Synthomer : Investor seminar Presentation

Investor Seminar

FUNCTIONAL SOLUTIONS A KEY GROWTH PLATFORM

18th November 2020

1 | Synthomer Investor Seminar 2020

Investor Seminar

Introducing the presenters

Calum MacLean	Rob Tupker	Marshall Moore	Robin Harrison	Stephen Bennett
Chief Executive Officer	President - Functional	Chief Technology Officer &	VP Platform Technology &	Chief Financial Officer
	Solutions & Europe	President Americas	External Innovation

2 | Synthomer Investor Seminar 2020

Investor Seminar

Functional Solutions - A key growth platform

1

2

Welcome and Introduction

Calum MacLean

Rob Tupker

Functional Solutions a Key Growth Platform Marshall Moore

Robin Harrison

3

4

Funding for Growth	Stephen Bennett
Summary	Calum MacLean

5	Q&A
6	Close	Calum MacLean

3 | Synthomer Investor Seminar 2020

Investor Seminar

Sustainable growth through strategic focus since 2015

Safety		Organic		Product
	Growth		Differentiation
Top quartile		Increased capex		70% + differentiated
performance - target		achieving Y-O-Y
zero incidents		growth
Manufacturing		Innovation		M&A
Excellence
Delivering upper		Delivering 20% +		4 acquisitions
quartile economics		target		completed

4 | Synthomer Investor Seminar 2020

Investor Seminar

Strong progress and positioned for further growth

• Synthomer has delivered strong and consistent growth
• Balanced organic and inorganic strategy CAGR of 13%
• Consistent proven strategy in place
• Growth capex investment programme 2017-19 and Omnova acquisition provides momentum
• Diversified end markets and increasing differentiation prove resiliency of business model during COVID-19 stress test
• Pro forma leverage expected to be ~2x EBITDA by end of 2020

EBITDA (£m)

CAGR 13%

300
							272
250						232
200			176	181	178
		160
150
118	125
100
50
0
2014	2015	2016	2017	2018	2019	2020	2021

2020 company guidance provided on the 14th of October 2020 2021 consensus (sourced: Teneo), not a forecast

5 | Synthomer Investor Seminar 2020

Investor Seminar

Resilient business model with catalysts in place to drive growth

Catalysts in place to drive further growth:

• Sustainable water-based solutions provide excellent ESG platform
• OMNOVA cost synergy programme increased to $40m by end 2022
• Slow to recover markets (automotive/ oil & gas) will return in 21/22
• Growth capex investment delivers further Nitrile 60kt in 2021 with Functional Solutions 50kt capacity in 2019 full by 2022
• SBR strategic review largely complete to support 21/22 performance
• On target leverage opens options for accelerated growth

6 | Synthomer Investor Seminar 2020

Investor Seminar

Robust investment case in line with global megatrends

Global,		Growing				Strong		Sustainable		Attractive
differentiated		proportion of		Resilient		organic and		and
					financial
chemical		speciality		demand		inorganic		responsible
					metrics
company		chemicals				growth drivers		operator

	Accelerating	Demographic &	Climate Change &	Shifting Economic
	Urbanisation	Social Change	Sustainability	Power

7 | Synthomer Investor Seminar 2020

FUNCTIONAL SOLUTIONS

A KEY GROWTH PLATFORM

8 | Synthomer Investor Seminar 2020

Investor Seminar

Functional Solutions - A key growth platform

1

2

3

4

5

Business Background & Overview
Omnova, the Perfect Fit	Rob Tupker
The Case for Growth
Innovation	Marshall Moore
Robin Harrison
Summary	Rob Tupker

