Kinnevik 'A' : Interim Report

ACCELERATED SHIFT TO DIGITAL IS VALIDATING OUR STRATEGY

With a large part of the world in lockdown, the shift to digital has taken a giant leap for-ward.I am proud to note that, in the midst of the uncertainty and suffering created by the Covid-19 pandemic, our digitally-enabled companies are responding to the challenge and providing vital services to consumers, validating our strategy.

Georgi Ganev,CEO of Kinnevik

Key Strategic Highlights

focused on complex, underserved urban populations

• •Completed a sell-down of a 4.4% stake in Zalando, ge-nerating net proceeds of SEK 6.7bn and providing us withincreased financial flexibility to execute on our strategy

  • • SEK 74m inCedar's funding round

  • • SEK 28m in secondary shares inVillageMD

  • • Total divestments of SEK 6.9bn in the quarter, of which:

• •The Board of Directors proposed an extraordinary cashdistribution of SEK 7 per share, or SEK 1.9bn in total. The distribution follows the sell-down in Zalando and is subject to approval by an EGM to be held on 19 August 2020

  • • SEK 6.7bn from theZalando sell-down

  • • SEK 198m from the sale of a 23% stake inQliro Group

• •Continued to build our healthcare portfolio with a newinvestment into Cityblock, and follow-on investments in

  Financial Position

  Cedar and VillageMD, which together with material valueuplifts have brought our healthcare businesses' share of ourportfolio value to 17%, compared to 3% a year ago

  • • NAV of SEK 89.6bn (SEK 323 per share),up SEK 24.7bn or 38%in the quarter

• •Established climate targets in line with the Paris Agre-ementto significantly reduce greenhouse gas emissionsfrom Kinnevik's own operations and from our businesses

  • • Net cash position of SEK 5.5bn, corresponding to 6.6% ofportfolio value by quarter-end, and amounting to SEK 3.6bnadjusted for our upcoming SEK 1.9bn extraordinary cashdistribution to shareholders

• •Continued negative impacts from Covid-19in our traveland emerging market businesses

Events After the Quarter

• •On 8 July, Kinnevik invested USD 25m inVillageMD's fundinground led by Walgreens Boots Alliance

  Investment Management Activities

  • • We remain focused onre-allocating capital dynamicallyto ensure our portfolio remains balanced and vibrant. In the quarter, we invested SEK 400m in total, including:

• •During early July, Kinnevik fully exited its 12% shareholdinginHome24, generating net proceeds of EUR 21m

• •SEK 235m inCityblock, a value-based care provider

Key Financial Data

SEKm

Net Asset Value

Net Asset Value per share, SEK Share Price, SEK

Net Cash/Debt (+/-)

SEKm

Net Profit/Loss (+/-)

Net Profit/Loss per Share (+/-), SEK

Change in Fair Value of Financial Assets Dividends Received

Dividend Paid Investments Divestments

30 Jun 2020

31 Mar 2020

31 Dec 2019

30 Jun 2019

89 577 322.50 245.00

64 925 234.72 164.35 -1 468

• 73 295

  89 049

• 264.98 322.97

• 228.60 241.00

Net Asset Value(SEK)

89.6bn

Change in NAV Q/Q

5 522

-930

-5 676

38%

Q2 2020

2019

Q2

H1 2020

H1 2019

FY 2019

One-Year TSR

24 643

5 961

16 271

19 703

21 572

89.03

21.60

58.78

71.38

78.02

31%

24 273

5 135

15 977

18 937

18 972

516 -

889

516 -

889

2 907

Five-Year Annualised TSR

-1 169

-1 169

-18 819

400

1 367

803

2 415

• 4 566

  9%

  6 928

  22

  6 929

  59

• 6 186

CHIEF EXECUTIVE'S REVIEW

Dear Shareholders,with a large part of the world in lockdown, the digitalisation of vital consumer services has taken a giant leap forward. We are proud to note that, in the midst of the uncertainty and suffering created by the Covid-19 pandemic, our digitally-enabled companies are responding to the challenge and providing va-luable services to consumers, validating our strategy. The Kinnevik team has been working closely with our companies to ensure that they come out on the other side, not only with even stronger customer propositions and market positions, but alsowith sound financials. During the quarter, we divested a small part of our stake in Zalando in order to strengthen our financial position and continue to rebalance ourportfolio in favour of a higher share of early growth companies. We remain on the lookout for the most promising investment opportunities in our focus sectors, and in June we invested in Cityblock, a US value-based care provider for urban popula-tions with complex health needs, adding another exciting company and dimensionto our healthcare portfolio.

