COMPANY PRESENTATION November 23, 2017 Strictly private and - - PowerPoint PPT Presentation

Strictly private and confidential

COMPANY PRESENTATION November 23, 2017

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• Joined Sdiptech in 2014
• Holds 266,749 ordinary shares and

1,040 preference shares

• Background: Axholmen (founder),

General Electric, Accenture

• Education: M.Sc. in Systems

Engineering at KTH Royal Institute of Technology

JAKOB HOLM, CEO CARL JOHAN ÅKESSON, CFO

• Joined Sdiptech in 2015
• Holds 100,000 ordinary shares and

150 preference shares

• Background: CFO Mediaplanet

International, EF Education, Modern Times Group

• Education: M.Sc. in Accounting &

Managerial Finance from Stockholm School of Economics

Todays presenters

Agenda

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• Sdiptech in brief
• Current situation and run-rate
• Acquisitions
• Summary
• Q & A

4

NICHE ENGINEERING FOR URBAN INFRASTRUCTURES

• Growing city infrastructures - continuous need to develop and maintain
• Stockholm main market - opportunity in additional urban areas in Europe
• Strong niches - businesses with documented history of profitability
• Decentralized - preserve entrepreneurial spirit, decision making closest to customer

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MARKET OPERATING MODEL GROWTH STRATEGY GOALS

• Acquisitions to add additional niched products and services in our core market
• SEK 500 million in capital injection in May 2017 to finance growth
• Add 90 MSEK acquired EBITA on a yearly average, 5-10 % organic yearly growth
• Continue on set path and pace and reach SEK 600-800 million EBITA in 2021

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Sdiptech in brief Core business of niched services and products for urban infrastructures

Tailored installations

Percent of EBITA*

34%

No of employees 519 EBITA margin

8,1%

Cooling Uninterrupted power supply Wastewater treatment Electrical automation Elevators (local) Renovation and service Elevators (global) New installations

Niche Products & Services

Electrical power quality Gas evacuation Shell completion Vibration monitoring District heating and water metering

Percent of EBITA*

66%

No of employees 246 EBITA margin

22,2%

Water cleaning Roof maintenance

*) Excluding central units. RTM.

* *

6 *) Through Serendipity Group AB

Sdiptech in brief Management and board

Management Board of Directors JAKOB HOLM CEO

Shares: 266,749 (Class B), 1,040 (Pref) Experience: Axholmen, General Electric, Accenture M.Sc. KTH Royal Institute of Technology

CARL JOHAN ÅKESSON CFO

Shares: 100,000 (Class B), 150 (Pref) Experience: Mediaplanet, EF, MTG M.Sc. Stockholm School of Economics

FREDRIK SEDERHOLM President, Tailored installations

Shares: 88,888 (Class B) Experience: Assemblin, Caverion, Otis Elevator M.Sc. Business Eonomics, Stockholm University

FREDRIK NAVJORD President, Niched products & services

Shares: 18,180 (Class B) Experience: Metric, Addtech, Volvo M.Sc. Chalmers University of Technology Shares: 1,000,000 (Class A), 5,835,383 (Class B)* Experience: Serendipity Ixora, Serial enrepreneur B.A. Business Administration Shares: 18,200 (Class B) Experience: Indutrade, Elektronikgruppen, Zeteco M.Sc. Linköping University Institute of Technology Shares: 91,000 (Class B) Experience: Resurs Bank, Accent Equity Partners M.Sc. Stockholm School of Economics Shares: 9,090 (Class B) Experience: ABB, Exeger M.Sc. in Material Science Shares: 1,000,000 (Class A), 5,835,383 (Class B)* Experience: Seredipity Ixora, Serial entrepreneur Ph.D. in Materials Chemistry

ASHKAN POUYA Chairman JOHNNY ALVARSSON Board Member JAN SAMUELSON Board Member KATARINA LUNDBLAD PINNEKAMP Board Member SAEID ESMAEILZADEH Board Member

