Annual accounts 2021

Important events during the financial year

Acquisitions

A contract was signed on 7 May to acquire 100% of the shares in the UK company Heat Trace Holdings Ltd, which has sales of approximately GBP 10 million. The company develops, manufactures and markets electric heating cables to a large number of sectors worldwide. The company was consolidated into the NIBE Element business area as from 1 May 2021. The acquisition value is still provisional.

At the end of August the company concluded an agreement on the acquisition of 50% of the shares in the British company Go Geothermal Ltd, including an agreement to acquire the remaining shares within a five-year period. The company is a significant distributor of heat pumps in the British market with sales of around GBP 8.3 million. It was consolidated with the NIBE Climate Solution business area r with effect from September 2021. The acquisition value is still

provisional.

The pandemic

In 2021 we continued to be affected by the pandemic, which had an

impact on both demand and operations. After a year with a high level of demand variability, a weak first half and a strong second half, 2021

started with very strong demand, and this continued throughout the year for most product groups. As for operations, the restrictions in certain countries meant that some of the Group’s production plants were idle for parts of the year. All three business areas were also severely affected by a global materials and components shortage and

hugely extended delivery times, which had an adverse impact on our own delivery capacity, especially in the last few months of the year, which are historically our strongest months.

Remuneration

The Annual General Meeting determines the level of remuneration to the Chairman of the Board and other directors.

The Annual General Meeting also determines the guidelines for the remuneration of the Managing Director and other senior executives. Based on these guidelines, the Board of Directors decides on remuneration of the Managing Director. The remuneration of other senior executives is determined by the Managing Director in consultation with the Chairman of the Board. Decisions in this regard are reported to the Board of Directors. See also Note 6 about remuneration for the year and the principles applied in 2021.

The Board’s proposal for guidelines for 2022 largely matches the principles approved at the 2021 Annual General Meeting. Environmental issues

NIBE has production facilities in 27 countries. Their environmental impact primarily consists of: • Use of raw materials such as metals and plastics • Use of natural resources such as energy and water • Generation of waste • Emission of air and water pollutants • Transportation

NIBE complies with national environmental legislation in all countries in which we have production facilities. Where operations require a permit, results and any failure to comply with permit conditions are reported to the environmental authorities in the country in question and to the Group’s sustainability department. Two cases of non-compliance with environmental conditions were reported in 2021.

The Group manages improvements in its environmental performance by setting targets, following key ratios and reporting results according to the GRI standards. Our LCE products have a positive impact on the environment as they help reduce primary energy consumption, increase the use of renewable energy and thus reduce climate impact. Our sustainability work in 2021 was complemented by the implementation of the new EU Taxonomy Regulation, the purpose of which is to show how much of our sales as well as operating costs and investments involve products that can significantly contribute to achieving the goals of the Paris Agreement by 2050. For more information about the Taxonomy, see pages 142-143.

There is contaminated soil at four of the Group’s production plants in Denmark, the Czech Republic and Sweden. No contingent liabilities were recognised for this as it is deemed extremely unlikely that any of this could entail significant costs if the Group were held liable.

In accordance with Chapter 6, Section 11 of the Swedish Annual Accounts Act, we have chosen to prepare the mandatory sustainability report as a separate report from the Annual Report. See page 141 for a description of the scope of the sustainability report.

Staff issues, human rights and anti-corruption measures

Our values assume that everyone is of equal value and everyone should have the same opportunities to develop in the company, regardless of gender, ethnicity, age or background. We want all our employees to see NIBE as a secure, fair employer that works to ensure a good working environment, good working conditions, diversity and equal opportunities.

Our policies to respect human rights and work to ensure equal opportunities and prevent discrimination also extend to our suppliers, and we evaluate new suppliers against our requirements before they are used. We also evaluate existing suppliers against our requirements for human rights and working conditions.

Our business principles and our values create a well-established code of conduct that forms the basis for our employees to work together, show commitment and enjoy freedom with responsibility. As part of our internal controls within the Group, all companies and several subsidiaries are visited every year to ensure that everyone applies the same principles and that the standard of working conditions remains high. For more information about our strategies relating to employees and responsible purchasing, see pages 28, 31 and 33, and for statistics, see the table of contents on page 141.

NIBE’s anti-corruption work is driven by our values. Information is provided to all employees, and more extensive e-learning training is provided to all salaried employees we have classified as being in exposed roles. The Group also provides a whistleblower function, which is managed by a third party. Zero tolerance is communicated to our suppliers and business partners via our values and contracts. See page 24.

Research and development

The NIBE Group carries out market-leading research and development within each business area. We believe that this is a crucial factor behind continued organic growth and our ability to establish a presence in new markets. It also means that we can respond quickly to changes in what our customers want and transform their wishes into the best possible solution in the relevant market context. See Note 8.

Future trends

• Our corporate philosophy and our strong range of products, with their focus on sustainability and energy efficiency, are in tune

with the times in which we are living. • We are well prepared to continue being proactive on acquisitions. • Our internal efforts to enhance efficiency, combined with our

rigorous cost control measures, will ensure consistently healthy margins.

• All three business areas have a good geographical spread, which makes us less vulnerable to local downturns in demand. • Our decentralised organisation, based on independent units, is well proven, and creates the conditions for greater motivation and flexibility.

• The fact that, after a fourth wave, the pandemic appears to be fading out and the virus is on the way to being classified as an ordinary flu virus gives us confidence.

• The effects of political unrest, interest rate developments and

rising energy prices are, as always, difficult to predict.

• Uncertainty relating to sub-suppliers will most probably be a cause for concern for the remainder of the year. • As is our habit, and based on experience, we nevertheless remain cautiously optimistic about our performance this year. Ownership

NIBE’s share capital is divided into 233,130,360 class A shares and 1,782,936,128 class B shares. Each A share carries ten votes at the

Annual General Meeting and each B share carries one vote. Class A shares, which represent approximately 57% of the votes, have pre-emption rights as per the company’s articles of association.

The company has two shareholders who each hold more than 10% of the votes, one of them a group of shareholders consisting of present and former directors and managers with around 46% of the votes, the other the Schörling family, with around 19% of the votes.

Proposal for appropriation of profits

The financial resources at the disposal of the Annual

General Meeting are: Profit brought forward SEK 3,728 million

Share premium reserve SEK 4,751 million

Net profit for the year SEK 443 million

Total SEK 8,922 million

The Board of Directors proposes issuing a dividend to shareholders of SEK 0.50 per share, equivalent to a total pay-out of SEK 1,008 million. A total of SEK 7,914 million will be carried over in the accounts:

SEK 4,751 million of this in the share premium reserve and SEK 3,163 million as profit brought forward.

The Board of Directors considers that the proposed dividend is reasonable considering the requirements that the nature, scope and inherent risks of the business operations make on the amount of equity and the company’s and the Group’s consolidation needs, liquidity and financial position. This must be seen against the background of the information provided in the Annual Report. Before proposing this dividend, the Board has paid due consideration to the investments planned.

Corporate governance report

The corporate governance report on pages 173-176 is not part of the administration report.