Demant

Demant A/S Annual Report 2024 Peter, hearing aid user, pensioner, and ironman Demant A/S Kongebakken 9 2765 Smørum Denmark CVR no. 71186911 1 January – 31 December 2024 Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 2 We are pleased to present Demant’s Annual Re- port 2024 prepared as an integrated report in ac- cordance with the reporting framework of the Fi- nancial Reporting Standards (IFRS) and the ‘EU Corporate Sustainability Reporting Directive’ (CSRD) and its European Sustainability Reporting Standards (ESRS). It encompasses both financial and sustainability performance for the full calen- dar year 2024 presented in our Management Statement, Sustainability Statement and Financial Statements. This report addresses how we create value for all our stakeholders as a leading hearing healthcare company with an impact on the environment and society. It provides a comprehensive overview of our strategy and business model, the risks and opportunities we face as well as our financial, en- vironmental, social and governance performance. Our sustainability reporting choices are guided by our double materiality assessment, detailed on page 57, where we outline the topics that have been identified as material. Information related to the impacts, risks and opportunities, policies, ac- tions and progress towards our targets are in- cluded thereafter. All information related to the ESRS disclosure re- quirements is provided with the corresponding ESRS reference throughout the report. You can find an overview of all the disclosure requirements included and their location in the report on pages 110-115. You can find the auditor’s reports in the “Signa- tures section” on page 199. In the “Document library” of our “News and media section” on Demant.com, we provide access to all our reports. This also includes our Remuneration Report, which offers an overview of the remunera- tion of the Executive Board and the Board of Di- rectors in 2024, and the Corporate Governance Report, which includes information on the com- pany’s management structure and a review on how we address the corporate governance pursu- ant to section 107b of the Danish Financial State- ments Act and the Nordic Main Market Rulebook for Issuers of Shares prepared by Nasdaq. Thank you for your interest in our report. We hope it provides valuable insights and that you enjoy reading it. About this report www.demant.com/reports -2024/re- muneration-report-2024 www.demant.com/reports -2024/cor- porate-governance-report-2024 “Despite living with a disease that causes both visual and hearing impairment that worsens over time, my motto is: Disability is not inability.” Peter is an Oticon hearing aids user, pensioner, and a passionate marathon runner and iron man Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 3 Overview 5 Market and strategy 14 Financial performance 21 Corporate governance 36 Sustainability in Demant 52 Environment 65 Social 84 Governance 102 Additional information 107 Consolidated financial statements 119 Parent financial statements 181 Statement by management 200 Independent auditor’s reports 202 Independent auditor’s limited assurance report on the sustainability statement 206 Table of contents Management statement Sustainability statement Financial statements Signatures Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 4 “Another thing I love about my hear- ing aids is the fact that I'm able to hear all the small details. For exam- ple, the sound of the waves when I'm at the beach playing catch with my dog.” Louise, clinical specialist and hearing aid user Management statement Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 5 Performance highlights 6 CEO letter 7 This is Demant 9 Event highlights in 2024 11 Overview Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 6 Revenue 1 (DKK billion) Medium- to long-term target: Growth of 8-10% p.a. in local currencies Scope 1 and 2 GHG emissions (tonnes of CO2 e ) 2030 target: 46% reduction in scope 1 and 2 greenhouse gas (GHG) emissions vs. 2019 3 EBIT before special items 1 (DKK million) Medium- to long-term target: Incremental EBIT margin expansion in constant currencies Share buy-backs (DKK million) Medium- to long-term target: Excess free cash flow after acquisitions to be used for share buy- backs Business integrity (share of relevant employees onboarded) 2030 target: Code of conduct training to reach 100% of highly exposed employees 17.9 19.7 21.6 22.4 0 5 10 15 20 25 2021 2022 2023 2024 34,288 37,136 33,103 29,426 0 40,000 2021 2022 2023 2024 3,663 3,207 4,506 4,404 0 1,000 2,000 3,000 4,000 5,000 2021 2022 2023 2024 3,200 1,840 846 2,301 0 1,000 2,000 3,000 4,000 2021 2022 2023 2024 76% 0% 2021 2022 2023 2024 Performance highlights Number of lives improved (million) 2030 target: More than 16 million lives improved 2 We are guided by our purpose and strategic ambition to create life - changing differences through hear- ing health. In 2024, we reached mil- lions of people living with a hearing loss, while continuing to deliver industry -leading financial perfor- mance and improve our sustainabil- ity metrics. Gender diversity in leadership (share of under-represented gender) 2030 target: Increase gender balance in top- level management to 35/65% (women/men) 8.8 9.4 10.3 10.9 0 5 10 15 2021 2022 2023 2024 22% 23% 29% 31% 0% 2021 2022 2023 2024 Data not available 1 Comparative figures for 2021-2022 have been restated to exclude Hearing Implants but include Communications 2 This represents the number of people who benefit from hearing aids from Demant 3 The target for reduction in scope 1 and 2 GHG emissions is calculated vs. the 2019 baseline of 31,980 tonnes of CO2 e 16 35% 100% Target Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 7 On 8 June 1904, the Demant family sold their first hearing aid from their mechanics spare parts store in a small Danish town. We can only guess whether the family celebrated this first order, but had they known what they started, they would have had ample reasons for excitement. This year, we certainly celebrated the 120th anni- versary of our cherished company, which has now evolved into a world-leading hearing healthcare company that offers solutions, benefitting millions of people either living with hearing loss or working on alleviating hearing loss. The innovative devel- opment of hearing aids, diagnostic equipment and hearing treatment for the past 120 years has taken place on the back of our commitment to al- ways exceed expectations and deliver on our core purpose: To help people overcome hearing loss and improve their quality of life through innovative solutions and personalised hearing care. Improved lives Our purpose is to change the lives of people who would otherwise be significantly limited in their so- cial and interpersonal interactions. In 2024, we im- proved the lives of 11 million people; they all ben- efitted from using hearing aids from Demant. This life-changing aspect and our ambition to help as many people as possible mean that we are com- mitted to providing quality solutions, raising awareness about hearing loss and ensuring ac- cess to treatment. One way to do this is to test hearing loss, and in 2024, 1.5 million people were tested in one of our clinics worldwide. Thanks to the activities in our business areas, Hearing Aids, Hearing Care and Diagnostics, Demant has a positive impact on people’s health and well-being every day. Before I celebrate the achievements of our busi- ness areas in 2024, let me start by saying that everything has not been all rosy in our anniver- sary year. Halfway through the year, we had to re- vise our financial outlook and implement cost-sav- ing initiatives to safeguard profitability and deliver on our commitment to drive attractive financial re- turns for investors. That being said, I want to emphasise that Demant is in a very strong position. This can be attributed to our ability to deliver growth and earnings across geographies and channels based on innovation, development of core technology and strong global distribution. In 2024, the Group delivered results – in line with our updated expectations – of 2% or- ganic revenue growth and an operating profit be- fore special items of DKK 4.4 billion. Especially our Hearing Care business area drove solid growth and generated 7% organic growth in sec- ond half year. A more focused company The Group’s solid performance in a highly com- petitive environment is the result of our important strategic decision to become a more focused hearing healthcare company. This was communi- cated in 2024, where we also harvested the first fruits of this strategy by finalising the divestment of our cochlear implants business and by creating a turnaround in our headset business EPOS from loss-making to profitable. Another upside of our focused hearing healthcare strategy is our ability to further concentrate our ef- forts on the core business. For our Hearing Aids business area, performance in 2024 did not live up to our original expectations. On the back of a very strong 2023, we were not able to sustain mo- mentum in 2024, which impacted our growth in a generally intense competitive market. CEO letter In 2024, where we marked Demant’s 120th anniversary, we also took im- portant steps to becom e a more focused hearing healthcare company. Based on our strategy, Leading hearing healthcare, I am proud to present in this Annual Report our key achievements of the year as well as the com- mercial and sustainable aspects of operating and growing a global company for the benefit of our customers , users, employees and shareholders. Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 8 Powerful artificial intelligence In 2024, all our hearing aid brands launched new products, Oticon Intent, Bernafon Encanta and Philips HearLink, and we were reassured that they hold their ground. Introduced at the beginning of the year, Oticon Intent offers powerful artificial in- telligence (AI) and provides superior audiology in terms of speech clarity and noise cancellation. The benefits of using AI in our solutions are signif- icant, and Demant is, and has been, investing sig- nificantly in AI-based signal processing for many years. At this time of exponential technological changes, the possibilities of helping users even more seem limitless, and I believe it is essential that our R&D efforts focus on key technology driv- ers, while considering important factors, such as power consumption, audiological performance, connectivity and size of the device. In Q1 2025, we will deliver on these priorities and launch new AI-powered in-the-ear devices featuring our first and second-generation deep neural networks in all our hearing aids brands. Our flagship product, Oticon Intent, was also a strong sales driver for our Hearing Care business area, boasting a strong global organisation, which at the end of 2024 counted more than 4,000 clin- ics worldwide, leaving us well positioned to drive strong growth in the future. This growth will be ob- tained by our continuous focus on expanding our clinic network, both organically and through acqui- sitions, on further improving best practices and on purposely developing our people and our brands. I cannot emphasise enough the importance of our specialists, the hearing care experts, as we base our customer promise on their ability to deliver personalised care. The Diagnostics business area welcomed a new President in 2024, who will be leading the busi- ness area into the future in collaboration with the many talented people in Diagnostics and across Demant. As the general market for diagnostic equipment was soft in 2024, there is a lot to at- tend to, but the structural growth drivers remain intact, so we expect to see better growth rates, and in that market, our Diagnostics business area should perform very well, backed by Demant’s historically strong market position and technologi- cal stronghold. Refined sustainability strategy When we operate a more focused business, we can leverage scale and increase business resili- ence as well as drive responsible and sustainable business practices. In 2024, we refined our sustainability strategy, based, among other elements, on our double ma- teriality assessment. Material sustainability risks and opportunities in our own operations and in Demant’s value chain guide our priorities in terms of reducing our negative impact and increasing our positive impact. Overall, both measures should enhance our sustainability performance. Let me highlight a few topics. Engaging hearts and minds Caring for people’s health and well-being goes hand in hand with caring for the planet, and a way of marking Demant’s 120th anniversary was to en- gage our locations worldwide in planting trees and contributing to our “anniversary grove”. We set out to plant 120 native species trees globally. In terms of positive impact on the environment, the event was more symbolic than tangible. But we need to engage both hearts and minds to take part in solv- ing the challenges the planet is facing, and our cli- mate ambitions are very concrete. In 2024, we have worked with decoupling our own emissions from company growth, and due to our focus on renewable electricity, 35% of our total electricity consumption is now from renewable sources. We also launched a Group-wide electri- cal vehicle ambition. Our targets are ambitious, not least the targets for our scope 3 emissions that relate to our value chain, so we depend on close collaboration with our suppliers to reach our goals. Care and respect The 120 trees event was also about unity and community in a Group with activities in many countries, with employees of many different back- grounds and with care for people at the core of what we do. Generally, when I look at the diversity traits of our Group and our efforts to create a work environment built on care and respect for others, I believe we are in a good place. In 2024, we reached our 2025 target for increased gender balance in our global top management ahead of time, and our new target for this group is now 35% women and 65% men. Furthermore, our inclusion score reached 4.27 on a scale of 1-5, and in the coming years, we will keep focusing on diversity, equity and inclusion, the target being to take the employee experience of inclusion to be among the top-third of “best in class” by 2030. Optimism for 2025 As 2024 came to an end, I was reassured that our hearing healthcare strategy with focus on the core business will secure our long-term growth and fu- ture success. We enter 2025 with optimism and energy to con- tinue to drive sustainable growth in all business areas. So, a big thank you to our customers, hear- ing aid users and shareholders for standing with us all the way and to our employees for their con- tinued engagement and commitment to creating life-changing hearing health. Søren Nielsen The innovative development of hearing aids, diagnostic equipment and hearing treatment for the past 120 years has taken place on the back of our commitment to always exceed expectations and deliver on our core purpose. Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 9 Founded in 1904 by the Demant family Employs more than 22,000 people globally 11 million lives improved in 2024 This is Demant Our purpose Life -changing hearing health Global HQ Direct sales markets Research & development Distributor markets Manufacturing & service Research and development Innovation is an integral part of Demant’s strategy, and we constantly strive for technological advance- ments in our R&D activities. Our main R&D sites are located in Denmark, Poland and Malaysia and we have smaller R&D sites in other countries. Manufacturing and service Demant has a strong manufacturing set-up with two main locations in Poland where we manufacture hearing aids and diagnostic equipment for global markets. We also have a site in Mexico, primarily for custom devices and servicing. Sales and distribution Demant serves customers in more than 130 coun- tries globally. In over 30 countries, we sell our prod- ucts directly through our own local sales organisa- tions and hearing care clinics. The remaining mar- kets are serviced by distributors. Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 10 The Demant Group develops, manufactures and sells products and equipment that help people with hearing loss connect and communicate with the world around them. We operate a focused hearing healthcare com- pany, consisting of three business areas: Hearing Aids, Hearing Care and Diagnostics. The business areas operate through separate or- ganisations and offer multiple brands to best serve their individual markets and channels. How- ever, the business areas also collaborate exten- sively across the entire value chain – from pur- chasing and manufacturing to technological devel- opment, distribution and global infrastructure. Our approach to hearing healthcare and innova- tion, combined with the synergies obtained be- tween our business areas, thus enables us to cre- ate life-changing differences through hearing health, thereby helping millions of people experi- ence the joy of hearing now and in the future. For more details on our strategy and operating model, please refer to Our strategy on page 17. Hearing Aids Hearing Care Diagnostics The Hearing Aids business area engages in the development, manufacturing and whole- sale of hearing aids, developing innovative and leading technological solutions that cre- ate life-changing hearing health. • Serves customers in 130+ countries • 900+ employees in Hearing Aids R&D The Hearing Care business area comprises the Audika Group, which is a global retail company that provides personalised hearing care to cus- tomers worldwide through several strong local brands . • 4,000+ clinics worldwide • Hearing care clinics in 25+ countries The Diagnostics business area consists of a group of international companies and is the global market leader in hearing and balance as- sessment solutions used by audiologists, ENT doctors and balance clinics worldwide. • Facilitated screening of 200+ million people • Holds a market leading position in relevant categories EXTERNAL REVENUE IN 2024 10,022 DKK MILLION REVENUE IN 2024 9,932 DKK MILLION REVENUE IN 2024 2,465 DKK MILLION Supplier engagement We launched a new supplier engagement programme in 2024 to collect primary data and set targets for our suppliers to enhance their environmental performance. Awareness of hearing health We offer people free yearly hearing tests to promote early detection of hearing loss and timely intervention. In 2024, we tested 1.5 mil- lion people. Scope 3 emissions reduction Demant aims to use less climate-intense transport modes to mitigate climate change. This target resulted in a 16% emissions reduc- tion from transportation for Diagnostics in 2024. Business areas ESRS 2 SBM-1 Strategy, business model and value chain. This page is part of limited assurance. Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 11 Read more at demant.com/about/latest-news Event highlights in 2024 8 February Oticon introduces Oticon Intent™ , the world’s first hearing aid with user - intent sensors 8 June Demant turns 120 years and kick -starts the anni- versary with a global tree -planting event 20 August Demant acquires Danish chain of hearing care clinics , Dansk HøreCenter 3 October Interacoustics intro- duces the Aided Corti- cal test to help infants with hearing loss hear better 1 November Anne - Karen Hunt joins Demant as President of the Diagnostics business area and part of the Executive Lead- ership Team 18 September The platform for s up- plier engagement for Demant’s Hearing Aids business area is launched 12 March Under the theme “ Sharpened focus on Hearing Healthcare ”, Demant hosts Capital M arkets Day 20 March The new Bernafon brand launches Encanta hearing aids with focus on the individual user Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 12 Key figures and financial ratios – year (DKK million) 2024 2023 2022 2021 2020 Income statement Revenue 22,419 21,601 19,705 17,905 14,469 Organic growth 2% 14% 4% 27% -13% Gross profit 17,090 16,320 14,669 13,458 10,193 EBITDA 5,963 5,799 4,383 4,730 2,578 Operating profit before special items 4,404 4,506 3,207 3,663 1,530 Special items 124 - - - - Operating profit (EBIT) 4,528 4,506 3,207 3,663 1,530 Net financial items -812 -761 -280 -202 -194 Profit after tax - continuing operations 2,892 2,823 2,276 2,711 1,134 Profit after tax - discontinued operations -504 -1,025 -192 -183 - Profit for the year 2,388 1,798 2,084 2,528 1,134 Cash flow statement Cash flow from operating activities (CFFO) 4,080 4,458 2,622 3,593 2,621 Acquisition of enterprises, participating interests and activities -1,234 -935 -2,323 -708 -394 Investment in property, plant and equipment, net 545 621 630 547 493 Free cash flow (FCF) 3,486 3,622 1,617 2,838 2,023 Share buy -backs 2,301 846 1,840 3,200 197 Balance sheet Equity 9,644 9,338 8,562 7,981 8,279 Total assets 32,450 30,546 29,857 24,860 21,927 Net interest -bearing debt (NIBD) 13,545 12,280 12,711 9,150 7,135 Net working capital (NWC) 3,289 3,630 3,648 3,025 2,452 Financial ratios Gross margin 76.2% 75.6% 74.4% 75.2% 70.4% EBIT before special items margin 19.6% 20.9% 16.3% 20.5% 10.6% Effective tax rate 22.2% 24.6% 22.2% 21.7% 15.1% Gearing multiple 2.3 2.1 2.9 1.9 2.8 2024 2023 2022 2021 2020 Sustainability impacts Number of lives improved (million) 10.9 10.3 9.4 8.8 8.5 Environment Scope 1 and 2 market -based GHG emissions (tonnes of CO2e)¹ 29,426 33,103 37,136 34,288 28,454 Scope 1 and 2 location -based GHG emissions (tonnes of CO2e)¹ 33,686 33,323 31,224 29,258 26,376 Scope 3 GHG emissions (tonnes of CO2e)¹ ⁾ 464,103 492,026 436,831 404,872 316,055 Share of renewable electricity 35% 21% n.a n.a n.a Social Gender diversity, top level management (women/men) 31/69% 29/71% 23/77% 22/78% - Gender diversity, all managers (women/men) 50/50% 48/52% 44/56% 43/57% 42/58% Inclusion score (1 - 5) 4.27 4.26 n.a n.a n.a Engagement score (1 - 5) 4.13 4.11 4.08 4.02 3.93 Average number of full -time employees 21,381 20,690 19,239 16,866 16,155 All employees (headcounts) 22,639 22,240 n.a n.a n.a Governance Code of Conduct training to highly exposed employees 76% n.a n.a n.a n.a Whistleblower reports 87 90 47 48 - Share ratios Earnings per share (EPS), - continuing operations, DKK 13.31 12.64 10.06 11.48 4.68 Earnings per share (EPS), DKK 10.99 8.04 9.21 10.70 4.68 Share price, end of period, DKK 264.20 296.00 192.55 335.10 240.60 As a consequence of the review of the strategic options for Communications, comparative figures for 2023 in the income statement and cash flow statement as well as related key figures , sustainability impacts and financial ratios excluding organic growth have been re- stated. The Hearing Implant business has been reported as discontinued operations since 2022, and comparative figures for 202 1 in the income statement and cash flow statement as well as related key figures and financial ratios excluding organic growth were restated. We refer to section 9.1 for a descrip tion of the accounting policies for key figures and financial ratios. ¹ 2023-2020 numbers are restated due to methodological improvement. Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 13 Key figures and financial ratios – half-year (DKK million) H2 2024 H1 2024 H2 2023 H1 2023 H2 2022 Income statement Revenue 11,332 11,087 10,907 10,694 10,208 Organic growth 2% 3% 13% 15% 3% Gross profit 8,580 8,510 8,303 8,017 7,586 EBITDA 3,066 2,897 3,010 2,789 2,255 Operating profit before special items 2,336 2,068 2,344 2,162 1,619 Special items - 124 - - - Operating profit (EBIT) 2,336 2,192 2,344 2,162 1,619 Net financial items -402 -410 -399 -362 -185 Profit after tax - continuing operations 1,538 1,354 1,452 1,371 1,118 Profit after tax - discontinued operations -350 -154 -236 -789 -84 Profit for the year 1,188 1,200 1,216 582 1,035 Cash flow statement Cash flow from operating activities (CFFO) 2,589 1,491 2,540 1,918 1,707 Acquisition of enterprises, participating interests and activities -471 -763 -622 -313 -1,810 Investment in property, plant and equipment, net 259 286 320 301 329 Free cash flow (FCF) 2,329 1,157 2,071 1,551 1,219 Share buy -backs 1,164 1,137 829 17 533 Balance sheet Equity 9,644 9,522 9,338 8,990 8,562 Total assets 32,450 32,390 30,546 29,833 29,857 Net interest -bearing debt (NIBD) 13,545 13,853 12,280 12,197 12,711 Net working capital (NWC) 3,289 3,546 3,630 3,831 3,648 Financial ratios Gross margin 75.7% 76.8% 76.1% 75.0% 74.3% EBIT before special items margin 20.6% 18.7% 21.5% 20.2% 15.9% Effective tax rate 20.5% 24.0% 25.3% 23.8% 22.0% Gearing multiple 2.3 2.3 2.1 2.4 2.9 H2 2024 H1 2024 H2 2023 H1 2023 H2 2022 Sustainability impacts Number of lives improved (million) 10.9 10.6 10.3 9.9 9.4 Environment Scope 1 and 2 market -based GHG emissions (tonnes of CO2e)¹ 15,559 13,867 16,322 16,781 18,844 Scope 1 and 2 location -based GHG emissions (tonnes of CO2e)¹ 17,350 16,336 16,451 16,872 15,843 Social Gender diversity, top level management (women/men) 31/69% 30/70% 29/71% 27/73% 23/77% Gender diversity, all managers (women/men) 50/50% 49/51% 48/52% 47/53% 44/56% Average number of employees 21,389 21,373 21,413 20,922 20,349 Share ratios Earnings per share (EPS), - continuing operations, DKK 7.08 6.18 6.50 6.14 4.99 Earnings per share (EPS), DKK 5.47 5.47 5.44 2.60 4.61 Share price, end of period, DKK 264.20 301.40 296.00 288.50 192.55 As a consequence of the review of the strategic options for Communications, comparative figures for 2023 in the income statem ent and cash flow statement as well as related key figures and financial ratios excluding organic growth have been restated. We r efer to section 9.1 for a description of the accounting policies for key figures and financial ratios. ¹ 2023 -2020 numbers are restated due to methodological improvement. Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 14 The societal implications of hearing loss 15 Market trends and developments 16 Our strategy 17 Market and strategy Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 15 Source: World report on hearing, World Health Organization, 2021 ESTIMATED ANNUAL GLOBAL COST 980 USD BILLION INCLUDING 34 MILLION CHILDREN OVER 400 MILLION LIVING WITH A M ODERATE TO SEVERE HEARING LOSS The World Health Organization (WHO) estimates that one in five people live with some degree of hearing loss and that, due to increasing life expec- tancy, this number is growing. Out of the total number of people living with hearing loss, over 400 million people have a moderate to severe hearing loss and would benefit from treatment. However, less than 20% of people who would benefit from using a hearing aid receive treatment. Furthermore, there are material barriers to the wider adoption of hearing aids, such as lack of awareness, stigmatisation and lack of hearing health infrastructure in some regions. If left untreated, hearing loss impacts many as- pects of life for the individual, from preventing ac- tive participation in education and employment to reducing interaction with family and friends, which can potentially impact the individual’s physical and mental health. Hearing loss has a considerable economic impact on society, beyond the financial challenges it can present for the individual. The WHO estimates that the global annual cost for society is USD 980 billion, consisting of healthcare costs incurred, if hearing loss is not treated, as well as the costs of educational support and loss of productivity due to unemployment and premature retirement. At Demant, we believe that alleviating hearing loss starts with the hearing care professional, who delivers personalised care by diagnosing and fit- ting hearing aids based on a person’s needs. Through best-in-class customer experience and innovative solutions, we can help more people live life to the fullest and thus contribute to creating a better society. The societal implications of hearing loss Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 16 1 Source: EHIMA statistics and Demant’s own estimates. Hearing aid market The global hearing aid market is characterised by stable and resilient growth drivers, as people liv- ing with hearing loss have a healthcare need, which at a certain point in time must be ad- dressed. The long-term structural growth rate of the hearing aid market in units is 4-6% p.a. Roughly half of this market growth is driven by demographic de- velopments, including an increasing life expec- tancy, while the other half is driven by an increas- ing adoption of hearing aids by the hearing im- paired due to improved awareness. Besides unit growth, the industry has historically seen flattish development in the average selling price (ASP), a trend that we expect to continue. Continuously improving technology supports in- creasing prices over time. However, this is offset by the general competitive environment and nega- tive developments in terms of geography and channel mix. When combining unit growth and ASP developments, we expect the hearing aid market to show a long-term structural growth rate of 4-6% p.a. in value terms. Market size and structure We estimate that approximately 13 million people were fitted with around 23 million hearing aids worldwide in 2024. The value of the wholesale hearing aid market is estimated to be roughly USD 7 billion p.a., while the retail value, excluding government channels, is estimated at roughly USD 20 billion p.a. The wholesale market consists of highly special- ised players competing in very product-driven markets where significant R&D initiatives underpin market positions. In the highly fragmented retail market, the majority of hearing aid clinics globally are independently owned and operated, leading to highly competitive markets, where strong market positions are important for customer awareness. Distribution channels Distribution channels of hearing aids are broadly categorised as either offering full reimbursement or some level of reimbursement, supplemented by out-of-pocket expenditures by the user. Channels offering full reimbursement include gov- ernment programmes, such as the National Health Service (NHS) in the UK and Veterans Af- fairs (VA) in the US. However, some countries also offer free-to-client hearing aids through pri- vately owned hearing clinics. Private-pay channels involve direct purchases by consumers in private clinics with some or no reim- bursement. These purchases are made either through independent audiologists or larger chains, and in some cases, through online retailers. In these channels, individuals pay some or all of the expenses for their hearing aids out-of-pocket, of- ten opting for more personalised services, ad- vanced technology and a wider range of product choices. This category allows for greater flexibility and customisation based on the user’s specific needs and preferences. Current trends Increasingly sophisticated products Hearing aids are increasingly expanding in fea- tures, which increases the complexity of their de- velopment and requires increasing investments in research and development. The most advanced hearing aids feature deep neural networks (DNNs) and use artificial intelligence (AI) to understand the sound scene, providing users with a clearer sound picture. Despite significant progress in this area, these features still have considerable un- tapped potential for improving the users’ audiolog- ical experience. Counselling is crucial Effective counselling and information are crucial. Different people have different types of hearing loss, and as technology advances, the service of a hearing healthcare professional is essential not only for determining what the best treatment is and fitting a hearing aid, but also for ensuring that the user gets the most out of the increasingly powerful features offered by the devices. Continu- ous support and counselling are of paramount im- portance in supporting users in their treatment. Consolidating distribution In retail, larger chains benefit from economies of scale, giving them greater purchasing power and operating leverage. For many years, distribution has been consolidating through larger players’ ac- quisitions of smaller chains and independent clin- ics. Acquisitions by manufacturers offer the further benefit of increasing the manufacturer’s share of wallet. Diagnostic market The diagnostic markets where Demant operates cover a range of product categories related to hearing. Major product areas are audiometers and hearing instrument fitting solutions, but other prod- uct areas, such as auditory brainstem response testing (ABR), otoacoustic emission (OAE) testing and impedance equipment, are also important. Balance testing has in recent years increased in relevance. In addition to diagnostic instruments, consumables and instrument servicing, including calibration, also contribute to market value. Distri- bution channels are diverse and are both govern- ment-funded and private and include not only hearing care professionals but also schools, large hospitals and specialised clinics. Like the hearing aid market, the market for diag- nostic instruments is generally characterised by stability and long-term structural growth trends. An increasing global installed base of instruments also supports long-term growth in services and consumables. In value terms, the long-term struc- tural growth rate in the market for diagnostic in- struments and services is 4-6% p.a., with the global market estimated to be roughly USD 0.7 billion p.a. Market trends and developments Global hearing aid unit sales 1 ( million) 0 5 10 15 20 25 2010 2012 2014 2016 2018 2020 2022 2024 ESRS 2 SBM-1 Strategy, business model and value chain. This page is part of limited assurance. Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 17 Our strategy Our PURPOSE is to create life-changing differences through hearing health Our AMBITION is as the leading hearing healthcare company to improve as many lives as possible Our PRIORITISATION is to support the entire journey to better hearing by focusing on personalised care and innovative solutions Our COMMITMENT Customers Deliver a world-class customer and user experi- ence that exceeds expectations Employees Pursue an engaging, inclusive and innovative work culture, enabling employees to develop and grow Investors Drive attractive financial returns and growth based on a resilient business model Our CHOICES and ENABLERS support sustainable growth CHOICES Fuel innovation and core technology develop- ment to ensure strong customer value generation Participate in consolidation of distribution and leverage commercial position Grow across geographies and channels and in adjacent business activities ENABLERS Leverage scalability and increase business resil- ience Continuously drive a culture of inclusion and en- gagement Drive responsible and sustainable business practices Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 18 Leading hearing healthcare In 2024, we communicated our Group strategy – leading hearing healthcare – reflecting our ambi- tion as the leading hearing healthcare company to improve as many lives as possible. In doing so, we contribute to building a more sustainable world and enable more people the opportunity to enjoy life in full. With our strategy, we are focused on creating value by growing our business at a rate exceeding the market growth rate, while improving our profit- ability through economies of scale and efficiency. Our strategy comprises three choices and three enablers, all of which are considered key for De- mant in order to create value: Fuel innovation and core technology development An important organic growth driver is to bring su- perior technological solutions to the market timely and in high quality. We are therefore firmly fo- cused on investing in R&D in both Hearing Aids and Diagnostics, aiming to advance technology further in our R&D programme. Participate in consolidation of distribution and leverage commercial position Another key growth driver is the acquisition and integration of hearing care clinics worldwide into our existing network as well as potential acquisi- tions within Diagnostics. We believe in the bene- fits of specialised care and premium equipment. By continuously expanding our network, we can reach more people with our products, including di- agnostic equipment, and services, thus delivering premium hearing care. In addition, our growing presence allows us to further raise awareness about hearing loss and to treat even more users in our clinics in the future. Grow across geographies and channels and in adjacent business activities To enable future growth, we focus strongly on growing sales in our existing markets and chan- nels. We aim to gain market share among inde- pendents and drive profitable growth with strategic accounts and in export markets. In Diagnostics, we continuously explore adjacent activities that can leverage our existing business model and cre- ate further expansion and scalability. Leverage scalability and increase business resilience We need to leverage our size and ensure effi- ciency in everything we do to increase profitability across the Group. A continuing effort in our lead- ing hearing healthcare strategy is to streamline our operations and supply chain to drive up the EBIT margin. Other important elements include ensuring that the Group benefits from economies of scale through our Group Services functions and investing in and implementing global standard business processes and applications to support further scalability. Continuously drive a culture of inclusion and engagement to a higher level Demant is a global employer with more than 22,000 employees worldwide, all dedicated to cre- ating life-changing differences through hearing health. Our employees are our most valuable re- source, as they are critical to Demant’s future suc- cess. Therefore, it is essential that we are a great company to work for. In driving this agenda, we firmly believe in a strong culture of inclusion and engagement. We want to ensure that everyone can contribute their strengths, regardless of their background. Our key focus is thus to further develop our employees and leaders. Drive responsible and sustainable business practices We are committed to adding value responsibly and sustainably, not only to meet requirements and comply with increasing regulations in this area, but also to align with the purpose and ambi- tion of the company we aspire to be. As part of our strategy, we have refined our sustainability strategy and set ambitious 2030 targets for our core impact and ESG focus areas to ensure that we continuously apply responsible and sustaina- ble business practices. Please refer to our sus- tainability strategy model on page 55. Medium- to long-term outlook Our ambition and strategy are also reflected in our medium- to long-term financial outlook. Please note that the outlook contains forward-looking statements that reflect Demant’s expectations for future events and financial performance. Please refer to Outlook for 2025 on page 35. Outlook assumptions • Our medium- to long-term revenue outlook comprises 6-8% p.a. organic growth based on an assumption of market growth of around 5% p.a. and approximately 2% p.a. acquisitive growth. • Our outlook for incremental EBIT margin expansion assumes constant foreign exchange rates. • Our capital allocation outlook is subject to a long-term gearing multiple target of 2.0-2.5. Our strategy and medium- to long-term outlook REVENUE 8-10% GROWTH P.A. IN LOCAL CURRENCIES EBIT MARGIN INCREMENTAL EBIT MARGIN EXPANSION CAPITAL ALLOCATION EXCESS FREE CASH FLOW AFTER ACQUISI- TIONS IS USED FOR SHARE BUY-BACKS Medium- to long-term outlook Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 19 Sustainability intrinsic to strategy Our PURPOSE is to create life- changing differences through hearing health Core impact: Improved lives Our core sustainability contribution is to improve lives, thereby contributing to building a more sus- tainable world. Caring for people’s health goes hand in hand with caring for our employees, soci- ety and the planet. Please refer to page 55. Drive responsible and sustainable business practices ESG ambitions Our ESG ambitions are to decouple our emissions and environmental impact from company growth, promote an organisational culture characterised by care and respect for others and perform busi- ness with integrity and honesty. E: Respect for the planet 2030 target: Reduce scope 1 and 2 GHG emissions by 46% compared to 2019. More details and targets, please refer to page 66. S: Caring for people 2030 target: Increase gender balance in top-level management to 35/65% (women/men). More details and targets, please refer to page 90. G: Performing with integrity 2030 target: Code of conduct training to reach 100% of highly exposed employees. More details, please refer to page 103. Our AMBITION is as the leading hearing healthcare company to improve as many lives as possible Social ambition Our core commitment to society is to help people overcome hearing loss and to improve their qual- ity of life through innovative solutions and person- alised hearing care. 2030 target More than 16 million lives improved. More details and targets, please refer to page 95. Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 20 Operating model Our operating model is designed to steer us in op- erating our three business areas – Hearing Aids, Hearing Care and Diagnostics – in a setup that is ensuring that we remain focused on excelling in each business area, while leveraging synergies across the Group through strong collaboration. This approach enables each business area to adopt a customer-centric approach and execute their specific strategic initiatives to deliver on the strategy, enabling the Group to create life-chang- ing solutions that complement each other. With our business areas’ common understanding of technology, innovation is at the core of our op- erating model. We will continue to focus on value- adding collaboration between the R&D functions of our individual business areas. Furthermore, our resilient manufacturing set-up across the value chain within R&D, production and distribution en- sures supply chain agility and resilience. Our operating model is founded on a robust inter- nal infrastructure, encompassing IT, HR, finance, sustainability as well as legal systems and pro- cesses. This strong backbone, which we call Group Services, supports business growth, en- sures efficiency and enables economies of scale in a sustainable and responsible way. With sales companies and hearing care clinics all over the world, the Group benefits from a strong global distribution set-up, which enables us to continuously increase our reach to a variety of countries, markets and customer segments, thereby expanding our business. This global net- work ensures that we can raise awareness and make our diagnostic equipment, hearing aids and personalised hearing care and treatments acces- sible to those in need, thereby enhancing patient care and improving lives. How we create value Input • Employing 22,000+ people. • More than DKK 1.4 billion invested annu- ally in R&D. • Growing portfolio of 3,500+ patents and designs as well as a portfolio of 1,400+ registered trademarks. • Global distribution network, comprising over 4,000 hearing care clinics, distribution of hearing aids to more than 130 markets and a comprehensive distribution set-up of diagnostic products, spanning around 100 countries. • Core expertise within audiology with a strong understanding of the difficulties faced by people living with a hearing loss. • Strong brand value across our multi-brand set-up, enabling the Group to strategically position itself across many markets and channels, thereby effectively addressing various customer needs. • Strong relationships with component sup- pliers. Demant’s operating model Output • Diagnostic equipment that increases the quality of patient care. • High-quality hearing aid solutions. • Personal and individualised treatment of- fering the highest level of expertise in audi- ology. Outcome We create life-changing differences through hearing health by helping people overcome hearing loss and improving their lives sup- ported by innovative solutions and hearing care. • Customers: We deliver a user experience that exceeds expectations by providing life- changing hearing health through innova- tive, state-of-the-art products. This benefits both individuals and society, improving the lives of 11 million people in 2024. • Employees: We are a great place to work with engaged employees who feel included and empowered to develop, grow and do what they do best. In 2024, our engage- ment score increased to 4.13 from 4.11 the year before. • Investors: We deliver attractive financial re- turns and growth based on a resilient busi- ness model and a strategy that focuses on value-creating growth. ESRS 2 SBM-1 Strategy, business model and value chain. This page is part of limited assurance. Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 21 Group performance 22 Hearing Aids 28 Hearing Care 31 Diagnostics 33 Financial outlook 35 Financial performance Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 22 Group performance Income statement H1 H2 FY (DKK million) 2024 2023 Growth 2024 2023 Growth 2024 2023 Growth Revenue 11,087 10,694 4% 11,332 10,907 4% 22,419 21,601 4% Production costs -2,577 -2,677 -4% -2,752 -2,604 6% -5,329 -5,281 1% Gross profit 8,510 8,017 6% 8,580 8,303 3% 17,090 16,320 5% Gross margin 76.8% 75.0% 75.7% 76.1% 76.2% 75.6% R&D costs -733 -607 21% -661 -619 7% -1,394 -1,226 14% Distribution costs -5,154 -4,726 9% -5,092 -4,828 5% -10,246 -9,554 7% Administrative expenses -586 -562 4% -559 -540 4% -1,145 -1,102 4% Share of profit after tax, associates and joint ventures 31 40 -23% 68 28 >100% 99 68 46% Operating profit (EBIT) before special items 2,068 2,162 -4% 2,336 2,344 0% 4,404 4,506 -2% Operating profit (EBIT) margin before special items 18.7% 20.2% 20.6% 21.5% 19.6% 20.9% Special items 124 - n.a. - - n.a. 124 - n.a. Operating profit (EBIT) 2,192 2,162 1% 2,336 2,344 0% 4,528 4,506 0% Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 23 Introduction As a result of the decision to discontinue the Com- munications business, this former business area is recognised as a discontinued operation, to- gether with Hearing Implants. Comparative figures for 2023 in the income statement and cash flow statement have been restated to reflect this. Com- parative figures for 2021-2022 have only been re- stated to exclude Hearing Implants and therefore include Communications. Revenue For the full year, Group revenue amounted to DKK 22,419 million, corresponding to a growth rate of 5% in local currencies. Organic growth was 2%, which is in line with our revised expectations for 2024. Acquisitive growth was 2%, and ex- change rates had an impact on revenue of -1%, which includes the effect of exchange rate hedg- ing. Total reported growth for 2024 was 4%. Revenue for H2 amounted to DKK 11,332 million, corresponding to a growth rate of 5% in local cur- rencies. Organic growth was 2%, and growth from acquisitions was 3%. Exchange rates impacted revenue by -1%, and total reported growth for H2 was 4%. Growth in H2 was driven by Hearing Care, which saw very good momentum and delivered above- market organic growth, which was further sup- ported meaningfully by acquisitions. Hearing Aids growth was below our original expectations, even considering the very strong comparative figures. In H2, growth was negatively impacted by a gen- erally intense competitive environment across channels, and the significant loss of market share with managed care in the US in Q2 also continued to weigh on growth. In Diagnostics, growth was negative in H2, impacted by a very soft global market for diagnostic instruments, headwinds ex- perienced by our portfolio of balance equipment and adverse developments in China due to limited access to public markets. In terms of geography, Europe saw solid organic growth in H2, particularly driven by good growth in Hearing Care across many of our medium-sized markets. In the UK, growth was slightly positive, whereas France saw slightly negative growth. We saw a continuous contribution from acquisitions, primarily from Germany. In North America, organic growth in H2 was slightly negative due to strong comparative figures in Hearing Aids which was not offset by the solid development in Hearing Care. Five-year revenue (DKK million) 14,469 17,905 19,705 21,601 22,419 10,000 12,000 14,000 16,000 18,000 20,000 22,000 24,000 2020 2021 2022 2023 2024 Revenue by business area Growth (DKK million) H2 2024 H2 2023 Org. Acq. LCY FX Rep. Hearing Aids, total revenue 6,183 6,024 2% 2% 4% -1% 3% Hearing Aids, internal revenue -1,183 -976 18% 3% 21% 0% 21% Hearing Aids, external revenue 5,000 5,048 -1% 2% 1% -2% -1% Hearing Care 5,098 4,575 7% 4% 11% 0% 11% Diagnostics 1,234 1,284 -4% 0% -4% 0% -4% Group 11,332 10,907 2% 3% 5% -1% 4% Growth (DKK million) FY 2024 FY 2023 Org. Acq. LCY FX Rep. Hearing Aids, total revenue 12,413 12,112 3% 1% 4% -1% 2% Hearing Aids, internal revenue -2,391 -2,076 12% 3% 15% 0% 15% Hearing Aids, external revenue 10,022 10,036 1% 1% 2% -2% 0% Hearing Care 9,932 9,083 5% 4% 9% 0% 9% Diagnostics 2,465 2,482 0% 0% 0% 0% 0% Group 22,419 21,601 2% 2% 5% -1% 4% Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 24 In Asia, organic growth in H2 was driven by very good performance in several of our medium-sized markets. In Japan, we saw good organic growth, whereas growth in China was negative, reflecting weak market dynamics, affecting the retail market, as well as headwinds in Diagnostics. Revenue growth in the region was negatively impacted by exchange rate effects. In the Pacific region, good organic growth was driven by Australia, particularly by our Hearing Care business. In our Rest of world region, we saw strong organic growth, particularly in several markets in South America, although this was largely offset by exchange rate headwinds. Gross profit The Group’s gross profit increased by 5% to DKK 17,090 million in 2024, corresponding to a gross margin of 76.2%. This is an increase of 0.6 per- centage points compared to 2023, primarily driven by a better-than-expected gross margin in H1 due to business mix effects and strong development in the ASP in Hearing Aids supported by the launch of Oticon Intent. For H2, the Group’s gross profit amounted to DKK 8,580 million leading to a gross margin of 75.7%, which is a decline of 0.4 percentage points com- pared to H2 2023. Developments in exchange rates and an increasing share of rechargeable units had a negative impact on the gross margin. These drivers more than offset the positive effect of a continuously good ASP in Hearing Aids. Operating expenses (OPEX) For the full year, OPEX increased by 8% in local currencies of which 4 percentage points relate to organic growth and 3 percentage points to acquis- itive growth. In H2, OPEX growth was 5% in local currencies. In organic terms, OPEX increased by 2%. This is a result of cost-saving measures taken across the Group in H1, which took effect in H2, leading to lower OPEX and a better balance between reve- nue and OPEX growth. Acquisitions added an additional 4 percentage points of growth, while ex- change rate effects were flat. Five -year gross profit (DKK million) Five -year OPEX (DKK million) 10,193 13,458 14,669 16,320 17,090 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 2020 2021 2022 2023 2024 9,168 10,014 11,584 11,882 12,785 4,000 6,000 8,000 10,000 12,000 14,000 2020 2021 2022 2023 2024 Revenue by geographic region Growth (DKK million) H2 2024 H2 2023 Org. Acq. Rep. Europe 4,733 4,405 4% 3% 7% North America 4,622 4,571 -1% 3% 1% Asia 1,088 1,078 3% 0% 1% Pacific region 560 532 5% 1% 5% Rest of world 329 321 10% 0% 3% Total 11,332 10,907 2% 3% 4% OPEX by function Growth (DKK million) H2 2024 H2 2023 Org. Acq. Rep. R&D costs 661 619 7% 0% 7% Distribution costs 5,092 4,828 1% 5% 5% Administrative expenses 559 540 4% 0% 4% Total 6,312 5,987 2% 4% 5% Revenue by geographic region H2 2024 Europe 42% North America 41% Asia 9% Pacific region 5% Rest of world 3% Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 25 Share of profit after tax from associates For the full year, the share of profit after tax from associates amounted to DKK 99 million. In H2, the share of profit after tax from associates amounted to DKK 68 million (DKK 28 million in H2 2023). Of this amount, DKK 57 million relates to a gain fol- lowing the disposal of an ownership stake in an associate. Operating profit (EBIT) before special items The Group’s EBIT before special items amounted to DKK 4,404 million in 2024, which corresponds to an EBIT margin before special items of 19.6%. In H2, EBIT before special items was DKK 2,336 million, reflecting flat year-over-year development. The EBIT margin before special items was 20.6%, a contraction of 0.9 percentage points. The EBIT margin before special items was negatively im- pacted by exchange rates, and by lower operating leverage, particularly in Hearing Aids. In line with our acquisition strategy, we recognised fair value adjustments of non-controlling interests in step acquisitions, contingent considerations etc., totalling a net positive fair value adjustment on EBIT before special items of DKK 13 million for the full year (DKK 27 million in 2023). Please refer to Financial statements, note 6.1 for more details. Special items In 2024, we recognised two significant non-opera- tional and non-cash items, resulting in a net in- come of DKK 124 million, entirely related to H1. This relates to a positive impact of a step-up gain from a large acquisition, which was partly offset by updated accounting treatments of certain earn-out payments related to acquisitions. Please refer to Financial statements, note 1.9, for further details. Operating profit (EBIT) For the full year, reported EBIT amounted to DKK 4,528 million, corresponding to an EBIT margin of 20.2%. In H2, the Group did not incur any special items, leading to a reported EBIT of DKK 2,336 million, corresponding to an EBIT margin of 20.6%. Financial items For the full year, net financial items amounted to DKK -812 million, an increase of DKK 51 million compared to 2023. The increase primarily relates to higher interest expenses due to a higher level of debt as well as a slightly higher average interest rate. In H2, net financial items totalled DKK -402 million, an increase of DKK 3 million versus H2 2023. Profit for the year – continuing operations Reported profit before tax from continuing opera- tions amounted to DKK 3,716 million in 2024, which is a slight decrease of 1% compared to 2023, due to the increase in net financial items. Tax amounted to DKK 824 million. The resulting effective tax rate was 22.2%, which is lower than our guidance of around 24%. The development in the effective tax rate relative to expectations was primarily driven by a positive impact of certain one-offs related to acquisitions. For H2, profit be- fore tax from continuing operations was DKK 1,934 million and tax amounted to DKK 396 mil- lion. For the full year, reported net profit for continuing operations was DKK 2,892 million, or an increase of 2%, resulting in earnings per share (EPS) from continuing operations of DKK 13.31. In H2, re- ported net profit for continuing operations was DKK 1,538 million, which corresponds to an EPS from continuing operations of DKK 7.08. Profit for the year – discontinued operations Profit after tax from discontinued operations, which comprise Communications and Hearing Im- plants, amounted to DKK -504 million for the full year, in line with our expectations. In H2, profit af- ter tax from discontinued operations amounted to DKK -350 million. The loss relates entirely to Communications, which incurred DKK 430 million in one-off costs related to the restructuring of EPOS and adjusted for this, the operating activi- ties of our discontinued operations delivered a profit. Following the successful divestment of the Cochlear Implants business in Q2 and the restruc- turing of EPOS in Q3, we saw a profit after tax from both businesses in Q4. Profit for the year For the Group as a whole, profit after tax in 2024 amounted to DKK 2,388 million, which is in line with our expectations. This corresponds to an EPS of DKK 10.99. In H2, net profit after tax was DKK 1,188 million, with an EPS of DKK 5.47. At the annual general meeting, the Board of Direc- tors will propose that the entire profit for the year be retained and transferred to the company’s re- serves. Half -year EBIT before special items (DKK million) Five -year EBIT before special items (DKK million) Earnings per share (EPS) for continuing operations (DKK per share) 1,619 2,162 2,344 2,068 2,336 0 500 1,000 1,500 2,000 2,500 H2 2022 H1 2023 H2 2023 H1 2024 H2 2024 1,530 3,663 3,207 4,506 4,404 0 1,000 2,000 3,000 4,000 5,000 2020 2021 2022 2023 2024 4.68 11.48 10.06 12.64 13.31 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 2020 2021 2022 2023 2024 Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 26 Cash flow statement The Group continued to generate strong cash flow in 2024, with cash flow from operating activities (CFFO) amounting to DKK 4,080 million. Com- pared to 2023, CFFO decreased by 8%, which is largely due to higher net financial expenses and higher tax. Despite continuously high net financial expenses, CFFO was very strong in H2 and amounted to DKK 2,589 million, up by 2% driven by a significant improvement in the net working capital (NWC). In 2024, our net investments in property, plant and equipment and intangible assets (CAPEX) amounted to DKK 748 million. CAPEX relative to revenue was 3%, which is slightly below our me- dium- to long-term ambition of 4%. In H2, CAPEX was DKK 373 million, down by 8% on the same period in 2023, primarily due to slightly lower in- vestments in property, plant and equipment than in the comparative period. Net investments in other non-current assets, which comprise customer loans and loans to as- sociates, amounted to a positive cash flow of DKK 154 million. The total net investments in 2024 were therefore DKK -594 million in 2024. For H2, net investments in other non-current as- sets amounted to a positive cash flow of DKK 113 million. This is primarily driven by the disposal of an ownership stake in an associate but net repay- ments of loans from customers were also a con- tributing factor. This led to total net investments of DKK -260 million. Following strong cash flow generation and lower investments, the free cash flow before acquisi- tions and divestments decreased by 4% to DKK 3,486 million for the full year. These dynamics were significant in H2 where free cash flow in- creased by 12% to DKK 2,329 million. Net cash flow relating to acquisitions and divest- ments totalled DKK -1,234 million for the year, an increase of 32%. The higher-than-normal level was driven by the acquisition of a value-added distributor in Hearing Aids. During the year, we also continued to acquire hearing care clinics in line with our strategy. In H2, the cash flow from acquisitions and divestments continued to be high and amounted to DKK -471 million, related en- tirely to acquisitions in Hearing Care. In 2024, the Group bought back a total of 7,598,403 shares worth DKK 2,301 million under the share buy-back programme. The shares were bought at an average price of DKK 302.78. In H2, share buy-backs amounted to DKK 1,164 million, as 4,298,401 shares were bought back at an aver- age price of DKK 270.74. Mainly related to the refinancing of loans through- out the year, other financing activities amounted to DKK 62 million in 2024, and the net cash flow from continuing operations totalled DKK 13 mil- lion. For H2, other financing activities amounted to DKK -884 million, primarily due to a change in long-term bank facilities, and the net cash flow from continuing operations was DKK -190 million. Driven by positive cash flows in both Communica- tions and Hearing Implants, the net cash flow from discontinued operations was DKK -16 million for the full year and DKK 276 million in H2. Please re- fer to Financial statements, note 6.2, for more de- tails. CAPEX (DKK million) CFFO (DKK million) 667 711 908 813 748 0% 2% 4% 6% 0 200 400 600 800 1,000 2020 2021 2022 2023 2024 CAPEX CAPEX % of revenue 2,621 3,593 2,622 4,458 4,080 0 1,000 2,000 3,000 4,000 5,000 2020 2021 2022 2023 2024 Cash flow by main items H1 H2 FY (DKK million) 2024 2023 Change 2024 2023 Change 2024 2023 Change CFFO 1,491 1,918 -22% 2,589 2,540 2% 4,080 4,458 -8% Net investments -334 -367 -9% -260 -469 -45% -594 -836 -29% Free cash flow before acquisitions and divestments 1,157 1,551 -25% 2,329 2,071 12% 3,486 3,622 -4% Acquisitions and divestments etc. -763 -313 >100% -471 -622 -24% -1,234 -935 32% Share buy –backs -1,137 -17 >100% -1,164 -829 40% -2,301 -846 >100% Other financing activities 946 -1,069 n.a. -884 -498 78% 62 -1,567 n.a. Cash flow for the period 203 152 34% -190 122 >100% 13 274 -95% Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 27 Balance sheet As at 31 December 2024, the Group’s total assets amounted to DKK 32,450 million, an increase of 6% compared to 31 December 2023. This in- crease was entirely driven by additions from ac- quisitions of 8%, and the total balance sheet amount includes DKK 1,393 million relating to Communications and Hearing Implants, which are recognised as assets held for sale. The increase in total assets is primarily due to an increase in goodwill, mostly related to acquisi- tions. This is also the case if we look at the devel- opment from 30 June 2024. Relative to the end of 2023, our NWC decreased by 9% and ended at DKK 3,289 million. This change is primarily a reflection of the reclassifica- tion of Communications to assets held for sale. Adjusted for this, net working capital increased slightly. When looking at the development since 30 June 2024, NWC declined by 7% driven by lower inventories and trade receivables. As a con- sequence of our strong focus on cash flow, our NWC-to-revenue ratio declined slightly to 15%. Please refer to Financial statements, note 9.1, for our definition of NWC. Although our net interest-bearing debt (NIBD) de- creased by 2% in H2, it increased by 10% in 2024 as a whole and thus amounted to DKK 13,545 mil- lion as at 31 December 2024. The full-year in- crease is primarily due to a high level of acquisi- tions during the year as well as to share buy- backs. As a result of the increase in our NIBD, but somewhat offset by the higher EBITDA, our gear- ing multiple increased slightly from 2.1 at the end of 2023 to 2.3 at the end of 2024, which is within our medium- to long-term gearing target of 2.0- 2.5. Positively impacted by profit, but somewhat offset by currency translation and share buy-backs, total equity for the full year increased by 3% to DKK 9,644 million of which DKK 80 million is attributa- ble to non-controlling interests and DKK 9,564 mil- lion to the shareholders of Demant A/S. In H2, to- tal equity increased by 1%, mainly because of profit generated by the Group. Employees As at 31 December 2024, the Group had 21,349 full-time employees compared to 21,501 as at 30 June 2024, a decrease of 1%. Growth was slightly negative due to natural attrition, primarily in our production, and focused rehiring despite seeing an increase in employees from acquisitions. The total number of full-time employees at the end of 2024 was up by 1% compared to the 21,081 employees at the end of 2023. Hedging activities The material forward exchange contracts in place as at 31 December 2024 to hedge against the Group’s exposure to