Mar 23, 2023

03/10 03/23/2023 | 03:13am EDT Message : March 23, 2023, 8:00 am CET TESSENDERLO GROUP: 2022 RESULTS OUTPERFORM HALF YEAR OUTLOOK DESPITE MORE CHALLENGING SECOND HALF YEAR - PROPOSED GROSS DIVIDEND OF 0.75 EUR/SHARE 1. KEY EVENTS On July 8, 2022, Tessenderlo Group and Picanol Group announced their intention to simplify and increase the transparency of the group structure of both companies, with a view to combining them into a single industrial group, with a single stock exchange listing and a single board of directors. In this context, Tessenderlo Group launched a voluntary public exchange offer for all shares issued by Picanol Group. More specifically, all Picanol Group shareholders were offered the opportunity to exchange their Picanol Group shares for new shares in Tessenderlo Group at an exchange ratio of 2.36 new shares in Tessenderlo Group per tendered share in Picanol Group. A third and final acceptance period had the effect of simplified squeeze- out. Shares that had not been tendered prior to the closing of the final acceptance period were transferred to Tessenderlo Group by force of law and the relevant shareholders will have to request payment of the offer price for their shares at the Belgian Deposit and Consignment Office. By the end of the first quarter of 2023, Tessenderlo Group was, therefore, holding 100% of the shares of Picanol Group. As a result of this transaction, Picanol Group became a business unit in the Machines & Technologies segment of Tessenderlo Group with effect from January 2023. In March 2022, Tessenderlo Group applied again to the Flemish Region for a construction permit for a new 900 MW Combined Cycle Gas Turbine plant (CCGT) in Tessenderlo (Belgium) (T-Power segment). The permit was obtained in September 2022 from the Flemish Minister of Justice and Enforcement, Environment, Energy and Tourism. However, the new plant will only be constructed if the group can present it as a viable project. In November 2022, PB Leiner (Bio-valorization segment) entered into a joint venture with Hainan Xiangtai Group in China for the production and sale of high-quality fish collagen peptides. Under this agreement, the joint venture (80% owned by the group) will produce fish collagen peptides based on PB Leiner's technology. The combined strengths of the two companies will enable a robust, premium product range to meet the increasing global demand for quality fish collagen peptides. Tessenderlo Kerley, Inc. began the construction of a new plant in Defiance (Ohio, USA) in the third quarter of 2022. This plant will produce the leading liquid and sulfur-based fertilizers Thio-Sul®, KTS®, K-Row 23®, and sulfite chemicals for industrial markets (Agro and Industrial Solutions segments). The plant is scheduled to start operations by the end of 2024. In December 2022, Tessenderlo Kerley International (Agro segment) started the construction of a new plant for the production of Thio-Sul® (ammonium thiosulfate/ATS), in Geleen, the Netherlands. This fertilizer is used for large-scale crops and in the cultivation of trees and vegetables. The plant is expected to be operational by mid-2024. After the balance sheet date In November 2022, the group announced that its PB Leiner business unit (Bio-valorization segment) had established a new joint venture with D&D Participações Societárias, which is one of Brazil's leading tannery groups. D&D Participações Societárias acquired a 40% minority stake in PB Leiner's Brazilian plant (PB Brasil Industria e Comercio de Gelatinas Ltda). The combined strength of the two companies will enable a long- term, sustainable supply of a premium bovine gelatin product range, based on PB Leiner's technology. The joint venture was subject to the fulfillment of a number of customary conditions precedent, and the transaction was closed in January 2023. 1 The enclosed information constitutes regulated information as defined in the Royal Decree of November 14, 2007, regarding the duties of issuers of financial instruments which have been admitted for trading on a regulated market. 1/16 In early January 2023, the Akiolis business unit (Bio-valorization segment) acquired the real estate and production assets of the former Spanish rendering company Promed 202 (Ribera d'Ondara, Lleida, Spain). The plant specializes in pig and poultry meat rendering and is located in one of the most intensive pig and poultry farming regions in Spain. The acquisition will expand Akiolis' operations on the Iberian Peninsula and strengthen its position in the European rendering market. Akiolis resumed operations during the first quarter of 2023 under the name Akiolis Iberia. Also in January 2023, Tessenderlo Group signed an agreement for the acquisition of the marketing and sales activities for ammonium thiosulfate (ATS) fertilizers produced by Esseco Srl (part of Esseco Group) in Trecate, Italy. These ATS fertilizers will be marketed by the Tessenderlo Kerley International business unit (Agro segment). Tessenderlo Group also acquired the Esseco trademarks Secofit® TS and Agrifix®, which are used in marketing this product range for agricultural applications. The deal was operational in March 2023. % Change 2. REVENUE 2H22 revenue increased by +17.7% (or increased by +12.9% when excluding the foreign exchange effect) compared to the same period last year. Excluding the foreign exchange effect, the revenue of Agro increased by +6.8%, Bio-valorization revenue increased by +17.0%, the revenue of Industrial Solutions increased by +14.7%, while T-Power revenue increased by +22.2%. This revenue increase could be mainly realized thanks to higher sales prices, implemented to offset the increase of raw material, energy and transportation costs. The 2H21 comparable was already impacted by price increases leading to a lower 2H22 revenue increase (+12.9%) compared to a 1H22 increase of +26.8%. 