Harboes Bryggeri A/S : Interim report Q3 2022-2023

TRADING

REPORT

Q3 - 2022/23

COMPANY ANNOUNCEMENT NO. 10 - 2022/23

TRADING REPORT FOR Q3 OF 2022/23 FOR THE PERIOD 1 MAY 2022 TO 31 JANUARY 2023

To NASDAQ OMX Copenhagen

The Board of Directors of Harboes Bryggeri A/S has today considered and approved the following trading report for the third quarter of 2022/23.

Skælskør, 9 March 2023

Bernhard Griese

Chairperson

CEO SØREN MALLING STATES:

"Development in the third quarter show that our implementation of price increases to offset the very high cost of manufacturing and distributing our products has started to show positive results. We're continuing the close dialogue with customers on security of supply and compensation for the continued high costs. We're also seeing positive development in both Denmark and Germany, with an increased volume of business with our customers contributing to revenue growth. We're still facing challenges in Export markets and expect growth here to remain under pressure as long as the existing challenges of high distribution prices persist. We're working on several cases to strengthen the organisation so we can equip the business for future organic growth.

The launch of the new design for our Harboe products in Denmark has been well received by both customers and consumers. At the same time, we see a positive consumer trend with increased activity in the budget segment, where we compete.

The overall results for the first nine months of the year are not satisfactory, but the positive development in the third quarter show that we are on the right track in line with our strategy. We're therefore continuing our efforts with planned strategic initiatives to ensure a future platform for value-creating growth. We maintain our expectations for the full year of an EBITDA in the range of DKK 63m to DKK 103m and a profit/(loss) before tax in the range of DKK -30m to DKK 10m, and with the expectation that the results will be around the middle of the ranges."

FOR FURTHER INFORMATION

CFO Simon Andersson

Telephone: [phone]

Harboes Bryggeri A/S - CRN: 43 91 05 15 - Telephone: [phone] - www.harboe.com

SIDE 2

TRADING REPORT - Q1 TO Q3 OF 2022/23

REVENUE GROWTH DRIVEN BY MAIN MARKETS

• Net revenue increased by 17% to DKK 1,221m
• EBITDA decreased from DKK 71m to DKK 51m
• Loss before tax from continuing activities* was DKK -18m, compared to DKK -6m in the first nine months of 2021/22

Revenue growth was driven in particular by Beverages in Germany, where net revenue increased by 35%, while Export activities remain under pressure and decreased by 2%. Overall, revenue in Beverages increased by 16%, while revenue in Ingredients increased by 22%.

However, the increase in revenue was not enough to cover the still very high costs, so earnings before interest, taxes, depreciation and amortisation (EBITDA) in the first nine months of 2022/23 amounted to DKK 51m, compared to DKK 71m for the same period last year.

Depreciation, amortisation and write-downs for the period amounted to DKK 65m, which is lower than in the first nine months last year (DKK 73m), resulting in a loss before tax from continuing activities of DKK -13m, compared to DKK -5m last year.

* Discontinued activities related to Viru Ölu in Estonia

BUSINESS DEVELOPMENT

The development in revenue was driven by increasing sales and implemented price increases. In addition, expanded customer agreements contributed to increased activity, particularly in Germany, while increased business volume from the activities in Denmark contributed to the increase in revenue.

At EBITDA level, the results were significantly impacted by high costs, driven by the continued high price of raw materials, packaging, distribution and energy. Furthermore, earnings were affected negatively by falling export revenue.

Harboe is cooperating with customers to ensure continued supply, and regularly negotiates compensation for the increased costs in the sales prices.

As a result of the continued uncertainty surrounding energy supply, Harboe implemented the necessary measures to be able to continue production without gas during the period. These measures have also entailed additional costs.

NET REVENUE

SEGMENT REVENUE, DKKm

SEGMENT EBITDA, DKKm

Export

Denmark

68

DKK 314m

1.111

1.221

51

DKK 399m

+18%

26%

+0%

32%

DKK 1.221m

9

+17%

110

0

-26

42%

Germany

DKK 508m

Beverages Ingredients Not allocated Total

Beverages Ingredients Not allocated Total

+33%

Harboes Bryggeri A/S - CRN: 43 91 05 15 - Telephone: [phone] - www.harboe.com

SIDE 3

TRADING REPORT - Q3 OF 2022/23

REVENUE GROWTH AND IMPROVED EARNINGS

• Net revenue increased by 32% to DKK 396m
• EBITDA increased from DKK 3m in Q3 2021/22 to DKK 24m
• Profit before tax from continuing activities was DKK 1m, compared to a loss of DKK -23m in Q3 2021/22

Revenue growth in Q3 was also driven by all markets, with net revenue in Germany increasing by 45%, while in Denmark net revenue increased by 26% and Export activities increased by 23%.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) in Q3 2022/23 was DKK 24m, compared to DKK 3m for the same period last year. The result was positively affected by revenue growth, but earnings remain under pressure from high costs.

Profit before tax from continuing activities amounts to DKK 1m for the period, compared to a loss of DKK -18mlast year.

BUSINESS DEVELOPMENT

The continued revenue growth in Germany and Denmark was driven by realised sales price increases and increased business volumes in both markets.

