11 November, 2019

AUTOMOTIVE

KOA (Buy tp NOK10): Above auto market performance, improved PMI’s, but lagging peers. Why?

Petter Kongslie SpareBank 1 Markets

Phone : (+47) 24 14 74 96 Phone : (+47) 2414 7400
Mobile : (+47) 98 41 10 80 Visit address : Olav Vs gate 5, 0161 Oslo
E-mail : petter.kongslie@sb1markets.no Post address : Post-box 1398 Vika, 0114 Oslo
Investment case; 5 bullets on KOA
Buy tp NOK10

1. KOA performs superior to the underlying automotive market on revenue growth…

2. …and has delivered significant earnings growth in reported EBIT…

3. …and global auto parts PMI’s is improving – early indicator?...

4. ….but KOA has considerably lagged peers over the last 1, 3 and 6 months…

5. …and is now trading at a considerably and unwarranted discount to peers

Source: SB1M, KOA, Bloomberg, Macrobond, LMC Global Commercial Vehicle Forecast (3Q19) 2
Investment case in slides

3
KOA performs superior to the underlying automotive market on growth…
KOA has consistently outperformed marked growth since 2017
Global passenger car production: units in millions KOA growth vs global vehicle car production growth

26 8.0% 15.0%
25.3
6.1% 6.0%
25 24.4 4.8%
24.3
24.1 4.0% 10.0%
23.9
24
Units in millions

2.3% 2.0%
23 22.9
23 0.8% 5.0%
0.0% 22.5 -0.4% 0.0%
22.1
21.9
22 -2.0%
-2.7% -2.7%
21.3
-4.0% 0.0%
21 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
-5.5% -5.8% -6.0%
20 -5.0%
-8.3% -8.0%
19 -10.0%
1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 -10.0%

Global Passenger Car production YoY growth Global Passenger Car production KOA YoY growth

Source: SB1M, KOA, LMC Global Commercial Vehicle Forecast (3Q19) 4

…and has delivered significant earnings growth in reported EBIT…
For 2020, we model with zero adj. figures and “one-offs” is included in our actual EBIT figure
EBIT adj. development EBIT rep. development vs. YoY growth in EBIT

90.0 80.0 160%

76.2 75.7 76.5 69.2
80.0 74.9 70.0 140%
138% 63.5
67.1 126% 59.3
70.0 60.0 53.8 120%
61.5
60.0 54.5 50.0 100%
90% 90% 94% 93%

EURm
47.6
50.0 40.0 80%
EURm

41.7 32.8 77%

30.5 39.2
40.0 34.7 30.0 60%
29.8
30.0 20.0 40%

20.0 10.0 20%

10.0 0.0 0%
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
0.0
1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Trailing 12m EBIT rep. YoY growth in trailing 12m EBIT (RHS)

Source: SB1M, KOA 5

…and global auto parts PMI’s is improving – early indicator?...

Global PMI per sector Global PMI per sector deviation from 50 and delta

Source: SB1M, Macrobond 6

….but KOA has considerably lagged peers over the last 1, 3 and 6 months…
Over the last six months, KOA share is down 34%, whereas peers is up 15% in line with PMI’s

20%
14% 15%
11%
10%
4%

0%
1m 3m 6m
-10%
-12%
-20%

-30%

-34%
-40%

Median KONGSBERG AUTOMOTIVE ASA

Source: SB1M, Bloomberg 7

…and is now trading at a considerably and unwarranted discount to peers
KOA trades at ‘20e and ‘21e P/E of 5.2x and 4.3x. Our NOK10 tp. correspond to 10x ‘20e P/E

Share price performance EV/EBITDA Hist. EV/EBIT Hist. P/E Hist. P/B Div yield (%)
KOA Peers 1m 3m 6m 2019 2020 2021 5Y avg. 2019 2020 2021 5Y avg. 2019 2020 2021 5Y avg. 2018 2019 2020 2021

