AMBU - 2023/24
| Working towards diversity, equity & inclusion |
| Ambu wants to be the employer of choice for |
| the talent in our industry. Alongside other ini- |
| tiatives, this means developing an inclusive |
| and equitable work environment for a highly |
| diverse workforce. |
| We hold integrity high in all we do, and this |
| is part of our company values and a cor- |
| nerstone in the way we operate, both in the |
| market, but also towards our people, who, we |
| believe, should be empowered and valued as |
| equals in a safe space. |
| As we operate in a global environment, we |
| recognise that a diverse and inclusive work- |
| ing environment will mean different things |
| for different sets of employees. We therefore |
| approach this through a mixture of global |
| and localised initiatives, including, but not |
| Ambition |
| Promote equality and inclusion for |
| all and continue our work to ensure |
| that Ambu remains an inclusive, |
| equal and diverse place to work |
| Target |
| 40% representation of the |
| underrepresented gender in other |
| management of Ambu A/S (Parent |
| Company) in 2023/24 |
| Governance |
| Governed through the Ambu Code |
| of Conduct and our Global Diversity, |
| Equity & Inclusion Policy, as well as |
| our Labour & Human Rights Policy |
| limited to, being a signatory to the United- |
| Nations’ Women’s Empowerment Principles |
| (UN WEP) and ensuring an accessible work- |
| ing environment across all our sites. |
| We live up to our Global Diversity, Equity & |
| Inclusion Policy through employee-driven |
| local initiatives and global strategic |
| approaches. Inherently, we believe that a |
| truly inclusive environment is best achieved |
| by encouraging our employees to speak up |
| and take ownership of creating a working |
| environment they feel they belong to, com- |
| bined with executive sponsorship, enabling |
| our employees to feel safe and comfortable |
| in doing so. |
| Targets and progress |
| Over the past financial year, Ambu continued |
| to deliver on our commitment to ensuring a |
| truly diverse workforce, as well as to uphold- |
| ing our target of 40% representation of the |
| underrepresented gender across other man- |
| agement in our Parent Company. |
| By the end of the 2023/24 financial year, we |
| achieved a gender split in other manage- |
| ment of 60% men and 40% women in Ambu |
| A/S, of a total of 30 employees, achieving an |
| equal gender distribution. Additionally, we |
| improved the gender split in our Executive |
| Leadership Team (for the Ambu Group), with |
| a split of 57% men and 43% women, of a |
| total of seven members, and across the total |
| | Ambu workforce, we achieved a gender split |
| | of 37% men and 63% women. |
| | Ambu is committed to structural equity and |
| | inclusion across the organisation.In 2023/24, |
| | we built on existing progress within Diversity, |
| | Equity and Inclusion with thorough quanti- |
| | tative and qualitative analysis. Based on the |
| | outcome of this research, we will continue to |
| | ensure structural equity across the organi- |
| | sation through pay, promotion and develop- |
| | ment equity. |
| | Ambu continues to be committed to a bias- |
| | free recruitment and promotion process. |
| | In 2023/24, we made significant strides in |
| | reducing bias in our recruitment process |
| | | and identifying talent from a holistic per- |
| | | spective through upskilling key hiring teams |
| | | and focusing on a skill and potential based |
| | | approach to assessing talent. In 2024/25, |
| | | we will build on this momentum across the |
| | | wider approach to talent in the organisation. |
| | | In our global employee engagement survey, |
| | | Ambu scored 4.2 out of 5 on our DEI driver. |
| | | Based on a range of parameters, we found |
| | | that we are particularly strong on being an |
| | | inclusive workforce, and while the cognitive |
| | | and demographic diversity has improved |
| | | across the organisation, this continues to be |
| | | a focus area for us. |
| Diversity in management positions |
| Report on the gender composition of the Board of Directors |
| (members elected at the annual general meeting), pursuant to |
| Section 99 b, and on diversity, pursuant to Section 107d, of the |
| Danish Financial Statements Act. |
| Board diversity |
| Ambu aims for the Board of Directors and |
| top-level management to be representative |
| across genders, nationalities, ages, edu- |
| cation, qualifications, competences and, |
| thereby, perspectives. |
| As stated in our Global Diversity, Equity |
| & Inclusion Policy, the Board should, as a |
| group, have sufficient knowledge, insight |
| and professional experience to understand |
| Ambu's activities and the risks connected |
| hereto. It is the Executive Management's |
| view that the policies are met, as the criteria |
| on diversity and inclusion has been consid- |
| ered for selection of the Board members in |
| 2023/24 The members of Ambu’s Board of |
| Directors were deemed to possess a wide |
| range of relevant competences in the finan- |
| cial year 2023/24. For an overview of the |
| competences of the Board, please refer to |
| p. 97→. |
| Since Ambu’s annual general meeting in |
| December 2022, the Board of Directors has |
| had two women on the Board. In this context, |
| board diversity refers to members of the |
| Board elected at the annual general meeting. |
| Our ambition is to have at least 28,6% of the |
| underrepresented gender on our Board. |
| With two women on a Board of Directors of |
| six members, Ambu achieved this target in |
| 2023/24, as the underrepresented gender |
| represented 33%. Thus, we have an equal |
| gender distribution in our Board of Directors. |
| We continuously aim to ensure diversity in |
| our Board and disclose the goals and actual |
| numbers of different genders, nationalities |
| and age intervals in our annual reporting. |
| Our goal is to have genders, nationalities and |
| age intervals represented, and we continue |
| our focus on driving broad diversity in the |
| Board. |
| Statutory reporting of gender diversity for Ambu A/S |
| Diversity in the Board of Directors (excluding employee-elected) |
| | Target 2023/24 | 2023/24 |
| Total number of members | Not required | 6 |
| Underrepresented gender (%) | Minimum 28.6 | 33 |
| Number of genders | 2 | 2 |
| Number of nationalities | 2 | 3 |
| Number of age intervals (40-49, 50-59, 60-69) | 3 | 3 |
| Gender diversity in the other management of Ambu A/S |
| Target 2023/24 | 2023/24 |
| Total number of members in other management | Not required | 30 |
| Underrepresented gender in other management (%) | 40 | 40 |
| Target 2027/28 |
| Underrepresented gender in other management (%) | Minimum 40 | - |
| Board of Directors refers to members elected by the shareholders at Ambu’s annual general meeting. Other management |
| of Ambu A/S relates to Ambu A/S (Parent Company) and features the Executive Leadership Team (including the Executive |
| Management) and the second management level, consisting of people managers reporting directly to the members of the |
| Executive Leadership Team. |
| Gender diversity in the other management of Ambu A/S |
| Ambu aims not just to have a broad diversity |
| in our Board of Directors, but also to achieve |
| a diverse management and workforce. From |
| a management perspective, we report on |
| gender diversity for both our Group Execu- |
| tive Leadership Team and our other manage- |
| ment level, defined only for Ambu A/S (Par- |
| ent Company. The Executive Leadership |
| Team comprises our top-level executives |
| across the Ambu Group (including our |
| Executive Management). The other manage- |
| ment, cf. § 99b, in Ambu A/S consist of two |
| levels of management. Level 1: The Executive |
| Management and the people who are on the |
| same organisational level as the Executive |
| Management. Level 2: People with employee |
| responsibilities who report directly to the |
| Executive Management. |
| In 2023/24, we achieved a gender split in |
| other management of 60% men and 40% |
| women in Ambu A/S, of a total of 30 employ- |
| ees. We therefore have an equal gender |
| distribution in our Parent Company. |
| Diversity, equity and inclusion continues |
| to be important at Ambu, and we strive to |
| maintain the equal gender distribution we |
| have achieved. |
| To maintain our high ambition for diversity in |
| our other management, as well as the aims |
| set forth in our Global Diversity, Equity & |
| Inclusion Policy, we will continually evaluate |
| and improve our practices across all People |
| & Culture activities. |
| This includes continuing our key initiatives |
| from 2023/24. Among other things, our initi- |
| atives involved closely tracking and reporting |
| measurements of gender diversity, ensur- |
| ing accountability and transparency in our |
| efforts to achieve target representation of the |
| underrepresented gender in our other man- |
| agement. Additionally, we made significant |
| strides in reducing bias in our recruitment |
| process and identifying talent from a holistic |
| perspective. |
| In 2024/25, we will continue to build on this |
| momentum through applying the same prin- |
| ciples in identifying, evaluating and promot- |
| ing talent within the organisation. |
| Above all, we are dedicated to continuing |
| our focus on driving diversity, not only at our |
| Board, Executive Leadership Team and other |
| management levels, but across our global |
| organisation. |
| Statement of target figures and policies for the underrepresented gender |
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Dr. Faiz Bhora Director Advanced Lung and Airway Center Chief Thoracic Surgery Hackensack Meridian Health Network → Click here to watch Dr. Bhora’s evaluation of the Ambu® aScope™ 5 Broncho HD solution CONTENTS In brief Solutions Governance Download our other statutory reports Letter from our Chair and CEO Ambu at a glance 5 7 Our business areas 28 29 30 31 32 33 38 Risk management 91 96 Drivers of single-use endoscopy Leading endoscopy solutions portfolio Reducing carbon emissions with bioplastics Future endoscopy innovations Endoscopy market potential Corporate governance Executive Management Board of Directors Financial highlights 8 99 Corporate governance report 2023/24 ↓ Business highlights 10 11 12 13 100 Five-year financial summary Five-year sustainability & ESG summary Single-use endoscopes and the environment Executive Management and Executive Leadership Team 102 103 104 Remuneration Anaesthesia & Patient Monitoring Shareholder information CORPORATE GOVERNANCE REPORT 2023/24 Company announcements 2023/24 and financial calendar 107 Ambu A/S, Baltorpbakken 13, DK-2750 Ballerup Registration no. 63644919 Strategy & business Sustainability Financial statements Remuneration report 2023/24 ↓ Purpose-driven company History of innovation Global presence 15 16 17 18 20 21 22 23 24 25 Our sustainability focus 41 42 46 51 55 66 70 73 82 84 Consolidated financial statements Statements 108 150 157 Sustainability governance Compliance with regulations Materiality and stakeholder engagement Environmental information Social information REMUNERATION REPORT 2023/24 Financial statements – Parent Company Strategy momentum Customer insights Leader in sustainability Value creation Diversity in management positions Governance information Find out more ⟶ Ambu.com Financial targets 2027/28 Equity story ESG & sustainability data collection Accounting practices Outlook 2024/25 Annual report 2023/24 4 In brief IN BRIEF 5 7 Letter from our Chair and CEO Ambu at a glance 8 Financial highlights 10 11 12 13 Business highlights Five-year financial summary Five-year sustainability & ESG summary Single-use endoscopes and the environment Annual report 2023/24 5 In brief LETTER FROM OUR CHAIR & CEO Solid progress and strong momentum marked the 2023/24 financial year for Ambu. In the second year of our transformative ZOOM IN strategy, we delivered strong results on our growth journey, centred on driving high customer value. Going into the 2023/24 financial year, we were committed to accelerating growth and profi- tability, advancing the solid financial founda- tion we built last year. And we delivered. delivered above expectations. As a result, we upgraded our financial guidance for the year twice, in April and July. Moreover, due to a continued focus on capital allocation, we further reduced our debt, now at -0.1x EBITDA before special items, and we continued to strengthen our free cash flow, reaching DKK 524m for the full year, versus DKK 192m last year. Subsequently, we reached a favourable position to explore and pursue growth oppor- tunities, both organically and externally, as we accelerate our strategy implementation. Cysto HD, in the USA and Europe. Our urol- ogy portfolio now consists of three endo- scopes integrated with our two endoscopy systems, enabling urologists to meet a wide range of needs. We are excited to leverage our extended potential in urology, delivering higher levels of workflow efficiency. For the full year, we nearly doubled our organic revenue growth to 13.8%, from 7.6% last year, as well as our profitability, with an EBIT margin before special items of 12.0%, from 6.3% last year. Our growth momentum was driven by impactful performance across our business, with Endoscopy Solutions growing 19.7% and Anaesthesia & Patient Monitoring growing 6.1%. Endoscopy Solu- tions, our key growth engine, now accounts for 59% of our business. The growth was driven by continuous adoption of our existing endoscopy solutions, solidifying our market leader position. In Anaesthesia & Patient Monitoring, our growth was driven by positive outcomes of price increases, aimed at increas- ing profitability in selected low-margin areas, as well as strong customer loyalty and stable market growth. With strong momentum, we In gastroenterology (GI), we also brought new solutions to market, specifically Ambu® aScope™ Gastro Large, in the USA, and our new generation Ambu® aScope™ Duodeno 2, in the USA and Europe. GI represents the largest endoscopy market globally, and we have the most comprehensive single-use endoscopy portfolio. Similar to our approach when we entered pulmonology years ago, we take a focused approach in GI, gradually addressing the potential, while allocating most resources to the other endoscopy segments. A strategic review has been performed across our GI endoscopy busi- ness, resulting in revised assumptions for the short-term potential, based on the longer Innovative solutions to market In 2023/24, we made impactful strides in our ZOOM IN strategy. Innovation is a core part of our DNA, and we continued to deepen our customer insights, dedicated to advancing our potential in single-use endoscopy. In pulmonology, we brought our new AI training platform to customers in key markets, and in urology, we expanded our portfolio with the launch of our latest solutions, Ambu® aScope™ 5 Uretero and Ambu® aScope™ 5 Annual report 2023/24 6 In brief time required to penetrate this segment. Despite the impairment, the carrying amount of GI technologies accounts for one-third of Ambu’s intangible assets (excluding good- will), thus representing solid mid- and long- term potential in GI - a potential we remain highly committed to unlocking. nies and will be instrumental in accelerating our transformation as we grow. Premier, Inc., the second-largest group pur- chasing organisation in the USA, awarding Ambu their ‘2024 Sustainability Award’. These recognitions are a testament to the progress we are making in sustainability, and we are proud to be leading the way in our industry. On our transformation journey, we are dedi- cated to having an engaged workforce. Our employees are key to building a successful company, and this year, our global employee engagement survey showcased a tangible increase in our global engagement, exceed- ing industry benchmarks. We remain dedi- cated to advancing our global engagement, building on a strong set of company values that defines how we work and create value for all stakeholders. Lastly, we achieved major milestones in sustainability. In our commit- ment to reducing the carbon footprint of our customers, we accelerated our bioplastics efforts. In September 2023, we launched the world’s first endoscope with bioplastics in the handle, and by the end of 2024, all endo- scopes from Ambu will use these materials. Advancing our momentum Driving growth and scalability As we look towards a new financial year, we are determined to advance our strong momentum. We will continue to set up Ambu for scalability, efficiency and growth, while leveraging new technologies and solutions to drive customer impact and investing in our organisation to support our growth ambitions. As part of our ambitious transformation programme, we continued to drive execution and efficiencies throughout our value chain to build a scalable, efficient business. New projects were initiated, including investing in a stronger commercial setup to drive organic growth across our endoscopy business, securing lean operations and automation, as well as enhancing our global IT landscape. As a whole, our transformation programme reflects a multi-year journey, centred on setting our organisation up for scalability and growth, while maintaining our unique agility. BRITT MEELBY JENSEN Chief Executive Officer Above all, Ambu is a growth company, com- mitted to providing shareholder value. As a result of our solid financial performance in 2023/24, the Board will propose a total divi- dend of DKK 102m at our upcoming annual general meeting in December 2024. On our journey to reduce our own carbon emissions, we obtained approval by the Science Based Targets initiative (SBTi) for our near-term climate targets. Combined with our net-zero target for 2045, we are committed to a 75% reduction in our Scope 1 and 2 emis- sions by 2029/30 and to 82% of our suppliers setting science-based targets by 2026/27. Moreover, our sustainability efforts were recognised by the Financial Times, declaring Ambu a ‘Europe Climate Leader’, and by Central to our efforts in building a strong foundation for the future is a strong Execu- tive Leadership Team that can propel Ambu forward. In 2023/24, we strengthened our Executive Leadership Team with two new profiles. Henrik Bender joined as Chief Finan- cial Officer in January, and Graziela Malucelli joined as Chief Operations Officer in June. Both leaders have extensive executive experi- ence from international high-growth compa- Lastly, thank you to our employees for being a key part of our success, supporting more than 100 million patients every year. And thank you to our customers, partners and shareholders for your continued collaboration and trust in our transformative growth journey. Jørgen Jensen Chair Britt Meelby Jensen Chief Executive Officer JØRGEN JENSEN Chair of the Board of the Board Annual report 2023/24 7 In brief AMBU AT A GLANCE 100 million patients Ambu is a global medical technology company that develops, produces and sells innovative solutions across the fields of single-use endoscopy, anaesthesia and patient monitoring . We live by our purpose to rethink solutions together with healthcare professionals, to save lives and improve patient care. Our innovative solutions support more than 100 million patients every year 1st ESG leader ~5,000 consists of around 5,000 team members across the world Scalable We are the market leader in single-use endoscopy, a fast-growing and high- potential market For four consecutive years, we have been recognised as a leader within ESG1 Our diverse workforce We have 3 R&D centres and 4 factories worldwide, with a scalable production set-up 1 In 2024, Ambu achieved an AA MSCI ESG rating in the Health Care Equipment and Supplies industry, among 83 companies. Portfolio Bioplastics Innovation We offer healthcare staff the most advanced single-use endoscopy solutions portfolio As the first company in the world we introduced bioplastics in the handle of our currently marketed single-use endoscopes We are an innovation-driven company, reinvesting 10% of our endoscopy revenue in R&D Annual report 2023/24 8 In brief FINANCIAL HIGHLIGHTS Revenue by business area 2023/24 marked a financial year of strong progress for Ambu. We returned to double-digit organic revenue growth and profitability, while also strengthening our free cash flow. • • Endoscopy Solutions Anaesthesia & Patient Monitoring 59% 41% Organic revenue growth, % EBIT margin before special items, % Free cash flow, DKKm 13.8% 12.0% 524 Revenue share by geography North America 2022/23: 7.6% 2022/23: 6.3% 2022/23: DKK 192m Europe 51% 39% Revenue, DKKm EBIT before special items, DKKm Gross margin, % Rest of World 5,391 645 59.4% 10% 2022/23: DKK 4,775m 2022/23: DKK 302m 2022/23: 56.8% Annual report 2023/24 9 In brief ENDOSCOPY SOLUTIONS ANAESTHESIA & PATIENT MONITORING Endoscopy Solutions continued to be Ambu’s biggest revenue contributor in 2023/24. It accounted for 59% of our total revenue and posted an organic revenue growth of 19.7% (15.3%). The underlying trend towards non-invasive procedures remained consistent, and we achieved significant growth beyond that. We experi- enced growth across all four major endoscopy seg- ments in which we are present, driven by the workflow efficiencies that our single-use endoscopy solutions provide to healthcare providers. Gastro and Ambu® aScope™ Gastro Large, both inte- grated with the Ambu® aBox™ 2 endoscopy system. Among other procedures, the solutions target specific needs for bleed management. Anaesthesia & Patient Monitoring accounted for 41% of Ambu's total revenue in 2023/24 and posted an organic revenue growth of 6.1% (-0.9%). Key drivers for our customers within this business area revolve around factors, such as, workflow efficiency, improved costs and patient safety. Pulmonology posted 11.7% organic revenue growth. The pulmonology business was mainly impacted by low comparables in the first half of the financial year, driven by last year’s hospital inventory de-stocking. Among others, a positive factor this financial year was the Center for Medicare & Medicaid Services (CMS) granting the Ambu® aScope™ 5 Broncho HD solution a transitional pass-through (TPT) payment. This TPT status allows for incremental reimbursement pay- ments for out-patient procedures where our high-per- formance single-use bronchoscope is used. TPT was granted, due to our solution’s substantial clinical improvement, compared to existing bronchoscopy technology. It took effect as of 1 January 2024 and is expected to remain active for 24-36 months. Drivers of the year Overall, Anaesthesia & Patient Monitoring was positively impacted by normalised post-Covid-19 levels, with stable market growth, as well as strategic pricing initiatives in selected low-margin areas. Drivers of the year Last financial year, Ambu announced strategic initiatives to increase profitability by raising prices in selected low-margin areas. The out- comes of these contract negotiations proved better than expected and contributed positively to the overall growth of the business area, bringing it above the long-term projection of 2-4% market growth. Ear-nose-throat (ENT), urology and gastroenterology (GI), combined, posted 29.6% organic revenue growth. The biggest growth contributors were ENT and uro- logy, featuring high double-digit growth throughout the year, with an increased uptake of orders and new customers in all regions. GI posted high double-digit growth as well, however, GI still represents a smaller part of our total endoscopy business. GI was mainly driven by our gastroscopy solutions, Ambu® aScope™ Additionally, Anaesthesia & Patient Monitoring was slightly offset by our strategic decision to exit ~40 markets, with a revenue impact of DKK~20m, most of which were related to this business area. organic revenue growth organic revenue growth of total revenue of total revenue ↑ 19.7% 59% ↑ 6.1% 41% Annual report 2023/24 10 In brief BUSINESS HIGHLIGHTS SOLUTIONS PORTFOLIO ENHANCED STRENGTHENED FOUNDATION SUSTAINABILITY PROGRESS Continued improvement of Ambu's global engagement score, surpassing industry benchmarks Launch of the world's first endoscope with bioplastics in the handle - expansion to full portfolio in progress Endoscopy Solutions Anaesthesia & Patient Monitoring Strong growth momentum across all segments in our Endoscopy Solutions business Solid growth in our Anaesthesia & Patient Monitoring business, driven by strategic pricing initiatives Advancement in transformation programme towards a scalable and efficient foundation for future growth Near-term climate targets validated by the Science Based Targets initiative (SBTi), and 2045 net-zero plan completed Pulmonology Urology Gastroenterology (GI) Portfolio strengthened with Ambu® Broncho Simulator, our new AI bronchoscopy training platform introduced in selected key markets Portfolio expanded with regulatory clearances of: Portfolio expanded with regulatory clearances of: • aScope™ 5 Cysto HD with aBox™ 2 (CE & FDA) • aScope™ Gastro Large with aBox™ 2 (FDA) Executive Leadership Team strengthened with Chief Financial Officer, Henrik Skak Bender, and Chief Operations Officer, Graziela Malucelli Recognised by Financial Times, EcoVadis and Premier, Inc, the second-largest US GPO, for our sustainability efforts • aScope™ 5 Uretero with aBox™ 2 and aView™ 2 Advance (CE & FDA) • aScope™ Duodeno 2 with aBox™ 2 (FDA & CE) Annual report 2023/24 11 In brief FIVE-YEAR FINANCIAL SUMMARY (DKKm) 2023/24 2022/23 2021/22 2020/21 2019/20 (DKKm) 2023/24 2022/23 2021/22 2020/21 2019/20 Income statement Revenue Gross profit EBITDA before special items Depreciation, amortisation and impairment EBIT before special items Special items EBIT EBITDA Net financials Profit before tax Key figures and ratios Organic growth, % Gross margin, % 5,391 3,201 1,009 -364 645 -334 311 1,007 -11 4,775 2,713 632 -330 302 -8 294 642 -84 4,444 2,554 423 -301 122 -148 -26 325 135 109 93 4,013 2,503 556 -216 340 - 340 556 -32 3,567 2,212 609 -181 428 - 428 609 -106 322 241 13.8 59.4 47.4 18.7 12.0 5.8 18.7 22 4 -0.1 78 7.6 56.8 50.5 13.2 6.3 6.2 13.4 20 4.3 57.5 54.7 9.5 2.7 -0.6 7.3 15 2 3.9 59 16.2 62.4 53.9 13.9 8.5 8.5 13.9 20 26.2 62.0 50.0 17.1 12.0 12.0 17.1 25 OPEX ratio, % EBITDA margin before special items, % EBIT margin before special items, % EBIT margin, % EBITDA margin, % Tax rate, % Return on equity, % NIBD/EBITDA before special items Equity ratio, % 3 0.7 79 8 1.4 69 11 2.2 48 300 235 210 168 308 247 Net profit for the year Net working capital, % of revenue Return on invested capital (ROIC), % Average number of employees 19 9 4,894 20 4 4,385 23 2 4,849 20 6 4,437 16 9 3,617 Cash flow Cash flow from operating activities (CFFO) Cash flow from investing activities before acquisitions (CFFI) Free cash flow before acquisitions (FCF) Acquisitions of enterprises and technology CFFO, % of revenue 813 518 95 328 295 -289 524 - 15 -5 -326 192 - 11 -7 -553 -458 -5 2 -12 -10 -573 -245 -301 8 -14 -6 -428 -133 -2 8 -12 -4 Share-related ratios Market price per share, DKK Earnings per share (EPS) (DKK) Diluted earnings per share (EPS-D) (DKK) Cash flow per share Equity value per share Price/equity value Dividend per share 131 0.88 0.88 3.02 21 6.3 0.38 43 74 0.64 0.64 1.92 20 3.7 - - 66 0.37 0.37 0.37 17 4.0 - - 190 0.98 0.98 1.27 15 12.4 0.29 30 180 0.98 0.97 1.17 9 19.2 0.29 30 CFFI, % of revenue FCF, % of revenue 10 4 Balance sheet Assets Net working capital Equity Net interest-bearing debt Invested capital 7,154 1,050 5,594 -57 6,859 939 5,393 427 7,215 1,022 4,261 1,658 5,919 5,740 789 3,952 759 4,926 581 2,372 1,346 3,718 Pay-out ratio, % P/E ratio 149 116 178 194 184 5,537 5,820 4,711 Annual report 2023/24 12 In brief FIVE-YEAR SUSTAINABILITY & ESG SUMMARY 2023/24 2022/23 2021/22 2020/21 2019/20 Decoupling economic growth and environmental impact For Ambu, being a sustainable business means adding value to society, securing our future business and striving for a more sustainable future. Above all, we are a growth company. In the past years, we have continuously expanded our reach, delivering more and more solutions and support to healthcare professionals and patients worldwide. With these global efforts, we benefit society, providing healthcare solutions that enhance workflow efficiency and patient care. Simultaneously, we aim to lead the way in developing sustainable practices that also help our customers reduce their carbon and environmental footprints. Emissions and waste Scope 1 and 2 Share of renewable electricity (%) Share of renewable energy (%) Waste recycled (%) 18,769 34.0 25.0 52.0 38.8 20,113 26.0 18.0 46.0 33.7 21,950 26.1 17.2 43.0 40.5 24,452 4.2 2.8 40.0 41.5 - 0.2 0.1 41.0 - GHG emissions per DKKm revenue
Gender diversity Women in workforce (%) Women in Executive Leadership Team of Ambu Group (%) 63.0 59.0 57.0 57.0 60.0 We recognise that higher growth and societal benefits often come with a higher environmental footprint. Therefore, we are dedicated to decoupling our growth from our environmental foot- print, meaning our business will grow at a faster rate than our environmental impact. In the last four years, we have made significant progress in this area. Since 2020/21, we have decreased our Scope 1 and 2 emissions (market-based) by 23% and improved our share of renewable electricity to 34%. 43.0 33.0 29.0 29.0 42.0 20.0 33.0 20.0 25.0 17.0 Women on Board of Directors (%) Market-based Emissions and waste Focusing solely on our direct impact is not sufficient. We are also committed to reducing the impact of our entire value chain. For instance, since 2020/21, we have successfully reduced our GHG emissions intensity per revenue by 6.6%. By transitioning our products to bioplastics and other low-carbon materials, we will continue to decouple our growth from our environmental impact. Gender diversity On our growth journey, we are dedicated to developing an inclusive and equitable work envi- ronment for a diverse workforce. A key metric for us in this area is gender diversity, and we are showing solid progress. For example, in 2023/24, we had 63% women in our global workforce, compared to 59% the year before, and in Ambu Group Executive Leadership Team, we had 43% females by the end of 2023/24, both metric representing a strong overall gender diversity. Annual report 2023/24 13 In brief SINGLE-USE ENDOSCOPES AND THE ENVIRONMENT As the leader in single-use endoscopy, we aim to lead the way in developing sustainable practices that continue to help our customers reduce their carbon and environmental footprints. Single-use endoscopes eliminate the need for endoscope cleaning, which requires substantial amounts of water, harmful chemicals, as well as healthcare personnel time. Comparing the carbon footprint of single-use and reusable medical devices is complex. For single-use devices, the primary source of emissions is the raw materials used in pro- duction, while for reusables, the main source of emissions comes from reprocessing endo- scopes after each procedure. Several studies find that single-use endo- scopes have a lower carbon footprint, com- pared to reprocessing reusable endoscopes. In fact, by eliminating the need for reprocess- ing, hospitals can reduce their use of energy, chemicals and water, improving their Scope 1 and 2 emissions. After each use, a reusable endoscope must be cleaned, disinfected, sterilised, dried and tested to ensure safe reuse. This resource- intensive process consumes significant amounts of water, chemicals and energy, as well as disposable personal protective equipment and cleaning utensils. In contrast, single-use endoscopes are always available, sterile and fully functional. Moreover, since they are simply discarded after use, they elimi- nate the need for reprocessing resources. CO2e reduction from using one single-use cystoscope, compared to reprocessing 33% 60 L one reusable cystoscope of water used for reprocessing a reusable cystoscope versus no water used for single-use Read more about this topic on p. 60→ Sources: Baboudjian, et al. (2022), Hogan D., et al. (2022), Sørensen & Grüttner (2018). Annual report 2023/24 14 Strategy & Business STRATEGY & BUSINESS 15 16 17 18 20 21 22 23 24 25 Purpose-driven company History of innovation Global presence Strategy momentum Customer insights Leader in sustainability Value creation Financial targets 2027/28 Equity story Outlook 2024/25 Annual report 2023/24 15 Strategy & Business PURPOSE-DRIVEN COMPANY CUSTOMER VIEW At Ambu, we are purpose-driven, dedicated to rethinking solutions together with healthcare professionals to save lives and improve patient care. Single-use bronchoscopy helps me arrange the workflow better. It’s better for my staff. It’s better for patients. Since our foundation in 1937, we have aspired to develop smarter and simpler ways of work- ing in healthcare to enhance the workflow efficiency for healthcare professionals and better the lives of patients. Driving an engaged culture At the core of all our efforts are our peo- ple. In our global Ambu culture, we strive to ensure that our people can put their skills, experiences and full selves to use in a dynamic and collaborative environment. Our founding purpose continues to resonate today. Through an in-depth understanding of the needs of our customers, we consistently deliver solutions that help healthcare systems worldwide achieve high levels of patient care. As we continue to grow, we are committed to building a highly engaged workplace where every member of our team feels they can make a real difference. Dr. Suchitra Pilli Interventional Pulmonologist and Assistant Professor at Creighton University School of Medicine, Nebraska. By using Ambu’s fourth-generation single-use bronchoscopes, Dr. Pillli and her staff have reduced turnover time between patients from 45 to 25 minutes. Watch our purpose video on our website ⟶ Annuaal reppoort 20223/24 16 Strategy & Business HISTORY OF INNOVATION Where it all began We have a proud heritage in healthcare. From our beginnings in Anaesthesia, to our expansion into Patient Monitoring, to our most recent high-potential venture into Endoscopy Solutions, our innovative DNA continues to propel us towards the future. Watch Ambu’s founder’s story on our website ⟶ 2009 1937 1956 2001 Ambu launches the world’s first single-use bronchoscope, the aScopeTM, thereby esta- blishing the high-potential industry of single-use Engineer Holger Hesse founds Ambu, originally named Testa Laboratorium, to save lives and improve patient care. The world’s first self-inflatable resuscitator, the Ambu Bag, is born, kickstarting our innova- tive journey in Anaesthesia. With the purchase of Medicotest, Ambu becomes the largest European manufacturer of electrodes and enters the field of Patient Monitoring. endoscopy. Our latest growth venture 2018 2019 2020 2023/24 Ambu expands its single- use endoscopy offering by entering into ear-nose-throat (ENT). Ambu further increases market leadership in single- use endoscopy by venturing into urology. By entering into The world’s first endoscope made with bioplastics in the handle is launched, advancing Ambu's pioneering sustainability journey. gastroenterology (GI), Ambu is now present in the four largest endoscopy segments. Learn more about Ambu’s endoscopy journey on our website ⟶ Annual report 2023/24 17 Strategy & Business GLOBAL PRESENCE Our R&D, commercial and manufacturing presence spans a strong global network, delivering top-tier, innovative solutions that are tailored to meet the unique needs of our customers. Close to our customers with a direct commercial presence in all major markets. Our medical solutions are available in 60 countries across the world. Global R&D presence HEADQUARTERS Ballerup, Denmark with a global R&D workforce of ~350 employees across three dedicated R&D centres in Denmark, Germany and Malaysia. Xiamen, China Noblesville, USA Augsburg, Germany Robust manufacturing set-up Juárez, Mexico with more than 3,600 employees across four manufacturing facilities, producing high-quality solutions that meet the needs of our customers. Penang, Malaysia R&D centres Factories Direct markets • Distributor markets • Annual report 2023/24 18 Strategy & Business STRATEGY MOMENTUM The 2023/24 financial year was a year of strong momentum for Ambu. Dedicated to supporting our customers, we delivered solid performance across all strategy areas, focused on accelerating profitable growth. Focus ahead on strategy execution We are committed to advancing our profitable growth in the years to come, positioning our organisation for greater scalability, efficiency and customer-centricity. We launched our ZOOM IN strategy in November 2022, dedicated to becoming the most customer-centric in our field and delivering strong profitable growth. Two years in, our teams worldwide continue to make strides on our growth jour- ney. Our strategic progress this year included expanding our customer insights and delivering new solutions to our customers in urology, pulmonology and gastroenterology (GI). Moreover, we conducted a strategic review across our GI business, which led to revised assumptions for the short-term potential, based on the extended time required to penetrate the market. Nevertheless, the carrying amount of GI technologies accounts for one-third of our intangible assets (excluding goodwill), representing solid mid- and long-term potential in GI. Additionally, our transformation programme gained momentum, unlock- ing new efficiencies, and we advanced our operational foundation to advance customer outcomes and scalability. For our sustainability agenda, we accel- erated our efforts to reduce the carbon footprint of our products and opera- tions. Lastly, we strengthened our Executive Leadership Team and secured an increase in Ambu’s global engagement. As we progress with our ZOOM IN strategy, we are focused on raising the bar for driving customer value. This involves delivering new innovative technologies and solutions that enhance workflow and patient care, as well as discovering new ways to help customers reduce their carbon footprint. Driving these efforts is a global Ambu culture, characterised by strong values and leadership, building continuously growing engagement levels. As a testament to our momentum in 2023/24, we achieved financial results above expectations, resulting in two upgrades of our financial guidance, in April and July 2024. With our ZOOM IN strategy, we aspire to become the most customer-centric in our field. On the next page, Ambu’s strategy highlights are listed, reflecting our strong momentum for the 2023/24 financial year. Annual report 2023/24 19 Strategy & Business Zoom in on people & culture Zoom in on execution Zoom in on customers Zoom in on sustainabiliꢀ Provide innovative solutions for true customer needs Excel in execution across the value chain Take leaps towards a sustainable future Bring people together in one shared culture Extended urology offering Strong Endoscopy Solutions growth Strong quarter-over-quarter momentum in our Endoscopy Solutions business, resulting in 19.7% growth, driven by solid performance across all segments, particularly high Bioplastics implementation Executive Leadership Team Extended urology portfolio, with CE mark and FDA clearance for our HD cystoscopy solution and for our ureteroscopy solution. All three endoscopes in urology now work on Ambu’s endoscopy systems platform. Acceleration of plans to implement bioplas- tics in the handles of our currently marketed endoscopes by the end of 2024. In addition, introduction of bioplastics in the cuff protec- tors of our laryngeal masks in Anaesthesia. Executive Leadership Team (ELT) strength- ened with Henrik Skak Bender joining as Chief Financial Officer and Graziela Malucelli joining as Chief Operations Officer. double-digit growth in urology and ENT. Setting up for scalability and growth Continued progress on setting up our organ- isation for best customer outcomes, strong collaboration, increasing scalability and accelerated profitable growth. New solutions in GI Heightened A & PM performance Solid 6.1% growth in our Anaesthesia & Patient Monitoring business, mainly due to price increases in selected low-margin areas and reduced market complexity. Near-term climate targets CE mark and FDA clearance for our new generation duodenoscopy solution and FDA clearance for our larger-version gastroscope, however, short-term GI potential re-evaluated. Near-term climate targets for Scope 1, 2 and 3 greenhouse gas emissions validated by the Science-Based Targets initiative (SBTi). Net-zero by 2045 2045 set as Ambu’s target year for reaching net-zero emissions across our value chain. Continued embedding of Ambu values Our refreshed Ambu values continued to be embedded across the organisation, through team workshops and annual review processes. New AI training platform Free cash flow further advanced Free cash flow significantly strengthened throughout the year, ending at DKK 524m, due to strong operational performance. Introduction in key markets of Ambu® Broncho Simulator, an AI-based platform for bronchoscopy training. Widespread recognition Key recognitions achieved, with the Financial Times declaring Ambu an ‘EU climate leader’, EcoVadis granting us a ‘Commitment’ badge and the leading US GPO, Premier, Inc., awarding us their ‘2024 Sustainability Award’. Engagement score multiplied Impactful customer insights Increased profitability levels Ambu’s 2024 global engagement survey showed a continued improvement in engagement score, achieving a rating of 4.1, compared to the industry benchmark of 3.9. Advanced understanding of our endo- scopy customers, reflecting key insights and opportunities for future development. Solid improvement of our profitability, driven by impactful transformation efforts, as well as strong revenue growth. Annuaal reppoort 20223/24 20 Strategy & Business SITE OF CARE A key parameter for our customers relates to site of care. Site of care refers to where procedures are per- formed, such as, the intensive care unit (ICU), operating room (OR), outpatient setting and endoscopy suite. SOLUTIONS CUSTOMER INSIGHTS Our customers emphasise that they don’t just value products; they value solutions. This means that they are not focused solely on the specific endoscope and its capabilities. They seek a solutions-based approach to innovation, integrating endoscopes with cutting-edge software, AI support, data management and portfolio- enhancing tools, to improve operational efficiency and enhance patient care. In the ICU, for example, clinicians and procedure assistants generally need easy-to-use and portable solutions that occupy minimal space, to support the fluctuating and often hectic environment. In fact, over- all, there are more common traits related to where they perform procedures than which endoscopy segment they operate within. Our innovation is fuelled by a deep understanding of our customers’ needs. We work closely with clinicians, procedure assistants, depart- ment administrators and procurement managers, each representing unique needs and perspectives on how we can best support them with our single-use endoscopy solutions. CUSTOMER EXPERIENCE Ambu’s customer service, clinical training and overall support are highlighted by our customers as crucial to their experience, satisfaction and loyalty. These elements are key to building strong relationships and trust. VARIETY OF NEEDS Another parameter is linked to the great variety of needs that exist in and across pulmonology, urology, ear-nose-throat (ENT) and gastroenterology (GI). In uro- logy, for instance, there are around 10 main cystoscopy procedures, all characterised by having distinct needs. As such, there is a high complexity of customer needs across all endoscopy segments, representing great opportunities for innovation and differentiation. AMBU BRAND The Ambu brand is of key importance for our customers. We are uniquely recognised for our quality, reliability and insights-driven partnerships with customers. Across all customer groups, five key parameters stand out for delivering strong value. Annual report 2023/24 21 Strategy & Business Our sustainability and ESG ratings Obtained in 2023/24 LEADER IN SUSTAINABILITY 36 0 100 Ambu has taken significant steps in sustainability and is recognised as a leader in our industry. Validated Non- Compliant Compliant Committed 0 0 100 100 65.1 We are deeply committed to helping our customers reduce the environmental footprint of their activities, while also reducing the footprint of our own activities. Four recognitions in one year Europe Climate In 2023/24, we added four new recognitions to our list of accreditations. In January, we announced the validation by Science Based Targets initiative (SBTi) of our near-term carbon reduction targets for Scope 1, 2 and 3 greenhouse gas emissions. In May, the Financial Times declared Ambu an “EU climate leader” for our significant strides in reducing greenhouse gas (GHG) emissions intensity and committing to more climate- related initiatives, while delivering strong economic growth. In August, S&P Global granted us an ESG score above the industry average. Lastly, also in August, EcoVadis awarded us a “Commitment” badge, reflect- ing good performance in our sustainability business practices. We are proud of our progress, on track to advance our ratings. Leader 2024 Financial Times x Statista Over the years, Ambu has achieved solid rat- ings from a wide range of renowned assess- ment organisations. Today, we are high- lighted by MSCI as a leader in the healthcare equipment and supplies industry, and we are dedicated to strengthening our foundation. Continued in 2023/24 AA CCC D AAA A B C+ D- A+ 0 22 Sustainalytics 100 Recognised by leading US GPO In August 2024, the USA’s second- largest group purchasing organisa- tion, Premier, Inc., awarded Ambu a 2024 Sustainability Award: “Reducing Harmful Chemicals of Concern”. Ambu has been certified as a Nasdaq ESG Transparency Partner Ambu commits to transparent and regular disclosures on progress related to human rights, labour, environment and anti-corruption principles. Learn more about our ESG and Sustainability efforts, targets and progress on p. 55→. Annual report 2023/24 22 Strategy & Business Our strongholds Our value creation VALUE • • • • Trusted Ambu brand • Enhancing workflow efficiency and patient care with an advanced offering of innovative healthcare solutions through products, systemt, software and tools. Strong customer relationships and insights Increasingly scalable business model CREATION • Supporting healthcare systems in reducing their environmental footprint Diverse group of dedicated and skilled employees in a purposeful and values-based culture We develop, manufacture and sell innovative medtech solutions that enhance workflow efficiency and patient care at hospitals and clinics around the world, driven by a purposeful culture in which our employees can thrive and grow. • • Highly engaged Ambu culture • • Low-carbon and fossil-based raw materials Financial capital Driving long-term shareholder value CUSTOMER-CENTRIC INNOVATION TAKE-BACK AND RECYLING Our R&D teams work closely with healthcare profes- sionals to develop innovative medtech solutions that enhance workflow efficiency and patient care. We engage in take-back and recycling programmes to minimise the waste and environmental impact of our single-use endoscopes. 3 dedicated R&D centres in Denmark, Germany and Malaysia We engage in take-back and recycling pilot programmes in three of our key markets At Ambu, creating value for our customers and employees is key to our success and strong financial performance. MANUFACTURING KNOW-HOW HARNESSING NEW INSIGHTS We produce high-quality, low-cost solutions and source low-carbon raw materials to reduce the environmental footprint of our customers. Our sales and marketing teams harness new market and customer insights, advancing our foundation for delivering future innovations. For our customers, which include clinicians, procedure assistants, department administrators and procure- ment managers, we are dedicated to understanding and addressing their unique needs. By working closely with them, we develop innovative solutions that 4 factories located in China, Mexico, Malaysia and the USA We have the world’s largest single-use endoscopy sales and marketing organisation enhance workflow efficiency and improve patient care. RELIABLE PRODUCT SUPPLY CUSTOMER SALES AND SERVICE We ship our solutions to regional warehouses before they safely and reliably reach the hands of our customers. We have our own sales force in all our key markets, ensuring closeness to customers and continuous feedback on our solutions offering. In all our endeavours, our people are our greatest asset. Empowering everyone to harness their diverse skills and knowledge – within and across teams – is key to driving high levels of collaboration and engagement in our dynamic Ambu culture. Our solutions reach more than 60 markets across the world More than 100 million patients are supported with our solutions every year BUSINESS MODEL Annual report 2023/24 23 Strategy & Business FINANCIAL TARGETS 2027/28 Deliver strong, profitable growth Financial targets 2027/28 At heart, Ambu is a growth company. The goal of our ZOOM IN strategy is to deliver strong profitable growth, corresponding to our long-term financial targets of +10% average annual organic revenue growth over the five year period 2022/23 - 2027/28 and an EBIT margin of ~20% in 2027/28. 2023/24 actuals 2022/23 actuals Organic growth CAGR from 2022/23 to 2027/28 +10% 15-20% 2-4% Total 13.8% 19.7% 6.1% 7.6% This year, we gained strong momentum, achieving solid cash flow, driven primarily by operating profit. Our Endoscopy Solutions, particularly in ear-nose- throat (ENT) and urology, posted double-digit growth, while our Anaesthesia & Patient Monitoring business also generated solid growth. Endoscopy Solutions 15.3% -0.9% Anaesthesia & Patient Monitoring This financial stability in the face of macroeconomic uncertainty, enhances our operational flexibility, allowing us to invest in long-term growth, in align- ment with the key aim of our ZOOM IN strategy to drive strong profitable growth. Profitability in 2027/28 EBIT margin b.s.i. ~20%
