Interim report 2017 Q3

The consolidated performance of the third quarter of 2017 was one of continued revenue improve-ments. Earningswise, however, the quarter was a...

0 downloads 181 Views 423KB Size
Highlights

Interim report 2017 Q3

 Schouw & Co.’s consolidated revenue grew by 12% in the third quarter of 2017 to DKK 4,835 million  EBIT was up by 3% to DKK 362 million  Acquisitions made in 2017 added 7% to revenue and 8% to EBIT  Cash flows from operating activities were up by DKK 327 million to DKK 689 million  Important capacity-increasing investments in Norway and Malaysia completed  BioMar’s acquisition of Alimentsa has now closed and the company has been consolidated  Schouw & Co. now expects full-year 2017 revenue of about DKK 16.9 billion  The Group maintains its guidance of full-year EBIT in the DKK 1,065-1,135 million range

Company announcement No. 11/2017 13 November 2017 · 34 pages

Statement by Jens Bjerg Sørensen, President of Schouw & Co.:

2017 Table of contents Financial highlights ................................ 2 Interim report .......................................... 3 Management statement ........................... 8 Our businesses ......................................... 9 Income statement .................................. 23 Balance sheet ......................................... 24 Cash flow statement .............................. 25 Statement of changes in equity ............. 26 Notes to the financial statements ......... 27

“At Schouw & Co., we are committed to future-proofing the strategic platforms of our businesses, and we are investing in capacity, innovation and developing our organisations for the long term. In recent years, we have invested heavily in company acquisitions, growth and expansion and are now firmly positioned and ready for the future. Our businesses operate in competitive growth markets with natural fluctuations in available capacity over time. There are indications of excess capacity occurring in the near future, which would make markets even more competitive and put prices, terms and conditions under pressure. However, we are confident that the long-term perspectives remain intact and that the investments we’ve made to future-proof each of our businesses will produce opportunities for profitable long-term growth.”

This is a translation of Schouw & Co.’s Interim Report for the nine months ended 30 September 2017. The original Danish text shall be controlling for all purposes, and in case of discrepancy, the Danish wording shall be applicable.

Financial highlights and key ratios GROUP SUMMARY (DKK MILLION)

Q3 2017

Q3 2016

YTD 2017

YTD 2016

2016 Total

Revenue and income Revenue Operating profit before depreciation (EBITDA) Depreciation and impairment losses Operating profit (EBIT) Profit after tax in associates and joint ventures Financial items, net Profit before tax Profit for the period

4,835 483 121 362 10 -26 347 262

4,325 471 120 351 516 -7 860 776

12,541 1,125 346 778 15 -27 766 585

10,473 1,046 323 723 563 -23 1,263 1,085

14,369 1,472 434 1,038 566 -27 1,578 1,339

689 -857 -137 213 45

363 -170 -243 -85 108

709 -2,342 -593 528 -1,106

845 -1,057 -536 -646 -859

1,598 -395 -828 -925 277

Cash flows Cash flows from operating activities Cash flows from investing activities Of which investment in property, plant and equipment Cash flows from financing activities Cash flows for the period Invested capital and financing Invested capital excluding goodwill Total assets Working capital Net interest bearing debt (NIBD) Share of equity attributable to shareholders of Schouw & Co. Non-controlling interests Total equity Financial data EBITDA margin (%) EBIT margin (%) EBT margin (%) Return on equity (%) Equity ratio (%) ROIC excluding goodwill (%) ROIC including goodwill (%) NIBD/EBITDA Avg. number of employees during the period

GROUP SUMMARY (DKK MILLION) Per share data Earnings per share (of DKK 10) Diluted earnings per share (of DKK 10) Net asset value per share (of DKK 10) Share price, end of period (of DKK 10) Price/net asset value Market capitalisation

Q3 2017

Q3 2016

YTD 2017

YTD 2016

2016 Total

11.03 10.96 335.60 684.50 2.04 16,408

32.74 32.65 315.24 432.50 1.37 10,267

24.77 24.60 335.60 684.50 2.04 16,408

45.82 45.72 315.24 432.50 1.37 10,267

56.56 56.41 328.38 526.00 1.60 12,489

Definitions of financial ratios Earnings per share (EPS) and diluted earnings per share (EPS-D) are calculated in accordance with IAS 33. Other key ratios are calculated in accordance with "Recommendations and Ratios 2015" issued by the Danish Finance Society. The financial ratios provided in this interim report are calculated in the following manner: Profit for the last 12 months excluding non-controlling interests Avg. equity excluding non-controlling interests EBITA the last 12 months ROIC excluding goodwill Avg. invested capital excluding goodwill EBITA the last 12 months ROIC including goodwill Avg. invested capital including goodwill Equity, end of period Equity ratio Total liabilities and equity, end of period NIBD, end of period NIBD/EBITDA EBITDA the last 12 months Profit for the last 12 months excluding non-controlling interests Earnings per share (EPS) Average number of shares in circulation Profit for the period excluding non-controlling interests Diluted earnings per share (EPS-D) Diluted average number of shares in circulation Equity excluding non-controlling interests, end of period Net asset value per share No. of shares excl. treasury shares, end of period Market capitalisation, end of period Price/net asset value (P/NAV) Equity excluding non-controlling interests, end of period Market capitalisation Number of shares, ex treasury shares, x share price Return on equity

6,964 14,591 2,175 1,071

5,626 12,185 2,092 412

6,964 14,591 2,175 1,071

5,626 12,185 2,092 412

5,416 12,273 1,727 -1,028

8,044 11 8,056

7,484 20 7,504

8,044 11 8,056

7,484 20 7,504

7,797 18 7,814

10.0 7.5 7.2 10.9 55.2 18.8 15.1 0.7 6,517

10.9 8.1 19.9 18.9 61.6 19.9 16.4 0.3 4,369

9.0 6.2 6.1 10.9 55.2 18.8 15.1 0.7 5,795

10.0 6.9 12.1 18.9 61.6 19.9 16.4 0.3 3,955

10.2 7.2 11.0 18.6 63.7 20.2 16.6 -0.7 4,108

Interim Report – third quarter of 2017  Schouw & Co.  2

Interim report – third quarter of 2017 Financial performance (DKK million) Revenue EBITDA EBIT Associates etc. Profit before tax Cash flow from operations

Q3 2017 4,835 483 362 10 347 689

Q3 2016 Change 4,325 510 12% 471 12 3% 351 11 3% 516 -505 -98% 860 -513 -60% 363 327 90%

(DKK million) YTD 2017 Revenue 12,541 EBITDA 1,125 EBIT 778 Associates etc. 15 Profit before tax 766 Cash flow from operations 709 Net interest-bearing debt 1,071 Working capital 2,175 ROIC excl. goodwill 18.8% ROIC incl. goodwill 15.1%

YTD 2016 Change 10,473 2,068 20% 1,046 79 8% 723 55 8% 563 -549 -97% 1,263 -497 -39% 845 -136 -16% 412 659 160% 2,092 83 4% 19.9% -1.0pp 16.4% -1.3pp

As expected, the companies of the Schouw & Co. Group performed well in the third quarter of 2017, even with increasingly competitive markets and unfavourable changes in foreign exchange rates and raw materials prices in a number of areas. Consolidated revenue improved by 12% to DKK 4,835 million in Q3 2017 from DKK 4,325 million in Q3 2016. While all group businesses contributed to the improvement, the largest single factors were the acquisition of Borg Automotive and the revenue improvements reported by BioMar, GPV og Fibertex Personal Care. For the nine months to 30 September 2017, consolidated revenue was up by 20% to DKK 12,541 million from DKK 10,473 million in the year-ear-

lier period. All group businesses were also contributors to the nine-month improvement, the largest single contributions being from BioMar and the acquisition of Borg Automotive, which added DKK 485 million to revenue from the date of acquisition on 1 April 2017. Another large contributor was GPV, as that company reported a significant revenue improvement and also was not consolidated in the Q1 2016 period. Acquired businesses contributed DKK 829 million of the revenue improvement. EBIT improved from DKK 351 million in Q3 2016 to DKK 362 million in Q3 2017. The moderate improvement derived from the acquisition of Borg Automotive and from Fibertex Personal Care and GPV, while the remaining businesses all reported lower EBIT. Depreciation and impairment charges resulting from purchase price allocation (PPA) of about DKK 17 million and transaction costs on acquisitions of about DKK 5 million had a negative impact on the Q3 2017 EBIT. By comparison, similar charges in the Q3 2016 period impacted EBIT by about DKK 9 million. Adjusted for these costs, EBIT was up by 7%.

Fibertex Personal Care and HydraSpecma both reported lower EBIT. Depreciation and impairment charges resulting from PPA of about DKK 72 million and transaction costs on acquisitions of about DKK 13 million had a negative impact on the 9M 2017 EBIT. By comparison, similar charges in the 9M 2016 period impacted EBIT by about DKK 37 million. Adjusted for these costs, EBIT was up by 14%. Associates and joint ventures contributed aggregate Q3 2017 profit after tax in line with expectations. The figure is not comparable with 2016, as the gains from the sale of shares in Kramp and Incuba Invest’s sale of shares in Scandinavian Micro Biodevices were recognised in the Q3 2016 results. Consolidated net financial items were an expense of DKK 26 million in Q3 2017, compared with a DKK 7 million expense in Q3 2016. The main reason for the larger expense was a foreign exchange loss, whereas actual net interest expenses were DKK 3 million higher.

For the nine-month period ended 30 September, EBIT improved from DKK 723 million in 2016 to DKK 778 million in 2017. The largest positive contributions were from the acquisition of Borg Automotive, which contributed DKK 31 million in the period from the date of acquisition on 1 April 2017, and from GPV, which reported improved earnings and also was not consolidated in EBIT for Q1 2016. BioMar and Fibertex Nonwovens also reported improvements, while

Interim Report – third quarter of 2017  Schouw & Co.  3

Interim report – third quarter of 2017 Liquidity and capital resources The consolidated operating activities generated a cash inflow of DKK 689 million in Q3 2017, compared with DKK 363 million in Q3 2016. The change was mainly due to a substantial drop in BioMar’s working capital during the course of the third quarter of 2017. Cash flows for investing activities in Q3 2017 amounted to DKK 857 million and were mainly used to acquire the shares in Alimentsa. By comparison, cash flows for investing activities in Q3 2016 amounted to DKK 170 million. The consolidated net interest-bearing debt amounted to DKK 1,071 million at 30 September 2017, compared to DKK 927 million at 30 June 2017. By comparison, the Group had consolidated net interest-bearing debt of DKK 412 million at 30 September 2016. Consolidated working capital fell from DKK 2,353 million at 30 June 2017 to DKK 2,175 million at 30 September 2017, mainly due to a reduction in BioMar. By comparison, working capital amounted to DKK 2,092 million at 30 September 2016.

Group developments The consolidated performance of the third quarter of 2017 was one of continued revenue improvements. Earningswise, however, the quarter was a challenging period of generally unfavourable changes in foreign exchange rates and raw materials prices. Moreover, the group businesses have incurred costs related to a number of initiatives intended to support the continued development

of the Group, but which make only limited contributions to near-term earnings. The companies of the Schouw & Co. Group have invested heavily in recent years to capitalise on the opportunities available for organic expansion. All businesses are currently investing in capacityincreasing assets, but two of the largest investments were recently completed in the third quarter: In Norway, construction of BioMar’s new production line at the existing factory in Karmøy was completed in July, and the new production line (annual capacity 140,000 tonnes) is now operational. The project represents a total investment of about DKK 300 million. In 2016, Fibertex Personal Care began construction of a new production site at Sendayan some 25 km south of the existing factory at Nilai outside Kuala Lumpur, Malaysia. The new site may eventually have as many as four production lines, and installation of the first line was completed in July 2017. The new production line, Fibertex Personal Care’s eighth line and the company’s fifth in Malaysia, was run in during the third quarter and began commercial production from the start of the fourth quarter. The total investment in this first phase amounted to about DKK 400 million. In addition to the investment in organic expansion, BioMar agreed on 2 June 2017 to buy a 70% stake in Ecuadorian shrimp feed producer Alimentsa at a price of about DKK 800 million (enterprise value for 70% of the business). The previous

owners have stayed on as non-controlling shareholders. The transaction received the approval of the relevant authorities on 31 August and closed on 13 September 2017. Shrimp makes up the largest single segment in global aquaculture, and Ecuador’s annual production of some 450,000 tonnes makes it the world’s fifth-largest shrimp farming country. As Alimentsa produces 10-15% of the feed used for shrimp farming, the acquisition gives BioMar a powerful entry into the shrimp feed market. The following is a brief review of other business developments in the portfolio companies in the third quarter of 2017. See the individual company reviews on the following pages for more information. B I O M A R reported strong growth in volumes sold with the largest improvement taking place in the salmon business, but developments in foreign exchange rates and prices of raw materials have curbed the revenue increase. The Q3 2017 EBIT declined relative to last year, mainly due to more competitive markets. F I B E R T E X P E R S O N A L C A R E reported a considerable revenue improvement driven mainly by an increase in revenue from Innowo Print. EBIT also improved, mainly due to the Danish operation where Q3 2016 was adversely affected by a planned closure and upgrade of a production line.