Shares: 169,215 (Class B) Experience: Serial entrepreneur B.A. Stockholm University and M.D. Karolinska Institutet

MIKAEL LÖNN Board Member KAMJAR HAJABDOLAHI Head of acquisitions

Shares: 46,700 (Class B), 12,349 (Pref) Experience: Orbion Consulting, Webbentus Master of Law (LL.M.) Uppsala University

Agenda

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• Sdiptech in brief
• Current situation and run-rate
• Acquisitions
• Summary
• Q & A

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SALES, Run-rate EBITA, Run-rate

• Growth in run-rate sales on a quarterly basis, coming from

both acquisitions and organic growth (2017 YTD 10,4 %).

• Overall solid demand for the Group’s offerings, especially

for Niched Products & Services.

• Lower margins in Tailored Installations in prevailing, high

intensity, market conditions

– Higher completion costs in delivery due to increased staff turnover, and a reduced capital allocation to the renovation sector

• Building central costs for future growth
• Additionally, shell completion margin squeeze with similar

dynamics as Tailored Installations

Current situation and run-rate Prevailing market conditions and a build-up in central costs lower margins, but good long term support in solid growth in sales

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16% New installation - infrastructure, municipality and commercial properties 41% 29% Other 14% Service, maintenance, renovation 25% 75% New installation - housing Share of EBITA RTM

New housing Stockholm – low portion of EBITA

• Sdiptech’s EBITA-exposure to the new housing market in

Stockholm is approx. 12%. Not insignificant, but limited.

• A cooling of the new housing market is likely to result in

an over-supply with some pressure on prices in the sector.

• Long term, the shortage of housing remains in Stockholm

as population is expected to continue grow. Support for less cyclical earnings

• New housing and population growth leads to follow-on

investments in city infrastructures, municipalities and commercial properties, areas where Sdiptech can capitalize.

• Currently under-investment in Sdiptech’s market for

maintenance and renovation, as property owners prioritize investments in new installation at the expense

• f existing property stock.

Stockholm 12% International 4%

Current situation and run-rate An expected cooling of the market for new housing in Stockholm should have a limited effect on Sdiptech’s overall earnings

Agenda

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• Sdiptech in brief
• Current situation and run-rate
• Acquisitions
• Summary
• Q & A

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1) Letter of Intent signed for transaction 2) Completed transactions. 3) EV at transaction based on flat growth during earn-out. Excl. transaction for ST Liftsystems in early phase with EBITA at zero.

…at attractive multiples Solid acquisition activity…

14 13 41 90 34

2013 2014 2015 2016 2017 Acquired EBITA (LFY)

SEK million

# of acquisitions

2 1 5 7 6

2

5

Closed LOI

1

EV/EBITA 3 2013-2016 2017 Weighted 6.0 6.1 Average 5.7 5.8

Acquisitions Successful M&A execution in the micro/small cap space

SPREAD LOW HIGH Average EV/EBITA 2017 3 4.6 8.3 Target size, SEKm 2013-2016 2017 EBITA (average) 3 10 7

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Initial Contact: ~300

2016 Proven acquisition strategy

First meetings: ~90 Bid discussions: ~35 LOIs signed: 9

2014 Early stage

Initial Contact: ~25 First meetings: 5 Bid discussions: 3 LOIs signed: 1

2015 M&A team established

Initial Contact: ~160 First meetings: ~40 LOIs signed: 6 Bid discussions: ~20

Acquired: 1

Acquired: 5

Acquired: 7 Initial Contact: ~290

2017 (YTD Nov 15th)

First meetings: ~80 Bid discussions: ~30 LOIs signed: 11 Acquired: 6

The methodology and capacity to acquire, unchanged at a high level

*) Time from LOI to Closing varies between one to two quarters, progress and current status varies across cases

Acquisitions can be cancelled for many reasons. To avoid deviations between expectations and outcome no EBITA numbers are provided.

