Aluflexpack : Jahresbericht 2021

Aluflexpack AG

Annual Report

2021

"Our ambition is to empower brands to maximise their success by using sustainable and circular packaging solutions tailored to their needs."

Johannes Steurer, CEO of Aluflexpack AG

ANNUAL REPORT 2021

Our Vision

We are the partner of choice for the development and large-scale industrial manufacturing of premium flexible packaging and barrier solutions in high demanding end markets.

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Aluflexpack AG - Key Figures

	For the twelve months ended December 31,
(financial figures in €m)1	2016	2017	2018	2019	2020	2021
Net sales	144.1	160.6	181.7	207.9	239.4	266.1
Growth in net sales (%, yoy)	8.2%	11.4%	13.1%	14.4%	15.2%	11.1%
EBITDA	14.4	18.1	21.5	19.2	36.4
42.3

Net sales growth

2021

+11.1%

	EBITDA before SE
(in €m)	2016 - 2021	42

		Net sales
(in €m)		2016 - 2021	239	266
			208
		182
	161
144
2016	2017	2018	2019	2020	2021

EBITDA margin before SE

2016 - 2021

EBITDA before special effects (SE)1	14.4	18.1	21.6	29.5	37,4	41.8
EBITDA margin before SE(%)	10.0%	11.3%	11.9%	14.2%	15.6%	15.7%
Operating profit (EBIT)	1.7	4.3	6.4	0.6	17.4	19.4

37

30

22

18

14

10.0%

14.2% 15.6% 15.7%

11.3% 11.9%

Operating profit before SE	3.3	5.9	8.0	13.8	20.0	20.3
Operating profit margin before SE (%)	2.3%	3.7%	4.4%	6.6%	8.3%	7.6%

2016

2017

2018

2019

2020

2021

Capital expenditure

2021

2016

2017

2018

2019

2020

2021

ROCE

11.7%

Result for the period	-0.6	0.2	-1.3	-3.4	9.0	14.2
Cash flow from operating activities	8.9	14.7	11.9	15.5	26.1	38.3
Cash flow from investing activities	-12.6	-21.1	-21.2	-32.8	-32.9	-45.9

€60.4m

9.6%

5.9% 6.9%

3.8%

10.3%

Cash flow from financing activities	-1.5	8.4	24.4	60.1	-11.5	-20.4
Equity ratio (%)	19.6%	16.1%	13.2%	61.9%	61.6%
60.2%
Net debt (cash)	67.0	82.1	100.5	-12.1	6.0	32.4
Total assets	132.0	156.6	196.9	278.4	282.7	301.7
ROCE	3.8%	5.9%	6.9%	9.6%	11.7%	10.3%
Employees	904	1,001	1,128	1,215	1,296	1,342

Net debt to EBITDA2

2021

0.8x

2016

2017

2018

2019

2020

2021

Equity ratio

2021

60.2%

1	A detailed reconciliation of the reported and adjusted figures, as well as an overview of alternative
ANNUAL REPORT 2021	performance measures used, can be found on pages 59-62.	2	EBITDA refers to EBITDA before SE	ANNUAL REPORT 2021

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Table of Contents

Our Company	16
Annual Review	38
Corporate Governance Report	63
Compensation Report	89
Consolidated Financial Statement	115
Statutory Accounts	173

ANNUAL REPORT 2021

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Letter to shareholders

Dear shareholders,

In 2021, Aluflexpack AG continued to expand business in most of its end markets and remained on its growth path. In an environment characterised by inflationary trends in the commodity markets and the restricted availability of many raw materials, Aluflexpack benefited from its strong network of suppliers and deeply integrated value chain. This allowed us to maintain our usual levels of product quality and reliably deliver to our customers throughout the year. Despite a more challenging second half of the year, robust demand and operational improvements laid the foundation for solid financial performance in 2021. In the months ahead, our focus will be on continuing to adjust our price structure based on the latest input prices, implementing a one-of-a-kind expansion project at our plant in Drniš (Croatia) and on securing our supply chain amid tight commodity markets. At the same time, we plan to focus more intensively on innovation and sustainability to boost value added and sustainable growth over the coming years.

Tightened commodity markets

In an attempt to prevent deep economic recessions over the past two years, governments and central banks across the globe have introduced accommodative fiscal stimuli and expansive monetary policy. This paved the way for a sharp recovery in global economic activity following pandemic- driven downturns in 2020, but ultimately created the conditions for increased competition for many raw materials in cyclical and non-cyclical industries. At the same time, supply-side constraints disrupted international flows of goods. This led to a highly inflationary environment, characterised by rising prices and the restricted availability of many input materials, some of which also form part of Aluflexpack's value chain.

Amid these extraordinary circumstances, our network of high-quality suppliers and strong commitment across the organisation enabled us to secure the continued flow of our goods - from receiving raw materials from suppliers to delivering final products to customers. Throughout 2021, we not only maintained supplies to our customers, but were also in a position to offer support to customers having difficulties in obtaining the volumes they needed on the market. By doing this, we continued to demonstrate the strength and resilience of the robust ecosystem of partners and suppliers we have shaped over the past few years.

ANNUAL REPORT 2021

Continued strong demand

In 2021, demand for Aluflexpack products remained at a robust level in most of our end markets. A large portion of our well-diversified portfolio is attributed to packaging for on-the-shelf food products designed for at-home consumption, which is naturally less affected by lockdowns and restrictions on movement. Compared with the previous year, consumption patterns had started to return to normal, as the effects resulting from the stockpiling behaviour observed predominantly in the second quarter of 2020 did not recur to the same extent in 2021.

In terms of demand in each of Aluflexpack's end markets, we continued to operate in a healthy market environment in 2021, especially in our Pet food and Coffee & Tea end markets. As a result of increasing trends towards pet ownership since the outbreak of COVID-19, driven by restrictions on social contact, demand for aluminium trays and stand-up pouches for pet food packaging was high. In response, we succeeded in further ramping up our capacities in relation to stand-up-pouches. In the Coffee & Tea end market, we continued to benefit from the trend away from plastic and towards full aluminium capsules, and the general trend towards the at-home consumption of single-serve beverages. The Confectionery end market recovered in 2021 thanks to increased sales through channels such as speciality chocolate shops and duty- free outlets, which were partly closed in 2020.

Demand in our pharmaceutical business was negatively impacted by lockdowns, stricter hygiene measures and restrictions on movement, which led to fewer cases of cold, flu and other illnesses (not including COVID-19). However, signs of recovery were already emerging in the second half of 2021. In our other end markets, demand remained at a generally robust level in 2021, and we managed to increase our share of wallet with many customers.

Solid development of results

Aluflexpack continued to exhibit solid performance in 2021. Despite the exceptionally high demand observed in several end markets in the first half of 2020 and weaker-than-expected demand in the Pharmaceutical end market in 2021, Aluflexpack achieved an organic growth rate of 8.6% in 2021. Taking into account the consolidation effects resulting from the acquisition of the Polish packaging company in September 2020, overall growth in net sales amounted to 11.1% compared with 2020.

Aluflexpack achieved again profitable growth in 2021 despite being hit by rising input material costs in the second half of the year. Overall, we achieved an adjusted EBITDA of €41.8m (2020: €37.4m).3 This equates to a strong increase of 11.9% compared with the previous year, and a margin of 15.7% (2020: 15.6%). Despite this positive overall development, our earnings in the second half of the year were already impacted by rising prices for input materials that are

3 A detailed reconciliation of the reported and adjusted figures, as well as an overview of alternative performance measures used, can be found on pages 59-62.

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ANNUAL REPORT 2021