SP Group 1. half year 2007 Presentation by CEO Frank Gad August 2007.

SP Group1. half year 2007

Presentation by CEO Frank Gad

August 2007

2Presentation August 2007 / SP Group

AGENDA

1. SP Group – an overview

2. Results 1. half year 2007• Group• Injection moulding• Polyurethane• Vacuum forming• Coating• Share price and liquidity

3. Strategic focus areas• Increasing sales and globalization• Growth industries and own brands• Higher efficiency in the Danish

production• Expansion in low-cost areas

4. Financial objectives

Frank Gad (born 1960, M. Sc.)

Career:

Nov. 2004: CEO, SP Group A/S

1999-2004: CEO, FLSmidth A/S

1996-99: President, Mærsk

Container Industri A/S

1985-99: Odense Steel Shipyard A/S latest as EVP


SP Group A/S

INJECTION MOULDING POLYURETHANE VACUUM COATINGS

SP Moulding A/S Tinby A/S

Ergomat A/S

Gibo Plast A/S Accoat A/S

TPI Polytechniek bv

SP Medical A/S

SP GROUP – AN OVERVIEW

• Manufacturer of moulded plastic components and coatings

• Supplier of customer specified solutions for manufacturing industries

• Increasing exports from Denmark; increasing production in China and Poland

• Strong international niche positions – also within own brands

Revenue split in the business units of the Group

H1 2007 and 2006:

64,7

27342,7

82,5

51,9

219,7

53,1

73,9

Polyurethane Vacuum formingCoating Injection moulding

2007

2006

82.5

42.7

64.7

273

73.9

53.1

51.9

219.7


RESULTS 1. HALF YEAR 2007


GROUP HIGHLIGHTS

• Results in H1 better than expected in spite of increasing prices in raw material and energies

• Growth in 3 of 4 business units

• Higher efficiency throughout the Group

• Continuing rationalisation of Danish production

• Two new Polish manufacturing units run on schedule

• Outlook 2007 is upgraded in spite of costs for the close-down of Sønderborg

200

250

300

350

400

450

500

H1 2004 H1 2005 H1 2006 H1 2007

Revenue in DKKm

+15%

Operating profit (EBITDA) i DKK m

0

5

10

15

20

25

30

35

40

45

50

H1 2004 H1 2005 H1 2006 H1 2007

+30%


GROUP HIGHLIGHTS 1. HALF YEAR 2007

DKKm H1 2007 H1 2006

Revenue 454.1 395.9

EBITDA 45.3 34.9

EBIT 26.5 17.7

Result before tax and minorities

20.7 10.0

Net profit 15.7 5.4

Equity incl. minorities 182.4 159.0

Cash flows from:

Operations 31.9 13.0

Investments -28.0 -26.4

Financing -4.8 15.4

0

5

10

15

H1 2004 H1 2005 H1 2006 H1 2007

Net profit ratio (EBITDA) in %

+1,2pp


SP Moulding A/S manufactures injection moulded advanced plastic components for a wide range of industries.

SP Medical A/S produces for customers in the medical appliance industry, including finished articles such as medical guide-wires. The production takes place in clean rooms.

SP Moulding is the leading manufacturer in Denmark and among the largest in Scandinavia. SP Medical ranks 3-4 in Scandinavia.

Locations: Juelsminde (DK), Stoholm (DK), Karise (DK), Sønderborg (DK), Suzhou (China), Sieradz (Poland) and Zdunska Wola (Poland).

