Absolent Air Care : Year-End Report 2021

QUARTER 4

YEAR-END REPORT 2021

SUMMARY QUARTER 4 2021

• Net sales amounted to SEK 272.7 (229.1) million, which equals a growth of 19.0 (-29.3) %.
• Operating profit before amortizations of intangible assets (EBITA) amounted to SEK 31.9 (45.7) million with a margin of 11.7 (19.9) %. Adjusted operating profit before amortizations of intangible assets (EBITA1*) amounted to SEK 44.6 (29.9) million with a margin of 16.3 (13.0) %.
• Operating profit (EBIT) amounted to SEK 3.8 (24.5) million with a margin of 1.4 (10.7) %. Adjusted operating profit (EBIT1*) amounted to SEK 16.4 (8.8) million with a margin of 6.0 (3.8) %. Amortizations of goodwill had an impact on EBIT of SEK -28.0(-21.1) million.
• Earnings per share amounted to SEK -0.20 (1.93). Adjusted earnings per share amounted to SEK 0.91 (0.53).
• Cash flow from operating activities after changes in working capital amounted to SEK 33.2 (8.2) million.

SUMMARY JANUARY-DECEMBER 2021

• Net sales amounted to SEK 1,029.8 (895.9) million, which equals a growth of 15.0 (-13.7) %.
• Operating profit before amortizations of intangible assets (EBITA) amounted to SEK 138.8 (49.5) million with a margin of 13.5 (5.5) %. Adjusted operating profit before amortizations of intangible assets (EBITA1*) reached SEK 151.4 (91.8) million with a margin of 14.7 (10.2) %.
• Operating profit (EBIT) amounted to SEK 36.3 (-31.2) million with a margin of 3.5 (-3.5) %. Adjusted operating profit (EBIT1*) reached SEK 48.9 (11.0) million with a margin of 4.8 (1.2) %. Amortizations of goodwill had an impact on EBIT with SEK -101.2(-80.7) million.
• Earnings per share amounted to SEK 0.37 (-4.87). Adjusted earnings per share amounted to SEK 1.48 (-1.14).
• Cash flow from operating activities after changes in working capital amounted to SEK 97.7 (54.4) million.
• The Board of Directors has decided to propose to the AGM a dividend of SEK 2.00 (1.80) per share.

• Adjusted key ratios are excluding items affecting comparability for 2021 and 2020. Key ratios for 2020 have been adjusted for effects related to the cost reduction program carried out by the Group during 2020. The cost reduction program was initiated during the second quarter of 2020 and successfully finalized during the fourth quarter of 2020. The fourth quarter of 2020 showed a positive impact, due to the costs for the program ending up lower than previously reported. To facilitate comparability, adjustment for items affecting comparability has also been made for 2021, partly a negative impact on the result of SEK 8.1 million related to the divestment of Bristol and partly costs of SEK 4.6 million related to restructuring of parts of the operations in China and our project-based business in the UK.

KEY RATIOS

		Oct-Dec	Oct-Dec		Jan-Dec	Jan-Dec
	2021		2020	2021		2020
Net sales (SEK thousands)		272 689		229 061		1 029 807		895 860
Sales growth (%)		19.0		-29.3		15.0		-13.7
EBITDA (SEK thousands)		34 084		53 559		149 703		73 455
EBITA (SEK thousands)		31 933		45 673		138 759		49 543
EBITA (%)		11.7		19.9		13.5		5.5
Amortizations of goodwill (SEK thousands)		-27 994		-21 139		-101 225		-80 728
Operating profit EBIT (SEK thousands)		3 762		24 534		36 323		-31 184
Operating margin EBIT (%)		1.4		10.7		3.5		-3.5
Cash flow from operating		33 236		8 153		97 691		54 447
activities (SEK thousands)
Equity ratio (%)		29.7		30.5		29.7		30.5
Net debt (SEK thousands)		312 913		129 903		312 913		129 903
Earnings per share (SEK)		-0.20		1.93		0.37		-4.87
Equity per share (SEK)		31.37		30.37		31.37		30.37
Number of shares, end of period		11 320 968		11 320 968		11 320 968		11 320 968

