Acquisition of Aleris Care Announcement presentation 16 October - - PowerPoint PPT Presentation

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Acquisition of Aleris Care Announcement presentation 16 October - - PowerPoint PPT Presentation

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Acquisition of Aleris Care Announcement presentation 16 October 2018 Transaction summary Transaction in brief Ambea has entered into an agreement to acquire Aleris Care at an enterprise value of SEK 2.6bn, The corresponding to an

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Acquisition of Aleris Care Announcement presentation

16 October 2018

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SLIDE 2

Transaction summary

2

Transaction in brief

EV/EBITA before synergies

14.0x

Enterprise value

SEK 2,600m

Bridge financing in place, rights issue in 2019

The acquisition

  • Ambea has entered into an

agreement to acquire Aleris Care at an enterprise value of SEK 2.6bn, corresponding to an equity value of

  • approx. SEK 3.0bn
  • Closing of the acquisition is expected

in Q1 2019, subject to customary regulatory approvals

Financing

  • Ambea has secured bank financing

for the acquisition, consisting of a SEK 1.4bn loan facility and a SEK 1.2bn bridge financing to be repaid by rights issue

  • Rights issue to be approved by the

EGM, planned for H1 2019 to maintain financial strength and flexibility

Note: EBITA-multiples based on adjusted LTM September 2018 SEK 186m (Reported SEK 127m).

EV/EBITA after direct cost synergies and

  • perational

improvements

8.5x

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SLIDE 3

3

The largest private care company in the Nordics, with leading positions in Sweden, Norway and Denmark

A robust platform in multiple countries with strong

  • rganic growth pipeline

Significant synergies and margin improvement

  • pportunities

 

Cross-country learning opportunities and sharing of best practice

The New Ambea Group

Strategic rationale

1,796

beds in the pipeline

SEK ~120m

annual direct cost synergies and operational improvement opportunity Significant cross-country learning and best practise sharing

Note: Competitors include for-profit care service providers in segments where Ambea is present. Comparison based on LFY reported revenues, adjusted for major acquisitions and divestments. Aleris Care pro forma group accounts K3. Attendo adjusted for divested healthcare operations and the acquisition of Mikeva. Team Oliva Danish sales exclude sales related to Personal Assistance Source: Company information, company filings

#1 #1 #1

#1 market position in the Nordics Care

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IoF (SWE) EC (SWE)

Two complementary companies with strong

  • wn management businesses

4

Ambea at a glance

Note: Aleris Care pro forma group accounts K3. Sales adjusted for discontinued businesses, terminated contracts and units in the process of being closed Source: Company information, company filings

Aleris Care at a glance

% sales LTM H1 Sweden Norway % sales LTM H1 Geography Own vs. Contract Segment Own Management Contract Management Staffing % sales LTM H1 Nytida Vardaga

SEK 5,937m sales LTM H1 #3 in the Nordic market

‒ #2 in Sweden ‒ #7 in Norway ‒ n.a. in Denmark

67% Own Management of sales 1,038 beds in pipeline

% sales LTM H1 % sales LTM H1 Geography Own vs. Contract Segment Own Management Contract Management % sales LTM H1 Norway

SEK 4,665m sales LTM H1 #6 in the Nordic market

‒ #6 in Sweden ‒ #1 in Norway ‒ #1 in Denmark

77% Own Management of sales 758 beds in pipeline

Norway Klara Denmark Sweden Norway Denmark

Care

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The new Ambea Group

  • the leading Nordic care provider

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From #3 to #1 in the Nordics The new Ambea Group

SEK 10,602m sales LTM H1 1,796 beds in pipeline 71% Own Management of sales #1 in the Nordic market

‒ #1 in Sweden ‒ #1 in Norway ‒ #1 in Denmark Note: Competitors include for-profit care service providers in segments where Ambea is present. Comparison based on LFY reported revenues, adjusted for major acquisitions and divestments. Aleris Care pro forma group accounts K3. Attendo adjusted for divested healthcare operations and the acquisition

