Creating sustainable, efficient and safe societies Jakob Bengt - PowerPoint PPT Presentation

Creating sustainable, efficient and safe societies

Jakob Bengt Holm Lejdström CEO CFO ▪ ▪ Joined Sdiptech in 2014 Joined Sdiptech in 2018 ▪ ▪ Holds 258,749 ordinary shares, 1,040 Holds 45,200 ordinary shares, 2,500 preference shares, 189,000 buy options preference shares, 68,400 buy options ▪ ▪ Background: Axholmen, Background: CFO Lagercrantz Group, General Electric, Accenture Intrum Justitia, Acando ▪ ▪ Education: M.Sc. in Systems Engineering Education: M.Sc. in Business Economics from KTH Royal Institute of Technology from Stockholm School of Economics

AN INFRASTRUCTURE TECHNOLOGY GROUP Creating sustainable, efficient and safe societies 14.4% 1,825 48% 1,263 32 MSEK Net Sales EBITA*-margin Growth EBITA* Employees Business 2019 2019 2019 Units Sources: Sdiptech Financial reports, LTM Q4 2019 3

Management Team and Board of Directors Management Jakob Holm Fredrik Navjord 258,749 (Class B) 1,040 (Pref) 189,000 (Buy options) 18,345 (Class B) 52,500 (Buy options) CEO Head of Metric, Addtech, Volvo Axholmen, General Electric, Accenture Water & Energy M.Sc. Chalmers University of Technology M.Sc. KTH Royal Institute of Technology Bengt Lejdström Anders Mattsson 68,400 (Buy options) 45,200 (Class B) 2,500 (Pref) 68,400 (Buy options) CFO Head of Special Lagercrantz Group, Interim Justitia, Acando Munters, Roland Berger, Bearingpoint M.Sc. Stockholm School of Economics Infrastructure Solution M.Sc. Chalmers University of Technology Steven Gilsdorf Fredrik Sederholm 2,485 (Class B) 68,400 (Buy options) 82,222 (Class B) 68,400 (Buy options) Head of Acquisitions Head of Property Assemblin, Caverion, Otis Elevator GE Capital, Booz & Co., Bisnode Technical Services M.Sc. Business Economics, Stockholm University MBA, London Business School Board of Directors Jan Samuelson Markus Sjöholm 236,000 (Class B) 90,000 (Buy options) 15,000 (Class B) Chairman Board Member Resurs Holding, Stillfront Group, Accent Equity Partners, EF Education CapMan Buyout. Lahti Precision Oy, Actone AB M.Sc. Stockholm School of Economics, LL.M. Stockholm University M.Sc Hanken School of Econ., LL.M. University of Helsinki Ashkan Pouya Birgitta Henriksson 4,600 (Class B) 5,435,000 (Class B) 1,000,000 (Class A) Board Member Board Member Serial Entrepreneur Brunswick, Stillfront Group, Carnegie B.Sc. Business Administration Uppsala University B.Sc. Business Administration Uppsala University Johnny Alvarsson Urban Doverholt No holdings 18,200 (Class B) 18,000 (Buy options) Board Member Board Member Assa Abloy, BAE Systems Hägglunds, Indutrade, Elektronikgruppen, Beijer Alma, Ericsson, Instalco, VBG M.Sc. KTH Royal Institute of Technology, IMD Lausanne M.Sc. Engineering Linköping University

The infrastructure challenge Sdiptech’s response Sdiptech as an investment

Examples of infrastructure challenges 23% 54% 14-25% reduction of car crashes distribution losses in increase in mobile malware freshwater networks 1) after speed camera variants 2017 to 2018 3) installation 2) $ 14.8 trillion = 27x Sweden’s GDP infrastructure investment need in Europe 2016-2040 4) 1) EurEau; 2) Cochrane; 3) Symantec 6

Reasons behind the infrastructure challenge ▪ Aging infrastructure and a need to rebuild ▪ Capacity requirements continue to grow ▪ Stricter regulations and inherent human drive for sustainability, efficiency and safety ▪ Growing urban population increases shortage and strain Sources: EurEau, Eurostat, Oxford Economics & Global Infrastructure Hub

Sdiptech solutions to examples of infrastructure challenges 23% 54% 14-25% reduction of car crashes distribution losses in increase in mobile malware freshwater networks 1) after speed camera variants 2017 to 2018 3) installation 2) 1) EurEau; 2) Cochrane; 3) Symantec 8

The infrastructure challenge Sdiptech’s response Sdiptech as an investment

Business model ▪ We deliver niched technical products and services to critical needs in the infrastructure sector ▪ We are organized in a decentralized structure , important decisions made closest to our customers ▪ We acquire and develop small and medium-sized companies to reach their full-potential ▪ We focus on niche positions in high-margin Creating sustainable, markets with strong drivers for long-term growth efficient and safe societies

