May 8, 2018 Quarterly highlights: Follow-up from main messages in - - PowerPoint PPT Presentation

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INTERIM REPORT JANUARY–MARCH 2018 May 8, 2018

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Quarterly highlights: Follow-up from main messages in year end presentation

Improvement program in elevator business

• Status - on track: Profitability program in phase with activities and in some areas ahead of plan
• Profit levels rising: Trend shift in terms of declining results. After three quarters, EBITA growing again
• Outlook: EBITA* in Q2 2018 expected in line with 2017, gradually improving with full effect in 2019

Growth remains

• n the agenda, but

profitability prioritized

• Satisfactory acquisition intensity: Currently two additional Letter of Intents totalling 20mSEK
• Adapting group management to our size: After summer, one additional business area lead and new CFO
• Simplification and focus on core: Divestment of the Support-business with negative and volatile results

Solid growth in general

• Exemplified by a steady growth in the largest business area, Niche products & services

Size representing 82% of the two business areas’ profits

• Underlying organic EBITA growth in 2017 was 10,9%
• EBITA* in the first quarter 2018 increased by 85% to 31.8 mSEK from 2017
• Dependable growth in full-year EBITA*: 66m (2016), 104m (2017), 119m (RTM 1st quarter 2018)

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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

118 395 745 1 045 1 153

2014 2015 2016 2017 RTM Q1 2018

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One primary target: to grow yearly profits

14 35 108 123 128

2014 2015 2016 2017 RTM Q1 2018

SEK million

Group Net sales

Group EBITA*

SEK million

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

Tailored Installations

Percent of EBITA1

18%

No of employees 665

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 EBITA1

82%

No of employees 320

Radio communication Roof maintenance

1) EBITA* excluding central units. RTM.

Security Water cleaning Site services

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Alternative Key Figure Introducing EBITA*

New Key Figure EBITA*

• EBITA* introduced from the first quarter
• EBITA* consists of EBITA before transaction costs on acquisitions and before adjustment of liabilities for additional payments to sellers
• Appropriate to introduce now when the Group’s accounting can be simplified in conjunction with the divestment of Support business

The purpose of EBITA*

• Clarify the dynamics of the Group, and to facilitate for investors and other external parties
• Firstly, highlight the Group’s operational result. Earnings trends can be made clearer as well as the underlying development in our business.
• Secondly, to break out and separately report non-operational and irregular items.
• As an effect, the Group’s operational results as well as the irregular items are easier to follow

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Net Sales

SEK 338.1 million

+46.9% (230.2 million) Quarter and RTM Financial development Group – continued operations1 EBITA*

SEK 34.3 million

+17.9% (29.1 million)

Q1-2018 (Q1-2017)

Net Sales

SEK 1,153 million

+10.3% (1,045.1 million) EBITA*

SEK 127.7 million

+4.2% (122.5 million)

RTM Q1 2018 (FY 2017)

Net Debt/EBITDA 1.35 RTM Q1 2018 (1.37 FY 2017)

1) Group excl. Support business to be divested. Pending approval AGM.

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Net sales

Quarter and RTM Financial development in Tailored Installations

EBITA* EBITA* margin Tailored Installations

11.5% 3.7% 5.5% 3.8%

Elevator improvement program

• Market dynamics; price pressure is expected to remain in
• 2018. Programme of measures was initiated in Q4 2017.
• Main activities of program; prioritize profitable contracts,

gradually build a more profitable core, complete contracted but less profitable projects and handle incurred redundancy.

• Improvement profile: No temporary ‘quick fix’. Fundamental

readjustment of business, thus a lag until realized benefits.

• Status; on-track, and at the end of Q1, affected companies

were in phase with the measures taken. Trend has shifted in terms of declining results. After three quarters, EBITA is now growing again. Expecting EBITA to be in line with previous year in the second quarter and reaching full effect in 2019. Other

• Group of companies in the business area, comparable and

acquired companies, are in line with the previous year.

• In Q1, the acquisitions of Centralmontage and Optyma

Security Systems was closed.

• Total number of companies 13

33,8 25,7

FY 2017 RTM Q1 2018 135,9 199,2

Q1 2017 Q1 2018 609,5 672,8

FY 2017 RTM Q1 2018

15,6 7,5

Q1 2017 Q1 2018

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Net sales

Quarter and RTM Financial development in Niched Products & Services

EBITA* EBITA* margin Niched Products & Services

18.2% 22.9% 23.9% 24.7%

Market and sales

• Solid demand and strong niched market positions

drive continued growth together with growth from acquisitions.

