NKT Holding - Finansforeningen...NKT Holding A/S / DDF presentation 7 June 2012 Page 6 • Strategic goals based on current levels for commodity prices, interest rates and currencies,

NKT HoldingDen Danske Finansanalytikerforening

Virksomhedsdag 2012

Presentation 1March 2011

Page 2NKT Holding A/S / DDF presentation 7 June 2012

Page 2

Agenda

Facts about NKT (5 min)

SWOT Analysis (15 min)

Value drivers in Cash Flow / Cash Conversion / Shareholder Value (20 min)



Page 3

The history

1891201580’erne

Diversification 19904,6 bn. DKK revenue+ 30 companies7.000 employees

- 75% in DK- 25% abroad

+ 70% of revenue in DK

201014,5 bn. DKK revenue4 divisions9.200 employees

- 18% in DK- 82% abroad

6% of revenue in DKMarket cap 7,1 bn. DKKEPS 11 DKK

2015App. 20 bn. DKK revenue 7-8% organic growthOperational EBITDA-margin 14-15%ROI 20%EPS 50 DKK



Page 4

Group structure June 2012

Nilfisk-Advance

NKT Flexibles 51%

Photonics Group

NK

T H

oldi

ng

NKT Cables

Global presence

North, Central and Eastern Europe,China, Australia

NKT PhotonicsLios TechnologyVytran

Ownership: NKT Holding: 51%Subsea 7: 49%

In February 2012 agreement was

signed concerning sale of NKT

Flexibles to National Oilwell Varco.

Transaction closedin April



Page 5

Manufacturing PMI

Expectation indicator – Above the line indicates positive expectations for the manufacturingsector and below the line indicates declining expectations for the manufacturing sector

Below the line indicates expectations of recession

32

37

42

47

52

57

62

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

USA EURO zone



Page 6

• Strategic goals based on current levels for commodity prices, interest rates and currencies, etc.• Expected growth of 1-3% in developed markets and 5-10% in emerging markets • Unchanged view on optimal capital structure• Continued best owner philosophy• Appreciation of “powering” capabilities• Structure, i.e. current number of business units and their exact scope not set in stone for the full strategy period

– but expected to remain unchanged during first half of the period

Strategy 2011-2015 ”Powered by NKT”

2010Goal2015 2010

Goal2015

Revenue, market prices (bnDKK) 14,5 ap. 20Revenue, std. prices (bnDKK) 11,5 ap. 16Average organic growth (CAGR) 12% 7-8%

Gearing (NIBD/Equity) 100% <100%Operational EBITDA margin, std. prices 8,6% 14-15% NIBD/Operational EBITDA 4,2x <2,5x

Solvency ratio 33% >30%Return on Capital Employed (RoCE) 7,5% 20%

Earnings per share, EPS (DKK) 11,3 50



Page 7

Megatrends



Page 8

NKT Cables

VISIONNKT Cables is creating value for its customers by providing solutions with cables



Page 9

500 kV

30 kV – 500 kV

110 kV-500 kV

10 kV – 30 kV

1 kV

OPGW /OPPC

OPGW- /OPPC-Accessoires

Submarine cables

HV accessoiresup to 500 kV

HV cablesup to 500 kV

MV cables 10 kV - 30 kV

Cabinets and Boxes1 kV-cables

Installation cables

Accessoires10 kV - 36 kV

VALCAP Monitoring

Superconducting cables

Energy flow with NKT Cables product range



Page 10

Product Scope for Sea Cables

All cable types are available with integrated optical fibres (On and Offshore)

From 2009 onwards longer cables lengths will be available

Medium voltage wind farm connections› Single core cables up to 10.000 m (36 kV) (Offshore)*› Three core cables up to 1.2000 m (36 kV) (Offshore)*

High voltage wind farm connections› Single core cables up to 3.000 m (145 kV) (Offshore)*

High voltage wind connections (Onshore)› Three core cables (170 kV)› Single core cables (420 kV)

Accessories› Appropriate accessories are available for all the cables

mentioned (On and Offshore)

Fibre Optic based monitoring with Real Time Thermal Rating system (RTTR)

› NKT own System for cables systems (On and Offshore)

Cluster cables› Complete scope of three core cables (Offshore)*



Page 11

Utilities

41%

Whole-sales

29%

Industry

30%

Sales by Customers

Denmark

9%

Germany

25%

Eastern Europe

26%

Asia

13%

Other

27%

Sales by Markets

NKT Cables

Sales by Customers and Fields of Applications are based on std. prices for FY 2011. Sales by Markets is based on market prices for FY 2011.

