SP A/S : 16 November 2017 - Q3 2017

NASDAQ Copenhagen A/S Nikolaj Plads 6

DK-1007 Copenhagen K

Announcement no. 66/2017

16 November 2017 Company reg. (CVR) no.

15701315

Summary: SP Group generated profit before tax and non-controlling interests of DKK 139.3 million in 9M 2017, a 52.6% increase from DKK 91.3 million in 9M 2016. Relative to the year-earlier period, revenue was up by 29.6% to DKK 1,421.8 million and EBITDA was up by 43.9% to DKK 217.0 million from DKK 150.8 million.

Earnings were in line with expectations. We maintain the FY 2017 guidance provided in Announcement no. 39/2017. We continue to guide for profit before tax and non-controlling interests of DKK 170-190 million on revenue of DKK 1.8-1.9 billion.

The Board of Directors of SP Group A/S has today considered and approved the interim report for the nine months ended 30 September 2017.

Highlights of the interim report:

• The 9M 2017 revenue was up by DKK 324.3 million to DKK 1,421.8 million, equal to a 29.6% improvement on the year-earlier period. Organic growth was 7.4%. Q3 revenue was up by 20.3%, of which organic growth accounted for minus 0.8pp. The organic growth was reduced by 1.2pp due to exchange rate adjustments, and an amended logistics agreement with a major customer accounted for minus 5.4pp.

• Profit before depreciation, amortisation and impairment losses (EBITDA) for the 9M 2017 period was DKK

  217.0 million, as against DKK 150.8 million in 9M 2016. Company acquisitions added DKK 32.5 million to EBITDA. Q3 EBITDA was up by 28.7% to DKK 68.2 million.

• Profit before net financials (EBIT) came to DKK 154.7 million in 9M 2017, against DKK 100.0 million in 9M 2016. EBIT for Q3 2017 was DKK 46.7 million, compared with DKK 35.3 million in Q3 2016.

• Net financials were an expense of DKK 15.4 million, a DKK 6.6 million greater expense than in the 9M 2016 period due to exchange rate adjustments and the larger debt.

• Profit before tax and non-controlling interests was DKK 139.3 million in 9M 2017, as against DKK 91.3 million in 9M 2016. The Q3 2017 profit before tax and non-controlling interests was DKK 42.0 million against DKK

  32.0 million in Q3 2016.

• Earnings per share (diluted) came to DKK 45.99 in 9M 2017 against DKK 30.01 in 9M 2016, for a 53.3% increase.

• Sales of own brands rose in 9M 2017 by 62.6% to DKK 288.9 million, with the organic growth rate at 21.6%. All five business areas with SP Group brands (ergonomics, guidewires, ventilation components, med-tech packaging and standard industry components) generated strong growth. Own-brand sales were up by 46.3% in Q3 2017, of which organic growth made up about 15.0pp.

• There was a cash inflow from operating activities of DKK 108.7 million in 9M 2017, against DKK 113.8 million in 9M 2016.

• Net interest-bearing debt (NIBD) amounted to DKK 524.0 million at 30 September 2017, against DKK 329.7 million at 30 September 2016. At 31 December 2016, NIBD was DKK 407.7 million. NIBD was 1.9 times LTM EBITDA.

• We continue to guide for profit before tax and non-controlling interests of DKK 170-190 million on revenue of DKK 1.8-1.9 billion.

Statement by CEO Frank Gad: "We've once again succeeded in growing our sales and earnings despite the many market challenges in the third quarter. The first three quarters of 2017 mark our best nine-month period ever in terms of both the top and bottom lines.

www.sp-group.dk

DKK '000 (key ratios excepted)

(unaud.)

(unaud.)

(audited)

Revenue 443,614 368,772 1,421,767 1,097,497 1,519,044

Profit before depreciation, amortisation and impairment

Depreciation, amortisation and impairment losses -21,438 -17,689 -62,350 -50,755 -69,442

Profit before net financials (EBIT) 46,717 35,277 154,654 100,046 133,415

Net financials -4,719 -3,256 -15,351 -8,778 -10,799

Profit before tax and non-controlling interests 41,998 32,021 139,303 91,268 122,616

Profit for the period 32,192 24,672 107,494 70,310 93,387

of which attributable to SP Group A/S 32,127 24,264 107,382 69,391 92,420

Earnings per share (DKK) 47.94 31.18 41.87

Diluted earnings per share (DKK) 45.99 30.01 40.33

Non-current assets 819,950 614,801 669,136

Total assets 1,467,417 1,092,618 1,200,671

Equity 505,337 423,349 427,636

Equity including non-controlling interests 506,466 426,226 428,976 Investments in property, plant and equipment (excluding

acquisitions) 45,900 12,402 107,257 65,965 107,035

NIBD/EBITDA (LTM) 1.9 1.6 2.0

Cash flows from:

