1 August 2021 – 31 July 2022
CVR No. 41 95 27 25
WE BUILD OUR
FUTURE BY
HELPING OTHERS
BUILD THEIRS
TRUST BUILDS THE FUTURE
STARK Group Annual Report 2022 Contents 3
CONTENTS
MANAGEMENT’S REVIEW
IN BRIEF
STARK Group at a glance 4
Letter from the CEO 5
Financial highlights 7
Key events 2021/22 8
Business review 10
STRATEGY
Strategy 16
Business model 19
Sustainability 20
GOVERNANCE
Risk management 22
Key risks 23
Data ethics 24
Executive Management 26
FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
Management’s Statement 29
Independent auditor’s report 30
Income Statement 32
Comprehensive Income 33
Statement of Financial Position 34
Statement of Changes in Equity 36
Cash Flow Statement 37
Notes – Consolidated Financial Statements 38
PARENT COMPANY FINANCIAL STATEMENTS
Income Statement 77
Statement of Financial Position 78
Statement of Changes in Equity 80
Notes – Parent Company Financial Statements 81
Company Information 89
Group
The Annual Report of STARK Group A/S (hereinafter referred to as
STARK Group to denote the consolidated group of companies) includes
consolidated financial statements prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU
and further requirements of the Danish Financial Statements Act, and
parent company financial statements prepared in accordance with the
Danish Financial Statements Act.
Forward-looking statements
The Annual Report contains forward-looking statements. Such
statements are subject to risks and uncertainties as various factors,
many of which are beyond the Group’s control, may cause actual
developments and results to differ materially from expectations
contained in the Annual Report.
STARK Group Annual Report 2022 In brief 4
STARK GROUP AT A GLANCE
STARK Group is a leading business-to-business distributor of heavy building materials in the
Nordics and Germany, with a strategic focus on serving small and medium sized enterprises
(SME) in the renovation, maintenance and improvements (RMI) end-market. STARK Group has a
strong footprint in faster growing urban areas, particularly in and around large cities and national
capitals, where population growth is above the national average.
STARK Group bridges the gap between suppliers and
customers by playing a critical role in a complex value
chain. For the 275k customers, the Group provides a
deep, competitively priced product range, essential
technical product expertise as well as logistical support,
offered through the densely populated distribution
network.
The Group has a critical role in assisting more than 10k
suppliers in gaining cost-efficient access to the large
and growing, but fragmented SME market while it
simultaneously provides key value-added services such
as deep insight into customer purchasing patterns,
efficient logistics and aftersales care.
Headquartered in Denmark, STARK Group has in recent
years more than doubled in size through organic growth
and acquisitions and today holds leading positions in all
its markets.
STARK Group has pioneered the industry for more than
120 years and continues to do so.
SEGMENTS
STARK Group’s operations are in the Nordics and Germany, which represent the two reporting segments.
NORDICS
The Nordics segment accounts for STARK Group’s
operations in Denmark (including Greenland), Sweden,
Finland and Norway under the STARK Danmark, Beijer
Byggmaterial, STARK Suomi and Neumann Bygg
business units, respectively.
For the 12 months ended on 31 July 2022, the Nordics
segment represented 55% of STARK Group’s net sales.
GERMANY
The German segment accounts for STARK Group’s
operations in Germany (including one branch in
Luxembourg) under the STARK Deutschland business
unit as well as its operations in Austria.
For the 12 months ended on 31 July 2022, the German
segment represented 45% of STARK Group’s net sales.
THE GROUP
The Group was established on 16 December 2020 when
the parent company and subsidiaries in Sweden and
Germany were incorporated by the ultimate owners, CVC
Capital Partners Fund VII.
The Group was established to prepare for the acquisition
of STARK Group, which was signed and announced on 8
January 2021. The acquisition of STARK Group was
subject to customary antitrust approvals.
The European Commission approved the acquisition on
30 April 2021, allowing CVC Capital Partners Fund VII to
take a 100% ownership stake in STARK Group. STARK
Group was previously owned by Lone Star Funds since
2018.
As of 4 May 2021, the acquisition of STARK Group was
completed and from that date the operations of STARK
Group are included in the group results. Before the
acquisition, the Group was essentially dormant.
STARK Group Annual Report 2022 In brief 5
LETTER FROM THE CEO
It is with great pleasure that I introduce our Annual
Report 2022 in highlights.
The most important messages I want to convey are, on
the one hand, pride of what we have achieved in
collaboration with customers, suppliers, and partners
and, on the other hand, my sincere gratitude to our
people for their commitment. Together, we managed to
navigate challenges in a year that has been extraordinary
in every sense of the word.
Commercially, we were unexpectedly busy. Financially,
we generated net sales that were out of the ordinary.
And people-wise, we saw record-high customer and
employee engagement. At the same time, we
leapfrogged our business platform by opening new
branches from greenfield and signing 12 acquisitions
during the year.
Leaving our financial year 2022, we are truly ahead of
our own expectations. 2022 was truly extraordinary.
EXTRAORDINARY PERFORMANCE
The past year played out on a backdrop of challenging
macro-economics and geopolitical unrest. Rising
inflation rates over the year were followed by central
banks diligently increasing interest rates towards the
end of our financial year. Political tensions led to war
close to our markets and was followed by plummeting
consumer confidence and additional strain on the
availability of certain building materials.
Despite this, the retail and distribution market for
building materials has been busy. Our activity levels
were very high, in particular, during the first half of our
financial year. Our people worked very hard to meet
customer needs in a marketplace in which securing
availability and managing prices was a challenge.
Our net sales ended at close to EUR 6 billion, a 21%
growth rate over last year. Close to half of the
improvement de-rived from acquisitions carried out in
the past two years, while the other half was due to very
high activity levels, inflation, and market share gains.
We secured our gross margin which was stable at 25.7%
and kept our operating costs under control.
Our Adjusted EBITDA ended at EUR 479 million. This
was a result out of the ordinary that mirrored a busy
year.
I am grateful for our colleagues’ extraordinary efforts. I
am also very pleased to note that we together with our
suppliers successfully turned a sharp corner despite
limited visibility and often heated discussions, to the
benefit of professional craftsmen whose needs we live
and breathe to serve.
REINVESTING FOR GROWTH
Solid financial performance allowed us to reinvest in our
business. In the past year, we reinvested EUR 284 million
in acquisitions, new and refurbished branches and in
improving our digital solutions and IT security.
During our financial year, we signed 12 acquisitions,
most of them bolt-on to our existing network of
generalists in heavy building materials. By making our
network denser in growth areas close to building sites,
we improved our offering to professional craftsmen who
value proximity, professional advice, and ease of
working with us.
In addition, we made solid progress on building a
footprint within specialist categories such a tiles, roofing
and façade, and civil engineering. By acquiring roofing
and façade specialist Dach & Wand Handels GmbH, we
expanded our geographical footprint into Austria, which
is close to the size of our Swedish market and is
distinguished by high professional standards in the
building and construction industry.
These are markets for which our strategy is particularly
well suited.
STARK Group Annual Report 2022 In brief 6
LETTER FROM THE CEO
WHY I AM CONFIDENT IN OUR FUTURE
What does the future hold? No one knows, but I am
confident that our future is prosperous.
Here is my thinking: We will likely see a continuation of a
challenged macro-economic environment and
geopolitical unrest for some time. It will continue to
adversely impact the newbuild segment and
consequently also impact recent years’ significant
uptake in the entire construction industry.
We have positioned our business in markets and
segments that will be attractive to our industry over the
coming years.
We have built our strategy to serve small and medium-
sized enterprises of professional craftsmen in the
market for renovation, maintenance, and improvement
(RMI). The RMI end-market has more cyclical resilience
than the newbuild market.
In addition, the populations in the Nordics, Germany and
Austria continue to grow, and that will require more and
better housing, office spaces, as well as new and
renovated buildings over the coming decade.
Renovations for energy efficiency and the EU Green Deal
stimuli package will contribute too.
We can now look back at what were unprecedented
challenging and good years for the construction industry
and for retailers and distributors of building materials.
We have used recent years to strengthen our business.
We are well positioned in the marketplace. Our
customers appreciate what we do. Our organisational
health is sound. And we have a solid leadership team
that has experience navigating challenging, volatile
times.
I am confident that we are fit for whatever the future
may bring.
SØREN P. OLESEN
GROUP CEO
STARK Group Annual Report 2022 In brief 7
FINANCIAL HIGHLIGHTS
EUR million 2021/22
1
2020/21
1
Income Statement
Net sales 5,995 1,474
Gross profit 1,541 376
EBITDA 459 101
Adjusted EBITDA
2
479 125
Depreciation and amortisation of non-current assets (171) (37)
EBIT 288 64
Financial items, net (102) (24)
Earnings before tax 186 40
Net earnings 132 22
Balance sheet
Total assets 4,942 4,431
Intangible non-current assets 1,806 1,730
Tangible non-current assets 1,453 1,298
Equity 692 541
Net interest-bearing debt 1,577 1,410
Investments in property, plant and equipment
71 16
Capital expenditure (Capex), total
3
95 21
Operational Capex, total
4
55 12
Operational Capex, base
5
32 8
Operational Capex, development
6
23 4
Cash flow
Cash flow from operating activities 230 300
Cash flow from investing activities (269) (2,173)
Cash flow from financing activities (25) 2,202
Total cash flow (64) 329
Key ratios
Gross profit margin
7
25.7% 25.5%
EBITDA margin
8
7.7% 6.9%
Adjusted EBITDA margin
9
8.0% 8.5%
Please also refer to proforma Business Review with like for like comparisons from page 14.
7. Gross profit as a percentage of net sales.
8. EBITDA as a percentage of net sales.
9. Adjusted EBITDA as a percentage of net sales.
6. Development Capex relates to expansion of the business to improve earnings capabilities or secure compliance.
1. 2020/21 includes 3 months of operating activities for STARK Group from the acquisition on 4 M ay 2021.
2. Adjusted EBITDA is defined as EBITDA excluding non-recurring items.
3. Non-recurring items are items of a material and exceptional nature which are adjusted for to provide a better understanding of the underlying performance of the Group.
4. Operational Capex (capital expenditures) is related to the normal business and excludes Freehold Capex.
4. Freehold Capex includes investments in new land/properties as well as upgrades/refurbishments to existing ones.
5. Base Capex relates to maintaining the normal operations of the business.
3. Capital expenditure (Capex) consists of investments in property, plant and equipment and investments in intangible assets (IT software).
STARK Group Annual Report 2022 In brief 8
KEY EVENTS 2021/22
THROUGHOUT THE YEAR
Navigating in another year of Covid-19
Navigating coronavirus restrictions and volatile Covid-19
infection rates continued to be a challenge for the
business throughout the winter of 2021-22, not least in
Germany and Finland. The health and safety of
employees and customers was STARK Group’s main
priority, and fortunately, the Group did not experience
any severe outbreaks at any of its facilities. The Group
has managed well overall during the pandemic.
FEBRUARY
Entering the Austrian market and building scale in
specialist areas
On 17 February, STARK Group acquired the Austrian
roofing and façade building material distributor Dach &
Wand Handels GmbH. The transaction expanded the
Group’s geographical footprint and added volume to the
roofing and façade specialist category following the
Group's entry through the acquisition of Melle Gallhöfer
in 2021.
In total, STARK Group signed 12 acquisitions during the
financial year. These include the Group’s third and fourth
largest acquisitions in recent years: German generalist
Konz and German civil engineering retailer and
distributor Tröger & Entenmann Group.
During the financial year, STARK Group expanded its
business platform through acquisitions across all its
operations in Germany, Denmark, Sweden, Finland, and
Norway.
MARCH
Ambitious climate targets approved by SBTi
The Science Based Targets initiative (SBTi) approved
STARK Group’s ambitious targets and plans to reduce
CO2 emissions to zero by 2050 at the latest. The
initiative verified the Group’s targets to reduce carbon
emissions by 42% from own operations (scope 1 and 2)
by 2030 and the plan to actively source 100% renewable
electricity and reduce its total scope 3 emissions by 12%
within the same timeframe.
The approval confirms the Group’ climate plan as one of
most ambitious in the industry. At the time of approval,
only 22 Danish companies, including Ørsted, Vestas,
Novo Nordisk and Carlsberg, had received the
endorsement.
STARK Group is well-positioned to deliver on its climate
ambition that is embedded in the UN Business Ambition
for 1.5°C pledge. The Group has achieved a platinum
rating for its sustainability policies, processes, actions,
and results by EcoVadis. The platinum rating places
STARK Group among the top 1% of the more than 75,000
companies that have been rated by this leading
sustainability rating agency.
MARCH
European sponsorship award to STARK Finland
On 10 March, STARK Finland and Ari Huusela won the
European Sponsorship Association’s Best of Europe
Gold Award. The parties were awarded for the
sponsorship of Ari Huusela Ocean Racing.
Ari Huusela was the first Nordic participant to complete
Vendée Globe. Completing the ocean race has been
com-pared to climbing Mount Everest. Ari Huusela
travelled 44,000 km. In 117 days. Alone. Crossing the
Atlantic, the Indian and the Pacific oceans.
The sponsorship gained much publicity in Finland and
met its goals for visibility before the race had even
started. At the end of the 117 days of ocean racing,
Finns didn’t talk about “the boat” but about STARK and
Ari.
STARK Group has several significant sponsorships,
including the Swedish Ice Hockey team and the Beijer
Hockey Games, the Danish national football team and
the Finnish Olympic Team.
STARK Group Annual Report 2022 In brief 9
KEY EVENTS 2021/22
FEBRUARY-JULY
A clear stance and swift action in support of Ukraine
On 24 February, the European security regime changed
when Russia invaded Ukraine. Shortly thereafter and
before sanctions were agreed, STARK Group decided to
stop purchasing directly from Russia and Belarus.
A branch of STARK Danmark initiated a collaboration
with the Ukrainian embassy and volunteers. More than
350 tonnes of humanitarian aid was collected, sorted,
packed, and transported to reception centres in Poland.
From there, the aid was distributed and driven to nine
areas in Ukraine.
In the late spring and summer, employees collected
money for humanitarian aid. STARK Group owner, CVC,
doubled the amount donated by the employees. The
donation has been distributed through Save the Children,
the Red Cross and the UN’s refugee organisation
UNHCR.
JUNE
Engaging with suppliers on resilience and sustainability
Working closely together through times of geopolitical
conflict and sustainability took centre stage at the
annual European Suppliers’ Day on 15 June.
During the year, STARK Sourcing’s European Supplier
Programme facilitated frequent updates on the volatile
market situation, working groups on sector specific
topics and annual events with its largest suppliers who
are members of the programme.
The number of suppliers in the European Suppliers’
Programme increased in the year. The programme is the
only suppliers programme of its magnitude and
importance in the industry for heavy building materials.
STARK Group Annual Report 2022 In brief 10
BUSINESS REVIEW
Very strong performance in the financial year 2021/22 driven by high activity in the markets and
supported by several value-accretive acquisitions in both the Nordics and Germany. The group
successfully navigated a complex macro environment with high price volatility and pressures on
supply-chain magnified by the tragic war in Ukraine.
The financial year 2021/22 was the second financial
year of the Group and included 12 months of operations
of STARK Group. The financial year 2020/21 included 3
months of operations of STARK Group from the
acquisition as of 4 May 2021 until 31 July 2021. The
financial years are therefore not directly comparable.
Financial year 2021/22
In the financial year, STARK Group delivered a very
strong performance above expectations, amidst a
volatile and challenging macro environment, supported
by several value-accretive acquisitions in both the
Nordics and Germany.
Especially in the first half of the year, the high activity
levels from 2020/21 continued with healthy demand
from both SME and large customers. The focused SME
strategy continued to support the growth and win market
shares and at the same time improve customer
satisfaction (Net Promoter Score). Prices on
commodities remained on a high level while inflation on
other categories started to become more widespread.
In the second half of the year, the market situation
became more uncertain with continued high and
widespread inflation across almost all product
categories and supply chain challenges driven both by
the war in Ukraine and continued Covid-19 related
lockdowns. Towards the end of the year, the prices on
some commodities, especially Timber, seemed to
gradually decrease following a slightly lower activity
level and increasing supply.
The Group has until now successfully been managing
the inflationary pressures and leveraged on its scale to
secure product availability and protect net sales and
gross margins.
Acquisitions
During the year, the Group completed several value-
accretive acquisitions in both the Nordics and Germany
of which the German façade and roofing specialist Melle
Gallhöfer was the most significant. Beyond these
acquisitions the Group has also entered a new market
with a significant acquisition in Austria. The acquisitions
are supporting both our Generalist and Specialist areas
as well as Civil Engineering. Please refer to note 3.1 for
further details.
Covid-19
Since the spring of 2020, the outbreak of Covid-19 has
resulted in lower planning visibility and increased
uncertainty. STARK Group has so far not experienced
any material negative impact on the financial
performance or been subject to branch closures or
similar government-imposed restrictions as the business
is considered critical infrastructure. The Group is still
monitoring the situation to maintain a secure workplace
for employees and ensure that customers can be
serviced.
Adjusted income statements
In the financial year, the Group incurred non-recurring
costs related mainly to integration, restructuring and
strategic alignment of acquisitions.
To provide a more accurate view of the Group’s
underlying performance, adjusted figures excluding non-
recurring items have been prepared. The adjusted
figures are presented in the relevant sections below.
In the following section, a summary review of the
financial year is presented. Please note that the
comparisons only include 3 months of operations for
STARK Group.
.
STARK Group Annual Report 2022 In brief 11
BUSINESS REVIEW
FINANCIAL YEAR 2021/22
CONSOLIDATED INCOME STATEMENT
The Consolidated income statement for the financial
year 2021/22 included 12 months of operations of
STARK Group compared to last financial year, which only
included 3 months of operations of STARK Group from
the acquisition on 4 May 2021. The amounts in the
consolidated income statement are therefore not
directly comparable. Please also refer to the proforma
12 months review starting on page 14.
Net sales in the year was EUR 5,995m with gross profit
of EUR 1.541m and a gross profit margin of 25.7%. The
performance was very satisfactory and driven by
continued high activity in the markets supported by
acquisitions and organic growth from successful
strategy execution.
Total operating expenses were EUR 1,082m including
non-recurring items of EUR 20m, which mainly related to
M&A costs and other costs driven by acquisitions made
during the year. Operating expenses are well in control
and cost control remains a top focus area for the
management.
EBITDA for the year adjusted for non-recurring items
was EUR 479m as a result of a strong top-line and
disciplined cost control.
Compared to the outlook for 2021/22 as set out in the
consolidated financial statements for 2020/21 with
reported net sales in the range of EUR 5,3bn to EUR
5.6bn and adjusted EBITDA in the range of EUR 390m to
EUR 410m, the Group has achieved results that are
significantly better. Main drivers behind the strong
performance have been described above with support
from acquired businesses during the year, which were
not known at the time of the outlook.