movements in exchange rates are shown in the table below. Hedging activities Currency Hedging period Average hedging rate USD 11 months 675 JPY 10 months 4.64 AUD 10 months 452 GBP 11 months 865 CAD 10 months 498 PLN 10 months 169 Events after the balance sheet date On 31 January 2025, the Group acquired 100% of the shares in Ohrwerk Group, which operates 77 hearing clinics across Germany. Apart from the above, no events have occurred af- ter the reporting date of importance to the consoli- dated financial statements. Half -year NWC (DKK million) 3,648 3,831 3,630 3,546 3,289 0 1,000 2,000 3,000 4,000 5,000 H2 2022 H1 2023 H2 2023 H1 2024 H2 2024 Balance sheet by main items Change (DKK million) FY 2024 H1 2024 FY 2023 H1 2024 FY 2023 Lease assets 2,665 2,630 2,596 1% 3% Other non -current assets 19,864 19,108 18,566 4% 7% Inventories 2,500 2,674 2,845 -7% -12% Trade receivables 3,563 3,705 3,650 -4% -2% Cash 1,112 1,048 1,138 6% -2% Other current assets 1,353 1,429 1,468 -5% -8% Assets held for sale 1,393 1,796 283 -22% >100% Total assets 32,450 32,390 30,546 0% 6% Equity 9,644 9,522 9,338 1% 3% Lease liabilities 2,771 2,732 2,686 1% 3% Other non -current liabilities 14,607 13,292 12,301 10% 19% Trade payables 658 858 799 -23% -18% Other current liabilities 4,426 5,634 5,333 -21% -17% Liabilities related to assets held for sale 344 352 89 -2% >100% Total equity and liabilities 32,450 32,390 30,546 0% 6% Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 28 Hearing Aids EXTERNAL GROWTH 2% IN LOCAL CURRENCIES EXTERNAL REVENUE 10,022 DKK MILLION Oticon Intent TM Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 29 Market developments Based on available market statistics, covering around two-thirds of the market, and on our own assumptions, we estimate that the global hearing aid market saw unit growth of 4% in 2024, which is in line with our expectations and within the structural growth range of 4-6%. Growth in 2024 was primarily driven by the US commercial mar- ket, with growth in Europe and our Rest of world region being slightly lower. We estimate that ge- ography and channel mix changes resulted in a slightly positive ASP development. Q4 update We estimate that global market unit growth was 5% in Q4. Growth was broad-based across re- gions, with the acceleration in growth relative to Q3 largely driven by easier comparative figures. Driven by geography and channel mix develop- ments, we estimate that the global hearing aid market saw slightly positive ASP development in Q4. In terms of geogr aphy and compared to the same period last year, we estimate that growth in Eu- rope was 3% in Q4. Growth was slightly below the structural trend due to slightly negative growth in the NHS. Growth was strong in Germany despite relatively strong comparative figures. In France, growth accelerated and was solid, and the market growth rate for the full year was slightly positive. Several medium-sized markets saw good growth, and the UK private market also grew in Q4. Growth in North America was 6% in Q4. Sup- ported by a slightly easier comparative base, the US commercial market continued to show good momentum, accelerating to 7%. Growth was strong in both managed care and the private-pay market. Growth in Veterans Affairs (VA) remained subdued and was flat, whereas growth was strong in Canada. Looking beyond North America and Europe, we estimate that unit growth in Rest of world was 6% in Q4. Growth in Japan and China was modest, despite the latter continuing to be impacted by challenging market dynamics. In Australia, growth was flat in Q4. We estimate that several emerging markets saw strong growth in Q4. Business update In 2024, total revenue in Hearing Aids amounted to DKK 12,413 million, corresponding to an or- ganic growth rate of 3% (Q4: 2%). Acquisitive growth of 1% (Q4: 2%) relates to the acquisition of a value-added distributor that was closed in Q2. Internal revenue from sales to our Hearing Care business accounted for 19% of total revenue. Un- less otherwise specified, our commentary below focuses on total revenue, including revenue from sales through our own retail clinics, and thus co- vers our total wholesale activities. However, inter- nal revenue is eliminated from reported revenue for the Group. In 2024, Hearing Aids delivered growth below our original expectations, even if we take the very strong comparative figures into account. Early in the year, we launched Oticon Intent, which was well received by customers. However, growth dur- ing the year was negatively impacted by a gener- ally intense competitive environment across chan- nels and by a significant loss of market share with managed care in the US. In 2024, unit growth was -3%, with ASP develop- ments contributing 8 percentage points to total growth. Similar to H1, growth in H2 was entirely driven by positive ASP developments due to prod- uct and channel mix changes. Throughout H2, our unit growth improved, reflecting stable market share developments and soft comparative figures. Growth in units and ASP (LCY) H1 2024 H2 2024 FY 2024 Units -6% -1% -3% ASP 11% 5% 8% Total 4% 4% 4% Hearing Aids (DKK million) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Revenue 3,107 3,123 3,004 3,179 12,413 Growth Organic 3% 3% 2% 2% 3% Acquisitions 0% 1% 2% 2% 1% Local currencies 3% 4% 5% 4% 4% FX -1% -2% -2% -1% -1% Total 2% 3% 3% 3% 2% Estimated hearing aid market unit growth in 2024 by region (vs. 2023) Q1 Q2 Q3 Q4 FY Europe 1% 8% 1% 3% 3% North America 10% 6% 4% 6% 6% US (commercial) 13% 6% 5% 7% 7% US (VA) -1% 1% -1% 0% -1% Rest of world 1% 2% 4% 6% 3% Global 3% 5% 3% 5% 4% Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 30 Q4 update When we look at Q4, growth to external custom- ers was 0% in local currencies of which organic growth accounted for -1% and acquisitive growth for 2%. Intense competition and strong compara- tive figures weighed on growth, but we estimate that in value terms, we saw stable market share developments, when comparing sequentially to Q3. In Europe, external growth was slightly negative driven by Germany, even though we saw gener- ally good performance in our medium-sized mar- kets. In France, growth was negative, in part due to very strong comparative figures, as our growth rate was well above the market growth rate in the same period last year. In the UK, growth was neg- ative, although we saw growth in the private chan- nel. In North America, growth continued to be im- pacted by the loss of market share with managed care in Q2, although our market share develop- ment in this channel remained stable in Q4 com- pared to Q3. Outside of managed care in the US, we continue to see an intense competitive environment, but we have nonetheless seen our growth improve and turn positive in Q4. In the im- portant VA channel, our market share in units ended at 20.3%, reflecting sustained market share gains realised in 2023. In Canada, growth was negative due to very strong comparative figures. Sales growth in Asia was strong in Q4, with Japan delivering strong growth and China delivering lower, but still positive, growth. We thus estimate that we have gained market share in China de- spite continuously weak market dynamics. Driven by Australia, growth in the Pacific region was solid. In our Rest of world region, mostly compris- ing emerging markets, we saw good growth, par- ticularly in South America. Product update In Q1 2025, we will continue to expand access to our unique BrainHearing™ technology and our powerful second-generation deep neural network (DNN) by making these technologies available in even more form factors. This is a continuation of our commitment to further integrate artificial intelligence into small and dis- crete form factors to allow all users to benefit from our products. This February, we will start the roll-out of our new premium in-the-ear hearing aids, Oticon Own SI, which will feature our second-generation DNN in our smallest form factors. In addition, all our brands will upgrade their in-the-ear instruments at lower price points. We will also expand our miniRITE and miniBTE form factors across our brands to lower price points and offer these de- vices with both rechargeable and disposable bat- teries. These will be the first devices in low price points to also offer DNN sound processing tech- nology. Revenue and growth Growth (DKK million) Q4 2024 Q4 2023 Org. Acq. LCY FX Rep. Hearing Aids, total revenue 3,179 3,100 2% 2% 4% -1% 3% Hearing Aids, internal revenue¹ -583 -482 18% 3% 21% 0% 21% Hearing Aids, external revenue 2,596 2,618 -1% 2% 0% -1% -1% Growth (DKK million) FY 2024 FY 2023 Org. Acq. LCY FX Rep. Hearing Aids, total revenue 12,413 12,112 3% 1% 4% -1% 2% Hearing Aids, internal revenue¹ -2,391 -2,076 12% 3% 15% 0% 15% Hearing Aids, external revenue 10,022 10,036 1% 1% 2% -2% 0% ¹ Revenue from internal sales to Hearing Care is eliminated from the reported revenue for the Group, i.e. we only include rev enue from external customers. The pricing used in internal transactions is determined on an arm’s length basis and thus reflects normal commercial terms. Bernafon brand relaunch Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 31 Hearing Care REVENUE 9,932 DKK MILLION Audika Fitting in a clinic GROWTH 9% IN LOCAL CURRENCIES Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 32 Fitting in a clinic Market developments Please refer to the Hearing Aids section above for details on developments in the hearing aid market in 2024, but note that our Hearing Care business is not present in many emerging markets or in government channels. Overall, we estimate that the growth rate in the part of the market where Hearing Care is active was roughly in line with the global unit market growth rate of around 4% in 2024. Business update In 2024, revenue in Hearing Care amounted to DKK 9,932 million. We delivered above-market or- ganic growth of 5% (Q4: 7%), driven by strong growth in most of our medium-sized markets. Ac- quisitions added 4% (Q4: 4%), with Germany be- ing the largest contributor. Apart from acquisitions in Germany, we have made acquisitions in several other markets, which will help elevate our busi- ness to a stronger commercial position in the fu- ture and to improve profitability faster in the re- spective countries, e.g. Italy, Belgium and Den- mark. Our Hearing Care business demonstrated very good momentum in 2024, despite headwinds from the continued normalisation of the French hearing aid market and an overall weak Chinese market. Following a slow start to the year, the US saw ac- celerating growth during the year, despite being impacted by lower traffic generated by managed care customers which saw a very significant re- duction in 2024. We have, however, been able to more than offset the lower traffic from these activi- ties and further increase our focus on the private- pay market, which has led to solid growth and – more importantly – improved profitability in the US. Despite a slow start to the year, growth in France was flattish, which is in line with our recent expec- tations. We saw continued normalisation of the French market during 2024, and towards the end of the year, we saw good initial traffic, leading to an increase in the number of test appointments ahead of the four-year anniversary of the French hearing healthcare reform implemented in 2021. For our total Hearing Care business, growth was predominantly driven by units, but we also experi- enced tailwind from positive ASP development, driven by favourable product mix changes, which was supported by the launch of Oticon Intent in February 2024, and by positive geography mix changes. Q4 update In Q4, organic growth was 7%, reflecting continu- ously solid business momentum in most medium- sized markets. We also saw the strong growth in North America in Q3 continue into Q4, whereas growth in France was slightly positive ahead of the four-year anniversary of the French hearing healthcare reform. Europe was the largest absolute growth driver in Q4, with particularly strong performances in Po- land and the UK, but other medium-sized markets also performed well. In North America, we saw good organic growth in the US in Q4, despite lower traffic generated by customers covered by managed care, and very strong organic growth in Canada. Australia saw strong growth in Q4, continuing the momentum from the first nine months of the year. In China, Sheng Wang improved relative to previ- ous quarters, although it still delivered negative growth in Q4, as the business continues to be im- pacted by weak consumer sentiment. Hearing Care (DKK million) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Revenue 2,318 2,516 2,400 2,698 9,932 Growth Organic 0% 5% 7% 7% 5% Acquisitions 5% 4% 5% 4% 4% Local currencies 5% 9% 11% 11% 9% FX 0% 0% 0% 0% 0% Total 5% 10% 12% 11% 9% Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 33 Diagnostics REVENUE 2,465 DKK MILLION GROWTH 0% IN LOCAL CURRENCIES Interacoustics Audible Contrast Threshold - ACT Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 34 Diagnostics Aided Cortical test Market developments We estimate that the market for diagnostic instru- ments and services saw slightly negative growth in 2024. This is due to generally soft demand for diagnostic instruments combined with headwinds in the Chinese market. The service market saw growth, but this was not enough to offset the neg- ative instrument market growth, leaving the growth rate in the total diagnostic market well be- low the structural market growth rate of 4-6% per year. Business update Diagnostics generated revenue of DKK 2,465 mil- lion in 2024 with organic growth of 0% (Q4: -3%), which is lower than our original expectations for the year. There was no impact on revenue from acquisitions during the year. After a strong start to the year, the market for di- agnostic instruments softened during 2024. In light of the very soft market developments – espe- cially in H2 – we estimate that our organic growth rate was above the estimated market growth rate in 2024. Our market-leading position and strong product portfolios across all our brands have been instrumental in maintaining and strengthening our market position despite the weaker-than-expected markets. Overall, growth in 2024 was driven by strong growth in the Pacific region whereas North Amer- ica and Europe saw flattish growth. Conversely, adverse market developments in China continued to be a drag on growth throughout the year, as our access to public markets in China continued to be limited. We have throughout 2024 worked on ob- taining further regulatory approvals through local initiatives to gain increased access to public mar- kets in China and expect this work to continue in the coming year. Q4 update Organic growth was -3% in Q4, a slight accelera- tion compared to the level in Q3, despite slightly higher comparative figures. The development in Q4 was driven by continued weakness in our larg- est region, North America, while our service and consumables business continued to deliver growth. In North America, the US saw continued slow- down due to negative growth in our portfolio of balance products and generally lower-than-ex- pected CAPEX investments, whereas Canada saw strong organic growth. In Q4, we saw good growth in Europe, particularly in Poland and the UK. However, this growth was somewhat offset by negative growth in a number of other European markets. Momentum in China in Q4 continued to be nega- tively impacted by general market weakness and our limited access to public markets. Thus, growth remained negative, although we saw a sequential improvement from a low level. Diagnostics (DKK million) Q1 2024 Q2 2024 Q3 2024 Q4 2024 FY 2024 Revenue 597 634 597 637 2,465 Growth Organic 7% 0% -4% -3% 0% Acquisitions 0% 0% 0% 0% 0% Local currencies 7% 0% -4% -3% 0% FX -1% 0% -1% 0% 0% Total 5% 0% -4% -3% 0% Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 35 Forward-looking statements This report contains forward-looking statements that reflect Demant’s current expectations regard- ing future events and financial performance. Forward-looking statements are statements other than historical facts and include, without limitation, statements that may predict, forecast, indicate or imply future events, results, performance or achievements and may include words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “project”, “will”, “may”, “could” or simi- lar expressions. These statements are based on assumptions, estimates and predictions that may prove incorrect and are subject to risks, uncertain- ties and other factors that could cause actual re- sults to differ materially from those expressed or implied. Factors that may affect future results include, but are not limited to, risks associated with the hear- ing healthcare industry and Demant’s operations as described in this Annual Report and other pub- licly available materials. Accordingly, undue reli- ance should not be placed on these forward-look- ing statements. Except as required by applicable law or regula- tion, Demant undertakes no obligation to update any forward-looking statements to reflect changes in actual results, expectations or events. Financial outlook Our outlook for 202 5 for continuing operations is summarised in the table below: Organic growth 3 -7% EBIT DKK 4,500-4,900 million Share buy -backs More than DKK 1,500 million The outlook is based on a number of key assumptions as described below: • We expect the unit growth rate in the global hearing aid market in 2025 to be in line with the struc- tural growth rate of 4-6% and the hearing aid market to see flattish ASP development for the year. • We expect the French market to grow in the high-single digits in units in 2025. • We expect the organic growth rate in Q1 to be below our full-year outlook, caused by the phasing of growth in Hearing Aids, due to managed care dynamics. However, we expect to see significant improvement in growth rate in the subsequent quarters. • We expect the cash allocated to bolt-on acquisitions in 2025 to be at a higher-than-normal level due to a continuously good pipeline of attractive opportunities. • We have not included any significant financial impacts of the potential introduction of tariffs in our 2025 outlook. • Our Communications business area and our business for bone anchored hearing systems are rec- ognised as part of discontinued operations, and for the full year 2025, the combined net profit after tax related to these businesses is expected to be DKK 0-50 million. This relates entirely to an ex- pected operating profit for the businesses and does not include any financial impact related to our intention to divest the businesses. For modelling purposes, we provide further assumptions for 202 5 below: Acquisitive growth 2 % based on revenue from acquisitions completed as at 4 February 202 5 FX growth 1% based on exchange rates as at 4 February 2025 and including the impact of hedging Tax rate Around 23% Profit from discontinued operations DKK 0-50 million Outlook for 2025 Table of contents Management statements Sustainability statements Financial statements Signatures Signatures Demant Annual Report 2024 36 Overview Strategy and business Financial performance Risk and management Corporate governance Risks and risk management 37 Governance framework 41 Shareholder information 44 Board of Directors 47 Executive Leadership Team 49 Corporate governance Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 37 Risk management activities in the Demant Group include a variety of risk areas, many of which may impact the performance and reputation of the Group. The overall responsibility for risk manage- ment lies with the Executive Leadership Team, but risk management activities are carried out throughout the organisation on a day-to-day basis. Risk management is an integral part of the man- agement of the Demant Group. Risks to which business areas, markets and operations are ex- posed are identified, monitored and mitigated at all management levels. Through frequent and transparent reporting, these measures ensure that key risks are escalated to the business area lead- ership, to functional boards, to the Executive Leadership Team, and if relevant, to the audit committee and ultimately the Board of Directors. We have established a number of functional boards to ensure focus on governance, develop- ment and risk management in key areas globally, i.e. IT, Finance, HR, Sustainability and Legal & Compliance. The functional boards are responsi- ble for risk management in their respective areas and for ensuring that policies, guidelines and pro- cesses are established to monitor risks and new legislation. The audit committee oversees the risk manage- ment processes related to financial risks, including sufficient and efficient internal controls. The audit committee has assessed the Group’s existing control environment and concluded that it is ade- quate. Business ethics are an integral part of conducting business in a global world with many stakehold- ers. We continuously expand and improve the Group’s business ethics programme to reflect our all-important commitment to a high level of busi- ness ethics, including our Code of Conduct, a global whistleblower scheme as well as global pol- icies and guidelines on business ethics. For more information, please refer to Sustainability state- ment on page 102. Innovation risks We operate in highly product-driven markets where significant R&D initiatives help underpin our market position. It is vital for us to maintain our in- novative edge. We protect and maintain patents for our own groundbreaking technology, while ensuring that we do not infringe the rights of others. We must continue to attract the most competent employees in key areas. An important means to this end is to maintain our strong company culture and high employee engagement. Our investments in people development, leadership training and in- formation-sharing platforms are key to achieving this objective. We track the latest technology and make sure we take advantage of this in our products and ser- vices. Product requirement risks As a major player in the hearing healthcare mar- ket, Demant is exposed to certain regulatory risks in terms of changes to product requirements. We adhere to external regulatory requirements apply- ing to our products and services to ensure that our products are safe and effective to use and meet the requirements and needs of our users. We continuously engage with customers, healthcare practitioners and other stakeholders to ensure that we meet their needs when developing groundbreaking products. We incorporate the re- quirements of international standards and regulations into the design and development of our products to ensure compliance with regula- tions and product safety. All processes in our quality management system (QMS) contribute to ensuring that our products are effective and safe for our users. Notified bod- ies and different local national health authorities inspect our QMS on a yearly basis. Demant works continuously to improve these systems. As a gen- eral principle, our products are designed and mar- keted under risk management guidelines comply- ing with ISO 14971 to ensure the safety of our us- ers. In case of an unexpected incident, we act fast and decisively, following our processes and main- taining a transparent dialogue with relevant stake- holders. For more information on how we manage product quality and safety, please refer to page 99. Supply chain risks Stability in sourcing and delivering high-quality manufactured goods on time is crucial for us to be able to fulfil the commitments we have made to our customers. Risks and risk management • Risk management is an integral part of the management of the Demant Group. • Risks are identified, monitored and miti- gated at all management levels. • Functional boards exist to ensure focus on governance, development and risk management. • The audit committee oversees financial risks and internal controls, and the Board of Directors approves and follows up on strategies and business plans. • We are committed to a high level of busi- ness ethics. Organisation and governance Innovation and operations Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 38 Supply disruptions may result in delayed deliver- ies or inefficient production set-ups. Lockdowns and other restrictions may also affect the global supply chain and thus increase the risk of sudden changes. We have business and contingency plans in place to secure service to our customers in the best possible way in any given situation. We closely monitor our supply situation and seek to keep adequate safety stocks to counter poten- tial interruptions in our production. Our main pro- duction facilities in Poland and Mexico are in close proximity to our largest markets, which is im- portant for us to be able to quickly and efficiently serve our customers in case of dynamic changes in the supply chain. We continuously evaluate our production footprint and dependency on key suppliers to strike a sound balance between flexibility, exposure and costs. We collaborate closely with our highly spe- cialised suppliers. In our supply chain and throughout our organisa- tion, we actively work to ensure a safe and engag- ing working environment. For more information on how we manage poten- tially negative impacts on our employees and peo- ple in our supply chain and potential risks linked to these, please refer to pages 85-94. Sustainability risks For information about sustainability-related risks, please refer to Sustainability statement on pages 60-61. The hearing healthcare market consists of highly specialised players that operate in an extremely competitive market. While navigating in the cur- rent market conditions, we monitor potential changes to the competitive situation to ensure that we respond swiftly and effectively to changes in the market. Macroeconomic impacts on markets Historically, the hearing healthcare market has seen stable growth driven by demographic changes. The current macroeconomic uncertainties, which are still to some extent impacting some regions, may have an adverse effect on the demand for hearing healthcare solutions in those regions. Some countries are also seeing high inflation rates, impacting the economies in some markets. In case of macroeconomic or geopolitical head- winds, we seek to adapt our organisation, activi- ties and costs accordingly to mitigate the financial impacts in the affected markets. After the coronavirus pandemic, we have seen a general stabilisation of the hearing healthcare market. While the pandemic has largely passed, a new pandemic could limit contact with hearing aid users. Although the demand for our hearing healthcare products is not considered cyclical, the demand for hearing aids may suffer if client con- tact is limited, as a significant part of our sales is based on in-person counselling of individuals with hearing difficulties. Regulatory risks in the markets The Group is exposed to certain regulatory risks related to reimbursement schemes and public ten- ders in the markets where we operate. In most markets, the current regulatory landscape is con- sidered stable, so for the time being, we do not expect significant changes in the regulatory envi- ronment. There might be an overlap with commer- cial risks, if the level of reimbursement changes, or if the method of distribution in a market changes. While regulatory changes are an intrinsic part of the hearing healthcare market, we feel well posi- tioned to respond to such changes in the commer- cial environment. We continue to monitor any changes in the regulatory landscape and engage in dialogues with regulators as part of our busi- ness planning. Regulations regarding import and export The Group is subject to regulations regarding the export of products manufactured at our production sites and the import of these products to the mar- kets where they are sold. In case of changes to import regulations or ap- plied tariffs, the Group may incur additional costs. We monitor regulatory changes and apply meth- ods to mitigate the impact of these changes, in- cluding considering alternative production loca- tions and supply chain set-ups, if possible. Innovation and operations – continued Market and customer risks • We operate in highly product-driven mar- kets. • We protect and maintain our technology through patents. • We track the latest technology and make sure we take advantage of this in our products and services. • We continuously engage with customers, healthcare practitioners and other stake- holders to ensure that we meet their needs when developing groundbreaking products. • We have business and contingency plans in place to secure service to our custom- ers in the best possible way in any given situation. • We continuously evaluate our production footprint and dependency on key suppli- ers to strike a sound balance between. Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 39 Go-to-market risks The market development over the last few years has confirmed our belief in the importance of providing a combination of personal counselling, individual fitting, life-long service and highly ad- vanced technology. In the US, the new over-the-counter category of hearing aids has now been available since 2022, and while this may increase general access to hearing aids, we have only seen a limited impact on the hearing aid market in the US. In addition, the US market in general continues to see a large part of hearing aid purchases being covered by in- surance companies. The emergence of large managed care organisations continues to pose a risk to average selling prices in the hearing aid market, as volumes may to an increasing extent be consolidated among fewer players. This con- solidation may also result in lower fitting fees and lost customer loyalty. Sanction-related risks The Group sells its products in countries that may be subject to EU or US sanctions. These sanc- tions include financial sanctions, trade/export con- trols and sanctions against entities and individu- als. To ensure compliance, distributors and other business partners engaging in business in these countries are subject to sanction checks. Where needed, firm and swift actions are taken to ensure that the Group is compliant. Sanctions may in- crease due to geopolitical risks and result in an overall stop to trade in certain cases, as it has been the case for Russia and Belarus. The Group continues to closely monitor the changing legislation in this area and to further de- velop systems and processes to ensure that proper controls and documentation are in place to secure compliance. As our Group becomes increasingly digitalised, more devices and control systems are connected online, resulting in a broader interface across our IT infrastructure that could potentially be compro- mised. As a large, global organisation, we are dependent on numerous IT systems and the general IT infra- structure to operate efficiently across our value chain. This carries an inherent risk of system er- rors, human errors, data breaches or other inter- ruptions that may impact the Group financially. In addition, we may be exposed to attempts to ac- cess or steal information, computer viruses, denial of service and other digital security breaches. Our IT security committee has continuously fol- lowed up on and monitored our IT security set-up to ensure that the Group remains focused on en- suring proper IT security. From 2025, the audit committee will carry this responsibility. Once a year, the committee reviews a maturity as- sessment based on the Cybersecurity Framework of the National Institute of Standards and Technol- ogy (NIST), the purpose of which is to ensure that also in future, we continue to focus on relevant parameters. The assessment was done internally in 2024. Confirming our commitment to protect client data and continuously improve cybersecurity, we have obtained ISO 27001 certification. We train and educate our employees in IT-related topics on an ongoing basis to limit any IT-related incidents caused by human errors. We regularly update policies to ensure that they are up-to-date and reflect the current environment. Demant is entrusted with personal data on em- ployees, customers, users and business partners, which are collected and processed in accordance with applicable laws and regulations. As our busi- ness continues to grow, the complexity of manag- ing customers’ data increases. We remain com- mitted to protecting personal data, and failure to do so could have serious consequences for the people whose data we possess as well as for the Group. We have a global data ethics policy, and it is mandatory for all employees to comply with the policy. The policy covers all processing of data, in- cluding personal and non-personal, and goes be- yond compliance as we already work diligently to ensure the processing of personal data is done in accordance with regulatory frameworks. For more information on how we manage personal data to protect our users’ right to privacy, please refer to page 101 and our Data Ethics Policy . • We monitor potential changes to the competitive situation to ensure that we respond swiftly. • We seek to adapt our organisation, activi- ties and costs to mitigate the financial im- pacts of macroeconomic uncertainties. • We adapt our operating model when we see changes to reimbursement schemes in markets where we operate. • We continue to monitor changes in the regulatory landscape and engage in dia- logues with regulators. • We are committed to complying with leg- islation related to financial sanctions, ex- port controls and other types of sanc- tions. • We continuously assess our IT maturity and remain focused on ensuring proper IT security. • We train and educate our employees in IT-related topics. • We ensure an adequate response and timely reporting in case of an IT security incident. • We remain committed to protecting per- sonal data. Market and customer risks – continued Data and IT security Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 40 Financial risk management focuses on identifying risks related to changes in the financial markets and to customers’ propensity to pay for products and services. The Executive Leadership Team monitors the fi- nancial risks of the company to ensure that these remain well-balanced. Financial risks are man- aged centrally by Group Treasury, which is re- sponsible for securing attractive funding under the prevailing market conditions and for monitoring and mitigating risks related to liquidity, interest rates and exchange rates. Risks related to coun- terparties are managed in the individual markets. Capital structure, funding and liquidity Demant remains a highly cash-generating Group with a strong balance sheet. The Group continu- ously adapts its capital structure to the prevailing market conditions to secure attractive financing. We secure funding based on a strong commit- ment by our banks to provide longer-term bank fa- cilities. To mitigate potential liquidity and refinanc- ing risks, the Group has secured considerable un- drawn committed credit facilities. To minimise financing risks, we aim for more than 50% of our credit facilities to be committed with long-term maturity. Our financial gearing multiple is currently within our desired target range of 2.0- 2.5. Interest rate risks Due to an increasing debt level as well as margin- ally increasing interest rates during the year, our financial expenses increased in 2024. Furthermore, credit spreads and debt margins in- creased in the financial markets due to higher capital requirements imposed on the banks. Currently, around 60% of the Group’s debt is funded through facilities with fixed rates or hedged through financial instruments that limit the interest rate risk. The Group seeks to maintain a balanced mix be- tween fixed and floating rate debt. Exchange rate risks The Group is exposed to exchange rate risks, as it trades with counterparties in a number of coun- tries, and as it has cash flows in different curren- cies. It is therefore important to adequately bal- ance foreign exchange rate risks to avoid unex- pected adverse impacts on the Group’s financial performance. The majority of Group companies transact mainly in local currencies and are therefore exposed to limited exchange rate risks. The Group does not hedge translation risks result- ing from the consolidation of Group accounts into Danish kroner. Most Group companies are in- voiced from the Danish production entities. Around two-thirds of the invoices out of Denmark are issued in other currencies than Danish kroner or euros. To reduce our exchange rate exposure, we continuously seek to balance incoming and outgoing cash flows in our main trading currencies as much as possible. To ensure predictability in terms of net profit, we hedge expected future net cash flows, mainly through forward exchange con- tracts with a horizon of up to 18 months. In addition, we seek to balance our on-balance net exposure in our main trading currencies and to hedge our exposure, if relevant. It is the Group’s policy to exclusively hedge financial risks arising from our commercial activities and not to under- take any financial transactions of a speculative nature. Counterpart risks From a commercial point of view, the Group is ex- posed to credit risks if our customers fail to pay for products and services provided. Such risks mainly relate to trade receivables and loans to customers or business partners, and failure to adequately manage credit risks may adversely impact the Group. To minimise the risk of suffering losses on cus- tomers, the Group monitors the credit risks on an ongoing basis. The Group generally has a diversi- fied customer base, and in 2024 the accumulated revenue from our ten largest customers ac- counted for approximately 13% of total consoli- dated revenue. We regularly adjust our financial accounts to reflect the current credit risks. When granting loans to business partners, we re- quire that our counterparties provide security in their business. In general, we estimate that the risk relative to our total credit exposure is well-bal- anced at Group level, and historically, we have only suffered limited credit-related losses. The credit risk on cash is managed in accordance with the Group’s policy by selecting core banking partners, all with strong credit ratings. Due to its global presence and operations, the Group holds some cash balances; however, these are distrib- uted across multiple banks and locations, minimiz- ing the associated credit risk. Please refer to Financial statements, note 4.1. • To mitigate potential liquidity and refi- nancing risks, the Group has secured ac- cess to considerable undrawn committed credit facilities. • We limit interest rate risks by hedging part of our exposure. • We continuously seek to balance and, if relevant, to hedge our foreign exchange rate exposures. • We monitor the credit risks related to business partners on an ongoing basis. Financial risks Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 41 Maintaining appropriate corporate governance is an ongoing focus area for the Board of Directors and Executive Board in Demant. Once a year, the Board of Directors and Executive Board review the company’s corporate govern- ance principles, including principles that derive from legislation, recommendations and good prac- tices. We are committed to developing and main- taining a transparent corporate governance struc- ture that promotes responsible business behav- iour and long-term value creation. Recommendations issued by the Danish Commit- tee on Corporate Governance and adopted by Nasdaq Copenhagen are best-practice guidelines for the governance of companies admitted to trad- ing on a regulated market in Denmark. When reporting on corporate governance, we fol- low the “comply or explain” principle. Demant complies with 38 of the 40 recommendations. In the two cases where we have chosen to deviate from a recommendation, we provide well-founded explanations and explain what we do instead. To further increase transparency, we provide supple- mentary and relevant information, even when we comply with the recommendations. Corporate Governance Report 2024 provides a complete presentation of the recommendations and how we comply with them . The report as well as the financial reporting process and internal control described in Risk management activities in this Annual Report 2024 constitute Demant’s statement on corporate governance, cf. section 107b of the Danish Financial Statements Act. Governance structure 1 In accordance with Danish legislation, Demant has a two-tier management system, comprising the Board of Directors and the Executive Board. No individual is a member of both. The division of responsibilities between the Board of Directors and the Executive Board is clearly outlined and described in the Rules of Procedure for the Board of Directors and in the Instructions for the Execu- tive Board. The Board of Directors is responsible for the over- all strategic management and the financial and managerial supervision of the company, the ulti- mate goal being to ensure long-term value crea- tion. The Board of Directors supervises the work of the Executive Board. The Executive Board is responsible for the daily operations and develop- ment of the business in accordance with the stra- tegic direction. The members of the Executive Board are the CEO, CFO and the President of Hearing Care, who are registered with the Danish Business Authority. The Executive Board has formed a wider Execu- tive Leadership Team. On 1 November, we wel- comed Anne-Karen Hunt as new President of Di- agnostics. With this addition, the Executive Lead- ership Team is complete with Presidents repre- senting the three business areas (Hearing Aids, Hearing Care and Diagnostics) and the President of Group Services. The CEO is also President of Hearing Aids, and the CFO is President of Group Services. Composition of the Board of Directors Since the annual general meeting in March 2024, the Board of Directors has consisted of seven members: four members elected by the share- holders at the annual general meeting and three members elected by staff in Denmark. Sharehold- ers elect Board members for a term of one year, and staff elect Board members for a term of four years. Staff-elected members are elected in ac- cordance with the provisions of the Danish Com- panies Act. On 1 November 2024, Charlotte Hede- gaard resigned and was replaced by staff-elected alternate, Anders Højsgaard Thomsen. Although the Board members elected by the shareholders at the annual general meeting are up for election every year, the individual Board members are traditionally re-elected and sit on the Board for an extended number of years. This en- sures consistency and maximum insight into the conditions prevailing in the company and the in- dustry. Such consistency and insight are consid- ered important in order for the Board members to bring value to the company. Two of the four Board members presently elected by the shareholders at the annual general meeting are considered independent. The four Board members stand for re-election at the annual gen- eral meeting in March 2025. Additionally, the Board proposes that Katrin Pucknat is elected as a new member of the Board. She will be consid- ered independent. She brings significant experi- ence from the MedTech Industry as well as strong competence within marketing, sale, product inno- vation and digital business transformation. The Board is composed to ensure the right combi- nation of competencies and experience, with ex- tensive international managerial experience, board experience from major listed companies and diversity traits carrying particular weight. On our website, www.demant.com/about/manage- ment-and-governance, we describe the compe- tencies and qualifications that the Board of Direc- tors deems necessary to have at its overall dis- posal in order to perform its tasks for the com- pany. Governance framework 1 ESRS 2 GOV-1 The role of the administrative, management and supervisory bodies. All sections below this header are part of limited assurance. Shareholders Board of Directors Executive Leadership Team Hearing Aids Hearing Care Diagnostics Group Services Functional Boards Executive Board Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 42 Diversity The Board of Directors aims to have at least 40% of the underrepresented gender among the Board members elected by the shareholders, as this constitutes an even distribution in terms of gen- der. In 2024, the Parent, Demant A/S, maintained an even distribution of gender both in the Board of Directors and at other management levels, cf. section 139c of the Danish Companies Act. As part of our ambitions to ensure diversity and in- clusion in the Group, we have a Policy on Diver- sity, Equity and Inclusion, which includes targets to increase diversity and inclusion in the Demant Group. Demant is present in all parts of the world and employs people with different ethnic background, personality, nationality, age, sexual orientation, gender and education. We encourage respect for diversity and strive to treat all employees fairly. Evaluation of the performance of the Board of Directors Once a year, the Board of Directors performs an evaluation of the Board’s work. The evaluation is performed either through personal, individual in- terviews with the Chair and each of the Board members or by means of a questionnaire to be filled out by the individual Board members. In both instances, the findings of the evaluation are pre- sented and discussed at the subsequent Board meeting. At least every third year, the evaluation is performed with external assistance. In 2024, the evaluation was performed through in- dividual interviews with the Board members. Over- all, the evaluation confirmed that the Board is sat- isfied with its governance structures and further- more confirmed that the interaction between the Board members works well. The Board of Direc- tors is keen to keep focus on and allocate time to the long-term strategic development of the com- pany to continuously ensure that the company’s potential is fully exploited. The Board confirmed that the separation of the audit committee meet- ings from the ordinary Board meetings, which was implemented in 2023, works well. This has led not only to more in-depth discussions on audit and fi- nancial topics, but also allowed the Board mem- bers to focus more on the strategic development of the company. Furthermore, the Board of Directors has decided to dissolve the IT security committee as a sepa- rate committee by the end of 2024. In the future, the audit committee will follow up on IT security matters. The IT security committee was estab- lished shortly after the IT incident in 2019, and for the past five years, it has served the Board and the company well by emphasising the importance of IT security and report- ing on the progress made by the company in this area. The audit committee will continue the work of the IT security committee. The collaboration between the Board of Directors and the Executive Board works well, and there is an open and trustful working atmosphere. The work performed by the Board of Directors takes its starting point in the annual wheel, which is regu- larly refined and updated and ensures the Board’s commitment and immersion into relevant areas. Board of Directors 2024 2023 Total number of shareholder - elected mem- bers 4 5 Women 25% 40% Men 75% 60% Equal to an even (40/60%) distribution, cf. the Danish Busi- ness Authority’s Guidelines on target figures and policies for the gender composition of management. Board meeting, Smørum, Denmark Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 43 Board committees In 2024, the company had four Board committees: an audit, a nomination, a remuneration and an IT security committee. The audit committee has, on an ongoing basis, been engaged in performing its work as a commit- tee separate from the ordinary Board meetings. This has allowed the members of the committee to focus more on audit and financial topics. In 2024, one major focus area for the audit commit- tee has been to ensure that the Group meets the provisions of the Corporate Sustainability Report- ing Directive in its financial and sustainability re- porting. The nomination committee has been engaged in activities in relation to its normal tasks pursuant to the committee charter. The committee has also been engaged in the search for a new candidate for the Board of Directors, who will be proposed for election at the upcoming annual general meet- ing. The remuneration committee has been engaged in supervising the remuneration structure and pre- paring the Remuneration Policy, which was adopted in March 2022. The committee is satis- fied with the Policy, which aims to align the Exec- utive Board’s focus with value creation on im- portant parameters. The IT security committee has focused on fol- lowing up on and ensuring progress in the plans made. Once a year, the committee performs a maturity assessment based on the Cybersecurity Framework of the National Institute of Standards and Technology (NIST), the purpose of which is to ensure that also in future, we continue to focus on relevant parameters. Board of Directors’ and Executive Board’s remuneration Demant has a Remuneration Policy and publishes a Remuneration Report. The current Policy was approved at the annual general meeting in March 2022. Please refer to Remuneration Report 2024 on our website for further details. The Report will be submitted for advisory vote at the annual general meeting in March 2025. Independence and meeting attendance overview Meeting attendance Name Role Independence Board of Directors Audit committee Nomination committee Remuneration committee IT security committee Niels B. Christiansen Chair, chair of the re- muneration, nomina- tion and IT security committees Not independent 7/7 3/3 4/4 3/3 Niels Jacobsen Vice Chair Not independent 7/7 3/3 3/3 4/4 3/3 Thomas Duer Staff-elected member N/A 7/7 Heidir Hørby Staff-elected member N/A 7/7 Sisse Fjelsted Rasmussen Member, chair of audit committee Independent 7/7 3/3 3/3 Anders Højsgaard Thomsen 1 Staff-elected member N/A 1/1 Kristian Villumsen Member Independent 7/7 3/3 Lars Nørby Johansen Chair of the Board of Directors of William Demant Foundation N/A 3/3 Søren Nielsen President & CEO N/A 3/3 Board members who stepped down in 2024 Charlotte Hedegaard 1 Staff-elected member N/A 6/6 Anja Madsen 2 Member Independent 2/2 1 Anders Højsgaard Thomsen replaced Charlotte Hedegaard as staff-elected member on 1 November 2024. 2 Anja Madsen decided not to stand for re-election in 2024 and stepped down at the annual general meeting on 6 March 2024. Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 44 Share price development The price of Demant shares decreased by 10.7% in 2024, and on 31 December 2024, the share price was DKK 264.2 This corresponds to a mar- ket capitalisation of DKK 56.3 billion (excluding treasury shares). The average daily trading turno- ver in 2024 was DKK 94 million. The company is a constituent of the OMX Copenhagen 25 Index (C25), which covers the 25 largest and most fre- quently traded shares on Nasdaq Copenhagen. The C25 Index decreased by 2.4% during the year. Ownership William Demant Foundation is the majority share- holder in Demant through its investment company William Demant Invest and has previously com- municated its intention to maintain an ownership interest of 55-60% of Demant’s share capital. As at 31 December 2024, William Demant Founda- tion held – either directly or indirectly – approxi- mately 56% of the share capital, excluding treas- ury shares. No other shareholders had flagged an ownership interest of 5% or more as at 31 December 2024. Demant had 33,847 individual investors as at 31 December 2024. Excluding shares held by the William Demant Foundation, approximately 40% of the share capital is registered in Denmark and 25% is registered in North America. The remain- ing 35% of the share capital is split between the remaining geographies but is predominantly regis- tered in Europe. As at 31 December 2024, the company held 8,075,473 treasury shares, corresponding to 3.6% of the share capital. Shareholder information Share information (DKK 1,000) 2024 2023 2022 2021 2020 Share capital at 1 January 44,788 46,076 48,025 48,138 49,057 Capital reduction -570 -1,288 -1,950 -113 -919 Share capital at 31 December 44,218 44,788 46,076 48,025 48,138 Nominal value per share, DKK 0.2 0.2 0.2 0.2 0.2 Total number of shares, thousand 221,090 223,939 230,378 240,127 240,691 Highest share price, DKK 371.0 312.3 339.3 394.7 244.4 Lowest share price, DKK 249.4 190.0 173.1 219.6 132.2 Share price, year -end, DKK 264.2 296.0 192.6 335.1 240.6 Market capitalisation at 31 December, DKK million¹ 56,278 65,284 42,977 77,117 57,718 Average daily trading turnover, DKK million¹⁾²⁾ 93.6 85.6 76.2 111.0 99.8 Average number of shares, million¹ 217.2 223.1 226.0 234.8 239.8 Number of shares at 31 December, million¹ 213.0 220.5 223.2 230.1 239.9 Number of treasury shares at 31 December, million 8.1 3.4 7.2 10.0 0.8 ¹Excluding treasury shares ²Average daily trading turnover on Nasdaq Shareholder structure as at 31 December 2024 (excluding treasury shares) William Demant Foundation 56% Free Float 44% Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 45 Share capital As at 31 December 2024, Demant’s nominal share capital was DKK 44,217,958.40 divided into 221,089,792 shares of DKK 0.20 each. All shares are the same class and carry one vote each. The change compared to the year before is due to the cancellation of treasury shares amount- ing to DKK 569,929.60, which was approved at the annual general meeting on 6 March 2024. The Board of Directors is authorised to increase the company’s share capital by a total nominal value of up to DKK 4,800,000. This increase may consist of no more than DKK 4,800,000 of the share capital with pre-emptive rights for existing shareholders and of no more than DKK 4,800,000 of the share capital without pre-emptive rights for existing shareholders. The company’s share capi- tal can also be increased through a combination of share capital with and without pre-emptive rights, but it cannot exceed a total nominal value of DKK 4,800,000. Furthermore, the Board of Di- rectors is authorised to increase the share capital by an additional nominal value of up to DKK 2,500,000 for shares offered to employees. All au- thorisations have been decided by the annual general meeting and are valid until 1 March 2026. Capital allocation The company follows the principles of its capital allocation policy and uses its cash flow from oper- ating activities for value-adding investments and acquisitions. Subject to Demant’s targeted gearing multiple of 2.0-2.5 measured as net interest-bear- ing debt relative to EBITDA, any excess liquidity is distributed back to shareholders through share buy-backs. Until the next annual general meeting in March 2025, the Board of Directors has been authorised to let the company buy back shares at a nominal value of up to 10% of the share capital. The pur- chase price may not deviate by more than 10% from the price quoted on Nasdaq Copenhagen. Investor Relations Demant strives to ensure a steady and consistent flow of information to Investor Relations (IR) stakeholders in order to promote the basis for a fair pricing of the company’s shares – pricing that will at any time reflect the company’s strategies, fi- nancial capabilities and outlook for the future. The flow of information will contribute to a reduction of the company-specific risk associated with invest- ing in Demant shares, thereby leading to a reduc- tion of the company’s cost of capital. We aim to reach this goal by continuously provid- ing relevant, correct, adequate and timely infor- mation in our company announcements. In the course of the year, we publish an annual report, an interim report as well as interim management statements pertaining to Q1 and Q3, all of which contain updates on the Group and its financial po- sition as well as results in relation to the full-year outlook, including updates on important events and transactions in the period under review. We strive to maintain an active and open dialogue with analysts and with current and potential inves- tors, which helps the company stay updated on the views, interests and opinions of the company’s various stakeholders. At our annual general meet- ing and through presentations, individual meet- ings, participation in investor conferences, webcasts, capital markets days etc., we aim to maintain an ongoing dialogue with a broad spec- trum of stakeholders. In 2024, we held nearly 400 investor meetings and presentations. We also use our website, www.demant.com , as a means of communication with our stakeholders. At the end of 2024, 25 equity analysts were cover- ing Demant. We refer to our website for a full list of analyst coverage. Demant has a three-week quiet period prior to publication of annual reports, interim reports and interim management statements during which time communication with IR stakeholders on the current market development is restricted. Five -year development in share price 100 150 200 250 300 350 400 Jan/20 Jul/20 Jan/21 Jul/21 Jan/22 Jul/22 Jan/23 Jul/23 Jan/24 Jul/24 Share price (DKK) Demant OMX C25 (Rebased) Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 46 Annual general meeting 2025 The annual general meeting will be held on Thurs- day, 6 March 2025, at 3:00 p.m. Shareholders can attend the meeting physically at the company’s headquarters. The meeting will also be webcast live on our website. Contact information for investors and analysts Phone: +45 3917 7300 E-mail: [email protected] Company announcements and investor news in 2024 3 Jan New Head of Investor Relations 10 Jan Transactions with Demant shares by managers and closely related parties 5 Feb Review of strategic options for Communications 5 Feb Results for 2023 and outlook for 2024 6 Feb Annual Report 2023 7 Feb Notice of annual general meeting 28 Feb Transactions with Demant shares by managers and closely related parties 6 Mar Decisions of annual general meeting 12 Mar Capital Markets Day 2024 6 May Interim Management Statement covering Q1 2024 21 May Closing of divestment of cochlear implants business 6 Jun Updated timeline for the strategic review of Communications 16 July Revised financial outlook for 2024 and preliminary H1 financial key figures 1 Aug Restated comparative figures for 2023 14 Aug Initiation of restructuring plan for EPOS 14 Aug Interim Report 2024 19 Aug Transactions with Demant shares by managers and closely related parties 9 Sep New staff-elected member of the Board of Directors 16 Sep New President of Diagnostics 11 Nov Interim Management Statement covering Q3 2024 12 Dec Financial calendar 2025 Peter Pudselykke Head of Investor Relations Gustav Høegh Investor Relations Officer Financial calendar 2025 22 Jan Deadline for submission of items for the agenda of annual general meeting 5 Feb Annual Report 2024 6 Mar Annual general meeting 6 May Interim Management Statement covering Q1 2025 12 Aug Interim Report 2025 4 Nov Interim Management Statement covering Q3 2025 Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 47 Board of Directors Sisse Fjelsted Rasmussen (woman) Born 1967 Nationality: Danish 1,475 shares ( +1,475) Kristian Villumsen (man) Born 1970 Nationality: Danish 4,130 shares (unchanged) Joined the Board in 2021 Chair of the audit committee and member of the IT security committee Considered independent: Yes P ositions: Hempel Foundation (M), Schouw & Co (M), Dades A/S (M) and Conscia A/S (M) Education : Holds an MSc in Business Economics and Auditing from Copenhagen Busi- ness School (CBS) and is a state-authorised pub- lic accountant Competences : International leadership experience within the areas of finance and ac- counting, including board and CFO experience from listed companies as well as in -depth insights into value creation, change management, M&A and sustainability/ESG 1 Joined the Board in 2021 Member of the audit committee Considered independent: Yes P ositions: President & CEO, Coloplast and Com- mittee on Life Science under the Confederation of Danish Industry (M) Education : Holds an MSc in Political Science from Aarhus University and a Master in Public Pol- icy from Harvard University Competences : International leadership experience from the global MedTech industry, management experience from such areas as inno- vation, sales, strategy deployment and commer- cial excellence 1 1 ESRS 2 GOV-1 The role of the administrative, manage- ment and supervisory bodies . Competences are part of the limited assurance. Abbreviations C = Chair, VC = Vice Chair, M = Member Niels B. Christiansen (man) Chair Born 1966 Nationality: Danish 8,060 shares ( unchanged) Niels Jacobsen (man) Vice Chair Born 1957 Nationality: Danish 8 01,340 shares ( -100,000) Joined the Board in 2008 Chair since 2017 Chair of the nomination, remuneration and IT se- curity committees Considered independent: No P ositions: CEO & President, LEGO A/S and CEO, LEGO Holding , William Demant Foundation (VC), William Demant Invest A/S (M), Tetra Laval S.A. (M) and Committee on Business Policy under the Confederation of Danish Industry (C) Education : Holds an MSc in Engineering from the Technical University of Denmark and an MBA from INSEAD Competences : International leadership experience from major, global, industrial , con- sumer goods and high -tech companies, business management and board experience as well as strong insights into industrial policy and sustaina- bility/ESG 1 Joined the Board in 2017 Vice Chair since 2017 Member of the audit, nomination, remuneration and IT security committees Considered independent: No P ositions: CEO, William Demant Invest A/S, Thomas B. Thrige Foundation (C), ABOUT YOU Holding GmbH (VC), ATP Long Term Danish Cap- ital (member of advisory board) and Central Board of the Confederation of Danish Industry (M). Re- lated to William Demant Invest: Jeudan A/S (C), Embla Medical hf. (C) and Vision RT Ltd. (C) Education : Holds an MSc in Economics from Aarhus University Competences : International leadership experience from major, global companies in the global healthcare and MedTech industry, business management and board experience as well as in - depth insights into financial matters, accounting, tax, risk management and M&A 1 Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 48 Thomas Duer (man) Born 1973 Nationality: Danish 1,335 shares ( unchanged) Staff-elected Board member since 2015. Re -joined the Board of Directors as alternate in 2023 Considered independent: N/A P ositions: Director, Audiological Solutions, R&D, Demant Has been with the Demant Group since 2002 Education: Holds an MSc in Electrical Engineer- ing from the Technical University of Denmark Heidir Hørby (woman) Born 1974 Nationality: Danish 591 shares ( unchanged) Anders Højsgaard Thomsen (man) Born 1977 Nationality: Danish 1,709 shares (+ 58) Staff-elected Board member in 2023 Considered independent: N/A P ositions: Quality Systems Engineer, Demant facility in Ballerup, Denmark Has been with the Demant Group since 1994 Education : N/A Staff-elected Board member. Joined the Board of Directors as alternate in 2024 Considered independent: N/A P ositions: Director, Audiological Solutions, R&D, Demant Has been with the Demant Group since 2002 Education : Holds an MSc in Engineering from the Technical University of Denmark Abbreviations C = Chair, VC = Vice Chair, M = Member Overview Market and strategy Financial performance Corporate governance Demant Annual Report 2024 49 Executive Leadership Team Søren Nielsen 1 (man) President & CEO Born 1970 Nationality: Danish 41 ,368 shares (+4, 331) René Schneider 1 (man) CFO Born 1973 Nationality: Danish 2 2,498 shares (+ 1,176) Niels Wagner 1 (man) President Born 1971 Nationality: Danish 2 9,940 shares ( +2,572) Anne-Karen Hunt ( woman) President Born 19 77 Nationality: German No Shares Joined the company in 1995 Education : Holds an MSc in Engineering from the Technical University of Denmark Competences : Broad business and leadership experience from various management positions in the Group, including the commercial area, product innovation, quality and strategic devel- opment. International board experience, strong insights into the MedTech industry as wel l as a wide network in the global hearing healthcare community Other positions: HIMPP A/S (M), HIMSA A/S (C), HIMSA II A/S (C), EHIMA (M), Vision RT Ltd. (M), Committee on Life Science under the Confederation of Danish Industry ( M), Commit- tee on Business Policy under the Confederation of Danish Industry (M), DOVISTA A/S (M) , Cen- tral Board of the Confederation of Danish Indus- try (M) and Board of the Confederation of Danish Industry Life Science (C) Area of responsibility : President of the Hearing Aids business area Joined the company in 2015 Education : Holds an MSc in Economics from Aarhus University Competences : Broad business and financial leadership experience from various manage- ment positions with major listed companies, leading to international experience in such areas as streamlining and re -establishing companies, completing M&A and driving value creation Areas of responsibility: President of Group Services , i.e. Finance, HR, IT and Corporate Functions Joined the company in 2007 (also employed with the company 1996-2003) Education : Holds an MSc in Economics from Aarhus University Competences : Broad business and leadership experience from various management positions in the Group, including M&A, and heading the Group’s many hearing aid clinics operating under various brands Area of responsibility: President of the Hearing Care business area 1 Registered with the Danish Business Authority as member of the Executive Board Joined the company in 2024 Education : Holds a BSc in Marketing and Econom- ics from the University of Bayreuth and an MSc in Business Administration (MBA) from the University of Düsseldorf Competences : In-depth business and leadership experience from major, global healthcare compa- nies , leading to strong international experience in such areas as marketing and sales with focus on driv ing value creation Area of responsibility : President of the Diagnostics business area Abbreviations C = Chair, VC = Vice Chair, M = Member Sustainability performance Environment Social Governance Additional information Demant Annual Report 2024 50 Sustainability statement “I often hear that people don't even realise that I can't hear ‘cause my hearing aids help me so much.” Louise, hearing aid user and adventurer Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 51 ESRS 2 General basis for preparation of sustainability statement Framework and scope The Sustainability statement has been prepared in accordance with the Corporate Sustainability Re- porting Directive (CSRD), including the European Sustainability Reporting Standards (ESRS). Since 2021, Demant has reported in accordance with the sustainability standards of the Global Re- porting Initiative (GRI). Following the agreement between ERFRAG and GRI on ESRS-GRI in- teroperability, reporting under ESRS is deemed reporting 'with reference' to the GRI standards. The Sustainability statement has been prepared on a consolidated basis and include all entities un- der Demant’s control as defined by the scope of consolidation used in our financial reporting in- cluding acquired entities in the reporting period. Any exclusions are clearly indicated and justified in the specific disclosure requirement sections. The Sustainability statement covers Demant’s own operation as well as upstream and down- stream value chains, where applicable, depending on the impacts, risks and opportunities identified in the double materiality assessment. Independent auditors are engaged to provide lim- ited assurance on our sustainability data. The scope and conclusions of the limited assurance process are disclosed in the assurance statement on 206. The comparative figures are covered by limited assurance. We have not chosen the options to omit or exclude information due to confidentiality or sensitivity. Time horizons Time horizons used in this report are as defined in the ESRS: Short term represents one year. Me- dium term spans from one year and up to five years. Long term is more than five years. Application of estimates and judgements The reporting of certain data points requires as- sessment, which includes estimates and/or judge- ments. The general assumptions are based on Demant’s assumption that the Demant group av- erages can be applied across the different areas as a leverage to estimate other metrics. These assumptions relate to: • Scope 3 emissions under E1-6 • Resource inflow under E5-4 • Resource outflow under E5-5 We regularly review and update these estimates and judgements based on our experience, ad- vancements in ESG reporting and various other factors. Any changes in estimates are recognised in the period they are revised. Additionally, we ap- ply judgements when implementing accounting policies. For more details on the key estimates, judge- ments and assumptions used, please refer to the pages with quantitative ESG data tables. Incorporation by reference Certain disclosure requirements are disclosed in other publicly available documents. When incor- poration by reference is used, it is clearly indi- cated. Disclosures placed outside the sustainabil- ity statement are clearly identified with a refer- ence, referring to the applicable disclosure re- quirement of the ESRS regulation. The tables on pages 110-112 summarise the dis- closures required by ESRS that are referenced outside the sustainability statement. Comparative figures for prior years Comparative figures for prior years are not cov- ered by limited assurance. This is clearly marked with “●”. Reporting scope and disclosure requirements Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 52 Sustainability strategy and governance 54 Double materiality assessment 57 Stakeholder views and interests 64 Sustainability in Demant Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 53 Through life-changing hearing health, we contribute to building a more sustainable world where all people have the opportunity to enjoy an active life. One in five people lives with hearing loss and, due to an ageing popula- tion, this number is increasing. Testing your hearing is the first step towards better hearing, but many hearing losses go undetected. If we can enable more people to hear better, we can give them a voice and thus the opportunity to be part of society without constraints. We empower them to tune in to life and take an active part in their community for the good of everyone. