Bewi Invest AS

Investor Presentation • Nov 11, 2020

Presentation of Q3 2020 results

CEO Christian Bekken, CFO Marie Danielsson

11 November 2020

Confidential

Cautionary note regarding forward-looking statements

This presentation, prepared by BEWi ASA (the "Company"), may contain statements about future events and expectations that are forwardlooking statements. Any statement in this presentation that is not a statement of historical fact including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements.

The Company assumes no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. This presentation contains alternative performance measures, or non-IFRS financial measures. Definitions and calculations are presented in our quarterly report.

Company overview and strategy

Provider of packaging, components & insulation solutions

Operating through three core segments

Production of white and grey EPS and BioFoam, which is further developed into end market products

Manufacturing standard and customised packaging solutions for many industrial sectors

Manufacturing of an extensive range of insulation products for the construction and infrastructure sectors

EUR 125.3 million Adj. EBITDA YTD 2020 EUR 25.4 million

Net sales YTD 2020

EUR 108.0 million

Adj. EBITDA YTD 2020 EUR 19.0 million

Net sales YTD 2020

A wide selection of products

Protecting people and goods for a better everyday

A wide selection of products

40 years of M&A and successful integration

BEWi's M&A strategy takes various forms…

Note: (1) Financials for 2019 and YTD 2020 based on unaudited pro forma consolidation of BEWi Drift Holding AS's group companies adjusted for effects of implementing IFRS 16. (2) Integration ensures demand for current RAW volume

Annual recycling target of 60,000 tons to secure full circularity

Third quarter 2020 highlights

Third quarter of 2020

• Sales growth of 13.7% from Q319, mainly driven by acquisitions
• Solid earnings improvement, all segments contributing positively
• Acquisition BDH completed, integration on track
• Divested real estate in Denmark for ~SEK 100 million
• Shares admitted to Merkur Market in Oslo

Subsequent events

• LOI to divest properties in the Netherlands for ~NOK 300 million
• Commenced recycling facility in Portugal
• Strategically important appointment of Director of Sustainabiltiy
• Board approval to apply for listing at Oslo Børs or Axess

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Diversified business model proven resilient

• Level of impact from Covid-19 pandemic varies across regions, segments, industries and customers
• Low raw material prices affect revenues of RAW negatively, while positively impacting earnings in Insulation and P&C
• Following acquisition of BDH, Norway currently largest market

RAW: Stable volumes and improved earnings

Third quarter 2020

• Net sales of EUR 44.6 million, down by 15.3% due to lower raw material prices
  • o Volumes in line with Q319, more sold externally, incl. increased sales to associated companies
• Adj. EBITDA of EUR 3.9 million, a margin of 8.8%
  • o Raw material prices still relatively low, although ~20% increase since Q220, impacting GAP and gross margin positively
  • o Volatility in raw material prices impacts EBITDA directly, explained by lag between changes in raw material price and sales price adjustments
• Extruder production line stabilising, incl. 100% recycled raw materials
  • o Contributing positively to EBITDA development

First nine months of 2020

• Net sales of EUR 140.8 million, down by 11.8%
  • o Volumes up ~10% explained by improved production efficiency and positive sales development to associated companies and external customers
• Adj. EBITDA increase to EUR 7.3 million, a margin of 5.2%
  • o Positive volume development and improved GAP

Net sales and Adj. EBITDA margin

0,00% 5,00% 10,00% 15,00% 20,00% 25,00%

0,00% 5,00% 10,00% 15,00% 20,00% 25,00%

P&C: Stable earnings, various market developments

Third quarter 2020

• Net sales of EUR 50.2 million, 27.1% growth driven by acquisitions and a 5% increase in volumes
  • o Higher volumes in all regions except Norway, where volumes were flat (excl. acquisitions)
  • o Some sales were recovered volumes from Q2
• Adj. EBITDA of EUR 9.3 million, a margin of 18.5%
  • o 14% earnings improvement (excl. acquisitions) from volume increase, positive development in Sweden and good cost control
  • o Integration of BDH progressing and synergies realised
• Entered into long-term agreement for delivery of fish boxes to SalMar's new plant at Senja in northern Norway, and commenced construction of own new facility nearby

