Metalfrio S A : Financial Statements 2020

Metalfrio Solutions S.A.

Financial statements December 31, 2020 and 2019

(A free translation of the original financial statements in Portuguese, prepared in accordance with the International Financial Reporting Standards (IFRS), with the accounting practices adopted in Brazil and rules of the Brazilian Securities and Exchange Commission - CVM)

Metalfrio Solutions S.A.
Financial statements
Years ended December 31, 2020 and 2019
Contents
Management report
3 - 11
Independent auditors' report on the
financial statements
12 - 15
Balance sheets
16
Statements of income
17
Statements of comprehensive income
18
Statements of changes in shareholders' equity
19 - 20
Statements of cash flows
21
Statements of added value
22
Notes to the financial statement
23 - 98
Other information
99 - 100

2

MANAGEMENT REPORT

Fourth quarter 2020 and Full Year Results March 8th, 2021

São Paulo, Brazil, March, 8th 2021 - Metalfrio Solutions S.A. (FRIO3) ("Metalfrio"), the world's leading cold solutions provider, announces its results for the fourth quarter of 2020 ("4Q20") and full year of 2020 ("FY20"). Financial and operational information given is in accordance with international accounting standards (IFRS), in Brazilian Reais (R$). Comparisons are with the fourth quarter of 2019 ("4Q19") and full year of 2019 ("FY19") or as indicated.

•  4Q20 net revenues up 3.1% to R$386.6 million versus prior year period; full year revenues marginally down 2.4% to R$1,445.2 million

•  Services increased by 8.5% to R$241.5 million for the full year and now account for 16.7% of net revenue versus 15.0% in 2019

•  Adjusted EBITDA of R$37.0 million in 4Q20 was 12.2% lower vs 4Q19; full year adjusted EBITDA of R$151.3 million, 1.9% higher than prior year and at historical high level

•  Net Profit of R$17.4 million in 4Q20; full year Net

  Loss of R$140.1 million, versus profit of R$47.4 million in 2019, owing mainly to non-cash foreign exchange variation losses.

Commenting on the results, President & CEO Petros Diamantides said:

"In delivering the highest full year adjusted EBITDA in Metalfrio's history, together with margin expansion, in a year of truly unprecedented external global challenges, the company clearly demonstrated the strength of its disruptive business model and the extraordinary engagement of its people.

The full integration of Services with Products has been an increasingly key driver for Metalfrio, based on further penetration and diversification in existing and new customers, across different geographies and service offerings. This was evidenced by the strong growth in Services in 2020 as well as the completion of our latest acquisition, in the fourth quarter, of the UK-based company assets365 which adds further momentum to our Connectivity/IoT strategy that together with LifeCycle, our asset management arm, and 3L, our full service equipment rental arm, to create a truly unique, fully integrated ecosystem.

Metalfrio is well-placed to benefit from the global economic recovery, and beyond, with an unrivalled depth of geographic reach, customer and multi-channel access and a value-enhancing Service offering. All our efforts are underpinned by a continued focus on developing our client partnerships, and unwavering commitment to operational excellence which has enabled us to successfully face the global crisis helped by a diligent approach to liquidity and the development of a longer average debt maturity profile. As such we are strongly engaged to generate greater value for our stakeholders."

(R$ million)	4Q20	4Q19	% Var	FY20	FY19	% Var
Net Revenues	386.6	374.8	3.1	1,445.2	1,480.8	(2.4)
Gross Profit	63.9	66.9	(4.5)	252.2	249.0	1.3
Gross Margin	16.5%	17.8%	17.4%	16.8%
Op. Profit	14.7	56.6	(74.0)	72.6	129.0	(43.7)
Adj. EBITDA	37.0	42.2	(12.2)	151.3	148.5	1.9
Adj. EBITDA Margin	9.6%	11.2%	10.5%	10.0%

Fourth Quarter 2020 and Full Year Results March 08th, 2021

Business Update

We started 2021 prepared for the future

Last year will be remembered as a year of overcoming and resilience, but also as a year of accomplishments that allowed Metalfrio to deliver the highest adjusted EBITDA in its history. Both, the industrial growth in the Turkish plant which is becoming a more and more competitive facility and the strong evolution in the Brazilian service market, demonstrate the company's successful strategy enabling Metalfrio to continue growing and generating value.

