Why digitize industrial assets?

WE DELIVER SOLUTIONS THAT HELP OUR INDUSTRIAL CUSTOMERS

BUILD A BETTER BUSINESS

+10%

+10%

+10%

300.000.000Industrialelectricalmotorstoday

SOURCE:ABB

GlobalTransformerMonitoringSolutionsmarket

2014-2019.

CAGR46.09%

“Retrofits:Forallthe

excitementaboutnewdevices,

theexistingcapitalstockinthe

U.S.isworth$6.8trillion,with

yearsofusefulliferemaining.

Retrofittinglegacyequipment

withsensorstodrivekey

insights,ratherthanrelyingon

expensivenewequipment,isa

bigopportunity…

Kleiner Perkins

Caufield &Byers

The “Edge”:

By 2019, at least 40%

of IoT-created data

will be stored

processed, analyzed

and acted upon close

to, or at the Edge of,

the network.

Source: IDC

Tools to capture aftermarket lifetime value

1.) Increase lifetime with better condition and usage monitoring

2.) Increase lifetime penetration

3.) Offer new services and capture more of the aftermarket business

Condition MonitoringAsset usePredictive maintenanceSpare parts managementR&D

EnergyConsumptionEmissions

LocationAsset trackingOperationsLogistics

KPI’sUtilizationProductionOptimization

Customer BehaviorNew sales opportunitiesNew business models

OperatorIDTraining needsComplianceSafetyHR

Why digitize industrial assets?- condition monitoring is just the tip of the ice berg

COST SAVINGS

NEW SALESQUALITY

RELIABILITY

Company Confidential

Temp: 27 C247 Hz300 PSI230V / 50 Hz747654 ppiID 683724

Temp: 27 C247 Hz300 PSI230V / 50 Hz747654 ppiID 683724

Temp: 27 C247 Hz300 PSI230V / 50 Hz747654 ppiID 683724

Temp: 27 C247 Hz300 PSI230V / 50 Hz747654 ppiID 683724

Temp: 27 C247 Hz300 PSI230V / 50 Hz747654 ppiID 683724

Smart Terminals Sense, analyze, connect, control

Condence platformConnect, manage, analyze, present

Business Model

OPERATING MODEL: Long term partnering to deliver an IIoT-servicePOSITION IN VALUE CHAIN: Technology and platform operatorREVENUE MODEL: Smart Terminal sales + recurring (MRR) from PaaS + services (IIoT-as-a-Service option)

0

2000

4000

6000

8000

10000

12000

14000

16000

2018 2019 2020 2021 2022

Distribution of Sales / Per Annum

HW MRR

Kim Korhonen, Instit. of Mkt. CEO• IBM, Efore, DELL• Solid Inf. Tech.

Esa HeikkinenSenior Engineer• Electrobit

Lauri Siponen, M.Sc.System Architect• Cybercom Finland

Pasi Lahti, M.Sc.Head of Technology• Aalto University, Computer

Science

Dr. Ahti Karjalainen, Doctor of Sc.Senior Electronics Engineer• Lappeenranta Technical Univ.

Henri Koskela, M.Sc.System Developer• Environics, Philips

Janne-Pekka Karttunen, M.Sc. Head of Sales• Assa Abloy• Niscayah

Otto-Ville RaitolahtiSystem Developer• Outotec, Reilu

Panu Virtanen, M.Sc.Operations Manager• Elcoteq SE• Ensto Utility• Vilant Systems Oy

MANAGEMENT

Patrik PomrenFinance

Antti RonkainenAccounting

APPLICATION DEV. HARDWARE DEV. FINANCE

Samil Hairetdin, M.Sc.Software Engineer• Preato Alpha Oy

SALESKrister HagströmSales Manager, Sweden/Denmark

TBDSales Manager

Juha PankakoskiExecutive Vice PresidentGroup Technologies Konecranes

BOARD OF DIRECTORS

Harri OllilaPartnerVNT Management

Timo Tammisto, COBManaging Director, Partner Miston Oy

Juha SilvennoinenCEOSerres Oy

Traction - radical increase since 1H 2017

* Estimation

Customer Country Potential / units ValueAnnual*

Status First order

Algol FIN 3K/total (200/year)