INJECTION MOULDING (1)

Technical plastics

Technical plastics Medico Medico 2K and 3K moulding


INJECTION MOULDING (2)

1. half year 2007: 6.1% organic growth; increasing sales to

all industries on the whole 24.3% growth in total New Polish sites run on schedule, but still

have negative impact on earnings Earnings in Sønderborg not satisfactory;

others Danish sites and site in China are generating profits

DKKm H1 2007 H1 2006

Revenue 273.0 219.7

EBITDA 17.6 14.1

EBIT 6.2 5.4


0.7 2.0

Employees (average) 593 474

Net profit ratio (EBIT) in %

2.3 2.4

DKKm 2006 2005

Revenue 462.0 398.6

EBITDA 27.2 18.9

EBIT 9.0 1.6

Full-year result 0.6 -2.5

Outlook 2007: Growth in SP Moulding and SP Medical Modest positive contribution from Poland

in H2 Improved revenue and earnings before

close down of Sønderborg


3 activities: Tinby A/S, Ergomat A/S and TPI Polytechniek BV

Locations: Søndersø (DK), Zdunska Wola (POL), Vught and MK Teuge (NL), Cleveland (US), Montreal (CAN), Zeil am Main (DE) and Helsingborg (SE)

Tinby is one of the leading suppler in Northern Europe of moulded products in solid foamed and flexible polyurethane (PUR). Global market leader within hard rollers.

Rollers Solid foamed PUR

TPI Polytechniek produces and sells light-foamed ventilation equipment for industrial buildings and poultry and pig houses. Market leader in the EU.

POLYURETHANE (1)

Ergomat produces and sells ergonomic solutions under own brands: Primarily mats (Ergomat), chairs (ErgoPerfect), tables and DuraStripe striping tape. Market leader in the EU. Mats DuraStripe


POLYURETHANE (2)

1. half year 2007: 11.5% growth – higher than expected Growth in TPI, especially in Eastern Europe Growth in Tinby, e.g. wind mill industry Ergomat: Flat growth, strongly improved

earnings Increasing net profit ratio due to better

product mix and growing activities

DKKm 2006 2005

Revenue 148.7 156.6

EBITDA 30.4 24.7

EBIT 23.3 17.8

Full-year result 14.0 10.9

Outlook 2007: Growth in all activities Improved efficiency and tight cost

management will result in higher earnings than in 2006

DKKm H1 2007 H1 2006

Revenue 82.4 73.9

EBITDA 19.1 15.2

EBIT 15.6 11.8


14.5 9.3



19.0 16.0


Gibo Plast develops and manufactures thermo-formed plastic products in different materials and colours. The products are mainly used in refrigerators and freezers, caravans as well as within transportation, medical equipment, lighting industries, wind turbines etc.

Market leader in Denmark and Scandinavia, among the 10 largest suppliers in the EU as regards traditional vacuum forming. Strong position within the new High-pressure and Twinsheet technologies.

Location: Skjern (DK)

Vacuum forming CNC milling High pressure Twinsheet

VACUUM FORMING (1)


VACUUM FORMING (2)

1. half year 2007: Expected drop in sales to the

refrigerator and freezer sector New activities in transportation

equipment, the medico industry and parts for wind turbines etc.

Finding new customer segments takes longer than expected

Capacity utilisation too low

DKKm 2006 2005

Revenue 101.0 104.2

EBITDA 8.4 8.7

EBIT 5.3 6.3

Full-year result 2.5 3.4

Outlook 2007: Drop in sales to the refrigerator

and freezer sector. Therefore new customer segments to be found

Drop in revenue; lower earnings

DKKm H1 2007 H1 2006

Revenue 42.7 53.1

EBITDA 1.0 5.3

EBIT -0.4 3.6


-1.3 2.7



-0.9 6.8


Accoat develops and manufactures high-build corrosion protection, non-stick and low-friction coatings in Teflon, PTFE, and other refined materials for a wide range of industries. Accoat engages in coating of both industrial products and production equipment.

Within industrial teflon coating Accoat is among the 5 largest suppliers in the EU.

