Garo

Annual Report • Feb 23, 2023

• Net sales amounted to MSEK 341.8 (370.1).
• Net sales declined 8% (+21).
• EBIT amounted to MSEK 8.9 (57.7).
• EBIT margin amounted to 2.6% (15.6).
• Net income was MSEK 7.0 (46.4).
• Earnings per share amounted to SEK 0.14 (0.93).

• Non-recurring costs of MSEK 15.0 were charged to EBIT.

• Net sales amounted to MSEK 1,390.5 (1,295.8).

• Net sales increased 7% (25).
• EBIT amounted to MSEK 152.8 (207.2).
• EBIT margin amounted to 11.0% (16.0).
• Net income was MSEK 120.5 (166.7).
• Earnings per share amounted to SEK 2.41 (3.33).

• The Board proposes a dividend of SEK 0.80 per share (1.40).

• On January 27, GARO announced weaker net sales and EBIT for the fourth quarter of 2022 than previously forecasted.

• GARO launched a new platform for destination charging offering products and services for single-family homes, apartment blocks, commercial properties and public environments, which was positively received by the market.
• The shortage of electronic components for connectable charger products substantially impacted production and delivery capacity during the quarter. The launch of GARO Entity is expected to lead to gradually improved supply of components, and we expect to have reached full production by the summer.
• Non-recurring costs of MSEK 15.0 arose in the fourth quarter in the GARO E-mobility business area for the phasing out and replacement of the technical platform.

	Oct–Dec	Oct–Dec	+/-	Jan–Dec	Jan–Dec	+/-
GARO Group key figures1)	2022	2021	%	2022	2021	%
Net sales, MSEK	341.8	370.1	-8	1,390.5	1,295.8	7
EBITDA, MSEK	19.8	68.1	-71	188.8	243.0	-22
EBITDA margin, %	5.8	18.4		13.6	18.8
EBIT, MSEK	8.9	57.7	-85	152.8	207.2	-26
EBIT margin, %	2.6	15.6		11.0	16.0
Net income, MSEK	7.0	46.4		120.5	166.7	-27
Earnings per share2 , SEK	0.14	0.93	-85	2.41	3.33	-27
Cash flow from operating activities, MSEK	13.0	47.6		89.2	121.7
Investments, MSEK	66.5	11.3		120.1	45.3
Depreciation, MSEK	10.9	10.3		36.0	35.8
Equity ratio, %	53.2	58.9		53.2	58.9
Equity per share2 , SEK	12.3	11.0		12.3	11.0
Return on equity, %	20.7	34.0		20.7	34.0
Return on capital employed, %	22.1	39.2		22.1	39.2
Net debt (+) / net cash position (-), MSEK	143.7	-9.4		143.7	-9.4

1) For definitions of key figures, see page 18.

2) Earnings per share were not diluted, so earnings per share pertains to before and after dilution.

GARO AB (publ) Corp. Reg. No. 556071–7772 is a company that develops, manufactures and markets innovative products and systems for the electrical installations market under its own brand. GARO's customer offering is to provide complete solutions in the product areas of Electrical distribution products, E-mobility, Project business & Temporary Power with a focus on electrical safety, user-friendliness and sustainability. GARO was founded in 1939, has its head office in Gnosjö and is today an international company with operations in six countries with around 500 employees. The company's production units in Sweden are located in Gnosjö and Värnamo, as well as in Szczecin, Poland. GARO is listed on Nasdaq Stockholm under the ticker name GARO. For more information, see www.garo.se

Group net sales amounted to MSEK 342 in the fourth quarter, which is 8% lower than the year-earlier quarter. As with previous quarters of the year, GARO Electrification continued to report favorable growth, while sales declined for GARO E-mobility. Our production and delivery capacity in the business area was primarily impacted by a shortage of electronic components.

The rapid pace of electrification of society combined with strong demand for our products provides us with a boost for continuing to pursue with the strategy we have adopted. We are continuing our aggressive investments with the aim of maintaining long-term growth and profitability. The investments are taking place within product development, production capacity and, in particular, within the sales and market organization. This has charged earnings in the short term. Together with lower invoiced volumes, this is the reason for the weaker EBIT of MSEK 9 (58). In addition, earnings were charged with non-recurring costs of MSEK 15 as the result of the replacement of a technical platform for GARO E-mobility. GARO Electrification maintained healthy profitability.

Net sales in the GARO E-mobility business area amounted to MSEK 81 (134) during the quarter. Compared with the year-earlier quarter, the market has increasingly transitioned to connectable products, even for home use. This has resulted in a decline in GARO's sales of certain non-connectable home chargers. The lower sales are also a result of the challenging situation with limited supplies of electronic components, which has led to long delivery times to customers. The order book remains large, particularly in connectable systems for public charging, where the expansion of charging infrastructure is continuing.

During the quarter, we launched a new product program for destination charging¹ . The range is based on a new technical platform with a high degree of functionality for home use, commercial properties and public environments. Interest from the market has been considerable and we have begun to take orders of GARO Entity, a newly developed charger designed for public environments. We are gradually increasing production and expect to reach full capacity by the summer.

As a natural step for our continued growth within GARO E-mobility, we have started to establish operations in the German market, which we have previously reached through retailers but where we would now like to see a higher market footprint.

Net sales in the GARO Electrification business area increased 11% to MSEK 261. We noted healthy growth in a number of markets and, in particular, in the Electrical distribution products and Project business product areas. The new construction and renovation sector remained generally strong during the quarter. In addition, the increased focus from households on energy efficiency and metering has driven sales in the Electrical distribution products product area. Temporary Power declined somewhat year-on-year. During the quarter, Daniel Emilsson was appointed as new Business Area Manager. Since 2007, Daniel has successfully led GARO's product development team as GARO's CTO and has the necessary background to continue to develop the business area.

