Financial investments (Invest

Invest generates returns with the primary purpose of securing sufficient reserves to protect the long-term ownership of the Foundation’s subsidiaries and to maintain grant-making activities. The financial investments are spread across a diversified investment portfolio.

2021 was a solid year for risk assets due to the global reopening of societies and the recovery of economies following the onset of the COVID-19 pandemic. Invest was well positioned for this scenario and delivered the strongest result ever, with a return of 23%.

The world economy recovered rapidly in 2021 and, in stark contrast to the pandemic-led ‘supply shock’ recession of 2020, experienced a ‘positive demand shock’, which disrupted global supply chains as the pandemic turbocharged demand for goods. The situation was exacerbated in many industries due to semiconductor shortages and a structural undersupply in the transport and logistics sector.

Inflation rose significantly due to strong demand, lack of supply and rising energy and raw material prices, among other factors. Part of the rise is likely to be temporary, but long-term inflation expectations increased, as did bond yields.

The Foundation’s financial investments generated a very satisfactory return of DKK 4,608m versus DKK 1,244m in 2020. The return was mainly driven by listed equities with additional significant contributions from private equities and real assets.

RETURN ON THE INVESTMENT PORTFOLIO Listed equities generated the highest absolute return, at DKK 3,112m. The investments in the consumer discretionary sector, which includes luxury goods, auto and retail, brought the largest absolute return, with financial sector names also contributing. Meanwhile, green energy stocks fell in 2021 following a prosperous 2020. In addition to returns from the underlying equity portfolio, call options on the European equity market, which were bought in anticipation of rising markets, contributed positively.

Private equities generated the highest percentage return, at 49%, as a strong exit strategy, combined with generally good earnings performances from underlying portfolio companies, contributed to a highly satisfactory performance.

Real assets, including real estate and woodland, generated the second-best return, at 48%. The robust real estate market in Copenhagen, with few idle properties and increasing property prices, resulted in a high return in Obel-LFI Ejendomme A/S. The woodland investments of LFI Silva Investments A/S also performed strongly, supported by rising timber prices and increasing demand for woodland from investors seeking suitable investments and inflation hedges. In 2021, Invest increased its woodland investments by investing in the specialised management company Cresco Capital Services A/S.

Credit also performed well, with a return of 13%, despite rising interest rates. Better credit fundamentals, due to the reopening of societies, supported the performance of both listed and unlisted credit.

In 2021, the expense ratio (including management fees) declined to 0.18% (0.37%) mainly reflecting lower payments of performance fees. INVESTMENT STRATEGY Invest entered 2021 with a ‘pro risk’ mindset, supported by the sentiment surrounding the ongoing global reopening, an expectation of strong earnings growth, and attractive investment opportunities within both equities and credit. To date, the investment strategy has been moderately offensive despite prospects of higher inflation and interest rates. Invest remains focused on a balanced approach to risk, quality and valuation as it focuses attention on companies with secular growth – i.e., driven by forces that will likely be in place for an extended period of time.

Long-term results for Invest remained strong, with returns of 16.1% and 11.9% over three and five years, respectively, both of which are well above the benchmark. This provides a firm endorsement of the current investment philosophy and the strategy of investing in high quality companies across asset classes with a view to generating an attractive long-term return.

INVESTMENT PORTFOLIO

Assets Market value (DKKm) Return (%)

2021 2020 2021 2020

Bonds and liquid funds 3,131 3,939 -0.5% 0.4% Credit etc. 3,599 3,373 13.1% 0.2% Listed equities 13,465 10,945 28.7% 11.9% Private equities 2,271 1,159 49.3% 3.5% Real assets 1,662 1,119 48.3% 5.0%

Total

24,128 20,535 23.5% 6.4%