4th quarter 2020 - globenewswire
TRANSCRIPT
4th Quarter 2020
Sarpsborg, 3 February 2021
Agenda
2
Per A Sørlie, President & CEO
Highlights
Proposed dividend
Business segments
Outlook
Per Bjarne Lyngstad, CFO
Financial performance
Highlights – 4th quarter 2020
3
EBITDA1 NOK 263 million (NOK 183 million)
Improved result in all business areas
Improved product mix for biopolymers and lower costs in BioSolutions
Lower wood and energy costs and high deliveries in BioMaterials
Favourable product mix in pharma intermediates and higher bioethanol sales volume
Strong cash flow
1) Alternative performance measure, see Appendix for definition
Highlights – full year 2020
4
All-time high EBITDA1 1,132 mNOK (1,007 mNOK)
Improved result for BioMaterials and Fine Chemicals, slight decline for BioSolutions
Reduced raw material supply and higher distribution costs, partly offset by improved product mix and cost reductions for biopolymers
Lower wood and energy costs, higher production volume and improved product mix for BioMaterials
Higher sales volume and prices as well as an extraordinary demand from disinfectants in Q2 for bioethanol
Positive net currency impact
Strong cash flow
1) Alternative performance measure, see Appendix for definition
Dividend proposal for 2020
5
Borregaard’s dividend policy
To pay regular and progressive dividends reflecting the expected long-term earnings and cash flows of the Group
Annual dividend is targeted between 30% and 50% of net profit
A dividend of NOK 2.50 per share is proposed by the Board of Directors
57% of net earnings
Total dividend payment of 249 mNOK
1 Includes 100% of sales volume from the J/V in South Africa. Average sales price is calculated using actual FX rates, excluding hedging impact.
BioSolutions markets – Q4
6 385
5 9995 865
6 455
6 885
7 431
6 701 6 756
5 000
5 500
6 000
6 500
7 000
7 500
8 000
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
NOK per mtds Average gross sales price1
115125 119
111115106
99 96
0
25
50
75
100
125
150
Q1 Q2 Q3 Q4
‘000 mtds Sales volume1 2019
2020
6
Sales volume 14% lower vs Q4-19 Discontinued raw material supply partly offset by increased sales volume from Florida and reduced inventory
Concrete admixtures and low-value industrial applications particularly affected by reduced raw material supply
Continued low demand in oil field chemicals
Sales to agriculture and batteries increased
Average price in sales currency 4% above Q4-19 due to improved product mix Reduced sales to concrete admixtures and low-value industrial applications
Sales price and sales volume include lignin-based biopolymers and biovanillin
1 Includes 100% of sales volume from the J/V in South Africa.Average sales price is calculated using actual FX rates, excluding hedging impact.
BioSolutions markets – full year
7
Sales volume 11% lower vs 2019 Discontinued raw material supply from Sappi Saiccor and Sniace, reduced supply from Park Falls
Sales to concrete admixtures and low-value industrial applications have been reduced
In Specialities, sales to oil field chemicals dropped significantly as a result of reduced demand, while sales to several other applications increased
Florida sales volume continued to increase in accordance with the ramp-up plan, but result is still unsatisfactory
Average price in sales currency 6% above 2019 due to improved product mix Reduced sales to concrete admixtures and low-value industrial applications
Sales price and sales volume include lignin-based biopolymers and biovanillin
5 684 5 618 5 654
6 166
6 951
5 000
5 500
6 000
6 500
7 000
7 500
8 000
2016 2017 2018 2019 2020
NOK per mtds Average gross sales price1
214 210 212 209 178
150 157 170 175150
80 83 86 8688
444 450 468 470416
