1 August 2022 – 31 July 2023
CVR No. 41 95 27 25
STARK Group A/S
C.F. Richs Vej 115
2000 Frederiksberg
Denmark
WE BUILD OUR
FUTURE BY
HELPING OTHERS
BUILD THEIRS
TRUST BUILDS THE FUTURE
STARK Group Annual Report 2023 Contents 3
CONTENTS
MANAGEMENT’S REVIEW
IN BRIEF
STARK Group at a glance 4
Letter from the CEO 5
Financial highlights 7
Key events 2022/23 8
Business review 10
STRATEGY
Strategy 17
Business model 19
Sustainability 20
GOVERNANCE
Risk management 23
Key risks 24
Data ethics 24
Executive Management 27
FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
Management’s Statement 30
Independent auditor’s report 31
Income Statement 33
Comprehensive Income 34
Statement of Financial Position 35
Statement of Changes in Equity 37
Cash Flow Statement 38
Notes – Consolidated Financial Statements 39
PARENT COMPANY FINANCIAL STATEMENTS
Income Statement 80
Statement of Financial Position 81
Statement of Changes in Equity 83
Notes – Parent Company Financial Statements 84
Company Information 92
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 2023 In brief 4
STARK GROUP AT A GLANCE
STARK Group is a leading business-to-business distributor of heavy building materials operating
through 3 segments: Nordics, Germany & Austria and United Kingdom. The strategic focus of the
Group is to serve 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. The Group provides customers with 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 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 tripled in size through organic growth
and acquisitions and today holds leading positions in all
its markets.
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 2023, the Nordics
segment represented 44% of STARK Group’s reported
net sales.
GERMANY & AUSTRIA
The Germany & Austria 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 2023, the Germany
& Austria segment represented 40% of STARK Group’s
reported net sales.
UNITED KINGDOM (UK)
The UK segment accounts for STARK Group’s operations
in the United Kingdom under the STARK UK business
unit, which was acquired from Compagnie de Saint-
Gobain SA with closing as of 28 February 2023. The UK
business includes the nationwide brand Jewson but also
strong local brands such as JP Corry in Northern Ireland.
The UK segment is included with 5 months of operations
(March-July 2023) in this report.
For the 12 months ended on 31 July 2023, the UK
segment represented 16% of STARK Group’s reported
net sales.
The Group
The Group was established on 15 December 2020 when the parent
company and subsidiaries in Denmark, Sweden and Germany were
incorporated by the ultimate owners, CVC Capital Partners Fund VII to
prepare for the acquisition of STARK Group, which was signed and
announced on 8 January 2021
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 2023 In brief 5
LETTER FROM THE CEO
NAVIGATING A WATERSHED YEAR
How do you navigate a business through extraordinarily
busy days and back to more normal ones? Business
schools are working on articles and white papers, while
we experience it first-hand.
The past three years have been both challenging and
exciting. Our financial year 2021/22 was extraordinary in
every sense of the word. Commercially and financially,
we were busy like never before. The past financial year
was the watershed year. Activity levels and hence
financial results pivoted early in our first half year,
followed by a decline late in the second half.
So, how did we manage to navigate these challenges?
We did well, I believe.
Our Annual Report 2022/23 presents net sales of EUR 7
billion, which is 17.7% up on last year, and adjusted
EBITDA of EUR 456 million – is only 4.7% short of our
2021/22 results, which were out of the ordinary.
These numbers include the results of five months of
operations from our major acquisition of Saint-Gobain
Building Distribution Ltd. in the United Kingdom. The UK
business contributed EUR 1.2 billion to our net sales, but
only EUR 31 million to adjusted EBITDA. Our business
case is to turn around this business, which has been
underperforming for several years, just like we did after
we acquired STARK Deutschland in 2019.
We have a solid track record of turning businesses
around and getting them back on track for growth and
improved profitability.
In the past year, our financial performance in the Nordics
and Germany & Austria fell slightly compared to last
year.
MANAGED FOR PROFITABILITY AND FUTURE GROWTH
So how do we manage our business from extraordinarily
good times back to more normal ones? We manage our
business for profitability, while positioning ourselves for
future growth. This is not easy, but having engaged
employees and an experienced management team in
place has allowed us to act resolutely.
We are mainly exposed to the Renovation, Maintenance,
and Improvement (RMI) segment of our industry, which
gives us more cyclical resilience to the new-build market
and benefits from the increasingly important market for
energy efficiency enhancement. That offers some
cushion, but the overall development in the construction
industry still impacts our business.
Starting early in the financial year, we planned for a drop
in activity levels in the second half of our financial year.
Taking out cost and accelerating our sales efforts have
sustained our profitability and developed our market
positions across our business.
In the second half, the drop in total markets exceeded
the decrease in activity levels we had planned for, and
the visibility of when markets will recover remains low.
While we continue to manage for profitability, we
maintain an ambitious and offensive approach to
winning market share and accelerating profitability and
growth once market recovery sets in.
In the past year, we concluded a strategy review of our
business and drew up a plan for the period to 2027. The
timing of our initiatives may be adjusted depending on
how our markets perform, but we will continue to invest
in our business to grow our market share and deepen
our customer relations organically while fuelling growth
through acquisitions.
We will continue to have a strong efficiency drive and
have in the past year initiated a digitalisation journey
aimed at making our business processes more efficient
and providing smarter, value-adding services to our
customers.
We will continue to leverage scale benefits from
sourcing synergies, building digital solutions to scale,
and a structured approach to sharing best practices
across markets.
In addition, we will work diligently to become the best
partner for sustainable building by managing our
business to high ESG standards and making
sustainability a commercial success for the benefit of
tradespeople and the entire construction industry.
STARK Group Annual Report 2023 In brief 6
LETTER FROM THE CEO
AMPLE OPPORTUNITIES, IRRESPECTIVE OF HOW
MARKETS DEVELOP
The past year’s acquisition of Saint-Gobain Building
Distribution Ltd. in the UK added significant business
volume and made us a leader in Europe. Turning around
STARK UK is a huge opportunity.
The beauty of STARK in the UK is that we have ample
opportunity to make it a better business to benefit our
customers, colleagues, and owners, irrespective of how
the market develops.
HOW WILL MARKETS DEVELOP?
Here is my thinking about our near-term future: We are
likely facing times that financially will be tougher than
what we experienced in the most recent financial year.
Interest rate shocks have adverse impact on our
business, but shocks are by nature a passing phase.
Challenging macroeconomics and geopolitical unrest
are likely here to stay. Still, the impact on the
construction industry will decrease as market
fundamentals, including population growth, urbanisation,
as well as energy efficiency and sustainability, call for
continued new-build and renovation of housing, office
spaces, and community buildings.
The current turmoil impacts the phasing of construction
activities but not the deficit of housing and demand for
building and construction work.
We look back at a year of normalisation after
unprecedentedly good years for the construction
industry and for builders’ merchants and distributors.
Throughout these recent years, we have focused on
strengthening our business and will continue to do so.
Financially, we have quadrupled our net sales through
organic and acquisitional growth, and we have increased
our gross margin and adjusted EBITDA margin by
sourcing harvesting synergies and leveraging our size.
We are well positioned in the marketplace, our
customers appreciate what we do, we continue winning
market shares, and our organisational health is sound.
We cannot change the overall markets, but we will
continue to respond swiftly to market changes and
investing in our business to act as a consolidator of our
markets. I remain firmly confident about the strength of
our business, whatever the future may bring.
SØREN P. OLESEN
GROUP CEO
STARK Group Annual Report 2023 In brief 7
FINANCIAL HIGHLIGHTS
EUR million 2022/23
2
2021/22
1
2020/21
1
Income Statement
Net sales 7,054 5,995 1,474
Gross profit 1,811 1,541 376
EBITDA 391 459 101
Adjusted EBITDA
3
456 479 125
Depreciation and amortisation of non-current assets (243) (171) (37)
EBIT
4
353 288 64
Financial items, net (197) (102) (24)
Earnings before tax 156 186 40
Net earnings 144 132 22
Balance sheet
Total assets 6,457 4,942 4,431
Intangible non-current assets 1,814 1,806 1,730
Tangible non-current assets 2,318 1,453 1,298
Equity 858 692 541
Net interest-bearing debt 2,123 1,577 1,410
Investments in property, plant and equipment
79 71 16
Capital expenditure (Capex), total
5
108 95 21
Operational Capex, total
6
71 55 12
Operational Capex, base
7
38 32 8
Operational Capex, development
8
33 23 4
Cash flow
Cash flow from operating activities 311 230 300
Cash flow from investing activities (673) (269) (2,173)
Cash flow from financing activities 424 (25) 2,202
Total cash flow 62 (64) 329
Key ratios
Gross profit margin
9
25.7% 25.7% 25.5%
EBITDA margin
10
5.5% 7.7% 6.9%
Adjusted EBITDA margin
11
6.5% 8.0% 8.5%
6. Operational Capex (capital expenditures) is related to the normal business and excludes Freehold Capex.
1. 2020/21 includes 3 months of operating activities for STARK Group from the acquisition on 4 May 2021.
2. 2022/23 includes 5 months of operating activities for STARK UK from the acquisition on 28 February 2023.
3. Adjusted EBITDA is defined as EBITDA excluding non-recurring items.
4. EBIT in 2022/23 includes bargain purchase gain of EUR 205m. The bargain purchase gain is presented on a separate line in the consolidated income statement after EBITDA.
5. Capital expenditure (Capex) consists of investments in property, plant and equipment and investments in intangible assets (IT software).
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.
7. Base Capex relates to maintaining the normal operations of the business.
8. Development Capex relates to expansion of the business to improve earnings capabilities or secure compliance.
9. Gross profit as a percentage of net sales.
10. EBITDA as a percentage of net sales.
11. Adjusted EBITDA as a percentage of net sales.
STARK Group Annual Report 2023 In brief 8
KEY EVENTS 2022/23
MARKET ENTRY TO THE UK THROUGH
TRANSFORMATIONAL ACQUISITION
The Group achieved a milestone in its growth strategy in
December 2022 when entering the UK market for
building materials through the acquisition of Saint-
Gobain Building Distribution Ltd. The business case
aims at turning around an underperforming, significant
UK builders’ merchant with a strong heritage in a market
that is challenging but has strong market fundamentals.
The UK housing stock is amongst the oldest in Northern
Europe, and its population is projected to grow by 1.6%
to 68.7 million in 2027. This will increase the need for
new-build and renovations of the existing housing stock.
The business operates 600 branches and distribution
centres in the UK under leading brands, including
Jewson in the UK and JP Corry in Northern Ireland.
On 1 March, following a swift two-and-a-half month
closing process from Saint-Gobain UK Ltd., John Carter
was appointed new CEO of the new company STARK
Building Materials UK Ltd. (STARK UK) and a member of
STARK Group’s Executive Committee. John Carter has
been in the building materials merchant and distribution
industry for more than 40 years. His career includes
serving as CEO of a FTSE 250 builders’ merchant and
home improvement retailer with 1,900 outlets.
When we took over the business, its financial
performance was on a downward trend. A strategic and
financial turnaround was announced early under STARK
Group ownership, and a new strategy plan was
developed over the summer. The business has
undertaken a significant strategic shift from being
centrally led to moving responsibility and accountability
back to branches and focusing the business and
strategic initiatives on professional trades peoples’
needs.
The acquisition added approx. EUR 2.7 billion to STARK
Group’s annual pro forma net sales. In the financial year,
net sales amounted to EUR 1,153 million with EBITDA at
EUR 31 million for the five months included in this report.
EXPANDING THE TILES SPECIALIST BUSINESS
STARK Group made a total of six acquisitions during the
financial year. The UK transaction was transformational,
whereas four others were bolt-on acquisitions in the
generalist space, and one supported the specialist
strategy.
