NEWS. Introduction. Electronic Manufacturing Services (EMS) Q Executive summary of the EMS and ODM industry. Transaction highlight

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1 Introduction Executive summary of the EMS and ODM industry The global EMS and ODM (Original Design Manufacturing) market is forecasted to reach over 540m in 2017, mainly driven by the growing digitalisation across non-technology sectors including medical, aerospace and defence, and industrial sectors. However, the 3C segments (computer, communication and consumer) still remain the most dominant sectors. The transformation of EMS companies towards fullservice providers will drive consolidation of the industry due to additional required service offerings and international expansion. Transaction highlight MACDONALD HUMFREY Automation, control and IT solutions systems integrators MacDonald Humfrey (Automation) Limited on its cross-border sale to L-3 Communications for a purchase price of approx. 300m Clearwater International advised MacDonald Humfrey on its crossborder sale to L-3 Communications for a purchase price of approximately 300m M&A activity in the EMS industry The number of M&A transactions in Q1 and stagnated compared to the same period in the previous year. Europe experienced the highest deal activity in the EMS sector. Clearwater International successfully completed these recent EMS transactions: INDUC Independent investment company Induc and Co-investors on the partial sale of Grundig Business Systems to VR Equitypartner SEIDEL HOLDING Manufacturer of electronic and mechatronic solutions SEIDEL Holding on the sale of SEIDEL Electronics Group to SVI Public Company Limited Valuation level of EMS players worldwide Towards the end of trading multiples increased and reached a historic record high. Small and medium-sized EMS companies are continuing to show higher valuation levels in comparison to large EMS providers. Clearwater International has advised the shareholders of one of the UK s largest independent automation, control and IT solutions system integrators, MacDonald Humfrey Automation Limited (MacDonald Humfrey), on its crossborder sale to L-3 Communications (L-3), the New York headquartered provider of communications and electronic systems products used on military and commercial platforms. MacDonald Humfrey is a globally recognised leader in the deployment of effective and efficient checkpoint security and wider aviation solutions, as well as in the development of state-of-the-art process automation and collaborative robotic capabilities supporting aviation and other end markets. MacDonald Humfrey s aviation solutions have been deployed throughout Europe, the Middle East and Canada, and most recently in the US where the company has engaged with airlines and airports to help reduce lengthy checkpoint delays. MacDonald Humfrey is also a key supplier to other high-end process automation markets including aerospace and automotive where it has automated the assembly of cars and aircraft engines. Clearwater International previously advised on a European landmark deal with the sale of Macdonald Humfrey to L-3 Communications (see right).

