Annual Report (ESEF) • Mar 14, 2024
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Download Source FileSKAKO A/S SKAKO A/S CVR: 36440414 Bygmestervej 2 5600 Faaborg Denmark Order backlog (DKKm) 61.9 (-12.4%) Down from 70.7 Revenue (DKKm) 248.2 (+4.5%) Up from 237.5 EBIT before special items (DKKm) 24.6 (+25.1%) Up from 19.7 EBIT margin 9.9% (+1.6pp) Up from 8.3% ROIC 91.5% (+74.6pp) Up from 16.9% 2023 Annual report | Annual report 2023 Page 2 CONTENTS Management review 1. Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.1 Letter to our shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.2 Key events 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.3 Financial key figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.4 Strategy and business model . . . . . . . . . . . . . . . . . . . . . . . . . . 13 1.5 Why invest in SKAKO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.6 Financial ambitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 1.7 Financial review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1.8 Guidance 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2. Discontinued activities, Business unit Concrete . . . . . . . . . . . . . . . . .23 2.0 Financial performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3. Corporate governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3.1 Company announcements 2023 . . . . . . . . . . . . . . . . . . . . . . . 25 3.2 Corporate social responsibility . . . . . . . . . . . . . . . . . . . . . . . . 26 3.3 Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 3.4 Corporate governance and remuneration report . . . . . . . . . . . . . 35 3.5 Executive management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 3.6 Board of directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 3.7 Shareholder information . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 4. Financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 4.1 Statement by Management . . . . . . . . . . . . . . . . . . . . . . . . . . 41 4.2 Independent auditor’s report . . . . . . . . . . . . . . . . . . . . . . . . . 42 4.3 Consolidated financial statements . . . . . . . . . . . . . . . . . . . . . 48 4.4 Consolidated notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 4.5 Parent company financial statements . . . . . . . . . . . . . . . . . . . 99 4.6 Parent company notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Important notice about this document This document contains forward-looking statements. Words such as believe, expect, may, will, plan, strategy, prospect, foresee, estimate, project, anticipate, can, intend, outlook, guidance, target and other words and terms of similar meaning in connection with any discussion of future operation of financial performance identify forward- looking statements. Statements regarding the future are subject to risks and uncertainties that may result in considerable deviations from the outlook set forth. Furthermore, some of these expectations are based on assumptions regarding future events which may prove incorrect. Due to the war in Ukraine, increased geopolitical tension and uncertainty regarding interest rate and inflation, this guidance is subject to a higher-than-normal degree of uncertainty. Due to the divestment of SKAKO Concrete activities at December 29, 2023 these activities are only included as discontinuing activities according to IFRS 5. | Annual report 2023 Page 3 SKAKO 2023 IN BRIEF PLANT ORDERS ( DKK ) 170,302 AFTERSALES ( DKK ) 77,857 Order intake (DKKm) 238.6 Down from 255.9 Order backlog (DKKm) 61.9 Down from 70.7 Revenue (DKKm) 248.2 Up from 237.5 EBIT before special items (DKKm) 24.6 Up from 19.7 EBIT margin before special items 9.9% Up from 8.3% Earnings per share (DKKm) 26.34 Up from 8.13 Employees 115 Up from 112 ROIC 91.5% Up from 16.9% Page 3 35% 40% 15% 10% Recycling Minerals Fasteners Others Revenue 2023 DKK 248.2m Revenue split by plant orders and aftersales | Annual report 2023 Page 4 1. HIGHLIGHTS 