XXL

Untitled XXL ASA Annual report 2021 All sports united. Sports unite all. XXL ASA Annual Report 2021 2 Revenue Growth (NOK Billion) 2001 2002 0,2 0,3 2003 0,4 2004 0,5 2005 0,5 2006 0,7 2007 1,0 2008 1,6 2009 2,0 2010 2,5 2011 3,1 2012 4,0 2013 5,2 2014 6,5 2015 7,8 2016 8,7 2017 9,5 2018 9,0 2019 10,4 2020 10,0 2021 XXL ASA Annual Report 2021 3 Highlights 4 Key figures 5 CEO Comment 9 Historical milestones 11 About us 12 Our strategy 22 Board of Directors Report 28 Corporate Governance 32 The XXL share 37 Consolidated Financial Statement 39 Financial Statement XXL ASA 61 Footnotes/Definitions 71 Content XXL ASA Annual Report 2021 4 Growth Revenue EBITDA 1) Please refer to definitions at the end of the report for descriptions of alternative performance measures that are used in highlights and key figures (numbers in brackets are numbers for 2020 unless otherwise stated) Total revenue of NOK 10 006 million (NOK 10 423 million) EBITDA reported of NOK 1 338 million (NOK 1 117 million) Net income of NOK 194 million (NOK 126 million) Norway and Finland with strongest performance in XXL History Strong balance sheet with net interest bearing debt of NOK 0.7 bn and liquidity reserves of NOK 1.1bn -4% 20% Highlights XXL ASA Annual Report 2021 5 Numbers of stores 8992 86 538 10 006 10 423 90 1117 92 1338 2019 2020 2021 Operating revenues EBITDA (Amounts in NOK) (Amounts in NOK) XXL ASA Annual Report 2021 6 FY 2021 FY 2020 (Audited) (Audited) Operating revenue 10 006 10 423 Growth (%) -4,0 % 15,9 % Gross profit 4 084 3 904 Gross margin (%) 40,8 % 37,5 % OPEX % 27,4 % 26,7 % EBITDA 1 338 1 117 EBITDA margin (%) 13,4 % 10,7 % Operating Income 391 364 Operating Income margin 3,9 % 3,5 % Net Income 194 126 Basic Earning per share (NOK) 0,77 0,57 Earning per share (adj) 1,31 0,57 Average number of shares (1 000 shares) 252 437 218 952 Cash provided by operating activities 905 1 653 Like for like revenue growth -2,6 % 12,5 % Number of stores at period end 92 90 New stores in the period 2 4 Key figures / Group (Amounts in NOK million) Earnings per share: See Note 14 XXL ASA Annual Report 2021 7 FY 2021 FY 2020 (Audited) (Audited) Norway Operating revenue 4 873 4 987 Growth (%) -2,3 % 20,2 % Gross profit 2 098 1 983 Gross margin (%) 43,1 % 39,8 % OPEX % 19,4 % 18,5 % EBITDA 1 154 1 062 EBITDA margin (%) 23,7 % 21,3 % Number of stores at period end 37 37 New stores in the period - 1 Sweden Operating revenue 2 961 2 974 Growth (%) -0,4 % 16,2 % Gross profit 1 148 1 055 Gross margin (%) 38,8 % 35,5 % OPEX % 24,6 % 24,9 % EBITDA 420 316 EBITDA margin (%) 14,2 % 10,6 % Number of stores at period end 30 29 New stores in the period 1 1 Finland Operating revenue 1 744 1 950 Growth (%) -10,6 % 10,4 % Gross profit 696 708 Gross margin (%) 39,9 % 36,3 % OPEX % 23,0 % 22,5 % EBITDA 294 270 EBITDA margin (%) 16,9 % 13,8 % Number of stores at period end 17 17 New stores in the period - - Key figures / Segment (Amounts in NOK million) XXL ASA Annual Report 2021 8 FY 2021 FY 2020 (Audited) (Audited) Denmark Operating revenue 20 27 Growth (%) -28,1 % -44,1 % Gross profit 6 8 Gross margin (%) 31,7 % 29,5 % OPEX % 25,9 % 30,8 % EBITDA 1 0 EBITDA margin (%) 5,9 % -1,3 % Austria Operating revenue 409 484 Growth (%) -15,5 % 3,0 % Gross profit 135 150 Gross margin (%) 33,0 % 30,9 % OPEX % 40,7 % 32,7 % EBITDA -31 -9 EBITDA margin (%) -7,7 % -1,8 % Number of stores at period end 8 7 New stores in the period 1 2 HQ & logistics EBITDA -501 -522 EBITDA margin (% of Group revenues) -5,0 % -5,0 % Key figures / Segment (Amounts in NOK million) XXL ASA Annual Report 2021 9 The Snowball Effect Retail is all about thinking of how to serve the customer needs in everything we do. This is why we have Customer First as one of our core values. CEO comment XXL ASA Annual Report 2021 10 Pål Wibe, CEO XXL One of the things that has happened in the “engine room”, is that we have improved our inventory processes. First of all, we have much better control of our stock compared to 2-3 years ago. We have also done fine-tuning in the replenishment of goods from our Central Warehouses to the stores. The trend in recent years has been that we keep more products in our CWs, for E-com sales and replenishment to stores with high sales. This is far more efficient than keeping high stock levels out in the stores. However, it is also a balancing act, because we also need to avoid unnecessary stock-outs in stores. For Spring/Summer 2022 we will frontload more volumes ahead of the season, es- pecially to the large stores, to make sure that we have enough of popular products like bikes and running shoes. We are also start- ing to work with space management in the stores for increased efficiency and to ensure that we always have a customer-friendly display of products. On some of these areas we have come quite far. On other areas, we still have a lot of work to do. XXL is the largest online sports retailer in the Nordics, with a leading position in all the Scandinavian countries. E-com is the area with highest growth in XXL, but also an area with large rooms for improvement. We have appointed Sebastian Blom as our new Head of Digital Commerce and are looking to increase our market share in the years to come. We will strengthen our expertise on Digital Sales, Digital Customer Experience, Digital Analysis and Product Development during the next 6-12 months. Our E-com growth story is also dependent on good execution from the Marketing & Category department. We have just start- ed to streamline and simplify our processes and there is plenty of work left. XXL is a campaign machinery with Great Brands at Great Prices every week and we need structure and routines to keep this machine running. The Christmas 2021 campaign showed some of the strength in our organization, but we still believe we can make the marketing wheel more commercial. We also continue work to strengthen our relationship to brands and other suppliers. One example is the increased effort on Mountain Sports with brands like Mammut, Salewa, Mountain Hardware and Haglöfs. This allows us to reach out to even more outdoor enthusiasts to cover trends like hiking and climbing even better. At the other end of the assortment diamond, we are also look- ing to develop our private label assortment further. We need good entry-level options to compete against outlets and online pure-players about the customer’s wallet. We would like to give a boost to some sub-categories in this aspect. But the biggest part of XXL will always be the huge selection of well-known brands. Continued Category development is anyway definitely one of our “must win” battles in 2022, together with E-com and Cam- paigns. As I said, there is a lot of things happening “under the hood”. Throughout the year I am convinced that we will make the “snowball” roll faster and that the customers will enjoy this. Finally, I would like to thank all our employees for a tremendous effort during 2021. XXL has more than 5,500 employees and most of them work in our stores. We have taken care of each other and the customers through the pandemic. We have been there with a smile on our faces and a solution-oriented mindset. As previously stated, I am proud of what we have achieved under difficult circumstances. In 2022, I look forward to travel more and meet customer-orient- ed, knowledgeable, passionate and caring XXL-ers. The beauty of getting back to normal life is also that we can spend so much more time on training courses and expertise sharing together with our dedicated team members. All Sports United – Sports Unite All 2021 was another rollercoaster year highly inﬂuenced by the pandemic. During the year, we suffered from closed stores multiple times in Austria and Norway and a supply crisis for bikes. At the same time, the “staycation” effect led to increased demand for some of our products. On top of this, we also com- pleted a record-high number of development projects to prepare XXL for the future. The last two years has been unlike anything else during my 25 years in retail. Crazy in many ways, but we have also learnt a lot. We have managed to be there for our customers both on- line and in stores. On behalf of XXL, I am proud of what we have achieved under difficult circumstances. XXL still stands firm in our markets. After a bumpy ride in 2018-2019, XXL is re-estab- lished as a company with satisfied customers. When we talk about customer satisfaction, the most important factor is the feedback we get from customers every day through our “Happy Or Not” surveys. More than 4 million customers gave us feedback in stores and online during 2021. 93 percent of the customers were positive, while 7 percent were negative. Our Happy score is above the average for North-European retailers, which is always nice, although no reason to rest on our laurels. We also see that our score is highest in the markets where we first implemented the surveys. This is probably because we work systematically with the feedback to learn and improve. XXL’s brand and reputation is also solid and improving. In fact, XXL was the top improver among Norwegian retailers on YouGov’s Brand Index last year. It means that more customers are happy and willing to recommend us to their families and friends. Other surveys, like Traction in Norway, show that XXL is considered as a company with a “good” reputation. This is a good fundament for our long-term work to take XXL to the next level. Financially, the results are also solid after a strong Christmas campaign. We deliver an EBITDA of NOK 1 338 million, up NOK 221 million from 2020. Norway and Finland deliver their strong- est results in XXL’s history, while Sweden has its second-best year. In Austria we are still struggling with negative results in a tough market with five lockdowns the last two years. We have invested a lot to establish XXL as a preferred destination also in Austria. However, we need to stop the financial losses and have initiated several actions to turn things around. This was the story about XXL in 2021. But what about 2022 and onwards? As I have stated many times before, the sports indus- try is well positioned for future growth. Health and well-being is a mega trend. Sports and outdoor activities play a major role in this trend. XXL’s vision is to be the preferred sports and outdoor destination in Europe. Last year we launched our new Brand Platform that contains information about the direction we are heading in. It was launched after a thorough process with em- ployees, management, board members and other stakeholders. Our heart and soul is that we want sports and outdoor activi- ties to be available to everyone. To make this happen, we offer a uniquely wide selection of great brands to great prices. We are present online and in highly accessible stores. And we make it our duty to share our expertise and passion to inspire people to get out and get into something new. This is XXL. Great Brands. Great Expertise. Great Assortment. Great Accessibility. And Great Prices. Our competitors also have some of these elements, but the combination makes XXL unique. To be the preferred sports and outdoor destination in Eu- rope, we need to demonstrate all the five Great’s. It is the com- bination that makes us unique. These five value propositions are something I often ask my colleagues about. Do we deliver on the promises we have given to our customers? “Plans are worthless, but planning is essential”, the American of- ficer and statesman Dwight D. Eisenhower said once. When we make new plans for Supply, Marketing, Category and Operations we ask our colleagues to passionately strive to learn from each other. We urge our teams to always challenge ourselves on how we can be better than we were 12 months ago in all we do. This is the way to keep XXL unique – and to keep our customers happy. We are still on a retail transformation journey. In the beginning these journeys are all about getting the “snowball” to start roll- ing. Then after a while, it starts to roll faster and the customers start to sense more of the differences. With the long lead times in our industry, it happens more “under the hood” than what you see currently in our offering to customers. XXL ASA Annual Report 2021 11 2000 2001 2002 2007 2010 2010 2011 2012 2012 2013 2013 2014 2014 2015 2017 2017 2019 2020 2021 Founded by Øivind Tidemandsen The first XXL store was openedin central Oslo Norwegian webpage was launched Reached a 10 per cent market share in Norway with 8 stores Private equity company EQT acquired a majority stake in XXL Opened the first three Swedish stores during a three month period Opened central warehouse at Gardermoen, Norway Swedish webpage was launched XXL gained a 20 per cent market share in Norway with 18 stores XXL became the market leader in Norway with a 24 per cent market share Established a central warehouse in Sweden for distribution in the EU Entered the Finnish market with 1 store and launch of Finnish website Successful IPO of XXL ASA at Oslo Stock Exchange XXL became the largest sports retailer in the Nordics Crossed 30 per cent market share in Norway and above 15 per cent market share in both Sweden and Finland Opened the first two stores in Austria and launched Austrian website Acquisition of West System Norge AS – a niche player within the watersport segment (XXL’s first acquisition) Passed NOK 10 billion in annual turnover for the first time Opened central warehouse in Austria Historical milestones We have quickly grown to be a leading distribution channel for sports, outdoors and wilderness in Europe with the formula of cost efficient operations, broad product range, focus on branded goods and high degree of service. XXL entered the Norwegian market in 2001, Sweden in 2010, Finland in 2014, Denmark in 2016 and Austria in 2017 with a concept that became a game changer in the sports retail market. Important historical milestones are listed below: XXL ASA Annual Report 2021 12 Business model and value chain We have a disruptive scalable retail model that drives efficien- cy and cost leadership. This model is a result of a large unit store format, controlled value chain, efficient logistics, central- ized purchasing and a fully integrated IT system resulting in a low cost operating structure, which allows us to offer products at low prices. We have, and strive to maintain, lower operat- ing expenses than all competitors. This is achieved by XXL’s scale, integrated value chain and a continuous focus on costs. The Group exercises tight control over store-level expenses, central warehouse expenses, real estate costs and corporate overhead. The cost consciousness and low cost base is criti- cal to XXL as it enables XXL to meet competition by delivering price leadership and to constantly innovate and stay ahead of the market development. Moreover, it has enabled XXL to have higher EBITDA margin than its Nordic competitors over time. XXL operates a fully integrated value chain that facilitates sim- ple and lean operations, which results in low costs. XXL owns all of the stores without joint venture or any franchise arrange- ments. This means that the Group has control of the product ﬂow with continuous tracking of key performance metrics such as sales data and inventory levels. XXL maintains central pur- chasing and distribution functions to manage inventory plan- ning, allocate ﬂow of goods to the stores and oversee the re- plenishment of goods to the central warehouses. Omni-channel XXL is in a strong position to build a true omni-channel plat- form offering a broad range of branded goods at the lowest price, providing valued customer service across all channels. With state of the art logistics and IT-systems, as well as an ex- perienced and efficient purchasing team with strong supplier relationships, XXL has a robust backbone structure to support both the E-commerce operations and the physical stores. XXL believe that the strong brand name and customer recognition ofﬂine is advantageous to the online offering and vice versa. Omni-channeling provides for a high degree of ﬂexibility for the customer. Our online presence allows XXL to effectively use customer data to optimize marketing and facilitate cross-selling and up-selling. This was further strengthened in 2020 with the launch of XXL Reward, and has so far achieved to obtain more than 3 million members across the Nordics and Austria. This allows us to further strengthen the use of personalization and segmentations activities. Through the CRM platform XXL has now the ability to use a single point of view of the customers based on behavior both in stores and online. This will over time improve personalized segmentation and optimize marketing activities. We are continuously working on strengthening the omni-channel offering to drive visitors and transactions. XXL has pick-up at store services in all the physical stores of the Group, enabling online shoppers at XXL to retrieve their goods in the nearest store. All products bought online with XXL could also be returned in the stores and the stores prepare the nec- essary services, fittings and adjustments on products for all our customers as well. We look at all stores as local warehouses, always closer to the customer than a pure online offering. XXL has in 2021 further developed the omni-channel offering. In order to improve sold out situations and broadening the available assortment, XXL has made all products in the Groups product range available for sales in all stores. XXL has contin- ued during 2021 to roll out new self-service pick-up solutions in some stores by using locker solutions for smaller stores and au- tomated pick-up towers in larger stores. XXL was the first Nor- dic retailer testing out the tower solution which is using state of the art robotics and engineering. These self service solutions provides for frictionless shopping and enhanced customer experience in stores as well as improved store efficiency and lower costs. XXL has also continued to install self-service cash- ier solutions in many stores in the Nordics with great feedback from customers and will continue to roll out more in the years to come. E-commerce operation XXL’s E-commerce operation currently consists of online web- sites in Norway, Sweden, Finland, Denmark and Austria with xxl. no, xxl.se, xxl.fi, xxl.dk and xxlsports.at respectively. The revenue contribution from E-commerce for the Group in 2021 corre- sponded to 23.5 per cent, an increase compared to previous years, partly explained be changed shopping behavior among customers related to the pandemic situation. XXL has contin- ued an upgraded online front-end on its webpages, with new design and features like search filters, new payment methods and promotional components to lift up services, specific prod- ucts and campaigns. This improves the relevancy and customer experience and enhances the efficiency for technical develop- ment. Also the new data driven and algorithm based logistics system implemented in the Group during 2019/2020 has fur- ther ensured availability of products online. The websites are an extension of the XXL brand and work as platforms for sale of goods, marketing of the brand as well as product education. The websites are also used to provide in- formation on upcoming events, promotions, new products and We are a true omni-channel sports retailer with the largest stores, well-functioning online websites, the widest assortment of products, fo- cusing on well-known quality brands at the best prices in the market. The core objective revolves around cus- tomer satisfaction and cost con- sciousness and thereby maximiza- tion of the Group’s profitability. XXL pursues a broad customer appeal, both in the stores and online, offering a wide range of products for sports, hunting, skiing, biking and other out- door activities, as well as sportswear, shoes, health & fitness and sports technology products. XXL is a leading sports retailer in Europe with stores and E-commerce in Norway, Sweden, Finland, Austria and Denmark. It is the largest among the major sports retail- ers in the Nordics. XXL has a strong, performance- based culture throughout the organ- ization. The business is based on trained, skilled and enthusiastic em- ployees strengthening the XXL brand every day. Motivated employees are crucial to maximize customer sat- isfaction. Big data, artificial intelli- gence and automation processes will strengthen the XXL value chain in the coming years. About us XXL ASA Annual Report 2021 13 2019 2020 2021 store locations. The websites feature a similar range of products as offered in the stores at generally the same prices as in the physical store. In the new store concept uses digital price tags. This allows for dynamic and ﬂexible pricing and uses robotics to compare prices so that XXL is true to its promise to have the lowest prices at all times. Store concept XXL stores aim at simplicity with highly uniform store layouts, a high degree of overlap in product ranges across stores and a lean cost structure. Each XXL store features specialist stores within a store concept for 1) sport, running & training, 2) leisure & youth, 3) outdoor & hunting, 4) ski, bike & tech. The ski/bike store changes in accordance with the relevant season and XXL has the ﬂexibility of changing assortment quickly when needed. The fully integrated model of XXL with a centralized purchasing function has the ability of shifting goods to regions with the high- est demand and rapidly switching from winter to summer assort- ment. XXL also places a strong emphasis on maximizing custom- er convenience with respect to the entire shopping experience, from accessibility and parking to customer service and product placement. XXL uses a comprehensive product information sys- tem which allows customers to easily assess where products are located, with the key facts on each product. This leads to a high degree of self-service among customers and an efficient use of skilled staff. The Group focuses on providing the best customer service with trained category specialists for each section o the store. The majority of the Group’s stores are located in shopping centers and retail parks in high-density residential areas, with a substantial number of potential customers in the surround- ing area and convenient access to transportation. XXL leases all of its stores. XXL has successfully opened new stores in city centers as well as suburban areas. In larger cities, such as Oslo, Bergen, Stockholm, Helsinki and Vienna, XXL has opened more than one store. This allows us to take advantage of local syner- gies for example in respect of marketing. Local infrastructure, the presence of competitors, the condition of available buildings for lease (i.e. technical standard, features and size) and the logisti- cal fit into XXL’s support system are important factors in select- ing locations for new stores. In addition XXL has a strong focus on cost-efficiency and synergies when rolling out new stores. XXL had in total 92 stores at the end of 2021, 37 stores in Nor- way, 30 stores in Sweden, 17 stores in Finland and 8 in Austria. Store development per country: Products XXL aims to offer a full assortment of branded goods for a wide range of sports and outdoor activities. The product range in- cludes branded goods from well-known international brands and strong national brands. Our product ranges are tailored to meet national brand preferences and local conditions at the best prices. We compare our prices to competitors on a daily basis and seek to offer customers the best prices at all times. The Group has a high degree of overlap in product ranges in the stores, but there are certain local and national differences in products and brand offerings due to demand and trends. The range of products available in XXL’s stores and on the websites is based upon market development, customer preferences and our understanding of evolving customer needs. XXL strives to offer a full range of equipment, sportswear and shoes for almost all sports and outdoor activities. The Group pays close attention to the performance of each product and product category and makes continuous adjustments to the product range. The purchase department centrally decides the product assortments, quantities and price for the products. The Group purchases branded goods from an extensive list of major sporting goods suppliers. XXL also offers a limited range of products under private labels to complement the branded product range, mainly for brand insensitive products with relatively low price points. Around 9 per cent of the operating revenues in 2021 were related to sales of private label goods. The products are organized into four product categories to match the stores-in-store model and the E-commerce offering. 1. Sport, Running & Training covers sports equipment and sportswear for a number of sports including running, football, golf, water sports, racke.t sports and ice hockey to mention a few. It also covers fitness equipment like treadmills and rowing machines, as well as food supplements and nutrition. 2. Leisure & Youth include a wide assortment of clothes for men, women and children for baselayers, outerwear, casual wear, sportswear and swimwear to name some. The sector also covers lifestyle shoes and wintershoes for both adults and children. 3. Outdoor & Hunting stocks a wide range of products to cater for fishing, wilderness living and camping, such as tents, lavvos, sleeping bags, backpacks, cooking equipment as well as climb- ing gear. I also include firearms and ammunition, clothes, binoc- ulars, optics, knives and axes. 4. Skis & Bikes is the product category with the most season- al ﬂuctuations. This category covers skis and ski accessories, such as shoes, poles, clothes and other equip ment needed for cross-country and downhill skiing as well as snowboarding.On bikes the Group offers both high-end and everyday bikes for children, women and men as well as bike equipment such as helmets, shoes, spare parts and clothes. The Group sells a wide range of bikes such as hybrid bikes, mountain bikes, city bikes and electric bikes. The category also includes Sportstech that covers products that connect technology and sports/outdoor activities including sport watches, action cameras, drones, GPS, earplugs and headphones, portable loudspeakers, sunglasses, pulse meters, power banks and cycle computers Services Due to the Group’s scale and highly efficient logistics setup, XXL is able to offer low prices and a price promise. Keeping costs low is critical for XXL to be able to maintain its price strategy of hav- ing the lowest prices at all times. If a product is found at a lower price within 30 days of purchase from XXL, the customer is en- titled to a refund of the difference. XXL also have a 100 percent satisfaction guarantee of which a customer who is not satisfied with a product may exchange it for another product within the same product category within 30 days of purchase. In addition unused products with receipt may be exchanged or fully refund- ed within 100 days of purchase (up to 365 days in Sweden). Each store also has its own studio for services and mainte- nance of products such as ski preparations, boot fitting and an- nual bicycle maintenance. This builds loyalty and good customer experience and currently XXL is working on building an environ- mental friendly work shop solution. Marketing XXL recognizes the value of powerful marketing and has adopt- ed an aggressive marketing strategy with an aim to be the dom- inant force across targeted channels. Marketing activities prin- cipally relate to the promotion of XXL’s stores and websites. We employ a range of marketing tools with direct marketing through weekly printed and digital newsletters as the backbone of the marketing strategy. We also use newspaper ads, TV-commer- cials and different digital marketing. XXL uses multiple digital channels to drive traffic to the stores and websites such as search engine marketing, internet ad placement, social media, email marketing such as weekly newsletters and personaliza- tion/retargeting through CRM initiatives. The marketing activities mainly focus on smart marketing across channels to build brand awareness, improve customer loyalty, attract new customers and increase sales. Sourcing and purchasing XXL purchases goods from suppliers inside and outside the EU. The Group’s purchasing vehicles are XXL Grossist Norge AS for Norway and XXL Europe GmbH for countries outside Norway. All of the purchases of the Group are made by one of these two companies. Merchandise is sold by XXL Grossist Norge AS to XXL Sport & Villmark AS for further distribution to Norwegian stores and online sales in Norway and similar sold by XXL Eu- rope GmbH to XXL Sport & Vildmark AB in Sweden, XXL Sport and Outdoors OY in Finland, XXL Sports & Outdoor ApS in Den- mark and XXL Sports & Outdoor GmbH in Austria. 