• Sales in quarter increased by 47% to SEK 138.9 (94.3)

Profits

• EBITA* in quarter increased by 85% to 31.8 mSEK

from 2017

• EBITA* RTM increased by 14% to 118,8 mSEK

from FY2017

• The EBITA* margin in end of 2017 was very good and

a normalization for RTM towards the current level is expected during 2018. Other

• In Q1, the acquisitions of Aviolinx and Multitech was

closed.

• Total number of companies 11

104,2 118,8

FY 2017 RTM Q1 2018 94,3 138,9 Q1 2017 Q1 2018 435,7 480,3 FY 2017 RTM Q1 2018

17,2 31,8

Q1 2017 Q1 2018

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Acquisitions Four acquisitions closed in Q1 2018 totalling SEK 40m added EBITA

Phase Company Operational niche Country EBITA (SEKm) Closed Q1 Centralmontage i Nyköping Tailored Installations SE ~40 Closed Q1 Aviolinx Communication and services Niched products and services SE Closed Q1 Optyma Security systems Tailored Installations UK Closed Q1 Multitech Site services Niched products and services UK Search / Contact 330 companies in total Both areas Multiple

• Bid discussions

4 companies Both areas Multiple

• LOI

2 companies*

• ~20

Comments

• Investments in the acquisition process has enabled us to tap into the larger acquisition market of UK and our first two

acquisitions in the Greater London area have been closed.

• Four acquisitions closed in Q1 add new segments both from an industrial and a geographic point of view, add to the

diversification of the Group.

• Despite an intense period of closing acquisitions, the volume of late stage opportunities is satisfactory
• The two LOIs are in late stages

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

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Divestment of the Support business proposed to Annual General Meeting

Rational for divestment

• Support business has added undesired complexity:

1) for external parties to assess volatile earnings in a non-core part of the business, and 2) for internal management to follow-up and control the operations

• A divestment will streamline Sdiptech’s core business and shareholder value can be created more effectively

1 2

• Divestment of 100% of the consulting businesses
• Payment 0,5 mSEK day 1 and additional consideration during coming two years estimated at 8 mSEK.
• To ensure continuity in acquisitions, an agreement between the divested consulting business and Sdiptech has been signed to ensure that the acquisition

processes continue unchanged in 2018-2019. Sdiptech has initiated recruitment of internal team to replace and take over the acquisition processes.

Support (mSEK) Jan-Mar 2018 Jan-Mar 2017 RTM 31 Mar 2018 Jan-Dec 2017 Net Sales 4,8 7,0 30,5 32,7 EBITA* before InsiderLog

• 4,2
• 0,2
• 11,0
• 7,1 Profits from external customers, i.e. excl. revenue from Sdiptech
• Regardless of the divestment of Support, Sdiptech

retains the financial upside in InsiderLog currently valued at 5,2 mSEK.

• Financial upside also remains in two additional tech

products with potentially a future value, VOXO and HomeMaker.

The divestment also has the benefit of excluding earnings from the Group that during 2017 turned negative Full financial upside in InsiderLog is retained by profit sharing agreements

• A. Cash payment, 80 percent

57,3

• B. Remaining 20 percent

14,3

• whereof Sdiptech

20,6

• whereof Sdiptech

5,2

• whereof other sharholders

36,7

• whereof other sharholders

9,2 57,3 14,3 InsiderLog, divestment of 80 percent

Appendix

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13 *) 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 (call options) 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: 82,222 (Class B), 68,400 (call options) Experience: Assemblin, Caverion, Otis Elevator M.Sc. Business Eonomics, Stockholm University

FREDRIK NAVJORD President, Niched products & services

Shares: 18,345 (Class B), 52,500 (call 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 (call 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 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

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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

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Source: Modular Finance

Ownership 31 March 2018

SDIP A SDIP B PREF CAPITAL % VOTES % Serendipity Group 2,000,000 12,581,711 45.53% 65.13% Swedbank Robur Fonder 2,182,143 6.81% 4.36% Elementa Management 1,709,907 5.34% 3.42% Handelsbanken Fonder 1,100,000 3.43% 2.20% Danica Pension 741,472 21,828 2.38% 1.53% Catella Fonder 720,000 2.25% 1.44% Aktia 662,500 2.07% 1.32% Avanza Pension 347,331 293,356 2.00% 1.28% Nordea Liv & Pension 582,771 40 1.82% 1.16% AB Axel Granlund 400,000 1.25% 0.80% Others 7,249,810 1,434,776 27.12% 17.36% Total 2,000,000 28,277,645 1,750,000 100% 100%