5*

Snap shot Nov 15th

~10 ~315 TOTAL: ~330

Acquisitions Proven ability to convert internally generated leads to acquisitions

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Acquisitions Six acquisitions completed in 2017 totaling 34mSEK in EBITA contribution

Acquisition Closing 2017 Description Revenue LFY* (mSEK) EBIT LFY* (mSEK) Business area Topas Vatten AB, Topas Vatten Service AB Q1

• Design, installation and service of small waste water treatment plants
• Clean water a focus area. Market for water and air purification is

expected to increase as more stringent environmental regulations are introduced. 33 5.5 Tailored installations Aufzüge Friedl Gmbh Q2

• Installation and service of elevators in Vienna, Austria
• Expansion of elevator business to a new geography and growing urban

area 70.8 7.2 Tailored installations ST Liftsystems Gmbh Q2

• Design and manufacture of elevators. Compact design suitable for the

modernization market. Early phase.

• Complement our global elevator offering with an export product

~0 Tailored installations AVA Monitoring AB Q3

• Automated and cloud-based measurement systems for monitoring of

vibration and noise in infrastructure projects

• Strengthened presence in vibration monitoring and a growing demand on

export markets 27.8 5.7 Niche Products & Services Tello Services Partner AB Q4

• Roof repainting and installation of personal protection on roofs
• Focus on renovation creates low-cyclical revenue over time

32.2 10.0 Tailored installations Polyproject Environment AB Q4

• Bespoke components, systems and facilities for cleaning contaminated

liquids, gases and water

• Expanding our area for Clean water

38.6 5.9 Niche Products & Services

*) Last fiscal year. 2015 for Topas Vatten AB and Topas Vatten and Service AB, 2016 for later acquisitions.

Total EBITA: 34

Agenda

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• Sdiptech in brief
• Current situation and run-rate
• Acquisitions
• Summary
• Q & A

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Metric Target

Organic EBITA growth Maintain a 5-10% EBITA organic growth CAGR

5-10%

EBITA Reach an EBITA of SEK 600-800 million before the end of 2021

600-800

(by 2021)

Capital structure Net debt / adjusted EBITDA LTM not to exceed 2.5 times

<2.5x

In addition to an annual preferred stock dividend of SEK 8 per share, Sdiptech intends to reinvest the remaining free cash flow back into the business

No dividend

Acquired EBITA growth Maintain a similar rate and profile of acquisitions as for 2016 in coming years Dividend

SEK 500m in capital injection in May 2017 to finance growth

Return on capital employed Return on capital employed to exceed 15 percent

>15% 90

yearly average

Summary Financial targets

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*) Run-rate as per Nov 15 2017, including completed acquisitions in the fourth quarter

18 34 111 133 153 2014 2015 2016 2017 Q1 (IPO) Run-rate*

SEK million

EBITA - RTM

Run-rate serves as an indicator of growth as it will, all else equal, shift into reported figures the coming 12 months

Summary One primary target: to grow yearly profits

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Attractive market: Focus on urban infrastructure with solid, long-term growth driven by strong underlying market trends

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Positioned in deep niches characterized by high entry barriers and a high share of recurring revenue throughout the life cycle

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Successful M&A execution: Proven M&A track record at attractive multiples in the micro/small cap space with a clear strategy to grow

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Attractive financial profile: Capitalized for continued growth towards goal of 600-800 EBITA in 2021

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Strong management team and board: Committed and experienced team with credible track record in place for further growth

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International expansion opportunity: Long-term strategy to replicate Sdiptech’s growth model in similar new markets

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Decentralised operating model designed for long-term stability: Independent and niched business units supported by central organization facilitates long-term stability

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Source: Company information

Summary Sdiptech as an investment

Agenda

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• Sdiptech in brief
• Current situation and run-rate
• Acquisitions
• Summary
• Q & A

NICHE ENGINEERING FOR URBAN INFRASTRUCTURES

Appendix

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Income statement, SEK million

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Balance sheet, SEK million

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Cash flow statement, SEK million