Inapa Investimentos Participações e Gestão S A : - Investimentos, Participações e Gestão, SA informe sobre resultados anuais de 2021 - versão inglesa

INDEX

• 4.1 Macroeconomic context

• 4.2 Sector framework

• 4.3 Consolidated Performance

• 4.4 Business Area Performance

• 4.5 Outlook for 2022

Consolidated AccountsAdditional Information

01

Message from the CEO

In 2019, Inapa shareholders approved a strategic plan for the 2019-2021 period focused on four pillars of performance: consolidation and optimization of the paper business, diversified growth in the businesses of packaging and visual communication, reinforcement of financial sustainability and sustainable development.

During this period, Inapa has continued to lead the consolidation movement of the sector, by completing the acquisition of Papyrus Deutschland in July 2019. This operation allowed in this triennium the annual volume of paper sold by Inapa to grow by 15%, while the paper market in Western Europe suffered a substantial decrease of 20%, affected by the impact of COVID-19 pandemic. The market share in the geographies where Inapa operates had therefore a 4.2pp growth (from 13.7% to 17.9%) from 2018 to 2021. When we compare this last year with 2015, we see that the share gain in the markets where Inapa operates was 6.1pp (in 2015 the share was 11.8%).

Synergy plans identified at the time of acquisition of Papyrus France and Papyrus Deutschland have been successfully implemented. In France the plan is already fully implemented with significantly higher savings than initially estimated and in Germany savings are already implemented, whose annual effect is greater than that presented to shareholders during the transaction approval. Meanwhile, in Germany, significant additional opportunities have been identified, which will be implemented during the course of 2022 and 2023.

To achieve a greater systematization and coordination of processes across geographies and business areas that allow optimizing resources, we have decided to use a new state-of-the-art ERP (SAP 4/HANA), in all the companies of Inapa Group. Its implementation began in Germany in 2020 and, despite the limitations caused by the new COVID-19 wave in early 2021, it was successfully completed at the end of the first half among all German operations. In the second half of 2021, the new ERP was implemented in the operations in Belgium and Portugal, continuing therefore to achieve an increase of efficiency at the Group level.

Complementary businesses grew by 4.3% over the three-year period, reduced by the impact of COVID-19, with significant effects on the Viscom area, which suffered a 10% drop (with emphasis on the consequence of trade fairs cancelations during the pandemic period) while the packaging area grew by 11%.

Net debt decreased by € 10 million over these three years, continuing the former trend (in the previous three years it had decreased by € 39 million). This development incorporates the effects of the application of IFRS16 in 2019 and the classification of sales made in factoring in Germany as true sale in 2021 and was achieved despite the acquisition of Inapa Deutschland. As a consequence of this reduction and the increase in recurrent EBITDA, the ratio of net debt to recurring EBITDA changed from 14.8 in 2018 to 8.3 in 2021.

The pillar of sustainable development has made interesting progress in 2021 with an unprecedented increase in global renewable energy consumption, exceeding the 12% target set for 2022. A significant part of this success is due to the shift of about 80% to wind and water electricity in Germany. We have also reinforced, among other measures described in the respective report, investing in lower consumption vehicles and hybrid technology. In terms of social matters, we highlight the Group's Gender Equality Plan, which, as a result of the joint initiative of several employees, was prepared for the year of 2021 for the first time. Therefore, we reaffirm our full commitment to the United Nations Sustainable Development Goals (SDGs) initiative, to which we have enthusiastically joined.

In 2021, the turnover stood at 965 million euros, down from 51 million euros, when compared to 2020. After the first half of the year, heavily affected by COVID-19 pandemic restrictions, in which turnover contracted by around 73 million euros compared to the first half of the previous year, in the second half of the year turnover grew by 22 million euros (+4.5%), when compared to the same period. The increase in activity in the second half of the year allowed to achieve a recurring EBITDA of 22 million euros in the first half, an improvement of 5 million euros, when compared to the same period.

The strong evolution of annual EBITDA needs to be highlighted. After significant restructuring costs in 2020, EBITDA stood in 2021 at 31 million euros, with an increase of 95% (+ 15 million euros), when compared to the previous year.

In the second half, we achieved a 6.3 million euros net profit, reversing the losses of the first half and closing the year 2021 with a net income of 3.3 million euros.

Compared to December 2020, net debt fell by around 53 million euros in December 2021 to 262 million euros (including 38 million euros for IFRS16 effects). This amount includes trade finance in all geographies, except in Germany where, due to changes in contracts, sales through factoring are now considered true sale. Gross short-term debt fell by 17 million euros and the medium and long-term debt by 38 million euros.

We rely on a team prepared to answer the challenges and opportunities for growth, efficiency, innovation and sustainability that will be very important in the coming years. To our employees, customers, suppliers, financial institutions and shareholders we leave a special word of thanks for their contribution so that Inapa will carry on with its values in the performance of its mission.

Diogo Rezende

CEO do Grupo Inapa

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