2 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 Dec 16 Jan 17 Feb 17 Mar 17 NEWS 1. Current trends in the EMS industry Size and structure of global EMS and ODM industry The global EMS and ODM market is forecasted to reach over 540m by the end of 2017 representing a CAGR ( ) of 7.0% for EMS and 7.4% for ODM providers. Strong growth is expected in the high-complexity sectors including industrials, medical, aerospace, automotive, and wearable sensors. EMS revenues in the non-technology sectors are projected to grow at a CAGR of approx. 13% by However, the commodity markets (3C segments) will remain the dominant end-markets until 2020 with more than three quarters of the market share. Growth drivers in the EMS and ODM industry An ageing population together with an increasing life expectancy and growing health consciousness create a dynamic market environment for EMS and ODM providers. The medical electronics segment is expected to create large sustainable demand for medical devices. OEMs specifically in Asia are increasingly considering outsourcing EMS and ODM due to significant capital investments for in-house manufacturing and improvements in their time to market and cost structure. Moreover, the growing digitalisation in industrials (IIoT) and in consumer sectors (wearables) provides attractive revenue potential for EMS and ODM companies. The global wearable sensor market shows a remarkable forecasted CAGR of approx. 45% until 2020 supported by growing healthcare expenditures and declining prices of raw materials. An additional trend that will shape the EMS industry is the growing pressure on manufacturers to adopt green electronics manufacturing for more energy efficiency and eco-friendly manufacturing, while introducing new methods to produce devices that consume less energy. Quantitative outlook The book-to-bill ratio, a ratio of orders received to the amount billed for a specific period, is an indicator of mid-term development. In the GSA (German Speaking Area) printed circuit board segment, the ratio increased from 0.94 at the end of December 2016 to a 12 month high of 1.23 by the end of February Continued transformation of the EMS industry The EMS industry is continuing to undergo a shift in its business model. Due to the expected strong growth in non-technology sectors EMS companies need to adapt towards the needs of OEMs in terms of complexity, flexibility, cost and energy efficiency. Current market dynamics put increasing pressure on small and medium-sized EMS providers for international expansion and further consolidation in order to offer one-stop-shop solutions to OEMs with regional proximity. Due to growing integration of EMS providers in OEMs logistics, rapid delivery will be one of the major focuses for the EMS industry. Source: Zentralverband Elektrotechnik- und Elektronikindustrie, Netherlands Ministry of Foreign Affairs, Clearwater Research

3 2. M&A activity in the EMS industry During the first half of 2017 M&A activity in the EMS industry stagnated compared to the first half of In Q1 and Q2 of 2017 Europe had the highest deal activity in the EMS sector. Selected EMS transactions worldwide Date Target Bidder Description 04/2017 Firstronic LLC Lacroix SA Lacroix acquired Firstronic, a US-based provider of electronic manufacturing services, for an undisclosed consideration 04/2017 STI Enterprises (80% stake) Integrated Micro-Electronics, Inc IMI acquired a stake of 80% in STI Enterprises, a UK-based contract designer and manufacturer of electronics, for an undisclosed consideration 03/2017 Wilson-Hurd Manufacturing Co., Inc. Nelson-Miller, Inc. Nelson-Miller acquired Wilson