Q2 2019 Presentation 14 August 2019 Staffan Ternstrm, President - PowerPoint PPT Presentation

Q2 2019 Presentation 14 August 2019 Staffan Ternström, President and CEO Pernilla Lindén, CFO

Summary Q2 2019 • Continued good growth and stable margins in Stairlifts • Lower revenue in Vehicle Accessibility and decreased margins • Lower revenue in PH NA and PH EU • US institutional sales still challenging • Sequential growth for PH NA vs Q1 • PH EU impacted by stock-up at key distributors in Q1-19 • Successful divestment of the non-core business area Puls. Total consideration 10.9 MEUR and EV / adjusted EBITA 7.6x • Gross margin lower than last year impacted by product mix. However improved margin vs Q1-19 • Adjusted EBITA margin decreased vs last year, but improved vs Q1-19 • Operating cash flow impacted by reduced inventory and timing of payments of accounts payable • Successful launch of 1100 on the important UK market • Pernilla Lindén new CFO 2

Financial highlights – Group Adjusted EBITA bridge April - June January - June LTM Full year 7.2 MEUR 2019 2018 ∆% 2019 2018 ∆% 2018/2019 2018 6.5 0.1 0.7 -0.2 Revenue 69.4 70.0 -0.8 % 136.6 135.3 0.9 % 271.0 269.8 -1.2 Organic revenue growth -1.8 % -0.5 % MEUR Gross margin 42.3 % 44.0 % 42.0 % 43.3 % 41.3 % 42.0 % Adjusted EBITA 6.5 7.2 -9.8 % 11.5 11.9 -2.9 % 20.3 20.7 Adjusted EBITA margin 9.3 % 10.2 % 8.4 % 8.8 % 7.5 % 7.7 % Note: All P&L numbers in this report exclude the divested business area Puls. No change to the balance sheet. Q2-18 Sales Margin Opex Depreciation Q2-19 Revenue Q2: organic growth - 1.8% • Accessibility +1.1% • Patient Handling -8.6% EBITA Q2: adjusted margin 9.3% (10.2%) • Gross margin decreased to 42.3% (44.0%) driven by product mix. Gross margin was up 0.6 ppts on Q1- 19 • Operating expenses decreased by 0.7 MEUR, primarily explained by decreased personnel costs • Group costs 2.9 MEUR (3.0 MEUR) OCF Q2: 0.7 MEUR (7.4) • Other specified items -0.5 MEUR (mainly severance costs related to former NA management) • Cash flow from working capital -5.5 MEUR (0.7 MEUR). Reduced inventory levels and timing of payments of accounts payable • Leverage 3.2x (excluding IFRS 16) Note: From 1 January 2019, the Group applies IFRS 16 Leases. To facilitate comparison between the periods, the performance 3 measures in this presentation are presented excluding the impact from IFRS 16. The transition impacts are set out in Appendix.

Accessibility Revenue and Q-on-Q organic growth (%)* – Stairlifts NA April - June January - June LTM Full year Q-on-Q %* 47% 15% 16% 6% 6% 19% 25% 33% MEUR 2019 2018 ∆% 2019 2018 ∆% 2018/2019 2018 Revenue 50.1 49.4 1.4 % 98.3 94.6 4.0 % 193.2 189.4 Organic revenue growth 1.1 % 3.3 % Adjusted EBITA 7.1 7.4 -3.9 % 13.9 13.0 6.3 % 26.2 25.4 Revenue (MEUR) Adjusted EBITA margin 14.2 % 15.0 % 14.1 % 13.8 % 13.6 % 13.4 % Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 *e.g. Q2 2019 vs Q2 2018 Revenue Q2: organic growth +1.1% • Stairlifts +4.6% (NA +5.6%) • NA growth compared to the strongest quarter in 2018 • Decreased revenue in Vehicle Accessibility due to soft market in Denmark. Moderate growth reported in Norway EBITA Q2: adjusted margin 14.2% (15.0) • Decline in gross margin from product mix in both Stairlifts and Vehicle Accessibility • Operating expenses were principally flat 4

Patient Handling PH NA organic revenue in constant FX rates April - June January - June LTM Full year 15 15 MEUR 2019 2018 ∆% 2019 2018 ∆% 2018/2019 2018 14 14 14 13 13 13 12 Revenue 19.3 20.5 -6.2 % 38.2 40.7 -6.2 % 77.7 80.3 MEUR Organic revenue growth -8.6 % -9.1 % Adjusted EBITA 2.2 2.7 -19.7 % 3.4 4.5 -24.8 % 6.0 7.1 Adjusted EBITA margin 11.5 % 13.4 % 8.9 % 11.1 % 7.7 % 8.8 % Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Revenue Q2: organic decline - 8.6% • PH EU reported a weaker quarter with organic decline vs Q2-18. This on the back of stock-up at certain key distributors in Q1-19 • Decreased revenue in NA vs Q2 last year (-9.2%), but sequential growth vs Q1-19 (4.8%). The lower revenue was principally due to lower Institutional sales in the US. EBITA Q2: adjusted margin 11.5% (13.4%) • Decreased gross margin explained by product mix and lower cost absorption in NA • Operating expenses decreased following the restructuring programme launched in Q2-18 • Profitability flat in the European business and healthy margins 5