KOA Peers
AUTOLIV INC 9% 26% 16% 8.4x 7.5x 6.9x 7.6x 12.5x 10.4x 9.2x 10.7x 15.2x 12.5x 10.8x 10.9x 2.8x 2.8 2.9 3.1
SOGEFI 21% 29% 21% 3.1x 2.9x 2.8x 3.7x 11.1x 8.8x 8.1x 7.1x 17.4x 10.0x 10.0x 8.6x 0.9x 0.0 1.6 0.0
HELLA GMBH & CO KGAA 17% 34% 15% 5.2x 6.0x 5.6x 5.0x 9.4x 10.8x 9.9x 8.9x 10.5x 16.5x 14.8x 10.7x 2.2x 3.0 1.9 2.1
CONTINENTAL AG 14% 14% -4% 6.2x 5.3x 4.9x 6.0x 13.1x 9.1x 8.1x 8.7x 15.2x 11.1x 9.9x 11.1x 1.5x 2.9 3.2 3.4
DELPHI TECHNOLOGIES PLC 0% -12% -38% 5.2x 5.0x 4.5x 5.4x 8.6x 8.2x 7.7x 7.6x 5.7x 5.8x 4.6x 7.2x 4.2x 0.0 0.1 0.9
WABCO HOLDINGS INC 0% 2% 2% 12.8x 13.2x 12.8x 11.6x 17.0x 16.8x 15.9x 14.7x 20.3x 20.2x 20.1x 17.5x 5.9x 0.0 0.0 0.0
TOYOTA BOSHOKU CORP 15% 21% 19% 3.2x 3.4x 3.2x 3.8x 4.8x 5.2x 4.8x 6.0x 11.2x 10.9x 9.9x 10.8x 1.2x 3.3 3.3 3.3
GRAMMER AG 6% 12% -6% 4.2x 4.3x 4.0x 4.4x 8.4x 8.3x 7.5x 7.1x 8.4x 8.2x 7.2x 9.5x 1.1x 3.7 3.9 4.4
GENTHERM INC 6% 13% 7% 10.7x 9.3x 7.7x 8.8x 17.2x 13.4x 13.1x 11.9x 22.4x 17.8x 14.1x 15.9x 2.7x n.a. n.a. n.a.
VALEO SA 11% 36% 25% 5.2x 4.9x 4.4x 5.4x 12.3x 10.4x 8.9x 9.1x 20.0x 13.4x 10.4x 11.0x 1.8x 3.1 3.3 3.6
HALDEX AB -4% -6% -31% 6.6x 5.9x 5.1x 7.8x 12.0x 10.5x 8.5x 11.2x 10.5x 11.7x 9.1x 15.4x 1.4x 2.0 3.1 3.8
COOPER-STANDARD HOLDING 11% 1% -27% 4.8x 4.9x 4.3x 4.9x 10.4x 10.2x n.a. 8.4x 41.3x 15.1x 9.3x 9.4x 0.7x n.a. n.a. n.a.
ELRINGKLINGER AG 18% 59% 21% 6.9x 6.1x 5.6x 6.5x 18.3x 15.2x 13.1x 11.2x 21.7x 12.5x 10.1x 10.0x 0.5x 0.0 1.6 2.4
TOWER INTERNATIONAL INC 0% 0% 51% 6.2x 5.2x n.a. 4.2x 13.0x 9.6x n.a. 7.2x 14.4x 9.5x n.a. 7.1x 1.9x n.a. n.a. n.a.
FAURECIA 14% 30% 28% 4.3x 4.0x 3.7x 3.8x 7.9x 7.2x 6.6x 6.3x 10.2x 9.1x 8.0x 9.5x 1.9x 2.6 2.8 3.2

Mean 9% 17% 6% 6.2x 5.9x 5.4x 5.9x 11.7x 10.3x 9.3x 9.1x 16.3x 12.3x 10.6x 11.0x 2.0x 1.9 2.3 2.5
Median 11% 14% 15% 5.2x 5.2x 4.7x 5.4x 12.0x 10.2x 8.5x 8.7x 15.2x 11.7x 10.0x 10.7x 1.8x 2.7 2.9 3.2

Source: SB1M, Bloomberg 8

Underinvestment in the past and unfavorable working capital hurt cash flow
Capex/sales peak in ’18A and WC not an easy fix; require improved internal processes/systems
Capex to sales – underinvestment in the past Working capital to sales – unfavorable development

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
16.1% 16.1%
15.3%
14.7%
13.1% 12.9%
12.0% 12.2%
11.2% 11.4%
-3.1% -3.0%
-3.5% -3.7%
-4.3%
-5.0%
-5.4%
-5.6%
-6.0%

-7.0%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: SB1M, KOA 9

We assume similar improvements YoY in ‘20e vs. 19e; EUR 26m FCF
Improved cash flow driven by increased earnings, flat capex and WC to sales and lower taxes
CFO, CFI and FCF; ‘20e FCF yield scenario