0
100
200
300
400
500
2016 2017 2018 2019 2020
‘000 mtds Sales volume1
Construction Industrial Specialities
BioMaterials markets – Q4
10 724 10 56110 982
10 417
11 382
12 579
11 780
11 128
9 000
10 000
11 000
12 000
13 000
14 000
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
NOK per mt Average gross sales price1
34,5
42,437,6 38,640,0
33,9 34,2
40,3
0
10
20
30
40
50
Q1 Q2 Q3 Q4
‘000 mt Sales volume2019
2020
8
High deliveries in Q4
Lower growth rate in demand for cellulose ethers to construction applications due to the Covid-19 pandemic
Food and pharma applications continued to show strong growth
Targeted actions to balance inventories
Average price in sales currency 3% above Q4-19
Q4-19 sales influenced by sale of declassified products
Increased sales of cellulose fibrils, but still at a low level
1 Average sales price is calculated using actual FX rates, excluding hedging impact
Sales price and sales volume include speciality cellulose and cellulose fibrils
BioMaterials markets – full year
9 992
10 58910 337
10 665
11 678
9 000
10 000
11 000
12 000
13 000
2016 2017 2018 2019 2020
NOK per mt Average gross sales price1
152,3 150,7 150,1 153,1 148,4
64%72%
62%
73%77%
0%
20%
40%
60%
80%
0
50
100
150
200
2016 2017 2018 2019 2020
‘000 mtds Sales volume1
Volume Highly specialised
9
Reduced sales volume mainly related to Covid-19 effects
Improved product mix, sales of highly specialised grades increased to 77% (73%)
Reduced demand growth for cellulose ethers to construction due to the Covid-19 pandemic
Food and pharma applications continued to show strong growth
Impact of low prices for textile cellulose limited due to reduced exposure to this market
Average price in sales currency 1% above 2019 due to improved product mix
Growing sales of cellulose fibrils
Sales price and sales volume include speciality cellulose and cellulose fibrils
1 Average sales price is calculated using actual FX rates, excluding hedging impact
Fine Chemicals markets – Q4 & full year
10994 95 102
127 130 128
153
0
25
50
75
100
125
150
175
200
Q1 Q2 Q3 Q4
mNOK Sales revenues – quarter2019
2020
10
Higher sales volume for bioethanol
Deliveries mainly to the biofuel segment
Favourable product mix and high deliveries for pharma intermediates
Extraordinary bioethanol sales to disinfectants in Q2 and increased production volume
Contributed to higher sales volume and improved product mix
Deliveries mainly to the biofuel segment in H2, biofuel market normalised after Covid-19 related reduction in Q2
Increased deliveries but weaker product mix for pharma intermediates
Sales revenues include pharma intermediates and bioethanol Sales revenues include pharma intermediates and bioethanol
363 365 369400
538
0
100
200
300
400
500
600
2016 2017 2018 2019 2020
mNOK Sales revenues – full year
Outlook
BioSolutions
Sales volume in 2021 forecast to decrease by approx. 10%, mainly depending on raw material supply
Will have positive effect on product mix and average price in sales currency
Reduced demand in certain speciality applications expected to continue in markets affected by the Covid-19 pandemic
Market conditions for biovanillin expected to be unchanged, the ongoing capacity expansion will be completed mid-2021
Full effect of cost savings from the upgrade of the lignin operation in Norway from 2021
BioMaterials
Average price in sales currency is expected to be 2-3% below the 2020 level, mainly related to markets affected by the Covid-19 pandemic
Total sales volume and volume of highly specialised grades expected to increase in 2021
In Q1-21, total sales volume expected to be higher vs Q1-20 with similar product mix
Lower wood costs but increased energy costs and freight rates expected in H1-21
