Annual Report (ESEF) • Mar 17, 2022
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Download Source FileUntitled Co-creating the homes of tomorrow – today Annual report 2021 Co - creating the homes of tomorrow – today Our purpose 9 Content Management review Overview 04 HusCompagniet at a glance 05 Performance highlights 06 Our sustainability journey 07 Letter from the Chairperson 08 Letter from the CEO 09 Consolidated Key figures Our business 10 Our Markets 14 Equity story 15 Business model 16 Strategy 20 Follow-up on 2021 guidance 21 Outlook for 2022 Financial review 22 Financial review 26 Q4 figures 28 Segments Sustainability 30 Our progress with sustainability in 2021 33 Climate change 45 Our People 49 Responsible business 51 Taxonomy eligibility 52 ESG disclosures and data, Nasdaq and SASB 54 TCFD Disclosures Risk Management 57 Risk Management Shareholder information 60 Shareholder information Corporate Governance 62 Corporate Governance 65 Board of Directors 67 Executive Management Financial statements 69 Consolidated financial statement 113 Parent Company financial statement 125 Statement by Management 126 Independent auditors’ report Leers rom Mnemen Read letters from our Chairperson Claus V. Hemmingsen and our CEO Martin Ravn-Nielsen. The Board of Directors proposes a dividend of DKK 7.35 per share Page 7 Tesin he Cime-mproved house ins he vounr susinbe buidin css Read more about the results Page 40 Susinbii Sustainability is an integral part of our strategy, and we consistently pursue our ambitions of operating a responsible business, securing our people, and playing an active part in reducing climate change. Page 29 HusCompagniet Annual report 2021 3 / 132 contents 455 162007 25,500 HusCompagniet a leading Nordic single- family housebuilder Co - creating the homes of tomorrow – today At a glance Our purpose Our semens HusCompnie is edin provider o deched houses in Denmrk. We so ciie semi-deched houses o boh prive consumers nd proession invesors nd hve presence in Sweden where we produce prebriced wood-rmed houses hrouh he VrrdHus brnd. The Group operes n sse-ih nd exibe deiver mode wih on-sie buidin, primri on cusomer-owned nd. The consrucion is ousourced o subconrcors, nd visibii o he order book ow exibe cos bse. HusCompnie hs 16 oices wih showrooms nd more hn 60 show houses hrouhou Denmrk nd Sweden, nd oers dii ses hrouh he onine porm “HusOnine”. Detached Read more On page 11 Semi-detached Read more On page 12 Sweden Read more On page 13 Office locations in Denmark and Sweden Company aquired. HusCompagniet brand established in 2010 employees houses built since establishment, trailing 40 years back HusCompagniet Annual report 2021 4 / 132 at a glance 2017 2018 2019 2020 2021 276 307 326 346 401 +10% 2017 2018 2019 2020 2021 2,816 3,095 3,496 3,596 4,315 +9% 4.3 bn Based on more than 4,000 reviews on Trustpilot 4.8/5.0 houses built in 2021 houses sold in 2021 1,831 2,376 Performance Highlights 401m EBITDA before special items (DKK) Free cash flow (DKK)EBITDA margin 237m9.3% Revenue (DKKm) EBTDA beore speci iems (DKKm) Revenue (DKK) Segment split Revenue and EBITDA are adjusted for discontinued operations in 2017-2019. Discontinued operations comprise Germany and the Swedish brick house activity closed in September 2020. Detached (2020: 89%) Semi-detached (2020: 3%) Sweden (2020: 8%) 81% 12% 7% HusCompagniet Annual report 2021 5 / 132 performance highlights 2021 2019 8 13 -38% 2021 2019 772 878 -12% Our sustainability journey scope 1 emissions through 100% electric owned and leased vehicle fleet by 2025 Zero of houses ordered with renewable energy sources by 2025 60% reduction in CO 2 emissions from building materials through the lifecycle of a house by 2030 compared to 2019 70% Susinbii res Cime Peope Responsibe businessAspire o impc Our susinbe ocus res nd reed SDG's Find more information about our sustainability targets On page 31 Read more about our sustainability On page 29 CO 2 emissions /m 2 , scope 1+2 (Metric tonnes CO 2 eq /m 2 location based) To direc CO 2 -emissions, Scope 1 (Metric tonnes CO 2 eq) Susinbii in 2021 Climate – customer use phase 60% houses ordered with renewable energy sources Diversity & inclusion 2/6 females on the BoD 25% females in management Sustainable sourcing N/A - annual targets are set Climate – own operations Zero scope 1 emssions through 100% electric owned and leased vehicle fleet Health & safety Reduce Ltif by 30% Labour rights and human rights N/A - annual targets are set Climate – building materials 35% reduction in emissions from building materials Sustainable cities and communities Employee well-being Reduce sick leave below 2% Responsible business N/A - annual targets are set 2025 Targets HusCompagniet Annual report 2021 6 / 132 our sustainability journey Letter from the Chairperson Continuing the sustainability journey The past year has once again been extraordinary, with the COVID-19 pandemic continuing to impact our lives and busi- nesses. In the wake of lockdowns, demand for new-builds increased significantly, and HusCompagniet generated strong growth rates. The year also marked challenges, especially for our em- ployees, who have gone an extra mile in a year with high building activity combined with distressed supply chains and bottlenecks around subcontractors. A tremendous effort was made across the organisation, and to all our colleagues, I owe a special thanks. As we have entered 2022 with considerable uncertainty as a consequence of the Russian war against Ukraine, it is clear that risks are present to the macroeconomic environment, which may also impact HusCompagniet. I’m afraid it will be another year requiring additional efforts, pro-active decision making and flexibility from many parties. Engaging our stakeholders Climate change is one of the defining challenges of our time and the building industry has a key responsibility to par- ticipate in the sustainable transition. The Paris Agreement goals cannot be met without a substantial increase in energy efficiency in the current building stock. 70% of the current building stock in Denmark has an energy label of D or lower, and renovation can only improve energy efficiency to a certain level. Therefore, we truly believe that the sustainable journey requires both renovation and new-builds, and Hus- Compagniet has an important role to play. In 2019, we set the target to reduce our CO 2 emissions from our houses by 70% in 2030, and 60% of our houses to have sus- tainable energy sourcing by 2025. Since then, we have worked ambitiously to reach these targets. We have launched the Cli- mate-Improved house and we have joined partnerships focus- ing on green transition. From 1 January 2022, HusCompagniet no longer offer gas heating as energy source, thereby removing the last fossil source from our offering, and we are engaging in creating a sustainable journey together with our customers. We invite our shareholders to follow our journey through transparent reporting. For our 2021 reporting, we have added Taxonomy-eligibility on voluntary basis in spite of HusCom- pagniet has below 500 employees. Introducing our purpose In 2021, we established our new purpose – Co-creating the homes of tomorrow – today. Thereby we are combining our quality cost-efficient dream house vision with an ambitious sustainability path for the future in co-creation with our future homeowners, our suppliers, our employees, and our partners. Only through co-creation will we be able to build sustainable dream homes for today and tomorrow. We aim to lead our in- dustry for sustainable house construction of the future, so we can create a positive impact for both our company and socie- ty. The purpose of HusCompagniet will be guiding our long- term objectives and our day-to-day actions and decisions. Professionalising the industry As part of our strategic ambitions, we also aim to professional- ise the industry with a bold digital strategy that will transform the customer journey. We will use our size and scale to lever- age data and become digital front-runners and use our digital platform to promote sustainable design and construction that covers the entire value chain. With the best combination of design and construction, we believe we are creating the best opportunity for long-term growth and shareholder value. Shareholder value The Board of Directors will propose a dividend payment of DKK 7.35 per share at the Annual General Meeting in April 2022. This will supplement the already completed share buyback programmes totalling DKK 180 million and the re- cent Q1 2022 share buyback programme of DKK 40 million. We are pleased to be able to create value for our sharehold- ers and will continue to pursue our strategic priorities and aim to drive performance throughout the value chain. Thank you! To reach our ambitions, we depend on the continued sup- port and dedication from our colleagues, and based on their outstanding efforts this past year, I feel very optimistic. Also, I would like to express my thanks to our customers for trust- ing in us, our suppliers and subcontactors for their coopera- tion and our shareholders for their continued support. Claus V. Hemmingsen Chairperson of the Board HusCompagniet Annual report 2021 7 / 132 letter from chairperson Letter from the CEO Strong performance in challenging markets Our first year as a listed company brought both opportuni- ties and challenges. The speed of the economic rebound combined with continued restrictions brought changes in customers’ prioritisation towards the housing market, and demand for new build was at an extraordinary high level in the first six months of 2021. Building activity remained high throughout the year and fuelled by the high sales rates, and we were able to deliver a record of 1,831 houses in 2021. Revenue grew by 20% and generated a record revenue of more than DKK 4 billion, and EBITDA of DKK 401 million. Re- sults were driven by strong performance in all three business segments, despite challenging markets. In both our semi-de- tached and Swedish business, our sales rate increased signifi- cantly reaching 387 and 400 units sold for the year. Managing turbulent waters Market conditions, however, remained challenging with increasing input costs during the year and distressed supply chains. We have implemented continuous price adjustments and thereby adapting our sales prices according to the mar- ket development. An outstanding performance across our organisation and an exceptional cooperation with our suppliers and subcontrac- tors have made it possible for us to maintain our strong track record of 98% on-time deliveries even under these challeng- ing market conditions. Our customers are key Despite all challenges and market constraints, our custom- er satisfaction score recorded 4.8 out of 5.0 on Trustpilot, being highest in the industry. Our relationships with our customers are built on trust and meeting our customers’ expectations is of utmost importance. Our close monitoring of the market development enables us to secure beneficial agreements for us and our customers when we enter con- tracts – therefore, we do not exit contracts after signing due to pricing issues. Health and Safety Health and safety continue to be a key focus area in our business, and we measure the development on an ongoing basis. We are pleased to see that the rate of Lost Time Injury frequency (LTIf) has improved overall, however for our own employees, LTIf increased in 2021. This illustrates the importance in our initiated improve- ment measures, including the launch of the safety programme “Secure Workplace”. We will continue our efforts to improve health and safety, and we aim to reduce the overall LTIf by 30% in 2025 and by 50% in 2030 compared to our baseline year in 2019. Strong growth drivers in Semi-detached and Sweden We utilise our unique position as market leader in the de- tached segment in Denmark, to improve our margins through digitalisation and efficiencies. In 2021, we have further lever- aged our position by gaining market shares in our Semi-de- tached and Swedish business. We see a significant potential in these markets and aim to drive a similar concentration as we have done in the detached market in Denmark. In Den- mark, we aim to sell 500 semi-detached houses a year by 2023-2025, and in Sweden we pursue organic growth and search the market for attractive acquisitions. Outlook We expect that the high building activity in 2021 will contin- ue into the first half of 2022, and that the challenges in the supply chain and price inflation will persist for months to come. The sales rate normalised in the second half of 2021, settling on an expected lower level for 2022 and we have adjusted the detached organisation accordingly. The increased geopolitical uncertainty in Europe has further reduced visibility for 2022, yet we are confident that our con- tinued strategic initiatives and timely adjustments will drive performance in all our business segments. Tremendous effort from our colleagues I am proud to have the amazing support of our colleagues, whom I wish to thank for a remarkable effort this year. I am confident that they will continue to drive our business with our customers at heart and a clear ambition of reaching our strategic targets in the years to come. Martin Ravn-Nielsen Chief Executive Officer HusCompagniet Annual report 2021 8 / 132 letter from ceo Consolidated key figures (DKKm) Income statement Revenue , , , , , Gross profit Operating profit before depreciation and amortisation (EBITDA) before special items Special items - - - - Operating profit before depreciation and amortisation (EBITDA) after special items Operating profit (EBIT) before special items Operating profit (EBIT) Financial, net - - - - - Profit for the year (continued operations) Profit for the year (discontinued operations) - - - - Profit for the year Balance sheet Total assets , , , , , Contract assets, net Net working capital Net interest bearing debt (NIBD) Equity , , , , , Cash flow Cash flow from operating activities Cash flow from investing activities - - - - - - Hereof from investment in property, plant and equipment - - - - - Cash flow from financing activities - - - - Free cash flow - (DKKm) Key figures Revenue growth .% .% ,% .% Gross margin .% .% .% .% .% EBITDA margin before special items .% .% .% .% .% EBITDA margin after special items .% .% .% .% .% EBIT margin .% .% .% .% .% Earnings Per Share (EPS Basic), DKK *** . . . . . Diluted earnings per share (EPS-D) (DKK) . . . . . Dividend per share, DKK . . Share price end of year . . Market value (bn) . . ROIC .% .% ROIC (Adjusted for goodwill) .% .% NIBD/EBITDA before special items ratio . . . . . Average number of employees ESG key Figures CO -e/m delivered (Scope +) - market-based CO -e/m delivered (Scope +) - location-based Direct CO - e emissions (Scope ) LTIf . . Sick leave .% .% .% Percentage female managers % % % Number of female board members / / / Revenue and EBITDA are adjusted for discontinued operations in 2017-2019. Discontinued operations comprise Germany and the Swedish brick house activity closed down in September 2020. Net working capital comparable figures (2019-2020) is adjusted due to change of method. * Operating profit before depreciation and amortisation (EBITDA) before special items and Operating profit (EBIT) before special items respectively are used as alternative performance measures to reflect a more true and comparable view of the Groups ordinary operations. ** Margins for continued operations *** Earnings per share, basic and diluted is calculated in accordance with IAS 33. Other key figures are calculated in accordance with the key definitions in Section 6.9 The key figures for the years 2017 have not been adjusted following the implementation of IFRS 9 and IFRS 15 at 1 January 2018. Furthermore, the key figures for the years 2017-2018 have not been adjusted following the implementation of IFRS 16 at 1 January 2019. 2019 numbers exclude discontinued operations which amounts to 47 average full-time employees HusCompagniet Annual report 2021 9 / 132 consolidated key figures 2,376 unis Detached (2020: 74%) Semi-detached (2020: 13%) Sweden (2020: 13%) 67% 16% 17% Our markets HusCompagniet is present in Denmark and Sweden, where we facilitate the construction of detached and semi-detached houses for private costumers and professional investors. HusCompagniet's core market, new-build detached houses in Denmark, is the most stable segment of the homebuilding market with average completions of approx. 6,000 over the last 40 years. Semi-detached and Sweden has each similar market sizes, where the semi-detached segment has some- what higher volatility. Besides building on new land, the detached market in Denmark presents additional opportunity in tear-downs. The current number of new-build detached houses in Denmark is well below the building boom in the 1960s and 1970s, during which more than 400,000 single-family detached houses were built. This huge stock of time-worn houses represents a growth opportunity due to favourable economics in tearing down an old house and replacing it with a new-build low-en- ergy house instead of renovating the old house. Around 18% of HusCompagniet houses built in 2021 replaced an older house. General market developments in 2021 Significant price inflation on certain materials impacted both the Danish and the Swedish market in 2021, and price inflation as well as scarcity in supply of subcontractors affected the markets in Q4, in particular. Also, energy prices increased significantly during 2021. All factors are expected to continue to affect the market in 2022. ~18% Built in 2021 replaced an older house Unis sod in 2021 Segment split HusCompagniet Annual report 2021 10 / 132 our markets 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 0 2000 4000 6000 8000 10000 12000 The high building activity for both new-builds and renovation caused bottlenecks, which especially affected the markets in Q4. Given an increased market size in terms of permits, the building activity is expected to continue at a high level in the first half of 2022. Market and business development In 2021 market size in terms of completions was 6,105 units and grew by 3% compared to 2020. In terms of permits, market size amounted to 7,714 and grew by 24% compared to 2020. In 2021, the Danish detached market was characterised by extraordinary high demand in the first six months of 2021, where HusCompagniet experienced a record high sales rate, and we expect that the high building activity will continue in the first half of 2022. A recent study shows an increased interest for families to move further away from city centers, where land is available to a larger extent than in areas closer to the big cities. In the wake of the pandemic, we have seen a tendency to further expand the distance from the city, as working from home has increased flexibility and reduced the importance of commute time, yet it is to early too say if this will materialise in a struc- tural change. The pandemic also supported a strong activity in the real estate market for both existing houses and new-builds. House buyers have to a larger extent prioritised more space, gardens, and home offices after working from home during lockdowns. The structural changes support the new-build markets, and we therefore await to see if these structural changes will continue after the pandemic. Denmark – detached Danish Research Institute for Economic Analysis and Modelling "Demografi, socioøkonomi og boligstruktur i danske kommuner", May 2021 In the Danish market for detached houses, HusCompagniet has been market leader since 2021 and today holds a market share of approx. 24%. The four largest competitors together hold a market share of around 26%, while the rest of the market is composed of smaller to mid-size competitors. Since 2007, HusCompagniet has taken a leading role in concentrating the originally highly fragmented market. HusCompagniet aims to maintain its market share while improving profitability. Compeions - To deched, Denmrk HusCompagniet Annual report 2021 11 / 132 0 1000 2000 3000 4000 5000 6000 7000 8000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Market and business development Market size (completions) amounted to 7,192 units in 2021 and grew 22% year-on-year. Compared to the detached market, the semi-detached market is more volatile, with a similar average completion rate of approx. 6,000 a year the last 40 years. In total amounts the market is half the size of Detached. We have been delivering semi-detached houses for private customers over the past 10 years. To further grow our position in this market, we are focusing on developing the business-to-business (B2B) segment by offering building and delivery of semi-detached houses to professional investors, who then lease or sell the houses to end users. Average delivery time in the semi-detached segment from sale to delivery is up to 1.5 year. We offer the professional investors a highly standardised building process for multiple houses and have built a central- ised project team securing an integrated offering. We offer an attractive pricing model, which benefits from our existing supply chain, scale, and competences. In 2021, we achieved a DGNB certification, which is further strengthening our business proposal. Although more volatile than the market for detached houses, the semi-detached market offers an attractive opportunity to further scale our operations in Denmark, and in 2021 alone, we increased our B2B sales to 322 units compared to 227 in 2020, underpinning our proof of concept. The Semi-detached market in Denmark is large and highly fragmented, characterised by many small multi-regional construction companies and local builders. The market characteristics are quite similar to the characteristics of the detached market back in 2006. HusCompagniet is aiming at being at the forefront of a concentration of the Danish semi- detached market as well, and in 2021 our market share, in terms of completions, grew from 1.0% to 2.5%. In terms of permits, our market share grew by 1.8% to 4.5% (permit market size, 8,074 units). Compeions - To Semi-deched, Denmrk Denmark – semi-detached HusCompagniet Annual report 2021 12 / 132 0 1000 2000 3000 4000 5000 6000 7000 8000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 The Swedish market for new-builds has been growing over the past couple of years and is characterised by a high degree of fragmentation with only a few large players and around 70% of the market composed by smaller and mid-sized construction companies. HusCompagniet’s Swedish subsidiary, VårgardaHus, increased its market share from 4.3% in 2020 to 4.8% in 2021. Sweden Market and business development In terms of permits, the Swedish market grew by 15% for de- tached houses to 6,047 units. The new-build market activity in 2021 was high, and we increased our sales by 156 units to 400 units compared to 2020, which was above 300 units for the first year. Following positive market growth after the dip post the financial crisis, the market slowed, due to tightened govern- ment induced credit restrictions taking effect in 2018. The new-build market activity in 2021 has been high despite the COVID-19 induced lockdowns, also supported by sof- tened credit restrictions in April 2020. Permis, To deched, Sweden We expect the demand to continue at a lower level in 2022. In order to meet the increased sales from 2021 and further pursue growth opportunities, we are in the process of upgrading part of our pre-fab production line through new ways of working and robotics with the target to increase throughput by up to 40%. The upgrade is planned for the summer 2022 and is expected to last for approx. two months. HusCompagniet Annual report 2021 13 / 132 Resilient business model through cycles • Asset-light structure with outsourced construction and scale benefits from strong relations with suppliers • High visibility in order book and ability to adapt capacity and costs to market fluctuations • Limited financial risk with payment guarantee at the time of order • Strong financial position and high cash generation Prove of execution • Danish market leader since 2010 in detached houses • Documented annual growth through core platform • Clear benefits from scale and flexible business model • Growing market shares and leading the concentration of the Danish detached market • Proven progress in targeting Danish semi-detached and Swedish markets – both highly fragmented markets with attractive growth opportunities Sustainability • Driving the sustainability agenda as market leader • Facilitating house construction of the future with focus on more sustainable housing • Ongoing initiatives throughout the portfolio to aviod emissions and promote sustainable choices • Creating a positive impact for both our company, our customers and society Mrke drivers Stable low-risk economies. Strong structural trends in demografics. Limited cyclicality in core market. Strong growth potential in Danish semi-detached market. Opportunities for both organic and acquisitive growth in Sweden. Equity story Driving profitable growth and promoting sustainability whilst benefiting from scale to innovate and disrupt the industry Digital ambitions • From analogue to fully digital platform • Professionalising the industry through digitalisation and automation of all elements in the buillding process across segments • Best-in-class sales process • Improved customer experience with overview and safety from order to delivery • Low-complexity projects • Automation of factories ensuring efficiencies and reduced costs • After-sales services to retain customers • Cross-function best-practice across segments HusCompagniet Annual report 2021 14 / 132 equity story Delivery & after sales services We deliver detached and semi-detached houses for private and commercial customers, approx. 80% on third-party land Focus on after-service sales to retain customers Design & construction Customised solutions let customers built their dream home We outsource construction to trusted partners for an asset light, flexible and risk mitigated delivery model Sales Customer-centric concept, a one-stop shop with early and extensive interaction Our business Drivning performance throughout the value chain Resources People Our diverse workforce and industry experience are at the core of our business Natural resources HusCompagniet houses are built from raw materials, such as timber, aircrete, concrete, brick, steel and glass Partners We rely on strong, long-term relations with our material suppliers and subcontractors Innovation Digital and sustainable innovation Our brand Our private and B2B customers know us as a trusted brand in the industry Financial capital We finance investments through cash flow from operations and credit facilities. Financial strength to offer customers bank guarenteed payment at delivery Vue creed Customer value • 1,831 houses delivered, providing quality houses at competitive prices • Customer satisfaction score of 4.8 out of 5.0, being highest in the industry Sustainable products • Climate-Improved House • Gas no longer offered as energy source from 1 January 2022 • Energy efficient, comfortable houses Planet 18 kg CO 2 e/m 2 delivered (scope 1-2) - market-based in 2021, reduced 14% from 2019 Safety and well-being at work • LTIf 9.3 down from 12.0 in 2019 • eNPS engagement score of +41 Shareholder value • DKK 270m returned to shareholders since listing • 4.3 DKKbn in revenue • 132 DKKm in shareholder dividends HusCompagniet co-creates houses with our customers and facilitates the construction, primarily on customers’ land, through outsourced subcontractors Business model HusCompagniet Annual report 2021 15 / 132 business model t h r o u g h s u s t a i n a b l e d e s i g n s A d d r e s s i n g c u s t o m e r n e e d s R e v e n u e f r o m d i g i t a l c h a n n e l s , p a r t n e r s h i p s a n d s e r v i c e s P r o d u c t g u i d a n c e t h r o u g h d i g i t a l s o l u t i o n s Core platform and competences Growth in business segments Digitalisation and customer journey Sustainability and design Strategy Our Vision: HusCompagniet wants to lead the market evolution and set the standard for sustainable construction practices – changing the way people think of sustainable homes and living The vision of HusCompagniet is to lead the market evolution and set the standard for sustainable construction practices – changing the way people think of sustainable homes and living. We need to drive the agenda, not just follow it, and we need our stakeholders to participate. We have in 2021 defined a corporate purpose that looks beyond our bottom line and call for other stakeholders in the market to join us in promot- ing more sustainable behaviour and drive the green transition of house construction. Sustainable development is develop- ment that meets the needs of the present without compromis- ing the ability of future generations to meet their own needs. We have defined a purpose that can unify us in a joint direc- tion, attract talent and loyal customers, and drive innovation and new thinking in our industry. In short, a purpose that lifts our business strategy and strengthens our role in society, so we are not just proud of the homes we build, but also how we build them. Our purpose will guide both long-term objec- We srenhen our core hrouh diiision, susinbe souions nd rowh in business semens tives and short-term actions and decisions. This is the only way we can co-create the homes of tomorrow – today. Roadmap to growth and value creation We have built our current position through dedicated customer focus, continuous innovation, and a key focus on custom- er-centric, professional end-to-end solutions. We co-create houses with our customers and facilitates the construction, primarily on customers own land and through outsourced subcontractors. The customer-centric concept and low-risk de- livery model make our business model resilient and adaptable to market cycles. In our efforts to lead the future of house building, we believe that digitalisation and sustainability are fundamental to raise industry standards and drive continuous growth in all our business segments and at the very core lies the platform and competencies. Our purpose Co-creating the homes of tomorrow – today HusCompagniet Annual report 2021 16 / 132 strategy 2007 20212020201920182017201620152014201320122011201020092008 0 1000 2000 3000 4000 5000 0 200 400 600 800 1000 ~ 13% Revenue CAGR 771 4,315 3,598 3,496 3,095 2,816 2,747 2,228 1,775 1,556 1,274 1,256 1,009 801 1,043 Lon erm innci deveopmen Growth in business segments Detached in Denmark The detached market in Denmark is our core market and main business segment, where we aim to maintain our clear leader- ship position and with focus on continued margin improvement. With fourteen offices and ten show parks in Denmark, we have a country-wide coverage while maintaining a local presence. In addition to our physical presence, we also en- gage with our customers using a broad range of virtual tools. Our continued development in the Danish detached market will be driven by a continued effort to provide a leading customer experience throughout the phase of building the houses as well as after handing over the keys to our custom- ers. We benefit from our scale which makes it possible for us to source in high volumes, and our brand is widely recog- nised for high quality and customer service. Our flexible business model allows us to quickly adapt to changes in the supply and demand structure and to safe- guard continuous competitive offerings to our customers. The increased focus on margins of houses sold and the use of technology to improve and standardise vital internal processes, enhanced process efficiencies and reduced mistakes will drive margin improvements. Our strategic targets for the detached market in Denmark are to grow in line with the market growth while building closer customer relationships and improving our margins through further digitalisation. Semi-detached B2B in Denmark Our semi-detached business-to-business segment in Denmark focuses on the building and deliveries of semi-de- tached houses to professional investors, who then lease or sell the houses to end-users. Competition in the Danish market is highly fragmented, with many small multi-regional construction companies and local builders engaged. With our size, profitability, and focused offering, HusCom- pagniet has a competitive advantage in entering the busi- ness-to-business market for semi-detached housing. Professional investors typically entail larger projects than private investors. We use our highly standardised building process “Ready to build” product for multiple houses and have built a centralised project team securing a one-stop- shop offering. The offering entails an attractive pricing mod- el, and HusCompagniet builds mostly on customer-owned land, coupled with strategic use of own land plots. Thus, from a delivery perspective, we replicate the model employed for detached houses, including utilising the ex- isting network of suppliers and adding additional subcon- tractors for the higher volumes. In combination with being built in blocks of multiple units, this provides a very efficient building process with digital tools. Our sustainable endeavours are also embedded in our business-to-business offerings, and we are to provide DGNB-certified projects for our customers. DGNB certifica- tion is based on three central sustainability areas of ecology, economy and sociocultural issues, and HusCompagniet closed the first DGNB agreement in November 2021. Our strategic targets are to increase our market share and sell 500 semi-detached B2B houses a year by 2023-2025. ~67% annual revenue growth in the semi-detached segment in the last 2 years Revenue EBITDA HusCompagniet Annual report 2021 17 / 132 Swedish market segment In our Swedish business, our value proposition is adapted to strong local preferences. Our 43 house models is based on a standardised pre-fab concept. The core features include value for money, responsive customer service and a strong local sales agent structure. We see a significant growth opportunity in the Swedish market, which we aim to realize through augmented product offerings and optimisation of the agent network. Sales focus is on three densely populated hub regions in a market characterised by a high degree of fragmentation. The headquarters and pre-fab production facility is located in Vårgårda. A key strategic project in 2022 is to upgrade and automate the pre-fab production line through robotics with the target to increase capacity by up to 40%. The upgrade will be completed during the summer of 2022. Our strategic ambition is to increase market share through consolidation of the market. Growth will be driven organical- ly as well as through potential acquisitions. We have laid the digital foundation Our newly implemented ERP system, which integrate cus- tomer relationship management and business intelligence functionalities, provides a detailed overview and control of the business. In addition, our sales provision system for our sales force supports margin over volume and is combined with value-added services in both add-on products, post- sale, and post-delivery add-ons. In 2021 we have launched a “document case management” system, laying the foundation for an upgraded CRM system. The system will further improve our ability to standardise pro- cesses and provide opportunities to collaborate on cases and documents both internally and externally, opportunities for opti- misation and automation, and increased data security. Further, we continue to expand the use of Power BI in the organisation. Digitalisation and customer journey We have a bold digital vision that will transform the customer journey and make HusCompagniet’s platform scalable. We will use our size and scale to leverage data and become digital front-runners and we will offer personalised products and new services to our customer through digital and part- nership channels that fit our customer needs at the right time. We will also use our digital platform to promoting sustainable design and construction, and we will build a scalable platform that covers the entire value chain and business segments to ensure that we can maintain our growth ambitions. In the order-to-delivery process, our services are based on a best-in-class construction planning and management system combined with a safety incident and inspection system. A key strategic focus area is to drive further sales in the customer use phase after delivery. Here we currently have a limited selection of partnerships and services to offer, but our ambition is to build a strong partnership offering through a digital platform to provide a broad range of support servic- es for our customers, including among others a maintenance subscription programme. As part of our digital ambitions, we launched a 100% digital offering in November 2020 "HusOnline". The key element being that customers can access the tool or platform in their own time without having to depend on an available sales force or opening houses. The platform has been well received by our customers yet the transition to fully digital purchase takes time. The offering is an important part of the transition towards implementing many digital applications along the house purchasing journey. "To be be o si home nd desin he house hs mde he process much more pesn. coud o hrouh he opions in m own ime nd in he end desin he house o m drems. m ver sisied wih he resu nd now m us excied or he house o be inished so cn move in." Brian Lindskov Andersen, HusOnline customer Grejs, 7100 Vejle, Denmark Vårgårdahus HusCompagniet operates in Sweden through VårgårdaHus, specialised in the production of prefabricated single-family wood framed houses. The Vårgårda Fritidshus brand offers wood framed vacation houses and HusCompagniet brand is offered on wooden frame with façade option of wood, plaster or bricks keeping the Danish brand expression. The houses are developed and produced at our factory in Vårgårda. HusCompagniet Annual report 2021 18 / 132 Sustainability and design Sustainability is embedded in our operating framework as an integral part of the strategic agenda, making it a systematic focus throughout our business. It is our vision to lead the market evolution and set the stand- ard for sustainable house building. We have intensified our efforts to integrate sustainability throughout the value chain, from selecting building materials and making sustainable op- tions available to customers, to dedicated sustainable house product offerings, and through the use phase of the houses after handover to the customers. One of the critical elements in the lifecycle of the house is heating. The choice of energy sources can impact emissions, and we have set a target aiming for 60% of our houses sold to be delivered with renewable energy sources by 2025. In 2021 we reached 48%, down from 50% in 2020, mainly due to increased use of district heating. We welcome this transi- tion as an alternative to gas. From 1 January 2022, HusCom- pagniet no longer offer gas as a heating source. In Denmark, oil burners have not been allowed as energy source for new-builds since 2013, and we stopped offering oil burners prior to that. With gas now phased out, fossil energy heating sources are therefore no longer part of our offering and we continue to advise customers on renewable energy sources. Our 2030 target is to achieve a 70% reduction in lifecycle CO 2 emissions. One way of reaching that has been the launch of our Climate-Improved house, which is designed to emit significantly fewer emissions than our Functionalism House from where the architecture originates. The house emits around 30% fewer emissions from building materials, and around 26% fewer throughout the entire lifecycle. In 2022 we will be investigating further improvements and upgrades of our general building materials packages for indoor surfaces and floors as well as outdoor facades, foun- dations, and terrain decks with a view to further reducing CO 2 emissions. Also, to reduce CO 2 emissions in the customer use phase, we have introduced energy packages offering heat pumps, solar and battery systems, and preparation of car charging stations. In our own operations we are aiming at reaching zero emis- sions through a 100 % electric vehicle fleet in 2025. In our efforts to reach our ambition of reducing CO 2 emis- sions by 70% in 2030, we aim to play a responsible role in the necessary green transition and action to reducing climate change. HusCompagniet Annual report 2021 19 / 132 Follow up on 2021 guidance Outlook for 2021 Initial financial outlook for 2021 issued at 6 November 2020. Upgrade in May 2021 On the 5 May 2021, we upgraded the full-year 2021 guidance due to higher than expected sales. 