Q3 2020 Presentation - Handicare group

Q3 2020 Presentation

5 November 2020

Johan Ek, President and CEOPernilla Lindén, CFO

Trading update

• Trading conditions steadily and sequentially improved since post-Covid low

• Small organic revenue decline in the quarter

- Organic revenue growth for Accessibility, decline for the other segments due to Covid-19

• We acted decisively and swiftly to improve efficiency and performance

• Adjusted EBITA margin increased vs. last year, as the recovery of the Accessibility market in combination with successful implementation of the first phase of the Lift Up Program has led to a more competitive cost base

• Very strong cash conversion

- Leverage of 1.3x (excl. IFRS 16), and significant liquidity available, financial position remains comfortable

Q3 2020 Highlights – strengthened position in the Accessibility market

2

Strategic update

• The Lift Up Program, Phase II ongoing – focus on procurement, go-to-market and pricing

• Patient Handling – focus on stability / profitability and thereafter assess options in 2021

Significant events after the end of the period

• New Group CEO and President, Henrik Teiwik, starting 1 January 2021

• The Board of Directors reintroduces dividend proposal of 0.07 EUR

Outlook – Handicare increasingly well positioned to meet our objectives

• Fundamental macro / thematic drivers support our plans

• Operational leverage in place as trading conditions continue to improve

• Repositioned Handicare geared to reach medium-term financial objectives

• Short-term forecasting difficult due to Covid-19 – high-level of preparedness within the Company

• Q4 thus far in line with Q3 trading

Good momentum in building a more focused Accessibility company

3

Covid-19 – Swift, effective mitigants to address challenging environment

4

• Accessibility: Recovery in continental Europe and North America. UK still negatively impacted.

• Patient Handling: Reduced access to Hospitals and Long-term care facilities

• Vehicle Accessibility: reduced capacity at Norwegian government heavily affects demand. Delays of car supply.

Focused measures to mitigate impact – active managementQ3 impact on the business

• Limited subsidies in the quarter

• Currently no furloughs or short-term layoffs

• Continued cost control

Reducing costs short term

Lift Up program –Phase 1

• Phase 1 fully implemented

Continued focus to protect the top line, customers

and staff

• Virtual sales processes

• Training and best practice sharing for partners to win

• Health and safety measures, e.g.;

- Social distancing, fogging units, cleaning kits

High Covid-19 readiness in place

5

• Furloughs and short-term layoffs

• External spend reduction and general spend and investment freezes of non-critical items / investments

• Virtual sales processes

• Training and best practice sharing for partners to win

• Health and safety measures, e.g.;

- Social distancing, fogging units, cleaning kits

Reducing costs short-term

Initiatives to protect the top

line and prepare for a bounce back

Lift Up program• Quarterly effect of 2 MEUR in sustained savings already implemented

• Lift Up Program phase II providing further buffer

Secure health and safety for

employees

• Secured ability to work from home (where possible)

• Covid-19 safety routines implemented in all our sites

LTM Full year

MEUR 2020 2019 ∆% 2020 2019 ∆% 2019/20 2019

Revenue 53.2 59.7 -10.9 % 145.7 182.9 -20.3 % 207.6 244.9

Organic revenue growth -1.2 % -12.4 %

Gross margin 42.2 % 40.3 % 41.4 % 40.6 % 40.8 % 40.3 %

Adjusted EBITA 6.1 3.9 58.1 % 9.3 13.1 -28.6 % 13.1 16.8

Adjusted EBITA margin 11.5 % 6.5 % 6.4 % 7.2 % 6.3 % 6.9 %

Adj. EBITA (ex. Veh Acc DK) 6.1 3.9 55.6 % 9.3 13.0 -28.0 % 13.0 16.6

Adjusted EBITA margin (ex. Veh Acc DK) 11.5 % 7.1 % 6.4 % 7.7 % 6.4 % 7.3 %

July - September January - September

Financial highlights: Group – Strong and improving EBITA margin

6

Revenue Q3: organic decline -1.2%

• Accessibility returned to growth.

• Patient Handling and Vehicle Accessibility still negatively impacted by Covid-19.

