Hexagon Ab Class B · OMXSTO:HEXA_B
Hexagon Ab Class B — Merger or Acquisition (July 2010)
55 slides from Hexagon Ab Class B's merger presentation, Jul 7, 2010
Slide 1: Acquisition of Intergraph
Acquisition of Intergraph ©) HEXAGON
Slide 2: Agenda
Agenda 7 July 2010 Executive summary Overview of Intergraph Acquisition rationale Transaction and financial impact Closing remarks and Q&A 2
Slide 3: Executive summary
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Slide 4: Executive summary – Intergraph acquisition
Executive summary – Intergraph acquisition Cash purchase price of 2 125 MUSD World-leading supplier of CAD and GIS software Hexagon captures and processes measurement data, Intergraph presents measurement data via CAD and GIS products By combining the two, significant synergies are expected
Slide 5: Entering measurement technology market's micro segment
Entering measurement technology market’s micro segment Brown & Sharpe 2001 NANO SEGMENT MACRO SEGMENT MICRO SEGMENT MOBILE SOLUTIONS ADVANCED 3D SOFTWARE 5
Slide 6: Entering measurement technology market's macro segment
Entering measurement technology market’s macro segment Leica Geosystems 2005 NANO SEGMENT MACRO SEGMENT MICRO SEGMENT MOBILE SOLUTIONS ADVANCED 3D SOFTWARE 6
Slide 7: Expanding presence in advanced 3D software segment
Expanding presence in advanced 3D software segment Intergraph 2010 NANO SEGMENT DATA STORAGE MACRO SEGMENT MICRO SEGMENT MOBILE SOLUTIONS ADVANCED 3D SOFTWARE 7
Slide 8: Acquisition rationale
Acquisition rationale Present model of Measure real world real world Sensors Information points, point clouds, images drawings, maps, 3D models 8
Slide 9: Acquisition rationale
Acquisition rationale Constant flow Present model of Measure real world of updated real world information to gain quality and efficiency Change real world 9
Slide 10: Constant flow of real world data to 3D models and back
Constant flow of real world data to 3D models and back Present real world Measure real world Process data 3D city Maps (GIS) Industry (CAD) Measure real world Process data Present real world 3D factory 10
Slide 11: Overview of Intergraph
¢())) Overview of Intergraph s ©) HEXAGON 11
Slide 12: Intergraph in brief
Intergraph in brief Leading provider of CAD and GIS software enabling users to visualise, analyse and manage complex data Consistently strong financial results in recent years Sales of 770 MUSD in 2009 EBITDA of 189 MUSD in 2009 Expected sales of 830-840 MUSD and Headquartered in Huntsvill
Slide 13: Intergraph PP&M – Recognized market and technological leader
Intergraph PP&M – Recognized market and technological leader Enterprise software for design, construction and operation of plants, ships and off shore facilities 3D plant design construction and asset management software (CAD) Shipbuilding 4% 2009 Pharma Metals & mining 4% & Bio 2% RoW 6% Canada
Slide 14: Intergraph PP&M – Recognized market and technological leader
Intergraph PP&M – Recognized market and technological leader Global no. 1 and technological innovator for more than 25 years Products used by nearly all Fortune Global 500 energy, chemical, petroleum and pharmaceutical companies The only rule based CAD software in the process, power and marine
Slide 15: Intergraph PP&M – Customer examples
Intergraph PP&M – Customer examples Bechtel - one of the world’s largest EPC companies Global alliance agreement providing Bechtel with unlimited use of plant design and engineering software Improves Bechtel’s project execution, reduces design work and preserves intellectual capital Shell - mult
Slide 16: Intergraph SG&I – Protects over 500 million people worldwide
Intergraph SG&I – Protects over 500 million people worldwide Enterprise software for incident command, evacuation planning, natural disaster planning as well as outage analysis by utility companies (GIS) 2009 Utilities & Public safety Canada RoW 1% communication & security 32% 6% 18% Asia USA Sale
Slide 17: Intergraph SG&I – Protects over 500 million people worldwide
Intergraph SG&I – Protects over 500 million people worldwide Global no. 2 provider of GIS Enhanced profit driven by vertically focused software applications and deep domain expertise Technologies address heightened security concerns, terrorist threats, outage analyses and geo positioning of ev
Slide 18: Intergraph SG&I – Customer examples
Intergraph SG&I – Customer examples UCC - Washington D.C. Communications Centre State of the art emergency response command and control centre Uses SG&I incident command software, including computer aided dispatch, records management, mobile and incident analysis software Ordnance survey - UK’s