Depreciation and amortisation amounted to EUR 171m
for the year, reflecting depreciation and amortisation of
tangible and intangible assets of EUR 87m and EUR 84m
related to right of use assets (IFRS 16). The level of
depreciation and amortisation was impacted by the fair
value assessment of tangible assets and recognition of
intangible assets from the acquisition of STARK Group
as of 4 May 2021.
Financial expenses for the year were EUR 102m of which
EUR 70m were related to financing from related parties,
EUR 14m to calculated interest on leasing debt and
other financial items of EUR 18m.
Income tax was EUR 54m with an effective tax rate of
29%. Effective tax rate is impacted by limitation of
interest deduction and non-deductible M&A costs.
Other comprehensive income consisted of net gain of
EUR 6m related to exchange gains from translation of
foreign operations and net gain of EUR 17m from
actuarial gains on retirement benefit plans.
Adjusted Income Statement
2021/22 2020/21
Reported
Non-
recurring
items
Adjusted Reported
Non-
recurring
items
Adjusted
Net sales 5,995 5,995 1,474 1,474
Cost of sales (4,454) (4,454) (1,098) (1,098)
Gross profit 1,541 1,541 376 376
Gross profit margin % 25.7% 25.7% 25.5% 25.5%
Staff costs (707) (3) (704) (171) (2) (169)
Other external operating expenses (375) (17) (358) (104) (22) (82)
Total operating expenses (1,082) (20) (1,062) (275) (24) (251)
EBITDA 459 (20) 479 101 (24) 125
EBITDA margin % 7.7% 8.0% 6.9% 8.5%
12 months of STARK Group operations in 2021/22
(3 months in 2020/21)
EUR million
STARK Group Annual Report 2022 In brief 12
BUSINESS REVIEW
FINANCIAL YEAR 2021/22
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Intangible assets
Total intangible non-current assets amounted to EUR
1,806m as of 31 July 2022 (31 July 2021: EUR 1,730m)
and consisted primarily of goodwill, trade names and
customer relations identified in connection with the
acquisition of STARK Group as of 4 May 2021.
Additions during the year relates to goodwill and
intangibles recognized on acquired businesses and
investments in software of EUR 24m. The impairment
test confirms that intangible non-current assets are not
impaired.
Tangible assets
Total tangible non-current assets amounted to EUR
1,453m as of 31 July 2022 (31 July 2021: EUR 1,298m).
The amount was primarily related to owned properties,
which amounted to EUR 732m and in addition, EUR
553m has been recognized as right of use assets
(primarily leased properties) in accordance with IFRS 16.
Capital expenditure during the year amounted to EUR
71m.
Capital expenditure (Capex)
During the financial year, the Group continued to invest
in and expand the branch network to support growth.
Total capital expenditure was EUR 95m, of which EUR
55m was related to operational Capex and EUR 40m was
related to freehold investments. The level for operational
Capex was EUR 10m higher than last year (proforma),
driven mainly by increased investments in digital
solutions and IT security.
In relation to freehold investments, the Group has
expanded and upgraded strategic locations in the
branch network, including in Germany and Greenland.
In addition to the investments, the Group divested
properties and other assets during the year with a total
positive cash impact of EUR 15m.
Working capital
Trade working capital (inventories, trade receivables less
trade payables) for the Group was EUR 286m as of 31
July 2022 (31 July 2021: EUR 113m). All components of
trade working capital increased over last year, mainly
due to acquisitions and price inflation.
For inventories specifically, coverage levels were
increased during the Spring of 2022 to secure product
availability.
Developments in other working capital components
were in accordance with expectations and in line with
the performance of the business.
Adjusted Segment Income Statement
2021/22 2020/21 2021/22 2020/21
Net sales 3,277 818 2,718 656
Cost of sales (2,395) (596) (2,059) (502)
Gross profit 882 222 659 154
Gross profit margin % 26.9% 27.1% 24.2% 23.6%
Staff costs (398) (98) (306) (71)
Other external operating expenses (193) (46) (165) (36)
Total operating expenses (591) (144) (471) (107)
EBITDA 291 78 188 47
EBITDA margin % 8.9% 9.5% 6.9% 7.2%
Nordics
Germany
12 months of STARK Group operations in 2021/22
(3 months in 2020/21)
EUR million
STARK Group Annual Report 2022 In brief 13
BUSINESS REVIEW
FINANCIAL YEAR 2021/22
CONSOLIDATED CASH FLOW STATEMENT
Operating activities
Operating activities generated a positive cash flow of
EUR 230m in 2021/22. The positive inflow was driven by
the strong result. Working capital generated an outflow
of EUR 88m driven mainly by increased inventories as
discussed in the previous section. Interest and tax
payments were in line with expectations and reflecting a
full-year period compared to only 3 months in the
previous year.
Investing activities
Investing activities during the year amounted to a net
cash out flow of EUR 269m, which related mainly to
acquisitions completed during the year of EUR 189m.
Net investments in tangible and intangible non-current
assets amounted to EUR 80m.
Financing activities
Net cash flow from financing activities amounted to an
outflow of EUR 25m, which mainly related to instalments
on leasing debt of EUR 77m and proceeds from loans
from related parties of EUR 58m.
OUTLOOK 2022/23
Visibility for the coming financial year 2022/23 is
significantly reduced, mainly due to the current macro-
economic situation of continuing high inflation,
increasing interest rates and potential recessions in one
or more of our key markets. However, this is offset by
positive demographic developments and governmental
focus on energy renovations.
The Group expects a stable top line for the coming year.
Price inflation is expected to remain high for the first
months in the financial year, before stabilising later in
the financial year. Activity in the market is expected to
be a bit softer compared to 2021/22, especially towards
the end of the coming financial year. The top line will be
supported by full-year run-rate effects from acquisitions
made in 2021/22.
As for adjusted EBITDA, the Group expects a stable to
slightly increasing level in 2022/23 compared to
2021/22 that will be driven by continued cost control
and the positive run-rate impact from acquisitions. The
Group expects to be able to partially offset inflation on
the cost base, particularly in terms of labour costs and
through efficiency measures and synergies from
acquired businesses.
Alongside the integration of recently completed
acquisitions, the Group will continue to pursue relevant
and value creating M&A opportunities.
Including acquisitions completed up to the date of this
report, the Group expects to deliver the following for
2022/23:
▪ Reported net sales in the range of EUR 6.1 billion to
EUR 6.5 billion
▪ Adjusted EBITDA in the range of EUR 480 million to
EUR 510 million
The outlook for 2022/23 is based upon assumptions and
estimates that, while prepared with numerical specificity
and considered reasonable, are inherently subject to
significant business, operational, economic, political,
legal and competitive uncertainties and contingencies,
many of which are beyond the company’s control and
influence, and upon assumptions with respect to future
business decisions that are subject to change. The
outlook may deviate substantially from actual
developments and the actual results of operations are
likely to deviate, and may deviate materially, from the
outlook, since anticipated events may not occur as
expected.
STARK Group Annual Report 2022 In brief 14
BUSINESS REVIEW
PROFORMA 12 MONTHS REVIEW
To better understand the underlying performance in the
year, an adjusted summary income statement with 12
months proforma comparisons for STARK Group has
been presented below. The proforma comparisons
include the 9 months performance of STARK Group in
the period August 2020 to April 2021 before the
inclusion into the Group. Acquisitions are included from
the time of closing.
The income statement has been adjusted to exclude
non-recurring items. In the financial year 2021/22, the
non-recurring items mainly related to acquisitions made
during the year and subsequent restructuring and
integration into the Group. In 2020/21, the non-recurring
items mainly related to the acquisition of STARK Group
and continued integration of acquisitions made by
STARK Group before the inclusion into the Group.
To supplement the proforma income statement,
adjusted proforma segment income statements for the
two segments, Nordics and Germany, have also been
included.
Net sales
Net sales grew by 21.2% to EUR 5,995m for the year
fuelled by strong underlying market demand especially
in the first half of the year. The Group continued to gain
market share as a result of its focused SME strategy. In
the last part of the year, market activity slowed in part
due to uncertainty resulting from the war in Ukraine and
the significant and wide-spread inflation.
Organic growth excluding acquisitions and currency
impact was 11.3%. Growth from acquisitions included
during the financial year was 9.8%, the most significant
were made in Germany and Sweden. Currency impact
was positive by 0.1%.
The Nordics grew by 17.3% mainly driven by strong
market conditions, continued market share gains and
acquisitions. Organic growth excluding acquisitions and
currency impact was 13.2%. All Nordic businesses
reported strong growth for the year.
Net sales in Germany grew by 26.1% with organic growth
excluding acquisitions and currency impact of 9.2%.
Market activity continued at a high level during the first
part of the year followed by a slowing trend in the last
part that was mainly driven by increased market
uncertainty, high inflation and some supply chain
pressure. Good execution of our SME strategy supported
the strong performance.
Adjusted Proforma Income Statement
2021/22 2020/21
Reported
Non-
recurring
items
Adjusted D % Reported
Non-
recurring
items
Adjusted
Net sales 5,995 5,995 21.2% 4,949 4,949
Cost of sales (4,454) (4,454) 21.0% (3,683) (2) (3,681)
Gross profit 1,541 1,541 21.5% 1,266 (2) 1,268
Gross profit margin % 25.7% 25.7% 0.1 pp 25.6% 25.6%
Staff costs (707) (3) (704) 11.5% (638) (6) (632)
Other external operating expenses (375) (17) (358) 20.5% (321) (24) (297)
Total operating expenses (1,082) (20) (1,062) 14.4% (959) (30) (929)
EBITDA 459 (20) 479 41.1% 307 (32) 339
EBITDA margin % 7.7% 8.0% 1.1 pp 6.2% 6.9%
12 months of STARK Group operations
EUR million
STARK Group Annual Report 2022 In brief 15
BUSINESS REVIEW
PROFORMA 12 MONTHS REVIEW
Gross profit and gross margin
Adjusted gross profit grew by 21.5% to EUR 1,541m,
which was mainly driven by the strong organic growth in
net sales and supported by acquisitions. Organic growth
excluding acquisitions and currency impact was 12.7%.
Currency impact was 0.0% for the year.
Gross margin was stable at 25.7% (up by 0.1 of a
percentage point). Maintaining the gross margin levels
was challenged by the high price volatility, supply chain
pressures and shifts in activity levels. The Group
maintained its focus on effective price management,
strategic sourcing initiatives with support from own
brands and a growing share of SME sales, which all
supported margin developments. In addition, there was
support from acquired specialist businesses (especially
within the tiles category), which operate at slightly higher
margins.
In the Nordics, the gross profit grew by 19.2% to EUR
882m driven by growth in net sales and an improved
gross margin. Organic growth excluding acquisitions
and currency impact was 14.2%. Gross margin was
supported by a positive product mix from acquired
businesses and positively impacted by effective
management of price volatility during the year.
In Germany, the gross profit grew by 24.8% to EUR 659m
driven by the strong net sales growth supported by
acquisitions. Organic growth excluding acquisitions and
currency impact was 10.5%. Gross margin was slightly
lower, mainly due to acquired businesses within Roofing,
which have below-average margins.
Operating expenses
Staff costs and other operating expenses were well
under control during the financial year thanks to a
persistent focus on cost discipline. This remains a top
priority due to the reduced forward-looking planning
visibility and market volatility.
Staff costs excluding non-recurring items increased by
11.5% to EUR 704 million in the year including a currency
impact of 0.1% and impact from acquisitions of 8.2%.
Organic growth was 3.2%. Staff costs increased mainly
due to a higher number of staff to serve customers and
support growth and due to salary increases following
union agreements and normal inflation. Employee
bonuses increased as a result of the strong
performance.
Other operating expenses excluding non-recurring items
increased by 20.5% to EUR 358m for the year including a
currency impact of 0.3% and impact from acquisitions of
11.0%. Organic growth was 9.2%, driven mainly by
normal inflation across cost categories, additional
infrastructure costs due to extraordinary price increases
on energy and generally increased activity across the
Group.
EBITDA
Adjusted EBITDA grew by 41.1% to EUR 479 million as a
result of the above dynamics. Growth in net sales and
improvements in gross margin flowed through to
EBITDA while the careful cost discipline and synergies
secured strong growth in EBITDA well above growth in
gross profit.
Adjusted Proforma Segment Income Statement
2021/22 2020/21 D% 2021/22 2020/21 D%
Net sales 3,277 2,792 17.3% 2,718 2,157 26.1%
Cost of sales (2,395) (2,052) 16.6% (2,059) (1,629) 26.5%
Gross profit 882 740 19.2% 659 528 24.8%
Gross profit margin % 26.9% 26.5% 0.4 pp 24.2% 24.5% -0.3 pp
Staff costs (398) (364) 9.2% (306) (268) 14.5%
Other external operating expenses (193) (162) 18.8% (165) (135) 22.6%
Total operating expenses (591) (526) 12.2% (471) (403) 17.2%
EBITDA 291 214 36.4% 188 125 49.1%
EBITDA margin % 8.9% 7.7% 1.2 pp 6.9% 5.8% 1.1 pp
12 months of STARK Group operations
EUR million
Nordics
Germany
STARK Group Annual Report 2022 Strategy 16
STRATEGY
STARK Group is an international leader in the fragmented markets for distribution of heavy
building materials.
STRATEGY
The world’s population is growing, and key urban areas
in the Nordics, Germany and Austria are experiencing an
ongoing housing deficit with population growth rates
well above European national averages. It is estimated
that the populations of the Nordics, Germany and
Austria will grow by 940,000 (0.8%) to 120.8 million in
the period 2022-27. This will require more housing,
office space and renovated buildings to accommodate
inhabitants who expect high quality of life in more
energy-efficient and sustainable cities.
STARK Group operates within a part of the building
industry that is instrumental in building and renovating
these cities. The Group is a builders’ merchant and
distributor of heavy building materials. It plays a crucial
role in connecting manufacturers of building materials
with professional craftsmen.
The Group sources more than 280,000 SKUs at scale
from more than 10,000 suppliers, advises manufacturers
about market developments and customer feedback,
and makes products available to professional craftsmen
from its densely knitted network of warehouses,
branches and shops close to building sites. Professional
craftsmen buy from STARK Group to obtain ease of
procurement, advice, documentation, credit, and efficient
distribution.
The business model on page 19 outlines the role of the
Group, our key resources and the value created.
STARK Group estimates the total market for building
materials in the Nordics and Germany at approx. EUR
160 billion annually. The retail distribution market for
professional craftsmen focusing on heavy building
materials such as timber, tiles, windows, plaster boards
etc. accounts for approximately one third of the total
market.
FOCUS ON ATTRACTIVE MARKETS AND SEGMENTS
STARK Group does business in a geopolitically stable
region and focuses its business on a highly attractive
market segment: Professional craftsmen working in
small and medium-sized enterprises (SME) in the market
for renovation, maintenance, and improvement (RMI).
The geographical footprint is in the Nordics, Germany
and Austria, all of which exhibit robust market
fundamentals including stable GDP growth, a stable
regulatory environment as well as compelling structural
growth drivers. These include urbanisation, population
growth and a push for improved energy efficiency and
sustainability in the existing housing stock.
The key market is the RMI end-market, which has
relatively high cyclical resilience compared to the
newbuild market. The RMI market benefits from the
increasingly important market for energy efficiency, the
EU Green Deal stimuli package and private investments
to improve the existing housing stock through more
energy efficient and sustainable solutions.
Customers are craftsmen in the market for small and
medium-sized enterprises that mainly engage in small
and medium-sized RMI projects or as subcontractors to
large building companies in large renovation works.
The products are heavy building materials that by nature
are large (e.g., timber, plasterboards and doors), heavy
(e.g., steel and cement) and fragile (e.g., roof tiles and
windows). Hence, the products are complex to distribute
and require specialist skills and utilities when craftsmen
procure different mixes of materials for delivery within a
short timeframe. To meet craftsmen’s needs, the Group
also keeps a full assortment of power tools, fasteners,
workwear, insulation, paint, etc.
STARK Group Annual Report 2022 Strategy 17
STRATEGY
LEADERSHIP AND OPERATIONAL EXCELLENCE
STARK Group is organised and operates to win and
consolidate the attractive market for heavy building
materials.
The Group competes in the marketplace from leading
market positions in the Nordics, Germany and Austria. It
holds no. 1 positions in Germany, Denmark and Sweden,
a no. 2 position in Finland, a no. 3 position in Austria and
is a leading regional player in Norway in the categories
and segments where it has chosen to compete. The
Group operates under the STARK brand and strong local
brand names such as Raab Karcher, Muffenrohr, Beijer
and Neumann, among others.
STARK Group’s strategy targets the needs of
professional craftsmen in the SME segment and builds
on seven pillars of operational excellence:
1. SME focus – preferred partner to SME customers
2. Customer promise – committed to offering a
superior customer service experience
3. Smart pricing – customised systems and processes
to optimise pricing dynamics
4. Better sourcing – shared sourcing function with
local business unit anchor points
5. Stronger network – further improve efficiency and
density of distribution network
6. Digital leadership – strengthen customer
relationships through digitalisation of services
7. Excellent operator – strong, local decision-making
and accountability supported by group-wide strategy
and sharing of best practice
Services are developed and honed to make it easy and
even more attractive to work with the Group.
These include 24/7 opening hours at destination
branches in urban areas, 24/7 customer service, a
promise to deliver On Time In Full (OTIF) at short notice,
a densely knitted network of warehouses, branches and
shops close to building sites, guaranteed availability of a
large number of key products, competitive prices,
personalised advice, documentation, credit and digital
solutions that make it easy to work with STARK Group.
STARK Group successfully gains market share year by
year. To accelerate growth, the Group makes value
creating acquisitions that either expand the Group’s
network, have a potential for synergies or add
capabilities to its business.
In recent years, STARK Group has expanded its
leadership in the generalist market for heavy building
materials into specialist areas. These include the
markets for tiles, roofing and façade as well as civil
engineering, as the Group has acquired specialist brands
in Germany, Sweden, and Denmark.
LOCAL OWNERSHIP – GLOBAL LEADERSHIP
The Group has a decentralised operating model building
on strong local ownership close to its markets. Decision-
making powers are country-based and exercised at
branch and business unit level. The branches work as
national chains in integrated networks that share head
office functions, sourcing, logistics handling, and
marketing that enable significant scale advantages.
A group-wide sourcing unit has been established to
reinforce local sourcing power from STARK Group’s
global scale. STARK Sourcing offers a single point of
entry for suppliers, effective distribution as well as
customer and market insights to suppliers, while
securing availability and competitive pricing for
craftsmen in their local markets.
In recent years, the Group has worked relentlessly to
secure availability across markets, reduce sourcing and
operating costs, built more efficient distribution
networks and streamlined our leadership structure by
enhancing local decision-making and accountability.
Lean corporate functions ensure efficient operations as
close to customers as possible.
