H+h International A/s · OMXCOP:HH
H+h International A/s — Investor Presentation (August 2021)
56 slides from H+h International A/s's investor presentation, August 2021
Slide 1: H+H International A/S Investor presentation
H+H International A/S Investor presentation August 2021 a
Slide 2: Introduction: H+H is a partner in wall building across Europe
Introduction H+H is a partner in wall building across Europe H+H is a wall-building materials provider. The core activity is the production and sale of autoclaved aerated concrete (“AAC” or “aircrete") and calcium silicate units (“CSU" or “sand lime bricks"). The primary products are building blocks
Slide 3: Equity story
Equity story H+H remains in a unique position for continued growth due to attractive market fundamentals, a differentiated market approach, sustainable products, and a proven track record of strategy execution Unique market conditions for growth ~ + Structural under-supply of housing + Governmental
Slide 4: Strategic position
Strategic position
Slide 5: H+H at a glance
H+H at a glance H+H has 29 factories in Northern and Central Europe with a total annual output of approximately four million cubic metres of wall-building materials. The Group has a leading position in mist of its markets. @ Sales and administration Se @ Aircrete factories @ Calcium silicate factori
Slide 6: Aircrete constitutes largest share of revenue, but consolidation provided balanced footprint
Aircrete constitutes largest share of revenue, but consolidation efforts have provided a more balanced geographical footprint Revenue by product line Revenue by region Share of total revenue, 2020 Share of total revenue, 2020 5% — 100% 2017 2020 2017 2020 I Calcium silicate("CSU") I Aircrete ("AAC")
Slide 7: Our products and wall-building solutions can be used for a variety of projects
Our products and wall-building solutions can be used for a variety of projects A strong solution in sustainable building Our homes, flats, offices and other buildings need to be - = comfortable, safe and sustainable. Our wall-building solutions have | | been specifically developed to deliver high-qu
Slide 8: H+H's product offering is enjoying increasing market penetration
H+H’s product offering is enjoying increasing market penetration in all of H+H’s core markets Germany United Kingdom Poland Predominantly used wall-building material Predominantly used wall-building material Predominantly used wall-building material + 100% + 100% + 100% 2010 2019 2010 2020 2010 2019
Slide 9: Modern and carbon-friendly products with increasing market penetration
Modern and carbon-friendly products with increasing market penetration Aircrete was invented in the early-1930’s, decades or even centuries later than timber, concrete, clay, and bricks. H+H’s products have an expected lifetime of 100-150 years. An improved indoor climate and energy savings due to b
Slide 10: Business model: adding value to customers throughout wall-building process
Business model—we focus on adding value to our customers throughout the entire wall-building process Value-added Sales ——_——> Diversified Market Quality Manufacturing Modern and carbon-friendly products Trusted partners in Innovative product solutions for wall building high-rise and low-rise 1H) Par
Slide 11: Partnership is key to managing increasing industry complexity
Partnership is key to managing increasing industry complexity Building projects are complex undertakings, involving many different stakeholders with equally different needs and demands. From architects to planners to distributors and contractors—everyone is under pressure to work faster, smarter and
Slide 12: We are Partners in Wall Building
We are Partners in Wall Building Our homes, flats, offices and other buildings need to be comfortable, safe and sustainable. Our wall-building solutions have been specifically developed to deliver high-quality and sustainable results. An improved indoor climate and energy savings due to better therm
Slide 13: H+H's growth strategy rests upon four strategic pillars
H+H’s growth strategy rests upon four strategic pillars Strategic pillars Defending margins and maintaining attractive returns Pursuing profitable growth Driving innovation and IT Focus on sustainability and safety H+H
Slide 14: The business has grown organically over recent years
The business has grown organically over recent years... Organic growth Increase/decrease on revenue in local currencies, excluding acquired and divested businesses 20% 16% 12% 8% 4% 0% “4% 8% 2015 2016 2017 2018 2019 20200 H12021 (1) Organic growth for 2020 reflects impact from the global COVID-19 p