2021 results Realised 2021 figures came in at around top range of guidance, with underlying expected margin levels. On 5 November we added EBITDA (bsi) to the 2021 guidance as a transition to the 2022 guidance, where EBITDA bsi replaced EBITA bsi. EBITDA before special items 401 m(DKK) EBITA before special items 372 m(DKK) Revenue 3,800 - 4,150 m(DKK) Revenue 4,100 - 4,250 m(DKK) EBITA before special items 350 - 360 m(DKK) EBITA before special items 360 - 370 m(DKK) Operating profit (EBIT) 325 - 335 m(DKK) Operating profit (EBIT) 335 - 345 m(DKK) EBITDA before special items 390 - 400 m(DKK) Revenue 4,315 m(DKK) Operating profit (EBIT) 355 m(DKK) Financial leverage Expected leverage ratio below 2.0x net debt to last twelve months EBITDA before special items (bsi) at the end of 2021. Financial gearing 1.8x net debt to EBITDA bsi (LTM) HusCompagniet Annual report 2021 20 / 132 follow up on 2021 guidance Deched Semi-deched Sweden Outlook for 2022 HusCompagniet introduces full-year 2022 guidance: Revenue 4,350 - 4,650 m(DKK) Operating profit (EBIT) 370 - 400 m(DKK) EBITDA before special items 420 - 450 m(DKK) Assumptions for the 2022 outlook The outlook above is based on HusCompagniets usual solid forecast and provides for an ambitious guidance for 2022. In the meantime, the geopolitical situation has not been as unstable as it currently looks for the past 50 years or more. The potential impact on macroeconomic factors and ele- ments possibly adversely affecting HusCompagniet are significant and uncertainty is at an unprecedented high level. HusCompagniets business model, agility and strong financial position provides us with what we believe to be the necessary platform and flexibility to proactively act on changes in the market environment. As described earlier in this report sales normalised already towards the end of 2021 and we took action to adjust the organisation in Q1 2022. Further action may be necessary during what could become a highly volatile 2022. Medium-erm res For our three segments we have the following medium-term targets: Forward-looking statements This annual report includes forward-looking statements on various matters, such as expected earnings and future strategies and expansion plans. Such statements are uncertain and involve various risks, as many factors, some of which are beyond our control, may result in actual devel - opments differing considerably from the expectations set o ut in the 2021 Annual Report. Such factors include, but are not limited to, general economic and business conditions, exchange rate and interest rate fluctuations, the demand for our services and competition in the market. For the Danish detached business our target is to pursue continued growth in line with the detached market segment whilst pursuing strong margins. For the Danish Semi-detached business our target is to seize the attractive B2B opportunity in the semi-detached market segment, targeting a run rate of 500 houses sold per year within two to four years. (23-25) For the Swedish business our tar- get is to drive profitable growth in the business and increase market share by means of organic growth and potential acquisitions. HusCompagniet expects a leverage ratio below 2.0x net debt to LTM EBITDA before special items at the end of 2022. • Current expectations for 2022 deliveries are between 2,020 and 2,160 houses. • Revenue from the semi-detached segment is as- sumed to be around DKK 500 million. • Share of deliveries on own land is expected to be below 10% due to the current size of the land bank. Long-term target remains at around 20%. • Current expectations for capital expenditures are DKK 40–60m and comprise investments in digitalisation, automation, B2B and sustainability. • Full year cash conversion (free cash flow to EBITDA) is expected to be at least 60% despite the increased capex level. • No significant special items are expected. The 2022 guidance is based on no severe disruption of sup- ply chains emerging and on raw material prices not signifi- cantly exceeding current levels. Further, due to the current market situation, it is expected that projects in the semi-de- tached segment will have a prolonged delivery process and encounter delays in building permits, which may postpone some revenue recognition into 2023. In Sweden, an investment to automate and increase utilisa- tion of capacity in the factory is planned for 2022, conse- quently closing the factory up to two months. The upgrade is expected to increase the production capacity by up to 40%. • Current expectations for 2022 sales are between 1,900 and 2,100 houses. Changed from 2,200 and 2,400 hous- es due to lower expected market levels in the detached segment. HusCompagniet Annual report 2021 21 / 132 outlook for 2022 Financial review HusCompagniet achieved a record number of both sales and deliveries in 2021, exceeding lasts year records. Supported by strong demand, sales totalled 2,376 houses after an extraordinary high sales rate in the first six months of 2021. Sales were up 24% from 1,921 houses in 2020. The high building activity continued throughout the year, and HusCompagniet delivered a record high 1,831 houses in 2021 up 12% from 1,638 in 2020. The year was characterised by high market activity, price inflation on materials and subcontractors and towards end of year both price inflation and scarcity of subcontractors impacted the fourth quarter, in particular. HusCompagniet continously adjusted prices according to the market development and were able to overall protecting margin levels despite a challenging market environment. The building process All of our houses are built by subcon- tractors, and to ensure our suppliers and subcontractors meet the high quality we demand, the construction phase is man- aged carefully by our very experienced construction managers. We are highly se- lective in our choice of suppliers in order to ensure the highest quality. As we carefully embrace responsibility for the health and safety of our employees, we are also strongly focused on the health and safety of our subcontractors working at our building sites. We have a Code of Conduct that sets out our standards for safety and working conditions at the building sites, which all subcontractors are required to sign. Increased use of digital solutions is optimising the building pro- cess and leads to improved efficiency. Our average building time for a single family house is among the shortest in the market. HusCompagniet controls all stages of the building process and a house normally takes 17-21 weeks to build. HusCompagniet Annual report 2021 22 / 132 financial review Revenue HusCompagniet reported a total revenue of DKK 4,315 million in 2021, up 20% from DKK 3,598 million in 2020. The increase was mainly due to an increase in the number of houses delivered to a total of 1,831 up 11.8% from 1,638 houses. The extraordinary high sales rate in H1 2021 gen- erated high building activity. The average sales price (ASP) was overall on par with full year 2020 level, reflected and underlying geographic mix. From Q1 through Q4, the ASP increased from DKK 2.0 million to DKK 2.2 million, showing increasing levels in all segments. Gross margin Gross margin was 20.3% against 21.0% in 2020. The gross margin was affected by increasing prices on input cost, ma- terials, and subcontractors, offset by increased sales prices during the year. The share of own land was slightly lower for Units Q Q Q Q Q Q Q Q FY- FY- Change Sales % Deliveries % both detached and semi-detached, totalling 19.5% against 20.5% in 2020. Despite lower share of own land sold, the detached segment had higher gross margin compared to 2020, where the gross margin level also reflected the enhanced margin focus. Also, Sweden’s gross margin exceeded 2020 level, despite a chal- lenging year and longer backlog - with high price inflation on materials and subcontractors and bottlenecks emerging during the year. EBITDA before special items Reported EBITDA before special items was DKK 401 million, up 16% compared with DKK 346 million in 2020. This corre- sponds to an EBITDA margin before special items of 9.3% compared to a margin of 9.6% in 2020. Staff cost and other external expenses (SG&A) amounted to DKK 474 million and increased from DKK 409 million. The increase was due to 20% Gross margin ramp up of the organisation and increased provisions due to the higher sales rate. Ratio to revenue was 11.0% in 2021 compared to 11.4% in 2020. Amortisation and depreciation Amortisation and depreciation amounted to DKK 46 million compared to DKK 47 million in 2020. Amortisation main- ly consists of developing projects including ERP system. Depreciation mainly refers to leasing contracts. In 2021, Depreciation amounted to DKK 29 million (DKK 29 million in 2020), and Amortisation amounted to DKK 17 million (DKK 18 million in 2020). Special items No special items incurred in 2021. In 2020, special items amounted to DKK 79 million and was mainly related to the listing in November 2020. HusCompagniet Annual report 2021 23 / 132 EBIT Reported EBIT amounted to DKK 355 million, an increase of DKK 135 million or 61% from DKK 222 million in 2020. Improved operating profit improved the results significantly, whilst 2020 was affected by extraordinarily high special items due to the listing in November 2020. Net financials Reported net financials was an expense of DKK 20 million compared to an expense of DKK 45 million in 2020. Im- provement was primarily due to lower interest paid to banks, positively impacted by the new loan agreement, HusCom- pagniet entered in October 2020. Profit for the year before tax for continued operations Profit for the year before tax from the continued operations was DKK 335 million in 2021, an increase of DKK 160 million or 91% from DKK 175 million in 2020. 2020 was impacted by special items of DKK 79 million. Taxation Reported tax for 2021 was DKK 70 million against DKK 16 million in 2020. The low 2020 tax level was affected by the changes in transfer-pricing effective from 2019, resulting in a tax value of estimated tax losses in Germany for the 2015- 2018 period, which was realised in 2002. We expect the transfer-pricing change to be finalised in 2022, and that no further adjustments will take effect. Net profit Net profit generated was DKK 265 million against DKK 92 million in 2020, as profit from discontinued operations amounted to an expense of DKK 0 million against an ex- pense of DKK 66 million in 2020. Cash flows Operating activities Net cash generated from operating activities was DKK 258 million compared with DKK 141 million in 2020. The higher cash flow was mainly supported by the higher operating profit. Investing activities Net investments of DKK 22 million were generated during 2021, against DKK 31 million in 2020. The development was mainly due to lower investments in property, plant and equipment. Free cash flow Free cash flow was DKK 237 million against DKK 110 million in 2020, mainly driven by changes in operating activities. Cash conversion was 59.0% (free cash flow to EBITDA). Financing activities Financing activities was negative DKK 261 million, against negative DKK 152 million in 2020. In 2021, dividends to shareholders of DKK 60 million was paid and shares of DKK 180 million was purchased through share buyback. We entered new loan agreement in 2020 that enabled us to make a down payment and reduce our combined term loan by DKK 130 million. 59% Cash conversion Balance sheet Financing Net interest-bearing debt totalled DKK 713 million at 31 December 2021 against DKK 697 million at 31 December 2020. The net interest-bearing debt to EBITDA ratio was 1.8x compared to 2.0x in 2020. Equity The Group's equity increased by DKK 28 million in 2021, to stand at DKK 1,885 from DKK 1,857 million. The increase was based on the profit for the period offset by dividends paid of DKK 60 million and purchase of own shares DKK 180 million, subject to annulment at the 2022 Annual General Meeting. Net working capital Net working capital totalled DKK 517 million at 31 December 2021, up from DKK 433 million at 31 December 2020. The change was partly caused by an DKK 261 million increase in contract assets due to higher building activity partly offset by a DKK 151 million change in trade and other payables. Inventories decreased by DKK 44 million due to reduced land expose. Contract assets Net contract assets amounted to DKK 725 million compared to DKK 445 million in 2020. Excluding contract liabilities, contract assets amounted to DKK 809 million against DKK 548 million in 2020. The contract work in progress (CWIP) at 31 December 2021 was affected by increased building activity compared to 2020. Contract liabilities were largely affected by a high HusCompagniet Annual report 2021 24 / 132 level of deposits due to the negative interest rate environ- ment. Deposit level was high in 2021, but relatively lower compared to prior year. Order backlog The order backlog (gross) as of 31 December 2021 amount- ed to DKK 3,735 million compared to DKK 2,688 million in 2020. The higher backlog was due to higher sales in 2021 compared to 2020, with an extraordinarily high level in H1 2021. Adjusted for backlog share recognised as revenue, or- derbook (net) amounted to DKK 2,855 million against 2,089 million in 2020. Deliveries amounted to 1,831 houses, which exceeded the 2020 figure of 1,638. In 2021, 19.5% of deliveries were hous- es built on own land (20.5% in 2020). In detached, the share of own land was 14.5% against 17.0% in 2020. As of 31 December 2021, HusCompagniet's land bank com- prised 271 individual land plots (including show houses and project houses) valued at DKK 207 million. 2020 Land bank comprised 487 land plot valued at DKK 228 million. Land at low value was sold in the period and new land plots at higher value were purchased. Discontinued operations During 2020, the Group closed down its German and Swed- ish brick house activities finalised in September 2020. Re- ported loss from discontinued operations was DKK 0 million in 2021 against a DKK 66 million loss in 2020. The 2020 tax level was negatively affected by the change in transfer-pric- ing taking effect from 2019, which resulted in the deferred Units Sales , , Detached , , Semi detached Sweden Deliveries , , Detached , , Semi detached Sweden Orderbook value (DKKm) gross , , Detached , , Semi detached Sweden Orderbook value (DKKm) net , , Detached , , Semi detached Sweden Share of own land (Denmark) .% .% Detached .% .% Semi detached .% .% tax assets related to prior years' tax losses in Germany in the period 2015-2018 was partly realised. Dividend Subject to shareholder approval, the Board of Directors rec- ommends that a dividend of DKK 7.35 per share for the 2021 financial year be distributed following the Annual General Meeting to be held on 8 April 2022. No dividend will be paid out on treasury shares. Events after the balance sheet date No material events have occurred between 31 December 2021 and the date of publication of this annual report that have not already been included in the annual report and that would have a material effect on the assessment of the Group’s financial position. The geopolitical uncertainty has increased significantly in Europe in 2022. The Russian invasion of Ukraine and the continued Covid-19 pandemic is not expected to have mate- rial impact on the Group in 2022 although this assessment is subject to uncertainty especially towards the development of the conflict in Ukraine. The events may have substantial effect on macroeconmic factors and disruption of supply chains. HusCompagniet can be directly impacted by supply chain deficiencies for certain materials such as timber and tiles, and indirectly due to a general pressure on energy and freight cost. The possible social and economic effects that potentially could impact the Group’s operations and supply chain, and is being carefully monitored by Management. HusCompagniet Annual report 2021 25 / 132 Q4 Figures DKK'm Q Q FY FY Income statement Revenue . , . . Gross profit Operating profit before depreciation and amortisation (EBITDA) before special items Special items () () - () Operating profit before depreciation and amortisation (EBITDA) after special items Operating profit (EBIT) before special items Operating profit (EBIT) Financial, net () () () () Profit for the year (continued operations) Profit for the year (discontinued operations) () () () Profit for the year Financial position as of December Total assets . . . . Contract assets, net Net working capital Net interest bearing debt (NIBD) Equity . . . . * Unaudited ** Operating profit before depreciation (EBITDA) and before special items and Operating proft (EBIT) before special items repectively are used as alternative performance measures to reflect a more true and comparable view of the Group's ordinary operations. DKK'm Q Q FY FY Cash flow Cash flow from operating activities Cash flow from investing activities - - - - - hereof from investment in property, plant and equipment - - - - Cash flow from financing activities - - - Free cash flow Key figures Revenue growth .% .% .% .% Gross margin .% .% .% .% EBITDA margin before special items .% .% .% ,% EBITDA margin after special items .% ,% .% ,% EBIT margin .% .% .% .% * Unaudited *** Continued operations HusCompagniet Annual report 2021 26 / 132 Q4 figures Key figures Q4 Revenue HusCompagniet reported total revenue of DKK 1,201 million in Q4 2021 up 18.6% from DKK 1,012 million in Q4 2020. The increase was positively affected by higher number of deliv- eries. Deliveries in the quarter comprised 623, up 16.0% from 537 in Q4 2020. Average selling price (ASP) was DKK 2.2 million, on par with Q4 2020. The ASP increased in all segment y-o-y, and the overall development was a result of higher level of semi-de- tahed delivieres and lower number of detached deliveries compared to prior year. Gross margin Gross profit was DKK 237 million against DKK 218 million, corresponding to a margin of 19.7% and 21.6%, respectively. Gross margin was 19.7% against 21.6% in Q4 2020. Q4 2021 was impacted by price inflation and scarcity in subcontrac- tors while Q4 2020, was at an extraordinary high level due to temporary Corona discounts from suppliers and subcon- tractors. EBITDA before special items Reported EBITDA before special items was DKK 116 million compared with DKK 119 million in Q4 2020, corresponding to an EBITDA margin before special items of 9.7% compared to a margin of 11.7% in 2020. Staff cost and other external expenses (SG&A) amounted to DKK 121 million against DKK 100 million. The increase was primarily due to ramp up of the organisation and change in quarterly phasing year-over-year. Special items Special items amounted to DKK 0 million in 2021, against DKK 59 million in Q4 2020. The level in 2020 was mainly due to the listing in November 2020. Profit for the period Profit for the period from continued operations was DKK 82 million in 2021 up 28% from DKK 64 million in Q4 2020. Cash flow Operating activities Net cash generated from operating activities was DKK 280 million compared with DKK 66 million in Q4 2020. The increase was mainly driven by higher profit before tax and changes in working capital due to high level of deliveries. Investing activities Net investments of DKK 10 million were made during Q4 2021, against DKK 18 million in Q4 2020. Mainly driven by investments in Property, plant and equipment. Free cash flow Free cash flow was DKK 271 million, against DKK 48 million in 2020. The increase was mainly driven by changes in operat- ing activities due to high number of deliveries. Q4 2020 level was affected by one-offs related to the listing in November 2020. Cash conversion in Q4 2021 was 233%. Financing activities Financing activities was negative DKK 6 million, against negative DKK 78 million in 2020. The financing activities in 2020 were affected by the repayment of long-term debt and proceeds from a new loan agreement. houses delivered in Q4 2021 623 Units Q Q Sales Detached Semi Detached Sweden Deliveries Detached -DK Semi Detached Sweden HusCompagniet Annual report 2021 27 / 132 Detached Sales Semi-detached Sales Sweden Sales 2019 2020 2021 +113% 188 244 400 2019 2020 2021 +12% 1,425 1,417 1,589 2019 2020 2021 +345% 87 260 387 Segments We introduced our three segments in 2020. Detached and Semi-detached in Denmark and our Swedish business. Detached is our largest segment comprising 81% of total revenue in 2021. Semi-detached and Sweden comprised 12% and 7%, respectively. Denmark – detached Revenue amounted to DKK 3,492 million, up 8.8% from DKK 3,209 million. The increase was driven by increased activity from both sales and deliveries. Average selling price (ASP) was DKK 2.3 million. Sales was 1,589 an increased 12% from 1,417. After an extraordinary high level in H1 2021, sales nor- malised in Q3 2021. Deliveries was 1,441 houses, up 6.3% from 1,355 houses. Gross profit was DKK 693 million against DKK 629 million, the gross margin was 19.8% against 19.6% The gross margin exceeded last year level in H1 2021 and were lower in H2 2021. Scarcity in subcontractors affected the 2021 level, whereas the 2020 level was positively affect- ed in H2 by Corona discounts. Q4 2021 gross margin came in at 18.9% against 20.0% in Q4 2020. Despite an increased cost pressure and scarcity of subcon- tractors in Q4 2021 affecting the gross margin level in Q4 2021, the overall high level was kept and increased year- over-year. This also despite share of own land deliveries decreased from 17.0% to 14.5%. EBITDA before special items at DKK 311 million against DKK 300 million, corresponding to a margin 8.9% against 9.4% The EBITDA margin increased from Q1 through Q3 2021. Staff costs increased primarily due to ramp up of the organ- isation and higher level of provision due to the high sales rate. Denmark - Semi-detached houses Revenue amounted to DKK 504 million, up 330% from DKK 117 million in 2020. The increase was driven by significant higher sales rate and consequently increased building activi- ty. 176 units were delivered in 2021 against 92 in 2020. The sales rate amounted to 387, up 49% from 260 unit in 2020. 322 were B2B sales against 227 in 2020. Gross margin was 12.5% against 22.9% in 2020. The devel- opment was mainly due to change in allocation key inter segment implemented in 2021. Q4 2021 gross margin came in at 14.4% against 34.3% in Q4 2020. Share of own land deliveries was 60.8% compared to 70.7% in 2020. EBITDA was DKK 44 million against DKK 8 million in 2020. EBITDA margin came in at 8.7% against 7.2%, up 1.5%-point year-over-year. Average selling price (ASP) was DKK 1.8 million and on par with 2020. Lower level of own land deliveries were offset by relatively higher ASP on 2021 own land projects. Sweden Revenue amounted to DKK 319 million, up 16.9% from DKK 273 million in 2020. Building activity was high and deliveries came in at 214 units up 12% against 191 units in 2020. Sales rate was record high at 400 units against 244 in 2020. The gross margin was 37.4% against 36.6% in 2020. Q4 Gross margin came in at 36.4% against 38.5%. EBITDA before special items at DKK 47 million, correspond- ing to an EBITDA margin of 14.6%. Average selling price (ASP) was DKK 1.5 million against DKK 1.4 million in 2020. Despite an increased cost pressure and scarcity of subcon- tractors performance improved in the Swedish segment. HusCompagniet Annual report 2021 28 / 132 segments Sustainability 30 Our progress with sustainability in 2021 33 Climate change 45 Our People 49 Responsible business 51 Taxonomy eligibility 52 ESG disclosures and data, Nasdaq and SASB 54 TCFD Disclosure HusCompagniet Annual report 2021 29 / 132 sustainability Sustainability Our progress with sustainability in 2021 In 2021, we continued our sustainability journey and further integrated ESG throughout our business, from strategy and governance to product innovation and customer offerings. HusCompagniet is committed to achieving our important climate, people and responsible business targets by 2030. With focus on our customers and the next generations, we are working with everyone in the value chain to improve our offerings. We want to take leadership in new decisions because the world needs sustainable homes. Sustainability issues such as climate change, safety, diver- sity, and inclusion are at the top of the agenda for investors, customers, and regulators. And as a leading house builder in the Nordics, we are uniquely positioned to contribute to sus- tainability within our industry and throughout the value chain. We are constantly driving innovation to reduce CO 2 emissions throughout the lifecycle of a house. Besides this, we actively promote respect for human and labour rights, fight corruption, and pioneer low-carbon offerings in the market. Sustainability is an integral part of our strategy, and we consistently pursue our ambitions of operating a responsible business, securing our people, and playing an active part in reducing climate change with an overall ambition of reducing CO 2 emissions by 70% by 2030. Sustainability reporting HusCompagniet is a signatory to UN Global Compact and committed to upholding the ten principles of human rights, labour rights, anti-corruption, and the environment. The fol- lowing report is our Communication on Progress according to that commitment. We are also presenting our Task Force on Climate-Related Financial Disclosures for 2021 along with material sector topics and metrics according to Sustainability Accounting Standards (SASB). Our ESG data are prepared in alignment with the recommended indicators from CFA Soci- ety Denmark, FSR – Danish Auditors, and Nasdaq Copenha- gen. In 2021 we have also included disclosures according to the EU taxonomy for sustainable activities. On the following page is an overview of our targets, initia- tives, and results in 2021. Our sreic pproch o susinbii A range of sustainable challenges impact our business and our stakeholders. We identify and prioritise key challenges. For house building in particular, we identify what lies within our control and what we can influence in the best possible way. We develop roadmaps, initiatives and programmes to address key challenges. We aspire to have a transformative impact in SDG 11 and relate our targets to specific SDG's. See page 31 for SDG's linked to our targets. HusCompagniet Annual report 2021 30 / 132 our progress with sustainability 2021 Ambitions Baseline Results 2021 Target 2022 Target 2025 Target 2030 Related SDGs Climate 1: Climate – building materials • 5.8kg CO 2 e per m 2 per year from building materials through the lifecycle of a house • 4.0kg CO 2 e per m 2 per year from the production of building materials • Climate-improved House launched, with 31% lower CO 2 emissions than defined baseline • First DGNB Gold B2B project sold to NREP • Internal DGNB course organised • Low-carbon solution tested • Prepare for Danish regulatory requirement for LCA-calculation from 2023 • Analysis results of LCA on 4 house types to be completed in Q1 2022 • Train DGNB consultant and work on DGNB pre/ system certification • 35% reduction in upstream CO 2 emissions from building materials, compared to 2019 (2.6kg CO 2 per m 2 per year) • 70% reduction in CO 2 emissions from building materials through the lifecycle of a house compared to 2019 (1.7kg CO 2 per m 2 per year) Target 9.4 2: Climate – customer use phase • 48% of houses ordered with one or more on-site renewable energy technologies • Natural gas phased out by 1 January 2022 • Education of sales force in advising customers on renewable energy solutions • 48% of houses sold in 2021 were with renewable energy sources • Continue educating sales force in advising customers on sustainability • With district heating become more renewable, consider 2025 target and add new target • 60% of houses ordered with renewable energy sources • Monitor the transition of the grid to more renewable sources • Assess and set new targets accordingly Target 7.1 3: Climate – own operations • 878 tonnes scope 1 CO 2 emissions (owned and leased company vehicles) • 1,536 tonnes scope 2 CO 2 emissions (purchased electricity and heating) • Testing of electric company cars initiated and electric vehicle infrastructure at offices expanded • Continue testing and installing charging infrastructure • Consider entering a PPA (Power Purchase Agreement) • Zero scope 1 emissions through 100% electric owned and leased vehicle fleet • Carbon neutral scope 1 and 2 emissions from operations Target 13.3 People 4: Employee well-being • 2.2% sick leave • Carried out annual employee satisfaction survey across Danish operations, including new questions about health and safety, diversity and inclusion • Carry out employee satisfaction survey across our Danish and Swedish operations • Establish baseline for Swedish operations • Reduce sick leave to 2% • Reduce sick leave to 2% Target 8.5 5: Diversity & inclusion • One female out of seven total members on the Board of Directors • 20% female in management • Two female out of six total members on the Board of Directors • 21% female in management • Monitor possible new regulatory requirements around gender quotas in Denmark • Two females out of six total members on the Board of Directors • 25% female in management • Two female out of six total members on the Board of Directors • 30% female in management Target 5.5 Target 10.3 6: Health & safety • LTIf of 15.2 for own blue and white collar • LTIf of 10.7 for subcontractors • Reduced overall LTIf from 11.4 in 2020 to 9.3 in 2021 • Top safety issues identified and safety reporting system implemented • Construction managers educated in Q4 2021, as part of launch of initiatives • Continue implementing initiatives (eg on-site safety inspections, site planning for materials, learning from near misses) • Continue embedding safety in our own and our subcontractors’ culture • Reduce LTIf by 30% compared to 2019 • Reduce LTIf by 50% compared to 2019 Target 8.3, 8.5 Responsible business 7: Responsible business • Employee Guidelines for Values and Ethics • Standards of Business Conduct • Codes of Conduct reviewed targeted suppliers and employees, based on best practice standards • Tax policy, data ethics policy and working environment policy adopted • Continue focus on ensuring best pratice poli- cies are in place • N/A, annual targets set • N/A, annual targets set Target 16.5 8: Sustainable sourcing • Supplier Code of Conduct • Whistle-blower system • Suppliers