ADJUSTED KEY RATIOS

	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
	2021	2020	2021	2020
Adjusted EBITA1 (SEK thousands)	44 557	29 892	151 383	91 752
Adjusted EBITA1 (%)	16.3	13.0	14.7	10.2
Adjusted operating profit EBIT1
(SEK thousands)	16 386	8 753	48 947	11 025
Adjusted operating margin EBIT1 (%)	6.0	3.8	4.8	1.2
Adjusted earnings per share (SEK)	0.91	0.53	1.48	-1.14

2	ABSOLENT AIR CARE GROUP 2021

COMMENTS BY CEO AXEL BERNTSSON

2021 was an intense year for Absolent Air Care Group, where recovery and structural work were mixed with market expansion, two acquisitions and two divest- ments. The result of the good work of all employees is a growth of 15.0% to SEK 1,029.8 (895.9) million in sales for the full year and a result improvement (EBITA) of 180.1% to SEK 138.8 (49.5) million.

During the fourth quarter, the Group delivered a growth of 19.0% compared to the same quarter previous year with net sales increasing to SEK 272.7 (229.1) million. The Group's underlying profitability also improved compared to the same period last year. However, the result includes some items affecting comparability - a SEK 8.1 million negative profit impact of the divestment of Bristol as well as costs of SEK 4.6 million related to restructuring of parts of the operations in China and our project-based business in the UK. Adjusted for these items, the Group's operating margin (EBITA) for the quarter amounted to 16.3% compared to 13.0% (adjusted EBITA-margin) the previous year.

Halfway through the fourth quarter, Quatro Air Technologies Inc. including its subsidiary Aerofil Inc. were acquired. The companies have their head office in Pointe-Claire, Quebec in Canada and generate net sales of approximately CAD 16 million with an average EBITDA-margin of 23%. The acquisition gives us access to several new market niches where we do not have any business today. This refers to, for example, portable plug & play air cleaning solutions and follows the Group strategy to increase our business outside of traditional machining. The acquisition also strengthens the Group's position on the North American market and gives access to a new product assortment that we intend to offer our customers on a global basis through our existing sales channels.

During the quarter, we opened a sales office in Italy. The office will serve as a base for direct sales in Italy and will also support our local partner and be a center for sales support and global business development for Italian customers. The opening of our sales office in Italy is a long-term investment with good potential, since Italy is the fourth largest economy in Europe with a large process industry.

After a period during the summer and autumn when order intake and delivery capacity have been hampered by shortage of components for us and our customers, the latter part of the year and the start of 2022 has shown a considerably higher market activity and order intake. Once again, the Group has received some larger orders from automotive companies and their subcontractors, which we have not seen since early spring 2021. The Commercial Kitchen companies, which have retained their sales levels despite major challenges faced by the industry during the pandemic, have also seen a clearly positive trend regarding number of quotes and order intake. The Group continues into 2022 with a well-filled order book and looks with confidence on the possibility of additional growth and profitability improvement.

Axel Berntsson, President and CEO

Gothenburg, February 2022

3	ABSOLENT AIR CARE GROUP 2021

JANUARY-DECEMBER 2021

NET SALES

The net sales for the Group amounted to SEK 1,029.8 (895.9) million, which corresponds to a change of 15.0 (-13.7) %.

RESULT

Operating profit (EBITA) amounted to SEK 138.8 (49.5) million, which corresponds to a margin of 13.5 (5.5) %. As the Group does not apply IFRS, no impairment tests of goodwill are performed. Instead, the Group amortizes goodwill over the estimated useful life, which is five to ten years. The amortizations of goodwill do not affect the taxable profit. EBIT amounted to SEK 36.3 (-31.2) million, where the previous year was negatively impacted of the Group cost reduction program of SEK 42.2 million. Currency rates impacted the operating profit (EBIT) by SEK 0.6 (-1.3) million for the period. The financial items include SEK 0.1 (-2.2) million of currency effects. The impact is related to the credit facility in foreign currency. Net financial items amounted to SEK -6.4(-9.9) million and result for the period to SEK 4.1 (-55.1) million. Earnings per share amounted to SEK 0.37 (-4.87).

INVESTMENTS

During the period January-December, the Group invested SEK 14.8 (14.3) million mainly in software, machinery and equipment in existing operations. In January 2021, the Group acquired the commercial kitchen ventilation company Tessu Systems B.V. in the Netherlands for EUR 5.3 million on a cash and debt-free basis plus an additional earnout depending on the company's performance in 2021 and 2022. During November 2021, the two Canadian companies Quatro Air Technologies Inc. and Aerofil Inc. were acquired for CAD 22 million plus an earnout based on the earnings development during 2022 and 2023. In January 2021, the Group divested the UK company Gallito Limited and during the fourth quarter the Bristol brand with related operations, where the latter had a negative impact on the result of SEK 8.1 million. In the second quarter of the year an earnout of SEK 35 million was paid in relation to the Interzon acquisition in 2019.