Slide 15: H+H will continue to pursue profitable growth through acquisitions
..but H+H will continue to pursue profitable growth through acquisitions H+H has a strong track record as a market consolidator. Since 2014, the strategy has been focused on consolidating the European whitestone market with a primary focus on Germany and Poland. Number of factories in H+H portfolio
Slide 16: Strong results from consolidation efforts, with positive impact on margins
Strong results from consolidation efforts, with positive impact on margins Improved capacity utilisation in the acquired plants h effective integral and organisation development, H+H has managed to impr tired factories ollows a lean manufacturing approach to 4 effectiveness. SC) wing a strengthening
Slide 17: Further growth opportunities in Central Europe are available
Further growth opportunities in Central Europe are available Strategic growth opportunities focused around Germany and Northern Poland * Continuous dialogue with potential targets but as previously communicated, M&A journey was adversely impacted by travel restrictions following COVID-19 outbreak in
Slide 18: Defending margins and maintaining attractive returns
Defending margins and maintaining attractive returns Effect of consolidation efforts underpinned EBIT and EBIT-margin before special items Profit after tax earnings in Germany EBIT in DKK million, EBIT margin in % DKKm * Germany a strong contributor to earnings with a DkKm % DKKm significant step-up
Slide 19: Group Innovation Function established
Group Innovation Function established H+H Group Innovation Function * Comprises three full-time employees with commercial, technical, and project management backgrounds, respectively + Asopposed to H+H’s previous attempts to push products and solutions to customers and partners, the new Innovation F
Slide 20: Nothing is so important that we cannot take the time to do it safely
Nothing is so important that we cannot take the time to do it safely! COVID-19 response Lost-Time Incident Frequency) Throughout the pandemic, H+H has been able to ensure business continuity and improved safety performance through a dedicated focus on Zero Harm and the well-being of the employees (1
Slide 21: 2020 sustainability highlights
2020 sustainability highlights Steady safety performance O fatalities Fifth consecutive year 6 Lost Time Injury Frequency Zero incidents at 19 out of 29 factories >) Net-zero by 2050 ey Reduced carbon emissions and carbon per unit produced % 8% reduction in direct carbon emissions 3% Reduction in en
Slide 22: H+H's sustainability approach
H+H’s sustainability approach ignificant source of energy consumptions and greenhouse-gas ("GHG") emissions that cause climate change. As such, building materials that ensure energy efficient buildings and help to reduce the life-cycle emissions of buildings are well-positions for long-term growth.
Slide 23: Overview of sustainability approach, risks and opportunities (1 of 2)
Investor presentation Overview of H+H’s sustainability approach, risks and opportunities (1 of 2) Environment Focus area 1—Sustainable buildings (SDG7+11+17) Time" [ns 7 Enhancing the product portfolio to lower life-cycle emissions and increase energy efficiency from the building envelope Opportunit
Slide 24: Overview of sustainability approach, risks and opportunities (2 of 2)
Overview of H+H’s sustainability approach, risks and opportunities (2 of 2) Social Focus area (SDG 3+ 8) H+H strives for Zero Harm to its people and aims to be an attractive employer Risks: + The building materi s from the heavy € mation order t Governance Focus area 2—Climate and environment (SDG7+
Slide 25: Generic product's carbon life-cycle assessment and path to net-zero
Generic product’s carbon life-cycle assessment and path to net-zero Scope 1 Scope 2 Scope 3 Scope 3 Total in 2020 Scope 1 Scope 2 Scope 3 Upstream Scope 3 Total in 2050 Upstream. Downstream Downstream Recarbonation 80% reduction 80% reduction >90% reduction 100% reduction (transport) Further reducti
Slide 26: Consolidation efforts and M&A pipeline lift long-term ROIC target
Successful consolidation efforts and M&A pipeline lifts long-term ROIC target EBIT margin before special items Return on invested capital (ROIC) 2020: 13% 2020: 18% Financial gearing 1-2x 2020: 0.4x Note: The Group's longterm financial targets reflects the ambition to maintain average minimum levels
