Annual Report (ESEF) • Feb 19, 2025
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Download Source FileALK - 2024 ALK-Abelló A/SBøge Allé6-8DK-2970HørsholmTelefonwww.alk.net63717916529900SGCREUZCZ7P0202024-01-012024-12-312023-01-012023-12-312789Regnskabsklasse Dhttps://ir.alk-abello.com/corporate-governanceÅrsrapport63717916Alk-Abello A/SBøge Alle 6-82970 HørsholmxWizard version 1.1.1325.5, by EasyX Aps. www.easyx.euRevisionspåtegningGrundlag for konklusionKonklusion2752529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember529900SGCREUZCZ7P0202023-01-012023-12-31cmn:ConsolidatedMember529900SGCREUZCZ7P0202024-01-012024-12-31529900SGCREUZCZ7P0202023-01-012023-12-31529900SGCREUZCZ7P0202023-12-31529900SGCREUZCZ7P0202022-12-31529900SGCREUZCZ7P0202024-12-31529900SGCREUZCZ7P0202023-12-31529900SGCREUZCZ7P0202023-12-31ifrs-full:IssuedCapitalMember529900SGCREUZCZ7P0202023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900SGCREUZCZ7P0202023-12-31ifrs-full:RetainedEarningsMember529900SGCREUZCZ7P0202024-01-012024-12-31ifrs-full:RetainedEarningsMember529900SGCREUZCZ7P0202024-01-012024-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900SGCREUZCZ7P0202024-12-31ifrs-full:IssuedCapitalMember529900SGCREUZCZ7P0202024-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900SGCREUZCZ7P0202024-12-31ifrs-full:RetainedEarningsMember529900SGCREUZCZ7P0202022-12-31ifrs-full:IssuedCapitalMember529900SGCREUZCZ7P0202022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900SGCREUZCZ7P0202022-12-31ifrs-full:RetainedEarningsMember529900SGCREUZCZ7P0202023-01-012023-12-31ifrs-full:RetainedEarningsMember529900SGCREUZCZ7P0202023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900SGCREUZCZ7P0202023-12-31ifrs-full:IssuedCapitalMember529900SGCREUZCZ7P0202023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900SGCREUZCZ7P0202023-12-31ifrs-full:RetainedEarningsMember529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember0529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember1529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember2529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember3529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember0529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember1529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember2529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember3529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember4529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember5529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember6529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember7529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember8529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember9529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember10529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember0529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember1529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember0529900SGCREUZCZ7P0202024-01-012024-12-31cmn:ConsolidatedMember1xbrli:pureiso4217:DKKiso4217:DKKxbrli:shares Annual report 2024 Pioneers of allergy solutions ALK-Abelló A/S Bøge Allé 6-8, DK-2970 Hørsholm, Denmark, CVR no. 63 71 79 16 ALK Annual report 2024 2 Contents Management's review Financial statements Reports and other disclosures Introduction Corporate matters 24 Risk management 28 Corporate governance and ownership 33 Board of Directors 35 Executive Leadership Team Consolidated financial statements 107 Income statement 107 Statement of comprehensive income 108 Cash flow statement 109 Balance sheet 110 Statement of changes in equity 145 Definitions Statements 157 Statement by Management on the annual report 159 Independent Auditor’s Reports 162 Independent auditor’s limited assurance report on the Sustainability Statement 3 5 6 7 8 Letter from the Chair and CEO ALK at a glance Business model 2024 performance highlights 2025 outlook Sustainability statement 36 General information 49 Environmental information 74 Social information 87 Governance information 92 Appendix Business and strategy Other information1 164 Financial highlights and key ratios by quarter for the ALK Group (unaudited) + 9 Introduction to Allergy Parent company financial statements 147 Income statement 148 Balance sheet 149 Statement of changes in equity 150 Notes + 10 Review of Allergy implementation 15 Long-term financial ambitions 16 Expanding the addressable markets Financial performance 18 Sales and market trends 20 Financial highlights and key ratios for the ALK Group 21 Financial review 23 Q4 review How to read this report This is ALK Abelló A/S’ (“ALK” or “the company”) first integrated annual report, consisting of the two main sections Management’s review including Sustainability statement and Financial statements. With the aim of addressing the requirements in the new Corporate Sustaina- bility Reporting Directive (CSRD), from a reader’s perspective, the requirements have been addressed in the part(s) of the report where they fit into the context thereby incorporating the information by reference. This means that throughout the report codes such as ESRS 2–SBM1 can be found, referring to specific disclosure requirements from the European Sustainability Reporting Standards (ESRS). Find more information Other 2024 reports Remuneration report Statutory corporate governance statement Corporate Governance recommendations review www.alk.net LinkedIn X 1 Part of Management's review Management's review Introduction ALK Annual report 2024 3 Letter from the Chair and CEO Introduction 2024 was a rewarding year for ALK 3 5 6 7 8 Letter from the Chair and CEO ALK at a glance Business model 2024 performance highlights 2025 outlook Market-leading portfolios We delivered on the short-term targets and established a new strategic framework for the long-term development of ALK, including entry into new disease areas. + Allergy aims to further strengthen ALK’s position in allergy immu- notherapy (AIT), address anaphylaxis and food allergy, and pursue innovations for adjacent allergic conditions with high unmet needs. In each disease area, our ambition is to build a portfolio of solutions with the potential to establish ALK as a global market leader and substantially expand our addressable markets as we help many more patients. 2024 was a rewarding year for ALK. We continued to build on the growth momentum and accelerated revenue growth to 15% in local currencies. Operating profit (EBIT) increased by 65% in local currencies and exceeded DKK 1 billion for the first time, driven by top-line growth, margin expansion and efficiencies. A portfolio is already in place for respiratory allergy, where tablets (SLIT), injections (SCIT) and drops for treatment of multiple allergies have established ALK as the global market leader in AIT. We are also well on our way to build a sustainable portfolio for anaphy- laxis, having recently gained the rights to neffy®, the first and only approved nasal spray for emergency treatment of anaphylaxis. This was a prime example of our efforts to bolster ALK's product portfolio through partnerships and in-licencing. Peter Halling President & CEO Anders Hedegaard Chair of the Board Growth was powered by an inflow of new patients with moderate to severe, uncontrolled allergies. We estimate that 2.6 million people, an increase of 200,000, were treated with ALK’s prod- ucts - an important step towards our ambition of helping five million people yearly by 2030. neffy® gives us first-mover advantages in a market about to undergo significant changes, while still leaving room for our Jext® autoinjector and our next-generation autoinjector currently in late-stage devel- opment. We believe that neffy® could reach peak sales of up to DKK 3 billion in anaphylaxis, and to this may be added the potential in other disease areas such as urticaria, currently in phase II development. To define ALK’s journey of sustained growth and earnings improvements towards 2028 and beyond, we launched the new + Allergy strategy and new long-term financial targets in June. The implementation of the strategy is progressing well and is starting to deliver the desired results. Key achievements in 2024 included approval of the house dust mite tablet for children, progress in food allergy, the licensing agreement for neffy® in the field of anaphylaxis, an expansion of the addressable markets in respiratory allergy, and efforts to calibrate ALK’s business platform to focus on high-potential growth levers. In food allergy, our portfolio is spearheaded by the peanut tablet. Based on positive results at the end of 2024, we will now assess the efficacy and safety of the tablet in a phase II trial and, contingent upon success, progress the asset towards phase III development and a subsequent market launch in the late 2020s. Management's review Introduction Letter from the Chair and CEO ALK Annual report 2024 4 We are also targeting food allergy beyond peanut allergy as well as diseases in the broader allergy space, through novel concepts and approaches in research phase and pre-clinical develop- ment. The objective is to continue to develop new treatments for allergic conditions with high unmet needs. Dr. Reddy’s Laboratories will be launching ALK’s HDM tablet in 2025 based on a recent regulatory approval. Market adoption of tablets is also advancing in the Southeast Asian markets, served by our partner Abbott, and in Canada, served by ALK itself. We expect the EBIT margin to increase by 5 percentage points to around 25% in 2025, while revenue is expected to grow by 9-13%, fuelled by more patients being treated. This is in line with the 25-in-25 target that was set in February 2021 on the back of our 2020 annual accounts which showed an EBIT margin of merely 4%. In China, the country with the highest number of people with house dust mite allergy world-wide, we expect to initiate a bridging trial in 2025 to facilitate the regulatory approval of our HDM tablet. The anticipated launch has been postponed by some years, and we have adjusted the Chinese organisation to the new timeline. Our short-term focus in China will be on continued growth of injectable Alutard SQ products. Tablets for all age groups Another key ambition of the Allergy strategy is to expand the reach of ALK’s respiratory tablet portfolio to additional patient groups, particularly children. Long-term ambitions As a pioneer in the field of allergies for more than a century, ALK's purpose is to help more people, with more solutions, more efficiently. + We are committed to sustaining this trajectory of profitable growth. + Approximately 10 million children suffer from uncontrolled respiratory allergy. They are impacted socially and in school and may face severe health implications. For instance, childhood allergic rhinitis increases the risk of asthma sevenfold. This is why it was of great importance that the authorities in 21 Euro- pean countries recently approved an expansion of the product indication for our house dust mite (HDM) tablet to include young children, aged five to 11. We expect the North American authori- ties to conclude the similar ongoing reviews before long. The Allergy strategy targets average revenue growth of at least 10% until 2028. After 2025, the EBIT result is set to grow in line with revenue, as we reinvest improvements beyond the 25% margin in initiatives to bolster long-term growth and profitability. In the USA, the focus remains on building new sales channels, especially among paediatricians. Some progress was seen in 2024, and US tablet sales continued to grow, but further steps are being investigated to accelerate growth of business in the USA. To meet these targets, we will maintain a financial gearing of maximum 2 x NIBD/EBITDA, which will allow us to both deliver on our ambitions and generate attractive shareholder returns. Delivering on our promises Focus and priorities have been top of the agenda in the past year. Careful resource allocation has been – and will remain – key to our planning, as we continue to reduce complexity and scale ALK for further growth. Testimony of commitment Subject to approval, ALK’s tree tablet could also become avail- able for children and adolescents from mid-2025 in Europe and Canada. By then, all of ALK’s respiratory tablets will be approved for all age groups – children, adolescents, and adults – in key markets. We expect the complete tablet portfolio for all ages, covering 80% of the most prevalent allergies, to open doors to even more prescribers, and we look forward to helping more children and adolescents live better lives. In conclusion, we would like to thank our leaders and employees for their efforts. The annual engagement survey showed that engage- ment among employees is in the top 5% in the international health- care industry. In light of the recent changes to ALK’s organisation, we see this result as a testimony to our employees’ constant commitment to helping more people with allergy to live better lives. In 2024, we downsized operations in certain markets with low potential, adjusted the footprint in China, and introduced a range of other optimisation initiatives. In total, these efforts are expected to generate savings of more than DKK 300 million in 2025, which will partly support earnings and partly be reallo- cated to initiatives with the most potential to generate strong returns and the greatest benefits for patients and prescribers. We wish to thank our partners, too, whose collaboration is part of our success. We also appreciate the growing number of patients and prescribers who place their trust in our products. Finally, we would like to thank our shareholders. As ALK’s performance continues to improve, we look forward to rewarding our owners through sustained, long-term value creation. Targeted market expansion Market expansion continues in Europe to enlarge prescriber networks and mobilise more people to act on their allergies. Efforts are also progressing outside Europe with tablets as the focal point. Our partner Torii continues to excel in Japan and is expanding production capacity to meet high demand while also working to bring the grass tablet to Japan. In India, our partner + These savings allow us to pursue Allergy priorities more rigor- ously – by investing in the pipeline, strengthening the footprint in high-growth markets, and supporting the launches of the chil- dren indications and neffy®, among other initiatives – while also improving earnings. Anders Hedegaard Chair of the Board Peter Halling President & CEO Management's review Introduction ALK Annual report 2024 5 ALK at a glance As a pioneer in the field of respiratory allergies for more than a century, ALK’s purpose is to help more people, with more solutions, more efficiently. ALK is a global specialty pharmaceutical company focused on allergy and allergic asthma. ALK markets allergy immunotherapy (AIT) and anaphylaxis treatments for people with allergy. Global presence Regional revenue distribution North America Europe 16% 71% 13% ALK is committed to growth. The company's tablet portfolio is key to driving growth and currently constitutes 51% of the global revenue. ALK's primary focus is on broadening its core business in respiratory allergies and gradually expand into the wider allergy field, including anaphylaxis, food allergy, and new adjacent disease areas with high unmet needs. ALK aspires to help five million people living with allergy by 2030. International markets Production sites R&D centres ALK markets a diversified portfolio of products, including AIT tablets, injections, and drops as well as adrenaline autoinjectors and nasal sprays. 1923 2,812 46 ~2.6m Established Employees1 Markets Patients in treatment with ALK products North America: 568 Europe: 2,066, Asia: 178 (Covering AIT and adrenaline) 1 ESRS 2-SBM 1-40(a.iii) Management's review Introduction ALK Annual report 2024 6 Business model Business and value chain ALK's business model is based on unique production processes, immunology insights, strong research and development skills, and commitment to applying modern science to allergies as well as a comprehensive commercial infrastructure, especially in Europe. ESRS 2-SBM1-42(a,b,c) Research & development Resources 2024 results IPR and discovery Process innovations and formulations Clinical trials Regulatory processes +100 years’ profound understanding of allergy 200,000 additional patients treated in 2024, bringing the total number to 2.6 million Externally sourced products ~2,800 employees with diverse talents Insights from academia, patients and partners 380 million AIT doses produced (excluding ALK's SCIT bulk extracts in the USA) ALK's activities cover the entire value chain of developing, sourcing, producing, and marketing a diversified portfolio of products for diagnosing and treating allergies, allergic asthma, and acute anaphylactic reactions. Manufacturing Raw materials, energy, water, etc. Standardise allergen extracts Production at 8 sites Cultivate allergenic source materials Digital engagement platforms Naturally sourced allergens (proteins) are vital active pharmaceutical ingredients in ALK's core AIT products. ALK’s unique manu- facturing processes ensure its products meet required quality standards and represent a significant entry barrier to potential compet- itors, ensuring sustained market exclusivity for ALK. ~45% global market share in AIT Financial resources Distribution and sales ALK present in 46 markets 16 markets served by partners Global distribution Digital patient mobilisation Safety, quality, and business ethics compliance Management's review Introduction ALK Annual report 2024 7 2024 performance highlights Financial Sustainability Employee headcount and turnover Revenue, DKK Gross profit, DKK CO2 emissions Patients in treatment 5,537 million 3,552 million 5,384 tonnes CO2 eq Decrease of 2% in CO2 emissions from production sites (scope 1 and 2) Target: 42% reduction by 2030 compared to 2022 2.6 million 2,812 / 17% 15% organic growth in local currencies, in line with latest guidance 64% gross margin, driven by benefits of scale and efficiencies Net increase of 200,000 Target: ALK aspires to annually help 5 million people living with allergy by 2030 Decrease in employee headcount and increase in turnover due to organisational adjustments 5,537 3,552 5,709 5,492 2.6 2,889 12% 2,812 17% 2,731 13% 5,384 2.4 2.4 4,824 4,511 3,035 2,791 3,916 3,491 2,396 2,028 15% 64% 63% 13% 12% 62% 61% 9% 58% 8% 2020 20221 20231 2024 20221 20231 2024 2021 2022 2023 2024 2020 2021 2022 2023 2024 20221 20231 2024 Earnings (EBIT), DKK Free cash flow, DKK Suppliers with science-based targets Gender diversity Work-related accident rate 1,091 million 20% EBIT margin, in line with latest guidance (204) million 37% 45% 1.5 Impact of higher earnings offset by the DKK 1 billion neffy® upfront payment Increase in share of suppliers with science-based targets to 37% Target: 80% by 2028 Underrepresented gender in Executive Leadership Team and direct reports in management positions Target: 40% 6 work-related accidents with absence, leading to an increased lost time injury frequency rate of 1.5 292 1,091 37 33 45 1.7 42 42 202 1.5 666 470 65 56 0.8 (204) 292 150 20% 14% N/A 10% 7% 4% 20221 20231 2024 20221 20231 2024 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 20221 20231 2024 1 2022 and 2023 figures are not covered by the Independent Auditor’s limited assurance report on the Sustainability Statement Management's review Introduction ALK Annual report 2024 8 2025 outlook Other assumptions Forward-looking statements The combined SCIT/SLIT-drops sales are projected to continue their growth trend, primarily benefitting from higher volumes and market expansion in Europe, supported by improved pricing in North America. • The forecast assumes an average growth in the patient inflow in the 2024/25 initiation season in Europe, with growth indicated to be lower than the exceptional 2023/24 season, but better than the 2022/23 season. • The in-licensing of the neffy® nasal spray is expected to contribute modestly to revenue growth from the second half- year, while investments in market building activities will adversely impact the EBIT margin. • CAPEX investments are projected at around DKK 400 million, excluding potential neffy® milestone payments, and ALK assumes a continuous build-up of inventories broadly in line with revenue growth to support future growth. Free cash flow is expected to be posi- tive at DKK 500-700 million • Except for neffy®, no additional revenue is included from acqui- sitions, partnerships, or in-li- censing activities, nor are any additional payments to M&A or additional in-licensing activities included. 2025 is expected to be yet another year of robust revenue and earnings growth, in line with ALK’s long-term financial ambitions. This report contains forward- looking statements, including fore- casts of future revenue, operating profit, and cash flows as well as expected business-related events. Such statements are subject to risks and uncertainties, as various factors, some of which are outside ALK's control, may cause actual results and performance to differ materially from the forecasts made. Such factors include, but are not limited to, consequences of pandemics, general economic and business-related conditions including: legal issues, uncer- tainty relating to demand, pricing, reimbursement rules, partners’ plans and forecasts, fluctuations in exchange rates, competitive factors, reliance on suppliers and tariffs. Additional factors include the risks associated with the sourcing and manufacturing of ALK’s products, as well as the potential for side effects from the use of ALK’s products, as allergy immunotherapy may be asso- ciated with allergic reactions of differing extent, duration, and severity. Growth in the combined sales of Other Products (adrena- line, diagnostics, PRE-PEN®, and life science products) is projected to further improve, primarily benefitting from the expanded adrenaline portfolio (Jext® and neffy®). (Revenue growth rates are stated as organic growth in local currencies, unless otherwise indicated) ALK’s European markets remain key to growth, however ALK also expects growth in its North American and International markets. As usual, the timing of product shipments to China and Japan may lead to quarterly fluctuations in revenue. Revenue is expected to grow by 9-13% in local currencies, driven by growth across all sales regions and product groups. This growth will be predominantly attributable to higher volumes, as ALK expects to treat more patients with its allergy immunotherapy (AIT) and anaphylaxis products. Costs The gross margin is expected to improve slightly, mainly driven by higher revenue, changes to the sales mix, and production efficiencies. The in-licensing of neffy®, which will hold a lower gross margin, as well as inflationary pressure are expected to partly off-set the improvements. The EBIT margin is projected to further improve to around 25%, an increase of approximately 5 percentage points, driven by revenue growth, improving gross margin and optimisations. The outlook is based on the following main assumptions: R&D expenses are expected to increase in support of the peanut SLIT-tablet programme, pre-clinical development projects, and the clinical trial with ACARIZAX® in China. R&D expenses are expected to remain at around 10% of the projected revenue. Revenue Tablets remain key to growth. Tablet sales are expected to grow by double digits in all sales regions, driven by a growing number of patients in treatment, including more children and adolescents following the paediatric launch of the house dust mite tablet and the anticipated paediatric launch of the tree tablet. ALK expects a reduced impact from price and rebate adjustment in 2025 compared to 2024 where these made a positive contribution to sales growth. Sales and marketing as well as administrative expenses are expected to decrease slightly, as savings will offset the planned growth investments in e.g. the neffy® rollout and the paediatric launches. In 2024, non-recurrent one-off costs for optimisation and prioritisation initiatives totalled DKK 75 million. • The outlook is based on current exchange rates, resulting in an immaterial effect on reported revenue and EBIT. Please refer to the Risk management section on pages 24-27 Management's review Business and strategy ALK Annual report 2024 9 + Business Introduction to Allergy ESRS 2-SBM1-40(e) and strategy + The Allergy strategy, launched in June 2024, builds on ALK’s promise to provide life-changing solutions to the millions of people with allergy. The strategy is based on four pillars. + 9 Introduction to Allergy + 10 Review of Allergy implementation 15 Long-term financial ambitions 16 Expanding the addressable markets ALK will prioritise and focus the commercial activities to To help more people with allergies, ALK will innovate and expand its R&D pipeline in a balanced way. ALK will maximise the value of existing core products and diversify the portfolio into food allergy, anaphylaxis and other adjacent, allergic diseases with potential to become new growth levers. The ambition is to become a market leader in each disease area. strengthen its global leadership in respiratory allergy. Key initiatives include targeted expansion of the respiratory tablets to new patient groups and geographies, efforts to increase prescription depth and breadth, digital mobilisa- tion of patients and prescribers, and investments in high- impact markets. Innovate Aspire to annually help 5 million people living with Focus Optimise allergy by 2030 To reduce complexity and maintain competitiveness, ALK will further optimise operations and scale for growth. Initi- atives include streamlining the cost base, reducing struc- tural complexities, and investing in digital infrastructure. ALK will continue to focus on high quality, expand produc- tion capacity and longer-term explore options to optimise the manufacturing set-up. + Activities and targets in the Allergy strategy are under- pinned by ALK’s commitment to cultivate the capabilities of its people and organisation to foster a strong performance culture through high engagement and conduct business sustainably by improving access to allergy care and reducing the environmental footprint. Cultivate Management's review Business and strategy ALK Annual report 2024 10 Strategy progress: + Review of Allergy implementation 2024 saw a re-allocation of resources to high-potential growth levers – market expansion, innovation, licensing, and capacity increases – with the largest potential to generate strong returns and the greatest impact for patients and prescribers. European children with moderate to severe house dust mite-induced allergy will soon gain access to treat- ment with ACARIZAX®. + In 2024, ALK took a series of steps to advance the Allergy strategy. The implementation of the strategy progressed as planned and the new strategy started to deliver the anticipated results. ment of young children aged five to 11. Initial market introduc- tions have taken place in ALK’s largest market, Germany, and other key markets. Subject to approval, the HDM tablet is also projected to become available for young children in the first half of 2025 in Canada and the USA, where the tablet is marketed as ODACTRA®. Full paediatric coverage S4-4 Key initiatives with respect to the current core products were the targeted expansion of the respiratory tablet portfolio to new prescribers and patients, particularly children, and new geog- raphies. The regulatory reviews of the tree tablet ITULAZAX® are expected to be completed by mid-2025 in Europe and Canada, allowing this tablet to become available for children and adoles- cents ahead of the 2025/26 initiation season for pollen tablets. Work intensified in 2024 to secure regulatory approvals to expand the product indications for the house dust mite (HDM) tablet and the tree pollen tablet to include young children, after authorities in Europe and North America accepted ALK’s regula- tory filings for review. The filings were based on the largest-ever phase III paediatric trials within the field, which ALK successfully completed in 2023. Regulatory submissions for paediatric use have also been submitted in other markets, such as Switzerland, the UK, and Southeast Asia. During the second half of 2025, all five tablets are expected to be approved for all age groups – children, adolescents, and adults – in all key markets across the main respiratory allergies. Leveraging full paediatric coverage of the tablet portfolio is anticipated to deliver a material contribution to ALK’s medium- and long-term growth. ALK’s commercial organ- In December 2024, the authorities in 21 European countries approved the HDM tablet, marketed as ACARIZAX®, for treat- Management's review Business and strategy Review of Allergy+ implementation ALK Annual report 2024 11 isation advanced launch preparations in 2024 with further initiatives lined up for 2025. Launch activities will focus on all existing tablet prescribers as well as potential new prescribers in selected countries – paediatricians, ENT (ear, nose, and throat) specialists and other medical professionals, treating the millions of children suffering from uncontrolled respiratory allergies. pollen tablet to meet high demand. The upscaled capacity is expected to become operational in late 2025. Meanwhile, Torii has initiated clinical development of ALK’s grass pollen allergy tablet (GRAZAX®) with a view to expanding the current portfolio comprising CEDARCURE™, the only approved tablet for treat- ment of Japanese cedar pollen induced allergy, and MITICURE™ for treatment of HDM-induced allergy. which is about to become the world’s largest market for HDM AIT. Building US sales channels In the USA, the focus is on building new sales channels for tablets, especially among paediatricians, in addition to working with the existing prescriber base among relevant allergists. Some progress was seen in 2024, and the expected approval of the paediatric indication for ODACTRA® will further strengthen ALK’s offering to this segment. Further steps will be investigated in 2025 to grow the prescription-based tablet business. Growing the patient base S4-4 In India, ALK’s partner Dr. Reddy’s Laboratories obtained regulatory approval for ALK’s HDM tablet for treatment of adults with uncontrolled HDM-induced allergic rhinitis and/or allergic asthma as well as adolescents with uncontrolled allergic rhinitis. The tablet, marketed as Sensimune™ in India, will be launched in 2025, as soon as an import license is in place. In Europe, ALK continued its efforts to mobilise eligible patients, increase prescription depth and breadth among its key prescribers, and strengthen advocacy for registered, evidence- based treatment among regulators, payers, and prescribers. As a result, ALK’s patient base saw double-digit growth, driven mainly by the tablet portfolio. To further leverage its strongholds and accelerate sales momentum, ALK increased investments in high-growth markets, while operations in a few other markets were downsized until market conditions improve. New innovations In 2024, ALK progressed its activities in food allergy, strength- ened the product portfolio in anaphylaxis, and pursued innova- tions to address new adjacent disease areas. The ambition is to become category leader in each area via in-house R&D activities and partnerships, and thereby build new revenue streams to complement the current core business in respiratory allergy. Efforts to increase market uptake of tablets are also progressing in the Southeast Asian markets, served by ALK’s partner Abbott, and in Canada. In 2025, ALK’s product offering in Canada will be strengthened by the expected approval of tablets for use in children and the in-licensing of neffy®, as described below. NICE review in the UK Positive results in food allergy S4-4 New clinical trial in China At the end of 2024, ALK reported positive interim results from its phase I/II clinical trial for the peanut tablet. Data showed that the tablet was safe and well tolerated across multiple doses. No severe adverse effects and no cases of treatment emergent anaphylaxis were reported. The development has now advanced to phase II for dose finding and efficacy, and the first patients have already initiated treatment. Phase II involves around 125 patients in North America and is scheduled to complete in 2026 after which ALK intends to advance the peanut tablet programme into phase III after which it can be submitted for regulatory approval, expectedly towards the late 2020s. In the UK, a recent recommendation from the prominent National Institute for Health and Care Excellence (NICE) has paved the way for ACARIZAX® to be included in the public National Health Service system, making it eligible for general reimbursement. ALK has submitted a similar application for NICE reviews regarding ITULAZAX®. Currently, the UK is the only major AIT market in Europe where ALK's tablets are authorised without adequate public reimbursement. In China, ALK has finalised the design of a new bridging trial with ACARIZAX®, after feedback from the authorities indicated that the existing clinical data package should be supplemented with further data from Chinese subjects. This was unexpected, given that ACARIZAX® is already approved in 45 markets. Subject to approval, the trial is expected to start in 2025 and enrol around 300 subjects. Contingent upon a successful outcome and regu- latory approval, ACARIZAX® could be launched in China towards the end of the current strategy period. Expansion outside Europe S4-4 In light of the delayed timeline for the tablet, ALK has reorgan- ised its activities in China. In the short run, ALK’s organisation will focus on growing sales of SCIT ALUTARD products in China, In Japan – the most important contributor to ALK’s tablet sales outside Europe – ALK is supporting its partner Torii in expanding manufacturing capacity for the Japanese cedar ALK’s future portfolio in food allergy also spans novel concepts in pre-clinical development, including tree nut allergy. Management's review Business and strategy Review of Allergy+ implementation ALK Annual report 2024 12 Transformative neffy® deal ALK has also initiated in-house innovation work to target new disease areas with strong scientific and commercial links to In emergency treatment of acute allergic reactions (anaphy- laxis), ALK entered into a potentially transformative license agreement with US-based ARS Pharma. Against an upfront payment of DKK 1 billion and future milestone payments and sales royalties, ALK was granted exclusive rights to commer- cialise the neffy® adrenaline nasal spray world-wide, except for the USA, Australia, New Zealand, Japan and China. current portfolio and prescribers. Building on the core capabil- ities within clinical allergology and immunology, these efforts generally focus on allergic inflammatory conditions and mast cell driven pathologies in the broader allergy space. Targets are not currently disclosed. To fulfil its ambitions, ALK will also explore supplementing in-house development activities with potential licensing deals and partnerships. neffy® is the first and only approved adrenaline nasal spray for emer- gency treatment of anaphylaxis EURneffy® (the trade name for neffy® in Europe) has obtained market authorisation in the EU, and ALK expects to start launching the product in key markets from the second half of 2025 once local market access negotiations are completed. Filings for regulatory approvals have recently been submitted in the UK – Europe’s largest anaphylaxis market – and in Canada – the world’s third largest anaphylaxis market. neffy® also has potential in other markets e.g. some of the countries in Asia, the Middle East, and Latin America. Focus and priorities In 2024, optimisation and prioritisation initiatives were imple- mented across ALK to reduce complexity and scale for future growth. Initiatives involved manufacturing and quality optimi- sations as well as downsizing of operations in certain markets with limited immediate growth prospects for AIT. The organisa- tion in China was also adjusted to the new expected timeline for the ACARIZAX® launch. In total, more than 200 positions were made redundant, and ALK expects the optimisation initiatives to generate savings of more than DKK 300 million with effect from 2025, and thereby exceeding the original target. ALK expects neffy® and other future needle-free innovations to transform anaphylaxis treatment and substantially expand the currently under-served markets, as further described on page 17. ALK estimates that neffy® holds a long-term annual peak sales potential in anaphylaxis of up to DKK 3 billion in the licensed territories, where the product will be an important add-on to ALK’s portfolio which covers the already marketed autoinjector Jext® and a next-generation autoinjector (the Genesis project), currently in late-stage development. With this portfolio, ALK is the only company offering both needle-free solutions and autoinjectors to the market. In 2025, savings from these and other initiatives will partly support ALK’s earnings growth and partly be reinvested in + Allergy priorities to strengthen ALK’s long-term growth and earnings trajectory. Priorities include investments in pipeline projects such as the peanut tablet development, the launches of neffy® and the tablets for paediatric use, and the strengthening of ALK’s footprint in Northern, Western and Central European markets with sustainable demand for AIT and strong endorse- ment of evidence-based AIT from regulators, payers, and prescribers. New, adjacent disease areas Under the agreement with ARS Pharma, ALK gains exclusive rights to any new indications in the licensed territories, enabling ALK to address new, adjacent disease areas. In 2025, ARS Pharma plans to begin a phase IIb clinical trial in people with acute flares due to chronic urticaria. Management's review Business and strategy Review of Allergy+ implementation ALK Annual report 2024 13 Status R&D pipeline Global availability of tablets Over the past decades, ALK has pioneered the development of standardised allergen extracts, formulated as rapidly dissolving SLIT-tablets. ALK is now expanding its leadership and targeting new geographies and patient groups while also leveraging its technology and capabilities within food allergy and other related disease areas. The tablet for grass pollen allergy (GRAZAX® or GRASTEK®) is approved in 34 countries in Europe, North America, and the Asia Pacific region. Clinical development is ongoing in Japan in 2024. Therapeutic area and project name Target indication Phase The tablet for house dust mite allergy (ACARIZAX®, ODACTRA® or MITICURE™) is approved in 45 countries in Europe, North America, the Middle East, and the Asia Pacific region. Regulatory fillings for young children use are oingoing in the USA and Canada. Respiratory allergy HDM SLIT-tablet House dust mite allergic rhinitis – paediatric label extension in the USA and Canada Tree pollen allergic rhinitis – paediatric label extension in EU and Canada Grass pollen allergic rhinitis in Japan P P P P 1 1 1 1 2 2 2 2 3 3 3 3 R R R R Tree SLIT-tablet Grass SLIT-tablet HDM SLIT-tablet House dust mite allergic rhinitis in China The tablet for tree pollen allergy (ITULAZAX® or ITULATEK®) is approved in 22 countries in Europe and Canada. Regulatory filings for young children use are ongoing in Europe and Canada. Food allergy Peanut SLIT-tablet Tree nut SLIT-tablet ALK 014 (biologic) Peanut allergy Tree nut allergy Food allergy P P P 1 1 1 2 2 2 3 3 3 R R R The tablet for ragweed pollen allergy (RAGWIZAK® or RAGWITEK®) is approved in 15 countries in Europe and North America. Anaphylaxis Adrenaline autoinjector Adrenaline nasal spray1 Emergency treatment of anaphylaxis P P 1 1 2 2 3 3 R R The tablet for Japanese cedar pollen allergy (CEDARCURE™) is approved in Japan. Emergency treatment of anaphylaxis in the UK, Canada, and other markets New therapeutic areas Adrenaline nasal spray1 ALK 014 (biologic) P P 1 1 2 2 3 3 R R Acute flares in chronic spontaneous Urticaria (CSU) Not disclosed P = Pre-clinical, R = Registration, Partnered with ARS Pharma = Current phase, = Phase in preparation, = Previous phase or phases to come 1 Management's review Business and strategy Review of Allergy+ implementation ALK Annual report 2024 14 Supply chain expansions and optimisations ALK is also investing in continued supply chain expansions and optimisations to support gross margin improvements. To facil- itate growth, tablet manufacturing capacity is being expanded to around 800 million units p.a. by 2030 within the existing foot- print. Legacy production is also being upgraded, and a supply chain being established for the next-generation autoinjector. These efforts progressed as planned in 2024, and investments will continue in 2025. 2025 will also see a strengthening of procurement processes and capabilities to exploit economies of scale and streamline the supplier landscape, in addition to investments in AI and digital solutions. Cultivating capabilities ALK is also executing initiatives under the Cultivate strategic pillar, including working to deliver on its science-based CO2 targets, strengthen its organisational capabilities to support future growth, conduct business in a sustainable manner, and deliver on diversity and inclusion targets. Please refer to the Sustainability section on pages 36-105. Efforts are on track to expand tablet production capacity to around 800 million units by 2030 Management's review Business and strategy ALK Annual report 2024 15 Long-term financial ambitions + The Allergy strategy targets sustained growth in revenue and earnings to 2028 and beyond, supported by careful allocation of resources to high- potential growth levers. ALK is targeting average revenue growth of minimum 10% in local currencies (5-year CAGR) from 2023 until 2028. The respiratory tablet portfolio remains key to this ambition, as ALK broadens its patient reach and leverages the planned full paediatric coverage. ALK will maintain an efficient capital structure with a finan- cial gearing of maximum 2 x NIBD/EBITDA and will allocate capital in a disciplined way to deliver on its growth ambitions while also generating attractive shareholder returns. ALK expects free cash flow to improve, and cash will be allocated in the following order of priority: Investments in organic growth, including R&D (projected in the range from 10-15% of revenue p.a. in 2025-28); CAPEX (projected in the range from DKK 400-600 million p.a. in 2025-28); business development and licensing activities; and finally cash distribution to shareholders via dividends and/or share buyback programmes. ≥10% revenue growth 2023-28 (CAGR) Revenue grew by 15% in local currencies in 2024, while 9-13% growth is expected for 2025, implying an average revenue growth (CAGR) in the range of 12-14% from 2023 to 2025, which supports that ALK is on track to deliver on its long-term financial ambitions. ~25% The EBIT margin improved to 20% in 2024. ALK is targeting an EBIT margin of around 25% in 2025 after which earnings improvements beyond the ~25% margin will be re-invested in initiatives to bolster the long-term growth and profitability trajectory, such as commercial activities, R&D, business devel- opment, and infrastructure. This implies that the reported EBIT result after 2025 is expected to grow in line with revenue. This does not rule out the possibility that margins could be higher or lower than ~25% in the strategy period, depending on market conditions and the timing of strategic initiatives. Despite the upfront payment of DKK 1 billion (USD 145 million) related to the licensing agreement for neffy®, the net debt to EBITDA ratio was only 0.4x in 2024. In 2025, the ratio is expected to further decrease and leave ample room for value-creating capital allocation. EBIT margin from 2025-28 ≤2 NIBD / EBITDA Management's review Business and strategy ALK Annual report 2024 16 Expanding the addressable markets Respiratory Allergy Anaphylaxis >50 million >20 million People eligible for AIT People at risk for anaphylaxis in Europe ~12bn DKK ~4 million ESRS 2-SBM1-40(g);S4-41 Estimated AIT market value Autoinjectors sold in Europe per year ALK addresses markets with a current value of around DKK 13 billion. The Allergy strategy aims at helping more people with allergies to a better life by unlocking the potential in existing markets and expanding into new therapy areas with high unmet needs. ~45% ALK share ~1.4bn DKK of global market Estimated market value in Europe + Under-treated, high potential therapy area with the right innovation ALK core business with high potential Respiratory Allergy Anaphy- laxis Food Allergy New adjacent therapy areas Food Allergy (Market data below is own estimates, to the greatest extent possible based on external sources, including IQVIA and other local market data providers). New adjacent therapy areas ~200 million People affected globally The global market for allergy immunotherapy (AIT) treatments – ALK’s core business – is estimated to be worth around DKK 12 billion, measured in 2024 ex-factory sales. The AIT market is underpenetrated and geographically concentrated around Europe, North America, China, and Japan. Since 2019, the AIT market is estimated to have grown on average by high single digits, while ALK’s revenue from tablets, injections (SCIT) and drops has grown by 12% p.a. (CAGR), thus strengthening ALK’s market position as market leader. ~8% Indications with high unmet needs and strong capability fit to ALK of children are affected in the USA ~2.5 million children (4-17) with peanut allergy in the USA and Europe Therapy area with high unmet need, close to core with high potential 1 Numbers in this section have not been subject to the limited assurance on the sustainability statement carried out by the independent auditor. Management's review Business and strategy Expanding the addressable markets ALK Annual report 2024 17 Even so, respiratory allergy remains a disease area with signif- icant under-treatment. At least 50 million people with severe uncontrolled symptoms would potentially be eligible for AIT treatment, but only around five million were estimated to receive AIT in 2024, hereof more than two million with products from ALK’s AIT portfolio, which spans around 40 different allergies, excluding US bulk SCIT extracts. stings, but only around 2 million Europeans carry recommended rescue medication, predominantly adrenaline autoinjectors (AAIs) such as ALK’s Jext® pen. The number of AAIs sold in Europe has been growing by 8% p.a. over the last decade. lence of food allergy is increasing, mostly driven by pollution, urbanisation, and dietary factors associated with cultural/ social behaviours (e.g. obesity, vitamin D deficiency, dietary fat, etc.) The recent in-licensing of neffy®, the world’s first and only nasal spray for anaphylaxis treatment, allows ALK to cultivate markets in Europe and Canada – where the combined value of current AAI sales is estimated at around DKK 1.6bn (2023) – and high- potential markets in Asia and the Middle East. neffy® is expected to expand markets because the spray eliminates needle-related safety concerns, fear and hesitation, as demonstrated by other emergency medicines going from needles to nasal. ALK’s most advanced programme targets peanut allergy, the most common cause of severe, life-threatening food-related allergic reactions. The condition often manifests during child- hood and persists into adulthood for up to 80% of patients. In the USA, peanut allergy affects up to 1.5 million children and adoles- cents, while in Europe, around one million children and adoles- cents are affected. Some reports suggest that the prevalence of peanut allergy has tripled over the last decade. Strong fundamentals Although it varies considerably across geographies and age groups, the prevalence of respiratory allergy is on the rise, and research suggests that this trend will continue. Global warming, for instance, affects plant and pollen cycles, prolongs pollen seasons and causes species, such as ragweed, to spread to new regions. Urbanisation sees more people migrating to cities where they are exposed to higher levels of air pollution, while people living in sterile, urban environments do not enjoy the same protection as people in rural areas, where a wide range of microbial exposures lowers the risk of allergic sensitisation and disease. Food allergy on the rise ALK’s ambition in food allergy is to build a portfolio of treatments that address unmet medical needs among the ~200 million people affected worldwide, particularly children. The preva- ALK's revenue split 2024 AIT treatments Anaphylaxis ALK targets 5 million patients annually by 2030 + Market expansion is a key part of ALK’s Allergy strategy. Efforts include enlargement of AIT prescriber bases, digital mobilisa- tion of eligible patients, advocacy for evidence-based medi- cines, and efforts to expand the reach of the respiratory tablet portfolio to certain new geographies and new patient groups, not least by leveraging the up-coming paediatric indications for the full tablet portfolio. Globally, it is estimated that more than ten million children, aged five to 11, have uncontrolled respira- tory allergies and the number is growing. Million patients Others 5 4 3 2 1 0 Estimated number of patients in treatment with ALK products (AIT and anaphylaxis) and AIT products based on allergens from ALK. 7% 5% 2.6 2.4 2.4 2.1 2.0 88% Significant under-treatment 2020 2021 2022 2023 2024 Anaphylaxis, currently ALK’s second largest disease area, is also an area with significant under-treatment and high growth poten- tial. In Europe alone, more than 20 million people are estimated to be at risk of experiencing severe, acute allergic reactions (anaphylaxis) after exposure to e.g. specific food, or bee or wasp Others include diagnostics of allergens, diagnostics of penicillin allergy, and life science products In 2023, a net increase of ~200,000 AIT patients was offset by fewer Jext® patients due to intermittent supply shortages. 2024 saw growth in the number of both AIT and Jext® patients. Management's review Financial performance ALK Annual report 2024 18 Financial performance Sales and market trends pean AIT in 2024, despite a softer sales performance in Italy and Spain after restructuring of the sales forces. ALK’s full-year revenue in 2024 was DKK 5,537 million (4,824) after 15% organic growth in local currencies, reflecting continued growth across Europe and International markets. Europe was the key growth driver with double-digit growth in tablet, SCIT/SLIT-drops, and Jext® sales. European tablet sales increased by 31%. The growth was due to higher volumes driven by the strong inflow of new patients starting treatment during the 2023/24 initiation season, particularly in Central, Western and Northern Europe, combined with price and rebate adjustments. Volumes accounted for roughly half of the growth while improved pricing, including rebate adjustments, accounted for the other half. 18 Sales and market trends 20 Financial highlights and key ratios for the ALK Group 21 Financial review 23 Q4 review Tablet sales in the main market Germany continued to benefit from the accelerated market transition towards evidence- based, registered products, leading to strong double-digit sales growth. Across markets, tablet sales were less influenced by pan-European trading patterns at wholesaler levels than last year, although these movements are still impacting develop- ments. (Comparative figures for 2023 are shown in brackets. Revenue growth rates are organic and stated in local currencies, unless otherwise indicated) Europe Revenue in Europe grew by 22% in local currencies to DKK 3,914 million (3,216) with growth in all product lines. The number of new patients initiated on tablets during 2024 is estimated to have increased by more than 10%. The European AIT market continued to recover strongly from its weakness in the first half of 2023. In 2024, demand for AIT was strong and market conditions were largely positive with improved pricing in some markets and no significant changes to reimbursement. ALK’s AIT sales increased in almost all markets with double-digit growth in most Northern, Central and Western European markets – including the region’s largest market Germany – as ALK further progressed its efforts to activate patients, prescribers, payers, and key opinion leaders. Combined sales of injection- and drop-based AIT products (SCIT/SLIT-drops) increased by 10%. Sales of SCIT progressed in most Central and Northern European markets, driven by higher volumes as well as price and rebate adjustments. Sales of SLIT-drops, marketed mainly in France, performed well with growth linked to higher patient inflow to existing and partly also new allergy doctors. Sales of Other products and services (the Jext® adrenaline pen, diagnostics, etc.) increased by 32%, driven by the recovery in Following gains in market share in Germany and other key markets, ALK consolidated its position as market leader in Euro- Management's review Financial performance Sales and market trends ALK Annual report 2024 19 Jext® sales. Jext® sales grew by 39% against 2023, where issues at a contract manufacturer limited market supply. Tablet revenue in the region was up 9%. Revenue from the main tablet market Japan (product shipments and sales royalties) grew by single digits and was somewhat impacted by phasing of shipments. Demand for AIT in Japan remains strong and Torii consolidated its position as market leader through continued growth in in-market tablet sales. However, capacity constraints as expected prevented Torii from fully meeting demand for CEDARCURE® in 2024. Although still small in scale, tablet sales continued to grow encouragingly in the Southeast Asian markets, operated by Abbott, and other minor markets. North America Revenue from SCIT product shipments to China registered a Revenue in North America was unchanged in local currencies to DKK 906 million (908) and was impacted by a weak development in the region’s main market, the USA, whereas performance in Canada was largely as expected. double-digit decline as no shipments were sent to China during the renewal of ALK’s import license in Q4 and due to in-market inventory adjustments. Chinese in-market sales of SCIT prod- ucts continued to show double-digit growth supported by an expansion of the prescriber base. ALK consolidated its position as number two in the fast-growing Chinese AIT market. Tablet sales increased by 15%, mainly on higher volumes in the USA and Canada. As previously announced, the impact from higher realised selling prices in the USA declined in the second half of the year. Revenue by geography Revenue by product line ESRS 2-SBM1-40(a.ii, f) ESRS 2-SBM1-40(a.i, f) Growth Growth Sales of the region’s largest product group – SCIT bulk allergen extracts for primarily US allergists – were flat and performing below expectations due to competition considered to have decreased prices. Amounts in DKKm 2024 (l.c.) 2023 Amounts in DKKm 2024 (l.c.) 2023 Europe 3,914 906 22% 0% 3,216 908 SLIT-tablets SCIT/ SLIT-drops Other products Revenue 2,851 2,052 634 24% 6% 2,296 1,939 589 North America Int’l markets Revenue 717 4% 700 7% Sales of Other products (diagnostics, PRE-PEN®, and life science products) decreased by 7%, mainly due to discontinuation of lower margin life science customers and lower PRE-PEN® sales in the first half of 2024. The integration of the PRE-PEN® penicillin diagnostic operation was completed according to plan, but sales performed below expectations. 