The acquisition of FagFlis in Norway and FF Kakel AB in
Sweden enhanced the Group’s leading positions in the
specialist area of tiles. FagFlis covers the whole of
Norway through 13 owned and 12 franchise branches,
while in Sweden, FF Kakel has branches in Stockholm,
Gothenburg, and Uppsala, which are three of Sweden’s
four largest cities.
Historically, the Group’s strongest position has been in
the general market for building materials. Since the
acquisition of German tile specialist Keramundo in 2019,
specialist areas such as tiles have played an increasingly
important role in the growth strategy. Being the leading
German tiles specialist, Keramundo has a broad offering
including its leading own brand, Terralis. During the year,
Keramundo was named Germany’s Best Retailer in the
Tiles Markets category for the fourth year in a row.
PUSHING AT THE FOREFRONT OF SUSTAINABILITY
A strong commitment to the ESG agenda continued
during the year. The Group secured its Platinum rating
and top 1% position in EcoVadis’ global sustainability
assessment. Being the proud winner of the FSR - Danish
Auditors’ CSR Report Award for non-listed companies in
2022, STARK Group continued its transparency efforts
by releasing its first tax impact report and making Group
policies publicly available on starkgroup.dk.
Commercially, the Group took another important step
when conducting its strategy review. Having committed
to Net Zero and to decreasing emissions from its own
operations (scopes 1 and 2), STARK Group’s strategy
expanded its commitment to commercialising
sustainability, which will bring manufacturers’ products
and innovation, our advice and documentation to the
centre stage (scope 3). In Sweden and Denmark,
documentation and LCA calculations were made easier
when Beijer Bygg and STARK Danmark introduced
Climate Monitor, which offers transparency about the
emissions and climate impact of specific building
materials.
During the UN General Assembly’s climate week in
September 2023, STARK Group and 26 other leading
companies headquartered in Denmark called on world
leaders for accelerated climate action and for
incentivising the transition to green energy.
STARK Group Annual Report 2023 In brief 9
KEY EVENTS 2022/23
ACCELERATED INVESTMENT PROGRAMME TO
TRANSFORM THE BUSINESS
The Group continued its accelerated investment
programme to transform its business. In addition to six
acquisitions, including STARK UK, the Group initiated a
comprehensive IT programme, and invested in opening
and refurbishing branches, including Hisings Backa in
Gothenburg. This 20,000 sqm. branch and distribution
centre in Western Sweden is Beijer’s largest and most
ambitious investment to date. It will be followed by a
light-hub for 30,000 light-side products scheduled to
open in the Greater Stockholm area in 2024.
An IT programme is intended to upgrade the existing IT
infrastructure in the Nordics by establishing a modern
digital platform that will make key business processes
more efficient, while providing value-adding services that
will solve essential customer pain points.
SUPPLIER ENGAGEMENT
STARK Sourcing expanded its European Supplier
Programme. More members joined the programme that
is the only one of its magnitude and importance in the
industry. Established in 2020, the European Supplier
Programme has since evolved into a platform for
sharing updates on market developments and
participate in working groups on sector-specific topics,
including its Sustainability Round Table. In June 2023,
members of the European Supplier Programme
discussed the Future of Big Cities and trends and future
demands in urban construction where growth is
significantly stronger and new regulation and customer
demand emerge first.
AWARDED BUILDERS’ MERCHANT OF THE YEAR
The Group was recognised by the building materials
industry when it was named builders’ merchant of the
year in Sweden, the UK, and Germany. In Sweden, Beijer
was given the award by the trade media Market and
Stockholm Business School for its financial results,
customer experience, brand strength, market position,
innovation capabilities and sustainability commitment.
In the UK, Jewson was awarded National Merchant of
the Year at the BMJ Industry Awards. German tiles
specialist Keramundo was awarded Germany’s best tiles
specialist retailer for the fourth consecutive year.
STARK Group Annual Report 2023 In brief 10
BUSINESS REVIEW
IN BRIEF
In the financial year, STARK Group delivered a solid
performance bolstered by acquisitions up against
extraordinarily strong results last year in both the
Nordics and Germany & Austria segments.
In the year, the Group added a new reporting segment,
United Kingdom (UK), upon completion of the
transformative acquisition of STARK UK in February
2023. The UK segment is included in the reported
numbers from March 2023 and is thereby included with
5 months of operations in this report.
Overall, the markets remained volatile and challenging to
navigate. In the first part of the year, the market
conditions exhibited positive resilience with support
from price inflation while underlying volume
development was softening. From the latter part of the
third quarter this transitioned into a significantly lower
activity and softer customer demand in addition to
deflation in some product categories.
The industry remains impacted by macro-economic
uncertainty, price volatility and higher interest levels
resulting in customers and builders being hesitant to
engage.
The Group leveraged on its strong operations and
dedicated people to successfully gain and safeguard
market shares. At the same time, diligent cost-out
measures were executed to adjust to the lower activity
level, combat inflationary pressures and protect
margins.
Adjusted Income Statements
In the financial year, the Group incurred non-recurring
costs related mainly to due diligence, financing,
integration, restructuring and strategic alignment of
acquisitions, especially the acquisition of STARK UK in
February 2023. To provide a more accurate view of the
Group’s underlying performance, adjusted figures
excluding non-recurring items are presented below.
Adjusted Income Statement
2022/23 2021/22
Reported
Non-
recurring
items
Adjusted
D%
Reported
Non-
recurring
items
Adjusted
Net sales 7,054 7,054 17.7% 5,995 5,995
Cost of sales (5,243) (5,243) 17.7% (4,454) (4,454)
Gross profit 1,811 1,811 17.5% 1,541 1,541
Gross profit margin % 25.7% 25.7% 0.0 pp 25.7% 25.7%
Staff costs (903) (18) (885) 23.2% (721) (3) (718)
Other external operating expenses (517) (47) (470) 36.7% (361) (17) (344)
Total operating expenses (1,420) (65) (1,355) 27.6% (1,082) (20) (1,062)
EBITDA 391 (65) 456 -4.7% 459 (20) 479
EBITDA margin % 5.5% 6.5% -1.5 pp 7.7% 8.0%
2022/23 includes 5 months of UK operations
EUR million
Adjusted Segment Income Statement UK
2022/23 2021/22
D%
2022/23 2021/22
D%
2022/23
Net sales 3,057 3,277 -6.7% 2,844 2,718 4.6% 1,153
Cost of sales (2,242) (2,395) -6.4% (2,161) (2,059) 4.9% (840)
Gross profit 815 882 -7.5% 683 659 3.7% 313
Gross profit margin % 26.7% 26.9% -0.2 pp 24.0% 24.2% -0.2 pp 27.1%
Staff costs (378) (398) -5.1% (344) (320) 7.5% (163)
Other external operating expenses (188) (193) -1.9% (163) (151) 7.3% (119)
Total operating expenses (566) (591) -4.0% (507) (471) 7.4% (282)
EBITDA 249 291 -14.7% 176 188 -5.6% 31
EBITDA margin % 8.1% 8.9% -0.8 pp 6.2% 6.9% -0.7 pp 2.7%
2022/23 includes 5 months of UK operations
EUR million
Nordics
Germany & Austria
STARK Group Annual Report 2023 In brief 11
BUSINESS REVIEW
CONSOLIDATED INCOME STATEMENT
Net sales
Net sales grew by 17.7% to EUR 7,054m compared to
EUR 5,995m last year with significant support from
acquisitions, especially the entry into the UK market. The
organic growth excluding impact from currencies and
acquisitions was -6.5% and was driven by similar market
developments across all segments against
extraordinarily strong growth the year before.
Markets showed positive resilience in the first half of the
year while especially from the latter part of the third
quarter a significantly softer trend emerged impacting
the otherwise solid performance.
The organic growth was positively supported by price
inflation in the first half of the year while the underlying
market activity and volumes were soft. Price inflation
has gradually come down over the year and in Q3 and Q4
price deflation were seen in some commodity
categories.
Gross profit and gross margin
Gross profit grew by 17.5% to EUR 1,811m, which was
mainly driven by the growth in net sales supported by
acquisitions. Organic growth excluding acquisitions and
currency impact was -7.6%. Currency impact was -1.3%
for the year driven by depreciating SEK and NOK.
Gross margin was stable at 25.7%. Maintaining the
gross margin levels was challenging in the year, mainly
due to volatility in prices/inflation and declining
demand/activity levels.
Amidst the market turmoil, the Group maintained its
focus on effective price and inventory management,
strategic sourcing initiatives with support from own
brands and growing the share of SME sales to safeguard
margins.
On Group level, there was support from acquired
businesses, especially STARK UK joining the Group as
well as from Fagflis in the tiles category, which both
operate at slightly higher gross margin levels.
Operating expenses
Staff costs and other operating expenses were well
under control during the financial year thanks to a
persistent focus on cost discipline. During the year,
significant cost reductions have been diligently executed
to mitigate inflationary pressures and to align to the
current market activity level. This remains a top priority
due to the current softer markets and macro-economic
developments.
Staff costs excluding non-recurring items increased by
23.2% to EUR 885m in the year including a currency
impact of -1.3% and impact from acquisitions of 27.1%.
Organic development was a reduction of -2.7% driven by
cost-out measures, FTE reductions and lower costs for
variable components such as employee bonuses and
partially offset by wage inflation/union agreed tariff
increases and strategic investments driving higher FTEs
in selected staff categories.
Other operating expenses excluding non-recurring items
increased by 36.7% to EUR 470m for the year including a
currency impact of -0.8% and impact from acquisitions
of 40.9%. Organic growth was -3.6%, driven mainly by
cost-out measures and to a lesser degree variable costs
that change with activity level. The savings were partially
offset by normal inflation across cost categories.
EBITDA
Adjusted EBITDA declined by -4.7% to EUR 456 million as
a result of the above dynamics. Strong support from
acquisitions reduced the negative underlying growth that
was driven by a softer market and partly mitigated by
cost-out measures.
STARK Group Annual Report 2023 In brief 12
BUSINESS REVIEW
CONSOLIDATED INCOME STATEMENT
Depreciation and amortisation
Depreciation and amortisation amounted to EUR 243m
for the year, reflecting depreciation and amortisation of
tangible and intangible assets of EUR 115m and EUR
128m related to right of use assets (IFRS 16). The level
of depreciation and amortisation was impacted by fair
value assessments of tangible assets and recognition of
intangible assets from the acquisition of STARK Group
as of 4 May 2021 as well as the acquisition of STARK UK
as of 28 February 2023.
Bargain purchase gain from the
acquisition of STARK UK
As a result of the fair value assessment of the
components in the opening balance sheet for STARK UK,
the Group has recognised bargain purchase gain of EUR
205m from the acquisition as of 28 February 2023. As
required by IFRS, this amount has been recognised as a
bargain purchase gain in the income statement.
Financial items, net
Financial expenses for the year were EUR 197m
(2021/22: EUR 102m) of which EUR 103m (2021/22:
EUR 70m) were related to financing from related parties,
EUR 15m (2021/22: EUR 8m) to external financing, EUR
27m (2021/22: EUR 14m) to calculated interest on
leasing debt and EUR 49m (2021/22: EUR 11m) to
exchange losses primarily on intercompany loans.
Financial expenses are impacted by additional financing
in relation to acquisitions and by increases in interest
levels in general.
Taxes
Income tax was EUR 12m (2021/22: EUR 54m) with an
effective tax rate of 8% (2021/22: 29%). Effective tax
rate is impacted by limitation of interest deduction and
non-deductible M&A costs and especially by the bargain
purchase gain of EUR 205m with no related tax.
