Q-FREE COMPANY PRESENTATION - December 2017
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Q-FREE COMPANY PRESENTATION December 2017
DISCLAIMER The following presentation (“Presentation”) does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Q-Free ASA (“The Company”). The release, publication or distribution of this Presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions in to which this Presentation is released, published or distributed should inform themselves about, and observe, such restrictions. This Presentation includes and is based, on forward-looking information and contains statements regarding the future in connection with The Company’s growth initiatives, outlook, strategies and objectives. All forward-looking information and statements in this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for The Company. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates” or similar expressions. Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although The Company believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation. The Company is making no representation or warranty, expressed or implied, as to accuracy, reliability or completeness of the Presentation, and neither The Company nor any of its directors, officers or employees will have any liability to Relevant Persons or any other persons resulting from its use. The Presentation is not intended to provide, and should not be relied upon for, legal, tax, regulatory, financial, accounting or investment advice. The Presentation does not purport to be complete on any topic addressed. Q-Free does not intend to update the information after its distribution, even in the event that the information becomes materially inaccurate. Certain information contained in the Presentation includes calculations or figures which have been prepared by Q-Free and have not been audited or verified by a third party. Use of different methods for preparing, calculating or presenting information may lead to different results and such differences may be material.
THE Q-FREE INVESTMENT CASE
Exposure to a large industry with
strong underlying market growth
Leading global position in electronic New Board and management team
tolling with proven track records
Exciting opportunities in “new and
adjacent” ITS segments based on recent All-time high order backlog
acquisitions
Initial restructuring of company including
equity raise, cost reductions, cash
management, and asset disposals
completed
3
INDUSTRY TRENDS AND BACKGROUND
URBANIZATION INCREASES DRAMATICALLY
CITIES BECOME MORE IMPORTANT DAY BY DAY
50% of global GDP is By 2030 there could be
generated by the 300 40 megacities with a
largest metropolitan areas population of more
in the world than 10 million
5 our of 10 people live in
cities and 1.5 million
Cities are responsible for
people are added to the
80% of CO2 emissions
urban population every
week
Cities are responsible for
75% of global energy
consumption
Source: PwC, 2015; UN Dept. of Economic and Social Affairs, 2014 6
CONSEQUENTLY, URBAN TRAFFIC LOADS, CONGESTION, AND
POLLUTION ALSO INCREASE
THERE ARE PLENTY OF URBAN TRAFFIC PAIN POINTS
42 hours wasted per 19. bn hours wasted in
American each year in Germany each year
peak traffic looking for parking
20.4 billion USD spent
300 billion USD wasted on
on overpaying for
congestion in the US each
parking in the US each
year
year
53 000 Americans die each 1.2 million people die
year due car emissions each year in traffic
accidents
Source: INRIX, 2017; The Economist, 2017; ITS International, 2017 8
INTELLIGENT TRANSPORTATION
c
SYSTEMS ARE NEEDED
TO SUSTAIN URBAN GROWTH AND QUALITY OF LIFE
9 Q-FREE FIRST QUARTER 2017
INTELLIGENT TRANSPORTATION SYSTEMS (ITS) BRING
SEVERAL BENEFITS
BETTER
REDUCED IMPROVED REDUCED INFRASTRUCTURE
CONGESTION ROAD SAFETY POLLUTION FINANCING
• Reduced peak traffic • Improved guidance and • Improved traffic flows • Funds service and
• Better utilization of information • Reduced traffic – maintenance of existing
existing capacity • V2V and V2I «polluter pays principle» infrastructure
• Traffic is shifted between communication • Traffic is shifted to • Raises money for new
different transport modes • Automated/autonomous greener transport modes infrastructure projects
vehicles
10ITS COVER A WIDE VARIETY OF SEGMENTS AND SOLUTIONS
Inter-Urban Urban Traffic
Electronic Tolling Parking Infomobility
Management Management
• Operational and • Central Parking • Highway • Intersection control • Backoffice systems
commercial back- Management management systems systems (SW • Journey time
office systems Systems (SW platform) platform) analyses
• On-board units/tags ‒ Access control • Tunnel and bridge • Detection systems (bluetooth, WiFi
• Roadside ‒ Payment management systems (cameras, radars etc.)