17 17 17 36 28 5 7 8 37 30 Norway Sweden Finland Austria 37 29 XXL ASA Annual Report 2021 14 The Group’s private label products are produced by manufactur- ers abroad, primarily in China and Taiwan. XXL possess huge amount of data of which products that sells well and poorly in each market and geography. To ensure that the Group’s product offerings are tailored to local market conditions and demand, the purchasing managers regularly meet with the vendors, review trade sales and evaluate mer- chandise offered by other sports retailers. In addition, they fre- quently gather feedback and new product reviews from store management and employees, as well as reviews submitted by the Group’s customers. Logistics and distribution TThe Group has three central warehouses, one at Gardermoen Norway (outside EU), one in Õrebro Sweden and one in Vienna, Austria (inside EU). The Norwegian warehouse serves the Nor- wegian market, while the Swedish and Austrian serves Sweden, Finland, Denmark and Austria. All warehouses are equipped with state of the art robotics (Autostore) which allows them to op- erate in an efficient and cost effective way. In addition XXL has developed customized order packing and shipping processes tailored to meet the specific requirements of the E-commerce business. XXL has centralized inventory management. XXL implement- ed in 2019/2020 a new data driven and algorithm based replen- ishment system with the result of significantly lower distribution of goods to the stores and more predictability for the central warehouses. It has reduced handling time for store personnel, provided more accurate and lower stock values combined and provides a more differentiated distribution of goods (by geogra- phy, season differences, size of store, relevant products). We use third party transport providers to deliver stock to the warehouses and stores with one day delivery from the cen- tral warehouse to most of the stores and E-commerce delivery points. IT-systems XXL has one key operating IT-system, Axapta, for management of supply chain, warehouse, E-commerce operations, stores, financial, accounting and payroll systems. The IT infrastructure of XXL is designed to be able to access real-time data from any store or channel. The network infrastructure is fully integrated and allows for quickly and cost-efficiently adding of new stores to the network. XXL has further incorporated reporting tools that allow comprehensive monitoring of business performance and benchmarking, which is critical to management’s ability to drive strong store level performance. XXL launched in 2019 a new business analytics solution (PBI), providing significant improved insight within supply chain, stock management, sales and pricing. The solution takes full advantage of one ERP sys- tem and the Group has developed several dashboards to sup- port decision making and take more correct actions to resolve critical issues. Competitive landscape XXL is currently serving the Norwegian, Swedish, Finnish and Austrian sporting goods markets with an omni-channel offer- ing through large unit stores and E-commerce. In addition XXL launched E-commerce services in Denmark in 2016. XXL is offering a full range of sporting equipment and apparel at the best prices and focusing on branded products. The competi- tors consist primarily of focused sporting goods chains, inde- pendent specialty stores and to a lesser extent general depart- ment stores as well as online retailers. In each market, the four largest retailers have a combined market share of more than 50 per cent. The most prevalent structure in the sporting goods mar- ket is companies operating under a franchise or buying union structure, where a local merchant operates a store and owns the operating company, while a central sports chain owns the brand and has a central warehouse and marketing function. Ex- amples of these structures are Intersport and Sport 1 in Norway, Team Sportia and Intersport in Sweden, Intersport in Finland, Denmark and Austria. Chains primarily relying on a franchising structure typically also have, to a varying degree, some stores operated by the chain. Less prevalent in the markets are stores that are operated by a single company, such as XXL and Stadium in Sweden. In these cases the store manager is an employee of the chain compa- ny and the sports chain owns the operations of the individual stores. These chains have the benefit of having integrated value chains and ﬂexibility to plan for optimal execution across the full store network. In addition to the sports chains, there are a number of inde- pendent sports retailers and specialist stores that operate a single store or a small number of stores. Because of the ad- vantage being part of a larger system or buying group in terms of supplier terms, the number of independent stores and spe- cialist stores has been declining for some time. In recent years, more producers have established stand-alone wholly owned brand stores. A number of discount and general retailers offer a range of sporting goods in addition to other general merchandise, and in many cases offer a wide range of products across the full spec- trum of sport categories. Key players include Coop, Prisma, Citymarket and Hervis/Spar. With the rise of E-commerce, a number of pure online play- ers focusing on sporting goods have emerged, including Spor- tamore in the Nordics or Outnorth in Europe. Typically also the sport retail chains operate with an E-commerce platform. In addition there are general online retailers that offer selected sporting goods as part of their assortment such as e-Bay, Am- azon and Zalando. The E-commerce market is also at the time being characterized by many niche players. The sports retail industry has experienced a long-term trend of declining number of stores characterized by an increase in chain formation, high growth online and a reduction in inde- pendent stores. We believe this trend has been driven by the changing industry dynamics that resulted in part from XXL’s in- troduction of large unit store concepts as well as the industrial transformation of sales over to online channels. Drivers and trends The outbreak of the covid-19 virus affected the markets differ- ently in 2020 and 2021 with large ﬂuctuations throughout the seasons and the year. Austria was negatively affected by sev- eral closures of retail trade during 2021, together with reduced tourism. The Nordics, on the other hand, experienced positive effects related to “staycation”, and the consumer using more of their disposable income to buy sports- and outdoor equipment. All markets experienced an overall changed consumer behav- iour towards the online channel. Fluctuations in the sport retail market has also been the case in 2021, and a more normalization is not expected until 2023. The traditional sport retail market has, especially in Nor- way, Sweden and Finland, experienced high competition from retailers in lower price segments. This pertains particularly from outlet store concepts, which have grown significantly during the last five to six years. Further, E-commerce is growing fast as a sales channel and continues to gain customers who pre- viously shopped in physical stores, and this escalated during the covid-19 situation in 2020 and 2021. The Group continues to experience competition from pure players within E-com- merce who only rely on digital sales and do not have any phys- ical stores. These E-commerce players constitute the greatest competition for the Group, and offer other high-end brands and products than the Group has in its product range, and have in a short period of time gained significant market shares within some categories of sports and outdoors merchandise. This is in line with the trend that sales channels such as E-commerce, outlets and direct-to-consumer sales have gained market shares from the sports retail chains in recent years. Further, consumers are becoming increasingly concerned with sustainability and the effects consumerism has on the environment, supporting the emerging trend of restrictive con- sumerism and consumer shaming. A survey performed by Finn. no and Opinion shows that three out of five have become more concerned with sustainable production and the environment than just a few years ago, while four out of five believe they will be more attentive to the environment in the future. This is in line with a global consumer trend of more conscious consumption to protect mankind, animals and the environment. Alternative marketplaces for second hand goods, sharing economy and clothing and equipment rental have also increased in popular- ity. There is, however, uncertainty regarding the size of the sec- ond hand market and the extent to which it replaces trade in the traditional retail market. XXL ASA Annual Report 2021 15 General economic factors such as development of disposable income and consumer confidence The Nordic economies, as well as Austria, are all among the most prosperous in the world as measured by GDP per capita. XXL believes that the strategy of offering attractive value to consumers has made the business to some extent resilient in the face of adverse macroeconomic conditions, as consumers become more price-sensitive, which have strengthened our position relative to competitors. Health, wellness and physical activity trends We believe health and wellness is a key trend among the con- sumers and to identify themselves with an active lifestyle. Con- sequently, strong public promotion of, and a positive attitude towards, health and fitness is observable in all our markets. Technology is also evolving into the sports industry and the market is experiencing increased demand of goods related to sports technology products and connected devices. Environmental friendly solutions are also in strong demand. Electric bicycle is a good example and is used also as a way of commuting, adapted to a broad range of users and saves the environment. More interest in equipment-focused sports Many of the most popular amateur sport competitions are equipment intensive such as bicycling, skiing and triathlons. We have seen a more sophisticated demand for a wider range of specialized products among consumers. The new genera- tion of amateur, professional and aspiring athletes has affected the traditional market for such merchandise through its strong purchasing power and preferences for high quality. Technology is also becoming more important with products such as sport watches, GPS, heart rate monitors, wearable technology and cameras. Weather and seasonal patterns Given the popularity of both winter and summer sports, most of the markets XXL is exposed to have a clear four season sport- ing environment which is a key characteristic affecting the sporting goods market. The demand for sports retail merchan- dise changes dependent on the time of the year. Although the local weather can impact local sales, the overall sales across the regions are more resilient as weather conditions typical- ly vary considerably within each country. The fully integrated model of XXL with a central purchasing function is to some extent less exposed to these seasonal and geographical varia- tions, as we have the ability of shifting merchandise to the regions with the highest demand. Fashion trends and retail industry fragmentation Several of the categories we sell are heavily inﬂuenced by fash- ion trends and are increasingly becoming lifestyle products for the consumers. Sports shoes and sportswear are the clearest examples. The industry is expanding into products traditionally sold by specialist fashion and shoe retailers as well as other categories such as health & wellness and home products. The Nordic sporting goods markets are driven by a number of factors and trends. The most important are: Executive Management Team XXL ASA Annual Report 2021 16 XXL ASA Annual Report 2021 17 Hugo Maurstad Kjersti Hobøl Ronny Blomseth Ulrikke Koehler Kai-Arne Nordhaug Cristina Moreno Chairman Board Member Board Member Board Member Board member - employee representative Board member - employee representative Hugo Maurstad is partner in Altor Equity Partners and has been in the company since 2004. Maurstad is educated as a business economist from the Norwegian Business School (“BI”). Prior to joining Altor he worked 13 years in McKinsey & Company, among other things as the leader of McKinsey’s office in Norway. Maurstad has several years of experience both as chairman and as board member in several private and public companies. Through Altor, Maurstad has also been responsible for several investments within sports and leisure. Hugo Maurstad is a Norwegian citizen and resides in Norway. Kjersti Helen Krokeide Hobøl is CEO of Nille, a retailer with 360 stores, revenues of NOK 1.7 billion and 2,000 employees. She came to Nille from leading Kid Interiør over 8 years. In both of these jobs, she has taken over the management in a demanding situation and demonstrated strong ability to drive change, develop and improve business. From 2001 to 2010, Kjersti worked for DNB in the corporate market division, where she among other things built up a unit for handling demanding engagements. Kjersti studied economics at BI Norwegian Business School, and had various roles within finance in COOP and DNB early in her career. Kjersti combines strong operational retail expertise with a solid background from the corporate treasury and financing. She is a Norwegian citizen and resides in Norway. Ronny Blomseth is CEO of POWER International AS. Mr. Blomseth has a degree in economics from the Norwegian Business School BI. Before joining POWER, Mr. Blomseth was CEO of Elkjøp Nordic AS. Ronny Blomseth is a Norwegian citizen and resides in Norway. Ulrike Koehler is an international senior executive, serving 30 years in the fast moving consumer goods – sports industry – in strategic and hands-on roles as Manager, General Manager and Vice President. Ulrike retired from Nike in September 2020 after 23 years. She is known as a catalyst for transforming businesses, marketplaces, teams and organizations. Koehler gained her experience with global and market leading iconic brands. Her working experience in multiple countries and regions have created a broad experience. Her latest responsibility at Nike assumed leading a USD 2.4 billion business with an integrated marketplace team of 1,900 employees in 9 countries. Ulrike Koehler’s former employees include Hyde Inc and Asics HQ Europe, serving as an assistant to the European marketing director. She is a German citizen and resides in Germany. Kai-Arne Nordhaug is an elected employer representative from the central warehouse in Oslo, Gardermoen. He joined XXL in October 2016 and works with logistics in the goods receipt department at the central warehouse facility in Norway. Before joining XXL he was a board member and a department leader in Finsbråten AS. Kai-Arne Nordhaug is a Norwegian citizen and resides in Norway. Cristina Moreno is SVP Store Experience at XXL ASA. Moreno holds a degree in retail from the Norwegian business school BI. Prior to XXL she worked as a manager for Sportshuset. Moreno started together with the founders of XXL in 2001, and was one of the first employees. Moreno has held important roles in the company from adirector. Through the history of XXL, she has been involved in all openings of XXL’s stores in all countries. With over 25 years in the retail and sports industry, she possesses both strategic and operational knowledge. Cristina Moreno is a Norwegian citizen and resides in Norway. Board of Directors Øyvind TidemansenTor Andrin Jacobsen Board memberBoard member - employee representative Øivind Tidemandsen is the founder of XXL. He has also founded or otherwise been instrumental in the build up of other Norwegian retail groups, including the electric home appliance retail group Elkjøp AS and the home furniture groups Living and Home & Cottage. He is a significant shareholder of the electric home appliance retail group Power AS and the home furniture group Home & Cottage AS. Øivind Tidemandsen is a Norwegian citizen and resides in Norway. Tor Andrin Jacobsen is a sales leader in XXL’s store in Åsane, Bergen, and has been in the company since january 2009. He has held various positions in the company, from part time worker in store to substitute store- and sales manager in Norway. From 2016 has he also been responsible for education of all outdoor departments in new stores, both in Norway and Austria. Tor Andrin is educated nutritionist and also studies business economics at the University of Tromsø. He is a Norwegian citizen and resides in Norway. XXL ASA Annual Report 2021 18 The Norwegian Market XXL opened the first store in Norway in 2001, grow- ing to 37 stores and E-commerce at the end of 2021 and revenues of NOK 4.9 billion for 2021. XXL’s mar- ket share in 2021 was about 32 per cent. The market increased with above 3 per cent each year from 2014 to 2020, according to Sportsbransjen AS. In 2021 the market grew with 3.6 per cent, while XXL had in the same period a negative growth of 2.3 per cent, hence losing market shares. The negative growth was partly explained by a massive clearance campaign in 2020, as well as closed stores and a challenging delivery situation of bicycles in 2021. Naf-Huset Forus Alnabru Lade Tune Jessheim Drammen Tiller Lagunen Majorstua Åsane Kristiansand Haugesund Moss Tromsø Ålesund Strømmen Steinkjer Tønsberg Ski Fredrikstad Mo i Rana Hamar Bodø Harstad Sandefjord Sartor Skien Lyngdal Porsgrunn Buskerud Storsenter Sandvika Storsenter Jessheim Arendal Bryne Storo Gjøvik Hønefoss XXL ASA Annual Report 2021 19 The Swedish Market In 2010 XXL started in Sweden and had in 2021 30 stores and E-commerce, including three outlet stores located at the border between Sweden and Norway. To date we have captured a significant share of the market and our total revenues for 2021 in Sweden amounted to NOK 3.0 billion. According to SCB the Swedish sports market in 2021 had a strong growth of 7.5 per cent, while XXL had a growth of 1.5 per cent. Bromma Arninge Sisjön Bäckebol Örebro Uppsala Kungens Kurva Linköping Sundsvall Jönköping Stockholm City Västerås Norrköping Karlstad Helsingborg Barkarby Luleå Gävle Umeå Östersund Växjö Kalmar Länna Halmstad Malmö Trianglen Malmö Emporia Sickla Charlottenberg Nordby Töcksfors XXL ASA Annual Report 2021 20 The Finnish Market XXL opened the first store Tammisto, Helsinki, in April 2014 as part of the strategy to build on the successful entry into Sweden and extend the XXL concept to new markets. XXL are developing a solid presence in the Finnish market with currently 17 stores and E-commerce. The market has increased since 2011 despite a contraction of the overall Finnish economy, show- ing superior performance compared to many oth- er retail sectors. The Finnish sports market had a strong growth of 10.8 per cent. XXL Finland had a negative growth of 6.0 per cent in 2021 in local currency, partly affected by last years clearance campaign, as well as a challenging delivery situa- tion of bicycles in 2021. Tammisto Itäkeskus Tampere Kaleva Kluuvi Espoo Lielahti Skanssi Mylly Oulu Lahti Vaasa Lappeenranta Jyväskylä Kuopio Pori Redi Seinäjoki XXL ASA Annual Report 2021 21 The Austrian Market In 2017 XXL opened the first two stores and its E-commerce offering in Austria and currently oper- ates 8 stores. The market is characterized by many small sports stores, spread all over the country and connected together through franchise models or buying unions. Market estimates consider the total market to be around EUR 3 billion and the sporting spending per capita is on Swedish level. XXL recog- nizes the Austrian consumer as brand focused and service minded and believes the market is attractive also because of the four distinctive seasons. In 2021 the Austrian authorities imposed lock down of retail trade for several weeks, negatively affecting sales sales both for the sporting goods industry as well as for XXL. XXL had in 2021 a negative growth 11.4 per cent in local currency The Danish market XXL entered the Danish market in late May 2016 by opening of a website offering only and by utilizing the existing infrastructure in the Group. The Danish market is very fragmented with many players and a high degree of pure online players. The Danish sports market has also experienced a sound growth over the last years. XXL successfully made adjustments to the operation in Denmark during the second half of 2019 in order to reach break-even on a significant lower cost base. Shopping City Sd Donau Zentrum Linz Graz Mariahilfer Wiener Neustadt Parndorf Klagenfurt XXL ASA Annual Report 2021 22 Our strategy To strengthen customer experience & operational efficiency Throughout 2021 the management of XXL has further developed and specified our strategy. The brand identity has been modernized and in parallel a comprehensive strategic program has been mobilized to improve operational performance both in the short- and long-term in addition to en- able future growth. Many initiatives have been implemented during 2021 while others are in the pipeline for 2022. Altogether we will strengthen customer experience, operational efficiency in addition to our quality and control. Further on we will especially prioritize enhancing our omni-channel platform and establish closer collaboration and relationship with key suppliers. In a difficult year heavily impacted by the COVID-19 situation XXL has prioritized to keep momentum on strategic initiatives and to accelerate where possible. This has been important to come out as a stronger company post-covid, but also to minimize the effect of the situation on our workforce during these months. Annual Report 2021 Our vision To be the preferred destination for the sports and outdoor enthusiasts XXL is in the sports and outdoor segments of the market. In this part of the market, we target the active people – the enthusiasts. Those who already find joy in sports and outdoor activities, and those who have just started. For our target group, we want to become a complete destination for sports and outdoor gear—a place they actively want to visit. In order to achieve that, we also need to become preferred in two other important dimensions - by our suppliers and by our employees. XXL ASA 23 As a market leader within sports and outdoor gear, we feel we have a great responsibility to foster an active and healthy lifestyle. We believe in the idea of democratizing sports. Through our wide range of products and great prices we can make sports and outdoor activ- ities accessible to the many. All in one place, all in one destination. And thereby make more people live more active lives.Sports and out- door activities unite people. Regardless of age, gender, skin color, geography or financial position, everyone can participate —on their own terms. This way, sports break down barriers and brings people together across the globe. In a common move- ment and a common spirit. At XXL, we are true believers of that spirit. We want even more peo- ple to discover the joy of being active. And doing what they love. By making our wide assortment of affordable sports and outdoor gear accessible to the many — we can make it happen. Our purpose All sports united. Sports unite all. XXL ASA 24 Annual Report 2021 XXL ASA Annual Report 2021 25 Our value propositions describe what we strive to offer in the continuous pursue to create the best value for our customers. Great brands. Great prices. Great selection. Great expertise. Great accessibility. We offer all the brands and models expected from a true sports and outdoor destination —by our target group: the enthusiasts. Both within sports and outdoor - equipment and apparel. Large purchasing volumes and efficient operations allow us to keep our prices down. Our prices are either better than our competitors, or on par with them. Never higher. At XXL, we offer our customers the best deals guaranteed. Our breadth of categories and wide assortment within each category is unparallel to any other sports retailer. We offer the enthusiasts products at all relevant price ranges. Investing more than others in staff training gives our customers access to the best trained employees in the industry. Both through our stores, e-com, workshops and service offering. Supportive self-service tools (on-and ofﬂine) complement our knowledgeable staff. With big stores in great locations and our strong eCom platform, our wide assortment is always highly accessible to our many customers. Flexible and efficient delivery options is a given when shopping at XXL. Our value propositions XXL ASA Annual Report 2021 26 1. At XXL, we always put our customer first. We all share the belief that this is what makes us profitable, which in turn lets us invest in our own business and people. 2. As a sports and outdoor specialist, our own know-how is key. We have relevant expertise in all categories we represent — and we are generous with our knowledge. 3. We have a deep passion for sports and outdoor. Helping our customers find just the gear, for their individual needs, is what makes us thrive. 4. We care genuinely about our customers, suppliers, the environment —and about each other. We honor great sportsmanship and celebrate as a team. Our corporate values 1 2 3 4 In order to attain our wanted position, deliver on our value proposition and ultimately reach our vision we need to act in ways that support that. Our values guide us to the right behaviors. Customer first Knowlegdeable Passionate Caring XXL ASA Annual Report 2021 27 Strategic pillars 1. Strengthen our offering to support our target position as “a complete destination” At XXL we offer great brands at great prices. Our broad assortment is truly one of our key differentiators. We are con- stantly optimizing our assortment finding the balance between providing a product range from novice to the trained enthusiasts. Close cooperation and strong relationships with our suppliers are important realizing this ambition 2. Enhance our marketing approach and build the XXL brand XXL is a strong brand in the Nordic markets but we will revitalize our brand platform to modernize our communication and market- ing. We target to be more segmented and personal in our cus- tomer communication to optimize relevance to our customer base. In parallel also differentiate our communication more to give customers inspiration and see the width of our val- ue propositions 3. Establish XXL as omni-channel champion Our strong eCom platform has throughout 2020 proven its scal- ability and efficiency. We are investing to both improve customer experience online as well as improving the customer journey across our online and physical retail. As a part of this ambition, we are investing on RFID and ESL technology to provide a ﬂexible and robust omnichannel infrastructure. Flexible and efficient delivery options must be a given when shopping at XXL 4. Improve in-store experience, concept and service offering Our highly accessible stores are a key asset to XXL and we will update and modernize the concept to improve the customer experience even further. We have during 2020 started to im- plement new zone structure across all stores to realize activi- ty-based sectors that benefits our staff, customers and partners. Further investing in our highly trained staff and adding on rele- vant services are essential to providing a great customer experience. Ongoing strategic program XXL mobilized in 2020 a comprehensive strategic program addressing all dimensions of the company and operations. 2021 was the year of implementation of several of these initiatives, like RFID, electronic price labels, new brand platform, as well as new store layout. XXL is still in the phase of implementation of several of the strategic initiatives and projects. The key strategic focus is currently on developing an ambitious E-commerce growth plan, continue improving category strategy and plans, stream- lining the campaign process as well as strengthening product availability. At XXL we prioritize to offer personal development and learning for our employees through training and internal career opportu- nities. We have a comprehensive training program for all levels in the organization and launched in 2021 an internal leadership development program to nurture our future leaders and man- agement. This work will continue in 2022. XXL´s overall strategic program is based on 5 strategic pillars to facilitate growth in both short and long-term perspective. These strategic pillars and belonging priorities are carried forward in 2022, with strengthened inhouse capabilities to support multiple strategic workstreams and implementation. 