STARK Group Annual Report 2022 Strategy 18
STRATEGY
ACCELERATING GROWTH THROUGH ACQUISITIONS
Strong parameters for competition include branch
density and branch closeness to building sites in growth
areas. STARK has been winning market share year after
year by building its services to professional craftsmen,
including by opening and acquiring branches in key
growth areas. We have expanded our leadership in the
generalist market for heavy building materials into the
specialist areas of tiles, roofing and façade as well as
civil engineering.
The Group’s M&A strategy builds on distinct rationales:
1. Bolt-on acquisitions in attractive growth regions to
increase branch network density
2. Expanding assortment in existing strong product
categories
3. Adding specialist capabilities and assortment to its
generalist network
In total, STARK Group signed 12 acquisitions in the past
financial year. These included the Group’s third and
fourth largest acquisitions in recent years: German
generalist Konz and German civil engineering retailer
and distributor Tröger & Entenmann Group. In addition,
the Group acquired roofing and façade specialist Dach &
Wand Handels GmbH, thereby expanding its platform
into the Austrian market.
CONSOLIDATING THE MARKET FOR THE BENEFIT OF
SUPPLIERS AND CRAFTSMEN
STARK Group plays an important role as a consolidator
of fragmented markets for retail and distribution of
heavy building materials. By acquiring new businesses,
the Group adds capabilities, while becoming a more
attractive partner for its customers and suppliers.
Having a dense network of branches, shops and
distribution centres in a geography with a population of
120 million, STARK Group offers effective distribution,
customer feedback and market-leading insights, while
providing advice on market developments to suppliers,
who also grow through acquisitions or grow with STARK
Group.
Professional craftsmen benefit from physical presence/
branch density, competitive pricing, availability,
improved credit facilities and the Group’s investments in
logistics, digital solutions, and other services.
STARK Group Annual Report 2022 Strategy 19
BUSINESS MODEL
Key resources
Products
More than 280,000 SKU numbers sourced
and sold.
Partnerships
Trusted relationships with 275k craftsmen,
10k suppliers and the industry at large.
People
More than 12k employees with
backgrounds as craftsmen, retailers,
distributors etc.
Expertise & knowledge
Continuous training of our employees and
more than 125 years of heritage.
Brand & reputation
Suite of leading brands acknowledged by
craftsmen and the industry at large.
Business activities
SOURCE
Scale in sourcing
Leverage scale to secure availability and
ensure competitive prices.
Break pallets
Break truckloads from manufacturers into
smaller quantities and mix needed at
construction sites.
Warehousing
Keep safety/buffer stock.
SELL
Product availability
Offer right assortment and in-full
availability within short timeframe.
Network with broad coverage
Located close to construction sites to
reduce craftsmen’s time spent on
procuring.
Sales facilitation
Provision of projects and bidding planning
services.
Customer consultations and credit
Act as sales force for manufacturers for
long tail of SME customers. Advise
customers and bridge the liquidity gap by
offering credit.
DISTRIBUTE
Efficient distribution
Manage complex distribution of heavy and
fragile materials with modified trucks and
direct delivery capabilities.
Value creation
Cities of tomorrow
More and better houses, office spaces and
renovated buildings for high quality of life
and sustainable cities.
Efficient sector
Reduced complexity when distributing
heavy building materials procured in
different mixes for delivery within a short
timeframe.
Customer value
Advise, service and credit for professional
craftsmen.
Great place to work
Career opportunities in an engaging and
safe work environment for a brand that
employees take pride in.
Shareholder value
Competitive total returns through above
average market growth and value creation.
STARK Group Annual Report 2022 Strategy 20
SUSTAINABILITY
STARK Group works in support of a future of zero carbon emissions from the construction
industry.
Being a proud signatory to the UN Global Compact,
STARK Group is mindful of how its business impacts
environmentally, socially, and economically sustainable
developments.
Most prominent is the Group’s commitment to the
Science Based Target initiative and the UN Business
Ambition for 1.5°C, which was signed in 2021.
Consequently, the Group works to reduce emissions by
42% from its operations (scope 1-2) and 12.3% from
purchased goods, transport and distribution, use of sold
products and end-life-treatment of sold products etc.
(scope 3) by 2030. The overall ambition is to reduce
emissions to net zero by 2050 at the latest.
ENVIRONMENTAL:
CLIMATE ACTION, CIRCULARITY, AND
ECOSYSTEM PROTECTION
STARK Group’s 2030 science-based carbon reduction
targets were approved by the Science Based Targets
Initiative (SBTi) in February 2022. This shows that the
Group’s carbon targets and efforts are aligned with what
science says is necessary to limit the global temperature
rise to 1.5°C. The approval of the Group’s 2030 targets
was an important step on our sustainability journey.
This is a commitment that the Group will work to
decarbonise the way it operates. It has a solid plan to
meet its interim goals in 2024 and 2030, as outlined in
its roadmap, and is determined to reach net zero by
2050.
In 2021/22, the Group reduced its scope 1 and 2
emissions by 22% from the 2020 baseline. 45% of its
electricity consumption was sourced from renewables
through the purchase of renewable electricity
certificates in Germany, Finland, and Norway.
Furthermore, the Group continued the transition from
conventional lighting to LED, improved efficiency
ventilation systems and a continued transition away
from gas and oil heating systems. In 2021/22, STARK
Group reduced total kWh energy consumption per mEUR
revenue by 34%.
Following the reduction of emissions, STARK Group
achieved interest savings on its ESG-linked loan of EUR
0.6 million in 2021/22. The interest savings achieved
through the ESG Margin ratchet were assigned to the
conversion of natural gas and oil heating systems to
electric heat pumps to ensure further progress towards
the Group’s target to net zero.
The Group reduced waste by 2% from a 2020 baseline
and absolute waste amounts by 578 tonnes, primarily
driven by initiatives to reuse packaging, selling surplus
products through new partnerships, as well as training
warehouse staff in resource efficiency. The percentage
of total waste segregated for recycling increased in all
business units except for STARK Deutschland which
holds the highest recycling rate of 88%. In Neumann
Bygg, great efforts made to increase recycling resulted
in an increase from 16% to more than 50%.
During 2021/22, we have further expanded our training
programme of sustainability specialists in Sweden and
Denmark and initiated a sustainability ambassador
programme in Germany and Finland. By the end of our
financial year, 250 employees, equal to 2% of all
employees, had been fully trained as sustainability
specialists.
A total of 17 sustainability events were held across the
business units for the purpose of promoting products
with sustainable value such as low carbon products,
fewer hazardous chemicals, eco-labelled and circular
products.
In 2021/22, over 89% of all timber and timber-based
products in stocked assortment in STARK Danmark and
Neumann Bygg were FSCR or PEFC-certified and made
up over 94% of the total sales of timber based products.
Similarly, in STARK Danmark, the share of third-party
eco-labelled SKUs comprised 28% of the stocked
assortment and represented roughly half of the total
sale of stocked assortment.
STARK Group Annual Report 2022 Strategy 21
SUSTAINABILITY
SOCIAL:
SAFE, ENGAGED AND INCLUSIVE
As a workplace, STARK Group works to ensure equal
treatment and opportunities for all employees. The
Group takes pride in belonging to a community that
supports the inclusion of all people, regardless of
gender, age, ethnicity, ability, sexual orientation, faith or
religion.
STARK Group has launched a Diversity and Inclusion
Council with quarterly meetings, and Diversity, Equity,
and Inclusion was a key topic at management, Board
and HR meetings throughout the year. In addition,
STARK Group completed the UN Global Compact Target
Gender equality accelerator program, and the D&I
Council is now working to implement the Women’s
Empowerment Principles and to strengthen our
contribution to SDG 5.5.
As of 31 July 2022, women constituted 25% of our
employees, a 3 percentage point increase compared to
2020/21, and accounted for 16% of our management
positions. At STARK Group level, the Executive
Management Team’s gender balance was 50/50. The
Board of Directors of STARK Group A/S consisted of
20% women (one out of five). The Group continuously
works to adjust the gender balance.
Employee engagement remained at a high level of 74,
with an overall participation rate of 83%.
The health and safety of people is a key priority for
STARK Group. During the year, the Group joined the
Vision Zero campaign via the Danish Vision Zero
Council. The updated Health and Safety strategy is
based on Vision Zero and the introduction of a number
of new KPIs that makes it possible to measure and
support a strong Health and Safety culture. In 2021/22,
the rate of occupational injuries decreased from 8.8 to
7.9 injuries per 1 million hours worked.
GOVERNANCE:
RESPONSIBLE BUSINESS ETHICS
STARK is committed to upholding a high standard of
responsible business conduct, sustainable procurement,
and high data ethics to meet the expectations of society
and the wider ecosystem we are a part of.
All new contracts entered into in the past year have
undergone and passed the product integrity evaluation,
and all targeted suppliers have signed legal terms and
conditions, including for compliance with STARK Group’s
Code of Conduct.
This year, we have implemented a Supplier Code of
Conduct to clarify our minimum requirements and
ambitions towards our suppliers across the supply
chain, covering both direct and indirect spend. We also
piloted an extended ESG screening of our suppliers
using an external partner as a foundation for our further
due diligence work.
We are committed to pay our fair share of taxes in all the
markets where we conduct business, as we strongly
believe that taxes constitute an important contribution to
society in the countries in which we operate. We are
presently developing a Tax Impact Report where our
total tax contributions will be presented, including a
breakdown of our tax contributions by type and
jurisdiction.
SUSTAINABILITY REPORT 2022
STARK Group’s sustainability activities are further
elaborated upon in the separate Sustainability report
2022:
The report serves as the baseline for STARK Group’s
annual Communications on the Progress to the UN
Global Compact, and as the statutory statement on
corporate social responsibility and the underrepresented
gender in accordance with the EU Directive 2014/95/EU
and Sections 99a, 99b and 99d of the Danish Financial
Statements Act.
STARK Group Annual Report 2022 Governance 22
RISK MANAGEMENT
STARK Group considers risk management a critical component of its decision-making and ability
to create value over time.
RISK MANAGEMENT
Risk management forms an integral part of STARK
Group’s operations and decision-making process, and
aims to create and safeguard business value, secure
continuity of operations and ensure the safety of our
people.
STARK Group´s Enterprise Risk Management process is
designed to identify and manage uncertainties and risks
affecting the Group and its business units in the global
marketplace. Integrated with the Internal Control
framework, the aim is to identify, prioritise and manage
key risks at all levels of the business to support the
Group in better decision making, proper allocation of
resources and better and faster utilisation of
opportunities as they arise.
Identified potential risks are addressed directly with
business unit management, so that relevant mitigating
actions can be implemented to safeguard our strategic
objectives and avoid disruptions or safety concerns in
day-to-day operations.
RISK MANAGEMENT CYCLE
RISK GOVERNANCE
The responsibility for the governance of risks lies with
the Board of Directors. On behalf of the Board of
Directors, the Audit Committee monitors the
effectiveness of the Group's risk management setup and
evaluates the design framework and governance.
The Executive Management is accountable for the
operational part of risk management, headed by the
individual business unit CEOs, who are responsible for
the implementation of the Group´s Risk Management
Policy and Internal Controls framework.
A Group Risk and control function validates the
implementation and ensures proper and complete
reporting to the Audit Committee on status, mitigations,
and newly identified risks.
RISK GOVERNANCE MODEL
STARK Group Annual Report 2022 Governance 23
KEY RISKS
Some risks could have a significant impact on STARK Group’s future operations. The Group
monitors such key risks more closely to assess and mitigate their impact.
ECONOMIC DOWNTURN
Impact
Rising inflation, interest rates and growing geopolitical
uncertainty creating faster-than-expected economic
decline might adversely impact customer demand in the
builders’ merchant industry. This may jeopardise the
Group´s operational strategic plans and targeted market
growth.
Mitigation
The Executive Management closely monitors market
conditions with intelligence provided by the Group’s
business development department and finance teams.
Each business unit’s management team holds in-depth
meetings with Executive Management to further provide
operational insights and assess current market
developments. Economic contingency plans for cost-out
initiatives have been designed and developed to take
recent market situations into account. The Group aims
to enhance its resilience towards economic downturns
through a continued focus on sales to the core customer
segment of small and medium-sized professional
craftsmen within the RMI market.
SUPPLY CHAIN DISRUPTION AND PRICING
MANAGEMENT
Impact
Supply chain disruptions due to conflicts, shortages of
products, restrictions of trade, adverse weather
conditions, energy restrictions, logistics disruption or
other external factors might impact suppliers, logistics
and STARK Group´s business units and thereby result in
product availability problems, delivery issues and rapid
price increases. The Group might not successfully be
able to manage prices of commodities and other
sourced goods quickly enough during volatile periods,
which could potentially result in margin decline or loss
of competitive offerings and market share.
Mitigation
During recent unstable and disruptive periods, STARK
Group Sourcing and business units have worked closely
with suppliers and logistics partners to address
situations as they arise and to mitigate the related risks
in the best way possible.
The Group aims to maintain an adequate number of
alternative suppliers, to support both product availability
and product price development and to secure
undisturbed business continuity and product availability
for our customers.
By continuously improving the pricing processes and
increasing automation, STARK Group has reduced
response time as well as simplifying the price
adjustment processes. During volatile periods, increased
internal inventory monitoring and consistent vendor
communication is key to managing an effective pricing
process and prevent margin deterioration and supply
shortages.
INFORMATION SYSTEMS AND CYBER RISK
Impact
The Group relies on business-unit-specific systems and
applications to operate efficiently. This carries an
inherent risk of system error, human error, data breaches
and other interruptions that may impact STARK Group
financially and operationally. The threat to the Group´s
cybersecurity and data security continues to be a key
risk area and a cyber-attack could result in an extended
period of downtime. Operational disruptions or
vulnerabilities in key information systems could
significantly affect the Group’s ability to carry out daily
operational business processes and servicing
customers.
Mitigation
STARK Group’s IT function continuously seeks to
minimise the above risks by revising strategy,
governance, and development plans. The Group invests
in employee training, additional relevant internal
competences, governance, and technological measures
to curb the cyber threat and increase overall resilience
and compliance with information security standards.
The Group IT Advisory board and the Information
Security Governance Committee are charged with the
oversight responsibility of STARK Group’s IT risk
management and with monitoring progress according to
plans.
STARK Group Annual Report 2022 Governance 24
DATA ETHICS
At STARK Group, we embrace digitalisation and the
world of opportunities it brings. We are committed to
high ethical standards when handling, using, and
processing data and to support appropriate safeguards
for protecting data at hand and constantly strengthen
our information security level.
ETHICAL USE OF DATA
We acknowledge that data privacy and protection is a
fundamental human right. Data is an important business
asset for STARK Group, and we aim for high ethical
standards when handling, using, and processing data.
We continuously gather data on customers, employees,
and vendors, but we have no intention to trade data.
We have processes in place to protect data in order to
avoid unwanted disclosure that may harm STARK
Group’s business operations, our partners or other
stakeholders. STARK Group does not presently have a
data ethics policy but plan to implement one during
2022/23. Presently, our data processing agreement
guideline sets clear requirements for third-party vendors
and stakeholders to comply with data protection and
ethics.
PERSONAL DATA PROTECTION
The privacy of individuals is important to us, and we
continuously strive to adapt our processes to comply
with privacy regulations to ensure data confidentiality
and integrity.
STARK GROUP processes personal data related to its
employees, customers, and suppliers. This use of
personal data is governed by our “Records Management
and Personal Data Protection Policy”. This Policy is, in
turn, supported by a continuously developed and
amended range of guidelines, processes and standard
communication material developed by STARK Group to
support all its Business Units. All data, whether personal
or business data, is protected by robust security
features.
STARK Group has, moreover, an annual GDPR activity
plan which addresses topics to steadily enhance
awareness training and compliance levels across the
entire Group.
Our principles
STARK Group is committed to supporting appropriate
safeguards for protecting data at hand and constantly
strengthening our information security level.
Our ambitions
To ensure confidentiality, integrity and availability of
data
Targets
100% of assigned employees have completed “personal
Data Protection” e-learning training
Supporting Policies
IT Policy and Records Management and Personal Data
Protection Policy
Sustainable development goal
16 Peace, justice and strong institutions
During 2021/22, this included the roll-out of tools to
facilitate risk assessment, e.g., in relation to Data
Processing Agreements, awareness campaigns through
posters and Town Hall meetings, implementation of an
access management procedure, specialist training, e.g.,
in Privacy by Design and Default as well as regular GDPR
community meetings.
The STARK GDPR community consists of subject matter
experts from functional areas such as Legal and IT, who
are responsible for promoting and safeguarding our
Policy.
STARK Group Annual Report 2022 Governance 25
DATA ETHICS
INFORMATION SECURITY
STARK Group is committed to supporting appropriate
safeguards for protecting information assets'
confidentiality, integrity, and availability to support and
defend the business from various information security
risks. STARK Group recognizes that cyberattacks have
the potential to ultimately disrupt all our business
activity. Therefore, STARK Group has initiated a
multiannual Information Security Program.
At STARK Group, we embrace digitalisation and the
world of opportunities it brings. We are committed to
high ethical standards when handling, using, and
processing data and to support appropriate safeguards
for protecting data at hand and constantly strengthen
our information security level.
During 2021/22, STARK Group has successfully engaged
in the first phase of the Information Security Program,
including substantial investments in cutting-edge
information security technologies, thereby reducing
costs, improving efficiency, and enhancing
effectiveness. Implementation has been successful
across STARK Group following robust collaborations
with partners.
The overarching Information Security Strategy ensures
continuous progress and guidance for internal and
external activities protecting our information assets,
thereby significantly improving the overall information
security.
STARK Group will continuously strengthen our
information security posture and promote information
security resilience to defend our business.
E-LEARNING AND AWARENESS CAMPAIGNS
Awareness campaigns during 2021/22 included
identifying personal data, Data Breaches, Data Subject
Requests, and handling and deleting unstructured data.
The eLearning module, “Personal Data Protection” has
during 2021/22 been assigned to 56% of the total
workforce, and the completion rate is currently above
93%.
CONTROLS
STARK Group is committed to supporting appropriate
safeguards for protecting data at hand and constantly
strengthening our information security level. All received
Data Subject Requests have been responded to within
the legal deadline of thirty days. Our yearly audit of
general IT controls has been performed by Deloitte.
During 2022 we have introduced a comprehensive
Information Security Framework, which included a new
Information Security Policy, cyber security awareness
campaigns and optimised process for continuous
security monitoring.
STARK Group Annual Report 2022 Governance 26
EXECUTIVE MANAGEMENT
SØREN P. OLESEN
GROUP CEO
Born in 1967, Danish nationality
Søren P. Olesen was appointed CEO of STARK Group in November 2016. Previously, he held the position as CEO of
STARK Danmark (2014-2016). Søren P. Olesen joined the Group from a position as CEO of Flügger Group A/S (2007-
2013). Søren P. Olesen holds a Master of Arts (Econ) from Limburg Rijksuniversiteit, the Netherlands, and a Master of
Science in Economics from Aalborg University, Denmark.