equipment/systems ‒ Customer (SW platform) etc.) • Weigh In Motion
(transceivers, Management • Road/tunnel/bridge • Local traffic • Pedestrian and
cameras etc.) ‒ Business int. instrumentation controllers cycle counting
• Enforcement ‒ Claims/enforceme • Speed cameras and • Cabinets • Vehicle
solutions nt enforcement • Signal heads classification
• Misc. hardware • Parking Guidance • Misc. hardware • Red light • Weather and air
(gantries, controllers, Systems (VMS, lighting etc.) enforcement systems quality monitoring
VMS etc.) • Misc. hardware • Misc. hardware
(barriers, kiosks, (VMS, lighting etc.)
VMS, CCTV etc.)
11ALTHOUGH IT SEEMS HARD TO QUANTIFY THE EXACT
MARKET SIZE, THE ITS MARKET IS BIG AND GROWING
The intelligent transportation Global ITS market is expected to The global intelligent
system (ITS) market is expected reach USD 38.68 billion by 2020 transportation system (ITS)
to grow from USD 36.10 billion in industry is expected to cross
2015 to USD 63.66 billion by $33.89 billion by 2020
2022, at a CAGR of 8.3%
Marketsandmarkets, July 2016 Grand View Research, July 2016 Radiant Insights Inc, July 2016
Intelligent Transportation System The ITS market size is predicted The global ITS and services
(ITS) market is expected to to hit USD 47.5 billion at a CAGR market is expected surpass USD
reach $42.67 billion by 2022 of over 13% from 2015 to 2022 80 billion by 2022 at a CAGR of
growing at a CAGR of 12.21% 6% from 2015 to 2022
Stratistics MRC, January 2016 Global Market Insights, July 2016 Credence Research Reports, March 2017
12THERE ARE 3 DISRUPTIVE FORCES AT WORK IN ITS…
Cloud computing
3. SELF
DRIVING
VEHICLES
1. ELECTRI-
FICATION Internet of things
DISRUPTIVE
FORCES
2. RIDE- Big data
SHARING
(AND
MOBILITY
AS A
SERVICE)
Battery technology
13..THAT WILL FUNDAMENTALLY CHANGE THE (URBAN)
TRAFFIC SITUATION
ELECTRIFICATION
CAVS RULE THE + ELECTRIFICATION +
BUSINESS
BUSINESSAS
ASUSUAL
USUAL AUTOMATION
STREETS AUTOMATION + SHARING
- CAVs complement - CAVs replace most - Ride-sharing electric
existing mobility offering traditional cars CAVs taxis take over
Impact on the city,
percent change
Number of vehicles -1 -8 -59
Accidents: -19 -55 -87
Parking space: 0 -5 -54
Emissions: -9 -23 -85
Modal mix, percent of
distance traveled
10
Private regular cars
5 7 14 9 5
CAVs
35
Traditional taxis
39 38 32
Robo taxis 31
53
Public transportation 11
6 64
Walking and biking 4
14
Source: The Boston Consulting Group, 2016Q-FREE IN BRIEF
OUR VISION:
Q-FREE AT A GLANCE
17COMPANY HISTORY
COMMERICAL BREAKTHROUGH STRONG TOLLING EXPANSION ITS TRANSFORMATIONQ-FREE HAS EVOLVED FROM A TOLLING COMPANY TO AN
ITS PLAYER
Complementary technologies obtained through a Development in revenues from new segments
series of acquisitions Percent of total
Parking Guidance Traffic controllers, Traffic Controllers
100 %
System VMS
90 %
80 %
70 %
Infomobility Tolling, parking, Traffic Central Parking
solutions traffic management management Management System
60 %
50 %
40 %
Rationale for pursuing new offerings
30 %
• Position Q-Free for future growth
20 %
• Secure multiple revenue streams from a broader
range of projects with different business models and 10 %
risk profiles
0%
• Leverage key Q-Free technologies in new areas 2012 2013 2014 2015 2016 YTD
2017
New segments TollingOUR FOOTPRINT Australia Brazil Canada Chile France Indonesia Malaysia Malta Norway Portugal Russia Serbia Slovenia South Africa Spain Sweden The Netherlands Thailand United Kingdom USA