5. Strengthen operational efficiency and our customer orientation To succeed going forward we need to maintain our high efficiency but make it even more easy to do so. We need to standardize our way of working and that we have the best toolbox and systems for daily operations so that we all can maximize efforts spent towards our customers. A project portfolio covering all strategic pillars are successful- ly launched and a program office structure in place to secure progress and safeguard results – several measures were imple- mented during 2021 and continues into 2022. Strategic targets Looking towards the landscape post Covid, we believe in more stable market dynamics and that XXL will capitalize on our strong business model and capabilities. Our strategic targets are: Α Our ambition is long-term market share gains in all markets and continue the growth within the e-com channel, a cornerstone of our strategy. Α We target a long term sustainable gross margin above 39 percent. Α We continue to invest in improved operational efficiency to decrease the cost ratio and increase quality. XXL ASA Annual Report 2021 28 2019 2020 2021 Board of Directors’ Report XXL continued in 2021 the rollout of several strategic measures in order to secure both short- and long term improvement on top line and profitability. Despite another year impacted by the corona pan- demic with both store closures and challenging deliverysitua- tion of bicycles, we delivered im- proved results in all Nordic coun- tries, while Austria was affected by challenging market conditions. The financial position of the Group was strong with liquidity reserves amounting to NOK 1.1 billion. The Board of Directors therefore proposes a dividend of NOK 0.6 per share The Group launched in the beginning of 2020 a comprehensive strategic program addressing all dimensions of the company and operations, and 2021 was the year were several of these strategic measures were taken into action. The work will continue into 2022 in order to improve operational efficiency and control. The Board believes that the strong finan- cial situation with a solid balance sheet provides a foundation for longer term value creation and is certain that the implemen- tation of the ongoing strategic projects will give positive effects going forward. Growth development Total operating revenue in 2021 was NOK 10 006 million (NOK 10 423 million), a decrease of 4 per cent. There was a negative like for like sales of 2.6 per cent. The decline vs 2020 were main- ly closed stores due to the pandemic and a challenging delivery situation of bicycles XXL continued with store roll-outs in 2021 and opened a total of 2 new stores. XXL had a total of 92 stores in total by the end of the year. E-commerce had a growth of 14 per cent for the year. The revenue contribution from E-commerce for the Group corre- sponded to 23.5 per cent in 2021 (20 per cent). Trends In Norway figures from “Sportsbransjen” (The Norwegian sports association) showed a market growth of 3.6 per cent for 2021 while XXL decreased by 2.3 per cent, partly affected by store closures, a challenging delivery situation of bicycles, and a mas- sive clearance campaign in 2020. Sweden figures from SCB (Statistics Sweden) showed a market growth of 7,5 per cent while XXL increased by 1,9 per cent (in local currency). In Fin- land, figures from TMA (Finnish Fashion and Sports Commerce Association) which represents about 75 per cent of the total market, showed a growth of 10.8 per cent while XXL had a nega- tive growth of 6.0 per cent. Both Sweden and Finland was neg- atively affected by last years massive clearance campaign, as well as a challenging delivery situation of bicycles. Austria had a negative growth of 11.4 per cent, affected by both delivery situa- tion of bicycles, as well as several store closures imposed by the local authorities due to the pandemic. During 2021 the Group has continued to experience increased competition from pure players within E-commerce. XXL believes that E-commerce will continue to increase its’ share of sport retail. It is therefore of most importance for XXL to be in front of this development and invest significantly in its plat- form. XXL believes that having the combination of E-commerce and stores is the most convenient and winning model. XXL will continue to utilize it’s scale to have the lowest operat- ing costs through a centralized model, and provide the broadest selection of attractive products at the best prices with the most qualified employees. Organization, Working Conditions and the Environment Operation XXL is a sport retail chain, with stores and E-commerce in Norway, Sweden, Finland and Austria, and pure E-commerce in Denmark. The Groups headquarter is in Oslo (Norway), but the Group also has an office in Stockholm (Sweden), Helsinki (Finland), Copenhagen (Denmark), Vienna (Austria), as well as a purchase department in Lucerne (Switzerland). By year end 2021 XXL had 37 stores in Norway, 30 in Sweden, 17 in Finland and 8 in Austria, as well as a central warehouse at Gardermoen (Norway), Örebro (Sweden) and in Vienna (Austria). The working environment and the employees The Group has 5789 employees (incl. full- and part time) at year end 2021 (5363 in 2020). Leave of absence due to illness to- taled at 7.2 per cent of total working hours in the Group in 2021 (8.6 per cent in 2020). No incidences or reporting of work relat- ed accidents resulting in significant material damage or person- al injury have occurred during the year. The Board would like to thank all the XXL employees for their dedication to the company and our concept. 2021 has been a challenging year and every one of our employees has been af- fected by the pandemic and the uncertainty it has brought. We appreciate all your hard work and dedication. Equal opportunities The Group aims to be a workplace with equal opportunities and has included in its policies regulations to prevent gender dis- crimination regarding salary, promotion and recruiting. The Discrimination Act’s objective is to promote gender equality, ensure equal opportunities and rights, and to prevent discrimination due to ethnicity, national origin, descent, skin color, language, religion and faith. XXL is working actively, deter- mined and systematically to encourage the act’s purpose within the business through recruiting, salary and working conditions, promotion, development opportunities and protection against harassment. The Group is actively investigating and analyzing sources of discrimination in the organization. 17 17 17 36 28 5 7 8 37 30 Norway -2,3% -6,0% -11,4% 1,9 % Number of stores Growth by segments Sweden Finland Austria 37 29 NO FI SE AT XXL ASA Annual Report 2021 29 The Group has traditionally recruited from environments equally dominated by both men and women. Out of the Group 5789 employees there are 3253 female employees which equals 44 per cent. We refer to the sustainability report for statement on gender equality and fulfilment of activity obligation. Sustainability report As a leader in the retail industry of sporting goods XXL is com- mitted to combat climate change, conduct responsible business with respect to employees, consumers, suppliers and all parts of the value chain. The group can and will use its market power to inﬂuence and set standards of excellence. XXL defines corpo- rate responsibility as achieving commercial profitability in a way that is consistent with fundamental ethical values and with re- spect for individuals, the environment and society. We have ex- perienced the positive correlation between being a responsible company and doing profitable business. Sustainability, which encompasses environmental, social, and governance concerns, increasingly positioned at the top of the board’s agenda. Sustainability is now central to the group’s competitiveness and ability to operate. The EU action plan on sustainable finance has led to a growing investor attention to sustainability. As part of this, the EU Taxonomy sets criteria’s for what´s considered a sustainable activity, and the group are pre- paring for the EU taxonomy disclosure and implementing meas- ures to improve and align with the screening criteria´s. In 2021, the group had emphasis on the governance and the board’s fidu- ciary duty to oversee a company’s strategy, risk, and capital allo- cation. Extensive risk management is central for expanding the group’s consideration of those risks posed by environmental and societal trends as well as changing stakeholder expectations that can, and increasingly do, affect the group’s ability to achieve its strategic objectives. The supply chain integrity due diligence procedure in ac- cordance with the OECD Guidelines for Multinational Enterpris- es is being piloted. An integration of ESG risks into broader risk management practices is a necessity to promote measurement and disclosure of meaningful ESG information and enable man- agement and the board to assess overall resource needs and allocate capital more effectively. The board of directors supervise the group’s daily sustaina- bility work and use their position to connect sustainability with XXL overall purpose and strategy. A broader universe of stake- holders ultimately drives value for shareholders, and the board of directors will use transparency to promote a more effective engagement with investors. The group has committed to contributing to the achievement of the UN's Sustainability Goals by setting clear objectives linked to chosen sustainability objectives. XXL has organized this com- mitment into four prioritized strategic sustainability areas: 1. Good working environment and attractive jobs 2. Sustainable products and circular business models 3. Sustainable production and value chain 4. In-house climate and environmental impact Achievements of high, but realistic sustainable development goals will contribute to both economic growth and increased reputation. Working conditions and work environment is defined as the group’s most material sustainability aspect in our materiality analysis. Consequently, the material topics related to employees has been top priority throughout the year. According to the Nor- wegian Equality and Anti-Discrimination Act, all Norwegian em- ployers are obliged to work actively, targeted and systematically to promote equality and prevent discrimination in the workplace. The HR department continuously works to improve the systems and to avoid adverse events related to our culture and working conditions. The group aim to develop an organization that pro- motes equality and prevents discrimination, among other things based on gender, pregnancy, maternity leave or adoption, care tasks, ethnicity, religion, beliefs, disabilities, sexual orientation, gender identity and gender expression and combinations there- of. The full statement of the activities to prevent discrimination and work to promote equality is published in its entirety in the group´s sustainability report under the chapter Employees. Code of conduct XXL’s Code of Conduct was revised in 2020 and is based on our four Core Values: Customer First, Knowlegdeable, Passionate and Caring. These Values are the fundamental prin- ciples that characterize who we are and how we act. Our Code is a statement of the group’s commitment to always conduct business and personal behaviour in accordance with the high- est legal and ethical standards. In order to facilitate an effective implementation and compliant application of the standards and guidelines set in XXL Code of Conduct and Anti-Corruption Guide, a case-based e-learning training program has been pro- vided to all XXL employees. XXL whistleblowing channel is avail- able to all XXL employees, business partners and anyone who want to report breaches, detected or reasonably suspected, of any applicable laws and regulations as well as XXL’s Code of Conduct. XXL is committed to conducting our business in accordance with the highest ethical principles and endorse a speak-up culture and encourage stakeholders to re- port any concerns they may have and thereby contribute to the positive development of XXL. XXL Childrens Foundation 50 per cent of the surplus from the fee from XXL shopping bags is transferred to the XXL Children’s Foundation (the other 50 per cent of the surplus is to be used to other charity initiatives in XXL mobilizing the Sports Unite All dimension). This year XXL Chil- dren Foundation donated NOK 0.6 million to the organization Bring Children From Streets and their project First Lady School. The funds will be used primarily to agricultural machinery to har- vest and refine the stock from the school’s corn fields. In 2021 the school doubled its capacity, from 500 to 1000 pupils as well as established dormitories and several sports arenas. Some of the funds donated in 2021 were therefore used to complete the building work. In the day-to-day business, waste and energy reduction further promote opportunities of reducing waste disposal, less CO2 emissions and cost efficiency. The group investigates new circular business models to reduce impact of material consump- tion and greenhouse gas emissions, in addition to meet require- ments and expectations from stakeholders and to take advan- tage of the opportunities that these business models represents. The groups internal control system monitors all aspects of our product value chain. Frequent pre-purchase risk assess- ments, in store internal control product audits, pre-shipment quality inspections and on-site factory audits are conducted in order to maintain high quality and eliminate risks. The internal framework for product compliance is continuously updated to comply with regulations and requirements from the European Commission and national authorities. The group does not pollute the environment significantly from its own operations. However, we acknowledge the fact that the most significant sources of emissions comes from produc- tion and up-stream transportation of goods. The climate crisis poses a risk in terms of both physical hazards and socioeco- nomic impacts while EU and domestic political and regulatory development such as pledges under the Paris agreement, new technology and changes in consumer trends poses transition risks. However, these changes also provide a spectrum of new opportunities. The board of directors will connect risk, strategy, and decision making and make the company more resilient and competitive. For more information on XXL’s corporate responsibility and ESG work, please find XXL’s Sustainability Report and Carbon Accounting Report on www.xxlasa.com/corporate/corporate- responsibility/ Corporate Governance XXL’s guidelines for Corporate Governance are in accordance with the Norwegian Code of Practice for Corporate Governance, dated 17 October 2018 as required for all listed companies on the Oslo Stock Exchange. Furthermore, the guidelines meet the disclosure requirements of the Norwegian Accounting Act and Securities Trading Act. The guidelines are included separately in this annual report. Consolidated Income statement Total operating revenue in 2021 was NOK 10 006 million (NOK 10 423 million), a decline of 4 per cent. There was a negative like for like growth in total of 2.6 per cent. The decline vs 2020 were mainly closed stores due to the pandemic and a challeng- ing delivery situation of bicycles. E-commerce is included in the like-for-like figure. The revenue contribution from E-commerce for the Group corresponded to 23.5 per cent in 2020 (20.0 per cent). Operating margin increased from NOK 364 million in 2020 to NOK 391 million in 2021, partly affected by an extraordinary write down of NOK 136 million. The change vs last year was mainly explained improved gross margins, as well as good cost control. The operating margin increased from 3.5 per cent to 3.9 per cent and is explained by both higher gross margins and low- er operating costs. The Group had net financial expenses of NOK 146 million in 2021 compared to NOK 172 million in 2020. Profit before tax was NOK 246 million (NOK 191 million) and Net income (Profit for the year) was NOK 194 million (NOK 126 mil- lion), but was negatively affected by an extraordinary write down of NOK 136 million, mainly related to the Austrian stores. Basic earnings per share were NOK 0.77 (NOK 0.57), or NOK 1.31 when adjusted for the above mentioned write down. XXL ASA Annual Report 2021 30 Consolidated Balance Sheet and Cash Flow Statement Total assets were NOK 9015 million at the end of 2021 (NOK 9375 million). The decrease is due to impairment losses and depreciation on right of use assets. Net interest bearing debt was NOK 707 million (NOK 71 million). Net cash position was NOK 173 million (NOK 830 million). Adding available credit facilities, the liquidity reserve was NOK 1093 million (NOK 1 111 million) at the end of 2021. Group equity was NOK 3753 (NOK 4185 million) resulting in an equity ratio of 41.6 per cent (44.6 per cent). Cash ﬂow provided by operating activities was NOK 905 million (NOK 1653 million). The decrease is mainly due to the increase of inventory of NOK 385 million. Cash used for investing activities was NOK 261 million (NOK 159 million). This is mainly related to several investments in all stores in 2021 as part of the general improvement program of XXL. Cash used by financing activities was NOK 1284 (NOK 1094 million). The change is mainly related to lower net level of debt repayments, offset by a dividend payment of NOK 483 million. Going Concern In accordance with Norwegian accounting regulations, the Board of Directors confirms that the prerequisites of a going con- cern have been met in the presentation of the annual financial statements. Outlook XXL is working on a number of initiatives to further improve operations. XXL’s ambitions going forward is to over time gain market shares in all markets, and continue the growth in the e-commerce channel. XXL targets to strengthen and stabilize the gross margin further above 39 per cent. In line with the existing strategy, XXL will continue to invest in operational efficiency, selectively new stores openings, E-commerce platform, existing stores, infra- structure and IT. Total CAPEX for XXL Group in 2022 is expected to be around NOK 250-300 million. Going forward XXL expects the pace of the store roll-out to be 3-5 new stores per year. XXL has signed 3 new lease agreements for store openings in 2022 where of 1 in Norway and 2 in Sweden. XXL will close down two outlet stores, Töcksfors and Nordby in Sweden, during 2022. At the same time XXL will be downsizing several existing stores, mainly in Swe- den. The Group will continue to focus on optimizing the store portfolio. Financial risk XXL uses bank loans and existing cash ﬂow from operating activities as its main source of funding to secure capital for the growth. For commercial hedging purposes, the Group uses derivatives. XXL does not apply hedge accounting or use any financial instruments, including derivatives, for trading purposes. Procedures for risk management are approved by the Board. The main financial risks that the Group is exposed to are interest rate risk, liquidity risk, currency risk and credit risk. The Group's man- agement regularly evaluates these risks and establishes guidelines for how they are handled. Credit risk The Group is mainly exposed to credit risk for trade and other receivables. The Group mitigates its exposure to credit risk by ensuring that all parties requiring credit, such as customers, are approved and subject to a credit check. The Group does not have significant credit risk associated with a single counterparty or counterparties which can be viewed as a Group due to similar credit risk. The Group has policies in place to ensure that sales are made to customers who have not had significant problems with payment and the outstanding amount does not exceed the established credit limits. Maximum risk exposure is represent- ed by the carrying amount of the financial assets in the balance sheet. The Group considers its maximum risk exposure to be the carrying amount of accounts receivable. Interest risk The Group is exposed to interest rate risk through its financial activities. The interest-bearing debt has ﬂoating rates, which means it is affected by changes in interest rates. The purpose of the Group's interest rate risk management is to reduce interest costs and at the same time keep the volatility of future interest payments within acceptable limits. Market risk The Group faces substantial competition in the sports retail in- dustry from a wide range of different concepts, including pure online players. Actions taken by competitors, as well as actions taken by the Group to maintain its competitiveness and repu- tation, will continue to put pressure on the pricing strategy, net sales growth and profitability. Customer preferences and trends in the sports and outdoor equipment market are volatile and tend to change rapidly. The business of the Group is dependent upon being able to antic- ipate, identify and respond to changing trends and customer preferences. If not, the sales may be lower than predicted and the Group faced with an increased amount of unsold inventory. This could lead to the need of more promotional sales and may also impact the XXL brand image and customer recognition. The business is subject to seasonal peaks and the Group must actively manage the purchase of inventory. Sports retail in gener- al is also to some extent affected by periods of abnormal, severe and unseasonal weather conditions, such as unfavorable snow conditions. Efficient logistics of the Group provides for the ability to rapidly switch from winter to summer assortment. The Group believes it is well-positioned with regards to relative price offerings in the markets, but consumer spending on sport- ing and outdoor goods may be adversely impacted by economic conditions such as consumer confidence, interest and tax rates, employment level, salary and wage levels, general business con- ditions, consumer credit and housing, energy and food costs. Supply chain risk Disruption to the supply chain leading to shortages of goods is a risk that has increased during the last years due to the in- creased challenging macro environment. The Group monitor the supply chain risk closely to make sure XXL take mitigating actions when necessary. Allocation of net income (Group) Long term XXL has a dividend policy with a target pay-out ratio of 40-50 per cent of annual net income. The Board of Directors proposes a dividend of NOK 0.6 per share for the year 2021. The dividend equals 77.9 per cent of net income, or 45.8 per cent, when adjusted for an extraordinary write down of assets of NOK 136 million. Responsibility Statement We, The Board of Directors, confirm to the best of our knowl- edge, that the financial statements for the period 1 January to 31 December 2021 have been prepared in accordance with current applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the entity and the Group taken as a whole, as well that the Board of Directors’ Report includes a true and fair review of the develop- ment and performance of the business and the position of the entity and the Group, together with a description of the principal risks and uncertainties facing the entity and the Group. The board of Directors and Group leadership have "Direc- tors and Officers Insurance”. The insurance covers personal legal liabilities including defence- and legal costs. XXL ASA Annual Report 2021 31 Hugo Maurstad Oslo, 26 April 2022 Kjersti HobølRonny Blomseth Ulrikke Koehler Kai-Arne Nordhaug Pål Wibe Chairman Board MemberBoard Member Board Member Board member - employee representative CEO Øyvind Tidemansen Cristina Moreno Tor Andrin Jacobsen Board Member Board member - employee representative Board member - employee representative Board of Directors XXL ASA Annual Report 2021 32 Corporate governance 1. Implementation and reporting on corporate governance XXL believes that good corporate governance contributes to the best possible value creation and trustworthiness over time for all shareholders, the capital markets and for other key stakeholders. In order to secure strong and sustainable corporate governance, it is important to ensure good and healthy business practices, reliable financial reporting and an environment of compliance with legislation and regulations across the XXL Group. The Norwegian Corporate Governance Board has for companies listed on the Oslo Stock Exchange issued the Norwegian Code of Practice for Corporate Governance (the “Code of Practice”). The Code of Practice is available on www.nues.no and was last amended on 14 October 2021. XXL comply with the Code of Practice. Details are included in this report with section numbers that refer to the Code of Practice’s articles. XXL’s corporate gov- ernance policy is based on the Code of Practice, and as such designed to establish a basis for good corporate governance, to support achievement of the Group’s core objectives on behalf of our shareholders. XXL has governance documents setting out principles for how business should be conducted. These apply to all XXL units. The XXL governance regime is approved by the Board of Directors, which has the overall supervision for corporate responsibility at XXL and ensures that the Group implements sound corporate governance principles. The Board of Directors revises the gov- ernance documents on a yearly basis and has strengthened the documents in light of the implementation of the MAR directive (“Markedsmisbruksforordningen”) in Norway with effect from 1 March 2021 as well as the amended Code of Practice. Deviation from the Code of Practice (NUES) - none 2. Business - XXL’s objectives and activities XXL believes good corporate governance involves openness and trustful cooperation between all stakeholders in the Group – the owners, the Board of Directors and the Executive Manage- ment, employees, customers, suppliers, creditors, public authorities, capital markets and society in general. By pursuing the principles of corporate governance the Board of Directors and Executive Management shall contribute to achieving the following objectives: • Openness – communication with the interest groups of XXL shall be based on openness in issues relevant to the evalu ation of the development and position of the company. • Independence – the relationship between the Board of Directors, the Executive Management and the owners shall be based on independence. Independence shall ensure that decisions are made on an unbiased and neutral basis • Equal treatment – one of XXL’s objectives is equal treatment and equal rights for all shareholders. • Control and management – good control and corporate governance mechanisms shall contribute to achieving pre dictability and reducing the level of risks for owners and other interest groups. XXL’s vision is to be the preferred sports and outdoor destina- tion in Europe. This is reﬂected in the Section 3 of the Articles of Association, which reads “The Company’s business operation is trade business within sport and wilderness products and oth- er business operations that are naturally related therewith. The business can be conducted by the company itself, by subsidiar- ies or through participation in, or in cooperation with, others”. XXL needs to interact in an open and responsible way with all the relevant stakeholders to be able to create a profitable busi- ness over time. Our corporate governance policies are designed in order to be true to this commitment, including the achieve- ment of sustainable profitability forthestakeholders of XXL. The Board of Directors set clear ambitions for the coming year in the budget process each year. Long term objectives, strategies and the risk profile are also evaluated yearly in con- nection with the work on strategy or as necessary in connection with major events or structural changes during the year. Included in this is also the sustainability work of the Group which is linked to the overall strategy and evaluated yearly. XXL publishes an annual sustainability report covering the most important aspects of this work which is based on a broad stakeholder materiality analysis. Deviation from the Code of Practice (NUES) - none XXL ASA Annual Report 2021 33 3. Equity and dividends The company’s equity will at all times be at a level appropriate to XXL’s objectives, strategy and risk profile. Long term XXL has a dividend policy with a target pay-out ratio of 40-50 per cent of