In the GARO Electrification business area, deliveries have remained on a healthy level in the fourth quarter. On the other hand, the lack of electronic components in the GARO E-mobility business area has significantly impacted our production and delivery capacity of connectable charger products. This will also impact the Group's operations in the beginning of 2023.

The market for charging infrastructure is growing structurally with rising numbers of rechargeable vehicles, and we see a continuing strong trend with further expansion of the charging infrastructure in the European market.

Housing construction remains at a favorable rate of production, but new production is expected to gradually slow during the second half of 2023. On the other hand, demand for other commercial and public construction, combined with renovation requirements, energy efficiency and electrification, is expected to remain favorable, which is positive for GARO.

All in all, we have a positive view of long-term market conditions, mainly driven by growth in charging infrastructure.

Patrik Andersson President and CEO

Net sales for the fourth quarter amounted to MSEK 341.8 (370.1), which corresponds to negative growth of 8% compared with the year-earlier quarter. Net sales for the full-year 2022 amounted to MSEK 1,390.5 (1,295.8), corresponding to growth of 7%. The increased sales for the full-year took place organically.

Change in	Oct–Dec	Oct–Dec	Jan–Dec	Jan–Dec
net sales	2022 (MSEK)	2022 (%)	2022 (MSEK)	2022 (%)
Year-earlier period	370.1		1,295.8
Organic growth	-26.8	-8%	93.4	7%
Acquisitions and structural changes	0		0
Exchange-rate effects	-1.5		1.3
Current quarter	341.8	-8%	1,390.5	7%

For definitions of key figures, see page 17

EBIT for the quarter amounted to MSEK 8.9 (57.7) providing an EBIT margin of 2.6% (15.6). Invoicing in GARO E-mobility was lower compared with the year-earlier quarter as shortages of electronic components continued to limit GARO's delivery capacity. GARO also paid non-recurring costs of MSEK 15.0 during the quarter as a result of the change of technical platform in GARO E-mobility. Adjusted for this cost, EBIT amounted to MSEK 23.9, providing an EBIT margin of 7.0%.

EBIT included currency effects of MSEK -6.4 (0.4), with SEK having further weakened against the EUR.

EBIT for the full-year 2022 amounted to MSEK 152.8 (207.2) providing an EBIT margin of 11.0% (16.0). Adjusted EBIT, in light of the above non-recurring cost, amounted to MSEK 167.8 with an EBIT margin of 12.1%. Negative currency effects in EBIT for the full-year 2022 amounted to MSEK 17.9. In the year-earlier period, positive currency effects amounted to MSEK 4.6, leading to a total currency effect between the years of MSEK 22.5.

Net financial items amounted to MSEK 2.1 (1.4) for the quarter and included currency effects from loans and hedging in foreign currency. Currency effects attributable to revaluations in hedging amounted to MSEK 0.6 (0.5).

Net income amounted to MSEK 7.0 (46.4) for the quarter, and earnings per share amounted to MSEK 0.14 (0.93). The tax expense amounted to MSEK 4.0 (12.7) generating an average effective tax rate of 36.4% (21.5).

Net income for the full-year 2022 amounted to MSEK 120.5 (166.7) and earnings per share amounted to MSEK 2.42 (3.33). The tax expense amounted to MSEK 32.9 (41.7) generating an average effective tax rate of 21.4% (20.0).

Cash flow from operating activities for the quarter amounted to MSEK 13.0 (47.6), primarily as a result of a lower EBIT. GARO has continued to make tactical material purchases to secure critical components, which has created a high inventory value. In addition, a large share of material remain in the inventory pending missing components for final production and delivery.

Cash flow from operating activities for the full-year 2022 amounted to MSEK 89.2 (121.7). During the year, a dividend of MSEK 70.0 (47.5) was distributed to shareholders.

Investments in the fourth quarter amounted to MSEK 66.5 (11.3). During the quarter, GARO invested in new premises in Ireland, boosting continued expansion in the Irish market. The construction of a new production facility in Poland is continuing according to plan and accrued investments amounted to MSEK 47.4 at the end of the year, and GARO continually raises construction loans in the corresponding amount.

Investments for the full-year 2022 amounted to MSEK 120.1 (45.3).

Investments attributable to product development amounted to MSEK 8.1 (8.5) for the quarter and MSEK 30.9 (26.5) for the full-year.

Right-of-use assets (leases and rental contracts) increased net by MSEK 42.7 (6.4) during the full-year. During the quarter, a new eightyear rental contract was signed for premises in Hillerstorp.

The Group's net debt at the end of the period amounted to MSEK 143.7 (net cash 9.4). The Group's net debt excluding lease liabilities, which is to say without the effects of IFRS 16, amounted to MSEK 65.2 (net cash: 45.2). Available liquidity in the Group, including unutilized overdraft facilities, amounted to MSEK 179.5 (182.0) and GARO expanded its overdraft facility by MEUR 5 during the quarter. The equity ratio amounted to 53.2% (58.9).

At the end of the period, the number of shares amounted to 50,000,000 (50,000,000). The average number of shares, adjusted for the split, amounted to 50,000,000 (50,000,000) for the fourth quarter of 2022. On December 31, 2022, the share price closed at SEK 108.60 (216.0).

In the second quarter of 2021, a 5:1 share split was carried out, meaning that each existing share was replaced with five new shares. Figures pertaining to dividends and earnings per share for previous periods have been recalculated in the report based on the new number of shares.

