Description of risk
‍Transport, water and energy consumption, packaging, warehousing, production, and food waste are key factors to be addressed in the Company’s environmental and climate impact. The production facilities engage in organized environmental work, including action plans and follow-up in a number of areas.Major negative environmental impact or non-compliance with environmental requirements represents a risk of detrimental impact on the Company’s reputation. More extreme weather is becoming an increasing challenge in food production and, therefore, also a challenge to Midsona. Warming of the climate may lead to higher operating costs in the form of a greater need for cooling in warehouses. There is also a risk that drought, hot weather, storms, floods, and cold may significantly reduce agricultural production in several important areas, resulting in both price increases and problems in obtaining volumes (see also below under the risk factor "Raw material prices and raw material shortages").In its production of foods and cosmetics, the Company is dependent on access to clean, fresh water. The requirement for fresh water, therefore, constitutes a risk to Midsona’s production of food and cosmetics. There is also a risk that water shortages may affect one or more of the countries in which Midsona conducts operations.Negative climate impacts arising from fossil fuel goods transports, business travel using fossil fuel vehicles, and consumption of fossil energy to power operations at all offices, warehouses, and production facilities also represent risks to Midsona’s operations. In all countries where Midsona conducts operations, environmental legislation already exists, including taxation of fossil fuels and plastics, for example.Any tightening of climate policy, new regulations, and changes in market conditions may affect operations dependent on fossil fuels, which may increase energy costs and operating expenses. Should these risks materialize, they would impact the Company’s earnings, for example, through their direct effect on costs associated with transport and production.

Risk management
We address the risk by monitoring developments closely to gain important insights that may contribute to better-informed decision-making and financial planning. To reduce our impact in terms of waste, our aim is to increase our focus on waste recycling and reducing food waste.Midsona operates in countries with a relatively low risk of fresh water shortages. In all divisions, we strive actively to keep water consumption low. The Spanish business involves the most water-intensive production, and we have taken action there to lower our fresh water consumption.We have taken direct action to reduce our energy footprint by using 100 percent renewable electricity at all offices, warehouses, and production facilities in Division Nordics and Division North Europe. We produce a certain amount of renewable solar energy in all divisions. For increased transport efficiency, we have a target to increase our focus on fossil-free transports.In addition, even before the pandemic, we had considerably increased the use of video conferencing as an alternative to business travel, as we always encourage all our employees to avoid unnecessary travel. We engage in systematic preventive environmental work at our production facilities and set environmental requirements for our carriers and suppliers to reduce our environmental impact.Midsona has also adopted science-based targets approved by SBTi (the Science-Based Target initiative) to reduce the Company’s climate impact. Through clear control of, and responsibility for, our climate targets within Midsona’s management, our climate impact is also a clear part of the Company’s business strategies and financial planning.Furthermore, Midsona has carried out scenario analyses to assess in detail what effects climate change may have on Midsona’s operations in future years. Midsona applies the recognized TCFD framework for the best possible analysis of its climate-related risks and opportunities, which are also reported within the Carbon Disclosure Project (CDP). The aim is to be able to optimally measure action and performance to mitigate climate-related risks and to reduce greenhouse gas emissions. CDP helps us visualize our environmental impact and assess environmental actions.

Description of risk
As the Company’s operations largely consist of developing, producing, and selling organic products, health foods, and consumer health products, it is crucial to Midsona that business partners, investors, and consumers associate the Company’s operations and brands with positive values. Both a good reputation and credibility are vital to the Company’s enterprise value and sales success.Reputation and credibility may easily be damaged if the Company, a supplier, or a partner, for example, causes damage to the environment, exploits its workforce, produces harmful products, or otherwise commits acts in conflict with the values that the Company’s brands represent. Such incidents could result in a negative sales trend and negative impacts on the Company’s earnings.Risks associated with corruption may also damage the Company’s reputation, which could affect its business relationships and, by extension, its profitability. Should these risks materialize, they could have a negative impact on the Company’s operations and earnings, for example, in the form of decreased sales.
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Risk management
We conduct systematic prevention work both internally and externally with partners through our Code of Conduct, Supplier Code of Conduct, policies, and other guidelines for our employees. This ensures the reputation of our Company and brands is upheld through the right quality, functionality, product labeling, and accurate market communications.In relationships with suppliers, our Supplier Code of Conduct, the supplier’s self-assessment, and an active partnership in terms of business ethics are the most important tools for taking responsibility for the value chain. The Group also has a whistleblower policy in place, which everyone is encouraged to use at the slightest hint of corruption or breach of our business ethics.

