Harboes Bryggeri

Quarterly Report • Mar 10, 2022

Harboes Bryggeri A/S Company registration (CVR) no.: 43 91 05 15 Tel.: +45 58 16 88 88 www.harboe.com

HARBOES BRYGGERI A/S – TRADING REPORT FOR Q3 2021/22

For the period 1st of May – 31st of January 2022

For NASDAQ OMX Copenhagen

Today, the Board of Directors of Harboes Bryggeri A/S have discussed and approved the following Trading report for Q1 2021/22.

Skælskør, 10 March 2022

Bernhard Griese Claus Christian Bayer Chairman Deputy chairman

In this connection, CEO Søren Malling states:

"We are pleased that in a challenging quarter in terms of sales, we can continue to realize revenue that is growing compared to the previous year. It is the result of a targeted effort to navigate as best as possible in a market situation where both bottlenecks in the supply chains and the competitive situation in general affect the potential. With a markedly increasing effect from Q3, the higher energy, raw material and packaging prices have taken hold, and this affect earnings in the quarter, which are unsatisfactory. We are fully focused on acting as efficiently as possible under the given market conditions, including through close dialogue with customers get implementation of the necessary price increases to meet the general rise in commodity prices and price inflation across markets. The current geopolitically very uncertain conditions create further uncertainties, and we expect that these factors will continue to affect the company for the remainder of the financial year, and with this considered, we can specify the expectations for the entire year within the interval adjusted in the announcement of 21 January.

However, we continue to work committed to create a new positive momentum, and have invested in forward-looking marketing initiatives and continued improvements in both production and supply chain, from which we will gradually see the results. We therefore maintain our long-term goals and are pleased to have an organization that delivers solid efforts to achieve the desired results every day."

For further information:

CFO Michael Møller Jensen Tel.: +45 22 10 05 94

Trading report – Q3 2021/22 Harboe Group – Q3, 2021/22

Stagnant demand and higher costs challenge in Q3 2021/22:

• Net turnover up 2% to DKK 299 million
• EBITDA down 78% to DKK 3 million
• Profit before tax will be DKK -23 million compared to -13 million i Q3 2020/21

The turnover growth remains driven by the export markets, but where the net turnover growth in the first half year was 47%, the net turnover in the export markets in Q3 increases by 6% to DKK 101 million.

The slowdown in turnover growth on exports is partly driven by a renewed effect of COVID-19, but to a large extent also by continued bottle necks in the general logistics capacity, certain commodity constraints and ongoing price negotiations derived from the massive cost increases.

In the Danish and German markets, significant growth was expected prior to the quarter. But massive supply of competing products at very low price points in the Christmas period has,

although net turnover is on a par with last year, resulted in significantly lower volumes than expected. The effect of this has affected sales in both December and January as well as into the beginning of February.

These volume challenges caused an adjustment of earnings expectations during the quarter, but the impacts are not expected to have a long-term nature and year-to-date, net turnover remains up by 5% compared to 2020/2021.

Compared to last year, Q3 2021/2022 is significantly affected by higher costs. While distribution costs have long been high, increasing energy as well as raw material and packaging costs in the quarter hit significantly higher levels.

Sales price increases have only been implemented to some extent, but it is expected that further price increases will have a successive effect during 2022. In isolation, however, the current situation will significantly affect the Group's margins in the current and the coming quarter.

