Alcadon Group AB (publ)

Good afternoon and welcome to Alcadon Group's presentation of the second quarter 2026. My name is Fredrik Valentin. And my name is Adam Johnson. And the new as of this time is that we will actually try to speak English throughout the presentation. So bear with us on that. To start with, we thought we'd just give you an insight on how the quarter went from a macro perspective. that go through a little bit of financials as usual and then wrap up with the priorities and direction going forward. And as usual, feel free to put in any questions that you might have through the chat and we will address them at the end of the presentation. If we start with the Alcadon Group and what we are and what we do for those who are newcomers, but also for those who have been around for a while, because during the quarter we have actually refined how we describe ourselves, not the least given the fact that we have done an acquisition of a product company. So previously we described ourselves, as is seen on the left side of the page here, as a group of European niche distributors. within the network infrastructure niche. While we, as of this quarter and going forward, have decided to broaden that perspective a little bit and now try to describe the Alcadon Group as more of an owner company. Our mission is to acquire, own and develop leading companies and brands that offer system solutions products that support digitalization of society. That's a niche that we have been speaking about for a number of times and we will continue to do so. But now we also start to a little bit more show our intentions to become or at least take the first steps towards becoming a niche serial acquirer in this niche of digitalization of society. and today we have a turnover around 1.4 billion Swedish so that's 130 million euro approximately with an EBITDA margin of around 7% rolling 12 so a slight improvement towards last year We are today present in seven European markets, although we closed to Germany here in December. So left is these seven countries that we are today present in. And as of 1st of June, we are now starting to do a little of a split up between our different entities. So we have a number of what we call distribution specialists under different brands, where we have network center operational in the United Kingdom and Netherlands and partly Norway. We have Wood Communications based in Ireland and then we have Alcadon which is actually a brand used in several countries. And now as of 1st of June also a product specialist in A antennas which we will talk a little bit more of going forward. But if we look at our strategy and what we do, this is a recap of what we presented in our annual report earlier this year. We believe that there is a lot of opportunities within this niche of digitalization of society. Therefore, we have established a strategic direction to broaden the offering that we as owners of niche specialist companies will focus on. Previously, until before 1 June, we only had distribution businesses in our portfolio. And as of now, we also have a product company. Our intention is to continue to develop the distribution specialists and let them do what they are very good at and also broaden the offering in that niche, meaning not only be too dependent on one separate leg, for instance, broadband rollout, which we know is in decline, but also to grow the offering into other product groups that support the digitalization of society as a distributor. And at the same time, we want to continue to acquire product companies like the one we bought on June 1st. And those product companies do not necessarily have to have any connections with our distribution business. And that is the whole purpose of the game is to broaden also our ownership structure, to balance risk and to create an increased shareholder value. And in doing this, we try to become more clear on what is the difference between the Alcadon Group and the subsidiaries. And since we are using partly the brand of a few of our subsidiaries, the Alcadon brand, we try to be more consequent in describing Alcadon Group as the holding company with the mission to acquire and develop our companies, while Alcadon is a brand used in several countries in the distribution niche. While our subsidiaries are independent, they are autonomous. They have a large degree of freedom and the responsibility to do their business in their way, in their niche. And as I said, we have a number of distribution businesses. They are fairly similar to each other, but with differences in between. And as of 1st of June, also a more product-oriented company. And this is the direction that we plan to continue to develop the Alcadon Group. and both develop the existing distribution business at our new product company and acquire more product companies. Zooming in on the product company, just giving you a brief of what A Antennas is doing. So it's our first acquisition under this new or broadened strategy. We thought we'd just discuss it slightly what they do, but also give you a hint of what the future M&A activities might look like because the A antennas is in many parts a good template to that. So this is a small technology-driven company founded in Sweden in 2011 as a spin-off of a very large antenna company that in those days were deeply involved in cellular connectivity and antenna design. A antennas, designs and develops antennas and related products for harsh environments where data transfer needs to be enhanced with an antenna, especially in what is called the smart metering technology. In Sweden, we know them mainly in electrical meters, as shown on the pictures on the right hand side. These are the electrical meter cabinets on the outside of buildings. with the antenna mounted to the left here on the upper left part of the gray cabinet. And on the right hand side there are the extra strong antennas mounted on top of the cabinets on the wall. And this is to enable data transfer in environments where connectivity is weak or where the broadband or 3, 4 or 5G development hasn't reached yet. The installed base for antennas for this company is fairly large in Sweden and now the company is focusing on developing also an export market to new countries. We see that the development of smart metering in Europe is kicking up so this is a