Novem Group S.A.

Earnings Release • Jun 1, 2023

01 June 2023

FY 2022/23 Preliminary Results

• Backed by strong revenue in Q4, Novem could again break the €700m mark in 2022/23 (+14.0% y/y)
• Adjusted for favourable foreign exchange effects, organic growth would have recorded at +8.9%
• Robust margin development throughout the whole year with Adj. EBIT of €81.7m (11.7% of revenue)
• Adverse impact from higher input costs on material, energy and transport prevailed in Q4 2022/23
• Instability of some suppliers in Europe created additional temporary pressure on the purchasing side
• Outstanding free cash flow in the last quarter put the full-year number up to €84.5m (PY: €65.0m)
• Cash reserves reached a record level of €165.5m demonstrating the Group's funding capability
• Net leverage ratio of 1.1x came down to the lowest level since refinancing the business in July 2021

Strong top line growth with a stable margin development

2 GROUP RESULTS

Page 6

Revenue

• In the last quarter of 2022/23, total revenue came in at €174.1m and outperformed PY by +9.3%
• Top line growth was again supported by positive FX effects; total revenue would have been lower by -1.7% at constant FX rates
• With revenue Series of €162.5m and robust growth of +8.4% y/y, Q4 was the strongest quarter in the financial year 2022/23
• LMC market data showed a noticeable increase in light vehicle production from 20.0m to 21.3m units (+6.8% y/y)
• Revenue Tooling of €11.6m ahead of last year (+23.4%) due to the closure of several projects (e.g. Lotus Lambda, Polestar 3)
• On a full-year basis, total revenue of €700.3m almost returned to the pre-pandemic record level of €711.1m in 2018/19

Adj. EBIT

• Adj. EBIT in Q4 2022/23 of €21.2m recorded on a similar level in comparison to last year
• Profit margin of 12.2% improved sequentially but could not reach prior-year level at 14.0% (-1.8pp)
• Bottom line was again affected by higher material prices, to some extent driven by distressed suppliers, energy and freight costs
• However, further customer compensation payments could partly offset the negative impact of inflation
• Compared to last year, the higher share of Tooling in the overall revenue had a dilutive impact on the Adj. EBIT margin
• Full-year Adj. EBIT of €81.7m resulted in a profit margin of 11.7% for the financial year 2022/23

Free cash flow

• Though not at the same level as previous year, Novem generated a strong free cash flow of €39.6m in Q4 2022/23
• Cash flow from operating activities (€44.4m) recorded at PY level (no deviation) with the following movements:
• Lower inventories (€+21.9m), largely relating to Tooling, deferred taxes (€+16.1m) and provisions (€+10.2m); conversely, reduced trade payables (€-17.0m), decreased trade receivables (€-16.6m) and lower profit (€-14.4m) as well as Others (€-0.2m)
• Cash flow from investing activities of €-4.8m above PY of €0.8m, which was influenced by a currency translation adjustment
• For the financial year 2022/23, free cash flow recorded at €84.5m and exceeded PY by almost one third
• Despite difficult trading conditions, Novem reported a strong cash conversion of 74.0% (Adj. EBITDA / FCF)

Capital expenditure

• In the last quarter of 2022/23, capital expenditure of €5.7m came in well below previous year of €8.4m
• Due to the lower investments, the underlying capex ratio of 3.3% of revenue also fell behind last year's level (5.2%)
• Above-average spending in prior year was predominantly driven by the additional capex relating to Faurecia
• For the whole financial year, Novem made overall investments of €17.9m almost evenly distributed across all quarters
• Majority of capital expenditure was allocated to China (€5.5m) in view of new product launches
• Capex ratio for the last twelve months recorded at 2.6% based on the annual revenue of €700.3m

Total working capital

LTM total working capital (€m)

• As of 31 March 2023, total working capital stood at €124.0m and was therefore below last year by -2.6%
• Positive deviation of €+3.3m vs. PY attributable to lower tooling net (€+18.9m) and lower inventories (€+3.3m); on the other hand, higher trade receivables (€-8.5m), lower trade payables (€-7.1m) and higher contract assets (€-3.4m)
• Decline in tooling net was driven by material customer payments; conversely, trade receivables, trade payables and contract assets saw a negative impact from the higher revenue
• As percentage of LTM revenue, total working capital recorded at 17.7% as of 31 March 2023 (20.7% PY)
• However, trade working capital, by definition excluding tooling net and contract assets, rose to 7.6% of LTM revenue (6.4% PY)
• DIO further improved to 36 days (41 PY), while DPO of 50 days (62 PY) and DSO of 33 days (28 PY) developed unfavourably