Other comprehensive income
Other comprehensive income of EUR 26m (2021/22:
EUR 23m) consisted of net gain of EUR 9m (2021/22:
EUR 6m) related to exchange gains from translation of
foreign operations and net gain of EUR 17m (2021/22:
EUR 17m) from actuarial gains on retirement benefit
plans.
STARK Group Annual Report 2023 In brief 13
BUSINESS REVIEW
SEGMENT HIGHLIGHTS
NORDICS
The Nordic business delivered another year of solid
performance. Up against the extraordinarily strong
financial results in the previous year, the financial
performance was softer, however, with good progress
on key parameters such as customer satisfaction (NPS),
market shares and general market position.
During the past year, reported net sales were EUR
3,057m, a decline of 6.7% driven mainly by lower activity
levels and negative currency impact from Swedish and
Norwegian Kroner of 2.9%. Acquisitions in Sweden,
Norway, and Denmark were positive contributors to net
sales by 2.3%. Organic net sales were 6.2% lower than in
the previous year.
The acquisition of the tiles specialists FagFlis and FF
Kakel contributed positively to gross profit and gross
margin but did not offset the negative impact of
declining activity levels and deflation seen in especially
some of the commodity categories during the second
half of the year. The gross margin remained at a high
level of 26.7% (26.9% in the previous year) supported by
acquisitions and positive market mix. Gross profit ended
at EUR 815m, a decline of EUR 67m compared to the
previous year.
To mitigate the lower activity levels and the impact of
inflation on our cost base, operating expenses were
reduced by EUR 25m to EUR 566 million.
Adjusted EBITDA landed at EUR 249m (EUR 291m in the
previous year) with an EBITDA margin of 8.1%.
GERMANY & AUSTRIA
The German & Austrian business has been on a journey
of many acquisitions. Compared with the previous year’s
extraordinary commercial and financial results, the
business grew its net sales from acquisitions, but
recorded slightly lower earnings.
Reported net sales were EUR 2,844m, a net increase of
4.6%. Acquisitions completed in 2022/23 contributed
12% to net sales. These increases were partly offset by
reduced activity levels, particularly in the second half of
the financial year. Organic growth was negative at 7.3%.
Deflation in several categories and the impact of
acquisitions with below-average gross margins
contributed slightly negatively to the gross margin of
24.0% (24.2% in previous years). This decline and the
lower activity levels were offset by the impact of
acquisitions. Gross profit grew by EUR 24m (3.7%) to
EUR 683m.
Mitigating the effect of lower activity levels and inflation
on the cost base, we reduced underlying operating
expenses by 3.4% in the year. This was more than offset
by the impact of acquisitions, which had a first-year
negative impact on the cost base and a slightly dilutive
impact on earnings. Operating expenses increased by
EUR 36 million to EUR 507m.
Adjusted EBITDA was EUR 176m (EUR 188m in previous
year), leaving the EBITDA margin at 6.2%.
UNITED KINGDOM
The UK business was acquired during the year and
contributed with five months of operational
performance. The business is among the market leaders
in the UK but has been underperforming financially for
several years. The business case is to turn around the
business.
Net sales were EUR 1,153 million for the five-month
period recognised in this report. Indicative organic
growth for the period was negative at approx. -5% versus
proforma net sales from the same period the year
before.
The gross margin was 27.1% and the gross profit was
EUR 313m. Indicative organic growth for the period was
approx. -10% versus proforma gross profit from the
same period the year before as a result of the
development in net sales and pressure on gross margin.
Operating expenses were EUR 282m in the five-month
period. Several restructuring activities have been
initiated to reduce operating expenses going forward.
Adjusted EBITDA was EUR 31m, leaving EBITDA margin
at a low 2.7%.
STARK Group Annual Report 2023 In brief 14
BUSINESS REVIEW
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Intangible assets
Total intangible non-current assets amounted to EUR
1,814m as of 31 July 2023 (31 July 2022: EUR 1,806m)
and consisted primarily of goodwill, trade names and
customer relations identified in connection with
acquisitions.
Additions during the year relate to goodwill and
intangibles recognized on acquired businesses and
investments in software of EUR 29m. The impairment
test confirms that intangible non-current assets are not
impaired.
Tangible assets
Total tangible non-current assets amounted to EUR
2,318m as of 31 July 2023 (31 July 2022: EUR 1,453m).
The amount was primarily related to owned properties,
which amounted to EUR 1,155m (31 July 2022: EUR
732m) and in addition EUR 891m (31 July 2022: 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
79m.
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 108m, of which EUR
71m was related to operational Capex and EUR 37m was
related to freehold investments. The level for operational
Capex was EUR 16m higher than last year, driven mainly
by increased investments in digital solutions and IT
security and impact from UK.
In relation to freehold investments, the Group has
expanded and upgraded strategic locations in the
branch network.
In addition to the investments, the Group divested
properties and other assets during the year with a total
positive cash impact of EUR 14m.
Working capital
Trade working capital (inventories, trade receivables less
trade payables) for the Group was EUR 572m as of 31
July 2023 (31 July 2022: EUR 286m). The increase in
working capital is driven by the acquisition of STARK UK,
which was partly offset by improvements in the existing
businesses.
Developments in other working capital components
were in accordance with expectations and in line with
the performance of the business.
STARK Group Annual Report 2023 In brief 15
BUSINESS REVIEW
CONSOLIDATED CASH FLOW STATEMENT
Operating activities
Operating activities generated a positive cash flow of
EUR 311m in 2022/23 (2021/22: EUR 230m). The
increase in the positive inflow was primarily driven by
the improvement in working capital, which was in part
offset by increasing interest payments due to higher
interest levels and additional financing in connection
with the acquisition of STARK UK. Tax payments were
EUR 55m lower than last year.
Investing activities
Investing activities during the year amounted to a net
cash out flow of EUR 673m (2021/22: EUR 269m), which
related mainly to acquisitions completed during the year
of EUR 579m. Net investments in tangible and intangible
non-current assets amounted to EUR 94m (2021/22:
EUR 80m).
Financing activities
Net cash flow from financing activities amounted to an
inflow of EUR 424m (2021/22: Outflow of EUR 25m),
which mainly related to proceeds from a new loan from
related parties and mortgage loans in Denmark, primarily
to finance the acquisition of STARK UK. The proceeds
from the loans were partly offset by instalments on
leasing debt of EUR 113m.
PARENT COMPANY, STARK GROUP A/S
The parent company income statement includes normal
activities in relation to the operations of STARK Group
headquarters. Costs related to operate the subsidiaries
have been recharged to these companies and is
recognised as net sales in the income statement.
In addition, the parent company has incurred expenses
related to M&A activities. In 2022/23 these expenses are
significantly higher than last year due to the acquisition
of STARK UK.
The parent company has received EUR 1,310m in
dividends during the year from the subsidiary LSF10
Wolverine Bidco ApS. EUR 894m has been recognized as
an impairment to the carrying value of investment in
LSF10 Wolverine Bidco ApS as of 31 July 2023. In
addition, the investment in Neumann Bygg AS has been
impaired by EUR 12m.
No other unusual items or transactions have occurred
during the year.
STARK Group Annual Report 2023 In brief 16
BUSINESS REVIEW
OUTLOOK 2023/24
For the coming financial year 2023/24, we will be
navigating in an environment where visibility is
significantly reduced and impacted by macro-economic
instability, increased and volatile interest rate levels and
potential ongoing market uncertainty across our
segments.
In the long term, management continues to see positive
demographic developments, a persisting need to update
and renovate the housing stocks as well as
governmental focus on energy renovations and
sustainable building, which will support the market and
business dynamics and drive consistent growth.
For the coming year 2023/23, the Group expects a
slightly declining organic top line due to continued soft
markets in the first half of the year versus very strong
comparisons. In the second half of the year,
management assumes that the markets will return to a
slow, but steady growth.
Development in prices is expected to stabilize during the
first half of the year. Volumes are expected to be soft in
the first half of the year and replaced with a slightly
growing trend from late Q3.
On a reported basis, the top line will be supported by full-
year run-rate effects from acquisitions made in 2022/23,
especially the additional 7 months of operations from
STARK UK.
For EBITDA, the Group expects a negative underlying
development for 2023/24 driven mainly by the continued
weakness in the total markets. Adjusted EBITDA will be
positively impacted by 7 additional months of operations
in STARK UK as well as the ongoing turnaround, which,
however, will also drive exceptional costs for integration
and restructuring activities. The Group expects to be
able to partially offset inflation on the cost base,
particularly in terms of labour cost reductions through
FTE adjustments in line with activity and through
efficiency measures and synergies from acquired
businesses.
Including acquisitions completed up to the date of this
report, the Group expects to deliver the following for
2023/24:
▪ Reported net sales in the range of EUR 8.0 billion to
EUR 8.6 billion
▪ Adjusted EBITDA in the range of EUR 420 million to
EUR 470 million
The outlook for 2023/24 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 2023 Strategy 17
STRATEGY
Being a European leader, STARK Group aims to consolidate the fragmented markets for the
distribution of heavy building materials.
STRATEGY
Being a European leader, STARK Group aims to
consolidate the fragmented markets for the distribution
of heavy building materials.
The Group operates within an industry that is
instrumental in building and renovating cities and
communities for the future. The continuing population
growth calls for more housing, office space and
community buildings to accommodate people expecting
high quality of life as well as more energy-efficient and
sustainable cities and communities.
STARK Group is a distributor of heavy building materials
that are used for building and renovating houses, offices
spaces, community buildings, and infrastructure.
It plays a crucial role in effectively connecting
manufacturers of building materials with tradespeople.
The Group sources more than 400,000 SKUs at scale
from more than 15,000 suppliers, advises manufacturers
about market developments and customer feedback,
and makes products available to tradespeople from its
densely knitted network of 1,150 warehouses and
distribution centres, branches and shops located close
to building sites.
More than 450,000 tradespeople buy from STARK Group
to obtain ease of procuring, advice, documentation,
credit, and effective distribution.
CONSOLIDATING THE MARKET
STARK Group’s goal is to win and consolidate the
attractive market for trading and distributing heavy
building materials in Northern Europe.
The Group has organised and endeavours to grow its
share and deepen its customer relations organically
while fuelling growth through acquisitions.
A strong efficiency drive is supported by a decentralised
operating model that leaves decision-making powers
and accountability at branch level close to the
customers, in combination with stringent performance
management.
In addition, the Group leverages scale benefits from
sourcing synergies, building digital solutions to scale,
and a structured approach to sharing best practice
across markets.
Managing a significant property portfolio actively, allows
the Group to hone and invest in its network with market-
leading sales and branch concepts as well as in
enhanced distribution capabilities.
AN ATTRACTIVE MARKET
STARK Group is a leader in an attractive market that is fuelled by an underlying population growth and an ongoing housing deficit.
The geographical footprint is in a stable region exhibiting strong market
fundamentals including stable GDP growth, a stable regulatory
environment and compelling structural growth drivers.
These include a population growth of an estimated 2.25 million people
(2.25%) to 191.3 million in the period 2023-28 and urbanisation as well
as a push for improved energy efficiency and sustainability in the
existing housing stock.
The key market is the attractive Renovation, Maintenance, and
Improvement (RMI) segment of the construction industry that is
instrumental in building and renovating to counter the ongoing housing
deficit.
The RMI end-market has more resilience to the new-build market and
benefits from the increasingly important market for energy efficiency
that is being further fuelled by the EU Green Deal stimuli package.
The customers are tradespeople working in the RMI segment. While
doing business across all customer segments, the Group has its main
foothold with small and medium-sized enterprises (SMEs) (1-50
employees) that mainly engage in small and medium-sized RMI projects
or as subcontractors.