In conjunction with the 2022 AGM, a directed share issue of 200,000 warrants for senior executives was resolved. The program has a three-year term and is expected to contribute to achieving GARO's long-term business plan, strategy and financial targets. In the second quarter, 42,500 warrants were subscribed. The subscription of shares using the warrants can take place in June 2025. Oversubscription may not take place.

In January, GARO published its expected EBIT and sales for the fourth quarter of 2022. Asides from the above, from the end of the period until the publication of this report, no significant events or conditions have occurred, favorable or unfavorable, that would require further disclosures.

The Board proposes a dividend for the 2023 fiscal year of SEK 0.80 per share (1.40), corresponding to a total dividend of MSEK 40 (70), which comprises 33% (42) of earnings after tax. The proposal also includes that the dividend will be divided into two occasions with record date in conjunction with the Annual General Meeting in May (20 MSEK) and one record date in November (20 MSEK).

The members appointed to the Nomination Committee ahead of the 2023 Annual General Meeting are: Niklas Bogefors, appointed by Lars Svensson, Fredrik Carlsson appointed by Svolder AB, Jan Andersson, appointed by Swedbank Robur Funds and Rickard Blomqvist in his capacity as Chairman of GARO AB. The 2023 Annual General Meeting will take place on Wednesday, May 11, 2023 in Gnosjö, Sweden. Shareholders who wish to submit proposals to the Nomination Committee can send an e-mail to valberedningen@garo.se.

Please visit www.garo.se for more information.

The 2023 Annual General Meeting will take place on Wednesday, May 11, 2023 in Gnosjö, Sweden. Please visit www.garo.se for more information.

Since January 1, 2022, GARO has divided operations in two business areas: GARO E-mobility and GARO Electrification. GARO E-mobility consists of the E-mobility product area and GARO Electrification consists of the three product areas of Electrical distribution products, Project business & Temporary power. Financial information concerning previous periods have been restated in the report to comply with the new segment division.

Net sales for GARO E-mobility amounted to MSEK 80.6 (134.3) for the fourth quarter and MSEK 421.8 (437.7) for the full-year 2022. The order intake during the quarter has remained favorable and lower invoicing has mainly been the result of a component shortages, which when combined with the healthy order intake, resulted in an increased order book. In Sweden, GARO has noted weaker sales to wholesalers, particularly in the home charging segment, which has to a certain extent been the result of fiercer competition. In addition, longer lead times for electric and hybrid has led to many end customers currently postponing their purchases of home chargers. Compared with the year-earlier quarter, the market has increasingly transitioned to connectable products, even for home use. This has resulted in a decline in GARO's sales of certain non-connectable home chargers.

Net sales to GARO's contract customers such as energy companies and players in the automotive industry that are established in Europe increased in the quarter by 12% and the full-year 2022 by 20%. The charger launched during the year for heavy trucks has attracted market success and is the main reason for growth in the quarter.

EBIT for the quarter amounted to MSEK -20.9 (28.0) providing an EBIT margin of -25.9% (20.8). The lower invoicing volumes combined with GARO's continued aggressive investments in the market and organization are the reasons for the loss in the quarter. In addition, GARO paid non-recurring costs of MSEK 15.0 during the quarter as a result of the change of technical platform in GARO E-mobility. Adjusted for these non-recurring costs, EBIT amounted to MSEK -5.9, providing an EBIT margin of -7.3%.

EBIT included currency effects of MSEK -2.0 (0).

The number of employees at the end of the period was 213 (202). In addition, 13 temporary personnel were contracted in production.

In addition to destination charging for heavy trucks, GARO also launched a new product program in the fourth quarter in destination charging for passenger cars under the name GARO Entity. The launch of the new innovative products signals the start of a new era regarding simplicity, safety and security. Destination chargers are based on a new technical platform as well as services for home use in single-family homes, apartment blocks, commercial properties and public environments. In January, GARO commenced sales of the new product, with deliveries expected to commence at the end of the first quarter of 2023.

GARO E-mobility		Oct–Dec	Oct–Dec	Jan–Dec	Jan–Dec
Key figures		2022	2021	2022	2021
Net sales	MSEK	80.6	134.3	421.8	437.7
Growth	%	-39%	35%	-3%	52
EBIT	MSEK	-20.9	28.0	13.1	85.8
EBIT margin	%	-25.9	20.8	3.1	19.6
Investments	MSEK	41.6	7.6	93.8	29.2
Depreciation	MSEK	2.9	2.2	11.5	8.2
Number of employees		213	202	213	202

For definitions of key figures, see page 17

The global transition to a fossil-free society benefits GARO. The strong demand for electric and hybrid cars is driving the need for the rapid expansion of charging infrastructure with products for electric car charging at home, in public environments and at workplaces. Norway and Sweden are at the forefront of charging infrastructure, primarily in electric car charging for housing, and these countries are therefore investing heavily in public spaces in both destination charging¹ and quick charging.

To accelerate the expansion of the charging infrastructure in Europe, governments are launching various initiatives to promote the development of fossil-free fuel. For example, the UK has requirements that all new housing, business premises, offices, etc.,

must have a minimum of one charging station for electric cars per four parking spaces. The regulation is expected to lead to demand for 1.45 million charging stations per year. In addition, there is now a legal requirement in the UK that all new wall boxes must be connectable with one Open Charge Point Protocol (OCPP). An OCPP makes it possible for electricity suppliers to balance accessible energy on the electricity grid. GARO welcomes this requirement partly because it is in line with the developments in society toward smart cities and partly because GARO is one of the players that has this type of product and function within its existing product portfolio.