SELECTED KEY FIGURES AND RATIOS

	3. quarter		1.-3. quater		Full year
DKK THOUSANDS	2021/22	2020/21	2021/22	2020/21	2020/21
Shareholdings (continued activities)
Net turnov er EBITDA Primary operation / EBIT Result before tax Result for the period	298,954 2,967 (21,878) (23,061) (17,704)	294,393 13,744 (10,959) (12,665) (9,553)	1,045,618 71,337 (1,313) (5,891) (5,378)	991,331 72,313 514 (4,174) (3,089)	1,328,184 107,786 10,026 3,243 1,659
Balance sheet
Non-current assets Current assets Equity Long-term liabilities Current liabilities Total assets Net interest bearing debt Working capital	667,222 407,350 675,177 173,113 226,282 1,074,572 130,523 204,351	709,266 381,569 668,072 166,134 256,629 1,090,835 121,020 137,631	667,222 407,350 675,177 173,113 226,282 1,074,572 130,523 204,351	709,266 381,569 668,072 166,134 256,629 1,090,835 121,020 137,631	706,954 434,115 679,792 191,687 269,590 1,141,069 135,761 177,521
Investments
Purchase of intangible assets Purchase of tangible assets Depreciation and write-downs	52 12,288 24,845	552 8,162 24,703	1,156 31,221 72,650	539 16,420 71,799	756 35,856 97,760
Cash flow
Cash flows from operations Cash flows from inv estment Cash flows from financing Change in cash and cash equiv alents	36,543 (12,406) (5,994) 18,143	(17,374) (8,954) (6,250) (32,578)	38,214 (32,797) (19,031) (13,614)	15,694 (17,629) (14,740) (16,675)	21,402 (36,256) (14,179) (29,033)
Key ratios
EBITDA-margin Operating margin Solv ency ratio Return on inv ested capital Av g. NIDB / LTM EBITDA	1.0% -7.3% 62.8% 0.5% 1.18	4.7% -3.7% 61.2% -0.5% 1.53	6.8% -0.1% 62.8% 0.5% 1.18	7.3% 0.1% 61.2% -0.5% 1.53	8.1% 0.8% 59.6% 0.8% 1.19

Development affected by increased costs

Q3 is traditionally low season in terms of both turnover and earnings. Despite a 2% higher turnover, significantly rising costs in the quarter impact earnings.

Year-to-date, net turnover is 5% higher than last year, and the growth has so far largely offset the rising costs. The result before tax is DKK 1.7 million lower than last year.

In Q1-Q3, investments of DKK 32 million were made against DKK 17 million last year.

The Group's net interest-bearing debt amounts to DKK 131 million as of 31 January 2022, representing a reduction of DKK 24 million in the quarter and an increase of DKK 10 million compared to the same period last year.

Working capital increases by DKK 67 million. The development is the result of an effort to ensure an efficient balance of working capital and liquidity including the best possible placement of free liquidity in an interest-free environment.

Considering this, operations in Q1-Q3 generated positive cash flows of DKK 38 million compared to a positive cash flow of DKK 16 million in the same period last year.

The development is in line with expectations for the period and supports the Group's ambition to maintain a solid financial basis for an expected increasing level of investment in the coming years.

EXPECTATIONS FOR 2021/22 DKKm	Realized results 2021/22	Expectations for 2021/22. (annual report 2020/21)	Expectations for 2021/22 Previously	Expectations for 2021/22 Current update
EBITDA	108 DKKm	115 - 125 DKKm	83 - 103 DKKm	83 - 100 DKKm
Profit before taxes from continued activities	3 DKKm	10 - 20 DKKm	-20 - 0 DKKm	-20 - -5 DKKm
Profits from discontinued activities	4 DKKm	3 - 5 DKKm	3 - 5 DKKm	3 - 5 DKKm

ORIGINAL ASSUMPTIONS (Annual Report 2020/21 and H1 21/22)

• Continued intense competition and pressure on prices, especially in Danish and German retail.
• Uncertainty about the continued impact of COVID-19.
• Pressured supply chains for both raw materials, packaging and logistics lead to capacity constraints and lost revenue. The constraints are expected to gradually decrease over the second half of the year.
• Increasing turnover driven by export markets
• Investments in strengthened supply chain and efficiency improvements
• Expected significant, further commodity price increases in a number of areas with initial effect in Q2 and continued into the financial year 2022/23
• In addition to the expected profit before tax, the divestment of the last part of the activities in Estonia is expected to have a positive effect of DKK 3-5 million as a result of discontinued operations.

UPDATED ASSUMPTIONS

• The war in Ukraine leads to discontinuation of sales to the Russian market as well as renewed and significantly increased uncertainty about the supply situation, including logistics, as well as even higher cost prices generally, but significant interruptions of supplies is not included in expectations.
• Positive effect of increasing consumer prices in Denmark and Germany in the categories where the group has its primary sales.

