Brødrene A & O Johansen A/S : AO - H1 2023

Interim Financial Report

for the Period

1 January - 30 June 2023

Brødrene A & O Johansen A/S

Rørvang 3 * DK-2620 Albertslund * Denmark

Tel: [phone] * www.ao.dk

CVR (Central Business Register) No.: 58 21 06 17

Company Announcement No. 6/2023

1/17

Brødrene A & O Johansen A/S

Interim financial report for H1 2023

Contents

Highlights for the second quarter and first half of 2023	page 3
Financial and operating data for the AO Group	page 5
Management's review	page 6-8
Company announcements in 2023	page 9
Management's statement	page 10
Income statement and statement of comprehensive income	page 11
Balance sheet as at 30 June 2023	page 12-13
Cash flow statement	page 14
Statement of changes in equity	page 15
Notes	page 16-17

Company Announcement No. 6/2023

2/17

Brødrene A & O Johansen A/S

Interim financial report for H1 2023

The Board of Directors has approved the Group's interim financial report for the period 1 January - 30 June 2023.

Highlights for the second quarter and first half of 2023

• As expected, market conditions were challenging in the second quarter of 2023. Building and construction activities softened in the period. The normalised price levels for conventional energy sources, in particular gas and oil, reduced the demand for heat pumps. The steep increase in interest rates dampened the activity in the building and construction industry.
• Second quarter sales and results were in line with expectations, and AO continued to gain market shares. Margins were under pressure in April and May. In June, margins rebounded to the June 2022 level.
• B2B activities continued to grow, and the B2B sales index reached 106.5 in the first half of 2023. As expected, margins took a hit compared to last year due to the one-off gains from price increases in 2022. In the B2C sector, private consumers reacted stronger than B2B customers towards the cost inflation, and the decrease in demand continued from the first quarter into the second quarter. The B2C sales index reached 85.5 in the first half of 2023.
• Consolidated revenue for the second quarter of 2023 was DKK 1,266.1 million against 1,318.8 million for the second quarter of 2022. At the end of the quarter, the overall sales index ended at 96. The B2B sales index ended at 98 corresponding to index 100 when adjusted for negative foreign exchange impact and the number of working days in the quarter. The B2C sales index ended at 83. Sales were in line with previous expectations for 2023. Consolidated revenue for the first half of 2023 was DKK 2,670.3 million, which is DKK 100.2 million, or 3.9%, more than for the same period last year.
• The gross profit margin for the second quarter of 2023 was down by 0.9 percentage point when compared with the second quarter of 2022. The main reason is the one-off gain from price increases in 2022. Gross profit went down by DKK 24.6 million driven by the lower margin and the slightly lower revenue.
• EBITDA for the second quarter of 2023 totalled DKK 92.6 million, corresponding to an EBITDA margin of 7.3%, against DKK 119.4 million and 9.1% for the second quarter of 2022. EBITDA for the first half of 2023 was DKK 214,5 million, corresponding to an EBITDA margin of 8.0%, against DKK 230.3 million and 9.0% for the first half of 2022.
• Profit before tax (EBT) for the second quarter of 2023 was DKK 57.5 million, which is DKK 33.4 million less than for the second quarter of last year. Profit before tax (EBT) for the first half of 2023 was DKK 140.8 million, which is DKK 36.0 million less than for the same period last year. The reduced profit before tax is impacted by DKK 7.0 million higher depreciation expenses and DKK 13.3 million higher interest expenses.
• As at 30 June 2023, the Group's total assets amounted to DKK 3,345.5 million, which is DKK 146.3 million more than at the same time in 2023. The increase is primarily attributable to investments in property, plant and equipment, increasing inventories and trade receivables.
• As at 30 June 2023, the Group's equity totalled DKK 1,370.6 million, which is DKK 115.1 million more than at the same time in 2022. The solvency ratio was 41.0% against 39.2% at 30 June 2022.
• Cash flow from operating activities for the second quarter of 2023 was DKK -159.2 million, which is DKK 122.8 million less than for the same period last year. The decrease is primarily attributable to increased working capital, which is affected by the timing of supplier payments. Inventories were reduced by DKK 73 million in the second quarter of 2023. Investments for the second quarter of 2023 totalled DKK 37.6 million, compared with DKK 61.5 million for the second quarter of 2022. Investments are primarily related to IT and store network development, including the introduction of EA assortment in relevant AO stores.
• As at 30 June 2023, net interest-bearing debt totalled DKK 940.3 million against DKK 722.7 million at the same time in 2022. Net interest-bearing debt was 2.0 times the Last Twelve Months EBITDA. Net gearing is expected to be reduced for the rest of the year.
• AO has re-assessed the estimated useful lives of the automated warehouses. The re-assessment of the estimated useful lives from 10 years to 15 years will reduce depreciation by approximately DKK 17 million in 2023.

