Beijer Ref — Interim / Quarterly Report 2020

Jul 15, 2020

BEIJER.REF

Beijer Ref AB Q2-2020

English version

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Beijer Ref AB

Q2-2020

Key figures	Q2-20	Q2-19	Δ%	H1-20	H1-19	Δ%	R12	12 months 19
Net sales, sek m	3 338	3 996	-16.5	6 816	7 430	-8.3	14 204	14 817
EBITDA, sek m	352	479	-26.4	661	825	-19.9	1 491	1 655
Operating profit, sek m	241	373	-35.3	438	617	-29.0	1 052	1 230
Profit margin, %	7.2	9.3		6.4	8.3		7.4	8.3
Net profit, sek m	168	265	-36.7	303	435	-30.4	741	873
Profit per share before dilution, sek	1.31	2.08	-36.8	2.37	3.40	-30.4	5.79	6.82
Profit per share after dilution, sek	1.30	2.06	-36.8	2.35	3.38	-30.4	5.75	6.78
Return on operating capital, %	3.3	5.3		5.9	8.8		14.0	17.8
Return on equity, %	3.9	6.8		7.0	11.2		18.0	21.4
Average number of employees				3 768	3 820	0.6		3 869

The total amount in tables and statements might not always summarize as there are rounding differences. The aim is to have each line item corresponding to the source and it might therefore be rounding differences in the total.

Second quarter

• Net sales decreased by 16.5% in the second quarter compared to the same period last year and amounted to SEK 3,338M (3,996). Acquisition effects amounted to 2.6% (6.9%). Negative currency effects amounted to -1.3% (2.6%). Organic growth was negative at -17.8% (4.4%). The end of the quarter shows a recovery and sales on a par with the previous year.
• The operating profit for the quarter amounted to SEK 241 M (373), a decrease of 35% compared with the same period last year. The operating margin amounted to 7.2% (9.3%). The main reason is the effects of Covid-19, but also to some extent lower prices for refrigerants.
• Profit before tax was SEK 227M (359). Net financial items are in line with previous years despite increased borrowing in connection with the acquisition of ACD Trade at the beginning of the year.
• Profit per share before and after dilution amounted to SEK 1.31 (2.08) and SEK 1.30 (2.06) respectively, which is a decrease of 37%.
• Cash flow was positive during the quarter and cash flow from current operations amounts to SEK 327M (-45). Unutilised credits amount to SEK 913M (1,427). Beijer Ref has performed a procurement and will after the end of the quarter extend the outstanding credits that fall due in November 2020.
• During the quarter, the group entered into a partnership with compressor manufacturer Bitzer in Australia and New Zealand; the group has previously entered into partnerships for Europe, Asia and Africa. Under the new agreement, Beijer Ref will be able to offer a complete range of Bitzer's product portfolio.
• After the end of the quarter, Beijer Ref signed a new exclusive agreement with Carrier International Corporation until 2023 regarding the continued sale and distribution of Carrier's comfort cooling product lines on the European market.

Beijer Ref AB
Q2 2020 – Published on 15 July 2020

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First half 2020

• Net sales decreased by 8.3% in the first half compared to the same period last year and amounted to SEK 6,816M (7,430). Acquisition effects amounted to 2.9% (12.4%). Negative currency effects amounted to -0.3% (3.3%). Organic growth was negative at -10.9% (5.8%).

• The operating profit for the period amounted to SEK 438M (617), a decrease of 29% compared with the same period last year. The operating margin amounted to 6.4% (8.3%). The main reasons are the effects of Covid-19 and lower prices for refrigerants.

• Profit before tax was SEK 409M (588). Net financial items are unchanged compared with previous years despite increased borrowing in connection with the acquisition of ACD Trade at the beginning of the year.

• Profit per share before and after dilution amounted to SEK 2.37 (3.40) and SEK 2.35 (3.38) respectively, which is a decrease of 30%.

• The acquisition of the wholesale company ACD Trade in Australia was completed in the first quarter of 2020. The company has annual sales of SEK 540M with 60 employees across 9 branches. The company is included in the consolidated accounts with effect from 1 February 2020.

• Beijer Ref has been affected by Covid-19 since the middle of March. Measures have been taken in all parts of the business to fend off some of the effects. This has led to net savings amounting to approximately SEK 150M during the period and the total net savings for 2020 are estimated to be approximately SEK 200M. The assessment is that Covid-19 will have a smaller effect on the group's earnings for the remainder of 2020, but the situation is difficult to assess.