143.000 First order Q2/2018

DB Santasalo FIN 200/year 143.000 First Order Q2/2018

Detector FIN 30/year 21.450 First Order Q2/2018

Lambertsson FIN 50/year 35.750 Delivery Q2/2018

Finnbow FIN 150/year 107.250 Delivery Q3/2018

Bonfiglioli DE 600/year* 429.000 Quoted Q1/2019

Katsa FIN 40/ year 28.600 Quoted Q2/2018

Danfoss DK 400/year* 286.000 Quoted Q4/2018

Flens Bygg Mask SE 30/year 21.450 Quoted Q3/2018

KP-Service FIN 30/year 21.450 Quoted Q3/2018

Ecobränsle SE 100/year 71.500 P. Planning Q1/2019

IMI Critical SE 15K/total 200/year

143.000 P.Planning Q1/2019

Process cntr.GT SE 100/year 71.500 P.Planning Q1/2019

LaSa Energi DE 150/year 107.250 P.Planning Q3/2019

Rickmeier DE 50/year 35.750 P. planning Q3/2018

Skanska SE 10 units 7.150 Delivered

DB Santasalo FIN 20 units 14.300 Delivered

• Installations in 40+ countries: wind turbines, processing plants, construction, power plants, manufacturing, logistics

• 2 new customers launched their services built on Condence at Pulp & Paper May 2018

• Algol Technics, intelligent cranes, as public reference May 2018

• Krister H. Started in Sweden in January, now 7 detailed discussions

Business Targets 2017-2021

-2000

-1000

0

1000

2000

3000

4000

2018 2019 2020 2021 2022

EBITDA per annum

0

2000

4000

6000

8000

10000

12000

14000

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20

Sold Units vs. Installed Base

Sold units Total unit base

Investment opportunity

FINANCING ROUND

• Valuation (pre-money) 6.900.062,40 EUR

• Round size +1.000.000,-

• Equity offered 12.77 - 26.59 %

• Number of existing shares 56,007

• Cap Table:• VNT Management Oy/Power Fund III

(37.53%)• Miston Oy (57.56%)• Management and personnel (4.91%)• Option Plan for Personnel

USE OF FUNDS

Marketing

• Increase visibility

• Develop vertical specific marketing

Sales Organization

• Increase sales organization

• Establish local sales in critical markets

• Establish technical sales organization

Technology

• Speed up piloting

• Package solutions for verticals

FlexibilityModular

Open Linux architecture

Proven Technology4000 assets

40+ countriesGlobal players

Speed to MarketPortfolio of solutions

Experience

Backup slides

Reference cases and traction

With installations in over 40 countries, we are off to a good start

Power Plants Transformers 5000+ delivered systemsProcess Industry Wind Turbine Gears Installed in over 40+ countriesEquipment Manufacturing Pumps, Motors, Gears Golobal Customers

Case 1: Moventas Gears Oy – CMaS System

Need: The customer wanted to build a global remote monitoring solution for conditionmonitoring services to offer to the wind turbine operators.

Solution: Delivered a solution based on Distence IIoT-platform and smart terminals for data collection and local analysis. Distence operates, maintains and provides continuous solution development to customer.

Value add: Customer was able to generate new service business. For their end customers remote monitoring and control helps to prevent very expensive gear break down and production stop in demanding environment.

Case 2: Kotkan Energia Power Plants / ABB Service Finland

Need: Power plant is controlled by a DCS solution. However there are process critical equipment which do not provide any feedback. The customer needed a solution to monitor these critical components.

Solution: ABB Service Finland delivered a solution based on Distence IIoT-platform and smart terminal technology.

Value add: In one year the customer prevented 2 unscheduled shutdowns using the solution – saving several hundreds of thousands of Euros.

Need: Create new business by renting tower-cranes by daily rate. Basic rate includes usage in business hours (when on-site service team is working). Evening and weekend usage is on additional cost per hour. Understand real operating hours from maintenance viewpoint.

Solution: Distence delivered solution using Distence IIoT-platform and smart terminals to track usage time (crane on time and actual operating time) and for reporting.