Sales growth will continue for cellulose fibrils, but new development and customer trials will be delayed due to the Covid-19 pandemic
Fine Chemicals
No major changes are expected in the market conditions for Fine Chemicals
Bioethanol sales mainly expected to be in the biofuel segment in 2021
Possible further consequences of the Covid-19 pandemic may affect Borregaard’s business
11
Financial performance Q4-20
Borregaard key figures – Q4
1 2
50
1 3
40
1 2
39
1 2
34
1 3
72
1 3
58
1 2
60
1 3
38
0
250
500
750
1 000
1 250
1 500
Q1 Q2 Q3 Q4
mNOK Operating revenues 2019
2020
20,4
21,1
23,1
14,817,6
26,6
21,1
19,7
0
10
20
30
40
Q1 Q2 Q3 Q4
% EBITDA margin1 2019
2020
13
Revenues 8% above Q4-19
EBITDA1 263 mNOK for the Group
All business areas improved their results
Slightly negative net FX effect on EBITDA1
Earnings per share (EPS) NOK 1.21 (NOK 0.38)
-20 mNOK in environmental accruals in Other income and expenses
25
5 28
3
28
6
18
3
24
2
36
1
26
6
26
3
0
50
100
150
200
250
300
350
Q1 Q2 Q3 Q4
mNOK EBITDA1 2019
2020
1,26
2,48
3,79
4,17
1,022,03
3,15
4,36
0
2
4
6
Q1 Q2 Q3 Q4
NOK EPS cumulative
1 Alternative performance measure, see Appendix for definition
4 4
92
4 6
18
4 7
85
5 0
63
5 3
28
0
1 000
2 000
3 000
4 000
5 000
2016 2017 2018 2019 2020
mNOKOperating revenues
Borregaard key figures – full year
14
Revenues increased by 5% vs 2019
All-time high EBITDA1 1,132 mNOK for the Group
Improved results for BioMaterials and Fine Chemicals, decline in Bio Solutions
Positive net FX effect on EBITDA1
Earnings per share (EPS) NOK 4.36 (NOK 4.17)
Impacted by -116 mNOK in Other revenues and expenses
1 Alternative performance measure, see Appendix for definition
1 0
21
1 0
55
90
3
1 0
07
1 1
32
22,7 22,8
18,919,9
21,2
0,0
4,0
8,0
12,0
16,0
20,0
24,0
0
200
400
600
800
1 000
1 200
1 400
2016 2017 2018 2019 2020
%mNOK EBITDA1 & EBITDA margin1
21,7
19,1
12,710,5
11,4
5,55 5,664,76
4,17 4,36
0
2
4
6
8
10
12
0
4
8
12
16
20
24
2016 2017 2018 2019 2020
NOK% ROCE1 & EPS
BioSolutions key figures – Q4
15
75
5
78
1
72
0
72
679
7
81
9
73
3
73
3
0
200
400
600
800
Q1 Q2 Q3 Q4
mNOK 2019
2020
16
8 19
2
15
6
13
117
0 19
3
13
2
13
7
0
50
100
150
200
Q1 Q2 Q3 Q4
mNOK 2019
2020
22,324,6
21,7
18,021,3
23,6
18,0
18,7
05
1015202530
Q1 Q2 Q3 Q4
% 20192020
• Revenues 1% above Q4-19
• Reduced raw material supply and 14% lower sales volume
• Full year growth 3%
• Reduced sales from South African operation had marginal impact on top-line due to JV accounting (equity method)
Op
erat
ing
reve
nu
esEB
ITD
A1
EBIT
DA
mag
in1
• Lower operating costs and improved product mix for biopolymers
• Negative net FX effects
• Full year EBITDA1 632 mNOK (647 mNOK)
• EBITDA margin1 slightly above Q4-19
• Full year EBITDA1 margin 20.5 (21.7)
1) Alternative performance measure, see Appendix for definition
BioMaterials key figures – Q4
16
• Revenues increased by 10% vs Q4-19
• High sales volume
• Average price in sales currency increased by 3%
• Full year growth 1%
Op
erat
ing
reve
nu
esEB
ITD
A1
EBIT
DA
mag
in1
• Q4-19 affected by operational incidents at the Sarpsborg site
• Lower wood and energy costs and higher sales volume for specialitycellulose
• Higher sales, cost reductions and improved result for cellulose fibrils
• Insignificant net FX impact
• Full year EBITDA1 318 mNOK (234 mNOK)
• EBITDA margin1 significantly above Q4-19
• Full year EBITDA1 margin 18.4 (13.7)
39
4 47
2
43
0
41
6
45
4
41
7
40
3 45
8
0100200300400500
Q1 Q2 Q3 Q4
mNOK 2019
2020
45
64
94
31
46
10
1
91
80
0
20
40
60
80
100
Q1 Q2 Q3 Q4
mNOK 2019
2020
11,413,6 21,9
7,5
10,1
24,2 22,617,5
05
1015202530
Q1 Q2 Q3 Q4
% 2019
2020
1) Alternative performance measure, see Appendix for definition
Fine Chemicals key figures – Q4
17