1.1 LETTER TO OUR SHARHOLDERS 1.2 KEY EVENTS 2023 1.3 FINANCIAL KEY FIGURES 1.4 STRATEGI & BUSINESS MODEL 1.5 WHY INVEST IN SKAKO 1.6 FINANCIAL AMBITIONS 1.7 FINANCIAL REVIEW 1.8 GUIDANCE 2024 2.0 FINANCIAL PERFORMANCE, DISCONTINUED ACTIVITIES | Annual report 2023 Page 4 | Annual report 2023 Page 5 Minerals/Mining SKAKO has provided sorting and processing solutions to the Mining industry for over 50 years. The industry faces significant investments to ensure raw materials for the green transition. The global market is expected to grow by almost 6% per year until 2028. Recycling SKAKO has provided solutions to the waste sorting market for many years. In 2019, the board decided to invest more actively in this segment through the acquisition of the company Dartek, located in St. Sebastian, Spain. This acquisition has been instrumental in getting deeper understanding of the growing Recycling market boosted by the push for green transition. SKAKO will invest into organic growth and pursue M&A opportunities in this segment. All years are different, and challenges and opportunities vary, but the dependance on skilled and satisfied employees as well as happy customers and partners is always important. We would like to thank everyone for the support and trust in SKAKO in 2023. 1.1 Letter to our shareholders A strong year and ahead of the financial targets in the 2024 plan! 2023 was a year that will go into the SKAKO history books in more than one way. The company delivered very strong results, SKAKO turned 60 years and the SKAKO Concrete activities were sold off to Esbjerg based Zefyr Invest. Entering the year 2023 things were pointing in other directions. The SKAKO Board of Directors had received an offer to sell all SKAKO activities at a price significantly above the market cap at that time and the board was looking into this opportunity. The opportunity did not materialize at the end, and the transaction was called off. However, the Board of Directors decided to test the general market appetite to buy SKAKO or one of the companies in SKAKO. The Esbjerg based industrial investment fund Zefyr Invest ended up buying the SKAKO Concrete activities by December 29 2023, at a significant premium price of DKK 123m, being 11 x EBIT of 2022 and 65% of the SKAKO Group market cap. The transaction unlocked significant shareholder value and the share-price increased with 50% from from 71 to the 110 level. DKK 122m was distributed to shareholders by the end of February, representing more than the proceeds from the transaction after transaction costs. On top of this we are proposing an ordinary dividend of DKK 15m in line with last year. We would like to use this opportunity to thank all SKAKO Concrete employees for an impressive job of turning the Concrete business around over the last 3 years. We are extremely happy to see the business continue under a new long sighted ownership committed to the domicile in Faaborg. The continuing SKAKO Vibration activities performed well in 2023 with an EBIT of DKK 24.6m. This is an increase of 26% compared with 2022 and a little above our latest guidance of DKK 20-24m. 1.1 LETTER TO OUR SHAREHOLDERS Jens Wittrup Willumsen Chairman of the Board Lionel Girieud CEO What should shareholders expect from the new SKAKO? For many years, SKAKO has been operated as two completely separate businesses with their own independent managements and organizations in Concrete and Vibration. The divestment of SKAKO Concrete means that the company now can focus more on the business segments in SKAKO Vibration. This part of SKAKO has for many years delivered a stable return, with good profitability of around 10%, by selling sorting solutions based on vibration technology in 3 main segments: Fasteners SKAKO delivers advanced conveying solutions to subcontractors for the automotive industry. SKAKO is the market leader in Germany, which is by far the largest market in Europe. The European market is expected to grow by almost 5% annually until 