Beijer Ref AB
Q2 2020 – Published on 15 July 2020

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Comments by the CEO

Impact of Covid-19 in the second quarter

As expected, the effects of Covid-19 have had full impact in the second quarter, a period characterised by virtually completely closed markets. Lost sales during the first half of the year amount to approximately SEK 1 billion, of which SEK 700 M can be attributed to the second quarter, where April and the first half of May were particularly heavily affected by the effects of the Corona pandemic. Since then, we have been able to monitor week by week how the markets have gradually opened up and sales at the end of June were on a par with the corresponding period last year, which is a faster recovery than our previous estimates.

Covid-19 has undoubtedly been a severe test for Beijer Ref and the world at large and I am proud and grateful for how our organisation and employees have shown loyalty, drive and flexibility in a situation that has been extreme. It shows once again our strength as a global group. When we realised that the world was facing a pandemic, major cost adjustments were immediately performed. During the first half of the year, these measures resulted in a saving of approximately SEK 150 M. We are prepared and have planned for further savings, but are awaiting developments to see at what level the market stabilises during the third quarter.

Although the period has been very different from previous years, we see clear signs that our HVAC segment is growing ever stronger. This is not only in the current year; if we look back, we can see several consecutive years in which air conditioning has seen increasing sales growth. We are seeing structural changes in the market, which means that air conditioning has in many respects gone from being something that was previously regarded as a luxury, but which is now increasingly regarded as a general everyday need. This becomes particularly clear during the summer months, even this year. It is therefore gratifying that we have concluded a new exclusivity agreement with Carrier for comfort cooling. During the period, we also signed an agreement with the compressor manufacturer Bitzer for the distribution of their products in Australia and New Zealand. Both partnerships strengthen Beijer Ref's global growth and presence.

In general, our market is relatively insensitive to cyclical changes. It will continue to be driven by a number of megatrends, not least the phasing-out programme for environmentally hazardous HFC gases. The transition to greener alternatives is continuing, and we are working actively to provide the market with such offers. The digitalisation of our business is currently developing slightly faster than our previous estimates, partly due to the fact that we have launched e-commerce in new markets. The closures due to Covid-19 are also judged to have had an effect. During the quarter, our e-commerce has set new sales records.

Price levels for refrigerants have so far this year been under some pressure but have still been relatively stable. However, the level is significantly lower than the corresponding period last year. Next year, the permitted volume of CO₂ equivalents in Europe will fall further, which may mean some stock build-up at our customers in the autumn.

Historically, business opportunities have arisen in times of crisis. In Beijer Ref's case, this may mean openings for new acquisitions in the coming quarters. We are following developments closely in order to be able to act quickly if opportunities arise.

Beijer Ref has previously become stronger in difficult times. Now too, I see opportunities for Beijer Ref to consolidate its position in the market as a leading global refrigeration wholesaler. We continue to work methodically according to our established strategy so to ensure positive long-term development for Beijer Ref.

Per Bertland
CEO

Beijer Ref AB
Q2 2020 – Published on 15 July 2020

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Second quarter of 2020

-16.5%
Change in sales

-35.3%
Change in operating profit

3.3%
Return on operating capital

35.5%
Equity ratio

NET SALES

Beijer Ref's net sales decreased by 16.5 per cent to SEK 3,338M (3,996) during the second quarter of 2020. Adjusted for exchange rate changes and acquisitions, organic growth in net sales was negative at -17.8 per cent (4.4).

The main reasons are the effects of Covid-19 and lower prices of refrigerants, since most of the largest markets, which together account for about 70 per cent of sales, were almost completely shut down from mid-March to early May. Beijer Ref estimates that sales have decreased by approximately SEK 700M mainly as a result of Covid-19. The decrease in sales has affected all geographical segments and had the greatest impact in southern

Sales, sek m	Q2	%	H1	%
Net sales 2019	3 996		7 430
Organic change	-699	-17.8	-809	-10.9
Change through acquisitions^{1}	104	2.6	217	2.9
Exchange rate fluctuation	-63	-1.3	-22	-0.3
Change total	-658	-16.5	-614	-8.3
Net sales 2020	3 338		6 816

1) The acquisition relates to ACD Trade, which is included in the consolidated financial statements from February 2020.

Europe and Africa and the least impact in Asia Pacific. A stronger Swedish krona resulted in negative currency effects of

SEK -63M (85), corresponding to -1.3 per cent (2.6), since most sales are in currencies other than Swedish kronor.

The figures above relate to the distribution of net sales during the second quarter of 2020. Figures in brackets refer to the corresponding period last year.

