Komplett : Q2 2023 Report

Q2

23

REPORT FOR THE FIRST HALF/ SECOND QUARTER 2023

Q2

23

FIRST HALF 2023 SECOND QUARTER 2023

KOMPLETT ASA

CONTENTS

HIGHLIGHTS

KEY FIGURES CEO COMMENTS FINANCIAL REVIEW SEGMENT REVIEW STATEMENT FROM THE BOARD FINANCIAL STATEMENTS AND NOTES APPENDIX

PAGE 2

| HIGHLIGHTS

• Soft retail market anticipated to continue for the remainder of 2023, but improved EBIT from Q2 2022 to Q2 2023
• Sales benefiting from careful investments in brand building and product availability
• Gross margin progress supported by active management in a healthier price environment
• Synergies extracted according to plan, but cost base is impacted by higher inflation
• Sound inventory position contributes to improved working capital and profitability
• Komplett Group remains well-positioned to capitalise on future market recovery

REVENUE PER SEGMENT

Distribution

19%

B2B		B2C
71%
10%

REVENUE PER COUNTRY

Denmark

2%

Sweden		Norway
45%
53%

REVENUE PER CHANNEL

In store shopping

25%

Click and	E-commerce
71%
collect

4%

Q2

23

FIRST HALF 2023 SECOND 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	Q2 2023	Q2 2022	YTD 2023	YTD 2022	FY 2022
Operating revenue	3 634	3 570	7 253	6 177	14 618
Growth (%)	1.8%	48.2%	17.4%	22.7%	32.4%
Gross profit ¹	512	441	1 023	750	1 794
Gross margin (%) ¹	14.1%	12.4%	14.1%	12.1%	12.3%
Operating expenses (ex dep) (adj.) ¹	(426)	(377)	(847)	(617)	(1 451)
Depreciation and amortisation	(86)	(75)	(167)	(106)	(256)
Total operating expenses (adj.) ¹	(512)	(452)	(1 014)	(723)	(1 707)
Operating cost percentage ¹	(14.1%)	(12.7%)	(14.0%)	(11.7%)	(11.7%)
EBIT (adj.) ¹	0	(10)	9	27	87
EBIT margin (adj.) (%) ¹	0.0%	(0.3%)	0.1%	0.4%	0.6%
One-off costs	(3)	(38)	(16)	(56)	(80)
EBIT	(3)	(49)	(7)	(29)	6
Net financials	(36)	(25)	(84)	(34)	(104)
Profit before tax from continued operations	(38)	(74)	(91)	(63)	(98)
Profit for the period	(27)	(69)	(70)	(62)	(32)
Investments (capex)	40	42	89	72	177
Net Interest bearing debt ¹	1 269	3 171	1 269	3 171	1 434
Operating free cash flow ¹	158	217	215	13	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%	14.1%			13.9%	14.1%							70
3 618	3 570 3 634	3 784					12.8%		12.7%	12.1%
			12.4%
											11.3%
					11.8%		11.8%
2 606							10.4%				37
													9
														-10	0	-10
Q1		Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2		Q3	Q4

Q2

23

FIRST HALF 2023 SECOND QUARTER 2023

KOMPLETT ASA

| CEO COMMENTS

During the course of the first six months of 2023, we have experienced a soft retail market, and we anticipate that the market will remain challenging for the remainder of 2023. In general, consumers are more cautious with their spending, while in recent months this impact has been most visible in Sweden.

CONTENTS

HIGHLIGHTS

KEY FIGURES

CEO COMMENTS

FINANCIAL REVIEW

SEGMENT REVIEW STATEMENT FROM THE BOARD FINANCIAL STATEMENTS AND NOTES APPENDIX

PAGE 4

That being said, we continue to actively counter these externally driven challenges. We have finalised favourable terms with several key sup- pliers, which will continue showing effects in the coming quarters. In parallel, we have optimised our inventory position to ensure a healthy and competitive product range as well as good avail- ability.

We have also launched our new marketing campaign for the Komplett brand in Norway; a collection of advertisements across TV, billboards, and newspapers. This marketing campaign has increased the awareness of our high service levels and seamless deliveries, and assisted us in improving our market position. We are also working on plans to launch a new marketing concept for the NetOnNet brand in Norway and Sweden in the second half of this year.