Hurd, a US-based provider of custom printing, fabricating, and electronic manufacturing services, for an undisclosed consideration 02/2017 BHE A/S GPV International A/S GPV acquired BHE, a Denmark-based EMS provider, for an undisclosed consideration 01/2017 FRANCELOG Electronique S.A. Tec Automatismes S.A.S. Tec Automatismes acquired FRANCELOG, a France-based designer and manufacturer of industrial electronic assembly, for an undisclosed consideration 01/2017 SKN Electronics Limited The Pexion Group The Pexion Group acquired SKN Electronics, a UK-based surface mount assembly company, from Ahmed Family for an undisclosed consideration 01/2017 PKC Electronics Enics AG Enics acquired PKC Electronics with factories in Raahe, Finland and Suzhou, China, for an estimated consideration of 10m Source: MergerMarket, Clearwater Research

4 3. Valuation of EMS companies worldwide Comparable company valuation EMS industry (categorised by market cap) Company Market cap Net Debt EV Share Revenue-CAGR EBITDA Margin EBIT Margin EV / Revenue EV / EBITDA EV / EBIT Price Large Tier EMS Provider Hon Hai 56,972.8 (9,575.8) 47, % 0.3% 5.5% 5.6% 5.8% 4.0% 4.2% 4.4% 0.4x 0.4x 0.3x 6.9x 6.6x 5.9x 9.4x 8.8x 7.8x Flextronics 7, , (1.2%) (1.0%) 5.0% 5.3% 5.5% 2.7% 3.2% 3.5% 0.4x 0.4x 0.4x 8.1x 7.5x 7.0x 15.4x 12.5x 10.9x Quanta 7,947.6 (1,728.6) 6, % (1.2%) 2.9% 3.0% 3.2% 2.1% 2.3% 2.4% 0.2x 0.2x 0.2x 8.3x 7.2x 6.6x 11.3x 9.7x 8.6x Pegatron 7,164.7 (2,006.2) 5, % (0.6%) 3.9% 4.0% 4.0% 2.8% 2.8% 2.9% 0.2x 0.1x 0.1x 4.0x 3.8x 3.4x 5.5x 5.3x 4.7x Jabil 4, , , % 3.2% 6.9% 7.3% 7.3% 3.1% 3.6% 3.9% 0.4x 0.3x 0.3x 5.2x 4.8x 4.6x 11.6x 9.6x 8.6x Compal 2,548.8 (49.3) 2, % (1.1%) 2.2% 2.3% 2.3% 1.4% 1.5% 1.6% 0.1x 0.1x 0.1x 5.2x 4.6x 4.5x 7.9x 6.9x 6.4x Sanmina 2,534.0 (31.0) 2, % 4.6% 5.3% 6.0% n/a 3.5% 4.2% n/a 0.4x 0.4x n/a 8.2x 6.8x n/a 12.2x 9.7x n/a Wistron 2, , (0.1%) 12.3% 2.1% 1.9% 2.3% 0.9% 0.9% 1.2% 0.1x 0.1x 0.1x 5.9x 5.5x 4.2x 13.6x 11.6x 7.8x Celestica 1,673.1 (290.4) 1, (1.4%) 5.3% 4.2% 4.9% 5.0% 3.0% 3.7% 3.9% 0.3x 0.3x 0.2x 6.3x 5.2x 4.9x 8.8x 6.7x 6.3x Plexus 1,527.3 (216.3) 1, % (1.3%) 6.4% 6.9% 6.8% 4.6% 5.1% 5.0% 0.6x 0.6x 0.5x 9.1x 8.4x 7.8x 12.7x 11.3x 10.4x Median 5.1% (0.2%) 4.6% 5.1% 5.0% 2.9% 3.4% 3.5% 0.3x 0.3x 0.2x 6.6x 6.0x 4.9x 11.5x 9.6x 7.8x Mean 5.0% 2.0% 4.4% 4.7% 4.7% 2.8% 3.2% 3.2% 0.3x 0.3x 0.3x 6.7x 6.0x 5.4x 10.9x 9.2x 8.0x Medium Tier EMS Provider Fabrinet 1,438.8 (187.2) 1, % 30.5% 10.3% 11.1% 11.0% 8.7% 9.6% 9.8% 1.2x 1.0x 0.8x 11.6x 8.6x 7.7x 13.8x 9.9x 8.6x Benchmark 1,419.7 (467.3) % (3.6%) 6.1% n/a n/a 3.8% 4.0% 4.4% 0.5x 0.5x 0.4x 7.7x n/a n/a 12.3x 11.5x 10.1x Hana 1,062.0 (263.5) % 5.2% 15.1% 15.6% 15.4% 9.5% 10.2% 10.2% 1.5x 1.3x 1.2x 9.9x 8.6x 8.0x 15.8x 13.2x 12.0x CTS Corp (23.5) (3.4%) 3.8% 18.8% 19.2% 19.5% 14.0% 14.6% 15.9% 1.7x 1.7x 1.6x 9.3x 8.8x 8.2x 12.5x 11.5x 10.0x VS Industry % 28.8% 10.1% 9.4% 9.0% 7.3% 7.3% 7.2% 1.1x 0.8x 0.6x 10.6x 8.3x 7.0x 14.6x 10.7x 8.8x Median 7.4% 5.2% 10.3% 13.4% 13.2% 8.7% 9.6% 9.8% 1.2x 1.0x 0.8x 9.9x 8.6x 7.8x 13.8x 11.5x 10.0x Mean 8.1% 12.9% 12.1% 13.8% 13.7% 8.6% 9.2% 9.5% 1.2x 1.0x 0.9x 9.8x 8.6x 7.7x 13.8x 11.4x 9.9x Small Tier EMS Provider SVI (84.8) % 25.7% 8.0% 8.2% 8.1% 5.3% 5.2% 5.5% 0.9x 0.8x 0.7x 11.7x 9.8x 8.7x 17.5x 15.4x 12.8x Ducommun (4.9%) (8.1%) 9.5% 9.9% 10.8% 5.4% 4.9% 6.0% 0.9x 0.9x 0.9x 9.9x 9.4x 8.2x 17.6x 19.0x 14.8x TT Electronics (2.1%) 9.0% 8.5% 9.6% 9.9% 4.7% 5.7% 6.0% 0.6x 