2031. | Annual report 2023 Page 6 Our purpose We aim to make customers’ production flow efficient, reliable and sustainable Our values We are dedicated as our knowledge and competencies are inherited from more than 60 years of experience and dedicated to your needs We are reliable as we are known for setting the standards of quality and accuracy within our industry We are accessible as we are well represented around the world and always ready to help Our brand promises We develop sustainable, technology-based and visionary solutions We meet customers with a future-oriented mindset and engage our technical know-how, digitization and innovative capacity in companies’ individual needs We provide profitable business We generate continuous and visible value for our customers and our investors We are big enough to cope - and small enough to care We match customers' needs and deliver scalable solutions We commit ourselves in close partnerships We put our customers’ needs first and bring our service, customer-adapted solutions and engineering expertise. | Annual report 2023 Page 7 The Precast Show In February, SKAKO Concrete participated in the Precast Show in Ohio. 1.2 KEY EVENTS 2023 Brand Manifesto SKAKO Vibration has made a brand manifesto explaining the core of the business, which is to help the Minerals, Fasteners, and Recycling industries use and reuse the planet's resources in the best possible way. From San Diego to Pennsylvania To get closer to the majority of the customers in the USA, SKAKO Concrete has moved the premises from San Diego to Coopersburg, PA. Solar panels SKAKO Vibration France has installed solar panels on the roof and is now generating its own electricity. Q1 Q1 Q1 Q2 | Annual report 2023 Page 7 | Annual report 2023 Page 8 Sale of SKAKO Concrete SKAKO Concrete is no longer a part of SKAKO, as it has been sold to Zefyr Invest A/S. 60-year anniversary On 1 July 2023, SKAKO had 60-year anniversary. The anniversary was celebrated with a reception in June and an employee event in September. Rebuild Ukraine SKAKO Concrete is ready to help rebuild Ukraine and participated in the Rebuild Ukraine exhibition in Poland in November. ExhibitionsPOLLUTEC Both SKAKO Concrete and SKAKO Vibration have participated in many exhibitions during the year. Photo: In October, SKAKO Vibration participated in the Recycling exhibition POLLUTEC in Lyon, France. Q3 Q4 Q4 Q4 | Annual report 2023 Page 8 1.2 KEY EVENTS 2023 | Annual report 2023 Page 9 1.3 Financial key figures 1.3 FINANCIAL KEY FIGURES Key figures and financial ratios – DKK DKK Thousands 2023 2022 2021 2020 2019 INCOME STATEMENT Revenue 248,159 237,535 203,200 167,600 180,600 Gross profit 74,734 68,486 57,000 47,000 52,900 Operating profit (EBIT) before special items 24,599 19,659 14,139 9,576 16,668 Special items (1,934) (1,958) - - - Operating profit (EBIT) after special items 22,662 17,701 14,139 9,576 16,668 Net financial items (3,330) (2,226) (4,004) (2,458) (2,080) Profit before tax 19,332 15,474 10,135 7,118 14,588 Profit after tax 13,774 12,385 8,676 6,300 13,908 Profit for the year discontinued activities 67,463 12,689 2,183 7,946 1,210 Profit for the year 81,237 25,074 10,859 14,246 12,698 BALANCE SHEET Non-current assets 55,001 88,599 84,216 84,265 85,947 Current assets 287,192 295,458 254,804 237,793 236,383 Assets 342,193 384,057 339,020 322,058 322,330 Equity 215,064 146,167 132,237 127,252 124,417 Non-current liabilities 14,454 26,473 29,122 38,455 32,851 Current liabilities 112,675 211,417 177,661 156,351 165,062 Net debt (137,478) 20,997 26,987 40,187 32,370 Net working capital 54,684 110,681 105,703 111,295 93,427 OTHER KEY FIGURES Investment in intangible assets 561 4,153 3,962 7,236 2,703 Investment in tangible assets 10,600 6,174 3,504 5,860 9,415 Cash flow from operating activities (CFFO) 16,783 35,665 30,276 4,806 24,451 Free cash flow 12,159 28,850 22,810 (8,293) (20,855) Average number of employees 115 112 199 195 191 * Free cash flow exclusive proceeds from sales of