12.0% 6.3% * Potential trade-offs in growth investments Annual report 2023/24 24 EQUITY STORY Attractive single- use endoscopy market Leading product portfolio Scalable business model Transforming for growth Fast-growing market Impactful single-use benefits High innovation knowhow Long-term profitable growth The growth potential for single- use is immense with only ~3% of the global endoscopy market having transitioned We partner with healthcare professionals to drive new innovative technologies and solutions to market Our single-use endoscopy portfolio brings improved workflow efficiency, patient safety and financial costs to health systems We deliver strong shareholder value: • >10% average growth over the next five years (2022/23- 2027/28) Unmet customer needs Scalable production facilities Health systems worldwide face staff shortages, capacity overload and rising costs, creating a need for efficient solutions Well-positioned to win We produce high-quality solutions at a low cost across our four factories, in a scalable production setup ∙ 15-20% growth in Endoscopy Solutions As the world’s leading single- use endoscopy player, we have the most advanced endoscopy solutions portfolio ∙ 2-4% growth in Anaesthesia & Patient Monitoring Focus on patient safety Global commercial infrastructure Regulatory bodies raise Sustainability dedication awareness of the risk of cross- contamination, advocating the adoption of single-use solutions • EBIT margin: ~20% in 2027/28, with potential trade-offs in growth invest- ments To reduce our customers' We have the world’s largest single-use endoscopy sales and marketing organisation, with our own sales force in all our key markets environmental footprint, we apply circular economy principles in how we design, manufacture and dispose of our solutions Annual report 2023/24 25 Strategy & Business OUTLOOK 2024/25 Building the foundation for future profitable growth Our ZOOM IN strategy was launched two years ago, initiating a transformation towards strong profitable growth. This transformation builds on delivering innovative solutions, focused execution and applying a flexible approach, with allocation of resources to the highest-potential opportunities. In 2023/24, we took a significant step forward, reaching double-digit organic revenue growth and improving profitability and free cash flow. Organic revenue duration is 1-3 years, however, the majority of contracts were renewed in the first half of 2023/24. The price increases will therefore partly impact the 2024/25 financial year, however, the volume growth prospects are not yet fully visible, leaving a small degree of uncertainty. For 2024/25, Ambu expects Anaesthesia & Patient Monitoring to grow mid-single digits. Our Endoscopy Solutions business remains the key growth engine for Ambu. In 2024/25, this business area is expected to grow +15% organically, with all four endoscopy seg- ments expected to contribute to the growth. In our more mature pulmonology segment, we will continue to strengthen our offering and expect solid organic growth in 2024/25. In the less mature yet fast-growing segments of ear-nose-throat (ENT) and urology, the strong growth momentum is expected to continue, delivering double-digit organic revenue growth in 2024/25. Gastroentero- logy (GI), which accounts for a small part of Ambu's endoscopy business, is also expected to contribute to the organic growth in 2024/25, however, this endoscopy segment mainly represents a mid- to long- term growth potential, with a stepwise and focused expansion approach. Financial guidance 2024/25 Organic revenue growth 10-13% Reported EBIT margin before special items Overall, for the 2024/25 financial year, Ambu’s total organic revenue growth is expected to be 10-13%, compared to 13.8% in 2023/24, while reported EBIT margin before special items is expected to be 12-14%, compared to 12.0% in 2023/24. This will be driven by both an improved gross margin and operating le- verage, partly off-set by growth investments. Market conditions Throughout 2023/24, geopolitical uncertainty and a volatile macroenvironment continued to impact the global economy, leading to inflationary pressures on raw materials, energy prices and logistics costs. We expect this to persist throughout 2024/25. Nonethe- less, we expect the single-use endoscopy market to continue to grow, driven by hospi- tal systems' and clinics' growing need for workflow efficiencies and improved econo- mics, as well as the increased awareness of infection control and the strong clinical performance that single-use solutions bring to healthcare professionals and patients. 12-14% Other assumptions Ambu's free cash flow before acquisitions is expected to be DKK +500m, compared to DKK 524m in 2023/24. The continued increased cash flow will be driven by a higher EBIT margin before special items and continued improvements from our transformation efforts. Last year, Ambu announced strategic initia- tives to increase profitability by raising prices in selected low-margin areas within Anae- sthesia & Patient Monitoring. The contracts’ Annual report 2023/24 26 Strategy & Business Currency expectations Follow-up on announced outlook During 2023/24, Ambu upgraded the outlook for organic revenue growth and EBIT margin before special items (b.s.i.) on two occasions in total. The financial outlook for 2024/25 is based on the exchange rate assumptions stated at the top of the table below. Approximately 53% of Ambu’s total revenue is invoiced in USD. Furthermore, approximately 29% of revenue is invoiced in EUR or DKK, and approximately 7% is invoiced in GBP, while the remaining 11% is invoiced in other currencies. Production and capacity costs are predominantly settled in USD, DKK, EUR, MYR and CNY. The effect of a weakening of 10% rela- tive to the Danish krone is estimated to be as depicted in the table below. Firstly, in April 2024, we raised our guidance for organic revenue growth to 10-12%, from 7-10%, and for EBIT margin b.s.i. to 10-12%, from 8-10%, based on better-than-expected outcomes of contract negotiations in Anaesthesia & Patient Monitoring. Secondly, in July 2024, we raised our guidance yet again for organic revenue growth to 12-14%, from 10-12%, and for EBIT margin b.s.i. to 11-13%, from 10-12%, based on continued strong growth in Endoscopy Solutions and solid growth in Anaesthesia & Patient Monitoring. Exchange rate assumptions as the basis for the financial outlook for 2024/25 Average in 2022/23 Average in 2023/24 Expected for 2024/25 Currency USD/DKK MYR/DKK CNY/DKK GBP/DKK 6.98 1.54 0.99 8.55 6.88 1.48 0.95 8.72 6.85 1.60 0.95 8.85 Overview of changed outlook expectations throughout 2023/24 Realised 10 Jul 10 Apr 8 Nov Organic revenue growth Reported EBIT margin b.s.i. 13.8% 12.0% 12-14% 11-13% 10-12% 10-12% 7-10% 8-10% Estimate of the effect of a weakening of 10% relative to the Danish krone USD MYR CNY GBP Revenue EBIT -320 -92 - 55 -8 24 -44 -35 EBIT margin -0.9 ppts 0.9 ppts 0.4 ppts -0.5 ppts Forward-looking statements Forward-looking statements, in particular relating to future sales, operating income and other key financials, are subject to risks and uncertainties. Various factors, many of which lie outside Ambu’s control, may cause the realised results to differ materially from the expectations pre- sented in this report. Such factors include, but are not confined to, changes in market condi- tions and the competitive situation, changes in demand and purchasing patterns, fluctuations in foreign exchange and interest rates, as well as general economic, political and commercial conditions. See also the section concerning risks on p. 91→ Annual report 2023/24 27 Solutions SOLUTIONS 28 29 30 31 32 33 38 Our business areas Drivers of single-use endoscopy Leading endoscopy solutions portfolio Reducing carbon emissions with bioplastics Future endoscopy innovations Endoscopy market potential Anaesthesia & Patient Monitoring Annual report 2023/24 28 Solutions OUR BUSINESS AREAS Ambu delivers innovative solutions across two business areas: Endoscopy Solutions and Anaesthesia & Patient Monitoring. Across – and within – each business area, we have a diverse array of customers with varied challenges and needs. Endoscopy Solutions Anaesthesia & Patient Monitoring Our Anaesthesia & Patient Monitoring The Endoscopy Solutions business area is Ambu’s main growth engine. We deliver high-quality, single-use solutions across the four major endoscopy segments: pulmo- nology, ear-nose-throat (ENT), urology and gastroenterology (GI). business area consists of a wide range of high-quality products. Our Anaesthesia portfolio is primarily intended to facilitate the ventilation of patients, while our Patient Monitoring portfolio mainly covers elec- trodes, used for measuring electrical signals to monitor and diagnose patients. The conversion from reusable to single-use endoscopes is fuelled by four key value driv- ers: workflow efficiency, improved economic costs, increased focus on patient safety and sustainability advancements. Combined, they represent our important legacy solutions, driving workflow efficiency, improved costs and patient safety. Long-term financial targets Long-term financial targets Organic revenue growth based on a Organic revenue growth based on a 5-year CAGR from 2022/23 - 2027/28 5-year CAGR from 2022/23 - 2027/28 15-20% 2-4% Annual report 2023/24 29 Solutions DRIVERS OF SINGLE-USE ENDOSCOPY The transition towards single-use endoscopy is dependent on proven benefits for health systems. Our single-use endoscopy solutions feature four main drivers, supported by health economic data studies. WORKFLOW ECONOMICS PATIENT SAFETY SUSTAINABILITY Single-use endoscopes enhance workflow efficiency by not requiring time-consuming reprocessing Single-use endoscopes are discarded after use, removing the need for costly repairs and servicing fees Single-use endoscopes are 100% sterile and thus eliminate the risk of transmitting bacteria between patients Single-use endoscopes reduce the use of energy, chemicals and water, as they require no reprocessing 69% $441 8.69% 33% reduction in post-cystoscopy encounters when using single-use cystoscopes versus reusables1 average repair cost per procedure for reusable ureteroscopes, versus no repairs needed for single-use3 cross-contamination rate associated with patient-ready reusable broncho- scopes, versus 0% in single-use5 CO2e reduction from one single-use cystoscope, compared to reprocessing one reusable cystoscope7 80% $126.23 60% 60 L reduction in staff time by using a single-use cystoscope2 saved per procedure by using a single-use gastroscope4 decrease in infection risk for ERCP with single-use6 of water used for reprocessing a single reusable cystoscope7 Sources: 1 Geldmaker et al. (2023); 2 Data on file, pending publication; 3 Rindorf et al. (2022); 4 Hoffman et al. (2023); 5 Travis et al. (2023); 6 Hutfless et al. (2022); 7 Baboudjian et al. (2022). Annual report 2023/24 30 Solutions LEADING Pulmonology Gastroenterology (GI) • • ENDOSCOPY SOLUTIONS PORTFOLIO Ambu® aScope™ 4 BronchoSampler Ambu® aScope™ 4 Broncho Slim Ambu® aScope™ 4 Broncho Regular Ambu® aScope™ 4 Broncho Large Ambu® aScope™ Gastro Ambu® aScope™ Gastro Large We offer healthcare professionals the most comprehensive single- use endoscopy portfolio across the four major endoscopy segments. Ambu® aBox™ 2 Ambu® aView™ 2 Advance Ambu® aScope™ Duodeno 2 Ambu® aScope™ Colon Ambu® aScope™ 5 Broncho HD 5.6/2.8 Ambu® aScope™ 5 Broncho HD 5.0/2.2 Ambu® aScope™ 5 Broncho 4.2/2.2 Ambu® aScope™ 5 Broncho 2.7/1.2 Our two endoscopy systems, Ambu® aBox™ 2 and Ambu® aView™ 2 Advance, comprise the backbone of our endoscopy ecosystem. Across our portfolio, endoscopy professionals can efficiently utilise our fleet Ear-nose-throat (ENT) • Urology • Ambu® aScope™ 4 RhinoLaryngo Slim Ambu® aScope™ 4 RhinoLaryngo Intervention of endoscopes on the same intelligent ecosystem platform. Ambu® aScope™ 4 Cysto Ambu® aScope™ 5 Uretero Ambu® VivaSight™ 2 DLT Ambu® VivaSight™ 2 SLT Ambu® aScope™ 5 Cysto HD Annual report 2023/24 31 Solutions We are committed to reducing the carbon footprint of our single-use devices by focusing on product design and material choices. By transitioning our plastics to lower-carbon bioplastics, we are reducing the carbon footprint of our products, for the benefit of our customers. REDUCING CARBON EMISSIONS WITH BIOPLASTICS The largest contributor to carbon emissions for our products is the materials used to pro- duce them. Our efforts are therefore focused on transitioning our products to bioplastics and other low-carbon materials. Bioplastics are made partly or entirely from bio-based feedstock, making it a renewable material source with a lower carbon footprint. This marks an important first step in our ambition to reduce the carbon footprint of our products and transform our industry towards a more sustainable future. Bioplastics in our Anaesthesia portfolio In August 2024, we further advanced our use of bioplastics. We introduced the innovative materials in our Anaesthesia portfolio, speci- fically in the cuff protectors used in our laryn- geal mask offering. By reducing our own carbon footprint, we sup- port our customers in becoming increasingly more sustainable. Bioplastics represent an World’s first endoscope with bioplastics Looking ahead, we are dedicated to exploring new ways of introducing bioplastics across our product portfolio and packaging. opportunity to replace traditional fossil-based plastics, providing the same strength, hygienic qualities and performance, but with a lower carbon footprint. In September 2023, we launched the world’s first endoscope made with bioplastics in the handle. One year later, we have implemented bioplastics in the handles of nearly all our recently marketed endoscopes, and we expect this to be implemented in all recently marketed endoscopes by the end of 2024. We are proud to be spearheading this trans- formation in single-use endoscopy and beyond, for the benefit of Ambu, our custom- ers and the world. → Read more about our environmental initiatives on our website Annual report 2023/24 32 Solutions FUTURE ENDOSCOPY INNOVATIONS Innovation has been at the core of Ambu’s DNA since 1937. We are dedicated to continuing to bring impactful endoscopy solutions to our customers, engaging in a multi-faceted approach to solution-based innovation. Ambu’s innovation efforts are fundamentally driven by our unwavering commitment to meeting the needs of our customers, empow- ering them to enhance their workflow effi- ciency and improve patient care. Our innovation approach within endoscopy is multifaceted and centres on three key aspects: Single-use endoscopes Key value-adding factors We will continue to innovate and improve our range of single-use endoscopes, ensuring they meet the highest standards of quality and per- formance through new features and capabilities that enhance the user experience and patient treatment. A new future innovation within our ENT solutions offering includes our upcoming high-resolution ENT endoscope. Key value adding-factors represent innovations that complement our endoscopy solutions offering, such as, portfolio-enhancing tools and sustainability measures. Portfolio-enhancing tools include products like our Ambu® BronchoSam- pler™, our AI training platform and our upcoming videolaryngoscope 2.0, which all complement our pulmonology solutions offering, adding additional value for customers. • Single-use endoscopes Focus on product innovation related to our single-use endoscopes In the ever-evolving healthcare landscape, our customers’ needs extend far beyond a demand for our high-quality single-use endoscopes. In fact, they encompass a broader spectrum of requirements, including advanced products, hardware, software, data, tools, sustainability measures. • Endoscopy systems Focus on innovation related to software and data management within our endos- copy systems Similarly, our innovations within sustainability, such as, our use of bioplastics in the handles of our single-use endoscopes, play an important role in our full endoscopy offering. Sustainable practices is getting increasingly crucial to our customers, and we are dedicated to continuing to innovate in this area to further reduce the environ- mental footprint of our customer’s activities. Software & systems • Other key value-adding factors Recognising the crucial role of digital technology in modern healthcare, we will develop and imple- ment cutting-edge software in our endoscopy sys- tems. This will not only enhance the functionality and features of our endoscopes, such as, image resolution, advanced red contrast (ARC) and artificial intelligence (AI), but also empower data management and improve overall operational efficiency for our customers. In our efforts to drive future endoscopy innova- tions, we are taking a multi-faceted approach to meet these diverse and unmet needs. We aim to go beyond a sole focus on endoscopes and instead deliver solutions that allow endos- copy professionals to excel in their field and deliver exceptional patient care. Focus on innovation complementing our endoscopy solution offering, such as, port- folio-enhancing tools and sustainability. Annual report 2023/24 33 Solutions ENDOSCOPY MARKET POTENTIAL When Ambu entered the endoscopy market in 2009 with the world’s first single-use broncho- scope, the single-use endoscopy market was non-existent. We pioneered this shift, driving the adoption of minimally invasive procedures towards single-use solutions. Addressable market with current portfolio2 • Ambu’s sales volume in 2023/24 • 5m +11.5m +17.0m + 68.5m = ~ 100m 4.1m Today, we are present in the four major endos- copy segments: pulmonology, ear-nose-throat (ENT), urology and gastroenterology (GI). Across these four segments, the global endos- copy market comprises a total of 150-200 mil- lion annual procedures. In our priority markets, the number of annual procedures amounts to approximately 100 million1, and with our currently marketed solutions and near-term solutions in development, we address ~23% of this 100-million procedure market. 6.0m Cysto 6.0m We remain strongly positioned as the market leader in single-use endoscopy. At present, we support around 2.4 million procedures annu- ally across the four major segments, show- casing an immense growth potential ahead. Gastro We are excited about our opportunities to fur- ther advance the transition towards single-use, ultimately enhancing workflow efficiency and patient care worldwide. Colon ~2.4m Pulmo- Urology nology Ear-nose-throat (ENT) Gastroenterology (GI) Total 1 DRG, Definitive Healthcare, iData & internal market research. 2 Addressable market is defined as product being technically & commercially viable. Annual report 2023/24 34 Solutions CUSTOMER VIEW PULMONOLOGY Challenging the gold standard Dr. Faiz Bhora, thoracic surgeon and Director at the Advanced Lung and Airway Center at Hackensack Meridian In pulmonology, ~5 million procedures are performed annually, of which Ambu addresses ~4.1 million with our advanced pulmonology offering. Across pulmonology, ~3 million procedures take place in the operating room (OR) and intensive care unit (ICU), while ~2 million procedures are performed in the endoscopy suite. Health Network, uses the Ambu® aScopeTM 5 Broncho HD solution for both simple diagnostic and therapeutic proce- dures, as well as for the most complex interventions. For him and his staff, the versatility and efficiency of the solution allows for more patients to be treated in the course of a day, covering a wide range of procedural needs. In the field of pulmonology, procedures are performed across various settings, including the operating room, intensive care unit and bronchoscopy suite. Key drivers of single-use in pulmonology In the operating room and intensive care unit, doctors perform basic pulmono- logy procedures, such as, intubating patients with difficult airways or removing secretions from the lungs, using bronchoscopes. These environments are typi- cally fluctuating, making it essential for clinicians to have access to solutions that ease workflow efficency (by not requiring time-consuming reprocessing), that are user-friendly, space-efficient and easily portable. These factors con- tribute to improved economics through faster patient visits, maximising space utilisation and removal of the need for costly repairs, allowing nurses to focus on patient care. Thus, the immediate availability and convenience of single-use bronchoscopy solutions have driven rapid adoption in these settings. ”It has really changed our workflow entirely and quite frankly has allowed us to do more cases in a day than we were doing prior.” Workflow Economics Patient safety Our pulmonology solutions offering Ambu’s wide-ranging fleet of single-use bronchoscopes, used in conjunction with the Ambu® aView™ 2 Advance and Ambu® aBox™ 2 systems, offer a portable, always-available solution that enhances workflow efficiency and eliminates unex- pected costs related to reprocessing, repairs and maintenance across all sites of care in pulmonology. In the bronchoscopy suite, more advanced procedures are performed, includ- ing lung cancer diagnosis and treatment. The nature of these more complex procedures, combined with the overall pressured hospital environment, make workflow efficiency important. Additionally, some pulmonology procedures, such as, rigid bronchoscopies or stent placements, carry a high risk of break- age, which means that eliminating the risk of cancelled procedures and repair costs is crucial. Infection risk is also a significant concern for immunocompro- mised patients, meaning that 100% sterile endoscopes are crucial. Watch the video with Dr. Faiz Bhora ⟶ Annual report 2023/24 35 Solutions CUSTOMER VIEW UROLOGY Time for patient care In urology, ~11.5 million procedures are performed annually, of which Ambu addres- ses ~7 million with our complete urology portfolio. Procedures in urology are split between ~10 million cystoscopies, which typically take place in an out-patient setting, and ~1.5 ureteroscopies, which are typically performed in an in-patient setting. Medical clinics and healthcare facilities often grapple with challenges related to efficiency, especially for cystoscopy procedures. Traditionally, the need for meticulous sterilisa- tion processes has been a time-consuming task that could otherwise be dedicated to patient care. The aScopeTM 4 Cysto effectively eliminates the cumbersome reprocessing process, allowing healthcare professionals to focus their time and energy on delivering the best care possible to their patients. This simple and efficient approach to cystoscopy has had a profound impact on workflow and productivity for Dr. Michael J. Kennelly, MD, FACS, Professor of Urology at Carolinas Medical Center, North Carolina, USA: Cystoscopies focus on examining and treating the lower urinary tract, particu- larly the bladder. These procedures are typically set in an out-patient setting, such as, a doctor’s office, and are relatively quick. In this setting, however, time and resources are often limited, and so, not requiring time-consuming repro- cessing makes single-use cystoscopy solutions popular. Key drivers of single-use in urology "It has improved our workflow tremendously, and we have been able to increase our number of surgical cystoscopy cases in the office by double." Ureteroscopies typically take place in the operating room, where urologists Workflow Economics Sustainability manage or remove kidney stones in the upper urinary tract. Reusable uretero- scopes are often subject to breakage and high repair costs, due to their thin and fragile design. As such, reusable ureteroscopes are not always readily available, leading to unreliable scheduling at hospitals and a relatively high cost-per-use. In contrast, single-use ureteroscopes eliminate these issues, improving workflow efficiency, and together with no need for reprocessing or repairs, scheduling becomes more reliable, allowing more patient treatments per day and benefit- ting reimbursement opportunities and hospital economics. Our urology solutions offering Ambu’s complete urology portfolio consists of our two cystoscopes and our uretero- scope, backed by our endoscopy systems, Ambu® aView™ 2 Advance and Ambu® aBox™ 2. All three endoscopes work on the same intelligent platform, enabling a stream- lined workflow for urologists and their staff in both in-patient and out-patient settings. For both cystoscopy and ureteroscopy procedures, single-use solutions are increasingly recognised for their potential to reduce environmental footprint, compared to reusable ones, as shown by life-cycle analyses. The high resource consumption of reprocessing reusable devices, including water, chemicals and personal protective equipment, along with frequent repairs, are driving a shift toward more sustainable single-use solutions in urology. Watch the video with Dr. Michael J. Kennelly ⟶ Annual report 2023/24 36 Solutions CUSTOMER VIEW EAR-NOSE-THROAT (ENT) More patients in a day Within ENT, ~17 million procedures are performed on an annual basis, of which Ambu addresses 6 million with our ENT solution. ENT procedures are performed in both in-patient and out-patient settings. Jacqueline Mojica is a speech pathologist at a New York City clinic, treating head and neck cancer patients. Ambu’s aScope™ 4 RhinoLaryngo Slim has added great value to her practice due to the single-use endoscope not requiring reprocessing, which, in turn, has allowed her to see more patients in a day. “I work in New York City, so we see a ton of patients in our practice. Single-use technology has improved our operational efficiency. We can see patients more quickly, because we don’t spend time with the logistics of reprocessing a scope. We open a package, we perform our examination, and then we discard or recycle the scope.” ENT procedures are commonly performed across in-patient and out-patient settings. They are aimed to examine the nasal passages, pharynx, larynx and related structures, diagnosing laryngeal disorders and identifying the causes of chronic nasal complaints, hoarseness, throat pain and difficulty swallowing. Standard procedures include fiberoptic endoscopic evaluation of swallowing (FEES) and other straightforward flexible laryngoscopies. Key drivers of single-use in ENT Workflow Economics In-patient ENT procedures include less complex routine examinations of patients’ ears, nose and throat. In this setting, time and resources are common constraints, making single-use solutions increasingly popular, as they enhance workflow efficiency by securing availability and portability to perform proce- dures in a timely manner. In the out-patient setting, however, more complex ENT procedures are performed, such as, cancer diagnostics. Here, single-use solutions with a high image quality have the potential to increase workflow by eliminating the need for reprocessing allowing doctors and staff to achieve greater schedule reliability. Our ENT solutions offering Ambu’s current ENT solution – consisting of our single-use rhinolaryngoscope in integra- tion with our Ambu® aView™ 2 Advance sys- tem – aims to streamline workflow efficiency for doctors and their staff in in-patient and out-patient settings. With our new high-res- olution ENT solution in development, we seek to strengthen the out-patient setting and further advance the conversion towards single-use. Optimising workflow efficiency is crucial for both in-patient and out-patient set- tings. Increasing the number of patient visits per day can significantly reduce waiting lists. Additionally, single-use solutions require less capital equipment and eliminate the need for costly repairs. Watch the video with Jacqueline Mojica ⟶ Annual report 2023/24 37 Solutions CUSTOMER VIEW GASTROENTEROLOGY (GI) Advanced efficiency Dr. Aram Jawed, a bariatric surgeon based in New Jersey, USA, has improved his clinic’s workflow efficiency with the aScope GastroTM when conducting endoscopic screenings for patients before, during and after bariatric surgery. Within GI, ~68.5 million procedures are performed on an annual basis. These procedures are split between gastroscopy, reflecting ~28 million procedures, duodenoscopy (ERCP), reflecting ~1.4 million procedures, and colonoscopy, reflecting ~39 million procedures. Ambu is dedicated to the long-term potential in GI, applying a stepwise and focused approach. "Advanced flexible endoscopy is a significant part of my practice, pre-operative, intraoperative and post-operative, in order to evaluate anatomy for screening and to determine pathology. The Ambu scope has allowed my practice to become much more efficient and productive. I'd really love to see what Ambu has in store for the future." The vast majority of GI procedures are conducted in the endoscopy suite, where advanced procedures, such as, cancer diagnosis and treatment take place. A hospital room is typically equipped to handle these intricate, complex Key drivers of single-use in gastroenterology and often lengthy procedures, and reusable endoscopes are typically the pre- valent choice of GI endoscopists, due to their high image quality. Some procedures, however, are performed in the operating room and intensive care unit. Here, the environment is often dynamic and fast-paced and involves acute therapeutic procedures for critical care patients, such as, bleed manage- ment. Since these procedures are often acute, having immediate access to a readily available GI solution is crucial for endoscopists to achieve good patient outcomes. Thus, in these settings, GI doctors prioritise solutions that do not require reprocessing, are easy to use and transport and take up minimal space. Lastly, having a solution that is 100% sterile eliminates the risk of transmitting bacteria between critically ill or immunocompromised patients. Workflow Economics Patient safety Our GI solutions offering Our GI portfolio – consisting of our two gastroscopes, our new generation duoden- oscope and our colonoscope, all backed by the Ambu® aBox™ 2 system – comprises a unified GI ecosystem, which has the poten- tial to streamline workflow efficiency and improve financial outcomes at hospitals. Furthermore, our solutions are designed with stringent infection control measures in mind to eliminate the risk of transmitting bacteria. In 2023/24, we performed a strategic review across our GI endoscopy business. This resulted in revised assumptions for the short-term potential, based on the longer time required to penetrate this segment. Nevertheless, the mid- and long-term potential in GI remains solid, and we are dedicated to applying a focused approach in GI to leverage the potential in the years to come. Watch the video with Dr. Aram Jawed ⟶ Annual report 2023/24 38 Solutions CUSTOMER VIEW ANAESTHESIA A lifesaving tool Our Anaesthesia portfolio constitutes multiple valued products, all with strong market positions and brand reputation among customers. Every year, our resuscitators save millions of lives. Last year alone, 6 million patients were in need of ventilation, and more than 7 million patients underwent procedures with the use of a laryngeal mask from Ambu. John Bosley, a firefighter with the Baltimore County Fire Department, was involved in a severe car accident in 2017. Fortunately, Dr. David Vitberg, Director of the intensive care unit at Greater Baltimore Medical Center, was nearby. Upon reaching the scene, he pulled out the Ambu® SPUR™ II resus- citator, commonly known as the Ambu® Bag™. Bosley had suffered a severe head injury, including a broken vertebra that controls breathing, a collapsed lung and traumatic brain injury. Using the Ambu® Bag™, Dr. Vitberg was able to main- tain Bosley’s critical oxygen levels, until he safely reached the hospital for further treatment. Dr. David Vitberg recalls: Key drivers Anaesthesia Ambu’s Anaesthesia products represent an important business area. Built upon the legacy of the iconic Ambu® Bag, released in 1956, our high-quality portfolio includes resuscitators, laryngeal masks, face masks and breathing cir- cuits, suitable for use across a wide range of environments and clinical scenar- ios, both in in-hospital and out-hospital settings, primarily intended to facilitate the ventilation of patients. “Of all the equipment we pulled out that night to treat him, the Ambu® Bag™ was the single most important piece of equip- ment we used.” Workflow Economics Patient care The main growth drivers for the future include demographics, in terms of the world’s ageing population, increased pollution leading to an increase in re- spiratory diseases and an increase in surgical procedures. Our Anaesthesia offering Our Anaesthesia portfolio supports health- care professionals and patients in out- hospital rescue, as well as in-hospital treat- ment. Our portfolio encompasses resus- citators, face masks, laryngeal masks and breathing circuits. Ambu’s Anaesthesia portfolio features an extensive selection of products available in a wide range of sizes, meaning that there is a reliable, high-quality product for every patient. Watch the video with John Bosley and Dr. David Vitberg ⟶ Annual report 2023/24 39 Solutions CUSTOMER VIEW PATIENT MONITORING Enhancing neonatal care For over four decades, Ambu has been an innovator in the field of Patient Monitoring, continuously improving via feedback from healthcare professionals. Our innovations, like the Ambu® BlueSensor™, have set industry standards, making us a trusted provider of premium solutions across hospitals, clinics and EMS services globally. At a hospital in Como, Italy, the head nurse of the cardiology department praises Ambu’s ECG electrode as an important innovation for neonatal babies and their mothers. The short cable of the Ambu® BlueSensor™ NF cardiology electrodes allows mothers to hold their babies in their arms, while healthcare professionals perform electrocardiograms (ECG). This contact not only comforts the child, reducing crying and movement, but also provides a sense of normalcy and bond- ing for the mothers, making the hospital experience feel more like home. The head nurse emphasises that this small, yet significant change has improved the way they can deliver neonatal care, ensuring both the well-being of the babies and the emotional comfort of their mothers. Our Patient Monitoring portfolio includes our single-use cardiology and neurol- ogy electrodes, designed to measure electrical signals in the brain, heart and Key drivers in Patient Monitoring body. In cardiology, our Ambu® BlueSensor™ ECG electrodes are known for their offset technology and reliability. They ensure precise and stable signal acqui- sition, even during high-motion activities, reducing the need for repositioning. They perform optimally across settings, such as, stress-testing, long-/short- term and resting ECG monitoring, neonatal and paediatric. Workflow Patient safety Patient care Our Patient Monitoring offering In neurology, our Ambu® Neuroline™ electrodes minimise cross-contamination risks, while enhancing patient safety and accuracy. They are designed for diag- nosing and treating neurological disorders and monitoring nervous function during surgeries. Our range includes cup, surface and needle electrodes used for EEG, EMG, nerve conduction studies, evoked potentials and sleep studies. Our Patient Monitoring portfolio covers not only our extensive premium electrode portfolio, but also our training manikins and emergency services products. Across our range, our products are used in numerous healthcare settings, from rescue situations and trauma sites, to hospitals, primary care clinics, ambulatory settings and specialised centres. Every year, we sell over 1 billion electrodes, showcasing an immense patient impact. We are committed to continuing to provide optimal performance for healthcare professionals and maximum comfort for patients. Read more about our ECG electrode on our website ⟶ Annual report 2023/24 40 Sustainability SUSTAINABILITY 41 42 46 51 55 66 70 73 82 84 Our sustainability focus Sustainability governance Compliance with regulations Materiality and stakeholder engagement Environmental information Social information Diversity in management positions Governance information ESG & sustainability data collection Accounting practices This report constitutes Ambu's compliance with the statutory disclosure on corporate social responsibility pursuant to Danish Financial Statement Act section 99a from p. 41→-p. 89→. Our statutory statement on the section 99b and 107d regarding diversity of the Board of Directors and management, along with targets and progress details can be found within 99a section on p. 70→-p. 71→. Our statutory statement on section 99d regarding data ethics can be found on the p. 81→. while the details about our climate risk man- agement can be found on p. 50→ and p. 91→-p. 95→. Details on due diligence process can be found on p. 44→-p. 45→ and p. 76→, p. 77→, p. 78→ and p. 80→. Annual report 2023/24 41 Sustainability In 2023/24, we focused on driving strong momentum throughout our business by integrating sustainability into our strategy, business processes and value chain. We have two key focus areas within our sustainability agenda, supported and approved by our Executive Leadership Team: "Circular products & packaging" and "Responsible operations". The development of the two focus areas have included identifi- cation of key stakeholders, engagement and analysis of their input on sustainability priorities assessed against the key priorities identified in our materiality analysis. Partnerships & stakeholder engagement: We work tougher through our partnerships and network to engage stakehold- ers, provide clear communication on our planned initiatives and engage with partners to challenge us and help us deliver on our sustainability ambitions. OUR SUSTAINABILITY FOCUS Governance, integrity & transparency: Finally, to strengthen our foundation, we lean on governance, integrity and transpa- rency. We continuously improve our ESG and sustainability data collection and reporting processes to support our busi- ness and stakeholders with relevant and transparent data, while also ensuring ongoing compliance with current and future requirements. In a world where sustainability is high on the agenda, we recognise our responsibility to take action and ensure a sustainable future. In recent years, Ambu has experienced growth that enables us to reach more patients, and we are committed to ensuring that our growth goes hand-in-hand with reducing pressure on the environment and climate, while increasing our focus on social and governance aspects. Therefore, we are working to decouple our growth from our environmental footprint. At the same time, we aim to lead the way in developing sustainable practices that help our customers reduce their carbon and environmental footprints. Sustainability is a key pillar of our ZOOM IN strategy, focused on taking leaps towards a sustainable future. This focus on sustainability is built on three enablers, which form the foun- dation for our activities. While our sustainability focus mainly covers environmental activities and initiatives, our social ambitions within Ambu are covered by our People & Culture focus, aiming to “Bring people together in one shared culture”. Read more about our culture focus on p. 66→. In addition, Ambu’s business model, which forms the basis of this section and our work with sustainability, is presented on p. 22→. Sustainability education & communication: We have an obligation to contribute to the education and awareness of sustainability within our own organisation and the health- care sector in which we operate by bringing a data-driven approach to environmental evaluations of medical devices, through robust and high-quality Life Cycle Analyses. Sustainability education & communication Circular products and packaging Partnerships & stakeholder engagement Take leaps towards a sustainable future Responsible operations (net- zero emissions) Governance, integrity & transparency Annual report 2023/24 42 Sustainability SUSTAINABILITY GOVERNANCE Sustainability is anchored across our corporate governance structures Audit Committee Board of Directors Oversees the governance aspect of ESG, including Ambu's ESG reporting processes and performance, as well as the limited assurance process of the sustainability disclosures Overall governing body of Ambu, overseeing that the purpose, strat- egy, values and culture of Ambu remain sound and in line with the principles on which our company was founded Our governance structure To ensure top-level commitment, as well as representation across lines of business, ESG & Sustainability is anchored in the Executive Leadership Team, headed by the CEO. The Sustaina- bility department is headed by the Senior Director, Sustainabi- lity, Risk & Compliance, who reports directly to the CFO. Nomination Committee Oversees the social aspect of ESG, including an annual review of the Diversity Policy and tar- gets, as well as the compositions, qualifications and diversity of the Board Executive Leadership Team Defines ESG & sustainability strategy and oversees related processes and progress as part of the agenda at each meeting To further ensure ownership and leadership focus, each ESG (related to the European Sustainability Reporting Standards) topic is assigned a sponsor from our Executive Leadership Team. The sponsors are responsible for driving the areas for- ward and are accountable for delivering on associated targets. Responsibility for executing on action plans and targets lies with the associated departments for the respective areas. Remuneration Committee Oversees the social aspect of ESG, including the preparation of proposals for incentive programmes, such as, short-term incentive programmes that include KPIs related to the ESG & sustainability performance of Ambu Global Sustainability & ESG Sustainability-related issues that require the attention of the Board are presented, reviewed and approved as part of the Board meetings. Our internal quarterly reporting on ESG, which is shared across the organisation, ensures that our per- formance on sustainability-related indicators is reviewed and assessed regularly by the Executive Leadership Team and the Board of Directors. Anchored in Finance, with strong ties to the commercial department. It is the responsibility of the Sustainability & ESG department to be the driving force of the sustainability pillar Innovation Committee Oversees the environmental aspect of ESG, including ensuring that the innovation at Ambu is consistent with our purpose and strategic aspirations, including our sustainability focus in our ZOOM IN strategy and to embed it across the organisation Annual report 2023/24 43 Sustainability As a further testament to our commitment to sustainability, Ambu currently has sustainability-linked loans, which incenti- vise delivery on specific ESG KPIs, as Ambu’s interest rate will be adjusted, depending on how successful we are in terms of delivering on the agreed targets. The loan facility was not used in 2023/24, but is available for use in the coming years accord- ing to the business needs. Category-specific ESG governance ENVIRONMENT ESG topic ELT sponsor Owner(s) R&D Circular products & packaging Approaching net-zero emissions CTO You can read more about our corporate governance structures on p. 96→-p. 103→. COO Operations Read about Ambu’s transparent tax management in note 2.7 SOCIAL on p. 125→. ESG topic ELT sponsor CPO Owner(s) Our people & culture Health & safety P&C COO, (CPO) CPO Operations, People & Culture P&C Employee diversity, equity & inclusion Human rights COO, (CPO) Risk & Compliance GOVERNANCE ESG topic ELT sponsor CFO Owner(s) Governance Sustainability Risk & Compliance Operations, R&D Marketing Business ethics CFO Product quality & safety Product access & affordablity Cyber & data security Responsible supply chain CTO CMO CFO IT COO Procurement Annual report 2023/24 44 Sustainability OUR ESG & SUSTAINABILITY-RELATED POLICIES AND SYSTEMS Policy Area(s) of application Description Systems, procedures and guidelines Code of Conduct (The Code) Approved in May 2024 Overarching The Code is an extension of our values and guides all of us in making ethical decisions and understanding expectations for employees to follow. • Local employee handbooks • Compliance Management System (CMS) • Enterprise Risk Management (ERM) framework Code of Conduct for Business Partners Approved in August 2024 Overarching The Ambu Code of Conduct for Business Partners defines the basic requirements set for any person or entity doing business with, or on behalf of, the Ambu Group, with respect to its responsibilities towards our stakeholders, employees and business partners to con- duct business in an ethical, legal and socially responsible manner. • Code of Conduct Declaration Form • Responsible Supplier Program • Business Partners Integrity Due Deligence Programme Sustainability Engagement Policy Approved in March 2021 Overarching Overaching The policy describes our commitments and continuous improvement focus within climate & environment, human & labour rights and anti-corruption. • United Nations Guiding Principles Responsible Supplier Programme Policy Approved in November 2023 The Responsible Supplier Programme policy is established to ensure that suppliers are carefully selected, evaluated and verified, based on an assessment of their commitment to ethical and sustainable business practices, accommodating our commitments as a signatory of the UN Global Compact. The policy implements a programme to prevent, detect and respond to potential sustainability risks and violations for existing and future suppliers. • Responsible Supplier Programme Global Diversity, Equity and Inclusion Policy Approved in November 2023 Social The policy describes our commitment to diversity, equity and inclusion, which rests on our company values, our commitment to the United Nations Global Compact and our Code of Conduct. It includes Ambu’s commitment to diversity in management, inclusion and gender pay equality, as well as our approach to attracting talent. • Local employee handbooks Labour & Human Rights Policy Approved in August 2023 Social Social The policy defines the labour and human rights standards, to which all Ambu employees are entitled, irrespective of the country in which they work, and represents our expecta- tions towards our business partners. • Human & Labour Rights Guidelines • UK Modern Slavery Act Statement Conflict Minerals Policy Approved in September 2024 The policy describes Ambu's commitment to responsible sourcing of minerals, specifi- cally tin, tantalum, tungsten and gold to avoid supporting conflict or human rights abuses in conflict-affected and high-risk areas. It applies globally to all Ambu entities and suppli- ers, requiring due diligence and accurate reporting on the origin of these minerals. This ensures compliance with international regulations and upholds Ambu’s environmental, social and governance standards. • Code of Conduct for Employees • Code of