Acquisition of Aleris Care Announcement presentation 16 October 2018
Transaction summary Transaction in brief The acquisition Ambea has entered into an agreement to acquire Aleris Care at an enterprise value of SEK 2.6bn, corresponding to an equity value of approx. SEK 3.0bn Closing of the acquisition is expected in Q1 2019, subject to customary regulatory approvals SEK 2,600m Enterprise value Bridge financing in place, rights issue in 2019 Financing Ambea has secured bank financing for the acquisition, consisting of a SEK 1.4bn loan facility and a SEK 1.2bn bridge financing to be repaid by rights issue Rights issue to be approved by the EGM, planned for H1 2019 to maintain financial strength and flexibility 14.0x EV/EBITA before synergies 8.5x EV/EBITA after direct cost synergies and operational improvements Note: EBITA-multiples based on adjusted LTM September 2018 SEK 186m (Reported SEK 127m). 2
Strategic rationale The largest private care company in the Nordics, with leading positions in Sweden, Norway and Denmark #1 market position in the Nordics The New Ambea Group A robust platform in multiple countries with strong organic growth pipeline #1 #1 #1 1,796 beds in the pipeline Significant synergies and margin improvement opportunities SEK ~120m Care Cross-country learning opportunities and sharing of best practice annual direct cost synergies and operational improvement opportunity Significant cross-country learning and best practise sharing Note: Competitors include for-profit care service providers in segments where Ambea is present. Comparison based on LFY reported revenues, adjusted for major acquisitions and divestments. Aleris Care pro forma group accounts K3. Attendo adjusted for divested healthcare operations and the acquisition of Mikeva. Team Oliva Danish sales exclude sales related to Personal Assistance Source: Company information, company filings 3
Two complementary companies with strong own management businesses Ambea at a glance Aleris Care at a glance Geography Geography % sales LTM H1 % sales LTM H1 Sweden Norway Care Norway Sweden Denmark Own vs. Contract Own vs. Contract % sales LTM H1 % sales LTM H1 SEK 5,937m sales LTM H1 #3 in the Nordic market #2 in Sweden #7 in Norway n.a. in Denmark Own Management Contract Management Staffing Segment SEK 4,665m sales LTM H1 #6 in the Nordic market #6 in Sweden #1 in Norway #1 in Denmark Own Management Contract Management Segment 67% Own Management of sales % sales LTM H1 77% Own Management of sales % sales LTM H1 1,038 beds in pipeline Nytida Vardaga Norway Klara 758 beds in pipeline IoF (SWE) EC (SWE) Norway Denmark Note: Aleris Care pro forma group accounts K3. Sales adjusted for discontinued businesses, terminated contracts and units in the process of being closed Source: Company information, company filings 4
The new Ambea Group - the leading Nordic care provider The new Ambea Group Indicative market position Indicative market position pre transaction From #3 to #1 in the Nordics Indicative market position post transaction #1 #1 #1 SEK 10,602m sales LTM H1 #1 in the Nordic market #1 in Sweden #1 in Norway #1 in Denmark 71% Own Management of sales 1,796 beds in pipeline Care Note: Competitors include for-profit care service providers in segments where Ambea is present. Comparison based on LFY reported revenues, adjusted for major acquisitions and divestments. Aleris Care pro forma group accounts K3. Attendo adjusted for divested healthcare operations and the acquisition of Mikeva. Team Oliva Danish sales exclude sales related to Personal Assistance Source: Company information, company filings 5
Active in attractive markets Favorable demographic development in elderly care, with number of +80 year olds expected to increase 522 096 55% 807 890 223 291 353 667 256 694 433 062 2018 2030 E 2018 2030E 2018 2030E Individuals +80 years old Low private penetration in the Nordics compared to rest of Europe indicates future potential % private providers Note: Share of private provision (incl. non-profit providers) of elderly care services in selected European countries. Indicative share of market Source: Socialstyrelsen, SCB, Konkurrensverket, Dansk Erhverv, SSB, DST 6
Significant number of beds in pipeline driving short term organic growth 1,796 beds in combined pipeline 18% 39% 23% 114 644 5 65 88 1,796 880 Ambea pipeline Aleris Care pipeline New Ambea Group pipeline Vardaga Nytida beds Nytida placements Norway Beds in pipeline as % of current OM beds/placements in operations Source: Company information, company filings 7
Operational excellence drives margin improvement Significant cross-country learning opportunities Ambea care model results in margin improvements 1 8,5% 9,0% 8,6% 8,4% Industry-leading quality system 7,7% 6,9% 2 Leader in education of high competence 4,6% 5,5% 3 Operational excellence and digitalisation 4 KPI-driven unit performance management Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 2017 2018 Adjusted EBITA-margin LTM Source: Company information, company filings 8
Attractive synergies to support further growth Annual financial impact Overhead cost synergies Direct costs Certain overlapping functions High degree of control of implementation SEK 90m ~50% of synergies achieved in 2019 100% of synergies achieved in 2020 Operational improvements Ambea care model Best practice and knowledge sharing Procurement contracts SEK 30m 100% of improvements achieved in 2020 Total SEK 120m One-off effects Integration & M&A costs Costs in connection to synergy realisation and M&A-related costs SEK ~135m Majority of M&A costs in 2018 Majority of realisation costs in 2019 Source: Company information 9
