Investor presentation Flemming H. Tomdrup, Group CEO Michael H. - - PowerPoint PPT Presentation

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4 June 2013, Paris roadshow

Solar Group Investor presentation

Flemming H. Tomdrup, Group CEO Michael H. Jeppesen, Group CFO

Investor presentation - agenda

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1 The results we achieved in Q1 2013 2 The results we expect in 2013 3 Solar 8000 expectations 4 Capital structure 5 Divestment 6 Appendix – facts about Solar

Organic growth of -5.7% in Q1 when adjusted for working days - revenue below expectations

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• 12%
• 10%
• 8%
• 6%
• 4%
• 2%

0% 2% 4% 6% 8% Q1 Q2 Q3 Q4 FY 2012 2013

Organic growth

Q1 2013 Q1 2012 Revenue € million 390.1 428.9 Revenue growth %

• 9.0

19.2 Organic growth %

• 10.1

5.7

Difficult market conditions The Dutch and German markets are decreasing

Market update

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• In Denmark we saw negative market

trends in Q1. Growth totalled -1.9% when adjusted for number of working days.

• The Swedish market was characterised

by lower growth than what we normally see in this market.

• Gross profit and earnings were

strengthened in Norway.

• New CED in Solar Nederland in place.

€ million Q1 2013 Revenue Q1 2013

• Org. growth

Denmark 91.5

• 8.0%

Sweden 79.3

• 6.9%

Norway 63.9

• 5.5%

The Netherlands 85.5

• 15.0%

Others 69.9

• 13.9%

Group 390.1

• 10.1%

Gross profit margin 0.1% up compared to Q1 2012 and 0.4% up compared to Q4 2012

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20,8% 20,9% 21,0% 21,1% 21,2% 21,3% 21,4% 21,5% 21,6% 21,7% Q1 Q2 Q3 Q4 FY 2012 2013

Gross profit margin

• Gross profit margin was strengthened

compared to Q1 2012 and Q4 2012.

• In the Netherlands gross profit was reduced

compared to Q1 2012 but improved compared to Q4 2012. Q1 2013 Q1 2012 Revenue € million 390.1 428.9 Revenue growth %

• 9.0

19.2 Organic growth %

• 10.1

5.7 Gross profit € million 84.4 92.0 Gross profit margin 21.6 21.5

Normalised EBITA of € 1.3m in Q1 2013

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2.1% 0.1%

• 0.7%
• 2.1%
• 0.3% -0.1% -1.0%
• 2,0%
• 1,0%

0,0% 1,0% 2,0% 3,0%

Q112 COGS EOC Staff

• Debt. Deprec. Q113

EBITA margin

Q1 2013 Q1 2012 Revenue € million 390.1 428.9 Revenue growth %

• 9.0

19.2 Organic growth %

• 10.1

5.7 Gross profit € million 84.4 92.0 Gross profit margin 21.6 21.5 EBITA € million

• 3.8

9.1 EBITA margin

• 1.0

2.1

• 2,0%
• 1,0%

0,0% 1,0% 2,0% 3,0% 4,0% Q1 Q2 Q3 Q4 FY 2012 2013

• Solar 8000 costs of € 0.9m in Q1 2013 and

€ 2.0m in Q1 2012.

• Restructuring costs of € 4.2m in Q1 2013

and € 0.0m in Q1 2012.

Gearing up to 3.0 in Q1 - expected to be reduced during the year

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Net working capital (NWC)

11% 12% 13% 14% 15% 16% 17% 150 170 190 210 230 250 270 2009 2010 2011 2012 2013Q1 € million NWC NWC/Revenue LTM

Net interest-bearing debt (NIBD)

Acquisition

• f operations

from Otra Acquisition of enterprises in NL, BE, DE, AU

1,3 1,5 1,7 1,9 2,1 2,3 2,5 2,7 2,9 3,1 3,3 40 50 60 70 80 90 100 110 120 130 140 150 2009 2010 2011 2012 Q1 2013

• No. of

times € million NIBD NIBD/EBITDA LTM

Acquisition

• f operations

from Otra Acquisition of enterprises in NL, BE, DE, AU

Efforts were made to reduce inventories with a negative impact on trade payables in the short run

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Cash flow

• 6.9

5.5 0.2

• 7.7
• 24.9
• 32.5

1.3

• 35
• 30
• 25
• 20
• 15
• 10
• 5

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Net profit

• Depr. &

amort. Tax & adj. Inv. Rec. Liab.

• Op. act.

€ million 36.5

• 32.5
• 3.3
• 2.4

0.5

• 1.2
• 5

5 10 15 20 25 30 35 40

Q4 2012

• Oper. act.
• Inv. act.
• Fin. act.

Other Q1 2013

€ million

Cash flow, operating activities

Guidance 2013: Revenue € 1,590-1,640m, EBITA € 25-33m

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10 20 30 40 50 60 70 80 200 400 600 800 1.000 1.200 1.400 1.600 1.800 2009 2010 2011 2012 2013E low 2013E high EBITA € million Revenue € million Revenue EBITA

• Expected restructuring costs of approx.

