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September 2012. Overview and Lessons Learnt from Swedish Spotlight on Carema Care. Disclaimer.

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September 2012

Overview and Lessons Learnt from Swedish Spotlight on Carema Care

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Disclaimer

This presentation (the "Presentation") which has been prepared by Triton Advisers Limited ("Triton" or the "Adviser") is strictly private and confidential and is intended only for the use of persons to whom it has specifically been given by the Adviser and, without the prior written consent of Triton, should neither be disclosed to any other person, company, partnership or other entity, nor reproduced in whole or in part. By accepting this Presentation you agree to be bound by the foregoing.

This Presentation is for information purposes only and should not be relied upon for any other purpose.

Neither Triton, nor any of its employees, advisers or agents accepts any responsibility for nor makes any representation of warranty, express or implied, as to the truth, accuracy or completeness of the information contained in this Presentation which is subject to further amendment, review and verification. This Presentation does not constitute or form part of or contain any invitation or offer to any person to underwrite, subscribe for, otherwise acquire or dispose of any interests in respect of any fund or advise persons to do so in any jurisdiction, nor shall it, or any part of it, form the basis of or be relied on in any connection with or act as an inducement to enter into any contract or commitment for such. No reliance may be placed for any purpose on the information or opinions contained in this Presentation, or on its completeness and no liability is accepted for any loss however arising from any use of this Presentation or its contents. Past developments and performances are no guarantee for any future developments and performances. This Presentation will be replaced by a full private placement memorandum in due course. Furthermore, this Presentation is only being directed to persons who are legally able to receive it in the jurisdiction in which they are situated.

Triton accordingly accepts no responsibility to any person for the completeness or accuracy of the information contained in this Presentation or for the consequences of any person placing reliance on the content of this Presentation for any purpose.

An investment in a fund is subject to various risks and should only be made after a careful review of the relevant documentation and following the consultation of a legal, tax or other adviser.

Triton is registered with the Jersey Financial Services Commission (the "Commission") pursuant to the Financial Services (Jersey) Law 1998 (the "FS Law") to provide fund services business as an investment adviser. The Commission is protected by the FS Law against liability arising from the discharge of its functions under the Law. The approval of the Commission in respect of this Presentation is not required and has been not sought.

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Triton - Invest to Build Better more valuable Businesses
  • Value oriented, Operational Improvementdriveninvestor
  • 2.5x / 30% IRR objective , vintage and cycle independent
  • Industry expertise, local presence and international know-how
  • Sector Focus : Business Services, Industrials and Consumer/ Health
  • German-speaking and Nordic countries
  • Out-of-favour, underperforming, overleveraged companies
  • €50 to €500 million businesses with significant value creation potential through operational improvements
  • Leader in its markets. Founded and owned by its partners

Triton

Advisers

Sweden AB(1)

(Stockholm)

Triton

Advisers

UK

(London)

Triton

Advisers

Limited

(Jersey)

Triton

Beteiligungsberatung

GmbH`

(Frankfurt)

Triton

Advisers S.àr.l.

(Luxembourg)

  • Triton Advisers Sweden is independent and separate from the Triton group of companies
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Invest and create value within our Circle of Competence (CoC)

Investment rationale, insights and angles

3

1

2

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Ambea – a leading private provider of healthcare and care services in the Nordic region

Ambea is a private healthcare and care provider in Sweden and Finland owned by Triton, KKR and management

The business consists of outpatient care, occupational health services, primary care and elderly care

The Group has three major subsidiaries: Carema Care, Carema Healthcare and Mehiläinen

Carema Care provides care services and nursing homes for disabled and elderly, Carema Healthcare runs primary care units, specialist healthcare services and psychiatric care operations and Mehiläinen provide privately and publicly funded healthcare services as well as publicly funded social services

Ambea employs almost 13 000 people and operates 650 units with close to 7 500 care beds across care and health care. Net revenues in 2011 were 978 MEUR

Carema Care is the largest subsidiary of Ambea

For a long time a premium provider or care services within the Swedish publicly financed care sector and currently the largest private care provider in Sweden

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Everyone is talkingabout Carema Care – butwhatreallyhappened?

