New Nordic Healthbrands : Six Month Report Q2 January – June 2023

N E W N O R D I C H E A L T H B R A N D S A B ( P U B L )

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N E W N O R D I C H E A L T H B R A N D S A B ( P U B L )

S I X - M O N T H R E P O R T

J A N U A R Y - J U N E 2 0 2 3

First half of the year (January 1, 2023 - June 30, 2023)

• New Nordic's net sales in SEK increased by 0.8 percent during the first half of the year to SEK 256.2 (254.0) million. In local currencies, the reduction was 4.8 percent.
• The gross margin decreased to 64.8 (66.0) percent. Operating profit improved to -0.4(-4.9) MSEK.
• The period's result after tax improved to -2.5(-6.5) MSEK, corresponding to -0.40(-1.05) SEK per share. *
• Cash flow from current operations amounted to SEK 18.4 (-14.9) million.

Second quarter (1 April 2023 - 30 June 2023)

• Net sales in SEK decreased by 0.6 percent during the quarter to SEK 129.9 (130.7) million. In local currencies, the reduction was 5.1 percent.
• The gross margin increased to 66.5 (64.8) percent.
• Operating profit improved to -2.6(-6.6) MSEK.
• The period's result after tax improved to -3.1(-7.5) MSEK, corresponding to -0.50(-1.21) SEK per share. *
• Cash flow from current operations amounted to SEK 11.6 (-11.5) million.

* Det finns inga utspädningseffekter

C O M M E N T S B Y K A R L K R I S T I A N B E R G M A N J E N S E N

We entered the year with humility and caution in our marketing activities. The first quarter was not satisfactory and our sales in April were poor in many of the countries we operate in. As a result of taking a more positive and aggressive approach to the market in the second quarter and increasing our activities and marketing, sales and results in May and June improved in many countries.

When we look at the half year as a whole, we have only achieved a minimal increase in our turnover of barely one percent measured in Swedish kronor. We have advanced in the Nordics and North America, but lost sales in the rest of Europe and the rest of the world. We feel that several countries in Europe have been hit harder by the economic situation and that it has been more difficult to navigate these markets.

We will continue to do our best in the second half of 2023 to get back on the growth curve we previously had. The opportunities for New Nordic are great in all markets and we will aim to increase our business and the value of our international brand in all markets where we operate.

We will not actively try to launch New Nordic in more markets right now, but we also cover almost all European markets, North America, Hong Kong, China and Australia. We will invest both in our older and established products and in our new and promising products with international potential.

After an extended period of "cleaning up" and taking back products from our US retailers, we can now focus on increasing sales of our best-selling products there. Products that have relatively low sales compared to their full potential. In China, we have entered into a distribution agreement with a local "cross border selling" company that will market New Nordic. We expect good growth in sales to China from the third quarter of 2023.

During the second quarter of 2023, we were able to strengthen our gross margin as planned. Unfortunately, the turnover has not been high enough, resulting in a loss. This is not satisfactory.

The economic environment remains challenging, but we are confident that we can grow in these market conditions while working to improve our profitability. Our costs are under control and the organization is ready for growth.

The inventory level is at the right level. Our financial situation is good and we can finance our future growth plans ourselves.

I thank our entire international team for their continued efforts and the passion for our business that I experience among all employees.

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I am excited about our pipeline of exciting new products and the introduction plans we have planned with several key retailers later this year. Innovation, improved distribution in the markets where we operate and increased effective marketing efforts are the keys to success.

I am convinced that we are on the right path back to growth in sales and earnings, and I am focused on adding value to the New Nordic brand and on increasing earnings per share.

D E V E L O P M E N T O F T H E G R O U P

Income statement and cash flow are compared with the corresponding period of the previous year. Items in the balance sheet refer to the time at the end of the period and are compared with the corresponding period in the previous year, June 30, 2022. The second quarter refers to the period April - June 2023.

Rounding differences may affect the summations in the tables in this report.

