Vistin Pharma — Interim / Quarterly Report 2020

Feb 19, 2021

Vistin Pharma - Fourth quarter and preliminary 2020 results

Kjell-Erik Nordby (CEO) Alexander Karlsen (CFO)

19 February 2021

Agenda

Highlights
Operational review
Financial review
Outlook
Appendix

HIGHLIGHTS

Fourth quarter and preliminary 2020 results

• MNOK 64.4 in revenue vs. MNOK 56.8 in Q4 2019
• Revenue positively affected by product mix and favourable EURNOK vs last year
• 2020 revenue MNOK 254 compared to MNOK 228 last year, a 11% growth
• MNOK 13.9 in EBITDA vs. MNOK 6.8 in Q4 2019
• EBITDA in the 4th quarter unfavourably affected by bonus accrual of MNOK 2.5 (Q4'19: MNOK 1)
• EBITDA of MNOK 58 in 2020 versus MNOK 30 in 2019, a 92% increase
• The Fikkjebakke plant has been running at full capacity during the Covid-19 pandemic
• There are no reported corona infected employees in Vistin Pharma as of today
• The demand for metformin is still high and is currently not affected by the corona epidemic
• Metformin capacity expansion Project (MEP) is on track
• First commercial batch from the 2nd production line expected in Q2 2022
• Approximately 35% of the investment paid as of end December
• Other financials
• Cash balance of MNOK 77 as of 31 December and no interest-bearing debt
• Dividend proposal for the AGM (20.05.2021) NOK 0.5 per share for 2020

HIGHLIGHTS

2018-2020 Strong revenue and EBITDA development

Agenda
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Highlights
Operational review
Financial review
Outlook
Appendix

Vistin Pharma a dedicated metformin producer with a bright outlook

Metformin will remain 1st-line treatment for type 2 diabetes in the foreseeable future OPERATIONAL REVIEW - PHARMACEUTICALS

Used to lower glucose (blood sugar) levels

• Reduces the liver's production of glucose
• Delays and reduces absorption of glucose from the intestine
• Increases insulin sensitivity, leading to increased uptake of glucose in the body

Most cost-efficient treatment with limited side effects and long-term safety profile

Comes in tablet form and can be combined with insulin or other glucose-reducing medicines

• Plain metformin is standard first-line treatment (~75% of volume)
• Extended release formulations are growing and expected to cover ~35% of volume by 2026

Metformin in combination with other APIs are second- and third-line treatments, often as higher priced patent-protected fixed dose combination products (~25% of volume)

• Metformin + DDP4-inhibitors increased insulin production
• Metformin + SGLT2-inhibitors increased excretion of sugar in urine
• Metformin + DDP4 + SGLT2 launch 2018 (MSD) and 2019/2020 (BI)

Diabetes – A global emergency

2045 49 million 1 55%
$2030$ 40 million	increase
$[2019]$ 32 million

Vistin Pharma is a metformin player with a world wide sales coverage OPERATIONAL REVIEW - PHARMACEUTICALS

Less volume available for sales in the quarter to finalize the "Creep" expansion project (3800MT)

▪ Sales volume for the fourth quarter was 802MT, down by 2% vs Q4 2019 (815MT)

▪ Less volume available for sale in Q4 due to planned maintenance and 2nd reactor installation stop in FW39/40.

▪ Inventory build during Q4 to support demand in Q1'21

▪ The creep program to stretch the production capacity with > 500MT to approx. 3800MT from 2018 – 2020 successfully implemented

• The 2nd reactor was installed in September/October 2020 and is operating according to expectations
• The new reactor will increase capacity by approx. 300MT annually and fulfill the 3800MT creep target
• 2020 sales volume of 3 360MT vs 3 219MT last year,

Corona pandemic status

• The Fikkjebakke plant has been running at full capacity throughout the Covid-19 pandemic
• Successful actions have been taken to secure the supply of critical raw materials and to build security stocks during the Covid-19 outbreak
• Lack of available containers in Asia has short term significantly increased the freight costs from China and India (across all international businesses and for all goods)
• There are no reported corona infected employees in Vistin Pharma as of today
• The company are strictly following the guideliens from the authorities and have taken active measures to reduce the risk of virus spread in the factory
• The demand in the market for metformin from Vistin is still high and is not affected by the corona epidemic
• Vistin is strategically well positioned to benefit from the expected increase in local supply demands following the pandemic
• Scientists at the University of Alabama in Birmingham (US) has recently presented a study showing that the risk of death in type 2 diabetic patients treated with metformin following a serious Covid-19 infection are reduced by two third (2/3). The results have been published in the paper "Frontiers in Endocrinology"

Agenda

Highlights
Operational review
Financial review
Outlook

FINANCIAL REVIEW

Key quarterly figures for Vistin Pharma

Revenue (pharmaceuticals)

NOK million

▪ MNOK 7 (13%) increase in revenue YoY – driven by favourable product mix and EURNOK

• MNOK 26 (+11%) higher revenue in 2020 vs 2019
• Q1 19 was affected by an extended maintenance stop
• Q3/Q4 20 affected by 2nd reactor installation

▪ Improved gross margin compared to similar quarter last year, driven by mix, a one-time effect, improved yield in production and operational excellence benefits.