Value add: Very profitable extra revenue from new billing mode. ROI for Distence system was only 14 days.

Case 3: Skanska Maskin – Tower crane

Our Productized System Offering

Solution

SensorsSensor

interfaces

Smart Terminal /

Field Aggregation

ConnectivityEdge/

Dedicated Cloud

Central Data Aggregation/

Cloud

Value Creation through

Customer Business Processes

Service

Software

Hardware

1. We consult our customer on the

e2e solution

2. We sell and deliver a Customer specific solution with

our Productized System Offering.

Smart unit intelligence

Readers Rule engine Distributor

OS (Linux)

Output control

Connectivity

Digitization of new and existing industrialassets is our expertise

➢ Pumps

➢ Motors

➢ Fans

➢ Gears

➢ Transformers

➢ Vehicles

➢ Electrical Devices

➢ Industrial Processes

The business model – sticky and recurring

1. Piloting – during the piloting the customer, together with Distence, search for the correct features and functions and modules to match the customer need.

2. Hardware sales – after piloting, the customer orders hardware, often in batches based on commissioning pace. Customer installs and commissions hardware.

3. SaaS – Monthly Recurring Revenue (MRR) from hardware connected to the Distence IIoT-platform.

4. Professional services – Data hosting, UI-configuration, new sensors and other service needs often emerge during the course of the business relationship.

Distence is the go-to partner for digitising industrial assets in demanding environments.

Provides reliable edge-technology and a flexible device cloud platform for fast deployment to digitise and connect industrial assets.

Industrial environments with large installed base

or growing OEM market.

By being flexible, fast and robust in delivering

a customer driven solution.

What?

To Whom?

How?

Business Idea:

Strategic Intent:

IIoT creates undeniable value

Distence Customers

“increased ROI of 10% on a 50M€ investment”

“200.000€ cost savings at a power plant”

“1000€ additional earnings per day from production capacity increase”

“150.000€ savings by preventing total failure of production”

Total Cost of OwnershipComponents addressable with digitization>80%

Long life of industrial assets,

TCO amplified

0 10 20 years

BORN GLOBALASSETS ARE THE

SAME ANYWHERE IN THE WORLD

ROI

The nature of the industrial market presents ahigh ROI potential for customers

Energy

Spareparts

Maintenance

Smart Terminals: With smart terminals, we take intelligence to the asset level. This modular industrial grade field proven technology is designed to make assets intelligent by making the asset aware of itself and its surroundings, process data at asset level and utilize information from the cloud. Smart Terminals enable eg. predictive maintenance, autonomous decision making, increased asset life, energy efficiency, operational excellence, machine learning and running AI-solutions and smart services. Condence Device Cloud Platform: This platform works together with the

Smart Terminals offering a robust, scalable and flexible solution to building an intelligent IoT service. Device management and configuration is handled from the cloud. With Condence the customer can update functional features, the micro apps running on smart terminals or the firmware in device groups or in an individual device. In Condence we provide transparency to the asset and an efficient reporting tool. The Platform is used by our customers e.g. to manage globally wind farm O&M; in closed environments, asset group or customer specific asset groups, as in power plants or industrial facilities. When necessary, we interface with other platforms such as Predix, ThingWorx, Mindsphere…* T800 Model – high voltage environments

Market Trends and Analyst ReportsSupporting Distence Strategy

The market is just warming up!

Distence solution is hitting the need spot on.

Success feeds new investments

Acquiring data is a prerequisite to processing it

Edge – the way to go

Edge – Distence focus is correct

Summary

• Distence has a solid and proven solution to digitalize industrial assets.

• The technology focus, in–house developed edge technology together with a secure IIoT-platform, is confirmed by market reports as the right area to focus on.

• The market focus, demanding industrial environments, requires years of development and proven technology, which Distence has.

• A clear strategy and implementation plan is in place – it is time to grow.

• Impressive solutions to demanding customers like ABB confirm team expertise and robust proven technology.

• Considering the global installed base of critical industrial assets Distence focuses on – the economic impact to the customer, ROI, and thus the potential for Distence, is enormous.

How much could digitization increase your ROI?