Komplett : Q3 2023 Report

Q3

23

REPORT FOR THIRD QUARTER 2023

Q3

23

THIRD QUARTER 2023

KOMPLETT ASA

CONTENTS

HIGHLIGHTS

KEY FIGURES CEO COMMENTS FINANCIAL REVIEW SEGMENT REVIEW

FINANCIAL STATEMENTS AND NOTES APPENDIX

PAGE 2

| HIGHLIGHTS

• Top-linegrowth of 2.4% supported by excellent customer ratings and strong brands
• 1 .7 pp gross margin expansion with central sourcing efforts further progressed
• Clear EBIT improvement in a difficult market, supported by good cost control
• Healthy stock situation, good service levels and strong position into peak season
• Additional measures being executed to mitigate continued challenging markets
• On track to improve profitability and pave the way for future growth
• Financial situation further improved with solid liquidity

REVENUE PER SEGMENT

Distribution

21%

B2C

B2B	67%

12%

REVENUE PER COUNTRY

Denmark

1%

Sweden		Norway
51%
48%

REVENUE PER CHANNEL

In store shopping

25%

Click and	E-commerce
72%
collect

3%

Q3

23

THIRD 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	Q3 2023	Q3 2022	YTD 2023	YTD 20222	FY 20222
Operating revenue	3 874	3 784	11 127	9 961	14 618
Growth (%)	2.4%	39.4%	11.7%	28.5%	32.4%
Gross profit ¹	524	447	1 547	1 196	1 794
Gross margin (%) ¹	13.5%	11.8%	13.9%	12.0%	12.3%
Operating expenses (ex dep) (adj.) ¹	(403)	(383)	(1 250)	(1 000)	(1 451)
Depreciation and amortisation	(82)	(74)	(249)	(180)	(256)
Total operating expenses (adj.) ¹	(485)	(457)	(1 499)	(1 180)	(1 707)
Operating cost percentage ¹	(12.5%)	(12.1%)	(13.5%)	(11.8%)	(11.7%)
EBIT (adj.) ¹	39	(10)	48	17	87
EBIT margin (adj.) (%) ¹	1.0%	(0.3%)	0.4%	0.2%	0.6%
One-off costs	(13)	(4)	(29)	(60)	(80)
EBIT	26	(14)	19	(43)	6
Net financials	(41)	(29)	(125)	(63)	(104)
Profit before tax from continued operations	(15)	(43)	(106)	(106)	(98)
Profit for the period	(21)	(29)	(91)	(91)	(32)
Investments (capex)	39	29	128	101	177
Net Interest bearing debt ¹	1 187	2 853	1 187	2 853	1 434
Operating free cash flow ¹	131	295	342	309	721

1. Alternative performance measure (APMs)
2. NetOnNet was consolidated into Komplett's financial statement as of 1 April 2022

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
			3 784	3 874				13.5%			12.7%	12.1% 12.5%
3 618	3 570 3 634					12.8%
			12.4%
												11.3%
						11.8%		11.8%
2 606								10.4%				37			39
														9
															-10	0	-10
Q1		Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2		Q3	Q4

Q3

23

THIRD QUARTER 2023

KOMPLETT ASA

| CEO COMMENTS

The macroeconomic environment experienced throughout the first nine months of the year has been tough, with reduced purchasing power for consumers and a challenging cost environment. Across the group, we are continuing our efforts to counter these externally driven challenges. We continue funnelling our efforts in areas of the business where we can make positive and long-lasting changes, and at the time of writing this letter, I am pleased to say that we are already seeing positive results from our initiatives.

CONTENTS

HIGHLIGHTS

KEY FIGURES

CEO COMMENTS

FINANCIAL REVIEW

SEGMENT REVIEW

FINANCIAL STATEMENTS AND NOTES APPENDIX

PAGE 4

Despite market decline in all our key geographies, we have succeeded in growing our top line and in parallel continued to improve our gross margin versus last year. Our B2C operations in Norway continued to deliver double-digit growth - now also through positive volume growth. In the B2B segment we have shown good progress and the Distribution business has only seen a slight decrease in revenue. While we have invested in brand visibility to pave the way for growth, we have simultaneously kept good cost control and improved our financial headroom.

We are making good progress in market share development across the group. Customer ratings consistently demonstrate that we have the most satisfied and loyal customers thanks to best-in-class delivery service and a seamless logistical set-up. Looking ahead, and with the aim to remain the customers' first choice, we are exploring options to improve the online customer journey further and to improve store performance in NetOnNet and Webhallen.

