INTERIM REPORT JANUARY MARCH 2019 Strictly private and - - PowerPoint PPT Presentation

Strictly private and confidential

INTERIM REPORT JANUARY – MARCH 2019 May 3, 2019

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Today’s presenters

JAKOB HOLM, CEO BENGT LEJDSTRÖM, CFO

• Joined Sdiptech in 2014
• Holds 258,749 ordinary shares, 1,040

preference shares, 189,000 buy options

• Background: Axholmen (founder),

General Electric, Accenture

• Education: M.Sc. in Systems

Engineering from KTH Royal Institute of Technology

• Joined Sdiptech in 2018
• Holds 45,200 ordinary shares, 2,500

preference shares, 57,600 buy options

• Background: CFO Lagercrantz Group,

Intrum Justitia, Acando

• Education: M.Sc. in Business

Economics from Stockholm School of Economics

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LONG-TERM TRENDS IN OUR MARKETS NEW BUSINESS AREAS CURRENT TRADING

Today’s presentation

UNDER-INVESTMENTS DRIVE LONG-TERM VOLUME DEMAND

■ Capacity requirements continue to grow ■ Aging infrastructure and a need to rebuild ■ Urbanization increases shortage & strain

■ Investment priority for nations worldwide

A STRIVE FOR BETTER SOCIETIES DRIVES TECHNICAL IMPROVEMENTS

■ Consumer expectations rise ■ We expect and demand increasing Sustainability, Efficiency & Safety ■ Specialists and niche companies ideal home for the technical advancements ■ Policy-makers adapt with regulations ■ Implemented in infrastructure

Net Sales Employees

1 100

Units

30

OFFERING

Niched technology, solutions and services to the Infrastructure sector

MARKET

Strong underlying trends, volume as well as improvements, drive long-term growth

Infrastructure technology group

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LTM Q1 2019 2 000

C A G R + 4 %

( 2 1 6 – Q 1 2 1 9 )

1 500 1 000 500 2016 2017 2018

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LONG-TERM TRENDS IN OUR MARKETS NEW BUSINESS AREAS CURRENT TRADING

Today’s presentation

PROPERTY TECHNICAL SERVICES SPECIAL INFRASTRUCTURE SOLUTIONS TAILORED INSTALLATIONS NICHED PRODUCTS & SERVICES Three new Business Areas from January 2019 WATER & ENERGY NEW BUSINESS AREAS

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WATER & ENERGY

Sub-segments:

• Water & Sanitation
• Power & Energy

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SALES1) 489 MSEK EBITA*-%1) 16.1 %

• NO. OF UNITS

13

37%

Acquisitions last 15 months Acquisitions prior to 2018

2): LTM excl. central costs

Share of total EBITA* 2)

1): LTM

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SALES1) 359 MSEK EBITA*-%1) 21.6 %

• NO. OF UNITS:

8

SPECIAL INFRASTRUCTURE SOLUTIONS

Sub-segments:

• Air & Climate control
• Safety & Security
• Transportation

36%

Acquisitions last 15 months Acquisitions prior to 2018

Share of total EBITA* 2)

2): LTM excl. central costs 1): LTM

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SALES1) 732 MSEK EBITA*-%1) 7.8 %

• NO. OF UNITS

9

PROPERTY TECHNICAL SERVICES

Sub-segments:

• Elevator
• Other

27%

Service elevators, Stockholm Service elevators, Vienna New elevators, Europe Other, Property Technical Services No acquisitions last 15 months

Share of total EBITA* 2)

2): LTM excl. central costs 1): LTM

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LONG-TERM TRENDS IN OUR MARKETS NEW BUSINESS AREAS CURRENT TRADING

Today’s presentation

§ Good market situation and demand § Net sales increased 25% to SEK 422m § EBITA* increased 51% to SEK 52m and EBITA* margin increased to 12.3% (10.1%) § Strong cash flow, SEK 58m (6) from operating activities, corresponding to a cash generation of 111% (26%) § Strong organic growth for Water & Energy and Special Infrastructure Solutions, in total +11% organic in the quarter § Our elevator business continues to develop positively with improved profitability and increased profits in the quarter § We saw a reversed development within shell completion. Large projects in previous year Q1 amplified the decrease

y-o-y in the quarter for shell completion, also expected for Q2 but not for Q3/Q4.

