Humble : Annual Report 2022

ANNUAL REPORT 2022

TABLE OF CONTENTS

PAGE

-	CEO LETTER	02
-	ABOUT HUMBLE GROUP	03
-	OUR STRATEGY	05
-	BUSINESS SEGMENTS	09
-	FINANCIAL TARGETS	17
-	CORPORATE GOVERNANCE	18
-	BOARD OF DIRECTORS	20
-	MANAGEMENT TEAM	21
-	SUSTAINABILITY WORK 2022	22
-	FINANCIAL REPORT	39

2022 IN NUMBERS

A LEADING FMCG POWERHOUSE

OFFERING BETTER CHOICES FOR THE EVERYDAY

4 800	22%
MSEK	ORGANIC GROWTH
NET SALES	pro forma 2022

551	11.5%
MSEK	ADJUSTED EBITDA
ADJUSTED EBITDA	MARGIN

504	10.5%
MSEK	EBITDA
EBITDA	MARGIN

255	24 080
MSEK CASH FLOW	NUMBER OF
FROM OPERATING ACTIVITIES	SHAREHOLDERS

1

CEO LETTER

CONSOLIDATION AND DEVELOPMENT IN A CHALLENGING MARKET

When we summarize the past year, it is clear that 2022 was an eventful year. We have had challenges with constant price increases, the introduction of the UTP directive, increased interest costs, extraordinary shipping costs, disruptions in the value chain and raw material shortages, which are critical factors and areas for a product company like Humble. Despite the challenges, we have managed to maintain strong underlying growth, where we increased pro forma turnover by a whopping 22 percent and at the same time defended our profitability. It is in times that these opportunities arise. I dare say that we are better equipped than ever to continue on the beaten path of building the leading modern FMCG group.

During the year, we have developed and changed the Group in many ways. We have recently changed accounting principles to IFRS and launched the new business segments Future Snacking, Quality Nutrition, Sustainable Care and Nordic Distribution. Overall, the new segments mean a clearer operational focus on the respective core business and show how we position our subsidiaries to jointly take market shares and compete in the traditional trade. At the time of writing, it is absolutely bursting with initiatives and possible synergies between the companies, where my hope is that we will see the results of successful investments and international expansion within a not too long time.

The challenging and volatile market in which we find ourselves also shows the strength of belonging to an entrepreneur-driven group, where the businesses help each other to, for example, obtain raw materials and continue to run profitable campaigns with collective strength. Relatively speaking, we have managed to maintain a good gross profit margin, which testifies to the strength of a dynamic business model where our decentralized management offers the necessary flexibility to be able to adapt the business weekly to constantly new conditions. This is a marked difference compared to industrial and older FMCG companies, with a significantly slower pace of change and innovation. Our ability to adapt only makes me more convinced that we are well positioned to capitalize on the impending transformation towards health and sustainability, which is still in its infancy but is inevitably happening.

We can state that Humble has maintained a lower acquisition rate during 2022 and the beginning of 2023 compared to the previous year. The cost of capital has increased significantly, and it is even more important to obtain maximum returns from the businesses that are already part of the Group. At the same time, we have brought in 13 new operating companies that already contribute both with strategic opportunities and strong underlying cash generation. The new companies open doors for our existing portfolio, strengthen the platform and increase distribution through more international markets and other sales channels.

The financial outcome linked to our financial goals has continued to develop well, albeit not at the same pace as in 2021. We have far surpassed the growth goal of at least 15 percent organically. The fulfillment rate of the turnover target increased from 23 percent to 43 percent and the profitability target increased from 25 percent to 34 percent. the Group's long-term goal of having a net debt/pro forma adjusted EBITDA of less than 2.5 times is a high priority to reach. We therefore work intensively on optimizing our cash generation and the use of working capital to organically strengthen our liquidity and balance sheet.

In terms of investment, we have developed the Group at group level to be ready to scale the business and streamline our operational platform. We have had an unusually high rate of investment in fixed assets, which has been according to plan to increase the Group's efficiency and the possibility of automation. I also want to highlight the modern BI platform that we built and integrated against 17 ERP systems in real time. Via the platform, we can in a resource-efficient way and with high accuracy follow the lion's share of the Group in depth and offer better decision-making support to our management teams in their daily business development.

Our vision of building a leading FMCG player with a focus on health and sustainability stands firm. Of course, it has been a challenging climate in 2022, but it is with some confidence that we look ahead and see opportunities to grow profitability faster and improve cash generation in Humble. I am very positive about our continued journey, both in the short and long term. Our companies are well positioned to take advantage of the opportunities that exist in the fast-growing product segments in which we operate, and we will continue to drive profitable growth with our business model and corporate culture as a foundation.

Finally, I would like to say a big thank you to all the fantastic employees and entrepreneurs for your commitment and ability to successfully navigate a tough market. I am constantly impressed by the solutions you find and how you develop your businesses to the next level daily. You are the hub of our culture and convey a sense of energy and faith in the future that our customers want to be a part of.

Simon Petrén

CEO HUMBLE GROUP AB (publ)

2

ABOUT HUMBLE GROUP

Humble Group is a Swedish FMCG group that supplies cutting edge healthy sugar-reduction and vegan products as well as eco-friendly and sustainable food and hygiene products for the broader FMCG market.

The Group consists of a number of manufacturers, distributors and well-recognized consumer brands that refine, develop and distribute functional and sustainable fast-moving consumer products on a global scale. Our business model is to both organically grow and acquire profitable, cash generative and market-leading FMCG companies within Humble Group's niche. Through the Group's operational platform, synergies can be realised to increase the respective companies' profitability and growth. Humble distributes over 36 000 products to 12 000 B2B customers and covers all strategic sales channels in the industry with a global sales footprint in 118 markets.

13	4	118
NEW ACQUISITIONS 2022	OPERATING SEGMENTS	MARKETS
36 000+	47+	1 000+
PRODUCTS	OPERATING ENTITIES	EMPLOYEES