A
Stronger together
– World class infrastructure
• Sweco acquires 100% of the shares
in Vectura of the Swedish
Government
• Consideration 927 MSEK
(Enterprise Value approximately 900
MSEK)
• Synergies >70 MSEK
- Predominantly costs synergies
- Additional upside potential
• Expected to contribute 100 MSEK to
operating profit (EBITA) by 2015 –
EPS accretive +9%
Summary of the deal
Strategic rationale
Continued value creating growth for Sweco’s shareholders
• Consolidates Sweco’s position as the leading consultancy in sustainable engineering and design
• Supplements Sweco with a market-leading position in the railway sector
• Strengthens the customer offering in roads, project management and traffic planning
• Strengthens Sweco’s position in the fast growing Swedish infrastructure market
• Opens up greater opportunities in the fast-growing Nordic market, above all in Norway. • Realizes substantial cost synergies
Sweco after the combination
5
•
#1
in the Nordics
•
Top 10
in Europe
•
9 000
employees
• Net sales
SEK 8,8 billion
• The Nordic’s leading engineering
consultancy for infrastructure of the
future
Area of operation
Share of sales
Infrastructure
Structural engineering
Building service systems
Energy systems
Water and Environment
Industry
Architecture
Project Management
Geographic IT
27%
16%
12%
11%
10%
8%
7%
7%
2%
Sweco after the combination
Strong market positions
Permanent establishments in 12
countries and successful projects
around the globe
• Market leading positions in
Sweden, Norway and Finland
• Strong niche positions in Central
and Eastern Europe
• Capacity to offer full service
offerings in international projects
Nordic leadership
Market share
14%Sweden
10%Norway
10%Finland
Source: Svensk Teknik & Design, Sweco
• >10% market share and leading
positions (1-4) in Nordic home
markets
• Nordics representing ~85% of Net
Sales
• Considerable potential to continue
to increase market shares
9
• The Nordic’s leading consultancy in
transportation infrastructure
• Particularly strong in railway
• Employees: 1 200
• Net sales: 1 300 MSEK
• Growth 7% annually 2010-2012
• Operating margin 2012 (EBIT) 31 MSEK
• Operations at ~40 locations in Sweden,
Norway and Denmark
• Established 2009 after combining the
national road and railway agencies’
consulting organizations
42 36 12 8 2
Vectura in brief
Other Trafic & urban planningRoad* Rail* Project & construction mgmt
Share of revenues, %
94%
5%
1%
*InfraDesign unit11 • 26 km double track railway
• 2 stations • 40 bridges
• 28 km highway with 35 bridges, of which a 620 m long steel bridge over Motalaviken • Railway tunnel under central
Gothenburg
• 8 km double track railway • 6 km tunnel
• Civil engineering and railway • Extension from 2 to 4 tracks
between Tomteboda-Kallhäll • In total 20 km
Vectura – Project examples
Strong market development
• Continued strong growth of infrastructure investments
• Sweco strengthens the position in this fast growing market – From 16% to 27% of group sales
• Also adds capabilities to participate in the strong growth in Norway
12
* Source: Trafikverket;Transportsystemets behov av kapacitetshöjande åtgärder (2012); Infrastrukturproposition 2012; Budgetpropositionen 2013; Vårpropositionen 2013; Riksrevisionens rapport om statens satsningar på transportinfrastruktur (2013), Swecoanalysis. ** Source: Nasjonal transportplan 2014-2023 (2013); Statsbudsjettet 2011, 2012, 2013
2013
Government investments Sweden
Government investments Norway
16 19 18 27 Railroad Road 2018 +36% 46 34 2013 6 9 10 20 Railroad Road 2018 +75% 17 SEK billion monetary value 2013* NOK billion monetary value 2013** 29
The Nordic’s leading engineering consultancy
Net Sales 2012, SEK billions, Nordic countries
13 1) Pro forma 2012. 2) Pro forma ÅF+ Epsilon 2012. Source: Year-end reports, Branschöversikten 2012
Conversion ratesr: EUR/SEK: 8,70 DKK/SEK: 1,17 NOK/SEK: 1,16 (average full year 2012)
7,9 7,1 6,5 5,1 3,3 2) 1) +
A
+
Value creating combination
15
The transaction
• Consideration 927 MSEK (Enterprise Value ~900 MSEK on the day of closing)
• EV/EBITA 9x (incl. synergies) • EV/Sales 0,7x
• Financed through a combination of existing and new credit facilities – Cost of financing ~3%
• Sweco’s financial target of Net debt/Equity <0,4 will be exceeded – Considered to be done with balanced risk taking
16
Impact on income
• Vectura’s EBIT 2012: 31 MSEK
• Yearly synergies exceeding 70 MSEK by 2015 – Primarily cost synergies – Additional upside potential
• Contribution to Sweco’s EBITA ~100 MSEK by 2015 • Integration costs estimated to 100 MSEK – Will
primarily impact income H2 2013 and H1 2014 • Transaction costs 5 MSEK will impact income Q2
2013
• EPS +0,48 SEK or +9% (including synergies 2015)
Profitability – Sweco vs. Vectura
17 Sweco Sweden 10,3% Other 0,6% Administration 5,4% Project operations 0,9% Billing ratio 1,1% Vectura 2,3%Healthy and profitable project operations
2/3 of difference attributable to administration costs
• Vectura start-up and incorporation costs
• Economies of scale in Sweco’s administration
Significant synergy potential
Source: Sweco analysis
2012
Norway 70 Traffic & Urban planning 109 Project & construction mgmt 158 Infradesign 1.031 -8,6 -17,4 5,1 4,7 EBIT-margin (%) -6 8 -19 48 EBIT (MSEK)
Net Sales (MSEK)
Sweco – 41 locations Vectura – 37 locations 26 overlapping locations Sweco Vectura 19
Synergies
Cost synergies (2015 >45 MSEK) • Reduction of external costs
• Coordination of administrative services • Co-location of offices
Coordination of unprofitable units with Sweco (2015 >25 MSEK)
• Coordination of the Norwegian business with Sweco Norway
• Coordination of Traffic & Urban planning with Sweco’s similar business
Potential for additional cost synergies – Longer term same profitability is expected as other Sweco
Sweden
Illustrative pro forma 2012, incl. synergies
Consolidated statement of income MSEK Sweco Vectura Adjustment Combined Increase
Net Sales 7 504 1 326 8 830 +18%
Operating costs -6 747 -1 295 -7 972
EBITA 757 31 70 858 +13%
EBITA margin 10,1% 2,3% 9,7%
Amortizations and depreciations -75 0 -12 -88
EBIT 682 31 58 770 +13%
EBIT margin 9,1% 2,3% 8,7%
Financial net -29 -1 -29 -58
Profit before tax 653 30 29 712 +9%
Income tax -177 -6 -9 -192
Profit for the period 476 24 20 519 +9%
Non controlling interests -6 -6
Earnings per share attributable to owners of the
Parent Company 470 24 20 514
21
Next steps
• Filing to competition authorities in
Sweden and Norway
• Closing in August 2013, provided
competition authorities positive ruling
• Vectura to be integrated in Sweco
Sweden using the Sweco brand
• Vectura continues to operate with current
organization and brand during a
transitional period
• Majority of integration completed H1
2014
A
Stronger together – The Nordic region’s
leading engineering consultancy