Komplett : Q1 2023 Report

Q1

23

REPORT FOR THE FIRST QUARTER 2023

Q1

23

FIRST QUARTER 2023

KOMPLETT ASA

CONTENTS

HIGHLIGHTS

KEY FIGURES CEO COMMENTS FINANCIAL REVIEW SEGMENT REVIEW

FINANCIAL STATEMENTS AND NOTES APPENDIX

PAGE 2

| HIGHLIGHTS

• Challenging and uncertain market environment persists, although showing some signs of improvements
• Continued revenue decline, yet improved gross margin across all business segments
• Inventory levels tuned to meet seasonality and market demand with sufficient service levels
• Synergy programme well underway and supported by good supplier relations and dynamics
• Strong cost control maintained in a highly inflationary environment
• Jaan Ivar Semlitsch was appointed as CEO of the group in February, and Thomas Røkke took up the position of group CFO in March

REVENUE PER SEGMENT

Distribution

20%

B2B		B2C
70%
10%

REVENUE PER COUNTRY

Denmark

2%

Sweden		Norway
48%
50%

REVENUE PER CHANNEL

In store shopping

23%

Click and		E-commerce
collect	73%
4%

Q1

23

FIRST QUARTER 2023

KOMPLETT ASA

CONTENTS

HIGHLIGHTS

KEY FIGURES

CEO COMMENTS FINANCIAL REVIEW SEGMENT REVIEW

FINANCIAL STATEMENTS AND NOTES APPENDIX

PAGE 3

| KEY FIGURES

Amounts in NOK million unless stated otherwise	Q1 2023	Q1 2022	FY 2022
Operating revenue	3 618	2 606	14 618
Growth (%)	38.8 %	(0.8%)	32.4 %
Gross profit ¹	511	308	1 794
Gross margin (%) ¹	14.1 %	11.8 %	12.3 %
Operating expenses (ex dep) (adj.) ¹	(420)	(240)	(1 451)
Depreciation and amortisation	(81)	(31)	(256)
Total operating expenses (adj.) ¹	(502)	(271)	(1 707)
Operating cost percentage ¹	(13.9%)	(10.4%)	(11.7%)
EBIT (adj.) ¹	9	37	87
EBIT margin (adj.) (%) ¹	0.3 %	1.4 %	0.6 %
One-off costs	(13)	(18)	(80)
EBIT	(4)	20	6
Net financials	(48)	(9)	(104)
Profit before tax from continued operations	(53)	11	(98)
Profit for the period	(43)	7	(32)
Investments (capex)	49	30	177
Net Interest bearing debt ¹	1 438	1 118	1 434
Operating free cash flow ¹	57	(204)	721

1. Alternative performance measure (APMs)

OPERATING REVENUE

GROSS MARGIN

OPERATING COST

EBIT (adj.)

NOK million

❚ 2022

❚ 2023

Per cent

❚ 2022

❚ 2023

Per cent

❚ 2022

❚ 2023

NOK million

❚ 2022

❚ 2023

4 657

14.1%

13.9%

70

3 618

3 570

3 784

12.8%

12.7%

12.1%

12.4%

11.3%

11.8%

11.8%

2 606

10.4%

37

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Q1

23

FIRST QUARTER 2023

KOMPLETT ASA

| CEO COMMENTS

On the 10th of February, I joined Komplett Group as the new CEO, and despite challenges in the past year, I see a clear and profitable route for Komplett going forward. While we continue to develop our strengths and market position, we will, in parallel, strive towards accelerating profitable organic growth.

CONTENTS

HIGHLIGHTS

KEY FIGURES

CEO COMMENTS

FINANCIAL REVIEW

SEGMENT REVIEW

FINANCIAL STATEMENTS AND NOTES APPENDIX

PAGE 4

Our core brands, Komplett, NetOnNet and Webhallen, have strong growth potential. They are well positioned amongst a large group

of consumers and have some of our indus- try's highest customer satisfaction ratings. Moreover, our cost position remains solid, with the lowest cost base in the retail indus- try. We are confident that improved sourcing terms, increased visibility and awareness of our brands, increased customer club participation and a more solid price position will nurture future growth and higher margins moving forward. Therefore, we will, as a group, scale benefits while maintaining local ownership and execution of our brands.

As of the 1st of May, I will also have a new and strong management team in place. The team is a result of external and internal hires, which points to the strong culture at Komplett. I would also like to acknowledge all my new colleagues who have made my transition into the new role both educational and enjoyable. I have had the opportunity to visit many of our locations in Norway and Sweden and I have been impressed by the engagement as well as the strong and proactive corporate culture I have met across the group.