Interim Report – third quarter of 2017  Schouw & Co.  4

Interim report – third quarter of 2017 reported a broadly based revenue improvement with all production sites contributing. The Q3 2017 EBIT declined relative to last year, mainly due to extremely challenging developments in raw materials prices.

FIBERTEX NONWOVENS

H Y D R A S P E C M A grew its revenue based on improvements in a number of business segments, but the marine, defence and offshore segments continue to feel the effects of slumping market demand. In addition, the wind power segment has reported softening activity in overseas markets. EBIT fell by a considerable margin year on year, in part due to costs of planned business development and planned structural changes. B O R G A U T O M O T I V E reported revenue in line with the year-earlier period when the company was not consolidated. EBIT was also in line with last year when adjusted for depreciation and impairment charges related to the purchase price allocation made in connection with the acquisition.

reported a significant revenue improvement that was mainly based on organic growth and the acquisition of BHE, an electronics manufacturing services company, earlier in the year. EBIT was also up, even with the costs incurred during the period in relation to the integration of the BHE acquisition and other business activity expansion. GPV

Schouw & Co. shares and shares held in treasury Schouw & Co.’s share capital comprises 25,500,000 shares with a nominal value of DKK 10 each for a total nominal share capital of DKK 255,000,000. Each share carries one vote.

Special risks The overall risk factors the Schouw & Co. Group faces are discussed in the 2016 Annual Report. The current assessment of special risks is largely unchanged from the assessment applied in the preparation of the 2016 Annual Report.

Schouw & Co. shares fell by 2% during the third quarter of 2017, from DKK 698.50 at 30 June 2017 to DKK 684.50 at 30 September 2017. Priced at DKK 526.00 per share at 31 December 2016, the shares have risen by 30% in 2017. At 30 June 2017, the company held 1,642,930 treasury shares, equal to 6.44% of the share capital. Schouw & Co. used 113,000 shares in the third quarter of 2017 in connection with options exercised under the Group’s share incentive scheme. Accordingly, at 30 September 2017, the company held 1,529,930 treasury shares, equal to 6.00% of the share capital. The market value of the holding of treasury shares was DKK 1,047 million at 30 September 2017. The portfolio of treasury shares is recognised at DKK 0.

Events after the balance sheet date Other than as set out elsewhere in this interim report, Schouw & Co. is not aware of events occurring after 30 September 2017 which are expected to have a material impact on the Group's financial position or outlook.

Interim Report – third quarter of 2017  Schouw & Co.  5

Outlook Most of the segments the Schouw & Co. Group companies are involved in generally have good momentum. The healthy activity and the sound investment climate have naturally provided the setting for a number of capacity-increasing investments made both by the Group’s businesses and by providers of competing products and services. Such movements in supply and demand do not necessarily always occur in a balanced setting, and several major areas are currently seeing more competitive markets. This applies in particular to BioMar and Fibertex Personal Care. At the same time, a number of business areas have experienced adverse changes in foreign exchange rates and raw materials prices that are putting their earnings under pressure. As a result, the Group’s healthy revenue performance is not, in some areas, matched by proportionate earnings improvements. However, the Group’s businesses stand well positioned to take on the market challenges, and maintaining competitive strength is a key priority. Accordingly, Schouw & Co. intends to allocate substantial resources to preparing the portfolio companies for the future – even if allocated costs and investments may not necessarily contribute to improving earnings in the short term. The following brief comments provide full-year revenue and EBIT guidance for the individual portfolio companies. See the individual company reviews on the following pages for more information.

REVENUE (DKK million) BioMar Fibertex Personal Care Fibertex Nonwovens HydraSpecma Borg Automotive GPV Other/eliminations Total revenue

2017 2017 After Q3 After Q2 c. 9,900 c. 9,800 c. 2,000 c. 2,000 c. 1,400 c. 1,400 c. 1,800 c. 1,800 c. 700 c. 700 c. 1,100 c. 1,025 16.9bn 16.7bn

2016 actual 8,867 1,792 1,301 1,747 668 -6 14,369

F I B E R T E X P E R S O N A L C A R E maintains its FY 2017 revenue forecast, reflecting an improvement on 2016. The EBIT forecast is also retained within the previously announced guidance range, but with a greater probability of EBIT at the lower end of the range due to unfavourable changes in raw materials prices and foreign exchange rates.

maintains its FY 2017 revenue forecast, reflecting an improvement on 2016. The full-year EBIT forecast is also unchanged but with a greater probability of EBIT being at the lower end of the range due to the challenging prices of raw materials.

FIBERTEX NONWOVENS EBIT (DKK million) BioMar Fibertex Personal Care Fibertex Nonwovens HydraSpecma Borg Automotive1 GPV2 Other Total EBIT Associates etc. Financial items, net Profit before tax

2017 2017 After Q3 After Q2 530-550 510-550 250-270 250-270 80-100 80-100 c. 100 100-120 60-80 60-80 70-80 60-70 c. -35 c. -35 1,055-1,145 1,025-1,155 c. 45 c. 20 c. -40 c. -25 1,060-1,150 1,020-1,150

2016 actual 581 246 81 111 44 -24 1,038 566 -27 1,578

Notes: 1) Less deduction for PPA adjustments of about DKK 50 million 2) GPV consolidated for only nine months in 2016 B I O M A R raises its full-year revenue guidance following the acquisition of Alimentsa. The group also raises its full-year EBIT forecast by an amount corresponding to the net contribution from Alimentsa and narrows its earnings forecast range for existing operations. BioMar's guidance reflects a significant revenue improvement relative to last year, whereas the EBIT forecast is slightly lower than the 2016 EBIT, which included positive effects of significant income flows relating to special circumstances, which are not expected to re-occur to the same extent in 2017.

H Y D R A S P E C M A maintains its forecast of revenue in line with last year, while the company lowers its EBIT forecast to a level around the low end of the previous range due to an increase in costs. B O R G A U T O M O T I V E has been consolidated from the date of acquisition on 1 April 2017. The company maintains its revenue forecast for the ninemonth consolidation period, but reduces its EBIT guidance to the lover part of the range. G P V has raised its revenue and EBIT forecasts once more due to strong organic growth and the successful acquisition of BHE earlier in the year.

Interim Report – third quarter of 2017  Schouw & Co.  6

The Group’s overall guidance Overall, the Schouw & Co. Group now projects full-year 2017 consolidated revenue of about DKK 16.9 billion against the previous forecast of about DKK 16.7 billion. Schouw & Co. applies a profit forecast range for each individual business, and based on a simple aggregation of these ranges, the Group revises its consolidated full-year 2017 EBIT guidance to the range of DKK 1,055-1,145 million, including the effects of the Alimentsa acquisition, from the previous range of DKK 1,025-1,155 million. In a weighted assessment, consolidated EBIT will most likely be in the range of DKK 1,065-1,135 million, which is unchanged from the past two quarters. Associates and joint ventures, which are recognised at a share of profit after tax, are now expected to contribute combined profit of about DKK 45 million, up from the previous forecast of DKK 20 million. The change is predominantly due to the Chilean fish farming company Salmones Austral, which is recognised as an associate effective from the third quarter of 2017, as BioMar has increased its ownership interest to 22.9%. Further, the result reflects that BioMar’s non-consolidated activities in China and Turkey have an increasing importance. Due to recent negative foreign exchange rate developments, consolidated net financials are revised from a DKK 25 million expense to a DKK 40 million expense, mainly due to changes in exchange rates of the Turkish lira (TRY), Malaysian

ringgit (MYR) and USD. As always, the forecast is subject to any positive or negative effects of any further exchange rate fluctuations.

Roundings and presentation The amounts appearing in this interim report have generally been rounded to one decimal place using standard rounding principles. Accordingly, some additions may not add up.

Accounting policies

Financial calendar for 2018 28 February 2018 Deadline for submission of proposals to be considered at the annual general meeting 8 March 2018 Release of Annual Report 2017 12 April 2018 Annual general meeting

The interim report is presented in accordance with IAS 34 “Interim financial reporting” as adopted by the EU and Danish disclosure requirements for consolidated and parent company financial statements of listed companies.

17 April 2018 Expected distribution of dividend

Schouw & Co. has implemented the standards and interpretations which are effective from 2017. None of those standards and interpretations have had an effect on recognition and measurement in 2017.

17 August 2018 Release of H1 2018 interim report

See the 2016 Annual Report for a full description of the accounting policies.

The company provides detailed information about contacts and times of conference calls held in connection with the release of its interim reports through company announcements and postings on its website, www.schouw.dk.

Judgments and estimates The preparation of interim financial statements requires management to make accounting judgments and estimates that affect recognised assets, liabilities, income and expenses. Actual results may differ from these judgments.

3 May 2018 Release of Q1 2018 interim report

8 November 2018 Release of Q3 2018 interim report

Interim Report – third quarter of 2017  Schouw & Co.  7

Management statement The Board of Directors and Executive Management today considered and approved the interim report for the period 1 January to 30 September 2017. The interim report, which has been neither audited nor reviewed by the company’s auditors, was prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as adopted by the EU and Danish disclosure requirements for listed companies.

Executive Management

Jens Bjerg Sørensen President

Peter Kjær

In our opinion, the interim financial statements give a true and fair view of the Group’s assets and liabilities and financial position at 30 September 2017 and of the results of the Group’s operations and cash flows for the period 1 January–30 September 2017. Board of Directors Furthermore, in our opinion the management's report includes a fair review of the development and performance of the business, the results for the period and the Group’s financial position in general and describes the principal risks and uncertainties that it faces. Jørn Ankær Thomsen Chairman

Jørgen Wisborg Deputy Chairman

Erling Eskildsen

Niels Kristian Agner

Kjeld Johannesen

Agnete Raaschou-Nielsen

Aarhus, 13 November 2017

Aktieselskabet Schouw & Co. Chr. Filtenborgs Plads 1 DK-8000 Aarhus C, Denmark T +45 86 11 22 22 www.schouw.dk [email protected] Company reg. (CVR) no. 63965812

Hans Martin Smith

Interim Report – third quarter of 2017  Schouw & Co.  8

Interim Report – third quarter of 2017  Schouw & Co.  9

BioMar BioMar is the world’s third-largest manufacturer of quality feed for the fish farming industry. The company’s operations are divided into three divisions: the Salmon division for the salmon operations based in northern (Norway and Scotland) and southern (Chile) waters, an EMEA division for all operations not covered by the Salmon division and an Emerging Markets division for new territories and other business development activities. BioMar’s acquisition of a 70% stake in Ecuadorian shrimp feed producer Alimentsa closed in September 2017 after approval was obtained from the relevant authorities, and the company has now been consolidated. Alimentsa forms a part of the Emerging Markets division, which now encompasses activities in Costa Rica, China and Ecuador.