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 54 Based on our corporate strategy and information obtained through a double materiality assessment (see page 57), we refined our Sustainability Strat- egy in 2024, including our sustainability ambition as well as our ESG ambitions and targets (see page 55). We are also basing our ambitions and priorities on the Sustainable Development Goals (SDGs) that are relevant to us. Where our sustainability ambition is intrinsic to Demant’s purpose and ambition, our ESG ambi- tions and priorities enable us to deliver on our overall ESG ambition, which is to drive responsi- ble and sustainable business practices. To achieve results based on these priorities, we have set the following three ESG ambitions. Respect for the planet (E) Caring for people goes hand in hand with caring for the environment, and, although our impact is relatively low compared to other industries, we take a proactive approach to lowering our footprint and any negative impact on the environment. As a Group in constant growth, decoupling our emis- sions and environmental impact from that growth is key to meeting our targets. To that end, we work on the environmental optimisation of our op- erations and our products, and we strive to achieve ambitious goals for emissions reductions. Caring for people (S) Being a leader in hearing health means we have an obligation to inspire the industry to continue in- novating and applying new ways of thinking. We want to stay ahead of the game and to be at the forefront in our core impact ambition – creating life-changing differences through hearing health. Our core commitment to society is to help people become aware of and overcome hearing loss and improve their quality of life through innovative so- lutions and access to personalised hearing care. To be a leader in creating a positive social impact on society requires us to be a leading employer capable of attracting the brightest minds for the benefit of people with hearing loss. Our over 22,000 employees are the most valuable part of our business, and their well-being, safety, en- gagement and development are fundamental to our success. We want to promote an organisa- tional culture characterised by care and respect for others, with diversity, equity and inclusion as important drivers. Performing with integrity (G) We take a proactive approach to business ethics to ensure we behave as a company we can be proud of. We strive for high ethical standards and conduct business with integrity and honesty. Our Code of Conduct and Third Party Compliance Code set the minimum standards and ethical prin- ciples applicable to all employees and third parties with whom Demant conducts business. Please refer to the chapters dedicated to our ma- terial topics under Environment, Social and Gov- ernance for further details on our targets and ac- tions and the progress of our sustainability work. Sustainability strategy and governance With our purpose to create life-changing hearing health and our ambition, as the leading hearing healthcare company, to improve as many lives as possi- ble, sustainability is at the core of our corporate strategy. Our contribution to the Sustainable Development Goals Core impact Our core business positively changes the lives of people with hearing loss. From screening newborns to testing in our clinics, we stay in people’s lives to continue to improve their hearing abilities. We share knowledge and awareness of hearing healthcare and seek to increase access to proper hearing rehabilitation (target 3.8). We invest in the education of hearing care professionals (target 4.4), particularly in areas where education is scarce. Furthermore, good hearing capabilities are essential for inclusive and equal access to education (target 4.5). Through decades of development, testing and growing insights in paradigm-setting technology, we make a substantial impact on innovation within hearing health (target 9.5). Our solutions reduce inequalities, thereby furthering the inclusion of people with hearing loss when it comes to employment and other important aspects of life (target 10.2). Environment We work actively to transition to renewable energy across our operations (target 7.2). We challenge the concept of “business as usual” to reduce, reuse and recycle as much as possible (target 12.5). Our transition plan guides us towards fulfilment of our climate targets (SDG 13). Social We positively impact gender equality through focused initiatives and targets to obtain a gender-balanced top management (target 5.5). We contribute to decent work conditions and economic growth (targets 8.5 and 8.8). Our diversity, equity and inclusion agenda takes a broad approach to ensure a workplace where all employees, irrespective of their differences, can contribute and belong (target 10.2). Governance As a global company with high focus on ethics, we work diligently with anti-bribery and anti-corruption (target 16.5). Please refer to demant.com for more information. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 55 Sustainability ambition Core impact: Improving lives through life-changing hearing health Our roots are in hearing health, and our purpose is to create life-changing differences through hearing health, whereby we contribute to building a more sustainable world where people have the opportunity to enjoy life. Caring for people’s health and well-being goes hand in hand with caring for our employees, society and the planet ESG ambition We will drive responsible and sustainable business practices Environment Social Governance • Decouple emissions from growth • Work with environmental optimisation • Strive for ambitious emissions reductions • Help people overcome hearing loss through awareness • Improve their quality of life through innovative solutions and personal care • Have a positive impact on health • Ensure our people’s well-being, safety, engagement and development • Promote an organisational culture characterised by care and respect with diversity, equity and inclusion as important drivers • Strive for high ethical standards • Perform business with integrity and honesty • Set the minimum standards and ethical principles through our code of conduct ESG priorities Respect for the planet Climate impact Caring for people Diversity, equity and inclusion Performing with integrity Business integrity Material topics • Climate change adaptation • Climate change mitigation • Product circularity • Providing life-changing hearing health • Hearing health awareness • Product quality and safety • Right to privacy • Working conditions • Diversity, equity and inclusion • Talent attraction and retention • Responsible supply chain • Corruption and bribery • Advocacy for hearing health Targets E 2025: 50% renewable electricity 2030: 100% renewable electricity 2030: 46% reduction in scope 1 and 2 GHG emissions 2030: 46% reduction in scope 3 GHG emissions 2050: Net-zero emissions Impact targets 2030: More than 16 million lives improved 2030: Increase awareness by hearing-testing more than 2 million people S 2030: Increase gender balance in top- level management to 35/65 % (women/men) 2030: Take employees’ experience of in- clusion to the top -third level of Gallup index 2030 : Take employee engagement to the top -third level of Gallup index G 2030: Increase excellence in business conduct through code of conduct training to reach 100% highly exposed employ- ees Sustainability strategy Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 56 ESRS 2 GOV-1 The role of the administrative, manage- ment and supervisory bodies ESRS 2 GOV-2 Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies Our governance model for sustainability ensures centralised oversight and accountability as well as deployment of our ESG priorities across our busi- ness areas. The Board of Directors evaluates progress on our sustainability ambition and ESG priorities twice a year and has final oversight. The audit committee oversees sustainability reporting. The Executive Board reports to the Board of Di- rectors. The Executive Board has formed a wider Executive Leadership Team, whose members represent the three business areas (Hearing Aids, Hearing Care and Diagnostics) as well as Group Services. The Executive Leadership Team en- dorses sustainability and ESG ambitions and gives strategic direction on priorities. In 2024, the Sustainability Board comprised the Executive Leadership Team as well as selected senior leaders from our business areas and func- tions. The Sustainability Board met every other month to review progress and risks, give strategic guidance on ESG priorities and ensure alignment and traction in the business areas. Group Sustainability drives the Group’s overall sustainability ambition, selected ESG priorities and, in collaboration with the ESG reporting team in Finance, the sustainability reporting. Other key functions drive specific sustainability areas, such as privacy, business ethics as well as diversity, equity and inclusion. Business areas implement the Group’s ESG priorities, drive supply chain- and product-related projects and monitor product- related and country-specific legislation. Information on the composition, diversity and ex- pertise of our Board of Directors and Executive Leadership Team can be found on pages 47-49. Information on the sustainability-related perfor- mance in incentive schemes can be found in the Remuneration Report . Sustainability governance Board of Directors Group Sustainability Executive Leadership Team Audit committee Hearing Aids Hearing Care Diagnostics Group Services Sustainability Board Executive Board Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 57 Understanding our impacts on society – both posi- tive and negative – ensures that we focus on the right things when managing ESG in our business. Assessing materiality of sustainability topics on an annual basis helps us take the right strategic deci- sions and guides our external disclosures. We as- sess sustainability topics from a double materiality perspective: How can Demant actually and poten- tially impact people and the environment (impact materiality), and can such impacts and/or depend- encies on resources affect Demant’s financial po- sition (financial materiality)? In 2024, we further qualified the extensive double materiality assessment (DMA) we conducted in 2023 to identify our material topics. Through a comprehensive process, which is de- tailed on page 62, we identified and assessed our current and potential positive and negative im- pacts, risks and opportunities (IROs). Double materiality assessment Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 58 ESRS 2 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model We organised all material impacts, risks and op- portunities (IROs) in 13 material topics for clar- ity. The material topics inform both our strategy and our reporting. In the models on page 55 we illustrate the interaction between the material topics and our strategy. The identified material topics determine the Eu- ropean Sustainability Reporting Standards (ESRS) on which we report as referenced in the matrix presented here. All material topics are described briefly on the following pages and for further details please refer the respec- tive chapters from page 65. The methodology and process used to identify the material topics are described on pages 62- 63. Material topics The material impacts, risks and opportunities identified during the materi- ality assessment process are presented and described on the following pages. Financially material Climate change adaptation (E1) Talent attraction and retention (S1) Product quality and safety (S4) Corruption and bribery (G1) Advocacy for hearing health (G1) Double material (financially and impact material) Climate change mitigation (E1) Product circularity (E5) Diversity, equity and inclusion (S1) Providing life-changing hearing health (S4) Hearing health awareness (S4) European Sustainability Reporting Standards E1: Climate change E5: Resource use and circular economy S1: Own workforce S2: Workers in the value chain S4: Customers and end-users G1: Business conduct Not material Various ESG topics, including pollution (E2), biodiversity (E3), water (E4) and affected communities (S3). Impact material Working conditions (S1) Responsible supply chain (S2) Right to privacy (S4) Financially material Impact material Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 59 Material topics and our value chain Climate change mitigation Climate change adaptation Product circularity Working conditions Diversity, equity and inclusion Talent attraction and retention Responsible supply chain Providing life-changing hearing health Hearing health awareness Product quality and safety Right to privacy Corruption and bribery Advocacy for hearing health Material topics Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 60 Description of material topics Value chain location: Where does the impact occur? Time horizon: When does the impact occur? Upstream Own operations Downstream Short term Medium term Long term Climate change (E1) Climate change mitigation Demant’s greenhouse gas emissions have a negative impact on the environment. Most greenhouse gas emissions are scope 3 greenhouse gas emissions stemming from suppliers’ operations and from materials and components that cannot be replaced. Climate change adaptation There is a risk that some of Demant’s facilities and suppliers may be exposed to natural dis- asters or extreme weather events, which could lead to operational disruption. Circular economy (E5) Product circularity Demant has an opportunity to further increase our use of recycled components and packag- ing materials to limit negative impact on the environment and reduce costs. In the long term, there is also a potential risk related to less availability of essential raw materials required for electronic components. Own workforce (S1) Working conditions Demant may have a negative impact on employees’ mental health and well-being, especially in busy periods. Negative impacts on employees' also present a risk to their efficiency levels, employee turnover rates and the company’s reputation. Diversity, equity and inclusion If Demant fails to ensure diverse representation of gender, nationalities and other diversity traits in our employee group it carries a risk that we cannot build a work environment charac- terised by care and respect. This could have negative impacts on certain groups of employ- ees and affect our ability to meet our strategic goals. Talent attraction and retention There is a potential risk related to the ability to attract the right talent and to high turnover rates in some employment areas, which could mean high expenses for the recruitment, onboarding and training of new staff. Workers in the value chain (S2) Responsible supply chain Demant operates a long and complex value chain, engaging with suppliers that operate in countries and industries with potentially negative impacts on workers’ rights. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 61 Description of material topics Value chain location: Where does the impact occur? Time horizon: When does the impact occur? Upstream Own operations Downstream Short term Medium term Long term Consumers and end-users (S4) Providing life-changing hearing health Through its products, Demant positively impacts users living with hearing loss, enhancing their engagement in life and creating a positive ripple effect on their surroundings, including their families, colleagues and friends. We also work to upskill and reskill audiologists and other healthcare professionals to further address talent gaps and educate the market which present opportunities for Demant in markets where hearing healthcare education is scarce. Hearing health awareness (entity-specific topic) Demant has an opportunity to raise awareness about the importance of treating hearing loss among potential users and to test as many people as possible. Working towards reducing the stigma associated with hearing loss and empowering people to seek help in due time can po- tentially have a significant positive impact on the individuals treated, their social network and public health in general. Product quality and safety If a lack of quality or compliance with all medical device regulations occurs, it represents a risk to the company's licence to operate and its ability to bring products to market. Right to privacy Due to the nature of our business, we have access to patients' and users’ sensitive personal data and therefore also potentially negative impacts if said data is compromised. Business conduct (G1) Corruption and bribery Demant operates in countries with risks of corruption and bribery, exposing our commercial departments to these risks. Corruption incidents may lead to fines and reputational damage. We also work with distributors who operate in countries where these risks are higher than in the countries where Demant operates directly. Advocacy for hearing health Engaging with governments and local authorities to raise awareness about the importance of hearing health by testing more people and ultimately treating their hearing loss represents an opportunity for Demant, since the level of reimbursement in individual countries affects the penetration rate and thus impacts markets. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 62 ESRS 2 IRO-1 Description of the process to identify and assess material impacts, risks and opportunities Double materiality assessment process Point of departure and benchmarks Assessment methodology Identification and engagement of stakeholders Identification of impacts, risks and opportunities Assessment of impact and financial materiality Shortlist of material impacts, risks and opportunities Consultation of stakeholders Integration of results into reporting plan Consideration of com- pany strategy and cor- porate governance model. Desktop review of ESG rating methodologies and sustainability re- porting standards. Review of peers ’ report- ing performance and sustainability strategies. Definition of scope to in- clude all entities where Demant has operational control as well as key locations in the value chain. Review and detailed mapping of value chain. Development of DMA tool for description and scoring of IRO s, includ- ing setting thresholds for impact and financial materiality ( please refer to page 63). Desktop analysis and interviews with approxi- mately 40 internal stakeholders selected based on their ability to represent affected inter- nal and external stake- holders and their insight into the business. More than 50 IROs were identified. The documentation and descriptions of the IROs include specifications of their nature (impact, risk or opportunity) and where in the value chain an IRO occurs. It also indicates the time hori- zons and the affected stakeholders and if the IRO is the result o f our own operations or our business relationships. Further analysis of IROs, including consid- eration of geographies with elevated potential impacts or risks, and as- sessment of impact and financial materiality of all IROs through scoring workshops with relevant stakeholders. To specifically under- stand impacts related to pollution, water and bio- diversity, an environ- mental analysis consid- ering main locations w as conducted. No ma- terial IROs were identi- fied deeming the stand- ards E2, E3 and E4 im- material. A shortlist of material IROs was further quali- fied with relevant inter- nal stakeholders. Process and material IROs were presented to the following stakehold- ers: • Industry peers (ex- perience exchange sessions) • Executive Leader- ship Team (ap- proval of material IROs) • Audit committee and Board of Direc- tors (approval of material IROs) Grouping of material IROs into larger material topics for external re- porting based on the ESRS . Assessment of material standards and existing gaps to meet reporting requirements. Development of plan for ESRS compliance and 2024 reporting. Continuous documentation of process and results Reassess In 2023, we executed a comprehensive double materiality assessment pro- cess as shown below. The results were further qualified in 2024. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 63 Double materiality assessment methodology The scoring methodology and criteria of the mate- riality assessment included the following parame- ters scored on a scale from 0 (lowest) to 5 (high- est): • Impact materiality: Scale, scope, irremediabil- ity of negative impacts and likelihood of im- pacts. For actual positive and negative im- pacts, materiality is based on the impact se- verity, whereas for potential positive and neg- ative impacts, materiality is based on the se- verity and likelihood of the impact. For scoring of potential negative human rights impacts, severity took precedence over likelihood. • Financial materiality: Size of financial effect, likelihood and impact on reputation. The materiality of IROs was ranked using predom- inantly qualitative scales. However, the basis for the ranking included quantitative input, such as quantitative scales on financial effect and infor- mation obtained from internal sources assessed to be sufficiently reliable. All impacts, risks and opportunities ranked over the materiality threshold of 1.8 on either impact, financial impact or both have been grouped into the 13 material topics in- cluded in this report (please refer to pages 58-61). Demant’s project group for implementation of the Corporate Sustainability Reporting Directive (CSRD) consists of members of the sustainability and ESG reporting teams. The project group is re- sponsible for the double materiality process and conducted the assessment, including the develop- ment of all documentation. Review of process and results in 2024 In 2024, the double materiality assessment was reviewed and further qualified through deeper im- pact and risk analyses, such as a human rights impact assessment and a detailed transition risk analysis. Based on new materiality guidance from the European Financial Reporting Advisory Group, EFRAG, that set the ESRS, and feedback from external auditors, the list, descriptions, scor- ing and grouping of IROs were reviewed. This re- view did not result in any change in the list of ma- terial sustainability IROs. In 2025, we will update the DMA process, consid- ering new learnings and experiences. The update will include further maturing of underlying impact analyses and information from Demant’s due dili- gence practices. The Sustainability Board is accountable for the as- sessment and management of material sustaina- bility impacts, risks and opportunities. This en- sures that sustainability-related risks are consid- ered appropriately alongside other types of risks and are integrated into the continuous risk man- agement processes of the Group’s business areas and functions. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 64 ESRS 2 SBM-2 Interests and views of stakeholders We engage with our stakeholders on a continuous basis to meet their expectations, report on our product innovation process and ensure mitigation of potential negative impacts. The interests and views of key stakeholders are shared with the Ex- ecutive Leadership Team through our functional boards as well as our functional and business area leadership teams. Please refer to our sus- tainability governance model on page 56. Stakeholder views and interests Key stakeholders Engagement Outcome of engagement Employees Please refer to S1-2 disclosures on pages 86-87, 89 and 92. Users Please refer to S4-2 disclosures on pages 96 and 99. Customers We engage with our customers, which include national health organisations, hospitals and hearing care clinics (retail), especially through the daily operations of our com- mercial teams. Please refer to S4-2 disclosures on pages 96 and 96 for more details on engagement with customers of our hearing care clinics. Providing optimal hearing health technology, service and treatment Building trust with customers Aligning on customer requirements Suppliers Please refer to S2-2 disclosures on page 94. Shareholders Please refer to pages 44-46. Regulators and authorities We closely follow updates from regulators and other public authorities, continuously aligning practices, and engage in advocacy through industry organisations and interest groups or in collaboration with peers. Ensuring compliance with all relevant legislation in the markets where we operate Mitigating business and impact risks Advancing positive impacts for people living with hearing loss Industry organisations and interest groups We are an active player in selected industry organisations and collaborate with relevant patient associations and in- terest groups on a continuous basis. Advancing the hearing healthcare industry and positive impacts for people living with hearing loss Including the views of interest groups into our business processes Academia We keep up with the high pace of primary scientific and technology research and base our solutions on significant research enabled through close collaboration with aca- demic experts. Assisting our users better through technological innova- tion Significantly enhancing user benefits in future hearing care through continuous audiological discoveries Stakeholder engagement on sustainability topics is crucial to Demant’s ability to increase its positive impact on hearing health and create value for our stakeholders. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 65 E1 Climate change 66 E5 Resource use and circular economy 75 EU taxonomy 79 Environment Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 66 Upstream Downstream Own operations Own Hearing Clinic We are committed to delivering on our climate tar- gets approved by the Science Based Targets initi- ative (SBTi) in 2023. These targets set not only the final goal of reaching net-zero emissions across the value chain by 2050 but also include mid-term targets. Our targets We aim to reduce absolute scope 1 and 2 green- house gas (GHG) emissions by 46% by 2030 and scope 3 GHG emissions by 46% by 2030, in both cases from a 2019 baseline. Transition to renewable electricity is also crucial for Demant’s progress towards achieving our climate targets. For this reason, we aim to cover 50% of our electricity consumption with renewable electric- ity by 2025 and 100% by 2030. E1 Climate change Caring for people’s health and well-being goes hand in hand with caring for the environment and, though we are not in the heaviest of industries, we take a proactive approach to lowering our environmental footprint. As a Group in constant growth, decoupling our greenhouse gas emissions and environmen- tal impact from that growth is key to meeting our targets. Material topics Climate change mitigation Climate change adaptation REDUCTION 46% Scope 3 greenhouse gas emissions INCREASE 31% 2030 target against baseline year 2019 Scope 3 in 2024 against baseline year 2019 REDUCTION 46% Scope 1 and 2 in 2024 against base- line year 2019 REDUCTION 8% Scope 1 and 2 greenhouse gas emissions 2030 target against baseline year 2019 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 67 Impacts, risks and opportunities ESRS 2 SBM-3 E1 Material impacts, risks and opportuni- ties and their interaction with strategy and business model Demant is committed to climate change mitigation and actively works to reduce our negative impact on the environment stemming from the Group’s GHG emissions, which occurs in the short, me- dium and long term. While the impact of scope 1 and 2 GHG emissions is relatively low and man- ageable, most of the Group’s GHG emissions are scope 3 GHG emissions stemming from suppliers’ operations and from materials and components that cannot be replaced. Therefore, supplier en- gagement and collaboration to reduce GHG emis- sions are crucial for Demant’s ability to reach our targets and lower our footprint. When it comes to Demant’s climate change adap- tation, the occurrence of natural disasters and ex- treme weather events pose a potential risk to our own and our suppliers’ operations in the medium term. Depending on the location and magnitude of the event, this physical material risk may generate different levels of business disruption. In 2023, as part of the DMA process, Demant per- formed a climate-scenario analysis to understand the climate-related physical and transition risks and their materiality to the Group. In 2024, Demant’s business strategy and busi- ness model were assessed for resilience against the risk of climate-related natural disasters. De- mant is considered resilient to the current risk level. The Group ensures the resilience of our business model by integrating considerations of climate-related natural disaster risks into our own operations and supply chain management to mini- mise business disruption, should such an event occur. Through the Group’s already established continuous risk management, both current and fu- ture risks will be considered. Specific actions to reduce potential business disruptions due to fu- ture climate scenarios have been analysed, as ex- plained in the following sections, and will be taken if and when deemed necessary. In the resilience assessment the timeframe for the scenario analysis is 2065 and it does not align with the timeframe of Demant’s climate targets, which have been set to 2030 and 2050. The latter aligns with science-defined key years for climate change mitigation and the former aligns with the secondary information used by Demant in the as- sessment. Nevertheless, as these two elements refer to climate change mitigation and climate change adaptation respectively, the timeframe misalignment neither influences the risk assess- ment nor the climate target alignment with the lim- ited 1.5°C scenario increase at the end of the cen- tury. There are some uncertainties in the resilience analysis, which mostly relate to the input used for our DMA. The climate-related risks considered in the assessment are based on secondary infor- mation and internal experts’ knowledge and are focused on specific business locations. As De- mant continuously improves the sustainability due diligence and DMA processes, the uncertainties about the resilience analysis should be reduced. Impact, risk and opportunity management ESRS 2 IRO-1 Description of the processes to identify and assess material climate-related impacts, risks and opportunities Regarding climate change mitigation, Demant re- ports on our full GHG emissions on an annual ba- sis and compared to our baseline year 2019, the Group’s GHG emissions have increased. In the double materiality assessment process, the Group’s climate performance was considered and assessed as a material negative impact. To identify the physical risks associated with cli- mate change adaptation, Demant performed an assessment to determine which climate-related threats represent a risk for the Group, considering relevant locations, such as our headquarters, own production sites and those of our main suppliers. Demant evaluated different climate scenarios from the Intergovernmental Panel on Climate Change (IPCC) namely RCP2.6; RCP4.5; RCP8.5 with a timeframe extending to 2065 to understand poten- tial future global warming and its implications for the Group. The scenarios considered multiple temperature increases, starting with the IPCC RCP2.6 scenario with the lowest rise in the global average temperature. It also included the highest emissions climate scenario, IPCC RCP8.5, which represents a scenario where GHG emissions con- tinue to rise and no significant efforts to mitigate climate change in the 21 st century are made. Us- ing available secondary information, Demant ana- lysed data at the most specific geographical level available (i.e. city, region or country), and relevant threats, such as wildfire, droughts, floods, changes in precipitation patterns and sea level rise, were also analysed for each location. Also associated with climate change adaptation and specific for the transition risks (which are risks associated with the shift towards a low-carbon economy) originating from different types of transi- tion events (i.e. technological, market and legal), Demant considered scenarios where global warm- ing was limited to 1.5°C with no or only limited overshoot scenarios. The Group considered differ- ent types of transition events in our own opera- tions and those of the supply chain. The results from the above-mentioned risk assessments were used as input for Demant’s DMA. Climate-related natural disasters are considered a material physi- cal risk for Demant, while no transition risks are considered material. E1-2 Policies related to climate change mitigation and adaptation Policy Our Sustainability Policy sets the direction within climate change mitigation and adaptation for all Demant entities and is publicly available on De- mant’s website. To steer the organisation towards the achievement of our climate targets, the Policy describes roles, responsibilities and actions to tackle GHG emissions in our own operations and value chain: • Avoiding the use of unnecessary energy and increasing energy efficiency in our operations • Substituting internal combustion vehicles by electric vehicles • Using renewable electricity in own operations • Focusing on the scope 3 categories where the impact is biggest. The Policy also lays down the Group’s expecta- tions for relevant business-critical locations re- garding the adaptation to climate change-related natural disasters. Climate change mitigation and adaptation We take action to reduce our climate-related impact and risks and work towards climate change mitigation across our value chain. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 68 The Sustainability Board approved the Policy in early H2 and is accountable for its implementa- tion. Progress on the Policy will be presented and discussed in meetings with the Sustainability Board, our Environmental Sustainability Commu- nity and relevant in-house experts. E1-1 Transition plan for climate change mitigation Transition plan Demant’s Transition Plan consolidates the exist- ing climate change mitigation plans and initiatives and details the different mitigation actions set by the Group to reduce the GHG emissions and reach our climate targets aligned with the Paris Agreement (please refer to page 66). The Transi- tion Plan, which is a dynamic document updated yearly, was approved by the Sustainability Board in H2 2024. The Plan currently focuses on De- mant’s near-term climate target for 2030. To reduce scope 1 and 2 GHG emissions, the Plan focusses on the GHG emissions from elec- tricity and fossil fuels from Demant’s fleet (petrol and diesel), as these energy sources represent most of the GHG emissions within these two scopes. For scope 3 GHG emissions, the decar- bonisation levers range from adopting less cli- mate-polluting transport methods to reducing the carbon intensity of the products and materials that the Group purchases. Read more under E1-3. In H2 2024, we further improved our scope 3 ac- counting methodology and restated our baseline and historical GHG emissions. Based on this im- provement, we are working to set additional de- carbonisation levers and to quantify the financing of the Transition Plan. Demant is in a position – and actively works – to reduce the carbon footprint in line with the goals of the Paris Agreement and contribute to global efforts to mitigate climate change. Therefore, the Group is not excluded from the ‘Paris-aligned benchmarks’ established by the European Com- mission. The benchmarks provide a roadmap to ensure that company activities are consistent with the Paris Agreement’s objectives, particularly the goal of limiting the global temperature rise to 1.5°C above pre-industrial levels. E1-3 Actions and resources in relation to climate change policies Demant’s Transition Plan currently focuses on five decarbonisation levers, each including one or more mitigation actions: Lever 1: Energy consumption reduction and efficiency in own operations This lever focuses on avoiding or reducing the consumption of all energy sources in our opera- tions and on increasing energy efficiency. The ac- tions to do so continued in 2024. Energy consumption reduction and efficiency ac- tions are managed locally, allowing us to tailor our approach to the specific characteristics of each lo- cation. This ensures that we can effectively ad- dress specific needs and opportunities for im- provement. This lever is mostly applied at Demant’s produc- tion sites and in other entities with high energy consumption. Each location is free to implement its own actions regarding energy efficiency based on local needs and context. Examples of actions that may be made in this lever are adjustments of the ventilation and heating systems in our facilities and the assessment of appropriate light levels. As a Group with both organic and acquisitive growth, we do not track the energy consumption performance of individual locations and compa- nies at Group level, but we consider their absolute energy consumption. As a result, there are no Group targets associated with this lever. Lever 2: Renewable electricity for own operations In 2024, GHG emissions from electricity repre- sented 88% of scope 2 GHG emissions and 44% of scope 1 and 2 GHG emissions combined. De- mant consumed 1,245 MWh on-site renewable electricity and therefore avoided the generation of 611 tonnes market-based CO 2e emissions in Mex- ico, Denmark, Poland, South Africa, Australia and Italy. Demant consumed 17,116 MWh off-site re- newable electricity of which 60% was directly ac- quired through electricity vendors in France, Italy and Poland and the remaining 40% was covered by Energy Attribute Certificates in Poland, Ger- many and Denmark. The use of offsite renewable electricity enabled Demant to avoid 10,145 tonnes market-based carbon dioxide equivalent (CO 2e ) emissions. Decarbonisation lever Scope of influence Mitigation actions Time horizon Geographical scope 1 Energy consumption re- duction and efficiency in own operations Scope 1 and 2 • Decrease in energy consumption • Increase in energy efficiency From short to long term Global 2 Renewable electricity for own operations Scope 2 • Use of on-site renewable electricity • Use of off-site renewable electricity From short to medium term Global 3 Vehicle fleet electrification Scope 1 and 2 • Transition to electric vehicles for already existing fleet in six prioritised European countries • Transition to electric vehicles for fleet in remaining countries From short to long term Global 4 Supplier engagement programme Scope 3 • Setting a supplier target for improvement of the environmental performance of pur- chased goods and services From short to medium term Global (determined by the location of the sup- pliers onboarded to the programme) 5 Use of less climate-inten- sive transport modes Scope 3 Shift from air freight transport to less cli- mate intensive transport modes From short to long term To be determined Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 69 The transition to renewable electricity is expected to remove all scope 2 GHG emissions associated with electricity consumption by 2030. Demant aims to have 100% renewable electricity in our own operations by 2030 and will continue using current renewable electricity sources while explor- ing the incorporation of new sources. Lever 3: Vehicle fleet electrification In H2 2024, the Sustainability Board approved a new plan to speed up electrification of Demant’s vehicle fleet, replacing internal combustion engine vehicles with electrical vehicles. Through this plan, Demant promotes the use of electric vehi- cles across the Group’s fleet. Phase one of the plan focuses on six specific countries where the legal entities must reach a defined electric vehicle share in their fleet by 2030. Considering fleet size and behaviour, phase one is expected to avoid the emission of 2,675 tonnes of CO 2e in 2030. Lever 4: Supplier engagement programme In 2024, the Hearing Aids business area launched a new supplier engagement programme, called Sustain, to collect primary data from the category of purchased goods and services (phase one) and to set a supplier target for improvement of the en- vironmental performance of this category (phase two). While phase one started in 2024, phase two is expected to start in 2025, and once decarboni- sation targets have been agreed with our suppli- ers, the expected avoided GHG emissions will be quantified. Lever 5: Use of less climate-intensive transport modes The use of less climate-intensive transport modes requires continuous work to identify the business needs, type of freight, routes and locations com- patible with the transition from air travel to alterna- tive transport modes. Last year, our Diagnostics business area started this lever and set a target for 5% GHG emissions reduction in 2024 com- pared to 2023. We exceeded the target by 11% and reduced our transportation emissions inten- sity from 0.14 kg CO 2e /DKK spent in 2023 to 0.11 kg CO 2e /DKK spent in 2024.The medium- and long-term targets associated with this lever are yet to be determined. Looking ahead Demant’s Transition Plan is under constant devel- opment, and new levers will be added over time, especially with a view to reducing our scope 3 GHG emissions, as new information becomes available. The financial resources required for the imple- mentation of the decarbonisation levers and their relation to the financial statements are yet to be determined, as this depends on further defining the decarbonisation levers and their mitigation ac- tions. Metrics and targets E1-4 Targets related to climate change mitigation and adaptation As part of Demant’s climate commitment, we have set targets for reducing our GHG emissions, which align with the Paris Agreement’s goal of lim- iting the global temperature increase to 1.5°C by the end of the century. The targets were validated by the SBTi in July 2023 and are described below: Near-term targets Demant commits to reducing absolute scope 1 and 2 GHG emissions by 46% by 2030 from a 2019 baseline year. Demant also commits to re- ducing absolute scope 3 GHG emissions by 46% within the same timeframe. Long-term targets Demant commits to reducing absolute scope 1 and 2 GHG emissions by 90% by 2050 from a 2019 baseline year. Demant also commits to re- ducing absolute scope 3 GHG emissions by 90% within the same timeframe. Overall net-zero targets As an additional step in the efforts towards climate change mitigation, Demant commits to reaching net-zero GHG emissions across the value chain by 2050 from a 2019 baseline year. Target setting methodology The targets follow the operational control ap- proach for setting Demant’s organisational bound- ary. As it is allowed in the target-setting methodol- ogy under the SBTi net-zero criteria V5.0, our tar- get-setting uses a cross-sector pathway and mar- ket-based accounting approach. Demant submitted its climate targets for validation to the SBTi in 2021, using 2019 as the baseline year, since it provided the latest available data be- fore coronavirus disrupted business operations. Demant does not consider GHG emissions re- movals, carbon credits and avoided GHG emis- sions as means of achieving the required GHG emissions levels in the near or long term. Aligned with the Greenhouse Gas Protocol, the GHGs considered in the targets are: Carbon dioxide – CO 2 Methane – CH 4 Nitrous oxide – N 2 O Hydrofluorocarbons – HFCs Perfluorocarbons – PFCs Sulphur hexafluoride – SF 6 Nitrogen trifluoride – NF 3 Regarding the link between the climate targets and the decarbonisation levers, for the near-term target in scope 1 and 2, the energy consumption reduction and efficiency in own operations (lever 1), along with the phase-in of renewable electricity for own operations (lever 2), will enable the re- quired reduction by 2030. It is important to highlight that fleet electrification (lever 3) is a complementary effort to ensure that the GHG emissions reduction takes place as soon as possible and that the fossil fuel emissions from the fleet are controlled and do not jeopardise the near-term target. For the near-term target in scope 3, the relevance of each lever still needs to be assessed. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 70 E1-5 Energy consumption and mix Energy Compared to 2023, Demant’s total energy con- sumption increased by 7%, from 113,404 MWh in 2023 to 121,209 MWh in 2024. The main part of the increase is attributable to higher usage of fuel by our vehicle fleet, corresponding to 2,141 MWh, and to acquisitions, resulting in increased usage of heating sources by 4,226 MWh and electricity by 2,099 MWh. Demant’s total use of energy from fossil fuels was 102,721MWh in 2024 compared to 102,425 MWh in 2023. Despite the overall increase in energy consump- tion, many of our energy-intensive entities suc- cessfully reduced their non-renewable electricity consumption and increased their use of renewa- ble sources, resulting in an increase in the Group’s renewable energy share from 10% in 2023 to 15% in 2024. Renewable electricity Transitioning to renewable electricity is crucial for Demant’s progress towards achieving its climate targets. In 2024, we increased our investments in on-site solar generation at several sites. 35% of the Group’s electricity consumption is now cov- ered by renewable sources, mainly from electricity vendors (directly sourced) and Energy Attribute Certificates. E1-6 Gross scopes 1, 2, 3 and total GHG emissions Scope 1 and 2 Driven by our transition to renewable electricity, the Group managed to reduce its market-based scope 1 and 2 GHG emissions by 11% in 2024 compared to 2023. We have reduced our scope 1 and 2 GHG emissions by 8% compared to our 2019 baseline year, thus making steady progress towards our goal to reduce our scope 1 and 2 GHG emissions by 46% by 2030. Electricity remains a key factor in our transition and our progress towards achieving our scope 1 and 2 GHG emissions targets. Additionally, GHG emissions from our fleet are a significant focus area for the Group. In 2024, we developed a plan for fleet electrification, aiming to further reduce our scope 1 GHG emissions. Scope 3 Most of our scope 3 GHG emissions (more than 96%) are distributed between five categories: pur- chased goods and services (category 1), capital goods (category 2), fuel- and energy-related activ- ities not included in scope 1 or 2 (category 3) and upstream and downstream transportation and dis- tribution (category 4 and 9). In 2024, our scope 3 GHG emissions decreased by 6% compared to 2023 and increased by 31% compared to our 2019 baseline. 86% of the reduc- tion can be attributed to reductions in category 1 and 2. The GHG emissions from these categories are dependent on the type and quantity of goods and services acquired for our products and opera- tions. While we have made clear progress in reducing our scope 1 and 2 GHG emissions, it takes time for the scope 3 numbers to reflect our efforts to- wards achieving our targets. Renewable energy of total energy consumption ● Renewable electricity of total electricity consumption ● Energy intensity ● (MWh per DKK million revenue) Energy consumption mix ● (MWh) 10% 15% 0% 2% 4% 6% 8% 10% 12% 14% 16% 2023 2024 21% 35% 0% 5% 10% 15% 20% 25% 30% 35% 40% 2023 2024 5.25 5.41 0 1 2 3 4 5 6 7 2023 2024 50,589 22,352 16,983 17,240 5,467 631 142 52,688 27,637 16,579 14,096 9,693 390 126 - 10,000 20,000 30,000 40,000 50,000 60,000 Electricity Fleet - petrol (fuel) Natural gas Fleet diesel (fuel) District heating Coal Liquefied petroleum gas (LPG) 2023 2024 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 71 The insights that our 2024 scope 3 accounting methodology provides will enable us to better de- fine actions towards GHG emissions reductions in accordance with our climate targets. Included scope 3 categories Out of the 15 scope 3 categories, ten are included in Demant’s inventory: Category 1: Purchased goods and services Category 2: Capital goods Category 3: Fuel- and energy-related activities not included in scope 1 or 2 Category 4: Upstream transportation and distribu- tion Category 5: Waste in operations Category 6: Business travel Category 7: Employee commuting Category 9: Downstream transportation and distri- bution (calculated together under category 4) Category 11: Use of sold products Category 12: End-of-life treatment Excluded scope 3 categories The remaining five categories and the reasons for their exclusion are shown in the table below. Exclusion of Communications We estimate the scope 3 greenhouse gas emis- sions for Communications account for 12% of the Group’s total scope 3 greenhouse gas emissions in 2024 based on our 2019 baseline and using the previous accounting principles. Based on a high-level recalculation using the rev- enue from EPOS, note 6.2 in the financial state- ments, the Groups total scope 3 GHG emissions would be: 2024: 519,795 tonnes CO2 2023: 551.069 tonnes CO2 2019 (baseline): 397,837 tonnes CO2 Total GHG intensity based on net revenue for 2024 including Communications is estimated to be 25. The metrics including scope 3 data do not in- clude Communications. Scope 3 category ID Scope 3 category Justification 8 Upstream leased assets Demant’s leased assets are under its operational control and therefore included in scope 1 and 2 accounting. 10 Processing of sold products Demant focuses on providing final products, accessories and consumables. 13 Downstream leased assets Demant does not own or lease assets to external parties. 14 Franchises Demant does not own or operate franchises. 15 Investments After screening the GHG emissions associated with this cat- egory, it was determined that the share of GHG emissions from investments is less than 0.1% of the total scope 3 GHG emissions. Aligned with the relevance and completeness principles of the GHG Protocol standard and in considera- tion of data quality and availability, this category was ex- cluded. Scope 1 and 2 market-based GHG emissions ● ( tonnes CO2e) Scope 3 GHG emissions ● ( tonnes CO2e) 11,206 8,866 9,432 12,765 14,904 14,645 20,774 19,588 24,856 24,371 18,199 14,781 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 2019 (baseline) 2020¹ 2021¹ 2022 2023 2024 Scope 1 Scope 2 355,211 316,055 404,872 436,831 492,026 464,103 - 100,000 200,000 300,000 400,000 500,000 600,000 2019 (baseline) 2020¹ 2021¹ 2022 2023 2024 ¹ 2020 and 2021 were impacted by lower activity due to coronavirus. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 72 Total GHG emissions ● (tonnes CO2) Year Target Baseline 2019 2024 2023 % vs. LY % vs. Base- line 2030 Annual % target/ Base- line¹ Scope 1 GHG emissions Gross scope 1 GHG emissions 11,206 14,645 14,904 -2% 31% 6,051 4% Scope 2 GHG emissions Gross scope 2 location-based GHG emissions² 17,996 19,041 18,419 3% Gross scope 2 market-based GHG emissions² 20,774 14,781 18,199 -19% -29% 11,218 4% Total scope 1 and scope 2 market based GHG emissions 31,980 29,426 33,103 -11% -8% 17,269 4% Category Significant scope 3 GHG emissions Total Gross indirect (scope 3) GHG emissions 355,212 464,103 492,026 -6% 31% 191,814 4% 1 and 2: Purchased goods and services and capital goods 322,094 421,480 444,999 -5% 3: Fuel and energy related services 4,798 7,253 6,767 7% 4 and 9: Transportation 18,870 26,491 26,067 2% 5: Waste in operations 701 1,971 1,008 96% 6: Business travel 4,261 2,741 5,897 -54% 7: Employee commuting 21 28 26 8% 11: Use of sold products 3,830 3,972 6,363 -38% 12: End of life treatment 636 167 899 -81% Total GHG emissions Total location-based GHG emissions 384,414 497,789 525,349 -5% 29% Total market-based GHG emissions 387,192 493,529 525,129 -6% 27% GHG Intensity based on net revenue Total GHG emissions (location-based) per net revenue 26 22 23 -15% Total GHG emissions (market-based) per net revenue 26 22 23 -15% ¹ Annual reduction in percentages from the baseline year 2019 required to reach the 2030 target. ² GHG accounting for electricity applies two methodologies based on the type of emissions factors to use: location and market-based emissions. Location-based emissions consider the average emission intensity of the power grid where the consumption takes place but disregard the use of off-site renewable electricity. Market-based emissions consider the specific type of electricity consumed and the associated specific emission intensity in the emissions calculations. Please refer to the Greenhouse Gas Protocol scope 2 guidance for additional information. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 73 Accounting policy Energy consumption Energy consumption includes both primary and estimated usage of electricity, district heating, nat- ural gas, diesel, petrol, coal and liquefied petro- leum gas. Energy consumption is recorded using different units (e.g. liters, kWh, kg) and is later converted to megawatt hours (MWh) for consoli- dation purposes. Energy data is recorded and compiled in our en- ergy management system, with each legal entity providing its monthly consumption figures on a bi- annual basis. The share of renewable energy represents the amount of renewable energy used by Demant in our operations. It is calculated by dividing the en- ergy consumed from renewable sources by the to- tal energy consumed by the Group. Refrigerants are not included in the energy con- sumption, as they account for less than 0.1% of the total energy consumption. Energy intensity Energy intensity is reported as the total energy consumption divided by the total revenue. Accord- ing to ESRS definitions, all of Demant’s business is classified as belonging to a high-climate impact sector. The revenue used as the denominator is the total revenue generated by the Group. Please refer to the Financial statements, Note 1.1, on page 127. Greenhouse gas accounting Demant’s carbon accounting adheres to the Greenhouse Gas Protocol (GHG Protocol) defined by the World Resources Institute and World Busi- ness Council for Sustainable Development in line with the recommendation of the ESRS. Our con- solidated GHG emissions data encompasses all entities under Demant’s operational control, including leased facilities, with emissions quanti- fied in carbon dioxide equivalent (CO 2e ). Demant’s Inventory Management Plan (IMP) sets the framework for defining, compiling and report- ing Group GHG emissions across all scopes of GHG emissions based on the Greenhouse Gas Protocol. The IMP specifies that baseline recalcu- lations may occur under the conditions defined in the publicly available Baseline Recalculation Pol- icy. Scope 1 and 2 GHG emissions Scope 1 emissions consist of direct GHG emis- sions that arise from the actual and estimated consumption of natural gas, liquefied petroleum gas, coal, petrol, diesel and refrigerants. Scope 2 emissions consist of indirect GHG emis- sions that arise from the actual and estimated consumption of electricity and district heating. The calculation of scope 1 and scope 2 GHG emissions is fully automated within our energy management system, utilising GHG emissions factors provided by the UK Department for Envi- ronment, Food & Rural Affairs (DEFRA), the US Environmental Protection Agency and the Interna- tional Energy Agency. Location- and market-based GHG emissions For scope 2, we calculate location- and market- based GHG emissions and use the latter to benchmark Demant’s performance against our cli- mate targets in accordance with our SBTi ac- counting approach. Scope 3 GHG emissions Demant’s business areas have different needs for data in the accounting of scope 3 GHG emissions. Therefore, we have decided to use different meth- odologies according to the data availability and needs of each business area. Demant employs two different methodologies for scope 3 accounting: one tailored for the Diagnos- tics business area and another for the Hearing Aids and Hearing Care business areas. Both methodologies align with the scope 3 GHG Proto- col standard and follow a combined approach, us- ing hybrid- and spend-based methods for the GHG emissions calculations. Category 1 is calculated using spend data multi- plied by the relevant GHG emissions factors for various types of purchases. Instead of using spend data, the elements of certain goods are classified per material and weighed to determine the quantity purchased. Category 2 includes goods purchased during the year, which have an expected lifetime that ex- ceeds the reporting period. It is calculated using spend data or the amount of capital goods pur- chased and is later multiplied by relevant emission factors. Category 1 and 2 are reported combined, as de- tailed data are not available, and estimating the categories is not possible. We expect to enhance the data quality and provide more detailed data for the reporting year 2025. Category 3 is calculated using actual fuel and en- ergy consumption, not included in scope 1 and 2, multiplied by relevant emission factors. Category 4 and 9 are calculated using primary data obtained directly from our logistics suppliers and are reported combined, as detailed data are not available, and estimating the categories is not possible. We expect to enhance the data quality and provide more detailed data for the reporting year 2025. Category 5 is calculated using actual waste data multiplied by relevant GHG emissions factors. Category 6 is calculated using primary air travel data available multiplied by relevant GHG emis- sions factors. Category 7 is calculated using secondary infor- mation from the passenger mobility statistics of the EU and the number of employees in Demant. Category 11 is calculated by multiplying the rele- vant GHG emissions factors, the number of sold products and the internal data collected by in- house experts on product design, functionality and typical usage patterns. This enables us to deter- mine the energy consumption data associated with each product. Category 12 is calculated using sales numbers, categorised by product type, material composition and the geographical location of the sold prod- ucts. The numbers are then multiplied by relevant GHG emissions factors. The GHG emissions factors used for the calcula- tions are from renowned sources, such as DE- FRA, the Danish Environmental Protection Agency database and the Ecoinvent database. Where needed, consumption and GHG emissions have been extrapolated to account for the whole Group. GHG intensity based on revenue GHG intensity is reported as the total GHG emis- sions of the Group divided by the Group’s total revenue for the period. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 74 Change in accounting policy In 2024, we changed our scope 3 accounting pol- icy by applying a new, more accurate method. The comparative and baseline figures have been adjusted accordingly. For 2024, the total effect of the change in accounting policy is estimated to be approximately 250,000 tonnes lower CO 2e com- pared to the previous method. Use of estimates and judgements Scope 3 calculation involves judgement and esti- mates to provide the necessary information that Demant does not have access to. This includes the use of generic emissions factors. The majority of the scope 3 emissions are calculated using spend-based method. We map our suppliers ac- cording to the type of goods or services we pri- marily purchase from them. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 75 Material topics Product circularity Upstream Downstream Own operations Own Hearing Clinic Product circularity is a material topic that impacts many processes and requires forward-thinking, in- novative solutions and proactive collaboration be- tween Demant and our suppliers. In 2024, we made progress in this area by launch- ing several initiatives and seeding others that will start showing results in 2025. Though there are regulatory limitations to the changes we can make in our products, we are committed to continuous progress in this area. E5 Resource use and circular economy We recognise the critical importance of the transition towards a circular economy to minimise the environmental impact, resource consumption and waste generation and to maximise resource efficiency. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 76 Impacts, risks and opportunities ESRS 2 SBM-3 E5 Material impacts, risks and opportuni- ties and their interaction with strategy and business model With increasing regulations and general customer pressure regarding the products’ environmental footprint, product circularity is becoming ever more important for Demant. Though there are reg- ulatory limitations to what we can change, we have the opportunity to further increase the rate of recycled components to limit our environmental footprint, reduce costs and use recycled materials. This is especially the case for product packaging, which also represents a negative impact on the environment in the short to medium term. In the long term, there is also a risk of having less avail- ability of essential raw materials required for elec- tronic components. Impact, risk and opportunity management ESRS 2 IRO-1 Description of the processes to identify and assess material resource use and circular economy- related impacts, risks and opportunities To identify material IROs related to circular econ- omy, we conducted a qualitative assessment of the materials used in production considering our supply chain. This assessment considered criteria related to resource use and circular economy, such as the percentage of materials not recycled at the end of a product’s life and was based on secondary information from the electronics industry. The findings of the assessment were later presented as input for the general double materiality process that considers both our own operations and our supply chain by assessing the relevance of the identified impacts, risks and op- portunities. E5-1 Policies related to resource use and circular econ- omy Under the umbrella of the Code of Conduct that instructs all employees to ensure efficient use of natural resources, our Sustainability Policy sets the specific direction for circular economy for the Group. Within resource use and circular economy, the Sustainability Policy addresses actions to tackle Demant’s impacts and risks regarding re- source inflows and outflows including: • Integrating circular economy principles and targets to reduce resource use and lower the environmental impact of Demant’s products. • Packaging optimisation to reduce packaging materials and quantities and to transition away from virgin materials, where possible. • Sustainable resource consumption and con- scious waste generation, including appropri- ate disposal, in daily business activities. • Responsible use of other materials, like the ones used for shipping and marketing of prod- ucts, and responsible acquisition of other ele- ments (i.e. interior design and furniture of fa- cilities). • Encouraging business partners to constantly reduce the use of natural resources in their own operations as communicated in our Third- Party Compliance Code. E5-2 Actions and resources related to resource use and circular economy Our circular economy actions include a wide range of topics from resource efficiency and use of secondary raw materials to value retention maximisation and end of life. The following circular economy-related actions are taken in 2024: Design of hearing aids for reuse as testing hearing aids for users’ trial period Designing a hearing aid intended for use by multi- ple individuals requires efforts to ensure compli- ance with the medical regulation and device sani- tation requirements. We have designed and man- ufactured a testing hearing aid, known as the De- moflex, to be used by up to 50 users during a short trial period. In 2024, the Demoflex resembled one specific hearing aid model from our portfolio and was available in one country. In 2025, it will resemble- new hearing aid models and be available in sev- eral countries worldwide. Resource use in hearing aids packaging In 2024, we launched a redesigned charger pack- aging alternative across all our hearing aids brands globally, with the exception of charger packaging for one private-label customer. The project aimed to eliminate plastic content and re- duce the packaging size to minimise material con- sumption. While we still use plastic bags to protect our products inside the package, both the inside and outside of the packaging itself is now plastic- free. With this modification, we have reduced the pack- aging size, removed a virgin oil-based pouch and eliminated the external plastic lamination. We con- tinue using pulp inlays and FSC-certified paper, as we have done before. This new design reduces the GHG emissions associated with each charger packaging unit by 80%. Resource efficiency in hearing aids accessories We are constantly striving to improve our hearing aids and accessories. Each of our hearing aids comes with a plastic container for storing small, replaceable filters that prevent earwax from enter- ing the instrument. These filters need frequent re- placement, as they accumulate wax. By enhanc- ing the moulding process and redesigning the container, we have reduced plastic consumption per unit produced for the new version of the con- tainer by 53%. The new version was introduced in 2024 and will be used for all of the earwax filter containers from 2025 and forward. Use of secondary raw materials in diagnostic devices In collaboration with our largest supplier of plastic for our diagnostic equipment, some of the plastic we receive and use in our devices is from recy- cled sources. The recycled content in the plastic we use comes from waste generated during our supplier’s internal plastic production. We started using recycled plastic in 2014 and in 2024, we used 1.5 tonnes of recycled plastic. We plan to continue with this initiative in the future. Use of secondary raw materials in packaging for diagnostic devices To reduce the pressure on the extraction of virgin materials and waste generation, our Diagnostics business area has incorporated recycled materials into its packaging. In 2022, we started using Product circularity We are continuously enhancing product circularity through various initiatives led by our Hearing Aids and Diagnostics business areas. We focus on de- sign, packaging, use of secondary materials and maintenance of our prod- ucts. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 77 recycled polyethylene plastic in the plastic bags we use in our global packaging. In 2024, the recy- cled content of our bags was on average 55.6%, and we used a total of 446 kg of recycled plastic. Moreover, the cardboard used in our packaging contains up to 98% recycled materials, represent- ing more than 50 tons of recycled material. Maintenance and repair of hearing aids In 2024, we continued to provide maintenance and repair services for our hearing aids, both at our hearing clinics and at our service facilities. By ensuring the proper maintenance of our hearing aids or by repairing those that need it, we aim to prolong our users’ use of our hearing aids. Maintenance and repair services are available worldwide for all hearing aid models of all brands for up to five years after the model has been dis- continued. In 2024, we provided over 1,500,000 repair services in our service facilities. Maintenance and repair of diagnostic devices To maximise the lifetime of our products, we offer maintenance services to our customers to ensure that normal wear and tear does not affect the usa- bility or quality of our devices. This service, which also includes the recalibration of our devices, is usually carried out at the customer’s location or at local in-house workshops. If required, we also of- fer repair service, which we provide worldwide. We guarantee to have spare parts available for up to seven years from the purchase date of our in- struments to ensure that whatever issue the de- vice is experiencing, it can be fixed. Unlike maintenance, the repair is carried out exclusively at one of our sales companies or at a central re- pair facility in Poland or USA. In 2024, we pro- vided 167,104 maintenance and repair services and will continue to do so in the future. Recyclability enhancement of hearing aid ele- ments In 2025, we will introduce a new material for the inlets (elements inside the hearing aids) for our entire hearing aids portfolio, eliminating the use of per- and polyfluoroalkyl substances (PFAS) in this component. This change enhances the recyclabil- ity of our inlets, as they are now PFAS-free. We continuously work towards eliminating these chemicals without compromising the quality and safety of our devices. Metrics and targets E5-3 Targets related to resource use and circular econ- omy As products, consumables and packaging charac- teristics differ greatly between our business areas, our circular economy efforts are led by the busi- ness areas and aim to enhance our circular econ- omy performance in specific topics that may not be applicable to the entire Group. Therefore, we have not yet established targets at Group level. As we recognise the importance of integrating cir- cular economy principles across our operations, we plan to assess our data and actions, and to ex- plore potential Group targets in 2025. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 78 E5-4 Resource inflows The table above outlines the materials used for manufacturing hearing aids and diagnostic equip- ment in Demant’s own operations and upstream value chain. In 2024, the resource inflow decreased by 1,572 tonnes compared to 2023, mainly due to reduced purchases of plastic by our Diagnostics business area in 2024. E5-5 Resource outflows The table above shows the total weight of materials that comes out of the manufacturing processes. Accounting policy Resource inflow Resource inflow includes materials directly related to the manufacturing of our products as well as core components of purchased goods and capital goods, including packaging and extra parts. The reported numbers are based on estimates. The resource inflows are categorised according to the origin of the materials. Cardboard in resource in- flow consists mainly of brochures. Biological materials and reused or recycled materials used in the production Biological materials cover biodegradable materi- als, such as wood, paper and cardboard derived from natural polymers found in plants. Reused or recycled materials cover the amount of confirmed recycled materials used in manufactur- ing. Resource outflow Resource outflow includes materials found in products and extra parts, including packaging. The outflow materials are categorised according to the origin of the materials. The reported num- bers are based on estimates. Resource outflow also includes purchased goods that are not used in the manufacturing process. Use of estimates and judgements The resource inflow and outflow are based on es- timates, using internal and external data com- bined with assumptions, and is then extrapolated to the total population based on sales volumes and inventory movements. Key assumptions are for resource inflow including actual weight of the materials found in two hearing aids and then multiplied with the total sales. In-house subject matter experts are consulted to reduce the risk of over- or understating. However, as the reported numbers are based on generic as- sumptions, numbers are subject to change when we gain access to more accurate data. Total weight of products and materials inflow ● (tonnes) 2024 2023 Plastic 604 1,709 Metals 181 346 Cardboard/paper 327 563 Electronic components 1,789 1,930 Wood 50 42 Other¹ ⁾ 170 103 Total resource inflow 3,121 4,693 Biological materials and reused or recycled materials used for manufacturing products ● 2024 2023 Percentage of biological materials used in manufacturing (%) 12.1% 12.9% Reused or recycled materials used in manufacturing and packaging (tonnes) 50 51 Reused or recycled materials used in manufacturing and packaging (%) 1.62% 1.09% Total weight of products and materials outflow ● (tonnes) 2024 2023 Plastic 1,463 1,566 Metals 258 277 Cardboard/paper 1,026 1,080 Electronic components 218 233 Wood 22 25 Other¹ 51 69 Total resource outflow 3,038 3,250 ¹Other consists of smaller categories such as glass, flux and other non -categorised materials Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 79 The Demant Group’s reporting on EU taxonomy follows Regulation (EU) 2020/852 of the European Parliament and of the Council. This requires non- financial listed companies to report their environ- mentally sustainable economic activities that are eligible under the Taxonomy Regulation and aligned with the screening criteria for the six envi- ronmental objectives to be included in the report- ing for 2024. This requires Demant to assess whether there are economic activities that qualify as eligible. To determine Demant’s eligible activities, we have screened our turnover, OPEX (the cost of R&D, short-term leases, maintenance and repair) and CAPEX (net investments in property, plant and equipment, intangible assets and addition of right- of-use assets) against the activities of the Taxon- omy Compass. The three eligible economic activities that are sub- ject to alignment under the EU taxonomy are: • Manufacture of electrical and electronic equip- ment, which relates to our manufacturing of hearing aids and diagnostic instruments. • Data processing, hosting and related activi- ties, which relates to our IT servers. • Acquisition and ownership of buildings, which relate to our offices, manufacturing facilities and retail. Changes since 2023 In 2024, it became mandatory to disclose align- ment with the identified eligible activities. Demant has considered the alignment criteria for each eli- gible activity applicable for Demant and included the result in the EU taxonomy tables of the 2024 report. Alignment For Demant to be able to claim alignment in any of the three eligible activities, the company needs to fulfil all the requirements of the technical crite- ria, the ‘do no significant harm’ requirement and the minimum safeguards requirements defined by the EU Commission. Demant has assessed the alignment requirements defined for each of Demant’s eligible activities to determine the alignment percentage for each of them. To ensure compliance with the minimum safe- guards, we have assessed the compliance of our policies and guidelines with UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises. During the assessment, we ascertained that De- mant aligns with the minimum safeguards require- ments. Nevertheless, for each eligible economic activity, there is at least one technical criteria or ‘do no significant harm’ requirement that we do not fulfil. An example of this is the eligible activity under the circular economy objective where our misalignment with the criteria is caused by the technical specifications of our products associated to quality and safety. Looking ahead We continue to monitor the development and guidance of the Taxonomy Regulation. EU taxonomy Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 80 Turnover Substantial contributions to objectives 1-6 (%) Do no significant harm to objectives 1-6 (y/n) Economic activity Code Absolute turnover Propor- tion of turnover in 2024 Climate change mitiga- tion Climate change adapta- tion Water and ma- rine re- sources Circular economy Pollution preven- tion and control Protec- tion of bi- odiver- sity Climate change mitiga- tion Climate change adapta- tion Water and ma- rine re- sources Circular economy Pollution preven- tion and control Protec- tion of bi- odiver- sity Minimum social safe- guards Propor- tion of turnover in 2023 Cate- gopry enbling/tr ansi- tional DKK mil- lion % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E/T A.1 Taxonomy aligned activities None 0 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 n/a Turnover of taxonomy aligned ac- tivities (A.1) 0 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 n/a Of which enabling 0 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 n/a Of which transitional 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 n/a Taxonomy eligible but not aligned activities Manufacturing of electrical and elec- tronic equipment CE 1.2 18,806 84 0 0 0 100 0 0 96 Turnover of taxonomy eligible but not aligned activities (A.2) 18,806 84 0 0 0 100 0 0 96 Turnover of taxonomy eligible ac- tivities (A1 + A2) 18,806 84 0 0 0 100 0 0 96 B. Taxonomy non -eligible activities Turnover of Taxonomy-non-eligible activities 3,613 16 4 Total ¹ 22,419 100 100 ¹ Total revenue, Financial statements 2024, note 1.1 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 81 CAPEX Substantial contributions to objectives 1-6 (%) Do no significant harm to objectives 1-6 (y/n) Economic activity Code Absolute CAPEX Propor- tion of CAPEX in 2024 Climate change mitiga- tion Climate change adapta- tion Water and ma- rine re- sources Circular economy Pollution preven- tion and control Protec- tion of bi- odiver- sity Climate change mitiga- tion Climate change adapta- tion Water and ma- rine re- sources Circular economy Pollution preven- tion and control Protec- tion of bi- odiver- sity Minimum social safe- guards Propor- tion of CAPEX in 2023 Cate- gopry ena- bling/tran sitional DKK million % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E/T A.1 Taxonomy aligned activities None 0 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 n/a Turnover of taxonomy aligned ac- tivities (A.1) 0 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 n/a Of which enabling 0 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 n/a Of which transitional 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 n/a Taxonomy eligible but not aligned activities Acquisition and ownership of build- ings CCM 7.7 876 57 100 0 0 0 0 0 56 Manufacturing of electrical and elec- tronic equipment CE 1.2 134 8 0 0 0 100 0 0 0 Data processing and hosting CCM 8.1 28 2 100 0 0 0 0 0 0 C APEX of taxonomy eligible but not activities (A.2) 1,038 67 100 0 0 100 0 0 56 C APEX of taxonomy eligible activ- ities (A1 + A2) 1,038 67 100 0 0 100 0 0 56 B. Taxonomy non -eligible activities C APEX of Taxonomy-non-eligible activities 490 33 44 Total ¹ 1,528 100 100 ¹ Property, plant and equipment, Financial statements, note 3.2 and 3.3 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 82 O PEX Substantial contributions to objectives 1-6 (%) Do no significant harm to objectives 1-6 (%) Economic activity Code Absolute OPEX Propor- tion of OPEX in 2024 Climate change mitiga- tion Climate change adapta- tion Water and ma- rine re- sources Circular economy Pollution preven- tion and control Protec- tion of bi- odiver- sity Climate change mitiga- tion Climate change adapta- tion Water and ma- rine re- sources Circular economy Pollution preven- tion and control Protec- tion of bi- odiver- sity Minimum social safe- guards Propor- tion of OPEX in 2023 Cate- gopry ena- bling/tran sitional DKK million % % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E/T A.1 Taxonomy aligned activities None 0 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 n/a O PEX of taxonomy aligned activi- ties (A.1) 0 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 n/a Of which enabling 0 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 n/a Of which transitional 0 0 0 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0 n/a Taxonomy eligible but not aligned activities Data processing and hosting CCM 8.1 49 3 100 0 0 0 0 0 0 O PEX of taxonomy eligible but not activities (A.2) 49 3 0 0 0 0 0 0 0 O PEX of taxonomy eligible activi- ties (A1 + A2) 49 3 0 0 0 0 0 0 0 B. Taxonomy non -eligible activities O PEX of Taxonomy-non-eligible ac- tivities 1,413 97 0 Total ¹ 1,462 100 100 ¹ Employee cost by function, Financial statements, note 1.2 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 83 Nuclear energy and fossil gas related activities The questionnaire below is related to the manda- tory EU taxonomy disclosure regarding nuclear energy and fossil gas related activities and covers the Turnover, OPEX and CAPEX KPI as the an- swer is the same. Accounting policy Turnover Turnover is reported and defined as taxonomy-eli- gible turnover (numerator) divided by the total turnover (denominator). OPEX Total OPEX covers direct non-capitalised costs pertaining to R&D, renovation of buildings, short- term leases, maintenance and other direct costs relating to the day-to-day servicing of property, plant and equipment. The KPI is defined as taxonomy-eligible OPEX (numerator) divided by total OPEX (denominator). CAPEX CAPEX consists of additions to property, plant and equipment, intangible assets, excluding good- will and addition of right-of-use assets. The KPI is defined as taxonomy-eligible CAPEX (numerator) divided by total CAPEX (denominator). Row Nuclear energy related activities Yes/No 1 The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. No 2 The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. No 3 The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. No Fossil gas related activities 4 The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. No 5 The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power gen- eration facilities using fossil gaseous fuels. No 6 The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. No Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 84 S1 Own workforce 85 S2 Workers in the value chain 93 S4 Consumers and end-users 95 Social Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 85 Material topics Working conditions Climate change adaptation Diversity, equity and inclusion Talent attraction and retention Reached top-half of inclusive companies in 2024 Guided by our values, we work to create a culture where our over 22,000 employees can belong, grow and contribute. We constantly welcome new colleagues and this growth trend requires a con- tinuous focus on integrating them into the Demant culture and investing in the development of our people, processes and systems. We believe in the strong link between high em- ployee engagement and experience of inclusion and a successful and responsible business. As an employer, we view this as one of our core responsibilities, which is reflected in our targets. Our targets We aim to increase the gender balance in our top- level management to 35/65% (women/men) by 2030. We also strive to reach the top-third level (67th percentile) in employees’ experience of in- clusion and engagement (Gallup indexes) by 2030. S1 Own workforce Our people are the most valuable part of our business, and their well-being, safety, engagement and development are fundamental to our success. We want to foster a n organisational culture of care and respect with diversity, equity and inclusion as important drivers. 52nd PERCENTILE 56th PERCENTILE Reach top-third level in employees’ experience of inclusion Reach top-third level in employee engagement 67th PERCENTILE Reached top-half of engaged companies in 2024 2030 target 2030 target 67th PERCENTILE Upstream Downstream Own operations Own Hearing Clinic Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 86 Impacts, risks and opportunities ESRS 2 SBM-3 S1 Material impacts, risks and opportuni- ties and their interaction with strategy and business model For all our employees, we strive to ensure a good work-life balance. However, for some of them, there is a potentially negative impact on their mental health in relation to work, especially from stress, which can occur in the short term. This is especially seen in busy periods, where managing expectations and priorities between employee and manager becomes increasingly important. Impact, risk and opportunity management S1-1 Policies related to own workforce Our commitment to a good working environment is framed in our Code of Conduct, which outlines the minimum standards and ethical principles ap- plicable to all employees regardless of their loca- tion and the nature of their work. To specify what we mean by a good workplace environment, we launched a Global Policy on Hu- man Resources in 2024. The purpose of this Pol- icy is to establish a clear framework for the gov- ernance of employment practices and workplace conditions that align with Demant’s strategy and values. The Policy applies to all employees, in- cluding full-time, part-time, and temporary staff across all departments and locations. The leader of Group HR is responsible for the implementation of this Policy and all policies related to our own workforce, unless otherwise stated. All policies relevant for our own workforce are available through our intranet. In all countries this includes personnel handbooks. In 2024, we began to roll out a global HR portal that we aim to imple- ment progressively during 2025 in the biggest countries (by number of employees). The day-to-day business of HR at Demant is pre- dominantly driven locally. Group HR is accounta- ble for all policies and responsible for implement- ing, monitoring and reviewing them. Cross-Group HR initiatives are prioritised, managed and coordi- nated via dedicated global forums, including the Global HR Board, which sets the direction and ap- proves strategies and budgets. All such global fo- rums are chaired by the leader of Group HR. Respecting human rights We commit to respecting all universally recog- nised human rights as outlined in the Universal Declaration of Human Rights and the International Labour Organization (ILO) Declaration on Funda- mental Principles and Rights at Work. This com- mitment is founded in our Sustainability Policy and covers the human rights of any persons who may be adversely impacted by Demant’s activities and business relationships, including customers, em- ployees, people who work in our value chains, community members and any other potentially af- fected rightsholders. The Sustainability Board is accountable for implementation of the Policy. We endorse the principles of the UN Guiding Prin- ciples on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. Our commitments are implemented through our Code of Conduct and other internal policies and procedures such as our Policy on Diversity, Equity and Inclusion and our Anti-Harassment and Dis- crimination Guideline (please refer to page 89). Our Code of Conduct explicitly addresses De- mant’s zero tolerance of any form of slavery or hu- man trafficking, use of compulsory labour or the employment of children, as well as discrimination and harassment, including sexual harassment. The sustainability team and other relevant func- tional teams implement Demant’s human rights commitments. The Executive Leadership Team is ultimately accountable for ensuring that human rights are respected in our own operations and throughout our value chain. Providing a healthy and safe workplace For managing health and safety, we have site- specific prevention policies and management sys- tems across our operational sites. The manage- ment systems include risk assessment processes, health and safety instructions, safety walks and talks, training, accident investigation management and continuous review of processes. Site man- agement is responsible for occupational health and safety. We acknowledge the potentially negative impact on mental health related to work and aim at pre- venting a stressful working context. Our Stress Policy covers all sites in Denmark and explains how to prevent and manage stress. Considering that certain aspects of stress management vary, depending on the location, cultural considerations and local legislation, stress management is han- dled locally by HR departments across the Group. The overall responsibility lies with the local HR Management in close collaboration with local busi- ness leadership. Demant strives to provide a good work-life bal- ance culture and to be a flexible workplace where the tasks and local conditions allow. Our position on workplace flexibility guides the entire Group on how to implement concrete measures to ensure the flexibility of our employees and of the work- place. S1-2 Processes for engaging with own workforce and workers’ representatives about impacts Demant collaborates with employee representa- tives in many areas, and we comply with all legal requirements when it comes to employee repre- sentation. Demant manages, measures and works with employee engagement through the global en- gagement programme, Pulse. It includes an an- nual survey that covers a range of relevant areas, such as well-being and working environment, de- velopment and inclusion. The survey enables identification of attention areas and calls to action, which are then discussed directly by managers and employees throughout the year. The survey is conducted by Gallup and covers the entire Group, except for those countries where local data pri- vacy legislation prevents it. Through quarterly info meetings, where Demant’s CEO gives a business update to employees, we provide a direct platform for employees to ask questions about the business performance and any actual or potential impacts that are likely to af- fect them. These info meetings are available online to the majority of the Group’s employees, except for those few countries or sites, such as newly acquired entities, that do not have access to our intranet. General Managers of local Demant Working conditions Working at Demant should not only be an enjoyable experience, both pro- fessionally and personally, but also physically and psychologically safe. This is the basis of the working environment we want to promote for all our employees. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 87 entities also share and cascade information, for example in info meetings or through other com- munication channels. In 2024, we strengthened our internal communica- tion about human rights in Demant towards our most important rightsholders – our employees. The main objective is to increase awareness of human rights in a business context and to further empower our employees to speak up, if they ex- perience an impact on their rights. S1-3 Processes to remediate negative impacts and chan- nels for own workforce to raise concerns Where Demant may cause or contribute to a ma- terial negative impact on employees, we are com- mitted to take appropriate remedial action. For cases raised directly with Group HR, we collabo- rate with the affected individuals. For any issues that the results of the anonymous engagement survey point out, Demant is committed to plan and execute actions that address such issues. Demant’s whistleblower hotline enables employ- ees to report any concerns about adverse human rights impacts in a confidential and anonymous manner, which enables remedy for human rights impacts. Please refer to page 104. S1-4 Taking action on material impacts on own work- force, and approaches to managing material risks and pursuing material opportunities related to own workers, and effectiveness of those actions How we are progressing We track the development in employee engage- ment through our Pulse survey. The Pulse survey results provide twofold information: Firstly, it is a way of assessing whether, and to what extent, the current initiatives on well-being, flexibility, inclu- sion and engagement are working. Secondly, they serve as the starting point for the further develop- ment of specific actions related to those areas that need special attention. During 2024, we have strengthened the follow-up activities, following the presentation of the survey results, on specific action planning for all teams around the world. We also laid the foundation for what we call the Leadership Compass, which serves as a frame- work that emphasises five essential pillars of lead- ership: purpose, development, performance, be- longing and personal awareness. These pillars highlight the key areas that leaders need to focus on and accelerate. In 2025, we will introduce the Leadership Compass for all leaders at Demant, which will be implemented through a leadership development programme, focusing on learning journeys within each of the five pillars. The five pil- lars are also reflected in the Pulse survey, which enables our leaders to measure progress. Furthermore, we have been working on establish- ing a global standard and a new platform for how we capture and report on HR data, driven by a global effort to standardise key HR processes, such as recruitment, promotion and performance. In 2025, the new platform will be rolled out in our biggest countries (by number of employees) Po- land, USA, Denmark, France, Canada, Germany, Australia and United Kingdom and the rest of the world will follow consecutively. In 2025, we will de- velop and implement a Global Policy on Remuner- ation and Rewards. Through this Policy, we aim to establish a salary philosophy and ensure that we provide guidance for the organisation. We identify and assess our impacts on human rights on an ongoing basis. In the second half of 2024, we carried out a corporate wide human rights assessment, covering the full value chain of activities. The assessment included a review of our own operations, with consideration of the ge- ographies where we operate and the industries we work in. We also mapped actual and potential impacts in our value chain. Having mapped actual and potential impacts, we assessed their salience based on the severity of impact on people and the likelihood of occurrence to prioritise actions to be taken. Following this pri- oritisation, we have initiated a more granular as- sessment of some of the salient issues to deter- mine whether our current impact management is adequate and to make improvements, if and where necessary. For all identified issues, we have management systems in place that help us bring to an end and mitigate actual and potential impacts. Metrics and targets S1-5 Targets related to managing material negative im- pacts, advancing positive impacts, and managing mate- rial risks and opportunities In 2024, Demant set a target to take employee en- gagement to the top-third level by 2030, which corresponds to the 67th percentile or above in the Gallup engagement index. We will measure progress from our 2024 baseline where Demant’s engagement rate reached 4.13, a slight increase of 0.02 compared to 2023. This re- sult places Demant in the 52nd percentile for the second consecutive year. The survey had a par- ticipation rate of 84%, with more than 17,000 em- ployees taking part. The target-setting process involved internal and external experts and was approved by Demant’s Executive Leadership Team and endorsed by the Board of Directors. S1-17 Incidents, complaints and severe human rights im- pacts In 2024, Demant received 11 submissions to its whistleblower hotline related to discrimination and/or harassment. These cases were handled in- ternally according to the Whistleblower Policy and Investigation Guideline. Having been addressed by the relevant internal organisation in collabora- tion with the affected individuals, 8 out of 11 claims have been closed. There were no severe human rights incidents in the period, and therefore no fines, penalties or compensation were paid. Engaged at work ● 2024 2023 2022 2021 2020 Engagement score 4.13 4.11 4.08 4.02 3.93 Participation rate 84% 87% 86% 88% 85% Percentile 52nd 52nd 50th 46th 40th Gallup conducts the engagement survey, and we collect data in February each year. Our level of engagement is rated on a scale from 1- 5. Percentile rank is used as a benchmark to determinate how a team’s result compares to those in Gallup’s extensive databa se. The 52nd percentile indicates that 50% of teams scores lower than Demant on the engagement rate. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 88 S1-6 Characteristics of the undertaking’s employees As of 31 December 2024, the Group had 22,639 employees globally. Compared to 2023, the total headcount has increased slightly by 2%. Among all employees, the gender ratio between female and male is 64/36%. This is due to the majority of our employees in hearing care clinics and produc- tion sites being female. Our headquarters in Denmark, along with our sites in Poland and the US, are the sites with the largest number of employees. Accounting policy General The employee data consists of two parts. In 2024, 88% of our employees were registered in our global HR management system. Data on regis- tered employees is extracted directly from the sys- tem. For the remaining employees, an estimation method based on geographical location was ap- plied. Engagement score The employees score their engagement using a scale from 1 to 5 based on the yearly engagement survey conducted by Gallup. Number of employees The number of employees is determined by head- count and as the number of persons employed by the Demant Group as of 31 December 2024. The number includes the total number of employees extracted from the global HR management system plus an estimate covering the entities not using the system. Characteristics of employees Data on the characteristics of employees is dis- closed by headcount. The characteristics of employees are aggregated and include both the analysis of data extracted from our global HR management system and esti- mates covering entities not using the system as stated below. Estimation method For entities not using the global HR management system, the characteristics of employees are esti- mated based on the characteristics of employees in the region where the entity is located. Using our global HR management system, we calculate the characteristics of employees in one region based on an overview of all entities in that particular re- gion. Number of employees by country (headcount) ● (Country) 2024 2023 Poland 5,087 5,116 USA 3,404 3,317 Denmark 2,111 2,019 France 1,650 1,730 China 1,625 1,654 Canada 1,284 1,216 Germany 1,020 945 Australia 941 874 UK 857 833 Other countries 4,660 4,536 Total employees 22,639 22,240 Number of employees by gender (headcount) ● 2024 2023 Male 8,045 8,016 Female 14,594 14,224 Total employees 22,639 22,240 Number of employees by contract type, broken down by gender (headcount) ● 2024 2023 Female Male Total Female Male Total Number of employees 14,594 8,045 22,639 14,224 8,016 22,240 Number of permanent employees 13,772 7,839 21,611 13,418 7,810 21,228 Number of temporary employees 822 206 1,028 806 206 1,012 Number of full -time employees 12,338 7,579 19,917 12,095 7,560 19,655 Number of part -time employees 2,256 466 2,722 2,129 456 2,585 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 89 Impacts, risks and opportunities ESRS 2 SBM-3 S1 Material impacts, risks and opportuni- ties and their interaction with strategy and business model Some minority groups in Demant may at times feel that they cannot be their true selves or have their voices heard, which may have a negative im- pact in the short to medium term. To harvest the true strength of Demant’s diverse culture, we aim to address potential unconscious biases and sameness thinking, and we seek to actively sup- port the engagement of employees, who may oth- erwise refrain from sharing their opinions, ideas and solutions. We believe that working with diversity, equity and inclusion (DE&I) boosts our performance, im- proves our leadership and innovation skills, main- tains high customer satisfaction and supports our efforts to attract and retain talented minds. Impact, risk and opportunity management S1-1 Policies related to own workforce In Demant, the concepts of DE&I are an indisputa- ble priority. We work to foster respect for diversity, and we strive to treat all employees fairly. Demant has a global presence and employs people with different ethnic backgrounds, personalities, na- tionalities, religions, ages, genders, abilities, sex- ual orientation and level of education. Our ap- proach is focused on and guided by our Policy on Diversity, Equity and Inclusion, which applies to all employees globally. This Policy outlines our ambi- tions and commitments to advance diversity and inclusion and further defines key short-term activi- ties planned to ensure that we deliver on these ambitions and commitments. It also outlines tar- gets for the entire Demant Group with a specific focus on gender balance. We also launched the Anti-Harassment and Dis- crimination Guideline. The key objective is to artic- ulate Demant’s approach to preventing, mitigating and acting on cases of discrimination, harass- ment, bullying and unethical behaviour. In De- mant, there is zero tolerance for any form of dis- crimination, harassment or bullying related to our workplace. The Guideline applies to all employees and contractors working for Demant globally, and it guides behaviour at work, at work assignments outside the office and at office-sponsored social functions as well as private behaviour that can be related to Demant (e.g. on social media). The Executive Leadership Team is ultimately ac- countable for adherence to the Policy and to reaching our targets and commitments. We will fully implement the new Guideline through e- learning in 2025. S1-2 Processes for engaging with own workforce and worker’s representatives about impacts Employee resource groups The formation of Employee Resource Groups (ERGs) is a way for our workplaces to become more inclusive. All ERGs are employee-led and formed based on specific traits that group mem- bers possess, want to support or work to enhance. Further, they are sponsored by a mem- ber of senior management, i.e. a Vice President or a Senior Vice President. ERGs provide an avenue for employees to have a sense of community, to raise concerns within specific DE&I-related issues in a safe space and provide input on actual and potential impacts on employees. ERGs are con- sulted on a regular basis and invited to provide in- put, which is invaluable for developing strategies to mitigate potential impacts on inclusion and equal opportunities, e.g. discrimination. Our ERGs attract more members and cultivate a focused agenda for their work on relevant DE&I topics, such as (in)visible (dis)abilities, women in Demant, LGBTQIA+, generational intelligence, in- ternational colleagues, Asian American employee network, mental health advocacy etc. Currently, ERGs are present at our Danish and US loca- tions. We will continue to strengthen the structure and format of as well as the collaboration with ERGs in Demant globally. Our ERGs are supported by Global HR and local HR in Denmark and US, who ensure that engage- ment informs Demant’s approach to diversity and inclusion. S1-3 Processes to remediate negative impacts and chan- nels for own workforce to raise concerns Remediation Our Anti-Harassment and Discrimination Guide- line provides specific information on how to raise grievances regarding harassment and discrimina- tion and the consequential complaints and remedy procedure. S1-4 Taking action on material impacts on own work- force, and approaches to managing material risks and pursuing material opportunities related to own workers, and effectiveness of those actions While diversity across Demant allows us to draw on a wide range of experience for the benefit of us all and our business, inclusion unlocks the strength of this diversity. Through the concept of belonging, we continue to focus on DE&I in our re- cruitment, performance and development pro- cesses and also in the DE&I leadership aware- ness training. Our global recruitment platform contains embed- ded materials designed to prompt inclusive re- cruitment behaviour. Furthermore, we have ex- panded training in unconscious bias, inclusive leadership and psychological safety, and we have developed the capabilities of our HR leaders to drive DE&I-related topics and training locally. To support this, DE&I-specific themes of rele- vance for our employee performance dialogue have been part of the global process for perfor- mance dialogue since the beginning of 2023. This provides input to assess the effectiveness of our actions on DE&I, which is also evaluated through our Pulse survey, as it has specific questions re- garding inclusion and fair treatment. How we are progressing DE&I actions are anchored in the HR function, which has dedicated roles to develop and imple- ment specific actions and initiatives to foster diver- sity and inclusion across Demant. Further, global HR leaders and partners are trained and equipped to drive this agenda. We want to foster a culture built on care and respect for others, character- ised by diversity, equity and inclusion . Diversity, equity and inclusion Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 90 In 2024, we continued supporting the Danish ERGs. Each of the ERGs arranged several talks and hybrid awareness sessions for all employees, focusing on different topics. In 2025, we will fur- ther strengthen our work involving ERGs – also globally. To understand gaps in engagement across gen- der, we conducted a global inclusion survey among female top leaders (from Vice Presidents and above), which provided a better understand- ing of how we can ensure higher engagement among women in the global top-level manage- ment across the Group. We celebrated diversity and inclusion in Denmark through our participation in Copenhagen Pride. In the US, we celebrated DE&I Week. We strive to expand such activities, as we mature our DE&I ef- forts globally. In 2024, we focused our efforts on training our leaders in Poland in DE&I awareness and bias, while delivering on-demand training to focused business areas on psychological safety, bias and DE&I awareness. In 2025, we plan to implement a global leadership programme with core elements of DE&I, while also offering on-demand, virtual classes on the subject. Metrics and targets S1-5 Targets related to managing material negative im- pacts, advancing positive impacts, and managing mate- rial risks and opportunities To drive the implementation and impact of our DE&I commitments, we have set targets for the underrepresented gender in global top-level man- agement (Vice President level and above) and tar- gets for experience of inclusion among all Demant employees, in scope of our annual Pulse survey. S1-9 Diversity metrics In 2024, Demant reached its target of 30% women in top-management positions – one year ahead of 2025, which was the goal year. We have set a new target to increase gender balance to 35/65% (women/men) by 2030. We will measure progress from the new 2024 baseline year. In 2024, our inclusivity score reached 4.27 (+0.01) placing us in the 56th percentile recorded in the annual Pulse survey. Overall, employees feel re- spected, valued for their strengths and trust De- mant to act with integrity and responsibility. In 2024, Demant set a target to take employees’ experience of inclusion to the top-third level by 2030, which corresponds to the 67th percentile or above in the Gallup inclusion index. Progress will be measured from a 2024 baseline year. External experts from Gallup have been consulted in defin- ing the target level for Demant. The target-setting process involved internal and external experts and was approved by Demant’s Executive Leadership Team and endorsed by the Board of Directors. Please refer to page 42 for diversity targets for the Board of Directors. S1-16 Remuneration metrics Demant is committed to provide transparent infor- mation on the gender pay gap within our organisa- tion. However, for the 2024 reporting period, the specific data required is not available. A project to develop the required information in our HR data management system is launched and is expected to be completed during 2025. In 2024, the CEO remuneration ratio decreased by 6 points to 41 compared to 2023. For more de- tails on remuneration, please refer to our Remu- neration Report. Age distribution of employees In 2024, the age distribution among Demant’s em- ployees was relatively even. This age distribution reflects a balanced and diverse workforce, ensur- ing not only an extensive exchange of knowledge and perspective but also fostering a collaborative and innovative work environment. Below 30 19% 30-39 26% 40-49 30% Above 50 25% CEO remuneration ratio ● 38 39 47 41 0 10 20 30 40 50 60 2021 2022 2023 2024 Inclusion at work ● 2024 2023 Inclusivity score 4.27 4.26 Participation rate 84% 87% Percentile 56th 53rd Gender diversity in Management ● 2024 2023 % Headcount % Headcount Board of directors (Women/Men) 25/75 1/3 40/60 2/3 Top -level management (Women/Men) 31/69 30/66 29/71 27/67 All managers (Women/Men) 50/50 980/975 48/52 832/913 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 91 Accounting policy Inclusivity score Employees score inclusivity using a scale from 1 (lowest) to 5 (highest) based on the yearly en- gagement survey conducted by Gallup. Gender diversity in Management Board of Directors The gender distribution is based on the share- holder-elected members of the Board of Directors. Global top-level management The gender distribution is shown at management levels from Vice Presidents and above. All managers The gender distribution is shown among all people managers with one or more direct reports. The number is calculated based on data from our global HR management system, covering 88% of Demant’s employees. CEO remuneration ratio The CEO remuneration ratio is calculated as the CEO’s total remuneration (numerator) divided by the average remuneration of all Group employees (denominator) instead of the median Group em- ployee. Demant is committed to enhancing data quality on this topic in future reporting periods. Age distribution of employees The chart shows the age distribution of employees in the Group, covering 100% of Demant’s employ- ees. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 92 Impacts, risks and opportunities ESRS 2 SBM-3 S1 Material impacts, risks and opportuni- ties and their interaction with strategy and business model Shortages of, for example, engineers and audiolo- gists and high turnover of production employees and front desk staff in clinics poses a potential risk to Demant in the short to medium term. To ensure we retain knowledge and know-how and to keep costs of recruitment at an acceptable level, we work actively to mitigate high turnover rates. Impact, risk and opportunity management S1-1 Policies related to own workforce We support both managers and employees in pur- suing relevant career opportunities that exist in the Group through different frameworks. Our Global Policy on Human Resources defines the minimum requirements that our employees are subject to regarding personal and professional de- velopment and growth and the company’s expec- tations of employees. The Policy applies to all em- ployees at Demant, including full-time and part- time employees, across all functions, business ar- eas and locations. S1-2 Processes for engaging with own workforce and worker´s representatives about impacts We believe that attracting and retaining talented employees is closely related to their development. At Demant, this is addressed in an ongoing devel- opment process between manager and employee. Through performance review meetings, managers and their employees meet on a regular basis to review the employee’s development. S1-4 Taking action on material impacts on own work- force, and approaches to managing material risks and pursuing material opportunities related to own workers, and effectiveness of those actions We provide our employees with development op- portunities through different global and local learn- ing platforms, focusing on leadership, project management, people development and much more. Development initiatives strengthen and develop leadership competencies to cultivate great leader- ship. A key focus area in the global leadership learning journeys that will be launched in 2025 is employee development and how to facilitate this as a leader. In 2024, 23 graduates were part of our Global Graduate Programme, which offers young profes- sionals opportunities to develop their personal and professional skills over a two-year journey across our entire global organisation. Talent retention efforts are focused on the busi- ness areas with the highest turnover rates. For those areas impacted by higher turnover rates, we have developed strategic initiatives to address specific challenges. At certain production and logistics sites in Poland and Mexico, we have ex- perienced undesired turnover rates and subse- quently developed a specific project to run in these countries. This project aims to reduce vol- untary turnover rates in those areas and to im- prove recruitment and onboarding processes. In our Hearing Care business area, part of the re- tail industry that traditionally has high employee turnover, we have focused specifically on leader- ship development. Career paths and growth op- portunities have been clarified through career frameworks and focus on internal recruitment. In addition, both recruitment and onboarding prac- tices have been improved, and we have strength- ened our overall focus on culture and engage- ment. Metrics and targets S1-6 Characteristics of the undertaking’s employees We measure employee engagement annually, among other factors, to guide our efforts on talent retention. Please refer to page 87 for more infor- mation. Accounting policy Employee turnover rate The employee turnover rate is calculated by divid- ing the total number of terminations (numerator), excluding external employees, by the average number of employees during the reporting period (denominator) and then multiplying by 100. This rate is based on the 88% of Demant Group em- ployees included in our global HR management system. Talent attraction and retention With the high focus on innovation and technological development in the field of hearing healthcare, it is important for Demant to attract and retain the brightest minds. We are determined to provide an attractive workplace with ample opportunities to devel op and grow professionally. Employee turnover ● 2024 2023 2022 2021 Employee turnover (%) 20 25 26 17 Employee turnover (headcount) 4,080 4,795 4,698 2,893 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 93 Upstream Downstream Own operations Own Hearing Clinic As a global business with a complex value chain spanning the world, we are very aware of how we deal and interact with business partners, including our suppliers. Demant depends on our direct suppliers, who mainly manufacture products within electrome- chanics, electronics and plastics as well as con- sumables and packaging materials. S2 Workers in the value chain Our commitment to caring for people extends not only to our own employees, but also to workers that we impact indirectly in our value chain. We work to ensure that we have the appropriate processes in place to sup- port the protection of rights throughout it. Material topics Responsible supply chain Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 94 Impacts, risks and opportunities ESRS 2 SBM-3 S2 Material impacts, risks and opportuni- ties and their interaction with strategy and business model Demant engages with suppliers that operate in countries and industries where there is a risk of negatively impacting workers’ rights. This is espe- cially the case in the electronic components man- ufacturing sector where impacts can be severe, e.g. poor health and safety standards, suboptimal working conditions and unfair labour practices. These negative conditions impact the individual workers and their families and take place in the short term. These impacts may be linked to our operations, products or services through our busi- ness relationships. Impact, risk and opportunity management S2-1 Policies related to value chain workers We have several policies in place that are de- signed to identify, document and manage poten- tial impacts on workers in our value chain and to mitigate associated risks. Our Third Party Compliance Code outlines our ex- pectations toward suppliers and business partners regarding working conditions for workers in the value chain. This includes the core International Labour Organization (ILO) standards on working conditions, workplace health and safety, freedom of association, forced/child labour and non-dis- crimination. We expect all new direct suppliers to comply with this Code, which is included as an ap- pendix in all new contracts with suppliers. Leadership of Group Legal and Compliance is ac- countable for the Code, while the implementation of the Code lies with Demant’s supply chain de- partments. Through our Supply Chain Sustainabil- ity Policy, we summarise our commitment to ad- vancing sustainability across our supply chain. The Policy covers all direct upstream buying prac- tices across the Demant Group as well as supplier risk assessment and risk-based due diligence steps. The implementation of this Policy is a shared responsibility between the leadership of the two main supply chain departments in De- mant, Hearing Aids and Diagnostics, respectively. Our commitment to respecting human rights, in- cluding the rights of value chain workers is out- lined in our Sustainability Policy. Please refer to the section S1 on page 86. S2-2 Processes for engaging with value chain workers about impacts Supplier engagement Our strong collaboration with suppliers enables us to consistently deliver quality products in scale and thus ensure timely delivery throughout our value chain. In our Hearing Aids business area, we have deepened this collaboration by integrat- ing sustainability into our partnerships through our supplier engagement programme. The pro- gramme’s objective is to collaborate more closely with suppliers on decarbonisation and addressing human rights impacts in our supply chain. We continuously take steps to gain insight into the perspectives of the impacts of our operations on workers in our value chain. Currently, supplier en- gagement does not involve direct engagement with workers in the value chain. S2-3 Processes to remediate negative impacts and chan- nels for value chain workers to raise concerns Our whistleblower hotline is available to all exter- nal stakeholders, including value chain workers. Please refer to page 104. Currently, Demant does not require its suppliers to establish reporting channels for their own employees to raise con- cerns. This will be considered the next time we update our Third Party Compliance Code. Where Demant may contribute to negatively impacting value chain workers, we are committed to contrib- uting to remediate such impacts. We expect sup- pliers to ensure they have effective remedies in place, as they are responsible for any adverse im- pacts on their own workers. S2-4 Taking action on material impacts on value chain workers, and approaches to managing material risks and pursuing material opportunities related to value chain workers, and effectiveness of those actions Supplier assessments We have many suppliers in our Hearing Aids and Diagnostics business areas. We therefore take a risk-based approach to identifying and managing the interests, views and rights of value chain workers. The large number of suppliers calls for prioritisation of resources to identify and mitigate the most significant negative impacts first. If a negative impact is reported to or identified by De- mant, we engage directly with the supplier in question to urge them to prevent and mitigate the impact, while clearly communicating our expecta- tion that the supplier provides remedies towards the affected value chain workers. In 2024, we established an updated and more ex- tensive sustainability supplier risk assessment process to identify and document the potential im- pacts that workers in our supply chain are ex- posed to, based on the countries and sectors in which the workers of our suppliers operate. The risk assessment process is based on a quantita- tive and qualitative analysis, using recognised da- tabases, indices and reports. Continuous risk assessment of existing and new suppliers helps us gain an overview of how the interests, views and rights of value chain workers could be materi- ally impacted by Demant, including respect for their human rights. These efforts are embedded in the supplier management process, and dedicated sustainability specialists lead this work in our pro- curement functions. In 2024, selected suppliers, based on spend, were screened as part of the risk assessment process. In the supply chain in our Diagnostics business area, all direct upstream suppliers and approxi- mately 80% of all indirect upstream suppliers to our Danish and Polish production sites were screened, based on the 2023 supplier base. In the supply chain in our Hearing Aids business area, 31% of direct upstream suppliers were screened, based on the 2023 supplier base, covering 99% of total direct spend. During 2025, we will implement the risk assessment process globally and align our due diligence efforts according to risk catego- ries. No severe human rights impacts or incidents con- nected to our upstream or downstream value chain were reported to Demant in 2024. Metrics and targets S2-5 Targets related to managing material negative im- pacts, advancing positive impacts and managing material risks and opportunities In Demant, we continuously evaluate our actions through our current practices, including direct sup- plier engagement, which is a part of the routine re- sponsibilities of the procurement functions in De- mant. We are currently implementing updated supplier risk assessment and due diligence pro- cesses. Therefore, we have not yet set targets to manage impact on workers in the value chain. In 2025, we will explore options to do so. Responsible supply chain We recognise that our value chain workers are essential stakeholders whose well -being and rights must always be respected. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 95 Lives improved in 2024 People tested in 2024 Upstream Downstream Own operations Own Hearing Clinic Demant offers innovative technologies, solutions and know-how to help improve people’s health and hearing. Our prioritisation is to support the en- tire journey towards better hearing. We believe that the best treatment of hearing loss starts with the hearing care professional, who delivers per- sonalised care by diagnosing the hearing loss, fit- ting the hearing aid and rendering support based on the individual’s needs. In 2024, we improved 10.9 million lives, and we carried out 1.5 million hearing tests in our own clinics. Our targets Our target is to improve more than 16 million lives by 2030. Creating awareness is crucial to fulfilling our purpose, and we also aim to raise awareness of hearing treatment by sequentially increasing test activities to more than 2 million hearing tests performed by 2030. . S4 Consumers and end-users Our core commitment to society is to help people become aware of and overcome hearing loss and improve their quality of life through innovative solutions and access to personalised hearing care. MORE THAN Material topics Providing life-changing hearing health Hearing health awareness Product quality and safety Right to privacy 10.9 MILLION Improving lives through hearing health 2030 target MORE THAN 16 MILLION 1.5 MILLION Increasing awareness through hearing tests 2030 target MORE THAN 2 MILLION Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 96 Impacts, risks and opportunities ESRS 2 SBM-3 S4 Material impacts, risks and opportuni- ties and their interaction with strategy and business model Demant’s purpose, strategy and business model is built upon driving a positive impact, ultimately improving quality of life for our users. This, in turn, poses positive impacts for their families, col- leagues and society at large in the short, medium and long term. Scaling of Demant’s business and innovation is driven by the strategic purpose and ambition of delivering life-changing hearing health globally to as many people as possible. With a stable and growing consumer base, dependencies on consumers do not pose material risks for De- mant. On the contrary, increased life expectancy and underserved markets provide material oppor- tunities to continue to deliver life-changing hearing health to users to drive social impact and solid fi- nancial performance. Raising awareness of the importance of hearing loss among potential hearing aids users in society is important for Demant to drive business growth. Removing the stigma around hearing loss and empowering people to get help in due time, will have a positive impact on the individuals treated, their social network and public health at large in the short, medium and long term. As a leader within diagnostics technology and with a global in- frastructure of hearing clinics, Demant is committed to enabling early detection of hearing loss and thereby increase awareness of the prob- lem. Impact, risk and opportunity management S4-2 Processes for engaging with consumers and end- users about impacts Engaging with users and consumers is integral to Demant’s purpose of providing life-changing hear- ing health. Continuous feedback from users and customers allows focused innovation and enables us to provide a high level of service in our hearing care clinics. We have established user communi- cation procedures for all our business areas. User engagement is at the heart of Demant’s product innovation activities. At Eriksholm Re- search Centre, which is part of our Hearing Aids brand Oticon, researchers make audiological dis- coveries with the potential to significantly enhance user benefits. Such discoveries are based on con- tinuous dialogue with many people living with hearing loss and dedicated hearing care profes- sionals, as well as strong academic partnerships. The Interacoustics Research Unit (IRU), which is a part of our Diagnostics business area, works to change the lives of hearing care professionals and hearing aid users alike by facilitating several pro- jects that engage users to advance diagnostics equipment and methods. S4-4 Taking action on material impacts on consumers and end-users, and approaches to managing material risks and pursuing material opportunities related to con- sumers and end-users, and effectiveness of those actions Since 2018, Demant’s Hearing Care business area has been championing global efforts to put hearing health on the map. Through the Interna- tional Campaign for Better Hearing, many Hearing Care clinics, for example in Canada, actively en- gage with their local communities, providing free hearing aids to individuals through our locally managed give-back programmes. Clinics in other countries, such as Australia, Ireland and Greece carry out other types of awareness-raising activi- ties. The Campaign’s mission is to increase awareness of the critical importance of hearing health, high- lighting both the benefits of treating hearing loss and the consequences of leaving it untreated. To make hearing care more accessible, we offer free screenings to everyone over the age of 60, pro- moting early detection and timely intervention. Our Diagnostics business area offers global ac- cess to the most current and relevant clinical knowledge about hearing and balance. According to the WHO (World Report on Hearing, 2021), early intervention is crucial to minimise the ad- verse impact of hearing loss on language and cognitive development. Building capacity among ear-nose-throat doctors, audiologists and healthcare professionals is therefore crucial to en- sure early intervention. As part of our strategy, we are committed to con- tinuing to invest in R&D and further expanding the distribution of our products in both existing and new markets going forward. We continuously en- gage with customers, healthcare practitioners and other stakeholders to ensure that we develop in- novative products. In 2024, Demant invested DKK 1,394 million in R&D to drive innovation and en- sure continuous technological leadership. R&D costs ● (DKK million) 915 943 1,082 1,226 1,394 0 200 400 600 800 1,000 1,200 1,400 1,600 2020 2021 2022 2023 2024 According to the World Health Organization, one in five people today lives with hearing loss. If untreated, it impacts their ability to interact, contribute and feel a sense of belonging . Providing life-changing hearing health and advancing hearing health awareness Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 97 How we are progressing S4-4 Continued ACT™ - one step closer to precise hearing aid fitting The IRU works to change the lives of people with hearing loss by inventing new or improving existing tools to help hearing care professionals in hearing screening, diagnostic evaluation of hearing and fitting of hearing aids. In 2024, IRU supported the commercial roll-out of the Audi- ble Contrast Threshold (ACT™) test. With the introduction of the ACT test, hearing care professionals can predict the quality of a person’s aided hearing in everyday speech-in- noise scenarios. This enables more precise fit- ting of the hearing aids, which then reduces the need for subsequent fitting and adjustments. Read more here. Detecting listening fatigue in occupational set- tings The EU-funded project EASYLI is a five-year doc- toral network in collaboration with several Euro- pean universities and industrial partners. The goal of EASYLI is to examine and optimise the ratio between costs and benefits of effortful listening in occupational settings. In demanding or noisy work situations, or for peo- ple with hearing loss, high listening effort may be necessary to maintain satisfactory job perfor- mance. Learnings from project EASYLI can help detect fatigue early on and prevent the negative effects of high listening effort. Read more here. AI: A strong focus area at Eriksholm Research Centre At Eriksholm Research Centre, we have made AI a dedicated scientific focus area where we explore how AI can be harnessed and utilised to help people with hearing impairment benefit from scientific discoveries at a faster pace than ever. With this focus area, we aim to take ad- vantage of the deep insight we have in cogni- tive hearing science, intent decoding and per- sonalised audiology. We use AI to spearhead research initiatives aimed at creating hearing aid systems that can provide precisely tailored sound experiences for individuals who are using hearing devices. In 2024, Demant launched next gen AI-ena- bled hearing aids. Read more here. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 98 Metrics and targets S4-5 Targets related to managing material negative im- pacts, advancing positive impacts, and managing mate- rial risks and opportunities In 2024, Demant established new targets for ad- vancing positive impacts on people with hearing loss: • Improve more than 16 million lives by 2030 • Increase awareness by performing hearing tests on more than 2 million people by 2030 The targets are set in relation to the overall ambi- tion and purpose of Demant. The targets cover all markets where Demant is present. The target-setting process involved internal ex- perts and was approved by Demant’s Executive Leadership Team and endorsed by the Board of Directors. Consumers and end-users were not di- rectly involved in the process. Based on the estimated lifetime of hearing aids, the number of hearings aids sold, and fittings made by the Group in 2024, we improved 10.9 million lives in 2024. People tested ● ( million people) In 2024, Demant tested 1.5 million people with suspected hearing loss. Accounting policy Lives improved The number of lives improved is determined by the number of hearings aids sold and a binaural rate. The number is accumulated based on a five- year product lifecycle. Hearing tests performed Hearing tests performed is the number of tested people in the reporting period. 1.5 0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2020 2021 2022 2023 2024 Data not available Lives improved ● ( million lives) 8.5 8.8 9.4 10.3 10.9 0 2 4 6 8 10 12 2020 2021 2022 2023 2024 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 99 Impacts, risks and opportunities ESRS 2 SBM-3 S4 Material impacts, risks and opportuni- ties and their interaction with strategy and business model In the hearing healthcare industry, a lack of prod- uct quality and safety could be troublesome, as hearing aid devices and diagnostics equipment are in contact with a person’s skin over extended periods. Thus, the devices need to comply with relevant medical device regulations to obtain the required certifications. If Demant fails to deliver on its product brand strategy of providing excellent innovation and high-quality products, it could pre- sent a risk. If this risk materialises, it could affect Demant’s licence to operate and ability to bring products to market and hence have financial con- sequences for Demant in the short and medium term. Demant invests many resources in maintain- ing high product quality and mitigating risks, which include accurate and accessible product infor- mation on the use of our products. Impact, risk and opportunity management S4-1 Policies related to consumers and end-users Working with quality is vital for us to sustain the high standards and reliability of our products and to ensure the safety of our customers and users. We ensure that the Group complies with relevant regulations related to specific substances and de- fines quality management in quality policies for the Hearing Aids and Diagnostics business areas. The policies cover activities that support product development, manufacturing, marketing and ser- vicing. Each function within the company is ac- countable for the quality of their deliveries. The leadership of the quality functions are accountable for ensuring that quality and compliance are deliv- ered by the organisation. S4-2 Processes for engaging with consumers and end- users about impacts Customer service We have established customer support service platforms for both our Hearing Aids and Hearing Care business areas, providing multiple channels for feedback. These channels are actively shared with users and consumers through the sales and service process and can easily be found on the websites of companies in the Demant Group. In our Hearing Aids business area, the first point of contact for users is the hearing care profes- sional, who in case of complaints or escalations will contact the respective Demant wholesale or- ganisations. Users can also contact Demant’s brands directly. Several of the brands within our Hearing Aids business area have created applica- tions for users to access relevant information as well as support services. We communicate di- rectly with the user in writing through our Instruc- tions for Use. In our Diagnostics business area, our sales and service entities located in 15 different countries have user communication toward the health care professional who uses the diagnostics equipment. This communication is guided by a feedback and complaint procedure and a customer relations management system that documents this dia- logue. Further, many of the brands within our Di- agnostics business area provide technical assis- tance via remote access as well as live online support. These channels allow our stakeholders to raise concerns and communicate cases of nega- tive impact. All complaints are handled by a dedi- cated customer service team, ensuring documen- tation and follow-up with the complainant. This in- cludes any remediation, such as fitting support, repair and replacement, where relevant. S4-4 Taking action on material impacts on consumers and end-users, and approaches to managing material risks and pursuing material opportunities related to con- sumers and end-users, and effectiveness of those actions Quality management Our Quality Management Systems for Hearing Aids and Diagnostics business areas demonstrate our ability to offer medical devices that consist- ently meet customer needs and comply with regu- latory requirements. Working with product quality and safety is our licence to operate, and our sys- tems and processes always align with the high standards expected of us. In our Hearing Aids business area, products are tested against reliability requirements, which are defined during the product development. These requirements are based on standards, regulations and our extensive experience in manufacturing hearing aids. At the end of the development pro- cess, final verification tests are conducted to en- sure safety and effectiveness. Extensive reliability testing ensures that a product is safe and effective throughout its lifetime, and the product is tested at component, assembly and product level. Inter- nally, the system is audited by our quality team and maintained to reflect developments and changes in our organisation. For our diagnostic equipment, we gather infor- mation about customer needs, product require- ments and procedures and apply risk manage- ment throughout the entire product life cycle, when designing new products. We work with sup- pliers that can deliver parts and services of the re- quired quality, we monitor supplier performance, and we give appropriate supplier feedback. When developing new instruments and accessories, we collaborate with external researchers and medical professionals. Before we release products, they are tested extensively by accredited test houses and verified according to established performance standards. We perform a 100% test and final in- spection of our products to ensure that they com- ply with and fulfil all specifications. We furthermore mitigate risks associated with quality and safety by biological safety evaluation, using ISO10993 as a guiding standard. We evalu- ate materials in skin contact in accordance with the standard and, when necessary, we perform animal testing according to ISO10993-10, while evaluating whether chemical extraction and char- acterisation is deemed sufficient instead. These tests are conducted by external partners who are required to meet the expectations of our Third Party Compliance Code. Metrics and targets S4-5 Targets related to managing material negative im- pacts, advancing positive impacts, and managing mate- rial risks and opportunities Demant monitors the quality of its products and uses both external audits and complaints mecha- nisms to assess the effectiveness of our actions. All development and manufacturing sites are au- dited on an on-going basis in accordance with Product quality and safety Ensuring the highest standards of quality and safety in our products, while meeting the regulatory requirements, is crucial to our purpose of providing life -changing differences through hearing health. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 100 certification requirements. When audited, Demant targets zero major findings. In 2024, in our Hearing Aids business area, the TÜV SÜD audit for ISO13485, MDR and MDSAP resulted in four minor non-conformances. All cor- rective actions and action plans have been ap- proved by TÜV SÜD. We were also audited by the Danish Medicines Agency that found one minor non-conformance. Our response to the non-con- formance finding was reviewed by the authorities, and they have accepted the root cause and ac- tions and have thus closed the inspection. We had zero product recalls in 2024. Accounting policy Product recalls Product recalls cover both voluntary and manda- tory recalls. In our Diagnostics business area, all external au- dits made by the certifying body, TÜV SÜD, in 2024 were completed, and no major findings were reported. We have set business area-specific targets for our quality management that support the mitigation of potential impacts on consumers in relation to product safety and use. Product recalls ● 2024 2023 2022 2021 2020 Hearing Aids 0 0 0 0 0 Diagnostic s 0 0 0 0 0 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 101 Impacts, risks and opportunities ESRS 2 SBM-3 S4 Material impacts, risks and opportuni- ties and their interaction with strategy and business model As our business continues to grow, the complexity of managing customers’ data increases. When it comes to data privacy, Demant has a material po- tentially negative impact on users and consumers on the short term to which no certain groups are particularly exposed. Further, the potentially nega- tive impact is not widespread or systemic. We re- main committed to protecting personal data, and failure to do so could have serious consequences for the people whose data we possess as well as for the Group. Impact, risk and opportunity management S4-1 Policies related to consumers and end-users Demant has a defined Data Privacy Strategy and programme to manage potentially negative im- pacts on the privacy of consumers and users. This includes policies and defined processes for han- dling personal data as well as processes for en- gaging with affected stakeholders and remediating any such impacts. Data privacy is also covered by Demant’s Code of Conduct, which outlines clear expectations of em- ployees’ conduct in this regard. Demant has im- plemented a global Data Ethics Policy, and it is mandatory for all employees in Demant to comply with the Policy. The Policy covers all processing of data, including personal and non-personal data, and goes be- yond compliance, as we already work diligently to ensure that the processing of personal data is done in accordance with regulatory frameworks. The Policy provides additional protection for the benefit of our customers, users and employees. Data privacy and ethics is governed by our Global Legal & Compliance Board. Group Legal & Com- pliance reports regularly on material issues to the Global Legal & Compliance Board, that includes the Executive Leadership Team, and to the audit committee. Demant’s commitment to human rights, embed- ded in our Sustainability Policy, also covers the rights of users and consumers. Please refer to Demant’s approach to due diligence in relation to human rights on page 86. Neither cases of non- respect of the United Nations Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines, nor severe human rights im- pacts involving consumers or users, have been reported in Demant’s value chain in 2024. S4-2 Processes for engaging with consumers and end- users about impacts Involvement Information about users’ and consumers’ data pri- vacy is provided in privacy notices when required by local legislation. Consumers and users are in- formed of the use of their personal data and are also guided on how to exercise their legal rights regarding their personal data. We continue to experience increasing interest in privacy matters from our customers and users, and we spend significant resources on ensuring that all privacy queries are addressed. S4-3 Processes to remediate negative impacts and chan- nels for consumers and end-users to raise concerns Demant’s whistleblower hotline is available to all external stakeholders, including users and con- sumers. Please refer to page 104. S4-4 Taking action on material impacts on consumers and end-users, and approaches to managing material risks and pursuing material opportunities related to con- sumers and end-users, and effectiveness of those actions All collection and processing of personal data are done in accordance with applicable laws and reg- ulations, including GDPR in the EU/EEA and CCPA and HIPAA in the US. Failure to comply with the rules may not only have serious conse- quences for the persons whose data we possess but may also result in large fines for Demant, if the rules are violated. Ways of working We have a dedicated Data Privacy team, which is part of Demant’s Group Legal & Compliance, and in 2024, we welcomed additional privacy profes- sionals to the team. The team is mainly based in Europe and the US, where privacy legislation was first passed and where internal demand for sup- port has been most prevalent. However, the team also supports legal colleagues and the business in other regions, as more countries pass compre- hensive data protection laws and impose local re- strictions on data handling. The team maintains a privacy portal for employ- ees, containing relevant national and international legislation and guidelines that Demant brands must comply with, training materials and access to relevant policies and processes. To ensure local implementation and awareness of data privacy policies and procedures, we have fur- thermore appointed 111 data privacy champions spread across our European sites. They receive ongoing training on privacy matters, and once a year, they participate in the annual internal Data Privacy Summit, which has been held since 2019. The champions reach out to the Data Privacy team if they experience any concerns or com- plaints about data privacy. The data landscape available to Demant supports our internal identification of efficiencies, develop- ment of new products, gaining customer insights, optimising operations and tailoring our business strategies. Collecting personal data is therefore not only necessary for the delivery of our products and services but also presents opportunities. However, any collection and use of data also pre- sent the inherent risk of misuse or access by threat actors, such as hackers and cybercriminals. Protecting data privacy is therefore dependent on a strong IT security system. The Data Privacy team collaborates closely with Demant’s IT Security team. In addition to estab- lished IT security measures, we have a well-func- tioning data breach response procedure. The Data Privacy team monitors any alerts of a poten- tial data breach every day of the year and ensures that appropriate action is taken. Working with data privacy remains a permanent focus area for Demant, and we strive to continu- ously optimise our internal processes in alignment with best practices and standards. Right to privacy Demant is entrusted with personal data on customers, users and business partners, which must be collected and processed in accordance with applicable laws and regulations . Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 102 G1 Business conduct 103 Governance Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 103 Material topics Corruption and bribery Advocacy for hearing health Highly exposed employees trained in 2024 Conducting business with integrity is important to us and is reflected in the way we connect with em- ployees, users, customers, third parties and other stakeholders. We strive to act responsibly and are committed to operating our business in accord- ance with the law and the minimum standards set in our Code of Conduct. Our target We aim to enhance our business conduct excel- lence by providing code of conduct training to all employees. To ensure we focus our efforts where we have the highest risk in terms of corruption and bribery, we have set a target to increase code of conduct training of our highly exposed employ- ees year over year, aiming to reach 100% by 2030. G1 Business conduct We take a proactive approach to business ethics to ensure we behave as a company we can be proud of. We strive for high ethical standards and oper- ate our business with integrity and honesty. Increase excellence in business conduct by providing code of conduct training 76% 2030 target 100% Upstream Downstream Own operations Own Hearing Clinic Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 104 Impacts, risks and opportunities Certain areas of our organisation are exposed to higher risk of corruption and bribery. This includes working with distributors in countries where there is a risk of bribery and corrupt practices. A bribery or corruption incident could lead to fines and pen- alties for Demant as well as reputational damage that could affect our business relationships with customers and suppliers. The risk of corruption exists in our own operations and in our down- stream value chain and is considered systemic in some of the countries where we have distributor relationships. It occurs in the short and medium term. Impact, risk and opportunity management G1-1 Business conduct policies and corporate culture Our Code of Conduct reflects our commitment to a prominent level of business ethics and is the overarching compliance document for our Group. The Code of Conduct outlines the behaviour we expect of our employees. It sets the minimum standards and ethical principles applicable to all employees, regardless of location and the nature of their work, and provides everyone with a com- mon understanding of how we conduct our busi- ness. Our business ethics programme lays a solid foun- dation for ensuring that Demant can identify, re- port and investigate any concerns about unlawful behaviour or behaviour that contradicts our Code of Conduct. Beyond the Code of Conduct, the business ethics programme covers the global whistleblower hotline as well as a portfolio of global programmes with relevant policies and guidelines, processes, tools, risk assessments, training and advice. Business ethics compliance is governed by the Legal & Compliance Board. The leader of Group Legal & Compliance is accountable for the imple- mentation of all the policies described in this sec- tion. Group Legal & Compliance is supported by a network of 62 business ethics champions ap- pointed in each subsidiary globally and in Group business functions. Group Legal & Compliance re- ports regularly on material reports received through the whistleblower hotline to the audit com- mittee and the Legal & Compliance Board. In H1 2024, we hosted Business Ethics Days at our headquarters in Denmark for all our global business ethics champions and for centralised business functions. The purpose of the days was to further educate our champions on business eth- ics compliance and ensure engagement through- out the champions’ network. Whistleblower hotline Demant has established a whistleblower hotline, which enables employees, business partners and all other internal and external stakeholders to re- port any concerns about serious and sensitive matters confidentially and anonymously. We en- courage employees and external stakeholders to raise their concerns about serious and sensitive actions that (1) fail to comply with our Code of Conduct, (2) fail to comply with applicable laws and regulations and/or (3) jeopardise the health and safety of our employees. Anti-retaliation is a part of our Whistleblower Pol- icy. We are committed to ensuring that there will be no discriminatory or retaliatory action against any employee or third party who in good faith raises a concern through the whistleblower hot- line. Our anti-retaliation efforts comply with Di- rective (EU) 2019/1937. Group Legal & Compliance manages the whistle- blower hotline and has developed an Investigation Guideline, which is a tool that describes step-by- step how an investigation into a concern raised by an employee is conducted. Group Legal & Compliance works closely with Global HR and has, in collaboration with them, de- veloped an HR investigation process, which HR use when conducting HR-related investigations. Employee concerns can also be reported to HR or managers directly and do not have to be reported through the whistleblower hotline. Training and awareness We strive to ensure that all employees are aware that they can safely report concerns through our whistleblower hotline. We have had several global campaigns promoting awareness about the hot- line and, most recently, awareness was created through our global Code of Conduct and Whistle- blower e-learning launched in H1 2024 in 11 lan- guages. Among other things, e-learning informs the em- ployees about the whistleblower hotline, how to report and what they can report and provides in- formation about our anti-retaliation principles. In 2024, all employees globally were asked to com- plete the e-learning, and we plan to relaunch the e-learning every three years. In addition, the busi- ness ethics champions appointed in each subsidi- ary globally help raise awareness about the whistleblower hotline. In 2025, we will update our code of conduct training to ensure a better fit to the different types of employees across Demant. All white-collar employees will be invited to com- plete the e-learning, while we plan to conduct physical training of production and warehouse staff. Anti-corruption and bribery G1-3 Prevention and detection of corruption and bribery It is a fundamental principle for Demant to com- pete for business on fair terms and solely on the merits of our services. Demant is committed to avoiding the use of corruption, wherever we do business. Through an anti-corruption risk assess- ment, we have identified the functions that are ex- posed to the highest risk in respect of corruption and bribery. These, among others, include em- ployees that are in direct contact with public offi- cials, for instance by participating in negotiations for public tenders on Demant’s behalf. We have implemented policies and guidelines to mitigate corruption risks throughout our organisa- tion. This includes an Anti-Corruption Policy, Gifts & Hospitality Guidelines, containing country-spe- cific appendices with local monetary limits and a Third Party Compliance Code, which contains a section on anti-corruption, and which is included as an appendix in contracts with third parties. For third parties, we have a due diligence process where we assess the anti-corruption risk associ- ated with dealing with the third parties in scope of due diligence. Based on our findings, we imple- ment appropriate mitigating measures, such as specific anti-corruption wording in the contract with the third party. Corruption and bribery We believe that strong and ethical business processes are undeniable as- pects of operating a sustainable business. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 105 The global Code of Conduct and whistleblower e- learning contains a deep dive into anti-corruption. Since all employees have been asked to complete the e-learning, it covers those employees that are exposed to the highest risk in respect of corrup- tion and bribery as well as the Executive Leader- ship Team. In addition to e-learning, we also con- duct in-person training for selected high-risk em- ployee groups on an ad hoc basis. Our business ethics champions have received ex- tensive training on anti-corruption. As they are ap- pointed in each subsidiary globally, they help us detect issues locally that could be problematic from an anti-corruption perspective and ensure that Group Legal & Compliance is involved to the extent necessary. In addition, our business ethics champions help us raise awareness locally about the Code of Conduct as well as on our Anti-Cor- ruption Policy and guidelines, which apply to all employees globally, thereby assisting in the pre- vention of corruption and bribery through training. In 2024, we collaborated with our business ethics champions to create country-specific appendices with local monetary limits to our Gifts & Hospitality Guidelines in all subsidiaries globally. The whistleblower hotline enables employees, business partners and other stakeholders to re- port their concerns relating to corruption and brib- ery confidentially and anonymously. Group Legal & Compliance manages all reports received through the whistleblower hotline and our Whistle- blower Policy and Investigation Guideline ensure that the investigator involved in a specific whistle- blower case is independent from the chain of management involved in the matter. Metrics and targets In 2024, we committed to increasing our business conduct excellence through code of conduct train- ing to reach 100% of highly exposed employees, such as top-level management, senior leaders of commercial functions, procurement and finance managers, by 2030. The target relates to the ob- jectives laid out in our Code of Conduct. The target-setting process involved internal ex- perts and was approved by Demant’s Executive Leadership Team and endorsed by the Board of Directors. In 2024, 58% of all Demant employees completed the e-learning. 76% of highly exposed employees, who are the target group for our 2030 target, com- pleted the training. Data on code of conduct training in our e-learning module for the period from 2020-2023 is not avail- able as e-learning was introduced in 2024. Em- ployees received training through other channels prior to 2024. Code of conduct training – Highly exposed employees Whistleblower reports ● In 2024, Demant received 87 reports through the whistleblower hotline. In 2024, Demant conducted 53 due diligence screenings. The decrease in number of distributor due diligence is due to backlogs in 2021 and 2022. G1-4 Incidents of corruption or bribery We have had no confirmed incidents of corruption or bribery in Demant in 2024. Therefore, there have been no convictions or fines for violation of anti-corruption and anti-bribery laws in 2024. Accounting policy Whistleblower reports The number of whistleblower reports received through the hotline during the year cover the sub- stantiated reports. Distributor due diligence The number of distributor due diligence conducted as part of our due diligence process for our distrib- utors. 76% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2020 2021 2022 2023 48 47 90 87 0 20 40 60 80 100 2021 2022 2023 2024 Code of conduct training – All employees Distributor due diligence ● 58% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2020 2021 2022 2023 75 65 57 53 0 10 20 30 40 50 60 70 80 2021 2022 2023 2024 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 106 Impacts, risks and opportunities G1-5 Political influence and lobbying activities To support Demant’s purpose of creating life- changing difference to people with hearing loss, we engage with international organisations, gov- ernments and local authorities to raise awareness about the importance of hearing health. Ensuring that more people test and treat their hearing loss can have a positive financial impact on Demant in the medium and long term. Impact, risk and opportunity management When exerting political influence, we carry with us our principles of conducting business with integrity and high ethical standards. We engage in political activities through industry organisations, lobbying for a more advanced and better hearing healthcare infrastructure to ultimately ensure the best possible treatment for people with hearing loss. We take active part in relevant industry organisa- tions including, but not limited to, the following: European Hearing Instrument Manufacturers Association (EHIMA) Demant is represented in the General Assembly and the Technical, Regulatory, Public Affairs and Sustainability Committees. Hearing Industries Association (HIA) Demant is represented in the board of directors and the Technical and Regulatory, Market In- sights, Market Analytics and Claims Committees. We are transparent about our stance and advo- cate for topics directly linked to our company pur- pose and strategy. How we engage politically var- ies, depending on local conditions, as activities to promote hearing health depend entirely on coun- try-specific legislation and hearing health infra- structure. Our Anti-Corruption Policy (please refer to page 104) does not allow for political contributions which are defined as contributions to politicians, political campaigns and political parties. Any devi- ations from this Policy must be approved by our Group CEO. In 2024, we did not make any politi- cal contributions. Advocacy for hearing health Our advocacy efforts are closely intertwined with our objective of raising awareness about hearing healthcare and driven by our main purpose. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 107 Sustainability reporting risks and internal controls 108 Disclosure requirements and incorporation by reference 109 Statement on sustainability due diligence 116 Additional information Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 108 Scoping of material topics A double materiality assessment is conducted on a yearly basis, please refer to page 62. ESRS 2 GOV-5 Risk management and internal controls over sustainability reporting Risk management in relation to sustainability reporting Demant’s sustainability reporting risk manage- ment framework is designed to identify, assess and manage risks related to sustainability report- ing. Key risk factors include regulatory compli- ance, data accuracy and stakeholder expecta- tions. We employ a comprehensive risk assess- ment process, involving regular reviews and up- dates. Through this process, we ensure that all identified potential risks are adequately addressed based on the scoping of material sustainability topics identified in the double materiality assess- ment. The identified risks are assessed as either high, medium or low. The sustainability reporting risk categorisation is based on inherent reporting risks, such as completeness and accuracy of the data. High risks have a higher prioritisation than medium and low risks. The main reporting risks are related to complete- ness and accuracy of the data submitted. The Sustainability Board receives updates on a quarterly basis and includes any findings in the in- ternal control framework related to sustainability reporting and how to mitigate risks. Sustainability reporting risks and internal controls Demant is committed to ensuring adequate reporting data quality and mitigating significant risks related to sustainability reporting. Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 109 ESRS 2 IRO-2 Disclosure requirements in ESRS covered by the undertaking’s sustainability statement. The following tables outline all ESRS disclosure requirements in ESRS 2 and five topical stand- ards, which are relevant to Demant and have guided us in the preparation of this Sustainability statement. We have excluded disclosure require- ments in E2, E3, E4 and S3, as they are below our materiality thresholds. These tables serve as a guide for locating infor- mation on specific disclosure requirements in the Sustainability statement. They also indicate where information on a specific disclosure requirement not included in the Sustainability statement can be found. This information is “incorporated by refer- ence” either in the Management statement and Fi- nancial statements of this Annual Report or in the separately published Remuneration Report . Disclosure requirements and incorporation by reference Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 110 Cross -cutting standards ESRS 2 General disclosures Disclosure requirements Statement Page BP-1 General basis for preparation Sustainability 51 BP-2 Datapoints that derive from other EU legislation Sustainability 113 GOV-1 The role of the administrative, management and supervisory bodies Management/ Sustainability 41, 47, 56 GOV-2 Information provided to and sustainability matters addressed by the undertaking's administrative, management and supervisory bodies Management/ Sustainability 56 GOV-3 Integration of sustainability -related performance in incentive schemes Remuneration report 8 GOV-4 Statement on sustainability due diligence Sustainability 116 GOV-5 Risk management and internal controls over sus- tainability reporting Sustainability 108 SBM-1 Strategy, business model and value chain (prod- ucts, markets and customers) Management/ Sustainability 10, 16, 20, 59 SBM-1 Strategy, business model and value chain (head- count by country) Sustainability 88 SBM-1 Strategy, business model and value chain (break- down of revenue) Financial 127 SBM-2 Interest and views of stakeholders Sustainability 64 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model Sustainability 58, 60- 62 IRO-1 Description of the process to identify and assess material impacts, risks and opportunities Sustainability 62-63 IRO-2 Disclosure requirements in ESRS covered by the undertaking ’s sustainability statement Sustainability 109 ESRS E5 Resource use and circular economy Disclosure requirements Statement Page ESRS 2 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model Sustainability 76 ESRS 2, IRO-1 Description of the processes to identify and assess material resource use and circular economy -re- lated impacts, risks and opportunities Sustainability 76 E5-1 Policies related to resource use and circular econ- omy Sustainability 76 E5-2 Actions and resources related to resource use and circular economy Sustainability 76 E5-3 Targets related to resource use and circular econ- omy Sustainability 77 E5-4 Resource inflows Sustainability 78 E5-5 Resource outflows Sustainability 78 Environmental standards ESRS E1 Climate change Disclosure requirements Statement Page E1-1 Transition plan for climate change mitigation Sustainability 68 ESRS 2, SBM-3 Material impacts, risks and opportunities, and their interaction with strategy and business model Sustainability 67 ESRS 2, IRO-1 Description of the processes to identify and assess material climate-related impacts, risks and opportu- nities Sustainability 67 E1-2 Policies related to climate change mitigation and adaptation Sustainability 67 E1-3 Actions and resources in relation to climate change policies Sustainability 68 E1-4 Targets related to climate change mitigation and adaptation Sustainability 69 E1-5 Energy consumption and mix Sustainability 70 E1-6 Gross Scopes 1, 2, 3 and total GHG emissions Sustainability 70-72 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 111 Social standards ESRS S1 Own workforce Disclosure requirements Statement Page ESRS 2, SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model Sustainability 86, 89, 92 S1-1 Policies related to own workforce Sustainability 86, 89, 92 S1-2 Processes for engaging with own workers and workers’ representatives about impacts Sustainability 86, 89, 92 S1-3 Processes to remediate negative impacts and channels for own workers to raise concerns Sustainability 87, 89 S1-4 Taking action on material impacts on own work- force, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions Sustainability 87, 89, 92 S1-5 Targets related to managing mate -rial negative im- pacts, advancing positive impacts, and managing material risks and opportunities Sustainability 87, 90 S1-6 Characteristics of the undertaking’s employees Sustainability 88, 92 S1-9 Diversity metrics Sustainability 90 S1-16 Remunerations metrics (pay gap and total remu- nerations ) Sustainability 90 S1-17 Incidents, complaints and severe human rights im- pacts Sustainability 87 Social standards ESRS S2 Workers in the value chain Disclosure requirements Statement Page ESRS 2, SBM-3 Material impacts, risks and opportunities, and their interaction with strategy and business model Sustainability 94 S2-1 Policies related to value chain workers Sustainability 94 S2-2 Processes for engaging with value chain workers about impacts Sustainability 94 S2-3 Processes to remediate negative impacts and channels for value chain workers to raise concerns Sustainability 94 S2-4 Taking action on material impacts on value chain workers, and approaches to managing material risks and pursuing material opportunities related to value chain workers, and effectiveness of those ac- tions Sustainability 94 S2-5 Targets related to managing material negative im- pacts, advancing positive impacts, and managing material risks and opportunities Sustainability 94 Social standards ESRS S4 Consumers and end-users Disclosure requirements Statement Page ESRS 2, SBM-3 Material impacts, risks and opportunities, and their interaction with strategy and business model Sustainability 96, 99, 101 S4-1 Policies related to consumers and end -users Sustainability 99, 101 S4-2 Processes for engaging with consumers and end - users about impacts Sustainability 96, 99, 101 S4-3 Processes to remediate negative impacts and channels for consumers and end -users to raise concerns Sustainability 101 S4-4 Taking action on material impacts on consumers and end -users, and approaches to mitigating mate- rial risks and pursuing material opportunities re- lated to consumers and end -users and effective- ness of those actions Sustainability 96-97, 99, 101 S4-5 Targets related to managing material negative im- pacts, advancing positive impacts, and managing material risks and opportunities Sustainability 98-100 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 112 Governance standards ESRS G1 Business conduct Disclosure requirements Statement Page ESRS 2, GOV-1 The role of the administrative, supervisory and management bodies Management 41, 47, 56 G1-1 Business conduct policies and corporate culture Sustainability 104 G1-3 Prevention and detection of corruption and bribery Sustainability 104 G1-4 Incidents of corruption or bribery Sustainability 105 G1-5 Political influence and lobbying activities Sustainability 106 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 113 Datapoints in cross-cutting and topical standards The table below outlines the list of datapoints in cross-cutting standards that derive from other EU legislation. Disclosure requirements Datapoints SFDR reference Pillar 3 reference Benchmark r egulation reference EU climate law reference Report/ section Page ESRS 2 GOV -1 21 (d) Board's gender diversity x x Management's re- view 42 ESRS 2 GOV -1 21 (e) Percentage of board members who are independent paragraph x Management's re- view 47-48 ESRS 2 GOV -4 30 Statement on due diligence x Statement on due diligence 116-117 ESRS 2 SBM -1 40 (d) i Involvement in activities related to fossil fuel activities paragraph x x x Not material ESRS 2 SBM -1 40 (d) ii Involvement in activities related to chemical production x x Not material ESRS 2 SBM -1 40 (d) iii Involvement in activities related to controversial weapons x x Not material ESRS 2 SBM -1 40 (d) iv Involvement in activities related to cultivation and production of tobacco x Not material ESRS E1 -1 14 Transition plan to reach climate neutrality by 2050 x Climate change 68-69 ESRS E1 -1 16 (g) Undertakings excluded from the EU Paris-Aligned Benchmark x x Not material ESRS E1 -4 34 GHG emissions reduction targets x x x Climate change 72 ESRS E1 -5 38 Energy consumption from fossil sources disaggregated by sources (only high climate-impact sectors) x Climate change 70 ESRS E1 -5 37 Energy consumption and mix x Climate change 70 ESRS E1 -5 40-43 Energy intensity associated with activities in high climate-impact sectors x Climate change 70 ESRS E1 -6 44 Gross scope 1, 2 and 3 and total GHG emissions x x x Climate change 72 ESRS E1 -6 53-55 Gross GHG emissions intensity x x x Climate change 72 ESRS E1 -7 56 GHG removals and carbon credits x Not material ESRS E1 -9 66 Exposure of the benchmark portfolio to climate-related physical risks x Not material ESRS E1 -9 66 (a) Disaggregation of monetary amounts by acute and chronic physical risk x Not material ESRS E1 -9 66 (c) Location of significant assets at material physical risk x Not material ESRS E1 -9 67 (c) Breakdown of the carrying value of real estate assets by energy- efficiency classes x Not material ESRS E1 -9 69 Degree of exposure of the portfolio to climate-related opportunities x Not material Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 114 Disclosure requirements Datapoints SFDR reference Pillar 3 reference Benchmark r egulation reference EU climate law reference Report/ section Page ESRS E2 -4 28 Amount of each pollutant listed in Annex II of the E-PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil x Not material ESRS E3 -1 9 Water and marine resources x Not material ESRS E3 -1 13 Dedicated policy x Not material ESRS E3 -1 14 Sustainable oceans and seas x Not material ESRS E3 -4 28 (c) Total water recycled and reused x Not material ESRS E3 -4 29 Total water consumption in m 3 per net revenue on own operations x Not material ESRS 2 - SBM 3 - E4 16 (a) i x Not material ESRS 2 - SBM 3 - E4 16 (b) x Not material ESRS 2 - SBM 3 - E4 16 (c) x Not material ESRS E4 -2 24 (b) Sustainable land/agriculture practices or policies x Not material ESRS E4 -2 24 (c) Sustainable oceans/seas practices or policies x Not material ESRS E4 -2 24 (d) Policies to address deforestation x Not material ESRS E5 -5 37 (d) Non-recycled waste x Not material ESRS E5 -5 39 Hazardous waste and radioactive waste x Not material ESRS 2 - SBM3 - S1 14 (f) Risk of incidents of forced labour x Own workforce 86 ESRS 2 - SBM3 - S1 14 (g) Risk of incidents of child labour x Own workforce 86 ESRS S1 -1 20 Human rights policy commitments x Own workforce 86 ESRS S1 -1 21 Due diligence policies on issues addressed by the fundamental Interna- tional Labour Organization Conventions 1 to 8 x Own workforce 86 ESRS S1 -1 22 Processes and measures for preventing trafficking in human beings x Own workforce 86 ESRS S1 -1 23 Workplace accident prevention policy or management system x Own workforce 86-87 ESRS S1 -3 32 (c) Grievance/complaints handling mechanisms x Own workforce 87 ESRS S1 -14 88 (b), (c) Number of fatalities and number and rate of work-related accidents x x Not material ESRS S1 -14 88 (e) Number of days lost to injuries, accidents, fatalities or illness x Not material ESRS S1 -16 97 (a) Unadjusted gender pay gap x x Not material ESRS S1 -16 97 (b) Excessive CEO pay ratio x Own workforce 90 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 115 Disclosure requirements Datapoints SFDR reference Pillar 3 reference Benchmark Regulation reference EU climate law reference Report/ section Page ESRS S1 -17 103 (a) Incidents of discrimination x Own workforce 87 ESRS S1 -17 104 (a) Non-compliance with UNGPs on Business and Human Rights and OECD Guidelines x x Own workforce 87 ESRS 2 - SBM3 - S2 11 (b) Significant risk of child labour or forced labour in the value chain x Workers in the value chain 94 ESRS S2 -1 17 Human rights policy commitments x Workers in the value chain 94 ESRS S2 -1 18 Policies related to value chain workers x Workers in the value chain 94 ESRS S2 -1 19 Non-compliance with UNGPs on Business and Human Rights principles and OECD guidelines x x Workers in the value chain 94 ESRS S2 -1 19 Due diligence policies on issues addressed by the fundamental Interna- tional Labour Organization Conventions 1 to 8 x Workers in the value chain 94 ESRS S2 -4 36 Human rights issues and incidents connected to upstream and down- stream value chain x Workers in the value chain 94 ESRS S3 -1 16 Human rights policy commitments x Not material ESRS S3 -1 17 Non-compliance with UNGPs on Business and Human Rights, ILO prin- ciples or OECD guidelines x x Not material ESRS S3 -4 36 Human rights issues and incidents x Not material ESRS S4 -1 16 Policies related to consumers and end-users x Consumers and end -users 95 ESRS S4 -1 17 Non-compliance with UNGPs on Business and Human Rights and OECD guidelines x x Consumers and end -users 95 ESRS S4 -4 35 Human rights issues and incidents x Consumers and end -users 95 ESRS G1 -1 10 (b) United Nations Convention against Corruption paragraph x Business conduct 104-105 ESRS G1 -1 10 (d) Protection of whistleblowers paragraph x Business conduct 104-105 ESRS G1 -4 24 (a) Fines for violation of anti-corruption and anti-bribery laws paragraph x x Business conduct 105 ESRS G1 -4 24 (b) Standards of anti-corruption and anti-bribery x Business conduct 104-105 Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 116 ESRS 2 GOV-4 Statement on due diligence The following table provides a mapping of how Demant applies the core elements of due dili- gence in relation to people and the environment and where they are presented in this Sustainabil- ity statement. Statement on sustainability due diligence Core elements of due diligence Paragraphs or pages in the Sustainability Statement Disclosure relating to people and/or environment a) Embedding due diligence in govern- ance, strategy and business model ESRS 2 GOV-2, page 56 People and environment ESRS 2 GOV-3, page 8 in Remuneration Report 2024 People and environment ESRS 2 SBM-3, pages 58-63 People and environment b) Engaging with affected stakeholders in all key steps of due diligence ESRS 2 GOV-2, page 56 ESRS 2 SBM-2, page 64 ESRS 2 IRO-1, page 62 People and environment S1-2, pages 86-87, 89, 92 S2-2, page 94 S4-2, pages 96, 99, 101 People G1-1, page 104 People and environment Sustainability in Demant Environment Social Governance Additional information Demant Annual Report 2024 117 Core elements of due diligence Paragraphs or pages in the Sustainability Statement Disclosure relating to people and/or environment c) Identifying and assessing adverse impacts ESRS 2 IRO-1, page 62 ESRS 2 SBM-3, page 58 People and environment d) Taking actions to address those ad- verse impacts E1-1, page 68 E1-3, page 68 E5-2, pages 76-77 Environment S1-4, page 87, 89, 92 S2-4, page 94 S4-4, pages 96-97, 99, 101 People G1-1, page 104 G1-3, page 104 People and environment e) Tracking the effectiveness of these efforts and communicating E1-4, page 69 E1-5, page 70 E1-6 pages 70-72 E5-3, page 77 E5-4, page 78 E5-5, page 78 Environment S1-5, pages 87, 90 S1-6, pages 88, 92 S1-9, page 90 S1-17, page 87 S4-5, pages 98-100 People G1-4, page 105 G1-5, page 106 People and environment Consolidated financial statements Parent financial statements Demant Annual Report 2024 118 “When I got fitted with the hearing aids, I realised at that moment that this is the moment where I will be able to move on and move forward to become a firefighter, and I couldn't wait to do it.” Clare, hearing aid user and firefighter Financial statements Consolidated financial statements Parent financial statements Demant Annual Report 2024 119 Consolidated income statement 120 Consolidated statement of comprehensive income 120 Notes to consolidated financial statements 125 Consolidated financial statements Consolidated financial statements Parent financial statements Demant Annual Report 2024 120 Consolidated statement of comprehensive income (DKK million) 2024 2023 Profit for the year 2,388 1,798 Foreign currency translation adjustment, subsidiaries 265 -177 Value adjustments of hedging instruments: Value adjustment for the year -91 41 Value adjustment transferred to revenue -5 -106 Tax on currency translation and value adjustments 22 17 Items that have been or may subsequently be reclassified to the income statement 191 -225 Actuarial gains/losses on defined benefit plans -17 -19 Tax on actuarial gains/losses on defined benefit plans 4 4 Items that will not subsequently be reclassified to the income statement -13 -15 Other comprehensive income 178 -240 Comprehensive income 2,566 1,558 Comprehensive income attributable to: Demant A/S’ shareholders 2,565 1,555 Non -controlling interests 1 3 2,566 1,558 Consolidated income statement (DKK million) Note 2024 2023 Revenue 1.1 22,419 21,601 Production costs 1.2 / 1.3 / 1.5 -5,329 -5,281 Gross profit 17,090 16,320 R&D costs 1.2 / 1.3 / 8.3 -1,394 -1,226 Distribution costs 1.2 / 1.3 / 8.3 -10,246 -9,554 Administrative expenses 1.2 / 1.3 / 8.2 / 8.3 -1,145 -1,102 Share of profit after tax, associates 3.4 / 6.1 99 68 Operating profit (EBIT) before special items 4,404 4,506 Special items 1.9 124 - Operating profit (EBIT) 4,528 4,506 Financial income 4.2 113 95 Financial expenses 4.2 -925 -856 Profit before tax 3,716 3,745 Tax on profit for the year 5.1 -824 -922 Profit after tax - continuing operations 2,892 2,823 Profit after tax - discontinued operations 6.2 -504 -1,025 Profit for the year 2,388 1,798 Profit for the year attributable to: Demant A/S' shareholders 2,387 1,795 Non -controlling interests 1 3 2,388 1,798 Earnings per share (EPS), DKK - continuing operations 1.4 13.31 12.64 Diluted earnings per share (DEPS), DKK - continuing operations 1.4 13.31 12.64 Earnings per share (EPS), DKK 1.4 10.99 8.04 Diluted earnings per share (DEPS), DKK 1.4 10.99 8.04 Consolidated financial statements Parent financial statements Demant Annual Report 2024 121 (DKK million) Note 2024 2023 Equity and liabilities Share capital 44 45 Other reserves 9,520 9,211 Equity attributable to Demant A/S' shareholders 9,564 9,256 Equity attributable to non -controlling interests 80 82 Equity 9,644 9,338 Borrowings 4.3 / 4.4 12,487 10,171 Lease liabilities 3.3 / 4.3 / 4.4 2,104 2,045 Deferred tax liabilities 5.2 634 633 Provisions 7.1 213 201 Other liabilities 4.3 / 7.3 461 661 Deferred income 7.4 812 635 Non -current liabilities 16,711 14,346 Borrowings 4.3 / 4.4 423 1,597 Lease liabilities 3.3 / 4.3 / 4.4 667 641 Trade payables 4.3 658 799 Payables to associates - 1 Income tax 603 578 Provisions 7.1 93 77 Other liabilities 4.3 / 7.3 2,617 2,497 Unrealised losses on financial contracts 2.3 / 4.3 / 4.5 102 35 Deferred income 7.4 588 548 Liabilities related to assets held for sale 6.2 344 89 Current liabilities 6,095 6,862 Liabilities 22,806 21,208 Equity and liabilities 32,450 30,546 Consolidated balance sheet 31 December (DKK million) Note 2024 2023 Assets Intangible assets 3.1 15,066 13,540 Property, plant and equipment 3.2 2,909 2,813 Lease assets 3.3 2,665 2,596 Investments in associates 3.4 363 728 Receivables from associates 3.4 / 4.3 / 4.4 193 277 Other investments 4.3 / 4.5 9 19 Customer loans 1.7 / 3.4 / 4.3 / 4.4 519 477 Other receivables 3.4 / 4.3 / 4.4 217 170 Deferred tax assets 5.2 588 542 Other non -current assets 4,554 4,809 Non -current assets 3.5 22,529 21,162 Inventories 1.5 2,500 2,845 Trade receivables 1.6 / 4.3 3,563 3,650 Receivables from associates 4.3 200 188 Income tax 78 236 Customer loans 1.7 / 4.3 / 4.4 155 191 Other receivables 4.3 / 4.4 454 378 Unrealised gains on financial contracts 2.3 / 4.3 / 4.5 31 60 Prepaid expenses 435 415 Cash 4.3 / 4.4 1,112 1,138 Assets held for sale 6.2 1,393 283 Current assets 9,921 9,384 Assets 32,450 30,546 Consolidated financial statements Parent financial statements Demant Annual Report 2024 122 (DKK million) Note 2024 2023 Operating profit (EBIT) 4,528 4,506 Non -cash items etc. 1.8 1,233 1,280 Change in receivables etc. -119 -158 Change in inventories -7 -120 Change in trade payables and other liabilities etc. 16 103 Change in provisions -46 51 Dividends received 43 85 Cash flow from operating profit 5,648 5,747 Financial income etc. received 95 80 Financial expenses etc. paid -884 -707 Income tax paid -779 -662 Cash flow from operating activities (CFFO) 4,080 4,458 Acquisition of enterprises, participating interests and activities -1,234 -935 Investments in intangible assets -203 -192 Investments in property, plant and equipment -576 -643 Disposal of property, plant and equipment 31 22 Investments in other non-current assets -251 -269 Disposal of other non -current assets 405 246 Cash flow from investing activities (CFFI) -1,828 -1,771 (DKK million) Note 2024 2023 Repayments of borrowings 4.4 -5,023 -6,743 Proceeds from borrowings 4.4 6,424 6,034 Change in short -term bank facilities 4.4 -586 -168 Repayments of lease liabilities 3.3 / 4.4 -750 -687 Transactions with non -controlling interests -3 -3 Share buy -backs -2,301 -846 Cash flow from financing activities (CFFF) -2,239 -2,413 Cash flow for the period, net – continuing operations 13 274 Cash flow for the period, net – discontinued operations 6.2 -16 -232 Cash flow for the year, net -3 42 Cash and cash equivalents at the beginning of the year 1,138 1,130 Foreign currency translation adjustment of cash and cash equiva- lents -23 -34 Cash and cash equivalents at the end of the year 1,112 1,138 Breakdown of cash and cash equivalents at the end of the year: Cash 4.3 / 4.4 1,112 1,138 Cash and cash equivalents at the end of the year 1,112 1,138 Consolidated cash flow statement Consolidated financial statements Parent financial statements Demant Annual Report 2024 123 Consolidated statement of changes in equity (DKK million) Other reserves Share capital Foreign currency translation reserve Hedging reserve Retained earnings Demant A/S’ shareholders’ share Non- controlling interests’ share Equity Equity at 1.1.2024 45 -103 22 9,292 9,256 82 9,338 Comprehensive income: Profit for the year - - - 2,387 2,387 1 2,388 Other comprehensive income: Foreign currency translation adjustment, subsidiaries - 265 - - 265 - 265 Value adjustments of hedging instruments: Value adjustment for the year - - -91 - -91 - -91 Value adjustment transferred to revenue - - -5 - -5 - -5 Actuarial gains/losses on defined benefit plans - - - -17 -17 - -17 Tax on other comprehensive income - 1 21 4 26 - 26 Other comprehensive income - 266 -75 -13 178 - 178 Comprehensive income for the year - 266 -75 2,374 2,565 1 2,566 Share buy-backs - - - -2,301 -2,301 - -2,301 Share -based compensation - - - 44 44 - 44 Capital reduction through cancellation of treasury shares -1 - - 1 - - - Transactions with non -controlling interests - - - - - -3 -3 Equity at 31.12.2024 44 163 -53 9,410 9,564 80 9,644 Consolidated financial statements Parent financial statements Demant Annual Report 2024 124 Consolidated statement of changes in equity (continued) (DKK million) Other reserves Share capital Foreign currency translation reserve Hedging reserve Retained earnings Demant A/S’ shareholders’ share Non- controlling interests’ share Equity Equity at 1.1.2023 46 71 73 8,371 8,561 1 8,562 Comprehensive income: Profit for the year - - - 1,795 1,795 3 1,798 Other comprehensive income: Foreign currency translation adjustment, subsidiaries - -177 - - -177 - -177 Value adjustments of hedging instruments: Value adjustment for the year - - 41 - 41 - 41 Value adjustment transferred to revenue - - -106 - -106 - -106 Actuarial gains/losses on defined benefit plans - - - -19 -19 - -19 Tax on other comprehensive income - 3 14 4 21 - 21 Other comprehensive income - -174 -51 -15 -240 - -240 Comprehensive income for the year - -174 -51 1,780 1,555 3 1,558 Share buy-backs - - - -846 -846 - -846 Share -based compensation - - - 63 63 - 63 Capital reduction through cancellation of treasury shares -1 - - 1 - - - Transactions with non -controlling interests - - - - - -3 -3 Non -controlling interests on acquisition - - - -76 -76 80 4 Other changes in equity - - - -1 -1 1 - Equity at 31.12.2023 45 -103 22 9,292 9,256 82 9,338 Consolidated financial statements Parent financial statements Demant Annual Report 2024 125 Section 1 – page 126 Operating activities and cash flow 1.1 Revenue and segment disclosures 1.2 Employees 1.3 Amortisation, depreciation and impairment losses 1.4 Earnings per share 1.5 Inventories 1.6 Trade receivables 1.7 Customer loans 1.8 Specification of non-cash items 1.9 Specification of special items Section 2 – page 137 Exchange rates 2.1 Exchange rate risk policy 2.2 Sensitivity analysis in respect of exchange rates 2.3 Hedging and forward exchange contracts Section 3 – page 140 Asset base 3.1 Intangible assets 3.2 Property, plant and equipment 3.3 Leases 3.4 Other non-current assets 3.5 Non-current assets by geographies 3.6 Impairment testing Section 4 – page 149 Capital structure and financial management 4.1 Financial risk management and capital structure 4.2 Net financial items 4.3 Categories of financial instruments 4.4 Net interest-bearing debt, liquidity and interest rate risks 4.5 Fair value hierarchy Section 5 – page 157 Tax 5.1 Tax on profit 5.2 Deferred tax Section 6 – page 161 Acquisitions, discontinued operations and assets held for sale 6.1 Acquisition of enterprises and activities 6.2 Discontinued operations and assets held for sale 6.3 Divestment of enterprises and activities Section 7 – page 168 Provisions, other liabilities etc. 7.1 Provisions 7.2 Employee benefit obligations 7.3 Other liabilities 7.4 Deferred income 7.5 Contingent liabilities Section 8 – page 173 Other disclosure requirements 8.1 Related parties 8.2 Fees to auditors 8.3 Government grants 8.4 Events after the balance sheet date Section 9 – page 176 Basis for preparation 9.1 Group accounting policies 9.2 Accounting estimates and judgements Section 10 – page 185 Notes to Parent financial statements 10.1 Employees 10.2 Fees to statutory auditors 10.3 Net financial items 10.4 Tax on profit for the year and deferred tax 10.5 Proposed distribution of net profit 10.6 Intangible assets 10.7 Property, plant and equipment 10.8 Financial assets 10.9 Treasury shares 10.10 Interest-bearing debt 10.11 Contingent liabilities 10.12 Related parties 10.13 Events after the balance sheet date 10.14 Parent accounting policies Section 11 – page 194 Subsidiaries and associates Notes to consolidated financial statements Consolidated financial statements Parent financial statements Demant Annual Report 2024 126 Operating activities and cash flow REVENUE 22,419 DKK MILLION FREE CASH FLOW 3,486 DKK MILLION Consolidated financial statements Parent financial statements Demant Annual Report 2024 127 Consolidated revenue mainly derives from the sale of goods and is broken down by the custom- ers’ geographic region. The ten largest single customers together account for around 13% (15% in 2023) of total consoli- dated revenue. For disclosures of non-current assets by geogra- phies, please refer to Note 3.5. Value adjustments transferred from equity relating to derivatives made for hedging foreign exchange risks on revenue amount to DKK 5 million (DKK 106 million in 2023). 