Location: Kvistgård (DK)

COATINGS (1)

Coating Coating Medico


COATINGS (2)

1. half year2007:

60.3% growth adjusted for transfer of Accoat Medical to SP Medical

High growth in the chemical industry, medico and oil/gas industry

EBIT margin rose from 10.4% to 20.8% due to better mix and capacity utilisation

Lower growth in Q2 due to speed up of projects to Q1

Trial production with nano coating

DKKm 2006 2005

Revenue 121.2 92.0

EBITDA 17.8 7.2

EBIT 11.5 2.3

Full-year result 6.5 -0.2

Outlook 2007: Higher revenue and earnings, even

after the transfer of Accoat Medical

DKKm H1 2007 H1 2006

Revenue 64.7 51.9

EBITDA 15.5 7.9

EBIT 13.5 5.4


13.0 4.5



20.8 10.4


90

120

150

180

210

240

270

02-01-0

6

02-04-0

6

02-07-0

6

02-10-0

6

02-01-0

7

02-04-0

7

02-07-0

7

ADDED VALUE TO THE SHAREHOLDERS

Share price development 2 January 2006 to 31 July 2007

SP Group

Total index

2.1.2006 2.7.2006 2.10.20062.4.2006 2.1.2007 2.4.2007 2.7.2007

Approx. 50% return in 2007

42.9% return in 2006

29% return in 2005

Source: Copenhagen Stock Exchange and Danske Markets

28,6%

71,4%

200794,0%

6,0%

2005

Major shareholders’ ownership

Major shareholders

Others46,4%53,6% 2006

94.0%

53.6%46.4%

71.4%

28.6%6.0%


SMALL-CAP+ AND MID-CAP+ COMPLIANCE

Order frequency

99,8%

80% 90% 100%

Begge indeks

SP Group

Source Copenhagen Stock Exchange - Gudme Raaschou Bank

Market value, EURm

66

0 20 40 60 80 100 120 140 160 180 200

SP Group

SmallCap+ MidCap+

1,8%

0% 2% 4% 6% 8%

SmallCap+

SP Group

MidCap+

Spread

Day-to-day revenue (average), DKKm

0,15

0,75

1,3

0 1 2 3 4 5

SmallCap+

SP Group

MidCap+

Both index


Action Who Number Exercise price

Warrants 2005 Frank Gad 54,000 warrants DKK 81 + 7.5% p.a.

Options 2006 Frank Gad 13,975 optioner DKK 109 + 7.5% p.a.

Warrants 2007 22 managers 80,000 warrants DKK 160 + 7.5% p.a.

INCREASED USE OF WAGES BASED ON SHARES

• New wage instruments to keep key employees in the Group

• Agreements based on shares underline common interest in added value

• The Annual General Meeting has adopted a new warrant programme

• All programmes are muti-annual to promote longterm behaviour

• The new warrant programme expires on 31 March 2011

• The programmes will be of value to the managers, when the shareholders have realized an increase in value – therefore a 7.5% annual adjustment of the share price


STRATEGIC FOCUS AREAS


INCREASED SALES AND INTERNATIONALISATION

• Strengthened sales and marketing in all units

• Focus on both present and new customers

• Increased export from the Danish production sites

• Increasing sales from units in Poland and China

• International revenue rose by 21% i 1. half year

• Goal to win market shares in Northern Europe

• Differentiation on processes, design and knowledge of raw material

0

20

40

60

80

100

120

140

160

180

200

H1 2004 H1 2005 H1 2006 H1 2007

International sales in DKKm

+21%

0

10

20

30

40

50

H1 2004 H1 2005 H1 2006 H1 2007

International sales in %

+2,2pp

-5

0

5

10

15

H1 2004 H1 2005 H1 2006 H1 2007

Organic growth in % (group revenue)

-5pp


GROWTH INDUSTRIES AND OWN BRANDS

• Stronger engagement in growth industries and new customers, e.g. medico and wind mills

• Medico revenue rose by 33% since 2005

• Competencies gathered in SP Medical with FDA-certified production in Denmark and Poland