5,537 15% 4,824 5,537 15% 4,824 Revenue by geography Europe 5-year revenue development by geography Revenue by product line SLIT-tablets 5-year revenue development by product line North America Int’l markets SCIT/SLIT-drops Other products ALK is market leader in AIT in Canada and number two in the US market. DKK million 6,000 DKK million 6,000 International markets 5,000 4,000 3,000 2,000 1,000 5,000 4,000 3,000 2,000 1,000 11% 13% Revenue in International markets increased by 4% in local currencies to DKK 717 million (700). Progress was driven by growth in ALK’s product shipments to the region’s largest market, Japan, which together with China account for around 90% of revenue in this region. 16% 52% 37% 71% 0 0 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 Management's review Financial performance ALK Annual report 2024 20 Financial highlights and key ratios for the ALK Group1 DKK 2024 DKK 2023 DKK 2022 DKK 2021 DKK 2020 EUR 2024 EUR 2023 DKK 2024 DKK 2023 DKK 2022 DKK 2021 DKK 2020 EUR 2024 EUR 2023 Amounts in DKKm/EURm2 Amounts in DKKm/EURm2 Income statement Revenue Information on shares Proposed dividend 5,537 1,363 1,091 (34) 4,824 911 4,511 708 3,916 534 3,491 395 742 183 146 647 122 89 - 111 - 111 - 111 - 111 - 111 - 14.9 - 14.9 EBITDA Share capital Operating profit (EBIT) Net financial items Profit before tax (EBT) Net profit 666 470 292 150 Shares in thousands of DKK 0.5 each Share price, at year end Net asset value per share 222,824 159 222,824 101 222,824 96 222,824 172 222,824 125 222,824 21,3 222,824 13.6 (19) 647 (23) 447 (13) 279 (49) 101 (5) (3) 1,057 815 142 109 86 65 24 20 18 16 14 3.2 2.7 486 335 219 25 Key figures Gross margin – % Average number of employees (FTE) 2,789 2,752 2,609 2,492 2,419 2,789 2,752 64.2 19.7 16.6 24.9 - 62.9 13.8 11.5 18.6 - 61.9 10.4 9.0 14.8 - 61.2 7. 5 6.6 10.2 - 58.1 4.3 0.8 5.5 - 64.2 19.7 16.3 24.9 - 62.9 13.8 11.5 18.7 - Balance sheet Total assets Invested capital Equity EBIT margin – % 8,246 5,003 5,373 6,726 3,765 4,447 6,308 3,400 3,988 5,830 2,931 3,480 5,563 2,807 3,153 1,105 671 902 502 597 Return on equity (ROE) – % ROIC incl. goodwill – % Pay-out ratio – % 720 Earnings per share (EPS) Earnings per share (DEPS), diluted Cash flow per share (CFPS) Price earnings ratio (PE) Share price/Net asset value 3.7 3.7 5.5 43 2.2 2.2 3.0 46 1.5 1.5 1.9 63 1.0 1.0 2.1 172 11.0 0.1 0.5 0.5 0.7 43 0.3 0.3 0.4 46 Cash flow and investments Cash flow from operating activities Cash flow from investing activities – of which investment in intangible assets – of which investment in tangible assetss 0.1 1,213 (1,417) (1,043) (260) 667 (375) (69) 416 (351) (55) 468 (266) (45) 301 (245) (26) 163 (190) (140) (35) 89 (50) (9) 1.4 1,092 8.8 6.6 5.1 5.4 6.6 5.1 (310) (298) (218) (196) (42) – of which acquisitions of companies and operations Revenue growth – % Organic growth (115) (204) - - - - (15) (27) - 15 - 9 13 2 12 - 8 15 - 9 Free cash flow 292 65 202 56 39 Exchange rate differences Acquisitions/divestments Total growth revenue (2) (1) (2) - - - - - - - 1 Management’s review comprises pages 1-105 as well as ‘Financial highlights and key ratios by quarter for the ALK Group’ on page 164. Financial highlights and key ratios stated in EUR constitute supplementary information to the Management’s review. The exchange rate used in translating from DKK to EUR is the exchange rate prevailing on 31 December 2024 (EUR 100 = DKK 746) (31 December 2023: EUR 100 = DKK 745). 15 7 15 12 7 15 7 2 For definitions and reconciliation of alternative performance measures, see page 145. Management's review Financial performance ALK Annual report 2024 21 Financial review Revenue increased by 15% in local currencies to DKK 5,537 million (4,824), mainly driven by a strong momentum for tablet sales, particularly in Europe. Exchange rates had an immaterial impact on reported revenue. these positive factors were somewhat offset by inflationary pressure on the cost base and minor one-off costs related to optimisation activities in product supply. Total costs included one-off costs of DKK 75 million (0) associated with optimisation initiatives in Europe and China which mainly impacted Sales and marketing expenses. ALK’s full-year operating profit (EBIT) increased by 65% in local currencies to DKK 1,091 million (666). Overall results were in line with the latest outlook issued in November 2024. Capacity costs increased by 4% in local currencies to DKK 2,464 million (2,371). As planned, R&D expenses decreased by14% in local currencies to DKK 531 million (618) reflecting last year’s completion of late-stage clinical trials. Sales and marketing expenses were up 10% in local currencies to DKK 1,564 million (1,422), in support of continued growth. Administrative expenses increased 12% in local currencies to DKK 369 million (331), The operating profit (EBIT) amounted to DKK 1,091 million (666), an improvement of 65% in local currencies and 64% in reported currency. Despite the above-mentioned one-off costs, the EBIT margin progressed to 20% (14%) due to higher sales, gross margin improvements and a lower capacity cost-to- revenue ratio – the ratio was down to 45% (49%). Exchange rates impact on growth in reported EBIT was negligible. Cost of sales increased by 11% in local currencies to DKK 1,985 million (1,789). The gross profit of DKK 3,552 million (3,035) yielded an improved gross margin of 64% (63%), mainly reflecting volume growth, changes to the sales mix, improved pricing, and production efficiencies. As expected, (Comparative figures for 2023 are shown in brackets. Revenue growth rates are stated in local currencies, unless otherwise indicated) + mainly linked to costs for the Allergy strategy process. Optimisation of resources and general savings contributed positively to the overall cost development. Net financials showed a loss of DKK 34 million (a loss of 19) related to interest expenses and currency losses. Revenue Gross margin Revenue Revenue Gross profit Cost of sales Revenue growth Gross margin DKK million 6,000 % DKK million % 20 6,000 4,500 3,000 1,500 0 80 2024 guidance history 4,500 3,000 1,500 0 16 12 8 70 60 50 40 2024E 8 Feb outlook 2024E 2 May outlook 2024E 21 Jun outlook 2024E 22 Aug outlook 2024 Actual DKK Revenue 9-12% (l.c.) 10-13% (l.c.) 12-15% (l.c.) 14-16% 19-21 60 15% (l.c.) 20% EBIT margin 17-19% 0 17-19% 60 18-20% 60 4 Included one-off costs 75 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 Management's review Financial performance Financial review ALK Annual report 2024 22 Tax on the profit totalled DKK 242 million (161), and the net profit increased to DKK 815 million (486). build-up for tablet production, upgrades of legacy production, and the development of the next-generation adrenaline auto-injector. Investments also included an upfront payment of DKK 1 billion related the strategic licensing agreement for neffy® with ARS Pharma as well as acquisition of the PRE-PEN® operation in the USA. Cash flow from financing activities was DKK 310 million (minus 31), mainly from new borrowings related to the neffy® upfront payment. Cash flow from operating activities was DKK 1,213 million (667), as higher earnings were partly offset by changes in working capital, which mainly related to planned inventory build-up in support of future revenue growth. At the end of the year, ALK held 1,423,497 of its own shares, or 0.6% of the share capital, versus 0.7% at the end of 2023. Free cash flow was DKK minus 204 million (positive at 292) following the upfront payment of DKK 1 billion (USD 145 million) to ARS Pharma related to the neffy® license agree- ment. Equity totalled DKK 5,373 million (4,447) at the end of the year, and the equity ratio was 65% (66%). The net debt to EBITDA ratio (financial gearing) was 0.4 (0.3) at the end of the year. Cash flow from investment activities was DKK minus 1,417 million (minus 375), reflecting investments in continued capacity Research and development Research and development expenses Percentage of revenue Sales, marketing and administration Administrative expenses EBIT EBIT Sales and marketing expenses Percentage of revenue EBIT margin DKK million 1,000 % DKK million 2,000 % DKK million 1,250 % 20 50 25 800 600 400 200 0 17 14 11 8 1,600 1,200 800 400 0 46 42 38 34 30 1,000 750 500 250 0 20 15 10 5 5 0 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 Management's review Financial performance ALK Annual report 2024 23 Revenue by geography Growth Q4 review Amounts in DKKm Q4 2024 (l.c.) Q4 2023 928 Europe 1,138 235 22% -7% Revenue in North America decreased by 7%, reflecting a continued soft performance and a lower impact from recent improvements to the average selling prices for tablets in the USA. North America Int’l markets Overall revenue 249 168 Q4 revenue increased by 11% in local 126 -25% 11% currencies to DKK 1,499 million (1,345), driven by the strong momentum in European tablet sales. Operating profit (EBIT) increased by 6% to DKK 205 million (194), reflecting a planned increase in costs to R&D and Sales and marketing as well as one-off costs. 1,499 1,345 Revenue from International markets decreased by 25%, reflecting planned phasing of tablet shipments to Torii in Japan and immaterial SCIT product shipments to China during the renewal of ALK’s import license which is progressing according to plans. In-market sales in both markets continued to show double-digit growth. Revenue by product line Growth (l.c.) Amounts in DKKm Q4 2024 Q4 2023 SLIT-tablets 795 552 17% 5% 677 522 SCIT/SLIT-drops Other products Overall revenue The gross margin improved to 64% (63%), mainly reflecting changes to the sales mix, improved pricing, and production efficiencies. These factors were somewhat offset by inflationary pressure on costs. 152 2% 146 (Comparative figures for Q4 2023 are shown in brackets. Revenue growth rates are stated in local currencies, unless otherwise indicated). 1,499 11% 1,345 ALK delivered 2024 full-year results in line with the most recent financial outlook, following a Q4 which saw 11% revenue growth, driven by a continued strong performance in Europe. Revenue growth was lower than in Q2 and Q3 due to previously announced factors: Fluctuations in the timing of product ship- ments to Japan and China, and a weaker sales performance in the USA. Capacity costs increased to DKK 749 million (651) as ALK advanced its strategic investments. R&D expenses increased by 11% in local currencies and included costs to the peanut tablet development programme and the upcoming clinical trial with ACARIZAX® in China. Sales and marketing expenses increased by 16% in local currencies in support of the upcoming paediatric launches and high activity levels in key markets. Total costs included one-off costs related to the in-licensing of neffy®, as well as DKK 26 million related to the previously announced opti- misation initiatives in Europe and adjustments of the Chinese organisation due to the delayed timeline for the ACARIZAX® approval. Excluding these one-off costs, the capacity costs to revenue ratio was unchanged at 48% (48%). Income statement Amounts in DKKm Q4 2024 Q4 2023 Revenue 1,499 545 954 64% 167 474 108 205 (7) 1,345 501 844 63% 151 407 93 Cost of sales Gross profit Gross margin Research and development expenses Sales and marketing expenses Administrative expenses Operating profit (EBIT) Net financials Exchange rates had an immaterial impact on reported revenue. Revenue in Europe increased by 22%, fuelled by a 32% growth in tablet sales which was driven by higher volumes linked to the inflow of new patients, combined with price and rebate adjust- ments. Combined sales of injection- and drop-based AIT (SCIT/ SLIT-drops) increased by 11%, while sales of Other products (the Jext® adrenaline pen and diagnostics) increased by 37%, driven by the recovery in Jext® sales. 194 (8) Profit before tax (EBT) Net profit 198 170 186 140 Operating profit (EBIT) was higher at DKK 205 million (194), mirroring higher sales and efficiencies across the business offset by strategic growth investments and one-off costs related to optimisation activities. Operating profit before depreciation and amortisation (EBITDA) 281 258 Management's review Corporate matters ALK Annual report 2024 24 Corporate matters Risk management ALK’s Executive Leadership Team is responsible for the ongoing management of risks throughout the value chain, including risk identification, the assessment of probabilities and potential consequences, and the introduction of risk-reducing measures. 24 Risk management 28 Corporate governance and ownership 33 Board of Directors 35 Executive Leadership Team The Executive Leadership Team has a risk committee to assist it in meeting its overall responsibility for risk management. The Risk Committee comprises representatives from each func- tional area relevant to ALK’s risk profile. The Risk Committee meets twice a year or more, as and when required to perform its tasks. Risks are systematically assessed according to a two- dimensional matrix, rating the potential impact and probability of each risk. A risk management report with key enterprise risks and recommended mitigation plans is presented to the Executive Leadership Team before it is submitted to the Board of Directors each year for their review and approval. Risk impact The impact of the risk has increased compared to the year before The impact of the risk is stable and has not changed from the year before The impact of the risk has decreased compared to the year before The following is a description of ALK’s key enterprise risks, and the main initiatives taken to mitigate these risks. The risk move- ments compared to the previous year are indicated. Management's review Corporate matters Risk management ALK Annual report 2024 25 Commercial risks impacting revenue growth Severe IT security breaches Description Risk mitigation Description The degree of market approval and acceptance for a new product, or a new indication for an existing product, depends on several factors, including the demonstration of clinical efficacy and safety, cost-effectiveness, reimbursement/market access, convenience and ease of administration, potential advantages over alternative treatment methods, competition, and marketing and distribution support. If ALK’s products, primarily tablets and anaphylaxis prod- ucts, fail to achieve acceptance in major markets, this could have a significant impact on the company’s ability to generate revenue. ALK closely monitors economic, market and regulatory develop- ments as they relate to product pricing, along with the competitive situation and initiatives in all important markets. ALK regularly conducts surveys of market conditions and commits significant resources to providing information on allergy treatment to doctors and patients. ALK continues its focus on market access strategies, especially in the USA, China, Spain, Canada, and UK. The threat of cyberattacks continues to intensify globally and ALK is no exception. Disruption to IT systems, such as severe breaches of data security, may occur across the global value chain, where well- functioning IT systems and infrastructure are critical for the compa- ny’s ability to operate effectively. Risk mitigation ALK has an IT and cybersecurity strategy in place to prevent intruders from causing damage to systems or gaining access to critical data and systems. ALK continuously invests in upgrading IT security. Awareness campaigns, access controls, intrusion detec- tion and prevention systems have all been implemented. Further initiatives are planned, and systems are regularly upgraded to increase network security. ALK actively engages in dialogue with authorities with the aim of securing fair pricing and reimbursement agreements and main- tains a strong focus on its market access strategy. ALK is strongly committed to evidenced-based medicine, based on strong clinical and health economic evidence as the basis for pricing and reim- bursement. Price pressures mandated by authorities can have a significant impact on the company’s earning capacity. In most of the countries in which ALK operates, prescription drugs are subject to reim- bursement from, and price controls by, national authorities and healthcare providers. This often results in significant price differ- ences between individual markets. Exceptionally, governments and national authorities may introduce permanent or temporary economic measures that also affect the pricing and reimbursement of medicines, for example, because of a major economic downturn. ALK consistently monitors the geo-political landscape and proac- tively implements mitigating measures in pertinent regions as needed. 2024 movement: Fluctuations in geo-political stability, trade relations, or regulatory environments in key regions may disrupt business operations, and market access, leading to potential financial losses and reputa- tional damage for ALK. 2024 movement: Management's review Corporate matters Risk management ALK Annual report 2024 26 Production and quality issues impacting product supply and patient safety Failures or delays in product development Description Risk mitigation Description ALK’s products are subject to many statutory and regulatory requirements with respect to issues such as safety, efficacy, and quality. The products may be associated with side-effects such as allergic reactions of varying extent, duration, and severity. Meeting pharmaceutical quality standards is a prerequisite for the compa- ny’s ability to supply products and hence its competitive strength, and for the company’s earnings and sales. ALK stringently monitors product and manufacturing quality compli- ance and safety via quality assurance, pharmacovigilance and sales and marketing activities. If, despite the high levels of quality and safety, a situation should occur in which it is necessary to recall a product, ALK has procedures in place to ensure that this can be managed swiftly and effectively and in accordance with regulatory requirements. Production and manufacturing processes are subject to periodic and routine inspections by regulatory authorities as a regular part of their monitoring to ensure that ALK observes the prescribed requirements and standards. The future success of ALK depends on the company’s ability to maintain current products and to successfully identify, develop and market new, innovative drugs. A pharmaceutical product must be subjected to extensive and lengthy clinical trials to document qualities such as safety and efficacy before it can be approved for marketing. During the devel- opment process, the outcomes of these trials are subject to signif- icant risks. Even though substantial resources are invested in the development process, the trials may produce negative results. The risk fluctuates over time in line with the extent and nature of ALK’s product development activities. As ALK continues to rationalise its product portfolio, there may be risks associated with the discontinuation of its products. Among others, these may include potential production interruptions at manufacturing sites during decommissioning and change-over work, loss of sales from products for which no suitable ALK substi- tute product exists, or inability to meet sudden spikes in demand for other products due to patients switching from discontinued prod- ucts. ALK has invested significantly in recent years to increase the robust- ness and compliance of the legacy business by reducing manufac- turing complexity, and all possible steps are taken during portfolio rationalisation work to mitigate any potential impact on other areas of manufacturing or the wider business. ALK conducts risk planning including the prevention of unwanted events, and preventive inven- tory management. Failures or delays in the development process, or in obtaining regu- latory approvals, may have a major impact on patients who are not able to benefit from the products, and on ALK’s ability to achieve its long-term goals. As part of its supply chain, ALK is dependent on selected key third parties for key production processes and supplies, which poses a risk for ALK’s ability to deliver products, especially tablets, to the markets. Risk mitigation ALK manages key third-party dependency risks through long-term contracts, diligent production forecasting, monitoring, and joint steering committees. ALK continuously monitors its dependencies on key third parties and considers relevant risk mitigation measures including alternative supply setups. ALK and its collaboration partners carry out thorough risk assess- ments of their research and development programmes throughout the development and registration processes, in the interests of risk mitigation to maximise the likelihood of the products reaching the market. ALK’s Scientific Committee is responsible for other patient/product- related innovation activities. The committee provides instrumental strategic sparring on matters relating to R&D activities and other patient/product-related innovation, including reviewing R&D programmes and the overall R&D pipeline. 2024 movement: 2024 movement: Management's review Corporate matters Risk management ALK Annual report 2024 27 Breaches of legal or ethical standards Talent retention and attraction Description Description Compliance requirements are generally increasing in many areas, and as ALK expands into more markets, the company is exposed to more complex compliance requirements. Non-compliance with applicable regulations and legislation, or ALK’s Code of Conduct, could negatively impact the company’s good reputation which is essential to operating within the pharmaceutical industry. Patents and other intellectual property rights are important for developing and retaining ALK’s competitive strength. ALK is dependent on being able to attract and retain employees across all key functions and markets to deliver on its strategy. Failure to attract, develop and retain the right talents may have a material impact on the company’s market and research efforts. Risk mitigation Among other things ALK manages this risk by continuously moni- toring and improving employee engagement, offering its staff oppor- tunities to develop their professional competencies, and by continu- ously monitoring the total reward packages against the market. ALK is also focusing increasingly on how to position itself as an attractive employer, and how best to identify, attract and recruit future global and local talents with the skills and capabilities that will be required in the future. Risk mitigation ALK strives to act professionally, honestly and with high integrity throughout the company in its dealings with stakeholders. ALK’s Code of Conduct defines the company’s high standards of ethical behaviour in relation to customers, employees, shareholders, society, suppliers, and partners. Each year, all employees are asked to sign and confirm their knowledge of the Code of Conduct and to take an online test. ALK has established a whistleblower scheme which allows for confidential and anonymous internal and external reporting of potential or suspected wrongdoing. Immediate action is taken on substantiated non-compliance. 2024 movement: Internal controls and policies are in place to safeguard ALK’s intel- lectual property rights. The risk that ALK might infringe patents or trademark rights held by other companies, along with the risk that other companies might attempt to infringe ALK’s own patents and/or trademark rights, are monitored and, if necessary, suitable measures are taken. 2024 movement: Management's review Corporate matters ALK Annual report 2024 28 Corporate governance and ownership Corporate governance Meeting attendance and competency matrix Audit Commitee meetings Remuneration & Nomination Committee meetings Scientific Committee meetings ALK’s statutory corporate governance statement for 2024 provides an account of ALK’s two-tier management structure, including the composition, competencies, activities, self- assessment, and remuneration of the Board of Directors. The statement, which is prepared pursuant to section 107b of the Danish Financial Statements Act, also describes key elements of ALK’s internal control and risk management systems related to financial reporting processes. Board meetings Core Competencies Name (male/female) Anders Hedegaard (m) Lene Skole (f) Gitte Aabo (f) Lars Holmqvist (m) Jesper Høiland (m) Bertil Lindmark (m) Alan Main(m) The full statement is available at https://ir.alk.net/financial-reporting/risk-management Board composition ESRS 2-Gov 1-21(a,b,d,e) Katja Barnkob (f)1 Nanna Rassov Carlson (f)1 Lise Lund Mærkedahl (f)1 Johan Smedsrud (m)1 The Board of Directors consists of 11 non-executive members. Seven of the none-executive members, including the Chair and the Vice Chair, are up for re-election each year at the Annual General Meeting. Four members are employee-elected, each serving a four-year term (the last election was in 2023). No member of the Board of Management serves on the Board of Directors. 1 employee-elected Meeting attendance Attended Absent Competencies With two female members on the Board of Directors, ALK meets its target of having a minimum of two members (29%) of the underrepresented gender among the non-executive shareholder-elected members in accordance with section 107d of the Danish Financial Statements Act. Furthermore, three out of four employee-elected members are female. Core competencies Executive experience in a global company Life science industry Consumer healthcare / OTC Role competencies: Chair & Vice Chair Experience at CEO level Board experience from other companies Financial / Risk Commercial Digitalisation Experience with US market Research & Development At the Annual General Meeting in 2024, all shareholder-elected board members were re-elected. The Board of Directors has a preponderance of independent, shareholder-elected, Management's review Corporate matters Corporate governance and ownership ALK Annual report 2024 29 Composition of the Board of Directors ESRS 2-GOV1-21(a, b, d, e) members, as five board members (out of seven) in 2024 may be considered independent according to the definitions set by the Danish Committee on Corporate Governance. 2024 20231 Number of non-executive members Number of shareholder-elected members Number of employee-elected members All board members are presented on pages 33-34 of this annual report, while ALK’s Executive Leadership Team is presented on page 35. Four members of the Executive Leadership Team are registered with the Danish Business Authority and legally consti- tute ALK’s Board of Management. 7 4 7 4 11 - 11 - Number of executive members Independent members of the Board of Directors Percentage of independent members in shareholder-elected members Percentage of independent members in shareholder and employee-elected members 71% 45% 71% 45% Competency matrix for the Board of Directors ESRS 2-GOV1-23(a, b); G1-GOV1-5(a, b) The Board of Directors represents international business expe- rience from management positions in a variety of industries, and particular regard is given to the members’ insight into the management and globalisation of R&D driven companies. The Board also has overall expertise in sustainability matters that are material to ALK and sustainability knowledge is integrated into board committees and the Board itself. External advice on specific sustainability topics is obtained, if needed. Board gender diversity Male Shareholder-elected Employee-elected Total 5 1 6 5 1 6 Female Shareholder-elected Employee-elected Total 2 3 5 2 3 5 To assess whether all of the necessary core competencies are adequately represented, each shareholder-elected member of the Board has been asked to identify the primary competen- cies they bring to the Board, in the context of ALK’s long-term strategy. Employee-elected members are not part of the compe- tency assessment. For the Chair and Vice Chair, two additional competencies, specific to these roles, have been identified. Ratio of female to male in shareholder and employee-elected members Percentage of underrepresented gender in shareholder-elected members 45% 29% 45% 29% Composition of the Executive Leadership Team1 and their direct reportsin management positions ESRS 2-GOV1-21(a, b, d, e) 2024 2023 Governance recommendations Executive Leadership Team and their direct reports in management positions The Danish Committee on Corporate Governance has set out a series of recommendations on corporate governance which has been adopted by Nasdaq Copenhagen. ALK complies with all recommendations and the Board of Directors uses these recom- Number of males 26 21 25 18 Number of females Total 47 45% 43 42% Percentage of underrepresented gender Percentage of females in total workforce 62% 62% 1 2023 figures are not covered by the Independent Auditor’s limited assurance report. Management's review Corporate matters Corporate governance and ownership ALK Annual report 2024 30 mendations as inspiration for setting up structures, tasks, and procedures. The remuneration for the Board of Management consisted of both fixed pay elements (base salary and benefits) and variable pay elements in the form of short-term incentive (STI) and long- term incentive (LTI) plans. The programmes reward the attain- ment of pre-defined financial and non-financial targets linked to the company’s strategy. The STI and LTI plans are governed by ALK’s remuneration policy. the Science Based Targets initiative (SBTi) target reported under Disclosure Requirement E1-4. It also includes targets for increasing the share of the underrepresented gender in management positions at VP and Senior Director level to 34% and on increasing the number of patients benefitting from ALK’s allergy products. ALK accounts for its compliance with the recommendations in an annual ‘comply-or-explain’ review which is available at https://ir.alk.net/ corporate-governance. Remuneration The variable pay elements were settled above target and reflect strong performance in the financial and non-financial KPIs defined for the STI and LTI plan. The general increase in base salary for members of the Board of Management was 3%, in line with the general increase for ALK employees in Denmark. There was no increase applied to the base salary for the CEO while the base salary for the CFO increased above the general level to align it more closely to market benchmarks. Remuneration of the Board of Directors and the Board of Management is determined in accordance with ALK’s remuner- ation policy as adopted by the AGM in March 2024. The policy is prepared in accordance with sections 139 and 139a of the Danish Companies Act as well as items 4.1.1 - 4.1.6 of the latest Danish Corporate Governance Recommendations. The remuneration policy is submitted for advisory approval at ALK's Annual General Meeting at least every four years. The remuneration policy allows for STI and LTI plans to include both financial and non-financial KPIs, including sustainability-related targets. The targets linked to the annual STI and LTI plans are approved each year by ALK’s Board of Directors. In accordance with the remuneration policy, ALK's Board of Directors does not participate in short or long-term incentive schemes linked to company results. Highlights of the remuneration report ESRS 2 – Gov 3; E1-GOV3-13 Remuneration ALK’s remuneration report for the Board of Directors and the Board of Management provides an overview of remuneration components, actual remuneration in 2024, its development over the past years, and the individual shareholdings of members of the Board of Directors and Board of Management. All remu- neration for the Board of Directors and Board of Management in 2024 followed the principles and framework outlined in ALK’s remuneration policy. The remuneration report for 2024 will be presented for an advisory vote at the AGM on 13 March 2025. Amounts in DKKt 2024 20231 Short-term incentive scheme (STI) The KPIs for the STI include sustainability targets accounting for 15% of pay to the CEO and 11% for the remainder of the Board of Management. The sustainability targets reward ALK's Board of Management for successfully preparing ALK for the CSRD and EU Taxonomy reporting and for getting science-based CO2 reduction targets approved. This supports ALK's ability to set additional sustainability targets in the future. The STI plan also rewards the achievement of gender balance in senior manage- ment and securing a high level of employee engagement. Board of Directors Base fee 4,900 1,138 6,038 4,820 1,137 5,957 Committee fees Total Board of Management Base salary 17, 593 13,320 3,364 18,249 7, 8 52 The report is prepared in accordance with section 139b of the Danish Companies Act and is available at https://ir.alk.net/corporate-governance. Short-term incentives (cash bonus) Pension and benefits Long-term incentives (grant value) Total 2,434 3,940 Long-term incentive scheme (LTI) 6,877 Members of the Board of Directors each received a fixed annual fee, with the Vice Chair and Chair receiving double and triple the annual fee, respectively. Members also received an additional fee for serving as member or chair on the Board committees. The fees for serving on the Board and the Board committees remained unchanged in 2024. Achievement of the LTI plan for 2022-2024 is linked to the fulfilment of both financial and sustainability targets with sustainability-related targets accounting for 10% of the plan for all members of the Board of Management. This is a grouped milestone that includes climate-related considerations. The LTI plan includes a previously established target linked to green- house gas (GHG) emission reduction, which does not align with 41,154 32,475 1 Including former members of Board of Management and excluding sign-on and severance payments. For further information, please refer to the Remuneration Report 2024 Management's review Corporate matters Corporate governance and ownership ALK Annual report 2024 31 Shareholder base Shareholder overview as at 31 December 2024 ALK aims to have a diversified shareholder base in terms of geography, investment profile, and time horizon with share- holders sharing the company’s vision and supporting its long- term strategy. To enable a fair valuation as well as regular trading of its shares, ALK provides relevant information on its strategy, goals, expectations, operations, performance, market development, R&D pipeline, and other matters of importance to the assessment of the share. Shareholder Registered office No of shares Interest Votes 67. 2% Lundbeck Foundation1 Copenhagen, Denmark 18,414,400 A shares 1,841,440 AA shares 69,496,540 B shares 40.3% ATP1 ALK2 Hillerød, Denmark Hørsholm, Denmark 11,156,329 B shares 5.0% 2.8% - 1,423,497 B shares (2023: 1,634,673) 0.6% (2023: 0.7%) (treasury shares) Board of Directors and Board of Management 109,027 (2023: 92,531) <0.1% (2023: <0.1) <0.1% 29.7% On 31 December 2024, ALK had 37,215 registered shareholders versus 39,766 at the end of 2023. The registered shareholders owned 97.8% of the share capital (97.3%). The vast majority of the largest registered shareholders were institutional inves- tors, mainly from Denmark, other European countries, and North America. The international ownership was estimated at approximately 28% (28%), representing 46% of the free float of the B shares, excluding the Lundbeck Foundation’s holding and treasury shares. Other 800 A shares 80 AA shares 120,381,807 B shares 54.0% 1 This shareholder has reported to ALK that they held 5% or more of the shares on 31 December 2024. To meet obligations to deliver shares under the management incentive programmes, ALK holds a number of its own shares. The holding was reduced in 2024 following the settlement of share option and performance share programmes 2 Return to shareholders ALK is listed on the Nasdaq Copenhagen stock exchange under the ticker symbol ALK B. At year-end, the closing price of ALK B shares was DKK 159 compared to DKK 101 at the end of 2023, an increase of 57%. The total market value of ALK’s B shares, excluding treasury shares, was DKK 32.0 billion (20.3) at year-end. The ALK share in 2024 ALK OMXC25 (indexed) Pharma, biotech and life sciences (NBI-NAS, indexed) Index 200 180 160 140 120 100 80 Dividend and capital structure The Board of Directors considers that ALK’s financial resources, including credit facilities, continue to form a sufficient basis for executing ALK’s strategy and funding investments. At the end of 2024, net interest-bearing debt (NIBD) amounted to DKK 598 million and the Net Debt to EBITDA ratio stood at 0.4 (0.3), well- below ALK’s long-term target of a maximum of two. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Management's review Corporate matters Corporate governance and ownership ALK Annual report 2024 32 To support investments in ALK’s new strategy, the Board of Directors is extending its recommendation that dividend payments be suspended until ALK’s cash flow further improves. Accordingly, the Board of Directors will propose to the AGM, that no dividends should be declared for 2024. The Board of Direc- tors revisits the dividend policy and ALK’s capital structure on an ongoing basis. Find out more Trading information and core data on ALK’s share: https://ir.alk.net/share-information Data ethics ALK processes data from clinical trials, research and development, employees, customer interactions, and pharmacov- igilance. Recognising the importance of responsibly managing stakeholder data, ALK adheres to its publicly communicated data ethics policy. This policy ensures strict compliance with privacy regulations and best practices to safeguard data confiden- tiality, integrity, and availability. Contact Investor Relations Per Plotnikof, Head of IR Tel. +45 45747527 Up to and including 15 March 2027, the Board of Directors is authorised to increase the share capital by up to DKK 11,141,196, with or without pre-emption rights for existing shareholders. Financial calendar 2025 Annual General Meeting 13 March Three-month interim report (Q1) 6 May The Board of Directors is authorised for the period until 22 March 2028 to let the company acquire its own B shares for a nominal value of up to DKK 11,141,196. The consideration for such shares may not deviate by more than 10% from the official quoted price of the B shares on the date of acquisition. Six-month interim report (Q2) ALK maintains transparency about how data is collected, processed, and used. Data is only used to expand scientific and medical understanding, ensure patient safety, improve products and services, and deliver appropriate treatments. The Board of Directors regularly assesses this policy, which applies to all ALK employees. Rele- vant business units manage day-to-day data ethics, integrating these principles into their operations. This report complies with section 99d of the Danish Financial Statements Act. 21 August 13 November Nine-month interim report (Q3) Investor Relations During 2024, ALK representatives participated in many indi- vidual meetings and briefing calls with analysts and investors as well as conferences and seminars targeting various audiences. ALK also hosted a well-attended Capital Markets Day in June 2024 where management presented ALK’s new strategy. All regulated company announcements are available on ALK’s corporate website together with reports, presentations, recordings of telephone conferences, share price information, analysts’ estimates, and related information. Registered share- holders are encouraged to sign up on the InvestorPortal. Management's review Corporate matters ALK Annual report 2024 33 Board of Directors Anders Hedegaard (1960, Danish, male) Lene Skole (1959, Danish, female) Gitte Aabo (1967, Danish, female) Lars Holmqvist (1959, Swedish, male) Jesper Høiland (1960, Danish, male) Professional board member Chair The Lundbeck Foundation, CEO and directorships at two other subsidiaries Vice Chair Professional board member Independent Professional board member Not independent Strategic adviser, PharmaCo Consult ApS Independent Independent Board member since 20211 Chair of the Audit Committee Board member since 20151 Member of the Audit Committee Board member since 20231 Member of the Audit Committee Board member since 20201 Chair of the Remuneration & Nomination Committee Not independent Board member since 20141 Member of the Remuneration & Nomination Committee Member of the Scientific Committee Member of the Scientific Committee Competencies2 Competencies2 Competencies2 Competencies2 Competencies2 Specific expertise within management and sales & marketing in international life science companies. Experience in management, financial and economic expertise, experience in strategy and communication in international compa- nies. Global leadership experience and comprehen- sive understanding of international manage- ment, finance, IT, and sales & marketing, as well as insights into building digital commu- nities. Experience in management, finance, and sales & marketing in international life science companies, including med-tech and pharma- ceutical businesses. Management and commercial experience from 35 years with global pharmaceutical compa- nies, including roles at Ascendis Pharma, Inc., Radius Health, Inc. and Novo Nordisk Inc., USA. Unique expertise in establishing and expanding commercial activities in North America, including product launches. Directorships2,3 Directorships2,3 Directorships2,3 Directorships2,3 Directorships2,3 Ellab, Chair and chair of the Remuneration Ørsted A/S: Chair and chair of the Nomination UNION therapeutics A/S: Board member Biovica International AB, Sweden: Chair and SciBase AB, Stockholm: Chair Committee & Remuneration Committee Tobii Dynavox: Chair GN Foundation: Chair member of the Audit Committee H. Lundbeck A/S: Board member and member of the Audit Committee The Lundbeck Foundation: Board member and Chair of the Investment Committee Vitrolife AB, Sweden: Board member and member of the Audit Committee Flen Health SA, Luxemburg: Director Rodenstock Group, Germany: Member of the Advisory Board Candela Medical, USA: Board adviser Falck A/S4: Vice Chair and member of the Remu- neration and Nomination Committee H. Lundbeck A/S4: Vice Chair and member of the Remuneration & Nomination and Scientific Committees Nordea Bank Abp, Finland: Vice Chair and member of the Audit Committee 1 2 3 All members elected by the Annual General Meeting are up for re-election each year. Board positions included in the position as CEO of the Lundbeck Foundation. ESRS 2-GOV1-21(c) Directorships do not include those for companies that are personally owned, fully or partly, by members of the Board of Directors. 4 Management's review Corporate matters Board of Directors ALK Annual report 2024 34 Bertil Lindmark (1955, Swedish, male) Alan Main (1963, British, male) Katja Barnkob (1969, Danish, female) Nanna Rassov Carlson (1976, Danish, female) Lise Lund Mærkedahl (1967, Danish, female) Johan Smedsrud (1972, Danish, male) Chief Medical Officer, Senior Adviser, Canson Capital Partners Independent Senior Project Director, Global Clinical Development, ALK-Abello A/S Board member since 2011 Employee-elected Senior Manager, QA Release, ALK-Abelló A/S Board member since 2019 Employee-elected Project Director, Global Research, ALK-Abelló A/S Board member since 2023 Employee-elected Senior Maintenance Supporter, Process & Production Support, ALK-Abelló A/S Board member since 2019 Employee-elected Vicore Pharma Holding AB Independent Board member since 20211 Chair of the Scientific Committee Board member since 20221 Member of the Remuneration & Nomi- nation Committee Competencies2 Competencies2 Competencies2 Competencies2 Competencies2 Competencies2 More than 30 years' experience of global executive R&D leadership in pharmaceuticals (Astra, Astra- Zeneca, Almirall) and biotech (ASLAN Pharmaceuticals, eTheRNA Immuno- therapies, Galecto Inc.). Experience in multi therapy area and bringing- blockbuster therapeutics to market globally. Served on the Research Board of AstraZeneca. Participated in a range of IPOs, acquisitions, and debt-financing activities. More than 30 years of experience from the consumer healthcare industry, including roles in Sanofi, Bayer and Roche. Experience in project management of global drug development projects in the pharmaceutical industry. Expertise in production and release of ALK’s active pharmaceutical ingre- dients for sublingual immunotherapy products. Experience in the development of new vaccines, project management of drug discovery projects, and most recently governance of data digitalisation and AI projects. Experience in HVAC systems, clean- room testing, utensil washing and sterilisation for the pharmaceutical industry. Directorships2,3 Directorships2,3 Aqilion AB, Sweden: Chair of the Board and member of the Remuneration Committee The Lundbeck Foundation: Board member, employee-elected Cellevate, Sweden: Director of the Board 1 2 3 All members elected by the Annual General Meeting are up for re-election each year. ESRS 2-GOV1-21(c) Directorships do not include those for companies that are personally owned, fully or partly, by members of the Board of Directors. Management's review Corporate matters ALK Annual report 2024 35 Executive Leadership Team Peter Halling (1977, Danish) Claus Steensen Sølje (1972, Danish) Søren Niegel (1971, Danish) Henriette Mersebach (1971, Danish) Christian G. Houghton (1964, Danish) Jan Engel Jensen (1966, Danish) Lika Thiesen (1975, Danish) Jacob Glenting (1974, Danish) Board of Management President & CEO Board of Management Executive Vice President & CFO Board of Management Executive Vice President, Commercial Operations Board of Management Executive Vice President, Research & Development Executive Leadership Team Executive Vice President, Product Supply Executive Leadership Team Senior Vice President, Global Quality Executive Leadership Team Executive Vice President, Global People & Organi- sation Executive Leadership Team Senior Vice President, Global Strategy & Corporate Development Competencies Competencies Competencies Competencies Competencies Competencies Competencies Competencies Executive management experience with a strong commercial and strategic background from phar- maceutical and biotech industries. International experience in management, finance, and other CFO-related areas in the pharmaceutical/med tech industry. Experience in management as well as global produc- tion and sales & marketing within the pharmaceutical industry. Experience in manage- ment, innovation, and research & development in the pharmaceutical industry. Experience within develop- ment of biopharmaceutical products and specialised in CMC development and supply operations. Experience within quality assurance from the medical and pharmaceutical industry. Experience in organi- sational change, Experience in pharmaceu- tical commercialisation, research & development, marketing, business development, strategy, and general management. people strategy and HR programme implementa- tion from different stock- listed and equity-owned companies. Jan Engel Jensen holds bachelor’s degrees in Production Management, Business Administration, and a master's degree in Quality Management in Scientific R&D. Claus Steensen Sølje holds a master's degree in Economics from the University of Copenhagen from 1999. Søren Niegel holds a master's degree in Economics and Business Administration from Copen- hagen Business School from 1996. Henriette Mersebach holds a master's degree in Medi- cine from 1998 and a PhD in Medicine from 2004. Christian G. Houghton holds a master's degree in chemical engineering from DTU – Technical University of Denmark. Peter Halling holds a Jacob Glenting holds a master's degree in biochemistry, and a PhD in vaccine development. master's degree in Interna- tional Marketing & Manage- ment from Copenhagen Business School from 2003. Lika Thiesen holds a master's degree and a PhD in Public Administra- tion from Northern Illinois University, USA. Directorships1 Directorships1 Directorships1 The Danish Chamber of Commerce Sonion A/S: Board member and member of the Remu- neration & Nomination Committee Appointed Chair of the Danish Pharmacopoeia Commission, Danish Medi- cines Agency UV Medico A/S: Board member 1 Directorships do not include those for companies that are personally owned, fully or partly, by members of the Executive Leadership Team. Management's review Sustainability statement ALK Annual report 2024 36 ESRS 2 Sustainability statement General disclosures Basis for preparation ESRS 2-BP1 Sources of estimation and outcome uncertainty The use of estimates for metrics, including data from the value chain, is outlined in the relevant accounting policies. General basis for preparation of the sustainability statement ALK has aligned its reporting with the European Corporate Sustainability Reporting Directive (CSRD), which is applicable to ALK from 1 January 2024, and Article 8 of the Taxonomy Regu- lation (EU) 2020/852. The sustainability statement has been prepared on a consolidated basis, covering the entire ALK group and subsidiaries, in line with the financial statements. ALK identified the following estimates, assumptions and judge- ments as significant for the sustainability statement: General • "Purchased goods & services" (scope 3, category 1) green- house gas emissions ( see E1-6 on page 54) • "Water consumption for irrigation" ( see E3-4 on page 60) • "Gender pay gap" ( see S1-16 on page 78) information 36 General disclosures 37 Sustainability governance 39 Stakeholder engagement 41 Materiality assessment process 44 Material impacts, risks and opportunities The sustainability statement is based on a Double Materiality Assessment (DMA) covering ALK's own operation as well as its upstream and downstream value chain. Policies, actions and targets also cover the value chain when related to its impacts, risks and opportunities. No information on intellectual property or know-how has been omitted. • "Number of patients in treatment" ( see S4-5 on page 85). Disclosures stemming from other legislation or generally accepted sustainability reporting pronouncements The sustainability statement has been prepared in compliance with Section 99a of the Danish Financial Statements Act, in accordance with the ESRS. Information prepared in compliance with Section 107d of the Danish Financial Statements Act has been included in the management review as well as in S1-1 on page 75. For a detailed description of the scope, methodology and assumptions behind the DMA process, see ESRS 2 IRO-1 on pages 41-43. ESRS 2-BP2 Disclosures in relation to specific circumstances Time horizons Incorporation by reference ALK defines the medium-term time horizon as the period ranging from over 1 to 3 years, and long-term as any timespan beyond 3 years. The time horizons are based on ALK’s Enterprise Risk Management framework. See appendix "Incorporation by reference" on pages 92-93 IBR for the list of datapoints incorporated by reference and phased-in, according to ESRS 2-BP2-16. Management's review Sustainability statement ALK Annual report 2024 37 ESRS 2 ALK's sustainability governance model Sustainability governance ESRS 2-GOV1 The role of the administrative, management and supervisory bodies Board of Directors Overall responsible for ALK’s sustainability strategy and targets ESRS 2-GOV2 Information provided to, and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies Audit Committee Oversee sustainability disclosures, processes, controls and assurance Remuneration Committee Oversee sustainability-related remuneration ALK's governance model ensures that sustainability is systemati- cally managed and integrated into decision-making and business strategy. It promotes long-term value creation while addressing societal and environmental challenges. The model defines clear roles and responsibilities and provides a framework for setting and monitoring sustainability targets. Executive Leadership Team Approve all sustainability-related policies and strategy Sustainability Committee Oversee legal reporting requirements within sustainability. Make recommendations to Executive Leadership Team on matters with strategic impact on the global organisation Information about the composition, diversity, expertise and business conduct-related role of the administrative, management and supervisory bodies, according to ESRS 2-GOV1-21(a, b, d, e), ESRS 2-GOV1-23(a, b) and G1-GOV1-5(a, b), is incorporated by reference to the section "Corporate governance" of Corporate matters on pages 28-29. Corporate Finance Department Responsible for accounting policies, internal controls, framework and guidelines for data processes and controls. Sustainability Department Information about experience of Board of Directors' members relevant to ALK's sectors, products and geographic locations, according to ESRS 2-GOV1-21(c), is incorporated by reference to the section "Board of Directors" of Corporate matters on pages 33-34. Responsible for the sustainability strategy implementation. Ensure compliance with legal reporting requirements as well as reporting to internal and external stakeholders ALK’s Board of Directors bears the overall responsibility for ALK’s sustainability strategy including impacts, risks, opportunities and targets. The Audit Committee oversees sustainability disclo- sures, processes, controls and assurance, and the Remuneration Committee oversees sustainability-related remuneration. Corporate functions Responsible for daily execution of strategic activities as well as collection of sustainability data Management's review Sustainability statement Sustainability governance ALK Annual report 2024 38 The Executive Leadership Team (ELT) is responsible for approval of all sustainability-related policies and strategy. The ELT reports to the Board of Directors. ESRS 2-GOV3 Integration of sustainability-related performance in incentive schemes Information about the integration of sustainability-related performance in incentive schemes, according to ESRS 2-GOV3 and E1-GOV3-13, is incor- porated by reference to the section "Corporate governance" of Corporate matters on page 30. The Sustainability Committee, led by the Executive Vice Pres- ident for People and Organisation, oversees legal reporting requirements within sustainability and makes recommenda- tions to the ELT on matters with strategic impact on the global organisation. The mandate of the Sustainability Committee is described in ALK’s sustainability committee charter. In 