• ) About 9% of the decline is explained by falling prices and lower volumes of refrigerants.

Beijer Ref AB

Q2 2020 – Published on 15 July 2020

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PROFIT

The group's operating profit amounted to SEK 241M (373) during the second quarter, which is a decrease of 35 per cent. Negative exchange rate effects of SEK -2M (11) are included in the operating profit figures. The operating margin amounted to 7.2 per cent (9.3). The reduction in profit is due to the effects of Covid-19, lower prices of refrigerants and a shift in the mix to a higher proportion of air conditioning. Profit before tax was SEK 227M (359) and profit for the period was SEK 168M (265). Profit per share before dilution amounted to SEK 1.31 (2.08).

CASH FLOW

Cash flow from current operations for the first 6 months of the year before changes in working capital amounted to SEK 521M in 2020, compared with SEK 659M in 2019. The change is mainly due to lower earnings during the quarter.

Working capital increased by SEK 3M during the first half of the year compared with SEK -468M during the corresponding period of the previous year. Normally, the group binds capital in the second quarter and frees up capital in the second half of the year due to seasonal variations. The change in working capital between the years is due primarily to a smaller buildup of stocks and longer credit periods at suppliers.

Altogether, this gives cash flow from current operations of SEK 524M (-191).

At the end of the period, credit facilities amounted to SEK 3,925M (3,939), of which unutilised credits amounted to SEK 913M (1,427). The unutilised part has decreased due to borrowing in connection with the acquisition of ACD Trade and decided unpaid dividend. Net debt has increased from SEK 3,824M to SEK 3,087M.

Of the total credit facilities, 70% are due in November 2020 and the remainder in 2022 and 2023. Beijer Ref performed a procurement during the quarter and will extend outstanding credits after the end of the quarter with a differentiated maturity structure.

INVESTMENTS

Cash flow from investment activities amounted to SEK -267M (-67), which relates primarily to business combinations and investments in fixed assets. During the first quarter, the company acquired ACD Trade.

COMPANY ACQUISITIONS

During the second quarter of 2020 no acquisitions were made, but Beijer Ref continuously evaluates different acquisition candidates in order to increase its range and consolidate the market. Acquisition activity has naturally been hampered by the ongoing pandemic and travel restrictions, but the group plans to resume this as soon as possible.

SIGNIFICANT EVENTS DURING AND AFTER THE QUARTER

The second quarter of the year has in many ways been marked by Covid-19 and its effects on society and the stock market. At the beginning of 2020, macroeconomic conditions were relatively good, although a slight slowdown could be observed. However, the spread of the Covid-19 virus changed the situation drastically and the market reacted with sharp stock market falls and lower interest rates. So far, the consequences have been significant and it is too early at present to assess the overall effects the outbreak will have on Beijer Ref. From the middle of March to the beginning of May, markets representing 70% of the group's operations have been closed. It is estimated that the group's net sales have decreased by approximately SEK 700 M as a result of Covid-19. Measures have been taken to address the effects, including in the following areas:

• Adjusted purchasing and inventory build-up, as well as extended credit periods
• Postponed investment plans at our central warehouse in Lyon, France
• Negotiations with landlords
• Temporarily reduced working hours for employees
• Redundancies and reductions in pay

The group estimates that savings amounting to approximately SEK 150M have taken effect during the period and the total net savings for 2020 are estimated to be approximately SEK 200M. Received subsidy amount to SEK 44.8M and received rental discounts amount to SEK 2.5M. These has been reported as reduction of cost. The group's assessment is that Covid-19 will have a smaller effect on earnings for the remainder of 2020, but the situation is difficult to assess.

ANNUAL GENERAL MEETING

The Annual General Meeting was held in special circumstances in Malmö on 25 June 2020. In view of the present uncertainty caused by the Covid-19 pandemic, the board decided to halve the dividend proposed to the Annual General Meeting. The dividend amounting to SEK 221M (190) was taken into account in figures as at 30 June 2020. The settlement date for the dividend was as previously announced 2 July 2020.