120 14.0
KOA trades at +11% '20e FCF Yield
100 11.7
12.0
80
9.8

NOk per KOA share

60 60 10.0
47 50 8.4
40
30 8.0 7.3
20 26 6.5
EURm

15 5.9
6 6.0 5.3
-3 4.9 4.5
2011 2012 2013 2014 2015 2016 -11
2017 2018 2019 2020 4.2 3.9
-20
-31 4.0
-40
-60 2.0

-80 0.0
-100 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15%

Operating Cash Flow Investing Cash Flow FCF FCF yield (FCF / mcap)

Source: SB1M, KOA 10

Appendix

11
Estimate changes
Estimate changes driven by a weakened market outlook during 2019
Kongsberg Automotive KOA KOA New Old Delta (%)
EURm 2017A 2018A 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E
Revenues 1.047 1.123 1.173 1.215 1.259 1.175 1.233 1.307 0% -1% -4%
Expenses -979 -1.034 -1.060 -1.089 -1.122 -1.062 -1.103 -1.160 0% -1% -3%
EBITDA (rep.) 68 89 113 126 137 113 130 147 0% -3% -7%
EBITDA-margin 6.5% 8.0% 9.6% 10.4% 10.9% 9.6% 10.6% 11.3%
DA&I -45 -36 -45 -46 -48 -44 -42 -44
EBIT 23 54 68 80 89 69 88 103 -1% -9% -13%
Net financials and other -18 -15 -19 -20 -19 -17 -19 -18
Pre-tax profit 5 39 49 60 70 52 69 85 -5% -13% -17%
Tax & Minorities -14 -15 -18 -16 -17 -20 -19 -21
Net income -9 24 31 44 52 33 50 63 -5% -13% -17%
EPS (EUR) -0.02 0.05 0.07 0.10 0.12 0.07 0.11 0.14 -5% -13% -17%

EBITDA (adj.) 91 110 120 126 137 118 131 147 2% -4% -7%
EBIT (adj.) 48 75 74 80 89 73 89 103 1% -10% -13%

Reported EPS (NOK) -0.2 0.5 0.7 1.0 1.2 0.7 1.1 1.4 -5% -14% -18%
Recurring EPS (NOK) 0.6 0.9 0.8 1.0 1.2 0.8 1.1 1.4 7% -10% -13%

Adj. P/E on current share price 8.8x 5.9x 6.0x 5.2x 4.3x 6.2x 4.5x 3.6x
Adj. P/E on target share price 17.2x 11.5x 11.8x 10.1x 8.4x 13.8x 10.0x 8.1x

Interior
Revenues 264 286 307 318 329 300 317 333 2% 0% -1%
EBIT (adj.) 10 12 10 11 15 9 13 19 5% -14% -19%
EBIT % 3.8% 4.3% 3.3% 3.6% 4.7% 3.2% 4.2% 5.7%

Powertrain & Chassis

Revenues 407 437 464 487 511 454 491 527 2% -1% -3%
EBIT (adj.) 2 13 19 23 27 18 26 30 7% -12% -12%
EBIT % 0.4% 3.0% 4.1% 4.7% 5.2% 3.9% 5.2% 5.8%

Specialty Products
Revenues 385 400 402 410 419 405 425 446 -1% -3% -6%
EBIT (adj.) 51 67 64 65 66 64 68 71 0% -4% -7%
EBIT % 13.2% 16.7% 16.0% 15.9% 15.8% 15.9% 16.0% 16.0%

Other & Eliminations

Revenues -10 0 0 0 0 0 0 0 #DIV/0! #DIV/0! #DIV/0!
EBIT (adj.) -16 -18 -19 -18 -18 -17 -16 -16 10% 10% 10%

Source: SB1M, KOA 12

Estimates

P&L Consolidated 2015 2016 2017 2018 2019 2020

Revenue 1.016.1 952.9 1.046.9 1.123.1 1.172.9 1.214.9

Growth y/y 3.8% -6.2% 9.9% 7.3% 4.4% 3.6%
Growth q/q
.. Currency effects 61.0 -22.7 -8.9 -35.4 12.8 0.0
Underlying Growth y/y -2.5% -4.0% 10.8% 10.7% 3.3% 3.6%

