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LR Group achieves substantial sales and earnings growth in Q2 2023

• Sales up 9.4% yoy to EUR 68.9 million in Q2 2023 
• Normalized EBITDA of EUR 8.8 million clearly up on prior-year figure in Q2 2023
• In the first half of the year, sales increased to EUR 140.9 million and normalized EBITDA to EUR 17.6 million
• Successful launch of UK market activities in August 
• Forecast for full year 2023 confirmed

Ahlen, 31 August 2023 – LR Global Holding GmbH, Europe’s leading digital social selling company in the area of high-quality health and care products, today released its figures for the second quarter of the 2023 financial year and the first half of 2023. The LR Group was able to increase sales (revenue from goods sold) by 9.4% from EUR 63.0 million in the second quarter of the previous year to EUR 68.9 million in the second quarter of 2023. In the first half of 2023, the LR Group thus achieved sales of EUR 140.9 million, compared to EUR 131.5 million in the same period of the previous year. This corresponds to a 7.1% increase in sales. The strong sales performance reflects the success of the initiatives introduced to promote the career development of LR partners in conjunction with an expansion of the Group’s innovative product range.

In addition, the LR Group improved its reported EBITDA by 34.1% to EUR 7.6 million in the second quarter, compared to EUR 5.7 million in the second quarter of the previous year. In the first half of 2023, the reported EBITDA increased by 12.2% to EUR 15.5 million, compared to EUR 13.8 million in the first six months of the previous year. Normalized EBITDA also rose significantly from EUR 6.9 million in the second quarter of the previous year to EUR 8.8 million in the second quarter of 2023. In the first half of 2023, the normalized EBITDA thus amounted to EUR 17.6 million (H1 2022: EUR 16.5 million).

Valdemaras Gordinskis, Vice President Global Controlling and Investor Relations of the LR Group, comments: “Our impressive results in the first half of 2023 show that the strategic measures we have introduced are beginning to bear fruit and that we were able to achieve a predominantly strong performance despite the weaker consumer climate in our sales markets. With our introductory programmes for newcomers, we have gained many additional partners who want to take advantage of the opportunities offered by a career with LR and build an attractive additional income for themselves. Furthermore, many existing partners have succeeded in further developing their careers. This has significantly contributed to the company’s success in the first half of 2023.”

Focus on international expansion

Meanwhile, the LR Group continues to drive its international expansion and has launched its business activities in the growth market of the UK as planned on 1 August 2023. The UK with its four countries England, Wales, Scotland and Northern Ireland boasts an overall population of around 70 million and offers favourable market conditions for the planned expansion of the business in Europe.

“We are very happy with our launch in the UK and confident that LR will firmly establish itself in this market, driven by its strong business model and high-quality products ‘Made in Germany’. The positive reactions of potential sales partners confirm that there is great interest in our company and future cooperation. Our existing partners are now able to cross-sponsor in the UK and thus also establish a foothold in this market. In doing so, we benefit from the digital sales structures that enable our partners to implement social selling across national borders in an easy and efficient manner,” explains Dr Andreas Laabs, Chief Executive Officer (CEO) of LR Health & Beauty SE.

In the second half of 2023, the LR Group will also focus on product development and additional marketing and sales activities. The Business Days to be held in the various markets in September will be an important cornerstone in this effort as they are expected to attract a record number of participants. Moreover, the LR Group is currently preparing a new product launch to be carried out in the autumn of this year, thus systematically expanding its portfolio of high-quality health and care products.

The LR Group continues to see itself well positioned to further boost its business activities in the international markets. Looking ahead to the 2023 financial year, LR still expects sales to be at the prior-year level based on conservative assumptions and, despite the expected cost increases, predicts that EBITDA will either dip only slightly or remain stable compared to the prior-year level. Against the backdrop of the LR Group’s sustained strong performance, the company plans to start exploring corporate refinancing options in the second half of the year, including the Nordic bond maturing in February 2025.

The report on the first half of 2023 is available online from today on the company’s website at https://ir.lrworld.com/.

LR Group

Following the motto “More quality for your life“, the LR Group with headquarters in Ahlen/Westphalia produces and markets various health and beauty products in 32 countries. As an attractive social selling company, LR combines personal exchange in its community with efficient, digital solutions. This expertise is particularly evident in the “LR Connect” app developed by LR itself, which supports the community in building and developing its business. The community often acting as micro influencers is young, flexible and increasingly uses social media as a sales platform.

LR’s goal is to improve people’s well-being and health with its portfolio – consisting of nutritional supplements and personal care, health representing close to 65% and beauty 35% of our sales. That is why the company continuously develops new products – from the power of nature in combination with the latest scientific findings. 