2024, the Sustainability Committee focused on ensuring that ALK meets ESRS and EU Taxonomy reporting requirements. Meeting quar- terly, the committee will in future also focus on implementing further due diligence programmes in the value chain and evalu- ating the effectiveness of policies, actions, metrics, and targets addressing impacts, risks and opportunities (IROs). ESRS 2-GOV5 Risk management and internal controls over sustainability reporting The Sustainability Department is responsible for preparing the sustainability statement, overseeing the DMA process, and advising on data collection. The Corporate Finance Department collaborates closely on numeric data collection. Data is gath- ered quarterly for ongoing progress tracking and verification, with all information stored centrally. The Corporate Finance Department is responsible for accounting policies, internal controls, frameworks and guide- lines for data processes and controls. Key challenges in creating unified sustainability disclosures across various business units and locations include human error and data misalignment. To minimise reporting errors, internal controls and standard operating procedures for critical metrics have been established based on a risk assessment, and a four-eye principle is applied. The Sustainability Committee, the ELT and the Audit Committee receive quarterly updates on progress on the sustainability statement. All data comply with the principles outlined by the ESRS. The Sustainability Department is responsible for the sustaina- bility strategy implementation, ensuring compliance with legal reporting requirements, and reporting to internal and external stakeholders. The corporate functions are responsible for day-to-day execution of strategic activities as well as collection of sustainability data. ESRS 2-GOV4 Statement on due diligence ALK's IROs are integral to the company strategy. Risks identified in the DMA are incorporated into the ERM process. However, as DMA risks are gross risks and ERM includes risk mitigation, the meth- odologies cannot be fully aligned. The Risk Committee, chaired by the Chief Finance Officer, informs the Board of Directors about ERM risks. The statement on due diligence, according to ESRS 2-GOV4-32, is incor- porated by reference to the appendix "Core elements of due diligence" on pages 94-95. Management's review Sustainability statement ALK Annual report 2024 39 ESRS 2 Stakeholder engagement ESRS 2-SBM1 ESRS 2-SBM2 Strategy, business model and value chain Interests and views of stakeholders Information about ALK's key elements of general strategy, significant groups of products and services and significant markets and customer groups, according to ESRS 2-SBM1-40(a.i, a.ii, f) is incorporated by refer- ence to the section "Sales and market trends" of Financial performance on page 19. Key stakeholders Employees How engagement is organised Purpose of engagement Examples of outcomes • Engagement survey • Employee-elected board members • Understanding employees' • Workers’ councils perceptions and experiences • Employee development dialogues • Defining training needs • Employee meetings • Strategic alignment • Human resources strategy • Improvement action plans • Training programmes • Employee information Description of sustainability-related goals in terms of significant groups of products and services, customer categories, geographical areas and relationships with stakeholders, according to ESRS 2-SBM1-40(e) is incor- + porated by reference to the section "Introduction to Allergy " of Business Consumers and general public • Various digital media platforms • Consumer websites, apps, email flows, etc. • Creating awareness around allergies, symptoms, impact on quality of life and treatment options, etc. • Improved awareness among consumers relating to allergies including symptoms, impact on and strategy on page 9. Strategy elements that relate to or impact sustainability matters, including the main challenges ahead, critical solutions and projects to be put in place, according to ESRS 2-SBM1-40(g) are incorporated by reference to the section "Expanding the addressable markets" of Business and strategy on pages 16-17. quality of life, treatment options, etc. Healthcare professionals • Scientific webinars and symposia, • Awareness of allergy, including scientific publications, clinical trial data sharing, etc. • Increased adoption and usage of evidence-based disease modifying allergy treatments • Correct identification and diag- nosis of people with allergy burden of disease and bene- fit-risk of available allergy treat- ment strategies Headcount of employees by geographical areas, according to ESRS 2-SBM1-40(a.iii) is incorporated by reference to the section "ALK at a glance" of the Introduction on page 5. • Clinical practice optimisation Suppliers and contract • Contract negotiations manufacturers • Compliance with ALK's Third- party Code of Conduct • Commitment to Science-Based Targets initiative • Reliable long-term partnerships • Adherence to ALK’s business conduct standards and collabora- tive decarbonisation progression • Third-party Code of Conduct implementation • Supplier meetings and corre- spondence The business model, according to ESRS 2-SBM1-42(a,b,c) is incorporated by reference to the section "Business model" of the Introduction on page 6. Investors and shareholders • Interim and annual reports, company announcements, websites, presentations, meet- ings and events • Enhancing transparency • Understanding expectations to sustainability • Strong reputation • Access to capital • Fair valuation • Attracting responsible investors • ESG ratings Regulatory authorities • Continuous interaction • Compliance with regulations, safety and efficacy of medicines • Compliance and market access Management's review Sustainability statement Stakeholder engagement ALK Annual report 2024 40 Active engagement with stakeholders is a fundamental aspect of ALK’s sustainability strategy and is integrated in the overall strategy. The interaction shapes the understanding of material issues and supports the initiatives outlined in the sustainability roadmap. Internal engagement occurs across a broad range of functions including but not limited to finance, legal, environ- ment, health and safety, procurement, people and organisation, R&D, commercial and the ELT. The interests and views of stakeholder groups inform ALK's + Allergy strategy and business model, including but not limited to: • Results from regular engagement with employees through the workers’ councils and engagement survey, integrated into the People and Organisation strategy and processes defined in the Cultivate pillar. • ALK’s ongoing interaction with representatives of healthcare professionals, patients and regulatory authorities, informing the Innovate and Focus pillars. • Engagement with suppliers and contract manufacturers, informing the Optimise pillar. • Engagement with investors and shareholders, handled though the Capital Markets Day, the Annual General Meeting and at meetings requested by larger investors on specific sustainability-related topics. The stakeholder engagement during the materiality assessment process is described under ESRS 2-IRO1 on pages 41-43. ALK’s overall business model has not been amended in response to engagement with its stakeholders; however, ALK’s strategy + was updated in 2024 and the Allergy strategy was launched. The administrative, management and supervisory bodies are informed about the views and interests of affected stakeholders through the sustainability strategy updates. Management's review Sustainability statement ALK Annual report 2024 41 ESRS 2 Materiality assessment process ESRS 2-IRO1 Description of the process to identify and assess material impacts, risks and opportunities In 2024, ALK updated its initial Double Materiality Assessment (DMA) from 2023 in a shortened review process, focusing on implementing regulatory changes as well as engaging with stakeholders to check for significant changes to the business model or value chain, or new sustainability-related information gathered throughout the year. bility matters. As far as possible, datapoints were triangulated across sources. Climate-related impacts, risks and opportunities Climate-related impacts, risks and opportuni- ties (IROs) were considered as part of the DMA process related to the sustainability topics of climate change mitigation and climate change adaptation. However, ALK has not yet under- taken a climate-related scenario analysis to inform the identification and assessment of physical risks and transition risks and oppor- tunities over the short, medium or long term. As a result, ALK has not yet included a climate- related scenario analysis in the resilience analysis of its strategy and business model. Parts of ALK’s value chain were covered more extensively due to their large potential impact and the nature of ALK’s business. External sources have been used to provide input on Environ- ment, Social and Governance (ESG) issues with a heightened risk of adverse impacts. Furthermore, Sustainability Accounting Standards Board (SASB) publications for the biotech and pharmaceuticals sector were reviewed to ensure an industry- specific viewpoint focussing especially on the potential adverse impacts on the end-users. Implementing regulatory changes Finalised European Sustainability Reporting Standards (ESRS) standards and European Financial Reporting Advisory Group (EFRAG) guidance published since 2023 led to adjustments to the DMA baseline. The main adjustments to the DMA 2023 include: Stakeholder engagement For the DMA review, ALK engaged with internal subject-matter experts. These representatives covered the views and inter- ests of affected stakeholders, including suppliers, end-users, employees and nature, ensuring that the scope encompassed the entire organisation. The unique nature of pharmaceuticals and the extensive regulation of the sector made their integration significant for ALK. The scope, methodology and assumptions for green- house gas emissions are described in detail in the accounting policies on pages 71-72. • A revision of initially identified positive impacts: positive impacts have only been deemed justified if they are business- model-related or if ALK performed well beyond standards. • An update of the DMA workbook to ensure ESRS-aligned scoring, based on the finalised sustainability matter list of the ESRS in inherent (gross) format. Pollution-related impacts, risks and opportunities As part of the DMA process, stakeholder representatives were consulted to identify and assess pollution-related impacts. Site- specific data was collected as a part of the assessment. All production sites purchase substances of concern, therefore they are all deemed material for the pollution-related impacts ( see accounting policies for list of the sites on page 71). • A greater focus on capturing value-chain-related impacts, risks and opportunities. ALK conducted a human rights risk assessment as part of its DMA, identifying impacts from a human rights perspective (including labour rights). Insights were drawn from the engage- ment survey and consultations with relevant stakeholders. Rele- vant impacts were translated into corresponding risks or oppor- tunities and mapped to ALK’s strategic functional roadmaps. Identifying sustainability matters The initial phase focused on evaluating ALK's activities and business relationships, value chain and affected stakeholders, in order to identify relevant sustainability matters, as outlined in ESRS 1-AR16. ALK has used internal documents and repre- sentative internal resources as sources to identify sustaina- Management's review Sustainability statement Materiality assessment process ALK Annual report 2024 42 Water and marine resources-related impacts, risks and opportunities The World Wildlife Fund (WWF) Water Risk Filter was used to identify material impacts related to water and marine resources at ALK's production sites. Potential negative impacts linked to water-scarce regions were also identified and assessed using the Aqueduct Water Risk Atlas tool from the World Resources Institute (WRI). Internal stakeholder representatives identified and assessed impacts, in ALK's own operations and value chain. ALK has not conducted consultations directly with affected commu- nities. followed the WWF technical guide. No transi- tion or physical risks, including systemic risks and opportunities were identified using the WWF Biodiversity Risk Filter. Materiality scoring approach The scoring methodology and criteria used in the DMA were defined in accordance with the requirements in ESRS 1, applying the principle of double materiality which comprises: Engagement with stakeholder representa- tives was also used to identify and assess impacts at the Post Falls site, particularly from cultivation and collection of allergenic source materials. Impact materiality: Scale, scope, irremedi- ability, and likelihood of impacts (based on whether an impact is positive/negative and actual/potential). Financial materiality: Financial magni- tude of risk/opportunity, likelihood, and the nature of the financial effect. ALK's only material site, Post Falls (USA), is not located in or near biodiversity-sensitive areas. ALK has not found it necessary to implement biodiversity mitigation measures. The threshold applied for the financial effect scale is consistent with the materiality threshold in ALK's Enterprise Risk Manage- ment (ERM) framework. The threshold for human rights-related impacts was lowered based on ESRS 1-45 requirements. Biodiversity and ecosystem-related impacts, risks and opportunities Resource use and circular economy-related impacts, risks and opportunities As part of the DMA, a review was conducted to determine which sites should be included in the evaluation of potential and actual biodiversity and ecosystem IROs. This review focused on filtering sites involved in farming processes, as they were deemed to have the most significant potential impact on biodi- versity. The review concluded that, after applying this filter, only one site – Post Falls (USA) – met the criteria. This site met the materiality threshold and was thus deemed material in relation to biodiversity impacts. As part of the DMA process, stakeholder representatives were consulted to identify and assess impacts related to resource use and circular economy. Site-specific data was collected as a part of the assessment. All production sites generate waste, therefore they are all deemed material for the related impacts ( see accounting policies for list of the sites on page 71). Internal stakeholders who identified the risks and opportunities assessed their magnitude and likelihood to the best of their knowledge. In the initial 2023 DMA, some topics were easily deemed material, based on ALK’s industry and business model. ALK focused its efforts on assessing the materiality of matters with greater scoring uncertainty. Special attention was given to sustainability matters with no identified IRO to ensure that no significant IROs were overlooked and the assessment accurately reflected ALK’s business. All IROs were assessed and scored at a gross level. A sustainability matter was deemed material if at least one IRO was above the threshold, indicating either impact materi- ality or financial materiality, or both. Non- material sustainability matters were those where no IRO was identified and/or all IROs were found to fall below these thresholds. The IROs and their scoring were evaluated and finalised at a workshop with the stake- holder representatives. Business conduct-related impacts, risks and opportunities To identify ALK's actual and potential For business-conduct-related IROs, an industry and geographical perspective was applied. The 2024 DMA result was presented and approved by the ELT, the Audit Committee and the Board of Directors. impacts on biodiversity and ecosystems, ALK has conducted an assessment using the WWF Biodiversity Risk Filter. The analysis Management's review Sustainability statement Materiality assessment process ALK Annual report 2024 43 Decision-making and internal controls In the DMA, there were three key decision points: Key decision point Decision making Internal control procedures Identification of internal stakeholders The identification was carried out by ALK’s sustainability director • Check that all sustainability matters were covered by internal stakeholders. • Check that all sustainability matters had identified IROs throughout the stakeholder engagement process. If none were identified, a sanity check with key stakeholders was performed, to see that this was sensible in light of the nature of the business. Appropriateness of thresholds ALK’s sustainability director and senior management • Financial materiality threshold was set based on ERM thresholds. • Impact materiality threshold was set based on key human rights-related considera- tions and following the ESRS methodology. • Thresholds were revisited in 2024 at a workshop held by senior management to reflect on the fit of the complete DMA result to key stakeholder considerations. Scoring of IROs Scoring of IROs was conducted by internal stakeholders • Scoring included a description of rationality for each IRO. • Scoring was based on ESRS guidelines with a consistent method. • ERM information was utilised where relevant. The process to identify, assess and manage sustainability impacts and risk including the use of tools is separated from the overall risk management process. Some members of the Risk Committee are also members of the Sustainability Committee to ensure that sustainability risks are also reflected in the ERM risk overview where relevant. unless significant changes in the business model, value chain, or methodology are detected. Output from the materiality assessment The results of ALK’s 2024 DMA can be seen below. There were no changes in materiality at the topical level compared to the previous reporting year; however, some sub-topics were moved from double material to financial or impact materiality, while others became non-material after the 2024 DMA review. Future steps: integration, monitoring, and review The process was guided by ALK's sustainability-related due diligence, including internal policy reviews, the whistleblower channel, and ERM. The DMA assesses risks and opportunities in relation to sustainability matters from a sustainability perspec- tive and assesses the gross risk from these. ALK’s ERM process is separated from the DMA process and includes risk mitigation in the scoring. ALK will review the DMA on an annual basis, considering trends, business context, key supplier changes, and regulations. This shortened review will be conducted annually In total, 178 IROs were identified and evaluated during the DMA. Of those, 97 impacts were identified, of which 30 were deemed material. 81 risks and opportunities were identified, of which 8 were deemed material. The IROs were consolidated and mapped to 22 material sustainability matters. Once completed, validated and approved, all material disclosure requirements and datapoints were further assessed to determine the final scope of reporting disclosures. Management's review Sustainability statement ALK Annual report 2024 44 ESRS 2 Impact material Double material Material impacts, risks and opportunities E2 E3 E1 G1 Pollution Water & marine resources Climate change Business conduct E4 E5 S1 S4 ESRS 2-SBM3 Material impacts, risks and opportunities and their interaction with strategy and business model Biodiversity & ecosystems Circular economy Own workforce Cosumers & end-users S2 The material IROs identified during the DMA are described and presented below and alongside the topical standards: Workers in the value chain E1 - Climate change, on pages 49-55 E2 - Pollution, on pages 56-57 Non material Financially material E3 - Water and marine resources, on pages 58-60 E4 - Biodiversity and ecosystems, on pages 61-62 E5 - Resource use and circular economy, on pages 63-66 S1 - Own workforce, on pages 74-80 S3 Affected S2 - Workers in the value chain, on pages 81-82 S4 - Consumers and end-users, on pages 83-85 G1 - Business conduct, on pages 87-90. communities Environmental Social Governance Financial materiality Management's review Sustainability statement Material impacts, risk and opportunities ALK Annual report 2024 45 Location in the value chain Time horizon Location in the value chain Time horizon Material impacts, risks and opportunities IRO IRO E1 – Climate change E2 – Pollution Emissions from own operations ALK generates greenhouse gas (GHG) emissions Actual through its direct operations (scope 1) and purchased energy (scope 2). These emissions contribute to climate change. Usage of REACH substances in production ALK uses chemicals regulated by the Registra- tion, Evaluation, Authorisation, and Restriction of Chemicals (REACH) Regulation, including Substances of Concern with potential environ- mental and health impacts. ● ● ● ● Actual ● ● ● ● negative impact negative impact Use of refrigerants contributing to climate change ALK uses refrigerants to cool raw materials, pharmaceuticals and production areas. If released, these refrigerants are GHGs that contribute to climate change. Actual negative impact ● ● ● ● ● ● ● E3 – Water and marine resources Water consumption in production facilities The consumption of water in production facilities Actual can contribute to local water scarcity, impacting negative ● ● ● ● Value chain emissions availability and increasing water costs for surrounding communities. Reduced water avail- ability may also impact local ecosystems and agriculture, and increase wildfire risks. impact ALK's value chain generates GHG emissions from purchased goods and services, capital goods, upstream and downstream transporta- tion & distribution, and business travel. These emissions contribute to climate change. Actual negative impact ● ● Usage of water in operations in water- scarce regions Climate change and respiratory health1 Climate change threatens respiratory health by extending pollen seasons, increasing airborne allergens and promoting mould growth. This represents a market opportunity for ALK. ALK’s Madrid (Spain) production site operates in a high-water stress area. Climate change and periodic droughts could further constrain water resources, potentially affecting the local population. Potential negative impact ● ● ● ● Oppor- tunity ● ● 1 "Climate change and respiratory health" has been identified as an opportunity in both E1 Climate change and S4 Consumers and end-users. Management's review Sustainability statement Material impacts, risk and opportunities ALK Annual report 2024 46 Location in the value chain Time horizon Location in the value chain Time horizon Material impacts, risks and opportunities IRO IRO Operational waste partly disposed in land- fills E4 – Biodiversity and ecosystems Some of ALK’s operational waste goes to land- fills. The impact varies depending on local waste management infrastructure and regional regulations. Limited recycling facilities in some areas hinder material recovery. Actual ● ● ● negative impact Hornets and wasps eliminated for venom harvesting Wasp and hornet nests are removed to collect Actual ● ● ● ● venom for the active pharmaceutical ingredients negative in ALK’s medicinal products. Wasps and hornets impact are eliminated during the harvesting process. End of life of products In some countries, limited recycling infrastruc- ture for end-of-life of medical products hinders the recovery of reusable materials and recy- clable packaging. Actual negative impact ● ● ● ● E5 – Resource use and circular economy Use of non-recycled paper, single-use aluminium and single-use plastic The use of single-use plastic, aluminium bottles and non-recycled paper in production have environmental impacts during manufacturing and disposal. Actual negative impact ● ● ● ● Pharmaceutical standards on products leaving minimal leeway for circularity in product design The pharmaceutical industry is highly regu- lated, requiring high standards for quality and sterility, which results in plastic waste and limited possibilities for circularity. Actual negative impact ● ● ● ● Management's review Sustainability statement Material impacts, risk and opportunities ALK Annual report 2024 47 Location in the value chain Time horizon Location in the value chain Time horizon Material impacts, risks and opportunities IRO IRO S1 – Own workforce S2 – Workers in the value chain Decline in employee competencies due to inadequate skill upgrading The skills of ALK employees decline over time as business develops and new competences are required. Individual development plans linked to impact job content and performance goals are required to promote continuous learning and skill- building, enhancing the ability for employees to meet job expectations and maintaining employ- ability. Health- and safety-related incidents involving workers in the value chain Workers across the value chain can encounter health and safety incidents, especially workers exposed to hazardous substances, transporta- tion workers, and workers handling hazardous waste. Potential negative ● ● ● ● Potential negative impact ● ● ● ● ● Employee retention, attraction and development challenges ALK relies on the retention and attraction of skilled employees to stay competitive and achieve its business strategy. The health- care industry in general faces persistent high demand for skilled labour in key locations. Risk ● ● Injuries due to workplace accidents in farming and production Employees working in farming and production are at increased risk of workplace accidents. Workplace accidents can cause physical harm, affect mental well-being, and impact employee morale and productivity. Actual negative impact ● ● Management's review Sustainability statement Material impacts, risk and opportunities ALK Annual report 2024 48 Location in the value chain Time horizon Location in the value chain Time horizon Material impacts, risks and opportunities IRO IRO S4 – Consumers and end-users G1 – Business Conduct Allergy treatment Animal welfare ALK’s allergy treatments significantly improve patients' quality of life and personal well- being by addressing a wide range of allergies, including potentially life-threatening conditions like anaphylaxis and insect venom reactions. Actual positive impact ● ● ● ● ALK conducts animal testing to ensure its medi- cines are safe and effective, using animals only when alternative models are insufficient. Regular impact experiments involve allergen injections on mice in internal R&D facilities. The negative impacts include injections, captivity and euthanasia. Actual negative ● ● ● ● Barriers to access Allergy treatment must be prescribed by a healthcare professional, and is often not prior- itized by healthcare systems, creating barriers for patients. Treatments are typically affordable through public or private insurance, but high costs can limit access for uninsured or low-in- come individuals. Actual negative impact ● ● ● ● Potential bribery of healthcare professionals The pharmaceutical industry, including ALK, faces bribery and corruption risks, especially in interactions with healthcare professionals. The main risk is potential bribery to boost sales which could lead to significant legal, reputa- tional, and financial repercussions. Risk ● ● Patient safety Allergy treatments are effective in most cases but not all. If treatment is ineffective, limited alternatives leave individuals without potential benefits, directly impacting their well-being and safety. Actual negative impact ● ● ● ● ESRS 2-IRO2 Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement Thresholds used for the DMA process are described in ESRS 2-IRO1 on page 42. The content index of ESRS disclosure requirements and the list of datapoints that derive from other EU legislation, according to ESRS 2-IRO2-56, are incorporated by reference to the appendices "Content index of ESRS disclosure requirements", on pages 96-98, and "List of datapoints that derive from other EU legislation", on pages 99-105. Climate change and respiratory health1 Climate change threatens respiratory health by extending pollen seasons, increasing airborne allergens, and promoting mould growth. This represents a market opportunity for ALK. Oppor- tunity ● ● 1 "Climate change and respiratory health" has been identified as an opportunity in both E1 Climate change and S4 Consumers and end-users. Management's review Environment information ALK Annual report 2024 49 Environmental information E1 Climate change Strategy 49 E1 Climate change 56 E2 Pollution 58 E3 Water and marine resources 61 E4 Biodiversity and ecosystems 63 E5 Resource use and circular economy 67 EU Taxonomy E1-1 Transition plan for climate change mitigation In January 2024, the Science Based Targets initiative (SBTi) validated and approved ALK's absolute CO2 reduction targets. The targets align with the latest climate science to achieve the Paris Agreement goals, limiting global warming to 1.5°C. While changes to ALK's business model will not be necessary, specific actions will be implemented following different decarbonisation levers. Embedded in strategy The transition plan is embedded in ALK's strategy and funded through the annual business and financial planning process. It has been approved by ALK’s Investment Portfolio and Sustain- ability committees. The transition plan requires investments, which are aligned with ALK's financial planning. In particular, 71 Accounting policies – Environmental information the electrification of boilers demands CapEx investments, and is reported as a taxonomy-eligible activity. Decarbonisation levers ALK has not claimed alignment of its economic activities with delegated regulations on climate adaptation or mitigation under the Taxonomy Regulation ( see "EU taxonomy" on page 67). However, efforts will be made to align activities where possible. ALK is not excluded from EU Paris-Aligned Benchmarks. ALK's transition plan is focused on reducing carbon emissions from its own operations. This is achieved through the following levers: • Transitioning towards renewable energy, • Electrifying boilers and the company vehicle fleet, • Substituting refrigerant chemicals in coolers, • Implementing energy efficiency measures. ALK's commitment to reducing its GHG emissions is strength- ened by sustainability-related incentives in the remuneration schemes for the Executive Leadership Team. This incentivising of executives results in a more urgent drive for decarbonisa- tion-related processes. Further details on decarbonisation levers and climate change mitigation actions undertaken in 2024 are provided in E1-3 on page 51. ALK's short-term and long-term incentive schemes are presented in detail in the "Corporate governance" section of Corporate matters on page 30. ALK recognises the presence of certain locked-in emissions and has considered them during target setting and reduction action planning. These emissions do not jeopardise the attainment of the greenhouse gas (GHG) emission reduction targets. Management's review Environment information E1 Climate change ALK Annual report 2024 50 Location in the value chain Time horizon ESRS E1 Impact Impacts, risks and opportunities Value chain emissions ALK's value chain represents 93% of GHG emissions, mostly due to the manufacture and provision of purchased goods and E1 Climate change IRO services. These emissions stemming from ALK's direct business relationships contribute to climate change. This negative impact is located within ALK's upstream and downstream value chain in the short, medium and long term. ALK has set a science-based target to ensure that suppliers representing 80% of its scope 3 emissions have science-based targets in place by 2028. Emissions from own operations Actual negative impact Actual negative impact Actual negative impact Opportunity ● ● ● ● ● ● ● ● ● ● ● ● Use of refrigerants contributing to climate change Value chain emissions ● ● Climate change and respiratory health ● Opportunity Climate change and respiratory health E1-SBM3 Climate change directly threatens respiratory health by extending pollen seasons, increasing airborne allergens, promoting mould growth, and altering the distribution and abundance of allergenic plants. The increased length and severity of pollen seasons expand the potential market size for ALK, as more individuals suffer from prolonged and intensified allergy symptoms. Material impacts, risks and opportunities and their interaction with strategy and business model ALK has not undertaken a climate-related scenario analysis or a resilience analysis. The materiality assessment described in ESRS 2-IRO1 on pages 41-43 identified the following climate change impacts. No material climate-related physical risks or climate-related transition risks were identified during the mate- riality assessment. committed to a science-based target to reduce its GHG emis- sions by 42% by 2030. As part of its GHG emission reduction plan, ALK is taking steps to transition to renewable energy and to improve energy use. Impact Use of refrigerants contributing to climate change ALK uses refrigerants as cooling agents in the storage of raw materials and pharmaceuticals and for cooling production areas. While these refrigerants are not ozone-depleting, they are classified as greenhouse gases (GHGs) and contribute to climate change if released into the atmosphere. Their role in supporting operational processes highlights their importance while also presenting potential environmental risks. This repre- sents an actual negative impact that occurs in ALK's own opera- tions over the short, medium and long term, as a result of its own activities. This long-term potential opportunity for ALK is described further in S4-SBM3 on page 84. Impact Emissions from own operations ALK impacts the environment through the emission of GHG. These emissions result from ALK's direct operations (Scope 1) and purchased energy (Scope 2). In particular, ALK’s energy consumption is partially based on non-renewable sources, including natural gas. This negative impact is located within ALK's own operations and occurs over the short, medium and long term. ALK has Management's review Environment information E1 Climate change ALK Annual report 2024 51 ESRS E1 Impact, risk and opportunity management ALK is addressing its climate change impacts and climate-related opportunity through the following decarbonisation levers and actions: 1 2 3 4 E1-2 Policies related to climate change mitigation and adaptation Transitioning towards renewable energy Electrifying boilers and the company vehicle fleet Substituting refrigerant chemicals in coolers Implementing energy efficiency measures ALK has been purchasing third-party audited Renew- able Energy Certificates for electricity since 2019. These certificates cover 100% of ALK’s electricity consumption at production sites where direct renewable energy sourcing is not possible. ALK is also reducing CO2 emissions by converting production boilers from natural gas to electricity. The replacement of a boiler in Hørsholm (Denmark) site was imple- mented in 2022. In 2024, ALK also initiated the replacement of a gas boiler in France, with daily operations expected to commence by 2026. The last boiler replacement will be initiated by 2028, with full implementation planned for 2030. Starting in 2023, ALK has mapped all cooling systems and refrigerants, creating a timeline for substitution based on legal requirements, equipment lifecycle, and cost considerations. Any refrig- erant replacement will priori- tise options with a lower global warming potential. In 2023, ALK initiated energy- saving measures, including installing LED lighting and sensor-controlled lighting systems, to reduce overall energy consumption. While the identification of further potential initiatives continues, the immediate large-scale activities have already been implemented. ALK is in the process of addressing the most significant categories of GHG emissions, including all of its scope 1 categories, as well as purchased goods and services and business travel in scope 3. As an example, this translates into local policy updates on company fleet and business travel. As a result, ALK has not had the need for estab- lishing a formal global policy related to climate change mitigation and adaptation, energy efficiency or renewable energy deployment. Operating expenditure (OpEx) is allocated on an ongoing basis to purchase the certifi- cates. In 2024, this amounted to DKK 0.5 million ( see Income statement, on page 107 in the consolidated finan- cial statements). In 2024, ALK also continued the transition of the company fleet to electric vehicles, with an initial focus on the countries in Northern Europe where the infrastructure is well devel- oped. To minimise the environ- mental risks associated with refrigerant use, ALK has initiated a cross departmental programme to better manage cooling systems and refrig- erants. ALK is focusing on initiatives to improve moni- toring, reporting, preventive maintenance and substitution, while maintaining operational efficiency. E1-3 Actions and resources in relation to climate change policies The electrification of boilers requires CapEx investments, which are accounted for in ALK's annual budget processes and have been approved by administrative, management, and supervisory bodies. In 2024, ALK allo- cated DKK 4 million in CapEx to support the implementation of the decarbonisation project for the boilers in France ( see note 3.2 in the consolidated financial statements, on page 123). The ability to implement the action does not depend on specific preconditions. ALK has developed a roadmap out to 2030 to reduce its carbon emissions. While this plan is not linear, it has been developed through a mapping exercise and, overtime, takes account of the projected business growth of the company. ALK has prioritised investments in reducing the environmental impact of its own operations (Scope 1 and 2). The achieved GHG emission reductions are described in E1-6 on pages 53-54. Management's review Environment information E1 Climate change ALK Annual report 2024 52 ESRS E1 Metrics and targets CO2 reduction roadmap Scope 1 and 2 E1-4 Targets related to climate change mitigation and adaptation ALK has set two targets related to climate change mitigation: Increase Decrease • reduce its absolute CO2 emissions by 42% between 2022 and 2030 in its own operations (market-based Scope 1 and Scope 2) • have 80% of its emissions from suppliers with science-based targets by 2028 (Scope 3). 42% reduction Those targets were approved by the Science Based Targets initiative in January 2024, and are compatible with limiting global warming to 1.5°C. Electricity, fuel and company cars (scope 1 and 2) In 2022, ALK's scope 1 and 2 (market-based) accounted for 5,492 tCO2e, with scope 1 repre- senting 90%. The boundaries of this target exclude ALK's sales offices, which account for less than 5% of its total emissions. The rest of the assumptions and methodologies align with the GHG emissions reporting disclosed under E1-6 on page 54. 2022 CO2 emissions baseline Production growth Renewable energy Electrifying boilers and company fleet Substituting refrigerants Energy efficiency 2030 CO2 emissions target The different decarbonisation levers are presented under E1-3 on page 51. Management's review Environment information E1 Climate change ALK Annual report 2024 53 E1-6 Gross Scopes 1, 2, 3 and Total GHG emissions Science-based targets Unit 2024 20231 20221 Total scope 1+2 (market-based)1 Tonnes CO2eq Scope 1+2 (production sites) - 42% (validated SBTi target) Total scope 1+2 (location-based) Total scope 1+2 (market-based) Change in scope 1 & 2 from a 2022 baseline Tonnes CO2eq Tonnes CO2eq % 11,348 5,384 -2% 11,266 5,709 +4% 10,814 5,492 - Scope 3 SBTi Scope 3 emissions from suppliers with science-based targets % 37 33 N/A 1 The comparative figures for 2022 and 2023 have been updated to reflect the acquisition of ALK's production site in Plainville (USA) as well as collecting vehicles in Post Falls (USA). 2022 and 2023 figures are not covered by the Independent Auditor’s limited assurance report. 2022 2023 2024 2025 2026 2027 2028 2029 2030 Emissions from scope 1 and 2 were 2% lower than the science-based target baseline (2022: 5,492 tonnes CO2eq). Scope 2 market-based reflects the purchase of renewable energy certificates for all sites. Scope 3 emissions from suppliers with science-based targets1 % ALK’s ambition to reduce GHG emissions by 42% by 2030 remains unchanged. This reflects a slight decrease in direct energy consumption, mainly related to the reduc- tion of natural gas consumption, due to the replacement of a gas boiler to run on elec- tricity at Hørsholm (Denmark) production site. 80% (validated SBTi target) Over the coming years, investments in boilers which run on electricity rather than natural gas will make a major contribution to the CO2 reduction. SBTi Refrigerants were reduced due to an increased focus on systematic and preventive maintenance as well as closing of equipment where leaks have been identified. The share of suppliers with science-based targets increased to 37% (2023: 33) reflecting ALK’s continued efforts in engaging with its suppliers to implement CO2 emission targets compatible with limiting global warming to 1.5°C. Emissions from company fleet were reduced compared to 2023. This reflects ALK’s tran- sition towards electric vehicles, which will be fully implemented in the coming years. 2022 2023 2024 2025 2026 2027 2028 2029 2030 Management's review Environment information E1 Climate change ALK Annual report 2024 54 Scopes Unit 2024 20231 20221 Scopes Unit 2024 20231 20221 Scope 1 Total emissions (location-based) Total emissions (market-based) Tonnes CO2eq Tonnes CO2eq 86,151 80,187 75,333 69,776 81,289 75,967 Direct energy consumption Company fleet Refrigerants Tonnes CO2eq Tonnes CO2eq Tonnes CO2eq Tonnes CO2eq 3,325 1,383 217 3,207 1,454 501 3,368 1,355 235 GHG intensity (scope 1 and 2 market-based) Tonnes CO2eq/ DKKm 1.0 15.6 14.5 1.2 15.6 14.5 1.2 18.0 16.8 GHG intensity (total emissions, location-based) Tonnes CO2eq/ DKKm Total scope 1 4,925 5,162 4,958 GHG intensity (total emissions, market-based) Tonnes CO2eq/ DKKm Scope 2 Location-based Production sites Sales offices Tonnes CO2eq Tonnes CO2eq Tonnes CO2eq 6,423 297 6,10 4 N/A 5,856 N/A Net revenue DKKm % 5,537 - 4,824 N/A 4,511 N/A N/A N/A Bundled energy attribute claims Unbundled energy attribute claims GHG scope 3 calculated using primary data Total scope 2 - location-based 6,720 6,104 5,856 % 88% 15% N/A % N/A Market-based Production sites Tonnes CO2eq Tonnes CO2eq Tonnes CO2eq 459 297 756 547 N/A 547 534 N/A 534 1 The comparative figures for 2022 and 2023 have been updated to reflect the acquisition of ALK's production site in Plainville (USA) as well as collecting vehicles in Post Falls (USA). 2022 and 2023 figures are not covered by the Independent Auditor’s limited assurance report. Sales offices Total scope 2 - market-based The increase in total scope 3 to 74,506 tonnes (2023: 64,067) is primarily related to the increase of purchased goods and services as a result of the increased turnover. Business travel decreased to 2,626 tonnes (2023:4,615) reflecting the focus on reduced travelling across all functions implemented end of 2023. Scope 3 Cat. 1. Purchased goods & services Cat. 2. Capital goods Tonnes CO2eq Tonnes CO2eq Tonnes CO2eq 53,825 3,307 2,985 5,614 89 41,175 3,403 2,364 5,471 773 49,096 3,974 2,483 4,748 105 Cat. 3. Fuel & energy related activities Cat. 4. Upstream transportation & distribution Tonnes CO2eq GHG intensity (scope 1 and 2 market-based) Scope 1 Direct energy consumption Cat. 5. Waste generated in operations Cat. 6. Business travel Tonnes CO2eq Tonnes CO2eq Tonnes CO2eq Tonnes CO2eq/DKKm 2,626 5,696 4,615 6,153 3,995 5,724 1 . Company fleet Refrigerants Cat. 7. Employee commuting 1.2 1.2 Cat. 9. Downstream transportation & distribution 1.0 4% Tonnes CO2eq 336 28 74 39 313 37 28% Cat. 12. End of life treatment of sold products Tonnes CO2eq Total scope 3 Tonnes CO2eq 74,506 64,067 70,475 68% 0 . 20221 20231 2024 Management's review Environment information E1 Climate change ALK Annual report 2024 55 E1-5 Energy consumption and mix Unit 2024 20231 Energy consumption from fossil sources Fuel consumption from coal and coal products Fuel consumption from crude oil and petroleum products Fuel consumption from natural gas MWh MWh MWh MWh - 2,420 14,524 - - 2,717 14,232 N/A Fuel consumption from other fuel sources Consumption of purchased or acquired electricity, heat, steam, or cooling from fossil sources MWh MWh 10,148 5,241 27,092 22,190 Energy consumption from nuclear sources Energy consumption from nuclear sources MWh MWh 4,505 4,658 4,505 4,658 Energy consumption from renewable sources Fuel consumption for renewable sources MWh - - Consumption of purchased or acquired electricity, heat, steam and cooling from renewable sources MWh MWh 19,810 23,702 19,810 23,702 Total energy consumption MWh 51,407 50,550 Share of renewable sources in total energy consumption % 39% 9.3 47% 10.5 Energy intensity associated with activities in high climate impact sectors MWh/DKKm 1 The comparative figures for 2023 have been updated to reflect the acquisition of ALK's production site in Plainville (USA) as well as collecting vehicles in Post Falls (USA). 2023 figures are not covered by the Independent Auditor’s limited assurance report. The share of renewable sources in total energy consumption decreased due to more accurate documentation from energy providers. Since ALK's activities belong to a high climate impact sector, energy intensity is calculated on the total revenue. The decrease in intensity reflects the more efficient use of energy at the production sites. Management's review Environment information ALK Annual report 2024 56 E2 Pollution ESRS E2 Location in Time the value chain horizon Impacts, risks and opportunities E2 Pollution IRO Usage of REACH substances in production Actual negative impact ● ● ● ● ESRS 2-SBM3 Material impacts, risks and opportunities and their interaction with strategy and business model requiring REACH-regulated chemicals reflect the ongoing chal- lenge of balancing operational needs with regulatory compli- ance and environmental considerations. ALK has not yet formal- ised policies or targets on Substances of Concern or Substances of Very High Concern. However, the company ensures compli- ance with local regulations and REACH requirements for chem- ical use and handling in production. Impact Usage of REACH substances in production ALK uses chemicals that fall within the scope of the Registration, Evaluation, Authorisation, and Restriction of Chemicals (REACH) Regulation. Substances of Concern (SoCs) are regulated on the basis of their potential environmental and health impacts. Some of these chemicals may also appear on restricted or phased-out lists, such as the Candidate List of Substances of Very High Concern (SVHCs), requiring careful management to ensure compliance with legal requirements. ALK recognises that the continued usage of such chemicals contributes to their commercialisation, which can result in broader environmental consequences if not properly controlled. Pollution of air, water, and soil is considered immaterial to ALK due to the very low levels of pollutants in its operations, with minimal impact on the environment or human health. The impacts and risks are deemed immaterial as they do not meet the threshold, and no risks or opportunities were identified for soil. The use of REACH substances has a negative actual impact on the environment, which arises in ALK's own operations on the short, medium and long term. The production processes Management's review Environment information E2 Pollution ALK Annual report 2024 57 ESRS E2 ESRS E2 Impact, risk and opportunity management Metrics and targets E2-1 E2-2 E2-3 Policies related to pollution Actions and resources related to pollution Targets related to pollution ALK has passed all the latest Local Envi- ronmental Authorities’ requirements and inspections at all of its sites. However, since 2024 is the first year of global consolidated reporting of substances of concern, ALK has not set global targets for preventing and controlling air pollutants, emissions to water, soil pollution, substances of concern and substances of very high concern, beyond what is determined by local regu- lations. of balancing operational needs with environmental and regulatory require- ments. As phase-outs and restrictions are implemented, ALK remains flexible to ensure compliance and mitigate risks. The company is evaluating its approach and considering future targets to align with evolving sustainability priorities and regulatory expectations. ALK will focus on reducing substances of very high concern by implementing improvements in the ALK ensures compliance with local regulations and REACH requirements for chemical use and handling in production, and relevant actions and resources are evaluated and allocated at the operational level as appropriate. As a result, ALK has not identified the need for a centralised global policy related to pollution that specifically addresses actions within the mitigation hierarchy related to pollution, such as pollution avoidance, reduction or restora- tion efforts where there has been pollution of air, water and soil. ALK is committed to maintaining compliance with the REACH regulation and local legisla- tion and to responsibly manage the chemicals it uses. Initiatives are directed at ensuring safe handling, storage, and use of regulated chemicals on all production sites, with ongoing updates to data and processes as required by evolving regulations. As part of its ongoing initiatives, ALK has worked in 2024 on mapping and estab- lishing an overview of purchased quantities of Substances of Concern (SoCs) and their subset, Substances of Very High Concern (SVHCs), in its own operations ( see E2-5 on page 57). This initiative aims to improve visibility and understanding of the volume and use of these chemicals within the organisation, supporting compliance and informed analysis and decision-making. Since ALK does not yet have a global policy, it has not taken specific actions in 2024 to achieve pollution-related policy objectives. processes at one of ALK’s material produc- tion sites. Compliance with REACH-regulated chem- icals standards highlights the challenge The use of REACH-regulated chemicals highlights the shared responsibility among producers and users to minimise their poten- tial impact on the environment and look at possible substitution. ALK acknowledges that the continued use of such chemicals contrib- utes to their commercialisation, which can result in broader environmental consequences if not carefully managed. E2-5 Substances of concern and substances of very high concern Substances of concern and substances of very high concern Unit 2024 Substances of concern procured Tonnes Tonnes 5.0 0.9 Substances of very high concern procured Management's review Environment information ALK Annual report 2024 58 E3 Water and marine resources Location in the value chain Time horizon ESRS E3 Impacts, risks and opportunities E3 Water and marine resources IRO Water consumption in production facilities Actual negative impact ● ● ● ● ● ● ● Usage of water in operations in water-scarce regions Potential negative impact ● ESRS 2-SBM3 Material impacts, risks and opportunities and their interaction with strategy and business model Impact Usage of water in operations in water-scarce regions ALK’s production site in Madrid (Spain) operates in an area of high-water stress. In this water-scarce region, the availability of water resources is increasingly constrained due to climate change and periodic droughts. As a pharmaceutical company ALK is prioritised in terms of water supply; however, the use of water in operations in such regions has a potential negative impact on the local population, who might face constraints in the use of water. This potential impact occurs over the short, medium and long term. ALK’s water consumption is monitored to ensure compliance with applicable regulations and minimise negative impacts on the local water basin. Impact Water consumption in production facilities ALK’s production facilities rely on the consumption of water, which is an important natural resource in many areas. Water usage can contribute to local water scarcity, poten- tially impacting availability and increasing water costs for surrounding communities. Reduced water availability may also affect the ability of the soil to support vegetation, impacting local ecosystems and agricultural activities. Prolonged dryness may also increase the potential for wildfires in certain areas. This represents an actual negative impact on people and the environment, occurring in the short, medium and long term. To mitigate it, ALK monitors water use in its production facilities to ensure compliance with local legal regulation. Management's review Environment information E3 Water and marine resources ALK Annual report 2024 59 ESRS E3 Impact, risk and opportunity management E3-1 Policies related to water and marine resources ALK monitors water use in its production facil- ities to ensure compliance with local waste- water discharge regulations and to minimise the impact on local water resources. has been on mapping ALK's impacts, risks In 2024, ALK focused on mapping consumption from the installed meters to evaluate opportu- nities for efficient water use and sustainable management. These efforts aim to reduce the environmental impact of water consumption while supporting operational needs. As a result, no actions were taken in 2024 in relation to general water use, and specifically to ALK's production site in Madrid (Spain). In addition, at the time of reporting, no action plan for 2025 has been developed yet. and opportunities linked to water and marine resources. In the coming years, the company will consider the potential adoption of such a policy. E3-2 ALK does not have a formal global policy on water management, treatment, or pollution beyond local regulations. There are currently no policies in place to guide product and service design in addressing water-related challenges, nor are there commitments to decrease material water consumption in regions facing water risks. Addressing the water-related challenges could involve adopting advanced technologies, recycling wastewater, or optimising processes to mini- mise water use, all in line with the local legal authorities and the production of pharma products. Actions and resources related to water and marine resources ALK aligns its practices with regulatory requirements and environmental considera- tions, seeking opportunities for efficient water use and sustainable management. Water management is an integral part of ALK's envi- ronmental and health and safety management tasks. The demand for water as a part of ALK's production processes underscores the need to balance operational requirements with envi- ronmental sustainability. As sustainable oceans and seas is not deemed material, no related policy has been adopted. To ensure operational efficiency and minimise consumption, ALK has installed water meters to monitor and control water usage. This is particularly important in areas with existing water-related challenges. ALK has not adopted a policy covering its Madrid (Spain) production site, located in an area of high-water stress. In 2024, the focus Management's review Environment information E3 Water and marine resources ALK Annual report 2024 60 ESRS E3 Metrics and targets E3-3 Targets related to water E3-4 and marine resources meters at all production sites to monitor water usage, both in production areas and for irri- gation. This enables ALK to assess efficiency and consumption across different processes, ensuring effective future water use. Water consumption systems, may not always be feasible or aligned with the terms of the leasing agree- ments. ALK has not set global targets for reducing water consumption or managing marine resources and water risk areas beyond local legal requirements. In 2024, ALK installed In 2024, ALK's overall water consumption was 405,306 m3. This year, ALK included the irri- gation for all leased land for ALK source mate- rials, and installed meters to measure exact consumption. The domestic water use was 92,533 m3 (2023: 101,413). ALK does not currently have water storage facilities. The production processes at ALK’s production sites generally rely on a direct and consistent supply of water from municipal or other external sources, reducing the imme- diate need for on-site water storage. Since water is not extensively reused or recycled, the requirement for storage infrastructure is limited. E3-4 Water consumption The consumption of water at Madrid (Spain) was 11,495 m3 (2023: 10,646). Madrid (Spain) production site is located in the Tagus river basin, which has a low water quality and quantity. Water Unit 2024 20231 Water consumption Irrigation m3 m3 m3 312,773 92,533 N/A 101,413 N/A 2 ALK reused 18,624 m3 of water for irrigation purposes on the land where crops are culti- vated to produce allergenic source materials. Water used in ALK’s production processes must meet strict regulatory standards for quality and sterility, particularly in pharma- ceutical manufacturing. These requirements make water reuse or recycling complex and may require advanced treatment systems to ensure compliance, which are not currently in place. As some allergenic source materials come from leased land, implementing long- term infrastructure, such as water recycling The focus on investments in initiatives with immediate and significant environmental impacts has over the past year taken prece- dence over the development of water storage systems. In regions where water availability is generally stable or sourced directly from external providers, water storage may not be deemed essential. For example, in areas where water supply networks are reliable, on-site storage systems may not add signifi- cantly to operational efficiency. Domestic water use 405,306 Water storage Water stored m3 m3 - - - - Changes in storage Water consumption in areas at material water risk Water reused and recycled m3 m3 m3/DKKm 11,495 18,624 73.2 10,646 N/A Water intensity N/A 1 2023 figures are not covered by the Independent Auditor’s limited assurance report. In 2023, ALK reported a total water consumption of 128,087 m3, excluding irrigation from leased land, for which data was not available and could not be retrieved. 