Coloplast A/S : H1 2020/21 Interim Financial Report

Announcement no. 03/2021 6 May 2021

H1 2020/21

Interim financial results, H1 2020/21

1 October 2020 - 31 March 2021

Coloplast A/S

Holtedam 1

DK-3050 Humlebaek,

Denmark

Company reg. (CVR) no. 69749917

Organic growth guidance maintained at 7-8% and EBIT margin guidance before special items raised from 31-32% to 32- 33%.

• Coloplast delivered 2% organic growth in Q2. Reported revenue in DKK was down by 1% to DKK 4,753 million. Year to date organic growth was 4% and reported revenue in DKK was flat at DKK 9,491 million due to significant FX headwinds.
• Organic growth rates by business area year to date: Ostomy Care 5%, Continence Care 3%, Interventional Urology 4% and Wound & Skin Care 1%.
• The Chronic Care business in Q2 was negatively impacted by around DKK 150 million in stock building in the comparison period and lower growth in new patients in Europe due to COVID-19, in particular in the UK.
• Ostomy Care delivered 4% organic growth in Q2 lifted by solid broad-based performance in Emerging markets. Continence Care delivered flat organic growth in Q2 reflecting lower growth in new patients in Europe and the US.
• The Interventional Urology business delivered 3% organic growth in Q2. The growth was driven by the Men's Health portfolio in the US, which continues to lead the recovery as elective procedures resume.
• The Wound and Skin Care business delivered 1% organic growth in Q2. Wound Care alone delivered 9% organic growth in Q2 driven by Europe and China. The Biatain® Fiber portfolio continued to contribute to growth, especially in Germany and France. Skin Care and in particular Contract manufacturing detracted from growth as a result of COVID-19.
• EBIT before special items amounted to DKK 3,113 million for H1 20/21, a 3% increase, and an EBIT margin before special items of 33% against 32% last year. EBIT was impacted by a further DKK 200 million provision for costs related to the existing lawsuits in the US alleging injury resulting from the use of transvaginal surgical mesh products.
• ROIC after tax before special items was 43% for the first six months against 46% in the same period last year negatively impacted by the acquisition of Nine Continents Medical in November 2020.
• Coloplast has achieved a breakthrough in Hungary around waste recycling. As a result, 58% of the production waste is now recycled (41% in FY 2019/20), exceeding the 2025 target of 50%.
• Coloplast was awarded a contract for ostomy products with Vizient, Inc., the largest healthcare performance improvement company in the US effective as of July 1, 2021.
• The Board of Directors has resolved that Coloplast will pay a half-year interim dividend of DKK 5.00 per share for a dividend pay-out of DKK 1,065 million.

2020/21 organic growth guidance unchanged, EBIT margin guidance raised

• We continue to expect organic revenue growth of 7-8% at constant exchange rates. Reported growth in DKK is still expected to be 4-5%.
• We now expect a reported EBIT margin before special items of 32-33% from previously 31-32% due to efficiency gains and lower costs as a result of COVID-19. After special items of DKK 200m the reported EBIT margin is expected to be 31-32%.
• Capital expenditure is still expected to be around DKK 1.1 billion. The effective tax rate is still expected to be around 23%.

Conference call

Coloplast will host a conference call on Thursday, 6 May 2021 at 15.00 CEST. The call is expected to last about one hour.

To actively participate in the Q&A session please call [phone], [phone] or [phone]. The participant PIN code is 62535223#.

Access the conference call webcast directly here:

