Swedencare : Interim Report – Q1 2021

Swedencare AB (publ) | Org.nr 556470-3790

INTERIM REPORT Q1

January-March

2021

Note: The English version is a non-official translation of the original Swedish report.

* Our vision

is to establish ourselves as the leading

company within Pet Health Care on

all larger markets.

This is Swedencare

Swedencare develop, produce partly in own facilities, markets and sells premium products in the global and fast-growing market within animal health care for cats, dogs and horses. The company has an extensive portfolio with strong brands and products in most therapy areas, which includes veterinary exclusive brands and the ProDen PlaqueOff® brand for oral health for dogs and cats as the largest. Swedencare with its head office in Malmö and the company's products are currently sold in about 50 countries to veterinarians, pet stores and online via a distribution network containing twelve subsidiaries and an international network of retailers. Swedencare's sales have increased significantly over the last few years with strong margins and results.

Vision

Swedencare is established in all major markets as an innovative and reliable pet healthcare company. With a global presence and channel strategy as well as a broad portfolio of well-functioning Pet Health Care products for the most important therapy areas, it is our vision to establish ourselves as theleading company within Pet Health Care on all larger markets.

Financial objective

Swedencare´s financial objective is to achieve revenue of 2 MDSEK during 2025 with an EBIT margin more than 30%. The financial objective must be achieved primarily through organic growth.

Dividend

Swedencare will pay a dividend that considers the Group's earnings performance and the need for consolidation and investment, liquidity, and financial position. The goal is to pay a dividend

of 40 percent of profit after tax.

Mission

We care about improving the health and wellbeing of pets,

creating reassurance for the pet parents, worldwide and throughout life.

2

Acquisitions and strong organic growth set new records

Summary of the period

First quarter: January 1st - March 31st, 2021

Numbers in parentheses refers to outcomes during the corresponding period of the previous year.

• Net revenue amounted to 133 908 KSEK (37 726 KSEK), an increase of 255%
• Organic, currency-adjusted growth amounted to 25%
• Operating profit before depreciation (EBITDA) amounted to 35 780 KSEK (10 430 KSEK), corresponding to an increase of 243% and an EBITDA-margin of 26.7% (27.6%)
• Operating profit after depreciation (EBIT) amounted to 35 189 KSEK (10 714 KSEK), corresponding to an increase of 228% and an EBIT-margin of 26.2% (28.3%)
• Profit after tax amounted to 26 743 KSEK (8 441 KSEK)
• Earnings per share calculated on 21 075 598 shares 1.27 SEK (0.53 SEK)
• As of March 31st, 2021 cash amounted to 162 528 KSEK (44 092 KSEK)
• Costs in connection with the acquisition of Holden2 amounted to 911 KSEK. Adjusted for this, EBITDA amounted to 36 690 KSEK, corresponding to an EBITDA margin of 27.4% and EBIT to 36 099 KSEK corresponding to an EBIT margin of 26.9%

Significant events during the first quarter

• Canagans Dental dry food, which contains Swedencare's ProDen PlaqueOff®, has been approved by VOHC
• Swedencare AB (publ) has completed the acquisition of Holden2 and part of the purchase price is settled with a non-cash share issue
• Swedencare AB (publ) presents new financial targets which are to achieve revenue of 2 MSEK in 2025 with an EBIT margin exceeding 30%
• Swedencare AB (publ) acquires Rx Vitamins, an American company focusing on dietary supplements for the veterinary channel

Significant events after the first quarter

There are no significant events after the end of the first quarter to comment.

Acquisitions and strong organic growth set new records

3

Words from the CEO

Synergies and business are easy when you have skilled colleagues

Strong demand for our products, some production and delivery challenges due to Covid-19, many internal projects regarding launches, product development, training, new employees, and optimizations as well as mergers of warehousing, logistics and finance in the US and finally a new acquisition completes an intense quarter!

The first quarter's net sales of 134 MSEK meant an increase of 255% compared with Q1 2020, while EBITDA profit increased by 243% to 35.8 MSEK, corresponding to a margin of 26.7%. Adjusted for acquisition costs, we reach an EBITDA margin of 27.4%. Q1 offered strong momentum in the industry despite continued pandemic impact worldwide.

As stated above, we have put a hectic quarter behind us. All companies in our group have had a strong quarter, a development that is largely due to active business development through collaborations between our subsidiaries but also due to our goal-oriented work in recent years that is now beginning to pay off. This correlates well with our goal, which is to grow significantly faster than the industry. During the first quarter, we show organic growth of 25% despite some production and delivery challenges that shifted some major orders, which were originally planned for delivery in the quarter but were just shipped in April.

