Annual Report (ESEF) • Feb 27, 2025
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Download Source FileBrødrene A & O Johansen A/S Annual Report 2024 Brødrene A & O Johansen A/S Rørvang 3, DK-2620 Albertslund, Denmark CVR no. 58 21 06 17 B r a c k e t s T o o l s W a t e r s u p p l y D r a i n & S e w a g e E l e c t r i c a l S a n i t a r y w a r e s H V A C S u p p l i e r s C e n t r a l W a r e h o u s e B 2 C S h o w r o o m s B 2 C W e b s h o p s B 2 B I n t e g r a t i o n B 2 B A p p & W e b s h o p s C a l l c e n t e r P r o j e c t s a l e B 2 B S t o r e s S a l e s c h a n n e l s A e r s a l e D e l i v e r y A O 3 6 5 S u s t a i n a b i l i t y S a l e A d v i c e I n s p i r a t i o n S e r v i c e s The customer is at the centre of everything that we do at AO and has been at the core ever since we were founded Tradesmen B2B Construction B2B AO employee Consumers B2C Business model AO's omni-channel business model secures a coherent customer experience for all customers across touchpoints. AO works with more than 1,000 suppliers and is continuously expanding our range of products to target more customers and suppor t one-stop-shopping. The automated central warehouse in Albertslund and the logistics centre in Horsens are corner stones in AO. 90% of all products are picked automatically, thus ensuring both high ser vice quality and efficiency. AO's product range and service are promoted across a number of different sales channels that support the individual customer's preference. AO is providing the best of two worlds via value-added digital ser vices and close customer relations through our local stores. Moder n wholesaling is a matter of offering the right products at the right prices and making customers’ lives as simple and as flexible as possible. The AO365 concept is one such example. With AO365, customers hold a digital key to all AO stores, - securing both convenience and flexibility for the individual customer. AO's employees are a key ressource in ensuring that the business model works. The knowledge and experience with the team is a significant value-add for the entire value chain. 1. Suppliers More than 1,000 suppliers provide the widest product range in the wholesale business 3. Sales channels Omnichannel business with 54 physical stores in Denmark and sixe in Sweden enabling 9,000 daily customer interactions. Digital share of sales makes up 53% of revenue. B2C customers are served out of more than 20 unique webshops 2. Central warehouse Automated warehouse solution ready to serve growth. 600,000 SKUs available for sale 4. Services As a true omnichannel business AO offers a wide range of ser vices from selfservice through AO365 to advanced project advice via our compentency centres In brief Performance Corporate governance Sustainability statements Strateg y Financial statementsAnnual Report 2024 13 Contents In brief 4 Our purpose 5 At a glance 6 Performance highlights 7 ESG highlights 8 Letter from the CEO 9 Highlights of the year 10 Five year summary 11 Outlook for 2025 Strategy 13 Business model 14 Industry and market trends 15 Corporate strategy 17 Strategic ambitions Follow us → Business model 13 Sustainability Statements 40 Performance 19 Financial results 21 Q4 financials 22 B2B performance 23 B2C performance Corporate governance 25 Risk management 29 Corporate governance 31 Board of Directors 36 Executive Board 37 Shareholder information Sustainability statements 41 Executive Summary 49 General 63 Environment 85 Social 100 Governance 108 Appendix Financial statements 118 Consolidated financial statements 170 Parent company financial statements Statements 201 Management’s statement 202 Independent auditor’s report 206 Independent auditor’s limited assurance report on the Sustainability Statement Company information 209 Company information Management's review Financial statements Performance Corporate governance Sustainability statementsStrategy Financial statementsIn briefAnnual Report 2024 In brief 4 Our purpose 5 At a glance 6 Performance highlights 7 ESG highlights 8 Letter from the CEO 9 Highlights of the year 10 Five year summary 11 Outlook for 2025 Annual Report 2024 Our purpose AO was founded in 1914 with the purpose of creating value for our customers. The purpose is at least as relevant now as it was 110 years ago. In AO, we lend a hand. We are determined to contribute to making our customers' lives easier. No matter the market conditions or the current mega trends, walking an extra mile for the customer will always be the AO way. AO is proud to be part of the customer team! In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 B2B 85.2% Serving the construction industry and professional tradesmen B2B 80.4% Serving the construction industry and professional tradesmen B2C 14.8% Serving private DIY consumers B2C 19.6% Serving private DIY consumers 2024 Q4 At a glance DK East 30 DK West 25 Sweden 6 Our long-term ambitions Beat the market by 2% year by year EBITDA margin of 10% 8,800 daily customer interactions in our stores Denmark 10 Norway 5 Sweden 4 Germany 2 Europe 2 Stores Solvency 40%+ and capital structure (gearing 1.0 - 2.5) Segments 23 B2C Webshops In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 4,098 946 328618 2020 2020 20202020 4,800 1,119 417702 2021 2021 20212021 5,375 1,310 492819 2022 2022 20222022 5,261 1,234 405829 2023 2023 20232023 5,429 1,266 366900 2024 2024 20242024 5.5 8.0% 23.1% 15.1% 6.1 8.7% 23.3% 14.6% 6.0 9.1% 24.4% 15.2% 5.8 7.7 % 23.5% 15.8% 5.6 6.7% 23.3% 16.6% Performance highlights Revenue (MDKK) Gross profit (MDKK) EBITDA (MDKK) Cost of doing business (MDKK) Gross proft Gross profit margin EBITDA Margin Cost of doing business Cost of doing business ratio Net revenue Revenue per employee In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Scope 3 results overview t CO 2 e 17% Asia 1% Other countries 82% of our purchases originates from Europe 72% Cat 11 - Use of Sold Products 24% Cat 1 - Purchased G&S 2% Cat 4 - Upstream transportation 2% Other categories 2025 Target -50% 2020 Baseline 1,835 tonnes CO 2 1,794 tonnes CO 2 1,692 tonnes CO 2 1,563 tonnes CO 2 965 tonnes CO 2 2021 2022 2023 2024 918 tonnes CO 2 A restatement has been made in the numbers for the periods 2020-2023 since scope 3-emissions related to the scope 1 & 2 was included by mistake. The updated numbers for each year, only including scope 1 & 2, is found in the figure. ■ Fuel for company vehicles ■ Fuel for forklifts ■ Gas for heating ■ Electricity ■ District Heating ■ Electricity for company vehicles ESG highlights The carbon emissions for scope 1 and 2 for AO Denmark activities: Scope 3 distribution on group level mapped for 2024: Use of sold products is the main contributor to our scope3 emissions Purchasing patterns: In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 AO is undergoing a significant transformation. Our revenues in 2025 are expected to be almost 50% higher than in 2020. While part of this growth will come from acquisitions, the majority of AO's growth journey stems from our commitment to winning today and tomorrow, as well as our continuous focus on improving daily operations. We anticipated that 2024 would be a challenging year, and our expectations proved right. Geopolitical and economic uncertainty hampered demand. Lower market activity led to fierce competition. In addition, we saw changed business dynamics with a significant customer consolidation and even minor projects going into price negotiations, which increased the pressure on margins. Given the challenging market, we are satisfied with AO landing an EBITDA at DKK 366m (6.7%). Having said that, 2024 earnings did not come close to our long- term ambitions. Even a challenging year can be well spent, and we are satisfied with the strategic steps taken in 2024. AO has a state-of-the-art central warehouse solution and an omnichannel setup that enable us to focus on growth. In 2024 we took important, strategic steps to grow our business. Letter from the CEO Navigating challenges through strategic initiatives We acquired Workwear Group, which will strengthen our sales of workwear both within B2C and B2B. We acquired Svenska VA-Grossisten, which gave us a stra- tegic foothold in the Stockholm area, and through the acquisition of Designkupp located near Oslo we tripled our B2C sales in Norway. Ever since our establishment in 1914, we have been lending a hand to our customers, and we will continue to do so in 2025. It has probably never been more important than now to lend a hand – especially to mid- and small-sized installers. New regulatory and green transition makes it more complicated than ever to stay competitive as a small installer. A successful wholesale company cannot stay competi- tive without offering a range of digital services and solu- tions to its customers. We are happy to see that our work with a digital agenda for more than a decade has formed an organisation that welcomes new technologies. AO also welcomes the increased focus on ESG, and you will find that the number of pages in this Annual Report has increased significantly compared to last year. The many pages of ESG/CSRD reporting may be difficult to digest, but it is very important for us to describe how AO operates regarding ESG. We expect 2025 to show modest organic growth. This – combined with the growth from the companies acquired in 2024 – leads us to expect a revenue growth of 7-12% in 2025 and an EBITDA of DKK 410-450m. Finally, I personally would like to welcome our new colleagues into the AO family and to thank all AO employees for their loyalty, dedication and hard work in 2024. Best regards Niels A. Johansen, CEO Niels A. Johansen CEO In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Highlights of the year The lowered demand in the second half of 2023 continued in the first half of 2024. During the second half of 2024 demand increased gradually as expected. Fierce competition continued to put pressure on margins. AO took strategic steps to prepare for the future and continued to gain market shares in a competitive market. At the beginning of 2024, AO acquired 8,800 m 2 of land and 4,000 m 2 of warehouse capacity in Albertslund. In 2025, the buildings at the site will be converted into a partly automated ware- house of 70,000 m 2 to achieve future growth and efficiency. New and refurbished flagship stores opened in Esbjerg, Odense and Hillerød. In 2024, a range of EA articles was introduced into these flagship stores as well as six other stores.Customer visits increased by 10%. Three acquisitions were completed in 2024, each with strategic importance for the future growth. A strategic foothold was established in the Stockholm area, the business in Norway tripled, and in Denmark AO became market leader in B2C sales of workwear. AO continued to gain market shares in 2024 and is in a good position to continue doing so in the future. AO continued to reduce its scope 1 and 2 CO 2 emissions. Compared to 2020, AO Denmark reduced its scope 1 and 2 CO emissions by 47% and is well underway to reach its target of reducing these emissions by 50% by 2025. The share of digital sales continued to increase. The digital share of B2B sales increased to 46%, and on group basis, a record high 53% of all sales were digital. Strategic steps preparing for the future In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Five year summary (mDKK) 2024 2023 2022 2021 2020 Key figures Revenue 5,429.3 5,261.0 5,375.0 4,800.5 4,098.3 Gross margin 1,266.3 1,234.3 1,310.3 1,119.3 945.7 Earnings before interest, taxes, depreciation and amortisation (EBITDA) 366.0 405.3 491.6 417.2 328.2 Operating profit or loss (EBIT) 246.1 292.2 383.6 316.7 223.8 Financial income and expenses, net (36.0) (30.4) (6.1) 9.4 (3.0) Profit or loss before tax (EBT) 210.1 261.8 377.4 326.1 220.8 Tax on profit or loss for the year (46.7) (55.7) (83.0) (72.3) (47. 9) Net profit or loss for the year 163.4 206.1 294.5 253.8 172.9 Non-current assets 2,231.1 1,805.9 1,727.3 1,472.7 1,320.0 Current assets 1,556.3 1,436.5 1,591.0 1,235.9 1,063.2 Total assets 3,787.4 3,242.4 3,318.3 2,708.5 2,383.2 Share capital 28.0 28.0 28.0 28.0 28.0 Equity 1,536.3 1,475.3 1,4 07.5 1,239.9 1,030.2 Non-current liabilities 831.6 535.2 539.5 295.9 330.6 Current liabilities 1,419.5 1,231.9 1,371.4 1,172.7 1,022.4 Cash flow from operating activities 199.2 346.4 215.8 308.1 375.4 Cash flow from investing activities (465.4) (130.2) (333.3) (212.7) (66.3) Of which investments in property, plant and equipment, net (116.2) (94.8) (164.5) (170.5) (37. 3) Cash flow from financing activities 232.1 (161.7) 15.5 (91.6) (256.2) Cash flow for the year (34.1) 54.5 (102.0) 3.7 52.8 2024 2023 2022 2021 2020 Financial ratios Gross profit margin 23.3% 23.5% 24.4% 23.3% 23.1% EBITDA margin 6.7% 7.7% 9.1% 8.7% 8.0% Profit margin 4.5% 5.6% 7.1% 6.6% 5.5% Return on capital employed 7.0% 8.9% 12.7% 12.4% 9.5% Return on equity 10.9% 14.3% 22.2% 22.4% 18.2% Net gearing 2.7 1.3 1.1 0.5 0.8 Solvency ratio 40.6% 45.5% 42.4% 45.8% 43.2% Book value 54.9 52.7 50.3 44.3 36.8 Share price at the end of the year 78.6 70.3 83.1 136.0 60.4 Price Earnings Basic (P/E Basic) 13.1 9.3 7.7 14.6 9.4 Dividend per DKK 1 share ** 3.0 3.75 5.25 4.5 1.5 Earnings per share (EPS Basic), DKK ** 6.0 7.6 10.8 9.3 6.4 Diluted earnings per share (EPS-D), DKK ** 6.0 7.6 10.8 9.3 6.4 Number of employees (FTE average) 968 912 889 784 741 Number of employees excluding temporary workers (FTE average) 899 841 822 705 678 Number of employees at year-end (FTE) 981 833 850 734 686 Basic EPS and diluted EPS have been calculated in accordance with IAS 33. Other financial ratios have been prepared in accordance with the CFA Society Denmark's 'Recommendations and Financial Ratios'. See definition of key figures on page 168 * Financial ratios for the respective periods have been restated retroactively for the share split. ** Comparative figures related to shares have been restated to reflect share split in 2022. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Outlook for 2025 Sensitivity to the outlook for 2025: Geopolitical and macroeconomic tensions bring higher uncertainty to estimates than normally. Continued change in the geopolitical and macroeconomic climate, supply disruptions and devel- opments in raw material prices and interest rates may impact outlook for 2025. Organic growth and gross margins are sensitive to revenue mix from ReMoVe versus projects and to price pressure driven by competition. Follow-up on previously announced outlook for 2024 Revenue ended at DKK 5,429m. AO delivered a growth in revenue of 3%. It's AO's ambition to reach an annual growth which is at least 2% higher than the market growth. An EBITDA for the year of DKK 366m corresponding to 6.7% of net sales for the year, and profit before tax of DKK 210m, corresponding to 3.9% of net sales of DKK 5,429m are in line with the latest outlook announced as at 23 October 2024 of net sales of DKK 5,300 – 5,500m, an EBITDA of DKK 340 – 370m and a profit before tax in the range of DKK 200 – 230m. 2025 outlook AO is in a good position to grow the business. Partly due to the current momentum in AO and partly due to the acquired companies in 2024. The market activity is expected to show a moderate growth of 2-5% in 2025. AO momentum and the full year effect from acquired companies is expected to bring a total growth of 7-12%. The competition and pressure on gross profit margins is expected to remain fierce. As house buildings and project activities are expected to increase, and as interest levels are expected to remain stable, it is though expected that customer demand and wholesale supply will gradually get more balanced. AO will continue its investments in digital solutions, logistics and stores. The investment level in 2025 is expected to be approximately DKK 200m. Half of it relates to a further investment in the central warehouse to facilitate the longer-term growth. Based on the above estimates and assumptions, AO expects a revenue of DKK 5,800-6,100m, an EBITDA in the range of DKK 410-450m, and an EBT in the range of DKK 235-275m. The 2025 guidance is as follows 2024 Revenue, (mDKK) 5,429 EBITDA, (mDKK) 366 EBT, (mDKK) 210 Outlook 2025 5,800 – 6,100 Growth 6.8% to 12.4% 410 – 450 EBITDA margin 7.1% to 7.4% 235 – 275 EBT margin 4.1% to 4.5% In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Strategy 13 Business model 14 Industry and market trends 15 Corporate strategy 17 Strategic ambitions Annual Report 2024 B r a c k e t s T o o l s W a t e r s u p p l y D r a i n & S e w a g e E l e c t r i c a l S a n i t a r y w a r e s H V A C S u p p l i e r s C e n t r a l W a r e h o u s e B 2 C S h o w r o o m s B 2 C W e b s h o p s B 2 B I n t e g r a t i o n B 2 B A p p & W e b s h o p s C a l l c e n t e r P r o j e c t s a l e B 2 B S t o r e s S a l e s c h a n n e l s A e r s a l e D e l i v e r y A O 3 6 5 S u s t a i n a b i l i t y S a l e A d v i c e I n s p i r a t i o n S e r v i c e s The customer is at the centre of everything that we do at AO and has been at the core ever since we were founded Tradesmen B2B Construction B2B AO employee Consumers B2C Business model SBM-1 AO's omni-channel business model secures a coherent customer experience for all customers across touchpoints. AO works with more than 1,000 suppliers and is continuously expanding our range of products to target more customers and support one-stop-shopping. The automated central warehouse in Albertslund and the logistics centre in Horsens are corner stones in AO. 90% of all products are picked automatically, thus ensuring both high service quality and efficiency. AO's product range and service are promoted across a number of different sales channels that support the individual customer's preference. AO is providing the best of two worlds via value-added digital services and close customer relations through our local stores. Modern wholesaling is about offering the right products at the right prices, deliv- ering them at the right time, and making customers' lives as simple and flexible as possible. The AO365 concept is a prime example. With AO365, customers have a digital key to all AO stores, ensuring both convenience and flexibility for each individual customer. AO's employees are a key resource to the success of our business model. Their knowledge and experience bring significant value to the entire value chain. 1. Suppliers More than 1,000 suppliers provide the widest product range in the wholesale business 3. Sales channels Omnichannel business with 55 physical stores in Denmark and six in Sweden enabling 8,800 daily customer interactions. Digital share of sales makes up 53% of revenue. B2C customers are served out of more than 20 unique webshops 2. Central warehouse Automated warehouse solution ready to serve growth. 600,000 SKUs available for sale 4. Services As a true omnichannel business AO offers a wide range of services from selfservice through AO365 to advanced project advice via our competency centres In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Industry and market trends AO's strategy is shaped by the prevailing megatrends that exert influence on the current market landscape. These trends present both challenges and significant opportunities for AO's business development. The dominant themes within these market trends revolve around the green transition, climate changes, and the escalating pace of digitalisation. These trends have been categorised into five megatrends that steer our strategic focus areas. Green transition The green transition megatrend symbolises a global shift toward sustainability and eco-con- scious practices across industries. It encom- passes CO 2 reductions, renewable energy adoption, resource efficiency, and circular economy principles. Consumers increasingly support certified products and services due to environmental certified construction projects and legislative requirements, driving market demand. The recent years have shown that energy prices are a major driver behind green transition demand. AO has a wide range of products that directly service the green transition. In addition, AO aims to be the wholesale company with the best and most accurate data on the environ- mental impact of our products enabling our customers to make informed choices in their purchases. Digitalisation & AI AI amplifies and transforms digitalisation in multiple ways by making digital systems more intelligent, adaptive, and efficient. AI provides great opportunities for efficiency gains and utilises complex and large datasets to develop new and more personalised services. AO has been at the forefront of digitalisation and will continue to be so regarding AI. Providing our customers with tailored user experience, accu- rate data on the products – including ESG data is a key point in being the best partner for our customers. Consolidation Installers are increasingly joining forces either by mergers or by joining purchasing organisa- tions. The consolidation is happening within and across installer segments. Larger groups of installers seek to use their purchasing power to get better terms as well as their larger flexi- bility to serve a broader range of customers. AO has good and long experience in working with various purchasing organisations and is in a good position to service these organisations via our omni-channel offerings. Climate change As part of the climate change adaptation in both Denmark and Sweden there is a need for investments in the water infrastructure. In both countries Sewage & Drainage as well as Water Supply in general are due for an overhaul. There will be more focus on storing, retaining, and recycling rainwater, including cleaning surface water. The recycling of rainwater after cleaning can be used in connection with increased biodiversity, especially in cities, where there will be a focus on more urban trees, green roofs and walls, and roof terraces. Storing and retaining surface water during cloudbursts and storm floods can prevent flooding of buildings and equipment. AO is in a good position to deliver into these projects. Electrification The electrification agenda is a pivotal shift toward cleaner energy sources, driving inno- vation and sustainability. It encompasses electrifying transportation, revolutionising industries, and advancing renewable energy infrastructure. AO plays a part in the electrification agenda by supplying electrical components, cables, EV chargers, and solar panels. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 The Group’s strategy is to serve the professional market via AO in Denmark and Sweden and to serve the private markets in Denmark, Norway and Sweden via our portfolio of differentiated webshops run on a common platform. In the professional market, It is AO’s ambition to be the preferred supplier of technical installation materials for tradesmen and large construction customers. As a rule of thumb, the ReMoVe market represents about 70%, while project sales represent about 30%. Corporate strategy At AO, the customer is at the heart of everything we do and develop. We want to create value for our professional and private customers. That’s something we aim to do every single day, and why we say: “We lend a hand”. It builds on AO's genuine and heartfelt interest in understanding the present and future needs of our customers and being able to support them. We lend a hand Part of the team AO is as much a sparring partner as a wholesaler. And we are proud to be part of the team when the tradesmen renovate, modernise and maintain Denmark. It is our strategy to remain the leader in the ReMoVe business by continuing the development of the value creation in our omni- channel offerings. Towards common goals AO's projects department creates a secure framework for large construction projects. We are not only focused on the offer, but also on ensuring that your project gets done better, cheaper and faster. It is our strategy to become one of the best partners to construction customers, by developing new digital support services. It pays to start in the right place AO has the industry's most complete B2C offer within simple home improvements and DIY. We are close to the customers with all the inspi- ration, advice and service they need. It is our strategy to remain the online leader in DIY, by continuing to offer new product ranges and solu- tions, and thus making DIY easier. Actively contributing to a sustainable world AO wants to be the leading green wholesaler to the construction industry and make it easy for all installers to comply with climate requirements, and to ensure a minimal environmental impact. AO wishes to help promote a sustainable world by supporting and contributing to a sustainable construction sector. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 “ Our strategy is to continue to innovate and develop our omni-channel offer- ings – a hybrid business strategy, embracing the human touch in physical and digital touchpoints and securing efficiency, flexibility and scalability via digitalised stores and harvesting the best of two worlds. We will continue to expand our product range and utilise it across target groups. We aim to increase the business in Sweden too as we see a strong potential for organic growth. The larger construction projects are served via our Group projects depart- ment with competencies targeting the special needs of the construction industry. We will increase both the digital, logistics and advisory services, and we will make it easy to comply with the increasing sustainability needs and requirements. In the private DIY market, it's AO’s ambition to be the leading online trading platform for the sale of technical home improvement materials in Denmark and one of the leading online platforms in Sweden and Norway. We will continue to evaluate opportunities within M&A in both B2B and B2C. At AO, we believe that everyone has a duty to manage available resources and opportunities in a responsible way, ensuring the best possible condi- tions for the next generation to build on. That is why we take responsibility through our climate goals: to reduce CO 2 by 50% by 2025 in compliance with GHG Protocol scope 1 and 2, and to make AO scope 1 & 2 carbon neutral by 2030. At AO, the customer is at the heart of everything we do and develop. We want to create value for our professional and private customers. That's something we aim to do every single day, and why we say: "We lend a hand". In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Strategic ambitions Profitable growth · It is a strategic priority for AO to maintain and expand the industry's best B2B opportunities and the market's best B2C opportunities. · The pressure on profit margins is estimated to remain high in the future, but AO will pursue a profitable growth via an ambitious and data-driven purchasing and pricing strategy. · AO has the widest installer coverage with increasing cross-sell across product categories. New growth opportunities await in new business segments and in AO Sweden. · AO´s omni-channel strategy secures both digital efficiency and close customer relations · It´s AO´s ambition to beat the market with a minimum of 2% each year via organic and acquisitive growth High efficiency · It is AO’s ambition to continue to optimise internal and external processes, so that we use our skills for the complex tasks that make a difference for our customers and automate simple manual tasks. · AI has been heralded as the most important technology of our time. We believe in a proactive approach to the use of artificial intelligence across AO. · AO has made substantial investments in optimising efficiency and increasing capacity at the central warehouse in Albertslund and the Logistics Centre West in Horsens. We will continue to exploit these synergies. · It's our ambition to have the highest efficiency in the market and to reach an EBITDA margin of 10%. Solid foundation · AO must attract and retain the industry's best employees with high agility, professionalism and well-being. · At AO, we have the best team in the industry. An organisation rounded out by AO's culture and with the industry's most loyal and experienced employees. The most important thing for AO's future competitiveness is the employees. · IT plays a decisive role in AO's transformational power. It is crucial that AO has an IT landscape that is agile, scalable and future-proof, so that we can use as many resources as possible on development rather than operation. · AO has a strong balance sheet and a robust capital structure, enabling AO to resist headwind and to seize opportunities. AO has a gearing target of an interest-bearing debt in the range 1.0-2.5 times EBITDA. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 19 Financial results 21 Q4 financials 22 B2B performance 23 B2C performance Performance Annual Report 2024 Financial results Financial results Growth for the year driven by organic development and strategic acquisitions Revenue Organic revenue development was -1.0% (-3.3%) and revenue for 2024 was DKK 5,429m (DKK 5,261m) in line with latest outlook from the Q3 report. On an organic level revenue, development improved over the year with organic growth of 3.0% in the second half of the year. Gross profit Gross profit ended at DKK 1,266m (DKK 1,234m) corre- sponding to a gross profit margin of 23.3% (23.5%). Included in gross profit is a one-time gain of DKK 14m related to the sale of real estate. Gross profit has been impacted negatively by price pressure and an unfavour- able product mix. Acquired businesses and a higher proportion of B2C sales have had positive impact on the gross profit margin. External costs and staff costs In total, external operating costs and staff costs made up 16.6% of revenue (15.8%). Cost of doing business has increased due to cost and salary inflation as well as increased administrative burdens increasing FTEs. A shift towards lower average revenue per sale transac- tion has increased the cost of doing business mea- sured in relation to revenue. Additionally, the acquired business carries an underlying higher rate of costs measured in percentage of revenue. In 2024 we achieved an EBITDA of DKK 366m (DKK 405m) in line with guidance. Organic growth was -1.0% (-3.3%) and gross profit margin ended at 23.3% (23.5%). Revenue development and earnings improved over the year. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Year end FTEs were 981 (833). Organic increase in FTEs was 42 while acquired businesses contribute 106 new FTEs. EBITDA EBITDA ended at DKK 366m (DKK 405m), corresponding to an EBITDA margin of 6.7% (7.7%). Margins were under pressure from cost inflation and lower basket sizes. EBITDA margins have increased in the B2C business where a new scale has been reached after the acqui- sitions during 2024. The results of the segments are presented in the following pages. Financials Net financials amounted to DKK -36m (DKK -30m). Interest rates came down during 2024, and the average debt level increased compared to last year. Earnings before tax (EBT) EBT ended at DKK 210m (DKK 262m). Income tax Income tax amounted to DKK -47m (DKK -56m), corre- sponding to an effective tax rate of 22.2% (21.3%). Earnings after tax (EAT) EAT ended at DKK 163m (DKK 206m). Equity At the end of the year equity amounted to DKK 1,536m (DKK 1,475m). Thus, the solvency ratio at year-end was 40.6% (45.5%) and the target of maintaining a solvency of 40%+ was achieved. Cash flows Average net working capital for the year was 6.3% (5.8%) of revenue. Net working capital at the end of the year was 7.1% (5.6%) of revenue. Cash flow from operating activities totalled DKK 199m (DKK 346m). Change in receivables was DKK -65m (DKK +85m) driven by the Q4 activity as well as timing of payments. Change in inventories contributed with a cash flow of DKK -2m (DKK +100m). Change in trade payables contributed with a cash flow of DKK -12m (DKK -191m) Cash flow from investing activities totalled DKK -465m (DKK -130m) impacted by the acquisitions of Svenska VA-Grossisten, Designkupp and Workwear Group. Cash flow from financing activities was DKK +232m (DKK -162m) reflecting a high level of dividend payouts as well as new loan facilities in relation to the acquisi- tions. Net interest bearing debt amounted to DKK 993m (DKK 522m) at year end after a year with three acquisitions. Financial gearing was 2.7 times EBITDA (1.3 times). AO has a target gearing between 1.0 and 2.5 times EBITDA. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Q4 financials After a slow start, the 2024 the market gradually improved over the year. On an organic level the growth in Q4 was 4.1%, and including acquisitions the growth was 13.9%. Number of customer visits in AO’s store network was at record high levels underlining the importance of local presence. Revenue Organic revenue development was +4.1% (-7.8%) with additional growth from acquisitions. Q4 Revenue was DKK 1,550m (DKK 1,361m) marking the first quarter with a quarterly revenue of more than DKK 1,500m. Gross profit Gross profit of DKK 374m (DKK 318m) corresponds to a profit margin of 24.1% (23.4%). Due to acquisitions the quarter showed a positive segment mix on the gross profit margin of 0.6%. External expenses and staff costs Driven by acquisitions external expenses and staff cost in Q4 increased to DKK 251m (DKK 223m) corresponding to a cost of doing business ratio of 16.2% (16.4%). On an organic level the cost of doing business ratio was reduced to 15.7% (16.4%). EBITDA EBITDA ended at DKK 123m (DKK 95m), corresponding to an EBITDA margin of 7.9% (7.0%). In Q4 margins improved but are still under pressure. Earnings before tax (EBT) EBT of the quarter ended at DKK 80m (DKK 58m). MDKK Q4 2024 Q4 2023 Revenue 1,550.4 1,361.4 Cost of sales (1,176.8) (1,043.6) Gross profit 373.6 317.8 Other operating income 0.4 0.4 Gross margin 374.0 318.2 External expenses (92.2) (90.1) Staff costs (158.7) (132.7) Earnings before interest, taxes, depreciation and amortisation (EBITDA) 123.1 95.4 Depreciation and amortisation (32.5) (29.6) Operating profit or loss (EBIT) 90.6 65.8 Financial income 5.4 0.7 Financial expenses (16.0) (8.6) Profit or loss before tax (EBT) 80.0 57.9 Tax on profit or loss for the year (18.5) (11.5) Net profit or loss for the year 61.5 46.4 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 B2B performance B2B The B2B business services the professional tradesmen as well as large construction companies out of our omni-channel business model. In Denmark, AO is the wholesaler with the broadest product range serving more trades than our competitors. The B2B segment has roughly 70% of its revenue within repair and maintenance and 30% within projects. In the B2B segment AO has continued to gain market shares on an organic level in 2024 and in Q4. Growth for the year and Q4 was positively affected by the acquisition of Svenska VA-Grossisten. Revenue Segment revenue was DKK 4,623m (DKK 4,659m) for the year and DKK 1,246m (DKK 1,173m) for the quarter. Revenue development has improved over the year ending in organic growth of 4.6% in Q4. Gross profit Gross profit of DKK 1,012m (DKK 1,070m) corresponds to a profit margin of 21.9% (23.0%) for the year due to margin pressure. Gross profit margin recovered partly in Q4 and ended at 22.2% (22.7%). Direct expenses Cost inflation as well as new hires have contributed to an increase in direct expenses which ended at DKK 508m (DKK 486m). EBITDA Segment EBITDA ended at DKK 507m (DKK 585m). Distribution of sales channels MDKK 2024 2023 Q4 2024 Q4 2023 Revenue 4,623.5 4,658.6 1,246.3 1,173.0 Cost of goods sold (3,438.7) ( 3,427.4) (927.0) (864.9) Product margin 1,184.8 1,231.1 319.3 308.0 Distribution (173.0) (160.7) (42.9) (41.5) Gross profit 1,011.8 1,070.4 276.4 266.5 Direct expenses (504.7) (485.9) (128.2) (122.4) EBITDA before indirect expenses 507.1 584.5 148.2 144.1 Key figures Gross margin % 21.9% 23.0% 22.2% 22.7% EBITDA % 11.0% 12.5% 11.9% 12.3% Physical 54% Digital 46% In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 B2C performance B2C AO is the market leader within online DIY sales in Denmark. With the acquisitions during the year AO has become the leading player within online DIY bathroom sales in Norway and within workwear in Denmark. The addition of the two new B2C companies has increased the number of websites significantly and B2C made up almost 20% of Group revenue in Q4. Revenue Segment revenue was DKK 805m (DKK 603m) for the year and DKK 304m (DKK 189m) for the quarter. On an organic level, the B2C segment recorded growth in all quarters of 2024 despite record-breaking sales during 'Black Week' in 2023. Gross profit Gross profit of DKK 240m (DKK 164m) corresponds to a profit margin of 29.8% (27.2%). The acquired companies bring higher gross profit margins than the organic busi- ness. On an organic level, margins increased slightly. Direct expenses In 2024, direct expenses increased to DKK 168m (DKK 133m), but driven by the higher activity, the ratio of cost of doing business decreased to 20.9% (22.1%). EBITDA Segment EBITDA ended at DKK 72m (DKK 31m) for the year. New top line scale to the B2C business improved the earnings. Segment EBITDA margin grew to 12.1% (6.1%) in Q4. Number of households serviced MDKK 2024 2023 Q4 2024 Q4 2023 Revenue 805.8 602.5 304.1 188.5 Cost of goods sold (504.7) (387.8) (182.7) (119.9) Product margin 301.1 214.6 121.4 68.5 Distribution (60.8) (50.7) (23.6) (16.7) Gross profit 240.3 163.9 97.8 51.8 Direct expenses (168.1) (133.2) (61.1) (40.3) EBITDA before indirect expenses 72.2 30.7 36.7 11.5 Key figures Gross margin % 29.8% 27.2 % 32.2% 27.5% EBITDA % 9.0% 5.1% 12.1% 6.1% 448,1702023 460,7002024 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Corporate governance 25 Risk management 29 Corporate governance 31 Board of Directors 36 Executive Board 37 Shareholder information Annual Report 2024 Risk management The identification and management of business risks form part of the annual strategic plan for the Group, which is approved by the Board of Directors. The Executive Board and the Board of Directors also establish the framework for determination of credit risk, currency risk, interest rate risk and liquidity risk. Risk management is an integral part of the business management at AO. We prioritise having the necessary competencies within the business areas in which we operate. A yearly reassessment of risks and methods for risk identification and management is conducted. To define risk appetite and assess risks, risks are mapped in a classical risk model based on probability (frequency) and financial impact. Risk identification The focus of the risk management process is to identify and evaluate opera- tional and strategic risks for AO in the short, medium, and long term. These risks are defined as events or developments that have a significant negative impact on AO's ability to: · achieve profit goals · execute on the strategy · maintain a 'license to operate'. Both gross risks (inherent risk) and net risks (residual risk) are considered. Gross risks are defined as the product of the consequence and probability of a risk, assuming that no risk mitigation measures are in place. Net risks are the product of the remaining risk after risk-reducing measures. Net risks should align with AO's risk appetite. Risk assessment The significance of risks is assessed as a combination of the probability of the risk materialising and the consequences if it does. The probability is evaluated based on the frequency with which AO expects the risk to occur, while the consequences are assessed on various parameters: · impact on results (direct or indirect financial effect) · impact on reputation · compliance (license to operate, including personal safety). Risk Management The purpose of identifying, assessing, and subsequently managing risks is to reduce net risk to an acceptable level in accordance with the decided level of risk appetite. In the risk management system, we employ four strategies to handle risks: · avoid – cease or make changes to activities that pose risks. · transfer – shift risk to a third party. · mitigate – seek to minimise identified risks to an acceptable level. · accept – monitor risk and create contingency plans if the risk occurs. Dynamic risk adaption Mitigation Devise and implement stra tegies to reduce the impact of risks. Reporting Communication of identified risks and results from analysis to stakeholders. Analysis Evaluation of risk nature, proba- bility, and impact across various business aspects. Identification Systematic recognition of potential risks within AO's operations. Ongoing key risk reassessment Tracking In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 A B C D E F G H Probability of occurence Severity of Impact Low High High Net risks Changes to previously identified risks The risk of 'New entrants in the market' has been expanded to a broader risk of "Market and competition dynamics". The people risk related to the inability to attract or retain key employees is no longer identified as a top risk for AO. Management and HR initiatives have reduced the risk and AO is able to attract key talent in the market. A Market and competition dynamics B Geopolitical and macroeconomic uncertainty C Credit Management D Global supply chain E Environmental & products master data F IT risks G Cyberattack H Dependency on service providers Risk map In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 A Market and competition dynamics B Geopolitical and macroeconomic uncertainty C Credit Management D Global supply chain Description Risk of new competitors entering into or expanding in the Danish market. Continued and accelerating consolidation amongst customer groups. New risk Risk of market decline due to geopolitical or macro- economic uncertainties. The risk is unchanged Risk of losses associated with extending credit to customers. The risk is unchanged Risk of product unavailability due to supply chain uncertainties. Impact assessment has been reduced Impact The risk of increased consolidation in the Danish market creating stronger competitors and customers with higher bargaining power could mean that AO loses competitive advantages and is unable to meet the goal of gaining market share or maintaining profit margins. Probability: High Impact: High Geopolitical uncertainties can lead to macroe- conomic downturns involving inflation, rising interest rates, increasing energy costs, etc. This could impact the construction industry overall and decrease market demand. Probability: High Impact: Medium Customer credits are an established part of the wholesale industry, and the majority of the group's sales are conducted on credit. The risk increases during downturns in the construction industry, where the likelihood of sudden bankruptcies among the customer base rises. Probability: Medium Impact: Medium In the event that AO cannot supply the products customers need, there is a risk of losing customers to competitors, ultimately affecting revenue and earnings. Probability: High Impact: Medium Risk response Mitigation To minimise the potential impact, AO aims to continue making it as easy and transparent as possible for customers to trade with AO. Emphasis on streamlining the supply chain and overhead costs is intended to ensure that AO can remain competitive in terms of pricing, even compared to larger competitors. Acceptance AO acknowledges that the risk cannot be entirely avoided and actively monitors the actions of existing and potential new competitors. Acceptance AO acknowledges that the risk cannot be entirely avoided and actively works to monitor market developments. In budgets and forecasts, AO estab- lishes the foundation for business initiatives. AO aims to have a scalable business with lower over- head costs than competitors, which can mitigate the impact. Mitigation AO has established a credit policy and continu- ously monitors customers' outstanding balances. Accounts with overdue balances are closed, reducing the risk of further losses. Transfer AO insures larger customer engagements through credit insurance, providing coverage against signif- icant individual losses. Acceptance There is an acceptance of a certain level of risk in customer credits. Mitigation AO collaborates closely with its key suppliers, gaining an understanding of their supply situations. In dialogue with the sales and procurement organ- isation, min/max inventory levels are established, and shortages are monitored. Where possible, efforts are made to have alternative products and suppliers for essential items. During crisis periods, buffer stocks are built up to ensure AO can fulfil customer orders. High Medium In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 E Environmental & products master data F IT risks G Cyberattack H Dependency on service providers Description Risk of not being able to adhere to regulatory and customer driven demands for detailed data on envi- ronmental impact of the products sold. New risk Risk of breakdowns in business-critical systems, including the failure to fully leverage IT integra- tions. The risk is unchanged Risk of IT breakdown due to a cyberattack. The risk is unchanged Risk of dicontinued service from key service providers causing business disruptions. New risk Impact Inadequate product documentation can reduce transparency in the assortment, making it harder for customers to assess a product's environmental impact. This may lead to lost business opportunities as customers' expectations are not met. Additionally, the required data collection from suppliers can be challenging and requires significant effort in data registration and validation. Probability: Medium Impact: Medium Frequent but short-term IT outages resulting in operational losses, leading to an inability to main- tain the desired efficiency and service level for AO's customers. There is a risk that the lack of optimisa- tion in operations could result in productivity loss. Probability: Medium Impact: High Business disruption due to compromised data, denial-of-service attacks, ransomware, etc. are among the consequences of a cyberattack. The duration of such a business disruption can be lenghty and have significant impact on AO's ability to conduct business. Probability: High Impact: Medium Sudden discontinued service from key service providers could disrupt AO's ability to deliver goods timely or negatively impact the efficiency of the logistics. A lack of ability to live up to AO's commitments towards customers could result in loss of business affecting revenue and earnings. Probability: Medium Impact: High Risk response Mitigation AO works primarily with major suppliers and a profes- sionel collaboration is established in order to get high quality product documentation. Every effort is being made to get EPDs (Environmental Product Documenta- tion) on the products as well as information relevant for certified construction projects such as Swan-la- beled construction and DGNB. AO is educating its own work force to support customers in their efforts towards legal and regulatory compliance. Master Data Governance plays an integral part in ensuring availability of documentation. Mitigation AO collaborates closely with its key partners and works on expanding a robust IT organisation to support AO's activities. Mitigation AO has established an IT Security Council reporting to AO's management, which provides guidelines for AO's IT security. Business Continuity Plans are in place to mitigate the impact. Transfer AO has obtained insurance coverage against cyberattacks, thus reducing but not eliminating the potential impact. Mitigation AO has a close collaboration with its key service providers. On an ongoing basis AO coordinates future demands for services with its suppliers in order to ensure that needs are met. Alternative suppliers are identified for key services. High Medium In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Group Management Corporate governance The Board of Directors/Audit Committee and the Executive Board have overall responsibility for the Group’s internal controls and risk management in connection with the financial reporting process, including compliance with applicable legislation and other regulations in relation to financial reporting. AO has established internal control and risk manage- ment systems to ensure that financial reporting is carried out in accordance with IFRS and other accounting regulations applicable to listed Danish companies. In addition, the systems increase the certainty that the internal and external financial reporting provides a true and fair presentation that is free from material misstatement. The Audit Committee monitors the control and risk management systems in the Group on an ongoing basis. In this context, risks that may affect the Group’s financial reporting process are likewise assessed on an ongoing basis. The risk assessment is based on signifi- cant items and other business-critical areas. Recommendations on corporate governance All recommendations have been analysed and consid- ered by the Board of Directors and the Executive Board of Brødrene A & O Johansen A/S, and the Board of Direc- tors is of the opinion that the management of Brødrene A & O Johansen A/S complies with the most important recommendations in the report. The company has opted to implement another approach to five areas in 2024, which is two fewer than in 2023. Two-tier governance structure Shareholders Board of Directiors Audit Committee Normination Committee Excutive Board Organisation Remuneration Committee In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 A summary of the areas where the Group has chosen to follow a different practice is provided below: · Given the company’s ownership structure, the Board reserves the right to reject takeover bids in certain cases without submission to shareholders. · The Chief Executive Officer is responsible for the general management of the company while also serving as a member of the Board. · 3 out of 5 of the Directors elected by the Annual General Meeting are not independent as they have been members for more than 12 years. · 2 out of 4 of the members of the Audit Committee are not independent. This committee is made up solely of members of the company’s Board of Directors, which is why there is no requirement for independence. The chair of the Audit Committee is independent. Brødrene A & O Johansen A/S has prepared a full report on corporate governance for the 2024 financial year under Section 107b of the Danish Financial Statements Act. This can be viewed or downloaded at: → Corporate Governance 2024 https://ao.dk/globalassets/download/regnskabsdata/2024/ statutory-report-on-corporate-governance-2024.pdf In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Board of Directors GOV-1 Brødrene A & O Johansen A/S’ Board of Directors comprises a total of eight members who have been elected to protect the interests of the shareholders as best as possible and to ensure an appropriate and balanced development of the company both in the short and the long term. The Board of Directors oversees the overall and stra- tegic management of the company. · Five members are elected by the General Meeting. The holders of Class B shares have the right to elect one Board member whereas the holders of Class A shares elect the remaining Board members. The elec- tion of Board members representing each individual share class is determined by a simple majority of votes. The Board members are elected for a period of one year after which they may be re-elected. · //Gov-1 In Denmark, the Company’s employees elect three Board members according to the current provisions of the Danish Companies Act. Staff-elected Board members are elected for a term of four years. In addi- tion, the Company’s employees also elect an equiva- lent number of alternates who are elected for a similar term.