https://getvisualtv.net/strea m/?coloplast-xu5g2qb8j5

1

Announcement no. 03/2021 6 May 2021

Financial highlights and key ratios

1 October 2020 - 31 March 2021, unaudited

Consolidated	2020/21		2019/20			2020/21	2019/20
	6 mths		6 mths		Change		Q2		Q2		Change
Income statement, DKK million
Revenue	9,491		9,535	0%	4,753	4,823	-1%
Research and development costs	-363		-351	3%	-177	-182	-3%
Operating profit before interest, tax, depr. and amort. (EBITDA)	3,305		3,436	-4%	1,567	1,756	-11%
Operating profit (EBIT) before special items	3,113		3,014	3%	1,577	1,542	2%
Special items	-200		-		N/A	-200	-		N/A
Operating profit (EBIT)	2,913		3,014	-3%	1,377	1,542	-11%
Net financial income and expenses	57		-211		N/A	98	-157		N/A
Profit before tax	2,970		2,803	6%	1,475	1,385	6%
Net profit for the period	2,266		2,159	5%	1,130	1,067	6%
Revenue growth, %
Period growth in revenue	0	9			-1	10
Organic growth	4	8			2	9
Currency effect	-4	1			-3	1
Balance sheet, DKK million
Total assets	15,249	13,528	13%	15,249	13,528	13%
Capital invested	11,682	10,251	14%	11,682	10,251	14%
Net interest-bearing debt	3,450	2,369	46%	3,450	2,369	46%
Equity end of period	6,936	6,586	5%	6,936	6,586	5%
Cash flow and investments, DKK million
Cash flows from operating activities	1,959	1,641	19%	747	611	22%
Cash flows from investing activities	-1,513	-460		N/A	-287	-246	17%
Investments in property, plant and equipment, gross	-462	-435	6%	-207	-230	-10%
Free cash flow	446	1,181	-62%	460	365	26%
Cash flows from financing activities	-369	-1,016	-64%	-494	-354	40%
Key ratios
Average number of employees, FTEs	12,532	12,179
Operating margin (EBIT margin) before special items, %	33	32			33	32
Operating margin (EBIT margin), %	31	32			29	32
Operating margin before interest, tax, depr. and amort., (EBITDA
margin), %	35	36			33	36
Return on average invested capital before tax (ROIC), %¹⁾	56	60			54	60
Return on average invested capital after tax (ROIC), %¹⁾	43	46			42	46
Return on equity, %	70	71			71	71
Equity ratio, %	45	49			45	49
Net asset value per outstanding share, DKK	33	31	6%	33	31	6%
Share data
Share price, DKK	954	987	-3%	954	987	-3%
Share price/net asset value per share	29.3	31.9	-8%	29.3	31.9	-8%
Average number of outstanding shares, millions	212.8	212.5	0%	212.8	212.6	0%
PE, price/earnings ratio	44.8	48.6	-8%	44.9	49.1	-9%
Earnings per share (EPS), diluted	10.63	10.12	5%	5.30	5.00	6%
Free cash flow per share	2.1	5.6	-63%	2.2	1.7	29%

¹⁾ Before special items. After special items, ROIC before tax was 54% (2019/20: 62%), and ROIC after tax was 41% (2019/20: 48%).

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Announcement no. 03/2021 6 May 2021

Sales performance

The organic growth rate was 4% in the first six months of 2020/21, adversely impacted by the COVID-19 pandemic, as well as around DKK 150 million in stock building in primarily Europe in Q2 last year. Reported revenue was flat at DKK 9,491 million. Exchange rate developments decreased revenue by 4% mainly related to a significant decrease in the value of USD, GBP and several emerging markets currencies against DKK, in particular ARS, BRL and RUB.

Organic growth in the second quarter was 2%. Reported revenue in DKK was down by 1% to DKK 4,753 million. Exchange rate developments decreased revenue by 3% mainly related to the negative development in USD and ARS against DKK.

During Q2, Coloplast acquired two small catheter dealers in the US. The revenue contribution in the quarter is immaterial.

Sales performance by business areas		DKK million
		2020/21		2019/20
		(6 mths)		(6 mths)
Ostomy Care		3,868		3,827
Continence Care		3,424		3,462
Interventional Urology		1,031		1,042
Wound & Skin Care		1,168		1,204
Revenue		9,491		9,535
		DKK million
		2020/21		2019/20
		(Q2)		(Q2)
Ostomy Care		1,936		1,920
Continence Care		1,719		1,776
Interventional Urology		495		507
Wound & Skin Care		603		620
Revenue		4,753		4,823

Growth composition (6 mths)

Organic	Acquired	Exchange	Reported
growth	operations	rates	growth
5%	-	-4%	1%
3%	0%	-4%	-1%
4%	-	-5%	-1%
1%	-	-4%	-3%
4%	0%	-4%	0%
	Growth composition (Q2)
Organic	Acquired	Exchange	Reported
growth	operations	rates	growth
4%	-	-3%	1%
0%	0%	-3%	-3%
3%	-	-5%	-2%
1%	-	-4%	-3%
2%	0%	-3%	-1%

Sales performance by region		DKK million			Growth composition (6 mths)
		2020/21		2019/20		Organic		Acquired		Exchange		Reported
		(6 mths)		(6 mths)		growth		operations		rates		growth
European markets		5,505		5,591		0%		-		-2%		-2%
Other developed markets		2,317		2,351		6%		0%		-7%		-1%
Emerging markets		1,669		1,593		15%		-		-10%		5%
Revenue		9,491		9,535		4%		0%		-4%		0%
		DKK million				Growth composition (Q2)
		2020/21		2019/20		Organic		Acquired		Exchange		Reported
		(Q2)		(Q2)		growth		operations		rates		growth
European markets		2,768		2,847		-2%		-		-1%		-3%
Other developed markets		1,143		1,172		5%		0%		-7%		-2%
Emerging markets		842		804		14%		-		-9%		5%
Revenue		4,753		4,823		2%		0%		-3%		-1%

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Announcement no. 03/2021 6 May 2021

Ostomy Care

Ostomy Care generated 5% organic sales growth in the first six months of the 2020/21 financial year, with reported revenue in DKK growing by 1% to DKK 3,868 million.

