Tessenderlo : Lower HY23 Adjusted EBITDA compared to record HY22 Adjusted EBITDA but stable cash flow generation realized

PRESS RELEASE

Regulated information1

August 24, 2023, 8:00 am CET

TESSENDERLO GROUP: LOWER HY23 ADJUSTED EBITDA COMPARED TO RECORD HY22 ADJUSTED EBITDA BUT STABLE CASH FLOW GENERATION REALIZED

1. Key events

From the first half of 2023

• In January 2023, Picanol Group became a business unit in the Machines & Technologies segment of Tessenderlo Group.
• In January 2023, the Akiolis business unit (Bio-valorization segment) acquired the real estate and production assets of a former Spanish rendering company (Ribera d'Ondara, Lleida, Spain). The plant specializes in pig and poultry rendering and is located in one of the most intensive pig and poultry farming regions in Spain. Akiolis resumed operations in the first quarter of 2023 under the name Akiolis Iberia.
• In January 2023, Tessenderlo Group signed an agreement for the acquisition of the marketing and sales activities for ammonium thiosulfate (ATS) fertilizers produced by Esseco Srl (part of Esseco Group) in Trecate, Italy. The deal became operational in March 2023, and the fertilizers are marketed by the Tessenderlo Kerley International business unit (Agro segment).
• In January 2023, Tessenderlo Group's PB Leiner business unit (Bio-valorization segment) finalized a new joint venture with D&D Participações Societárias, which is one of Brazil's leading tannery groups. D&D Participações Societárias acquired a 40% minority stake in PB Leiner's Brazilian plant (PB Brasil Industria e Comercio de Gelatinas Ltda). The combined strength of the two companies will enable a long-term, sustainable supply of a premium bovine gelatin product range, based on PB Leiner's technology.
• In March 2023, Tessenderlo Group's business unit PB Leiner held an inauguration ceremony to mark the start of PB Leiner (Hainan) Biotechnology Ltd. In November 2022, PB Leiner entered into a joint venture (80% owned by Tessenderlo Group) with Hainan Xiangtai Group for the production and sale of fish collagen peptides based on PB Leiner's technology. The first production batches of PB Leiner's SOLUGEL® premium fish collagen peptides were shipped in the second quarter of 2023.
• In April 2023, Tessenderlo Group sold 654,000 shares (which is equivalent to a participation of 14%) in Rieter Holding AG (SWX: RIEN). The sale of this financial participation in Rieter Holding AG reflects
  Tessenderlo Group's intention to focus more on its core business.
• In June 2023, Picanol (Machines & Technologies segment) successfully participated in the 19th edition of ITMA in Milan, Italy. ITMA is the most important four-yearly textile machinery exhibition in the world and
  Picanol's new Ultimax rapier weaving machine was received with much acclaim. Picanol was once again able to present itself at the event as a technology leader in airjet and rapier weaving machines.
• Construction works on the new plants in Defiance (Ohio, US) and Geleen (The Netherlands) remain on schedule. The Defiance plant will produce the leading liquid and sulfur-based fertilizers Thio-Sul®, KTS®, K-Row 23®, and sulfite chemicals for industrial markets (Agro and Industrial Solutions segments). The Defiance plant is scheduled to start operations by the end of 2024. Meanwhile, the Thio-Sul® plant in Geleen (Agro segment) is expected to be operational by mid-2024.
• As of June 2023, construction works on the new Picanol Group headquarters (Machines & Technologies segment) in Ieper (Belgium) remained on track. The opening of the new headquarters is planned for 2024.

1 The enclosed information constitutes regulated information as defined in the Royal Decree of November 14, 2007, regarding the duties of issuers of financial instruments which have been admitted for trading on a regulated market.

