Komplett ASA

Quarterly Report • Apr 28, 2022

First quarter results 2022

Lars Olav Olaussen, CEO Krister Pedersen, CFO

28 April 2022

Disclaimer

This presentation has been prepared by Komplett ASA (the "Company") solely for information purposes. The presentation does not constitute an invitation or offer to acquire, purchase or subscribe for securities.

This presentation includes forward-looking statements which are based on our current expectations and projections about future events. All statements other than statements of historical facts included in this report, including statements regarding our future financial position, risks and uncertainties related to our business, strategy, capital expenditures, projected costs and our plans and objectives for future operations, including our plans for future costs savings and synergies may be deemed to be forward-looking statements. Words such as "believe," "expect," "anticipate,", "may," "assume," "plan," "intend," "will," "should," "estimate," "risk" and similar expressions or the negatives of these expressions are intended to identify forwardlooking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. You should not place undue reliance on these forward-looking statements. In addition, any forward-looking statements are made only as of the date of this notice, and we do not intend and do not assume any obligation to update any statements set forth in this notice.

Highlights for the quarter: Improved competitive advantage

• o Successful combination with NetOnNet making Komplett the leading online first electronics retailer in the Nordic region
• o Sustained solid top-line growth in B2B and Distribution segments of 20.5 per cent and 19.8 per cent respectively
• o B2C revenue decline of 14.6 per cent due to softer market conditions
• o EBIT margin impacted by gross margin pressure
• o Net improvement in operating costs despite cost inflation
• o New packaging line will reduce plastic use by 17 tonnes annually

Combination with NetOnNet successfully completed

An online-first consumer electronics champion of the Nordics

New executive management following combination with NetOnNet

Lars Olav Olaussen

Roger Sandberg Chief Procurement Officer

CEO Martin Klafstad MD Komplett

Trine Lise Jensen Group SC/IT Program

Susanne Holmström MD NetOnNet, Deputy CEO

Kristin Torgersen Chief HR Officer

Anders Torell MD Webhallen

Krister Pedersen Chief Financial Officer

Softer market conditions in B2C - strong platform for value creation

• o More consumer spending has moved from goods to services
• o Trade has partly returned from e-commerce to physical retail as the society has re-opened
• o Intense price campaign activity in the market high inventory levels across the industry
• o Softer market conditions in B2C expected to continue in the coming quarters
• o

B2C Nordic electronics market

¹ December data excluded due to differences in number of shopping days in 2021 vs. 2020 covered by GfK data (34 vs. 27 days).

Note: Product groups included in data set are office equipment, information technologies, small and major domestic appliances, photo, consumer electronics and telecom.

Source: SSB; Svensk Handel; GfK.

Solid revenue growth across B2B and Distribution

• o Natural hedge from multi-segment business model
• o Stable revenue despite headwind in B2C and following record-strong 31 per cent growth in Q1 2021
• o Double-digit top-line growth in B2B and Distribution

Gross margin

• o Gross margin impacted by softer market conditions in B2C, higher inventory levels and increased share of campaigns across the industry, adding pressure on sales price
• o Gross profit increased across B2B and Distribution segments driven by higher sales volume
• o Currency effects from a stronger NOK relative to SEK and DKK have had an estimated negative impact of NOK 17 million on gross profit
• o The currency effects equal 0.7 percentage points of the gross margin decline

Gross profit and gross margin

Gross margin by segment	Q1-21	Q1-22
B2C	15.9%	13.9%
B2B	18.2%	16.7%
Distribution	6.3%	5.6%

EBIT margin

• o EBIT* decline mainly driven by volume decline in B2C and pressure on gross margin
• o Currency effects had an estimated net negative impact of NOK 17 million on EBIT
• o Negative EBIT impact of NOK 4 million related to Ironstone, and NOK 2 million from IFRS effects
• o Efficient operations and good cost control led to a net reduction in operating expenses excluding Ironstone

Operating cost percentage including depreciation and excluding one-offs

B2C

Well-positioned in a tougher market

• o Revenue decline following a period of unmatched growth
• o Competitive market with heightened price campaign activity pressuring prices down
• o EBIT decline as a result of lower revenue base, increased pressure on gross margins and estimated currency effects of NOK 10 million