- operating activities 38,927 41,890 108,706 113,841 140,439

- investing activities -32,031 34,743 -137,852 -18,093 -80,126

- financing activities 67,194 -45,987 81,606 -83,677 -124,102

Change in cash and cash equivalents 74,090 30,646 52,460 12,071 -63,789

EBITDA margin (%) 15.4 14.4 15.3 13.7 13.4

EBIT margin (%) 10.5 9.6 10.9 9.1 8.8

Profit before tax and non-controlling interests as a

percentage of revenue 9.5 8.7 9.88.3 8.1

Return on invested capital including goodwill (%) 15.5

Return on invested capital excluding goodwill (%) 18.6

Return on equity, excluding non-controlling interests 22.6

Equity ratio, excluding non-controlling interests (%) 34.4 38.7 35.6

Equity ratio, including non-controlling interests (%) 34.5 39.0 35.7

Financial gearing 1.0 0.8 1.0

Cash flow per share, DKK 46.6 49.2 61.3

Total dividends for the year per share (DKK) 6.0

Market price, end of period (DKK per share) 1,105.0 629.0 674.0

Net asset value per share, end of period (DKK) 225 188 192

Market price/net asset value, end of period 4.92 3.34 3.52

Number of shares, end of period

of which treasury shares, end of period

2,278,000

29,456

2,278,000

28,058

2,278,000

46,359

Average no. of employees 1,846 1,592 1,559

We continued to record rising sales to many of our customers across industries and geographies in the first nine months of 2017. The improvements were the most pronounced in our international markets, as sales outside Denmark grew by 51.7% in the 9M period. Sales to our Danish customers were up by 5.8%.

Our performance numbers relative to the corresponding period of 2016:

Sales to the oil and gas industry declined despite the slightly higher oil prices.

Sales of our own brands were up by 62.6% and now account for 20.3% of consolidated revenue. Q3 sales were up by 46.3% year-on-year.

SP Medical reported a 23.1% improvement in guidewire sales. Ergomat reported a 19.8% improvement in sales of ergonomic products. TPI reported a 10.8% improvement in sales of farm ventilation components.

MedicoPack, Tinby Skumplast and MM Composite, which were not part of the comparative figures, and

SP Moulding and Tinby all reported fair growth in own-brand sales - standard industry components - to DKK 88.7 million. The improvements were driven by new innovative solutions and products, improved marketing opportunities and a larger sales force. The resulting growth contributed to the higher earnings.

SP Group continued its intensified marketing efforts towards both existing and potential customers. We won new customers in the first nine months of 2017 and are taking proactive steps to develop and

Most of the change in Q3 revenue was due to higher volume sales. Changes in foreign exchange rates had a negative impact on revenue, as the currency effect accounted for about minus 1.2 percentage point (pp) of the 20.3% overall revenue increase (USD, RMB and BRL have depreciated against DKK). An amended logistics agreement had a negative impact of 5.4pp. Acquired businesses and operations contributed 21.2pp.

Revenue for the nine months to 30 September was up by 29.6%, of which foreign exchange developments accounted for minus 0.4pp, acquired businesses and operations accounted for 21.7pp and an amended logistics agreement with a major customer accounted for minus 2.5pp.

Sales to the healthcare industry were up by 12.8% year-on-year to DKK 490.1 million and now account for 34.5% of consolidated revenue. Q3 revenue was down by 7.9% due to an amended logistics agreement.

Sales to the cleantech industry were up by 71.8% to DKK 490.9 million and now make up 34.5% of consolidated revenue. Q3 sales were up by 71.4% year-on-year.

Sales to food-related industries were up by 4.3% to DKK 181.4 million and now make up 12.8% of consolidated revenue. Sales improved by 6.9% in the third quarter.

market a number of new solutions for the healthcare, cleantech and food-related industries, among others, which we believe hold an attractive growth potential for our Company.

Our sales to the healthcare industry are growing strongly, and we have won orders for many new plastics components for regular shipment.

We expect the acquisitions of Tinby Skumplast A/S and MM Composite A/S to further accelerate our sales to the cleantech industry. Together, we can offer our customers innovative and value-adding solutions. Some of these solutions consist of standard industry components.

International sales now make up 60.5% of revenue (compared with 51.7% in the 9M 2016 period).

SP Group continually seeks to optimise its business under the prevailing market conditions by raising production efficiency, aligning capacity and pursuing tight cost management.

