Reported third quarter July – Sep 2023 (compared to July – Sep 2022)

• Net sales were KSEK 167,697 (33,593)
• Adjusted EBITDA was KSEK -3,106 (-1,128)
• EBITA was KSEK -4,732 (-4,679)
• Net financial debt / Adjusted EBITDA was -43.17 (-26.16) [1]
• Cash flow from operating activities was KSEK -256,635 (-70,823)
• ROCE was -10.7% (-1.3%)

During Q3, Go North reported strong net sales, mainly driven by continued organic sales as no new acquisitions were made. Given the increase in overhead costs, adjusted EBITDA and EBITA demonstrated poorer performance compared to the same quarter last year. Given the current negative Adjusted EBITDA on a reported basis, the Company's Net Debt / Adjusted EBITDA ratio for the period is negative. Cash flow from operating activities was influenced by a previous acquisition's upfront payment and higher inventory levels for the holiday season. Overall, the financial results underscore a strategic focus on organic growth and investments in core capabilities, in addition to challenging market conditions.

Key Points of Interest

• Covenant Breach Acknowledged: In the reporting period of Q3’23, it became evident that the Group had breached its financial covenants. The primary factors for this breach are the lack of profitability as well as not being able to raise sufficient new capital. As press released by Go North on 6th October 2023, Go North's parent company was unsuccessful with the contemplated convertible bond issue which would have provided Go North with additional capital. Due to IAS 1 point 69, the bond has now been reclassified as short-term. In response to this, The Group has initiated a proactive dialogue with the bondholders and will apply for a waiver to address these covenant violations.
• Strategic Pause on Acquisitions: Go North strategically halts all acquisitions, redirecting focus on optimizing the existing brand portfolio. 
• Lowered financial projections and a restructuring program underscore Go North's commitment to recalibrating resources and fortifying financial standing.
• Renewed emphasis on refining marketing and replenishment strategies, Go North strategically aligned with the upcoming holiday quarter, focusing on fast-moving and more profitable products within its existing portfolio.
• To enhance profitability and improve cash flow from operations, Go North accelerated the sunsetting and liquidation processes for slower-moving products.
• Leveraging cutting-edge technologies, AI tools, and collaborations within the Amazon platform.
• Reallocation of marketing budgets, targeted price increase experimentation.

“We’re making deliberate decisions to reinforce our financial standing and adapt to market dynamics. By concentrating on the growth of our existing brands and leveraging a product-centric focus, we are not just adapting to change but driving it. Our focus remains unwavering on enhancing organic profitability and operational efficiency. The decision to pause acquisitions and halting fundraising shows our dedication to rebuild a resilient and sustainable business model”  Johan Hallenby, CEO/ Founder Go North Group AB

Go North remains committed to strategic initiatives that enhance profitability and optimize cash flow. The ongoing restructuring program positions the company for organic growth, improved margins, and a streamlined operational focus.

The full report is published on Go North’s website at https://gonorth.co/investor-relations/ 

[1] For bond net debt covenant see pro forma income statement.