B2B

Sustained growth and good cost control

• o 20.5 per cent operating revenue increase driven by core product categories such as phones, monitors and PCs
• o Gross margin decline is a result of product mix, negative currency effects and increased price pressure on components
• o EBIT amounted to NOK 33 million, including estimated negative currency effect of NOK 3 million and negative impact of Ironstone of NOK 4 million

• o EBIT margin was 7.5 per cent (8.9 per cent excl. Ironstone) compared with 10.4 per cent in the first quarter of 2021

• o Another period of record-high operating revenue driven by new distribution agreements, product launces and organic growth

• o Gross profit amounted to NOK 46 million, and was mainly driven by increased sales , and partly offset by negative currency effects
• o Gross margin came down mainly due to currency effects, as well as product mix
• o EBIT remained strong at NOK 17 million but was impacted by an estimated currency effect of NOK 4 million

Financial performance

Krister Pedersen, CFO

Profit and loss

• o Revenues declined 0.8 per cent in the first quarter
• o Higher cost of goods sold driven by sales growth in B2B and Distribution, combined with lower gross margin and negative currency effects
• o Adjusted for one-off costs and the effect from Ironstone, the Group achieved a net decline in operating expenses of NOK 9 million
• o The one-off cost is related to the transaction with NetOnNet. Expect additional cost of around NOK 25- 30 million in the second quarter
• o Tax expenses increased from last year as the first quarter of 2021 included a positive tax effect from a settlement with the tax authorities in Norway and Sweden
• o Profit for the period impacted by pressure on gross margins, negative currency effects and increased one-off costs

	Q1 2022	Q1 2021	FY 2021
Operating revenue	2 606	2 627	11 043
EBIT (adj.)	37	93	388
One-off cost	-18	-2	-19
EBIT	20	90	369
Net financials	-9	-4	-22
Profit before tax	11	86	347
Tax expense	-4	8	-48
PROFIT FOR THE PERIOD	7	95	300

Cash flow & working capital

• o Cash flow from operating activities amounted to negative NOK 158 million, a result of increased net working capital, driven by decreased trade payables
• o Cash flow from investing activities increased as a result of more investments in IT and supply chain projects
• o Cash flow from financing activities was NOK 171 million, an increase from the same period last year due to increased utilisation of financial facilities

Cash flow	Q1 2022	Q1 2021	FY 2021
Net cash from operating activities	-158	-155	65
Net cash used in investing activities	-31	-10	-114
Net cash (used in)/from financing activities	171	129	36
Net increase in cash and cash equivalents	-18	-35	-12

Change in net working capital	Q1 2022	Q1 2021	FY 2021
Change in inventory	-223	130	425
Changes in trade receivables - regular	-68	-39	186
Changes in payables	451	211	-190
Changes in other assets and liabilities	61	-	35
Change in net working capital	222	302	455

Financial position

• o The inventory is still too high and the accounts payable is too low
• o The liquidity reserve was NOK 316 million at the end of the first quarter compared with NOK 418 million one year earlier
• o Net interest-bearing debt was NOK 784 million equalling a leverage ratio (NIBD / LTM EBITDA¹) of 2.2x at the close of the first quarter of 2022

Q1 2021

Q1 2022

Summary and outlook

Lars Olav Olaussen, CEO

Key takeaways

o Solid progress on strategic initiatives

• o New packaging line will reduce plastic use by 17 tonnes annually
• o Combination with NetOnNet made Komplett the leading online-first electronics retailer in the Nordic region
• o Sustained top line performance due to multi-channel business model
• o Net improvement in operating costs despite cost inflation
• o Softer market conditions in B2C expected to continue in the coming quarters
• o Stronger and better positioned to continue gaining market shares across the Nordics

KOMPLETT®GROUP

Alternative Performance Measures (APMs)

The APMs used by Komplett Group are set out below (presented in alphabetical order):

EBIT adjusted: Derived from Financial Statements as operating result (EBIT) excluding one-off costs. The Group has presented this item because it considers it to be a useful measure to show Management's view on the efficiency in the profit generation of the Group's operations before one-off items.

Reconciliation

	01'22	01'21	FY'21
Total Operating revenue	2606	2627	11043
EBIT	20	90	369
+ One-off cost	18	$\mathfrak{p}$	19
$=$ EBIT adjusted	37	93	388
EBIT Margin adjusted	1.4%	3.5%	3.5%

EBIT Margin: Operating result (EBIT) as a percentage of total operating revenue. The Group has presented this item because it considers it to be a useful measure to show Management's view on the efficiency in the profit generation of the Group's operations as a percentage of total operating revenue.