Conduct for Business Partners • Labour & Human Rights Policy • Procurement Policy • Material Characterisation Questionnaire Annual report 2023/24 45 Sustainability OUR ESG & SUSTAINABILITY-RELATED POLICIES AND SYSTEMS continued... Policy Area(s) of application Description Systems, procedures and guidelines Anti-Bribery & Corruption Policy Approved in June 2022 Governance The policy describes Ambu’s dedication to ensuring that its business is conducted in an honest way without the use of corrupt practices or acts of bribery to obtain an unfair advantage. It describes various types of corruption and bribery applicable to the business of Ambu, as well as guidelines on how to act appropriately. Specifically, it includes our policy towards bribery and corruption in the form of gifts, hospitality and entertainment, interaction with government officials and facilitation payments. • Enterprise Risk Management (ERM) framework • Internal Guidelines for Interactions with Healthcare Professionals (HCPs) • Business Partners Integrity Due Diligence Pro- gramme Political Contribution Policy Approved in May 2024 Governance Governance The policy describes Ambu’s position on political contributions, as well as employees’ right to engage personally in political activity. Speak Up – Integrity Line Policy Approved in April 2024 The policy describes Ambu’s commitment to maintaining the highest ethical standard of business and offering guidance for Ambu employees and business partners in terms of how to act when faced with suspicions or concerns about criminal offences, violations of Ambu’s Code of Conduct and policies, as well as other serious violations of law or regula- tions that govern Ambu’s operations. • Ambu Speak Up – Integrity Line • Ambu Integrity Line Committee Anti-Retaliation Policy Approved in November 2020 Governance The policy describes Ambu’s commitment to ensuring that any individual who, in good faith, reports a misconduct or violation, or who participates in an investigation, is not experiencing or suspecting retaliation against themselves or others. Tax Policy Approved in August 2024 Governance Governance The policy presents Ambu’s most relevant tax policies and standards of operation within the field of corporate income tax. • OECD Transfer Pricing Guidelines Quality Policy Approved in November 2021 The policy sets the framework for our commitment to maintaining high quality in all Ambu products and processes, and to complying with all applicable regulatory requirements across all Ambu sites. • Global Quality Management System (QMS) Global Animal Testing & Clinical Trials Policy Approved in March 2020 Governance Governance The policy provides guidance on the ethical aspects of animal testing and clinical trials in relation to research activities and development of Ambu products. • Triple R's Principle Information Security Policy Approved in April 2023 The policy describes information security objectives and Ambu’s risk-based approach to information security. It defines the responsibility for implementation and compliance with legal, regulatory and contractual requirements which our organisation is subject to. • Information Security Risk Management System • Privacy Statement Data Ethics Policy Approved in November 2021 Governance Governance The policy describes how information about individual persons may be collected, used, disclosed, transferred and stored by Ambu. Global Procurement Policy Approved in August 2020 The policy sets the direction for Ambu's global procurement activities, with the purpose of ensuring compliance with principles and applicable rules and regulations, as well as the incorporation of environmental and social aspects in purchasing decisions, while allowing Ambu to meet its business objectives. • Responsible Supplier Program • Global Quality Management System (QMS) Annual report 2023/24 46 Sustainability COMPLIANCE WITH REGULATIONS CSRD Implementation EU Taxonomy Green Claims Directive In the 2023/24, Ambu A/S started preparations for the Corporate Sustainability Reporting Directive (CSRD) and corresponding European Sustainability Reporting Standards (ESRS), applicable to Ambu from 1 October 2024 and the 2024/25 financial year. As a listed company with over 500 employees, we fall under the EU Taxonomy Regulation. This year, we screened our activities against the six environmental objectives, assessing our activities by using our NACE codes and by sector within manufacturing, electricity, gas, steam and air conditioning supply, water, sewer- age, waste and remediation, transportation and stor- age, information and communications, and construc- tion and real estate activities. Ambu welcomes the proposed EU Green Claims Directive, which aims to combat greenwashing by ensuring product-level sustainability claims are reliable and verifiable. During the 2023/24 financial year, we continued to build a data-driven foundation for our product sustainability claims, using Life Cycle Assess- ments (LCAs) and Life Cycle Impact assessments, as elaborated on p. 59→-p. 60→. To prepare for compliance, we established a robust framework for CSRD implementation, reviewed our double materiality assessment (DMA) to meet the new requirements and conducted a gap analysis to build the strong foundation for expanding our ESG reporting scope. During these processes, we engaged extensively with stakeholders across the organisation to assess our current compliance level and develop action plans for the 2024/25 financial year. Our DMA has undergone preliminary review of the process methodology by an independent third party and is detailed on p. 51→-p. 52→, alongside the pro- We continue to monitor legislative progress to ensure compliance with upcoming regulations in this area. While we found no eligible activities for revenue, OPEX and CAPEX, we identified contributions to climate change adaptation and mitigation that are detailed in our environmental disclosures, see p. 51→-p. 52→. As we did not have any eligible activities within the EU Taxonomy, we have not per- formed any alignment assessment. We remain vigilant of the evolving regulation and our future reporting obligations. cess and eligibility of the topical ESRS. Some elements required by the CSRD have already been implemented in this sustainability statement as a preparation step towards full CSRD reporting next year. Annual report 2023/24 47 Sustainability Revenue REVENUE Substantial contributions to objectives Do no significant harm to objectives Economic activity Code DKK million Y;N; N/L Y;N; N/L Y;N; N/L Y;N; N/L Y;N; N/L Y;N; N/L % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % 0 E E T T A.1. Taxonomy-aligned activities None Revenue of taxonomy-aligned activities (A.1) Of which enabling Of which transitional Taxonomy-eligible, but not -aligned, activities 0 0% 0 0 0% 0% 0 0 EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL None 0 Revenue of taxonomy-eligible, but not -aligned, activities (A.2) Revenue of taxonomy-eligible activities (A1 + A2) B. Taxonomy-non-eligible activities Revenue of taxonomy-non-eligible activities Total 0 0 0 0% 5,391 5,391 100% 100% 100% Accounting policy: Revenue is in accordance with Ambu's annual report 2023/24, note 2.2. For calculation of denominator of revenue, figures have been extracted directly from Ambu's enterprise resource planning (ERP) system to ensure that registrations are only counted once. The KPI is defined as Taxonomy-eligible revenue (numerator) divided by the total revenue (denominator). Y = Yes (Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective) N/EL = Not eligible (Taxonomy-non-eligible activity for the relevant environmental objective) NA = Not applicable as we found no eligible activities N = No (Taxonomy-eligible, but not Taxonomy-aligned activity with the relevant environmtal objective) EL = Eligible (Taxonomy-eligible activity for the relevant environmental objective) Annual report 2023/24 48 Sustainability OPEX OPEX Substantial contributions to objectives Do no significant harm to objectives Economic activity Code DKK million Y;N; N/L Y;N; N/L Y;N; N/L Y;N; N/L Y;N; N/L Y;N; N/L % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % 0 E E T T A.1. Taxonomy-aligned activities None OPEX of taxonomy-aligned activities (A.1) Of which enabling Of which transitional Taxonomy-eligible, but not -aligned, activities 0 0% 0 0 0% 0% 0 0 EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL None 0 OPEX of taxonomy-eligible, but not -aligned, activities (A.2) OPEX of taxonomy-eligible activities (A1 + A2) B. Taxonomy-non-eligible activities OPEX of taxonomy-non-eligible activities Total 0 0 0 0% 131 131 100% 100% 100% Accounting policy: OPEX consists of only direct non-capitalised costs that relate to sustainability activities (maintenance, resource efficiency, R&D, training, renovation of buildings, short-term lease and other direct costs relating to day-to-day servicing of property, plant and equipment ). For calculation of denominator of OPEX, figures have been extracted directly from Ambu's enterprise resource planning (ERP) system to ensure that registrations are only counted once. The KPI is defined as Taxonomy-eligible OPEX (numerator) divided by total OPEX (denominator). Y = Yes (Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective) N/EL = Not eligible (Taxonomy-non-eligible activity for the relevant environmental objective) NA = Not applicable as we found no eligible activities N = No (Taxonomy-eligible, but not Taxonomy-aligned activity with the relevant environmtal objective) EL = Eligible (Taxonomy-eligible activity for the relevant environmental objective) Annual report 2023/24 49 Sustainability CAPEX CAPEX Substantial contributions to objectives Do no significant harm to objectives Economic activity Code DKK million Y;N; N/L Y;N; N/L Y;N; N/L Y;N; N/L Y;N; N/L Y;N; N/L % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % 0 E E T T A.1. Taxonomy-aligned activities None CAPEX of taxonomy-aligned activities (A.1) Of which enabling Of which transitional Taxonomy-eligible, but not -aligned, activities 0 0% 0 0 0% 0% 0 0 EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL None 0 CAPEX of taxonomy-eligible, but not -aligned, activities (A.2) CAPEX of taxonomy-eligible activities (A1 + A2) B. Taxonomy-non-eligible activities CAPEX of taxonomy-non-eligible activities Total 0 0 0 0% 381 381 100% 100% 100% Accounting policy: CAPEX consists of additionas in property, plant and equipment, intangible assets, excl. goodwill, and addition of right-of-use assets. For calculation of denominator of CAPEX, figures have been extracted directly from Ambu's enterprise resource planning (ERP) system to ensure that registrations are only counted once. The KPI is defined as Taxonomy-eligible CAPEX (numerator) divided by total CAPEX (denominator). Y = Yes (Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective) N/EL = Not eligible (Taxonomy-non-eligible activity for the relevant environmental objective) NA = Not applicable as we found no eligible activities N = No (Taxonomy-eligible, but not Taxonomy-aligned activity with the relevant environmtal objective) EL = Eligible (Taxonomy-eligible activity for the relevant environmental objective) Annual report 2023/24 50 Sustainability Strategy cretely, Ambu commits to reducing absolute Scope 1 and 2 greenhouse gas emissions by 75% by 2029/30, from a 2020/21 base year, and to reaching a near-term target of 82% of our suppliers setting Science Based Targets by 2026/27 (Scope 3). TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES Sustainability is anchored as one of four pillars of our ZOOM IN strategy. With our sustainability focus, we aspire to take leaps towards a sustainable future, as we focus on two key areas, "Responsible operations" and "Circular products & packaging". At Ambu, we acknowledge our impact on the environment and climate, as well as our role in helping to mitigate major repercussions for life on Earth, due to the physical impacts of climate change. In addition, Ambu has set 2045 as the target year for reaching net-zero emissions across our value chain. While our annual report is the main source of disclosure of our climate performance, strategy and risk management, as well as our metrics and targets, we also disclose more granular data into the climate change mod- ule of CDP (Carbon Disclosure Project). Read more about our ambitions and targets for carbon emissions and climate change on p. 55→-p. 57→. Leaning on the recommendations from TCFD (Task Force on Climate-related Finan- cial Disclosures), we report on how climate change impacts Ambu’s business, strategy and financial planning, together with how we strategically manage climate-related risks and opportunities. issues, and the Board of Directors oversees that all relevant procedures and commit- ments are in place, including target setting and related activities. Climate-related issues that require the attention of the Board are presented, reviewed and approved as part of Ambu's Board meetings. Read more about our strategy on p. 18→. Risk management Climate-related risks are identified as part of our risk management process and are assessed and responded to according to a standardised process for estimating the impact and likelihood of risks in view of their impact on revenue, cost and reputation, as well as the related compliance requirements. We continuously assess the requirements concerning risk assessment and materiality under the EU Directive on Corporate Social Responsibility (CRSD) to ensure we are compliant by 2024/25 and that our material- ity assessment gives a true and fair view of Ambu’s impact, as well as the financial risks and opportunities of ESG and sustaina- bility-related issues. To further ensure top-level commitment and representation across the business, ESG & Sustainability is anchored in the Executive Leadership Team, headed by the CEO. The Sustainability department is headed by the Senior Director, Sustainability, Risk & Compli- ance, who reports directly to the CFO. Read more about our risk management pro- cess on p. 91→-p. 95→. Read more about our sustainability govern- ance on p. 42→-p. 43→. Metrics & targets Governance The Executive Leadership Team holds the overall responsibility for climate-related Ambu's near-term carbon reduction targets were validated by the Science Based Targets initiative (SBTi) in December 2023. Con- Read more about the integration of ESG in the Management compensation on p. 102→. Annual report 2023/24 51 Sustainability Materiality ness model and geographical reach of our operational and commercial activities. MATERIALITY AND STAKEHOLDER ENGAGEMENT During 2023/24, we updated our double materiality assessment (DMA) in preparation for meeting the compliance requirements of the CSRD next year. This update aligns our process with the requirements published in ESRS 1 – General Requirements, as well as additional guidelines developed by Euro- pean Financial Reporting Advisory Group (EFRAG). The DMA will provide the basis for preparation of Ambu’s sustainability state- ments next year, as it outlines the impacts, risks and opportunities relevant to Ambu and, consequently, the reporting standards to which Ambu is eligible as of the 2024/25 financial year. Our DMA has undergone preliminary review of the process methodol- ogy by an independent third party to ensure that it is accurate and aligns with the CSRD requirement. The process included an assessment of impact and financial materiality, based on due diligence and risk management out- comes, as well as an analysis of Ambu’s value chain, to determine how and to what extent Ambu influences and is influenced by various stakeholders and activities in the short, medium and long term. An initial list of topics was developed from the sustainability matters covered in topical ESRS, incorporat- ing inputs from ESG rating agencies, internal and external stakeholders and various ESG reports issued by reputable publishers. A mix of qualitative and quantitative meth- ods was applied to the DMA, including workshops with subject matter experts and organisational representatives, to define topics and related impacts, risks and oppor- tunities, as well as scoring sessions to assess each topic according to ESRS 1 require- ments. These sessions included inputs from primary and secondary stakeholders (see page p. 54→ for stakeholder engagement details), which supported the assessment and provided valuable insights for defining materiality. Methodology and assumptions To ensure a comprehensive and accurate outcome, the assessment was conducted from a global perspective, considering sustainability impacts, risks and opportuni- ties on a global scale, while accounting for regional and national differences. It encom- passed Ambu’s operations and our entire value chain, both upstream and downstream, under the assumption that we will maintain our current growth ambitions, as outlined in our business strategy, with the existing busi- The process included continuous validation and feedback with internal stakeholders, as Annual report 2023/24 52 Sustainability well as Executive Leadership Team and the Board, to whom the process and results were presented and validated before undergoing preliminary review of the process method- ology by an independent third party. Going forward, we plan to review the process as part of the annual reporting process for sustainabil- ity disclosures. ability statements, non-material topics will be mostly excluded from our sustainability activities and reporting, with exception of few that we will continue reporting on voluntarily. While the DMA did not result in any major changes to the overall list of material topics identified in 2021, it reinforced our strategic priorities within sustainability. The assess- ment highlighted two key areas with high materiality scores that are already within our sustainability focus and our ambition to 'Take leaps towards a sustainable future': 'Respon- sible operations' (net-zero emissions) and 'Circular products & packaging'. Ambu's material topics For the financial year 2023/24, the material topics for Ambu are: ENVIRONMENT SOCIAL GOVERNANCE Carbon emissions, Safeguarding the rights of our employees, human cap- ital management, employee diversity, equity & inclusion, employee health & safety, protection of workers in the value chain, responsible Corporate governance & reporting, business ethics & integrity, product quality & safety, cyber- & data secu- rity, access & affordability of products & services, responsible supply chain management Material topics climate change, energy consumption, responsible supply chain management
, circular products & packag- ing design, environmental impact of products, material consumption, manufac- turing waste and hazardous materials, substances of concern The assessment categorised topics into material and non-material. While material topics represent those which we will dis- close information on in our future sustain- supply chain management Condensed into overall topics: Condensed into overall topics: Condensed into overall topics: Climate change
S1 Own workforce Business conduct G1 E1 E5 Water management S2 Workers in the value chain E3 Resource use and circu- lar economy and waste management
S4 Consumers and end-users Identified as a strategic priority for Ambu Legend: E1, E3, E5, S1, S2, S4 and G1 stand for topical ESRS - European Sustainability Reporting Standards Annual report 2023/24 53 Sustainability Partnerships & stakeholder engagement Since 1937, Ambu has been rethinking solu- tions, together with healthcare professionals, to save lives and improve patient care. We have a longstanding tradition of supporting the communities in which we operate. industry experts who bring the necessary skills, networks and capabilities. These part- nerships are crucial in challenging us and enhancing the effectiveness of our sustaina- bility efforts. Through these actions, we are not only advancing our sustainability goals, but also contributing to a broader understanding and adoption of circular practices within the healthcare sector. As part of our commitment to fostering edu- cation and awareness around sustainability within the healthcare sector, we have made significant strides over the past year. We recognise our obligation to simple and clear sustainability communication, ensuring that it is accessible and easy to understand for all stakeholders. Therefore, we have prioritised the internal education of our salesforce to better equip them for communicating sus- tainability initiatives to our broader network. A key achievement in this area is the launch of a mandatory digital sustainability course, which has been released across our organisation. At Ambu, we are proud of our legacy and the fact that our products continue to play an important part in saving lives across the globe, and we are proud to have employees who care deeply for the communities in which we operate. This year, Ambu's headquarters office in Denmark engaged in a local munic- ipality project about green mobility, explor- ing the opportunities to increase employee engagement and use of green means of transportation for their daily commute to their workplace. Around 1,000 employees partic- ipated in the survey globally, of whom 300 were in Denmark. Ten employees engaged directly in activities, such as, suggesting and testing of green mobility awareness cam- paigns, setting up discounts for public trans- port and bicycle rentals. We are also intensifying our efforts in evi- dence generation, aiming to communicate evidence transparently to our stakeholders. We acknowledge that the current evidence base is incomplete, and we are dedicated to taking a holistic approach in communicating the environmental impact of our products. This includes all aspects of our environmen- tal footprint. To ensure the success of these initiatives, we are actively collaborating with During 2023/24, Ambu did not make any donations. Annual report 2023/24 54 Sustainability At Ambu, we interact with many different stakeholder groups in our efforts to provide world-class medical solutions and deliver strong, profitable growth. Although our stakeholders represent different demands and agendas, we are committed to understanding their wants and needs to engage in meaningful collaborations and strong value creation. Stakeholder group Why we engage Engagement Value created Through ongoing customer engagement and feedback, we identify and adopt customer needs in the development process, contributing to Ambu delivering world-class solutions that make a difference in healthcare, while also contributing to reducing the environmental footprint of the healthcare sector. • Innovation days Ambu provides benefits for healthcare professionals and patients through our single-use endoscopy solutions, which provide workflow efficiency, availability, patient safety and economics, as well as an improved environmental impact. Customers • Development activities and feedback • Performance trials and data assessment • Hospital visits • Conferences • Management interactions We are focused on building a purposeful and diverse, engaged and inclusive culture where our employees can harness their com- petences and ideas, thrive in close collaborations with colleagues and customers, apply high levels of trust and take ownership of driving shared success. • Global engagement surveys • Global town halls • Ambu purpose and values team sessions • CEO letters and strategy newsletters • Intranet communication Ambu creates value for employees by continuously advancing our shared culture and sustainability awareness, driven by our strong purpose, actionable values and strategic direction. Employees • Performance and development dialogues • Workers’ councils • Sustainability trainings Ambu is reliant on our many suppliers to reach our emission reduction goals and approach net-zero emissions. Therefore, we aim to work with and support suppliers that share our commitment to sustainability and responsible business practices. • Responsible supplier program Ambu focuses on supporting and collaborating with our sup- ply chain to ensure that our suppliers live up to the increasing standards within sustainability. Suppliers Investors To ensure efficient financial allocation, Ambu regularly engages with analysts and institutional investors to support a fair company valuation and ensure liquidity of the Ambu share. • Investor roadshows and conferences • Investor calls • Briefings with equity research analysts • Capital market days Ambu provides long-term shareholder return by investing capital in projects and utilising our strong commercial and innovation infrastructure to achieve high growth, as well as a return on invested capital (ROIC) that exceeds the cost of capital (WACC). • Annual general meeting Compliance with existing regulations on responsible business prac- tices is a requirement for Ambu to retain our licence to operate. • Industry associations • Roundtables with key stakeholders Ambu supports and complies with legislations developed to maintain stable and efficient institutions, as well as resilient societies in which people and businesses can thrive. Regulators & authorities Community engagement is pivotal to building trust between Ambu and the communities in which we operate, to reduce the risk of conflicts that may affect the success of Ambu. • Engagement with NGOs • Collective action alliances and partnerships Ambu engages with and supports the communities in which we operate to ensure that Ambu understands and responds to the impact we have on people and the planet. Society Annual report 2023/24 55 Sustainability ENVIRONMENTAL INFORMATION Ambition GHG emissions & climate change Reduce our impact on the environ- ment and climate, while helping to mitigate major repercussions for life on Earth, due to the physical impacts of climate change Near-term Science Based Targets (SBTi) We are committed to operating responsibly and approaching net-zero emissions In December 2023, the Science Based Targets initiative (SBTi) validated and published Ambu’s near-term carbon reduction targets for Scope 1, 2 and 3 greenhouse gas emissions. Ambu has committed to reducing absolute Scope 1 and 2 greenhouse gas emissions by 75% by the 2029/30 financial year, from a 2020/21 base year, and reaching a near-term target of 82% of its suppliers setting Science Based Targets by the 2026/27 financial year (Scope 3). Since 2020/21, we reduced absolute Scope 1 and 2 emissions by 23%, targeting a 35% reduction in 2024/25 and anticipating to achieve our target reduction of 75% a year ahead of schedule - in 2028/29. We expect to publish our Scope 3 reduction target in 2024/25, when submitting net-zero targets. The SBTi validation and our 2045 target year underscore Ambu's strong commitment to sustainability. This aligns with our strategic priorities of reaching net-zero emissions and creating circular products and packaging, which are becoming key factors for our customers. Target As we have seen multiple global tempera- ture records broken during the past year, the urgency of immediate action to tackle climate change is becoming more evident to avoid serious negative repercussions for life on Earth. The 1.5°C target of the Paris Agreement indicates that global emissions need to be reduced by 50% by 2030 and become net- zero in 2050. Achieving this goal requires sub- stantial effort. Ambu aims to remain a leader in the transition towards a net-zero future by reducing its emissions through innovative and circular products and packaging, transporta- tion and production sites powered by renew- able energy sources, setting the sustainability standards in the MedTech industry. 75% absolute reduction of Scope 1 and Scope 2 emissions by 2029/30 82% of suppliers engaged to set SBTi targets by 2026/27 Governance Governed through our Sustainability Engagement Policy and overseen as a strategic priority by the Executive Leadership Team Annual report 2023/24 56 Sustainability Net-zero target year set for 2045 Reduction Plan' and a long-term roadmap for achieving net-zero emissions. more sustainable products and packaging, and cooperating with suppliers who, by reducing their emissions, will contribute to a decrease in Ambu’s Scope 3 emissions. 2 and 3 emissions. Our analysis indicates Ambu’s near-term targets are key building blocks in our long-term objective to achieve net-zero emissions across our value chain. The executional steps towards approaching net-zero emissions are already in motion, as we have committed to reaching this milestone by 2045 by developing a 'Carbon that Scope 3 emissions account for 91% of our total GHG emissions, with the majority occurring upstream and downstream of our operations. This highlights our reliance on numerous suppliers to achieve our emis- sion reduction goals. Consequently, we are focusing on establishing closer, trustful The term 'net-zero' describes a commitment to decarbonisation. The reduction can occur, among other things, by increasing the use of renewable energy, reducing consumption of fossil-based energy sources, developing Over the past years, we have laid the foun- dation for reducing our greenhouse gas (GHG) emissions by mapping our Scope 1, Where do our emissions come from? Distribution of Scope 1, 2 and 3 emissions in 2023/24 2% 7% Raw material extraction Material formulation Material transportation Component production & Product assembly Distribution Use of products sold Waste management Offices Scope 1 91% Scope 2 Scope 3 Scope 3 Scope 1 are direct GHG emissions occurring from activi- ties under our direct control in sources that are owned or controlled by Ambu. They include emissions from Ambu’s company cars, emissions from fuel used at our production sites and fugitive emissions that occur from refilling of cool- ing agents in air-conditioning units. Scope 2 are indirect GHG emissions caused by the energy Scope 3 are indirect GHG emissions – not included in Scope 2 – that occur in our value chain, including both upstream and downstream emissions. Scope 1 • • • • • we purchase, such as, electricity and district heating. Scope 2 • Scope 3 Annual report 2023/24 57 Sustainability collaborations with our key suppliers, par- ticularly in purchased goods and services to drive down emissions. We are dedicated to disclosing our annual Scope 1, 2 and 3 emis- sions, including historical data, as part of our progress reporting towards our near-term Science Based Targets (SBTi). In 2023/24, we have been working on improving our GHG calculation tools, calculation methods, inven- tory and data quality. Carbon Reduction Plan We are committed to operating responsi- bly and approaching net-zero emissions. Our strategy includes energy efficiency measures, purchasing Renewable Energy Certificates (RECs) and establishing Power Purchase Agreements (PPAs) to support renewable energy production. Through energy monitoring and audits, our sites are gaining a clearer understanding of where the highest energy consumption occurs. We are actively sharing insights across locations to help reduce local energy use and emissions by implementing the following measures: Distribution of Ambu's Scope 3 emissions in 2023/24 3% 0% Energy Efficiency: Our sites have imple- mented various initiatives to reduce energy consumption, including replacing old equip- ment and optimising production processes. 1% 1% 1% 6% 4% 4% Renewable Energy: Our share of renew- able energy increased to 25% in 2023/24, supported by the purchase of RECs and the production of electricity at our sites using solar panels, reduction of our car fleet and production optimisation processes. 80% Purchased goods and services Waste generated in Operations • • Capital goods Business travel • • • • • We have a LEED Silver certification for our production site in Mexico Fuel- and energy-related activities (not included in Scope 1 or 2) Employee commuting Use of sold products • End-of-life treatment of sold products Upstream transportation and distribution • Annual report 2023/24 58 Sustainability Targets and progress Also, we managed to reduce our GHG emis- sions intensity per DKKm revenue (market- based) by 6,6% in the last four financial years - a testament to a successful decoupling of our GHG emissions from our growth. Com- pared to last financial year, the increase in emissions was mainly driven by significantly reduced production in 2022/23, intended to lower inventories. Total Scope 1 and Scope 2 emissions (market-based) Metric tonnes of CO2e We continue to make progress on near-term SBTi targets for Scope 1 and Scope 2, by reducing our market-based emissions by 23%, compared to the baseline year. Since last year, our Scope 1 and Scope 2 emissions decreased by 7%, mainly driven by increas- ing renewable energy consumption of 25%, compared to 18% last year. -23% 25,000 4,346 20,000 5,047 3,945 3,369 15,000 10,000 5,000 0 This year, our renewable electricity share increased to 34% covering consumption of 15,510 MWh, compared to 26% in 2022/23. This was driven by the purchase of RECs, covering 99.9% of the electricity consump- tion at our site in Xiamen, China, as well as 33% of our electricity consumption at our site in Penang, Malaysia. RECs cover 13,982 MWh, or 90%, of our total renewable electric- ity, while our solar panels in Penang, Malay- sia, and Ballerup, Denmark, have produced 1,528 MWh, covering 10%. With our focus on transitioning our products to bioplastics and other low-carbon materials, we expect to continue to observe reduction of the GHG emissions intensity per revenue. 20,106 16,904 16,168 15,400 2020/21 2021/22 2022/23 2023/24 Scope 1 Scope 2 In 2023/24, we significantly improved our data quality and methodology for GHG emission calculations. Specifically, we standardised the emission factors for all three Scopes and have therefore restated all financial years, starting from the 2020/21 financial year (baseline year) to the 2023/24 financial year. Read more on the p. 85→. Total GHG emissions per DKKm revenue (market-based) Metric tonnes of CO2e/DKKm revenue -6.6% 50 40 30 20 10 The reductions achieved this year were also attributable to various initiatives at our sites, aimed to bring down energy consumption. This included initiatives related to transfor- ming our company car and truck fleet from fuel based to electric- and hybrid-based, energy saving programmes, such as, aircon optimisation that saved 111 MWh of electri- city and replacement of injection moulding tools estimated to save 13MWh/Pcs annually. We will continue to improve our quality of data and reporting in the coming years. This prepares us for the requirements set by the CSRD, effective as of January 2024, which Ambu will apply to from the 2024/25 financial year, starting on 1 October 2024. 41.5 40.5 33.7 38.8 0 2020/21 2021/22 2022/23 2023/24 Total GHG emissions per DKKm revenue Annual report 2023/24 59 Sustainability Bioplastics in endoscope handles: We have successfully implemented bioplastics in the handles of all our currently marketed endo- scopes, as well as achieved FDA clearance for the world’s first endoscope manufactured with bioplastic materials in the handle. We are exploring the use of additional bioplastic types to further reduce our GHG emissions and enhance recyclability. Circular design Circular products & packaging Ambu's single-use endoscopes have an environmental impact throughout their life- cycle – from raw material extraction until they are disposed of after use. At Ambu, we use high-quality plastic in our products to ensure that our solutions are safe for patients and users and to ensure flexible products that adapt to the human anatomy in a way that is gentle for patients. Ambition Develop more sustainable products to minimise our environmental impact and, if possible, contribute to the circular economy We are committed to sustainable endoscopy through circular products and packaging Primary packaging: We have integrated bio- plastics into the cuff protector of the Ambu® Aura laryngeal mask packaging. Target The choices we make when designing new products impact our operations, suppliers and customers, making sustainability inte- gral to our R&D processes and governance. All innovation projects must follow a sustain- ability standard operating procedure (SOP), defined in our Quality Management System (QMS), which extends our circular design guide. This guide outlines six principles and Our commitment to sustainability is reflected in our approach to product design and packaging. We aim to develop circular prod- ucts that minimise environmental impact throughout their lifecycle. This includes using renewable materials, reducing greenhouse gas (GHG) emissions and ensuring recycla- bility through the following initiatives: • Bioplastics in all the handle of all marketed endoscopes by the end of 2024 • Primary packaging for high-volume products made from bioplastics • Recycling offering in all major markets Recycling programmes: We have initiated take-back recycling pilot programmes in Germany and the UK, with plans to expand to the other markets. Governance Circular design guide Governed through our Sustainability Engagement Policy and overseen as a strategic priority by the Executive Leadership Team Healthy substances Circular product design Manufacturing cascades Refuse harmful substances when choosing materials to avoid exposure of people and the environment to substances of concern and to enable safe recycling. Redefine the product structure to enable recycling by design and strive to keep materials at the highest possible value. Reduce and recirculate materials, energy and water from side streams of our pro- cesses to make more from less through cascaded use. Circular packaging & logistics Rethink packaging and the way we ship our products by designing recyclable pack- aging and using renewable or recycled packaging materials. Materials innovation System innovation Rethink the way we enable circulation of low-carbon-footprint materials (bioplastics and chemically recycled content) in our products. Reconfigure the health and waste system through pilots and partnerships to achieve actual take-back and recycling in key regional markets. Annual report 2023/24 60 Sustainability KPIs to integrate our strategic sustainability ambitions into design. These principles help identify the best opportunities to reduce our environmental footprint. Additionally, the SOP requires each project to set targets, baselines, deliverables and metrics, support- ing our data-driven approach to sustaina- bility. This means that all new development projects must include a sustainability objec- tive, be developed in line with that goal and implement measures to capture the neces- sary data and documentation to support any green claims. The use of LCAs to evaluate medical devices is increasing, and so is the understanding that there is not always a clear environmen- tally better option between a single-use endoscope and a reusable endoscope. Additionally, from an LCA perspective, the comparative climate and environmental footprints of single-use devices and reusable devices often depend on the specific type of medical device. approach, as it also feeds directly into regu- latory requirements, such as, the European CSRD and the Green Claims Directive. Taking a data-driven approach to product sustainability Targets and progress Our efforts to reduce the impact from our products rest on a foundation of research and investments in the use of renewable materials like bio-based feedstock for plastic, as well as the development of solutions for take-back and recycling purposes. The intro- duction of bio-ABS in our endoscope han- dles has already provided us with substantial carbon reductions at a material level. Still, we continue to look into better low-carbon mate- rial alternatives to ensure further reduction of emissions related to the production of our products, as well as to ensure that recyclabil- ity for our products will be a viable end-of-life treatment (once we have established our take-back and recycling infrastructure). As a next step on our journey to improve the sustainability of our pro- ducts, Ambu is taking a data-driven approach. Specifically, we are build- ing a strong data-driven foundation for decision-making, which rests on the development of targets and solid data sets to track our progress. This includes the use of literature search systems to secure evidence for claims made on product sustainability, as well as LCAs to calculate and evalu- ate the environmental impact of our products. This data driven approach is important to ensure we contribute and help nurture a fair, objective and holistic environmental evaluation of medical devices across all relevant parameters. Further, we are develop- ing roadmaps, targets and baselines at product level to create realistic action plans that match the oppor- tunities within our product portfolio when it comes to sustainability. From a carbon footprint perspective within endoscopy, the emissions from the produc- tion, delivery and end-of-life treatment of a single-use endoscope can be lower than the emissions released during the cleaning (reprocessing) of a reusable endoscope. Existing studies on single-use vs reusable endoscopes have a wide range of conclu- sions, of which many highlight single-use devices as having a lower carbon footprint than reusable devices - while in a few catego- ries, the opposite is the case. We therefore need continued focus and investment in more high-quality comparative LCA analyses, across medical devices, before any strong conclusions can be drawn. Life cycle assessment Evaluating the holistic environmental impact of a product can be challenging, as there are 16 potential environmental parameters to consider in an analysis. Moreover, to be done accurately and fairly, it requires following strict Life Cycle Analysis (LCA) standards, such as, ISO 14040 and ISO 14044. Being a first mover in this area presents some challenges, as the access to materials and technologies for recycling is limited. While we have already established partner- ships with our suppliers, we believe more collaboration across the sector is needed to drive the agenda and the change needed to reduce the overall environmental impact of the healthcare sector. As an official partner of Operation Clean Sweep, Ambu Product-level sustainability is highly is committed to requested by our customers, and we believe that we are applying the right approach for continuous improvement in this aspect. In these efforts, we welcome a data-driven ensuring proper and careful handling of the plastic pellets used in production. Annual report 2023/24 61 Sustainability Overview of our 2025 targets and progress within sustainable product development Bioplastics Target Progress 2023/24 Details and next steps Bioplastics in all Implementation of bioplastics is well underway and expected to be completed for all currently marketed endoscopes by the end of this 2024 calendar year. The use of bioplastic material in our endoscope handles reduces the carbon footprint of our single-use endoscopes. The introduction of bioABS reduces GHG emissions at a raw material level (cradle to gate) by more than 70%, compared to traditional fossil-based plastics. The bioplastics we use are called bio-attributed plastics, which are a type of plastics of which the sourcing is controlled under a so-called mass-balance approach. Here, the material is made from a combination of bio-based- and fossil-based feedstock. currently marketed endoscope handles by the end of 2024 FDA clearance of Ambu® aScopeTM Gastro Large – the world’s first endoscope manu- factured with bioplastic materials. We continue to explore even better bioplastic options to further reduce the carbon footprint of the materials we use, as well as converting more parts of our endoscopes to other appropriate bioplastics. FDA clearance of our first-generation single-use ureteroscope solution, Ambu® aScopeTM 5 Uretero – the first ureteroscope manufactured with bioplastic materials. Second-generation feedstock comes from, e.g. recycled food waste. Primary packaging for high-volume products made from bioplastics Implementation of bioplastics in protec- tive parts is implemented for products in development. We continue to roll out new packaging options that include lower carbon bioplastics, including exploring new bioplastic options for increased carbon footprint reductions. The use of bioplastic Recycling offering in all focus markets Take-back pilot continued in Germany. Take-back pilot initiated in the UK. Throughout the 2023/24 financial year, we progressed with the ongoing pilot of our take-back recycling initiatives in key markets, including Germany and the UK. In addition, we enhanced our capa- bilities through carefully selected strategic partnerships. We remain committed to advancing recycling options in our focus markets, and while we continue to assess and refine our approach, we aim to explore opportunities for expanding these solutions to other mar- kets in the coming year. materials in our endoscope handles sends a message aimed at driving positive change in the industry in the area of global sustainability – a small, but crucial step towards preserving our We continue to work on our objective to phase out PVC from our new products. During 2022/23, we launched five new products1, of which all five are PVC- free. Moreover, we are working on redesigning our packaging to reduce the amounts of packaging material and to ensure recyclability and reduce our plastic usage. This year, we implemented changes in the packaging of our Ambu® AuraTM laryngeal masks to reduce the amount of waste associated with the packaging and by introducing bioplastics in the cuff protector. We have also implemented bioplastics in the handles of all endoscopes ahead of the target for completion in 2025. Our main challenge still lies within primary packaging, where sterility and high performance barriers are essential and require intensive innovation in new solutions. This year, we identified a viable option for recyclable, sterile packaging that is moving into implementation. planet for future generations. 1 We define a new product launch as when a product has obtained its first market clearance. We exclude products line extension products, software updates, sustaining activities or minor change projects. Annual report 2023/24 62 Sustainability Bioplastics reduce our carbon footprint How our bioplastics are made We use several different types of bioplastics in our products (following a bio-attribution by mass balance approach) to ensure that the bioplastics we source are attributed to our The use of bioplastic material in our endoscope handles will reduce the carbon footprint of the ABS plastics we use products. In our endoscope handles, we use bioABS, a bioplastic that will reduce the car- bon footprint of the traditional fossil-based ABS plastics by 70% (based on cradle-to- grave LCA). In the future, we will build on this by 70%. In the future, we will build on this initiative by expanding the use of bioplastics in other parts of initiative by expanding the use of this bio- our endoscopes. plastics in other parts of our endoscopes. The largest contributor to carbon emissions for Ambu's products comes from our mate- rials, and as we continue to transition our products to bioplastics and other low-carbon materials or plant materials that actually absorb carbon as they grow, we can continue to drive down the environmental footprint of our products through smart and selective environmental choices, as we aim to make sure our single-use devices become the more environmentally friendly choice for our customers. Raw materials are the largest contributor to carbon emissions for our products, and our efforts are therefore focused on transition- ing our products to lower-carbon materials. Bioplastics offer an innovative opportunity within medical devices to replace traditional fossil-based plastics with lower-carbon alter- natives that maintain the needed strength, hygienic qualities and performance. This use of bioplastic represents a small, but crucial step towards reducing the carbon footprint of our industry and driving down emissions for our customers. 1 2 3 4 Fossil-based The fossil-based and bio-based second-generation feedstock are mixed during production of bioplastics. The use of bioplastics Bioplastic material is as strong and durable as fossil based plastic. The performance of our endoscopes are the same, but now with a lower carbon footprint. and bio-based second-generation feedstock (such as, food waste) is sourced by the supplier. reduces the carbon footprint of the ABS plastics used for the production of our endoscope handles by 70%.