  • f Mikeva. Team Oliva Danish sales exclude sales related to Personal Assistance

Source: Company information, company filings

#1 #1 #1

Indicative market position pre transaction Indicative market position post transaction Indicative market position

Care

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SLIDE 6

Active in attractive markets

6 Note: Share of private provision (incl. non-profit providers) of elderly care services in selected European countries. Indicative share of market Source: Socialstyrelsen, SCB, Konkurrensverket, Dansk Erhverv, SSB, DST

Favorable demographic development in elderly care, with number of +80 year olds expected to increase Low private penetration in the Nordics compared to rest of Europe indicates future potential

% private providers

522 096 807 890 2018 2030

55%

223 291 353 667 2018 2030 256 694 433 062 2018 2030

Individuals +80 years old

E E E

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880 1,796 88 644 65 114 5 Ambea pipeline Aleris Care pipeline New Ambea Group pipeline Vardaga Nytida beds Nytida placements Norway

Significant number of beds in pipeline driving short term organic growth

7

1,796 beds in combined pipeline

18% 39% 23% Beds in pipeline as % of current OM beds/placements in operations

Source: Company information, company filings

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Operational excellence drives margin improvement

Significant cross-country learning opportunities

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Ambea care model… …results in margin improvements

4,6% 5,5% 6,9% 7,7% 8,5% 9,0% 8,6% 8,4% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 2017 2018 Leader in education of high competence Industry-leading quality system KPI-driven unit performance management

1 2

Operational excellence and digitalisation

4 3

Source: Company information, company filings Adjusted EBITA-margin LTM

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Attractive synergies to support further growth

9

  • Direct costs
  • Certain overlapping functions
  • High degree of control of implementation
  • Costs in connection to synergy realisation

and M&A-related costs

Overhead cost synergies Integration & M&A costs SEK 90m SEK ~135m

  • ~50% of synergies

achieved in 2019

  • 100% of synergies

achieved in 2020

  • Majority of M&A

costs in 2018

  • Majority of

realisation costs in 2019

Annual financial impact One-off effects

  • Ambea care model
  • Best practice and knowledge sharing
  • Procurement contracts

Operational improvements SEK 30m

  • 100% of

improvements achieved in 2020

Total SEK 120m

Source: Company information

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Ambea financial targets reconfirmed

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Sales growth

  • Adjusted earnings per share accretive as of

Q2 2019 provided the proposed rights issue

  • Margin dilution short-term
  • Financial targets reconfirmed medium-term

Medium-term further potential Reconfirmed financial targets

  • Targets reached

medium-term

Ambea financial targets

8-10%

Adjusted EBITA margin Net debt / adjusted EBITDA

Annual growth ranging between 8-10% through a combination of organic and acquisition driven growth An adjusted EBITA margin of 9.5% in the medium-term Net debt to adjusted EBITDA below 3.25x with short-term deviations, e.g. in association with acquisitions

9.5% <3.25x

Earnings dividend

Given proposed rights issue in 2019, the Board anticipates to recommend to the AGM to resume dividend for fiscal year 2019, payable in 2020

30%

Note: Earning per share adjusted for M&A related amortisations and one-off costs Source: Company information

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Transaction terms

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The acquisition Financing Timetable

  • Ambea has secured SEK 2.6bn in bank financing in order to finance the acquisition

− Danske Bank, DNB and Nordea are the arrangers and lenders of the bank financing, which comprises (i) a revolving credit facility of SEK 1.4bn with an original term of 3 years, plus two

  • ptional extensions of 1 year each, and (ii) a bridge facility of up to SEK 1.2bn with an original term
  • f 9 months, plus two optional extensions of 3 months each. The intention is to repay the bridge

facility through the rights issue.

  • Rights issue supported by largest shareholders, to be approved by the EGM, planned for H1 2019 to

maintain financial strength and flexibility − ACTR Holding AB and ACTOR SCA, which are controlled by KKR and Triton – jointly holding 50.1%

  • f the shares in Ambea intend to vote in favour of the rights issue at a general meeting and to

subscribe for their respective pro-rata shares in the rights issue.