• Revenues increased by 47% vs Q4-19
• High sales for both pharma intermediates and bioethanol
• Full year growth 34%
Op
erat
ing
reve
nu
esEB
ITD
A1
EBIT
DA
mag
in1
• Favourable product mix and high deliveries for pharma intermediates
• Higher sales and production volume and reduced variable costs for bioethanol
• Negligible net FX impact
• Full year EBITDA1 182 mNOK (126 mNOK)
• EBITDA margin1 above Q4-19
• Full year EBITDA1 margin 33.5 (31.0)
11
0
96
96
10
412
8
13
1
13
1 15
3
0255075
100125150175
Q1 Q2 Q3 Q4
mNOK 2019
2020
42
27 3
6
212
6
67
43 46
010203040506070
Q1 Q2 Q3 Q4
mNOK 2019
2020
38,2
28,137,5
20,220,3
51,1
32,8
30,1
0
10
20
30
40
50
Q1 Q2 Q3 Q4
% 2019
2020
1) Alternative performance measure, see Appendix for definition
Currency impact
-8 -13-23
-32
-62
-84
-51-44
-100
-80
-60
-40
-20
0
20
Q1 Q2 Q3 Q4
mNOK Hedging effects2 on EBITDA120192020
98,0 98,4
100,4103,2
107,1
112,9
104,7 104,0
90
95
100
105
110
115
120
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
Borregaard’s currency basket3
18
Net FX EBITDA1 impact ≈-5 mNOK vs Q4-19 Includes change in hedging effects and based on estimated FX exposure
Net FX EBITDA1 impact YTD ≈30 mNOK
Net FX EBITDA1 impact in 2021 estimated to be ≈-10 mNOK vs 2020 Assuming rates as of 2 February (USD 8.59 and EUR 10.35) on expected FX
exposure
Net FX EBITDA1 impact in Q1 estimated to be ≈-10 mNOK vs Q1-20
Significant FX exposure, but delayed impact of FX rate fluctuations due to hedging policy
Revised hurdle rates for extended currency hedging:
USDNOK: 8.00 and 8.50
EURNOK: 9.25 and 9.75
Revised due to change in long-term average for USD and EUR
1 Alternative performance measure, see Appendix for definition. 2 See Appendix for currency hedging strategy, future hedges and hedging effects by segment.3 Currency basket based on Borregaard’s net exposure on EBITDA1 in 2019 (=100): USD 65% (approx. 203 mUSD), EUR 35% (approx. 98 mEUR), Other 0% (GBP, BRL, JPY, SEK, ZAR).
Cash flow, investments and NIBD
288
-125
442
153
416
-200
-100
0
100
200
300
400
500
Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
mNOK Cash flow from operating activities
Cash flow from operating activities EBITDA¹
2114
1794
263
200
54
59191
16
49
1 600
1 700
1 800
1 900
2 000
2 100
mNOK NIBD1 change Increase
Decrease
19
Strong cash flow in Q4
Cash effect from improved EBITDA1, reduced tax payments and significant reduction in net working capital
Investments below Q4-19 and Borregaard’s forecast
NIBD1 decreased by 320 mNOK in Q4
Leverage ratio1 1.58 (1.86)
Equity ratio1 53.9% (51.4%)
182
35
104
52
153
31
23
51
47
38
213
58
155
99
191
0
50
100
150
200
250
Q4'19 Q1'20 Q2'20 Q3'20 Q4'20
mNOK Investments
Replacement Expansion Depr. ex IFRS16
1 Alternative performance measure, see Appendix for definition
INVESTMENT FORECAST 2021-2023
Replacement investments
Targeted at depreciation level
Upgrade of caustic soda production facility a major investment in 2020 and 2021
Expansion2 investments
Capacity expansion for wood-based vanillin the main project (130 mNOK, completion mid-2021)
A few smaller expansion projects are ongoing or planned
Revised forecast mainly due to carry-over from 2020
Related to the caustic soda production facility (replacement) and capacity expansion for wood-based vanillin (expansion)
New projects may lead to additional investments
344400
350 350
159
150
50 50
503
550+/-60
400+/-60
400+/-60
0
100
200
300
400
500
600
2020 2021 2022 2023
mNOKInvestment forecast1
Replacement Expansion² Depreciation ex IFRS16
20
1 Uncertainty is related to final investment decisions, timing of investment payments, execution time and risk and unexpected events2 Alternative performance measure, see Appendix for definition
Questions?