OUR PORTFOLIO • DSRC tags and • Parking guidance • Weigh in motion • ATMS and Traffic • Local readers solutions • Traffic, cycle & Management intersection/traffic • ALPR solutions • Parking access pedestrian Centers controllers • Electronic toll control detection • Ramp metering • Centralized collection systems • Journey time • Truck parking Intersection incl. multi lane free monitoring system SW flow tolling, video • Weather & air- • Cooperative ITS tolling, truck tolling, quality monitoring solutions congestion charging etc. 21
BUSINESS MIX
Geographical focus Revenue breakdown (2016 numbers)
NOK million
NORTH AMERICAN
GLOBAL SERVICE LINES SERVICE LINES
TOLLING INTER-URBAN
PARKING URBAN
INFOMOBILITY
22TOLLING SYSTEM REFERENCE: NORWAY
• >150 charging/tolling points
• Combination of DSRC & ALPR
• Operational and commercial back-
office (>600 million transactions/year)
• Service & maintenance
23 • 24/7 online supportPARKING SYSTEM REFERENCE: STOCKHOLM, SWEDEN
• Parking guidance system for 1400 spaces
in Globen (sports and event arena)
• Barrier-free & ticketless access based on
ALPR (18 cameras covering 9
24
entrances/exits) and 21 touchscreen kiosksINFOMOBILITY SYSTEM REFERENCE: WIM, SCOTLAND
• High-speed WIM solution for enforcement
• Integrated ANPR for vehicle identification
• Industry-leading HI-TRAC® TMU4 with Class 1
piezo-electric sensors
• Additional benefit of data for asset management
25INTER-URBAN SYSTEM REFERENCE: PENNDOT, USA
• Statewide ATMS with
centralized architecture
• Rules-based incident response
• Service patrol tracking
• Performance measures system
• Over 1,700 managed devices
26URBAN SYSTEM REFERENCE: GEORGIA DOT, USA
• 9,500 signalised intersections
• Unified signal operations across multiple jurisdictions
using MAXVIEW
• Real-time signal adjustments to optimise performance
based on actual roadway conditions
• Transparency to the public on system performance
• Automated monitoring and alerting
27STRATEGY
OUR 2016-2021 STRATEGY
2H 2016 2017 – 2018 2019 – 2020 2021 ->
1
RESTORE
2
DEVELOP
3
INTEGRATE &
EXPAND
4
TRANSFORM
Restore a healthy capital Develop distinct and leading Integrate offerings and Transform Q-Free through
structure and establish positions within target expand presence to deliver game changing
platform for profitable growth segments on full ITS ambition partnerships/transactions
29WE RAISED 134 MNOK IN NEW EQUITY TO IMPROVE OUR
CASH POSITION AND CAPITAL STRUCTURE
CASH AT HAND EQUITY RATIO
NOK million Percent
43,1
41,8 41,6
40,9
102 36,4
55 53
18 19
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016
30WE REDUCED OPERATIONAL EXPENSES BY INTEGRATING
AND STREAMLINING ACQUIRED COMPANIES
GROSS OPEX SAVINGS, FULL-YEAR 2017 vs. 2016
NOK million
5
2
3
13
55
32
NA ELA NORDIC APMEA CENTRAL GROSS SAVINGS
31WE REDUCED PORTFOLIO COMPLEXITY TO ALLOW
FORCEFUL EXECUTION OF PRIORITIZED INITIATIVES
GLOBAL SERVICE LINES NORTH AMERICAS SERVICE LINES
1B
TOLLING • Exited unprofitable markets INTER-URBAN • Focused market development
and sales on North America
• Exited unprofitable/low volume
product segments • Defined clear product
roadmaps
• Defined clear product
roadmaps
PARKING URBAN
DIVESTED
INFOMOBILITY SECURITY
32WE PUT IN PLACE A NEW MANAGEMENT TEAM
New hire or
new person in
CEO charge
Håkon Volldal
Member of
management
CFO Business Support
Tor Eirik Knutsen Rita Isaksen
team
Comm. & Marketing C-ITS/Innovation
Idunn H B de-Garcia Knut Evensen
SVP EUROPE SVP AMERICAS SVP APMEA
Fredrik Nordh Morten Andersson Per F. Ecker
VP TOLLING
Arvid Strømme
VP PARKING
Kristina Bergstad
VP SCM
Pål Almlie
INFO-
URBAN
MOBILITY
INTER-
URBAN
33WE BUILT AN ALL-TIME HIGH ORDER BACKLOG
ORDER BACKLOG AND INTAKE 1B
NOK million
1 450
1 405
820 775
710
876
320
204 183 196
Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016
Order backlog Order intake
34PHASE 1 OUTCOME: A SOLID PLATFORM FOR PROFITABLE
AND SUSTAINABLE GROWTH!