First nine months of 2020

• Net sales of EUR 125.3 million, 4.1% growth
  • o Slightly higher volumes than 2019: good volumes in Q3 offset negative volume development in first half of the year
• Adj. EBITDA increase to EUR 25.4 million, a margin of 20.3%
  • o ~12% improvement (excl. acquisitions) from volume increase, product mix, positive contribution from Sweden and cost control

Q319 Q320

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Net sales and Adj. EBITDA margin

Net sales

0,00% 5,00% 10,00% 15,00% 20,00% 25,00%

0,00% 5,00% 10,00% 15,00% 20,00% 25,00%

Insulation: Volumes stable in Nordics, lower in Benelux

Third quarter 2020

• Net sales of EUR 36.9 million, 7.3% growth explained by acquisitions
  • o Volumes stable in the Nordics, lower in Benelux
  • o Noted a positive development in Benelux towards the end of the quarter
• Adj. EBITDA of EUR 5.9 million, a margin of 16.0%
  • o Less favourable product mix fully compensated by lower raw material prices and good cost control
  • o Integration of XPS production site in Norrköping, Sweden on track

First nine months of 2020

• Net sales of EUR 108.0 million, 0.5% growth
  • o Nordic volumes stable during the year, slowdown in Benelux
• Adj. EBITDA of EUR 19.0 million, a margin of 17.6%
  • o Favourable raw material prices, good cost control, positive development in Sweden

BDH's product portfolio strengthens position in Norway

• Leading turnkey supplier of packaging in Norway
• Frontrunner in the transformation to a circular economy
• Operations will mainly be part of Packaging & Components segment
• 3 production facilities in Levanger, Stjørdal and Fredrikstad, Norway
  • Sales offices in Båtsfjord, Tromsø, Trondheim, Ålesund, Spydeberg, Hokksund and Iceland

▪ Net sales of NOK 848 million and EBITDA of NOK 81 million in 2019¹ ▪ ~100 FTEs

BDH in brief Overview of BDH operations

Rationale:

Strengthening position as a major provider of packaging and insulation solutions

BDH compromise four main brands

Company
Established	1947	1947	1919	1998
Locations	Production and sales office in Stjørdal	Production and sales office in Fredrikstad	Sales offices in Trondheim (HQ), Tromsø, Askim and Levanger. Production in Levanger	Sales offices in Hokksund (HQ), Ålesund, Båtsfjord, Tromsø. Måløy and Hafnafjordur
Employees	~20 employees	~30 employees	~40 employees	~20 employees
Main products	Thermoplastic Thermoset plastic	Thermoplastic Thermoset plastic	Vapor barriers Laminate film Plastic packaging materials	Plastic packaging materials Fibre packaging Nordic bags and cool seals
End-market presence	Food packaging Industrials Construction Other	Industrials Construction	Food packaging Construction Other	Food packaging Other
Selected key accounts

BDH: Targeting annual synergies of EUR 2.3-4.5m

	Identified synergy drivers and action plan	Target annual synergies (SEK)	One-off costs
Procurement and IT	Capitalize on existing expertise and structure/processes within BEWi… …and harmonizing of applications landscape, infrastructure and hardware	1-2% of BDH COGS cost base 10-15% of BDH IT cost base 0.6-1.2m	EUR 0.05m
Operations and organisation	Cost reductions, and potentially further reductions in administrative functions	Cost reduction Optimization and efficiency 1.2-2.6m1	EUR 0.7-1.0m
Sales	Nordic expansion for BDH solutions, improved sales channels and internal sales	0.5-0.7m	EUR 0.1.0-0.2m
Total		2.3-4.5m	EUR 0.8-1.3m
			EBITDA impact

Divestment of real estate releasing capital for growth

• Divestments support long-term strategy for growth and expansion of circular activities
  • Release cash/ capital
  • Increase financial flexibility
• Divestment of certain real estate properties in Denmark for ~SEK 100 million
• Announced intention to divest properties in the Netherlands of ~NOK 300 million in October
  • Letter of Intent with real estate company KMC Properties