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After the balance sheet date

• In July 2023, Violleau put its new production line for organic fertilizers in Vénérolles (Aisne, France) into operation (Agro segment). The new production line has been built on the site of the Akiolis plant in Vénérolles.
• In March 2023, a share repurchase program was started for an amount not exceeding 40 million EUR. As the share price was quoted below its book value, as well as taking into account the liquidity position of the group, the Board of Directors of Tessenderlo Group was of the opinion that it was opportune to proceed with the repurchase of its own shares. By the end of July 2023, Tessenderlo Group had acquired 344,806 of its own shares at an average price of 29.61 EUR per share, for a total amount of 10.2 million EUR.

Note

• The half year information has been subject to a review by external auditors. Reference is made to the independent auditor's review report in the interim report.
• Following the acquisition of Picanol Group by Tessenderlo Group, 2022 Pro Forma financial information was included where relevant. The Pro Forma information shows the impact as if the acquisition of Picanol Group by Tessenderlo Group would have occurred as of January 1, 2022, thereby impacting the statement of financial position per December 31, 2022, and the income statement as from January 1, 2022. These impacts are presented solely for comparison reasons. The 2022 figures of Tessenderlo Group have not been restated.
• As the group HY23 results were not significantly impacted by foreign exchange effects, the group did not report key financial indicators excluding foreign exchange impact.
• Figures may not add up due to rounding.

HY23

Million EUR

HY22

• Change as reported

HY22 Pro

Forma

• Change compared to Pro Forma figures

Revenue	1,626.5	1,339.6	21.4%	1,707.3	-4.7%
Adjusted EBITDA2	205.1	247.6	-17.1%	266.0	-22.9%
Adjusted EBIT3	106.8	182.6	-41.5%	170.5	-37.4%
Profit (+) / loss (-) for the period	83.4	163.6	-49.0%	123.9	-32.7%
Total comprehensive income	72.3	218.8	-66.9%	179.4	-59.7%
Capital expenditure	97.9	59.3	65.1%	67.8	44.3%
Cash flow from operating activities	107.9	97.3	10.9%	103.7	4.1%
(Net financial debt) / Net cash position 4	13.3	-48.5	nm5	-14.5	nm

2. Revenue

HY23 revenue increased by +21.4% compared to the HY22 revenue as reported and decreased by -4.7% compared to the Pro Forma HY22 revenue. The Agro revenue decreased by -18.8% because of decreased volumes and lower selling prices. The revenue of Bio-valorization and Industrial Solutions remained stable compared to prior year, while the revenue of T-Power increased by +5.8%. Picanol Group contributed 384.5 million EUR to the HY23 revenue, while the HY22 Pro Forma Picanol Group revenue amounted to 367.7 million EUR (increase by +4.5%).

3. Adjusted EBITDA

The HY23 Adjusted EBITDA amounts to 205.1 million EUR compared to a reported HY22 Adjusted EBITDA of 247.6 million EUR and a Pro Forma Adjusted EBITDA of 266.0 million EUR in HY22. The Adjusted EBITDA of Agro (-64.2% or -78.1 million EUR) and Bio-valorization(-30.6% or -15.4 million EUR) decreased, while the Adjusted EBITDA of Industrial Solutions and T-Power slightly increased. Picanol Group contributed 45.2 million EUR to the HY23 Adjusted EBITDA (compared to a HY22 Pro Forma Adjusted EBITDA of 18.4 million EUR).

1. Adjusted EBITDA equals Adjusted EBIT plus depreciation and amortization.
2. Adjusted EBIT is considered by the group to be a relevant performance measure in order to compare results over the period 2022-2023 as it excludes adjusting items from the EBIT (Earnings Before Interests and Taxes). EBIT adjusting items principally relate to restructuring, impairment losses, provisions, gains or losses on significant disposals of assets or subsidiaries and the effect of the electricity purchase agreement.
3. (Net financial debt) / Net cash position equals cash and cash equivalents and long term investments minus non-current and current loans and borrowings and bank overdrafts.
4. Nm is shown in the tables when the % change is not meaningful.