// Staff-elected Board members have good knowledge of the Company’s activities and contribute in a construc- tive way to the decisions of the Board, and they have the same rights, duties, and responsibilities as Board members elected by the General Meeting. The Board of Directors holds meetings 6-7 times a year. In 2024 additional meetings were held in relation to the three acquisitions. Audit Committee The purpose of the Audit Committee's work is to make an independent assessment of whether the Company's financial reporting, internal control, risk management and statutory audit are appropriate in relation to the Company's and the Group's size and complexity. In 2024, the Board member elected by the Class B share- holders was appointed Chair of the Audit Committee. The Audit Committee has the following tasks: · to monitor and report on the financial reporting process, · to monitor and report on the sustainability reporting proces, · to monitor the efficiency of the Company's internal control, internal audit, if any, and risk management systems, · to monitor the statutory audit of the financial state- ments and sustainability reports, · to monitor and review the independence of the auditor, including reviewing and approving the nature and extent of the external auditor's non-audit services, · to recommend the appointment of auditors including sustainability auditors, Meetings The Audit Committee consists of four members who are appointed from and among the Board of Directors. The Audit Committee hold meetings 4-5 times a year. In 2024, additional meetings were held in relation to the implementation of new sustainablity reporting. Nomination Committee The Board of Directors has set up a Nomination Committee consisting of two members responsible for performing the following preparatory tasks: · describing the required qualifications for a given member of the Board of Directors and the Execu- tive Management, the estimated time required for performing the duties of this member of the Board of Directors and the competencies, knowledge and experience that are or should be represented in the two management bodies, · on an annual basis evaluating the Board of Directors and the Executive Management’s structure, size, composition, and results and preparing recommen- dations for the Board of Directors for any changes, · in cooperation with the chairperson handling the annual evaluation of the Board of Directors and assessing the individual management members’ competencies, knowledge, experience, and succes- sion as well as reporting on it to the Board of Direc- tors, · handling the recruitment of new members to the Board of Directors and the Executive Management and nominating candidates for the Board of Directors' approval, · ensuring that a succession plan for the Executive Management is in place, · supervising Executive Managements’ policy for the engagement of executive employees, and · supervising the preparation of a diversity policy for the Board of Directors’ approval. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Remuneration committee The Remuneration Committee is made up of two members who are appointed from among the Board of Directors. The committee is responsible for: · preparing a draft remuneration policy for the Board of Directors’ approval prior to the presentation at the general meeting, · providing a proposal to the Board of Directors on the remuneration of the members of the executive management, · providing a proposal to the Board of Directors on the remuneration of the Board of Directors prior to the presentation at the General Meeting, · ensuring that the management’s actual remuneration complies with the Company’s remuneration policy and the evaluation of the individual member’s perfor- mance, and · assisting in the preparation of the annual remunera- tion report for the Board of Directors’ approval prior to the presentation for the General Meeting's advi- sory vote. Board member Board Meetings Audit Committee Remuneration Comittee Nomination Comittee Henning Dyremose Erik Holm Peter Gath Niels A. Johansen Ann Fogelgren René Alberg Leif Hummel Marlene L. Jakobsen Meeting participation in 2024 % 96.9% 100% 100% 100% * During the year, two Board meetings were held on short notice. In each case, the Board was represented by seven of the eight members, and the member who could not attend was briefed and consulted beforehand. Participation in Board meetings in 2024 Board evaluation procedure The Board of Directors annually assess and evaluate the competence, knowledge, and experience of the individual members of the Board of Directors and the Executive Management and report their findings to the Board of Directors. In 2024, the Board of Directors conducted an evaluation of the Board of Directors and its individual members. As in 2023, this year's evaluation was conducted thorugh a questionnaire provided to each individual member of the Board of Directors by an external service provider. The evaluation included, effectiveness, performance, and composition of the Board of Directors. The evalu- ation concluded that the Board of Directors is working well, forwarded material is of high quality, the Board of Directors has the right competencies, and that there is a high degree of satisfaction with the cooperation between the Board of Directors and Executive Manage- ment. Proposals for the Annual General Meeting The Annual General Meeting will be held completely electronically at 1 p.m. on March 21 2025. 1. Allocation of profits The net profit for the year amounts to DKK 163.4m. The Board of Directors proposes to distribute a dividend of DKK 3.0 per DKK 1 share, corresponding to around 50% of the profit after tax for the year and 300% of the share capital. 2. Approval of remuneration policy The Board of Directors proposes that the Annual General Meeting approves the amended remuneration policy adopted by the Board of Directors. The full text of the revised remuneration policy is attached to the notice to attend the Annual General Meeting. 3. Authorisation to acquire own shares The Board of Directors proposes that it be authorised by the General Meeting during the period until 1 May 2026 to let the Company acquire own shares equiva- lent to a total of 10% of the Company’s share capital at the time of being granted authorisation, provided that the Company’s total holding of own shares at no point exceeds 10% of the Company’s share capital. The consideration must not deviate by more than 10% from the official price quoted at Nasdaq Copenhagen at the time of acquisition. 4. Authorisation of the Chair The Board of Directors proposes that the Chair of the Annual General Meeting (with the right of substitution) be authorised to register the resolutions passed by the Annual General Meeting with the Danish Business Authority and to make such alterations as the Danish Business Authority may require for registration or approval. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Members of the Board of Directors GOV-1 Henning Baunbæk Dyremose Erik Holm Chair Born: 1945 Joined: 1997, Chair since 2007 Nationality: Danish Deputy Chair of the Audit Committee, Chair of the Remuneration and Nomination Committees Elected by Class A shareholders As Henning Dyremose has been a member of the Board of Directors for more than 12 years, he cannot, according to the ‘Danish Recommendations on Corporate Governance’, be characterised as being inde- pendent of special interests. Deputy Chair Born: 1960 Joined: 2009 Nationality: Danish Member of the Audit Committee, Deputy Chair of the Remuneration and Nomination Committees Elected by Class A shareholders As Erik Holm has been a member of the Board of Directors for more than 12 years, he cannot, according to the ‘Danish Recommendations on Corporate Governance’, be characterised as being independent of special interests. Qualifications Broad leadership experience in business, finance and politics Experience as managing director of a wholesale company with the same customers as Brødrene A & O Johansen A/S Former Minister of Finance Qualifications Experience as managing director of a wholesale company with the same customers as Brødrene A & O Johansen A/S Broad leadership experience in sales, finance, and logistics, both in Denmark and internationally Experience of Board work in other listed companies Managerial Posts Chair of the Board of AO Invest A/S CEO of Henning Dyremose ApS; HD Invest, Virum ApS; HCE Invest, Virum ApS; CD Invest, Virum ApS and Elly Dyremose ApS Managerial Posts Chair of the Boards of CR EL & TEKNIK A/S, Norr11 Holding ApS, Norr11 International ApS, Hotel Kold- ingfjord A/S Deputy Chairman of the Boards of SP Group A/S, Arvid Nilssons Fond and AO Invest A/S Member of the Boards of Miluda Invest ApS, Dragsholm Slot P/S, Hotelselskabet af 8. februar 2018 K/S and Tokyo Topco Limited (Sticks 'n' Sushi) CEO of Erik Holm Holding ApS, JU-CH Holding Aps and Lullula ApS Share ownership 59,770 (59,770) Class B shares. No trades in AO shares in 2024. Share ownership 0 (0) Class B shares. No trades in AO shares in 2024. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Ann Fogelgren Peter Gath Niels A. Johansen Member Born: 1974 Joined: 2023 Nationality: Swedish Member of the Audit Committee Elected by Class A shareholders According to the ‘Danish Recommendations on Corporate Governance’ Ann Fogel- gren is considered to be independent of special interests. Member Born: 1965 Joined: 2023 Nationality: Danish Chair of the Audit Committee Elected by Class B shareholders According to the ‘Danish Recommendations on Corporate Governance’ Peter Gath is considered to be independent of special interests. Member Born: 1939 Joined: 1979 Nationality: Danish Elected by Class A shareholders As Niels A. Johansen has been a member of the Board of Directors for more than 12 years, he cannot, according to the ‘Danish Recommendations on Corporate Governance’, be characterised as being independent of special interests. Qualifications PhD in Information Systems from Copenhagen Business School in 2005 Chief Information Officer of GN Store Nord A/S Former CIO posts at a number of large Danish companies Former CDO In depth knowledge of strategic IT solutions and AI technology Qualifications State-authorised public accountant in 1996 Cand.jur. (Master of Law) in 1991 Certified Sustainablility Auditor in 2024 Former long term Audit Partner at KPMG and EY and former Chair of FSR (The Institute of State-Authorised Public Accountants in Denmark) Former external auditor for Brødrene A & O Johansen A/S Qualifications Long-time managerial experience as CEO In-depth knowledge of the wholesale industry of installation materials in Denmark and the rest of Europe Managerial Posts Member of the Board of AO Invest A/S Managerial Posts Chair of the Board of FSRs Studie- & Understøttelsesfond and Fonden Johannes Hages Hus Member of the Board of AO Invest A/S, Milde-Fonden, Lyn Mildé A/S, Konsolidator A/S and Board Office A/S CFO of St. Jørgen Holding ApS and CEO of Strategia Finans ApS Managerial Posts Chair of the Board of Directors of Avenir Invest ApS. Niels A. Johansen is the CEO and member of the Board of Directors of a consol- idated company and the Chair of the Board of Directors of three consolidated companies Share ownership 28,270 (28,270) Class A shares and 2,810,400 (2,810,400) Class B shares. No trades in AO shares in 2024. Share ownership 7,000 (7,000) Class B shares. No trades in AO shares in 2024. Share ownership 0 (0) Class B shares. No trades in AO shares in 2024. Members of the Board of Directors GOV-1 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 René Alberg Leif Hummel Marlene L. Jakobsen Employee-elected member Elected in 2022, term expires in 2026 Born: 1971 Joined: 2006 Nationality: Danish Product Manager Employee-elected member Elected in 2022, term expires in 2026 Born: 1963 Joined: 2022 Nationality: Danish Facility Manager Employee-elected member Elected in 2022, term expires in 2026 Born: 1983 Joined 2022 Nationality: Danish Store Manager Share ownership 500 (500) Class B shares. No trades in AO shares in 2024. Share ownership 5,200 (5,200) Class B shares. No trades in AO shares in 2024. Share ownership 364 (294) Class B shares. Acquired 70 Class B shares in 2024. Members of the Board of Directors GOV-1 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Executive Board GOV-1 Niels A. Johansen Per Toelstang Stefan Funch Jensen Lili Johansen CEO Born: 1939 Chair of the Board of Directors of Avenir Invest ApS. Niels A. Johansen is the CEO and member of the Board of Directors of a consolidated company and the Chair of the Board of Directors of three consolidated companies Holds 28,270 (28,270) Class A shares and 2,810,400 (2,810,400) Class B shares either directly or indirectly CFO, Deputy CEO Born: 1966 CEO of MP Toelstang Holding ApS, Toelstang Invest ApS, Ridersclub ApS Chair of the Board of Directors of Høvegaard ApS Member of the Board of Directors of Kohberg Bakery Group A/S Holds 20,000 (20,000) Class B shares either directly or indirectly CTO Born: 1974 Holds 0 (0) Class B shares either directly or indirectly CHRO Born: 1957 Member of the Board of Directors of Avenir Invest ApS. Holds 28,110 (28,110) Class A shares and 360,000 (360,000) Class B shares either directly or indirectly AO Management Team Jeanette Roed Berthelsen CSO, HVAC & Projects Torben Christiansen CSO, Construction Lars Kestner CSO, Electricals Gitte Lindeskov CIO Ian Schlottmann CPO Sebastian Sigvaldason Logistics Director In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Shareholder information Dividend The Board of Directors proposes that a dividend of DKK 3.00 per DKK 1 share be distributed for 2024 corre- sponding to a payout ratio of 51.4%. The proposal is in line with the capital allocation policy which states a payout ratio of 33% - 50%. Shareholders, capital, and voting rights AO has two classes of shares. Class A shares cannot be negotiated without the approval of the Board, whereas Class B shares are freely negotiable. In addition, the B share class carries special rights in the form of payment of cumulative dividends. The Company’s nominal share capital is DKK 28,000k. Of which DKK 5,640k are Class A shares and DKK 22,360k are Class B shares. Each class A share of DKK 100 carries 1,000 votes, whereas each Class B share of DKK 1 carries 1 vote. In addition to the difference in the number of votes, the two share classes differ in the following respects: The Class A shares are non-negotiable instruments, whereas the Class B shares are listed on Nasdaq Copen- hagen under ID code DK0061686714. The holders of Class B shares have a preferential cumu- lative dividend right of 6%. This means that no dividend will be paid for Class A shares until the Class B shares have achieved a cumulative dividend of 6%. In the event of liquidation, Class B shares take prece- dence over Class A shares. Changes to the Company’s Articles of Association require that two thirds of cast votes and two thirds of the represented capital at a general meeting are in favour of the change. The Company’s Board of Directors consists of eight members who do not have to be shareholders. Five members are elected by the Annual General Meeting, and three members are elected by the staff. Holders of Class B shares are entitled to appoint and elect one Board member, while holders of Class A shares elect the remaining Board members elected by the Annual General Meeting. A share B share Shares 56,400 22,360,000 Nominal value per share (DKK) 100 1 Nominal value (DKK) 5,640,000 22,360,000 Votes per share 1,000 1 Treasury shares 823,900 Stock Exchange Nasdaq Copenhagen Ticker: AOJ B ISIN: DK0061686714 Share price year-end (DKK) 78.6 Market Cap year-end (MDKK) 443.3 1,757.5 AO shares Dividend payments MDKK 2024 2023 2022 2021 2020 Dividend 84.0 105.0 147.0 126.0 42.0 Payout ratio 51% 50% 50% 50% 24% In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 Jan DKK Shares Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 40 50 60 70 80 90 100 By making factual, relevant, and reliable information available to shareholders and other stakeholders, the management of Brødrene A & O Johansen A/S aims at giving the share market the best possible basis for pricing the Company’s shares fairly. Brødrene A & O Johansen A/S’s Investor Relations activities are designed to ensure that the disclosure of information is in accordance with the current disclosure requirements established by Nasdaq Copenhagen A/S. Brødrene A & O Johansen A/S’s financial communication with stakeholders takes place mainly through company announcements, quarterly webcasts, and investor meetings. Brødrene A & O Johansen A/S does not comment on any information relating to financial results or expec- tations in the period between the end of an accounting period and the date on which results are published. The Company’s management will refrain from holding investor meetings and the like in this period. The Company will also be reluctant to arrange meetings in periods where it is dealing with matters that could result in decisions that are to be announced to the public. Investor relations policy Financial calendar 27/2 2025 Annual Report 21/3 2025 Annual General Meeting 30/4 2025 Quarterly Report Q1 2025 14/8 2025 Quarterly Report Q2 2025 29/10 2025 Quarterly Report Q3 2025 Analysts The AO share is covered by the following financial institutions: · SEB Investor contacts CEO Niels A. Johansen CFO, Deputy CEO Per Toelstang Head of IR Nicolaj Harmundal Petersen [email protected] Number of Class A shares (DKK 100) Number of Class B shares (DKK 1) Number of shares – nominal value Capital, % Votes, % Avenir Invest ApS 56,220 208,000 5,830,000 20.82% 71.65% Niels A. Johansen 160 2,706,400 2,722,400 9.72% 3.64% Other registered shares 20 16,860,371 16,862,371 60.22% 21.43% Unregistered shares 0 1,761,329 1,761,329 6.29% 2.24% Total, excluding treasury shares 56,400 21,536,100 27,176,100 97.0 6% 98.95% Treasury shares 0 823,900 823,900 2.94% 1.05% Total 56,400 22,360,000 28,000,000 100.00% 100.00% Total volume Closing price AO share price 2024 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 This statutory statement on data ethics of Brødrene A&O Johansen A/S is part of the Management’s review in the Annual Report for 2024 and covers the accounting period from 1 January to 31 December 2024. Brødrene A & O Johansen A/S is the only Danish company in the group covered by the rules. Therefore, this statement only applies to Brødrene A & O Johansen A/S (hereinafter referred to as ‘AO’). Statement on Data Ethics It is important for AO that customers and other business partners can trust AO’s processing of data. AO has therefore chosen to focus on data ethics, so that it is constantly ensured that data is processed ethically for the common good of both customers and AO. Consequently, the Board of Directors has adopted a data ethics policy; a policy that determines AO's posi- tion on and handling of data ethics issues. The policy is based on a series of data ethics principles about · Management's dedication to data ethics · Responsible processing of data in accordance with rules and society's perception · Ensure transparency of processing operations · Avoid discrimination and exclusion · Support privacy and information security · Training of employees. It is AO’s goal that all employees are aware of the data ethics values that underlie AO’s work with data. There- fore, there is continuous awareness-raising about the data ethics policy, and all employees are required to complete a data ethics training programme. AO makes extensive use of data to optimise business processes and develop its operations. AO has therefore estab- lished a data ethics working group to address data ethics issues. The purpose of the data ethics working group includes making recommendations on specific data ethics challenges and ensuring compliance with AO’s data ethics policy. AO has, for a number of years, been highly focused on protecting data – including personal data – from unauthorised disclosure. This protection includes, among other things, deletion, data minimisation, and safeguarding through technical and organisational measures. In the autumn of 2024, AO has therefore been certified according to a standard for information security (ISO27001) and a standard for data protection (ISO27701). Compliance with these standards ensures that all data is secured in a reasonable manner and that the outside world can trust AO’s use of data. The data ethics working group has also ensured that AO’s use of artificial intelligence (AI) on data has been mapped within AO. In the summer of 2024, AO’s IT Security Council conducted a mapping of where AI is used in AO. At the end of 2024, the data ethics working group has been author- ised to assess data ethics issues before AI-based projects are put into operation. These assessments will, among other things, focus on legality, reasonableness, and bias. In 2025, the data ethics working group will therefore focus on AI-based projects and continuously assess whether there is a need to adjust the use of AI within AO. Data ethics Statutory Statement on Data Ethics, cf. Section 99d of the Danish Financial Statements Act In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Sustainability statement 41 Executive Summary 49 General 63 Environment 85 Social 100 Governance 108 Appendix AO now exclusively uses electric company vehicles, with charging already installed or to be installed at every store Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix AO is committed to participate in creating a positive change in the construction and installation industry by helping our customers achieving sustainable growth. This can be done by setting a good example, by working with the value chain to reduce negative ESG impacts, and most importantly, by making it easy for the AO's customers to comply with sustainability demands and progress in their own sustainability efforts. In 2024 AO has taken significant steps towards inte- grating ESG further into its business strategy. AO aims to be the Everyday Green Partner for its customers by delivering products and services enabling the customer to deal with sustainability requirements and make a positive impact. Executive Summary AO’s Sustainability Statement for 2024 The employees are the core of AO, and they are crucial to the company’s success and results. AO is committed to being a socially responsible business and providing the best possible working conditions for our employees.In 2025 AO will be focusing on further increasing the overall employee satisfaction. Finally, 2024 was a busy year with 3 new companies joining the AO family introducing new opportunities to make a positive impact in the industry. AO believes that we all have a common responsibility to manage resources and opportunities in a responsible way to ensure the best possible conditions for the next generation to build upon. Highlights of 2024 include: → AO's 1.5° near-term 2030 target and our net zero target by 2045 has been validated by Science Based Targets initiative (SBTi). → The goal is to reduce scope 1 and 2 CO 2 -emis- sions for AO Denmarks activities by 50% in 2025 compared with 2020 is well on track. → Fossil fuels across Denmark, Sweden, and Norway has almost been eliminated with the only exceptions of gas heating in a few locations and a few heavy vehicles that cannot be electrified yet. → All gas forklifts have been replaced by electric forklifts → 47% of AO's employees have worked for AO for more than 5 years → AO's whistleblower scheme has been expanded to include external stakeholders → Finally, AO has strengthened its position as the Everyday Green Partner by increasing the efforts to meet customers’ demands for environmental data and services for sustainability certified construction projects. This will continue to be a key priority in the years to come. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix ESG timeline 1998 · AO developed and implemented its first environmental policy 2000 63% of waste sorted for recycling 2010 · First annual CSR report 2020 · First scope 1 & 2 CO 2 -baseline year for AO Denmark 2023 · AO Denmark reduced CO 2 -emissions by 30% in one year due to massive phasing out of fossil fuels. · New solar roofs were introduced in our Central Warehouse in Albertslund covering appr. 15% of electrical usage. 2024 · Science Based climate targets validated by SBTi · Full implementation of CSRD in the sustainability statement · All passenger cars are changed to pure electric. · All gas heating except for three locations is changed to district heating or heating pumps · AO Sweden’s ISO-certifications covered both environmental, quality and health & safety management (ISO 14001, 9001 and 45001) · AO Denmark’s ISO-certifications covered both environmental and quality management (ISO 14001 and 9001) 1999 · ISO 14001 certification for headquarters and central warehouse 2008 · Logistics center in Horsens receives ISO 14001-certification 2012 80% of waste sorted for recycling 2021 · First annual ESG report · Whistleblower scheme was introduced in AO 2022 · First Taxonomy reporting · Creation of a climate and sustainability department · First CO 2 goal for AO Denmark activities in scope 1 & 2: 50% reduction in 2025 by phasing out fossil fuels across AO In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix In line with our commitment to create a positive change in the construction and installation industry, AO helps the customers achieving sustainable growth. AO believe it can be done by setting a good example and by working with the value chain to reduce nega- tive ESG impacts, and most importantly, by making it easy for the customers to choose the more sustain- able path forward. ESG is now fully incorporated in our strategy and represents a cornerstone in the strategic vision. At AO sustainability is seen as a way to help customers reach their objectives more effectively and responsibly. Sustainability is an integrated part of our strategic vision and business strategy We lend a hand Part of the team AO is as much a sparring partner as a wholesaler. And we are proud to be part of the team when the tradesmen renovate, modernise and maintain Denmark. It is our strategy to remain the leader in the ReMoVe business by continuing the development of the value creation in our omni- channel offerings. Towards common goals AO's projects department creates a secure framework for large construction projects. We are not only focused on the offer, but also on ensuring that your project gets done better, cheaper and faster. It is our strategy to become one of the best partners to construction customers, by developing new digital support services. It pays to start in the right place AO has the industry's most complete B2C offer within simple home improvements and DIY. We are close to the customers with all the inspi- ration, advice and service they need. It is our strategy to remain the onlineleader in DIY, by continuing to offer new product ranges and solu- tions, and thus making DIY easier. Actively contributing to a sustainable world AO wants to be the leading green wholesaler to the construction industry and make it easy for all installers to comply with climate requirements, and to ensure a minimal environmental impact. AO wishes to help promote a sustainable world by supporting and contributing to a sustainable construction sector. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Near-term target AO is committed to reducing absolute Scope 1 and 2 GHG emissions by 80% by 2030, using 2022 as the base year. Addi- tionally, AO commits to a 42% reduction in absolute Scope 3 GHG emissions within the same timeframe. Net-zero target AO commits to reach net-zero greenhouse gas emissions across the value chain by 2045. The Science Based Targets initiative (SBTi) is a globally recognised organisation that validates corporate climate targets based on the latest climate science. By having AO's targets validated by SBTi, AO demonstrates that our climate ambitions align with the necessary efforts to limit global warming to 1.5°C. This validation ensures that AO's near- term and net-zero goals are credible and in line with interna- tional climate action standards. AO's targets represent a significant step forward in setting new benchmarks for climate ambition. AO’s climate targets have been validated by the SBTi In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Progress on AO's Science Based Targets initiative validated CO 2 -reduction targets 81% Cat 11 - Use of Sold Products 16% Cat 1 - Purchased G&S 2% Cat 4 - Upstream Transportation & Distribution 1% Other categories 82% Cat 11 - Use of Sold Products 15% Cat 1 - Purchased G&S 2% Cat 4 - Upstream Transportation & Distribution 1% Other categories 72% Cat 11 - Use of Sold Products 24% Cat 1 - Purchased G&S 2% Cat 4 - Upstream Transportation & Distribution 2 % Other categories 2022 1,040,228 tCO 2 e total 987, 33 4 t CO 2 e total 666,121 t CO 2 e total 2023 2024 100% -5% -36% In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Goal for waste sorting 90% We are making significant progress in reaching AO's goal of sorting 90% of all waste Waste sorting is the area where our employees have the greatest environmental impact. Stores in Sweden 91% Stores in Denmark 66% Warehouses 92% 2021 2022 2023 20242021 2022 2023 20242021 2022 2023 2024 To strengthen our efforts, we have implemented a waste sorting scheme across AO, leading to a significant improvement — particularly in our stores, where the potential is highest. In the coming years, we will further enhance waste sorting across AO, working towards our long-term goal of achieving a 90% sorting rate. * Data consists of existing facilities excluding acquired facilities in 2024. / ** Sorting is defined as sorted waste excluding residual waste and landfill In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix The employees are the core of our business of AO's employees has worked for AO for more than 5 years 47% of AO Group staff are trainees. It is important to AO to ensure the right mix of skills and to help trainees get a good start in their career 5% There is room and opportunities in AO throughout life Seniority levels in the workplace 34% 0-2 years 19% 3-5 years 16% 6-10 years 31% More than 10 years In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix AO believes that goals and best practices should set the standard across all aspects of the business. AO is committed to maintaining structured processes and continuous improvement in quality, environmental management, and occupational health and safety through internationally recognised ISO certifications. In Denmark, AO currently hold ISO 9001 and ISO 14001 certifications. AO is actively working towards ISO 45001 certification in Denmark, which AO expect to achieve in 2025. This will further strengthen AO's commitment to a safe and healthy work environment for all employees. AO's operations in Sweden are certified according to ISO 9001 (quality management), ISO 14001 (environ- mental management), and ISO 45001 (occupational health and safety). ISO certifications also play a key role in tender processes, where they serve as a recognised framework Governance Achieving progress through ISO management systems I S O 9 0 0 1 , 1 4 0 0 1 M a n a g e m e n t S y s t e m ISO 9001 and ISO 14001 certifications for structured processes and continuous improvement. Looking ahead to 2025, AO's goal is to ensure that all parts of the AO Group, including recently acquired businesses, are included in our ISO certifications, rein- forcing AO's dedication to systematic management and long-term progress. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix General General In brief Strategy Performance Financial statements Sustainability statements Corporate governance Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix General basis for preparation The sustainability statement covers the AO Group's operations, including all subsidiaries and the latest businesses acquired by the Group in 2024. The format is similar to that of the financial statement. In the event of acquisitions or divestments, the Sustain- ability Statement is following the same principles as the Financial Statements. Value Chain Coverage The sustainability statement explicitly includes impacts of upstream, own operations and downstream aspects of AO's value chain, reflecting the company's role as a construction wholesaler. The upstream value chain encompasses the whole lifecycle of the upstream activities including extraction of raw materials, trans- portation and production and their associated impacts, risks, and opportunities (IROs), while the downstream value chain covers all impacts of our customers and end users including transportation, usage and disposal. The specific IRO’s for both upstream, own operations and downstream will be mentioned in the beginning of each ESRS-section in the sustainability statement. AO sustainability statement covers the whole upstream and downstream value chain informed by AO’s double Basis of preparation materiality assessment and an ESG-survey conducted as AO’s due diligence process. · Upstream: AO evaluates the sustainability perfor- mance of its suppliers through shared information and ongoing collaboration. Key IROs identified are based on desktop research of the impacts of the various parts of our value chain and knowledge about the environmental impact on the products we purchase. · Downstream: AO assesses the IRO’s related to the use and disposal of its products by customers using desktop research about the impact of our industry as well as specific knowledge on the impact of the products we sell. Furthermore, AO has close corporation with suppliers and customers as well as knowledge on the impact of its activities including the products AO sell, which informs AO's assessments. The value chain coverage is in accordance with any specific requirements related to the value chain in other ESRS and the IRO’s for each ESRS can be found in the beginning of each ESRS section. AO has no associates or joint ventures. AO has not used the option to omit a specific piece of information corresponding to intellec- tual property, know-how or the results of innovation. AO has not used exemption from disclosure of impending developments or matters in the course of negotiation. Disclosures in relation to specific circumstances Time horizons In the process of stating AO's impacts, risks and oppor- tunities for the Group's double materiality assessment and material topics, the definition in ESRS 1 section 6.4 for time horizon has been used. If estimation has been made with a time horizon deviating from the used definition, it will be clearly stated. The time horizons applied for the sustainability state- ment: · Short-term (within reporting year): Immediate oper- ational adjustments and mitigation strategies for identified high-risk sites. · Medium-term (end of reporting year to 5 years): Integration of formal climate scenario analyses and adaptation of business strategies accordingly. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix · Long-term (5+ years): Ongoing evaluation and adjustment of AO's business model to align with evolving climate-related trends and regulations. Sources of estimation and outcome uncertainty In AO's calculations based on data and estimates from its business and value chain, the basis and accuracy of the calculation will be stated, regarding quantitative measurement techniques and monetary amounts along with uncertainty of estimations of the future. Preparation of ESG performance data requires Manage- ment to make estimates in some areas, which affect the reported data. Management forms its estimates based on historical experience, independent advice, in-house specialists and other information believed to be reasonable under the circumstances. AO has identified following metrics subject to uncertainty and estimates: - Scope 3 emissions (Page 71) No changes in reporting or reporting errors There are no changes or errors in the sustainability statement compared to last year as this is the first year of reporting a full sustainability statement. Segment information There are no material ESRS sectors for AO and no group, products, services or customer accounts for more than 10% of our revenue. List of disclosure requirements incorporated by reference · Strategy, Business Model, and Value Chain SBM-1 - Strategy, page 13-17 · Headcount of employees by geographical areas SBM-1 - Social, page 99 · Composition and diversity of administra- tive, management and supervisory bodies GOV-1 - Corporate governance, page 31-36 In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Responsible for approving ESG strategy and CSR policy Responsible for strategy and risk management Responsible for development of strategy, risk identification and implementation E S G FinanceHR AO's task force for Green Transition ESG Council Executive BoardBoard of Directors Sustainability governance Group sustainability AO manages and controls our business in a responsible manner ensuring honesty and integrity in the way AO does business. The sustainability in AO is governed by the ESG Council, which consists of the Executive Board and the head of Climate & Sustainability (1 female and 4 males). AO's permanent taskforce for the green transition in AO reports to the head of Climate & Sustainability. Strategy and implementation of ESG initiatives as well as material IROs are discussed at monthly meetings in the ESG Council. These meetings provide the possibility to inform and address views from affected stakeholders on sustain- ability-related impacts. The ESG Council reports to the Board of Directors multiple times a year. When presenting initiatives, no trade-offs has been identified during the assessment. The ESG Council leverages the expertise of subject matter experts with in-depth knowledge of sustaina- bility matters within the organisation. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Governance structure You can read more about AO's Board composition and governance structure in the Corporate Governance section on page 29, where you can also find informa- tion on the experience and background of the Board of Directors and Executive Board cf. DR ESRS GOV-1. The role of the administrative, management and supervisory bodies Clear policies and guidelines for how to conduct and do business are important for AO. Management and other administrative roles and leaders are expected to set a good example. AO’s policies and guides for business conduct are built upon many years of experience doing business in the wholesale industry. This experience is based on management in sales, finance, logistics, and IT. In addition, valuable knowledge is acquired through the Board of Directors’ experience with global stan dards. The acquired experience is important to follow, maintain and keep relevant, both for AO and its busi- ness partners. Sustainability targets Environmental targets on decarbonisation reductions in AO's own operations, environmental information and impact on products sold and circularity improvement targets have been approved by the ESG-Council and Board of Directors. Governance of the sustainability targets transpires throughout the organisation from procurement to sales and service, by assigning ownership to the permanent taskforce. This results in a matrix-based governance model.ESG-related topics are being monitored monthly by the ESG Council and regular risk assessments with ESG topics have been established and included, along with internal controls and documentation of ESG related data. A transition plan is endorsed by AO's management and supervisory bodies, with focus on energy efficiency and transition to renewable energy, both within AO's operations and across its value chain. The foundation for AO’s environmental efforts is the ISO 14001 environmental management system, where AO's policies and procedures to support the climate and environmental policy are audited every year. AO's most significant climate and environmental impact lies within the value chain, meaning a crucial part of the task is collaborating with customers and suppliers to drive change in the industry. As the Everyday Green Partner, AO assists the customers in their green transition by offering environ- mental data, products, and services that support more sustainable constructions and societies. AO submitted a target to reduce absolute Scope 1 and 2 GHG emissions by 80% by 2030 from a 2022 base year and reach net-zero greenhouse gas emissions across the value chain by 2045, which was validated by SBTi. AO’s waste targets are not based on any significant assumptions but inspired by legislation and driven by AO’s environmental ambitions. AO informs its executive team and board of directors about sustainability matters through robust govern- ance mechanisms, business ethics training, whistle- blower systems, audits, transparent communication, and proactive supplier management. These measures enable the company to address sustainability issues effectively and maintain high ethical standards. Sustainability matters addressed by AO in 2024 In 2024, the ESG Council prioritised discussions on key sustainability impacts, risks, and opportunities aligned with AO's sustainability objectives and compli- ance frameworks. The Council’s efforts focused on four primary areas: 1. Climate action and resource management The Council reviewed initiatives to transition AO’s opera- tions away from fossil fuels, with specific projects initiated at selected sites to support renewable energy adoption. Waste management improvements were also discussed, with strategies to enhance waste sorting across locations, aiming to embed best practices and improve transparency to support AO’s environmental goals. 2. Sustainable partnerships and innovation Recognising the importance of circular economy princi- ples, the Council has approved a new research initiative to focus on circular economy opportunities for AO. Additionally, opportunities to invest in biodiversity and sustainable procurement were explored. The Council evaluated Power Purchase Agreements (PPAs) as part of its green energy procurement strategy, deciding to re-evaluate long-term financial instruments in this area in the future. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix 3. Sustainability strategy and reporting The ESG Council played an instrumental role in guiding AO’s strategic roadmap for sustainability, involving departments across the green transition taskforce, finance, and HR to build a flexible, sustainable strategy that aligns with AO’s ESG vision. To ensure compliance, the ESG Council also addressed ISO 14001 environ- mental certification requirements, aligning audits to drive consistency in environmental and quality manage- ment across all business units. 