Financial performance BioMar increased overall volumes sold by 10% in the third quarter relative to Q3 2016. The largest improvement was in the salmon business, in which BioMar increased its share of an extremely competitive market. Both Norway and Scotland reported strong market developments. Fish farming conditions have generally been favourable, and biological conditions have improved over recent years, although they also gradually became more challenging during the quarter. The Chilean market is returning to normal following last year’s severe decline caused by the natural phenomenon of severe algal blooms in the spring of 2016. The EMEA division increased its sales volume to markets in northern

All amounts in DKK million

Europe. While volumes to southern Europe declined, the joint venture operations in Turkey increased sales volumes as the new factory, which began commercial operations in 2016, gradually increased its production output. That operation is not recognised in BioMar’s consolidated revenue and EBIT. The same applies to the joint venture operations in China, which forms a part of the Emerging Markets division.

The selling shareholders have stayed on as noncontrolling shareholders. The transaction received the approval of the relevant authorities on 31 August and closed on 13 September 2017. As the agreement includes an option for BioMar to take over the outstanding shares at a later date, the company has been fully consolidated, with the outstanding obligation being recognised in the balance sheet.

Consolidated revenue was up by 3.5% from DKK 2,945 million in Q3 2016 to DKK 3,048 million in Q3 2017. The revenue improvement was based on the higher volumes and the Alimentsa acquisition, which contributed revenue of DKK 37 million in September, whereas foreign exchange adjustments and raw materials prices had a negative effect on revenue.

In Norway, construction of a new production line at the existing factory in Karmøy ended in July, and the new production line (annual capacity 140,000 tonnes) is now operational. The project also involves expansion of warehouse and other efficiency-enhancing facilities, which are currently being completed.

EBIT fell to DKK 213 million in Q3 2017 from DKK 233 million in Q3 2016, mainly due to increased market competition. When adjusted for acquisition costs and depreciation and impairment charges resulting from PPA, the Alimentsa acquisition has had no notable effect on Q3 earnings. Working capital fell from DKK 750 million at 30 September 2016 to DKK 447 million at 30 September 2017, in part due to a drop in trade receivables. ROIC excluding goodwill improved to 35.6% at 30 September 2017 from 30.2% at 30 September 2016.

Business development BioMar agreed on 2 June 2017 to buy a 70% stake in Ecuadorian shrimp feed producer Alimentsa.

In China, BioMar is constructing a new fish feed factory in Wuxi near Shanghai in a joint venture with Chinese partner Tongwei Co. Ltd. The factory will have an annual capacity of about 50,000 tonnes and is expected to start operations in the second quarter of 2018. On 24 March 2017, BioMar announced an almost DKK 300 million investment in a new feed factory in Australia. Preparations at the factory are progressing to plan, and BioMar continues to expect the new facility will be ready by the end of 2019 with an annual capacity of about 110,000 tonnes. BioMar increased its ownership interest in the Chilean fish farming company Salmones Austral to 22.9% in the third quarter of 2017, and the company is now recognised as an associate.

Interim Report – third quarter of 2017  Schouw & Co.  10

BioMar Q3 2017

Q3 2016

YTD 2017

YTD 2016

2016 Total

3,047.8 401.6 252.2 39.4 212.8 11.4 -6.0 218.3 -48.6 169.7

2,944.7 401.4 267.8 35.0 232.8 2.7 -5.2 230.2 -60.6 169.7

7,317.5 880.9 494.7 108.3 386.4 15.7 19.2 421.3 -89.2 332.1

6,376.6 812.8 469.2 103.4 365.8 10.7 -9.2 367.3 -104.9 262.3

8,867.5 1,133.2 722.4 141.4 581.0 12.6 -16.4 577.1 -148.4 428.7

516.4 -766.4 297.9

161.6 -80.4 -39.1

337.7 -985.2 521.7

338.9 -230.1 -273.2

884.2 -375.6 -633.7

BALANCE SHEET Intangible assets * Property, plant and equipment Other non-current assets Cash and cash equivalents Other current assets Total assets

1,289.6 1,247.4 488.5 497.9 3,135.2 6,658.6

395.3 990.3 316.6 557.3 3,170.2 5,429.7

1,289.6 1,247.4 488.5 497.9 3,135.2 6,658.6

395.3 990.3 316.6 557.3 3,170.2 5,429.7

405.9 1,049.3 374.1 329.5 3,408.6 5,567.4

Equity Interest-bearing debt Other creditors Total liabilities and equity

2,401.1 1,176.7 3,080.8 6,658.6

2,122.0 788.9 2,518.8 5,429.7

2,401.1 1,176.7 3,080.8 6,658.6

2,122.0 788.9 2,518.8 5,429.7

2,347.7 668.6 2,551.1 5,567.4

993

877

943

883

887

FINANCIAL KEY FIGURES EBITDA margin 8.3% 9.1% 6.8% EBIT margin 7.0% 7.9% 5.3% ROIC excl. goodwill 35.6% 30.2% 35.6% ROIC incl. goodwill 23.3% 20.7% 23.3% Working capital 447.2 749.6 447.2 Net interest-bearing debt 615.4 161.4 615.4 * Excluding goodwill on consolidation in Schouw & Co. of DKK 430.2 million

7.4% 5.7% 30.2% 20.7% 749.6 161.4

8.1% 6.6% 35.8% 24.4% 413.7 -234.1

Outlook BioMar maintains its guidance of a significant revenue increase relative to 2016, despite unfavourable developments in foreign exchange rates and lower raw materials prices. The reported revenue for the first nine months of the year combined with contracts signed for the remainder of the year support this guidance. In addition, Alimentsa is expected to contribute about DKK 160 million to the full-year revenue for 2017. Against this background, BioMar now guides for revenue of about DKK 9.9 billion from the previous forecast of about DKK 9.8 billion. Full-year EBIT will inherently be lifted by the increase in sales, but will also be affected by unfavourable developments in foreign exchange rates and extremely competitive markets. In addition, the Alimentsa acquisition is expected to contribute about DKK 20 million to EBIT, net of PPA-related depreciation and impairment charges of DKK 8 million. Overall, BioMar now forecasts EBIT in the DKK 530-550 million range instead of the previous forecast range of DKK 510-550 million, which did not include the contribution from Alimentsa.

INCOME STATEMENT Revenue Gross profit EBITDA Depreciation and impairment Operating profit (EBIT) Profit after tax from ass. and joint ventures Financial items, net Profit before tax Tax for the period Profit for the period CASH FLOWS Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities

Average number of employees

Volume (1,000 t) Revenue (DKK million) - of which Salmon north - of which Salmon south - of which EMEA and Emerging

All amounts in DKK million

Q3 Q3 YTD YTD 2016 2017 2016 2017 2016 Total 360 326 832 696 966 3,048 2,945 7,318 6,377 8,867 1,696 1,582 3,964 3,159 4,593 462 531 1,468 1,389 1,903 890 832 1,886 1,829 2,371

Interim Report – third quarter of 2017  Schouw & Co.  11

Fibertex Personal Care Fibertex Personal Care is one of the world's largest manufacturers of spunbond/spunmelt nonwoven fabrics for the personal care industry. Its products are key components in baby diapers, sanitary towels and incontinence products. The company has production facilities in Denmark and Malaysia and mainly sells its products in Europe and South-east Asia to customers representing multinational brands for the consumer goods market. Its operations also include Innowo Print, a market leader in direct printing on nonwoven textiles for the personal care industry. Innowo Print has production facilities in Germany and Malaysia.

Financial performance Fibertex Personal Care reported a 14% revenue increase to DKK 505 million in Q3 2017, up from DKK 444 million in Q3 2016. The improvement was mainly driven by an increase in revenue reported by Innowo Print. EBIT for Q3 2017 was DKK 70 million (Q3 2016: DKK 57 million), the increase driven mainly by improvements to the Danish operations, whose Q3 2016 EBIT was adversely affected by the planned closure and upgrade of a production line. Fibertex Personal Care increased its working capital from DKK 276 million at 30 September 2016 to DKK 334 million at 30 September 2017, due to an increase in trade receivables and inventories. ROIC excluding goodwill fell from 22.5% at 30 September 2016 to 15.4% at 30 September 2017. The lower return was mainly due to an increase All amounts in DKK million

in invested capital resulting from investments in a new factory unit in Malaysia, a new print line in Germany and a technology upgrade in Denmark, and these new investments have as yet only made moderate contributions to earnings.

Business development Fibertex Personal Care regularly allocates resources for its extensive product development and product optimisation efforts. The company is working to develop softer products for improved skin comfort and to produce thinner and more lightweight materials while at the same time improving their ability to conduct and encapsulate liquids. The company is also working to improve its in-house processes to ensure customers have a highly reliable supply and a degree of flexibility in their sourcing of nonwovens. In 2016, Fibertex Personal Care launched an investment to build another factory unit in Malaysia with a view to increasing the company’s total output capacity in the country. The project includes a new production site at Sendayan, some 25 km south of the existing factory at Nilai, outside Kuala Lumpur. The new site may eventually have as many as four production lines and thus provides a suitable base for future expansion.

will it help grow capacity for the company’s current product range: it will also facilitate the production of super-soft products, a category in very high demand in Asian markets. Fibertex Personal Care is also investing heavily to expand its print facilities. In 2016, Fibertex Personal Care added print facilities at the existing nonwovens plant at Nilai in order to accommodate the growing demand for these products in Asian markets, and at the end of March 2017, Innowo Print in Germany added a new print line in response to the continuing growth in demand in Europe. Work is also currently ongoing to set up an additional print line in Malaysia, which is expected to be operational in the first quarter of 2018. In addition to expanding its print capacity in Malaysia, Fibertex Personal Care began building a print facility in North Carolina, USA, in the third quarter of 2017. This facility will cover the North and South American markets, which are expected to generate positive growth rates in the coming years. The US factory is expected to be ready for commercial operations at the end of 2018, and the overall investment will amount to about DKK 85 million.

Installation of the new production line was completed in July. After it was commissioned and run in to begin manufacturing a number of both new and existing products, the line was ready to start operating early in the fourth quarter of 2017. This will be Fibertex Personal Care’s eighth production line and the company’s fifth in Malaysia. Not only

Interim Report – third quarter of 2017  Schouw & Co.  12

Fibertex Personal Care Q3 2017

Q3 2016

YTD 2017

YTD 2016

2016 Total

INCOME STATEMENT Revenue Gross profit EBITDA Depreciation and impairment Operating profit (EBIT) Financial items, net Profit before tax Tax for the period Profit for the period

504.6 114.8 97.8 27.5 70.3 -10.7 59.7 -14.1 45.6

444.0 97.2 86.3 29.3 56.9 -1.4 55.6 -12.7 42.8

1,471.2 307.6 262.6 83.2 179.4 -19.9 159.5 -37.6 121.8

1,335.7 302.5 276.3 87.3 189.0 -11.7 177.3 -40.6 136.8

1,791.5 398.3 361.8 116.2 245.6 -6.9 238.6 -60.5 178.1

CASH FLOWS Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities

87.1 -30.6 -43.7

103.0 -117.1 -6.1

181.1 -246.0 98.0

264.7 -230.2 -40.3

331.4 -361.3 25.3

BALANCE SHEET Intangible assets * Property, plant and equipment Other non-current assets Cash and cash equivalents Other current assets Total assets

80.9 1,302.4 36.0 63.8 604.5 2,087.6

83.4 1,120.2 73.7 23.0 498.5 1,798.8

80.9 1,302.4 36.0 63.8 604.5 2,087.6

83.4 1,120.2 73.7 23.0 498.5 1,798.8

85.6 1,171.0 44.5 23.0 563.5 1,887.6

Equity Interest-bearing debt Other creditors Total liabilities and equity

864.6 815.8 407.2 2,087.6

857.3 573.5 368.0 1,798.8

864.6 815.8 407.2 2,087.6

857.3 573.5 368.0 1,798.8

876.9 609.6 401.1 1,887.6

672

565

648

543

574

FINANCIAL KEY FIGURES EBITDA margin 19.4% 19.4% 17.8% EBIT margin 13.9% 12.8% 12.2% ROIC excl. goodwill 15.4% 22.5% 15.4% ROIC incl. goodwill 14.5% 20.9% 14.5% Working capital 334.2 276.4 334.2 Net interest-bearing debt 752.0 550.5 752.0 * Excluding goodwill on consolidation in Schouw & Co. of DKK 48.1 million