Earlier this year, we successfully launched a new marketing concept for the Komplett brand in Norway. We also recently launched a similar initiative for NetOnNet in Sweden - and Norway will follow. These campaigns emphasise our high service levels and seamless deliveries and

contribute to keeping our brands "top of mind" amongst consumers.

We have already executed a successful "back to school" campaign, and moving forward, one of our key actions will be to deliver a strong promotional programme during the peak season. Along with our campaign strategy, we have built up a healthy stock composition, enabling us to provide market-leading service levels during the festive season.

Operational excellence and profitability remain a top priority. A central commercial team is now in place and is being combined with a new local structure. Additionally, our new pricing tool is increasingly becoming integrated into the daily work across the entire group, ensuring more effective pricing strategies.

Along with building brand recognition and service levels, we have remained fully dedicated to improving our cost base, and we are on track with the planned sourcing initiatives. We are also looking at ways to improve cost efficiency by increasing the level of automation across more processes.

This autumn, we have started the search for a new managing director for NetOnNet, as Susanne

Holmström has decided to step down. Until her successor is in place, I will take on the role as interim leader for NetOnNet as of 1 November. As we speak, NetOnNet is growing its footprint in Norway with store expansions at Alnabru and in Stavanger, and I am excited to work more closely with the NetOnNet concept in the near future.

We are currently in the process of refining our strategic direction, which implies that we will continue to nurture our strong local brands and the local autonomy of our individual business units while utilising our scale benefits to maintain an industry-leading cost base and sharing best practices and central resources across the group. Our market position is increasingly gaining a solid foothold, and our key brands, Kom- plett, NetOnNet and Webhallen, are on track for future growth.

Yours sincerely

Jaan Ivar Semlitsch

President & CEO

Q3

23

THIRD QUARTER 2023

KOMPLETT ASA

| QUARTERLY SUMMARY

The macroeconomic environment and the consumer electronics retail market remained challenging through the third quarter, although again with regional differences. The Komplett Group has managed to lift its performance markedly and improved operating results (EBIT adj.) by NOK 49 million on modest revenue growth.

CONTENTS

HIGHLIGHTS

KEY FIGURES

CEO COMMENTS

FINANCIAL REVIEW

SEGMENT REVIEW

FINANCIAL STATEMENTS AND NOTES APPENDIX

The group's operations in Norway made good progress, while the Swedish market remained more unpredictable and challenging, negatively affecting sales growth. All the group's brands are maintaining or extending market shares while showing continued high customer loyalty and satisfaction, underlined by top-tier delivery and logistical services.

The group has continued to improve its gross margin, reflecting both a more stable pricing environment as well as improved pricing strategies and initiatives, while upholding careful expansion of the brands through investments in marketing and select outlets.

The synergy program has continued to deliver broadly in accordance with expectations, despite market headwinds. In addition, central sourcing and commercial efforts are further

evolving; supported by recent recruitments. High cost inflation continues to impact the cost base, which is still being managed with the aim of maintaining the industry leading cost position; in the short term through targeted cost reduction measures and long term through continued investment in technology as well as automation.

At the end of September, the company's inventory position remained healthy, enabling good availability and high service levels going into the critical peak season in the coming quarter.

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 for the year-to-date period is provided in Appendix 1 to this report.

PAGE 5

| FINANCIAL REVIEW

PROFIT AND LOSS

Total operating revenue increased by 2.4 per cent in the third quarter of 2023, from NOK 3 784 million to NOK 3 874 million. Adjusted for currency translation effects, like for like revenue growth was 1.1 per cent. Sales were supported by select marketing investments in Norway and Sweden, and an improved inventory position, with a par-

ticularly favourable effect in Norway. The underlying market environment remained challenging.

Cost of goods sold was NOK 3 350 million in the third quarter, compared with NOK 3 338 million in the same period last year. The synergy program is progressing largely as planned and combined with strong supplier relations, contributes

to mitigate many of the negative effects from higher input costs driven by cost inflation and currency effects compared to last year.

These sourcing efforts together with improved pricing strategies and initiatives, led to a 17 per cent increase in gross profit for the period from NOK 447 million last year to NOK 524 million in

Q3

23

THIRD QUARTER 2023

KOMPLETT ASA

CONTENTS

HIGHLIGHTS

KEY FIGURES

CEO COMMENTS

FINANCIAL REVIEW

SEGMENT REVIEW

FINANCIAL STATEMENTS AND NOTES APPENDIX

PAGE 6

2023. The industry as well as the group also benefited from healthier inventory positions and hence less price pressure compared with the prior-year period.