Brexit: Impact is expected to be small and manageable Export to UK Our exporting companies have a low share of revenue to UK Potential loss or disturbance in sales for the group is expected to be insignificant Import to UK Our UK based companies do have a share of purchases with origin outside the UK Larger inventories Redirected routes mitigates the risk of a temporarily weakening avoids EU customs duties by redirected Asian GBP or disturbances at border customs shipping routes straight to UK 11

Value Creation ▪ Infrastructure focus Infrastructure know-how is an integral part of our business model ▪ Serial acquisitions A proven investment process executed by internal acquisitions team ▪ Business development Focus on specialization and differentiated market positions

Business Areas Water & Special Infrastructure Property Technical Energy Solutions Services • • Air & Climate control Elevators • Water & Sanitation • • Safety & Security Other property technical services • Power & Energy • Transportation 21% 37% 42% Share of total EBITA* Share of total EBITA* Share of total EBITA* 19% 479 22% 705 9% 9 641 13 10 Revenue EBITA*- Business Revenue EBITA*- Business Revenue EBITA*- Business (MSEK) margin Units (MSEK) margin Units (MSEK) margin Units Sources: Sdiptech Financial reports, LTM Q4 2019

Financial Development Sales Distribution 1) Group Sales & EBITA* MSEK +22% 2,000 20% 8% 1,825 4% 1,732 1,651 5% 1,580 1,496 14.4% 1,500 15% 13.9% 5% 13.6% 12.9% 12.3% 11.8% 11.4% 1,078 55% 10% 1,000 776 25% +48% 5% 500 262 235 213 195 177 123 108 0 0% 2016 2017 2018 LTM Q1 LTM Q2 LTM Q3 LTM Q4 2019 2019 2019 2019 Sweden Austria United Kingdom Norway Net Sales EBITA* EBITA*-Margin Germany Other Sources: Sdiptech Financial reports Notes: 1) Based on revenue for FY 2019 14

Historical Acquisitions 9 9 8 Companies acquired in 2019 7 7 Number of Acquisitions Company Business Area Region EBITA Period 6 RedSpeed Special Infrastructure 5 UK 19 Q1 5 International Solution 4 4 4 Water treatment Water & Energy UK 31 Q1 Products 3 Special Infrastructure 2 Cryptify SE 7 Q2 2 Solution 1 Auger Site Special Infrastructure 1 UK 36 Q3 Investigations Solution 0 2017 1) 2013 2014 2015 2016 2018 2019 Total 93 Notes: 1) Ava Monitoring was acquired in August 2017 and divested in February 2019, hence number of acquisitions in 2017 is reduced by 1 company

In-house acquisition process and team - differentiator Origination Identification Initial contact Initial Evaluation Bid development Phase 1 Second meeting First meeting Weekly team Inflow of sit-down and company Call evaluation data Price and structure Filter and create negotiations Pool of selected one-pagers companies Light commercial DD Execution LOI Detailed evaluation SPA Development Signing & Closing Phase 2 Commercial DD Financial & Tax DD Define a LOI Legal DD Negotiations Other DD

Transaction structure and impact on debt structure Additional consideration Seller’s reinvestment Initial consideration 125 Conditional debt ▪ Final payment dependent 25 on the profit performance 100 ▪ A probable outcome booked on balance sheet 25 25 (IFRS) 4-5 year earn-out period: ▪ Reviewed quarterly and marked-to-market (IFRS) Aggregation of profits over (+) or below (-) threshold. 75 Equity/Cash flow & Bank debt 75 ▪ Cash flow from existing operations ▪ Existing bank facility ▪ Included in net bank debt and covenants Enterprise Value adjustment Enterprise Value at after earn-out completion

The infrastructure challenge Sdiptech’s response Sdiptech as an investment

Key differentiators As serial acquirer we create value by arbitrage and professional development of our business units. We have chosen to differ in a few distinct ways: ▪ A clear industrial theme and focus Infrastructure know-how is an integral part of our business model ▪ A proprietary acquisition process A proven in-house process to ensure a steady flow and reduce competition ▪ A unique transaction model Down- side protection to ensure that we “pay the right price”

Peer group comparision Financial development Company Revenue (BSEK) 3Y EBITDA Growth (%) Indexed Stock Price Development Indutrade 2) 16.8 12% Addtech 3) 8.0 16% Lagercrantz 4) 3.9 8% Sdiptech 5) 1.7 34% P/E-valuation Company 2019e 2020e Stock price Addtech 6) 18.8 20.1 285 Indutrade 6) 18.6 17.4 280 Lagercrantz 6) 17.8 16.6 121 Sdiptech 10 Redeye 7) 14.8 11.3 68 Carnegie 8) 9.6 9.7 64 Börsveckan 9) 9.6 7.1 50 Sources: 1) Nasdaq OMX; 2) Indutrade financial reports; 3) Addtech financial reports; 4) Lagercrantz financial reports; 5) Sdiptech financial reports; 6) Carnegie Securities Research 191028; 7) Redeye Research update 190724 8) Carnegie Securities Research 191028; 9) Börsveckan no 39, 2019