IMCD N.V.

Good morning, ladies and gentlemen. Thank you for holding and welcome to the analyst call Q3 results AMCD-NV. At this moment, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. I would now like to hand over the conference to Mr. Piet van der Slikke. Please go ahead, sir.

Thank you. Welcome everybody. I'm here as usual with Hans Corrimans and together we will answer your questions on the first nine months and Q3. Despite the COVID-19 crisis, we report strong results. For the first nine months, EBITDA growth of 8% and even 11% if you correct for Forex. Q3 was in particular strong with 11% growth of operating EBITDA and even 17% when we adjust for currencies. All regions contributed to this success. Furthermore, free cash flow is 21% above last year. We are very pleased to see that we are able to continue our business also in these difficult times and that we are even able to grow by margin expansion and cost control. although we are, like everybody else, affected in our top line. This is promising once this crisis goes away as it leaves room for further growth. Generally, we are encouraged by the positive resonance our business model receives from suppliers and customers, which is evidenced by the projects we are working on and which will hopefully fuel future growth as well. This Q3 was very positive in another sense. We were able to sign an agreement to acquire 70% of the shares of Cygnet Excipients of India and successfully issued almost 4.4 million shares to finance this acquisition. Last week we closed this deal. Cygnet fits very well in our global pharma strategy and expands our position in India. As you know, everything is made possible by our excellent staff who continues to deliver a top performance under difficult circumstances in the various activities, in sales, in order handling, in labs, in warehouses and logistics. I want to thank them all. In summary, IMCD is in good shape and we are positive about our near-term prospects. I would like to hand over now to Hans. to lead you through our results. Thank you, Pete. Hans here. Good morning, ladies and gentlemen. Before we go to Q&A, I will briefly summarize IMCD's first nine-month results. The bio will start on page 10 of the presentation with an overview of the key financial figures. As you can see and as Pete just mentioned, Forage Adjusted's revenue increased 3% compared to the same period last year, and more important, gross profit increased 9%. This gross profit increase is a combination of 4% organic growth and 5% as the result of the first-time inclusion of acquired businesses. In 2019, like Wawon and DCS, further acquisition growth includes the positive impact of Gifroni, Daveling, VitaQuali and Cockle Fiber acquisitions that we signed and closed in the first nine months of 2020. SIGNET is, as you might understand, not included in these year-to-date September figures as we closed this transaction on November 4. Growth profit and percentage of revenue increased 1.1% from 22.2% to 23.3%. This increase is the result of gross margin improvement initiatives, changes in local market circumstances, currency developments and the usual fluctuations in the product mix. Forex adjusted operating EBITDA increased 11% to 190 million. And this increase was a combination of organic growth and first time inclusion of acquisitions. The conversion margin, calculated as operating EBITDA in percentage of gross profit, was 39.1% in the first nine months of 2020, an improvement of 0.7% compared to the same period last year. Net results before amortization and non-recurring items increased 11 million to 131 million, an increase of 11%. Free cash flow was 168 million and the cash conversion ratio increased to 87.5%. A substantial improvement compared to the same period of last year. Operating EBITDA growth in 2020 combined with a lower increase in working capital in the first nine months of this year were the main drivers of this improvement. Year-to-date cash earnings per share were 2 euro and 46 cents. The forex adjusted increase of 11% compared to the same period of last year. And on the last line of this page you will notice a 9% increase of our full-time employees. Most of this increase is the result of the first-time inclusion of acquisitions done. On the next slide, slide 11, you will find growth profit, operating EBITDA, EBITDA margin and conversion margin for operating segments. EMEA, in the first column, reported 4% forex adjusted growth profit growth and 3% operating EBITDA growth. Q3 was a strong quarter in EMEA, with low double-digit operating EBITDA growth. Further, operating EBITDA in percentage of revenue improved from 9.7% to 9.9%. In the second column, the Americas, where we report 11% forex adjusted growth profit growth and 16% operating EBITDA growth. Operating EBITDA margin and conversion margin both improved with 1.4% and 2.1% respectively. Asia Pacific reported 25% growth profit growth and 29% operating EBITDA growth at constant currencies. Operating EBITDA in percentage of revenue and conversion margin further improved compared to the same period of last year. Q3 was a strong quarter with double-digit EBITDA growth for both the Americas and Asia-Pacific. And in the last column you will find the cost of the holding companies. On page 11, a summary of INCD's free cash flow. Free cash flow and cash conversion ratio were both higher than in the same period of last year. And this healthy cash flow was mainly the result of higher operating EBITDA and less investments in working capital. working capital days improved during Q3 substantially from 60 days end of June to 55 days end of September. A more or less normalization of stock levels during this quarter was an important driver of the improvement. Then on page 12, a short update on net debt and leverage. Compared to the end of December last year, net debt decreased substantially to a level of 390 million. In the first nine months, we saw healthy operating cash flow combined with the proceeds of the issuance of €4.4 million of new shares at a price of €91 per share. The net proceeds of the new shares were used early November to finance 70% of the acquisition of Signet and for general corporate purposes. At the end of September, the reported leverage ratio and the leverage ratio based on the definitions used in the loan documentation dropped to 1.2 and 0.9 respectively. Excluding the net proceeds from the new shares and keeping all other factors equal, the pro forma leverage could be calculated at 2.6 and 2.5 times either there. And then last but not least, on page 15 you will find the outlook for 2020. where you could read that we expect operating EBITDA growth for the full year. This was a short summary of our year-to-date financials, and Peter and myself are happy to hand over to the operator to answer your questions.

Thank you, sir. Ladies and gentlemen, we will start the question-and-answer session now. If you have a question or remark, please press star 1 on your telephone. Go ahead, please, star 1 for questions or remarks. And the first question is coming from Mr. Mutlu Gondogan, ABN AMRO. Please go ahead, sir. Your line is open now.