Selected board positions
Søren P. Olesen holds board positions in Hempel A/S, and Industriens Arbejdsgivere i Danmark.
SISSE FJELSTED RASMUSSEN
GROUP CFO
Born in 1967, Danish nationality
Sisse Fjelsted Rasmussen joined STARK Group in 2018 as Chief Financial Officer (CFO). Previously, she held the position
as CFO of Scandinavian Tobacco Group (2008-2018). Sisse Fjelsted Rasmussen holds a master’s degree in Business
Economics and Auditing from Copenhagen Business School and has worked as state-authorised public accountant.
Selected board positions
Sisse Fjelsted Rasmussen holds board positions in Demant A/S and Conscia A/S.
STARK Group Annual Report 2022 Consolidated Financial Statements 27
CONSOLIDATED
FINANCIAL STATEMENTS
2022
STARK Group Annual Report 2022 Consolidated Financial Statements 28
CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
Management’s Statement 29
Independent auditor’s report 30
Income Statement 32
Comprehensive Income 33
Statement of Financial Position 34
Statement of Changes in Equity 36
Cash Flow Statement 37
NOTES – CONSOLIDATED FINANCIAL STATEMENTS
1 BASIS OF REPORTING
1.1 Basis of reporting 38
1.2 Group accounting policies 39
1.3 Key accounting estimates
and judgements 40
2 INCOME STATEMENT
2.1 Segment analysis 43
2.2 Net sales 44
2.3 Staff costs 45
2.4 Depreciation and amortisation
of non-current assets 46
2.5 Financial expenses, net 46
2.6 Income tax 47
3 INVESTED CAPITAL
3.1 Acquisitions of businesses 48
3.2 Goodwill 50
3.3 Other intangible assets 52
3.4 Tangible non-current assets 54
3.5 Leases 56
4 WORKING CAPITAL AND PROVISIONS
4.1 Inventories 58
4.2 Trade receivables 59
4.3 Provisions 61
5 CAPITAL STRUCTURE AND FINANCING
5.1 Share capital and share premium 62
5.2 Dividend 62
5.3 Borrowings 63
5.4 Financial instruments,
risk management policies 64
6 OTHER FINANCIAL NOTES
6.1 Deferred tax assets and liabilities 67
6.2 Employee benefit obligations 68
6.3 Cash flow, adjustments and reversals 71
6.4 Cash flow, changes in working capital 71
6.5 Contingent liabilities 71
6.6 Fee to statutory auditors 72
6.7 Securities 72
6.8 Related parties 72
6.9 Subsequent events 73
6.10 List of Group companies 74
STARK Group Annual Report 2022 Consolidated Financial Statements 29
MANAGEMENT’S STATEMENT ON THE
CONSOLIDATED FINANCIAL STATEMENTS
Board of Directors
Executive Management
STARK Group Annual Report 2022 Consolidated Financial Statements 30
INDEPENDENT AUDITOR’S REPORT
Opinion
Basis for opinion
Statement on Management’s Review
Management’s responsibilities for the Consolidated
Financial Statements and the Financial Statements of
the Parent company
STARK Group Annual Report 2022 Consolidated Financial Statements 31
INDEPENDENT AUDITOR’S REPORT
Auditor’s responsibilities for the audit of the
Consolidated Financial Statements and the Financial
Statements of the Parent company
Business Registration No 33 96 35 56
Identification No (MNE) mne10944
Identification No (MNE) mne45854
STARK Group Annual Report 2022 Consolidated Financial Statements 32
INCOME STATEMENT
See notes to the financial statements.
EUR million Note 2021/22 2020/21
Net sales 2.2 5,995 1,474
Cost of sales (4,454 ) (1,098 )
Gross Profit 1,541 376
Staff costs 2.3 (707 ) (171 )
Other external operating expenses (375 ) (104 )
Earnings before interest, tax, depreciation and amortisation (EBITDA) 459 101
Depreciation and amortisation of non-current assets 2.4 (171 ) (37 )
Earnings before interest and tax (EBIT) 288 64
Financial expenses, net 2.5 (102 ) (24 )
Earnings before tax 186 40
Income tax 2.6 (54 ) (18 )
Net earnings 132 22
Net earnings is attributable to:
Shareholders in Stark Group A/S 127 21
Non-controlling interests 5 1
Total 132 22
STARK Group Annual Report 2022 Consolidated Financial Statements 33
COMPREHENSIVE INCOME
See notes to the financial statements.
EUR million Note 2021/22 2020/21
Net earnings 132 22
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss:
Exchange gain/(loss) on translation of foreign operations
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on retirement benefit plans 6.2 23 (4 )
Tax on actuarial gain/(loss) on retirement benefit plans 6.2 (6 ) 1
Other comprehensive income/(loss) 23 (10 )
Total comprehensive income/(loss) 155 12
Total comprehensive income is attributable to:
Shareholders in Stark Group A/S 150 11
Non-controlling interests 5 1
Total 155 12
STARK Group Annual Report 2022 Consolidated Financial Statements 34
STATEMENT OF FINANCIAL POSITION
ASSETS
See notes to the financial statements.
31 July 31 July
EUR million Note 2022 2021
Non-current assets
Goodwill 3.2 810 769
Other intangible assets 3.3 996 961
Total intangible non-current assets 1,806 1,730
Property 3.4 732 700
Plant and equipment 3.4 122 81
Non-currents assets under construction 3.4 46 52
Right of use assets 3.5 553 465
Total tangible non-current assets 1,453 1,298
Investment in a joint venture 1 1
Total financial non-current assets 1 1
Total non-current assets 3,260 3,029
Current assets
Inventories 4.1 813 553
Trade receivables 4.2 569 491
Corporate tax receivables 5 -
Other receivables 22 21
Prepayments 12 7
Cash and cash equivalents 261 330
Total current assets 1,682 1,402
TOTAL ASSETS 4,942 4,431
STARK Group Annual Report 2022 Consolidated Financial Statements 35
STATEMENT OF FINANCIAL POSITION
EQUITY AND LIABILITIES
See notes to the financial statements.
31 July 31 July
EUR million Note 2022 2021
Equity
Share capital 5.1 2 1
Reserves 679 530
Equity, shareholders in STARK Group A/S 681 531
Non-controlling interests 11 10
Total equity 692 541
Non-current liabilities
Leasing liabilities 3.5 472 398
Deferred tax liabilities 6.1 312 301
Provisions 4.3 32 27
Employee benefit obligations 6.2 92 113
Loans from related parties 5.3 / 6.8 1,790 1,707
Borrowings 5.3 16 11
Total non-current liabilities 2,714 2,557
Current liabilities
Leasing liabilities 3.5 84 65
Provisions 4.3 8 10
Loans from related parties 5.3 / 6.8 5 6
Borrowings 5.3 27 16
Payables to related parties 5.4 31 37
Trade payables 1,096 931
Corporate tax payables 31 35
Other liabilities 254 233
Total current liabilities 1,536 1,333
Total liabilities 4,250 3,890
TOTAL EQUITY AND LIABILITIES 4,942 4,431
STARK Group Annual Report 2022 Consolidated Financial Statements 36
STATEMENT OF CHANGES IN EQUITY
EUR million
Share
capital
Trans-
lation
reserve
Retained
earnings
Non-
controlling
interests
Total
equity
Balance as of 1 August 2021 1 (7 ) 537 531 10 541
Comprehensive income/(loss):
Net earnings - - 127 127 5 132
Other comprehensive income/(loss) - 6 17 23 - 23
Comprehensive income/(loss) - 6 144 150 5 155
Non-cash capital increase 1 - (1 ) - - -
Dividend paid - - - - (4 ) (4 )
Balance as of 31 July 2022 2 (1 ) 680 681 11 692
Tax-exempt group contribution in cash - - 519 519 - 519
Business acquisitions - - - - 9 9
Comprehensive income/(loss):
Net earnings - - 21 21 1 22
Other comprehensive income/(loss) - (7 ) (3 ) (10 ) - (10 )
Comprehensive income/(loss) - (7 ) 18 11 1 12
Balance as of 31 July 2021 1 (7 ) 537 531 10 541
Reserves
Equity,
share-
holders in
STARK
Group A/S
Capitalisation upon incorporation in cash
as of 16 December 2020
STARK Group Annual Report 2022 Consolidated Financial Statements 37
CASH FLOW STATEMENT
See notes to the financial statements.
EUR million Note 2021/22 2020/21
Net earnings 132 22
Adjustments and reversals, non-cash 6.3 331 79
Changes in working capital 6.4 (88 ) 215
(Decrease)/increase in provisions and other liabilities (3 ) (6 )
Cash flow from operating activities before financial items and tax 372 310
Interest paid (67 ) (6 )
Tax paid (75 ) (4 )
Cash flow from operating activities 230 300
Cash flow from investing activities
Acquisition of businesses (net of cash acquired) 3.1 (189 ) (2,152 )
Purchases of property, plant and equipment (71 ) (16 )
Proceeds from sale of land, property, plant and equipment 15 -
Purchases of intangible assets (24 ) (5 )
Cash flow from investing activities (269 ) (2,173 )
Free cash flow (39 ) (1,873 )
Cash flow from financing activities
Repayment of borrowings 5.3 (2 ) -
Proceeds from loans from related parties 5.3 58 1,696
Proceeds from equity contributions 5.1 - 520
Payment of dividend to minority interests (4 ) -
Repayment of leasing liabilities 5.3 (77 ) (14 )
Cash flow from financing activities (25 ) 2,202
Net cash (used)/generated (64 ) 329
Effects of exchange rate changes (5 ) 1
Net increase/(decrease) in cash and cash equivalents (69 ) 330
Cash, cash equivalents, beginning balance 330 -
Cash and cash equivalents, ending balance 261 330
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 38
1.1 BASIS OF REPORTING
Overview of business
The Group was established on 16 December 2020. The
Group completed the acquisition of STARK Group as of
4 May 2021.
STARK Group is a leading business-to-business (“B2B”)
distributor focusing mainly on customers in the resilient
and structurally growing renovation, maintenance and
improvement (“RMI”) end-markets within the greater
construction sector across Northern Europe. The
business is divided into two segments: “Nordics”
(Denmark, Sweden, Finland and Norway) and “Germany”
(Germany and Austria).
Comparative figures
The comparative figures in the Consolidated Financial
Statements cover the period 16 December 2020 – 31
July 2021 as the Group’s first accounting year and where
the income statement includes operating activities from
4 May 2021, whereby the income statement represents
approx. 3 months of operations.
Basis of reporting
The Consolidated Financial Statements have been
prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European
Union (EU) and additional Danish requirements in
accordance with the Danish Financial Statement Act
(Class Large C).
Management has assessed the impact of new or
amended and revised accounting standards and
interpretations (IFRSs) issued by the IASB and IFRSs
endorsed by the European Union effective on or after 1
August 2021. It is assessed that application of
amendments effective from 1 August 2021 has not had
a material impact on the consolidated financial
statements for 2021/22. Furthermore, Management
does not anticipate any significant impact on future
periods from the adoption of these amendments.
The Consolidated Financial Statements have been
prepared on a going concern basis and under the
historical cost convention as modified by the revaluation
of certain financial assets and certain financial liabilities
that are measured at fair value.
Applying materiality
The consolidated financial statements are a result of
processing large numbers of transactions and
aggregating those transactions into classes according
to their nature or function. The transactions are
presented in classes of similar items in the consolidated
financial statements. If a line item is not individually
material, it is aggregated with other items of a similar
nature in the consolidated financial statements or in the
notes.
Management provides specific disclosures required by
IFRS unless the information is not applicable or is
considered immaterial to the decision making of the
primary users of these financial statements.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 39
1.2 GROUP ACCOUNTING POLICIES
A summary of the principal accounting policies applied by the Group in
the preparation of the consolidated financial statements is set out
below and together with the notes to which they relate. The
descriptions of accounting policies in the notes form part of the overall
description of the accounting policies.
Consolidation
The Consolidated Financial Statements include the results of the
Company and its subsidiary undertakings and its share of the results of
its joint venture, see note 6.10 for list of subsidiaries.
Subsidiaries are all entities (including structured entities) over which
the Group has control. The Group controls an entity where 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
to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group. Subsidiaries
are deconsolidated from the date that control ceases.
Intra-group transactions and balances and any unrealised gains and
losses arising from intra-group transactions are eliminated in the
consolidated figures.
Foreign currencies
The Consolidated Financial Statements are presented in Euros which is
the presentation currency of the Group. Items included in the financial
statements of each of the Group’s companies are measured using the
currency of the primary economic environment in which the companies
operate (the “functional currency”).
Transactions in foreign currencies are translated to the functional
currency using the exchange rates at transaction date. At each balance
sheet date, monetary assets and liabilities that are denominated in
foreign currencies are translated to the functional currency at the rate
prevailing on the balance sheet date. All differences are recognised in
the consolidated income statement.
The assets and liabilities of subsidiaries having other functional
currencies than Euro are translated into Euros at exchange rates
prevailing at the balance sheet date. Income statement items are
translated at average exchange rates for the accounting year.
Exchange differences arising are recognised in the consolidated
statement of comprehensive income and are included in the
translation reserve. The relevant parts of the translation reserve is
related to subsidiaries and will be recognised in the income statement
when a subsidiary is sold or closed down.
Goodwill and fair value adjustments arising on the acquisition of a
foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate.
Impairment of assets
Assets that have an indefinite useful life, such as goodwill and certain
trade names, are not subject to amortisation or depreciation and are
tested for impairment annually and whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. Assets that are subject to amortisation or depreciation
and assets under construction are tested for impairment whenever
events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value
less costs to sell and value in use. The value in use is in most cases
based on the discounted present value of the future cash flows
expected to arise from the cash generating unit to which the asset
relates, or from the individual asset or asset group.
Cash flow statement
The consolidated statement of cash flows shows cash flows from
operating, investing and financing activities, and the Group’s cash and
cash equivalents at the beginning and end of the year. Cash flow from
operating activities is compiled using the indirect method starting with
the net result for the year adjusted for noncash items, received and
paid financial items, corporate income tax paid and change in working
capital. Cash flow from investing activities comprises payments
relating to the acquisition and sale of companies and noncontrolling
interests, intangible assets, and property, plant and equipment. Cash
flow from financing activities comprises proceeds from borrowings,
repayment of principal on interest-bearing debt, repayment of lease
liabilities, payment of dividends, proceeds from share issues, and the
purchase and sale of treasury stock. Cash and cash equivalents
comprises cash at bank deposits due on demand. Cash flows in
foreign currencies are translated to EUR at the average exchange rate
for the respective years.
OTHER SPECIFIC ACCOUNTING POLICIES WITHOUT A NOTE
REFERENCE
Cost of sales
Cost of sales includes costs for the goods sold and consumed in order
to obtain net sales for the year. The Group enters into arrangements
with certain vendors providing purchase rebates. These purchase
rebates are recognized when earned and are recorded initially as a
reduction in the cost price for the inventory resulting in a reduction in
cost of sales when the related product is sold.
Other external expenses
Other external expenses comprise operating expenses such as sales,
marketing and distribution costs, costs related to infrastructure and
logistics, and corporate costs.
Other operating income and expenses
Other operating income and other operating expenses comprise items
of a secondary nature to the main activities of the Group, including
gains and losses on the sale of intangible assets and property, plant
and equipment.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at
call with banks. Bank overdrafts are shown within borrowings in
current liabilities to the extent that there is no legal right of offset
and/or no practice of net settlement with cash balances. Cash, which
is not freely available to the Group, is disclosed as restricted cash.
Trade payables
Trade payables are non-interest bearing and are recognised initially at
fair value and subsequently measured at amortised cost using the
effective interest method.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 40
1.3 KEY ACCOUNTING ESTIMATES AND JUDGEMENTS
In the process of applying the Group’s accounting
policies, management makes various accounting
judgements and estimates that form the basis of
presentation, recognition and measurement of the
Group’s assets, liabilities, income and expenses.
The judgements and estimates made are based on
historical experience and other factors that
management assesses to be reliable, but that, by nature,
are associated with uncertainty and unpredictability and
may therefore prove incomplete or incorrect. Should
these judgements or estimates prove incorrect there
may be an impact on the following year’s Consolidated
Financial Statements.
The Group believes that the judgements and estimates
that have been applied in these Consolidated Financial
Statements will not give rise to a material impact within
the next financial year. The judgements or estimates are
reviewed on an ongoing basis.
ACQUISITIONS OF BUSINESSES AND ACTIVITIES
Assessment of type of transaction (judgement)
In connection with an acquisition, STARK Group uses its
judgment to determine whether the transaction is a
business combination by applying the definition in
IFRS 3 Business combinations. A transaction is
determined as a business combination when the assets
acquired and liabilities assumed constitute a business.
A business consists of inputs and processes applied to
those inputs that have the ability to create outputs. If the
assets acquired do not constitute a business, the
transaction is recognized as a purchase of individual
assets.
Identification of assets and liabilities (judgement)
As part of an acquisition, an assessment of fair value of
the identifiable assets, liabilities and contingent
liabilities is carried out.
On recognition of assets and liabilities from a business
combination, management judgements are required
in identifying assets, liabilities and contingent liabilities.
Purchase price allocations (estimates)
When STARK Group applies the acquisition method to
business combinations, by its nature this involves
estimates on assessing the fair value of identifiable
assets and liabilities. The assessment of the fair value
of customer relations and trade names are based on a
number of estimates regarding WACC and expected
cash flows which have a significant impact on the fair
value and the resulting goodwill or bargain purchase
gain from the acquisition.
Customer relations and trade names (estimates)
The valuation of the intangible assets is based on the
following methods:
▪ Trade names: the relief-from-royalty method. It has
been assessed that the trade names in the Group
each has a strong market position and that their lives
are considered indefinite. Consequently, trade names
are not amortised but are subject to annual
impairment testing.
▪ Customer relations: the multi-period excess earnings
method (MEEM), in which the value of customer
relations is estimated based on the residual earnings
after fair returns on all other assets employed are
deducted from the business unit’s after-tax earnings.
Properties (estimates)
Estimation of fair value of properties is based on the
normalized earnings model, which requires management
estimates related to required rate of return and the
applicable market rent.
Please refer to note 3.1.
Other acquired assets and liabilities
The fair value of the acquired finished goods is
determined on the basis of expected selling prices to be
obtained in the course of normal business operations
less expected costs to execute the sale, and less a
reasonable profit on the sales effort.
Receivables are measured at the fair value of the
amounts that are expected to be received less expected
costs for collection.
Liabilities are measured at the present value of the
amounts that are required for settling the liabilities. The
Group’s incremental borrowing rate is applied for
discounting purposes.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 41
1.3 KEY ACCOUNTING ESTIMATES AND JUDGEMENTS -
CONTINUED
GROUP AS LESSEE
Determining the lease term of contracts with renewal
options (estimate)
The Group determines the lease term as the non-
cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is
reasonably certain to be exercised. The Group has
several lease contracts that include extension options.
