NKT — Proxy Solicitation & Information Statement 2017

Sep 18, 2017

18 September 2017
Announcement No. 19

NKT A/S to be split into two independently listed companies
As previously announced, the Board of Directors of NKT A/S (NKT) has decided to
seek a split of the company into two stand-alone businesses - Nilfisk and NKT.
With the acquisition of ABB HV Cables as of March 2017, NKT became a leading
power cable supplier, while Nilfisk is a leading player in the professional
cleaning equipment industry. Both businesses are, thus, viable stand-alone
companies.

As a consequence of the decision, NKT today publishes a demerger statement, cf.
attachment to this announcement. The demerger is subject to approval at an
Extraordinary General Meeting to be held on 10 October 2017 and which will be
convened via a separate announcement today. The demerger statement supplements
the demerger plan, which was published on 11 September 2017, cf. Company
Announcement no. 18.

Chairman of the NKT Board of Directors, Jens Due Olsen, says:
- The decision to split the holding company into two independently listed
companies is the culmination of a long strategic journey to create two viable
businesses, each with a clearly defined investment case as amongst the leaders
in their respective industries: Nilfisk, a leading supplier of professional
cleaning equipment and services, and NKT, a leading power cable supplier. We
see the split as the beginning of a new chapter and an opportunity for both
companies to unlock their full value potential.

Below is a brief description of NKT and Nilfisk. The listed Nilfisk entity will
be NilfiskHolding A/S. Please see attached demerger statement for further
details.

Nilfisk
Nilfisk is a leading player in the professional cleaning equipment industry.
The global professional cleaning equipment market relevant to Nilfisk is
estimated at a value of around EUR 7.5bn annually and is in general growing in
line with real GDP.

Selected key strengths
A global leader in the attractive professional cleaning equipment industry
Nilfisk has an estimated global market share of approx. 11-13% and holds a
strong market position within the high-end segment, which is estimated to
account for approx. 45-50% of the total market value. Nilfisk holds an
estimated market share within the high-end segment of approximately 20-25%.
Nilfisk sees growth opportunities in its core high-end segment as well as
growth opportunities in the mid-market and emerging markets. Also, within
intelligent cleaning new technologies can increase the market scope for
professional cleaning equipment.

Strong customer access
Nilfisk operates globally, and is present in 45 countries with own sales
companies and more than 1,700 sales representatives. With an additional network
of dealers Nilfisk is reaching more than 100 countries in total. Nilfisk
services a large and diversified customer base of more than 200,000 active
customers. Top ten customers accounted for approximately 10% of Nilfisk's
revenue in 2016. Nilfisk has a strong portfolio of highly recognised and
trusted brands some of which carry 100+ years of legacy. The global brands
Nilfisk and Viper are supplemented by a number of strong regional and local
brands.

Extensive range of premium products and a reputable aftermarket offering
Nilfisk offers a wide range of high performing and reliable cleaning equipment
(floorcare machines, vacuum cleaners and high-pressure washers). In addition,
Nilfisk also provides value-added aftermarket offerings such as service
solutions, spare parts and accessories, which in 2016 accounted for around for
35% of total revenue. The aftermarket offering serves to strengthen customer
relationships thereby securing high customer retention and creates further
sales opportunities. In 2016, Nilfisk spent 3.6% of revenue on product
development and had more than 250 employees within this area.

Low capital intensity through effective sourcing and assembly focused production
Nilfisk has a standardised assembly-focused production and flexible
manufacturing footprint with limited capital expenditure and working capital
requirements. Nilfisk has a total of 17 production sites in 10 countries with
the main facilities located in Hungary, Italy, China, the United States and
Mexico. From 2012 to 2016, Nilfisk has had tangible capital expenditures of
between 1.3% and 2.2% of annual revenue, and Nilfisk has available capacity to
support future growth.

Financial guidance and dividend policy
In connection with the demerger, Nilfisk has set medium-term, three to five
years, financial targets:

· Organic revenue growth of 3% to 5% per year
·EBITDA margin before special items of 13% to 15%
· Return on Capital Employed (RoCE) above 20%

For 2017, Nilfisk expects organic revenue growth of 2% to 4% and an EBITDA
margin before special items of 11.0% to 11.5%. The expectations for 2017 are
unchanged compared to the guidance provided in the Q2 Interim Report 2017
released on 17 August 2017.

Nilfisk targets a leverage ratio at or below 2.5, measured as net
interest-bearing debt divided by EBITDA before special items. As of 30 June
2017, pro forma leverage ratio was 3.1, measured as net interest-bearing debt
divided by EBITDA before special items, LTM.

Nilfisk plans to adopt a dividend policy with a target pay-out of approximately
one third of profit for the year. The first dividend payment is expected to be
paid in 2019 on the basis of the 2018 results. Further excess cash can be
distributed as share buybacks or extraordinary dividends.

Board of Directors and management of Nilfisk Holding A/S
The following candidates will be proposed appointed to the Board of Directors
of Nilfisk Holding A/S by the Extraordinary General Meeting:

Jens Due Olsen
René Svendsen-Tune
Jens Maaløe
Jutta af Rosenborg
Anders Runevad
Lars Sandahl Sørensen

Nilfisk management consists of Chief Executive Officer Hans Henrik Lund and
Chief Financial Officer Karina Deacon.

NKT
NKT is a leading supplier of AC and DC power cable systems and solutions. NKT
has modern and technologically advanced production facilities in Europe and
sales offices around the world.

Selected key strengths
Attractively positioned in some of the most profitable segments within the
cable industry
NKT has an attractive product mix balance between the attractively growing AC
and DC high-voltage segment and the more stable medium- and low-voltage
segment. The growth prospects for the high-voltage market is attractive with
several projects in the pipeline in the years to come. In the medium- and
low-voltage segment, markets are more stable, with NKT strongly positioned in
selected countries in Northern and Western Europe.