9 | Synthomer Investor Seminar 2020

Functional Solutions - A Key Growth Platform

Functional Solutions 2019: £70M EBITDA, 37% of Synthomer

Synthomer 2019 Business Performance

9%		13%	50%
	58%
Volume		EBITDA*
1,466kt		£178M
33%		37%

Performance Elastomers

Functional Solutions

Industrial Specialities

10 | Synthomer Investor Seminar 2020

________________________

*2019 EBITDA after deducting corporate costs

Functional Solutions - A Key Growth Platform

A history of investment and growth, organic and inorganic

	2016		2019		2020
	Acquisition of Hexion PAC division		Global FS business		Omnova acquisition
	-	30% volume increase for FS		- Launch of global		-	40% volume increase for FS
	-	Regional and product expansion		Functional Solutions		-	Regional expansion (US,
	-	Re-dispersible powders, first US		Division Jan 1st			China)
		footprint				-	Increased speciality grades
						- Increased Oil & Gas presence
		2018 EBITDA £64M		2019 EBITDA £70M		Pro Forma 2020 EBITDA est £95-£100M

2011

Polymer Latex acquisition

• Regional expansion
• Improved positioning in Europe and Asia Pacific

2018-2019

Plant Investments

Worms, Germany

• Additional 36kt acrylics dispersions
• Strengthening of specialty business in central Europe Roebuck, USA
• Upgrade and expansion of local capacity (12kt) and capability

11 | Synthomer Investor Seminar 2020

Functional Solutions - A Key Growth Platform

FS now global top 5 supplier with leading positions in EMEA

		Rank
Market Position
Key

Points

Plant Network	# Locations
SYN
	Key
	Points

	Global			EMEA			Americas			Asia
	SYN: 3rd / FS: Top 5			SYN: 1st / FS: 2nd			SYN: 5th / FS: Top 10			SYN: 4th / FS: Mid-tier
▪ FS now Top 5		▪	FS now number two		▪	FS NORAM business		▪	FS Top 6 among
	supplier globally			in EMEA			tripled with Omnova			global players; many
										local and regional
										manufacturers
	SYN: 38 / FS: 18			SYN: 20 / FS: 8			SYN: 11 / FS: 6			SYN: 7 / FS: 4
▪	Third largest plant		▪	Largest plant network		▪	Third largest plant		▪	Two Production
	network globally			in EMEA			network in Americas			locations in China
▪	Plants based in 17		▪	Plants based in 9
	countries			countries

Top 5 Supplier in an estimated £12B addressable market

12 | Synthomer Investor Seminar 2020

________________________

Sources: Kline, KNG, internal analysis

Functional Solutions - A Key Growth Platform

Applications driven business derived from C2-C4 chemistry

Monomer

Polymer

Application

				▪	PVAc	▪	Wall paint
	C2	▪	Styrene	▪	Intumescent
	▪	VACO
	▪	Vinyl Acetate	▪	Wood glue
	▪	RDP
				▪	Tiles adhesives
		▪	Acrylic acid			▪	Flooring adhesives
	C3	▪	Butyl acrylate	▪	SA
	▪	Tapes
	▪	2-EHA	▪	PA
		▪	MMA			▪	Sealants
Oil & Gas			▪	XSBR	▪	Waterproofing
		▪	Mortar
	C4
	▪	Butadiene	▪	HSSBR
	▪	Nonwovens
				▪	XNBR	▪	Wovens
	Benefits:		Large Buyer,		Broadest	Differentiation through
			Diverse Supply	Water Based		Innovation and
			Base	Dispersion*	Application know how
					portfolio

• A dispersion is a system in which distributed particles of one material (e.g. a polymer) are dispersed in a continuous phase of another material (e.g. water or solvent)

13 | Synthomer Investor Seminar 2020

Functional Solutions - A Key Growth Platform

FS holds leading positions in a variety of industries

Coatings		Textiles		Construction		Adhesives		Oil & Gas

Business

42%

24%

17%

14%

3%

Volume Split

▪

Global #5

▪

Global #4

▪

Global #4

▪

Mid-tier

▪ Global leader in

Market

▪

#3 in EMEA

▪

Leading position in

▪

#2 in EMEA

▪

Leader in Europe in

specialty drilling and

Position

▪

Global leader in

EMEA

WB specialty tapes

cementing additives

intumescent

and filmic labels

	▪	Architectural	▪	Insulation systems	▪	Repair mortars	▪	Packaging &	▪	Drilling fluid
Main		coatings	▪	Deco Laminates	▪	Ceramic tile		specialty tapes		additives
▪	Wood trim	▪	Disposables (e.g.,		adhesives	▪	Paper & filmic labels	▪	Cement
Applications
▪	Intumescent		diapers)	▪	Waterproofing	▪	Contact adhesives		enhancement
						membranes	▪	Can sealings		additives