Reconciliation

	01'22	01'21	FY'21
Total Operating revenue	2606	2627	11043
EBIT	20	90	369
EBIT margin	0.8%	3.4%	3,3%

EBIT Margin adjusted: EBIT adjusted as a percentage of total operating revenue. The Group has presented this item because it considers it to be a useful measure to show Management's view on the efficiency in the profit generation of the Group's operations before one-off items as a percentage of total operating revenue. Reconciliation - see above under EBIT adjusted

EBITDA excl. impact of IFRS-16: Derived from Financial Statements as the sum of operating result (EBIT) plus the sum of depreciation and amortisation for the segments B2C, B2B, Distribution and Other. The Group has presented this item because it considers it to be a useful measure to show Management's view on the overall picture of operational profit and cash flow generation before depreciation and amortisation in the Group's operations, excluding any impact of IFRS-16 Reconciliation

	01'22	01'21	FY'21
FBIT	20	90	369
$-$ EBIT $-$ IFRS 16	-2	$-2$	-9
+ Dep B2C, B2B, Dist. Other	14	17	64
$=$ EBITDA excl IFRS 16	32	105	424

Gross Margin: Gross Profit (as defined below) as a percentage of total operating revenue. The Group has presented this item because it considers it to be a useful measure to show Management's view on the efficiency of gross profit generation of the Group's operations as a percentage of total operating revenue. Reconciliation - see below under Gross Profit

Gross Profit: Total operating revenue less cost of goods sold. The Group has presented this item because it considers it to be a useful measure to show Management's view on the overall picture of profit generation before operating costs in the Group's operations. Reconciliation

	01'22	01'21	FY'21
Total Operating revenue	2606	2627	11043
- Cost of goods sold	$-2298$	$-2264$	$-9581$
$=$ Gross Profit	308	363	1462
Gross Margin	11.8%	13.8%	13.2%

Net Interest-Bearing Debt: Interest-bearing liabilities less cash and cash equivalents. The Group has presented this item because Management considers it to be a useful indicator of the Group's indebtedness, financial flexibility and capital structure. Reconciliation

	01'22	01'21	FY'21
Long-term loans	400	$\overline{\phantom{a}}$	400
+ Bank overdraft	407	200	207
- Cash/cash equivalents	$-23$	$-19$	-41
$=$ Net Int. Bear. Debt	784	182	566

Net Working Capital: Working capital assets, comprising inventories plus total current receivables less trade receivables from deferred payment arrangements less current lease receivables, les working capital liabilities, comprising total current liabilities less current lease liabilities less bank overdraft. Management considers it to be a useful indicator of the Group's capital efficiency in its dayto-day operational activities. Reconciliation

	01'22	01'21	FY'21
Inventories	1083	1010	1305
+ Total Curr. receivables	1079	819	1152
- Deferred payment	$-112$	$-132$	$-130$
- Curr. lease receivables	$-12$	-11	$-12$
- Total curr, liabilities	$-1690$	$-1502$	$-1984$
+ Curr. lease liabilities	87	82	80
+ Bank overdraft	407	200	207
= Net Working Capital	841	465	619

Operating Cost Percentage (adj.): Total operating expenses less cost of goods sold and One-off cost as a percentage of total operating revenue. The Group has presented this item because Management considers it to be a useful measure of the Group's efficiency in operating activities.

Reconciliation

	01'22	01'21	FY'21
Total Operating revenue	2606	2627	11043
Total operating exp.	2587	2536	10 674
- Cost of goods sold	$-2298$	$-2264$	$-9581$
- One-off cost	$-18$	$-2$	$-19$
= Total operating expenses (adj.)	271	270	1074
Operating Costs %	10.4%	10.3%	9.7%

Operating Free Cash Flow: EBITDA excl. impact of IFRS16 less investment in property, plant and equipment, less change in Net Working Capital less change in trade receivable from deferred payment arrangements. The Group has presented this item because Management considers it to be a useful measure of the Group's operating activities' cash generation. Reconciliation

	01'22	01'21	FY'2
EBITDA excl IFRS 16	32	105	421
Investments $\overline{a}$	-30	$-10$	$-56$
+/- Change in Net Working Capital	$-222$	$-302$	$-455$
+/- Change in deferred payment	17	20	22
= Operating Free Cash Flow	$-204$	$-186$	-65

