Harboes Bryggeri A/S : rsquo; annual report 2021-22

ANNUAL REPORT 2021-2022

ANNUAL REPORT 2021-2022

The year in brief
Updated strategy to strengthen
our competitiveness	4
Challenging year impacts earnings	6
Financial results	8
Results and expectations	9
Key figures and ratios	10
Our business	11
The People's Brewery	13
Sustainability	16
Financial statement	18

Harboes Bryggeri A/S

Annual report 2021/2022

S 2

12		13

Resources	Raw materials and	Breweries	Clients	Consumers	Value creation
suppliers

Harboe is Denmark's 3rd largest brewery and, together with our subsidiary	In 2021/2022, Harboe has prepared an updated strategy for the group
in Germany, we produce and market beverages and malt-based ingredi-	with a focus on getting closer to consumers, restoring growth, strength-
ents to a large number of markets worldwide.	ening the group's foundation and increasing earnings. Read more about
See Harboe's business model here.	the strategy here.

Harboe Beverages	22
Harboe Ingredients	28
Risk factors, financial
reporting and control	31
Corporate governance	35
Shareholder relations	38
Harboe's board of directors	41
Annual report 2021-2022
Statement by the executive board
and the board of directors	43
Independent auditor's report	44
Consolidated financial statements	48

16

ENVIRONMENT AND

PEOPLE

CONSUMER

BUSINESS ETHICS

CLIMATE

Main areas:

Main areas:

Main areas:

Main areas:

CO2 emissions

Job creation and social

Food safety and quality

Culture and business

inclusion

Water and wastewater

Health and safety

Health

Sustainable procurement

Circular economy

Job satisfaction

Food waste

Local anchoring

It is crucial that Harboe's growth and development takes place on a sustainable basis and in accordance with current regulations and standards for good ethical behaviour and social responsibility. Get an overview of Harboe's sustainability efforts here.

18

Beverages	TURNOVER	Ingredients
92%	DISTRIBUTION	8%

In 2021/2022, Harboe had a turnover of DKK 1,419m, and EBITDA was DKK 98.9m. See the full financial statement here.

Link to our other reports

Statement on Corporate	Sustainability Report	Remuneration
Governance	2021/2022	Report 2021/2022

Harboes Bryggeri A/S

Annual report 2021/2022

S 3

"

We have sought to act as efficiently as possible under the extremely challenging market conditions in 2021/2022, but fierce competition on volumes and markedly rising input prices negatively affected earnings and resulted in an unsatisfactory result for the year. Internally, we have worked purposefully to formulate an updated strategy for the group which will strengthen our commercial innovation and focus on consumers so that we meet and drive demand further. Over the coming years, we expect strategic initiatives to strengthen our competitiveness and the robustness of our business model, and we have a clear ambition to deliver growth and improved earnings as the initiatives take effect.

Søren Malling

CEO

Harboes Bryggeri A/S

Annual report 2021/2022

S 4

UPDATED

STRATEGY TO

STRENGTHEN OUR

COMPETITIVENESS

The extremely challenging market conditions in the financial year 2021/22 made the sensitivity of our business model very clear. It also emphasised the importance of the process we initiated during the year with a view to adjusting and updating Harboe's strategic priorities so that in the future we will be better equipped for the continued development of our markets. Over the coming years, we will work purposefully to implement the strategic initiatives associated with this, and we expect that these initiatives will gradually contribute to creating growth and increasing earnings.

Increased focus on consumers

In Denmark, since the early eighties when i.a. Netto launched a budget grocery store chain, Harboe has been targeting partnerships with few large retail chains. For many years, this business

model created a solid foundation for both growth and earnings, and Harboe developed into Denmark's 3rd largest brewery.

Today, however, we are also experiencing a need to focus more directly on consumers so that we can better utilise our position of strength to create more value for the benefit of consumers, customers and Harboe shareholders.

Among the strategic priorities is therefore an increased effort in commercial innovation, where we want to get better at following consumer trends so that we can continue to deliver good products at a good price in the future - and in the long run also outside the lower price segment.

Create renewed interest in Harboe in Denmark

In Denmark, we will continue to prioritise an agile approach with smart business acumen in order to be the leading actor in the lower price segment, together with our customers. All of course based on a platform that prioritises sustainability. At the same time, we will work to expand the collaboration with existing and new customers.

We feel proud about the Harboe brand and for having been "The People's Brewery" since 1883. We want to strengthen that narrative towards consumers with clear, consumer-oriented communication. The first concrete results of the initiatives launched are already manifesting with the new packaging design, which has been brought to market during the early summer - and which will gradually be launched for our entire

Harboes Bryggeri A/S

Annual report 2021/2022

S 5

We focus on strengthening our strategic positions in the largest export markets, and we work both broadly and opportunistically to identify interesting, new sales opportunities.

range. We expect the new packaging - and a continuously more proactive communication with consumers - to create renewed interest in our strategic Harboe brand.

Fill our large capacity in Germany

In the German market, Harboe, through its subsidiary Darguner Brauerei, is one of the largest breweries in the state of Mecklenburg-Western Pomerania. Here, we are primarily a private-label supplier to some of Germany's leading retail chains. We benefit from our significant capacity, which we are working to utilise even more efficiently by creating new business with customers who demand large volumes. Although we are only present with our own brands to a limited extent, we are working to optimise that part of the business as well, e.g. by updating the visual expression and positioning of our own brands, to further exploit our strong position in the local area.

Develop the position in international markets

International markets are important to Harboe because we can sell many of our own brands at prices that are often more attractive than in the domestic markets. We are therefore focusing on strengthening our strategic positions in the largest export markets and working both broadly and opportunistically to identify new, interesting sales opportunities, including larger private-label agreements, where this can help increase volume and create value.

Unlock the potential

of the ingredient business

We see a continued attractive potential in our ingredient business and in creating the optimal framework for utilising this through a strength- ened, independent management focus. We will use our unique competences and technologies to optimise the sales of our ingredients to both existing and new customers in the food industry and thus meet the ever-increasing demand for more sustainable foods.

Strengthened organisation

In connection with the adjustment of the strategy, we have also strengthened the organisation and added new relevant competences in the consumer- and customer-oriented functions. The management team has also been strengthened and now consists of four people, including a Chief Commercial Officer, who has overall responsibility for sales.

The board of directors has also been strengthened with relevant commercial competences through two new external and independent members, elected at the 2021 annual general meeting.

Improve competitiveness

Our competitiveness is largely determined by the strength of our commercial platform and the efficiency of our supply chain. The latter is also essential for us to live up to our ambitions for sustainability. The adjustments we make are all aimed at improving Harboe's long-term

competitiveness and strengthening the resilience of our business model. We have a strong financial situation enabling us to invest in the future.

Therefore, we have positive expectations for the coming years, and we welcome the great daily commitment from our loyal organisation and strong management team.

Bernhard Griese	Claus Bayer
Chairman of	Deputy chairman
of the board	of the board