Brødrene A & O Johansen A/S : AO - Annual Report 2022

The future is created in the present

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Annual Report 2022

Brødrene A & O Johansen A/S

Rørvang 3 - DK-2620 Albertslund

Denmark

CVR No.: 58 21 06 17

Inspired by our 'general ledgers', our Annual Report for 2022 is a combination of things that happened in the past, things that are happening now, and things that will be happening in the future. It's also the last annual report that we're choosing to print in the traditional way. Because we're creating the future in the present - and innovative, eco-friendly solutions are the way of the future. Scan the QR code to find out more

When we say the future is created in the present, what we mean is that everything we do now has an impact on us, our business and, above all, our customers' ability to always be able to access the very best expertise, technology and products. We don't know what the future will bring, but we do know what we're bringing to the future - and we believe that the future is created by the actions, the choices and the investments we're making right now, in the present. In combination with our proud traditions and the very special AO spirit, it means we feel ready to share responsibility and be part of the future - part of the team that's building and maintaining Denmark. We're ready to give our customers a helping hand - now and in the future!

Axel Johansen*

Axel Johansen

Ove Johansen

Svend Johansen

Niels A. Johansen

Lili Johansen

2022

BRØDRENE A & O JOHANSEN A/S

* Please note that font type Javacom has been used for Axel Johansen's signature.

We live in a time of extremes in many ways, and we can take nothing for granted.

We have all been - and continue to be - heavily affected by COVID-19, unstable supply chains, geopolitical crisis and war in Ukraine, high cost- push inflation, sharp interest rate rises and volatile energy prices.

We are constantly reminded that traditional patterns and developments are about to collapse.

Many of the things we are now seeing are traditional indicators of declining consumer spending power and a slowdown in the building and construction sector. However, some factors suggest continued high activity despite these conditions.

The Danish consumer economy is generally good, and in terms of savings, households have never been wealthier than they are now, having benefited from many years of low interest rates and zero inflation in the consumer price index. Very high energy prices in combination with more energy-efficient products and solutions mean that both households and businesses will find that continued investment can provide good business cases that would seem to indicate high demand; not least when it comes to green transformation.

So we are looking ahead to 2023 and finding it very difficult to work out what we need to prepare for as a company. All we know is that being prepared and agile is more important now than ever!

We feel that AO is well equipped for the future.

We have good momentum on a commercial lev- el. Nothing is taken for granted. 'The customer is king': that is our guiding principle. With more than a century behind us, built up around proud traditions, the AO culture is and will remain a cornerstone of fundamental acceptance and understanding of the situations and needs of our customers: we will never be too big to thank our customers for their orders or learn something new from them.

The AO strategy - which is built around the ReMoVe market (Renovation, Modernisation and Maintenance) - has demonstrated its strength with its local presence, broad trade ranges and its distinctive nature which is deeply embedded in all elements of the organisation. With the latest acquisitions and our digital initiatives, we are in a great position to face the new year, and

• not least - our staff and their targeted team efforts are and will remain at the very heart of our success.

The takeover of EA Værktøj has given us the ability to serve a new market - carpenters and joiners. EA has been integrated into AO in 2022, sharing an IT platform, supply chain, etc. Now comes the exciting part - welcoming carpenters and joiners into our nationwide network of stores allowing customers of both EA and AO to benefit from our combined range, which will have expanded from about 400,000 products in 2022 to almost 600,000 products ready for delivery in 2023. Our automated central warehouse is ready to cope with the expanded range and future turnover.

We are well prepared for the future in financial terms, too. We own our central warehouse in

Albertslund and logistics centre in Horsens, as well as a large proportion of our other buildings, which gives us the freedom to look far into the future. Our interest-bearing liabilities at the end of 2022 are essentially mortgage debt, and our banking facilities and partnerships mean that we have the financial capacity to service both organic and acquired growth, as well as providing attractive capital allocations to our shareholders - when times are good, and when they are more challenging. AO is a stable and reliable company.

We have focused on the environment and green initiatives in 2022, and worked hard on their lasting implementation in society. This applies both in our direct impact as a company, where we have clear objectives when it comes to becoming carbon neutral, but also in our ability as a wholesaler and a partner to supply and support our customers with products and solutions that have a lasting positive impact on the environment and energy consumption.

Although ESG has been a high priority for us in 2022 and previously, we are becoming increasingly aware, as citizens and as businesses, that the world's collective efforts have not been enough.

We look forward to making an active contribution and sharing responsibility for the future we are passing on to generations to come.

Best regards,

Niels A. Johansen, CEO

Brødrene A & O Johansen A/S is a Danish-owned business, founded in 1914. We are currently a leading wholesale supplier to the construction industry. Given our customer base, an award-winninge-commerce platform, 58 stores nationwide, a high-tech logistics set-up and our constant focus on services that make life easier for tradespersons working in Denmark today, we consider ourselves well-equipped for the future and ready to fulfil our role as an IT, knowledge and logistics company. We run a leading e-commerce platform on the private market that provides inspiration, guidance and sales of products to consumers in Denmark, Sweden and Norway for modernisation projects around the home.Dividing our attention successfully between B2B and B2C, we are well equipped to deal with the future, and to fulfil the role of an IT-based, knowledge and logistics business.

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CONTENTS

CONSOLIDATED FIVE-YEAR SUMMARY	8
MANAGEMENT'S REVIEW	9
Highlights of the year	9
Strategy, expectations and objectives	9
Business foundation	11
Development in 2022 and the fourth quarter	14
Financial review	18
Risk management	20
Corporate governance	20
Sustainability	21
Shareholder information	24
MANAGEMENT'S STATEMENT	30
INDEPENDENT AUDITOR'S REPORT	31
INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME	34
BALANCE SHEET AS AT 31 DECEMBER	36
CASH FLOW STATEMENT	38
STATEMENT OF CHANGES IN EQUITY	40
NOTES TO THE CONSOLIDATED AND ANNUAL FINANCIAL STATEMENTS	44
FINANCIAL RATIO DEFINITIONS AS RECOMMENDED BY CFA SOCIETY DENMARK ...	81
COMPANY INFORMATION	82
AO'S STORES AND OFFICES	83
INFORMATION ABOUT THE BOARD OF DIRECTORS' MANAGERIAL POSTS	84

This financial statement is available in Danish and English. In case of doubt, the Danish version shall apply.

ANNUAL REPORT 2022 5