focus area for us. and for A antennas. It's a small company, six employees in total turnover of 50 million SEK which is 5 million euros approximately and very strong financial figures supporting the group's financials. This company adds a competence that our existing subsidiaries do not have or they do but not in this depth which is wireless connectivity. We are very good at cables but this brings us also the wireless data transfer knowledge. It operates in a regulatory market. This is decided by the electrical companies and also the regulator on different markets to install or start with the remote metering to reduce cost of people traveling out to read your water meters or electricity meters. And we see this development in Europe over time. And we believe that this is a strong potential for us to capitalize on. And some takeaways for future deals when we continue with our M&A journey is that we are looking for companies like A Antennas with a proven operational track record that have an established market position. We like to buy mature companies that know what they do. We like companies that are product owners. They do in-house design and development. Those are skills that normally drive higher gross margins and build higher barriers of entry. And we like when we build win-win transaction models with both upfront and earnouts to motivate the management to stay and really form partnerships with us over time. And we like the size. Here is between 5 and 10 million euro turnover with decent profits. That is a good balance between opportunity and risk for a player like us starting the journey towards a niche serial acquirer in the niche of digitalization of society. If we touch a little bit on the quarter and the macro perspective. It has been a slightly challenging quarter when it comes to turbulence on the market. We have seen everything from geopolitical turmoil, the closing of the Hormuz Strait, bringing severe logistical challenges to both us and players in our markets. We have seen scarcity on raw materials with Meta buying a year production of fiber producer Corning and making it harder for others to get access to fiber material. And all of this has of course influenced the price fluctuations. So there have been very quick price changes and really difficult to get hold of materials for our customers projects. And we believe and would like to give strong credit to our daughter companies in how they have handled this situation because it has been a fantastic work done by our subsidiaries to balance risk and opportunity in such a turbulent market that we have seen in the second quarter. On top of that, we see that the broadband rollout in Europe is coming to an end. And when we say the rollout, we of course mean the installation of broadband fiber to homes. Then this market is now transforming into connecting those homes and actually getting subscriptions so they can have income on their investments that they have made. That is of course affecting us and especially those companies that have had a large exposure to broadband. We do see that the economic uncertainty and increasing interest rates hampers the development in residential construction. We are fairly exposed to that as well in several markets with structured cabling. There's a lot of cables going into new buildings, both the residential but as well as commercial buildings. And we see how product companies more and more are bypassing distributors, especially on the larger deals. And all of these are things that we need to handle and manage and I think we have handled it really well. So again, large credit to our subsidiaries. On the other hand, we see really big opportunities continued in the data center niche, very strong growth, especially driven by AI, where we believe that there are quite interesting opportunities in most of our markets, but mainly, especially in the Nordics, given low temperatures and cheap energy. We see increasing investments in infrastructure as well as in the defense sector, which is quite new niches for us and interesting to expand into, bringing new exciting opportunities, as well as the rapid development of connectivity and more and more things are connected to a broadband network that is developing. We have a 5G network now covering large parts of Europe and 6G is waiting in the hallway. As networks become more and more stable, there will be more and more data transfers and that will bring more opportunities to us as well. On top of that, with a broadened agenda into, or at least a broadened opportunity, when we say that we are now looking into a niche of digitalization of society and not only into distribution of cables, it opens up opportunities for new acquisitions where we can look under a broader umbrella. So macro in the quarter challenges and opportunities at the same time and fairly well managed or really well managed by our subsidiaries. Shall we talk a little bit numbers, Adam? Yes, please.

So as you described, Fredrik, this Q2 was challenging from a macro and a global perspective. But we believe that we, despite that, performed a rather solid quarter from the financial aspect. And on this slide, we're looking at the numbers presented at each reported time. And we then performed a fifth consecutive quarter with increased EBITDA. As you can see on the left hand graph as well, that's mainly driven by the increased EBITDA margin. So a year of strong focus on profitability and costs has improved our margins and substantially improved our EBITDA as well. We also reported an increase or improved profit over working capital, which is our measurement of how efficient our subsidiaries and ourselves are working with profitability and the working capital. We see a strong increase, partly driven by the increase in profitability, of course, but mainly from the working capital aspect. And even though we had an increase in inventory, inventory during the quarter from from previous quarter we working very efficiently with the other aspects of the accounts receivable and accounts payable making the the improvement in the profitable working capital the investment in inventory also brings down the cash flow the operating cash flow a bit from a very strong rolling 12 in q1 however we note that we still are on a rolling 12 higher operating cash flow than our

for rolling 12 EBITDA.