REDUCED FIXED COST BASE IMPROVED EBITDA MARGIN* MORE CASH AT HAND
NOK million Percent NOK million
After restructuring After restructuring After restructuring
180 75%
156
160 150 145
138 141 143
140 70% 129
120 102 104
69%
100 67% 14,3 %
67% 65% 75
80 65%
8,9 %
60 63% 6,9 %
40 60%
4,1 % 18
60% 2,9 % 19
20
0 55%
Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3
2016 2016 2016 2017 2017 2017 2016 2016 2016 2017 2017 2017 2016 2016 2016 2017 2017 2017
-5,0 %
OPEX
12 month rolling OPEX share of revenues
‘ Excluding non-recurring itemsOUR 2016-2021 STRATEGY
2H 2016 2017 – 2019 2019 – 2021 2021 ->
1
RESTORE
2
DEVELOP
3
INTEGRATE &
EXPAND
4
TRANSFORM
Restore a healthy capital Develop distinct and leading Integrate offerings and Transform Q-Free through
structure and establish positions within target expand presence to deliver game changing
platform for profitable growth segments on full ITS ambition partnerships/transactions
• 134 MNOK in new equity raised • Maintain top 3 position in
• Cash management significantly DSRC tolling globally
improved • Become a top 5 player in
• ~50 MNOK in gross OPEX parking guidance globally
savings executed • Build a sizeable global
• Security division divested and infomobility business
Brazil closed down • Become a top 3 US provider of
• New organization put in place intersection controllers
• All time high order backlog of • Become the number 1 TMC
1400 MNOK end of 2016 provider in the US Mid Atlantic
and South East 36THERE ARE SEVERAL SHORT- AND MID-TERM
OPPORTUNITIES UP FOR GRABS
THAILAND INDONESIA USA
• Tag tenders • Nationwide conversion of manual tolling to • Traffic management system upgrades and expansions
• Large highway/motorway tolling projects electronic tolling • Traffic controller system contracts
• Traffic controller system for Bangkok • Congestion charging system in Jakarta • Image based solutions for tolling
• Parking guidance expansion • Parking guidance expansion
• Infomobility expansion
NORWAY SWEDEN FRANCE/SPAIN/PORTUGAL CHILE
• Tag mini-tenders • Service and maintenance • Tag tenders • Tag tenders
• Expansion of roadside equipment in contract in Stockholm • Large highway/motorway tolling • Service and maintenance contract
Oslo, Bergen and other cities • Roadside tolling equipment in projects
• New central system(s) for AutoPASS Stockholm • Parking guidance expansion
• Roadside equipment for ferries
37WE HAVE A GREAT STARTING POINT
Best-in class DSRC tolling World-leading image Breakthrough radar-based
technology recognition solutions parking sensor (incl. NB-IoT)
Modular traffic managment World-leading intersection First universal
system control software C-ITS station
38VALUE PROPOSITION SUMMARY
DOMAIN
INNOVATION PERFORMANCE FLEXIBILITY COLLABORATION
KNOW-HOW
• 30 years of DSRC experience • Highest accuracy • Interoperability
• Global references • Lowest leakage • Full or partial delivery
• Strong track record • Highest uptime • Local partners/content
• Barrierless, ticketless, cashless • Lowest revenue leakage
parking concept • Level/facility counting • Open standards
• Wireless single space sensor accuracy • Modular offerings
• Bi-directional ultrasonic level • Best SSS accuracy and • Interoperability
counter lifetime
• Real-time data
• Modular, open architecture • Local presence
• High accuracy
• Interoperable offerings • Tight follow up
• High uptime
• Unique know-how of the Mid- • Easy to use ATC SW and
• Modular, open architecture
Atlantic traffic market customizable dashboards
• Interoperable offerings
• Advanced ATMS features
• First to market with ATC • Easy to use ATC SW and
• Modular and open standard
platform, embedded web server customizable dashboards
product approach
• Real time dashboards, visual • Handles timing of complex
• All-inclusive licensing
replay, historical archive, intersections with ease
automatic upload • Customers first
• Advanced ATMS features
39PHASE 2 MARKET AMBITIONS
GLOBAL SERVICE LINES REGIONAL SERVICE LINES (NA ONLY)
Maintain top 3 • Defend and harvest existing Become a top 3 • Continue to steer evolution
position in markets through cost US provider of and vision of relevant
DSRC reductions and new features intersection markets
• Selectively develop new controllers • Establish position as the #1
markets SW provider in the US and
• Position for future tolling become #3 in sales (excl.
