interim report january march 2018 -...
TRANSCRIPT
2
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
on 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 & servicesSize 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 salesGroup EBITA*
SEK million
5
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 communicationRoof 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 CountryEBITA
(SEKm)
Closed Q1 Centralmontage i Nyköping Tailored Installations SE
~40Closed 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
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*) 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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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%