March 2010

Triton and KKR acquire Ambea

May 2012

A completely new image appears. DN’sreporting is the focus

November 2011

Media storm. 45 news articles daily

Strengthened quality work | New management | Story on Koppargården | Media storm | Conversion of Shareholder Loans | New CEO | Redistribution of resources

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Why the massive media attention?

A

Private Equity owned, Tax Financed, Elderly care business

perceived as

Avoiding taxes

while simultaneously

pay out bonuses based on financial results

is accused for

Lacking in quality of care

A breadth of interesting players: unknown investors and owners, national politicians sensitive to the debate, local politicians responsible for tenders and ultimately for quality, and 7 500 caretakers across the country

Private alternatives in public sector still controversial

Variable salary is an issue that engage

Exposed users that are seen as powerless

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PHASE 1: Carema Care discover deviations and takes action in Spring 2011

The analysis show deviations in deliverables at Koppargården

Carema Care informs the municipality

Management that does not meet quality and ethical standards leaves the company

Errors are corrected and the quality work is strengthened

Carema acts on deviations

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PHASE 2: The scrutiny starts and escalates in Autumn 2011

Challenges

The public’s strong empathy for the residents- everyone has a grandmother or grandfather

Private Equity is perceived as short-term and profit maximizing

There were some quality deviations, but many of the reported incidents were investigated and proven untrue. Media on the other hand were uninterested in these aspects which made it a tough challenge

Media focused on a contradiction between good care and the possibility to make a profit. To explain the links between care quality and long-term return is hard when media has more exciting news to tell and no reason to help you.

The owners go out in a

joint ad declaring the

conversion of Share

Holder Loans to Equity- Nov 9

Carema Care’s President reveal the cancelationofall bonuses on live TV – Nov 10

A forceful outreach by

Carema management

correct the public opinion

On weighing diapers- Dec 22

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PHASE 3: Forceful actions are taken

Key Messages

All instances where quality has lacked are unacceptable

Carema Care aim to offer the highest possible healthcare and care quality

Several powerful actions have been taken to secure quality

Since the new ownership, quality has steadily improved

The owners are prepared to do everything necessary to resolve the situation

Carema and Ambea are taking all necessary action to re-establish the public’s confidence

The owners assume full responsibility

Media scrutiny begins

Further action is taken

  • Ambea’s immediate actions:
  • Ambea’s board release action plan
  • Fast investigations of all potential quality deviations
  • Open house at Koppargården for relatives and media
  • Carema Care’s president participate in debates on TV, radio and newspapers
  • Quality index initiativelaunched in largest daily newspapers op-ed
  • Triton / KKR’s immediate actions
  • External quality system evaluation
  • Decision to appoint CMO
  • Customer ombudsman and whistle-blower function
  • Removal of the bonus system
  • Public apology and action plan
  • Conversion of shareholder loans to equity
  • New Board-level competence
  • Increased transparency and visibility for Triton
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PHASE 4: Media’s scrutiny isreviewed in Spring 2012
  • Carema Care initiates an external review of the media’s handling of sources, among other things. Results of the report spreads; leading daily Expressen concludes that Dagens Nyheter (daily leading the scrutiny) has done wrong in several aspects of its review
  • Weekly newspaper Dagens Samhälle go back to the sources and find more factual mistakes and that Dagens Nyheter did not portray a balanced picture of what actually happened
  • The review spread to other leading media, including dailies Svenska Dagbladet and Sydsvenskan
  • Think-tank Timbro, independently from Dagens Samhälle, produced an extensive report regarding the media scrutiny, drawing similiar conslusions to Dagens Samhälle

”It’stimetospeakfranklyabout Carema” – Mats Edman, Editor at Dagens Samhälle

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Spring 2012: Continued actions to strengthen confidence
  • Increased transparency
  • Go on the offence
  • New Ambea CEO
  • Redistribution of resources to the units to improve deliverables
  • Show expertise and take control over the own agenda
  • Admit mistakes
  • Increased transparency
  • Building relationships
  • Transparency on website and in press releases
  • Member of SVCA
  • Participates in debates and seminars
  • Accessibility for the media

Clear ambition: Carema Care will regain the position as perceived quality leader. Company now winning tenders again.

From completely unknown to the general public to active participants in the debate. Remain as long-term and dedicated owners.