A green technology tax deduction of 50% of the labor and material costs for the installation of home chargers for purchases through

electrical installers has been available in Sweden since January 2021. However, long lead times for hybrid and electric cars have, during the second half of 2022, somewhat dampened demand for chargers for home use. We expect this part of the market to recover in line with car manufacturers' lead times reducing.

Energy companies play an important role for the end user. The relationship that they have with their customers is continually changing, and GARO has noted that energy companies are developing their customer relationships toward various forms of subscription and other long-term relationships. This means that the Group's relationships with energy companies and vehicle manufacturers is becoming increasingly important. With the help of their platforms, GARO receives access to new markets and opportunities to introduce products to more European countries.

1

GARO developed its first charging station back in 2008 and today is a complete supplier with a broad offering in electric car charging, primarily in destination charging0F 1 . Together with the GARO Electrification business area, GARO offers a complete solution from power supply to electric car charging.

GARO currently has a broad and strong product portfolio, which is a prerequisite for success in this rapidly growing industry. To ensure that the customer offering remains at the forefront in terms of the

product portfolio, considerable resources are invested in product development, primarily in destination charging¹ . GARO benefits considerably from its long experience and expertise in electrical safety, which has been central to the development of the latest addition in destination charging. GARO Entity Pro and GARO Entity Compact were launched in November at the London EV Show. These new products are part of the destination charger product category that meets the needs of electric car charging in home environments, at the workplace and in public.

The expansion of public charging infrastructure remains at a high level, particularly for advanced systems connected to payment solutions.

The increased demand for suppliers who can offer a broad array of products and complete solutions for public charging benefits GARO which, for example, delivered two projects to BMW in the third quarter in both DC and AC charging.

GARO E-mobility has a positive impact on sales of components in GARO Electrification and the Electrical distribution products product area as well as cable cabinets and energy supply in the Project business product area.

1 The range includes AC chargers (alternating current) with effects between 11–22 kW and DC chargers (direct current) with an effect up to 50 kW.

The range includes AC chargers (alternating current) with effects between 11–22 kW and

DC chargers (direct current) with an effect up to 50 kW.

Net sales, GARO E-mobility

Net sales amounted MSEK 261.2 (235.8) for the fourth quarter and MSEK 968.7 (858.1) for the full-year 2022. This corresponds to growth of 11% for the quarter and 13% for the full-year 2022. Growth is attributable to the Electrical distribution products and Project business product areas Growth in GARO's sales companies in Europe (excluding the Nordic region) amounted to 29% in the fourth quarter and 30% for the full-year 2022.

EBIT for the quarter amounted to MSEK 29.8 (29.7) and the EBIT margin amounted to 11.4% (12.6). The weaker EBIT margin was the result of the product mix and fewer workdays in the Project business product area following the relocation of operations to new premises in Hillerstorp that started during the quarter. EBIT included currency effects of MSEK -4.4 (0.4), with SEK having weakened against the EUR.

EBIT for the full-year amounted to MSEK 139.6 (121.4) providing an EBIT margin of 14.4% (14.1).

Due to price hikes on incoming materials and components, GARO is regulating its sales price, albeit with a slight delay.

The number of employees at the end of the period was 308 (296). In addition, around 30 temporary personnel were contracted in production.

Sales in the Electrical distribution products product area amounted to MSEK 159.8 (142.7) for the quarter and MSEK 604.3 (529.4) for the full-year. This corresponds to growth of 12% for the fourth quarter and 14% for the full-year 2022, which is assessed to be higher growth than the market in general. GARO has noted strong sales and healthy demand in a number of customer categories related to new production, renovation and energy efficiency, demonstrating the importance of a broad product range. Healthy sales of engine heaters in Sweden and Finland during the quarter was particularly positive since it is the high season for this product.

Sales in the Project business product area amounted to MSEK 78.3 (67.4) for the quarter and MSEK 287.2 (238.7) for the full-year. This corresponds to growth of 16% for the quarter and 20% for the fullyear. The growth is a result of healthy demand for large and more complex customer projects.

In Sweden, demand has been very high, although the relocation of operations from Gnosjö to new premises in Hillerstorp negatively impacted our delivery capacity in December. Volume growth in Sweden and Ireland is driven by new construction, renovation and the energy efficiency of properties as well as by electrification of the vehicle fleet. In the UK, growth is particularly driven by the roll-out of charging infrastructure. Overall, these conditions enable continued favorable growth.

Sales in the Temporary Power product area were 9% lower compared with the year-earlier quarter and 14% lower for the full-year. Sales in this product area are primarily to customers in Sweden, and in 2021, GARO had one individual customer who invested heavily. Considering this, GARO has performed well in the product area.

GARO believes that the underlying market as a whole is unchanged compared with the preceding year, which indicates that GARO has captured market shares.

GARO Electrification		Oct–Dec	Oct–Dec	Jan–Dec	Jan–Dec
Key figures		2022	2021	2022	2021
Net sales	MSEK	261.2	235.8	968.7	858.1
Growth	%	11	13	13	15
EBIT	MSEK	29.8	29.7	139.6	121.4
EBIT margin	%	11.4	12.6	14.4	14.1
Investments	MSEK	24.9	3.8	26.3	16.1
Depreciation	MSEK	8.0	8.1	24.5	27.5
Number of employees		308	296	308	296

For definitions of key figures, see page 18

GARO is continually developing its customer offering in both of its business areas of Electrification and E-mobility. As such, the material synergy effects between the Electrical distribution products, Project business and E-mobility product areas are further improved.