4. Environmental awareness AO increased the visibility of its environmental commit- ments to raise awareness of environmental impacts both internally and externally. These discussions are an attempt to pursue a proactive approach to sustain- ability, embedding compliance, and driving long-term value creation in line with stakeholder expectations and regulatory requirements. Integration of sustainability-related performance in incentive schemes The incentive schemes and remuneration policies related to the Executive Board are currently not linked to sustainability or climate-related targets. Inclusion of sustainability and climate-related targets in future incentive schemes will be evaluated. Risk management and internal controls over sustainability reporting In the reporting of the sustainability statement AO is exposed to risk of human error and incomplete data, as the process of data collection consist of data from multiple external sources and manual collection and handling of data. To best mitigate the risks, automated data collection processes have been established, where possible, and data is thoroughly analysed and reviewed. The business environment is becoming increasingly volatile, with economic fluctuations and societal changes occurring at a faster pace. In this context, managing risks and identifying potential threats to AO’s business are crucial components of AO's governance. The most significant risks to the company are regularly monitored, and if deemed material, they are disclosed in company announcements, as well as in interim and annual reports. In recent years, the nature of business risks has evolved, with digital risks and cyber threats becoming more prominent due to the rapid growth of globalisation and digitalisation. This has heightened the need for robust contingency plans to ensure that the company is prepared for potential incidents, such as cyberattacks or data breaches. AO monitors these emerging risks on a regular basis and implement contingency measures to safeguard its operations. By staying vigilant and adaptable, AO ensures that the company is well-prepared to address current threats and protect the long-term sustainability of the business. AO’s commitment to risk management reflects its broader dedication to responsible business conduct and maintaining the trust of stakeholders. Strategy, business model and value chain The integration of the three newly acquired businesses in 2024 has not changed the significance of the type of products and services AO offers or the markets and customer groups AO focuses on. AO's sustainabili- ty-related goals and strategy remain the same after the integration. Please read more about AO's strategy, business model and value chain in the Strategy section in page 13-17. Strategy In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix AO's customers are its most important stakeholders. AO is customer-driven, guided by the principle 'Customer is King' in everything it does. AO strives to be the main and preferred partner for its customers and continuously aims to deliver first class service, by understanding their needs. Employees AO's employees are key to its success. AO is committed to provide the employees a mean- ingful and engaging workplace with room for growth and develop- ment in a safe and healthy envi- ronment for its employees. AO engages with its employees through different channels, by sending updates on the business through the intranet, developments conversation with managers, the Worker Councils and employee surveys. AO also has a whistleblower system for employees to raise concerns and awareness of any issues. Suppliers AO relies on strong partner- ships and open dialogue with its suppliers to operate effectively and profitably. Ongoing supplier relationships are crucial for AO to meet its targets, as its main ESG-impacts are closely linked to the production and use of the products it sells. Environment The environment is directly affected by the actual and poten- tial negative impacts of AO's business activities. From the extraction of raw materials to the energy consumed during product use and the challenges of waste disposal for outdated or damaged items, every stage of the lifecycle has environmental consequences. AO recognise its responsibility to minimise these impacts and adopt sustainable practices that protect the planet for future generations. Shareholders AO is listed on Nasdaq Copen- hagen, an international market- place for Danish Securities.It requires regular engagement with shareholders, analysts and others interested in Ao's business. This is managed through the investor relations department, which participates in conference calls, briefings, and general dialogue, to ensure clear financial commu- nication. Interests and views of stakeholders The administrative, manage- ment and supervisory bodies are informed about the relevant views and interests of affected stake- holders when assessing various sustainability initiatives. Significant decisions are presented to and discussed by the Executive Board and, where appro- priate, the Board of Directors. These meetings also provide the possibility to inform and address views from affected stakeholders on sustainability-related impacts, when relevant. Stakeholders Customers Employees Suppliers Environment Shareholders Interests and views of stakeholders In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Material impact risks and opportunities Impact, risk or opportunity Actual or potential Positive or negative Value chain Time horizon E1 Climate change E1 Climate change adaptation Climate change adaptation plays a significant role in three of AO's vital product categories: VA (water supply and drainage), VAGA, and VVS (heating, plumbing and sanitary ware). By offering products in these categories, AO actively contribute to assisting communities in adapting to the growing impact of extreme weather events such as floods, droughts, and rising sea levels. Thus, climate change adaptation is highly relevant in the downstream segment of AO's value chain. Opportunity Actual Positive Downstream Long term E1 Climate Change mitigation Our direct CO 2 footprint is limited (scope 1 and 2). The majority of AO's overall CO 2 footprint lies in indirect emissions (scope 3), including emissions from the manufacturing of AO's products sold to customers, transportation of goods from manufacturers to AO and to customers, as well as emissions from customers' use and disposal of AO's goods. Impact Actual Negative Upstream, own operations and downstream Medium term E1 Energy Our direct CO 2 footprint is limited (scope 1 and 2). The majority of AO's overall CO 2 footprint comes from indirect emissions (scope 3), including emissions from the manufacturing of AO's purchases, transporta- tion of goods from manufacturers to AO and to customers, as well as emissions from customers' use and disposal of AO goods. Impact Actual Negative Upstream, own operations and downstream Medium term E2 Pollution E2 Substances of very high concern The relationship with Substances of Very High Concern (SVHCs) is essentially indirect and is largely connected to upstream and downstream activities. This includes substances like certain heavy metals, carcinogens, mutagens, or persistent organic pollutants that may originate from suppliers' manufacturing processes or may be components within the products AO acquire and distribute to customers. In addition, our product line includes a multitude of chemicals commonly used in the construction industry. Among these are substances categorized as SVHCs due to their considerable health and environmental impacts. The handling, utilisation, and eventual disposal of these substances can result in their release into the environment, impacting both ecosystems and potentially human health. Impact actual Negative Upstream and downstream Medium term In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Material impact risks and opportunities - continued Impact, risk or opportunity Actual or potential Positive or negative Value chain Time horizon E5 Resource use and circular economy E5 Resource inflows, including resource use Resource inflows have implications for resource use, both within the operations and along the broader value chain. Although we do not produce our own materials, our operations rely on virgin resources for packaging and distribution. Additionally, products we source are possibly manufactured using raw mate- rials extracted from mines or natural areas. This extraction process can have substantial environmental impacts. Impact Actual Negative Upstream and own operations Medium term E5 Resources outflows related to products and services As a technical installation wholesale company, the resource outflows are significantly tied to the products and services, spanning across their life cycle from distribution to end-of-life. Upon product distribution, resource outflows primarily encompass packaging materials. The packaging used to protect and trans- port our products, such as cardboard, plastic wrap, and pallets, can become waste after delivery. At the customer's end, the products, once transformed into buildings or other construction projects, embody significant resource outflows. Construction waste, which includes unused materials and by-products of the building process, represents a substantial portion of this outflow. When the products reach the end of their life cycle, incorrect treatment can cause loss of valuable resources, which can be avoided by repurposing or recycling. Impact Actual Negative Downstream and own oper- ations Medium term E5 Waste Impact on waste generation and management is significant and can be categorised into three main areas: upstream activities, operations, and downstream activities. Upstream, suppliers in the extraction, processing, and manufacturing of raw materials contribute to waste generation. For example, the mining and refining of metals or the manufacturing of construction materials often result in a substantial amount of waste, including unused raw materials, by-products, and packaging materials. In the operations, waste is generated primarily through the warehouses, shops and packaging materials and unsold or expired products. The facilities also generate typical office waste, such as paper, plastics, and electronic waste. Downstream, the products AO distributed can contribute to waste at the end of their life cycle. Construction materials and other products that are not fully used or recycled can end up as waste in landfills or other disposal sites. Impact Actual Negative Downstream and own oper- ations Medium term In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Material impact risks and opportunities - continued Impact, risk or opportunity Actual or potential Positive or negative Value chain Time horizon S1 Own workforce S1 Working conditions Secure employment In general AO utilises temporary workers to address fluctuations in activity driven by market devel- opment. In the recent market downturn AO has not made significant redundancies but in a recession scenario that would be an inherent risk. In relation to M&A activities realisation of synergies could result in redundancies on a limited scale. Impact Actual Negative Own operations Medium term Working time Pressure on specific groups of employees at peak times both in stores and in the administration can lead to stress both in the warehouse and in the administration and support functions. Impact Actual Negative Own operations Medium term Health and safety Occupational health and safety remain a priority, particularly in high-risk areas like warehouses and stores (heavy lifting, truck driving etc.). Additionally, offensive language, bullying, and stress is a high priority and are not tolerated. Risk Potential Negative Own operations Medium term S1 Equal treatment and opportunities for all Training and skills development AO is committed to providing equal opportunities for all employees to enhance their skills and compe- tencies. This is facilitated through annual employee development interviews and an educational system accessible via the intranet. Additionally, AO invests in training and education programmes specifically designed for AO trainees, fostering the development of future talent within the organisation. These efforts reflect a strong commitment to employee growth and career advancement. Opportunity Potential Positive Own operations Medium term Diversity AO is focused on promoting from within for middle management, managerial, and director roles, this approach can inadvertently limit diversity in skills and experience. The current workforce shows a not fully balanced gender distribution, with a predominance of men in the organisation. These factors suggest an opportunity to broaden recruitment efforts to increase gender balance. Risk and opportunity Potential Negative and positive Own operations Medium term In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Material impact risks and opportunities - continued Impact, risk or opportunity Actual or potential Positive or negative Value chain Time horizon G1 Business Conduct G1 Corporate culture When doing business with complex international business value chains with more than 1,000 suppliers there is an inherent potential negative impact from corruption, bribery, harassment or an informal economy if not properly addressed and managed through a sound and stable corporate culture. Risk Potential Negative Upstream, own operations and down- stream Short term G1 Protection of whistleblowers Whistleblowers can be subject to negative consequences if the organisation does not implement adequate protection. A lack of whistleblower protection can lead to negative impacts on the workforce and lack of knowledge of incidents. A lack of whistleblower channels in the value chain increases the risk of AO to be linked with incidents outside of AOs sphere of control. Risk Potential Negative Upstream, own operations and down- stream Short term G1 Corruption and bribery In general AO operate in countries with little tradition of corruption and bribery. We have a policy for corruption and bribery and provide training for our employees to make them able to detect and prevent corruption and bribery. Cases of corruption and bribery could lead to reputational damage for AO. Risk Potential Negative Own operations Short term In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix E2: Substances of very high concern E5: Waste S1: Working conditions S1: Equal treatment and opportunities for all G1: Corporate culture G1: Protection of whistleblowers G1: Corruption and bribery E1: Climate change adaptation E1: Climate change mitigation E1: Energy E5: Ressource inflows E5: Resource outflows Financial impact on AO Impact on the environment & people IMPACT MATERIAL NON-MATERIAL DOUBLE MATERIAL FINANCIAL MATERIAL Double Materiality Assessment In 2023, AO started working towards CSRD readiness and compliance by completing the first Double Materi- ality Assessment (DMA) and GAP analysis. The process included engagement with multiple internal and external stakeholders. In 2024 to ensure compliance, AO has performed a review of the double materiality assessment and GAP analysis along with the data collection, risk assessment and internal controls. During AO's review assistance from specialised consultants has been used. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix The process of AO double materiality assessment followed the requirements of the European Sustain ability Reporting Standards ESRS1 and 2. The Board of directors has approved the Double Mate- riality Assessment, the given threshold for materiality, and the list of material topics. Scope AO identified and assessed impacts, risks and oppor- tunities for its own operations and its value chain for all topics, focusing on both upstream and downstream activities. The value chain assessment was mainly based on direct suppliers and AO's own internal know ledge combined with data from external consultants and supplier information. Impact and financial assessment included both positive and negative impacts, which were considered actual and/or potential for our business related to environ- ment, social and governance matters. AO's assessment was based on ESRS, and guidelines provided in 2024, to ensure alignment and compliance to CSRD. As AO's busi- ness develops, the company will continue to review its double materiality assessment (DMA) and activities with impacts, risks, and opportunities to keep a relevant and actual assessment on the most material topics to AO. Stakeholder engagement In completing the DMA, AO engaged internal stake- holders from the start to secure understanding, provide ownership and benefit from the knowledge of the stake- holders. External consultation was included to support the process and ensure understanding of the require- ments. While working on the DMA, AO approached external business partners and stakeholders to better understand how their business could impact AO and how the business decisions and activities could affect their business. AO maintains a continuous engagement with our busi- ness partners and stakeholders to improve our busi- ness, collaboration, and commitment to agreements. Materiality scoring Process For actual impacts AO used the three parameters ‘Scale,’ ‘Scope,’ and ‘Irremediability’ for a combined scoring of Severity. For potential impacts, an additional parameter ‘Likelihood’ was added, as per the ESRS guidance. Assessment of actual impact: See table below Two parameters, ‘Size of the potential financial impact’ and ‘Likelihood’ were used to score financial risk and opportunity. The measurement for “Size of the potential financial impact” has been based on the same scale as the used for AO risk assessment. Likelihood was scored on the same basis as for impacts. Methodology and scoring Environment Social Governance Scale The extent of the impact on the rele- vant individuals/economy/en vironment - whether low or high. The extent of the impact on the right to life/health/basic life needs - whether low or high. The extent of the impact on the right to life/health/basic life needs - whether low or high. Scope How widespread the impact would be from immediate to global level How widespread the impact would be on a population or employees How widespread the impact would be on a population or employees Irremediability How difficult it would be to undo the damage based on time, effort, and costs How difficult it would be to undo the damage based on time, effort, and costs How difficult it would be to undo the damage based on time, effort, and costs Likelihood Assessment of likelihood on a scale from 'rare' to 'certain'. Assessment of likelihood on a scale from 'rare' to 'certain'. Assessment of likelihood from 'rare' to 'certain'. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Material topics based on the DMA The outcome of the DMA scoring shows that the following five out of the ten ESRS topics are material to AO: · E1 Climate change · E2 Pollution · E5 Resource use and circular economy · S1 Own workforce · G1 Business conduct The outcome of the DMA is consistent with current sustainability strategy. For each material topic AO has identified impacts, risks and opportunities (IROs) and assessed whether each subtopic was material or not. The material topics and subtopics are further specified and presented in the following sections, with more informa- tion on why AO find them material and how they are incor- porated as part of our organisation and daily activities. Non-material topics based on DMA The outcome of the DMA scoring shows that the following six out of the ten ESRS topics are not material to AO due to the nature of our business as a wholesale company: · E2: Pollution of air, Water & soil, Living organ- isms and food resources, Substances of concern, Microplastics · E3: Water, Marine resources · E4: Direct impact drivers of biodiversity loss, Impacts on the state of species, Impacts on the extent and condition of ecosystems, Impacts and dependencies on ecosystem services · S1: Other work-related rights · S2: Working conditions, Equal treatment and opportu- nities for all, Other work-related rights · S4: Information-related impacts, Personal safety, Social inclusion Topics reviewed as immaterial in early assessment iand not included in the full Double Materiality Assessment: · S3: Economic, social and cultural rights · S3: Civil and political rights · S3: Rights of indigenous peoples · G1: Animal welfare · G1: Political engagement and lobbying activities In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Environment Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Environment In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix E1 Climate change Impact, risks and opportunities Through the company's double materiality assessment AO identified which climate related impacts, risk and opportunities that are material for AO and its value chain. To identify these climate related impacts, AO has conducted an analysis of its GHG emission calcula- tions as well as a flood risk assessment of its physical locations. When conducting the flood risk assessment, no full scenario analysis has been conducted, but AO has made an analysis based on external expertise and relevant flood risk tools. AO has yet to conduct any substantial financial assess- ment that will provide data on Climate change regarding how the impacts, risks and opportunities can affect AO on a monetary basis. The process to identify these financial effects will be conducted when AO has more mature data. AO has found that in terms of its own operations, AO has a limited area of opportunity where it is possible for the company to have any climate change adaptation strat- egies and implementations. AO has around 60 physical locations and based on its assessment of the physical locations, only a few AO stores are situated in areas associated with climate-related hazards like flood risk. AO has a product portfolio where climate change adap- tation plays a significant role in creating an opportunity. Through three of AO's product categories: VA, VAGA, and VVS. AO offers products in categories that actively contributes to assisting communities in adapting to the growing impact of extreme weather events such as floods and rising sea levels. Climate change adap- tation measures are already needed today, due to the climate-related hazards AO is experiencing. Furthermore, AO is exposed to risks such as supply chain disruptions and increasing prices due to extreme weather events brought on by climate change. If AO's suppliers and sub suppliers are not able to adapt to climate change, it could become a potential financial risk for AO. As AO is a wholesaler selling goods to craftsmen and installers, with a very limited own in-house production, AO's direct CO 2 footprint is limited. This assessment is based on the GHG-emissions calculations. AO’s scope 3 accounted for 99% of our total emissions, whereas Scope 1 and 2 only accounted for 1% total. AO’s main CO 2 footprint lies in scope 3 activities in the upstream and downstream value chain from the manu- facturing of AO's purchases, transportation of goods from manufacturers to AO and to customers, as well as emissions from customers' use of sold goods. Even though AO’s scope 1 & 2 CO 2 footprint is small, AO still considers emissions in scope 1 and 2 material, as AO has direct influence on the emissions and due to the fact that CO 2 causes harm on a global scale and is hard to redeem once the damage is done. AO’s direct energy consumption is limited to its daily operational activities. This includes energy required for running the offices, warehouses, and the energy source consumed by our own vehicles. The indirect energy usage, however, forms a substantial part of AO's total energy footprint. Primarily this involves the energy usage of sold products and secondarily the energy consumed during the production of the materials AO distribute, sourced from various manufacturers. Addi- tionally, significant energy is used in the transportation of these materials from factories to AO's warehouses and to its customers. Resilience analysis AO has identified the following material climate-related risks impacting the operations: Physical Risk: Two of the retail sites is in an area with a high risk of flooding. This constitutes a climate-re- lated physical risk due to the potential for property and damage and operational disruptions. The flooding risk is not considered a safety concern for employees and customers at the locations. The financial consequences of these flooding events are very limited as the nearest store is less than 30 km away and the downtime is limited. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Transition Risk: Changes in climate-related regulations, market preferences, and technological advancements may affect the business operations. However, given the diverse supply chain with numerous suppliers across each product group, AO consider the transition risk to be manageable. The ease of substituting suppliers allows AO to adapt swiftly to regulatory and market changes. The scope of the resilience analysis is focused on: Assessing the vulnerability of the physical locations to climate-related events, specifically flooding as well as evaluating the flexibility and robustness of the supply chain in the face of climate-related disruptions. The analysis of the physical risks was conducted internally in late 2023 by mapping the locations against climate risk zones. AO has not conducted a formal anal- ysis of the supply chain meaning that the assessment is based on a high-level assessment of the supplier landscape. AO has not employed a formal climate scenario anal- ysis as outlined in ESRS 2 IRO-1. AO recognises the importance of global supply chain risks, but due to the diverse number of suppliers, AO is not currently plan- ning to do a scenario analysis. AO expects a gradual shift towards a lower-carbon economy, impacting energy consumption patterns and technological advancements. Anticipated increases in renewable energy adoption may affect operational costs and supply chain dynamics. Technological inno- vations may offer new opportunities for efficiency and sustainability in our operations. The shift will have a limited financial impact on the own operations, but a shift in macroeconomic trends could present business opportunities for AO. AO has business areas supporting both climate mitigation and climate change investments. The time horizons applied and their alignment with the climate and business: · Short-Term (within reporting year): Immediate oper- ational adjustments and mitigation strategies for identified high-risk sites. · Medium-term (end of reporting year to 5 years): Integration of formal climate scenario analyses and adaptation of business strategies accordingly. · Long-term (5+ years): Ongoing evaluation and adjust- ment of the business model to align with evolving climate-related trends and regulations. The primary uncertainty in the resilience analysis lies in the lack of rigid methodology behind the assessments. Additionally, timing and severity of climate-related events and regulatory changes is an uncertainty. While AO has identified assets at risk, incorporating these insights into the strategic planning and investment decisions is an evolving process also taking into consid- eration the limited amount of assets at risk. AO has identified Global supply chain risks as one of the key risks for the Group. It is being evaluated whether and how to integrate climate change resilience into the strategy. AO is assessing its ability to adjust or adapt its strategy and business model to climate change in both short, medium, and long term as follows: Strategic Flexibility: AO's diversified supply chain and flexible sourcing strategies position AO well to adapt to climate-related changes over the short, medium, and long term. Access to finance: AO is committed to maintaining strong relationships with financial partners to secure ongoing access to capital at affordable rates. Asset management: AO can redeploy, upgrade, or decommission assets as needed to respond to climate risks, which is currently very limited. Product and service shifts: The business model allows for adjustments in our product and service offerings to meet changing market demands. Workforce reskilling: AO is prepared to invest in reskilling the workforce to support new operational needs arising from climate adaptation strategies. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Transition plan for Climate change mitigation & adaption AO believe that we all have a responsibility to manage the resources in a manner beneficial to both current and future generations, respecting people, and the planet. The biggest difference AO can make is by simplifying the process for the customers to make more sustainable choices, hence considering a sustainable business model as the prerequisite for commercial success. As a wholesaler in the construction and installation industry, with various business units and products, AO has a complex value chain with an upstream that spans across the globe. However, AO’s own operations and downstream is limited to primarily Denmark, Sweden and Norway. AO takes responsibility over own activities by reducing climate and environmental impacts in its business, regardless of their significance across the value chain. By obtaining a better understanding of AO's impact, risks and opportunities regarding climate change AO has now continued with a transition plan to address climate change mitigation, with clear objectives. The Science Based Targets initiative (SBTi) has vali- dated that the science-based greenhouse gas emis- sions reduction target(s) submitted by Brødrene A&O Johansen A/S conform to the SBTi Criteria and Recom- mendations (Version 5.2). SBTi has validated that AO's near-term target is in line with the 1.5°C trajectory. The official near-term science-based target language: Brødrene A&O Johansen A/S commits to reduce abso- lute scope 1 and 2 GHG emissions 80% by 2030 from a 2022 base year. Brødrene A&O Johansen A/S also commits to reduce absolute scope 3 GHG emissions 42% within the same timeframe. The SBTi has also vali- dated AO’s net-zero target. The official net-zero science- based target language is: Brødrene A&O Johansen A/S commits to reach net-zero greenhouse gas emissions across the value chain by 2045. The assessment does not show any potential locked in GHG emissions from AO's key assets and product, and is thereby not considered a risk, which could prevent AO from achieving the GHG reduction targets. AO’s transition plan is endorsed by AO's management and supervisory bodies, embedding climate objectives within AO's corporate governance. This ensures a coordinated approach across all levels of the organisa- tion, with financial planning that reflects the company's priorities, ensuring that resources are allocated to support its transition goals and annual reporting to track progress against our targets. AO is well underway with this transition plan being implemented throughout the Group and will annually report on progress, maintaining transparency with stakeholders. This includes detailing actions taken to reduce emissions, challenges faced, and adjustments to the strategy as needed to stay on track with targets aligning with the Science Based Target initiative. Policies Building on the transition plan, AOs climate and envi- ronmental policy establish a structured framework to drive sustainable progress across its entire value chain. The scope of AO’s climate & environmental policy is covering the entire value chain across all geographies and all identified stakeholders. The ESG Council is responsible for the implementation of the policy. The environmental and climate policy solely covers climate change mitigation and adaptation, energy efficiency, pollution, waste management, circular economy. Transition plan for Climate change In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Climate change mitigation: · Reducing CO 2 emissions in scope 1, 2, and 3 in accordance with the Science Based Targets initiative (SBTi)-validated goals. · Phasing out fossil fuels in heating, company vehicles and forklifts to meet the CO 2 targets for scope 1 and 2. · Increasing the share of more sustainable products when sourcing from suppliers to benefit customers. Through prioritisation and dialogue, AO aim to shift customer focus towards more sustainable products. · Inspiring partners and the industry to support a sustainable value chain, also leveraging AO's influ- ence in industry associations. Climate change adaptation: · Addressing the consequences of climate change by adapting locations to the climate. · Providing goods and solutions that assist customers and local communities with necessary climate adaptation. Energy efficiency and renewable energy deployment: · Reducing the annual energy consumption and increasing the share of renewable energy by installing solar panels. · Investing in energy-efficient solutions and promoting energy and CO 2 saving initiatives among both our customers and suppliers. Recognising the significant impact of scope 3 emis- sions, AO has initiated a comprehensive ESG survey for suppliers, aiming to gain a better understanding of their business practices regarding ESG. AO will consider introducing supplier’s carbon reduction information during procurement and contracting to source more energy-efficient products. AO wants to cooperate with its suppliers and encourage practices across the value chain that increase use of recycled material and encourage them on their transition from conventional electricity to renewables etc. AO will especially engage in collaboration with suppliers of ceramics-, plastics and metals-based products to reduce CO 2 -emissions in accordance with the net zero target. This effort is essen- tial for addressing emissions from purchased goods and services, and the use phase of sold products, which constitute most of AO's indirect emissions. Actions and Targets AO has not yet implemented a strategy as to how the company intend to eliminate its residual GHG emissions in relation to the SBTi- aligned net zero target. However, in the fall of 2024 students from Aalborg University’s Sustainable Cities Master’s program have investigated credible beyond value chain mitigation measures, and AO will at a later stage decide on whether to engage in further studies. AO is currently investigating the possibility to introduce nature-based solutions to the sites. The ability to implement the actions requires resources; however, these are not significant or extraordinary in nature, especially when compared to resource-intensive industries such as large-scale production companies. AO continuously look for opportunities to reduce the emissions and has identified areas of investments and costs related to actions taken in line with the transition plan taken in 2024. Investments related to buildings and company cars have been made. The financial amount of the actions taken in 2024 can be found in the Taxonomy section on page 80. AO will continue to invest in emission reductions to reach the emission targets. This includes both capital and operational expenditures aimed at reducing emis- sions and enhancing efficiency. There are no other targets than the above mentioned related to manage the IRO’s in ESRS E1. Other relevant environmental targets are referenced in other chapters of the report. AO’s actions so far has led to a substantial reduction in the carbon footprint, with a 27% decline in Scope 1 and 2 CO 2 emissions compared to the 2022 baseline. AO’s targets are aligned with the GHG protocol and validated by Science Based Target initiative. The accounting of CO 2 -emissions is conducted for both scope 1, 2 and 3 for the value chain. AO monitor the GHG-emissions in scope 1, 2 and 3 every year in alignment with the SBTi guidelines, and follow the accounting guidelines for calculations for all categories. AO accounts for all scope 3-categories besides from excluded categories: 8, 10, 14 and 15 and the target is furthermore not derived using a sectoral decarbonisation pathway. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Aside from calculating AO's GHG inventory and carbon reduction potentials, some of the main levers of GHG emissions in Scope 3 have been identified. As shown in the Scope 3 calculations, the two largest emission categories are the use of sold products and purchased goods & services. Reducing emissions, therefore, requires AO to engage with suppliers and customers to drive behavioral change. The materials with the highest emissions include ceramics, plastic, and metals. AO is well underway with the current actions to reduce carbon emissions in Scope 1 and 2 to zero CO 2 e, and by engaging with suppliers and downstream costumers, there is potential for a substantial reduction in Scope 3. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Achieved and expected GHG emission reductions UoM 2024 Achieved GHG emission reductions % 36.0% Expected GHG emission reductions by 2030 Scope 1 & 2 vs 2022 base year % 80.0% Scope 3 vs 2022 base year % 42.0% Expected GHG emission reductions by 2045 Scope 1, 2 & 3 vs 2022 base year 90.0% Energy consumption mix 2024 2023 Fuel consumption from coal and coal products (MWh) 0 0 Fuel consumption from crude oil and petroleum products (MWh) 1,089.6 2,056.5 Fuel consumption from natural gas (MWh) 641.7 1,128.5 Fuel consumption from other fossil sources (MWh) 0 0 Consumption of purchased or acquired electricity, heat, steam, and cooling from fossil sources (MWh) 11,283.8 12,042.7 Total fossil energy consumption (MWh) 13,015.1 15,227.7 Share of fossil sources in total energy consumption (%) 97.9% 99.9% Consumption from nuclear sources (MWh) 0 0 Share of consumption from nuclear sources in total energy consumption (%) 0% 0% Fuel consumption for renewable sources, including biomass (also comprising industrial and municipal waste of biologic origin, biogas, renewable hydrogen, etc.) (MWh) 0 0 Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources (MWh) 0 0 The consumption of self-generated non-fuel renewable energy (MWh) 280.0 8.0 Total renewable energy consumption (MWh) 280.0 8.0 Share of renewable sources in total energy consumption (%) 2.1% 0.1% Total energy consumption (MWh) 13,295.0 15,235.7 § Accounting policy Energy consumption and mix Non-renewable sources (fossil fuel) Energy from non-renewable sources covers fuel consumption related to the Group’s leasing car fleet, natural gas consumption, electricity consumption and district heating related to the heating of office buildings, AO stores and office activities. For conversion from litre and m 3 consumption to megawatt-hours, Energistyrelsen and Danmarks statistik conversion factors have been used. Renewable sources Energy from renewable sources covers electricity generated, related to office activities Energy consumption and mix Energy efficiency and the transition to renewable energy are central to AO’s climate strategy, both within the operations and across the value chain. Internally, AO focuses on reducing energy consumption by imple- menting energy-efficient technologies and installing solar panels to increase the share of renewable energy in the operations. Additionally, AO is committed to phasing out conventional fossil fuels in heating, company vehicles, and forklifts, directly supporting AO's Science Based Targets for scope 1 and 2. Externally, AO prioritises enabling customers to make more energy-efficient choices. By sourcing and offering In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix a broader range of energy-saving products, AO actively guide customers towards solutions that lower energy use and reduce CO 2 emissions during the use phase. Through targeted dialogue with suppliers, AO will investigate the development and adoption of renewable energy technologies, particularly in industries reliant on ceramics, plastics, and metals. These efforts align with AO's ambition to reach our net-zero target. GHG emissions The methodologies, assumptions and emissions factors used to calculate the AO group emissions are provided in the accounting policies together with the presented data. The acquisition of Svenska VA-Grossisten, DesignKupp, and Workwear Group has led to an increase in the share of fossil fuel cars and non-renewable energy within the total AO Group's energy consumption, despite improve- ments made during the year. However, AO was still able to reduce its total emissions in 2024 compared to 2023. The primary reason for the total reduction in 2024 vs 2023 comes from cat 11 - Use of sold products, mainly driven by a reduction of CO 2 e from electricity usage. 2024 2023 Baseline 2022 % vs LY % vs Baseline 2030 2045 Annual % target/ Baseline Gross scope 1 GHG emissions Actual total GHG emission 420 861 1,602 -51.2% -73.8% 320 160 -10.0% Actual total GHG emission Gross location-based Scope 2 GHG emissions 1,941 2,389 3,093 -18.8% -37.2 % 619 309 -10.0% Gross market-based Scope 2 GHG emissions 4,712 4,796 5,451 -1.8% -13.6% 1,090 545 -10.0% Significant scope 3 GHG emissions Category 1. Purchased Goods & Services 160,179 149,060 171,917 7.5% -6.8% 2. Capital Goods 2 1 2 97.5% 8.6% 3. Fuel & Energy related Emissions 246 287 436 -14.3% -43.6% 4. Upstream Transportation & Distribution 16,337 16,989 18,797 -3.8% -13.1% 5. Waste generated in Operations 374 316 703 18.4% -46.8% 6. Business Travel 63 83 89 -24.1% -29.0% 7. Employee Commuting 753 689 642 9.3% 17.3% 9. Downstream Transportation & Distribution 4,141 3,559 6,221 16.4% -33.4% 11. Use of Sold Products 480,877 813,478 838,255 -40.9% -42.6% 12. End-of-life Treatment of Sold Products 3,146 2,870 3,162 9.6% -0.5% 13. Downstream leased Assets 3 2 4 9.3% -37. 9% Significant scope 3 GHG emissions 666,121 9 8 7, 334 1,040,228 -32.5% -36.0% 603,332 -5.3% Total GHG emissions Total GHG emissions location based 668,482 990,278 1,035,275 -32.5% -35.4% 66,850 -3.2% Total GHG emissions market based 671,253 992,685 1,037,633 -32.4% -35.3% 67,127 -3.2% GHG intensity based on net revenue UoM 2024 2023 2022 GHG intensity (location based) t CO 2 e per DKK million 123.1 188.3 194.4 GHG intensity (market based) t CO 2 e per DKK million 123.6 188.7 194.8 § Accounting policy GHG intensity (scope 1, 2 & 3) GHG intensity has been calculated as gross scope 1, scope 2 location-based/market-based, and gross scope 3 CO 2 emissions divided by reported net revenue in DKK million. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Direct GHG emissions (scope 1) Scope 1 emissions are reported based on the Greenhouse Gas (GHG) Protocol and cover all direct emissions of green- house gases from AO. The direct carbon emissions from various fuels are determined based on the fuel quantities and the relevant emission factor. Indirect GHG emissions (scope 2) Scope 2 emissions are reported based on the GHG Protocol and include indirect GHG emissions from the generation of electricity and heat purchased and consumed by AO. Scope 2 emissions are primarily calculated as the power volumes purchased multiplied by the emission factor for electricity. For district heating local emission factors from each district heating area are not used. Location-based emissions are calculated based on average country-specific emission factors. Market-based emissions consider renewable power purchased and assume that regular power is delivered as residual power. Indirect GHG emissions (scope 3) Scope 3 emissions are reported based on the GHG Protocol, where the scope 3 inventory is split into 15 subcategories (C1-C15): · Category 1. Purchased goods for resale’s emissions were calculated using a physical data approach, where products were categorized based on weight and custom codes to estimate material composition and assign GWP emission factors. This covered 88% of the purchased goods list, with extrapolations applied to remaining § Accounting policies for GHG emissions scope 1, 2 & 3 Scope 3 category ID Scope 3 category Justification 8 Upstream leased assets The fuel and electricity consumption of leased items are accounted for in Scope 1-2 and Scope 3.3. Double accounting is avoided. The life cycle emissions associated with manufacturing or constructing leased assets are optional. SBT asks to exclude optional GHG activities from the Scope 3 GHG boundary. 10 Processing of Sold Products AO does not sell products that (may) require further processing. 14 Franchises AO does not operate a franchising business model. 15 Investments AO does not have any investments that fall under the definition of this category. items. For products lacking weight data, weight and emissions were estimated using averages from the other product categories. For remaining products and services not meant for resale, a spend-based approach was applied, using AO’s financial data across entities and emission factors from the EEIO database, adjusted for inflation and currency conversion. · Category 2 includes GHG emissions from capital goods procurement. CO 2 e emissions were calculated using a spend-based approach and relevant emission factors were applied. · Category 3 includes the indirect emissions of fuels, elec- tricity and district heating. They were calculated using data from scope 1 and 2. When location-specific emis- sion factors were unavailable for Denmark, proxy factors were applied. The indirect share of the market-based emission factors was determined using the DK grid mix emission factor split. · Category 4 includes transportation emissions from suppliers, goods transportation between stores, ware- houses, and direct deliveries to customers. For deliveries from AO to own facilities or customers CO 2 -reports was provided by the transportation-companies. For emis- sions deriving from delivery to AO these reports were not available. Therefore, the calculations were based on: Product origin, weight, and units and they were used to group suppliers by country and region. A transport split In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix was applied based on whether the region is within the EU. Transport distances were estimated using seadistance.org, with emissions calculated based on assumed distances and product weights. Where country of origin was not available emissions were extrapolated based on averages from the known data sources. · Category 5 includes emissions from waste disposal, based on data provided on waste type from our waste handling partners. Relevant emission factors was multi- plied by the waste amount. · Category 6 includes emissions from business travel, calculated using a spend-based approach. Travel spending was categorized into domestic, foreign, and client-related travel, with a statistical ratio applied as a proxy for other locations. Emissions were calculated using spend-based factors for air and land travel, while hotel stay emissions were estimated using an average hotel rate and a global emission factor per night. · Category 7 includes emissions from employee commuting, calculated based on average travel distance, transport mode, and the number of employees, including temporary workers. The transport split was derived from national statistics, with commuting distances adjusted for round trips and annual working days. Emission factors were applied except for foot and bike travel, which were set to zero. · Category 9 includes customer product pick-ups in 2024. The average shopping travel distance in Denmark (14.7 km/day) was used. Emissions were calculated without considering product weight. · Category 11 includes emissions from the use of sold products. As no use-phase data was provided, esti- mates were made using product category information and purchased units. Electricity-consuming products were identified, sorted by relevance, and assessed for wattage, lifespan, and daily usage. Where data was insufficient, an extrapolation was applied. · Category 12 includes emissions from the end-of-life treatment of sold products. Products were sorted by weight, with the most relevant categories covering 80% of the total. Material and waste type assumptions were made, and a waste ratio was applied to the full product list. Waste treatment methods were based on statistical data, with emissions per kg of waste calculated. · Category 13 includes emissions from the operation of assets owned and leased to third parties. CO 2 e emis- sions were calculated using a spend-based approach, with emission factors adjusted for inflation. · The subcategories 8, 10, 14 and 15 are not relevant for AO and was therefore excluded. · The metrics for the scope 3 calculations, will have some level of uncertainty, as some of the data is based on extrapolations. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents The carbon emissions for scope 1 and 2 2025 Target -50% 2020 Baseline 1,835 tonnes CO 2 1,794 tonnes CO 2 1,692 tonnes CO 2 1,563 tonnes CO 2 965 tonnes CO 2 2021 2022 2023 2024 918 tonnes CO 2 Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Update on the original AO Denmark CO 2 -targets for scope 1 & 2 As part of AO’s ongoing commitment to sustainability and reducing the environmental impact, we have set ambitious climate targets both for AO Denmark and the AO Group as a whole. AO Denmark Targets Since 2020, AO Denmark has committed to reducing its Scope 1 and 2 carbon emissions by 50% by 2025, with a longer-term goal of achieving zero emissions in scope 1 & 2 by 2030. These targets were designed to align with AO Denmark’s operational focus and are outlined in previous annual reports. Due to the progress being made in phasing out fossil fuels in heating, forklifts and company vehicles AO has achieved a reduction in 2024 compared to the base year of 47.4%. Based on this positive development, it is expected that the 2025 goal of reducing 50% compared to 2020 for AO Denmark activities will be achieved. New group-level Climate targets aligned with Science-Based Targets (SBTi) In 2023, AO took a significant step forward by calcu- lating our scope 1, 2, and 3 emissions across the entire AO Group. Validation from the Science-Based Targets initiative (SBTi) for the new, more comprehensive climate targets were received. These targets commit the AO Group to reduce scope 1 and 2 emissions by 80% in 2030, while reducing scope 3 emissions by 42% in the same timeframe and achieving net-zero emissions by 2045. These new goals reflect our broader, long-term climate strategy and are in line with global standards and the EU’s sustainability regulations, including the Corporate Sustainability Reporting Directive (CSRD). Maintaining AO Denmark’s Targets While the new SBTi-aligned goals are now the primary focus for the AO Group, it is important to retain the original climate targets for AO Denmark. These goals remain relevant and demonstrate our ability to achieve short-term climate objectives, particularly for inves- tors and stakeholders who value seeing measurable progress. AO is committed to transparent reporting on both sets of targets until 2025 to ensure clarity and to highlight progress across both the Danish operations and the wider AO Group. After 2025 the reporting will focus solely on the SBTi-related scope 1, 2 & 3 progress on group level. Navigating the difference in targets Maintaining both the AO Denmark-specific targets and the Group-level SBTi targets may initially appear complex. However, these two sets of goals serve different purposes. AO Denmark’s targets reflect the historical commitment and focus on operational perfor- mance within Denmark, while the Group-level SBTi A restatement for the years 2020-2023 has been made excluding scope 3 emissions related to Scope 1 & 2 which were included in previous years reporting. Corrected Scope 1 & 2 emissions can be seen in the figure above. ■ Fuel for company vehicles ■ Fuel for forklifts ■ Gas for heating ■ Electricity ■ District Heating ■ Electricity for company vehicles targets represent the broader climate ambitions across all operations. Both are important in demonstrating the overall sustainability strategy and progress. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix E2 Pollution Impact, risks and opportunities AO’s material impact on pollution is related to substances of very high concern (SVHC), that AO sells to its customers, and it is both relevant for upstream and downstream activities. No part of AO's business value chain is excluded if it relates to the harmful substances that are in the company's products. AO has conducted an analysis of the harmful substances sold by AO across its operations including all sites and business activities. In addition the amount of items with harmful substances stored in each of AO's warehouses and stores has been ascertained. The phys- ical risks of pollution in emergency situations are not considered material due to the limited amounts stored in AO's warehouses. However, all AO's locations follow all regulatory requirements regarding hazardous items and fire regulation sas a part of our ISO 14001 certified management system. Products handled by AO and registered on the SVHC list will only affect the immediate surroundings and will not cause significant harm to others besides the people who use the chemicals. However, some of the chemi- cals that are under SVHC have the potential to cause more lasting damage, where irremediability (part of the severity assessment) scores high in the assessment. There is also a high likelihood that the customers in the downstream value chain will be exposed to these substances when they use them. Due to the limited number of products sold and the well-regulated area, no subtopic concerning pollu- tion was considered financial material based on AO’s benchmark for financial materiality used throughout the assessment across all ESRS’s. The decision process regarding IRO’s is similar to the IRO assessment process across ESRS’s and will be evaluated yearly based on potential changes in the upstream supply chain, AO’s own operations and downstream effects of products sold. Opportunities to minimise the negative impact of products containing harmful substances will be part of AO’s work with customers to reduce the number of such goods. This effort is also integrated into the ISO 14001 manage- ment system. Input parameters for current the material sub-topic are safety data sheets used for analysis and the REACH restriction lists and the SCIP-database under the European Chemical Agency (ECHA). Input parameters for reassessment of non-material topics will be scale, scope, irremediability and likelihood of potential pollu- tion throughout the value chain. Process for analysing SVHC Based on safety data sheets AO has conducted an anal- ysis of all chemicals sold. The analysis was performed by internal and external specialists. Based on the safety data sheet information all chem- icals were divided into categories based on REACH restriction lists. All new chemicals are analysed to assess which restriction lists (if any) the substances are categorised into. Articles with SVHC-substances are monitored through the registration of goods that are listed in the SCIP-database by the European Chemicals Agency (ECHA). The reported quantities of chemicals and articles containing SVHC substances reflect the total weight in kilograms of the products, regardless of the proportion of SVHC substances within them. The disclosure is not validated by an external body. The information and communication provided on these substances to customers follows the CLP-regulation. Policies on substances of very high concern AO’s Climate and Environmental policy as well as Corporate Social Responsibility Policy address the issue of harmful substances. The responsibility for imple- menting the policies lies with the Procurement Director. Reducing harmful substances in the chemicals AO sells relates to both upstream and downstream activities. In In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix the policies and ISO 14001 management system, it is addressed how to address harmful substances in the following way: Climate and environmental policy: · Annually analyse and reduce the amount of environ- mentally harmful substances by engaging in dialogue with suppliers on how to replace or phase them out, particularly in products sold to private consumers and substances of very high concern (SVHC). Our goal is to phase out SVHCs completely by 2030 for the benefit of both people and the environment. · Increasing the share of sustainable products when purchasing from suppliers to benefit our customers. Through prioritisation and dialogue, AO aim to shift customer focus towards sustainable products. Corporate social responsibility policy: · AO reduces environmentally harmful substances for the benefit of both people and the environment. As AO's work with monitoring harmful substances both in terms of reduction of harmful substances as well as handling emergency situations is a part of the certified ISO 14001-manangement system, the following part of AO's climate and environmental policy is also relevant: AO's environmental management certification aims to support AO and its employees in the climate and environmental efforts. Therefore, the entire AO, from top management to stores, is certified in the ISO 14001 environmental management system, which includes: · Actively involving employees in environmental efforts. · Including environmental topics on the agenda of internal sales, board, and management meetings. · Measuring departments on environmental perfor- mance, just as they are measured on other outcomes. · Ensuring that initiatives with environmental impact are planned, implemented, and evaluated in collabo- ration with AO's responsible environmental unit. · Assisting AO's customers in making green choices when shopping with us. AO's environmental policy should be viewed in conjunc- tion with its social responsibility policy, where reducing AO's climate and environmental impact is central to AO's efforts. The scope of AO’s climate & environmen tal policy is covering the whole value chain across all geographies and all identified stakeholders. The CTO is responsible for the implementation of the policy. The environmental and climate policy solely covers climate change mitigation and adaptation, energy efficiency, pollution, waste management, circular economy. AO has consulted stakeholders by interviewing customers about their view on AO’s customer-related work with sustainability including harmful substances. We have not consulted neighbours regarding the matter, but as harmful substances are a well-regulated field, we are following regulation on the matter including require- ment to warehouse setup. Targets and actions AO’s target is linked to AO's policies, and it is to elimi- nate all SVHC-substances in products AO sell by 2030 and reduce substances of concern, where viable substi- tutes are available. AO's policy states that the company will do that by annually analysing and reducing the amount of environmentally harmful substances by engaging in dialogue with suppliers on how AO can replace or phase out these substances — particularly in products sold to private consumers and substances of very high concern (SVHC). As 2030 is a short time frame, the interim target is to decrease the number of chemical products each year. No official methodology has been used to set the targets as it is not applicable and therefore there are no significant assumptions used to set the targets. The targets are related to the EU’s chemicals strategy for sustainability towards a toxic-free environment and the scientific evidence proposed in the strategy. AO do not have any targets related to air, water, and soil pollution reduction activities, as these topics are not material for AO. Process for analysing and monitoring SVHC AO plans to tracks the effectiveness of our actions yearly by reanalysing the substances in chemicals using specialised software and track the amounts sold of SVHC substances as well as substances of other REACH restric- tion lists. The baseline for the calculation will be 2024, as the target has been set during 2024. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix AO has consulted stakeholders by customer interview during the fall of 2023 about their view on AO’s cus- tomer-related work with sustainability including harmful substances. They were not a part of the target setting process. The target relates directly to the climate and environ- mental policy as stated above. AO follow regulation updates using software and updates its list of relevant regulation each year. § Accounting policy Substances of very high concern Total weight in tonnage (in tonnes) and percentage of SVHC as part of substances or articles (ingredi- ents in final product) sold in AO. The volume of SVHC is presented as total weight (in tonnes) of all substances or articles containing SVHC, not the total weight of the actual SVHC ingredient. The weight of a substance or article is included if the SVHC concentration is more then 0.1% of its volume. 2024 Substances of very high concern UoM SCIP SVHC Amount of substances of very high concern that leave facilities as part of products Weight tonnes 679.8 9.6 Percentage of net revenue made with products and services that are or that contain substances of very high concern % 5.8% 0.04% In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix To assess the materiality of AO's ressource use and impact on the circular economy, general knowledge about the construction industry was used, based on year-long involvement in the industry and continuous knowledge expansion about the industry’s negative impacts through desk research as well as external and internal knowledge sharing. To understand trends in the construction industry and circular economy, and to understand what can be expected in the future, AO is keeping itself updated on legislation on relevant topics on international level. This can minimise certain risks, like incompliance, and highlight opportunities like market trends. Most of the materiality assessment was based on general data regarding the construction industry, while calculation and analysis of waste and packaging is based on product-specific supplier data. AO’s activities are not classified as a polluting company, as defined by the Danish Environmental Protection Act, where local negative impacts are absent or negligible and therefore there are no affected stake- holders. Due to AO’s stakeholders participating in the production of some of the most problematic materials, affected stakeholders can be expected in some of the value chain. Due to the complexity of the value chain and no direct influence on the initial stages of product production, the affected stakeholders are difficult to identify and negative impacts on them difficult to miti- gate. AO will work towards stronger risks assessments including stakeholder management in the future. AO’s material impacts in the construction industry come from the products it buys and sells, which require a significant amount of resources—both the materials themselves and the energy, water, and other resources needed for raw material extraction, production, pack- aging, and distribution. For own activities, most of the resources are used for production of energy for elec- tricity and heating of own facilities, and production of procured packaging. While identifying IROs relevant for resource use and circular economy, all types of resource inflows and outflows were considered, including energy and water consumption in own operations as well as in upstream and downstream activities. Water was deemed non-material (see Non-material topics based on DMA). Energy consumption is covered in chapter E1. Policy The scope of AO’s climate & environmental policy is covering the whole value chain across all geographies and all identified stakeholders. Due to the nature of AO’s business, where most of the material impacts are a conse- quence of the activities in AO’s upstream value chain, the Climate and Environmental Policy primarily concerns downstream and upstream activities with AO’s direct influence. However, reduction of waste is the first step toward reducing material impacts of downstream opera- tions. The activities to reduce the material impact of AO’s own activities, require AO’s employees to learn new daily habits, such as correct waste sorting. The ESG Council is responsible for the implementation of the policy. The environmental and climate policy solely covers climate change mitigation and adaptation, energy efficiency, pollution, waste management, circular economy. The Climate and Environmental Policy is accessible on the company's intranet and on AO’s website. The policy is accessible to stakeholders and the public. All AO employees must complete an online course regarding AO’s work with environment and climate. AO finds it important that all employees receive information about the focus area in the policy. All AO employees are encouraged to contact the AO's sustainability team regarding questions, help or ideas. AO is focusing on reducing residual waste amounts, and is contributing to minimise use of virgin resources. In Q4 2024, AO began a take-back scheme project to scale-up take-back efforts of suppliers and contribute to the use of recycled and secondary materials in their manufacturing processes. E5 Resource use and circular economy Impact, risks and opportunities In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Actions To support correct waste management, AO established a waste sorting solution and is continuously adjusting the solution to optimise it depending on the location. AO’s employees must also undergo a course in correct sorting and are kept updated when new knowledge about specific waste fractions is obtained. AO expects the knowledge about correct waste sorting to spread and contribute to higher waste sorting rates as well as a higher actual recycling rate at all AO’s locations. Waste data is uploaded monthly and made available to all AO’s employees. Here, waste data is visualised, indicating which of AO Denmark’s locations are reaching or exceeding the targets, and which locations are lagging. This gives an insight into which locations need help, and which locations can be used as an inspiration for good practices. As mentioned above, AO began a take-back scheme project in Q4 2024, to reduce reliance on virgin resources and increase the use of secondary and recycled resources directly in AO’s value chain. This project has already shown potential for scaling up take- back efforts, not only for products, but also packaging. Further dialogue with relevant suppliers is needed to fully explore the potential and develop and implement specific take-back schemes. In the same quarter, another project was initiated, where returned goods will be mapped, including the reason for return, process for return and further handling of the returned goods. This is the first step in identifying opportunities for achieving higher levels of waste hierarchy for this group of products. Both of the above mentioned projects are meant to contribute to the development of circular strategy, which will cover downstream, upstream and AO’s own activities and will focus on value retention, waste prevention and high actual recycling rates, as well as procurement of products with recycled materials. Most of the mentioned and planned actions are meant to be a continuous effort unless their positive effect is not proven. In that case, new actions and initiatives will be implemented by AO. AO has not previously reported en these actions and therefore the progress in relation to previous reporting periods is not possible. Targets Regarding circular economy, one target is specified in the Climate and Environmental Policy: - 90% of waste is sorted for further treatment by 2030 and residual waste should be no more than 10 % of all waste produced by AO. This relates to recycling in the waste hierarchy. AO plans to track the effectiveness of our actions yearly by analysing the amount of waste that is sorted for further treatment and amount of residual waste. The baseline for the calculation will be 2024, as the target has been set during 2024. Danish legislation does not set any specific targets that companies must reach. AO’s waste sorting targets are not based on any significant assumptions but inspired by legislation and driven by AO’s environmental ambi- tions. In 2025, AO will strive to set more relevant goals for the future, including upstream, downstream and AO’s own activities. Resources inflows Due to the extent of AO’s product range and conse- quently its wide-reaching and complex value chain, AO has not executed an analysis of its full resource inflows. Regarding own operations, AO is in the process of mapping its packaging consumption in line with the extended producer responsibility for packaging. These are the resource inflows that are within AO’s full control. AO has no knowledge of the resource inflows derived from property, plant and equipment used in own opera- tions. As water usage is not a part of AO’s main opera- tions, it is not considered material. Resources outflows and waste AO’s primary activities are procurement and sales of products and AO does not contribute to the products’ design. Furthermore, AO’s own production activities, VAGA, represents a negligible share of AO’s revenue. Consequently other areas, such as waste, are being prioritised as more important at the moment. As a wholesaler in the construction industry, AO generates waste, often due to breakage, cutoffs, and incorrect orders. However, cardboard packaging is AO’s largest material waste stream, accounting for 35% of its total waste. The second-largest material waste stream is wood, at around 30%, followed by incinerated waste, which makes up about 14%. Steel, other metals, and In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix ceramics each account for approximately 3% of AO’s total waste. Other material waste streams do not exceed 1.5% of annual waste. AO’s waste data is collected through various waste management companies that sort and weigh all our waste and provide detailed data reporting. Waste is generally reported based on invoices received from waste recipients, supplemented with plant-specific measurement methods for commercial facilities, including construction activities. Waste is weighed using verified weights and sorted by type, every month, by our waste partners. The table below shows waste amounts across all AO’s locations in Denmark, Sweden and Norway, including the newly acquired companies. Waste data for the three new companies is included from the time they became part of the AO Group. Waste UoM Hazardous Non-hazardous Diverted from disposal Preparation for reuse Weight tonnes 0 0 Recycling Weight tonnes 3 1,390 Other recovery operations Weight tonnes 3 209 Directed to disposal Incineration Weight tonnes 0 82 Landfill Weight tonnes 0 21 Other disposal operations Weight tonnes 0 0 AO Denmark generates about 88 % of all waste generated by AO Group and has, together with AO Sweden, the most versatile waste streams in the group (described above). Other members of AO Group generate primarily paper and wood waste, most of which is recycled. Waste recycling is not yet fully imple- mented in some of the smaller Group entities leading to higher disposal rates. In the coming years, AO will intensify collaboration with these locations to ensure high waste sorting rates across the group. Waste UoM 2024 Total amount of waste generated Weight tonnes 1,708 Non-recycled waste Weight tonnes 315 Percentage of non-recycled waste % 18.4% § Accounting policy Waste weight Waste treatment volumes are reported in absolute tonnage (in tonnes) of waste collected from AOs location during the reporting period. All data is third-party data. Data is actual data from the whole AO Group. Non-recycled waste Total weight in tonnage (in kg) and percentage of waste that has not been recycled. Small projects encouraging reduction of waste NEXT Whenever AO has materials and products that are still intact and useful but not eligible for sale, such as screws that have expired and are in old pack- aging, AO sends them to a vocational school that can use them for training and education of future carpenters, rather than disposing of the screws. RED project The 'RED' project, initiated by our customer Finn L. & Davidsen, receives monthly donations from AO. We provide slow-moving stock items and returned products with cosmetic damage, which are handed out to DIY enthusiasts once a year. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix EU Taxonomy Under the EU Taxonomy Regulation, listed companies employing more than 500 people must disclose the share of their revenue, expenses and capital employed in 2024 that are defined as environmentally sustainable under the Taxonomy Regulation. For the 2024 financial year, reporting is required in relation to “Countering climate change”, “Adapting to climate change”, "Water", "Pollu- tion", "Circular Economy", and "Biodiversity and ecosystems". AO is an environmentally aware and climate conscious company. As stated previously, AO’s direct carbon footprint is limited, as we are a wholesaler and conduct neither major produc- tion nor other activities that could potentially harm our environment and climate. That is why reporting on the environmental sustainability of our activities as defined in the EU Taxonomy Regulation is limited and does not present a complete view of our environmental and climate efforts, as they extend beyond our own activi- ties. See section “Environment and climate” for more information about our activities. We have conducted an analysis of our activities to identify if any of our activities are eligible as defined in the Annexes 1-2 of the Climate delegated act or in the Annexes 1-4 of the Envi- ronmental delegated act in the EU Taxonomy Regulation. The aim of this has been to identify whether AO has any reportable turnover, invest- ments or expenses to be included in our report for 2024. Wholesale trading is not included as a separate activity in the EU Taxonomy Regulation. Hence AO only has sub-activities that are covered by the Regulation. Identified areas with eligible economic activ- ities during the reporting period were further assessed for alignment. However, AO does not claim alignment for 2024 due to insufficient documentation in the relevant areas. Reporting in accordance with the taxonomy According to the classification system in the EU Taxonomy, AO is required to submit a report in relation to activity “CCM 6.5 Transport by motor- bikes, passenger cars and commercial vehicles”, "CCM 7.6 Installation, maintenance and repair of renewable energy technologies” and activity “CCM 7.7 Acquisition and ownership of build- ings”. All three activities are deemed to have the potential to contribute to the environmental and climate objective “Adapting to climate change”. We have compared the three identified activities "CCM 6.5 Transport by motorbikes, passenger cars and commercial vehicles”, "CCM 7.6 Instal- lation, maintenance and repair of renewable energy technologies” and "CCM 7.7 Acquisition and ownership of buildings” with technical screening criteria according to the Delegated Regulation 2021/2139 and have identified 0% of our revenue, 56% of our investments, and 27 % of our total maintenance expenses to be eligible according to the classification system, cf. below in the taxonomy form for turnover, capital expenditure (CapEx) and operating expenses (OpEx). None of the turnover, investments or operating expenses have been assessed as being environmentally sustainable activities. As yet, no capital expenditure plan for upgrading our investments to become environmentally sustainable in the longer term has been made. This is illustrated below in the mandatory tables in accordance with Delegated Regulation (EU) 2021/852. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Taxonomy form for turnover Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm') Economic Activities (1) Code (2) Absolute turnover (3) mDKK Proportion of Turnover (4) Climate Change Mitigation (5)* Climate Change Adaptation (6) Water (7) Pollution (8) Circular Economy (9) Biodiversity and ecosystems (10) Climate Change Mitigation (11) Climate Change Adaptation (12) Water (13) Pollution (14) Circular Economy (15) Biodiversity (16) Minimum Safeguards (17) Taxonomy aligned or eligible propor- tion of total turnover, year N (18) Category (enabling activity) (20) Category(transitional activity)(21) A. Taxonomy-eligible activities 2023 A.1. Environmentally sustainable activities (Taxonomy-aligned) Turnover of environmentally sustain- able activities (Taxonomy-aligned) (A.1) 0 0% 0% 0% 0% 0% 0% 0% N/A N/A N/A N/A N/A N/A N/A 0% 0% 0% Of which Enabling Of which Transitional A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxono- my-aligned activities) (A.2) 0 0% 0% A. Turnover of Taxonomy eligbile activi- ties (A.1+A.2) 0 0% 0% B. Taxonomy-non-eligible activities Turnover of Taxonomy-non-eligible activities 5,429.3 100% 100% Total Turnover (A+B) 5,429.3 100% 100% In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Taxonomy form for capital expenditure (CapEx) Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm') Economic Activities (1) Code (2) Absolute CapEx (3) mDKK Proportion of CapEx (4) Climate Change Mitigation (5) Climate Change Adaptation (6) Water (7) Pollution (8) Circular Economy (9) Biodiversity and ecosystems (10) Climate Change Mitigation (11) Climate Change Adaptation (12) Water (13) Pollution (14) Circular Economy (15) Biodiversity (16) Minimum Safeguards (17) Taxonomy aligned or eligible propor- tion of total CapEx, year N (18) Category (enabling activity) (20) Category(transitional activity)(21) A. Taxonomy-eligible activities 2023 A.1. Environmentally sustainable activities (Taxonomy-aligned) CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0 0% 0% 0% 0% 0% 0% 0% N/A N/A N/A N/A N/A N/A N/A 0% 0% 0% Of which Enabling Of which Transitional A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Acquisition and ownership of buildings CC M 7.7 84.5 49% 33% Installation, maintenance and repair of renewable energy technologies CCM 7.6 2.7 2% Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5 9.5 6% 18% CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 96.7 56% 51% A. CapEx of Taxonomy eligible activi- ties (A.1+A.2) 96.7 56% 51% B. Taxonomy-non-eligible activities CapEx of Taxonomy-non-eligible activities 75.1 44% 49% Total CapEx (A+B) 171.8 100% 100% In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Taxonomy form for operating expenditure (OpEx) Substantial Contribution Criteria DNSH criteria ('Does Not Significantly Harm') Economic Activities (1) Code (2) Absolute OpEx (3) mDKK Proportion of OpEx (4) Climate Change Mitigation (5) Climate Change Adaptation (6) Water (7) Pollution (8) Circular Economy (9) Biodiversity and ecosystems (10) Climate Change Mitigation (11) Climate Change Adaptation (12) Water (13) Pollution (14) Circular Economy (15) Biodiversity (16) Minimum Safeguards (17) Taxonomy aligned or eligible propor-2023 tion of total OpEx, year N (18) Category (enabling activity) (20) Category(transitional activity)(21) A. Taxonomy-eligible activities 8% 2023 A.1. Environmentally sustainable activities (Taxonomy-aligned) OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0 0% 0% 0% 0% 0% 0% 0% N/A N/A N/A N/A N/A N/A N/A 0% 0% 0% Of which Enabling Of which Transitional A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Acquisition and ownership of buildings (OpEx B) CCM 7.7 14.0 24% 23% Installation, maintenance and repair of renewable energy technologies CCM 7.6 0 0% Transport by motorbikes, passenger cars and light commercial vehicles (OpEx C) CCM 6.5 1.4 2% 4%3 OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 15.3 27% 27% A. OpEx of Taxonomy eligible activities (A.1+A.2) 15.3 27% 27% B. Taxonomy-non-eligible activities OpEx of Taxonomy-non-eligible activities 41.9 73% 73% Total OpEx (A+B) 57. 2 100% 100% In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment E1 Climate Change E2 Pollution E5 Resource use and circular economy Taxonomy Social Governance Appendix Accounting policies All KPIs have been calculated on Group level in accordance with Commission Delegated Regu- lation (EU) 2021/2178 of 6 July 2021 supple- menting Regulation (EU) 220/852 of the Euro- pean Parliament and of the Council, Annex 1. Our accounting policies below are described in detail to allow a better understanding of how the proportion of our taxonomy-aligned and taxono- my-eligible activities has been calculated. Turnover Turnover is calculated on the same basis as the turnover in the financial statements. No turn- over has been identified for activity "CCM 6.5 Transport by motorbikes, passenger cars and commercial vehicles", "CCM 7.6 Installation, maintenance and repair of renewable energy technologies” and activity "CCM 7.7 Acquisition and ownership of buildings". CapEx Capital expenditure for activity "CCM 6.5 Trans- port by motorbikes, passenger cars and commer- cial vehicles” is calculated on the basis of Annex 1, section 1.1.2 and includes the purchase and lease of company cars and other vehicles. This is viewed in relation to the total investments in "Intangible assets" (excluding goodwill), "Prop- erty, plant and equipment" and "Right-of-use assets", cf. notes 3.1-3.3 of AO’s Annual Report for 2024. Capital expenditure for activity "CCM 7.6 Instal- lation, maintenance and repair of renewable energy technologies” is calculated on the basis of Annex 1, section 1.1.2 and includes the purchase and lease of solar panels. This is viewed in relation to the total investments in "Intangible assets" (excluding goodwill), "Prop- erty, plant and equipment" and "Right -of-use assets", cf. notes 3.1-3.3 of AO’s Annual Report for 2024. Capital expenditure for activity "CCM 7.7 Acquisi- tion and ownership of buildings” is calculated on the basis of Annex 1, section 1.1.2 and includes all acquisitions and property leases. This is viewed in relation to the total investments in "Intangible assets" (excluding goodwill), "Prop- erty, plant and equipment" and "Right -of-use assets", cf. notes 3.1-3.3 of AO’s Annual Report for 2024. OpEx Operating expenses for activity "CCM 6.5 Transport by motorbikes, passenger cars and commercial vehicles" are calculated on the basis of Annex 1, section 1.1.3. and include all direct maintenance expenses associated with the Group’s company cars and other vehicles. The proportion of operating expenses is calcu- lated as direct maintenance expenses viewed in relation to the Group's total maintenance expenses. Operating Expenses for activity "CCM 7.6 Instal- lation, maintenance and repair of renewable energy technologies” are calculated on the basis of Annex 1, section 1.1.3. and include all direct installation and maintenance expenses associ- ated with the operative administration of own and leased property. The proportion of maintenance expenses is calculated as direct maintenance expenses viewed in relation to the Group's total mainte- nance expenses. Operating Expenses for activity "CCM 7.7 Acqui- sition and ownership of buildings“ are calcu- lated on the basis of Annex 1, section 1.1.3. and include all direct maintenance expenses asso- ciated with the operative administration of own and leased property. The proportion of maintenance expenses is calculated as direct maintenance expenses viewed in relation to the Group's total mainte- nance expenses. Through cross checking with the Annual Report for 2024, it has been ensured that there is no duplication of the components included in the calculation of revenue, capital expenditure and operating expenses. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Social Executive Summary General Environment Social S1 Own Workforce Governance Appendix Social In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix S1 Own workforce Working and social conditions are an integrated part of AO’s CSR (Corporate Social Responsibility) policy. The employees are the core of AO, and they are crucial to the company’s success and results. AO is committed to being a socially responsible business and ensuring that every employee is satisfied and has the best working conditions. AO has identified the following key social employee-related topics as part of our assessment of material sustainability factors: · Employee retention and job satisfaction · Sick leave and workplace accidents · Skill enhancement and further training Risks relate to economic downturns and business acquisitions, which may lead to workforce reductions. To a lesser extent, risks relate to the potential loss of talented employees and the challenge of recruiting and developing the necessary resources and expertise. Own Workforce In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix The employees are the core of AO, and they are crucial to the company’s success and results. Through targeted activities in working environment and employee development, AO strives to create long-term opportunities. AO focuses on building a dynamic and flexible workforce capable of adapting to changes and supporting the company’s ambitions of being an attrac- tive, inclusive, and socially responsible workplace. AO’s CHRO is responsible for the implementation of all HR policies applying to the entire AO Group, unless anything else is stated. The measurement of the metrics related to characteris- tics of own employees is based on the AO Group and is not validated by an external body other than the assur- ance provider, unless anything else is stated. Health and safety AO actively works to create a safe and healthy work environment that enhances the company's reputation. Through strategic workforce planning, compliance with policies, health programmes, and continuous evaluations via job satisfaction surveys and workplace assessments, areas for improvement are identified to reduce risks associated with work-related stress and physical safety. AO has implemented preventive measures, including flexible working arrangements and mental health initiatives, to help employees achieve a good work-life balance. Inclusion through diversity initiatives Diversity is regarded as a strength that contributes to innovation and AO’s long-term success. Efforts are made to ensure equal opportunities for all employees, regardless of background, to foster a workplace where all employees feel valued and respected. Skill enhancement and further training To minimise risks associated with the loss of key competencies and ensure long-term competitiveness, AO offers ongoing talent development, skill enhance- ment, and further training. This includes both internal and external training options allowing employees to pursue professional and personal growth. These initiatives not only support individual employee development but also strengthen the company's overall competencies and resilience. Risk identification and prevention AO proactively addresses potential challenges as they are identified. Implemented measures to mitigate identified risks include enhanced well-being initiatives, flexible work arrangements, health programmes, and a clearly defined code of conduct through guidelines and policies, such as Ethics & Compliance, which are regularly updated based on employee feedback and business needs. Goals and systems To support AO’s efforts and sustainability goals, a struc- tured approach to data collection through integrated HR systems has been established. Using modern systems, data on employee well-being, retention, sick leave, workplace accidents, etc., are collected. Systematic data collection allows the company to precisely identify areas with potential for improvement and respond quickly to risks and changes. This ensures that AO’s social efforts are part of the company’s daily operations. For instance, AO uses data from job satisfaction surveys and workplace assessments to improve the work envi- ronment by identifying stress factors and implementing specific improvement measures. By analysing retention data, AO can tailor its development programmes to ensure that employees have the necessary skills and motivation to stay with the company long-term. By working in a structured and data-driven way, AO ensures that its social sustainability initiatives are effec- tive and yield long-term results for both employees and the company. This contributes to creating a sustainable and inclusive workplace that meets both employee needs and company goals. HR activities are managed by a central HR function headed by AO’s CHRO. The HR function is tasked with the manage- ment of the material impacts affecting AO’s own workforce. S1 Own workforce Impact, risks and opportunities In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix Forward-looking efforts AO prioritises employee well-being, retention, and development, and will continue to strengthen its efforts in the identified areas to ensure a workplace that promotes both well-being and motivation among employees. AO is dedicated to advancing its initiatives and achieving its ambitious social goals so that the company can maintain a supportive and diverse work environment that contributes to the sustainable devel- opment of all employees, the company, and society. AO takes pride in a strong corporate culture, reflected in low employee turnover and a commitment to ensuring health and safety of everyone. Data collection AO's HR-related data collection and analysis is designed to create an accurate, targeted, and ongoing assess- ment of conditions within the company. AO uses a combination of quantitative and qualitative methods to gain a comprehensive understanding of employee well- being, work environment, diversity, and skill enhance- ment. This methodology outlines the key practices and sources for collecting and maintaining employee data. Data sources and collection As part of the hiring process, all contract employees, including trainees, must complete a form with the personal information necessary for employment. The collected information is entered into AO’s HR database, which serves as the central data warehouse for all employee-related data. The database is continuously updated with changes, such as start and end dates, working hours, transfers, management levels, or contract status. Additional data sources include direct input from managers or employees, for instance, in cases of workplace accidents or extended illness. Data is also collected through job satisfaction surveys. Data entry is primarily manual, based on input from managers or employees, and data is regularly updated throughout the employment period. Analytical approach Economic factors and project-based work are considered when analysing variations in workforce numbers over the reporting period. Overall workforce planning is done by senior management based on strategic goals, economic conditions, and the compa- ny’s vision. Actual figures are periodically compared with budg- eted targets, including data on any third-party personnel The HR department monitors the implementation of improve- ments and adjustments by conducting assessments with the employees involved and affected. This process ensures that the changes have achieved the desired outcomes and identifies whether additional actions are required to meet expectations. Actions and targets AO does not have any key actions for 2024 or specific targets, but is working on actions and setting targets for 2025. Policies Policy for Corporate Social Responsibility AO continuously enhances the company’s work environment through regular monitoring and use of KPIs. AO tracks productivity, employee satisfaction, and retention rates using annual reports to assess progress. These insights guide necessary adjustments to AO’s strategies and policies, ensuring AO remains responsive to both employee needs and business requirements. To further ensure a safe and dynamic workplace, AO conducts regular assess- ments of human rights impacts across its operations. These comprehensive assessments involve employee interviews, policy reviews, and consultations with stakeholders and experts. The insights gained are used to develop action plans that mitigate potential risks. By focusing on these key areas, AO aims to create a dynamic, inclusive, and sustainable work environment where all employees feel valued, protected, and supported. Maintaining high standards in reporting and monitoring enables AO to contribute to the well-being and professional development of its workforce, ensuring that AO remains a responsible and forward-thinking employer. Policy on Respect for Human Rights Senior Policy Ethics & Compliance In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix Employee retention and job satisfaction Employee well-being and retention are fundamental to AO’s success as a company. AO recognises that an engaged and satisfied workforce not only increases productivity but also fosters a strong corporate culture and creates a positive work environment. AO’s approach to well-being includes both physical and mental health, balanced working hours, and meaningful opportunities for personal and professional development. To ensure retention, AO is focused on building a sustain- able culture where employees feel valued and respected. Retention AO recognises that low employee turnover creates continuity and forms the foundation for strong team- work. Therefore, AO has implemented a range of initiatives aimed at enhancing employee engagement and creating a work environment where all employees thrive and feel valued. AO’s retention strategy includes flexible working conditions, competitive salary packages with an annual individual salary review for salaried employees, health benefits, and extensive opportunities for skill enhance- ment and further training. AO continuously evaluates the effectiveness of these initiatives and adjust them based on employee feed- back and market developments. Employee turnover UoM 2024 Number of employees who have left undertaking Headcount 130 Percentage of employee turnover % 12.6% AO’s goal is to remain an attractive workplace where talented employees choose to stay and contribute to the group’s success and sustainability. Working conditions 9 years 3 1 % 1 6 % 1 9 % 3 4 % M o r e t h a n 1 0 y e a r s 6 - 1 0 y e a r s 3 - 5 y e a r s 0 - 2 y e a r s § Accounting policy Employee turnover The rate of employee turnover is calculated as the number of employees who left volun- tarily or due to dismissal, retirement, or death in service during the reporting period to the headcount at the end of the reporting period. Seniority amongst our employees is In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix Conditions of employment All AO employees have employment contracts that clearly state their rights and obligations. Salaried employees and workers paid by the hour are covered by collective agreements. Managers’ employment terms are governed by the National Salaried Employees Act and are aligned with the collective agreement for salaried employees regarding parental leave, additional vacation days, and child sickness leave. All employees are enti- tled to five weeks of paid vacation according to national law, and to legally permitted absences due to, for example, illness, parental leave, adoption, or compul- sory military service in accordance with national law. AO pays a fair wage to their employees in line with national legislation, market trends and agreements with trade unions. All employees are covered by social protection, through public programs in both Denmark, Sweden and Norway. AO respects employees' rights to organise and to engage in collective bargaining. Collective bargaining agreements UoM 2024 Percentage of total employees covered by collec- tive bargaining agreements % 88.7% Percentage of own employees covered by collective bargaining agreements - by country with significant employment (in the EEA) % 100.0% To foster trust and open communication regarding working conditions, AO has made the company guide- lines and policies accessible to all employees on the company intranet and in the employee handbook. Additionally, AO has implemented an e-learning portal, 'AO Campus', where all new employees complete mandatory e-learning courses, including the "Ethics and Compliance' course, which helps protect and safeguard employees against discrimination, harassment, and unsafe working conditions. AO has established a whistleblower system, an effec- tive grievance and feedback mechanism that is exter- nally managed, allowing employees to report issues without fear of retaliation. Through the company’s 'Learning Universe' on the intranet, employees are informed about the company's training strategy and their opportunities to develop their skills and compe- tencies through courses and continuing training and education. In AO’s occupational health and safety organisation, a key focus is on safety protocols to minimise risks and prevent injuries. By focusing on these elements, AO is committed to providing a socially responsible and supportive work environment that not only promotes employee well- being throughout their careers but also enhances the company’s overall performance and reputation. Health services All employees can enrol in a health insurance plan that provides quick and professional assistance for treatment or diagnosis of discomfort, illness, or injury. In addition, an EarlyCare programme is offered, where employees who are on sick leave or at risk of taking sick leave can receive support for treatment. Job satisfaction AO puts value in sharing knowledge and information with its employees. With a focus on improving working conditions and ensuring high job satisfaction, AO conducts regular job satisfaction surveys where employees can provide feedback to the company. These surveys are followed § Accounting policy Collectives bargaining agreements Data consists of full-time, part-time and temporary employees (students + maternity substitute), at the end of the reporting period. The split between employees covered and not covered by collective bargaining agreements, is determined by the position of the employee. All managers with staff responsibility are not covered. No assumptions are made. Metric for the employees covered by country is for employees located in Sweden. Non-employees are covered under Danish legislation, market trends and agreements with trade unions, through the external bureau the non-employees are employed with. The social protection through the public programs cover sickness, unemployment, employment injury and acquired disability, parental leave and retirement. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix by action plans, and based on them, improved mea- sures are implemented to meet employees' needs and preferences. By combining job satisfaction initiatives with a clear code of conduct and employee involvement, AO fosters a workplace community built on trust, respect, and engagement. This supports AO’s goal of creating a workplace where everyone feels valued and motivated to contribute to the company’s success. Flexible work arrangements The company offers flexible working hours and the option to work from home to support a healthy work- life balance. The flexibility policy is outlined in the employee handbook and available on the company intranet. In cases of long-term illness, the goal is to bring the employee back to work in a safe, swift, and considerate way. Employees are offered a gradual return-to-work plan with hours adapted to their individual recovery, ensuring they can return to work with confidence. To support employees approaching retirement, AO has a senior policy that allows employees to plan their retire- ment well in advance. This ensures that their roles can be individually tailored to accommodate abilities and preferences in the later stages of their careers. Employee involvement AO continuously promotes employee involvement and transparency through regular updates via the company intranet, kick-off meetings, team, and department meetings, as well as virtual presentations covering topics such as company performance (financial review). IT security, training opportunities and e-learning courses. AO actively involves employees in shaping and improving company processes, often through project- based initiatives and evaluations of new systems. AO’s goals and results are communicated in part through mandatory reports, ensuring the maintenance of stakeholder trust. This strengthens the shared understanding of the company’s goals and reinforces its culture, which brings the organisation closer together. AO assesses the effectiveness of its engagement with its own workforces through regular job satisfaction surveys, direct communication channels, and work- place assessments (APVs), i.e. also with regard to previous remedies provided and Works Council. Family-related leave UoM Female Male Total Percentage of employees entitled to take family-related leave % 100% 100% 100% Total of entitled employees that took family-related leave by gender No. 17 36 53 Percentage of entitled employees that took family-related leave by gender % 6.0% 4.8% 5.2% § Accounting policy Family-related leave Data consists of full-time, part-time, temporary employees (students + maternity substitutes), at the end of the reporting period. Data collection is done in HR systems and is reviewed and approved by employee managers. Additional data registration is done in government systems required by law. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix Works Council AO has not entered into an agreement with its employees to set up a European Works Council. According to the Danish rules for works councils, which are set out in the Cooperation Agreement between the Confederation of Danish Employers and the Danish Confederation of Trade Unions (now merged into the Danish Trade Union Confederation), companies with more than 35 employees must establish a works council. AO has therefore set up a Works Council, which meets every two months. The Works Council consists of six management representatives and six employee repre- sentatives, the latter being elected by the employees. Employee representatives are elected from among employees within the Danish parent company, without managerial responsibilities for a term of two years. Minutes of Works Council meetings are made available to Danish employees through AO’s intranet. Workers' representatives UoM DK SWE Percentage of employees in each country with signifi- cant employment (in the EEA) covered by workers' represent- atives % 100% 100% The Works Council ensures mutual information-sharing and dialogue about workplace matters, both actual and potential impacts, so that management and employees can achieve a common understanding, thereby promoting a positive workplace culture and efficient operations. Employees can contact their workers’ repre- sentatives and ask them to bring up issues at the Work Council meetings. Employees who may be particularly vulnerable to impacts and/or who are marginalised will usually contact AO’s HR department regarding special needs – either directly or through their immediate manager. The HR department will strive to find acceptable solutions to any problems. Employee representatives in the Board of Directors AO’s Board of Directors consists of eight members, three of whom are employee representatives elected by the employees for a term of four years. The employee representatives ensure that employees have a direct voice in the top management of the company. The employee representatives are, among other things, involved in identifying and assessing actual and poten- tial impact on AO’s workforce. Thus, AO’s employees can influence decisions that directly affect their work environment, working conditions, setting targets and the company's future development. Approximately six ordinary board meetings are held each year. Employee code of conduct AO’s code of conduct, including guidelines and policies for employees, defines and establishes the expected behaviour in both internal and external situations. As part of their onboarding, all new employees are required to complete a mandatory online course with information about AO’s culture. The e-learning course on ethics and compliance clari- fies expectations regarding employees’ ethical behav- iour and actions. All employees are expected to act in accordance with this code of conduct, respecting AO’s principles and commit- ments regarding health and safety, discrimination, anti-corruption and bribery, environment, data protec- tion, etc. Managers are responsible for ensuring the implementation and adherence to the code of conduct. § Accounting policy Workers’ representatives Data consists of full-time, part-time and temporary employees (students + maternity substitutes), at the end of the reporting period. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix Sick leave and workplace accidents Ensuring a safe and healthy work environment is one of AO's top priorities. Low absence rates and the prevention of workplace accidents are essential for AO employees' well-being and the overall efficiency of the company. AO is continually working on developing preventive measures, which include safety training, ergonomic improvements, health programmes and regular risk assessments. Through systematic follow-up and analysis of the causes of absence and accidents, AO can identify areas for improvement and implement targeted actions. In this way, AO can promote a work environ- ment where safety and health are central, and where all employees thrive and feel secure. Sick leave management AO places a strong focus on sick leave management, with a policy aimed at supporting an early and proac- tive approach to help retain employees who are on sick leave and, to the largest extent possible, support their return to work as quickly as possible. Through the company’s EarlyCare programme, the organisation and/or an employee who is on sick leave or at risk of taking sick leave can contact EarlyCare and speak with Health Guides who can offer treatment assistance. Early intervention can minimise the risk of illness developing into a long-term absence. The employee is provided with a personal Health Guide who closely follows and supports them through consultations and offers additional treatment options if needed. The Health Guide supports the person throughout the entire process. The goal is to help the employee return to work in a safe, quick, and successful manner. In addition, employees have the option to enrol in the company’s health insurance, which gives them quick and professional access to treatment or assessment if they experience discomfort, illness, or injury. This insur- ance also covers the employee's child or children, and employees can opt to extend the insurance to their spouse, partner, or registered partner at a favourable rate. AO conducts regular workplace assessments (APVs), which allow employees to provide feedback on their physical and psychological working conditions. Action plans are developed based on the feedback, enabling ongoing improvements and the implementation of both existing and new safety protocols to protect employees from injury and stress. Health and safety AO has implemented ergonomic workstations and robotic technology in its warehouses to reduce physical strain. In other company functions, ergonomic work- spaces have been introduced to prevent work-related ailments. Workplace accidents AO prioritises employee safety and protection, in part through AO's occupational health and safety committee, which continuously works to prevent accidents by updating and establishing new standards and policies to safeguard employees. The committee actively addresses safety challenges in the workplace, especially in high-risk areas such as logistics and stores. It provides safety briefings to management and conducts regular audits in departments and stores to identify and address potential safety risks. The health and safety committee implements regular safety training for all employees, including refresher courses, to maintain awareness of best practices. Interac- tive workshops and hands-on exercises are held to ensure proper equipment use and risk management. Procedures are updated regularly to keep employees informed and equipped with the necessary knowledge to work safely. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix § Accounting policy Health and safety management system Data consists of full-time, part-time, temporary employees (students + maternity substitutes) and non-employees (substitutes) in storage facilities, end of the reporting period. Health and safety incidents Data consists of full-time, part-time, temporary employees (students + maternity substitutes) and non-employees (substitutes) in storage facilities, end of the reporting period. Incidents are recorded with specific information required for formal registration to the labor and welfare authority Days lost is exclusive non-employees (substitutes) in storage facilities Accidents in the workplace are reported through the health and safety committee, which receives informa- tion about incidents and reports them to the public authorities via a safety management system. AO’s goal is to establish a zero-accident culture, partly through risk assessments of work processes to identify potential hazards and initiate preventive actions. This approach enhances employee awareness, engagement, and accountability, fostering a culture of safe be- haviour. The target for 2025 is to reduce our rate of recordable work-related accidents by 20% compared to 2024, consisting of our own employees and non-em- ployees combined. Health and safety incidents UoM DK SWE 2024 Number of fatalities in own workforce as result of work-related injuries and work-re- lated ill health No. 0 0 0 Number of fatalities as result of work-related injuries and work-related ill health of other workers working on undertaking's sites No. 0 0 0 Number of recordable work-related accidents for own workforce No. 20 0 20 Number of recordable work-related accidents for non-employees No. 4 0 4 Rate of recordable work-related accidents for own workforce Rate 12.3 0,0 12.3 Rate of recordable work-related accidents for non-employees Rate 30.6 0,0 30.6 Number of cases of recordable work-related ill health of employees No. 0 0 Number of days lost to work-related injuries and fatalities from work-related acci- dents, work-related ill health and fatalities from ill health related to employees No. 48 0 48 Health and safety management system UoM 2024 Percentage of people in its own workforce who are covered by health and safety management system based on legal requirements and (or) recognised standards or guidelines % 100% In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix Equal treatment and opportunities for all Skill enhancement and further training AO’s strategy for skill enhancement is an investment in our employees and in the company’s future success and sustainability. Enhancing skills and providing further training and education are crucial for AO to remain competitive and adapt to ever-changing market needs. AO’s employees are central to its success, and the company invests in their professional development to enhance both individual and organisational competencies. AO encour- ages ongoing learning as an integral part of its culture and offers a wide range of educational opportunities. Skill enhancement is considered an opportunity for AO to increase our employees’ skills and knowledge. AO invests in training programmes and courses that allow employees to develop their skills, expand their competencies, and grow professionally. For example, AO offers a course in pipe-laying techniques with the possibility of advancing to a training course on the construction of sewerage systems, specialised IT courses, and continuing education such as a graduate diplomas. Unskilled warehouse workers are offered a skills assessment, enabling them to pursue a training programme in warehouse and terminal operations and thereby become skilled workers. As part of AO’s social responsibility and commitment to the future workforce, AO prioritises hiring trainees across all company functions. Through the company’s trainee programme, AO provides young people with hands-on learning, professional development, and mentorship programmes that help them build the skills and experience needed for a successful career. This initiative is part of AO’s social responsibility and an important step toward supporting the future workforce, while also creating a talent pipeline for the company. AO views it as its duty to contribute to youth employ- ment and development and work actively to foster a supportive learning culture. By participating in the training of young people, AO supports both its own business goals and society’s need for a skilled work- force, creating value for all involved. To prepare managers for their roles and promote AO’s values, managers are offered a company-tailored lead- ership programme at academy level, developed with a global and societal focus, closely following trends and values in leadership and management. Due to the company’s size, many employees advance or change roles within AO over the course of their careers - both horisontally and vertically. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix § Accounting policy Development and training Data consists of full-time, part-time and temporary employees (students + maternity substitutes), at the end of the reporting period. Performance and career development reviews All employee performance and development reviews is registered, allowing tracking of the total of completed, ongoing and planned reviews. Training hours Data is combined from 2 data sources. First source: AO internal education system with mandatory and voluntary training courses. Second source: Manual tracking of external educa- tion and courses. The total hours from both sources is used to calcu- late the average training hours. Development and training UoM Female Male Total Percentage of employees that participated in regular perfor- mance and career development reviews % 18.2% 19.6% 19.2% Average number of training hours per person for employees Avg. 5.0 9.0 7.9 In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix Diversity and Inclusion AO recognises that diversity contributes to creating a dynamic and innovative workplace. Through the company’s ethics and compliance policies, AO actively promotes diversity with a focus on respecting human rights. AO strives to foster an inclusive environment at all levels, attracting and retaining talented employees from diverse backgrounds and cultures. The company offers equal opportunities regardless of ethnicity, race, religion, age, gender, disability, sexual orientation, political views, or social status. In addition, AO has a policy for increasing the underrepresented gender at the company’s other management levels. AO views an inclusive environment as key to achieving long-term success and works continuously to ensure that its workplace reflects these values. Human rights AO complies with and upholds fundamental inter- national human rights standards, including the UN Universal Declaration of Human Rights, the core prin- ciples on human rights as described in the UN Guiding Principles on Business and Human Rights, the EU Convention on Human Rights, and the basic conventions adopted by the International Labour Organization (ILO), which is an agency of the UN dealing with labour issues. AO’s policy for respect for human rights specifically addresses the right to freely associate, organise, and engage in collective bargaining. AO does not tolerate forced labour, child labour, or discrimination. All employees are required to complete a training course about discrimination, part of the full ethics and compli- ance course. AO’s policies do not address trafficking in human beings as AO complies with national and local rights and EU legislation. AO’s policy for respect for human rights and supplier code of conduct, which are part of AO’s broader sustain- ability strategy set out by the ESG Council, apply to all employees and business partners, ensuring that respect for human rights is upheld naturally throughout the company. Discrimination, human rights etc. UoM 2024 Number of incidents of discrimination No. 0 Number of complaints filed through channels for people in own workforce to raise concerns No. 0 Number of complaints filed to National Contact Points for OECD Multinational Enterprises No. 0 Amount of fines, penalties, and compensation for damages as result of incidents of discrimina- tion, including harassment and complaints filed Amount 0 Number of severe human rights issues and incidents connected to own workforce No. 0 Number of severe human rights issues and incidents connected to own workforce that are cases of non respect of UN Guiding Principles and OECD Guidelines for Multinational Enter- prises No. 0 Amount of fines, penalties, and compensation for severe human rights issues and incidents connected to own workforce No. 0 § Accounting policy Discrimination, human rights etc. Data consists of full-time, part-time, temporary employees (students + maternity substitutes) and non-employees (substitutes) in storage facilities, at the end of the reporting period. Data collection is from AO's whistleblower system, formal complaints given to own manager or to HR. All formal complaints are registered regardless of channel. Incidents can only be counted if a formal complaint has been made through the whistle- blower system, through the employees' own manager or through HR. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix Equal treatment AO has developed policies and set clear goals to support diversity in recruitment and career develop- ment. AO strives to ensure a diverse and supportive workplace where equal treatment and opportunities are central to its values. § Accounting policy Workers’ representatives Data consists of full-time, part-time and temporary emplyees (students + maternity substitutes), at the end of the reporting period. § Accounting policy Gender distribution at top management Data consists of members of the Executive Board and the Group Management. Diversity split and number of members is disclosed at the end of the reporting period. Gender distribution at top management UoM Female Male Total Gender distribution in number of employees (head count) at top management level Headcount 3 7 10 Gender distribution in percentage of employees at top manage- ment level % 30.0% 70.0% 100% AO is focused on creating a work environment that promotes respect, continuous professional growth, and engagement for all employees, regardless of background, gender, or personal circumstances. This is key to attracting and retaining talented employees. Pay-gap UoM 2024 Gender-pay gap (male vs female) % 20.4% Remuneration UoM 2024 Annual total remuneration ratio Ratio 23.2 Non-employees UoM 2024 Number of non-employees in own workforce FTE 65 Number of non-employees in own workforce - self-employed people FTE 0 Number of non-employees in own workforce - people provided by undertakings primarily engaged in employ- ment activities FTE 0 Age groups UoM 2024 Distribution of employees (head count) under 30 years old Headcount 182 Distribution of employees (head count) between 30 and 50 years old Headcount 436 Distribution of employees (head count) over 50 years old Headcount 411 The gender pay gap reflects historical sector factors in the industry in which AO operates, where more men histori- cally have pursued careers within the construction sector and make up the majority of the talent pool, which is evident in our leadership levels and throughout the organ- isation. Many of AO’s diversity initiatives aim to balance gender representation in leadership and throughout the organisation and achieve pay equity for equal qualifica- tions and jobs. Although AO practices equal pay for equal work, the overall figures are affected by the gender imbal- ance in the sector. Without these sector-specific impacts, our gender pay data reflects equality. § Accounting policy Full time equivalent (FTE) The total number of hours worked divided by the standard number of hours for a full-time employee. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social S1 Own Workforce Governance Appendix § Accounting policy Pay-gap Data consists of full-time, part-time, temporary employees (students + maternity substitutes), for the whole reporting period. Data used for the calculation is a "full salary package" i.e. salary, bonus, holiday pay, pension, benefits. Calculation is based on the difference of average pay levels between female and male employees, expressed as percentage of the average pay level of male employees (data includes all employees ’ gross hourly pay level). Remuneration ratio Data consists of full-time, part-time, temporary employees (students + maternity substitutes), for the whole reporting period. Calculation is based on the highest paid individual to the median annual total remuneration for all employees (excluding the high- est-paid individual). Data used for the calculation is a "full salary package" i.e. salary, bonus, holiday pay, pension, benefits. Non-employees Data consists of non-employees (substitutes) in storage facilities, at the end of the reporting period. Age groups Data consists of full-time, part-time, temporary employees (students + maternity substitutes), at the end of the reporting period. Employees UoM Female Male Total Number of employees (head count) Headcount 285 744 1,029 Number of employees (FTE) FTE 249 732 981 Permanent employees UoM Female Male Total Number of employees (head count) Headcount 268 701 969 Number of employees (FTE) FTE 232 689 921 Temporary employees UoM Female Male Total Number of employees (head count) Headcount 17 43 60 Number of employees (FTE) FTE 17 43 60 Employees by country UoM Female Male Total Denmark Headcount 274 697 971 Norway Headcount 3 5 8 Sweden Headcount 8 42 50 This table covers S1-6 and SBM-1 § Accounting policy Employees Data consists of full-time, part-time and temporary employees (students + maternity substitutes), at the end of the reporting period. Permanent employees Data consists of full-time and part-time employees, at the end of the reporting period. Temporary employees Data consists of students and maternity substitutes, at the end of the reporting period. Employees by countries Data consists of full-time, part-time and temporary employees (students + maternity substitutes), at the end of the reporting period. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Governance Executive Summary General Environment Social Governance G1 Business Conduct Appendix Governance In brief Strategy Performance Financial statements Sustainability statements Corporate governance Annual Report 2024 Contents Executive Summary General Environment Social Governance G1 Business Conduct Appendix AO is committed to conducting its business responsibly and fairly, with a strong emphasis on partnerships. As a major player in the Danish construction industry, AO’s operations span over 400,000 products sourced from more than 1,000 suppliers, creating both opportunities and potential risks. Ensuring that the company main- tains the highest standards of business conduct and governance is central to AO’s corporate culture, particu- larly in managing the complexities of international business value chains. The company has procedures and systems in place for reporting misconduct. In a large and complex business network, there are inherent risks such as corruption, bribery, harassment, and participation in an informal economy if not properly managed. AO actively promotes a culture of integri- ty and honesty throughout its business, with clear guidelines and regular training on ethical behaviour. This includes stringent anti-corruption policies and a zero-tolerance stance toward unethical conduct. By setting high standards within AO, it is ensured that both employees and business partners adhere to best prac- tices, reducing the risk of improper business practices infiltrating AO’s operations. The AO culture is promoted on the company’s internal e-learning environment. A whistleblower system for both external and internal has been implemented. Without adequate whistle- blower protection, individuals may hesitate to report misconduct due to fear of retaliation. A lack of trust in whistleblower systems can lead to unreported incidents, both internally and across the company’s value chain, increasing the risk of legal violations and reputational harm. AO is committed to safeguarding whistleblowers by implementing robust and anonymous reporting mechanisms. AO ensures that whistleblowers are protected from any negative consequences, thereby fostering a culture of openness and accountability. Extending these practices to AO’s value chain also strengthens its oversight of suppliers and partners, allowing AO to detect and address any potential issues early. Imposing long payment terms on smaller suppliers could potentially destabilise their financial health. AO is committed to fair and responsible supplier relations. AO prioritises timely payments and equitable terms. By maintaining fair payment practices, AO not only supports the sustainability of its suppliers but also preserve its reputation as a trusted and reliable partner. AO enforces strict anti-corruption policies and regularly audits its business practices to ensure compliance with all relevant laws and ethical standards. Employees and part- ners are trained on recognising and preventing corrupt practices, and AO’s systems are designed to prevent unethical behaviour at all levels of the organisation. By promoting transparency and ensuring that all decisions are free from undue influence, AO protects both its repu- tation and the integrity of its business operations. AO commits to a culture of honesty, transparency, and accountability to reduce risks and enhance its relation- ships with stakeholders, from suppliers to customers and employees. Effective governance leads to long-term business sustainability. By ensuring ethical business conduct, timely supplier payments, and strong whistleblower protection, AO creates a more resilient and trustworthy organisation. These measures also position AO as a preferred partner in the market, attracting like-minded businesses and customers who value integrity and responsible corporate practices. AO’s approach to business conduct and governance is centred on maintaining the highest ethical standards, fostering transparency, and protecting its business relationships. By mitigating risks related to corruption, supplier relations, and whistleblower protection, AO G1 Business Conduct Impact, risks and opportunities In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance G1 Business Conduct Appendix upholds its reputation as a fair and responsible player in the industry, while seizing opportunities to build stronger, more sustainable partnerships. Maintaining clear communication about the compa- ny’s business conduct and corporate culture is key to AO’s success. AO’s policies not only provide a strong foundation for how AO operates but also create a tangible set of guidelines for AO’s employees to follow. A well-defined code of conduct, backed by mechanisms for reporting and investigating concerns, is crucial in fostering transparency and accountability throughout the organisation. AO places emphasis on keeping its policies relevant and up to date, ensuring they remain aligned with international standards, including UN conventions. AO’s corporate culture is built on integrity and responsibility, and it is vital that all employees understand how AO conducts business and the expectations surrounding ethical behaviour. By providing clear guidance on these policies, AO helps employees navigate challenges and contribute to maintaining AO's reputation as an honest and responsible business. In addition to other mandatory courses on, for example, corruption and bribery, environmental policies, etc, all new employees are required to complete a training course on business conduct in AO. The training courses are expected to be completed during the beginning of the employment. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance G1 Business Conduct Appendix Business practice and ethics At AO, ethical business practices are at the heart of how the company operates. To ensure that AO’s business conduct aligns with its values and those of its partners, AO has developed a Supplier Code of Conduct. This Code is a key part of the commercial agreements between AO and its suppliers, serving as a framework to align expec- tations regarding business practices and ethics. The Supplier Code of Conduct outlines essential provisions for compliance with internationally recog- nised standards on workers’ rights, human rights, environmental protection, and the prevention of bribery and corruption. AO holds both its suppliers and their subcontractors accountable to these high standards. In 2024, AO recorded no breaches or instances of non-compliance with its Supplier Code of Conduct, reflecting the commitment of our partners to uphold these values. The Supplier Code of Conduct has been approved by the Board of Directors and can be accessed here: The Supplier Code of Conduct 2024 https://ao.dk/globalassets/download/regnskabsdata /2024/2024-supplier-code-of-conduct.pdf In addition to these provisions, while no separate goals or activities were completed specifically in 2024 regarding workers’ rights, human rights, or anti-corrup- tion, AO remains observant. AO continues to monitor and assess its practices to identify areas for further action as needed. In the fall of 2023, AO initiated an ESG Supplier Survey to screen all its suppliers. This screening is part of AO’s ongoing effort to strengthen risk management and enhance its due diligence processes, ensuring that sustainability and ethical standards are integrated into every aspect of its operations. AO believes that strong partnerships with our customers and suppliers provide the foundation for focusing on sustainable solutions across its entire value chain. At AO, the customer is paramount, and this commitment extends to offering products that meet high environmental standards. In 2024, AO increased the percentage of products with ecolabels or prod- ucts that have undergone life cycle analysis from our suppliers. This allows AO to support its customers in making more sustainable choices by prioritising certi- fied products and engaging with them on these matters. Looking ahead, AO aims to pass on sustainability awareness from its suppliers to its customers through information sharing and expertise training for its staff. AO also seeks to inspire and encourage its partners to adopt sustainable solutions. AO will continue to advo- cate for sustainability through industry associations, employers’ associations, and in collaboration with public authorities, contributing to a more sustainable future in the construction industry. Tax policy Taxes play an important role in society and the devel- opment of the countries in which AO operates. AO contributes to this by taking on its share of social responsibility regarding common welfare and sustaina- bility through tax. AO pursues a responsible and transparent tax practice and does not support tax evasion, contribute to tax speculation, or misuse of tax laws. AO complies with applicable tax laws and pays the correct taxes and duties at the appropriate time in the countries in which AO operates. AO provides full transparency and openness to both tax authorities and the company's other stakeholders. The company has zero tolerance for tax evasion or abuse. Corporate culture In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance G1 Business Conduct Appendix It must always be possible to explain and defend tax dispositions. AO expects its customers, suppliers, and other partners to have the same view on tax payment as the company. AO’s tax policy can be viewed here: Tax Policy 2024 https://ao.dk/globalassets/download/regnskabsdata /2024/2024-tax-policy-_final.v2.pdf Payment Practices AO is committed to fair and transparent payment prac- tices for all suppliers, regardless of their size including SMEs. AO ensures that all suppliers, whether SMEs or large companiesand across all categories, are treated equally with respect to payment terms, maintaining consistent conditions. AO’s payment system is struc- § Accounting Policy Standard payment terms The Groups standard payment terms are "Current month plus 60 days." unless other payment terms are agreed with the supplier. Payment practices Payments to suppliers are made twice a week in accordance with agreed payment terms. tured to process payments twice a week, with devia- tions from this schedule occurring only in rare cases. While AO does not disclose specific details of its standard payment terms, AO upholds equal treatment in all supplier transactions. On average, AO can calcu- late the number of days before payments are processed through its system, further ensuring timely and reliable payments to its partners. This approach strengthens AO’s relationships with suppliers and reinforces its commitment to responsible business practices. Payment practices UoM 2024 Average number of days to pay invoice Days 1.5 Percentage of payments aligned with standard payment terms % 94.9% Number of outstanding legal proceedings for late payments No. 0 AO accept reverse factoring as a payment option. This allows the supplier to be paid within a few days from delivery. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance G1 Business Conduct Appendix AO has chosen to establish a whistleblower scheme that allows its employees as well as external stake- holders to report serious violations or suspicion thereof in a confidential matter. Employees are informed about the whistleblower system and where to access it. Other stakeholders may access the system through the Group’s websites. Information about AO’s policy on and usage of the whistleblower system is available on AO’s intranet and the Group’s websites. No formal training is conducted or required to use the reporting system. The scheme is administered by an independent third party to secure the anonymity and confidentiality of the reporting person. Incidents will be managed by the independent third party and forwarded to AO where they will be processed and investigated in accordance with AO’s whistleblower procedure which is available on AO’s intranet and various websites. Zero whistleblower reports have been received in 2024. Protection of whistleblowers Once a year, the Board of Directors will assess whether the scheme is working as intended. In 2024, it was decided to extend the scheme to include external stakeholders. The whistleblower system is an integral part of AO to prevent, detect and address allegations and incidents of corruption and bribery. AO’s whistleblower policy can be viewed here: Whistleblower Policy 2024 https://ao.dk/om-ao/whistleblower In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance G1 Business Conduct Appendix 82% of our purchases originates from Europe 17% Asia 1% Other countries Purchase patterns of our purchases originates from Europe 82% AO complies with applicable legislation and interna- tional conventions on corporate governance, including workers’ rights, human rights, environment, bribery, and corruption, in the countries in which AO operates. AO maintains a zero-tolerance approach to violations of these conditions or breaches of rights. Rules on anti-corruption and bribery are covered by the company’s own rules and ethical guidelines. In the company’s view, the countries in which AO does busi- ness are all well-regulated in respect of these areas. AO is aware that its dealings with suppliers pose the most significant risk of infringement or violation in these areas, primarily due to direct and indirect purchasing from countries where local legislation is not followed or enforced to the same degree. AO regularly monitors purchasing patterns and the origin of its goods to ascertain the risk of non-compli- ance with AO’s Supplier Code of Conduct. Given the current distribution of its purchases, AO is of the opinion that the company is only at a limited risk of being indirectly involved in violations of workers’ rights, human rights and rules on anti-corruption and bribery, given that AO operates only in well-regulated countries and that 82% of the company’s purchases originate (2023: 83%) from Europe. Corruption and bribery § Accounting policy Purchase origins Purchase pattern is calcu- lated as: Total volume of purchase of goods deter- mined by country of origin as informed by suppliers. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance G1 Business Conduct Appendix Incidents of corruption or bribery UoM 2024 Number of convictions for violation of anti-corrup- tion and anti- bribery laws No. 0 Amount of fines for violation of anti-corruption and anti- bribery laws No. 0 Any actions taken to address breaches in proce- dures and standards of anti-corruption and anti-bribery. No. 0 In 2024, AO decided to implement a mandatory online corruption and bribery course for all employees. The purpose is to give every employee the necessary know- ledge on how to act in difficult situations or who to ask for guidance if there is any confusion or uncertainty. It is the target that all employees undergo the training within 3 months after joining AO. No specific process has been established for reporting on results from investigations of incidents. Prevention and detection of corruption and bribery UoM 2024 The percentage of functions-at-risk covered by training programmes (Corruption and Bribery) - Passed % 92.0% Not started / In progress % 8.0% AO takes business conduct seriously and does not tolerate violations in relation to corruption and bribery. § Accounting policy Incidents of corruption or bribery Number of incidents is based on reported inci- dents that has led to conviction for a violation, the monetary amount for violation fines and if any actions was taken. If any actions are necessary, further details will be presented. Functions-at-risk Functions-at-risk consists of purchasing depart- ment, sales management & IT management. Completion rate is stated as of the end of the period. In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Appendix PHOTO Executive Summary General Environment Social Governance Appendix Appendix In brief Strategy Performance Financial statements Sustainability statements Corporate governance Annual Report 2024 Contents Cross-cutting standards ESRS 2 General disclosures Section/ report Page BP-1 General basis for preparation of sustainability statements SUS 50 BP-2 Disclosures in relation to specific circumstances SUS 50-51 Datapoints that derive from other EU legislation SUS 112-115 GOV-1 The role of the administrative, management and supervisory bodies MR 31 GOV-2 Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies SUS 53-54 GOV-3 Integration of sustainability-related performance in incentive schemes SUS 54 GOV-4 Statement on sustainability due diligence SUS 111 GOV-5 Risk management and internal controls over sustainability reporting SUS 54 SBM-1 Strategy, business model and value chain FS 13 SBM-2 Interests and views of stakeholders SUS 55 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model SUS 56-59 IRO-1 Description of the process to identify and assess material impacts, risks and opportunities SUS 60-62 IRO-2 Disclosure requirements in ESRS covered by the undertaking’s sustainability statement SUS 109-111 Environmental standards ESRS E1 Climate change Section/ report Page ESRS 2 GOV-3 Integration of sustainability-related performance in incentive schemes SUS 54 E1-1 Transition plan for climate change mitigation SUS 66-68 ESRS 2 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model SUS 57 ESRS 2 IRO-1 Description of the processes to identify and assess material climate-related impacts, risks and opportunities SUS 64-65 E1-2 Disclosure Requirement E1-2 – Policies related to climate change mitigation and adaptation SUS 67-68 E1-3 Disclosure Requirement E1-3 – Actions and resources in relation to climate change policies SUS 67 E1-4 Targets related to climate change mitigation and adaptation SUS 67 E1-5 Energy consumption and mix SUS 69 E1-6 Gross Scopes 1, 2, 3 and Total GHG emissions SUS 70 E1-7 GHG removals and GHG mitigation projects financed through carbon credits - - E1-8 Internal carbon pricing - - E1-9 Anticipated financial effects from material physical and transition risks and potential - - Executive Summary General Environment Social Governance Appendix In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Social standards ESRS S1 Own workforce Page ESRS 2 SBM-2 Interests and views of stakeholders SUS 55, 88 ESRS 2 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model SUS 58, 87-88 S1-1 Policies related to own workforce SUS 88 S1-2 Processes for engaging with own workforce and workers’ representatives about impacts SUS 91-92 S1-3 Processes to remediate negative impacts and channels for own workforce to raise concerns SUS 90 S1-4 Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions SUS 88 S1-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities SUS 88 S1-6 Characteristics of the undertaking’s employees SUS 98-99 S1-7 Characteristics of non-employees in the undertaking’s own workforce SUS 98 S1-8 Collective bargaining coverage and social dialogue SUS 90 S1-9 Diversity metrics SUS 97-99 S1-10 Adequate wages SUS 90 S1-11 Social protection SUS 93-94 S1-12 Persons with disabilities - - S1-13 Training and skills development metrics SUS 96 S1-14 Health and safety metrics SUS 94 S1-15 Work-life balance metrics SUS 91 S1-16 Remuneration metrics (pay gap and total remuneration) SUS 98 S1-17 Incidents, complaints and severe human rights impacts SUS 97 Environmental standards ESRS E2 Pollution Section/ report Page ESRS 2 IRO-1 Description of the processes to identify and assess material pollution-related impacts, risks and opportunities SUS 56, 74 E2-1 Policies related to pollution SUS 74-75 E2-2 Actions and resources related to pollution SUS 75 E2-3 Targets related to pollution SUS 75 E2-4 Pollution of air, water and soil - - E2-5 Substances of concern and substances of very high concern SUS 75-76 E2-6 Anticipated financial effects from pollution-related impacts, risks and opportunities - - Environmental standards ESRS E5 Resource use and circular economy Section/ report Page ESRS 2 IRO-1 Description of the processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities SUS 57, 77 E5-1 Policies related to resource use and circular economy SUS 77 E5-2 Actions and resources related to resource use and circular economy SUS 78 E5-3 Targets related to resource use and circular economy SUS 78 E5-4 Resource inflows SUS 78 E5-5 Resource outflows SUS 78-79 E5-6 Anticipated financial effects from resource use and circular economy-related impacts, risks and opportunities - - Executive Summary General Environment Social Governance Appendix In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Executive Summary General Environment Social Governance Appendix Governance standards ESRS G1 Business conduct Section/ report Page ESRS 2 GOV-1 The role of the administrative, supervisory and management bodies MR 31 ESRS 2 IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities SUS 61-62 G1-1 Business conduct policies and corporate culture SUS 103 G1-2 Management of relationships with suppliers - - G1-3 Prevention and detection of corruption and bribery SUS 106-107 G1-4 Incidents of corruption or bribery SUS 107 G1-5 Political influence and lobbying activities - - G1-6 Payment practices SUS 104 Statement on sustainability due diligence Core elements of due diligence Section/ report Page 1 Embedding due diligence in governance,strategy and business model General 50-54 2 Engaging with affected stakeholders in all key steps of the due diligence General 50, 52-55, 61 3 Identifying and assessing adverse impacts General Environment Social Governance 56-62, 66, 74, 77, 87, 101 4 Taking actions to address those adverse impacts Environment 67, 78 5 Tracking the effectiveness of these efforts and communicating Environment Social 67, 75, 78, 88 In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Executive Summary General Environment Social Governance Appendix EU legislation data points Disclosure requirement Datapoint Sustainability statements SFDR reference Pillar 3 reference Benchmark regulation reference EU Climate Law reference Section Page ESRS 2 GOV-1 21 (d) Board's gender diversity MR 33-35 ESRS 2 GOV-1 21 (e) Percentage of board members who are independent MR 33-35 ESRS 2 GOV-4 30 Statement on due diligence SUS 111 ESRS 2 SBM-1 40 (d) i Involvement in activities related to fossil fuel activities Not relevant - ESRS 2 SBM-1 40 (d) ii Involvement in activities related to chemical production Not relevant - ESRS 2 SBM-1 40 (d) iii Involvement in activities related to controversial weapons Not relevant - ESRS 2 SBM-1 40 (d) iv Involvement in activities related to cultivation and production of tobacco Not relevant - ESRS E1-1 14 Transition plan to reach climate neutrality by 2050 SUS 66-67 ESRS E1-1 16 (g) Undertakings excluded from Paris-aligned Benchmarks Not relevant - ESRS E1-4 34 GHG emission reduction targets SUS 69-70 ESRS E1-5 38 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) Not relevant - ESRS E1-5 37 Energy consumption and mix SUS 69 ESRS E1-5 40-43 Energy intensity associated with activities in high climate impact sectors Not relevant - ESRS E1-6 44 Gross Scope 1, 2, 3 and Total GHG emissions SUS 70 ESRS E1-6 53-55 Gross GHG emissions intensity SUS 70 In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Executive Summary General Environment Social Governance Appendix Disclosure requirement Datapoint Sustainability statements SFDR reference Pillar 3 reference Benchmark regulation reference EU Climate Law reference Section Page ESRS E1-7 56 GHG removals and carbon credits Not material - ESRS E1-9 66 Exposure of the benchmark portfolio to climate-related physical risks Not material - ESRS E1-9 66 (a); 66(c) Disaggregation of monetary amounts by acute and chronic physical risk; Location of significant assets at material physical risk Not material - ESRS E1-9 67 (c) Breakdown of the carrying value of its real estate assets by energy-effi- ciency classes Not material - ESRS E1-9 69 Degree of exposure of the portfolio to climate-related opportunities Not material - ESRS E2-4 28 Amount of each pollutant listed in Annex II of the E-PRTR Regulation emitted to air, water and soil Not material - ESRS E3-1 9 Water and marine resources Not material - ESRS E3-1 13 Dedicated policy Not material - ESRS E3-1 14 Sustainable oceans and seas Not material - ESRS E3-4 28 (c) Total water recycled and reused Not material - ESRS E3-4 29 Total water consumption in m 3 per net revenue on own operations Not material - ESRS 2 SBM-3 - E4 16 (a) i Not material - ESRS 2 SBM-3 - E4 16 (b) Not material - ESRS 2 SBM-3 - E4 16 (c) Not material - ESRS E4-2 24 (b) Sustainable land / agriculture practices or policies Not material - ESRS E4-2 24 (c) Sustainable oceans / seas practices or policies Not material - ESRS E4-2 24 (d) Policies to address deforestation Not material - ESRS E5-5 37 (d) Non-recycled waste SUS 79 EU legislation data points – continued In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Disclosure requirement Datapoint Sustainability