AO - Q1-3 2021

Interim Financial Report

for the Period

1 January - 30 September 2021

Brødrene A & O Johansen A/S

Rørvang 3 * DK-2620 Albertslund * Denmark

Tel: [phone] * www.ao.dk

CVR (Central Business Register) No.: 58 21 06 17

Company Announcement No. 12/2021

1/17

Brødrene A & O Johansen A/S

Interim financial report for Q1-3 2021

Contents

Highlights for the third quarter and first nine months of 2021......................................	page 3-4
Financial and operating data for the AO Group ..........................................................	page 5
Management's review ................................................................................................	page 6-9
Management's statement ..........................................................................................	page 10
Income statement and statement of comprehensive income .....................................	page 11
Balance sheet as at 30 September 2021....................................................................	page 12-13
Cash flow statement...................................................................................................	page 14
Statement of changes in equity ..................................................................................	page 15
Notes..........................................................................................................................	page 16-17

Company Announcement No. 12/2021

2/17

Brødrene A & O Johansen A/S

Interim financial report for Q1-3 2021

Today the Board of Directors has approved the Group's interim financial report for the period 1 January - 30 September 2021.

Highlights for the third quarter and first nine months of 2021

• Consolidated revenue for the third quarter of 2021 was DKK 1,114.5 million, which is DKK 134.7 million, or 13.8%, more than for the third quarter of 2020. The third quarter of 2021 had the same number of working days as the year-earlier period. Consolidated revenue for the first nine months of 2021 was DKK 3,533.8 million, which is DKK
• 1. million, or 19.7%, more than for the same period last year. The gross profit margin for the first three quarters increased by 0.1 percentage point compared with the same period of 2020.
• Operating profit (EBIT) for the third quarter of 2021 was DKK 75.1 million, corresponding to a profit margin of 6.7%, against DKK 49.8 million and 5.1% for the third quarter of 2020. Operating profit (EBIT) for the first nine months of 2021 was DKK 233.8 million, corresponding to a profit margin of 6.6%, against DKK 155.9 million and 5.3% for the first three quarters of 2020. The increase in the earnings margin is a result of the fact that the profit impact from revenue growth exceeds the increase in the cost base.
• Profit before tax (EBT) for the third quarter of 2021 was DKK 77.5 million, which is DKK 27.3 million more than in the third quarter of last year. Profit before tax for the first nine months of 2021 amounted to DKK 238.3 million, corresponding to an increase of DKK 83.9 million.
• The Group's total assets as at 30 September 2021 amounted to DKK 2,597.9 million, which is DKK 263.7 million more than at the same time in 2020. The gain is mainly attributable to an increase in property, plant and equipment of DKK 107.5 million, inventories of DKK 77.4 million, trade receivables of DKK 53.2 million, and goodwill of DKK 27.3 million.
• The Group's equity as at 30 September 2021 was DKK 1,174.2 million, which is DKK 200.9 million more than at the same time in 2020. The solvency ratio is 45.2% against 41.7% at 30 September 2020.
• Cash flow from operating activities totalled DKK -158.2 million for the third quarter of 2021 and DKK -25.4 million for the first nine months of 2021, which is DKK 214.5 million and DKK 229.7 million less than for the same periods last year. The development is driven by changes in working capital due to increased revenue and timing differences in supplier payments. Investments for the third quarter of 2021 totalled DKK 66.4 million and DKK
• 1. million for the first nine months of 2021, compared with DKK 12.0 million and DKK 44.0 million in 2020. The investment in the central warehouse of the future amounts to DKK 113 million of the investments for the first nine months of 2021.
• The Group's financial leverage, measured as the ratio between the net interest-bearing debt and the EBITDA of the last 12 months, was 1.2 as at 30 September 2021, against 1.3 at the same time last year and 1.8 as at 31 December 2020.

Other highlights for the first nine months of 2021:

• After the reopening of Danish society, the market has returned to more ordinary conditions. The third quarter of 2021 saw higher than expected performance in the B2B and B2C segments. As expected, the growth in sales slowed but remained at a higher level than normal. When compared to last year, moderate growth is expected in the remainder of 2021.
• Brødrene A & O Johansen A/S entered into an agreement to sell the subsidiary Vaga Tehnika Eesti OÜ in Estonia to the Swedish Ahlsell Group. The subsidiary sells water supply and drainage products, and the disposal is a consequence of the fact that having activities in Estonia is no longer part of AO's long-term strategy. The sale is subject to the approval of the local competition authorities. The transaction is expected to be executed in 2021 and to have no material impact on AO's revenue and profit for 2021.
• AO opened store no. 51 in Kalundborg on 1 September.
• The expansion of the central warehouse is proceeding as planned and is expected to be completed in the second quarter of 2022.