Kinnevik's second quarter results

Our net asset value amounted toSEK 89.6bn, or SEK 323 per share,at the end of the second quarter.

This is an increase of SEK 24.7bn or38 percent compared to the end of the first quarter,fuelled by multiple expansion in certain sectors, a significant rebound in Zalando's share price andcontinued strong performance in our healthcareportfolio overall, particularly by Livongo. The conti-nued effects of Covid-19 contributed negatively tothe valuations of our travel and emerging marketscompanies.

With the divestment of a 4.4 percent sharehol-ding in Zalando, our balance sheet was strengthe-ned with SEK 6.7bn of net proceeds, and at quarter-end, we had a net cash position of SEK 5.5bn,corresponding to 6.6 percent of portfolio value.Accordingly, Kinnevik's Board of Directors has re-solved to propose an extraordinary cash distribu-tion of SEK 7 per share, equivalent to SEK 1.9bn inaggregate, at an Extraordinary General Meeting ofshareholders on 19 August 2020. This extraordinarydividend is driven by our ambition to remain leanand financially disciplined, and to honour our com-mitment to our shareholder remuneration policy.

Cityblock - delivering care to underservedurban communities

We have invested SEK 235m for an 8 percent ow-nership stake in Cityblock, a US value-based care provider focused on underserved urban popula-tions with complex health needs. The investment

Our innovative and tech-enabled healthcare busi-nesses, providing better patient experiences, now comprise 17 per-cent of Kinnevik's portfolio, compa-red to 3 percent at the end of the second quarter last year, and yet we are only at the beginning of our companies' growth trajectories.

is stemming from our conviction in the transforma-tive power of value-based tech-enabled care asan investment theme, and draws on many of ourlearnings from our VillageMD investment. Cityblockwas founded on the premise that individuals whoreceive suboptimal medical care and face socialchallenges, require care beyond the traditionaldoctor's office. We believe this is a great comple-ment to Kinnevik's healthcare portfolio, and we lookforward to working with the company to continuebuilding its digitally-enabled care platform. Youwill find a more in-depth description of Cityblockand an interview with the founders, Dr. Toyin Ajayiand Iyah Romm, on pages 11 and 12 in this report.

Healthcare portfolio gains weight

Our innovative and tech-enabled healthcare bu-sinesses, providing better patient experiences,now comprise 17 percent of Kinnevik's portfolio, compared to 3 percent at the end of the secondquarter last year, and yet we are only at the begin-ning of our companies' growth trajectories.

Livongo is the main driver of value in the healt-hcare portfolio in the quarter. The company is pro-ving to be very well positioned to support someof the most vulnerable populations during theCovid-19 pandemic. Its share price appreciatedby almost 150 percent in the second quarter of2020, and in the first quarter, revenues grew bymore than 100 percent and the number of diabetesmembers more than doubled compared to thesame period last year.

In the second quarter, we invested a furtherUSD 8m in Cedar, underlining our conviction in

CHIEF EXECUTIVE'S REVIEW

Cedar's vision to deliver exceptional patient finan-cial experiences and transform the US healthcarebilling space. Cedar, with its founders Florian Ottoand Arel Lidow, has impressed us, their clients andtheir customers with how it has reduced friction andcost in the complex, and often fraught, financialengagement sector.