20.7% 14.1% 22.5% 20.9% 276.4 550.5

20.2% 13.7% 18.4% 17.1% 294.7 586.0

Outlook Fibertex Personal Care’s reported revenue and earnings for the nine months to 30 September 2017 are in line with the company’s forecast. Expectations for its business activities for the rest of 2017 are also promising, but, in a comparison with last year’s earnings, it should be noted that the Q4 2016 EBIT was supported by lower prices of raw materials and positive foreign exchange rate developments. This will not be the case in the fourth quarter of 2017, as current commodity markets are much more challenging due to, among other things, the aftereffects of hurricanes in the USA and changed market conditions in China. After the end of the first half-year of 2017, prospects of sound business activity and an accelerated effect from the new production line in Malaysia made Fibertex Personal Care raise its fullyear EBIT guidance to the DKK 250-270 million range from its previous forecast of DKK 230-260 million. However, considering current trends in raw materials prices, recent months’ developments in foreign exchange rates, and the outlook for the rest of the year, Fibertex Personal Care is reducing its EBIT forecast to the lower half of that range. Fibertex Personal Care continues to guide for full-year 2017 revenue of about DKK 2.0 billion. Revenue (DKK million) - from Denmark - from Malaysia - from Germany

All amounts in DKK million

Q3 2017 505 183 271 51

Q3 2016 444 160 246 38

YTD 2017 1,471 538 783 150

YTD 2016 1,336 518 713 105

2016 Total 1,792 695 955 142

Average number of employees

Interim Report – third quarter of 2017  Schouw & Co.  13

Fibertex Nonwovens Fibertex Nonwovens is among Europe's leading manufacturers of nonwovens, i.e. non-woven textiles used for a large number of industrial purposes. The company's core markets are in Europe and North America and its secondary markets are in Africa and Asia.

Financial performance Fibertex Nonwovens reported a 7% revenue increase to DKK 336 million in Q3 2017, up from DKK 314 million in Q3 2016. As in recent quarters, this revenue improvement was broadly based, with all production sites contributing. Q3 2017 EBIT was DKK 15 million (Q3 2016: DKK 17 million). The performance reflects high capacity utilisation at the European factories and improved performance in the USA, but which was offset by extremely challenging trends in raw materials prices. The higher level of business activity drove working capital to DKK 415 million at 30 September 2017, up from DKK 375 million at 30 September 2016. ROIC excluding goodwill increased from 7.4% at 30 September 2016 to 7.7% at 30 September 2017.

Business development Fibertex Nonwovens reported a generally positive performance in 2017, with growing sales to the automotive industry, an improved product mix that included higher sales of advanced products, and European sales of products for the construction industry and for infrastructure projects that improved relative to last year. In addition, the

All amounts in DKK million

company grew its business activity in Asia, reporting sales to major infrastructure projects, for example. The sales subsidiaries set up in India and China in 2016 supported this performance. In recent years, Fibertex Nonwovens has consolidated its position as a leading manufacturer of industrial nonwovens. In terms of development and innovation, the company has built a solid portfolio of new projects, including products for the automotive and composite industries and for filtration and acoustic purposes. To capitalise on its growth potential, Fibertex Nonwovens expanded capacity by adding two new production lines in 2016, one in the Czech Republic and one in South Africa, and the company has made capex investments in 2017 to further increase capacity and upgrade production lines to grow revenue and increase the proportion of value-added products offered. The main focus on the North American market in 2016 was to build up the market and prepare the manufacturing facility in the USA for a future increase in local production for the North American customer base. Fibertex Nonwovens’ US subsidiary reaped the results of these efforts in 2017, reporting a revenue increase and improved earnings. The company has also built a strong customer portfolio, and setting up in the USA is considered an important long-term investment in an attractive market expected to see significant growth.

tivity and low commodity prices constrained infrastructure and mining projects, both in South Africa and in neighbouring countries. On the other hand, the South African factory has driven up business activity in the course of 2017, in part based on growing sales in local markets and, since 2016, on greater integration with the company’s global sales organisation, which is intended to improve sales from South Africa to relevant export markets.

Outlook Fibertex Nonwovens expects stable business activity in the fourth quarter of 2017 combined with stable conditions in most markets and business segments. The main challenge is rising prices of the main commodities in 2017, which have triggered price increases in all product areas and made already competitive markets even more challenging. Commodity prices remain volatile but are expected to stabilise at a higher level. This will likely produce a negative effect on profits in the short term, until a satisfactory balance between raw materials prices and selling prices can be restored. Fibertex Nonwovens’ operations have enjoyed the benefits in 2017 of the production lines upgraded in 2016 and the new capacity established in the Czech Republic and South Africa. South Africa will remain a weak-activity market, but a greater integration with the global sales organisation is expected to improve year-on-year earnings.

Market conditions in South Africa have been challenging in recent years, as weak economic ac-

Interim Report – third quarter of 2017  Schouw & Co.  14

Fibertex Nonwovens From the start of the year, Fibertex Nonwovens has guided for full-year revenue of about DKK 1.4 billion and EBIT in the DKK 80-100 million range. Based on the fair level of activity in the first half of 2017 and a number of new initiatives, the company previously expected EBIT to land at the upper end of the forecast range. However, given challenging developments in recent months and the outlook for prices of raw materials for the rest of the year, Fibertex Nonwovens has reduced its EBIT guidance to the lower half of that range. Fibertex Nonwovens continues to guide for full-year 2017 revenue of about DKK 1.4 billion.

Q3 2017

Q3 2016

YTD 2017

YTD 2016

2016 Total

INCOME STATEMENT Revenue Gross profit EBITDA Depreciation and impairment Operating profit (EBIT) Financial items, net Profit before tax Tax for the period Profit before non-controlling interests Non-controlling interests Profit for the period

335.9 70.2 38.0 22.6 15.4 -12.1 3.2 -4.6 -1.4 1.6 0.1

313.6 67.8 37.1 19.8 17.3 -5.9 11.3 -4.8 6.5 1.0 7.6

1,091.6 246.5 138.5 66.7 71.8 -31.9 39.9 -18.3 21.7 3.7 25.4

1,013.1 232.9 129.0 60.2 68.8 -11.3 57.5 -18.7 38.8 3.1 41.8

1,301.4 296.1 162.5 81.8 80.6 -20.2 60.5 -19.9 40.6 4.2 44.7

CASH FLOWS Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities

34.5 -28.3 -5.3

24.1 -14.5 -25.7

70.2 -94.0 11.5

79.7 -62.3 -16.7

113.7 -108.4 -12.6

BALANCE SHEET Intangible assets * Property, plant and equipment Other non-current assets Cash and cash equivalents Other current assets Total assets

151.7 770.9 4.4 35.1 628.9 1,591.0

161.6 742.7 0.0 58.5 570.7 1,533.5

151.7 770.9 4.4 35.1 628.9 1,591.0

161.6 742.7 0.0 58.5 570.7 1,533.5

164.1 753.9 4.3 48.7 560.6 1,531.6

Equity Interest-bearing debt Other creditors Total liabilities and equity

522.3 790.1 278.6 1,591.0

496.9 784.2 252.4 1,533.5

522.3 790.1 278.6 1,591.0

496.9 784.2 252.4 1,533.5

503.8 782.3 245.5 1,531.6

876

821

858

802

810

11.3% 4.6% 7.7% 7.0% 415.2 754.9

11.8% 5.5% 7.4% 6.7% 375.0 725.7

12.7% 6.6% 7.7% 7.0% 415.2 754.9

12.7% 6.8% 7.4% 6.7% 375.0 725.7

12.5% 6.2% 7.7% 7.0% 383.0 733.5

Average number of employees FINANCIAL KEY FIGURES EBITDA margin EBIT margin ROIC excl. goodwill ROIC incl. goodwill Working capital Net interest-bearing debt

* Excluding goodwill on consolidation in Schouw & Co. of DKK 32.0 million

All amounts in DKK million

Interim Report – third quarter of 2017  Schouw & Co.  15

HydraSpecma HydraSpecma is a specialised manufacturing, trading and engineering company whose core business is hydraulic components and systems development for industry and the aftermarket. The company is a hydraulics market leader in the Nordic region, which is the base of its core operations, and also serves customers in other parts of Europe and in selected business segments in China, India, the USA and Brazil.

Financial performance HydraSpecma reported a 6% revenue increase to DKK 409 million in Q3 2017, up from DKK 387 million in Q3 2016. The company has sustained its high level of business activity with OEM customers and industrial and aftermarket customers in the building and construction segments, materials handling, mining, forestry and the automotive segment (lorries and buses), whereas the marine, defence and offshore segments continue to feel the effects of slumping market demand. The wind power segment has reported softening activity in overseas markets, while European markets have performed in line with expectations. The Q3 2017 EBIT amounted to DKK 18 million, compared with DKK 27 million in Q3 2016. EBIT was affected by depreciation charges of DKK 6 million in both quarterly periods, due to the PPA adjustments made in connection with the acquisition of Specma in January 2016. An unexpectedly high level of business activity in certain product areas weighed on the Q3 2017 EBIT, causing HydraSpecma to incur additional costs in meeting customer demand, especially in Sweden. In addition, the company incurred costs All amounts in DKK million

from planned structural changes and building an organisation capable of achieving future targets. The Q3 period was also affected by reduced earnings in the overseas units due to the continued slump in activity in the marine and wind power segments. Working capital rose from DKK 497 million at 30 September 2016 to DKK 531 million at 30 September 2017. ROIC excluding goodwill fell from 18.2% at 30 September 2016 to 14.7% at 30 September 2017, the main reason for the change in the reported return being that Specma had only been recognised for nine of the preceding 12 months at the end of the third quarter of 2016.

Business development The acquisition of Specma in January 2016 has secured HydraSpecma of a strong base in the Nordic region and a solid platform for serving global customers. Since the merger, HydraSpecma has focused especially on achieving procurement synergies, and these efforts are now being continued through its newly established Product Management Group. The company continues the work to build value from integration across the entire organisation with a special focus on cross-selling, product assortment and on optimising production and logistics.

At the end of 2016, HydraSpecma acquired the activities of Chinese company Etola Hydraulic Systems (Tianjin) Co., and the activities were rolled into Hydra-Grene’s existing operations in China. As a result, this combined unit has encountered a number of practical and organisational changes that have taken longer to implement than originally expected. However, the takeover has given HydraSpecma a stronger production platform close to strategic wind turbine customers in the Beijing region and a potential for growing sales to overseas customers. HydraSpecma also has production facilities in the Shanghai region. Like the rest of HydraSpecma, the China-based units collaborate to achieve synergies in procurement, design, product assortment and production optimisation. In its US operations, HydraSpecma has established warehousing facilities from which it serves US customers in the wind power segment. So far, shipments have involved complete units and components manufactured at HydraSpecma’s production sites in Europe, but during the fourth quarter of 2017, the company will begin to ship products manufactured at its Chinese sites as well.

HydraSpecma is reporting positive sales performances to several key customer groups, and will in the upcoming period be investing to further automate and upgrade its production facilities with a view to meeting demand and cutting production costs.

Interim Report – third quarter of 2017  Schouw & Co.  16

HydraSpecma Outlook HydraSpecma expects to maintain the high level of business activity in most of its European market segments, with the exception of the offshore and marine segments, in which demand is expected to remain subdued due to excess capacity. The Chinese market is expected to remain soft for the rest of the year, and sales to the wind power segment in India are negligible due to new regulations introduced in government wind power auctions. HydraSpecma maintains its guidance for a fullyear 2017 revenue of about DKK 1.8 billion, but the company expects changes to the mix of segment contributions. The company has launched a number of initiatives and made investments that will increase costs in the short term, but which have been necessary to align its operations to the change in the revenue mix, and which are an important prerequisite for achieving future targets. Due to the higher costs and the lower level of business activity in China and India, HydraSpecma lowers its full-year EBIT forecast to about DKK 100 million (previously DKK 100-120 million). The EBIT forecast is net of DKK 23 million in PPA-related depreciation charges.