Opex -917.5 -891.9 -978.9 -1.033.8 -1.059.8 -1.088.6

Growth y/y 4.0% -2.8% 9.8% 5.6% 2.5% 2.7%
Growth q/q

EBITDA (adj.) 70.6 90.5 110.0 119.6 126.2

Restructuring -9.6 -22.5 -21.1 -6.4 0.0

EBITDA 98.6 61.0 68.0 89.3 113.0 126.2

EBITDA (%) 9.7% 6.4% 6.5% 8.0% 9.6% 10.4%
EBITDA (%) adjusted for FX effects

Depreciation -29.6 -28.5 -29.8 -30.8 -40.4 -41.3

Depr. % of Sales (TTM) -2.9% -3.0% -2.8% -2.7% -3.4% -3.4%

Amortisation -17.0 -14.3 -14.6 -4.8 -4.7 -4.9

Amort. % of Sales (TTM) -1.7% -1.5% -1.4% -0.4% -0.4% -0.4%

D&A -46.6 -42.7 -44.4 -35.5 -45.0 -46.1

D&A % of Sales (TTM) -4.6% -4.5% -4.2% -3.2% -3.8% -3.8%

Impairment -19.5 0.0 -1.0 0.0 0.0 0.0

EBIT 32.5 18.3 22.7 53.8 68.0 80.1

EBIT (%) 3.2% 1.9% 2.2% 4.8% 5.8% 6.6%

Other -19.5 -0.4 -1.4 0.0 0.0 0.0

Underlying EBIT 52.0 27.9 47.6 74.9 74.4 80.1

Underlying EBIT (%) 5.1% 2.9% 4.5% 6.7% 6.3% 6.6%

Financial Items
Interest Income 0.0 0.2 0.2 0.4 0.5 0.7
Interest Expense -8.1 -6.9 -10.0 -12.8 -20.7 -20.8
FX gains (losses) -22.4 5.3 -5.4 -2.9 2.4 0.0
Change in valuation currency contracts 1.1 3.2 -0.7 0.0 0.0 0.0
Other financial items 0.7 -0.9 -1.6 0.1 -0.7 0.0
Net Financial Items -28.7 1.0 -17.5 -15.2 -18.5 -20.1
… of which special items / other -20.6 7.7 -7.7 -2.9 1.7 0.0
… of which special items / other (after-tax)

EBT 3.7 19.3 5.1 38.6 49.5 60.0

One-Offs -40.1 -2.3 -32.6 -23.9 -4.7 0.0
Underlying EBT 43.8 21.3 37.7 62.5 54.2 60.0

Income Taxes
Change in deferred taxes
Tax expense -12.0 -17.6 -14.4 -14.8 -18.3 -16.2
Effective Tax Rate -329.0% -90.8% -279.9% -38.5% -37.0% -27.0%

Net Income, attributable to… -8.4 1.8 -9.2 23.8 31.2 43.8

EPS (EUR)
Basic -0.02 0.00 -0.02 0.05 0.07 0.10
Diluted -0.02 0.00 -0.02 0.05 0.07 0.10
Own EPS Calculation -0.02 0.00 -0.02 0.05 0.07 0.10
Underlying EPS 0.08 0.01 0.06 0.09 0.08 0.10

EPS NOK -0.23 0.54 0.70 0.99

Recurring EPS 0.58 0.87 0.85 0.99
EUR/NOK 10.1 10.1 10.1 10.1

Outstanding Shares (m) 406.8 406.8 406.8 447.4 447.4 447.4

Source: SB1M, KOA 13

Estimates

1) Interior 2016 2017 2018 2019 2020

Revenue 235.8 263.9 285.6 306.9 317.7

Growth y/y 11.9% 8.2% 7.5% 3.5%
Growth q/q
.. Currency effects 0.0 0.7 -5.6 2.9 0.0
Underlying Growth y/y 11.6% 10.3% 6.4% 3.5%

Opex 215.0 243.5 262.2 283.8 292.6

Growth y/y 13.3% 7.7% 8.2% 3.1%
Growth q/q

EBITDA (adj.) 20.8 20.4 23.4 23.2 25.1

EBITDA (%) 8.8% 7.7% 8.2% 7.5% 7.9%
EBITDA (%) adjusted for FX effects 8.8% 7.8% 8.0% 7.6% 7.9%

Depreciation -6.8 -7.9 -10.3 -12.5 -12.9

% of total charge 23.9% 26.5% 33.5% 30.9% 31.4%
% of divisional sales -2.9% -3.0% -3.6% -4.1% -4.1%

Amortization -2.4 -2.6 -0.8 -0.7 -0.7

% of total charge 16.8% 17.8% 15.8% 14.6% 15.4%

EBIT (adj.) 11.6 9.9 12.4 10.0 11.4

EBIT (%) 4.9% 3.8% 4.3% 3.3% 3.6%

Restructuring

EBIT
EBIT (%)