The segment is attractive because SME tradespeople work across cities
and hence value the dense branch network, effective distribution, broad
and guaranteed assortment, and services that STARK Group delivers.
STARK Group Annual Report 2023 Strategy 18
STRATEGY
WINNING BY MAKING HARD WORK EASIER
STARK Group’s newly reviewed strategy plan towards
2027 outlines how it intends to grow its share and
deepen customer relations, drive efficiency, and manage
its assets to future-proof the business. The Group is on a
quest to support tradespeople in making hard work and
their working lives as easy as can be:
▪ by moving CLOSER to tradespeople
▪ by acting SMARTER when with tradespeople
▪ by growing STRONGER to the benefit of
tradespeople
while extending its industry leadership in ESG and
sustainability. The strategy plan builds on ten pillars. In
its 2027 plan, the Group’s aims to:
MOVE CLOSER
To win the local zone by building more trusted
relationships and enhancing its range, service offering
and network.
1. SME focus: aim to win SME customers, actively
reduce churn, and do more business with existing
customers.
2. Customer promise: aim to offer great availability and
On Time In Full (OTIF) delivery while expanding
offering in must win categories, such as tiles, energy
efficiency and light building supplies.
3. Best branches: aim to hone its network through high
proximity and market-leading branch concepts,
enhanced logistics capabilities and light hubs that
offer above-branch logistics with superior ranging
and availability.
ACT SMARTER
To offer great customer experience smarter by bringing
‘digital, people, and pricing power’ from business units
into the local zone.
4. Digital in everything we do: aim to establish a
modern digital foundation that makes key processes
more effective, frees up time, and provides smarter,
value-adding services that solve essential customer
pain points.
5. Empowering people: aim to organise for local
responsibility and accountability, work smartly with
efficiency and performance, and ensure that we have
capable and engaged people serving our customers.
6. Smart pricing: aim to secure best prices and pricing
consistency tailored for individual customers while
enhancing automated pricing practices through
improved use of data and AI.
GROW STRONGER
To bring benefits to tradespeople from working with
Europe’s strongest Group by gaining sourcing synergies,
consolidating our industry, and reinvesting in our
business.
7. Europe’s #1 sourcing channel: aim to leverage our
scale and buying power to regain margin from
suppliers, chase synergies and roll out a rejigged
Own Brand offering.
8. M&A leadership: aim to consolidate our industry to
secure scale benefits to tradespeople, build local
proximity in growth zones and fuel must-win
category plays.
9. Commercial real estate: aim to manage our property
portfolio actively to secure operational excellence
and rein-vest in our business and branch network.
LEAD ON SUSTAINABILITY
To become the best partner for sustainable building by
managing the business to high ESG standards and
making sustainability a commercial success to the
benefit of tradespeople and the entire construction
industry.
10. Best partner for sustainable building: aims at
making carbon data on products available to
customers and expanding the “low-carbon”
assortment while enhancing our advisory,
documentation, distribution etc. services.
By successfully moving closer, acting smarter and
getting stronger, STARK Group will not only grow its
business and consolidate its industry.
The Group will also create a ripple effect giving its
customers and the industry greater efficiency and
empowering them to take an active part in the transition
to emissions-free building;
▪ to the benefit of employees who will have more
career opportunities and a great place to work
▪ to the benefit of the communities in which we
operate,
▪ and to the benefit of our planet when climate action
and decent social and governance standards are
being pushed for and become part of every business’
license to operate.
STARK Group Annual Report 2023 Strategy 19
BUSINESS MODEL
Key resources
Products
Extensive range of SKUs sourced and sold.
Partnerships
Trusted relationships with tradespeople, suppliers
and the industry at large.
People
Dedicated employees with backgrounds as
tradespeople, 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
tradespeople 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 building
sites ensuring efficient low-carbon logistics.
Warehousing
Efficient distribution from manufacturers to
network of large warehouses and branches that
keep buffer stock for tradespeople.
SELL
Network with broad coverage
Located close to building sites to reduce
tradespeople's time spent on procuring.
Product availability
Offer the right product mix and full availability
within short timeframe on time in full. This
includes a market leading assortment of
materials to fulfil energy efficiency and LCA
requirements.
Sales facilitation
Provision of projects and bidding planning
services
Customer consultations and credit
Offer deep customer and market insights and act
as sales force for manufacturers for long tail of
SME customers. Ensure competitive pricing and
advice to customers about products,
sustainability etc. Bridge the liquidity gap by
offering credit.
Product documentation
Provide market leading product documentation
to fulfil national and sustainability scheme
requirements.
DISTRIBUTE
Efficient distribution
Manage complex distribution of heavy and fragile
materials with modified trucks and direct delivery
capabilities. Ensure access to and availability of
materials close to building sites with efficient
low-carbon logistics solutions.
Value created
Net zero cities of tomorrow
More and better housing, office spaces and
renovated and energy-efficient buildings for high
quality of life and sustainable communities and
cities.
Customer value
Advise, service and credit for professional
tradespeople.
Efficient building industry
Reduced complexity, more speed and best prices
when distributing heavy building materials
procured in different mixes for delivery within a
short timeframe.
Great place to work
Career opportunities in an engaging and safe
working environment for a brand that employees
take pride in.
Shareholder value
Competitive total returns through high ESG
performance and above average market growth
and value creation.
STARK Group Annual Report 2023 Strategy 20
SUSTAINABILITY
STARK Group works with high business integrity in support of a net zero future.
STARK Group works to reduce emissions in line with the
Group's approved Science Based Targets by 42% in
scope 1 & 2 and 12.3% in scope 3 by 2030. The overall
ambition is to reduce emissions to net zero by 2050 at
the latest.
Being a signatory to the UN Global Compact, STARK
Group is committed to upholding the ten principles
within environment, human rights, labour rights and anti-
corruption throughout all business activities. This has
been further strengthened through the 2023 strategy
review, which has cemented the Group's ambition to be
the best partner for sustainable building. Reaching this
ambition entails two focus areas: maintaining high ESG
performance and making sustainability a commercial
success.
In 2022/23, the European sustainability reporting
standards of the emerging EU corporate sustainability
reporting directive have been integrated into the Group
sustainability framework using double materiality as the
foundation.
ENVIRONMENTAL:
CLIMATE ACTION, CIRCULARITY, AND
ECOSYSTEM PROTECTION
STARK Group’s 2030 science-based carbon reduction
targets are a clear commitment that we will continue to
work to decarbonise the way we operate across the
value chain. STARK Group has a solid roadmap to meet
our interim goals for 2024 and 2030, and we are
determined to reach net zero by 2050 despite high
growth rates through acquisitions.
In 2022/23, STARK Group, including our newly acquired
UK market, reduced scope 1 and 2 emissions by 19.4%
from the 2020 baseline. The reduction is driven by the
continued sourcing of renewable electricity, comprising
65% of total electricity consumption. Furthermore, we
continued the transition away from diesel forklift trucks
to electric and from gas and oil heating systems to
district heating and electric heat pumps.
Despite the increased electrification of energy systems
and transport fleet, our electricity consumption has
decreased by 6% from the 2020 baseline. Following the
reduction of emissions, STARK Group achieved interest
savings on our ESG-linked loan of EUR 1 million in
2022/23.
STARK Group reduced waste to 5.2 tonnes per mEUR
revenue, corresponding to a reduction of 21% since
2020. This reduction is primarily driven by the Nordics,
who achieved a 16% reduction in absolute waste despite
market growth. The percentage of total waste
segregated for recycling has decreased to 67% due to
lower waste recycling rates in STARK UK. Best practice
sharing across markets will be utilised to leverage waste
recycling potentials in STARK UK.
During 2022/23, STARK Group expanded the
sustainability specialists' training programme and
initiated Sustainability Ambassador Programmes in
Germany and Finland. A total of 520 employees, equal to
2.5% of the Group’s employees, have been trained as
sustainability specialists. A sustainability training
programme will be launched in the UK during 2023/24.
In 2023, STARK Group launched a new digital climate
tool for customer product carbon reporting in Denmark
and Sweden. The climate monitor provides customers
and end-users with an overview of product climate
impact, making it easier to assess and compare product
carbon data and identify lower-impact alternatives for
building life cycle assessments (LCAs). The tool is
planned for launch across all markets within the next
years to support customers in making informed
decisions regarding product carbon impact. We expect
this to impact our scope 3 reduction plans significantly.
In 2022/23, there was an increase in sales of third-party
certified eco-labelled products in all Nordic markets. FSC
and PEFC-certified timber-based products comprised 78-
95% of total timber sales in Finland, Denmark, Sweden,
and Norway. Similarly, the share of sales of third-party
eco-labelled products in stocked assortment contributed
to 25-73% of sales between our Nordic markets.
Accounting principles will be streamlined to report a
Group number in 2023/2024. As penetration levels of
eco-labelled products are relatively low in the UK market,
we see considerable potential for promoting such
products in our newest market. However, it is expected
that average Group percentages will drop significantly.
81% of our branches are environmentally certified.
STARK Deutschland, Beijer Byggmaterial and 521 STARK
UK branches are all certified to ISO 14001, while
Neumann Bygg is certified under the Eco-Lighthouse
certification system.
STARK Group Annual Report 2023 Strategy 21
SUSTAINABILITY
STARK Group Annual Report 2023 Strategy 22
SUSTAINABILITY
STARK Group Annual Report 2023 Governance 23
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 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, monitors trends and findings within the
control framework and ensures proper and complete
reporting to the Audit Committee on status, mitigations,
and newly identified risks.
RISK GOVERNANCE MODEL
STARK Group Annual Report 2023 Governance 24
KEY RISKS
Some risks could have a significant impact on STARK Group’s future operations. The Group
monitors such key risks closely to assess and mitigate their impact.
ECONOMIC DOWNTURN
Impact
Rising inflation, higher 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, finance and sourcing 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 various
scenarios have been designed and specific initiatives
activated 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 and to constantly adjust the cost base to be in
line with market activity.
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 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 has 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-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
significantly in upgrading IT platforms and digitizing the
business. Furthermore, the Group invests in employee
training, governance, and technological measures to
curb cyber threats 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. These bodies work to proactively safeguard the
Group’s operational efficiency and protect against
potential financial and operational impacts stemming
from IT-related disruptions.
STARK Group Annual Report 2023 Governance 25
STARK Group Annual Report 2023 Governance 26
DATA ETHICS
STARK Group Annual Report 2023 Governance 27
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 (AC Chair) and Conscia A/S.