14 | Synthomer Investor Seminar 2020

Functional Solutions - A Key Growth Platform

FS serves a variety of diversified consumer end markets

Construction &		Food & Beverage		Home Furnishing		Automotive		Hygiene &
Home Improvement					Personal Care

Architectural

Bottle Labels

Wood Coatings

Underbody

Opacifiers

Coatings

Coatings

Tile Adhesives

Can Sealings

Wood Adhesives

Liquid Applied

Lamination

Sound Damping

Adhesives

Construction

Cheese Coatings

Decorative

Automotive Tapes

Diapers

Tapes

Laminates

Insulation

Sausage

Blackout for

Engine Gaskets

Wipes

Systems

Wrapping

Curtains

Coatings Construction Adhesives Textiles

15 | Synthomer Investor Seminar 2020

Functional Solutions - A Key Growth Platform

Our products improve the quality of your life

Binding		Bonding			Coating
		SYN dispersion			SYN dispersion
SYN dispersion		supports the
		coated on a
binds different		bonding of two
		substrate for
ingredients in end		separate
		protection or
formulation		substrates to one
		finishing
		another

Wall Paint

Tile Adhesives

Seed Coatings

Waterproofing

Bottle Labels

Sport Surfaces

Membrane

Caulk Sealant

Yarn Sizing

Glass Fibre

Oil Well

Cementing

Coatings

Construction

Adhesives

Textiles

Oil & Gas

16 | Synthomer Investor Seminar 2020

Functional Solutions - A Key Growth Platform

FS is a strategic supplier into many well-recognised brands

Synthomer is a key supplier of distribution layer binders to a leading diaper producer

Top 3 supplier to leading paints & coatings producers

Synthomer is the global leading supplier for can sealings, serving well-known brands in the industry

Hydro Pliolite -

the 'Intel Inside®'

equivalent in the chemical industry

Strategic supplier to global customers with top consumer brands

Close collaboration in innovation, supply chain and branding

17 | Synthomer Investor Seminar 2020

Functional Solutions - A Key Growth Platform

Blue chip customer base with long term relationships

	3,000+
		2.5%			20%			15 years
	customers		of sales from largest customer		of sales from top 20 customers		average length of relationship
	Coatings				Construction			Oil & Gas

Adhesives	Textiles

18 | Synthomer Investor Seminar 2020

Functional Solutions - A Key Growth Platform

FS in times of Covid: Passing the ultimate resilience test

→ Diversified end markets and differentiation help mitigate most of COVID-19 impact

→ Robust network of sites, strong Covid protocols and supplier management has ensured and today ensures continuity of supply

→ FS geographic, chemistry and end market diversification means:

- Most end markets bounced back rapidly in Q3, Q4 holding up to datefrom Impact COVID

- Coatings benefitting from enduring DIY surge

- Automotive and Oil & Gas hit hardest with Automotive recovering through Q3

- Oil & Gas drilling will remain sluggish with gradual improvement through 2021

80% of Functional Solutions Revenues

on Resilient side of spectrum

Least Impacted by Covid

Nonwovens

Adhesives & sealants

Construction

Paints & coatings

Textiles

Leather

Automotive

Oil & Gas

Most Impacted by Covid

19 | Synthomer Investor Seminar 2020

OMNOVA THE PERFECT FIT

20 | Synthomer Investor Seminar 2020

Omnova The Perfect Fit

Strong strategic fit between heritage Synthomer and Omnova

Synthomer			Omnova
Key Activities			Key Activities
		Coatings		Coatings
Functional		Adhesives		Adhesives		CAST
Solutions
	Textiles		Textiles & Surface Treatments
		Construction		Oil & Gas

