[Nick Hargrave]

I joined the BFSA 5-yr growth plan presentation. The presentation is available on the company’s website, but some key takeaways:

Not providing 2023 guidance today, but confident that 2022 EBITDA is a solid floor for 2023 despite inflationary / energy cost headwinds. Noted that energy prices have come down a lot recently and expecting the correlation between energy and metal price to increasingly revert to normal

Currently has the best capital structure in its history – no debt maturities until mid-26 and can finance growth plan entirely out of cash and cash flow while keeping leverage <2x EBITDA and maintaining the dividend policy of 40-50% net profit pay-out

Decarbonisation (EAF steel production produces 7x less CO2 than blast furnaces) and electric vehicles (increasing zinc and aluminium requirement in green technologies/EVs) are the key megatrends supporting the growth plan

More comfortable with the current 5-year growth plan than the plan they had 5 years ago at IPO given the visibility of the projects

Growth plan of €410-450m total capex to generate annual EBITDA of €125-155m (at 19-23% margin), balanced 1/3 in each of the US, Europe (dust and aluminium) & Asia/China. This includes the first new plant they are putting in Europe in the last 20 years (lowest risk). Plan is 100% organic growth, providing full control and flexibility around external factors

Huge new US, EU & China investments in EAF steel production coming, generating additional EAF dust for the company to process. The company is managing their expansion timing in line with the steel producer plans. Taking a more cautious approach in China and will have contracts with steel producers before even commencing the new plant build

50% of term debt interest has been fixed so interest rate rises aren’t impacting at the full rate. Increases are also partially offset by interest on cash balances

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