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Strong growth and margin increase

Quarterly highlights

Strong organic growth but slowdown in shell completion

§ Coming quarters unchanged positive view on growing profit levels § Good market situation and acquisitions contribute with results § An agreement was signed with Nordea regarding bank financing of SEK 800m, which strengthens Sdiptech's scope

for further acquisitions and growth Outlook is positive

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Growth in LTM Q1 2019 +37% Group Net sales Group EBITA*

2016 LTM Q3 2018 2017 LTM Q1 2019 LTM Q1 2018 LTM Q2 2018 LTM Q4 2018

+37%

2016 LTM Q4 2018 2017 LTM Q2 2018 LTM Q1 2018 LTM Q3 2018 LTM Q1 2019

+52% Net Sales (SEK m) EBITA* (SEK m) 745 1045 1153 1291 1408 108 123 177 128 153 1496 168 1580 195

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Quarter and LTM Financial development Group Q1 2019

(Q1 2018)

LTM Q1 2019

(LTM Q1 2018)

Net Sales (SEKm) +25% 422 (338) +37% 1,580

(1,153)

EBITA* (SEKm) +51% 52 (34) +52% 195 (128) EBITA* margin 12.3% (10.1%) 12.3%

(11.1%)

Net bank debt/EBITDA 0.84 (-0.43) Net debt/EBITDA

1)

3.30 (1.35)

1) Comment on the Net debt/EBITDA ratio. At a share of 54%, Net debt consists of debt related to “conditional considerations for acquisitions” (Swe: tilläggsköpeskillingar). These debts are sized for profit growth, i.e. current Net debt is based on future EBITDA levels higher than the current EBITDA levels used in the ratio.

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Quarter and LTM Financial development in Water & Energy

Quarter

• Continued strong growth in sales, in the

quarter increased with 69% to SEK 150m, of which organic growth was 10%

• EBITA* increased with 123% to SEK 26m
• EBITA* margin increased to 17.4% (13.2%)
• The margin increase comes partly from

acquired units with higher profit margins, and partly from good organic growth in high margin businesses. Other

• EBITA * margin for the business area is

expected to be around 16–18% for the full year 2019

• Acquisitions during 2019:

Water Treatment Products Ltd, in Feb-19

• Total number of units: 13

Water & Energy

20% 0% 5% 15% 10% 25%

2017 2016 LTM Q1 2018 LTM Q2 2018

13,0%

LTM Q3 2018

14,8%

LTM Q4 2018

16,1%

LTM Q1 2019 Net Sales (SEK m) EBITA* margin (%)

112 211 359 299 251

22,8%

428 Q1 2019

(Q1 2018)

LTM 2019

(LTM 2018)

Net Sales (SEKm) 150.2

(88.9)

489.2

(250.7)

EBITA* (SEKm) 26,1

(11.7)

78,6

(47,3)

EBITA* margin 17.4% (13.2%) 16.1% (18.9%) 489

18,9% 15,6% 15,7%

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Quarter and LTM Financial development in Special Infrastructure Solutions

Quarter

• Sales in the quarter increased with 60% to

159.1 MSEK

• EBITA* increased with 20% to 28.7 MSEK

supported by strong market positions and good demand

• EBITA* margin increased from last quarter

to 20.3%, but decreased compared to RTM, due to very good profitability in the last three months 2017. A normalization to current levels in the third quarter has

• ccurred.

Other

• Acquisitions:

KSS Klimat- & Styrsystem AB in Q2 Rogaland Industri Automasjon AS early in Q3

• Total number of companies: 13

20% 5% 0% 10% 15% 25% 30%

LTM Q4 2018 2016

25,5%

2017

27,1%

LTM Q1 2018

26,2%

LTM Q2 2018

25,2%

LTM Q3 2018

22,1% 21,6%

LTM Q1 2019

91 167 284 Quarter

• Continued strong growth in sales, in the

quarter increased with 66% to SEK 100m, of which organic growth was 13%

• EBITA* increased with 51% to SEK 21m
• The EBITA * margin decreased during the first

quarter to 20.6 percent (22.6), as a leveling of margins is done through acquisition activities

• Good growth in Safety & Security and in the

market for refrigeration plants. Other

• EBITA * margin for the business area is

expected to be around 18–20% for the full year 2019

• Acquisitions during 2019:

RedSpeed International Ltd, in Jan-19

• Total number of units: 8

Special Infrastructure Solutions

238 320 193

Net Sales (SEK m) EBITA* margin (%)

Q1 2019

(Q1 2018)

LTM 2019

(LTM 2018)

Net Sales (SEKm) 100.0

(60.4)

359,2

(193,2)

EBITA* (SEKm) 20.6 (13.6) 77,6

(52,3)

EBITA* margin 20.6% (22.6%) 21,6% (27,1%) 359

26,0%

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Quarter and LTM Financial development in Property Technical Services

Quarter

• Sales in the quarter decreased with 9% to SEK

172m, partly from a planned focus on fewer but more profitable customer segments within elevators, partly from a slowdown in new construction of housing in Stockholm, which affected our operations in shell completion. Large projects previous year in Q1 amplified the decrease, also expected for Q2 but not for Q3 nor Q4.

