Duroc : 4Q 2020/21

YEAR-END REPORT

JULY 2020-JUNE 2021

FINANCIAL YEAR ENDS WITH RECORD QUARTER

Prerequisites for a continuous good profit development are established

Fourth quarter April-June 2021

• Net sales increased by 68 percent to MSEK 942.1 (560.1). The previous year was to a greater degree affected by Covid 19.
• Adjusted EBITDA* increased by 70 percent to MSEK 76.4 (45.1), corresponding to an adjusted EBITDA* margin of 8.1 percent (8.1).
• Adjusted EBIT totaled MSEK 53.6 (19.4).
• Operating profit totaled MSEK 54.4 (10.3 during the fourth quarter 2019/20 and 26.6 during the fourth quarter 2018/2019).
• Cash flow from operating activities totaledMSEK-35.1 (133.3).
• Profit after tax was MSEK 38.1(-1.2).
• Adjusted earnings per share totaled SEK 0.96 (0.20).
• Earnings per share totaled SEK 0.98(-0.03).
• Due to Durocs cointinous growth expansions and the positive effects from historical investments, the Board of Directors proposes that no dividend be paid for the financial year 2020/2021.

July 2020-June 2021

• Net sales increased by 3 percent to MSEK 3,254.5 (3,158.2).
• Adjusted EBITDA* increased by 5 percent to MSEK 224.2 (212.7), corresponding to an adjusted EBITDA* margin of
• 1. percent (6.7).
• Adjusted EBIT totaled MSEK 125.8 (110.8)
• After restructuring costs of MSEK 37.2, operating profit totaled MSEK 88.6 (MSEK 161.8 including 66.9 from the dissolution of negative goodwill).
• Cash flow from operating activities totaled MSEK 70.6 (322.3).
• Profit after tax totaled MSEK 55.4 (116.5 including MSEK
• 1. from the dissolution of negative goodwill).
• Adjusted earnings per share totaled SEK 2.37 (1.68).
• Earnings per share totaled SEK 1.42 (2.99).
• Cash and cash equivalents at the end of June totaled MSEK
• 1. (142.3) and net debt excluding lease liabilities from IFRS 16 totaled MSEK 139.9 (117.8). Unutilized credit facilities totaled MSEK 275.

	2020/2021	2019/2020	2020/2021	2019/2020
Group (MSEK)	Q4	Q4	Q1-Q4	Q1-Q4
Net sales	942.1	560.1	3,254.5	3,158.2
EBITDA	77.7	41.5	189.9	269.1
Adjusted EBITDA*	76.4	45.1	224.2	212.7
Adjusted EBITDA*-margin, %	8.1	8.1	6.9	6.7
Operating profit/loss (EBIT)	54.4	10.3	88.6	161.8
Adjusted EBIT*	53.6	19.4	125.8	110.8
Profit/loss after tax	38.1	-1.2	55.4	116.5
Profit per share, before and after dilution, SEK	0.98	-0.03	1.42	2.99
Adjusted profit per share, before and after dilution, SEK*
0.96	0.20	2.37	1.68
Cashflow from operating activities	-35.1	133.3	70.6	322.3
Net debt excl. lease liability from IFRS 16	139.9	117.8	139.9	117.8
Net debt incl. lease liability from IFRS 16	283.3	257.0	283.3	257.0
Net debt/Equity ratio, %	26	27	26	27

*Adjusted for items affecting comparability. A reconciliation of amounts can be found on page 17

Duroc acquires, develops and manages companies with a focus on trade and industry. Using their profound knowledge of technology and markets, the Group's companies aim to achieve leading positions in their respective industries. As the owner, Duroc actively contributes to their development. Duroc is listed on Nasdaq Stockholm (short name: DURC). www.duroc.se

D U RO C Y E A R - E N D R E P O R T Q 4 20 2 0/ 2 02 1	2 ( 1 9 )

CEO'S COMMENT

The fourth quarter was Duroc's strongest ever. Net sales increased by 68 percent and adjusted EBIT by 176 percent. The quarter was characterized by high demand in most of the portfolio companies and measures taken in parts of the portfolio are expected to contribute to strong earnings growth moving forward. The year-over-year quarter was, to a larger extent, affected by the pandemic.