statements SFDR reference Pillar 3 reference Benchmark regulation reference EU Climate Law reference Section Page ESRS E5-5 39 Hazardous waste and radioactive waste SUS 79 ESRS 2 SBM-3 - S1 14 (f) Risk of incidents of forced labour Not relevant - ESRS 2 SBM-3 - S1 14 (g) Risk of incidents of child labour Not relevant - ESRS S1-1 20 Human rights policy commitments SUS 97 ESRS S1-1 21 Due diligence policies on issues addressed by the fundamental Interna- tional Labor Organisation Conventions 1 to 8 87-88 ESRS S1-1 22 Processes and measures for preventing trafficking in human beings SUS 97 ESRS S1-1 23 Workplace accident prevention policy or management system SUS 87, 93-94 ESRS S1-3 32 (c) Grievance/complaints handling mechanisms SUS 93-94 ESRS S1-14 88 (b) and (c) Number of fatalities and number and rate of work-related accidents SUS 94 ESRS S1-14 88 (e) Number of days lost to injuries, accidents, fatalities or illness SUS 94 ESRS S1-16 97 (a) Unadjusted gender pay gap SUS 98 ESRS S1-16 97 (b) Excessive CEO pay ratio SUS 98 ESRS S1-17 103 (a) Incidents of discrimination SUS 97 ESRS S1-17 104 (a) Non-respect of UNGPs on Business and Human Rights and OECD Not relevant - ESRS 2 SBM-3 - S2 11 (b) Significant risk of child labour or forced labour in the value chain Not material - ESRS S2-1 17 Human rights policy commitments Not material - ESRS S2-1 18 Policies related to value chain workers Not material - EU legislation data points – continued In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Contents Executive Summary General Environment Social Governance Appendix Disclosure requirement Datapoint Sustainability statements SFDR reference Pillar 3 reference Benchmark regulation reference EU Climate Law reference Section Page ESRS S2-1 19 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines Not material - ESRS S2-1 19 Due diligence policies on issues addressed by the fundamental Interna- tional Labor Organisation Conventions 1 to 8 Not material - ESRS S2-4 36 Human rights issues and incidents connected to its upstream and downstream value chain Not material - ESRS S3-1 16 Human rights policy commitments Not material - ESRS S3-1 17 Non-respect of UNGPs on Business and Human Rights, ILO principles or and OECD guidelines Not material - ESRS S3-4 36 Human rights issues and incidents Not material - ESRS S4-1 16 Policies related to consumers and end-users Not material - ESRS S4-1 17 Non-respect of UNGPs on Business and Human Rights and OECD guidelines Not material - ESRS S4-4 35 Human rights issues and incidents Not material - ESRS G1-1 §10 (b) United Nations Convention against Corruption Not material - ESRS G1-1 §10 (d) Protection of whistle- blowers SUS 105 ESRS G1-4 §24 (a) Fines for violation of anti-corruption and anti-bribery laws SUS 107 ESRS G1-4 §24 (b) Standards of anti- corruption and anti-bribery SUS 106-107 EU legislation data points – continued In brief Performance Corporate governance Sustainability statements Strategy Financial statements Annual Report 2024 Financial statements 118 Consolidated financial statements 170 Parent company financial statements 200 Statements Annual Report 2024 Consolidated financial statements Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Parent company financial statements Primary statements Income statement Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes 1 Basis of preparation 1.1 Accounting policies 1.2 Significant estimated uncertainties and assumptions 2 Income statement 2.1 Segment information 2.2 Cost of sales 2.3 Other operating income 2.4 External expenses 2.5 Staff costs 2.6 Depreciation and amortisation 2.7 Tax on profit or loss for the year 3 Invested Capital 3.1 Intangible assets 3.2 Property, plant and equipment 3.3 Right-of-use assets and lease liabilities 3.4 Inventories 3.5 Trade receivables 3.6 Earnings per share 3.7 Corporation tax receivable/payable 3.8 Deferred tax 3.9 Other payables 4 Capital Structure and financing 4.1 Equity 4.2 Financing activities 4.3 Financial risks 4.4 Financial income 4.5 Financial expenses 5 Other notes 5.1 Business combinations 5.2 Contingent liabilities, security, etc. 5.3 Share based remuneration 5.4 Related parties 5.5 Subsequent events 5.6 New accounting regulation Consolidated financial statements Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Parent company financial statements Income statement For 1 January – 31 December DKK millions Note 2024 2023 Revenue 2.1 5,429.3 5,261.0 Cost of sales 2.2 (4,179.4) (4,028.7) Gross profit 1,249.9 1,232.3 Other operating income 2.3 16.4 2.0 Gross margin 1,266.3 1,234.3 External expenses 2.4 (331.1) (310.7) Staff costs 2.5 (569.2) (518.3) Earnings before interest, taxes, depreciation and amortisation (EBITDA) 366.0 405.3 Depreciation and amortisation 2.6 (119.9) (113.1) Operating profit or loss (EBIT) 246.1 292.2 Financial income 4.4 12.3 3.3 Financial expenses 4.5 (48.3) (33.7) Profit or loss before tax (EBT) 210.1 261.8 Tax on profit or loss for the year 2.7 (46.7) (55.7) Net profit or loss for the year 163.4 206.1 Earnings per share 3.6 Earnings per share (EPS) 6.0 7.6 Diluted earnings per share (EPS-D) 6.0 7.6 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Parent company financial statements Statement of comprehensive income For 1 January – 31 December DKK millions Note 2024 2023 Other comprehensive income Net profit or loss for the year 163.4 206.1 Items which will be reclassified to the income statement Foreign currency translation adjustment relating to foreign entities (4.1) 1.0 Tax on other comprehensive income 0 0 Other comprehensive income after tax (4.1) 1.0 Total comprehensive income 159.4 207.1 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Parent company financial statements Balance sheet as at 31 December Assets DKK millions Note 2024 2023 Non-current assets Intangible assets 3.1 Goodwill 757.5 508.5 Intellectual property rights 63.9 44.6 Software 106.6 82.9 928.0 636.1 Property, plant and equipment 3.2 Land and buildings 941.9 832.3 Leasehold improvements 15.2 15.5 Fixtures and operating equipment 254.7 222.0 Right-of-use assets 3.3 91.1 99.8 1,302.9 1,169.6 Other non-current assets Other investments 0.2 0.2 0.2 0.2 Total non-current assets 2,231.1 1,805.9 DKK millions Note 2024 2023 Current assets Inventories 2.2, 3.4 814.5 757.4 Trade receivables 3.5 608.2 542.8 Joint tax contribution 16.4 0 Other receivables 36.5 20.6 Prepayments and accrued income 25.3 26.2 Cash and short-term deposits 55.4 89.5 Total current assets 1,556.3 1,436.5 Total assets 3,787.4 3,242.4 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Parent company financial statements Balance sheet as at 31 December Equity and liabilities DKK millions Note 2024 2023 Equity 4.1 Share capital 28.0 28.0 Reserve for foreign currency translation adjustments (11.7) (7.6) Retained earnings 1,436.0 1,349.9 Proposed dividend for the financial year 84.0 105.0 Total equity 1,536.3 1,475.3 Non-current liabilities Deferred tax 3.8 83.2 70.1 Credit institutions 4.2 643.6 398.7 Lease liabilities 3.3, 4.2 93.7 66.4 Other non-current liabilities 11.1 0 Total non-current liabilities 831.6 535.2 DKK millions Note 2024 2023 Current liabilities Credit institutions 4.2 278.9 109.3 Lease liabilities 3.3, 4.2 31.8 36.8 Trade payables 4.2, 4.3 1,036.8 1,006.6 Joint tax contribution 0 8.4 Corporation tax payable 3.7 8.2 3.1 Provisions for liabilities 3.9 0.5 0.5 Other payables 3.9 63.3 67.2 Total current liabilities 1,419.5 1,231.9 Total liabilities 2,251.1 1,767.1 Total equity and liabilities 3,787.4 3,242.4 Segment information 2.1 Contingent liabilities, security, etc. 5.2 Notes without reference 5.3-5.6 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Parent company financial statements Cash flow statement DKK millions Note 2024 2023 Cash flow from operating activities Operating profit or loss (EBIT) 246.1 292.2 Depreciation and amortisation 2.6 119.9 113.1 Other non-cash operating items, net 3.5 3.4 Cash flow from operations before change in working capital 369.5 408.7 Change in inventories (2.4) 99.7 Change in receivables (65.0) 84.6 Change in trade payables and other current payables (11.7) (191.0) Change in working capital (79.1) (6.7) Cash flow from operations 290.4 402.0 Financial income received 12.3 3.3 Financial expenses paid (48.3) (33.7) Corporation tax paid (55.2) (25.2) Cash flow from operating activities 199.2 346.4 DKK millions Note 2024 2023 Cash flow from investing activities Purchase of intangible assets (44.1) (33.9) Purchase of property, plant and equipment (116.2) (94.8) Sale of other non-current assets 0 0 Acquisition of enterprise 5.1 (305.1) (1.5) Cash flow from investing activities (465.4) (130.2) Cash flow from financing activities Change of debt to credit institutions 16.0 (76.4) Raising of loans from credit institutions 359.7 92.7 Repayment of lease liabilities (41.7) (35.3) Dividends paid (101.9) (142.7) Cash flow from financing activities 232.1 (161.7) Cashflow for the year (34.1) 54.5 Cash and short-term deposits at beginning of year 89.5 35.0 Cash and short-term deposits at end of year 55.4 89.5 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Parent company financial statements Consolidated statement of changes in equity DKK millions Share capital Foreign currency translation adjustment Proposed dividend for the year Retained earnings Total equity Equity at 1 January 2024 28.0 (7.6) 105.0 1,349.9 1,475.3 Net profit for the year 0 0 84.0 79.4 163.4 Foreign currency translation adjustment 0 (4.1) 0 0 (4.1) Total comprehensive income 0 (4.1) 84.0 79.4 159.4 Dividend distribution 0 0 (101.9) 0 (101.9) Dividend, treasury shares 0 0 (3.1) 3.1 0 Sharebased remuneration 0 0 0 3.5 3.5 Total transactions with owners 0 0 (105.0) 6.6 (98.4) Equity at 31 December 2024 28.0 (11.7) 84.0 1,436.0 1,536.3 Equity at 1 January 2023 28.0 (8.6) 147.0 1,241.1 1,407.5 Net profit for the year 0 0 105.0 101.1 206.1 Foreign currency translation adjustment 0 1.0 0 0 1.0 Total comprehensive income 0 1.0 105.0 101.1 207.1 Dividend distribution 0 0 (142.7) 0 (142.7) Dividend, treasury shares 0 0 (4.3) 4.3 0 Sharebased remuneration 0 0 0 3.4 3.4 Total transactions with owners 0 0 (147.0) 7.7 (139.3) Equity at 31 December 2023 28.0 (7.6) 105.0 1,349.9 1,475.3 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Basis of preparation Section 1 1.1 Accounting policies 1.2 Significant estimated uncertainties and judgements Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 1 1.1 Accounting policies Brødrene A & O Johansen A/S is a limited company domi- ciled in Denmark. The financial part of the annual report for the period 1 January to 31 December 2024 comprises both the consolidated financial statements of Brødrene A & O Johansen A/S and its subsidiaries (the Group) and separate annual financial statements for the parent company. The consolidated financial statements of Brødrene A & O Johansen A/S for 2024 are presented in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional disclosure requirements in the Danish Financial Statements Act. On 27 February 2025, the Board of Directors and the Exec- utive Board discussed and approved the annual report for 2023 for Brødrene A & O Johansen A/S. The annual report will be presented to the shareholders of Brødrene A & O Johansen A/S for approval at the annual general meeting on 21 March 2025. Basis of preparation The annual report is presented in Danish kroner, rounded to the nearest DKK 1,000,000. In previuous years amounts were rounded to the nearest DKK 1,000 so comparison figures have been restated. The annual report has been prepared in accordance with the historical cost principle except financial instruments presented at fair value. The accounting policies as described below have been applied consistently throughout the financial year and to the comparative figures. For standards implemented prospectively, the comparative figures will not be restated. Changes in accounting policies Effective as of 1 January 2024, Brødrene A & O Johansen A/S has implemented: · Classification of Liabilities as Current or Non-current and Non-current liabilities with covenants – Amendments to IAS1; · Lease Liability in a Sale and Leaseback – Amendments to IFRS 16; and · Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7 The changed standards have had no effect on recognition and measurement in the annual report. iXBRL reporting The annual report is published in the European Single Electronic Format (ESEF), xHTML, that can be opened by all standard web browsers. The annual report has been tagged using inline eXtensible Business Reporting Language (iXBRL) in accordance with the ESEF taxonomy. The annual report has been submitted in a XHTML document along with specific technical files all included in the file 5299004B6ZEGVCR9ZR75-2024-12-31- en.zip. Consolidated financial statements The consolidated financial statements consist of the parent company Brødrene A & O Johansen A/S and subsidiaries in which Brødrene A & O Johansen A/S has a controlling influence. The Group has a controlling influence over a company if the Group is exposed or entitled to variable returns from its involvement in the company and has the ability to influence these returns through its control over the company. In assessing whether the Group exercises a controlling influence, account is taken of de facto control and potential voting rights, which are real and have substance at the balance sheet date. The consolidated financial statements have been prepared as a summary of the parent company’s and the individual subsidiaries’ financial statements, prepared according to the Group’s accounting policies, with intra-group income In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 1 and expenses, shareholdings, internal balances and divi- dends, as well as realised and unrealised gains on transac- tions between the consolidated companies, all eliminated. Business combinations Newly acquired or newly established companies are recognised in the consolidated financial statements as of the date of acquisition. Companies sold or liquidated are recognised in the consolidated financial statements as of the date of disposal. Comparative figures are not corrected for newly acquired companies. Discontinued activities are presented separately. The acquisition method is applied when the Group acquires control over the newly acquired company. The acquired companies’ identifiable assets, liabilities, and contingent liabilities are measured at fair value at the acquisition date. Identifiable intangible assets are recognised if they can be segregated or arise from a contractual right. Deferred tax is recognised on the revaluations made. The acquisition date is the point at which control is actually gained over the acquired company. Positive differences (goodwill) between the purchase price and the fair value of acquired identifiable assets, and the liabilities and contingent liabilities, are recognised as goodwill under intangible assets. Goodwill is not amortised but is tested for impairment at least annually. The first impairment test is performed before the end of the year of acquisition. Upon acquisition, goodwill is allocated to cash-generating units, which subsequently form the basis for impairment testing. Negative differences (negative goodwill) are recog- nised in profit/(loss) for the year as at the acquisition date. The purchase price for a company consists of the fair value of the agreed price. If parts of the purchase price are contingent on future events, this part of the price is recog- nised at fair value as at the acquisition date and is classi- fied as either a financial liability or equity according to its content. A contingent purchase price, which is classified as a financial liability, is regularly remeasured at fair value and adjusted directly in the income statement. Costs attributable to business combinations are recognised in profit/(loss) for the year when incurred. If, at the time of acquisition, there is uncertainty about the measurement of the acquired identifiable assets, liabilities, and contingent liabilities, initial recognition takes place on the basis of preliminarily calculated fair values. If subse- quently it turns out that identifiable assets, liabilities, and contingent liabilities had a different fair value at the time of acquisition than first assumed, goodwill is adjusted for up to 12 months after the acquisition. The effect of the adjust- ments is recognised in opening equity and the comparative figures are adjusted. Gains or losses on the disposal or liquidation of subsidi- aries are calculated as the difference between the sales price or the settlement amount, and the carrying amount of net assets including goodwill at the time of sale and costs of the sale or liquidation. Foreign currency translation A functional currency is set for each of the reporting companies in the Group. The functional currency is the currency used in the primary economic environment in which each reporting company operates. Transactions in currencies other than the functional currency are foreign currency transactions. The functional currency of the parent company is DKK. Foreign currency transactions are initially translated into the functional currency at the exchange rate on the trans- action date. Receivables, payables, and other monetary items denom- inated in foreign currencies are translated into the func- tional currency at the exchange rate at the balance sheet date. The difference between the exchange rate at the balance sheet date and the exchange rate at the time of the occurrence or recognition of the receivable or payable in the 1.1 Accounting policies (continued) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 1 latest annual report is recognised in the income statement under financial items. When recognised in the consolidated financial statements of companies with a functional currency other than Danish kroner, the income statements are translated at the exchange rate on the transaction date, and the balance sheet items are translated at the exchange rates at the balance sheet date. The average rate for the individual month in question is used for the exchange rate on the transaction date to the extent that this does not give a significantly different picture. Exchange rate differences arising from the translation of the equity of these companies at the beginning of the year at the exchange rates at the balance sheet date and when translating income statements from average exchange rates to the exchange rates at the balance sheet date are recog- nised in other comprehensive income on a separate provi- sion for exchange rate adjustments under equity. Exchange rate adjustments of outstanding balances which are considered part of the total net investment in compa- nies with a functional currency other than Danish kroner are recognised in the consolidated financial statements in other comprehensive income on a separate provision for exchange rate adjustments under equity. Description of accounting policies in notes Descriptions of accounting policies in the notes form part of the overall description of accounting policies. These descriptions are found in the following notes: 2.1 Segment information 2.2 Cost of sales 2.4 External expenses 2.5 Staff costs 4.4 Financial income 4.5 Financial expenses 2.7 Tax on profit or loss for the year 3.1 Intangible assets 3.2 Property, plant and equipment 3.3 Right-of-use assets and lease liabilities 3.4 Inventories 3.5 Trade receivables 3.7 Corporation tax receivable/payable 3.8 Deferred tax 4.2 Financing activities 4.3 Financial risks Accounting policy Prepayments Prepayments recognised under assets consist of costs paid for subsequent financial years and are measured at cost price. Equity Dividend Proposed dividend is recognised as a liability at the time of adoption at the annual general meeting. Dividend that is expected to be paid for the year is shown as a separate item under equity. Treasury shares Acquisition and disposal amounts and dividends for treasury shares are recognised directly in retained earnings under equity. Gains and losses on sales are thus not recog- nised in the income statement. Proceeds from the sale of treasury shares in connection with the exercise of share options are recognised directly in equity. Reserve for foreign currency translation adjustments The reserve for foreign currency translation adjustments consists of exchange rate differences arising on translation of the financial statements of foreign companies from their functional currency to DKK. 1.1 Accounting policies (continued) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 1 Accruals and deferred income Accrued expenses recognised under liabilities consist of deferred income and are measured at their cost price. Cash flow statement The cash flow statement shows cash flows from operating, investing, and financing activities for the year, the change in cash and cash equivalents for the year, and cash and cash equivalents at the beginning and end of the year. The liquidity effect of business acquisitions and sales is shown separately under cash flow from investing activities. Cash flow from acquired companies is recognised in the cash flow statement from the date of acquisition, and cash flows from sold companies are recognised up to the point of sale. Cash flow from operating activities Cash flows from operating activities are calculated as profit/(loss) before tax adjusted for non-cash operating items, changes in working capital, interest received and paid, and corporate taxes paid. Cash flow from investing activities Cash flows from investing activities include payments in connection with: the purchase and sale of companies and activities; the purchase and sale of intangible, tangible, and other non-current assets; and the purchase and sale of secu- rities that are not included as cash and cash equi valents. The conclusion of finance leases is considered a non-cash transaction. Cash flow from financing activities Cash flows from financing activities include changes in the size or composition of share capital and related costs, as well as the raising of loans, the repayment of inter- est-bearing debt, the purchase and sale of treasury shares, and the payment of dividends to shareholders. Cash flows from assets held under finance leases are recog- nised as the payment of interest and repayment of debt. Cash and cash equivalents Cash and cash equivalents consist of cash and short-term deposits. Financial ratios Financial ratios have been prepared in accordance with IAS 33 and the CFA Society Denmark’s ‘Recommendations and Financial Ratios’. When presenting figures, parentheses are used to indicate negative results and deductions. 1.1 Accounting policies (continued) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 1 1.2 Significant estimated uncertainties and judgements When calculating the carrying amount of certain assets and liabilities, estimates are made of how future events affect the value of these assets and liabilities at the balance sheet date. The estimates and assumptions may have a significant effect on the financial reporting and can be categorised as significant accounting judgements or significant accounting estimates and assumptions. The estimates made are based on historical experience and other factors that the management considers reasonable in the circumstances, but which are inherently uncertain and unpredictable. The assumptions may be incomplete or inaccurate, and unexpected events or circumstances may arise. Furthermore, the company is subject to risks and uncertainties that may cause actual results to differ from those estimates. It may be necessary to change previous estimates due to changes in the circumstances underlying them or due to new knowledge or subsequent events. Significant accounting judgements, estimates and assumptions Significant accounting estimates and judgements include assumptions and estimates of the future and other uncertainty, that could potentially affect the company within the next 12 months. Estimates that are material to the financial reporting are made, inter alia, by valuing the impairment testing of goodwill, receivables, and invento- ries and by calculating depreciation and impairment. The following estimates and accompanying assessments are deemed material for the preparation of the financial statements: · Impairment testing for goodwill and other intangible assets · Valuation of receivables · Inventory valuation · Valuations in connection with business combinations These estimates and assessments are described in the following notes: Note 3.1 Intangible assets Note 3.4 Inventories Note 3.5 Trade receivables Note 5.1 Business combinations In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Income statement Section 2 2.1 Segment information 2.2 Cost of sales 2.3 Other operating income 2.4 External expenses 2.5 Staff costs 2.6 Depreciation and amortisation 2.7 Tax on profit or loss for the year Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 2 The Group has activities within the professional B2B segment and the private B2C segment. The same products are sold to the two segments. The customer base and pricing structure differ signifi- cantly which is why B2B and B2C have been identified as separate operating segments. Geographical information The Group operates primarily in Denmark. International revenue amounts to DKK 549.3m (2023: DKK 377.1m) just above 10% of the total Group's revenue relates to foreign countries. DKK 443.0m (2023: DKK 338.0m) or 8.2% of the Groups revenue comes from Sweden. Less than 10% of the book value of the assets of the Group is related to assets outside of Denmark. Sales channels Digital as well as physical sales channels are used in connection with the Group's sales. Digtal sales channels are defined as sales through websites and apps. For 2024 sales through digital sales chan- nels amount to DKK 2,891.1m (2023: DKK 2,599.2m) while sales through physical sales channels amount to DKK 2,538.2m (2023: DKK 2,661.8m). In the B2C segment, all sales are considered digital. Major customers Just as in 2023, the Group has not traded with any individual customer representing more than 10% of the Group's total revenue for 2024. 2.1 Segment information DKK millions B2B B2C Total2024Revenue 4,623.5 805.8 5,429.3Cost of goods sold (3,438.7) (504.7) (3,943.4)Product margin 1,184.8 301.1 1,485.9Distribution (173.0) (60.8) (233.8)Gross margin 1,011.8 240.3 1,252.1Direct expenses (504.7) (168.1) (672.8)EBITDA before indirect expenses 507.1 72.2 579.3Sale of property 14.2Indirect expenses (227.5)EBITDA 366.0Depreciation and amortisation (119.9)EBIT 246.1Financial income and expenses (36.0)EBT 210.1Key figures B2B B2C TotalGross margin % 21.9 % 29.8 % 23.1 %EBITDA (before indirect expenses) % 11.0 % 9.0 % 10.7 %EBITDA % 6.7 % In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 2 Accounting policy Revenue Revenue consists of the sale of goods that is recognised in the income statement. Revenue is recog- nised when the control of the individual identifiable delivery obligation is transferred to the customer, and if the income can be calculated reliably and is expected to be received. Control is transferred at delivery of the products sold. The recognised revenue is measured at the fair value of the agreed consideration excluding VAT and taxes, and after the deduction of discounts made in connection with the sale. Revenue consists of contracts with a single delivery obligation, and where the individual components of the transaction price are separately identifiable. There are no material differences in relation to sales channels or operating segments. Discounts are deducted from the consideration based on an estimate of the total discounts during the measurement period. Customer bonus due to customers is calculated at the time of sale and deducted from the recognised revenue. Subsequent adjustments to customer bonus is also recognised as revenue. In the B2C segment sales are mostly done without credit while the Group offers market-conform payment terms to customers. Segment information The Group has activities within the professional B2B segment and the private B2C segment. The two segments share the same chief operating decision maker but are identified as separate operating segments in the internal management reporting with separate budgets. Direct expenses are allocated based on the section of the Group that bears the salaries or the external expenses. 2.1 Segment information (continued) DKK millions B2B B2C Total2023Revenue 4,658.5 602.5 5,261.0Cost of goods sold (3,427. 4) (38 7.8) (3,815.3)Product margin 1,231.1 214.6 1,445.7Distribution (160.7) (50.7) (211.4)Gross margin 1,070.4 163.9 1,234.3Direct expenses (485.9) (133.2) (619.1)EBITDA before indirect expenses 584.5 30.7 615.2Indirect expenses (209.9)EBITDA 405.3Depreciation and amortisation (113.1)EBIT 292.2Financial income and expenses (30.4)EBT 261.8Key figures B2B B2C TotalGross margin % 23.0 % 27.2 % 23.5 %EBITDA (before indirect expenses) % 12.5 % 5.1 % 11.7 %EBITDA % 7.7 % In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 2 2.3 Other operating income The item includes property rental income. In 2024 other operating income includes a one-time gain of DKK 14.2m from sale of a property. 2.4 External expenses DKK millions 2024 2023Remuneration for the auditor elected by the annual general meeting:Total remuneration may be specified as follows:Statutory audit (1.7) (1.4)Tax and VAT related advisory services (0.1) 0Assurance engagements (0.9) 0Other services (0.1) (0.5)Total (2.8) (1.9) Other assurance engagements' primarily included statutory limited assurance over the sustainability statements and to a limited degree assurance services related to WEEE declaration. Tax and VAT related advisory services related to minor advice on general tax and VAT matters. Other services primarily related to ESG-related advice and advice in connection with mergers within the Group. Accounting policy External expenses External expenses include costs for internal transport, administration, advertising and exhibition costs, etc., including costs for the operation of real estate and losses to debtors. 2.2 Cost of sales DKK millions 2024 2023Cost of goods purchased during the year (3,996.0) (3,676.6)Distribution costs (233.8) (211.4)(4,229.8) (3,888.0)Change in inventories:Inventory at the beginning of the year 757.4 866.0Change in inventory during the year (1.3) 10.0Inventory writedown, net 8.0 22.2Inventory at the end of the year 814.5 757.4Change in inventory for the year 50.4 (140.8)Cost of sales for the year (4,179.4) (4,028.8) Accounting policy Cost of sales Cost of sales consists of the cost price of goods sold during the financial year, as well as distribution costs, which are variable in direct relation to revenue. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 2 The Group only has defined contribution plans. The increase in FTE's for the Group relates to the acquisitions of Svenska VA-Grossisten, Designkupp and Workwear Group in 2024. Accounting policy Staff costs Staff costs include salaries and wages to employees, costs related to defined pension contribution plans, social security costs and other staff expenses such as training and education expenses. Employee benefits The Group has entered into agreements to provide defined contribution pension schemes for the majority of the Group’s employees. Liabilities relating to defined contribution pension schemes for which the Group regularly pays fixed pension contributions to independent pension companies are recognised in the income statement during the period in which they are earned, and payments due are recognised in the balance sheet under other liabilities. Restricted stock units are measured at fair value at the date of issue and are recognised in the income statement under staff costs. The counter item is recognised directly in equity. The fair value of the granted share options is calculated using the option price model (Black & Scholes). 2.5 Staff costs DKK millions 2024 2023Wages and salaries (465.3) (417. 3)Pension contributions (41.1) ( 37.7 )Share-based remuneration (3.5) (3.4)Other social security costs (12.0) (9.7)Other staff expenses (3.7) (3.3)Staff costs excl. temporary employees (525.6) (471.4)Wages temporary employees (43.6) (46.9)Staff costs total (569.2) (518.3)Wages and salaries include remuneration for:Board of Directors (3.8) (3.8)Board of Directors total (3.8) (3.8)Executive Board (25.4) (21.6)Share-based remuneration (1.2) (1.4)Pension contributions (1.6) (2.6)Benefits (0.6) (0.8)Executive Board total (28.8) (26.4)Board of Directors and Executive Board total (32.6) (30.2)Average number of full-time employees, incl. temporary employees 968 912Average number of full-time employees 899 841 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 2 2.6 Depreciation and amortisation DKK millions 2024 2023Intangible assets (26.0) (18.7)Property, plant and equipment (52.7) (59.3)Right-of-use assets, external (41.4) (35.3)Gains/losses from the disposal of assets 0.2 0.3Total (119.9) (113.1) 2.7 Tax on profit or loss for the year DKK millions 2024 2023Current tax for the year (35.7) (49.8)Adjustment related to previous years (0.6) (0.4)Addition from acquisition 0 0(36.3) (50.1)Adjustment of deferred tax for the year (10.2) (6.4)Adjustment of deferred tax for previous years (0.2) 0.8Total (46.7) (55.7) Tax on profit/loss for the year can be explained as follows: Calculated tax on profit/loss before tax 45.4 57.0Tax effect of:Non-taxable income (0.8) (0.9)Other non-deductible costs 0.6 0.3Adjustment of tax for previous years 1.6 (0.8)46.7 55.7Effective tax rate 22.2% 21.3%Taxes paid during the financial year (55.2) (25.2) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 2 Accounting policy Tax on profit/(loss) for the year Brødrene A & O Johansen A/S is taxed jointly with all Danish subsidiaries as well as with the parent company Avenir Invest ApS. The full liability is shown in the financial statements of Avenir Invest ApS. The current Danish corporation tax is distributed by settling joint tax contributions between the jointly taxed companies in proportion to their taxable income. In connection with this, companies with a tax loss receive a joint tax contribution from companies that have been able to use these losses to reduce their own taxable profits. (Full distribution). The jointly taxed companies are included in the Danish Tax Prepayment Scheme. Tax for the year, which consists of the current tax for the year and changes in deferred tax, is recognised in the income statement for tax attributed to profit/(loss) for the year, and in equity for tax attributable to items directly in equity. 2.7 Tax on profit or loss for the year (continued) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Invested capital Section 3 3.1 Intangible assets 3.2 Property, plant and equipment 3.3 Right-of-use assets and lease liabilities 3.4 Inventories 3.5 Trade receivables 3.6 Earnings per share 3.7 Corporation tax receivable/payable 3.8 Deferred tax 3.9 Other payables Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3 3.1 Intangible assets Intellectual property DKK millions Goodwillrights SoftwareCost at 1 January 2024 508.5 70.1 330.4Foreign currency translation adjustment 0 0 0Additions from acquisitions 249.0 22.8 2.2Additions during the year 0 0 44.1Disposals during the year 0 0 (41.4)Cost at 31 December 2024 757.5 92.9 335.2Amortisation and depreciation at 1 January 2024 0 (25.5) (247.5)Foreign currency translation adjustment 0 0 0Amortisation and depreciation for the year 0 (3.5) (22.5)Disposals during the year 0 0 41.4Amortisation and depreciation at 31 December 2024 0 (29.0) (228.6)Carrying amount at 31 December 2024 757.5 63.9 106.6 Intellectual property DKK millions Goodwillrights SoftwareCost at 1 January 2023 499.7 70.1 348.5Foreign currency translation adjustment 0 0 0Additions from acquisitions 0 0 0Additions during the year 8.8 0 33.9Disposals during the year 0 0 (52.0)Cost at 31 December 2023 508.5 70.1 330.4Amortisation and depreciation at 1 January 2023 0 (22.0) (284.3)Foreign currency translation adjustment 0 (0) 0Amortisation and depreciation for the year 0 (3.5) (15.2)Disposals during the year 0 0 52.0Amortisation and depreciation at 31 December 2023 0 (25.5) (247.5)Carrying amount at 31 December 2023 508.5 44.6 82.9 In 2024, additions to goodwill derive from the acquisition of Svenska VA-Grossisten, DesignKupp and Workwear Group. Apart from goodwill, all intangible assets are considered to have definite useful lives. No significant changes have been made in estimates relating to intangible assets. Intellectual property rights relate to trademarks and domain names related to Billig VVS, Greenline, LampeGuru EA Værktøj, VVSKupp and Billig Arbejdstøj. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3Section 3 Goodwill At 31 December 2024, Management performed an impairment test of goodwill. Separate cash-gener- ating untis (CGUs) were tested for impairment including an sensitivity analysis for future cash flows. The carrying amount of goodwill and key assumptions may be specified per CGU in the following way: Pre-tax Terminal DKK millions Goodwill 2023 GoodwillWACCgrowth rateB2B Denmark 151.6 197.1 10% 1.5%B2B Sweden 47.0 101.3 10% 1.5%B2C 309.9 459.1 10% 2.5% The applied pre-tax WACC has been reduced to 10% from 12% in 2023 due to decreasing risk-free interest rates. Terminal growth rates are unchanged for all CGUs. Goodwill has been allocated to the two operating segments B2B and B2C, which is reflected above. In addition, goodwill in the B2B segment is futher allocated into Danish and Swedish goodwill in order to reflect the CGUs. The recoverable amount is based on the value in use, which is determined by means of expected net cash flows on the basis of budgets for 2025 and forecasts for 2026-2029 approved by Management, and an adjusted discount rate of 7.8% (after tax). The applied discount rate reflects the specific risks related to the Group, including geography, capital structure, etc. The applied terminal growth rate is not expected to exceed the long-term average growth rate of the markets in which the company operates. The applied 5-year growth rate and growth in terminal values are not expected to exceed the long- term average growth rate of the Group's operating segements. For both operating segments profit margins and market shares are expected to reflect the financial targets of outgrowing the market by 2 percentage points and increasing the EBITDA margin. By comparing the budgets for the respective Group companies and the expected market development it has been concluded that the recoverable amount will be consideraby higher than the carrying amount. Development costs Development costs are included in "Software". The net value of capitalised development costs may be illustrated as follows: DKK millions 2024 2023Work in Work in Consolidated Completedprogress CompletedprogressCost at 1 January 162.2 36.8 133.9 22.3Additions during the year 0 47.5 18.6 24.2Transfer 47.9 (52.1) 9.7 (9.7)Disposal (43.1) 0 0 0Cost at 31 December 167.0 32.2 162.2 36.8Amortisation and depreciation at 1 January (118.3) 0 (103.3) 0Amortisation and depreciation for the year (23.1) 0 (15.0) 0Transfer (12.4) 0 0 0Amortisation and depreciation related to disposals 40.7 0 0 0Amortisation and depreciation at 31 December (113.1) 0 (118.3) 0Carrying amount at 31 December 53.9 32.2 43.9 36.8 3.1 Intangible assets (continued) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3Section 3 3.1 Intangible assets (continued) Accounting policy Intangible assets Goodwill is initially recognised in the balance sheet at cost price as described under ‘Business combi- nations’. Goodwill is subsequently measured at cost price less accumulated impairment losses. Good- will is not amortised. The carrying amount of goodwill is allocated to the Group’s cash-generating units at the acquisition date. The determination of cash-generating units follows the management structure and internal finan- cial management. Rights are measured at cost price less accumulated amortisation and impairment losses. Rights are amortised on a straight-line basis over their expected useful life, for a maximum of 20 years. Software is measured at cost price less accumulated amortisation and impairment losses. Software is amortised on a straight-line basis over its expected useful life, for a maximum of 10 years. Impairment of non-current assets Goodwill and intangible assets with indefinite useful lives are tested annually for impairment, the first time before the end of the year of acquisition. The carrying amount of goodwill is tested for impairment together with the other non-current assets in the cash-generating unit to which goodwill is allocated and is written down over the income statement if the carrying amount is higher than the recoverable amount. The recoverable amount is generally calculated as the present value of the expected future net cash flow from the activity to which goodwill is linked. The impairment of goodwill is recognised in a sepa- rate item in the income statement. The carrying amount of the other non-current assets is assessed annually to determine whether there is any indication of impairment. When such an indication is present, the asset’s recoverable amount is calculated. The recoverable amount is the asset’s fair value less the expected cost of disposal or net present value. The net present value is calculated as the present value of expected future cash flows from the asset or the cash-generating unit which the asset is part of. An impairment loss is recognised when the carrying amount exceeds the asset’s recoverable amount. Impairment losses are recognised in the income statement under depreciation. Impairment losses on goodwill are not reversed. Impairment losses on other assets are reversed to the extent that changes have occurred in the assumptions and estimates that led to the impairment. Impairment losses are reversed only to the extent that the new carrying amount does not exceed the carrying amount after depreciation if an impairment loss has not been recognised for the asset. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3 Key accounting judgments and estimates Impairment testing for goodwill and other intangible assets Impairment testing of goodwill requires significant judgement and estimation, as it involves assessing whether the carrying value of goodwill remains recoverable based on future economic benefits. Since goodwill is not amortized but tested annually for impairment, management must evaluate whether the associated cash-generating units (CGUs) will generate sufficient future cash flows to support the recorded value of goodwill. A key judgement lies in defining CGUs and determining how goodwill is allocated to them. This alloca- tion impacts the impairment assessment, as a CGU’s performance is the basis for determining whether goodwill remains recoverable. Estimating future cash flows requires assumptions about revenue growth, profitability, cost structures, and market conditions over a multi-year period, often influenced by broader economic factors and industry-specific risks. Another significant estimate is the discount rate applied to projected cash flows, which reflects both the time value of money and the risk associated with achieving forecasted performance. Given the inherent uncertainty in long-term projections, small changes in key assumptions, such as future earn- ings growth, discount rates, or terminal values, can significantly impact the impairment outcome. Management reviews these estimates annually, adjusting them based on changes in market conditions, operational performance, and economic forecasts. However, due to the forward-looking nature of impairment testing, there is always an element of uncertainty, and deviations from projected outcomes may lead to future impairments. 3.1 Intangible assets (continued) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3Section 3 3.2 Property, plant and equipment Leasehold Fixtures and Land and improve- operating DKK millionsbuildingsmentsequipmentCost at 1 January 2024 1,077.5 31.5 603.8Foreign currency translation adjustment (0.7) 0 (0.2)Additions from acquisitions 39.9 0 44.9Additions during the year 87. 2 3.8 25.2Disposals during the year (9.3) (6.2) (45.9)Cost at 31 December 2024 1,194.6 29.1 627.8Amortisation and depreciation at 1 January 2024 (245.2) (16.0) (381.8)Foreign currency translation adjustment 0.2 0 0.2Amortisation and depreciation for the year (11.8) (4.0) (36.8)Disposals during the year 4.1 6.1 45.3Amortisation and depreciation at 31 December 2024 (252.7) (13.9) (373.1)Carrying amount at 31 December 2024 941.9 15.2 254.7 Leasehold Fixtures and Land and improve- operating DKK millionsbuildingsmentsequipmentCost at 1 January 2023 1,032.7 25.8 578.2Foreign currency translation adjustment 0 0 (0.1)Additions during the year 57. 8 5.7 33.0Disposals during the year (13.0) 0 (7.2)Cost at 31 December 2023 1,07 7.5 31.5 603.8Amortisation and depreciation at 1 January 2023 (236.8) (12.2) (353.4)Foreign currency translation adjustment 0 0 0.1Amortisation and depreciation for the year (21.4) (3.8) (34.1)Disposals during the year 13.0 0 5.5Amortisation and depreciation at 31 December 2023 (245.2) (16.0) (381.8)Carrying amount at 31 December 2023 832.3 15.5 222.0 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3Section 3 3.2 Property, plant and equipment (continued) Specification of land and buildingsYear of Building acqui-area Carrying Mortgage Address Usesition(sqm)amountloansAdministration and central warehouseRørvang 1-9, DK-2620 Albertslund Administration 8,140Rørvang 1-9, DK-2620 Albertslund Central warehouse 29,687Rørvang 11, DK-2620 Albertslund Central warehouse 3,992Herstedvang 9-13, DK-2620 Albertslund Central warehouse 3,694Herstedvang 6, DK-2620 Albertslund Central warehouse 5,674Ølstrupvej 2A, DK-6971 Spjald Central warehouse 6,611Mossvej 2, DK-8700 Horsens Central warehouse 19,167Administration and central warehouse total 76,965 568.8 313.2StoresØstbanegade 169, DK-2100 Østerbro Store 1990 478Rørvang 1-9, DK-2620 Albertslund Store 1990 1,907Gl. Køge Landevej 362, DK-2650 Hvidovre Store 1999 619Håndværkervænget 18-20, DK-2670 Greve Store 1995 713Englandsvej 360, DK-2770 Kastrup Store 1996 437Kokkedal Industripark 42A, DK-2980 Hørsholm Store 2014 702Industrivej 16, DK-3000 Helsingør Store 2013 736Herredsvejen 12, DK-3400 Hillerød Store 2013 751Sigrunsvej 1, DK-3400 Hillerød Store 2024 1,494Centervej 44, DK-3600 Fr.sund Store 2020 700Sandemandsvej 10, DK-3700 Rønne Store 2003 768Københavnsvej 205, DK-4000 Roskilde Store 2022 1,448Industriparken 1, DK-4100 Ringsted Store 2022 864Japanvej 16, DK-4200 Slagelse Store 2014 700Tækkemandsvej 3, DK-4300 Holbæk Store 2000 1,307 Specification of land and buildings (continued)Year of Building acqui-area Carrying Mortgage Address Usesition(sqm)amountloansStores (continued)Valdemarshaab 15, DK-4600 Køge Store 2014 862Holsted Park 6, DK-4700 Næstved Store 2000 1,185Herningvej 23, DK-4800 Nykøbing F Store 2013 700Middelfartsvej 8, DK-5000 Odense Store 2000 1,111Ove Gjeddes Vej 18, DK-5220 Odense SØ Store 2017 800Mandal Alle 5, DK-5500 Middelfart Store 2022 1,343Mønten 5, DK-6000 Kolding Store 1990 1,359Næstmark 21, DK-6200 Aabenraa Store 2005 987Kattegatvej 1, DK-6705 Esbjerg Store 2013 800Ibæk Strandvej 8, DK-7100 Vejle Store 2022 1,564Ibæk Strandvej 12, DK-7100 Vejle Store 2014 702Søren Frichs Vej 24, DK-8000 Århus Store 2004 1,089Tomsagervej 3-7, DK-8000 Århus Store 2022 1,596Jens Juuls Vej 7, DK-8260 Viby Store 2014 700Lillehøjvej 42, DK-8600 Silkeborg Store 2018 800Allégade 40, DK-8700 Horsens Store 1990 1,500Toldbodgade 24, DK-8930 Randers Store 2004 1,337Brodalsvägen 15, SE-433 38 Partille Store and warehouse 2003 1,660Bronsyxegatan 6A, SE-213 75 Malmö Store and warehouse 2000 1,350Total stores 35,069 364.5 129.4Buildings under construction 8.6Land and buildings 112,034 941.9 442.6 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3Section 3 3.2 Property, plant and equipment (continued) Accounting policy Property, plant and equipment, including leases Land and buildings, leasehold improvements, operating equipment, and fixtures and fittings are meas- ured at their cost price less accumulated depreciation and impairment losses. The cost price consists of the acquisition price and costs directly related to the acquisition until the time when the asset is ready for use. The cost price of a total asset is divided into separate compo- nents, which are depreciated separately if the useful life of the individual component is different. Subsequent costs, such as when replacing components of a tangible asset, are recognised in the carrying amount of the asset in question when it is probable that the holding will result in future economic benefits for the Group. All other general repair and maintenance costs are recognised in the income statement as they are incurred. The assets are depreciated on a straight-line basis over their expected useful lives, based on the following assessment of the expected life of assets: Buildings: up to 50 years Installations: 10 years Leasehold improvements: Maximum 5 years Fixtures and operating equipment: Normally 5 years. 