2 Management's review Environment information ALK Annual report 2024 61 E4 Biodiversity and ecosystems Location in the value chain Time horizon ESRS E4 Strategy Impacts, risks and opportunities E4-1 E4 Biodiversity and ecosystems IRO Transition plan and consideration of biodiversity and ecosystems in strategy and business model As part of the materiality assessment process, a review of ALK's production sites has been done, using the WWF Risk Filter to identify and evaluate potential and actual biodiversity and ecosystem impacts, risks and opportunities Hornets and wasps eliminated for venom harvesting Actual negative impact ● ● ● ● The majority of ALK's allergenic source mate- rials covering pollens, mites and molds are cultivated and collected. Source material from insect venom is collected by electro-stimu- lation (bees) and by a collection of wasp and hornet nets. The allergen source materials are purified before further processing to active pharmaceutical ingredients (APIs) used in ALK's medicinal products. Systemic sustain- able agricultural practices are implemented to minimise ALK's impact on nature, including: ( for more details, see E4-IRO1 on page 42). Post Falls (USA) met the materiality threshold and was thus deemed material in relation to biodiversity impacts. ESRS 2-SBM3 Material impacts, risks and hornet nets is part of pest control programs in areas in densely populated areas. opportunities and their interaction with strategy and business model The materiality assessment process outlined in ESRS 2 IRO-1, on pages 41-43, did not identify any material negative impacts with regard to land degradation, desertification or soil sealing. However, the following material impact on the state of species was identified: ALK has not yet conducted a comprehensive resilience analysis of its strategy and business model in relation to biodiversity and ecosys- tems. As a result, a transition plan related to biodiversity and ecosystems has not been created yet. The analysis of ALK’s material sites in terms of dependencies and ecolog- ical status will be performed over the coming years. This site is not located close to a biodiversity- sensitive area and thereby not negatively affecting such areas. Moreover, wasps and hornets are not threatened species. • Diversifying species by planting a variety of crop types and thereby providing a diverse range of pollination times for pollinator species like bees. • Minimising pesticide and fertiliser inputs by leveraging Integrated Pest Management Principles. • Protective native flora and fauna by estab- lishing large buffer zones. • Minimum soil disturbance by implementing lime application. The venom harvesting process represents an actual negative impact on the local popula- tion size of wasps and hornets. This impact is directly due to ALK's activities and occurs in ALK's own operation in the short, medium and long term. Impact Hornets and wasps eliminated for venom harvesting ALK collaborates with local communities near Post Falls (USA) production site to remove wasp and hornet nests and collect venom for the API in its medicinal products. The wasps and hornets are eliminated as part of the harvesting process. Removing wasp and The list and description of material sites is further developed in E4-1 on page 61. Management's review Environment information E4 Biodiversity and ecosystems ALK Annual report 2024 62 ESRS E4 ESRS E4 Impact, risk and Metrics and targets opportunity management E4-2 E4-3 E4-4 Policies related to biodiversity and ecosystems Actions and resources related to biodiversity and ecosystems Targets related to biodiversity and ecosystems ALK is to conduct a deeper analysis of its biodiversity impacts in the coming years with inspiration from the Task Force on Nature-related Disclosure framework. As this analysis is still to be performed, ALK has not yet set targets related to biodiversity and ecosystems. In particular, no ecological thresholds and allocations of impacts were applied, and no biodiversity offsets have been used. The Kunming-Montreal Global Biodiversity Framework, the EU Biodiversity Strategy for 2030 and other biodiversity and ecosystem-related national policies and legis- lation have not been used. ALK adheres to national legislation and regu- latory demands, as described in procedures part of ALK's Quality Management System covering the part of the supply chain ALK controls. ALK has performed several initiatives over the years to support biodiversity at its material site in Post Falls (USA). As ALK has not yet performed a biodiversity-related resil- ience analysis, ALK does not currently have a formal policy relating to biodiversity and ecosystems. In 2024, the focus has been on mapping ALK's impacts, risks and opportunities relating to biodiversity and ecosystems. No new actions have been taken in 2024 on this matter beyond what is already implemented as part of daily management. In particular, no biodiversity offsets have been used, and local and indige- nous knowledge and nature-based solutions have not been considered. Specifically, the company has not adopted a policy addressing its material impacts or dependencies, or their social consequences. There are also no policies on responsible production, sourcing, or consumption from ecosystems, nor on the traceability of prod- ucts, components, and raw materials. ALK does not have a biodiversity and ecosystem protection policy covering operational sites owned, leased, or managed in or near a biodi- versity sensitive area. ALK has no policy on sustainable land and agriculture, sustainable oceans and seas or deforestation. Management's review Environment information ALK Annual report 2024 63 E5 Resource use and circular economy Location in the value chain Time horizon ESRS E5 Impact Impacts, risks and opportunities Pharmaceutical standards on products leaving minimal leeway for circularity in product design The pharmaceutical industry is highly regulated, setting high standards on the quality and sterility of products. The high E5 Resource use and circular economy IRO standards, which ALK must comply with, result in plastic waste and limited options for using circular products. This leads to environmental impacts from the upstream production of the materials and increased waste from both production and end- users. Use of non-recycled paper, single-use aluminium and single-use plastic Actual negative impact ● ● ● ● ● ● ● ● Pharmaceutical standards on products leaving minimal leeway for circularity in product design Actual negative impact Operational waste partly disposed in landfills End of life of products Actual negative impact Actual negative impact ● ● ● ● ● This results in a negative actual impact on the environment, which spans the short, medium and long term in its own oper- ations. ALK is exploring opportunities to transition to more sustainable packaging, e.g. by introducing recycled paper and cardboard. ● ● ESRS 2-SBM3 Material impacts, risks and opportunities and their interaction with strategy and business model gases, furthering climate change, while plastic waste, often Impact non-biodegradable, poses long-term environmental risks. Once disposed of, plastics accumulate in landfills and, in some cases, enter natural ecosystems, where they can harm wildlife and pollute water bodies. However, if disposed correctly, plastic is also to be recognised as an important energy source. Aluminium is an energy-intensive resource. The environmental effects of paper production include deforestation, use of large amounts of energy and water, and air pollution and waste problems. Operational waste partly disposed in landfills A portion of ALK’s operational waste is disposed of in land- fills, leading to potential environmental effects such as odour, noise, smoke, and water contamination. This impact varies with local waste management infrastructure, with greater reliance on landfills in the USA compared to Europe. Limited recycling infrastructure in some areas hampers the recovery of reusable materials, and recycling rates depend heavily on local state regulations. Impact Use of non-recycled paper, single-use aluminium and single-use plastic ALK's operations require the use of single-use plastics in production, as well as single-use aluminium bottles for trans- porting active pharmaceutical ingredients. ALK also uses non-recycled paper and plastics, which are vital for maintaining sterility and efficiency in operations. This actual negative impact occurs in ALK's own operations on the short, medium and long term. ALK recognises its short- term operational reliance on these materials and is working to evaluate opportunities for more sustainable practices, such as improved recycling efforts. Those materials have negative environmental impacts during manufacturing and/or end of life. In particular, manufacturing of single-use plastics consumes fossil fuels and emits greenhouse This actual negative impact occurs within ALK’s own opera- tions over the short and medium term. Efforts are underway to Management's review Environment information E5 Resource use and circular economy ALK Annual report 2024 64 ESRS E5 enhance waste tracking and explore recycling and reuse oppor- tunities to reduce landfill dependency. Impact, risk and opportunity management Impact End of life of products The management of ALK products at the end of their lifecycle is shaped by national and regional differences in waste handling practices. Limited recycling infrastructure for medicinal prod- ucts means that, in some regions, some products are ultimately disposed of in landfill systems. This hinders the recovery of potentially reusable materials, including recyclable packaging, and creates uncertainty in disposal outcomes. E5-1 Policies related to resource use and circular economy Waste is managed at site level, meeting local legal require- ments. As a result, ALK has not previously had the need for establishing a formal global policy on resource use and circular economy. In 2025, ALK plans to introduce a global waste policy to address landfill waste. This creates an actual negative impact in ALK's downstream value chain as a result of ALK's own activities. It occurs in the short, medium and long term. Concerning circular economy, ALK has not adopted global policies specifically focused on transitioning away from the extraction of virgin resources. Moreover, ALK does not have global policies on sustainable sourcing and use of renewable resources, or on addressing impacts, risks and opportunities in ALK's upstream and downstream operations. Although some ALK products include recyclable packaging or components, the recycling rates for these materials depend heavily on local country and state regulations. ALK is continuing to evaluate opportunities to better understand and improve the handling of waste streams in the product lifecycle. E5-2 Actions and resources related to resource use and circular economy Because ALK has not developed policies yet, no actions were undertaken in 2024 to achieve resource use and circular economy-related policy objectives. However, relevant actions and resources are evaluated and allocated at the operational level as appropriate to meet local regulatory requirements. As part of its ongoing initiatives, ALK's focus in 2024 has been on improving its mapping of waste types and fractions in alignment with the ESRS. Moreover, ALK has launched initiatives which focus on developing plans to reduce and eliminate the amount of waste that is not part of a reuse or recycling programme. Management's review Environment information E5 Resource use and circular economy ALK Annual report 2024 65 ESRS E5 Metrics and targets At ALK, the waste composition can be separated into two primary waste streams: E5-3 Waste generated diverted from disposal Preparation for reuse Recycling Targets related to resource use and circular economy Total waste generated amounted to 2,882 tonnes (2023: 1,939). The waste generated increased by 49% due to improved waste reporting and the fact that organic materials are now included in the waste reporting. 86% (2,478 tonnes) of the total waste is non- hazardous. 1 The focus in 2024 has been on aligning the waste reporting with the ESRS to establish a baseline. As a result, ALK has not currently set targets related to any layer of the waste hierarchy for resource inflows and outflows, in particular on waste, products and materials, whether mandatory or voluntary. However, ALK is evaluating its approach and considering implementing relevant targets in the future to align with evolving sustainability priorities and regulatory expectations. Pharmaceutical waste streams, which include • chemical waste and medical waste (residues from APIs, solvents, and reagents used in production processes) Waste generated directed to disposal Incineration Landfill 81% of the waste was diverted from disposal (reused or recycled). Within this diverted waste, 40% (929 tonnes) was directed towards recycling initiatives and 60% (1,408 tonnes) was prepared for reuse, aligning with the Waste Framework Directive (Directive 2008/98/EC). • product-related material (plastics, metals, glass, and transportation boxes). 5% 14% 32% 49% E5-4 2 Resource inflows ALK does not currently gather global data on its material resource inflows but plans to map this out during 2025 for future reporting. The waste directed to disposal was carefully managed based on waste treatment types. Out of the 545 tonnes, 74% (403 tonnes) was incinerated and 26% (142 tonnes) was sent to landfill. Agricultural waste streams, which come from ALK's source materials used in the allergen production, and include • mite media (residual materials from the cultivation and extraction of allergenic source materials) E5-5 Resource outflows All of ALK's waste is directed towards recy- cling, reuse, incineration with energy recovery and landfill. ALK does not have any waste managed as ‘other disposal operations’. ALK does not currently gather global data on the rate of recycable content but plans to map this out during 2025 for future reporting. • organic materials (plant-based or biological substances such as hay and wood trimmings). Management's review Environment information E5 Resource use and circular economy ALK Annual report 2024 66 E5-5 Resource outflows Waste generated diverted from disposal Unit 2024 20231 Waste generated directed to disposal Unit 2024 20231 Preparation for reuse Hazardous Incineration Hazardous Tonnes Tonnes Tonnes 24 1,384 1,408 N/A N/A N/A Tonnes Tonnes Tonnes 158 245 403 N/A N/A 270 Non-hazardous Non-hazardous Recycling Landfill Hazardous Tonnes Tonnes Tonnes 221 708 929 N/A N/A N/A Hazardous Non-hazardous Tonnes Tonnes Tonnes 1 141 142 N/A N/A 218 Non-hazardous Other recovery operations Hazardous Other disposal operations Hazardous Tonnes Tonnes Tonnes - - - N/A N/A N/A Tonnes Tonnes Tonnes - - - N/A N/A N/A Non-hazardous Non-hazardous Total hazardous Tonnes Tonnes Tonnes 245 2,092 2,337 N/A N/A Total hazardous Tonnes Tonnes Tonnes 159 386 545 N/A N/A N/A Total non-hazardous Total non-hazardous Total waste generated diverted from disposal 1,451 Total waste generated directed to disposal 1 2023 figures are not covered by the Independent Auditor’s limited assurance report, and are not comparable due to change in methods and data quality. Total waste Unit 2024 20231 Waste generated Hazardous and radioactive Non-hazardous Tonnes Tonnes Tonnes 404 N/A N/A 2,478 2,882 1,939 Non-recycled waste Non-recycled waste Recycled waste Tonnes % 544 19% N/A N/A N/A N/A Tonnes % 2,337 81% Recycled waste Management's review Environment information ALK Annual report 2024 67 EU Taxonomy Under Article 8(1) of the Taxonomy regulation (EU) 2020/852 and further detailed in Annex I of the Disclosure Delegated Act (EU) 2021/2178, ALK is obligated to report on the sustainability profile of its Turnover, Capital Expenditure (CapEx), and Operating Expenditure (OpEx). This process involves evaluating ALK's economic activities against those enumerated in the delegated legislation of the EU Taxonomy (i.e. eligibility assessment), identifying ALK's eligible Turnover, CapEx, and OpEx, and finally assessing compliance with the Substantial Contribution Criteria (i.e. alignment assessment).The findings from both the eligibility and alignment assess- ments are encapsulated in key performance indi- cators (KPIs) for Turnover, OpEx, and CapEx. Turnover OpEx ALK has identified the following eligible turnover activities: ALK has identified the following eligible OpEx activities: • PPC 1.2, manufacture of medicinal products: OpEx relate to the manufacturing of allergy immunotherapy treatments and adrenaline pens (52.7% of OpEx). • CCM 6.5, transport by motorbikes, passenger cars and light commercial vehicles: Leased vehicles (5.2% of OpEx). • PPC 1.2, manufacture of medicinal products: A large portion of ALK's turnover stems from the production of allergy immunotherapy treatments as well as adrenaline pens (97.9% of turnover). • PPC 1.1, manufacture of active pharmaceutical ingredients (API) or active substances: A minor portion of ALK’s turnover is related to manufac- ture of allergen extracts for use in the diagnosis of specific allergies, for instance in skin prick tests (0.1% of turnover). Annex XII of the Consolidated Complementary Delegated Act All amounts in the tables below are presented in mEUR CapEx Turnover CapEX OpEx Template 1 Nuclear and fossil gas related activities ALK has identified the following eligible CapEx activities: Row For a full overview of our taxonomy-eligible activites, see the tables on pages 68-70. • PPC 1.2, manufacture of medicinal products: Capital expenditures related to the manufac- turing of allergy immunotherapy treatments and adrenaline pens (12.8% of CapEx). • CCM 7.5, Installation, maintenance and repair of instruments and devices for measuring, regula- tion and controlling energy performance of build- ings: In 2024, ALK continued to install metering equipment in Denmark to monitor water and elec- tricity consumption (0.1% of CapEx). • CCM 7.6, Installation, maintenance and repair of renewable energy technologies: Related to the installation of an electrified boiler in France replacing a boiler running on natural gas (0.3% of CapEx). • CCM 7.7, Acquisition and ownership of buildings: Projects related to investments and mainte- nance of ALK’s buildings (5.5% of CapEx). Nuclear energy related activities 1. 2. The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. NO NO Eligibility and alignment In 2024, ALK has identified 98.0% turnover (2023: 97.8%), 18.7% CapEx (2023: 70.5%), and 57.9% OpEx (2023: 47.4%) eligibility. Key changes from 2023 results from error identification in last year reporting for CapEx and OpEx KPIs. The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. 3. The undertaking carries out, funds or has exposures to safe operation of existing nuclear installa- tions that produce electricity or process heat, including for the purposes of district heating or indus- trial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. NO ALK has not claimed EU taxonomy alignment for any eligible activities as it cannot be documented. A climate risk assessment is planned for 2025. Fossil gas related activities 4. 5. 6. The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. NO NO The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels. The undertaking carries out, funds or has exposures to construction, refurbishment and operation of NO heat generation facilities that produce heat/cool using fossil gaseous fuels. Management's review Environment information EU Taxonomy ALK Annual report 2024 68 Taxonomy turnover Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2024 DNSH criteria ('Does Not Significantly Harm') Financial year 2024 2024 Substantial Contribution Criteria Proportion of Taxonomy Propor- tion of Climate Change Mitiga- tion Climate Change Adapta- tion Climate Change aligned Climate Change (A.1.) or eligible Category Category transitional activity (20) turnover, Circular Bio- Adapta- Circular Bio- Minimum (A.2.) turnover, year 2023 (18) enabling activity (19) Economic activities (1) Code (2) Turnover year N Water (7) Pollution (8) Economy diversity Mitigation tion Water (13) Pollution (14) Economy diversity Safeguards (3) (4) (5) (6) (9) (10) (11) (12) (15) (16) (17) DKKm % Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. Taxonomy-eligible activities A.1. Environmentally sustainable activities (Taxonomy-aligned) Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% N N N N N N N N N N N N N N N N N N N N N 0.0% 0.0% 0.0% Of which Enabling 0 0 E Of which Transitional T A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL;N/EL N/EL EL;N/EL N/EL EL;N/EL N/EL EL;N/EL EL EL;N/EL N/EL EL;N/EL N/EL Manufacture of active pharmaceutical ingredients (API) or active substance Manufacturing of Medicinal products PPC 1.1 PPC 1.2 7 0.1% 0.4% 5,418 97.9 % N/EL N/EL N/EL EL N/EL N/EL 97.4% Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 5,425 5,425 98.0% 98.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 98.0% 98.0% 0.0% 0.0% 0.0% 0.0% 97.8% 97.8% A. Turnover of Taxonomy eligible activities (A1 + A2) B. Taxonomy-non-eligible activities Turnover of Taxonomy-non-eligible activities Total 112 2.0% 5,537 100.0% Management's review Environment information EU Taxonomy ALK Annual report 2024 69 Taxonomy CapEx Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2024 DNSH criteria ('Does Not Significantly Harm') Financial year 2024 2024 Substantial Contribution Criteria Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) CapEx, year 2023 (18) Climate Proportion Change of CapEx, Mitiga- Climate Change Adapta- tion Climate Change Climate Biodiver- Change Circular Adapta- Circular Bio- Minimum Category Category transi- Economic activities (1) Code (2) CapEx (3) year N (4) tion (5) Water (7) Pollution (8) Economy sity Mitigation tion Water (13) Pollution (14) Economy diversity Safeguards enabling activity tional activity (6) (9) (10) (11) (12) (15) (16) (17) (19) (20) DKKm % Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. Taxonomy-eligible activities A.1. Environmentally sustainable activities (Taxonomy-aligned) CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% N N N N N N N N N N N N N N N N N N N N N 0.0% 0.0% 0.0% Of which Enabling 0 0 0.0% 0.0% E Of which Transitional T A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL;N/EL N/EL EL EL;N/EL N/EL EL;N/EL N/EL EL;N/EL EL EL;N/EL N/EL EL;N/EL N/EL Manufacturing of Medicinal products PPC 1.2 167 0 12.8% 0.0% 69.0% 0.7% Installation, maintenance and repair of energy efficiency equipment (CapEx C) CC M 7. 3 N/EL N/EL N/EL N/EL N/EL Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings CC M 7. 5 CC M 7.6 CC M 7.7 1 4 0.1% 0.3% 5.5% EL EL EL N/EL N/EL N/EL N/EL N/EL N/EL N/EL N/EL N/EL N/EL N/EL N/EL N/EL N/EL N/EL 0.8% 0.0% 0.0% Installation, maintenance and repair of renewable energy technologies Acquisition and ownership of buildings 71 CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 243 243 18.7% 18.7% 5.9% 5.9% 0.0% 0.0% 0.0% 0.0% 12.8% 12.8% 0.0% 0.0% 0.0% 0.0% 70.5% 70.5% A. CapEx of Taxonomy eligible activities (A1 + A2) B. Taxonomy-non-eligible activities CapEx of Taxonomy-non-eligible activities Total 1,060 1,303 81.3% 100.0% Management's review Environment information EU Taxonomy ALK Annual report 2024 70 Taxonomy OpEx Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2024 DNSH criteria ('Does Not Significantly Harm') Financial year 2024 2024 Substantial Contribution Criteria Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) OpEx, year 2023 (18) Climate Climate Change Adapta- tion Climate Change Proportion Change Climate Change of OpEx, year N (4) Mitiga- tion (5) Circular Bio- Adapta- Circular Biodiver- Minimum Category Category transi- Economic activities (1) Code (2) OpEx (3) Water (7) Pollution (8) Economy diversity Mitigation tion Water (13) Pollution (14) Economy sity Safeguards (17) enabling activity tional activity (6) (9) (10) (11) (12) (15) (16) (19) (20) DKKm % Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. Taxonomy-eligible activities A.1. Environmentally sustainable activities (Taxonomy-aligned) OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% N N N N N N N N N N N N N N N N N N N N N 0.0% 0.0% 0.0% Of which Enabling 0 0 E Of which Transitional T A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL;N/EL N/EL EL EL;N/EL N/EL EL;N/EL N/EL EL;N/EL EL EL;N/EL N/EL EL;N/EL N/EL Manufacturing of Medicinal products PPC 1.2 CCM 6.5 172 17 52.7% 5.2% 46.9% 0.5% Transport by motorbikes, passenger cars and light commercial vehicles (OpEx C) N/EL N/EL N/EL N/EL N/EL OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxono- my-aligned activities) (A.2) 189 189 57.9% 57.9% 5.2% 5.2% 0.0% 0.0% 0.0% 0.0% 52.7% 52.7% 0.0% 0.0% 0.0% 0.0% 47.4% 47.4% A. OpEx of Taxonomy eligible activities (A1 + A2) B. Taxonomy-non-eligible activities OpEx of Taxonomy-non-eligible activities Total 138 327 42.1% 100.0% Management's review Environment information ALK Annual report 2024 71 Accounting policies – Environmental information The numeric datapoints reported are verified through internal controls, analysis, benchmarks, and regular business meetings. External auditors provide limited assurance on 2024 metrics. The metrics are not vali- dated by another external body, with the exception of the science-based target metrics which are approved by the Science Based Targets initiative (SBTi). N/A is used when data was not available at the time of the reporting and could not be retrieved. reporting periods. While the majority of the data is derived from actual data, some estimations are applied to a minor portion of the fuel consumption data: This methodology ensures accurate emission factors by reflecting local energy mixes and regional character- istics, leading to reliable and relevant emission calcu- lations. When such data are unavailable or outdated, general emission factors are utilized. The specific data- bases used in these instances are disclosed below. Refrigerants Emissions from refrigerants listed in the GHG Protocol are included in scope 1. Associated CO2e emissions, resulting from the leakage of refrigerants from cooling systems, are calculated based on refrigerant quantities and their respective global warming potential. Emission factors used for reporting are based on annual data from the UK Government Conversion Factors for GHG reporting. • Fuel consumption from diesel backup generators: Diesel consumption under "fuel consumption from crude oil and petroleum products" is primarily based on estimates. These generators contribute only a minor portion of the overall fuel consumption from crude oil and petroleum products. Scope 1 emissions Reported scope 1 emissions comprise direct energy consumption (including emissions from collecting vehi- cles), company fleet and refrigerants. Scope Scope 2 emissions Environmental data covers ALK’s production sites in the USA (Post Falls and related farms, Port Wash- ington, Oklahoma City, Luther and Plainville), Denmark (Hørsholm), Spain (Madrid), and France (Vandeuil and Varennes). Sales offices located across the globe are excluded from reporting on energy, pollution, water, substance of concerns and waste data due to the low materiality of their environmental footprint. • Fuel consumption estimation for collecting vehi- cles: For some collecting vehicles at USA production sites, where odometers are aged or damaged and mileage data cannot be documented, fuel consump- tion is estimated. Scope 2 emissions comprise CO2e emissions from purchased electricity and heat (district heating), as Direct energy consumption GHG emission from direct energy consumption is calcu- lated using the fuel consumption reported in page 55. This includes diesel, gas oil, natural gas and propane. disclosed in E1-5 on page 55. E1-5 on Scope 2 location-based emissions are calculated based on average energy generation emission factors for defined locations, while scope 2 market-based emis- sions are calculated based on emissions calculated from specific energy purchase contracts and therefore consider renewable energy purchase certificates. Electricity production is sourced 100% from renew- able power, primarily through Renewable Electricity Certificates (REC). The share of renewable power used at production sites is reported according to the market- based method of the GHG Protocol scope 2 Guideline. When local emission factors are unavailable, general CO2 emission factors from UK Government GHG Conver- sions Factors and Environmental Protection Agency (EPA) GHG Emissions Factors are used. These authori- tative sources provide comprehensive data covering a wide range of activities and energy sources, ensuring that the Global Environment, Health and Safety (EHS) function has access to extensive data suitable for all ESG calculations. From 2024 onwards, in accordance with ESRS require- ments, data from sales offices are included in green- house gas (GHG) emission reporting ( E1-6 on page 54). However, the reduction target for scope 1 and 2 remains focused primarily on production sites, as vali- dated by SBTi. When local emission factors are unavailable, general CO2 emission factors from UK Government GHG Conver- sions Factors and EPA GHG Emissions Factors are used. These authoritative sources provide comprehensive data covering a wide range of activities and energy sources, ensuring that Global EHS has access to exten- sive data suitable for all ESG calculations. The conversion factors for measuring units are sourced from well-established and authoritative references. The use of conversion factors for measuring units are consistent across multiple sites and contexts, ensuring reliability and uniformity in reporting and calculations. Climate Change Emissions from collecting vehicles are reported under direct energy consumption. Collecting vehicles are leased or owned company vehicles used for collecting source materials. Emissions are based on mileage and emission factors for diesel and gas oil are updated according to EPA annual emissions factors. E1-6 E1-5 Gross Scopes 1, 2, 3 and Total GHG emissions GHG emissions are prepared in accordance with the GHG Protocol, using the operational control approach. ALK does not have bundled certificates. All electricity consumption is covered by 100% unbundled renewable energy certificates, while none of its district heating consumption is covered by unbundled certificates. Energy consumption and mix Energy consumption for operations is measured as consumption of power, heat and fuel. "Fuel consump- tion from crude oil and petroleum products" consists of diesel, gas oil and propane. Energy consumption is based on meter readings and/or invoices at individual production sites. Numbers are reported in KWh and converted to MWh. GHG emissions are reported in metric tonnes of carbon dioxide equivalent according to global warming poten- tial values published by the Intergovernmental Panel on Climate Change (IPCC) based on a 100-year time horizon. All greenhouse gases are included. Company fleet Sales offices Company fleet emissions are based on either actual mileage or contracted annual mileage. Average passenger vehicle emission factors are taken from UK Department for Environment, Food & Rural Affairs (DEFRA). Data for December is estimated based on average monthly consumption in the reporting year. GHG emissions from sales offices are estimated based on office area (square meters). Emission factors are specific to each country, and the energy use factor is a worldwide average for offices. Some invoice service periods do not align with calendar months; however, they are one month long, determining When available and recent, source and supplier-specific emission factors or local grid emission factors are used. Management's review Environment information Accounting policies – Environmental information Downstream transportation and distribution (Cate- ALK Annual report 2024 72 Scope 3 emissions irrigation consumption is calculated using data from a specific area at Post Falls (USA) production site and then applied to that leased land for reporting purposes. Pollution gory 9): Calculated using spend-based emission factors from CEDA on trunk transportation. All scope 3 emissions are calculated based on data covering January-December 2024, except category 3, 4 and 12. The months of November and December are estimated based on average consumption in the reporting year. ALK follows the EU’s Corporate Sustainability Reporting Directive (CSRD) and its definition of "Substances of Concern" (SoCs) and subset category “Substances of Very High Concern” (SVHCs). All production sites and Research and Development report on purchased quan- tities of SoCs and SVHCs. All SoCs and SVHCs arise from purchased quantities. End-of-life treatment of sold products (Category 12): Estimated for materials used in products using DEFRA emission factors for material type, country of distribu- tion, assumed treatment type and weight. • Water usage at leased facilities in Plainville and Port Washington (USA) production sites is estimated based on square footage occupied by ALK, as stated in the leasing contract, relative to the total square footage of the building. Using these numbers, an esti- mation for water consumption is calculated. Scope 3 categories 8, 10, 11, 13, 14, and 15 from the GHG Protocol are excluded as they are not relevant to the company's operations. E1-3 Actions and resources in relation to climate change policies Scope 1+2 reduction target At production sites, which include Product Supply and Research and Development, comprehensive lists of SoC chemicals are created by using the internal chem- ical management system. SoC chemicals are labelled with one or more Hazard-statements (H-statements), according to the Classification, Labelling and Packaging of chemicals (CLP Regulation) in EU. For production sites in the USA, where H-statements are not available, GHS hazard statements (defined by OSHA) are translated into H-statements to determine which chemicals are SoCs or SVHCs. Purchased goods and services (Category 1) (significant estimate): Calculated using spend-based emission factors from the Comprehensive Environmental Data Archive (CEDA). The use of estimates for this data- point is considered significant. Currently, there is only one leased land in the USA where water reuse occurs, overseen of the DEQ (Department of Environmental Quality). This area is part of a water reclamation program. The landowner provides water consumption values for ALK crops once a year based on meter reading. GHG emission reduction targets follow SBTi guidelines, encompassing all production sites. Emissions from sales offices are excluded, as they account for less than 5% of scope 1 and 2 GHG emissions. Future developments, such as changes in sales volumes, have been consid- ered when setting the targets. The achieved reduction is calculated against a 2022 baseline for scope 1 and 2 emissions from production sites, ensuring consistency in the scope over the years. Capital goods (Category 2): Calculated using spend- based emission factors from CEDA for upstream emis- sions of industrial machinery owned and operated by ALK. Production sites located in areas at water risk are identified using the "Water Scarcity" dimension of the WWF Water Risk Filter. Madrid (Spain) production site is the only site classified as being in a water risk area. Additionally, areas of high-water stress are defined as areas were the percentage of total water withdrawn is higher than 40%, as determined by the "Water stress" dimension of Aqueduct Water Risk Atlas tool of the World Resources Institute (WRI). Madrid (Spain) production site is also the sole site identified in a high-water stress area. Fuel and energy related activities Purchased quantities are based on invoices or delivery notes from vendors, reported in local unit of measures and converted to metric tons for disclosure. Scope 3 emissions from suppliers with science- based targets (Category 3): Calculated for upstream transmission & distribution losses of fuels, electricity and district heating consumed by ALK which are not included in scope 1 and scope 2, by using emission factors from DEFRA. This metric quantifies scope 3 emissions from suppliers with SBTi targets, including those with commitments. To determine this, suppliers responsible for more than 80% of GHG emissions (covering purchased goods and services, capital goods, upstream transportation and distribution, business travel and downstream trans- portation and distribution) are identified based on the highest spend and emissions data for 2024. Water and marine resources Upstream transportation and distribution (Category 4): Calculated using a mix of spend-based emission factors from CEDA and primary emissions from certain distribution providers. Well-to-tank emission factors are provided by DEFRA. (incl. significant estimate for irrigation) At production sites, water is categorised into water for domestic use (drinking water, sanitary water, and water for production) and water for irrigation, which is used for cultivating source materials. For irrigation, the use of estimates is considered significant. Resource use and circular economy These suppliers are verified through the SBTi dashboard to confirm which have approved targets. The Supplier Tracker List is used to document suppliers with approved targets. Waste is generally reported and classified at site level based on invoices received from waste vendor recipi- ents. Waste for production sites is converted from local unit into metric tons in total. Some estimates are used to calculate waste: Waste generated in operations (Category 5): Calcu- lated using emission factors from DEFRA dependent on material type, treatment type, material location and material weight. Water consumption is reported in m3 based on meter readings and/or invoices at individual production sites. When meter readings or invoices are unavailable, esti- mation-based water consumption is used to calculate water consumption: After verification, the emissions from these suppliers are aggregated and compared to the total emissions in these categories. This methodology ensures accurate and transparent reporting aligned with standard ESG accounting principles. Business travel (Category 6): Calculated using well-to- wheel flight emissions from DEFRA with primary activity data from service providers. • General solid waste at Luther and Plainville (USA) production sites is estimated based on the pickup cycles reported by the waste vendor for each quarter. • Water irrigation for leased land at Post Falls (USA) production site is estimated based on land area. The water consumption intensity factor (water consump- tion per acre) is calculated by the landowner using data from their records and their knowledge of the land, crops, and soil. For one of the leased land, water Employee commuting (Category 7): Estimated using Quantis emission factors based on the average number of full-time equivalent employees in the reporting year, with well-to-tank emission factors from DEFRA. • For the leased location at 2 Channel at Port Wash- ington (USA) production site, general solid waste is not managed internally. Estimation is therefore based Management's review Environment information Accounting policies – Environmental information ALK Annual report 2024 73 on the average number of garbage bags collected per day. EU Taxonomy The turnover, OpEx and CapEx numerators are deter- mined from ALK’s assessment of the relevant economic activities within all six environmental objectives. • For some USA production sites and Madrid (Spain) production site, certain types of waste are estimated based on the number of pickups reported by the waste vendor. These estimates are either supported by actual waste weight measurements collected over a defined period and applied as fixed standards for the waste type, or, when actual weights are unavailable, derived using conversion factors published by govern- mental authorities. The turnover denominator is derived from ALK group‘s total revenue of the consolidated financial statements ( see note 2.1 on page 114). The Turnover KPI is defined as Taxonomy-eligible Turnover divided by total Turnover. The CapEx denominator is derived from the ALK group’s total annual investments in property, plant and equip- ment as well as intangible assets, excluding short term leases and non-capitalised ROU assets based on Danish GAAP, as stated in the consolidated financial statements The actual weights of containers or dumpsters are meas- ured at local production sites over a defined period. By default, waste is reported in accordance with the waste hierarchy of EU waste polices and legislation, which is described in the EU waste framework directive (Directive 2008/98/EC). ( see notes 3.1 - 3.3 on pages 121-126). Goodwill is not included in CapEx. The CapEx KPI is defined as Taxonomy-eligible CapEx divided by total CapEx. The OpEx denominator covers direct non-capitalised costs that primarily relate to repair and maintenance, car expenses that are short term leased, tests and costs relating to the servicing of group assets that are neces- sary to ensure the continued and effective functioning of such assets. The OpEx KPI is defined as Taxonomy eligible OpEx divided by total OpEx. For production sites in Europe, when there is a difference between EU and national legislation, ALK follows the national legislation. Waste types are categorised by the respective waste vendor according to the national legislation. For production sites in the USA, estimation-based waste is calculated using conversion factors published by the US EPA. For the CapEx and OpEx allocations, the relevant purchases and measures, as well as the primary related economic activity, are identified. Thereby, it is ensured that no CapEx or OpEx is double counted. Intensity calculations Net revenue amounts are derived from ALK group's total revenue of the consolidated financial statements (note 2.1 on page 114). Intensity calculations are reported as unit / annual revenue in million DKK. GHG intensity is calculated using total emissions (scope 1, 2 and 3) on location-based and market-based methods. All revenue falls under NACE Section C: Manufacturing, Division 21: manufacturing of basic pharmaceutical products and pharmaceutical preparations according to Commission Delegated Regulation (EU) 2022/1288. Manufacturing is a high climate impact sector. Management's review Social information ALK Annual report 2024 74 Social information S1 Own workforce ESRS S1 74 S1 Own workforce Equal treatment and opportunities 81 S2 Workers in the value chain 83 S4 Consumers and end-users 86 Accounting policies – Social information ESRS 2-SBM3 Material impacts, risks and opportunities and their interaction with strategy and business model Location in Time the value chain horizon Impacts, risks and opportunities S1 Own workforce IRO Decline in employee competencies due to inadequate skill upgrading Potential negative impact ● ● ● ● ● ● Employee retention, attraction and development challenges Risk As a global leader in allergy treatment within the pharmaceu- tical industry, ALK recognises that its workforce is its most valuable asset. ALK's strategy is designed to support their well- being, professional growth and inclusivity, ensuring that ALK attracts and retains key competences across its operations. Management's review Social information S1 Own workforce ALK Annual report 2024 75 In the materiality assessment, ALK identified the following mate- rial impact and risk: impact employee retention and reduce the overall attractiveness of ALK as a workplace. This may hinder the company's ability to attract new employees and retain existing ones. department on company-wide diversity performance. The ALK D&I policy specifies that the following grounds for discrimination are unacceptable: age, gender, race, ethnicity, religion, sexual orientation, disability or and other characteristics including work and life perspectives. The policy does not include specific commitments for inclusion of people from particularly at-risk or vulnerable groups. Impact Decline in employee competencies due to inadequate skill upgrading This risk is focused on ALK's own operations and could lead to a shortage of necessary competencies needed to support busi- ness growth in the short, medium, and long term. ALK relies on its employees having the right skills and compe- tences in order to be able to perform their tasks and support business growth. If not maintained, the employees' skills will decline over time, and their ability to meet future business needs will not be supported. Without adequate development plans, employees may find it more challenging to meet new job expec- tations, have limited opportunities for promotion, and experi- ence a decrease in employability after leaving ALK. To mitigate this risk, ALK’s reward philosophy and salary processes aim to ensure competitive wage levels and empha- sises continuous skill enhancement across all business areas, through learning and development opportunities. ALK tracks employees’ perceptions of diversity and inclusion and their sense of psychological safety via the annual employee engagement survey. In 2024, the overall perception of D&I in ALK was 8.4, which is 0.2 points above the industry benchmark. Other initiatives to promote diversity and inclusion include training leaders on unconscious bias and incorporating D&I topics into talent development programmes. S1-1 Policies related to own workforce ALK endorses the UN Guiding Principles on Business and Human Rights and is a signatory to the UN Global Compact. These commitments are integrated into ALK's Code of Conduct, which applies to all employees. This creates a potential negative impact, which occurs in ALK's own operations over the short, medium and long term and is directly linked to ALK's own activities. S1-2 Processes for engaging with own workforce and workers’ representatives about impacts ALK’s commitment to fostering a culture of open communica- tion, engagement and collaboration is anchored in two key processes: the workers’ councils and the employee engagement survey. This engagement has informed the material impacts and opportunities around development plans and learning opportu- nities, as well as health and safety matters. Therefore, ALK seeks to foster a culture of continuous learning and growth for its workforce. As part of the Global People Performance Process, all employees are required to have a personal development plan. These plans are linked to job content and performance goals and are updated annually. This process is exclusive to ALK employees and does not extend to non-employees. ALK's Code of Conduct explicitly prohibits employees from condoning or engaging in any form of child or forced labour. The policy does not specifically mention human trafficking, as this is not a high-risk topic within ALK's industry. The Code of Conduct is presented in detail in G1-1 on page 88. Workers’ councils Risk In addition to the Code of Conduct, which addresses harass- ment, ALK has adopted a Diversity & Inclusion (D&I) Policy which aims to eliminate discrimination and promote equal treatment and opportunities for all employees. It sets out ALK's ambition to create an inclusive work environment that fosters a sense of belonging where different perspectives, abilities, talents and experiences are able to contribute equally. The policy applies to all ALK employees. The most senior level accountable for implementing the policy is the ALK Sustainability Committee, which receives quarterly reports from ALK’s sustainability Formalised workers’ councils are established at all European sites where legally required. These councils serve as dedicated forums where both employees and management can address and resolve a spectrum of issues, ranging from the company's competitiveness to employee engagement. In the USA and China, dialogues are facilitated through the People & Organisa- tion departments. Employee retention, attraction and development challenges ALK operates in a highly competitive labour environment within the pharmaceutical industry, especially at its Danish, Chinese, and USA East Coast sites. With a revenue growth strategy of 10%, paying competitive salaries and ensuring continuous learning and skills development is critical for ALK to meet its strategic targets. Salaries below relevant market levels as well as insuf- ficient learning and development opportunities can negatively Workers’ council meetings are held several times a year. Engagement varies according to topic and can take the form of Management's review Social information S1 Own workforce ALK Annual report 2024 76 information-sharing, consultation or co-determination. Involve- ment of workers' councils in decision-making follows local legal principles for engagement. the exact linkage between development actions and individual performance. ALK plans to review and improve the development plan process in 2025 by providing clearer guidance and enhanced training for both employees and leaders. ALK also aims to enhance its D&I strategy to include other diversity parameters, such as geography. ALK intends to update its talent approach to ensure that the right talents are identified, targeted, and developed in alignment with the overall strategy. Engagement survey Direct engagement with all employees is driven by the annual global employee engagement survey, which provides a direct avenue for expressing satisfaction and offering feedback. This year's participation rate remained high at 95% (2023: 95%), reflecting the Executive Leadership Team's commitment to valuing employee feedback and taking action. The overall engagement score was 8.3 (2023: 8.4), positioning ALK in the top 5% against the international healthcare benchmark. To address the continuous development of its leaders, ALK continued the rollout of the Leading with Impact programme for 186 leaders across the organisation. ALK will continue to focus on leadership development by addressing critical leadership capabilities and creating scalable training solutions for leaders worldwide. The Executive Vice President of People and Organisation is responsible for ensuring that the engagement with employees happens and informs the Executive Leadership Team (ELT) of the results and actions taken. ALK has a dedicated team within Global People and Organ- isation that manages global development programmes for employees. In addition, leaders and employees are responsible for ensuring that own skills meet current and future job require- ments. S1-4 Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions Development plans at ALK depend on an employee's life- cycle stage (new hire, experienced professional, or resigned employee). These plans are linked to job content and perfor- mance goals, updated annually between March and October. The process is tracked through the human resources system, with a completion rate of 93% for 2024 ( see S1-13 on page 78). S1-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities As part of the CSRD implementation, ALK has prioritised the establishment of baseline data for its reporting before initi- ating the target-setting process. As a result, ALK has not yet set targets to address its material impacts and opportunities within its own workforce or engaged with employees or their repre- sentatives specifically on this matter. The need for additional targets will be reviewed in 2025. ALK follows the 70-20-10 learning principle: 70% on-the-job training, 20% peer learning, and 10% training/classroom learning. ALK does not currently have a process to assess the quality of development plans, so it is not possible to document Management's review Social information S1 Own workforce ALK Annual report 2024 77 S1-6 Characteristics of the undertaking’s employees 20231 Employees' characteristics Unit 2024 20231 Employees' characteristics Unit 2024 Number of employees per country Number of non-guaranteed hours employees China # # # # # # # # # 175 942 357 137 96 164 983 Male # # # # 15 20 - 14 23 - Denmark France Germany Poland Spain Female 379 Chooses not to self identify 142 35 37 101 364 547 194 373 Employee turnover Employee turnover # 463 316 USA 533 % 17% 12% Other 214 1 2023 figures are not covered by the Independent Auditor’s limited assurance report. 