Beijer Ref AB

Q2 2020 - Published on 15 July 2020

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Beijer Ref AB
Q2 2020 – Published on 15 July 2020

THE SHARE

Since 2 January 2019, Beijer Ref's B share has been listed on Nasdaq OMX Stockholm's Large Cap list. The share capital in Beijer Ref totals SEK 371,685,513, made up of 127,434,690 shares, each with a quota value of SEK 2.92. There are two types of share, A shares and B shares, which represent ten and one votes respectively. Beijer Ref had 10,246 shareholders on 30 June 2020 (7,893). The proportion of foreign shareholders amounts to 4.3% (4.5), with a capital shareholding of 59.5% (56.9). As of 30 June 2020, there were 9,918,720 class A shares and 117,515,970 class B shares. The company's ten largest shareholders hold 80% (79.1) of the votes and 66.9% (65.3) of the capital. Average sales of the Beijer share in the quarter amounted to 220,647 shares (208,173) per day at an average purchase price of SEK 234 (198). The closing price on 30 June 2020 was SEK 281 (229). As of 30 June 2020, the market value was SEK 35.6 billion (29.0).

RISK DESCRIPTION

Beijer Ref group's operations are affected by a number of external factors whose effects on the group's operating profit can be monitored to varying degrees. The group's operations depend on general economic developments in Europe in particular, which govern demand for Beijer Ref's products and services.

Like other global companies, Beijer Ref is affected by pandemics and in 2020 the Group will be affected by Covid-19. Most of the largest markets, which together make up about 70% of sales, has been almost completely shut down during part of March. The company is taking the necessary steps to reduce its impact and is following the WHO recommendations.

Acquisitions are normally associated with risks, such as loss of key personnel. Other operating risks, such as agency and supplier agreements, product liability and delivery commitments, technical development, guarantees, dependence on individuals etc., are continuously analysed. If necessary, measures are taken to reduce the group's risk exposure. In its operations, Beijer Ref is exposed to financial risks such as foreign exchange risk, interest rate risk and liquidity risk. The parent company's risk pattern is the same as that of the group. For further information, see the group's annual report.

ACCOUNTING POLICIES

This interim report was prepared in accordance with IAS 34, the Swedish Annual Accounts Act and RFR 2. Beijer Ref continues to apply the same accounting policies and valuation methods as described in the most recent annual report. Information pursuant to IAS 34.16A, in addition to disclosure in the financial reports and their associated notes, also appears in other parts of the interim report.

Financial assets and liabilities by category and level of valuation The group's financial assets and liabilities consist of financial assets measured at fair value through other comprehensive income and financial assets and liabilities valued at accrued acquisition value.

Financial assets valued at fair value through other comprehensive income consist of two holdings, one of which (SEK 11M) refers to listed shares and is valued at market value on the balance sheet date (valuation level 1). The second holding (SEK 25M) is an unlisted holding and is valued at estimated fair value (valuation level 3). Financial assets valued at accrued acquisition value, such as trade receivables and other receivables, as well as cash and cash equivalents, amount to SEK 4,183M on the balance sheet date and financial liabilities valued at accrued acquisition value such as accounts payable, leasing liabilities and borrowings, as well as other long-term liabilities, amount to SEK 7,205M.

Financial interest-bearing liabilities such as loans linked to financing are entered at accrued acquisition value and are considered to constitute a good estimate of fair value taking into account the fixed terms and the setting of interest rates.

TELEPHONE CONFERENCE Q2 2020

The company invites investors, analysts and the media to attend a telephone conference at which CEO Per Bertland and CFO Maria Rydén will present the interim report for the second quarter of 2020. The presentation is held in English and lasts about 20 minutes. The meeting is on 15 July at 10.00 CET.

Follow the link: https://financialhearings.com/event/12675.

Teleconference: Dial-in number
SE: +46 8 566 426 93
UK: +44 33 330 090 32
US: +1 833 526 83 81

The presentation will also be available on the company's website www.beijerref.com from 08.40 on 15 July.

For more information on this report:
Per Bertland, CEO – switchboard, +46 (0)40-35 89 00
Maria Rydén, CFO – switchboard, +46 (0)40-35 89 00

This interim report has not been the subject of examination by the Company's Auditors.

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The Board of Directors and the President assure that the six-month report provides a fair overview of the operations, position and results of the Group and Parent Company, and describes material risks and uncertainties faced by the Parent Company and the companies that are included in the Group.

Malmö, Sweden, 15 July 2020

Bernt Ingman
Chairman

Peter Jessen Jürgensen
Board Member

Frida Norrbom Sams
Board Member

William Striebe
Board Member

Greg Alcorn
Board Member

Monica Gimre
Board Member

Joen Magnusson
Board Member

Per Bertland
President

This information is information that Beijer Ref AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 08.30 CET on 15 July 2020.

