Interim Report 1 April - 31 June 2015, Zinzino AB (publ)

”Inspire change in life”

Dag Bergheim Pettersen, CEO of Zinzino AB

HIGHLIGHTS
All of Zinzino’s markets grew in the second around compared with the previous
year. Total revenue was SEK 112.2m (79.6m), which corresponds to sales growth of
41 per cent for the group, compared with the previous year. The profit after tax
was SEK 4.1m (3.6m), corresponding to earnings per share of SEK 0.13 (0.13). Our
gross profit margin was 30.1 per cent (26.2), which is a year-on-year
improvement of 3.9 percentage points.

SECOND QUARTER, Q2 2015, (compared with the same period in the previous year,
2014)

  · Total adjusted revenue was SEK 112.2m (79.6m), corresponding to growth of 41
per cent.
  · The operating profit was SEK 5.6m (3.5m) and the operating margin 5.0 per
cent (4.4).
  · The profit after tax was SEK 4.1m (3.6m). Earnings per share were SEK 0.13
(0.13).

SIGNIFICANT EVENTS DURING THE PERIOD

  · Zinzino AB expanded at a stable pace, with sales growth of 41 per cent.
  · The Annual General Meeting approved the Board’s proposed dividend payment of
SEK 0.25 per share, resulting in a total payment of SEK 7.7m to the shareholders
in respect of the past financial year.
  · The AGM elected Pierre Mårtensson to the Board of Directors. Pierre
Mårtensson has many years’ experience from senior direct sales positions across
the world. Torben Lundberg stepped down from the Board.
  · The AGM resolved to issue 600,000 warrants. The warrants have an exercise
price of SEK 26 and expire in 2020.
  · Zinzino AB has launched a free app for iPhone and Android. The purpose of
the app is to remind customers to take their daily dose of BalanceOil.
  · Faun Pharma AS upgraded its machinery and streamlined its production during
the quarter. The aim is to further raise the quality of the products and
maintain an attractive price level.
  · Work on establishing a presence in Canada and Germany continued during the
period. Sales begins in Canada in the beginning of September through the new
subsidiary, Zinzino Canada Corp.
  · Turnover distribution by product area (as a percentage of turnover) was 23
per cent for Zinzino Coffee and 77 per cent for Zinzino Health in the second
quarter.
  · Net sales in Zinzino Health were SEK 71.7m (40.3m), which represents growth
of 78 per cent.
  · Net sales in Zinzino Coffee were SEK 20.9m (31.5m), which is a decrease of
34 per cent.

COMMENT BY CEO DAG BERGHEIM PETTERSEN:

“Our vision is to inspire our customers and distributors to change their
lifestyle, which we will do by being the most customer-friendly direct sales
company in the world. Our goal is to have one million customers by 2020. This is
an ambitious goal that we are confident of achieving and have integrated in our
strategy. Our goal and our vision serve as guiding principles for our day-to-day
work.

In the second quarter of 2015 net sales grew by 41 per cent compared with the
same quarter in 2014. Profitability also improved during the period. Growth
during the first half of the year amounted to 43% with a gross margin that
improved by no less than 2.9 percentage points compared to the previous year. We
are pleased that the positive trend in sales growth, customer numbers and profit
margins has continued.

In the second half of 2015 we will launch additional new product concepts that
we believe will help us achieve our ambitious financial targets – sales growth
in excess of 25 per cent over the coming three- year period and improved
earnings every year.

I am very pleased with the underlying improvements that have been made in
product development and in terms of cost cuts in the production of our own
brands in health. This will give us a lower goods cost over time while also
significantly reducing the amount of capital that is tied up in inventory, thus
also reducing the risk of obsolescence.

To maintain the pace of growth in the Group, we will establish a presence in
Canada in the beginning of September. Zinzino Canada will be administered from
our US office. This is a natural step forward in our North American roll-out,
and we are confident of achieving strong sales growth in Canada. We are also
hoping to establish a presence in Germany in the fourth quarter. Germany and
Canada are large markets that will generate long-term growth for the company.

The establishment of operations in new markets is implemented in a resource
-efficient way through our existing organisation. This means that our costs in
the establishment phase are absorbed in the operations and kept at a low level.
In connection with the start-up and establishment of operations in new markets
our business model has proved highly effective and profitable.

It is now three years since we entered what was for us a new area – health.
Today this product segment accounts for over 75 per cent of our sales. Initially
we operated through a partnership with a Norwegian research company, BioActive
Foods AS, which we subsequently acquired in 2014. This has been a successful
acquisition, and I am very happy to confirm that we have improved our product
development in our own brands. Thanks to our in-house production unit, our
product development activities are faster and more precise. We will continue to
work on product development on a large scale over the coming years.

BalanceTest was, along with BalanceOil, the first product that we launched in
health, and we have today reached a milestone with over 100,000 tests conducted
on our customers and distributors. This makes us the largest player in the
market in this area. The statistics of the test results show that people
generally have an unbalanced diet and that there is a strong need for our
products in all markets where we have conducted tests on customers.

We recently launched an exciting new service for our customers and distributors
in the form of an application for mobile phones. Zinzino Balance App has been
developed with the aim of increasing customer loyalty and customer satisfaction,
and is available for download from App Store and Google Play.

We have for some time being working on the implementation of a new IT platform.
The platform has now been launched, and we are working all out on dealing with
the challenges that an implementation of this kind naturally entail, but also on
taking advantage of all the new opportunities that arise. The implementation is
a major investment for the company, but one that will give us a very modern IT
tool. The system takes us straight into the future and gives us a new web shop
that creates significant benefits in the internal follow-up of customers and
distributors. The system also gives our distributors an outstanding tool for use
in the field. The platform will be another contributing factor behind our
continued success story.”
Dag Bergheim Pettersen, CEO of Zinzino AB

For a full report, please see the attached PDF.

This information comprises information that Zinzino AB must disclose under the
Securities Market Act and/or the Financial Instruments Trading Act. The
information was released for publication on 31 August 2015.

INFORMATION ABOUT THE COMPANY Zinzino was founded under the name Zinzino Holding
in autumn 2007. In 2009, the company acquired 93% of the equity and 97% of the
votes in Zinzino Nordic AB, partly by means of a non-cash issue and partly by
means of a private placement. Zinzino Nordic is a sales company that uses
independent distributors to market and sell products for commission via so
-called direct sales.

NEXT REPORT
Interim report Q3 2015, published on 23 November 2015.

For further information:
Dag Bergheim Pettersen, CEO, Zinzino, Tel. +47(0) 93 22 57 00
Fredrik Nielsen, CFO, Zinzino, Tel. +46 (0) 707 900 174
Photos for publication free of charge:
Anders Ekhammar, Tel. +46 (0) 707 462 579
www.zinzino.se

Zinzino AB (publ.) is one of the leading direct sales companies, represented in
Nordic countries, the Baltic States, Poland, the Netherlands, the USA and
Canada. We offer customers products centered around quality, environment and
health. The Zinzino Food product line consists of functional food, such as oil,
shakes and capsules. The Zinzino Coffee product line consists of espresso
machines, coffee, tea and accessories. Our business is characterized by high
quality, closeness to the customer and focus on active product development.

Zinzino owns the Norwegian knowledge-based company BioActive Foods AS and the
research and production unit Faun Pharma AS. Since 2005, Zinzino is the general
agent for the FrenchBelgian coffeehouse Rombouts & Malongo. Today, the Zinzino
Group has some 100 employees. The company has its headquarters in Gothenburg,
Sweden, a production unit south of Oslo, Norway, and an office in Florida, USA.