Total operating expenses (adj.): Total operating expenses less cost of goods sold and One-off cost. The Group has presented this item because Management considers it to be a useful measure of the Group's efficiency in operating activities. Reconciliation - see above under Operating Cost Percentage

Pro forma figures

Komplett + NetOnNet pro forma key figures

Key figures Q1 2022 Key figures Q1 2021

	Pro forma Group	Komplett	NetOnNet	Adjustment
Amounts in NOK million	Q1 2022	Q1 2022	Q1 2022	Q1 2022
Operating revenue	4 076	2 606	1 470	-
Growth (%)	-5.2%	-0.8%	-12.0%	-
Gross profit 1	529	308	220	-
Gross margin (%) 1	13.0%	11.8%	15.0%	-
Operating expenses (ex dep and one-off) (adj.)	-421	-240	-181	-
Depreciation and amortisation	-77	-31	-32	-15
Total operating expenses (adj.)	-499	-271	-213	-15
Operating Cost Percentage (adj.) 1	-12.2%	-10.4%	-14.5%	-
EBIT (adj.) 1	30	37	7	-15
EBIT margin (adj.) (%) 1	0.7%	1.4%	0.5%	-
One-off cost	-22	-18	-4	-
EBIT	9	20	4	-15
Net financials	-24	-9	-2	-12
Profit before tax	-15	11	1	-27
Profit before tax (%)	-0.4%	0.4%	0.1%	-

NetOnNet Adjustment	Komplett	Pro forma Group
Q1 2021 Q1 2021	Q1 2021	Q1 2021	Amounts in NOK million
1 671 -	2 627	4 298	Operating revenue
35.6% -	31.0%	32.8%	Growth (%)
294 -	363	657	Gross profit 1
17.6% -	13.8%	15.3%	Gross margin (%) 1
-201 -	-237	-438	Operating expenses (ex dep and one-off) (adj.)
-33 -15	-33	-81	Depreciation and amortisation
-234 -15	-270	-519	Total operating expenses (adj.)
-14.0% -	-10.3%	-12.1%	Operating Cost Percentage (adj.) 1
93 60 -15		138	EBIT (adj.) 1
3.6% -	3.5%	3.2%	EBIT margin (adj.) (%) 1
-2 - -		-2	One-off cost
90 60 -15		136	EBIT
-4 0 -12		-16	Net financials
86 60 -27		120	Profit before tax
3.6% -	3.3%	2.8%	Profit before tax (%)

Komplett + NetOnNet pro forma IFRS P&L

Q1 2022 Incl IFRS

	Pro forma Group	Komplett	NetOnNet	Adjustment
Amounts in NOK million	Q1 2022	Q1 2022	Q1 2022	Q1 2022
Revenues from sale of goods	4 025	2 558	1 468	-
Other operating income	51	49	2	-
Total operating income	4 076	2 606	1 470	-
Cost of goods sold	-3 548	-2 298	-1 250	-
Employee benefit expenses	-245	-136	-109	-
Depreciation and amortisation expense	-77	-31	-32	-15
Other operating expenses	-198	-122	-76	-
Total operating expenses	-4 068	-2 587	-1 466	-15
OPERATING RESULT	9	20	4	-15
Net finance income and expenses	-24	-9	-2	-12
PROFIT BEFORE TAX	-15	11	1	-27
Tax expense	3	-4	1	6
PROFIT FOR THE PERIOD	-12	7	2	-21

Q1 2021 Incl IFRS

	Pro forma
	Group	Komplett	NetOnNet	Adjustment
Amounts in NOK million	Q1 2021	Q1 2021	Q1 2021	Q1 2021
Revenues from sale of goods	4 269	2 601	1 669	-
Other operating income	29	26	2	-
Total operating income	4 298	2 627	1 671	-
Cost of goods sold	-3 641	-2 264	-1 377	-
Employee benefit expenses	-243	-126	-117	-
Depreciation and amortisation expense	-81	-33	-33	-15
Other operating expenses	-197	-113	-84	-
Total operating expenses	-4 162	-2 536	-1 611	-15
OPERATING RESULT	136	90	60	-15
Net finance income and expenses	-16	-4	0	-12
PROFIT BEFORE TAX	120	86	60	-27
Tax expense	3	8	-11	6
PROFIT FOR THE PERIOD	122	95	49	-21

KOMPLETT®GROUP