Q4 2019 Presentation

12 February 2020

Staffan Ternström, President and CEOPernilla Lindén, CFO

Summary 2019• Mixed results, Group revenue and results did not match our

expectations for the year

• Stairlifts continues to deliver good organic growth of 5.6% (NA: 11.1%)

• Vehicle Accessibility Norway reported good organic growth vs last year

• Delayed turnaround in PH North America, due to continued struggling for US Institutional. New leadership setup in place in North America and EU/ROW to drive execution

• Puls and Vehicle Accessibility Denmark divested

• Adjusted EBITA margin slightly above last year

• Improved operational capabilities

• Developed product pipeline. Launched 1100

• Improved customer experience

• Onboarded critical talents for the future

• Dividend proposal 0.07 EUR / share ≈ 0.7 SEK / share (increase by 40% vs last year)

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Summary Q4 2019

• Modest organic growth in the last quarter

• Solid growth in Accessibility

• Double-digit growth for Stairlift North America

• 1100 exceeded expectations on the important US market

• UK back to growth after Brexit uncertainties Q3

• Decline in revenue for Patient Handling

• US sales still challenging, Staffan Ternström steps in as interim president Handicare North America

• EU/ROW revenue stabilized with good growth momentum in key direct markets

• Adjusted EBITA margin increased vs last year due to higher gross margin, but H2 (7.1%) was lower than projected

• Strong operating cash conversion in the quarter

• Leverage 2.6x (excluding IFRS 16)

• Strategic review continues

• Divestment of Vehicle Accessibility Denmark

• New segment reporting 2020

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MEUR 2019 2018 ∆% 2019 2018 ∆%

Revenue 68.8 69.2 -0.6 % 271.0 269.8 0.5 %

Organic revenue growth 1.2 % 1.1 %

Gross margin 40.6 % 37.5 % 41.5 % 42.0 %

Adjusted EBITA 4.8 2.8 68.5 % 21.0 20.7 1.9 %

Adjusted EBITA margin 7.0 % 4.1 % 7.8 % 7.7 %

Adj. EBITA (ex. Veh Acc DK) 4.7 3.0 58.5 % 20.9 20.4 2.7 %

Adjusted EBITA margin (ex. Veh Acc DK) 7.2 % 4.7 % 8.3 % 8.2 %

October - December January - December

Financial highlights – Group

Revenue Q4: organic growth 1.2%

• Accessibility +4.8%

• Patient Handling -6.0%

EBITA Q4: adjusted margin 7.0% (4.1%)• Gross margin increased to 40.6% (37.5%) driven by low comparison period as a consequence

primarily of last years large inventory write down• Operating expenses were basically flat• Group costs 2.7 MEUR (3.3 MEUR)

OCF Q4: 5.8 MEUR (9.1)• Other specified items -0.2 MEUR• Cash flow from working capital +2.0 MEUR (7.3 MEUR). • Leverage 2.6x (excluding IFRS 16)

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Adjusted EBITA bridge

Q4-18

-0.1

2.8

Depreciation

2.1

Sales Q4-19Margin

-0.1

Opex

0.1 4.8

Note: From 1 January 2019, the Group applies IFRS 16 Leases. To facilitate comparison between the periods, the performance measures in this presentation are presented excluding the impact from IFRS 16. The transition impacts are set out in Appendix.

MEU

R

Note: All P&L numbers in this report exclude the divested business area Puls. No change to the balance sheet Note: Numbers include Vehicle Accessibility Denmark for the period prior the divestmentNote: Organic revenue growth exclude Vehicle Accessibility Denmark

MEUR 2019 2018 ∆% 2019 2018 ∆%

Revenue 48.8 48.3 1.1 % 195.1 189.4 3.0 %

Organic revenue growth 4.8 % 5.5 %

Adjusted EBITA 6.2 5.2 19.0 % 26.2 25.4 3.3 %

Adjusted EBITA margin 12.7 % 10.8 % 13.5 % 13.4 %

Adj. EBITA (ex. Veh Acc DK) 6.2 5.4 14.8 % 26.1 25.1 4.0 %

Adjusted EBITA margin (ex. Veh Acc DK) 13.6 % 12.5 % 14.7 % 15.0 %

October - December January - December Revenue and Q-on-Q organic growth (%)* – Stairlifts NA

Accessibility

Revenue Q4: organic growth +4.8%

• Stairlifts +6.6% (NA +23.7%), UK back to growth after Brexit uncertainties in Q3. Solid growth in major European markets

• Organic decline in Vehicle Accessibility 7.2% due to a tough comparison period. For the full year, Vehicle Accessibility showed an organic increase by 4.4%

EBITA Q4: adjusted margin 12.7% (10.8)

• Adjusted EBITA margin increase driven by higher gross margin. Last year’s margin was negatively impacted by primarily inventory write-downs. Q4-19 lower than YTD due to unfavourable product mix in Vehicle Accessibility

• Operating expenses were higher in absolute terms and in relation to sales due to investments in Sales FTEs

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*e.g. Q4 2019 vs Q4 2018

Q-on-Q %*

Q3-19Q4-18 Q2-19 Q4-19Q1-19Q3-18Q2-18

Revenue(MEUR)

Q1-18

33% 47% 15% 16% 6% 6% 9% 24%

Note: Numbers include Auto Denmark for the period prior the divestment.Note: Organic revenue growth exclude Auto Denmark.