Beijer Ref AB
Q2 2020 – Published on 15 July 2020

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Summarised profit and loss account, sek m	Q2-20	Q2-19	H1-20	H1-19	R12	FY 19
Net sales	3 338	3 996	6 816	7 430	14 204	14 817
Other operating income	2	4	10	9	30	28
Operating expenses	-2 988	-3 522	-6 166	-6 614	-12 743	-13 191
Depreciation	-111	-106	-223	-208	-439	-424
Operating profit	241	373	438	617	1 052	1 230
Net financial income/expense	-14	-13	-29	-29	-56	-56
Profit before tax	227	359	409	588	995	1 174
Tax	-59	-94	-107	-153	-255	-301
Net profit	168	265	303	435	741	873
Net profit attributable to:
The parent company's shareholders	166	263	299	430	733	864
Non-controlling interests	2	2	3	4	8	9
Net profit per share before dilution, sek	1.31	2.08	2.37	3.40	5.79	6.82
Net profit per share after full dilution, sek	1.30	2.06	2.35	3.38	5.75	6.78
The Group's report on other comprehensive income, sek m	Q2-20	Q2-19	H1-20	H1-19	R12	FY 19
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Net profit	168	265	303	435	741	873
OTHER COMPREHENSIVE INCOME
Items which will not be reversed in the profit and loss account:
Revaluation of the net pension commitment	5	-	5	-	-19	-24
Change in fair value in respect of equity instruments valued at fair value via other comprehensive income	6	-	-7	1	-13	-5
Income tax relating to components of other comprehensive income	-2	-	1	-	5	4
Items which can later be reversed in the profit and loss account:
Exchange rate differences	-262	55	-168	164	-187	145
Hedging of net investment	49	-8	-49	9	-39	18
Income tax relating to components of other comprehensive income	-10	2	10	-2	8	-4
Other comprehensive income for the year	-215	48	-207	172	-244	135
Total comprehensive income for the period	-47	313	96	607	497	1 008
Attributable to:
The parent company's shareholders	-46	309	95	597	489	990
Non-controlling interests	-1	4	-	10	8	18

Beijer Ref AB

Q2 2020 - Published on 15 July 2020

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Summarised balance sheet, sek m	30 June 2020	30 June 2019	31 Dec 2019
ASSETS
Fixed assets:
Intangible fixed assets	2 188	2 145	2 134
Tangible fixed assets	524	479	486
Other fixed assets	348	328	329
Right of use assets	977	998	998
Total fixed assets	4 037	3 951	3 947
Current assets:
Inventories	3 785	3 866	3 755
Trade debtors	2 632	3 161	2 247
Other receivables	415	371	334
Liquid funds	1 092	565	795
Total current assets	7 924	7 964	7 132
Total assets	11 960	11 914	11 079
EQUITY AND LIABILITIES
Shareholders' equity	4 243	3 974	4 369
Total equity	4 243	3 974	4 369
Long term liabilities	2 190	3 741	2 210
Total long term liabilities	2 190	3 741	2 210
Current liabilities:
Trade creditors	1 969	2 086	1 538
Other liabilities	3 559	2 114	2 961
Total current liabilities	5 527	4 200	4 499
Total equity and liabilities	11 960	11 914	11 079
Of which interest-bearing liabilities	4 179	4 389	4 002
Net debt	3 087	3 824	3 207
Authorised credit limit	3 925	3 939	3 918
Of which remains to be utilised	913	1 427	1 631

Beijer Ref AB

Q2 2020 - Published on 15 July 2020

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Key figures	30 June 2020	30 June 2019	31 Dec 2019
Equity ratio, %	35.5	33.4	39.4
Equity per share before dilution, sek	34	31	35
Equity per share after full dilution, sek	34	32	35
Return on equity after tax, %	7.0	11.2	21.4
Return on capital employed, %	5.3	7.9	15.9
Return on capital employed in operations, %	5.9	8.8	17.8
Debt ratio	0.7	1.0	0.7
Interest coverage ratio	13.5	20.0	18.4
Interest coverage ratio	126 536 710	126 536 710	126 536 710
Holding of own shares 1	897 980	897 980	897 980
Total number of shares	127 434 690	127 434 690	127 434 690
Average number of outstanding shares	126 536 710	126 536 710	126 536 710

1) Holdings of own shares ensure the delivery of shares to participants in the options programme. The options programme falls due in June 2021.