The trend we see now is for increased safety requirements from different players in the market, while regulations are becoming increasingly stringent for all types of electrical products. GARO welcomes the developments related to safety and certifications. With the help of innovative product development, products are designed based on country-specific requirements and regulations in the European market. The Group offers the market safe and futureproof products - Future-proof.

In 2022, GARO launched a number of new exciting and innovative products, primarily in the E-mobility business area in which GARO Entity – an entirely new wall box and platform to meet upcoming requirements and functionality – in the fourth quarter.

The Group bases its framework of GARO's sustainability work on two cornerstones: how proprietary operations are structured, and how the products contribute to the transition to an electrified society. The business is working continuously to be an environmentally friendly, safe and enjoyable workplace in which the Group assumes overall responsibility for the organization and the value chain. The products and services provided create the preconditions for a fossil-free society and, in this way, operations can contribute to the transition to a carbon-neutral society.

GARO's sustainability efforts are to contribute to the UN Sustainable Development Goals (SDGs) and be in line with the Paris Agreement. The Group has selected six SDGs for contributing to the global transition. To ensure that relevant operational targets have been identified, continual follow-ups and assessments are conducted throughout operations, including the value chain.

For more information about GARO's goals for a more sustainable environment, refer to our 2021 Annual Report, pages 34-51.

The Parent Company's operations encompass the product area Electrical distribution products, development department, Group Management and certain Group-wide functions.

Net sales for the Parent Company in the fourth quarter amounted to MSEK 133.7 (134.3), of which internal sales to other Group companies comprised MSEK 44.4 (55.8). EBIT for the quarter amounted to MSEK 17.1 (19.8).

Net sales for the Parent Company amounted to MSEK 498.4 (481.7) for the full-year 2022, of which internal sales to other Group companies comprised MSEK 159.0 (146.8). EBIT for the full-year amounted to MSEK 78.6 (63.4).

GARO develops, manufactures and markets innovative products and systems for the electrical installations market under its own brand. The company has operations in Sweden, Norway, Finland, Ireland, Poland and the UK. The Group is organized in two business areas: GARO Electrification and GARO E-mobility. GARO has a broad product assortment and is a market leader within several product areas.

GARO's business concept is to, with a focus on innovation, sustainability and design, provide profitable complete solutions for the electrical industry.

GARO's operations are, to a certain degree, subject to seasonal variations. GARO's sales are generally stable from one quarter to the next, but can fluctuate monthly within the quarter. Sales can be somewhat lower during the vacation months (July–August) and from December to January. During periods of high production, GARO is normally tied up in working capital. Cash and cash equivalents are freed from working capital after the busy season, when the finished products have been installed in customers' facilities and invoices have been paid.

Currently, the situation in Ukraine is not having any notable impact for GARO and its operations. However, uncertainty remains concerning the availability of components as well as the potential consequences of the varying degrees of rising inflation and interest rates. GARO's risks and uncertainties are described in Note 3 on pages 68–71 of the 2021 Annual Report. The Annual Report is available at www.garo.se. Aside from these, no other changes have affected the company's view of risks and uncertainties.

In this interim report, GARO presents certain financial measures that are not defined by IFRS, known as alternative performance measures. The Group believes that these measures provide valuable supplementary information to investors since they enable evaluations of the company's earnings and financial position. These financial measures are not always comparable with the measures

used by other companies since not all companies calculated them in the same way. Investors should view these financial measures as a supplement rather than a replacement of financial reporting in accordance with IFRS.

Related-party transactions in 2022 took place at a limited extent as the previous year and in accordance with the principles described in the 2021 Annual Report.

Since January 1, 2022, GARO has divided operations in two business areas: GARO E-mobility and GARO Electrification. Financial information concerning previous periods have been restated in the report to comply with the new segment division.

Otherwise, GARO AB applies the same accounting policies as in the most recent Annual Report.

This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. Disclosures in accordance with IAS 34, 16A are presented in the financial statements and their notes in the interim information on pages 1–18, which constitute an integrated part of this financial statement.

The Parent Company's interim report was prepared in accordance with Chapter 9 of the Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2.

This year-end report has not been reviewed by the company's auditors.

Gnosjö, February 23, 2023

GARO AB

The Board of Directors

This information is such information that GARO aktiebolag is obligated to publish in accordance with the EU Market Abuse Regulation. The information was published by the abovementioned contact persons on February 23, 2023, at 8:30 a.m. CET.

	CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Oct–Dec	Oct–Dec	Jan–Dec	Jan–Dec
Amount in MSEK	2022	2021	2022	2021
Operating income
Net sales	341.8	370.1	1,390.5	1,295.8
Other operating income	1.6	3.6	6.8	6.6
Total operating income	343.3	373.7	1,397.3	1,302.4
Operating expenses
Raw materials and consumables	-182.5	-188.3	-727.4	-649.3
Other external expenses	-57.7	-43.4	-174.3	-144.9
Personnel expenses	-83.4	-74.0	-306.8	-265.2
Depreciation/amortization of tangible and intangible
assets	-10.9	-10.3	-36.0	-35.8
Other operating expenses	0.1	0	0	0
EBIT	8.9	57.7	152.8	207.2
Result from financial items
Net financial income/expenses	2.1	1.4	0.6	1.2
Profit before tax	11.0	59.1	153.4	208.4
Income tax	-4.0	-12.7	-32.9	-41.7
Net income	7.0	46.4	120.5	166.7
Other comprehensive income:
Items that may be reclassified to the income statement
Translation differences	6.5	1.4	10.6	2.0
Other comprehensive income, net	6.5	1.4	10.6	2.0
Total comprehensive income for the period	13.5	47.8	131.1	168.7
Net income and total comprehensive income for the period
is attributable to shareholders of the Parent Company.
Key ratios per share
Average number of shares	50,000,000	50,000,000	50,000,000	50,000,000
Earnings per share, before and after dilution, SEK	0.14	0.93	2.41	3.33

EBIT and EBITDA before and after adjustment of non-recurring costs

The effects of non-recurring costs for inventory impairment for the phasing out and replacement of the technical platform has impacted the comparability of our interim report. The costs were charged to GARO E-mobility.

