Lifco : Interim Report January – September 2021

22 October 2021

INTERIM REPORT JANUARY - SEPTEMBER 2021

Reporting period January - September

• Net sales increased 24.9 per cent to SEK 12,528 (10,031) million. Organically, net sales grew by 13.7 per cent.
• EBITA* increased 40.4 per cent to SEK 2,696 (1,920) million.
• The EBITA margin* improved 2.4 percentage points to 21.5 (19.1) per cent.
• Profit before tax grew 43.3 per cent to SEK 2,226 (1,553) million.
• Net profit for the period grew 43.0 per cent to SEK 1,669 (1,167) million.
• Earnings per share increased 42.5 per cent till SEK 3.62 (2.54).
• Cash flow from operating activities amounted to SEK 1,915 (1,995) million.
• The pandemic did not negatively affect the market situation during the period.
• 14 new businesses were consolidated during the period with total annual net sales of about SEK 1,700 million.

Reporting period July - September

• Net sales increased 25.6 per cent to SEK 4,158 (3,311) million. Organically, net sales grew by 7.5 per cent.
• EBITA* increased 23.3 per cent to SEK 862 (699) million.
• The EBITA margin* was 20.7 (21.1) per cent.
• Profit before tax grew 20.1 per cent to SEK 692 (576) million.
• Net profit for the period grew 19.1 per cent to SEK 518 (435) million.
• Cash flow from operating activities amounted to SEK 736 (736) million.

Summary of financial performance

SEK million

Net sales

EBITA*

EBITA margin*

Profit before tax

Net profit for the period Earnings per share2 Return on capital employed

Return on capital employed excl. goodwill

NINE MONTHS	THIRD QUARTER	Rolling 12	FULL
						months	YEAR
2021	20201	change	2021	20201	change		change	20201
12,528	10,031	24.9%	4,158	3,311	25.6%	16,279	18.1%	13,782
2,696	1,920	40.4%	862	699	23.3%	3,478	28.7%	2,702
21.5%	19.1%	2.4	20.7%	21.1%	-0.4	21.4%	1.8	19.6%
2,226	1,553	43.3%	692	576	20.1%	2,880	30.4%	2,207
1,669	1,167	43.0%	518	435	19.1%	2,187	29.8%	1,685
3.62	2.54	42.5%	1.12	0.94	19.1%	4.75	29.4%	3.67
22.7%	18.6%	4.1	22.7%	18.6%	4.1	22.7%	3.1	19.6%
161%	125%	36	161%	125%	36	161%	22	139%

* Before acquisition costs.

• In the first quarter 2021, the Group changed its accounting policies concerning call/put options issued in non-controlling interests. Comparative figures have been recalculated for 2020 without this leading to any material impact on the reporting.
  For more information, see the section on accounting policies.

• Comparative figures have been recalculated after the share split in May 2021, whereby each share was split into five new shares of the same share class (split 5:1).

Lifco AB (publ)

Verkmästaregatan 1, SE-745 85 Enköping

Org nr 556465-3185 www.lifco.se

COMMENTS FROM THE CEO

Lifco's primary target is to increase its earnings every year through organic growth as well as acquisitions. Net sales increased by 24.9 per cent to SEK 12,528 (10,031) million in the first nine months of the year, driven by organic growth and acquisitions. Exchange rate effects negatively impacted sales. The generally favourable market environment in all three business areas was a strong contributing factor to organic growth of 13.7 per cent.

During the first nine months of the year, EBITA* increased by 40.4 per cent to SEK 2,696 (1,920) million and the EBITA margin* improved by 2.4 percentage points to 21.5 (19.1) per cent. Improvements in profitability are a result of organic growth, Lifco's continual focus on profit margins, acquisitions as well as low sales and marketing activities during the first half of the year as a result of the pandemic. Sales and marketing activities have begun to return to more normal levels during the third quarter of 2021.

Earnings per share during the period increased 42.5 per cent till SEK 3.62 (2.54). Cash flow from operating activities amounted to SEK 1,915 (1,995) million during the nine-month period.

During the first nine months of the year, Lifco consolidated 14 acquisitions, of which four in the Dental business area, two in Demolition & Tools and eight in Systems Solutions. The acquisitions comprise four German companies, four Italian, three British, one Swedish, one Czech and one in the US. Many of the companies are market leaders in their respective market niches. The acquisitions will together have a positive impact on Lifco's results and financial position during the year.