15 years for mini-load storage systems and high bay systems. Land is not depreciated. The basis for depreciation is calculated by taking into account the asset’s scrap value and is reduced by any impairment losses. The depreciation period and the scrap value are determined at the time of acquisition and are reviewed annually. If the scrap value exceeds the carrying amount, depreciation ceases. Gains and losses on the disposal of property, plant, and equipment are calculated as the difference between the sale price less selling costs and the carrying amount at the time of sale. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3Section 3 3.3 Right-of-use assets and lease liabilities Fixtures and Land and operating Right-of-use assetsbuildingsequipment TotalBalance at 1 January 2024 59.1 40.7 99.8Foreign currency translation adjustment (0.2) (0.2) (0.4)Additions during the year 2.3 25.4 27.7Disposals during the year (0.6) (0.8) (1.4)Remeasurement of lease liability 5.9 0.9 6.8Amortisation and depreciation for the year (24.3) (17.1) (41.4)Carrying amount at 31 December 2024 42.2 48.9 91.1 Fixtures and Land and operating Right-of-use assetsbuildingsequipment TotalBalance at 1 January 2023 65.6 15.1 80.7Foreign currency translation adjustment 0.2 0 0.2Additions during the year 13.1 43.6 56.7Disposals during the year (0.3) (5.8) (6.1)Remeasurement of lease liability 3.3 0.4 3.7Amortisation and depreciation for the year (22.8) (12.6) (35.3)Carrying amount at 31 December 2023 59.1 40.7 99.8 Lease liabilities 2024 2023Maturity of lease liabilities0-1 year 38.4 39.71-5 years 80.1 60.7>5 years 11.9 10.4Total un-discounted lease liabilities at 31 December 130.4 110.8Short-term lease liabilities, less than 1 year 31.8 36.8Long-term lease liabilities, more than 1 year 93.7 66.4Lease liabilities recognised in the balance sheet 125.5 103.2Amounts recognised in the income statementInterest expenses on lease liabilities (1.6) (1.6)Expenses related to low value leasing arrangements (0.3) (0.2)Expenses related to short term leasing arrangements (1.0) (1.6)Depreciation related to right-of-use assets (38.3) (35.3)Total (41.2) (38.7) In relation to leases, including low-value and short-term leasing arrangements, the Group has paid DKK 37.0m towards leasing contracts in 2024 (2023: DKK 34.5m). Hereof interest payments related to leasing liablilities amount to DKK 3.0m (2023: DKK 1.6m) and instalments on leasing liabilities amount to DKK 41.3m (2023: DKK 35.2m) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3Section 3 3.3 Right-of-use assets and lease liabilities (continued) Accounting policy Leases Right-of-use assets and lease liabilities are recognised in the balance sheet at the time when a lease for a specific identifiable asset is made available to the Group for the lease term and when the Group obtains the right to most of the financial benefits from the use of the identified asset and the right to decide the use of the identified asset. On initial recognition, lease liabilities are measured at the present value of future lease payments using the incremental borrowing rate as the discount factor. The following lease payments are recognised as part of the lease liability: · Fixed payments. · Changes in variable lease payments which fluctuate with changes in an index or interest rate based on the current index or interest rate. · Amounts payable under a residual value guarantee. · The exercise price of call options reasonably certain to be exercised by the Group. · Payments made in periods covered by an option to extend the lease which the Group is reasonably certain to exercise. · Penalties related to a termination option, unless the Group is reasonably certain not to exercise the option. Lease liabilities are measured at amortised cost using the effective interest rate method. A remeasure- ment is made when changes in the cash flow as a result of changes in an index or interest rate is iden- tified, if the estimate of a residual guarantee is changed or if the Group is changing the assessment of whether it is reasonably certain to exercise an extension or termination option, or a call option. Initially right-of-use assets are recognised at cost which is equal to the lease liabilities adjusted for prepaid lease payments and estimated cost of demolition, repairs etc less received discounts or other types of incentive payments from lessor. Subsequently, right-of-use assets are measured at cost less accumulated depreciation. Right-of-use assets are depreciated over the shorter of the lease term and the useful life of the right-of-use asset. The depreciation is recognised on a straight-line basis in the income statement. Adjustments are made to the right-of-use asset in case of changes in the lease liability due to changes in the conditions of the leases or changes in the cash flow from fluctuations in an index or an interest rate. The right-of-use assets are amortised on a straight-line basis over their expected lease periods which constitute: Operating equipment 3 – 10 years Warehouse properties with associated administration 3 – 10 years Stores 3 – 10 years. Right-of-use assets and leasing liabilities are presented separately in the Group’s balance sheet. The Group has chosen not to recognise leases with a term of less than 12 months or a present value of less than DKK 30,000. Instead lease payments are recognised on a straight-line basis in the income statement. Furthermore, the Group has chosen to determine a discount rate on a portfolio of lease agreements with uniform characteristics. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3 3.4 Inventories DKK millions 2024 2023Carrying amount of inventories recognised at net selling price 47.5 42.4 Accounting policy Inventories Inventories are measured at cost price, which is calculated on the basis of average prices. If the net realisable value is lower than the cost price, an impairment loss is made to the net realisable value. The cost price includes the acquisition price plus the cost of repatriation. The net realisable value is calculated as the expected sale price less costs to execute the sale and is determined on the basis of marketability, obsolescence, and expected development in the sales price. The value of inventories accounted for at fair value is specified in note 3.4 of the annual report. Key accounting judgments and estimates Inventories The estimated uncertainty of inventories relates primarily to slow-moving goods and thus to impair- ment to the net realisable value. Impairment requirements are continuously assessed on inventories based on historical sales and the assessment of future sales. Supplier bonus Reporting from suppliers as well as AO’s own records are used when assessing the supplier bonus that is due to AO. Estimates are used when reporting from suppliers have not been received or when the reporting from suppliers do not reconcile with AO’s records. Ongoing retrospective reviews are performed to ensure that supplier bonus is included correctly in the financial statements. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3 3.5 Trade receivables Trade receivables consist of sale of goods to business customers which, in essence, have the same risk profile. Provisions for bad debts are made in accordance with the simplified expected credit loss model, taking into account AO's credit policy and debt collection procedure. AO has taken up credit insurance on customers with large balances. Historically, the Group has incurred no losses on receivables from subsidiaries, and is not expected to going forward. Calculated on the basis of a weighted loss ratio, the Group's expected credit losses on trade receiv- ables are as follows: Receivable Expected DKK millions Loss ratioamountloss Total2024Not yet due 0.4 % 576.7 (2.4) 574.3Due within 1-30 days 1.2 % 23.3 (0.3) 23.0Due within 31-60 days 28.9 % 3.2 (0.9) 2.3Due in more than 60 days 7 7.7 % 38.6 (30.0) 8.6Total at 31 December 2024 641.8 (33.6) 608.22023Not yet due 0.5 % 512.4 (2.8) 509.6Due within 1-30 days 3.0 % 23.6 (0.7) 22.9Due within 31-60 days 14.8 % 2.8 (0.4) 2.4Due in more than 60 days 83.2 % 47.2 (39.2) 7.9Total at 31 December 2023 586.0 (43.2) 542.8 * Expected losses are shown including VAT. DKK millions 2024 2023Provision for losses on receivables:Provision for losses on receivables at 1 January excl. VAT 35.0 37.6Realised loss during the year - use of previous provision (15.1) (8.3)Adjustment of provisions for losses 7.1 5.7Provision for losses on receivables at 31 December 27.0 35.0Recognised previously written-off receivables (0.3) (0.3)Losses recognised in the year and not previously provided for 0 0Operating effect, net from loss and provision for losses on receivables 6.8 5.4 Accounting policy Receivables Receivables are measured at their amortised cost price. Impairment to counter losses is conducted according to the simplified expected credit loss model, after which the total loss is recognised immedi- ately in the income statement at the same time as the receivable is recognised in the balance sheet on the basis of the expected loss over the total life of the receivable. Intra-group receivables are measured at the amortised cost price. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3 3.5 Trade receivables (continued) Key accounting judgments and estimates Receivables Estimates are used when assessing the probability of receivables. Due to the financial situation in society, the risk of losses on doubtful receivables remains high, which has been taken into account when assessing new customers, by way of impairment losses at the balance sheet date, and in the day-to-day governance and control of the receivables as described in note 4.3. Customer bonus Estimates are used in relation to the determination of the bonus levels reached on bonus agreements with a duration of more than one year. The applied estimates are reviewed on an ongoing basis to ensure a correct valuation of bonus due to customers. 3.6 Earnings per share DKK millions 2024 2023Net profit or loss for the year 163.4 206.1Average number of shares in circulation 28,000,000 28,000,000Average number of own shares (823,900) (823,900)Average number of shares in circulation 27,176,100 27,176,100The average dilution effect of outstanding RSU's 93,977 54,053Diluted average number of outstanding share options 27,270,077 27, 230,153Earnings per share (EPS) of DKK 1 (DKK) 6.0 7.6Diluted earnings per share (EPS-D) of DKK 1 (DKK) 6.0 7.6 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3 3.8 Deferred tax DKK millions 2024 2023Deferred tax at 1 January 70.1 64.6Foreign currency translation adjustment 0.3 (0.1)Merger / acquisition of enterprise 3.6 0Change in deferred tax for the year 9.4 6.3Change in deferred tax relating to previous years (0.2) (0.7)Deferred tax at 31 December 83.2 70.1 Deferred tax relates to: Intangible assets 31.8 27.7Property, plant and equipment 57.7 51.4Receivables/inventory (4.2) (7.6)Liabilities (2.1) (1.5)Tax deficit 0 0Deferred tax at the end of the year 83.2 70.1 3.7 Corporation tax receivable/payable DKK millions 2024 2023Corporation tax paid on account during the year 8.5 7.3Tax on taxable profit for the year (14.4) (8.6)Tax payable relating to previous years (2.3) (1.8)Total corporation tax receivable/payable (8.2) (3.1) Accounting policy Corporation tax Current tax liabilities and receivables are recognised in the balance sheet as calculated tax on taxable income for the year, adjusted for tax on previous years’ taxable income and tax paid on account. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 3 Accounting policy Deferred tax Deferred tax is measured according to the balance sheet liability method of all temporary differences between the net asset value and tax value of assets and liabilities. However, deferred tax is not recog- nised on temporary differences relating to non-deductible goodwill and other items where temporary differences - other than business acquisitions - have arisen at the time of acquisition without affecting profit/(loss) or taxable income. Deferred tax is measured based on the tax rules and at the tax rate that will apply as per the legislation on the balance sheet date when the tax liability is expected to be triggered as current tax. Changes in deferred tax as a result of changes in the tax rate are recognised in the income statement. Deferred tax assets are recognised under non-current assets at the value that is expected to be real- ised, either by set-off against deferred tax liabilities or by offsetting tax on future earnings. Deferred tax assets are assessed annually and recognised only to the extent that it is probable that they will be utilised. 3.8 Deferred tax (continued) 3.9 Other payables DKK millions 2024 2023Holiday allowance 23.5 19.7Salary-related items 16.0 21.0VAT and taxes 18.4 16.9Frozen holiday allowance 1.4 0Earn out liability 9.7 0Other payables 5.4 9.7Total 74.4 67.2 At the end of 2024, provisions for liabilities were DKK 0.5m (2023: DKK 0.5m). Of other payables DKK 11.1m is classified as non-current on the balance sheet while DKK 63.3m is classified as current. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Capital structure and financing Section 4 4.1 Equity 4.2 Financing activities 4.3 Financial risks 4.4 Financial income 4.5 Financial expenses Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 4 4.1 Equity Capital management The Group regularly assesses the need for adapting the capital structure with a view to balancing a higher required rate of return on equity with the increased uncertainty associated with loan capital. At the end of 2024, the equity share of total equity and liabilities amounted to 40.6% (2023: 45.5%). The target is to obtain an equity ratio of a minimum of 40%. The financial gearing as at December 31 2024 was 2.7 (2023: 1.3). The Group target is to maintain a financial gearing within the range of 1.0 and 2.5. Capital is managed for the Group as a whole. The share capital consists of the following classes: k DKKClass A share capital: 56,400 shares of DKK 100 each 5,640Class B share capital: 22,360,000 shares of DKK 1 each 22,360Total share capital 28,000 Of the Company's share capital of DKK 28,000k DKK 5,640k is in the form of Class A-shares and DKK 22,360k is in the form of Class B-shares. Each Class A-share of DKK 100 carries 1,000 votes whereas each Class B-share of DKK 1 carries one vote. In addition to the the difference in the number of voting rights, the two share classes differ in the following respects: The Class A-shares are non-negotiable securities. The Class B-shares are listed on Nasdaq Copen- hagen. The Class B-share capital has a preferential dividend right of 6%. In case of liquidation, Class B-shares take precedence over Class A-shares. As at December 31 2024, there are no outstanding obli- gations related to preferential dividends to Class B-shares. An alteration to the Company's Articles of Association requires that two thirds of cast votes and two thirds of the represented capital at a general meeting are in favour of the alteration. Holders of Class B-shares are entitled to appoint and elect one member of the Board of Directors, while holders of Class A shares elect the remaining Board members. Nomimal value Number of shares(DKK thousands) % of share capitalTreasury shares 2024 2023 2024 2023 2024 20231 January 823,900 823,900 824 824 2.9% 2.9%Holding at 31 December 823,900 823,900 824 824 2.9% 2.9% There have been no transactions with treasury shares in 2024. According to the authorisation of the annual general meeting, Brødrene A & O Johansen A/S is allowed to acquire treasury shares up to a total holding of 10% of the share capital. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 4 4.2 Financing activities DKK millions 2024 2023Mortgage loans - floating interest rate - 5 years 442.6 421.2Bank loans - floating short-term interest rate 479.8 86.9Lease liabilities - floating interest rate 125.5 103.21,047.9 611.2 Payables relating to financing activities: Beginning-of-year 611.2 57 7.5Repayment of debt to credit institutions, net 16.0 (76.4)Raising of loans from credit institutions 359.7 92.7Debt from acquisition 38.7 0Addition, lease liabilities, net 64.0 52.7Repayment, lease liabilities (41.7) (35.3)Year-end 1,0 47.9 611.2 According to the leases there are no contingent rents. The contractual cash flows appear from note 4.3. 4.1 Equity (continued) Dividend The payment of dividends to the Company's shareholders has no tax implication for Brødrene A & O Johansen A/S. Proposed dividend for 2024 amounts to TDKK 84,000 corresponding to DKK 3.0 per share. Other reserves Reserve for net revaluation according to the equity method contains value adjustments related to investments in subsidiaries. Included in reserve for development costs is an amount corresponding to capitalised intangible assets meeting the criteria for being defined as a development project. Reserve for net revaluation according to the equity method and reserve for development costs are unavailable for distribution to shareholders. Reserve for foreign currency translation adjustment The reserve for foreign currency translation adjustments includes all translation adjustments that arise as a result of the translation of the financial statements of entities using a functional currency other than Danish kroner. There are no translation adjustments in connection with assets and liabilities constituting a part of the Group's net investment in such entities. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 4 Accounting policy Financial liabilities Debt to mortgage-credit institutions and credit institutions is recognised at the time of borrowing at the value of the proceeds received less transaction costs incurred. In subsequent periods, the financial liabilities are measured at amortised cost corresponding to the capitalised value using the effective interest rate, so that the difference between the proceeds and the nominal value is recognised in the income statement over the loan period. Other payables, which include debt to suppliers, are measured at their amortised cost price, and other liabilities at net realisable value. 4.2 Financing activities (continued) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 4 4.3 Financial risks The Group's risk management policies As a result of its operations, investments and financing, the Group is exposed to changes in exchange rates and interest-rate levels. It is Group policy not to engage in any active speculation in financial risks. The Group's financial management therefore only concentrates on the management of the finan- cial risks that are directly linked to the Group's operations and financing. Financial risks are managed centrally by the Group's finance function. The overall framework for the financial risk management is defined in the Group's finance policy, which has been approved by the Board of Directors. The finance policy covers the Group's finance policy as well as its policy relating to credit risks associated with financial counterparties and contains a description of the approved risk framework. Management monitors the Group's risk concentration on customers, currencies and other areas on a regular basis. Currency risks The Group's currency risk in connection with Danish operations is limited as revenue is generated in Danish kroner, and goods are primarily purchased in DKK or EUR. The Group's foreign operations are not much affected by currency fluctuations, as income and expenses are largely paid in local currency. Consolidated results will be affected by exchange differ- ences arising on translation of foreign operations' results and on translation of net assets. The Group uses derivative financial instruments to a very limited extent. The derivative financial instru- ments consist of forward exchange contracts for the purchase of EUR. At 31 December 2024 there were no forward exchange contracts, and therefore no further information is provided. The Group had no significant currency risks relating to receivables or payables in foreign currencies at 31 December 2024, and the consolidated results would therefore not be affected to any major extent by changes in exchange rates at 31 December 2024. The Group has the following currency exposure at 31 December: 2024 2023DKK millions EUR OTHER TOTAL EUR OTHER* TOTALTrade payables 47.1 49.6 96.7 49.4 40.6 90.0Payables to credit institutions 6.6 (19.5) (12.9) (28.1) (74.8) (102.9)Net exposure 53.7 30.1 83.8 21.3 (34.2) (12.9)Risk in exchange rate fluctuation 1% 10% 1% 10%Estimated effect on income statement and equity 0.5 3.0 3.5 0.2 (3.4) (3.2) * Mainly SEK and NOK The Group's currency exposure related to financial instruments is primarily a result of the Group's financing activities . In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 4 4.3 Financial risks (continued) Interest rate risks As a result of its investing and financing activities, the Group has a risk exposure relating to fluctua- tions in the interest-rate level in Denmark. The main interest rate exposure is related to fluctuations in CIBOR. In 2024, the Group's interest-bearing debt, determined as payables to credit institutions and lease liabilities less negotiable securities and cash increased by DKK 470.9m to DKK 992.6m at the end of the year. Based on the debt, a decrease of one percentage point in the general interest-rate level would result in a decrease in the Group's annual interest expenses before tax of approximately DKK 10.1m (2023: approximately DKK 6.1m). Liquidity risks In connection with borrowing, it is the Group's policy to ensure the greatest possible flexibility by spreading the loans on different maturity/renegotiation dates and on different lenders to ensure the best possible terms. The Group's cash resources comprise cash and short-term deposits, securities and undrawn credit facilities. It is the Group's aim to have sufficient cash resources in order to make appro- priate decisions also in connection with unforeseen liquidity fluctuations. The Group's payables fall due as follows: Carrying Contractual Less than 1 to More than DKK millionsamountcash flows1 year5 years5 years2024Mortgage loans 442.6 5 67.9 38.1 153.4 376.4Bank loans 479.8 479.8 254.0 225.8 0Lease liabilities 125.5 220.3 60.7 99.0 60.7Trade payables 1,036.8 1,036.8 1,036.8 0 0Total at 31 December 2,084.8 2,304.8 1,389.5 478.2 437.1 2023 Mortgage loans 421.2 582.4 37.4 149.0 396.0Bank loans 86.9 86.9 86.9 0 0Lease liabilities 103.2 110.8 39.7 60.7 10.4Trade payables 1,006.6 1,006.6 1,006.6 0 0Total at 31 December 1,617.9 1,786.7 1,170.6 209.7 406.4 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 4 Assumptions regarding the maturity analysis: · The maturity analysis is based on all undiscounted cash flows, including estimated interest payments according to contractual basis. · Interest payments are estimated on the basis of current market conditions. Based on the Group's expectations for future operations and the Group's current cash resources, no material liquidity risks have been identified. Agreements containing Supply Chain Finance programmes have been concluded. The Supply Chain Finance programmes typically has a credit time of two months longer than comparable financial liabilities. At the balance sheet date liabilities related to Supply Chain Finance programmes amount to DKK 235.5m (2023: DKK 204.2m) of which DKK 224.9m has been settled from the third-party finance provider. In the balance sheet the Supply Chain Finance programmes are classified as trade payables. Group loans and committed credit facilities are not subject to any special terms or conditions (cove- nants). Credit risks The Group's credit risks relate to receivables and cash and short-term deposits. The maximum credit risk associated with financial assets corresponds to the values recognised in the balance sheet. The Group has no material risks relating to individual customers or business partners. Credit rating is based on an individual assessment of customers and business partners and their respective financial situation. The management of the credit risk is based on internal credit limits determined according to the customers' credit rating. As a result of the current market conditions, the Group has amended its credit limits for a number of customers. If the credit rating of a customer is assessed as being insuffi- cient, the terms of payment are amended or security is provided. The Group's credit exposure to customers is monitored on an ongoing basis as part of the Group's risk management. Of the DKK 608.2m in trade receivables DKK 198.5m are credit-insured thus the maximum credit risk is was DKK 409.7m at the balance sheet date. In general, no security has been received for overdue or impaired receivables. Categories of financial instruments, and methods and assumptions for determining fair values The carrying amount and fair value of financial instruments are identical with the exception of loans measured at amortised cost, and where the carrying amount at 31 December 2024 amounts to DKK 1,047.9m (2023: DKK 611.2m) incl. lease liabilities at the end of the year. The methods and assumptions applied in determining fair values of financial instruments are presented below for each class of financial instrument. The methods used have not been changed compared to last year. The fair value of mortgage debt is determined on the basis of the underlying bonds. Short-term float- ing-rate bank loans are measured at nominal value. Trade receivables, cash and short-term deposits, and trade payables are subject to a short credit period and are considered to have a fair value that corresponds to the carrying amount. No further fair value information for financial assets is given when the carrying amount is assumed to be a proper measure of the fair value of the assets. 4.3 Financial risks (continued) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 4 4.3 Financial risks (continued) Accounting policy Financial instruments Derivative financial instruments are recognised on the trade date and measured at fair value in the balance sheet. Positive and negative fair values of derivative financial instruments are included in other receivables and other payables, respectively, and the offsetting of positive and negative values is only made when the company is entitled to and intends to settle several financial instruments net. Fair values of derivative financial instruments are calculated on the basis of current market data and recognised valuation methods. Hedge accounting is only used in connection with currency futures. 4.4 Financial income DKK millions 2024 2023Interest income from current assets 11.8 3.3Foreign exchange gains, net 0.5 0Total 12.3 3.3 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 4 4.5 Financial expenses DKK millions 2024 2023Interest expenses on liabilities (44.3) (25.5)Expenses, lease liabilities, external (3.3) (1.6)Other interest expenses (0.7) (0.4)Foreign exchange losses, net 0 (6.2)Total (48.3) (33.7) Accounting policy Financial income and expenses Financial income and expenses include interest and realised and unrealised capital gains and losses, as well as write-downs on securities and debt, the amortisation of financial assets and liabilities, including supplements and reimbursements under the advance tax scheme, etc. Borrowing costs from general or specific loans attributable to the construction period of qualifying assets are recognised at the cost price of the relevant assets. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Other notes Section 5 5.1 Business combinations 5.2 Contingent liabilities, security, etc. 5.3 Share based remuneration 5.4 Related parties 5.5 Subsequent events 5.6 New accounting regulation Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 5 5.1 Business combinations Svenska VA-Grossisten AB On May 1 2024 the Group gained 100% control of the Swedish company Svenska VA-Grossisten AB by acquiring all the shares in the company. With the acquisition AO expands its operation to the capital area of Sweden and will be a foundation for geographic expansion of AO Sweden. Svenska VA-Grossisten is a specialist wholesaler within water and drainage products based in the Stockholm area of Sweden. In Svenska VA-Grossistens first financial year that ended 31 December 2023 a revenue of DKK 57m and an EBITDA of DKK 9m was achieved. Had Svenska VA-Grossisten been a part of the Group for the full year 2024 it would have contributed with a revenue of DKK 74.3m and an EBITDA of DKK 10.8m. Svenska VA-Grossisten will be a part of AO Sweden and of the B2B segment in AO. Transaction costs in relation to the acquisition were DKK 0.2m. The earn out liability is related to future financial performance in the Stockholm area. The earn out agreement is expeted to be paid in full and the full amount is therefore recognised in the balance sheet as per 31 December 2024. The fair value of acquired assets, liabilities and contingent liabilities, and aqusition price for Svenska VA-Grossisten has been calculated and can be specified as follows: DKK millions 2024Property, plant and equipment 2.9Inventories 4.3Trade receivables 8.3Other receivables 2.1Cash 6.7Interest-bearing debt including lease liabilities (1.9)Trade payables (8.9)Other payables (4.6)Acquired net assets 8.9Goodwill 53.5Price of acquisition 62.3 Cash paid on acquisition 52.7Cash acquired (6.7)Net cash effect 2024 from aquisition 46.1Earn out liability recognised in balance 9.6 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 5 5.1 Business combinations (continued) Designkupp AS On June 30 2024 the Group gained 100% control of the Norwegian company Designkupp AS by acquiring all the shares in the company. With the acquisition AO gains a leading position in the Norwegian online market for bathroom and home improvement products. Designkupp operates VVSKupp.no, the leading online store for bathroom products in Norway. In the financial year that ended December 31 2023 Designkupp had a revenue of DKK 82m and an EBITDA of DKK 3m. Had DesignKupp been a part of the Group for the full year 2024 it would have contributed with a revenue of DKK 75.1m and an EBITDA of DKK 1.4m. Designkupp will together with AO's existing webshops in Norway form the Norwegian part of AO's B2C segment. Transaction costs in relation to the acquisition were DKK 0.4m. The fair value of acquired assets, liabilities and contingent liabilities, and aqusition price for Designkupp has been calculated and can be specified as follows: DKK millions 2024Property, plant and equipment 0.4Inventories 4.4Trade receivables 0.8Other receivables 0.1Cash 4.0Interest-bearing debt including lease liabilities 0Trade payables (6.4)Other payables (1.7)Acquired net assets 1.6Goodwill 43.0Rights 3.4Price of acquisition 48.0 Cash paid on acquisition 48.0Cash acquired (4.0)Net cash effect 2024 from aquisition 44.0 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 5 5.1 Business combinations (continued) Workwear Group ApS On August 13 2024 the Group gained 100% control of the Danish company Workwear Group ApS by acquiring all the shares in the company. With the acquisition AO gains control of a leading player within onlines sales of workwear in Scandi- navia. Workwear Group operates 10 webshops selling Workwear to B2C customers as well as to compa- nies. Workwear Group operates out of a modern automated warehouse in Jutland which will be a part of the Groups future logistics set up. In the financial year that ended December 31 2023 Workwear Group had a revenue of DKK 240m and an EBITDA of DKK 22m. Had Workwear Group been a part of the Group for the full year 2024 it would have contributed with a revenue of DKK 267.3m and an EBITDA of DKK 22.5m. Transaction costs in relation to the acquisition were DKK 0.7m. Workwear Group will significantly expand the Groups offering within workwear to B2B and B2C customers. The fair value of acquired assets, liabilities and contingent liabilities, and aqusition price for Workwear Group has been calculated and can be specified as follows: DKK millions 2024Property, plant and equipment 84.0Inventories 46.2Trade receivables 4.2Deferred tax (2.7)Interest-bearing debt including lease liabilities (68.1)Trade payables (12.5)Other payables (7.1)Acquired net assets 44.0Goodwill 151.6Rights 19.4Price of acquisition 215.0 Cash paid on acquisition 215.0Net cash effect 2024 from aquisition 215.0 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 5 5.2 Contingent liabilities, security, etc. Land and buildings with a total carrying amount of DKK 763.6m (2023: DKK 672.3m) are provided as security for the Group's payables to mortgage credit institutions and finance lease liabilities. As a normal part of doing business AO can be invovled in disputes or legal proceedings. The outcome of pending legal actions is not expected to have any material impact on the financial position of the Group. The parent company is jointly taxed with AO Invest A/S and the ultimate Danish parent company Avenir Invest ApS, which is the administration company for joint taxation purposes. The company and there- fore the Group is unlimited, jointly and severally liable with other jointly taxed companies towards the Danish tax authorities for the total corporation tax. Payable corporation taxes within the joint taxation group amounted to DKK -16.4m at 31 December 2024 (2023: DKK 8.4m). Any adjustment to the taxable income subject to joint taxation might entail an increase in the Compa- ny's liability. Group companies are not subject to withholding tax on dividends. 5.3 Share based remuneration In order to motivate and retain members of the Executive Board and other managers in the Group, Brødrene A & O Johansen A/S has introduced an incentive programme based on the shares of the company. The programme is designed to align the interests of the participants of the share programme with the interests of the shareholders. The intention is to promote long-term value creation in the Group. In 2024 no new Restricted Stock Units (RSUs) have been granted (2023: 56,935). The RSUs are measured at fair value at the time of the grant using a Black & Scholes model. The fair value is recognised as staff costs and equity on a straight line basis over the vesting period of 36 months. The RSUs can only be settled in shares and no subsequent measurement of the fair value is performed. The vesting conditions for all RSUs are related to continued employment with the Group. Restricted Out-Released Granted Out -Fair value Stock Units standing during during standing at the time Vesting 2024RSUs Jan 1the yearthe yearRSUs Dec 31of the grantdateExecutive BoardGrant 2022 44,370 0 0 44,370 4.4 March 2025Executive Board total 44,370 0 0 44,370 4.4 Other employeesGrant 2022 18,468 0 0 18,468 1.8 March 2025January Grant 2023 56,935 0 0 56,935 4,42026Other employees total 75,403 0 0 75,403 6.2Total 119,773 0 0 119,773 10.6 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 5 5.4 Related parties The Group's related parties comprise the parent company Avenir Invest ApS (Axeltorv 2, DK-1607 Copenhagen V, Denmark), the Board of Directors, the Executive Board and management employees. Avenir Invest ApS has control over the company through its ownership of the majority of the voting rights. During the year, no transactions were carried out with Avenir Invest ApS apart from payment of dividends and corporate tax. During the year, no significant transactions were carried out with the Board of Directors, the Executive Board, management employees or major shareholders apart from normal management remuneration, cf. note 2.5, and dividend payments. 5.5 Subsequent events No events have occurred after 31 December 2024 that are considered to have a material effect on the annual report for 2024. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Parent company financial statements Section 5 5.6 New accounting regulation At the time of publication of this annual report, IASB has issued the following new and amended finan- cial reporting standards and interpretations that are not compulsory for Brødrene A & O Johansen A/S in preparing the annual report for 2024: · Amendments to IAS 21 - Lack of Exchangeability (effective for annual periods beginning on or after 1 January 2025) · Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7 (effective for annual periods beginning on or after 1 January 2026) · IFRS 19 Subsidiaries without Public Accountability: Disclosures (effective for annual periods beginning on or after 1 January 2027) · IFRS 18 Presentation and Disclosure in Financial Statements (effective for annual periods beginning on or after 1 January 2027) None of the standards and interpretations mentioned above have been adopted by the EU. The adopted standards and interpretations that have not yet come into effect will be implemented as they become compulsory for Brødrene A & O Johansen A/S. It has been assessed that none of the above-mentioned standards and interpretations apart from IFRS 18 will affect recognition and meas- urement for Brødrene A & O Johansen A/S. Management is currently assessing the detailed implications of applying the new IFRS 18 standard on the group’s consolidated financial statements. Line items presented on the primary might change and there may be a change in the definition of operating profit. The group does not expect significant changes in the information currently disclosed in the notes; however, the way in which the information is grouped might change. From a cash flow statement perspective, there will be changes to how interest received and interest paid are presented. Interest paid will be presented as financing cash flows and interest received as investing cash flows, which is a change from current presentation as part of oper- ating cash flows. Financial ratio definitions as recommended by CFA Society Denmark Gross profit margin (Gross margin / Revenue) * 100 Profit margin (Operating profit or loss (EBIT) / Revenue) * 100 Return on capital employed (EBIT / Average total assets) * 100 Return on equity (Net profit or loss for the year / Average equity) * 100 Net gearing (Net interest bearing debt (NIBD) / EBITDA) Solvency ratio (Equity / Total assets) * 100 Price Earnings Basic (P/E Basic) Share price at the end of the year / Earnings per share Earnings per share (EPS Basic), DKK Profit after tax / Average number of shares in circulation Diluted earnings per share (EPS-D), DKK Profit after tax / Diluted average number of outstanding share options Book value Equity at the end of the year / Average number of shares in circulation In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Parent company financial statements In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Primary statements Income statement Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes 1 Basis of preparation 1.1 Accounting policies 1.2 Significant estimated uncertainties and assumptions 2 Income statement 2.1 Cost of sales 2.2 Other operating income 2.3 External expenses 2.4 Staff costs 2.5 Depreciation and amortisation 2.6 Tax on profit or loss for the year 3 Invested Capital 3.1 Intangible assets 3.2 Property, plant and equipment 3.3 Right-of-use assets and lease liabilities 3.4 Investments in subsidiaries 3.5 Inventories 3.6 Trade receivables 3.7 Deferred tax 3.8 Other payables 4 Capital Structure and financing 4.1 Equity 4.2 Financing activities 4.3 Financial risks 4.4 Financial income 4.5 Financial expenses 5 Other notes 5.1 Contingent liabilities, security, etc. 5.2 Related parties 5.3 Subsequent events Parent company financial statements Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Income statement For 1 January – 31 December DKK millions Note 2024 2023 Revenue 4,9 07.7 4,993.4 Cost of sales 2.1 (3,824.3) (3,838.8) Gross profit 1,083.4 1,154.6 Other operating income 2.2 1.3 1.5 Gross margin 1,084.7 1,156.1 External expenses 2.3 (284.8) (291.1) Staff costs 2.4 (520.4) (495.1) Earnings before interest, taxes, depreciation and amortisation (EBITDA) 279.5 369.9 Depreciation and amortisation 2.5 (153.5) (144.7) Operating profit or loss (EBIT) 126.0 225.2 Subsidiaries' profit after tax 3.4 80.7 46.4 Financial income 4.4 17.3 3.7 Financial expenses 4.5 (36.4) (26.0) Profit or loss before tax (EBT) 187.6 249.2 Tax on profit or loss for the year 2.6 (24.2) (43.1) Net profit or loss for the year 163.4 206.1 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Statement of comprehensive income For 1 January – 31 December DKK millions Note 2024 2023 Other comprehensive income Net profit or loss for the year 163.4 206.1 Items which will be reclassified to the income statement Foreign currency translation adjustment relating to foreign entities (4.1) 1.0 Tax on other comprehensive income 0 0 Other comprehensive income after tax (4.1) 1.0 Total comprehensive income 159.4 207.1 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Balance sheet as at 31 December Assets DKK millions Note 2024 2023 Non-current assets Intangible assets 3.1 Goodwill 464.8 464.8 Intellectual property rights 40.7 44.2 Software 104.6 82.9 610.1 591.9 Property, plant and equipment 3.2 Land and buildings 146.7 138.9 Leasehold improvements 16.2 16.5 Fixtures and operating equipment 208.0 219.8 Right-of-use assets 3.3 168.7 196.0 539.6 571.1 Other non-current assets Investments in subsidiaries 3.4 675.1 349.4 Other investments 0.2 0.3 675.3 349.7 Total non-current assets 1,825.1 1,512.7 DKK millions Note 2024 2023 Current assets Inventories 2.1, 3.5 721.0 723.9 Trade receivables 3.6 571.6 517.2 Receivables from subsidiaries 3.6 167.5 139.9 Joint tax contribution 26.3 0 Other receivables 31.4 16.2 Prepayments and accrued income 22.3 22.9 Cash and short-term deposits 26.8 46.8 Total current assets 1,566.8 1,466.8 Total assets 3,391.9 2,979.5 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Balance sheet as at 31 December Equity and liabilities DKK millions Note 2024 2023 Equity 4.1 Share capital 28.0 28.0 Reserve according to the equity method 284.4 221.8 Reserve for development costs 67. 2 62.9 Reserve for foreign currency translation adjustments 0 Retained earnings 1,072.7 1,057.6 Proposed dividend for the financial year 84.0 105.0 Total equity 1,536.3 1,475.3 Non-current liabilities Deferred tax 3.7 40.0 32.4 Credit institutions 4.2 306.1 84.4 Lease liabilities 3.3, 4.2 114.9 119.1 Other non-current liabilities 0 Total non-current liabilities 461.0 235.8 DKK millions Note 2024 2023 Current liabilities Credit institutions 4.2 263.8 95.2 Lease liabilities 3.3, 4.2 57.2 80.2 Trade payables 4.2 979.3 976.9 Amounts owed to subsidiaries 48.3 53.1 Joint tax contribution 0 3.7 Corporation tax payable 0 0 Provisions for liabilities 0.5 0.5 Other payables 3.8 45.6 58.9 Total current liabilities 1,394.6 1,268.4 Total liabilities 1,855.6 1,504.2 Total equity and liabilities 3,391.9 2,979.5 Contingent liabilities, security, etc. 5.1 Notes without reference 5.2 - 5.3 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Cash flow statement DKK millions Note 2024 2023 Cash flow from operating activities Operating profit or loss (EBIT) 126.0 225.2 Depreciation and amortisation 2.5 153.5 144.7 Other non-cash operating items, net 3.5 3.4 Cash flow from operations before change in working capital 283.0 373.3 Change in inventories 2.9 101.5 Change in receivables (69.1) 87.9 Change in trade payables and other current payables (9.9) (191.4) Change in working capital (76.1) (2.1) Cash flow from operations 206.9 371.3 Financial income received 17.3 3.7 Financial expenses paid (36.4) (26.0) Corporation tax paid (46.5) (17.5) Cash flow from operating activities 141.4 331.4 DKK millions Note 2024 2023 Cash flow from investing activities Purchase of intangible assets (44.1) (33.9) Purchase of property, plant and equipment (35.9) (40.1) Change in receivables from subsidiaries (32.5) (51.7) Dividends received 14.0 34.8 Sale of other non-current assets 0 0 Acquisition of enterprise (263.0) (1.5) Sale of enterprise 0 0 Cash flow from investing activities (361.5) (92.3) Cash flow from financing activities Repayment of debt to credit institutions 70.5 (61.7) Raising of loans from credit institutions 319.8 92.7 Repayment of lease liabilities (88.4) (80.9) Dividends paid (101.9) (142.7) Cash flow from financing activities 200.0 (192.5) Cashflow for the year (20.0) 46.5 Cash and short-term deposits at beginning of year 46.8 0.3 Cash and short-term deposits at end of year 26.8 46.8 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes DKK millions Share capital Equity method Reserve for development costs Proposed dividend for the year Retained earnings Total equity Equity at 1 January 2024 28.0 221.8 62.9 105.0 1,057.6 1,475.3 Net profit for the year 0 80.7 84.0 (1.3) 163.4 Movement for the year 0 0 4.3 0 (4.3) 0 Foreign currency translation adjustment 0 (4.1) 0 0 0 (4.1) Total comprehensive income 0 76.6 4.3 84.0 (5.5) 159.4 Dividend distribution 0 0 0 (101.9) 0 (101.9) Dividend treasury shares 0 0 0 (3.1) 3.1 0 Dividend received 0 (14.0) 0 0 14.0 0 Sharebased remuneration 0 0 0 0 3.5 3.5 Total transactions with owners 0 (14.0) 0 (105.0) 20.6 (98.4) Equity at 31 December 2024 28.0 284.4 67.2 84.0 1,072.7 1,536.3 Equity at 1 January 2023 28.0 209.3 41.2 147.0 982.0 1,407.5 Net profit for the year 0 46.4 0 105.0 54.7 206.1 Movement for the year 0 0 21.6 0 (21.6) 0 Foreign currency translation adjustment 0 1.0 0 0 0 1.0 Total comprehensive income 0 47.3 21.6 105.0 33.1 207.1 Dividend distribution 0 0 0 (142.7) 0 (142.7) Dividend treasury shares 0 0 0 (4.3) 4.3 0 Dividend received 0 (34.8) 0 0 34.8 0 Sharebased remuneration 0 0 0 0 3.4 3.4 Total transactions with owners 0 (34.8) 0 (147.0) 42.5 (139.3) Equity at 31 December 2023 28.0 221.8 62.9 105.0 1,057.6 1,475.3 Company statement of changes in equity In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Basis of preparation Section 1 1.1 Accounting policies 1.2 Significant estimated uncertainties and assumptions Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 1 1.1 Accounting policies The financial statements of the parent company Brødrene A & O Johansen A/S for 2024 are presented in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional disclosure requirements in the Danish Financial Statements Act. The accounting policies of the parent company remain unchanged from last year. Significant accounting policies are identical to those applied by the AO Group except for those mentioned below. A general description of accounting policies can be found in note 1.1 of the consolidated finan- cial statements. Result of investments in subsidiaries In the parent company’s income statement, the propor- tionate share of the individual subsidiaries’ profit/(loss) after tax is recognised after the full elimination of internal gains/losses. Investments in subsidiaries in the parent company’s financial statements Investments in subsidiaries are measured according to the equity method. Investments in subsidiaries are measured at the propor- tionate share of the companies’ net worth calculated according to the Group’s accounting policies with the addition or deduction of unrealised intra-group profits and losses, and the addition or deduction of the remaining value of positive or negative goodwill calculated according to the acquisition method. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 1 1.2 Significant estimated uncertainties and assumptions When calculating the carrying amount of certain assets and liabilities, estimates are made of how future events affect the value of these assets and liabilities at the balance sheet date. The estimates and assumptions may have a significant effect on the financial reporting and can be categorised as significant accounting judgements or significant accounting estimates and assumptions. The estimates made are based on historical experience and other factors that the management considers reasonable in the circumstances, but which are inherently uncertain and unpredictable. The assumptions may be incomplete or inaccurate, and unexpected events or circumstances may arise. Furthermore, the company is subject to risks and uncertainties that may cause actual results to differ from those estimates. It may be necessary to change previous estimates due to changes in the circumstances underlying them or due to new knowledge or subsequent events. Significant accounting judgements, estimates and assumptions Significant accounting estimates and judgements include assumptions and estimates of the future and other uncer- tainty, that could potentially affect the company within the next 12 months. Estimates that are material to the financial reporting are made, inter alia, by valuing the impairment testing of goodwill, receivables, and inventories and by calculating depreciation and impairment. The following estimates and accompanying assessments are deemed material for the preparation of the financial statements: · Impairment testing for goodwill and other intangible assets · Valuation of receivables · Inventory valuation These estimates and assessments are described in the following notes: Note 3.1 Intangible assets Note 3.5 Inventories Note 3.6 Trade receivables In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Income statement Section 2 2.1 Cost of sales 2.2 Other operating income 2.3 External expenses 2.4 Staff costs 2.5 Depreciation and amortisation 2.6 Tax on profit or loss for the year Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 2 2.2 Other operating income The item includes property rental income. 2.3 External expenses DKK millions 2024 2023 Remuneration for the auditor elected by the annual general meeting: Total remuneration may be specified as follows: Statutory audit (1.3) (1.2) Tax and VAT related advisory services (0.1) 0 Other assurance engagements (0.9) 0 Other services (0.1) (0.4) Total (2.4) (1.6) Other assurance engagements' primarily included statutory limited assurance over the sustainability statements and to a limited degree assurance services related to WEEE declaration. Tax and VAT related advisory services related to minor advice on general tax and VAT matters. Other services primarily related to ESG-related advice. 2.1 Cost of sales DKK millions 2024 2023 Cost of goods purchased during the year (3,599.1) (3,502.6) Distribution costs (203.6) (193.7) (3,802.7) (3,696.3) Change in inventories: Inventory at the beginning of the year 723.9 834.2 Change in cost during the year 13.9 9.9 Inventory writedown, net 4.7 22.3 Inventory at the end of the year 721.0 723.9 Change in inventory for the year (21.6) (142.6) Cost of sales for the year (3,824.3) (3,838.8) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 2 2.4 Staff costs DKK millions 2024 2023 Wages and salaries (427.7 ) (400.7) Pension contributions (37.4) (36.3) Share-based remuneration (3.5) (3.4) Other social security costs (5.8) (5.9) Other staff expenses (3.3) (3.2) Staff costs excl. temporary employees (477.7) (449.4) Wages temporary employees (42.7) (45.6) Staff costs total (520.4) (495.1) Wages and salaries include remuneration for: Board of Directors (2.6) (2.6) Board of Directors total (2.6) (2.6) Executive Board (25.4) (21.6) Share-based remuneration (1.2) (1.4) Pension contributions (1.6) (2.6) Benefits (0.6) (0.8) Executive Board total (28.8) (26.4) Board of Directors and Executive Board total (31.4) (29.0) Average number of full-time employees incl. temporary employees 884 879 Average number of full-time employees 815 808 The Company only has defined contribution plans. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 2 2.5 Depreciation and amortisation DKK millions 2024 2023 Intangible assets (25.8) (18.7) Property, plant and equipment (39.7) (45.4) Right-of-use assets, external (38.6) (32.9) Right-of-use assets, subsidiaries (49.8) (48.0) Gains/losses from the disposal of assets 0.4 0.3 Total (153.5) (144.7) 2.6 Tax on profit or loss for the year DKK millions 2024 2023 Current tax for the year (16.1) (39.5) Adjustment related to previous years (0.5) (0.3) Addition from acquisition 0 0 (16.6) (39.8) Adjustment of deferred tax for the year (7. 3) (4.1) Adjustment of deferred tax for previous years (0.3) 0.8 Total (24.2) (43.1) Tax on profit/loss for the year can be explained as follows: Calculated tax on profit/loss before tax, not incl. subsidiaries' profits 23.5 44.6 Tax effect of: Non-taxable income (0.7) (0.9) Other non-deductible costs 0.6 0.3 Adjustment of tax for previous years 0.8 (0.9) 24.2 43.1 Effective tax rate 22.2% 21.3% Taxes paid during the financial year (46.5) (17.5) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Invested capital Section 3 3.1 Intangible assets 3.2 Property, plant and equipment 3.3 Right-of-use assets and lease liabilities 3.4 Investments in subsidiaries 3.5 Inventories 3.6 Trade receivables 3.7 Deferred tax 3.8 Other payables Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 3 3.1 Intangible assets DKK millions Goodwill Intellectual property rights Software Cost at 1 January 2024 464.8 68.5 330.4 Foreign currency translation adjustment 0 0 0 Additions from acquisitions 0 0 0 Additions during the year 0 0 44.1 Disposals during the year 0 0 (41.4) Cost at 31 December 2024 464.8 68.5 333.1 Amortisation and depreciation at 1 January 2024 0 (24.3) (247.5) Foreign currency translation adjustment 0 0 0 Amortisation and depreciation for the year 0 (3.5) (22.4) Disposals during the year 0 0 41.4 Amortisation and depreciation at 31 December 2024 0 (27. 8) (228.4) Carrying amount at 31 December 2024 464.8 40.7 104.6 DKK millions Goodwill Intellectual property rights Software Cost at 1 January 2023 456.0 68.5 344.8 Foreign currency translation adjustment 0 0 0 Additions from acquisitions 0 0 0 Additions during the year 8.8 0 33.9 Disposals during the year 0 0 (48.3) Cost at 31 December 2023 464.8 68.5 330.4 Amortisation and depreciation at 1 January 2023 0 (20.8) (280.6) Foreign currency translation adjustment 0 0 0 Amortisation and depreciation for the year 0 (3.5) (15.2) Disposals during the year 0 0 48.3 Amortisation and depreciation at 31 December 2023 0 (24.3) (247.5) Carrying amount at 31 December 2023 464.8 44.2 82.9 In 2024 additions to goodwill derive from the acquisitions of DesignKupp and Workwear Group. Apart from goodwill, all intangible assets are considered to have definite useful lives. No significant changes have been made in estimates relating to intangible assets. Intellectual property rights relate to Billig VVS', Greenline's, LampeGuru's and EA Værktøj's trademarks, domain names, etc. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 3 3.1 Intangible assets (continued) Development costs Development costs are included in "Software". The net value of capitalised development costs may be illustrated as follows: DKK millions 2024 2023 Company Completed Work in progress Completed Work in progress Cost at 1 January 162.2 36.8 133.9 22.3 Additions during the year 0 47.5 18.6 24.2 Transfer 47.9 (52.1) 9.7 (9.7) Disposals (43.1) 0 0 0 Cost at 31 December 167.0 32.2 162.2 36.8 Amortisation and depreciation at 1 January (118.3) 0 (103.3) 0 Amortisation and depreciation for the year (23.1) 0 (15.0) 0 Transfer (12.3) 0 0 0 Amortisation and depreciation related to disposals 40.7 0 0 0 Amortisation and depreciation at 31 December (113.1) 0 (118.3) 0 Carrying amount at 31 December 53.9 32.2 43.9 36.8 Accounting policy Impairment testing for goodwill and other intangible assets In the annual impairment tests of intangible assets, including goodwill and rights, estimates are made of how the parts of the business (cash-generating units) to which goodwill and rights are attributed will be able to generate sufficient positive net cash flows in the future to support the value of the goodwill and rights. Due to the nature of the business, expected cash flows must be estimated for many years to come, leading to some uncertainty. This uncertainty is reflected by the chosen discount rate. Impairment testing has been described in note 3.1 of the consolidated financial statements. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 3 3.2 Property, plant and equipment DKK millions Land and buildings Leasehold improve- ments Fixtures and operating equipment Cost at 1 January 2024 195.2 34.2 588.9 Foreign currency translation adjustment 0 0 0 Additions from acquisitions 0 0 0 Additions during the year 10.2 3.8 21.9 Disposals during the year (0.1) (6.2) (45.6) Cost at 31 December 2024 205.3 31.8 565.2 Amortisation and depreciation at 1 January 2024 (56.4) (17.7 ) (369.2) Foreign currency translation adjustment 0 0 0 Amortisation and depreciation for the year (2.4) (4.0) (33.2) Disposals during the year 0.2 6.2 45.2 Amortisation and depreciation at 31 December 2024 (58.6) (15.6) (357.2) Carrying amount at 31 December 2024 146.7 16.2 208.0 DKK millions Land and buildings Leasehold improve- ments Fixtures and operating equipment Cost at 1 January 2023 190.6 28.8 563.5 Foreign currency translation adjustment 0 0 0 Additions from acquisitions 0 0 0 Additions during the year 4.7 5.7 31.4 Disposals during the year 0 (0.3) (6.0) Cost at 31 December 2023 195.2 34.2 588.9 Amortisation and depreciation at 1 January 2023 (48.3) (14.2) (339.8) Foreign currency translation adjustment 0 0 0 Amortisation and depreciation for the year (8.0) (3.8) (33.6) Disposals during the year 0 0.3 4.3 Amortisation and depreciation at 31 December 2023 (56.4) (17.7 ) (369.2) Carrying amount at 31 December 2023 138.9 16.5 219.8 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 3 3.3 Right-of-use assets and lease liabilities Right-of-use assets Land and buildings Fixtures and operating equipment Total Balance at 1 January 2024 157.1 38.9 196.0 Foreign currency translation adjustment 0 0 0 Additions during the year 30.5 23.8 54.3 Disposals during the year (1.2) (0.8) (2.0) Remeasurement of lease liability 8.0 0.8 8.8 Amortisation and depreciation for the year (72.3) (16.1) (88.4) Carrying amount at 31 December 2024 122.1 46.6 168.7 Right-of-use assets Land and buildings Fixtures and operating equipment Total Balance at 1 January 2023 190.7 14.6 205.3 Foreign currency translation adjustment 0 0 0 Additions during the year 39.2 41.6 80.9 Disposals during the year (6.7) (5.8) (12.4) Remeasurement of lease liability 2.8 0.4 3.2 Amortisation and depreciation for the year (69.0) (11.9) (80.9) Carrying amount at 31 December 2023 157.1 38.9 196.0 Lease liabilities 2024 2023 Maturity of lease liabilities 0-1 year 57. 9 86.7 1-5 years 98.1 103.5 >5 years 30.9 30.5 Total un-discounted lease liabilities at 31 December 186.8 220.8 Short-term lease liabilities, less than 1 year 57.8 80.2 Long-term lease liabilities, more than 1 year 114.3 119.1 Lease liabilities recognised in the balance sheet 172.1 199.3 Amounts recognised in the income statement Interest expenses on lease liabilities (5.1) (2.8) Expenses related to low value leasing arrangements (0.2) (0.2) Expenses related to short term leasing arrangements (1.0) (1.6) Depreciation related to right-of-use assets (85.2) (80.9) Total (91.5) (85.5) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 3 3.4 Investments in subsidiaries DKK millions 2024 2023 Cost at 1 January 127.6 127.6 Additions during the year 263.1 0 Disposal due to merger 0 0 Cost at 31 December 390.7 127.6 Value adjustment at 1 January 221.8 209.3 Disposal due to merger 0 0 Dividends (14.0) (34.8) Forign currency translation adjustments (4.1) 1.0 Subsidiaries' results 80.7 46.4 Value adjustment at 31 December 284.4 221.8 Carrying amount at 31 December 675.1 349.4 2024 2023 Name Registered office Ownership interest Ownership interest AO Invest A/S Albertslund 100% 100% AO Sverige AB Sweden 100% 100% VVSochBAD Sverige AB Sweden 100% 100% Billig VVS AS Norway 100% 100% LampeGuru AS Norway 100% 100% Designkupp AS Norway 100% 0% Workwear Group ApS Denmark 100% 0% 3.5 Inventories DKK millions 2024 2023 Carrying amount of inventories recognised at net selling price 32.3 41.8 Accounting policy Inventories The estimated uncertainty of inventories relates primarily to slow-moving goods and thus to impair- ment to the net realisable value. Impairment requirements are continuously assessed on inventories based on historical sales and the assessment of future sales. Key accounting judgments and estimates Supplier bonus Reporting from suppliers as well as AO’s own records are used when assessing the supplier bonus that is due to AO. Estimates are used when reporting from suppliers have not been received or when the reporting from suppliers do not reconcile with AO’s records. Ongoing retrospective reviews are performed to ensure that supplier bonus is included correctly in the financial statements. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 3 3.6 Trade receivables Trade receivables consist of sale of goods to business customers which, in essence, have the same risk profile. Provisions for bad debts are made in accordance with the simplified expected credit loss model, taking into account AO's credit policy and debt collection procedure. AO has taken up credit insurance on customers with large balances. Historically, the Company has incurred no losses on receivables from subsidiaries, and is not expected to going forward. Calculated on the basis of a weighted loss ratio, the expected credit losses on trade receivables are as follows: DKK millions Loss ratio Receivable amount Expected loss Total 2024 Not yet due 0.4% 547.2 (2.4) 544.7 Due within 1-30 days 1.8% 15.4 (0.3) 15.2 Due within 31-60 days 34.8% 2.7 (0.9) 1.7 Due in more than 60 days 73.0% 37.1 (27.1) 10.0 Total at 31 December 2024 602.4 (30.7) 571.6 2023 Not yet due 0.6 % 491.2 (2.7) 488.5 Due within 1-30 days 3.6 % 19.8 (0.7) 19.1 Due within 31-60 days 15.6 % 2.6 (0.4) 2.2 Due in more than 60 days 83.5 % 44.9 (37.5) 7.4 Total at 31 December 2023 558.5 (41.3) 517.2 * Expected losses are shown including VAT. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 3 3.6 Trade receivables (continued) DKK millions 2024 2023 Provision for losses on receivables: Provision for losses on receivables at 1 January excl. VAT 33.5 36.2 Realised loss during the year - use of previous provision (14.5) (8.3) Adjustment of provisions for losses 5.7 5.6 Provision for losses on receivables at 31 December 24.7 33.5 Recognised previously written-off receivables (0.3) (0.3) Losses recognised in the year and not previously provided for 0 0 Operating effect, net from loss and provision for losses on receivables 5.4 5.3 Accounting policy Receivables Estimates are used when assessing the probability of receivables. Due to the financial situation in society, the risk of losses on doubtful receivables remains high, which has been taken into account when assessing new customers, by way of impairment losses at the balance sheet date, and in the day-to-day governance and control of the receivables. Customer bonus Estimates are used in relation to the determination of the bonus levels reached on bonus agreements with a duration of more than one year. The applied estimates are reviewed on an ongoing basis to ensure a correct valuation of bonus due to customers. 3.7 Deferred tax DKK millions 2024 2023 Deferred tax at 1 January 32.4 29.1 Foreign currency translation adjustment 0 0 Merger / acquisition of enterprise 0 0 Change in deferred tax for the year 7.3 4.1 Change in deferred tax relating to previous years (0.3) (0.8) Deferred tax at 31 December 40.0 32.4 Deferred tax relates to: Intangible assets 31.7 27.7 Property, plant and equipment 14.4 13.6 Receivables (4.1) (7.5) Liabilities (2.0) (1.4) Tax deficit 0 0 Deferred tax at the end of the year 40.0 32.4 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 3 3.8 Other payables DKK millions 2024 2023 Holiday allowance 19.7 18.0 Salary-related items 12.1 18.6 VAT and taxes 10.7 13.0 Other payables 3.1 9.3 Total 45.6 58.9 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Capital structure and financing Section 4 4.1 Equity 4.2 Financing activities 4.3 Financial risks 4.4 Financial income 4.5 Financial expenses Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 4 4.1 Equity Share capital The share capital consists of the following classes: k DKK Class A-share capital: 56,400 shares of DKK 100 each 5,640 Class B-share capital: 22,360,000 shares of DKK 1 each 22,360 Total share capital 28,000 Of the Company's share capital of DKK 28,000k DKK 5,640k is in the form of Class A-shares and DKK 22,360k is in the form of Class B-shares. Each A-share of DKK 100 carries 1,000 votes whereas each Class B-share of DKK 1 carries one vote. In addition to the the difference in the number of voting rights, the two share classes differ in the following respects: The Class A-shares are non-negotiable securities. The Class B-shares are listed on Nasdaq Copen- hagen. The Class B-share capital has a preferential dividend right of 6%. In case of liquidation, Class B-shares take precedence over Class A-shares. As at December 31 2024 there are no outstanding obli- gations related to preferential dividends to Class B-shares. An alteration to the Company's Articles of Association requires that two thirds of cast votes and two thirds of the represented capital at a general meeting are in favour of the alteration. Holders of Class B-shares are entitled to appoint and elect one member of the Board of Directors, while holders of Class A-shares elect the remaining Board members. Number of shares Nomimal value (DKK thousands) % of share capital Treasury shares 2024 2023 2024 2023 2024 2023 1 January 823,900 823,900 824 824 2.9% 2.9% Holding at 31 December 823,900 823,900 824 824 2.9% 2.9% There have been no transactions with treasury shares in 2024. According to the authorisation of the annual general meeting, Brødrene A & O Johansen A/S is allowed to acquire treasury shares up to a total holding of 10% of the share capital. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 4 4.1 Equity (continued) Dividend The payment of dividends to the Company's shareholders has no tax implication for Brødrene A & O Johansen A/S. Proposed dividend for 2024 amounts to TDKK 84,000 corresponding to DKK 3.0 per share. Other reserves Reserve for net revaluation according to the equity method contains value adjustments related to investments in subsidiaries. Included in reserve for development costs is an amount corresponding to capitalised intangible assets meeting the criteria for being defined as a development project. Reserve for net revaluation according to the equity method and reserve for development costs are unavailable for distribution to shareholders. 4.2 Financing activities DKK millions 2024 2023 Mortgage loans - floating interest rate - 5 years 85.7 90.1 Bank loans - floating short-term interest rate 484.2 89.6 Lease liabilities - floating interest rate 172.1 199.3 742.0 378.9 Payables relating to financing activities: Beginning-of-year 378.9 358.9 Repayment of debt to credit institutions 390.3 (61.7) Raising of loans from credit institutions 0 92.7 Addition, lease liabilities, net 61.2 69.8 Repayment, lease liabilities (88.4) (80.9) Year-end 742.0 378.9 According to the leases there are no contingent rents. The contractual cash flows appear from note 4.3. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 4 4.3 Financial risks The companys payables fall due as follows: DKK millions Carrying amount Contractual cash flows Less than 1 year 1 to 5 years More than 5 years 2024 Mortgage loans 85.7 109.9 7. 8 30.9 71.3 Bank loans 484.2 484.2 258.4 225.8 0 Lease liabilities 172.1 186.8 57. 9 98.1 30.9 Trade payables 979.3 979.3 979.3 0 0 Intra-group balances 48.3 48.3 0 48.3 0 31 December 1,769.6 1,808.5 1,303.3 403.1 102.1 2023 Mortgage loans 90.1 124.0 8.2 32.3 83.6 Bank loans 89.6 89.6 89.6 0 0 Lease liabilities 199.3 220.8 86.7 103.5 30.5 Trade payables 976.9 976.9 976.9 0 0 Intra-group balances 53.1 53.1 0 53.1 0 31 December 1,408.8 1,464.3 1,161.2 188.9 114.1 4.4 Financial income DKK millions 2024 2023 Interest income from current assets 10.2 2.9 Interest income from subsidiaries 5.9 0.8 Foreign exchange gains, net 1.3 0 Total 17. 4 3.7 4.5 Financial expenses DKK millions 2024 2023 Interest expenses on liabilities (31.3) (17.3) Expenses, lease liabilities, external (2.4) (1.6) Expenses, lease liabilities, subsidiaries (2.6) (1.3) Other interest expenses (0.1) (0.1) Foreign exchange losses, net 0 (5.8) Total (36.4) (26.0) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Other notes Section 5 5.1 Contingent liabilities, security, etc. 5.2 Related parties 5.3 Subsequent events Financial statements Sustainability statementsCorporate governancePerformanceStrategyIn brief Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 5 5.1 Contingent liabilities, security, etc. Land and buildings with a total carrying amount of DKK 106.1m (2023: DKK 102.3m) are provided as security for the Company's payables to mortgage credit institutions and finance lease liabilities. As a normal part of doing business AO can be invovled in disputes or legal proceedings. The outcome of pending legal actions is not expected to have any material impact on the financial position of the Company. The company is jointly taxed with AO Invest A/S and the ultimate Danish parent company Avenir Invest ApS, which is the administration company for joint taxation purposes. The company is unlimited, jointly and severally liable with other jointly taxed companies towards the Danish tax authorities for the total corporation tax. Payable corporation taxes within the joint taxation group amounted to DKK -16.4m at 31 December 2024 (2023: DKK 8.4m). Any adjustment to the taxable income subject to joint taxation might entail an increase in the Compa- ny's liability. Group companies are not subject to withholding tax on dividends. Transactions appear from note 5.2. The company manages cash pooling for the Group entities and is jointly and severally liable for this. At 31 December 2024, the cash-pool arrangement amounts to DKK 43.9m (2023: DKK 89.1m). 5.2 Related parties The Company's related parties comprise the parent company Avenir Invest ApS (Axeltorv 2, DK-1607 Copenhagen V, Denmark), the Board of Directors, the Executive Board and management employees. Avenir Invest ApS has control over the company through its ownership of the majority of the voting rights. During the year, no transactions were carried out with Avenir Invest ApS apart from payment of dividends and corporate tax. During the year, no significant transactions were carried out with the Board of Directors, the Executive Board, management employees or major shareholders apart from normal management remuneration, cf. note 2.4, and dividend payments. In addition, related parties are the Company's subsidiaries to whom letters of subordination have been submitted. Trading with subsidiaries comprises the following: DKK millions 2024 2023 Sale of goods 114.1 109.8 Rental expenses 53.1 48.5 Management fee 5.1 4.0 Transactions with subsidiaries are eliminated in the consolidated financial statements in accordance with the accounting policies. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Contents Consolidated financial statements Parent company financial statements Income statement Statement of comprehensive Income Balance sheet Cash flow statement Statement of changes in equity Notes Basis of preparation Income statement Invested capital Capital structure and financing Other notes Section 5 The Company's balances with subsidiaries at 31 December can be seen in the balance sheet. Balances with subsidiaries comprise ordinary trading balances related to the sale of goods. Ordinary trading balances attract no interest and are subject to the same terms of trade as other customers of the Company. Balances with subsidiaries also comprise the construction and conversion of buildings. Return on balances appears from notes 4.4 and 4.5. The Company has entered into building leases with AO Invest A/S, cf. note 3.3. As the Company is jointly taxed with other Danish Group entities, it is liable to pay taxes of DKK -26.3m (2023: DKK 3.7m). 5.3 Subsequent events No events have occurred after 31 December 2024 that are considered to have a material effect on the annual report for 2024. 5.2 Related parties (continued) In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Statements 201 Management’s statement 202 Independent auditor’s report 206 Independent auditor’s limited assurance report on the Sustainability Statement In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Management’s statement The Board of Directors and the Executive Board have today considered and adopted the annual report of Brødrene A & O Johansen A/S for the financial year 1 January - 31 December 2024. The Consolidated Financial Statements and the Parent Company Financial Statements have been prepared in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act. Management’s Review has been prepared in accordance with the Danish Financial Statements Act. In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the financial position at 31 December 2024 of the Group and the Parent Company and of the results of the Group and Parent Company operations and cash flows for 2024. In our opinion, Management’s Review includes a fair review of the development in the operations and financial circum- stances of the Group and the Parent Company, of the results for the year and of the financial position of the Group and the Parent Company as well as a description of the most signifi- cant risks and elements of uncertainty, which the Group and the Parent Company are facing. Additionally, the sustainability statement, which is part of Management’s Review, has been prepared, in all material respects, in accordance with paragraph 99 a of the Danish Financial Statements Act. This includes compliance with the European Sustainability Reporting Standards (ESRS) including that the process undertaken by Management to identify the reported information (the “Process”) is in accordance with the description set out in the section titled Double Materiality Assessment. Furthermore, disclosures within the sustainability statement are, in all material respects, in accordance with the EU Taxonomy Regulation. The year 2024 marks the initial implementation of paragraph 99 a of the Danish Financial Statements Act concerning compliance with ESRS. As such, more clear guidance and practice are anticipated in various areas, which are expected to be issued in the coming years. Furthermore, the sustaina- bility statement includes forward-looking statements based on disclosed assumptions about events that may occur in the future and possible future actions by the Group. Actual outcomes are likely to be different since anticipated events frequently do not occur as expected. In our opinion, the annual report for the financial year 1 January – 31 December 2024, file name 5299004B6ZEG- VCR9ZR75-2024-12-31-en.zip, is prepared, in all material respects, in compliance with the ESEF Regulation. We recommend that the Annual Report be adopted at the Annual General Meeting. Albertslund, 27 February 2025 Executive Board Niels A. Johansen Per Toelstang CEO CFO/Deputy CEO Stefan Funch Jensen Lili Johansen CTO CHRO Board of Directors Henning Dyremose Erik Holm Chair Deputy Chair René Alberg Ann Fogelgren Peter Gath Leif Hummel Marlene L. Jakobsen Niels A. Johansen In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Independent auditor’s report Report on the audit of theFinancial Statements Our opinion In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the Group’s and the Parent Company’s financial position at 31 December 2024 and of the results of the Group’s and the Parent Company’s operations and cash flows for the financial year 1 January to 31 December 2024 in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act. Our opinion is consistent with our Auditor’s Long- form Report to the Audit Committee and the Board of Directors. What we have audited The Consolidated Financial Statements and Parent Company Financial Statements of Brødrene A & O Johansen A/S for the financial year 1 January to 31 December 2024 comprise income statement and statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including material accounting policy information for the Group as well as for the Parent Company. Collectively referred to as the “Financial Statements”. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor’s responsibilities for the audit of the Financial 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. Independence We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark. We have also fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. To the best of our knowledge and belief, prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 were not provided. Appointment We were first appointed auditors of Brødrene A & O Johansen A/S on 19 March 2021 for the financial year 2021. We have been reappointed annually by shareholder resolution for a total period of uninterrupted engagement of 4 years including the financial year 2024. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements for 2024. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. To the shareholders of Brødrene A & O Johansen A/S In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Key audit matter How our audit addressed the key audit matter Recognition of revenue Revenue is measured at fair value of the consideration agreed exclusive of VAT and duties and after deduction of discounts and customer bonus. We focused on revenue recognition because revenue is the most significant financial statement line item, consists of a large number of IT-dependent transactions and is based on many individual contracts. We refer to note 2.1 of the Financial State- ments. We carried out risk assessment procedures to gain an understanding of relevant IT systems, business procedures and controls for revenue recognition, including customer bonus. For relevant controls we assessed whether they were designed and imple- mented to effectively address the risk of material misstatement. For selected controls, which we planned to rely on in our audit, we tested whether they had been carried out on a consistent basis. We analysed revenue transactions and iden- tified transactions that did not follow the usual or expected transaction pattern. On a sample basis we tested the transactions to the underlying contractual basis. We performed analytical procedures over revenue and discussed significant fluc- tuations with management and obtained corroborating evidence of material fluctua- tions, where deemed necessary. We reviewed Management's calculation of customer bonus and on sample basis tested it to the underlying contracts as well as to subsequent and historical settlements. Measurement of inventories and calculation of supplier bonus receivable I Inventories are measured at the lower of cost and net realisable value. The measurement of inventories contains significant accounting estimates related to their net realisable value and expected supplier bonus. Additionally, inventories acquired through business combinations require assessment of the fair value at the date of take-over. The calculation of supplier bonus is based on individual and complex contracts as well as estimates of the total purchases for the year made through international procure- ment cooperations. We focused on the measurement of inven- tories as inventories represent a significant line item in the Financial Statements and since technical obsolescence of inventories and changes in consumption patterns may lead to significant write-downs. Further, because the assessment of the fair value of inventories acquired through business combinations is subject to management’s estimate and uncertainty. We focused on the calculation of supplier bonus receivables as recognition is based on comprehensive contracts and significant data volumes as well as estimates of the total purchases for the year made through international procurement cooperation. We refer to notes 2.2 and 3.4 of the Finan- cial Statements. We carried out risk assessment procedures to gain an understanding of relevant IT systems, business procedures and controls for inventories and supplier bonuses. For relevant controls, we assessed whether they were designed and implemented to effectively address the risk of material misstatement. For selected controls, which we planned to rely on in our audit, we tested whether they had been carried out on a consistent basis. We assessed management’s estimate of the fair value of inventories acquired through business combinations, and reviewed the underlying method, assumptions and data. We compared cost prices with underlying documentation and reviewed Management's method, assumptions and data for its esti- mate of the net realisable value of the indi- vidual goods, including look back analysis of historical inventory write-downs. On a sample basis, we tested Manage- ment's calculation of supplier bonus to the underlying contractual basis, as well as management’s look back analysis of histor- ical settlements and confirmations from counterparties. In addition, we reviewed Management's assumptions and data for its estimates of the total purchases made through inter- national procurement cooperations and expected final settlements. Statement on Management’s Review Management is responsible for Management’s Review. Our opinion on the Financial Statements does not cover Management’s Review, and we do not as part of the audit express any form of assurance conclusion thereon. In connection with our audit of the Financial State- ments, our responsibility is to read Management’s Review and, in doing so, consider whether Manage- ment’s Review is materially inconsistent with the Finan- cial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Moreover, we considered whether Management’s Review includes the disclosures required by the Danish Financial Statements Act. This does not include the requirements in paragraph 99 a related to the sustain- ability statement covered by the separate auditor’s limited assurance report hereon. Based on the work we have performed, in our view, Management’s Review is in accordance with the Consol- idated Financial Statements and the Parent Company Financial Statements and has been prepared in accord- ance with the requirements of the Danish Financial Statements Act, except for the requirements in para- graph 99 a related to the sustainability statement, cf. above. We did not identify any material misstatement in Management’s Review. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Management’s responsibilities for the Financial Statements Management is responsible for the preparation of consolidated financial 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 further requirements in the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, Manage- ment is responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about 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 assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstate- ments can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. As part of an audit in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain profes- sional scepticism throughout the audit. We also: · Identify and assess the risks of material misstate- ment of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is 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 collu- sion, forgery, intentional omissions, misrepresenta- tions, or the override of internal control. · Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effec- tiveness of the Group’s and the Parent Company’s internal control. · Evaluate the appropriateness of accounting policies used and the reasonableness of accounting esti- mates and related disclosures made by Management. · Conclude on the appropriateness of Management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern. · Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view. · Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the Consolidated Financial Statements and the Parent Company Financial Statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. 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. 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 independence and, where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial State- ments of the current period and are therefore the key audit matters. We describe these matters in our audi- tor’s report unless law or regulation precludes public disclosure about the matter. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Report on compliance with the ESEF Regulation As part of our audit of the Financial Statements we performed procedures to express an opinion on whether the annual report of Brødrene A & O Johansen A/S for the financial year 1 January to 31 December 2024 with the filename 5299004B6ZEGVCR9ZR75-2024-12-31-en. zip is prepared, in all material respects, in compli- ance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the Consolidated Financial State- ments including notes. Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility includes: · The preparing of the annual report in XHTML format; · The selection and application of appropriate iXBRL tags, including extensions to the ESEF taxonomy and the anchoring thereof to elements in the taxonomy, for all financial information required to be tagged using judgement where necessary; · Ensuring consistency between iXBRL tagged data and the Consolidated 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. 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 judge- ment, including the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The proce- dures include: · Testing whether the annual report is prepared in XHTML format; · Obtaining an understanding of the company’s iXBRL tagging process and of internal control over the tagging process; · Evaluating the completeness of the iXBRL tagging of the Consolidated Financial Statements including notes; · Evaluating the appropriateness of the company’s use of iXBRL elements selected from the ESEF taxonomy and the creation of extension elements where no suitable element in the ESEF taxonomy has been identified; · Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and · Reconciling the iXBRL tagged data with the audited Consolidated Financial Statements. In our opinion, the annual report of Brødrene A & O Johansen A/S for the financial year 1 January to 31 December 2024 with the file name 5299004B6ZEG- VCR9ZR75-2024-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. Hellerup, 27 February 2025 PricewaterhouseCoopers, Statsautoriseret Revisionspartnerselskab, CVR no 3377 1231 Anders Stig Lauritsen Daniel Sitch State Authorised Public Accountant State Authorised Public Accountant mne32800 mne47889 In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Independent auditor’s limited assurance report on the Sustainability Statement To the stakeholders of Brødrene A & O Johansen A/S Limited assurance conclusion We have conducted a limited assurance engagement on the sustainability statement of Brødrene A & O Johansen A/S (the “Group”) included in the Management’s review (the “Sustainability Statement”), page 40 – 115, for the financial year 1 January – 31 December 2024. Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Sustainability Statement is not prepared, in all mate- rial respects, in accordance with the Danish Financial Statements Act paragraph 99 a, including: · compliance with the European Sustainability Reporting Standards (ESRS), including that the process carried out by the management to iden- tify the information reported in the Sustainability Statement (the “Process”) is in accordance with the description set out in the section titled ‘Double Mate- riality Assessment’; and · compliance of the disclosures in the section titled ‘EU Taxonomy’ of the Sustainability Statement with Article 8 of EU Regulation 2020/852 (the “Taxonomy Regulation”). Basis for conclusion We conducted our limited assurance engagement in accordance with International Standard on Assur- ance Engagements (ISAE) 3000 (Revised), Assurance engagements other than audits or reviews of historical financial information (“ISAE 3000 (Revised)”) and the additional requirements applicable in Denmark. The procedures in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assur- ance engagement been performed. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Our responsibilities under this standard are further described in the Auditor’s responsibilities for the assurance engagement section of our report. Our independence and quality management We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Account- ants (IESBA Code) and the additional ethical require- ments applicable in Denmark. We have also fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Our firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Management’s responsibilities for the Sustainability Statement Management is responsible for designing and imple- menting a process to identify the information reported in the Sustainability Statement in accordance with the ESRS and for disclosing this Process as included in the section titled ‘Double Materiality Assessment’ of the Sustainability Statement. This responsibility includes: · understanding the context in which the Group’s’ activities and business relationships take place and developing an understanding of its affected stake- holders; · the identification of the actual and potential impacts (both negative and positive) related to sustainability matters, as well as risks and opportunities that affect, or could reasonably be expected to affect, the Group’s’ financial position, financial performance, cash flows, access to finance or cost of capital over the short-, medium-, or long-term; · the assessment of the materiality of the identified impacts, risks and opportunities related to sustaina- bility matters by selecting and applying appropriate thresholds; and · making assumptions that are reasonable in the circumstances. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Management is further responsible for the preparation of the Sustainability Statement, which includes the information identified by the Process, in accordance with the Danish Financial Statements Act paragraph 99a, including: · compliance with the ESRS; · preparing the disclosures in the section titled ‘EU taxonomy’ within the Sustainability Statement, in compliance with Article 8 of the Taxonomy Regulation; · designing, implementing and maintaining such internal control that management determines is necessary to enable the preparation of the Sustain- ability Statement that is free from material misstate- ment, whether due to fraud or error; and · the selection and application of appropriate sustaina- bility reporting methods and making assumptions and estimates that are reasonable in the circumstances. Inherent limitations in preparing the Sustainability Statement In reporting forward-looking information in accordance with ESRS, management is required to prepare the forward-looking information on the basis of disclosed assumptions about events that may occur in the future and possible future actions by the Group. Actual outcomes are likely to be different since anticipated events frequently do not occur as expected. Auditor’s responsibilities for the assurance engagement Our responsibility is to plan and perform the assur- ance engagement to obtain limited assurance about whether the Sustainability Statement is free from material misstatement, whether due to fraud or error, and to issue a limited assurance report that includes our conclusion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence decisions of users taken on the basis of the Sustainability Statement as a whole. As part of a limited assurance engagement in accord- ance with ISAE 3000 (Revised) we exercise professional judgement and maintain professional scepticism throughout the engagement. Our responsibilities in respect of the Process include: · Obtaining an understanding of the Process, but not for the purpose of providing a conclusion on the effectiveness of the Process, including the outcome of the Process; · Considering whether the information identified addresses the applicable disclosure requirements of the ESRS; and · Designing and performing procedures to evaluate whether the Process is consistent with the Group’s description of its Process, as disclosed in the section titled 'Double materiality assessment'. Our other responsibilities in respect of the Sustaina- bility Statement include: · Identifying where material misstatements are likely to arise, whether due to fraud or error; and · Designing and performing procedures responsive to disclosures in the Sustainability Statement where material misstatements are likely to arise. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Summary of the work performed A limited assurance engagement involves performing procedures to obtain evidence about the Sustainability Statement. The nature, timing and extent of procedures selected depend on professional judgement, including the identification of disclosures where material misstatements are likely to arise, whether due to fraud or error, in the Sustainability Statement. In conducting our limited assurance engagement, with respect to the Process, we: · Obtained an understanding of the Process by performing inquiries to understand the sources of the information used by management; and reviewing the Group’s internal documentation of its Process; and In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Hellerup, 27 February 2025 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR no 33 77 12 31 Anders Stig Lauritsen Daniel Sitch State Authorised Public Accountant State Authorised Public Accountant mne32800 mne47889 · Evaluated whether the evidence obtained from our procedures about the Process implemented by the Group was consistent with the description of the Process set out in the section titled 'Double materi- ality assessment'. In conducting our limited assurance engagement, with respect to the Sustainability Statement, we: · Obtained an understanding of the Group’s reporting processes relevant to the preparation of its Sustain- ability Statement including the consolidation processes by obtaining an understanding of the Group’s control environment, processes and infor- mation systems relevant to the preparation of the Sustainability Statement but not evaluating the design of particular control activities, obtaining evidence about their implementation or testing their operating effectiveness; · Evaluated whether the information identified by the Process is included in the Sustainability Statement; · Evaluated whether the structure and the presentation of the Sustainability Statement are in accordance with the ESRS; · Performed inquiries of relevant personnel and analytical procedures on selected information in the Sustainability Statement; · Performed substantive assurance procedures on selected information in the Sustainability Statement; · Where applicable, compared disclosures in the Sustainability Statement with the corresponding disclosures in the financial statements and manage- ment’s review; · Evaluated the methods, assumptions and data for developing estimates and forward-looking informa- tion; and · Obtained an understanding of the Group’s process to identify taxonomy-eligible and taxonomy-aligned economic activities and the corresponding disclo- sures in the Sustainability Statement. In brief Performance Corporate governance Sustainability statementsStrategy Financial statements Annual Report 2024 Company information Brødrene A. & O . Johansen A/ S Rørvang 3 DK-2620 Albertslund Phone: +45 70 28 00 00 Website: www.ao.dk CVR number: 58 21 06 17 LEI code 5299004B6ZEGVCR9ZR75 ID code: DK0060803831 Founded: 1914 Registered Office: Albertslund Board of Directors Henning Dyremose, Chair Erik Holm, Deputy Chair René Alberg Ann Fogelgren Peter Gath Leif Hummel Marlene L. Jakobsen Niels A. Johansen Executive Board Niels A. Johansen, Chief Executive Officer Stefan Funch Jensen, Chief Transformation Officer Lili Johansen, Chief Human Resources Officer Per Toelstang, Chief Financial Officer/ Deputy Chief Executive Officer Auditors PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Annual General Meeting The Annual General Meeting will be held on 21 March 2025. 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