The Group applies judgement in evaluating whether it is
reasonably certain to exercise the option to renew or
whether to terminate the lease. With due consideration
to the Group’s location plans and strategy, the Group
considers all relevant factors that create an economic
incentive for it to exercise the renewal option or to let the
leases expire. Unless contractually obligated, the Group
never estimates lease lengths of more than ten years.
The estimated lease term is reassessed at each
reporting date.
INVENTORY
Valuation of inventory (estimate)
Provisions are made against slow-moving, obsolete and
damaged inventories for which the net realisable value is
estimated to be less than the cost. The risk of
obsolescence of slow-moving inventory is assessed by
comparing the level of inventory held to future sales
projected on the basis of historical experience. The
actual realisable value of inventory may differ materially
from the estimated value on which the provision is
based.
The Group has recognised provisions in respect of
inventory balances of EUR 61m as of 31 July 2022 (31
July 2021: EUR 49m), see note 4.1.
ACCOUNTS RECEIVABLE
Valuation - expected credit losses (estimate)
Provision is made for expected credit losses in respect
of the Group’s trade and other receivables, which are
estimated to occur if a customer subsequently is unable
to pay. In connection with the assessment of whether
the Group’s provisions for expected credit losses are
sufficient, management analyses accounts receivable
and estimates lifetime expected credit losses applying a
provision matrix as defined in the accounting policy for
trade receivables by reference to past default experience
and analysis of the current financial position, including
historical credit losses, customer credit worthiness,
current economic trends and changes in customer
payment terms and also takes into account the extent to
which protection is provided for through credit insurance
arrangements. If customers’ financial conditions were to
deteriorate compared to the assumed trends, it may be
necessary to recognise further credit losses in future
periods.
The Group has a provision for expected credit losses of
EUR 27m as of 31 July 2022 (31 July 2021: EUR 21m),
see note 4.2.
TRADE PAYABLES
Assessment of supplier rebates (estimates)
The Group enters into agreements with many of its
vendors that provide rebates. Many of these agreements
apply to purchases in a calendar year rather than the
Group’s financial year.
Under certain agreements, the rebate increases as a
proportion of purchases as higher quantities or values of
purchases are made. The Group adjusts the cost of
purchases to reflect estimated rebates receivable, which
can depend on the projected volume, value and mix of
purchases from a vendor through to the end of the
qualifying period. Actual rebates receivable from
vendors may differ materially from the estimates on
which the cost of purchases is based.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 42
1.3 KEY ACCOUNTING ESTIMATES AND JUDGEMENTS -
CONTINUED
PROVISIONS
Provisions for legal claims and environmental
restoration (judgement)
Provisions for legal claims and environmental
restoration are recognised when the Group has a present
legal or constructive obligation as a result of past
events, when it is more likely than not that an outflow of
resources will be required to settle the obligation, and
when the amount can be reliably estimated. Such
provisions are measured at the present value of
management’s best estimate of the expenditure required
to settle the present obligation at the balance sheet
date. The discount rate used to determine the present
value reflects current market assessments of the time
value of money. The Group has provided EUR 40m as of
31 July 2022 (31 July 2021: EUR 37m) to cover for the
described risks and claims in addition to other
provisions as presented in note 4.3.
EXPECTED USEFUL LIFE AND RESIDUAL VALUE
FOR NON-CURRENT ASSETS
Useful life is initially assessed when the assets are
acquired and is estimated individually in each case.
Amortisation and depreciation of non-current assets is
based upon an expected useful life for the assets and an
estimated residual value.
Management reassesses expected useful life and the
residual value on an on-going basis. When changing the
amortisation or depreciation due to a change in the
useful life and/or residual value, the effect on
depreciation is recognised prospectively as a change in
accounting estimates.
Management has generally determined that trade names
have indefinite lives. The reasonableness of this
determination is reassessed annually.
Customer relations are amortised over 15 years based
upon historical experience, market trends and strong
relationships between STARK Group and the customers.
NON-CURRENT ASSETS – IMPAIRMENT TESTING
Intangible assets such as goodwill and intangible assets
with indefinite lives are annually tested for impairment,
whereas intangible assets and tangible assets in use
with definite useful lives are tested for impairment only if
there is any indication of impairment.
The Group performs the impairment test based on a
discounted cashflow model, where assets are allocated
to the smallest possible cash generating units (CGUs).
CGUs (judgement)
The CGU determination involves judgement and is based
on the smallest identifiable cash generating units. Group
management monitor performance at business unit
level, and hence the individual business units are
identified as the smallest identifiable cash generating
units.
Discounted cashflows (estimates)
The expected future cash flows are based on budgets
and forecasts for the Group based on Management’s
expectations and target plans based on current market
conditions and future growth expectations. The key
factors used in calculating the value are revenue, costs
of goods sold (COGS), operating expenses (OPEX),
EBITDA, working capital, capital expenditures (CAPEX)
and discount rate.
The impairment test did not result in any recognition of
impairment losses as of 31 July 2022 and 2021, see
note 3.2.
EMPLOYEE BENEFIT PLANS
Valuation of defined benefit plans (estimates)
The value of the defined benefit plans is based on
valuations from external actuaries. The valuation is
based on a number of actuarial assumptions, including
discount rates, expected return on plan assets, expected
growth in wages and salaries, mortality and retirement
benefits. See note 6.2.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 43
2.1 SEGMENT ANALYSIS
The operating structure and related segments have been
defined based on how management manages and
controls the business. This structure is used in the
internal reporting framework for the Board of Directors,
and the operating segments are regularly reviewed by
the Board of Directors to decide how to best allocate
resources and manage performance. The operating
segments derive their net sales from a single business
activity, the distribution of building materials.
EUR million Nordics Germany Total Nordics Germany Total
Income statement
Net sales 3,277 2,718 5,995 818 656 1,474
Cost of sales (2,395) (2,059) (4,454) (596) (502) (1,098)
Gross Profit 882 659 1,541 222 154 376
Staff costs (398) (309) (707) (98) (73) (171)
Other external operating expenses (197) (178) (375) (56) (48) (104)
287 172 459 68 33 101
Depreciation and amortisation of non-current assets (101) (70) (171) (22) (15) (37)
Earnings before interest and tax (EBIT) 186 102 288 46 18 64
Financial expenses (102) (24)
Result before tax 186 102 186 40
Tax for the period (54) (18)
Result for the period 186 102 132 22
Capital expenditures by segment
Property, plant and equipment 40 31 71 9 7 16
Intangible assets 21 3 24 4 1 5
Total capital expenditures by segment 61 34 95 13 8 21
Assets and liabilities by segment
Segment non-current assets 2,035 1,221 3,256 1,969 1,055 3,024
Segment current assets 772 647 1,419 625 445 1,070
Segment liabilities (1,572) (809) (2,381) (1,424) (676) (2,100)
Net liabilities not allocated (24) (43)
Net assets 1,235 1,059 2,270 1,170 824 1,951
Net debt (1,578) (1,410)
Total equity 692 541
Specification of total assets
Segment non-current assets 2,035 1,221 3,256 1,969 1,055 3,024
Segment current assets 772 647 1,419 625 445 1,070
Assets not allocated, non-current 5 5
Assets not allocated, current 1 2
Cash and cash equivalents included in net debt 261 330
Total assets 4,942 2,594 1,500 4,431
2021/22
Earnings before interest, tax, depreciation and
amortisation (EBITDA)
2021/22
31 July 2022
31 July 2022
31 July 2021
2020/21
2020/21
31 July 2021
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 44
2.2 NET SALES
§ ACCOUNTING POLICIES
Net sales
The Group derives its revenues from contracts with customers for the
transfer of goods at a point in time. Net sales comprise the fair value
of consideration received or receivable for the sale of goods in the
ordinary course of the Group’s activities. Net sales from the sale of
goods for resale and finished goods is recognised in the income
statement when control of the goods has transferred to the customer,
being when the goods are delivered to the buyer and the amount of net
sales can be measured reliably.
Net sales is recorded net of returns, discounts and value added taxes.
EUR million 2021/22 2020/21
Sale of goods 5,995 1,474
Total net sales 5,995 1,474
The net sales in Denmark, which is the domicile market of the Group amounted to EUR 1,362m in 2021/22 (2020/21: EUR 335m).
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 45
2.3 STAFF COSTS
§ ACCOUNTING POLICIES
Staff expenses
Staff expenses comprise wages and salaries as well as other payroll
expenses. Salaries and wages, social security contributions, holiday
and sick leave, bonuses and other monetary and non-monetary
benefits are recognised in the year in which the employees render the
associated services. Bonus for eligible personnel is recognised based
on the estimated or agreed bonus as of year-end calculated in
accordance with the agreed bonus schemes.
The average number of employees is calculated as average of the
number of employees at the end of each month.
EUR million 2021/22 2020/21
Salary and wages 582 143
Pensions - contribution plans 27 6
Pensions - defined benefit plans 5 2
Other expenses for social security 93 20
Total staff costs 707 171
Compensation for the Executive Management of the Group:
Salary and wages 5 1
Pensions - contribution plans 0 0
Other expenses for social security 0 0
Total compensation paid to the Executive Management 5 1
2021/22 2020/21
Average number of fulltime employees 11,932 11,117
Number of employees at the end of the financial period 13,059 11,389
The members of the Executive Management as well as other employees are entitled to a cash bonus based on fulfilment of pre-
defined financial and non-financial targets.
The Board of Directors has not received any fee.
The Group has not established share-based incentive programs.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 46
2.4 DEPRECIATION AND AMORTISATION OF NON-
CURRENT ASSETS
§ ACCOUNTING POLICIES
Amortisation, depreciation and impairment losses
Amortisation, depreciation and impairment losses comprise
amortisation, depreciation and impairment of intangible assets and
property, plant and equipment including depreciation of right of use
assets.
2.5 FINANCIAL EXPENSES, NET
§ ACCOUNTING POLICIES
Financial expenses
Financial expenses are recognised in the income statement at the
amounts relating to the relevant financial year applying the effective
interest rate method.
EUR million 2021/22 2020/21
Intangible assets 45 9
Buildings 15 4
Fixtures, fittings, tools and equipment 27 6
Right of use assets 84 18
Total depreciation and amortisation of non-current assets 171 37
EUR million 2021/22 2020/21
Financial expenses
Interests on loans from related parties 70 17
Interests on loans from third party 8 2
Net interest employee benefit obligations (1) (1)
Foreign exchange losses 11 2
Leases interest (IFRS16) 14 4
Total financial expenses 102 24
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 47
2.6 INCOME TAX
§ ACCOUNTING POLICIES
Taxation
The tax expense included in the consolidated income statement
consists of current and deferred tax.
Current tax is the expected tax payable on the taxable income for the
year, using tax rates enacted or substantively enacted at the balance
sheet date. Tax expense is recognised in the consolidated income
statement except to the extent that it relates to items recognised in the
consolidated statement of comprehensive income or directly in the
consolidated statement of changes in equity.
Current tax receivables and liabilities are recognised in the balance
sheet at the amount calculated on the basis of the expected taxable
income for the year adjusted for tax prepayments.
Tax receivables and liabilities are offset to the extent that there is legal
right to set-off, and items are expected to be settled net or
simultaneously.
EUR million 2021/22 2020/21
Current tax 60 21
Deferred tax (5) (3)
Adjustment of current tax regarding previous years 3 -
Adjustment of deferred tax regarding previous years (4) -
Total income tax for the period 54 18
Tax on items charged/(credited) to the statement of other comprehensive income:
Deferred tax charge/(credit) on actuarial gain/loss on retirement benefit plans 6 (1)
Total tax on items charged/(credited) to other comprehensive income 6 (1)
Tax reconciliation: % %
Corporation tax rate in Denmark 22% 22%
Adjustment of calculated tax in foreign Group entities relative to 22% 3% 3%
Non-deductible and non-taxable items 2% 8%
Non-deductible interest expenses 3% 12%
Adjustment relating to prior year -1% 0%
Tax rate on profit before tax 29% 45%
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 48
3.1 ACQUISITIONS OF BUSINESSES
In the beginning of March 2021, STARK Group signed an
agreement to acquire 100% of the shares in Melle
Gallhöfer, which is a leading German specialist
distributor of roofing and façade building materials with
an annual net sales of EUR 326m and annual EBITDA of
around EUR 20m. The agreement was approved by the
relevant authorities at the end of October 2021 and the
closing and takeover was effective as of 29 October
2021 from which date Melle Gallhöfer is included in the
consolidated financial statements of the Group.
The acquisition of Melle Gallhöfer will support STARK
Deutschland’s position as a market leader within
distribution of building materials, including roofing and
facade materials through more than 250 branches and
distribution centres across all of Germany.
During the financial year 2020/21, the Group also signed
agreements to acquire three companies in Sweden,
Kakeldaxgruppen AB, Centro Kakel & Klinker AB and AB
Knut Lindgren. Closing was completed as of
1 September 2021 for the two tiles companies and as of
1 October 2021 for AB Knut Lundgren. Total annual net
sales for these businesses is around EUR 54m with an
annual EBITDA of around EUR 2m.
During 2021/22, the Group has signed and closed eleven
contracts to acquire Sotenäs Trävaru AB, Angered
Byggvaror AB and 100% Proffs AB in Sweden, a business
from HOK-Elanto Liiketoiminta Oy in Finland and Lieblein
Baustoffe GmbH, Ludwig Pfeiffer Hoch- und Tiefbau
GmbH and Tröger & Entenmann Group in Germany,
Treprodukter Øst in Norway, XL-Byg Allinge and Arnum
Rør in Denmark, and Dach & Wand in Austria. Total
annual net sales for these businesses is around EUR
314m with an annual EBITDA of around EUR 21m.
The 15 closed acquisitions with a total annual net sales
of around EUR 694m and a total annual EBITDA of
around EUR 43m, will increase the Group’s geographic
coverage in the Nordic countries and Germany and with
the acquisition of Dach & Wand, STARK Group enters a
new market and gains a strong foothold in the Austrian
market for distribution of building materials.
Following recognition of acquired identifiable assets and
liabilities at their fair values, the goodwill related to the
acquisitions in 2021/22 is totally measured at EUR 44m.
The recognised goodwill represents primarily the value
of the staff and expected synergies from combining the
acquired entities with the existing STARK Group
activities. The goodwill is not deductible for tax
purposes.
The acquisitions in total contribute with EUR 457m and
EUR 31m to the Net sales and EBITDA, respectively.
Transaction and acquisition costs incurred in 2021/22
amounts to EUR 6m which are recognised as part of
Other external operating expenses
In 2021/22, the Group also signed a contract to acquire
Konz in Germany. With the acquisition of Konz, STARK
Group strengthens its foothold in two fast-growing
growth areas in Europe's largest market for heavy
building materials, Stuttgart and Dresden. The
acquisition was closed as of 1 August 2022 and will be
included in the consolidated financial statements in
2022/23 and onwards. The consideration for Konz
amounts to EUR 41m and is financed with existing
available facilities. Konz has an annual net sales of
approx. EUR 110m and an EBITDA of around EUR 4m.
The initial accounting is not yet completed, why
disclosures of the fair value of assets acquired and
other disclosures required by IFRS 3 Business
Combinations cannot be provided. The acquisition
implies a business combination, and the Group is
currently in the process of determining the purchase
price allocation.
In November 2022, STARK Group has signed an
agreement to acquire Norwegian FagFlis, Norway's
leading distributor and retailer of ceramic tiles for
professional craftsmen, as well as the Swedish FF Kakel.
FagFlis and FF Kakel have an annual turnover of approx.
EUR 63m and an annual EBITDA of around EUR 9m. The
consideration amounts to EUR 42m and will be financed
with existing facilities. Closing is expected to take place
in December 2022.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 49
3.1 ACQUISITIONS OF BUSINESSES - CONTINUED
The fair values of the identifiable assets and liabilities
acquired as of the acquisition dates and the
consideration for the acquisitions closed and taken over
during 2021/22 are as follows:
§ ACCOUNTING POLICIES
Business combinations
The cost of an acquisition is measured as the fair value of the assets
given, equity instruments issued, and liabilities incurred or assumed at
the date of exchange. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date, irrespective of the
extent of any non-controlling interests. Deferred tax is calculated on
fair value adjustments. Acquisition related costs are expensed.
The excess of the cost of acquisition over the fair value of the Group’s
share of the identifiable net assets acquired is recorded as goodwill. If
the cost of acquisition is less than the fair value of the Group’s share of
the net assets of the subsidiary acquired, negative goodwill, the
difference is recognised directly in the consolidated income statement
as “Bargain purchase gain”.
If the initial accounting for a business combination is incomplete by
the end of the reporting period in which the combination occurs, the
Group reports provisional amounts for the items for which the
accounting is incomplete. Those provisional amounts are adjusted
during the measurement period (which cannot exceed one year beyond
the acquisition date), or additional assets or liabilities are recognised,
to reflect new information obtained about facts and circumstances
that existed as of the acquisition date that, if known, would have
affected the amounts recognised as of that date.
Changes in estimates of contingent consideration that reflect
additional information received in the measurement period are
adjusted retrospectively. Other changes in estimates of contingent
consideration are generally recognised in the income statement.
2020/21
EUR million Nordic
Melle
Gallhöfer
Other
Germany
1
Total Total
Customer relationships 10 22 15 47 446
Trade names - 7 3 10 490
Other intangible assets - 1 1 2 32
Property, plant and equipment 9 15 27 51 833
Right of use assets 37 35 15 87 468
Inventories 21 35 27 83 553
Receivables 16 15 21 52 537
Cash and cash equivalents 2 1 - 3 175
Trade and other payables (24) (12) (25) (61) (1,009)
Borrowings (1) (0) (16) (17) (28)
Employee benefit obligations - (0) (0) (0) (112)
Leasing obligations (35) (35) (15) (85) (463)
Deferred tax (2) (8) (5) (15) (305)
Tax payable (0) (4) (0) (4) (18)
Provisions (0) (2) (2) (4) (35)
Non-controlling interests - - - - (8)
Total 33 70 46 148 1,556
Goodwill arising 25 - 19 44 771
Consideration 58 70 65 192 2,327
Total consideration as cash payment 58 70 65 192 2,327
Cash and cash equivalents acquired (2) (1) - (3) (175)
Net cash outflow 56 69 65 189 2,152
1. Other Germany includes Austria.
2021/22
The net outflow of cash in respect of the
purchase of businesses is as follows:
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 50
3.2 GOODWILL
Impairment review of goodwill
and trade names with indefinite lives
Goodwill and intangible assets acquired have been
allocated to the individual cash generating units or
aggregated cash generating units (together “CGUs”),
which are deemed to be the smallest identifiable group
of assets generating independent cash inflows. CGUs
have been aggregated in the disclosure above at a
geographical level. Impairment reviews were performed
for each individual CGU as of 31 July 2022.
The relevant inputs to the value-in-use calculations of
each CGU were:
▪ Cash flow forecasts for year one to five are derived
from the most recent approved strategic plan. The
strategic plan is developed based on analysis of
sales, markets and costs at a geographical level.