MEUR 2019 2018 ∆% 2019 2018 ∆%

Revenue 20.0 20.9 -4.3 % 75.8 80.3 -5.5 %

Organic revenue growth -6.0 % -8.0 %

Adjusted EBITA 1.3 0.9 38.5 % 5.8 7.1 -18.8 %

Adjusted EBITA margin 6.5 % 4.5 % 7.6 % 8.8 %

October - December January - DecemberPH NA organic revenue in constant FX rates

Patient Handling

Revenue Q4: organic decline -6.0%

• PH EU/ROW reported unchanged revenue vs last year, rebounded from a decrease in the third quarter

• Decreased revenue in NA vs Q4 last year (-8.8%). The lower revenue was principally due to continued weak sales for US Institutional

EBITA Q4: adjusted margin 6.5% (4.5%)

• Gross margin increased compared with the weak gross margin last year.

• Operating expenses decreased compared to last year, but were basically flat in relation to sales.

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131212

1413

141513 13

Q3-18Q4-17 Q3-19Q4-18 Q1-19 Q2-19Q2-18Q1-18 Q4-19

MEU

R

Update on North America

7

• Focus on 1100 to drive share of wallet with existing customers and to drive new customer acquisition

• Elite Dealer program (launched Q3): customer adoption is ahead of plan

• New setup of regional sales offices (old Hub:s)

• Satisfying order-to-cash metrics and improved inventory control

• New leadership and management team in place

• Canada institutional delivered solid underlying growth

• Results from actions initiated takes longer than expected in the US institutional business

• Two new VP of sales deployed and VP of corporate accounts

• Focus on getting new sales force “up to speed”

• Increased sales call activity and quality

• Increased focus on IDN:s and VA to maximize value of existing and new contracts

• Increase recurring sales of high margin “below-the-bar” products

Strategic review - update

• Divestment of Vehicle accessibility Denmark

• The divestment is an important step in streamlining Handicare’s core business, focusing on profitable growth

• New segments from Q1 2020

• Will increase transparency and comparability

• Accessibility divided into Accessibility and Vehicle Accessibility

• Strategic review process continues

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FY20 priorities

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• Focus on solid organic growth and improved EBITA margins

• Commercial excellence:

• Patient Handling US Institutional turn around

• Drive dealer loyalty programs

• Leverage launch of 1100 across all markets

• Innovation & products:

• Execute on Stairlifts and Patient handling roadmaps

• MDR readiness by end of May

• Process improvement:

• Further develop customer experience

• Continue improvement of Supply chain

• Finalize strategic review

Q&A

Forward-looking statements

To the extent this report contains forward-looking statements, these statements are based on the current expectations of Handicare’s Group management. Although management considers the expectations expressed in such forward-looking statements to be reasonable, there is no guarantee that these expectations will prove correct. Accordingly, actual future outcomes may differ significantly from those expressed in the forward-looking statements due to such factors as changed economic, market and competitive conditions, changes in regulatory requirements and other policy measures, and fluctuations in exchange rates.

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Appendices

13 *The pay-out decision will be based on Handicare’s financial position, investment needs, acquisition opportunities and liquidity position.** Excluding IFRS 16 impacts

An annual dividend corresponding to 30-50 percent of the net profit for the period*

An average annual growth of 10 percent, of which 4-6 percent organically, in the medium-term

Leverage of approximately 2.5 times net debt/LTM (last 12 months) adjusted EBITDA, with flexibility for strategic activities**