CASH FLOW

Cash flow from the operating activities before changes in working capital amounted to SEK 112.9 (38.7) million. Cash flow after changes in working capital amounted to SEK 97.7 (54.4) million.

4

NET SALES PER REGION, JAN - DEC

EUROPE43%

UK & 20%

APAC 13%

AMERICAS

24%

NET SALES

SEK million

280

270

260

250

240

230

220

210

200

Q4	Q1	Q2	Q3	Q4
2020	2021	2021	2021	2021

EBITA AND EBITA MARGIN

SEK million
50					25%
40					20%
30					15%
20					10%
10					5%
0						0%
	Q4	Q1	Q2	Q3	Q4
	2020	2021	2021	2021	2021

CASH FLOW FROM OPERATING ACTIVITES

SEK million

35

30

25

20

15

10

5

0

Q4

Q1

Q2

Q3

Q4

2020 2021 2021 2021 2021

ABSOLENT AIR CARE GROUP 2021

FINANCIAL POSITION

Interest-bearing liabilities amounted to SEK 546.1 million at the end of the period. At the beginning of the period, the liabilities amounted to SEK 581.7 million. Net debt of the Group was SEK 312.9 million by the end of the period compared to SEK 129.9 million at the beginning of the period. The net debt increase is related to the acquisitions made during the year. The equity ratio amounted to 29.7 (30.5)

• The Parent company's credit facility amounts SEK 600 million and expires during 2024.

OTHER INFORMATION

RISKS AND UNCERTAINTIES

The Group and the Parent company are exposed to a number of different risks in their daily operations such as business risk, competitor risk, distributor risk, supplier risk and acquisition risk. These risks are described in detail in the Annual Report of Absolent Air Care Group for 2020 (available on www.absolentgroup.com). The risk profile remains since the Annual Report of 2020 was published. During 2021, COVID-19 has continued to create uncertainty in the market, but to a more limited extent and with more regional differences.

FINANCIAL IMPACT OF COVID-19

The Group has received government grants of SEK 3.3 million for the period January to December 2021.

ACCOUNTING POLICIES

The Group and the Parent company apply the Swedish Annual Accounts Act (1995:1554) and BFNAR 2012:1 Annual Accounts and Consolidated Financial Statements (K3). The accounting policies applied are the same as those described in the annual report for 2020. Government grants are reported as other operating income. No new accounting policies for 2021 have had any material impact on the Group.

ANNUAL GENERAL MEETING

The Annual General Meeting (AGM) will be held on May 19 (a meeting with only postal voting, provided that the so-called temporary AGM Act is reintroduced). The annual report is expected to be available on April 26 at the company's head office in Gothenburg.

DIVIDEND

The Board of Directors has decided to propose to the AGM a dividend of SEK 2.00 (1.80) per share, corresponding to SEK 22.6 (20.4) million.

CONTACT INFORMATION

Axel Berntsson, President and CEO

Karin Brossing Lundqvist, CFO

Phone: [phone]

E-mail: [e-mail]

Absolent Air Care Group AB (publ)

Västra Hamngatan 10

SE-411 17 Göteborg

Company ID: 556591-2986

www.absolentgroup.com

CERTIFIED ADVISER

Erik Penser Bank AB is the company's Certified Adviser.

FINANCIAL CALENDER

Interim report Jan-Mar 2022, May 19, 2022 Annual General Meeting, May 19, 2022 Interim report Jan-Jun 2022, Aug 17, 2022 Interim report Jan-Sep 2022, Nov 11, 2022

This year-end report has not been reviewed by the company auditors.

This document is a translation of the Swedish original. In the event of any discrepancies between this translation and the Swedish original, the latter shall prevail.

The year-end report is available on the Group website (www.absolentgroup.com).

Gothenburg, February 24, 2022

Axel Berntsson

President and CEO

This information is information Absolent Air Care Group AB (publ.) is obligated to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 8:00 a.m. CET Feb 24, 2022.

5	ABSOLENT AIR CARE GROUP 2021