Description of risk
Here’s the reformatted and spaced version of your text:In the Company’s view, it has become more difficult and costly in recent times to insure production facilities in the food industry. This difficulty is also influenced by the technical status of the Company’s production facilities.Production facilities, production equipment, and other assets may be damaged by fire, power outages, and other physical hazards in the wake of environmental and climate change, such as flooding. There is a risk that insurance cover for the Company’s assets may not be adequate. Inadequate insurance cover could negatively affect the Company’s financial position in the event of damage or loss.An unplanned production stoppage may directly impact customer deliveries, as a high degree of production is order-based. Should this risk materialize, it could negatively affect the Company’s financial position.
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Risk management
We work with external insurance brokers to maintain well-balanced, cost-effective insurance cover for our assets in line with policy. An extensive range of insurance is maintained, including property and business interruption insurance, transport insurance, financial loss insurance, and third-party liability and product liability insurance. The Company works systematically both to minimize the risk of incidents and to have contingency plans in place to limit the effects of possible incidents.

Description of risk
Here’s the reformatted and spaced version of your text:In the Company’s view, it has become more difficult and costly in recent times to insure production facilities in the food industry. This difficultyThe business is dependent on a properly functioning and secure IT infrastructure. Disruptions or faults in critical systems have a direct impact on our production and distribution activities, as well as on our financial reporting.Such issues may be caused by system overload, lack of competence, or external influences, including unauthorized access, hacking, or physical damage to the infrastructure. Sophisticated data intrusion, cyberattacks, IT-related fraud, and shortcomings in the handling of customer and employee information could negatively affect both financial capacity and reputation. is also influenced by the technical status of the Company’s production facilities.Production facilities, production equipment, and other assets may be damaged by fire, power outages, and other physical hazards in the wake of environmental and climate change, such as flooding. There is a risk that insurance cover for the Company’s assets may not be adequate. Inadequate insurance cover could negatively affect the Company’s financial position in the event of damage or loss.An unplanned production stoppage may directly impact customer deliveries, as a high degree of production is order-based. Should this risk materialize, it could negatively affect the Company’s financial position.
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Risk management
We work continuously to keep our IT systems well protected from attacks and intrusions and to improve the level of service regarding the IT infrastructure, in line with policies, guidelines, and procedures. Processes are established to increase information security within and between systems.For example, investments are being made to improve recovery plans and data storage functions. Information security is regularly monitored through IT security audits. We maintain a centralized IT environment for better control and cost awareness, while also collaborating with local experts to ensure compliance with all legal requirements.

Description of risk
Midsona is dependent on certain major suppliers, particularly in the health food segment, to secure its supply of goods in the short term. If the agreement with a critical supplier were to be terminated prematurely, renegotiated on less favorable terms, or if a critical supplier were to declare bankruptcy or experience extensive operational disruptions, there is a risk of disruptions in the flow of goods.Additionally, if a critical supplier were to be adversely affected by external factors, the capacity for sales could be negatively impacted if Midsona is unable to replace the supplier at commercially acceptable prices within a reasonable period. Delayed deliveries may negatively affect Midsona’s commitments and its relationships with customers, causing customers to cease buying the Company’s products and/or, in some cases, require refunds.If supplier risks were to arise, this could have an overall negative impact on Midsona’s operations, profits, and brand.
Risk management
To minimise risks in the supply of goods, we maintain close dialogue on volume critical products with our major suppliers to ensure reliable delivery. To reduce our dependence on individual suppliers, alternative suppliers are established, above allin connection with delivery-critical, volume raw materials. We assume responsibility in the value chain by cooperating with our suppliers in areas such as quality, safe raw materials and products, the environment, human rights and ethical enterprise. We monitor, rate and follow up suppliers using our supplier assessment system. Suppliers are rated in terms of sustainability, quality and safety. The findings from the risk mapping increases awareness of our sustainability risks in the value chain, improving risk management and the capacity to focus on the risks that may cause us most harm. In addition, this allows us to maintain better and more constructive dialogue with our suppliers and affords us opportunities to work with them to improve key processes.