  • Transaction costs for the acquisition are estimated at SEK 35m
  • Closing of the acquisition expected in Q1 2019, subject to customary regulatory approvals
  • Rights issue is expected to be completed during H1 2019

Note: EBITA-multiples based on adjusted LTM September 2018 SEK 186m (Reported SEK 127m). Source: Company information

Enterprise value

SEK 2,600m

EV/EBITA before synergies

14.0x

EV/EBITA after direct cost synergies

9.4x

EV/EBITA after cost synergies and operational improvements

8.5x

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Deleveraging to reach medium- term financial target

Fully funded acquisition maintaining a strong financing structure

12

Rights issue Shareholder support

  • Loan and bridge facility available to

finance the acquisition

  • Plan to raise approximately

SEK 1.2bn in a rights issue – to be approved by the EGM

  • Rights issue expected to be

completed during H1 2019

  • The larger shareholders ACTR

Holding AB and ACTOR SCA, controlled by KKR and Triton and representing approximately 50.1 per cent of the total number of shares and votes in Ambea, intend to vote in favour of the rights issue at a general meeting and to subscribe for their respective pro-rata shares in the rights issue. The rights issue is expected to be resolved and completed during the first half of 2019.

Illustrative Net debt / EBITDA development

New Ambea Group Down to current level after right issue, trending towards target end of 2019

4.0 5.4x 3,9x 3,25x

Leverage Q2 2018 Illustrative leverage post acquisition Illustrative leverage post acquisition and rights issue Long-term financial target Source: Company information

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Time table

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Next steps

  • Announcement of acquisition
  • Expected approval from competition filing
  • Closing of acquisition
  • EGM
  • Rights issue

Today, 16 October 2018 Q1 2019 Q1 2019 H1 2019 H1 2019

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Appendix

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New structure of Ambea Group

15

New Ambea Group

Norway Klara Nytida Denmark Vardaga

New segment

Source: Company information

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New Ambea Group income statement

16 Note: Aleris pro forma group accounts K3 adjusted for discontinued businesses, terminated contracts and units in the process of being closed. OH attributable to Aleris Sweden has been allocated to Nytida and Vardaga based on the segments’ share of Aleris Sweden sales Source: Company information, company filings

Aleris Care LTM H1 2018

SEKm Vardaga Nytida Norw ay Denmark Klara Group Adjusted sales 1 034 636 2 595 400 n.a. 4 665 OPEX and depreciation (1 030) (594) (2 504) (390) n.a. (4 519) Adjusted EBITA 3 42 91 9 n.a. 146 % adjusted EBITA margin 0,3% 6,6% 3,5% 2,3% n.a. 3,1% Reported EBITA n.a. n.a. n.a. n.a. n.a. 96

Ambea LTM H1 2018

SEKm Vardaga Nytida Norw ay Denmark Klara Group Sales 2 234 2 938 444 n.a. 321 5 937 OPEX and depreciation (2 087) (2 576) (427) n.a. (306) (5 439) Adjusted EBITA* 147 362 17 n.a. 15 498 % adjusted EBITA margin* 6,6% 12,3% 3,8% n.a. 4,7% 8,4%

New Ambea LTM H1 2018

SEKm Vardaga Nytida Norw ay Denmark Klara Group Sales 3 268 3 574 3 039 400 321 10 602 OPEX and depreciation (3 117) (3 170) (2 931) (390) (306) (9 958) Adjusted EBITA* 150 404 108 9 15 644 % adjusted EBITA margin* 4,6% 11,3% 3,6% 2,3% .a. 4,7% 6,1%

* EBITA for each Ambea sub-segment standalone. Group includes unallocated and group adjustments

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Specification of costs related to the Transaction

Transaction costs

SEKm M&A-related costs 35 Rights issue costs To be confirmed Synergy realisation costs 100 Total transaction costs 135

Source: Company information