After quarter-end in early July, we announcedthe investment of a further USD 25m in VillageMD,a leading national provider of primary care in the

US, as part of a USD 275m equity funding led by the company's existing investor Walgreens Boots

Alliance ("WBA"). Including this funding round,WBA will in total invest USD 1bn into VillageMDover the next three years to finance an acceleratedroll-out of VillageMD clinics, paving the way forthe creation of a truly innovative model at scale,combining the best of VillageMD's care deliverywith WBA's pharmacy capabilities.

Consumer services solving everyday needsDriven by the accelerated digitalisation and shift in consumer behaviour, we see strong traction in our e-Commerce companies. On the back of thesurge in demand, MatHem decided to expand itswarehouse footprint and capacity with the openingof a second warehouse in Stockholm in the nextmonth. The entire MatHem team has come togetherto meet the elevated demand while maintaining a high service level, something that has not gone unnoticed by consumers. However, satisfying thesurge in demand creates efficiency challenges overthe short term, which has led to elevated fulfilmentcosts negatively impacting margins.

To cater to the surge in demand during the firstweeks of March, Kolonial.no quickly doubled itscapacity by adding a third shift on the picking lineas well as launching an entirely new product - pre-packed food boxes - in under 48 hours, completewith its own operating line and front-end web. Theeffects of the pandemic on society has truly acted as a push factor getting people to try the service,and Kolonial.no is now directing significant effortsinto retaining the new shoppers on its platform.

Driving sustainability in Kinnevik and inour companies

Kinnevik's strategy for sustainable business deve-lopment is based on Agenda 2030 and the UN's Global Goals. In May, we established climate tar-gets to reduce our greenhouse gas emissions inline with the Paris Agreement. By implementingclimate targets at Kinnevik, we hope to catalyseaction and drive change within our portfolio toensure that our companies remain competitive

1.9bn

Kinnevik's Board of Directors propose an extraordinary cash distribution of SEK 1.9bn in aggregate

Driven by the ac-celerated digi-talisation of and shift in consumer behaviour, we see strong traction in our e-Commerce companies

and relevant to their customers. You can read moreabout our targets on page 16.

Taking the lead, Zalando became the first onlineplatform worldwide to set science-based targetsand have them approved by the Science BasedTargets initiative. We are also working closely withour early growth companies to help them measuretheir carbon footprint and to implement a strategyto reduce their emissions.

Our Diversity and Inclusion framework is another important pillar of our sustainability agenda. Havingset targets and measurable KPIs a year ago, wehave made significant progress during the year.

The Kinnevik management team is now 43 percentfemale, and we have incorporated diversity andinclusion aspects into all stages of the investmentprocess, from the sourcing and assessment of newbusiness opportunities, to the ongoing develop-ment of our companies. The team is continuously working to diversify and broaden the pipeline ofpotential investments, work that is bearing fruit.

We have delivered on our promise to increase theshare of female founded or led companies in whichwe invest, and this also confirms our convictionthat setting clear KPIs and targets is the best way to ensure progress.

Concluding Remarks

It has been a unique first half of the year in manyways, placing an unparalleled strain on our society,our companies and our employees. I am proudof how the team and all our companies have ap-proached the challenges and continued to delivergreat customer experiences. With the hope thatyou will stay safe, I wish you all a good summer!

Georgi Ganev,

CEO of Kinnevik

KINNEVIK IN SUMMARY

Kinnevik is an industry focused investment companywith an entrepreneurial spirit.

Our purpose is to make people's lives better by providing more and better choice. In partnership with talented founders and management teams we build challenger businesses that use disruptive technology to address material, everyday consumer needs. As active owners, we believe in delivering both shareholder and social value by building long-term sustainable businesses that contribute positively to society. We invest in Europe, with a focus on the Nordics, the US, and selectively in other markets. Kinnevik was founded in 1936 by the Stenbeck, Klingspor and von Horn families. Kinnevik's shares are listed on Nasdaq Stockholm's list for large cap companies under the ticker codes KINV A and KINV B.

Note:The annualised total shareholder return includes reinvested dividends.

During Q4 2019, Kinnevik distributed its entire SEK 16.5bn shareholding in Millicom to its shareholders.