Company Announcement No. 12/2021

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Brødrene A & O Johansen A/S

Interim financial report for Q1-3 2021

• AO won the award for 'Digital Company of the Year' at the Danish Digital Award. Danish Digital Award aims to reward and highlight the most inspiring, effective and well-executed digital work that develops or supports a company's business activities. AO won the award for AO365

Expectations for the year

As announced in Company Announcement No. 11-2021 of 7 October, profit before tax for the year is expected to be DKK 310-330 million. This is an upward adjustment compared with earlier information given in the interim financial report for the first half of 2021, where pre-tax profit expectations for the year were DKK 290-310 million.

In 2020, Brødrene A & O Johansen A/S recorded a pre-tax profit of DKK 220.8 million.

The upward adjustment is based on stronger than expected third-quarter revenue and earnings as well as on an anticipation of moderate growth in the market for the rest of 2021.

The expansion of the Albertslund central warehouse decided upon in 2020 is in progress. The expansion is expected to be completed in the second quarter of 2022, and it is estimated to amount to approximately DKK 200 million, of which approximately DKK 150 million is expected to be recognised in 2021.

	Albertslund, 28 October 2021
Niels A. Johansen	Per Toelstang
CEO	CFO

Company Announcement No. 12/2021

4/17

Brødrene A & O Johansen A/S

Interim financial report for Q1-3 2021

Financial and operating data for the AO Group

(DKKm)

Key figures

Q1-3	Q1-3	Q3	Q3	Full Year
2021	2020	2021	2020	2020

Consolidated revenue	3,533.8	2,952.3	1,114.5	979.7	4,098.3
Gross margin	796.3	660.4	255.4	218.6	914.4
Earnings before interest, taxes, depreciation
and amortisation (EBITDA)	308.8	234.6	100.2	75.1	328.2
Profit or loss before financial income and expenses
(EBIT)	233.8	155.9	75.1	49.8	223.8
Financial income and expenses, net	4.5	(1.6)	2.4	0.4	(3.0)
Profit or loss before tax (EBT)	238.3	154.3	77.5	50.2	220.8
Tax on profit or loss for the period	(50.9)	(33.4)	(16.7)	(10.8)	(47.9)
Net profit or loss for the period	187.4	120.9	60.8	39.4	172.9
Non-current assets	1,459.9	1,320.1	1,459.9	1,320.1	1,320.0
Current assets	1,137.9	1,014.0	1,137.9	1,014.0	1,063.2
Total assets	2,597.9	2,334.1	2,597.9	2,334.1	2,383.2
Share capital	28.0	28.0	28.0	28.0	28.0
Equity	1,174.2	973.3	1,174.2	973.3	1,030.2
Non-current liabilities	300.1	337.1	300.1	337.1	330.6
Current liabilities	1,123.6	1,023.7	1,123.6	1,023.7	1,022.4
Cash flow from operating activities	(25.4)	204.3	(158.2)	56.3	375.4
Cash flow from investing activities	(186.7)	(44.0)	(66.4)	(12.0)	(66.3)
Of which investments in property, plant and
equipment, net	(135.7)	(22.0)	(59.1)	(7.4)	(37.3)
Cash flow from financing activities	80.1	(226.0)	162.1	(43.9)	(256.2)
Cash flow for the period	(132.0)	(65.8)	(62.5)	0.4	52.8

Financial ratios*

Gross profit margin	22.5%	22.4%	22.9%	22.3%	22.3%
Profit margin	6.6%	5.3%	6.7%	5.1%	5.5%
Return on capital employed**	9.4%	6.7%	3.1%	2.2%	9.5%
Return on equity**	17.0%	13.1%	5.3%	4.1%	18.2%
Solvency ratio	45.2%	41.7%	45.2%	41.7%	43.2%
Book value	419	348	419	348	368
Share price at the end of the period	1,020	566	1,020	566	604
Earnings per share (EPS Basic), DKK***	69	44	22	15	64
Diluted earnings per share (EPS-D), DKK***	69	44	22	15	64
Average number of employees****	775	736	777	740	741

• Other financial ratios have been calculated in accordance with CFA Society Denmark's 'Recommendations and Financial Ratios'.
• Not translated into full-year figures.
• Basic EPS and diluted EPS have been calculated in accordance with IAS 33.
• The number of employees includes external temporary workers.

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