Manufacturing and Sales CompaniesSales Entities

Railway

7%

Other

6%

Sales by Fields of Applications (Products)

Automotive 5%

Construction

19%

ElectricityInfrastructure

63%

63%

HV+offshore 33%

MV 18%

Other 12%



Page 12

Nilfisk-Advance

MISSIONWe enable sustainable cleaning worldwide to improve quality of life



Page 13

Industrial

36%

Domestic

12%

Sales by Customers

Commercial

52%

EMEA

64%

Americas

24%

APAC

12%

Sales by Markets

Nilfisk-Advance

Sales EntitiesManufacturing Companies

All data based on FY 2011

Floor-care

41%

Vacuum cleaners

25%

High pressure washers

19%

Service

8%

Other sales

7%

Sales by Products



Page 14

Sustainability

Consolidation

Continued cleaning

outsourcing

Customer WC reduction

• Emerging markets are gradually adapting cleaning standards ofdeveloped countries, driven in particular by entrance of supermarket chains (requiring modern cleaning standards)

• Requirements for reduction of power, water and detergents

• Increasing demands for suppliers being “green” throughout entirebusiness system

• Customers focusing on cash and predictability and asking forinnovative solutions

• Large customers are demanding that suppliers take over theresponsibility for entire fleets of machines, including servicing andproposals for refurbishments/replacements

• Consolidation in the industry is expected to continue in order to gain scale advantages and broaden product range and geographical reach

• Contract cleaners taking increasing share of cleaning/facility management across all customer segments

• Increasing professionalisation of contract cleaners’ central purchasing

Growth in emerging markets

Nilfisk-Advance - Industry trends



Page 15

Photonics Group



Page 16

Photonics Group

NKT Photonics

48%Lios

Technology

22%

Vytran

30%

Sales by entities

HQ NKT PhotonicsHQ Lios TechnologyHQ Vytran

All data based on FY 2011



Page 17

Photonics Group

Ultra Precise LasersKOHERAS

• Security (Perimeter)

• Wind measurements

• Oil exploration andexploitation

• Large displays

High Power Fiber LasersCrystal Fibre

• Cutting and welding

• Semiconductor and solarcell production

• Anti missile defence

• Marking

Super Continuum(White Light)KOHERAS & Crystal Fibre

• Biotech/microscopy

• Measurement/test equipm.

• Semiconductor inspection

• Surface topography

Distributed Temperature SensingLIOS Technology

• Fire detection

• Power cable monitoring

• Oil exploitation

• LNG terminals andtankers

• High temp. ovens

• Global market size: ~ 1,1 bn. DKK• 9% of total laser market • 30 - 40% annual growth rate• Substitution from conventional lasers

• Market growing from low base• New functionality drives application market• Potential market of 1 bn. DKK

• Market growing from low base• New functionality drives application market• Potential to substitute conventional lasermarket of estimated 1 bn. DKK

• Global market size: ~ 0,5 bn. DKK• Market for power cable monitoring andoil exploitation expects to show stronggrowth



Page 18

Agenda






Page 19

SWOT Analysis

Healthy Balance Sheet Clear strategy supported by compelling mega trends Global mindset and footprint Further improvement potential Diversity in business portfolio yields balanced risk Good Corporate Governance and CSR in place Long term industrial approach minded at superior value creation Active ownership



Page 20

SWOT Analysis

Cable division underperforming- Deployed assets yet underutilised- Offshore segment immature - Exposure to large projects- Exposure to delays on customer side

Photonics remains to develop into industrial division

Nilfisk-Advance lacks service offerings in US due to indirect distribution model



Page 21

SWOT Analysis

EU energy policy Renewable energy Emerging markets Continued polarisation in professional cleaning equipment sector China infrastructure Continued urbanisation Consolidation in industries