All amounts in DKK million

Q3 2017

Q3 2016

YTD 2017

YTD 2016

2016 Total

INCOME STATEMENT Revenue Gross profit EBITDA Depreciation and impairment Operating profit (EBIT) Financial items, net Profit before tax Tax for the period Profit before non-controlling interests Non-controlling interests Profit for the period

408.9 107.4 33.1 15.0 18.0 -5.2 12.8 -2.4 10.4 0.0 10.5

387.5 101.0 42.0 14.6 27.4 -2.7 24.7 -4.9 19.8 -0.3 19.5

1,341.9 361.9 120.7 45.0 75.7 -17.1 58.7 -13.0 45.7 1.4 47.1

1,306.5 331.5 129.8 43.2 86.6 -6.5 80.1 -16.3 63.8 -1.7 62.1

1,746.9 443.7 169.9 59.4 110.6 -7.8 102.8 -22.3 80.5 -1.4 79.1

CASH FLOWS Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities

-5.8 -10.7 8.4

25.1 -18.4 -10.9

26.4 -26.7 9.4

65.8 -521.5 489.9

127.7 -545.0 445.5

BALANCE SHEET Intangible assets Property, plant and equipment Other non-current assets Cash and cash equivalents Other current assets Total assets

298.8 186.1 10.4 88.3 818.7 1,402.3

316.4 178.6 4.5 76.8 745.1 1,321.4

298.8 186.1 10.4 88.3 818.7 1,402.3

316.4 178.6 4.5 76.8 745.1 1,321.4

315.7 191.9 6.7 36.0 806.1 1,356.4

Equity Interest-bearing debt Other creditors Total liabilities and equity

446.5 599.3 356.5 1,402.3

385.6 600.4 335.4 1,321.4

446.5 599.3 356.5 1,402.3

385.6 600.4 335.4 1,321.4

407.1 594.4 354.9 1,356.4

Average number of employees

1,166

1,017

1,129

1,004

1,020

FINANCIAL KEY FIGURES EBITDA margin EBIT margin ROIC excl. goodwill ROIC incl. goodwill Working capital Net interest-bearing debt

8.1% 4.4% 14.7% 12.5% 531.3 511.0

10.8% 7.1% 18.2% 15.6% 497.0 523.5

9.0% 5.6% 14.7% 12.5% 531.3 511.0

9.9% 6.6% 18.2% 15.6% 497.0 523.5

9.7% 6.3% 16.1% 13.6% 462.9 497.0

Interim Report – third quarter of 2017  Schouw & Co.  17

Borg Automotive One of Europe’s largest remanufacturing companies, Borg Automotive produces, sells and distributes remanufactured automotive parts for the European market. Borg Automotive sells its products under three different brands: Lucas, Elstock and DRI, Elstock and DRI being proprietary brands. The company’s main products are starters, alternators, brake calipers, air-condition compressors, EGR valves, steering racks and pumps. Headquartered in Silkeborg, Denmark, Borg Automotive operates production facilities in Poland and the UK and a sales and development subsidiary in Belgium. As Schouw & Co. acquired Borg Automotive at 1 April 2017, the company was consolidated effective from the second quarter of 2017. For ease of comparison, however, the YTD and FY 2016 income statement items shown in the financial highlights table also contain Q1 data. Balance sheet figures for prior periods are not directly comparable and have been left out of the table.

and impairment charges, which brings reported EBIT to DKK 27 million. EBIT for the nine months to September 30, 2017 was DKK 41 million, impacted by non-recurring costs of DKK 22 million that were incurred prior to the acquisition at 1 April 2017 and amortisation and depreciation charges, etc. totalling DKK 43 million due to purchase price allocation. Adjusted for these items, EBIT for the period was DKK 106 million, against DKK 96 million in the year-earlier period.

Business development Borg Automotive reported positive growth in demand in the third quarter of 2017. Borg Automotive has two sales departments: based in Denmark, Elstock sells to the independent aftermarket, while CPI, based in Belgium, sells to private label customers, including OES (Original Equipment Service) customers. Both sales departments have felt the positive trends in demand seen across the entire product range.

Financial performance Borg Automotive reported Q3 2017 revenue of DKK 237 million, compared with DKK 246 million in Q3 2016 when the company was not consolidated. The moderate fall is mainly considered to reflect quarterly timing differences. Comparable EBIT was DKK 32 million in Q3 2017 against DKK 34 million in Q3 2016. However, on recognition in Schouw & Co.’s Q3 2017 consolidated financial statements, EBIT is impacted by almost DKK 6 million in PPA-related depreciation

All amounts in DKK million

Developing the product programme, optimising production and ensuring complementary operations at the two production units in Poland and the UK is an ongoing priority at Borg Automotive. After Schouw & Co. took over the business, the company has accelerated its strategy work in order to explore the business opportunities available in the market. The financial leverage that comes with the long-term ownership is expected to provide a platform for both geographical and product expansion.

Over the past few years, Borg Automotive has generated stable organic growth in terms of both sales volume and revenue. Ongoing negotiations with major OES customers for additional longterm agreements support the outlook for continuing positive developments. Borg Automotive’s strong performance makes it relevant to ramp up capacity, and work continues to plan future production expansion in eastern Europe. The purpose of the upcoming expansion will be to build the capacity to manage a wider product range and a broader geographical footprint, while also maintaining a level of service of the current customer base that is compliant with the ever-growing demand for speed of delivery, precision and quality.

Outlook The market Borg Automotive serves has experienced considerable customer consolidation in recent years, as many other industries have. Obviously, the consolidating businesses achieve higher procurement volumes, leading to a change in trade patterns. On the positive side, consolidation also facilitates higher sales volumes. Borg Automotive has a broad product portfolio and a strong pipeline that will continue to support positive sales developments to the independent aftermarket, the private label market and to the OES segment.

Interim Report – third quarter of 2017  Schouw & Co.  18

Borg Automotive Borg Automotive maintains its forecast of revenue of about DKK 700 million for the period of consolidation from 1 April to 31 December 2017. For that same period, the company continues to forecast EBIT of DKK 110-130 million less PPA-related depreciation and impairment charges amounting to about DKK 50 million in 2017. As a result, Borg Automotive continues to forecast EBIT of DKK 60-80 million net of the effects of purchase price allocation, but most likely with a result in the lower end of the range. In the following years, PPA-related depreciation and impairment charges will impact EBIT by about DKK 23 million p.a.

Q3 2017

Q3 2016

YTD 2017

YTD 2016

2016 Total

INCOME STATEMENT Revenue Gross profit EBITDA Depreciation and impairment Operating profit (EBIT) Financial items, net Profit before tax Tax for the period Profit before non-controlling interests Non-controlling interests Profit for the period

237.4 60.0 35.5 8.7 26.8 -3.0 23.8 -3.6 20.2 0.0 20.2

246.2 64.6 37.2 2.8 34.4 -0.9 33.5 -5.8 27.6 0.0 27.6

721.6 160.5 60.8 20.1 40.7 -1.9 38.8 -2.3 36.5 0.0 36.5

691.3 192.0 104.6 9.0 95.6 -12.0 83.6 12.7 96.3 0.0 96.3

910.4 251.6 138.3 11.9 126.4 -14.1 112.3 -0.6 111.7 0.0 111.7

CASH FLOWS Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities

75.3 -4.5 -54.3

52.5 -3.3 -47.3

47.8 -192.7 134.0

80.8 -14.0 -66.6

123.9 -14.6 -72.0

1,225

1,259

15.1% 13.8%

15.2% 13.9%

BALANCE SHEET Intangible assets * Property, plant and equipment Other non-current assets Cash and cash equivalents Other current assets Total assets

369.3 71.0 58.6 37.1 505.3 1,041.3

369.3 71.0 58.6 37.1 505.3 1,041.3

Equity Interest-bearing debt Other creditors Total liabilities and equity

430.3 154.8 456.2 1,041.3

430.3 154.8 456.2 1,041.3

Average number of employees

1,476

1,276

1,437

FINANCIAL KEY FIGURES EBITDA margin 15.0% 15.1% 8.4% EBIT margin 11.3% 14.0% 5.6% Working capital 173.9 173.9 Net interest-bearing debt 117.8 117.8 * Excluding goodwill on consolidation in Schouw & Co. of DKK 506,5 million.

All amounts in DKK million

Interim Report – third quarter of 2017  Schouw & Co.  19

GPV GPV is Denmark’s largest EMS (Electronic Manufacturing Services) company and a significant international player in its field. The company is a high-mix/low-medium (HMLM) volume manufacturer. GPV's core products are both electronics and mechatronics (combination of electronics, software and mechanical technology). Headquartered in Denmark, GPV has production facilities in Denmark, Thailand and Mexico. Its customers are primarily major international businesses with a leading position in their particular field and typically headquartered in Europe or North America. GPV sells its products to international customer units in large parts of the world and ships to customers in more than 30 countries. GPV was acquired by Schouw & Co. at 1 April 2016, and was thus only consolidated as of the second quarter of 2016. For ease of comparison, however, the YTD and full-year 2016 income statement items shown in the financial highlights table also contain Q1 2016 data.

Financial performance GPV continued its positive performance of the year in the third quarter, lifting revenue by 36% to DKK 305 million, up from DKK 225 million in Q3 2016. Contributing to the revenue performance was GPV’s acquisition of another EMS company, BHE A/S, which took effect on 1 March 2017.

EBIT rose to DKK 24 million in Q3 2017, up from DKK 20 million in Q3 2016, an improvement driven by an increase in business activity, even with costs incurred for business expansion purposes. Working capital amounted to DKK 269 million at 30 September 2017, compared with DKK 199 million at 30 September 2016. ROIC excluding goodwill increased from 15.0% at 30 September 2016 to 18.0% at 30 September 2017, despite an increase in investments during the reporting period, which included the BHE acquisition, setting up in Mexico and major business activity expansion.

Acquiring BHE is consistent with GPV’s strategic 2020 growth plan, a key element of which is to take part in consolidating northern Europe’s EMS market. Integration of BHE’s operations with GPV’s existing platform is progressing to plan and will be completed in 2017.

Business development

Outlook

The HMLM volume segment of the technical electronics and mechatronics market is highly demanding in terms of testing skills and service excellence. Meeting customer requirements for high quality standards and reliability of supply is a big priority for GPV, and the company is able to absorb to a reasonable extent shifts in demand caused by market fluctuations. With a view to ensuring sufficient flexibility, GPV runs an investment programme to increase automation and expand SMT capacity at all three of its electronics factories – in Thailand, Denmark and Mexico – while also investing in its two mechatronics facilities in Thailand and Denmark.

The trend of outsourcing production in the sectors in which GPV operates is expected to continue, as customers increasingly focus on their core skills. This approach allows OEM customers to cut back on their capital expenditure and inventories while still retaining access to flexibility and, through GPV, an outsourcing partner capable of handling their manufacturability analysis, complex production, test designs, testing and logistics.

The electronics factory established recently in Guadalajara, Mexico, is a strategic location for

All amounts in DKK million

GPV in terms of manufacturing and shipping in the three major time zones of Asia, Europe and the Americas. Commissioned in the first quarter of 2017, the new factory will enable GPV to share in its existing customers’ growth in North America and to expand its share of the HMLM volume technical electronics market.

The general market forecast for 2017 continues to indicate a positive trend in Europe. The same applies to the US market, although market conditions there are more volatile, whereas markets in China and Russia are expected to weaken.

Interim Report – third quarter of 2017  Schouw & Co.  20

GPV The positive market trends seen in 2017 to date have resulted in longer delivery times for certain electronic components, which could impact GPV’s operations in the remainder of 2017 and the first half of 2018. The general market situation, new products, new customers and the BHE acquisition have all had a positive effect on the 2017 revenue guidance. BHE’s ordinary operations are expected to support the financial results, but BHE's overall earnings contribution for 2017 is expected to be negative due to necessary integration costs. As a result, GPV is again raising its full-year revenue forecast, this time to the DKK 1,075-1,125 million range (from previously about DKK 1,000-1,050 million) and its EBIT guidance range to DKK 70-80 million (from previously DKK 60-70 million).