EBITA Q3: adjusted margin 11.5% (6.5%)• Gross margin increased to 42.2% (40.3%). Positive impact from the divestment of Vehicle Accessibility

Denmark and lower costs for direct personnel from the Lift Up Program.• Operating expenses: 3.3 MEUR lower vs. LY, driven mainly by cost reduction activities in the Lift Up Program. • Group-wide expenses 2.0 MEUR (2.5 MEUR).• Government subsidies of 0.3 MEUR impacting EBITA positively.

OCF Q3: 13.0 MEUR (7.3 MEUR)• Operating cash conversion: 170%.• Leverage 1.3x (Net debt / LTM Adj. EBITDA, excluding IFRS 16).

Adjusted EBITA bridge

Note: All P&L numbers in this report exclude the divested businesses Puls and Patient Handling Europe. No change to the balance sheet. Note: Numbers include Vehicle Accessibility Denmark for the period prior the divestment December 2019 (apart from the organic revenue growth number)

Depreciation

-2.6

OpexQ3-19 Sales Margin

3.3

Q3-20

3.9

1.0

0.5 6.1

LTM Full year

MEUR 2020 2019 ∆% 2020 2019 ∆% 2019/20 2019

Revenue 40.7 38.7 5.2 % 105.8 117.1 -9.7 % 145.9 157.3

Organic revenue growth 6.2 % -9.4 %

Adjusted EBITA 7.4 6.1 21.1 % 16.2 19.0 -14.7 % 22.0 24.8



Accessibility – Regained organic growth and improving margin

7

Revenue Q3: organic increase 6.2%

• Europe +4.1%, North America +23.2%.

• Solid growth in Continental Europe. UK still impacted due to Covid-19 restrictions.

• Continued strong demand in North America.

EBITA Q3: adjusted margin 18.3% (15.9)

• The adjusted EBITA margin increased with 2.4ppts, mainly driven by establishing a lower cost base in the Lift Up Program. Gross Margin was in line with last year.

LTM Full year

MEUR 2020 2019 ∆% 2020 2019 ∆% 2019/20 2019

Revenue 9.2 11.7 -21.5 % 28.4 36.6 -22.3 % 41.5 49.7


Adjusted EBITA 0.7 0.1 382.4 % -0.1 1.1 n/a 0.1 1.2

Adjusted EBITA margin 7.5 % 1.2 % -0.3 % 2.9 % 0.2 % 2.5 %


Patient Handling – Revenue decline offset by leaner cost structure

8


• Significant impact of Covid-19.

EBITA Q3: adjusted margin 7.5% (1.2%)

• Gross Margin in line with last year.

• Operating expenses (excl. costs of goods sold) significantly reduced in the period. Positive impact from substantial capacity adjustments and cost reductions in the Lift Up Program.

LTM Full year

MEUR 2020 2019 ∆% 2020 2019 ∆% 2019/20 2019

Revenue 3.3 4.8 -31.2 % 11.5 14.7 -21.7 % 16.7 19.9


Adjusted EBITA 0.0 0.2 -83.5 % 0.6 1.1 -50.4 % 1.0 1.6



Vehicle Accessibility – Continued negative impact from Covid-19

9


• Significant impact of Covid-19.

EBITA Q3: adjusted margin 0.9% (3.7)

• Gross margin above last year, driven by favourable changes in product mix.

• Operating expenses (excl. costs of goods sold) significantly reduced in the period in absolute terms, following the Lift Up Program, but increased in relation to revenue.

Leverage improvement from cash generation and divestments

Strong cash conversion and improved leverage

10

Net debt / LTM Adj. EBITDA, excl. IFRS 16

2017

3.1

1.3

2020 Q3

2018 2019 2020 Q1

3.0

2020 Q2

2.62.4

2.2

Financial Target 2.5x

70%

111%

170%

0

20

40

60

80

100

120

140

160

180

2018

39%

64%

Adj. OCF / adj. EBITDA

2017 2020 Q1

2019

73%

2020 Q2

2020 Q3

• 55 MEUR of cash and ~37 MEUR of unutilized back-up facilities gives a liquidity of 92 MEUR

• Loan repayment of 7.5 MEUR in the quarter

Positive cash conversion development

Note: Historical periods have not been adjusted for divested entities.