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4. Adjusted EBIT

The HY23 Adjusted EBIT amounts to 106.8 million EUR, compared to 182.6 million EUR in HY22 and 170.5 million EUR in HY22 Pro Forma results.

Picanol Group is fully consolidated as from January 2023. The gross carrying amount of the fair value adjustments recognized in HY23 after the completion of the Picanol Group acquisition amounted to +364 million EUR. Depreciation and amortization expenses on these adjustments impacted the HY23 Adjusted EBIT by -23.4 million EUR (compared to a HY22 Pro Forma impact of -23.7 million EUR). Please refer to note 7 - Acquisitions and disposals of the HY23 interim report for further details regarding the acquisition accounting of Picanol Group.

5. Net financial debt

As per HY23, the net cash position of the group amounts to +13.3 million EUR, compared to a net financial debt of -48.5 million EUR as per HY22 and -59.5 million EUR as per year-end 2022. Significant cashflow impacts during the first six months of 2023 include:

• The HY23 cash flow from operating activities and capital expenditure for an amount of +107.9 million EUR and -97.9 million EUR respectively.
• The impact of the change in consolidation scope, following the acquisition of Picanol Group, amounts to +34.0 million EUR (including cash and cash equivalents for +39.3 million EUR).
• The sale of 654,000 shares in Rieter Holding AG (SWX: RIEN) for an amount of +80.7 million EUR. After this sale the group still holds 54,602 shares (or 1.17% of the total number of outstanding shares of Rieter Holding AG).
• The dividend paid over the financial year 2022, leading to a HY23 cash outflow of -39.9 million EUR.

6. Profit (+) / loss (-) for the period

The HY23 profit amounts to 83.4 million EUR compared to 163.6 million EUR and 123.9 million EUR Pro Forma in HY22. The HY23 result compared to the HY22 Pro Forma result was impacted by the following items:

• The decrease of the HY23 Adjusted EBIT compared to the HY22 Pro Forma Adjusted EBIT, partially compensated by a lower income tax expense.
• The impact of exchange losses, mainly on non-hedged intercompany loans and cash and cash equivalents in USD, amounted to -8.6 million EUR in HY23 compared to an exchange gain of +13.4 million EUR in HY22.
• The gain realized on the sale of 654,000 shares of Rieter Holding AG (+11.3 million EUR), while the HY22 Pro Forma result was negatively impacted by the unrealized financial loss on the Rieter shares, due to the revaluation to fair value as per June 30, 2022 (-33.3 million EUR).

7. Capital expenditure

For the six month period ended June 30, 2023 the group's capital expenditure amounts to 97.9 million EUR (HY22:

59.3 million EUR). The major capital expenditure projects relate to:

• The acquisition of the real estate and production assets of a former Spanish rendering company (Ribera d'Ondara, Lleida, Spain - Bio-valorization segment).
• The acquisition of production assets for the fish collagen peptides plant in Hainan (China) by PB Leiner (Hainan) Biotechnology Co Ltd. (Bio-valorization segment).
• The ongoing construction of a new Thio-Sul® manufacturing plant in Geleen (the Netherlands, Agro segment) and a new liquid fertilizer and industrial products plant in Defiance (the United States, Agro and Industrial Solutions segments). These factories are scheduled to be operational by mid-2024 and the end of 2024 respectively.
• The ongoing construction of a new headquarter office for Picanol Group in Ieper (Belgium, Machines & Technologies segment).
• Investments in a gasification installation of category 1 meat meals in Saint-Langis (France) by Akiolis Group (Bio-valorization segment) and a new organic fertilizer production line in Vénérolles (France) by Violleau (Agro segment).
• Further investments in production efficiency improvements, as well as in supply chain assets within DYKA Group (Industrial Solutions segment).
• The replacement of equipment and vehicles, which were previously leased, through purchase.