All amounts in DKK million

Q3 2017

Q3 2016

YTD 2017

YTD 2016

2016 Total

INCOME STATEMENT Revenue Gross profit EBITDA Depreciation and impairment Operating profit (EBIT) Financial items, net Profit before tax Tax for the period Profit before non-controlling interests Non-controlling interests Profit for the period

304.9 64.7 31.2 7.2 24.0 1.9 25.9 -5.4 20.5 0.0 20.5

225.0 50.9 25.4 5.6 19.8 0.1 19.9 -0.2 19.8 0.0 19.8

852.3 183.6 81.5 20.5 61.0 4.5 65.5 -13.5 52.0 0.0 52.0

652.2 132.9 60.5 17.7 42.9 -4.5 38.3 1.4 39.7 0.0 39.7

876.8 183.4 84.2 23.6 60.6 -7.2 53.5 6.7 60.1 0.0 60.1

CASH FLOWS Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities

-22.4 -15.9 16.4

19.6 -10.2 -2.0

-5.0 -79.0 55.0

66.7 -16.3 -27.8

106.5 -41.7 -27.7

BALANCE SHEET Intangible assets Property, plant and equipment Other non-current assets Cash and cash equivalents Other current assets Total assets

18.7 224.6 23.1 17.6 541.3 825.3

0.0 176.4 17.4 39.0 380.4 613.2

18.7 224.6 23.1 17.6 541.3 825.3

0.0 176.4 17.4 39.0 380.4 613.2

0.0 199.3 24.6 51.5 362.1 637.5

Equity Interest-bearing debt Other creditors Total liabilities and equity

199.3 348.3 277.7 825.3

135.4 296.7 181.1 613.2

199.3 348.3 277.7 825.3

135.4 296.7 181.1 613.2

164.5 291.2 181.8 637.5

Average number of employees

1,314

1,079

1,231

1,060

1,074

FINANCIAL KEY FIGURES EBITDA margin EBIT margin ROIC excl. goodwill ROIC incl. goodwill Working capital Net interest-bearing debt

10.2% 7.9% 18.0% 17.5% 269.5 330.8

11.3% 8.8% 15.0% 15.0% 198.9 257.7

9.6% 7.2% 18.0% 17.5% 269.5 330.8

9.3% 6.6% 15.0% 15.0% 198.9 257.7

9.6% 6.9% 15.9% 15.9% 181.4 239.7

Interim Report – third quarter of 2017  Schouw & Co.  21

All amounts in DKK million

Interim Report – third quarter of 2017  Schouw & Co.  22

Statements of income and comprehensive income Note Income statement 1

2

8 8

Revenue Cost of sales Gross profit Other operating income Distribution costs Administrative expenses Other operating expenses Operating profit (EBIT)

Q3 2017 4,835.3 -4,017.0 818.3

Q3 2016

YTD 2017

4,325.3 12,541.4 -3,605.9 -10,471.9 719.4 2,069.5

YTD 2016

2016 Total

10,473.5 14,369.1 -8,700.2 -11,952.3 1,773.3 2,416.8

21.3 -287.8 -183.9 -6.0 361.9

10.0 -230.5 -147.9 -0.1 350.9

24.6 -792.2 -520.6 -2.8 778.5

43.6 -658.8 -434.9 -0.2 723.0

73.8 -879.4 -570.6 -2.1 1,038.5

Profit after tax in associates Profit after tax in joint ventures Financial income Financial expenses Profit before tax

10.3 0.0 9.6 -35.3 346.5

519.3 -3.5 9.5 -16.3 859.9

12.6 2.1 71.2 -98.6 765.8

567.8 -4.6 23.2 -46.2 1,263.2

571.5 -5.1 33.3 -59.9 1,578.3

Tax on profit Profit for the period

-84.2 262.3

-83.5 776.4

-180.7 585.1

-178.1 1,085.1

-239.5 1,338.8

Attributable to Shareholders of Schouw & Co. Non-controlling interests Profit for the period

263.9 -1.6 262.3

777.1 -0.7 776.4

590.3 -5.2 585.1

1,086.5 -1.4 1,085.1

1,341.5 -2.7 1,338.8

Earnings per share (DKK) Diluted earnings per share (DKK)

11.03 10.96

32.74 32.65

24.77 24.60

45.82 45.72

56.56 56.41

All amounts in DKK million

Q3 2017

Q3 2016

YTD 2017

YTD 2016

2016 Total

-78.4 6.3 8.3 0.4 58.3

-39.2 -18.9 0.0 -0.3 0.0

-207.6 6.4 0.5 2.8 58.3

-64.5 -11.7 -0.8 0.2 0.0

-16.0 -4.1 -0.8 7.1 0.0

-0.1 -0.2 -3.4 -8.8

22.5 -0.8 5.0 -31.7

-0.8 0.7 -2.8 -142.5

21.0 -5.5 4.0 -57.3

10.0 -4.3 -0.2 -8.3

Profit for the period Total recognised comprehensive income

262.3 253.5

776.4 744.7

585.1 442.6

1,085.1 1,027.8

1,338.8 1,330.5

Attributable to Shareholders of Schouw & Co. Non-controlling interests Total recognised comprehensive income

255.9 -2.4 253.5

744.7 0.0 744.7

448.8 -6.2 442.6

1,028.5 -0.7 1,027.8

1,334.6 -4.1 1,330.5

Comprehensive income Items that can be reclassified to the profit and loss statement: Exchange rate adjustment of foreign subsidiaries Hedging instruments recognised Hedging instruments transferred to cost of sales Hedging instruments transferred to financials Value adjustment of financial liabilities Other comprehensive income from ass. and joint ventures Other adjustment on equity Tax on other comprehensive income Other comprehensive income after tax

Interim Report – third quarter of 2017  Schouw & Co.  23

Balance sheet · assets and liabilities 30/9 2017

31/12 2016

30/9 2016

31/12 2015

Goodwill Completed development projects Development projects in progress Other intangible assets Intangible assets

2,216.9 17.3 2.8 988.7 3,225.7

1,168.6 7.7 0.0 305.2 1,481.5

1,147.8 24.5 2.9 291.7 1,466.9

1,006.1 0.0 0.0 169.9 1,176.0

Land and buildings Plant and machinery Other fixtures, tools and equipment Assets under construction, etc. Property, plant and equipment

1,649.0 1,519.1 135.5 569.4 3,873.0

1,420.6 1,328.0 93.5 608.0 3,450.1

1,400.7 1,124.7 125.6 642.3 3,293.3

1,260.2 1,152.3 65.4 298.3 2,776.2

Equity investments in associates Equity investments in joint ventures Securities Deferred tax Receivables Other non-current assets

330.1 162.1 5.3 89.4 99.9 686.8

62.6 171.2 121.3 35.5 138.9 529.5

61.5 115.2 115.3 37.7 156.4 486.1

570.3 109.1 83.9 18.1 177.7 959.1

Total non-current assets

7,785.5

5,461.1

5,246.3

4,911.3

Inventories Receivables Income tax receivable Securities Cash and cash equivalents Total current assets

2,709.2 3,448.8 85.7 0.0 562.2 6,805.9

1,970.5 3,103.7 55.3 0.0 1,682.4 6,811.9

2,038.6 3,308.0 8.3 1,034.5 549.2 6,938.6

1,435.1 2,752.7 5.9 0.1 1,410.7 5,604.5

Note Assets

3

Note Liabilities and equity 5

6

6 6

30/9 2017

31/12 2016

30/9 2016

31/12 2015

Share capital Hedge transaction reserve Fair value adjustment reserve Exchange adjustment reserve Retained earnings Proposed dividend Share of equity attributable to the parent company

255.0 -3.6 58.3 33.8 7,700.9 0.0

255.0 -10.7 0.0 240.4 7,006.1 306.0

255.0 -21.0 0.0 197.9 7,051.7 0.0

255.0 -12.4 0.0 263.1 5,895.1 255.0

8,044.4

7,796.8

7,483.6

6,655.8

Non-controlling interests Total equity

11.4 8,055.8

17.6 7,814.4

20.0 7,503.6

20.7 6,676.5

Deferred tax Pensions and similar liabilities Credit institutions Non-current liabilities

340.8 386.8 550.6 1,278.2

188.6 100.4 402.2 691.2

202.2 103.8 386.8 692.8

147.9 106.3 686.6 940.8

Current portion of non-current debt Credit institutions Trade payables and other payables Income tax Current liabilities

131.5 1,014.6 3,973.3 138.0 5,257.4

152.1 168.8 3,339.4 107.1 3,767.4

158.5 485.8 3,246.4 97.8 3,988.5

190.6 109.4 2,567.1 31.4 2,898.5

Total liabilities

6,535.6

4,458.6

4,681.3

3,839.3

Total liabilities and equity

14,591.4 12,273.0 12,184.9 10,515.8

Notes without reference 7 & 9. Total assets

All amounts in DKK million

14,591.4 12,273.0 12,184.9 10,515.8

Interim Report – third quarter of 2017  Schouw & Co.  24

Cash flow statement Q3 2017

Q3 2016

YTD 2017

YTD 2016

2016 Total

Profit before tax Adjustment for operating items of a noncash nature, etc.: Depreciation and impairment losses Other operating items, net Provisions Profit/(loss) after tax in associates and joint ventures Financial income Financial expenses Cash flows from operating activities before changes in working capital

346.5

859.9

765.8

1,263.2

1,578.3

Note

4

121.1 33.4 -11.9

120.1 0.1 -0.3

346.3 35.7 1.4

322.6 -37.3 -0.7

434.0 13.7 -1.1

-10.3 -9.6 35.3

-515.8 -9.5 16.3

-14.7 -71.2 98.6

-563.2 -23.2 46.2

-566.4 -33.3 59.9

504.5

470.8

1,161.9

1,007.6

1,485.1

Changes in working capital Cash flows from operating activities

212.8 717.3

-88.4 382.4

-212.8 949.1

-38.9 968.7

371.6 1,856.7

Interest income received Interest expenses paid Cash flows from ordinary activities

13.1 -27.3 703.1

3.1 -14.2 371.3

26.0 -69.6 905.5

14.5 -35.5 947.7

25.2 -54.5 1,827.4

Income tax paid Cash flows from operating activities

-13.6 689.5

-8.7 362.6

-196.9 708.6

-103.1 844.6

-229.3 1,598.1

-2.1 -7.3 0.0 0.1 -242.8 -592.8 0.5 4.0 0.0 -1,661.6

-4.0 0.0 -535.7 1.0 -551.0

-18.8 0.0 -828.3 5.9 -551.0

-13.3 0.0 64.3

-74.3 1,033.8 64.3

11.2 2.3 -18.5 -169.7 -2,342.3 -1,057.2

-27.1 -395.5

Purchase of intangible assets Sale of intangible assets Purchase of property, plant and equipment Sale of property, plant and equipment Acquisition of enterprises Acquisition/capital increase in ass. and joint ventures Divestment of associates Received dividend from associates Additions/disposals of other financial assets Cash flows from investing activities

All amounts in DKK million

-1.3 0.0 -137.1 0.4 -734.5 -63.5 0.0 0.0 79.1 -856.9

0.0 0.0 63.5

-87.0 0.0 0.0

Debt financing: Repayment of non-current liabilities Proceeds from incurring non-current financial liabilities Increase (repayment) of bank overdrafts Shareholders: Capital contributions, etc. by non-controlling interests Dividend paid Purchase/sale of treasury shares, net Cash flows from financing activities Cash flows for the period Cash and cash equivalents at 1 Jul./Jan. Value adjustment of cash and cash equivalents Cash and cash equivalents at 30 Sep./Dec.