Slide 27: Financial position
Financial position
Slide 28: Five-year financial summary
Five-year financial summary Revenue and organic growth Gross profit and gross margin EBIT and EBIT margin I Revenue kon % WM Gross profit Ay, % mein kK % —* Organic growth | -* Gross margin . 3,000 24 1,000 40 = EBIT margin? 400 6 2,500 5 6 B00 30 300 e 2,000 600 9 1.500 8 20 200 400 6 1,000 . 2020
Slide 29: Financial outlook for the full year 2021
Financial outlook for the full year 2021 Organic growth EBIT before special items 8% to 11% 360 to 400 (Previously 2% to 7%) (Previously 330-390) DKKm Specific assumptions: * The COVID-19 pandemic is not expected to have any material impact on construction activity levels or supply chains + Exchange
Slide 30: Solid recovery in the UK drove 39% organic growth
Solid recovery in the UK over 2020, coupled with continued price increases in CWE and higher CSU volumes in Poland drove 39% organic growth Revenue growth by market Consolidated revenue by quarter DKKm. Bubbles show revenue growth (organic growth) DKKm Q2 2019 im 022020 403 MM Q2 2021 836 aa 770 72
Slide 31: Ability to manage inflationary pressure underpinned by solid margins
The Group’s ability to manage inflationary pressure and increased transport costs underpinned by solid earnings margins Gross profit and gross profit margin EBITDA and EBITDA margin EBIT and EBIT margin DKKm and percent, respectively DKKm and percent, respectively DKKm and percent, respectively 31%
Slide 32: Earnings versus operating cash flow
Earnings versus operating cash flow EBITDA and EBITDA-margin Cash flow from operating activities EBITDA in DKKm and EBITDA-margin in % DKKm KKM 4c
Slide 33: Strong free cash-flow generation to fund continued growth strategy
Strong free cash-flow generation to fund continued growth strategy Free cash flow bridge 2020, DKKm 50 (134) (72) Cash flow from operating activities Capital expenditures Other cash flow from Free cash flow nvesting activities
Slide 34: Larger investments to be made in existing production and sustainability
Larger investments to be made in existing production and sustainability Timely care Sand conversion in the UK Sustainable investments * Since 2011, capital inve: have been significantly depreciation levels ments W * Increasing upsides from additional investments in current CSU plants in Poland ry up
Slide 35: Financial gearing remains well-below long-term target
Financial gearing remains well-below long-term target and plenty of financial firepower available NIBD® bridge Q12021, DKKm 230 (140) 9 Free FRS16 cash flow impact NI D from 2019 onwards includes impact from IFRS. NIBD and financial gearing DKKm OKKm Ratio 600 2.0 500 15 400 300 10 200 05 100 of fi
Slide 36: Financial policy and capital allocation
Financial policy and capital allocation Capital structure The overall objective of H+H's financial policy is to ensure sufficient financial flexibility to meet the Group's strategic objectives and a robust capital structure to maximise the return for H+H's shareholders. The long-term target (i.¢., t
Slide 37: Update on share buy-back programme
Update on share buy-back programme + Asof 30 June 2021, a total of 213,300 shares, corresponding to 1.19% of the total share capital in H+H, had been bought back under the programme for a total purchase price of DKK 37 million. * Acquisitive growth remains the key strategic focus for H+H. * Given th
Slide 38: Market outlook
Market outlook
Slide 39: Unique market conditions for growth
Unique market conditions for growth Unique market conditions for growth + Structural under-supply of housing + Governmental stimuli of housebuilding Demographic growth and changing housing needs Fragmented markets with room for consolidation through acquisitions igh entry barriers for new competitor
Slide 40: Central Western Europe: overview of key markets
Central Western Europe Overview of key markets for H+H Share of Group revenue 49% Market position® Estimated market size: 7 million m@ White-stone market penetration: 34%) # 2 Key competitors: Xella Alternative products: Clay blocks, concrete F MarkétshareAAG>15%2 blocks, wood-frame solutions Market
Slide 41: Central Western Europe: stable market with solid demand outlook
Central Western Europe: stable market with a solid demand outlook from a significant lack of housing space Market conditions and trends Germany: * Germany continues to provide a strong and stable market for H+H, but unbalanced geographical CSU demand brings logistical challenges + Significant lack o