The gross margin continued to improve and reached 13.5 per cent in the third quarter, corresponding to an increase of 1.7 percentage points from 11.8 per cent in the same period of 2022.

Operating expenses, excluding one-off costs, depreciation and amortisation, totalled NOK 403 million in the third quarter, compared with NOK 383 million in the same period of 2022. The increase from the prior-year period is mainly driven by cost inflation, and partly offset by cost reduction measures. For the group's Swedish operations, further cost savings are being executed given the more challenging market and competitive environment.

Depreciation and amortisation expenses were NOK 82 million, of which NOK 12 million were related to the amortisation of acquired customer value. Depreciation and amortisation in the quarter were broadly in line with the preceding quarters in 2023, and the increase from NOK 74 million in the third quarter last year was primarily driven by higher depreciations on right-of-useassets.

Adjusted EBIT amounted to NOK 39 million in the third quarter of 2023, compared with negative NOK 10 million in the third quarter of 2022, representing an increase of NOK 49 million compared with last year. The improvement was mainly driven by expanded gross margins. This resulted in an adjusted EBIT margin of 1.0 per cent in the third quarter, compared with negative 0.3 per cent in the same quarter of last year.

One-offcosts totalled NOK 13 million in the quarter and were related to organisational changes and restructuring in some of the group's brands and operations.

The operating result (EBIT) for the third quarter amounted to NOK 26 million, compared with a loss of NOK 14 million in the same period of 2022.

Net financial expenses totalled NOK 41 million, compared with NOK 29 million in the same period last year. Significantly higher interest rates, also affecting the included factoring costs, contributed materially to the increase in financial items compared to last year despite the reduced debt levels. The costs in the quarter include effects relating to the move into a new shared group cash pool as well as certain other elements of exceptional nature.

Tax expense was NOK 6 million, and contains in-period taxes, adjustments from prior reporting periods and tax effects from permanent differences. A tax income of NOK 8 million was booked in the same period last year.

Loss for the period came in at NOK 21 million, compared with a net loss from continuing operations of NOK 35 million in the same period last year. In the third quarter of 2022, profit from discontinued operations was NOK 6 million net of tax related to a repayment of a supplier guarantee from the bankruptcy estate of the former subsidiary JES Computer GmbH (Comtech Group), resulting in a loss for the period of NOK 29 million.

FINANCIAL POSITION AND LIQUIDITY

Consolidated financial position

Non-currentassets amounted to NOK 4 592 million at the end of the third quarter of 2023, compared with NOK 4 559 million at 30 September 2022. The increase from the previous year was mainly related to an increase in other intangible assets, driven by software investments, mainly in the new SAP ERP solution as well as eCommerce infrastructure, which both successfully went live in the Komplett brand in October.

Current assets amounted to NOK 3 078 million at the end of the third quarter of this year, compared with NOK 3 252 million in the same period last year. The group's inventory position is considered healthy, and at 30 September 2023, inventories represented NOK 2 108 million, compared with NOK 2 101 million one year earlier; reflecting higher availability and service levels.

Cash and cash equivalents totalled NOK 168 million at the end of the quarter versus NOK 85 million at the end of September last year.

Equity amounted to NOK 3 519 million at the end of the third quarter of 2023, compared with NOK 2 542 million in the same period last year. The increase in equity was mainly driven by the issuance of 35 242 424 new shares to SIBA Invest as part of the settlement of the acquisition of NetOnNet, and the issuance of 67 843 582 new shares in connection with the private placement in 2022 and subsequent offering in Janu- ary 2023. Following the issuance of these shares, the company's share capital is NOK 70 136 464.40, divided into 175 341 161 shares, each with a nominal value of NOK 0.40.

This yields an equity ratio of 45.9 per cent at the end of the third quarter, compared with 32.5 per cent in the same period of 2022.

Q3

23

THIRD QUARTER 2023

KOMPLETT ASA

CONTENTS

HIGHLIGHTS

KEY FIGURES

CEO COMMENTS

FINANCIAL REVIEW

SEGMENT REVIEW

FINANCIAL STATEMENTS AND NOTES APPENDIX

PAGE 7

Total liabilities amounted to NOK 4 151 million at the end of the third quarter of 2023, compared with NOK 5 270 million in the same period last year. The reduction is related to repayment of debt and refinancing of the group's credit facil- ities. The Swedish subsidiaries have partly utilised the extension of the Swedish tax deferred payment rules with a total of NOK 427 million, which are shown as part of other current lia- bilities. This temporary tax deferral has been extended to September 2024.