The Lift Up Program well on track

11

• Half of EBITA impact already in 2020 with full run-rate impact end of year

GrowthOrganic & inorganic opportunities

ProfitabilityBoost performance

Focus & SimplifyCreate an Accessibility company

• Create a Group that reflects our focus on Stairlifts

• Optimize processes and avoid duplication of efforts

• Simplify structures and streamline cost base – best fit for purpose

• Improve margins by better procurement processes and pricing mechanisms

• Action to improve Patient Handling profitability - thereafter assess options

• Expand market presence

• Drive focused M&A agenda

Handicare

Full Adj EBITA impact 2020 Adj EBITA impact 2021 Adj EBITA impact One-time costs Cash payback

8 MEUR3-4 MEUR

Updated: 4 MEUR8 MEUR

8 MEURCash: 6.5 MEUR

Non-cash: 1.5 MEUR

1 year

Handicare’s transformation into an Accessibility focused company

12

Handicare in the futureHandicare today

Strategic review

Handicare at IPO

Plans for the future

48%

16%

29%

7%

Vehicleaccessibility

Accessibility

Patient Handling

Puls

73%

8%

20%

Accessibility

Vehicle accessibility

Patient Handling

Accessibility

Vehicle accessibility

Note: % of Group revenue

Henrik Teiwik, new President and CEO

13

• Henrik Teiwik, new President and CEO of Handicare Group enters his position 1 January 2021.

• Henrik is currently Head of Business Area Construction Equipment and Business Area Rental at Alimak Group AB (publ.)

- Prior to joining Alimak in 2013, Henrik was an Associate Principal at McKinsey & Company, specializing in strategy, corporate finance and organizational topics. Henrik holds an MSc in Economics and Business from Stockholm School of Economics.

• Henrik is well qualified to continue the journey of building a focused Accessibility company.

• Handover already started to guarantee a successful transition of leadership.

Summary Q3 2020 and Outlook

14

Summary

• Still impacted by Covid-19, but recovery seen in key Accessibility markets.

• Structural improvements in place – stronger & more focused Handicare.

Outlook

• Fundamental macro / thematic drivers support our plan – perhaps intensified.

• Operational leverage in place as trading conditions continue to improve.

• Underpins our conviction we will deliver medium-term objectives.

• Short-term forecasting difficult due to Covid-19 – high-level of preparedness within the Company.

• Q4 thus far in line with Q3 trading.

Q&A

Forward-looking statements

16

To the extent this report contains forward-looking statements, these statements are based on the current expectations of Handicare’s Group management. Although management considers the expectations expressed in such forward-looking statements to be reasonable, there is no guarantee that these expectations will prove correct. Accordingly, actual future outcomes may differ significantly from those expressed in the forward-looking statements due to such factors as changed economic, market and competitive conditions, changes in regulatory requirements and other policy measures, and fluctuations in exchange rates.

Appendices

18 *The pay-out decision will be based on Handicare’s financial position, investment needs, acquisition opportunities and liquidity position.

An annual dividend corresponding to 30-50 percent of the net profit for the period*

An average annual growth of 10 percent, of which 4-6 percent organically, in the medium-term

Leverage of approximately 2.5 times net debt/LTM (last 12 months) adjusted EBITDA (excl. IFRS16), with flexibility for strategic activities*