On 20 July, Lifco established a new MTN program with a loan framework of SEK 5 billion, making it possible to issue bonds in the Swedish market. On 26 August, Lifco issued an unsecured bond totalling SEK 750 million, and thereby has bonds outstanding totalling SEK 3,550 million. Lifco's financial position remains solid and interest-bearing net debt amounted to 1.2 times EBITDA* at 30 September 2021, which is well in line with our target of interest-bearing net debt of a maximum of three times EBITDA* and means that Lifco possesses the financial scope to make additional acquisitions.

Per Waldemarson

President and CEO

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GROUP PERFORMANCE IN JANUARY - SEPTEMBER

Sales increased 24.9 per cent to SEK 12,528 (10,031) million. Organic growth was 13.7 per cent, acquisitions attributed 12.4 per cent and exchange rate effects had a negative impact on sales of 1.2 per cent. The companies consolidated in the first nine months of the year were the Swedish Elvärmeprodukter i Skellefteå, the British companies Cleveland Cascades and T. Freemantle as well as the German Bode Components and the Czech Medema. Also during the period, the majority of the German companies Kaniedenta and Kentzler-Kaschner, the Italian companies Cangini Benne, DVG De Vecchi, MultiOne and Next Hydraulics as well as the British company Spinaclean, were consolidated. The assets and liabilities of Rissmann Dental and German ErgoPack's distributor in the US were also consolidated.

EBITA* increased 40.4 per cent to SEK 2,696 (1,920) million and the EBITA margin* improved 2.4 percentage points to 21.5 (19.1) as a result of organic growth, Lifco's ongoing focus on profit margins, acquisitions as well as low sales and marketing activities during the first half of the year as a result of the pandemic. Exchange rate effects had a negative impact on EBITA* of 1.9 per cent. During the period, 41 (34) per cent of EBITA* was generated in EUR, 24 (29) per cent in SEK, 12 (14) per cent in NOK, 7 (8) per cent in GBP, 5 (6) per cent in DKK, 5 (3) per cent in USD and 6 (6) per cent in other currencies.

Net financial items were SEK -52(-44) million.

Profit before tax grew 43.3 per cent to SEK 2,226 (1,553) million and net profit for the period increased 43.0 per cent to SEK 1,669 (1,167) million.

Average capital employed excluding goodwill increased by SEK 227 million during the period, to SEK 2,165 million at 30 September 2021, compared with SEK 1,938 million at 31 December 2020.

EBITA* in relation to average capital employed excluding goodwill increased during the period to 161 per cent from 139 per cent at year-end.

The Group's net debt increased by SEK 2,137 million from 31 December 2020 to SEK 6,913 million at 30 September 2021, of which liabilities related to put/call options and additional considerations for acquisitions amounted to SEK 1,518 (986) million. Interest-bearing net debt increased by SEK 1,436 million since year-end and amounted to SEK 4,678 (3,862) million at 30 September 2021.

On 20 July 2021, Lifco established a new MTN program with a loan framework of SEK 5 billion, making it possible to issue bonds in the Swedish market. On 26 August 2021, Lifco issued an unsecured bond totalling SEK 750 million, and thereby has bonds outstanding totalling SEK 3,550 million. In addition to bonds outstanding, Lifco has standard short-term credit facilities.

The net debt/equity ratio at 30 September 2021 was 0.7 (0.6) and net debt/EBITDA* was 1.8 (1.6) times. Interest-bearing net debt/EBITDA* was 1.2 (1.1) times. At period-end, 50 (41) per cent of the Group's interest-bearing liabilities were denominated in EUR.

Cash flow from operating activities amounted to SEK 1,915 (1,995) million during the first nine months of the year. Cash flow has been impacted by increased inventory and increased accounts receivables. Cash flow from investing activities was SEK -2,392(-1,099) million, which was mainly attributable to acquisitions.

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GROUP PERFORMANCE IN THE THIRD QUARTER

Sales increased 25.6 per cent to SEK 4,158 (3,311) million in the third quarter. Acquisitions contributed 15.9 per cent and organic growth 7.5 per cent while exchange rate effects had a positive impact of 2.2 per cent.

EBITA* increased 23.3 per cent to SEK 862 (699) million as the result of acquisitions and exchange rate effects. Foreign exchange gains added 1.9 per cent to EBITA*. The EBITA margin* was 20.7 (21.1) per cent. The quarterly comparison is affected by sales and marketing activities being at unusually low levels from the second quarter of 2020 as a result of the pandemic. Sales and marketing activities in the third quarter of 2021 have begun to return to more normal levels. During the third quarter, 46

1. per cent of EBITA* was generated in EUR, 22 (30) per cent in SEK, 11 (13) per cent in NOK, 7 (9) per cent in GBP, 4 (4) per cent in USD, 4 (4) per cent in DKK and 6 (5) per cent in other currencies.

Net financial items were SEK -18(-16) million.