Duroc is an acquisitions and development company that focuses on creating value for its shareholders through oportunistic acquisition of businesses at low financial risk and develop them for long term profitability . Most of the portfolio companies are performing well. Some of the companies are high performers, e.g. Cresco, Duroc Rail and Duroc Laser Coating (part of the Smaller Company Portfolio).

Conditions are even better now that Duroc is entering financial year 2021/22. The majority of investments in new capacity, new product launches and geographical expansion were carried out at the same time as less profitable production was shut down, leading to significant cost savings. There is a strong conviction in the portfolio companies that these investments and activities, combined with the market situation, will have positive effects both in the short and long terms.

Duroc's acquisition ambitions seek to create value by finding companies with high intrinsic values. These can be real assets as well as potential upsides, e.g. through new product launches and geographical expansion. In Durocs experience, it is more difficult to find and realize these acquisitions than to acquire well- performing companies at high purchase prices. However, I feel Duroc's strategy entails lower risk, while the resulting profit can be very significant in the long run, in other words a major gain in relation to invested capital. I believe Durocs intentionally conservative financial position to be sound for investors over the long term. Duroc works with low risk over the long term and has a well-developed acquisition process that involves valuation analyses, scanning via established networks and an ability to conclude potential deals quickly. With its strong balance sheet and excellent cash flows, Duroc has significant scope for continued acquisitions.

Fourth quarter April-June 2021

Duroc performed well in the fourth quarter. Net sales increased by 68 percent to MSEK 942.1 (560.1). Adjusted EBIT increased by 176 percent to MSEK 53.6 (19.4). The quarter was characterized by record levels in several of the portfolio companies. The intentional focus on highly profitable products with high technology content led to a strong quarter for IFG. Investments in new products and markets generated record profits for cultivation equipment company Cresco, which with e.g. its

climate products for greenhouses contributes to the sustainable production of local crops around the world. With its sales of machine tools, the DMT Group reached the highest order levels in the history of the company. Drake Extrusion, Duroc Rail, Plastibert (a Belgian company in the Cotting Group) and Duroc Laser Coating (part of the Smaller Company Portfolio) closed the financial year strongly. The Cotting Group's French unit continues to struggle with low volumes arising from semiconductor shortages in the automotive industry.

Financial year July 2020-June 2021

Net sales increased by 3 percent to MSEK 3,254.5 (3,158.2). Adjusted EBIT increased by 14 percent to MSEK 125.8 (110.8). The pandemic affected most of the portfolio companies negatively at the beginning of the financial year. Demand then rose gradually until it reached record levels in the last quarter in most parts of the portfolio. As the business climate in general has normalized, the operating capital has increased to more normal levels. Altogether, profits for the year were affected by shortages of raw materials and strong price increases for input goods. However, Duroc finished the year with a record quarter. Cresco, IFG, Duroc Rail and Duroc Laser Coating were the brightest stars in the portfolio during the year.

Future prospects

Overall, net debt remains low; there is a good spread across the portfolio and many of our companies are performing well. The economic climate continues to be good and demand is expected to remain strong. As previously announced, conditions and expectations for the next 12-month period look good. However, variations between the quarters will occur. Logistics challenges and a lack of certain raw materials may lead to disruptions in the operations, but with well-filled order books and our well- considered investments in the portfolio companies, I'm convinced that the 2021/22 financial year will be a bettter one for the Group. I expect materially higher profit levels during the coming years after 2021/2022 due to the investments and structural measures taken during the last years in combination with Durocs future investment - and improvement plans.

Duroc as a whole has made a good profit in the light of the challenges the pandemic has caused. The portfolio companies have driven the development ahead with efficient cost control and has created conditions to maintain a safe work environment. would like to take this opportunity to thank all of our talented employees who have done a fantastic job in challenging conditions.