Summarised consolidated cash flow analysis, sek m	H1 2020	H1 2019	FY 2019
Operating profit	438	617	1 230
Non-cash generated items	221	206	438
Paid interest	-33	-31	-67
Paid income tax	-105	-133	-313
Profit on sale of tangible fixed assets	—	—	-8
Cash flow from current operations before changes in working capital	521	659	1 280
Changes in working capital	3	-468	-25
Cash flow from investment operations	-267	-67	-137
Cash flow from financial operations	213	-153	-570
Amortisation of leasing liabilities	-157	-145	-296
Dividend paid	—	-190	-380
Change in cash and bank	314	-364	-127
Exchange rate difference in liquid funds	-18	19	12
Cash and bank on 1 January	795	909	909
Cash and bank at the period end	1 092	565	795
Shareholders' equity, sek m	30 June 2020	30 June 2019	31 Dec 2019
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Opening balance	4 369	3 785	3 785
Adjustment on adoption of IFRS 16	—	-32	-32
Total comprehensive income for the period	96	607	1 008
Dividend	-221	-380	-380
Transactions with holders with no controlling influence	—	—	1
Dividend to shareholders with no controlling influence	-1	-6	-12
Closing balance	4 243	3 974	4 369

Beijer Ref AB

Q2 2020 - Published on 15 July 2020

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12
Beijer Ref AB
Q2 2020 – Published on 15 July 2020

| Q2
sek m | Nordic | | Central Europe | | Southern Europe | | Eastern Europe | | Africa | | Asia Pacific | | Group | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 |
| Net sales by operation | 445 | 501 | 869 | 967 | 1 237 | 1 635 | 114 | 147 | 130 | 283 | 601 | 548 | 3 396 | 4 082 |
| - of which Commercial and industrial refrigeration | 258 | 280 | 456 | 585 | 407 | 575 | 79 | 111 | 104 | 184 | 224 | 260 | 1 528 | 1 995 |
| - of which HVAC | 144 | 168 | 391 | 340 | 702 | 903 | 28 | 34 | 17 | 57 | 249 | 145 | 1 532 | 1 647 |
| - of which OEM | 43 | 53 | 21 | 42 | 128 | 157 | 6 | 2 | 9 | 43 | 129 | 143 | 335 | 440 |
| Internal sales between operations | | | | | | | | | | | | | -58 | -86 |
| Net sales | | | | | | | | | | | | | 3 338 | 3 996 |
| Operating profit by operation | 65 | 93 | 74 | 92 | 103 | 158 | 11 | 18 | -8 | 15 | 22 | 18 | 268 | 393 |
| Group-wide expenses | | | | | | | | | | | | | -26 | -20 |
| Operating profit | | | | | | | | | | | | | 241 | 373 |
| Net financial | | | | | | | | | | | | | -14 | -13 |
| Tax | | | | | | | | | | | | | -59 | -94 |
| Net profit | | | | | | | | | | | | | 168 | 265 |
| Working capital, average for the period | 537 | 582 | 954 | 974 | 1 461 | 1 732 | 177 | 194 | 421 | 514 | 860 | 833 | 4 410 | 4 830 |
| Group eliminations | | | | | | | | | | | | | -4 | -9 |
| Total average working capital | | | | | | | | | | | | | 4 405 | 4 820 |
| H1
sek m | Nordic | | Central Europe | | Southern Europe | | Eastern Europe | | Africa | | Asia Pacific | | Group | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 |
| Net sales by operation | 863 | 934 | 1 683 | 1 740 | 2 422 | 2 871 | 226 | 246 | 465 | 630 | 1 287 | 1 154 | 6 946 | 7 575 |
| - of which Commercial and industrial refrigeration | 519 | 531 | 952 | 1 100 | 854 | 1 070 | 159 | 187 | 322 | 410 | 504 | 555 | 3 309 | 3 853 |
| - of which HVAC | 248 | 310¹ | 667 | 570 | 1 319 | 1 519 | 57 | 54 | 95 | 141 | 526 | 317 | 2 913 | 2 911 |
| - of which OEM | 96 | 93 | 63 | 70 | 250 | 282 | 10 | 5 | 48 | 79 | 258 | 282 | 724 | 811 |
| Internal sales between operations | | | | | | | | | | | | | -130 | -145 |
| Net sales | | | | | | | | | | | | | 6 816 | 7 430 |
| Operating profit by operation | 102 | 143 | 111 | 135 | 162 | 249 | 18 | 23 | 20 | 43 | 73 | 63 | 487 | 657 |
| Group-wide expenses | | | | | | | | | | | | | -49 | -40 |
| Operating profit | | | | | | | | | | | | | 438 | 617 |
| Net financial | | | | | | | | | | | | | -29 | -29 |
| Tax | | | | | | | | | | | | | -107 | -153 |
| Net profit | | | | | | | | | | | | | 303 | 435 |
| Working capital, average for the period | 543 | 550 | 980 | 983 | 1 452 | 1 582 | 183 | 187 | 460 | 514 | 890 | 832 | 4 508 | 4 648 |
| Group eliminations | | | | | | | | | | | | | -3 | -9 |
| Total average working capital | | | | | | | | | | | | | 4 506 | 4 638 |

1) Last year is effected by one-time sales amounting to SEK 50M outside geographical territories.