EXPECTATIONS FOR 2021/22 are specified

• The above expected conditions are now included in the expectations for the full year 2021/22, which also considering the realized results for Q3 are specified within the previously adjusted range.
• Long-term goals and expectations are not affected.

Trading report – Q3 2021/22 Harboe Beverage – Q3, 2021/22

Beverages delivers increasing revenue in Q3 2021/22

• Sales down 3% in Q3, against a year-to-date increase of 1%
• Net sales up 1% to DKK 268 million while year-todate shows an increase of 7% to DKK 956 million
• The average net sales price per HL during the past year is driven by an increasing export share, where pricing is higher. In Q3, however, a more modest price increase of 4% is realized, as the domestic markets takes a larger share in the quarter.

The slowdown in turnover growth on exports is partly driven by a renewed effect of COVID-19, but to a large extent also by continued bottle necks in the general logistics capacity, certain commodity constraints and ongoing price negotiations derived from the massive cost increases.

In the Danish and German markets, significant growth was expected prior to the quarter. But massive supply of competing products at very low price points in the Christmas period has, although net turnover is on a par with last year, resulted in significantly lower volumes than expected.

The effect of this has affected sales in both December and January as well as into the beginning of February.

In the Danish and German markets, the Group has renewed a significant part of the customer agreements and, especially in the German market, has entered into agreements for new private label volumes. The remaining, outstanding agreements are expected to be extended during Q4 at higher prices.

In the export markets, Harboe's products are primarily marketed under own brands and in higher price segments, but in addition there is also a focus on relevant private label volumes, which can support the Group's capacity utilization. It is expected that in the current situation, this private label business will partly compensate for the decline in volume, which will follow from discontinued activities in the Russian market.

The most important, short-term focus area in addition to volume growth is to ensure sufficient sales price increases to mitigate the significant and continued increasing costs. This will, individually depending on the length of customer agreements, continue into the financial year 2022/23.

Trading report – Q3 2021/22 Harboe Ingredients – Q3, 2021/22

Ingredients delivers revenue growth in Q3 2021/22

• Sales down 1% in Q3, against a year-to-date decrease of 9%
• Net turnover up 4% to DKK 31 million and break the trend, where year-to-date shows a decrease of 5% to DKK 90 million
• The average net sales price per kilo has increased by 5% during the past year, primarily as a result of an optimized sales mix.

Going into this year, the group lost a major South American customer in terms of volume and focus till Q3 has been on building new volume. The progress is primarily made in the German market.

The ingredient segment has generally - and in comparison with the Beverage segment - shown to be less affected by COVID-19 as well as fluctuations in supply and demand patterns. The segment therefore continues to deliver a stable earnings trend on a par with expectations for 2021/22.

There is still strong demand for ingredients that meet sustainability and clean label requirements for food, and Harboe has continued to work closely with customers to develop and implement new uses for malt-based ingredients

Several of these products are being incorporated and continue to be rolled out in production at a number of customers, and this is expected to drive a stable and positive sales developement.

At the same time, a targeted focus on product and cost optimisation, in addition to fixed cost reduction and an immproved product mix, has contributed to an overall improvement in earnings per kilo.

INCOME STATEMENT

	3. quarter		1.-3. quater		Full year
DKK THOUSANDS	2021/22	2020/21	2021/22	2020/21	2020/21
Net turnover	298,954	294,393	1,045,618	991,331	1,328,184
Production costs	(259,709)	(252,602)	(854,857)	(829,482)	(1,105,266)
Gross profit	39,245	41,791	190,761	161,849	222,918
operation income Other distribution Sales and costs Administrativ e expenses operating Other costs	2,463 (46,588) (15,463) (1,535)	3,892 (39,252) (16,478) (912)	7,283 (149,832) (45,010) (4,515)	11,049 (124,969) (43,590) (3,825)	13,323 (165,277) (57,658) (3,280)
Operating profit (EBIT)	(21,878)	(10,959)	(1,313)	514	10,026
Financial income Financial costs	70 (1,253)	181 (1,887)	187 (4,765)	771 (5,459)	138 (6,921)
profit from continuing activities Pre-tax	(23,061)	(12,665)	(5,891)	(4,174)	3,243
Tax on profit on continuing activ ities	5,357	3,112	513	1,085	(1,584)
The period's profit from continuing activities	(17,704)	(9,553)	(5,378)	(3,089)	1,659
The period's results from disontinued activ ities	(139)	0	(475)	0	3,573
Profit or loss for the period	(17,843)	(9,553)	(5,853)	(3,089)	5,232