Page 22

SWOT Analysis

Adverse macro economic development Euro collapse Political exposure in China Consolidation in industries



Page 23

Agenda






Page 24

Value creation in a 25 year perspective

• Value 1987 1,2 bn. DKK • Value 2012 5,0 bn. DKK• Dividend pay-out 6,3 bn. DKK

Shareholder return:• > 9% annual return = 9,4 times pay back

of investment

1,2

11,3



Page 25

Cash generationmDKK

-1.500

-1.300

-1.100

-900

-700

-500

-300

-100

100

300

500

700

900

1.100

1.300

1.500

Q4-07

Q1-08

Q2-08

Q3-08

Q4-08

Q1-09

Q2-09

Q3-09

Q4-09

Q1-10

Q2-10

Q3-10

Q4-10

Q1-11

Q2-11

Q3-11

Q4-11

Q1-12

Cash flow - operations LTM Cash flow - investments LTM (excl. acquisitions)

Free cash flow LTM Operationelt EBITDA LTM



Page 26

Ambitions

Return on invested capitalWorking Capital management Tax management Capital structure

Capex management

Cash Conversion (EBITDA to CFFO) : 70-80%(EBIT to FCF) : 70-80%

FCF Yield of current Market Cap: 10 – 20% p.a.

Target: Increase 10% pointsTarget: Reduce 2-3% pointsTarget: 20-25% of EBTTarget: NIBD/EBITDA < 2,5x

Maintenance Capex: 250 mDKKProduct dev. etc: 150 mDKK



Page 27

Return on invested capital

RoCE determines capital allocation

- Capacity expansions- Acquisitions- Product development

Leavers to increase return:

- Customer Satisfaction- People & Performance- Risk Management

- Growth combined with operational gearing- Product portfolio management (high value added)

- Capacity utilisation (existing markets / new markets)

- Price management (“Return on Customers”)

- Cost competitive products (Mgt. footprint, sourcing)

- Reduce complexity- Strict overhead cost control

- Reduce Working Capital- Capex management / “Positioning in the value chain”



Page 28


What do we do• Analyse all cost related to specific product

variants• Work to correct prices or eliminate variants

Heavy pruning

What do we do• Define a vision of “100% modularity”• Include modularity principles in new product development

Modularity

What do we do• Define healthy business policies and

processes around customer profitability• Support implementation of these processes

in small and medium-sized sales companies

Barnacles



Page 29


• Service sustained at 95%/98%

Global Operations

Delivery performance on par with or above industry average

• Global Operations structure

• Next wave of improvements defined

• Rethink our structure and service levels

Reduce future inventory levels



Page 30


What do we do• Acquired Chinese factory with HV capabilities• Factory upgrade to our standards• Qualification of HV products (220 kV and above)

China HV Market

What do we do• Build a new HV factory with subsea cable capabilities• Establish a project organisation• Step-up on mgt. capacity and risk management

Energy policy in EU

What do we do• Waiting for re-activation by Ministry of Railway• Factories in ramp-up mode• Technology development• Expand offering to rail segment (MV cables, Signal cables)

High Speed Rail in China

25% of total Capital Employed / 40% of Tangible Fixed Assets are structurally well positioned, but yet underutilised



Page 31




Page 32

Working Capital management

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

0

50

100

150

200

250

300

350

400

450

500

Wor

king

Cap

ital

in m

€LT

M

WC in % of Sales @ MP

WC monthly in m€ LE I BU 12 WC in %of Net Sales LTM WC in %of Net Sales 3 mth

131 124 125 117 124 126 131 138 142156 164 169 181 177 181 180 180 191 187 180

201217

235 227213 205 203 204 203 196 186

170 172186

202 206

74

6771

6670 69 71

8591

116

10298

95

87 89

80 81 7973 71

84

98

107

99

87

80 8183

87 87 86 8591

106

113 114

73 76 77 79 81 82 84 85 87 88 89 89 90 88 88 86 87 87 86 85 85 85 86 86 87 89 89 90 90 92