1.1 Revenue and segment disclosures (DKK million)2024 2023 Liabilities related to contracts with customers: Customer prepayments¹⁾ 52 62 Future performance obligations¹⁾ 1,347 1,121 Expected volume discounts and other customer-related items²⁾ 368 389 Expected product returns³⁾ 196 197 Contract liabilities with customers 1,963 1,769 ¹ Included in deferred income. ² Included in other cost payables under other liabilities. ³ Included in product-related liabilities under other liabilities. (DKK million)2024 2023 Changes in contract liabilities with customers:Contract liabilities at 1.1. 1,769 1,525 Foreign currency translation adjustment 19 -15 Revenue recognised and included in the contract liability balance at 1.1. -536 -576 Increases due to cash received, excluding amounts recognised as revenue during the year 702 614 Changes from expected volume discounts and other customer-related items -29 51 Changes from product returns -7 28 Additions from acquisitions 45 142 Contract liabilities at 31.12. 1,963 1,769 (DKK million)2024 2023 Revenue by business area: Hearing Aids 10,022 10,036 Hearing Care 9,932 9,083 Diagnostics 2,465 2,482 Revenue 22,419 21,601 (DKK million)2024 2023 Revenue by geographic region:Europe 9,301 8,678 North America 9,231 9,031 Asia 2,145 2,199 Pacific region 1,097 1,064 Rest of world 645 629 Revenue 22,419 21,601 Revenue by country: Denmark 290 244 USA 7,668 7,468 Other countries 14,461 13,889 Revenue 22,419 21,601 Consolidated financial statements Parent financial statements Demant Annual Report 2024 128 Nature of goods and services Control is normally transferred to the customer when the goods are shipped to the customer, though delivery terms can vary and control may be transferred at a later point in time. When selling hearing aids and diagnostic equip- ment to customers, control is transferred and rev- enue recognised, when the hearing aid and diag- nostic equipment is delivered to the customer at a given point in time, and when a hearing aid is ini- tially fitted to the user’s specific hearing loss. In some countries, the users are granted a trial pe- riod. In such cases, the transfer of control occurs when the trial period expires. In some countries, customers are given the right to return the hearing aid within a certain period. In such cases, the number of expected returns is es- timated based on an analysis of historical return rates adjusted for any known factors impacting ex- pectations of future return rates. Revenue and cost of goods sold are adjusted accordingly, and contract liabilities (refund liabilities) and rights to the returned goods (included in prepaid expenses) are recognised for the expected returns. The Group’s activities also involve delivery of vari- ous services, such as extended warranties, war- ranty-related coverages (loss and damage) and after-sales services (e.g. fine-tuning of the hearing aid, additional hearing tests and cleaning). Reve- nue from these services is recognised on a straight-line basis over the warranty or service pe- riod, as the user makes use of the service contin- uously. Some users purchase a battery package or are given batteries free of charge as part of the purchase of the hearing aid, entitling them to free batteries for a certain period. Revenue is recog- nised when the user receives the batteries or is given batteries free of charge as part of the pur- chase of the hearing aid. When available, an observable price to determine the stand-alone selling price for the separate performance obliga- tions related to these services is used, and in countries where observable prices are not availa- ble, a cost-plus-margin method is used. The standard warranty period for hearing aids and diagnostic equipment varies between countries but is typically 12-24 months and for certain prod- ucts or countries up to 48 months. The extended warranty covers periods beyond the standard war- ranty period or standard warranty terms. Payment terms vary significantly between countries and de- pend on whether the customer is a private or public customer. The majority of hearing aids sold to users are in- voiced and paid for after the initial fitting, but some customers choose to have the hearing aid fi- nanced by us. The transaction price of such ar- rangements is adjusted for any significant financ- ing benefit, and the financing component is recog- nised as financial income. Accounting policies Segment information In 2024, Demant announced the decision to un- dertake a review of strategic options for its Com- munications business and came to the conclusion to divest the business. As Communications is pre- sented as discontinued operation and held for sale, it is no longer considered an operating seg- ment in the continuing business. Management has identified one operating seg- ment, Hearing Healthcare, as this reflects Man- agement’s approach to the organisation and to management activities, including the assessment of results and the use of resources. Hearing Healthcare comprises the Hearing Aids, Hearing Care and Diagnostics business areas, which pro- vide hearing healthcare solutions, involving manu- facturing, servicing and sale of hearing aids, diag- nostic products and services. Even though reve- nue from this operating segment can be split by business area and geographic market, the main part of the activities within production, research and development and administration is shared by the Group as a whole. Revenue recognition Revenue is recognised when obligations under the terms of the contract with the customer are satisfied, which usually occurs with the transfer of control of the products and services. Revenue is measured as the consideration expected to be re- ceived in exchange for transferring goods and providing services net of the estimated discounts or other customer-related reductions. Accounting estimates and judgements Discounts, returns etc. (estimate) Discounts, loyalty programmes and other revenue reductions are estimated and accrued when the related revenue is recognised. To make such esti- mates is a matter of judgement, as all conditions are not known at the time of sale, e.g. the number of units sold to a given customer or the expected utilisation of loyalty programmes. Sales discounts, rebates and loyalty programmes are adjusted, as better information on the likelihood that they will be realised and the value at which they are ex- pected to be realised is obtained. Sales discounts and rebates are recognised under other cost pay- ables as part of other liabilities, and loyalty pro- grammes are recognised under deferred income. Depending on local legislation and the conditions to which a sale is subject, some customers have the option to return purchased goods and obtain a refund. Based on historical return rates, an esti- mate is made of the number of expected returns, and a provision is recognised. This provision is updated, as returns are recognised, or when more accurate data on return rates is collected. After-sales services (estimate) After-sales services are provided to users of the hearing aids and are based on estimates, as not all users make use of these services. The esti- mate is a matter of judgement and is based on the number of visits, the duration of an average user’s visits and the expected number of users that make use of the after-sales services. 1.1 Revenue and segment disclosures (continued) Consolidated financial statements Parent financial statements Demant Annual Report 2024 129 Remuneration of the Executive Board The total remuneration of the Executive Board comprises: • Wages and salaries, which include a base sal- ary and certain other benefits • A short-term incentive programme (cash bo- nus) – STIP • A long-term incentive programme (share- based remuneration) – LTIP The remuneration of the Executive Board and the Board of Directors is described in detail in the Re- muneration Report 2024. Remuneration of the Board of Directors The remuneration of the Board of Directors com- prises a fixed fee and is not incentive-based. In 2024, the basic remuneration was DKK 450,000 (DKK 450,000 in 2023). The Chair re- ceives three times the base fee and the Vice Chair twice the base fee. The members of the audit committee receive a base fee of DKK 100,000 (DKK 100,000 in 2023), and the chair of the audit committee receives twice the base fee. The individual Board members' fees and their shareholdings can be found in the Remuneration Report 2024. Accounting policies Employee costs comprise wages, salaries, social security contributions, annual and sick leave, bo- nuses and non-monetary benefits and are recog- nised in the year in which the associated services are rendered by the employees. Where the Group provides long-term employee benefits, the costs are accrued to match the rendering of service by the employee in question. 1.2 Employees Remuneration to Executive Board and Board of Directors (included in employee costs) (DKK million)2024 2023 Executive Board:Wages and salaries 25.1 25.6 Cash bonus 0.6 4.4 Share-based remuneration 10.5 11.6 Remuneration in the notice period¹⁾ - 22.1 Total 36.2 63.7 Board of Directors: Fee 5.1 5.4 Total 5.1 5.4 ¹ As announced on 27 April 2023, Arne Boye Nielsen, former President of Diagnostics and Communications and member of the Exec utive Board, left his position in Demant. (DKK million)Note 2024 2023 Employee costs:Wages and salaries 8,367 7,732 Share-based remuneration 16 38 Defined contribution plans 108 96 Defined benefit plans 7.2 - 12 Social security costs etc. 1,064 911 Employee costs 9,555 8,789 Employee costs by function:Production costs 1,236 1,161 R&D costs 920 917 Distribution costs 6,298 5,745 Administrative expenses 1,101 966 Employee costs 9,555 8,789 Average number of full -time employees 21,381 20,690 Consolidated financial statements Parent financial statements Demant Annual Report 2024 130 Share-based remuneration The Group has two types of share-based remu- neration programmes, which consist of the “shadow share” programme and the RSU (re- stricted stock units) programme. The “shadow share” programme introduced in 2016 is cash-set- tled, whereas the RSU programme introduced in 2019 is equity-settled. Remuneration under both programmes is granted on a yearly basis and is contingent on the employee still being employed and not under termination when three years have passed from the time of the grant. The fair value of the shares at the time of the grant under both programmes is based on the average share price of the first five trading days after publication of the annual report. “Shadow share” programme In 2024, the Group granted 9,999 “shadow shares” (zero in 2023). The fair value of “shadow shares” granted was DKK 3 million (DKK 0 million in 2023) at the time of the grant. The liability is recognised on a straight-line basis, as the service is rendered, and the liability is remeasured at each reporting date and at the settlement date based on the fair value of the “shadow shares”. Fair value adjustments are recognised as financial income or financial expenses. If relevant, the lia- bility is adjusted to reflect the expected risk of non-vesting as a result of resignations. Any changes to the liability are recognised in the income statement. In 2024, the Group bought back shares to cover the financial risk of share price fluctuations related to the programmes. At 31 De- cember 2024, the remaining average contractual life of cash-settled remuneration programmes was 15 months (three months in 2023). RSU programme In 2024, RSU shares were granted to 153 employ- ees (151 employees in 2023). The Group recognised costs of DKK 40 million (DKK 34 mil- lion in 2023) in the income statement related to the RSU programme. There has been no subse- quent remeasurement of the fair value. The costs are recognised on a straight-line basis, as the ser- vice is rendered. At 31 December 2024, the re- maining average contractual life of equity-settled share programmes was 21 months (21 months in 2023). Restricted share units (RSU programme) Total number of Total shares fair value No. (DKK million) Outstanding 1.1.2023 249,298 Granted 235,254 52 Exercised -19,001 Forfeited -1,753 Outstanding 31.12.2023 463,798 Granted 147,697 52 Exercised -55,375 Forfeited -3,558 Outstanding 31.12.2024 552,562 Accounting estimates and judgements Vesting conditions and fair value (estimate) For the share-based programmes, Management estimates the likelihood of vesting conditions be- ing satisfied. Vesting is entirely dependent on the persons enrolled in the share-based programmes remaining employed until expiry of the vesting pe- riod. Based on such likelihood, the estimate made is used to calculate the fair value of the share-based programmes. Furthermore, the shares must be valued. For this purpose, Management uses the share price quoted on Nasdaq Copenhagen. Share -based remuneration ("shadow share" programme) (DKK million)2024 2023 Other senior Other senior Executive members of Executive members of Board Management Board Management Liabilities at 1.1. 9.3 2.3 11.0 1.8 Transfer due to termination of Executive Board member¹⁾ - - -2.1 2.1 Expensed during the year in wages and salaries 0.8 0.7 4.5 0.2 Fair value adjustments 1.9 0.4 3.9 0.4 Settled during the year -12.0 -2.9 -8.0 -2.2 Liabilities at 31.12. - 0.5 9.3 2.3 Granted during the year - 3.0 - - Unrecognised commitment at 31.12.²⁾ - 2.1 0.8 0.3 ¹ As announced on 27 April 2023, Arne Boye Nielsen left his position in Demant. The liability at the end of the year has ther efore been transferred to the Other senior members of Management. ² Unrecognised commitment is the part of granted ”shadow shares” not expensed at 31 December. 1.2 Employees (continued) Consolidated financial statements Parent financial statements Demant Annual Report 2024 131 For accounting policies on amortisation and de- preciation, please refer to Note 3.1, Note 3.2 and Note 3.3. There were no impairment losses in 2024 and 2023, except for the impairment losses related to discontinued operations. Please refer to Note 6.2. 1.3 Amortisation, depreciation and impairment losses 1.4 Earnings per share (DKK million) Note 2024 2023 Amortisation of intangible assets 3.1 194 165 Depreciation of property, plant and equipment 3.2 490 432 Depreciation of lease assets 3.3 751 696 Amortisation, depreciation and impairment losses 1,435 1,293 Amortisation, depreciation and impairment losses by function:Production costs 133 116 R&D costs 47 50 Distribution costs 1,028 912 Administrative expenses 227 215 Amortisation, depreciation and impairment losses 1,435 1,293 2024 2023 Demant A/S' shareholders' share of profit for the year, DKK million – continuing operations 2,891 2,820 Demant A/S' shareholders' share of profit for the year, DKK million – discontinued operations -504 -1,025 Demant A/S' shareholders' share of profit for the year, DKK million 2,387 1,795 Average number of shares, million 221.86 225.77 Average number of treasury shares, million -4.64 -2.64 Average number of shares outstanding, million 217.22 223.13 Earnings per share (EPS), DKK – continuing operations 13.31 12.64 Diluted earnings per share (DEPS), DKK – continuing operations 13.31 12.64 Earnings per share (EPS), DKK – discontinued operations -2.32 -4.60 Diluted earnings per share (DEPS), DKK – discontinued operations -2.32 -4.60 Earnings per share (EPS), DKK 10.99 8.04 Diluted earnings per share (DEPS), DKK 10.99 8.04 Consolidated financial statements Parent financial statements Demant Annual Report 2024 132 Write-downs for the year are shown net, as break- down into reversed write-downs and new write- downs is not possible. Inventories are generally expected to be sold within one year. Accounting policies Raw materials, components and goods for resale are measured at cost according to the FIFO prin- ciple (according to which the most recently pur- chased items are considered to be in stock) or at their net realisable value, whichever is lower. Group-manufactured finished goods and work in progress are measured at the value of direct costs, direct payroll costs, consumables and a proportionate share of indirect production costs, which are allocated based on the normal capacity of the production facility. Indirect production costs include the proportionate share of capacity costs directly relating to Group-manufactured finished goods and work in progress. The net realisable value of inventories is deter- mined as the estimated selling price less costs of completion and costs to sell. Accounting estimates and judgements Indirect production costs (significant judgement) Indirect production cost allocations to inventories are based on relevant judgements of capacity utili- sation at the production facility, of production time and of other product-related factors. The judge- ments are reviewed regularly to ensure that inven- tories are measured at their actual production cost. Changes in judgements may affect gross profit margins as well as the valuation of work in progress, finished goods and goods for resale. Obsolescence provision (estimate) The obsolescence provision for inventories is based on the expected sales forecasts for the in- dividual types of hearing devices and diagnostic equipment. Headsets and other gaming/enterprise devices are only included in the comparative fig- ures. Sales forecasts are based on Management’s expectations of market conditions and trends, and the obsolescence provision is subject to changes in these assumptions. 1.5 Inventories (DKK million)2024 2023 Raw materials and purchased components 1,289 1,244 Work in progress 35 71 Finished goods and goods for resale 1,176 1,530 Inventories 2,500 2,845 Write-downs, provisions for obsolescence etc. included in the above 187 149 Included in the income statement under production costs: Write-downs of inventories for the year, net 82 41 Cost of goods sold for the year 3,880 3,976 Consolidated financial statements Parent financial statements Demant Annual Report 2024 133 The opening balance of trade receivables in 2023 amounted to DKK 3,626 million. Of the total amount of trade receivables, DKK 284 million (DKK 267 million in 2023) is expected to be collected after 12 months. For information on secu- rity and collateral, please refer to Credit risks in Note 4.1. Accounting policies Trade receivables assets are measured at amor- tised costs less expected lifetime credit losses. For trade receivables, the Group has a simplified approach to determining the expected credit loss. The allowance for credit loss is measured through a provision matrix. To measure the expected credit loss, trade receivables are grouped based on shared credit risk and the number of days that have passed after the due date. Allowances are also made for trade receivables not due. For trade receivables that are considered credit-impaired, the expected credit loss is determined on an indi- vidual basis. Accounting estimates and judgements Impairment of receivables (estimate) The Group has historically incurred insignificant losses on trade receivables. Allowance for impairment is calculated for trade receivables. The allowance is determined as ex- pected credit losses based on assessments of the debtors’ ability to pay. These assessments are made for uniform groups of debtors based on ma- turity analyses. When indicated by special circum- stances, impairments are made for individual trade receivables. 1.6 Trade receivables (DKK million) 2024 2023 Allowance for impairment:Allowance for impairment at 1.1. -385 -324 Foreign currency translation adjustments -3 3 Realised during the year 97 67 Additions during the year -123 -147 Reversals during the year 68 16 Transfer to assets held for sale 8 - Allowance for impairment at 31.12. -338 -385 Credit riskMore Total 0-3 3-6 6-12 than 12 carry-Balance months months months months ing (DKK million)not due overdue overdue overdue overdue amount 2024Gross carrying amount 2,618 625 199 156 303 3,901 Specific loss allowance -27 -45 -30 -29 -171 -302 General loss allowance -12 -7 -3 -5 -9 -36 Total 2,579 573 166 122 123 3,563 Expected loss rate 1.5% 8.3% 16.6% 21.8% 59.4% 8.7% 2023 Gross carrying amount 2,583 759 221 140 332 4,035 Specific loss allowance -19 -62 -41 -28 -180 -330 General loss allowance -12 -9 -4 -5 -25 -55 Total 2,552 688 176 107 127 3,650 Expected loss rate 1.2% 9.4% 20.4% 23.6% 61.7% 9.5% Consolidated financial statements Parent financial statements Demant Annual Report 2024 134 Accounting policies Customer loans are initially recognised at fair value less transaction costs and are subsequently measured at amortised costs less loss allowance or impairment losses. Any difference between the nominal value and the fair value of the loans at ini- tial recognition is treated as a prepaid discount on future sales to the customer and is recognised in the income statement as a reduction of revenue when the customer purchases goods from the Group. The fair value of customer loans at initial recogni- tion is measured as the present value of future re- payments on the loan discounted at a market in- terest rate. The effective interest on customer loans is recognised as financial income in the in- come statement over the term of the loans. A loss allowance is recognised on initial recogni- tion and is subsequently based on a 12-month ex- pected credit loss model. If a significant increase in the credit risk has arisen since the initial recog- nition of the loan, a loss allowance based on the expected lifetime credit loss is provided. Accounting estimates and judgements Accounting treatment (judgement) and impairment (estimate) of loans The Group provides sales-related financing in the form of loans to some of its customers and busi- ness partners. These customer loan arrange- ments are complex, cover several aspects of the customer relationship and may vary from agree- ment to agreement. Management assesses the recognition and classi- fication of income and expenses for each of these agreements, including whether the agreement represents a discount on future sales (judgement). Management also assesses whether there is an indication of impairment based on current eco- nomic market conditions and changes in the cus- tomer’s payment behaviour (estimate). 1.7 Customer loans (DKK million)2024 2023 Non-current customer loans 519 477 Current customer loans 155 191 Total customer loans 674 668 Allowance for impairment:Allowance for impairment at 1.1. -62 -33 Foreign currency translation adjustment -3 - Realised during the year 14 - Additions during the year -49 -32 Reversals during the year 16 3 Allowance for impairment at 31.12. -84 -62 Group internal credit rating (DKK million)Expected Gross credit carrying Carrying 2024loss rate amount amount Performing12-month expected credit loss 0.3% 588 586 UnderperformingExpected lifetime credit loss 48.2% 170 88 Total customer loans 758 674 2023Performing12-month expected credit loss 0.4% 551 549 UnderperformingExpected lifetime credit loss 33.5% 179 119 Total customer loans 730 668 Consolidated financial statements Parent financial statements Demant Annual Report 2024 135 (DKK million)2024 2023 Amortisation and depreciation 1,435 1,293 Share of profit after tax, associates -99 -68 Gain on sale of intangible assets and property, plant and equipment -1 10 Provisions 23 95 Exchange rate adjustments -33 -50 Employee share salary arrangement 44 64 Step-up gains¹⁾ -13 -27 Non-cash on special items -124 - Other non-cash items 1 -37 Non-cash items etc. 1,233 1,280 ¹ Excluding the step-up gain presented in special items in the income statement. 1.8 Specification of non-cash items Consolidated financial statements Parent financial statements Demant Annual Report 2024 136 In 2024, the Group recognised as special items two significant, non-operational and non-cash items of DKK 124 million net. The positive impact of DKK 324 million relates to a step-up gain from the acquisition of Fuel Medical Group. This was partly offset by the adjustment of a judgement re- lated to the accounting treatment of deferred pay- ments of DKK 200 million in respect of a prior- year acquisition. Accounting policies Special items are used in the presentation of con- solidated income statement for the year to distin- guish consolidated operating profit from significant non-recurring income and expenses from extraor- dinary items of a non-operational nature. Special items are shown separately from the Group’s op- erating activities to facilitate a better understand- ing of the Group’s performance and are presented on a net basis. Accounting estimates and judgements Presentation of items as special (judgement) Management exercises judgement to ensure that only significant non-recurring income and ex- penses from items of a non-operational nature are included. Adjustment to deferred payments (estimate) Adjustments of judgements related to deferred payments include accounting estimates. 1.9 Specification of special items (DKK million)2024 2023 Step-up gain on acquisition 324 - Adjustment of management judgement related to deferred payments -200 - Special items, net 124 - Impact of special items on consolidated income statement (DKK million) 2024 2023 Special Special Reported items Adjusted¹⁾Reported items Adjusted¹⁾Revenue 22,419 - 22,419 21,601 - 21,601 Production costs -5,329 - -5,329 -5,281 - -5,281 Gross profit 17,090 - 17,090 16,320 - 16,320 R&D costs -1,394 - -1,394 -1,226 - -1,226 Distribution costs -10,246 124 -10,122 -9,554 - -9,554 Administrative expenses -1,145 - -1,145 -1,102 - -1,102 Share of profit after tax, associates 99 - 99 68 - 68 Operating profit (EBIT) before special items 4,404 124 4,528 4,506 - 4,506 Special items 124 -124 - - - - Operating profit (EBIT) 4,528 - 4,528 4,506 - 4,506 Financial income 113 - 113 95 - 95 Financial expenses -925 - -925 -856 - -856 Profit before tax 3,716 - 3,716 3,745 - 3,745 ¹ ‘Reported’ is the figures reported in the income statement, while ‘Adjusted’ illustrates what the figures would have been, if the special items had not been presented as such in the income statement. Consolidated financial statements Parent financial statements Demant Annual Report 2024 137 Exchange rates Consolidated financial statements Parent financial statements Demant Annual Report 2024 138 The Group has cash flow in foreign currencies due to its international operations, which exposes the Group to fluctuations in exchange rates. Hedging against exchange rate exposures en- sures greater predictability in profit. The Group manufactures most of its products at the produc- tion facilities in Poland and also distributes them from these facilities. The general principle is to consolidate exchange rate risks at Group level, with the local entities be- ing invoiced in their functional currencies. The currencies that mainly contribute to the Group’s exchange rate risks are US dollars, Polish zloty, British pound, Canadian dollars and Australian dollars. The aim of the Group’s hedging policy is to reduce the Group’s exposure to ex- change rate fluctuations, mainly by entering into forward exchange contracts to mitigate the Group’s risks related to the impact that exchange rate fluctuations have on consolidated earnings for up to 18 months rolling forward. Exchange rate risks are managed by Group Treasury. Hedging is done in accordance with the Group’s policy to maintain adequate hedging of the Group’s material exposure to exchange rate fluctuations. It is the Group’s policy to exclusively hedge financial risks arising from our commercial activities and not to undertake any financial trans- actions of a speculative nature. Cash flow hedging is undertaken to the extent possible to mitigate any negative effects of adverse developments in exchange rates on the consolidated operating re- sults. Furthermore, the Group seeks to balance the on-balance net exposure in its main trading currencies. Due to the fixed exchange rate policy towards the euro in Denmark, the risk associated with expo- sure to fluctuations in this currency is considered to be limited and is not hedged. The Group does not hedge translation risks asso- ciated with the consolidation of Group accounts. The tables show the impact on the year’s operat- ing profit (EBIT) and consolidated equity, given a change of 5% in the exchange rates with the high- est exposures. The exchange rate impact on EBIT is calculated based on the Group’s EBIT for each currency and does not include the possible exchange rate im- pact on balance sheet values in those currencies. 2.2 Sensitivity analysis in respect of exchange rates 2.1 Exchange rate risk policy Effect on EBIT, 5% positive change in Effect on equity, 5% positive change in exchange rates¹⁾exchange rates(DKK million)2024 2023 (DKK million)2024 2023 USD +61 +81 USD +49 +66 GBP +34 +35 GBP +35 +34 CAD +20 +29 CAD +18 +26 AUD +12 +10 AUD +10 +9 PLN -36 -33 PLN -38 -35 ¹ Estimated on a non-hedged basis, i.e. the total annual exchange rate effect, excluding forward exchange contracts. Consolidated financial statements Parent financial statements Demant Annual Report 2024 139 Cash flow hedging Open forward exchange contracts at the balance sheet date, which are entered to hedge future cash flows, are specified as shown in the table, with contracts for the sale of currency being shown at negative contract values. The expiry dates reflect the periods during which the hedged cash flows are expected to be realised. Realised forward exchange contracts, which are entered to hedge future cash flows, are recog- nised in the income statement together with reve- nue in foreign currencies that such contracts are designed to hedge. In 2024, the Group realised a gain of DKK 5 million (DKK 106 million in 2023) on forward exchange contracts, which increased the reported revenue for the year. The Group’s for- ward exchange contracts were effective in 2024 and 2023. Accounting policies On initial recognition, derivatives are measured at fair value at the settlement date. After initial recog- nition, derivatives are measured at fair value at the balance sheet date. Any positive or negative fair values of derivatives are recognised as sepa- rate items on the balance sheet as unrealised gains/losses on financial contracts. Forward ex- change contracts are measured based on current market data and by means of commonly recog- nised valuation methods. Please refer to Note 4.5. Any changes in fair values of derivatives classified as hedging instruments and satisfying the criteria for hedging the fair value of a recognised asset or a recognised liability are recognised in the income statement together with any changes in the fair value of the hedged asset or hedged liability. Any changes in fair values of derivatives classified as hedging instruments and satisfying the criteria for effective hedging of future transactions are recog- nised in other comprehensive income. The inef- fective portion is recognised directly in the income statement. On realisation of the hedged transac- tions, the accumulated changes are recognised together with the related transactions. Derivatives not fulfilling the conditions for treat- ment as hedging instruments are considered trad- ing investments and measured at fair value, with fair value adjustments being recognised on an on- going basis in the income statement. 2.3 Hedging and forward exchange contracts Forward exchange contractsAverage Positive fair Negative Hedging hedging Contractual value at fair value at (DKK million)Expiry period¹⁾rate value Fair value year-end year-end 2024USD 2025 11 months 675 -1,356 -64 - 64 AUD 2025 10 months 452 -212 5 5 - GBP 2025 11 months 865 -553 -15 - 15 CAD 2025 10 months 498 -463 3 3 - JPY 2025 10 months 4.64 -79 1 1 - PLN 2025 10 months 169 772 16 16 - -1,891 -54 25 79 2023USD 2024 10 months 676 -1,216 15 18 3 AUD 2024 11 months 447 -239 -5 - 5 GBP 2024 10 months 844 -523 -4 1 5 CAD 2024 10 months 504 -413 -2 1 3 JPY 2024 11 months 4.80 -95 1 2 1 PLN 2024 9 months 161 711 37 37 - EUR²⁾ 2024 12 months 742 893 1 1 - -882 43 60 17 ¹ Hedging periods represent the estimated periods for which the exchange rate exposure of a relative share of the net flow in a currency will be covered by forward exchange contracts. ² Forward exchange contracts in euros hedged a fixed committed financial loan. Consolidated financial statements Parent financial statements Demant Annual Report 2024 140 Asset base INTANGIBLE ASSETS 15,066 DKK MILLION PROPERTY, PLANT AND EQUIPMENT 2,909 DKK MILLION OTHER NON-CURRENT ASSETS 1,292 DKK MILLION Consolidated financial statements Parent financial statements Demant Annual Report 2024 141 3.1 Intangible assets (DKK million)2024 2023 Assets Assets Other under Total Other under Total Patents and intangible develop- intangible Patents and intangible develop- intangible Goodwill licences assets ment¹⁾assets Goodwill licences assets ment¹⁾assets Cost at 1.1. 12,381 71 1,777 332 14,561 11,488 75 1,639 260 13,462 Foreign currency translation adjustments 255 - 16 16 287 -220 - -8 -6 -234 Additions during the year - - 56 152 208 - 1 48 145 194 Additions relating to acquisitions 1,836 - 47 - 1,883 1,112 - 58 1 1,171 Disposals during the year -1 - -4 - -5 - -5 -54 - -59 Adjustment of management judgement related to deferred payments -200 - - - -200 - - - - - Transferred to/from other items - - 244 -233 11 1 - 76 -68 9 Transferred to assets held for sale -417 - -88 - -505 - - 18 - 18 Cost at 31.12. 13,854 71 2,048 267 16,240 12,381 71 1,777 332 14,561 Amortisation at 1.1. - -56 -965 - -1,021 - -56 -824 - -880 Foreign currency translation adjustments - - -11 - -11 - - 5 - 5 Amortisation for the year - -3 -193 - -196 - -5 -176 - -181 Disposals during the year - - 3 - 3 - 5 50 - 55 Transferred to/from other items - - -8 - -8 - - -9 - -9 Transferred to assets held for sale - - 59 - 59 - - -11 - -11 Amortisation at 31.12. - -59 -1,115 - -1,174 - -56 -965 - -1,021 Carrying amount at 31.12. 13,854 12 933 267 15,066 12,381 15 812 332 13,540 ¹ Prepayments are included in assets under development. Consolidated financial statements Parent financial statements Demant Annual Report 2024 142 Accounting policies On initial recognition, goodwill is recognised and measured as the difference between the acquisi- tion cost – including the value of non-controlling interests in the acquired enterprise and the fair value of any existing investment in the acquired enterprise – and the fair values of the acquired as- sets, liabilities and contingent liabilities. Please re- fer to Accounting policies in Note 6.1. On recognition, goodwill is allocated to corporate activities that generate independent payments (cash-generating units). The definition of a cash- generating unit is in line with the Group’s manage- rial structure as well as the internal financial man- agement reporting. Goodwill is not amortised but is tested for impair- ment at least once a year. If the recoverable amount of a cash-generating unit is lower than the carrying amounts of property, plant and equip- ment and intangible assets, including goodwill, at- tributable to the particular cash-generating unit, the particular assets will be written down. Patents and licences acquired from third parties are measured at cost less accumulated amortisa- tion and impairment losses. Patents and licences are amortised on a straight-line basis over their estimated useful lives. Other intangible assets consist of software, other rights than patents and licences and other intangi- ble assets acquired in connection with business combinations, primarily brand value, customer re- lationships and non-compete agreements. Other intangible assets are measured at cost less accumulated amortisation and impairment losses. Other intangible assets are amortised on a straight-line basis over their estimated useful lives, except other rights, which are not amortised, as the residual value of other rights is considered to exceed the cost price and is instead tested an- nually for impairment. Please refer to Note 3.6. Assets under development include internally de- veloped IT systems. Assets under development are measured at cost, which includes direct sala- ries, consultant fees and other direct costs at- tributable to the development of such assets. As- sets under development are not amortised, as they are not available for use. Useful lives of intangible assets: Patents and licences 5-20 years Software 3-10 years Brand value 5-10 years Customer relationships 5-9 years Accounting estimates and judgements Product development (judgement) It is Management’s opinion that the product devel- opment undertaken by the Group today cannot meaningfully be allocated to either the develop- ment of new products or the further development of existing products. Moreover, as the products are subject to approval by various authorities, it is difficult to determine the final completion of new products. Consequently, development costs are expensed as incurred, as the criteria for capitali- sation are not considered to be met. 3.1 Intangible assets (continued) Consolidated financial statements Parent financial statements Demant Annual Report 2024 143 3.2 Property, plant and equipment (DKK million)2024 2023 Other Other plant, plant, fixtures Total fixtures Total and Assets property and Assets property Land opera- Lease-under plant Land opera- Lease- under plant and Plant ting hold con-and and Plant ting hold con-and build-and ma-equip- improve-struc-equip-build-and ma-equip- improve- struc-equip-ings chinery ment ments tion¹⁾ment ings chinery ment ments tion¹⁾ment Cost at 1.1.1,439 726 1,796 1,574 225 5,760 1,339 835 1,737 1,391 220 5,522 Foreign currency translation adjustments 21 4 11 -4 2 34 6 13 - - 12 31 Additions during the year 9 33 202 232 113 589 20 51 188 206 187 652 Additions relating to acquisitions - 1 13 11 - 25 8 9 22 15 - 54 Disposals during the year -1 -36 -100 -13 -11 -161 -60 -221 -167 -40 -3 -491 Transferred to/from other items 4 98 4 14 -127 -7 126 39 16 2 -191 -8 Transferred to assets held for sale - - -56 -2 -4 -62 - - - - - - Cost at 31.12.1,472 826 1,870 1,812 198 6,178 1,439 726 1,796 1,574 225 5,760 Depreciation and impairment losses at 1.1. -304 -466 -1,288 -889 - -2,947 -333 -598 -1,281 -757 - -2,969 Foreign currency translation adjustments -8 -3 -6 7 - -10 - -6 3 3 - - Depreciation for the year -30 -100 -178 -180 - -488 -29 -87 -172 -158 - -446 Disposals during the year 1 35 84 11 - 131 58 219 160 23 - 460 Transferred to/from other items - -1 1 - - - - 6 2 - - 8 Transferred to assets held for sale - - 43 2 45 - - - - - Depreciation and impairment losses at 31.12. -341 -535 -1,344 -1,049 - -3,269 -304 -466 -1,288 -889 - -2,947 Carrying amount at 31.12. 1,131 291 526 763 198 2,909 1,135 260 508 685 225 2,813 ¹ Prepayments are included in assets under construction. Consolidated financial statements Parent financial statements Demant Annual Report 2024 144 Accounting policies Property, plant and equipment are recognised at cost less accumulated depreciation and impair- ment losses. Cost is defined as the acquisition price and costs directly relating to the acquisition until the point in time when the particular asset is ready for use. For assets produced by the Group, cost includes all costs directly attributable to the production of such assets, including materials, components, sub-supplies and payroll. If the ac- quisition or the use of an asset requires the Group to defray costs for the demolition or restoration of such asset, the calculated costs hereof are recog- nised as a provision and as part of the cost of the particular asset, respectively. Assets consisting of various elements will be de- preciated separately, if their useful lives are not the same. Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Land is not depreciated. Buildings 30-50 years Technical installations 10 years Plant and machinery 3-5 years Other plant, fixtures and operating equipment 3-5 years IT hardware 3-5 years Leasehold improvements Up to 10 years Accounting estimates and judgements Useful life and residual value (estimate) The depreciation basis is cost less the estimated residual value of an asset after the end of its use- ful life. The residual value is the estimated amount, which could after deduction of costs to sell be obtained through the sale of the asset to- day, such asset already having the age and being in the state of repair expected after the end of its useful life. The residual value is determined at the time of acquisition and is reviewed annually. If the residual value exceeds the carrying amount, de- preciation will be discontinued. Depreciation methods, useful lives and residual values are reviewed annually. Property, plant and equipment are written down to their recoverable amounts, if these are lower than their carrying amounts. 3.2 Property, plant and equipment (continued) Consolidated financial statements Parent financial statements Demant Annual Report 2024 145 Approximately 95% of the Group’s leases consist of property agreements. The lease terms can be up to twenty years but are normally up to ten years and may contain extension and termination options. The carrying amounts of vehicles and other equipment is DKK 132 million (DKK 126 mil- lion in 2023). Management exercises significant judgement in determining whether it is reasonably certain that these extension and termination op- tions will be exercised. Accounting policies Lease assets Lease assets and liabilities are recognised in the balance sheet at the commencement date of the contract, if it is or contains a lease. Lease assets are recognised at cost less accumulated deprecia- tion and impairment. Cost is defined as the lease liability adjusted for any lease payments made at or before the commencement date. Lease assets are depreciated on a straight-line basis over the lease term. Lease liabilities Lease liabilities are measured at the present value of future payments, using the implicit interest rate in the lease agreement. Lease payments are dis- counted, using the Group’s incremental borrowing rate adjusted for the functional currencies and length of the lease term, if the implicit interest rate in the lease agreement cannot be determined. Lease payments contain fixed payments less any lease incentives receivable, variable lease pay- ments that depend on an index or a rate as well as payments of penalties for terminating the lease, if the terms of the lease warrant that the Group exercises such option. The lease liability is remeasured if or when the fu- ture payment or lease term changes. Any net re- measurement of the lease liability is recognised as an adjustment to the lease asset. If the carry- ing amount of the lease asset is reduced to zero, the adjustment will be recognised in the income statement. Additional information Short-term lease expenses, low-value assets and variable lease payments are classified as operat- ing expenses in the income statement. Please refer to Note 4.4 for a maturity analysis of the lease liabilities. Accounting estimates and judgements Lease term (judgement) The lease term is the period during which the lease contract is enforceable. If the original expiry date of a lease contract has passed, typically in the case of property leases, but the contract con- tinues without a determined expiry date, the lease term is set for an estimated period during which the lease contract is expected to be enforceable. This assessment is based on Management’s judgement and takes into consideration the loca- tion of the lease, capitalised leasehold improve- ments and experience with similar leases for the specific area. Extension and termination options (significant judgement) When determining the lease term for lease agree- ments containing extension and termination op- tions, Management considers circumstances that create a financial incentive to exercise an exten- sion option or not to exercise a termination option. Extension and termination options are only in- cluded in the lease term, if it is reasonably certain that a lease will be extended/terminated. (DKK million)2024 2023 Lease assets at 1.1. 2,596 2,304 Foreign currency translation adjustments -3 -6 Additions during the year 751 913 Additions relating to acquisitions 163 142 Disposals during the year -59 -50 Depreciations during the year -761 -707 Transferred to assets held for sale -22 - Lease assets at 31.12. 2,665 2,596 Lease liabilities at 1.1. 2,686 2,380 Foreign currency translation adjustments 1 -8 Additions during the year 751 918 Additions relating to acquisitions 163 142 Covid-19-related rent concessions - -6 Disposals during the year -57 -42 Payments -827 -767 Interest 77 69 Transferred to liabilities related to assets held for sale -23 - Lease liabilities at 31.12. 2,771 2,686 Current lease liabilities 667 641 Non-current lease liabilities 2,104 2,045 Amounts recognised in the income statement: Variable lease payments 34 33 Short-term lease expenses 45 41 Low-value assets 8 6 3.3 Leases Consolidated financial statements Parent financial statements Demant Annual Report 2024 146 3.4 Other non-current assets (DKK million)2024 2023 Receivables Receivables Investments from Customer Investments from Customer in associates associates loans Other in associates associates loans Other Cost at 1.1. 741 268 526 172 816 369 587 108 Foreign currency translation adjustments 21 10 24 13 -11 -1 -17 -2 Additions during the year - 26 285 47 - 73 136 58 Additions relating to acquisitions 8 - - 4 15 - - 15 Disposals related to step acquisitions -383 - - - -79 -28 - - Disposals, repayments etc. during the year -68 -34 -129 -56 - -145 -69 -7 Transferred to current assets - -68 -113 48 - - -111 - Cost at 31.12.319 202 593 228 741 268 526 172 Value adjustments at 1.1. -13 9 -49 -2 6 2 -21 -24 Foreign currency translation adjustments -4 - -3 -1 2 - 1 - Share of profit after tax¹⁾ 42 - - - 69 - - - Dividends received -43 - - - -85 - - - Disposals related to step acquisitions 56 - - - -3 1 - - Disposals during the year - - 11 - - - - 6 Provisions during the year - - -49 - - - -31 - Recovered during the year - - 16 - - - 2 - Other adjustments 6 -18 - -8 -2 6 - 16 Value adjustments at 31.12. 44 -9 -74 -11 -13 9 -49 -2 Carrying amount at 31.12. 363 193 519 217 728 277 477 170 ¹ Excluding gain from the sale of an associate recognised in the income statement. Consolidated financial statements Parent financial statements Demant Annual Report 2024 147 Transactions with associates Under the provisions of contracts concluded with associates, the Group is not entitled to receive dividends from certain associates. This is re- flected in the profit included in the income state- ment, as no profit is recognised, if the Group is not entitled to receive dividends. Accounting policies Investments in associates are recognised and measured using the equity method, i.e. invest- ments are recognised in the balance sheet at the proportionate share of the equity value deter- mined in accordance with the Group’s accounting policies after the deduction and addition of propor- tionate intra-group gains and losses, respectively, and after the addition of the carrying amount of any goodwill. The proportionate shares of profit af- ter tax in associates are recognised in the income statement after the year’s changes in unrealised intra-group profits less any impairment loss relat- ing to goodwill. The proportionate shares of all transactions and events, which have been recognised in other com- prehensive income in associates, are recognised in consolidated other comprehensive income. On the acquisition of interests in associates, the ac- quisition method is applied. For accounting policies on segment information, please refer to Note 1.1. 3.5 Non-current assets by geographies (DKK million)2024 2023 Non-current assets by geographic region: Europe 10,304 10,296 North America 8,681 7,155 Asia 1,968 2,125 Pacific region 831 853 Rest of world 157 191 Non-current assets 21,941 20,620 Non-current assets by country: Denmark 2,388 2,303 USA 6,966 5,635 France 3,197 3,139 Other countries 9,390 9,543 Non-current assets 21,941 20,620 3.4 Other non-current assets (continued) Associates (DKK million)2024 2023Transactions with associates:Revenue from sales 263 620 Royalties and paid licence fee, net 20 12 Purchased materials and other fees - 11 Dividends received 43 85 Interest income 19 24 Financial information from financial statements (Group share):Revenue 622 768 Profit for the year 99 69 Comprehensive income 99 69 Consolidated financial statements Parent financial statements Demant Annual Report 2024 148 Impairment testing is carried out for the Group’s only cash-generating unit. Based on the impair- ment test performed, a material excess value was identified in the cash-generating unit compared to the carrying amount for which reason no impair- ment of goodwill was made at 31 December 2024, except for the impairment of goodwill related to discontinued operations. Please refer to Note 6.2. The result of the impairment test is supported by the fact that the market capitalisation of the Com- pany on Nasdaq Copenhagen by far exceeds the equity value of the company. At 31 December 2024, goodwill amounted to DKK 13,854 million (DKK 12,381 million in 2023). The impairment test is performed as a test of the value in use, including a five-year budget/projec- tion period from 2025-2029. Future cash flows are based on the budget for 2025, on strategy plans and on projections hereof. Projections extending beyond 2025 are based on general parameters, such as expected market growth, selling prices and profitability assump- tions. The terminal value for the period after 2029 is determined on the assumption of 2% growth (2023: 2%). The market growth rate in the hearing aid industry is predominantly determined by the following fac- tors: • Growing demographics and an increasing share of elderly in the population driving sta- ble volume growth in the hearing aid market. • Increased penetration rates of hearing health- care solutions due to increased awareness, higher affluence and improved availability. • Expansion of diagnostic instruments and ser- vices across the world. The pre-tax discount rate is 8% (2023: 8%). Sen- sitivity calculations show that even a significant in- crease in the discount rates or a significant reduc- tion of the growth assumptions will not change the outcome of the impairment test. Apart from good- will, all intangible assets have limited useful lives. Accounting estimates and judgements Cash-generating units (judgement) In 2024, Demant announced the decision to un- dertake a review of strategic options for its Com- munications business and came to the conclusion to divest the business. As Communications is pre- sented as a discontinued operation and held for sale, it is no longer considered as a cash-generat- ing unit in the continuing business. Impairment testing is carried out annually on prep- aration of the annual report or on indication of im- pairment in which discounted values of future cash flows are compared with carrying amounts. Management has identified one cash-generating unit, as this reflects Management’s approach to the organisation and to management activities, in- cluding the assessment of results and the use of resources. Group enterprises cooperate closely on R&D, purchasing, production, marketing and sale, as the use of resources in the individual mar- kets is coordinated and monitored by Manage- ment in Denmark. Group enterprises are thus highly integrated. Accounting policies The carrying amounts of property, plant and equipment and intangible assets with definite use- ful lives as well as investments in associates are reviewed at the balance sheet date to determine whether there are indications of impairment. If so, the recoverable amount of the particular asset is calculated to determine the need for impairment, if any. The recoverable amounts of goodwill and other intangible assets with indefinite useful lives will be estimated, whether or not there are indica- tions of impairment. The recoverable amount is estimated for the smallest cash-generating unit of which the asset is part of. The recoverable amount is determined as the higher of the fair value of the asset or cash- generating unit less costs to sell and the value in use of such asset or unit. On determination of the value in use, estimated future cash flows will be discounted to their present values, using a dis- count rate that reflects partly current market valu- ations of the time value of money, and partly the special risks attached to the particular asset or cash-generating unit for which no adjustment has been made in the estimated future cash flows. If the recoverable amount of a particular asset or cash-generating unit is lower than its carrying amount, such asset or unit is written down to its recoverable amount. Impairment losses are recognised in the income statement. On any subsequent reversal of impair- ment losses due to changes in the judgements on which the calculation of the recoverable amount is based, the carrying amount of an asset or cash- generating unit is increased to the adjusted esti- mate of the recoverable amount, however not ex- ceeding the carrying amount of the asset or cash- generating unit, had the particular asset or cash- generating unit not been written down. Impairment of goodwill is not reversed. 