STARK Group Annual Report 2023 Consolidated Financial Statements 28
CONSOLIDATED
FINANCIAL STATEMENTS
2023
STARK Group Annual Report 2023 Consolidated Financial Statements 29
CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
Management’s Statement 30
Independent auditor’s report 31
Income Statement 33
Comprehensive Income 34
Statement of Financial Position 35
Statement of Changes in Equity 37
Cash Flow Statement 38
NOTES – CONSOLIDATED FINANCIAL STATEMENTS
1 BASIS OF REPORTING
1.1 Basis of reporting 39
1.2 Group accounting policies 40
1.3 Key accounting estimates
and judgements 41
2 INCOME STATEMENT
2.1 Segment analysis 44
2.2 Net sales 46
2.3 Staff costs 47
2.4 Depreciation and amortisation
of non-current assets 48
2.5 Financial expenses, net 48
2.6 Income tax 49
3 INVESTED CAPITAL
3.1 Acquisitions of businesses 50
3.2 Goodwill 52
3.3 Other intangible assets 54
3.4 Tangible non-current assets 56
3.5 Leases 58
4 WORKING CAPITAL AND PROVISIONS
4.1 Inventories 60
4.2 Trade receivables 61
4.3 Provisions 63
5 CAPITAL STRUCTURE AND FINANCING
5.1 Share capital and share premium 64
5.2 Dividend 64
5.3 Borrowings 65
5.4 Financial instruments,
risk management policies 66
6 OTHER FINANCIAL NOTES
6.1 Deferred tax assets and liabilities 69
6.2 Employee benefit obligations 70
6.3 Cash flow, adjustments and reversals 73
6.4 Cash flow, changes in working capital 73
6.5 Contingent liabilities 73
6.6 Fee to statutory auditors 74
6.7 Securities 74
6.8 Related parties 74
6.9 Subsequent events 75
6.10 List of Group companies 76
STARK Group Annual Report 2023 Consolidated Financial Statements 30
MANAGEMENT’S STATEMENT ON THE
CONSOLIDATED FINANCIAL STATEMENTS
Board of Directors
Executive Management
Søren P. Olesen Sisse Fjelsted Rasmussen
STARK Group Annual Report 2023 Consolidated Financial Statements 31
INDEPENDENT AUDITOR’S REPORT
STARK Group Annual Report 2023 Consolidated Financial Statements 32
Business Registration No 33 96 35 56
Identification No (MNE) mne32208
Identification No (MNE) mne45854
STARK Group Annual Report 2023 Consolidated Financial Statements 33
INCOME STATEMENT
See notes to the financial statements.
EUR million Note 2022/23 2021/22
Net sales 2.2 7,054 5,995
Cost of sales (5,243 ) (4,454 )
Gross Profit 1,811 1,541
Staff costs 2.3 (903 ) (721 )
Other external operating expenses (517 ) (361 )
Earnings before interest, tax, depreciation and amortisation (EBITDA) 391 459
Depreciation and amortisation of non-current assets 2.4 (243 ) (171 )
Bargain purchase gain 3.1 205 -
Earnings before interest and tax (EBIT) 353 288
Financial expenses, net 2.5 (197 ) (102 )
Earnings before tax 156 186
Income tax 2.6 (12 ) (54 )
Net earnings 144 132
Net earnings is attributable to:
Shareholders in Stark Group A/S 141 127
Non-controlling interests 3 5
Total 144 132
STARK Group Annual Report 2023 Consolidated Financial Statements 34
COMPREHENSIVE INCOME
See notes to the financial statements.
EUR million Note 2022/23 2021/22
Net earnings 144 132
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 19 23
Tax on actuarial gain/(loss) on retirement benefit plans 6.2 (2 ) (6 )
Other comprehensive income/(loss) 26 23
Total comprehensive income/(loss) 170 155
Total comprehensive income is attributable to:
Shareholders in Stark Group A/S 167 150
Non-controlling interests 3 5
Total 170 155
STARK Group Annual Report 2023 Consolidated Financial Statements 35
STATEMENT OF FINANCIAL POSITION
ASSETS
See notes to the financial statements.
31 July 31 July
EUR million Note 2023 2022
Non-current assets
Goodwill 3.2 825 810
Other intangible assets 3.3 989 996
Total intangible non-current assets 1,814 1,806
Property 3.4 1,155 732
Plant and equipment 3.4 174 122
Non-currents assets under construction 3.4 98 46
Right of use assets 3.5 891 553
Total tangible non-current assets 2,318 1,453
Investment in a joint venture 1 1
Total financial non-current assets 1 1
Total non-current assets 4,133 3,260
Current assets
Inventories 4.1 1,087 813
Trade receivables 4.2 823 569
Corporate tax receivables 11 5
Other receivables 75 22
Prepayments 21 12
Cash and cash equivalents 307 261
Total current assets 2,324 1,682
TOTAL ASSETS 6,457 4,942
STARK Group Annual Report 2023 Consolidated Financial Statements 36
STATEMENT OF FINANCIAL POSITION
EQUITY AND LIABILITIES
See notes to the financial statements.
31 July 31 July
EUR million Note 2023 2022
Equity
Share capital 5.1 2 2
Reserves 846 679
Equity, shareholders in STARK Group A/S 848 681
Non-controlling interests 10 11
Total equity 858 692
Non-current liabilities
Leasing liabilities 3.5 714 472
Deferred tax liabilities 6.1 322 312
Provisions 4.3 148 32
Employee benefit obligations 6.2 71 92
Loans from related parties 5.3 / 6.8 2,253 1,790
Borrowings 5.3 143 16
Total non-current liabilities 3,651 2,714
Current liabilities
Leasing liabilities 3.5 146 84
Provisions 4.3 21 8
Loans from related parties 5.3 / 6.8 6 5
Borrowings 5.3 28 27
Payables to related parties 5.4 31 31
Trade payables 1,338 1,096
Corporate tax payables 43 31
Other liabilities 335 254
Total current liabilities 1,948 1,536
Total liabilities 5,599 4,250
TOTAL EQUITY AND LIABILITIES 6,457 4,942
STARK Group Annual Report 2023 Consolidated Financial Statements 37
STATEMENT OF CHANGES IN EQUITY
See notes to the financial statements.
EUR million
Share
capital
Trans-
lation
reserve
Retained
earnings
Non-
controlling
interests
Total
equity
Balance as of 1 August 2022 2 (1 ) 680 681 11 692
Comprehensive income/(loss):
Net earnings - - 141 141 3 144
Other comprehensive income/(loss) - 9 17 26 - 26
Comprehensive income/(loss) - 9 158 167 3 170
Dividend paid - - - - (4 ) (4 )
Balance as of 31 July 2023 2 8 838 848 10 858
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
Reserves
Equity,
share-
holders in
STARK
Group A/S
STARK Group Annual Report 2023 Consolidated Financial Statements 38
CASH FLOW STATEMENT
See notes to the financial statements.
EUR million Note 2022/23 2021/22
Net earnings 144 132
Adjustments and reversals, non-cash 6.3 269 331
Changes in working capital 6.4 36 (88 )
(Decrease)/increase in provisions and other liabilities (15 ) (3 )
Cash flow from operating activities before financial items and tax 434 372
Interest paid (103 ) (67 )
Tax paid (20 ) (75 )
Cash flow from operating activities 311 230
Cash flow from investing activities
Acquisition of businesses (net of cash acquired) 3.1 (579 ) (189 )
Purchases of property, plant and equipment (79 ) (71 )
Proceeds from sale of land, property, plant and equipment 14 15
Purchases of intangible assets (29 ) (24 )
Cash flow from investing activities (673 ) (269 )
Free cash flow (362 ) (39 )
Cash flow from financing activities
Proceeds from borrowings 5.3 132 -
Repayment of borrowings 5.3 (14 ) (2 )
Proceeds from loans from related parties 5.3 794 58
Repayment of loans from related parties 5.3 (375 ) -
Payment of dividend to minority interests - (4 )
Repayment of leasing liabilities 5.3 (113 ) (77 )
Cash flow from financing activities 424 (25 )
Net cash (used)/generated 62 (64 )
Effects of exchange rate changes (16 ) (5 )
Net increase/(decrease) in cash and cash equivalents 46 (69 )
Cash, cash equivalents, beginning balance 261 330
Cash and cash equivalents, ending balance 307 261
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 39
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. Following
the acquisition of STARK UK with closing as of 28
February 2023, the business is divided into three
segments: “Nordics” (Denmark, Sweden, Finland and
Norway), “Germany” (Germany and Austria) and “UK”
(United Kingdom). The UK segment is included with 5
months of operations (March-July 2023) in this report.
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).
The accounting principles are unchanged compared to
last year. A few reclassifications have been made in the
comparative figures. These reclassifications have not
had any impact on the result and the equity. The
reclassifications performed are deemed immaterial.
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 2022. It is assessed that application of
amendments effective from 1 August 2022 has not had
a material impact on the consolidated financial
statements for 2022/23. Furthermore, Management
does not anticipate any significant impact on future
periods from the adoption of new or amended standards
not effective yet.
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 2023 Notes - Consolidated Financial Statements 40
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 2023 Notes - Consolidated Financial Statements 41
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.
When determining estimates and assumptions,
Management has assessed the qualitative and
quantitative impact of climate related risks. It is
Management’s assessment that the effects of climate
related risks do not significantly impact estimates and
assumptions.
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. As applicable Management
includes allowances to reflect the likely costs and risks
associated with re-letting the property.
Other acquired assets and liabilities (estimates)
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 2023 Notes - Consolidated Financial Statements 42
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 as
the Group cannot predict with a very high degree of
certainty that it will in all cases remain in leaseholds
beyond a planning horizon of 10 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 137m as of 31 July 2023 (31
July 2022: EUR 61m), 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 43m as of 31 July 2023 (31 July 2022: EUR 27m),
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
include thresholds defined based on purchases within a
calendar year rather than the Group’s financial year.
Under certain agreements, the rebate percentage is
based on quantities or values of purchases 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 2023 Notes - Consolidated Financial Statements 43
1.3 KEY ACCOUNTING ESTIMATES AND JUDGEMENTS -
CONTINUED
PROVISIONS (JUDGEMENT)
Provisions 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 169m as
of 31 July 2023 (31 July 2022: EUR 40m) to cover for the
described risks and claims for the various categories of
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 as
determined primarily by analysing independent cash
inflows. The group has identified it’s CGUs as either
geographic areas or more granular groupings under the
geographic level based on the branch network.
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 2023 and 2022, 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 multiple 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 2023 Notes - Consolidated Financial Statements 44
2.1 SEGMENT ANALYSIS
2022/23
EUR million Nordics
Germany
& Austria
United
Kingdom
Not
allocated
Total
Income statement
Net sales 3,057 2,844 1,153 7,054
Cost of sales (2,242) (2,161) (840) (5,243)
Gross Profit 815 683 313 1,811
Staff costs (405) (329) (169) (903)
Other external operating expenses (177) (191) (130) (19) (517)
233 163 14 (19) 391
Depreciation and amortisation of non-current assets (110) (86) (47) (243)
Bargain purchase gain 205 205
Earnings before interest and tax (EBIT) 123 77 (33) 186 353
Financial expenses, net (197)
Result before tax 156
Tax for the period (12)
Result for the period 144
Capital expenditures by segment
Property, plant and equipment 38 25 16 - 79
Intangible assets 8 3 2 16 29
Total capital expenditures by segment 46 28 18 16 108
Assets and liabilities by segment 31 July 2023
Segment non-current assets 1,982 1,280 865 4,127
Segment current assets 652 549 812 2,013
Segment liabilities (1,345) (805) (1,010) (3,160)
Net assets/liabilities not allocated 1 1
Net assets 1,289 1,024 667 1 2,981
Net debt (2,123)
Total equity 858
Specification of total assets 31 July 2023
Segment non-current assets 1,982 1,280 865 4,127
Segment current assets 652 549 812 2,013
Assets not allocated, non-current 6 6
Assets not allocated, current 4 4
Cash and cash equivalents included in net debt 307 307
Total assets 2,634 1,829 1,677 317 6,457
Earnings before interest, tax, depreciation and
amortisation (EBITDA) (non-IFRS)
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 45
2.1 SEGMENT ANALYSIS (CONTINUED)
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.