Having closed off the first quarter of 2023, we see similar market conditions to that of 2022. Consumers are more careful with their spending, which is reflected in our revenues. We aligned our inventory position during Q1 to

meet seasonal variations and secure a good service level, and the composition remains healthy. We have strengthened our market position due to an attractive product range and a good service level. A positive pattern that has also followed into the first quarter is improved gross margin. This is a result of good supplier partnerships, solid price management and tac- tics, as well as a healthy inventory and a good service level. Many of the campaigns have also been balanced between price and margin. I am also pleased to have seen the strong performance of our private labels and see further potential for growing this business.

Furthermore, we are experiencing strong engagement from suppliers, which represents significant opportunities as a consequence of larger scale together with NetOnNet. To date, we are underway to reach the expected synergies. The initiatives made in 2022 to strengthen the group's financial position also mean that we are in a good position to support the organic growth opportunities we have identified based on our well-recognised brands, leading same-day delivery and last mile service and excellent shopping experi- ences.

Towards the end of the quarter, we released our Annual and Sustainability Report for 2022. Part of what is high on our agenda is the transition to a circular economy, as we note that consumers are increasingly concerned with

circular services and products. Sustainability is a crucial part of our long-term strategy and part of what we want to achieve can be summarised across our three sustainability pil- lars: increased durability and reusability of everything we sell, to record, document and limit our emissions and promote an inclusive work environment. I am proud of what we have achieved to date and look forward to working closely with the team to ensure we meet our targets in the future.

We have an exciting road ahead of us, and I look forward to sharing further thoughts and insights during the upcoming year.

Yours sincerely

Jaan Ivar Semlitsch

CEO Komplett ASA

Q1

23

FIRST QUARTER 2023

KOMPLETT ASA

CONTENTS

| QUARTERLY SUMMARY

As expected, the demand environment in consumer electronics continued to be challenging in the first quarter, with low consumer sentiment in all key markets. On the positive side, the pricing environment in the industry showed signs of improvement and Komplett continued its positive trend in gross margins.

During the quarter, Komplett continued to maintain a healthy inventory position and optimise its cost base. Supplier negotiations to realise synergies following the combination with NetOnNet are progressing as planned.

HIGHLIGHTS

KEY FIGURES

CEO COMMENTS

FINANCIAL REVIEW

SEGMENT REVIEW

FINANCIAL STATEMENTS AND NOTES APPENDIX

A STRENGTHENED BUSINESS IN A CHALLENGING DEMAND ENVIRONMENT

Total revenue for the group amounted to NOK 3 618 million compared with NOK 2 606 million in the same period in 2022. The revenue increase was driven by the acquisition of NetOnNet, which contributed NOK 1 289 million in revenues. Improved pricing conditions and a healthy inventory partly compensated for the shortfall in sales, and translated into gross margin progress across the group compared

with previous quarters. This combined with good cost control partly mitigated the negative effects from cost inflation and contributed to an adjusted EBIT result for the group of NOK 9 million, corresponding to an adjusted EBIT margin of 0.3 per cent.

NetOnNet was consolidated into Komplett's financial statements as of 1 April 2022 and has been reported as a part of the B2C segment as of Q2 2022.

PAGE 5

| FINANCIAL REVIEW

PROFIT AND LOSS

Total operating revenue increased by 38.8 per cent in the first quarter of 2023, from NOK 2 606 million to NOK 3 618 million. The increase was driven by the combination of Komplett and NetOnNet, where NetOnNet contributed NOK 1 289 million in revenue in the quarter. Excluding the contribution from NetOnNet, the group's revenue decreased by 10.6 per cent, mainly due to the challenging demand conditions for online retail across the group's key markets.

Cost of goods sold was NOK 3 108 million in the

first quarter, compared with NOK 2 298 million in the same period last year. The increase is driven by the inclusion of NetOnNet, which accounted for NOK 1 083 million.

Gross profit for the first quarter increased from NOK 308 million last year to NOK 511 million in 2023. NetOnNet represented NOK 206 million of the gross profit. Despite an underlying volume decline, the gross margin continued to improve and reached 14.1 per cent in the first quarter, corresponding to an increase from

11.8 per cent in the same period of 2022. The

progress was partly driven by the inclusion of NetOnNet, which has a business model with a higher gross margin. In addition, good supplier relations and an improved pricing environment contributed positively, with healthier inventory positions and less price pressure in the industry compared with the prior-year period.

Operating expenses, including depreciation and amortisation, but excluding one-off costs, totalled NOK 502 million in the first quarter, compared with NOK 271 million in the comparable period of 2022. The increase was mainly