Q3 2017

Q3 2016

YTD 2017

YTD 2016

2016 Total

-28.0

-263.5

-83.6

-435.0

-488.7

22.3 186.7

9.1 169.9

198.6 629.6

32.4 -33.7

103.5 -332.3

0.0 0.0 31.7 212.7

0.0 0.0 0.0 -84.5

0.0 -285.6 68.6 527.6

0.0 -237.7 27.8 -646.2

1.0 -237.7 28.9 -925.3

45.3 519.9 -3.0 562.2

108.4 -1,106.1 441.5 1,682.4 -0.7 -14.1 549.2 562.2

-858.8 1,410.7 -2.7 549.2

277.3 1,410.7 -5.6 1,682.4

Interim Report – third quarter of 2017  Schouw & Co.  25

Statement of changes in equity Share capital

Hedge transaction reserve

Fair value adjustment reserve

Exchange adjustment reserve

Retained earnings

Proposed dividend

Total

255.0

-12.4

0.0

263.1

5,895.1

255.0

6,655.8

20.7

6,676.5

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.0 -11.7 -0.8 0.2 0.0 0.0 3.7 0.0 -8.6

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

-65.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -65.2

0.0 0.0 0.0 0.0 21.0 -5.5 0.3 1,086.5 1,102.3

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

-65.2 -11.7 -0.8 0.2 21.0 -5.5 4.0 1,086.5 1,028.5

0.7 0.0 0.0 0.0 0.0 0.0 0.0 -1.4 -0.7

-64.5 -11.7 -0.8 0.2 21.0 -5.5 4.0 1,085.1 1,027.8

0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

9.2 17.3 27.8 54.3

0.0 -255.0 0.0 -255.0

9.2 -237.7 27.8 -200.7

0.0 0.0 0.0 0.0

9.2 -237.7 27.8 -200.7

Equity at 30 September 2016

255.0

-21.0

0.0

197.9

7,051.7

0.0

7,483.6

20.0

7,503.6

Equity at 1 January 2017

255.0

-10.7

0.0

240.4

7,006.1

306.0

7,796.8

17.6

7,814.4

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.0 6.4 0.5 2.8 0.0 0.0 0.0 -2.6 0.0 7.1

0.0 0.0 0.0 0.0 58.3 0.0 0.0 0.0 0.0 58.3

-206.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -206.6

0.0 0.0 0.0 0.0 0.0 -0.8 0.7 -0.2 590.3 590.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

-206.6 6.4 0.5 2.8 58.3 -0.8 0.7 -2.8 590.3 448.8

-1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -5.2 -6.2

-207.6 6.4 0.5 2.8 58.3 -0.8 0.7 -2.8 585.1 442.6

0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

15.8 20.4 68.6 104.8

0.0 -306.0 0.0 -306.0

15.8 -285.6 68.6 -201.2

0.0 0.0 0.0 0.0

15.8 -285.6 68.6 -201.2

255.0

-3.6

58.3

33.8

7,700.9

0.0

8,044.4

11.4

8,055.8

Equity at 1 January 2016 Other comprehensive income Exchange rate adjustment of foreign subsidiaries Value adj. of hedging instruments recognised Hedging instruments transferred to cost of sales Hedging instruments transferred to financials Other comprehensive income from associates and JVs Other adjustment on equity Tax on other comprehensive income Profit for the period Total recognised comprehensive income Transactions with the owners Share-based payment, net Dividend distributed Treasury shares bought/sold Transactions with the owners

Other comprehensive income Exchange rate adjustment of foreign subsidiaries Value adj. of hedging instruments recognised Hedging instruments transferred to cost of sales Hedging instruments transferred to financials Value adjustment of financial liabilities Other comprehensive income from associates and JVs Other adjustment on equity Tax on other comprehensive income Profit for the period Total recognised comprehensive income Transactions with the owners Share-based payment, net Dividend distributed Treasury shares bought/sold Transactions with the owners Equity at 30 September 2017

All amounts in DKK million

Noncontrolling interests Total equity

Interim Report – third quarter of 2017  Schouw & Co.  26

Notes to the financial statements 1

SEGMENT REPORTING

Total reportable segments YTD 2017

BioMar

Fibertex Personal Care

Fibertex Nonwovens

HydraSpecma

Borg

GPV

Total

External revenue Intra-group revenue Segment revenue

7,317.5 0.0 7,317.5

1,454.9 16.3 1,471.2

1,088.0 3.6 1,091.6

1,341.9 0.0 1,341.9

484.9 0.0 484.9

851.9 0.4 852.3

12,539.1 20.3 12,559.4

108.3 386.4

83.2 179.4

66.7 71.8

45.0 75.7

17.1 31.5

20.5 61.0

340.8 805.8

Segment assets Including goodwill Equity investments in associates and joint ventures Segment liabilities Working capital NIBD

7,088.8 1,322.6 418.8 4,257.5 447.2 615.4

2,135.7 99.1 0.0 1,223.0 334.2 752.0

1,623.0 119.0 0.0 1,068.7 415.2 754.9

1,402.3 150.1 2.5 955.8 531.3 511.0

1,547.8 507.5 0.0 611.0 173.9 117.8

825.3 18.7 0.0 626.0 269.5 330.8

14,622.9 2,217.0 421.3 8,742.0 2,171.3 3,081.9

Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Capital expenditure *

337.7 -985.2 521.7 1,289.9

181.1 -246.0 98.0 246.5

70.2 -94.0 11.5 94.0

26.4 -26.7 9.4 27.3

91.7 -194.3 119.8 14.9

-5.0 -79.0 55.0 70.0

702.1 -1,625.2 815.4 1,742.6

943

648

858

1,129

973

1,231

5,782

Total reportable segments YTD 2016

BioMar

Fibertex Personal Care

Fibertex Nonwovens

HydraSpecma

Borg

GPV

Total

External revenue Intra-group revenue Segment revenue

6,376.6 0.0 6,376.6

1,319.2 16.5 1,335.7

1,007.7 5.4 1,013.1

1,306.5 0.0 1,306.5

-

442.7 0.3 443.0

10,452.7 22.2 10,474.9

103.4 365.8

87.3 189.0

60.2 68.8

43.2 86.6

-

11.4 26.7

305.5 736.9

5,859.8 778.3 99.4 3,307.7 749.6 161.4

1,846.8 99.1 0.0 941.5 276.4 550.5

1,565.6 121.5 0.0 1,036.6 375.0 725.7

1,321.4 149.0 2.5 935.8 497.0 523.5

-

613.2 0.0 0.0 477.8 198.9 257.7

11,206.8 1,147.9 101.9 6,699.4 2,096.9 2,218.8

338.9 -230.1 -273.2 192.2

264.7 -230.2 -40.3 230.8

79.7 -62.3 -16.7 62.3

65.8 -521.5 489.9 458.8

-

37.5 -12.0 -19.1 16.1

786.6 -1,056.1 140.6 960.2

883

543

802

1,004

-

712

3,944

Depreciation and impairment EBIT

Average number of employees

Depreciation and impairment EBIT Segment assets Including goodwill Equity investments in associates and joint ventures Segment liabilities Working capital NIBD Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Capital expenditure * Average number of employees

* Capital expenditure consists of additions of intangible assets and property, plant and equipment, including additions on acquisition

All amounts in DKK million

Interim Report – third quarter of 2017  Schouw & Co.  27

Notes to the financial statements 1

SEGMENT REPORTING (CONTINUED)

Based on management control and financial management, Schouw & Co. has identified six reporting segments, which are BioMar, Fibertex Personal Care, Fibertex Nonwovens, HydraSpecma, Borg Automotive and GPV.

The data on revenue by geography are based on customers' geographical location. The specification shows individual countries that account for more than 5% of the Group in terms of revenue or assets. As Schouw & Co.'s consolidated revenue is generated in some 100 different countries, a very large proportion of the revenue derives from the 'Other' category. Revenue by country:

All inter-segment transactions were made on an arm’s length basis.

Reconciliation of consolidated revenue, EBIT, assets and liabilities

YTD 2017 Reporting segments Non-reporting segments The parent company Group elimination etc. Total

Group revenue 12,559.4 2.1 6.5 -26.6 12,541.4

YTD 2016

YTD 2017

25%

25% Norway

EBIT 805.8 -4.0 -23.3 0.0 778.5

Assets 14,622.9 99.5 9,245.1 -9,376.1 14,591.4

Liabilities 8,742.0 37.1 1,200.7 -3,444.2 6,535.6

Chile 43%

Denmark 12%

42%

UK

13%

Sweden Other 9%

YTD 2016 Reporting segments Non-reporting segments The parent company Group elimination etc. Total

5%

Group revenue

EBIT

Assets

Liabilities

10,474.9 20.7 5.1 -27.2 10,473.5

736.9 3.2 -17.1 0.0 723.0

11,206.8 149.8 8,310.8 -7,482.5 12,184.9

6,699.4 39.3 827.1 -2,884.5 4,681.3

8% 6%

6%

6%

Revenue by segment: YTD 2017

YTD 2016 5%

7% 4%

12% BioMar

10%

FPC 9%

FIN 9%

58%

HydraSpecma

62%

Borg GPV

12%

12%

All amounts in DKK million

Interim Report – third quarter of 2017  Schouw & Co.  28

Notes to the financial statements 2

COSTS

Share-based payment: Share option programme The company maintains an incentive programme for the Executive Management and senior managers, including the executive managements of subsidiaries. The programme entitles participants to acquire shares in Schouw & Co. at a price based on the officially quoted price at around the date of grant plus a premium (2017 allocation: 3% p.a.) from the date of grant until the date of exercise. Outstanding options Granted in 2013 Granted in 2014 Granted in 2015 Granted in 2016 Outstanding options in total at 31 December 2016 Granted in 2017 Exercised (from the share options granted in 2013) Exercised (from the share options granted in 2014) Exercised (from the share options granted in 2015) Outstanding options in total at 30 September 2017

Management 40,000 55,000 55,000 55,000 205,000 55,000 -40,000 -15,000 0

Other 0 50,000 172,000 199,000 421,000 238,000 0 -50,000 -122,000

Total 40,000 105,000 227,000 254,000 626,000 293,000 -40,000 -65,000 -122,000

205,000

487,000

692,000

Options exercised in 2017: Exercised number of shares Average exercise price in DKK Average share price in DKK on exercise Group's cash proceeds in DKK million

Exercised from Exercised from Exercised from 2015 grant 2014 grant 2013 grant 122,000 65,000 40,000 349.16 277.96 197.71 667.34 661.31 698.00 42.6 18.1 7.9

The expected volatility is calculated as 12 months' historical volatility based on average prices. Exercise of the share options is subject to the holders being in continuing employment during the abovementioned periods. If the share option holder leaves the company’s employ before a share option vests, the holder may in some cases have a right to exercise the share options early during a fourweek period following Schouw & Co.’s next following profit announcement. In the event of early exercise, the number of share options will be reduced proportionately.

The following assumptions were applied in calculating the fair value of outstanding share options at the date of grant: Presumptions for the fair value: Expected volatility Expected term Most recent dividend per share ** Risk-free interest rate Other information regarding the options: Strike price in DKK * Fair value in DKK per option ** Fair value in total in DKK millions ** Can be exercised from Can be exercised to

2017 grant 23.27% 48 mths DKK 10 -0.25%

2016 grant 31.50% 48 mths DKK 8 0.10%

2015 grant 27.62% 48 mths DKK 6 0.00%

2014 grant 26.12% 48 mths DKK 5 0.65%

671.93 68.45 20.1 March 2020 March 2021

450.88 69,65 17.7 March 2019 March 2020

379.50 40.99 9.3 March 2017 March 2019

297.50 30.87 6.9 March 2016 March 2018

*) On exercise after four years (at the latest possible date) **) At the date of grant

All amounts in DKK million

Interim Report – third quarter of 2017  Schouw & Co.  29

Notes to the financial statements 3

RECEIVABLES - CURRENT 30/9 2017 30/9 2016

Trade receivables Other current receivables Accruals and deferred income Receivables current

3,219.2 202.2 27.4 3,448.8

3,128.6 147.8 31.6 3,308.0

Trade receivables by portfolio company:

30/9 2017

30/9 2016 6%

7% 6%

11% BioMar

12%

FPC 58%

HydraSpecma 9%

Proportion of the total receivables which is expected to be settled Impairment percentage

0.4%

30/9 2016 Trade receivables not considered to be impaired Trade receivables individually assessed to be impaired Trade receivables in total Impairment losses on trade receivables Trade receivables net

Not due 2,722.7 86.3 2,809.0 -14.0 2,795.0

Proportion of the total receivables which is expected to be settled Impairment percentage

0.5%

Due between (days) 1-30 31-90 >91 239.7 67.5 27.5 44.1 18.5 156.3 283.8 86.0 183.8 -6.9 -7.0 -129.0 276.9 79.0 54.8

Total 3,036.7 336.7 3,373.4 -154.2 3,219.2

70.2%

95.4% 4.6%

Due between (days) 1-30 31-90 >91 188.9 61.9 15.9 30.1 27.3 189.9 219.0 89.2 205.8 -2.0 -3.2 -175.2 217.0 86.0 30.6

Total 2,989.4 333.6 3,323.0 -194.4 3,128.6

2.4%

8.2%

0.9%

3.6%

85.1%

94.1% 5.9%

67%

Borg 10%

Not due 2,702.0 117.8 2,819.8 -11.3 2,808.5

7%

FIN 7%

30/9 2017 Trade receivables not considered to be impaired Trade receivables individually assessed to be impaired Trade receivables in total Impairment losses on trade receivables Trade receivables net

A total of 10.0% (2016: 10.0%) of receivables at the balance sheet date were impaired to a greater or lesser extent. There is a continual follow-up on overdue debtors.