Description of risk
The Group has eight production facilities: five for organic products, one for health food products, and two for consumer health products. These facilities are located in Sweden (1), Denmark (2), Finland (1), Germany (2), France (1), and Spain (1). At the production facilities in Denmark (1), Germany (1), France (1), and Spain (1), substantial volumes of certified organic products are produced for the Company’s brands.Stoppages or disruptions in the production processes at any of these facilities—caused, for example, by fire, mechanical faults, technical disruptions, weather conditions, chronic climate change, natural disasters, labor market disputes, or terrorist activities—may have a negative impact in the form of direct damage to property. Unplanned production stoppages may also directly affect customer deliveries, as a high degree of production is order-based.In addition, increased inflationary pressure, which is likely to lead to higher interest rates and increased rental costs following index adjustments, combined with increased energy costs, could substantially increase costs at the Company’s production facilities.Should the above risks materialize, they could have a significant impact on the Company’s operations and earnings.
‍Risk management
For some volume products, production may be transferred to other machines. Machines are maintained continuously in accordance with established schedules, and major maintenance events are typically scheduled for the summer months. Compensatory investments are made according to a predetermined plan that the Group follows, and new investments are made when necessary.We work with external insurance brokers to maintain well-balanced and cost-effective insurance cover for our assets. An extensive range of insurance is maintained, including property and business interruption insurance, transport insurance, financial loss insurance, and third-party liability and product liability insurance.The Company works systematically to minimize the risk of incidents and to have contingency plans in place to limit the effects of possible incidents.

Description of risk
Organic products and brands represent one of the cornerstones of the Company’s operations. However, there is always a risk of serious product liability incidents. Within the EU, market-wide rules determine what may be considered organic. These rules outline how production is to be performed, how products are to be labeled, how control is to be exercised, and the regulations regarding imports of organic products from countries outside the EU.An important aspect of the checks on organic production is traceability, ensuring that goods can be tracked during the manufacturing stage and verifying that they have been produced organically. This requires accurate documentation and information about how products are manufactured. Shortcomings or inaccuracies in such documentation and information may have significant consequences for Midsona. The handling of food and other products sold by Midsona, such as pharmaceuticals, is a critical aspect of the Company’s operations, imposing strict demands on traceability, hygiene, and handling. Shortcomings in product handling or safety checks could lead to contamination, allergic reactions, personal injury, or other types of damage. Such incidents may harm the Company’s reputation, reduce stakeholders’ trust in the Company’s products, and necessitate product recalls or repurchases.Recalls can damage the Company’s reputation and become costly if goods in stock cannot be sold. Additionally, product liability claims may arise if a product is deemed to have caused personal injury or harm. Should such risks materialize, they could negatively impact the Company’s reputation and earnings.
‍Risk management
Our aim is for our own production facilities to be product safety certified. We strive to take responsibility at all stages of the value chain by working with our suppliers on quality, safe raw materials, and safe products. We focus on supplier quality and product control, as well as maintaining high social and environmental standards in the supply chain, with the goal of ensuring safe and sustainable suppliers. Our quality and purchasing functions have collaborated to map the risks arising in the process to ensure approved, safe, and sustainable suppliers and the manufacture of our products. Our work on quality and product safety is guided by applicable laws, official requirements, customer expectations, industry guidelines, and internal policies, procedures, and instructions. Strict quality requirements are applied in all processes to minimize the risk of shortcomings, product recalls, and product liability claims. Any complaint flows are detected early through our quality assurance system to enable a proactive response. Our products are certified to a wide range of standards, all of which set stringent requirements for quality, environmental, and sustainability issues. These certifications serve as a stamp of quality for our products. Our insurance solution includes third-party liability and product liability insurance to cover any product liability claims.