N E T R E V E N U E

Net sales in the quarter amounted to SEK 129,921 thousand (SEK 130,712 thousand), which is a decrease of -0.6%. In the quarter, currency had a positive impact on the change in net sales by 5.1% and is mainly attributable to the continued weak development of the krona against the majority of currencies in the geographical areas in which New Nordic operates. No structural effects in the form of changed group composition have had an impact in the period.

Underlying demand for the group's products is generally good, even if we see caution in the market primarily driven by inflation and general uncertainty in the economy and the world situation. We also see that consumers generally tend to buy smaller packaging sizes than before, which we believe is an effect of the deteriorating economic situation that many consumers have suffered recently.

It is mainly the markets in the Nordics and North America that had a positive development in the quarter with an increase of SEK 4,634 thousand or 13.0% in the Nordics and SEK 4,940 thousand or 14.4% in North America. The European market is still the largest market but saw a decline in the quarter by SEK - 9,892 thousand or -18.2% when compared to the corresponding period last year. The rest of the world saw a certain decline in the quarter with a decrease of SEK -473 thousand or -7.5% and is still the group's smallest market by far.

For the first half of 2023, the group's net sales increased by 0.8% to SEK 256,182 thousand (SEK 254,048 thousand). This is a similar development as in the second quarter, where the Nordic market shows the greatest growth with an increase of SEK 9,404 thousand or 12.9%, while the European market fared worse and reduced its net sales by SEK -5,609 thousand or -5.7 % when compared with the first half of the previous year.

G R O S S M A R G I N

The gross profit in the quarter amounted to SEK 86,365 thousand (SEK 84,706 thousand), which is an increase of SEK 1,659 thousand. The gross margin also increased in the quarter and amounted to 66.5% (64.8%), which is an increase of 1.7%. The improved gross margin is a positive signal and a certain trend break as we had a couple of quarters with declining gross margins. The improvement is partly explained by a more favorable product mix and lower promotional discounts in major markets, led by Denmark.

For the first half of the year, the group's gross profit amounted to SEK 165,903,000 (SEK 167,613,000) and is a decrease of -1,710,000 SEK or -1.0%

O T H E R E X T E R N A L C O S T S

Other external costs decreased by SEK -4,491 thousand or -5.9% to SEK -71,329 thousand (SEK -75,821 thousand) in the quarter. A continued restraint and optimization of marketing activities and marketing costs are the single most important reasons for the reduction. Personnel costs have continued to increase during the quarter and amounted to SEK -17,277 thousand (SEK -15,184 thousand), which is an effect of the prevailing wage situation and the personnel mix.

For the first half of the year, other external costs amounted to SEK -131,584 thousand (SEK -141,089 thousand) and personnel-related costs to SEK -33,955 thousand (SEK -30,784 thousand).

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E A R N I N G S B E F O R E D E P R E C I A T I O N ( E B I T D A )

The group's earnings before depreciation (EBITDA) amounted to SEK -2,241 thousand (SEK -6,299 thousand) in the quarter, which is an improvement of SEK 4,058 thousand. The improvement is a combination of increased gross margin and lower other external costs.

For the first half of the year, the group's earnings before depreciation (EBITDA) amounted to SEK 363,000 (-4,261,000), which is an improvement of SEK 4,624,000.

F I N A N C I A L I T E M S

Financial items in the quarter amount to -180,000 SEK (-98,000 SEK) and are a combination of exchange rate effects and interest costs. Net interest has contributed negatively by SEK -559 thousand (SEK -238 thousand), which is an effect of increased interest in recent periods when the group's overdraft facility runs at variable interest.

The group's financial items for the first half of the year amounted to SEK -1,013 thousand (SEK -294 thousand).

T A X

Tax for the period amounted to SEK -278 thousand (SEK -744 thousand). The group's effective tax for the period was -9.9%(-11.0%), which is a combination of local tax rates, change in deferred tax on loss carryforwards and other temporary differences.

The group's tax for the first half of the year amounted to SEK -1,093 thousand (SEK -1,328 thousand).