Slide 19: Intergraph – Significant backlog and high recurring revenue
Intergraph – Significant backlog and high recurring revenue Ending backlog as of 31 December 2009 represented approximately 65 per cent of estimated systems and services revenue 2010 Ending backlog (excludes maintenance), MUSD Contractually recurring revenues account for more than 75 per cent 20
Slide 20: Intergraph – Resilient profitability through the downturn
Intergraph – Resilient profitability through the downturn Strong sales and EBITDA development Significant increase in profitability due to business realignment and enhancement of software centricity Sales, MUSD EBITDA , MUSD 2003-08 CAGR 34% +4% 2003-08 CAGR 9% -5% 189 182 808 770 725 144 632 57
Slide 21: Acquisition rationale
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Slide 22: Hexagon's structural development
Hexagon’s structural development – 2000 2000 – 2003 2004 – 2006 2007 – 2009 2010 – Vision 2011 • Scandinavian • Acquisition of US • Acquisition of Leica • Acquisition of • Acquisition of Dedicated conglomerate listed metrology Geosystems added NovAtel added core Intergraph adds measurement with no c
Slide 23: Intergraph market situation 2000 – No stronghold in either market
Intergraph market situation 2000 – No stronghold in either market “GIS world” “CAD world” 23
Slide 24: Intergraph market situation 2005 – Specialise on industry applications
Intergraph market situation 2005 – Specialise on industry applications “GIS world” “CAD world” 24
Slide 25: Intergraph market situation 2010 – Large players established
Intergraph market situation 2010 – Large players established “GIS world” “CAD world” 25
Slide 26: Intergraph and Hexagon market situation today
Intergraph and Hexagon market situation today “GIS world” “CAD world” “Bridging” “Bridging” software software ABS TPS GPS HDS Multiple sensors 26
Slide 27: Market situation tomorrow – Sensor fusion
Market situation tomorrow – Sensor fusion “GIS world” “CAD world” “Bridging” “Bridging” software software Sensor fusion - Scanning is becoming a disruptive technology ABS TPS GPS HDS 27
Slide 28: Market situation tomorrow – Point cloud engine
Market situation tomorrow – Point cloud engine “GIS world” “CAD world” Interface (point cloud engine) – replacing bridging software Sensor fusion ABS TPS GPS HDS 28
Slide 29: Market situation tomorrow – CAD and GIS merging
Market situation tomorrow – CAD and GIS merging With scanning the boundary between GIS and CAD is becoming increasingly blurred Interface (point cloud engine) Sensor fusion ABS TPS GPS HDS 29
Slide 30: How will Intergraph's software and Hexagon's sensor fusion change market strategy?
How will Intergraph’s industry specific application software and Hexagon’s sensor fusion change the Group’s market strategy? 30
Slide 31: Hexagon market strategy today
Hexagon market strategy today ABS TPS, GPS and HDS sensors 31
Slide 32: Hexagon and Intergraph joint market strategy
Hexagon and Intergraph joint market strategy + Point cloud sensors combined with GIS and CAD application software Having a strong sensor technology docked into industry specific application software will be a very powerful technology 32
Slide 33: Example oil and gas – Today
Example oil and gas – Today Design Construction Project ready Re-design: reality does not match the drawing Third party asset management software Measure via point to point technology 33
Slide 34: Example oil and gas – In merged technology
Example oil and gas – In merged technology Design Construction Project ready Customer benefits • Improves project execution • Seamless integration from Re-design design to asset management • Re-design and simulations available with real data • Preserves intellectual capital Asset management software
Slide 35: Intergraph PP&M market
Intergraph PP&M market Activity intensity Initial design and construction projects Asset life 35
Slide 36: Hexagon and Intergraph PP&M joint market
Hexagon and Intergraph PP&M joint market Activity intensity Initial design and construction projects Re-design, maintenance and retrofit projects + Asset life 36
Slide 37: Example railroads – Today
Example railroads – Today Single point measurements TPS mounted beside the tracks Maintenance Today two separate information flows Reactive response Incident command system 37
Slide 38: Example railroads – In merged technology
Example railroads – In merged technology Point cloud scanning of tracks – scanner mounted on train Proactive maintenance Tomorrow integrated information to act upon Customer benefits • Enables customer to manage and analyze high value assets • Enables customer to act on large amounts of complex real
