Absolent Air Care Group’s Interim Report Q3 2021

QUARTER 3

INTERIM REPORT JANUARY - SEPTEMBER 2021

SUMMARY QUARTER 3 2021

• Net sales amounted to SEK 254.4 (191.1) million, which equals a growth of 33.1 (-33.1) %.
• Operating profit before amortizations of intangible assets (EBITA) amounted to SEK 38.4 (12.8) million with a margin of 15.1 (6.7) %.
• Operating profit (EBIT) amounted to SEK 13.1 (-6.5) million with a margin of 5.1 (-3.4) %. Amortizations of goodwill had an impact on EBIT of SEK -25.0(-19.3) million.
• Earnings per share amounted to SEK 0.33 (-1.08).
• Cash flow from operating activities after changes in working capital amounted to SEK 13.4 (24.9) million.

SUMMARY JANUARY-SEPTEMBER 2021

• Net sales amounted to SEK 757.1 (666.8) million, which equals a growth of 13.5 (-6.7) %.
• Operating profit before amortizations of intangible assets (EBITA) amounted to SEK 106.8 (3.1) million with a margin of 14.1 (0.5) %.
• Operating profit (EBIT) amounted to SEK 32.6 (-55.7) million with a margin of 4.3 (-8.4) %. Amortizations of goodwill had an impact on EBIT with SEK -73.2(-59.6) million.
• Earnings per share amounted to SEK 0.57 (-6.79).
• Cash flow from operating activities after changes in working capital amounted to SEK 61.9 (46.3) million.

KEY RATIOS

		Jul-Sep	Jul-Sep		Jan-Sep	Jan-Sep	Jan-Dec
	2021		2020	2021		2020	2020
Net sales (SEK thousands)		254 395		191 098		757 119		666 799	895 860
Sales growth (%)		33.1		-33.1		13.5		-6.7	-13.7
EBITDA (SEK thousands)		41 289		16 438		115 618		19 081	73 455
EBITA (SEK thousands)		38 436		12 802		106 826		3 072	49 543
EBITA (%)		15.1		6.7		14.1		0.5	5.5
Amortizations of goodwill (SEK thousands)		-24 956		-19 254		-73 231		-59 589	-80 728
Operating profit EBIT (SEK thousands)		13 054		-6 453		32 562		-55 718	-31 184
Operating margin EBIT (%)		5.1		-3.4		4.3		-8.4	-3.5
Cash flow from operating		13 439		24 858		61 853		46 294	54 447
activities (SEK thousands)
Equity ratio (%)		33.9		29.3		33.9		29.3	30.5
Net debt (SEK thousands)		181 903		145 434		181 903		145 434	129 903
Earnings per share (SEK)		0.33		-1.08		0.57		-6.79	-4.90
Equity per share (SEK)		30.88		29.94		30.88		29.94	30.40
Number of shares, end of period		11 320 968		11 320 968		11 320 968		11 320 968	11 320 968

2	ABSOLENT AIR CARE GROUP 2021

COMMENTS BY CEO AXEL BERNTSSON

Sales for the third quarter have developed positively compared to the previous year and amounted to SEK

254.4 (191.1) million, which corresponds to a growth of 33.1%. The operating margin (EBITA) has also developed positively and increased from 6.7% to 15.1%. The combination of higher margin and higher volume causes EBITA for the quarter to triple compared to the same period last year.

Despite a positive result for the quarter, we still see challenges in the market for industrial applications. Several customer segments, with the automotive industry at the forefront, have challenges related to shortage of components which hampers their production and increases uncertainty. As a result, we see longer decision-making processes and delayed investments at several of our customers.

The Group's own companies delivering industrial products are also affected by the shortage of components. Together with challenges related to in- and outbound logistics, the component shortage has caused increased costs and longer lead times during the quarter. As a response we have decided to temporary increase inventory levels, which has resulted in a higher working capital and lower cash flow.

The Commercial Kitchen market has distinct seasonal effects where the months with larger share of vacation days (July, August and December) imply less installations and lower sales. However, shortage of components does not affect the Commercial Kitchen business to the same extent as the Industrial business, which is why Commercial Kitchen has had a positive development compared the previous year where the post-summer period has shown a strong order intake and sales.

Geographically, the strongest development during the quarter compared to the previous year has been seen

in the Europe region. Partly driven by the fact that our Commercial Kitchen business mainly operates in this region and partly a result of many years' diligent work in building a large customer base outside the automotive industry. Other regions have also experienced growth compared to the previous year. Looking at individual countries, India stands out with a high growth related to the fact that we have been trusted to deliver filter units to a number of new production facilities for one of the world's largest producer of electronics. This project has potential to become the Group's single largest deal ever and the first units have been delivered during the quarter.

We are continuously working with improving and refining our offer to customers and during the quarter decision has been taken to stream-line our investments in filtration of oil mist to centrifugal and fiber media technologies, and because of that we have chosen to divest the Group's brand for electrostatic technology, Bristol, and the related operations. The divestment, which has occurred during the fourth quarter, will not have any material effects on the Group's sales, cash flow or margins. During the fourth quarter, we have also launched a new series of connected and intelligent products (IOT). The first products will form the basis in an offer giving the customers improved access, analysis and presentation of data related to the customers' processes and working environment.

In conclusion, the Group's business is developing well and despite above-mentioned uncertainties there are still good growth opportunities, and we are confident in the future development of the business.