P R O F I T A F T E R T A X

The profit after tax for the period amounted to SEK -3,087 thousand (SEK -7,475 thousand). Earnings per share amounted to SEK -0.50 (SEK -1.21) and there are no dilution effects.

The group's profit for the first half of the year amounted to SEK -2,501 thousand (SEK -6,496 thousand). Earnings per share amounted to SEK -0.40 (SEK -1.05).

W O R K I N G C A P I T A L

The group realized a net working capital in the quarter of SEK 119,493,000 (137,206,000), corresponding to 24.4% (27.4%) of net sales for the past twelve months. The inventory position remains stable and comes in at SEK 97,765 thousand, which is positive from a capital commitment perspective. The stock position has improved to a satisfactory level.

N E T D E B T ( + ) / N E T C A S H ( + )

The group's net debt (+) decreased to SEK 21,555 thousand (SEK 37,342 thousand). The reduction is due to a lower utilization rate of the group's overdraft facility as a result of a reduced need for tied up capital and an improved result.

C A S H A N D C A S H E Q U I V A L E N T S

Cash and cash equivalents increased to SEK 16,575,000 (6,045,000), mainly driven by cash flow from current operations and, in particular, working capital.

I N T E R E S T - B E A R I N G L I A B I L I T I E S

Interest-bearing liabilities (short- and long-term) have decreased to SEK 38,130,000 (SEK 43,387,000), mainly driven by a reduced overdraft facility as a result of a reduced need for tied up capital.

S H A R E H O L D E R S E Q U I T Y

Shareholders equity increased to SEK 113,966 thousand (SEK 108,359 thousand). The equity ratio amounted to 44.6% (43.4%) and equity per share amounted to SEK 18.40 (SEK 17.49).

C A S H F L O W

The cash flow for the period amounted to SEK 4,527,000 (-4,395,000 SEK) primarily driven by the cash flow from current operations and in particular the working capital.

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The cash flow for the first half of the year amounted to SEK 5,373 thousand (-6,014 thousand).

C A S H F L O W F R O M C U R R E N T O P E R A T I O N S

Cash flow from current operations amounted to SEK 11,602 thousand (-SEK 11,537 thousand). Compared to the corresponding period last year, it is a clear improvement which is primarily driven by changes in working capital and in particular the inventory and operating liabilities, which both contributed positively. The improved result in the period has also contributed positively.

The cash flow from current operations in the first half of the year amounted to SEK 18,397 thousand (- 14,895 thousand), which is also driven by a positive change in working capital and an improved result.

C A S H F L O W F R O M I N V E S T M E N T A C T I V I T I E S

The cash flow from investment activities amounted to SEK -193 thousand (SEK -39 thousand) and the rate of investment in primarily tangible and intangible fixed assets remains low.

For the full year, investments amounted to -1,157,000 SEK (-1,099,000 SEK).

C A S H F L O W F R O M F I N A N C I N G A C T I V I T I E S

Cash flow from financing activities amounted to SEK -6,882 thousand (SEK 7,181 thousand). The change is mainly due to reduced overdrafts in the period when compared with the corresponding period of the previous year when the utilization rate of overdrafts increased. In addition, no dividend was paid to the shareholders in the quarter, which had a positive effect when compared with the corresponding quarter of the previous year.

For the full year, cash flow from financing activities amounted to SEK -11,867,000 (9,980,000 SEK), which is also explained by the lower utilization rate of the group's overdraft facility.

P E R S O N N E L

The number of employees, converted to full-time employees, at the end of the quarter amounted to 74 people (73) and the average number of employees in the period amounted to 72 people (74).

O T H E R I N F O R M A T I O N

New Nordic's operations create value for the company's customers and shareholders. In 2023 and beyond, the company will continue to develop herbal supplements and beauty products to address specific health and beauty needs. New Nordic will market these products to a growing number of consumers worldwide. Everything with care for people and nature. The products will be marketed under the characteristic New Nordic brand. A brand that reflects the Scandinavian cultural heritage, the Scandinavian values and the company's passion for herbs and a healthy life.