annual net income. When proposing a div- idend the Board of Directors will take into account legal restric- tions, capital requirements and the overall financial position of the Company. The Board of Directors will make an overall as- sessment in order to secure the Company a healthy capital base both for daily operations and for future growth. Dividend pay- ments are subject to approval by the General Meeting. Authorization to increase the share capital of the Company will be restricted to defined purposes and will in general be limited in time to no longer than the time of the next Annual General Meeting. If the authorization is for different purposes, the Com- pany will present the authorizations to the shareholders as sep- arate items. Authorizations to acquire own shares will also be restricted to defined purposes and if the acquisition is for sever- al purposes, the Company will present the authorization as sepa- rate items to the shareholders. Such authority will state the max- imum and minimum amount payable for the shares and applies for no longer than the time of the next Annual General Meeting. The aggregate nominal value of treasury shares acquired by the Company must not exceed 10 percent of the total outstanding shares in the company. In the Annual General Meeting held on 3 June 2021, the Board of Directors was granted authorization to increase the share capital of the Company by a maximum of NOK 10,097,466.32 representing up to 10 per cent of the share capital at that time. The purpose of the authorization is for general financing and strengthening of equity. The authorization is valid until the Annual General Meeting in 2022, but no longer than to 30 June 2022. The Board of Directors was also granted authorization to increase the share capital of the Company by a maximum of NOK 5,048,733.16 representing up to 5 per cent of the share capital at that time. The purpose of the authorization is to secure delivery of shares under the Company’s share incentive pro- grams. The authorization is valid until the Annual General Meet- ing in 2022, but no longer than to 30 June 2022. The Board of Directors has also been granted authorization to repurchase the Company’s own shares within a total nominal value of NOK 5,048,733.16 corresponding to up to 5 per cent of the Company’s share capital. The main purpose of the authoriza- tion is to acquire own shares in order to use such shares in con- nection with XXL’s share incentive programs. To the extent the shares are not required for the share incentive program after all, the shares shall be deleted in connection with a later reduction of the registered share capital. The maximum amount that can be paid for each share is NOK 500 and the minimum is NOK 1. The authorization is valid until the Annual General Meeting in 2022, but no longer than 30 June 2022. The two above mentioned authorizations must be view together so that the total utilization of both authorizations does not ex- ceed 5 per cent of the Company’s share capital. Further, the Board of Directors has been granted authorization to repurchase the Company’s own shares within a total nominal val- ue of NOK 5,048,733.16 corresponding to up to 5 per cent of the Company’s share capital. Shares in XXL acquired in accordance with this authorization are planned used in order to optimize the Company’s share capital structure. The maximum amount that can be paid for each share is NOK 500 and the minimum is NOK 1. The authorization is valid until the Annual General Meeting in 2022, but no longer than 30 June 2022. Lastly, the Board of Directors has been granted authorization to repurchase the Company’s own shares within a total nominal value of NOK 5,048,733.16 corresponding to up to 5 per cent of the Company’s share capital. Shares in XXL acquired in accord- ance with this authorization are planned used as consideration shares with regards to acquisition of other businesses. The max- imum amount that can be paid for each share is NOK 500 and the minimum is NOK 1. The authorization is valid until the Annual General Meeting in 2022, but no longer than 30 June 2022. In total XXL held 8,470,000 own shares in treasury, representing 3.36 per cent of the outstanding shares in XXL, at the end of the year 2021. The treasury shares were acquired by the Compa- ny pursuant to the authorization granted under which treasury shares may be used to cover for shares to a long term manage- ment investment program. Deviation from the Code of Practice (NUES) - none 4. Equal treatment of shareholders Equal treatment of all our shareholders is core in how XXL ap- proaches corporate governance. The Company has only one class of shares and all provide equal rights in the Company. Each of the shares carries one vote and is freely transferable. All shareholders are entitled to attend, speak, vote and deliver items to the agenda for General Meetings, which is the highest author- ity in the Company. Where the Board of Directors resolves to carry out an increase in the share capital and waive the pre-emptive rights of the ex- isting shareholders on the basis of a mandate granted to the Board of Directors, an explanation will be publicly disclosed in an announcement to the stock exchange in connection with the increase of the share capital. XXL has established instructions for handling inside information, rules for primary insiders and insider trading which is closely monitored. They have recently been update in compliance with the new MAR legislations. Any transaction the Company carries out in its own shares will be carried out either through the stock exchange or at prevailing market prices if carried out in any other way. Such transaction will be publicly disclosed in a stock exchange announcement immediately. Deviation from the Code of Practice (NUES) – none 5. Shares and negotiability There are no provisions in the Company’s Articles of Association that limit the right to own, trade or vote for shares in the Compa- ny. The Articles of Association do not provide for any restrictions on the transfer of shares, or a right of first refusal for the Compa- ny. Share transfers are not subject to approval by the Board of Directors. Deviation from the Code of Practice (NUES) - none 6. General meetings Through the General Meeting, shareholders exercise supreme authority in the Company. In accordance with Norwegian law, the Annual General Meeting of shareholders is required to be held each year on or prior to 30 June. Norwegian law requires that written notice of Annual General Meetings, setting forth the time of the venue and the agenda, to be sent to all shareholders with a known address no later than 21 days before the Annual General Meeting, unless the Articles of Association stipulates a longer deadline, which is not currently the case for the Company. Apart from the Annual General Meeting, Extraordinary General Meetings of shareholders may be held if the Board of Directors considers it necessary. An Extraordinary General Meeting must also be convened if, in order to discuss a specified matter, the auditor or shareholders representing at least 5 per cent of the share capital demands this in writing. The requirements for notice to the Annual General Meeting also apply to Extraordinary General Meetings. According to the Articles of Association, documents relating matters to be dealt with by the Company’s General Meeting, including documents which by law shall be included in or at- tached to the notice of the General Meeting, do not need to be sent to shareholders if such documents have been made availa- ble on the Company’s website. A shareholder may nevertheless request that documents which relate to matters to be dealt with at the General Meeting are sent to him/her. A shareholder may vote at the General Meeting either in person or by proxy appointed at their own discretion. In accordance with the requirements of the Norwegian Securities Trading Act, the Company will include the proxy form with the notice of Gen- eral Meetings. Furthermore, the Company will appoint a person, normally the Chairman of the Board of Directors, who may act as a proxy holder for the shareholders. All of the Company’s shareholders who are registered in the register of shareholders maintained with the VPS as of the date of the General Meeting, or who have otherwise reported and documented ownership to shares, are entitled to participate at General Meetings, without any requirement of pre-registration. Shareholders are also able to participate and vote electronically. XXL ASA Annual Report 2021 34 The Company’s Articles of Association does, however, include a provision requiring shareholders to pre-register in order to par- ticipate at General Meetings. The deadline for pre-registration cannot expire earlier than three days prior to the General Meet- ing. The shareholders may cast their votes in writing, includ- ing through electronic communication, in a period prior to the General Meeting. The Board of Directors can establish specific guidelines for such advance voting. The established guidelines must be stated in the notice of the General Meeting. The Chairman of the Board of Directors and the Chairman of the Nomination Committee, the Group CEO and CFO as well as the auditor will under normal circumstances be present at the Gen- eral Meeting in person. Other members of the Board of Directors and subcommittees are entitled to attend when necessary. The General Meeting elects the members of the Board of Direc- tors, members of the Nomination Committee, determines the remuneration of the members of the Board of Directors and the members of the Nomination Committee, approves the annual ac- counts and the annual report, including distribution of dividend, and any other matters which are referred to the General Meeting by law or the Articles of Association. Decisions that shareholders are entitled to make under the Nor- wegian law or the Company’s Articles of Association may be made by a simple majority of the votes cast. In the case of elec- tions or appointments, the person(s) who receive(s) the greatest number of votes cast are elected. Certain decisions, including resolutions to waive preemptive rights to subscribe in connec- tion with any share issue in the company, to approve a merger or demerger of the company, to amend the Articles of Association, to authorize an increase or reduction in the share capital, to au- thorize an issuance of convertible loans or warrants by the com- pany or to authorize the Board of Directors to purchase shares and hold them as treasury shares or to dissolve the company, must receive the approval of at least two-third of the aggregate number of votes cast as well as at least two-third of the share capital represented at a General Meeting. Norwegian law further requires that certain decisions, which have the effect of substan- tially altering the rights and preferences of any shares or class of shares, receive the approval by the holders of such shares or class of shares as well as the majority required for amending the Articles of Association. Decisions that would reduce the rights of some or all of the company’s shareholders in respect of dividend payments or other rights to assets or restrict the transferability of the shares, require that at least 90 percent of the share capital represented at the General Meeting in question vote in favor of the resolution, as well as the majority required for amending the Articles of Association. There are no quorum requirements that apply to the General Meetings. The minutes from the General Meeting, as well as the register of participants at the General Meeting, will be posted on the Com- pany’s website no later than 15 days after the General Meeting was held, but generally as soon as possible after the end of the meeting. Information that a General Meeting has been held will also be made public through a stock exchange announcement as soon as possible after the end of the meeting. The Annual General Meeting of 2021 was held on 3 June 2021 and in addition the Company convened an Extraordinary Gener- al Meeting on 16 September 2021. Deviation from the Code of Practice (NUES) – NUES recommends that efforts should be made to make it possible to vote for individual candidates to the Board of Directors and the Nomination Committee. Elections are demanding because of the requirements of the composition of the Board of Directors including com- bined expertise, independence and gender requirements. The election is there- fore organized such that the General Meeting votes on the Nomination Commit- tee’s overall recommendation. 7. Nomination committee XXL has established a Nomination Committee pursuant to the Articles of Association and shall consist of two or three mem- bers who are shareholders or representatives of shareholders. The members should be independent of the Board of Directors and the Executive Management. Currently the Nomination Com- mittee consists of two members, Øistein Widding (Chairman) and Robert Iversen. The Nomination Committee shall give rec- ommendations for the election of shareholder elected members of the Board of Directors, remuneration to the members of the Board of Directors including remuneration for subcommittees, the election of members to the Nomination Committee and re- muneration to the members of the Nomination Committee. The General Meeting may adopt instructions for the Nomination Committee. XXL has established an instruction for the Nomination Com- mittee, which includes recommendations for the tasks described above. When nominating members to the Board of Directors, the Nomination Committee should look at competence and di- versity, legal requirements, independence from any significant business associates, at least two of the members of the Board of Directors should be independent of the Company’s principal shareholders and that members of the Executive Management should not be members of the Board of Directors. Remuneration of the Board of Directors should take into account the respon- sibility of the Board of Directors and that the proposal is suited to the character and time commitment of the tasks it carries out. According to the instruction for the Nomination Committee a certain amount of the annual remuneration is to be used to ac- quire shares in the Company. The recommendations from the Nomination Committee will be explained. The Nomination Committee must look actively to the share- holders in order to try to ensure that its recommendations have their support. In its work the Nomination Committee will monitor the need for changes to the composition of the Board of Direc- tors and will pay specific attention to the annual appraisal report for the Board of Directors. In addition, the Nomination Commit- tee will perform individual discussions with the members of the Board of Directors as well as the Group CEO. It must ensure that information is made available on the Company’s website of any deadlines for proposing candidates or making suggestions to the Nomination Committee regarding elections of members to the Board of Directors and Nomination Committee. The recom- mendations should be given together with the notice of the Gen- eral Meeting. Deviation from the Code of Practice (NUES) - none 8. Board of Directors – composition and independence XXL’s Board of Directors shall consist of a minimum of three and a maximum of seven shareholder elected members according to the decision of the General Meeting. In addition, the Board of Directors has employee elected representatives. Currently the Board consists of five shareholder elected members, three employee elected representatives as well as one observer. The Board of Directors is responsible for the management of the Company, including the appointment of the CEO to as- sume the daily management of the company. The composition of the Board of Directors in XXL ASA is in compliance with the independence requirements meaning that the majority of the shareholder elected members of the Board of Directors is inde- pendent of the Company’s Executive Management and material business contacts. At the same time more than two of the share- holder elected members of the Board of Directors are independ- ent of the Company’s main shareholders, meaning shareholders holding more than 10 percent of the total outstanding shares in the Company. In the Company’s view all the shareholder elected members of the Board of Directors are independent from the Ex- ecutive Management and material business contacts. Members of the Executive Management should not be a member of the Board of Directors. Currently, no Executive Manager is a Board Member. The term of office for members of the Board of Direc- tors is a maximum of two years, but a member may be re-elected. Information regarding each individual member of the Board of Directors could at all times be found on the Company’s website as well as in the Annual Report. The members of the Board of Directors are encouraged to own shares in the company. Currently four of the shareholder elect- ed members have shares directly or through an investment in XXL management investment program, please see note 3 in the consolidated financial statement for the overview of share own- ership and detailed background of the members of the Board of Directors. Deviation from the Code of Practice (NUES) – none 9. The work of the Board of Directors The conduct of the Board of Directors follows the adopted Board of Directors’ rules of procedure, which states that the board members should perform their duties in a loyal manner, attending to the interests of the company. The Board of Directors prepares a plan for the ordinary meetings for each calendar year. The Board of Directors will meet several times a year and it will host additional meetings when required due to special circum- stances. Between meetings, the chairman and the CEO have frequent contact on current matters and update the board mem- bers accordingly. The board meetings ensure that the Group’s activities are organized in a prudent manner, maintaining sys- tems, procedures and a corporate culture that promote high ethical conduct and in compliance with legal and regulatory re- quirements. Each board meeting includes a briefing by the CEO and a review of the latest financial development by the CFO. The Board of Directors keeps itself informed of the financial position of the company to ensure that the corporate accounts and asset management are subject to satisfactory controls. The chairman of the Board of Directors ensures that board mem- bers are kept informed, convene and chair the board meetings and ensure that the matters are handled in accordance with applicable law and procedures. In the case of the chairman’s absence, the Board of Directors elects a board member to chair the meeting. If the chairman of the Board of Directors is, or has been, personally involved in matters of material significance to the company, such matters will be chaired by some other mem- ber of the Board of Directors. A member of the Board of Directors or the CEO could not participate in the discussion or decision of issues of such special importance to the member in question or to any closely related party to that said member. XXL ASA Annual Report 2021 35 The Board of Directors’ rules of procedure include instructions on how the Board of Directors and the Executive Management handle agreements with related parties and whether an inde- pendent valuation must be obtained. There have been no sig- nificant transactions between the Company and closely related parties in 2021. If XXL should enter into agreements or transac- tions with closely related parties within the Company, or with companies in which a leading director or leading employee of XXL or close associates of these have a material direct or indi- rect interest, the agreements or transactions will immediately be notified to the Board of Directors. Any such agreements or transactions must be approved by the Board of Directors and be publicly disclosed if required. In the event of an agreement or transaction between the Company and closely related parties, the Board of Directors will arrange for an independent valuation overview from an independent third party, unless the agreement or transaction requires an approval of the General Meeting. Any such agreements will also be disclosed in the Annual Report. For further information on closely related transactions, please see note 10 in the consolidated financial statements. The Board of Directors has established a Remuneration Com- mittee and an Audit Committee. The Remuneration Committee shall have at least two members of the Board of Directors and comprises for the time being of two members, Øivind Tidemand- sen (chairman) and Ronny Blomseth. The primary purpose of the Remuneration Committee is to assist the Board of Directors in performing its duty relating to determining the compensation to the Executive Management. The Remuneration Committee re- ports and makes recommendations to the Board of Directors, but the Board of Directors retains responsibility for implementing such recommendations. The Audit Committee shall compose of at least two members of the Board of Directors and the current members are Kjersti Hobøl (chairman) and Ronny Blomseth. The primary purposes of the Audit Committee are to act as a pre- paratory and advisory committee for the Board of Directors in questions concerning accounting, audit and finance. The Audit Committee monitors the financial reporting process and inter- nal control, reviews the independent auditor’s qualifications and independence and the Group’s compliance with applicable le- gal and regulatory requirements. The Audit Committee reports and makes recommendations to the Board of Directors, but the Board of Directors retains responsibility for implementing such recommendations. The Board of Directors carries out an annual evaluation of its performance. The evaluation report for the year 2021 has been presented to the Nomination Committee. 10. Risk management and internal control The Board of Directors supervises the daily management and the activities and risks of the Company in general. XXL’s risk management and internal control are an integral part of all daily business activities and are integrated in the business planning processes and corporate strategy. The day-to-day risk manage- ment is placed on the business segments and governed by the Executive Management team. The Board of Directors carries out separate reviews of the most important risk exposures. The Audit Committee monitors on an ongoing basis the risk and control related to the financial situ- ation including review and implementation of accounting prin- ciples and policies, the effectiveness of the Company’s internal control, internal audit and risk management system. The Audit Committee has full access to all books, record and personnel of the Group, as well as the external auditor of the Company. Instructions for the CEO’s responsibilities and duties have been implemented by the Board of Directors to clarify the powers and responsibilities between the Board of Directors and the Execu- tive Management team. The CEO has the right to represent the Company within the adopted budget and is responsible for im- plementing the resolutions adopted by the Board of Directors. It is the CEO’s responsibility that the Company’s book keeping and accounting are performed in accordance with the law and that the management of company’s assets is conducted safely. The Board of Directors ensures that the CEO uses proper and effec- tive management and control systems, including systems for risk management. The internal control systems also encompass the company’s corporate values, ethical guidelines and corporate social responsibility. XXL operates internationally and is exposed to various financial risks such as currency risk, interest rate risk, liquidity risk and credit risk. The CFO has the day to day responsibility for man- aging activities related to this. In order to manage foreign cur- rency risk exposure, XXL hedge approximately 50 per cent of its purchases of own produced goods (private label products). The Group is exposed to interest rate risk through its financial activ- ities. The interest-bearing debt has ﬂoating rates, which means it is affected by changes in interest rates. The purpose of the Group’s interest rate risk management is to reduce interest costs and at the same time keep the volatility of future interest pay- ments within acceptable limits. The Group constantly monitors the interest rate level and uses derivatives to adjust the effective interest rate exposure when necessary. XXL monitors liquidity ﬂows, short- and long-term, through reporting and forecasting, that better control the liquidity risk. The management of credit risk related to trade and other receivables is handled as part of business risk and is continuously monitored by XXL’s finance department. The Group mitigates this risk by ensuring that all parties requiring credit, such as customers, are approved and subject to credit check. Policies are in place to ensure that sales are made with customers who have not had significant problems with payment and the outstanding amount does not exceed the established credit limits. XXL has agreements with third parties related to recoverability of trade receivables from online sales and supplier bonuses. In order to comply with the arm’s length principle as stated in ap- plicable standards and laws and to maintain good control, XXL has established transfer pricing policy. The main purpose of this policy is to ensure that all significant intra group transactions are priced in accordance with the arm’s length principle and relevant domestic tax regimes. It ensures a simple, coherent and logical transfer pricing methodology, and consistency and trans- parency on how the intra group prices are set and tested. It fur- ther minimizes the risk of double taxation and conﬂicts with the tax authorities and captures any relevant and significant issues and need for revisions. The Group’s accounting unit is responsible for the preparation of the financial statements and to ensure that they are in accord- ance with applicable laws, regulations and adopted accounting policies. The CFO and the controller functions are responsible for reporting to the Board of Directors and the Executive Man- agement, as well as planning and coordinating the business plan process. The finance department prepares financial reporting and provides a set of procedures and processes detailing the re- quirements with which the local reporting units must comply. The Group has established processes and a variety of control meas- ures that will ensure quality assurance in the financial reporting. The Group is reporting to the Board of Directors on a monthly basis. Several controls are established such as reconciliation, segregation of duties, management review and authorization. All monthly and quarterly reports are analyzed and assessed rel- ative to budgets, forecasts, trends and the long-term business plan. The Executive Management comments on the financial results on a quarterly basis and the results are announced to the Oslo Stock Exchange. The external auditor provides a description of the main elements in the audit, including opinions on internal control related to financial reporting. XXL is subject to a yearly external statutory audit. XXL Board of Directors has also implemented ethical proce- dures in the company, subject to all employees and the mem- bers of the Board of Directors. These documents contain the ba- sic principles of business practice, personal conduct, roles and responsibilities, covering topics including employee relations, anti-corruption, health, environment, human rights, anti-discrim- ination, handling business information, conﬂicts of interest, fair competition, money laundering. Please also see the Sustainability report for 2021. Deviation from the Code of Practice (NUES) - none Deviation from the Code of Practice (NUES) - none XXL ASA Annual Report 2021 36 11. Remuneration of the Board of Directors The remuneration of the Board of Directors will be proposed by the nomination committee and approved by the Annual General Meeting. The remuneration is a fixed annual fee and is not linked to the company’s performance. It reﬂects the responsibility, qual- ifications, time commitment and complexity of the Company’s activities in general and also separate fees for participation in committees of the Board. Shareholder elected members are not granted share options but are considered for investing in the XXL management investment program, and none of them (or any company associated