Our investments in the USA and the timing of them are perfect as several new surveys and market reports confirm the strength of the American pet market. The experts agree that the market will grow for many years to

come, both in terms of the number of pets and, above all, the willingness to spend money on the four- legged family members. A clear majority of the new pet owners in recent years have a completely new level of purchasing power, which is why we as a premium producer believe that we are well positioned for the increased demand. We offer high-quality products, with a proven effect, within attractive brands and, above all, we make accessibility easy with our large online investments.

In a short time, we have succeeded with many of our online ventures. A proof of this and a fantastic achievement I dare say, is that our two flagship products, ProDen PlaqueOff® powder and ProDen PlaqueOff® Cat both hold first place on Amazon UK for top product in the Pet oral care category! With a newly hired online manager based in Leeds, we got off to a flying start. Already we have seen several successful contributions and over the year many more will follow, such as improvements regarding Amazon Europe which will be led from the UK. I am impressed and positively surprised by the speed of our digital transformations but feel that we still have most of it ahead of us.

Some projects that I had hoped would be completed during Q1 were, for various reasons a bit delayed, some due to the challenges I mentioned above. However, I can inform you that most projects were completed in April such as; production start at our internal facility in Houston for ProDen PlaqueOff® powder, full integration of Animal Pharm to Stratford regarding finance, warehousing, and logistics, moving to new premises in Malmö and some new additions to the organization, mainly

in the USA.

4 Words from the CEO

In Q2, we have had several exciting start-up projects, including the launch of the Animal Pharm products on Amazon and Chewy.com, which will be handled by our internal online specialists at Holden2. They will also take over the entire ProDen PlaqueOff® portfolio's presence on Amazon. Another upcoming project starting soon is that our Greek subsidiary will be the first group company to launch Nutravet in a new country. We have hired a dedicated resource for this launch, who during the current quarter will present the concept on the Greek veterinary market. The above projects are all proof of the strong business spirit and the curiosity for new markets that characterizes the entrepreneurs in our organization.

All subsidiaries will launch a number of new products and/or new product lines and I look forward to reporting on their progress in the coming quarterly reports.

During the quarter, we received even more attention in the market from a number of major players who approached us with requests for new or expanded collaborations. I see it as proof that our strategy to grow both organically and with qualitative acquisitions is a success. We are well prepared and have laid the ground to take an even more prominent position in the fast-growing pet market around the world.

KPI´s

Q1 2021

Net revenue

133 908 KSEK

Change in

net revenue

255%

A brief update of our markets shows that the USA continues to develop very strongly, despite some coordination and other structural projects. Stratford's takeover of many parts of the operations regarding Animal Pharm was a large project eminently carried out by the parties involved. At the end of the quarter the store and clinic chain increased its activities due to Covid restrictions being eased or eliminated in most US states. From now on we look forward to increasing sales within all channels, and to fully see results from synergy work regarding product and sales collaboration.

OP. EBIT*

36 099 KSEK

EBIT margin

26.9%

*operational EBIT adjusted for acquisition costs

EBIT

35 189 KSEK

EBIT margin

26.2%

At the end of the quarter, we made another acquisition, Rx Vitamins, founded and	Solvency
led by Craig Kisciras. With Rx Vitamins, we add yet another quality addition to
our group as both the product range and the organization's expertise are at the		83.1%
highest level. Other companies in the group will be able increase the number of
volume deals that Rx Vitamins has so far not been able to focus on.
Despite reintroduced restrictions due to Covid, our companies in the UK have
delivered high growth, partly through great success on Amazon and partly thanks
to Nutravet. In addition to growing in the UK, Nutravet has managed to get many
products approved in South Korea, an already strong market for Swedencare.		Earnings per share
An initial order has been sent and we expect a second larger order to be shipped
already in Q2. The organization has also recruited a well needed Operations		1.27 SEK
Director, who will be crucial in managing Nutravet's future growth.
Also, in the rest of Europe, we have noted growth with record quarters in both
Spain and Greece and stable sales in France and the
Nordic countries. Regarding France, a major change is
taking place now that Hans Persson, to whom we can	Cash portion of
credit ProDen PlaqueOff®'s success in Central Europe,
Rx Vitamins		Cash
has decided to retire. Hans introduced the product
paid on April 1st		162 528 KSEK
more than 15 years ago in France as well as on several	161 MSEK
European markets. Hans has successfully built a large
network, which his newly recruited successors will
manage and develop.
		Words from the CEO	5