Consideration is given to past events, expected
market development, competition and
macroeconomic trends. Long-term growth rate of 1.5
percent was applied for all countries for the years
beyond year five.
▪ The cash flow per CGU is discounted using risk-
adjusted, pre-tax discount rate, calculated by
reference to the weighted average cost of capital
(“WACC”). The discount rate per CGU is as follows:
Germany 10.0%
Austria 11.8%
Denmark 9.5%
Sweden 9.4%
Finland 9.7%
Norway 10.0%
The impairment review did not result in impairment
charges.
EUR million 2021/22 2020/21
Cost at the beginning of the period 769 -
Business acquisitions 44 771
Exchange rate adjustment (3) (2)
Cost at the end of the period 810 769
Impairment losses at the beginning of the period - -
Impairment charge for the period - -
Accumulated impairment losses at the end of the period - -
Carrying amount at the end of the period 810 769
The carrying amount of goodwill by cash generating unit (CGU) is as follows:
31 July
2022
31 July
2021
Germany 261 251
Austria 9 -
Denmark 225 228
Sweden 191 172
Finland 94 94
Norway 30 24
Group 810 769
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 51
3.2 GOODWILL - CONTINUED
Management has performed a sensitivity analysis
across all CGUs, which have goodwill and acquired
intangible assets, using reasonably possible changes in
the following key impairment review assumptions:
compound average net sales growth rate, pre-tax
discount rate and long‑term growth rate, keeping all
other assumptions constant. With an increase in
discount rate of 1%, a decrease in compound average
net sales growth rate of 1% or a decrease in the long-
term growth rate of 1%, the sensitivity testing did not
identify any need for impairment.
In light of the current macro-economic situation with an
increased risk of recession, the Group has performed
additional scenario analysis. The analysis models a 10%
decline in EBITDA versus the current long-term financial
plan and also considers the above-mentioned sensitivity
changes. The analysis confirms that even in this
scenario, there is no need for impairment.
§ ACCOUNTING POLICIES
Goodwill
Goodwill represents the excess of the cost of an acquisition over the
fair value of the Group’s share of the net identifiable assets of the
acquired subsidiary undertaking at the date of acquisition. Goodwill on
acquisitions of subsidiary undertakings is included within intangible
assets. Goodwill is allocated to cash generating units or aggregations
of cash generating units (together “CGUs”). CGUs are independent
sources of income streams and represent the lowest level within the
Group at which the associated goodwill is monitored for management
purposes. The Group considers that a CGU is a business unit because
independent cash flows cannot be identified below this level.
Goodwill is not amortised but is tested annually for impairment and
carried at cost less accumulated impairment losses. For goodwill
impairment testing purposes, no CGU is larger than the operating
segments determined in accordance with IFRS 8 “Operating
Segments”.
The recoverable amount of goodwill and acquired trade names with
indefinite life is assessed on the basis of the value in use estimate for
CGUs to which they are attributed. Where carrying value exceeds the
recoverable amount, an impairment loss is recognised with a charge
included in the consolidated income statement.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 52
3.3 OTHER INTANGIBLE ASSETS
2021/22
EUR million
Trade
names
Customer
relation-
ships
Software Total
Cost at the beginning of the period 489 445 36 970
Business acquisitions 10 47 2 59
Additions - - 24 24
Disposals - - 0 0
Transfers - - 2 2
Exchange rate adjustment (2) (3) - (5)
Cost at the end of the period 497 489 64 1,050
Amortisation and impairment at the beginning of the period - (7) (2) (9)
Amortisation for the period - (32) (13) (45)
Exchange rate adjustment - 0 - 0
Amortisation and impairment at the end of the period - (39) (15) (54)
Carrying amount at the end of the period 497 450 49 996
2020/21
EUR million
Trade
names
Customer
relation-
ships
Software Total
Cost at the beginning of the period - - - -
Business acquisitions 490 446 32 968
Additions - - 5 5
Disposals - - (1) (1)
Exchange rate adjustment (1) (1) - (2)
Cost at the end of the period 489 445 36 970
Amortisation and impairment at the beginning of the period - - - -
Amortisation for the period - (7) (2) (9)
Exchange rate adjustment - - - -
Amortisation and impairment at the end of the period - (7) (2) (9)
Carrying amount at the end of the period 489 438 34 961
Trade names with indefinite lives can be specified as follows per business unit:
31 July
2022
31 July
2021
Germany 209 202
Austria 3 -
Denmark 128 128
Sweden 91 93
Finland 66 66
Total 497 489
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 53
3.3 OTHER INTANGIBLE ASSETS – CONTINUED
The Group has determined that the trade names
recognized with a value on the consolidated balance
sheet have an indefinite life, subject to annual
impairment testing, see note 3.2.
The Group continues to invest in retaining brand
awareness and thereby expects to maintain the value of
the trade names.
§ ACCOUNTING POLICIES
Other intangible assets
An intangible asset, which is an identifiable non-monetary asset
without physical substance, is recognised to the extent that it is
probable that the expected future economic benefits attributable to the
asset will flow to the Group and that its cost can be measured reliably.
The asset is deemed to be identifiable when it is separable or when it
arises from contractual or other legal rights.
Intangible assets, primarily trade names and customer relationships,
acquired as part of a business combination are capitalised separately
from goodwill and are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is calculated using
the straight-line method for intangible assets.
Trade names with indefinite useful lives are not amortised but are
tested for impairment annually and whenever there is an indication of
impairment.
Software that is not integral to an item of property, plant and
equipment is recognised separately as an intangible asset and is
carried at cost less accumulated amortisation and accumulated
impairment losses. Costs include software licences, consulting costs
attributable to the development, design and implementation of the
software and internal costs directly attributable to the development,
design and implementation of the software. Costs in respect of training
and data conversion are expensed as incurred.
The cost of the intangible assets is amortised and charged to the
consolidated income statement over their estimated useful lives as
follows:
Customer relationships 15 years
Software 3 - 5 years
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 54
3.4 TANGIBLE NON-CURRENT ASSETS
2021/22
EUR million Property
Plant &
equipment
Non-
current
assets
under con-
struction
Total
Cost at the beginning of the period 704 87 52 843
Business acquisitions 40 11 1 52
Additions 11 21 39 71
Disposals (12) (1) (0) (13)
Transfers 7 37 (46) (2)
Exchange rate adjustment 1 0 (0) 1
Cost at the end of the period 751 155 46 952
Depreciation at the beginning of the period (4) (6) - (10)
Depreciation for the period (15) (27) - (42)
Disposals 0 0 - 0
Exchange rate adjustment (0) (0) - (0)
Depreciation at the end of the period (19) (33) - (52)
Carrying amount at the end of the period 732 122 46 900
2020/21
EUR million Property
Plant &
equipment
Non-
current
assets
under con-
struction
Total
Cost at the beginning of the period - - - -
Business acquisitions 707 82 44 833
Additions - 4 12 16
Disposals - - (1) (1)
Transfers 1 1 (2) -
Exchange rate adjustment (4) - (1) (5)
Cost at the end of the period 704 87 52 843
Depreciation at the beginning of the period - - - -
Depreciation for the period (4) (6) - (10)
Disposals - - - -
Exchange rate adjustment - - - -
Depreciation at the end of the period (4) (6) - (10)
Carrying amount at the end of the period 700 81 52 833
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 55
3.4 TANGIBLE NON-CURRENT ASSETS - CONTINUED
§ ACCOUNTING POLICIES
Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated
depreciation and less any accumulated impairment losses. Cost
comprises the cost of acquisition and expenses directly related to the
acquisition up until the time when the asset is ready for use. Interest
expenses on loans raised for financing the construction of property,
plant and equipment and which are related to the period of
construction are recognised in the consolidated income statement
when incurred.
Depreciation based on cost is calculated on a straight-line basis over
the expected useful lives of the assets, which are:
Office buildings up to 50 years
Commercial buildings and office
premises in connection herewith up to 25 years
Plant and equipment 3 - 10 years
Properties under construction are not depreciated.
At the balance sheet date, an assessment is made of the residual
values, useful life left and amortisation pattern. Changes are
accounted for as changes in accounting estimates.
Gains and losses on disposals or retirements are recognised in the
consolidated income statement as other operating expenses or
income.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 56
3.5 LEASES
RIGHT OF USE ASSETS
Right-of-use assets and related leasing liabilities derive
from the Group being lessee in leasing arrangements
from especially leasing land and buildings representing
stores used in the Group’s business units.
2021/22
EUR million
Land and
buildings
Other
equipment
Total
Cost at the beginning of the period 426 57 483
Business acquisitions 77 10 87
Additions 38 19 57
Disposals (2) (1) (3)
Additions due to revised lease terms 32 0 32
Exchange rate adjustment (2) (1) (3)
Cost at the end of the period 569 84 653
Depreciation and impairment at the beginning of the period (14) (4) (18)
Depreciation for the period (63) (21) (84)
Disposals 1 1 2
Exchange rate adjustment 0 0 0
Amortisation and impairment at the end of the period (76) (24) (100)
Carrying amount at the end of the period 493 60 553
2020/21
EUR million
Land and
buildings
Other
equipment
Total
Cost at the beginning of the period - - -
Business acquisitions 415 53 468
Additions 7 4 11
Disposals - - -
Additions due to revised lease terms 5 - 5
Exchange rate adjustment (1) - (1)
Cost at the end of the period 426 57 483
Depreciation and impairment at the beginning of the period - - -
Depreciation for the period (14) (4) (18)
Disposals - - -
Exchange rate adjustment - - -
Amortisation and impairment at the end of the period (14) (4) (18)
Carrying amount at the end of the period 412 53 465
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 57
3.5 LEASES - CONTINUED
LEASING LIABILITY
In 2021/22, short term, low value and variable leases
have been expensed as other external operating costs
with EUR 12m (2020/21: EUR 4m).
§ ACCOUNTING POLICIES
Right of use lease assets and lease liabilities
The Group recognises a right of use asset and a lease liability at the
commencement date for all lease agreements that the Group has
entered into as lessee. Right of use assets consist primarily of property
and equipment, except short-term leases and leases of low value
assets.
The lease liability is initially measured at the present value of the future
lease payments, discounted using the incremental borrowing rate for
the individual lease.
The lease liability is subsequently measured by increasing the carrying
amount to reflect interest and by reducing the carrying amount to
reflect the lease payments made. Further, lease liabilities are changed
when re-measurements are needed with a corresponding adjustment
to the related right of use asset.
Gains or losses from a lease modification, not accounted for as a
separate lease, is recognised in profit and loss.
The initial right of use assets comprise the amount of the initial
measurement of the lease liability, lease payments made at or before
the commencement day, initial direct costs and costs to restore the
underlying asset at the end of the lease period. The right of use assets
are subsequently measured at cost less accumulated depreciation and
impairment losses.
The right of use assets are depreciated over the shorter period of the
lease term and the useful life of the underlying asset according to the
straight-line method. Property leases normally have a lease term of up
to 20 years, whereas leases of plant and equipment normally have
lease term of up to 10 years. Property leases may include extension
options with the intention of securing flexibility in the lease. Extensions
options are included in the lease term if the extension option is
reasonably certain to be exercised.
For short-term leases and leases of low-value assets, the Group has
opted to recognise a lease expense on a straight-line basis as
permitted by IFRS 16. This expense is presented within “other external
operating expenses”.
EUR million 2021/22 2020/21
Less than 1 year 101 81
Between 1 and 5 years 306 263
More than 5 years 233 235
Undiscounted leasing liability as of 31 July 640 579
Current 84 65
Non-current 472 398
Discounted leasing liability as of 31 July 556 463
Amounts recognized in the statement of cash flows:
Repayment of liabilities 77 14
Interest 14 4
Short term, low value and variable leases included in cash flows from operations
12 4
Total cash outflow for leases 103 22
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 58
4.1 INVENTORIES
In 2021/22, inventory purchases of EUR 4,454m has
been expensed (2020/21: EUR 1,098m).
§ ACCOUNTING POLICIES
Inventories
Inventories, which comprise goods purchased for resale, are stated at
the lower of cost and net realisable value. Cost is determined using the
first-in, first-out (“FIFO”) method. The cost of goods purchased for
resale includes import and custom duties, transport and handling
costs, freight and packing costs and other attributable costs less
supplier rebates. Net realisable value is the estimated selling price in
the ordinary course of business, less applicable variable selling
expenses.
Provisions are made against slow-moving, obsolete and damaged
inventories for which the net realisable value is estimated to be less
than the cost. The risk of obsolescence of slow-moving inventory is
assessed by comparing the level of inventory held to estimated future
sales on the basis of historical experience.
EUR million
31 July
2022
31 July
2021
Trading goods 874 602
Provision for excess and obsolete goods (61) (49)
Total inventories 813 553
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 59
4.2 TRADE RECEIVABLES
The Group is utilizing a trade receivable factoring
agreement covering a facility for a total of EUR 100m of
which EUR 64m was utilised at the balance sheet date
(31 July 2021: EUR 48m). The agreements expire unless
extended on 22 October 2024. The Group has no
obligations on the sold receivables.
EUR million
31 July
2022
31 July
2021
Trade receivables
Trade receivables, gross 596 512
Provision for expected credit losses (27) (21)
Net Trade receivables 569 491
Of this, due after more than 1 year - -
Amounts not yet due 491 439
Past due not more than one month 73 44
Past due more than one month and less than two months 2 3
Past due more than two months and less than three months 1 -
Past due more than three months and less than six months 1 4
Past due more than six months 1 1
As of 31 July 569 491
Movements in the provision for expected credit losses are as follows:
2021/22 2020/21
Provision at the beginning of the period (21) -
Business acquisitions (2) (20)
Net charge for the period (9) (4)
Utilised in the period 5 3
As of 31 July (27) (21)
Trade and other receivables have been aged with respect to the payment terms specified in
the terms and conditions established with customers as follows:
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 60
4.2 TRADE RECEIVABLES - CONTINUED
Provisions for expected credit losses are based on the
simplified expected credit loss model. Credit loss
provisions on individual receivables are provided for
when objective indications of credit losses occur such
as customer bankruptcy and uncertainty about the
customers’ ability and/or willingness to pay, etc. In
addition to this, allowances for expected credit losses
are made on the remaining trade receivables based on a
simplified approach.
§ ACCOUNTING POLICIES
Trade receivables
Trade receivables are non-interest bearing and are recognised initially
at fair value, and subsequently at amortised cost using the effective
interest rate method, less provision for expected credit losses.
The Group measures the provision for expected credit losses at an
amount equal to lifetime expected credit losses (ECL). The expected
credit losses on trade receivables are estimated using a provision
matrix by reference to past default experience of the debtor and an
analysis of the debtor’s current financial position, adjusted for factors
that are specific to the debtors, general economic conditions of the
industry in which the debtors operate and an assessment of both the
current as well as the forecast direction of conditions at the reporting
date. The estimate also takes into account the extent to which
protection is provided through customer insurance arrangements.
The Group writes off a trade receivable when there is information
indicating that the debtor is in severe financial difficulty and there is no
realistic prospect of recovery, e.g. when the debtor has been placed
under liquidation or has entered into bankruptcy proceedings, or when
the trade receivable is over two years past due, whichever occurs
earlier. None of the trade receivables that have been written off are
subject to enforcement activities.
31 July 2022
EUR million
Gross
carrying
amount
Expected
credit loss
Specification of provision for expected credit losses:
Amounts not yet due 493 (2)
Past due not more than one month 81 (8)
Past due more than one month and less than two months 4 (2)
Past due more than two months and less than three months 3 (2)
Past due more than three months and less than six months 1 (0)
Past due more than six months 14 (13)
As of 31 July 2022 596 (27)
31 July 2021
EUR million
Gross
carrying
amount
Expected
credit loss
Specification of provision for expected credit losses:
Amounts not yet due 451 (2)
Past due not more than one month 45 (6)
Past due more than one month and less than two months 4 (3)
Past due more than two months and less than three months 0 (0)
Past due more than three months and less than six months 5 (4)
Past due more than six months 7 (6)
As of 31 July 2021 512 (21)
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 61
4.3 PROVISIONS
The Environmental provision is related to risks for
potential claims on properties.
Restructuring includes provisions for staff redundancy
costs as well as expected unavoidable losses from
onerous lease obligations from closed branches. In
determining the provision for onerous leases, the cash
flows have been discounted on a pre-tax basis using
appropriate incremental borrowing rates.
Other provisions include warranty and separation costs
relating to businesses disposed of and dilapidations on
leased properties.
§ ACCOUNTING POLICIES
Provisions
Provisions are recognised when, in consequence of an event that
occurred before or on the balance sheet date, the Group has a legal or
constructive obligation, and it is probable that economic benefits must
be given up settling the obligation.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax discount
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognised as interest expense.
2021/22
EUR million
Environ-
mental
and Legal
Restruc-
turing
Other pro-
visions
Total
Provision as of 1 August 2021 9 6 22 37
Business acquisitions 2 1 1 4
Utilised in the period - (4) (2) (6)
Charge/(credit) for the period - 4 2 6
Unused amounts reversed during the period - (1) - (1)
Provision as of 31 July 2022 11 6 23 40
2020/21
EUR million
Environ-
mental
and Legal
Restruc-
turing
Other pro-
visions
Total
Provision as of 16 December 2020 - - - -
Business acquisitions 9 3 23 35
Utilised in the period - (1) (3) (4)
Charge/(credit) for the period - 4 3 7
Unused amounts reversed during the period - - (1) (1)
Provision as of 31 July 2021 9 6 22 37
Other provisions can be specified as follows:
31 July
2022
31 July
2021
Dilapidation costs 5 2
Warranty commitments 3 4
Miscellaneous 15 16
Total other provisions 23 22
Maturity of provisions are expected to be:
Within 1 year 8 10
Between 1 and 5 years 9 8
Over 5 years 23 19
Total provisions 40 37
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 62
5.1 SHARE CAPITAL AND SHARE PREMIUM
Subscribed capital
On 16 December 2020, the Company was incorporated
with a subscribed and fully paid-up capital amounting to
DKK 40,000.
On 30 April 2021, the sole shareholder granted a tax-
exempt group contribution amounting to EUR 519m.
On 15 December 2021, the Company made a non-cash
capital increase (bonus shares) of DKK 14,960,000 to
DKK 15,000,000.
5.2 DIVIDEND
No dividends have been paid during the financial year to
the shareholder in STARK Group A/S and no dividends
are proposed to be distributed of the net earnings for
2021/22.
EUR million
Number of
shares
Share
capital
Share
premium
Total
Changes in share capital and share premium for 2021/22:
Balance as of 1 August 2021 40,000 1 0 1
Non-cash capital increase 14,960,000 1 - 1
Balance as of 31 July 2022 15,000,000 2 0 2
Changes in share capital and share premium for 2020/21:
Incorporation - 16 December 2020 40,000 1 0 1
Balance as of 31 July 2021 40,000 1 0 1
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 63
5.3 BORROWINGS
§ ACCOUNTING POLICIES
Borrowings
Interest-bearing loans from related parties and credit institutions and
overdrafts are initially recorded at fair value, net of attributable
transaction costs.