	Oct–Dec		Oct–Dec		Jan–Dec		Jan–Dec
Amount in MSEK	2022	%	2021	%	2022	%	2021	%
EBIT	8.9	2.6	57.7	15.6	152.8	11.0	207.2	16.0
Phase out of the technical platform	15.0				15.0
Adj. EBIT	23.9	7.0	57.7	15.6	167.8	12.1	207.0	16.0

	Oct–Dec		Oct–Dec		Jan–Dec		Jan–Dec
Amount in MSEK	2022	%	2021	%	2022	%	2021	%
EBITDA	19.8	5.8	68.1	18.4	188.8	13.6	243.0	18.8
Phase out of the technical platform	15.0		-		15.0		-
Adj. EBITDA	34.8	10.2	68.1	18.4	203.8	14.6	243.0	18.8

Amount in MSEK	Dec 31, 2022	Dec 31, 2021
ASSETS
Fixed assets
Intangible assets	127.7	108.1
Tangible assets	269.4	144.1
Other assets	4.1	3.2
Total fixed assets	401.2	255.4
Current assets
Inventories	344.9	242.1
Accounts receivable	321.1	336.0
Other current receivables	56.8	21.8
Cash and cash equivalents	29.5	81.6
Total current assets	752.3	681.5
TOTAL ASSETS	1,153.5	936.9
EQUITY AND LIABILITIES
Share capital	20.0	20.0
Other reserves	9.7	-0.9
Other contributed capital	1.5	0
Retained earnings including net income for the period	582.9	532.4
Total equity	614.1	551.5
Long-term liabilities
Liabilities to credit institutions	36.6	26.5
Lease liabilities	62.4	26.3
Other provisions	9.0	6.3
Deferred tax liabilities	0	0
Total long-term liabilities	108.0	59.1
Short-term liabilities
Liabilities to credit institutions	58.1	9.9
Lease liabilities	16.1	9.5
Accounts payable	187.4	166.5
Other short-term liabilities	169.8	140.4
Total short-term liabilities	431.4	326.3
TOTAL EQUITY AND LIABILITIES	1,153.5	936.9

Equity attributable to shareholders in the Parent Company	Share		Other contributed	Retained	Total
Amount in MSEK	capital	Reserves	capital	earnings	equity
Equity at January 1, 2021	20.0	-2.9		413.2	430.3
Net income for the period				166.7	166.7
Other comprehensive income for the period		2.0		0	2.0
Dividend to shareholders				-47.5	-47.5
Closing equity, December 31, 2021	20.0	-0.9	0	532.4	551.5
Equity at January 1, 2022	20.0	-0.9	0	532.4	551.5
Net income for the period				120.5	120.5
Other comprehensive income for the period		10.6		0	10.6
Warrant liquidity received			1.5	0	1.5
Dividend to shareholders				-70.0	-70.0
Closing equity, December 31, 2022	20.0	9.7	1.5	582.9	614.1

	Oct–Dec	Oct–Dec	Jan–Dec	Jan–Dec
Amount in MSEK	2022	2021	2022	2021
Operating activities
Cash flow from operating activities
before changes in working capital	12.2	70.0	159.9	217.5
Cash flow from changes in working capital	0.8	-22.4	-70.7	-95.8
Cash flow from operating activities	13.0	47.6	89.2	121.7
Investing activities
Investments in intangible assets	-8.1	-8.5	-30.8	-26.5
Acquisition of subsidiaries	0	0	-0.9	0
Investments in tangible assets	-58.4	-2.8	-89.3	-18.8
Disposal of tangible assets	1.9	0.9	1.9	0.9
Cash flow from investing activities	-64.6	-10.4	-119.1	-44.3
Financing activities
Net borrowing/amortization of loans	46.7	0.8	58.1	-6.2
Amortization of lease liability	-3.8	-3.0	-12.0	-11.7
Warrant liquidity received	0	0	1.5	0
Dividend paid to shareholders	0	0	-70.0	-47.5
Cash flow from financing activities	42.9	-2.2	-22.4	-65.4
Cash flow for the period	-8.7	35.0	-52.3	11.9
Currency effect in cash and cash equivalents	0.5	0.2	0.2	0.3
Cash and cash equivalents, start of the period	38.7	46.4	81.6	69.4
Cash and cash equivalents, end of the period	29.5	81.6	29.5	81.6

	Oct-Dec	Oct-Dec	Jan–Dec	Jan–Dec
Amount in MSEK	2022	2021	2022	2021
Operating income
Net sales	133.7	134.3	498.4	481.7
Other operating income	17.1	4.7	65.1	12.8
Total income	150.8	139.0	563.5	494.5
Operating expenses
Raw materials and consumables	-83.0	-72.9	-310.1	-291.3
Other external expenses	-19.2	-16.1	-61.6	-50.1
Personnel expenses	-27.5	-25.8	-102.1	-77.1
Depreciation/amortization of tangible and intangible assets	-4.0	-4.5	-11.1	-12.6
EBIT	17.1	19.8	78.6	63.4
Result from financial items
Profit from participations in Group companies	2.8	7.2	2.8	7.2
Net interest income and similar items	3.9	0.9	10.4	6.8
Net interest expenses and similar items	-1.1	0.3	-0.8	-2.5
Profit before tax	22.7	28.2	91.0	74.9
Appropriations	28.5	47.0	28.5	47.0
Income tax	-10.4	-14.5	-24.4	-23.6
Net income	40.8	60.6	95.1	98.3

The Parent Company does not have any items recognized as other comprehensive income which is why comprehensive income corresponds to net income.