In the quarter, revenue from Export markets increased by 23% compared with the same period last year, but this should be seen in the context of a very weak quarter in 2021/2022. Activities remain under pressure, mainly due to very high transport prices, and the implemented price increases continue to have a negative impact on demand.

In the third quarter, the focus was also on continuously cost savings initiatives in order to counter the cost increases, and we are in close dialogue with customers to ensure continued delivery and compensation for the increased costs.

NET REVENUE

Export
DKK 124m
+23%		Denmark
31%	27%	DKK 105m
+26%
	Net revenue Q3
	DKK 396m
	+32%

42%

Germany

DKK 167m

+45%

NET REVENUE DKKm						EBITDA, DKKm								PROFIT/(LOSS) BEFORE TAX, DKKm
			+32%									28	+70 0 %											1
			421	404
		374	396
								24
																	-1
299												19								-4
														8									-15
									3									-23
21/22 Q3	21/22 Q4	22/23 Q1	22/23 Q2	22/23, Q3		21/22 Q3	21/22 Q4	22/23 Q1	22/23 Q2	22/23, Q3	21/22 Q3	21/22 Q4	22/23 Q1	22/23 Q2	22/23, Q3
Harboes Bryggeri A/S - CRN: 43 91 05 15 - Telephone: [phone] - www.harboe.com															SIDE 4

SELECTED FINANCIAL HIGHLIGHTS AND KEY FIGURES

	Q3		Q1 - Q3	Full year
DKK'000	2022/23	2021/22	2022/23	2021/22	2021/22
Earnings (continuing activity)
Net revenue	396,039	298,954	1,221,445	1,045,618	1,419,353
EBITDA	24,064	2,967	51,246	71,337	99,016
Earnings before interest and tax (EBIT)	2,686	(21,878)	(13,299)	(1,313)	(796)
Profit/(loss) before tax from continuing activities	561	(23,061)	(18,350)	(5,891)	(6,957)
Profit/(loss) after tax from continuing activities	1,141	(17,704)	(13,232)	(5,378)	(4,227)
Balance
Non-current assets	633,791	667,222	633,791	667,222	653,619
Current assets	462,035	407,350	462,035	407,350	489,403
Equity	667,619	675,177	667,619	675,177	680,903
Non-current liabilities	152,621	170,620	152,621	170,620	167,172
Current liabilities	275,586	228,775	275,586	228,775	294,947
Balance sheet total	1,095,826	1,074,572	1,095,826	1,074,572	1,143,022
Net interest-bearing debt	145,575	130,523	145,575	130,523	82,930
Working capital	313,937	300,871	313,937	300,871	278,212
Investments
Investment in intangible assets	0	52	0	1,156	1,219
Investment in tangible assets	20,789	12,288	47,967	34,609	49,452
Depreciation, amortisation and write-downs	21,378	24,845	64,545	72,650	99,812
Cash flows
Cash flows from operations	38,189	36,543	(18,430)	38,214	100,134
Cash flows from investments	(19,815)	(12,406)	(44,284)	(32,797)	(47,119)
Cash flows from financing	(4,096)	(5,994)	(10,588)	(19,031)	(23,384)
Change in cash and cash equivalents (free cash flow)	14,278	18,143	(73,302)	(13,614)	29,631
Key figures
EBITDA margin	6.1%	1.0%	4.2%	6.8%	7.0%
Operating margin	0.7%	-7.3%	-1.1%	-0.1%	-0.1%
Solvency ratio	60.9%	62.8%	60.9%	62.8%	59.6%
Return on invested capital (ROIC) (prev. 12m)	-0.8%	0.5%	-0.8%	0.5%	-0.3%
Net interest-bearing debt, average/EBITDA (prev. 12m)	1.7	1.2	1.7	1.2	1.1
Number of full-time employees	523	496	519	498	504
kg CO2/hL	4.0	2,9	3.2	2.7	2.7

REVENUE GROWTH AND CONTINUED FOCUS ON MEASURES TO IMPROVE PROFIT

Harboe's Q3 revenue increased by 32% to DKK 396m compared with the same period last year, driven by the developments in all markets and in both Beverages and Ingredients.

The Group's EBITDA in the third quarter was positively affected by the implemented price increases. We remain in close negotiation with suppliers about prices and security of supply. Internally, work is ongoing to ensure supply chain efficiency, and we continue to cooperate and negotiate with customers about the security of supply and compensation for high costs.

The EBITDA margin was 6% in the third quarter, compared to 1% for the same period last year.

Investments of DKK 21m were made in Q3, including finalising investment in production facility for alcohol-free beer in order to meet an increasing demand in this category.

The group's net interest-bearing debt amounted to DKK 146m as of 31 January 2023, slightly higher than for the same period last year.

Cash flow from operations were DKK 38m, compared to DKK 37m for the same period last year. This development was influenced among other by the improved earnings and working capital. Free cash flow was affected by several investments but remains positive at DKK 14m.

The improved earnings in the third quarter are a positive contribution to a continued good financial basis that supports the implementation of the Group's strategy.

Harboes Bryggeri A/S - CRN: 43 91 05 15 - Telephone: [phone] - www.harboe.com

SIDE 5