Concrete activities | Annual report 2023 Page 10 1.3 Financial key figures Figures before 2022 contains the “old” SKAKO Group including SKAKO Vibration and the discontinued business SKAKO Concrete. For calculation of financial ratios please see note 26. Net working capital is calculated as Inventory, Trade receivables and Contract assets less Contract liabilities and Trade payables. Backlog represents revenue from signed contracts or orders executed but not yet completed or performed in full. Key figures and financial ratios – DKK CONTINUED DKK Thousands 2023 2022 2021 2020 2019 FINANCIAL RATIOS Gross profit margin 30.1% 28.8% 25.4% 23.2% 24.3% Profit margin (EBIT margin) before special items 9.9% 8.3% 5.6% 4.5% 5.1% Liquidity ratio 254.9% 126.2% 143.4% 152.1% 141.3% Equity ratio 62.8% 37.5% 39.0% 39.5% 38.6% Return on equity 42.5% 16.3% 10.2% 8.6% 12.2% ROIC 91.5% 16.9% 10,3% 8,3% 9,1% Financial leverage -69.9% 17.8% 20.4% 31.6% 26.1% Net debt to EBITDA -4.7 0.6 1.0 1.8 1.4 Net debt to EBITDA after extraordinary dividends -0.5 - - - - NWC/Revenue 22.0% 25.5% 29.1% 33.1% 26.4% Earnings per share (EPS) 26.34 5.73 2.8 2.0 4.5 Equity value per share 69.74 27.38 42.9 41.3 40.1 Share price 103.0 62.6 55.2 49.8 45.9 Price-book ratio 1.4 1.3 1.3 1.2 1.1 Market cap 319,960 194,461 171,474 154,700 142,584 Order backlog 61,942 70,700 54,300 58,600 60,000 | Annual report 2023 Page 11 1.3 Financial key figures Key figures and financial ratios – EUR EUR Thousands 2023 2022 2021 2020 2019 INCOME STATEMENT Revenue 33,305 31,866 27,275 22,497 24,242 Gross profit 10,030 9,188 7,651 6,309 7,101 Operating profit (EBIT) 3,301 2,637 1,898 1,285 2,237 Special items (260) (263) - - - Operating profit (EBIT) after special items 3,041 2,375 1,898 1,285 2,237 Net financial items (447) (299) (537) (330) (279) Profit before tax 2,595 2,076 1,360 955 1,958 Profit after tax 1,849 1,662 1,165 846 1,867 Profit for the year discontinued activities 9,055 1,702 293 1,066 162 Profit for the year 10,903 3,364 1,457 1,911 1,704 BALANCE SHEET Non-current assets 7,380 11,913 11,325 11,327 11,506 Current assets 38,532 39,728 34,264 31,964 31,644 Assets 45,912 51,640 45,589 43,291 43,150 Equity 28,855 19,654 17,782 17,105 16,655 Non-current liabilities 1,939 3,560 3,916 5,169 4,099 Current liabilities 15,118 28,430 23,890 21,017 22,395 Net debt (18,446) 2,824 3,629 5,402 4,333 Net working capital 7,337 14,884 14,214 14,960 12,373 OTHER KEY FIGURES Investment in intangible assets 75 558 533 973 362 Investment in tangible assets 1,423 828 471 788 1,260 Cash flow from operating activities (CFFO) 2,252 4,785 4,071 644 3,273 Free cash flow * 1,632 3,871 3,067 (1,113) (2,792) Average number of employees 115 112 199 195 191 * Free cash flow exclusive proceeds from sales of Concrete activities | Annual report 2023 Page 12 1.3 Financial key figures Figures before 2022 contains the “old” SKAKO Group including SKAKO Vibration and the discontinued business SKAKO Concrete. Net working capital is calculated as Inventory, Trade receivables and Contract assets less Contract liabilities and Trade payables. Backlog represents revenue from signed contracts or orders executed but not yet completed or performed in full. On the translation of key figures and financial ratios from Danish kroner to euro, Danmarks Nationalbank’s rate of exchange at 31 December 2023 of 745.32 has been used for balance sheet items, and the average rate of exchange of 745.10 has been used for income statementand cash flow items. Key figures and financial ratios – EUR CONTINUED EUR Thousands 2023 2022 2021 2020 2019 FINANCIAL RATIOS Gross profit margin 30.1% 28.8% 25.4% 23.2% 24.3% Profit margin (EBIT margin) 9.9% 8.3% 5.6% 4.5% 5.1% Liquidity ratio 254.9% 139.8% 143.4% 152.1% 141.3% Equity ratio 62.8% 38.1% 39.0% 39.5% 38.6% Return on equity 42.5% 17.9% 10.2% 8.6% 12.2% ROIC 91.5% 19.6% 10,3% 8,3% 9,1% Financial leverage -69.9% -61.5% 20.4% 31.6% 26.1% Net debt to EBITDA -4.7 -3.0 1.0 1.8 1.4 Net debt to EBITDA after extraordinary