0,0

50,0

100,0

150,0

200,0

250,0

300,0

350,0

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

Inve

ntor

y in

m€

Inve

ntor

y in

CO

GS

Day

s

Inventory NET in Days, excluding POC element

Inventory in m€ Inventory days 3 months Inventory days 12 months of 3 months

161177 182 176 181 178 175

137 145 148165

175191

209 205 210

235246 240

213 221

246 239257

246236 243

256245 237

253

221 218237

221 228

6569

7371

7371

67

58

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7471

6967

70 68

64

7067

65

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7876

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6972

7371 70

75

6771

8482 83

68 68 69 69 69 69 69 69 69 68 68 67 67 67 67 68 68 69 69 69 70 70 70 71 72 72 73 73 74 74

0,0

50,0

100,0

150,0

200,0

250,0

0

10

20

30

40

50

60

70

80

90

Trad

e ac

coun

ts r

ecei

vabl

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n m

€

Trad

e ac

coun

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ceiv

able

s in

Day

s

Trade accounts receivables Days

BU 12 LE I Trade receivables in m€ Trade receivables days 3 months Trade receivables days 12 months of 3 months

67 72 69 7180 84 80 74

87 86 8494

102111 113

125133

151160

146 145161

174

144 139 140

156 160174 167 165

177

143

160

182 18138

43

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49 50

4345

4445

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50 51 51 5149 49

54 55

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6866 66

81

69

78 7876

44 43 44 44 43 44 44 44 45 46 46 47 47 48 48 48 49 50 50 51 53 5455 57 58

6062

6466

68

0

20

40

60

80

100

120

140

160

180

200

0

10

20

30

40

50

60

70

80

Trad

e ac

coun

ts p

ayab

les

in m

€

Trad

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ccou

nts

Paya

bles

in D

ays

Trade Accounts Payables in Days

BU 12 LE I Trade Paybles in m€ Trade Payables days 3 months Trade payable days 12 months of 3 months



Page 33

Working Capital management



Page 34

Capex management

0

0,01

0,02

0,03

0,04

0,05

0,06

0,07

0,08

0,09

0,1

100

200

300

400

500

600

700

800

900

1.000

jan-

07

jan-

08

jan-

09

jan-

10

jan-

11

jan-

12

CAPEX ex. Cologne and CangzhouCologne and Cangzhou

% of revenue (LTM)

2009 2010 2011 20122008

mDKK

2007

Gross CAPEX in Q1 2012 is 89 mDKKvs. Q1 2011: 99 mDKK

Investments in intangible assets in Q1 2012 are 36 mDKK vs. Q1 2011: 29 mDKK

NKT Cables

70%

Nilfisk-Advance

28%

Other 2%

NKT Cables

17% Nilfisk-Advance

78%Other 5%



Page 35

Capital structure

• NIBD of 4.491 mDKK as per 31 March 2012 vs. 4.429 mDKK as per 31 December 2011

• End March 2011 net interest bearing debt amounts to 4,3x operational EBITDA (end 2011: 4,3x). Max. NIBD of 2,5x operational EBITDA remains the internal target. Proforma (incl. the sale of NKT Flexibles) 2,4x

• Gearing of 109% (Q1 2011: 121%). Max. ratio of 100% remains the internal target. Proforma (incl. the sale of NKT Flexibles) 46%

• Solvency ratio of 30% (Q1 2011: 29%). Ratio >30% remains the internal target. Proforma (incl. the sale of NKT Flexibles) 41%

Q1 2011

5,0x4.821mDKK

Q1 2012

4,3x4.491 mDKK

0,0x

1,0x

2,0x

3,0x

4,0x

5,0x

6,0x

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

Q1-

08

Q2-

08

Q3-

08

Q4-

08

Q1-

09

Q2-

09

Q3-

09

Q4-

09

Q1-

10

Q2-

10

Q3-

10

Q4-

10

Q1-

11

Q2-

11

Q3-

11

Q4-

11

Q1-

12

Prof

o…

mDKK Net interest bearing debt, mDKK

Net interest bearing debt relative to operational EBITDA

Documents

NKT Holding - Finansforeningen...NKT Holding A/S / DDF presentation 7 June 2012 Page 6 • Strategic goals based on current levels for commodity prices, interest rates and currencies,