Reporting for segments

Operating segments

The Group's operation is split into operating segments based on how the company's highest executive decision maker, i.e. the CEO, monitors the operation. The Group has the following segments; the Nordic countries, Central Europe, Southern Europe, Eastern Europe, Africa and Asia Pacific.

The segments reporting for the regions contains the profit and loss account up to and including operating profit. Internal sales within each segment are eliminated in net sales by operation, internal sales between segments are eliminated on total level. Net sales are distributed by product area, i.e. Commercial and Industrial Refrigeration, HVAC and OEM. The working capital includes inventories, trade debtors and trade creditors and is an average based on monthly values for the period.

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Company acquisitions

For each acquisition, the company performs a materiality assessment based on net sales, product area and market. It is our assessment that an acquisition is significant in cases where the net sales of the acquired company exceed 5% of total net sales.

2020

First quarter

During the quarter, Beijer Ref acquired ACD Trade, a leading company in HVAC distribution in Australia with some 60 employees. With the acquisition of ACD Trade, the group's presence in Australia has been further strengthened. Sales are made through nine branches and annual sales amount to approximately SEK 540M. The total purchase price amounts to SEK 211M and is included in the consolidated financial statements with effect from 1 February 2020. ACD Trade contributed SEK 217.0M to the group's net sales for the first half 2020 and made a positive contribution to operating profit of SEK 12.0M. The figures presented below are preliminary and may be adjusted once the acquisition balances have been established.

Second quarter

No acquisitions made during the quarter.

2019

First quarter

No acquisitions made during the quarter.

Second quarter

No acquisitions made during the quarter.

Acquisitions of companies	ACD Trade Reported value	Fair value adjustment	Fair value in the Group
Goodwill	51	51	102
Customer lists	0	18	18
Tangible fixed assets	15	0	15
Deferred tax assets	5	1	6
Inventories	88	-4	84
Other current assets	72	0	72
Liquid funds	31	0	31
Deferred tax liability	-6	-5	-11
Other current liabilities	-217	112	-105
Total identifiable net assets	38	173	211
Effect on the cash flow
Consideration	-211		-211
Liquid funds	31		31
	-180		-180

Beijer Ref AB
Q2 2020 – Published on 15 July 2020

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Parent company profit and loss account in summary, sek m	H1 2020	H1 2019	FY 2019
Operating income	1	1	57
Operating expenses	-37	-36	-74
Depreciation	-2	-2	-3
Operating profit	-38	-37	-20
Net financial income/expense	-34	23	53
Result of participations in Group companies	—	401	448
Profit before appropriations	-72	388	481
Appropriations	—	2	68
Profit before tax	-72	390	549
Tax	—	—	-20
Net profit	-72	390	529
Parent company balance sheet in summary, sek m	30 June 2020	30 June 2019	31 Dec 2019
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ASSETS
Intangible fixed assets	6	8	7
Tangible fixed assets	4	4	4
Financial fixed assets	3 894	3 796	3 800
Current assets	1 078	1 446	1 050
Total assets	4 982	5 254	4 860
EQUITY AND LIABILITIES
Shareholders' equity	1 670	1 824	1 963
Long-term liabilities	1 176	2 740	1 174
Current liabilities	2 136	690	1 723
Total equity and liabilities	4 982	5 254	4 860

Beijer Ref AB

Q2 2020 - Published on 15 July 2020

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Beijer Ref AB
Q2 2020 – Published on 15 July 2020