In the quarter, we have continued to realise synergies across the group as we continue to use our benefits of scale as a leading Nordic player. We have come a long way in extracting supplier synergies and are on track to realise the full potential of the combination with NetOnNet.

Moving forward, part of our focus will be on pri- oritising plans to ensure successful roll-out of campaigns ahead of peak seasons, such as Back-to-School and Black Week. In parallel, we are mindful about maintaining close control of our cost base.

Last quarter, we also highlighted the potential of our private label products, which offer our customers a broader product assortment in selected categories. As an example, our private label TV range is very successful in Sweden and gaining share with a healthy margin. Private label continues to grow, and we see more potential in this segment, especially in Norway.

As of the 1st of May, our new top management team (KL) in Komplett Group is up and running, and from 1 June the Komplett Services management team in Sandefjord has been appointed and they are off to a good start. There is no question that we now have a solid team to steer the group in the right direction.

Although Komplett Group is facing a tough market in 2023, the group is well positioned for the medium to long term on several dimensions, which are not easy to replicate in the short term for competitors:

• Superior customer satisfaction ratings
• Unparalleled customer service response time
• Best in class same and next day delivery, and seamless logistical set-up
• Attractive synergies between the B2C and the B2B business
• Industry-leadingcost position
• Untapped potential in core and adjacent categories

As we continue our journey into the next quarters and years, we will keep a close eye to these competitive advantages and utilise them commercially in all aspects to both deliver excellent customer experience and to drive profitable growth for our shareholders.

Yours sincerely

Jaan Ivar Semlitsch

President & CEO

Q2

23

FIRST HALF 2023 SECOND QUARTER 2023

| QUARTERLY SUMMARY

The overall market development from the first quarter continued into the second quarter, with a soft demand in retail and low consumer sentiment being observed in all key markets.

KOMPLETT ASA

CONTENTS

HIGHLIGHTS

KEY FIGURES

CEO COMMENTS

FINANCIAL REVIEW

SEGMENT REVIEW STATEMENT FROM THE BOARD FINANCIAL STATEMENTS AND NOTES APPENDIX

Despite market challenges, the group's operations in Norway made good progress, both in terms of revenue growth and improved profit- ability, supported by selective investments in both marketing and stock availability. Total revenue for the group amounted to NOK 3 634 mil- lion, compared with NOK 3 570 million in the same period in 2022. The industry continued to benefit from an improved pricing environment against last year, which supported Komplett Group in sustaining its positive trend in gross margins.

Operational efficiencies, cost savings and good cost control reduced the negative effects from continued high cost inflation and contributed to

an adjusted EBIT result for the group of NOK 0 million, compared with a negative NOK 10 million in the prior-year period.

At the end of the first half-year, the company's inventory position is healthy, ensuring a good product availability while contributing to lower working capital.

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. A specification of the financial impact from NetOnNet in Q1 2023 is provided in Appendix 1 to this report.

PAGE 5

| FINANCIAL REVIEW

PROFIT AND LOSS

Total operating revenue increased by 1.8 per cent in the second quarter of 2023, from NOK 3 570 million to NOK 3 634 million. Sales were supported by increased marketing investments and an improved inventory position, with particularly favourable effect in Norway. The increase from last year was however to a large extent driven by price increases and positive currency translation effects, which more than offset a net sales volume decline in a soft and challenging market overall.

For the first six months, revenue totalled NOK

7 253 million, compared with NOK 6 177 million in the same period in 2022. NetOnNet is consolidated for the entire half-year period this year, while comparable figures from 2022 only include NetOnNet as from the second quarter.

Cost of goods sold was NOK 3 122 million in the second quarter, compared with NOK 3 129 million in the same period last year. The synergy program is well underway and, combined with strong supplier relations, contributes to mitigate many of the negative effects from higher input costs driven by cost inflation and adverse FX effects compared to last year.

For the half-year period, cost of goods sold was NOK 6 230 million, compared with NOK 5 427 million in the same period in 2022, with NetOnNet included from 1 April 2022.

Gross profit for the second quarter increased from NOK 441 million last year to NOK 512 million in 2023. The gross margin continued to improve and reached 14.1 per cent in the second quarter, corresponding to an increase of 1.7 percentage points from 12.4 per cent in the same period of 2022. Despite market headwinds, the group has maintained improved margins reflecting both the more stable pricing environment as well