Capex -19.3 -22.5 -26.3 -25.5 -23.5

Capex / Sales (Yearly) -8.2% -8.5% -9.2% -8.3% -7.4%
Capex / Sales
Capex / Total KOA 37.6% 42.7% 33.4% 31.0% 29.6%

Source: SB1M, KOA 14

Estimates

Powertrain & Chassis 2016 2017 2018 2019 2020

Revenue 350.4 407.3 437.0 463.7 486.9

Growth y/y 16.2% 7.3% 6.1% 5.0%
Growth q/q
.. Currency effects 0.0 -4.0 -15.0 4.4 0.0
Underlying Growth y/y 17.4% 11.0% 5.1% 5.0%

Opex 336.2 389.6 408.9 426.5 445.4

Growth y/y 15.9% 5.0% 4.3% 4.4%
Growth q/q

EBITDA (adj.) 14.2 17.7 28.1 37.2 41.4

EBITDA (%) 4.1% 4.3% 6.4% 8.0% 8.5%
EBITDA (%) adjusted for FX effects 4.1% 4.3% 6.2% 8.1% 8.5%

Depreciation -13.0 -12.6 -12.8 -15.3 -15.2

% of total charge 45.5% 42.3% 41.6% 37.9% 36.8%
% of divisional sales -3.7% -3.1% -2.9% -3.3% -3.1%

Amortization -4.4 -3.6 -2.3 -2.9 -3.5

% of total charge 30.9% 24.4% 48.2% 62.9% 72.3%

EBIT (adj.) -3.2 1.6 13.0 18.9 22.7

EBIT (%) (0.9%) 0.4% 3.0% 4.1% 4.7%

Restructuring

EBIT
EBIT (%)

Capex -19.6 -18.7 -21.6 -25.4 -19.1

Capex / Sales (Yearly) -5.6% -4.6% -4.9% -5.5% -3.9%
Capex / Sales
Capex / Total KOA 38.2% 35.5% 27.4% 30.9% 24.1%

Source: SB1M, KOA 15

Estimates

Speciality products 2016 2017 2018 2019 2020

Revenue 357.5 385.4 400.3 402.3 410.3

Growth y/y 7.8% 3.9% 0.5% 2.0%
Growth q/q
.. Currency effects 0.0 -5.8 -14.8 5.5 0.0
Underlying Growth y/y 9.4% 7.7% -0.9% 2.0%

Opex 306.7 320.2 325.2 326.8 333.6

Growth y/y 4.4% 1.5% 0.5% 2.1%
Growth q/q

EBITDA (adj.) 50.8 65.2 75.1 75.5 76.7

EBITDA (%) 14.2% 16.9% 18.8% 18.8% 18.7%
EBITDA (%) adjusted for FX effects 14.2% 16.7% 18.1% 19.0% 18.7%

Depreciation -7.0 -7.6 -7.3 -10.4 -10.7

% of total charge 24.7% 25.4% 23.6% 25.7% 25.9%
% of divisional sales -2.0% -2.0% -1.8% -2.6% -2.6%

Amortization -7.5 -6.7 -1.2 -0.9 -0.9

% of total charge 52.9% 46.3% 25.3% 19.2% 18.5%

EBIT (adj.) 36.2 50.9 66.7 64.2 65.2

EBIT (%) 10.1% 13.2% 16.7% 16.0% 15.9%

Restructuring

EBIT
EBIT (%)

Capex -9.9 -8.3 -19.4 -18.5 -22.7

Capex / Sales (Yearly) -2.8% -2.2% -4.8% -4.6% -5.5%
Capex / Sales
Capex / Total KOA 19.3% 15.7% 24.6% 22.5% 28.6%

Source: SB1M, KOA 16

Estimates

Others and elimination 2016 2017 2018 2019 2020

Revenue 9.2 -9.7 0.2 0.0 0.0

Growth y/y
Growth q/q
.. Currency effects
Underlying Growth y/y

Opex 24.4 3.1 16.8 16.2 17.0

Growth y/y
Growth q/q

EBITDA -15.2 -12.8 -16.6 -16.2 -17.0

EBITDA (%)
EBITDA (%) adjusted for FX effects

Depreciation -1.7 -0.5 -0.5 -2.0 -0.5

% of total charge
% of divisional sales

Amortization 0.1 -2.6 -0.5 -0.5 -0.5

% of total charge

EBIT -16.8 -15.9 -17.6 -18.7 -18.0

EBIT (%)