2022 revenue increased by +24.3% (or by +19.7% when excluding the foreign exchange effect). The revenue of all four segments increased, when excluding the foreign exchange effect (Agro: +22.6%, Industrial Solutions: +19.7%, Bio-valorization: +17.0% and T-Power: +13.1%). As the group results might be impacted significantly by foreign exchange changes, the group reports some key financial indicators excluding any foreign exchange impact. The "% change excluding foreign exchange effect" is calculated by translating the 2022 result of foreign currency entities at the average exchange rate of 2021. The variance between this calculated result and the previous year result shows the effective result variance excluding any foreign exchange impact. Adjusted EBITDA equals Adjusted EBIT plus depreciation and amortization. Adjusted EBIT is considered by the group to be a relevant performance measure in order to compare results over the period 2021-2022 as it excludes adjusting items from the EBIT (Earnings Before Interests and Taxes). EBIT adjusting items principally relate to restructuring, impairment losses, provisions, gains or losses on significant disposals of assets or subsidiaries and the effect of the electricity purchase agreement. Operational free cash flow equals to Adjusted EBITDA minus capital expenditure minus change in trade working capital. Net financial debt equals non-current and current loans and borrowings and bank overdrafts, minus cash and cash equivalents, short term investments and long term investments. 2/16 3. ADJUSTED EBITDA The 2H22 Adjusted EBITDA amounts to 187.2 million EUR compared to 169.5 million EUR one year earlier (+10.4%). When excluding the impact of the foreign exchange effect, the Adjusted EBITDA increased by +6.2 million EUR (+3.7%) compared to 2H21. While the contribution of the operating segments Bio-valorization (+61.7%), Industrial Solutions (+5.7%) and T-Power (+30.1%) increased, the contribution of Agro decreased by -36.5% in 2H22. The 2022 Adjusted EBITDA amounts to 434.8 million EUR, compared to 354.2 million EUR in 2021 (+22.7%). When excluding the foreign exchange effect, the Adjusted EBITDA has increased by +57.1 million EUR compared to 2021 (+16.1%). The positive foreign exchange effect of +23.5 million EUR is mainly caused by the strengthening of the USD compared to one year ago (average EUR/USD rate of 1.05 in 2022 versus 1.18 in 2021). The Adjusted EBITDA of all four segments increased: Agro (+7.4%), Bio-valorization (+36.7%), Industrial Solutions (+9.7%) and T-Power (+19.1%). 4. NET FINANCIAL DEBT As per year-end 2022, the group net financial debt amounts to 59.5 million EUR, which implies a leverage of 0.1x (2021: 74.8 million EUR or a leverage of 0.2x). Short-term borrowings for 56.2 million EUR and 209.3 million EUR long-term borrowings are partially compensated by cash and cash equivalents (156.1 million EUR) and long term investments (long-term bank deposits for an amount of 50.0 million EUR, with maturity date in 2024). Excluding the IFRS 16 lease liabilities, group net financial debt would have amounted to 7.3 million EUR compared to 20.8 million EUR as per year-end 2021. In 2022, a bond, issued in 2015, with a maturity of 7 years was reimbursed (165.5 million EUR). Also in 2022, the group agreed two term loan credit facilities for 30.0 million EUR each, with a maturity of 7 years (started in April 2022) and a maturity of 5 years (starting August 2022) respectively. These loans, with quarterly capital reimbursements, have a fixed interest rate of 1.17% and 0.94% respectively, and contain no financial covenants. Both transactions will further reduce the liquidity risk as well as the interest costs of the group. 5. PROFIT (+) / LOSS (-) FOR THE PERIOD The 2022 profit amounts to 226.8 million EUR compared to 188.3 million EUR in 2021. The profit (+) / loss (-) was impacted by exchange gains and losses, mainly on non-hedged intercompany loans and cash and cash equivalents in USD. Excluding these exchange gains and losses, the profit (+) / loss (-) for 2022 would have amounted to approximately 221 million EUR, while the 2021 result would have amounted to approximately 173 million EUR. The 2022 profit was also impacted by a loss of -12.0 million EUR recognized in EBIT adjusting items, which includes a settlement loss of the UK pension plan (-7.3 million EUR) and an impairment loss recognized on T-Power assets (-37.6 million EUR). These were partially offset by the positive contribution of the electricity purchase agreement (+21.1 million EUR). 6. OPERATIONAL FREE CASH FLOW The 2022 operational free cash flow amounts to 156.6 million EUR, compared to 188.9 million EUR in 2021. This decrease, despite the increase of the Adjusted EBITDA (+80.6 million EUR), can be explained by higher capital expenditure (-17.4 million EUR compared to 2021) and higher working capital needs (-164.8 million EUR in 2022 compared to -69.4 million EUR in 2021), mainly linked to higher raw material costs, which led to a higher inventory valuation, and an increase of trade receivables following higher sales prices. 3/16