and subcontractors have signed the updated Code of Conduct • Initiated dialogue with suppliers in documentation on more sustainable products • Continue engaging with suppliers in creating more sustainable solutions • Continue focus on adoption of CoC throughout the supply chain • N/A, annual targets set • N/A, annual targets set Target 12.6 9: Labour rights and human rights • Employee Guidelines for Values and Ethics • Standards of Business Conduct • Continue awareness efforts have been conducted towards suppliers and subcontractors • Continue to work with suppliers and subcontractors to promote sound working conditions • N/A, annual targets set • N/A, annual targets set Target 8.7, 8.8 Target 10.3 Our ambitions and targets HusCompagniet Annual report 2021 31 / 132 our ambitions and targets Reuse, Recycle and Recovery Landfill Production of materials House construction Living in the house End of life / Demolition The iecce o HusCompnie house Materiality & The UN Sustainable Development Goals In addition to carbon emissions, other environmental im- pacts include water and waste. HusCompagniet’s current influence on waste at the end of the lifecycle of a house lies primarily in selection of materials that are more easily recycled. Since water is not a natural resource that is used in large volumes during our construction process, and we do not operate in areas of high-water stress, this issue has been deselected for the time being. Acknowledging the key role of the water in healthy ecosystems and the importance of efficiency, HusCompagniet, however, does not operate in water-stressed regions. Material social topics for HusCompagniet include health and safety, employee well-being, diversity, and inclusion, as well as human and labour rights, and anti-corruption. These elements are core to the long-term success of our business and our values as a company and inform our sustainability ambitions. With our asset-light business model in mind, we are aware of our responsibility to also uphold these standards with our subcontractors and suppliers. The prioritisation of our material sustainability topics and focus areas are based on the UN Sustainable Development Goals (SDGs) and directs our focus to areas, where we can make a positive impact. At the same time, we acknowledge that the nature of our commercial activities also entails the risk of negative impact, which we have a responsibility to mitigate and minimise. The product stage of building materials includes the raw material supply, transport, and manufacturing of building materials to reduce the environmental impact of production. We can influence this phase of the house’s lifecycle through our offerings to customers, and by working with our sup- pliers to reduce the environmental impact of production. The house construction phase includes transport to the site, construction of the house, and HusCompagniet’s operations. We have the most direct influence over our own operations and this phase. We focus on limiting waste through optimis- ing and thus reducing excess material to the site. After a house is delivered to our custom- ers, the use phase consists of mainte- nance, repair, replacement, refurbish- ment, and operational energy and water use. HusCompagniet’s influence on the use is driven by the on-site energy solu- tion and the house design. The end of life of a house involves demolition, including transport and processing of materials for recycling, reuse, recovery, or disposal. While furthest from our influence, our main contribution to this phase is through the selection of materials, that are, for example, more readily recycled or reused. For teardowns, we additionally partner with demolition companies that have higher rates of recycling and reuse of building materials. HusCompagniet Annual report 2021 32 / 132 The impacts of climate change are wide ranging, from physical events such as flooding, extreme weather events, water, and heat stress, to climate-related displacement and subsequent population movement, all of which have implications for business in the future. The climate transition also presents significant opportunities for HusCompagniet and others. HusCompagniet's vision is to set a new standard for sustain- able construction and changing the way people think and talk about house building and sustainable living. We must drive the agenda, not just follow it. For HusCompagniet, climate change presents opportunities to bring new, low-carbon house concepts and alternative energy technologies to our customers. It also presents risks that we must mitigate, starting with reducing our own CO 2 emissions. We are committed to take a leadership role in climate-related innovation, reducing our CO 2 emissions, and integrating climate considerations into our strategic decision making. Being in the construction industry and as market leader, we acknowledge the responsibility to contribute towards a more sustainable development. As a house builder, we have a key impact on climate change, which we address across the lifecycle of a house. Pursuing ambitious targets In 2019 we began our journey and set ambitious targets for 2025 and 2030. In doing so, we understand that we need the commitment of our suppliers, and equally important we need to find the right sustainable and cost-efficient solutions for our customers. We believe the sustainable choice should be available for the many, and it is our aim to inspire and enable our customers to reduce the climate impact of their homes in the most cost-efficient way. Sustainability Climate change Climate change is one of the defining challenges of our time. It is an urgent global threat, and how we respond will determine the trajectory of global warming for generations. HusCompagniet Annual report 2021 33 / 132 climate change It is our ambition to reduce the lifecycle CO 2 emissions from building materials of HusCompagniet homes by 70% by 2030. To achieve this target, we are focusing our efforts at the areas, where we can make the biggest difference. One of the most important areas is in the selection of lower car- bon building materials, and we have set a short-term target of a 35% reduction in CO 2 emissions from the production of building materials by 2025. Transparent reporting In 2021 we have, by use of external support, evaluated our ESG figures. We have chosen a free reliable data source on emissions factors from “Energistyrelsen” and have restated figures for 2020 and 2019 for comparability. We believe this process will provide a smooth process for 2023 assurance process. In 2021 we have also added market-based emission figures, and total CO 2 emissions (Scope1 & 2 market-based) show an increase of 14%, linked to increased activity and output. We do not participate in the purchase of certificates, which would significantly improve the figures. We believe the market for purchase of certificates is not a reliable way of reducing emissions and more a way to artificially improve your figures. Instead, HusCompagniet is looking into the opportunity of entering into Power Purchase Agreements. This way we contribute to expand the market for renewable energy and not just buy certificates that claims the usage of existing sources. We achieved lower carbon intensity of our operations, from 19.8 to 18.4 CO 2 per m 2 indicating increased CO 2 efficiency in our operations, equivalent to a 7% reduction. We also achieved a reduction of 3% year-over-year of indirect CO 2 emissions – location-based. Scope 1 CO 2 emissions was on par with 2020, and reduced 12% compared to 2019 resulting from decreased business travel and more virtual meetings, likely resulting from COV- ID-19 restrictions. From laboratory to portfolio initiatives 2019 provided us with important knowledge of the life-cy- cle emission (LCA) of our standard house, which constitute around 80% of our sales. 2020 gave us important learnings, when we developed our Climate-Improved house. In 2021, we launched the Climate-Improved house. We are using the learnings from this process to develop initiatives and as an incubator for low-carbon solutions that can be rolled out across our entire portfolio. The first steps were taken in 2021 and more will come in the coming years. We are in close cooperation with our suppliers to explore and test for low-carbon solutions and building materials. We believe this will enable us to assess and scale viable solutions that reduce CO 2 emissions throughout the portfolio and achieve our targets. In December 2021, we launched a campaign, offering renewable energy sources at low cost and from 1 January 2022, we no longer offer gas as heating source and all houses sold will include preparation for instal- lation of charging stations. Sustainable initiatives We are looking into the opportunity of entering into Power Purchase Agreements to contribute to expanding the renewable energy market.. HusCompagniet Annual report 2021 34 / 132 Reuse, Recycle and Recovery Climate – building materials in the lifecycle End of life / Demolition Currently, HusCompagniet has the least influence on the end of life phase. Our main contribu- tion is through the selection of more readily recycled or reused building material. Production of materials Target 2025: 35% reduction of CO 2 emission from the production of build- ing materials, base year 2019. House construction Living in the house – energy consumption Target 2025: 60% of Houses ordered with renewa- ble energy sources HusCompagniet will further explore and provide alter- native energy technologies to our customers. Living in the house: replacement HusCompagniet’s scope 1 & 2 emissions Emissions from the construc- tion of a house, as well as our operations (A4-A5). Downstream scope 3 emissions Emissions from replacement of building materials and compo- nents throughtout the lifecycle of the house (B4). Downstream scope 3 emissions Emissions from operational energy use of the house after it is delivered to customer (B6). Downstream scope 3 emissions When a house reaches the end of its lifetime and is torn down, how materials are disposed, recycled, recovered, and reused have a substantial impact on lifecycle CO 2 emissions (C3-C4). Upstream scope 3 emissions Emissions from the production of building materials (A1-A3). A1-A3 A4-A5 B4 B6 C3-C4 Total 3.7 (34%) 0.2 (2%) 0.7 (10%) 0.9 (11%) 1.3 (15%) 6.8 (100%) We continue to partner with dem- olition firms that focus on reuse of materials, and encourage circular and other innovations that further close the loop in the lifecycle of a house. HusCompnie’s sndrd house - crbon emissions cross he iecce o he house * The proportion of CO emissions by lifecycle phase are based on HusCompagniet’s standard home and the use of geothermal heating Target 2030: 70% reduction of CO 2 emission from the production of building materials through the lifecycle of a house, base year 2019 HusCompagniet Annual report 2021 35 / 132 With district heatingWith geo thermal heating 6.8 8.6 14.9 6.8 6.8 8.6 14.9 8.6 6.8 8.6 14.9 14.9 With gas heating Seecion o hein source is imporn o reduce iecce CO 2 emissions or our sndrd house CO 2 emissions of the standard house by heating source (lifecycle CO 2 emissions in kgCO 2 e/m 2 /year) When assessing climate impact and CO 2 emissions, it is important to take a view of the entire value chain of a house, and the upstream and downstream scope 3 emissions. The lifecycle of a house starts with CO 2 from the extraction of the raw materials and production of building materials, followed by emissions from the house construction phase. It continues with energy consumption while the customer is living in the house, and finally reaches the end of life, during which the house is demolished, and materials are reused, recycled, or disposed. To illustrate the lifetime carbon emissions of a house, we have in 2020 calculated the full lifetime carbon emissions of an standard house (scopes 1, 2 and 3), based on a standard single floor house, our most sold house, accounting for about 80% of our sales. The CO 2 emissions per phase of the lifecycle provides an indication of the impact in each phase. The percentage of CO 2 emissions changes, depending on the type of heating source used. We use the standard defi- nition for the lifecycle of a house of 50 years according to Life-cycle assessment (LCA) measures. The emissions under HusCompagniet’s direct control, are scope 1 and 2 emissions from our own operations, where we have the most control, and where we have set the most ambitious targets. However, a majority of the CO 2 emissions across the lifecycle of a house occurs in other phases, in the form of upstream and downstream scope 3 emissions, where HusCompagniet has an influence, but not direct control. Our role in these phases is more complex, and requires engagement with our suppliers upstream and our customers downstream. As a large player in our sector, we see potential in leveraging our centralised purchasing and product devel- opment efforts for emissions reductions across the value chain. We are in dialogue with several suppliers for more sustainable products and documentation requirements. HusCompagniet Annual report 2021 36 / 132 The lifecycle emissions of the standard house, and HusCom- pagniet’s potential influence, targets, and actions within each phase. In the short- and medium-term, our focus will be upstream and in the use phase, where we can engage with our suppliers to reduce scope 3 emissions from the produc- tion of building materials, and with our customers, offering houses built with less carbon-intensive materials and on-site alternative energy technologies. In the longer term, we will further focus on end of life, starting with materials selection, shifting towards more readily recy- cled and reused materials, thereby reducing future down- stream scope 3 emissions. Additionally, we plan to focus on waste reduction and management on construction sites. In our Danish business we are working with Bygma, one of our key materials suppliers, to identify opportunities for integrating sustainability into our purchasing processes and improve traceability of the materials that we purchase. According to the Nordic Council of Ministers, realising the vision of a carbon-neutral and circular building sector will be impossible without addressing CO 2 emissions embedded in building materials and processes, which combined represent 11% of global CO 2 emissions. It is our ambition to continue to identify and test feasible, low-carbon building solutions and work with our suppliers. In order to realise further CO 2 savings from our design processes, we will continue to explore the potential of various products, and closely follow developments in more sustainable building materials. Well prepared for the coming requirements In March 2021, the Danish government published the Nation- al strategy for sustainable construction “National strategi for bæredygtigt byggeri”, that set out expected future require- ments for CO 2 emission from buildings over a life cycle (LCA). We welcome initiatives towards more sustainable housing and HusCompagniet is well positioned to meet the requirements.We could even wish for even more ambitious requirements. According to the agreement, all new-builds below 1,000 sqm will require a LCA assessment from 2023, and from 2025 there will be introduced a threshold for maximum kg CO 2 e/ m 2 /year. The expected threshold is 10.5 but will be assessed by the end of 2023 based on latest knowledge and data. In 2027 the threshold is expected to fall to 9.0 kg CO 2 e/m 2 /year and for 2029 to 7.5 kg CO 2 e/m 2 /year. The voluntary sustainable building class “Den Frivillige bæredygtighedsklasse” has equivalently a recommended threshold of 7 kg CO 2 e/m 2 /year in 2025, while reducing the threshold to 5 kg CO 2 e/m 2 /year in 2029. The lifecycle emissions of the standard house amounts to between 6.8 kg CO 2 e/m 2 /year with geothermal heating, and 8.6 kg CO 2 e/m 2 /year with district heating. In comparison, the Climate-Improved house emits 5.9 kg CO 2 e/m 2 /year with geothermal heating. The lifecycle emissions of our functionalism house amount to between 8.2 kg CO 2 e/m 2 /year with geothermal heating, and 10.0 kg CO 2 e/m 2 /year with district heating according to our assessments. We therefore expect to secure an LCA of 10.0 CO 2 e/m 2 /year or below in all our offerings. Given the green transition of the energy system and our focus on sus- tainable solutions as well as our suppliers', we expect further reduction of the live cycle emisison of our houses. In H1 2022, we will get results of LCA of 9 different show houses (covering 4 of our house types), including an updated assesment of the Climate-Improved house. This is part of a collaboration with BUILD (Aalborg University), where Hus- Compagniet’s data from built houses are used to develop a simplified LCA tool as part of ongoing work to develop a DGNB certification for single family houses. We feel com- fortable that our portfolio upholds expected LCA and expect that recalculations of prior LCA will improve as they are done with a conservative approach. The voluntary sustainable building class requirements have prepared us for the coming regulatory requirements. Read more on page 40 on our test against the class. On a more local level, that of municipalities, we currently see constraints on choice of for example facade materials. These could hinder the introduction of new lower-carbon alternatives. HusCompagniet Annual report 2021 37 / 132 The new offering is based on our Functionalism House, which was selected based on its modern aesthetic and suitability with more sustainable materials such as timber and slate. The project team behind the Climate-Improved house have spanned across engineering, procurement, sales and busi- ness development. We have additionally drawn on external expertise to conduct life-cycle analyses on various products and building materials. In April 2021 we launched our Climate- Improved house, designed to emit significantly less CO 2 across the entire life cycle of a house. This is achieved through more sustainable building materials, alternative energy sources, and considerations in circularity, reuse, and recycling of materials at the end of the house’s life. Case: Development of our Climate-Improved House 5.2 tonnes CO avoided per house throughout its lifetime Slate façade replacing brick 0.7 tonnes CO avoided Paper wool replacing glass/stone wool 2.6 tonnes CO avoided Reduction of use concrete in foundation 2.7 tonnes CO avoided Timber inner and outer walls replacing aircrete Total reduction from building materials throughout the lifecycle 31% less CO 2 from building materials than our Functionalism House HusCompagniet Annual report 2021 38 / 132 HusCompagniet’s scope 1 & 2 emissions Emissions from the construction of a house, as well as our opera- tions (A4-A5). Downstream scope 3 emissions Emissions from replacement of building materials and compo- nents throughtout the lifecycle of the house (B4). Downstream scope 3 emissions Emissions from operational energy use of the house after it is delivered to customers (B6). Downstream scope 3 emissions When a house reaches the end of its lifetime and is torn down, how materials are disposed, recycled, recovered, and reused have a substantial impact on lifecycle CO 2 emissions (C3-C4). Upstream scope 3 emissions Emissions from the production of building materials (A1-A3). Sustainable building materials The Climate-Improved house is designed with high-quality materials and innovative solutions that result in approxi- mately 30% lower CO 2 emissions from materials, compared to the Functionalism House, equating to 2.42 fewer kg CO 2 e per m per year. The Climate-Improved house has a slate façade, produced without the use of chemicals. Slate is a lower carbon alternative to traditional brick façades, and provides a contemporary take on our traditional Nordic building heritage, while also more readily replaced or reused than bricks, as it is not fastened with mortar. The inner and outer walls of the house are constructed using wood, and we have reduced the amount of concrete, a carbon intensive material, in the foundation. The insulation of the house has been changed to paper wool insulation, which is produced by recycled paper. Our Climate-Improved house is delivered with on-site renew- able energy as standard. These solutions contribute not only to a lower carbon footprint from building materials, but also to lower transport emissions, and lower emissions during the use phase of the house. In our Climate-Improved house, the use of timber significantly impacts the emissions of both the materials and end-of-life phases. The carbon emissions of the materials production phase are negative because timber stores more carbon than harvesting emits. During the end-of-life stages, the stored CO 2 is then released, based on the current assumption that timber is incinerated. With the increasing focus on circularity globally, We anticipate that future innovations related to timber, such as effective recycling and reuse markets, may further reduce the carbon footprint of our Climate-Improved houses, when they reach their end-of-life stage. Cime-improved house A1-A3 -0.4 (-7%) A4-A5 0.2 (3%) B4 0.7 (11%) B6 0.9 (15%) C3-C4 4.6 (78%) Total 5.9 (100%) HusCompagniet Annual report 2021 39 / 132 9 1. Life cycle assessment - the overall climate impact of the building 2. Use of resources on site 3. T otal economic analysis - costs for construction, operation and maintenance 4 Operational and maintenance plan for maintaining the indoor climate 5. Documentation of problematic substances 6. Degassings for the indoor climate 7 . Detailed demonstration of daylight levels 8. Noise from ventilation systems in homes 9 . Room acoustic in homes The concusion hs been posiive, nd our Cime- mproved house mee he requiremens or he vounr susinbe buidin css or eih o he nine crieri. Our internal engineering team has worked with an external consultant to test our Climate-Improved house against the voluntary sustainable building class (Den Frivillige Bæredyg- tighedsklasse) proposed by the Danish government. This effort has been supported by Realdania and will serve to pro- vide learnings and insights for the relevant ministries involved, the construction sector, as well as for HusCompagniet. The voluntary requirements are expected to become mandatory regulatory requirements in the future. By participating in this effort, HusCompagniet has gained knowledge that will prepare us for future requirements, which are expected to be imple- mented in Danish law in 2023. Only as regards to room acoustics, our house did not live up to the requirement in the voluntary sustainability class, which is a reverberation time of 0,6 seconds. Our house was measured to 0,7. It is not known what the final requirement will be, but as we are in the testing period, input from the industry concerning the room acoustics is the current benchmark for the industry. We have also learned that, of the nine criteria, the difference between the Climate-Improved house and our standard offer- ings are primarily of the overall climate impact of the building (criterion 1, the LCA). This means that all our offerings should meet the remaining eight criteria, with the exception of room acoustics. This illustrates the high quality of HusCompagniet’s building process as well as the quality of the house delivered to customers in terms of comfort and the low cost of heating and maintenance. Testing the Climate-Improved house against the voluntary sustainable building class HusCompagniet Annual report 2021 40 / 132 testing the climate improved house 70% of the current building stock A B C D E F G 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 HusCompaniets standard house B Full lifecycle emissions Emissions from heating only Emissions from district heating only for energy classes B through F C D E F 0 3 6 9 12 15 18 21 Number o houses b ener css in Denmrk Houses in ener css C – F emi more CO in hein one hn he u iecce emissions o our house pes CO 2 e / m 2 / year Geo thermal District heating To reach the EU's climate neutrality target for 2050, it is crit- ical to ensure a transition towards a more sustainable build- ing stock, requiring both renovation and new-builds. At Hus- Compagniet, we build new homes at high energy efficiency standards, corresponding to the Danish Energy Agency's class A. Almost 75% of buildings in the EU were built before energy performance standards existed. In Denmark, nearly 70% of all houses have an energy class of D or lower. While the construction of a new house incurs more CO 2 emissions than the renovation of an older house, older hous- es tend to be less energy efficient, making the CO 2 footprint during its use phase higher than in a new house. Further- A successful green transition must include both new-builds and renovation, and we applaud that both activities have been included in the EU Taxonomy for sustainable activ- ities, as long as the relevant technical criteria are met. At HusCompagniet, we welcome this development towards a uniform classification system of sustainable activities, ensuring a level playing field and providing investors and stakeholders with clarity on how companies' activities are aligned with the green transition. Read more on our report- ing on Taxonomy- eligibility on page 51. Susinbe ener svins more, even after renovation, there is a limit to how much the energy performance of the existing building stock can be improved. Most existing houses in Denmark cannot reach an energy class higher than C. This also has an economic and social (comfort-related) impact for the home owner, who will expectively have relatively higher heating costs. We are ac- tively exploring opportunities to reduce the CO 2 embedded in the use phase of our homes, and the end-of-life. We experience that our customers demand energy efficient homes and see this as an important part of more environ- mental friendly houses. of all houses in Denmark have an energy class of D or lower 70% HusCompagniet Annual report 2021 41 / 132 Avoiding CO 2 emissions in our own operations It is our announced target to become carbon neutral in our scope 1 and 2 emissions by 2030. We are also committed to the EV100 initiative, transitioning to fully electric fleet by 2025. We have been working to install electric vehicle (EV) charg- ing stations in all offices and completed a full roll out in 2021, as we move towards our 2025 target. In 2021, we have tested an electric van for our construction managers. Our construction managers have high mileage re- quirements, and after the testing period we must realise that the technological development of vans cannot yet meet the milage need of our construction managers. For our other cars we focus on shift to EV cars, when a car is replaced by new leasing agreement. We are monitoring developments in the EV market closely. While remaining firmly committed to the full electrification of our fleet, we expect viable EV solutions to enter the market in the coming years. Still, we are optimistic that increased demand will continue to drive technological innovation over the coming years and bring EVs to market with ranges that meet the needs of our employees, especially our construc- tion managers, who spend most of their time on the road or on construction sites. Future initiatives Over the coming years, we will increase our focus on closing the loop at homes’ end-of-life, starting with materials selection, increasing our use of readily recycled and reused materials, thereby reducing future downstream scope 3 emissions. Addi- tionally, we plan to focus on waste reduction and management on construction sites and in our demolition processes. We have initiated a test project with our supplier Bygma, for waste reduction through reuse of rubble in new bricks, thus, reducing waste from the building process and increasing the recycled content of new bricks. Further, we will explore waste sorting on specific sites. We are pursuing additional partner- ships to reduce waste further in the construction phase. A crucial first step in the work on waste reduction is obtain- ing good data on actual waste quantities of each fraction, and we are in dialogue with some of our waste companies about these data. Our digitalisation efforts will further optimise materials deliv- ered to the house through automation of material quantifi- cation. It is our ambition to continue to identify and test feasible, low-carbon building solutions and work with our suppliers. In order to realise further CO 2 savings from our design pro- cesses, we will continue to explore the potential of various products and closely follow developments in sustainable building materials. In 2020, we tested cross laminated timber (CLT) as a sus- tainable alternative in the portfolio. Given the development in timber prices we will for the time being not pursue further implementation of CLT in the portfolio. We aim to be sustainable while keeping a cost-efficient mindset for our customers, in line with both ‘den frivillige bæredygtighedsklasse’ and the DGNB certification scheme, sustainability must be seen holistically, covering both envi- ronmental, economic and social aspects. HusCompagniet Annual report 2021 42 / 132 2019 2020 2021 2% 9% 5% Renewable energy sources in our homes We know from the standard house Life cycle assesment that alternative heating solutions have a substantial impact on the total lifecycle CO 2 emissions of a home. (see page 36). For instance, replacing gas heating with geothermal heating reduces lifetime emissions by over 50%, from 14.9kg to 6.8kg CO 2 eq /m 2 /year. It was our target to increase the proportion of homes delivered with one or more alternative energy sources to 60% by 2025. In 2021, we saw a slight de- crease in houses sold with green energy solutions from 50% in 2020 to 48% in 2021. However, we also saw a decrease in gas to 2% and increase in district heating – and we welcome this transition. From 1 January 2022, HusCompagniet no longer offers gas as heating source. In Denmark, oil burners have not been allowed as an energy source for new-builds since 2013, and we excluded oil burners from our offering prior to that. With gas now phased out, fossil energy heating sources are therefore no longer part of our offering. Given the growing spread of district heating, and the expec- tation that this heating source will gradually have lower emis- sions than today, we consider to have reached our target when it comes to air source heat pumps and geo thermal heating pumps. Going forward, we will consider whether we should introduce new targets from the use phase of our houses. Phasing out fossil natural gas in households is an impor- tant part of achieving Denmark's common goal of reducing CO 2 emissions by 70% by 2030. Today there are good alternatives to natural gas heating. We actively advise our customers on alternative heating sources to further drive the sustainable development and at the same time provide cost-effective solutions for our customers. 