Total equity and liabilities amounted to NOK 7 670 million at the end of the third quarter, compared with NOK 7 812 million in the same period

last year.

LIQUIDITY

The group's total credit facilities include a revolving credit facility in the amount of NOK 1 300 mil- lion, a credit facility of SEK 100 million, and an overdraft facility in the amount of NOK 400 mil- lion. The latter may be increased to NOK 500 million in the fourth quarter of each year. Currently the overdraft facility amount is kept at NOK 400 million.

At 30 September 2023, NOK 16 million of the credit facility and NOK 800 million of the revolving credit facility were utilised. Including available cash of NOK 168 million, the liquidity reserve was hence NOK 1 149 million at the end of the third quarter, compared with NOK 969 million one year earlier. The liquidity reserve continues to be positively affected by the utilisation of the Swedish tax deferment scheme that occurred in the previous quarter.

Net interest-bearing debt at 30 September was NOK 649 million, excluding IFRS 16, and NOK 1 187 million including IFRS 16. The leverage ratio, defined as NIBD / LTM EBITDA (adjusted for certain exceptional items), was 2.6x at the close of the third quarter of 2023.

CASH FLOW

Operating activities generated a net cash flow of NOK 186 million in the third quarter, compared with NOK 380 million in the same period last year. Operating cash flow in the current quarter was positively affected by an increase in trade payables of NOK 276 million, countered by an increase in inventory of NOK 212 million. The cash flow from same period last year was highly affected by the ramp-up of the factoring agreement which

then had a positive effect of around NOK 200 mil- lion.

Cash flow used in investing activities was NOK 39 million, which were invested in property, plant and equipment, including ongoing improvements of the IT infrastructure. The comparable figure from last year was NOK 29 million.

Cash flow used in financing activities was NOK 321 million during the third quarter, compared- with a cash inflow of NOK 314 million in the same quarter prior year. The changes from last year were primarily related to refinancing of the group's debt facilities.

EVENTS AFTER QUARTER-END

After the end of the reporting period, a restructuring plan in the subsidiary Webhallen Sverige AB has been approved and communicated. The plan involves a decision to close five Webhallen stores in Sweden by the end of the first quarter of 2024. Provision for this restructuring will be recognised in the fourth quarter of 2023.

In October, Komplett Services successfully transitioned to a new ERP system (SAP 4/Hana) and at the same time introduced a tailored integration and service layer. Additionally, significant portions of the seven webstores have had an overhaul to synchronise with the more standardised business logic prevalent in the back-office systems. The transition to a new IT platform was executed without significant disruption to the customers and the IT platform not only enables Komplett Services to enhance the customer experience, introduce cutting-edge services and streamline internal operations, but also accelerates their pace of development and innovation.

Q3

23

THIRD QUARTER 2023

KOMPLETT ASA

CONTENTS

HIGHLIGHTS

KEY FIGURES

CEO COMMENTS

FINANCIAL REVIEW

SEGMENT REVIEW

FINANCIAL STATEMENTS AND NOTES APPENDIX

PAGE 8

| RISKS AND UNCERTAINTIES

Komplett Group is subject to several risks, including market and competition risks, operational and financial risks, such as currency, interest, credit, and liquidity risks, as well as IT security risks. The board and executive management are continuously monitoring the group's risk exposure, and the group strives to take an active approach to risk management and internal control processes. Below is a summary of the key risks for the group over the coming period.

There is a risk that consumer sentiment and spending expectations remain at submersed levels due to macroeconomic uncertainty, which in turn may impact demand for capital intensive goods, such as electronics.

Market headwinds may lead to inventory build-up, resulting in increased price pressure in the market. Temporary fluctuations in the long-term growth trajectory of online retail trade may impact the group's performance in the short term.

The group operates in an intensely competitive industry, and the entry of new market players, regulatory changes or changes in market dynamics may impact its competitive position.

The current geopolitical situation may also impact the costs and availability of raw materials and other input factors. Due to its online-first business model, the group is less exposed to cost inflation than many of its peers, but its cost base is nevertheless subject to market inflation and currency effects.

As the group operates online, it is vulnerable to hacking and cybercrimes on critical applications and its websites. Although the group has systems in place to identify and block external attacks, the group will likely be subject to new and smarter attempts at unauthorised access that expose a risk to the business.

The group's balance sheet carries a substantial amount of intangible assets, including goodwill, which are subject to risk of impairment, also relative to industry valuations, and other factors that may contribute to a loss in value.

Change in market circumstances may further alter the phasing of the expansion of supply chain facilities and IT systems, which potentially might require adjustments to the capitalised development costs of these initiatives.