* Based on cradle-to-grave LCAs on the raw material from supplier. Watch our bioplastics video to learn more ⟶ Annual report 2023/24 63 Sustainability Water management Water is a critical resource for life on Earth, and as water scarcity becomes more wide- spread, it is important to reduce water con- sumption where possible. As production of Ambu products is not categorised as water intensive, water is mainly used for hygiene reasons, and consumption is therefore related to the number of employees. We ensure sustainable water management at our sites through monitoring and continuous upgrades to our water consumption systems. Progress In 2023/24, we experienced a 6% increase in total water consumption. The increase in water consumption is a result of growing number of employees in our offices, as well as our production sites, and may be further influenced by weather fluctu- ations. Ambition Execute sustainable water manage- ment at our production sites and headquarters through monitoring and assessment of the development in water consumption and conti- nuous adaptation to any changes. Water consumption m3 water Governance Governed through our Sustainability Engagement Policy 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 115,850 122,392 0 2022/23 2023/24 Annual report 2023/24 64 Sustainability Waste management At Ambu, we see waste as a valuable While eliminating waste entirely is not yet possible, we are dedicated to maximising its value along the upstream and downstream value chain. Our sites are increasingly sorting waste into various categories to increase recycling rates. Through partnerships and local initiatives, we are exploring ways to expand the reuse of waste or convert it into energy, fertilisers or components for new materials by increasing our recycling rate and reusing the waste material for other purposes. resource waiting to be transformed through innovative solutions. Like water consump- tion, we monitor the amount of waste at our production sites and at our headquarters. Progress Ambition We continue to focus on reducing the amounts of waste generated at our sites and the diversion of waste to energy or recycling instead of landfill. One way to further reduce waste from production is by using hot runners, where applicable, which does not create any waste during production. Reduce waste where possible and recycle our waste according to the waste hierarchy in order to minimise use of virgin resources, thereby reducing our impact on the environ- ment and climate. By measuring waste amounts, each produc- tion site gains a better understanding of the waste streams and upcycling opportunities. In 2023/24, total waste increased by 21%, compared to 2022/23 due to increase of production output, sales and our new facil- ity that continues setting up new produc- tion lines. Overall, we also see an increase in the share of recycled waste, which has increased to 52% this year, compared to 46% in 2022/23. Waste Metric tonnes Governance Governed through our Sustainability Engagement Policy. 3,500 3,000 2,500 1,398 2,000 1,247 1,500 1,000 1,761 220 1,320 222 500 0 2022/23 2023/24 Waste sent to incineration Waste sent to recycling Waste sent to landfill • • • Annual report 2023/24 65 Sustainability Examples of initiatives within waste management Initiatives Activities Details and next steps Recycling of IT equipment Since the last financial year, Ambu has entered into a global partnership with Tier1Asset, which specialises in the refurbishment and recycling of worn-out IT equipment. The equipment undergoes a stringent process, which includes certified data erasure and a meticulous sorting process, whereby the equipment is either sent for refurbishment and resale, or recycled with an external partner special- ising in recycling the different components into raw materials for a new lifecycle. In 2023/24, we continued our partnership with Tier1Asset, and we sent 1503 kg of IT equipment for recycling from our headquarters. Out of 1503 kg, the 1013 kg of equipment was refurbished and given a new lifespan, 478 kg was recycled, 7kg was sent to waste to energy recovery and only 5 kg was sent to landfill. We expect to further expand the scope of the partnership next year. Internal recycling of runners from injection moulding processes At our Xiamen and Noblesville production sites, in China and the USA, respectively, we recycle runners arising from the injection moulding process by regrinding the runners and feeding them back into the production machines in an internal setup. In 2023/24, we recycled a total of 370 tonnes of plastics internally from our injection moulding processes in Xiamen and Noblesville. We con- tinue to focus on optimising and reusing the plastic in our production processes. Our increased share of recycled waste is a testament to the vigorous efforts of our colleagues at our sites, who work every day to increase the amount of recycled waste, diverting it from landfill and ensuring it can serve a new purpose Increase in waste Total increase in waste Total share of recycled waste 21% 52% compared to 2022/23 compared to 46% in 2022/23 Annual report 2023/24 66 Sustainability SOCIAL INFORMATION Underpinning our purpose are our Ambu values: Take Charge, Team Up and Be True. ‘why’ as a company and constitutes the guid- Social capital management ing star for our one shared Ambu culture. In November 2022, we launched our purpose alongside our ZOOM IN strategy, thereby fostering a strong interconnection between our reason for being and our concrete plan of action for winning in the market. Ambition Ensure a safe and healthy work- ing environment, characterised by mutual trust and respect as a workplace, where every employee is treated fairly and can prosper. Ambu is a purpose- and values-driven com- pany. Across the Group, we aspire to foster a highly engaged, diverse and inclusive culture where our people and teams can grow, as Ambu grows. Furthermore, in September 2023, we launched our refreshed values – Take Charge, Team Up and Be True. Together with our purpose, these values shape our company culture, guide our behaviours and capture the essence of our culture. They were derived from extensive feedback from across our global organisation and highlight our way of working together with colleagues across functions and country borders, as well as with partners and customers. We are made up of people who want to be challenged, drive results and make a differ- ence for our customers, and we are commit- ted to continuing to unlock the full power of our people and culture. Governance Governed through the Ambu Code of Conduct and our Global Diversity, Equity & Inclusion Policy, as well as our Human & Labour Rights Policy At the core of our business lies our purpose. Together, we rethink solutions to save lives and improve patient care. It encapsulates our Annual report 2023/24 67 Sustainability As Ambu continues to evolve and grow, so does our approach to people development. The AmbuDialogue, a process of regular yearly touchpoints between our leaders and employees, ensures a structured develop- ment dialogue for all employees. We also remain committed to people development through our ZOOM IN pillar of ‘Fostering a highly engaged, diverse and inclusive cul- ture’. overall engagement score of 4.1, reflecting a tangible increase, compared to 3.9 last year – and a result exceeding the benchmark of the medical device industry. Employee feedback remains critical to us, and we will continue to track this closely going forward. Voluntary employee turnover Our Voice: Our annual global engagement survey All employees Rate (%) 35 28 21 14 7 In our continuous efforts to foster an engaged culture, we keep track of the engagement of our people. Our annual Our Voice global employee engage- ment survey is a key tool, allowing colleagues worldwide to share their individual and anonymised feedback. For our voluntary turnover, we saw a signif- icant decrease in turnover for the second year in a row. We consider this to be a result of some of the actions taken in response to Ambu’s Our Voice survey, as well as a sign of increased stability two years into our trans- formation journey. 30 25 20 0 2021/22 2022/23 2023/24 In addition to developing our existing work- force, Ambu is dedicated to attracting the best talent in the market. By maintaining a globally aligned approach to our employer brand and ensuring consistency in identi- fying and attracting talent, we provide an objective process that focuses on both com- pany needs and candidate aspirations. This year, for the first time, we included all our operational colleagues in the survey, giving us a truly global perspec- tive. The results showed improvements on nearly all counts, compared to last year, with a global engagement score above industry benchmarks. Building an engaged global Ambu culture is a key priority, and based on our global results, Ambu’s Executive Leadership team identifies focus areas for conti- nued development and momentum. White collar and indirect blue collar employees Rate (%) Similarly, as some of our manufacturing sites are becoming more established, we are see- ing significant improvements in the turnover across this employee population. 25 20 15 10 5 Targets and progress Moving forward, we will continue to closely monitor our global employee turnover, while continuing to venture forward on our trans- formation journey. 20 16 11 0 For our annual global engagement survey, we continued our Ambu-wide survey, which we call “Our Voice”. 2021/22 2022/23 2023/24 Blue-collar employees Rate (%) This year, for the first time ever, our survey enabled all voices across Ambu to be heard, including all our colleagues working in our four factories. The global results showed that we surpassed last year’s results on nearly all parameters, reflecting that our engagement levels are on the rise. Concretely, Ambu’s 2024 Our Voice results demonstrated an 50 40 30 20 At least once a year, we will run a global survey to track our progress, advancing our truly global set-up and reflecting the unique voices of all our employees – regardless of position or function. 10 42 33 29 0 2021/22 2022/23 2023/24 Annual report 2023/24 68 Sustainability Working towards diversity, equity & inclusion Ambition Promote equality and inclusion for all and continue our work to ensure that Ambu remains an inclusive, equal and diverse place to work Ambu wants to be the employer of choice for the talent in our industry. Alongside other ini- tiatives, this means developing an inclusive and equitable work environment for a highly diverse workforce. We hold integrity high in all we do, and this is part of our company values and a cor- nerstone in the way we operate, both in the market, but also towards our people, who, we believe, should be empowered and valued as equals in a safe space. Target 40% representation of the underrepresented gender in other management of Ambu A/S (Parent Company) in 2023/24 As we operate in a global environment, we recognise that a diverse and inclusive work- ing environment will mean different things for different sets of employees. We therefore approach this through a mixture of global and localised initiatives, including, but not Governance Governed through the Ambu Code of Conduct and our Global Diversity, Equity & Inclusion Policy, as well as our Labour & Human Rights Policy Annual report 2023/24 69 Sustainability limited to, being a signatory to the United- Nations’ Women’s Empowerment Principles (UN WEP) and ensuring an accessible work- ing environment across all our sites. Targets and progress Ambu workforce, we achieved a gender split of 37% men and 63% women. and identifying talent from a holistic per- Over the past financial year, Ambu continued to deliver on our commitment to ensuring a truly diverse workforce, as well as to uphold- ing our target of 40% representation of the underrepresented gender across other man- agement in our Parent Company. spective through upskilling key hiring teams and focusing on a skill and potential based approach to assessing talent. In 2024/25, we will build on this momentum across the wider approach to talent in the organisation. Ambu is committed to structural equity and inclusion across the organisation.In 2023/24, we built on existing progress within Diversity, Equity and Inclusion with thorough quanti- tative and qualitative analysis. Based on the outcome of this research, we will continue to ensure structural equity across the organi- sation through pay, promotion and develop- ment equity. We live up to our Global Diversity, Equity & Inclusion Policy through employee-driven local initiatives and global strategic In our global employee engagement survey, Ambu scored 4.2 out of 5 on our DEI driver. Based on a range of parameters, we found that we are particularly strong on being an inclusive workforce, and while the cognitive and demographic diversity has improved across the organisation, this continues to be a focus area for us. approaches. Inherently, we believe that a truly inclusive environment is best achieved by encouraging our employees to speak up and take ownership of creating a working environment they feel they belong to, com- bined with executive sponsorship, enabling our employees to feel safe and comfortable in doing so. By the end of the 2023/24 financial year, we achieved a gender split in other manage- ment of 60% men and 40% women in Ambu A/S, of a total of 30 employees, achieving an equal gender distribution. Additionally, we improved the gender split in our Executive Leadership Team (for the Ambu Group), with a split of 57% men and 43% women, of a total of seven members, and across the total Ambu continues to be committed to a bias- free recruitment and promotion process. In 2023/24, we made significant strides in reducing bias in our recruitment process Gender split at Ambu Gender split in the Board of Directors Gender split in the Executive Leadership Team of the Ambu Group Gender split in the other management of Ambu A/S (Parent Company) Gender split in Ambu's global workforce Male Female Male Female Male Female Male Female 67% (71% in 2022/23) 33% (29% in 2022/23) 57% (71% in 2022/23) 43% (29% in 2022/23) 60% (no prior years to compare) 40% (no prior years to compare) 37% (41% in 2022/23) 63% (59% in 2022/23) 2023/24 2023/24 2023/24 2023/24 Annual report 2023/24 70 Sustainability Diversity in management positions Report on the gender composition of the Board of Directors (members elected at the annual general meeting), pursuant to Section 99 b, and on diversity, pursuant to Section 107d, of the Danish Financial Statements Act. Statutory reporting of gender diversity for Ambu A/S Diversity in the Board of Directors (excluding employee-elected) Target 2023/24 2023/24 Total number of members Underrepresented gender (%) Number of genders Number of nationalities Number of age intervals (40-49, 50-59, 60-69) Not required Minimum 28.6 6 33 2 3 3 Board diversity Since Ambu’s annual general meeting in December 2022, the Board of Directors has had two women on the Board. In this context, board diversity refers to members of the Board elected at the annual general meeting. Our ambition is to have at least 28,6% of the underrepresented gender on our Board. With two women on a Board of Directors of six members, Ambu achieved this target in 2023/24, as the underrepresented gender represented 33%. Thus, we have an equal gender distribution in our Board of Directors. Ambu aims for the Board of Directors and top-level management to be representative across genders, nationalities, ages, edu- cation, qualifications, competences and, thereby, perspectives. 2 2 3 As stated in our Global Diversity, Equity & Inclusion Policy, the Board should, as a group, have sufficient knowledge, insight and professional experience to understand Ambu's activities and the risks connected hereto. It is the Executive Management's view that the policies are met, as the criteria on diversity and inclusion has been consid- ered for selection of the Board members in 2023/24 The members of Ambu’s Board of Directors were deemed to possess a wide range of relevant competences in the finan- cial year 2023/24. For an overview of the competences of the Board, please refer to p. 97→. Gender diversity in the other management of Ambu A/S Target 2023/24 2023/24 Total number of members in other management Underrepresented gender in other management (%) Not required 40 30 40 We continuously aim to ensure diversity in our Board and disclose the goals and actual numbers of different genders, nationalities and age intervals in our annual reporting. Our goal is to have genders, nationalities and age intervals represented, and we continue our focus on driving broad diversity in the Board. Target 2027/28 Underrepresented gender in other management (%) Minimum 40 - * Board of Directors refers to members elected by the shareholders at Ambu’s annual general meeting. Other management of Ambu A/S relates to Ambu A/S (Parent Company) and features the Executive Leadership Team (including the Executive Management) and the second management level, consisting of people managers reporting directly to the members of the Executive Leadership Team. Annual report 2023/24 71 Sustainability Gender diversity in the other management of Ambu A/S To maintain our high ambition for diversity in our other management, as well as the aims set forth in our Global Diversity, Equity & Inclusion Policy, we will continually evaluate and improve our practices across all People & Culture activities. Ambu aims not just to have a broad diversity in our Board of Directors, but also to achieve a diverse management and workforce. From a management perspective, we report on gender diversity for both our Group Execu- tive Leadership Team and our other manage- ment level, defined only for Ambu A/S (Par- ent Company. The Executive Leadership Team comprises our top-level executives across the Ambu Group (including our Executive Management). The other manage- ment, cf. § 99b, in Ambu A/S consist of two levels of management. Level 1: The Executive Management and the people who are on the same organisational level as the Executive Management. Level 2: People with employee responsibilities who report directly to the Executive Management. This includes continuing our key initiatives from 2023/24. Among other things, our initi- atives involved closely tracking and reporting measurements of gender diversity, ensur- ing accountability and transparency in our efforts to achieve target representation of the underrepresented gender in our other man- agement. Additionally, we made significant strides in reducing bias in our recruitment process and identifying talent from a holistic perspective. In 2024/25, we will continue to build on this momentum through applying the same prin- ciples in identifying, evaluating and promot- ing talent within the organisation. In 2023/24, we achieved a gender split in other management of 60% men and 40% women in Ambu A/S, of a total of 30 employ- ees. We therefore have an equal gender distribution in our Parent Company. Above all, we are dedicated to continuing our focus on driving diversity, not only at our Board, Executive Leadership Team and other management levels, but across our global organisation. Diversity, equity and inclusion continues to be important at Ambu, and we strive to maintain the equal gender distribution we have achieved. Annual report 2023/24 72 Sustainability Through global approaches, such as, performed at sites reminds people of the correct procedures. Health & safety engagement surveys, AmbuDialogue and our Speak Up – Integrity Line (formerly called Whisteblower Hotline), we ensure a contin- uous feedback loop from our employees on topics, such as, a psychologically safe and inclusive working environment, as well as other aspects related to health and safety. The health and safety officers appointed at our locations are responsible for systematic training, registration and reporting – and for checking that safety procedures adequately match the risk level. In 2023/24, all our pro- duction sites and headquarters organised a Safety Week with comprehensive pro- grammes aimed at raising and enhancing employee awareness of workplace safety. We do this to ensure that our safety man- agement systems and training are tailored to local needs and allows for flexibility that takes local laws and traditions into account. Ambition Ensure safe working conditions for all At Ambu, we monitor the health and safety of our employees through data points for accidents and fatalities, as well as sickness absence. Safety is a top priority, and we take all accidents very seriously. We continuously work to avoid and mitigate the occurrence of accidents, as well as their severity. In 2023/24, we had nine lost-time accidents, which translated to a Lost-Time Injury fre- quency (LTIf) of 0.83, a small decrease from a LTIf of 0.93 in 2022/23. At Ambu, we are committed to ensuring safe and healthy working conditions for all, and we maintain that health and safety include both the physical and mental well-being of our employees. Target 0 fatalities Stay below 2.0 for Lost-Time Injury frequency (LTIf) We believe that our purpose of saving lives and improving patient care through rethink- ing solutions, combined with our values and focus on mental well-being, lead to high job satisfaction and a healthy working environ- ment. As we operate in a global environment with a diverse range of business activities, we recognise that a safe and healthy work environment will vary, depending on the context. We therefore approach this through a mix of global and localised processes and initiatives. * covers Ambu globally Governance While we have no official target for our global sickness absence rate, we monitor our performance closely to ensure that we maintain a healthy working environment that does not contribute to ill health among our employees. Governed through the Ambu Code of Conduct and our Global Inclusion & Diversity Policy, as well as our Labour & Human Rights Policy If an accident does occur, preventive action will be taken to avoid similar accidents from happening in the future. This action includes, but is not limited to, regular risk assessments and updates of safety instructions, as well as briefings on correct procedures and the importance of using the correct personal protective equipment (PPE) when handling certain procedures and machines. Further- more, general safety awareness training During 2023/24, our sickness absence rate across Ambu remained at a stable level at 1.78 similar to the previous year, with a few temporary increases at local level, due to Covid-19, among other things. Lost-time accidents In 2023/24, Ambu had 9 lost-time accidents, which resulted in an LTIf of 0.83 Number of lost-time injuries Number of working days lost Location Production site Office 5 4 33 90 9 LTIs Annual report 2023/24 73 Sustainability GOVERNANCE INFORMATION • ISO 13485 • Medical Device Single Audit Program (MDSAP) • EU Medical Device Regulation (EU MDR) • UKCA (UK Conformity Assessment). expansion of Ambu's urology offering, as it Product quality & safety enables us to serve and support our custom- ers with a wide range of endoscopy needs within urology. In addition, we received Ambition FDA clearance and CE marking for our new generation duodenoscopy solution, Ambu® aScopeTM Duodeno 2 with Ambu® aBoxTM 2, designed for use in ERCP procedures. Our Ambu® aScopeTM Gastro Large together with Ambu® aBoxTM 2 was also cleared by the FDA and obtained CE mark. On the back of these regulatory clearances, we advanced our long-term fondation in gastroenterology (GI). As a producer of medical solutions used by hospitals, clinics and rescue services all over the world, Ambu has a great impact on people’s health and safety. Demonstrate excellence within pro- duct governance and ensure that our products and processes live up to all applicable external regulatory require- ments and are safe and effective MDSAP certification covers the requirements of the US FDA, the Japanese Ministry of Health, Australia TGA, Health Canada and Brazil ANVISA. For training devices, Ambu adheres to ISO 9001 requirements, and our manufacturing site in Xiamen (China) holds an ISO 9001 certification. Our Global Quality Man- agement Review Committee ensures that qua- lity management is anchored and in compliance across Ambu’s functions and operations. The quality management review process ensures top-level management commitment, as well as decision-making and actions related to quality. Quality standards Upholding quality standards in our solutions and processes is our licence to operate and imperative for bringing high-quality products to the market. Ambu must therefore demon- strate excellence within product governance and ensure that our products and processes live up to all applicable external regulatory requirements and are safe and effective. Maintain the highest ethical standards and comply with all applicable laws, rules and regulations, and only use animal testing where no non-animal alternatives are available. Furthermore, if a device manufactured by Ambu or its subsidiaries is deemed to poten- tially affect the safety of patients or users, Ambu will take immediate action to ensure the highest standards of safety and com- pliance. This includes conducting thorough investigations to identify the root cause, collaborating with regulatory authorities to provide transparent and timely updates and implementing corrective measures to pre- vent future occurrences. Governance The Ambu Quality Management System (QMS) covers all aspects of our operations, including management responsibilities, design control, risk management, process- and production controls, as well as product surveillance, and ensures that Ambu com- plies with all applicable regulatory require- ments. Ambu’s QMS is certified according to: Targets and progress Governed through Ambu's Quality Policy and the Global Quality Management Review Committee, as well as Ambu’s Ethics Committee and Ambu's Global Animal Testing & Clinical Trials policy In 2023/24, we achieved several significant milestones that allow us to further revolution- ise the field of single-use endoscopy. Ambu received CE marking and FDA clearance for our single-use ureteroscopy solution as well as for our HD cystoscopy solution.This represents a significant milestone in the Annual report 2023/24 74 Sustainability Substances of concern needle electrodes have been sterilised exclusively with the emission-reduced EO recipe since Q3 in the 2022/23 financial year, marking a complete shift from conventional methods. Ethylene oxide (EtO) The Ethylene Oxide (EO) Emission Reduction initiative by Ambu, launched in May 2022, aimed to develop a more sustainable sterili- sation method for our products. The initiative focused on reducing the concentration of ethylene oxide (EtO) without compromising sterilisation effectiveness. Ambu’s endoscopes have also seen a shift towards emission-reduced EO, with two sterilisation partners adopting the recipe. By Q3 2023/24, it is forecasted that 52% of our endoscopes would be sterilised using emission-reduced EO, with plans to further increase this ratio, as Ambu aims to imple- ment emission-reduced EO, or other sustain- able methods, for all sterilised products in the future. In collaboration with Malaysian and US partners committed to emission reduction, Ambu qualified and validated a new sterili- sation recipe for all products sterilised with EtO, including endoscopes and needle elec- trodes. The results were significant: As such, Ambu’s emission-reduced EO initi- ative represents a significant stride towards sustainability in the medical device industry. aScopeTM endoscopes in Mexico: Imple- mented the emission reduced EO recipe from primo January 2023. PFAS aScopeTM endoscopes in Malaysia: Recorded a 37-45% reduction since January 2024. Ambu recognises and takes active part in the global initiatives to eliminate PFAS from medical devices, due to concern for their impact on human health and the environ- ment. During the ongoing investigation, it was confirmed that no regulated PFAS were identified in our products. Needle electrodes: Achieved a 36-42% reduction in EtO use since March 2023. The transition to emission-reduced EO recipes led to a substantial decrease in EtO usage, benefiting the environment and the safety of the products. For instance, Ambu’s Animal testing & clinical trials Animal testing and clinical trials for clinical investigations are important elements in Annual report 2023/24 75 Sustainability bringing solutions to market and are, in some Clinical investigations Our approach Biosafety and pre-clinical testing situations and in certain countries, required during research and development to demon- strate the safety and effectiveness of a solu- tion, as part of the regulatory authorisation process, or to further substantiate the perfor- mance of the product in a real-world setting. All of Ambu’s clinical investigations are con- ducted in accordance with our ethical princi- ples, as well as international standards and local regulatory requirements. Clinical investi- gations, both completed and terminated, are registered at Clinicaltrials.gov and published within 12 months from the last patient primary endpoint, according to Clinicaltrials.gov’s pub- lication principles. We did not run any clinical investigations in 2023/24. to animal testing Animal trials 25% Chemical characterisation studies Replace Use an alternative to animal testing whenever possible 46% Ambu is committed to only using animal testing where no non-animal alternatives are available, or when regulatory bodies, such as the FDA, do not accept the non-animal alternatives. When animal testing is required, we follow all applicable laws and regulations, as well as the Triple R’s Principle. This means that we will 'Replace, Reduce and Refine' ani- mal studies used for biocompatibility testing, without compromising patient safety and regulatory requirements whenever possible. Reduce Total Minimise the number of tested animals, while still obtaining scientifically valid results 41 29% In-vitro studies Refine Evolve experimental procedures to minimise the stress, suffering or discomfort of animals Animals used for biosafety and pre-clinical testing Other animals (rabbits, dogs, pigs) Ambu aims to replace animal trials with in-vitro studies or chemical characterisation tests, which in 2023/24 accounted for 75% of a total of - 41 studies, of which 10 or 25% were animal trials. These trials involved 117 animals, of which 85% were rodents (mice, rats, guinea pigs) and 15% were other animals (rabbits, dogs, pigs). The number of animals used has increased, compared to the previous year, due to increased R&D activities. During the deve- lopment phase, two animal tests were run, with a total of five live pigs, testing specific performance parameters. 15% Total 117 85% Rodents (mice, rats, guinea pigs) Annual report 2023/24 76 Sustainability on three pillars: prevent, detect and respond. It is based on an extensive internal set of rules: The Ambu Code of Conduct defines the basic principles and standards of beha- viour that must be observed by all employ- ees in the company units and in relation to third parties, external partners and the pub- lic. In addition, there are extensive internal compliance regulations, including associated controls, which oblige all Ambu employees to ensure the implementation of the CMS. They contain topic-specific implementation regulations for the individual risk areas with regard to compliance processes and tools, as well as additional guidelines and infor- mation. The system allows us to continu- ously monitor and evaluate our compliance efforts and ensure that we adhere to all the standards set for us within healthcare sys- tems globally, and that there is consistency and authenticity in the way we work. The entire CMS is continually adapted to busi- ness-specific risks and various local legal requirements. The findings from compliance risk management and compliance controls and audits are used to derive measures for further development of the CMS. Business ethics & integrity As a global company with a long history in the medical device industry, we promote business ethics and compliance and act with integrity. This is what our stakeholders expect of us and what is needed for us to retain our licence to operate and safeguard our business. Ambition Maintain the highest ethical standards by carrying out our business honestly, fairly, ethically and openly, while complying with all applicable laws, rules, regulations and local customary practices Our business activities are subject to nume- rous national legal systems, as well as vari- ous political, social and cultural frameworks that are constantly changing. Navigating the complex landscape of local laws, rules, legislation and customs requires a high level of due diligence and processes to ensure compliance and ethical business conduct in our engagement and interactions with stake- holders. We continuously work to ensure that we are not complicit in any forms of corruption, as we enter new contexts where we cannot automatically expect the same standards. Target 100% completion rate on employee online training course in our Code of Conduct Governance Governed by the Ambu Code of Conduct Our compliance management system (CMS) is designed to ensure that our worldwide business practices comply with internal and external rules, and it provides a framework for compliant behaviour. Our CMS is based Resting on the foundation of the Ambu CMS, individual compliance programmes ensure we act with integrity in everything we do, as we continuously carry out risks assessment which provides basis for development of Annual report 2023/24 77 Sustainability action plans and targets, implementation, evaluation and trainings, among others. With the adoption of the Corporate Sustainability Due Diligence Directive (CSDDD), we will work on further updating the system to meet the future requirements. the rebranding of our Whistleblower Hotline – now the “Speak up – Integrity Line” – whose new name reflects our dedication to inte- grity and encourages employees to voice any concerns they may have regarding unethical behaviour or violations. Ethical marketing practices As the production of medical devices requires interaction and collaboration with healthcare professionals (HCPs) to ensure safe and efficient devices that meet the requirements and needs of the market, Ambu has an ethical responsibility to ensure that this is not perceived as an improper inducement for positive evaluation and pro- motion of our products. To ensure this, we do our utmost to ensure openness and trans- parency, also to protect the HCPs with whom we interact. These include our customers and key opinion leaders in the industry. To anchor compliance and integrity in the organisation, all employees are trained in our Code of Conduct, which contains the basic principles and rules for ethical business conduct within Ambu, and in relation to our employees, external partners and the gene- ral public, covering various topics, including business ethics and compliance, diversity and inclusion, health and safety, as well as human rights and labour standards. In 2023/24, 99% our in-scope employees completed the online training course in our Code of Conduct, and we continued the implementation of our local training sessions for our blue-collar employees. Anti-corruption and bribery Ambu has zero tolerance towards any form of bribery and/or corruption, and it is our policy to comply with all applicable anti-bribery and anti-corruption laws. Furthermore, we strive to only work with third parties who maintain the same policy. Ethical marketing promotion risks are identi- fied as part of our Enterprise Risk Manage- ment (ERM) framework. The risks are man- aged as part of our healthcare compliance procedures, and approval of marketing material is integrated in our internal quality management system to ensure compliance with relevant regulations. Our internal train- ing and guidelines for interactions with HCPs help our sales and marketing employees in their daily work and strengthen our global and local marketing policies and procedures. Internal monitoring, as well as our Speak Up – Integrity Line, help us detect and investigate non-compliance incidents. In 2023/2024, we launched the Ambu Code of Conduct Campaign with the theme “Inclu- sive, diverse and respectful workplace for all employees” which included a re-launch of our Ambu Code of Conduct and our Code of Conduct for Business Partners, which have both been updated to follow with new deve- lopments in legislation, as well as expecta- tions and requirements from stakeholders. During the campaign, our employees parti- cipated in local sessions, facilitated by their managers, focused on maintaining respect- ful interactions and understanding the Code of Conduct training completion Through annual training of our employees on our Code of Conduct, we ensure that each and every one of us is prepared to act with integrity in our business conduct and know how to avoid the risks of corruption and bri- bery. Together, our Speak Up – Integrity Line, Business Partners Integrity Due Diligence Process and Responsible Supplier Program contribute to our work to prevent and detect the risks of corruption and bribery in our operations. 2023/24 importance of diversity in driving innovation and success. The campaign also revealed 99% (99% in 2022/23) Annual report 2023/24 78 Sustainability Speak Up – Integrity Line All employees, customers, business partners and stakeholders, within Ambu and along our supply chain, are strongly encouraged to act promptly when faced with suspicions or concerns about criminal offences, viola- tions of Ambu’s Code of Conduct or policies, human rights and/or environmental viola- tions or other serious violations of laws or regulations that govern Ambu’s operations. Via the Speak up – Integrity Line (formerly known as the Ambu Whistleblower Hotline), Ambu provides protected reporting chan- nels for all employees, customers, business partners and stakeholders within Ambu and along the supply chain to raise serious con- cerns about misconduct and improper man- agement, including fraud, bribery, serious breaches of occupational health and safety standards, human rights and/or environmen- tal violations and serious issues directed towards individuals, such as, discrimination, violence or sexual assault, or serious viola- tions of local policies. In addition, possible misconduct can also be reported directly to the Global Risk & Compliance Officers, another member of management, line ate retaliation against any individual who, in good faith, reports misconduct or violations or who participates in an investigation. employees generally feel comfortable speak- ing up, we aim to ensure that relevant issues are reported to the Speak Up – Integrity Line. To further expand the reach of the Speak Up - Integrity Line, we are planning to roll out an initiative in our supply chain with the aim of further cementing the system as a grievance mechanism for workers in our supply chain to raise concerns. Ambu’s Speak up – Integrity Line received 15 reports in 2023/24. All reports, except one, fell within the scope and were investigated. Three reports related to data privacy and IT security. Three reports concerned conflict of interest, one case involved theft, and five reports dealt with discrimination and harass- ment. Finally, one report concerned business practices and one employee treatment. All cases were thoroughly investigated and handled according to Ambu whistleblower procedure. Additionally, one case involving a violation of internal policies related to data privacy and IT security was substantiated and resulted in termination of employment. Governance of the Speak Up – Integrity Line managers, Global or local People & Culture personnel and/or Global or local Legal. The governance of Ambu’s Speak Up – Integrity Line is two-fold. Our Hotline Committee serves as a Our Speak up – Integrity Line provides a global, accessible channel for reporting con- cerns and is available 24 hours a day, 7 days a week. It is independent (hosted externally by an independent third party), secure and confidential, guaranteeing a safe mechanism for anonymous reporting (where permitted by local law) of suspected concerns or poten- tial violations. Moreover, Ambu has a clear anti-retaliation policy. Ambu does not toler- decision-making secretariat for handling whistleblower reports. All reports generated in the system are forwarded to the Global Risk & Compliance team and then reported to the C-suites, CFO and Audit Committee. This ensures that all whistleblower reports are handled properly and brought to the attention of the appropriate management level. Despite receiving fewer reports to the Speak Up – Integrity Line than the industry bench- mark, the number of reports increased by 36% in comparison to the last year. Our ongoing efforts include annual campaigns and awareness initiatives among employees and external stakeholders. We are enhanc- ing collaboration across the business to streamline concern-raising processes. While Annual report 2023/24 79 Sustainability operations. Ambu is aware that this may be different when it comes to suppliers. Protection of human rights and labour rights Through our Responsible Supplier Pro- gram, we track our suppliers' commitment within the scope of our Code of Conduct for Business Partners by monitoring the rate of signage. Ambu has a team that carry out due diligence of relevant business partners, suppliers and other relevant parties. Due diligence includes business ethics, human rights, environment, etc., and include all suppliers above a minimum threshold, covering the majority of our total spend and all distributors, agents, etc. Due diligence is carried out based on relevant information from and about the external partner, use of external ESG and compliance databases, as well as screening of other public forums. The result of the due diligence process contains concrete recommendations for mitigations if needed. Mitigation activities can include follow up questionnaires, on-site visits and audits, and will always include an improve- ment plan. Ambu respects the internationally recog- nised human rights of all people, and we are committed to identifying and addressing any adverse impacts which may result from our own operations or business relationships. Conflict minerals Ambu is committed to responsible sourcing of conflict minerals in our supply chain and to complying with applicable requirements. Our commitment to respecting human rights is anchored in our Ambu Code of Conduct, which, together with our Human & Labour Rights Policy, supports the principles con- tained within the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the UN Guiding Principles on Business and Human Rights. To ensure this, Ambu carries out due diligence processes that include the reviewing of raw materials for potential content of conflict minerals used in our products. Where relevant, CMRT (Conflict Minerals Reporting Template) documentation is provided, and we issue product statements that our raw materials in specific products are not known to be sourced from conflict areas. preparations for compliance. However, with the delay in the implementation of this new EU Directive, we decided to postpone our initial plans and focus on strengthening our existing programs and processes. expand beyond inherent business risks and thereby include human rights risks, among others. In addition to promoting ethical and envi- ronmentally sound actions, we recognise the importance of assessing, monitoring and taking action to protect human rights in our own operations, as well as our value chain. Due to the nature of Ambu produc- tion and the skills needed to operate, the risk of forced labour and child labour are not considered material within Ambu’s direct Any individual, either inside or outside of Ambu, can report suspected human rights violations anywhere in the world using the Ambu Speak Up – Integrity Line. Next financial year we plan to perform a human and environmental impact assess- ment together with the development of a due diligence policy and responsible purchasing practices as part of our preparations for the CSDDD. As we lay the foundation for complying with the new requirements of the CSDDD as well as CSRD, we have updated our Enterprise Risk Management (ERM) framework to While we expected the CSDDD to enter into force this year, we had started our initial Annual report 2023/24 80 Sustainability diligence process, Ambu and the supplier will agree and collaborate on the required improvements, rather than simply terminat- ing the collaboration. and labour standards, as well as the environ- ment, energy and climate and anti-corruption. Responsible supplier management 98% of suppliers in scope have signed our Code of Conduct In 2023/2024, we conducted two supplier audits in China that focused on key areas of responsible business practices throughout the supply chain, including ethics, human rights, labour, environment and health & safety. None of the audits revealed signif- icant findings related to the mentioned aspects that would require addressing. Our Responsible Supplier Program, coup- led with our Code of Conduct for Business Partners, is developed to ensure that our suppliers not only address quality and cost requirements, but also a wide range of sus- tainability and integrity considerations, such as, business ethics, human rights and labour standards, as well as environmental impact and awareness. Supplier due diligence is conducted on an ongoing basis, with revi- sion and repetition of the exercise every 2-3 years, based on the current risk profile. New suppliers enter the program through the sup- plier onboarding processes. As a multinational company, we believe that we can make a difference in our global sup- ply chain. As part of achieving our sustaina- bility goals, close collaboration with our sup- pliers is essential to foster the sustainability of our end-to-end supply chain. As Scope 3 emissions cover 91% of our total emissions, Ambu is reliant on our many suppliers in order to achieve our emission reduction goals and approach net-zero emissions. Ambition Work with and support suppliers that share our commitment to sustainability and responsible business practices Further, we updated our Code of Conduct for Business Partners which now outlines the relevant international standards, reporting channels and grievance mechanism (Speak Up - Integrity Line), as well as aspects related to remedies and continuous improvement. Target Therefore, we aim to work with and sup- port suppliers that share our commitment to sustainability and responsible business practices. In addition to signing the Ambu Code of Conduct for Business Partners, our suppliers are subject to risk assessment, as we audit selected suppliers and describe and implement mitigation measures, if appli- cable and necessary, which are validated together with the supplier. This means that if a potential issue is identified during the due 98% rate of signage of Code of Conduct for Business partners by suppliers in scope
We continue our preparations to ensure compliance with new and upcoming regula- tions, such as, the CSDDD and US measures addressing supply chain compliance as well as other multilateral efforts in relation to economic sanctions in response to con- cerns about human rights and forced labour. The goal of all these activities is to reduce or eliminate human rights-related risks and ensure supply chain stability, while providing our customers with high-quality products. In 2023/2024, we continued to strengthen our responsible supplier program to conform to its increasing importance to our other priori- ties related to environment and human rights, among others. We continued the roll-out of self-assessment questionnaires included in our due diligence processes to include a wider range of questions on human rights Governance Governed through the Ambu Code of Conduct and the Code of Conduct for Ambu Business Partners, as well as the Ambu Global Procurement Policy and our Sustainability Engagement Policy Code of Conduct signed by suppliers in scope Target 2023/24 2022/23 Rate of signage (%) 98% 98 93.4 The rate of Code of Conduct signage for * Suppliers in scope are all A, B or C suppliers, regardless of spend volume, and D suppliers with a yearly spend above DKK 250,000. business partners increased to 98% this year. Annual report 2023/24 81 Sustainability Targets and progress Our information and cybersecurity strategy are aligned with the NIST CSF and ISO 27001/27002 security frameworks. In the context of NIS2-Directive, Ambu has under- taken collaborative efforts across business functions and IT to comply with the statutory requirements. These efforts have resulted in a focused range of initiatives designed to meet the NIS2 requirements. Cyber and data security We aim to secure that it remains a business priority to maintain our operations and pro- tect our intellectual property at Ambu, with a focus on safeguarding our business value and our customers. Ambu’s security-organi- sation continues to address security threats by strengthening our capabilities in terms of risk management, regulatory compliance and improved awareness across our organ- isation. These measures are continuously improved to ensure we avoid business dis- ruption and to protect our information from being compromised. Ambition Maintain robust cybersecurity, embedded throughout the organisation. Cyberthreats are evolving constantly, with information and cyber security becoming increasingly necessary in the digitalisation era. Technology moves very fast, and we must ensure we continuously guard against and prepare for cyberattacks by staying up to date with security best practices, tools and technologies. In addition, information secu- rity and cybersecurity regulations are expand- ing internationally, and security is becoming part of our licence to operate. Our customers are also increasingly focused on how we pro- tect them and how we protect our products from tampering, attacks and breaches. As part of the security journey, Ambu employees receive annual cybersecurity training, to foster a security-conscious mind- set among employees, promoting vigilance and proactive risk management. Ambu will launch a new advanced security training platform to ensure that security targeted trainings are effectively addressed. Governance Governed through Ambu’s Information Security Policy, which is the overarching policy for information security and cybersecurity. Our privacy statement further describes how information about individual persons may be collected, used, disclosed, transferred and stored by Ambu. All Ambu employees are trained annually in cybersecurity and are regularly provided with alerts and periodic information on impor- tant and pertinent topics related to security through, for instance, specific campaigns and phishing simulations. This creates a cadence of responsibility throughout the organisation concerning the importance of this topic. We recently conducted several phishing simulations and information cam- paigns to increase the awareness of cyber threats and the need to be careful and vigi- lant when interacting and communicating in the digital space. The new EU-regulation, NIS2 directive (Net- work and Information Security), is expected to come into effect by July 2025. This NIS2 directive aims to enforce cybersecurity posture and capability across all EU mem- ber state countries in organisations that are supplying the public and society with critical functions. This directive requires companies, like Ambu, to understand how and to what extent the legislation dictates further efforts. As a supplier of vital healthcare equipment to our customers and the society, Ambu takes this responsibility very seriously. Data Ethics It is Ambu’s policy to maintain the highest ethical standards and comply with all applicable data and privacy laws and regulations. Our work with data ethics is governed by the data ethics policy, as well as internal policies and standard operating procedures. Please go to Ambu.com/data ethics for more information on our Data Ethics Policy, prepared in accordance with Section 99d of the Danish Financial Statements Act. Annual report 2023/24 82 Sustainability ESG & SUSTAINABILITY DATA COLLECTION We are committed to enhancing ESG & sus- tainability data collection and reporting to support the business and provide stakehold- ers with transparent, relevant insights. To ensure transparency, we provide a detailed overview of ESG and sustainability indicators on p. 83→. New ESG & sustainability indicators: Due to changes in the requirements for reporting of the gender composition of management, cf. Section 99b, applicable from 1 January 2023, Ambu has revised the indicators for reporting on gender diversity. This means that, going forward, Ambu will report on gen- der diversity in the management of Ambu A/S on two levels: Discontinued ESG & sustainability indica- tors: Due to the aforementioned changes in the requirements for reporting of the gender composition of management, Ambu will dis- continue reporting on the following: Ambu has revised the governance indicators for GDPR and cybersecurity trainings com- pletion percentage. This means that we will no longer report on the following: • GDPR training (%) . • Cybersecurity training (%) • Women in management, all employees • Women in management, white-collar employees During 2023/24, there were no mergers or acquisitions impacting ESG & sustainability data. Revised ESG & sustainability indicators: As part of our preparations for compliance with the CSRD, Ambu has decided to change the unit of measurement for our own work- force from full-time equivalents (FTE) to headcount. This means that all calculations, including number of employees, will apply headcount instead of FTE as the unit of measurment going forward. Previous years' data will not be restated and cannot be compared. • Women on the Board of Directors • Women at other management levels in Ambu A/S, consisting of the Executive Leadership Team (ELT) and their direct reports, both contracted at Ambu A/S. Due to the major update of our GHG inven- tory, Ambu will discontinue reporting on: Revised ESG & sustainability indicators • Scope 1 and 2 per tonne of manufactured- products (location- and market-based) • Scope 1 and 2 per DKKm revenue (loca- tion- and market-based) During 2023/24, Ambu undertook a signifi- cant review of our ESG indicators to prepare for the forthcoming Corporate Sustainability Reporting Directive (CSRD) reporting stand- ards. This process led to the introduction of new indicators, the discontinuation of out- dated ones and the revision of several exist- ing indicators, with data restated as needed, to maintain accuracy and ensure compara- bility over time. Indicators affected by restatement are marked with numerated footnotes on p. 83→. If the update has resulted in material changes to the data collec- tion or the indicators, a note on the change and its effect is provided on p. 85→-p. 89→. Due to the major update of our GHG inven- tory, Ambu will going forward report on: While, we discontinue segregated reporting on: • Total GHG emissions (market-based) • Total GHG emissions per tonne of manu- factured products (market-based) • Total GHG emissions per DKKm revenue (market-based) Indirect blue-collar employees and their voluntary turnover is now merged together with white-collar employees into the new metric called 'White-collar and indirect blue-collar employees'. • Emissions from natural gas and LPG • Emissions from petrol and diesel • Emissions from refrigerants we still report on these emissions as a part of total Scope 1. • Scope 3 • Energy from hybrid fuels Annual report 2023/24 83 Sustainability FIVE-YEAR ESG & SUSTAINABILITY PERFORMANCE 2023/24 2022/23 2021/22 2020/21 2019/20 2023/24 2022/23 2021/22 2020/21 2019/20 Waste (metric tonnes)4 Total waste Greenhouse Gas Emissions1 (Metric tonnes CO2e)