3.6 Impairment testing Consolidated financial statements Parent financial statements Demant Annual Report 2024 149 Capital structure and financial management NET INTEREST- BEARING DEBT 13,545 DKK MILLION NET FINANCIAL ITEMS -812 DKK MILLION Consolidated financial statements Parent financial statements Demant Annual Report 2024 150 Policies relating to financial risk management Financial risk management focuses on identifying risks related to changes in the financial markets and to customers’ propensity to pay for products and services. The Executive Leadership Team monitors the fi- nancial risks of the Company to ensure that these remain well-balanced. Financial risks are man- aged centrally by Group Treasury, which is re- sponsible for securing attractive funding under the prevailing market conditions and for monitoring and mitigating risks related to liquidity, interest rates and exchange rates. Risks related to coun- terparties are managed in the individual markets. Capital structure, funding and liquidity Demant remains a highly cash-generating Group with a strong balance sheet. The Group continu- ously adapts its capital structure to the prevailing market conditions to secure attractive financing. We secure funding based on a strong commit- ment by our banks to provide longer-term bank fa- cilities. To mitigate potential liquidity and refinanc- ing risks, the Group has secured considerable un- drawn committed credit facilities. To minimise financing risks, we aim for more than 50% of our credit facilities to be committed with long-term maturity. Our financial gearing multiple is currently within our desired target range of 2.0- 2.5. Interest rate risks Due to an increasing debt level as well as margin- ally increasing interest rates during the year, our financial expenses increased in 2024. Further- more, credit spreads and debt margins increased in the financial markets due to higher capital re- quirements imposed on the banks. Currently, around 60% of the Group’s debt is funded through facilities with fixed rates or hedged through financial instruments that limit the interest rate risk. The Group seeks to maintain a balanced mix be- tween fixed and floating rate debt. The Group’s net interest-bearing debt (NIBD) amounted to DKK 13,545 million at 31 December 2024, and the gearing multiple was 2.3. Exchange rate risks The Group is exposed to exchange rate risks, as it trades with counterparties in a number of coun- tries, and as it has cash flows in different curren- cies. It is therefore important to adequately bal- ance foreign exchange rate risks to avoid unex- pected adverse impacts on the Group’s financial performance. The majority of Group companies transact mainly in local currencies and are therefore exposed to limited exchange rate risks. The Group does not hedge translation risks result- ing from the consolidation of Group accounts into Danish kroner. Most Group companies are in- voiced from the Danish production entities. Around two-thirds of the invoices out of Denmark are issued in other currencies than Danish kroner or euros. To reduce our exchange rate exposure, we continuously seek to balance incoming and outgoing cash flows in our main trading currencies as much as possible. To ensure predictability in terms of net profit, we hedge expected future net cash flows, mainly through forward exchange con- tracts with a horizon of up to 18 months. In addition, we seek to balance our on-balance net exposure in our main trading currencies and to hedge our exposure, if relevant. It is the Group’s policy to exclusively hedge financial risks arising from our commercial activities and not to under- take any financial transactions of a speculative nature. Counterpart risks From a commercial point of view, the Group is ex- posed to credit risks if our customers fail to pay for products and services provided. Such risks mainly relate to trade receivables and loans to customers or business partners, and failure to adequately manage credit risks may adversely impact the Group. To minimise the risk of suffering losses on cus- tomers, the Group monitors the credit risks on an ongoing basis. The Group generally has a diversi- fied customer base, and in 2024 the accumulated revenue from our ten largest customers ac- counted for approximately 13% of total consoli- dated revenue. We regularly adjust our financial accounts to reflect the current credit risks. When granting loans to business partners, we re- quire that our counterparties provide security in their business. In general, we estimate that the risk relative to our total credit exposure is well-bal- anced at Group level, and historically, we have only suffered limited credit-related losses. The maximum credit risk relating to receivables matches the carrying amounts of such receiva- bles. Overall, the Group has limited deposits with financial institutions for which reason the credit risk in respect of deposits is considered to be low. The credit risk on cash is managed in accordance with the Group’s policy by selecting core banking partners, all with strong credit ratings. Due to its global presence and operations, the Group holds some cash balances; however, these are distributed across multiple banks and locations, minimizing the associated credit risk. 4.1 Financial risk management and capital structure Consolidated financial statements Parent financial statements Demant Annual Report 2024 151 Accounting policies Net financial items mainly consist of interest in- come and interest expenses, credit card fees and bank fees and also include interest on lease liabili- ties, the unwinding of discounts on financial as- sets and liabilities, fair value adjustments of “shadow shares” under share-based remuneration programmes as well as certain realised and unre- alised foreign exchange gains and losses. Interest income and interest expenses are accrued based on the principal amount and the effective interest rate. The effective interest rate is the discount rate used for discounting expected future payments at- taching to the financial asset or financial liability in order for the present value to match the carrying amount of such asset or liability. The following non-financial item is included in the balance sheet and represents the difference be- tween the table and the balance sheet: Other lia- bilities of DKK 508 million (DKK 543 million in 2023). Accounting policies Debt to credit institutions is recognised at the date of borrowing as the proceeds received less trans- action costs. For subsequent periods, financial lia- bilities are measured at amortised cost in order for the difference between proceeds and the nominal value to be recognised as a financial expense over the term of the loan. On initial recognition, other financial liabilities are measured at fair value and subsequently at amor- tised cost using the effective interest method, and the difference between proceeds and the nominal value is recognised in the income statement as a financial expense over the term of the loan. 4.2 Net financial items (DKK million)2024 2023 Interest on cash and bank deposits 26 35 Interest on receivables, customer loans etc. 75 49 Other financial income 12 11 Financial income from financial assets measured at amortised cost 113 95 Interest on bank debt, mortgages etc. -575 -460 Interest expense on lease liabilities -77 -71 Financial expenses on financial liabilities measured at amortised cost -652 -531 Foreign exchange losses, net -45 -149 Transaction costs -228 -176 Financial expenses -925 -856 Net financial items -812 -761 4.3 Categories of financial instruments (DKK million) 2024 2023 Receivables from associates 393 465 Customer loans 674 668 Other receivables 671 548 Trade receivables 3,563 3,650 Cash 1,112 1,138 Financial assets at amortised cost 6,413 6,469 Unrealised gains on financial contracts 31 60 Other investments 9 19 Financial assets at fair value through profit/loss 40 79 Contingent considerations -298 -380 Unrealised losses on financial contracts -102 -35 Financial liabilities at fair value through profit/loss -400 -415 Debt to credit institutions etc. -12,670 -11,238 Short-term bank facilities etc. -240 -530 Lease liabilities -2,771 -2,686 Trade payables -658 -799 Other liabilities excluding contingent considerations -2,272 -2,235 Financial liabilities measured at amortised cost -18,611 -17,488 Consolidated financial statements Parent financial statements Demant Annual Report 2024 152 4.4 Net interest-bearing debt, liquidity and interest rate risks (DKK million)Contractual cash flows Weighted average effective Less than More than Carrying interest 1 year 1-5 years 5 years Total amount rate 2024Interest-bearing receivables¹⁾ 254 662 169 1,085 1,024 Cash 1,135 - - 1,135 1,112 Interest-bearing assets 1,389 662 169 2,220 2,136 3.9% Debt to credit institutions etc. -609 -11,972 -1,314 -13,895 -12,670 Short-term bank facilities etc. -253 - - -253 -240 Borrowings -862 -11,972 -1,314 -14,148 -12,910 3.6% Lease liabilities -669 -2,023 -661 -3,353 -2,771 Net interest-bearing debt -142 -13,333 -1,806 -15,281 -13,545 2023 Interest-bearing receivables¹⁾ 269 677 145 1,091 1,036 Cash 1,172 - - 1,172 1,138 Interest-bearing assets 1,441 677 145 2,263 2,174 4.1% Debt to credit institutions etc. -1,489 -10,619 -301 -12,409 -11,238 Short-term bank facilities etc. -560 - - -560 -530 Borrowings -2,049 -10,619 -301 -12,969 -11,768 3.9% Lease liabilities -688 -1,822 -650 -3,160 -2,686 Net interest-bearing debt -1,296 -11,764 -806 -13,866 -12,280 ¹ Interest -bearing receivables comprise customer loans, receivables from associates and other receivables. Consolidated financial statements Parent financial statements Demant Annual Report 2024 153 Trade payables and other liabilities have a con- tractual maturity of less than one year, with the exception of other liabilities of DKK 461 million (DKK 661 million in 2023), which have a contrac- tual maturity of 1-5 years. The contractual cash flows approximate their carrying amounts. Borrowings broken down by currency, excluding hedging: 61% in Danish kroner (55% in 2023), 19% in euros (24% in 2023), 14% in US dollars (12% in 2023), 2% in Canadian dollars (2% in 2023) and 4% in other currencies (7% in 2023). Reconciliation of liabilities arising from financing activities The table below shows the changes in consoli- dated liabilities arising from financing activities, in- cluding both cash and non-cash changes. Liabili- ties arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the consolidated cash flow state- ment as cash flows from financing activities. The fair value of the interest rate swap outstand- ing at the balance sheet date is DKK -17 million (DKK -18 million in 2023), and the contractual value of the interest swap is DKK 5,641 million (DKK 1,000 million in 2023). The interest rate swap matures between 2026 and 2031. Sensitivity analysis in respect of interest rates Based on the Group’s net debt at the end of the 2024 financial year, a rise of 1 percentage point in the general interest rate level will cause an in- crease in consolidated annual interest expenses before tax of approximately DKK 44 million (DKK 58 million in 2023). Around 60% (around 45% in 2023) of the interest-bearing debt is subject to fixed interest rates, partly due to a bought interest rate swap and partly due to loans being raised at fixed interest rates. 4.4 Net interest-bearing debt, liquidity and interest rate risks (continued) Interest rate swap(DKK million)Contractual Positive Negative Interest amount fair value fair value Start Expiry rate/strike at year-end at year-end at year-end 2024DKK/DKK 2023 2026 3.27% 1,000 - 22 DKK/DKK 2025 2026 2.02% 1,000 1 - DKK/DKK 2024 2027 2.22% 746 1 - DKK/DKK 2025 2027 2.05% 1,000 1 - DKK/DKK 2026 2027 2.26% 1,000 - 1 DKK/DKK 2025 2031 2.20% 895 3 - 5,641 6 23 2023DKK/DKK 2023 2026 3.27% 1,000 - 18 1,000 - 18 Consolidated financial statements Parent financial statements Demant Annual Report 2024 154 4.4 Net interest-bearing debt, liquidity and interest rate risks (continued) Non-cash changes Cash flow Covid-19 Acquisi-from rent tions and Foreign Transferred financing conces-divest-exchange Other to held for (DKK million)31.12.2023 activities sions ments movement additions Disposals sale 31.12.2024 Lease liabilities 2,686 -750 - 163 1 751 -57 -23 2,771 Debt to credit institutions etc. 11,238 1,401 - - 31 - - - 12,670 Short-term bank facilities 530 -586 - 3 12 - - 281 240 Interest-bearing liabilities 14,454 65 - 166 44 751 -57 258 15,681 31.12.2022 31.12.2023 Lease liabilities 2,380 -698 -6 142 -8 918 -42 - 2,686 Debt to credit institutions etc. 11,931 -706 - 15 -2 - - - 11,238 Short-term bank facilities 765 -188 - 1 -48 - - - 530 Interest-bearing liabilities 15,076 -1,592 -6 158 -58 918 -42 - 14,454 Consolidated financial statements Parent financial statements Demant Annual Report 2024 155 Methods and judgements for determining fair values Other investments Other investments are assessed on the basis of their fair value. Derivatives Forward exchange contracts are assessed using discounted cash flow valuation techniques. Future cash flows are based on observable forward ex- change rates at the end of the reporting period and on contractual forward exchange rates dis- counted at a rate that reflects the credit risk re- lated to various counterparties. Interest rate swaps are assessed using dis- counted cash flow valuation techniques. Future cash flows are based on observable forward yield curves at the end of the reporting period and on contractual interest rates discounted at a rate that reflects the credit risk related to various counterpar- ties. Contingent considerations Contingent considerations are measured at their fair values based on the contractual terms of the contingent considerations and on non-observable inputs (level 3), such as the financial performance and purchasing patterns of the acquired enter- prises for a period of typically 1-5 years after the date of acquisition. Fair value hierarchy for assets and liabilities measured at fair value in the balance sheet Financial instruments measured at fair value are broken down according to the fair value hierarchy: • Listed prices in an active market for the same type of instrument (level 1). • Listed prices in an active market for similar as- sets or liabilities or other valuation methods, with all significant inputs being based on ob- servable market data (level 2). • Valuation methods, with any significant inputs not being based on observable market data (level 3). Accounting policies On initial recognition, other investments are rec- ognised at fair value and subsequently measured at fair value in the income statement. Unrealised and realised value adjustments are recognised in in net financial items in the income statement. Contingent considerations arising from the acqui- sition of enterprises and activities are recognised at fair value at the time of acquisition. The obliga- tions are re-evaluated on a recurring basis at fair value. 4.5 Fair value hierarchy Consolidated financial statements Parent financial statements Demant Annual Report 2024 156 There have been no transfers between level 1 and in the 2024 and 2023 financial years. Financial assets and contingent considerations are measured at fair value in the balance sheet based on valuation methods, with any significant inputs not being based on observable market data (level 3). Most of the contingent considerations recognised relate to deferred payments, which are not dependent on any performance obligations and will usually be paid out within 1-5 years. The majority of the contingent considerations are recognised as the maximum consideration to be paid, which Management has assessed to be the most likely outcome. (DKK million)Level 1 Level 2 Level 3 Total 2024Financial assets used as hedging instruments - 31 - 31 Other investments - - 9 9 Financial liabilities used as hedging instruments - -102 - -102 Contingent considerations - - -298 -298 2023Financial assets used as hedging instruments - 60 - 60 Other investments - - 19 19 Financial liabilities used as hedging instruments - -35 - -35 Contingent considerations - - -380 -380 4.5 Fair value hierarchy (continued) Contingent (DKK million)Financial assets considerations 2024 2023 2024 2023 Assets and liabilities (level 3) Carrying amount at 1.1. 19 15 -380 -420 Foreign currency translation adjustment - - - -1 Acquisitions - 7 -126 -156 Disposals, repayments, settlements etc. -5 - 175 192 Other adjustments -5 -3 33 5 Carrying amount at 31.12. 9 19 -298 -380 Consolidated financial statements Parent financial statements Demant Annual Report 2024 157 Tax TAX ON PROFIT -824 DKK MILLION EFFECTIVE TAX RATE 22.2% Consolidated financial statements Parent financial statements Demant Annual Report 2024 158 The Group is not impacted by OECD/EU Pillar Two Model rules and their local implementation. Accounting policies Tax on profit for the year includes current tax and any changes in deferred tax. Current tax includes taxes payable and is determined on the basis of the estimated taxable income for the year and any prior-year tax adjustments. Tax on changes in eq- uity and other comprehensive income is recog- nised directly in equity and in other comprehen- sive income, respectively. Foreign currency translation adjustments of de- ferred tax are recognised as part of the year’s ad- justments of deferred tax. Permanent differences primarily include Danish interest limitation, R&D incentives, profit in associ- ates, non-deductible share-based payments and special items. Current tax liabilities or tax receivables are recog- nised in the balance sheet and determined as tax calculated on taxable income for the year, ad- justed for any tax on account. The tax rates pre- vailing at the balance sheet date are used for cal- culation of the year’s taxable income. (DKK million)2024 2023 Current tax on profit for the year -878 -886 Adjustment of current tax, prior years -1 11 Change in deferred tax 39 -42 Adjustment of deferred tax, prior years 16 -4 Impact of changes in corporate tax rates - -1 Tax on profit for the year -824 -922 Reconciliation of tax rates:Danish corporate tax rate 22.0% 22.0% Differences between tax rates of non-Danish enterprises and Danish corporate tax rate 0.8% 0.9% Impact of changes in corporate tax rates - - Impact of unrecognised tax assets, net 0.5% - Permanent differences -1.8% 2.3% Other items, including prior-year adjustments 0.7% -0.6% Effective tax rate 22.2% 24.6% 5.1 Tax on profit (DKK million)2024 2023 Breakdown of tax on other comprehensive income:Foreign currency translation adjustment, foreign enterprises 1 3 Value adjustment of hedging instruments for the year 20 -9 Value adjustment of hedging instruments transferred to revenue 1 23 Actuarial gains/losses on defined benefit plans 4 4 Tax on other comprehensive income 26 21 Consolidated financial statements Parent financial statements Demant Annual Report 2024 159 The tax value of deferred tax assets not recognised is DKK 108 million (DKK 104 million in 2023) and relates mainly to tax losses and tax credits for which there is considerable uncertainty about their future utilisation. Tax losses of DKK 25 million will expire within 5-10 years, whereas other tax losses carried forward have no expiry date. Any sale of shares in subsidiaries, associates and joint ventures at the balance sheet date is esti- mated to result in tax in the amount of DKK 0 mil- lion (DKK 0 million in 2023). The Group is not impacted by OECD/EU Pillar Two Model rules and their local implementation. Accounting policies Deferred tax is recognised, using the balance sheet liability method on any temporary differ- ences between the tax base of assets and liabili- ties and their carrying amounts, except for de- ferred tax on temporary differences arisen either on initial recognition of goodwill or on initial recog- nition of a transaction that is not a business com- bination, with the temporary difference ascer- tained on initial recognition affecting neither net profits nor taxable income. Deferred tax is determined on the basis of the tax rules and rates prevailing at the balance sheet date in a particular country. The effect of any changes in tax rates on deferred tax is included in tax on profit for the year, unless such deferred tax is attributable to items previously recognised di- rectly in equity or in other comprehensive income. In the latter case, such changes will also be rec- ognised directly in equity or in other comprehen- sive income. The tax base of a loss, if any, which may be set off against future taxable income, is carried forward and set off against deferred tax in the same legal tax entity and jurisdiction. 5.2 Deferred tax (DKK million)2024 2023 Deferred tax recognised in the balance sheet:Deferred tax assets 588 542 Deferred tax liabilities -634 -633 Deferred tax, net at 31.12. -46 -91 Deferred tax, net at 1.1. -91 -82 Foreign currency translation adjustments -28 8 Changes in deferred tax 39 -31 Additions relating to acquisitions 3 5 Adjustment of deferred tax, prior years 16 -4 Impact of changes in corporate tax rates - -1 Deferred tax relating to changes in equity, net 26 14 Transferred to assets held for sale -11 - Deferred tax, net at 31.12. -46 -91 Consolidated financial statements Parent financial statements Demant Annual Report 2024 160 Accounting estimates and judgements Deferred tax assets (significant estimate) Deferred tax assets, including the tax value of any tax losses allowed for carryforward, are recog- nised in the balance sheet at the estimated realis- able value of such assets, either by a set-off against a deferred tax liability or by a net asset to be set off against future positive taxable income. At the balance sheet date, an assessment is made as to whether it is probable that sufficient taxable income will be available in the future against which the deferred tax asset can be uti- lised. Deferred tax on temporary differences between the carrying amounts and the tax values of invest- ments in subsidiaries and associates is recog- nised, unless the Parent is able to control the time of realisation of such deferred tax, and it is proba- ble that such deferred tax will not be realised as current tax in the foreseeable future. Deferred tax is recognised in respect of eliminations of intra- group profits and losses. Foreign Recognised currency in other Transferred Temporary translation Recognised compre-to assets Temporary differences adjust-Acquisi-in profit for hensive held for differences (DKK million)at 1.1. ments tions the year income sale at 31.12. 2024Intangible assets -565 -3 1 -151 - -1 -719 Property, plant and equipment -159 -28 - 57 - 2 -128 Leased assets 21 -1 - 5 - - 25 Inventories 208 -3 - -15 - 3 193 Receivables 52 - - 10 - -2 60 Provisions 99 2 - 13 - - 114 Deferred income 158 2 1 27 - -12 176 Tax losses 56 10 1 11 - -1 77 Other 39 -7 - 98 26 - 156 Total -91 -28 3 55 26 -11 -46 2023 Intangible assets -542 - 5 -28 - - -565 Property, plant and equipment -102 13 - -70 - - -159 Leased assets 13 1 - 7 - - 21 Inventories 204 - - 4 - - 208 Receivables 42 - - 10 - - 52 Provisions 67 -2 - 34 - - 99 Deferred income 161 -1 - -2 - - 158 Tax losses 47 -4 - 13 - - 56 Other 28 1 - -4 14 - 39 Total -82 8 5 -36 14 - -91 5.2 Deferred tax (continued) Consolidated financial statements Parent financial statements Demant Annual Report 2024 161 Acquisitions , discontinued opera- tions and assets held for sale Consolidated financial statements Parent financial statements Demant Annual Report 2024 162 As part of the capital allocation policy, a portion of the cash flow from operating activities is allocated to value-adding acquisitions. In 2024, a total of 54 acquisitions were completed at an estimated total consideration of DKK 1,971 million. The individual acquisitions are not considered to be material and therefore not disclosed separately, but are grouped together with other acquisitions within the geographical region. In 2024, the Group acquired a number of enter- prises or obtained significant stakes in hearing healthcare businesses, the most significant one being Fuel Medical Group in the US. On 1 May 2024, the Group acquired the remaining 51% of the shares in Fuel Medical Group and now holds 100% of the shares. Fuel Medical Group is a value-added distributor of hearing aids that op- erates in North America. The step acquisition re- sulted in a fair value adjustment of the Group’s ex- isting shares of DKK 324 million, presented as a special item in the income statement. On 2 September 2024, the Group acquired 100% of the shares in Dansk HøreCenter ApS, which operates hearing clinics across Denmark. In addition, the Group made a number of other mi- nor acquisitions in Europe, North America, the Pa- cific region and Asia in 2024. The Pacific region and Asia are presented together. In 2023, the Group acquired a number of enter- prises or obtained significant stakes in hearing healthcare businesses, the most significant ones being Mr. Optik and Flemming & Klingbeil, both in Germany, Virtualis in France and the hearing aid- related activities of Goed Hulpmiddelen in Bel- gium. On 5 January 2023, the Group acquired 55% of the shares in Virtualis, a developer and manufac- turer of virtual reality rehabilitation equipment based in France. As part of the agreement, a for- ward contract was entered into for the remaining 45% of the shares, meaning that the Group agreed to buy and the seller to sell in three tranches based on an agreed revenue multiple. The purchase price for the remaining shares was estimated based on Virtualis’ current performance and on expectations of the future. The purchase price was not capped. (DKK million)2024 2023 North North Europe America Other Total Europe America Total Intangible assets 21 25 1 47 55 4 59 Property, plant and equipment 20 3 2 25 53 1 54 Other non-current assets 141 22 15 178 167 21 188 Inventories 19 1 1 21 47 2 49 Current receivables 19 44 - 63 105 7 112 Cash and cash equivalents 41 81 - 122 56 2 58 Non-current liabilities -176 -19 -12 -207 -413 -5 -418 Current liabilities -75 -35 -4 -114 -131 -9 -140 Acquired net assets 10 122 3 135 -61 23 -38 Goodwill 502 1,284 50 1,836 1,078 34 1,112 Acquisition cost 512 1,406 53 1,971 1,017 57 1,074 Carrying amount of non-controlling interests on obtaining control -26 -301 - -327 -80 -4 -84 Fair value adjustment of non-controlling interests on obtaining control -9 -328 - -337 -26 -1 -27 Contingent considerations and deferred payments -32 -81 -13 -126 -151 -5 -156 Acquired cash and cash equivalents -41 -81 - -122 -56 -2 -58 Cash acquisition cost 404 615 40 1,059 704 45 749 Figures are shown at fair value on the acquisition date. 6.1 Acquisition of enterprises and activities Consolidated financial statements Parent financial statements Demant Annual Report 2024 163 On 1 March 2023, the Group acquired the remain- ing 51% of the shares in Mr. Optik and now holds 100% of the shares. Mr. Optik operates hearing clinics across Eastern Germany. The step-up re- sulted in a fair value adjustment of the Group’s ex- isting shares of DKK 26 million. On 31 August 2023, the Group acquired 100% of the shares in Flemming & Klingbeil, which oper- ates hearing clinics across Berlin, Germany. On 31 August 2023, the Group acquired all the hearing aid-related activities of Goed Hulpmid- delen. The transaction was structured as an asset purchase. The activities in Goed Hulpmiddelen consist of hearing clinics in the northern part of Belgium. The activities were integrated into the existing retail business in Belgium. Accounting treatment In respect of the acquisitions, the Group paid total acquisition costs of DKK 1,971 million, exceeding the fair values of the acquired assets, liabilities and contingent liabilities. Such positive balances in value can be attributed to expected synergies between the activities of the acquired entities and the Group’s existing activities, to the future growth opportunities and to the value of staff competen- cies in the acquired businesses. These synergies are not recognised separately from goodwill, as they are not individually identifiable. Total goodwill recognised in respect of the acquisitions made in 2024 amounts to DKK 1,836 million. Of the total acquisitions made in 2024, the fair value of the estimated contingent considerations in the form of earn-outs and deferred payments accounted for DKK 126 million (DKK 156 million in 2023). Earn-outs depend on the results of the ac- quired entities for a period of 1-4 years. Earn-outs and other contingent considerations related to the acquisitions are estimated to be maximum DKK 145 million (DKK 158 million in 2023). The fair values of acquisitions are not considered final until 12 months after the acquisition date. Ad- justments to acquisitions completed more than 12 months prior to the time of the adjustments, in- cluding changes in estimated contingent consider- ations, are recognised in the income statement. In 2024, adjustments were made to the prelimi- nary recognition of acquisitions recognised in 2023. These adjustments relate to payments made, contingent considerations provided as well as net assets and goodwill acquired. The impact of these adjustments on goodwill was DKK 9 mil- lion (DKK 5 million in 2023) and DKK -1 million (DKK 2 million in 2023) on contingent considera- tions. In 2024, adjustments were also made to contin- gent considerations related to acquisitions com- pleted more than 12 months prior to the time of the adjustments. These adjustments amount to DKK 35 million (DKK 5 million in 2023) and are recognised as part of distribution costs for acquisi- tions. Step acquisitions At the time of acquisition of non-controlling inter- ests, the shares of the acquisitions are measured at the proportionate share of the total fair value of the acquired entities, including goodwill. On ob- taining a controlling interest through step acquisi- tions, previously held non-controlling interests are, at the time of obtaining control, remeasured at fair value with fair value adjustments recognised in the income statement. The total impact on the income statement of fair value adjustments of non-controlling interests in step acquisitions was DKK 337 million in 2024 (DKK 27 million in 2023). The statements of fair values of acquisitions are not considered final until 12 months after the ac- quisition date. Transaction costs Transaction costs in connection with acquisitions made in 2024 amounted to DKK 23 million (DKK 14 million in 2023) and were recognised in distri- bution costs. Acquired assets and pro forma figures The acquired assets include contractual receiva- bles amounting to DKK 57 million (DKK 59 million in 2023) of which DKK 2 million (DKK 1 million in 2023) was considered to be uncollectible at the date of the acquisition. Of total goodwill in the amount of DKK 1,836 million (DKK 1,112 million in 2023), DKK 1,328 million (DKK 209 million in 2023) can be amortised for tax purposes. Revenue and profit after tax generated by the ac- quired enterprises since acquiring them in 2024 amount to DKK 371 million (DKK 311 million in 2023) and DKK 17 million (DKK 13 million in 2023), respectively. Had such revenue and profit been consolidated on 1 January 2024, it is esti- mated that consolidated pro forma revenue and profit after tax would have been DKK 22,710 mil- lion (DKK 22,636 million in 2023) and DKK 2,401 million (DKK 1,805 million in 2023), respectively. Without taking synergies from our core business into account, we believe that these pro forma fig- ures reflect the level of consolidated earnings af- ter acquisition of the enterprises. Acquisitions after balance sheet date On 31 January 2025, the Group acquired 100% of the shares in Ohrwerk Group, which operates 77 hearing clinics across Germany. From the balance sheet date and until the date of financial reporting in 2025, the Group has ac- quired a number of enterprises including Ohrwerk Group. The Group is in the process of completing the purchase price allocation, including the valua- tion of intangible assets and liabilities assumed. The final impact will be reflected in the subse- quent reporting period. 6.1 Acquisition of enterprises and activities (continued) Consolidated financial statements Parent financial statements Demant Annual Report 2024 164 Accounting policies Newly acquired or newly established enterprises are recognised in the consolidated financial state- ments from the time of acquisition or formation. The time of acquisition is the date when control of the enterprise is transferred to the Group. For Group accounting policies on control, please refer to Note 9.1. In respect of newly acquired enter- prises, comparative figures and key figures will not be restated. On acquiring new enterprises of which the Group obtains control, the purchase method is applied according to which their identi- fied assets, liabilities and contingent liabilities are measured at the fair values on the acquisition date. Any non-current assets acquired for the pur- pose of resale are, however, measured at the fair values less expected cost of disposal. Restructur- ing costs are solely recognised in the pre-acquisi- tion balance sheet if they are a liability for the ac- quired enterprise. Any tax effect of revaluations will be taken into account. The acquisition cost of an enterprise consists of the fair value of the consideration paid for the en- terprise with the addition of the fair values of pre- viously held interests in the acquiree. If the final consideration is conditional upon one or more fu- ture events, the consideration will be recognised at the fair value on acquisition. Any subsequent adjustment of contingent considerations is recog- nised directly in the income statement, unless the adjustment is the result of new information about conditions prevailing on the acquisition date, and this information becomes available up to 12 months after the acquisition date. Transaction costs are recognised directly in the income state- ment when incurred. If the purchase price ex- ceeds the fair values of the assets, liabilities and contingent liabilities identified on acquisition, any remaining positive differences (goodwill) are rec- ognised in the balance sheet under intangible as- sets and tested for impairment at least annually. If the carrying amount of an asset exceeds its re- coverable amount, it is written down to such lower recoverable amount. If, on the acquisition date, there are any uncertain- ties with respect to identifying or measuring ac- quired assets, liabilities or contingent liabilities or uncertainty with respect to determining their cost, initial recognition is made on the basis of provi- sionally calculated values. Such provisionally cal- culated values may be adjusted, or additional as- sets or liabilities may be recognised up to 12 months after the acquisition date, if new infor- mation becomes available about conditions pre- vailing on the acquisition date, which would have affected the calculation of values on that day, had such information been known. Accounting estimates and judgements Identification of assets and liabilities (significant judgement) On recognition of assets and liabilities from acquisitions, management judgements may be required for the identification of the following: • Intangible assets, resulting from technology, customer relationships, client lists or brand names. • Contingent consideration arrangements. Contingent considerations (estimate) Acquisitions may include provisions to the effect that additional payments of contingent considera- tions be paid to the previous owners when certain events occur or certain results are obtained. Man- agement assesses on a regular basis the judge- ments made in respect of the particular acquisi- tions, taking sales run rates of the acquired entity into account. 6.1 Acquisition of enterprises and activities (continued) Consolidated financial statements Parent financial statements Demant Annual Report 2024 165 On 5 February 2024, the Group announced the decision to undertake a review of the strategic op- tions for its Communications business. On 14 Au- gust 2024, the Group announced the conclusion of the review and, consequently, it was decided to initiate a significant restructuring plan for the Com- munications business. The process commenced immediately and as part of the restructuring of the Communications business, an impairment of the goodwill of DKK 110 million was recognised as well as other one-offs. Following the restructuring, the Group intends to carry on with the divestment of the Communications business. The Communi- cations business still meets the criteria for being classified as held for sale and a discontinued op- eration. On 21 May 2024, the Group finalised the divest- ment of the cochlear implants (CI) business to Cochlear Limited after all regulatory approvals and customary closing conditions had been ful- filled. The divestment of the CI business resulted in a loss of DKK 25 million in 2024. As previously communicated, the bone anchored hearing systems (BAHS) business will currently remain with the Group and continues to be con- sidered a discontinued operation. In 2024, discontinued operations realised a loss after tax of DKK 504 million, including the loss re- lating to the divestment of the CI business. The remaining loss of DKK 479 million is related to a combined net operating loss in the Hearing Im- plants (CI and BAHS) and Communications busi- ness areas. Accounting policies Discontinued operations represent a separate line of businesses disposed of or being prepared for sale. The results of discontinued operations are presented separately in the income statement, and comparative figures are restated. Assets and liabilities of discontinued operations are presented as separate items in the balance sheet, and cash flow from discontinued operations are presented separately in the cash flow statement. 6.2 Discontinued operations and assets held for sale (DKK million)2024 2023 Revenue 1,162 1,351 Expenses -1,551 -1,818 Gain/loss on divestment of enterprises and activities -25 - Amortisation, depreciation and impairment losses -224 -673 Profit before tax – discontinued operations -638 -1,140 Tax on profit for the year 134 115 Profit for the year – discontinued operations -504 -1,025 Profit for the year for discontinued operations attributable to: Demant A/S' shareholders -504 -1,025 -504 -1,025 Earnings per share (EPS), DKK -2.32 -4.60 Diluted earnings per share (DEPS), DKK -2.32 -4.60 Cash flow from discontinued operations: Cash flow from operating activities (CFFO) -247 -348 Cash flow from investing activities (CFFI) -38 -39 Cash flow from financing activities (CFFF) 269 155 Cash flow for the year, net – discontinued operations -16 -232 Consolidated financial statements Parent financial statements Demant Annual Report 2024 166 Following the divestment of the CI business, assets classified as held for sale at 31 December 2024 comprise the Communications business and the BAHS business. The comparative figures only include the Hearing Implants business, consisting of both the CI and the BAHS business. Accounting policies Assets and liabilities of discontinued operations and assets held for sale, except financial assets etc., are measured at the lower of the carrying amount and the fair value less costs to sell. Non- current assets held for sale are not depreciated. Key accounting estimates and judgements No key estimates were identified. 6.2 Discontinued operations and assets held for sale (continued) (DKK million)2024 2023 Balance sheet items:Intangible assets 433 97 Property, plant and equipment 25 1 Lease assets 44 1 Deferred tax assets 47 44 Other non-current assets 1 1 Non-current assets 550 144 Current assets 843 139 Assets held for sale 1,393 283 Provisions 46 8 Lease liabilities 46 1 Other liabilities 252 80 Liabilities related to assets held for sale 344 89 Consolidated financial statements Parent financial statements Demant Annual Report 2024 167 In May 2024, the Group divested its CI business to Cochlear Limited, and no consideration was paid as part of the transaction. As part of the agreement with Cochlear Limited, post-closing re- view of balances resulted in DKK 25 million being transferred to Demant as part of the net debt ad- justment. At 31 December 2024, the divestment resulted in a loss of DKK 25 million of which DKK 11 million relates to transaction costs. The total transaction costs incurred by the Group in relation to the di- vestment of the CI business amount to DKK 66 million. Accounting policies Gains or losses on the divestment of enterprises and activities are determined as the difference be- tween the selling price and the carrying amount of the net assets divested. Transaction costs and any provisions made for obligations related to the divestment of enterprises and activities are de- ducted. 6.3 Divestment of enterprises and activities (DKK million)2024 Sales price - Net debt adjustment 25 Selling price for divested enterprises and activities 25 Gain/loss on divestment of enterprises and activities: Selling price for divested enterprises and activities 25 Net assets sold -619 Previously recognised impairment losses 612 Provisions as a result of the transaction -32 Foreign currency translation reserve and hedging of net investment - Transaction costs -11 Gain/loss on divestment of enterprises and activities -25 Net profit from divestment of enterprises and activities:Profit from divested discontinued operations -65 Gain/loss on divestment of enterprises and activities -25 Net profit from divestment of enterprises and activities -90 Consolidated financial statements Parent financial statements Demant Annual Report 2024 168 Provisions, other liabilities etc . PROVISIONS 306 DKK MILLION OTHER LIABILITIES 3,078 DKK MILLION Consolidated financial statements Parent financial statements Demant Annual Report 2024 169 Miscellaneous provisions relate to provisions for disputes etc. The majority of these provisions are expected to be realised within the next five years. 7.1 Provisions 2024 2023 Restructur-Staff- Miscel- Staff- Miscel- (DKK million) ing costs related laneous Total related laneous Total Other provisions at 1.1. - 65 98 163 59 58 117 Foreign currency translation adjustments - - -1 -1 - -5 -5 Additions relating to acquisitions - 6 8 14 - 17 17 Provisions during the year 40 - 27 67 6 27 33 Realised during the year - - -7 -7 - -9 -9 Reversals during the year - 4 -14 -10 - -9 -9 Transfer to/from liabilities related to assets held for sale -40 - - -40 - 19 19 Other provisions at 31.12. - 75 111 186 65 98 163 Breakdown of provisions: Non-current provisions - 75 21 96 65 24 89 Current provisions - - 90 90 - 74 74 Other provisions at 31.12. - 75 111 186 65 98 163 (DKK million)2024 2023 Staff-related provisions 75 65 Miscellaneous provisions 111 98 Other provisions 186 163 Defined benefit plan liabilities, net 120 115 Provisions at 31.12. 306 278 Breakdown of provisions:Non-current provisions 213 201 Current provisions 93 77 Provisions at 31.12. 306 278 Consolidated financial statements Parent financial statements Demant Annual Report 2024 170 Generally, the Group does not offer defined bene- fit plans, but it has such plans in Switzerland, France and Germany where they are required by law. Defined benefit plan costs recognised in the in- come statement amount to DKK 0 million (DKK 12 million in 2023), and the accumulated actuarial loss recognised in the statement of comprehen- sive income amounts to DKK 7 million (income of DKK 10 million in 2023). In 2025, the Group expects to pay approximately DKK 22 million (DKK 24 million in 2024) into de- fined benefit plans. Defined benefit obligations in the amount of DKK 132 million (DKK 132 million in 2023) will mature within 1-5 years and obligations in the amount of DKK 352 million (DKK 324 million in 2023) after five years. If the discount rate were 0.5% higher (lower), the defined benefit obligation would decrease by 6% (increase by 7%). If the expected salary growth rate were 0.5% higher (lower), the defined benefit obligation would increase by 1% (decrease by 1%). Plan assets are recognised as follows: Equity 28% Bonds 31% Property 26% Other 15% Accounting policies Provisions are recognised if, as a result of an ear- lier event, the Group has a legal or constructive obligation, and if the settlement of such obligation is expected to draw on corporate financial re- sources, but there is uncertainty about the timing or amount of the obligation. Provisions are meas- ured on a discounted basis based on Manage- ment’s best estimate of the amount at which a particular liability may be settled. The discount ef- fect of any changes in the present value of provi- sions is recognised as a financial expense. The Group has defined benefit plans and similar agreements with some of its employees. With respect to defined contribution plans, the Group pays regular, fixed contributions to inde- pendent pension companies. Contributions are recognised in the income statement for the period in which employees have performed work entitling them to such pension contributions. Contributions due are recognised in the balance sheet as a lia- bility. With respect to defined benefit plans, the Group is obliged to pay a certain contribution when an em- ployee covered by such a plan retires, for instance a fixed amount or a percentage of the employee’s final salary. An actuarial calculation is prepared periodically of the accrued present value of future benefits to which employees, through their past employment with the Group, are entitled and which are payable under the defined benefit plan. This defined benefit obligation is calculated annu- ally, using the projected unit credit method based on judgements in respect of the future develop- ment in for instance wage levels, interest rates, mortality and inflation rates. (DKK million)2024 2023 Present value of defined benefit obligations:Defined benefit obligations at 1.1. 456 429 Foreign currency translation adjustments -10 24 Additions relating to acquisitions 1 - Current service costs -3 10 Calculated interest on defined benefit obligations 7 8 Actuarial gains/losses 50 34 Net benefits paid -27 -57 Contributions from plan participants 11 8 Defined benefit obligations at 31.12. 485 456 Fair value of defined benefit assets:Defined benefit assets at 1.1. 341 338 Foreign currency translation adjustments -5 21 Actuarial gains/losses 33 21 Contributions 23 18 Net benefits paid -27 -57 Defined benefit assets 31.12. 365 341 Defined benefit obligations recognised in the balance sheet, net 120 115 Return on defined benefit assets:Actual return on defined benefit assets 33 21 Actuarial gains/losses on defined benefit assets 33 21 Assumptions:Discount rate 1.2% 1.7% Expected return on defined benefit assets 0.0% 0.0% Future salary increase rate 1.5% 1.6% 7.2 Employee benefit obligations Consolidated financial statements Parent financial statements Demant Annual Report 2024 171 The defined benefit obligation less the fair value of any assets relating to the defined benefit plan is recognised in the balance sheet under provisions. Defined benefit costs are categorised as follows: • Service costs, including current service costs, past-service costs as well as gains and losses on curtailments and settlements • Net interest expenses or income • Remeasurements Remeasurements, comprising actuarial gains and losses, any effects of changes to the asset ceiling as well as returns on defined benefit assets, ex- cluding interest, are reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income for the period in which it occurs. Remeasurements recognised in other comprehen- sive income are reflected immediately in retained earnings and are not reclassified to the income statement. Service costs and net interest ex- penses or income are included in the income statement as staff costs. Other non-current employee benefits are recog- nised using actuarial calculation. Actuarial gains or losses on such benefits are recognised directly in the income statement. Accounting estimates and judgements Assessment of provisions (estimate) Management assesses, on an ongoing basis, pro- visions for, among others, restructuring costs and the likely outcomes of pending and probable law- suits etc. (other provisions). When assessing the likely outcomes of lawsuits, Management bases its assessments on internal and external legal ad- vice and established precedent. Provisions for re- structuring costs are based on the estimated costs of implementing restructuring initiatives and thus on a number of assumptions about future costs and events. For all provisions, the outcome and fi- nal expense depend on future events, which are by nature uncertain. Product-related liabilities include standard warran- ties and returned products etc. Staff-related liabili- ties include holiday pay and payroll costs due. The carrying amounts of other liabilities approxi- mate the fair values of such liabilities. Accounting policies Other non-financial liabilities are recognised if, as a result of an earlier event, the Group has a legal or constructive obligation, and if the settlement of such obligation is expected to draw on corporate financial resources. Other non-financial liabilities are measured on a discounted basis, and the dis- count effect of any changes in the present value of the liabilities is recognised as a financial ex- pense. On the sale of products with a right of return, a re- fund liability and a right to the returned products is recognised as a refund liability and a current asset (included in prepaid expenses), respectively. The refund liability is deducted from revenue, and the right to the returned products is offset in produc- tion costs. Warranty commitments include an obli- gation to remedy faulty or defective products dur- ing the warranty period. Accounting estimates and judgements Warranty and return liabilities (estimates) Liabilities in respect of service packages and war- ranties are calculated on the basis of information on products sold, related service and warranty pe- riods and past experience of costs incurred by the Group to fulfil its service and warranty liabilities. Liabilities in respect of returns are calculated based on information on products sold, related rights concerning returns and past experience of products being returned in the various markets. Consolidated product-related liabilities are the sum of a large number of small items, with the sum changing constantly due to a large number of transactions. 7.2 Employee benefit obligations (continued) P37 7T 379#y 7.3 Other liabilities (DKK million)2024 2023 Product-related liabilities 508 543 Staff-related liabilities 981 1,022 Other debt, public authorities 299 356 Contingent considerations 298 380 Other costs payable 992 857 Other liabilities 3,078 3,158 Due within 1 year 2,617 2,497 Due within 1-5 years 461 661 Consolidated financial statements Parent financial statements Demant Annual Report 2024 172 Some products, some services and some of the warranty-related services mentioned are provided free of charge to the customer. Certain other ser- vices and warranty-related services are paid by the customer on delivery of the related goods, but delivery of the service takes place 1-4 years after delivery of the goods. Please refer to Note 1.1 for a description of the nature of the deferred income. Accounting policies Deferred income includes income received or fu- ture performance obligations relating to subse- quent financial years and is recognised as revenue when the Group fulfils its obligations by transfer- ring the goods or services to the customers. 7.5 Contingent liabilities The Group is involved in minor litigations, claims, disputes etc. Management is of the opinion that such disputes do not or will not significantly affect the Group’s financial position. The Group seeks to make adequate provisions for legal proceedings. As part of its business activities, the Group has en- tered into normal agreements with customers and suppliers etc. as well as agreements for the pur- chase of shareholdings. The Demant Group is jointly taxed with William Demant Invest A/S, which is the administration company, and all Danish subsidiaries. Under the Danish Corporation Tax Act, the Group is first of all fully liable for corporate tax payments and for withholding tax at source in respect of interest, royalties and dividends in relation to its own sub- sidiaries and is secondly liable for tax payments due for William Demant Invest A/S and its partly owned subsidiaries. 7.4 Deferred income Expected recognition of revenue Less than 1 More than (DKK million)year 1-2 years 2-4 years 4 years Total 2024Prepayments from customers 52 - - - 52 Deferred warranty-related revenue 287 261 119 10 677 Deferred free products revenue 74 48 66 31 219 Deferred service revenue 175 127 110 40 452 Total 588 436 295 81 1,400 2023Prepayments from customers 62 - - - 62 Deferred warranty-related revenue 247 232 104 8 591 Deferred free products revenue 75 35 15 1 126 Deferred service revenue 164 116 94 30 404 Total 548 383 213 39 1,183 (DKK million)2024 2023 Prepayments from customers 52 62 Future performance obligations:Deferred warranty-related revenue 677 591 Deferred free products revenue 219 126 Deferred service revenue 452 404 Total 1,400 1,183 Consolidated financial statements Parent financial statements Demant Annual Report 2024 173 Other disclosure requirements Consolidated financial statements Parent financial statements Demant Annual Report 2024 174 William Demant Foundation, Kongebakken 9, 2765 Smørum, Denmark, is the only related party with a controlling interest. Controlling interest is achieved through a combination of William De- mant Foundation’s own shareholdings and the shareholdings of William Demant Invest A/S for which William Demant Foundation exercises the voting rights. Subsidiaries and associated enter- prises of William Demant Invest A/S are related parties to the Demant Group. Related parties with significant influence are the Company’s Board of Directors and their related parties. Furthermore, related parties are the Exec- utive Board and companies in which the above persons have significant interests. Subsidiaries and associates as well as the De- mant Group’s ownership interests in these compa- nies appear from Subsidiaries and associates in Section 11. For financial information on transac- tions with associates, please refer to Note 3.4. In 2024, William Demant Foundation paid admin- istration fees to the Group of DKK 2 million (DKK 2 million in 2023). The Demant Group paid admin- istration fees to William Demant Invest A/S of DKK 4 million (DKK 3 million in 2023) and re- ceived service fees of DKK 4 million (DKK 5 mil- lion in 2023) from William Demant Invest A/S. In 2024, the Demant Group paid service fees to Embla Medical, a subsidiary of William Demant In- vest A/S, of DKK 3 million (DKK 4 million in 2023) and received service fees of DKK 48 million (DKK 44 million in 2023) from Embla Medical. In 2024, the Demant Group was reimbursed by Vi- sion RT, a subsidiary of William Demant Invest A/S, for pass-through expenses in the amount of DKK 123 million (DKK 115 million in 2023). At year-end 2024, the Demant Group had receiva- bles of DKK 22 million for services provided to Vi- sion RT and Embla Medical (DKK 18 million in 2023). In 2024, William Demant Foundation donated DKK 8 million (DKK 31 million in 2023) to mainly PhD projects in the Demant Group. Further, Wil- liam Demant Foundation acquired diagnostic equipment and hearing aids worth DKK 0 million and DKK 1 million (DKK 3 million and DKK 6 mil- lion in 2023), respectively, from the Group. Since 2011, the Demant Group has settled Danish tax on account and residual tax with William De- mant Invest A/S, which is the administration com- pany for the joint taxation. There have been no transactions with the Execu- tive Board and the Board of Directors apart from normal remuneration. Please refer to Note 1.3. Some of the Group's subsidiaries are not subject to auditing by PricewaterhouseCoopers. In 2024, the fee for non-audit services delivered by PricewaterhouseCoopers Statsautoriseret Re- visionspartnerselskab, Denmark, amounted to DKK 4 million (DKK 0 million in 2023). 8.1 Related parties 8.2 Fees to auditors (DKK million)2024 2023 Fees to Parent’s auditors appointed at the annual general meeting:Statutory audit fee 19 18 Other assurance engagements 3 - Other services 2 1 Total 24 19 Consolidated financial statements Parent financial statements Demant Annual Report 2024 175 In 2024, the Group received government grants in the amount of DKK 5 million (DKK 20 million in 2023). Accounting policies Government grants are recognised when there is reasonable certainty that the conditions for such grants are satisfied and that they will be awarded. Grants received as compensation for costs in- curred are recognised proportionately in the in- come statement over the periods in which the re- lated costs are recognised in the income state- ment and are offset against costs incurred. Government grants relating to the acquisition of non-current assets are deducted from the cost of such assets. On 31 January 2025, the Group acquired 100% of the shares in Ohrwerk Group, which operates 77 hearing clinics across Germany. For further infor- mation, see note 6.1. Apart from the above, no events have occurred after the reporting date of importance to the consolidated financial statements. 8.4 Events after the balance sheet date 8.3 Government grants (DKK million)2024 2023 Government grants by function:R&D costs 2 16 Distribution costs 3 3 Administrative expenses - 1 Total 5 20 Consolidated financial statements Parent financial statements Demant Annual Report 2024 176 Basis for preparation Consolidated financial statements Parent financial statements Demant Annual Report 2024 177 The Group’s general accounting policies are de- scribed below. In addition to this, specific account- ing policies are described in each of the individual notes to the consolidated financial statements as outlined here: 1.1 Revenue and segment disclosures 1.2 Employees 1.5 Inventories 1.6 Trade receivables 1.7 Customer loans 1.9 Special items 2.3 Hedging and forward exchange contracts 3.1 Intangible assets 3.2 Property, plant and equipment 3.3 Leases 3.4 Other non-current assets 3.6 Impairment testing 4.2 Net financial items 4.3 Categories of financial instruments 4.5 Fair value hierarchy 5.1 Tax on profit 5.2 Deferred tax 6.1 Acquisition of enterprises and activities 6.2 Discontinued operations and assets held for sale 6.3 Divestment of enterprises and activities 7.1 Provisions 7.2 Employee benefit obligations 7.3 Other liabilities 7.4 Deferred income 8.3 Government grants General The consolidated financial statements are pre- sented in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and Danish disclosure requirements for annual re- ports published by reporting class D (listed) companies, cf. the Danish executive order on IFRS issued in compliance with the Danish Finan- cial Statements Act. The registered office of De- mant A/S is in Denmark. The consolidated financial statements are pre- sented in Danish kroner (DKK), which is the func- tional currency of the Parent. The consolidated fi- nancial statements are presented based on histor- ical costs, except for obligations for contingent considerations in connection with business combi- nations, share-based remuneration, derivatives and financial assets classified as assets available for sale, which are measured at fair value. The financial statements for the Parent as well as the Parent’s accounting policies are presented separately from the consolidated financial state- ments and are shown on the last pages of this An- nual Report 2024. Effect of new accounting standards The Group has adopted the new, amended and revised accounting standard and interpretation as published by the IASB and adopted by the EU ef- fective for the accounting period beginning 1 Jan- uary 2024. The new, updated and amended standard and interpretation did not result in any changes to the accounting policies for the Group, nor had it any significant impact on the consoli- dated financial statements for 2024. IASB has issued new accounting standards and amendments effective for accounting periods be- ginning after 1 January 2025, which have been adopted by the EU. The changes to these stand- ards are not expected to have any significant im- pact on the Group. In 2024, the IASB issued IFRS 18, which replaces IAS 1. The new accounting standard is not yet adopted by EU and the implications of the new requirements is currently being evaluated. Management expects to adopt the accounting standards and interpretations as they become mandatory. Except for the imple- mentation of the new and amended standards and update to the cash flow statement, the accounting policies remain unchanged compared to last year. The Group has applied the exception to recognise deferred tax in accordance with OECD/EU Pillar Two Model rules and their local implementation. Consolidated financial statements The consolidated financial statements comprise Demant A/S (the Parent) and the enterprises in which the Parent can or does exercise control by either directly or indirectly holding more than 50% of the voting rights, or in which the Parent exer- cises control in some other manner. Enterprises in which the Group holds 20-50% of the voting rights and/or in some other manner can or does exer- cise significant influence are considered associ- ates or joint ventures and are incorporated propor- tionately into the consolidated financial statements using the equity method. Consolidation principles The consolidated financial statements are pre- pared based on the financial statements of the Parent and its subsidiaries by aggregating uniform items. Enterprises that, by agreement, are man- aged jointly with one or more other enterprises are recognised using the equity method. The consolidated financial statements are pre- pared in accordance with the Group’s accounting policies. Intra-group income, expenses, share- holdings, balances and dividends as well as unre- alised intra-group profits on inventories are elimi- nated. The accounting items of subsidiaries are recog- nised 100% in the consolidated financial state- ments. On initial recognition, non-controlling inter- ests are measured either at fair value or at the proportionate share of the fair value of the identifi- able assets, liabilities and contingent liabilities of the acquired subsidiary. The method is chosen for each individual transaction. Non-controlling inter- ests are subsequently adjusted according to their proportionate share of changes in equity of the subsidiary. Comprehensive income is allocated to non-con- trolling interests whether or not, as a result hereof, the value of such interests is negative. The pur- chase or sale of non-controlling interests in a sub- sidiary, which does not result in obtaining or dis- continuing control of such subsidiary, is treated as an equity transaction in the consolidated financial statements, and any difference between the con- sideration and the carrying amount is allocated to the Parent’s share of the equity. Foreign currency translation The Group’s presentation currency is Danish kro- ner. On initial recognition, transactions in foreign cur- rencies are translated at the exchange rates pre- vailing at the date of the transaction. The func- tional currencies of the enterprises are determined by the economic environment in which the enter- prises operate, normally the local currency. Receivables, payables and other monetary items in foreign currencies are translated into Danish kroner at the exchange rates prevailing at the bal- ance sheet date. Realised and unrealised foreign currency translation adjustments are recognised in the income statement as part of gross profit or net financial items, depending on the purpose of the underlying transaction. 9.1 Group accounting policies Consolidated financial statements Parent financial statements Demant Annual Report 2024 178 Property, plant and equipment, intangible assets, inventories and other non-monetary assets pur- chased in foreign currencies and measured on the basis of historical cost are translated at the ex- change rates prevailing at the transaction date. Non-monetary items, which are revalued at their fair values, are translated using the exchange rates at the revaluation date. On recognition in the consolidated financial state- ments of enterprises presenting their financial statements in a functional currency other than Danish kroner, the income statement is translated using average exchange rates for the months of the year in question, unless they deviate materi- ally from actual exchange rates at the transaction dates. In case of the latter, actual exchange rates are applied. Balance sheet items are translated at the ex- change rates prevailing at the balance sheet date. Goodwill is considered as belonging to the ac- quired enterprise in question and is translated at the exchange rate prevailing at the balance sheet date. All foreign currency translation adjustments are recognised in the income statement, except for the following, which are recognised in other com- prehensive income: • The translation of income statements of for- eign subsidiaries using monthly average ex- change rates for the respective months of the year, whereas balance sheet items of such foreign subsidiaries are translated using ex- change rates prevailing at the balance sheet date. • The translation of non-current, intra-group re- ceivables that are considered to be additions to or deductions from net investments in for- eign subsidiaries. • The translation of investments in associates. Income statement Income and costs are recognised on an accruals basis. The income statement is broken down by function, and all costs, including depreciation, amortisation and impairment losses, are therefore charged to production, distribution, administration and R&D. Production costs Production costs are costs incurred to generate revenue. Distribution companies recognise cost of goods sold as part of production costs. Production companies recognise cost of raw materials, con- sumables, production staff as well as mainte- nance of and depreciation, amortisation and im- pairment losses on property, plant and equipment and intangible assets used in the production pro- cess as part of production costs. R&D costs Research costs are always recognised in the in- come statement as such costs incur. Develop- ment costs include all costs not satisfying capitali- sation criteria but incurred in connection with the development, prototype construction, develop- ment of new business concepts and amortisation of capitalised development costs. Distribution costs Distribution costs include costs relating to training, sales, marketing, promotion materials, distribution, bad debts as well as depreciation and amortisa- tion of and impairment losses on assets used for distribution purposes. Administrative expenses Administrative expenses include administrative staff costs, office expenses as well as deprecia- tion and amortisation of and impairment losses on assets used for administrative purposes. Prepaid expenses Prepaid expenses recognised as part of assets in- clude costs relating to the subsequent financial years. Prepaid expenses are measured at cost. Cash flow statement The cash flow statement is prepared according to the indirect method and reflects the consolidated net cash flow broken down into operating, invest- ing and financing activities. Cash flow from operating activities includes in- flows from the year’s operations adjusted for non- cash operating items, changes in working capital, financial income received, financial expenses paid and income tax paid. Cash flow from operating ac- tivities also includes short-term lease payments, lease payments of low-value assets and variable lease payments. Cash flow from investing activities includes pay- ments in respect of the acquisition or divestment of enterprises and financial assets as well as the purchase, development, improvement or sale of intangible assets and property, plant and equip- ment. In addition to this, cash flow from investing activities also includes movements in receivables from associates as well as customer loans. Cash flow from financing activities includes pay- ments to and from shareholders and the raising and repayment of non-current and current debt and lease liabilities. Cash flow in currencies other than the functional currency is recognised at average exchange rates for the months of the year unless they deviate sig- nificantly from actual exchange rates on the trans- action dates. Repayments of lease liabilities are included as well. Cash and cash equivalents are cash less over- drafts, which consist of uncommitted bank facili- ties that often fluctuate from positive to over- drawn. Any short-term bank facilities that are con- sistently overdrawn are considered cash flow from financing activities. In 2024, the Group changed its principles related to the elimination of transactions between discon- tinued and continued operations, which changes the presentation of the cash flow for discontinued operations. Equity Foreign currency translation reserves include for- eign currency translation adjustments on the translation of financial statements of foreign sub- sidiaries and associates from their respective functional currencies into Danish kroner. Foreign currency translation adjustments are recognised in the income statement on realisation of the net investment. Hedging reserves include fair value adjustments of derivatives and loans satisfying the criteria for hedging of future transactions. The amounts are recognised in the income statement or the balance sheet at the same time as hedged transactions are recognised. Treasury shares and dividend On the buy-back of shares or sale of treasury shares, the purchase price or selling price, re- spectively, is recognised directly in equity as other reserves (retained earnings). A capital reduction through the cancellation of treasury shares will re- duce the share capital by an amount correspond- ing to the nominal value of such shares. Proposed dividends are recognised as a liability at the time of adoption at the annual general meeting. 