	11 (incl. 6 OMN) Technical	3,000 (incl. 700 OMN)
18 (incl. 7 OMN) Plants in 10	Centres & 240 (incl. 80 OMN)	Customers	900 (incl. 300 OMN)
Countries	Technical Staff	100+ Countries served	Products

21 | Synthomer Investor Seminar 2020

Omnova The Perfect Fit

Becoming a true global player in water based dispersions

	EMEA
	23%
Americas	62% of
	Total FS
31%	Sales
23% of	77%
Total FS
Sales	SYN	OMN

69%

SYN OMN

• Significantly improved presence in US
• Manufacturing assets in China

		FS within Synthomer
		100%
APAC
22%
15% of
Total FS	(%)
Sales	50%
	Sales
78%
SYN	OMN
		0%
		Americas	EMEA	APAC
		SYN Other	FS

22 | Synthomer Investor Seminar 2020

________________________

Base year 2019

Omnova The Perfect Fit

FS - Oil & Gas a global leader in drilling and cementing niche

Drilling Fluid		Cement Advancement
Additives		Additives

Acquisition strengthens position in Energy sector

• 'Oil based economy' will remain in place for many years to come and medium term outlook for drilling remains strong
• Provides platform to expand into adjacencies

Value through Differentiation

PEXOTROLTM - dynamic particles that reduce fluid loss across a wide range of temperature and base oils

PEXOSEALTM - special deformable microparticles that seal off depleted formations under high differential pressures

VERIFLEXTM - flexible copolymer powders enhance set cement mechanical properties in a life of well cement design

VERILOKTM - additives deliver gas migration control, bonding, and low fluid loss values sustaining low viscosity

• Preferred additives for the most challenging environments:
• • Offshore
  • High-Temperature,High-Pressure
  • High Differential Pressures
• Tier I supplier to major service companies

Global leader in specialty polymeric solutions that promote wellbore stability, overall drilling efficiency and reduce Non- Productive Time

23 | Synthomer Investor Seminar 2020

FUNCTIONAL SOLUTIONS

THE CASE FOR GROWTH

Functional Solutions - The Case for Growth

FS is well positioned to participate in global megatrends

	Accelerating			Demographic &			Climate Change &			Shifting Economic
	Urbanisation			Social Change			Sustainability			Power
▪	Migration from rural areas		▪	Aging population					▪	Economic centre of gravity
	to cities		▪	Growing middle class in						shifting toward Asia
▪	Increase in infra-structure			emerging markets
	developments
▪	Construction materials	▪	Nonwovens for diapers		▪	Heat reflection (coatings)	▪	Expanding presence in
▪	Architectural coatings	▪	Adhesives & textiles for			and insulation (textiles)		Asia through plant network
				Automotive and Food &		▪	Energy savings through	▪	Launch of Asia Innovation
				Beverage			reduced drying time		Centre; develop in Asia for
										Asia

25 | Synthomer Investor Seminar 2020

Functional Solutions - The Case for Growth

Synthomer continues to invest in sustainable solutions

Low VOC & hazardous	Energy saving &	Bio-degradable &	Bio-based material	Circular economy
substance emission	carbon footprint	compostable material
	reduction
▪ Conversion of solvent	▪ Products resulting in:	▪ Degradable materials	▪ Products wholly or	▪ Development of
based to water based	✓ lower energy	from the action of	partly derived from	material that can be
products	needs	naturally occurring	biological origin	a recyclable waste
▪ Further VOC reduction	✓ reduced steps	micro-organisms		▪ Manufacturing of
▪ Move away from	✓ higher productivity	▪ Industrially		material from
hazardous substance	at our customers.	compostable products		recycled material

26 | Synthomer Investor Seminar 2020

________________________

Sources: Morgan Stanley report, internal information

Functional Solutions - The Case for Growth

Regulations support GDP+ growth for water based dispersions

Market Share		SB
		WB

CAGR 2019-2024	WB
SB

								Key Facts
								→ Water based outperforming
								Solvent based growth
Global		EMEA		Americas		Asia		→ Significant Solvent based
								volumes still transitioning
60%		65%		65%		50%		→ Strongest growth and
								transition potential in APAC
40%		35%		35%		50%
								→ FS growing at GDP+ rates
4-5%		2%		2-3%		7-8%
3-4%		1%		0-2%		4-5%