2021/22
EUR million Nordics
Germany
& Austria
Not
allocated
Total
Income statement
Net sales 3,277 2,718 5,995
Cost of sales (2,395) (2,059) (4,454)
Gross Profit 882 659 1,541
Staff costs (398) (309) (707)
Other external operating expenses (195) (176) (4) (375)
289 174 (4) 459
Depreciation and amortisation of non-current assets (101) (70) - (171)
Earnings before interest and tax (EBIT) 188 104 (4) 288
Financial expenses, net (102)
Result before tax 186
Tax for the period (54)
Result for the period 132
Capital expenditures by segment
Property, plant and equipment 40 31 - 71
Intangible assets 21 3 - 24
Total capital expenditures by segment 61 34 - 95
Assets and liabilities by segment 31 July 2022
Segment non-current assets 2,035 1,221 3,256
Segment current assets 772 647 1,419
Segment liabilities (1,572) (809) (2,381)
Net assets/liabilities not allocated (25) (25)
Net assets 1,235 1,059 (25) 2,269
Net debt (1,577)
Total equity 692
Specification of total assets 31 July 2022
Segment non-current assets 2,035 1,221 3,256
Segment current assets 772 647 1,419
Assets not allocated, non-current 5 5
Assets not allocated, current 1 1
Cash and cash equivalents included in net debt 261 261
Total assets 2,807 1,868 267 4,942
Earnings before interest, tax, depreciation and
amortisation (EBITDA) (non-IFRS)
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 46
2.2 NET SALES
§ ACCOUNTING POLICIES
Net sales
The Group is a distributor of heavy building materials. The sold goods
are used for building and renovating houses, offices spaces,
community buildings, and infrastructure.
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 2022/23 2021/22
Sale of goods 7,054 5,995
Total net sales 7,054 5,995
The net sales in Denmark, which is the domicile market of the Group amounted to
EUR 1,312m in 2022/23 (2021/22: EUR 1,362m).
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 47
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 2022/23 2021/22
Salary and wages 750 596
Pensions - contribution plans 40 27
Pensions - defined benefit plans 3 5
Other expenses for social security 110 93
Total staff costs 903 721
Compensation for the Executive Management of the Group:
Salary and wages 5 5
Pensions - contribution plans 0 0
Other expenses for social security 0 0
Total compensation paid to the Executive Management 5 5
2022/23 2021/22
Average number of fulltime employees 15,302 11,932
Number of employees at the end of the financial period 21,504 13,059
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 2023 Notes - Consolidated Financial Statements 48
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 2022/23 2021/22
Intangible assets 50 45
Buildings 31 15
Fixtures, fittings, tools and equipment 34 27
Right of use assets 128 84
Total depreciation and amortisation of non-current assets 243 171
EUR million 2022/23 2021/22
Financial expenses
Interests on loans from related parties 103 70
Interests on loans from third party 15 8
Net interest employee benefit obligations 3 (1)
Foreign exchange losses 49 11
Leases interest (IFRS16) 27 14
Total financial expenses 197 102
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 49
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 2022/23 2021/22
Current tax 35 60
Deferred tax (23) (5)
Adjustment of current tax regarding previous years 2 3
Adjustment of deferred tax regarding previous years (2) (4)
Total income tax for the year 12 54
Tax on items charged/(credited) to the statement of other comprehensive income:
Deferred tax charge/(credit) on actuarial gain/loss on retirement benefit plans 5 6
Total tax on items charged/(credited) to other comprehensive income 5 6
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 -25% 2%
Non-deductible interest expenses 8% 3%
Adjustment relating to prior year 0% -1%
Tax rate on profit before tax 8% 29%
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 50
3.1 ACQUISITIONS OF BUSINESSES
STARK UK
In December 2022, STARK Group signed an agreement
with Compagnie de Saint-Gobain SA to acquire Saint-
Gobain Building Distribution Ltd. (“SGBDUK“). SGBDUK
generates approximately EUR 2.7bn in annual net sales
and EUR 54m in EBITDA. Closing took place as of 28
February 2023. The consideration amounted to EUR
484m net of cash on balance sheet.
The acquisition of SGBDUK has resulted in a negative
goodwill of EUR 205m, which in accordance with IFRS
has been recognized in the consolidated income
statement as a bargain purchase gain. The bargain
purchase gain is assessed to have arisen due to the low
historical financial performance of the acquired entity
combined with a need for investments and significant
efforts from the Group to implement a new strategy and
operating model to support a turn-around of the entity.
As a result of the purchase price allocation showing a
bargain purchase gain, the Group has carefully assessed
the identification of underlying assets, liabilities and
contingent liabilities, and has concluded that all relevant
assets and liabilities have been recognised at their fair
values, and that the acquisition has in fact resulted in a
bargain purchase gain even without recognition of any
intangible assets in the opening balance.
Other acquisitions
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 areas
in Europe's largest market for heavy building materials,
Stuttgart and Dresden. The acquisition was closed as of
1 August 2022 and is included in the consolidated
financial statements from that date and onwards.
In November 2022, STARK Group signed an agreement
to acquire FagFlis, Norway's leading distributor and
retailer of ceramic tiles for professional craftsmen, as
well as the Swedish FF Kakel. Closing took place as of 1
December 2022.
In February 2023, STARK Group has acquired two minor
businesses in Denmark from XL-Byg.
These other acquisitions had annual net sales of approx.
EUR 193m and EBITDA of EUR 16m. Total net
consideration was EUR 95m, which was financed with
existing available facilities.
Goodwill
Following recognition of acquired identifiable assets and
liabilities at their fair values, the goodwill related to the
acquisitions in 2022/23 is totally measured at EUR 40m.
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.
Impact on financial year 2022/23
The acquisitions in total contributed with EUR 1,290m
and EUR 21m to the Net sales and EBITDA, respectively
in 2022/23.
Transaction and acquisition costs
Transaction and acquisition costs incurred in 2022/23
amounts to EUR 25m which are recognised as part of
Other external operating expenses and are part of total
non-recurring items.
Acquisitions in the previous financial year 2021/22
In 2021/22, the Group closed a number of acquisitions
with roofing and façade specialist Melle Gallhöfer in
Germany being the most significant. No
remeasurements have taken place regarding these
acquisitions in 2022/23.
Acquisitions in the new financial year 2023/24
In March 2023, STARK Group signed an agreement to
acquire the family owned Schilowsky Baumarkt und
Baustoffhandel KG in Austria. The acquisition will
increase STARK Group’s presence in Austria’s largest
cities. The acquisition of Schilowsky was closed 1
August 2023 and will be included in the consolidated
financial statements in 2023/24 and onwards.
Schilowsky has annual net sales of approx. EUR 122m.
The initial accounting is not yet completed, which is the
reason 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.
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 51
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 2022/23 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.
2021/22
EUR million UK Others Total Total
Customer relationships - 35 35 47
Trade names - 1 1 10
Other intangible assets 0 0 0 2
Property, plant and equipment 512 14 526 51
Right of use assets 349 26 375 87
Inventories 350 28 378 83
Receivables 410 25 435 52
Tax receivable 14 - 14 -
Cash and cash equivalents 108 3 111 3
Trade and other payables (501) (26) (527) (61)
Borrowings - (7) (7) (17)
Leasing obligations (302) (26) (328) (85)
Deferred tax (24) (11) (35) (15)
Tax payable - (5) (5) (4)
Provisions (119) - (119) (4)
Total 797 57 854 148
Goodwill arising - 41 41 44
Bargain purchase gain arising (205) - (205) -
Consideration 592 98 690 192
Total consideration as cash payment 592 98 690 192
Cash and cash equivalents acquired (108) (3) (111) (3)
Net cash outflow 484 95 579 189
2022/23
The net outflow of cash in respect of the
purchase of businesses is as follows:
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 52
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 2023.
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 2.0
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:
2022/23 2021/22
Denmark 9.9% 9.5%
Sweden 9.8% 9.4%
Finland 10.2% 9.7%
Norway 10.6% 10.0%
Germany 10.7% 10.0%
Austria 10.7% 10.0%
The impairment review did not result in impairment
charges.
EUR million 2022/23 2021/22
Cost at 1 August 810 769
Business acquisitions 41 44
Exchange rate adjustment (26) (3)
Cost at 31 July 825 810
Impairment losses at 1 August - -
Impairment charge for the period - -
Accumulated impairment losses at 31 July - -
Carrying amount at 31 July 825 810
The carrying amount of goodwill by cash generating unit (CGU) is as follows:
31 July
2023
31 July
2022
Denmark 229 225
Sweden 173 191
Finland 94 94
Norway 44 30
Germany 276 261
Austria 9 9
Group 825 810
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 53
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
▪ 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.
Impairment will need to be assessed in certain CGUs if
the pre-tax discount rate increases by 1.5 percent or
more or if the long-term growth rate decreases to 0.3
percent or lower.
§ 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 2023 Notes - Consolidated Financial Statements 54
3.3 OTHER INTANGIBLE ASSETS
2022/23
EUR million
Trade
names
Customer
relation-
ships
Software Total
Cost at 1 August 2022 497 489 64 1,050
Business acquisitions 1 35 0 36
Additions - - 29 29
Transfers - - 2 2
Exchange rate adjustment (9) (15) (1) (25)
Cost at 31 July 2023 489 509 94 1,092
Amortisation and impairment at 1 August 2022 - (39) (15) (54)
Amortisation for the period - (35) (15) (50)
Exchange rate adjustment - 1 0 1
Amortisation and impairment at 31 July 2023
- (73) (30) (103)
Carrying amount at 31 July 2023 489 436 64 989
2021/22
EUR million
Trade
names
Customer
relation-
ships
Software Total
Cost at 1 August 2021 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 31 July 2022 497 489 64 1,050
Amortisation and impairment at 1 August 2021 - (7) (2) (9)
Amortisation for the period - (32) (13) (45)
Exchange rate adjustment - 0 - 0
Amortisation and impairment at 31 July 2022
- (39) (15) (54)
Carrying amount at 31 July 2022 497 450 49 996
Trade names with indefinite lives can be specified as follows per business unit:
31 July
2023
31 July
2022
Germany 209 209
Austria 3 3
Denmark 128 128
Sweden 82 91
Finland 66 66
Norway 1 -
Total 489 497
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 55
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 2023 Notes - Consolidated Financial Statements 56
3.4 TANGIBLE NON-CURRENT ASSETS
2022/23
EUR million Property
Plant &
equipment
Non-
current
assets
under con-
struction
Total
Cost at 1 August 2022 751 155 46 952
Business acquisitions 405 55 66 526
Additions 15 19 45 79
Disposals (9) (2) - (11)
Transfers 40 16 (58) (2)
Exchange rate adjustment 3 (4) (1) (2)
Cost at 31 July 2023 1,205 239 98 1,542
Depreciation and impairment at 1 August 2022 (19) (33) - (52)
Depreciation for the period (31) (34) - (65)
Disposals 0 1 - 1
Exchange rate adjustment 0 1 - 1
Amortisation and impairment at 31 July 2023
(50) (65) - (115)
Carrying amount at 31 July 2023 1,155 174 98 1,427
2021/22
EUR million Property
Plant &
equipment
Non-
current
assets
under con-
struction
Total
Cost at 1 August 2021 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 31 July 2022 751 155 46 952
Depreciation and impairment at 1 August 2021 (4) (6) - (10)
Depreciation for the period (15) (27) - (42)
Disposals 0 0 - 0
Exchange rate adjustment (0) (0) - (0)
Amortisation and impairment at 31 July 2022
(19) (33) - (52)
Carrying amount at 31 July 2022 732 122 46 900
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 57
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 2023 Notes - Consolidated Financial Statements 58
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
branches in the Group’s business units.