21
For questions, please contact Borregaard’s Investor Relations by phone or email
See: https://www.borregaard.com/Investor-Relations
Appendix
Borregaard – key figures
23
Amounts in NOK million Q4-2020 Q4-2019 Change YTD-2020 YTD-2019 Change
Operating revenues 1 338 1 234 8 % 5 328 5 063 5 %
EBITDA1263 183 44 % 1 132 1 007 12 %
Depreciation property, plant and equipment -110 -110 -443 -418
Amortisation intangible assets -2 -1 -5 -4
Other income and expenses1-20 -11 -116 -27
Operating profit 131 61 115 % 568 558 2 %
Financial items, net -12 -31 -72 -91
Profit before taxes 119 30 297 % 496 467 6 %
Income tax expenses -8 -12 -117 -116
Profit for the period 111 18 517 % 379 351 8 %
Profit attributable to non-controlling interests -10 -20 -57 -66
Profit attributable to owners of the parent 121 38 436 417
Cash flow from operating activ ities (IFRS) 416 288 886 697
Earnings per share 1,21 0,38 218 % 4,36 4,17 5 %
EBITDA margin119,7 % 14,8 % 21,2 % 19,9 %
1 Alternative performance measure, see Appendix for definition
Operating revenues and EBITDA1 per segment
24
Amounts in NOK million Amounts in NOK million
Operating revenues Q4-2020 Q4-2019 Change EBITDA1 Q4-2020 Q4-2019 Change
Borregaard 1 338 1 234 8 % Borregaard 263 183 44 %
BioSolutions 733 726 1 % BioSolutions 137 131 5 %
BioMaterials 458 416 10 % BioMaterials 80 31 158 %
Fine Chemicals 153 104 47 % Fine Chemicals 46 21 119 %
Eliminations -6 -12
Amounts in NOK million Amounts in NOK million
Operating revenues YTD-2020 YTD-2019 Change EBITDA1 YTD-2020 YTD-2019 Change
Borregaard 5 328 5 063 5 % Borregaard 1132 1007 12 %
BioSolutions 3082 2982 3 % BioSolutions 632 647 -2 %
BioMaterials 1732 1712 1 % BioMaterials 318 234 36 %
Fine Chemicals 543 406 34 % Fine Chemicals 182 126 44 %
Eliminations -29 -37
1 Alternative performance measure, see Appendix for definition
Cash flow
25
Amounts in NOK million Q4-2020 Q4-2019 YTD-2020 YTD-2019
Amounts in NOK million
Profit before taxes 119 30 496 467
Amortisation, depreciation and impairment charges 113 121 449 432
Change in net working capital, etc 200 171 -21 -85
Dividend (share of profit) from JV -12 2 51 5
Taxes paid -4 -36 -89 -122
Cash flow from operating activ ities 416 288 886 697
Investments property, plant and equipment and intangible assets * -191 -213 -503 -583
Other capital transactions 12 8 14 29
Cash flow from Investing activ ities -179 -205 -489 -554
Dividends - - -229 -224
Proceeds from exercise of options/shares to employees 1 1 35 35
Buy-back of shares -1 -4 -62 -60
Gain/(loss) on hedges for net investments in subsidiaries 59 5 10 -26
Net paid to/from shareholders 59 2 -246 -275
Proceeds from interest-bearing liabilities 200 402 1 550 2 100
Repayment from interest-bearing liabilities -257 -493 -1 703 -1 971
Change in interest-bearing receivables/other liabilities -12 -1 18 -3
Change in net interest-bearing liablities -69 -92 -135 126
Cash flow from financing activ ities -10 -90 -381 -149
Change in cash and cash equivalents 227 -7 16 -6
Cash and cash equivalents at beginning of period -127 92 81 86
Change in cash and cash equivalents 227 -7 16 -6
Currency effects cash and cash equivalents -4 -4 -1 1
Cash and cash equivalents at the end of the period 96 81 96 81
* Investment by category
Replacement Investments 153 182 344 370
Expansion investments138 31 159 213
1 Alternative performance measure, see Appendix for definition
Balance sheet
26
Amounts in NOK million 31.12.2020 30.09.2020 31.12.2019
Assets:
Intangible assets 86 90 93
Property, plant and equipment 3 973 3 962 3 852
Right-of-use assets 381 374 380
Other assets 380 249 251
Investment in joint venture 38 26 99