48% 26% 18% 5% of sold houses have installed air source heat pumps of sold houses have installed geo thermal heating pumps of sold houses have installed solar panels Percene o houses sod wih renewbe ener sources in 2021 of sold houses have one or more of the following alternative energy sources From 1 nur 2022 we sopped oerin s s ener source HusCompnieAnnu report 2021 43 / 132 Case: First semi-detached DGNB- Gold agreement signed In our B2B business, we develop semi-detached projects for customers, ranging from private investors to asset manag- ers, pension funds and other institutional investors. A long investment time horizon naturally calls for a long-term view on sustainability-related risks and opportunities. DGNB, a leading global certification system for sustaina- ble buildings, is based on the three central sustainability areas of ecology, economy and sociocultural issues. The performance of green buildings is evaluated by means of certification criteria similar (but not equal) to the volun- tary sustainable building class where we have tested the Climate-Improved house. The DGNB certification aim to set more ambitious thresholds in order to push the industry towards more sustainable development. DGNB is currently agreed by the industry in Denmark to be the chosen certifi- cation due to the holistic approach and the expectation that certified buildings will lift the building quality. At HusCompagniet, we are exploring our product portfolio's alignment with the DGNB criteria, with the aim of providing DGNB-certified projects for our customers. This is relevant for both our B2B offerings as well as our B2C offering. HusCompagniet currently live up to the Gold-standard and certification will entail collection of documentation rather than improving performance. In November 2021, we signed our first agreement of a DGNB- Gold project. For the documentation phase we have chosen external support and will benefit from the learnings. Going for- ward, we have secured general internal knowledge by hiring competencies within sustainability and in addition, we expect to train at least one employee to become DGNB consultants. This is clearly a strategic area for HusCompagniet and will serve as an incubator for integrating a holistic approach to sustainability into our broader offerings and we believe the steps taken towards this, will further push our sustainability agenda. In parallel, our internal engineering team has worked with an external consultant to test our Climate-Improved house against the voluntary sustainable building class (frivillig bæredygtighedsklasse) proposed by the Danish govern- ment, see page 40 for details. The effort is supported by Realdania and serves to provide learnings and insights for the relevant ministries involved, the construction sector, as well as for HusCompagniet. Environmen qui 22.5% Economic qui 22.5% Soci qui 22.5% DGNB's six main focus areas Technic qui 15% Process qui 12.5% Qui o he re 5% HusCompagniet Annual report 2021 44 / 132 HusCompagniet has a lean structure, and we work with local subcontractors for most of our construction work. This oper- ating model gives us a high degree of agility and efficiency, which we have benefitted from during the past year with exceptionally high sales and building activities. On the other hand, our operating model also means that we must maintain a close cooperation with our subcontractors to ensure that they also maintain a satisfactory performance on safety, quality, and sustainability standards. Over the years, we have built long-term, recurring working relation- ships with our suppliers and subcontractors, which has led to an efficient, standardised operating model across projects. Employee well-being The physical and mental well-being of our people is of ut- most importance to HusCompagniet. Meeting our custom- ers’ expectations every day requires us to bring together a broad range of people and skill sets, from sales to architec- ture and construction management. To improve employee engagement and well-being, we continue to work with development and engagement initiatives that improve team dynamics and communication. HusCompagniet uses a psychometric tool to measure and improve employees’ awareness of strengths and devel- opment areas, and to promote understanding of different personality types working together. It is part of our goal to enable better communication both among our employees and in client engagement, and we have had positive feed- back and commitment from many employees. In 2021, all new employees were also tested according to the system. Sick leave is a challenge to both employees and the busi- ness, and we aim to reduce overall sick leave to 2% in 2025. In 2021, sick leave increased to 3.5% from 2.8% in 2020. The level was impacted by the pandemic and the following restrictions, which caused relativity more sick days reported for the employees and their children. HusCompagniet has a proactive approach for long-term sickness incidents and successful return plans and feel comfortable that the level will decrease again post-pandemic. Employee satisfaction Since 2020, we conduct a yearly employee satisfaction survey measuring areas such as satisfaction and loyalty, and in 2021 we added new questions concerning health and safety and diversity and inclusion. The survey which covered our Danish employees, yielded a response rate of 86%, with a satisfaction score of 77%, and a loyalty score of 84%, which are about the same levels as in 2020. We are very pleased with this performance, which is compa- rable with both national and industry benchmarks. As part of the survey, we also achieved an employee Net Promoter Score (eNPS) of +41 compared to +47 in 2020. The level reflected a challenging year for our employees. The +41 score is still above both industry and eNPS benchmarks, but we aim to improve the score in 2022 with special focus on optimising the building flow for a sustainable working flow. The results of the survey have been shared with local man- agers, who are tasked with engaging their teams to develop action plans based on the survey results. Our organisational structure, with smaller teams, is well positioned to anchoring efforts at the local level, with our central HR team following progress on local action plans. As such, the implementation of initiatives will be customised to suit the needs of each de- partment at the discretion of managers, who drive our local efforts to improve employee well-being across our organisa- tion. In 2022, we plan to expand the employee engagement survey to cover the Swedish organisation as well. Employee turnover increased to 20% from 15% in 2020 in a high activity market, with a high demand for employees with- Our employees are the most important asset at HusCompagniet, and their knowledge and insights are among our strongest assets. We rely on the capabilities of our employees to facilitate and deliver high-quality homes for families and doing so safely. We support and engage our people, through focusing on safety, well-being, diversity, and inclusion. People 77% Satisfaction score in employee satisfaction HusCompagniet Annual report 2021 45 / 132 people 21% 2021 25% 2025 30% 2030 in our sector. We expect the relatively high level to decrease again when the market normalises. Diversity & inclusion This section includes our statutory reporting on diversity & inclusion. At HusCompagniet, we strive to provide a diverse and inclusive work environment with equal opportunity for people of all ages, genders, nationalities, religions, political opinions, and abilities. The construction sector has traditionally been a male-dom- inated industry, which poses a challenge for the industry and for HusCompagniet. The starting point for improving the gender diversity of our workforce is to monitor the demographics of our employees, with the aim to track and improve gender balance over time. As of 31 December 2021, the underrepresented gender is female and constituted 21% of our workforce against 20% as of 31 December 2020. People are encouraged to apply for positions in HusCom- pagniet, irrespective of gender, age, nationality, sexual orientation, religion or ethnicity, and decisions regarding recruitment, promotion and dismissal are not influenced by these. Our employees have equal opportunities for career development and management ambitions, which are dis- cussed as part of the yearly performance reviews. Diversity in management The tone set at the top Management is important, not least when it comes to diversity and inclusion. In 2021, females comprised 33% of our board of directors, which is in line with our target. The composition of the Board of Directors of Hus- Compagniet is also in accordance with the Danish Business Authority's guidelines on equal gender distribution on the Board of Directors. In 2021, other levels of management, defined by the exec- utive management and their direct reports with employee responsibility, had a female representation of 21%. HusCom- pagniet has set a target to increase the representation of females in management to 25% by 2025 and 30% by 2030. n 2021, we hd 21% o he underrepresened ender in mnemen, nd we hve se res or 2025 nd 2030 HusCompagniet Annual report 2021 46 / 132 Health and safety The safety of our employees and subcontractors is an un- wavering priority for HusCompagniet. We acknowledge that there is more work to be done regarding employee safety with our subcontractors, and we have taken several steps over the past years to substantially scale up our efforts. Our commitment is to reduce the lost-time injury frequency (LTIf) by 30% in 2025 and by 50% in 2030, respectively, compared to our baseline level in 2019. This target applies to both our own employees and our contractors’ employees. This is an ambitious target but we remain fully committed to achieving it. Our Board of Directors receives safety updates at all ordi- nary Board meetings to monitor progress against our targets and ensure that the safety of our people and partners remain at the very top of our agenda. Working Environment Policy In 2021, we formulated a company Working Environment Policy aiming to protect both our employees, and the em- ployees of our subcontractors, suppliers, and customers. In addition to complying with the Danish working environment regulations, the policy also covers a range of initiatives to prevent accidents and ensure that all partners comply with the same working environment standards and procedures, as we do. By analysing risks and monitoring accidents we aim to ensure that we have the right capabilities, processes, and tools applicable. To monitor safety for both our own employees and our sub- contractors, we make regular safety performance reporting. In 2021, the reporting covered 86% of our subcontractors against an 87% response rate last year. We value transparent and accurate reporting, as it is the outset for improving safety performance, and we will work to push towards complete coverage. As part of our safety reporting, we also have a proactive and preventive safety registration on-site, which is integrated into our online project management system. The system en- ables our construction managers and subcontractors to reg- ister safety incidents and pre-emptive safety risk observa- tion such as near misses, observations and safety incidents in the app, we already use in the construction process. Our updated Standards of Business Conduct and Supplier Code of Conduct further detail our expectations of both em- ployees and subcontractors, and we are firmly committed to uphold the highest safety standards on our construction sites. HusCompagniet Annual report 2021 47 / 132 Safety overview LTIf . . . LTIf - own employees . . . LTIf - subcontractors . . . LTIs LTIs - own employees LTIs - subcontractors Total lost days Lost days - own employees Lost days - subcontractors Fatalities Lost-time injuries in for own blue- and white-collar employees Days of absence Hand injury from nailgun accident Knee and back injury from fall from height Neck injury from car accident Broken arm from fall from height Back injury from fall from ladder in .- meters height Knee injury from stepping on brick on site Head injury resulting from collisions with obejct on site Electric shock resulting from dehumidifier employee Net Promoter Score (eNPS) +41 Secure Workplace programme In 2021, we further invested in strengthening our safety by launching the safety programme “Tryg Arbejdsplads” or “Secure Workplace”. The programme includes a broad range of initiatives including improved reporting, increased focus on construction site layout and special focus on working in hights. The programme also includes initiatives to improve competences among our own and subcontractors’ em- ployees and more visible leadership through regular site visits, among others. The programme was launched with a workshop for top management followed by onboarding workshops for technical and construction management. Implementation of activities will continue through 2022, and the activities have been integrated into our safety reporting and management systems. Safety reporting Safety reporting in 2021 resulted in a 19% reduction in our overall LTIf, from 11.4 in 2020 to 9.3 in 2021. We increased the LTIf for our own employees from 5.3 to 10.5, correspond- ing to an increase in injuries from 4 injuries to 8. LTIf for subcontractors decreased by 36%, from 13.9 to 8.9. The LTIf for own employees decreased from 15.2 in 2019 to 5.3 in 2020. As incidents are limited, fluctuations can occur, and improvement in reporting quality may also inflate the numbers. Even though the 2021 figure was lower than 2019, the increase in LTif for own employees y-o-y is not satisfac- tory. The development illustrates the importance in the invest- ments done on safety programme, launched in H2 2021 and our continued focus on relentless attention. HusCompagniet Annual report 2021 48 / 132 Responsible business Working against corruption, and in support of environmental responsibility, human rights, and labour rights throughout our value chain, is an essential part of our license to operate. We are aware, that our sector is often scrutinised for challenges related to business ethics, labour relations and working conditions. Through our long-standing, recurring business relationships, we are well-positioned to address responsible business principles in collaboration with suppliers and subcontractors. In 2021, we strengthened our policy framework with updated Code of Conducts for our suppliers and our employees, which will be communicated and integrated into our contracts, oper- ations, and HR manuals throughout our organisation. In line with the latest Corporate Governance recommen- dations, HusCompagniet has also formulated a Tax Policy to ensure compliance with applicable regulations, proper behaviour towards public authorities and payment of taxes as required by law. Data Ethics Policy Pursuant to section 99d of the Danish Financial Statement act, C and D sized companies must account for their data ethics policy and work related thereto. We have in 2021 set in place a new data ethics policy, which regulates how we process and use the information and personal data we keep, which are necessary to service our customers, complete our building activities and ensure transparency towards our investors. Our data ethics policy is developed according to the data ethics value compass. It is key to us, that our customers and other stakeholders can rely on us and the way we process data. Our customers are primarily private individuals, and we use personal data to ensure our customers the best possible service. All data are processed with great care and confidentiality, also in our collaboration with our suppliers. Employees, who due to their work have access to data, are trained in our data ethics and data processing standards. HusCompagniet is continu- ously implementing and updating IT tools and systems, and we maintain a strict access control to limit security risks. Ex- ternal partners are only allowed access to data for a limited period and only related to the work-related need. Maintaining ethical standards At HusCompagniet, we have a zero-tolerance policy to corruption and bribery in any form, and we are firmly com- mitted to conducting our business responsibly. Our business operations are regulated by our Anti-Corruption and Busi- ness Ethics Policy, which details our approach to combating corruption, and formulates our company’s position on the matter. As a company operating in the construction sector, we are aware that our main business ethics risks lie in our collabo- ration with third parties. As such, we take active measures to ensure that our business partners understand and uphold our ethical standards. All our suppliers are required to adhere to our Supplier Code of Conduct, which reflects our commitment to the UN Global Compact and align with our Anti-Corruption and Business Ethics Policy. At HusCompagniet, we consider responsible business practices to be fundamental to a transparent, efficient, and prosperous business environment, and we will continue to strengthen our understanding of business ethics risks throughout our organisation and in our collaboration with business partners. HusCompagniet Annual report 2021 49 / 132 responsible business Our whistleblower system provides our employees and business partners with a confidential channel for addressing concerns or breaches of our ethical standards without fear of reprisal. No breaches to our Anti-Corruption Policy were identified during 2021. Engaging with our suppliers and subcon- tractors for sustainable sourcing As HusCompagniet continues to explore sustainable ma- terials for our homes, sustainable sourcing will continue to be an area of focus and collaboration with a view to further improving supply availability and traceability. When working with suppliers and subcontractors, HusCom- pagniet requires compliance with all applicable regulation. All purchasing agreements with suppliers and subcontrac- tors include a requirement to comply with the Supplier Code of Conduct, which includes elements of human and labour rights, anti-corruption, and environmental sustainability. We encourage our suppliers to further promote its principles within their own organisations and supply chains. Non-com- pliance, or where a supplier or subcontractor demonstrates a lack of improvement, may result in termination of the business relationship. All new contracts as well as annual renewals of existing con- tracts will require suppliers to sign our Code of Conduct. HusCompagniet negotiates the purchase of key materials categories directly with manufacturers, centralising a large portion of our procurement and enabling long-term relations with key materials suppliers. The centralised procurement somewhat mitigates the risk of business ethics breaches. Additionally, substantial purchasing decisions are made at the relevant authority level, and approval processes have been put in place. Supplier agreements above a specific threshold must be approved by our Executive Board or Group Purchasing department. Smaller materials categories are sourced from builder merchants, and subcontractors used for the construction process are typically managed locally to enable flexibility. We are aware that flexible and decentralised decision mak- ing have the downside of potential increased risk in terms of business ethics. Environmental responsibility Our contribution is further increasing focus on the full life cycle of a home, and the integration of circular thinking and environmental stewardship. We aim to further understand and integrate environmental and biodiversity considerations in our business model, from the ecosystems of the land we build on, to our construction processes and materials. This will include, for instance, increasing the re-use and recycla- bility of our building materials, and improving waste and wa- ter management on our construction sites. Materials used for HusCompagniet houses are mainly locally sourced, reducing the environmental impact of transportation. Respect for labour rights and human rights HusCompagniet is committed to respecting human rights and labour rights as set out in the Universal Declaration of Human Rights and the fundamental Conventions of the International Labour Organization (ILO). We work to advance these principles both in our own organisation and among our business partners, subcontractors, and suppliers. Our Sus- tainability Policy, internal Standards of Business Conduct, and Supplier Code of Conduct reflect our commitment to the UN Global Compact (UNGC) and its principles related to human rights and labour rights, among other areas. We respect our employees' right to freedom of association and collective bargaining. The construction industry in general has been scrutinised for labour issues, particularly related to vulnerable groups, such as migrant workers. This is a dilemma across geogra- phies because the legal minimum wage may not necessarily reflect a living wage. We have minimum wage requirements integrated into our subcontractor agreements, and contrac- tually secured our right to audit. HusCompagniet does not tolerate social dumping and will terminate subcontractors who engage in this practice. Going forward, we will continue to work with our suppliers and subcontractors to promote sound working conditions and protect human and labour rights throughout HusCom- pagniet’s value chain. In 2021, no breaches of our supplier Code of Conduct related to human rights were identified. Concern or breaches reported in 2021 0 HusCompagniet Annual report 2021 50 / 132 60% 40% 56% 44% 100% Revenue OPEX CAPEX Taxonomy-eligible activities . Construction of new buildings % % % . Installation, maintenance, and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) % Taxonomy non-eligible activities or activities not covered Non-eligible activities % % % Sum of Activities % % % HusCompagniet has assesed Taxonomy-eligibility for 2021 on voluntary basis, as we are below the 500 employee threshold. We have identified our 2021 activities that are covered by the Climate Delegated Act in the EU Taxonomy. The detailed legislation for the remaining Taxonomy objectives is not fi- nalised, as the interpretation and implementation of the new classification system are still under development. Therefore, we have taken a conservative approach in defining Taxono- my-eligible activities. Our accounting policies for the calculations are based on our, using external advisory, best interpretation of the EU taxonomy regulation and delegated acts and the currently available guidelines from the European Commission. Taxonomy-eligible revenue Our share of revenue associated with taxonomy-eligible activities in 2021 was 100%. All revenue streams are related to the construction of a house. Approx. 80% is constructed on third party land. For the remaining part, land is owned by HusCompagniet. In the sales process land and house will be divided in two contracts for the private customer. Yet, Hus- Compagniet does not speculate in land and will solely sell land in connection with construction of a house. Therefore, it is assessed that revenue stream from land is within scope 7.1. and thus, taxonomy eligible. Net turnover is based on the revenue according to IAS 1.82(a), i.e. IFRS 15 and other revenue if applicable. The de- nominator of the turnover KPI is based on our consolidated net turnover in accordance with IAS 1.82(a). Taxonomy-eligible OPEX Our taxonomy-eligible share of OPEX in 2021 was 56%. The Opex KPI is defined as Taxonomy-eligible Opex divided by our total Opex. Where both Taxonomy-eligible and Taxonomy-non-eligible economic activities are carried out such as offices, market- ing and IT related costs, the Taxonomy-eligible portion of OPEX is determined based on a defined allocation key. We have defined the allocation key from allocated FTE’s. We exclude administration staff in total, even though sustain- ability initiatives originate from the Business Development department and a sustainability resource has been hired. Our sales team are one of the core elements to promote more sustainable house choices, and the full sales team will in 2022 receive training in sustainable advisory. We therefore consider the sales team to be an important factor to enhance sustainable housing choices for the customers, including choice of material, energy source etc. According to current guidelines, we have also excluded our sales team. We consider our approach to be conservative. Taxonomy-eligible CAPEX Our taxonomy-eligible share of CAPEX in 2021 was 60%. The Capex KPI is defined as Taxonomy-eligible Capex divided by our total Capex. Total Capex consists of additions to tangible and intangible fixed assets during the financial year. All CAPEX additions are assessed individually. The Taxon- omy-eligible share of investments primarily relates to 7.1. construction of new buildings. Items include, but are not limited to, investments in development, IT and leased vans for construction managers. For investments in charging stations, we assess the share of CAPEX directly linked to 7.4. Installation, maintenance, and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings). Revenue OPEX CAPEX Txonom-eigibe Txonom non-eigibe Taxonomy-eligibility HusCompagniet Annual report 2021 51 / 132 taxonomy eligibility ESG disclosures and data ENVIRONMENTAL ESG data / disclosures Unit Energy consumption Nasdaq E., FSR/Nasdaq CPH/CFA Total energy consumption , , mWh Nasdaq E. Energy from electricity consumption , , mWh Nasdaq E. Energy from district heating and thermal heating , mWh Nasdaq E. Energy from natural gas for heating mWh Nasdaq E. Diesel consumption , , Liters Nasdaq E. Petrol consumption , , Liters GHG Emissions Nasdaq E.. Total CO -e emissions (Scope & ) - market-based , , Metric tonnes Nasdaq E.., FSR/Nasdaq CPH/CFA Direct CO -e emissions (Scope ) Metric tonnes Nasdaq E.., FSR/Nasdaq CPH/CFA Indirect CO -e emissions (Scope - market-based) , , Metric tonnes Nasdaq E.., FSR/Nasdaq CPH/CFA Indirect CO -e emissions (Scope - location-based) , , Metric tonnes GHG Intensity Nasdaq E. CO -e emissions per m delivered (Scope + - market-based) . . kg/m Nasdaq E. CO -e emissions per m delivered (Scope + - location-based) . . kg/m SASB, IF-HB-a. Number of homes with Energimærkning for energy efficiency % % % SASB, IF-HB-a. Average score of Energymærkning BR & Lavenergi BR & Lavenergi Score ( based on sales) ( based on sales) Renewable energy Nasdaq E., FSR/Nasdaq CPH/CFA Renewable energy percentage (market-based) % % % Nasdaq E., FSR/Nasdaq CPH/CFA Renewable energy percentage (location-based) % % % SASB, IF-HB-a. Number of homes with Energimærkning for energy efficiency (BR) and (lavenergi) % % % SASB, IF-HB-a. Average score of Energymærkning BR & Lavenergi BR & Lavenergi Downstream emissions: Nasdaq E.. Percentage of homes sold with renewable energy technologies % % % Land use & ecological impacts SASB F-HB-a. Number of () lots and () homes sold in regional with High or Extremely High Baseline Water Stress # SASB F-HB-a. Number of () lots and () homes delivered on redevelopment sites % % # Nasdaq E., SASB IF-HB-a. Process to integrate environmental considerations into site selection, design, development and construction See page See page Description 1 new metrics in 2021. 2 unit expressed in % instead of #. 3 all of the countries in which HusCompagniet operates are low or low to medium water stress, according to the World Resources Institute. 4 excludes covid-related and blue collar layoffs. 5 comprise detached and semi-detached houses in Denmark. Data not available in Sweden. SASB: Home Builders Standard. Nasdaq: Nasdaq ESG Guide 2.0. FSR/NasdaqCPH/CFA: ESG key figures in the annual report. HusCompagniet Annual report 2021 52 / 132 esg disclosures and data ENVIRONMENTAL ESG data / disclosures Unit Climate risks SASB IF-HB-a., TCFD Description of risks and opportunities related to incorporating See TCFD See TCFD resource efficiency into home design, and how benefits are disclosure table disclosure table Discussion & communicated to customers Annual report page analysis SASB IF-HB-a., TCFD Description of climate change risk exposure analysis, degree of See TCFD disclosure tableSS See TCFD disclosure Discussion & systematic portfolio exposure, and strategies for mitigating risks Annual report tabel page analysis SOCIAL ESG data / disclosures Unit FTE & Turnover FSR/Nasdaq CPH/CFA FTE (continued operations) # Nasdaq S., FSR/Nasdaq CPH/CFA Employee turnover ratio % % Ratio Health & safety Nasdaq S., SASB IF-HB-a. LTI (lost-time injuries) total - own employees and subcontractors # Nasdaq S., SASB IF-HB-a. LTI own employees - blue and white collar # Nasdaq S., SASB IF-HB-a. LTI subcontractors # Nasdaq S., SASB IF-HB-a. LTIf (lost-time injury frequency) total - own employees and subcontractors . . Frequency Nasdaq S., SASB IF-HB-a. LTIf own employees - blue and white collar . . Frequency Nasdaq S., SASB IF-HB-a. LTIf - subcontractors . . Frequency FSR/Nasdaq CPH/CFA Sick leave .% .% Days per FTE Diversity Nasdaq S., FSR/Nasdaq CPH/CFA Gender Pay Ratio . . Ratio Nasdaq S., FSR/Nasdaq CPH/CFA % female in the company .% .% % FSR/Nasdaq CPH/CFA % female in management .% .% % Nasdaq S. Non-discrimination policy Annual Report See page Description Nasdaq S. Child- and forced-labour policy Sustainability policy Sustainability policy Description GOVERNANCE ESG data / disclosures Unit Nasdaq G., FSR/Nasdaq CPH/CFA Gender diversity on the Board of Directors - underepresented gender .% .% # Nasdaq S., FSR/Nasdaq CPH/CFA CEO Pay Ratio . . Ratio FSR/Nasdaq CPH/CFA Board Meeting Attendance Rate . .% Ratio 1 new metrics in 2021. 2 unit expressed in % instead of #. 3 all of the countries in which HusCompagniet operates are low or low to medium water stress, according to the World Resources Institute. 4 excludes covid-related and blue collar layoffs. 5 comprise detached and semi-detached houses in Denmark. Data not available in Sweden. SASB: Home Builders Standard. Nasdaq: Nasdaq ESG Guide 2.0. FSR/NasdaqCPH/CFA: ESG key figures in the annual report. HusCompagniet Annual report 2021 53 / 132 TCFD disclosures TCFD Recommendation 2021 Disclosures Governance Describe the board’s oversight of climate- related risks and opportunities The HusCompagniet Board of Directors has the ultimate oversight of climate-related risks and opportunities, and ESG-related issues, including those related to climate. Sustainability and climate are an item in the Board’s annual wheel, meaning that climate risks are considered at least once annually, or more frequently as needed. Cli- mate-related risks are an important part of HusCompagniet’s overall ESG risk considerations, and are incorporated into strategic discus- sions, in annual business planning, and in annual reporting. Describe management’s role in assessing and managing climate- related risks and opportunities The Executive Management team is responsible for assessing and managing climate-related risks. The Group CEO and Group CFO are actively involved in the sustainability strategy process, and the oper- ationalis action of the sustainability focus areas is owned by the Head of Business Development. In 2019, we set out to establish a Sustainability Committee. As we worked with sustainability and climate throughout 2020, it became clear that our Executive Management team and leaders across our business were actively engaged, which led to the decision to further integrate sustainability and climate into the organisation, in place of a formal Committee. Ultimate oversight of progress against sustainabil- ity ambitions remains with the Board and Executive Management. TCFD Recommendation 2021 Disclosures Strategy Describe the climate- related risks and opportunities the organisation has identified over the short, medium, and long term Last year, HusCompagniet conducted the first assessment of the risks and opportunities that we may be exposed to as a result of climate change, in accordance with the TCFD recommendations. This year, we revisited the findings, adjusted the timeframes to better reflect our internal planning processes and the TCFD recommenda- tions, and updated some of our expectations. Updated time frames: 0-3 years is considered to be short-term, 4-10 years to be medium- term, and more than 10 years to be long-term. Short-term (0-3 years) risks identified: Political risk from increased prices on emissions or standards; Political push to bring new low-carbon products to market before they are fully tested; Political preference for incentivising renovations instead of new-builds; Tech- nology-related risks from investment in unsuccessful new, renewable technologies; The physical risks identified were all expected to manifest in the longer term. Medium-term (4-10 years) risks identified: Reputational risks from potential shifts in consumer and market preferences towards low-car- bon products; Political ambitions of allocating more landmass to nature, resulting in reduced availability of plots suitable for commer- cial development. Long-term (more than 10 years) risks identified: Physical risks from: reduced availability of lots without exposure to flooding or other weather hazards available for development; Construction times marginally prolonged from chronic changes in weather patterns, such as heavier rainfall and increased temperatures; Rising sea levels and heightened risk of flooding may impact the availability of develop- ment plots; Increased accuracy in pricing, physical climate risks into mortgage and insurance policies may affect demand. HusCompagniet Annual report 2021 54 / 132 tcfd disclosures TCFD Recommendation 2021 Disclosures Strategy Describe the climate- related risks and opportunities the organisation has identified over the short, medium, and long term HusCompagniet continues to identify the potential opportunities from climate change. To address the current and expected shift in consumer demand towards more sustainable house offerings, we have launched our Climate-Improved House and tested it towards the voluntary sustainable building class. Further, from 1 January 2022, we no longer offer gas as an anergy source. Read more on pages 38-40 and page 43 of this Report. Sustainable house offerings might also lead to increased market share in the house market as well as in new markets, as consumer preferences shift towards low-carbon solutions. This development might be further accelerated if increased climate-related damage on the existing property mass results in an increased demand for new houses. Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario In 2019, we conducted our first qualitative scenario analysis in alignment with the TCFD recommendations. The analysis explored the implications to the business model and strategy in the context of three scenarios based on groupings of IEA, IPCC, WEC scenarios, and other publicly available scenarios. The three scenarios explored were: a scenario based on “business as usual” and current policies, a scenario based on stated political commitments, and a decarbon- isation scenario resulting in no more than a 2°C increase in average global temperatures. Each scenario included an overlay of the physi- cal risks posed by the corresponding temperature increase based on data projecting the physical changes specific to Denmark prepared by DMI in accordance with the IPCC scenarios. The analysis showed that our business model can be made resilient in all three scenar- ios. In 2021, we continued to use these insights when considering long-term exposure, and we plan to refresh the analysis as more data becomes available. TCFD Recommendation 2021 Disclosures Risk management Describe the organisation’s processes for identifying and assessing climate- related risks In 2019, the Management conducted a detailed assessment of risks and opportunities in line with the TCFD classifications, which was refreshed for 2021. As we continue to work towards our ambitions and targets, risk management procedures will be put into place. Hus- Compagniet follows the developments of green building standards and certifications closely. We continue to increase our understanding and integration of physical climate risks into decision-making and strategy. Describe the organisation’s processes for managing climate-related risks Climate risks are evaluated on an annual basis, and action will be if and when needed. We continue to strengthen our ongoing processes for climate risk management. HusCompagniet Annual report 2021 55 / 132 TCFD Recommendation 2021 Disclosures Metrics and targets Describe how processes for identifying, assessing, and managing climate- related risks are integrated into the organisation’s overall risk management We identify climate-related risks through the process of prioritising sustainability focus areas. Climate considerations have also informed our product development. Processes for integrating climate-related risks and opportunities were initiated in 2020, and continued in 2021. Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process See pages 57-59 in this Report Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks See pages 31 in this Report Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets See pages 31 in this Report HusCompagniet Annual report 2021 56 / 132 Impact Likelihood Low Low High High 1 2 3 4 7 5 6 1 2 3 4 6 7 5 The Board of Directors are responsible for ensuring the Group’s risk exposure is consistent with its target risk profile. The Board of Directors evaluates the appropriate awareness and management processes are in place. Managing the risk process is part of the GROUP CFO's day-to-day responsi- bility and report developments in the main risk areas to the Audit Committee and Board of Directors. Risk management is based on ongoing monitoring to identify relevant risks. Our enterprise risk management practice aims to identify, monitor, assess and mitigate risks as early as possible to manage the likelihood and potential impact. Risk Management Macroeconomic risk Supply chain risk IT systems and information Climate risk and change in regulation Our people Health and safety Cyber threats Risk management Matrix 2021 Risk action hierarchy HusCompagniet is exposed to numerous inherent risks, some of which are market-driven, some industry related and some climate-related while others are more directly related to the Group’s reputation. Insurances are assessed on an ongoing basis by Group CFO and the audit committee to ensure sufficient coverage is provided to mitigate the day-to-day concerns. An insurance agency reports their assessment on HusCompagniet’ s cov- erage to the Board of Directors once a year. Board of Directors Audit Commmitee Executive Management The COVID-19 pandemic and the ensuing government policies have an uncertain impact on the Group and the related social and economic effects may impact the Group’s business, financial condition, results of operations, cash flow and prospects. Although the COVID-19 pandemic had a significant impact on the world in 2020 and 2021, its effects have not been catego- rised as a specific key risk. The Group has not been serverely inpacted by risk arising from COVID-19 in 2021, despite a slight increase in sick leave. The Group will continue to monitor and address potential risks arising from the COVID-19 situation. Main changes: • Cyber threats (new) • Supply chain risk (likelihood increased) HusCompagniet Annual report 2021 57 / 132 risk management (2020: 13%) Macroeconomic risk Supply chain risk IT systems and information Climate risks and change in regulation Risk The Group is subject to general macroeconomic conditions, and an economic slowdown could ad- versely affect demand for the houses and land it sells. External factors that could affect our ability to generate revenue include the rate of employ- ment, mortgage availability, property prices, interest rate changes and GDP growth. Geopolit- ical uncertainty in Europa could impact external factors. In general, the Group operates in stable low risk economies and the Danish detached market has historically had low volatility and is structurally supported by demographic transition. The Group setup means exposure to and reliance on third-party suppliers, contractors, subcontractors and other service providers in executing its projects. Shortage of materials and/or subcontractors may result in price pres- sure or lack of labour for execution. This could cause liquidity strain due to the "payment at delivery" model and cost in terms of delay penalties. 