Company Announcement No. 6/2023

3/17

Brødrene A & O Johansen A/S

Interim financial report for H1 2023

Expectations for the year

The first half of 2023 confirmed expectations of a strong first quarter and a lower second quarter. Updated expectations for 2023 are as follows:

• Revenue updated to DKK 5,350-5,500 million from DKK 5.250-5.450 million.
• EBITDA unchanged in the range of DKK 435-465 million.
• Earnings before tax unchanged in the range of DKK 300-330 million. Due to the change in deprecation which will impact full-year EBT positively by approximately DKK 17 million, EBT is expected to be in the high end of the range of DKK 300-330 million.

The guidance assumes that demand in the second half of 2023 will continue to be negatively impacted by high cost inflation and increased interest rates which are expected to dampen activities in the building and construction industry. Revenue growth is expected to be flat to slightly negative in the second half of 2023. Margins are expected to be slightly lower than last year.

	Albertslund, 17 August 2023
Niels A. Johansen	Per Toelstang
CEO	CFO

Company Announcement No. 6/2023

4/17

Brødrene A & O Johansen A/S

Interim financial report for H1 2023

Financial and operating data for the AO Group

(DKKm)

Key figures

H1	H1	Q2	Q2	Full Year
2023	2022	2023	2022	2022

Consolidated revenue	2,670.3	2,570.1	1,266.1	1,318.8	5,375.0
Gross margin	632.9	618.6	299.0	323.6	1,310.3
Earnings before interest, taxes, depreciation
and amortisation (EBITDA)	214.5	230.3	92.6	119.4	491.6
Profit or loss before financial income and expenses (EBIT)	154.6	177.3	65.1	92.3	383.6
Financial income and expenses, net	(13.7)	(0.4)	(7.6)	(1.4)	(6.1)
Profit or loss before tax (EBT)	140.8	176.8	57.5	90.9	377.4
Tax on profit or loss for the period	(30.3)	(38.7)	(12.1)	(19.9)	(83.0)
Net profit or loss for the period	110.6	138.1	45.4	71.1	294.5
Non-current assets	1,771.8	1,713.9	1,771.8	1,713.9	1,727.3
Current assets	1,573.7	1,485.3	1,573.7	1,485.3	1,591.0
Total assets	3,345.5	3,199.2	3,345.5	3,199.2	3,318.3
Share capital	28.0	28.0	28.0	28.0	28.0
Equity	1,370.6	1,255.4	1,370.6	1,255.4	1,407.5
Non-current liabilities	534.5	367.2	534.5	367.2	539.5
Current liabilities	1,440.4	1,576.5	1,440.4	1,576.5	1,371.4
Cash flow from operating activities	(159.2)	(36.4)	(5.2)	73.8	215.8
Cash flow from investing activities	(68.8)	(247.6)	(37.6)	(187.1)	(333.3)
Of which investments in property, plant and
equipment, net	(52.0)	(106.0)	(29.3)	(52.7)	(164.5)
Cash flow from financing activities	193.3	147.8	42.7	113.4	(15.5)
Cash flow for the period	(34.7)	(136.2)	(0.1)	0.1	(102.0)
Financial ratios*
Gross profit margin	23.7%	24.1%	23.6%	24.5%	24.4%
EBITDA margin	8.0%	9.0%	7.3%	9.1%	9.1%
Profit margin	5.8%	6.9%	5.1%	7.0%	7.1%
Return on capital employed**	4.6%	6.0%	2.1%	3.0%	12.7%
Return on equity**	8.0%	11.1%	3.6%	5.8%	22.2%
Net gearing	2.0	1.6	2.0	1.6	1.1
Solvency ratio	41.0%	39.2%	41.0%	39.2%	42.4%
Book value	48.9	44.8	48.9	44.8	50.3
Share price at the end of the period	75.8	72.1	75.8	72.1	83.11
Earnings per share (EPS Basic), DKK***	4.1	5.1	1.7	2.6	10.8
Diluted earnings per share (EPS-D), DKK***	4.1	5.1	1.7	2.6	10.8
Average number of employees	844	795	841	853	822
Average number of employees, incl. external temporary workers	910	864	902	920	889

• Other financial ratios have been calculated in accordance with CFA Society Denmark's 'Recommendations and Financial Ratios'.
• Not translated into full-year figures.
• Basic EPS and diluted EPS have been calculated in accordance with IAS 33.

Company Announcement No. 6/2023

5/17