• However, solid growth, demand and profitability

increase in the elevator business

• EBITA* decreased with 33% to SEK 9m
• EBITA* margin decreased to 5.4% (7.3%)

Other

• A gradual normalization of the EBITA* margin

for the business area towards 8–10%

• Acquisitions during 2019:

None

• Total number of units: 9

Property Technical Services

5% 0% 10% 15% 20%

2016

6,3%

2017 LTM Q1 2018

7,3%

LTM Q2 2018

7,9%

LTM Q3 2018

8,1%

LTM Q4 2018 LTM Q1 2019

7,7%

Net Sales (SEK m) EBITA* margin (%)

545 667 766 754 709

7,0% 12,8%

749 Q1 2019

(Q1 2018)

LTM 2019

(LTM 2018)

Net Sales (SEKm) 172.1

(188.8)

732.2

(709.1)

EBITA* (SEKm) 9.3

(13.9)

57.1

(44.8)

EBITA* margin 5.4%

(7.3%)

7.8%

(6.3%)

732

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§ RedSpeed International is a leading supplier of

solutions to the traffic enforcement industry, specialising in the development, manufacturing and maintenance of digital enforcement cameras.

§ Through the acquisition, we complement the

Group’s offering in the special infrastructure solution segment.

§ Net Sales: GBP 5.6m

Acquisitions in Q1

RedSpeed International Ltd Water Treatment Products Ltd

§ Water Treatment Products is a leading formulator

and manufacturer of water treatment chemical products in the UK.

§ Water Treatment Products Ltd will be a great

addition to Sdiptech’s offering within our business area Water & Energy.

§ Net Sales: GBP 9.4m

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Acquisitions 10 acquisitions completed in last 15 mths

Completed Company Business area Country

Q1-19 Water Treatment Products Ltd Water & Energy UK Q1-19 RedSpeed International Ltd Special Infrastructure Solutions UK Q4-18 Pure Water Scandinavia AB Water & Energy SE Q4-18 Vera Klippan AB Water & Energy SE Q3-18 Rogaland Industri Automasjon AS Water & Energy NO Q2-18 KSS Klimat- & Styrsystem AB Special Infrastructure Solutions SE Q1-18 Centralmontage i Nyköping AB Water & Energy SE Q1-18 Storadio Aero AB (former Aviolinx) Special Infrastructure Solutions SE Q1-18 Optyma Security systems Ltd Special Infrastructure Solutions UK Q1-18 Multitech Site services Ltd Water & Energy UK

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Summary

177

LTM Q4 2018 2017 2016 LTM Q2 2018 LTM Q1 2018 LTM Q3 2018 LTM Q1 2019

+52% EBITA* (SEK m) 108 123 168 128 153

§ The positive trend and growth in the Group continues

in the first quarter of the year

§ Unchanged positive view on growing profit levels § Good market situation and newly added acquisitions

contribute with results

Outlook is positive

177 195

Long term growth in Infrastructure niches

§ Niched technology, solutions and services to the

Infrastructure sector

§ Growth driven by under-investments, fundamentally

growing demand, as well as continuous improvements for increased sustainability, efficiency and safety

Group EBITA*

Thank you for listening.

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Appendix

24 *) Through Serendipity Group AB

Sdiptech in brief Management and board

Management Board of Directors JAKOB HOLM CEO

Shares: 258,749 (Class B), 1,040 (Pref),189,000 (Buy options) Experience: Axholmen, General Electric, Accenture M.Sc. KTH Royal Institute of Technology

BENGT LEJDSTRÖM CFO

Shares: 45,200 (Class B), 2,500 (Pref), 57,699 (Buy options) Experience: Lagercrantz Group, Intrum Justitia, Acando M.Sc. Stockholm School of Economics

FREDRIK SEDERHOLM Head of Property Technical Services

Shares: 82,222 (Class B), 68,400 (Buy options) Experience: Assemblin, Caverion, Otis Elevator M.Sc. Business Economics, Stockholm University