2,812 2,889 Number of permanent employees ALK employs 2,812 employees (2023: 2,889), out of which 2,574 are permanently employed (2023: Male # # # # 970 1,601 3 990 1,645 3 2,638). The employee turnover was 17% in 2024 (2023:12%), out of which 283 employees left voluntarily and 180 involuntarily. The decrease in number of employees and the increase in employee turnover Female + Chooses not to self identify reflects the organisational adjustments relating to the implementation of the Allergy strategy. 2,574 2,638 The most representative number, disclosed in the consolidated financial statements, corresponding to the total number of employees is the full-time equivalent employees (FTEs) (note 2.4 on page 116). Number of temporary employees Male # # # # 95 142 1 95 156 - Female Chooses not to self identify 238 251 Total male # # # 1,065 1,743 4 1,085 1,801 3 Total female Total chooses not to self identify Total number of employees # 2,812 2,889 Management's review Social information S1 Own workforce ALK Annual report 2024 78 S1-13 Training and skills development metrics Training and skills development Unit 2024 Participation in performance and career reviews Male % % % 91% 94% Female Chooses not to self identify 100% Number of performance reviews per employee per year # 1 Total participation to performance and career reviews % 93% S1-16 Remuneration metrics (pay gap and total remuneration) Remuneration metrics Unit 2024 20231 CEO annual compensation ratio Times % 33 30 Gender pay gap 17% 16% 1 2023 figures are not covered by the Independent Auditor’s limited assurance report. The gender pay gap reflects the disparity in representation, as ALK currently has a higher proportion of men than women in senior lead- ership positions. ALK is continuously working on ensuring gender equality in leadership positions. Management's review Social information S1 Own workforce ALK Annual report 2024 79 ESRS S1 Health and safety ESRS 2-SBM3 Material impacts, risks and opportunities and their interaction with strategy and business model As a result, ALK has not previously identified the need for a global Environmental, Health, and Safety (EHS) policy or a global management system. Location in the value chain Time horizon Impacts, risks and opportunities S1-3 Processes to remediate negative impacts and channels for own workforce to raise concerns ALK emphasises the importance of engaging workers in health and safety practices to foster shared responsibility and work- place safety. S1 Own workforce IRO Injuries due to workplace accidents in farming and production Actual negative impact ● ● To prevent injuries, ALK conducts risk assessments across all its production sites. These assessments identify potential hazards, implement appropriate measures to reduce risks and evaluate the effectiveness of existing safety measures. Workers contribute to those risk assessments by providing input on hazards and by helping to develop site-specific safety meas- ures. Impact Injuries due to workplace accidents in farming and production This creates an actual negative impact on ALK's own workforce, which is related to individual incidents and occurs annually in the short term. To prevent accidents and mitigate their effects, ALK conducts risk assessments, implements safety protocols, and adheres to national and Occupational Safety and Health Admin- istration (OSHA) standards for injury recording and compliance. Health and safety management is an essential part of ALK’s operations, especially in production and farming activities where employees may face workplace risks. Based on engage- ment with internal stakeholders representing affected stake- holder groups, ALK has developed an understanding of how people working in particular activities may produce specific negative impacts. Workplace injuries are also recorded and monitored. For USA operations, ALK adheres to OSHA standards for tracking and reporting injuries. This data provides insights into workplace safety trends and helps ensure that operations comply with applicable legal frameworks. S1-1 Policies related to own workforce ALK adheres to national legislation and regulatory requirements in all countries of operation. ALK follows local legislation to ensure compliance with health and safety requirements. In the USA, ALK complies with OSHA standards. Safety procedures are implemented at production facilities to mitigate risks identified through assessments and ensure a safer working environment. Workplace accidents during production and farming may result in injuries to members of ALK’s workforce. These injuries can cause physical harm, impact mental well-being, and raise concerns about workplace safety. Such incidents may also affect employee morale and productivity. Employees are encouraged to report unsafe conditions or hazards, which are promptly reviewed and addressed to improve workplace safety. Regular training ensures that Management's review Social information S1 Own workforce ALK Annual report 2024 80 workers understand health and safety procedures and risks relevant to their tasks. S1-14 Health and safety metrics Health and safety Unit 2024 20231 All employees can also raise concerns through the whistleblower platform ALK Alertline, which is described in detail in G1 on page 89. Work-related accidents Work-related accidents # 112 1.5 106 0.8 S1-4 rate Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions ALK has a continuous focus on maintaining health and safety for its employees and is actively engaged in projects focused on improving material risk and work force exposure. This engage- ment has ensured that ALK employees’ exposure to chemicals/ substances is minimised/reduced. Tracking of yearly training ensures that ALK employees have the necessary competences to perform safe work processes. Fatalities as a result of work-related incident # - - Employees covered by health & safety manage- ment system % 74% N/A 1 2023 figures are not covered by the Independent Auditor’s limited assurance report. ALK had 6 accidents with lost time absence ordinated by a medical professional in 2024 (2023:3). This resulted in an acci- dent rate of 1.5. S1-17 Incidents, complaints and severe human rights impacts See G1 on page 90. Management's review Social information ALK Annual report 2024 81 S2 Workers in the value chain ESRS 2-SBM3 Material impacts, risks and opportunities and their interaction with strategy and business model injuries or fatalities. These include risks during loading and unloading as well as during transit. Location in the value chain Time horizon Impacts, risks and opportunities • Workers handling hazardous waste. They can encounter harmful chemicals that pose significant health risks, including chemical burns, respiratory issues and toxic exposure. S2 Workers in the value chain IRO The potential negative impact is concentrated in ALK's upstream and downstream supply chain and may occur in the short, medium and long term as individual incidents. To address this impact and prevent harm to workers in its value chain, ALK has policies and procedures in place to ensure that its business partners and suppliers uphold high safety standards. Moreover, ALK seeks to establish long-term partnerships with its suppliers, which offer them financial stability and allow them to allocate resources toward ensuring job security for their workers. Health and safety related incidents of workers in the value chain Potential negative impact ● ● ● ● ● The materiality assessment identified the impacts seen below related to workers in ALK's value chain. Those impacts originate from ALK’s strategy and business model and are integrated into ALK’s work with its suppliers. While ALK has identified its high- level material impacts on value chain workers, a more detailed understanding is still to be developed, to identify specific activ- ities where workers may be at a greater risk of harm. However, the majority of ALK’s suppliers are EU-based where the level of law enforcement is generally high and the risk of child labour low. produce and distribute its products. Health and safety manage- ment is integral to the success of both ALK and its suppliers. Health and safety incidents can result in a range of negative consequences for individuals and can potentially happen in all parts of the value chain. S2-1 Policies related to value chain workers The most significant groups of supplier employees who could be materially impacted are: ALK’s Third-Party Code of Conduct outlines the standards of behaviour that ALK expects from all third parties globally when it comes to business conduct and treatment of employees. The Third-Party Code of Conduct is aligned with the Ten Principles of the United Nations Global Compact and follows the UN Guiding Principles on Business and Human Rights, as well as applicable laws, regulations, standards and labour agreements. • Workers in upstream production units. They could be exposed to hazardous substances, including chemicals used in the manufacture of pharmaceutical ingredients and consumables. Key risks in this area include chemical expo- sure, operational hazards and ergonomic risks. Impact Health- and safety-related incidents involving workers in the value chain As an international pharmaceutical company specialising in products based on allergenic source materials, ALK relies upon business partners and suppliers across its value chain to Key areas covered include health and safety, animal welfare, anti-corruption, environmental practices, working conditions, human rights (including child and forced labour, anti-discrimi- • Workers involved in downstream transportation. They face the risk of vehicle accidents, which can result in serious Management's review Social information S2 Workers in the value chain ALK Annual report 2024 82 nation and fair pay), interaction with healthcare professionals and patient organisations. The policy does not specifically mention human trafficking. tures or processes to assess whether value chain workers are aware of and trust ALK Alertline. The potential negative impact that ALK might cause is monitored through its business relationships. If there is a potential case, appropriate actions are taken accordingly. ALK Alertline is described in detail in G1 on page 89. Any violations of the standards set out in the ALK Third-Party Code of Conduct can be reported through the whistleblower platform. No severe human rights issues and incidents connected to ALK’s upstream and downstream value chain were reported in 2024 S2-4 Taking action on material impacts on value chain workers, and approaches to managing material risks and pursuing material opportunities related to value chain workers, and effectiveness of those actions ( see G1-1 for more information on page 90). The Third-Party Code of Conduct is an integral part of ALK's GxP (good practice) supplier agreements. All new suppliers must commit to the Code as a pre-requisite for collaboration with ALK. The Chief Finance Officer is the most senior-level executive accountable for the implementation of ALK’s Third-Party Code of Conduct. Monitoring and continuous improvement The sustainable procurement manager is a newly established role with responsibility for oversight and management of the sustainable procurement programme globally in ALK. Supplier relationships ALK prioritises collaboration with reputable suppliers who adhere to high standards in their labour practices, reducing the likelihood of serious working conditions-related issues. By establishing long-term contracts with these suppliers, ALK ensures financial stability, which fosters a commitment to high labour standards and responsible working conditions. These agreements provide suppliers with reliable revenue streams, enabling them to invest in infrastructure, training and safety initiatives. Financial stability is fundamental for business development, and it enables suppliers to allocate resources to product development and job security for workers. While ALK has not identified any material actual negative impacts, ALK will continue to evaluate its suppliers from a sustainability perspective and take action accordingly. To properly track the effectiveness of remedy actions for workers in the value chain in the future, ALK is seeking to implement a comprehensive monitoring system that includes regular assess- ments and feedback mechanisms to measure outcomes related to worker welfare and satisfaction over time. In addition to the Third-Party Code of Conduct covering human rights impacts, ALK also adheres to the UK Modern Slavery Act and publishes an annual statement of compliance. S2-2 Processes for engaging with value chain workers about impacts While ALK does not currently have a formal process in place to engage with value chain workers about impacts, ALK is committed to developing robust engagement strategies that will enhance communication and strengthen its connection with value chain workers in the future. ALK is actively working to establish processes for engaging with value chain workers in 2025. The Senior Vice President of Global Procurement is responsible for the supplier engagement. ALK is committed to enhancing its due diligence processes by 2025, with a focus on continuous improvement and compliance with emerging reporting standards. As a result, long-term contracts with suppliers both strengthen supply chain resilience and promote the well-being of workers, contributing to a sustainable and ethical operational environ- ment. S2-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities ALK will be updating its responsible supply chain strategy in 2025 and considering the need for specific targets to manage health- and safety-related impacts on workers in the value chain. As of 2024, ALK has therefore not yet identified the need for targets related to workers in the supply chain or for engaging with workers in the value chain or their representatives. Risk assessment and monitoring To address supplier risk, ALK continued its collaboration with an external supplier evaluation platform to identify environ- mental, labour and human rights, and procurement risks. From this initial risk assessment, ALK continues to conduct high-level assessments to identify whether further engagement may potentially be required. S2-3 Processes to remediate negative impacts and channels for value chain workers to raise concerns Value chain workers can raise their concerns through the whis- tleblower platform ALK Alertline. No complaints involving such workers were substantiated in 2024. ALK does not have struc- Management's review Social information ALK Annual report 2024 83 S4 Consumers and end-users S4-SBM3 Material impacts, risks and opportunities and their interaction with strategy and business model ALK’s products therefore seek to enhance the health and well- being of patients regardless of their ethnicity, gender, or age. Location in the value chain Time horizon Impacts, risks and opportunities ALK's portfolio includes treatment options for a variety of allergens, some of which can be potentially life-threatening (e.g. anaphylaxis, venom immunotherapy). An adrenaline autoinjector is indicated in the emergency treatment of severe acute allergic reactions (anaphylaxis) to insect stings or bites, foods, drugs and other allergens as well as idiopathic or exer- cise anaphylaxis. Similarly, ALK’s venom immunotherapy can help patients who are highly allergic to stings from insects. For both cases, ALK enhances the personal safety of its end- users by providing effective treatment options and can turn a S4 Consumers and end-users IRO Allergy treatment Actual positive impact Actual negative impact Actual negative impact Opportunity ● ● ● ● ● ● ● ● ● ● ● Barriers to access ● Patient safety ● Climate change and respiratory health ● life-threatening condition into a non-life-threatening issue. For other allergies like house dust mites and grass and tree pollen, the treatment improves the quality of life of the patient. Allergy is the most common type of chronic disease globally and it has a profound impact on people’s lives. For more than 100 years, ALK has been at the forefront of long-term allergy treat- ment. ALK is dedicated to offering a wide range of treatments, products and services to meet the unique needs of people living with allergy, their families and doctors. standing of how particular products may create specific nega- tive impacts. These actual positive impacts are concentrated in ALK's down- stream value chain, occur in the short, medium and long term and are linked to ALK's own activities. Impact Allergy treatment Impact ALK products are available worldwide, reaching individuals with diverse ethnic backgrounds, in some cases starting from childhood. ALK offers solutions and products for people affected by allergy and aims to treat a wide range of allergies. Within ALK's portfolio, sublingual immunotherapy tablets offer acces- sible long-term allergy treatment, which can be administered at home, unlike injections which require regular visits to a doctor. Moreover, tablets do not require up-dosing or refrigeration and are available for five of the most common respiratory allergies. Barriers to access The materiality assessment identified the following material impacts and opportunities related to customers and end-users. The materially impacted consumers and end-users are health- care professionals and patients. ALK is committed to providing more effective help to a greater number of people with allergies and implements its allergy care principles globally to ensure broad access. However, ALK products need to be prescribed by a healthcare professional. Currently, allergy treatment is not necessarily considered a priority topic by all healthcare systems, leading to a barrier to access to allergy care for the patient. This can have a consider- Based on engagement with internal stakeholders representing affected stakeholder groups, ALK has developed an under- Management's review Social information S4 Consumers and end-users ALK Annual report 2024 84 Opportunity able negative impact on patients who are unlikely to receive ALK medicines from an allergy specialist. ALK Group. Reporting is done through ALK's website and annual report, ensuring transparency and accountability. Climate change and respiratory health Climate change directly threatens respiratory health by extending pollen seasons, increasing airborne allergens, and altering the distribution and abundance of allergenic plants. Global warming also leads to higher humidity, creating favour- able conditions for mould growth and potentially higher allergen exposure. Addressing climate change is thus an environmental imperative with significant social and public health dimensions. ALK aims to price its treatments fairly and competitively, and affordability for patients is often supported by public and/or private health insurance and reimbursement schemes offered by authorities. However, without access to public health provi- sions or insurance, some patient groups who could benefit from allergy treatment may not be able to afford it. The oversight, accountability and responsibility for the imple- mentation of ALK's Access to Medicines Policy rests with the Board of Directors, which has delegated this responsibility to the ELT. The policy covers both people with allergy and healthcare professionals and relates to material impacts related to access treatment and access barriers. In markets such as the USA with private healthcare, hospital doctors and general practitioners are paid based on the services provided, leading them to favour giving injections over prescribing tablets. The structure of the healthcare system can therefore disincentivise doctors to prescribe the cheaper allergy tablets and favour potentially suboptimal and more expensive treatments such as injections. Climate-induced species migration introduces new types of pollen and allergens to regions that were previously unaffected, presenting new market opportunities for ALK through emerging allergies. The increased length and severity of pollen seasons expand the potential market size for ALK, as more individuals have prolonged and intensified allergy symptoms. Spikes in allergen concentrations can also trigger reactions in a larger segment of the population by exceeding their individual toler- ance levels. The pharmaceutical industry is heavily regulated, with human rights topics like the right to health and informed consent in clin- ical trials already embedded in legislation. Therefore, ALK does not have specific consumer policies aligned with the UN Guiding Principles of Business and Human Rights. The barriers to treatment access represent systemic actual negative impacts. They occur in ALK’s downstream value chain and recur every year. ALK is indirectly impacting the patients. External stakeholders with a business-related connection to ALK can report potential human rights impacts through the Alertline ( see G1 on page 89). This potential opportunity is concentrated in ALK's own opera- tions, it would not be related to specific groups of consumers or end-users, and is expected to happen over the long term. ALK has indirect control over this opportunity which would benefit its own operations. Specific financial effects have not yet been identified. Impact S4-2 Patient safety Processes for engaging with consumers and end-users about impacts See ESRS 2-SBM2 on pages 39-40. Allergy treatments are effective in most cases but not all. If the treatment proves ineffective, alternative options are limited, leaving individuals without the potential life-changing benefits of ALK products. This creates an actual negative impact, which directly compromises the well-being and safety of individuals relying on those treatments. S4-1 Policies related to consumers and end-users ALK’s Access to Medicines Policy sets out the company’s ambi- tion to reach more patients. The policy focuses on three key principles: improving quality of life through better treatment options and earlier diagnosis, supporting healthcare systems with training and education on allergy care, and forming part- nerships for broader access. The policy is continually reviewed by the ELT to ensure alignment with the overall strategy of the The impact is concentrated in ALK's downstream value chain, arises from ALK's own activities as individual and isolated events, and occurs in the short, medium and long term. Management's review Social information S4 Consumers and end-users ALK Annual report 2024 85 S4-3 Rigorous industry regulations ensure that safety data from any source, including clinical trials, healthcare professionals or patients, is collected and analysed systematically by ALK's global pharmacovigilance team. This ensures that the safety profile of the products is optimised for the benefit of the patient and that the relevant authorities can be made aware of any safety issue in order to facilitate immediate action. S4-5 Processes to remediate negative impacts and channels for consumers and end-users to raise concerns ALK works closely with doctors, pharmacists, and other health- care professionals to ensure they have the necessary informa- tion to advice patients. Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities ALK aims to help 5 million allergy patients by 2030 to advance its positive impact and opportunity. The target covers ALK’s down- stream activities in the countries where ALK operates ( see "ALK at a glance" on page 5). Furthermore, ALK’s digital universe empowers people to proac- tively manage their allergies by offering information and guid- ance on how to avoid or alleviate symptoms and seek treatment. Patients are informed of how they can contact ALK to report potential side effects in the leaflets for all products. In 2024, ALK reached an estimated 2.6 million patients in treat- ment, as a result of its commercial activities. External stakeholders with a work-related connection to ALK can raise their concerns through the whistleblower platform ALK Alertline, which is described in detail in G1 on page 89. In addition to reaching patients through its digital platforms, ALK engages systematically in educational activities, training and dialogue with healthcare professionals to elevate the standard of care in allergy diagnosis and treatment. Much of the engagement is done digitally to enable ALK to reach more healthcare professionals within a shorter time and reduce the climate impact of travelling to physical meetings. ALK’s approach to engaging with healthcare professionals also encompasses collaboration with patient organisations across the globe to raise awareness around patient care and product safety. Although ALK has previously had the need to establish specific external targets, it will assess the potential necessity for addi- tional targets related to access barriers and patient safety in 2025. S4-4 Taking action on material impacts on consumers and end- users, and approaches to managing material risks and pursuing material opportunities related to consumers and end- users, and effectiveness of those actions Helping more people with allergies is at the core of ALK’s ALK has not engaged directly with patients or their represent- atives on the target setting, but information has been obtained indirectly through market insights. + Allergy strategy. ALK will prioritise and focus its commercial activities to strengthen its global leadership in respiratory aller- gies including targeted expansion of the sublingual immuno- therapy tablets to new patient groups and geographies, digital mobilisation and investments in high impact markets. Number of patients in treatment In the ongoing efforts to develop innovative, effective treat- ments for allergies, ALK conducts clinical trials in close collabo- ration with authorities, healthcare professionals, scientists and, most critically, patients. ALK upholds safety, privacy, ethics and respect through every phase of the clinical trials and adheres to the Principles for Responsible Clinical Trial Data Sharing from the European Federation of Pharmaceutical Industries and Associations (EFPIA) and the Pharmaceutical Research and Manufactures of America (PhRMA). In this way, ALK ensures that clinical trial data is used responsibly and transparently, safe- guarding patient privacy and respecting the integrity of national regulatory systems that protect proprietary information. Million patients (estimated) 5.0 target Information about actions taken, planned and underway to address material impacts and opportunities, according to S4-4, is incorporated + by reference to the sections "Strategy progress: Review of Allergy imple- 2.6 mentation", on pages 10-11, and "Expanding the addressable markets" of Business and strategy, on pages 16-17. 2024 2025 2026 2027 2028 2029 2030 Management's review Social information ALK Annual report 2024 86 Accounting policies – Social information The numeric datapoints reported are verified through internal controls, analysis, benchmarks, and regular business meetings. External auditors provide limited assurance on 2024 metrics, but they are not validated by another external body. N/A is used when data was not available at the time of the reporting and could not be retrieved. broken down into North America (USA, Canada), Asia (China, Russia, Jordan, Turkey), and Europe (Denmark, France, Spain, Germany, Poland, Netherlands, Sweden, Slovakia, United Kingdom, Austria, Switzerland, Norway, Italy, Belgium, Czech Republic, Finland, Ireland). S1-13 When a more precise method is not available, units sold ex-factory are converted to treatment years per patient using a treatment years conversion factor. This estima- tion is adjusted based on market and patient research from various countries, applying an adherence rate and a co-administration rate across products and coun- tries to prevent e.g. double counting patients receiving multiple types of allergy immunotherapy treatments (AIT) simultaneously. Training and skills development metrics A regular performance review is defined as a review based on criteria known to the employee and his or her superior undertaken with the knowledge of the employee at least once per year. The review can include an evalua- tion by the employee’s direct superior, peers, or a wider range of employees. Employee turnover Employee turnover is defined by the number of employees leaving ALK during the period. The turnover is a total of voluntary and involuntary terminations. The employee turnover ratio is calculated by dividing the number of employees who left ALK by the average number of employees in the reporting year. The employees included in the calculation are all permanent employees and inactive employees on garden leave. Due to local regulations, temporary employees located in Poland and China are also included, as a temporary contract is required before transitioning to permanent status. Own workforce Employee engagement Participation rate and engagement score are collected from a survey conducted by a third party. When available, more precise methods are tailored to specific product groups as follows: Workforce is defined as all ALK employees who are on payroll as of 31 December 2024, both full-time and part- time, as well as active and non-active. The numbers are reported in headcount as of end of reporting period. S1-14 For SLIT-drops in most markets, anonymized data and unique patients counted based on prescription data are used. Health and safety metrics Work-related incidents are reported to Global Environ- ment, Health and Safety. Work-related accidents are defined as unplanned events that result in injury, with or without absence. The number of accidents is reported per site on a monthly basis. The rate of work-related accidents is calculated as Lost Time Injury Frequency Rate (LTIFR). It measures the number of accidents with absence multiplied by million, divided by total working hours during a single financial year. A lost-time injury is a work-related injury that results in time lost from work ordered by a medical professional person. S1-6 Characteristics of the undertaking’s employees Permanent employees are determined as employees whose employment contract is without a specified end-date. Temporary employees are determined as employees whose employment contract is with specified end-date. Non-guaranteed hours employees are deter- mined as employees employed by ALK without a guar- antee of a minimum or fixed number of working hours. The employee may need to make themselves available for work as required, but ALK is not contractually obli- gated to offer the employee a minimum or fixed number of working hours per day, week, or month. For SLIT-tablets in most markets, data is based on the in-house Patient Model. The Patient Model uses in-market units sales data and where possible new patient data to convert to patients in treatment. Actual in-market sales and patient data are used for two-thirds of the year, while the remaining portion is forecasted. A co-administration rate is applied to tablet patients. S1-16 Remuneration metrics Gender pay gap (significant estimate) Gender pay gap is defined as the difference of average base pay levels between male and female employees, relative to the average annual pay of male employees. Average gross annualised earnings are used in this calculation due to limited data availability for hourly pay levels. The use of estimates for this datapoint is consid- ered significant. In North America, ALK sells bulk allergen extracts to healthcare professionals who prepare the allergy shots using various and unspecified dosing schedules. To esti- mate the number of patients receiving AIT, a commercial claims database is used. Extrapolation of the patient number to USA population is done using the ratio of database coverage to the total USA population. To obtain the number of patients on AIT, an estimated market share is applied. Given that commercial claims data have a 14-16-month time lag, the extrapolation to the current year is done by applying a discounted revenue growth from the time of data extraction to the current year. Fatalities are the number of employees who lost their lives as a result of a work-related incident. For any employee-related metrics, headcount meas- ures are used. The measures are extracted from the HR systems. The numbers are reported in headcount as of end of reporting period. CEO annual compensation ratio Consumers and end-users CEO annual compensation is determined by the annual total compensation of the CEO against the median annual total compensation for all full-time active (permanent and temporary) employees, excluding the CEO. Annual total compensation includes salary, bonus, allowances, pension, and all one-time payments over the course of a year. Number of patients in treatment (significant estimate) Due to the absence of comprehensive data sources across all markets, it is not possible to directly and specifically measure the number of patients treated with ALK prod- ucts. Patient numbers are estimated using various data sources, an in-house Patient Model and insurance claims data, while applying several assumptions, which leads to a certain level of uncertainty. The use of estimates for this datapoint is considered significant. For reporting by gender, the following descriptions are used: ’Male’, ‘Female’, and ‘Employee chooses not to self-identify'. For the Auto Adrenaline Injector (AAI), following official recommendations, the number of sold pens is divided by 2 to reflect the assumption that each patient carries two pens at a time. For breaking down per countries, countries with less than 50 employees are classified as ‘other countries’. When reporting by geographical areas, regions are Management's review Governance information ALK Annual report 2024 87 Governance information G1 Business conduct Location in the value chain Time horizon ESRS G1 87 G1 Business conduct 91 Accounting policies – Governance information Impacts, risks and opportunities G1 Business conduct IRO Animal welfare Actual negative impact Risk ● ● ● ● ● Potential bribery of healthcare professionals ● Information about Corporate governance can be found on page 28. is from the injections, and also from keeping them in captivity and euthanising them after the experiments are finished. This impact occurs over the short, medium and long term. ESRS G1 Animal Welfare To mitigate this impact, ALK selects professional, well- ESRS 2-SBM3 Material impacts, risks and opportunities and their interaction with strategy and business model recognised and accredited suppliers, adhering to the guidelines from the Federation of European Laboratory Animal Science Associations (FELASA). Impact G1-1 Animal welfare Business conduct policies and corporate culture Animal welfare When developing new treatments, ALK conducts tests on animals to ensure that patients receive safe and effective medicines. ALK only uses animals for research purposes when alternative models do not provide the data necessary to evaluate the treat- ment. ALK conducts regular experiments on animals through allergen injections on mice in its own internal R&D facilities. Within ALK's own operations, the negative impact on the animals ALK ensures compliance with local regulations related to animal welfare. As a result, ALK has not previously identified the need for a centralised global policy on animal welfare. However, it is in the process of developing a global animal welfare policy sched- uled for implementation by 2025, which will be approved by the governance bodies. Management's review Governance information G1 Business conduct ALK Annual report 2024 88 ESRS G1 Corruption and bribery ESRS 2-SBM3 G1-1 Material impacts, risks and opportunities and their interaction with strategy and business model Business conduct policies and corporate culture Code of Conduct Whistleblowing Policy professionals. It is consistent with the United Nations Convention against Corruption. The Code of Conduct is supplemented by specific policies, such as the Whistleblowing Policy, which defines the organisation and processes in place to ensure that ethical concerns are treated seriously and appro- priately; it includes the standards for inves- tigating such cases and protecting whistle- blowers. The policy includes a non-retaliation commitment to protect any employee or stake- holder who raises a concern in good faith. ALK's approach to business conduct is grounded in a comprehensive framework of policies centred on its Code of Conduct. The Code of Conduct, applicable to all ALK employees, sets the tone for business integrity and ALK’s ethical principles. It affirms ALK's commitment to upholding human rights, safe- guarding confidential business information, and promoting zero-tolerance for corruption and fraud. The Executive Leadership Team (ELT) is responsible for oversight of the Code of Conduct. The Board of Directors is responsible for ensuring that the policy complies with appli- cable laws, while managers are responsible for implementing the policy at all levels. Risk Potential bribery of healthcare professionals The pharmaceutical industry faces risks associated with bribery and corruption, particularly in the context of employees’ interactions with healthcare professionals (HCPs). The main risk of corrupt behaviour for ALK concerns potential bribery of healthcare professionals, i.e., using improper influence over HCPs to increase ALK’s sales and cash f low. Third-Party Code of Conduct In parallel with this, expectations for business partners are outlined in the Third-Party Code of Conduct, which applies to ALK’s upstream and downstream value chain. ALK’s Whistle- blowing Policy also applies to external stake- holders. The ALK Audit Committee has the overall responsibility for the Whistleblowing Policy, and for reviewing the effectiveness of actions taken in response to concerns raised under the policy. The Corporate Affairs & Legal depart- ment has day-to-day operational responsi- bility for the policy. ALK has not developed specific global policies on business conduct training, as the ALK Policy for Anti-Corruption already includes a general commitment to train employees, and business conduct training is administered in practice Details on the Third-Party Code of Conduct are provided in S2-1 on pages 81-82. An incident of such corrupt behaviour could have significant legal, reputational and finan- cial repercussions. This risk arises in ALK’s downstream value chain over the short term. There are no current financial effects, nor any significant risk of material adjustment for next year. This risk is mitigated through the regular training of all employees on ALK’s Code of Conduct. Policy for Anti-Corruption ( see "Training and awareness" on page 90). With regard to the risk of potential bribery of healthcare professionals, the ALK Policy for Anti-Corruption addresses compliance with general anti-bribery and anti-corruption legislation, as well as industry-specific stand- ards covering interactions with healthcare ALK’s Code of Conduct is complemented by additional policies on business conduct matters, which also apply to all ALK employees and are publicly accessible on the ALK website. Management's review Governance information G1 Business conduct ALK Annual report 2024 89 ESRS G1 ESRS G1 Channels to raise concerns Whistleblowing and anti-corruption system ALK Alertline Incidents of bribery and corruption Unit 2024 ALK has established a whistleblowing system: ALK Alertline, which is accessible to internal and external stakeholders. The company's own workforce, value chain workers and other external stakeholders with a work-related connection to ALK can use the ALK Alertline to raise and report serious and sensitive concerns, including reasonable suspicions of breaches of ALK’s Code of Conduct, anti- corruption laws, and laws within the scope of the EU Whistleblower Protection Directive. ALK assesses awareness and trust in the processes for raising concerns by including questions in the annual engagement survey about employees' confidence in ALK addressing serious misconduct and the impor- tance managers place on employee well- being. Convictions for violation of anti-corruption and bribery laws Fines for corruption and bribery convictions # - - DKKm G1-3 Prevention and detection of corruption and bribery In addition to ALK Alertline, employees are encouraged to speak up and raise any concerns through ordinary management channels. ALK launched manager training in 2024 on how to recognise and respond to whistleblower reports. This training includes a section stressing reporter protections, including against retaliation. G1-4 Incidents of corruption or bribery ALK Alertline is confidential and offers the option of anonymous reporting, as a protec- tive measure against retaliation. Available by phone or online in eight languages, ALK Alert- line is accessible via ALK's intranet and on its public websites. ALK takes a zero-tolerance approach to corruption and bribery. In addition to ALK Alertline, financial control systems act to prevent and detect any corruption and bribery events. external legal counsel, or the Chair of the Audit Committee. The Chair of the Audit Committee is noti- fied of reports concerning corruption and is responsible for deciding whether to approve case recommendations. Corpo- rate Affairs & Legal also updates the Audit Committee on an annual basis on all ALK Alertline activities for the past year. Should an allegation of corruption or Reports are entered directly into an inde- pendent company’s secure server. Corporate Affairs & Legal manages the access, and the reports are made available only to pre- appointed individuals within ALK who are responsible for evaluating reports. bribery be made through ALK Alertline, the ensuing investigation is governed by ALK’s Compliance Investigations Process. Each case is overseen by an investigation supervisor. This may be the Vice President, Corporate Affairs & Legal or their designee, usually within the Legal or Compliance func- tions. Where appropriate due to specific allegations in a report, an investigation supervisor independent from the chain of management will oversee the case: either In 2024, ALK had no convictions or related fines for violations of anti-corruption and anti-bribery laws. The monitoring and tracking of registered reports are described below under G1-3 on page 89. The non-retaliation commitment is specified under G1-1 on page 88. Management's review Governance information G1 Business conduct ALK Annual report 2024 90 ESRS G1 Training and awareness S1-17 Code of Conduct training Unit 2024 Incidents, complaints and severe human rights impacts ALK Alertline and human rights incidents Unit 2024 Functions-at-risk Code of Conduct training completion % 99% ALK Alertline Work-related discrimination reports registered on Alertline Reports of other work-related complaints # # 1 3 G1-3 competition law, conflicts of interest, political contributions, human rights, interaction with healthcare professionals, IT security, patient safety, and data privacy. Prevention and detection of corruption and bribery G1-4 Amount of fines, penalties and compensation for damages as a result of work-related complaints DKKm - Incidents of corruption or bribery Severe human rights incidents Employees who interact directly with health- care professionals have been identified as being at higher risk with regard to corruption and bribery. In ALK, these are to be found in commercial operations and medical affairs functions. Among ALK employees in such functions, 99% completed the global Code of Conduct e-learning course in 2024. Additional targeted training is offered at local level to these employees in these functions, to cover specific compliance matters such as promo- tional activities and interactions with health- care professionals. As 2024 is the first year of reporting of functions-at-risk, ALK does not have a specific target on completion rate of functions-at-risk Code of Conduct training. Severe human rights incidents # - - Training and awareness activities are essential for fostering a culture of integrity and creating a common understanding of what is expected from ALK’s employees. Amount of fines, penalties, and compensation for damages for severe human rights incidents DKKm All new hires are required to confirm that they agree to act in accordance with the Code of Conduct. Online training on the Code of Conduct is also rolled out annually for all employees. It includes all ELT members and ALK employee representatives serving on the Board of Directors. In 2024, ALK was not liable for any fines, penalties, or compensation for damages as a result of work-related Alertline reports or severe human rights incidents. Therefore, no related amounts have been accounted for in the financial statements. The training covers relevant business conduct topics including anti-corruption, ALK Alertline, communications, promotion & social media, Management's review Governance information ALK Annual report 2024 91 Accounting policies – Governance information The numeric datapoints reported are verified through internal controls, analysis, benchmarks, and regular business meetings. External auditors provide limited assurance on 2024 metrics, but they are not validated by another external body. G1-4 Corruption and bribery Bribery can take the form of money, gifts, loans, fees, hospitality, services, discounts, the award of a contract or any other advantage or benefit, and it comprises any financial or other inducement or reward for an action which is illegal, unethical, a breach of trust or improper in any way. Corruption is defined as abuse of entrusted power by someone for personal gain. Business conduct S1-17 Incidents, complaints and severe human rights impacts ALK Alertline is the company’s whistleblower system, which can be used to report serious and sensitive concerns - including serious offenses against persons such as discrimination. For purposes of the reporting, convictions in scope are final decisions or acts by courts of law, which constitute criminal convictions under applicable local law in the jurisdiction where the decision or act takes place. As required by the ESRS, only convictions where ALK or its employees are directly involved are considered within scope. Fines relating to such convictions are reported in the reporting year when they are imposed and final (i.e., no longer under appeal or in dispute). Work-related complaints and reports refer to allegations registered on Alertline which involve ALK’s own work- force. Severe human rights incidents refer to substanti- ated incidents of human rights violations pertaining to ALK’s own workforce. G1-3 Prevention and detection of corruption and bribery “Percent of functions at risk covered by training programs” refers to the percentage of Code of Conduct e-learning completion for employees in commercial operations or medical affairs. The Code of Conduct e-learning course was rolled out between March and May 2024. Fines, penalties and compensation for damages are “as a result” of allegations and complaints only when such allegations and complaints are substantiated and undis- puted. They are reported in the reporting year when they are imposed and final (i.e., the amount is no longer under appeal or in dispute). Management's review Appendix ALK Annual report 2024 92 Appendix Incorporation by reference 92 Incorporation by reference 94 Core elements of due diligence 96 Content index of ESRS disclosure requirements 99 List of datapoints that derive from other EU legislation The table below provides an overview of information incorporated by reference as part of other sections of this annual report, by stating the datapoint code beneath the relevant header, which remains applicable until the next header of the same level. When the datapoint applies to a specific part of a section, the datapoint code is cited in a footnote. Disclosure Requirement Disclosure Requirement code Disclosed in section Disclosed on page name Datapoint code ESRS 2-BP2-16 ESRS 2-BP2 Disclosures in relation to specific circumstances Incorporation by reference 92-93 28-29 28-29 ESRS 2-GOV1 The role of the administrative, ESRS 2-GOV1-21a ESRS 2-GOV1-21b ESRS 2-GOV1-21c ESRS 2-GOV1-21d ESRS 2-GOV1-21e ESRS 2-GOV1-23 ESRS 2-GOV1-23a ESRS 2-GOV1-23b Corporate governance management and supervisory bodies Corporate governance Board of Direc- 33-34 tors Corporate governance 28-29 28-29 29 Corporate governance Corporate governance Corporate governance 29 Corporate 29 governance ESRS 2-GOV3 Integration of sustainability- All data points related performance in Corporate governance 30 incentive schemes ESRS 2-GOV4 Statement on due diligence ESRS 2-GOV4-32 Core elements 94-95 of due diligence Management's review Appendix Incorporation by reference ALK Annual report 2024 93 Disclosure Requirement Disclosure Requirement code name Disclosure Requirement Disclosure Requirement Disclosed in section Disclosed on page Disclosed in section Disclosed on page Datapoint code code S1-6 S4-4 name Datapoint code S1-6-50f ESRS 2-SBM1 Strategy, business model ESRS 2-SBM1-40 Sales and market trends 19 19 19 Characteristics of the undertaking’s employees Staff costs 116 and value chain ESRS 2-SBM1-40a.i Sales and market trends ESRS 2-SBM1-40a.ii Sales and market trends ESRS 2-SBM1-40a.iii ALK at a glance Taking action on material impacts on consumers and end- users, and approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and effectiveness of those actions All data points Strategy 10 -11; 16-17 progress; Expanding the addressable markets 5 9 ESRS 2-SBM1-40e ESRS 2-SBM1-40f ESRS 2-SBM1-40g Introduction to + Allergy Sales and market trends 19 G1-GOV1 The role of the adminis- trative, management and supervisory bodies G1-GOV1-5a G1-GOV1-5b Corporate governance 29 29 Expanding the 16-17 addressable markets Corporate governance ESRS 2-SBM1-42 ESRS 2-SBM1-42a ESRS 2-SBM1-42b ESRS 2-SBM1-42c ESRS 2-IRO2-56 Business model Business model Business model Business model 6 6 6 6 Phased-in Disclosure Requirements ESRS 2-IRO2 Disclosure Requirements in ESRS covered by Content index of 96-105 ESRS disclosure requirements; List of data- Disclosure Requirement / Datapoint code the undertaking’s sustainability statement Disclosure Requirement / Datapoint name points that derive from other EU legis- lation ESRS 2-SBM3-48e E1-9 Anticipated financial effects Anticipated financial effects from material physical and transition risks and potential climate-related opportunities S1-7 Characteristics of non-employees in the undertaking’s own workforce Average training time per employee and by gender Cases of work-related illness E1-GOV3 E1-3 Integration of sustainability- E1-GOV3-13 related performance in incentive schemes Corporate governance 30 S1-13-83b S1-14-88d S1-14-88e Lost time due to work-related injuries, fatalities and illness Actions and resources in relation to climate change policies E1-3-29c.i Income state- ment 107; 123 Management's review Appendix ALK Annual report 2024 94 Core elements of due diligence The table below maps the core elements of ALK's due diligence process, cross-referencing the impacts on people and the environment with the relevant disclosures in the sustainability statement. ESRS 2-GOV4 Statement on due diligence Does the disclosure relate to people and/or the environment? Does the disclosure relate to people and/or the environment? Core elements of Due Diligence Pages in the sustainability statement Core elements of Due Diligence Pages in the sustainability statement a) Embedding due diligence in governance, strategy and business model ESRS 2 GOV-2, pages 37-38 ESRS 2 GOV-3, pages 38 ESRS 2 SBM-3, pages 44-48 People and environment People and environment People and environment Environment b) Engaging with affected stakeholders in all key steps of the due diligence ESRS 2 GOV-2, pages 37-38 ESRS 2 SBM-2, pages 39-40 ESRS 2 IRO-1, pages 41-43 People and environment People and environment People and environment Environment ESRS 2 SBM-3-E1, page 50 ESRS 2 SBM-3-E2, page 56 ESRS 2 SBM-3-E3, page 58 ESRS 2 SBM-3-E4, page 61 ESRS 2 SBM-3-E5, pages 63-64 ESRS 2 MDR-P: E1-2, page 51 E2-1, page 57 E3-1, page 59 E4-2, page 62 E5-1, page 64 ESRS 2 SBM-3-S1, pages 74-75; 79 ESRS 2 SBM-3-S2, page 81 ESRS 2 SBM-3-S4, pages 83-84 People ESRS 2 MDR- P: S1-1, pages 75; 79 S2-1, pages 81-82 S4-1, page 84 People People ESRS 2 SBM-3-G1, pages 87-88 People and environment S1-2, pages 75-76 S2-2, page 82 S4-2, page 84 Management's review Appendix Core elements of due diligence ALK Annual report 2024 95 Does the disclosure relate to people and/or the environment? Does the disclosure relate to people and/or the environment? Core elements of Due Diligence Pages in the sustainability statement Core elements of Due Diligence Pages in the sustainability statement c) Identifying and assessing adverse impacts ESRS 2 IRO-1, pages 41-43 ESRS 2 SBM-3, pages 44-48 People and environment People and environment Environment e) Tracking effectiveness of these efforts and communi- cating ESRS 2 MDR-M: E1-5, page 55 E1-6, pages 53-54 E2-5, page 57 E3-4, page 60 E5-4, page 65 E5-5, pages 65-66 Environment ESRS 2 SBM-3-E1, page 50 ESRS 2 SBM-3-E2, page 56 ESRS 2 SBM-3-E3, page 58 ESRS 2 SBM-3-E4, page 61 ESRS 2 SBM-3-E5, pages 63-64 ESRS 2 MDR-M: S1-13, page 78 S1-14, page 80 S1-16, page 78 S1-17, pages 80; 90 People ESRS 2 SBM-3-S1, pages 74-75; 79 ESRS 2 SBM-3-S2, page 81 ESRS 2 SBM-3-S4, pages 83-84 People ESRS 2 SBM-3-G1, pages 87-88 People and environment Environment d) Taking actions to address those adverse impacts ESRS 2 MDR-A: E1-3, page 51 E2-2, page 57 E3-2, page 59 E4-3, page 62 E5-2, page 64 G1-4, pages 89-90 People and environment Environment E1-4, page 52 E2-3, page 57 E3-3, page 60 E4-4, page 62 E5-3, page 65 ESRS 2 MDR-A: S1-4, pages 76; 80 S2-4, page 82 S4-4, page 85 People S1-5, page 76 S2-5, page 82 S4-5, page 85 People E1-1, page 49 E4-1, page 61 Environment G1-1, pages 87-88 G1-3, pages 89-90 People and environment Management's review Appendix ALK Annual report 2024 96 Content index of ESRS disclosure requirements The table below presents the disclosure requirements from ESRS 2 and the nine topical standards relevant to