with such member) have specific as- signments for the Company in addition to their duties as Board members except for Board Member Øivind Tidemandsen. XXL is required to have individual licenses to sell firearms for all stores in which firearms and ammunition are sold. The Group’s applica- tions for licenses in Norway are made by XXL Sport & Villmark AS with the Chairman Øivind Tidemandsen being registered as the individual responsible person. This duty is carried out on a non-pay basis and is known for all the other members of the Board of Directors. The Annual General Meeting in June 2019 decided that parts of the remuneration to the shareholder elected members of the Board of Directors are subject to being invested in shares in the Company. This means that shareholder elected members of the Board of Directors shall utilize 1/3 of their annual gross board fee (excluding any fee for committee work) to purchase shares in XXL until they (including their related parties) own shares in XXL at a value equivalent to two times their gross board fee (ex- cluding any fee for committee work). These shares must be re- tained as long as the member serves on the Board of Directors. Currently four of the shareholder elected Board members have shares in the Company. For more information please see note 3 in the consolidated financial statements. Deviation from the Code of Practice (NUES) - none 12. Remuneration of executive personnel XXL Board of Directors has established a Remuneration Com- mittee with a set of instructions for the Committee to follow. The Committee acts as preparatory and advisory body to the Board of Directors in relation to the Company’s remuneration of Execu- tive Management. The Board of Directors determines the remu- neration of the CEO based on a proposal from the Remuneration Committee and approves the general terms of the Company’s incentive plans for the Executive Management and key employ- ees. The CEO determines the compensation to other members of XXL’s Executive Management. In accordance with the Norwegian Public Limited Companies Act, a statement related to the determination of salary and other benefits for the Executive Management will be prepared by the Board of Directors. The statement will be presented to the An- nual General Meeting for voting and the statement will also be a separate appendix in the notice to the Annual General Meeting. The Board of Directors has established guidelines for the re- muneration to the CEO and members of the Executive Manage- ment. It is a policy to offer competitive remuneration based on current market standards, company and individual performance. The remuneration consists of a basic salary element combined with a performance based bonus program. The Executive Man- agement participates in the Company’s insurances and is en- titled to certain other elements like benefits upon termination, internet access and phone expenses. Executives on expatriate contracts have various other costs covered by the Company. The annual salary adjustment for employees in Norway forms the basis for the XXL’s Executive Management salary development. Members of the Executive Management do not receive separate remuneration for board membership in XXL subsidiaries. The Group has established a bonus scheme for the Exec- utive Management, which is based on elements such as the Group’s results before tax exceeding the budget and certain KPIs. Under the bonus scheme, members of the Executive Man- agement may be awarded an annual bonus of up to 50 per cent of the respective employee’s gross base salary. The annual bo- nus for Executive Management will be communicated by the Board of Directors each year. The Group does not include bonus payments in the basis for calculation of holiday pay and pension. The Group has established an equity-based long term in- vestment program for members of the Executive Management. The main objective of the Program is to align the long-term inter- ests of the Executive Management with those of the sharehold- ers of XXL ASA. The Group has a defined contribution plan which covers all of the XXL’s employees. The guidelines to be presented at the Annual General Meet- ing in June 2022 are disclosed in note 3 in the consolidated financial statements. For information on salary and other ben- efits for 2021 for the Executive Management see note 3 in the consolidated financial statements. For additional information about the pension plans see note 3 in the consolidated financial statements. Deviation from the Code of Practice (NUES) – none 13. Information and communications XXL’s communication with the financial market is based on openness and equal treatment of all shareholders. Investor Re- lations is a high priority and the Board of Directors has estab- lished an Investor Relations policy to build trust and awareness in the investor community. The XXL corporate website (www. xxlasa.com) includes an updated financial calendar, financial reports, announcements, contact details and other Investor Re- lations information. XXL regularly hosts meetings with investors and analysts, participates on investor conferences and arranges regular presentations and roadshows worldwide. To ensure all stakeholders have equal access to information at the same time, important events affecting the company are reported immedi- ately to the Oslo Stock Exchange in accordance with applicable legislation and also at the same time on XXL’s corporate website. Deviation from the Code of Practice (NUES) - none 14. Take-overs In accordance with the Norwegian Securities Trading Act and the Code of Practice, the Board of Directors has adopted guid- ing principles for how to act in the event of a take-over bid. The Board of Directors will not seek to hinder or obstruct any takeo- ver bids. In a take-over process, the Board of Directors and ex- ecutive management each have an individual responsibility to ensure that the Company’s shareholders are treated equally and that there are no unnecessary interruptions to the Company’s business activities. The Board of Directors will ensure that the shareholders have sufficient information and time to assess the offer and will not undertake any actions intended to give share- holders or others an unreasonable advantage at the expense of other shareholders. Information about agreements entered into between the Compa- ny and the bidder that are material to the market’s evaluation of the bid will be publicly disclosed no later than at the same time as the announcement that the bid will be made is published. Any agreements with the bidder that acts to limit the Company’s abil- ity to arrange other bids for Company’s shares will only be en- tered into where the Board of Directors believes it is in the com- mon interest of the Company and its shareholders. If a take-over offer is made, the Board of Directors will obtain a valuation from an independent expert. On this basis, the Board of Directors will issue a statement making a recommendation as to whether shareholders should accept the offer or not. The valu- ation from the independent expert will be disclosed at the same time. Deviation from the Code of Practice (NUES) - none 15. Auditor The external auditor participates in meetings with the Audit Committee or the Board of Directors when matters falling within the scope of the external auditors responsibilities are consid- ered. The external auditor provides to the Audit Committee a description of the main elements of the audit for the preceding financial year, including in particular the elements that caused the most discussions with the Executive Management and ma- terial weaknesses uncovered related to internal controls of the financial reporting process and proposals for improvement. The auditor participates in meetings of the Board of Directors and the Audit Committee that approves financial statements. Once a year the Board of Directors holds a meeting with the auditor and no member of the Executive Management participates. Norwegian laws and regulations stipulate the type of non-au- dit services that external auditors can perform for XXL. The Board of Directors has established guidelines with respect to the use of the auditor by the company’s executive personnel for services other than the audit. The Annual General Meeting is informed about the Company’s engagement and remuneration of the auditor and for fees paid to the auditor for services other than the annual audit. Details are disclosed in note 3 to the con- solidated financial statements. Deviation from the Code of Practice (NUES) - none XXL ASA Annual Report 2021 37 XXL XXL and OSEBX Performance (rebased to XXL) Oslo Børs /OSEBX Index XXL is committed to maintaining a consistent dialogue with the share- holders and potential investors. The communication with the financial mar- ket is based on openness and equal treatment of all shareholders. Good relations with the investor communi- ty contribute to building trust and re- ducing cost of capital. XXL gives high weight to providing accurate, clear, relevant, comprehensive and up-to- date information about the Company through stock exchange announce- ments, interim reports, annual reports, general meetings, presentations and meetings with investors and analysts. The XXL share should be an attrac- tive investment opportunity, providing competitive returns to the owners, both through dividends and by increasing the value of the equity through positive developments in the operations over time. Extensive information about the Investor Relations policies and the XXL share could be found on www.xxlasa. com/investor The XXL share and shareholder information Share performance The XXL share started the year at a price of NOK 18.40 and closed the year 2021 at NOK 14.03, giving a negative return of 24 per cent. When taking into consideration an extraordinary dividend payment of NOK 1.98 per share in H2 2021, the neg- ative return was 13 per cent. XXL’s market value as of year end 2021 was NOK 3.5 billion. The highest closing price was NOK 23.73 and the lowest was NOK 13.02. The average daily volume in 2021 was NOK 18.7 million or 1.0 million shares. The Oslo Stock Exchange – OSEBX index – increased by around 4.6 per cent in 2020. Dividend policy XXL ASA will over time target a dividend pay-out of at 40-50 per cent of the Group’s annual net income. When proposing a dividend the Board of Directors will take into account legal restrictions, capital requirements and the overall financial posi- tion of the company. The Board of Directors will make an over- all assessment in order to secure the Company with a healthy capital base both for daily operations and for future growth. Due to the strong financial position of the Company an Extraor- dinary General Meeting decided to distribute extraordinary dividends for H2 2021 of NOK 1.98 per share. Shareholders XXL ASA had on 31 December 2021 a total of 252,436,658 outstanding shares owned by 15,736 shareholders. Non-Nor- wegians amounted to 14.7 per cent of outstanding shares, with shareholders from Ireland representing 6.6 per cent. The larg- est shareholder was Altor Equity Partners AS with 23.82 per cent. Annual General Meeting 2022 XXL ASA’s Annual General Meeting is scheduled for Thursday 2 June 2022 at 09.00 CET at the XXL head office, Alna Center, Strømsveien 245, Oslo. Attendance either in person, electron- ically or by proxy should be registered within 1 June 2022 at 15.00 CET. Shareholders may register by submitting a registra- tion form or electronically on www.xxlasa.com or at the Norwe- gian Central Securities Depository investor services website (VPS – www.vps.no) 30 25 20 15 10 5 0 Financial calendar 2022 27. April Q1 2022 results 02. June Annual General Meeting 15. July Q2 2022 results 27. October Q3 2022 results XXL ASA Annual Report 2021 38 Total amount of shares Ownership Voting right Altor Equity Partners 60 118 964 23,8 % 23,8 % Dolphin Management 34 500 000 13,7 % 13,7 % Ferd AS 22 922 385 9,1 % 9,1 % Odin forvaltning AS 21 872 210 8,7 % 8,7 % Arctic Fund Management AS 12 245 433 4,9 % 4,9 % XXL ASA 8 470 000 3,4 % 3,4 % Dimensional Fund Advisors LP 2 548 717 1,0 % 1,0 % Barclays Capital Securities LTD 2 236 126 0,9 % 0,9 % Nordkronen II AS 2 220 000 0,9 % 0,9 % Blackrock Fund Advisors 2 207 568 0,9 % 0,9 % Robert Iversen Holding AS 1 956 403 0,8 % 0,8 % Geni Holding AS 1 800 000 0,7 % 0,7 % Carucel Holding AS 1 677 110 0,7 % 0,7 % Arrowstreet Capital 1 595 117 0,6 % 0,6 % BOFA Securities Europe SA 1 523 930 0,6 % 0,6 % Stamina II AS 1 419 404 0,6 % 0,6 % Norron AB 1 351 057 0,5 % 0,5 % KLP Kapitalforvaltning AS 1 304 335 0,5 % 0,5 % EVLI Fund management co. ltd 1 268 390 0,5 % 0,5 % Ulsmo Finans 1 260 000 0,5 % 0,5 % Other 67 939 509 26,9 % 26,9 % Sum 252 436 658 100 % 100 % Overview of major shareholders as of 31 .12.2021 Geographical shareholder distribution Norway 84 % Ireland 6 % Luxemburg 3 % USA 2 % Sweden 2 % Other 1 % XXL ASA Annual Report 2021 39 XXL ASA Annual report 2021 Consolidated Financial Statements XXL ASA Annual Report 2021 40 Consolidated Statement of total comprehensive income 41 Consolidated Statement of Financial Position / Assets 42 Consolidated Statement of Financial Position / Equity and Liabilities 43 Consolidated Statement of Cash Flows 45 Consolidated Statement of Changes in Equity 46 Notes to the financial statements 47 Content XXL ASA Annual Report 2021 41 Consolidated Statement of total comprehensive income Note 2021 2020 Operating Revenue 2 10 006 10 423 Cost of Goods Sold 5 923 6 519 Personnel Expenses 3 1 886 1 863 Depreciation and Amortization 4,5 810 753 Impairment Losses 4,18 136 0 Other Operating Expenses 6,22 860 924 Operating Income 391 364 Net Financial Expenses 19 (146) (172) Net Financial Income (Expense) (146) (172) Income before tax 246 191 Income Tax Expense 7 52 66 Net Income 194 126 Net income attributable to non-controlling interest 6 6 Net income attributable to owners of the parent 188 120 Basic Earnings per share (NOK) 14 0,77 0,57 Diluted Earnings per share (NOK) 14 0,77 0,57 Statement of other comprehensive income Items that may be subsequently reclassified to profit or loss Currency translation differences (61) 22 Total other comprehensive income (61) 22 Total comprehensive income 133 148 Notes 1 to 22 are an integral part of the Consolidated Financial Statements (Amounts in NOK million) XXL ASA Annual Report 2021 42 Consolidated Statement of Financial Position / Assets Note 31.12.2021 31.12.2020 NONCURRENT ASSETS Intangible Assets Trademarks 5 193 194 Proprietary software 5 50 50 Software 5 18 14 Deferred tax asset 7 64 18 Goodwill 5 2 744 2 744 Total Intangible Assets 3 069 3 019 Property, Plant and Equipment Construction in progress 4 17 18 Machinery and equipment 4 49 59 Land and buildings 4 21 22 Transport and vehicles 4 0 1 Fixtures and fittings 4 738 739 Right-of-Use Assets 18 2 126 2 569 Total Property, Plant and Equipment 2 952 3 408 Total Non-current Assets 6 020 6 427 CURRENT ASSETS Inventory Inventories 8 2 220 1 835 Total Inventory 2 220 1 835 Trade and Other Receivables Trade receivables 12 161 166 Other receivables 12,20 440 118 Total Trade and Other Receivables 601 284 Cash and Cash Equivalents Cash and cash equivalents 11 173 830 Total Cash and Cash Equivalents 173 830 Total Current Assets 2 994 2 949 Total Assets 9 015 9 375 Notes 1 to 22 are an integral part of the Consolidated Financial Statements (Amounts in NOK million) XXL ASA Annual Report 2021 43 Consolidated Statement of Financial Position / Equity and Liabilities Note 31.12.2021 31.12.2020 SHAREHOLDERS’ EQUITY Paid-in Capital Share capital 13 101 102 Share premium 13 3 049 3 609 Other paid-in equity 13 36 31 Non-Controlling Interest 13 30 26 Total Paid-in Capital 13 3 216 3 768 Retained Earnings Other equity 537 417 Total Retained Earnings 537 417 Total Shareholders’ Equity 3 753 4 185 LIABILITIES Non-Current Liabilities Deferred tax liability 7 0 3 Non-Current interest bearing debt 21 485 483 Non-Current lease liabilities 18 1 925 2 180 Total Non-Current Liabilities 2 410 2 665 Current Liabilities Accounts payable and supplier finance 16 644 532 Current Lease liabilities 18 567 593 Current interest bearing debt 21 395 418 Tax payable 7 102 16 Public duties payable 544 391 Other current liabilities 17 600 574 Total Current Liabilities 2 852 2 524 Total Liabilities 5 262 5 190 Total Equity and Liabilities 9 015 9 375 Notes 1 to 22 are an integral part of the Consolidated Financial Statements (Amounts in NOK million) XXL ASA Annual Report 2021 44 Hugo Maurstad Oslo, 26 April 2022 Kjersti HobølRonny Blomseth Ulrikke Koehler Kai-Arne Nordhaug Pål Wibe Chairman Board MemberBoard Member Board Member Board member - employee representative CEO Øyvind Tidemansen Cristina Moreno Tor Andrin Jacobsen Board Member Board member - employee representative Board member - employee representative Board of Directors Hugo Maurstad Oslo, 26 April 2022 Kjersti HobølRonny Blomseth Ulrikke Koehler Kai-Arne Nordhaug Pål Wibe Chairman Board MemberBoard Member Board Member Board member - employee representative CEO Øyvind Tidemansen Cristina Moreno Tor Andrin Jacobsen Board Member Board member - employee representative Board member - employee representative Board of Directors XXL ASA Annual Report 2021 45 Consolidated Statement of Cash Flows Note 2021 2020 Operating Activities Income before tax 246 191 Income tax paid (16) 0 Depreciation and amortization 4,5 810 753 Impairment 4,18 136 0 Net financial expense 146 172 Changes in inventory (385) 789 Changes in accounts receivable (318) (19) Changes in accounts payable and supplier financing 111 (462) Other changes 175 229 Cash provided (used) by operating activities 905 1 653 Investing Activities Investment in fixed assets 4,5 (261) (181) Payments/proceeds from acquisitions/disposals 0 22 Cash provided (used) by investing activities (261) (159) Financing Activities Sales/(purchase) of own shares (77) (100) Proceeds from share issue 0 500 Extraordinary dividends (483) 0 Payment on debt 21 (1 006) (2 366) Proceeds on debt 21 993 1 546 Interest payments (29) 3 Interest on lease liabilities 18 (82) (95) Total leasing payments for the lease liability 18 (600) (582) Cash provided (used) by financing activities (1 284) (1 094) Net Change in Cash and Cash Equivalents (641) 400 Cash and cash equivalents - beginning of year 11 830 433 Effect of foreign currency rate changes on cash and equivalents (16) (3) Cash and Cash Equivalents - End of Year 173 830 Notes 1 to 22 are an integral part of the Consolidated Financial Statements (Amounts in NOK million) XXL ASA Annual Report 2021 46 Consolidated Statement of Changes in Equity Shareholders’ Equity 31.12.19 (Restated) 66 3 264 29 284 (8) 0 3 635 Net Income 2020 0 0 0 120 0 6 126 Foreign currency rate changes 0 0 0 0 22 0 22 Transaction with owners: Employee share incentive programme 0 0 2 0 0 0 2 Share Issue 35 446 0 0 0 481 Purchase of own shares 0 (101) 0 0 0 0 (101) Transactions with non-controlling interest 0 0 0 0 0 20 20 Shareholders’ Equity 31.12.20 101 3 609 31 404 14 26 4 185 Net income 2021 0 0 0 188 0 6 194 Foreign currency rate changes 0 0 0 0 (61) 0 (61) Transactions with owners: Employee share incentive programme 0 0 5 0 0 0 5 Extraordinary Dividends 0 (484) 0 0 0 0 (484) Purchase of own shares 0 (77) 0 0 0 0 (77) Transactions with non-controlling interest 0 0 0 (9) 0 (2) (11) Shareholders’ Equity 31.12.21 101 3 049 36 583 (47) 30 3 753 Notes 1 to 22 are an integral part of the Consolidated Financial Statements The share capital as of 31.12.2021 is 101 million NOK (Amounts in NOK million) Share Capital Share premium Other Paid in Equity Other Equity Non- controlling interest Total Share- holders’ Equity Foreign Currency Rate Changes XXL ASA Annual Report 2021 47 Notes to the financial statements 1.1 Organization XXL ASA was founded 2000 and is incorporated and domiciled in Norway. The address of its registered office is Strømsveien 245, N-0668 Oslo, Norway. XXL ASA’s shares are listed on the Oslo Børs (OSL, Norway) with the ticker XXL. The XXL is omni-channel sports retailer focusing on well-known quality brands at the best price of the market. XXL operates in Norway, Sweden, Finland, Denmark and Austria. XXL ASA is the ultimate parent of the group. The consolidated financial statements for XXL ASA, including notes, for the year 2021 were approved by the Board of Directors of XXL ASA on 26 April 2021. 1.2 Basis of preparation The Consolidated Financial Statements for XXL ASA (“the Group”) are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union as well as Norwegian disclosure requirements pursuant to the Accounting Act. The Consolidated Financial Statements have been prepared in accordance with the historical cost convention, modified by thex revaluation of certain financial assets and liabilities (including derivative instruments) at fair value through other comprehen- sive income or the income statement. The Consolidated Financial Statements are prepared using uni- form accounting policies for like transactions and events under similar conditions. Functional and presentation currency Foreign currency transactions are translated into the function- al currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions. Foreign ex- change gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at closing rates at the report- ing date are recognized in the income statement. Non-monetary items are measured at historical cost translated using the ex- change rates at the transaction date, except for non-monetary items measured at fair value which are translated using the ex- change rates at the date when fair value was determined. The presentation and functional currency is NOK. Group entities with a functional currency other than NOK are translated at the closing rate at the reporting date for balance sheet items, includ- ing goodwill, and at transaction rate for income and expenses. Monthly average rates are used as an approximation for transac- tion rates. Exchange differences are charged/credited to other comprehensive income and recognized in the currency transla- tion reserve in equity. Restatement of previous years As described in the 2019 Annual financial statements, vol- ume-based market support has previously been recognized in the Consolidated income statement and presented as a reduc- tion of Cost of goods sold upon delivery of the goods to XXL. In 2020, the Group determined that it would be more appropriate to account for volume-based market support as a reduction of the cost of inventory. Volume-based market support will only be recognized and presented as a reduction of an expense if it con- stitutes a refund of a specific expense. Please see note 24 for further information. 1.3 Basis of consolidation The Consolidated Financial Statements include the parent com- pany XXL ASA and all of its subsidiaries. Subsidiaries are all enti- ties over which the Group has the power to control the financial and operating policies. All transactions and balances between Group companies are eliminated at consolidation, including unrealized gains and loss- es on transactions between Group companies. Subsidiaries Subsidiaries are all entities over which the group has control. The group controls an entity 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 entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases. The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity inter- ests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consid- eration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are meas- ured initially at their fair values at the acquisition date. The group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognized amounts of acquiree’s identifiable net assets. 1.4 Significant accounting policies Revenue recognition The Group provides sporting goods and related equipment to its customers. Customers are individuals who shop at XXL stores and online. Revenue is recognized when it transfers promised goods or ser- vices to customers at an amount that reﬂects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue excludes sales taxes, rebates, and trade discounts. Each contract with a customer consist of one or more products, and each product or batch order of the same product consti- tute one performance obligation, since the customer can ben- efit from each good or batch on its own or together with other resources already available. The fixed transaction price, which represents the stand-alone selling price of each product, is sep- arately stated for each product or batch of products within the contract. The group recognises revenue from the sale of goods at the point in time when control of the goods is transferred to the customer. Control of an asset refers to the ability to direct the use of and obtain substantially all of the remaining benefits from the asset, and the ability to prevent others from directing the use of and re- ceiving the benefits from the asset. The group therefore generally recognize revenue at the point of sale (retail) or delivery (inter- net sales). Payment within the retail sales channel takes place in the form of cash purchase or by the use of payment cards. Inter- net customers are invoiced either through debit/credit cards or through a 3. party sales finance provider, in both cases the Group receives payment within a couple of days. The group also has some business to business sales where it provides limited cred- it sales to the customers. This credit is mainly due 30 days after the purchase. Cash receivables through debit/credit cards or the sales finance provider is included in the line item ‘Cash and cash equivalents’ in the consolidated balance sheet. The Group’s policy is to provide the customer with a right of re- turn within 100 days. As a consequence, revenue is reduced by the right to return. The right to return goods is estimated based on historical information. The liability is recognized in the line item Other short-term liabilities in the consolidated balance sheet. XXL ASA Annual Report 2021 48 Customers can also purchase gift cards. At the point of sales of the gift card, a liability is recognized. Revenue is recognized at the point in time when the gift card is redeemed. Management estimates the expected value of gift cards that will expire unused based on historical information. The amount not expected to be redeemed is also recognized as revenue each month. The gift card liability is part of Other short-term liabilities in the consol- idated balance sheet. Gift cards expires differently across the countries we operate, the lowest expiry time is two years and the highest is indefinite Income tax Tax expense recognized in the income statement comprises the sum of changes in deferred tax and current tax not recognized in other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those obli- gations to, or claim from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. The calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Based on these evaluations, provisions for anticipated tax payments are made, as necessary. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of as- sets and liabilities and their tax bases. Deferred tax on temporary differences associated with invest- ments in subsidiaries is not provided if reversal of these tempo- rary differences can be controlled by the Group and it is proba- ble that reversal will not occur in the foreseeable future. Deferred tax assets are recognized to the extent that it is proba- ble that they will be utilized against future taxable income, based on the Group’s forecast of future operating results which are adjusted for significant non-taxable income and expenses. Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and liabili- ties from the same taxation authority. Fixed assets Property, plant and equipment are carried at cost less accumu- lated depreciation and impairment losses. When assets are sold or disposed of, the difference between the proceeds and the carrying value of the assets is recognized as gain or loss. The cost of fixed assets is the purchase price including taxes and expenses directly attributable to preparing the asset for use. Ex- penditures incurred after the asset has been put into operation, such as ongoing maintenance, are expensed, while other ex- penses that are expected to generate future economic benefits are capitalized. Depreciation is recognized on a straight-line basis to write down the cost less estimated residual value of buildings and equipment. The following useful lives are applied: Land and Buildings 20 years Transport and vehicles 5 years Machinery and equipment 35years Fixtures and fittings 10 years Material residual value estimates and estimates of useful life are updated as required, but at least annually. Gains or losses arising from the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the car- rying amount of the assets and are recognized in the income statement within other income or other operating expenses. Construction in progress is classified as a fixed asset and is rec- ognized at cost until the asset is commissioned. Construction in progress is not depreciated until the asset is placed into service. Right-of-use assets and lease liability: Leases are recognized as a right-of-use asset and a correspond- ing liability at the date at which the leased asset is available for use by the Group (the commencement date). Each lease pay- ment is allocated between the liability and finance cost. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. The cor- responding liability is included as Current lease liabilities in the balance sheet. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • fixed payments (including in-substance fixed payments), less any lease incentives receivable • variable lease payment that are based on an index or a rate • amounts expected to be payable by the lessee under residual value guarantees The lease payments are discounted using the interest rate im- plicit in the lease, if that rate can be determined, or the lessee’s incremental borrowing rate. Right-of-use assets are measured at cost comprising the following: • the amount of the initial measurement of lease liability • any lease payments made at or before the commencement date less any lease incentives received • any initial direct costs, and • restoration costs. Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets are assets with a purchase value below 50 000. Impairment of financial assets and non-financial assets Financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such indications can be sig- nificant fall in market values; significant underperformance rela- tive to historical or projected future operating results; significant changes in the use of the assets or the strategy for the overall business, including assets that are decided to be phased out or replaced and assets that are damaged or taken out of use; sig- nificant negative industry or economic trends; significant loss of market share; significant unfavorable regulatory and court deci- sions and significant cost overruns in the development of assets Whenever the carrying amount of an asset exceeds its recov- erable amount, an impairment loss is recognized in the income statement. The recoverable amount is the higher of an asset’s net selling price and value in use. Where there are circumstances and ev- idence that impairment recognized in previous years no longer exists or has decreased, reversals of impairment will be rec- ognized except of goodwill. Intangible assets that have an in- definite useful life or intangible assets not ready to use are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impair- ment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carry- ing amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of dis- posal and value in use. For the purposes of assessing impair- ment, assets are grouped at the lowest levels for which there are largely independent cash inﬂows (cash-generating units). Prior impairments of nonfinancial assets (other than goodwill) are re- viewed for possible reversal at each reporting date. Goodwill Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognized. Goodwill is calculated as the sum of the consideration and the book value of non-controlling interest and the fair value of previously owned shares, minus net value of identifiable assets and liabilities at the acquisition date. Good- will is not amortized, but is tested annually for impairment. Good- will is carried at cost less accumulated impairments losses. In connection with impairment testing, goodwill is allocated to the related cash-generating units or groups of cash generating units. Trade and other receivables Trade and other receivables are initially and subsequently meas- ured at the transaction price less expected credit losses. Trade receivables are adjusted for provision for impairment in accordance with the expected credit loss model. The Group applies the simplified approach for trade receivables, measuring the loss allowance at an amount equal to lifetime expected cred- it losses. Impairment for expected credit losses is recognized in the income statement and updated at each reporting date. The impairment is calculated by taking into account the historic ev- idence of the level of bad debt experienced for customer types and the aging of the receivable balance Intangible assets Acquired intangible assets are capitalized on the basis of the costs incurred to acquire and put the asset into use. Intangible assets acquired in a business combination that qualify for sepa- rate recognition are recognized as intangible assets at their fair values. Expenditure on the research phase of projects to develop new customized software for IT and telecommunication systems is recognized as an expense as incurred. All intangible assets, including capitalized internally developed software, are accounted for using the cost model whereby capi- talized costs are amortized on a straight-line basis over their es- timated useful lives, as these assets are considered finite. Resid- ual values and useful lives are reviewed at each reporting date. Intangible assets with indefinite useful lives are tested for im- pairment annually, either individually or as part of a cash-gener- ating unit. Intangible assets with indefinite lives are not amortized. Man- agement reviews annually to determine whether the indefinite XXL ASA Annual Report 2021 49 life assumption can be justified. If not, a change to the predeter- mined useful life is made. Brand/Trademark Trademark allocated as part of the purchase price allocation in 2010 is capitalized and has undefined useful life. Software - acquired and developed Expenses related to the purchase of new software are capi- talized as an intangible asset if these costs are not part of the original hardware cost. Software is depreciated over three years. Expenses incurred due to service or maintenance are expensed unless the changes in the software increase the future economic benefits of the software. Financial instruments The Group has the following financial instruments: trade receiv- ables, cash and cash equivalent, lease liabilities, debt, accounts payable and supplier finance and derivatives. All financial instruments except for derivatives are measured at amortized cost. Trade receivables meet the SPPI criteria of IFRS 9. For derivatives not traded on an active market, an appropriate valuation method is used in order to determine the fair value. Such valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, and referencing the current fair value of another instru- ment that is substantially the same, as well as a discounted cash ﬂow analysis or other valuation models. An analysis of financial instruments and their fair value measure- ment can be found in note 20. FX derivatives used to secure purchases in foreign currency are measured at fair value and recognized in the P&L. Impairment of non-financial assets Intangible assets that have an indefinite useful life or intangible as- sets not ready to use are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circum- stances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the as- set’s carrying amount exceeds its recoverable amount. The recover- able amount is the higher of an asset’s fair value less costs of dis- posal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inﬂows (cash-generating units). Prior impair- ments of nonfinancial assets (other than goodwill) are reviewed for possible reversal at each reporting date. Inventories Inventories are measured at the lower of cost and net realizable value. Net realizable value is estimated sales price less transac- tion cost. Se section “Significant management judgment in ap- plying accounting policies” below. Cost is reduced by discounts from suppliers, unless these are determined to be separate services that are delivered to the supplier or reimbursements for joint marketing or similar activities. Sales support billed to suppliers for joint marketing is presented as a reduction in marketing costs under other operating expenses. Inventory cost is recognized based on weighted average. Cash and cash equivalents Cash includes cash in hand and bank deposits. . Funds originally bound for more than three months are not included in cash and cash equivalents. Bank overdrafts are presented in the statement of cash ﬂows less cash and cash equivalents. Stockholder’s equity Foreign currency rate changes The translation reserve is comprised of foreign currency rate changes arising from the translation of financial statements of the Group’s foreign entities into NOK. Exchange differences on monetary items (assets or liabilities) which are in reality part of a company’s net investment in a foreign entity are also included in the translation reserve. Provisions Provisions are recognized when the Group has a present obliga- tion (legal or constructive) as a result of a past event, it is proba- ble (more likely than not) that an outﬂow of economic resources will be required from the Group and amounts can be estimated reliably. Timing or amount of the outﬂow may still be uncertain. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable ev- idence available at the reporting date, including the risks and uncertainties associated with the present obligation. Supplier financing The Group has entered into a supplier financing arrangement with DNB. An accounts payable is derecognized and a supplier financing payable is recognized when the financial liability to the supplier has been extinguished by DNB paying the supplier on behalf of the Group and a new liability to the bank has been agreed in its stead. The accounts payable is also considered ex- tinguished and derecognized if the rights under the trade receiv- able are acquired from the supplier by the bank, and the Group is given significantly different terms by the bank. This may be the case if the payment terms are extended for the group. A specifi- cation of accounts payable and supplier financing can be found in note 16. Contingent liabilities and assets In those cases where the possible outﬂow of economic resourc- es as a result of present obligations is considered improbable or remote, no liability is recognized. A contingent asset is not recognized in the financial statements but disclosed in notes if it is probable that the benefit will ﬂow to the Group. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating deci- sion-maker. The chief operating decision-maker, who is respon- sible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Direc- tors that make strategic decisions. 1.5 Significant management judgment in applying accounting policies When preparing the Consolidated Financial Statements, man- agement undertakes a number of judgments, estimates and as- sumptions about the recognition and measurement of assets, li- abilities, income and expenses. Estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below. Estimated impairment of goodwill, trademark, and Right of Use-Assets The Group tests for impairment of goodwill and trademark as necessary, or at a minimum annually (note 5). The recoverable amount of cash-generating units are based on the value-in-use calculation. The cash-generating unit for goodwill and trademark corresponds with our segment reporting. The Group tests for impairment of the Right-of-Use Assets if there is any indication that an asset may be impaired. IAS 36 is applied to account for any impairment loss identified, and the calculations requires use of estimates. Provision for obsolescence The group makes provision for obsolescence. These provisions are based on a detailed assessment of the age distribution of inventory items and whether the goods are part of an active or expired product range. A provision for obsolescence is made when the net realizable value of the good is lower than the cost of the good. These provisions are estimate-based and require in- depth knowledge about goods and markets. 1.6 New IFRS standards New standards and amendments – applicable 1 January 2021 The following standards and interpretations apply for the first time to financial reporting periods commencing on or after 1 January 2021. XXL has not identified any significant impact to the Group’s consolidated financial statements as a result of the mentioned amendments: IFRS 16 and COVID-19 - Extension of practical expedient The extension permits a lessee to apply the practical expedient regarding COVID-19-related concessions to rent concessions for which any reduction in lease payments affects only payments originally due on or before 30 June 2022 (rather than only pay- ments originally due before 30 June 2021). The extension re- quires a lessee applying the amendment to do so for annual re- porting periods beginning on or after 1 April 2021 and requires a lessee applying the amendment to do so retrospectively, recog- nizing the cumulative effect of initially applying the amendment as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the beginning of the annual reporting period in which the lessee first applies the amendment (no restatement of comparatives). Interest Rate Benchmark Reform – Amendments to IFRS 7, IFRS 9, IFRS 16, IFRS 4 and IAS 39 - Phase 2 Phase 2 amendments relate to issues that could affect financial reporting when an IBOR is replaced with an alternative bench- mark interest rate. The amendments are relevant for entities with financial assets, financial liabilities or lrease liabilites that are subject to the interest rate benchmark reform and those that apply the hedge accounting requirements in IFRS 9 or IAS 39 to hedging relationships that are affected by the reform. No chang- es have been made to any of the current accounting standards. No changes have been made to any of the current accounting standards XXL ASA Annual Report 2021 50 Note 2 Operating Segments The Group’s business is the sale of sports and leisure equipment and leisure events. The Group’s sales are made primarily from the Group’s stores in Norway, Sweden, Finland, Austria and E-commerce in Denmark. The Company’s performance is reviewed by the chief operating decision maker as five reportable geo- graphical segments, and in addition HQ & Logistics. Internet Note 3 Personnel expenses sales are included in each geographic segment based on the geographic location of the consumer. HQ & Logistics includes Group HQ costs, such as IT, Finance, Training and Administration. Group HQ also includes costs related to wholesalers and central warehouses. 01.01.2021 - 31.12.2021 HQ & (Amounts in NOK million) Norway Sweden Finland Denmark Austria Logistics Total Operating revenue 4 873 2 961 1 744 20 409 0 10 006 Gross profit¹ 2 098 1 148 696 6 135 (0) 4 084 EBITDA² 1 154 420 294 1 (31) (501) 1 338 Operating Income 866 173 176 1 (191) (634) 391 01.01.2020 - 31.12.2020 HQ & (Amounts in NOK million) Norway Sweden Finland Denmark Austria Logistics Total Operating revenue 4 987 2 974 1 950 27 484 0 10 423 Gross profit¹ 1 983 1 055 708 8 150 0 3 904 EBITDA² 1 062 316 270 (0) (9) (522) 1 117 Operating Income 816 101 142 (0) (61) (633) 364 ¹Gross profit represent operating revenue less cost of goods sold. ²Our EBITDA represents operating income plus impairment losses, depreciation and amortization. Executive management remuneration The following benefits were provided to the members of the Executive Management for 2021: (Amounts in NOK Thousands) Number of Total shares in Name Title Currency Salary Bonus Other Pension remuneration XXL ASA Pål Wibe CEO NOK 5 000 1 561 7 22 6 591 2 220 000 Rest of the members of the Executive Management NOK 21 476 5 766 696 1 219 29 157 182 388 Total remuneration NOK 26 476 7 327 703 1 241 35 748 2 402 388 * Rest of the members of the Executive Management consists of 10 people The following benefits were provided to the members of the Executive Management for 2020: Number of Total shares in Name Title Currency Salary Bonus Other Pension remuneration XXL ASA Pål Wibe CEO NOK 3 277 0 4 518 66 7 794 2 220 000 Rest of the members of the Executive Management NOK 18 651 7 825 178 373 26 655 179 289 Total remuneration NOK 21 928 7 825 4 696 439 34 449 2 399 289 * Rest of the members of the Executive Management consists of 8 people We refer to Remuneration Guidelines for determination of salary and other remuneration to the executive management and key em- ployees. These can be found on the company’s website. Weighted Weighted (Amounts in Thousands) Average Exercise Average Exercise Options 2021 price (NOK) 2020 price (NOK) Outstanding at the end of the period 564 88,2 1 206 88,2 Exercised Terminated 564 642 Granted Outstanding at the end of the period 0 0 564 88,2 Options held by Board of Directors Outstanding at the Outstanding at the and Executive Management: Title beginning of the period end of the period EVP Human Resources, Tolle Grøterud Communications and Sustainability 133 948 0 Espen Terland EVP IT 133 948 0 Harald Borgen EVP Supply Chain 133 948 0 Options held by others 162 002 0 (Amounts in NOK million) Employee benefit expenses 2021 2020 Wages, salaries 1 502 1 461 Social security costs 279 276 Pension expenses 66 81 Other benefits 39 45 Total 1 886 1 863 Average number of full time employees 3 239 3 157 XXL ASA Annual Report 2021 51 Program for restricted share units In order to further align the interests of the company and the employees and its shareholders, and to motivate the employees to contribute materially to the success and profitability of XXL, the Board of Directors has resolved to implement a program of Restricted Share Units (“”RSUs””). This program will also enable the company to attract and retain such employees. RSUs were granted to employees in 2019 and 2021, but there was no alloca- tion in 2020. In total 220,728 RSUs from 2019 were exercised by employees, corresponding to 220,728 ordinary shares, in Febru- ary 2022. The next RSU grant (“the 2022 Plan”) took place after the Q4 2021 results in February 2022 and will be related to individual contributions to XXL, position in the organization, competence, Long term investment program “The Group has established an equity-based long term invest- ment program (the “”Program””) for members of the Executive Management. The main objective of the Program is to align the long-term interests of the Executive Management with those of the shareholders of XXL ASA. The members of the Executive Management is entitled to invest in XXL Management Invest AS (XMI) which is entitled to invest in XXL Sport & Villmark AS. The calculated market price for the shares in XXL Sport & Villmark AS is based on the volume weighted average price of the XXL-share during a 10 trading days period towards the time of transaction, adjusted for the assets and liabilities of XXL oth- er than its shares in XXL Sport & Villmark AS. The shares sub- scribed for by the participants in XMI and by XMI in XXL Sport & Villmark AS is subject to a three-year lock-up (the “Lock-up”) which entails an illiquidity discount of 25%. The total investment of XMI in XXL Sport & Villmark AS is on the balance date NOK 69.4 million (after deduction of the illiquidity employment duration and the importance for XXL. Allocations will be based on individual accomplishments. XXL has developed allocation levels according to different positions within the com- pany, with some ﬂexibility on individual adjustments and with the possibility of internal benchmarking. Each EVP in the executive management team proposes their recommendations to the CEO who commence the final allocation. The allocation price will be equal to the volume weighted average price in the market the five trading days after the Q4 2021 results presentation. The RSUs are exercisable after three years subject to the holder at the time of exercise is employed in the company. discount) and XMI holds 34,583 ordinary shares in XXL Sport & Villmark AS. XXL ASA has provided XMI with a loan in the amount of NOK 46.8 million to fund a part of XMI’s investment in XXL Sport & Villmark AS while the remaining amount will be contrib- uted by the Investment Program participants. The loan carries an annual interest of 8%. After expiration of the Lock-up period, the Executive Manage- ment as a group may for a period of 24 months require that XXL ASA acquires or exchanges the shares in XMI for shares in XXL ASA at market price. For a period of 12 months thereafter, XXL ASA will be entitled to acquire all of the Executive Management’s shares in XMI at market price. The market price for the XMI shares shall in both of the aforementioned situations be based on the XXL VWAP during the 10 trading days prior to determina- tion of the market price, XXL ASA’s and XMI’s respective owner- ship interest in XXL Sport & Villmark AS, as well as their assets and liabilities other than the shares in XXL Sport & Villmark AS, while the market price for the XXL ASA shares shall be equal to the XXL VWAP during the same 10 trading days. RSUs held by Board of Directors Outstanding at the Outstanding at the and Executive Management: Title beginning of the period end of the period Magnus Kreuger Managing Director Austria 4 985 5 641 RSU 2021 2020 Outstanding at the beginning of the period 292 646 409 561 Exercised 63 376 82 050 Terminated 46 510 34 865 Granted 457 000 0 Outstanding at the end of the period 639 760 292 646 2021 2020 RSU program expensed for the year 5 632 4 276 Board of Directors and Shares in XXL Indirect ownership of Executive Management: Title ´Management Invest AS XXL Sport & Villmark AS Pål Wibe CEO 9 961 1,0% Stein Eriksen CFO 3 187 0,3% Tolle Grøterud EVP HR, Communications and Sustainability 3 187 0,3% Andre Sjåsæt EVP Strategy and Business Development 2 202 0,2% Espen Terland EVP IT 1 195 0,1% Harald Borgen EVP Supply Chain 1 195 0,1% Kjersti Jamne EVP Commercial 1 195 0,1% Stine Trygg Hauger Managing Director Norway 1 207 0,1% Anders Lindblom Managing Director Sweden 1 255 0,1% Päsi Lämpsä Managing Director Finland 1 195 0,1% Magnus Kreuger Managing Director Austria 796 0,1% Kjersti Helen Krokeide Hobøl Board Member 796 0,1% Ronny Blomseth Board Member 796 0,1% Others 2 388 0,2% Total number of shares in XMI held by Board of Directors and Executive Management 30 555 2,9% XXL ASA Annual Report 2021 52 Board of directors remuneration 2021 (Amounts in NOK Thousands) Number of Total Name Title shares XXL ASA remuneration Hugo Maurstad Chairman of the Board 500 000 400 Øivind Tidemandsen (Dolphin Management) Board member 34 500 000 350 Kjersti Hobøl Board member and Chairman audit committee 35 000 410 Ronny Blomseth Board and audit committee member 342 719 390 Maria Aas-Eng Board member (resigned in 2021) 0 350 Ulrike Koehler Board member (new in 2021) 0 0 Christina Moreno Board member (new in 2021, employee representative) 0 0 Tor Andrin Jacobsen Board member (new in 2021, employee representative) 0 0 Kai-Arne Nordhaug Board member (new in 2021, employee representative) 0 0 Robert Iversen Election Committee 1 956 403 50 Ingar Solheim Election Committee 0 75 Vegar Søraunet Election Committee 0 50 Board of directors remuneration 2020 (Amounts in NOK Thousands) Number of Total Name Title shares in XXL ASA remuneration Hugo Maurstad Chairman of the Board 500 000 400 Øivind Tidemandsen (Dolphin Management) Board member 34 500 000 1 500 Kjersti Hobøl Board member and Chairman audit committee 35 000 410 Ronny Blomseth Board and audit committee member 342 719 390 Maria Aas-Eng Board member 0 350 Robert Iversen Election Committee 1 956 403 50 Ingar Solheim Election Committee 0 75 Vegar Søraunet Election Committee 0 50 There are no loans or guarantees to the Managing Director or other related parties. The CEO and the Board do not have any agreement for compensation upon termination or change of employment / directorship. Pension The Group is required to have a compulsory pension in accordance with the Norwegian Accounting Act §7-30a. The Group has a pension plan that fulfills this requirement, which covers all employees and is a defined contribution plan. Audit Fees Divided by type of service (exclusive of VAT) (Amounts in NOK Thousands) 2021 2020 Statutory audit 4 963 3 838 Other attestation services 101 80 Tax related services 388 647 Other services 431 872 Total fees 5 883 5 437 XXL ASA Annual Report 2021 53 Note 4 Property, Plant and Equipment Land and Transport and Machinery and Fixtures Construction Total (Amounts in NOK Million) buildings vehicles equipment and fittings in progress Balance 01.01.20 (Restated) 29 3 276 1 336 15 1 660 Additions 0 0 38 84 2 124 Disposals (-) / transfer to oth. cat. of fixed assets (+/-) 0 0 0 0 0 0 Net exchange differences 0 0 10 70 1 81 Balance 31.12.20 29 4 324 1 490 18 1 864 Accumulated depreciation pr. 01.01.20 -5 -3 -214 -582 0 -804 Disposals 0 0 0 0 0 0 Depreciation -1 0 -46 -135 0 -182 Net exchange differences 0 0 -5 -34 0 -39 Accumulated depreciation pr. 31.12.20 -7 -3 -265 -751 0 -1 025 Carrying amount pr. 31.12.20 22 1 59 739 18 839 Balance 01.01.21 29 4 324 1 490 18 1 864 Additions 0 0 15 206 0 221 Disposals (-) / transfer to oth. cat. of fixed assets (+/-) 0 0 0 0 0 0 Net exchange differences 0 0 -7 -61 -1 -69 Balance 31.12.21 29 4 332 1 635 17 2 016 Accumulated depreciation pr. 01.01.21 -7 -3 -265 -751 0 -1 025 Impairment 0 0 0 -13 0 -13 Depreciation -1 0 -23 -165 0 -189 Net exchange differences 0 0 5 32 0 38 Accumulated depreciation pr. 31.12.21 -8 -3 -283 -896 0 -1 190 Carrying amount pr. 31.12.21 21 1 49 738 17 826 Note 5 Intangible assets Proprietary (Amounts in NOK Million) Goodwill Trademarks software Software Total Balance 01.01.2020 (Restated) 2 888 206 155 35 3 284 Additions 0 0 33 4 38 Disposals 0 0 0 0 0 Net exchange differences 0 0 0 0 1 Balance 31.12.2020 2 888 206 189 39 3 322 Accumulated amortization pr. 01.01 -144 -11 -109 -23 -287 Disposals 0 0 0 0 0 Amortization 0 -1 -30 -3 -33 Accumulated amortization pr. 31.12 -144 -12 -139 -25 -320 Carrying amount pr. 31.12.2020 2 744 194 50 14 3 002 Balance 01.01.2021 2 888 206 189 39 3 322 Additions 0 0 32 8 40 Disposals 0 0 0 0 0 Net exchange differences 0 0 0 -1 -1 Balance 31.12.2021 2 888 206 221 46 3 361 Accumulated amortization pr. 01.01 -144 -12 -139 -25 -320 Disposals 0 0 0 0 0 Amortization 0 -1 -32 -4 -36 Accumulated amortization pr. 31.12 -144 -13 -171 -29 -357 Net exchange differences 0 0 0 0 0 Carrying amount pr. 31.12.2021 2 744 193 50 18 3 004 not including deferred tax Amortization of Goodwill and Trademark relates amortization performed prior to the company IFRS conversion XXL ASA Annual Report 2021 54 Trademark Trademark allocated as part of the purchase price allocation in 2010 (190 mNOK) and additions is capitalized and has indefinite life. Trademark is not amortized due to XXL’s extensive spending on commercials and advertising, keeping the brand awareness growing.The value of trademark is tested annually for impairment. The carriyng value is allocated to the group of cash generating units comprised of the shops in Norway (part of the operating segment Norway). The impairment assessment of trademark is included in the goodwill impairment test. See below. Software - acquired and developed Expenses related to the purchase of new software are capitalized as an intangible asset if these costs are not part of the original hard- ware cost. Software is depreciated over 3 years. Expenses incurred due to service or maintenance are expensed unless the changes in the software increase the future economic benefits of the software. Goodwill The Group’s booked goodwill per December 31.12.2021 is NOK 2744 million. NOK 2 734 million of this amount is related to the acquisitions of XXL Sport & Villmark AS in 2010 and NOK 10mil- lion is related to the acquisition of West Systems Norge AS in 2019. The carrying value is allocated to the group of cash gen- erating units (CGU) comprised of the shops in Norway (part of the operating segment Norway). The management evaluates and monitors the goodwill based on the performance on an operat- ing segment level. The recoverable amount of each operating segment is calculated based on a value in use method. Goodwill is not amortized, but tested annually for impairment. In accordance with IFRS, we have used a 5-year budget period and terminal value in the impairment model. Both Goodwill and Trademark are included in the assessment for impairment. The impairment testing includes estimates such as gross margin, cash ﬂows, growth rates and calculation of