In addition to capacity adjustments, we focus on adjusting our general costs on an ongoing basis. Our goal at SP Group is for all of our production facilities to manufacture and deliver better, cheaper and faster. We continually consider steps to cut consumption of input materials and resources (reducing carbon emissions, etc.) and to reduce the time necessary to commission equipment and switch-over times. We are continuing the current roll-out of our LEAN project, which aims to improve

our processes and flows and to enhance the skill sets of our organisation.

Currently, some 65% of our staff are employed outside Denmark.

The Group's headcount grew by 225 in the nine months to 30 September 2017 (59 through acquisitions and 166 due to organic growth).

The new employees are based in Poland (137), Denmark (60), the USA (15) and Slovakia (14). There was a net reduction of 1 employee in other countries of operation.

At 30 September 2017, SP Group had 1,921 employees worldwide.

Business activity in the third quarter was impacted by exchange rate adjustments (DKK 5 million) and an amended logistics agreement (minus DKK 20 million). The buoyant market trends seen in the early months of the year have faded.

As announced in Announcement No. 17/2017, SP Group has launched a DKK 30 million share buy- back programme under the Safe Harbour regulations to cover existing warrant programmes (Market Abuse Regulation). The share buy-back programme will be extended until 10 April 2018 and increased by DKK 30 million to DKK 60 million, as announced in Announcement No. 49/2017.

The Company sold 56,000 treasury shares in April, May and August 2017 to cover the cost of warrants exercised under the 2012, 2013 and 2014 warrant programmes (as announced in Announcements Nos. 25/2017, 33/2017 and 53/2017). The

proceeds added DKK 16.8 million in cash to equity.

On 6 January 2017, SP Group acquired LM Skumplast A/S, a company offering customised PUR and PIR foam solutions. LM Skumplast subsequently changed its name to Tinby Skumplast A/S. See Announcement No. 02/2017. CEO Kim Andersen has stayed on with the company. The company has performed extremely well since the acquisition.

On 21 March 2017, SP Group acquired MM Composite A/S (see Announcement No. 14/2017), a company offering customised composite solutions and with production facilities in the USA and Denmark. The former owners Kent Bøllingtoft Madsen and Mogens D. Marxen have both stayed on with the company. The company has performed well since the acquisition.

Both acquisitions are well-run businesses, and they will enhance SP Group's value proposition to customers in the cleantech industry. Both acquisitions were made with borrowed funds.

SP Group signed a seven-year DKK 100 million loan agreement with the Nordic Investment Bank (NIB) on 29 June. The purpose of the loan is to support the Group's continued organic growth (see Announcement No. 42/2017).

In July, SP Group acquired a property at Langeskov in Funen, which serves as the head office of MedicoPack. Technically speaking, SP Group bought shares in the company owning the property. See page 11 for more information on the acquisition of LNS1 ApS, which has subsequently changed its name to SPG Ejendomme 1 ApS. The acquisition has increased SP Group's debt by a net amount of DKK 22.6 million and will increase the future EBITDA by approximately DKK 2.2 million and future profit before tax by approximately DKK 1.6 million per year.

In October, SP Group acquired a number of properties in the town of Nørre Aaby in Funen, which serve as the head office of MM Composite A/S. Technically speaking, SP Group bought shares in the company owning the properties. See page 11 for more information on the acquisition of SPG Ejendomme 2 ApS. The acquisition has increased SP Group's debt by a net amount of DKK 16.7 million and will increase the future EBITDA by DKK

3.3 million and future profit before tax by approximately DKK 2.5 million per year.

The property acquisitions were partially financed by way of a 20-year mortgage with the interest rate locked in for the first five years.

Revenue for the first nine months of 2017 amounted to DKK 1,421.8 million, a 29.6% improvement from DKK 1,097.5 million in the year- earlier period. Approximately 21.7 percentage points of the improvement derived from acquired businesses and operations. Q3 sales were up by 20.3% year-on-year.

The consolidated 9M 2017 EBITDA was DKK 217.0 million compared with DKK 150.8 million in 9M 2016. Approximately DKK 32.5 million of the revenue increase derived from acquired businesses and operations. The EBITDA margin improved to 15.3% from 13.7% in the 9M 2016 period. The Q3 EBITDA margin was 15.4% - our highest ever.

Profit before net financials (EBIT) came to DKK

154.7 million in 9M 2017, against DKK 100.0 million in 9M 2016. The 9M 2017 EBIT margin was 10.9%, compared with 9.1% in 9M 2016.

Net financials were an expense of DKK 15.4 million in 9M 2017, a DKK 6.6 million greater expense than in 9M 2016 that was due to exchange rate adjustments and the larger debt.