Description of risk
To fulfil its goals, Midsona is dependent its ability to recruit, retain and develop qualified and motivated employees. There is stiff competition for qualified staff.
‍Risk management
Through annual staffing, skills and succession planning, Midsona ensures that employees are recruited and that they stay and develop the right skills. Midsona focuses continuously on making the Company an attractive employer, where health and safety in the workplace, wellness and marketable and competitive employment benefits are important parameters. A modern and attractive corporate culture is also an important factor in the recruitment of workers.

Description of risk
Legal risks include a number of different risks in a number of separate areas.Changes in legislation, legal infringements within the business, maintenance of permits and certifications and shortcomings in agreements entered into by Midsona are some examples of legal risks that may have negative financial consequences to Midsona.
‍Risk management
Midsona continuously monitors developments in upcoming legislation and a number of areas and, with external advisers, addresses any legal risks identified. Midsona has also developed systematic and controlled follow-up of permits, certifications and licenses. Our legal, regulatory and quality organisations together manage existing and new requirements, laws and guidelines from government agencies, as well as management of permits, certifications and licenses in a quality management system.

Description of risk
‍Midsona’s customers are mainly pharmacy, grocery and health food chains that also offer competing products sold under their own brands, which is why many of Midsona’s customers can also be regarded as competitors to some extent. In theCompany’s view, these players are not dependent on individual brands and can hold back price increases, making increased marketing initiatives necessary. If these players widen their assortments under their own brands, this may lead to further competition and increased price pressure. Should these risks materialise, the impact on the Company’s earnings would be substantial, above all in the form of decreased sales.

Risk management
We work actively on development and innovation of our brands to earn the place of each brand on the shelf in shops and, at the same time, to convey a clear and accurate message to consumers at the point of sale. The customer’s and consumer’s trust in our brands is of crucial importance to our competitiveness and long-term development. Without strong trust in the Company’s brands, it would be very difficult to capture market shares and to grow. Reliable development, innovation and sustainability processes foster conditions for gaining and retaining the trust of customers and consumers.

Description of risk
‍Consumers change their buying behaviour and new consumer trends come and go. There is always a risk that changes in consumer behaviours, or when new trends arise, are not seized upon in time, leading to a loss of competitiveness visà-vis competitors. If the Company’s competitors are better at monitoring consumer behaviour and new trends, there is a risk that the Company will lose competitiveness. Should this risk materialise, the impact on the Company’s earnings, in the form of reduced sales, would be substantial.

Risk management
To help people live a healthy life, it is vital that we recognise trends and changes in consumer behaviour early. That requires knowledge of trends, consumer behaviours and product content. We believe we have well-developed practices and processes for actively monitoring external developments and identifying new consumer behaviours and trends. We attend major trade fairs in Europe andNorth America, read and analyse trend reports and buy market data on our local markets.

Description of risk
‍Midsona purchases raw materials, such as grain, rice, nuts, almonds and fruit mainly from suppliers in Europe, South America and Asia. Both the supply of raw materials and raw material prices may be affected by strong demand, combined with low supply or other external factors beyond Midsona’s control, such as agricultural policy decisions, subsidies, trade barriers, increased energy prices, military conflicts, acts of terrorism, crop yields, events on raw-material exchanges and the cost of manufacturing the raw material. Normally, price reviews take place once a year. However, higher prices for raw materials may require Midsona to further raise its product prices over and above customary price revisions. It may be difficult, generally, to get price increases passed on to customers directly. In special cases, discussions are held with customers continuously during the year in the event of a drastic rise in the price of a raw material. If Midsona does not succeed in passing on a price increase to its customers, there is a risk that this will negatively affect the Company’s margin. Another risk is that the Company will be affected by a shortage of raw materials if its suppliers are unable to supply the quantities ordered.