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8. Cash flow from operating activities

The HY23 cash flow from operating activities amounts to 107.9 million EUR, compared to 97.3 million EUR in HY22 as reported. Lower working capital needs (-57.1 million EUR in HY23 compared to -119.8 million EUR in HY22) were able to offset the lower operational results (the HY23 Adjusted EBITDA decreased by -42.5 million EUR compared to the reported HY22 Adjusted EBITDA).

Outlook

The following statements are forward-looking and actual results may differ materially.

The group anticipates a continued high level of economic uncertainty in the second half of 2023, putting the development of customer demand and sales margin more under pressure. Based on currently available information, the group expects that the 2023 Adjusted EBITDA will be 20% to 30% lower than the record Adjusted EBITDA achieved in 2022. The Pro Forma 2022 Adjusted EBITDA amounted to 467.0 million EUR, being the sum of the Tessenderlo Group 2022 Adjusted EBITDA (434.8 million EUR) and the 2022 Picanol Group (Machines and Technologies segment) Adjusted EBITDA (32.2 million EUR).

The group wishes to emphasize that it currently operates in a volatile geopolitical, economic, financial, and health environment.

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OPERATING SEGMENTS PERFORMANCE REVIEW

GROUP KEY FIGURES - FOR THE SIX MONTH PERIOD ENDED JUNE 30

Million EUR	HY23

HY22

• Change as reported

HY22 Pro

Forma

• Change compared to ProForma figures

Revenue Group	1,626.5	1,339.6	21.4%	1,707.3	-4.7%
Agro	443.5	546.0	-18.8%	546.0	-18.8%
Bio-valorization	375.2	376.8	-0.4%	376.8	-0.4%
Industrial Solutions	384.7	380.3	1.1%	380.3	1.1%
Machines & Technologies	384.5	-	nm	367.7	4.5%
T-Power	38.6	36.5	5.8%	36.5	5.8%
Adjusted EBITDA Group	205.1	247.6	-17.1%	266.0	-22.9%
Agro	43.5	121.6	-64.2%	121.6	-64.2%
Bio-valorization	34.8	50.2	-30.6%	50.2	-30.6%
Industrial Solutions	52.8	48.2	9.6%	48.2	9.6%
Machines & Technologies	45.2	-	nm	18.4	146.0%
T-Power	28.7	27.5	4.2%	27.5	4.2%
Adjusted EBIT Group	106.8	182.6	-41.5%	170.5	-37.4%
Agro	7.2	105.5	-93.2%	86.9	-91.7%
Bio-valorization	15.6	33.5	-53.3%	32.5	-51.9%
Industrial Solutions	35.1	35.1	0.1%	31.0	13.3%
Machines & Technologies	37.7	-	nm	11.6	226.1%
T-Power	11.1	8.6	29.6%	8.6	29.6%
EBIT adjusting items	-0.7	9.6	nm	9.7	nm
EBIT	106.2	192.1	-44.7%	180.2	-41.1%

AGRO

Million EUR	HY23

HY22

• Change as reported

HY22

Pro Forma

• Change compared to ProForma figures

Revenue	443.5	546.0	-18.8%	546.0	-18.8%
Adjusted EBITDA	43.5	121.6	-64.2%	121.6	-64.2%
Adjusted EBITDA margin	9.8%	22.3%		22.3%
Adjusted EBIT	7.2	105.5	-93.2%	86.9	-91.7%
Adjusted EBIT margin	1.6%	19.3%		15.9%

The HY23 Agro revenue decreased by -18.8%, impacted by a decrease of volumes combined with lower selling prices.

The Adjusted EBITDA decreased to 43.5 million EUR compared to 121.6 million EUR in prior year (-64.2%). The Adjusted EBITDA of Crop Vitality, Tessenderlo Kerley International and Violleau decreased because of lower sales volumes, while margins were under pressure following lower selling prices in combination with higher valued stock.

The Adjusted EBITDA of NovaSource increased thanks to the contribution of the in 2H22 acquired Lannate® product line.

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