Capex -2.5 -3.2 -11.4 -10.4 -18.0

Source: SB1M, KOA 17

Estimates

Balance Sheet 2015 2016 2017 2018 2019 2020

Deferred tax assets 41.8 32.4 23.7 20.1 21.1 21.8

Intangible assets 193.5 182.3 162.0 162.2 162.1 157.3
PPE 143.3 160.2 169.7 196.3 331.6 358.4
Other 1.1 1.1 3.5 10.1 8.4 8.4
Total non-current assets 379.7 376.0 358.9 388.7 523.3 545.9

Inventories 80.5 78.6 104.7 120.4 113.5 117.6

Accounts receivable 144.6 155.2 180.0 210.7 227.5 235.7
Other short-term receivables 39.4 47.3 38.9 41.2 53.7 53.7
Cash and cash equivalents 53.9 34.6 39.5 59.2 34.2 29.4
Total current assets 318.4 315.7 363.1 431.5 429.0 436.4

TOTAL ASSETS 698.1 691.7 722.0 820.2 952.3 982.3

Share capital 21.2 22.4 20.7 22.6 22.7 22.7

Share premium reserve 175.6 185.6 171.4 205.8 212.6 237.1
Other equity 13.6 -3.1 -4.9 21.5 47.1 47.1
Non-controlling interests 3.9 3.8 3.6 3.6 3.7 3.7
Total equity 214.3 208.7 190.8 253.5 286.1 310.6

Interest-bearing loans and borrowings 253.9 238.4 257.8 269.4 359.3 359.3
Deferred tax liabilities 30.8 27.1 19.5 23.6 26.8 26.8
Other long-term liabilities 17.9 20.7 19.5 21.9 22.0 22.0
Total non-current liabilities 302.6 286.2 296.8 314.9 408.2 408.2

Bank overdraft (Accounted for in NIBD, but not IBD for NOA) 14.0 0.0 0.0 0.0 0.0 0.0
Interest-bearing liabilities 0.0 0.0 0.1 0.1 20.2 20.2
Accounts payable 101.0 111.0 130.6 159.7 152.5 157.9
Other short-term liabilities 66.3 85.8 103.7 92.0 85.3 85.3
Total current liabilities 181.3 196.8 234.4 251.8 258.0 263.5
TOTAL LIABILITIES 483.9 483.0 531.2 566.7 666.2 671.7

TOTAL EQUITY AND LIABILITIES 698.2 691.7 722.0 820.2 952.3 982.3
Check 0.1 0.0 0.0 0.0 0.0 0.0

Interest-bearing debt 253.9 238.4 257.9 269.5 379.5 379.5

NIBD 214.0 203.8 218.4 210.3 345.3 350.1

Capital Employed (NOA) 468.2 447.1 448.7 523.0 665.6 690.2

Average Capital Employed 465.7 457.7 447.9 485.9 594.3 677.9

Underlying EBITA (LTM) 52.0 27.9 47.6 74.9 74.4 80.1

Pre-tax ROCE 11.2% 6.1% 10.6% 15.4% 12.5% 11.8%

Ratios and Metrics

NIBD/EBITDA (TTM) 2.2x 3.3x 3.2x 2.4x 3.1x 2.8x
Debt / Equity 2.3x 2.3x 2.8x 2.2x 2.3x 2.2x
Equity Ratio 31% 30% 26% 31% 30% 32%
Total Debt to Assets 69% 70% 74% 69% 70% 68%
IBD to Assets 36% 34% 36% 33% 40% 39%
Effective interest-rate (TTM)
Sales TTM / Avg. PPE 7.2x 6.7x 5.8x 5.7x 4.3x 3.4x

Working Capital 124.1 122.8 154.1 171.4 188.6 195.4

Change in WC 6.3 -1.3 31.3 17.3 17.2 6.7
in % of LTM sales 12.2% 12.9% 14.7% 15.3% 16.1% 16.1%

