Kitron — Investor Presentation 2021

Dec 20, 2021

Acquisition of BB Electronics

Kitron Group | 2021 12 20

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Peter Nilsson President & CEO from 2014

Cathrin Nylander CFO from 2013

Acquisition of BB Electronics

• Kitron ASA has on 20 December 2021 entered into an agreement to acquire BB Electronics A/S ("BB") for DKK 600 million on a debt- and cash free ("Enterprise Value") basis
• o Will add 3 new production facilities and DKK 1,000m of revenues with a 6.6 % EBIT margin
• The acquisition is estimated to be clearly accretive to EPS on 2021 (pro-forma) and 2022, and adds significant shareholder value
• With BB, Kitron establishes a strong market position in Denmark in addition to strengthening its international presence in China, and the Czech Republic

Kitron group revenues (NOKm) and EBIT margin¹

1 Showing mid-range revenues and EBIT from adjusted outlook as announced 10 December 2021. 2021 Pro-forma include BB revenues and EBIT prognosis for the full year, assuming a DKK/NOK of 1.37 and NOK 10m of cost synergies. EBIT-margin of 6.6% excluding synergies

BB is a full service EMS provider with a global reach

• EMS company with HQ in Demark, founded in 1975
• Production facilities in Denmark, the Czech republic and China
• Key market sectors serviced (2021 revenues):

Company overview International presence

Adding 3 new production facilities to Kitron

BB adds strong capabilities within efficient automated production

Customer cases: Revenue development for selected customers with automated production (DKKm)

A strategic robotic manufacturing partner through investments in automation technology and competencies

A diversified and loyal customer base with no known overlap with Kitron

BB customer concentration BB customer tenure¹

BB customer churn² BB overlap with Kitron

No known overlap on customers

All customers is expected to be new for Kitron

Detailed revenue mix 2021 for BB

Strategic rationale for the acquisition

1 2

• Establishes presence and gateway in Denmark, an additional Nordic country
• Strengthens presence in CEE with a site in Czech Republic
• Provides a pathway to establishment in India
• Increases footprint and added capacity and capabilities in China

Regional expansion Opportunities for long-term synergies

• Improves leverage on material cost
• Accelerates Kitron's production automation
• Provides new opportunities with a broader and improved offering to the customers
• Cross-sell and up-sell opportunities
• Provides U.S. operations for existing BB customers

3 4

• Profitable contribution to Kitron's growth strategy from day 1
• Highly skilled BB management will be valuable for Kitron
• BB's CEO to join Kitron's group management
• Solid customer base with long-term relations
• Automated facility highly competitive in a high-cost region

Strategic aspects Other strengths

• Solid double-digit growth and foundation for further development
• Loyal and satisfied customer base and attractive segments

• Strong order backlog and diversified customer concentration

• Adds significant size with strong underlaying growth and margin

• Quality company with strong capabilities, limited integration risk
• Kitron and BB complement each other and see significant mutual benefits

Kitron Group's new global footprint

In line with Kitron's strategic positioning

• Kitron targets the sweet spot between mass-production and customized low volume.
• Products tend to be high in complexity
• We focus on regionalized supply chains and manufacturing
• BB in line with this strategy

Positioning versus EMS competitors

Volume

Transaction details

• Kitron has on 20 December signed an SPA to acquire 100% of the shares in BB Electronics
• The transaction will be completed January 2022
• BB Electronics valued at an Enterprise Value of DKK 600m
• o The purchase price corresponds to an EV/EBIT 2021 of 9.1x and EV/EBIT 2022 of 7.3x
• o Estimated EBIT of DKK 65.8m for 2021 and DKK 82m 2022
• o BB had net debt of DKK 54.2m as of 30 September 2021, and as of the same period Kitron had net debt of NOK 791m.
• In addition, Kitron has identified DKK 10m of yearly synergies
• Kitron has established a term loan facility with DNB Bank ASA, has available revolving credit facilities and received binding offers for debt financing of the acquisition. Kitron expects to enter into agreements for relevant debt financing of the acquisition in due course prior to closing and may also consider equity financing in relation to funding of the acquisition
• There are no financing conditions for the acquisition

Key takeaways

• Clearly accretive transaction, and adds significant shareholder value
• o High quality company with strong growth and margins
• o EV/EBIT 2021 of 9.1x and EV/EBIT 2022 of 7.3x
• o Adding new attractive geographies
• In line with Kitron's long term strategy for growth, sustainable margins and accretive M&A

Q&A

Appendix: Definition of alternative performance measures

Order backlog

All firm orders and 4 months of committed customers forecast at revenue value as at balance sheet date.

Foreign exchange effects

Group consolidation restated with exchange rates as comparable period the previous year. Change in volume or balance calculated with the same exchange rates for the both periods are defined as underlying growth. Change based on the change in exchange rates are defined as foreign exchange effects. The sum of underlying growth and foreign exchange effects represent the total change between the periods.

EBITDA Operating profit (EBIT) + Depreciation and Impairments

EBIT Operating profit

EBIT margin (%) Operating profit (EBIT) / Revenue

Net working capital Inventory + Accounts Receivable – Accounts Payable

Operating capital Other intangible assets + Tangible fixed assets + Net working capital

Return on operating capital (ROOC) % Annualised Operating profit (EBIT) / Operating Capital

Return on operating capital (ROOC) R3 %

(Last 3 months Operating profit (EBIT))*4 /(Last 3 months Operating Capital /3)

Direct Cost

Cost of material + Direct wages (subset of personnel expenses only to include personnel directly involved in production)

Days of Inventory Outstanding 360/ (Annualised Direct Costs/Inventory)

Days of Inventory Outstanding R3 360/ ((Last 3 months Direct Costs *4) /(Last 3 months Inventory/3))

Days of Receivables Outstanding 360/ (Annualised Revenue/Trade Receivables)

Days of Receivables Outstanding R3 360/ ((Last 3 months Revenue*4)/(Last 3 months Trade Receivables/3))

Days of Payables outstanding 360/ ((Annualised Cost of Material + Annualised other operational expenses) /Trade Payables)

Days of Payables Outstanding (R3) 360/ (((Last 3 months (Cost of Material + other operational expenses)*4) /(Last 3 months Trade Payables)/3))

Cash conversion cycle (CCC) Days of inventory outstanding + Days of receivables outstanding – Days of payables outstanding

Cash conversion cycle (CCC) R3 Days of inventory outstanding (R3) + Days of receivables outstanding (R3) – Days of payables outstanding (R3)

Net Interest-bearing debt

• Cash and cash equivalents + Loans (Non- current liabilities) + Loans (Current liabilities)

Interest-bearing debt Loans (Non- current liabilities) + Loans (Current liabilities)

Net gearing Net Interest-bearing debt / Equity

Free Cash flow

Net Cash Flow from operating activities – Cash flows from acquisition of tangible fixed assets – Cash flows from acquisition of other intangible assets

Equity ratio

Total Equity / Total Assets

EPS

Earnings Per Share