ALK and indicates where to find information related to each specific requirement. ESRS 2-IRO2 Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement List of material Disclosure Requirements Page number List of material Disclosure Requirements Page number ESRS 2 BP-1 General Disclosures E1 Climate change General basis for preparation of the sustainability statement Disclosures in relation to specific circumstances 36 ESRS 2 GOV-3-E1 schemes Integration of sustainability-related performance in incentive 30 BP-2 36; 54; 60; 78; 85; 92-93 E1-1 Transition plan for climate change mitigation 30; 49; 51 GOV-1 GOV-2 The role of the administrative, management and supervisory bodies 28-29; 33-34; 37-38 ESRS 2 Material impacts, risks and opportunities and their interaction with 50; 84 SBM-3-E1 strategy and business model Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies 37-38 ESRS 2 IRO-1-E1 Description of the processes to identify and assess material 41 climate-related impacts, risks and opportunities Policies related to climate change mitigation and adaptation Actions and resources in relation to climate change policies Targets related to climate change mitigation and adaptation Energy consumption and mix E1-2 E1-3 E1-4 E1-5 E1-6 51 GOV-3 Integration of sustainability-related performance in incentive schemes 30; 38 51; 53-54; 107; 123 51-52 55 GOV-4 GOV-5 Statement on due diligence 38; 94-95 38 Risk management and internal controls over sustainability reporting Gross Scopes 1, 2, 3 and Total GHG emissions 53-54 SBM-1 Strategy, business model and value chain 5; 6; 9; 16-17; 19; 39 E2 Pollution ESRS 2 Material impacts, risks and opportunities and their interaction with 56 41 SBM-2 SBM-3 Interests and views of stakeholders 39-40 ; 41-43 SBM-3-E2 strategy and business model Material impacts, risks and opportunities and their interaction with strategy and business model 44-48; 50; 56; 58; 61; 63; 74-75; 79; 81; 83-84; 87-88 ESRS 2 Description of the processes to identify and assess material IRO-1-E2 pollution-related impacts, risks and opportunities E2-1 E2-2 E2-3 E2-5 Policies related to pollution 57 57 57 57 IRO-1 IRO-2 Description of the processes to identify and assess material impacts, risks and opportunities 41-43 Actions and resources related to pollution Targets related to pollution Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement 42; 48; 96-105 Substances of concern and substances of very high concern Management's review Appendix Content index of ESRS disclosure requirements ALK Annual report 2024 97 List of material Disclosure Requirements Page number List of material Disclosure Requirements Page number E3 Water and marine resources E5 Resource use and circular economy Material impacts, risks and opportunities and their interaction with ESRS 2 Material impacts, risks and opportunities and their interaction with 58 42 ESRS 2 63 SBM-3-E3 strategy and business model SBM-3-E5 strategy and business model ESRS 2 Description of the processes to identify and assess material water ESRS 2 Description of the processes to identify and assess material 42-43 IRO-1-E3 and marine resources-related impacts, risks and opportunities Policies related to water and marine resources Actions and resources related to water and marine resources Targets related to water and marine resources Water consumption IRO-1-E5 resource use and circular economy-related impacts, risks and opportunities E3-1 E3-2 E3-3 E3-4 59 59 60 60 E5-1 E5-2 Policies related to resource use and circular economy 64 64 Actions and resources related to resource use and circular economy E5-3 E5-4 E5-5 Targets related to resource use and circular economy Resource inflows 65 65 E4 Biodiversity and ecosystems Resource outflows 65 -66 E4-1 Transition plan and consideration of biodiversity and ecosystems in strategy and business model 61 61 42 S1 Own workforce ESRS 2 Material impacts, risks and opportunities and their interaction with SBM-3-E4 strategy and business model ESRS 2 SBM-2-S1 Interests and views of stakeholders 39-40 ESRS 2 Description of processes to identify and assess material biodi- IRO-1-E4 versity and ecosystem-related impacts, risks dependencies and opportunities ESRS 2 Material impacts, risks and opportunities and their interaction with 74-75; 79 SBM-3-S1 strategy and business model E4-2 E4-3 E4-4 Policies related to biodiversity and ecosystems 62 62 62 S1-1 S1-2 Policies related to own workforce 75; 79; 88 75-76 Actions and resources related to biodiversity and ecosystems Targets related to biodiversity and ecosystems Processes for engaging with own workforce and workers' repre- sentatives about impacts S1-3 Processes to remediate negative impacts and channels for own workforce to raise concerns 79-80; 88-89 Management's review Appendix Content index of ESRS disclosure requirements ALK Annual report 2024 98 List of material Disclosure Requirements Page number List of material Disclosure Requirements Page number S1-4 Taking action on material impacts on own workforce, and 80 S4 Consumers and End-users approaches to mitigating material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions ESRS 2 SBM-2-S4 Interests and views of stakeholders 39-40 ESRS 2 Material impacts, risks and opportunities and their interaction with 83-84 S1-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 76 SBM-3-S4 strategy and business model S4-1 S4-2 Policies related to consumers and end-users 84; 88-89 39-40; 84 S1-6 Characteristics of the undertaking’s employees Training and skills development metrics 77; 116 78 Processes for engaging with consumers and end-users about impacts S1-13 S1-14 S1-16 S1-17 Health and safety metrics 80 S4-3 S4-4 Processes to remediate negative impacts and channels for consumers and end-users to raise concerns 85; 88-89 Remuneration metrics (pay gap and total remuneration) Incidents, complaints and severe human rights impacts 78 80; 90 10 -11; 16-17; 85 Taking action on material impacts on consumers and end-users, and approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and effective- ness of those actions S2 Workers in the value chain ESRS 2 SBM-2-S2 Interests and views of stakeholders 39-40 81 S4-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 85 ESRS 2 Material impacts, risks and opportunities and their interaction with SBM-3-S2 strategy and business model G1 Business Conduct S2-1 S2-2 S2-3 Policies related to value chain workers 81-82 82 ESRS 2 Material impacts, risks and opportunities and their interaction with 87-88 29 Processes for engaging with value chain workers about impacts SBM-3-G1 strategy and business model Processes to remediate negative impacts and channels for value chain workers to raise concerns 82; 88-89 ESRS 2 GOV-1-G1 bodies The role of the administrative, management and supervisory S2-4 Taking action on material impacts on value chain workers, and approaches to managing material risks and pursuing material opportunities related to value chain workers, and effectiveness of those actions 82; 90 82 ESRS 2 Description of the processes to identify and assess material 42 IRO-1-G1 impacts, risks and opportunities G1-1 G1-3 G1-4 Business conduct policies and corporate culture 81-82; 87-88; 90 89-90 Prevention and detection of corruption and bribery Incidents of corruption or bribery S2-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities 89-90 Management's review Appendix ALK Annual report 2024 99 List of datapoints that derive from other EU legislation The table below includes all the ESRS datapoints that derive from other EU legislation and indicates where the information can be found if deemed material. Benchmark Regulation reference EU Climate Law reference Material / Not material Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Page number ESRS 2 GOV-1 Board's gender diversity paragraph 21 (d) Indicator number 13 of Table #1 of Annex 1 Commission Delegated Regulation (EU) Material 28-29 2020/1816, Annex II ESRS 2 GOV-1 Percentage of board members who are independent paragraph 21 (e) Delegated Regulation (EU) 2020/1816, Annex II Material 28-29 94-95 ESRS 2 GOV-4 Statement on due diligence paragraph 30 Indicator number 10 Table #3 of Annex 1 Material ESRS 2 SBM-1 Involvement in activities related to fossil fuel activities paragraph 40 (d) i Indicators number 4 Table #1 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Delegated Regulation (EU) 2020/1816, Annex II Not material Table 1: Qualitative information on Environmental risk and Table 2: Qualitative information on Social risk ESRS 2 SBM-1 Involvement in activities related to chemical production paragraph 40 (d) ii Indicator number 9 Table #2 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Not material Not material ESRS 2 SBM-1 Involvement in activities related to controversial weapons paragraph 40 (d) iii Indicator number 14 Table #1 of Annex 1 Delegated Regulation (EU) 2020/1818, Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II ESRS 2 SBM-1 Involvement in activities related to cultivation and production of tobacco paragraph 40 (d) iv Delegated Regulation (EU) 2020/1818, Article 12(1) Delegated Regulation (EU) Not material 2020/1816, Annex II Management's review Appendix List of datapoints that derive from other EU legislation ALK Annual report 2024 100 Benchmark Regulation reference EU Climate Law reference Material / Not material Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Page number ESRS E1-1 Regulation Material 49 Transition plan to reach climate neutrality by 2050 paragraph 14 (EU) 2021/1119, Article 2(1) ESRS E1-1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book-Climate Change transition risk: Credit quality of exposures by sector, emissions and residual maturity Delegated Regulation (EU) 2020/1818, Article12.1 (d) to (g), and Article 12.2 Material 49 Undertakings excluded from Paris-aligned Benchmarks paragraph 16 (g) ESRS E1-4 Indicator number 4 Table #2 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate change transition risk: alignment metrics Delegated Regulation (EU) 2020/1818, Article 6 Material Material 51-52 55 GHG emission reduction targets paragraph 34 ESRS E1-5 Indicator number 5 Table #1 and Indicator n. 5 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) paragraph 38 Table #2 of Annex 1 ESRS E1-5 Indicator number 5 Table #1 of Annex 1 Material Material 55 55 Energy consumption and mix paragraph 37 ESRS E1-5 Indicator number 6 Table #1 of Annex 1 Energy intensity associated with activities in high climate impact sectors paragraphs 40 to 43 ESRS E1-6 Indicators number 1 and 2 Table #1 of Annex 1 Article 449a; Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Delegated Regulation (EU) 2020/1818, Article 5(1), 6 and 8(1) Material 54 Gross Scope 1, 2, 3 and Total GHG emissions paragraph 44 Template 1: Banking book – Climate change transition risk: Credit quality of exposures by sector, emissions and residual maturity ESRS E1-6 Indicators number 3 Table #1 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Delegated Regulation (EU) 2020/1818, Article 8(1) Material 54 Gross GHG emissions intensity paragraphs 53 to 55 Template 3: Banking book – Climate change transition risk: alignment metrics Management's review Appendix List of datapoints that derive from other EU legislation ALK Annual report 2024 101 Benchmark Regulation reference EU Climate Law reference Material / Not material Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Page number ESRS E1-7 Regulation Not material GHG removals and carbon credits paragraph 56 (EU) 2021/1119, Article 2(1) ESRS E1-9 Delegated Regulation (EU) 2020/1818, Annex II Delegated Regulation (EU) 2020/1816, Annex II Phase-in Phase-in Exposure of the benchmark portfolio to climate- related physical risks paragraph 66 ESRS E1-9 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Disaggregation of monetary amounts by acute and chronic physical risk paragraph 66 (a) ESRS E1-9 paragraphs 46 Location of significant assets at material physical risk paragraph 66 (c). and 47; Template 5: Banking book - Climate change physical risk: Exposures subject to physical risk. ESRS E1-9 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraph 34; Template 2:Banking book -Climate change transition risk: Loans collateralised by immovable property - Energy efficiency of the collateral Phase-in Breakdown of the carrying value of its real estate assets by energy-efficiency classes paragraph 67 (c). ESRS E1-9 Delegated Regulation (EU) 2020/1818, Annex II Phase-in Degree of exposure of the portfolio to climate- related opportunities paragraph 69 ESRS E2-4 Indicator number 8 Table #1 of Annex 1 Indicator number 2 Table #2 of Annex 1 Indicator number 1 Table #2 of Annex 1 Indicator number 3 Table #2 of Annex 1 Not material Amount of each pollutant listed in Annex II of the E-PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil, paragraph 28 Management's review Appendix List of datapoints that derive from other EU legislation ALK Annual report 2024 102 Benchmark Regulation reference EU Climate Law reference Material / Not material Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Page number ESRS E3-1 Water and marine resources paragraph 9 Indicator number 7 Table #2 of Annex 1 Material 59 ESRS E3-1 Dedicated policy paragraph 13 Indicator number 8 Table 2 of Annex 1 Not material Material ESRS E3-1 Indicator number 12 Table #2 of Annex 1 59 60 60 Sustainable oceans and seas paragraph 14 ESRS E3-4 Indicator number 6.2 Table #2 of Annex 1 Material Total water recycled and reused paragraph 28 (c) ESRS E3-4 Indicator number 6.1 Table #2 of Annex 1 Material Total water consumption in m3 per net revenue on own operations paragraph 29 ESRS 2- SBM 3 - E4 paragraph 16 (a) i Indicator number 7 Table #1 of Annex 1 Material Material Material Material 61 61 61 62 ESRS 2- SBM 3 - E4 paragraph 16 (b) Indicator number 10 Table #2 of Annex 1 ESRS 2- SBM 3 - E4 paragraph 16 (c) Indicator number 14 Table #2 of Annex 1 ESRS E4-2 Indicator number 11 Table #2 of Annex 1 Sustainable oceans / seas practices or policies paragraph 24 (c) ESRS E4-2 Indicator number 12 Table #2 of Annex 1 Material 62 Sustainable oceans / seas practices or policies paragraph 24 (c) ESRS E4-2 Indicator number 15 Table #2 of Annex 1 Material Material Material 62 Policies to address deforestation paragraph 24 (d) ESRS E5-5 Non-recycled waste paragraph 37 (d) Indicator number 13 Table #2 of Annex 1 65-66 65-66 ESRS E5-5 Hazardous waste and radioactive waste paragraph 39 Indicator number 9 Table #1 of Annex 1 ESRS 2- SBM3 - S1 Risk of incidents of forced labour paragraph 14 (f) Indicator number 13 Table #3 of Annex I Not material Not material ESRS 2- SBM3 - S1 Risk of incidents of child labour paragraph 14 (g) Indicator number 12 Table #3 of Annex I Management's review Appendix List of datapoints that derive from other EU legislation ALK Annual report 2024 103 Benchmark Regulation reference EU Climate Law reference Material / Not material Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Page number ESRS S1-1 Indicator number 9 Table #3 and Material 75 Human rights policy commitments paragraph 20 Indicator number 11 Table #1 of Annex I ESRS S1-1 Delegated Regulation (EU) 2020/1816, Annex II Material 75 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 21 ESRS S1-1 Indicator number 11 Table #3 of Annex I Material Material Material Material Phase-in Material 75 processes and measures for preventing trafficking in human beings paragraph 22 ESRS S1-1 workplace accident prevention policy or management system paragraph 23 Indicator number 1 Table #3 of Annex I 79 ESRS S1-3 Indicator number 5 Table #3 of Annex I 88-89 80 grievance/complaints handling mechanisms paragraph 32 (c) ESRS S1-14 Indicator number 2 Table #3 of Annex I Delegated Regulation (EU) 2020/1816, Annex II Number of fatalities and number and rate of work- related accidents paragraph 88 (b) and (c) ESRS S1-14 Indicator number 3 Table #3 of Annex I Number of days lost to injuries, accidents, fatalities or illness paragraph 88 (e) ESRS S1-16 Unadjusted gender pay gap paragraph 97 (a) Indicator number 12 Table #1 of Annex I Delegated Regulation (EU) 2020/1816, Annex II 78 ESRS S1-16 Excessive CEO pay ratio paragraph 97 (b) Indicator number 8 Table #3 of Annex I Material Material Material 78 90 90 ESRS S1-17 Incidents of discrimination paragraph 103 (a) Indicator number 7 Table #3 of Annex I ESRS S1-17 Indicator number 10 Table #1 and Indicator n. 14 Table #3 of Annex I Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818 Art 12 (1) Non-respect of UNGPs on Business and Human Rights and OECD paragraph 104 (a) Management's review Appendix List of datapoints that derive from other EU legislation ALK Annual report 2024 104 Benchmark Regulation reference EU Climate Law reference Material / Not material Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Page number ESRS 2- SBM3 – S2 Significant risk of child labour or forced labour in the value chain paragraph 11 (b) Indicators number 12 and n. 13 Table #3 of Annex I Material 81 ESRS S2-1 Indicator number 9 Table #3 and Material 81-82 Human rights policy commitments paragraph 17 Indicator n. 11 Table #1 of Annex 1 ESRS S2-1 Indicator number 11 and n. 4 Table #3 of Annex 1 Material Material 81-82 81-82 Policies related to value chain workers paragraph 18 ESRS S2-1 Indicator number 10 Table #1 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines paragraph 19 Delegated Regulation (EU) 2020/1818, Art 12 (1) ESRS S2-1 Delegated Regulation (EU) 2020/1816, Annex II Material 81-82 82; 90 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 19 ESRS S2-4 Indicator number 14 Table #3 of Annex 1 Material Human rights issues and incidents connected to its upstream and downstream value chain paragraph 36 ESRS S3-1 Indicator number 9 Table #3 of Annex 1 and Indicator number 11 Table #1 of Annex 1 Not material Human rights policy commitments paragraph 16 ESRS S3-1 Indicator number 10 Table #1 Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Not material Not material non-respect of UNGPs on Business and Human Rights, ILO principles or and OECD guidelines paragraph 17 ESRS S3-4 Indicator number 14 Table #3 of Annex 1 Human rights issues and incidents paragraph 36 Management's review Appendix List of datapoints that derive from other EU legislation ALK Annual report 2024 105 Benchmark Regulation reference EU Climate Law reference Material / Not material Disclosure Requirement and related datapoint SFDR reference Pillar 3 reference Page number ESRS S4-1 Indicator number 9 Table #3 and Indicator number 11 Table #1 of Annex 1 Material 84 Policies related to consumers and end-users paragraph 16 ESRS S4-1 Indicator number 10 Table #1 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Material 84 Non-respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 17 Delegated Regulation (EU) 2020/1818, Art 12 (1) ESRS S4-4 Indicator number 14 Table #3 of Annex 1 Not material Not material Human rights issues and incidents paragraph 35 ESRS G1-1 Indicator number 15 Table #3 of Annex 1 United Nations Convention against Corruption paragraph 10 (b) ESRS G1-1 Indicator number 6 Table #3 of Annex 1 Not material Material Protection of whistle- blowers paragraph 10 (d) ESRS G1-4 Indicator number 17 Table #3 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II) 89 89 Fines for violation of anti- corruption and anti-bribery laws paragraph 24 (a) ESRS G1-4 Indicator number 16 Table #3 of Annex 1 Material Standards of anti- corruption and anti- bribery paragraph 24 (b) Financial statements ALK Annual report 2024 106 Consolidated financial statements Notes Section 1 Basis of reporting Section 4 Capital structure and financing 1.1 1.2 Accounting policy information Significant accounting estimates and judgements 113 111 4.1 4.2 Share capital and earnings per share Financial risks and financial instruments 133 134 Section 2 Results for the year Section 5 Other disclosures 107 Income statement 107 Statement of comprehensive income 108 Cash flow statement 109 Balance sheet 110 Statement of changes in equity 2.1 2.2 2.3 2.4 2.5 2.6 Revenue and segment information Expenses Depreciation, amortisation and impairment Staff costs Fees to the ALK Group’s auditors Financial income and expenses 114 115 116 116 117 117 5.1 5.2 5.3 5.4 5.5 5.6 5.7 Share-based payments Cash flow 138 141 142 143 143 143 144 Business combinations Related parties Events after the reporting period Approval of financial statements List of companies in the ALK Group 145 Definitions Section 3 Operating assets and liabilities 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 Intangible assets Property, plant and equipment Leases Inventories Trade receivables Prepayments Pensions and similar liabilities Provisions Other payables 121 123 125 127 128 128 129 131 131 132 3.10 Contingent liabilities and commitments Financial statements Consolidated financial statements ALK Annual report 2024 107 Income statement Statement of comprehensive income Amounts in DKKm Note 2024 2023 Amounts in DKKm Note 2024 815 2023 486 Revenue 2.1 5,537 1,985 3,552 4,824 1,789 3,035 Net profit Cost of sales Gross profit 2.2-2.4, 3.4, 5.1 Items that will subsequently not be reclassified to the income statement: Actuarial gains/(losses) on pension plans 3.7 2.7 3 (1) Research and development expenses Sales and marketing expenses Administrative expenses 2.2-2.4, 5.1 2.2-2.4, 5.1 2.2-2.4, 5.1 531 1,564 369 618 1,422 331 2 Tax related to actuarial gains/(losses) on pension plans (1) 1 2 - Other operating income 3 Items that will subsequently be reclassified to the income statement, when specific conditions are met: Operating profit (EBIT) 1,091 666 Foreign currency translation adjustment of foreign affiliates 83 (38) Financial income 2.6 2.6 61 95 12 31 83 (38) Financial expenses Profit before tax (EBT) 1,057 647 Other comprehensive income Total comprehensive income 85 (38) 448 Tax on profit 2.7 4.1 242 161 900 Net profit 815 486 Earnings per share (EPS) Earnings per share (EPS) 3.68 3.68 2.20 2.20 Earnings per share (DEPS), diluted Financial statements Consolidated financial statements ALK Annual report 2024 108 Cash flow statement Amounts in DKKm Note 2024 815 2023 486 Net profit Adjustments Adjustments for non-cash items Changes in working capital Financial income, received Financial expenses, paid Income tax, paid (net) 5.2 5.2 640 (151) 17 458 (203) 9 (13) (23) (60) 667 (95) 1,213 Cash flow from operating activities Acquisitions of companies and operations Purchase of intangible assets 5.3 3.1 (115) (1,043) (260) 1 - (69) (310) 4 Purchase of tangible assets 3.2-3.3 Investments in other financial assets Cash flow from investing activities (1,417) (375) Free cash flow (204) 292 Sale of treasury shares 6 (38) 671 - (20) 671 Exercised share options, paid Proceeds from borrowings Repayment of borrowings 5.2 5.2 5.2 (279) (50) 310 (636) (46) (31) Repayment of lease liabilities Cash flow from financing activities Net cash flow 106 261 Cash beginning of year 474 221 Unrealised gain/(loss) on cash held in foreign currency and financial assets carried as cash 9 106 589 (8) 261 474 Net cash flow Cash year end The consolidated statement of cash flow is compiled using the indirect method. As a result, the individual figures in the cash flow statement cannot be reconciled directly to the income statement and the balance sheet. Financial statements Consolidated financial statements ALK Annual report 2024 109 Balance sheet – Assets Balance sheet – Equity and liabilities 31 Dec. 2024 31 Dec. 2023 31 Dec. 2024 31 Dec. 2023 Amounts in DKKm Note Amounts in DKKm Note Non-current assets Equity Intangible assets Goodwill Share capital 4.1 111 65 111 (18) 3.1 3.1 463 1,329 1,792 459 212 671 Currency translation adjustment Retained earnings Total equity Other intangible assets 5,197 5,373 4,354 4,447 Tangible assets Land and buildings 3.2-3.3 3.2 1,137 603 994 511 Liabilities Plant and machinery Non-current liabilities Mortgage debt Other fixtures and equipment Property, plant and equipment in progress 3.2-3.3 3.2 79 80 4.2 3.7 4.2 166 251 285 45 184 245 255 46 528 596 Pensions and similar liabilities Lease liabilities 2,347 2,181 Other non-current assets Prepayments Deferred income 26 642 145 813 49 659 198 906 Provisions 3.8 2.7 1 1 Deferred tax assets Income tax receivables 2.7 Deferred tax liabilities Income tax payables 3 4 173 924 230 965 Total non-current assets Current assets 4,952 3,758 Current liabilities Mortgage debt Bank loans 4.2 4.2 19 671 165 46 19 261 128 46 Trade payables Lease liabilities Deferred income Provisions Inventories 3.4 3.5 1,716 812 10 1,423 816 34 4.2 3.8 3.9 Trade receivables Income tax receivables Other receivables Prepayments 4 4 38 2 49 74 Income tax payables Other payables 124 882 1,949 17 3.6 118 147 474 2,968 837 1,314 Cash 589 3,294 Total current assets Total liabilities 2,873 8,246 2,279 6,726 Total assets 8,246 6,726 Total equity and liabilities Financial statements Consolidated financial statements ALK Annual report 2024 110 Statement of changes in equity Currency translation adjust- Currency translation adjust- Share capital Retained earnings Total equity Share capital Retained earnings Total equity Amounts in DKKm ment Amounts in DKKm ment 2024 2023 Equity at 1 January 111 (18) 4,354 4,447 Equity at 1 January 111 20 3,857 3,988 Net profit - - - - 83 83 815 2 815 85 Net profit - - - - 486 - 486 (38) 448 Other comprehensive income/(loss) Total comprehensive income Other comprehensive income/(loss) Total comprehensive income (38) (38) 817 900 486 Share-based payments Share options settled - - - - - - - - - - - - 51 (38) 6 51 (38) 6 Share-based payments - - - - - - - - - - 30 (20) - 30 (20) - Share options settled Sale of treasury shares Sale of treasury shares Tax related to items recognised directly in equity Other adjustments 8 8 Tax related to items recognised directly in equity Other transactions 1 1 (1) 26 (1) 26 11 11 Other transactions Equity at 31 December 111 (18) 4,354 4,447 Equity at 31 December 111 65 5,197 5,373 Financial statements Notes to the consolidated financial statements ALK Annual report 2024 111 Section 1 – Basis of reporting 1.1 Accounting policy information than DKK, the income statements are translated at average exchange rates for the respective months, unless these deviate materially from the actual exchange rates at the transaction dates. In that case, the actual exchange rates are used. Balance sheet items are translated at the exchange rates at the balance sheet date. Goodwill is considered to belong to the acquired company in question and is translated at the exchange rate at the balance sheet date. The consolidated financial statements for the period 1 January to 31 December 2024 have been prepared in accordance with the IFRS accounting standards as adopted by the EU and in accor- dance with Danish disclosure requirements for listed companies. Additional Danish disclosure requirements for annual reports are imposed by the Statutory Order on Adoption of IFRS issued under the Danish Financial Statements Act. New standards effective from 1 January 2024 The ALK Group has implemented all new and amended standards and IFRIC interpretations which are effective for the financial year 2024. This has not resulted in any changes to the accounting policies of the ALK Group. The consolidated financial statements are prepared as a consolidation of items of a uniform nature. The financial statements used for conso- lidation are prepared in accordance with the ALK Group’s accounting policies. On consolidation, intra-group income and expenses, intra-group balances and dividends, and gains and losses arising on intra-group transactions are eliminated. New standards effective on or after 1 January 2025 A number of IFRS standards, amended standards and IFRIC interpretations, which are effective on or after 1 January 2025, have not been imple- mented. Based on a preliminary assessment it is estimated that these standards and interpreta- tions will have no material impact on the consoli- dated financial statements apart from IFRS18. The consolidated financial statements are presented in Danish kroner (DKK), which is consi- dered the primary currency of the ALK Group’s activities and the functional currency of the parent company. The consolidated financial statements are presented on a historical cost basis, apart from certain financial instruments, which are measured at fair value. The general accounting policies described below apply to the consolidated financial statements as a whole. To enhance understanding, specific accounting policies are described in the notes to which they relate. The description of accoun- ting policies in the notes form part of the overall description of accounting policies. The accounting policies are unchanged from last year except for the below mentioned impacts of new standards. Foreign currency translation On initial recognition, transactions denominated in currencies other than DKK are translated at average exchange rates, which are an approxi- mation of the exchange rates at the transaction date. Receivables and debt and other monetary items not settled at the balance sheet date are translated at the closing rate. Exchange rate differences between the exchange rate at the date of the transaction and the exchange rate at the date of payment or the balance sheet date, respectively, are recognised in the income statement under financial items. Tangible assets and intangible assets, invento- ries and other nonmonetary assets acquired in foreign currency and measured based on histo- rical cost are translated at the exchange rates at the transaction date. On recognition in the consolidated financial state- ments of subsidiaries whose financial statements are presented in a functional currency other Exchange rate differences arising on the trans- lation of foreign subsidiaries’ opening balance sheet items to the exchange rates at the balance sheet date and on the translation of the income statements from average exchange rates to exchange rates at the balance sheet date are recognised in other comprehensive income. Foreign exchange rate adjustment of receivables or debt to subsidiaries which are considered part of the parent company’s overall investment in the subsidiary in question are also recognised in other comprehensive income in the consolidated financial statements. IFRS18 Presentation and Disclosure in Financial Statements is effective for annual period begin- ning on or after 1 January 2027. The ALK Group is currently assessing the implications of applying the new standard on the consolidated financial statements. Although the adoption of IFRS 18 will have no impact on the net profit, the ALK Group expects that the new grouping of items of income and expenses in the income statement will impact how operating profit is calculated and reported. Definitions and ratios The key ratios have been calculated in accor- dance with generally accepted financial ratios applied by financial analysts. Definitions are shown on page 145. Basis of consolidation The consolidated financial statements comprise the financial statements of ALK-Abelló A/S (the parent company) and companies (subsidiaries) controlled by the parent company. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 112 Section 1 – Basis of reporting 1.1 Accounting policy information – continued Reporting under the ESEF regulation The Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF) (ESEF Regulation) has introduced a single electronic reporting format for the annual financial reports of issuers with securities listed on the EU regulated markets. The ESEF Regulation sets out the following main requirements: (1) Issuers shall draw up and disclose their annual financial reports using the XHTML format; and (2) issuers that draw-up their primary consolidated financial statements in accordance with IFRS as endorsed by the EU shall tag those consolidated financial state- ments using inline eXtensible Business Reporting Language (iXBRL) including block-tag of the notes to the consolidated financial statements. As part of the tagging process financial state- ment line items are marked up to elements in the ESEF taxonomy. If a financial statement line item is not defined in the ESEF taxonomy, an extension to the taxonomy is created. Extensions have to be anchored to elements in the ESEF taxonomy, except for elements corresponding to subtotals. The tagging process is a process where iXBRL tags are applied to financial statement line items, notes etc. ESEF data Name of reporting entity or other means of identification ALK-Abelló A/S Taxonomy is an electronic dictionary of business reporting elements used to report business data. A taxonomy element is an element defined in a taxonomy that is used for the machine-readable labeling of information in an XBRL data record. Domicile of entity Denmark The annual report 2024 for the ALK Group submitted to the Danish Financial Supervisory Authority and Nasdaq consists of the XHTML docu- ment together with some technical files all included in a ZIP file named alk-2024-12-31-en.zip. Legal form of entity A/S Country of incorporation Denmark Key definitions XHTML (eXtensible HyperText Markup Language) is a text-based markup language used to struc- ture and mark up content such as text, images, and hyperlinks in documents that are displayed as Web pages in an updated standard Web browser like Chrome or Edge. Address of entity’s registered office Bøge Allé 6-8, DK-2970 Hørsholm Principal place of business Global The combination of the XHTML format with the iXBRL tags makes the annual financial reports both human-readable and machine-readable, thus enhancing accessibility, analysis and comparability of the information included in the annual financial reports. iXBRL tags shall comply with the ESEF taxonomy, which is included in the ESEF Regulation and developed based on the IFRS taxonomy published by the IFRS Foundation. Description of nature of entity’s operations and principal activities ALK is a global allergy solutions company iXBRL tags (or Inline XBRL tags) are hidden meta-information embedded in the source code of an XHTML document in accordance with the Inline XBRL 1.1 specification, which enables the conversion of XHTML-formatted information into a machine-readable XBRL data record by appro- priate software. Name of parent entity Lundbeckfond Invest A/S Name of ultimate parent of group Lundbeck Foundation Financial statements Notes to the consolidated financial statements ALK Annual report 2024 113 Section 1 – Basis of reporting 1.2 Significant accounting estimates and judgements In the preparation of the consolidated financial statements according to IFRS, Management is required to make certain estimates as many financial statement items cannot be reliably measured, but must be estimated. Such esti- mates comprise judgements made on the basis of the most recent information available at the reporting date. of assets and liabilities often depends on future events that are somewhat uncertain. In that connection, it is necessary to set out e.g. a course of events that reflects Management’s assess- ment of the most probable course of events. Management considers those listed below as the key accounting estimates and related judge- ments used in the preparation of the consolidated financial statements. It may be necessary to change previous esti- mates as a result of changes to the assumptions on which the estimates were based or due to supplementary information, additional experi- ence or subsequent events. Similarly, the value A description of significant accounting estimates and judgements as well as assumptions applied is included in the relevant notes. Estimate/ Note Key accounting estimates and judgements judgement Sales deductions comprising rebates, discounts, and mandated 2.1 Revenue and segment information Estimate price adjustments 2.2 Expenses Recognition of costs for outsourced clinical trials Estimate Provision for uncertain tax positions and measurement of Estimate/ 2.7 Income tax and deferred tax deferred tax assets judgement Estimate/ 3.1 Intangible assets Recoverable amount of goodwill and acquired intangible rights judgement Valuation of inventories and capitalisation of indirect production 3.4 Inventories Estimate costs Financial statements Notes to the consolidated financial statements ALK Annual report 2024 114 Section 2 – Results for the year 2.1 Revenue and segment information International Europe North America markets Total Amounts in DKKm 2024 2023 2024 2023 2024 2023 2024 2023 SLIT-tablets 2,080 1,592 209 184 562 520 2,851 2,296 SCIT/SLIT-drops 1,568 1,424 361 362 123 153 2,052 1,939 Other products and services 266 200 336 362 32 27 634 589 Total revenue 3,914 3,216 906 908 717 700 5,537 4,824 Sale of goods 5,426 4,723 Royalties 108 99 Services 3 2 Total revenue 5,537 4,824 § Accounting policies Segment information Based on the internal reporting used by the Board of Management to assess the results of operations and allo- cation of resources, the ALK Group has identified one operating segment ‘Allergy treatment’, which is in accord- ance with the way the activities are organised and managed. Even though revenue within the operating segment “Allergy treatment” can be divided by product lines and market, the main part of the activities within production, research and development, sales and marketing and administration are shared by the ALK Group as a whole. The disclosures in the financial statements include a breakdown of revenue by product line and a geographical break- down of revenue and non-current assets. The geographical information on markets is based on customer and asset location. Revenue The primary performance obligation of the ALK Group is the sale and delivery of own-manufactured goods and goods for resale for allergy treatment. Revenue from the sale of goods is recognised in the income statement upon the control of the goods being transferred to the customer, i.e. when goods are delivered. Revenue is recognised by the ALK Group at a point in time. Of total revenue, DKK 141 million (2023: DKK 104 million) is derived from Denmark. The ALK Group had more than 10% of its total revenue from Germany 25% (2023: 22%), France 17% (2023: 17%), and the USA 14% (2023: 16%) based on the location of the customers. The ALK Group’s non-current tangible and intangible assets are distributed among the following geographical markets: Revenue by product line 2024 SLIT-tablets Revenue by geography 2024 Europe International Europe North America markets Total Amounts in DKKm 2024 2023 2024 2023 2024 2023 2024 2023 Non-current tangible and intangible assets 3,066 1,953 1,069 895 4 4 4,139 2,852 SCIT/SLIT-drops North America Other International 11% 13% markets 16% 52% 37% 71% Of total non-current tangible and intangible assets, DKK 2,583 million relates to assets in Denmark (2023: DKK 1,536 million). The USA accounts for 26% (2023: 31%) of total non-current tangible and intan- gible assets. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 115 Section 2 – Results for the year 2.1 Revenue and segment information - continued 2.2 Expenses The ALK Group’s products are sold primarily to distributors of pharmaceuticals, pharmacies, and hospitals. The payment conditions for the customers vary, and are based on industry practice in the relevant markets. As a result of special trading conditions in specific markets, the credit period may be up to 180 days. § Accounting policies Cost of sales The item comprises cost of sales and production costs incurred in generating the revenue for the year. Costs for raw materials, consumables, goods for resale, production staff and a proportion of production overheads, including maintenance and depreciation, amortisation and impairment of tangible assets and intangible assets used in production as well as operation, administration and management of factories are recognised in cost of sales and production costs. In addition, the costs and write-down to net realisable value of obsolete and slow-moving goods are recognised. Revenue is measured as the fair value of the consideration received or receivable. Revenue is measured exclusive of VAT, taxes etc. charged on behalf of third parties and less any commissions and discounts in connection with sales. Furthermore, revenue includes licence income and royalties from outlicensed products as well as up-front payments, milestone payments and services in connection with partnerships. These revenues are recognised in the income statement in accordance with the agreements and when the ALK Group obtains the right to the payments, which is when services have been delivered to the customer or at the point in time the subsequent sales occur. When combined contracts are entered, the elements of the contracts are identified and assessed separately for accounting purposes. Research and development expenses The item comprises research and development expenses, including expenses incurred for wages and salaries, amortisation, impairment of capitalised development projects in progress, and other overheads as well as costs relating to research partnerships. Research expenses are recognised in the income statement when incurred. Due to the long development periods and significant uncertainties in relation to the development of new products, including risks regarding clinical trials and regulatory approvals, it is the assessment that most of the ALK Group’s development expenses do not meet the capitalisation criteria in IAS 38, Intangible Assets. Consequently, develop- ment expenses are generally recognised in the income statement when incurred. Development expenses relating to individual minor development projects running for short-term periods and subject to limited risk are capitalised under other intangible assets. Sales and marketing expenses The item comprises selling and marketing expenses, including salaries and expenses relating to sales staff, adver- tising and exhibitions, depreciation, amortisation and impairment losses on tangible assets and intangible assets used in the sales and marketing process as well as other indirect costs. Significant accounting estimates and judgements Sales deductions comprising rebates, discounts, and mandated price adjustments are estimated and accrued for at the time when the related sales are recorded. Management is required to make significant estimates in the revenue recognition relating to the accruals for sales deductions as not all conditions are known at the time of sale and as revenue can only be recognised to the extent that it is probable that a significant reversal of the recognised revenue will not occur. Management’s estimate of accruals for sales deductions is based on a calculation taking into consideration among other factors, existing contractual obligations, the extent of predictability, historical experience with similar trans- actions and whether the consideration is highly susceptible to factors outside ALK’s influence. ALK considers the accruals established for sales deductions to be reasonable and appropriate based on currently available information. The accruals for sales deductions are adjusted regularly as new or more detailed informa- tion becomes available and when actual amounts are processed. At 31 December 2024, DKK 208 million is recognised as accrued rebates, discounts, and mandated price adjust- ments (2023: DKK 241 million), cf. note 3.9. Administrative expenses The item comprises expenses incurred for management and administration, including expenses for administrative staff and management, office expenses and depreciation, amortisation and impairment losses on tangible assets and intangible assets used in administration. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 116 Section 2 – Results for the year 2.2 Expenses - continued 2.4 Staff costs Amounts in DKKm 2024 2023 Wages and salaries 1,846 1,708 Pensions, cf. note 3.7 151 145 Other social security costs, etc. 250 223 Share-based payments, cf. note 5.1 48 30 Total 2,295 2,106 Significant accounting estimates and judgements Clinical trials, which are outsourced to Clinical Research Organisations (“CROs”), take several years to complete. As such, Management is required to make estimates based on the progress and costs incurred to-date for the ongoing trials. Estimates are made in determining the amount of costs to be expensed during the period or recog- nised as prepayments or accruals on the balance sheet. At 31 December 2024, DKK 24 million is recognised as accrued expenses (2023: DKK 26 million) and DKK 20 million as prepayments in the balance sheet (2023: DKK 21 million). In 2024, external expenses for clinical trials of DKK 56 million have been recognised in the income statement (2023: DKK 150 million). Staff costs are allocated as follows: Cost of sales 885 799 Research and development expenses 331 308 Sales and marketing expenses 786 696 Administrative expenses 233 222 Included in the cost of assets 60 81 Total 2,295 2,106 2.3 Depreciation, amortisation and impairment Amounts in DKKm 2024 2023 Depreciation, amortisation and impairment allocation: Cost of sales 185 163 Research and development expenses 11 11 Sales and marketing expenses 19 20 Administrative expenses 57 51 Total 272 245 Remuneration to Management: Remuneration to Board of Management:1 Salaries and other benefits 18 19 Short-term incentive (cash bonus) 13 9 Pensions 3 2 Termination benefits - 23 Long-term incentives (share-based) based on expensed accounting value, cf. note 5.12 13 5 Total remuneration to Board of Management 47 58 Remuneration to Board of Directors 6 6 Total remuneration to Board of Management and Board of Directors 53 64 Impairment amounts to DKK 6 million (2023: DKK 1 million), of which DKK 4 million relates to impairment of tangible assets (2023: DKK 1 million) and DKK 2 million relates to impairment of intangible assets (2023: DKK 0). The impairment of tangible assets is related to impairment of production equipment of DKK 3 million and administrative equipment of DKK 1 million with no recoverable amount after impairment (2023: DKK 1 million). The impairment is recognised as cost of sales and administrative expenses. The impairment of intangible assets is related to impairment of production software of DKK 1 million and administrative software of DKK 1 million with no recoverable amount after impairment. The impairment is recognised as cost of sales and administrative expenses. Employees Average number (FTE) 2,789 2,752 Number year end (FTE) 2,753 2,824 1 In 2023, total remuneration to Board of Management included sign-on payments for the new members including a cash bonus of DKK 0.75 million and three share-based payment plans with a total grant value of DKK 23 million. 2 The expensed costs include DKK 2 million (2023: DKK 1 million) related to adjustment in the share options and performance share units expected to vest. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 117 Section 2 – Results for the year 2.5 Fees to the ALK Group’s auditors Amounts in DKKm 2024 2023 Fees to the auditors appointed at the annual general meeting: Audit services 4 4 Other opinions 2 - Tax advisory services 1 1 Other services - 1 Total 7 6 The fee for non-audit services provided by PricewaterhouseCoopers Statsautoriseret Revisionspartner- selskab (Denmark) of DKK 3 million (2023: DKK 2 million) relates to limited assurance of sustainability statement, tax advisory, and other general financial accounting matters. 2.6 Financial income and expenses Amounts in DKKm 2024 2023 Interest income1 61 12 Financial income from financial assets measured at amortised cost 61 12 Currency gains, net - - Total financial income 61 12 Interest expenses1 62 22 Financial expenses from financial liabilities measured at amortised cost 62 22 Interest expenses on uncertain tax positions, net 3 - Currency losses, net 30 9 Total financial expenses 95 31 1 In 2024, interest income and interest expenses include interest related to the resolved tax audit in Germany. Further, interest expenses include interest related to leasing of DKK 9 million (2023: DKK 7 million). § Accounting policies Financial items comprise interest receivable and interest payable, bank fees, the interest element of lease payments, realised and unrealised gains and losses on securities, cash, liabilities and foreign currency transac- tions, mortgage amortisation premium/allowance etc. and provisions for uncertain tax position. Interest expenses and income related to uncertain tax position are recognised on the balance sheet as tax liabili- ties and tax assets respectively upon the receipt of ruling from the tax authorities and correspondingly reflected in the income statement as financial items net. Interest income and expenses are accrued based on the principal and the effective rate of interest. The effective rate of interest is the discount rate to be used on discounting expected future payments in relation to the financial asset or the financial liability so that their present value corresponds to the carrying amount of the asset or liability, respectively. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 118 Section 2 – Results for the year 2.7 Income tax and deferred tax Amounts in DKKm 2024 2023 Tax on profit Current income tax 215 84 Adjustment of deferred tax 25 74 Prior years adjustments, income tax 4 10 Prior years adjustments, deferred tax (2) (7) Tax on profit for the year 242 161 Profit before tax 1,057 647 Income tax, tax rate of 22% (2023: 22%) 233 142 Effect of deviation of foreign subsidiaries’ tax rate relative to Danish tax rate (10) 24 Permanent differences 3 (5) Other taxes and adjustments 14 (7) Change in valuation of net tax assets - 4 Prior years adjustments, income tax 4 10 Prior years adjustments, deferred tax (2) (7) Tax on profit for the year 242 161 Tax related to equity comprises an income of DKK 8 million (2023: income of DKK 1 million) and other comprehensive income comprises an expense of DKK 1 million (2023: income of DKK 1 million). Pillar Two The ALK Group is within the scope of OECD’s global minimum tax (Pillar Two) due to being included in a joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S). As the Lundbeck Foundation Group has a revenue above EUR 750 million, the ALK Group is eligible for Pillar Two. Pillar Two legislation was enacted in Denmark in 2023 and effective from 1 January 2024. The ALK Group applies the exception to recognise and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. Under the legislation, the ALK Group is liable to pay a top-up tax for the difference between its GloBE effective tax rate per jurisdiction and the 15% minimum tax rate. ALK has applied Safe Harbour provi- sions and successfully met the Substance Test criteria. These results confirm that ALK’s effective tax rate complies with the minimum requirements without further adjustments. Certain estimations are subject to change with additional OECD guidance. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 119 Section 2 – Results for the year 2.7 Income tax and deferred tax – continued Intangible Tangible Current and Tax losses Amounts in DKKm assets assets other assets Liabilities carried forward Total 2024 Deferred tax Carrying amount beginning of year (27) (120) 279 124 399 655 Adjustment to prior years’ deferred tax - (7) 2 7 (2) - Adjustment of receivables from group companies - - - - 2 2 Currency adjustments - (2) - 2 - - Adjustment of deferred tax due to coming year change of tax rates - 1 (1) 1 - 1 Recognised in the income statement, net (221) (20) 274 24 (83) (26) Recognised in other comprehensive income, net - - - (1) - (1) Recognised in equity, net (share-based payments) - - 3 - 5 8 Carrying amount year end (248) (148) 557 157 321 639 2023 Deferred tax Carrying amount beginning of year (24) (107) 370 106 367 712 Adjustment to prior years’ deferred tax - 1 (2) 1 7 7 Adjustment of receivables from group companies - - - - 7 7 Currency adjustments - 2 - (1) - 1 Adjustment of deferred tax due to coming year change of tax rates - 1 (1) - (1) (1) Recognised in the income statement, net (3) (17) (86) 21 16 (69) Change in valuation of net tax assets - - - (4) - (4) Recognised in other comprehensive income, net - - - 1 - 1 Recognised in equity, net (share-based payments) - - (2) - 3 1 Carrying amount year end (27) (120) 279 124 399 655 Deferred tax consists of deferred tax assets of DKK 642 million (2023: DKK 659 million) and deferred tax liabilities of DKK 3 million (2023: DKK 4 million). The ALK Group recognises deferred tax assets including the value of tax losses if it is probable that it can be utilised against future taxable income within a forseeable future. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 120 Section 2 – Results for the year 2.7 Income tax and deferred tax – continued At each balance sheet date, it is reassessed whether it is likely that there will be sufficient future taxable income for the deferred tax asset to be utilised. The parent company is included in a joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S) and its Danish subsidiaries. The tax charge for the year is allocated among the jointly taxed companies in proportion to the taxable incomes of individual companies, taking into account taxes paid. § Accounting policies Tax on the profit for the year comprises the year’s current tax and changes in deferred tax. The tax expense relating to the profit/loss for the year is recognised in the income statement, and the tax expense relating to items recog- nised in other comprehensive income and directly in equity, respectively, is recognised in other comprehensive income or directly in equity. Exchange rate adjustments of deferred tax are recognised as part of the adjustment of deferred tax for the year. Current tax payable and receivable is recognised in the balance sheet as the expected tax on the taxable income for the year, adjusted for tax paid on account. The current tax charge for the year is calculated based on the tax rates and rules enacted at the balance sheet date. Uncertain tax position is recognised for those matters for which the tax determination is uncertain but it is consid- ered probable that there will be a future outflow of funds to a tax authority (and a future inflow of funds from a tax authority). The uncertain tax position is measured at the best estimate of the amount expected to become payable (and receivable). Deferred tax is measured using the balance sheet liability method on all temporary differences between the carrying amount and the tax base of assets and liabilities. However, deferred tax is not recognised on temporary differences relating to the initial recognition of goodwill or the initial recognition of a transaction, apart from busi- ness combinations, and where the temporary difference existing at the date of initial recognition affects neither profit/loss for the year nor taxable income. Deferred tax is calculated based on the planned use of each asset and settlement of each liability, respectively. Deferred tax is measured using the tax rates and tax rules that, based on legislation enacted or in reality enacted at the balance sheet date, are expected to apply in the respective countries when the deferred tax is expected to crystallise as current tax. Changes in deferred tax as a result of changed tax rates or rules are recognised in the income statement, in other comprehensive income or in equity, depending on where the deferred tax was originally recognised. Deferred tax related to equity transactions is recognised in equity. Deferred tax assets, including the tax value of tax loss carry-forwards, are recognised in the balance sheet at the value at which the asset is expected to be realised, either through a set-off against deferred tax liabilities or as net assets to be offset against future positive taxable income. Deferred tax assets including the tax value of tax losses are recognised if it is probable that it can be utilised against future taxable income within a foreseeable future. This includes an assessment of the possibilities to utilise tax losses in the joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S). Significant accounting estimates and judgements Management is required to make an estimate in the recognition of deferred tax assets. This assessment includes estimates of future taxable income in ALK and other members of the joint Danish taxation scheme with the Lundbeck Foundation. At 31 December 2024, the value of the total net deferred tax asset is DKK 639 million (2023: DKK 655 million). It includes a net deferred tax asset in Denmark related to tax losses carried forward of DKK 301 million (2023: DKK 369 million). Complying with tax rules, when conducting business globally, can be complex as the interpretation of legislation and case law may change over time or may not always be clear. Management’s judgements are applied to assess the possible effect of exposures and the possible outcome of disputes or interpretational uncertainties when transfer pricing disputes with local tax authorities may occur. Dialogue with local tax authorities, tax advisors, business plans and knowledge of the business are key parameters for Management to estimate the tax assets and liabilities. At 31 December 2024, the ALK Group recognises uncertain tax position as part of non-current tax. The actual outcome may deviate and depends on the result of litigation and settlements with the relevant local tax authorities. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 121 Section 3 – Operating assets and liabilities 3.1 Intangible assets Patents, Other trademarks intangible Amounts in DKKm Goodwill Software and rights assets1 Total 2024 Cost beginning of year 481 479 204 304 1,468 Currency adjustments 4 1 11 - 16 Additions - 8 - 1,035 1,043 Acquisition of companies and operations, cf. note 5.3 - - 118 - 118 Disposals - (13) (33) - (46) Transfer to/from other groups - 25 - (25) - Cost year end 485 500 300 1,314 2,599 Amortisation and impairment beginning of year 22 378 203 194 797 Currency adjustments - 1 5 - 6 Amortisation for the year - 32 12 4 48 Disposals during the year - (13) (33) - (46) Impairment during the year, cf note 2.3 - 2 - - 2 Amortisation and impairment year end 22 400 187 198 807 Carrying amount year end 463 100 113 1,116 1,792 1 Other intangible assets includes intangible assets in progress, and individual development projects running for short-term periods. In 2024, ALK has entered a Collaboration, License and Distribution Agreement with ARS Pharmaceuticals Operations Inc. where the asset of DKK 994 million is not ready for use due to pending regulatory and other approvals. Patents, Other trademarks intangible Amounts in DKKm Goodwill Software and rights assets1 Total 2023 Cost beginning of year 482 459 207 263 1,411 Currency adjustments (1) - (3) 1 (3) Additions - 12 - 57 69 Disposals - (9) - - (9) Transfer to/from other groups - 17 - (17) - Cost year end 481 479 204 304 1,468 Amortisation and impairment beginning of year 22 357 202 188 769 Currency adjustments - - (3) 2 (1) Amortisation for the year - 30 4 4 38 Disposals during the year - (9) - - (9) Amortisation and impairment year end 22 378 203 194 797 Carrying amount year end 459 101 1 110 671 1 Other intangible assets includes intangible assets in progress and individual development projects running for short-term periods. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 122 Section 3 – Operating assets and liabilities 3.1 Intangible assets – continued Goodwill Goodwill is related to acquisition of companies in previous years and has been subject to an impairment test, which has been submitted to the Audit Committee for subsequent approval by the Board of Directors. The impairment test performed in 2024 revealed no need for impairment of goodwill. Goodwill has been tested at an aggregated level for ALK as one cash-generating unit. In the calculation of the value in use of the cash-generating unit, future free net cash flow is estimated based on Board of Direc- tors-approved budget (2025) and financial forecasts (2026-2028) in line with the ALK Group’s strategy. The budget and the forecast plans are based on specific future business initiatives for which the risks relating to key parameters have been assessed and recognised in estimated future free cash flows. The key parameters in the calculation of the value in use are revenue, earnings, working capital, capital expenditure, discount rate and the preconditions for the terminal value. Estimates are based on histor- ical data and expectations on future changes in the markets and products. These expectations are based on a number of assumptions including expected product launches, volume forecasts, price information and profitability of both the ALK Group’s business as well as geographical expansions. § Accounting policies Goodwill On initial recognition, goodwill is measured and recognised as the excess of the cost of the acquired company over the fair value of the acquired assets, liabilities and contingent liabilities. On recognition of goodwill, the goodwill amount is allocated to the ALK Group’s cash-generating unit. The ALK Group is considered as one cash-generating unit as the individual companies and business units in the ALK Group cannot be evaluated separately due to the value-adding processes are generated across corporations and entities. Goodwill is not amortised, but is tested for impairment at least once a year. To the extent that the carrying amount of goodwill exceeds the recoverable amount, goodwill is written down to this lower amount. Impairment of goodwill is not reversed. Software, patents, trademarks and rights Acquired intellectual property rights in the form of software, patents, trademarks, licenses, customer base, and similar rights are measured at cost less accumulated amortisation and impairment. The cost of software includes costs of installation and direct salaries. Intangible assets with determinable useful lives are amortised on a straight-line basis over the expected useful lives of the assets, typically not exceeding 15 years. If the actual useful life is shorter than either the remaining life or the contract period, the asset is amortised over this shorter useful life. The carrying amounts are reviewed at the balance sheet date to determine whether there are any indications of impairment. If such indications are identified, the recoverable amount of the asset is calculated to determine any need for an impairment write-down and, if so, the amount of the write-down. Intangible assets with indeterminable useful lives are not amortised, but are tested for impairment at least once a year. To the extent that the carrying amount of the assets exceeds the recoverable amount, the assets are written down to this lower amount. See note 3.2 for more information on assessment, recognition and reversal of impairment. For financial years after the four year forecast period (2025-2028), the cash flows in the most recent period have been extrapolated adjusted for a growth factor of 1.5% (2023: 1.5%) during the terminal period. The discount rate used is 10.3% pre-tax and 8.0% after tax (2023: 10.9% pre-tax and 8.5% after tax). The calculated value in use shows that future earnings and cash flows fully support the carrying amount of total net assets, including goodwill. Other intangible assets Other intangible assets includes individual minor development projects running for short-term periods, including software development projects, which fulfil the requirements in IFRS. The measurement and impairment follow the same rules as described above for software, patents, trademarks, and rights. Intangible assets 2024 Goodwill Software Patents, trademarks and rights Other intangible assets 2024 26% Significant accounting estimates and judgements The assessment of whether goodwill is impaired requires a determination of the value in use of the cash- generating unit. The determination of the value in use requires estimates of the expected future cash flow of the cash-generating unit and a reasonable discount rate. At 31 December 2024, the carrying amount of goodwill is DKK 463 million (2023: DKK 459 million). 6% 6% 62% Financial statements Notes to the consolidated financial statements ALK Annual report 2024 123 Section 3 – Operating assets and liabilities 3.2 Property, plant and equipment Other Property, fixtures plant and Land and Plant and and equipment Amounts in DKKm buildings1 machinery equipment in progress Total 2024 Cost beginning of year 1,811 1,182 298 596 3,887 Currency adjustments 34 23 3 9 69 Additions 88 17 13 219 337 Acquisition of companies and opera- tions, cf. note 5.3 2 2 - 2 6 Remeasurement of lease obligations (1) - - - (1) Disposals (38) (29) (6) - (73) Transfer to/from other groups 131 160 7 (298) - Cost year end 2,027 1,355 315 528 4,225 Depreciation and impairment beginning of year 817 671 218 - 1,706 Currency adjustments 8 13 2 - 23 Depreciation for the year 103 94 21 - 218 Disposals during the year (38) (29) (6) - (73) Impairment during the year, cf. note 2.3 - 3 1 - 4 Depreciation and impairment year end 890 752 236 - 1,878 Carrying amount year end 1,137 603 79 528 2,347 of which financing costs - Value of land and buildings subject to mortgages 228 1 Land and buildings include buildings on land leased from Scion DTU A/S, Hørsholm in Denmark. The estimated lease terms are 9 years. See also note 3.3. Other Property, fixtures plant and Land and Plant and and equipment Amounts in DKKm buildings1 machinery equipment in progress Total 2023 Cost beginning of year 1,743 1,048 278 511 3,580 Currency adjustments (19) (10) (1) (6) (36) Additions 99 22 16 248 385 Remeasurement of lease obligations 8 - - - 8 Disposals (27) (20) (2) (1) (50) Transfer to/from other groups 7 142 7 (156) - Cost year end 1,811 1,182 298 596 3,887 Depreciation and impairment beginning of year 752 608 202 - 1,562 Currency adjustments (4) (8) (1) - (13) Depreciation for the year 96 91 19 - 206 Disposals during the year (27) (20) (2) (1) (50) Impairment during the year, cf. note 2.3 - - - 1 1 Depreciation and impairment year end 817 671 218 - 1,706 Carrying amount year end 994 511 80 596 2,181 of which financing costs - Value of land and buildings subject to mortgages 164 1 Land and buildings include buildings on land leased from Scion DTU A/S, Hørsholm in Denmark. The estimated lease terms are 10 years. See also note 3.3. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 124 Section 3 – Operating assets and liabilities 3.2 Property, plant and equipment – continued Impairment The carrying amounts of tangible assets are reviewed at the balance sheet date to determine whether there are any indications of impairment. If such indications are found, the recoverable amount of the asset is calculated to determine any need for an impairment write-down and, if so, the amount of the write-down. § Accounting policies Land and buildings, plant and machinery, and other fixtures and equipment are measured at cost less accumulated depreciation and impairment. Land is not depreciated. Cost comprises the purchase price and any costs directly attributable to the acquisition and any preparation costs incurred until the date when the asset is available for use. The depreciation base is cost less the estimated residual value at the end of the useful life. The residual value is determined as the amount the company expects to obtain for the asset less costs of disposal. The cost of an asset is divided into smaller components that are depreciated separately if such components have different useful lives. Tangible assets are depreciated on a straight-line basis over their estimated useful lives as follows: Buildings 25-50 years Plant and machinery 5-10 years Other fixtures and equipment 5-10 years Depreciation methods, useful lives and residual values are reassessed once a year. If the asset does not generate any cash flows independently of other assets, the recoverable amount is calculated for the smallest cash-generating unit that includes the asset. The recoverable amount is calculated as the higher of the fair value less costs to sell and the value in use of the asset or the cash-generating unit, respectively. In determining the value in use, the estimated future cash flows are discounted to their present value, using a discount rate reflecting current market assessments of the time value of money as well as risks that are specific to the asset or the cash-generating unit and which have not been taken into account in the estimated future cash flows. If the recoverable amount of the asset or the cash-generating unit is lower than the carrying amount, the carrying amount is written down to the recoverable amount. For the cash-generating unit, the write-down is allocated in such a way that goodwill amounts are written down first, and any remaining need for write-down is allocated to other assets in the unit, although no individual assets are written down to a value lower than their fair value less costs to sell. Impairment write-downs are recognised in the income statement. If write-downs are subsequently reversed as a result of changes in the assumptions on which the calculation of the recoverable amount is based, the carrying amount of the asset or the cash-generating unit is increased to the adjusted recoverable amount, not, however, exceeding the carrying amount that the asset or cash-generating unit would have had, had the write-down not been made. Property, plant and equipment 2024 Land and buildings Plant and machinery Other fixtures and equipment Property, plant and equipment in progress 2024 48% 26% 3% 23% Financial statements Notes to the consolidated financial statements ALK Annual report 2024 125 Section 3 – Operating assets and liabilities 3.3 Leases Specification of right-of-use assets: Other Land and fixtures and Amounts in DKKm buildings1 equipment Total 2024 Cost beginning of year 452 3 455 Currency adjustments 8 - 8 Additions 77 - 77 Remeasurement of lease obligations (1) - (1) Disposals (18) - (18) Cost year end 518 3 521 Depreciation beginning of year 170 2 172 Currency adjustments 5 - 5 Depreciation for the year 51 - 51 Disposals (18) - (18) Depreciation year end 208 2 210 Carrying amount year end 310 1 311 1 Land and buildings include buildings on land leased from Scion DTU A/S, Hørsholm in Denmark. The estimated lease terms are 9 years. Specification of right-of-use assets: Other Land and fixtures and Amounts in DKKm buildings1 equipment Total 2023 Cost beginning of year 395 3 398 Currency adjustments (4) - (4) Additions 75 - 75 Remeasurement of lease obligations 8 - 8 Disposals (22) - (22) Cost year end 452 3 455 Depreciation beginning of year 147 1 148 Currency adjustments (1) - (1) Depreciation for the year 46 1 47 Disposals (22) - (22) Depreciation year end 170 2 172 Carrying amount year end 282 1 283 1 Land and buildings include buildings on land leased from Scion DTU A/S, Hørsholm in Denmark. The estimated lease terms are 10 years. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 126 Section 3 – Operating assets and liabilities 3.3 Leases – continued Leases in the income statement Amounts in DKKm 2024 2023 Expenses from short-term leases 1 4 Expenses from low-value assets (including cars) 20 19 Depreciation of right-of-use assets 51 47 Interest expenses on lease liabilities 9 7 Total 81 77 Cash outflow related to lease agreements was DKK 59 million (2023: DKK 53 million). Lease liabilities are disclosed in note 4.2. § Accounting policies Lease liabilities Lease assets are recognised at the commencement date of the contract if it is or contains a lease. Lease assets are recognised at cost less accumulated depreciation and impairment. Cost is defined as the lease liability adjusted for any lease payments made at or before the commencement date. Lease assets are depreciated on a straight-line basis over the lease term. Lease assets are remeasured when the lease liability is impacted by reassessment of lease terms, modifications to lease agreements, and when applying indexation or a rate. On initial recognition, lease liabilities are measured as the present value of future payments. The lease payments contain fixed payments less any lease incentives receivable and variable lease payments that depend on an index or a rate. On subsequent recognition, lease liabilities are measured at amortised cost. The difference between the present value and the nominal value of lease payments is recognised in the income statement over the term of the lease as a finance charge. If the interest rate cannot be determined in the agreement, the lease payments are discounted using the ALK Group’s incremental borrowing rate adjusted for the functional currency and length of the lease term. The lease liability is remeasured if or when the future payment or lease term changes. Short term lease expenses and low value assets are not recognised as part of lease liabilities. They are recognised in the income statement when incurred as an operating expense. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 127 Section 3 – Operating assets and liabilities 3.4 Inventories Amounts in DKKm 2024 2023 Raw materials 405 307 Work in progress 649 637 Manufactured goods and goods for resale 662 479 Total 1,716 1,423 Amount of write-down of inventories during the year 31 41 Amount of reversal of write-down of inventories during the year1 16 16 Total cost of materials included in cost of sales 657 569 Net carrying amount of inventory not expected to be sold in following year 518 447 1 Reversal of provision for slow moving items, sold in 2024. § Accounting policies Inventories are measured at cost determined under the FIFO method or net realisable value where this is lower. Cost comprises raw materials, goods for resale, and direct payroll costs as well as fixed and variable production overheads. Variable production overheads comprise indirect materials and payroll costs and are allocated based on predetermined costs of the goods actually produced. Fixed production overheads comprise maintenance of and depreciation on the machines, factory buildings and equipment used in the manufacturing process as well as the cost of factory management and administration. Fixed production overheads are allocated based on the normal capacity of the production plant. The net realisable value of inventories is calculated as the expected selling price less completion costs and costs incurred in making the sale. A minor part of ALK’s raw materials inventory contains biological assets from agricultural activities. Due to missing market on which a fair value can be established these products are not valuated. Significant accounting estimates and judgements The valuation of inventories includes Management’s assessment of the saleability of the finished goods, and the quality of raw materials to be used in the production process. If the expected sales price less any completion costs and costs to execute sales (net realisable value) of inventories is lower than the carrying amount, the inventories are written down to net realisable value. When assessing salability and net realisable value, Management uses estimates for future sales and related costs. End of 2024, the write-down of inventories to net realisable value amounted to DKK 147 million (2023: DKK 90 million). Further, work in progress and manufactured goods and goods for resale are measured at cost including indirect production costs. The indirect production costs are measured using a standard cost method. This is reviewed regularly to ensure reliable measurement of employee costs, capacity utilisation, cost drivers and other relevant factors. When including the indirect productions costs for capitalisation, Management makes estimates about cost of production, standard cost variances, cost drivers and capacity utilisation. Changes in these parameters may have a significant impact on the gross margin and the overall valuation of work in progress and manufactured goods and goods for resale. End of 2024, the indirect production costs capitalised under inventories amounted to DKK 554 million (2023: DKK 483 million). Inventories 2024 Raw materials Work in progress Manufactured 24% goods and 38% goods for resale 38% Financial statements Notes to the consolidated financial statements ALK Annual report 2024 128 Section 3 – Operating assets and liabilities 3.5 Trade receivables Days past due Amounts in DKKm Not due <180 days 180-360 >360 days Total 2024 Average expected credit loss rate 1% 5% 20% 33% Trade receivables (gross) 739 81 5 3 828 Loss allowance 10 4 1 1 16 Trade receivables (net) 729 77 4 2 812 Loss allowance: Balance beginning of year 7 Change in allowances during the year 11 Realised losses during the year (2) Loss allowance, year end 16 2023 Average expected credit loss rate 1% 3% 0% 33% Trade receivables (gross) 744 74 2 3 823 Loss allowance 4 2 - 1 7 Trade receivables (net) 740 72 2 2 816 Loss allowance: Balance beginning of year 8 Change in allowances during the year - Realised losses during the year (1) Loss allowance, year end 7 § Accounting policies On initial recognition, receivables are measured at fair value, subsequently at amortised cost. Expected credit losses are measured based on historical data adjusted by forward-looking information. Forward- looking information includes assessment of the probability of default as well as consideration of various external sources of actual and economic information that is reasonable and supportable without undue cost or effort. ALK recognises expected credit losses that result from default events possible within the whole asset life. Risk related to trade receivables is managed in ALK locally by entities, based on an individual assessment. Loss allow- ance for doubtful trade receivables is also based on an individual assessment of the receivables. ALK has not implemented a global provision matrix due to different characteristics related to receivables across the ALK Group. Loss allowance are calculated based on variables, e.g. probability-weighted amount (based on historical realised losses), the time value of money, additional supportable information, including an individual assessment of each customer/customer group. An impairment loss or reversal of prior impairment loss is recognised in the income statement. Receivables are written down when information indicates severe financial difficulties and that there is no reason- able expectation of recovery. Financial assets written off may still be subject to enforcement activities. Any recov- eries made are recognised in the income statement. 3.6 Prepayments Amounts in DKKm 2024 2023 Clinical trials, cf. note 2.2 20 21 Royalties 25 46 Other 73 80 Total 118 147 § Accounting policies Prepayments are recognised as an asset and comprise incurred costs relating to subsequent financial years. Prepayments are measured at cost. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 129 Section 3 – Operating assets and liabilities 3.7 Pensions and similar liabilities The ALK Group has entered into defined contribution plans as well as defined benefit plans. In defined contribution plans, the ALK Group is obliged to pay a certain contribution to a pension fund or the like but bears no risks regarding the future development in interest, inflation, mortality, disability rates etc. regarding the amount to be paid to the employee. The ALK Group sponsors defined benefit plans for qualifying employees of its subsidiaries in Germany, France and Switzerland. The defined benefit plans guarantee employees a certain level of pension bene- fits for life. The pension is based on seniority and salary at the time of retirement. The ALK Group bears the risks regarding the future development in interest, inflation, mortality, disability rates etc. regarding the amount to be paid to the employee. Amounts in DKKm 2024 2023 Costs related to defined contribution plans 125 119 Costs related to defined benefit plans 26 26 Total 151 145 Present value of funded pension obligations 26 24 Fair value of plan assets (100% insurance contract) (22) (22) Funded pension obligations, net 4 2 Present value of unfunded pension obligations 172 171 Pension obligations 176 173 Anniversary liabilities 11 10 Other liabilities1 64 62 Pension obligations and similar liabilities, year end 251 245 1 Other liabilities include liability related to the transition period for the Danish Holiday Act of DKK 62 million (2023: DKK 61 million). Plan assets consist of assets placed in pension companies. Assets are placed in investments classified as other assets than shares, bonds and property by the pension companies, and are not measured at quoted prices. The weighted average duration of the pension obligations is 15,78 years (2023: 16.37 years). Amounts in DKKm 2024 2023 The principal assumptions used for the actuarial valuations Discount rate range of 1.1% - 3.45% (weighted average rate) 3.4% 3.4% Expected future rate of salary increase range of 1% - 2.5% (weighted average rate) 2.4% 2.4% Assumed life expectations on retirement age for current pensioners (years based on weighted average)1: Males 20.1 20.0 Females 23.1 23.1 Assumed life expectations on retirement age for current employees (future pensioners) (years based on weighted average)1: Males 21.2 21.1 Females 24.8 24.8 Sensitivity analysis: Significant actuarial assumptions for determining the defined benefit obligation Discount rate, effect in case of increase in range of 0.25% - 1%2 (22) (22) Discount rate, effect in case of decrease in range of 0.25% - 1%2 27 27 Salary, effect in case of 0.25% - 0.5% increase2 3 3 Salary, effect in case of 0.25% - 0.5% decrease2 (2) (3) Life expectancy, effect in case of increase by 1 year1 6 7 Life expectancy, effect in case of decrease by 1 year1 (7) (7) Movements in the present value of the funded defined benefit obligation in the current year Opening funded defined benefit obligation 24 24 Current service costs 2 2 Actuarial (gains)/losses arising from changes in financial assumptions 3 (3) Actuarial (gains)/losses arising from experience adjustments (1) - Contribution from plan participants - 1 Benefits paid (1) (2) Currency translation adjustment (1) 2 Closing funded defined benefit obligation 26 24 1 Based on national statistics for mortality. 2 Based on actuarial reports with different rates. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 130 Section 3 – Operating assets and liabilities 3.7 Pensions and similar liabilities – continued Amounts in DKKm 2024 2023 Movements in the fair value of the plan assets in the current year Opening fair value of plan assets 22 21 Contribution from plan participants 2 2 Benefits paid (1) (2) Currency translation adjustment - 2 Return on plan assets (1) (1) Closing fair value of plan assets (fully invested in insurance contracts) 22 22 Movements in present value of unfunded pension obligations in the current year Opening present value of unfunded pension obligations 171 161 Current service costs 5 4 Interest costs 6 6 Actuarial (gains)/losses from changes in financial assumptions (2) 13 Actuarial (gains)/losses arising from experience adjustments (2) - Actuarial (gains)/losses arising from demographic adjustments (1) (9) Benefits paid (5) (4) Closing present value of unfunded pension obligations 172 171 Amount recognised as staff expenses in the income statement Current service costs 6 6 Net interest expense 6 6 Total 12 12 Amount recognised in comprehensive income in respect of defined benefit plans Actuarial (gains)/losses (3) 1 Total (3) 1 The expected contribution for 2025 for the defined benefit plans is DKK 12 million (2024: DKK 12 million). The most recent actuarial valuations of the defined benefit liability were carried out by external inde- pendent actuary agents at 31 December 2024. § Accounting policies The ALK Group has entered into pension agreements and similar agreements with some of the ALK Group’s employees. In respect of defined contribution plans, the ALK Group pays in fixed contributions to independent pension funds etc. The contributions are recognised in the income statement during the period in which the employee renders the related service. Payments due are recognised as a liability in the balance sheet. In respect of defined benefit plans, the ALK Group is required to pay an agreed benefit in connection with the retirement of the employees covered by the plan, e.g. in the form of a fixed amount or a percentage of the salary at retirement. For defined benefit plans, an annual actuarial assessment is made of the net present value of future benefits to which the employees have earned the right through their past service for the ALK Group and which will have to be paid under the plan. The Projected Unit Credit Method is applied to determine net present value. The net present value is calculated based on assumptions of the future development of salary, interest, inflation, mortality and disability rates. The net present value of pension liabilities is recognised in the balance sheet, after deduction of the fair value of any assets attached to the plan, as either plan assets or pension liabilities, depending on whether the net amount is an asset or a liability, as described below. If the assumptions made with respect to discount factor, inflation, mortality and disability are changed, or if there is a discrepancy between the expected and realised return on plan assets, actuarial gains or losses occur. These gains and losses concerning previous financial years are recognised in other comprehensive income. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 131 Section 3 – Operating assets and liabilities 3.8 Provisions Restructuring Other Amounts in DKKm programs1 provisions2 Total 2024 Provisions beginning of year - 3 3 Provisions made during the year 63 13 76 Used during the year (40) - (40) Provisions, year end 23 16 39 Provisions are recognised as follows: Non-current liabilities - 1 1 Current liabilities 23 15 38 Provisions, year end 23 16 39 2023 Provisions beginning of year - 3 3 Provisions made during the year - 3 3 Used during the year - (2) (2) Reversals during the year - (1) (1) Provisions, year end - 3 3 Provisions are recognised as follows: Non-current liabilities - 1 1 Current liabilities - 2 2 Provisions, year end - 3 3 1 The provision for restructuring programs of DKK 23 million relates to the implementation of restructuring initiatives aimed at freeing up resources to reinvest in strategic growth opportunities. 2 Other provisions in 2024 include a provision for sales in Italy of DKK 8 million (2023: DKK 2 million) and provisions for various minor legal proceedings of DKK 8 million (2023: DKK 1 million). 3.9 Other payables Amounts in DKKm 2024 2023 Rebates and commissions, cf. note 2.1 208 241 Salaries, holiday payments etc. 337 307 Clinical trials, cf. note 2.2 24 26 VAT and other indirect taxes 123 96 Other payables 190 167 Total 882 837 § Accounting policies Other payables are recognised as a current liability and comprise costs due in the subsequent financial year. Other payables are measured at amortised cost. Other payables 2024 Rebates and commissions Salaries, holiday payments etc. Clinical trials 21% 24% VAT and other indirect taxes Other payables 14% 3% 38% § Accounting policies Provisions are recognised when, as a consequence of a past event during the financial year or previous years, the ALK Group has a legal or constructive obligation, and it is likely that settlement of the obligation will require an outflow of the ALK Group’s financial resources. Provisions are measured as the best estimate of the costs required to settle the obligations at the balance sheet date. Provisions with an expected term of more than a year after the balance sheet date are measured at present value. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 132 Section 3 – Operating assets and liabilities 3.10 Contingent liabilities and commitments Security in assets Land and buildings provided as security vis-à-vis for mortgage debt amount to DKK 228 million (2023: DKK 164 million). Mortgage debt amounts to DKK 185 million (2023: DKK 203 million). Contingent liabilities In the ordinary course of business, the ALK Group is involved in certain claims, disputes etc. In the opinion of Management, settlement or continuation of pending claims and other disputes will have no material impact on the ALK Group’s financial position. The ALK Group operates in a wide variety of jurisdictions, in some of which the tax law is subject to varying interpretations and potentially inconsistent enforcement. As a result, there can be practical uncertainties in applying tax legislation to the ALK Group’s activities. Whilst the ALK Group considers that it operates in accordance with applicable tax law, there are potential tax exposures in respect of its operations, the impact of which cannot be reliably estimated, but could be material. Joint taxation scheme ALK-Abelló A/S is included in a joint Danish taxation scheme with the Lundbeck Foundation (Lundbeck- fond Invest A/S) and its Danish subsidiaries. The Danish companies are joint and several liable for the joint taxation liability. The joint taxation liability covers income taxes and withholding taxes on dividends, royalties and interest. The joint taxation liability is capped at an amount equal to the share of the capital of the company directly or indirectly owned by the ultimate parent company. The total tax obligation under the joint Danish taxation scheme is shown in the financial statements of the Lundbeck Foundation (Lundbeckfond Invest A/S). Change of control The ALK Group’s credit facilities and drawn loans are subject to standard change of control clauses according to which the lender has the right to cancel the commitment and demand repayment of outstandings. Commitments Amounts in DKKm 2024 2023 Bank guarantees1 80 80 Other guarantees 16 12 Total 96 92 1 Bank guarantees include DKK 78 million related to ongoing tax audits (2023: DKK 78 million). Financial statements Notes to the consolidated financial statements ALK Annual report 2024 133 Section 4 – Capital structure and financing 4.1 Share capital and earnings per share 2024 2023 Nominal Nominal value value Units (DKKm) Units (DKKm) Share capital The share capital consists of: A shares (nominal value of DKK 0.5) 18,415,200 9 18,415,200 9 AA shares (nominal value of DKK 0.5) 1,841,520 1 1,841,520 1 B shares (nominal value of DKK 0.5) 202,567,200 101 202,567,200 101 Total 222,823,920 111 222,823,920 111 2024 2023 Treasury shares Treasury shares beginning of year (B-shares), units 1,634,673 1,824,975 Sale of treasury shares, units (211,176) (190,302) Treasury shares year end (B-shares), units 1,423,497 1,634,673 Proportion of share capital year end 0.6% 0.7% Nominal value year end (DKKm) 0.7 0.8 Market value year end (DKKm) 226 165 Earnings per share The calculation of earnings per share is based on the following: Net profit (DKKm) 815 486 Number in units: Average number of issued shares 222,823,920 222,823,920 Average number of treasury shares (1,505,851) (1,678,589) Average number of shares used for calculation of earnings per share 221,318,069 221,145,331 Average dilutive effect of outstanding share options 225,765 130,812 Average number of shares used for calculation of diluted earnings per share 221,543,834 221,276,143 Earnings per share (EPS) (DKK) 3.68 2.20 Earnings per share, diluted (DEPS) (DKK) 3.68 2.20 Each A and AA share carries 10 votes, whereas each B share carries 1 vote. AA shares no longer held by individuals or legal entities other than the Lundbeck Foundation or companies which are group affiliated with the Lundbeck Foundation, cf. the definition of groups in section 6 of the Danish Companies Act, or in the event that a company which holds AA shares is no longer group affiliated with the Lundbeck Founda- tion, such AA shares shall be transferred to the B share capital. According to a resolution passed by the parent company at the annual general meeting, the parent company is allowed to purchase treasury shares, up to 10% of the share capital. The parent company has purchased treasury shares in connection with the issuance of share-based incentive plans. All shares are paid in. § Accounting policies Acquisition and sales sums arising on the purchase and sale of treasury shares and dividends on treasury shares are recognised directly in retained earnings under equity. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 134 Section 4 – Capital structure and financing 4.2 Financial risks and financial instruments The general objective of the ALK Group’s foreign exchange risk management is to limit and delay any adverse impact of exchange rate fluctuations on earnings and cash flows and thus increase the predict- ability of the financial results. The most significant financial risk relates to exchange rate fluctuations. The greatest exposure is to USD and in 2024, 14% (2023: 16%) of the revenue was denominated in USD. The sales are not deemed to be exposed to EUR due to Denmark’s participation in the European Exchange Rate Mechanism. The ALK Group is exposed to exchange rate risks when intercompany balances and net assets of foreign subsidiaries are translated into DKK. In accordance with the ALK Group’s accounting policies, such currency translation adjustments are recognised in the income statement and in other comprehensive income, respectively. No exchange rate hedge contracts were open at 31 December 2024 or 31 December 2023. Financial risk management policy As a result of operations, investments and financing, the ALK Group is exposed to exchange and interest rate changes. ALK-Abelló A/S manages the ALK Group’s financial risks centrally and coordinates the ALK Group’s cash management, including the raising of capital and investment of excess cash. The ALK Group complies with a policy, approved by the Board of Directors, to maintain a low risk profile, ensuring that the ALK Group is only exposed to foreign exchange rate risk, liquidity risk, interest rate risk, and credit risk in connection with its commercial activities. Capital structure The ALK Group manages its capital to ensure that all entities will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balances. The capital structure of the ALK Group consists of net debt and equity. The ALK Group will maintain an effi- cient capital structure with a financial gearing of maximum 2 x NIBD/EBITDA. The ALK Group will be disci- plined about capital allocation to ensure flexibility to deliver on its growth ambitions while also gener- ating attractive shareholder returns. Cash will be allocated in the following order of priority: Investments in organic growth, including R&D; CAPEX; business development and licensing activities; and finally, cash distribution to shareholders via dividends and/or share buyback programmes. The dividend policy of the ALK Group is to distribute maximum possible dividend to ALK-Abelló A/S. The ALK Group’s Risk Committee reviews the capital structure annually. As a part of this review, the committee considers the cost of capital and the risks associated with each class of capital. Sensitivity to a 10% increase in USD exchange rate The table below shows the estimated effect of a 10% increase in the USD exchange rate on revenue, EBIT and equity levels, respectively. A decrease in the exchange rates will have a corresponding adverse effect. In the sensitivity analysis, data for revenue and EBIT are based on current short-term expecta- tions and data for equity are based on actual equity at 31 December 2024. Amounts in DKKm Revenue EBIT Net profit Equity 31 December 2024 USD approx. +95 approx. +10 approx. +10 approx. +25 31 December 2023 USD approx. +95 approx. +20 approx. +15 approx. +55 Foreign exchange rate risk Foreign exchange rate risk arises due to imbalances between revenue and expenses in each individual currency. Foreign exchange rate exposure relating to future transactions and assets and liabilities is evaluated and hedged through matching of payments received and paid in the same currency. This serves to limit the impact on the financial results of any exchange rate fluctuations. The exchange rate exposure relating to net investments in foreign subsidiaries is not hedged by forward exchange contracts. In case it is evaluated to be relevant, the ALK Group hedges significant exchange rate expo- sures regarding future sales and purchase of goods in the coming six months in accordance with the ALK Group’s policy. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 135 Section 4 – Capital structure and financing 4.2 Financial risks and financial instruments – continued Liquidity risk In connection with the ALK Group’s ongoing financing of operations, including refinancing, efforts are made to ensure adequate and flexible liquidity. This is guaranteed by placing free funds in credit-worthy, liquid, interest bearing instruments of relatively short durations in accordance with the ALK Group’s policy. The ALK Group has not entered into any supplier finance arrangements in 2024 or 2023. The liquidity risk is considered to be minimal due to the ALK Group’s current capital structure. Net positions Amount Net Amounts in DKKm Cash Receivables Liabilities hedged position 31 December 2024 DKK 5 47 (744) - (692) USD 164 152 (283) - 33 EUR 279 373 (1,632) - (980) GBP 12 29 (35) - 6 SEK 18 32 (21) - 29 Other 111 264 (158) - 217 Total 589 897 (2,873) - (1,387) 31 December 2023 DKK 5 59 (873) - (809) USD 262 214 (222) - 254 EUR 100 437 (1,017) - (480) GBP 3 17 (11) - 9 SEK 6 41 (19) - 28 Other 98 206 (138) - 166 Total 474 974 (2,280) - (832) Liquidity exposure Revaluation/payment date Carrying Total Within From After Amounts in DKKm amount cash flow1 1 year 1-5 years 5 years 31 December 2024 Mortgage debt and bank loans 856 862 696 74 92 Trade payables 165 165 165 - - Lease liabilities 331 372 55 163 154 Other financial liabilities 1,006 1,006 1,006 - - Financial liabilities 2,358 2,405 1,922 237 246 31 December 2023 Mortgage debt and bank loans 464 466 282 74 110 Trade payables 128 128 128 - - Lease liabilities 301 337 54 143 140 Other financial liabilities 854 854 854 - - Financial liabilities 1,747 1,785 1,318 217 250 1 Total cash flow includes interest. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 136 Section 4 – Capital structure and financing 4.2 Financial risks and financial instruments – continued Interest rate risk The ALK Group does not hedge its interest rate exposure, as this is not considered to be financially viable. Concerning the ALK Group’s financial assets and financial liabilities, the earlier of the contractual reval- uation and redemption date is applied. Effective interest rates are stated on the basis of the current level of interest rates on the balance sheet date. An increase in the interest rate of 1 percentage point on mortgage debt and bank loans would decrease net profit and equity by approximately DKK 9 million (2023: decrease of DKK 5 million). An increase in the interest of 1 percentage point on cash would increase net profit and equity by approximately DKK 6 million (2023: increase of DKK 5 million). Credit risk The ALK Group’s primary credit exposure is related to trade receivables and cash. The ALK Group has no major exposure relating to one single customer or business partner. According to the ALK Group’s policy for assuming credit exposure, all customers and business partners are credit rated regularly. Trade receivables are monitored at the local level and are distributed across a number of markets and customers. Therefore, the credit risk is considered to be low. For more information, see note 3.5. Interest rate exposure Carrying Fixed/ Effective Amounts in DKKm amount Currency Expiry date floating interest rate 31 December 2024 Cash 589 Various Floating (0.25)-5.15 Interestbearing assets 589 Mortgage debt 185 DKK 2035 Floating 0.2 Lease liabilities 331 Various 2025-2038 Fixed 2.0 Bank loans 671 Various 2025 Fixed 3.6 Interestbearing liabilities 1,187 31 December 2023 Cash 474 Various Floating (1.25)-5.05 Interestbearing assets 474 Mortgage debt 203 DKK 2035 Floating 0.2 Lease liabilities 301 Various 2024-2036 Fixed 2.0 Bank loans 261 Various 2024 Fixed 4.5 Interestbearing liabilities 765 Embedded derivative financial instruments The ALK Group has made a systematic review of contracts that might contain terms that would make the contract or parts thereof a derivative financial instrument. The review did not lead to recognition of deriv- ative financial instruments relating to the contracts. § Accounting policies Financial assets On initial recognition, investments and other financial assets are measured at cost, corresponding to fair value. They are subsequently measured at fair value either through the income statement or through comprehensive income. Financial liabilities Other financial liabilities, including bank loans, lease liabilities, trade payables, and other payables, are on initial recognition measured at fair value. The liabilities are subsequently measured at amortised cost. Debt Trade payables, other payables, including sales discounts and rebates as well as debt to public authorities etc., are measured at amortised cost. Mortgage debt Mortgage debt is recognised on the raising of a loan at cost, equalling fair value of the proceeds received, and net of transaction costs incurred. Subsequently, mortgage debt is measured at amortised cost. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 137 Section 4 – Capital structure and financing 4.2 Financial risks and financial instruments – continued Measurement and fair value hierarchy Revaluation/payment date Fair Within From After Amounts in DKKm value 1 year 1-5 years 5 years 31 December 2024 Mortgage debt 187 19 74 94 Bank loans 671 671 - - Total 858 690 74 94 31 December 2023 Mortgage debt 206 19 75 112 Bank loans 261 261 - - Total 467 280 75 112 All financial assets and liabilities are measured at cost or amortised cost. The carrying amounts for these approximate fair value. Fair value for mortgage debt is measured by level 1 input (quoted prices in active markets) from the fair value hierarchy and fair value for bank loans is measured by level 2 input (inputs other than quoted markets that are observable) from the fair value hierarchy. No financial derivatives were used in 2024 or 2023. Financial resources The ALK Group has a DKK 1,500 million credit facility which runs until 2026. By the end of 2024, DKK 671 million was drawn. Categories of financial instruments Amounts in DKKm 2024 2023 Financial assets Financial assets measured at amortised cost Impairment method Prepayments 12m ECL 26 49 Trade receivables Lifetime ECL (simplified approach) 812 816 Other receivables 12m ECL 49 74 Cash 589 474 Total 1,476 1,413 Financial liabilities Financial liabilities measured at amortised cost Mortgage debt 185 203 Bank loans 671 261 Lease liabilities 331 301 Trade payables 165 128 Other payables 882 837 Total 2,234 1,730 Financial statements Notes to the consolidated financial statements ALK Annual report 2024 138 Section 5 – Other disclosures 5.1 Share-based payments The ALK Group has established long-term equity-based incentive plans linked to the creation of share- holder value and the fulfilment of strategic goals. The plans are established for the members of Board of Management and other key employees, reward long-term value creation, and align to interests of the shareholders. The incentive plans consist of share options, performance share units, and restricted stock units that are considered sufficiently covered by treasury shares. The share options entitle the holder to acquire one existing B share of DKK 0.5 nominal value in the company per share option. The performance share units and restricted stock units entitle the holder to receive one existing B share per performance share unit or restricted stock unit free of charge. The vesting period for both share options, performance share units, and restricted stock units is three years after grant. Vesting of share options and performance share units is conditional upon certain targets being met and upon the participant not having resigned. Target achievement is met upon fulfil- ment of strategic key performance indicators. In case performance is below the threshold there will be no units vesting, and if above target, a multiplier is applied that can increase the vesting by up to 100%. Vesting of restricted stock units is conditional upon continued employment. The exercise of share options is possible in the trading windows following the release of annual and interim reports conditional upon the share option holder not having resigned at the time of exercise. For performance share units and restricted stock units, the final transfer of ownership takes place at vesting three years after the grant. For the 2023 and 2024 plans, a cap applies to the maximum total value gain from share options, perfor- mance shares, and restricted stock units at exercise and/or vesting, respectively, granted in a calendar year. The cap is four times the annual base salary at the time of award of the share options, performance share units, and restricted stock units concerned. Expensed in the income statement: Amounts in DKKm 2024 2023 Cost for the year regarding share-based payments is recognised as follows: Cost of sales 10 6 Research and development expenses 9 6 Sales and marketing expenses 13 9 Administrative expenses 16 9 Financial expenses 3 - Total 51 30 In 2024, the total cost of share-based payments included a financial expense of DKK 3 million due to the exercise and cash settlement of share options (2023: financial income of DKK 0.1 million). The total cost included DKK 22 million related to adjustment in the share options and performance share units (2023: DKK 8 million). Financial statements Notes to the consolidated financial statements ALK Annual report 2024 139 Section 5 – Other disclosures 5.1 Share-based payments – continued Specification of outstanding share options, performance share units, and restricted stock units: Share options Performance share units Restricted stock units Weighted Board of Other key average Board of Other key Board of Management employees Total exercise price Management employees Total Management units units units DKK units units units units 2024 Outstanding at 1 January 4 87, 811 766,268 1,254,079 95 28,263 3 87,116 415,379 151,997 Additions 49,945 116,286 166,231 126 39,98 3 154,12 5 194,10 8 - Exercised/settled (105,535) (588,280) (693,815) 92 (6,216) (175,980) (182,196) - Cancellations - - - - - (20,639) (20,639) - Outstanding at 31 December 432,221 294,274 726,495 109 62,030 344,622 406,652 151,997 Total number of vested share options 103,656 Average remaining life at year end (years) 4.3 Exercise prices at year end (DKK) 76-148 2023 Outstanding at 1 January 590,120 638,740 1,228,860 82 79,020 423,920 502,940 - Additions 397,6 61 86,657 484,318 86 25,358 165,452 190,810 151,997 Exercised/settled (192,320) (241,899) (434,219) 48 (42,895) (202,216) (245,111) - Change in Board of Management1 ( 3 07,6 5 0) 3 07,6 5 0 - - (8,240) 8,240 - - Cancellations - (24,880) (24,880) 106 (24,980) (8,280) (33,260) - Outstanding at 31 December 487,811 766,268 1,254,079 95 28,263 387,116 415,379 151,997 Total number of vested share options 451,150 Average remaining life at year end (years) 2.6 Exercise prices at year end (DKK) 59-144 The Board of Directors decided for two trading windows in 2024 to settle share options by cash and a total of 616,647 share options were exercised and total cash payments amounted to DKK 33 million. For two trading windows in 2024 the Board of Directors decided to settle share options by shares and a total of 77,168 share options were exercised. In 2023, the Board of Directors decided for two trading windows to settle share options by cash and a total of 434,219 share options were exercised and total cash payments amounted to DKK 14 million. The Board of Directors decided not to open two trading windows for exercises in 2023. 1 In relation to the resignation of the previous CEO in 2023, it was agreed that he kept his outstanding share options and the related outstanding costs were accelerated, while outstanding performance share units were cancelled. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 140 Section 5 – Other disclosures 5.1 Share-based payments – continued Performance share units In 2024, performance share units have been granted at DKK 126 per share (2023: DKK 104 per share). Outstanding share options, performance share units and restricted stock units have the following char- acteristics: Performance Restricted Share options share units stock units Average exercise Exercise price Vested period Vested Vested Plan Units DKK as per (years) Units as per Units as per 2021 Plan 103,656 126 1 Mar 2024 2 1 Mar 2024 2022 Plan 126,080 152 1 Mar 2025 2 119,30 0 1 Mar 2025 2023 Plan 84,433 104 1 Apr 2026 4 150,330 1 Apr 2026 2023 Plan, special 323,519 82 1 Jun 2026 4 2023 Plan, special 21,925 1 Mar 2026 2023 Plan, special 130,072 1 Nov 2026 2024 Plan 88,807 126 1 Apr 2027 4 13 7,0 2 2 1 Apr 2027 Outstanding at 31 December 726,495 406,652 151,997 Restricted stock units No restricted stock units were granted in 2024. In 2023, restricted stock units were granted at DKK 105 and DKK 77 per share for the respective 2023 plans. § Accounting policies Share-based incentive plans (equity-settled share-based payments), which comprise share options, perfor- mance share units, and restricted stock units are measured at the grant date at fair value and recognised in the income statement under the respective functions over the vesting period and offset in equity. The fair value of share options is determined using the Black & Scholes model. The exercise price is equivalent to the average market price of the share for the five trading days immediately preceeding the date of grant. For 2023 and later share option plans the exercise price is reduced by dividends paid. For share option plans before 2023 the exercise price is increased by 2.5% p.a. and reduced by dividends paid. The fair value of performance share units and restricted stock units is determined using the average share price (closing) five days after annual general meeting. The ALK Group settles the equity-settled share-based incentive plans in shares. However, the share option agree- ment entitles the ALK Group to demand cash settlement of the options. The ALK Group recognises share options, in case of cash settlement, as other liabilities and adjusts to fair value as from the time when the ALK Group has an obligation to settle in cash. The ALK Group recognises subsequent adjustment to fair value in the income statement under financial income or financial expenses. Fair value of share options, performance share units, and restricted stock units granted: Share options Fair value at grant date is measured in accordance with the Black & Scholes model for valuation of share options, using the following assumptions: 2024 2023 2023 Plan Plan Special plan Average share price (DKK) 126 104 82 Expected exercise price (DKK) 126 104 82 Expected volatility rate, based on the historical volatility 40% p.a. 36% p.a. 38% p.a. Expected option life 5 years 5 years 5 years Expected dividend per share - - - Risk-free interest rate 2.29% p.a. 2.57% p.a. 2.73% p.a. Calculated fair value of granted share options (DKK) 48 37 31 Financial statements Notes to the consolidated financial statements ALK Annual report 2024 141 Section 5 – Other disclosures 5.2 Cash flow Adjustment for non-cash items Amounts in DKKm 2024 2023 Tax on profit 242 161 Financial income and expenses 34 19 Share-based payments 51 30 Depreciation, amortisation and impairment 272 245 Other adjustments 41 3 Total 640 458 Changes in working capital Amounts in DKKm 2024 2023 Change in inventories (272) (132) Change in receivables and prepayments 78 (69) Change in short-term payables 43 (2) Total (151) (203) Reconciliation of liabilities arising from financing activities Amounts in DKKm 2024 2023 Liabilities from financing activities at 1 January 765 696 Proceeds from borrowings 671 671 Repayment of borrowings (279) (636) Lease additions and modifications 76 83 Instalments of lease liabilities (50) (46) Exchange rate adjustments 4 (3) Liabilities from financing activities at 31 December 1,187 765 Financial reserves Amounts in DKKm 2024 2023 Cash 589 474 Undrawn facilities 829 1,239 Total 1,418 1,713 ALK has a DKK 1,500 million credit facility which runs until 2026. By the end of 2024, DKK 671 million was drawn. § Accounting policies Cash flow The cash flow statement of the ALK Group is presented using the indirect method and shows cash flows from oper- ating, investing and financing activities as well as cash at the beginning and at the end of the financial year. The cash effect of acquisitions and divestments is shown separately under cash flows from investing activities. In the cash flow statement, cash flows concerning acquired companies are recognised from the date of acquisition, while cash flows concerning divested companies are recognised until the date of divestment. Cash flows from operating activities are stated as net profit, adjusted for non-cash operating items and changes in working capital, less the income tax paid and plus net financial items. Cash flows from investing activities comprise payments in connection with acquisition and divestment of companies and financial assets as well as purchase, development, improvement and sale of intangible and tangible assets. Cash flows from financing activities comprise changes to the parent company’s share capital and related costs as well as the raising and repayment of loans, instalments on interest-bearing debt, lease liabilities, purchase of treasury shares, and settlement of share options and payment of dividends. Cash flows in currencies other than the functional currency are recognised in the cash flow statement using average exchange rates for the individual months if these are a reasonable approximation of the actual exchange rates at the transaction dates. If this is not the case, the actual exchange rates for the specific days in questions are used. Cash comprise cash subject to an insignificant risk of changes in value less any overdraft facilities that are an inte- gral part of the ALK Group’s cash management. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 142 Section 5 – Other disclosures 5.3 Business combinations On 2 January 2024, the ALK Group acquired the operating assets of AllerQuest for a total cash consider- ation of DKK 125 million. The consideration amount includes an escrow amount of DKK 10 million which serves as reserve for potential indemnifications over 18 months from acquisition date. AllerQuest was a U.S.-based company dedicated to manufacturing PRE-PEN® Skin Antigen Test. This acquisition makes ALK the sole manufacturer and distributor of PRE-PEN in the U.S. and Canada, with global ownership rights to all assets of AllerQuest. PRE-PEN is the only FDA-approved diagnostic skin test for the evaluation of penicillin allergy and is indicated for the assessment of sensitization to penicillin in patients suspected to have clinical penicillin hypersensitivity. AllerQuest was previously a supplier of the ALK Group and integration has been completed in 2024. The transaction was on a debt and cash free basis. No liabilities were transferred. § Accounting policies Newly acquired or newly established companies or operations are recognised in the consolidated financial state- ments from the date of acquisition or establishment. The date of acquisition is the date when control of the company actually passes to the ALK group. Acquisitions are accounted for using the purchase method, according to which the identifiable assets, liabilities and contingent liabilities of companies acquired are measured at fair value at the date of acquisition. Restructuring costs are only recognised in the takeover balance sheet if they represent a liability to the acquired company. The tax effect of revaluations is taken into account. The cost of a company is the fair value of the consideration paid. If the final determination of the consideration is conditional on one or more future events, these are recognised at their fair value as of the acquisition date. Costs that can be attributed directly to the transfer of ownership are recognised in the income statement when they are incurred. As a general rule, adjustments to estimates of conditional consideration are recognised directly to the income statement. If the fair value of the acquired assets or liabilities subsequently proves different from the values calculated at the acquisition date, cost is adjusted for up to 12 months after the date of acquisition. Any excess of the cost of an acquired company over the fair value of the acquired assets, liabilities and contingent liabilities (goodwill) is recognised as an asset under intangible assets and tested for impairment at least once a year. Consolidated fair values of acquisitions: Amounts in DKKm 2024 Tangible assets and inventory 7 Product rights 118 Acquisition cost 125 Contingent considerations (10) Cash acquisition cost 115 No companies or operations were acquired in 2023. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 143 Section 5 – Other disclosures 5.4 Related parties 5.5 Events after the reporting period No events have occured after the reporting period, that influence the evaluation of the consolidated financial statements. Related party exercising control ALK-Abelló A/S is controlled by the Lundbeck Foundation (Lundbeckfond Invest A/S) domiciled in Copen- hagen, Denmark, which holds 67.2% of the total number of votes in ALK Abelló A/S. The remaining shares are widely held. ALK-Abelló A/S is parent company, and ultimate parent for the ALK Group is the Lund- beck Foundation (Lundbeckfond Invest A/S, incorporated in Denmark). Other related parties comprise ALK’s Board of Management and Board of Directors, companies in which the majority shareholder exercises control, and such companies’ subsidiaries, in this case e.g, H. Lund- beck A/S and Falck A/S and their subsidiaries. Transactions and balances Transactions with the parent company’s majority shareholder: • ALK-Abelló A/S received DKK 3 million (2023: DKK 14 million) concerning outstanding company tax from the Lundbeck Foundation (Lundbeckfond Invest A/S). The company tax relates to ALK-Abelló A/S and ALK-Abelló Nordic A/S. Transactions with key management personnel consist of remuneration and exercise of share options, see notes 2.4 and 5.1 of the consolidated financial statements. No other transactions have taken place during the year with Board of Directors, Board of Management, major shareholders or other related parties. 5.6 Approval of financial statements The financial statements were approved by the Board of Directors and authorised for issue on 19 February 2025. Financial statements Notes to the consolidated financial statements ALK Annual report 2024 144 Section 5 – Other disclosures 5.7 List of companies in the ALK Group Activity Production Sales and distribution Research and development Services Percentage of Entity Country shares owned Activity Parent company ALK-Abelló A/S Denmark Subsidiaries by geographical area Europe ALK-Abelló Allergie-Service GmbH Austria 100% ALK-Abelló Nordic A/S Denmark 100% ALK-Abelló Nordic A/S (branch) Finland 100% ALK-Abelló Nordic A/S (branch) Norway 100% ALK-Abelló Nordic A/S (branch) Sweden 100% ALK S.A.S. France 100% ALK-Abelló Arzneimittel GmbH Germany 100% ALK-Abelló B.V.1 Netherlands 100% ALK-Abelló Sp. z o.o. Poland 100% ALK Slovakia s.r.o. Slovakia 100% ALK Slovakia s.r.o. – odšteˇ pný závod (branch) Czech Republic 100% ALK Slovakia s.r.o. Magyarországi Fióktelepe (branch) Hungary 100% ALK-Abelló S.A. Spain 100% ALK-Abelló S.p.A. Italy 100% ALK AG (In liquidation) Switzerland 100% ALK-Abelló AG Switzerland 100% ALK-Abelló Ltd. United Kingdom 100% 1 Exemption for local audit of the 2024 accounts under the ruling of the Article 2:403 of the Dutch Civil Code is intended – Btw-nr. NL005302766B01 Percentage of Entity Country shares owned Activity North America ALK-Abelló Pharmaceuticals, Inc. Canada 100% ALK-Abelló, Inc. USA 100% OKC Allergy Supplies, Inc. USA 100% ALK-Abelló Source Materials, Inc. USA 100% International markets ALK-Abelló A/S (branch) China 100% ALK (Shanghai) Medical Technology Co., Ltd. China 100% ALK (Shanghai) Medical Technology Co., Ltd. Beijing (branch) China 100% ALK (Shanghai) Medical Technology Co., Ltd. Guangzhou (branch) China 100% ALK (Guangzhou) Medical Technology Co., Ltd. China 100% Tasfiye Halinde ALK Ilac ve Alerji Ürünleri Ticaret Anonim Sirketi Turkey 100% (In liquidation) Financial statements Notes to the consolidated financial statements ALK Annual report 2024 145 Definitions Term Definitions Gross margin – % Gross profit x 100 / Revenue EBIT margin – % EBIT x 100 / Revenue Return on equity (ROE) – % Net profit/(loss) for the period x 100 / Average equity ROIC incl. goodwill – % Operating profit x 100 / Average invested capital incl. goodwill Pay-out ratio – % Proposed dividend x 100 / Net profit/(loss) for the year Earnings/(loss) per share Net profit/(loss) for the period / Average number of (EPS) outstanding shares Earnings/(loss) per share Net profit/(loss) for the period / Average number of diluted (DEPS) outstanding shares diluted Cash flow per share (CFPS) Cash flow from operating activities / Average number of outstanding shares Price earnings ratio (PE) Share price / Earnings per share Net asset value per share Net asset value / Number of shares end of period Invested capital Intangible assets, tangible assets, inventories and current receiva- bles reduced by liabilities except for mortgage debt and bank loans Markets Geographical markets (based on customer location): • Europe comprises the EU, UK, Norway and Switzerland • North America comprises the USA and Canada • International markets comprise Japan, China and all other coun- tries The definitions are aligned with generally accepted financial ratios applied by financial analysts. The definitions are part of the Management’s review. Alternative Performance Measures Amounts in DKKm 2024 2023 EBITDA reconciliation to net profit Net profit 815 486 Tax on profit 242 161 Financial income (61) (12) Financial expenses 95 31 Depreciation, amortisation and impairment 272 245 EBITDA 1,363 911 Net asset value Equity 5,373 4,447 Net asset value 5,373 4,447 Invested capital reconciliation Intangible assets 1,792 671 Tangible assets 2,347 2,181 Inventories 1,716 1,423 Trade receivables 812 816 Income tax receivables 10 34 Other receivables 49 74 Prepayments 118 147 Pensions and similar liabilities (251) (245) Lease liabilities (non-current) (285) (255) Deferred income (non-current) (45) (46) Provisions (non-current) (1) (1) Trade payables (165) (128) Lease liabilities (current) (46) (46) Deferred income (current) (4) (4) Provisions (current) (38) (2) Income tax payables (current) (124) (17) Other payables (882) (837) Invested capital 5,003 3,765 Financial statements ALK Annual report 2024 146 Parent Notes company financial statements 1 2 3 Accounting policies Revenue and segment information Staff costs 150 151 151 151 151 152 153 154 155 155 11 12 13 14 15 16 17 18 19 Mortgage debt and bank loans Pensions and similar liabilities Lease liabilities Income tax payables to group companies Contingent liabilities and commitments Related parties Fees to ALK-Abelló A/S’ auditors Proposed appropriation of net profit Events after the reporting period 155 155 156 156 156 156 156 156 156 4 5 Financial income and expenses Income tax 6 Intangible assets 7 8 Property, plant and equipment Deferred tax 147 Income statement 148 Balance sheet 149 Statement of changes in equity 150 Notes 9 10 Investments in subsidiaries Inventories Financial statements Parent company financial statements ALK Annual report 2024 147 Income statement Amounts in DKKm Note 2024 2023 Revenue 2 3 4,114 1,457 2,657 2,171 1,061 1,110 Cost of sales Gross profit Research and development expenses Sales and marketing expenses Administrative expenses 3 3 514 466 544 371 170 25 3, 17 185 Operating profit/(loss) (EBIT) 1,492 Income from investments in subsidiaries Financial income 9 4 4 119 86 152 29 Financial expenses 69 36 Profit before tax (EBT) 1,628 170 Tax on profit/(loss) 5 325 (19) Net profit 18 1,303 189 Financial statements Parent company financial statements ALK Annual report 2024 148 Balance sheet – Assets Balance sheet – Equity and liabilities 31 Dec. 2024 31 Dec. 2023 31 Dec. 2024 31 Dec. 2023 Amounts in DKKm Note Amounts in DKKm Note Non-current assets Equity Intangible assets Intangible assets Share capital 111 4,969 51 111 3,652 38 6 1,200 1,200 187 187 Retained earnings Capitalised development costs Total equity Tangible assets 5,131 3,801 Land and buildings Plant and machinery Other fixtures and equipment Property, plant and equipment in progress 7 7 7 7 366 286 52 329 1,033 311 244 52 389 996 Liabilities Non-current liabilities Mortgage debt Pensions and similar liabilities Lease liabilities 11 12 13 166 62 131 44 184 61 141 46 Other non-current assets Investments in subsidiaries Receivables from group companies Prepayments 9 8 1,058 2,450 19 1,058 1,754 45 Deferred income Income tax payables to group companies 14 - 120 552 403 Deferred tax assets 22 289 Income tax receivables 118 3,667 149 3,295 Current liabilities Mortgage debt 11 11 19 671 72 19 261 52 Bank loans Trade payables Total non-current assets 5,900 4,478 Payables to group companies Lease liabilities Deferred income Other payables 991 14 3 241 2 ,011 882 14 3 212 1,443 Current assets Inventories 13 10 727 60 327 1 81 88 689 45 245 2 53 110 1,144 Trade receivables Receivables from group companies Income tax receivables Other receivables Prepayments Total liabilities 2,414 7,545 1,995 5,796 1,284 Total equity and liabilities Cash 361 174 Total current assets 1,645 1,318 Total assets 7,545 5,796 Financial statements Parent company financial statements ALK Annual report 2024 149 Statement of changes in equity Reserve for capitalised Retained development Share capital Proposed dividend Total equity Amounts in DKKm 2024 earnings costs Equity at 1 January 111 3,652 38 - 3,801 Appropriated from net profit Share-based payments - - - - - - - 1,303 51 - - - - - - - - - 1,303 51 Share options settled (38) 6 - (38) Sale of treasury shares - 6 Transfer to legal reserves Tax related to items recognised directly in equity Other transactions (13) 8 13 - - 8 1,317 13 1,330 Equity at 31 December 111 4,969 51 - 5,131 See note 4.1 in the consolidated financial statements for information on treasury shares. Financial statements Notes to the parent company financial statements ALK Annual report 2024 150 Notes 1 Accounting policies General Balance sheet Capitalisation of development costs A reserve for capitalisation of development costs less deferred tax is recognised in the statement of equity. The reserve contains development costs, less amortisation/impairment losses, and less deferred tax, capitalised since 1 January 2016. The financial statements of the parent company ALK-Abelló A/S for the period 1 January to 31 December 2024 have been prepared in accordance with the Danish Financial Statements Act for large reporting class D enterprises. Acquisition of activities from subsidiaries Acquisition of activities from subsidiaries is accounted for using the purchase method. On initial recognition, goodwill is measured and recognised as the excess of the consideration transferred exceeding the fair value of the net assets acquired at the acquisition date. The financial statements are presented in Danish kroner (DKK), which is also the functional currency of the company. Other accounting information Goodwill Goodwill is measured at cost less accumulated amortisation and impairment. Amortisation is calculated using the straight-line method over the expected useful life, estimated at 10 years. This estimate was made based on estimated useful lives of the assets acquired. Cash flow statement The accounting policies are unchanged from last year. As allowed under section 86 (4) of the Danish Financial Statements Act, no cash flow statement is presented, as this is included in the consoli- dated cash flow statement. The parent company’s accounting policies for recognition and measurement are in accordance with the ALK Group’s accounting policies with the following exceptions: Investments in subsidiaries Investments in subsidiaries are measured at cost. Income statement Where the recoverable amount of the investments is lower than cost, the investments are written down to this lower value. Results of investments in subsidiaries Dividends from investments in subsidiaries are recognised in the parent company’s financial statements when the right to the dividend finally vests, typically at the date of the company’s approval in general meeting of the dividend of the company in question less any write-downs at the investments. In addition, cost is written down to the extent that dividends distributed exceed the accumulated earnings in the company since the acquisition date. In the event of indications of impairment, an impairment test is performed of investments in subsidiaries. Financial statements Notes to the parent company financial statements ALK Annual report 2024 151 Notes 2 Revenue and segment information 4 Financial income and expenses Amounts in DKKm 2024 2023 Amounts in DKKm 2024 2023 Sale of goods Royalties Services 4,003 108 3 2,070 99 Interest on receivables from group companies Other interest income1 Total financial income 18 68 86 20 9 29 2 Total revenue 4,114 2,171 Interest on payables to group companies Other interest expenses2 Currency loss, net 2 40 27 69 7 28 1 Europe International markets Total revenue 3,579 535 4,114 1,657 514 2,171 Total financial expenses 36 1 In 2024, other interest income include interest related to the resolved tax audit in Germany. Further, other interest income include net interest related to uncertain tax positions of DKK 4 million (2023: DKK 0) In 2024, other interest expenses include leasing interest expenses of DKK 4 million (2023: DKK 3 million). 2 3 Staff costs Amounts in DKKm 2024 2023 Wages and salaries Pensions Other social security costs, etc. Share-based payments Total 742 71 18 33 864 744 68 16 21 849 5 Income tax Amounts in DKKm 2024 2023 Current income tax 52 273 (2) 2 (21) 1 2 (1) (19) Adjustment of deferred tax Prior years adjustments, income tax Prior years adjustments, deferred tax Total Staff costs are allocated as follows: Cost of sales 344 283 65 126 46 326 267 69 120 67 325 Research and development expenses Sales and marketing expenses Administrative expenses Included in the cost of assets Total Profit before tax 1,628 170 Income tax, tax rate of 22% Permanent differences Prior years adjustments, income tax Prior years adjustments, deferred tax Other taxes and adjustments Tax on profit for the year 358 (42) (2) 2 9 325 37 (37) 2 (1) (20) (19) 864 849 Remuneration to Board of Management and Board of Directors: See note 2.4 and 5.1 in the consolidated financial statements. Employees Average number (FTE) Number year end (FTE) 923 896 926 950 Financial statements Notes to the parent company financial statements ALK Annual report 2024 152 Notes 6 Intangible assets Patents, trademarks and rights Development cost1 Assets in progress2 Amounts in DKKm Goodwill Software 2024 2023 Cost beginning of year Additions 867 69 - 59 18 - 359 8 51 1,017 - 1,405 1,043 (21) 1,344 70 - - Disposals (12) - (9) (9) Transfer to/from other groups Cost year end - - 24 (24) 1,044 - - 867 57 77 382 2,427 1,405 Amortisation and impairment beginning of year Amortisation for the year 867 69 - 11 1 271 28 - - - - - 1,218 29 1,198 29 - - Disposals during the year (12) - - (9) (21) 1 (9) Impairment during the year - - 1 - Amortisation and impairment year end 867 57 12 291 1,227 1,218 Carrying amount year end - - 65 91 1,044 1,200 187 1 The capitalised development cost relates to development of medical device products where the individual minor development projects are running for short-term periods and are subject to limited risk. The development projects are generating economic benefits in the form of sale of goods. At 31 December 2024, the capitalised development cost relates to the development of the adrenaline auto-injectors for the European and US markets. In 2024, ALK-Abelló A/S has entered into a Collaboration, License and Distribution Agreement with ARS Pharmaceuticals Inc. where the asset is not ready for use due to pending regulatory and other approvals. 2 Financial statements Notes to the parent company financial statements ALK Annual report 2024 153 Notes 7 Property, plant and equipment Property, plant and equipment in progress Land and buildings Plant and machinery Other fixtures and equipment Amounts in DKKm 2024 2023 Cost beginning of year Additions 667 6 560 1 81 9 389 105 - 1,697 121 4 1,488 211 10 Remeasurement of lease obligations Disposals 4 - - (22) 75 (21) 86 626 (1) - (44) - (12) - Transfer to/from other groups Cost year end 4 (165) 329 730 93 1,778 1,697 Depreciation and impairment beginning of year Depreciation for the year 356 30 316 44 29 13 (1) - - - - - - 701 87 632 81 Disposals during the year (22) - (21) 1 (44) 1 (12) - Impairment during the year Depreciation and impairment year end 364 340 41 745 701 Carrying amount year end 366 286 52 329 1,033 136 996 147 164 of which assets held under leases1 135 - 1 - Value of land and buildings subject to mortgages 228 1 Land and buildings in Denmark include buildings on land leased from Scion DTU A/S, Hørsholm. The estimated lease terms are 15 years. Financial statements Notes to the parent company financial statements ALK Annual report 2024 154 Notes 8 Deferred tax Intangible assets Tangible assets Current and other assets Tax losses carried forward Amounts in DKKm Liabilities Total 2024 Carrying amount beginning of year Adjustment to prior years (19) (1) (73) (4) - (31) 1 44 1 368 - 289 (3) Adjustment of receivables from group companies Recognised in the income statement, net Recognised in equity, net (share-based payments) Carrying amount year end - - - 1 1 (273) 8 (219) - (6) - 26 3 (1) (73) 5 - (239) (83) (1) 44 301 22 2023 Carrying amount beginning of year Adjustment to prior years (19) (61) (19) - 36 - 345 1 282 1 - - - Adjustment of receivables from group companies Recognised in the income statement, net Recognised in equity, net (share-based payments) Carrying amount year end - - - 7 7 - - (12) - (10) (2) (31) 8 13 2 (1) - - (19) (73) 44 368 289 ALK-Abelló A/S is included in a joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S) and its Danish subsidiaries. ALK-Abelló A/S recognises deferred tax assets including the tax value of tax losses if it is probable that it can be utilised against future taxable income within a foreseeable future. This includes an assessment of the possibilities to utilise tax losses in the joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S). Financial statements Notes to the parent company financial statements ALK Annual report 2024 155 Notes 9 Investments in subsidiaries 11 Mortgage debt and bank loans Amounts in DKKm 2024 2023 Amounts in DKKm 2024 2023 Cost beginning of year 1,470 1,470 Debt to mortgage credit institutions secured by buildings Cost year end 1,470 1,470 Mortgage debt is due as follows: Within 1 year 19 74 19 74 Write-down beginning of year 412 412 From 1-5 years After 5 years Write-down year end 412 412 92 110 203 Total 185 Carrying amount year end 1,058 1,058 Bank loans In the income statement, income from investments in subsidiaries is dividends, which amounts to DKK 119 million (2023: DKK 152 million). Bank loans are due as follows: Within 1 year 671 - 261 - From 1-5 years After 5 years For an overview of all subsidiaries see note 5.7 in the consolidated financial statements. - - Total 671 261 10 Inventories Amounts in DKKm 2024 2023 12 Pensions and similar liabilities Raw materials 194 452 81 109 513 67 Amounts in DKKm 2024 2023 Work in progress Pensions and similar liabilities expire as follows:1 Manufactured goods and goods for resale Within 1 year From 1-5 years After 5 years Total - 5 1 3 Total 727 689 57 62 57 61 Amount of write-down of inventories during the year 10 7 18 8 Amount of reversal of write-down of inventories during the year 1 Pensions and similiar liabilities relate to the provision for transition period for the Danish Holiday Act. Financial statements Notes to the parent company financial statements ALK Annual report 2024 156 Notes 13 Lease liabilities 17 Fees to ALK-Abelló A/S’ auditors Amounts in DKKm 2024 2023 Amounts in DKKm 2024 2023 Lease liabilities expire as follows: Within 1 year Fees to the auditors appointed at the annual general meeting: 14 62 14 58 Audit services Other opinions Tax advisory services Other services Total 2 2 1 - 2 - From 1-5 years After 5 years 69 83 1 1 4 Total 145 155 5 14 Income tax payables to group companies In 2024, a tax audit in Germany has been resolved and end of 2024 ALK-Abelló A/S has no non-current income tax payables to group companies (2023: DKK 120 million). 18 Proposed appropriation of net profit Amounts in DKKm 2024 2023 15 Contingent liabilities and commitments Proposed dividend Retained earnings Net profit - 1,303 1,303 - 189 189 End of 2023, ALK-Abelló A/S had issued a hold-harmless letter to ALK-Abelló Arzneimittel GmbH. As a result of the resolved tax audit in Germany in 2024, there is no hold-harmless letter issued end of 2024. For more information on contingent liabilities and commitments, see note 3.10 in the consolidated finan- cial statements. 19 Events after the reporting period 16 Related parties No events have occured after the reporting period, that influence the evaluation of the parent company financial statements. ALK-Abelló A/S is included in the consolidated financial statements of the Lundbeck Foundation (Lund- beckfond Invest A/S, incorporated in Denmark). ALK-Abelló A/S has had transactions with subsidiaries during 2024. All subsidiaries are owned 100%. The transactions are eliminated in the consolidated financial statements. Transactions with the majority shareholder are disclosed in note 5.4 in the consolidated financial state- ments. Apart from remuneration, no other transactions have taken place during the year with Board of Directors, Board of Management, major shareholders or other related parties. Remuneration etc. to Board of Directors and Board of Management For information on remuneration and exercise of share options for the ALK Group’s Board of Directors and Board of Management, see note 2.4 and 5.1 in the consolidated financial statements. Reports and other disclosures ALK Annual report 2024 157 Statements and other information Statement by Management on the annual report The Board of Directors and the Board of Management have today considered and adopted the annual report of ALK-Abelló A/S for the financial year 1 January to 31 December 2024. In our opinion, Management’s review includes a true and fair account of the development in the operations and financial circum- stances of the group and the parent company, of the results for the year, and of the financial position of the group and the parent company, as well as a description of the most significant risks and elements of uncertainty which the group and the parent company are facing. The consolidated financial statements have been prepared in accordance with IFRS accounting standards as adopted by the EU and further requirements in the Danish Financial Statements Act. The parent company financial statements have been prepared in accordance with the Danish Financial Statements Act. Manage- ment's review has been prepared in accordance with the Danish Financial Statements Act. Statements 157 Statement by Management on the annual report Additionally, the Sustainability Statement, which is part of Manage- ment’s review, has been prepared, in all material respects, in accordance with paragraph 99 a of the Danish Financial Statements Act. This includes compliance with the European Sustainability Reporting Standards (ESRS) including that the process undertaken by Management to identify the reported information (the “Process”) is in accordance with the description set out in section “Descrip- tion of the process to identify and assess material impacts, risks and opportunities”. Furthermore, disclosures in subsection “EU Taxonomy” in the environmental section of the Sustainability State- 159 Independent Auditor’s Reports 162 Independent auditor’s limited assurance report on the Sustainability Statement In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the financial position at 31 December 2024 of the group and the parent company and of the results of the group and parent company opera- tions and consolidated cash flows for the financial year 1 January to 31 December 2024. Other information1 164 Financial highlights and key ratios by quarter for the ALK Group (unaudited) 1 Part of Management's review Reports and other disclosures Statements Statement by Management on the annual report ALK Annual report 2024 158 ment are, in all material respects, in accordance with Article 8 of EU Regulation 2020/852 (the “Taxonomy Regulation”). In our opinion, the annual report of ALK-Abelló A/S for the financial year 1 January to 31 December 2024 with the file name alk-2024-12- 31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. The year 2024 marks the initial implementation of paragraph 99 a of the Danish Financial Statements Act concerning compliance with ESRS. As such, more clear guidance and practice are anticipated in various areas, which are expected to be issued in the coming years. Furthermore, the Sustainability Statement includes forward-looking statements based on disclosed assumptions about events that may occur in the future and possible future actions by the Group. Actual outcomes are likely to be different since anticipated events frequently do not occur as expected. We recommend that the annual report be adopted at the annual general meeting. Hørsholm, 19 February 2025 Board of Management Peter Halling President & CEO Claus Steensen Sølje Executive Vice President & CFO Søren Niegel Executive Vice President, Commercial Operations Henriette Mersebach Executive Vice President, Research & Development Board of Directors Anders Hedegaard Lene Skole Chair Vice Chair Gitte Aabo Lars Holmqvist Alan Main Jesper Høiland Katja Barnkob Johan Smedsrud Bertil Lindmark Nanna Rassov Carlson Lise Lund Mærkedahl Reports and other disclosures Statements ALK Annual report 2024 159 Independent Auditor’s Reports Key audit matters Key audit matters are those matters that, in our professional judgement, were of most signif- icance in our audit of the Financial Statements for 2024. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. To the shareholders of ALK-Abelló A/S Parent Company, and statement of comprehensive income and cash flow statement for the Group. Collectively referred to as the “Financial Statements”. Report on the audit of the Financial Statements Basis for opinion How our audit addressed We conducted our audit in accordance with Inter- national Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor’s responsibilities for the audit of the Financial State- ments section of our report. Key audit matter the key audit matter Our opinion In our opinion, the Consolidated Financial State- ments give a true and fair view of the Group’s financial position at 31 December 2024 and of the results of the Group’s operations and cash flows for the financial year 1 January to 31 December 2024 in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act. Revenue recognition and related sales deductions The Group sells products in certain markets subject to various rebate and discount arrangements and mandated price adjust- ments schemes. These arrangements and schemes result in deductions to gross revenue in arriving at net revenue and in accruals for estimated sales deductions. We discussed the policies for revenue recog- nition, including accounting for rebates, discounts and mandated price adjustments with Management. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. We performed risk assessment procedures to obtain an understanding of the IT systems, business processes and relevant controls for revenue recognition and related sales deduc- tions. We assessed whether the controls were designed and implemented to effectively address the risk of material misstatement. Moreover, in our opinion, the Parent Company Financial Statements give a true and fair view of the Parent Company’s financial position at 31 December 2024 and of the results of the Parent Company’s operations for the financial year 1 January to 31 December 2024 in accordance with the Danish Financial Statements Act. Independence We focused on these areas as accounting for rebates, discounts and mandated price adjustments is complex and requires a high degree of estimation by Management. This includes the estimation uncertainty regarding accruals for estimated sales deductions. We are independent of the Group in accordance with the International Ethics Standards Board for Account- ants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark. We have also fulfilled our other ethical responsibilities in accord- ance with these requirements and the IESBA Code. We evaluated and challenged the assump- tions and estimates, including methods, data and assumptions used for calculating rebates, discounts and mandated price adjustments and accruals for sales deductions. Our opinion is consistent with our Auditor’s Long- form Report to the Audit Committee and the Board of Directors. We refer to note 2.1 in the consolidated financial statements. To the best of our knowledge and belief, prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 were not provided. What we have audited We assessed the appropriateness of the related disclosure provided in the consoli- dated financial statements. The Consolidated Financial Statements (pp 106-145) and the Parent Company Financial Statements (pp 146-156) of ALK-Abelló A/S for the financial year 1 January to 31 December 2024 comprise income statement, balance sheet, statement of changes in equity and notes, including material accounting policy information for the Group as well as for the Appointment We were first appointed auditors of ALK-Abelló A/S on 11 March 2020 for the financial year 2020. We have been reappointed annually by shareholder resolution for a total period of uninterrupted engage- ment of 5 years including the financial year 2024. Reports and other disclosures Statements Independent Auditor's Report ALK Annual report 2024 160 Statement on Management’s Review Management is responsible for Management’s Review (pp 1-105 and 164). and fair view in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act and for the preparation of parent company financial statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. As part of an audit in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: attention in our auditor’s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern. Our opinion on the Financial Statements does not cover Management’s Review, and we do not as part of the audit express any form of assurance conclusion thereon. • Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is suffi- cient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omis- sions, misrepresentations, or the override of internal control. In connection with our audit of the Financial Statements, our responsibility is to read Manage- ment’s Review and, in doing so, consider whether Management’s Review is materially inconsistent with the Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. • Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view. In preparing the Financial Statements, Manage- ment is responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no real- istic alternative but to do so. Moreover, we considered whether Manage- ment’s Review includes the disclosures required by the Danish Financial Statements Act. This does not include the requirements in paragraph 99 a related to the Sustainability Statement covered by the separate auditor’s limited assurance report hereon. • Plan and perform the group audit to obtain sufficient appropriate audit evidence • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circum- stances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Parent Company’s internal control. regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the Consol- idated Financial Statements. We are respon- sible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assur- ance about whether the Financial Statements as a whole are free from material misstate- ment, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the addi- tional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial State- ments. Based on the work we have performed, in our view, Management’s Review is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act, except for the requirements in paragraph 99 a related to the Sustainability Statement, cf. above. We did not identify any material misstate- ment in Management’s Review. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and signifi- cant audit findings, including any significant defi- ciencies in internal control that we identify during our audit. • Conclude on the appropriateness of Manage- ment’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw We also provide those charged with governance with a statement that we have complied with rele- vant ethical requirements regarding independ- ence, and to communicate with them all relation- ships and other matters that may reasonably be Management’s responsibilities for the Financial Statements Management is responsible for the preparation of consolidated financial statements that give a true Reports and other disclosures Statements Independent Auditor's Report ALK Annual report 2024 161 thought to bear on our independence and, where applicable, actions taken to eliminate threats or safeguards applied. taxonomy and the anchoring thereof to elements in the taxonomy, for all financial infor- mation required to be tagged using judgement where necessary; ESEF taxonomy and the creation of extension elements where no suitable element in the ESEF taxonomy has been identified; From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclo- sure about the matter. • Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and • Ensuring consistency between iXBRL tagged data and the Consolidated Financial State- ments presented in human-readable format; and • Reconciling the iXBRL tagged data with the audited Consolidated Financial Statements including notes. • For such internal control as Management determines necessary to enable the prepara- tion of an annual report that is compliant with the ESEF Regulation. In our opinion, the annual report of ALK-Abelló A/S for the financial year 1 January to 31 December 2024 with the file name alk-2024-12- 31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. Report on compliance with the ESEF Regulation Our responsibility is to obtain reasonable assur- ance on whether the annual report is prepared, in all material respects, in compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our opinion. The nature, timing and extent of procedures selected depend on the auditor’s judgement, including the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The procedures include: As part of our audit of the Financial Statements we performed procedures to express an opinion on whether the annual report of ALK-Abelló A/S for the financial year 1 January to 31 December 2024 with the filename alk-2024-12-31-en.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes require- ments related to the preparation of the annual report in XHTML format and iXBRL tagging of the Consolidated Financial Statements including notes. Hellerup, 19 February 2025 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR No 33 77 12 31 • Testing whether the annual report is prepared in XHTML format; Lars Baungaard State Authorised Public Accountant mne23331 • Obtaining an understanding of the company’s iXBRL tagging process and of internal control over the tagging process; Management is responsible for preparing an annual report that complies with the ESEF Regu- lation. This responsibility includes: Kim Tromholt State Authorised Public Accountant mne33251 • Evaluating the completeness of the iXBRL tagging of the Consolidated Financial State- ments including notes; • The preparing of the annual report in XHTML format; • Evaluating the appropriateness of the compa- ny’s use of iXBRL elements selected from the • The selection and application of appropriate iXBRL tags, including extensions to the ESEF Reports and other disclosures Statements ALK Annual report 2024 162 Independent auditor’s limited assurance report on the Sustainability Statement To the stakeholders of ALK-Abelló A/S Basis for conclusion Our firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality management including policies or proce- dures regarding compliance with ethical require- ments, professional standards and applicable legal and regulatory requirements. • assessment of the materiality of the identi- fied impacts, risks and opportunities related to sustainability matters by selecting and applying appropriate thresholds; and We conducted our limited assurance engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance engagements other than audits or reviews of historical financial information (“ISAE 3000 (Revised)”) and the additional require- ments applicable in Denmark. Limited assurance conclusion We have conducted a limited assurance engagement on the sustainability statement of ALK-Abelló A/S (the “Group”) included in Management’s Review, page 36-105, for the financial year 1 January – 31 December 2024 (the “Sustainability Statement”). • making assumptions that are reasonable in the circumstances. Management’s responsibilities for the Sustainability Statement Management is further responsible for prepa- ration of the Sustainability Statement, which includes the information identified by the Process, in accordance with the Danish Financial Statements Act paragraph 99 a, including: The procedures in a limited assurance engage- ment vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assur- ance obtained in a limited assurance engage- ment is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Sustainability Statement is not prepared, in all material respects, in accordance with the Danish Financial Statements Act paragraph 99 a, including: Management is responsible for designing and implementing a process to identify the informa- tion reported in the Sustainability Statement in accordance with ESRS and for disclosing this Process as included in section “Description of the process to identify and assess material impacts, risks and opportunities” of the Sustainability Statement. This responsibility includes: • compliance with ESRS; • preparing the disclosures as included in subsection “EU Taxonomy” of the Sustainability Statement, in compliance with Article 8 of the Taxonomy Regulation; • compliance with the European Sustainability Reporting Standards (ESRS), including that the process carried out by Management to identify the information reported in the Sustainability Statement (the “Process”) is in accordance with the description set out in section “Descrip- tion of the process to identify and assess mate- rial impacts, risks and opportunities”; and We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Our responsibilities under this standard are further described in the Auditor’s responsibilities for the assurance engagement section of our report. • understanding the context in which the Group’s activities and business relationships take place and developing an understanding of its affected stakeholders; • designing, implementing and maintaining such internal control that Management deter- mines is necessary to enable preparation of the Sustainability Statement that is free from material misstatement, whether due to fraud or error; and • identification of the actual and potential impacts (both negative and positive) related to sustainability matters, as well as risks and opportunities that affect, or could reasonably be expected to affect, the Group’s financial position, financial performance, cash flows, access to finance or cost of capital over the short-, medium-, or long-term; Our independence and quality management We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark. We have also fulfilled our other ethical responsibilities in accordance with these require- ments and the IESBA Code. • compliance of the disclosures in subsection “EU Taxonomy” within the environmental section of the Sustainability Statement with Article 8 of EU Regulation 2020/852 (the “Taxonomy Regulation”). • the selection and application of appropriate sustainability reporting methods and making assumptions and estimates that are reason- able in the circumstances. Reports and other disclosures Statements Independent auditor's limited assurance report on the Sustainability Statement ALK Annual report 2024 163 • Designing and performing procedures to eval- uate whether the Process is consistent with the Group’s description of its Process, as disclosed in section “Description of the process to iden- tify and assess material impacts, risks and opportunities” of the Sustainability Statement. reviewing the Group’s internal documentation of its Process; and • Where applicable, compared disclosures in the Sustainability Statement with the corre- sponding disclosures in the Financial State- ments and Management’s Review; Inherent limitations in preparing the Sustaina- bility Statement In reporting forward-looking information in accordance with ESRS, Management is required to prepare forward-looking information on the basis of disclosed assumptions about events that may occur in the future and possible future actions by the Group. Actual outcomes are likely to be different since anticipated events frequently do not occur as expected. • Evaluated whether the evidence obtained from our procedures about the Process imple- mented by the Group was consistent with the description of the Process set out in section “Description of the process to identify and assess material impacts, risks and opportuni- ties” of the Sustainability Statement. • Evaluated the methods, assumptions and data for developing estimates and forward-looking information; and Our other responsibilities in respect of the Sustainability Statement include: • Obtained an understanding of the Group’s process to identify taxonomy-eligible and taxonomy-aligned economic activities and the corresponding disclosures in the Sustainability Statement. • Identifying where material misstatements are likely to arise, whether due to fraud or error; and Auditor’s responsibilities for the assurance engagement In conducting our limited assurance engagement, with respect to the Sustainability Statement, we: Our responsibility is to plan and perform the assurance engagement to obtain limited assur- ance about whether the Sustainability Statement is free from material misstatement, whether due to fraud or error, and to issue a limited assurance report that includes our conclusion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence decisions of users taken on the basis of the Sustainability Statement as a whole. • Designing and performing procedures respon- sive to disclosures in the Sustainability State- ment where material misstatements are likely to arise. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omis- sions, misrepresentations, or the override of internal control. • Obtained an understanding of the Group’s reporting processes relevant to the prepara- tion of its Sustainability Statement, including the consolidation processes, by obtaining an understanding of the Group’s control envi- ronment, processes and information systems relevant to the preparation of the Sustaina- bility Statement but not evaluating the design of particular control activities, obtaining evidence about their implementation or testing their operating effectiveness; Other matter The comparative information included in the Sustainability Statement was not subject to an assurance engagement. Our conclusion is not modified in respect of this limitation of scope. Hellerup, 19 February 2025 Summary of the work performed As part of a limited assurance engagement in accordance with ISAE 3000 (Revised) we exercise professional judgement and maintain profes- sional scepticism throughout the engagement. A limited assurance engagement involves performing procedures to obtain evidence about the Sustainability Statement. The nature, timing and extent of procedures selected depend on professional judgement, including the identifica- tion of disclosures where material misstatements are likely to arise, whether due to fraud or error, in the Sustainability Statement. PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR No 33 77 12 31 • Evaluated whether the information identified by the Process is included in the Sustainability Statement; Lars Baungaard State Authorised Public Accountant mne23331 Our responsibilities in respect of the Process include: • Evaluated whether the structure and the pres- entation of the Sustainability Statement are in accordance with ESRS; • Obtaining an understanding of the Process, but not for the purpose of providing a conclusion on the effectiveness of the Process, including the outcome of the Process; Kim Tromholt State Authorised Public Accountant mne33251 In conducting our limited assurance engagement, with respect to the Process, we: • Performed inquiries of relevant personnel and analytical procedures on selected information in the Sustainability Statement; • Obtained an understanding of the Process by performing inquiries to understand the sources of the information used by Management; and • Considering whether the information identified addresses the applicable disclosure require- ments of ESRS; and • Performed limited substantive assurance procedures on selected information in the Sustainability Statement; Reports and other disclosures Other information ALK Annual report 2024 164 Financial highlights and key ratios by quarter for the ALK Group1 (unaudited) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Amounts in DKKm 2024 unaudited unaudited unaudited unaudited Amounts in DKKm 2024 unaudited unaudited unaudited unaudited Balance sheet Total assets Invested capital Equity Income statement Revenue 8,246 5,003 5,373 8,246 5,003 5,373 7,149 4,056 5,086 7,0 45 4,025 4,919 6,784 3,935 4,690 5,537 1,985 531 1,499 545 167 474 108 - 1,313 471 109 349 78 1,374 507 125 387 93 1,351 462 130 354 90 Cost of sales Research and development expenses Sales and marketing expenses Administrative expenses Other operating items, net Operating profit (EBIT) Net financial items Profit before tax (EBT) Net profit 1,564 369 Cash flow and investments Cash flow from operating activities Cash flow from investing activities – of which investment in intangible assets – of which investment in tangible assets – of which acquisitions and operations Free cash flow 1,213 (1,417) (1,043) (260) 453 (1,082) (1,009) (73) 218 (65) (11) (54) - 259 (98) (13) (84) - 283 (172) (10) (49) (115) 111 3 - 2 1 1,091 (34) 1,057 815 205 (7) 306 (25) 281 212 369 264 5 316 (7) 198 170 281 269 201 331 309 232 382 (115) - (204) (629) 153 161 EBITDA 1,363 Average number of employees (FTE) 2,789 2,812 2,778 2,811 2,828 Information on shares Dividend - 111 - 111 - 111 - 111 - 111 Revenue (Growth in revenue in local currency %) Share capital Shares in thousands of DKK 0.50 each Share price, end period – DKK Net asset value per share – DKK 222,824 159 222,824 159 222,824 172 222,824 153 222,824 124 Europe 3,914 2,080 1,568 266 (22) (31) (10) (32) 1,138 (22) (32) (11) (37) 884 450 354 80 (21) (27) (5) 900 487 345 68 (25) (35) (15) (12) 992 531 399 62 (18) (28) (9) – SLIT-tablets 612 470 56 24 24 23 22 21 – SCIT/SLIT-drops – Other products and services (91) (7) Key figures Gross margin – % 64 20 64 14 64 23 63 19 66 23 1.1 North America 906 209 361 336 (0) (15) (0) 235 48 (-7) (-2) 219 46 (3) (13) (4) 241 61 (3) (29) (4) 211 54 83 74 (2) (20) (-4) (-3) EBIT margin - % – SLIT-tablets Earnings per share (EPS) – DKK Earnings per share diluted (DEPS) – DKK Cash flow per share (CFPS)– DKK Share price/Net asset value 3.7 0.8 1.0 0.9 – SCIT/SLIT-drops – Other products and services 97 (-5) 89 92 (-7) 90 (-11) 84 (-4) 88 (-9) 3.7 1.4 6.6 0.8 (2.1) 6.6 1.0 1.0 7. 5 0.9 1.2 6.9 1.1 1.3 5.9 International markets – SLIT-tablets 717 (4) 126 (-25) 210 138 67 (27) (39) (7) 233 168 53 (32) (25) (55) (51) 148 (-18) 121 18 (-66) 562 (9) 135 (-17) 1 – SCIT/SLIT-drops 123 (-18) (15) (-3,964) 1 Management’s review comprises this page as well as pages 1-105 and Financial highlights and key ratios for the ALK Group on page – Other products and services 32 (17) 6 (-9) 5 (20) 12 9 (9) 20. Definitions: see page 145. Total revenue 5,537 2,851 2,052 634 (15) 1,499 (11) (17) (5) 1,313 634 510 (18) 1,374 (21) 1,351 (10) (22) (-1) (1) – SLIT-tablets (24) (6) 795 552 152 (29) (5) 716 490 168 (32) (16) (1) 706 500 145 – SCIT/SLIT-drops – Other products and services (7) (2) 169 (26) ALK-Abelló A/S Bøge Allé 6-8 DK-2970 Hørsholm Denmark CVR no. 63 71 79 16
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