S I G N I F I C A N T E V E N T S D U R I N G T H E R E P O R T I N G P E R I O D

During the period, an agreement with a new distributor in China was signed, which will contribute positively to the group's net sales and results in the coming periods. Otherwise, no significant events have occurred in the period that are not explicitly described in other parts of this report.

S I G N I F I C A N T E V E N T S A F T E R T H E R E P O R T I N G P E R I O D

No material events have occurred up to the time this report was released for publication.

R I S K S A N D U N C E R T A I N T I E S

A number of factors can affect New Nordic's results and operations. Many of these can be handled through internal routines, while some others are more affected by external influences. There are risks and uncertainties in connection with consumer trends, weather conditions, negative macroeconomic changes, geopolitical risks, sustainability and external factors in production countries, regulatory issues, trade interventions, foreign exchange and tax, but also in connection with expansion into new markets, the launch of new products, changes in consumer behavior and how the brand is managed. There are also certain risks related to the group's reputation, so-called "reputational risks".

For a more detailed description of risks and uncertainties, reference is made to the annual report and consolidated accounts for 2022 under "Risk factors".

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A C C O U N T I N G P R I N C I P L E S

The consolidated accounts for the interim report have, like the 2022 annual accounts, been prepared in accordance with the Annual Accounts Act and BFNAR 2012:1 (K3). Statements and valuation principles in this interim report are consistent with those used in the most recently published annual report. For complete accounting principles, refer to the latest published annual report.

The parent company's financial reports are prepared in accordance with the Annual Accounts Act and RFR 2 BFNAR 2012:1 (K3), and according to the same accounting principles as those applied in the most recently published annual report.

S I G N I F I C A N T E S T I M A T E S A N D J U D G M E N T S

Significant estimates and judgments appear in the accounting principles in the annual report for 2022. No significant changes have been made to these positions that could have a significant impact on the current interim report.

R E L A T E D P A R T Y T R A N S A C T I O N S

New Nordic's circle of related parties and the extent of transactions with related parties are described in note 3 and note 24 in the annual report for 2022. No transactions have been carried out during the period between New Nordic and related parties that have had a significant impact on the company's position and results. All transactions take place on market terms and pricing takes place at arm's length.

Intra-group sales in the quarter amounted to SEK 62,810 thousand (SEK 43,518 thousand) and for the full year SEK 122,320 thousand (SEK 98,577 thousand).

A U D I T O F A C C O U N T S

This report has not been reviewed by the company's auditor.

C E R T I F I E R A D A D V I S E R

New Nordic Healthbrands AB's certified advisor is Mangold Fondkommission AB.

Telephone: [phone]

T H E P A R E N T C O M P A N Y

New Nordic Healthbrands AB (publ), org. no. 556698-0453, is a registered limited liability company based in Malmö, Sweden. The share is listed on Nasdaq First North Growth Market, Stockholm.

During the second quarter, the parent company had net sales of SEK 45,453,000 (SEK 35,920,000) and the profit for the period amounted to SEK -2,827,000(-1,065,000). Net sales in the first half of the year amounted to SEK 84,265,000 (SEK 80,284,000). The balance sheet total amounted to SEK 156,147,000 (SEK 161,746,000) and an equity ratio of 46.7% (48.1%).

U P C O M I N G R E P O R T S A N D E V E N T S
Nine months report 2023	October 31, 2023
Full year report 2023	February 28, 2024
Annual report 2023	March 27, 2024
Three month report 2024	April 30, 2024
Annual General Meeting in Malmö 2024	April 30, 2024

F O R F U R T H E R I N F O R M A T I O N

Karl Kristian Bergman Jensen, CEO, [e-mail] Ruscic, CFO, [e-mail]

Claes Libell, Group Financial Controller and Investor Relation Manager, [e-mail]

Malmö July 31, 2023, New Nordic Healthbrands AB (publ)

The board

New Nordic Healthbrands AB · Hyllie Boulevard 34 · SE-215 32 Malmö · Sweden Phone: [phone] The year-end report has not been reviewed by the company's auditor.

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