The processing of Aloe Vera has been one of the core competencies of LR Health & Beauty for more than 20 years. Only the valuable inside of the leaf is used for the products. In Ahlen, the company has established one of the most modern Aloe Vera production sites for Aloe Vera Drinking Gels in Europe. LR has been firmly established in the market for over 35 years with around 1,200 employees and around 300,000 registered community members. LR also established the LR Global Kids Fund e.V. which provides efficient and unbureaucratic support for deprived children and their families in many different countries around the world in cooperation with local institutions. The commitment to take responsibility in terms of ESG is part of LRs philosophy. Since 2020 LR started using FSC-certified paper, takes various measures to avoid plastic consumption and switched to green power. 

Your contacts:

PR contact: 
LR Global Holding    
Almut Kellermeyer     
Head of PR / Public Affairs    
Kruppstraße 55    
59227 Ahlen    
Phone: +49(0)2382 7060-106
E-mail: a.kellermeyer@LRworld.com
https://ir.lrworld.com/

IR contact: 
cometis AG
Thorben Burbach 
Unter den Eichen 7 | Gebäude D 
65195 Wiesbaden
Phone: +49(0)611 - 205855-23
Fax: +49(0)611 - 205855-66
E-mail: burbach@cometis.de
 

Approval of Waiver Request relating to the guarantor accession of "LR RUS" by Nordic Trustee & Agency AB (publ) (the “Agent”) under the terms and conditions (the “Terms and Conditions”) for the EUR125,000,000 Senior secured floating rate bonds due 2025 (ISIN: NO0010894850) (the "Bonds")

Terms defined in the Terms and Conditions shall have the same meaning when used in this notice, unless otherwise defined herein.

According to clause 15.14(b)(i)(A) and (B) of the Terms and Conditions, Limited Liability Company “LR RUS”, Moscow, Russian Federation (“LR Rus”), a direct subsidiary of LR-International Beteiligungs GmbH, has been nominated a Material Group Company in the most recent Compliance Certificate delivered together with the related audited consolidated annual financial statements of the Group. Furthermore, according to clause 15.14(b)(ii) and subject to the Agreed Security Principles, LR Rus shall accede as a Guarantor to the Guarantee Agreement and of LR-International Beteiligungs GmbH shall grant first priority pledges over the shares in LR Rus (together, the “Guarantee Accession”).

On 21 July 2023, the expert legal counsel to the Agent has informed the Agent and the Issuer that (i) the share security as well as the Guarantee Accession seems to have limited value (or no value at all) at this moment (due to the circumstances in Russia) and (ii) that this exercise may potentially entail risks for certain stakeholder. It was also noted that the accession might affect the tradability of the Bonds. On the other hand, fee estimates of the various legal counsels involved in the process (including for purposes of obtaining regulatory approvals) add up to about EUR 150,000 or more and the regulatory filing will further require consistent involvement and resources of the management of LR Rus and its shareholders. 

According to Schedule 2 (Agreed Security Principles) any guarantees and security to be provided under the Finance Documents will only be given subject to and in accordance with the Agreed Security Principles. According to the Agreed Security Principles, a key factor in determining whether or not a guarantee or security will be taken is the applicable time and cost (including adverse effects on taxes, interest deductibility, stamp duty, registration taxes, notarial costs and all applicable legal fees) which shall not be disproportionate to the benefit accruing to the Agent and the Bondholders of obtaining such guarantee or security. Given that the guarantee and the security would have limited or even no value and further given the adverse effects on the interests of certain stakeholders, the Agent shares the Issuer's view that currently no Guarantee Accession is required according to the Terms and Conditions as long as the current legal and regulatory environment in the Russian Federation persists.

Therefore, the Agent has agreed to approve that:
(a) until receipt by the Issuer of a written notice from the Agent to the contrary, the Guarantee Accession shall be suspended;
(b) as long as the Guarantee Accession is suspended, LR Rus shall not be considered a Material Group Company for purposes of the Terms and Conditions; and 
(c) as long as the Guarantee Accession is suspended and subject to the paragraph below, the omission of the Guarantee Accession shall not constitute an Event of Default.

The Issuer shall (without having an obligation to actively monitor the legal and regulatory environment in the Russian Federation) inform the Agent without undue delay upon becoming aware of material changes to the legal and regulatory environment in the Russian Federation which would substantially increase the value of the Guarantee Accession and resolves the adverse effects on the interests of certain stakeholders. Once the Issuer has received a notice from the Agent in accordance with paragraph (a) above, the Guarantee Accession shall be implemented within the period initially provided for the Guarantee Accession of LR Rus (i.e. 120 Business Days) from the date of receipt of that notice.     