Source: SB1M, KOA 18

Estimates

Cash Flow 2015 2016 2017 2018 2019 2020

Operating Activities
Profit before Taxes 3.7 18.9 5.1 38.6 49.5 60.0
Depreciation 29.6 28.5 29.8 30.8 40.4 41.3
Amortisation 36.5 14.7 15.6 4.8 4.7 4.9
Interest Income 0.0 -0.2 -0.2 -0.4 -0.5 -0.7
Interest Expenses 8.1 6.9 10.0 5.9 21.6 20.8
Taxes Paid -11.3 -6.9 -13.1 -8.9 -12.8 -16.2
(Gain) or Loss on Sale of N/C Assets 0.0 0.0 -0.9 0.7 -0.4 0.0
Changes in Receivables -4.5 -10.6 -21.0 -30.7 -16.8 -8.1
Changes in Inventory -3.7 1.9 -24.2 -15.7 6.9 -4.1
Changes in Payables 1.9 10.0 19.6 29.1 -7.2 5.5
Currency (Gain) or Loss 22.4 -5.3 5.4 2.9 -2.4 0.0
Changes in Value of Financial Derivatives -1.1 -3.2 0.7 0.0 0.0 0.0
Changes in Other Items -8.3 11.2 10.9 -13.5 -16.7 -10.0
Operating Cash Flow 73.3 65.7 37.7 43.5 66.2 93.3
Items excl. EBIT 3.5 3.7 -12.8 -30.6 -28.4 -12.8
LTM CFO

Investing Activities
Investments (includes intangibles…) -43.8 -51.3 -52.7 -78.7 -70.7 -68.0
Sale of Fixed Assets/business 0.1 0.4 3.3 3.5 1.0 0.0
Investments in Subsidiaries 0.3 0.0 0.0 0.2 0.1 0.0
Interest Received 0.0 0.4 0.2 0.4 0.4 0.7
Investing Cash Flow -43.4 -50.4 -49.2 -74.6 -69.2 -67.3
LTM CapEx to LTM Sales -4.3% -5.3% -4.7% -6.6% -5.9% -5.5%
FCF 29.9 15.3 -11.5 -31.1 -3.1 26.0
LTM FCF

Financing Activities
Proceeds from Sale of Treasury Shares -2.6 0.4 -2.6 0.8 0.2 0.0
Repayment of External Loans -13.7 -19.8 30.6 10.3 10.3 0.0
Interest Paid -8.4 -7.0 -9.9 -6.3 -23.4 -20.8
Dividends Paid -0.3 0.0 0.0 0.0 0.0 0.0
Repayment of Lease Liabilities and other -1.3 0.0 0.0 39.2 -10.4 -10.0
Investing Cash Flow -26.3 -26.4 18.1 44.0 -23.3 -30.8

FX effect on Cash 1.5 2.4 -2.3 1.9 1.4 0.0

Net Change in Cash 5.1 -8.7 4.3 14.7 -25.0 -4.8

In Cash 53.5 53.9 34.6 39.5 59.2 34.2

Out Cash 53.9 34.6 39.5 59.2 34.2 29.4

Source: SB1M, KOA 19

IMPORTANT DISCLOSURES AND CERTIFICATIONS
DISCLAIMER

SpareBank 1 Markets AS (“SB1 Markets”)

This report originates from SB1 Markets’ research department. SB1 Markets is a limited liability company subject to the supervision of The Financial Supervisory Authority of Norway
(Finanstilsynet). SB1 Markets complies with the standards issued by the Norwegian Securities Dealers Association (VPFF) and the Norwegian Society of Financial Analysts.

Author’s own views

This report is an outsider’s view of the securities referred to in the report. It has been produced by the authors independent of any issuers mentioned in the report, and independent
of other divisions of SB1 Markets. The authors of this report confirm that, notwithstanding potential conflicts of interest referred to herein, the views expressed in this report
accurately reflect the author’s personal views of the relevant issuers, and that no part of the authors’ compensation is related to the views expressed in the report, the performance
of their investment recommendations, investment banking assignments or other specific services performed by SB1 Markets. The analyst partakes in the general bonus scheme of
SB1 Markets, and as such, may receive compensation that is generated by overall firm profitability.

No investment advice
The report does not provide tailored personal investment advice within the meaning of section 2-3 (4) of the Norwegian securities trading act. The report is intended for general
circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should seek advice from a financial
adviser regarding the suitability of any product mentioned in this report, taking into account your specific financial objectives, financial situation or particular needs before making
a commitment to purchase any such product.

Research for the purposes of unbundling

This report constitutes research material for the purpose of the inducement rules under MiFID II.

Sources of information
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external sources. SB1 Markets deem these external sources reliable. However, we do not guarantee the accuracy, adequacy or completeness of such information.

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Any use of information contained in this report is at your individual risk. SB1 Markets assumes no liability for any losses caused by relying on the information contained in this report,
including investment decision you may have taken on the basis of this report.