Axel Berntsson, President and CEO

Gothenburg, November 2021

3	ABSOLENT AIR CARE GROUP 2021

JANUARY-SEPTEMBER 2021

NET SALES

The net sales for the Group amounted to SEK 757.1 (666.8) million, which corresponds to a change of 13.5 (-6.7) %.

RESULT

Operating profit (EBITA) amounted to SEK 106.8 (3.1) million, which corresponds to a margin of 14.1

(0.5) %. As the Group does not apply IFRS, no impairment tests of goodwill are performed. Instead, the Group amortizes goodwill over the estimated useful life, which is five to ten years. The amortizations of the goodwill do not affect the taxable profit. EBIT amounted to SEK 32.6 (-55.7) million. Currency rates impacted the operating profit (EBIT) positively by SEK 2.0 (0.2) million for the period. The financial items were impacted by SEK 0.8 (-2.9) million by currency rates. The impact is related to the credit facility in foreign currency. Net financial items amounted to SEK -4.8(-8.6) million and result for the period to SEK 6.5 (-76.9) million. Earnings per share amounted to SEK 0.57 (-6.79).

INVESTMENTS

During the period January-September, the Group invested SEK 12.0 (12.9) million mainly in software, machinery and equipment in existing operations. In January 2021, the Group acquired the commercial kitchen ventilation company Tessu Systems B.V. in the Netherlands for EUR 5.3 million on a cash and debt-free basis plus an additional earnout depending on Tessu's performance in 2021 and 2022. In January 2021, the Group divested the UK company Gallito Limited, and during the second quarter of the year an earnout of SEK 35 million was paid in relation to the Interzon acquisition in 2019.

CASH FLOW

Cash flow from the operating activities before changes in working capital amounted to SEK 84.7 (32.5) million. Cash flow after changes in working capital amounted to SEK 61.9 (46.3) million.

FINANCIAL POSITION

Interest-bearing liabilities amounted to SEK 427.3 million at the end of the period. At the beginning of the period, the liabilities amounted to SEK 581.7 million. Net debt of the Group was SEK 181.9 million by the end of the period compared to SEK 129.9 million at the beginning of the period. The net debt increase is related to the acquisition of Tessu. The equity ratio amounted to 33.9 (29.3) %. The Parent company's credit facility amounts SEK 600 million and expires during 2024.

4

NET SALES PER REGION, JAN - SEP

EUROPE43%

UK & 21%

APAC 13%

AMERICAS

23%

NET SALES

SEK million

300
250
200
150
100
50
0
Q3	Q4	Q1	Q2	Q3
2020	2020	2021	2021	2021

EBITA AND EBITA MARGIN

SEK million
50					25%
40					20%
30					15%
20					10%
10					5%
0						0%
Q3	Q4	Q1	Q2	Q3
	2020	2020	2021	2021	2021

CASH FLOW FROM OPERATING ACTIVITES

SEK million

35

30

25

20

15

10

5

0

Q3

Q4

Q1

Q2

Q3

2020 2020 2021 2021 2021

ABSOLENT AIR CARE GROUP 2021

OTHER INFORMATION

RISKS AND UNCERTAINTIES

The Group and the Parent company are exposed to a number of different risks in their daily operations such as business risk, competitor risk, distributor risk, supplier risk and acquisition risk. These risks are described in detail in the Annual Report of Absolent Air Care Group for 2020 (available on www.absolentgroup.com). The risk profile remains since the Annual Report of 2020 was published. During 2021, COVID-19 has continued to create uncertainty in the market, but to a more limited extent and with more regional differences.

FINANCIAL IMPACT OF COVID-19

The Group has received government grants of SEK

3.0 million for the period January to September 2021.

ACCOUNTING POLICIES

The Group and the Parent company apply the Swedish Annual Accounts Act (1995:1554) and BFNAR 2012:1 Annual Accounts and Consolidated Financial Statements (K3). The accounting policies applied are the same as those described in the annual report for 2020. Government grants are reported as other operating income. No new accounting policies for 2021 have had any material impact on the Group.

EVENTS AFTER THE CLOSING DATE

As of November 1, the Group's brand for electrostatic technology, Bristol, and the related operations have been divested. The divestment will not have any material effects on the Group's sales, cash flow or margins.

CONTACT INFORMATION

Axel Berntsson, President and CEO

Karin Brossing Lundqvist, CFO

Phone: [phone]

E-mail: [e-mail]

Absolent Air Care Group AB (publ)

Västra Hamngatan 10

SE-411 17 Göteborg

Company ID: 556591-2986

www.absolentgroup.com

CERTIFIED ADVISER

Erik Penser Bank AB is the company's Certified Adviser.

FINANCIAL CALENDER

Year-end report 2021, Feb 24, 2022 Interim report Jan-Mar 2022, May 19, 2022 Annual General Meeting, May 19, 2022 Interim report Jan-Jun 2022, Aug 17, 2022 Interim report Jan-Sep 2022, Nov 11, 2022

This interim report has not been reviewed by the company auditors.

This document is a translation of the Swedish original. In the event of any discrepancies between this translation and the Swedish original, the latter shall prevail.

The interim report is available on the Group website (www.absolentgroup.com).

Gothenburg, November 12, 2021

Axel Berntsson

President and CEO

This information is information Absolent Air Care Group AB (publ.) is obligated to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 8:00 a.m. CET Nov 12, 2021.

5	ABSOLENT AIR CARE GROUP 2021