2021 has been affected by dis- tressed supply chains and the risk of further constraints has increased in connection with the geopolitical instability in Europe. With continuous digitalisation of business processes and implementation of systems to enhance control and drive efficiency, failure of these systems, could restrict the Group’s operations. Failure to comply with data regu- lations could also trigger significant financial penalties and reputational damage. For HusCompagniet, climate risks and the expect- ed transition to a low-carbon economy can pose financial challenges. Long-, medium,- and short term climate-related risks include market risks such as shifts in consumer preferences towards low-carbon homes, policy and legal risks stem- ming from increased regulation, carbon taxes and tariffs. Regulation towards sustainable housing is expected to increase over the coming years, requiring necessary R&D investment in product development from house builders. Mitigation The Group diversifies its business by operating an agile and asset light business model and only acquiring a small number of highly selective strategic land plots with a high turnover rate. The Group strives to maintain its share of own land projects at around 20% of total house deliveries in Denmark. The Group also operates a flexible cost base as most construction projects are out- sourced to subcontractors, which add resilience to the business model in facing down turns. An order book of minimum six months visibility enables rightsizing in due time and scale the business accordingly. Strong relationship established with sub- contractors during boom and bust periods. The Group reduces its reliance on individual contractors by always engaging with several contractors. An overheated market can be partly mitigated through yearly negotiations on longer-term master agreements, and also by cascading cost to customers. The sustain- ability journey opens up for a larger variety of materials, thus reducing dependency of suppliers. Operation of critical applications are moni- tored and managed according to business continuity plan. We ensure segregation of duties in our applications and strong access control to prevent unintended usage. Risk of loss of data is mitigated by a daily backup laced on separate location for 30 days and a disaster recovery strategy is implemented with yearly exercise of disaster recovery. Data protection policy was implemented in 2018. HusCompagniet integrates considerations on climate-related risks and opportunities into our strategy and operations. The Group has since 2019 implemented and publicly supported the rec- ommendations of the Task Force on Climate-re- lated Financial Disclosures (TCFD). We have set ambitious 2025 and 2030 targets to reduce carbon emissions, and in our efforts to reach the targets set, we continuously expand our low-car- bon offerings in terms of materials and renewable energy solutions. The efforts taken also prepares for future regulatory changes. For our Semi-de- tached offerings, a DGNB certification process was completed in 2021. Top risks HusCompagniet Annual report 2021 58 / 132 Our people Health and safety Cyber threats Risk The Group depends upon its management team and on the expertise of its key personnel and may be unable to attract and retain a highly skilled and experienced workforce. Development of skilled employees is critical to delivery of the Group’s strategy of profit and volume growth through quality and efficiency. The Group’s subcontractors may fail to operate in ac- cordance with high ethical and safety standards and in accordance with applicable laws and regulation. The cyber threat has continued to increase. With in- creased digitalisation of business processes, cyber attack could have financial and reputational consequences for HusCompagniet. Malicious hacking activities or theft of sensitive business data, personal employee data or customer data, which may result in significant business disruption, monetary losses or fines and penalties from authorities. Risk of cyber threats has increased further in 2022 due to increased geopolitical uncertainty in Europe. Mitigation HR processes including retaining and recruiting talent are increasingly important to the Group. The Group has a key focus on maintaining an attractive workplace with competitive compensation packages and a long-term incentive programme has been introduced with a view to retaining key personnel. Employee surveys are conducted on regular basis in order to open a line of communication for all employees to provide feedback and help growth the company. It is HusCompagniet's ambition to eliminate work related injuries. HusCompagniet has increased the training of construction managers and engaging in subcontractors at building sites as well as maintaining a strong focus on safety when onboarding new companies. Further, imple- mentation of a safety measuring system during 2021 was performed through an online project management tool to ensure a data driven approach to improve safety. A Code of Conduct is being implemented. The Group IT’s strategy comprises a continued effort to protect against cyber threats regarding IT infrastruc- ture and operations. The Group mitigates security risks through a strong access control to the infrastructure including multifactor authentication. Continuous updates of IT equipment and infrastruc- ture provide new technology to support best practice. Furthermore, the IT strategy seeks to improve upon user awareness continuously on data security, especially with respect to passwords, emails, and devices. Top risks HusCompagniet Annual report 2021 59 / 132 36% Denmark - Institutional 8% Treasury shares 14% Denmark - Retail 10% UK 27% Europe 2% USA 3% Other Shareholder information The share price HusCompagniet A/S was listed on Nasdaq Copenhagen on 18 November 2020, becoming part of the mid-cap index. At first trading day the share price was DKK 117. The share price was at DKK 129 in the beginning of 2021 and closed at DK 118.4 at year end. In comparison, the Copenhagen mid-cap index increased 29% in the period. Shareholder structure HusCompagniet A/S’ share capital is nominally DKK 100,000,000 divided into 20,000,000 shares each with a nominal value of DKK 5 and carrying five votes. On 30 December 2021, HusCompagniet had more than 4,700 reg- istered shareholders collectively holding 97% of the share capital. Three shareholders had at year end notified Hus- Compagniet A/S of holding 5% or more of the share capital: • Henderson Global Investors Limited • Handelsbanken Fonder AB • PFA Asset management After the listing in November 2020, our selling shareholder, EQT, held 44.2% of the shares in HusCompagniet. Through two Accelerated Bookbuilding (ABB) in May and August, respectively, EQT sold their holding and was as of 19 August 2021 no longer shareholder in HusCompagniet. HusCompagniet held 1,683,058 treasury shares at year end, corresponding to 8.4% of the share capital. The treasury shares are subject to cancellation, while a minor share cover the commitments under the current share-based incentive program. Share-based incentive schemes In total, 136,831 RSUs were issued on 23 November 2020, of which 18,589 were granted to the Executive Management and 118,242 were granted to other employees. No RSU’s were granted in 2021. The fair value of the RSUs at grant was DKK 16.0 million. The related cost is expensed over the vest- ing period. A total amount of DKK 4.9 million was recognised as staff costs in the income statement for 2021. Capital structure The primary objective of HusCompagniet’s capital manage- ment is to ensure that it maintains a strong credit rating and healthy capital ratios to support its business and maximise shareholder value. HusCompagniet manages its capital structure and adjusts in response to changes in economic conditions. To maintain or adjust the capital structure, Hus- Compagniet may adjust dividend payments to shareholders, acquire its own shares or issue new shares. HusCompagniet has a target leverage of below 2.0x net debt to EBITDA be- fore special items considering the Group’s cash flow profile. The Company will generally work towards a leverage ratio of around 2.0x. If the leverage ratio is below 1.5x and capital is not committed or expected to be short-term committed towards investments, the Company will seek to return capital to shareholders in addition to the initial pay-out ratio through dividends and/or share buybacks. The financial leverage at year end 2021 was 1.8x net debt to EBITDA before special items. Updated dividend policy The Board of Directors has adopted a dividend policy with a target initial pay-out ratio of at least 50% of reported profit HusCompagniet Annual report 2021 60 / 132 shareholder information Jan 2021 Feb 2021 Mar 2021 Apr 2021 May 2021 Jun 2021 Jul 2021 Aug 2021 Sep 2021 Oct 2021 Nov 2021 Dec 2021 70 80 90 100 110 120 130 140 150 for the year. For 2022, HusCompagniet has updated the dividend policy from at least 50% by means of dividend to at least 25% by means of dividend, supplemented by means of share buyback for around 25%. The dividend policy is subject to change at the discretion of the Board of Directors, and there can be no assurance that the Group’s performance will facilitate adherence to the dividend policy and that in any given year a dividend will be proposed or declared. The Board of Directors proposes that an ordinary dividend of DKK 7.35 per share be paid for the 2021 financial year, to be paid out in the second quarter of 2022. No dividend will be paid out on treasury shares. The proposed dividend per share adds up to a total dividend payout of approximately DKK 132 million, corresponding to payout ratio of 50% of the consolidated profit after tax. Insiders and trading windows Members of HusCompagniet A/S’s Board of Directors and Executive Board are listed in the Company’s register of permanent insiders. These persons and their related parties are allowed to buy or sell shares in the Company only during the four weeks immediately following the publication of each interim financial report, quarterly trading statements or annual report. If in possession of inside information, such persons are prohibited from trading even during the said four-week period for as long as such information remains inside information. The Company may solely buy or sell its own shares during the three-week period immediately preceding each interim financial report, quarterly trading statement or annual report, and the Company may not trade whilst in possession of inside information. Communication with investors To ensure that capital market participants, including current and prospective shareholders, can make well-informed investment decisions, HusCompagniet hosts conference calls with the Executive Management each quarter following the release of financial reports and trading statements. The Executive Management and Investor Relations also meet current and potential investors on a regular basis at road shows and equity conferences. Analyst coverage The company is covered by three equity research providers, Nordea, SEB, and Citi Bank. We are expecting coverage from additional financial institutions during 2022, including Danske Bank. The company is not normally available for dialogue about financial matters in the three-week period leading up to the publication of an interim financial report, trading statements or the annual report. Financial calendar Deadline for proposals to the agenda of the Annual General Meeting February Annual General Meeting April Trading statement for the period ending March May Interim report for the period ending June August Trading statement for the period ending September November HusCompagniet share information No. of shares: 20,000,000 Listing: Nasdaq Copenhagen Trading symbol: HUSCO Index: Nasdaq Copenhagen mid-cap Shareprice 2021 HusCompagniet Annual report 2021 61 / 132 Corporate governance The Board of Directors sets guidelines on the day-today responsibilities and obligations of the Executive Manage- ment. The Board of Directors and the Executive Manage- ment further assess HusCompagniet’s business processes, the organisation, strategy, risks, business objectives and controls. A set of rules of procedure governs the work of HusCompagniet’s Board of Directors. These rules are reviewed annually by the Board of Directors and updated as necessary. In 2021, the Board of Directors approved a Tax Policy for the company. Further the Board of Directors has considered the company’s purpose and discussed how to ensure and promote a good culture and sound values in the company going forward. Board of Directors The Board of Directors consist of six members and has ap- pointed a Chairperson and a Vice Chairperson. All six mem- bers of the Board of Directors are at end of 2021 regarded as independent. The Board of Directors represents broad international business experience and skills considered rel- evant to HusCompagniet. The Board of Directors evaluates its work on an annual basis, and determines once a year the qualifications, experience and skills needed for the Board of Directors to best perform its tasks. All Board Members are up for election at each Annual General Meeting. The Board of Directors meet 5 times a year and holds extraordinary meetings when required. The Board’s annual wheel covers all essential areas of the business, including sustainability and climate. The Board attendance rate for 2021 is included in our table shown on next page and our ESG table on page 52. Composition and Competencies At the Annual General Meeting on 12 April 2021, Claus V. Hemmingsen, Anja B. Eriksson, Ylva Ekborn and Mads Munkholt Ditlevsen were re-elected, and Bo Rygaard and Stig Pastwa were elected as new members of the Board. With the addition of the two new members, the Board repre- sents comprehensive experience and competences, which is considered crucial for the further realisation of HusCom- pagniet’s strategic targets. The Board’s competences are further described on page 66. Every year, the Board of Directors conducts a self-evaluation and will engage external assistance for the evaluation at least every third year. In 2021, the Board of Directors’ self-evaluation covered a broad range of topics, including evaluation of the Chair- personship, meeting structure and effectiveness, strategy develo pment, risk management and stakeholder relations among others. All board members participated in the eval- uation along with two executives. On the overall topic of whether the Board achieves its mandate, fulfils its responsi- bilities, and provides value the score was 4.38 of 5.00. Also, questions concerning meeting management and dynamics as well as evaluation of the Chairperson all scored above 4, which is considered to be a clear strength. The Board will use the feedback to further develop the framework for its activities in the coming year. The next evaluation will be performed with external assistance in 2022 in time for the AGM in 2023. HusCompagniet has a two tier management structure comprising the Board of Directors and the Executive Management. There are no overlapping members. The Board of Directors is responsible for the overall and strategic management and proper organisation of the Group’s business and operations. On behalf of the shareholders, the Board of Directors supervises HusCompagniet's organisation, day-to-day management, and results. female board members in 2021 33% HusCompagniet Annual report 2021 62 / 132 corporate governance Diversity HusCompagniet strives towards diversity in the composi- tion of the Board of Directors, including gender as well as international experience, qualifications, and competencies. HusCompagniet is strongly focused on promoting diversity and equal opportunities as we believe that diversity leads to better performance and decision making. The construction sector has traditionally been and still is a male-dominated sector, which poses a challenge for both HusCompagniet and other companies within the sector. Yet, we aim to reach our ambitious targets and we are compliant with regulatory guidelines. At Board level, HusCompagniet has communi- cated a 2025 target that 25% of the total members on the Board of Directors should be female and a target that 30% of members should be females by 2030. We have already reached our 2030 target as our Board of Directors currently consists of two female and four male directors. The compo- sition of the Board of Directors as such is in accordance with the Danish Business Authority’s guidelines on equal gender distribution on the Board of Directors. Board Chairpersonship and committees The Board of directors has established a Chairpersonship consisting of the Charperson and the Vice Chairperson. They ensure a regular dialogue with the management. In order to support the Board of Directors, HusCompagniet has established an Audit Committee and a Remuneration & Nomination Committee. The purpose of the Board Commit- tees is to report and make recommendations to the Board of Directors on committee related matters. The overall purpos- Bord meein nd bord commiee meein endnce Board Meetings Audit Committee Meetings Remuneration & Nomination Committee Meetings Election period Claus V. Hemmingsen 7/7 3/3 1 year Anja B. Eriksson 7/7 5/5 1 year Stig Pstw (joined in Apri 2021) 5/6 4/4 1 year Ylva Ekborn 7/7 5/5 3/3 1 year Mads Munkholt Ditlevsen 7/7 1/1 1 year Bo Rgrd (joined in Apri 2021) 5/6 2/2 1 year Former members Mgnus Torming 1/1 1/1 1 year Steffen Mrtin Bungrd 1/1 1 year Attendance rate 95% 100% 100% Chair of the committee Vice Chairperson Member of the committee Former member HusCompagniet Annual report 2021 63 / 132 es of the Audit Committee and Remuneration & Nomination Committee, respectively, can be found here: https://investors.huscompagniet.com/English/governance/ committees/default.aspx. Remuneration In our policies and reports, we aim to be transparent in terms of our structure and size. HusCompagniet has adopted a general remuneration structure for the Board of Directors and Executive Management, where targets are closely aligned with the Company’s strategy and typically include targets relating, e.g., to EBITDA, number of houses sold and delivered as well as ESG related targets as deemed relevant by the Board of Directors. CEO pay ratio and gender pay ratiosare included in our ESG disclosures (see page 53). Our Remuneration Policy is availa- ble here: https://s26.q4cdn.com/546028197/files/doc_down- loads/2020/11/HusCompagniet-Remuneration-Policy.pdf. The remuneration report for 2021 can be found here: https://investors.huscompagniet.com/English/governance/ AGM/default.aspx. All current board members have in 2021 received com- pensation fee. Mads Munkholt Ditlevsen has since august received compensation. He has forfeit his remuneration fee. HusCompagniet has opted to donate the waived board fee to Human Practice Foundation. Reporting on Corporate Governance HusCompagniet is committed to complying with corporate governance standards and creating transparency around the Company’s affairs in order to maintain the trust of the Company’s shareholders and stakeholders. HusCompagniet reports on compliance with the Committee on Corporate Governance’s recommendations on Corporate Governance and the Board of Directors reviews the recommendations in force on a regular basis and at least once a year. The Board of Directors and the Executive Management share the committee's views in all material respects. HusCompagniet deviates from just one of the recommendations as the com- pany publishes trading statements for Q1 and Q3 instead of quarterly reports. We believe trading statements will provide shareholders and other relevant stakeholders with sufficient information on the company’s financials. HusCompagniet’s position on the recommendations on Corporate Governance as well as an explanation for recommendation that Hus- Compagniet has opted to deviate from, can be found in the corporate governance statement available here: https://s26. q4cdn.com/546028197/files/doc_downloads/2020/11/Hus- Compagniet-Corporate-Governance-Statement-2021.pdf. Business policies HusCompagniet has a set of policies to govern and further guide our overall efforts towards responsible business con- duct and governance. In 2021 we have implemented further business conduct guidelines, including codes of conduct for our employees and our suppliers. The relevant policies are available here: https://investors.huscompagniet.com/English/ governance/governance-documents/default.aspx. General meeting The next Annual General Meeting will be held on 8 April 2022 at 10.00 (CEST). The General meeting will be a physi- cal meeting and held at Bech Bruun Advokatpartnerselskab, Langelinie Allé 35, 2100 Copenhagen, Denmark. In addition, the Annual General Meeting wil be live streamed. HusCompagniet Annual report 2021 64 / 132 Anja B. Eriksson Vice-Chairperson (Independent), Chair of Audit Committee Member since: July 2020 Born: 1974 Gender: Female Nationality: Danish Position: Director, ATP Education: M.Sc. In Applied Economics and Finance, B.Sc. International Business from Copenhagen Business School, Young Managers Programme and Negotiation Dynamics from INSEAD Business School and High Performance Boards pro- gramme at IMD. Other positions: Chairperson: M.J. Eriksson Holding, Chairperson: Anders Nielsen & Co. A/S, Board member: M.J Eriksson A/S, Board member: Pihl Holdings A/S, Board member: Pihl & Søn A/S. Competencies: Extensive experience from leading roles in the financial and construction indus- tries, with a strong commercial focus, having driven change processes, M&A transactions, sale and HSSE. Holdings 33,326 changed from 31,179 at 31 December 2020 Stig Pastwa Board member (Independent) Member of of Audit Committee Member since: April 2021 Born: 1967 Gender: Male Nationality: Danish Position: Partner, Copenhagen Infrastructure Partners P/S Education: Graduate Diploma, HD (r) Business Administration, Financial and management accounting from Copenhagen Business School. PED from IMD Business School and ADP from London Business School Other positions : Member of the Board of Representatives, Hedeselskabet. Member of the Board of Management and Board of Directors of several CIP companies and CI related funds Competencies: Extensive commercial and managerial experience, including M&A, with a strong financial background as both CFO and CEO from executive roles and non-exec- utive directorships in several large Danish corporations and institutions. Holdings * 6,237 Corporate Governance Bord o Direcors Claus V. Hemmingsen Chairperson (Independent), Chair of Remuneration and Nomination Committee Member since: May 2020 Born: 1962 Gender: Male Nationality: Danish Position: Non-executive board-member Education: Management Programs, London Business School and Cornell University; Exec. MBA, IMD; International Directors Program, INSEAD Other positions: Managing Director, CVH Consulting ApS. Chairperson: Maersk Drilling (The Drilling Company of 1972 A/S), DFDS A/S, Innargi A/S . Board member: A.P. Møller Holding A/S, A.P. Møller og Hustru Chastine Mc-Kinney Møllers Fond til almene Formaal, Den A.P. Møllerske Støttefond, Bacher A/S, Maersk Mc-Kin- ney Moller Center for Zero Carbon Shipping, Global Maritime Foundation, Det Forenede Dampskibs-Selskabs Jubilæumsfond Competencies: Extensive international, commercial and managerial experience, including HSSE & Sustainability, M&A, capital markets and non-executive directorships. Holdings 55,044, changed from 46,453 at 31 December 2020 * Indirect and direct HusCompagniet Annual report 2021 65 / 132 board of directors Ylva Ekborn Board member (Independent), Member of of Audit Committee, Member of Remuneration and Nomination Committee Member since: July 2019 Born: 1975 Gender: Female Nationality: Swedish Position: CEO PostNord Strålfors Group Education: M.Sc. in Economics and Business Administration, Stockholm School of Economics Other positions: Postnord Strålfors Oy (Chairperson), PostNord Strålfors AS Competencies: Extensive experience from executive positions in both B2C and B2B companies in the Nordic region with a strong focus on driving strategic business develop- ment, commercial development, M&A strategies and digital transformation. Holdings 20,247 changed from 12,687 at 31 December 2020 Mads Munkholt Ditlevsen Board member (Independent), Member since: August 2015 Born: 1976 Gender: Male Nationality: Danish Position: Partner at EQT Partners, Head of EQT Partners Denmark Education: M.Sc. in Finance & Accounting, Copenhagen Business School Other positions: Brancheforeningen for Aktive Ejere i Danmark (Board Member), Banking Circle (Vice Chairperson), Fonden Human Practice Foundation (Board Member), 3Shape (Board member), Oterra (Vice Chairperson) Competencies: Extensive experience within Private Equity, M&A, investments, operations and financing working out of Copenhagen and Hong Kong. Holdings No shares Bo Rygaard Board member (Independent), Member of Remuneration and Nomination Committee Member since: April 2021 Born: 1965 Gender: Male Nationality:Danish Position: CEO, Dreyers Foundation Education: M.Sc in Economics and Business Administration, Copenhagen Business School Other positions: CEO, Dreyers Foundation, Chairperson of the Board Netcompany Group A/S, Chairperson of the Board, Skamol A/S, Chairperson of the Board KFI Erhvers- drivende Fond, Chairperson of the Board, KV Foundation, , Deputy Chairperson of the Board, Statens Ejendomsselskab A/S, Member of the Board Fondenes Videnscenter, Chairperson of Richters foundation, member of the board of HusCompagniet group A/S. Competencies: Extensive managerial experience in industry related areas, including real-estate and development, both in Denmark and internationally and experience as both executive and chairperson in listed companies, currently as Chairperson of the Board of Netcompany Group A/S. Holdings No shares Corporate Governance Bord o Direcors * Indirect and direct HusCompagniet Annual report 2021 66 / 132 Martin Ravn-Nielsen Group CEO Born: 1971 Gender: Male Nationality: Danish Year of first employment: 2009 In current position since: 2020 Education: Diploma in Economics and Law from Finansforbundet (Copenhagen) Previous experience: MD NCC Enfamiliehuse Head of sales Eurodan-huse, Various leadership positions within HusCompagniet. Holdings 261,861 changed from 219,256 at 31 December 2020 Mads Dehlsen Winther Group CFO Born: 1977 Gender: Male Nationality: Danish Year of first employment: 2019 In current position since: 2019 Education: M.Sc. in Auditing and Accounting and M.Sc. in Economics and Business Administration, Copenhagen Business School Previous experience: Maersk, Sadolin & Albæk, Deloitte, PwC Holdings 129,304 changed from 101,529 at 31 December 2020 Corporate Governance Execuive Bord * Indirect and direct HusCompagniet Annual report 2021 67 / 132 executive board Financial statements HusCompagniet Annual report 2021 68 / 132 financial statements intro Income statement – consolidated DKK’ Note Revenue . 4,314,783 3,598,408 Cost of Sales . -3,439,886 -2,842,835 Gross profit 874,897 755,573 Staff cost ., . -349,059 -296,330 Other external expenses -124,900 -113,114 Other operating income 173 311 Operating profit before depreciation and amortisation (EBITDA) before special items . 401,111 346,440 Special items . 0 -78,879 Operating profit before depreciation and amortisation (EBITDA) after special items 401,111 267,561 Depreciation and amortisation ., . -46,118 -47,357 Operating profit (EBIT) 354,993 220,204 Financial income . 300 44 Financial expenses . -20,761 -45,253 Profit before tax from continuing operations 334,533 174,995 Tax on profit . -69,981 -16,419 Profit for the period from continuing operations 264,552 158,576 Profit / (loss) after tax for the period from discontinued operations . 0 -66,411 Profit for the period 264,552 92,165 Profits attributable to: Equity owners of the Company 264,552 92,165 DKK Note Earnings per share: . Earnings per share (EPS Basic) 13.7 4.6 Diluted earnings per share (EPS-D) 13.7 4.6 Earnings per share (EPS Basic) continuing operations 13.7 7.9 Diluted earnings per share (EPS-D) continuing operations 13.7 7.9 Earnings per share (EPS) (DKK) from discontinued business 0.0 -3.3 Diluted earnings per share (EPS-D) (DKK) from discontinued business 0.0 -3.3 Statement of other comprehensive income DKK’ Note Profit for the year 264,552 92,165 Other comprehensive income Items that may be reclassified to the income statement in subsequent periods Foreign currency translation differences, subsidiary -2,112 3,236 Other comprehensive income, net of tax -2,112 3,236 Total comprehensive income for the year 262,440 95,401 Total comprehensive income attributable to: Equity owners of the Company 262,440 95,401 HusCompagniet Annual report 2021 69 / 132 con income statement Balance sheet – consolidated DKK’ Note Assets Non-current assets Goodwill . 2,031,471 2,036,580 Intangible assets . 39,741 46,472 Right-of-use assets . 87,709 93,717 Property, plant and equipment . 20,728 19,945 Deferred tax asset . 28,153 4,634 Other receivables . 4,756 4,360 Total non-current assets 2,212,558 2,205,708 Current assets Inventories . 315,926 359,661 Contract assets . 809,330 547,977 Trade and other receivables . 170,272 203,091 Prepayments 14,203 13,378 Cash and cash equivalents 55,420 77,916 Total current assets 1,365,151 1,202,022 Total assets 3,577,709 3,407,730 DKK’ Note Equity and liabilities Equity Share capital . 100,000 100,000 Retained earnings and other reserves 1,784,982 1,757,192 Total equity 1,884,982 1,857,192 Liabilities Non-current liabilities Borrowings . 672,058 671,163 Lease liabilities . 73,247 82,812 Provisions . 8,680 9,520 Deferred tax liability . 38,683 2,966 Total non-current liabilities 792,668 766,461 Current liabilities Borrowings . 0 448 Lease liabilities . 23,076 20,563 Trade and other payables . 554,333 402,998 Contract liabilities . 84,730 102,501 Prepayments from customers . 10,081 13,718 Provisions . 34,718 31,407 Income tax payable . 44,998 35,905 Other liabilities 148,123 176,537 Total current liabilities 900,059 784,077 Total liabilities 1,692,727 1,550,538 Total equity and liabilities 3,577,709 3,407,730 Reference to off-balance sheet notes: Leasing contracts not yet effective 6.3, Related parties 6.5, and Contingent liabilities 3.4 HusCompagniet Annual report 2021 70 / 132 con balance Statement of cash flows – consolidated DKK’ Note Cash flow from operating activities EBITDA, after special items 401,111 267,561 EBITDA, discontinued activities 5,501 -16,190 EBITDA 406,612 251,371 Adjustments for non-cash items . 11,495 786 Adjustet EBITDA 418,107 252,157 Changes in working capital . -84,508 -19,903 Cash flow from operating activities before financial items and taxes 333,599 232,254 Interest received . 300 44 Interest elements of lease payments . -5,736 -6,146 Interest paid . -15,025 -39,107 Corporation tax paid . -54,661 -45,758 Net cash generated from operating activities 258,477 141,287 Cash flow from investing activities Investment in assets recognised as property, plant and equipment -11,327 -19,646 Investment in assets recognised as intangible assets -10,435 -11,383 Net cash generated from investing activities -21,762 -31,029 DKK’ Note Cash flow from financing activities Repayment of long-term debt . 0 -805,903 Proceeds from loans . 0 675,000 Repayment of lease liabilities . -21,850 -20,964 Dividends to equity holders . -60,000 0 Dividends from own treasury shares . 410 0 Acquisition of own shares . -179,990 0 Net cash generated from financing activities -261,430 -151,867 Total cash flows -24,715 -41,609 Cash and cash equivalents at January 77,467 109,610 Net foreign currency gains or losses 2,668 9,466 Cash and cash equivalents at December 55,420 77,467 Cash and cash equivalents Cash at bank 55,420 77,916 Cash and cash equivalents as at December 55,420 77,916 Bank overdrafts 0 -448 Net cash and cash equivalents as at December 55,420 77,467 Free cash flow 236,715 110,258 The cash flow statement cannot be inferred from the published financial information only HusCompagniet Annual report 2021 71 / 132 con cash flow Statement of changes in equity – consolidated Foreign currency Share translation Retained Proposed DKK’ capital reserve earnings dividend Total Equity at January 100,000 3,768 1,693,424 60,000 1,857,192 Profit for the period 0 0 264,552 0 264,552 Other comprehensive income: Foreign currency translation differences 0 -2,112 0 0 -2,112 Total other comprehensive income 0 -2,112 0 0 -2,112 Transactions with owners of the Company and other equity transactions: Share-based payment 0 0 4,930 0 4,930 Purchase of own shares 0 0 -179,990 0 -179,990 Proposed dividends 0 0 -132,276 132,276 0 Dividends, own shares 0 0 410 0 410 Dividends paid 0 0 0 -60,000 -60,000 Total transactions with owners of the Company and other equity transactions 0 0 -306,926 72,276 -234,650 Equity on December 100,000 1,656 1,651,050 132,276 1,884,982 HusCompagniet Annual report 2021 72 / 132 con equity Statement of changes in equity – consolidated Foreign currency Share translation Retained Proposed DKK’ capital reserve earnings dividend Total Equity at January 14,689 532 1,762,126 0 1,777,347 Profit for the period 0 0 92,165 0 92,165 Other comprehensive income: Foreign currency translation differences 0 3,236 0 0 3,236 Total other comprehensive income 0 3,236 0 0 3,236 Transactions with owners of the Company and other equity transactions: Increase in capital 85,311 0 -85,311 0 0 Share-based payment 0 0 444 0 444 Purchase of own shares 0 0 -16,000 0 -16,000 Proposed dividends 0 0 -60,000 60,000 0 Total transactions with owners of the Company and other equity transactions 85,311 0 -160,867 60,000 -15,556 Equity on December 100,000 3,768 1,693,424 60,000 1,857,192 Capital structure The primary objective of HusCompagniet’s capital management is to ensure that it maintains a strong credit rating and healthy capi- tal ratios to support its business and maximise shareholder value. HusCompagniet manages its capital structure and adjusts in response to changes in economic conditions. To maintain or adjust the capital structure, HusCompagniet may adjust dividend payments to share- holders, acquire its own shares or issue new shares. HusCompagniet has a target leverage of below 2.0x net debt to EBITDA before special items considering the Group’s cash flow profile. The Company will generally work towards a leverage ratio of around 2.0x. If the leverage ratio is below 1.5x and capital is not committed or expected to be short-term committed towards investments, the Company will seek to return capital to shareholders in addition to the initial pay-out ratio through dividends and/or share buybacks. The financial leverage at year-end 2021 was 1.8x net debt to EBITDA before special items. Dividends The Board of Directors has adopted a dividend policy with a target initial pay-out ratio of at least 50% of reported profit for the year. For 2022, HusCompagniet has updated the dividend policy from at least 50% by means of dividend to at least 25% by means of div- idend, supplemented by means of share buyback for around 25%. The dividend policy is subject to change at the discretion of the Board of Directors, and there can be no assurance that the Group’s performance will facilitate adherence to the dividend policy and that in any given year a dividend will be proposed or declared. The Board of Directors proposes that an ordinary dividend of DKK 7.35 per share be paid for the 2021 financial year, to be paid out in the second quarter of 2022. No dividend will be paid out on treasury shares. The proposed dividend per share adds up to a total divi- dend payout of approximately DKK 132 million, corresponding to payout ratio of 50% of the consolidated profit after tax. HusCompagniet Annual report 2021 73 / 132 Notes 1 Basis of preparation Note . General accounting policies Note . Introduction to significant estimates and judgements Note . Application of materiality 2 EBITDA Note . Segment information Note . Costs including staff costs and remuneration Note . Share-based payment Note . Special items Note . Earnings per share Note . Financial risk management Note . Accounting policy Note . Significant estimates and judgements 3 Working capital Note . Inventories Note . Contract assets Note . Trade and other receivables Note . Guarantee commitments and contingent liabilities Note . Net working capital Note . Financial risk management Note . Accounting policy Note . Significant estimates and judgements 4 Investments Note . Goodwill and Intangible assets Note . Property, plant and equipment and right-of-use assets Note . Impairment Note . Accounting policy Note . Significant estimates and judgements 5 Funding and capital structure Note . Equity Note . Treasury shares Note . Borrowings and non-current liabilities Note . Lease liabilities Note . Financial income and expenses Note . Financial risk management Note . Accounting policy 6 Other disclosures Note . Tax Note . Discontinued operations Note . Other non-cash items Note . Related parties Note . Auditor's fee Note . Events after the balance sheet date Note . List of Group companies Note . Definitions Note . Accounting policy Note . Significant estimates and judgements HusCompagniet Annual report 2021 74 / 132 con note oversigt Noe . Gener ccounin poicies Basis of preparation The consolidated financial statements are pre- pared in accordance with International Financial Reporting Standards as endorsed by the EU (“IFRS”) and additional requirements of the Danish Financial Statements Act. The consolidated financial statements have been prepared on a historical cost basis, except when noted otherwise in the various accounting policies. These consolidated financial statements are expressed in DKK, as it is HusCompagniet A/S’s functional and presentation currency. All values are rounded to the nearest thousand DKK ‘000. Basis of consolidation The consolidated financial statements comprise HusCompagniet A/S and entities controlled by HusCompagniet A/S. Control is achieved when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries are included in the consolidated fi- nancial statements from the date on which control commences until the date on which control ceases. The financial statements for the subsidiaries are prepared for the same accounting period as Hus- Compagniet using consistent accounting policies. On consolidation, intragroup balances and intra- group transactions are eliminated in full. These consolidated financial statements include the accounts of HusCompagniet and its subsidiary companies, which are listed in note 6.8. Foreign currency translation Transactions and balances Foreign currency transactions are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transac- tion. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchange ruling at the report- ing date. All differences are recognised in the Income State- ment under financial items. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Group companies On consolidation, the assets and liabilities in foreign operations are translated into DKK at the spot rate of exchange prevailing at the reporting date and their income statements are translated at spot exchange rates prevailing at the dates of Section 1 Basis of preparation Introduction HusCompagniet A/S is a company incorporated and domiciled in Denmark. HusCompagniet A/S and its subsidiaries are collectively referred to in the financial statement as the “Group”. The Group is a leading provider of single-family detached houses in Denmark. The Group’s core activity is the design, sale and delivery of customizable high-quality detached houses in Denmark to consumers predominantly built on-site on third-party (customer-owned) land. The Group also designs, sells and delivers semi-detached houses in Denmark to consumers, predominantly on land owned by the Group, and since January 2020 to professional investors, both on land also owned by the Group and on land owned by investors. Investors in the semi-detached business-to-business segment often lease or sell the houses to end-users. The Group is also present in Sweden, where it produces prefabricated wood-framed detached houses in its factory, which are finalised on-site and in most cases facilitated by third-party sales agents. During September 2020, the Group closed down its German and Swedish brick house activities. In accordance with IFRS 5, the activities have in the consolidated financial statements been treated as discontinued operations. Accordingly, the net results of these activities are for year-end 31 December 2021 and 2020 respectively, presented separately in one line in the income statement. The annual report has been approved by the Board of Directors at their meeting 16 March 2022. The annual report will be presented to the shareholders af HusCompagniet A/S for approval at the annual general meeting. The accounting policies are, except for the amendment listed in Note 1.1 General accounting policies, unchanged compared to last year. The following notes are presented in Section 1: Note . General accounting policies Note . Introduction to significant estimates and judgements Note . Application of materiality HusCompagniet Annual report 2021 75 / 132 con note 1.1 Noe . Gener ccounin poicies (coninued) the transactions. The exchange differences arising on translation for consolidation are recognised in Other Comprehensive Income. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operations, and are translated at the closing rate of exchange. Implementation of new or amended standards and interpretations The accounting policies adopted in the prepara- tion of the consolidated financial statements are consistent with those followed in the preparation of the Group’s consolidated annual financial statements for the year ended 31 December 2020, except for the adoption of new standards effective as of 1 January 2021. The Group has not early adopted any standard, interpretation or amend- ment that has been issued but is not yet effective. The Group has adopted relevant new or amend- ed standards (IFRS) and interpretation (IFRIC) as adopted by the EU and which are effective for the financial year 1 January – 31 December 2021. The Group has assessed that the new or amended standards and interpretations have not had any material impact on the Group’s Annual Report in 2021. The Group expects to implement the new stand- ards when they become effective. It has been assessed that the implementation of the new standards will not have any significant effect on the recognition and measurement of the balance sheet at 1 January 2022. HusCompagniet Annual report 2021 76 / 132 Noe . nroducion o siniicn esimes nd udemens In preparing the consolidated financial statements, management made various judgements, estimates and assumptions concerning future events that affected the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and assumptions are reviewed on an ongoing basis and have been prepared taking the financial market situation into consideration, but still ensuring that one-off effects which are not expected to exist in the long term do not affect estimation and determination of these key factors. The Group has not been materially affected by COVID-19 but there are still some uncertainties related to the economic development in Denmark and Sweden and how it will affect the house developing market. The most significant risks are assessed to be restrictions on building activities and construction sites related to an increase in the number of infections and a lower demand on houses due to a declining economy. Based on the above assumptions the estimates are assessed to be unchanged from previous years. Significant estimates and judgements covering specific accounts are placed in each section to which they relate. Significant judgements Note Percentage-of-completion profit recognition . Leases - Estimating the incremental borrowing rate and lease period . Significant estimates Guarantee provisions . Assessment of risk of impairment of non-financial assets . Assessment of recoverbility of deferred tax assets . Noe . Appicion o merii The consolidated financial statements are a result of processing large numbers of transactions and ag- gregating those transactions into classes according to their nature or function. When aggregated, the transactions are presented in classes of similar items in the consolidated financial statements. If a line item is not individually material, it is aggre- gated with other items of a similar nature in the consolidated financial statements or in the notes. The disclosure requirements are substantial in IFRS and the Group provides these specific required disclosures unless the information is considered immaterial to the economic decision-making of the readers of the financial statements or not applicable. HusCompagniet Annual report 2021 77 / 132 con note 1.2-1.3 Section 2 EBITDA This section provides information regarding the Group’s performance in 2021, including the effects of non-recurring items on EBITDA. The development of cost of sales, other external expenses, staff costs and remuneration, and information about the Group’s low exposure towards currency risk on transaction level is also contained in this section. Noe . Semen inormion For management purposes, the Group is organised into business units based on its products and ser- vices as well as geographical location. The Group has three reportable segments, as follows: • The detached houses in Denmark segment, which comprise brick houses built on sites and plots • The semi-detached houses in Denmark seg- ment, which comprise brick houses built on sites and plots, includes both business-to-busi- ness and business-to-consumers • The Swedish business which comprise de- tached prefabricated houses The Group has discontinued two reportable seg- ments, Brick Houses in Sweden and the operation in Germany during the 2020. Please refer to Note 6.2 for further disclosure. No operating segments have been aggregated to form the above reportable operating segments. Executive Management is responsible for oper- ating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is for 2021 evaluated based on EBITDA and is measured consistently with oper- ating profit (EBIT) plus amortisation and deprecia- tion in the consolidated financial statements. The Group's depreciation, amortisations , financing (including financial income and financial expenses) and income taxes are managed on a Group basis and are not allocated to operating segments. As- sets and Liabilities are not allocated to segments. A share of 55% semi-detached houses is pro- duced in the detached segment in 2021. All B2C semi-detached houses are built by the detached segment. Hence the B2B department is currently ramping up and lack capacity, some B2B projects are currently being produced by the detached segment. For segment purposes this revenue has been transferred via an inter-segment allocation. The transferred revenue carries a fixed mark-up. Transfer prices between operating segments are conducted on an arm's length basis in a manner similar to transactions with third parties. The following notes are presented in Section 2: Note . Segment information Note . Costs including staff costs and remuneration Note . Share-based payments Note . Special items Note . Earnings per share Note . Financial risk management Note . Accounting policy Note . Significant estimates and judgements HusCompagniet Annual report 2021 78 / 132 con note 2.1 Noe . Semen inormion (coninued) Denmark Sweden Semi- Total Total Detached detached Wooden continuing discontinued Total DKK’ houses houses houses operations operations segments Revenue External customers ,, , , ,, , ,, Inter-segment -, , Total revenue ,, , , ,, , ,, Income / (expenses) Cost of goods -,, -, -, -,, -, -,, Inter-segment , -, Segment gross profit , , , , -, , Gross margin .% .% .% .% -.% .% Other operating income Staff costs -, -, -, -, - -, Other operating expenses -, -, -, -, - -, Segment EBITDA , , , , -, , EBITDA margin .% .% .% .% -.% .% HusCompagniet Annual report 2021 79 / 132 Noe . Semen inormion (coninued) Denmark Sweden Semi- Total Total Detached detached Wooden continuing discontinued Total DKK’ houses houses houses operations operations segments Revenue External customers ,, , , ,, , ,, Inter-segment Total revenue ,, , , ,, , ,, Income / (expenses) Cost of goods -,, -, -, -,, -, -,, Inter-segment Segment gross profit , , , , , , Gross margin .% .% .% .% .% .% Other operating income Staff costs -, -, -, -, -, -, Other operating expenses -, -, -, -, -, -, Segment EBITDA , , , , -, , EBITDA margin .% .% .% .% -.% .% HusCompagniet Annual report 2021 80 / 132 Noe . Semen inormion (coninued) DKK' Reconciliation of profit Segment EBITDA before special items from continuing operations , , Segment EBITDA before special items from discontinued operations -, -, Special items from discontinued operations , -, Depreciation and amortisations -, -, Financial income , , Financial expenses -, -, Loss before tax from discontinued operations -, , Profit before tax from continuing operations , , DKK' Revenue from external customers Denmark ,, ,, Sweden , , Germany , , Sweden (Discontinued operations) - -, Germany (Discontinued operations) -, -, Total revenue ,, ,, The revenue information above is based on the locations of the customers. No individual customer amounts to more than % of the consolidated revenue. DKK' Non-current operating assets Denmark ,, ,, Sweden , , Germany Total non-current operating assets ,, ,, The non-current operating assets information above is based on the locations of the assets’ physical location. Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets, other receivables, goodwill and intangible assets. HusCompagniet Annual report 2021 81 / 132 Noe . Semen inormion (coninued) Denmark Sweden Semi- Total Total Detached detached Wooden continuing discontinued Total DKK’ houses houses houses operations operations segments Revenue per segment and category - Contracted sales Sales value, houses sold on customers' building sites ,, , , ,, ,, Sales value, houses sold on own building sites , , , , Total Contracted sales ,, , , ,, ,, Revenue per segment and category - Non-contracted sales Show- and project houses , , , Other revenue , , , , Sale of land plots , , , Total Non-contracted sales , , , , Total Revenue ,, , , ,, , ,, HusCompagniet Annual report 2021 82 / 132 The Group is engaged in construction activities in Denmark and Sweden. The Group’s brick house activity in Sweden and the Group’s activities in Germany were discontin- ued in September 2020. Please refer to note 6.2 for further disclosure hereof. Non-contracted sales are recognised on delivery (point-in-time). Contracted sales are recognised Noe . Semen inormion (coninued) Denmark Sweden Semi- Total Total Detached detached Wooden continuing discontinued Total DKK’ houses houses houses operations operations segments Revenue per segment and category - Contracted sales Sales value, houses sold on customers' building sites ,, , , ,, , ,, Sales value, houses sold on own building sites , , , , Total Contracted sales ,, , , ,, , ,, Revenue per segment and category - Non-contracted sales Show- and project houses , , , Other revenue Sale of land plots , , , Total Non-contracted sales , , , Total Revenue ,, , , ,, , ,, DKK’ Revenue per continuing and discontinued operations Total revenue from continuing operations ,, ,, Total revenue from discontinued operations , , Total revenue ,, ,, over time. Payment is typically due at the time of final delivery of the house project, however a small deposit is paid upon contract negotiation. The Group receives a bank guarantee in connection with the start-up of each contract, and is entitled to payment for work performed, including profit, during the project. Construction contracts with professional investors may also include payments on account. Contracted sales comprise the sale of houses constructed on the customers land, or houses sold on own land (semi detached includes land plots) that are covered by a customer contract before construction is started. Conversely, non-contracted sales comprise of: 1. The sale of houses constructed on own land to which no customer contract has been entered into before construction starts. 2. The sale of detached land-plots to which no customer contract has been entered into before purchase and development of the land plots. HusCompagniet Annual report 2021 83 / 132 Noe . Coss incudin s coss nd remunerion DKK’ Staff costs Wages and salaries , , Defined pension contribution plans , , Other social security costs , , Share-based remuneration , Transferred to Special items -, Total , , Average number of full-time employees 455 452 Key management personnel is defined as the Executive Management, and disclosures are provided below. DKK’ Remuneration of Board of Directors Base salary and non-monetary benefits , , One-time bonus award , Total remuneration , , Remuneration of Executive Management Base salary and non-monetary benefits , , Share-based remuneration Bonus , , One-time bonus award , Severance payment , Total remuneration , , DKK’ Remuneration of Executive Management Martin-Ravn Nielsen (CEO from May ): Salary , , Bonus , , Share-based One-time bonus award , , , Mads Dehlsen Winther (CFO from September ): Salary , , Bonus , , Share-based payment One-time bonus award , , , In Executive management (amongst other employees) were eligible to receive a cash-based bonus (“One-time Bonus”) subject to the completion of the listing of the Group. Costs related to one-time bonus awards are classified as special items. The long-term incentive programme is described in note .. HusCompagniet Annual report 2021 84 / 132 con note 2.2 Executive Other Total DKK’ management employees shares Number of shares at January Granted during the year , , , Exercised during the year Forfeited during the year Outstanding at December , , , Outstanding at January , , , Granted during the year Exercised during the year Forfeited during the year -, -, Outstanding at December , , , Number of restricted shares that may be sold at December Noe . Shre-bsed pmens Share-based payments In accordance with the Company’s Remunera- tion Policy, individual members of the Executive Management participate in a long-term incentive programme consisting of restricted share units ("RSUs"), which was implemented on 23 Novem- ber 2020. Participants of the RSU programme are granted RSUs which entitle the participant to receive for free a number of shares in the Compa- ny equivalent to the number of vested RSUs upon vesting as described below. The RSUs will vest over a three-year vesting peri- od. Vesting is not conditional upon achieving any financial or non-financial targets, but is, however, conditional upon (i) the participant remaining em- ployed with the Group for a period of three years from the date of grant, or the participant becoming a good leaver during the vesting period in which case only a proportionate portion of RSUs shall vest, and (ii) the participant having complied in all respects with the general terms and conditions as determined by the Board of Directors. Participation in the RSU programme is offered to members of the Executive Management as an element of remuneration as incentive for the Executive Management to remain focused on value creation and achievement of the Company’s long-term objectives. As determined by the Board of Directors, a selected number of employees of the Company in key positions may also be eligible to participate in long-term incentive programmes on terms similar to those of the Executive Manage- ment. Fair value measurement The Group measures share-based payments at fair value at the grant date. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. The average remaining term to vesting for out- standing restricted shares at 31 December 2021 was approx. 1.9 years. The fair value of the RSU grant at the grant date totalled DKK 16.0 million. In 2021, an expense of DKK 4.9 million was recognised in the income statement in respect of the incentive program (2020: 0.4 million). The fair value of the RSU at the grant date was calculated based on the share price at grant date. HusCompagniet Annual report 2021 85 / 132 con note 2.3 Noe . Speci iems DKK’ Special items • Insurance compensation . -, • Cost related to IPO . , • Strategic organisational changes . , • Costs in connection with Acquisition and Vendor Due Dilligence . , • Other special items . , Total special items , Insurance compensation is related to compensation for prepaid insurances from the bankruptcy estate of the insurance company Qudos Insurance, where HusCompagniet had taken out insurances. IPO-related costs comprise various consultancy fees as part of the IPO and bonuses for a number of employees for a successful transaction, including but not limited to the CEO, the CFO, the former CEO and board members. Strategic organisational changes include severance payments to former senior management and employees. Reconciliation of EBITDA Operating profit before depreciation and amortisation , , Special items , Operating profit before depreciation and amortisation (EBITDA) before special items , , Noe . Ernins per shre DKK Profit for the year ,, ,, Average number of shares ,, ,, Average number of treasury shares -, -, Average number of outstanding shares ,, ,, Dilution from share options , , Average number of outstanding shares, diluted ,, ,, DKK’ Attributable to shareholders of HusCompaniet: Loss from discontinued business -, Profit from continuing business , , Profit for the year , , In calculating dilution from RSU, , shares (: ,), could potentially dilute the profit per share in the future. Earnings per share (EPS) (DKK) . . Diluted earnings per share (EPS-D) (DKK) . . Earnings per share (EPS) (DKK) from continuing business . . Diluted earnings per share (EPS-D) (DKK) from continuing business . . Earnings per share (EPS) (DKK) from discontinued business . -. Diluted earnings per share (EPS-D) (DKK) from discontinued business . -. The per share calculations for continuing business and discontinued business are based on corresponding key figures in profit per share. The Group presents certain financial measures in the consolidated financial statements that are not defined under IFRS. It is the Management's belief that these measures provide valuable supple- mental information to investors and the Group's management, as they allow for evaluation of trends and the Group's performance. Since such financial measures are not calculated in the same way by all companies they are not always comparable to measures used by other companies. These financial measures should therefore not be considered to be a replacement for measurements as defined under IFRS. Defini- tions provided in section 6.9 provide information in greater detail regarding definitions of financial performance measures. HusCompagniet Annual report 2021 86 / 132 con note 2.4-2.5 Noe . Finnci risk mnemen Currency Risk The Group is exposed to currency fluctuations from its activities in Sweden. The subsidiary in the country is not affected, as income and costs are denominated in the local functional currency. The Management continuously assesses the sig- nificance of the Group’s activities denominated in foreign currencies. Total revenue generated in SEK for 2021 amounted to 318 million DKK (2020: 273 million DKK). Due to the reduced continuing business activities related to SEK the management consider the Groups exposure to SEK as low. Noe . Accounin poic Revenue Revenue comprises completed construction con- tracts and construction contracts in progress (con- tracted sales), land plots and sales of showhouses (non-contracted sales). Contracted sales Contracted sales are recognised over time according to percentage-of-completion based on construction time, as all performance obliga- tions are fulfilled on an ongoing basis throughout the construction period. The contracted sales contracts are considered to comprise of only one performance obligation, as all components are considered interrelated, and any changes to a contract will therefore be recognised as changes to the original contract and not as a separate per- formance obligation. The Group acts as primarily responsible for the delivery of the performance obligation and carries the risks related to the construction and is therefore considered as the principal. The contracts are not assessed to have a signifi- cant financing component. The time value of the transaction price for contracts with a duration that exceeds 12 months is assessed insignificant, as the Group does not consume the main part of the costs before the end of the contract phase. Therefore, an adjustment of the transaction price with regards to a financing component in the contracts with customers is not required. Payment is typically due at the time of final delivery of the construction, however a small deposit is paid upon contract negotiation. The Group receives a bank guarantee in connection with the start-up of each contract, and is entitled to payment for work per- formed, including profit, during the project. Contract modifications are recognised when they have been approved by all parties to the contract. Modifications and the associated revenue are accounted for based on an assessment of the stand-alone price of the modifications and an actual assessment of the elements of the contract with the other performance obligations under the sales contract. The transfer of control and recognition of revenue are determined using input methods based on construction days incurred relative to total estimated construction time for the contracts, as these methods are considered to best depict the continuous transfer of control. The selling price is measured by reference to the total expected income from each contract and the stage of completion at the reporting date. The stage of completion is determined on the basis of the costs incurred and the total expected con- struction time. HusCompagniet Annual report 2021 87 / 132 con note 2.6-2.7 If the outcoume of a construction contract cannot be estimated reliably, revenue is only recognised corresponding to costs incurred and indirect production costs, if it is probable that these will be recovered. The Group expenses incremental costs of obtain- ing a contract, as the amortisation period of the asset that the entity otherwise would have recog- nised is less than one year. Costs in connection with sales work to secure contracts are recognised as costs in the income statement in the financial year in which they are incurred. Non-contracted sales For non-contracted sales, revenue is recognised in the income statement when the performance obligation is fulfilled. This is defined as the point in time when control of the non-contracted construc- tion (sale of land plot or sales of houses construct- ed on own land for which no customer contract has been entered info before construction starts) is transferred to the customer, the amount of revenue can be measured reliably and collection is probable. The transfer of control to customers takes place according to agreed delivery date. Furthermore, revenue is only recognised when it is highly probable that a significant reversal in the revenue amount will not occur. Cost of sales Cost of sales include costs of raw materials and consumables incurred in generating the revenue for the year. Other external expenses Other external expenses include the period’s expenses relating to the Group’s core activities, including expenses relating to distribution, sale, advertising, administration, premises, bad debts, low-value and short-term leases, etc. Other operating income Other operating income includes income from secondary activities such as gains/losses from sale of property, plant and equipment. Staff costs Staff costs include wages and salaries, including compensated absence, share-based payments and pensions, as well as other social security con- tributions, etc. made to the Group’s employees. The item is net of refunds made by public author- ities. The Group has established a long-term bo- nus-based share programme (LTI) in accordance with the current remuneration policy. Share-based payments are recognised over the period in which the participant renders the service entitling the participant to the payment. This is, in principle, from the date of grant until the date on which the vesting conditions may have been met. The LTI programme is classified as an equity-set- tled plan. The value of services received as consid- eration for the granted right to restricted shares is measured at the fair value of the shares at the date of grant. The fair value of the granted right to re- stricted shares is not subsequently adjusted. The component of the fair value that can be attributed to employees that do not meet the vesting condi- tions is adjusted and recognised over the vesting period. In the consolidated financial statements, the cost is recognised as staff costs and a set-off to the recognised cost is recognised in equity over the vesting period. In the parent company, costs associated with the LTI programme related to participants employed by subsidiaries are recognised in investments in subsidiaries, and a set-off to the recognised cost is recognised in equity over the vesting period. The LTI programme is classified as an equity-settled plan. Special items Special items include significant income and costs of a special nature in terms of the Group’s revenue-generating operating activities which cannot be attributed directly to the Group’s ordi- nary operating activities. Such income and costs include costs related to significant restructuring of processes and fundamental structural adjustment, as well as gains or losses arising in this connec- tion, and which are significant. Special items also include items such as impair- ment of goodwill, gains and losses on the disposal of activities and transaction cost from business combinations. These items are classified separately in the In- come Statement, in order to provide a more accu- rate and transparent view of the Group’s recurring operating profit. Noe . Accounin poic (coninued) HusCompagniet Annual report 2021 88 / 132 Noe . Siniicn esimes nd udemens Construction contracts, including estimated recognition and measurement of revenue and contribution margin At contract inception, management assesses if the contracts involve a high degree of individual cus- tomisation and satisfy the criteria for recognition over time. The assessment is based on an analysis of, among other things, the contract provisions on: • The degree of customisation, including the potential alternative use of buildings • The time of transfer of legal title • Payment terms, including options of early termi- nation of contract • Enforceable right to payment for performance completion to date. For construction contracts, management considers if they constitute a single performance obliga- tion and if the recognition of the selling price of contracts over time is best depicted by using an input method based on costs incurred relative to budgeted project costs. Variable elements of consideration are not recog- nised in revenue until it is highly probable that a reversal of the amount of consideration will not occur in future periods. Percentage-of-completion profit recognition A fundamental condition for being able to estimate percentage-of-completion profit recognition is that project revenues and project costs can be es- tablished reliably. This reliability is based on such factors as compliance with the Group’s systems for project control and that project management. The assessment of project revenues and project costs is based on a number of estimates and assessments that depend on the experience and knowledge of project management in respect of project control, training and the prior management of project. There is a risk that the final result will differ from the profit accrued based on percent- age-of-completion. At year-end, recognised revenues from contract assets amounted to DKK 864 million (2020: DKK 567 million); refer to note 3.2 Contract assets. HusCompagniet Annual report 2021 89 / 132 con note 2.8 Section 3 Working capital This section provides information regarding the development in the Group’s working capital. This includes notes to understand the development in construction contracts and related guarantee commitments. Information to understand the Group’s low exposure towards credit risk is also contained in this section. Noe . nvenories (DKK’) Raw materials , , Show houses and semi-detached houses , , Land , , Write-down inventories -, Total inventories , , Herof, unsold inventories , , Write-down inventories in was due to land plot where the assessed realisable value were lower than cost price of the land plots. The land plots were sold in . Unsold inventories comprise of raw materials, unsold land and unsold houses constructed on own land to which no customer contract has been entered into before construction starts (typically showhouses). As these houses are constructed before being sold, they are recoignized as inventories, and can therefore not be recognized as contracted work-in-progress. Noe . Conrc sses (DKK’) Selling price of contract assets , , Invoicing on account -, -, , , Calculated as follows: Contract assets , , Contract liabilities -, -, , , Prepayments from customers regarding construction contracts not yet started , , The following notes are presented in Section 3: Note . Inventories Note . Contract assets Note . Trade receivables Note . Guarantee commitments and contingent liabilities Note . Changes in working capital Note . Financial risk management Note . Accounting policy Note . Significant estimates and judgements HusCompagniet Annual report 2021 90 / 132 con note 3.1-3.2 Noe . Conrc sses (coninued) (DKK’) Delivery obligations Within one year ,, ,, After one year , , There are no detained payments related to contract assets. Noe . Trde nd oher receivbes (DKK’) Trade receivables , , Provision for expected credit losses -, -, Other receivables , , As at December , , Provision for expected credit losses at January -, -, Exchange rate adjustment - Arising during the year - - Utilised , Reversed , Provision for expected credit losses at December -, -, Construction contracts (assets/liabilities) Contract assets comprise the selling price of work performed where the Group does not yet have an unconditional right to payment, as the work performed has not yet been approved by the customer. Contract liabilities comprise agreed, unconditional payments received on account for work yet to be performed. During 2021, the entire contract liabil- ity recognised at the beginning of the period has been recognised as revenue. Payment is typically due at the time of final deliv- ery of the house project, however a small deposit is paid upon contract negotiation. The Group receives a bank guarantee in connection with the start-up of each