Capital structure

• As of 31 March 2023, gross financial debt of €288.5m remained at prior year's level, while cash balances increased considerably
• Lease liabilities, by definition forming part of gross financial debt, amounted to €39.1m (€34.9m PY)
• Principal sources of funds included €165.5m cash (€117.0m PY) and €54.0m non-recourse factoring (€47.8 PY)
• Net financial debt as of 31 March 2023 recorded at €123.0m and strengthened sequentially over last year (€165.6m PY)
• Net leverage ratio of 1.1x stood at the lowest level since the new financing was put in place after the IPO in July 2021
• Again, Novem proved to be able to deleverage its balance sheet even in difficult trading conditions

Revenue by operating segments

Q1 22/23 Q2 22/23 Q3 22/23 Q4 22/23 Europe Americas Asia

• Buoyant revenue growth in Q4 2022/23 was driven by both Asia and Americas, while Europe developed unfavourably
• Asia and Americas contributed top line growth of €+10.5m and €+9.7m respectively, while Europe declined by €-5.4m y/y
• Lower revenue in Europe due to Tooling, poor customer call-offs and the phase-out of certain platforms (MB GLC, BMW 5-series)
• Growth in Americas was supported by a positive FX impact from the USD and continued strong demand for SUVs
• Sharp rise in Asia resulted from increased revenue Tooling and the ramp-up of new programs (e.g. BMW X5, Lotus Lambda)
• Regionally, total revenue in 2022/23 was distributed as follows: 47.5% Europe, 37.7% Americas and 14.7% Asia

Adj. EBIT by operating segments

• On a regional basis, Adj. EBIT improved well in Americas, while Asia moved sideways and Europe fell short of previous year
• In Europe, Adj. EBIT of €1.3m (€8.9m PY) was badly affected by inflation, lower Tooling and volatile customer call-offs resulting in operational inefficiencies
• Material prices impacted by suppliers in insolvency proceedings; nonetheless, supply chain remained fully intact
• Americas delivered outstanding Adj. EBIT of €15.9m (€9.9m PY) supported by dynamic market demand, positive product mix and customer compensation payments
• In Asia, Adj. EBIT of €4.0m (€3.5m PY) benefited from increased revenue (Series, Tooling) but suffered from negative product mix
• Full-year Adj. EBIT of €81.7m increased by €+0.8m compared to last year and resulted in a solid profit margin of 11.7%

Profit and loss statement (€m)

	Q4 2021/22	Q4 2022/23	FY 2021/22	FY 2022/23
Revenue	159 3	174 1	614 5	700 3
Increase or decrease in finished goods and work in process	13 0	-1 4	29 6	-7 5
Total operating performance	172 3	172 7	644 1	692 8
Other operating income	8 4	11 4	20 0	25 8
Cost of materials	-92 0	-88 4	-328 0	-354 7
Personnel expenses	-40 0	-44 6	-157 6	-167 7
Depreciation , amortisation and impairment	-7 9	-8 3	-30 9	-32 5
Other operating expenses	-18 6	-21 6	-66 8	-82 0
Adj EBIT	22 3	21 2	80 9	81 7
Adjustments	-1 3	-0 2	-8 0	-1 3
(EBIT) Operating result	21 0	21 0	72 9	80 5
Finance income	1 5	5 3	3 4	3 6
Finance costs	-1 6	-3 9	-25 8	-13 1
Financial result	-0 2	1 5	-22 4	-9 5
Income taxes	-1 7	-1 9	-16 1	-15 7
Deferred taxes	9 5	-6 3	9 7	2 -5
Income result tax	7 8	-8 3	-6 5	-20 9
Profit for period the	28 6	14 2	44 0	50 0