Slide 42: United Kingdom: very high demand, near-full capacity
United Kingdom: very high demand with H+H producing at near-full capacity to service its customers Market conditions and trends _ * The British Government remains committed to increasing the housing output to 300,000 dwellings annually, but roadmap remains unclear * The new Help to Buy programme has
Slide 43: Poland: strong demand stabilises competitive environment
Poland: strong demands stabilises competitive environment and partly absorbs pricing pressure Market conditions and trends + Several developers have increased capacity at building sites to compensate for the slow winter months. * The number of awarded building permits increased by 40% in H1 2021 rel
Slide 44: Supplementary information
Supplementary information
Slide 45: Consolidated income statement
Consolidated income statement Income statement (DKK milion) 22021 922020 H12021 12020 FY 2020 Revenue 836 596 1478 1,300 2654 Cost of goods sold (585) (419) (1,039) (901) 818) Gross profit before special items 251 7 439 399 836 Sales costs (36) G4) (72) (73) 51) Administrative costs (43) (36) (89) (
Slide 46: Consolidated statement of comprehensive income
Consolidated statement of comprehensive income Statement of comprehensive income (DKK million) 22021 922020 H12021 12020 FY 2020 Profit for the period 93 38 142 102 251 Items that may be reclassified subsequently to profit or loss: Foreign exchange adjustments, foreign entities 16 10 (36) (48) 16 10
Slide 47: Consolidated balance sheet
Consolidated balance sheet Assets (DKK million) 30 Jun. 2021 _31Dec. 202030 Jun. 2020 Equity and liabilities (OKK milion) 30 Jun. 2021 _31Dec. 2020 _30 Jun. 2020 Non-current assets Equity Goodwill an au 202 Share capital 180 180 180 Other intangible assets 248, 258 279 Retained earnings 1540 1.405 1
Slide 48: Consolidated cash flow statement
Consolidated cash flow statement Cash flow statement (DKK milion) 22021 922020 H12021 H12020 Operating profit (05s) 125 57 189 142 Financial income received ) 1 1 2 Financial items, paid ) ) ay ay Depreciation, amortisation and impairment losses a7 a7 92 92 Gain and losses on sale of assets and othe
Slide 49: Risk management (1 of 2)
Risk management (1 of 2) Top six risks 1. Market 2. Production 3. Financial 2 € £ changes toEU or UK regulation, o° the carbon emission agenda resulting iack of demand for andi/or substitution way from H+H's products. The markets in which H+H operate tend to be cyclical and to some degree correlate,
Slide 50: Risk management (2 of 2)
Risk management (2 of 2) Top six risks (continued) 4. Compliance 5. People 6.1T probaoitymact EE 1 nnn © _raskotlc of complanoe wth aw andregultion eg. compettoniaw, GOPR. transfer preingete. _Reskofinidents rfaalties to production eclitiesas they are inherently dangerous arcmuationetveats Yom cyber
Slide 51: Shareholder information
Shareholder information H+H International A/S is listed on the Nasdaq Copenhagen stock exchange and is trading under the ticker symbol, HH. Inquiries concerning investor relations issues should be addressed to the Group's Investor Relations and Treasury Manager via email to Shareholder@HplusH.com Sh
Slide 52: Board of Directors
Board of Directors Members of the Board of Directors Kent Arentoft, Chairman Stewart A. Baseley Volker Christmann Pierre-Yves Jullien Miguel Kohimann Chairman of DSVM Invest Executive Chairman, Home al board member Professional board member Builders Feder: and advisor Board of Di ia German German an
Slide 53: Executive Management Team
Executive Management Team t-——_ Executive Board Michael Troensegaard Andersen Peter Klovgaard-Jargensen Senior Executives Peter Lidstone Bjarne Pedersen Chief Executive Officer since 2011 Chief Financial Officer since 201 Chief Operating Officer since 2016 Chief Human Resourc 2019 Chief Strategy Off
Slide 54: More than 100 years of experience
More than 100 years of experience Hell asa conglomerate 1909 1997 1958 1962 reas 1998 2003, European wall building provider as consolidator, Turnaround 8 2008 200¢ Normalisation and expansion 2020 2018 2019 ans © Henriksen & W. Kahler ~established joint gravel pitenterprise # Business expanded with
Slide 55: H+H
H+H
Slide 56: For further information, please contact
For further information, please contact Andreas Holkjaer Investor Relations and Treasury Manager +45 24 48 03 67 aho@HplusH.com H+H International A/S Lautrupsgade 7, 5th Floor 2100 Copenhagen © Denmark +45 35 270200 info@hplush.com www.hplush.com
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