Regulations and industry trends:

• EU as main driver but other regions picking up
• Synthomer at forefront of regulatory trends
• • Alkyl Phenol Ethoxylate (APEO) free
  • Formaldehyde free product range
  • Enables biocide-free paints
  • Low VOC

27 | Synthomer Investor Seminar 2020

________________________

Synthomer driving change toward water-based technology:

Intumescent		Specialty		Wood
Coatings		Tapes		Coatings

Asphalt/ Road		Anti Corrosion		Trim
Repair		Coatings		Paints

Sources: Internal analysis, KNG report (2019)

Functional Solutions - The Case for Growth

Revenue synergy potential through complementary offerings

Technology Drivers

Regional Drivers

Intumescent

Coatings

Specialty

Tapes

Textiles

Oil & Gas

NORAM &

APAC

	Synthomer		Omnova
▪	Leader in water-based		▪	Leader in solvent-based		▪	Leading position globally
	technology			technology		▪	Ability to guide existing solvent-
							based business to water-based
▪	Leading position in pressure		▪	Saturants and release		▪	One-stop-shop for all solutions
	sensitive adhesives			coatings			needed in tape production

▪	Focus on woven, abrasives,		▪	Focus on nonwoven,		▪	Complementary textiles
	and technical fibres			especially hygiene and			business with strong positions
				personal care			in both woven and nonwoven
▪	Small player in ME and		▪	Global leader in		▪	Strengthen global position,
	Europe			dispersions niche			particularly in Middle East
▪	Local footprint in ME		▪	Footprint in NORAM
▪	US: 1 plant, 1 lab		▪	US: 5 plants, large R&D		▪	Expanded plant network,
▪	Asia: 4 plants in SEA, 2			centre			development and applications
	labs		▪	Asia: 1 plant in China, 1 lab			in NORAM and APAC

28 | Synthomer Investor Seminar 2020

DIFFERENTIATION THROUGH INNOVATION

29 | Synthomer Investor Seminar 2020

Differentiation Through Innovation

Continued technology & capability development and acquisition

2016	2020
Acquisition of Hexion division	Omnova acquisition

Roebuck Technical	Advances Adhesive	Americas Innovation	Mogadore Process
Centre	Formulation & Testing	Centre	Technology

Redispersible	Polyester Powder	Advanced Materials	Advances Oil Field
Powders	Coatings	Characterisation	Formulation & Testing

2015	2017	2020	2020
Harlow Innovation Centre	Micro-biology Lab	Asia Innovation Centre	Biodegradability Testing

30 | Synthomer Investor Seminar 2020

Differentiation Through Innovation

Enhanced innovation capability and capacity

Before

• 2 competing organizations
• Neither truly global
• Agile innovation models
• Customer intimate
• Resources focused to incremental innovation

Synthomer

Innovation Team

Coatings	Textiles		Adhesives	Construction

Coatings	Textiles		& Adhesives Release
	& Oil Gas

Omnova

Innovation Team

	New Combined Organisation
	→ Single global organization with
	strengths of both
	→ 50% more resources to execute the
	strategy
Deliver Innovative	→ Truly global footprint
→ Dedicated team to explore new
Solutions Ahead of
Changing Market	technologies
Demand	→ Best practices in IP management,
	advanced material characterization,
	microbiology, toxicology, and
	multiple specialty applications.
	→ New leadership to pursue
	sustainable innovation goals

31 | Synthomer Investor Seminar 2020

Differentiation Through Innovation

Global footprint with 17 technology centres in 9 countries

		Accrington, UK
		Stallingborough, UK
	Auburn, PA	Le Havre, FR	Marl, DE
	Jeannette, PA
Mogadore, OH	Harlow, UK
	Monroe, NC
Akron, US		Villejuste, FR
Chester, SC
	Roebuck, SC
		St. Albano, IT	Shanghai, CN
	Houston, TX	Sintra, PT	Rayong, TH