Financials

Financials - Overview of BEWi

Amounts in EUR million	Q3 2020	Q3 2020	YTD 2020	YTD 2019	2019
Net Sales	122.1	107.4	332.3	325.9	429.9
Other operating income	-	0.2	0.0	0.7	0.9
Total operating income	122.1	107.5	332.3	326.7	430.8
Raw materials and consumables	-44.7	-50.9	-134.9	-147.5	-198.1
Goods for resale	-14.0	-3,0	-18.7	-11.5	-13.8
Other external costs	-24.8	-22,0	-72.2	-68.2	-90.7
Personnel cost	-22.2	-19.6	-62.3	-60.9	-80.9
Depreciation/ amortisation/ impairment	-7.5	-6.7	-21.5	-20.2	-27.6
Share of income from associated comp.	0.1	0.3	4.5	0.7	0.6
Capital gain from sale of assets	1.6	-	1.7	-	-
Operating income (EBIT)	10.6	5.6	29.0	19.2	20.3
Net financial items	-2.7	-2.5	-7.8	-7.9	-11,0
Income tax expense	-2,2	-0.5	-4.6	-2.9	-3.7
Profit for the period	5.7	2.7	16.5	8.4	5.6

Third quarter 2020

• Net sales EUR 122.1 million, 13.7% growth
  • o Growth driven by acquisitions
  • o Some Q3 volumes regarded as recovery from slow Q2

▪ Operating costs

• o Lower raw material prices than Q319 impact sales
• o Increase of goods for resale related to the acquisition of BDH, partly trading operation
• o Other external cost, personnel cost and Depreciation has increased due to acquisitions

o FTE end of Sept 2020 approx. 1,440 (1,250)

• Capital gain from sales of assets related to divestment of real estate
• Operating income (EBIT) EUR 10.6 million
  • o Items affecting comparability of EUR 0.1 million compared to EUR -0.5 million in 2019
• Net financial items amounted EUR -2.7 million
• Tax rate 27.2 %

Financials – Capital structure

EUR million

Working capital

• Net debt EUR 184.6 million at 30 September 2020
  • o EUR 130.0 million excluding IFRS 16
• Acquisitions** during 2020 impact net debt negatively
• Unutilised credit facility of SEK 200 million
• Decreasing leverage due improved earnings
• Increase in working capital due to acquisitions and higher volumes in Q3

EUR million	30.09.20	30.09.19	31.12.19
Cash and Cash equivalents	29.4	21.6	56.3
Non-current liabilities	140.9	77.1	140.2
Current liabilities	18.4	53.2	17.5
Debt related to IFRS 16	54.6	33.7	32.9
Net debt in total	184.6	142.5	134.4

**EBITDA ratio: adjusted EBITDA rolling 12-months pro-forma acquired entities. Change in accounting principle from 1 January 2019 (IFRS 16), increasing leverage 0.3-0.4.

** France, Ravago (Norrköping), Poredo, Hirsch France, Jablite

Financials – Cash flow

▪ Operating cash flow of EUR 10.8 million

• o Lower than Q319 due do less cash release from WC
• CAPEX of EUR 4.9 million in Q320
  • o EUR 1.4 million related to Greenfields (Senja and Circular Portugal)
  • o EUR 1.5 million related to expansion

Key financial targets

Revenue growth	>10%	Q320 13.7%	• Mix of organic, incl. Greenfields and M&A growth • 45% CAGR between 2012 and 2019, largely driven by acquisitions • Significant changes in raw material prices may impact the ability to achieve the target
EBITDA Margin (normalised)	10-15%	Q320 14.7%	• Underlying EBITDA target of 10-15% • Significant changes in raw material prices may impact the ability to achieve the target
NIBD / EBITDA (LTM excl. IFRS 16)	<2.5x	Q320 2.4	• Leverage NIBD / EBITDA below 2.5x, assuming normalised working capital levels • Targeting flexibility to pursue M&A opportunities and maintenance of the dividend capacity
Capex	EUR 13-15m	Q320 4.91	• Normalised capex levels of EUR 12.5-15.0 million, where replacement capex and expansion capex typically account for 2/3 and 1/3, respectively • In addition, the Group will invest in Greenfield projects
Dividend payout policy	30-50%		• Target dividend payout ratio of 30-50% of underlying net profit • Annual distribution

Summary and outlook

Summary and outlook

• Solid operational performance and resilient business model
• Earnings improvement from all segments
• Continued growth through M&A initiatives, Greenfield projects and expansion of existing business
• Remain committed to reaching annual recycling target of 60,000 tonnes, securing full circularity

Continued focus on growth, building a fully circular packaging, components and insulation provider, offering customers complementary and innovative solutions

Key investment highlights

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