▪ Gross profit MNOK 174 in 2020 vs MNOK 139 in 2019, +26% increase

FINANCIAL REVIEW

Key quarterly figures for Vistin Pharma

Results (pharmaceuticals)

NOK million

• EBITDA of MNOK 13.9 vs MNOK 6.8 in Q4 2019
• Bonus accrual of MNOK 2.5 negatively affects EBITDA in Q4'20 (MNOK 1 in Q4'19)
• 2020 EBITDA increased by MNOK 28 compared to 2019, (+92%)
• EBITDA positively affected by higher sales volumes, favorable EURNOK and operational efficiency improvements
• Depreciation of MNOK 2.4 in the quarter, compared to MNOK 2.7 in Q4'19

Consolidated income statement

(NOK 1 000)	Q4 2020	Q4 2019	YTD 2020	YTD 2019
Total revenue and income
Pharmaceuticals	64 421	56 767	253 905	228 129
Trading Energy	-	-	-	-
HQ & other	-	-	-	-
Total revenue and income	64 421	56 767	253 905	228 129
EBITDA
Pharmaceuticals	13 922	6 799	58 189	30 358
Energy Trading	(51)	(298)	(190)	(1 611)
HQ & other	(664)	(762)	(2 822)	(3 020)
EBITDA	13 207	5 738	55 177	25 726
EBT
Pharmaceuticals	11 547	3 721	39 805	21 493
Trading Energy	(48)	807	(162 117)	63 752
HQ & other	(415)	(34)	(2 010)	(1 203)
EBT	11 084	4 494	(124 323)	84 043
Depreciation , amortisation and impairment	(2 371)	(2 656)	(9 623)	(8 956)
finance Net income/(expense)	247	1 411	(169 827)	67 273
Profit/(loss) before from continuing operations tax	11 084	4 494	(124 273)	84 043
Profit/(loss) for the period	8 645	4 154	(96 922)	66 201

Balance sheet Vistin Pharm FINANCIAL REVIEW

Assets

NOK 1000

• Deferred tax asset in relation to realized loss for Energy Trading in Q1 2020
• Favourable working capital development driven by reduction in receivables, partly offset by inventory increase due to demand forecast for Q1'21
• Decrease in cash balance mainly driven by settlement of oil derivative contracts in April, dividend pay-out of MNOK 44.5 in June and two instalment payments for MEP of MNOK 35.

Balance sheet Vistin Pharm FINANCIAL REVIEW

Equity and liabilities

NOK 1000

	31.12.2020	31.12.2019
EQUITY AND LIABILITIES
Equity
Share capital	7 44 345	44 345
Share premium	229 056	273 402
Retained earnings	(996)	95 649
Total equity	272 405	413 396
liabilities Non-current
Other non-current liablites	1 123	1 222
Pension liabilites	16 330	16 309
Total liabilities non-current	453 17	531 17
Current liabilities
Trade payables	17 893	23 612
financial Derivative instruments	-	31 616
Other current liabilities	13 919	18 011
Total liabilities current	31 812	73 239
Total liabilities	49 264	90 770
Total Equity and Liabilities	321 670	504 166

• Share premium reduced due to dividend pay-out in June
• No interest-bearing debt, MNOK 1.9 in obligations related to lease contracts that are recognized in the balance sheet according to IFRS 16 (MNOK 2.9).
• Strong balance sheet with 85 % equity ratio

Agenda

Highlights
Operational review
Financial review
Outlook
Appendix

Outlook

Outlook

• Metformin market expected to continue to grow by 5 -6% annually
• Diabetes is one of the largest health crises of the 21st century
• Metformin is expected to maintain its position as the Gold Standard treatment for T2D in the foreseeable future
• Attractive growth potential from existing customer base and expansion into new markets and customer segments
• The Covid -19 situation has been an «eye opener» to both authorities and the industry leading to large pharma looking for lower risk supply chains and «short travelled medicines»
• Vistin is strategically well positioned in the geopolitically stable Europe
• Investment in a significant capacity expansion at the Fikkjebakke plant will fuel future revenue growth
• Short/Medium initiatives to stretch the capacity to approx 3800MT implemented
• Investment in a new parallel production line to further increase the capacity to +/ -7000MT approved. First commercial batch from the 2nd production line is expected in Q2 2022

Agenda

Appendix
Outlook
Financial review
Operational review
Highlights

Top 20 shareholders as of 31 December 2020

NAME	SHAREHOLDING	% SHARE
AS* INTERTRADE SHIPPING	11 075 000	24 97 % ,
AS* PACTUM	3 242 414	70 % 7 ,
HOLMEN SPESIALFOND	3 250 000	7 33 % ,
ASA* SAGA PURE	2 284 280	15 % 5 ,
MP PENSJON PK	1 752 913	3 95 % ,
AUGUST RINGVOLD AGENTUR AS	697 666	1 57 % ,
NORDNET LIVSFORSIKRING AS	676 227	1 52 % ,
LØGES IVAR STIFTELSE	583 000	1 31 % ,
STORKLEIVEN AS	565 000	1 27 % ,
BERIT HELENE DYBDAHL	540 000	1 22 % ,
MIKLA INVEST AS	525 000	1 18 % ,
INVEST AS WEM	500 000	1 13 % ,
CAM AS	500 000	1 13 % ,
TIGERSTADEN AS	472 958	1 07 % ,
LUCELLUM AS	466 354	1 05 % ,
CORTEX AS	464 525	1 05 % ,
TOM RAGNAR STAAVI	420 000	0 95 % ,
BORGEN INVESTMENT GROUP NORWAY AS	400 000	0 90 % ,
DYVI INVEST AS	355 500	0 80 % ,
HENRIK MIDTTUN HAAVIE	344 610	0 78 % ,
TOTAL 20 LARGEST SHAREHOLDERS	29 287 275	66 0% ,
OTHER SHAREHOLDERS	15 057 317	34 0% ,
TOTAL NUMBER OF SHARES	44 344 592	100 0% ,

* Board members of Vistin Pharma, or companies controlled by Board members

Thank you for your attention!

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