Johor Baru, MY

• State of the art facilities for all technology functions
• • Polymer synthesis
  • Materials characterisation
  • Applications technology
  • Technical service
  • Production scale-up
• Leveraging and transferring knowledge across regions
• Customer proximity and intimacy

Centre of excellence

Other technical centre

32 | Synthomer Investor Seminar 2020

Differentiation Through Innovation

Robust innovation framework for market driven innovation

Establishing an ESG governance
framework and Sustainability Goals to		SHE
guide how we innovate and operate.

Sustainability

Occupational safety in our Innovation Centres & Labs.

Responsible Care Management System.

Designing-in process safety.

Protecting our proprietary knowledge and maximizing the value capture

from inventions through patents.

IP &

Knowledge

Management

Innovating new technology platforms to fuel sustainable growth with differentiated products.

	Global
Platform	Technology &	Material
Innovation
Technology &
	Characterization
External

Innovation

Product Advanced

Stewardship & Process

Regulatory Innovation

Compliance

Understanding materials at a molecular level to enable smarter product design.

Ensuring that the products we sell are safe and compliant, and guiding inherently safe product design.

Industrializing new innovations and engineering safer, more effective and efficient ways to manufacture our products.

33 | Synthomer Investor Seminar 2020

Differentiation Through Innovation

Effective and efficient delivery of innovation

• Market centric model driven by megatrends
• A well balanced business driven project portfolio
• Focussed and disciplined execution of projects
• Broad technology in polymer and applications
• Well invested and constantly evolving technical capability
• Leveraging knowhow through global R&D
• Platform approach for tailored customer solutions
• Strengthened capability through acquisition

Climate Change &	Demographic &
Sustainability	Social Change

Accelerating	Shifting Economic
Urbanisation	Power

34 | Synthomer Investor Seminar 2020

Differentiation Through Innovation

Enabling new innovation platforms for growth

Bio-degradable & industrial- compostable material

Bio-based

material

Low VOC & hazardous substance emission

Collaborative

Program

Internally &

Externally

Energy saving & carbon footprint reduction

Circular economy

35 | Synthomer Investor Seminar 2020

Differentiation Through Innovation

Driving change through product innovation

36 | Synthomer Investor Seminar 2020

Differentiation Through Innovation

Hydro PlioliteTM - Thin film intumescent coatings

Key Applications

• Reactive fire protection coatings for structural steel in construction
• Protects people and property by delaying possible structural collapse

Performance benefits

• Provides fire protection by creating a layer of thermal insulation
• Preserves the aesthetics of the steel structure
• Applicable on complex shapes and easily repairable if damage
• Improved water resistance for durability during construction
  Environmental impact
• Enables low VOC and low odour coatings systems
• Free of APEO's and other harmful additives

37 | Synthomer Investor Seminar 2020

Differentiation Through Innovation

Litex LB - Binders for automotive battery cells

Key Applications

• Binder for graphite based anode batteries in automotive applications
• Provides key role in cell integrity and lasting performance

Performance benefits

• High adhesion binders to maintain cell integrity during manufacture
• Formulation optimisation to maximise active material density
• Stable electrochemistry through cell discharge/recharge cycles

Environmental impact

• Water based technology to minimise air emissions in application
• Improved air quality through shift from internal combustion to electric vehicle

38 | Synthomer Investor Seminar 2020

Differentiation Through Innovation

A pipeline of innovation for a sustainable future

Low VOC & hazardous	Energy saving & carbon	Bio-degradable & industrial-	Bio-based material	Circular economy
substance emission	footprint reduction	compostable material

Differentiation Through Innovation

FS innovation delivering differentiated solutions

• Close collaboration with customers who value our partnership & products
• Efficient development of differentiated local solutions delivered on a global basis
• Investment in new platforms to support future growth driven by megatrends
• Omnova acquisition has further strengthened technology and capability
• Excellence in technology & IP management to capture and exploit knowhow
• Proven track record in portfolio management to deliver winning products