Amount in MSEK	Dec 31, 2022	Dec 31, 2021
ASSETS
Fixed assets
Intangible assets	8.3	43.5
Tangible assets	33.8	38.4
Participations in Group companies	80.3	80.8
Other financial assets	75.8	59.9
Total fixed assets	198.2	222.6
Current assets
Inventories	54.6	40.8
Accounts receivable	89.3	83.9
Other receivables	282.9	189.9
Cash and bank balances	5.9	71.4
Total current assets	432.7	386.0
TOTAL ASSETS	630.9	608.6
EQUITY AND LIABILITIES
Share capital	20.0	20.0
Fund for internal development expenses	6.1	40.5
Statutory reserve	2.6	2.6
Non-restricted equity including net income for the period	360.1	299.1
Total equity	388.8	362.2
Provisions	3.4	1.7
Long-term liabilities
Liabilities to credit institutions	22.8	10.4
Total long-term liabilities	22.8	10.4
Short-term liabilities
Short-term interest-bearing liabilities	3.0	2.6
Short-term non-interest-bearing liabilities	212.9	231.7
Total short-term liabilities	215.9	234.3
TOTAL EQUITY AND LIABILITIES	630.9	608.6

	GARO Electrification			GARO E-mobility		Elimination	Group
	Q4	Q4		Q4	Q4	Q4	Q4	Q4
Business area information	2022	2021	2022	2021	2022	2021	2022	2021
Income
Total external income	360.2	321.4	120.3	203.6	-138.7	-154.9	341.8	370.1
Total internal income	-99.0	-85.6	-39.7	-69.2	138.7	154.9
Income from contracts with customers	261.2	235.8	80.6	134.3	0	0	341.8	370.1
EBIT	29.8	29.7	-20.9	28.0	0	0	8.9	57.7
Net financial income/expenses							2.1	1.4
Tax expense for the year							-4.0	-12.7
Net income for the year							7.0	46.4

Product area		GARO Electrification			GARO E-mobility		Total
	Oct–Dec 2022	Oct–Dec 2021	growth, %	Oct–Dec 2022	Oct–Dec 2021	growth, %	Oct–Dec 2022	Oct–Dec 2021	growth, %
Sweden	168.2	154.4	9%	36.0	103.6	-65%	204.2	258.0	-21%
Nordic region excl. Sweden Europe excl. Nordic	40.6	40.7	0%	11.4	19.0	-40%	52.0	59.7	-13%
region	52.6	40.7	29%	34.5	11.7	195%	87.1	52.4	66%
Currency effects	-0.2	0		-1.3	0		-1.5	0
Total	261.2	235.8	11%	80.6	134.3	-40%	341.8	370.1	-8%

Product area		GARO Electrification			GARO E-mobility		Total
	Jan–Dec	Jan–Dec growth, %		Jan–Dec	Jan–Dec	growth, %		Jan–Dec	growth,
	2020	2021		2022	2021		2022	2021	%
Sweden	617.2	551.9	12%	230.3	308.6	-25%	847.5	860.5	-2%
Nordic region excl.
Sweden	147.3	150.5	-2%	53.4	63.9	-16%	200.7	214.4	-6%
Europe excl. Nordic
region	202.6	155.4	30%	138.4	64.7	114%	341.0	220.1	55%
Currency effects	1.6	0.3		-0.3	0.5		1.3	0.8
Total	968.7	858.1	13%	421.8	437.7	-4%	1,390.5	1 ,295.8	7%

		Oct-Dec	Oct-Dec
		2022	2021	2022	2021	2020	2019	2018	2017
Net sales	MSEK	341.8	370.1	1,390.5	1,295.8	1,039.8	1,008.1	903.7	796.0
Growth	%	-8	21	7	25	3	12	13	21
EBITDA	MSEK	19.8	68.1	188.8	243.0	163.2	134.9	128.8	110.3
EBITDA margin	%	5.8	18.4	13.6	18.8	15.7	13.4	14.3	13.9
EBIT	MSEK	8.9	57.7	152.8	207.2	136.2	112.6	113.8	98.1
EBIT margin	%	2.6	15.6	11.0	16.0	13.1	11.2	12.6	12.3
Earnings per share, before
and after dilution	SEK	0.14	0.93	2.41	3.33	1.91	1.71	1.65	1.71
Equity per share	SEK	12.28	11.0	12.28	11.03	8.61	6.86	5.92	5.05
Dividend per share	SEK	n/a	n/a	0.80	1.40	0.95	0	0.80	0.80
Dividend	MSEK	n/a	n/a	40.0	70.0	47.5	0	40.0	40.0
Closing rate, share	SEK	108.6	216.0	108.6	216.0	127.0	61.4	34.7	7.0
Return on equity	%	20.7	34.0	20.7	34.0	24.7	26.8	31.2	38.3
Return on capital
employed,	%	22.1	39.2	22.1	39.2	32.2	30.4	34.7	36.5
Investments	MSEK	66.5	11.3	120.1	45.3	45.3	33.4	22.7	51.4
Depreciation	MSEK	10.9	10.3	36.0	35.8	26.9	22.3	15.0	12.2
Equity ratio	%	53.2	58.9	53.2	58.9	57.9	52.2	52.4	47.3
Net debt	MSEK	143.7	-9.4	143.7	-9.4	11.3	45.6	45.7	56.1
	multipl
Net debt/EBITDA	e	0.8	0.0	0.8	n/a	0.1	0.3	0.4	0.5
Number of employees		521	498	521	498	412	421	402	376