-market-based 3,379 220 1,761 1,398 52.0 0.8 2,788 222 1,320 1,247 46.0 1.1 3,007 254 1,291 1,461 43.0 0.5 2,532 159 1,013 1,360 40.0 0.6 2,276 55 937 1,284 41.0 - Waste sent to incineration Waste sent to recycling Waste sent to landfill Waste recycled (%) Hazardous waste (%) Total GHG emissions Total GHG emissions per tonne of manufactured products
Total GHG emissions per DKKm revenue Scope 1 209,157 160,923 179,850 166,718 - 16,7 38.8 3,369 15,5 33.7 3,945 16,7 40.5 5,047 16.0 41.5 4,346 - - 957 Scope 2
Scope 2 (location-based) Scope 1 + 2 Scope 1 + 2 (location-based) Scope 3 15,400 23,173 18,769 26,541 190,388 16,168 21,202 20,113 25,147 140,810 16,904 21,912 21,950 26,959 157,899 20,106 19,628 24,452 23,974 142,266 Gender diversity (%) 18,249 Women in workforce7 63.0 40.0 59.0 - 57.0 - 57.0 - 60.0 - - 19,206 - Women in the other management positions3 Women on Executive Leadership Team of Ambu Group Women on Board of Directors5,6 43.0 33.0 29.0 29.0 42.0 20.0 33.0 20.0 25.0 17.0 Energy consumption (GJ)2 Total energy consumption 219,619 30,005 14,880 6,765 159,609 5,500 2,859 25.0 214,303 33,468 21,159 6,495 144,971 5,319 2,890 18.0 26.0 227,082 52,676 16,382 5,927 143,298 5,262 3,538 17.2 201,973 47,493 15,654 4,950 124,819 5,501 3,556 2.8 138,411 16,947 1,324 - 116,978 179 2,982 0.1 0.2 Employee turnover rate (%)7 All employees Voluntary turnover White-collar & indirect blue-collar employees Voluntary turnover Blue-collar employees Voluntary turnover Energy from natural gas and LPG Energy from petrol and diesel Energy from hybrid fuels for hybrid cars Energy from electricity from grid Energy from electricity from solar panels Energy from district heating 23.0 20.0 15.0 11.0 31.0 29.0 30.0 25.0 23 16 38.0 33.0 34.0 30.0 - 20.0 17.0 15.0 - - - - - - - - - - 45.0 42.0 Renewable energy share (%) Renewable electricity share (%) Employee health & safety Fatalities (number) Lost-time Injury frequency (per million hours worked) 34.0 26.1 4.2 0 0 0 0 0 Water consumption (m3)3 Total water consumption 122,392 115,850 125,390 141,863 123,115 0.83 1.78 0.93 1.79 0.92 2.29 1.07 1.76 1.44 1.76 Sickness absence rate (%) 1 All indicators in the section related to GHG emissions in FY 2022/23, FY 2021/22 and FY 2020/21 have been restated, due to improvement of GHG inventory, data quality and data sources, change in calculation methods and change of emission factors. Read more on p. 82→-p. 86→. E-learning completion rate (%) Code of Conduct training 2 All indicators in the section related to energy consumption in FY 2022/23, FY 2021/22 and FY 2020/21 have been restated, due to improvement of ESG inventory, data quality and data sources, change in calculation methods and change of energy intensity factors. Read more on p. 82→-p. 86→. 99.0 99.0 99.0 100.0 - 5 Persuant to 99b and reported only for the employees with contractual relationship with Ambu A/S. The term "Women on Board of Directors" refers to members elected at the annual general meeting (AGM). 3 4 All indicators in the section related to water consumption in FY 2022/23, FY 2021/22 and FY 2020/21 have been restated, due to improvement of ESG inventory, data quality and data sources, change in calculation methods. Read more on p. 82→-p. 86→. All indicators in the section related to waste in FY 2022/23, FY 2021/22 and FY 2020/21 have been restated, due to improvement 6 7 Indicators are affected by the change from full-time equivalent (FTE) to headcount (HC), but are not restated. of ESG, data quality and data sources, change in calculation methods. Read more on p. 82→-p. 86→. Years with no data ("-") reflect that data collection for that specific indicator did not take place at that point in time. Annual report 2023/24 84 Sustainability ACCOUNTING PRACTICES Reporting standards control mechanism. Specifically, data owners are requested to ensure the four-eye princi- ple to include another colleague for control/ quality assurance of data. Data owners are also required to provide an explanation for significant developments of +/-5% in the data reported. Restatement policy indicators, prior-period data will be restated to ensure consistency and comparability. The nature of the reason for restatement and the change, along with the impact on previously reported data, will be disclosed. Key ESG data follows the recommendations as per “ESG key figures in annual reporting”, prepared by the Danish Finance Society/CFA Society Denmark, FSR – Danish Auditors and Nasdaq Copenhagen, with assistance from the Centre for ESG Research. Deviations of the standards will be described. Materiality threshold Restatements of ESG metrics or indicators will only be made when the identified error or change materially affects the reported performance or may influence stakeholders' decision-making. As indicators are different in their nature, it is not always possible or relevant to set a fixed numerical threshold. Materiality will therefore be assessed based on quantitative and qualitative factors for each of the individual indicators. Frequency of restatement Factors that can trigger restatements will be reviewed and, if deemed material, issued on an annual basis during Ambu's ESG report- ing cycle, and will be reflected in the relevant sustainability or integrated reports. Reporting scope Our materiality assessment, conducted in alignment with the Global Reporting Initia- tive’s (GRI) Reporting Principles, serves as the foundation for determining the content of this report. The double materiality assess- ment conducted this financial year, in line with CSRD requirements, closely overlaps with our GRI-based assessment; however, it was not used to determine the scope of this report. Unless otherwise stated, the data and report- ing included in the ESG & sustainability performance tables cover the entire Ambu Group. Specifically, the scope of ESG data covers: four production sites, headquarters, R&D and sales offices, as well as warehouses owned or controlled by Ambu. It also covers all company cars owned or leased by Ambu. In the financial year 2023/24, Ambu opened a new R&D office in Penang, for which con- sumption of electricity, water and waste is accounted for in 2023/24 for the first time. Ambu also opened two new warehouses in Penang and India. Here, we have estimated electricity, water and waste consumption for 2023/2024, using the same approach as for sales offices, see p. 88→. Disclosure of restatement Restatement triggers All restatements will be clearly disclosed in the relevant ESG reports, including the reason for the restatement, the nature of the changes and their impact on previously reported data. This will ensure transparency and accountability in Ambu’s ESG reporting. A restatement may be triggered by factors, such as, changes in methodology, baseline revisions, improved data quality, error cor- rections, or mergers, acquisitions and dives- ments. However, these factors will not result in a restatement if the old metric is replaced by a new metric that is calculated differently in terms of both data input and output, or if the company decides to implement a new reporting standard that mandates calcu- lation or reporting of metrics in a different way to that currently established - if deemed immaterial. If there is a change triggered by any of these factors used to calculate ESG The reporting period is 1 October 2023 to 30 September 2024. Recalculation of GHG emissions In connection with our submission to SBTi, we have formulated a policy for recalculating the base year, in alignment with criteria 26 and criteria 27 of the SBTi criteria v.5.1. Controls Our sustainability reporting manual is a core element of our annual reporting cycle. It defines the reporting rules, processes and responsibilities for ESG & sustainability reporting at Ambu, including a two-tier Recalculation of the base year is thus trig- gered by significant changes in company Annual report 2023/24 85 Sustainability structure, such as, acquisitions, divestments, etc. Recalculation is also triggered if data sources or calculation methodologies are updated, resulting in significant changes. This might for example be improving data quality by using physical units instead of monetary units, as a basis for calculating emissions or the discovery of significant errors that would result in + - 5% variance. Discussion of new versus old disclosures emissions. These improvements reflect our ongoing commitment to enhancing the accu- racy of our GHG accounting and reporting. and diesel decreased from 24,949 GJ to 21,159 GJ, due to distinguishing fuel con- sumption for hybrid-based company cars as a separate indicator. Energy from electricity from the grid increased slightly from 144,771 GJ to 144,971 GJ. Energy from electricity from solar panels remained the same at 5,319 GJ. Energy from district heating remained the same at 2,890 GJ. The updated Scope 1 and Scope 2 figures are higher than previously reported, reflecting enhanced inventory completeness by includ- ing estimates for previously unaccounted offices and other parts of the inventory, while at the same time, removing emissions from gasses that do not belong to the Kyoto Protocol. In addition we changed and stand- ardised emission factors source to IEA latest available version, see p. 83→. The revised Scope 3 figures are lower, due to several key factors. We refined our data sources and excluded emissions that are out of scope. For Categories 1, 2, 4 and 6, revised and audited financial data was used, while for Category 11 and 12, we incorporated improved prod- uct weight data. Additionally, for Category 11, emissions from sold products that indi- rectly use energy were removed, as per SBTi requirements, since they fall outside Scope 3 boundaries. We also applied more accurate and consistent emission factor sets across all categories. Lastly, for Categories 5, 7 and 12, we adopted an updated calculation and estimation methodology, based on newer data sources and industry reports, to improve accuracy. Overall, the application of clear inclusion and exclusion criteria to raw data sets further strengthens the integrity of the data treatment process, ensuring a more precise and transparent calculation of our Restatement descriptions for 2022/23, 2021/22 and 2020/21 are explained in the previous sections of this page and below: In 2022/23, Scope 1 emissions were restated from 3,687 to 3,945 metric tonnes CO2e, reflecting improved data accuracy for In 2023/24, we significantly improved our GHG inventory, data quality, methodology and calculation tools for GHG emission calculations. Specifically, we use third-party specialised GHG protocol compliant soft- ware that provides regularly updated and standardised emission and conversion factors for Scope 1, 2 and 3. While imple- menting new calculation tools, we reviewed the completeness of our GHG inventory, data sources and historical data. This review resulted in a significant improvement of data quality, accounting transparency and calcu- lation methods. We have therefore decided to restate all financial years, starting from the 2020/21 financial year (baseline year) to the 2023/24 financial year. Restated numbers for the last three financial years can be found in the five-year ESG & Sustainability perfor- mance overview on p. 83→. For 2021/22, Scope 1 emissions were restated from 4.832 to 5,047 metric tonnes CO2e, reducing the figure. Scope 2 emissions (loca- tion-based) increased from 19,206 to 21,912 metric tonnes CO2e, as a result of improved accuracy in energy consumption data and changes to IEA emission factors. Scope 2 emissions (market-based) were adjusted from 14,797 to 16,904 metric tonnes CO2e. Scope 3 emissions are not restated as they were not reported, but are calculated to be 157,899 metric tonnes CO2e. Total Scope 1 and 2 emissions (location-based) were restated from 24,571 to 26,959 metric tonnes CO2e, following corrections in Scope 1 and 2 emis- sions. Total Scope 1 and 2 emissions (mar- ket-based) increased from 19,630 to 21,950 metric tonnes CO2e, reflecting updated calcu- lations for both Scopes. Water consumption decreased from 125,549 to 125,390, and total waste decreased from 3,011 to 3,007, while incinerated waste decreased from 346 to 254 tonnes, and waste to recycling increased from direct emissions. Scope 2 emissions (loca- tion-based) were revised from 20,316 to 21,202 metric tonnes CO2e. Scope 2 emis- sions (market-based) increased slightly from 16,083 to 16,168 metric tonnes CO2e. Total Scope 1 and 2 emissions (location-based) were restated from 24,003 to 25,147 metric tonnes CO2e, driven by adjustments in both Scope 1 and 2. Total Scope 1 and 2 emis- sions (market-based) increased from 19,771 to 20,113 metric tonnes CO2e, reflecting corrections in both Scope 1 and Scope 2 figures. Water consumption and total waste remained the same, while incinerated waste decreased from 296 to 222 tonnes, and waste to recycling increased from 1,283 to 1,320, along with waste to landfill from 1,209 to 1,247. In 2022/23, total energy consump- tion increased from 211,398 GJ to 214,303 GJ, reflecting improved data accuracy. Energy from natural gas and LPG remained the same at 33,468 GJ. Energy from petrol Annual report 2023/24 86 Sustainability 1,246 to 1,291, along with waste to landfill from 1,419 to 1,461. In 2021/22, total energy consumption increased from 224,343 GJ to 227,082 GJ. Energy from natural gas and LPG decreased slightly from 52,704 GJ to 52,676 GJ. Energy from petrol and diesel decreased from 19,863 GJ to 16,382 GJ, due to distin- guishing fuel consumption for hybrid-based company cars as a separate indicator. Energy from electricity from the grid increased from 142,976 GJ to 143,298 GJ. Energy from elec- tricity from solar panels remained the same at 5,262 GJ. Energy from district heating remained the same at 3,538 GJ. tonnes CO2e, reflecting corrections in both Scope 1 and 2. Total Scope 1 and 2 emis- sions (market-based) were revised from 22,834 to 24,452 metric tonnes CO2e, incor- porating adjustments across both Scopes. Water consumption increased from 137,115 to 141,863, and total waste increased 2,429 to 2,532, while incinerated waste increased from 146 to 159 tonnes, and waste to recy- cling increased from 968 to 1,013, along with waste to landfill from 1,315 to 1,360. In 2020/21, total energy consumption increased from 199,927 GJ to 201,973 GJ. Energy from natural gas and LPG decreased from 47,634 GJ to 47,493 GJ. Energy from petrol and diesel decreased from 18,865 GJ to 15,654 GJ, due to distinguishing fuel consumption for hybrid-based company cars as a separate indicator. Energy from electricity from the grid increased from 124,371 GJ to 124,819 GJ. Energy from electricity from solar panels remained the same at 5,501 GJ. Energy from district heating remained the same at 3,556 GJ. These restatements ensure more accu- rate and transparent reporting of Ambu’s greenhouse gas emissions across all years. and updated inventory, enabling consistent comparisons over time. • Refilling of refrigerants from air condition- ing and ventilation units. Environmental indicators Scope 2 covers indirect GHG emissions from the generation of electricity and heat, including renewable energy. The GHG emis- sions physically occur at the facility where the electricity or heat is generated. As from 2020/21, Ambu discloses Scope 2 emissions according to both the market- and location- based method. Greenhouse gas emissions (CO2e) Besides accounting for CO2 emissions, we also include other greenhouse gas emissions. GHG emissions are disclosed in line with the guidelines of the Greenhouse Gas Protocol. Fuel and electricity consumption in our four production sites, one R&D office and head- quarters are based on actual consumption or purchase. Consumption of fuel and electri- city by warehouses, R&D offices, sales offices and related company cars are based on esti- mated data, due to non-accessible data. This year, our renewable electricity share increased to 34%, covering consumption of 15,510 MWh, compared to 26% in 2022/23. This result is driven by the purchase of RECs, covering 99.9% of the electricity consumption at our site in Xiamen, China, and 33% of our electricity consumption at our site in Penang, Malaysia. RECs cover 13,982 MWh or 90% of our total renewable electricity, while our solar panels in Penang, Malaysia, and Ballerup, Denmark, have produced 1,528 MWh and cover 10%. Consumption of electricity used at our sales offices and warehouses is based on a standardised number of kWh per m2. In 2020/21, Scope 1 emissions saw a slight adjustment from 4,329 to 4,346 metric tonnes CO2e, improving the accuracy of direct emissions reporting. Scope 2 emis- sions (location-based) were restated from 18,027 to 19,628 metric tonnes CO2e, due to updates in energy consumption data and changes to IEA emission factors. Scope 2 emissions (market-based) increased from 18,505 to 20,106 metric tonnes CO2e, reflect- ing corrections in energy source data. Scope 3 emissions were restated from 419,783 to 142,266 metric tonnes CO2e, due to signif- icant improvements in the spend dataset, an improved calculation method and con- sistency in emission factors used. Total Scope 1 and 2 emissions (location-based) increased from 22,356 to 23,974 metric Scope 1 covers direct GHG emissions from sources that are controlled by the company. Ambu has the following sources of Scope 1 emissions: • Consumption of natural gas and LPG and diesel to power heat sources or stationary combustion engines • Consumption of fuels, both at production sites and in company cars. As it is not possible to collect complete fuel or driving data for our company cars used by our sales force, emissions are calculated using a standardised yearly driving distance and emissions from an average car. We improved the data quality and complete- ness for energy, water and waste indicators during the GHG review process. Although the changes for these indicators are consid- ered immaterial, we choose to restate them to ensure the figures reflect a comprehensive Scope 3 covers the indirect GHG emissions that occur both up and down the value chain. The emissions disclosed in this report are calculated on data for this financial year, FY 2023/24, covering the period of 11 months, from 1st of October 2023 to 31st of August Annual report 2023/24 87 Sustainability 2024 for categories 6 (supplier data), 11 and 12, while the emissions for the last month of the financial year (September 2024) are extrapolated. For categories 1, 2, 4 and 6, we use the data for the entire year. Rental car for supplier-specific data is extrapolated for the last two months. Categories 3 and 5 are cal- culated based on the entire year consump- tion and estimate, while category 7 is calcu- lated for the entire year, based on the survey that took place in September, covering the reporting period of 11 months and extrapola- tion for employees who did not respond the survey, based on the headcount for Q3. • Direct Purchases: Raw materials, compo- nents, hardware and services essential to Ambu's core business operations. • Indirect Purchases: Goods and services not directly involved in manufacturing or core business processes. • Finished Goods Purchases: Ambu products produced by external suppliers through outsourced manufacturing. vices purchased by Ambu, including inbound logistics, outbound logistics and between own facilities. Transportation of goods from tier one suppliers to Ambu is implicitly included in Category 1 and 2, when the trans- portation is ensured by the suppliers. Category 7: Employee commuting Emissions from employees commuting to Ambu’s entities are calculated based on information provided via a global sur- vey, filled out by employees, depicting the share of employees commuting by private car, Ambu bus and other public means of transportation. This information is applied to extrapolate the emissions for the entire Group, based on the total number of employ- ees as per Q3. Category 5: Waste generated in operations Emissions from the treatment of waste and wastewater generated in operations are calculated based on the actual waste and water data from our production sites and headquarters, together with an estimation of waste and water generated per employee, multiplied with the total number of employ- ees in Ambu sales offices. For waste that is recycled or incinerated with energy recovery, only transportation-related emissions are included, as emissions from the recovery process are considered out of scope. Category 2: Capital goods Capital goods include purchases of manu- facturing machines, IT equipment and other larger purchases that deviate from the pur- chases made in every financial year. Emis- sions are calculated based on monetary data. Category 11: Use of sold products Emissions from the use of products that directly consume electricity are calculated based on sales quantity data. Energy con- sumption has been estimated by consi- dering inputs on the product usage time for different medical interventions that spans between a few seconds to a number of hours, number of single-use products used per unit and maximum usage hours by design. Products that indirectly consume energy are excluded, in accordance with SBTi requirements. Activity data in the shape of monetary data, quantity data, supplier-specific data and estimates are multiplied with relevant emis- sion factors retrieved mainly from UK DEFRA and IEA. In cases where the monetary data is used, emission factors from Exiobase 3.8.2 are applied. Emission factors from other databases are applied only when necessary, please refer to p. 83→. Category 3: Fuel- and energy-related activities Emissions are calculated based on energy consumption data, according to the location- based approach reported in Scope 1 and 2, including electricity, district heating and various fuels used at our production sites, headquarters, sales offices, warehouses and company cars owned by Ambu. Category 6: Business travel Emissions from flights, trains, car rentals and car mileage are calculated using dis- tance data provided by our supplier. Emis- sions from other business travel activities are based on monetary data recorded in Ambu’s procurement management system. Emissions from hotel stays are excluded, in accordance with SBTi requirements. Category 1: Purchased goods and services Purchased goods and services include three types of purchases and are calculated using both quantity and monetary data from: Category 12: End-of-life treatment of sold products Emissions are calculated based on weight data (some of it extrapolated) for sold Ambu products, mapped in categories represent- ing the different material components of product and packaging. For waste that is Category 4: Upstream transportation and distribution Emissions are calculated based on actual well-to-wheel CO2e data from supplier-spe- cific reports and monetary data for all third- party transportation and distribution ser- Annual report 2023/24 88 Sustainability recycled or incinerated with energy recovery, with 93/7 split for incineration with/without energy recovery, only transportation-related emissions are included, as emissions from the recovery process are considered out of scope. Categories 8, 9, 10, 13, 14 and 15 are deemed not relevant for Ambu, due to the nature of the company. In addition, we have performed an estimate of Category 9, for which emissions were deemed to be imma- terial. emissions (Scope 1, 2 and 3), divided by the total metric tonnes of manufactured prod- ucts or DKKm revenue, respectively. Tonnes of manufactured products include packaging and are based on the number and weight of products produced at our factories. Inter- company parts and products are excluded to avoid double-counting manufactured products. Data is extracted from local ERP systems. Revenue is defined as per Note 2.2 on p. 121→. renewable energy from solar panels and RECs of all energy used. Renewable electri- city share is the share of renewable electricity from solar panels and RECs of all electricity used. In 2023/24, we purchased 13982 units (MWh) of renewable energy certificates RECs, covering 34% of our total energy consumption, specifically, 9447 units (MWh) covering 99.9% of our electricity consump- tion at our site in Xiamen and 4,535 units (MWh) covering 33% of our electricity con- sumption at our site in Penang, for which we have obtained invoices and certificates for our RECs, as well as cancellation proof. collectors and divided into total volumes of waste and the various waste treatment methods. Hazardous waste, as defined in the European Waste Directive, is disclosed as a percentage of the total waste amount. Waste generation from Ambu’s sales offices is esti- mated based on employee headcount, using a standard derived from waste generated per employee at our headquarters. Waste recycled (%) is calculated by dividing the recycled waste amount by the total waste amount. A completeness check of the inventory and a review of emission and conversion factors are reviewed annualy and were conducted prior to our sustainability disclosure. For FY 2023/24, Global Warming Potentials Set is a mix of IPCC Fifth Assessment Report (AR5) and IPCC Fifth Assessment Report (AR4) List of Emission Factor Sets: Total energy consumption is summarised in GJ. Conversion of units to GJ is based on factors presented by the GHG protocol cross-sector tool, DEFRA conversion factors and other recognised sources. Energy for sales offices and other facilities where we do not collect data, is estimated based on energy intensity per m2. Energy from com- pany cars (fuel-based cars and hybrid cars) is estimated based on the annual driving distance and distance to energy conversion factors from UK DEFRA. Hazardous waste (%) is calculated by divid- ing the hazardous waste amount by the total waste amount. Water consumption is the sum of all water consumed. The sum of all water drawn into the boundaries of the company from all sources, including surface water, ground- water, rainwater and any municipal water sup- ply. Water consumption is based on meter readings and invoices from our four produc- tion sites and headquarters. Water consump- tion from Ambu’s sales offices is estimated on the basis of employee headcount, using a standard derived from water consumption per employee at our headquarters. Social indicators Headcount (number) is measured as the current employee headcount per end of financial year 2023/24, on 30 September 2024. It includes all active employees, as well as employees on paid and unpaid leave, with a temporary or permanent Ambu con- tract. People without an Ambu contract, e.g., interns, consultants and externally hired temps, are excluded. • Exiobase - Monetary 3.8.2 • UK DEFRA - Conversion Factors 2022 • UK DEFRA - Conversion Factors 2023 • US EPA - Emission Factor Hub 2023 • US EPA - eGRID 2022 Sub Region (Publication Year 2024) Renewable electricity is generated by solar panels installed at our headquarters and at our Penang production site. The renewa- ble energy volume from our headquarters is based on a performance calculation, for Penang it is based on invoices. We purchase Renewable Energy Certificates (RECs). Renewable energy share is the share of • AIB 2023 • IEA International Electricity Factors (2023) Waste is defined as what is left when pro- duction or consumption end. It is material that must be disposed of, so that it does not accumulate to become a nuisance. Waste data are based on invoices from waste Average headcount (number) is mea- sured over the course of 12 months (roll- ing average), leading up to the end of the financial year 2023/24, on 30 September Carbon intensity metrics (CO2e per manu- factured product and CO2e per unit of reve- nue) are calculated using total market-based Annual report 2023/24 89 Sustainability 2024. The rolling average is an average of employee headcount at the last day of each of the 12 months, running from October 2023 to September 2024. It includes all active employees, as well as employees on paid and unpaid leave, with a temporary or permanent Ambu contract. People without an Ambu contract, e.g., interns, consultants and externally hired temps, are excluded. The 'Average headcount (number)' figure for the current year and the prior years (FY 2020/21, FY 2021/22 and FY 2022/23) are not fully comparable, as full-time equivalent (FTE) was used previously, whereas rolling headcount (HC) is applied in the current year (FY 2023/24), due to a change in accounting practices. elected at the annual general meeting (AGM), does not include employee-elected members. Gender denotations, currently available from the system provider in the global employee system, are Female, Male, Unknown, Undeclared and Others. Genders are self-declared. Unknown or undeclared gender entries will be presented as Others. A manager is defined as an employee who is on management level (F-level). the current year FY23/24, due to a change in accounting practices. Thus, prior-year and current-year numbers are not fully compara- ble, due to a change in accounting practice, whereas in the current year, rolling HC is applied, while for the prior year, FTE was applied. reported number of accidents with lost time per million hours worked. A lost time injury is an accident resulting in more than eight hours of absence from work in connection with the accident. Our production sites in China, Malaysia, the USA and Mexico report actual working hours. Our headquarters in Ballerup, as well as our warehouse and office locations, use an estimate based on national averages or contractual agreements (e.g., 37 hours/week), excluding absence, such as, planned leave, sickness absence or other absence. In 2019/20 and 2020/21, data from our production site in China only included employees with an Ambu contract. Safety data for our 12 employees in Sweden, Nor- way and Finland is not captured. Sickness absence rate (%) includes all employees with an Ambu contract. Data compares the total number of sickness days reported with the total number of working days in the year (excluding planned leave). Working days for our white-collar and indi- rect blue-collar employees are based on national averages or derived from contrac- tual agreements on working time. For our blue-collar employees, we use planned working days registered on-site. In 2019/20 and 2020/21, sickness absence data for our production site in Malaysia included exter- nally hired workers. Sickness absence for our 12 employees in Sweden, Norway and Fin- land is not captured. Employee turnover rate (%) includes tem- porary and permanent employees (based on headcount) with an Ambu contract. People without an Ambu contract, e.g., interns, consultants and externally hired temps, are excluded. An employee that has been internally transferred from one legal entity to another within Ambu’s network is not con- sidered as turnover and hence, it has been excluded too. The turnover rate only includes employees with an Ambu contract who have been employed for seven days or more. It is calculated by comparing the total number of voluntary and non-voluntary leavers (retirees and terminations due to abscondment are considered voluntary leavers) with the ave- rage headcount. The 'Employee turnover rate (%)' figure for the current year and the prior years (FY 2020/21, FY 2021/22 and FY 2022/23) are not fully comparable, as full- time equivalent (FTE) was used previously, whereas rolling headcount (HC) is applied in Gender diversity (%) includes temporary and permanent employees (based on headcount) with an Ambu contract. People without an Ambu contract, e.g., interns, consultants and externally hired temps, are excluded. Gender diversity is calculated by comparing the num- ber of women at year-end with the average headcount. Gender diversity at management levels (in the Board of Directors and in other management) is calculated by comparing the number of underrepresented gender within the management level in question with the headcount within the same management level. The gender diversity for members of the Board, specifically Board members Fatalities is the sum of fatalities reported at our four production sites in China, Malaysia, the USA and Mexico and at our headquarters, as well as our warehouse and office loca- tions. Governance indicators Lost-Time Injury Frequency (LTIF) Lost- Time Injury Frequency (LTIF) includes all employees at our production sites, includ- ing employees with an Ambu contract and externally hired employees without an Ambu contract. The data from our office locations solely include employees with an Ambu contract. It is calculated as the Code of Conduct training (%) is calculated by comparing the number of employees who have completed training in our Code of Conduct, with the number of employees in scope. Employees in scope are white-collar and indirect blue-collar employees. Annual report 2023/24 90 Governance GOVERNANCE 91 96 99 Risk management Corporate governance Executive Management 100 Board of Directors 102 Executive Management and Executive Leadership Team 103 Remuneration 104 Shareholder information 107 Company announcements 2023/24 and financial calendar Annual report 2023/24 91 Governance implementation of the mitigation plans. Relevant risks are prioritised in terms of oping, initiating and monitoring appropriate response measures according to the chosen response strategy, within an appropriate time frame. To allow for effective risk man- agement, these response measures must be specifically tailored to relevant circum- stances. RISK MANAGEMENT impact and likelihood, considering different perspectives, including business objectives, reputation and regulatory matters. Responsi- bilities are assigned for all relevant risks and opportunities. The hierarchical assignment of responsibility depends on the significance of the risk or opportunity. In a first step, assu- ming responsibility involves choosing one of our general response strategies. The general risk response strategies are to avoid, transfer, reduce, retain or watch the relevant risk. The general response strategy for opportunities is to pursue the opportunity concerned. In a second step, responsibilities involve devel- For Ambu, diligent handling of risks and opportunities is part of responsible corporate governance and supports our pursuit of sus- tainable growth and, thereby, increased com- pany value. This makes it essential to manage risks and opportunities appropriately. Our risk management is an integral part of the planning and implementation of our business strategies. Our Enterprise Risk Management (ERM) process aims for early identification and evaluation of, and response to, risks and opportunities that could materially affect the achievement of our strategic, operational, financial and compliance objectives. There- fore, Ambu’s risk management is focused on early identification and rigorous assessment of risks and opportunities, as well as continu- ous mitigation, management and monitoring of risks, thereby aiming to reduce the risks to an acceptable level and ensuring that only calculated risks are taken. are identified and assessed. Potential new risks, as well as updates to the mitigation plans, are reported to Global Risk & Com- pliance on a quarterly basis. While report- ing generally follows a quarterly cycle, this regular reporting process is complemented by an ad hoc reporting process that aims to escalate critical issues in a timely manner. The long-term risks are integrated into the overall development of Ambu's strategy and business plans. This year, further focus was on strengthening the monitoring and Based on the reported risks and updated mitigation plans, Global Risk & Compliance conducts a series of in-depth interviews with risk officers in the organisation, after which the most significant risks are assessed by risk boards, before being reported to the Executive Management and the Board of Directors on a quarterly basis. The management of each function is respon- sible for identifying, assessing and manag- ing the risks associated with their part of the organisation. The Executive Management is responsible for determining Ambu’s overall risk profile, in alignment with the company’s strategy and values. They are also respon- sible for delegating responsibility for the shared risks across the organisation, as well as for approving the mitigating activities that address the most significant risks. Company-wide risk management process and organisation (Enterprise Risk Management Process) Ambu has established an ERM system to ensure that the most significant risks and opportunities, in the short to medium term, The Board of Directors monitors and reviews the reported risks and the planned mitiga- tion, as well as any recommendations from the Executive Management, every quarter. Annual report 2023/24 92 Governance INNOVATION & DEVELOPMENT RISKS PRODUCT SUPPLY, QUALITY AND SAFETY RISKS Ambu’s achievement of its strategic targets depends on our ability to develop relevant and unique products of high quality. A good clinical and commercial under- standing of the sector’s long-term needs, as well as user insights regarding targeted procedures in new segments and their integration into product development, are essential for keeping our market-leader position. As a manufacturer and distributor of medical devices, Ambu adheres to the legisla- tion of the territories in which we operate. Failure to comply may negatively impact our ability to sell our solutions. There is an inherent risk of supply chain disruptions, due to infrastructure breakdowns or congestion, and delays can lead to higher freight rates. Furthermore, increased demand and/or supply shortages may lead to increased raw material and energy costs and a potential delay of orders. Risk examples Risk examples • Insufficient capturing of user insights. • Dependency on external partners’ know-how. • Major disruption at a manufacturing facility, due to a natural disaster or other emergencies, such as, a fire or a pandemic, may disrupt Ambu’s ability to manufacture and distribute products. • Lockdowns, breakdowns, political unrest, fires, natural disasters, etc. at key suppliers’ sites may result in disruption of Ambu’s supply chain. Primary risk mitigation activities Primary risk mitigation activities • Products are launched in multiple segments. • The screening process for capturing user insights is very detailed and integrated into product development, allowing for rounds of modifications before the design is locked. • Global production with multiple facilities and maintaining adequate safety stock. • Dual sourcing, identification of high-risk suppliers and continuous development of contingency plans. • Continuous development and improvement of control processes and quality procedures and ongoing monitoring of legislation and market standards. Annual report 2023/24 93 Governance COMMERCIAL RISKS CLIMATE-RELATED RISKS There is a constant and ongoing focus on reducing healthcare costs and ensur- ing better patient care in Ambu's most important markets. This leads to a general demand for hospitals to become more efficient. Ambu’s Anaesthesia & Patient Monitoring business have historically experienced modest price pressures, while prices within the Endoscopy Solutions business have been more stable. Climate change in general, including increased frequency of extreme weather condi- tions, is assessed to pose a limited risk to Ambu. Climate-related risks are identified as part of our risk management process and are assessed and responded to accord- ing to a standardised process for estimating the impact and likelihood of risks in view of their impact on revenue, cost and reputation, as well as the related compliance requirements. Risk examples Risk examples • Delays in product launches and penetration into a market. • Pace of market creation and product acceptance in single-use endoscopy. • Economic and political development, leading to budgetary constraints and healthcare reforms. • High temperatures affecting our operations, as well as our employees. • Extreme weather conditions, such as, heavy rains, floods, cyclones and other natural disasters, leading to supply chain disruption. • Increased compliance requirements and demand for more sustainable products and packaging. Primary risk mitigation activities Primary risk mitigation activities • Validation of value proposition in single-use, for instance, workflow efficiency and sterility. • Continuous improvement of product launch capabilities. • Ensuring low-cost production, with manufacturing in low- cost jurisdictions, to enable competitive pricing. • Risk scenario analyses conducted at regular intervals, in accordance with the Task Force on Climate-related Financial Disclosure framework (TCFD), in order to assess the potential future risks and to ensure business continuity. • Develop forecasts and projections on climate changes to ensure timely preparedness. • Sustainability is a key focus area in our business strategy, including circularity as a core concept in how we develop, manufacture and dispose of products and packaging material. Annual report 2023/24 94 Governance CYBERSECURITY RISKS Globally, and across most industries, cybercriminal activity continues to take place. Cyber- threats, such as, cybercrime and cyberattacks, could have a major business impact by affecting Ambu’s operations, delivery performance and competitive advantage. Risk examples • Cybersecurity breaches and/or a major IT breakdown could have a severe impact on Ambu’s ability to maintain day-to-day operations, resulting in disruption of sales and shipments to customers. • The disclosure of confidential information could compromise data privacy, and business critical information could be lost, stolen or otherwise released into the hands of people for whom it was never intended. • Theft of intellectual property could result in a severe impact on competitive advantage. Primary risk mitigation activities • Continuously evolve Ambu’s cybersecurity measures to monitor and mitigate potential data breaches and cyberattacks, ensuring that incident response and crisis management processes and capabilities for timely remediation of security issues are in place and continuously improved. • A solid, risk-based cybersecurity framework, built on NIST CSF and the ISO 27001 standard, enabling Ambu to protect its assets and continue producing secure products to serve our customers in a digitally evolving space. • Internal and external security assessments, conducted on a regular basis, including : vulnerability assessments, penetration testing and threat hunting. • Infrastructure modernisation project to comply with external requirements and modernise our IT infrastructure. Annual report 2023/24 95 Governance FINANCIAL RISKS LEGAL & COMPLIANCE RISKS The development of Ambu’s results and equity is subject to several financial risks, including foreign exchange risks, interest rate risks, liquidity risks and credit risks, as well as the risk of changing international trading conditions. Ambu operates in a highly regulated industry that is subject to great variation in laws and regulations across geographies and business areas, leading to a complex and often unpredictable legal environment. Enforcement of various anti-corruption, data-privacy and healthcare-related laws and regulations, as well as increased pub- lic awareness of business ethics and protection of personal data, contribute to an increased risk to Ambu. Risk examples Risk examples • Changes to tax legislation and the inherent tax risk associated with being a multinational company. • Implementation of customs barriers and limitations to free trade. • Fluctuations in interest rates and inflation. • Lawsuits. • Violations of healthcare-related laws and non- compliance with Ambu’s Code of Conduct. • Investigations by authorities and/or criminal sanctions and other penalties, in case of non-compliance. Primary risk mitigation activities Primary risk mitigation activities • Centralisation of financial risks in the Group’s finance function, which also serves as a service centre for all subsidiaries. • As a general rule, Ambu relies on the neutral hedging of currency risks that are embedded in the ordinary cash flows. • The management of financial risks is described in further detail in note 4.1 in the consolidated financial statement. • Ongoing implementation and monitoring of Ambu’s compliance programs, including training and auditing activities. • Legal reviews of key activities. • Independent and confidential ethics hotline for reporting of unethical situations, violations and misconduct. Annual report 2023/24 96 Governance CORPORATE GOVERNANCE Corporate governance concerns the way Ambu is managed and controlled. We are continuously developing our corporate governance in response to the strategic development, goals and activities. Ambu seeks to establish close and trusted relations with relevant stakeholders, including shareholders, employees, customers, suppliers and society as a whole. We also seek to ensure transparency, and we want to openly share relevant information with our stakeholders. Corporate governance reporting Ambu’s Board of Directors complies with all of Nasdaq Copenhagen’s recommendations regarding corporate governance and reports. Governance structure The shareholders of Ambu A/S exercise their rights at the general meeting, which is the supreme governing body of the company. At the annual general meeting, the sharehold- ers approve the annual report, dividends, elect the Board members and the auditors of the company, and adopt the company’s Articles of Association and proposals sub- mitted by shareholders and the Board. Any shareholder has the right to raise questions and suggestions for consideration at the general meetings. More information on the mandatory annual corporate governance report is disclosed at www.ambu.com in accordance with section 107(b) of the Danish Financial Statements Act. Annual report 2023/24 97 Governance The company has two share classes and Ambu’s Articles of Association do not impose any restrictions on ownership or vot- ing rights. Class A shares carry ten votes per share, while Class B shares carry one vote per share. Class A and Class B shares carry equal economic rights. The Class B shares are traded publicly at NASDAQ Copenhagen. Any shareholder is entitled to attend and vote at the general meetings. overall supervision of the company’s activi- ties and ensures that Ambu is managed in a responsible manner and in compliance with legislation and the Articles of Association. latory & legal, supply chain & manufacturing, sustainability, board governance and ESG, HR & compensation and digital/technology experience. The members of Ambu’s Board of Directors are deemed to possess these competences. The Chair Council consists of the Chair and the Vice Chair of the Board of Directors. The Chair Council performs certain preparation and planning in relation to Board meetings and is a forum for the Chair Council’s and Executive Management’s reflections. The Chair Council held eight meetings during 2023/24. The Board of Directors has established an annual process, whereby self-evaluation of the Board of Directors’ work and per- formance is assessed. At least every three years, the evaluation is conducted by an experienced external facilitator. The self-eval- uation in 2023/24 led to focus areas, which will be included in the work of the Board of Directors in 2024/25. Currently, the Board consists of nine mem- bers, of which three are employee-elected. Of these nine members, three are women and six are men. In accordance with section 139c of the Danish Companies Act, this is considered equal gender representation in the Board, and no policy or further reporting is thus required. The Audit Committee consists of three members of the Board of Directors. In addi- tion, the CEO, the CFO, the VP of Finance & Accounting and the auditor appointed at the annual general meeting attend the Audit Committee meetings. The Audit Commit- The Board of Directors regularly discusses the existing ownership structure with the holders of Class A shares. The Board of Directors and the holders of Class A shares agree that the ownership structure has been and remains expedient for all of the company’s stakeholders, as it lays a sound framework for the implementation of Ambu’s strategy and plans, thereby safeguarding the interests of all shareholders. Qualifications and composition of the Board of Directors All members elected by the shareholders at the annual general meeting are considered to be independent members, as defined by the Committee on Corporate Governance. The Board of Directors currently has six members elected by the shareholders at the annual general meeting, and three members, elected by the employees, pursuant to the Danish rules concerning employee repre- sentation. The shareholder-elected members are elected for one year at a time, while the employee-elected members are elected for a four-year period. For the Board of Directors to undertake its responsibilities and act as a good sounding board for the Executive Management, the following competences are particularly relevant: Global strategy & execution, MedTech industry, organisational transformation and restructuring, finance, audit & risk management, compliance, regu- Board of Directors Overview of attendance rate for 2023/24 The Board of Directors held ten meetings Board of Directors Ambu has a two-tier management structure, consisting of the Board of Directors and the Executive Management. The two bodies are independent of each other, and no person serves as a member of both. The Board of Directors is responsible for, but not limited to, the overall management of Ambu, defin- ing strategies and setting objectives, as well as approving the overall budgets and plans. The Board of Directors also undertakes during 2023/24. To ensure dedicated and in-depth work in specific areas, the Board of Directors has established several committees and one council that report to the Board of Directors: Chair Council, Audit Committee, Remuneration Committee, Innovation Committee and Nomination Committee. Annual report 2023/24 98 Governance tee held four meetings during 2023/24. The purpose of the Audit Committee is to assist the Board of Directors in ensuring the quality and integrity of the presentation of the com- pany’s financial statements, reporting and auditing, as well as reviewing the risk and control management systems in connection with Ambu's financial reporting. tion Committee held three meetings during 2023/24. Innovation Committee meetings. The Innova- tion Committee held three meetings during 2023/24. The purpose of the Innovation Committee is to oversee and make recom- mendations for the innovation strategy and its execution, and to consider external inno- vation opportunities. The Nomination Committee is charged with evaluating the composition of the Execu- tive Management and with evaluating, and possibly renewing, the Board of Directors to ensure that the members of the Board meet the requirements and possess the skills required. The duties of the Remuneration Committee are set in place to ensure that the remune- ration offered by Ambu is competitive and sufficient to attract and retain the best quali- fied directors and executives. The charter of the Innovation Committee can The charter of the Nomination Committee The charter of the Audit Committee can be The charter of the Remuneration Committee be found at → Ambu.com/innovationcom. can be found at → Ambu.com/nomcom. found at → Ambu.com/auditcom. can be found at → Ambu.com/remcom. The Nomination Committee consists of three members of the Board of Directors. The Nomination Committee held three meet- ings during 2023/24. Ambu’s CEO attends the meetings of the Nomination Committee. The Remuneration Committee consists of three members of the Board of Directors. In addition, the CEO and the Chief People Officer attend the meetings. The Remunera- The Innovation Committee consists of three members of the Board of Directors. In addi- tion, the CEO, the Chief Marketing Officer and the Chief Technology Officer attend the Overview of committee members and attendance rate for 2023/24 Board governance Board of Directors Chair Council Audit Committee Remuneration Committee Innovation Committee Nomination Committee 2023/24 2022/23 2021/22 2020/21 2019/20 Jørgen Jensen (Chair) Shacey Petrovic (Vice Chair) Christian Sagild Susanne Larsson Michael Del Prado Simon Hesse Hoffmann Charlotte Elkjær Bjørnhof Thomas Bachgaard Jensen Jesper Mads Bartroff Frederiksen 10/10 8/10 9/10 10/10 9/10 10/10 10/10 10/10 10/10 8/8 - 3/3 3/3 3/3 CEO pay ratio (times) Board meeting 6/8 2/8 - - 2/3 - - 1/3 2/3 - 24 20 11 94 12 34 95 4/4 4/4 - 2/3 3/3 - - - - - - attendance rate (%) 97% 100 100 - - - - - 3/3 3/3 4/4 - - - - - - - - - - - Annual report 2023/24 99 Governance EXECUTIVE MANAGEMENT The Board of Directors appoints the Executive Management and lays down its terms of employment. The Executive Management is responsible for Ambu’s day-to-day management, including, but not limited to, the development of Ambu’s activities and operations and its risk management, financial reporting and internal affairs. The Executive Management prepares and presents the company’s strategy, long-term financial planning and budgets to the Board of Directors. The delegation of powers and responsibilities by the Board of Directors to the Executive Management is defined in the Rules of Procedure for Ambu’s Board of Directors (Bestyrelsens Forretningsorden) and the provisions of the Danish Companies Act (Selskabsloven). gen, in the Rules for issuers of shares and Section 107b of the Danish Financial State- ments Act. Download our corporate governance report ↓ The Board of Directors has considered the recommendations from the committee on corporate governance and has reported on them in a corporate governance document. Ambu complies with all of the recommenda- tions of the Committee on corporate gover- nance, and the report on compliance with the corporate governance recommendations can be found at → Ambu.com/corpgov. The Executive Management consists of Ambu's CEO, Britt Meelby Jensen, and our CFO, Henrik Skak Bender. CORPORATE GOVERNANCE REPORT 2023/24 Recommendations for corporate governance Ambu A/S, Baltorpbakken 13, DK-2750 Ballerup Registration no. 63644919 As a Danish listed company, Ambu A/S must comply with, or explain deviations from, the “Recommendations for Corporate Govern- ance”, implemented by Nasdaq Copenha- Annual report 2023/24 100 Governance BOARD OF DIRECTORS JØRGEN JENSEN Chair of the Board (he/him/his) SHACEY PETROVIC Vice Chair of the Board (she/her/hers) CHRISTIAN SAGILD Board member (he/him/his) SUSANNE LARSSON Board member (she/her/hers) Joined Board in 2020 Appointed until 2024 Independent Joined Board in 2022 Appointed until 2024 Independent Joined Board in 2012 Appointed until 2024 Independent Joined Board in 2021 Appointed until 2024 Independent Born 1968 Born 1973 Born 1959 Born 1968 Danish 16,236 B shares American 5,535 B shares Danish 255,000 B shares Swedish 1,000 B shares Chair of the Remuneration Committee, the Nomination Committee and Chair Council and member of the Innovation Committee Member of the Innovation Committee, the Nomination Committee and the Chair Council Member of the Audit Committee and the Remuneration Committee Chair of the Audit Committee and member of the Remuneration Committee Position and honorary offices: Position and honorary offices: Position: Professional board member and former CEO & President of Insulet Corporation Honorary offices: Exact Sciences (MB), Governance and Nominating Commit- tee at Exact Sciences (C), Imperative Care (VC), Strategy and Business Deve- lopment Committee at Imperative Care (C), NovoCuff (C), Axena Health (MB) Position and honorary offices: Position: Professional board member Honorary offices: Nordic Solar (C) Position and honorary offices: Position: Group CFO, EVP IT, Digital Enablement, GBS and Indirect Procurement at Mölnlycke Honorary offices: Dovista A/S Group (MB and C of Audit Committee) Position: Professional board member Honorary offices: 3Shape (C), VELUX (C), Micro Matic (C), Weibel (C), VKR Holding (VC), Healthcare Denmark (C), Armacell International S.A. (MB) Special competences: Special competences: Special competences: Special competences: International leadership experience from global companies, as well as medtech- specific experience covering sales, R&D, production, supply chain and M&A International executive experience from global medtech companies, including expertise within commercial and operational leadership positions Leadership experience and general management of a listed company including special insights into financial matters and risk management General management and financial leadership experience in public listed companies covering strategy, M&A, transformation and change management, finance and IT Annual report 2023/24 101 Governance BOARD OF DIRECTORS MICHAEL DEL PRADO Board member (he/him/his) SIMON HESSE HOFFMANN Board member (he/him/his) JESPER MADS BARTROFF FREDERIKSEN Employee-elected member (he/him/his) CHARLOTTE ELGAARD BJØRNHOF Employee-elected member (she/her/hers) THOMAS BACHGAARD JENSEN Employee-elected member (he/him/his) Joined Board in 2021 Appointed until 2024 Independent Joined Board in 2022 Appointed until 2024 Independent Joined Board in 2021 Appointed until 2025 Born 1983 Joined Board in 2021 Appointed until 2025 Born 1983 Joined Board in 2021 Appointed until 2025 Born 1975 Born 1963 Born 1978 Danish Danish American 2,418 B shares Danish 5,717,500 A shares 1,985,000 B shares Danish 2,013 B shares 1,268 B shares 1,799 B shares Chair of the Innovation Committee and member of the Nomination Committee Member of the Audit Committee Elected by the employees Elected by the employees Elected by the employees Position and honorary offices: Position: Former Company Group Chair of Johnson & Johnson Medical Devices and Lead Director of Verb Surgical, joint venture (MB) in Digital Surgery of J&J and Verily (Google Life Sciences) Honorary offices: Cochlear Limited ASX (MB) Position and honorary offices: Position: Professional investor, financial advisor and board member Honorary offices: Magenta (C), HC Andersen Capital (C), SMILfonden (VC), Testa Invest (MB), WireOnAir (MB), JHO Holding (Director) Position: Senior Project Manager, Portfolio Strategy & Pulmonology & ENT Solutions, R&D Position: Senior Director, Commercial Excellence, Global Marketing Position: Mechanical Architect, Systems Engineering, Engineering & Imaging, R&D Joined Ambu in 2018 Joined Ambu in 2011 Joined Ambu in 2016 Special competences: Special competences: Global senior leadership experience in major healthcare companies, including transformative innovation, commercialisation, governance, strategic partnerships and health policy Financial management, governance, reporting, budgeting and funding. Additionally, third generation of the founding family of Ambu Annual report 2023/24 102 Governance EXECUTIVE MANAGEMENT AND EXECUTIVE LEADERSHIP TEAM Executive Management HENRIK BENDER Chief Financial Officer (he/him/his) BRITT MEELBY JENSEN Chief Executive Officer (she/her/hers) Honorary offices: Honorary offices: Hempel A/S (MB), Novo Holdings (MB), IAD (MB) and DI's main board (MB) Adent A/S (MB), TW Engineering A/S (MB), Teach First Denmark (MB) Special competences: Business and leadership Joined Ambu in 2022 Born 1973 Danish Joined Ambu in 2024 Born 1984 Danish Special competences: experience from both listed and private companies in the global healthcare industry. This is combined with in-depth knowledge of the commercial area and strategic development Finance, IT, legal and M&A experi- ence from private and listed com- panies, combined with in-depth experience with business trans- formations and execution of global growth strategies within the global MedTech industry 45,333 shares 25,000 shares Executive Leadership Team FINN MÖHRING Chief Technology Officer, R&D (he/him/his) GRAZIELA MALUCELLI Chief Operations Officer (she/her/hers) SANNE KJÆRSGAARD HJORDRUP Chief People & Culture Officer (she/her/hers) STEVEN BLOCK President of Ambu USA (he/him/his) BASSEL RIFAI President of Ambu EMEA & APAC (he/him/his) Joined Ambu in 2023 Born 1965 Danish Joined Ambu in 2024 Born 1973 Brazilian Joined Ambu in 2022 Born 1977 Danish Joined Ambu in 2013 Born 1963 American Joined Ambu in 2021 Born 1982 American Annual report 2023/24 103 Governance REMUNERATION The overall objective of the remuneration is to create value for the shareholders by enabling Ambu to attract and retain the best qualified directors and executives. The remuneration policy and remuneration report for the Board of Directors and Executive Management are available at Ambu.com/reports →. The remuneration of the Board of Directors and Executive Management is in accord- ance with the remuneration policy and the incentive guidelines, and the latest revision was adopted at the annual general meeting in 2023. Executive Management The total remuneration earned by the Executive Management was DKK 32.3m (DKK 26.7m). 