Leading provider of high quality solutions to address the growing global
high-voltage DC and established high-voltage AC markets
With a technology leading product portfolio in the high-voltage segment, NKT is
well prepared to capture parts of this growing market. NKT has established a
solid high-voltage market position both within AC and DC technology through
delivery of a range of projects during the past years. In April 2017, NKT
launched the world’s most powerful extruded DC landcable system of 640kV, which
will be supportive towards serving the increasing share of high-voltage DC
projects coming to the market both in and outside Europe.

A leading European player in medium- and low-voltage markets with focus on
profitable growth
NKT holds strong market positions within the medium- and low-voltage segments
in Denmark, Germany, Sweden, Poland and Czech Republic and with further
attractive growth opportunities in other European markets. The strong market
positions are founded on long-standing relationships with key customers across
Europe. NKT offers a string of products across segments, and with a
multi-channel distribution approach, NKT ensures an offering that meet
custom-specific demands.

Scalable cost-effective manufacturing facilities and world-class turnkey
capabilities
In the high-voltage segment, NKT operates two of the most cost effective,
technology advanced production facilities globally in Cologne, Germany, and
Karlskrona, Sweden. The facilities are modern and have state-of-the-art
equipment. The plant in Cologne was inaugurated in 2010 and the plant in
Karlskrona has been significantly upgraded in recent years. As one of the few
players in the power cable industry, NKT offers its customers complete turn-key
solutions; including design and production of the high-voltage cable as well as
full installation and related cable-laying services with the cable-laying
vessel NKT Victoria.

Financial guidance and dividend policy
In connection with the demerger, NKT has set medium-term, three to five years’
financial targets:

· Operational EBITDA of approx. EUR 200-225m
· Return on Capital Employed (RoCE) above 13%

For 2017, NKT expects revenue, std. metal prices of approx. EUR 1.1bn and
operational EBITDA of approx. EUR 140m corresponding to an operational EBITDA
margin of approx. 12.7%.

NKT targets a leverage ratio up to approx. 1.5, measured as net
interest-bearing debt divided by EBITDA. As of 30 June 2017, pro forma leverage
ratio was 2.2, measured as net interest-bearing debt divided by EBITDA, LTM.

NKT plans to adopt a dividend policy with a target pay-out of approximately one
third of profit for the year, provided that capital structure allows for it.
Further excess cash can be distributed as share buybacks or extraordinary
dividends. No dividend payment is expected to be paid out in 2018 on the basis
of the 2017 results due to focus on reducing the debt level.

NKT Photonics
NKT Photonics, a leading supplier of high performance fiber lasers and photonic
crystal fibers, will after the demerger remain under a joint holding structure
with NKT while it continues to operate as a fully stand-alone company reporting
directly to the NKT Board of Directors.

NKT Photonics has set medium-term, three to five years’ financial targets:

· Annual organic growth above 10%
· EBITDA margin of approx. 25%
· Return on Capital Employed (RoCE) of approx. 20%

Board of Directors and management of NKT
The NKT Board of Directors encompasses the following General Meeting elected
members:

Jens Due Olsen
René Svendsen-Tune
Jens Maaløe
Jutta af Rosenborg
Anders Runevad
Lars Sandahl Sørensen

Anders Runevad has decided to step down from his position, and the Board of
Directors proposes Andreas Nauen to be elected at the Extraordinary General
Meeting on 12 October 2017.

NKT management consists of Chief Executive Officer Michael H. Lyng. Basil
Garabet is Chief Executive Officer of NKT Photonics.

Details about the demerger
As announced in the demerger plan published on 11 September 2017, the split
will be conducted as a partial, tax-exempt demerger of NKT, which - for
accounting purposes - will have retrospective effect as of 1 January 2017.

At completion of the demerger, the shareholders in NKT will also become
shareholders in Nilfisk Holding A/S in the same proportion as they are
shareholders in NKT. The Nilfisk Holding A/S shares will be registered in the
names of the eligible receiving shareholders. Immediately after registration in
VP Securities, receiving shareholders will receive a notification of the number
of Nilfisk Holding A/S shares allocated to them. Thus, receiving shareholders
do not have to take any action in connection with the issue of Nilfisk Holding
A/S shares. Further details about the demerger are available in the demerger
statement.

Expected timetable of principal events

                                                               Date

---

Extraordinary General Meeting to approve the demerger, including 10 October
election of Board of Directors of Nilfisk Holding A/S 2017

---

Registration of the Demerger with the Danish Business Authority 11 October
2017

---

Last day of trading in NKT shares including Nilfisk (cut-off 11 October
date) 2017 at 5PM
CET

---

Official listing of shares of Nilfisk Holding A/S on Nasdaq 12 October
Copenhagen and first day of trading (Permanent ISIN: 2017
DK0060907293, trading symbol “NLFSK”)

---

Record date (i.e. date and time for determining which 13 October
shareholders of NKT will be the receiving shareholder for the 2017 at 5.59
purpose of the demerger) pm CET

---

Delivery of Nilfisk Holding A/S shares to receiving shareholders 16 October
2017

---

The above timetable is subject to change. Any changes will be announced via
Nasdaq Copenhagen.

J. P. Morgan Securities plc. and Nordea Danmark, filial af Nordea Bank AB
(publ), Sverige have acted as financial advisers and Kromann Reumert as legal
adviser in connection with the demerger.

Contact
InvestorRelations: Michael Nass Nielsen, Head of Investor Relations, Tel:
+45 2494 1654
MediaRelations: Helle Gudiksen, Head of Group Communications, Tel: +45
2349 9098