Midsona AB: Interim Report, January-June 2016

Guía de Regalos

LUND, Sweden–(BUSINESS WIRE)–Regulatory News

Midsona (STO:MSONA) (STO:MSONB) strengthens organic profile and improves
earnings.

APRIL-JUNE 2016 (SECOND QUARTER)

· Net sales amounted to SEK 351 million (223).

· Operating profit before amortisation/depreciation and impairment,
EBITDA, amounted to SEK 23 million (14), before non-recurring items.

· Profit for the period was SEK 11 million (12), corresponding to
earnings per share before and after dilution of SEK 0.39 (0.53).

· Cash flow from continuing operations amounted to a negative SEK 22
million (23).

· A new financing agreement was signed with Danske Bank for credit
facilities totalling SEK 425 million.

JANUARY-JUNE 2016 (SIX MONTHS)

· Net sales amounted to SEK 701 million (455).

· Operating profit before amortisation/depreciation and impairment,
EBITDA, amounted to SEK 46 Mkr (29), before non-recurring items.

· Profit for the period was SEK 22 million (11), corresponding to
earnings per share before and after dilution of SEK 0.77 (0.49).

· Cash flow from continuing operations amounted to a negative SEK 2
million (37).

SIGNIFICANT EVENT AFTER THE REPORTING PERIOD

· Midsona acquired Internatural AB, a company with a leading position in
organic food products in Sweden and Norway, including the Kung Markatta
and Helios brands.

Comments by the CEO

Midsona – market leader in organic colonial products

Sales of organic goods have shown strong growth in both the Nordic
region and globally in recent years. The trend has been particularly
strong in Midsona’s largest market, Sweden, where sales of organic
products increased by some 39 percent in 2015. The organic segment is
expected to continue growing in the Nordic region for the next few
years. Following acquisitions, Midsona is now the Nordic market leader
in organic colonial products. Just over a year ago, Midsona acquired
Denmark-based Urtekram International A/S (Urtekram). The acquisition was
strategically important as it expanded the product portfolio of
proprietary brands positioned for the attractive organic growth segment.
Urtekram has been successfully integrated into Midsona’s operations over
the past year. The acquisition of Internatural AB (Internatural) at the
start of July 2016, with its leading organic brands Kung Markatta and
Helios, marks the next step for Midsona and makes the company the market
leader in organic colonial products in all our principal markets. Kung
Markatta is a market leader in Sweden, Helios is a leader in Norway and
Urtekram is a market leader in Denmark and Finland. Urtekram is also now
the number two product on the Swedish and Norwegian markets. Following
the acquisition, organic products account for over half of Midsona’s
sales.

Acquisition of Internatural strengthens Midsona

Internatural is the company’s largest acquisition to date. In addition
to its proprietary brands Kung Markatta and Helios, Internatural
distributes market-leading products such as Alpro, Yogi Tea and Green &
Black’s. Internatural reported net sales of SEK 637 million and EBITDA
of SEK 65 million for the 2015 financial year. Midsona expects
Internatural to achieve significantly increased net sales and an
improved EBITDA. The acquisition of Internatural with its Kung Markatta
and Helios brands, combined with Midsona’s brands such as Urtekram and
Friggs, position us as a leading Nordic group geared towards plant-based
products with a particular focus on organic products.

Good opportunities for synergies

Synergies will mainly be achieved through purchasing, logistics and
production. For example, Midsona has a full-scale facility for producing
organic food products in Mariager, Denmark, whereas Internatural
purchased all its products for Kung Markatta and Helios from a third
party. Our assessment is that it will be possible to produce a
considerable proportion of these products in Mariager, resulting in cost
savings. Larger purchasing volumes will provide better opportunities for
negotiation and subsequent lower prices. Synergies over the next few
years are expected to result in an annual boost of around SEK 35 million
to EBITDA, around SEK 25 million of which is expected to be achieved by
the end of 2017.

Financing through acquisition loan and rights issue

Midsona will fund the acquisition of Internatural using an existing
credit facility combined with an acquisition loan from Danske Bank.
Approximately half the new acquisition loan is in the form of a bridge
loan and Midsona plans to carry out a share rights issue totalling SEK
400 million later this year, possibly combined with other financing
solutions, such as a bond loan. The rights issue will enable Midsona to
maintain its financial ratios while achieving its growth targets.
Midsona’s largest shareholder, Stena Adactum AB, has agreed to subscribe
for its pro rata share of the rights issue and provide an underwriting
guarantee for the remainder of the issue. Midsona will provide
shareholders with further information as soon as possible.

Continued improvement in sales and earnings

In the second quarter, Midsona’s sales rose by 57 percent to SEK 351
million (223). Operating profit before amortisation/depreciation and
impairment, EBITDA, amounted to SEK 22 million (16). Adjusted for
non-recurring items, EBITDA was SEK 23 million (14). Larger than usual
investments were made in sales promotion measures in the second quarter,
particularly for the Friggs and Urtekram brands in Sweden. For Friggs,
this involved investments in the new range of corn cakes. They have been
well received by consumers, resulting in a rapid increase in sales. We
also invested in continued development of the distribution of Urtekram
in Sweden. There is very significant demand for organic products and
this led to the issue of bottle necks and additional logistics costs. We
are now implementing measures to streamline the logistics chain.

The Nordic leader in health and well-being

Midsona has undergone significant change. It has gone from a sprawling
structure with numerous subsidiaries focussing on a wide range of
activities, with products ranging from pharmaceuticals to washing
detergent and a presence in almost all parts of the value chain to being
a company with a focus on strong brands in growth segments such as
plant-based food products and organic products. A number of the Group’s
brands are now market leaders in their respective segments. Our ambition
is to continue growing these brands, achieving synergies from the
acquired Internatural and preparing for new acquisitions. We are close
to achieving our vision of being the Nordic leader in health and
well-being.

Peter Åsberg, President and CEO

This information is such that Midsona AB (publ) is obliged to disclose
in accordance with the EU Market Abuse Regulation and the Swedish
Securities Market Act. The information was submitted, through the
provision of Lennart Svensson, for publication on 15 July at 08:00 CET.

About Midsona

Midsona holds a strong position in the Nordic market with own strong
brands within healthfoods, personal care and hygiene. Midsona also sells
a number of licensed internationally established brands. Our products
are sold through grocery and convenience stores, pharmacies, health
stores and internet. Midsona’s priority trademarks are: DALBLADS,
FRIGGS, MIWANA, MYGGA, NATURDIET, SUPERNATURE, TRI TOLONEN and URTEKRAM.
Midsona has annual sales of about MSEK 1,174 (2015). The Midsona share
(MSON) is listed on NASDAQ OMX Stockholm, Small Cap. For further
information: www.midsona.com

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Contacts

Midsona
Peter Åsberg, MD and CEO
+46 (0)730 26 16 32