H+H Annual Report 2017

“Our performance in 2017 was satisfactory, as we have been challenged on a number of issues. Despite increases of raw material costs and adverse currency development, our business model and value proposition have enabled us to take advantage of the positive market development shown by growth in earnings just above initial expectations”, says CEO Michael T Andersen. “Furthermore, we expect higher earnings in 2018 and have increased our long-term financial targets.”

Selected financial highlights for 2017

	Q4 2017	Q4 2016	Q1-Q4 2017	Q1-Q4 2016
Revenue	370	347	1.622	1.611
Organic growth	6%	0%	3%	6%
EBITDA before special items	61	45	242	211
EBIT margin before special items	11%	5%	10%	8%
ROIC	16%	16%	16%	16%
Financial gearing	2.2	1.8	2.2	1.8
Free cash flow	(18)	(7)	(61)	68

Other highlights

• In December 2017 an agreement was signed to acquire the HeidelbergCement group’s calcium-silicate unit business in Germany and Switzerland (HDKS) and in conjunction a term loan facility of DKK 850 million was signed with Danske Bank. The acquisition was closed on 28 February 2018.
• H+H intend to issue new shares with net proceeds of around DKK 500 million.

 Outlook for 2018

• Growth before acquisitions and measured in local currencies is expected to be around 5%.
• EBITDA before special items is expected to be DKK 350-390 million.
• Approximately DKK 25-30 million cost are expected to be incurred as a result of the Borough Green factory upgrade and resulting need to import products from sister companies. The increased transportation costs will be expensed at the point of sale and treated as a special item.
• Approximately DKK 35 million for transaction and integration costs for HDKS will be expensed as special items.
• Investments excluding mergers, acquisitions and divestments are expected to be in the region of DKK 150 million of which approximately DKK 35 million relates to an investment required at one of the HDKS plants damaged by fire during the acquisition process. A similar amount was covered by a reduction in the purchase price.

Long-term financial targets

Long-term financial targets have been upgraded as follows:

• EBIT margin before special items is upgraded to at least 11% from 8-10%
• ROIC is maintained at at least 12%
• Financial gearing between one and two

Investor teleconference

H+H International A/S will host an investor teleconference on 14 March 2018 at 11.00 a.m. CET.

Please see attached pdf for full version of the annual report for 2017.

Kent Arentoft                                       Michael T Andersen
Chairman of the Board of Directors        CEO

Disclaimer

This announcement contains forward-looking statements. Such statements are subject to risks and uncertainties, as various factors, many of which are beyond the control of H+H International A/S, may cause actual developments and results to differ materially from the expectations expressed in this report.

H+H’s core activity is the manufacture and sale of wall building materials, with a revenue in 2017 of DKK 1.6 billion before acquisition of the calcium silicate product line. The main product lines are aircrete blocks and since 2018 calcium silicate units used for the residential new building segment. H+H has 21 factories in Northern and Central Europe and Northwest Russia with a total output of more than 3.5 million cubic metres of products annually and has a leading position in most of its markets. H+H has around 1,200 employees and is listed on Nasdaq Copenhagen.

355 Annual Report 2017