Risks and uncertainties must be considered when looking at the outlook comments below.

Reference is made to the prospectus from the subsequent offering dated 4 January 2023, section 2, and note 4 in the company's Annual and Sustainability Report for 2022 for additional explanations regarding risks and uncertainties.

Q3

23

THIRD QUARTER 2023

KOMPLETT ASA

CONTENTS

HIGHLIGHTS

KEY FIGURES

CEO COMMENTS

FINANCIAL REVIEW

SEGMENT REVIEW

FINANCIAL STATEMENTS AND NOTES APPENDIX

PAGE 9

| SUMMARY AND OUTLOOK

The consumer electronics retail market continued to be challenging in the third quarter. The demand environment is likely to remain weak in the near term, despite some indications of a potentially easing macroeconomic conditions for Nordic households in the coming year.

Across the Komplett Group, efforts continue to counter these externally driven challenges, and over the recent months, the group has demonstrated marked progress across all key financial indicators combined with a continued solid liqu- idity.

In the third quarter, the group achieved moderate top line growth underpinned by first-rate customer ratings and strong brand positions. Sourcing and other margin-related efforts have progressed further, which contributed to a con-

tinued positive gross margin trend for the group. Strong margins combined with good cost control resulted in a significant EBIT improvement versus the prior-year period in a difficult market.

Moving into the peak season, one of the group's key actions will be to deliver a strong promotional programme. The Komplett Group has built up a healthy stock composition, enabling the group to provide high and materially improved service levels into the coming months.

Looking ahead, operational excellence and profitability remain a top priority. A central commercial team is now in place and is being combined with a new local set up. Along with building brand recognition and service levels, the group remains fully dedicated to improving its cost base through further cost efficiency gains.

The Komplett Group is currently in the process of refining its strategic direction which will be presented at a Capital Markets Day to be held on 29 February 2024. The strength and autonomy of the group's local brands will remain at the core of the group's strategy, while utilising the scale benefits as a leading player to maintain an industry -leading cost base and sharing best practices and central resources across the group.

The Komplett Group has made good progress on key financial metrics, which has equipped the group with a more resilient financial position. Looking into the coming quarters, the group is well-positioned with best-in-class customer ratings, a well-managed cost base and strong brand positions as well as having further potential to benefit from a normalisation of its core markets.

Q3

23

THIRD QUARTER 2023

| SEGMENT REVIEW

| BUSINESS TO CONSUMER (B2C)

• Strong EBIT improvement driven by gross margin progress and good cost control

KOMPLETT ASA

CONTENTS

HIGHLIGHTS

KEY FIGURES

CEO COMMENTS

FINANCIAL REVIEW

SEGMENT REVIEW

FINANCIAL STATEMENTS AND NOTES APPENDIX

PAGE 10

REVENUE

Operating revenue for the B2C segment increased to NOK 2 594 million, compared with NOK 2 528 million for the same period in 2022. Adjusted for currency translation effects, revenue increased by 0.7 per cent year-over-year in constant currency terms. The demand environment in consumer electronics continued to be challenging, especially for the Swedish enti- ties. In Norway, the group made good progress

on the back of improved product availability compared to last year, recovered activity in the gaming segment as well as selective brand and demand investments.

In local currency, the operations in Norway had a revenue growth of 10.8 per cent, and a decline of

3.4 per cent in Sweden. Denmark, which repre- sents approximately 2.1 per cent of the B2C rev- enue, had an increase of 13.9 per cent.

GROSS PROFIT

The overall gross profit for the B2C segment amounted to NOK 412 million in the third quar- ter, compared with NOK 336 million in the same quarter in 2022. The improvement was driven by successful sourcing initiatives and improved pricing strategies. In addition, the inventory situation was healthier compared with the prior-year period, with less associated price pressure both for the group and in the industry.

Gross margin ended at 15.9 per cent, compared with 13.3 per cent in the same quarter of 2022.

OPERATING EXPENSES

B2C operating expenses were NOK 377 million in the third quarter, compared with NOK 359 million for the same period in 2022. The increase is a result of overall cost inflation, strategic marketing investments and currency effects, and was partly offset by cost savings.

As a result, the operating cost percentage increased to 14.5 per cent, from 14.2 per cent in the same quarter of last year.

EBIT

EBIT in the third quarter amounted to NOK 35 mil- lion, compared with negative NOK 24 million in the third quarter of 2022. For the third quarter, the EBIT margin came in at 1.3 per cent compared with a margin of negative 0.9 per cent in the prior -year period.