Risk management
We continuously monitor the trend of prices for all important raw materials to stand a good chance of contracting volumes at the best possible time. To secure both supply and price of key raw materials, supplier agreements are normally signed covering the requirement over the six to twelve months ahead. Midsona usually charges higher raw material prices at the next stage by raising the prices charged to customers. Several key raw material purchases are coordinated at the European level by our supply chain organisation. By purchasing large volumes, it is possible to influence raw material prices to a certain extent.

Description of risk
‍Financing risk refers to the risk of future capital procurement and refinancing of maturing loans becoming difficult or costly.

Risk management
To ensure that in all situations the Group has access to the necessary external financing at reasonable cost, the rule is that confirmed credit commitments are to have an average remaining term to maturity of no less than 12 months. At yearend, the average remaining term to maturity on confirmed loan commitments was 18 months.

Description of risk
‍Liquidity risk refers to the risk of not being able to fulfil payment obligations when they fall due, as a result of an inadequate supply of liquid funds.

Risk management
To control and plan for the Group’s cash requirements, the Group economy and finance function uses liquidity forecasts that the subsidiaries submit on a monthly basis for the six months ahead. A financial contingency must be maintained in the form of a liquidity reserve, comprising cash balances and unused credit commitments, which must correspond to no less than 7.5 percent of the Group’s forecast annual sales. The liquidity reserve was in the range of 9.8–19.0 percent of net sales in 2023. In addition, the liquidity reserve must, at all times, exceed the sum of the Group’s loan maturity for the next six months.

Description of risk
‍Transaction exposure is the risk that affects the Group’s earnings and cash flow through the operational and financial transactions that are effected in currencies other than the functional currency of each Group company. The Group’s sales of goods are mainly made in the companies’ local currencies, although the currency flows arising from purchases, primarily of goods, in other currencies give rise to the Group’s current transaction exposure.

Risk management
As a result of the increased currency exposure in USD/DKK and USD/EUR, GroupManagement has a mandate to hedge goods purchases in USD, above all, for contracts with predefined payment plans. Currency risks are otherwise to be managed in supplier and customer agreements through currency clauses. Inorder to reduce the impact on earnings from changes in exchange rates, Midsona continuously uses price adjustments to customers and suppliers based on the changes in exchange rates.

Description of risk
‍Interest rate risk refers to the impact of a change in interest rates on earnings.How quickly a change in interest rates affects earnings is determined by the fixed-interest period for credit and investments. The Group is a net borrower and does not invest in listed instruments. As a result, the Group’s interest-bearing liabilities to credit institutions represent the main exposure to changes in interest rates. Most interest-bearing liabilities to credit institutions are subject to variable interest rates.

Risk management
The Group strives to strike a balance between a reasonable ongoing expense for its borrowings and the risk of a significant negative impact on earnings from a major change in interest rates. At present, the guidance is not to hedge interest rate risks in the Group. As a result, changes in the market interest rates have an impact on the financial cash flow and earnings. The average interest rate on theGroup’s bank loans and overdrafts in 2023 was 5.7 percent. In December 2023, a voluntary additional amortisation of liabilities to credit institutions was made within the existing credit limit of SEK 80 million.

Description of risk
‍There is a risk of losses if counterparties with whom the Group has cash and cash equivalents or financial investments are unable to fulfil their obligations; this is known as a financial credit risk. Another risk is that our customers cannot fulfil their payment commitments; this is known as a customer credit risk.

Risk management
Rules for how surplus liquidity is to be managed is established in a policy. TheGroup is a net borrower and excess liquidity is to be used to pay down loans from credit institutions. The Group’s subsidiaries are required to place surplus liquidity in bank accounts in the Group account system or in bank accounts approved by the Group economy and finance function. The Group’s counterparties in financial transactions are credit institutions with good credit ratings. Customer credit riskis managed continuously by each Group company via credit checks and internal credit limits per customer. Bank guarantees or other sureties are required for customers with low creditworthiness or insufficient credit history.