40 | Synthomer Investor Seminar 2020

FUNCTIONAL SOLUTIONS

SUMMARY

Functional Solutions - A Key Growth Platform

Summary

01 A global top 5 water based dispersions provider, with regional and

	product leadership positions and the ambition to become a top 3 player
Resilient performance based on diversified end markets,	02
customer base and products

03	Excellent competitive position: broadest portfolio,
customer intimacy and responsiveness, strong local

presence and platform driven innovation

Core markets have GDP+ growth based on favourable mega trends, most notably the drive for sustainable solutions, where we have an extensive track record

04

05 Poised for accelerated growth with Omnova fully integrated

42 | Synthomer Investor Seminar 2020

SYNTHOMER

FUNDING FOR GROWTH

43 | Synthomer Investor Seminar 2020

Funding for Growth

Strong and resilient profitability and cash flow generation

Resilient EBITDA and low maintenance capex

EBITDA (£m)

						232*
		160	176	181	178
118	125
2014	2015	2016	2017	2018	2019	2020

Capex (£m)

				76	69
			60			54
		46		51
				48
			41		31
		26
22	23
7	4
			24		24
15	19	20	20	21
2014	2015	2016	2017	2018	2019	2020

SHE & sustenance capex		Growth capex

Cash flow generation pre and post growth capex**

FCF Conversion

		66%			69%
	62%	64%	63%
			61%
57%	59%
51%		50%				47%
			41%		42%
				35%
2014	2015	2016	2017	2018	2019	2020

FCF conversion

FCF conversion pre growth capex

• High cash conversion underpinned by low capex
• Continued robust free cash flow generation despite challenging sector backdrop

44 | Synthomer Investor Seminar 2020

________________________

Source: Company information, annual reports; *2020 EBITDA consensus (source: Teneo), **FCF conversion defined as FCF (excluding WC movements and growth capex) over EBITDA

Funding for Growth

Strong cash flow expected 2020F - indicative 2.0x leverage

Free cash flow - 2020	EBITDA to FCF Reconciliation (£m)

• EBITDA growth ~ EBITDA at £232m (2019: £178m)
• Capex ~ £54m (2019: £69m)
• Interest ~ £30m ~ 50% cash cost 2020
• Tax ~ 22% ETR plus adjustments
• Pensions ~ Synthomer and OMNOVA - £16m and $6m
• Working capital inflow ~ 10% of sales with lower raw material prices

Indebtedness 1 April and indicative 31 December 2020

• 1 April 2020 - post acquisition ~ £658m
• 31 December - year end indicative ~ £500m

Indicative leverage 31 December 2020 circa 2.0x

• £500m indebtedness / £232m EBITDA plus OMNOVA proforma

45 | Synthomer Investor Seminar 2020

________________________

*2020 EBITDA consensus (source: Teneo)

Funding for Growth

Investing in growth - capex and acquisitions

Synthomer Acquisition History

June 2016	Hexion PAC	FS	$226m
March 2017	Speciality Additives	IS	€78m
January 2018	BASF Pischelsdorf	PE	€30m
April 2020	Omnova Solutions	FS	$824m

Net Debt / EBITDA

						~2,0x
1,0x			1,0x	1,2x	1.0x
	0,9x
	0,6x
					-0,1x
2014	2015	2016	2017	2018	2019	2020

2019 assuming the rights issue did not occur

• Organic growth capex programme from late 2016 including:
• • PE - Pasir Gudang - 90kt Nitriles on line Q4 2018 £45m
  • FS - Worms and Roebuck - 50kt Dispersions on line Q2/Q3 2019 £40m
  • PE - Pasir Gudang - 60kt Nitriles on line Q4 2021 £30m
  • PE Asia Innovation Centre on line Oct 2020 £5m
• Inorganic growth through acquisitions
• • Significant expansion of FS - largest acquisitions
  • Synergies - costs and revenues
  • Improved innovation
• Capex and acquisitions underpinning future growth
• Investment funded within conservative capital allocation policy