Subsequent to initial recognition, interest-bearing borrowings are
stated at amortised cost with any difference between proceeds and
redemption value being recognised in the consolidated income
statement over the period of the borrowings on an effective interest
basis.
Maturity analysis of borrowings
EUR million
31 July
2022
31 July
2021
Current
Bank loans 10 -
Loans from non-controlling interests 17 16
Loans from related parties 5 6
Current total 32 22
Non-current
Bank loans 16 11
Loans from related parties 1,790 1,707
Non-current total 1,806 1,718
Total borrowings 1,838 1,740
Within 1 year 22 22
Between 1 and 5 years 7 2
After 5 years 1,799 1,716
Carrying amount 1,828 1,740
Changes in assets and liabilities from financing activities
2021/22
EUR million
1 Aug.
2021
Cash
flows
Acquisi-
tions
Other
non-cash
1
31 July
2022
Bank loans 11 (2) 17 - 26
Loans from related parties 1,713 47 - 35 1,795
Leasing liabilities 463 (77) 85 85 556
Loans from non-controlling interests 16 - - 1 17
Total change from financing activities 2,203 (32) 102 121 2,394
2020/21
EUR million
16 Dec.
2020
Cash
flows
Acquisi-
tions
Other
non-cash
2
31 July
2021
Bank loans - 12 (1) 11
Loans from related parties - 1,696 - 17 1,713
Leasing liabilities - (14) 463 14 463
Loans from non-controlling interests - - 16 - 16
Total change from financing activities - 1,682 491 30 2,203
1. Other non-cash includes accrued interest of EUR 35m on loans from related parties. new leasing contracts amounting to EUR 57m and re-measurements of EUR 32m..
2. Other non-cash includes accrued interest of EUR 17m on loans from related parties, new leasing contracts amounting to EUR 11m and re-measurements of EUR 5m.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 64
5.4 FINANCIAL INSTRUMENTS, RISK MANAGEMENT
POLICIES
Risk management
As a result of its operations, investments and financing
the Group is exposed to changes in exchange and
interest rates. The Group’s financial management is
exclusively aimed at the management of financial risks
related to finance. Thus, it is the Group’s policy not to
engage in speculation in financial risks.
Capital Risk Management
The Group’s sources of funding currently comprise
equity contributed by the sole shareholder and cash
flows generated by operations, loans from related
parties and borrowings from banks. The Group’s capital
management is reflected in the financing arrangements
as set out in note 5.3 and note 6.8 and in the
specifications in these notes.
Liquidity Risks
The Group maintains a policy of ensuring sufficient
borrowing headroom to finance all investments and
capital expenditures included in the strategic plan, with
an additional contingent safety margin. The Group
substantially manages its liquidity needs with cash flow
from operations and to achieve effective management
of the Group’s cash, cash pooling is used. The Group’s
liquidity reserves consist of cash and an undrawn credit
facility.
Currency risks
The Group’s currency risk is limited since costs of wages
and purchases of supplies are largely incurred in the
same currency as sales are generated. Currency risks
are primarily related to international purchases and to a
limited extent, sale of goods in foreign currencies. The
Group’s exposure to currency risk is substantially
consistent with the geographic allocation of net assets
as set out in note 2.1.
The Group is subject to translation risk when results of
subsidiaries are translated into EUR. Translation risk is
not hedged with financial contracts. Currently translation
risk is primarily related to DKK, SEK and NOK.
It is the Group’s policy to actively monitor the impact of
exchange rate changes on the results and the Group’s
financial position. The Group does not engage in
speculative currency transactions.
Credit risk
Financial counterparty risk is reduced by only entering
into transactions or arrangements with financial
counterparties that have a satisfactory credit quality.
Furthermore, maximum credit limits for each financial
counterparty applies.
The Group has no material risks relating to an individual
customer or business partner. The Group’s policy for
accepting credit risks means that all major customers
and other partners are credit rated continuously.
The Group’s credit risk is related to accounts receivable,
other receivables and cash. The maximum credit risk
related to receivables and cash correspond to the
balance sheet values recognised. All cash balances are
held with reputable financial institutions. Significant
outstanding and overdue balances are reviewed on a
regular basis and resulting actions are put in place on a
timely basis.
In some cases, protection is provided through credit
insurance arrangements.
Interest rate risk
Fluctuating interest rates influence the Group’s income
statement and the present value of future cash flows
resulting from changes in interest rates. The objective of
actively managing the Group’s interest rate exposure is
to maintain the interest rate risk at a known and
acceptable level and to minimise the Group’s borrowing
costs.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 65
5.4 FINANCIAL INSTRUMENTS, RISK MANAGEMENT
POLICIES – CONTINUED
The future interest for borrowings and payables to
related parties have been estimated using the current
interest rates.
Fair value is considered to be equal to or approximate
the carrying amounts of the various loans and payables.
Financial instruments
The carrying amount of financial instruments by category:
EUR million
31 July
2022
31 July
2021
Financial assets
Trade receivables 569 491
Other receivables 22 21
Cash and cash equivalents 261 330
Financial assets at amortised cost 852 842
Financial liabilities
Payables to related parties (31) (37)
Trade and other payables (1,350) (1,164)
Less: Tax and social security 43 38
Less: Payroll accruals 10 11
Net trade and other payables (current) (1,328) (1,152)
Loans from related parties (1,795) (1,713)
Borrowings (43) (27)
Leasing liabilities (556) (463)
Financial liabilities at amortised cost (3,722) (3,355)
Maturity at fair value on the financial liabilities is as follows:
EUR million
Trade and
other
payables
(current)
Loans
from
related
parties
Borrowings
Leasing
liabilities
Interest Total
31 July 2022
Due in less than one year (1,328) (10) (27) (84) (58) (1,507)
Due in two to five years - - (7) (263) (205) (475)
Due in over five years - (1,818) (9) (209) (229) (2,265)
Total (1,328) (1,828) (43) (556) (492) (4,247)
31 July 2021
Due in less than one year (1,152) (11) (16) (65) (62) (1,306)
Due in two to five years - - (2) (222) (226) (450)
Due in over five years - (1,738) (9) (176) (374) (2,297)
Total (1,152) (1,749) (27) (463) (662) (4,053)
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 66
5.4 FINANCIAL INSTRUMENTS, RISK MANAGEMENT
POLICIES – CONTINUED
§ ACCOUNTING POLICIES
Financial instruments
A financial instrument is any contract that gives rise to a financial
asset, a financial liability or equity instrument.
Financial assets and financial liabilities are recognised in the
Consolidated statement of Financial Position when the Group becomes
a party to the contractual provisions of the instrument. The Group’s
financial instruments comprise trade and other receivables (including
amounts owed by related parties), derivative financial instruments,
cash and cash equivalents, trade and other payables (including
amounts owed to related parties) and borrowings.
Financial assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets or
financial liabilities at fair value through profit or loss are recognised
immediately in profit or loss.
Financial assets at amortised cost are subsequently measured using
the effective interest rate (EIR) method and are subject to impairment.
Gains and losses are recognised in profit or loss when the asset is
derecognised, modified or impaired. The Group’s financial assets at
amortised cost includes trade and other receivables.
The classification of financial assets at initial recognition depends on
the financial asset’s contractual cash flow characteristics and the
Group’s business model for managing them.
A financial asset (or, where applicable, a part of a financial asset or
part of a group of similar financial assets) is primarily derecognised
(i.e., removed from the Group’s consolidated statement of financial
position) when:
▪ The rights to receive cash flows from the asset have expired or
▪ The Group has transferred its rights to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows
in full without material delay to a third party under a ‘pass-through’
arrangement; and either (a) the Group has transferred substantially
all the risks and rewards of the asset, or (b) the Group has neither
transferred nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from
an asset or has entered into a passthrough arrangement, it evaluates if,
and to what extent, it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the
risks and rewards of the asset, nor transferred control of the asset, the
Group continues to recognise the transferred asset to the extent of its
continuing involvement. In that case, the Group also recognises an
associated liability. The transferred asset and the associated liability
are measured on a basis that reflects the rights and obligations that
the Group has retained.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 67
6.1 DEFERRED TAX ASSETS AND LIABILITIES
The Group has an unrecognised deferred tax asset of
EUR 3m relating to tax loss carry forwards where the
timing of possible future utilization is not certain. The
related tax losses can be carried forward indefinitely.
§ ACCOUNTING POLICIES
Deferred tax
Deferred tax is provided for using the balance sheet liability method,
providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the tax base
of assets and liabilities.
Deferred tax is calculated at the tax rates that are expected to apply in
the period when the liability is settled or the asset realised. Deferred
tax is charged or credited in the consolidated income statement,
except when it relates to items charged or credited directly to the
consolidated statement of changes in equity or the consolidated
statement of comprehensive income, in which case the deferred tax is
recognised in equity, or other comprehensive income, respectively.
Deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. The carrying amount of deferred tax assets
is reviewed at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to
allow all or part of the assets to be recovered.
EUR million 2021/22 2020/21
Balance at the beginning of the period 301 -
Business acquisitions 15 305
Recognised in the income statement regarding current year (5) (3)
Recognised in other comprehensive income 6 (1)
Adjustment of deferred tax regarding previous years (4) -
Exchange rate adjustment (1) -
Balance at the end of the period 312 301
EUR million
31 July
2022
31 July
2021
Deferred tax relates to:
Intangible assets 235 229
Property, plant and equipment 242 210
Pensions (4) (12)
Inventory (7) (7)
IFRS 16 leasing liabilities (143) (112)
Other assets and liabilities (11) (7)
Total 312 301
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 68
6.2 EMPLOYEE BENEFIT OBLIGATIONS
The Group has entered into pension plans with those of
the Group’s employees who are eligible. The Group has
entered into both defined contribution plans and defined
benefit plans.
Defined contribution plans
The Group finances the plans by paying premiums to an
independent insurance company that is responsible for
the pension obligations. Once the pension contributions
to the defined contribution plans have been paid, the
Group has no further pension obligation to current or
retired employees.
Defined benefit plans
The Group operates defined benefit plans with
employees of the Group´s subsidiaries in Germany and
Sweden.
FINANCIAL IMPACT OF PLANS
EUR million 2021/22 2020/21
Analysis of liability in the consolidated statement of financial position
Fair value of plan assets 47 45
Present value of defined benefit obligations (139) (158)
Net liability recognised in the consolidated statement of financial position (92) (113)
Analysis of total expense recognised in the consolidated income statement
Current service cost (5) (1)
Past service cost and gain from settlements - -
Charged to staff costs (5) (1)
Interest on pension liabilities (2) (1)
Other 3 2
Credited/(charged) to finance costs 1 1
Total expense recognised in the consolidated income statement (4) -
Analysis of amount recognised in the consolidated statement of comprehensive income
Actuarial gain/(loss) 23 (4)
Taxation (6) 1
Total amount recognised in the consolidated statement of comprehensive income 17 (3)
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 69
6.2 EMPLOYEE BENEFIT OBLIGATIONS - CONTINUED
EUR million 2021/22 2020/21
Fair value of plan assets
At the beginning of the period 45 -
Business acquisitions - 44
Other 3 2
Employer’s contributions (2) (1)
Fair value gain on plan assets 1 -
As of 31 July 47 45
Present value of defined benefit obligations
At the beginning of the period (158) -
Business acquisitions - (156)
Current service cost (5) (1)
Interest cost (2) (1)
Benefits paid 3 4
Actuarial gain/(loss) - demographic assumptions 23 (4)
Actuarial gain/(loss) - financial assumptions (1) -
Currency translation 1 -
As of 31 July (139) (158)
31 July
2022
31 July
2021
Analysis of present value of defined benefit obligations
Amounts arising from wholly unfunded plans (62) (69)
Amounts arising from plans that are wholly or partly funded (77) (89)
Total (139) (158)
Analysis of present/fair value of plan assets
Property 47 45
Total 47 45
The actuarial calculations as of 31 July 2022 are based on the following assumptions:
Germany Sweden
Discount rate 2.79% 3.40%
Rate of inflation 2.50% 2.80%
Increases to pensions in payment 2.50% 3.80%
Increase in salary 2.10% 3.80%
Current pensioners 1,120 762
Future pensioners 774 601
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 70
6.2 EMPLOYEE BENEFIT OBLIGATIONS - CONTINUED
Sensitivity analysis
The Group considers that the most sensitive
assumptions are the discount rate, inflation and life
expectancy. Below presented as a weighted view across
the active benefit plans.
▪ A change in discount rate of +/- 0.25% respectively
would impact the defined benefit obligation by -4% or
+5% respectively.
▪ A change in the inflation rate of +/-0.25%
respectively would impact the defined benefit
obligation by +3% or -3% respectively.
▪ Changing expectations for the number of years of life
after retirement with 1 year would increase the
defined benefit obligation by 5%.
§ ACCOUNTING POLICIES
Post-employment obligations
Contributions to defined contribution pension plans and other post-
retirement benefits are charged to the income statement as incurred.
For defined benefit plans, obligations are measured at discounted
present value (using the projected unit credit method) whilst plan
assets are recorded at fair value. The operating and financing costs of
such plans are recognised separately in the consolidated income
statement; service costs are spread systematically over the expected
service lives of employees and financing costs are recognised in the
periods in which they arise.
Actuarial gains and losses are recognised immediately in the
consolidated statement of other comprehensive income. Payments to
defined contribution schemes are recognised as an expense as they
fall due.
Where a plan shows a surplus funding, the asset recognised is limited
to the present value of any amount which the Group expects to recover
by way of refunds or a reduction in future contributions.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 71
6.3 CASH FLOW, ADJUSTMENTS AND REVERSALS
6.4 CASH FLOW, CHANGES IN WORKING CAPITAL
6.5 CONTINGENT LIABILITIES
As part of the Group’s ordinary operations, the Group is
involved in various legal proceedings and disputes. The
outcome of these legal cases is not expected to have a
material significance for the Group’s financial position.
§ ACCOUNTING POLICIES
Contingent liabilities
A contingent liability is disclosed when the Group identifies a possible
obligation that arises from past events and where the existence will be
confirmed only by one or more uncertain future events outside the
Group’s control, it is not probable that an outflow of resources will be
required to settle the obligation or the amount of the obligation cannot
be measured sufficiently reliably.
Contingent liabilities are disclosed based on the best estimate of the
expenditure required to settle the potential obligation at the end of the
reporting period.
EUR million 2021/22 2020/21
Financial expenses, net 102 24
Depreciation and amortisation 171 37
Gain from sale of properties and equipment (2) -
Change in provisions 6 -
Income tax 54 18
Adjustments and reversals, non-cash 331 79
EUR million 2021/22 2020/21
(Increase) / decrease in inventories (177) (2)
(Increase) / decrease in trade and other receivables (32) 15
Increase / (decrease) in trade and other payables 121 202
Changes in working capital (88) 215
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 72
6.6 FEE TO STATUTORY AUDITORS
6.7 SECURITIES
The shareholdings in the major group companies have
been pledged as security for the external financing
obtained by the single shareholder Winterfell Financing
S.à r.l. and the same major group companies are jointly
and several liable for the Term loan B amounting to EUR
1,345m and the Senior Revolving Credit facilities
agreement with lenders up to EUR 200m.
The Senior Revolving Credit facilities were not drawn as
of 31 July 2022.
As of 31 July 2022, the Group had pledged properties
with a book value of EUR 21m as security for the
secured bank loans.
6.8 RELATED PARTIES
The Group has most of its financing from related parties
with the single shareholder Winterfell Financing S.à r.l.
The financing consists of several loans which to a
certain extent mirrors the conditions and maturities of
the external financing managed in the shareholder
company. The borrowers are Stark Group A/S (EUR
628m), Winterfell Sweden AB (EUR 450m) and Winterfell
Germany GmbH (EUR 734m). In general, the financing
consists of longer-term financing with varying interest.
In 2021/22 the weighted average interest rate on the
financing with related parties was 3.6%. Interest is paid
on a portion of the debt and accrues on the rest. Interest
expensed in the financial period amounted to EUR 70m.
Related parties are considered to be the parent company
Winterfell Financing S.à r.l. and its subsidiaries.
Reference is made to the list of group companies in note
6.10.
Other related parties with significant influence over
STARK Group A/S comprise Winterfell Financing S.à r.l.,
Winterfell S.à r.l., Winterfell Investments S.à r.l.,
Winterfell Holdings S.à r.l., Winterfell ManCo I S.A.,
Winterfell ManCo II S.A., Winterfell Topco S.à r.l. and the
Company’s Board of Managers. Furthermore,
transactions with the respective companies’ Boards of
Directors, Supervisory Boards and senior employees and
their immediate family members are included. Related
parties also include companies where the mentioned
persons have significant interests.
Remuneration to key management personnel is
disclosed in note 2.3.
Controlling interest
The ultimate shareholders of the company are limited
partnerships with CVC Capital Partners VII Limited
acting as General Partner.
EUR million Deloitte
Other
audit
firms
2021/22
Total
Deloitte
Other
audit
firms
2020/21
Total
Statutory audit 1 1 2 1 0 1
Assurance engagements 0 0 0 0 0 0
Tax advisory 0 0 0 0 0 0
Other services 0 0 0 0 0 0
Total fee to statutory auditors 1 1 2 1 0 1
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 73
6.9 SUBSEQUENT EVENTS
In April 2022, the Group signed a contract to acquire
Konz in Germany. With the acquisition of Konz, STARK
Group strengthens its foothold in two fast-growing
growth areas in Europe's largest market for heavy
building materials, Stuttgart and Dresden. The
acquisition was closed as of 1 August 2022 and will be
included in the consolidated financial statements in
2022/23 and onwards. The consideration for Konz
amounts to EUR 41m and is financed with existing
available facilities. Konz has an annual net sales of
approx. EUR 110m and an EBITDA of around EUR 4m.
In November 2022, STARK Group has signed an
agreement to acquire Norwegian FagFlis, Norway's
leading distributor and retailer of ceramic tiles for
professional craftsmen, as well as the Swedish FF Kakel.
FagFlis and FF Kakel have an annual turnover of approx.
EUR 63m and an annual EBITDA of around EUR 9m. The
consideration amounts to EUR 42m and will be financed
with existing facilities. Closing is expected to take place
in December 2022.