Financial definitions

Δ%	Change in percentage.
Capital employed	Balance sheet total with a deduction for non-interest-bearing liabilities and deferred tax liability.
Debt/equity ratio	Net debt in relation to equity. The objective is to show borrowing in relation to book value of equity.
EBITDA	Earnings before interest, taxes, depreciation and amortisation of tangible and intangible fixed assets. The objective of reporting EBITDA is that the Group regards it as a relevant measure for an investor who wants to understand the generation of earnings before investments in fixed assets.
Equity ratio	Equity at the end of the period in relation to balance sheet total.
Interest-bearing liabilities	Interest-bearing liabilities include interest-bearing provisions.
Interest coverage ratio	Earnings before tax plus financial expenses in relation to financial expenses. The objective of this measure is to show the proportion of earnings allocated to paying interest expenses and other financial expenses.
Net debt	Interest-bearing liabilities less liquid funds including current investments. We are of the opinion that the net debt is useful for the users of the financial report as a complement for assessing the possibility for a dividend, for carrying out strategic investments and for assessing the Group's possibilities for living up to financial commitments.
Operating capital	Capital employed minus liquid funds, financial assets and other interest-bearing assets.
Operating margin	Operating profit in relation to net sales.
Organic change	Comparative figures year over year adjusted for translation effects on consolidation and changes in the structure.
Profit per share before/after dilution	Net profit in relation to average number of shares before/after dilution.
R12	Rolling twelve is the latest 12 months.
Return on capital employed	Profit before tax plus financial expenses (for each period) in relation to average capital employed.
Return on equity	Earnings after tax (for each period) as a percentage of average equity. The objective of return on equity and other return measures is to put the earnings in relation to important balance sheet items.
Return on operating capital	Operating profit (for each period) as a percentage of average capital employed in operations.

Trade terms

ARW	Air Condition & Refrigeration Wholesale.
Chiller	Liquid refrigeration unit.
CO₂ equivalent	A measurement of greenhouse gas emissions and how much carbon dioxide is needed to produce the same effect on the climate.
F-gas	Synthetic gases containing fluorine, such as HCFCs and HFCs.
GWP	Global Warming Potential
HCFC	HydroChloroFluoroCarbons, which affects the ozone layer and contribute to global warming.
HFC	HydroFluoroCarbons, Fluorised greenhouse gases which contribute to global warming.
HFO	HydroFluoroOlefins, synthetic environmentally friendly refrigerants.
HVAC	Heating, Ventilation, Air Conditioning.
OEM	Original Equipment Manufacturer.
Transcritical	Heat transfer with gas cooler.

Geographic areas

Africa	Botswana, Ghana, Mozambique, Namibia, South Africa, Tanzania, Zambia
Asia Pacific	Australia, China, India, Malaysia, New Zealand, Singapore, Thailand
Central Europe	Belgium, Ireland, The Netherlands, Switzerland, Germany, UK
Eastern Europe	Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia
Nordic	Denmark, Finland, Norway, Sweden
Southern Europe	France, Italy, Portugal, Spain

Other

CSR	Corporate Social Responsibility.
The Kigali Agreement	Amendment to the Montreal Protocol. An agreement between countries that have committed themselves to reducing the production and consumption of HFCs by more than 80% over the next 30 years (2050).
KPI	Key Performance Indicator.
PIM	Product Information Management, centralised management of product information that is needed to market and sell the products through one or more distribution channels.

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Beijer Ref in short

The Beijer Ref Group is focused on trading and distribution operations within refrigeration products, air conditioning and heat pumps. The product programme consists mainly of agency products from leading international manufacturers and, in addition, some manufacture of own products, combined with service and support for the products. The Group creates added value by contributing: technical competence to the products; accounting for knowledge and experience about the market; and by providing efficient logistics and warehousing.

Operations are carried out by region within the Beijer Ref, which comprises Beijer Ref ARW (Air conditioning, refrigeration, wholesale) and Toshiba's distribution operation within air conditioning and heating. The Beijer Ref Group is a leading operator within the refrigeration sector in Europe and has a significant position within air conditioning in Europe. The operation is split into six geographic segments: Nordic countries, Southern Europe, Central Europe, Eastern Europe, Africa and Asia Pacific. Growth is achieved both organically and through the acquisition of companies which supplement existing operations.

Seasonal effects

Beijer Ref's sales are seasonally dependent as demand for refrigeration and air conditioning is at its peak during the warm months of the year. It means that demand in the northern hemisphere is at its peak during the second and third quarters whilst demand in the southern hemisphere is at its peak during the first and fourth quarters.

Financial calendar

• The Interim Report for the third quarter 2020 will be published on 20 October 2020.
• The Interim Report for the fourth quarter 2020 will be published on 28 January 2021.
• Annual Report 2020 will be published in March 2021.
• AGM will be held in Malmö in April 2021.

BEIJER REF

Stortorget 8, SE-211 34 Malmö, Sweden

Telephone +46 40-35 89 00

Corporate ID number 556040-8113

www.beijerref.com

This document is a translation of the Swedish language version.

In the event of any discrepancies between this translation and the original Swedish document, the latter shall be deemed correct.

Beijer Ref AB

Q2 2020 – Published on 15 July 2020