contract, and is entitled to pay- ment for work performed, including profit during the project. The increase in contract assets in 2021 reflects an increase in building activity compared to last year. Contract liabilities were largely affected by a high level of deposits due to the negative interest rate environment. Deposit level was high in 2021, but relatively low compared to prior year. Delivery obligations are relative higher than 2020 due to the increased activity level in 2021. Credit risk on contract assests is generally managed by regular credit rating of customers and business partners. The credit risk exposure relating to dealing with private counterparties is estimated to be limited. HusCompagniet Annual report 2021 91 / 132 con note 3.3 Noe . Gurnee commimens nd coninen ibiiies (DKK’) Guarantee provision at January , , Exchange rate adjustment Arising during the year , , Utilised -, -, Guarantee provision at December , , Distributed in the balance as follows: Non-current liabilities , , Current liabilities , , At year-end, the guarantee provision amounted to DKK 43 million (2020: DKK 41 million). Provi- sions for future costs of guarantee commitments at one and five year reviews of houses delivered are recognized at the amounts expected at the balance sheet date to be required to settle the commitment. This estimate is based on calculations, assess- ments by company management and experiences gained from past transactions. Contingent liabilities The Group is regularly involved in disputes. In 2021 the Group entered an arbitration which is expected to be settled in 2022. The Group expects a posi- tive outcome of the dispute but has recognised a provision. Collateral DKK 64 million of cash and short-term deposits is held in restricted accounts and released when the completed houses are delivered to the customers (2020: DKK 115 million). Restricted accounts are classified as other receivables. The Company had issued guarantees to trade creditors of DKK 39 million as of 31 December 2021 (2020: DKK 42 million). Contractual obligations The Group has no material obligations not already recognised as liabilities in the financial statements. The Group receives security in the form of a bank guarantee or deposit in connection with the start- up of construction contracts and there is there- fore limited risk of loss on trade receivables in connection with the Group's receivable from sales activities. The Group's trade receivables consist of invoices issued shortly before delivering the house, and no key is delivered until payment is re- ceived. The increase in trade receivables is due to an increase in activity in 2021 compared to 2020. Provision for losses mainly relates to a special sit- uation in Germany, where local management had entered into trades without adequately securing receivables according to the group’s policies. Amounts are included in special items. Provision for losses on trade receivables in 2020 and 2021 is recognised following the decision to close down of brick houses in Sweden and Ger- many as well as re-assessment of provision made at year-end 2018. Amounts related to Sweden and Germany are included in discontinued operations. Credit risks are generally managed by regular credit rating of customers and business partners. The credit risk exposure relating to dealing with private counterparties is estimated to be limited. Write-downs for bad and doubtful debts are con- sequently negligible except for debt in discontin- ued business which constitues the main part of provision for expected credit losses in both 2020 and 2021. Other receivables include restricted cash. Due to negative interest rates customers have increasing- ly chosen to pay in advance instead of providing a bank guaranteee. The cash are located on a re- stricted bank account until the house is delivered to the customer. Noe . Trde nd oher receivbes (coninued) HusCompagniet Annual report 2021 92 / 132 con note 3.4 Noe . Ne workin cpi (DKK’) Inventories , , Contract assets , , Trade and other receivables , , Prepayments , , Trade and other payables -, -, Contract liabilities -, -, Prepayments from customers -, -, Other liabilities -, -, Total , , (DKK’) Change in working capital Inventories -, -, Contract assets , -, Trade and other receivables -, , Prepayments , Trade and other payables -, , Contract liabilities , -, Prepayments from customers , -, Other liabilities , -, Cash flow effect , , Noe . Finnci risk mnemen Credit risk HusCompagniet is exposed to customers’ inability to meet their financial obligations. To address this risk, the Group obtains a bank guarantee on the agreed selling price from all customers before construction starts and the customers pay on delivery. In contracts where the scope and price is subsequently changed, the bank guarantee is updated if the Management considers the change to be significant. This eliminates the risk of debtor loss, as all payment rights are secured before the houses are delivered. Impairment of other receivables amounted to nil in 2021 and 2020. HusCompagniet Annual report 2021 93 / 132 con note 3.5-3.6 Noe . Siniicn esimes nd udemens Guarantee commitments Provisions for future costs due to guarantee com- mitments are recognised at the amount expected to be required to settle the commitment at the balance sheet date. This estimate is based on cal- culations, assessments by company management and experiences gained from past transactions. At year-end, guarantee provisions amounted to DKK 43 million (2020: DKK 41 million), refer to note 3.4 Provisions and contingent liabilities. arising from impairment are recognised as financial expenses in the income statement. Other liabilities Other liabilities which include debt to public authorities, employee-related costs payable and accruals etc. are measured at amortised cost. Cash and cash equivalents Cash and cash equivalents comprise cash at banks and on hand. For the purpose of the consolidated financial state- ment of cash flows, cash and cash equivalents consist of cash and short-term deposits, net of outstanding overdrafts. Noe . Accounin poic Inventories Inventories are measured at the lower of cost and net realisable value. The cost price of raw materials includes costs of bringing each product to its present location and condition. Cost of raw materials is measured on a first-in/first-out basis. Work in progress and finished houses (non-contracted construction) The cost of work in progress and finished houses (non-contracted), includes costs of direct materials and labour. The cost price of land plots includes indirect costs such as development costs etc. bringing the land to its present condition. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs nec- essary to make the sale. Work in progress is discribed further in Note 3.2 Contract assets. Provisions Provisions differ from other liabilities because there is a degree of uncertainty concerning when payment will occur or concerning the size of the amount required to settle the provision. Provisions are recognised in the balance sheet when a legal or informal commitment exists due to an event that has occurred and it is probable that an outflow of resources will be required to settle the commitment and the amount can be estimated reliably. Trade and other receivables Receivables are measured at amortised cost. Write-down to counter losses is made according to the simplified expected credit loss model, after which the total loss is recognised immediately in the profit and loss account at the same time as the receivable is recognised in the balance sheet on the basis of expected loss during the total lifetime of the receivable. The effective rate of interest used at the time of initial recognition is used as the discount rate for the individual receivable or portfolio. Other receivables includes restricted cash. On initial recognition, such financial assets are sub- sequently measured at amortised cost using the effective interest rate method (EIR) less impair- ment. The EIR amortisation is included in finan- cial income in the income statement. The losses HusCompagniet Annual report 2021 94 / 132 con note 3.7-3.8 Section 4 Investments In this section the Group's investments are explained. This includes investments in intangible and intangible assets, and how these are tested for impairment. Noe . Goodwi nd nnibe sses Goodwill (DKK’) Goodwill Total Cost at January ,, ,, Exchange rate adjustments -, -, Cost at December ,, ,, Impairment losses at January , , Impairment losses at December , , Carrying amount at December ,, ,, Cost at January ,, ,, Exchange rate adjustments , , Cost at December ,, ,, Impairment losses , , Impairment losses at December , , Carrying amount at December ,, ,, The following notes are presented in Section 4: Note . Goodwill and Intangible assets Note . Property, plant and equipment and rights-of-use assets Note . Impairment Note . Accounting policy Note . Significant estimates and judgements HusCompagniet Annual report 2021 95 / 132 con note 4.1 Noe . Goodwi nd nnibe sses (coninued) Software development Software projects Intangible assets (DKK’) Trademarks development in progress Total Cost at January , , , Additions , , , Exchange rate adjustments Cost at December , , , , Amortisation and impairment losses at January , , , Amortisation , , Impairment losses Exchange rate adjustments Amortisation and impairment losses at December , , , Carrying amount at December , , , Cost at January , , , Additions , , Exchange rate adjustments - - Cost at December , , , Amortisation and impairment losses at January , , , Amortisation , , Impairment losses Exchange rate adjustments Amortisation and impairment losses at December , , , Carrying amount at December , , Noe . Proper, pn nd equipmen nd rih-o-use sses Right of Other Fixtures use assets, Right of and fittings, Leasehold Motor use assets, tools and improve- (DKK’) vehicles property equipment ments Total Cost at January , , , , , Exchange rate adjustments - - Additions , , , , , Remeasurement of lease liabilities Disposals -, -, -, -, Cost at December , , , , , Depreciation and impairment January , , , , , Exchange rate adjustments , Depreciation , , , , , Impairment losses Depreciation of disposals -, -, Depreciation and impairment on December , , , , , Carrying amount at December , , , , , HusCompagniet Annual report 2021 96 / 132 con note 4.2 Noe . Proper, pn nd equipmen nd rih-o-use sses (coninued) Right-of- Other Fixtures use assets, Right-of- and fittings, Leasehold Motor use assets, tools and improve- (DKK’) vehicles property equipment ments Total Cost at January , , , , , Exchange rate adjustments - , Additions , , , , , Remeasurement of lease liabilities -, -, Disposals -, -, -, Cost at December , , , , , Depreciation and impairment January , , , , , Exchange rate adjustments - - - - Depreciation , , , , , Impairment losses , , , Depreciation of disposals -, -, Depreciation and impairment on December , , , , , Carrying amount at December , , , , , Impairment losses are mainly related to discontinued business. Please refer to note . Noe . mpirmen Goodwill At 31 December 2021, Management tested the carrying amount of goodwill for impairment based on the allocation of the cost of goodwill on the geographic segments. (DKK') Cost at January Denmark ,, ,, Sweden , , Carrying amount on December ,, ,, In each individual case, the recoverable amount is calculated as the highest of the value in use. The below descriptions state the value on which the recoverable amount is based. The recoverable amount is based on the value in use determined using expected net cash flows based on budgets for the year 2022 approved by the Management and with a discount factor of 8.5% after tax (2020: 8.5%). The contribution margin for the budget period is estimated based on the average historical contri- bution margin. The budgeted revenue is expected to increase by an average of 11 % in the budget period (2020: 14%). The budgeted revenue is driven from expectations for the future based on historical and future order- log. The Group has had success with a historically very strong design combined with competitive prices and a large volume of show parks. The Group’s market initiatives with many show houses, being first in the market with continuous innovative new solution for the benefit of the house buyer and a business model where the buyer pay for the house upon delivery is a significant factor in driving the future revenue. The weighted average growth rate used in con- nection with extrapolation of future net cash flows for the years after 2022 is estimated to 2% (2020: 2%). The growth rate is not assessed to exceed the long-term average growth rate within the Group's markets. Sensitivity analysis The Management assesses that probable changes in the basic assumptions would not cause the carry- ing amount of goodwill to exceed recoverable value. HusCompagniet Annual report 2021 97 / 132 con note 4.3 Noe . Accounin poic Goodwill At the acquisition date goodwill is recognised in the balance sheet at cost as described under Business combinations. Subsequently, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but is tested for impairment at least once a year. Goodwill is written down to the recoverable amount if the carrying amount is higher than the computed recoverable amount. The recoverable amount is computed as the present value of the expected future net cash flows from the enterprises or activities to which the goodwill is allocated. Impairment of goodwill is not reversed. The carrying amount of goodwill is allocated to the Group’s cash-generating units at the acquisition date. Identification of cash-generating units is based on the management structure and internal financial control. Intangible assets Trademarks Trademarks are initially recognised at cost. Subsequently, trademarks are measured at cost less accumulated amortisation and impairment. Trademarks are amortised on a straight-line basis over their estimated useful lives up to no more than 10 years. Software development projects Software development projects are capitalised when they are clearly defined and identifiable when the technical equality, sufficient resources, and a potential future market or potential for use in the group can be demonstrated and where it is intended to manufacture, market or use project. These assets are recognised as intangible assets if the cost price can be reliably determined and there is sufficient reasonable assurance that future earnings or the net selling price may cover produc- tion, sales, administration and development costs. Other development costs are recognised in the income statement under other external costs. Development projects are measured at cost less accumulated amortisation and impairment losses. Cost includes salaries, depreciation and other costs attibutable to the Group’s development activities and borrowing costs from specific and general borrowing that relate directly to the devel- opment of development projects. Upon completion of the development work, devel- opment projects are amortised on a straight-line basis over the assessment period economic life from the time the asset is ready for use. The amortisation period usually constitutes 3-5 years. The amortisation basis is reduced by any write-downs. Property, plant and equipment Land and buildings, plant and machinery and fixtures and fittings, other plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost comprises the pur- chase price and costs of materials, components, suppliers, direct wages and salaries and indirect production costs until the date when the asset is available for use. Depreciation is provided on a straight-line basis over the expected useful lives, which are 3-5 years for operating assets and equipment, and 3-5 years for leasehold improvements. Business combinations Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether it will measure the non-con- trolling interest in the acquiree at fair value or at the proportionate share of the acquiree’s identifi- able net assets. Acquisition-related costs are ex- pensed as incurred and included in other external expenses When the Group acquires a business, it assess- es the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for the non-controlling interest over the net identifiable assets acquired and liabilities assumed. Lease agreements The Group has lease contracts for leaseholds, vehicles and other equipment used in its oper- ations. Lease of leaseholds generally has lease terms between 3 and 5 years, while vehicles generally have lease terms between 5 and 6 years. Generally, the Group is restricted from assign- ing and subleasing the leased assets. There are several lease contracts that include extension and termination options and variable lease payments. These options are negotiated by the management to provide flexibility in managing the leased-as- set portfolio and align with the Group’s business needs. The Management exercises significant judgement in determining whether these ex- tension and termination options are reasonably certain to be exercised. HusCompagniet Annual report 2021 98 / 132 con note 4.4 The lease obligation is measured at amortised cost using the effective interest rate method. The lease obligation is remeasured when changes in the underlying contractual cash flow occur from e.g. changes in an index or a borrowing rate, changes in determining whether extension and termination options are reasonably certain to be exercised. The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjust- ed for any remeasurement of lease agreements. Subsequently the right-of-use asset is measured at cost less accumulated depreciation and impair- ment losses. The right-of-use asset is adjusted for changes in the lease obligation as a consequence of changes in lease terms or changes in the cash flows of the lease agreement upon changes in an index or a borrowing rate. Right-of-use assets are depreciated on a straight- line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows: Leaseholds: 3-5 years Cars: 5-6 years The Group presents lease assets and lease obliga- tions separately in the balance sheet. The Group also has certain leases of other equip- ment with lease terms of 12 months or less and leases of office equipment with low value. The Group applies the short-term lease and lease of low-value assets’ recognition exemptions for these leases. Noe . Accounin poic (coninued) Noe . Siniicn esimes nd udemens Impairment of non-financial assets Impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremen- tal costs of disposing of the asset. The value in use calculation is based on a Discounted Cash Flow model. The cash flows are derived from the budget for 1 year and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the perfor- mance of the assets of the CGU being tested. The recoverable amount is sensitive to the dis- count rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill with indefinite useful lives recognised by the Group. The key assumptions used to determine the recov- erable amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained in Note 4.3. Leases - Estimating the incremental borrowing rate The Group cannot readily determine the interest rate implicit in the lease. Therefore, it uses its incremental borrowing rate to measure lease liabil- ities. The incremental borrowing rate is the rate of interest that the Group would have to pay to bor- row over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar econom- ic environment. The incremental borrowing rate therefore reflects what the Group ‘would have to pay’, which requires estimation when no observ- able rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease. The Group estimates the incremental borrowing rate using observable inputs (such as market interest rates) when availa- ble and is required to make certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating). In determining its incremental bor- rowing rate, the Group groups its lease assets in two categories in which the Group assesses that the lease agreements and the underlying assets in each category have the same characteristica and risk profile. The categories are as follows: • Leaseholds • Cars HusCompagniet Annual report 2021 99 / 132 con note 4.5 The Group determines its incremental borrowing rate for the above categories in relation to the first recognition in the balance sheet. Moreover, it is determined in connection with subsequent changes in the underlying contractual cash flows upon changes in the estimation of a changed assessment of the use of the extension or termi- nation options or in case of altered agreements. In the determination of the incremental borrowing rate for leaseholds the Group has performed its determination based on an interest rate from a mortgage loan with a loan maturity that resembles the maturity of the lease agreements. The rate on the financing of the part where a mortgage loan cannot be accomplished, has been estimated based on a reference rate with a supplement of a credit margin from the Group’s existing credit facilities. The Group has adjusted the credit margin for lessor’s right to take back the asset in case of violation of the lease payments (secured debt). The Group has determined its incremental bor- rowing rate on lease agreements regarding cars with basis on a reference rate with a credit margin from the Company’s existing credit facilities. The applied incremental borrowing rates are 5-6%. Noe . Siniicn esimes nd udemens (coninued) HusCompagniet Annual report 2021 100 / 132 Section 5 Funding and capital structure This section includes information regarding the Group’s capital structure, and information on how the activities and investments of the Group are funded. Information regarding the Group’s exposure towards liquidity and interest rate risk is also included in this section. Noe . Equi Nominal Number (DKK’) value of shares Share capital Share capital at January (issued and fully paid) , ,, Additions Share capital at December , ,, Share capital Share capital at January (issued and fully paid) , ,, Additions , ,, Share capital at December , ,, The Company’s share capital is nominally DKK 100,000,000 divided into 20,000,000 shares of DKK 5 each or multiples hereof. On 5 November 2020 HusCompagniet A/S increased its share cap- ital by a nominal amount of DKK 85,311,001 from DKK 14,688,999 to DKK 100,000,000. The share capital increase was issued through free reserves. The following notes are presented in Section 5: Note . Equity Note . Treasury shares Note . Borrowings and non-current liabilities Note . Lease liabilities Note . Financial income and expenses Note . Financial risk management Note . Accounting policy HusCompagniet Annual report 2021 101 / 132 con note 5.1 Noe . Borrowins nd non-curren ibiiies (DKK’) Borrowings Non-current liabilities , , Current liabilities , , Total carrying amount , , Nominal value , , Interest-bearing borrowings, incl. leases liabilities Interest-bearing borrowings at January , ,, Additions , , Implementing IFRS , Change short-time bank overdraft -, Repayments -, -, Other (amortised cost, reassesment leasing liabilities IFRS etc.) , -, Exchange rate adjustments - , Interest-bearing borrowings at December , , Noe . Tresur shres Number of shares Treasury shares at January , Acquisition of treasury shares ,, , Treasury shares at December ,, , Market value of treasury shares based on quoted share price at December, DKK million ,, ,, Until 1 November 2025, the Board of Directors are authorised to approve the acquisition of Shares (treasury shares), on one or more occasions, with a total nominal value of up to 10% of the share capital of the Company from time to time, provided that the Company’s hold of treasury shares after such acquisition does not exceed 10% of the share capital. The consideration paid for such Shares may not deviate more than 10% from the official price quoted on Nasdaq Copenhagen at the date of the acquisition as determined by the Board of Directors. Based on this authorisation, the Board of Directors has authorised Executive Manage- ment to initiate share buy-backs of treasury shares to fully cover the Company’s obligations under its long-term incentive programme. The treasury shares are held for the purpose of cancellation and HusCompagniets commitments under RSU incentive programmes. HusCompagniet Annual report 2021 102 / 132 con note 5.2-5.3 Interest Average Carrying (DKK’) Currency rate interest rate amount Bank borrowings DKK Floating .% , Commitments on leasing agreements DKK Fixed-rate .% , , Bank borrowings DKK Floating .% , Commitments on leasing agreements DKK Fixed-rate .% , , Noe . Lese ibiiies (DKK’) Lease liabilities Maturity of lease liabilities Due within year , , Due between and years , , Due after years , , Total lease liabilities at December , , Lease liabilities recognised in balance sheet Hereof short-term lease liabilities , , Hereof long-term lease liabilities , , Amounts recognised in income statement Interest expenses related to lease liabilities , , Costs related to leases less than months (included in cost of sales) Costs related to leasing contracts of low value (included in operating expenses) Total amount recognised in income statement , , Reference is made to note . for statement of right-of-use assets in connection with lease liabilities. Noe . Borrowins nd non-curren ibiiies (coninued) HusCompagniet Annual report 2021 103 / 132 con note 5.4 Noe . Finnci risk mnemen HusCompagniet's Group’s activities and capital structure are exposed to a variety of financial risks: Market risks (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. Group management oversees the management of these risks in accordance with the Group’s risk management policies. This section includes description of the risks re- lated to liquidity risk and interest rate risk. Please refer to section 2 for description of currency risk, and section 3 for description of credit risk. Liquidity risk The Group does not receive payment until con- struction is finished and the house is handed over to the client. Accordingly, the Group needs sufficient credit facilities to fund constructions in progress. The Group continues monitoring the need of liquidity. 31 December 2021, the Group has an undrawn credit facility of DKK 400 million to ensure that the Group is able to meet its obliga- tions (2020: DKK 400 million). The Management considers the credit availability to be sufficient for the next 12 months. The below presented cash flows are non-dis- counted amounts, on the earliest possible date at which the Group can be required to settle the financial liability. Floating interest payments on bank borrowings have been determined applying a forward curve on the underlying interest rate at the reporting date. Noe . Finnci income nd expenses (DKK’) Financial income Interests received from banks Exchange rate gains Other financial income Total financial income Financial expenses Interest paid to banks , , Interest lease liabilities , , Exchange rate losses Other financial cost , , Total financial expenses , , Net financials -, -, HusCompagniet Annual report 2021 104 / 132 con note 5.5-5.6 Noe . Finnci risk mnemen (coninued) Due within Due between Due between Due after Total contractual Carrying Contractual maturity analysis of financial liabilities (DKK’) year and years and years years cash flow amount Non-derivative financial liabilities Trade and other payables , , , Bank borrowings , , , , , Lease liabilities , , , , , , Other liabilities , , , Total non-derivative financial liabilities , , , , ,, ,, Non-derivative financial liabilities Trade and other payables , , , Bank borrowings , , , , , Lease liabilities , , , , , , Other liabilities , , , Total non-derivative financial liabilities , , , , ,, ,, The presented cash flows are non-discounted amounts, on the earliest possible date at which the group can be required to settle the financial liability. Floating interest payments on bank borrowings have been determined applying a forward curve on the underlying interest rate at the reporting date. Interest rate risk HusCompagniet is exposed to fluctuations in mar- ket interest rates primarily related to the Group's long-term loan with floating rates. The Group has a 3 year bank agreement based on an agreed interest rate margin. At 31 December 2021 the Group's long-term debt is kept at floating rates. If the interest rate increased (decreased) by 1% the effect on interest during 2021 would have been DKK 6.7 million (2020: DKK 6.7 million, 2019: 16.9 million). HusCompagniet Annual report 2021 105 / 132 Noe . Accounin poic Equity Dividends The expected dividend payment for the year is disclosed as a separate item in equity. Proposed dividends are recognized as a liability at the date they are adopted by the annual general meeting (declaration date). Foreign currency translation reserve The reserve comprises currency translation adjust- ments arising on the translation of financial state- ments of foreign subsidiaries from their functional currencies into the presentation currency used by HusCompagniet. Financial income and expenses Financial income and expenses comprise interest income and expenses including interest on leases, cost of permanent loan facilities, gains and losses on securities, receivables, payables and transac- tions denominated in foreign currencies, amortisa- tion of financial assets and liabilities, etc. Financial assets Financial assets are classified as receivables. The Group determines the classification of its financial assets at initial recognition. All financial assets are recognised initially at fair value plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs. Financial liabilities All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, carried at amortised cost. This includes directly attributable transaction costs. The Group’s financial liabilities comprise trade pay- ables, borrowings and other payables (primarily staff-related costs not due for payment). Noe . Finnci risk mnemen (coninued) (DKK’) Categories of financial assets and financial liabilities Cash and receivables , , Receivables , , Bank borrowings , , Lease liabilities , , Trade and other payables , , Other liabilities , , It is estimated that the fair value of financial assets and liabilities corresponds to carrying amount in balance sheet. HusCompagniet Annual report 2021 106 / 132 con note 5.7 Section 6 Other disclosures This section includes other disclosures required by IFRS or additional disclosures required by the Danish Companies Act. Noe . Tx (DKK’) Tax Tax for the year can be specified as follows: Tax on profit from continued operations , , Tax on profit from discontinued operations , , Income taxes in the income statement , , Current tax continued operations Tax for the year from continued operations can be specified as follows: Income tax , , Movement in deferred tax , -, Adjustment relating to previous years , Income taxes in the income statement , , Profit before tax , , Tax rate, Denmark .% .% Calculated tax at the applicable rate for continued operations , , Non-taxable income -, -, Expenses not deductible for tax purposes , Adjustments related to prior years , Effective change in tax rate - Other , -, Tax expense for the year , , Effective tax rate, % .% .