46 | Synthomer Investor Seminar 2020

________________________

Source: Company information, Heritage Synthomer for illustration purposes. Annual reports; (1) FCF conversion defined as FCF (business cash flow, net movement in borrowings before dividends, FX, and cash impact of specia l items, asset disposals and business

combinations) over EBITDA (excluding IFRS16 impact) ; (2) FY19A EBITDA includes the impact of IFRS16

Funding for Growth

2020 acquisition refinancing complete, significant funding and headroom

01

03

Facilities

Available Expiry Facilities

Strong balance

Conservative

Multi currency

€460m

July 2024

sheet and

capital policy in

revolving facilities

02

04

finance

place

Term loan

$260m

July 2024

structure

01

Significant

Investment

Bond 3 7Τ8%

€520m

July 2025

liquidity in place

opportunities

▪

Strong structure in place to July

2024

▪ Leverage ~2.0x with single

covenant in 2021 of 4.0x

04

▪

Capex for growth projects including

▪

High cash conversion will drive

further deleveraging in 2021

growth on newly acquired Omnova sites

02

03

▪

▪

Step change capex (Nitriles)

▪

£1,080m committed

▪ Target range 1 to 2x

M&A activity (consolidation, new

technology, bolt on and transformational)

unsecured

net debt/EBITDA

• Indicative net debt circa £500m
• Indicative liquidity circa £580m

47 | Synthomer Investor Seminar 2020

Investor Seminar

SUMMARY

Investor Seminar

Synthomer: Resilient and sustainable growth

Clear and consistent strategy delivering strong performance

Functional Solutions a key growth platform through consistent investment

Global mega trends driving demand across diversified end markets

Increasing proportion of differentiated products

Strong financial position from which to fund organic and inorganic investment

Multiple catalysts to drive future growth

EBITDA (£m)

CAGR 13%

300
							272
250						232
200			176	181	178
		160
150
118	125
100
50
0
2014	2015	2016	2017	2018	2019	2020	2021

2020 company guidance provided on the 14th of October 2020 2021 consensus (sourced: Teneo), not a forecast

49 | Synthomer Investor Seminar 2020

Investor Seminar

Q&A

50 | Synthomer Investor Seminar 2020

Investor Seminar

Appendix

51 | Synthomer Investor Seminar 2020

Investor Seminar

List of abbreviations

Abbreviation Meaning	Slide
ESG	Environmental, Social, and Governance	6, 33
PAC	Performance Adhesives & Coatings	11
2-EHA	2-Ethylhexyl Acrylate	13
MMA	Methyl Methacrylate	13
PVAc	Polyvinyl Acetate	13
VACO	Vinylacetate Copolymer	13
RDP	Re-Dispersible Powder	13
SA	Styrene Acrylic	13
PA	Pure Acrylic	13
XSBR	Carboxylated Styrene Butadiene Rubber	13
HSSBR	High-SolidsStyrene-Butadiene Rubber	13
XNBR	Carboxylated Nitrile Butadiene Rubber	13
WB	Water Based	10, 27
CAST	Coatings, Adhesives & Surface Treatments	21
VOC	Volatile Organic Compound	26, 35
SB	Solvent Based	27
SHE	Safety Health & Environment	33, 44, 46

52 | Synthomer Investor Seminar 2020

Investor Seminar

Strong trading momentum across all divisions

→ FY 2020 EBITDA guidance raised 10% to ~£232m in Q3

trading update on 14th October 2020

→ Indicative 2020 Divisional split to be circa PE 50%, FS

35% IS 15%

→ Reporting in 2020 will separate OMN from Synthomer

but 2021 reporting will only be for enlarged group

Indicative EBITDA by Division 2020

15%

£232m*

→ All revenue synergies will be reported within the

businesses with no further increase to $40m synergy

target anticipated

35%

50%

53 | Synthomer Investor Seminar 2020

________________________

Performance	Functional	Industrial
Elastomers	Solutions	Specialities

*After deducting Corporate Costs ~£16m