The SenSura® Mio portfolio and the Brava® range of supporting products continued to be the main drivers of revenue growth. At product level, SenSura Mio Convex was the main contributor to growth driven by the UK, Germany and the US. SenSura Mio Concave continued to contribute to growth. The SenSura and Assura/Alterna® portfolios also delivered satisfactory sales growth in the markets where they are being actively promoted, most notably in China. Sales of the Brava range of supporting products continue to contribute to growth driven by the US, China and Germany.

From a geographical perspective, growth in Europe remains challenged by lower growth in new patients due to COVID-19. Sales growth in Europe in H1 was also negatively impacted by stock building in Q2 last year. The Emerging markets region was the main contributor to growth, led by China, LATAM and tender deliveries in Russia, which similar to last year were phased in H1. The US also contributed nicely to growth in the first six months.

Across the Ostomy Care business, and most pronounced in the European markets, growth in new patients has been negatively impacted as only the most acute ostomy surgeries have taken place following the COVID-19 outbreak. The impact has been largest in the UK, which is Coloplast's largest market in Europe. Growth in new patients continues to improve, albeit at a slower pace in Europe.

Q2 organic growth was 4% and reported revenue increased by 1% to DKK 1,936 million.

The SenSura Mio portfolio and the Brava range of supporting products were the main contributors to growth. SenSura Mio Convex was the main contributor to growth driven by Europe and in particular Germany. The SenSura and Assura/Alterna portfolios delivered satisfactory growth, most notably in China. Revenue growth in the Brava range of supporting products was driven by China and the US.

From a geographical perspective, sales growth in Europe was negatively impacted by stock building in Q2 last year and lower growth in new patients in Europe due to COVID-19, in particular in the UK.

The Emerging markets region was the main contributor to growth in Q2, led by China and LATAM. The US also delivered a good contribution to growth.

1.9 billion

Reported revenue

in DKK for Q2 2020/21

Organic growth

5%

4%

H1 20/21

Q2 20/21

Reported growth

1%1%

H1 20/21

Q2 20/21

1%

	H1	5%
-4%	Growth compo-
	sition (6 mths)

Organic growth

Exchange rates

Reported growth

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Announcement no. 03/2021 6 May 2021

Continence Care

Continence Care generated 3% organic sales growth for the first six months of the 2020/21 financial year, with reported revenue in DKK declining by 1% to DKK 3,424 million.

SpeediCath® intermittent catheters were the main drivers of revenue growth. The growth in sales of the SpeediCath portfolio was driven by flexible catheters, compact catheters and standard catheters, all of which are ready-to-use hydrophilic coated catheters. The growth in flexible catheters and compact catheters was mainly driven by the US and Germany. SpeediCath Navi, a hydrophilic catheter specifically designed for emerging markets and lower priced developed markets, continued to contribute to growth.

The Bowel Management and Collecting Devices businesses were negatively impacted by COVID-19, and contributed to the weakness in the European Continence Care business.

From a geographical perspective, growth in Europe remains challenged by lower growth in new patients due to COVID-19. Sales growth in H1 in Europe was also negatively impacted by stock

the most significant in the UK, which is Coloplast's largest market in Europe. Growth in new patients continues to improve, albeit at a slower pace in Europe.

Q2 organic growth was flat, while reported revenue in DKK decreased by 3% to DKK 1,719 million.

Sales growth in Q2 was driven by the SpeediCath portfolio, and more specifically flexible catheters.

Growth in Q2 was adversely impacted by Bowel Management and Collecting Devices, in particular in Europe, as fewer patients have been treated as a result of COVID-19.

From a geographical perspective, sales growth in Europe was adversely impacted by stock building in Q2 last year, as well as lower growth in new patients due to COVID-19, mainly in the UK.

The US and Emerging markets contributed positively to growth in Q2. The growth momentum in the US was impacted by lower growth in new patients in Q2.

1.7 billion

Reported revenue

in DKK for Q2 2020/21

Organic growth

3%

0%

H1 20/21

Q2 20/21

Reported growth

-1%

-3%

H1 20/21

Q2 20/21

building in Q2 last year.

The US and Emerging markets contributed positively to growth.

-1%

H1

3%

Momentum in Q2 in the US was weaker due to lower growth in new patients.

Across the Continence Care business, and most pronounced in Europe, growth in new patients has been negatively impacted due to the COVID-19 outbreak, as only the most acute patient groups such as spinal cord injured have been treated, whereas other patient groups including MS, BPH and Bowel Management patients have postponed their treatment. The impact has been

Growth compo-

sition (6 mths)

-4%

Organic growth

Exchange rates

Reported growth

5