An adjusted EBITA margin exceeding 12 percent in the medium-term

FINANCIAL TARGETS

LTM 2020 organic:-15%

LTM 2020: 6.3%

30 Sep 2020: 1.3x

Dividend 2019: 0.07 EUR per share, 176% of

the net profit

Q3 revenue and adjusted EBITA bridges

19

1.9ppts 2.5ppts 0.6ppt

Q3 Adjusted EBITA bridge by SBUQ3 Adjusted EBITA bridge by component

Q3 Revenue bridge by SBU

MEU

R

MEU

RQ3-19 Sales Margin

-2.6

3.9

1.0

3.3

Opex

0.5 6.1

Depreciation Q3-20

Q3-19

0.0-1.4

FX Acc

-1.9

PH

-1.1

Veh. Acc Q3-20 organicQ3-19 FX AdjVeh. Acc. DK Q3-19

53.9

59.7

Other

2.4

-4.5

53.2

-1.2%

6.5% 11.5%

Margin Q3-19

3.9

1.3

0.6

Acc

0.5

-0.1

PH Veh. Acc Other Q3-20

6.1

21%Growth 382% n/a 58%-84%

LTM Full year

MEUR 2020 2019 2020 2019 2019/20 2019

Adjusted EBITDA 7.7 6.0 14.5 19.3 20.3 25.1

Inventory -1.0 0.3 0.0 -0.1 0.6 0.5

Accounts receivable -3.0 1.3 6.3 1.3 4.8 -0.2

Accounts payable 8.7 0.9 1.0 -5.4 2.0 -4.4

Other receivables/liabilities 2.0 0.0 1.1 -3.6 3.0 -1.7

Change in NWC 6.6 2.5 8.4 -7.9 10.4 -5.8

Tangible assets -0.9 -0.4 -1.3 -1.2 -2.2 -2.1

Intangible assets -0.4 -0.7 -1.8 -2.0 -2.7 -2.9

Total capex -1.3 -1.2 -3.1 -3.1 -5.0 -5.0

Adjusted operating cash flow 13.0 7.3 19.8 8.3 25.8 14.2

KPI:s

Paid tax -0.1 -0.3 -0.4 -0.6 -0.1 -0.3

Adjusted OCF / Adjusted EBITDA 170% 122% 136% 43% 127% 57%

Net debt (excl IFRS 16) 19.2 70.4 19.2 70.4 19.2 62.5

Net debt / Adjusted LTM EBITDA (excl IFRS 16) 1.3 3.1 1.3 3.1 1.3 2.6


Cash flow

20

Adjusted OCF: 13.0 MEUR (7.3)• Other specified items paid in Q3-20: 3.5 MEUR.• Increased operating cash flow due to improved net working capital.• Q3-20 capex of 1.3 MEUR (2.4% of revenue).

Net debt / LTM Adjusted EBITDA 1.3x (excl. IFRS 16)• Strong cash flow position, cash balance end of the period 55.5 (35.6), in addition a RCF

of 40 MEUR, of which c. 37 MEUR undrawn at quarter end.• Following strong cash position, 7.5 MEUR repayment of long-term debt made in the

quarter.• Unpaid Other specified items: 4.2 MEUR at 30 Sep 2020.

Balance sheet

21

Group 30 Sep 30 Sep 31 Dec

MEUR 2020 2019 2019

Goodwill 100.6 165.9 159.3

Other intangible assets 37.3 46.7 46.3

Property, plant and equipment 5.2 8.1 7.9

Right-of-use assets 15.3 26.6 22.5

Deferred tax assets 1.4 7.2 3.2

Other non-current assets 0.1 0.1 0.1

Total non-current assets 159.9 254.6 239.2

Inventory 23.1 33.0 27.7

Accounts receivable 28.6 41.5 40.4

Tax receivables 0.1 0.2 0.3

Other current assets 2.5 3.1 2.8

Cash and cash equivalents 55.5 35.6 33.8

Total current assets 109.7 113.5 105.0

Total assets 269.6 368.1 344.2

Total equity 123.9 184.1 173.4

Provisions for pensions 0.5 0.2 0.6

Deferred tax liabilities 5.2 7.9 6.0

Advance payments 2.4 2.4 2.4

Other liabilities 1.0 0.3 0.8

Lease liabilities 13.0 21.7 18.2

Interest-bearing loans 73.6 105.0 95.1

Total long-term liabilities 95.7 137.5 123.1

Interest-bearing loans - 0.0 -

Lease liabilities 3.6 4.9 4.4

Accounts payable 21.4 24.5 23.1

Other current liabilities and provisions 24.9 17.0 20.2

Total current liabilities 49.9 46.5 47.7

Total shareholders' equity and liabilities 269.6 368.1 344.2

Documents

Q3 2020 Presentation - Handicare group