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Return on investments in financial instruments is inherently exposed to risks. Past performance is not a reliable indicator of future performance, and estimates of future performance
are based on assumptions that may not be realized. When investing in financial instruments, the value of the investment may increase or decrease and the investor may lose all or
part of the investments.

This document contains certain forward-looking statements relating to the business, financial performance and results of the issuer and/or the industry in which it operates. Forward-
looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “believes”, “expects”, “predicts”,
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including assumptions, opinions and views of the issuer or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors
that may cause actual events to differ materially from any anticipated development.

Conflicts of interest
SB1 Markets, affiliates and staff may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives)
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effective information barriers between divisions in possession of material, non-public information and other divisions of the firm. Our research team is well versed in the handling
of confidential information and unpublished research material, contact with other departments of SB1 Markets, and restrictions on personal account dealing.

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IMPORTANT DISCLOSURES AND CERTIFICATIONS

IMPORTANT DISCLOSURES

Previous company reports

For an overview of previous recommendations regarding the financial instruments or issuer subject to this report, consult the chart below:

3-Year Price, Target Price and Rating Change History Chart for KOA NO
KOA NO Closing Target 16
Date Price Price Rating 15
14
06/11/2017 9.86 12 BUY 13
12 12 12
14/05/2018 10.56 15 BUY B 11
10
07/11/2018 8.33 13 BUY
8
24/07/2019 6.96 12 BUY
6 06/01/00
26/07/2019 6.5 11 BUY
4
12/11/2019 5.12 10 BUY
2

14/05/17

14/11/17

14/08/18

14/02/19
14/11/16

14/02/17

14/08/17

14/02/18

14/05/18

14/11/18

14/05/19

14/08/19
Cl osin g Price Targe t Price Ra ti ng

B=Buy, H=Hold, S=Sell

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IMPORTANT DISCLOSURES AND CERTIFICATIONS
Planned updates
SB1 Markets generally update company reports and recommendations following the publication of new figures or forecasts by the issuer, or upon the occurrence of other events
that could potentially have a material effect.

Issuer disclosure
This report has not been submitted to the issuer for review.

Investment services provided by SB1 Markets

SB1 Markets may have provided investment services and/or ancillary services to the issuers mentioned in this report and received compensation for it during the past 12 months.
Please refer to our webpage for an overview of all investment banking assignments carried out in the last 12 months: www.sb1markets.no. Note that assignments subject to
confidentiality are excluded.

Ownership of securities issued by the companies covered in this report

The authors of this report do not (alone or jointly with related persons) own securities issued by the companies mentioned in this report. SB1 Markets may have holdings in the
issuers mentioned in this report as a result of own account trading, market making and/or underlying shares as a result of derivatives trading.
However, SB1 Markets does not own a net long or short position exceeding the threshold of 0,5% of the total issued share capital of the issuer, nor does SB1 Markets hold other
interests likely to affect the objectivity of a recommendation.
For an overview of instruments where SB1 Markets and related companies are market makers or liquidity providers, please refer to our webpage: www.sb1markets.no.

Material interest held by the issuers in shares issued by SB1 Markets

The issuers mentioned in this report do not hold more than 5% of the total share capital of SB1 Markets or related persons.

Valuation method
The target prices on companies in the SB1 Markets’ research universe reflect the subjective view of the analyst about the absolute price that financial instruments should trade. The
target price is based on an absolute valuation approach, which is detailed in our research reports. The target price can differ from the absolute valuation, in accordance with the
analyst's subjective view on the trading or cyclical patterns for a particular financial instrument, or a possible discount/premium to reflect factors such as market capitalization,
ownership structure and/or changes in the same, and company-specific issues.

Recommendation categories
Our equity recommendations are based on a six-month horizon, and on absolute performance. We operate with three recommendation categories where Buy indicates an expected
annualized return of greater than +10%; Neutral, from 0% to +10%; Sell, less than 0%.

Recommendation distribution
Find below an overview of SB1 Markets’ recommendation distribution as of the date of this report:

Current recommendations of the Research Department

Recommendation Percentage of Percentage of companies under coverage for
companies under which SB1 Markets has provided investment
coverage with this banking services in the past 12 months
recommendation
Buy 58.2% 12.4%
Neutral 27.4% 7.0%
Sell 14.4% 0.0%
Total 100%

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IMPORTANT DISCLOSURES AND CERTIFICATIONS
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