Ambea financial targets reconfirmed Medium-term further potential Adjusted earnings per share accretive as of Q2 2019 provided the proposed rights issue Margin dilution short-term Financial targets reconfirmed medium-term Reconfirmed financial targets Targets reached medium-term Ambea financial targets 8-10% Sales growth Annual growth ranging between 8-10% through a combination of organic and acquisition driven growth 9.5% Adjusted EBITA margin An adjusted EBITA margin of 9.5% in the medium-term <3.25x Net debt / adjusted EBITDA Net debt to adjusted EBITDA below 3.25x with short-term deviations, e.g. in association with acquisitions 30% Earnings dividend Given proposed rights issue in 2019, the Board anticipates to recommend to the AGM to resume dividend for fiscal year 2019, payable in 2020 Note: Earning per share adjusted for M&A related amortisations and one-off costs Source: Company information 10
Transaction terms The acquisition SEK 2,600m Enterprise value 14.0x EV/EBITA before synergies 9.4x EV/EBITA after direct cost synergies 8.5x EV/EBITA after cost synergies and operational improvements Timetable Financing Closing of the acquisition expected in Q1 2019, subject to customary regulatory approvals Rights issue is expected to be completed during H1 2019 Ambea has secured SEK 2.6bn in bank financing in order to finance the acquisition Danske Bank, DNB and Nordea are the arrangers and lenders of the bank financing, which comprises (i) a revolving credit facility of SEK 1.4bn with an original term of 3 years, plus two optional extensions of 1 year each, and (ii) a bridge facility of up to SEK 1.2bn with an original term of 9 months, plus two optional extensions of 3 months each. The intention is to repay the bridge facility through the rights issue. Rights issue supported by largest shareholders, to be approved by the EGM, planned for H1 2019 to maintain financial strength and flexibility ACTR Holding AB and ACTOR SCA, which are controlled by KKR and Triton jointly holding 50.1% of the shares in Ambea intend to vote in favour of the rights issue at a general meeting and to subscribe for their respective pro-rata shares in the rights issue. Transaction costs for the acquisition are estimated at SEK 35m Note: EBITA-multiples based on adjusted LTM September 2018 SEK 186m (Reported SEK 127m). Source: Company information 11
Fully funded acquisition maintaining a strong financing structure Illustrative Net debt / EBITDA development Rights issue Loan and bridge facility available to finance the acquisition Plan to raise approximately SEK 1.2bn in a rights issue to be approved by the EGM Rights issue expected to be completed during H1 2019 4.0 5.4x 3,9x Down to current level after right issue, trending towards target end of 2019 Deleveraging to reach mediumterm financial target 3,25x Shareholder support The larger shareholders ACTR Holding AB and ACTOR SCA, controlled by KKR and Triton and representing approximately 50.1 per cent of the total number of shares and votes in Ambea, intend to vote in favour of the rights issue at a general meeting and to subscribe for their respective pro-rata shares in the rights issue. The rights issue is expected to be resolved and completed during the first half of 2019. Leverage Q2 2018 Illustrative leverage post acquisition Illustrative leverage post acquisition and rights issue New Ambea Group Long-term financial target Source: Company information 12
Time table Next steps Announcement of acquisition Expected approval from competition filing Closing of acquisition EGM Rights issue Today, 16 October 2018 Q1 2019 Q1 2019 H1 2019 H1 2019 13
Appendix
New structure of Ambea Group New Ambea Group Nytida Vardaga Norway Denmark New segment Klara Source: Company information 15
New Ambea Group income statement Aleris Care LTM H1 2018 SEKm Vardaga Nytida Norw ay Denmark Klara Group Adjusted sales 1 034 636 2 595 400 n.a. 4 665 OPEX and depreciation (1 030) (594) (2 504) (390) n.a. (4 519) Adjusted EBITA 3 42 91 9 n.a. 146 % adjusted EBITA margin 0,3% 6,6% 3,5% 2,3% n.a. 3,1% Reported EBITA n.a. n.a. n.a. n.a. n.a. 96 Ambea LTM H1 2018 SEKm Vardaga Nytida Norw ay Denmark Klara Group Sales 2 234 2 938 444 n.a. 321 5 937 OPEX and depreciation (2 087) (2 576) (427) n.a. (306) (5 439) Adjusted EBITA* 147 362 17 n.a. 15 498 % adjusted EBITA margin* 6,6% 12,3% 3,8% n.a. 4,7% 8,4% New Ambea LTM H1 2018 SEKm Vardaga Nytida Norw ay Denmark Klara Group Sales 3 268 3 574 3 039 400 321 10 602 OPEX and depreciation (3 117) (3 170) (2 931) (390) (306) (9 958) Adjusted EBITA* 150 404 108 9 15 644 % adjusted EBITA margin* 4,6% 11,3% 3,6% 2,3%. 4,7% 6,1% * EBITA for each Ambea sub-segment standalone. Group includes unallocated and group adjustments Note: Aleris pro forma group accounts K3 adjusted for discontinued businesses, terminated contracts and units in the process of being closed. OH attributable to Aleris Sweden has been allocated to Nytida and Vardaga based on the segments share of Aleris Sweden sales Source: Company information, company filings 16
Specification of costs related to the Transaction Transaction costs SEKm M&A-related costs 35 Rights issue costs To be confirmed Synergy realisation costs 100 Total transaction costs 135 Source: Company information 17