Profit before tax grew by 20.1 per cent to SEK 692 (576) million. Net profit for the period grew 19.1 per cent to SEK 518 (435) million.

Average capital employed excluding goodwill increased by SEK 86 million to SEK 2,165 million at 30 September 2021, compared with SEK 2,079 million at 30 June 2021. EBITA relative to average capital employed excluding goodwill increased from 159 per cent at 30 June 2021 to 161 per cent at 30 September 2021.

From 30 June 2021, the Group's net debt increased by SEK 391 million to SEK 6,913 million.

Cash flow from operating activities amounted to SEK 736 (736) million. Cash flow from investing activities was SEK -721(-228) million, which was attributable to acquisitions.

FINANCIAL PERFORMANCE - BUSINESS AREAS

Dental
		NINE MONTHS		THIRD QUARTER		Rolling 12		FULL
							months		YEAR
			2020
SEK million		2021	change		2021	2020	change			change		2020
Net sales		3,822	3,077	24.2%		1,166	1,065	9.5%		5,035	17.4%		4,290
EBITA*		839	632	32.8%		239	247	-3.2%		1,105	23.1%		898
EBITA margin*		22.0%	20.5%	1.5		20.5%	23.2%	-2.7		21.9%	1.0		20.9%

The companies in Lifco's Dental business area are leading suppliers of consumables, equipment and technical service to dentists across Europe, and the business area also has operations in the US. Lifco sells dental technology to dentists in the Nordic countries and Germany, and develops and sells medical record systems in Denmark, Sweden and Germany. The business area also includes manufacturers which produce fitting products for dentures, disinfectants, saliva ejectors, bite registration and dental impression materials, bonding agents and other consumables that are sold to dentists through distributors around the world. In recent years, Dental has through acquisitions and

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organic growth increased its earnings in manufacturing, dental technology and software faster than in distribution, which has had a positive impact on margin growth in the business area.

Net sales in Dental increased by 24.2 per cent to SEK 3,822 (3,077) million during the first nine months of the year, positively impacted by organic growth and acquisitions. The year-on-year comparison is affected by the negative effects of the pandemic in 2020 that primarily occurred during the second quarter of 2020.

EBITA* increased by 32.8 per cent to SEK 839 (632) million during the nine-month period and the EBITA margin improved by 1.5 percentage points to 22.0 (20.5) per cent. Profitability was impacted positively from organic growth, Lifco's continual focus on profit margins and acquisitions. The quarterly comparison is affected by sales and marketing activities being at unusually low levels from the second quarter of 2020 as a result of the pandemic. Sales and marketing activities have begun to return to more normal levels during the third quarter of 2021.

The dental market remains generally stable. The results of individual companies in Lifco's Dental business may in any individual quarter be influenced by significant fluctuations in exchange rates, calendar effects (such as Easter), gained or lost contracts in procurements of consumables by public- sector or major private-sector customers and fluctuations in the delivery of equipment. In the third quarter of the year, there were no individual events that had a substantial impact on the earnings of the Dental group as a whole.

As of January 2021, the German operations Kaniedenta and Rissmann Dental were consolidated. Kaniedenta produces and sells dental consumables primarily for the German market. The company had a turnover of about EUR 29 million in 2019 and has 35 employees. The acquisition comprised the majority of the shares. Rissmann Dental is a dental laboratory and had sales of approximately EUR

4.1 million in 2019. The company has about 50 employees. The acquisition was an assets and liabilities acquisition. As of February 2021, the majority of the German company Kentzler-Kaschner was consolidated, which sells consumables to the dental market, mainly in Germany. The company had a turnover of about EUR 3.6 million in 2020 and has 20 employees. As of March 2021, the Czech company Medema was consolidated, which sells consumables and smaller sized equipment to dental clinics and dental laboratories in the Czech Republic. The company had a turnover in 2020 of about CZK 26 million, corresponding to about EUR 1 million. The company has four employees and the acquisition comprised all of the shares.

Demolition & Tools
		NINE MONTHS		THIRD QUARTER		Rolling 12		FULL
							months		YEAR
SEK million		2021	2020	change		2021	2020	change			change		2020
Net sales		3,372	2,378	41.8%		1,146	741	54.7%		4,228	30.7%		3,234
EBITA*		900	530	69.8%		299	175	70.9%		1,120	49.3%		750
EBITA margin*		26.7%	22.3%	4.4		26.1%	23.6%	2.5		26.5%	3.3		23.2%

The Demolition & Tools business area develops, manufactures and sells equipment for the construction and demolition industries. The Group is the world's leading supplier of demolition robots and crane attachments. The Group is also one of the leading global suppliers of excavator

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