*For definitions of key figures, see page 18

Consolidated income statement	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Amount in MSEK	2022	2022	2022	2022	2021	2021	2021	2021	2020	2020	2020	2020
Net sales	341.8	317.0	350.2	381.6	370.1	293.9	341.2	290.6	306.3	247.0	238.3	248.3
Operating expenses	-332.9	-279.6	-310.6	-314.7	-312.4	-245.4	-286.1	-244.7	-256.8	-209.5	-208.0	-229.5
EBIT	8.9	37.4	39.6	66.8	57.7	48.5	55.1	45.9	49.5	37.5	30.3	18.8
Net financial income/expenses	2.1	-2.9	1.8	-0.1	1.4	0.5	-2.1	1.3	-4.6	-1.3	-6.8	-0.5
Profit before tax	11.0	34.5	41.4	66.7	59.1	49.0	53.0	47.2	45.0	36.3	23.6	18.3
Tax	-4.0	-7.9	-8.1	-13.0	-12.7	-9.6	-10.5	-8.9	-10.5	-7.9	-5.5	-3.8
Net income	7.0	26.6	33.3	53.7	46.4	39.4	42.6	38.3	34.4	28.3	18.1	14.6
Net sales per business area	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Amount in MSEK	2022	2022	2022	2022	2021	2021	2021	2021	2020	2020	2020	2020
GARO E-mobility	80.6	92.1	103.3	146.4	134.4	91.2	118.4	93.8	100.2	68.9	64.8	58.6
GARO Electrification	261.2	224.9	246.9	235.2	235.7	202.7	222.8	196.8	206.1	178.1	173.5	189.7
Total Group	341.8	317.0	350.2	381.6	370.1	293.9	341.2	290.6	306.3	247.0	238.3	248.3
EBIT per business area	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Amount in MSEK	2022	2022	2022	2022	2021	2021	2021	2021	2020	2020	2020	2020
GARO E-mobility	-20.9	0.4	3.0	30.7	27.9	20.1	20.2	17.6	14.7	9.6	9.7	2.4
GARO Electrification	29.8	37.0	36.6	36.1	29.8	28.4	34.9	28.3	34.8	27.9	20.6	16.4
Total Group	8.9	37.4	39.6	66.8	57.7	48.5	55.1	45.9	49.5	37.5	30.3	18.8

The performance measures in this report take into account the nature of the operations and are deemed to provide relevant information to shareholders and other stakeholders and also enable comparability with other companies.

EBIT: Earnings before interest and tax

EBIT margin, %: EBIT as a percentage of net sales for the period

Earnings per share, before and after dilution, SEK: Net income for the period divided by the average number of shares at the end of the period

Equity per share, SEK: Equity divided by the number of shares at the end of the period

Return on equity, %: Net income for the past 12 months divided by average equity

Return on capital employed, %: EBIT for the past 12 months divided by capital employed

Equity ratio, %: Equity as a percentage of total assets

Capital employed, SEK: Total assets less short-term liabilities adjusted for cash and bank balances

Net debt: Interest-bearing liabilities, lease liabilities according to IFRS 16 less assets including cash and cash equivalents

Net debt/EBITDA, multiples: Net debt at the end of the period as a percentage of EBITDA for the past 12 months

GARO uses certain performance measures that are not defined in the rules for financial reporting that GARO applies. The goal of these performance measures is to create better understanding of how the operations are performing. It must be stressed that these alternative performance measures, as defined, are not entirely comparable with performance measures of the same name used by other companies.

Organic growth: Organic growth with adjustments for currency effects from operations in currencies other than SEK.

EBITDA: Earnings before interest, taxes, depreciation and amortization

EBITDA margin, %: EBITDA as a percentage of net sales for the period

R12: A summary of the outcome of the past 12 months

Number of employees: The number of employees at the end of the period

On February 23, 2023 at 9:30 a.m., the President and CEO Patrik Andersson and CFO Helena Claesson will present the report and respond to questions in a teleconference.

Code:	45 94 88
International:	+44 203 936 29 99
Sweden:	+46 10 884 80 16
Telephone number:

The presentation used during this teleconference can be downloaded at www.garo.se under GARO Group. A recording of the teleconference will be available on the company's website afterwards.

Patrik Andersson, President and CEO:	+46 76 148 44 44
Helena Claesson, CFO:	+46 70 676 07 50

First quarter of 2023	May 11, 2023
Annual General Meeting 2023 (in Gnosjö)	May 11, 2023
Interim report April–June 2023	August 15, 2023
Interim report July–September 2023	November 10, 2023

Certain statements in this report are forward-looking and the actual outcome may be significantly different. In addition to the specifically mentioned factors, other factors may have a material impact on the actual outcome. Such factors include, but are not limited to, the general economic climate, exchange-rate fluctuations and changes in interest rates, political developments, the impact of competing products and the prices of such products, difficulties associated with product development and commercialization, technical problems, interruptions to the access to raw materials and credit losses attributable to major customers.

Disclosures according to IAS 34.16A are presented in the financial statements and their notes as well as other parts of the interim report.