models cabinets)
Become a top • Launch and monetize new Become the • Maintain stronghold in PA, VI
5 player in parking guidance portfolio number 1 ATMS and WV
parking • Roll out outdoor NB IoT provider in the • Win new statewide ATMS
guidance solution with telcos US Mid-Atlantic contracts
globally and South-East
• Start integration of other QFR
offerings (parking, signal
processing, infomobility etc.)
Build a sizeable • Consolidate offering and build
global business volume for key products
(>100 MNOK) • Expand and develop distributor
network in Europe and North
America
40OUR 2016-2021 STRATEGY
2H 2016 2017 – 2018 2019 – 2020 2021 ->
1
RESTORE
2
DEVELOP
3
INTEGRATE &
EXPAND
4
TRANSFORM
Restore a healthy capital Develop distinct and leading Integrate offerings and Transform Q-Free through
structure and establish positions within target expand presence to deliver game changing
platform for profitable growth segments on full ITS ambition partnerships/transactions
• 134 MNOK in new equity raised • Maintain top 3 position in • Expand internationally across • Transform the business model
• Cash management significantly DSRC tolling globally all service lines to a service-based model
improved • Become a top 5 player in • All relevant offerings available • Consolidate the business
• ~50 MNOK in gross OPEX parking guidance globally in public cloud and IoT Hub and/or become part of a bigger
savings executed • Build a sizeable global • Integrate inter-urban, urban, ecosystem
• Security division divested and infomobility business infomobility and parking
Brazil closed down • Become a top 3 US provider of offering on overall smart city
• All time high order backlog of intersection controllers platform
1400 MNOK end of 2016 • Become the number 1 TMC • Pursue structural partnerships
• New organization put in place provider in the US Mid Atlantic and selected M&A
and South East opportunities 41WE ARE MOVING TOWARDS OPEN AND INTEGRATED
SOLUTIONS
From.. To..
C-ITS
• Isolated, stand-alone systems • Modular, connected systems based on standard APIs and
• Separately/independently purchased and deployed protocols
• Local/regional/national product/service monopolies • More holistic approach to purchasing and deployment?
• No/limited 3rd party innovation on generated data • Less vertical integration?
• Data made available to 3rd parties?
42WE BELIEVE IN Q-CITY - A MOBILITY PLATFORM FOR
EFFICIENT, SAFE AND CLEAN TRANSPORTATION
Q-City Mobility Hub
Advanced & Decision Events Detection & Mobility Efficiency Public Information & Dashboards &
…
Predictive Analytics Support Management Management Safety Management Reports
Smart Data Fusion and Dissemination Portal
ITS Systems
Regional Freight Bike and Tolling/Road
Corridor Urban traffic Transit Parking
traffic management pedestrian user …
management systems systems management
systems systems systems charging
ITS Devices
43THERE ARE SEVERAL OPPORTUNITIES TO CONSOLIDATE THE
MARKET AND/OR BECOME PART OF A BIGGER ECOSYSTEM
Selected ITS players
Vast, fragmented market with hundreds of players = Large addressable market
Wide range of products and services offered = Several different offerings/niches that can be targeted
No dominant global player = Opportunity to build global leadership within niches
Very few players able to provide end-to-end solutions = Q-Free has technology, position and references to create
in multiple segments market leading offerings within selected segmentsYou can also read