John Häger

CEO

D U RO C Y E A R - E N D R E P O R T Q 4 20 2 0/ 2 02 1	3 ( 1 9 )

DEVELOPMENTS IN DUROC PORTFOLIO COMPANIES

Duroc's portfolio companies consist of International Fibres Group (IFG), Drake Extrusion, Cresco, Cotting Group, Duroc Machine Tool Group (DMT Group), Duroc Rail and the Smaller Company Portfolio, which comprises Universal Power Nordic (UPN), Herber and Duroc Laser Coating (DLC). Set forth below are each individual portfolio company's share of net sales and adjusted EBIT for the past 12-month period, July 2020- June 2021. Read more about developments company by company on pages 4-7 and in Duroc's segment report on page 15.

SHARE OF NET SALES (R12)

ADJUSTED EBIT PER PORTFOLIO COMPANY (R12)

	Duroc Rail	Smaller
	4%
	Comp Portf
	DMT Group	4%
	12%	IFG
	Cotting	36%
	Group
	16%
	Cresco	Drake
	Extrusion
	9%
	19%

50
40
30
20
10
0
IFG	Drake	Cresco	Cotting	DMT Group	Duroc Rail	Smaller
-10	Extrusion		Group			Comp Portf

Fourth quarter April-June 2021

Net sales increased by 68 percent to MSEK 942.1 (560.1). Organic growth stood at 77 percent. With the single exception of the Smaller Company Portfolio, all companies increased sales by between 9 and 160 percent. The high growth is partly attributable to low levels in the year-over-year quarter as a result of the pandemic. However, most companies in the portfolio delivered high growth even in comparison with more normal levels. The high net sales drove adjusted EBITDA up to MSEK 76.4 (45.1). Strong results in IFG, Cresco, DMT Group and Duroc Rail. Drake Extrusion recovered from a challenging situation on the raw material side. At 8.1 percent (8.1), the adjusted EBITDA margin was unchanged compared with the previous year. Adjusted EBIT totaled MSEK 53.6 (19.4) and profit after tax MSEK 38.1 (-1.2).

July 2020-June 2021

Net sales increased by 3 percent to MSEK 3,254.5 (3,158.2). Organic growth stood at 8 percent. Increased sales in all portfolio companies except for the Cotting Group and the Smaller Company Portfolio, which are still facing challenges from the post-pandemic aftereffects. Adjusted EBITDA totaled MSEK 224.2 (212.7) with a maintained adjusted EBITDA margin of 6.9 percent (6.7). Improved EBITDA in IFG, Cresco and Duroc Rail. DMT Group performed in line with the previous year. Adjusted EBIT totaled MSEK 125.8 (110.8). Operating profit (EBIT) which includes restructuring costs of MSEK 37.2, totaled MSEK 88.6 (161.8), including MSEK 66.9 from the dissolution of negative goodwill from the acquisition of Cotting Group).

The restructuring costs mainly relate to the closure of one of IFG's production facilities in the UK and are expected to lead to an annual improvement in earnings of around MSEK 10.

DEVELOPMENT OF DUROC'S NET SALES

MSEK
900
800
700
600
500
400
300
200
100
0
Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
		2018/2019			2019/2020		2020/2021

DEVELOPMENT OF DUROC'S OPERATING PROFIT (EBIT)

MSEK
100
90
80
70
60
50
40
30
20
10
0
Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
		2018/2019			2019/2020		2020/2021

Operating profit for Q1 and Q2 2019/2020 includes MSEK 65.7 and MSEK 1.2 respectively for negative goodwill from business acquisitions.

D U RO C Y E A R - E N D R E P O R T Q 4 20 2 0/ 2 02 1	4 ( 1 9 )

International Fibres Group (IFG) is one of	Share of Duroc's sales
Europe's leading manufacturers of	(R12)
polypropylene-based staple fibers, an input
product with reinforcing, insulating,
separating or draining properties. The fiber is
used in the production of e.g. flooring, rugs,
furniture, filters, foodstuff packaging, car	36%
interiors and nonwoven fabrics, which means

a diversified customer portfolio. IFG has production facilities in Belgium, the United Kingdom and Austria.