GPV

30/9 2017 30/9 2016 Impairment losses on trade receivables Impairment losses at 1 January Exchange adjustments Additions on company acquisitions Reversed impairment losses Impairment losses for the period Realised loss Impairment losses

-158.2 8.6 -4.7 11.9 -12.3 0.5 -154.2

-206.8 1.2 -1.5 4.6 -29.8 37.9 -194.4

Interim Report – third quarter of 2017  Schouw & Co.  30

Notes to the financial statements 4

The acquisition of Borg Automotive involved acquisition costs of DKK 5.0 million. ACQUISITIONS

Intangible assets Property, plant and equipment Financial assets Inventories Receivables Tax asset Cash and cash equivalents Credit institutions Deferred tax Provisions Trade payables Other liabilities Tax payable Contingent liabilities Net assets acquired Goodwill Cost Of which cash and cash equivalents Cash cost total

Borg

BHE

Alimentsa

379.2 65.3 0.1 320.6 183.1 60.5 20.5 -218.3 -91.3 -16.0 -53.5 -227.0 -13.2 0.0 410.0 507.6 917.6 -20.5 897.1

9.5 1.0 0.6 23.1 14.8 0.0 0.0 -10.9 -1.4 0.0 -12.2 -4.3 0.0 0.0 20.2 9.8 30.0 0.0 30.0

378.5 169.3 0.3 41.2 79.1 7.5 33.3 0.0 -85.5 -339.2 -19.7 -39.6 0.0 -32.4 192.8 575.1 767.9 -33.3 734.6

YTD 2017 YTD 2016 767.2 235.6 1.0 384.9 277.0 67.9 53.8 -229.1 -178.2 -355.2 -85.4 -270.9 -13.2 -32.4 623.0 1,092.4 1,715.4 -53.8 1,661.6

176.2 256.7 7.9 424.6 353.3 14.7 89.8 -457.5 -55.3 -4.3 -197.2 -125.1 0.0 0.0 483.8 157.0 640.8 -89.8 551.0

Had Borg Automotive been recognised as from 1 January 2017, revenue would have been DKK 237 million higher and EBIT would have been DKK 13.9 million higher. Effective 1 September 2017, BioMar acquired a 70% stake in Ecuadorian shrimp feed producer Alimentsa for a cash consideration of DKK 734.6 million and with an option to buy the outstanding 30% of the shares at a later date. The parties have agreed on a firm model for pricing the outstanding shares in Alimentsa, and non-controlling interests have thus not been recognised. Acquiring Alimentsa forms part of BioMar’s growth strategy. Alimentsa is a producer of shrimp feed and generates annual revenue of about DKK 500 million. Founded in 1986, Alimentsa is headquartered in Ecuador’s largest city, Guayaquil, and employs some 160 people. In connection with PPA adjustments relating to the acquisition of Alimentsa, preliminary goodwill was calculated at DKK 575.1 million. Goodwill represents non-identifiable assets. The acquisition of Alimentsa involved acquisition costs of DKK 8.2 million. Had Alimentsa been recognised as from 1 January 2017, revenue would have been DKK 343 million higher and EBIT would have been DKK 45 million higher.

Effective 1 March 2017, GPV acquired BHE, an EMS company based in Horsens, Denmark, for a cash consideration of DKK 30.0 million. Acquiring BHE forms part of GPV’s growth strategy. Established in 1984, BHE has over a number of years generated annual revenue of about DKK 100 million, selling mainly to the Danish and German markets. In connection with PPA adjustments relating to the acquisition of BHE, goodwill was calculated at DKK 9.8 million. Acquisition costs amounted to DKK 0.7 million. Had BHE been recognised as from 1 January 2017, revenue would have been DKK 14 million higher, while EBIT would have been the same. At 1 April 2017, Schouw & Co. acquired the industrial company Borg Automotive of Silkeborg, Denmark for a cash consideration of DKK 897.1 million. Borg Automotive remanufactures used auto parts such as starters, alternators, brake calipers and air-condition compressors and generates annual revenue of about DKK 1 billion. Founded in 1975, the company employs about 1,400 people, of whom some 1,200 work in Poland. In connection with PPA adjustments relating to the acquisition of Borg Automotive, goodwill was calculated at DKK 507.6 million. Goodwill represents non-identifiable assets.

Interim Report – third quarter of 2017  Schouw & Co.  31

Notes to the financial statements 5

6

SHARE CAPITAL

Treasury shares

Number of shares

1 January 2016

1,906,130

Percentage of share Cost in DKK million capital 352.0

INTEREST-BEARING DEBT

Percentage breakdown of interest-bearing debt by currency:

30/9 2017

7.48%

30/9 2016

9%

Movements in Q1-Q3 2016 Share option programme Additions 30 September 2016

-180,000 34,800 1,760,930

-21.7 13.1 343.4

-0.71% 0.14% 6.91%

5%

-4,000 1,756,930

-0.5 342.9

-0.02% 6.89%

Movements in Q1-Q3 2017 Share option programme 30 September 2017

-227,000 1,529,930

-26.3 316.6

-0.89% 6.00%

9%

DKK

6%

33%

EUR

46%

Movements in Q4 2016 Share option programme 31 December 2016

4%

7%

NOK

13%

MYR

13%

CZK 0%

USD 12%

Other

19%

24%

The share capital consists of 25,500,000 shares with a nominal value of DKK 10 each. All shares rank equally. The share capital is fully paid up. Schouw & Co. has been authorised by the shareholders in general meeting to acquire up to 5,100,000 treasury shares, equal to 20.0% of the share capital. The authorisation is valid until 1 April 2021.

Consolidated interest-bearing debt: 3

The company acquires treasury shares for allocation to the Group’s share option programmes.

2

A total of 227,000 shares held in treasury were used in connection with options exercised in 2017. The shares had an aggregate fair value of DKK 152.3 million at the time of exercise.

1

The Group’s holding of treasury shares had a market value of DKK 1,047.2 million at 30 September 2017.

Interest-bearing debt

DKK billion

NIBD

0 -1 Sep 2017

Jun 2017

Mar 2017

Dec 2016

Sep 2016

Jun 2016

Mar 2016

Dec 2015

Sep 2015

Jun 2015

Mar 2015

Dec 2014

Sep 2014

Jun 2014

Mar 2014

Dec 2013

Sep 2013

Jun 2013

Mar 2013

Dec 2012

-2

The share capital has not changed in the past five years.

The weighted average effective rate of interest at 30 September 2017 was 2.1% (30 Sep. 2016: 3.0%).

Interim Report – third quarter of 2017  Schouw & Co.  32

Notes to the financial statements 7

8

EARNINGS PER SHARE (DKK)

FAIR VALUE OF CATEGORIES OF FINANCIAL ASSETS AND

LIABILITIES

Financial assets Securities measured at fair value through profit or loss – level 1 Derivative financial instruments to hedge future cash flows – level 2 Securities measured at fair value – level 3 Financial liabilities Derivative financial instruments to hedge future cash flows – level 2

30/9 2017

31/12 2016

30/9 2016

3.0 10.9 2.3

2.3 17.8 119.0

2.3 9.1 1,147.5

17.1

34.4

34.5

Securities measured at fair value through other comprehensive income (level 3) amounted to DKK 119.0 million at the beginning of the year. The change for the reporting period was due to negative foreign exchange adjustments of DKK 13.6 million, negative reclassifications of DKK 145.6 million and a fair value adjustment of DKK 42.5 million. Foreign exchange adjustments, reclassifications and the fair value adjustment were mainly related to Salmones Austral, which was reclassified as an associate in the third quarter of 2017. The fair value of listed securities (level 1) has increased by DKK 0.7 million in 2017.

Share of the profit for the period attributable to shareholders of Schouw & Co. Average number of shares Average number of treasury shares Average number of outstanding shares Average dilutive effect of outstanding share options * Diluted average number of outstanding shares Earnings per share of DKK 10 Diluted earnings per share of DKK 10

Q3 2017

Q3 2016

YTD 2017

YTD 2016

263.9

777.1

590.3

1,086.5

25,500,000 25,500,000 25,500,000 25,500,000 -1,588,745 -1,760,930 -1,664,626 -1,789,639 23,911,255 23,739,070 23,835,374 23,710,361

155,243

63,370

161,905

53,051

24,066,498 23,802,440 23,997,279 23,763,412 11.03 10.96

32.74 32.65

24.77 24.60

45.82 45.72

* See note 2 for information on options that may cause dilution.

The Group uses interest rate swaps and forward currency contracts to hedge fluctuations in interest rate levels and foreign exchange rates. Forward exchange contracts and interest rate swaps are valued using generally accepted valuation techniques based on relevant observable swap curves and exchange rates (level 2). The fair values applied are calculated mainly by external sources on the basis of discounted future cash flows. The fair value of derivative financial instruments is calculated by way of valuation models such as discounted cash flow models. Anticipated cash flows for individual contracts are based on observable market data such as yield curves and exchange rates. In addition, fair values are based on nonobservable market data, including exchange rate volatilities, or correlations between yield curve, exchange rates and credit risks. Non-observable market data account for an insignificant part of the fair value of the derivative financial instruments at the end of the reporting period.

Fair value hierarchy Level 1 Listed shares, stated at market value of shareholding. Level 2 Financial instruments valued by external credit institutions using generally accepted valuation techniques on the basis of observable data. Level 3 Unlisted shares, stated at estimated value.

Interim Report – third quarter of 2017  Schouw & Co.  33

Notes to the financial statements 9

RELATED PARTY TRANSACTIONS

Under Danish legislation, Givesco A/S, Svinget 24, DK-7323 Give, members of the Board of Directors, the Executive Management and senior management as well as their family members are considered to be related parties. Related parties also comprise companies in which the individuals mentioned above have material interests. Related parties also comprise subsidiaries, joint arrangements and associates, in which Schouw & Co. has control, significant influence or joint control of as well as members of the boards of directors, management boards and senior management of those companies. Management's remuneration and share option programmes are set out in note 2.

Joint Ventures: During the financial year, the Group sold goods of At 30 September the Group had a receivable of Associates: During the financial year, the Group received management fee of During the financial year, the Group sold goods of During the financial year, the Group bougth goods of During the financial year, the Group received interest income of At 30 September the Group had a receivable of At 30 September the Group had debt of During the financial year, the Group received dividends of

YTD 2017

YTD 2016

18.6 2.0

8.3 15.7

0.1 96.2 62.9 0.0 181.4 101.2 0.0

0.1 27.6 11.4 0.2 2.4 0.0 64.3

During 2017, the Group traded with Incuba Invest, BioMar-Sagun, BioMar-Tongwei, LetSea, ATC Patagonia, Salmones Austral and Young Tech Co. Other than as set out above, no transactions were made during the year with related parties.

Interim Report – third quarter of 2017  Schouw & Co.  34