Balance sheet

Balance sheet (€m)
	31 Mar 2022	31 Mar 2023		31 Mar 2022	31 Mar 2023
			Total equity	67 7	107 3
Intangible assets	3 1	2 4	Pensions and similiar obligations	34 9	27 0
Property , plant and equipment	184 9	185 1	Tax liabilities	0 0	0 0
Trade receivables	47 5	46 3	Other provisions	3 2	1 4
Other non-current assets	12 6	10 3	Financial liabilities	247 7	248 2
Deferred tax assets	18 8	8 3	Other liabilities	29 8	33 3
			Deferred liabilities tax	3 6	0 6
Total non-current assets	267 0	252 5	liabilities Total non-current	319 1	310 6
Inventories	129 4	116 3	Tax liabilities	13 8	19 1
Trade receivables	37 7	47 5	Other provisions	48 0	46 7
Other receivables	28 6	38 0	Financial liabilities	1 4	1 2
Other current assets	13 7	18 2	Trade payables	70 4	60 6
Cash and cash equivalents	117 0	165 5	Other liabilities	73 7	92 7
Assets held for sale	0 8	0 0
Total current assets	327 0	385 5	Total liabilities current	207 3	220 2
Assets	594 0	638 0	Equity and liabilities	594 0	638 0

Cash flow statement

Cash flow statement (€m)

	Q4 2021/22	Q4 2022/23	FY 2021/22	FY 2022/23
Profit for the period	28 6	14 2	44 0	50 0
expense (+)/income Income (-) tax	1 7	1 9	16 1	15 7
Financial result (+)/(-) net	0 9	2 9	21 7	7 1
Depreciation , amortisation and impairment (+)	8 4	8 3	31 4	32 5
Other non-cash expenses (+)/income (-)	0 3	-2 3	0 9	-9 1
Increase (-)/decrease (+) in inventories	-15 8	6 1	-30 7	13 2
(-)/decrease (+) Increase in trade receivables	16 7	0 0	20 0	-9 4
Increase (-)/decrease (+) in other assets	1 2	-1 5	2 9	-3 2
(-)/decrease (+) deferred Increase in taxes	-9 8	6 4	-10 1	5 2
Increase (-)/decrease (+) in prepaid expenses/deferred income	2 0	1 0	1 0	1 9
(+)/decrease (-) Increase in provisions	-14 1	-3 9	-8 1	2 7
Increase (+)/decrease (-) in trade payables	21 5	4 6	8 2	-10 0
(+)/decrease (-) Increase in other liabilities	6 7	7 5	0 7	10 4
Gain (-)/loss (+) on disposals of non-current assets	0 0	0 0	0 0	0 1
Cash (+) from/cash (-) received paid for income taxes	-4 1	-0 9	-17 3	-8 7
Cash flow from operating activities	44 4	44 4	80 5	98 3

Cash flow statement (€m)

	Q4 2021/22	Q4 2022/23	FY 2021/22	FY 2022/23
Cash received (+) from disposals of intangible assets	0 1		0 0
Cash (+) from of received disposals , plant and equipment property	-0 8	0 0	0 0	0 8
Cash paid (-) for investments in intangible assets	-0 3	-0 2	-0 4	-0 3
Cash (-) for paid investments in , plant and equipment property	1 1	-5 5	-18 1	-17 6
Interest received (+)	0 7	0 9	3 1	3 4
Cash flow from investing activities	0 8	-4 8	-15 5	-13 8
Cash (-) of loans/cash (+) from received loans repayments	0 2	0 0	247 6	0 0
Cash received (+) from shareholders of the parent company	-0 6	-0 0	48 8	0 0
Cash (-) of bond/cash (+) from of received issuance bond repayments			-400 0
Cash paid (-) for subsidies/grants	-0 0	-0 0	-0 0	-0 0
Cash (-) for paid lease liabilities	-2 3	-2 9	-8 4	-9 8
Interest paid (-)	-0 9	-3 3	-13 0	-8 5
(-) Dividends paid	0 0	0 0	-0 0	-17 2
Cash flow from financing activities	-3 6	-6 2	-124 9	-35 5
Net increase (+)/decrease (-) in cash and cash equivalents	41 6	33 4	-59 8	49 0
Effect of fluctuations exchange on cash and cash equivalents rate	1 5	-0 4	1 5	-0 5
Cash and cash equivalents the beginning of the reporting period at	73 9	132 4	175 3	117 0
Cash of and cash equivalents the end the reporting period at	117 0	165 5	117 0	165 5

EBIT adjustments (€m)