Non-current assets 4 858 4 701 4 675
Inventories 887 1 001 931
Receivables 1 051 1 055 991
Cash and cash deposits 207 50 147
Current assets 2 145 2 106 2 069
Total assets 7 003 6 807 6 744
Equity and liabilities:
Group equity 3 668 3 112 3 306
Non-controlling interests 110 124 158
Equity 3 778 3 236 3 464
Provisions and other liabilities 291 373 294
Interest-bearing liabilities 1 381 1 480 1 419
Non-current liabilities 1 672 1 853 1 713
Interest-bearing liabilities 623 687 608
Other current liabilities 930 1 031 959
Current liabilities 1 553 1 718 1 567
Equity and liabilities 7 003 6 807 6 744
Equity ratio1 (%): 53,9 % 47,5 % 51,4 %
1 Alternative performance measure, see Appendix for definition
Net financial items & net interest-bearing debt1
27
Amounts in NOK million
Net financial items Q4-2020 Q4-2019 YTD-2020 YTD-2019
Net interest expenses -17 -20 -76 -69
Currency gain/loss 6 -3 7 -12
Other financial items, net -1 -8 -3 -10
Net financial items -12 -31 -72 -91
Amounts in NOK million
Net interest-bearing debt 1 (NIBD) 31.12.2020 30.09.2020 31.12.2019
Non-current interest-bearing liabilities 1 381 1 480 1 419
Current interest-bearing liabilities including overdraft facilities 623 687 608
Non-current interest-bearing receivables (included in "Other Assets") -3 -3 -4
Cash and cash deposits -207 -50 -147
Net interest-bearing debt 1 (NIBD) 1 794 2 114 1 876
- of which impact from IFRS 16 leases 396 386 387
1 Alternative performance measure, see Appendix for definition
Currency hedging strategy
28
USDmillion
USD rate
EURmillion
EUR rate
Q1-2021 34 8.17 26 10.09
Q2-2021 34 8.28 25 10.13
Q3-2021 35 8.42 24 10.21
Q4-2021 33 8.59 24 10.36
2021 136 8.35 99 10.20
2022 128 8.95 101 10.65
2023 90 9.42 70 11.08
2024 7 8.78 6 10.88
NOK million Q4-20 Q4-19 YTD-20 YTD-19
BioSolutions -18 -14 -103 -33
BioMaterials -22 -16 -116 -37
Fine Chemicals -4 -2 -22 -6
Borregaard -44 -32 -214 -76
Contracted FX hedges with EBITDA impact (as of 02.02.21) Hedging effects by segment
1 Alternative performance measure, see Appendix for definition2 Hedging done mainly in the Norwegian company3 Strict definition of contracts applied for 100% hedging (mutually binding agreement in which price, currency, volume and time are defined)
Purpose is to delay effects of currency fluctuations and secure competitiveness
Hedging based on expected EBITDA1 impact2
Base hedge: 75%/50% on a rolling basis for 6/9 months for major currencies
Extended hedge: 75%/50% of the next 24/36 months if USD and EUR are above defined levelsEUR; gradually increased at effective rates from 9.25 to 9.75USD; gradually increased at effective rates from 8.00 to 8.50
Contracts3: 100% hedged
Balance sheet exposure hedged 100%
Net investments in subsidiaries hedged up to 90% of book value in major currencies
Credit facilities, solidity and debt
Long-term credit facilities
• 1,500 mNOK revolving credit facilities, maturity 2021Facilities refinanced in July, maturity 2023 and 2025
• 400 mNOK 5-year bond issue, maturity 2023
• 40 mEUR 10-year loan, maturity 2024
• 60 mUSD term loan for LT Florida, tenor 8.5 years from completion
Short-term credit facilities
• 225 mNOK overdraft facilities
• 15 mUSD overdraft facility in LignoTech Florida
• 400 mNOK commercial paper
Solidity
• Equity ratio1 53.9% (> 25%)
• Leverage ratio1 LTM 1.58 (< 3.252) (covenant)
29
1 Alternative performance measure, see Appendix for definition2 Leverage ratio covenant is pre IFRS 16 Leases, and the actual leverage ratio1 is restated to pre IFRS 16 for compliance calculations
3 536
1 381
620207
1 742
0
250
500
750
1 000
1 250
1 500
1 750
2 000
2 250
2 500
2 750
3 000
3 250
3 500
3 750