2022/23
EUR million
Land and
buildings
Other
equipment
Total
Cost at 1 August 2022 569 84 653
Business acquisitions 286 89 375
Additions 15 48 63
Disposals (9) (8) (17)
Additions due to revised lease terms 42 1 43
Exchange rate adjustment (15) 1 (14)
Cost at 31 July 2023 888 215 1,103
Depreciation and impairment at 1 August 2022 (76) (24) (100)
Depreciation for the period (94) (34) (128)
Disposals 4 8 12
Exchange rate adjustment 3 1 4
Amortisation and impairment at 31 July 2023
(163) (49) (212)
Carrying amount at 31 July 2023 725 166 891
2021/22
EUR million
Land and
buildings
Other
equipment
Total
Cost at 1 August 2021 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 31 July 2022 569 84 653
Depreciation and impairment at 1 August 2021 (14) (4) (18)
Depreciation for the period (63) (21) (84)
Disposals 1 1 2
Exchange rate adjustment 0 0 0
Amortisation and impairment at 31 July 2022
(76) (24) (100)
Carrying amount at 31 July 2022 493 60 553
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 59
3.5 LEASES - CONTINUED
LEASING LIABILITY
In 2022/23, short term, low value and variable leases
have been expensed as other external operating costs
with EUR 16m (2021/22: EUR 12m).
§ 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 2022/23 2021/22
Less than 1 year 184 101
Between 1 and 5 years 536 306
More than 5 years 412 233
Undiscounted leasing liability as of 31 July 1,132 640
Current 146 84
Non-current 714 472
Discounted leasing liability as of 31 July 860 556
Amounts recognized in the statement of cash flows:
Repayment of liabilities 113 77
Interest 27 14
Short term, low value and variable leases included in cash flows from operations
16 12
Total cash outflow for leases 156 103
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 60
4.1 INVENTORIES
In 2022/23, inventory purchases of EUR 5,243m has
been expensed (2021/22: EUR 4,454m).
§ 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
2023
31 July
2022
Trading goods 1,224 874
Provision for excess and obsolete goods (137) (61)
Total inventories 1,087 813
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 61
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 74m was utilised as of 31 July 2023 (31 July
2022: EUR 64m). The agreements expire unless
extended on 22 October 2024. The Group has no
obligations on the sold receivables.
EUR million
31 July
2023
31 July
2022
Trade receivables
Trade receivables, gross 866 596
Provision for expected credit losses (43) (27)
Net Trade receivables 823 569
Of this, due after more than 1 year - -
Amounts not yet due 663 491
Past due not more than one month 137 73
Past due more than one month and less than two months 15 2
Past due more than two months and less than three months 5 1
Past due more than three months and less than six months 2 1
Past due more than six months 1 1
As of 31 July 823 569
Movements in the provision for expected credit losses are as follows:
2022/23 2021/22
Provision at the beginning of the period (27) (21)
Business acquisitions (11) (2)
Net charge for the period (10) (9)
Utilised in the period 5 5
As of 31 July (43) (27)
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 2023 Notes - Consolidated Financial Statements 62
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 transaction price, 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 2023
EUR million
Gross
carrying
amount
Expected
credit loss
Specification of provision for expected credit losses:
Amounts not yet due 669 (6)
Past due not more than one month 141 (4)
Past due more than one month and less than two months 16 (1)
Past due more than two months and less than three months 6 (1)
Past due more than three months and less than six months 6 (4)
Past due more than six months 28 (27)
As of 31 July 2023 866 (43)
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)
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 63
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.
Dilapidation provision covers estimated costs for
repairing leaseholds when they terminate. The provision
is primarily related to STARK UK.
Other provisions include warranty and separation costs
relating to businesses disposed of and legal cases.
§ 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.
2022/23
EUR million
Environ-
mental
Restruc-
turing
Dilapi-
dations
Other pro-
visions
Total
Provision at 1 August 2022 10 6 5 19 40
Business acquisitions 2 2 111 4 119
Utilised in the period - (6) (1) (5) (12)
Charge/(credit) for the period 0 11 3 9 23
Unused amounts reversed during the period - - (1) (3) (4)
Exchange rate adjustment - - 3 0 3
Provision at 31 July 2023 12 13 120 24 169
2021/22
EUR million
Environ-
mental
Restruc-
turing
Dilapi-
dations
Other pro-
visions
Total
Provision at 1 August 2021 8 6 5 18 37
Business acquisitions 2 1 - 1 4
Utilised in the period (0) (4) (0) (2) (6)
Charge/(credit) for the period 0 4 0 2 6
Unused amounts reversed during the period (0) (1) - (0) (1)
Provision at 31 July 2022 10 6 5 19 40
Other provisions can be specified as follows:
31 July
2023
31 July
2022
Warranty commitments 3 3
Legal 1 1
Miscellaneous 20 15
Total other provisions 24 19
Maturity of provisions are expected to be:
Within 1 year 21 8
Between 1 and 5 years 11 9
Over 5 years 137 23
Total provisions 169 40
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 64
5.1 SHARE CAPITAL AND SHARE PREMIUM
Share 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.
The share capital as of 31 July 2023 is unchanged
compared to 31 July 2022.
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
2022/23.
EUR million
Number of
shares
Share
capital
Share
premium
Total
Changes in share capital and share premium for 2022/23:
Balance as of 1 August 2022 15,000,000 2 0 2
Balance as of 31 July 2023 15,000,000 2 0 2
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 - 1
Balance as of 31 July 2021 40,000 1 - 1
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 65
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
2023
31 July
2022
Current
Bank loans and loans from non-controlling interests 28 27
Loans from related parties 6 5
Current total 34 32
Non-current
Bank loans 143 16
Loans from related parties 2,253 1,790
Non-current total 2,396 1,806
Total borrowings 2,430 1,838
Within 1 year 34 32
Between 1 and 5 years 1,786 7
After 5 years 610 1,799
Carrying amount 2,430 1,838
Changes in assets and liabilities from financing activities
2022/23
EUR million
1 August
2022
Cash
flows
Acquisi-
tions
Other
non-cash
1
31 July
2023
Bank loans 26 120 7 - 153
Loans from related parties 1,795 419 - 45 2,259
Leasing liabilities 556 (113) 328 89 860
Loans from non-controlling interests 17 (2) - 3 18
Total change from financing activities 2,394 424 335 137 3,290
2021/22
EUR million
1 August
2021
Cash
flows
Acquisi-
tions
Other
non-cash
2
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
1. Other non-cash includes accrued interest of EUR 45m on loans from related parties. new leasing contracts amounting to EUR 63m and re-measurements of EUR 43m.
2. 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..
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 66
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 SEK, NOK and GBP.
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.
The majority of the long-term financing is with variable
interests. Disregarding any short-term hedges or similar
arrangements to temporarily fix the variable interest, a
1% change in interest levels would result in a structural
change of interest expenses of approximately 18m EUR
on an annual basis.
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 67
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
2023
31 July
2022
Financial assets
Trade receivables 823 569
Other receivables 75 22
Cash and cash equivalents 307 261
Financial assets at amortised cost 1,205 852
Financial liabilities
Payables to related parties (31) (31)
Trade and other payables (1,673) (1,350)
Less: Tax and social security 40 43
Less: Payroll accruals 12 10
Net trade and other payables (current) (1,652) (1,328)
Loans from related parties (2,259) (1,795)
Borrowings (171) (43)
Leasing liabilities (860) (556)
Financial liabilities at amortised cost (4,942) (3,722)
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 2023
Due in less than one year (1,652) (19) (28) (146) (93) (1,938)
Due in two to five years - (1,794) (29) (455) (285) (2,563)
Due in over five years - (496) (116) (259) (370) (1,241)
Total (1,652) (2,309) (173) (860) (748) (5,742)
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)
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 68
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 2023 Notes - Consolidated Financial Statements 69
6.1 DEFERRED TAX ASSETS AND LIABILITIES
The Group has an unrecognised deferred tax asset of
EUR 13m 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 2022/23 2021/22
Balance at the beginning of the year 312 301
Business acquisitions 35 15
Recognised in the income statement regarding current year (23) (5)
Recognised in other comprehensive income 5 6
Adjustment of deferred tax regarding previous years (2) (4)
Exchange rate adjustment (5) (1)
Balance at the end of the year 322 312
EUR million
31 July
2023
31 July
2022
Deferred tax relates to:
Intangible assets 211 235
Property, plant and equipment 386 242
Pensions 4 (4)
Inventory (6) (7)
IFRS 16 leasing liabilities (209) (143)
Other assets and liabilities (64) (11)
Total 322 312
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 70
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 2022/23 2021/22
Analysis of liability in the consolidated statement of financial position
Fair value of plan assets 43 47
Present value of defined benefit obligations (114) (139)
Net liability recognised in the consolidated statement of financial position (71) (92)
Analysis of total expense recognised in the consolidated income statement
Current service cost (4) (5)
Charged to staff costs (4) (5)
Calculated interest on pension liabilities (4) (2)
Calculated interest on plan assets 1 3
Credited/(charged) to finance costs (3) 1
Total expense recognised in the consolidated income statement (7) (4)
Analysis of amount recognised in the consolidated statement of comprehensive income
Actuarial gain/(loss) 19 23
Taxation (5) (6)
Total amount recognised in the consolidated statement of comprehensive income 14 17
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 71
6.2 EMPLOYEE BENEFIT OBLIGATIONS - CONTINUED
EUR million 2022/23 2021/22
Fair value of plan assets
At the beginning of the period 47 45
Calculated interest on plan assets 1 3
Disbursed benefits (3) (2)
Fair value gain on plan assets (2) 1
As of 31 July 43 47
Present value of defined benefit obligations
At the beginning of the period (139) (158)
Current service cost (4) (5)
Calculated interest on pension liabilities (4) (2)
Disbursed benefits from the Group 3 1
Disbursed benefits from plan assets 3 2
Actuarial gain/(loss) - demographic assumptions (5) (1)
Actuarial gain/(loss) - financial assumptions 26 23
Currency translation 6 1
As of 31 July (114) (139)
31 July
2023
31 July
2022
Analysis of present value of defined benefit obligations
Amounts arising from wholly unfunded plans (48) (62)
Amounts arising from plans that are wholly or partly funded (66) (77)
Total (114) (139)
Analysis of present/fair value of plan assets
Property 43 47
Total 43 47
31 July
2023
31 July
2022
The actuarial calculations are based on the following assumptions:
Germany
Discount rate 4.06% 2.79%
Rate of inflation 2.60% 2.50%
Increases to pensions in payment 2.60% 2.50%
Increase in salary 2.10% 2.10%
Current pensioners 1,072 1,120
Future pensioners 775 774
Sweden
Discount rate 4.10% 3.40%
Rate of inflation 1.80% 2.80%
Increases to pensions in payment 2.80% 3.80%
Increase in salary 2.80% 3.80%
Current pensioners 784 762
Future pensioners 571 601
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 72
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
+4% respectively (31 July 2022: -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 (31 July 2022:
+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 4% (31 July 2022: +4%).
§ 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 2023 Notes - Consolidated Financial Statements 73
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 2022/23 2021/22
Financial expenses, net 197 102
Depreciation and amortisation 243 171
Bargain purchase gain (205) -
Gain from sale of properties and equipment (3) (2)
Change in provisions 25 6
Income tax 12 54
Adjustments and reversals, non-cash 269 331
EUR million 2022/23 2021/22
(Increase) / decrease in inventories 101 (177)
(Increase) / decrease in trade and other receivables 117 (32)
Increase / (decrease) in trade and other payables (182) 121
Changes in working capital 36 (88)
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 74
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 loans amounting to EUR
1,795m and the Senior Revolving Credit facilities
agreement with lenders up to EUR 371m.
The Senior Revolving Credit facilities were not drawn as
of 31 July 2023.