cost of capital. These estimates may change over time, and thus be difficult to predict. A brief summary of the most important assumptions and esti- mates is mentioned below. Assumptions in the impairment test model FUTURE CASH FLOWS The first year’s cash ﬂow is based on preliminary budgeted figures for 2022, while the consecutive years are calculated based on estimated growth rates. The budget is based on history and the group’s strategy plan, and is approved by the Board of Directors. GROWTH RATES AND MARGINS Revenue growth is based on budgets for 2022, followed by a growth rate of 4-5 % in the years 2023-2026. The growth rate is based on both expected sales in both physical stores and E-com. The growth in E-commerce sales has been substantial prior years, and we expect most of the growth in the next 5 years to derive from the E-com channel. Long term growth for the terminal value is set to 2%, corresponding with expected inﬂation. Gross margin and EBITDA margin is estimated based on the current margin level and expected future market developments. Both gross margin and EBITDA margin is expected to be on historical levels. We have used slightly lower margins in the terminal value in the model to take a conservative approach for the impairment test purposes. COST OF CAPITAL Future cash ﬂows are discounted to present value using the weighted average cost of capital (WACC). The WACC is estimated to be 6.9 % pre tax (6.8 after tax) , and is based on a risk free interest rate, a risk premium, and a beta value. - Risk-free interest rate is set to the 10-year government bond yield. - Risk premium of 5.8 %, based available market data and observation of similar companies. - Beta value is set to 1.25 and based on a calculation of historical beta value for XXL ASA, as well as figures from comparable companies. No impairment of goodwill is deemed necessary in 2020 or 2021. Cash Generating Units (CGUs) (Amounts in NOK million) Shops in Norway 2021 2020 Goodwill 2 744 2 744 Trademark 193 194 Impairment 0 0 Sensitivity Discount rate after tax (WACC) 6,83% 6,78 % Increase in the discount rate before possible impairment of goodwill 5.3 p.p 5.3 p.p Decrease in the terminal value gross margin before possible impairment of goodwill 6.8 p.p N/A Note 6 Other operating expenses Other operating expenses by nature (Amounts in NOK million) 2021 2020 Cost of premises 153 181 Marketing expenses 488 482 Other operating expenses (incl. IT licenses, maintenance, legal fees and other) 219 261 Sum 860 924 Note 7 Tax Income tax expense for the year (Amounts in NOK million) Tax expense for the year 2021 2020 Tax payable 102 16 Change in deferred tax -50 50 Exchange rate effect/other 0 0 Total income tax expense 52 66 Effective tax rate 21 % 34 % Current tax payable Tax payable 102 16 Total tax payable in the balance sheet 102 16 Explanation of difference between Norwegian statutory tax rate of 22% and the effective tax rate Income before tax 246 191 22 % tax of income before tax 54 42 Permanent differences (22%) 1 1 Change in unrecognised deferred tax assets 1 28 Effect of change of tax rate 0 0 Differences in tax rates amongst the Group and other -4 -5 Income tax expense 52 66 XXL ASA Annual Report 2021 55 Specification of temporary differences Asset (-)/liability 2021 2020 Change Property, plant and equipment 419 228 -191 Trade receivables -6 -7 0 Inventories -730 -339 -391 Other current liabilites -56 -57 1 Trademarks 190 190 0 Amortization of loan expenses 2 2 0 Financial derivatives 6 0 6 Leasing -280 -87 -193 Total temporary differences -455 -70 385 Tax loss carried forward -283 -293 10 Basis for deferred tax -738 -363 -375 Deferred tax assets not recognised 302 293 0 Basis for deferred tax recognised -435 -70 0 Deferred tax liability in the balance sheet 0 3 -3 Deferred tax asset in the balance sheet -64 -18 -47 * the tax loss carried forward is located in different geographies and expire in line with local regulation. The expiery varies between 7 years (minimum) and indefinite Deferred tax assets are only capitalised to the extent that it is probable that there will be sufficient future taxable profit for the tax asset to be used, either because the entity recently reported a profit or because assets with excess value have been identified. If it is unlike- ly that future profits will be sufficient to absorb the tax-reducing temporary differences, deferred tax assets are not recognised. Deferred tax assets (-) / liabilities are presented net for the Norwegian entities. Tax rate in Norway is 22%. Tax rate in Sweden is 20.6% for 2021, tax rate in Finland is 20% in 2021, tax rate in Switzerland is 9.7% in 2021, tax rate in Austria is 25% in 2021. Note 8 Inventories (Amounts in NOK million) 2021 2020 Goods purchased for resale 2 301 2 015 Goods in transit 65 5 Reserve for inventory obsolescence (145) (185) Total inventories 2 220 1 835 Note 9 Investment in subsidiaries The Group has an ownership interest in the following subsidiaries: Year of Business Ownership Subsidiaries incorporation location percentage XXL Sport & Villmark AS 2000 Oslo 100 % XXL Grossist Norge AS 2000 Oslo 100 % XXL Adventure AS 2002 Oslo 100 % XXL Sport og Vildmark AB 2005 Stockholm 100 % XXL Sports & Outdoor OY 2013 Helsinki 100 % XXL Sports & Outdoor ApS 2016 Copenhagen 100 % XXL Sports & Outdoor Gmbh 2016 Wien 100 % XXL Europe Holding Sarl 2013 Luxembourg 100 % XXL Europe Gmbh 2013 Luzern 100 % XXL Online Gmbh 2013 Luzern 100 % Level2Invest AS 2016 Oslo 100 % West System Norge AS 2019 Oslo 100 % Investments in subsidiaries are consolidated in the Consolidated Financial Statements. Note 10 Related party transactions The Group’s related parties include its key management, members of the board and majority shareholders. The Board members represent 37.5% of the shares (voting rights) in the Group, in addition to the shares they hold personally they also represent Dolphin Managment AS, Altor Invest 5 AS and Altor Invest 6 AS. None of the Board members have been granted loans or guarantees. Further- more, none of the Board members are included in the Group’s pension or bonus plans. Note 11 Cash and cash equivalents (Amounts in NOK million) 2021 2020 Bank deposits (restricted) 5 5 Cash 10 17 Bank accounts (unrestricted) 158 808 Total cash and cash equivalents 173 830 The Group has a multi-currency cash-pool owned by XXL Sport & Villmark AS, a fully owned subsidiary of XXL ASA, and operated by Nordea. XXL Sport & Villmark AS presents total bank deposits in the international cash pool, while subsidiaries/parent who participate in the cash-pool present their share of the international cash pool as intra-group balances in their stand-alone financial statements. For consolidated group reporting the cash balances are shown as the net balance as either cash or as short-term bank loan. XXL ASA Annual Report 2021 56 Note 12 Trade and other receivables (Amounts in NOK million) 2021 2020 Trade receivables, gross 179 181 Allowance for credit losses -18 -17 Trade receivables 31.12 161 165 Changes in allowance for credit losses Beginning balance -17 -14 Change in the allowance -1 -2 Allowance for credit loss expense -1 -2 FX effect reserve balance sheet/profit or loss - - Ending balance 31.12 -18 -17 The table below shows the aging analysis of trade receivables per 31.12 Year Total Not yet due >30 days >60 days >90 days 2021 161 113 13 10 25 2020 181 122 24 6 29 All of the Group’s trade and other receivables have been reviewed for indicators of impairment and an allowance for credit losses has been reserved for amounts which are considered uncollectable. Other receivables (Amounts in NOK million) 2021 2020 Accrued supplier bonus 105 64 Prepaid expenses 31 20 Other receivables 16 34 Public duties receivables 287 0 Other receivables 31.12 440 118 Note 13 Share capital and shareholder information The share capital of XXL is NOK 100,974,663.20 consisting of 252,436,658 shares with a par value of NOK 0.40 each. Overview of the major shareholders of the Group as of 31.12.2021: Total amount of shares Ownership Voting right Altor Equity Partners 60 118 964 23,8 % 23,8 % Dolphin Management 34 500 000 13,7 % 13,7 % Ferd AS 22 922 385 9,1 % 9,1 % Odin Forvaltning AS 21 872 210 8,7 % 8,7 % Arctic Fund Management AS 12 245 433 4,9 % 4,9 % XXL ASA 8 470 000 3,4 % 3,4 % Dimensional Fund Advisors LP 2 548 717 1,0 % 1,0 % Barclays Capital Securities Ltd 2 236 126 0,9 % 0,9 % Nordkronen II AS 2 220 000 0,9 % 0,9 % Blackrock Fund Advisors 2 207 568 0,9 % 0,9 % Robert Iversen Holding AS 1 956 403 0,8 % 0,8 % Geni Holding AS 1 800 000 0,7 % 0,7 % Carucel Holding AS 1 677 110 0,7 % 0,7 % Arrowstreet Capital 1 595 117 0,6 % 0,6 % Bofa Securities Europe SA 1 523 930 0,6 % 0,6 % Stamina II AS 1 419 404 0,6 % 0,6 % Norron AB 1 351 057 0,5 % 0,5 % Klp Kapitalforvaltning AS 1 304 335 0,5 % 0,5 % Evli Fund Management Co. Ltd 1 268 390 0,5 % 0,5 % Ulsmo Finans 1 260 000 0,5 % 0,5 % Other 67 939 509 26,9 % 26,9 % Sum 252 436 658 100 % 100 % All shares have been fully paid. XXL ASA Annual Report 2021 57 Note 14 Earnings per share (Amounts in NOK million) 2021 2020 Net income 194 126 Weighted average number of ordinary shares in issue 252 436 658 218 952 136 Number of shares outstanding 252 436 658 252 436 658 Total number of outstanding shares incl. share options 252 436 658 253 000 504 Adjustment for: Effect share options 639 760 292 646 Weighted number of ordinary shares in issue for diluted earnings per share 253 076 418 219 244 782 Basic Earnings per share (in NOK) 0,77 0,57 Diluted Earnings per share (in NOK) 0,77 0,57 Reconciliation weighted average number of ordinary shares 2021 2020 Number of shares opening 247 466 658 165 762 744 Share issue - 86 673 914 Purchases/Sales of own shares -3 500 000 -4 970 000 Purchase of shares RSU -63 376 -82 050 Transfer of shares RSU 63 376 82 050 Number of shares closing (excluding own shares) 243 966 658 247 466 658 Weighted average 252 436 658 218 952 136 Effect share option 639 760 292 646 Basic Earnings per share (in NOK) 0,77 0,57 Diluted Earnings per share (in NOK) 0,77 0,57 Adjusted Earnings per share (in NOK) 1,31 0,57 Note 15 Security and guarantees XXL ASA has a total loan engagement of NOK 1800 millions with DNB and Nordea as of December 2021, consisting of a Overdraft of NOK 150 million and a Revolving Credit Facility of NOK 1 650 million in which NOK 770 millions are available. The loans are secured by a negative pledge from the participants. Note 16 Accounts payable and supplier financing (Amounts in NOK million) 2021 2020 Accounts payable 599 470 Supplier financing 45 62 Total other current liabilities 644 533 In 2019 the group entered into a supplier financing arrangement with DNB, whereas DNB purchases the payable from our Supplier and the group obtains an extended payment date for the payable. The Group pays only the set-up costs for this arrangement. The arrangement is limited towards 3 suppliers. Note 17 Other current liabilities (Amounts in NOK million) 2021 2020 Credit notes / gift cards customers 176 161 Accrued salary and bonus 161 151 Accrued holiday pay 160 158 Other short term accruals and right of return 103 105 Total other current liabilities 600 575 * Gift cards expires differently across the countries we operate, the lowest expiry time is two years and the highest is indefinite Note 18 Right-of-Use Assets and Lease Liabilities (Amounts in NOK million) Buildings, machinery and vehicles Aquisition cost 01.01.2021 3 656 Additions and adjustments 328 Change incentives -19 Net exchange differences -92 Aquisition costs 31.12.2021 3 872 Accumulated depreciation and impairment losses 01.01.2021 -1 087 Depreciation -578 Impairment losses in the period -123 Disposals 0 Transfers and reclassifications 0 Currency exchange differences 41 Accumulated depreciation and impairment 31.12.2021 -1 747 Total Right-of-Use Assets at 31.12.2021 2 126 Lower of remaining lease term or economic life 0 - 13 years Depreciation method Linear An impairment indicator was identified related to the Austria seg- ment due to their negative trend and store closures due to COV- ID-19. In order to further evaluate the ROU assets and indication of a triggering event we have evaluated the store EBITDA on in- dividual stores after allocating shared services(such as HQs and central warehouses). When EBITDA is positive we evaluate that no impairment trigger is necessary as it then by nature carries the cash ﬂow of the rental cost of the stores. A value-in-use calculation was performed for the stores which showed a negative EBITDA. The impairent testing include esti- mates like gross margin, cash ﬂows, growth rates and calculation of cost of capital. A brief summary of the assumptions are listed below. Future cash ﬂow An estimate for 2021 (calculation made in november 2020, but no material change for FY 2021 reported numbers) is used, while figures as of 2022 are equal to approved business case in Austria Growth rates In the impairment model, the revenue growth is set to 2,5 % per year. Discount rate The discount rate used was 7 %. A minimum level of healthy store economy is used as a terminal value. The calculation showed that an impairment was needed. As such the Right of use assets related to the Austrian segment was impaired by NOK 123m. Adjusted Earnings per share is adjusted for impairment losses in 2021. XXL ASA Annual Report 2021 58 Lease liabilities 2021 (Amounts in NOK million) Total Summary of the lease liabilities in the financial statements Total lease liabilities 01.01.2021 2 773 New lease liabilities recognised in the period 328 Total leasing payments for the lease liability -600 Interest expense on lease liabilities 82 Reassessment of the discount rate on previous lease liabilities 0 Currency exchange differences -91 Total lease liabilities at 31.12.2021 2 492 whereof: Current lease liabilities < 1 year 567 Non-current lease liabilities > 1 year 1 925 For maturity profile of the lease liabilities, please refer to disclosure note 20 for this information. (Amounts in NOK thousands) Expensed variable payments linked to performance or use¹ 0 Expenses related to contracts with exception for short term leases² 0 Expenses related to contracts with exception for low value assets (short term contract excluded)² 0 ¹ All accrued expenses (any possible income substracted) related to transactions classified as “variable payment l linked to perfor- mance or use” is included ²All accrued expenses (any possible income substracted) for contracts is included Note 19 Net financial expenses (Amounts in NOK million) 2021 2020 Other financial income 0 0 Net realized / unrealized foreign exchange gains 0 5 Total financial income 0 5 Interest expenses bank loans 21 44 Interest expenses on lease liabilities 82 92 Other interest expenses 8 8 Other financial expenses 25 33 Net realized / unrealized foreign exchange losses 9 0 Total financial expenses 146 177 Net financial expenses -146 -172 Note 20 Financial instruments Financial risk The Group uses financial instruments such as bank loans. The purpose of these financial instruments is to raise capital for investments that are necessary for the Group’s business. In addition, the Group has financial instruments such as accounts receivable, accounts payable, etc. which are directly related to its daily operations. For commercial hedging purposes, the Group uses derivatives. The Group does not apply hedge accounting. The Group does not use financial instruments, including derivatives, for trading purposes. Procedures for risk management are approved by the Board. The financial risks that the Group is exposed to are interest rate risk, liquidity risk, currency risk and credit risk. The Group’s management regularly evaluates these risks and establishes guidelines for how they are handled. Credit risk The Group is mainly exposed to credit risk for trade and other receivables. The Group mitigates its exposure to credit risk by ensuring that all parties requiring credit, such as customers, are approved and subject to a credit check. The Group does not have significant credit risk associated with a single counterparty or counterparties which can be viewed as a Group due to similar credit risk. The Group has policies in place to ensure that sales are made to customers who have not had significant problems with payment and the outstanding amount does not exceed the established credit limits. Maximum risk exposure is represented by the carrying amount of the financial assets in the balance sheet. The Group considers its maximum risk exposure to be the carrying amount of accounts receivable (see note 12). Market risk - interest rate sensitivity The Group is exposed to interest rate risk through its financial activities. The interest-bearing debt has ﬂoating rates, which means it is affected by changes in interest rates. The purpose of the Group’s interest rate risk management is to reduce interest costs and at the same time keep the volatility of future interest payments within acceptable limits. The Group constantly monitors the interest rate level and uses derivatives to adjust the effective interest rate exposure when deemed necessary. The following table illustrates the sensitivity of the Group to potential interest rate changes. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. Interest rate sensitivity Changes in Effect on profit interest rates before tax Effect on equity in basis points (NOK 1 000) (NOK 1 000) 2021 +50 -4 453 -3 473 -50 4 453 3 473 2020 +50 -6 393 -4 986 -50 6 393 4 986 The average effective interest rate of financial instruments were as follows: 2021 2020 Overdraft 2,98 % 2,72% Bank syndicate 3,41 % 4,81% Liquidity Risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s strategy for managing liquidity risk is to maintain sufficient liquid funds at all times to meet its financial obligations, both under normal and extraordinary circum- stances, without risking unacceptable losses or damaging its reputation. The Group has large ﬂuctuations related to restricted working capital due to seasonality and the timing of deliveries and payments. XXL ASA Annual Report 2021 59 Market risk - foreign currency sensitivity Exposures to currency exchange rates arise from the Group’s purchases denominated in USD. Currency exchange rate exposure in EUR and SEK are limited due to the Group’s setup with distributors in Sweden, Finland and Austria and an European wholesale entity. The following table shows currency effect on the Group’s profit and equity if the exchange rates ﬂuctuate with +/- 10% measured against NOK: 2021 2020 Effect on profit Effect on profit Foreign currency Changes in before tax on equity before tax on equity sensitivity currency (NOK 1 000) (NOK 1 000) (NOK 1 000) (NOK 1 000) EUR +10% 11 378 8 875 16 870 13 159 -10% -11 378 -8 875 -16 870 -13 159 USD +10% 69 531 54 234 55 379 43 196 -10% -69 531 -54 234 -55 379 -43 196 Furthermore, the carrying amount of its net investments in foreign companies ﬂuctuates in Norwegian kroner compared to the local relevant currencies. Profit after tax for the Group is also affected by changes in exchange rates, as the results of foreign companies are translated into Norwegian kroner at the weighted average exchange rate for the period. The Group hedges its foreign currency in the form of forward contracts. Hedge accounting has not been applied. The contracts are settled continuously throughout the year and if the contract extends over the period end, it is recognized in the financial statements at fair value. Determination of fair value The carrying amount of cash and cash equivalents and bank overdrafts is fair value. Similarly, the carrying amount of accounts receivable and accounts payable approximates fair value as the impact of discounting is not significant. The fair value of capital leases is calculated as the present value of estimated cash ﬂows discounted at the interest rate applicable for the corresponding assets and liabilities at the balance sheet date. The fair value of long-term debt is similar to the par value plus accrued interest. The fair value hierarchy The Group classifies fair value measurements using a fair value hierarchy that reﬂects the significance of the inputs used in making the measurement. The fair value hierarchy has the following levels: - Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; - Level 2: inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices); and - Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs) The following categories of financial instruments are measured at fair value as of 31 December 2021 (Amounts in NOK million) Assets/Liabilities carried at fair value Level 1 Level 2 Level 3 Financial assets at fair value through profit or loss FX derivatives 0 6 0 Total 0 6 0 The following categories of financial instruments are measured at fair value as of 31 December 2020 (Amounts in NOK million) Assets/Liabilities carried at fair value Level 1 Level 2 Level 3 Financial assets at fair value through profit or loss FX derivatives 0 -3 0 Total 0 -3 0 Classification of financial assets and liabilities The Group has the following classification of financial assets and liabilities. See note 1 for a description of the various categories. (Amounts in NOK million) Financial instruments 2021 2020 Financial assets at amortized cost Trade receivables 161 166 Cash and cash equivalents 173 830 Total current financial assets 334 995 At fair value through profit or loss FX derivatives 6 -3 Total financial assets (+) / liabilities (-) at fair value through profit or loss 6 -3 Other Liabilities at amortised cost Interest bearing debt 880 901 Lease liability 2 491 2 773 Accounts payable and other short-term debt 1 244 1 106 Total other financial liabilities 4 615 4 779 XXL ASA Annual Report 2021 60 Note 21 Capital management Capital management policy and equity The main objective of the Group’s capital management is to ensure that the Group maintains strong credit ratings and thus affordable financing terms that are reasonable in relation to its activities. The Group manages its capital structure and makes necessary changes to it based on a current assessment of the financial condition of the business and prospects in the short and medium term. Net debt is defined as interest-bearing debt (current and non-current), excluding lease liability, less cash. This definition is in line with our financial covenants. Equity includes all capital and reserves, paid and earned. Dividend policy The Board of Directors is targeting a payout ratio of 40-50 per cent of annual net income as the dividend policy. (Amounts in NOK million) 2021 2020 Interest bearing debt excluding lease liability 880 901 Cash -173 -830 Net debt 707 71 Equity 3 753 4 185 Total equity and net debt 4 459 4 256 Note 22 Interest bearing debt (Amounts in NOK million) Non-Current Interest-Bearing Liabilities due > 1 year 2021 2020 Bank loan 485 483 Non-current lease liability 1 925 2 180 Sum Non-Current Interest-Bearing Liabilities 2 410 2 662 Current Interest-Bearing Liabilities due < 1 year 2021 2020 Current lease liability 567 593 Credit Facility 395 418 Sum Current Interest-Bearing Liabilities 961 1 012 Total Interest-Bearing debt 3 371 3 674 Total Interest-Bearing debt, excluding Lease Liabilities 880 901 The fair value of current and non-current debt approximately their carrying amount. The Group has a long-term loan from a consortium of banks consisting of NORDEA BANK NORGE ASA and DNB BANK ASA amount- ing to NOK 485 million as of 31 December 2021. The interest rate related to the bank loan is based on NIBOR, STIBOR and EURIBOR plus a margin. As of 31 December 2021 the margin is 1.5% The margin on the loan is regulated in the loan agreement. The Group is measured on the following covenants as of 31 December 2021: Net Interest Bearing Debt (excluding IFRS 16 effect on lease liabilities) divided by EBITDA. As of 31 December 2021 the company is compliant with all covenants under the loan facilities. The bank loans are denominated in NOK, SEK and EUR. The following table shows the maturity schedule of the Group’s financial liabilities based on undiscounted contractual payments. In cases where the other party can demand early redemption, the amount is included in the earliest period payment that can be de- manded. If liabilities are redeemed on demand, they are included in the first column: 31.12.2021 Remaining period Financial liabilities Under 1 year 1-2 years 2-3 years 3-4 years 4-5 years More than 5 years Total Bank loan 395 485 0 0 0 0 880 Interest 13 7 0 0 0 0 20 Lease liabilities 593 512 450 382 295 603 2 835 (undiscounted cashﬂows) Total 1 001 1 004 450 382 295 603 3 736 31.12.2020 Remaining period Financial liabilities Under 1 year 1-2 years 2-3 years 3-4 years 4-5 years More than 5 years Total Bank loan 418 483 0 0 0 0 901 Interest 41 22 0 0 0 0 62 Lease liabilities 606 574 471 392 320 750 3 112 (undiscounted cashﬂows) Total 1 065 1 079 471 392 320 750 4 076 Reconciliation of interest bearing debt 2021 2020 Total Opening Balance 3674 4637 Payments on new short-term debts (1 006) (2 366) Proceeds from new short-term debts 993 1 546 Total Leasing Payments for the lease liability (600) (594) Interest expense on Lease Liabilities 82 92 Changes with Cash effect (531) (1 322) New Lease Liabilities recognized in the period 328 161 Amortisation of transaction cost of bank loan 2 (17) FX effects on bank loans + lease liabilities (102) 214 Changes with non Cash effect 228 359 Total Closing Balance 3 371 3 674 Financial Statements XXL ASA XXL ASA Annual report 2021 XXL ASA Annual Report 2021 62 Statement of Income 63 Balance Sheet - Assets 64 Balance Sheet – Equity and Liabilities 65 Statement of Cash Flows 67 Notes to the financial statements 68 XXL ASA Annual Report 2021 63 Statement of income Note 2021 2020 Personnel expenses 2 0 5 Other operating expenses 21 47 Total Operating Expenses 21 51 Operating Income -21 -51 Interest income 6 0 0 Other financial income 5 0 0 Interest income group companies 6 5 Total Financial Income 6 6 Interest expense 0 13 Interest expense to group companies 6 2 -1 Other financial expense 10 13 Total Financial Expense 12 25 Net Financial Income (Expense) -6 -20 Income Before Income Taxes -27 -71 Tax expense 3 -6 -16 Net Income -22 -55 Allocation of Net Income Other paid-in equity -22 -55 Total allocated -22 -55 (Amounts in NOK million) XXL ASA Annual Report 2021 64 Balance sheet / Assets Note 31.12.2021 31.12.2020 NONCURRENT ASSETS Intangible assets Deferred tax asset 3 6 18 Total intangible assets 6 18 Financial Assets Investment in subsidiaries 4 3 611 3 602 Total Financial Assets 3 611 3 602 Total Noncurrent Assets 3 616 3 620 CURRENT ASSETS Other receivables 5 72 43 Total Other Receivables 72 43 Cash and Cash Equivalents Cash and equivalents 7 10 0 Total Cash and Cash Equivalents 10 0 Total Current Assets 82 43 Total Assets 3 699 3 662 (Amounts in NOK million) XXL ASA Annual Report 2021 65 Balance sheet / Equity and Liabilities Note 31.12.2021 31.12.2020 SHAREHOLDERS’ EQUITY Paid-in Capital Share capital 8,10 101 101 Share premium 8,10 3 531 3609 Total Paid-in Capital 3 632 3 710 Retained Earnings Other equity 10 -687 -182 Total Retained Earnings -687 -182 Total Shareholders’ Equity 2 945 3 528 LIABILITIES Non-Current Liabilities Deferred tax liabilities 3 0 0 Interest bearing debt 9 -2 0 Total Non-Current Liabilities -2 0 Current Liabilities Accounts payable 0 0 Current debt 0 64 Tax payable 3 0 0 Public duties payable 0 -7 Other short-term debt 5 755 76 Total Current Liabilities 755 134 Total Liabilities 753 134 Total Equity and Liabilities 3 699 3 662 (Amounts in NOK million) XXL ASA Annual Report 2021 66 Hugo Maurstad Oslo, 26 April 2022 Kjersti HobølRonny Blomseth Ulrikke Koehler Kai-Arne Nordhaug Pål Wibe Chairman Board MemberBoard Member Board Member Board member - employee representative CEO Øyvind Tidemansen Cristina Moreno Tor Andrin Jacobsen Board Member Board member - employee representative Board member - employee representative Board of Directors XXL ASA Annual Report 2021 67 Statement of Cash Flows 31.12.2021 31.12.2020 Operating Activities Income before income taxes -27 -71 Tax payable 0 0 Changes in accounts payable 0 -4 Changes in other assets and liabilities 656 721 Cash provided (used) by operating activities 628 647 Investing Activities Investment in subsidiaries -9 -402 Received group contribution 18 7 Cash provided (used) by investing activities 9 -395 Financing Activities Sales/Purchase of own shares/other equity transactions 0 481 Payments on long-term debt -78 -101 Purchase of own shares -66 -631 Payments/proceeds on long/short-term debt -483 0 Cash provided (used) by financing activities -627 -251 Net Change in Cash and Cash Equivalents 10 0 Cash and cash equivalents - beginning of year 0 0 Cash and Cash Equivalents - End of Year 10 0 (Amounts in NOK million) XXL ASA Annual Report 2021 68 Notes to the financial statements 1. Accounting Principles The financial statements have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway. Classification and valuation of balance sheet items Assets intended for long term ownership or use have been classified as fixed assets. Assets expected to be realised in, or is intended for sale or consumption in, the entity’s normal operating cycle have been classified as current assets. Receivables are classified as current assets if they are expected to be realised within twelve months after the transaction date. Similar criteria apply to liabilities. Current assets are valued at the lower of cost and fair value. Short term liabilities are reﬂected at nominal value. Fixed assets are carried at historical cost. Fixed assets are written down to net realizable value if a value reduction occurs which is not expected to be temporary. Except for accruals, long term liabilities are reﬂected in the balance sheet at nominal value on the establishment date. Accruals are discounted to present value if the time value of money is material. Foreign currency Foreign currency transactions are translated into Norwegian kroner using the exchange rate prevailing at the date of the transaction (spot exchange rate), while monetary items denominated in foreign currencies are translated at the rate per the balance sheet date. Trade receivables Trade and other receivables are recorded at their nominal value less a provision for losses. Tax Tax expense in the income statement includes the change in the deferred tax asset. Deferred tax is calculated at 22% based on the temporary differences between accounting and tax values, as well as any tax loss carryforwards at the end of the financial year. Taxable and non-taxable temporary differences that reverse or may reverse in the same period are offset. Recognition of the deferred tax asset on net deductible temporary differences that are not offset and carried forward is based on estimated future earnings. If a deferred tax asset that can be recognized, it is classified in the balance sheet. Deposits Receivable/payable cash pooling arrangements are classified as balances with group companies. All figures are stated in NOK million unless otherwise stated. 