LR Group makes a successful start to financial year 2023

• Sales up by 5.1% to EUR 72.0 million in the first quarter  
• Normalized EBITDA of EUR 8.8 million in Q1 2023
• Improvements in production and logistics lay the foundation for future growth
• Forecast for full year 2023 confirmed 

Ahlen, 31 May 2023 – Today, LR Global Holding GmbH, Europe’s leading digital social selling company in the area of high-quality health and care products, unveiled its figures for the first quarter of the 2023 financial year. According to the information released, the LR Group achieved sales (revenue from goods sold) of EUR 72.0 million as against EUR 68.6 million in the first quarter of the previous year. This corresponds to a 5.1% increase in sales in a year-on-year comparison. The strategic measures to promote career development for the company’s partners also bore fruit in the first quarter, allowing the LR Group to get off to a good start in 2023. 

The reported EBITDA amounted to EUR 7.9 million in the first three months of 2023, as against EUR 8.1 million in the same period of the previous year. In addition, normalized EBITDA came to EUR 8.8 million in the first quarter of 2023 compared to EUR 9.6 million in the first quarter of the previous year.  

Valdemaras Gordinskis, Vice President Global Controlling and Investor Relations of the LR Group, comments: “In the first quarter of 2023, many partners showed successful career development, reaping the benefits of our top sellers such as the new and improved weight management programme LR LIFETAKT Body Mission. This year will see us continue to focus on helping partners get started through targeted qualification and bonus programmes such as Fast Track 5.0. These measures have made a key contribution to a very good start we have made to the 2023 financial year."

LR sets the course for future growth 

In a quest to further strengthen logistics for future growth and to optimise production processes, the LR Group recently invested, among other things, in a new packaging and palletising machine at its Ahlen site, which will boost production capacity for health products alone by 30%. The system, which meets state-of-the-art standards, automates the packaging process, allowing orders to be processed more quickly and efficiently. 

“The new packaging machine will put us in an even better position to meet the demand for our products. Likewise, the new logistics centre in Ahlen, which is scheduled to be commissioned next year, will help to speed up order processing significantly going forward. This lays the foundation to allow LR to be able to systematically exploit the attractive growth opportunities available to it. At the same time, we are setting the course for our further international expansion. We will start operating in the United Kingdom (UK) market on 1 August 2023. The final preparations for this move are in full swing”, explains Dr Andreas Laabs, Chief Executive Officer (CEO) of LR Health & Beauty SE. 

The LR Group is convinced that it remains in a strong position to drive business activities in international markets in 2023. Looking ahead to the 2023 financial year, LR still expects sales to be on a par with the previous year based on conservative assumptions and, despite the expected cost increases, predicts that EBITDA will either dip only slightly or remain stable.  

The report on the first quarter of 2023 is available online from today on the company’s website at https://ir.lrworld.com/. 

LR Group

Following the motto “More quality for your life“, the LR Group with headquarters in Ahlen/Westphalia produces and markets various health and beauty products in 32 countries. As an attractive social selling company, LR combines personal exchange in its community with efficient, digital solutions. This expertise is particularly evident in the “LR Connect” app developed by LR itself, which supports the community in building and developing its business. The community often acting as micro influencers is young, flexible and increasingly uses social media as a sales platform.

LR’s goal is to improve people’s well-being and health with its portfolio – consisting of nutritional supplements and personal care, health representing close to 65% and beauty 35% of our sales. That is why the company continuously develops new products – from the power of nature in combination with the latest scientific findings. 

The processing of Aloe Vera has been one of the core competencies of LR Health & Beauty for more than 20 years. Only the valuable inside of the leaf is used for the products. In Ahlen, the company has established one of the most modern Aloe Vera production sites for Aloe Vera Drinking Gels in Europe. LR has been firmly established in the market for over 35 years with around 1,200 employees and around 300,000 registered community members. LR also established the LR Global Kids Fund e.V. which provides efficient and unbureaucratic support for deprived children and their families in many different countries around the world in cooperation with local institutions. The commitment to take responsibility in terms of ESG is part of LRs philosophy. Since 2020 LR started using FSC-certified paper, takes various measures to avoid plastic consumption and switched to green power. 

Your contacts:

PR contact: 
LR Global Holding    
Almut Kellermeyer     
Head of PR / Public Affairs    
Kruppstraße 55    
59227 Ahlen    
Phone: +49(0)2382 7060-106
E-mail: a.kellermeyer@LRworld.com
https://ir.lrworld.com/

IR contact: 
cometis AG
Thorben Burbach 
Unter den Eichen 7 | Gebäude D 
65195 Wiesbaden
Phone: +49(0)611 - 205855-23
Fax: +49(0)611 - 205855-66
E-mail: burbach@cometis.de