0.6x 0.6x 7.2x 6.0x 5.7x 13.0x 10.2x 9.5x Sparton % (0.8%) 6.4% 6.6% n/a 2.5% 2.5% n/a 0.8x 0.8x n/a 12.1x 12.2x n/a n/m n/m n/a Neways % 6.0% 4.9% 5.7% 6.4% 3.1% 3.7% 4.4% 0.4x 0.4x 0.4x 9.2x 7.3x 6.1x 14.6x 11.3x 8.9x Stadium % 7.3% 9.2% 11.5% 11.3% 6.2% 9.8% 9.9% 1.0x 0.9x 0.7x 11.0x 7.6x 6.6x 16.3x 8.9x 7.5x Median 6.9% 6.7% 8.2% 8.9% 9.9% 5.0% 5.1% 6.0% 0.9x 0.8x 0.7x 10.5x 8.5x 6.6x 16.3x 11.3x 9.5x Mean 7.0% 6.5% 7.8% 8.6% 9.3% 4.5% 5.3% 6.3% 0.8x 0.7x 0.7x 10.2x 8.7x 7.1x 15.8x 12.9x 10.7x Total EMS Providers 75- Percentile 13.0% 7.3% 9.2% 9.7% 10.6% 5.4% 5.7% 6.6% 0.9x 0.8x 0.7x 9.9x 8.6x 7.7x 14.8x 11.6x 10.3x Median 6.5% 3.8% 6.4% 6.8% 7.0% 3.8% 4.2% 4.4% 0.5x 0.5x 0.4x 8.3x 7.4x 6.6x 12.9x 10.4x 8.8x Mean 6.3% 5.9% 7.2% 7.7% 8.0% 4.7% 5.2% 5.7% 0.7x 0.6x 0.5x 8.4x 7.3x 6.4x 12.8x 10.7x 9.2x 25- Percentile (0.1%) (1.0%) 4.9% 5.2% 5.1% 2.8% 3.2% 3.7% 0.4x 0.3x 0.3x 6.9x 5.9x 5.1x 11.5x 9.4x 7.8x EV/EBITDA by Size Median EV/EBITDA 8.0x EV/EBITDA Development Median EV/EBITDA 10.5x 9.9x 8.3x 6.6x 8.6x 8.5x 7.4x 6.0x 7.8x 6.6x 6.6x 4.9x 7.5x 7.0x 6.5x 6.0x 5.5x 5.0x 4.5x 4.0x 3.5x Large-tier Medium-tier Small-tier Total Size by market cap: Large-tier > 1.5bn Medium-tier 500m - 1.5bn Small-tier < 500m 3.0x Jul 2012 Jul 2013 Jul 2014 Jul 2015 Jul 2016 Source: S&P Capital IQ 7 July 2017, Clearwater Research Jul 2017

5 Contact Chicago Dallas Detroit Cleveland San Francisco Boston New York Dublin Lisbon Paris Porto Madrid UK (4) Aarhus Copenhagen Barcelona Frankfurt Milan Mumbai Beijing Shanghai Tokyo Clearwater International Office Partner Offices São Paulo SUEZ (S.I. FINANCE) Private equity firm S.I. Finance (a subsidiary of SUEZ) on the sale of its 49.6% limited partnership interest in BuS Elektronik to the management PIEPS World leading manufacturer of avalanche transceivers SEIDEL Privatstiftung on the sale of PIEPS to Black Diamond SEIDEL HOLDING Manufacturer of electronic and mechatronic solutions SEIDEL Holding on the sale of SEIDEL Electronics Group to SVI Public Company Limited INDUC GMBH Independent investment company Induc and Co-investors on the partial sale of Grundig Business Systems to VR Equitypartner Coordinating as a single team, more than 200 experienced professionals have been responsible for the successful completion of over 1,300 deals worth in excess of 50bn; in the last ten years over half of these have had transaction values between 10m and 200m. Working alongside directors, shareholders and investors we advise on all aspects of corporate finance from mergers and acquisitions (M&A) and company sales to management buyouts (MBOs) and fundraising transactions. With 15 offices around the world and deals completed in 31 countries, our team makes us a natural choice for transactions requiring knowledge of, and access to, global markets. We have longstanding relationships with M&A firms around the globe; including the US, Japan, and India; helping us to provide clients with unique insights into international opportunities. Our 10 industry teams, focusing on automotive, consumer, energy and utilities, food and beverage, financial services, healthcare, industrials and chemicals, real estate, support services and TMT, add to our compelling proposition. Each sector is supported by an international research and origination team who provide our clients with insights into strategic opportunities.

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