STARK Group Annual Report 2022 Notes - Consolidated Financial Statements 74
6.10 LIST OF GROUP COMPANIES
Name
Registered
office
Parent:
STARK Group ApS Fr eder ik sber g , Denmark
Subsidiaries:
Denmark and Greenland:
LSF10 Wolverine BidCo ApS Frederiksberg, Denmark 100%
STARK Sourcing A/S Frederiksberg, Denmark 100%
STARK Danmark A/S Aarhus, Denmark 100%
Electro Energy A/S Albertslund, Denmark 100%
Arnum Rør ApS Haderslev, Denmark 100%
Stark Kalaallit Nunaat A/S Nuuk, Greenland 100%
Germany:
Winterfell Germany GmbH Offenbach, Germany 100%
Stark Group Holding Germany GmbH Frankfurt, Germany 100%
Stark Deutschland GmbH Offenbach, Germany 100%
Melle Gallhöfer Dach GmbH Neus, Germany 100%
Fliesen Discount GmbH Berlin, Germany 100%
Dr. Sporkenbach GmbH Magdeburg, Germany 100%
Muffenrohr Tiefbauhandel GmbH Ottersweier, Germany 100%
Platten Peter Fliesenzentrum Nord GmbH Münster, Germany 100%
Dämmisol Baustoffe GmbH Berlin, Germany 94.94%
Saxonia Baustoffe GmbH Dresden, Germany 87.50%
Sporkenbach GbR Magdeburg, Germany 80.95%
Balzer Group:
1
Balzer Verwaltungsgesellschaft mbH Marburg, Germany 67.40%
Chr. Balzer GmbH & Co. KG Marburg, Germany 67.34%
Austria:
STARK Group Holding Austria GmbH Eberstalzell, Austria 100%
Dach und Wand handels GmbH Eberstalzell, Austria 100%
Sweden:
Winterfell Sweden AB Stockholm, Sweden 100%
DT Holding (Sweden) AB Stockholm, Sweden 100%
Beijer Byggmaterial AB Stockholm, Sweden 100%
Vagn Jensens Byggkomponenter AB Trelleborg, Sweden 100%
Kakeldax i Sverige AB Stockholm, Sweden 100%
Centro Kakel & Klinker AB Stockholm, Sweden 100%
100 Procent Proffs Bandhagen AB Stockholm, Sweden 100%
100 Procent Proffs Rotebro AB Stockholm, Sweden 100%
BraByggare Sverige AB Stockholm, Sweden 50%
Vivaldi AB Stockholm, Sweden 51%
Lund Sandby 6:45 AB Malmö, Sweden 100%
Sierra-Stark HoldCo AB Sollentuna, Sweden 100%
Finland:
Stark Suomi Oy Espoo, Finland 100% Espoo, Finland 100%
Norway:
Neumann Bygg AS Oslo, Norway 100%
Stark Norway Propco AS Bergen, Norway 100%
Margrethe Jørgensen Vei 6 AS Bergen, Norway 100%
1. have controlling influence. In this overview only the two top entities of the Balzer Group are included. The Balzer Group in total comprises 8 entities.
1. M easured on net sales, the Balzer group represents about 5% of the total German business.
1. The companies in the Balzer Group are owned through both vertical and horizontal ownerships and in total, the Group owns approximately 50% and as such is deemed to
Voting and
ownership share
STARK Group Annual Report 2022 Parent Company Financial Statements – STARK Group A/S 75
PARENT COMPANY
FINANCIAL STATEMENTS
2022
STARK GROUP A/S
STARK Group Annual Report 2022 Parent Company Financial Statements – STARK Group A/S 76
CONTENTS
PARENT COMPANY FINANCIAL STATEMENTS
Income Statement 77
Statement of Financial Position 78
Statement of Changes in Equity 80
NOTES – PARENT COMPANY FINANCIAL STATEMENTS
1 BASIS OF REPORTING
1.1 Basis for reporting 81
1.2 Accounting policies 82
2 INCOME STATEMENT
2.1 Net sales 83
2.2 Staff costs 83
2.3 Financial items 84
2.4 Tax for the period 84
3 INVESTED CAPITAL
3.1 Goodwill 85
3.2 Investments in subsidiaries 85
5 CAPITAL STRUCTURE AND FINANCING
5.1 Share capital and share premium 86
5.2 Payables to related parties 86
5.3 Proposed distribution of profit 86
6 OTHER FINANCIAL NOTES
6.1 Contingent liabilities 87
6.2 Securities 87
6.3 Related parties 87
6.4 Subsequent events 88
STARK Group Annual Report 2022 Parent Company Financial Statements – STARK Group A/S 77
INCOME STATEMENT
EUR million Note 2021/22 2020/21
Net sales 2.1 19 6
Gross Profit 19 6
Staff costs 2.2 (14) (4)
Other external operating expenses (9) (16)
Earnings before interest, tax, depreciation and amortisation (EBITDA) (4) (14)
Amortisation of goodwill (0) (0)
Earnings before interest and tax (EBIT) (4) (14)
Dividend from investments in subsidiaries 60 -
Financial income 2.3 2 -
Financial expenses 2.3 (53) (7)
Earnings before tax 5 (21)
Income tax 2.4 8 0
Net earnings 5.3 13 (21)
STARK Group Annual Report 2022 Parent Company Financial Statements – STARK Group A/S 78
STATEMENT OF FINANCIAL POSITION
ASSETS
31 July 31 July
EUR million Note 2022 2021
Non-current assets
Goodwill 3.1 5 5
Total intangible non-current assets 5 5
Investments in subsidiaries 3.2 2,621 2,611
Total financial non-current assets 2,621 2,611
Total non-current assets 2,626 2,616
Current assets
Deferred tax 1 0
Receivables from related parties 126 5
Corporate tax receivables 12 0
Other receivables 1 0
Cash and cash equivalents 190 89
Total current assets 330 94
TOTAL ASSETS 2,956 2,710
STARK Group Annual Report 2022 Parent Company Financial Statements – STARK Group A/S 79
STATEMENT OF FINANCIAL POSITION
EQUITY AND LIABILITIES
31 July 31 July
EUR million Note 2022 2021
Equity
Share capital 5.1 2 1
Share premium 5.1 0 0
Retained earnings 510 498
Total equity 512 499
Non-current liabilities
Payables to related parties 5.2 2,116 628
Total non-current liabilities 2,116 628
Current liabilities
Payables to related parties 5.2 316 1,563
Trade payables 2 3
Other liabilities 10 17
Total current liabilities 328 1,583
Total liabilities 2,444 2,211
TOTAL EQUITY AND LIABILITIES 2,956 2,710
STARK Group Annual Report 2022 Parent Company Financial Statements – STARK Group A/S 80
STATEMENT OF CHANGES IN EQUITY
EUR million
Share
capital
Share
premium
Retained
earnings
Total
equity
Equity as of 1 August 2021 1 0 498 499
Changes in equity for 2021/22:
Non-cash capital increase 1 - (1) -
Net earnings - - 13 13
Equity as of 31 July 2022 2 0 510 512
Equity as of 16 December 2020 - - - -
Changes in equity for 2020/21:
Capitalisation upon incorporation 1 0 - 1
Tax-exempt group contribution - - 519 519
Net earnings - - (21) (21)
Equity as of 31 July 2021 1 0 498 499
STARK Group Annual Report 2022 Notes – Parent Company Financial Statements – STARK Group A/S 81
1.1 BASIS OF REPORTING
Basis of reporting
The Financial Statements of STARK Group A/S have
been prepared in accordance with the provisions of the
Danish Financial Statements Act for reporting class C –
large companies.
The Financial Statements are presented in million Euros,
which is the presentation currency of the Company.
In compliance with section 86(4) of the Danish Financial
Statements Act, the Company has not presented cash
flow statement on a stand-alone basis. Reference is
made to the consolidated cash flow statement of the
Company and its subsidiaries presented on page 37.
Comparative figures
The comparative figures cover the period 16 December
2020-31 July 2021 as the company’s first accounting
year and where the income statement includes operating
activities from May, whereby the income statement
represents approximately 3 months of operations.
STARK Group Annual Report 2022 Notes – Parent Company Financial Statements – STARK Group A/S 82
1.2 ACCOUNTING POLICIES
Recognition and measurement
The Financial Statements have been prepared under the historical cost
method.
Income in the form of dividends are recognised in the income statement
as earned. Furthermore, value adjustments of financial assets and
liabilities measured at fair value or amortised cost are recognised.
Moreover, all expenses incurred to achieve the earnings for the year are
recognised in the income statement, including depreciation,
amortisation, impairment losses and provisions as well as reversals due
to changed accounting estimates of amounts that have previously been
recognised in the income statement.
Assets are recognised in the balance sheet when it is probable that
future economic benefits attributable to the asset will flow to the
Company, and the value of the asset can be measured reliably.
Liabilities are recognised in the balance sheet when it is probable that
future economic benefits will flow out of the Company, and the value of
the liability can be measured reliably.
Assets and liabilities are initially measured at cost. Subsequently, assets
and liabilities are measured as described for each item below.
Recognition and measurement consider predictable losses and risks
occurring before the presentation of the Annual Report which confirm or
invalidate affairs and conditions existing at the balance sheet date.
Foreign currencies
Transactions in foreign currencies are translated to the functional
currency using the exchange rates at transaction date. At each balance
sheet date, monetary assets and liabilities that are denominated in
foreign currencies are translated to the functional currency at the rate
prevailing on the balance sheet date. All differences are recognised in
the income statement.
Net sales
Service fee from subsidiaries is recognised over the service period.
Other external operating expenses
Other external expenses comprise operating expenses such as
administration and professional services expenses.
Financial income and expenses
Financial income and expenses comprise interest realised and
unrealised exchange gains and losses as well as interest surcharge and
interest reimbursements under the Danish Tax Prepayment Scheme.
Tax on result for the year
The Company is subject to the Danish rules for compulsory joint taxation
with the Group’s Danish Subsidiaries. Danish subsidiaries are included in
joint taxation from the time they are acquired or incorporated by a
Danish Group company until the date that control is no longer effective.
The Company is administration company of the Danish joint taxation
group and, consequently, settles all payments of corporation tax with the
tax authorities.
The current Danish corporation tax is allocated by settling joint taxation
contributions between the jointly taxed companies in proportion to their
taxable income. In connection with this, companies with tax losses
receive joint taxation contributions from companies that have been able
to utilize this loss to reduce their own tax profit/loss.
The tax for the year, consisting of current corporate income tax, the
year’s joint tax contribution and change in deferred taxes - including as a
result of a change in tax rate - are recognised in the income statement
with the part attributable to the profit for the year and directly to equity
with the part that can is attributable to entries directly in equity. The
Company is subject to the Danish Tax Prepayment Scheme. Interest
reimbursement and interest surcharge have been recognised in financial
income and expenses.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair
value of the Group’s share of the net identifiable assets of the acquired
subsidiary undertaking at the date of acquisition.
The cost of goodwill is amortised in the income statement over the
useful live which is estimated to 10 years.
Investments in subsidiaries
Investments in subsidiaries are measured at cost. Where cost exceeds
the recoverable amount, write down is made to this lower value.
Prepayments
Prepayments comprise costs incurred relating to subsequent financial
years.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call
with banks.
Borrowings
Interest-bearing loans from group enterprises are initially recorded at fair
value, net of attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost
with any difference between proceeds and redemption value being
recognised in the income statement over the period of the borrowings on
an effective interest basis.
Current tax receivables and payables
Current tax liabilities and receivables are recognised in the balance sheet
as the expected taxable income for the year adjusted for tax on taxable
incomes for prior years and tax paid on account. Surcharges or refunds
under the on-account taxation scheme are recognised in the income
statement in financial income and expenses
Equity
Proposed dividend for the financial year is presented as a separate item
in equity.
Liabilities
Liabilities have been measured at amortised cost, which corresponds to
nominal value.
STARK Group Annual Report 2022 Notes – Parent Company Financial Statements – STARK Group A/S 83
2.1 NET SALES
2.2 STAFF COSTS
EUR million 2021/22 2020/21
Service fees from subsidiaries 19 6
Total net sales 19 6
EUR million 2021/22 2020/21
Salary and wages 13 4
Pensions - contribution plans 1 0
Other expenses for social security 0 0
Total staff costs 14 4
Compensation for the Executive Management:
Salary and wages 5 1
Pensions - contribution plans 0 0
Other expenses for social security 0 0
Total compensation paid to the Executive Management 5 1
Average number of fulltime employees
2021/22 2020/21
Average number of fulltime employees 47 49
The members of the Executive Management as well as other employees are entitled to a cash bonus based on fulfilment of pre-
defined financial and non-financial targets.
The Board of Directors has not received any fee.
The Company has not established share-based incentive programs.
STARK Group Annual Report 2022 Notes – Parent Company Financial Statements – STARK Group A/S 84
2.3 FINANCIAL ITEMS
2.4 INCOME TAX
EUR million 2021/22 2020/21
Financial income
Interests received from related parties 2 -
Total financial income 2 -
Financial expenses
Interests on loans from related parties 47 6
Foreign exchange losses 1 1
Other interest expenses 5 0
Total financial expenses 53 7
EUR million 2021/22 2020/21
Current tax 7 0
Deferred tax 1 0
Adjustment of current tax regarding previous years 0 -
Total income tax 8 0
STARK Group Annual Report 2022 Notes – Parent Company Financial Statements – STARK Group A/S 85
3.1 GOODWILL
3.2 INVESTMENTS IN SUBSIDIARIES
EUR million 2021/22 2020/21
Cost at the beginning of the period 5 -
Additions - 5
Cost at the end of the period 5 5
Impairment losses at the beginning of the period (0) -
Impairment charge for the period (0) (0)
Accumulated impairment losses at the end of the period (0) (0)
Carrying amount at the end of the period 5 5
EUR million 2021/22 2020/21
Cost at the beginning of the period 2,611 -
Additions 10 2,611
Cost at the end of the period 2,621 2,611
Impairment losses at the beginning of the period - -
Impairment charge for the period - -
Accumulated impairment losses at the end of the period - -
Carrying amount at the end of the period 2,621 2,611
Investments in subsidiaries as of 31 July 2022 are specified as follows:
Voting and
ownership
share
Winterfell Sweden AB Stockholm, Sweden 100%
Winterfell Germany GmbH Frankfurt, Germany 100%
Stark Danmark A/S Viby J, Denmark 100%
Stark Suomi Oy Espoo, Finland 100%
Neumann Bygg AS Oslo, Norway 100%
LSF10 Wolverine Bidco ApS Frederiksberg, Denmark 100%
Stark Group Holding Austria GmbH Eberstalzell, Austria 100%
Registered office
Company
STARK Group Annual Report 2022 Notes – Parent Company Financial Statements – STARK Group A/S 86
5.1 SHARE CAPITAL AND SHARE PREMIUM
5.2 PAYABLES TO RELATED PARTIES
5.3 PROPOSED DISTRIBUTION OF PROFIT
EUR million
Number of
shares
Share
capital
Share
premium
Total
Changes in equity for 2021/22:
Balance as of 1 August 2021 40,000 1 0 1
Non-cash capital increase 14,960,000 1 - 1
Balance as of 31 July 2022 15,000,000 2 0 2
Changes in equity for 2020/21:
Incorporation - 16 December 2020 - paid in cash 40,000 1 0 1
Balance as of 31 July 2021 40,000 1 0 1
EUR million
31 July
2022
31 July
2021
Maturity analysis of payables to related parties
Within 1 year 316 1,563
Between 1 and 5 years 1,488 -
After 5 years 628 628
Carrying amount 2,432 2,191
EUR million 2021/22 2020/21
Proposed distribution of profit:
Dividend - -
Retained earnings 13 (21)
Total 13 (21)
STARK Group Annual Report 2022 Notes – Parent Company Financial Statements – STARK Group A/S 87
6.1 CONTINGENT LIABILITIES
The Company is administration company of the Danish
joint taxation group. As a management company, the
Company assumes unlimited and joint liability for Danish
company taxes for the Danish companies included in the
joint taxation. The total known net tax liability of jointly
taxed companies on corporation taxes is EUR 21m as of
July 31, 2022.
Any subsequent corrections of joint taxation income
could result in the Company’s liability amounting to a
larger amount.
Stark Group A/S have operating lease contracts with a
contingent liability as of 31 July 2022 of less than EUR
1m. The maturity is 1-3 years.
6.2 SECURITIES
The shares in the major subsidiaries with a carrying
amount of EUR 2,611m have been pledged as security
for external financing obtained by the single shareholder
Winterfell Financing S.à r.l. and the same major
subsidiaries are jointly and several liable for a Term loan
B amounting to EUR 1,345m and Senior Revolving Credit
facilities agreement with lenders up to EUR 200m. The
Senior Revolving Credit facilities were not drawn as of
31 July 2022.
6.3 RELATED PARTIES
On 4 May 2021 Stark Group A/S utilized a EUR 628
shareholder loan provided by the parent company,
Winterfell Financing S.à r.l. The Loan is a subordinated
loan. The loan will mature on 4 May 2028. Interest on the
loan is set to reflect an arm’s length transaction. Interest
expensed in the financial year amounts to EUR 21m
(2020/21: EUR 6m).
Controlling interest
Winterfell Financing S.à r.l., 20, avenue Monterey,
Luxembourg is the parent company and owns 100% of
the share capital of the Company. The ultimate
shareholders of the company are limited partnerships
with CVC Capital Partners VII Limited acting as General
Partner.
The Group’s related parties with significant influence
comprise Winterfell Financing S.à r.l., Winterfell S.à r.l.
and the Company’s Board of Managers. Furthermore,
transactions with the respective companies’ Boards of
Directors, Supervisory Boards and senior employees and
their immediate family members are included. Related
parties also include companies where the mentioned
persons have significant interests.
There have been no transactions with the Board of
Directors, Executive Management, significant
shareholders, group enterprises or other related parties,
except for intercompany transactions and regular
salaries and bonus to the Executive Management as
disclosed in note 2.2. All transactions are made on an
arm’s length basis and, according to the Danish
Financial Statements Act §98c, 7, they are not disclosed.
The Company and its subsidiaries are included in the
consolidated financial statements of Winterfell Topco
S.à r.l. which can be obtained at the following address:
Winterfell Topco S.à r.l.
20, avenue Monterey
L-2163 Luxembourg
R.C.S. Luxembourg: B 250.784
STARK Group Annual Report 2022 Notes – Parent Company Financial Statements – STARK Group A/S 88
6.4 SUBSEQUENT EVENTS
No events have occurred after the balance sheet date
that materially affect the Company’s financial
statements.
STARK Group Annual Report 2022 Company information 89
COMPANY INFORMATION
Company STARK Group A/S
C.F. Richs Vej 115
2000 Frederiksberg
Denmark
CVR No. 41 95 27 25
Financial year: 1 August – 31 July
Incorporated: 16 December 2020
Current financial period: 1 August 2021 – 31 July 2022
nd
financial year
Executive Management Søren P. Olesen (CEO)
Sisse Fjelsted Rasmussen (CFO)
Board of Directors Søren Vestergaard-Poulsen (chair)
Christoffer Helsengreen Sjöqvist (vice-chair)
Philip Bendorff Røpcke
Søren P. Olesen
Sisse Fjelsted Rasmussen
Auditor Deloitte
Statsautoriseret Revisionspartnerselskab
Annual General Meeting 2 December 2022
STARK Group A/S