The COVID crisis led to significant changes in the consumption behaviour and the relationship between our clients and their final customer resulting in new demands for increasingly technological and intelligent products and services. Investments in the acquisition of assets365 (a UK-based company focused on offering IoT services) and 3L which specializes in offering full-lifecycle equipment rental services, were key steps in a strategy that firmly established Metalfrio as a unique provider of complete solutions to its customers. These strategic developments have reinforced Metalfrio's market position well for future trends.

The Future demands a complete range of smart solutions Clients are demanding remote management of equipment that provides information about selling points and consumer experience. New points of sale emerged, in non-traditional channels such as condominiums, gyms or business centres and specific segments are growing with new dimensions such as vaccine and health-related applications. This expanded frontier is requiring new forms of interaction such as auto-checkout, inventory management, remote temperature control in a self-service environment.

The acquisition of assets365 allows Metalfrio to provide IoT services such as telemetry and remote management. In 2021 we are gearing-up to offer on-line tracking of coolers and freezers supporting clients with strategic information on asset location and operating performance together with sales analytics and remote equipment management.

Wide coverage

Metalfrio's field network is flexible allowing new services and equipment types to be added. We are able to provide services for a wide range of equipment beyond coolers and freezers, such as coffee machines, draft beer, post-mix machines, ice-cream dispensers, dishwashers, ice machines and other point of sale appliances. We now also added new technical assistance capabilities, improved our client experience and fostered key alliances with other equipment principals, consolidating Metalfrio's strong position in this space.

Growth with scale

Our portfolio of field solutions already includes preventive maintenance, logistics and equipment refurbishment and now through 3L, these are combined to a full-service rental proposition that includes other equipment types beyond those of Metalfrio, offering a unique and seamless integrated solution. Full-service rental allows an asset-light market coverage for our customers and this alternative ownership and operating framework is proving to be very attractive for a wide range of customers. The unique Metalfrio ecosystem allows for extensive organic growth and expansion of its addressable market.

Strong fundamentals

Towards the end of 2020 key markets resumed equipment placement that together with increased exports to new markets in Middle East, Asia and Africa, where the pandemic has had less effect and the ongoing good conditions in future consumption channels, has contributed to Metalfrio's good performance. Additionally, the Company's ability to respond and adapt rapidly to the dynamic environment has reinforced the strength of its close relationships with global and regional customers, suppliers and partners, underpinned by its market-leading range of multi-channel innovative solutions.

As Metalfrio continues to move closer towards the end-consumer and therefore more aligned with the positive long-term customers' growth trends, the quality of its growing earnings stream is expected to continue increasing, driven by the following key elements:

•  Innovation & multi-channel approach:

  Metalfrio's track record in delivering value-creating innovation throughout its range of branded coolers and freezers serving multi-channels and consumer categories has enabled the Company to address the rapid changes in consumer demand behaviour.

•  Geographic spread:

  With sales to over 100 countries, Metalfrio has the

  broadest geographic footprint amongst its peers,

  enabling it to meet the requirements of global food &

  beverage customers. This diversity has ensured that it

  has been able to offset declines in some countries

  through tapping into pockets of demand in other

  markets.

•  Service & Full Service Rental:

  LifeCycle delivers an unrivalled after-sales solution to ensure optimal asset performance through national field service networks, well-established processes and management systems. The complementary 3L full-service rental creates a very powerful combination that is increasing our share of business fast as it presents a very attractive asset-light solution to existing customers but importantly to new accounts though its flexibility to integrate a wide-range of equipment types. This in turn, allows diversifying Metalfrio's earnings stream and ensures close and regular communication with customers, invaluable in fostering and maintaining strong relationships, so ensuring recurrent revenues. Whilst in 2020 the revenue from Services accounted for 16.7% of total revenue we are well within our target of 25% contribution in the medium term.

•  Connectivity:

  Metalfrio's disruptive business model continues to

  evolve, now encompassing IoT technology

  (Connectivity), unique in the industry, where it is able

  to generate invaluable, data-driven insights in areas

  such as asset tracking, equipment health,

  environmental impact as well as consumer behavior

  trends uniquely integrated into its service

  infrastructure to deliver appropriate follow-up actions

  at the point-of-sale. This market leadership was

  further reinforced in early November 2020 with the

  acquisition of assets365, an IoT solutions provider

  based in the UK.

Fourth Quarter 2020 and Full Year Results - March 8th, 2021 - Metalfrio