Update on North America actions Key Q3 to Q4 activities: Key Q2 achievements: • Sales force effectiveness and geographical presence: • PH NA sequential growth in Q2 vs Q1 of 4.8% • Continued focus on increased activity (call rate, • Improved proposal pipeline and increased win number of visits, etc.) and quality (pre-tender rate, however still below target levels work, win-rate, etc) • Recruit new VP of institutional sales in the US • Around 1/3 of the US institutional sales force redeployed and replaced end of Q2 • Improved value proposition: • • Increase recurring sales of high margin “below-the- Introduced the Elite Dealer program to propel bar” products homecare sales (PH and Stairlifts) • Introduce “full solution” sales approach • Key recruitments in order to cash project: • Implement new HUB setup: • Customer service director • Switch a majority from full service Hub:s to • Logistics director regional sales offices • Assess future footprint • Improved order to cash process: • • Improved customer/technical service Increased focus on IDN:s and VA to maximize value of existing and new contracts. Recruit VP corporate response time and resolution rate accounts to drive this initiative • Increased number of fulfilled shipments on • time Launch 1100 in Q4 6

Puls divestment Puls Q1 Q2 Q3 Q4 Q1 MEUR 2018 2018 2018 2018 2019 Revenue 6.2 5.4 4.9 4.7 5.1 Adjusted EBITA 0.4 0.5 0.1 0.2 0.4 Adjusted EBITA margin 6.2 % 9.1 % 2.7 % 4.0 % 7.4 % Background: • This is an important step in focusing Handicare on its core businesses • The divestment creates additional capacity for growth (both organic and through M&A) and expansion of the core businesses of Handicare • Divested to Mediq International BV • Signed and closed on 22 May 2019 Financial impact: • Total consideration: 10.9 MEUR (106 MNOK) • Pre-tax capital gain of 4.3 MEUR • EV / adjusted EBITA 7.6x • Medium-term growth and margin expectations below Group average 7

Summary Q2 2019 • Organic growth -1.8%: • Stairlifts posted good organic growth of 4.6% (NA: 5.6%) and stable EBITA margin • Vehicle Accessibility reported lower revenue vs last year. Lower margin driven by product mix • PH reported negative organic growth of -8.6%. However, sequential growth vs Q1-19 for PH-NA • Adjusted EBITA margin declined to 9.3% (10.2%) explained by lower gross margin from unfavorable product mix • Organic growth in H2-19 vs H2-18 expected to be in our 4-6% target range: • Continued good momentum in the Stairlifts business • Vehicle Accessibility expected to deliver organic growth in H2-19 vs H2- 18 • PH NA return to organic growth may be delayed 1 to 2 quarters compared to our previous communicated target (second half of 2019) • Adjusted EBITA margin expected to increase in H2-19 vs H1-19 (8.4%) • Continued increased focus on product development: Successful launch of 1100 on the important UK market in Q2. 1100 to be launched in all markets in 2019 • Continued focus on evaluating new markets and acquisition targets • Macro trends remain favorable 8

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. 10

Appendices

An average annual growth of 10 percent, of which 4-6 percent LTM 2019 organic: organically, in the medium-term 1.0% An adjusted EBITA margin exceeding 12 percent in the medium-term LTM 2019: 7.5% FINANCIAL TARGETS Leverage of approximately 2.5 times net debt/LTM (last 12 months) 3.2x as at 30 June adjusted EBITDA, with flexibility for strategic activities** 2019 Dividend 2019: 5 cent An annual dividend corresponding to 30-50 percent of the net profit for the per share, 26% of the period* net profit 12 *The pay-out decision will be based on Handicare’s financial position, investment needs, acquisition opportunities and liquidity position. ** Excluding IFRS 16 impacts

Q2 revenue and adjusted EBITA bridges - 1.8% Q2 Revenue bridge by SBU 0.5 70.7 0.7 70.0 69.4 -1.8 MEUR 1% Organic growth -9% Q2-18 FX Q2-18 FX Adj Acc PH Q2-19 Q2 Adjusted EBITA bridge by component Q2 Adjusted EBITA bridge by SBU 7.2 7.2 0.1 6.5 -0.3 6.5 0.1 0.7 -0.2 -0.5 -1.2 Margin Growth -4% -20% 4% n/a -10% 10.2% 9.3% 0.7.p 0.1p.p -1.8p.p MEUR MEUR Q2-18 Sales Margin Opex Depreciation Q2-19 Q2-18 Acc PH Other Q2-19 13