350,000, which is approved by the sharehold- ers at the annual general meeting. receive a fee of DKK 175,000, while committee members receive a fee of DKK 117,000. The Chair receives three times the base fee, while the Vice Chair receives two times the base fee. The Chairs of the committees The total remuneration paid to the Board of Directors, including the Board committees, constituted DKK 6.5m (DKK 6.6m). Short-term incentives earned were DKK 10.2m (DKK 7.3m), equivalent to 94% (69%) of the full bonus potential, based on the finan- cial and ESG performance for the year for the pre-defined KPIs of organic revenue growth, EBIT margin b.s.i., free cash flow and ESG. (DKKm) 2023/24 2022/23 Fixed compensation Short-term incentive scheme Long-term incentive scheme 13.2 10.2 8.9 12.4 7.3 7.0 Total remuneration earned by the Executive Management Long-term incentives earned were DKK 8.9m (DKK 7.0m) or 91% (68%) of the full potential, based on the financial performance for the year for the pre-defined KPIs of organic reve- nue growth and EBIT margin b.s.i.. Total remuneration earned 32.3 26.7 DKK Remuneration in connection with redundancy pay Adjustment to redundancy and resignation pay, previous years Remuneration of Executive Management Remuneration of Board of Directors 5.9 0.0 38.2 6.5 0.0 1.0 27.7 6.6 32.3m (versus DKK 26.7m in 2022/23) Remuneration of Board of Directors and Executive Management 44.7 34.3 Board of Directors Adjustment of earned incentive schemes
Total expense in the Income statement -4.9 39.8 -5.2 29.1 Members of the Board of Directors do not receive variable remuneration and are not part of share-based incentive schemes, but receive a fixed annual base fee of DKK * The adjustment bridges the accounting expense in the Income statement to various earned incentive schemes, including long-term incentive schemes that are earned in one year but vest over three years. Annual report 2023/24 104 Governance SHAREHOLDER INFORMATION Share capital Ambu's share capital consists of 234,974,389 Ambu’s share capital is divided into two classes of shares, each with a nominal share value of DKK 0.50. Class A shares carry 10 votes per share, while Class B shares carry one vote per share. There is no difference between the financial rights pertaining to the individual share classes. All shares are paid-up in full. Ambu’s Class B shares are listed on Nasdaq Copenhagen under ISIN code DK0060946788 and named 'AMBU-B', while the Class A shares are unlisted. B shares of DKK 0.50 each, together with 34,320,000 A shares of DKK 0.50 each, equi- valent to a registered share capital of DKK 134,647,194.50. Shareholders On 30 September 2024, the total number of shareholders in Ambu, whose holdings are registered by name, was 60,169 (68,944). They hold a combined 98% (99%) of the total share capital. The Class A shares are negotiable instru- ments, and according to Ambu's Articles of Association, the transfer of more than 5% of the total number of Class A shares, at a price higher than the price quoted for the company’s Class B shares, may take place only if the buyer offers all holders of Class A and Class B shares to buy their shares at the same price. All Class A shares are owned by the three lines of descendants of Ambu’s founder, Dr. Holger Hesse. At the end of the fiscal year, the portfolio of treasury shares comprised 2,904,590 (2,992,769), corresponding to 1.1% (1.1%) of the share capital. On 30 September 2024, the share of total voting rights controlled by the founding family was At the end of the fiscal year, the portfolio of treasury shares comprised As of 30 September 2024, the shareholders, featured in the table on the next page, had filed ownership of more than 5% of the share capital and/or votes. Back in 1987, a share- holders’ agreement was established by the holders of the Class A shares, as described * 61.5% 2,904,590 2023: 61.6% 2023: 2,992,769 * B shares Annual report 2023/24 105 Governance in the prospectus, in connection with the listing of Ambu A/S in 1992. The shareholders’ agreement solely governs the family’s holdings of Class A shares, while the family’s holdings of listed Class B shares are not governed by the shareholders’ agree- ment. Moreover, Ambu’s Articles of Asso- ciation contain provisions on the trading of Class A shares. Share price development long-term target of a NIBD/EBITDA ratio of Ambu’s Class B share price on 30 September 2024 was DKK 131.15 per share, equal to a market capitalisation of the Ambu's Class B shares of DKK 30.8bn (EUR 4.1bn). The share price increased by 82% in the 2023/24 finan- cial year. By comparison, Nasdaq Copen- hagen’s C25 index increased by 17% in the same period. The average daily turnover of Ambu shares on Nasdaq Copenhagen declined by 23% to DKK 59.1m (DKK 79.9m), while the average number of trades per day declined by 25% to 1,882 (2,504). less than 2.5x. With disciplined capital alloca- tion, Ambu is now a positive cash flow-gen- erating company (FCF), which provides oper- ational flexibility to deliver on our long-term sustainable and profitable growth targets. In November 2015, a new shareholders’ agreement was established between the holders of the Class A shares, in which the agreed terms and conditions were updated. The updated shareholders’ agreement governs the relationship between the three lines of the family and the family's views on decisions concerning the possible conver- sion of Class A shares into Class B shares and the process of transferring or selling Class A shares. The Board of Directors has considered Ambu’s cash position and liquidity forecast, and on the basis thereof, the Board of Direc- tors intends to recommend to the sharehold- ers at the annual general meeting that dividends worth of DKK 102m will be distri buted in the 2024/25 financial year. In addition to the Class A shares, the family holds ~12.3 million Class B shares, corre- sponding to 5.2% (5.6%) of the Class B share capital. The family thus controls a total of 17.3% (17.6%) of the combined Class A and Class B share capital and 61.5% (61.6%) of the votes. As per 30 September 2024, inter- national owners hold 46% (43%) of the share capital. Capital allocation Ambu’s ambition is to create a strong bal- ance sheet, and we are committed to our Overview of A and B shares Shareholders with voting rights of more than 5% Share of capital, % Share of votes, % 2023/24 2022/23 Total number of shares ('000) Total number of A shares 269,294 34,320 234,974 - 269,294 34,320 234,974 11,578 0.50 Dorrit Ragle
, Virum Pia Hesse, Hellerup Eva Hesse Lundström, Kgs. Lyngby 17.4 3.0 2.9 17.4 10.3 10.2 Total number of B shares Hannah Hesse Hoffmann, Frederiksberg Simon Hesse Hoffmann, Copenhagen N. P. Louis Hansen ApS, Nivå 2.9 2.9 10.2 10.2 6.5 Change in number of shares Nominal value per share, DKK Share capital (DKK '000) 0.50 14.0 134,647 2,905 134,647 2,993 Number of treasury shares ('000) Dorrit Ragle has transferred a number of Class A shares to family members, but has retained the voting rights associ- ated with the transferred shares. Annual report 2023/24 106 Governance Additionally, the Board of Directors intend to propose an updated dividend policy of up to 30% (previously around 30%) of the Group's annual net profit via dividends and/or share- buy back. with investors and the press on issues relat- ing to the company’s shares. Please contact: Anders Hjort, Head of Investor Relations, Phone: +45 7225 2910, [email protected] Investor relations Ambu pursues an open dialogue with inves- tors and analysts about our business and financial performance. In order to ensure that all Ambu’s stakeholders have equal access to corporate information, news is released to Nasdaq Copenhagen, the media and on Ambu’s website, where users can also subscribe to Ambu’s news service. Ambu’s Investor Relations team handles all contact Annual general meeting 2024 The annual general meeting 2024 will be held on Wednesday 4 December 2024 at 13.00 CET at the Ambu A/S headquarters, Baltorp- bakken 13, DK-2750 Ballerup. Shareholders can sign up to attend the annual general meeting and download all relevant material in relation to the meeting at → Ambu.com/AGM Development in share price 2023/24 160 120 80 40 0 Oct23 Nov23 Dec23 Jan24 Feb24 Mar24 Apr24 May24 Jun24 Jul24 Aug24 Sep24 NASDAQ OMXC25 (rebased) Ambu • • Annual report 2023/24 107 Governance COMPANY ANNOUNCEMENTS 2023/24 AND FINANCIAL CALENDAR No. 1 No. 2 No. 3 No. 4 No. 5 No. 6 No. 7 No. 8 No. 9 Ambu announces preliminary financial results for the fiscal year 2022/23 Ambu appoints new Chief Financial Officer Ambu announces financial outlook for the 2023/24 financial year Annual report 2022-23 Financial calendar 2023/24 Financial calendar 2024/25 Notice of annual general meeting of Ambu A/S Decisions of the annual general meeting of Ambu A/S Interim report for Q1 2023/24 2023 2024 8 November 13 December Annual report 2022/23 Annual general meeting 2023 5 November 4 December Annual report 2023/24 Annual general meeting 2024 Grant of performance share units Reporting of transactions made by persons discharging managerial responsibilities 2024 2025 No. 10 Ambu raises outlook for the 2023/24 financial year No. 16 Interim report for Q2 2023/24 30 January 14 May 30 August 30 September Earnings release Q1 2023/24 Earnings release Q2 2023/24 Earnings release Q3 2023/24 End of 2023/24 financial year 30 January 7 May 22 August 30 September 5 November 3 December Earnings release Q1 2024/25 Earnings release Q2 2024/25 Earnings release Q3 2024/25 End of 2024/25 financial year Annual report 2024/25 No. 12 Ambu increases financial outlook for the 2023/24 financial year No. 13 Interim report for Q3 2023/24 Annual general meeting 2025 No. 14 Major shareholder announcements No. 15 Ambu financial calendar for 2024/25 FINANCIAL YEAR 2024/25 No. 1 No. 2 Ambu announces financial outlook for the 2024/25 financial year Interim report for Q4 and full-year 2023/24 results (unaudited) Annual report 2023/24 108 Consolidated financial statements CONSOLIDATED FINANCIAL STATEMENTS 109 Income statement and statement of comprehensive income 111 Cash flow statement 113 Balance sheet 115 Equity statement 117 Notes Annual report 2023/24 109 Consolidated financial statements INCOME STATEMENT Revenue Gross margin by a more effective distribution set-up, and scale in administrationen costs, however, offset by by increased sales and marketing costs that increased in line with our ZOOM IN strategy to invest in our commerical infra- structure. Special items Total reported revenue in 2023/24 was DKK 5,391m, corresponding to a reported growth of 12.9% and an organic growth of 13.8%, compared to 2022/23. Gross margin in 2023/24 was 59.4%, corre- sponding to an increase of 2.6%-pts, com- pared to 2022/23. The increase in gross margin was driven by price increases in A & PM, increased revenue share in the more profitable Endoscopy Solutions business, as well as economies of scale in production costs as we contunie to increase the utilisa- tion rate of existing production sites. Special items in 2023/24 was DKK -334m, mainly related to impairment within gastro- enterology (GI). A strategic review has been performed across the GI endoscopy business. This resulted in revised assump- tions, based on the longer time required to penetrate this market, as the short-term potential for the market has been re-eval- uated. Despite this revision, the continued effort and ambition to solve unmet customer needs within GI is unaffected. Organic growth was primarily driven by solid Endoscopy Solutions growth, while Anaesthe- sia & Patient Monitoring (A & PM) continued strong momentum, driven by the strategic decision to increase prices in low margin areas. Across regions, North America continued its high growth momentum, while Europe and Rest of World began to pick up solid growth as well. Read more on p. 9→. Depreciation, amortisation and impairment losses (DA) DA was DKK -364m, while DA was DKK -330m in 2022/23. DA primarily comprise amortisation of internal development pro- jects and acquired technologies. Impairment losses recognised in ‘Special items’ totalled DKK -332m. OPEX to revenue OPEX to revenue in 2023/24 was 47.4%, cor- responding to an decrease of 3.1%-pts, com- pared to 2022/23. The decrease was driven Net financials Net financials in 2023/24 was DKK -11m, cor- responding to an improvement of DKK 73m, compared to 2022/23. The improvement was mainly due to improved financial gearing with reduced debt compared to 2022/23. EBIT margin b.s.i. EBIT margin b.s.i. in 2023/24 was 12.0%, corresponding to an increase of 5.7%-pts, compared to 2022/23. The substantial increase was driven by revenue growth as OPEX increases were modest, in line with our ZOOM IN strategy to increase profitable growth. The currency effect on EBIT margin b.s.i. was negligible. Revenue and revenue growth EBIT margin before special items Tax Tax in 2023/24 was DKK -65m (DKK -42m), corresponding to an effective tax rate of 21.7% (20.0%). Current tax for the year was DKK 140m (DKK 41m), and income tax paid for the year was DKK 90m (DKK 57m). 26.2% 12.0% 12.0% 16.2% 8.5% 13.8% 6.3% 7.6% 4.3% 2.7% 3,567 4,013 4,444 4,775 5,391 428 340 122 302 645 2019/20 2020/21 2021/22 2022/23 2023/24 2019/20 2020/21 2021/22 2022/23 2023/24 Revenue Organic growth EBIT b.s.i. EBIT margin b.s.i. Annual report 2023/24 110 Consolidated financial statements INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME 1 October – 30 September (DKKm) Note 2023/24 2022/23 (DKKm) 2023/24 2022/23 INCOME STATEMENT STATEMENT OF COMPREHENSIVE INCOME Revenue Production costs Gross profit 2.2 2.3, 2.4 5,391 -2,190 3,201 4,775 -2,062 2,713 Net profit for the year 235 168 Other comprehensive income: Items which are moved to the income statement under certain conditions: Translation adjustment in subsidiaries Selling and distribution costs Development costs Management and administrative costs Operating profit (EBIT) before special items 2.3, 2.4 2.3, 2.4 2.3, 2.4 -1,571 -325 -660 645 -1,522 -295 -594 302 -66 -168 Other comprehensive income after tax -66 -168 Comprehensive income for the year 169 - Special items 2.3, 2.4, 2.6 -334 -8 Operating profit (EBIT) 311 294 Financial income Financial expenses Profit before tax 4.3 4.3 16 -27 300 2 -86 210 Tax on profit for the year 2.7 -65 -42 Net profit for the year 235 168 Earnings per share in DKK Earnings per share (EPS) Diluted earnings per share (EPS-D) 2.9 2.9 0.88 0.88 0.64 0.64 Annual report 2023/24 111 Consolidated financial statements CASH FLOW STATEMENT Cash flow from operating activities (CFFO) CFFO in 2023/24 was DKK 813m. The solid cash flow was driven by improved operating profitability (EBITDA), with balanced net working capital and higher income tax paid. amounted to DKK 205m, corresponding to 4% of revenue, however, when factoring in development costs less depreciation, amor- tisation and impairment losses, total R&D expenditure amounted to DKK 320m (DKK 343m), corresponding to 6% (7%) of total revenue. The improvement was driven by underlying profitable growth, while last year’s improve- ment were postively affected by a strong non-recurring cash flow effect from reduc- tion in net working capital. Cash position At 30 September 2024, cash and cash equivalents were DKK 615m, reflecting an increase of DKK 458m since last year, driven by the free cash flow. Acquisitions of enterprises and technology No acquisitions were made in 2023/24. The cash position is distributed between Cash at bank of DKK 265m, and short-term deposits of DKK 350m. Cash flow from investing activities (CFFI) before acquisitions Free cash flow (FCF) CFFI before acquisitions was DKK 289m, cor- responding to 5% of revenue. This fell slightly below our long-term projection of allocating 7-9% of revenue to investment activities. CFFI was primarily driven by R&D activities that before acquisition FCF before acquisitions was DKK 524m, corresponding to an improvement of DKK 332m, compared to 2022/23. Cash flow from financing activities (CFFF) CFFF in 2023/24 was DKK -65m stemming Committed undrawn credit facilities amounts to DKK 1,800m. from repayment of lease liabilities. Cash flow impact of development costs Free cash flow – main components Free cash flow before acquisitions DKKm 2023/24 2022/23 -111 -289 192 524 Development costs 325 295 -133 -83 -245 Depreciation, amortisation, and impairment losses -210 205 320 -188 236 343 -458 1,007 524 Investments Cash flow, R&D EBITDA Change in working capital CAPEX1 Other2 Free cash ꢀow 2019/20 2020/21 2021/22 2022/23 2023/24 1 2 CAPEX is defined as cash flow from investing activities 'Other' includes; change in provisions, income tax and interest paid Annual report 2023/24 112 Consolidated financial statements CASH FLOW STATEMENT 1 October – 30 September (DKKm) Note 2023/24 2022/23 (DKKm) Note 2023/24 459 2022/23 -30 Net profit 235 168 Changes in cash and cash equivalents Adjustment for non-cash items: Income taxes in the income statement Financial items in the income statement Depreciation, amortisation and impairment losses Share-based payment Change in working capital Change in provisions Interest received Cash and cash equivalents, beginning of year Translation adjustment of cash and cash equivalents Cash and cash equivalents, end of year 157 -1 615 187 - 157 65 11 696 26 -111 -3 14 42 84 348 17 -21 - 1 2.4 5.2 3.7 5.1 Cash and cash equivalents, end of year, are composed as follows: Cash and cash equivalents Short-term deposits 265 350 615 157 - 157 Cash and cash equivalents, end of year Interest paid Income tax paid Cash flow from operating activities -30 -90 813 -64 -57 518 2.7 Investments in intangible assets Investments in tangible assets Cash flow from investing activities 3.2 3.3 -201 -88 -289 -255 -71 -326 Free cash flow 524 192 Proceeds from borrowings Repayment of borrowings Repayment of lease liability Exercise of options 4.6 4.6 4.6 - - 325 -1,575 -63 -65 - 14 Sale of treasury shares Capital increase Cash flow from financing activities 4.5 4.5 - - 23 1,054 -222 -65 Annual report 2023/24 113 Consolidated financial statements BALANCE SHEET Total assets Invested capital Net working capital Net interest-bearing debt (NIBD) to EBITDA before special items (b.s.i.) At 30 September 2024, NIBD to EBITDA b.s.i. was -0.1x, corresponding to a decrease of 0.8x, compared to 30 September 2023. The decrease was driven by improved operating profitability (EBITDA b.s.i), which converted into higher free cash flow compared to 2022/23. At 30 September 2024, total assets were DKK 7,154m, corresponding to an increase of DKK 295m, compared to 30 September 2023. At 30 September 2024, invested capital in 2023/24 was DKK 5,537m, corresponding to a decrease of 283m compared to 30 Septem- ber 2023. The decrease was driven by the GI-related write-down in intangible assets, partially offset by an increased net working capital of DKK 111m. At 30 September 2024, net working capital was DKK 1,050m, corresponding to 19% of revenue. Current level is aligned with the objective of 20% of revenue. The development was driven by increased cash and cash equivalents of DKK 458m and higher inventories, partially offset by impair- ment of gastroenterology (GI) of DKK -327m. Despite the impairment, the carrying amount of GI technologies is DKK 596m, reflecting a solid long-term potential. Net interest-bearing debt (NIBD) At 30 September 2024, NIBD was DKK -57m, corresponding to a decrease of DKK 484m, compared to 30 September 2023. The decrease was driven by solid cash flow, slightly offset by net increase in lease liabi- lities. ROIC ROIC in 2023/24 was 9%, corresponding to an improvement of 5%-pts, compared to 2022/23. The increase reflected our ZOOM IN strategy's aim to drive profitable growth through a focused investment approach. Total assets Invested capital and ROIC Net interest-bearing debt (NIBD) and gearing 12% 3.9% 1.4% 9% 8% 0.7% 427 2.2% 4% 3% 1,346 759 1,658 -57 -0.1% 2023/24 4,926 5,740 7,215 6,859 7,154 3,718 4,711 5,919 5,820 5,537 2019/20 2020/21 2021/22 2022/23 2023/24 2019/20 2020/21 2021/22 2022/23 2023/24 2019/20 2020/21 2021/22 2022/23 Absolute invested capital ROIC NIBD NIBD/EBITDA b.s.i. Annual report 2023/24 114 Consolidated financial statements BALANCE SHEET 30 September (DKKm) Note 30.09.24 30.09.23 (DKKm) Note 30.09.24 30.09.23 ASSETS EQUITY AND LIABILITIES Goodwill 3.1 3.2 3.2 3.2 3.2 1,527 376 905 72 350 1,565 643 888 71 444 Share capital Other reserves Equity 4.5 135 5,459 5,594 135 5,258 5,393 Acquired technologies, trademarks and customer relations Completed development projects Other incl. IT software Development projects and other assets in progress Intangible assets Deferred tax Provisions Lease liabilities Non-current liabilities 2.8 5.1 3.4, 4.4 4 14 483 501 3 9 512 524 3,230 3,611 Property, plant and equipment Right-of-use assets Deferred tax asset 3.3 3.4 2.8 582 545 160 584 571 85 Provisions 5.1 3.4, 4.4 4.2 6 75 490 49 439 1,059 9 72 359 10 492 942 Lease liabilities Trade payables Income tax Other payables Current liabilities Total non-current assets 4,517 4,851 Inventories Trade receivables Other receivables 3.5 3.6, 4.2 4.2 1,078 745 44 907 766 44 4.2 Income tax receivable Prepayments Derivative financial instruments Cash and cash equivalents Total current assets 40 112 3 50 73 11 Total liabilities 1,560 7,154 1,466 6,859 4.2 4.2, 4.4 Total equity and liabilities 615 2,637 157 2,008 Total assets 7,154 6,859 Annual report 2023/24 115 Consolidated financial statements EQUITY STATEMENT Equity Dividend No dividend was paid out during 2023/24. Other At 30 September 2024, equity was DKK 5,594m, corresponding to an increase of DKK 201m, compared to 30 September 2023. Other in 2023/24 was DKK 32m and included share-based payments of DKK 26m and the associated tax effect of DKK 6m. The Board of Directors are suggesting a DKK 102m dividend distribution, on the basis of the Company's solid financial position. Other comprehensive income Other comprehensive income in 2023/24 was DKK -66m which was related to transla- tion adjustment in subsidiaries. Treasury shares At 30 september, 2024, treasury shares amounted to 2,905m class B-shares, changed from 2,993m since 30 september 2023. The dividend distribution, corresponding to DKK 0.38 per share, will be recommended for adoption at the annual general meeting in December. Changes in equity during 2023/24 Proposed dividend 0 32 169 5,393 5,594 73 75 0 0 102 Equiꢀ Oct. 1, 2023 Other compre- hensive income Dividend Other Equiꢀ Sep. 30, 2024 2019/20 2020/21 2021/22 2022/23 2023/24 Annual report 2023/24 116 Consolidated financial statements EQUITY STATEMENT 1 October – 30 September Reserve for foreign currency translation Retained earnings Proposed dividend (DKKm) Share capital adjustments Total Other reserves are made up of share premium, reserve for hedg- ing transactions, reserve for foreign currency translation adjust- ment, retained earnings and proposed dividend and total DKK 5,459m (DKK 5,258m). Equity 1 October 2023 135 211 5,047 - 5,393 Net profit for the year - - 133 102 235 Other comprehensive income for the year Total comprehensive income § Accounting policies - - -66 -66 - - -66 169 Reserve for foreign currency translation adjustments in the consol- idated financial statements comprised exchange rate differences arising from the translation of the financial statements of foreign subsidiaries to DKK, as well as foreign currency translation adjust- ments of intercompany balances, regarded as a supplement to the net investment in foreign subsidiaries. 133 102 Transactions with the owners: Share-based payment Tax deduction relating to share-based payment Equity 30 September 2024 - - - - - - - 26 6 - - - - 26 6 135 145 5,212 102 5,594 Equity 1 October 2022 129 379 3,753 - 4,261 Net profit for the year Other comprehensive income for the year Total comprehensive income - - - - -168 -168 168 - 168 - - - 168 -168 - Transactions with the owners: Share-based payment Tax deduction relating to share-based payment Exercise of options Sale of treasury shares Share capital increase - - - - - - - - - - - - 15 26 14 23 - - - - - - - - 15 26 14 23 6 135 1,048 5,047 1,054 5,393 Equity 30 September 2023 211 Annual report 2023/24 117 Consolidated financial statements NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS SECTION 1: BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS SECTION 4: FINANCIAL RISK MANAGEMENT, CAPITAL STRUCTURE AND NET FINANCIALS Financial risk management Financial instruments Net financials Interest-bearing debt Share capital and treasury shares Cash flows from financial liabilities classified as financing activities Note 1.1 Basis of preparation 118 Note 4.1 Note 4.2 Note 4.3 Note 4.4 Note 4.5 Note 4.6 137 138 140 140 141 SECTION 2: OPERATING PROFIT AND TAX Note 2.1 Note 2.2 Note 2.3 Note 2.4 Segment information Revenue Staff costs Depreciation, amortisation and impairment losses on non-current assets 121 121 122 142 123 123 124 125 127 128 Note 2.5 Note 2.6 Note 2.7 Note 2.8 Note 2.9 Financial risks from operating activities Special items Income taxes Deferred tax Earnings per share SECTION 5: PROVISIONS, OTHER LIABILITIES ETC. Note 5.1 Note 5.2 Note 5.3 Note 5.4 Note 5.5 Note 5.6 Note 5.7 Note 5.8 Note 5.9 Note 5.10 Provisions Share-based payment Fee to auditors appointed by the annual general meeting Group companies Contingent liabilities and other contractual liabilities Related parties 143 143 145 145 146 146 146 146 147 148 SECTION 3: INVESTED CAPITAL AND NET WORKING CAPITAL Subsequent events Note 3.1 Note 3.2 Note 3.3 Note 3.4 Note 3.5 Note 3.6 Note 3.7 Goodwill 129 130 133 134 135 135 136 Adoption of the annual report and distribution of profit Non-IFRS financial measures Key figure and ratio definitions Other intangible assets Property, plant and equipment Leases Inventories Trade receivables Change in working capital Annual report 2023/24 118 Consolidated financial statements SECTION 1: BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS 1.1 Basis of preparation The Group’s general accounting policies are described below. In connection with this, specific accounting policies have been incorporated into each of the individual notes related to the consoli- dated financial statements. The consolidated financial statements are pre- sented in accordance with IFRS accounting stand- ards as adopted by the EU and additional require- ments in the Danish Financial Statements Act. The Group’s ultimate parent company, Ambu A/S, is a public limited company, domiciled in Denmark. The financial statements of the parent company, Ambu A/S, are presented separately from the consolidated financial statements and can be found on the last pages of this report. The parent company’s separate accounting policies are shown in conjunction with the financial statements of the parent company. The accounting policies described below have been applied consistently in the preparation of the consolidated financial statements in the years pre- sented. The accounting policies have been applied consistently with prior year. Applying materiality The consolidated financial statements are a result of processing large numbers of transactions and aggregating those transactions into classes according to their nature or function. The transac- tions are presented in classes of similar items in the consolidated financial statements. If a line item is not individually material, it is aggregated with other items of a similar nature in the consolidated financial statements or in the notes. There are substantial disclosure requirements throughout IFRS. Management provides specific disclosure required by IFRS, unless the information is not applicable or considered immaterial to the economic decision-making of the users of these consolidated financial statements. The estimates and underlying assumptions are reviewed on an ongoing basis. Changes in esti- mates may be necessary if there are changes in the circumstances on which the estimate was based, or more detailed information becomes available. Such changes are recognised in the period in which the estimate is revised. The application of the company’s accounting policies may require Management to make judge- ments that can have a significant effect on the amounts recognised in the financial statement. Management’s judgement is required, in particu- lar, when assessing the substance of transactions that have a complicated structure or legal form. The significant accounting estimates and judge- ments can potentially significantly impact the con- solidated financial statement. The Group has assessed the impact of climate risk on its financial reporting. The impact assessment was primarily focused on the valuation and useful lives of intangible assets, tangible assets and the identification and valuation of provisions and con- tingent liabilities, as these are judged to be the key areas that could be impacted by climate risks. No material accounting impacts or changes to judge- ments or other required disclosures were noted. Management regards '2.2 Revenue' and '3.2 Other intangible assets' as the key accounting estimates and judgements used in preparation of the conso- lidated financial statements. Please refer to these specific notes for further information on the key accounting estimates and judgements and the assumptions applied. Adoption of new or amended IFRSs Management has assesed the impact of new or amended and revised accounting standards and interpretations issued by IASB and IFRSs, endorsed by the European Union, effective on or after 1 October 2023. The following amendments have been adopted as of 1 October 2023: • Amendment to IAS 1 “Presentation of Financial Statements and IFRS Practice Statement 2: Dis- closure of Accounting Policies” • Amendment to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates” • Amendments to IAS 12 “Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction” • Amendments to IAS 12 “Income Taxes: Interna- tional Tax Reform - Pillar Two Model Rules” The amendments listed above did not have any impact on the amounts recognised in the prior period and current period, and are not expected to significantly affect future periods. Significant accounting estimates and judgments The preparation of the consolidated financial state- ments, in conformity with IFRS, requires Manage- ment to make estimates and assumptions that can have a significant effect on the application of policies and reported amounts of assets, liabilities, income, expenses and related disclosures. Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circum- stances, the results of which form the basis for making judgements about the reported carrying amounts of assets and liabilities, and the reported amounts of revenues and expenses that may not be readily apparent from other sources. Actual results could differ from those estimates. Basis of measurement The consolidated financial statements are pre- sented in Danish kroner (DKK), which is also Ambu A/S’ functional currency. All amounts are rounded to the nearest million, unless otherwise stated. The annual report has been prepared in accordance with the historical cost principle, except for deriv- ative financial instruments, which are measured at fair value. Standards not yet adopted IASB has issued new or amended accounting standards and interpretations that have not yet become effective and have consequently not been implemented in the consolidated financial statements for 2023/24. Management expects Annual report 2023/24 119 Consolidated financial statements SECTION 1: BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS 1.1 Basis of preparation (continued) to adopt the accounting standards and interpre- tations as they become mandatory. None of the new or amended standards or interpretations are expected to have significant impact on the consoli- dated financial statements. a controlling interest. Control is deemed to be obtained if Ambu A/S owns more than 50% of the voting rights, or if Ambu A/S in any other way has a controlling interest in the company. The subsidiaries’ financial statements are adjusted, if necessary, to ensure that their account- ing policies are consistent with those of the rest of the group. All intercompany transactions, balan- ces, income and expenses are fully eliminated on consolidation. occurred or the exchange rate stated in the most recent annual report, is recognised in the income statement under net financials. The financial statements of subsidiaries with a functional currency different than DKK are trans- lated to Danish kroner at the exchange rates for balance sheet items applicable at the balance sheet date and at average exchange rates, as far as income statement items are concerned. Exchange rate differences arising from the translation of the net assets of such subsidiaries, at the beginning of the year, using the exchange rates applicable at the balance sheet date and the translation of income statement items from the exchange rates applicable at the transaction date to the exchange rates applicable at the balance sheet date, are re- cognised in other comprehensive income and pre- sented as a separate reserve for foreign currency translation adjustments under equity. nection with the purchase of commodities, etc., production wages and salaries for support func- tions and factory management, as well as depre- ciation and impairment of plant and depreciation of leases. Reporting under the ESEF regulation With securities listed on a regulated market within the EU, Ambu is required to prepare the annual report using a combination of the HTML format and to tag the primary consolidated financial state- ments using iXBRL (Inline eXtensible Business Reporting Language). The Group’s iXBRL tags have been prepared in accordance with the ESEF taxonomy, which is included in the ESEF regulation and developed based on the IFRS taxonomy, published by the IFRS Foundation. The line items in the consolidated financial state- ments are tagged to elements in the ESEF taxo- nomy. For financial line items that are not directly defined in the ESEF taxonomy, an extension to the taxonomy has been created. Extensions are anchored to elements in the ESEF taxonomy, except for extensions that are subtotals. The annual report submitted to the Danish Finan- cial Supervisory Authority (the Officially Appointed Mechanism) are included in the zip file AMBU- 2024-09-30-en.zip. Selling and distribution costs Selling and distribution costs comprise costs for sales staff, advertising and exhibitions, deprecia- tion, impairment and operation of central ware- houses, as well as all costs relating to the transport of goods from the Group’s factories to customers. Foreign currency translation A functional currency is determined for each com- pany in the Ambu Group. The functional currency is the currency used in the primary economic environment in which the individual subsidiary operates. Transactions in foreign currencies are translated to the functional currency using the exchange rate applicable at the transaction date. Foreign exchange gains and losses in connection with the settlement of these transactions and the transla- tion of monetary assets and liabilities in foreign currencies at the exchange rates applicable at the balance sheet date, are recognised in the income statement under net financials. Receivables, payables and other monetary items denominated in foreign currencies are translated to the functional currency, at the exchange rate applicable at the balance sheet date. The differ- ence between the exchange rate applicable at the balance sheet date and the exchange rate applica- ble at the date on which the receivable or payable Development costs Development costs comprise salaries and costs, which, directly or indirectly, can be attributed to product improvements and the development of new products that do not meet the criteria for capi- talisation of an internally generated development project. In addition, the amortisation and impair- ment of capitalised development costs and rights and acquired technologies are recognised. Presentation of income statement Income statement Income and expenses are recognised according to the accruals concept. The income statement is presented by functions, where the respective cost impacts the function to which the cost is deemed to relate. The Group’s functions are divided into production, sales and distribution, development, as well as management and administrative costs. Management and administrative costs Administrative costs comprise expenses incurred for management and administration, including expenses for the administrative staff, office pre- mises and office expenses, as well as amortisation and impairment, and depreciation of leases. Cash flow statement The cash flow statement has been prepared on the basis of the indirect method and shows the Group’s cash flows from operating, investing and financing activities for the year. Production costs Production costs comprise costs incurred in gene- rating the revenue for the year. Production costs include direct and indirect costs for raw materials and consumables, freight costs incurred in con- Principles of consolidation The consolidated financial statements comprise Ambu A/S and companies in which Ambu A/S has Annual report 2023/24 120 Consolidated financial statements SECTION 1: BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS 1.1 Basis of preparation (continued) Cash flows from operating activities are presented using the indirect method, and calculated as the operating profit adjusted for non-cash operating items, working capital changes, as well as finan- cial income received and financial expenses and income taxes paid. Cash flows from investing activities comprise payments in connection with acquisition of sub- sidiaries, activities and fixed and intangible asset investments and proceeds from the sale of proper- ty, plant and equipment. In the parent financial statements, investing activities also include receipt of dividends from subsidiaries. Leases are considered to be non-cash transac- tions. Cash flows relating to assets held under leases are recognised as payment of interest and repayment of debt. Cash flow from financing acti- vities comprise changes to the size or composition of share capital and costs incidental thereto, as well as the arrangement of loans, the repayment of interest-bearing debt, the purchase and sale of treasury shares and the payment of dividend to the Group’s shareholders. Cash flow denominated in currencies other than Danish kroner (DKK) is translated using average exchange rates, unless such rates deviate mate- rially from the exchange rates applicable on the transaction date. Cash and cash equivalents comprise cash less short-term bank debt, alternating between posi- tive and negative balances, as well as short-term deposits with a maturity less than three months. Annual report 2023/24 121 Consolidated financial statements SECTION 2: OPERATING PROFIT AND TAX 2.1 Segment information 2.2 Revenue (DKKm) 2023/24 2022/23 Endoscopy Solutions 3,190 2,687 Anaesthesia 1,155 1,093 Patient Monitoring 1,046 995 Total revenue by activities 5,391 4,775 North America1 2,732 2,424 Europe2 2,114 1,863 Rest of World 545 488 Total revenue by markets 5,391 4,775 1 North America includes revenue in the USA of DKK 2,666m (DKK 2,364m). 2 The Group's domicile country, Denmark, is included in Europe at DKK 58m (DKK 57m). Segment reporting Ambu is a supplier of medical technology products for the global market. Except for the sales of the vari- ous products, no structural or organisational aspects allow for a division of earnings from individual pro- ducts, as sales channels, customer types and sales organisations are identical for all important markets. Furthermore, production processes and internal controls and reporting are identical, which means that, with the exception of revenue, everything else is unsegmented. Ambu has thus identified one segment. The Group operates in three geographical regions: North America, Europe and Rest of World. The geo- graphical distribution of revenue is based on the country in which the goods are delivered. See note 2.2 for a breakdown of revenue on geography and countries that individually represent more than 10% of the Group's revenue. The majority of the Group’s intangible and tangible assets are located in Denmark, as the parent com- pany owns the Group's intellectual property rights. Denmark accounts for DKK 1,828m (DKK 2,163m) of the amounts in Europe presented below. Deployed assets in North America and Rest of World primarily relates to the Group's production facilities. The management monitors goodwill as a whole, and goodwill is thus not allocated to geographical areas. Delivery and payment terms The Group's primary performance obligation is the sale and delivery of medical technology products to cus- tomers. The performance obligation is fulfilled when the risk of the goods is passed to the buyer, which most often occurs at delivery at the customer's address. Due to the Group's focus on disposable devices, the Group is not subject to any material guarantee obligations, and customers are not entitled to return unused goods. The Group's customers have payment terms that reflect the market in which the sale takes place. For the major- ity of sales, payment terms are 15-60 days, with a very limited amount of the sales up to 360 days. Historically, the Group has not experienced any major losses on trade receivables. See note 3.6 on trade receivables. (DKKm) 2023/24 2022/23 Intangible and tangible assets less goodwill by geographical region: North America 141 168 Europe 1,966 2,315 Rest of World 723 717 Total 2,830 3,200 § Accounting policies Revenue from the sale of goods is recognised in the income statement, when all performance obligations have been fulfilled at the point in time when risk is transferred. Revenue is measured at the fair value of the agreed consideration, excluding VAT and taxes collected on behalf of a third party. At the time of recognition of reve- nue, a number of price adjustments are also estimated. These are recognised as a reduction to revenue. ! Material accounting estimates Price adjustments Price adjustments are offset against revenue and trade receivables, and primarily concern sales in the USA. Price adjustments in the U.S. market are subject to estimation uncertainty, as the actual price adjustment is not determined until the dealer’s sale to the end-customer (hospitals, clinics, etc.) has been completed. Price adjustments are the difference between the price agreed with the end-customer and the dealer’s list price. Price adjustments recognised in balance sheet amount to DKK 72m (DKK 54m) as of 30 September 2024. Annual report 2023/24 122 Consolidated financial statements SECTION 2: OPERATING PROFIT AND TAX 2.3 Staff costs Staff costs are distributed between the Executive Management, the Board of Directors and other employees as follows: (DKKm) 2023/24 2022/23 Remuneration 22 20 Share-based payment 5 2 Resignation payment - -1 Severance payment 5 -1 Severance pay, share-based payment 1 3 Staff costs, Executive Management 33 23 Wages and salaries 1,630 1,562 Pension contributions 91 67 Social security costs 116 129 Share-based payment 20 15 Remuneration, Board of Directors 7 6 Total staff costs 1,897 1,802 Average number of employees during the year 4,894 4,385 Number of full-time employees at the end of the year 5,196 4,616 Remuneration to the Executive Management and the Board of Directors totalled DKK 40m (DKK 29m). The staff costs of the group are distributed onto the respective functions as follows: (DKKm) 2023/24 2022/23 Production costs 474 409 Selling and distribution costs 869 833 Development costs 81 75 Management and administrative costs 339 302 Special items -1 9 Total staff expenses 1,762 1,628 Staff costs included in intangible assets 132 168 Staff costs included in property, plant and equipment 3 6 Total staff costs 1,897 1,802 § Accounting policies Staff costs comprise remuneration, wages and salaries, pension contributions, etc., and share-based payment to the company’s employees, including termination benefits. The Group has no defined benefit plans. Annual report 2023/24 123 Consolidated financial statements SECTION 2: OPERATING PROFIT AND TAX 2.4 Depreciation, amortisation and impairment losses on non-current assets 2.5 Financial risks from operating activities (DKKm) 2023/24 2022/23 Amortisation of intangible assets, identified in connection with business combinations 61 47 Amortisation of intangible development projects and other, incl. IT software 154 137 Depreciation of property, plant and equipment 75 77 Depreciation of right-of-use assets 65 65 Net loss on disposed non-current assets 8 - Impairment losses on non-current assets 333 22 Total depreciation, amortisation and impairment losses 696 348 Foreign currency risks The majority of Ambu's sales are invoiced in USD, EUR and GBP. The majority of Ambus production costs and OPEX are in USD, DKK, EUR, MYR and CNY. All assets and liabililties in the subsidiaries' balance sheets are denominated in foreign currency. As a consequence, fluctuations in these exchange rates against DKK might impact Ambu’s financial position and results. The most important exchange rates in relation to risk exposure are USD, MYR, CNY and GBP (collectively referred to as ‘main currencies’). Fur- thermore, EUR is a currency with large exposure, but the risk is deemed limited, due to DKK being pegged to EUR. Sensitivity analysis The following table shows the impact on the Group's net profit and other comprehensive income, in the event of a 10% fluctuation in the main currencies, relative to the recognised financial instruments. The fluctuation of 10% constitutes the Management’s assessment of a realistic exchange rate development within the main currencies. The financial instruments comprised by the sensitivity analysis include trade receivables, cash, payables, trade payables and intercompany balances. The sensitivity analysis does not take into consideration any translation effect from functional currency to presentation currency. In 2023/24, DKK 327m of the total impairment losses on non-current assets of DKK 333m relates to an impairment of GI technologies reflecting the longer time required to penetrate the market. The impair- ment losses are charged to 'special items'. Please refer to note 2.6 for more information. Depreciation, amortisation and impairment losses have been allocated to the following functions: (DKKm) 2023/24 2022/23 Production costs 84 77 Selling and distribution costs 22 25 Development costs 210 188 Management and administrative costs 48 40 Special items 332 18 Total depreciation, amortisation and impairment losses 696 348 Decrease of 10% Increase of 10% (DKKm) in main currencies in main currencies 2023/24 2022/23 2023/24 2022/23 Income statement - -34 - 34 Other comprehensive income - - - - - -34 - 34 § Accounting policies For a description of accounting policies, please refer to notes 3.1, 3.2 and 3.3. Annual report 2023/24 124 Consolidated financial statements SECTION 2: OPERATING PROFIT AND TAX 2.5 Financial risks from operating activities (continued) In 2023/24, special items represent a net expense of DKK 334m, relating to an impairment within gastro- enterology (GI). A strategic review has been performed across the GI endoscopy business, resulting in revised assumptions, based on the longer time required to penetrate this market. Impairment tests have been carried out for each GI technology. 