• Sales volumes increased by 44 percent. Organic growth, which was also impacted by the effects of increased raw material prices*, was 102 percent.
• Volumes were lower than usual in theyear-over-year period due to Covid 19, but even adjusted for this, IFG ended the financial year very strongly.
• The transition of the product mix to niche products more than doubled profitability during the financial year.
• While raw material prices remain at a high level, the availability of materials has improved. Pricing to customers led to sustained profitability*.
• Tests with PLA fiber (organic polymers) has shown great potential for yet another profitable product area in the years ahead.
• Full year 2020/2021 includes restructuring costs of MSEK 26.0. The closure of a production unit in the UK is expected to result in an annual improvement in earnings of approximately MSEK 10.
• Government support linked to Covid 19 during the quarter totaled MSEK 0.2, and for the financial year, MSEK 3.3.

*During the second half of the financial year, commodity prices rose at IFG. Price mechanisms in customer agreements mean that sales increase as raw material prices rise and decrease as prices fall.

Because raw material prices affect both the sales price and raw material costs, gross profit remains unchanged, but with a certain lag.

	2020/	2019/	2020/	2019/
	2021	2020	2021	2020
Amounts in MSEK	Q4	Q4	Q1-Q4Q1-Q4
Net Sales	361.0	186.5	1,155.8	1,067.5
Growth, Net Sales %	93.6	-44.4	8.3	-16.2
Organic growth %	101.8	-43.6	13.2	-18.2
EBITDA	33.2	4.1	43.4	26.3
EBITDA margin %	9.2	2.2	3.8	2.5
Adjusted EBITDA	32.1	6.1	69.1	29.2
Adjusted EBITDA-margin, %	8.9	3.3	6.0	2.7
EBIT	26.5	-8.4	13.5	-9.6
EBIT margin %	7.3	-4.5	1.2	-0.9
Net Debt/Net Cash (-)	87.3	24.4	87.3	24.4
of which from leasing IFRS 16	66.3	74.6	66.3	74.6
Capital employed	421.8	388.3	421.8	388.3
ROCE %	3.7	-2.2	3.7	-2.2
Adjusted ROCE %	11.2	-0.3	11.2	-0.3

Drake Extrusion is North America's leading producer of polypropylene-based colored filament yarn and staple fiber. Filament yarn is used mostly by customers who produce fabrics for the furniture industry. Staple fiber is used for production in a variety of areas including flooring, rugs, furniture, technical filters, car interiors and nonwoven fabrics. The business is located in Virginia, USA.

Share of Duroc's sales (R12)

19%

• Sales volumes increased by 78 percent. Organic growth of 160 percent is also affected by higher prices due to increased raw material costs.
• Volumes were lower than usual in theyear-over-year period due to Covid 19.
• The shortage of raw materials and associated price increases caused by the temporary elimination of suppliers in Texas and the effects of the pandemic lingered longer than anticipated. Raw material prices increased further in the fourth quarter.
• Prices to customers are adjusted upwards on a continual basis, but with a certain lag. In the last month of the fourth quarter, Drake Extrusion's profitability was back at its usual high level.
• A weakened USD had a negative impact on EBIT compared to the previous year. The negative effect totaled MSEK 2.5 for the financial year:

	2020/	2019/	2020/	2019/
	2021	2020	2021	2020
Amounts in MSEK	Q4	Q4	Q1-Q4Q1-Q4
Net Sales	179.6	77.6	622.2	543.8
Growth, Net Sales %	131.5	-53.6	14.4	-19.8
Organic growth %	159.5	-53.2	26.9	-23.9
EBITDA	11.5	20.8	44.6	63.4
EBITDA margin %	6.4	26.9	7.2	11.7
EBIT	6.5	14.8	20.3	38.5
EBIT margin %	3.6	19.1	3.3	7.1
Net Debt/Net Cash (-)	26.1	-4.0	26.1	-4.0
of which from leasing IFRS 16	12.8	14.9	12.8	14.9
Capital employed	278.6	254.5	278.6	254.5
ROCE %	8.2	15.6	8.2	15.6