• Globalization of high-margin products under own brands (TPI og Ergomat)

• Potential in other product niches must be utilized

• New niche products with control of brands and distribution

0

10

20

30

40

50

60

70

80

90

100

H1 2004 H1 2005 H1 2006 H1 2007

Medico revenue in DKKm

+6%

Revenue in own brands in DKKm

0

10

20

30

40

50

60

70

H1 2004 H1 2005 H1 2006 H1 2007

+6%


RATIONALISATION OF DANISH PRODUCTION (1)

Sites closed since 2004

Existing sites

1. Skjern2. Kvistgaard3. Søndersø4. Karise5. Juelsminde6. Stoholm7. Sønderborg

1

34

5

6

7

2


RATIONALISATION OF DANISH PRODUCTION (2)

Polen

Poland

Denmark Negotiations concerning the close-

down of Sønderborg Production transferred to

Juelsminde, Stoholm and Poland in H2 2007

Transfer in close co-operation with the customers

50 jobs affected Close-down will strengthen SP

Moulding’s earnings as of 2008 Restructuring costs included in new

outlook for 2007

Production transfer to Stoholm, Juelsminde and

Poland


EXPANSION IN POLAND AND CHINA

New PUR factory in Poland to be built during 2007-08

Investment of approx. DKKm 30 Need for a 100% expansion of

capacity due to expected growth Polish injection moulding factory

from 2006 on break-even in June Polish medico factory from 2006 on

break-even in Q2 Continuing expansion of capacity

at SP Moulding in China SP Group will follow the customers’

transfer of production to low-cost countries

Sites in Poland

1. Zdunska Wola2. Sieradz

Poland

12


FINANCIAL OBJECTIVES AND OUTLOOK


LONG-TERM FINANCIAL OBJECTIVES

• Result before tax and minorities of 5% of revenue within 3 years

• Group revenue in the range of DKK 1bn i 2009

• EBITDA margin to exceed 10% • Lower net interest-bearing debt • Increased cash flows from

operations• NIBD/EBITDA ratio at 3-4 in 2009

– 11.5 in 2004; 4.6 in 2006

• Solidity (incl. equity of minorities) in the range of 20-35%

• Competitive return to shareholders from rising share price

0

1

2

3

4

5

6

H1 2004 H1 2005 H1 2006 H1 2007

Result before tax and minorities in % of revenue

+2pp

Equity (solidity)incl. minorities in %

0

5

10

15

20

25

30

H1 2004 H1 2005 H1 2006 H1 2007

+1,8pp


New outlook Previous outlook 2006

Revenue Growth of 6-10% = DKKm 875-908

Growth of 4-8% = DKKm 860-890

DKKm 825.4


Approx. DKKm 30 after restructuring costs

DKKm 25-30 excl. restructuring costs

DKKm 20.7

OUTLOOK FOR 2007

• Growth in 3 business units, shortfall of revenue in Gibo Plast

• Modest positive contribution from new Polish factories in H2 2007

• Based on present activities, prices in raw material and energies, exchange rates and macro economic activities


FORWARD-LOOKING STATEMENTS

This presentation reflects the management’s expectations of future events and financial results.

The statements as regards 2007 and the years to come are subject to certain uncertainties and actual results may therefore deviate

materially from the outlook and the financial objectives. Circumstances that could cause changes are among others – but

not exclusively – price changes in raw material and energies, changes in exchange rates, changes in the macro economic and

political conditions, changes in the customers’ demands and production ways and other circumstances on which we do not have

any influence.

This presentation is not a request for buying or selling shares in SP Group A/S.


Q&A SESSION

Thank you for your attention

For more information:

Frank Gad, Chief Executive OfficerSP Group A/SSnavevej 6-105471 Søndersø

Phone: 7023 2379 / 3042 1460E-mail: [email protected]

SP Group 1. half year 2007 Presentation by CEO Frank Gad August 2007.

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