INTERIM REPORT JANUARY – MARCH 2018 Strictly private and confidential May 8, 2018
Quarterly highlights: Follow-up from main messages in year end presentation • Exemplified by a steady growth in the largest business area, Niche products & services Size representing 82% of the two business areas’ profits Solid growth - Underlying organic EBITA growth in 2017 was 10,9% in general - 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 1 st quarter 2018) • Status - on track: Profitability program in phase with activities and in some areas ahead of plan Improvement program • Profit levels rising: Trend shift in terms of declining results. After three quarters, EBITA growing again in elevator business • Outlook: EBITA* in Q2 2018 expected in line with 2017, gradually improving with full effect in 2019 • Satisfactory acquisition intensity : Currently two additional Letter of Intents totalling 20mSEK Growth remains • Adapting group management to our size : After summer, one additional business area lead and new CFO on the agenda, but profitability prioritized • Simplification and focus on core : Divestment of the Support-business with negative and volatile results 2
NICHE ENGINEERING FOR URBAN INFRASTRUCTURES • Growing city infrastructures - continuous need to develop and maintain MARKET Stockholm main market - opportunity in additional urban areas in Europe • OPERATING • Strong niches - businesses with documented history of profitability MODEL Decentralized - preserve entrepreneurial spirit, decision making closest to customer • GROWTH • Acquisitions to add additional niched products and services in our core market STRATEGY 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 • GOALS Continue on set path and pace and reach SEK 600-800 million EBITA in 2021 • 3 3
One primary target: to grow yearly profits Group EBITA* Group Net sales SEK million SEK million 1 153 1 045 128 123 108 745 395 35 118 14 2014 2015 2016 2017 RTM Q1 2018 2014 2015 2016 2017 RTM Q1 2018 4
Sdiptech in brief Core business of niched services and products for urban infrastructures Tailored Installations Niche Products & Services Elevators (local) Electrical power quality Renovation and service Percent of EBITA 1 Percent of EBITA 1 Elevators (global) Shell completion New installations Vibration monitoring Cooling 82% 18% Gas evacuation Uninterrupted power supply District heating and Wastewater treatment water metering No of employees 320 No of employees 665 Water cleaning Electrical automation Radio communication Roof maintenance Site services Security 1) EBITA* excluding central units. RTM. 5
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 busi ness 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 6
Quarter and RTM Financial development Group – continued operations 1 Q1-2018 (Q1-2017) RTM Q1 2018 (FY 2017) Net Sales Net Sales SEK 338.1 million SEK 1,153 million +46.9% (230.2 million) +10.3% (1,045.1 million) EBITA* EBITA* SEK 127.7 million SEK 34.3 million +4.2% (122.5 million) +17.9% (29.1 million) Net Debt/EBITDA 1.35 RTM Q1 2018 (1.37 FY 2017) 1) Group excl. Support business to be divested. Pending approval AGM. 7
Quarter and RTM Financial development in Tailored Installations Tailored Installations Elevator improvement program • Market dynamics; price pressure is expected to remain in 2018. Programme of measures was initiated in Q4 2017. 672,8 199,2 • Main activities of program; prioritize profitable contracts, 135,9 gradually build a more profitable core, complete contracted Net sales 609,5 but less profitable projects and handle incurred redundancy. • Improvement profile: No temporary ‘quick fix’. Fundamental readjustment of business, thus a lag until realized benefits. Q1 2017 Q1 2018 FY 2017 RTM Q1 2018 • 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 33,8 EBITA* 15,6 and reaching full effect in 2019. 25,7 7,5 Other Q1 2017 Q1 2018 FY 2017 RTM Q1 2018 • Group of companies in the business area, comparable and acquired companies, are in line with the previous year. EBITA* • In Q1, the acquisitions of Centralmontage and Optyma 11.5% 3.7% 5.5% 3.8% Security Systems was closed. margin • Total number of companies 13 8
Quarter and RTM Financial development in Niched Products & Services Niched Products & Services Market and sales • Solid demand and strong niched market positions drive continued growth together with growth from 138,9 480,3 acquisitions. 94,3 • Sales in quarter increased by 47% to SEK 138.9 (94.3) Net sales 435,7 Profits • EBITA* in quarter increased by 85% to 31.8 mSEK Q1 2017 Q1 2018 FY 2017 RTM Q1 2018 from 2017 • EBITA* RTM increased by 14% to 118,8 mSEK from FY2017 • The EBITA* margin in end of 2017 was very good and 118,8 a normalization for RTM towards the current level is EBITA* 31,8 104,2 expected during 2018. 17,2 Other FY 2017 RTM Q1 2018 Q1 2017 Q1 2018 • In Q1, the acquisitions of Aviolinx and Multitech was closed. EBITA* margin 18.2% 22.9% 23.9% 24.7% • Total number of companies 11 9
Acquisitions Four acquisitions closed in Q1 2018 totalling SEK 40m added EBITA EBITA Phase Company Operational niche Country Process (SEKm) Closed Q1 Centralmontage i Nyköping Tailored Installations SE Closed Q1 Aviolinx Communication and services Niched products and services SE ~40 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 *) Time from LOI to Closing varies between one to two quarters, progress and current status varies across companies 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 10
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 The divestment also has the benefit of excluding earnings from the Group that during 2017 turned negative 1 Support Jan-Mar Jan-Mar RTM Jan-Dec (mSEK) 2018 2017 31 Mar 2018 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 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. Full financial upside in InsiderLog is retained by profit sharing agreements 2 Regardless of the divestment of Support, Sdiptech • InsiderLog, divestment of 80 percent retains the financial upside in InsiderLog currently A. Cash payment, 80 percent 57,3 B. Remaining 20 percent 14,3 valued at 5,2 mSEK. - whereof Sdiptech 20,6 - whereof Sdiptech 5,2 - whereof other sharholders 36,7 - whereof other sharholders 9,2 Financial upside also remains in two additional tech • products with potentially a future value, VOXO and 57,3 14,3 HomeMaker. 11
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