9.1 Group accounting policies (continued) Consolidated financial statements Parent financial statements Demant Annual Report 2024 179 Financial ratios are calculated in accordance with Recommendations and Ratios from CFA Society Denmark. Key figures and financial ratios Organic growthOrganic growth is measured as the year-on-year change, excluding impact from acquisitions, divestments and foreign exchange adjustments in percent-ageEBITDA before Operating profit before special items, amortisation, depreciation and impair-special items ment lossesEBITDA Operating profit before amortisation, depreciation and impairment lossesEBIT before Operating profit before special items special items EBIT Operating profit Free cash flowCash flow from operating activities (CFFO) and investing activities (CFFI) before acquisitions and disposals of enterprises, participating interests and activitiesNet interest-bearing Net amount of borrowings and lease liabilities less interest-bearing debt (NIBD) receivables and cashNet working capitalNet amount of current assets (excluding tax, financial contracts and cash) less trade payables, the current part of other liabilities and deferred incomeEPSEarnings per sharePer shareFinancial ratios per share are calculated per share of nominally DKK 0.20Average number of Average number of shares, excluding the average number of treasury shares shares outstanding for the year 9.1 Group accounting policies (continued) Gross profit 100 Gross marginRevenue Operating profit 100 EBIT marginRevenue Net interest-bearing debt including unrealised gains/losses on Gearing multiplefinancial contracts *100 EBITDA before special items Profit for the year attributable to Demant A/S' shareholders EPSAverage number of shares outstanding Profit for the continuing operations for the year attributable to EPS – continuing Demant A/S' shareholders operationsAverage number of shares outstanding Profit for the discontinued operations for the year attributable to EPS – discontinued Demant A/S' shareholders operationsAverage number of shares outstanding Free cash flow Free cash flow per shareAverage number of shares outstanding Consolidated financial statements Parent financial statements Demant Annual Report 2024 180 iXBRL tagging The Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic For- mat (ESEF Regulation) has introduced a single electronic reporting format for the annual financial reports of issuers with securities listed on the EU regulated markets. The combination of XHTML format and iXBRL tags makes it possible for annual financial reports to be read by both humans and machines, thus enhancing accessibility, analysis and comparabil- ity of the information included in the annual finan- cial reports. The Group’s iXBRL tags have been prepared in accordance with the ESEF taxonomy, which is in- cluded in the ESEF Regulation and developed based on the IFRS taxonomy published by the IFRS Foundation. The line items in the consolidated financial state- ments are tagged to elements in the ESEF taxon- omy. For financial line items that are not directly defined in the ESEF taxonomy, an extension to the taxonomy has been created. Extensions are anchored to elements in the ESEF taxonomy, ex- cept for extensions that are subtotals. The annual report submitted to the Danish Finan- cial Supervisory Authority (the Officially Appointed Mechanism) consists of the XHTML document to- gether with the technical files, all of which are in- cluded in the ZIP file DEMANT-2024-12-31-en.zip. Key definitions XHTML (eXtensible HyperText Markup Language) is a text-based language used to structure and mark up content such as text, images and hyper- links in documents that are displayed in a web browser. iXBRL tags (or Inline XBRL tags) are hidden me- tainformation embedded in the source code of an XHTML document that enables the conversion of XHTML-formatted information into a machine- readable XBRL data record using appropriate software. A financial reporting taxonomy is an electronic dic- tionary of business reporting elements used to re- port business data. A taxonomy element is an ele- ment defined in a taxonomy that is used for the machine-readable labelling of information in an XBRL data record. As part of the preparation of the consolidated fi- nancial statements, Management makes a num- ber of accounting estimates and judgements. These relate to the recognition, measurement and classification of assets and liabilities. Many items can only be estimated rather than accurately measured. Such estimates are based on the most recent information available on preparation of the financial statements. Estimates and assumptions are therefore reassessed on an ongoing basis. Actual figures may, however, deviate from these estimates. Any changes in accounting estimates will be recognised in the reporting period in which such changes are made. Significant accounting estimates and judgements are described in the individual notes to the consol- idated financial statements as outlined below: 1.5 Inventories 3.3 Leases 5.2 Deferred tax 6.1 Acquisition of enterprises and activities Specific accounting estimates and judgements are described in each of the individual notes to the consolidated financial statements as outlined be- low: 1.1 Revenue and segment disclosures 1.2 Employees 1.5 Inventories 1.6 Trade receivables 1.7 Customer loans 1.9 Special items 3.1 Intangible assets 3.2 Property, plant and equipment 3.3 Leases 3.6 Impairment (identification of CGUs) 6.1 Acquisition of enterprises and activities 7.1 Provisions 7.3 Other liabilities 9.2 Accounting estimates and judgements 9.1 Group accounting policies (continued) Consolidated financial statements Parent financial statements Demant Annual Report 2024 181 Parent income statement 182 Parent balance sheet 31 December 183 Parent statement of changes in equity 184 Notes to Parent financial statements 190 Parent financial statements Consolidated financial statements Parent financial statements Demant Annual Report 2024 182 Parent income statement (DKK million) Note 2024 2023 Revenue - - Administrative expenses 10.1 / 10.2 -113 -116 Operating loss (EBIT) -113 -116 Share of profit after tax, subsidiaries 10.8 2,575 1,742 Share of profit after tax, associates 10.8 -2 -2 Gain/Loss on divestment of enterprises and activities -527 - Financial income 10.3 289 158 Financial expenses 10.3 -620 -413 Profit before tax 1,602 1,369 Tax on profit for the year 10.4 56 6 Profit for the year 10.5 1,658 1,375 Consolidated financial statements Parent financial statements Demant Annual Report 2024 183 Parent balance sheet 31 December (DKK million) Note 2024 2023 Assets Goodwill 17 20 Intangible assets 10.6 17 20 Land and buildings 24 24 Property, plant and equipment 10.7 24 24 Lease assets 1 1 Investments in subsidiaries 10.8 18,019 16,211 Loans to subsidiaries 10.8 3,890 3,014 Investments in associates 10.8 28 30 Other investments 2 2 Other receivables - 9 Deferred tax assets 3 - Other non -current assets 21,943 19,267 Non -current assets 21,984 19,311 Income tax 45 11 Other receivables 6 2 Prepaid expenses 32 32 Cash 5 7 Current assets 88 52 Assets 22,072 19,363 (DKK million) Note 2024 2023 Equity and liabilities Share capital 10.9 44 45 Other reserves 2,712 2,312 Retained earnings 1,657 2,426 Total equity 4,413 4,783 Provisions 1,058 498 Deferred tax liabilities 10.4 - 4 Provisions 1,058 502 Borrowings 10.10 12,474 10,137 Lease liabilities 10.10 1 1 Other debt 97 240 Non -current liabilities 10.10 12,572 10,378 Borrowings 10.10 377 1,311 Debt to subsidiaries 3,404 2,168 Other debt 248 221 Current liabilities 4,029 3,700 Liabilities 16,601 14,078 Equity and liabilities 22,072 19,363 Contingent liabilities 10.11 Related parties 10.12 Events after the balance sheet date 10.13 Parent accounting policies 10.14 Consolidated financial statements Parent financial statements Demant Annual Report 2024 184 Parent statement of changes in equity (DKK million) Other reserves Share capital Foreign cur- rency transla- tion reserve Hedging reserve Reserve according to equity method Retained earnings Total equity Equity at 1.1.2023 46 -76 10 1,878 2,522 4,380 Profit for the year - - - 1,740 -365 1,375 Dividends received - - - -1,018 1,018 - Foreign currency translation adjustment of investments in subsidiaries etc. - -7 - -114 - -121 Other changes in equity in subsidiaries - - - -72 - -72 Value adjustment for the year - - -37 - - -37 Tax relating to changes in equity - - 8 - - 8 Share buy -backs - - - - -846 -846 Capital reduction through cancellation of treasury shares -1 - - - 1 - Share -based compensation - - - - 96 96 Equity at 31.12.2023 45 -83 -19 2,414 2,426 4,783 Profit for the year - - - 2,573 -915 1,658 Dividends received - - - -1,104 1,104 - Foreign currency translation adjustment of investments in subsidiaries etc. - 7 - 148 - 155 Other changes in equity in subsidiaries - - - 68 1 69 Share buy-backs - - - - -2,301 -2,301 Capital reduction through cancellation of treasury shares -1 - - - 1 - Share -based compensation - - - - 12 12 Other changes in equity - - - - 37 37 Equity at 31.12.2024 44 -76 -19 4,099 365 4,413 Consolidated financial statements Parent financial statements Demant Annual Report 2024 185 Notes to Parent financial statements Consolidated financial statements Parent financial statements Demant Annual Report 2024 186 (DKK million) 2024 2023 Employee costs Wages and salaries 103 83 Share -based remuneration 12 14 Defined benefit plans - - Total 115 97 Average number of full -time employees 52 44 For further details on the remuneration of the Ex- ecutive Board and the Board of Directors and the share-based remuneration programme, please re- fer to Note 1.2. 10.1 Employees Remuneration to Executive Board and Board of Directors (included in employee costs) (DKK million) 2024 2023 Executive Board:¹⁾ Wages and salaries 25.1 25.6 Cash bonus 0.6 4.4 Share -based remuneration 10.5 11.6 Remuneration in the notice period² ⁾ - 22.1 Total 36.2 63.7 Board of Directors: Fee 5.1 5.4 Total 5.1 5.4 ¹ The amounts are based on the principles set out in Note 1.2. ² As announced on 27 April 2023, Arne Boye Nielsen, former President of Diagnostics and Communications and member of the Exec utive Board, left his position in Demant. 10.2 Fees to statutory auditors (DKK million) 2024 2023 Statutory audit fee 6 4 Total 6 4 10.3 Net financial items (DKK million) 2024 2023 Interest from subsidiaries 288 158 Interest income 1 - Financial income 289 158 Interest to subsidiaries -129 -31 Interest expenses -500 -367 Transaction costs -14 -7 Foreign exchange losses, net 23 -8 Financial expenses -620 -413 Net financial items -331 -255 Consolidated financial statements Parent financial statements Demant Annual Report 2024 187 10.4 Tax on profit for the year and deferred tax (DKK million) 2024 2023 Current tax on profit for the year 48 - Adjustment of current tax, prior years 1 2 Change in deferred tax 8 6 Adjustment of deferred tax, prior years -1 -2 Tax on profit for the year 56 6 Deferred tax, net at 1.1. -4 -8 Changes in deferred tax 8 6 Adjustment of deferred tax, prior years -1 -2 Deferred tax, net at 31.12. 3 -4 10.5 Proposed distribution of net profit (DKK million) 2024 2023 Transferred to reserves for net revaluation according to the equity method 2,573 1,740 Retained earnings -915 -365 Total 1,658 1,375 Consolidated financial statements Parent financial statements Demant Annual Report 2024 188 10.6 Intangible assets (DKK million) Goodwill Rights and other intangible assets Total intangible assets Cost at 1.1.2024 65 11 76 Cost at 31.12.2024 65 11 76 Amortisation at 1.1.2024 -45 -11 -56 Amortisation for the year -3 - -3 Amortisation at 31.12.2024 -48 -11 -59 Carrying amount at 31.12.2024 17 - 17 Cost at 1.1.2023 65 11 76 Cost at 31.12.2023 65 11 76 Amortisation at 1.1.2023 -42 -11 -53 Amortisation for the year -3 - -3 Amortisation at 31.12.2023 -45 -11 -56 Carrying amount at 31.12.2023 20 - 20 10.7 Property, plant and equipment (DKK million) Land and buildings Cost at 1.1.2024 31 Cost at 31.12.2024 31 Depreciation and impairment losses at 1.1.2024 -7 Depreciation and impairment losses at 31.12.2024 -7 Carrying amount at 31.12.2024 24 Cost at 1.1.2023 31 Cost at 31.12.2023 31 Depreciation and impairment losses at 1.1.2023 -7 Depreciation and impairment losses at 31.12.2023 -7 Carrying amount at 31.12.2023 24 Consolidated financial statements Parent financial statements Demant Annual Report 2024 189 The carrying amount of investments in subsidiaries includes capitalised goodwill of DKK 9,224 million (DKK 8,059 million in 2023). Amorti- sation of capitalised goodwill for the year was DKK 695 million (DKK 627 million in 2023). On 21 May 2024, the Group finalised the divest- ment of the cochlear implants (CI) business to Cochlear Limited after all regulatory approvals and customary closing conditions had been ful- filled. The divestment of the CI business resulted in a loss of DKK 527 million in 2024. Loans to subsidiaries of DKK 3,890 million (DKK 3,014 million in 2023) are considered additions to the total investments in the particular enterprises and are therefore considered non-current. Please refer to Section 11 for further information on subsidiaries and associates. 10.8 Financial assets (DKK million) 2024 2023 Investments in subsidiaries Loans to subsidiaries Investments in associates Investments in subsidiaries Loans to subsidiaries Investments in associates Cost at 1.1. 13,266 3,014 50 13,009 1,284 50 Foreign currency translation adjustments - 64 - - -7 - Additions during the year 234 839 - 257 1,801 - Divestments during the year -498 - - - - - Disposals during the year -864 -27 - - -64 - Cost at 31.12. 12,138 3,890 50 13,266 3,014 50 Value adjustments at 1.1. 2,447 - -20 1,895 - -17 Foreign currency translation adjustments 148 - - -114 - - Share of profit after tax 2,575 - -2 1,742 - -2 Dividends received -1,104 - - -1,018 - -1 Divestments during the year -47 - - - - - Disposals during the year 736 - - - - - Other adjustments 68 - - -58 - - Value adjustments at 31.12. 4,823 - -22 2,447 - -20 Carrying amount at 31.12. 16,961 3,890 28 15,713 3,014 30 Subsidiaries with negative equity reclassified to provisions 1,058 - - 498 - - Carrying amount after reclassification 18,019 3,890 28 16,211 3,014 30 Non -current financial assets 18,019 3,890 28 16,211 3,014 30 Consolidated financial statements Parent financial statements Demant Annual Report 2024 190 At the balance sheet date in 2024, the share capi- tal was nominally DKK 44 million (DKK 45 million in 2023) divided into the corresponding number of shares of DKK 0.20. There are no restrictions on the negotiability or voting rights of the shares. At the balance sheet date in 2024, the number of shares outstanding was 221,089,792 (220,552,501 in 2023). As part of the company’s share buy-back pro- gramme, the company acquired 7,598,403 own shares in 2024 (2,952,703 shares in 2023), worth a total of DKK 2,301 million (DKK 846 million in 2023). 10.9 Treasury shares 2024 2023 Treasury shares Percentage of share capital Treasury shares Percentage of share capital Treasury shares at 1.1. 3,386,939 1.5% 7,217,705 3.1% Cancellation of treasury shares -2,909,869 -1.3% -6,783,469 -2.9% Share buy -backs 7,598,403 3.4% 2,952,703 1.3% Treasury shares at 31.12. 8,075,473 3.6% 3,386,939 1.5% Consolidated financial statements Parent financial statements Demant Annual Report 2024 191 Other debt of DKK 345 million (DKK 461 million in 2023) consist of DKK 248 million (DKK 221 million in 2023) that has a contractual maturity of less than one year, and DKK 96 million (DKK 240 mil- lion in 2023) has a contractual maturity of 1-5 years. Interest-bearing debt broken down by currency: 79% in Danish kroner (74% in 2023), 15% in eu- ros (22% in 2023) and 6% in US dollars (4% in 2023). The fair value of the interest rate swap outstand- ing at the balance sheet date was DKK -17 million (DKK -18 million in 2023), and the contractual value of the interest swap was DKK 5,641 million (DKK 1,000 million in 2023). The interest rate swap matures in 2026. Sensitivity analysis in respect of interest rates Based on bank debt facilities at the balance sheet date, a rise of 1 percentage point in the general interest rate level will result in an increase in the Parent’s annual interest expenses before tax of approximately DKK 64 million (DKK 76 million in 2023). Around 50% (around 33% in 2023) of the interest-bearing debt is subject to fixed or limited interest rates, partly due to a bought interest rate swap, and partly due to loans being raised at fixed interest rates. 10.10 Interest-bearing debt Interest rate swap (DKK million) Start Expiry Interest rate/strike Contractual amount at year-end Positive fair value at year-end Negative fair value at year-end 2024 DKK/DKK 2023 2026 3.27% 1,000 - 22 DKK/DKK 2025 2026 2.02% 1,000 1 - DKK/DKK 2024 2027 2.22% 746 1 - DKK/DKK 2025 2027 2.05% 1,000 1 - DKK/DKK 2026 2027 2.26% 1,000 - 1 DKK/DKK 2025 2031 2.20% 895 3 - 5,641 6 23 2023 DKK/DKK 2023 2026 3.27% 1,000 - 18 1,000 - 18 Contractual cash flows (DKK million) Less than 1 year 1-5 years More than 5 years Total Carrying amount Weighted average effective interest rate 2024 Debt to credit institutions etc. 591 11,959 1,314 13,864 12,639 Short -term bank facilities etc. 223 - - 223 212 Lease liabilities - 1 - 1 1 Interest -bearing liabilities 814 11,960 1,314 14,088 12,852 3.5% 2023 Debt to credit institutions etc. 1,474 10,584 301 12,359 11,189 Short -term bank facilities etc. 271 - - 271 259 Lease liabilities 1 - - 1 1 Interest -bearing liabilities 1,746 10,584 301 12,631 11,449 3.9% Consolidated financial statements Parent financial statements Demant Annual Report 2024 192 Demant A/S has provided security in respect of credit facilities established by Danish subsidiaries. These credit facilities totalled DKK 1,095 million in 2024 (DKK 1,140 million in 2023) of which DKK 101 million was utilised (DKK 103 million in 2023). Demant A/S has provided security in respect of rent as well as guarantees concerning the contin- uous operation and payment of liabilities in 2024 for some of the subsidiaries. The Parent is jointly taxed with William Demant In- vest A/S, which is the administration company, and with all Danish subsidiaries of both. Under the Danish Corporation Tax Act, Demant A/S is first of all fully liable for corporate tax payments and for withholding tax at source in respect of interest, royalties and dividends in relation to its own sub- sidiaries and is secondly liable for tax payments due for William Demant Invest A/S and its partly owned subsidiaries. For the purposes of section 357 of the Republic of Ireland Companies Act 2014, Demant A/S has un- dertaken to indemnify the creditors of its subsidi- aries incorporated in the Republic of Ireland in re- spect of all losses and liabilities for the financial year ending on 31 December 2024 or any amended financial period incorporating said finan- cial year. No material loss is expected to arise from this guarantee. 10.12 Related parties William Demant Foundation, Kongebakken 9, 2765 Smørum, Denmark, is the only related party with a controlling interest. Controlling interest is achieved through a combination of William De- mant Foundation’s own shareholdings and the shareholdings of William Demant Invest A/S for which William Demant Foundation exercises the voting rights. Subsidiaries and associated enter- prises of William Demant Invest A/S are related parties to Demant A/S. Related parties with significant influence are the company’s Board of Directors and their related parties. Furthermore, related parties are the Exec- utive Board and companies in which the above persons have significant interests. 10.13 Events after the balance sheet date Please refer to Note 8.4. 10.1 1 Contingent liabilities Consolidated financial statements Parent financial statements Demant Annual Report 2024 193 The financial statements of the Parent, Demant A/S, are presented in accordance with the provi- sions of the Danish Financial Statements Act for class D entities. The Parent financial statements are presented in Danish kroner (DKK), which is also the functional currency for the Parent. The accounting policies are the same as last year. In respect of recognition and measurement, the Parent’s accounting policies are generally con- sistent with the Group’s accounting policies. The instances in which the Parent’s accounting poli- cies deviate from those of the Group are de- scribed below. The Parent has decided to apply recognition and measurement in accordance with IFRS 15 and 16. The standards affect the Parent’s proportionate share of its subsidiaries’ equity value, and IFRS 16 affects the Parent’s leases. Income statement Tax The Parent is jointly taxed with its Danish subsidi- aries and its parent, William Demant Invest A/S. Current income tax is allocated to the jointly taxed Danish companies in proportion to their taxable in- come. Balance sheet Goodwill Goodwill is amortised on a straight-line basis over 20 years, which is the useful life determined on the basis of Management’s experience in respect of the individual business activities. Goodwill is written down to its recoverable amount, if lower than its carrying amount. Rights Rights acquired are amortised on a straight-line basis over their estimated useful lives and meas- ured at cost less accumulated amortisation and impairment losses. The amortisation period is five years. Rights acquired are written down to their recoverable value, if lower than their carrying value. Investments in subsidiaries and associates Investments in subsidiaries and associates are recognised and measured using the equity method, i.e. interest is measured at the propor- tionate share of the equity values of such subsidi- aries and associates with the addition or deduc- tion of the carrying amount of goodwill and with the addition or deduction of unrealised intra-group profits or losses, respectively. The Parent’s proportionate shares of profits or losses in subsidiaries and associates are recog- nised in the income statement after elimination of unrealised intra-group profits or losses less any amortisation and impairment of goodwill. Subsidiaries and associates with negative equity values are measured at DKK 0, and any receiva- bles from such companies are written down with the Parent’s share of the negative equity value to the extent that such receivable is considered irre- coverable. If the negative equity value exceeds the value of receivables, if any, such residual amount is recognised under provisions to the ex- tent that the Parent has a legal or constructive ob- ligation to cover liabilities incurred by the particu- lar subsidiary or associate. On distribution of profit or loss, net revaluation and net impairment losses on investments in sub- sidiaries and associates are transferred to re- serves for net revaluation according to the equity method. Loans to and receivables from subsidiaries Loans to and receivables from subsidiaries are recognised at amortised cost and subsequently measured after deduction of allowance for losses based on an individual assessment. Other investments On initial recognition, other investments are meas- ured at cost. Subsequently, they are measured at fair value on the balance sheet date, and any changes in fair values are recognised in the in- come statement under net financial items. Provisions Provisions include liabilities, which are uncertain in respect of the amount or the timing of their set- tlement. Provisions may include different types of liabilities, such as deferred tax liabilities, pension obligations, investments in subsidiaries with nega- tive equity as well as provisions for disputes etc. Debt to subsidiaries Debt to subsidiaries is measured at amortised cost. Statement of changes in equity In compliance with the format requirements of the Danish Financial Statements Act, any items in- cluded under comprehensive income in the con- solidated financial statements are recognised di- rectly in equity in the Parent financial statements. Cash flow statement In compliance with section 86(4) of the Danish Fi- nancial Statements Act, a cash flow statement is not prepared for the Parent, such statement being included in the consolidated cash flow statement. 10.14 Parent accounting policies Consolidated financial statements Parent financial statements Demant Annual Report 2024 194 Subsidiaries and associates Consolidated financial statements Parent financial statements Demant Annual Report 2024 195 Company Interest Audilab SAS, France¹⁾ ²⁾ ³⁾ 100% Audio Seleccion S.L., Spain¹⁾ 100% Audiology Services Company USA, LLC, United States²⁾ 100% AudioNet America, Inc., United States 100% Audmet Australia Pty Ltd, Australia 100% Audmet Canada Ltd., Canada 100% Audmet New Zealand Limited, New Zealand¹⁾ 100% Audmet Oy, Finland¹⁾ 100% Audmet Srl, Italy¹⁾ 100% AudPractice Group, LLC, United States 100% Beijing Shengwang Yuanbo Commerce and Trade Co., Ltd., China¹⁾ ²⁾ 100% Bernafon (UK) Limited, United Kingdom¹⁾ 100% Bernafon A/S, Denmark¹⁾ 100% Bernafon AB, Sweden¹⁾ 100% Bernafon AG, Switzerland¹⁾ 100% Bernafon Hörgeräte GmbH, Germany 100% Bernafon, LLC, United States 100% Birdsong Hearing Benefits, LLC, United States 100% Braun Hören GmbH & Co. KG, Germany 100% Braun Hörgeräte GmbH & Co. KG, Germany 100% Braun Hörgeräte Offenburg GmbH & Co. KG, Germany 100% Centro Auditivo Telex Ltda., Brazil²⁾ 100% CQ Partners, LLC, United States 100% Danacom Høreapparater A/S, Denmark¹⁾ 100% Dansk HøreCenter ApS, Denmark 100% Demant Australia Pty Ltd, Australia¹⁾ 100% Demant Belgium BV, Belgium¹⁾ 100% Demant Business Services Poland Sp. z o.o., Poland¹⁾ 100% Demant Iberica, S.A., Spain¹⁾ 100% Demant İşitme Cihazları San. Tic. A.Ş, Turkey¹⁾ 100% ³ Sub-consolidated group of companies, including companies with non-controlling interests. The list includes the Group's active companies Company Interest Demant A/S Parent Oticon A/S, Denmark¹⁾ 100% Oticon AS, Norway¹⁾ 100% Oticon Denmark A/S, Denmark¹⁾ 100% Oticon GmbH, Germany 100% Oticon Limited, United Kingdom¹⁾ 100% Oticon Medical A/S, Denmark¹⁾ 100% Oticon Medical AB, Sweden 100% Oticon Medical, LLC, United States 100% Oticon Polska Sp. z o.o., Poland¹⁾ 100% Oticon, Inc., United States 100% Oticon (Shanghai) Hearing Technology Co., Ltd., China¹⁾ 100% 21st Century Hearing Ltd, United Kingdom 100% AccuQuest Hearing Center, LLC (Texas), United States 100% AccuQuest Hearing Center, LLC, United States 100% ACS Audika Sp. z.o.o., Poland 100% Acustica Sp. z o.o., Poland¹⁾ 100% Advanced Hearing Providers, LLC, United States 100% Akoustica Medica S.A., Greece¹⁾ 100% Amplivox Limited, United Kingdom 100% Audika AB, Sweden¹⁾ 100% Audika AG, Switzerland¹⁾ 100% Audika ApS, Denmark¹⁾ 100% Audika Australia Pty Ltd, Australia 100% Audika GmbH, Germany 100% Audika Groupe S.A.S., France¹⁾ ²⁾ ³⁾ 100% Audika K.K., Japan¹⁾ 100% Audika Management GmbH, Germany 100% Audika New Zealand Limited, New Zealand¹⁾ 100% Audika NV, Belgium¹⁾ 100% ¹ Directly owned by the Parent by 100% ² Sub-consolidated group of companies, including associated companies. Consolidated financial statements Parent financial statements Demant Annual Report 2024 196 Company Interest Diatec Singapore, Singapore 100% Diatec Spain, S.L.U., Spain¹⁾ 100% Dr. B. Schwaller GmbH, Switzerland 100% DSEA A/S, Denmark 100% e3 Diagnostics, Inc., United States 100% Entomed Medtech AB, Sweden¹⁾ 100% EPOS Audio Australia Pty Ltd, Australia 100% EPOS Audio India Private Limited, India 100% EPOS Audio Ireland Limited, Ireland 100% EPOS Audio Singapore Pte. Ltd., Singapore 100% EPOS Audio UK Ltd., United Kingdom 100% EPOS Austria GmbH, Austria 100% EPOS Belgium BV, Belgium 100% EPOS Canada Ltd., Canada¹⁾ 100% EPOS France S.A.S, France 100% EPOS Germany GmbH, Germany 100% EPOS Group A/S, Denmark 100% EPOS Hong Kong Limited, Hong Kong 100% EPOS Japan Kabushiki Kaisha, Japan 100% EPOS Netherlands B.V., Netherlands 100% EPOS Sales A/S, Denmark 100% EPOS Sweden AB, Sweden 100% EPOS Switzerland AG, Switzerland 100% EPOS USA, Inc., United States 100% Etymonic Design Inc., Canada¹⁾ 100% Fluorite Sp. z o.o., Poland 100% Frey & Bührer Hörsysteme GmbH, Germany 100% Fuel Medical Group, LLC, United States 100% G. Roberts (Hearing Aids) Ltd., United Kingdom 100% Great Lakes Provider Network, LLC, United States 100% ³ Sub -consolidated group of companies, including companies with non-controlling interests. The list includes the Group's active companies Company Interest Demant Italia S.r.l., Italy¹⁾ 100% Demant Japan K.K., Japan¹⁾ 100% Demant Korea Co., ltd., Korea, Republic Of¹⁾ 100% Demant Malaysia Sdn. Bhd., Malaysia¹⁾ 100% Demant México, S.A. de C.V., Mexico 100% Demant Nederland B.V., Netherlands¹⁾ 100% Demant New Zealand Limited, New Zealand¹⁾ 100% Demant Operations Poland Sp. z o.o, Poland 100% Demant Operations S.A. de C.V., Mexico 100% Demant Participaçoes Ltda, Brazil 100% Demant Sales Strategic Accounts A/S, Denmark¹⁾ 100% Demant Schweiz AG, Switzerland¹⁾ 100% Demant Singapore Pte Ltd, Singapore¹⁾ 100% Demant South Africa (Pty) Ltd., South Africa¹⁾ 100% Demant Sweden AB, Sweden¹⁾ 100% Demant Technology & Innovation Centre Sdn. Bhd., Malaysia¹⁾ 100% Demant Technology Centre Sp. z o.o., Poland¹⁾ 100% DGS Diagnostics Sp. z o.o., Poland 100% Diagnostic Group LLC, United States 100% Diatec A/S, Denmark¹⁾ 100% Diatec AG, Switzerland¹⁾ 100% Diatec Canada Ltd., Canada 100% Diatec Diagnostics GmbH, Germany¹⁾ 100% Diatec Diagnostics Ltd, United Kingdom 100% Diatec France SAS, France 100% Diatec Japan K.K., Japan¹⁾ 100% Diatec Korea Joshik Hoesa, Korea, Republic Of¹⁾ 100% Diatec New Zealand Limited, New Zealand 100% Diatec Polska Sp. z o.o., Poland¹⁾ 100% Diatec Shanghai Medical Technology Co., Ltd., China¹⁾ 100% ¹ Directly owned by the Parent by 100% ² Sub-consolidated group of companies, including associated companies. Consolidated financial statements Parent financial statements Demant Annual Report 2024 197 Company Interest Guymark UK Limited, United Kingdom 100% HearBase Limited, United Kingdom 100% Hearing Screening Associates, LLC, United States 100% HearingLife Canada Ltd., Canada¹⁾ ²⁾ ³⁾ 100% Hidden Hearing (N.I.) Limited, United Kingdom 100% Hidden Hearing (Portugal), Unipessoal, Lda., Portugal¹⁾ 100% Hidden Hearing International Plc, United Kingdom¹⁾ 100% Hidden Hearing Limited, Ireland¹⁾ 100% Hidden Hearing Limited, United Kingdom 100% Hidden Hearing Properties Ltd, United Kingdom 100% Horgerate-Akustik Flemming & Klingbeil Verwaltungs-GmbH, Germany 100% Hörgeräte-Akustik Flemming & Klingbeil GmbH & Co. KG, Germany 100% IDEA Isitme Sistemleri Sanayi ve Ticaret A.S., Turkey¹⁾ 100% Interacoustics A/S, Denmark¹⁾ 100% Interacoustics Pty Ltd, Australia 100% Inventis North America Inc., United States 100% Inventis S.r.l., Italy¹⁾ 100% ITSA Medical SAS, France¹⁾ 100% Kuulopiiri Oy, Finland¹⁾ 100% Langer Hörstudio GmbH, Germany 100% LeDiSo Italia S.r.l., Italy¹⁾ 100% Maico Diagnostics GmbH, Germany¹⁾ 100% Maico S.r.l., Italy¹⁾ 100% Mediszintech Audiologica Kft., Hungary¹⁾ 100% MedRx, Inc., United States 100% Medton Ltd., Israel¹⁾ 100% Medton Retail Ltd., Israel 100% Mr. Optik GmbH, Germany²⁾ 100% myHearingU, LLC, United States 100% Northeast Hearing Instruments, LLC, United States 100% ¹ Directly owned by the Parent by 100% ² Sub-consolidated group of companies, including associated companies. Company Interest Philiear Inc., Philippines¹⁾ 100% Prodition SAS, France¹⁾ 100% Ritter Hörgeräte GmbH, Germany 100% SBO Hearing A/S, Denmark¹⁾ 100% SBO Hearing US, Inc., United States 100% SBO International Sales A/S, Denmark¹⁾ 100% Sevenoaks Hearing Care Centre Ltd, United Kingdom 100% Shanghai YinPo Technology Co., Ltd., China 100% Sonic AG (Sonic SA) (Sonic Ltd.), Switzerland¹⁾ 100% Sonic Equipment Australia Pty Ltd, Australia 100% Sonic Innovations, Inc., United States 100% Synapsys S.A.S, France 100% Udicare S.r.l., Italy¹⁾ 100% Value Hearing (Pty) Ltd., South Africa¹⁾ 100% Van Boxtel Hoorwinkels B.V., Netherlands 100% Virtualis VR, Corp., United States 100% WDH Germany GmbH, Germany¹⁾ 100% WDH NR. 11 A/S, Denmark¹⁾ 100% WDH UK Limited, United Kingdom¹⁾ 100% WDH USA, Inc., United States¹⁾ 100% Workplace Integra Inc., United States 100% Your Hearing Network, LLC, United States 100% Colorado Hearing, LLC, United States 80% Destin Hearing Associates, LLC, United States 70% Virtualis SAS, France 55% Conc. Maico - Centro Otoacustico Marchesin S.r.l., Italy 50% European Hearing Care (Myanmar) Limited, Myanmar 50% Exclusive Hearing Limited, United Kingdom 49% Microfon S.r.l., Italy 49% Otic Hearing Solutions Private Limited, India 49% ³ Sub -consolidated group of companies, including companies with non-controlling interests. The list includes the Group's active companies Consolidated financial statements Parent financial statements Demant Annual Report 2024 198 Company Interest Ma.Bi.Ge Bioacustica S.r.l., Italy 49% AIRD S.r.l., Italy 40% Audiology Concepts, LLC, United States 40% Audiology Specialty Clinics of Minnesota, LLC, United States 40% Audition Bahuaud SAS, France 40% Dencker A/S, Denmark 40% Istituto Acustica Italia S.r.l., Italy 40% Vocechiara S.r.l., Italy 40% Acustica Umbra S.r.l., Italy 35% Centro Audioprotesico Lombardo S.r.l., Italy 35% Euro Hearing LLC, Uzbekistan 35% TruEar LLC, United States 35% Fonema Italia S.r.l., Italy 30% HearWell Audiology Clinics Inc., Canada 25% HIMSA A/S, Denmark 25% Imperial Hearing Limited, United Kingdom 25% Acufon S.r.l., Italy 20% Audiovox Preduzece Za Izradu I Promet Ortopedskih Pomagaladoo, Serbia 20% Bontech Research CO D.o.o., Croatia 20% HIMSA II A/S, Denmark 20% The Hearing Doctors of Georgia, LLC, United States 20% K/S HIMPP, Denmark 18% HIMSA II K/S, Denmark 15% HIMPP A/S, Denmark 14% ¹ Directly owned by the Parent by 100% ² Sub -consolidated group of companies, including associated companies. ³ Sub -consolidated group of companies, including companies with non-controlling interests. The list includes the Group's active companies Statement by management Independent auditor’s report Independent assurance report Demant Annual Report 2024 199 Statement by Management 200 Independent auditor’s reports 202 Independent auditor’s limited assurance report on the sustainability statement 206 Signatures “Today’s hearing aids are small, handy and almost invisible depend- ing on your hair length.” Steen, hearing aid use r, pensioner, pilot Statement by management Independent auditor’s report Independent assurance report Demant Annual Report 2024 200 The Board of Directors and the Executive Board have today considered and adopted the Annual Report of Demant A/S for the financial year 1 Jan- uary – 31 December 2024. The consolidated financial statements for Demant A/S has been prepared in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act, and the Parent financial state- ments have been prepared in accordance with the Danish Financial Statements Act. Management statement has been prepared in accordance with the Danish Financial Statements Act. In our opinion, the consolidated financial state- ments and the Parent financial statements give a true and fair view of the financial position at 31 December 2024 of the Group and the Parent and the results of the Group and the Parent operations and consolidated cash flows for the financial year 1 January to 31 December 2024. In our opinion, Management statement includes a fair review of the development in the operations and financial circumstances of the Group and the Parent, of the results for the year and of the finan- cial position of the Group and the Parent as well as a description of the most significant risks and elements of uncertainty, which the Group and the Parent are facing. Additionally, the Sustainability statement, which are part of Management statement, have been prepared, in all material respects, in accordance with paragraph 99a of the Danish Financial State- ments Act. This includes compliance with the Eu- ropean Sustainability Reporting Standards (ESRS), including that the process undertaken by Management to identify the reported information (the “Process”) is in accordance with the descrip- tion set out in the section titled Double materiality assessment. Furthermore, disclosures in subsec- tion EU taxonomy in the environmental section of the Sustainability statement are, in all material re- spects, in accordance with article 8 of EU Regula- tion 2020/852 (the “Taxonomy Regulation”). The year 2024 marks the initial implementation of paragraph 99a of the Danish Financial Statements Act on compliance with ESRS. As such, clearer guidance and practice are anticipated in various areas and are expected to be provided in the coming years. Furthermore, the Sustainability statement include 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. Statement by Management Statement by management Independent auditor’s report Independent assurance report Demant Annual Report 2024 201 In our opinion, the Annual Report of Demant A/S for the financial year 1 January to 31 December 2024 with the file name DEMANT-2024-12-31- en.zip is prepared, in all material respects, in com- pliance with the ESEF Regulation. We recommend that the Annual Report be adopted at the annual general meeting on 6 March 2025. Smørum, 5 February 2025 Executive Board Søren Nielsen, President & CEO René Schneider, CFO Niels Wagner, President Hearing Care Board of Directors Niels B. Christiansen, Chair Niels Jacobsen, Vice Chair Thomas Duer Heidi Hørby Sisse Fjelsted Rasmussen Anders Højsgaard Thomsen Kristian Villumsen Statement by management Independent auditor’s report Independent auditor’s limited assurance report on the sustainability statement Demant Annual Report 2024 202 To the shareholders of Demant A/S Report on the audit of the Financial Statements Our opinion In our opinion, the Consolidated Financial State- ments give a true and fair view of the Group’s fi- nancial position at 31 December 2024 and of the results of the Group’s operations and cash flows for the financial year 1 January to 31 December 2024 in accordance with IFRS Accounting Stand- ards as adopted by the EU and further require- ments in the Danish Financial Statements Act. Moreover, in our opinion, the Parent Company Fi- nancial Statements give a true and fair view of the Parent Company’s financial position at 31 Decem- ber 2024 and of the results of the Parent Com- pany’s operations for the financial year 1 January to 31 December 2024 in accordance with the Dan- ish 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 of De- mant A/S for the financial year 1 January to 31 December 2024 comprise the consolidated in- come statement and consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated cash flow statement, the consolidated statement of changes in equity and the notes, including material accounting policy in- formation. The Parent Company Financial Statements of De- mant A/S for the financial year 1 January to 31 December 2024 comprise the income statement, the balance sheet, the statement of changes in equity and the notes, including material account- ing policy information. Collectively referred to as the “Financial Statements”. Basis for opinion We conducted our audit in accordance with Inter- national Standards on Auditing (ISAs) and the ad- ditional requirements applicable in Denmark. Our responsibilities under those standards and re- quirements are further described in the Auditor’s responsibilities for the audit of the Financial State- ments section of our report. We believe that the audit evidence we have ob- tained 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 Pro- fessional Accountants (IESBA Code) and the ad- ditional ethical requirements applicable in Den- mark. We have also fulfilled our other ethical re- sponsibilities in accordance with these require- ments and the IESBA Code. To the best of our knowledge and belief, prohib- ited 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 Demant A/S on 10 March 2022 for the financial year 2022. We have been reappointed annually by shareholder resolution for a total period of uninterrupted en- gagement of three 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. Independent auditor’s reports Statement by management Independent auditor’s report Independent auditor’s limited assurance report on the sustainability statement Demant Annual Report 2024 203 Key audit matter How our audit addressed the key audit matter Acquisitions Acquisitions are complex transactions, which are subject to significant estimates, including the identification and valuation of assets, liabilities and contingent con- sideration etc. In order to determine the fair value of the separately identified as- sets and liabilities in a business combina- tion, the valuation methodologies require input based on assumptions about the fu- ture and applied discounted cash flow forecasts, including market development and WACC. We focused on this area because of the significance to the Financial Statements, the inherent complexity and high degree of estimation in the accounting for acqui- sitions, as well as the potential inherent risk related to the control environment. Reference is made to section 6.1 “Acqui- sition of enterprises and activities” in the Consolidated financial statements. We performed risk assessment procedures with the pur- pose of achieving an understanding of it-systems, proce- dures and relevant controls relating to acquisition account- ing. In respect of controls, we assessed whether these were designed and implemented effectively to address the risk of material misstatement. Our audit procedures included assessing the appropriate- ness of the accounting policies for acquisitions applied by Management and assessing compliance with IFRS Ac- counting Standards. We assessed the valuation methodologies applied by Management and challenged Management’s significant assumptions used to determine the fair value of the ac- quired assets and liabilities in the acquisitions, including the fair value of the intangible assets. Finally, we assessed the adequacy of disclosures relating to the acquisitions. Key audit matter How our audit addressed the key audit matter Revenue recognition Recognition of revenue is inherently complex due to the extent of different revenue streams, several performance obligations, trial periods and prepaid dis- counts, which are subject to interpreta- tion, including the point in time of satis- faction of the perfo rmance obligations and recognition of related deferred in- come in respect of e.g. extended warran- ties, after sales services, etc. We focused on this area because of the significance to the Financial Statements, as well as the complexity and high de- gree of estimation related to e.g. prepaid discounts, provision for sales returns and extended warranties and deferred in- come. In addition , we focused on this area as revenue comprises a substantial number of transactions, with different characteristics depending on the busi- ness area the revenue relates to. Reference is made to section 1.1 “Reve- nue and segment disclosures” in the Consolidated financial statements. Our audit procedures included considering the appropri- ateness of the accounting policies for revenue recognition applied by Management and assessing compliance with IFRS Accounting Standards. We performed risk assessment procedures to understand the information processing activities in relation to revenue recognition and evaluated whether the information sys- tems appropriately support revenue recognition and measurement in accordance with the accounting policies. We identified controls addressing risk of material misstate- ments determined to be significant risk and evaluated the design of the controls and determined whether the con- trols have been implemented. We assessed the accounting estimates related to the recognition and presentation of revenue with Manage- ment. Further, we performed substantive procedures regarding invoicing, significant contracts, cut-off at year-end and provision for e.g. sales returns and extended warranties in order to assess the accounting treatment and principles applied. We applied data analysis in our testing of selected reve- nue streams in order to identify transactions outside the ordinary transaction flow, including journal entry testing. Finally, we assessed the adequacy of disclosures relating to revenue recognition. Statement by management Independent auditor’s report Independent auditor’s limited assurance report on the sustainability statement Demant Annual Report 2024 204 Statement on Management statement Management is responsible for Management statement. Our opinion on the Financial Statements does not cover Management statement, 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 statements and, in doing so, consider whether Management statement is materially inconsistent with the Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Moreover, we considered whether Management statement includes the disclosures required by the Danish Financial Statements Act. This does not include the requirements in paragraph 99 a re- lated to the sustainability statement covered by the separate auditor’s limited assurance report hereon. Based on the work we have performed, in our view, Management statement is in accordance with the Consolidated financial statements and the Parent Company financial statements and has been prepared in accordance with the require- ments of the Danish Financial Statements Act, ex- cept for the requirements in paragraph 99 a re- lated to the sustainability statement, cf. above. We did not identify any material misstatement in Man- agement statement. Management’s responsibilities for the Financial Statements Management is responsible for the preparation of consolidated 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 the preparation of parent company fi- nancial statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, Manage- ment is responsible for assessing the Group’s and the Parent Company’s ability to continue as a go- ing concern, disclosing, as applicable, matters re- lated to going concern and using the going con- cern basis of accounting unless Management ei- ther intends to liquidate the Group or the Parent Company or to cease operations, or has no realis- tic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assur- ance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an au- ditor’s report that includes our opinion. Reasona- ble assurance is a high level of assurance, but is not a guarantee that an audit conducted in ac- cordance with ISAs and the additional require- ments applicable in Denmark will always detect a material misstatement when it exists. Misstate- ments can arise from fraud or error and are con- sidered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the ba- sis of these Financial Statements. As part of an audit in accordance with ISAs and the additional requirements applicable in Den- mark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material mis- statement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and ob- tain audit evidence that is sufficient and appro- priate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one re- sulting from error, as fraud may involve collu- sion, forgery, intentional omissions, misrepre- sentations, or the override of internal control. • Obtain an understanding of internal control rel- evant to the audit in order to design audit pro- cedures that are appropriate in the circum- stances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Parent Company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of ac- counting estimates and related disclosures made by Management. • Conclude on the appropriateness of Manage- ment’s use of the going concern basis of ac- counting and based on the audit evidence ob- tained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Par- ent Company’s ability to continue as a going concern. If we conclude that a material uncer- tainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial Statements or, if such disclo- sures are inadequate, to modify our opinion. Our conclusions are based on the audit evi- dence 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, in- cluding the disclosures, and whether the Fi- nancial 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 suf- ficient 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 State- ments and the Parent Company Financial Statements. We are responsible for the direc- tion, 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 govern- ance 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 rele- vant ethical requirements regarding independ- ence, and to communicate with them all relation- ships 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 Statements of the current period and are therefore the key audit matters. We de- scribe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter. 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 Demant A/S for the financial year 1 January to 31 December 2024 with the filename DEMANT-2024-12-31-en.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) Statement by management Independent auditor’s report Independent auditor’s limited assurance report on the sustainability statement Demant Annual Report 2024 205 2019/815 on the European Single Electronic For- mat (ESEF Regulation) which includes require- ments related to the preparation of the annual re- port in XHTML format and iXBRL tagging of the Consolidated Financial Statements including notes. Management is responsible for preparing an an- nual report that complies with the ESEF Regula- tion. 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 ele- ments in the taxonomy, for all financial infor- mation required to be tagged using judgement where necessary; • Ensuring consistency between iXBRL tagged data and the Consolidated Financial State- ments presented in human-readable format; and • For such internal control as Management de- termines necessary to enable the preparation of an annual report that is compliant with the ESEF Regulation. Our responsibility is to obtain reasonable assur- ance on whether the annual report is prepared, in all material respects, in compliance with the ESEF Regulation based on the evidence we have ob- tained, and to issue a report that includes our opinion. The nature, timing and extent of proce- dures selected depend on the auditor’s judge- ment, including the assessment of the risks of ma- terial departures from the requirements set out in the ESEF Regulation, whether due to fraud or er- ror. The procedures 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 tag- ging of the Consolidated Financial Statements including notes; • Evaluating the appropriateness of the com- pany’s use of iXBRL elements selected from the ESEF taxonomy and the creation of exten- sion 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 Demant A/S for the financial year 1 January to 31 December 2024 with the file name DEMANT-2024-12-31- en.zip is prepared, in all material respects, in com- pliance with the ESEF Regulation. Hellerup , 5 February 2025 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR No 3377 1231 Rasmus Friis Jørgensen State-Authorised Public Accountant mne28705 Torben Jensen State-Authorised Public Accountant mne18651 Statement by management Independent auditor’s report Independent auditor’s limited assurance report on the sustainability statement Demant Annual Report 2024 206 To the stakeholders of Demant A/S Limited assurance conclusion We have conducted a limited assurance engage- ment on the sustainability statement of Demant A/S (the “Group”) included in Management state- ment in the Annual Report for 2024 (the “Sustain- ability Statement”), page 50 – 117, for the finan- cial 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 ma- terial respects, in accordance with the Danish Fi- nancial Statements Act paragraph 99 a, including: • Compliance with the European Sustainability Reporting Standards (ESRS), including that the process carried out by the management to identify the information reported in the Sus- tainability Statement (the “Process”) is in ac- cordance with the description set out in the section “Double materiality assessment”; and • Compliance of the disclosures in subsection “EU taxonomy” within the environmental sec- tion 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 As- surance Engagements (ISAE) 3000 (Revised), Assurance engagements other than audits or re- views of historical financial information (“ISAE 3000 (Revised)”) and the additional requirements applicable in Denmark. The procedures in a limited assurance engage- ment vary in nature and timing from, and are less in extent than for, a reasonable assurance en- gagement. 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 assurance 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 re- sponsibilities for the assurance engagement sec- tion 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 Pro- fessional Accountants (IESBA Code) and the ad- ditional ethical requirements applicable in Denmark. We have also fulfilled our other ethical responsibilities in accordance with these require- ments 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 man- agement including policies or procedures regard- ing compliance with ethical requirements, profes- sional standards and applicable legal and regula- tory requirements. Management’s responsibilities for the Sustainability Statement Management is responsible for designing and im- plementing a process to identify the information reported in the Sustainability Statement in accord- ance with the ESRS and for disclosing this Pro- cess as included in the section 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 stakeholders; • The identification of the actual and potential impacts (both negative and positive) related to sustainability matters, as well as risks and op- portunities 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 iden- tified impacts, risks and opportunities related to sustainability matters by selecting and ap- plying appropriate thresholds; and • Making assumptions that are reasonable in the circumstances. Management is further responsible for the prepa- ration of the Sustainability Statement, which in- cludes the information identified by the Process, in accordance with the Danish Financial Statements Act paragraph 99 a, including: • Compliance with the ESRS; • Preparing the disclosures as included in sub- section “EU taxonomy” within the environmen- tal section of the Sustainability Statement, in compliance with Article 8 of the Taxonomy Regulation; • Designing, implementing and maintaining such internal control that management deter- mines is necessary to enable the preparation of the Sustainability Statement that is free from material misstatement, whether due to fraud or error; and • The selection and application of appropriate sustainability reporting methods and making Independent auditor’s limited assurance report on the sustainability statement Statement by management Independent auditor’s report Independent auditor’s limited assurance report on the sustainability statement Demant Annual Report 2024 207 assumptions and estimates that are reasona- ble in the circumstances. In reporting forward-looking information in accord- ance with ESRS, management is required to pre- pare 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 differ- ent since anticipated events frequently do not oc- cur as expected. Auditor’s responsibilities for the assurance engagement Our responsibility is to plan and perform the as- surance 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 mate- rial 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 ac- cordance with ISAE 3000 (Revised) we exercise professional judgement and maintain professional scepticism throughout the engagement. Our responsibilities in respect of the Process in- clude: • Obtaining an understanding of the Process, but not for the purpose of providing a conclu- sion on the effectiveness of the Process, in- cluding the outcome of the Process; • Considering whether the information identified addresses the applicable disclosure require- ments of the ESRS; and • Designing and performing procedures to eval- uate whether the Process is consistent with the Group’s description of its Process, as disclosed in the section “Double materiality assessment”. Our other responsibilities in respect of the Sus- tainability Statement include: • Identifying where material misstatements are likely to arise, whether due to fraud or error; and • Designing and performing procedures respon- sive to disclosures in the Sustainability State- ment where material misstatements are likely to arise. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omis- sions, misrepresentations, or the override of internal control. Summary of the work performed A limited assurance engagement involves per- forming procedures to obtain evidence about the Sustainability Statement. The nature, timing and extent of procedures selected depend on profes- sional 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 manage- ment; and reviewing the Group’s internal doc- umentation of its Process; and • Evaluated whether the evidence obtained from our procedures about the Process imple- mented by the Demant A/S was consistent with the description of the Process set out in the section Double materiality assessment. In conducting our limited assurance engagement, with respect to the Sustainability Statement, we: • Obtained an understanding of the Group’s re- porting processes relevant to the preparation of its Sustainability Statement including the consolidation processes by obtaining an un- derstanding of the Group’s control environ- ment, processes and information systems rel- evant to the preparation of the Sustainability Statement but not evaluating the design of particular control activities, obtaining evidence about their implementation or testing their op- erating 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 is 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 corre- sponding disclosures in the financial state- ments and Management statement; • Evaluated the methods, assumptions and data for developing estimates and forward- looking information; and • Obtained an understanding of the Group’s process to identify taxonomy-eligible and tax- onomy-aligned economic activities and the corresponding disclosures in the Sustainability Statement. Other matter The comparative information included in the Sus- tainability Statement of the Group was not subject to an assurance engagement. Our conclusion is not modified in respect of this matter. Hellerup, 5 February 2025 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR No 3377 1231 Rasmus Friis Jørgensen State-Authorised Public Accountant mne28705 Torben Jensen State-Authorised Public Accountant mne 18651 Statement by management Independent auditor’s report Independent auditor’s limited assurance report on the sustainability statement Demant Annual Report 2024 208 Demant A/S Kongebakken 9 DK -2765 Smørum Denmark Phone +45 3917 7300 [email protected] www.demant.com CVR 71186911 Annual reportAuditor's report on audited financial statementsParsePort XBRL Converter2024-01-012024-12-312023-01-012023-12-31213800RM6L9LN78BVA56Reporting class DOpinionBasis for Opinion2025-02-052025-02-052025-02-05213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember213800RM6L9LN78BVA562024-01-012024-12-31213800RM6L9LN78BVA562023-01-012023-12-31213800RM6L9LN78BVA562024-12-31213800RM6L9LN78BVA562023-12-31213800RM6L9LN78BVA562022-12-31213800RM6L9LN78BVA562023-12-31ifrs-full:IssuedCapitalMember213800RM6L9LN78BVA562024-01-012024-12-31ifrs-full:IssuedCapitalMember213800RM6L9LN78BVA562024-12-31ifrs-full:IssuedCapitalMember213800RM6L9LN78BVA562023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800RM6L9LN78BVA562024-01-012024-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800RM6L9LN78BVA562024-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800RM6L9LN78BVA562023-12-31ifrs-full:ReserveOfCashFlowHedgesMember213800RM6L9LN78BVA562024-01-012024-12-31ifrs-full:ReserveOfCashFlowHedgesMember213800RM6L9LN78BVA562024-12-31ifrs-full:ReserveOfCashFlowHedgesMember213800RM6L9LN78BVA562023-12-31ifrs-full:RetainedEarningsMember213800RM6L9LN78BVA562024-01-012024-12-31ifrs-full:RetainedEarningsMember213800RM6L9LN78BVA562024-12-31ifrs-full:RetainedEarningsMember213800RM6L9LN78BVA562023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember213800RM6L9LN78BVA562024-01-012024-12-31ifrs-full:EquityAttributableToOwnersOfParentMember213800RM6L9LN78BVA562024-12-31ifrs-full:EquityAttributableToOwnersOfParentMember213800RM6L9LN78BVA562023-12-31ifrs-full:NoncontrollingInterestsMember213800RM6L9LN78BVA562024-01-012024-12-31ifrs-full:NoncontrollingInterestsMember213800RM6L9LN78BVA562024-12-31ifrs-full:NoncontrollingInterestsMember213800RM6L9LN78BVA562022-12-31ifrs-full:IssuedCapitalMember213800RM6L9LN78BVA562023-01-012023-12-31ifrs-full:IssuedCapitalMember213800RM6L9LN78BVA562022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800RM6L9LN78BVA562023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember213800RM6L9LN78BVA562022-12-31ifrs-full:ReserveOfCashFlowHedgesMember213800RM6L9LN78BVA562023-01-012023-12-31ifrs-full:ReserveOfCashFlowHedgesMember213800RM6L9LN78BVA562022-12-31ifrs-full:RetainedEarningsMember213800RM6L9LN78BVA562023-01-012023-12-31ifrs-full:RetainedEarningsMember213800RM6L9LN78BVA562022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember213800RM6L9LN78BVA562023-01-012023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember213800RM6L9LN78BVA562022-12-31ifrs-full:NoncontrollingInterestsMember213800RM6L9LN78BVA562023-01-012023-12-31ifrs-full:NoncontrollingInterestsMember213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember1213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember2213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember3213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember1213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember2213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember3213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember4213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember5213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember6213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember7213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember1213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember2213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember1213800RM6L9LN78BVA562024-01-012024-12-31cmn:ConsolidatedMember2213800RM6L9LN78BVA562023-01-012023-12-31cmn:ConsolidatedMemberiso4217:DKKiso4217:DKKxbrli:sharesxbrli:pure

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