'Colonoscopy' and 'Duodenoscopy' were written down to their recoverable amounts, and 'Cholangio' was fully written down, due to project plans being put on hold as a consequence of the strategic review, resulting in total impairment losses of DKK 327m. Furthermore, related assets have been revaluated, resulting in excess production equipment and excess inventories written down by, respectively, DKK 5m and DKK 3m. In 2022/23, a remeasurement of a historical technology acquisition amounted to an income of DKK 19m. Hedging of expected future transactions Interest rate swaps have been entered to hedge when the Group has debt to credit institutions, converting floating-rate debt into fixed-rate debt. Management has decided not to apply the rules of 'hedge account- ing' on the DKK 250m interest rate swap, and consequently, fair value adjustments are recognised in the income statement, i.e., the treatment is the same when the Group has no debt. Please refer to note 4.1 and note 4.2. (DKKm) Contract value Fair value 30.09.24 30.09.23 30.09.24 30.09.23 Interest rate swaps: Interest rate swap, DKK 250m, floating to fixed rate, maturity May 2025 250 250 3 11 Total financial liabilities 250 250 3 11 If special items had been recognised in operating profit (EBIT) before special items, the impact would have been allocated to the following functions: (DKKm) 2023/24 2022/23 Production costs 8 - Selling and distribution costs - -2 Development costs 326 10 Total special items 334 8 2.6 Special items (DKKm) 2023/24 2022/23 Impairment of acquired technologies 206 - Impairment of completed development projects 121 2 Impairment of intangible rights related to production - 16 Impairment of plant and machinery 5 - Write-down of inventories 3 - Remeasurement of technology debt - -19 Severance costs and reversals hereof -1 9 Total special items 334 8 § Accounting policies Special items comprise costs or income that cannot be attributed directly to the Group's ordinary acti- vities and are non-recurring of nature, e.g., strategic re-evaluation. Such costs include the cost related to significant restructuring of the cost base and processes, as well as restructuring costs related to resigna- tion of employees. Further special items include redundancy costs' related to the Group's Management, impairment of assets and remeasurement of technology debt. Annual report 2023/24 125 Consolidated financial statements SECTION 2: OPERATING PROFIT AND TAX 2.7 Income taxes Transparent tax management Ambu strives to meet the standard of being a good corporate citizen in all countries in which we operate. Ambu develops, manufactures and sells solutions to hospitals and rescue services all over the world through our own companies or in collaboration with third parties, naturally leading to cross-border trans- actions. In order to counter the inherent tax risk associated with being a multinational company, Ambu follows the OECD’s transfer pricing principles and general guidelines. Even though Ambu operates in OECD member countries, a tax risk still exists, given the fact that applicable principles and guidelines are, to some extent, subject to interpretation by the member countries, and also related to the fact that appli- cable case law is not always clear and changes over time. Ambu utilises a straightforward transfer pricing system that adheres to the principal structure. In this arrangement, the Parent company earns residual profits, due to its ownership of intangible assets and pays corporate income tax in the countries where we conduct business. (DKKm) 2023/24 2022/23 Tax for the year comprises: Current tax on profit for the year 140 41 Deferred tax on profit for the year -71 13 Adjustment, previous years -4 -12 Tax on profit for the year 65 42 Current tax on other comprehensive income and entries on equity for the year - - Deferred tax on other comprehensive income and entries on equity for the year -6 -26 Tax on other comprehensive income and entries on equity for the year -6 -26 Total income taxes for the year 59 16 Tax governance Our work with income taxes is governed by the Tax Policy, approved by the Board of Directors. Ambu’s policy is to have a low tax risk appetite and to refrain from having business in tax havens or low tax juris- dictions for the purpose of conduction tax optimisation. Ambu does not have activities in tax havens, as defined according to the EU list of non-cooperative jurisdictions for tax purposes. In some jurisdictions where we operate, tax incentives are offered to all market participants. Our tax policy does not prevent us from making use of such incentives, in so far as our activities are business-driven and not motivated by tax considerations. Tax incentives utilised by Ambu mainly relate to R&D activities. Most of the current tax incentives relates to R&D credit relief / uplift in Denmark entailing a R&D uplift and addi- tionally, a 116% depreciation of new equipment rolled forward. In USA, the tax incentive received relates to R&D tax credit and in Malaysia it regards reinvestment allowances. 2023/24 2022/23 Reconciliation of effective tax rate and tax: % DKKm % DKKm Profit before tax 300 210 Applicable tax rate in Denmark, 22% 22.0 66 22.0 46 Effect of tax rate in foreign subsidiaries -0.2 -1 3.1 7 Income not subject to tax -0.1 - -1.9 -3 Non-deductible costs 3.2 9 3.8 8 Adjustment, change in tax rates -0.1 - - - Tax adjustment in respect of previous years -1.4 -4 -5.1 -12 Additional tax deduction on R&D costs -1.7 -5 -1.9 -4 Effective tax rate / income tax expense 21.7 65 20.0 42 Tax risks To counter any future tax disputes and disagreements with the tax authorities, the Managements makes estimates and assessments of the Group's tax exposure and, on the basis thereof, makes a provision for uncertain tax positions. Even though the Management considers this provision to be sufficient, future lia- bilities may deviate from this. Annual report 2023/24 126 Consolidated financial statements SECTION 2: OPERATING PROFIT AND TAX 2.7 Income taxes (continued) Current tax / income tax paid Current tax Income tax paid (DKKm) 2023/24 2022/23 2023/24 2022/23 China 6 5 9 10 Denmark 42 - - - France 3 2 1 3 Germany 6 4 - 8 Italy 4 3 1 2 Malaysia 11 2 6 7 Mexico 3 - - 7 Spain 2 2 2 - UK 3 2 4 3 USA 57 18 62 15 Other countries 3 3 5 2 140 41 90 57 Global minimum corporate tax rate – Pillar Two requirements The legislation implementing OECD’s proposals for a global minimum corporate tax rate (Pillar two) was enacted into Danish law by the end of 2023, with effect from 2024. Based on the financial strategic plan- ning, we expect Ambu to be applicable to this legislation from 1 October 2026 and onwards. The Group has performed a high-level assessment of the Group’s potential exposure to Pillar Two income taxes for periods from 1 October 2024. The assessments of the potential exposure to Pillar Two income taxes are based on the most recent tax filings and financial statements for the entities in the Group. Based on the assessments, the Pillar Two effective tax rates, in most of the jurisdictions in which the Group operates, are above 15%, and the tran- sitional safe harbour relief is expected to apply. On this basis, the Group does not expect a material expo- sure to Pillar Two income taxes in any jurisdiction. § Accounting policies The tax for the year, which consists of current tax and changes in deferred tax, is recognised in the income statement for the portion attributable to the profit for the year, and in equity for the portion attributable to amounts recognised directly in equity. The tax effect of share-based payment is included in tax on profit for the year, with the portion attributable to the Group’s deductible share of the cost from the Black- Scholes or other applied valuation model and the remaining tax effect, being included in equity. Tax is provided on the basis of the tax rules and tax rates applicable in the individual countries. Income tax paid for the year was DKK 90m, of which DKK 0 was in Denmark. Ambu has not paid income tax in Denmark, due to tax losses primarily incurred from high levels of tax deductible investments. There will be current year tax in Denmark in 2023/24, due to positive taxable income, which have been partly off- set by tax losses under the Danish rules for tax loss restriction. Annual report 2023/24 127 Consolidated financial statements SECTION 2: OPERATING PROFIT AND TAX 2.8 Deferred tax (DKKm) 30.09.24 30.09.23 Deferred tax at 1 October 82 62 Currency translation adjustment -3 1 Deferred tax on share-based payment recognised in equity 6 26 Deferred tax for the year recognised in the income statement 71 -13 Adjustments in respect of previous years - 6 Deferred tax at 30 September 156 82 Deferred tax relates to: Intangible assets -333 -383 Property, plant and equipment -28 -23 Current assets 119 54 Deferred tax on share-based payment recognised in equity 8 -3 Provisions -32 -29 Payables 27 19 Tax loss carry-forwards 395 447 156 82 Classified in the balance sheet as follows: Deferred tax asset 160 85 Deferred tax liability -4 -3 156 82 § Accounting policies Deferred tax is measured under the balance sheet liability method, on the basis of all temporary differen- ces between the carrying amount and tax base of assets and liabilities. Deferred tax is not recognised on temporary differences, resulting from the initial recognition of goodwill. Deferred tax assets, including the tax base of tax loss carry-forwards, are recognised under other non-current assets at the expected usable value, either as a set-off against tax on future income or as a set-off against deferred tax liabilities in the same legal tax entity. Adjustment is made to deferred tax in relation to eliminations made regarding unrealised intercompany profits and losses. The value of deductible temporary differences is recognised to the extent that the Management, on the basis of budgets, business plans, etc., is able to render probable that the value can be offset against tem- porary deferred tax liabilities or against future taxable income. Tax losses are recognised to the extent that the Management can render probable that these can be offset against future taxable income. Deferred tax is calculated on share-based payments, to the extent that the individual scheme is deducti- ble for the Group. Deferred tax is calculated as the difference between the value of the share-based pay- ment at the time of allocation and the fair value, whichever is higher. Deferred tax assets from share-based payment schemes are recognised proportionately over the vesting period. The tax asset is recognised in the income statement at a value corresponding to the tax deduction for the scheme-related costs, recog- nised in the income statement. Any additional values are recognised directly in equity. Deferred tax is measured on the basis of the taxation rules and tax rates, which, pursuant to the legislation in force at the balance sheet date, will apply in the individual countries at the time when the deferred tax is expected to become payable as current tax. Changes in deferred tax resulting from changes in tax rates are recognised in the income statement. Tax losses in the Group In recognising tax loss carry-forwards in Denmark, the Management has assessed whether convincing evidence was present, as the Group has a history of recent losses in Denmark, due to high investment levels, lower earnings and tax deductibility of employees' share-based payments. Tax loss carry-forwards in Denmark, totalling DKK 395m (DKK 440m), were recognised by the end of the year. The tax loss carry-forwards are recognised on the basis of budgets and strategy plans for the indivi- dual activities approved by the Management, incl. tax planning opportunities aimed to advance the tax- able profit. Estimates and assessments of future taxable income are thus consistent with the basis for the impairment tests. In Germany, unrecognised tax assets amounted to DKK 30m (DKK 30m). Annual report 2023/24 128 Consolidated financial statements SECTION 2: OPERATING PROFIT AND TAX 2.9 Earnings per share (DKKm) 2023/24 2022/23 Net profit for the year 235 168 Average number of Class A and Class B shares in circulation (’000) 266,331 260,480 Dilutive effect of outstanding share options, warrants and employee share programmes (’000) 383 176 Average number of outstanding Class A and Class B shares, including the dilutive effect of share-based payment settled in shares (’000) 266,714 260,656 Earnings per DKK 0.50 share (EPS) in DKK 0.88 0.64 Diluted earnings per DKK 0.50 share (EPS-D) in DKK 0.88 0.64 § Accounting policies Earnings per share are presented as both earnings per share and diluted earnings per share. Earnings per share are calculated as the net profit for the year, divided by the average number of outstanding shares. Diluted earnings per share are calculated as the net profit for the year, divided by the sum of the average number of outstanding shares, including the dilutive effect of outstanding share-based payment settled in shares that are ‘in the money’. The dilutive effect of share-based payment that are ‘in the money’ is calculated as the difference between the number of shares that could be acquired at fair value for the pro- ceeds from the exercise of the share-based payment, offset against the share of the granted fair value of the share-based payment not yet recognised. Annual report 2023/24 129 Consolidated financial statements SECTION 3: INVESTED CAPITAL AND NET WORKING CAPITAL 3.1 Goodwill (DKKm) 30.09.24 30.09.23 Cost at 1 October 1,565 1,623 Currency translation adjustment -38 -58 Cost at 30 September 1,527 1,565 The carrying amount of goodwill at DKK 1,527m (DKK 1,565m) stems primarily from the business combi- nations of Invendo Medical GmbH in 2017 and King Systems Corp. in 2013. § Accounting policies On recognition, goodwill represents the excess cost of an acquisition over the fair value of the identifia- ble net assets of the acquired company. Subsequently, goodwill is measured at cost, less accumulated impairment losses. Goodwill is not amortised. At the time of acquisition, goodwill is attributed to the cash-generating units, which are expected to bene- fit from the business combination; however, not to a level lower than the segment level and the level on which goodwill is monitored, as part of the internal financial management. The Management has identi- fied one operating segment being the whole group to which goodwill is allocated. The carrying amount of goodwill is tested for impairment, together with the other non-current assets of the cash-generating unit to which goodwill has been allocated (being the whole Group) and is impaired to the recoverable amount in the income statement, if the carrying amount is higher. Impairment of goodwill is recognised as a separate item in the income statement. Goodwill is tested annually for impairment, the first time being by the end of the year of recognition, in connection with a business combination. Impairment of goodwill is not reversed. Impairment of other assets is reversed in so far as the assump- tions and estimates, on the basis of which the impairment is made, have been changed. Impairments are only reversed in so far as the new carrying amount of the asset does not exceed the carrying amount of the asset after amortisation, had the asset not been impaired. Impairment testing As described in section 2.1, the Ambu Group is managed as one single unit, for which reason the Manage- ment monitors goodwill as a whole, at Group level. Consequently, the impairment test is based on the Group’s market value. The market value of Ambu A/S’s shares is based on the quoted price of DKK 131.15 per share on Nasdaq Copenhagen at 30 September 2024 (DKK 73.86 per share at 30 September 2023). Based on this market value approximation, Ambu's equity value is DKK 34.9bn (DKK 19.9bn), which leaves DKK 29.3bn (DKK 14.5bn) in headroom to the carrying amount of equity. Therefore, the Management has concluded that the net selling price, calculated on the basis of a level 1 fair value measurement, proves that there is no indication of impairment of goodwill. Annual report 2023/24 130 Consolidated financial statements SECTION 3: INVESTED CAPITAL AND NET WORKING CAPITAL 3.2 Other intangible assets § Accounting policies Acquired technologies, trademarks and customer relations, pri- marily comprising identified technologies, are recognised at fair value on the time of acquisition in connection with a business com- bination. Any other intangible asset is recognised at cost. Development and IT projects are recognised as intangible assets if they meet certain criteria. These projects must be clearly defined and identifiable, with proven technical feasibility and sufficient resources available for completion. Additionally, there should be a potential market or scope for the project, and the Group must intend to produce, market or use the project. The directly attrib- utable cost should be reliably measurable, and there must be certainty that future earnings or the net selling price will cover all costs. Useful lifetime and residual value Intangible assets, excl. goodwill, are amortised according to the straight-line method over the expected useful lifetime of the indi- vidual asset. The residual value for all intangible assets is assessed as zero. The amortisation of the intangible asset commences upon completion of the project or when the asset is ready for use. The basis of amortisation is reduced by impairment losses, if any. The useful life of the asset may subsequently be changed if the original assumptions, on which the useful life and any residual value are based, have changed significantly. The expected useful lifetime of intangible assets are as follows: Acquired technologies 5-15 years Completed development projects 5-10 years Distribution rights, patents and licenses etc. 5-20 years IT software projects 3-5 years Acquired technologies, Development trademarks Completed projects and and cust. development Other, incl. other assets (DKKm) relations projects IT software in progress Total 2023/24 Cost at 1 October 929 1,492 257 444 3,122 Currency translation adjustment -6 1 - -1 -6 Additions during the year - - - 201 201 Transferred during the year - 269 25 -294 - Cost at 30 September 923 1,762 282 350 3,317 Amortisation and impairment losses at 1 October -286 -604 -186 - -1,076 Currency translation adjustment 6 - -2 - 4 Impairment losses for the year -206 -121 - - -327 Amortisation for the year -61 -132 -22 - -215 Amortisation and impairment losses at 30 September -547 -857 -210 - -1,614 Carrying amount at 30 September 376 905 72 350 1,703 2022/23 Cost at 1 October 944 1,260 198 483 2,885 Currency translation adjustment -15 - - - -15 Additions during the year - - 13 242 255 Disposals during the year - -1 -2 - -3 Transferred during the year - 233 48 -281 - Cost at 30 September 929 1,492 257 444 3,122 Amortisation and impairment losses at 1 October -251 -496 -142 - -889 Currency translation adjustment 12 - - - 12 Disposals during the year - 1 2 - 3 Impairment losses for the year - -2 -16 - -18 Amortisation for the year -47 -107 -30 - -184 Amortisation and impairment losses at 30 September -286 -604 -186 - -1,076 Carrying amount at 30 September 643 888 71 444 2,046 Annual report 2023/24 131 Consolidated financial statements SECTION 3: INVESTED CAPITAL AND NET WORKING CAPITAL 3.2 Other intangible assets (continued) Sensitivity analysis The sensitivity analysis assesses the impact of changes in key assumptions of the impairment test results. The ‘relief from royalty’ method estimates the discounted value of an intangible asset determined on the expected royalty payments to an independent third party to be saved by owning the respective asset instead of licensing it. When applying the ‘relief from royalty’ method in the impairment test for the GI technologies, the fair value is measured over the useful lifetime of the individual assets and applying the main key assumptions as revenue, royalty rate and pre-tax discount rate. Useful lifetime for GI technologies is 15 years from FDA approval of the first product generation, also cor- responding to the budgeted period used in the impairment test. The sensitivity shown for revenue is the amount of decrease in headroom, when reducing the expected revenue in all budgeted years by 5 percentage points, everything else kept equal. The sensitivity shown for royalty rate is the amount of decrease in headroom, when reducing the applied royalty rate by 5 percentage points, everything else kept equal. The sensitivity shown for pre-tax discount rate is the amount of decrease in headroom, when increasing the applied pre-tax discount rate by 1 percentage points, everything else kept equal. Key assumptions Description Revenue • Revenue in the budgeted period is based on a combination of expected quanti- ties sold and the average selling price together with a 15 years of survival curve for each technology, commencing upon first FDA approval Royalty rate • Based on an expected royalty rate paid to an independent third party to license the individual technology Discounted rates • Based on 20-year government bonds (pre-tax) • Equity risk premium: 8.1% (8.8%) • Premium added to adjust for variability and associated risks of the in-market and pipeline products Result of impairment test other intangible assets In 2023/24, a strategic review across our GI endoscopy business was conducted. This resulted in revised assumptions, based on the longer time required to penetrate the market, resulting in a re-evaluation of our short-term potential for GI. Despite this revision, we remain dedicated to solving unmet customer needs within GI, unlocking potential on the mid to long term, by applying a focused approach in the years to come. The technologies 'Colonoscopy' and 'Duodenoscopy' have been written down to their respective recover- able amount as a result of the strategic review performed across the GI endoscopy business, resulting in revised assumptions, based on the longer time required to penetrate this market. The recoverable amount is determined as the highest of fair value and value in use in accordance with Ambu’s accounting policies. The recoverable amount has been calculated on basis of the estimated fair value by use of the ‘relief from royalty’ method, except for the internal development project ‘Cholangio’, where project plans have been put on hold as a consequence of the strategic review. The total DKK 327m impairment loss on intangible assets has been charged to special items, as described in note 2.6. Hereafter, the total carrying amount, as of 30 September 2024, for the GI technologies amounts to DKK 596m. In 2022/23, an impairment loss of DKK 2m on in-progress development projects was recognised, due to ceased development plans, and an impairment loss of DKK 16m on intangible rights related to production was recognised, due to rights not expected to be used. Annual report 2023/24 132 Consolidated financial statements SECTION 3: INVESTED CAPITAL AND NET WORKING CAPITAL 3.2 Other intangible assets (continued) (DKKm) Cholangio Colon Duodeno Gastro 2023/24 Carrying amount, tested technology 26 254 416 227 Impairment loss (-) / headroom (+) -26 -162 -139 67 Carrying amount at 30 September - 92 277 227 Budget period Revenue (CAGR) 19% 61% 27% Royalty rate 20% 25% 20% Pre-tax discount rate 14.1% 11.5% 11.5% Sensitivity analysis – impacted headroom1 Revenue -5 -14 -16 Royalty rate -26 -56 -80 Pre-tax discount rate -7 -15 -16 2022/23 Carrying amount, tested technology 26 276 425 232 Impairment loss (-) / headroom (+) 135 116 330 Carrying amount, 30 September 26 276 425 232 Budget period Revenue (CAGR) 47% 62% 27% Royalty rate 20% 25% 20% Pre-tax discount rate 15.4% 12.8% 12.8% Sensitivity analysis – impacted headroom1 Revenue -22 -29 -30 Royalty rate -111 -116 -150 Pre-tax discount rate -27 -31 -33 1 Sensitivity for revenue and royalty rate is based on a 5 percentage points decrease, and pre-tax discount rate is based on a 1 per- centage point increase § Accounting policies Impairment testing other intangible assets At each reporting date, the Management performs an assessment of whether internal or external indications of impairment of the identified intangible assets exist. If there is any indication of impairment, an impairment test is carried out. If an indication of impairment exists, the recoverable amount of the asset is determined, i.e. the higher of the fair value of the asset less anticipated costs of disposal and its value-in-use. Development projects in progress, either acquired or internally generated, are tested for impairment mini- mum on an annual basis and if any indication of impairment. For completed development projects, it is con- tinuously assessed whether there is any indication of impairment. Impairment tests is either carried out by calculating the value in use, by use of discounted cashflow model, or by calculating the fair value, depending on the type of intangible asset. If the initial impairment test shows a calculated amount lower than the carrying value of the asset, both fair value and value in use is calculated, and an impairment loss is recognised at the higher amount of either fair value or value in use, if both calcu- lated values are below the carrying amount of the asset. The impairment assessment, and possible following impairment test, is carried out per individual asset. ! Material accounting estimates Impairment test of other intangible assets The Management assesses the risk of impairment of the Ambu Group’s intangible assets. This requires judg- ment in relation to the underlying assumptions of the future expected cashflow, of the individual assets, to be applied in the Group’s impairment model. An impairment test is performed at least once a year for development projects in progress. The impairment test is for each development project in progress determined on the basis of certain key assumptions, i.e. pay- back time, net present value and actual development costs realised, compared to the business case. For acquired and completed development projects related to the GI technologies, the impairment test is con- ducted by use of the ‘relief from royalty’ method as the valuation model for determining the fair value. This is consistent with the valuation method applied when the technologies were acquired. The fair value hierarchy, by use of the ‘relief from royalty’ method, is level 3, as unobservable inputs are used to measure the fair value to the extent that relevant observable inputs are not available, which includes any information about market participant assumptions that is reasonably available. The recoverable amount of each identified intangible asset, related to the GI technologies, is determined on the basis of certain key assumptions, i.e., expected revenue, royalty rate and discount rate, etc. The cash flow projections for the individual assets, applied in the short-, mid- and long-term perspective, reflect Man- agement’s best estimate, including Group-strategic initiatives, local initiatives, past experience and external sources of information, where possible and relevant for the individual assets. Annual report 2023/24 133 Consolidated financial statements SECTION 3: INVESTED CAPITAL AND NET WORKING CAPITAL 3.3 Property, plant and equipment Other Property, plant Land and Plant and fixtures and and equipment (DKKm) buildings machinery equipment in progress Total 2023/24 Cost at 1 October 287 537 285 79 1,188 Currency translation adjustment 5 5 -13 -1 -4 Additions during the year - 2 - 86 88 Disposals during the year -2 -29 -20 - -51 Transferred during the year 1 68 13 -82 - Cost at 30 September 291 583 265 82 1,221 Depreciation and impairment losses at 1 October -112 -360 -132 - -604 Currency translation adjustment - -2 5 - 3 Disposals during the year 2 23 18 - 43 Impairment losses for the year - -5 -1 - -6 Depreciation for the year -4 -43 -28 - -75 Depreciation and impairment losses at 30 September -114 -387 -138 - -639 Carrying amount at 30 September 177 196 127 82 582 2022/23 Cost at 1 October 301 538 222 156 1,217 Currency translation adjustment -23 -46 -11 -3 -83 Additions during the year - 4 7 60 71 Disposals during the year - -8 -9 - -17 Transferred during the year 9 49 76 -134 - Cost at 30 September 287 537 285 79 1,188 Depreciation and impairment losses at 1 October -108 -360 -117 - -585 Currency translation adjustment 7 30 6 - 43 Disposals during the year - 7 8 - 15 Depreciation for the year -11 -37 -29 - -77 Depreciation and impairment losses at 30 September -112 -360 -132 - -604 Carrying amount at 30 September 175 177 153 79 584 § Accounting policies Land and buildings, plant and machinery, as well as other plant, fix- tures and fittings, tools and equipment are measured at cost, less accumulated depreciation and impairment losses. Cost comprises the acquisition price and any costs directly attributable to the acqui- sition until the date when the asset is ready for use. The cost of a total asset is divided into separate elements which are depreciated individually when the useful lives of the individual elements differ. The basis of depreciation is calculated in consideration of the residual value of the asset and is reduced by impairment losses, if any. The residual value is fixed at the date of acquisition and is subject to annual review. When the residual value exceeds the car- rying amount of the asset, depreciation will no longer take place. In connection with changes in the depreciation period or the residual value, the effect of depreciation is recognised in the future as a change in the accounting estimate. The carrying amount of property, plant and equipment is assessed on an annual basis to establish whether there is any indication of impairment. When such indication exists, an impairment test is performed. An impairment loss is recognised when the carrying amount of an asset exceeds the recoverable amount of the asset. Property, plant and equipment are depreciated according to the straight-line method over the expected useful lives of the assets/ components as follows: Buildings 10-40 years Building installations 10 years Plant and machinery 2-10 years Other fixtures and equipment 3-5 years Land is not depreciated. Depreciation is recognised in the income statement under produc- tion costs, selling and distribution costs, development costs or man- agement and administrative expenses, as appropriate. See note 2.4. Annual report 2023/24 134 Consolidated financial statements SECTION 3: INVESTED CAPITAL AND NET WORKING CAPITAL 3.4 Leases § Accounting policies Lease assets are ‘right-of-use assets’, which refer to a contract or part of a contract that conveys the les- see’s right to use an asset for a period of time. At the commencement date, the Group recognises a lease liability and a corresponding right-of-use asset at the same amount. A right-of-use asset is initially mea- sured at cost, which equals the initial lease liability and initial direct costs, less any lease incentives received. The Group has applied the practical expedient option allowed under IFRS, by using a portfolio approach for the recognition of lease contracts related to assets of the same nature and with similar lease terms. (DKKm) 30.09.24 30.09.23 Land and buildings 516 538 Other plant, fixtures and fittings, tools and equipment 29 33 Carrying amount of lease assets 545 571 Additions on lease assets during the year 92 48 (DKKm) 30.09.24 30.09.23 Lease liabilities Less than 1 year 74 79 Between 1 and 5 years 285 227 More than 5 years 308 419 Undiscounted lease liabilities 667 725 The right-of-use asset is depreciated over the earlier of the lease term or the useful life of the asset. The impairment testing of right-of-use assets follows the same principles as those applied for property, plant and equipment, cf. note 3.3. The cost price is adjusted for remeasurement of the lease liability. The Group has chosen not to recognise right-of-use assets and liabilities for leases with a term of 12 months or less and leases of low-value assets. Lease payments related to such leases are recognised in the income state- ment as an expense on a straight-line basis over the lease term. (DKKm) 2023/24 2022/23 Amounts recognised in the income statement Expenses related to low value and short-term leases 2 2 Interest on lease liabilities 20 17 Depreciation of lease assets per asset class Land and buildings 50 46 Other plant, fixtures and fittings, tools and equipment 15 19 Depreciation of lease assets 65 65 Amounts recognised in the cash flow statement Total cash outflow for leases 87 82 Annual report 2023/24 135 Consolidated financial statements SECTION 3: INVESTED CAPITAL AND NET WORKING CAPITAL 3.5 Inventories 3.6 Trade receivables (DKKm) 30.09.24 30.09.23 Raw materials and consumables 435 430 Finished goods 643 477 1,078 907 The above includes write-downs amounting to -38 -54 Direct production costs 1,689 1,541 Unallocated indirect production costs, incl. inbound freight 496 489 Freight costs on transportation between Ambu's warehouses 96 134 Cost of sales for the year 2,281 2,164 Cost of sales for the year is incurred under the following functions: Production costs 2,185 2,030 Selling and distribution costs 96 134 Cost of sales for the year 2,281 2,164 Trade receivables fall due as follows: Due Due Due 1-90 91-180 > 180 (DKKm) Not due days days days Total 2023/24 Trade receivables, amortised cost 581 154 15 15 765 Write-down for expected credit loss -2 -4 -5 -9 -20 Trade receivables 579 150 10 6 745 Provision for bad debt at 1 October -27 Bad debt realised during the year 3 Bad debt provision for the year -6 Bad debt provision reversed for the year 10 Provision for bad debt at 30 September -20 2022/23 Trade receivables, amortised cost 580 163 23 27 793 Write-down for expected credit loss - -4 -10 -13 -27 Trade receivables 580 159 13 14 766 Provision for bad debt at 1 October -25 Bad debt realised during the year 1 Bad debt provision for the year -3 Provision for bad debt at 30 September -27 § Accounting policies Inventories are measured at the lower of cost, calculated according to the FIFO principle and net realis- able value. The net realisable value is calculated as the selling price, less costs of completion and costs necessary to make the sale. The cost of goods for resale, as well as raw materials and consumables, com- prises the acquisition price plus delivery costs. The cost of manufactured goods comprises the cost of raw materials, consumables, direct labour costs and production overheads, in the form of logistics and planning costs, production management, as well as expenses for production facilities and equipment, etc. Annual report 2023/24 136 Consolidated financial statements SECTION 3: INVESTED CAPITAL AND NET WORKING CAPITAL 3.6 Trade receivables (continued) Credit risks Ambu monitors trade receivables on a daily basis by means of due date reports, changes in payment pattern trends and ordinary follow-up routines to identify any indications that the initial expectations per- taining to credit losses on the individual receivables should be adjusted. This risk assessment is targeted private customers. Public-sector customers are an important part of the company’s receivables, and it is believed that no debtor risks are associated with public-sector customers. In addition to a specific assessment for expected credit losses on private customers, the Management estimates general macro risks on the port- folio of trade receivables. The Group does not use factoring in connection with the collection of debts. § Accounting policies Trade receivables are measured at amortised cost, less write-down for lifetime expected credit losses. To measure the expected credit losses, trade receivables are grouped according to shared credit risk charac- teristics and days overdue. Furthermore, an allowance for lifetime credit losses for trade receivables is recognised on initial recognition. 3.7 Change in working capital (DKKm) 2023/24 2022/23 Change in inventories -170 237 Change in receivables -40 -47 Change in payables 99 -211 Change in working capital -111 -21 Annual report 2023/24 137 Consolidated financial statements SECTION 4: FINANCIAL RISK MANAGEMENT, CAPITAL STRUCTURE AND NET FINANCIALS 4.1 Financial risk management Supply chain financing (SCF) To improve the relationship with our suppliers and minimise the financing cost in the value chain, Ambu facilitates a SCF programme. When participating in this programme, the supplier has the option to receive early payment from the bank, based on the invoices approved by Ambu, through a factoring arrangement between the supplier and the bank, where the outstanding invoices are transferred to the bank without re-course. Ambu is exposed to fluctuations in foreign exchange and interest rates. Furthermore, Ambu is exposed to liquidity and financing risks. These risks are managed and monitored centrally in the Parent Company in accordance with the Finance Policy, approved by the Board of Directors. Ambu does not undertake any active speculation in financial risks. Market risk As described above, the Group is exposed to changes in foreign exchange and interest rate risks. Addi- tionally, the Group is exposed to changing raw materials prices and freight rates. Ambu's Global Procure- ment and Global Supply Chain functions, respectively, monitor these risk and work to mitigate them to an acceptable level. The Management assesses these risks to be manageable, as they represent a small value of the total cost, despite substantial volatility in recent years. Ambu's liability in relation to the SCF programme is the outstanding invoices, which are recognised and presented as trade payable until paid upon maturity. The trade payables covered by the SCF programme arise in the ordinary course of business, from supply of goods and services, and the payment terms of the suppliers that are participating in the SCF programme are not significantly extended, compared to trade payables not part of the SCF programme. At the end of 2023/24, trade payables covered by the pro- gramme amounted to DKK 48m (DKK 44m). Currency risk The effect of fluctuations in foreign exchange rates on the Group’s financial targets and financial position is monitored on an on-going basis. Prior years' analyses and on-going quantification of short term expo- sure, using reckon statistical models, have indicated an acceptable level of currency risk to Ambu's cash flow and financial targets. On this background, the Company continues to rely on natural hedging, given the current mix of transaction in different foreign exchange rates. See note 2.5 for further information about foreign currency exposure, as well as the 'Outlook for 2024/25' section in the Management's review section. Credit facility To cover the Group’s liquidity needs, Ambu has committed credit facilities for a total of DKK 1,800m. The facilities carry floating interest rates in the range of 0.58-2.98%, depending on the Group’s gearing and ESG performance. To mitigate the interest rate risk, DKK 250m was hedged in May 2022, through an interest rate swap, until 2 May 2025, at a fixed interest rate of 1.24%. The credit facilities expires on 28 June 2026 and are subject to standard financial covenants. The cash resources, that consist of cash at bank including short-term cash deposits, committed and uncommited unutilised credit facilities in banks, is of DKK 2.5bn (DKK 2.1bn). Considering committed facilities and cash at bank only, the cash resource was DKK 2.4bn (DKK 2.0bn). Cash-pool solutions are applied to some extent, and intercompany loans have been granted by Ambu A/S to a few subsidiaries. The liquidity risk is mitigated by a consistent focus on budgeted and realised cash flow. Interest rate risk Ambu's policy is to hedge interest rate risk to mitigate fluctuating interest payments. Hedging is done through interest rate derivatives, swapping floating-rate loans into fixed-rate loans. The Group’s credit facilities carry floating interest rate. The development in interest rates is linked to IBOR/SOFR reference rate. In May 2022, the Company entered into a DKK 250m interest rate swap, involving receipt of CIBOR 3 months and payment of a fixed interest rate of 1.24%. The derivative is not considered an accounting hedge in accordance with IFRS 9. Credit risk Ambu is mainly exposed to credit risks in respect of trade receivables. The maximum credit risk corre- sponds to the carrying amount. For many years, Ambu has not realised any significant losses on receiv- ables. Reference is made to note 3.6. Liquidity and financing risk Financing and sufficient liquidity are fundamental to Ambu’s continued operation and growth. Liquidity is managed centrally from the Parent Company. The objective of the cash management is to ensure that adequate and flexible cash resources are being maintained, thus enabling Ambu to honour its current obligations, such as, repaying loans and settling other liabilities. Annual report 2023/24 138 Consolidated financial statements SECTION 4: FINANCIAL RISK MANAGEMENT, CAPITAL STRUCTURE AND NET FINANCIALS 4.1 Financial risk management (continued) 4.2 Financial instruments Counterparty risk Counterparty risk for cash and financial instruments is mitigated by Ambu setting cash limits for each institution, based on their respective credit rating. Contractual cash flows Carrying (DKKm) 0-1 year 1-5 years > 5 years Total amount 2023/24 Trade receivables 745 - - 745 745 Other receivables 21 23 - 44 44 Cash and cash equivalents 615 - - 615 615 Financial assets measured at amortised cost 1,381 23 - 1,404 1,404 Derivative financial instruments (level 2)1 3 - - 3 3 Financial assets stated at fair value in the income statement 3 - - 3 3 Trade payables 490 - - 490 490 Other payables 428 8 3 439 439 Financial liabilities measured at amortised cost 918 8 3 929 929 1 Level 1: The fair value of financial instruments traded on active markets is based on the listed market prices at the balance sheet date. The listed price is used for the Group’s financial assets as the current purchase price. Level 2: The fair value of financial instruments, which are not traded in an active market (e.g., over-the-counter derivatives), is determined using ordinary valuation methods. Level 3: If no observable market data are available, the instrument is included in the last category. Capital management The primary objective of the Group’s capital management is to ensure the funding of growth of the Group, while maximising the return to the shareholders through the optimisation of the debt and equity balance. For the purpose of the Group’s capital management, capital includes share capital and all other equity reserves attributable to the equity holders of the parent. The Group manages its capital structure and makes adjustments in light of changes in economic con- ditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders or issue new shares. Annual report 2023/24 139 Consolidated financial statements SECTION 4: FINANCIAL RISK MANAGEMENT, CAPITAL STRUCTURE AND NET FINANCIALS 4.2 Financial instruments (continued) Contractual cash flows Carrying (DKKm) 0-1 year 1-5 years > 5 years Total amount 2022/23 Trade receivables 766 - - 766 766 Other receivables 25 18 1 44 44 Cash and cash equivalents 157 - - 157 157 Financial assets measured at amortised cost 948 18 1 967 967 Derivative financial instruments (level 2)1 7 4 - 11 11 Financial assets stated at fair value in the income statement 7 4 - 11 11 Trade payables 357 2 - 359 359 Other payables 485 3 4 492 492 Financial liabilities measured at amortised cost 842 5 4 851 851 1 Level 1: The fair value of financial instruments traded on active markets is based on the listed market prices at the balance sheet date. The listed price is used for the Group’s financial assets as the current purchase price. Level 2: The fair value of financial instruments, which are not traded in an active market (e.g., over-the-counter derivatives), is determined using ordinary valuation methods. Level 3: If no observable market data are available, the instrument is included in the last category. Financial instruments measured at fair value At the end of the financial year, it is assessed whether an instrument has moved between the levels of the fair value hierarchy. There have been no movements between the various levels this year or the year before. Methods and assumptions for the determination of fair value Derivative financial instruments Derivative financial instruments are recognised at fair value, based on a valuation report, prepared by an external party who valuates the instruments, based on discounted cash flows, and other inputs, based on observable market data. § Accounting policies Debt to credit institutions, etc., is recognised at the date of borrowing at fair value, corresponding to the proceeds received, less transaction costs paid. In subsequent periods, the financial liabilities are mea- sured at amortised cost, using the ‘effective rate of interest method,’ so that the difference between the proceeds and the nominal value is recognised under financial expenses in the income statement for the duration of the loan term. Derivative financial instruments are recognised as from the transaction date and are measured at fair value in the balance sheet. The fair value of derivative financial instruments is calculated on the basis of current market data, as well as accepted valuation methods. Changes in the fair value of derivative financial instruments are recognised on an ongoing basis in the income statement. Other liabilities are measured at amortised cost. Annual report 2023/24 140 Consolidated financial statements SECTION 4: FINANCIAL RISK MANAGEMENT, CAPITAL STRUCTURE AND NET FINANCIALS 4.3 Net financials 4.4 Interest-bearing debt (DKKm) 2023/24 2022/23 Interest income, banks 14 1 Interest income, others 1 - Foreign exchange gains, net 1 - Fair value adjustment, interest rate swap - 1 Financial income 16 2 (DKKm) 30.09.24 30.09.23 Lease liabilities 483 512 Long-term interest-bearing debt 483 512 Lease liabilities 75 72 Short-term interest-bearing debt 75 72 Interest-bearing debt 558 584 § Accounting policies Financial income and expenses comprise interest, exchange gains and losses, transactions in foreign cur- rencies and amortisation of financial assets and liabilities, including leases. The table below shows the composition of the Group’s net interest-bearing debt. (DKKm) 30.09.24 30.09.23 Interest-bearing debt 558 584 Cash and cash equivalents -615 -157 Net interest-bearing debt -57 427 (DKKm) 2023/24 2022/23 Interest expenses, banks 6 42 Interest expenses, leases 20 17 Interest expenses, others 1 2 Foreign exchange loss, net - 23 Effect of shorter discount period, acquisition of technology - 2 Financial expenses 27 86 Annual report 2023/24 141 Consolidated financial statements SECTION 4: FINANCIAL RISK MANAGEMENT, CAPITAL STRUCTURE AND NET FINANCIALS 4.5 Share capital and treasury shares Development in the number of shares: Class A shares Class B shares Total ('000) 2023/24 2022/23 2023/24 2022/23 2023/24 2022/23 Number of shares issued 1 October 34,320 34,320 234,974 223,396 269,294 257,716 Capital increase, private placement - - - 11,578 - 11,578 Number of shares issued 30 September 34,320 34,320 234,974 234,974 269,294 269,294 Share capital Ambu’s share capital is DKK 135m (DKK 135m), divided into two classes of shares with a nominal share value of DKK 0.50. A Class A share carries 10 votes per share, while a Class B share carries one vote per share. There is no difference between the economic rights pertaining to the individual share classes. All shares are paid-up in full. Capital increases Last year, on 24 March 2023, Ambu concluded its accelerated bookbuild offering to increase the share capital by a nominal amount of DKK 5,788,979 through direct issue of 11,577,957 Class B shares and sale of 250,000 treasury Class B shares, by a nominal amount of DKK 125,000. The sale price was DKK 93 per share and DKK 91.10 per share net total transactions costs of DKK 23m. Total net proceeds raised was DKK 1,054m from increase of share capital, and net proceeds raised from sale of treasury shares was DKK 23m. Development in treasury shares: Nominal value In % No. ('000) (DKKm) of share capital 2023/24 2022/23 2023/24 2022/23 2023/24 2022/23 1 October 2,993 3,642 1.6 2.0 1.1% 1.4% Disposals, private placements - -250 - -0.1 - -0.1% Disposals, long-term incentive schemes - -47 - -0.1 - -0.1% Disposals, employee shares (matching shares) -88 -37 - - - - Disposals, share options - -315 - -0.2 - -0.1% 30 September 2,905 2,993 1.6 1.6 1.1% 1.1% § Accounting policies Acquisition costs and consideration, as well as the dividend on treasury shares, are recognised directly in retained earnings under equity. Proceeds from the sale of treasury shares and the issue of shares in Ambu A/S, in connection with the exercise of share options and from the sale of employee shares or warrants, are taken directly to equity. Annual report 2023/24 142 Consolidated financial statements SECTION 4: FINANCIAL RISK MANAGEMENT, CAPITAL STRUCTURE AND NET FINANCIALS 4.6 Cash flows from financial liabilities classified as financing activities Raising (DKKm) 30.09.23 Cash flow Adjustments1 of leases 30.09.24 Lease liabilities 584 -65 -56 95 558 584 -65 -56 95 558 Raising (DKKm) 30.09.22 Cash flow Adjustments1 of leases 30.09.23 Borrowings 1,250 -1,250 - - - Lease liabilities 595 -63 4 48 584 1,845 -1,313 4 48 584 1 Non-cash transactions mainly related to foreign currency translation. Annual report 2023/24 143 Consolidated financial statements SECTION 5: PROVISIONS, OTHER LIABILITIES, ETC. 5.1 Provisions 5.2 Share-based payment (DKKm) 2023/24 2022/23 Provisions at 1 October 18 23 Additions during the year 7 15 Used during the year -3 - Value adjustment -2 -17 Currency translation adjustment - -3 Provisions at 30 September 20 18 Provisions expected to fall due: Non-current liabilities 14 9 Current liabilities 6 9 Provisions at 30 September 20 18 Share-based payment is governed by the Remuneration Policy, approved by the Board of Directors and adopted at the annual general meeting. The Board of Directors does not receive share-based payment. Total share-based payment costs in the income statement (DKKm) 2023/24 2022/23 Performance Share Units, amortised cost during the period, based on value at grant date 6 2 Fair value adjustment of settled-in-cash Performance Share Units, previous management - 3 Executive Management 6 5 Performance Share Units, amortised cost during vesting-period, based on value at grant date 14 7 Employee shares, amortised cost during vesting-period, based on value at grant date 6 8 Total costs for share-based payment in the income statement 26 20 Provisions at the balance sheet date concern onerous contracts, deferred purchase price relating to acquired technology in previous years and other items. In 2022/23, value adjustments net amounted to DKK 17m. Hereof, the value of remeasured debt from technology acquisition was DKK 19m, which was reported as an income in special items. Performance Share Units (PSU) In 2023/24, Ambu established a share-based, long-term incentive plan for the Executive Management and key employees, selected on the basis of job level, by way of granting PSUs. The financial target weighted into the performance was organic revenue growth (50%) and EBIT margin before special items (50%), which was achieved by 91% of maximum potential. The fair value per PSU at grant date was DKK 99.10. The programme will vest in January 2027, after a three-year vesting period. In 2022/23, a PSU programme was granted under the same conditions as in 2023/24. The fair value per PSU at grant date was DKK 91.12. The financial target was organic revenue growth (50%) and EBIT margin before special items (50%), which was achieved by 68% of maximum potential. § Accounting policies Provisions are recognised when the Group, as a result of an event having occurred before or on the balance sheet date, has incurred a legal or actual liability, and it is probable that economic benefits will flow from the Group in order to settle the liability. If the effect of the time value of money is significant, provisions are discounted using a pre-tax discount rate. When applying a discount rate, the change in provisions, due to the timing, is recognised as a financial cost. Annual report 2023/24 144 Consolidated financial statements SECTION 5: PROVISIONS, OTHER LIABILITIES, ETC. 5.2 Share-based payment (continued) Executive Other and former Management employees Total 2023/24 2022/23 2023/24 2022/23 2023/24 2022/23 Outstanding PSUs at 1 October 84,648 8,548 254,885 189,884 339,533 198,432 Allocated during the year 89,624 76,100 236,439 238,917 326,063 315,017 Transferred during the year -21,030 - 21,030 - - - Exercised during the year - - - -168,070 - -168,070 Cancelled during the year - - -17,303 -5,846 -17,303 -5,846 Outstanding PSUs at 30 September 153,242 84,648 495,051 254,885 648,293 339,533 Legacy incentive equity-based remuneration to current and prior employees, incl. prior Executive Man- agement, includes stock options and warrants. According to the current Remuneration Policy, Ambu only grants PSUs. Share options Warrants Total 2023/24 2022/23 2023/24 2022/23 2023/24 2022/23 Outstanding shares at 1 October 1,438,157 1,774,247 - 169,500 1,438,157 1,943,747 Exercised during the year - -314,760 - - - -314,760 Cancelled during the year -445,553 -21,330 - -169,500 -445,553 -190,830 Outstanding shares at 30 September 992,604 1,438,157 - - 992,604 1,438,157 Of which are vested 992,604 1,438,157 - - 992,604 1,438,157 Outstanding PSUs have, on average, 1.8 years and 1.7 years until contract expiry for the Executive Man- agement and 'Other and former employees', respectively. The average market price on the date of exer- cise was DKK 92 in 2022/23, and the exercise price in accordance with the policy was DKK 0. The average market price on the date of exercise of share options was DKK 106.32 in 2022/23. Outstanding share options have on average 0.7 years until contract expiry at an exercise price of DKK 134.10 per option. Employee shares Ambu is offering all its employees the opportunity to acquire a number of shares, based on a fixed percentage of their annual base salary. The number of shares, with which an employee participates, is matched free of charge after two years (Restricted Stock Units). The Executive Management participates with 1,200 (646) shares in the current employee share programmes currently under vesting. The total market value at the time of allocation in 2024 was DKK 6m (DKK 7m) at a fair value per share of DKK 129.96 (DKK 108.69) at grant date. § Accounting policy The fair value of Ambu’s share-based payment is expensed on an accrual basis. Fair value of equity-based schemes at the time of allocation is calculated according to recognised valuation models or methods. This value is expensed over the service period for each of the respective schemes and taken to equity. On recognition of the fair value during the service period, account is taken of the number of employees who are expected to obtain a final right to the scheme, including the conditions to which the allocation is subject. This estimate is reassessed at the end of each reporting period, so that only the number of rights expected to be vested are recognised. Adjustments relating to previous periods are recognised in the period in which the adjustment is made. The fair value per unit does not change. PSUs that are settled in cash are taken to liabilities, instead of equity, and the fair value adjustment of the respective scheme end of the period is expensed to the income statement. This includes any changes to the quoted price of the Ambu B-share on Nasdaq Copenhagen. 