FREDRIK NAVJORD Head of Water & Energy

Shares: 18,345 (Class B), 52,500 (Buy options) Experience: Metric, Addtech, Volvo M.Sc. Chalmers University of Technology Shares: 2,000,000 (Class A), 12,581,711 (Class B)* Experience: Serendipity Ixora, Serial enrepreneur B.A. Business Administration Shares: 18,200 (Class B), 18,000 (Buy options) Experience: Indutrade, Elektronikgruppen, Zeteco M.Sc. Linköping University Institute of Technology Shares: 191,000 (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: 2,000,000 (Class A), 12,581,711 (Class B)* Experience: Seredipity Ixora, Serial entrepreneur Ph.D. in Materials Chemistry

ASHKAN POUYA Board Member JOHNNY ALVARSSON Board Member KATARINA LUNDBLAD PINNEKAMP Board Member SAEID ESMAEILZADEH Board Member

Shares: 15,000 (Class B) Experience: CapMan Buyout LL.M. & M.Sc. In Economics

MARKUS SJÖHOLM Board Member Steven Gilsdorf Head of Acquisitions

Shares: 68,400 (Buy options) Experience: GE Capital, Booz & Co., Bisnode MBA, London Business School,

ANDERS MATTSSON Head of Special Infrastructure Solutions

Shares: 68,700 (Buy options) Experience: Munters M.Sc. Chalmers University of Technology

JAN SAMUELSON Chairman

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Source: Modular Finance

Ownership 31 March 2019

SDIP A SDIP B PREF CAPITAL % VOTES % Serendipity Group 2,000,000 12,581,711 45,53% 65,13% Elementa Management 2,296,750 7,17% 4,59% Swedbank Robur Fonder 2,061,000 6,44% 4,12% Handelsbanken Fonder 1,670,000 5,21% 3,34% Catella Fonder 748,243 2,34% 1,50% Aktia 662,500 2,07% 1,32% Avanza Pension 340,219 259,643 1,87% 1,20% F Holmström Private Equity 579,248 1,81% 1,16% AB Axel Granström 400,000 1,25% 0,80% Nordnet Pensionsförsäkring 317,107 74,504 1,22% 0,78% Others 6,620,867 1,415,853 25.09% 16.06% Total 2,000,000 28,277,645 1,750,000 100.00% 100.00%

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EBITA* → Net profit - example

2019 2018 LTM Q1 Jan-Dec Net Sales 1 641.0 1 496.2 Operational costs

• 1446.3
• 1 319.0

Profit from operations, EBITA* 194.7 177.2

EBITA*, best representation of the profits from the ongoing operations

Acquisition costs

• 28.0
• 21.1

Direct costs related to acquisitions, occurs with irregularity

Earn-out debt adjustments 33.9 33.9

Adjustment of debt related to conditional considerations (“earn-out”) for acquisitions, booked as a revenue item

EBITA 200.6 189.9 Amortizations

• 47.6
• 46.6

Incl reduced goodwill related to acquisitions, booked as a cost item

• 46.6 (-46.6)

EBIT 153.0 143.3 Net interest expense

• 14.3
• 10.2

Discounted interest

• 8.9
• 6.3

Discounted interest on conditional considerations (“earn-out”) for acquisitions and discounted interest for leases according to IFRS 16

EBT 129.8 126.8 Tax

• 30.1
• 30.5

Tax (20.2% in 2018) based on EBT excluding GW writedown, earn-out debt adjustments, discounted interest and tax related to previous year

Net profit 99.7 96.3

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Divestment in Q1

§ In February 2019, AVA Monitoring was returned to its original owners. The

transaction entailed a minor capital gain for Sdiptech, while more room for new investments was freed up.

§ The reversal of the acquisition was effectuated by Sdiptech receiving a refund

• f the cash purchase consideration paid on the acquisition of AVA Monitoring in

July 2017, approx. SEK 21.5 million.

§ Sdiptech’s outstanding liabilities to the sellers of AVA Monitoring, totaling SEK

72 million was written off, including the reserved liability for future payment of the conditional purchase consideration.

§ The booked goodwill asset of SEK 71 million that arose in connection with the

acquisition was also written off.

§ Finally, a cash payment of approximately SEK 2 million was received. § Net Sales in Q1 2019 was SEK 2.1m (7.4) and EBITA was SEK 0.6 (2.4)

AVA Monitoring AB