2. Personnel expenses The Company had no employees in 2021. There were no loans or guarantees given to the CEO, Chairman of the Board or other related parties. Description of the option program and other incentive programmes are disclosed in note 3 in the Group Consolidated Financial Statements. Board of directors remuneration (figures in NOK thousand) Name Title Fee Total remuneration Hugo Maurstad Chairmain of the Board 400 400 Øivind Tidemandsen Board member 350 350 Kjersti Hobøl Board member and Chairman audit committee 410 410 Ronny Blomseth Board and audit committee member 390 390 Maria Aas-Eng Board member (resigned in 2021) 350 350 Ulrike Koehler Board member (new in 2021) Robert Iversen Election Committee 50 50 Ingar Solheim Election Committee 75 75 Vegar Søraunet Election Committee 50 50 Audit fees (figures in NOK thousand) Divided by type of service (exclusive of VAT) 2021 2020 Statutory audit 995 1 088 Other services 422 950 Total fees 1 417 2 038 XXL ASA Annual Report 2021 69 Note 3 Tax Income tax expense for the year Basis for tax payable 2021 2020 Income before tax -27 -71 Permanent differences 0 0 Change in temporary differences 27 73 Interest limitation rules 0 0 Basis for tax payable 0 2 Tax payable in the statement of income 0 0 Taxable income 0 2 Tax payable in the balance sheet 0 0 Tax expense for the year Tax payable 0 0 Change in deferred tax -6 -16 Total tax expense -6 -16 Explanation for why tax is not 23% of income before tax 22 % tax of income before tax -6 -16 Permanent differences (22%) 0 0 Changes in deferred tax du to changes in tax rate 0 0 Expected tax expense -6 -16 Effective tax rate 22 % 22 % Specification of temporary differences Asset (-)/liability Change 2021 2020 Amortization of loan expenses 0 0 0 Tax loss carry forward -27 -81 Total temporary differences -27 -81 Basis for deferred tax assets/liability -27 -81 Deferred tax assets (+) / liability (-) in the balance sheet 6 18 Reconciliation change in deferred tax Change in deferred tax in balance sheet -6 -16 Change in deferred tax in tax expense -6 -16 Tax rate in Norway is 22% Note 4 Investment in subsidiaries The Company has an ownership interest in the following subsidiary: Year of Business Ownership Equity (100%) Net income (100%) Book value acquisition location percentage 31.12.2021 31.12.2021 31.12.2021 XXL Sport og Villmark AS 2015 Oslo 96 % 1 000 (156) 3 599 The investment is booked using the cost method. *The subsidiary Gigasport AS was merged into parent XXL ASA in 2015. XXL Sport og Villmark is now directly owned by XXL ASA. Note 5 Balances with group companies The Company has the following receivables and liabilities with group companies: Liabilities 2021 2020 Other current liabilities 87 76 Cash pool arrangement 668 67 Accounts payables 0 0 Total liabilities 755 143 Receivables 2021 2020 Other non-current receivables from group companies 71 1 Cash pool arrangement 0 0 Group contribution 0 0 Total receivables 71 1 Note 6 Related party transactions Management remuneration is included in note 2 and intercompany balances are discussed in note 5. The Company’s transactions with related parties are as follows: Interest income 2021 2020 XXL Sport og Villmark AS -2 3 Total interest income -2 3 Interest expense 2021 2020 Cash pool interest expense 0 0 Total interest expense 0 0 Other operating expenses 2021 2020 Administrative services 11 31 Total operating expenses with related parties 11 31 XXL ASA Annual Report 2021 70 Note 7 Cash and cash equivalents Cash and cash equivalents include the following items: 2021 2020 Deposits 10 0 Total cash and equivalents 10 0 The Company is a part of a cash pool arrangement with XXL Sport and Villmark AS. The Company’s share of the cash pool is NOK 668 million negative per the balance sheet date. The Cash pool is classified as other short-term receivables in the balance sheet. Note 8 Share capital and shareholder information The share capital of XXL is NOK 100,974,663.20 consisting of 252,436,658 shares with a par value of NOK 0.40 each. 2021 2020 Overview of the major shareholders of the Group as of 31.12.2021: Total amount of shares Ownership Altor Equity Partners 60 118 964 23,8 % Øivind Tidemandsen (Dolphin Management) 34 500 000 13,7 % Ferd AS 22 922 385 9,1 % Odin forvaltning AS 21 872 210 8,7 % Arctic Fund Management AS 12 245 433 4,9 % XXL ASA 8 470 000 3,4 % Dimensional Fund Advisors LP 2 548 717 1,0 % Barclays Capital Securities Ltd 2 236 126 0,9 % Nordkronen II AS 2 220 000 0,9 % Blackrock Fund Advisors 2 207 568 0,9 % Robert Iversen Holding AS 1 956 403 0,8 % Geni Holding AS 1 800 000 0,7 % Carucel Holding AS 1 677 110 0,7 % Arrowstreet Capital 1 595 117 0,6 % BOFA Securities Europe SA 1 523 930 0,6 % Stamina II AS 1 419 404 0,6 % Norron AB 1 351 057 0,5 % KLP Kapitalforvaltning AS 1 304 335 0,5 % EVLI Fund management co. Ltd 1 268 390 0,5 % Ulsmo finans 1 260 000 0,5 % Other 67 939 509 26,9 % Sum 252 436 658 100,0 % Shares held by Board of Directors & Chief Executive Officer: Title Amount of shares Pål Wibe Chief Executive Officer 2 220 000 Hugo Lund Maurstad Chairman of the Board 500 000 Øivind Tidemandsen (Dolphin Management AS) Board member 34 500 000 Ronny Blomseth Board member 342 719 Kjersti Helen Krokeide Hobøl Board member 35 000 Ulrike Koehler Board member (new in 2021) 0 Note 9 Current and non-current interest-bearing liabilities Current liabilities 2021 2020 Current bank debt 0 0 Amortization borrowing costs 0 -2 Sum 0 -2 Note 10 Shareholder’s equity Changes in shareholder’s equity Share capital Share premium Retained earnings Total equity Shareholder’s equity 01.01.20 101 3 609 -182 3 528 Net income for the year 0 0 -22 -22 Extraordinary Dividends 0 0 -483 -483 Purchase of own shares 0 -78 0 -78 Shareholder’s equity 31.12.21 101 3 531 -687 2 945 XXL ASA Annual Report 2021 71 Footnotes / Definitions Alternative Performance Measures (APM) The Group has three central warehouses, one at Gardermoen Norway (outside EU), one in Õrebro Sweden and one in Vienna, Austria (inside EU). The Norwegian warehouse serves the Nor- wegian market, while the Swedish and Austrian serves Sweden, Finland, Denmark and Austria. All warehouses are equipped with state of the art robotics (Autostore) which allows them to op- erate in an efficient and cost effective way. In addition XXL has developed customized order packing and shipping processes tailored to meet the specific requirements of the E-commerce business. XXL has centralized inventory management. XXL implemented in 2019/2020 a new data driven and algorithm based replen- ishment system with the result of significantly lower distribution of goods to the stores and more predictability for the central warehouses. It has reduced handling time for store personnel, provided more accurate and lower stock values combined and provides a more differentiated distribution of goods (by geogra- phy, season differences, size of store, relevant products). EBIT Our EBIT represents operating income EBITDA Earnings before interest, tax, depreciation, amortization and impairment losses (EBITDA) is a key financial parameter for XXL. Our EBITDA represents operating income plus depreciation and impairment losses. Like for Like Like for Like include comparable stores and E-commerce. Com- parable stores are stores that have been open all months of the current year and all months of the previous year. Stores that have been relocated or significantly expanded are excluded from Like for Like stores. Gross profit / Gross margin Gross profit represents operating revenue less cost of goods sold. Gross margin is gross profit in per cent of revenue. Working capital Working capital consists of trade and other receivables, ac- counts payables, inventory, public duties payable and other current liabilities OPEX OPEX is defined as other operating expenses including person- nel expenses, but excluding depreciation, amortization and im- pairment of right-of-use assets. Net interest bearing debt (NIBD) Net interest bearing liabilities is defined as non-current interest bearing debt and current interest bearing liabilities less cash and cash equivalents. NIBD does not include lease liabilities due to IFRS 16. Net debt is a measure of the Group’s net indebt- edness that provides an indicator of the overall balance sheet strength CAPEX Capital expenditure is the sum of purchases of fixed assets and intangible assets as used in our cash ﬂow. Capex is a measure of investments made in the operations in the rele- vant period and is useful to users of XXL’s financial information in evaluating the capital intensity of the operations. Liquidity reserve Our liquidity reserve is defined as our available cash and cash equivalents plus available liquidity through overdraft and credit facilities. Reconciliation (example) Reconciliation (example) Reconciliation (example)Reconciliation (example) Reconciliation (example) Operating Income 391 364 + Depreciation 810 753 + Impairment losses 136 –––– = EBITDA 1 338 1 117 FY 21 FY 20 Operating revenue 10 006 10 423 ÷ Cost of goods sold 5 923 6 519 = Gross profit 34 084 3 904 Gross margin 40,8% 37,5% Non-Current Interest Bearing Debt 485 483 + Current Interest Bearing Debt 395 418 ÷ Cash and Cash Equivalents 173 830 = Net Interest Bearing Debt 707 71 Cash and Cash Equivalents 173 830 + Undrawn Credit Facilities 920 281 = Liquidity reserve 1 093 1 111 Other operating expenses 860 924 + Personnel expenses 1 886 1 863 = OPEX 2 746 2 787 FY 21 FY 21 FY 21 FY 21 FY 20 FY 20 FY 20 FY 20 XXL ASA Annual Report 2021 72 Footnotes / Definitions Alternative Performance Measures (APM) The Group has three central warehouses, one at Gardermoen Norway (outside EU), one in Õrebro Sweden and one in Vienna, Austria (inside EU). The Norwegian warehouse serves the Norwegian market, while the Swedish and Austrian serves Sweden, Finland, Denmark and Austria. All warehouses are equipped with state of the art robotics (Autostore) which allows them to operate in an efficient and cost effective way. In addition XXL has developed customized order packing and shipping processes tailored to meet the specific requirements of the E-commerce business. Leverage ratio Leverage ratio is defined as NIBD/EBITDA, a measure for the strength of our financial position. See NIBD/EBITDA for explanation. E-commerce Ecommerce is sales through online sales channels in compari- son to sales through retail stores that are physical stores. Inventory per store Total inventory excluding goods in transit (GIT) divided on num- ber of stores and number of E-commerce markets at end of period. Imagery All brand imagery and pictures in this report is with and by XXL employees. IFRS 16 effects affecting EBITDA and EBIT IFRS 16 was implemented for the Group 1 January 2019. EBITDA ex IFRS 16 effects and EBIT ex IFRS 16 effects represent our EBITDA and EBIT if IFRS 16 had not been implemented, respectively. FY 21 EBITDA reported IFRS 16 EBITDA ex IFRS 16 effects EBIT Reported IFRS 16 effects affecting EBIT EBIT ex IFRS 16 effects XXL Group 1338 -600 737 391 -106 498 Nor 1338 -600 737 391 -106 498 Swe 420 -169 251 172 -21 194 Fin 294 -103 191 176 -10 162 Aut -31 -42 -73 -191 +100 -90 Den 1 - 1 1 - 1 HQ & Logistics -501 -54 -555 -634 -6 -628 Reconciliation (example) Sports unite all XXL ASA Annual report 2021 PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap To the General Meeting of XXL ASA Independent Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the financial statements of XXL ASA, which comprise: • The financial statements of the parent company XXL ASA (the Company), which comprise the balance sheet as at 31 December 2021, the statement of income and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and • The consolidated financial statements of XXL ASA and its subsidiaries (the Group), which comprise the statement of financial position as at 31 December 2021, the statement of total comprehensive income, statement of cash flows and statement of changes in equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion: • the financial statements comply with applicable statutory requirements, • the financial statements give a true and fair view of the financial position of the Company as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and • the financial statements give a true and fair view of the financial position of the Group as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by laws and regulations and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. Independent Auditor's Report - XXL ASA (2) We have been the auditor of the Company for 11 years from the election by the general meeting of the shareholders on 3 February 2011 for the accounting year 2011. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The Group's business activities are largely unchanged compared to last year. Consequently, Valuation of inventories, Recognition of supplier bonuses and Impairment of goodwill carry the same risks as the previous year and continue to be in our focus. Key audit matter How our audit addressed the key audit matter Valuation of inventories Inventory amounts to NOK 2 220 million in the Financial Statements. A total obsolescence write-down of NOK 145 million has been provided for in 2021. Inventory is carried at the lower of cost and net realizable value in accordance with IAS 2. The valuation of inventory at net realizable value involves judgment made by management. The judgment is based on detailed assessment of factors such as the age distribution of inventory items, whether the goods are part of an active or expired product range and historical levels of obsolescence. We consider valuation of inventory to be a key audit matter due to the high volume and heterogeneity of merchandise, the significance to the financial statements, as well as the judgment involved in deciding net realizable value. See “Note 1.4 Significant accounting policies - Inventories”, “Note 1.5 Significant management judgment in applying accounting policies – Provision for obsolescence” and “Note 8 Inventories” where management explains how they account for inventories. We evaluated management’s policy for assessing the valuation of inventory. We verified management’s assertions through a combination of audit procedures including reviewing documents that supported management’s assessment, challenging management’s assumptions, observing the inventory and performing analysis. We were present at several stocktakes, both in stores and in the central warehouses. In addition to observing the physical count, this allowed us to make our own observations of obsolete, damaged, or aging inventory. Our procedures included reviewing that management applied valuation policies consistently year on year. To assess management’s estimation of net realizable value, we obtained an overview of the aging profile of the inventory and performed an assessment of whether the goods are part of an active or expired product range. Our audit procedures included tracing relevant inputs used in the calculation to supporting documentation, and challenging management on central assumptions. Finally, we recalculated the inventory impairment based on historical cost and the estimated net realizable value, assessed adequacy of historic provisions and considered the adequacy of the financial statement disclosures. We also reviewed the disclosures in note 8 and found them to be appropriate. The results of our testing were satisfactory. Independent Auditor's Report - XXL ASA (3) Recognition of supplier bonuses The Group receives various types of supplier bonuses from its suppliers, as further disclosed in “Note 1.4 Significant accounting policies - Inventories”. These allowances are a significant component of cost of sales. The supplier bonus receivable at year end amounts to NOK 105 million (Note 12 Trade and other receivables). The supplier bonus agreements with suppliers contain volume-related bonuses, promotional and marketing allowances and various other fees and discounts received in connection with the purchase of goods for resale from those suppliers. The Group recognizes supplier bonuses as a reduction in cost of sales when the performance obligations associated with the allowances have been met, for example when the product has been sold, placed or when the marketing campaign has been held. We consider this to be a key audit matter because of the magnitude of amounts involved and the judgment required from management to determine the nature and level of fulfilment of the Company’s obligations under the supplier agreements and to recognize the amounts in the correct period. This requires a detailed understanding of the contractual arrangements in addition to complete and accurate data to estimate purchase and sales volumes and fulfilment of promotional programs. We obtained management’s calculation of estimated supplier bonuses. We read and understood a sample of supplier agreements to gain an understanding of key terms in these agreements. Our audit procedures included testing of completeness and accuracy of inputs to the calculations. To challenge managements judgement on the assumed volumes in the estimates we looked at, among other things, purchase volumes and details from the agreements and historical accuracy and held extensive discussions with management. Further, we tested the recoverability of invoiced supplier bonuses including the supplier bonus accruals. We reviewed management’s technical assessment and method to calculate the part of volume-based supplier bonuses and whether they were classified as reduction of inventory in accordance with IAS 2. We performed substantive procedures of supplier contracts to verify correct classification and reviewed legal opinions regarding specific elements in supplier contracts. We also reviewed the disclosures in note 1.4 and note 12 and found them to be appropriate. The results of our testing were satisfactory. Impairment of goodwill The goodwill balance of NOK 2 744 million is subject to annual impairment review required by IFRS. No impairment was recognised in 2021. We consider goodwill to be a key audit matter due to the significance to the financial statements and the necessary level We obtained management’s impairment review. The review includes documentation about how management assessed cash generating units (CGUs). We satisfied ourselves that the impairment review contained the elements required by IFRS. We challenged management’s key assumptions used in the cash flow forecasts included within the impairment model. We challenged specifically future revenues, margins, costs and level of Independent Auditor's Report - XXL ASA (4) of management judgment when performing an impairment review. Valuation of goodwill and the corresponding impairment tests are complex and require judgment related to future revenue, costs and the level of reinvestment needed. See “Note 1.4 Significant accounting policies – Goodwill”, “Note 1.5 Significant management judgment in applying accounting policies” and “Note 5 Intangible assets – Estimated impairment of goodwill, trademarks, and Right of Use-Assets” where management explains how they account for goodwill and their impairment test. reinvestments. We tested the mathematical accuracy of cash flow models, and assessed relevant data to historical financial data, future budgets approved by management and other obtainable market information such as relevant benchmarks for growth estimates. We evaluated the discount rate used by management by comparing its composition to empirical data for future interest rates, relevant risk premium and debt ratio. Key assumptions used were benchmarked against external data and our own internal data, including examining management’s sensitivity analysis. Finally, we considered the adequacy of financial statements disclosures in note 5 and found them appropriate. Based on our audit procedures we found management’s assumptions to be reasonable. Other Information The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors’ report and the other information accompanying the financial statements. The other information comprises information in the annual report, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the information in the Board of Directors’ report nor the other information accompanying the financial statements. In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’ report and the other information accompanying the financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors’ report and the other information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’ report and the other information accompanying the financial statements otherwise appears to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors’ report or the other information accompanying the financial statements. We have nothing to report in this regard. Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report • is consistent with the financial statements and • contains the information required by applicable legal requirements. Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility. Responsibilities of Management for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation and true and fair view of the consolidated financial statements of the Group in accordance with International Financial Reporting Standards as adopted Independent Auditor's Report - XXL ASA (5) by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern. The financial statements of the Company use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations. The consolidated financial statements of the Group use the going concern basis of accounting unless management either intends to liquidate the Group 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 about 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. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. We 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, misrepresentations, or the override of internal control. • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's or the Group'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, and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company and the Group's ability to continue as a going concern. If we conclude that a material uncertainty 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 Company and the Group to cease to continue as a going concern. • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. • obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial Independent Auditor's Report - XXL ASA (6) 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 the Board of Directors regarding, 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 the Audit Committee 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 reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the 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 Other Legal and Regulatory Requirements Report on compliance with Regulation on European Single Electronic Format (ESEF) Opinion We have performed an assurance engagement to obtain reasonable assurance that the financial statements with file name 5967007LIEEXZXHCTC69-2021-12-31-en.zip have been prepared in accordance with Section 5-5 of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the accompanying Regulation on European Single Electronic Format (ESEF). In our opinion, the financial statements have been prepared, in all material respects, in accordance with the requirements of ESEF. Management’s Responsibilities Management is responsible for preparing, tagging and publishing the financial statements in the single electronic reporting format required in ESEF. This responsibility comprises an adequate process and the internal control procedures which management determines is necessary for the preparation, tagging and publication of the financial statements. Auditor’s Responsibilities For a description of the auditor’s responsibilities when performing an assurance engagement of the ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger Oslo, 26 April 2022 PricewaterhouseCoopers AS Vidar Lorentzen State Authorised Public Accountant 5967007LIEEXZXHCTC692021-01-012021-12-315967007LIEEXZXHCTC692020-01-012020-12-315967007LIEEXZXHCTC692021-12-315967007LIEEXZXHCTC692020-12-315967007LIEEXZXHCTC692019-12-315967007LIEEXZXHCTC692019-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXHCTC692020-01-012020-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXHCTC692020-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXHCTC692019-12-31ifrs-full:SharePremiumMember5967007LIEEXZXHCTC692020-01-012020-12-31ifrs-full:SharePremiumMember5967007LIEEXZXHCTC692020-12-31ifrs-full:SharePremiumMember5967007LIEEXZXHCTC692019-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXHCTC692020-01-012020-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXHCTC692020-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXHCTC692019-12-31ifrs-full:OtherReservesMember5967007LIEEXZXHCTC692020-01-012020-12-31ifrs-full:OtherReservesMember5967007LIEEXZXHCTC692020-12-31ifrs-full:OtherReservesMember5967007LIEEXZXHCTC692019-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXHCTC692020-01-012020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXHCTC692020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXHCTC692019-12-31ifrs-full:NoncontrollingInterestsMember5967007LIEEXZXHCTC692020-01-012020-12-31ifrs-full:NoncontrollingInterestsMember5967007LIEEXZXHCTC692020-12-31ifrs-full:NoncontrollingInterestsMember5967007LIEEXZXHCTC692021-01-012021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXHCTC692021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXHCTC692021-01-012021-12-31ifrs-full:SharePremiumMember5967007LIEEXZXHCTC692021-12-31ifrs-full:SharePremiumMember5967007LIEEXZXHCTC692021-01-012021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXHCTC692021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXHCTC692021-01-012021-12-31ifrs-full:OtherReservesMember5967007LIEEXZXHCTC692021-12-31ifrs-full:OtherReservesMember5967007LIEEXZXHCTC692021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXHCTC692021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember5967007LIEEXZXHCTC692021-01-012021-12-31ifrs-full:NoncontrollingInterestsMember5967007LIEEXZXHCTC692021-12-31ifrs-full:NoncontrollingInterestsMemberiso4217:NOKiso4217:NOKxbrli:shares

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