Long-termdebt
Other NIBD Cash & cashdeposit
Undrawnfacilities
Total available
Debt and undrawn facilities31.12.2020
NIBD1 1,794 mNOK
Alternative performance measures
In the discussion of the reported operating results, financial position and cash flows, Borregaard refers to certain measures which are not defined by generally accepted accounting principles (GAAP) such as IFRS. Borregaard management makes regular use of these Alternative performance measures and is of the opinion that this information, along with comparable GAAP measures, is useful to investors who wish to evaluate the company’s operating performance, ability to repay debt and capability to pursue new business opportunities. Such Alternative performance measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure.
• EBITDA: Operating profit before depreciation, amortisation and other income and expenses.
• EBITDA margin: EBITDA divided by operating revenues
• Equity ratio: Equity (including non-controlling interests) divided by equity and liabilities.
• Expansion investments: Investments made in order to expand production capacity, produce new products or to improve the performance of existing products. Such investments include business acquisitions, pilot plants, capitalised R&D costs and new distribution set-ups.
• Other income and expenses: Non-recurring items or items related to other periods or to a discontinued business or activity. These items are not viewed as reliable indicators of future earnings based on the business areas’ normal operations. These items will be included in the Group's operating profit.
• Leverage ratio: Net interest-bearing debt divided by last twelve months’ (LTM) EBITDA.
• Net interest-bearing debt (NIBD): Interest-bearing liabilities minus interest-bearing assets (see slides 23 and 26).
• Return on capital employed (ROCE): Last twelve months’ (LTM) capital contribution (operating profit before amortisation and other income and expenses) divided by average capital employed based on the ending balance of the last five quarters. Capital employed is defined by Borregaard as the total of net working capital, intangible assets, property, plant and equipment, right-of-use assets and investment in joint venture minus net pension liabilities.
30
Important notice
This presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’). Any person who is not a relevant person should not act or rely on this presentation or any of its contents.
This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Borregaard Group. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.
This presentation includes and is based, inter alia, on forward-looking information and contains statements regarding the future in connection with the Borregaard Group’s growth initiatives, profit figures, outlook, strategies and objectives. All forward-looking information and statements in this presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for the Borregaard Group and its lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates” or similar expressions.
Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although Borregaard believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation.
Borregaard is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither Borregaard nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.
This presentation was prepared for the interim results presentation for the fourth quarter of 2020, held on 3 February 2021. Information contained herein will not be updated. The slides should also be read and considered in connection with the information given orally during the presentation.
31