	Q4 2021/22	Q4 2022/23	2021/22 FY	2022/23 FY
Revenue	159 3	174 1	614 6	700 3
EBIT	21 0	21 0	72 9	80 5
EBIT margin	13 2%	12 1%	11 9%	11 5%
Revenue	159 3	174 1	51 614	700 3
Restructuring
Material quality claims			-0 1
Onerous contracts	0 1		3 1
Covid-19 costs	0 3	0 0	1 4	0 3
Transaction costs	-0 3		2 1
Others	1 2	0 2	1 5	0 9
Exceptional items	1 3	0 2	8 0	1 3
Discontinued operations
Adjustments	1 3	0 2	8 0	1 3
Adj EBIT	22 3	21 2	80 9	81 7
Adj EBIT margin	14 0%	12 2%	13 2%	11 7%

1) Including revenue-related adjustments

Definitions and basis of preparation of the financial information

• Adj. EBIT is defined as EBIT as adjusted for certain adjustments which management considers to be non-recurring in nature, as Novem believes such items are not reflective of the ongoing performance of the business
• Adj. EBIT margin is defined as Adj. EBIT divided by revenue
• Adj. EBITDA is defined as profit for the year before income tax result, financial result and amortisation, depreciation and write-downs as adjusted for certain adjustments which management considers to be non-recurring in nature, as Novem believes such items are not reflective of the ongoing performance of the business
• Adj. EBITDA margin is defined as Adj. EBITDA divided by revenue
• Capital expenditure is defined as the sum of cash paid for investments in property, plant and equipment and cash paid for investments in intangible assets excluding currency translation effects
• Days inventory outstanding (DIO) is defined by dividing inventories (as shown in the consolidated statement of financial position, but excluding tooling) by revenue generated from the sale of series trim elements in the last three months
• Days sales outstanding (DSO) is defined by dividing trade payables (as shown in the consolidated statement of financial position, but excluding tooling) by revenue generated from the sale of series trim elements in the last three months
• Days payables outstanding (DPO) is defined by dividing trade payables (as shown in the consolidated statement of financial position, but excluding tooling) by net costs series incurred in the three months
• EBIT is defined as profit for the year before income tax result and financial result
• EBITDA is defined as profit for the year before income tax result, financial result and amortisation and depreciation
• Free cash flow is defined as the sum of cash flow from operating and investing activities
• Gross financial debt is defined as the sum of liabilities to banks, hedging and lease liabilities
• Net financial debt is defined as gross financial debt less cash and cash equivalents
• Net leverage ratio is defined as the ratio of net financial debt to Adj. EBITDA
• Total operating performance is defined as the sum of revenue and increase or decrease in finished goods
• Total working capital is defined as the sum of inventories, trade receivables and contract assets excluding expected losses less trade payables, tooling received advance payments received and other provisions related to tooling
• Trade working capital is defined as the sum of inventories non-tooling and trade receivables related to non-tooling less trade payables related to non-tooling

Date of publication

01 June 2023

Contact

investor.relations@novem.com | All information is constantly updated and available. Please visit the Investor Relations Portal on the Company website: https://ir.novem.com

Editor

Novem Group S.A. | 19, rue Edmond Reuter | 5326 Contern | Luxembourg | www.novem.com

Financial information

This presentation contains unaudited financial information for Novem, which may be subject to change.

Disclaimer

Novem Group S.A. (the "Company", "Novem") has prepared this presentation solely for your information. It should not be treated as giving investment advice. Neither the Company, nor any of its directors, officers, employees, direct or indirect shareholders and advisors nor any other person shall have any liability whatsoever for any direct or indirect losses arising from any use of this presentation. While the Company has taken all reasonable care to ensure that the facts stated in this presentation are accurate and that the opinions contained in it are fair and reasonable, this presentation is selective in nature. Any opinions expressed in this presentation are subject to change without notice and neither the Company nor any other person is under any obligation to update or keep current the information contained in this presentation. Where this presentation quotes any information or statistics from any external source, you should not interpret that the Company has adopted or endorsed such information or statistics as being accurate. This presentation contains forward-looking statements, which involve risks, uncertainties and assumptions that could cause actual results, performance or events to differ materially from those described in, or expressed or implied by, such statements. These statements reflect the Company's current knowledge and its expectations and projections about future events and may be identified by the context of such statements or words such as "anticipate", "believe", "estimate", "expect", "intend", "plan", "project" and "target". No obligation is assumed to update any such statement. Numbers were rounded to one decimal. Due to rounding, the numbers presented may not add up precisely to the totals provided.

Novem Group S.A. 19, rue Edmond Reuter | 5326 Contern | Luxembourg

Email: investor.relations@novem.com www.novem.com