As of 31 July 2023, the Group had pledged properties
with a book value of EUR 244m 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
1,078m), Winterfell Sweden AB (EUR 450m) and
Winterfell Germany GmbH (EUR 734m). In general, the
financing consists of longer-term financing with varying
interest. In 2022/23 the weighted average interest rate
on the financing with related parties was 5.3%
(FY2021/22: 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 103m (FY2021/22:
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
2022/23
Total
Deloitte
Other
audit
firms
2021/22
Total
Statutory audit 3 1 4 1 1 2
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 3 1 4 1 1 2
STARK Group Annual Report 2023 Notes - Consolidated Financial Statements 75
6.9 SUBSEQUENT EVENTS
In March 2023, STARK Group signed an agreement to
acquire the family owned Schilowsky Baumarkt und
Baustoffhandel KG in Austria. The acquisition will
increase STARK Group’s presence in Austria’s largest
cities. The acquisition of Schilowsky was closed 1
August 2023 and will be included in the consolidated
financial statements in 2023/24 and onwards.
Schilowsky has annual net sales of approx. EUR 122m.
STARK Group Annual Report 2023 Parent Company Financial Statements – STARK Group A/S 76
6.10 LIST OF GROUP COMPANIES
Name
Registered
office
Parent:
STARK Group A/S Frederiksberg, 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%
C.F. Richs Vej 115 ApS Aarhus, Denmark 100%
Fragtvej 7-9 ApS Aarhus, Denmark 100%
Jarlsberggade 10 ApS Aarhus, Denmark 100%
Trælastkompagniet Nakskov Torben Christensen A/S Nakskov, Denmark 100%
XL-Faxe Trælast & Proffcenter A/S Faxe, 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%
Konz Baustoffring GmbH Eislingen, Germany 100%
Konz Baustoffring Ulm GmbH Vöhringen, 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 100.00%
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%
Schilowsky Baustoffhandel GmbH Eberstalzell, Austria 100%
United Kingdom
STARK Group Holding UK 1 Ltd. Coventry, United Kingdom 100%
STARK Group Holding UK 2 Ltd. Coventry, United Kingdom 100%
STARK Building Materials UK Limited Coventry, United Kingdom 100%
STARK UK Property Holdings Limited Coventry, United Kingdom 100%
Norman Limited Coventry, United Kingdom 100%
Jewson Limited Coventry, United Kingdom 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.
Voting and
ownership share
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
STARK Group Annual Report 2023 Parent Company Financial Statements – STARK Group A/S 77
6.10 LIST OF GROUP COMPANIES – CONTINUED
Name
Registered
office
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%
Flis Fram AB Stockholm, Sweden 100%
FF Kakel 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%
FagFlis Group Holding AS Oslo, Norway 100%
Flis Fram AS Oslo, Norway 100%
L-Flis & Interiør AS Oslo, Norway 100%
Østfold Flis AS Oslo, Norway 100%
Flisdekor AS Oslo, Norway 100%
Flisfakta AS Oslo, Norway 100%
Hejo AS Oslo, Norway 100%
Stark Norway Propco AS Bergen, Norway 100%
Margrethe Jørgensen Vei 6 AS Bergen, Norway 100%
Voting and
ownership share
STARK Group Annual Report 2023 Parent Company Financial Statements – STARK Group A/S 78
PARENT COMPANY
FINANCIAL STATEMENTS
2023
STARK GROUP A/S
STARK Group Annual Report 2023 Parent Company Financial Statements – STARK Group A/S 79
CONTENTS
PARENT COMPANY FINANCIAL STATEMENTS
Income Statement 80
Statement of Financial Position 81
Statement of Changes in Equity 83
NOTES – PARENT COMPANY FINANCIAL STATEMENTS
1 BASIS OF REPORTING
1.1 Basis for reporting 84
1.2 Accounting policies 85
2 INCOME STATEMENT
2.1 Net sales 86
2.2 Staff costs 86
2.3 Financial items 87
2.4 Tax for the period 87
3 INVESTED CAPITAL
3.1 Goodwill 87
3.2 Investments in subsidiaries 88
5 CAPITAL STRUCTURE AND FINANCING
5.1 Share capital and share premium 89
5.2 Payables to related parties 89
5.3 Proposed distribution of profit 89
6 OTHER FINANCIAL NOTES
6.1 Contingent liabilities 90
6.2 Securities 90
6.3 Related parties 91
6.4 Subsequent events 91
STARK Group Annual Report 2023 Parent Company Financial Statements – STARK Group A/S 80
INCOME STATEMENT
EUR million Note 2022/23 2021/22
Net sales 2.1 18 19
Gross Profit 18 19
Staff costs 2.2 (9) (14)
Other external operating expenses (23) (9)
Earnings before interest, tax, depreciation and amortisation (EBITDA) (14) (4)
Amortisation of goodwill (2) (0)
Earnings before interest and tax (EBIT) (16) (4)
Income from investments in subsidiaries 448 60
Financial income 2.3 31 2
Financial expenses 2.3 (66) (53)
Earnings before tax 397 5
Income tax 2.4 4 8
Net earnings 5.3 401 13
STARK Group Annual Report 2023 Parent Company Financial Statements – STARK Group A/S 81
STATEMENT OF FINANCIAL POSITION
ASSETS
EUR million Note
31 July
2023
31 July
2022
Non-current assets
Goodwill 3.1 3 5
Total intangible non-current assets 3 5
Investments in subsidiaries 3.2 1,744 2,621
Deferred tax asset - 0
Receivables from related parties 708 -
Total financial non-current assets 2,452 2,621
Total non-current assets 2,455 2,626
Current assets
Deferred tax 1 1
Receivables from related parties 71 126
Corporate tax receivables 10 12
Other receivables 4 1
Cash and cash equivalents 196 190
Total current assets 282 330
TOTAL ASSETS 2,737 2,956
STARK Group Annual Report 2023 Parent Company Financial Statements – STARK Group A/S 82
STATEMENT OF FINANCIAL POSITION
EQUITY AND LIABILITIES
EUR million Note
31 July
2023
31 July
2022
Equity
Share capital 5.1 2 2
Share premium 5.1 0 0
Retained earnings 911 510
Total equity 913 512
Non-current liabilities
Payables to related parties 5.2 1,081 2,116
Total non-current liabilities 1,081 2,116
Current liabilities
Payables to related parties 5.2 736 316
Trade payables 2 2
Other liabilities 5 10
Total current liabilities 743 328
Total liabilities 1,824 2,444
TOTAL EQUITY AND LIABILITIES 2,737 2,956
STARK Group Annual Report 2023 Parent Company Financial Statements – STARK Group A/S 83
STATEMENT OF CHANGES IN EQUITY
EUR million
Share
capital
Share
premium
Retained
earnings
Total
equity
Equity as of 1 August 2022 2 0 510 512
Changes in equity for 2022/23:
Net earnings - - 401 401
Equity as of 31 July 2023 2 0 911 913
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
STARK Group Annual Report 2023 Notes – Parent Company Financial Statements – STARK Group A/S 84
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.
The accounting principles are unchanged compared to
last year.
STARK Group Annual Report 2023 Notes – Parent Company Financial Statements – STARK Group A/S 85
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. Write
down of investments is presented in the income statement as income
from investments in subsidiaries.
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 2023 Notes – Parent Company Financial Statements – STARK Group A/S 86
2.1 NET SALES
2.2 STAFF COSTS
EUR million 2022/23 2021/22
Service fees from subsidiaries 18 19
Total net sales 18 19
EUR million 2022/23 2021/22
Salary and wages 8 13
Pensions - contribution plans 1 1
Other expenses for social security - 0
Total staff costs 9 14
Compensation for the Executive Management:
Salary and wages 5 5
Pensions - contribution plans 0 0
Other expenses for social security 0 0
Total compensation paid to the Executive Management 5 5
Average number of fulltime employees
2022/23 2021/22
Average number of fulltime employees 49 47
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 2023 Notes – Parent Company Financial Statements – STARK Group A/S 87
2.3 FINANCIAL ITEMS
2.4 INCOME TAX
3.1 GOODWILL
EUR million 2022/23 2021/22
Financial income
Interests received from related parties 30 2
Other financial income 1 -
Total financial income 31 2
Financial expenses
Interests on loans from related parties 54 47
Foreign exchange losses 2 1
Other interest expenses 10 5
Total financial expenses 66 53
EUR million 2022/23 2021/22
Current tax 3 7
Deferred tax (P&L) 1 1
Adjustment of current tax regarding previous years - 0
Total income tax 4 8
EUR million 2022/23 2021/22
Cost at the beginning of the period 5 5
Additions - -
Cost at the end of the period 5 5
Amortisation at the beginning of the period (0) (0)
Amortisation charge for the period (2) (0)
Accumulated amortisation at the end of the period (2) (0)
Carrying amount at the end of the period 3 5
STARK Group Annual Report 2023 Notes – Parent Company Financial Statements – STARK Group A/S 88
3.2 INVESTMENTS IN SUBSIDIARIES
EUR million 2022/23 2021/22
Cost at the beginning of the period 2,621 2,611
Additions 36 10
Disposals (7) -
Cost at the end of the period 2,650 2,621
Impairment losses at the beginning of the period - -
Impairment for the period
1
(906) -
Accumulated impairment losses at the end of the period (906) -
Carrying amount at the end of the period 1,744 2,621
Investments in subsidiaries as of 31 July 2023 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%
STARK Building Materials UK Limited Coventry, UK 100%
Stark Group Holding UK 1 Limited Coventry, UK 100%
Company
Registered office
1) The company has received EUR 1,310m in dividend from LSF10 Wolverine Bidco ApS during the financial year.
EUR 894m of this has been recognised as an impairment of the carrying value to the net asset value in
LSF10 Wolverine Bidco ApS as of 31 July 2023 and is included in the impairment for the period.
STARK Group Annual Report 2023 Notes – Parent Company Financial Statements – STARK Group A/S 89
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 2022/23:
Balance as of 1 August 2022 15,000,000 2 0 2
-
Balance as of 31 July 2023 15,000,000 2 0 2
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
EUR million
31 July
2023
31 July
2022
Maturity analysis of payables to related parties
Within 1 year 736 316
Between 1 and 5 years 1,081 1,488
After 5 years - 628
Carrying amount 1,817 2,432
EUR million 2022/23 2021/22
Proposed distribution of profit:
Dividend - -
Retained earnings 401 13
Total 401 13
STARK Group Annual Report 2023 Notes – Parent Company Financial Statements – STARK Group A/S 90
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 34m as of
July 31, 2023.
Any subsequent corrections of joint taxation income
could result in the Company’s liability amounting to a
larger amount.
Stark Group A/S has the following operating lease
commitments:
6.2 SECURITIES
The shares in the major subsidiaries with a carrying
amount of EUR 1,744m 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 Term loans
amounting to EUR 1,795m and Senior Revolving Credit
facilities agreement with lenders up to EUR 371m. The
Senior Revolving Credit facilities were not drawn as of 31
July 2023.
EUR million 2022/23 2021/22
Operating lease commitments
Within 1 year 0 0
Between 1 and 5 years 1 -
After 5 years 1 -
Total minimum lease commitments 2 0
STARK Group Annual Report 2023 Notes – Parent Company Financial Statements – STARK Group A/S 91
6.3 RELATED PARTIES
On 4 May 2021 Stark Group A/S utilized a EUR 628m
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 22m
(2021/22: EUR 21m).
On 31 March 2023 Stark Group A/S utilized a EUR 450m
shareholder loan provided by the parent company,
Winterfell Financing S.à r.l. The Loan is a subordinated
loan. The loan will mature on 31 March 2026. Interest on
the loan is set to reflect an arm’s length transaction.
Interest expensed in the financial year amounts to 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
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 2023 Company information 92
COMPANY INFORMATION
Company STARK Group A/S
Denmark
CVR No. 41 95 27 25
Financial year: 1 August – 31 July
Incorporated: 16 December 2020
Current financial period: 1 August 2022 – 31 July 2023
3
rd
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 8 December 2023
STARK Group A/S
C.F. Richs Vej 115
2000 Frederiksberg
Denmark