2023/24 2022/23 Outstanding shares at 1 October 179,159 162,053 Allocated during the year 40,949 67,364 Released during the year -88,178 -37,488 Cancelled during the year -20,728 -12,770 Outstanding shares at 30 September 111,202 179,159 Annual report 2023/24 145 Consolidated financial statements SECTION 5: PROVISIONS, OTHER LIABILITIES, ETC. 5.3 Fee to auditors appointed by the annual general meeting 5.4 Group companies (continued) (DKKm) 2023/24 2022/23 Audit fee 6 6 Other assurance engagements 1 1 Tax consultancy services - - Other services 1 - Total fees 8 7 Activity Owner- Cur- ship Produc- Company Reg. office rency interest Sales1 tion2 R&D Other Ambu Sarl France EUR 100% x Ambu GmbH Germany EUR 100% x Ambu Innovation GmbH Germany EUR 100% x Ambu India Private Limited India INR 100% x Ambu s.r.l. Italy EUR 100% x Ambu KK Japan JPY 100% x Ambu Sdn. Bhd. Malaysia MYR 100% x x Ambu Sales & Services Sdn. Bhd. Malaysia MYR 100% x Ambu Innovation Sdn. Bhd. Malaysia MYR 100% x Ambu Mexico Operations S. A. DE C. V. Mexico MXN 100% x Ambu Mexico S. DE R.L. DE C.C. Mexico MXN 100% x Ambu B.V. Netherlands EUR 100% x Ambu New Zealand Pty. Ltd. New Zealand NZD 100% x Ambu LLC3 Russia RUB 100% x Firma Ambu, S.L. Spain EUR 100% x Ambu AG Switzerland CHF 100% x Ambu Ltd. UK GBP 100% x Ambu Inc. USA USD 100% x King Systems Holding Inc. USA USD 100% x King Systems Corp. USA USD 100% x x 1 Sales include promotional activities. 2 Production includes the purchase of goods for resale and the coordination thereof. 3 Ambu is in the process of formally liquidating our Russian subsidiary. We have not sold or marketed any products in Russia during the financial year 2023/24, nor do we have any plans to do so in the future. Fee for non-audit services provided to the Group by EY Statsautoriseret Revisionspartnerselskab, Denmark, amounted to DKK 2m (DKK 1m), relating mainly to IT assessment and other assurance assessments and reports. 5.4 Group companies This note shows the legal entities which are consolidated in the consolidated financial statements. Activity Owner- Cur- ship Produc- Company Reg. office rency interest Sales1 tion2 R&D Other Parent Company: Ambu A/S Denmark DKK 100% x x x x Subsidiaries: Ambu Australia Pty. Ltd. Australia AUD 100% x Ambu Healthcare Solutions Canada Inc. Canada CAD 100% x Ambu Ltd. China CNY 100% x x Ambu (Xiamen) Trading Co., Ltd. China CNY 100% x Ambu Nordic A/S Denmark DKK 100% x Ambu Operations A/S Denmark USD 100% x Ambu Rusland Holding ApS Denmark DKK 100% x Annual report 2023/24 146 Consolidated financial statements SECTION 5: PROVISIONS, OTHER LIABILITIES, ETC. 5.5 Contingent liabilities and other contractual liabilities 5.8 Adoption of the annual report and distribution of profit Contingent liabilities Ambu is involved in pending litigations, claims and investigations arising out of the normal conduct of its business. Ambu’s ongoing operations and the use of Ambu’s products in hospitals and clinics, etc., involve the general risk of claims for damages and sanctions against Ambu. The risk is deemed to be customary for the industry. Provisions for probable losses have been made for those matters that Management has assessed as needed, but there are uncertainties associated with these estimates. Ambu does not expect any pending litigations, claims and investigations to have a material effect on the Group’s financial position. At the board meeting on 5 November 2024, the Board of Directors approved the annual report presented. Subsequently, the annual report will be presented to the shareholders of Ambu A/S for adoption at the annual general meeting on 4 December 2024, including the proposed distribution of profits for the year. (DKKm) 2023/24 2022/23 Proposed dividend for the year 102 - Transferred to distributable reserves 133 168 235 168 Dividend per share in DKK 0.38 0.00 Pay-out ratio, in % of net profit 43% 0% Other contractual liabilities A change-of-control clause exists in respect to committed borrowing facilities, which constitute the main part of Ambu’s loan financing. Change-of-control remuneration to members of the Executive Management is subject to a maximum value corresponding to two years’ remuneration. § Accounting policies Proposed dividend is recognised as a liability at the time of adoption by the general meeting. Expected dividend payable for the year is shown as a separate reserve under equity. 5.6 Related parties The Group’s related parties include the company’s Board of Directors and Executive Management and members of their families. Related parties furthermore include enterprises in which the aforementioned persons have a significant interest. During the year, no transactions, except for payment of the Management’s remuneration (notes 2.3 and 5.2) and ordinary dividend payments, took place with the Board of Directors, Executive Management, major shareholders or other related parties. 5.7 Subsequent events No material events have occurred in the period between the end of the financial year and the Board of Directors’ approval of the annual report. Annual report 2023/24 147 Consolidated financial statements SECTION 5: PROVISIONS, OTHER LIABILITIES, ETC. 5.9 Non-IFRS financial measures Balance sheet and cash flow APMs (DKKm) 2023/24 2022/23 Total current assets (IFRS) 2,637 2,008 Income tax receivable -40 -50 Derivative financial instruments -3 -11 Cash and cash equivalents -615 -157 Total current assets adjusted 1,979 1,790 Total current liabilities (IFRS) -1,059 -942 Provisions 6 9 Lease liabilities 75 72 Income tax 49 10 Net working capital 1,050 939 (DKKm) 2023/24 2022/23 Cash and cash equivalents -615 -157 Lease liabilities 558 584 Net interest-bearing debt -57 427 (DKKm) 2023/24 2022/23 Cash flow from operating activities (IFRS) 813 518 Cash flow from investing activities (IFRS) -289 -326 Free cash flow 524 192 The Group uses several financial metrics, which are not defined in IFRS accounting standards. These Alternative Performance Measures (APM's) are used in the daily management of the Group and in the communication with external stakeholders. The non-IFRS financial measures are defined by management and therefore may not be comparable with other companies' measures. The most relevant APM's are: 'Organic growth', 'Special items', 'EBITDA before special items', 'Net work- ing capital', 'Net-interest bearing debt' and 'Free cash flow before acquisitions of enterprises and technol- ogy'. Below is a reconciliation of the different APMs used in the annual report. Key figure and ratio definitions are found in note 5.10. Income statement APMs (DKKm) 2023/24 2022/23 Operating profit (EBIT) 311 294 Depreciations, amortisations and impairment losses on non-current assets, cf. note 2.4 696 348 EBITDA 1,007 642 Special items cf. note 2.6 334 8 of which depreciations, amortisations and impairment, cf. note 2.4 -332 -18 EBITDA before special items 1,009 632 Depreciations, amortisations and impairment losses, not classified as special items, cf. note 2.4 -364 -330 EBIT before special items 645 302 Annual report 2023/24 148 Consolidated financial statements SECTION 5: PROVISIONS, OTHER LIABILITIES, ETC. 5.10 Key figure and ratio definitions The key figure and ratios used in the annual report is defined as shown below. 'APM' (Alternative Performance Measure) / 'IFRS' indicates whether the metric is defined by IFRS or not. Reference is made to note 5.9 for a reconciliation of APM's to IFRS. APM IFRS Income statement Gross margin, % Gross profit in % of revenue. X Operating Expenditures (OPEX) Selling and distribution costs, development costs, X management and administrative expenses, as well as other operating income and expenses. EBITDA before special items Operating profit before special items, depreciation, X amortisation and impairment losses. Operating profit (EBIT) before Profit for the year before special items, net financials X special items and tax Operating profit (EBIT) Profit for the year before net financials and tax X Special items (s.i.) Special items comprise costs that cannot be attri- X buted directly to the Group's ordinary activities and are non-recurring of nature. Balance sheet Net working capital Inventories, trade receivables, other receivables X and prepayments, less trade payables and other payables. Interest-bearing debt Debt on which interest is paid, including bank debt, X debt to credit institutions, lease debt and corporate bonds, but not trade payables. Net interest-bearing debt (NIBD) Interest-bearing debt, less cash and cash equiva- X lents. Invested capital Equity and net interest bearing debt. X APM IFRS Cash flows Cash flow from operating activities Cash flow from operating activities, as defined in X IAS 7. Cash flow from investing activities Cash flow from investing activities, as defined in IAS X before acquisitions of enterprises 7, excluding cash flow for the acquisition of technol- and technology ogies and enterprises. Free cash flow before acquisitions The sum of cash flow from operating activities and X of enterprises and technology cash flow from investing activities before acquisi- tions of enterprises and technology. Acquisitions of enterprises and Cash flow from the acquisition of enterprises and X technology technologies, including payment to the seller and payment of earn-outs less cash in acquired enter- prises. Annual report 2023/24 149 Consolidated financial statements SECTION 5: PROVISIONS, OTHER LIABILITIES, ETC. 5.10 Key figure and ratio definitions (continued) APM IFRS Key figures and ratios Organic growth Development in revenue, adjusted for fluctuations X in foreign exchange rates and the effect of acquisi- tions, in the past 12 months in % of revenue in the period of comparison. OPEX ratio Capacity costs in % of revenue. X Tax rate Tax for the year relative to the profit before tax. X EBITDA margin before special items EBITDA before special items in % of revenue. X EBIT margin EBIT in % of revenue. X EBIT margin before special items EBIT before special items in % of revenue. X Return on equity Net profit/loss for the year for a rolling 12-month X period in relation to average equity. NIBD/EBITDA before special items Net interest-bearing debt/EBITDA before special X items. Equity ratio Equity’s share of total assets at end of year. X CFFI, % of revenue Cash flow from investing activities, including assets X disposed of, in % of revenue. Net working capital, % of revenue Inventories, trade receivables, other receivables and X prepayments, less trade payables and other paya- bles in % of revenue. Return on invested capital (ROIC) EBIT b.s.i. for a rolling 12-month period, less the X Group’s expected long-term tax rate, relative to the average equity, plus the average net interest-bearing debt. APM IFRS Share-related ratios Earnings per share (EPS) Earnings per share for the year, calculated in accord- X ance with IAS 33. Diluted earnings per share (EPS-D) Diluted earnings per share, calculated in accordance X with IAS 33. Cash flow per share Cash flow from operating activities, relative to num- X ber of shares at end of year. Equity value per share Total equity relative to number of shares at end of X year. Dividend per share Dividend relative to number of shares at end of year. X Pay-out ratio Dividend as a percentage of net profit/loss for the X year. P/E ratio Market price relative to earnings per share (EPS). X Annual report 2023/24 150 Statements Statements 151 Management statement 152 Independent auditor's report 155 Independent auditor's assurance report on the selected sustainability data Annual report 2023/24 151 Statements MANAGEMENT STATEMENT The Board of Directors and the Executive Management have today considered and approved the annual report of Ambu A/S for the financial year from 1 October 2023 to 30 September 2024. Executive Management The annual report has been prepared in accordance with the IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act. In our opinion, the consoli- dated financial statements and the parent financial statements give a true and fair view of the Group’s and the company’s assets, equity and liabilities and financial position at 30 September 2024, and of the results of the Group’s and the company’s operations and cash flows for the financial year from 1 October 2023 to 30 September 2024. Britt Meelby Jensen Chief Executive Officer Henrik Skak Bender Chief Financial Officer In our opinion, the Management’s review gives a fair account of the development and performance of the Group and the ompany, the results for the year and the Group’s and the company’s financial position, together with a description of the principal risks and uncertainties faced by the Group and the company. The Consolidated ESG data have been prepared in accordance with the stated accounting policies. In our opinion, it gives a fair view of the Group’s environmental, social, and governance performance. In our opin- ion, the annual report of Ambu A/S, for the financial year 1 October 2023 to 30 September 2024 identified as AMBU-2024-09-30-en.zip, has been prepared, in all material respects, in compliance with the ESEF Regulation. Board of Directors Jørgen Jensen Chair Shacey Petrovic Vice Chair The annual report is submitted for adoption by the annual general meeting. Copenhagen, 5 November 2024 Susanne Larsson Christian Sagild Michael Del Prado Simon Hesse Hoffmann Charlotte Elgaard Bjørnhof Employee-elected Thomas Bachgaard Jensen Employee-elected Jesper Mads Bartroff Frederiksen Employee-elected Annual report 2023/24 152 Statements INDEPENDENT AUDITOR'S REPORT To the shareholders of Ambu A/S statements") section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. to our assessment of the risks of material misstatement of the finan- cial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the financial statements. Report on the audit of the Consolidated Financial Statements and Parent Company Financial Statements Opinion Independence We have audited the consolidated financial statements and the parent company financial statements of Ambu A/S for the financial year 1 October 2023 – 30 September 2024, page p. 109→-p. 171→ which comprise income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including material accounting policy information, for the Group and the Parent Company. The consolidated financial state- ments and the parent company financial statements are prepared in accordance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act. 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, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Recognition of revenue in the USA due to price adjustment structure In the US market, a significant portion of Ambu’s sales flow through dealers (third-party warehouses) who sell the products to public and private hospitals and clinics (the end-customers). Ambu’s sales price to the dealer depends on the pricing arrangement Ambu has agreed with the end-customer. To the best of our knowledge, we have not provided any prohibited non-audit services as described in article 5(1) of Regulation (EU) no. 537/2014. As Ambu’s sales to end-customers deviate in amounts and timing from the amounts invoiced to the dealer, Ambu subsequently adjusts the price stated in the preliminary invoice. Price adjustments are rec- ognized on an ongoing basis, and price adjustments which have not been settled at the balance sheet date are recognized as a reduction in trade receivables in the balance sheet. In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the finan- cial position of the Group and the Parent Company at 30 September 2024 and of the results of the Group's and the Parent Company's operations and cash flows for the financial year 1 October 2023– 30 September 2024 in accordance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Finan- cial Statements Act. Appointment of auditor We were initially appointed as auditor of Ambu A/S on 13 December 2017 for the financial year 2017/18. We have been reappointed annually by resolution of the general meeting for a total consecutive period of seven years up until the financial year 2023/24. We focus on this area, as the assessment of non-settled price adjust- ments to dealers is complex and includes management estimates and judgements. Key audit matters Key audit matters are those matters that, in our professional judge- ment, were of most significance in our audit of the financial state- ments for the financial year 2022/23. These matters were addressed during our audit of the financial statements as a whole and in forming our opinion thereon. We do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. Reference is made to note 2.2 in the consolidated financial state- ments. Our opinion is consistent with our long-form audit report to the Audit Committee and the Board of Directors. How our audit addressed the key audit matter We have identified, tested and assessed key internal controls and related systems which are used to process and calculate price adjust- ments for dealers. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and additional requirements applicable in Den- mark. Our responsibilities under those standards and requirements are further described in the "Auditor's responsibilities for the audit of the consolidated financial statements and the parent company finan- cial statements" (hereinafter collectively referred to as "the financial We have fulfilled our responsibilities described in the "Auditor's responsibilities for the audit of the financial statements" section, including in relation to the key audit matters below. Accordingly, our audit included the design and performance of procedures to respond We assessed and reviewed management’s calculation of price adjust- ments by comparing the assumptions applied with the group’s trad- ing policies, the terms of existing contracts, third-party reported data and historical price adjustment levels. Annual report 2023/24 153 Statements Further, we made an assessment of the most significant parameters included in the calculation of the non-settled price adjustments as per 30 September 2024 based on historical data, accounting records, external inventory statements and the terms of existing contracts. Statement on the Management’s review Management is responsible for the Management's review. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assur- ance, but is not a guarantee that an audit conducted in accordance with ISAs and additional 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, indi- vidually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Our opinion on the financial statements does not cover the Man- agement's review, and we do not express any assurance conclusion thereon. Valuation of acquired technologies, etc. Following prior years’ acquisitions including the acquisition of Invendo Medical GmbH in October 2017, the Group has recognized acquired technologies, trademarks and customer relations totalling DKK 648 million as per 30 September 2024. In connection with our audit of the financial statements, our respon- sibility is to read the Management's review and, in doing so, consider whether the Management's review is materially inconsistent with the financial statements, or our knowledge obtained during the audit, or otherwise appears to be materially misstated. The value of acquired intangible assets was initially determined in connection with the purchase price allocation. Subsequent, additional internally generated development costs associated to the acquired technologies have been capitalized. In case of indications of impair- ment, an impairment test is prepared, based on management’s estimates of the recoverable amount based on an assessment of net present value of future cash flows on the basis of strategic revenue plans, long-term growth, royalty rate and discount rate, etc. Moreover, it is our responsibility to consider whether the Manage- ment's review provides the information required by relevant law and regulations. As part of an audit conducted in accordance with ISAs and additional requirements applicable in Denmark, we exercise professional judge- ment and maintain professional scepticism throughout the audit. Based on our procedures, we conclude that the Management's review is in accordance with the financial statements and has been prepared in accordance with the requirements of relevant law and regulations. We did not identify any material misstatement of the Management's review. We also: − Identify and assess the risks of material misstatement of the finan- cial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks and obtain audit evi- dence that is sufficient 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 omissions, misrepresentations or the override of internal control. Due to the inherent uncertainty involved in determining the recover- able amount, we considered these impairment tests to be a key audit matter. Management’s responsibilities for the financial statements Management is responsible for the preparation of consolidated finan- cial statements and parent company financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Finan- cial Statements Act and for such internal control as Management determines is necessary to enable the preparation of financial state- ments that are free from material misstatement, whether due to fraud or error. Reference is made to note 3.2 in the consolidated financial state- ments. How our audit addressed the key audit matter Our audit procedures included testing the mathematical accuracy of the discounted cash flow models and comparing forecasted profita- bility to internally approved budgets and long-term strategy. − Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the cir- cumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's and the Parent Company's internal control. We evaluated the assumptions and methodologies used in the dis- counted cash flow model, in particular the assumptions relating to the forecasted revenue growth, including comparing with historical growth rates and the royalty rate and discount rate. In preparing the financial statements, Management 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 in preparing the financial statements unless Management either intends to liqui- date the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so. − Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. Further, we evaluated the sensitivity analysis on the assumptions applied in the impairment models prepared by management. − Conclude on the appropriateness of Management's use of the going concern basis of accounting in preparing the financial statements and, based on the audit evidence obtained, whether a Annual report 2023/24 154 Statements 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 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 conclu- sions 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 and the Parent Company to cease to continue as a going concern. Report on compliance with the ESEF regulation The procedures include: As part of our audit of the Consolidated Financial Statements and Parent Company Financial Statements of Ambu A/S, we performed procedures to express an opinion on whether the annual report of Ambu A/S for the financial year 1 October 2023 – 30 September 2024 with the file name AMBU-2024-09-30-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 Reg- ulation) which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the Consoli- dated Financial Statements including notes. − Testing whether the annual report is prepared in XHTML format; − Obtaining an understanding of the company’s iXBRL tagging pro- cess and of internal control over the tagging process; − Evaluating the completeness of the iXBRL tagging of the Consoli- dated Financial Statements including notes; − Evaluating the appropriateness of the company’s use of iXBRL ele- ments selected from the ESEF taxonomy and the creation of exten- sion elements where no suitable element in the ESEF taxonomy has been identified; − Evaluate the overall presentation, structure and contents of the financial statements, including the note disclosures, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view. Management is responsible for preparing an annual report that com- plies with the ESEF Regulation. This responsibility includes: − The preparing of the annual report in XHTML format; − Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and − Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. − The selection and application of appropriate iXBRL tags, including extensions to the ESEF taxonomy and the anchoring thereof to ele- ments in the taxonomy, for all financial information required to be tagged using judgement where necessary; − Reconciling the iXBRL tagged data with the audited Consolidated Financial Statements. In our opinion, the annual report of Ambu A/S for the financial year 1 October 2023 – 30 September 2024 with the file name AMBU-2024- 09-30-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. − Ensuring consistency between iXBRL tagged data and the Consol- idated Financial Statements presented in human readable format; and − For such internal control as Management determines necessary to enable the preparation of an annual report that is compliant with the ESEF Regulation. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our inde- pendence, and where applicable, actions taken to eliminate threats or safeguards applied. Copenhagen, 5 November 2024 Our responsibility is to obtain reasonable assurance 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 require- ments set out in the ESEF Regulation, whether due to fraud or error. EY Godkendt Revisionspartnerselskab CVR no. 30 70 02 28 From the matters communicated with those charged with govern- ance, we determine those matters that were of most significance in the audit of the consolidated financial statements and the parent com- pany 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 disclosure about the matter. Søren Skov Larsen Henrik Pedersen State Authorised Public Accountant State Authorised Public Accountant mne26797 mne35456 Annual report 2023/24 155 Statements INDEPENDENT AUDITOR'S ASSURANCE REPORT ON THE SELECTED SUSTAINABILITY DATA To the shareholders of Ambu A/S As agreed, we have performed an examination with a limited assur- ance, as defined by the International Standards on Assurance Engage- ments, on Ambu A/S Group’s (‘Ambu’) ESG & Sustainability Perfor- mance data (the ‘selected sustainability data’) contained in Ambus’ Annual Report 2023/24 on p. 83→ for the period 1 October 2023 to 30 September 2024. to the preparation of the selected sustainability data, such that it is free from material misstatement, whether due to fraud or error. Description of procedures performed In obtaining limited assurance over the selected sustainability data in the table on p. 83→, our objective was to perform such procedures as to obtain information and explanations which we consider neces- sary in order to provide us with sufficient appropriate evidence to express a conclusion with limited assurance. Auditor's responsibilities Our responsibility is to express a conclusion based on our examina- tions on the presentation of the selected sustainability data in accord- ance with the scope defined above. In preparing the selected sustainability data, Ambu applied the accounting practice described on p. 84→-p. 89→. The selected sustainability data needs to be read and understood together with the accounting practice, which Management is solely responsible for selecting and applying. The absence of an established practice on which to derive, evaluate, and measure the selected sustainability data allows for different, but acceptable, measurement techniques and can affect comparability between entities and over time. The procedures performed in connection with our examination are less than those performed in connection with a reasonable assurance engagement. Consequently, the degree of assurance for our conclu- sion is substantially less than the assurance which would be obtained had we performed a reasonable assurance engagement. We conducted our examinations in accordance with ISAE 3000 Assur- ance Engagements Other than Audits or Reviews of Historical Finan- cial Information and additional requirements under Danish audit regu- lation to obtain limited assurance for the purposes of our conclusion. EY Godkendt Revisionspartnerselskab applies International Standard on Quality Management 1, ISQM1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical require- ments, professional standards and applicable legal and regulatory requirements. As part of our examinations, we performed the below procedures: − Interviewed those in charge of the selected sustainability data to develop an understanding of the process for the preparation of the selected sustainability data in the Sustainability section in the Annual Report 2023/24 and for carrying out internal control proce- dures. Other than as described in the preceding paragraph, which sets out the scope of our engagement, we did not perform assurance proce- dures on the remaining information included in the Sustainability sec- tion in the Annual Report 2023/24, and accordingly, we do not express an opinion on this information. We have complied with the independence and other ethical require- ments of the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (IESBA Code), which is founded on fundamental principles of integrity, objec- tivity, professional competence and due care, confidentiality and professional behaviour as well as ethical requirements applicable in Denmark − Performed analytical review of the data and trends to identify areas of the selected sustainability data with a significant risk of mis- leading or unbalanced information or material misstatements and obtained an understanding of any explanations provided for signifi- cant variances. Management's responsibilities Ambu's Management is responsible for selecting the accounting practices, and for presenting the selected sustainability data in accordance with the accounting practice, in all material respects. This responsibility includes establishing and maintaining internal controls, maintaining adequate records, and making estimates that are relevant Annual report 2023/24 156 Statements − Based on inquiries we evaluated the appropriateness of the accounting practice used, their consistent application and related disclosures in the Sustainability section in the Annual Report 2023/24. This includes the reasonableness of estimates made by management. København, 5 November 2024 EY Godkendt Revisionspartnerselskab CVR no. 30 70 02 28 − Designed and performed further procedures responsive to those risks and obtained evidence that is sufficient and appropriate to provide a basis for our conclusion Søren Skov Larsen State Authorised Public Accountant Lars Fermann State Authorised Public Accountant − In connection with our procedures, we read the other sustainability information in the Annual Report 2023/24 of Ambu and, in doing so, considered whether the other sustainability information is materially inconsistent with the selected sustainability data or our knowledge obtained in the review or otherwise appear to be materially mis- stated mne26797 mne45879 In our opinion, the examinations performed provide a sufficient basis for our conclusion. Conclusion Based on our examinations and the evidence obtained, nothing has come to our attention that causes us to believe that Ambu’s ESG & Sustainability Performance data (the ‘selected sustainability data’) contained in Ambu A/S’ Annual Report 2023/24, on p. 83→, for the period from 1 October 2023 to 30 September 2024 have not been prepared, in all material respects, in accordance with the accounting practices described on p. 84→-p. 89→. Annual report 2023/24 157 Financial statements – Parent company FINANCIAL STATEMENTS Parent Company 158 Income statement and statement of comprehensive income 159 Cash flow statement 160 Balance sheet 161 Equity statement 162 Notes Annual report 2023/24 158 Financial statements – Parent company INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME Ambu A/S Financial statements for the period 1 October – 30 September (DKKm) Note 2023/24 2022/23 (DKKm) 2023/24 2022/23 INCOME STATEMENT STATEMENT OF COMPREHENSIVE INCOME Revenue Production costs Gross profit 4,415 -2,836 1,579 3,317 -2,319 998 Net profit for the year Other comprehensive income Comprehensive income for the year 206 - 206 18 - 18 2.1, 2.2 Selling and distribution costs Development costs Management and administrative costs Operating profit (EBIT) before special items 2.1, 2.2 2.1, 2.2 2.1, 2.2 -344 -295 -427 513 -296 -270 -374 58 Special items 2.3 -334 -8 Operating profit (EBIT) 179 50 Financial income Financial expenses Profit before tax 4.2 4.2 87 -29 237 43 -93 - Tax on profit for the year 2.4 -31 18 Net profit for the year 206 18 Annual report 2023/24 159 Financial statements – Parent company CASH FLOW STATEMENT Ambu A/S Financial statements for the period 1 October – 30 September (DKKm) Note 2023/24 2022/23 (DKKm) Note 2023/24 452 2022/23 -42 Net profit 206 18 Changes in cash and cash equivalents Adjustment for non-cash items: Income taxes in the income statement Financial items in the income statement Depreciation, amortisation and impairment losses Share-based payment Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year 85 537 127 85 31 -58 545 13 -140 -3 -18 50 208 13 129 - 2.2 Cash and cash equivalents, end of year, are composed as follows: Cash and cash equivalents Short-term deposits 187 350 537 85 - 85 Change in working capital Change in provisions 3.7 5.1 Cash and cash equivalents, end of year Interest received 12 2 Interest paid Cash flow from operating activities -10 596 -45 357 Investments in non-current assets Investments in subsidiaries Dividend from subsidiaries -207 -3 75 -259 -10 40 3.3 4.2 Cash flow from investing activities -135 -229 Free cash flow 461 128 Proceeds from borrowings Repayment of borrowings Repayment of lease liability Exercise of options - - -9 - 325 -1,575 -11 14 Sale of treasury shares - 23 Capital increase Cash flow from financing activities - -9 1,054 -170 Annual report 2023/24 160 Financial statements – Parent company BALANCE SHEET Ambu A/S Financial statements at 30 September (DKKm) Note 30.09.24 30.09.23 (DKKm) Note 30.09.24 30.09.23 ASSETS EQUITY AND LIABILITIES Goodwill Completed development projects Other, incl. IT software Development projects and other assets in progress Intangible assets 3.1 3.1 3.1 3.1 147 904 446 351 1,848 147 888 702 442 2,179 Share capital Other reserves Equity 135 4,650 4,785 135 4,426 4,561 Provisions Lease liabilities Payables to subsidiaries Non-current liabilities 5.1 3.4 4.1 4 80 6 4 87 11 Property, plant and equipment Rights-of-use assets Investments in subsidiaries Deferred tax asset 3.2 3.4 3.3 2.5 17 110 2,095 53 17 114 2,094 48 90 102 Provisions 5.1 3.4 4.1 4.1 - 11 128 371 36 3 12 95 368 - 119 597 Lease liabilities Trade payables Payables to subsidiaries Income tax Other payables Current liabilities Total non-current assets 4,123 4,452 Inventories Trade receivables Receivables from subsidiaries Income tax receivable Other receivables 3.5, 4.1 3.6, 4.1 4.1 293 98 386 17 - 62 239 122 302 12 4 33 4.1 98 644 4.1 Total liabilities 734 699 Prepayments Derivative financial instruments Cash and cash equivalents Total current assets 4.1 4.1 3 11 85 808 Total equity and liabilities 5,519 5,260 537 1,396 Total assets 5,519 5,260 Annual report 2023/24 161 Financial statements – Parent company EQUITY STATEMENT Ambu A/S Financial statements for the period 1 October – 30 September Reserve for development costs Retained earnings Proposed dividend (DKKm) Share capital 135 Total Other reserves are made up of reserve for hedging transactions, reserve for foreign currency translation adjustment, reserve for development costs, retained earnings and proposed dividend, totalling DKK 4,650m (DKK 4,426m). Other reserves are free for distribution, with the exception of the reserve for development costs. Equity 1 October 2023 1,015 3,411 - 4,561 Net profit for the year Other comprehensive income for the year Total comprehensive income - - - -46 - -46 150 - 150 102 - 102 206 - 206 § Accounting policies Reserve for development costs Transactions with the owners: Share-based payment Tax deduction relating to share-based payment Equity 30 September 2024 - - - - 13 5 3,579 - - 13 5 4,785 Contrary to the accounting policies applied in the consolidated financial statements, in accordance with the Danish Financial Statements Act, Ambu A/S must tie up a reserve in equity, corre- sponding to the capitalised value of development costs (see note 3.1). The amortisation of the capitalised development costs, as well as deferred tax, is set off against this reserve. 135 969 102 Equity 1 October 2022 129 936 2,348 - 3,413 Net profit for the year Other comprehensive income for the year Total comprehensive income - - - 79 - 79 -61 - -61 - - - 18 - 18 Transactions with the owners: Share-based payment Tax deduction relating to share-based payment Exercise of options Sale of treasury shares Share capital increase, warrants Equity 30 September 2023 - - - - 6 - - - - - 13 26 14 - - - - - - 13 26 14 23 23 1,048 3,411 1,054 4,561 135 1,015 Annual report 2023/24 162 Financial statements – Parent company NOTES ON THE FINANCIAL STATEMENTS – PARENT COMPANY Note 1.1 Basis of preparation 163 Note 4.1 Note 4.2 Categories of financial instruments Net financials 170 170 Note 2.1 Note 2.2 Staff costs 163 Depreciation, amortisation and impairment losses on non-current assets Special items Tax on profit for the year Deferred tax Note 5.1 Note 5.2 Note 5.3 Provisions 171 171 171 164 164 165 165 Fee to auditors appointed by the annual general meeting Related parties Note 2.3 Note 2.4 Note 2.5 Note 3.1 Note 3.2 Note 3.3 Note 3.4 Note 3.5 Note 3.6 Note 3.7 Intangible assets 166 167 168 168 169 169 169 Property, plant and equipment Investments in subsidiaries Leases Inventories Trade receivables Change in working capital Annual report 2023/24 163 Financial statements – Parent company NOTES ON THE FINANCIAL STATEMENTS Ambu A/S Financial statements 1.1 Basis of preparation 2.1 Staff costs Ambu A/S is a public limited company domiciled in Denmark. Ambu A/S is the Parent Company of the Ambu Group. The staff costs of the Parent Company are distributed onto the respective functions as follows: (DKKm) 2023/24 2022/23 The financial statements of the Parent Company are included in the consolidated financial statements, in accordance with the provisions of the Danish Financial Statements Act. Production costs Selling and distribution costs Development costs Management and administrative costs Special items 12 119 132 228 - 9 102 145 212 7 General The financial statements of the Parent Company are presented in accordance with the IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB), IFRS as adopted by the EU, as well as additional requirements in the Danish Financial Statements Act. Total staff costs 491 475 Accounting policies – Parent company For information on accounting policies, reference is made to note 1.1 in the consolidated financial state- ments. In addition, the accounting policies of the Parent Company are supplemented for the following items: Equity statement, 2.3 Special items, 3.3 Investments in subsidiaries and 4.2 Net financials. Staff costs are distributed between the Executive Management, the Board of Directors and other employees as follows: (DKKm) 2023/24 2022/23 For information relating to the Parent Company, reference is made to the following notes in the consoli- dated financial statements: Remuneration Share-based payment Resignation payment Severance payment Severance, share-based payment Staff costs, Executive Management 22 5 - 5 1 20 2 -1 -1 3 3.1 Goodwill 3.2 Other intangible assets 4.5 Share capital and treasury shares 5.2 Share-based payment 5.5 Contingent liabilities 5.7 Subsequent events 33 23 5.8 Adoption of the annual report, etc. Wages and salaries Pension contributions Social security costs Share-based payment Remuneration, Board of Directors Total staff costs 401 34 9 7 7 391 34 10 11 6 The accounting policies have been applied consistently in the preparation of the financial statements of the Parent Company for the years presented, as well as being consistent with previous years. 491 475 Average number of employees during the year Number of full-time employees at the end of the year 459 485 475 443 Annual report 2023/24 164 Financial statements – Parent company NOTES ON THE FINANCIAL STATEMENTS Ambu A/S Financial statements 2.2 Depreciation, amortisation and impairment losses on non-current assets 2.3 Special items (DKKm) 2023/24 2022/23 (DKKm) 2023/24 2022/23 Amortisation of intangible development projects and other, incl. IT software Depreciation of property, plant and equipment Depreciation of right-of-use assets Impairment losses on non-current assets Total depreciation, amortisation and impairment losses 207 5 6 327 545 176 5 7 20 208 Impairment of acquired technologies Impairment of completed development projects Impairment of intangible rights related to production Impairment of plant and machinery Write-down of inventories 206 121 - 5 3 - 2 16 - - Remeasurement of technology-debt Severance costs in the group - -1 -19 9 Depreciation, amortisation and impairment losses have been allocated to the following functions: Total special items 334 8 (DKKm) 2023/24 2022/23 Reference is made to note 2.6 to the consolidated financial statements for a description of 'special items'. Production costs Selling and distribution costs Development costs Management and administrative costs Special items Total depreciation, amortisation and impairment losses - 3 187 28 327 545 1 2 168 19 18 208 If special items had been recognised in Operating profit (EBIT) before special items, the impact would have been allocated to the following functions: (DKKm) 2023/24 2022/23 Production costs 8 - 326 334 - -2 10 8 Selling and distribution costs Development costs Total special items § Accounting policies Special items comprise costs or income that cannot be attributed directly to the Parent Company's ordi- nary activities and are non-recuring of nature, e.g. strategic re-evaluation. Such costs include the cost related to significant restructuring of the cost base and processes, as well as restructuring costs related to resignation of employees in the Parent Company and cost charged by subsidiaries related to such. Fur- ther special items include redundancy costs' related to Group Management and impairment of assets. Annual report 2023/24 165 Financial statements – Parent company NOTES ON THE FINANCIAL STATEMENTS Ambu A/S Financial statements 2.4 Tax on profit for the year 2.5 Deferred tax (DKKm) 2023/24 2022/23 (DKKm) 30.09.24 30.09.23 Current tax on profit for the year Deferred tax on profit for the year Adjustment, previous years 37 -2 -4 - -6 -12 -18 Deferred tax at 1 October 48 5 2 -2 53 4 26 6 12 48 Deferred tax on share-based payment recognised in equity Deferred tax for the year recognised in the income statement Change in respect of previous years Total tax on profit for the year 31 Deferred tax at 30 September Tax on profit for the year comprises (in DKKm): Applicable tax rate on profit for the year in Parent Company Income not subject to tax 52 -17 3 -3 -4 - -9 5 -2 -12 -18 Deferred tax relates to: Intangible assets Property, plant and equipment Current assets Deferred tax on share-based payment recognised in equity Provisions -338 -1 -4 4 -3 -388 2 - -3 Non-deductible costs Additional tax deduction on R&D costs Tax adjustment in respect of previous years Total tax on profit for the year 31 -3 Tax loss carry-forwards 395 53 440 48 The Group’s transfer pricing setup is based on the widely used principal model. In this model, Ambu A/S distributes an arm's length profit to its subsidiaries, and any residual profit is repatriated back to Ambu A/S for taxation. The taxable profit is then reduced by deductions from investments made. Furthermore, income tax payable is reduced by Ambu A/S’s tax deduction, resulting from the employees’ gains from exercised warrants and share options. Such gains are subject to personal tax. Tax losses in Ambu A/S In recognising tax loss carry-forwards in Denmark, the Management has assessed whether convincing evidence was present, as the Group has a history of recent losses in Denmark, which is due to high investment levels, low residual profit earned in the Parent Company as a consequence of the arm's length mechanish in OECD Principal-model and tax deductibility of employees' share-based payments. Tax loss carry-forwards in Denmark, totalling DKK 395m (DKK 440m), were recognised by end of the year. The tax loss carry-forwards are recognised on the basis of budgets, strategy plans for the individual acti- vities approved by the Management, incl. tax planning opportunities that will advance the taxable profit. Estimates and assessments of future taxable income are thus consistent with the basis for the impairment tests and the measurement of contingent consideration carried out. Annual report 2023/24 166 Financial statements – Parent company NOTES ON THE FINANCIAL STATEMENTS Ambu A/S Financial statements 3.1 Intangible assets Development projects and other assets in progress Completed development projects Other incl. IT software (DKKm) Goodwill Total Reference is made to note 3.2 to the consolidated financial statements for a description of impairment losses. 2023/24 Cost at 1 October 147 1,435 - 269 1,049 - 25 1,074 442 203 -294 351 3,073 203 Additions during the year Transferred during the year Cost at 30 September - - - 147 1,704 3,276 Amortisation and impairment losses at 1 October Impairment losses for the year Amortisation for the year Amortisation and impairment losses at 30 September Carrying amount at 30 September - - - - -547 -121 -132 -800 904 -347 -206 -75 -628 446 - - - - -894 -327 -207 -1,428 1,848 147 351 2022/23 Cost at 1 October 147 1,204 - -2 233 1,435 990 13 -2 48 1,049 481 242 - -281 442 2,822 255 -4 Additions during the year Disposals during the year Transferred during the year Cost at 30 September - - - - 147 3,073 Amortisation and impairment losses at 1 October Disposals during the year - - -438 2 -264 2 - - -702 4 Impairment losses for the year - -4 -16 - -20 Amortisation for the year Amortisation and impairment losses at 30 September Carrying amount at 30 September - - -107 -547 888 -69 -347 702 - - -176 -894 2,179 147 442 * Carrying amount at 30 September 2024 of Other, incl. IT software, includes intangible rights of DKK 378m (DKK 636m). Annual report 2023/24 167 Financial statements – Parent company NOTES ON THE FINANCIAL STATEMENTS Ambu A/S Financial statements 3.2 Property, plant and equipment Property, plant and equipment in progress Other plant, fixtures and equipment Land and buildings Plant and machinery (DKKm) Total 2023/24 Cost at 1 October 16 - -1 2 1 - - - 1 31 - -1 2 3 6 - -4 5 51 6 -2 - Additions during the year Disposals during the year Transferred during the year Cost at 30 September 17 32 55 Depreciation and impairment losses at 1 October Disposals during the year -10 - - - -24 1 - - -34 1 Depreciation for the year -1 - -4 - -5 Depreciation and impairment losses at 30 September Carrying amount at 30 September -11 6 - 1 -27 5 - 5 -38 17 2022/23 Cost at 1 October 15 - - 1 16 1 - - - 1 35 - -10 6 7 4 -1 -7 3 58 4 -11 - Additions during the year Disposals during the year Transferred during the year Cost at 30 September 31 51 Depreciation and impairment losses at 1 October Disposals during the year -9 - - - -25 5 - - -34 5 Depreciation for the year -1 - -4 - -5 Depreciation and impairment losses at 30 September Carrying amount at 30 September -10 6 - 1 -24 7 - 3 -34 17 Annual report 2023/24 168 Financial statements – Parent company NOTES ON THE FINANCIAL STATEMENTS Ambu A/S Financial statements 3.3 Investments in subsidiaries 3.4 Leases (DKKm) 2023/24 2022/23 (DKKm) 30.09.24 30.09.23 Cost at 1 October Additions Cost at 30 September 2,589 3 2,592 2,579 10 2,589 Land and buildings Other plant, fixtures and fittings, tools and equipment Carrying amount of lease assets 103 7 110 107 7 114 Impairment losses at 1 October Impairment losses for the year Impairment losses at 30 September Carrying amount at 30 September -495 -2 -497 2,095 -485 -10 -495 2,094 Additions on lease assets during the year (DKKm) 3 3 30.09.24 30.09.23 Lease liabilities Less than 1 year Between 1 and 5 years More than 5 years 11 92 - 12 35 67 In the financial year 2023/24, subsidiaries distributed DKK 75m (DKK 40m) in dividends to the Parent Company, which has been recognised as a financial income. Impairment losses for the year was DKK 2m, of which DKK 2m (DKK 10m) were taken to financial expenses to reflect the lower carrying amount, and the remainder was offset against payables to subsidiaries. Reference is made to note 5.4 to the consolidated financial statements for an overview of the company’s subsidiaries. Undiscounted lease liabilities 103 114 (DKKm) 2023/24 2022/23 § Accounting policies Investments in subsidiaries are measured at cost including goodwill. If there is any indication of impair- ment, an impairment test is carried out. Where the cost exceeds the recoverable amount, a write-down for impairment is made to the lower value. Amounts recognised in the income statement Interest on lease liabilities 3 3 Depreciation of lease assets per asset class Land and buildings Other plant, fixtures and fittings, tools and equipment Depreciation of lease assets 3 3 6 4 3 7 Amounts recognised in the cash flow statement Total cash outflow for leases 13 15 Annual report 2023/24 169 Financial statements – Parent company NOTES ON THE FINANCIAL STATEMENTS Ambu A/S Financial statements 3.5 Inventories 3.7 Change in working capital (DKKm) 30.09.23 30.09.23 (DKKm) 2023/24 2022/23 Raw materials and consumables Finished goods 20 273 293 12 227 239 Change in inventories Change in receivables Change in balances with Group companies Change in trade payables, etc. Change in working capital -54 7 -104 11 43 23 207 -144 129 The above includes write-downs amounting to Cost of sales for the year -13 -27 -140 2,815 2,310 3.6 Trade receivables Trade receivables fall due as follows: Due 1-90 days Due 91-180 days Due > 180 days (DKKm) Not due Total 2023/24 Trade receivables, amortised cost Write-down for expected credit loss Trade receivables 89 9 - 1 -1 - 99 -1 98 89 9 - Provision for bad debt at 1 October Bad debt realised during the year Bad debt provision for the year -3 2 - Provision for bad debt at 30 September -1 2022/23 Trade receivables, amortised cost Write-down for expected credit loss Trade receivables 85 - 85 24 - 24 6 - 6 10 -3 7 125 -3 122 Provision for bad debt at 1 October Bad debt realised during the year Bad debt provision for the year -3 - - Provision for bad debt at 30 September -3 Annual report 2023/24 170 Financial statements – Parent company NOTES ON THE FINANCIAL STATEMENTS Ambu A/S Financial statements 4.1 Categories of financial instruments 4.2 Net financials (DKKm) 2023/24 2022/23 The Parent Company has recognised the following financial instruments: (DKKm) 30.09.24 30.09.23 Interest income, subsidiaries Interest income, banks Dividend from subsidiaries Fair value adjustment, interest rate swap Financial income - 12 75 - 2 - 40 1 Trade receivables Receivables from subsidiaries Other receivables Cash and cash equivalents Receivables and cash and cash equivalents 98 386 - 537 1,021 122 302 4 85 513 87 43 (DKKm) 2023/24 2022/23 Derivative financial instruments (level 2) 3 11 Interest expenses, subsidiaries Interest expenses, banks Interest expenses, leases 1 6 3 17 - 2 - 42 3 36 2 Financial assets recognised at fair value 3 11 Trade payables Payables to subsidiaries Other payables 128 377 98 95 379 119 Foreign exchange loss, net Effect of shorter discount period, acquisition of technology Impairment, investments in subsidiaries Financial expenses Financial liabilities recognised at amortised cost 603 593 10 93 29 The Parent Company’s payables fall due as follows: § Accounting policies (DKKm) 0-1 year 1-5 years > 5 years Total Dividend from subsidiaries is recognised under financial income at the time that the dividend is declared. 2023/24 Other financial liabilities 597 6 - 603 597 6 - 603 (DKKm) 0-1 year 1-5 years > 5 years Total 2022/23 Other financial liabilities 582 11 - 593 582 11 - 593 Annual report 2023/24 171 Financial statements – Parent company NOTES ON THE FINANCIAL STATEMENTS Ambu A/S Financial statements 5.1 Provisions 5.3 Related parties (DKKm) 2023/24 2022/23 The Parent Company’s related parties include subsidiaries, the company’s Board of Directors and Execu- tive Management and members of their families. Related parties furthermore include enterprises in which the aforementioned persons have a significant interest. Provisions at 1 October Additions during the year Used during the year Value adjustment Currency translation adjustment Provisions at 30 September 7 - -3 - - 4 23 4 - -17 -3 7 Ambu A/S has engaged in the following important transactions with related parties: (DKKm) 2023/24 2022/23 Sale of goods and services to subsidiaries Purchase of goods and services from subsidiaries 3,682 2,703 2,789 2,459 Provisions expected to fall due: Non-current liabilities Current liabilities Purchase of development services from subsidiaries capitalised as develop- ment projects Dividend received from subsiduaries 4 - 4 4 3 7 30 75 18 40 Provisions at 30 September During the year, no transactions, except for payment of the Management’s remuneration and intercompany transactions eliminated in the consolidated financial statements, have been carried out with the Board of Directors, Executive Management, senior employees, major shareholders or other related parties. 5.2 Fee to auditors appointed by the annual general meeting (DKKm) 2023/24 2022/23 Outstanding balances and receivables in respect of related parties, essentially arising from ordinary busi- ness relations, i.e,. the purchase and sale of goods and services, are included in the balance sheet of the Parent Company. Such transactions are carried out on the same terms that apply to the Group’s other cus- tomers and suppliers. For information on the year’s interest on intercompany loans, see note 4.2. Audit fee Other assurance engagements Other services 2 1 1 4 2 1 - Sale of services to Group companies include facility services and IT costs. The purchase of services from Group companies mainly consists of development services. Total fees 3 Fee for non-audit services provided to the Parent Company by EY Statsautoriseret Revisionspartnersel- skab, Denmark, amounted to DKK 2m (DKK 1m), relating mainly to IT assessment and other assurance assessments and reports. The Parent Company has provided loans to a number of subsidiaries. The loans carry interest on market terms. Guarantees have been provided to banks in respect of the subsidiaries. The subsidiaries have not furnished security for their debt to the Parent Company. (DKKm) 2023/24 2022/23 Guarantees and security provided on behalf of subsidiaries 396 418 Annual report 2023/24 172 Financial statements – Parent company CONNECT WITH AMBU Stay up to date with the latest news, announcements and events taking place across Ambu. Find us here Find us online Sign up to receive news from Ambu Ambu A/S → Ambu.com Baltorpbakken 13, 2750 Ballerup Denmark → Get our press releases and → Ambu.com/investors → Ambu.com/news-from-ambu → Ambu.com/sustainability company announcements Find us on social media All our local addresses can be found at LinkedIn.com/company/Ambu-as x.com/AmbuEurope → ambu.com/ambu-addresses Ambu A/S Baltorpbakken 13 DK-2750 Ballerup Denmark
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