D U RO C Y E A R - E N D R E P O R T Q 4 20 2 0/ 2 02 1	5 ( 1 9 )

Cresco develops, produces and sells textile- based solutions for the professional cultivation of crops and is one of the leading players on the global market. The products contribute to favorable environments in greenhouses, mushroom farms and composting installations. The most important product is a climate screen for greenhouses that controls the cultivation climate, contributing to a more efficient process with lower energy consumption. Cresco's production facility is in Belgium.

Share of Duroc's sales (R12)

9%

• Order levels at the end of the period totaled MEUR 14.2, an increase of 25 percent in relation to the third quarter.
• Cresco closed the financial year strongly. EBIT increased by 131 percent during the quarter, and by 71 percent for the financial year. The already strong EBIT margin improved significantly.
• Sales are back at the same levels as 2018/2019 and with a clear increase in profitability.
• Cresco is well positioned to continue growing the business in a favorable market. Geographical expansion and active development efforts to complement the product offering is increasing growth capacity.

	2020/	2019/	2020/	2019/
	2021	2020	2021	2020
Amounts in MSEK	Q4	Q4	Q1-Q4Q1-Q4
Net Sales	86.6	70.8	296.8	258.5
Growth, Net Sales %	22.3	-20.8	14.8	-13.9
Organic growth %	28.3	-21.2	19.7	-15.7
EBITDA	20.8	9.6	46.7	29.1
EBITDA margin %	24.0	13.6	15.7	11.3
EBIT	19.4	8.4	41.8	24.4
EBIT margin %	22.4	11.9	14.1	9.5
Net Debt/Net Cash (-)	27.8	51.3	27.8	51.3
of which from leasing IFRS 16	5.0	5.4	5.0	5.4
Capital employed	172.8	175.4	172.8	175.4
ROCE %	24.7	13.7	24.7	13.7

Duroc Machine Tool Group (DMT Group) is one of the biggest suppliers of machine tools, tools, machine service and support to mechanical engineering companies in the Nordics and Baltics. Its customers can be found in e.g. forestry, the automotive industry, construction machinery and power generation. Its most important products are machining centers from Doosan Machine Tools, one of the market's world-leading brands. The DMT group represents more than 60 internationally renowned brands and is alone in its activity in seven markets: Sweden, Norway, Denmark, Finland, Estonia, Latvia and Lithuania.

Share of Duroc's sales (R12)

12%

• High sales and strong growth in the quarter. Low levels in theyear-over-year quarter due to Covid 19. The order level remains high and totaled MSEK 174.6 at the end of the quarter, the highest ever.
• Strategic investments in sales and system support initiated earlier in the year have borne fruit.
• EBITDA and EBIT improved driven by increased sales volumes.
• The market developed strongly during the quarter.
• DMT received state support of MSEK 0.2 during the quarter and MSEK 0.5 for the full year.

	2020/	2019/	2020/	2019/
	2021	2020	2021	2020
Amounts in MSEK	Q4	Q4	Q1-Q4Q1-Q4
Net Sales	122.7	73.5	379.0	381.4
Growth, Net Sales %	66.9	-33.3	-0.6	-16.1
Organic growth %	71.7	-32.5	2.3	-17.0
EBITDA	12.4	5.6	34.1	35.9
EBITDA margin %	10.1	7.7	9.0	9.4
EBIT	10.9	4.3	29.1	30.8
EBIT margin %	8.9	5.8	7.7	8.1
Net Debt/Net Cash (-)	-17.6	-7.7	-17.6	-7.7
of which from leasing IFRS 16	7.9	4.9	7.9	4.9
Capital employed	46.9	34.8	46.9	34.8
ROCE %	84.0	69.0	84.0	69.0