BALANCE SHEET

ASSETS	31. january	31. january	30. april 2021
DKK TUSINDE	2022	2021
Intangible assets	9,804	17,028	13,421
Tangible assets	636,243	669,130	667,947
Inv estment properties	18,602	20,017	19,701
Other inv estment and securities	2,573	3,091	5,885
Non-current assets	667,222	709,266	706,954
entories Inv Receiv ables deferred income Accruals and equiv Cash and cash alents	153,015 247,869 3,420 3,046	159,633 185,418 8,082 28,436	144,726 264,396 8,351 16,642
Current assets	407,350	381,569	434,115
Assets	1,074,572	1,090,835	1,141,069

EQUITY LIABILITIES AND DKK THOUSANDS	31. january 2022	31. january 2021	30. april 2021
Share capital Other reserv es Transferred total income	60,000 (1,045) 616,222	60,000 (2,503) 610,575	60,000 (1,275) 621,067
Equity	675,177	668,072	679,792
Minority shareholders	6	3	14
Equity included in parent company's assets	675,171	668,069	679,778
Mortgage debt Recognised leasing obligations Deferred tax liabilities Deferred recognition of income	74,442 33,318 44,648 18,212	90,789 35,156 32,360 21,839	86,301 39,907 44,629 20,850
liabilities Long-term	170,620	180,144	191,687
Bank debt and mortgage debt Recognised leasing obligations Trade payables Deferred recognition of income Other debt and other liabilities	15,926 9,883 100,013 3,013 99,940	15,953 7,558 98,604 3,606 116,898	16,199 9,996 117,908 3,443 122,044
Current liabilities	228,775	242,619	269,590
Liabilities	399,395	422,763	461,277
Equity and liabilities	1,074,572	1,090,835	1,141,069

CASH FLOW STATEMENT

	3. quarter		1.-3. quater		Full year
DKK THOUSANDS	2021/22	2020/21	2021/22	2020/21	2020/21
Operating profit	(21,878)	(10,959)	(1,313)	514	10,026
Depreciations, amortisation and write-down Income-recognised inv estent grants Other adjustments Change in working capital Discontinued activ ity	24,845 (1,027) 9 35,883 (112)	24,703 (983) (262) (25,308) (2,327)	72,650 (3,050) (82) (15,040) (345)	71,799 (3,317) (299) (45,637) (13)	97,760 (4,457) (8) (71,190) 4,128
Cash flows from primary operations	37,720	(15,136)	52,820	23,047	36,259
Financial income Financlal costs paid Corporate taxes	122 (1,299) 0	181 (1,887) (532)	187 (3,757) (11,036)	771 (5,459) (2,665)	138 (6,921) (8,074)
Cash flows from operations	36,543	(17,374)	38,214	15,694	21,402
of intangible Purchase assets Purchase of tangible assets Sale of tangible assets Change in financial assets	(52) (12,288) 0 (66)	(552) (10,564) 2,402 (240)	(1,156) (34,609) 3,388 (420)	(539) (23,945) 7,525 (670)	(756) (45,400) 9,544 356
flows from investments Cash	(12,406)	(8,954)	(32,797)	(17,629)	(36,256)
Repayments on mortgage debt Incurrence of lease liabilities Repayments of lease liabilities	(4,123) 500 (2,371)	(3,993) 0 (2,257)	(12,321) 562 (7,272)	(12,047) 3,907 (6,600)	(16,697) 12,867 (10,349)
flows from financing Cash	(5,994)	(6,250)	(19,031)	(14,740)	(14,179)
Change in cash and cash equivalents	18,143	(32,578)	(13,614)	(16,675)	(29,033)
Cash and cash equiv alents, opening rate adjustment FX	(15,110) 13	61,014 0	16,642 18	45,943 (832)	45,943 (268)
Cash and cash equivalents closing	3,046	28,436	3,046	28,436	16,642