An adjusted EBITA margin** exceeding 12 percent in the medium-term

FINANCIAL TARGETS

FY 2019 organic:1.1%

FY 2019: 7.8%

2.6x as at 31 December 2019

Dividend 2019: 0.07 EUR per share, 177% of

the net profit

Q4 revenue and adjusted EBITA bridges

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1.0

Q4-18 PHAcc

0.4

0.6

Other Q4-19

2.8

4.8

19%Growth 38%

n/a

4.8

DepreciationSales Q4-19Q4-18

-0.1

Margin

-0.1

2.1

Opex

0.1

2.8

Margin

4.1% 3.1ppts -0.4ppt +0.2ppt 7.0%

Q4 Adjusted EBITA bridge by SBUQ4 Adjusted EBITA bridge by component

69%

Q4-19

68.8

Q4-19 organicQ4-18

0.6

OtherAcc

0.0

Q4-18 FX Adj

65.4

Veh. Acc. DK Q4-18

64.62.1

Veh. Acc. DK Q4-19

3.4

-5.2

PH

-1.3

69.2

FX

+1.2%

5%Organic growth

Q4 Revenue bridge by SBU

-6%

MEU

RM

EUR

MEU

R

MEUR 2019 2018 2019 2018

Adjusted EBITDA 5.6 3.8 24.4 24.4

Inventory 0.6 3.3 0.5 0.5

Accounts receivable -1.5 1.3 -0.2 -1.8

Accounts payable 1.0 3.7 -4.4 5.7

Other receivables/liabilities 1.9 -1.0 -1.7 -5.7

Change in NWC 2.0 7.3 -5.8 -1.3

Tangible assets -0.9 -0.7 -2.1 -2.1

Intangible assets -0.9 -1.4 -2.9 -3.8

Total capex -1.9 -2.0 -5.0 -5.9

Adjusted operating cash flow 5.8 9.1 13.6 17.2

KPI:s

Paid tax 0.3 -0.2 -0.3 -1.6

Adjusted OCF / Adjusted EBITDA 103% 241% 56% 70%

Net debt (excl IFRS 16) 62.5 80.5 62.5 80.5

Net debt / Adjusted LTM EBITDA (excl IFRS 16) 2.6 3.3 2.6 3.3

October - December January - December

Cash flow

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Adjusted OCF: 5.8 MEUR (9.1)• Other specified items paid in Q4-19: 0.2 MEUR• Continued to reduce net working capital• Q4-19 capex of 1.9 MEUR (2.7% of revenue)

Net debt / adjusted EBITDA 2.6x (excl IFRS 16)• RCF of 40 MEUR undrawn at quarter. Period end Cash balance of 33.8 MEUR (23.6)• Dividend of 2.9 MEUR paid out in May 2019• Cash received from divestments in 2019 of 11.9 MEUR• 10 MEUR of loan repayments in Q4• Unpaid other specified items: 2.3 MEUR at 31 Dec 2019

Group 31 Dec 31 Dec

MEUR 2019 2018

Goodwill 159.3 162.8

Other intangible assets 46.3 49.1

Property, plant and equipment 7.9 9.7

Right-of-use assets 22.5 -

Deferred tax assets 3.2 8.0

Other non-current assets 0.1 0.2

Total non-current assets 239.2 229.7

Inventory 27.7 35.6

Accounts receivable 40.4 43.7

Tax receivables 0.3 0.1

Other current assets 2.8 3.3

Cash and cash equivalents 33.8 23.6

Total current assets 105.0 106.3

Total assets 344.2 336.0

Total equity 173.4 171.3

Provisions for pensions 0.6 0.2

Deferred tax liabilities 6.0 8.3

Advance payments 2.4 2.4

Other liabilities 0.8 0.4

Lease liabilities 18.2 -

Interest-bearing loans 95.1 103.0

Total long-term liabilities 123.1 114.3

Interest-bearing loans - 0.0

Lease liabilities 4.4 -

Accounts payable 23.1 30.5

Other liabilities 0.9 1.1

Accrued expenses and deferred income 19.3 18.7

Total current liabilities 47.7 50.4

Total shareholders' equity and liabilities 344.2 336.0

Balance sheet

16

From 1 January 2019, the Group applies IFRS 16 Leases. Therefore, the balance sheet for 2019 is not fully comparable with 2018. Refer to the Quarterly report (Q4 2019) for a specification of the impact.

Auto DK Q1 Q2 Q3 Q4 Full year Q1 Q2 Q3 Q4 Full year

MEUR 2018 2018 2018 2018 2018 2019 2019 2019 2019 2019

Revenue 6.0 6.4 4.6 5.2 22.2 5.1 5.0 4.5 3.4 18.0

Adjusted EBITA -0.1 0.2 0.3 -0.1 0.3 0.1 0.0 -0.1 0.0 0.1

Adjusted EBITA margin -0.8 % 3.8 % 5.5 % -2.8 % 1.3 % 2.8 % 0.2 % -1.7 % 1.4 % 0.7 %

Auto DK divestment

Background

• As part of the strategic review communicated in the Q3 report, Handicare Auto A/S was divested to Auto Solutions ApS on 16 December 2019

• The divestment is an important step in streamlining Handicare’s core business, focusing on profitable growth.

Financial impact

• Total purchase price: 3.3 MEUR (25 MDKK)

• Transaction triggered a capital loss of 9.3 MEUR mainly due to a write of goodwill and other intangibles. The capital loss has been booked as Other specified items in Q4.

• The divestment will have a positive impact on our EBITA margin going forward. Excluding Auto DK in FY19 numbers, the Group’s adjusted EBITA margin would increase from 7.8% to 8.3%.

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MEUR 2019 2018 ∆% 2019 2018 ∆%

Reported EBITA -5.6 1.8 n.a. 11.0 17.7 -37.7 %

Other specified items 10.5 1.0 10.5 3.0

Adjusted EBITA (incl IFRS 16) 4.9 2.8 73.5 % 21.5 20.7 4.2 %

IFRS 16 impact - Operating costs -1.5 - -5.9 -

IFRS 16 impact - Depreciation 1.4 - 5.4 -

Adjusted EBITA 4.8 2.8 68.5 % 21.0 20.7 1.9 %

October - December January - December

IFRS 16 impact on EBITA

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Note: From 1 January 2019, the Group applies IFRS 16 Leases. To facilitate comparison between the periods, the performance measures in this presentation are presented excluding the impacts from IFRS 16. The transition impacts are set out above.