Slide 39: Example agriculture – Today
Example agriculture – Today Today two separate Verbal communication and/or written reports information Farmer steering a tractor using GPS flows guided machine control systems Data collection using airborne sensors Presentation and analysis - agronomist trying to improve utilisation of plants for fo
Slide 40: Example agriculture – In merged technology
Example agriculture – In merged technology GPS guided machine control system steers tractor to defined trouble spot Tomorrow Geo-referenced GIS maps integrated programmes the tractors’ GPS information steering system to act upon Data collection using airborne sensors Presentation and analysis - agro
Slide 41: Further examples of application areas for Hexagon and Intergraph
Further examples of application areas for Hexagon and Intergraph Railroads, monitoring rail, train wheels, City centres traffic planning bridge and tunnel structures and vegetation (supply and waste management) Rail loading systems Security, surveillance and Airborne data feed back in area
Slide 42: Acquisition rationale conclusions
Acquisition rationale conclusions Merging Hexagon’s sensor technology with Intergraph’s software technology enables The new Group to address a much larger PP&M market – Following the life of an asset (design, construction, asset management and retrofit) – Reducing plant construction cost and time by
Slide 43: Transaction and financial impact
Transaction and financial impact 43
Slide 44: Future Group structure
Future Group structure Geosystems Metrology Sales regions Other Operations 44
Slide 45: Pro forma Group sales mix
Pro forma Group sales mix Eastern Europe, Middle East, Russia, Africa North America EU 7% (7) 30% (22) 37% (40) China 12% (17) South America 3% (3) Rest of Asia 11% (11) Greater balance between regions in the Western world Significant potential for growth in Share of sales Hexagon and Intergraph
Slide 46: Pro forma Group employee distribution
Pro forma Group employee distribution Eastern Europe, Middle East, Russia, Africa North America EU 1% (1) 32% (20) 41% (50) China 13% (19) South America 2% (2) Rest of Asia 11% (8) Greater balance between regions in the Western world Share of number of employees Hexagon Software development cent
Slide 47: Intergraph financial performance
Intergraph financial performance Based on current market conditions and the expectations for the market segments1) in which Intergraph operates Approximately 10 per cent organic growth expected in the coming years EBITDA margin to increase gradually from the current 24-25 per cent level Pro fo
Slide 48: Significant synergies expected to arise from the transaction
Significant synergies expected to arise from the transaction Synergies MUSD Total EBIT impact per annum Combining Hexagon and Intergraph > 100 technologies Cross selling of existing products 70 Rationalisation of overlapping resources at Hexagon and Intergraph 40 Enlarge PP&M market via point cloud
Slide 49: Financing the transaction
Financing the transaction Uses & sources 1) Net debt/EBITDA 1) MSEK 2) MUSD Times Uses: Cash purchase price 16 575 2 125 ~4x Sources: ~3x Acquisition debt 1) 9 945 1 230 ~2.5x Assumed debt 350 45 Rights issue ~6 630 ~850 Total 16 575 2 125 FY 2010E 2) FY 2011E FY 2012E 1) Post rights issue 1) Post r
Slide 50: Closing remarks and Q&A
a Oy) Closing remarks and Q&A ©) HEXAGON 50
Slide 51: Financial plan
Financial plan 2000 2004 2007 2009 Vision 2011 Objective Objective Net sales, bn SEK 4.6 Sales x2 8.3 Sales >15 14.6 11.5* 20 EBIT margin, % 4 Margin x2 7.4 Margin >15 15.6 16.5* 20 Number of Reduce businesses 24 Reduce 4 to 2 2 1 1 Sales breakdown Automation Engineering Polymers Measurement Technol
Slide 52: Time schedule
Time schedule Announcement 7 July 2010 Approval process expected to take 2-3 months Closing to take place shortly after regulatory clearance Rights offering as soon as practically possible following completion of the acquisition JUL AUG SEP OCT NOV 52
Slide 53: Summary
Summary Hexagon’s sensor technology in combination with Intergraph’s software technology will bring significant improvements in efficiency across several industries Substantial synergies ensures a financially attractive combination Intergraph key to Hexagon’s software driven expansion strategy 53
Slide 54: Hexagon – precision in everything
O)) HEXAGON precision in everything ©) HEXAGON 54
Slide 55: Disclaimer
Disclaimer This presentation does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The shares in Hexagon AB have not been, and will not be, registered under the US Securities Act of 1933 (the "Securities Act"). Such shares may n