Azelis : H1 2023 Financial Report (EN)

Interim Financial Report

For the first six months of 2023

C O N T E N T S

1. Report of the management
2. Management review

1. Statement of the Board of Directors
2. Auditor's report

16 Unaudited condensed consolidated interim financial statements

31 Alternative performance measures

35 Disclaimer

• Contents › Report of the management

Report of the management

Interim report H1 2023

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• Contents › Report of the management › Management review

H1 2023 Highlights

• Revenue of EUR 2.1bn, representing year-on-year growth of 6.1% (8.0% on a constant currency basis). In Q2, total group revenue was stable relative to the prior year, as organic revenue decline was offset by M&A revenue contribution.
• Gross profitof EUR 517.1m represents year-on-year growth of 5.8%, supported by positive mix effects across our businesses. Gross profitmargin was broadly stable relative to the prior year at 24.1%.
• Adjusted EBITA of EUR 263.4m represents an 8.6% year-on-year increase and a 29 bp margin step-up. Conversion margin expanded by 129 bp compared to H1 2022 to 50.9%, demonstrating the defensiveness of our business model.
• Net profitof EUR 109.2m represents a year-on-year decline of 22.9%, driven by higher interest expense due to increased debt level and higher interest rates. In addition, the Group had EUR 17.8m in non-cash charges related to FX volatility and hyperinflation accounting.
• Free cash flow of EUR 245.2m increased by 76.1% year-on-year, with FCF conversion ratio expanding by 35 p.p. over the period.
• Leverage ratio was 2.6x at the end of June 2023, versus 2.2x at the end of December 2022 and 2.3x at the end of June 2022.
• Six acquisitions were completed in H1, representing combined prior year revenue of over EUR 370m.
• Industry-leadingESG ranking confirmedin latest Sustainalytics assessment1 reflecting our commitment to Sustainability.
• At present, the Group remains on track to achieve its midterm annual revenue growth guidance of 8-10%, subject to currency fluctuation, and is confident of delivering 10-15 bps adjusted EBITA margin expansion for the full year 2023.
• The Board of Directors has appointed Anna Bertona, current President & CEO of Azelis EMEA, to succeed Dr. Hans Joachim Müller as Group CEO, starting the 1st of January, 2024.

						Reported		Constant
(in millions of €)		H1 2023		H1 2022		Change		Currency
Life Sciences		1,316.9		1,208.6		9.0%		10.8%
Industrial Chemicals		824.4		810.4		1.7%		3.7%
Revenue		2,141.2		2,019.0		6.1%		8.0%
Gross Profit		517.1		488.6		5.8%		7.6%
Gross ProfitMargin		24.1%		24.2%		-5 bp		-9 bp
Adjusted EBITDA1		279.2		255.0		9.5%		11.8%
Adjusted EBITDA Margin		13.0%		12.6%		41 bp		45 bp
Adjusted EBITA1		263.4		242.6		8.6%		10.9%
Adjusted EBITA Margin		12.3%		12.0%		29 bp		33 bp
Conversion Margin1		50.9%		49.7%		129 bp		156 bp
Net Profit		109.2		141.7		-22.9%		-20.7%
Cash earnings per share1		0.60		0.73		-17.2%		-15.0%
Earnings per share		0.44		0.59		-26.2%		-26.0%
Operating Cash Flow		250.2		151.5		65.2%
Free Cash Flow1		245.2		139.2		76.1%
FCF Conversion ratio1		92.2%		56.9%		3524 bp
Net Working Capital / Revenue normalized for acquisitions1		15.4%		15.4%		4 bp
Leverage Ratio1		2.6		2.3		9.5%

1 Refer to the definitions of Alternative Performance Measures in the 2022 Annual Report

1 Morningstar Sustainalytics Assessment June 2023 ESG Risk Score of 11.9

4 Interim report H1 2023

• Contents › Report of the management › Management review

Comment from Dr. Hans Joachim Müller, CEO: "Our results for H1 2023 reflect the current trends in the industry, which is undergoing a normalization following very strong growth in 2021-2022. The group's diverse footprint allows us to mitigate the weaker demand in some of our markets, notably in the Americas. Furthermore, our asset-light, defensive business model allows us to generate strong cashflows despite the pressure on our top line.

While the current volatility in our markets has raised the risk in our outlook, at present, the Group remains on track to achieve its midterm annual revenue growth guidance of 8-10%, subject to currency fluctuation, and is confident of delivering 10-15 bps adjusted EBITA margin expansion for the full year 2023.

Notwithstanding the current challenges in our industry, we continue to execute on our growth strategy. In H1, we expanded our footprint with the acquisition of six companies that significantly strengthen our lateral value chain. We are also more determined than ever to strengthen the relationships with our principals, as reflected in multiple mandate wins during the period. Overall, we remain focused on achieving our long-term strategy to become the reference innovation solutions provider in specialty chemicals and food ingredients distribution.

Consistent with this long-term strategy, we are delighted to announce that Anna Bertona, current President

• CEO of Azelis EMEA, will be succeeding as Group CEO when I retire at the end of the year. Anna brings a wealth of experience, and equally important, represents continuity in our journey as a company. Having successfully led our EMEA business since 2016, she not only embodies our mission, but also drives our values as Executive Committee sponsor for our Sustainability agenda. I have every confidence that Anna will successfully lead the Group to the next stage of its growth journey."

Our results for H1 2023 reflect the current trends in the industry, which is undergoing a normalization following exceptionally strong growth in 2021-2022. Notwithstanding the current challenges in our industry, we continue to execute on

our growth strategy.

Dr. Hans Joachim Müller

Chief Executive Officer

Interim report H1 2023

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