€ 6m and Solar 8000 roll-out costs of

• approx. € 4m.
• The lower expectation level equals
• rganic growth of approx. -4.5%, while

the upper expectation level equals

• rganic growth of approx. -1.5%.
• Net working capital below 14% on

average. 2013 expectations:

Solar 8000 expectations

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• We are planning to roll out Solar 8000 in Solar Danmark in late Q3, and roll-out in

Solar Sverige is expected 3-4 months after this.

• As always, quality and safety take centre stage when we roll out IT platforms in
• ur group enterprises.
• We still expect the overall investment in Solar 8000 to total up to € 54m.
• We stick to our expectations for positive effects, still expecting the transition to

Solar 8000 to increase earnings (EBITDA) by € 8-10m annually when fully implemented.

Capital structure Gearing of 1.5 to 2.5 times EBITDA will be maintained

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• At the annual general meeting, the Supervisory Board proposed that an ordinary

dividend of DKK 6.65 per share be paid. This equates to € 0.89 per share.

• We do not expect to make any major acquisitions in 2013.
• In this light, the Supervisory Board will assess the option to pay out extraordinary

dividends of up to DKK 15.00 per share, equalling € 2.01 per share, in the autumn

• f 2013.

Divestment We have sold all shares in Aurora Group Danmark A/S

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• On 24 April 2013 we sold our subsidiary Aurora Group Danmark A/S to the

Swedish company Deltaco AB.

• The expected total selling price is approximately € 17m and includes an earn-out

agreement.

• The sale is expected to generate an accounting gain of approximately € 1.4m.
• We want to focus fully on our core business - wholesaling of electrical, heating

and plumbing, and ventilation products – where we want to be the strongest link between suppliers and customers.

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Appendix Facts about Solar

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Business Ace Operation People

Solar in short

Solar is one of Northern Europe’s leading technical wholesalers Listed on NASDAQ OMX Copenhagen € 1,701m revenue in 2012 – approx. 3,500 people Servicing customers in 9 countries from 11 central warehouses Electrical, heating, plumbing and ventilation components and solutions

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Values Glow, SmartFun & Courage Mission We understand our customers’ needs and provide value adding services and

• products. We call it

stronger together. Vision #1 in Technical Wholesale To become one of the most profitable technical whole- salers in our markets To excel in Business Acumen, Operation & People Focus on Northern Europe Increase productivity Excel in sales Grow in the climate and energy area Develop our people Daily operations Continuous improvement

• Simplification
• Standardisation
• Digitalisation

Performance management

Foundation Ambition Strategies Operations Increased profit

To increase profits is our number one priority

We will achieve this through focused strategies and operation

Group strategy 2013-2015 Short-term financial objectives

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Short-term financial objectives

• Prerequisites: Average growth

exceeding 3% for this period and stabilisation of the Dutch market in 2013. Long-term financial objectives

• EBITA margin of 5-6%.

Prerequisites: Average growth exceeding 4%. Financial ratios Year / period Financial

• bjectives

EBITA margin 2015 4.5% ROIC excl. amortisation 2015 >14% NWC/revenue LTM 2015 <13% Equity ratio 2013-2015 35-40% Gearing (NIBD/EBITDA) 2013-2015 1.5-2.5x Dividend yield (PAT) 2013-2015 35-45%

Solar is listed on NASDAQ OMX Copenhagen and has a majority of long term investors

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Solar’s business areas are within:

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Electrical - HVAC&R - Plumbing - Renewable Energy

Installation Cables Marine & Offshore Lighting Industry Communication Security Ventilation Heating, Water & Sanitation Renewable energy

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Business Ace Operation People

Solar delivers products and solutions to customers within:

Residential and Commercial Buildings Industry Marine and Offshore Utility and Infrastructure Public Sector

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Business Ace Operation People

Solar Blue Energy

• making energy efficiency a better business

A strategic focus area

• A sales, marketing and training concept
• One energy-efficient product is good

– an intelligent solution is better

• Focus on renovation projects through cases

and cost-savings potential

• Cooperation between strategic

suppliers and Solar The 20-20-20 targets of the EU Climate and Energy Package are:

• a 20% reduction in EU greenhouse gas

emissions based on 1990 levels by 2020

• 20% of EU energy to come from renewable

sources by 2020

• a 20% reduction in primary energy use

through improved energy efficiency by 2020, compared with projected levels

CSR - we take our responsibilities with regard to people and the environment seriously

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• We have signed up for the United Nations’ Global Compact Programme, which

contains ten principles, including human rights, working environment/labour, the environment and anti-corruption.

• We see our involvement in the programme as an asset in relation to customers

and suppliers and a clear advantage in respect of attracting and maintaining employees.

• In addition, there is the need for and a desire to be seen as a company in which

both Danish and foreign investors can safely invest – also from an ethical standpoint.

• CDP: Solar has established a reporting system for the company’s CO2

consumption.

• UN Global Compact – Communication of Progress:

http://www.unglobalcompact.org/participant/10987-Solar-A-S

CSR - strong focus on ethics

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• As a condition for entering into strategic partnerships with suppliers, Solar requires

that such suppliers observe the Global Compact principles.

• We have implemented a Code of Conduct across the group. Under the code,

Solar is committed to comply with current legislation and regulations and to act in an ethical, sustainable and socially responsible way in all its business activities.

• We value a broad and diverse workforce in terms of gender, age and nationality.

Solar shows respect for all employees and is committed to ensuring a good working environment with room for diversity.