% Expenses not deductible for tax purpose primarily relates to costs related to transactions (incl. IPO in ). The following notes are presented in Section 6: Note . Tax Note . Discontinued business Note . Other non-cash items Note . Related parties Note . Auditor’s fee Note . Events after the balance sheet date Note . List of Group companies Note . Definitions Note . Accounting policy Note . Significant estimates and judgements HusCompagniet Annual report 2021 107 / 132 con note 6.1 Noe . Tx (coninued) (DKK’) Deferred tax Deferred tax at January -, -, Recognised in profit or loss, continued business , -, Recognised in profit or loss, discontinued business , , Adjustments relating to prior years - Exchange differences - Deferred tax at December , -, Deferred tax is presented in the statement of financial position as follows: Deferred Deferred Deferred Deferred tax asset tax liability tax asset tax liability (DKK’) Intangible assets , -, Right-of-use assets and property, plant and equipment , , Construction contracts , -, Other payables , Tax loss carried forward , , , Deferred tax , , , , Noe . Disconinued operions In 2019, the Group decided to close down its German activities and to focus on its original core market segments. The decision was driven by the difficulty of establishing a network of suppliers to support its business and of establishing significant brand recognition in a new large market.Also in 2019, the Group decided to cease its Swedish brick-house business activities due to the substan- tial differences in the supply and sales process in Sweden as compared to Denmark and due to Swedish customer preferences for wood rather than brick houses. The German and Swedish brick house activities were closed down during Septem- ber 2020. As part of the discontinuation of the operations assets were impaired by DKK 7.5 million at 30 September 2020. The impairment has been rec- ognised in the Group’s result under discontinued operations. Costs incurred in 2021 has been on a lower level than expected hence provision for close down costs have been partly reversed. (DKK’) Corporation tax payable Corporation tax payable at January , , Foreign exchange adjustments - Adjustment of corporation tax related to prior year , , Current tax including jointly taxed subsidiaries, from continued business , , Current tax including jointly taxed subsidiaries, from discontinued business , , Corporation tax regarding previus years tranferred from other receivables Corporation tax paid during the year -, -, Tax related to financial instruments Corporation tax payable at December , , HusCompagniet Annual report 2021 108 / 132 con note 6.2 Noe . Oher non-csh iems (DKK’) Movements in provisions recognised in the income statement , Movement in provisions regarding discontinued business , Non-cash financial items , - Other non-cash items , Noe . Reed pries Transactions with Executive Management & Board of Directors Transactions with the Executive Management & Board of Directors include transactions with com- panies controlled by the Executive Management & Board of Directors. Reference is made to note 2.2 and note 2.3. Related parties with a significant influence HusCompagniet A/S has no related parties with control of the Group and no related parties with significant influence other than key management personnel – mainly in the form of the Board of Directors and the Executive Management. Significant transactions between the Group and related parties with a significant influence There were no transactions between the Group and related parties with a significant influence be- sides remuneration in 2021 (2020: no transactions besides remuneration). Noe . Disconinued operions (coninued) (DKK’) Revenue , , Expenses , -, Impairment -, Operating income , -, Finance costs -, -, Profit / (loss) before tax from discontinued operations , -, Tax on profit / (loss) -, -, Profit / (loss) after tax for the period from discontinued operations -, Earnings per share (EPS) (DKK) from discontinued business . -. Diluted earnings per share (EPS-D) (DKK) from discontinued business . -. The net cash flows generated / (incurred) by the business segments brick houses in Sweden and the operations in Germany are, as follows: (DKK’) Operating cash flow -, , Investing cash flow Financing cashflow -, Net cash inflow / (outflow) -, , HusCompagniet Annual report 2021 109 / 132 con note 6.3-6.4 Noe . Audior’s ee Group Parent Fees to auditors (DKK’) Audit Services , , Assurance engagements , , Tax advice services Other non-audit services , , Total , , , The fee for non-audit services and assurance engagements delivered by EY Godkendt Revisionspartnerselskab to the Group amounts to DKK . million (: DKK . million) and consists of other assurance engagements, advisory, tax assistance and tax services, sundry accounting advisory. Noe . Evens er he bnce shee de No material events have occurred between 31 December 2021 and the date of publication of this annual report that have not already been included in the annual report and that would have a material effect on the assessment of the Group’s financial position. The geopolitical uncertainty has increased significantly in Europe in 2022. The Russian invasion of Ukraine and the continued Covid-19 pandemic is not expected to have material impact on the Group in 2022 although this assessment is subject to uncertainty especially towards the development of the conflict in Ukraine. The events may have substantial effect on macroeconmic factors and disruption of supply chains. HusCompagniet can be directly impacted by supply chain deficiencies for certain materials such as timber and tiles, and indirectly due to a general pressure on energy and freight cost. The possible social and economic effects that potentially could impact the Group’s operations and supply chain, and is being carefully monitored by the Management. Noe . Lis o Group compnies Investment in Group companies comprise the following at 31 December 2021. Country of % equity interest Name incorporation HusCompagniet Holding A/S Denmark % % HusCompagniet Danmark A/S Denmark % % RækkehusCompagniet A/S Denmark % % Svenska Huscompagniet AB (Discontinued) Sweden % % VårgårdaHus AB Sweden % % HusCompagniet Sverige AB Sweden % % Svenska HusCompagniet Fastighetsutveckling AB Sweden % % Svenska HusCompagniet Fastighetsutveckling Allerum AB Sweden % % Svenska HusCompagniet Fastighetsutveckling Allerum AB Sweden % % Die Haus-Compagnie GmbH (Discontinued) Germany % % Die Haus-Compagnie GmbH, Deutschland sind eine vollständig konsolidierte Tochtergesellschaft, die Freistellungsbestimmung in § 264, Absatz 3 HGB nutzen. HusCompagniet Annual report 2021 110 / 132 con note 6.5-6.7 * Earnings per share (EPS) and diluted earnings (EPS-D) are determined in accordance with IAS 33 Noe . Deiniions Definition of key figures and ratios The financial ratios under consolidated key figures have been calculated as follows: Gross margin Gross profit x Revenue EBITDA margin EBITDA before special items x before special items Revenue EBITA margin EBITA after special items x after special items Revenue Earnings per share Profit for the year excl. non-controlling interests Average number of outstanding shares Diluted earnings per share Profit for the year excl. non-controlling interests Diluted average number of outstanding shares Dividend per share Proposed dividend for the year Number of shares at the end of the year Market value Number of outstanding shares x share price end of year NIBD/EBITDA Net interest bearing debt, year-end before special items EBITDA before special items Average selling price House delivered revenue Number of houses delivered Return on invested Operating profit (EBIT) before special items x capital before tax Average invested capital Free cash flow Cash flow from operating activities Capex Glossary EBITDA before special items: Operating profit before depreciations, amortisations, financial items, tax and special items EBITDA: Operating profit before depreciations, amortisations, financial items and tax EBIT: Operating profit before financial items and tax Net working capital (NWC): Trade receivables, other receivables and other current operating as- sets less trade payables, other payables, prepay- ments and other current operational liabilities Net interest bearing debt: Cash less bank loans and other loans less bank debt less lease liabilities Special items: Special items comprise non-recur- ring income and expenses, reference to note 2.4 Margin before special items: Consists of defined margins adjusted for special items ASP (average selling price): House delivered reve- nue / Number of houses delivered Invested capital: NWC + property, plant and equip- ment, right-of-use (ROU) assets, intangible assets including goodwill and customer relationships less long-term provisions Key figures and ratios The ratios have been calculated in accordance with www.keyratios.org/ issued by CFA Society Denmark. The ratios mentioned in the five-year summary are calculated as described in the defini- tions above ESG key figures have been calculated in accord- ance with FSR - Danish Auditors, CFA Society Denmark and Nasdaq’s 15 suggestions on stand- ardised ESG key figures for the annual report HusCompagniet Annual report 2021 111 / 132 con note 6.8 Noe . Accounin poic Current income tax The parent company is jointly taxed with all Danish subsidiaries. The current Danish corporation tax is allocated between the jointly-taxed compa- nies in proportion to their taxable income. The jointly-taxed companies are taxed under the on-ac- count tax scheme. Tax for the year comprises current tax and chang- es in deferred tax for the year. The tax expense re- lating to the profit (loss) for the year is recognised in the income statement, and the tax expense relating to amounts recognised in other compre- hensive income is recognised in other comprehen- sive income. Current tax payable is recognised in current liabili- ties and deferred tax is recognised in non-current liabilities. Tax receivable is recognised in current assets and deferred tax assets are recognised in non-current assets. Deferred tax Current tax payable and receivable is recognised in the balance sheet as tax computed on the taxa- ble income for the period, adjusted for tax on the taxable income of prior periods and for tax paid on account. Deferred tax is measured using the balance sheet liability method on all temporary differences between the carrying amount and the tax value of assets and liabilities. Where alternative tax rules can be applied to determine the tax base, deferred tax is measured based on the planned use of the asset or settlement of the liability, respectively. Deferred tax assets, including the tax value of tax loss carry-forwards, are measured at the expect- ed value of their utilisation; either as a set-off against tax on future income or as a set-off against deferred tax liabilities in the same legal tax entity. Any deferred net assets are measured at net real- isable values. Deferred tax is measured according to the tax rules and at the tax rates applicable at the balance sheet date when the deferred tax is expected to crystallise as current tax. Changes in deferred tax due to changes in the tax rate are recognised in the income statement. Discontinued business Discontinued operations are a considerable component of the entity the operations and cash flows of which can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity and that have either been disposed of or is classified as held for sale and expected to be disposed of within one year according to a formal plan. Net profit / (loss) from discontinued operations and value adjustments after tax of the associated assets and liabilities and gains / losses on sale are presented as a separate line in the income statement. Revenue, expenses, value adjustments and tax of discontinued operations are disclosed in the notes. Assets and related liabilities for discontin- ued operations are reported as separate line items in the balance sheet without restatement of com- parative figures. Cash flows from the operating, investing and financing activities of discontinued operations are disclosed in note 6.2. Noe . Siniicn esimes nd udemens Recovery of deferred tax assets Deferred tax assets are recognised for all unused tax losses, to the extent that it is considered likely that tax surpluses in which deficits can be offset. Determining the amount recognised for deferred tax assets are based on estimates of the likely timing and the amount of future taxable profits. HusCompagniet Annual report 2021 112 / 132 con note 6.9-6.10 Parent Company HusCompagniet Annual report 2021 113 / 132 parent intro Income statement – parent DKK’ Note Revenue , , Staff cost -, -, Other external expenses -, -, Operating profit before depreciation and amortisation (EBITDA) before special items -, , Special items -, Operating profit before depreciation and amortisation (EBITDA) after special items -, -, Depreciation and amortisation Operating profit (EBIT) -, -, Share of result from subsidiaries after tax , , Financial expenses -, -, Profit before tax , , Tax on profit , , Profit for the year , , Profits attributable to: Equity owners of the Company , , Statement of other comprehensive income DKK’ Note Profit for the year , , Other comprehensive income Items that may be reclassified to the income statement in subsequent periods Foreign currency translation differences, subsidiary -, , Other comprehensive income, net of tax -, , Total comprehensive income for the year , , Total comprehensive income attributable to: Equity owners of the Company , , HusCompagniet Annual report 2021 114 / 132 parent income Balance sheet – parent DKK’ Note Assets Non-current assets Investments in subsidiaries ,, ,, Total non-current assets ,, ,, Current assets Income tax receivable , , Receivables from affiliated companies , , Total current assets , , Total assets ,, ,, DKK’ Note Equity and liabilities Equity Share capital , , Retained earnings and other reserves ,, ,, Total equity ,, ,, Liabilities Non-current liabilities Borrowings , , Total non-current liabilities , , Current liabilities Credit institutions , Trade and other payables , Payables to affiliated companies , , Other liabilities , , Total current liabilities , , Total liabilities ,, ,, Total equity and liabilities ,, ,, Reference to off-balance sheet notes: Other disclosures 10. HusCompagniet Annual report 2021 115 / 132 parent balance Statement of cash flows – parent DKK’ Note Cash flow from operating activities EBITDA, after speical items -, -, EBITDA -, -, Adjustments for non-cash items , Adjustet EBITDA -, -, Changes in working capital -, , Cash flow from operating activities before financial items and taxes -, Interest paid -, -, Corporation tax received -, , Net cash generated from operating activities -, -, Cash flow from financing activities Change in intercompany balances , , Repayment of long-term debt -, Proceeds from loans , , Dividends from own treasury shares Dividends to equity holders -, Acquisition of own shares -, Net cash generated from financing activities , , Total cash flows , Cash and cash equivalents at January -, Net foreign currency gains or losses -, Cash and cash equivalents at December DKK’ Note Cash and cash equivalents Cash at bank and on hand Cash and cash equivalents as at December Bank overdrafts Net cash and cash equivalents as at December The cash flow statement cannot be inferred from the published financial information only. HusCompagniet Annual report 2021 116 / 132 parent cash flow Statement of changes in equity – parent Revaluations reserve under Share the equity Retained Proposed DKK’ capital method earnings dividend Total Equity at January , , ,, , ,, Profit for the period , , Reserve for net revaluation according to equity method , -, Other comprehensive income: Foreign currency translation differences, subsidiary -, -, Total other comprehensive income -, -, Transactions with owners of the Company and other equity transactions: Value of share-based payment , , Purchase of own shares -, -, Dividends, own shares Proposed dividends -, , Dividends paid -, -, Total transactions with owners of the Company and other equity transactions -, , -, Equity on December , , , , ,, HusCompagniet Annual report 2021 117 / 132 parent equity Statement of changes in equity – parent Revaluations reserve under Share the equity Retained Proposed DKK’ capital method earnings dividend Total Equity at January , , ,, ,, Profit for the period , , Reserve for net revaluation according to equity method , -, Other comprehensive income: Foreign currency translation differences , , Total other comprehensive income , , Transactions with owners of the Company and other equity transactions: Increase in capital , -, Value of share-based payment Purchase of own shares -, -, Dividends paid -, , Total transactions with owners of the Company and other equity transactions , -, , -, Equity on December , , ,, , ,, HusCompagniet Annual report 2021 118 / 132 Parent Company financial statements Notes Noe Summr o siniicn ccounin poicies Basis of preparation The separate financial statements are prepared in accordance with International Financial Reporting Standards as endorsed by the EU (“IFRS”) and additional requirements of the Danish Financial Statements Act, applying to large reporting class D entities. The separate financial statements have been prepared on a historical cost basis, except as noted in the various accounting policies. These separate financial statements are expressed in DKK, as this is HusCompagniet’s functional and presentation currency. All values are rounded to the nearest thousand DKK ‘000. Investments in subsidiaries The Company’s investments in subsidiaries are accounted for using the equity method. Under the equity method, the investments in subsidiaries are initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Company’s share of net assets of the subsidiary since the acquisition date. Goodwill relating to the subsidiary is included in the carrying amount of the investment and is not tested for impairment individually. The statement of profit or loss reflects the Com- pany’s share of the results of operations of the subsidiary. Any change in OCI of those investees is presented as part of the Company’s OCI. In addition, when there has been a change recog- nised directly in the equity of the subsidiary, the Company recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Company and the sub- sidiaries are eliminated in the subsidiary. The aggregate of the Company’s share of profit or loss of an subsidiary is shown on the face of the statement of profit or loss outside operating profit and represents profit or loss after tax of the subsidiary. The financial statements of the subsidiaries are prepared for the same reporting period as the Company. When necessary, adjustments are made to bring the accounting policies in line with those of the Company. After application of the equity method, the Compa- ny determines whether it is necessary to recog- nise an impairment loss on its investment in its subsidiaries. At each reporting date, the Company determines whether there is objective evidence that the investment in the subsidiary is impaired. If there is such evidence, the Company calcu- lates the amount of impairment as the difference between the recoverable amount of the subsid- iary and its carrying value, and then recognises the loss as ‘Share of profit of a subsidiary’ in the income statement. In this section Note Summary of significant accounting policies Note Staff costs Note Special items Note Finance costs Note Income taxes Note Investments in subsidiaries Note Changes in working capital Note Adjustments for non-cash items Note Interest-bearing borrowings Note Other disclosures HusCompagniet Annual report 2021 119 / 132 parent note 1 Noe Coss incudin s coss nd remunerion DKK’ Staff costs Wages and salaries , , Defined contribution plans Other social security costs Share based payment Movement in bonus provision -, Transferred to special items -, Total , , Average number of full-time employees DKK’ Remuneration of Board of Directors Base salary and non-monetary benefits , , One-time bonus award , Total remuneration , , Remuneration of Executive Management Base salary and non-monetary benefits , , Share-based remuneration Bonus , , One-time bonus award , Severance payment , Total remuneration , , DKK’ Remuneration to the Executive management Martin-Ravn Nielsen (CEO from May ): Salary , , Bonus , , Share-based payment One-time bonus award , , , Mads Dehlsen Winther (CFO from September ): Salary , , Bonus , , Share-based payment One-time bonus award , , , * In Executive management (amongst other employees) were eligible to receive a cash-based bonus (“One-time Bonus”) subject to the completion of the listing of the Group. Costs related to one-time bonus awards are classified as special items. Part of the management remuneration is partly paid by group companies. The long term incentive programme is described in note . in Group. HusCompagniet Annual report 2021 120 / 132 parent note 2 Noe Speci iems DKK’ Strategic organisational changes , Costs in connection with acquisition and vendor due dilligence , Cost related to IPO , Other special items Total special items , DKK’ Reconciliation of EBITDA Operating profit before depreciation and amortisation -, -, Special items , Operating profit before depreciation and amortisation (EBITDA) before special items -, , Special items in was IPO related costs comprises of various consultency fees related the listing and to bonuses for a number of employees for a successful transaction, including but not limited to CEO, CFO, former CEO and board members. Strategic organisation changes includes severance payment for former senior management and employees. There has been no special items in continued business in . Noe Finnce coss DKK’ Interests paid to banks , , Exchange rate losses Other financial cost , , Total financial costs , , Interest income and expenses from financial assets and financial liabilities measured at amortised cost. HusCompagniet Annual report 2021 121 / 132 parent note 3-4 Noe ncome xes DKK’ Current tax Income tax -, -, Movement in deferred tax , Adjustment relating to previous years , Income taxes in the income statement -, -, Profit before tax , , Tax rate, Denmark .% .% Tax at the applicable rate , , Non-taxable income -, -, Expenses not deductible for tax purposes , Adjustments relating to prior years , Effective change in tax rate Other Tax expense for the year -, -, Effective tax rate, % -% -% Deferred tax Deferred tax at January -, Recognised in profit or loss , Exchange differences Deferred tax at December DKK’ Corporation tax receivable Corporation tax receviable at January -, -, Adjustment of corporation tax at January, from deferred tax Current tax including jointly taxed subsidiaries -, -, Corporation tax paid during the year -, , Adjustment related to prior year , Corporation tax receivable at December -, -, HusCompagniet Annual report 2021 122 / 132 parent note 5 Noe nvesmens in subsidiries Investments in subsidiaries (DKK’) Cost at January ,, ,, Additions Cost at December ,, ,, Share of result at January , , Share of results , , Other comprehensive income -, , Share of results at December , , Net book value ,, ,, Reference is made to note . in the consolidated financial statements for overview of subsidiaries. Noe Chnes in workin cpi DKK’ Increase / (decrease) in trade and other payables -, , Total -, , Noe Adusmens or non-csh iems DKK’ Non-cash financial items , Other non-cash items , Noe Borrowins DKK’ Interest-bearing borrowings, January , ,, Additions , Change short-term overdraft -, Other (amortised cost, etc.) , Repayments -, Interest-bearing borrowings, December , , Investments in subsidiaries have been provided as security for the Group's balances with Nordea and Danske Bank, covering all bank borrowings. HusCompagniet Annual report 2021 123 / 132 parent note 6-9 Noe Oher discosures For the following disclosures reference is made to the consolidated financial statements: • Guarantee commitments and contingent liabilities (note 3.4) • Equity (note 5.1) • Related parties (note 6.4) • Auditors fee (note 6.5) • Events after the balance sheet date (note 6.6) • Receivables and payables from affiliated com- panies at 31 December 2021 stated in the bal- ance sheet relates primarily to tax payments in joint taxation and cash pool. Balances are uninterdeent and settled on an ongoing basis. No write-downs have been made on balances in 2021 or 2020. There are no losses on group receivables, so an expected credit loss is considered to be very limited. The Parent has provided collateral for bank loan amounting to DKK 1,075 million in 2021 (2020: DKK 1,075 million) The Company was engaged in the below related parties transactions: DKK’ Sales of services (Management fee and allocated income) from subsidaries , , HusCompagniet Annual report 2021 124 / 132 parent note 10 Statement by Management The Board of Directors and the Executive Board have today discussed and approved the annual report of HusCom- pagniet A/S for 2021. The annual report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act. In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the financial position of the Group and the Parent Company at 31 December 2021 and of the results of their operations and cash flows for the financial year 1 January – 31 December 2021. Further, in our opinion, the Management's review gives a fair review of the development in the Group's and the Parent Company's activities and financial matters, results for the year, cash flows and financial position as well as a descrip- tion of material risks and uncertainties that the Group and the Parent Company face. We recommend that the annual report be approved at the annual general meeting. Virum, 17 March 2022 Executive Board: Mrtin Rvn-Niesen Mds Dehsen Winther Group CEO Group CFO Board of Directors: Cus V. Hemmingsen Anj B. Eriksson Chairperson Vice chairperson Stig Pstw Yv Ekborn Mds Munkhot Ditevsen Bo Rgrd HusCompagniet Annual report 2021 125 / 132 statement by management Independent auditor's report To the shareholders of HusCompagniet A/S Report on the audit of the Consolidated Financial Statements and Parent Company Financial Statements Opinion We have audited the consolidated financial statements and the parent company financial statements of HusCom- pagniet A/S for the financial year 1 January – 31 December 2021, which comprise income statement, statement of other comprehensive income, balance sheet, statement of cash flow, statement of changes in equity and notes, including accounting policies, for the Group and the Parent Company. The consolidated financial statements and the parent com- pany financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act. In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the financial position of the Group and the Parent Company at 31 December 2021 and of the results of the Group's and the Parent Company's operations and cash flows for the financial year 1 January – 31 December 2021 in accordance with International Financial Reporting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act. Our opinion is consistent with our long-form audit report to the Audit Committee and the Board of Directors. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the "Auditor's responsibilities for the audit of the consolidated financial statements and the parent company financial state- ments" (hereinafter collectively referred to as "the financial statements") section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Inter- national Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled our other ethical responsibil- ities in accordance with these requirements and the IESBA Code. To the best of our knowledge, we have not provided any prohibited non-audit services as described in article 5(1) of Regulation (EU) no. 537/2014. Appointment of auditor Subsequent to HusCompagniet A/S being listed on Nasdaq Copenhagen, we were initially appointed as auditors of HusCompagniet A/S on 12 April 2021. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the fi- nancial statements for the financial year 2021. These matters were addressed during our audit of the financial statements as a whole and in forming our opinion thereon. We do not provide a separate opinion on these matters. For each mat- ter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled our responsibilities described in the "Audi- tor's responsibilities for the audit of the financial statements" section, including in relation to the key audit matters below. Accordingly, our audit included the design and performance of procedures to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the financial statements. Recognition and measurement of construction contracts and related revenue recognition Accounting policies and information regarding revenue recognition related to construction contracts are disclosed in notes 1.1, 1.2 and 3.2 to the consolidated financial state- ments. The Group’s main activity and revenue comes from sale and delivery of detached and semi-detached houses under construction contracts with private customers or profes- sional investors, where the delivery of the houses typically HusCompagniet Annual report 2021 126 / 132 independent auditor extends over a longer period. Due to characteristics of the projects and in accordance with the accounting policies, HusCompagniet recognizes and measures revenue on these construction contracts over time based on input-based accounting methods as the performance obligation usually is considered fulfilled throughout the construction. Recognition and measurement of construction contracts involve estimates and judgments by Management to assess percentage-of-completion at the balance sheet date, cost of completion of the houses, including costs related to war- ranties or disputes. Changes to these accounting estimates during the construction phase, can have a material impact on revenue, production costs and results. Therefore, we consider recognition of construction contracts as a key audit matter in respect of the financial statements. How our audit addressed the above key audit matters Our audit procedures included: • Assessment of the assumptions and methodology applied by Management to calculate the sales value of construction contracts and recognition and accrual of revenue. We have considered the approach taken by Management, assessed key assumptions and obtained corroborative evidence for the explanations provided by comparing key assumptions to past performance, con- tract estimate, our past experience of similar transactions and Management’s forecast supporting the calculated sales value. • Analysis of selected contracts to assess and compare recognised revenue, including any contract modifica- tions, and production cost to contract estimate, current project economy and the latest forecast of cost to complete, including any costs related to warranties or disputes. • Discussions of the status of houses in progress with members of Management, the finance function and pro- ject management. • For the purpose of assessing dispute and/or litigation, we obtained letters of attorney from the Group’s external and internal attorneys and discussed with members of Management and the finance function cases subject to disputes to provide an assessment hereof. • Focused on ensuring that policies and processes for performing management estimates have been applied consistently to uniform contracts and in accordance with previous years. Statement on the Management's review Management is responsible for the Management's review. Our opinion on the financial statements does not cover the Management's review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the Management's review and, in doing so, consider whether the Management's review is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether the Management's review provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we conclude that the Management's review is in accordance with the financial statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of the Management's review. Management's responsibilities for the financial statements Management is responsible for the preparation of consol- idated financial statements and parent company financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act and for such internal control as Management determines is necessary to enable the preparation of finan- cial statements that are free from material misstatement, whether due to fraud or error. HusCompagniet Annual report 2021 127 / 132 In preparing the financial statements, Management is re- sponsible for assessing the Group's and the Parent Com- pany's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the financial statements unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so. Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasona- ble assurance is a high level of assurance, but is not a guar- antee that an audit conducted in accordance with ISAs and additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit conducted in accordance with ISAs and additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepti- cism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, mis- representations or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are ap- propriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's and the Parent Company's internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. • Conclude on the appropriateness of Management's use of the going concern basis of accounting in preparing the financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's and the Parent Company's ability to continue as a going concern. If we conclude that a material un- certainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group and the Parent Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and contents of the financial statements, including the note disclo- sures, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view. • Obtain sufficient appropriate audit evidence regard- ing the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance re- garding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may rea- sonably be thought to bear on our independence, and where HusCompagniet Annual report 2021 128 / 132 applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial state- ments and the parent company financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on compliance with the ESEF Regulation As part of our audit of the financial statements of HusCom- pagniet A/S we performed procedures to express an opinion on whether the annual report for the financial year 1 January – 31 December 2021 with the file name HusCompagniet- Group-2021-12-31.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the Consolidated Financial Statements. Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility includes: • The preparing of the annual report in XHTML format; • The selection and application of appropriate iXBRL tags, including extensions to the ESEF taxonomy and the anchoring thereof to elements in the taxonomy, for finan- cial information required to be tagged using judgement where necessary; • Ensuring consistency between iXBRL tagged data and the Consolidated Financial Statements presented in human readable format; and • For such internal control as Management determines necessary to enable the preparation of an annual report that is compliant with the ESEF Regulation. Our responsibility is to obtain reasonable assurance on whether the annual report is prepared, in all material re- spects, in compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our opinion. The nature, timing and extent of proce- dures selected depend on the auditor’s judgement, includ- ing the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The procedures include: • Testing whether the annual report is prepared in XHTML format; • Obtaining an understanding of the company’s iXBRL tagging process and of internal control over the tagging process; • Evaluating the completeness of the iXBRL tagging of the Consolidated Financial Statements; • Evaluating the appropriateness of the company’s use of iXBRL elements selected from the ESEF taxonomy and the creation of extension elements where no suitable element in the ESEF taxonomy has been identified; • Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and • Reconciling the iXBRL tagged data with the audited Con- solidated Financial Statements. In our opinion, the annual report for the financial year 1 Janu- ary – 31 December 2021 with the file name HusCompagniet- Group-2021-12-31.zip is prepared, in all material respects, in compliance with the ESEF Regulation. Copenhagen, 17 March 2022 EY Godkendt Revisionspartnerselskab CVR no. 30 70 02 28 Torben Bender Morten Weinreich Larsen State Authorised Public Accountant State Authorised Public Accountant mne21332 mne42791 HusCompagniet Annual report 2021 129 / 132 HusCompagniet Annual report 2021 130 / 132 HusCompagniet Annual report 2021 131 / 132 Design and production: Noted H usCompagniet A/S Plutovej 3 DK-8700 Horsens (+45) 75 64 57 99 www.HusCompagniet.dk CVR: 36972963 894500SWECYCFZ58R2462021-01-012021-12-31cmn:ConsolidatedMember894500SWECYCFZ58R2462021-01-012021-12-31894500SWECYCFZ58R2462020-01-012020-12-31894500SWECYCFZ58R2462021-12-31894500SWECYCFZ58R2462020-12-31894500SWECYCFZ58R2462019-12-31894500SWECYCFZ58R2462020-12-31ifrs-full:IssuedCapitalMember894500SWECYCFZ58R2462021-01-012021-12-31ifrs-full:IssuedCapitalMember894500SWECYCFZ58R2462021-12-31ifrs-full:IssuedCapitalMember894500SWECYCFZ58R2462020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember894500SWECYCFZ58R2462021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember894500SWECYCFZ58R2462021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember894500SWECYCFZ58R2462020-12-31ifrs-full:RetainedEarningsMember894500SWECYCFZ58R2462021-01-012021-12-31ifrs-full:RetainedEarningsMember894500SWECYCFZ58R2462021-12-31ifrs-full:RetainedEarningsMember894500SWECYCFZ58R2462020-12-31HUS:ProposedDividendRecognisedInEquityMember894500SWECYCFZ58R2462021-01-012021-12-31HUS:ProposedDividendRecognisedInEquityMember894500SWECYCFZ58R2462021-12-31HUS:ProposedDividendRecognisedInEquityMember894500SWECYCFZ58R2462019-12-31ifrs-full:IssuedCapitalMember894500SWECYCFZ58R2462020-01-012020-12-31ifrs-full:IssuedCapitalMember894500SWECYCFZ58R2462019-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember894500SWECYCFZ58R2462020-01-012020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember894500SWECYCFZ58R2462019-12-31ifrs-full:RetainedEarningsMember894500SWECYCFZ58R2462020-01-012020-12-31ifrs-full:RetainedEarningsMember894500SWECYCFZ58R2462019-12-31HUS:ProposedDividendRecognisedInEquityMember894500SWECYCFZ58R2462020-01-012020-12-31HUS:ProposedDividendRecognisedInEquityMember894500SWECYCFZ58R2462020-01-012020-12-31cmn:ConsolidatedMember894500SWECYCFZ58R2462021-01-012021-12-311cmn:ConsolidatedMember894500SWECYCFZ58R2462021-01-012021-12-312cmn:ConsolidatedMember894500SWECYCFZ58R2462021-01-012021-12-311cmn:ConsolidatedMember894500SWECYCFZ58R2462021-01-012021-12-312cmn:ConsolidatedMember894500SWECYCFZ58R2462021-01-012021-12-314cmn:ConsolidatedMember894500SWECYCFZ58R2462021-01-012021-12-313cmn:ConsolidatedMember894500SWECYCFZ58R2462021-01-012021-12-316cmn:ConsolidatedMember894500SWECYCFZ58R2462021-01-012021-12-315cmn:ConsolidatedMember894500SWECYCFZ58R2462021-01-012021-12-311cmn:ConsolidatedMember894500SWECYCFZ58R2462021-01-012021-12-312cmn:ConsolidatedMemberxbrli:pureiso4217:DKKiso4217:DKKxbrli:sharesAnnual reportAuditor's report on audited financial statementsParsePort XBRL Converter2021-01-012021-12-312020-01-012020-12-312022-04-0801Claus V. Hemmingsen894500SWECYCFZ58R246HusCompagniet A/SReporting class DPlutovej38700HorsensDenmark2082015-07-23Plutovej 3, 8700 Horsens894500SWECYCFZ58R24636972963HusCompagniet A/SPlutovej 38700 HorsensOpinionBasis for Opinion
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