction of the United States, and may not be offered, sold or otherwise transferred, directly or indirectly, in or into the United States absent such registration, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements under the Securities Act, in each case in compliance with any applicable securities laws of any state or other jurisdiction of the United States. Any public offering of securities to be made in the United States would be made by means of a prospectus that could be obtained from Cherry AG and that would contain detailed information about the company and management, as well as financial statements. There will be no public offer of the securities in the United States.
Subject to certain exceptions under applicable law, the securities referred to herein may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan.
The information contained in this document does not purport to be comprehensive. None of the Company, Hauck & Aufhäuser Privatbankiers Aktiengesellschaft, M.M.Warburg & CO (AG & Co.) KGaA and ABN AMRO Bank N.V. (the "Banks"), any of their respective subsidiary undertakings or affiliates, or their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, fullness, accuracy or completeness of the information in this document (or whether any information has been omitted from this document) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection therewith. By accepting this document, you acknowledge the foregoing and that you will be solely responsible for your own assessment of the Company, the industry and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the current and potential future performance of the Company's business. All information in this document is subject to verification, correction, completion, updating and change without notice. Neither the Company nor the Banks undertake any obligation to provide the recipient with access to any additional information nor to update this document nor any information nor to correct any inaccuracies in any such information.
A significant portion of the information contained in this document, including market data and trend information, is based on estimates or expectations of the Company, and there can be no assurance that these estimates or expectations are or will prove to be accurate. Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by the Company as being accurate. All statements in this report attributable to third party industry experts represent the Company's interpretation of data, research opinion or viewpoints published by such industry experts, and have not been reviewed by them. Each publication of such industry experts speaks as of its original publication date and not as of the date of this document. This document contains forward-looking statements relating to the business, financial performance and results of the Company or the industry in which the Company operates. These statements may be identified by words such as "expectation", "belief", "estimate", "plan", "target" or "forecast" and similar expressions, or by their context. Forward-looking statements include all matters that are not historical facts, such as statements regarding: strategies, outlook and growth prospects; future plans and potential for future growth; growth for products and services in new markets; industry trends; and the impact of regulatory initiatives. These statements are made on the basis of current knowledge and assumptions and involve risks and uncertainties, many of which are beyond the Company's control. Various factors could cause actual future results, performance or events to differ materially from those described in these statements, and neither the Company nor any other person accepts any responsibility for the accuracy of the opinions expressed in this document or the underlying assumptions. No obligation is assumed to update any forward-looking statements.
The information contained in this document does not purport to be comprehensive and has not been subject to any independent audit or review. Certain of the financial information as of and for the fiscal years ended December 31, 2018, 2019 and 2020 has been taken or derived from audited financial statements. The financial information as of and for the six-month periods ended June 2021 is unaudited. Information derived from unaudited financial information should be read in conjunction with the relevant audited financial statements, including the notes thereto. Certain financial data included in the document consists of "non-IFRS financial measures", including Adjusted EBIT, Adjusted EBITDA, Adjusted EBIT Margin, Adjusted EBITDA Margin, Free Cash Flow and Cash Conversion Rate. These non-IFRS financial measures may not be comparable to similarly titled measures presented by other companies, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS. You are cautioned not to place undue reliance on any non-IFRS financial measures and ratios included herein.
Adjusted EBIT is calculated as EBIT (operating result/earnings before interest, taxes and income taxes) adjusted for the following either non-recurring items or non-operating items: (i) Staff expenses (incl. share-based staff expenses) / (income); (ii) expenses in connection with capital market transactions; (iii) expenses in connection with M&A Transactions; (iv) expenses in connection with natural disaster and pandemic, and (v) other one-off cost (the items (i) through (v), the "Adjustment Items").
Adjusted EBITDA is calculated as EBIT plus depreciation and amortization and adjusted for the Adjustment Items.
Adjusted EBIT Margin and Adjusted EBITDA Margin are calculated by dividing Adjusted EBIT and Adjusted EBITDA by revenue, as applicable.
Free Cash Flow is calculated as cash flows from operating activities less cash flows from investing activities.
Cash Conversion Rate is calculated as Free Cash Flow divided by consolidated profit/loss, expressed as a percentage.
Certain figures, including financial and market data, have been rounded and the relevant sums may not add up to 100% due to rounding.
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
In each member state of the European Economic Area and the United Kingdom (each a "Relevant Member State"), this document is only directed at persons in such Relevant Member State who are "qualified investors" within the meaning of Article 2(e) of the Regulation (EU) 2017/1129 and within the meaning of Article 2(e) of the Regulation (EU) 2017/1129 as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018. In addition, in the United Kingdom, this document is only directed at persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, (the "Financial Promotion Order"), (ii) are persons falling within Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as "relevant persons"). This document is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates in available only to Relevant Persons and will be engaged in only with relevant persons.
In relation to the contemplated offering of shares of the Company, this presentation does not constitute an offer or invitation to subscribe for, or purchase, any shares of the Company and neither this document nor anything contained herein shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. Should the Company pursue the contemplated public offering in Germany and international private placements outside of Germany, such offers are only made on the basis of a prospectus in relation to the offer which has been approved by the 'Bundesanstalt für Finanzdienstleistungsaufsicht' on June 15, 2021 (the "Prospectus"). Any acquisition of shares in the offering should be made solely on the basis of the information contained in the Prospectus and no reliance is to be placed on any representations other than those contained in the Prospectus. Copies of the Prospectus will be available free of charge from Cherry AG, Einsteinstraße 174, 81677 Munich, Germany or on Cherry AG's website (http://www.cherry.de).
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