dividends -0.5 - - - - NWC/Revenue 22.0% 46.6% 29.1% 33.1% 26.4% Earnings per share (EPS) 3.53 1.09 0.38 0.27 0.60 Equity value per share 9.36 6.45 5.77 5.55 5.36 Share price 13.82 8.42 7.42 6.69 6.14 Price-book ratio 1.4 1.3 1.3 1.2 1.1 Market cap 42,929 26,150 23,058 20,795 19,088 Order backlog 8,311 9,499 7,289 7,866 8,054 | Annual report 2023 Page 13 SKAKO Dartek Recycling – Expert Center SKAKO Vibration France Minerals – Expert Center SKAKO Vibration Denmark Fasteners – Expert Center 1.4 Strategy & business model Business areas SKAKO Vibration develops, designs, and sells equipment for the Recycling, Minerals, and Fasteners industries. Our engineering, assembly, and test facilities are located in Faaborg in Denmark, Strasbourg in France, and San Sebastian in Spain, and our products are based on application know-how and own developed technology. SKAKO Vibration has a flexible production where parts are sourced through both internal and external suppliers. Our main markets are the EU and North Africa, where branch companies are located, and we are present in the USA, South America, and Asia through partnerships with local companies. We build our success on an attractive range of high-quality products and a dynamic organization with a high level of design and application know-how. Strategy SKAKO Vibration is one of the leading suppliers of vibratory equipment and offers solutions based on and around vibration technology which are included in its customers' industrial processes. The company is the preferred partner within the Fasteners industry on targeted markets – especially through European, Asian, and US players. In Minerals, we are also strong, particularly in the phosphate mining sector in North Africa and the building sector in Europe. In recent years, we have been focusing on our expansion in Recycling with our complete range of products dedicated to this industrial sector, in particular since we made the acquisition of SKAKO Dartek at the end of 2019. After the Covid-19 pandemic period, the revenue coming from Minerals and Fasteners has returned to normal, while the growth coming from the Recycling industry has been very high. The development of waste recycling is becoming more and more imperative, for which reason we expect the growth trend of the Recycling market to intensify in the decades to come. That’s why we are in the process of developing a strategy based on our 3 main business segments and where the Recycling segment is the main development lever enabling us to achieve a growth of at least 50% by the end of 2028, while maintaining an EBIT ratio of around 10%. 1.4 STRATEGY & BUSINESS MODEL | Annual report 2023 Page 14 Our strategy is to work with the main players in the Fasteners, Minerals and Recycling segments. In these segments we work with industrial customers with equipment to meet with the major changes taking place all over the world. Electric Vehicle technology places new and exciting challenges in the Fasteners sector The last few years have seen the rise of the electric vehicle and, after years of uncertainty, the automotive sector seems to have found its future for decades to come. For the Fasteners industry, this means clarification of market needs and clearer investment opportunities. Indeed, the need for fastening systems is as large in terms of volume for electric vehicles as for internal combustion vehicles: the latter certainly contains more moving parts, but on the other hand, electric vehicles have many new sub-elements such as battery cells and dozens of sensors. In addition, the trend is towards the use of lighter and lighter screws that will require investments in manufacturing tools to enable the production of this new type of fasteners. We therefore remain particularly confident about the future of the Fasteners segment in the coming years where our reputation as a first-class supplier remains at an all-time high. The Minerals industry, a rapidly changing sector The Minerals industry is facing, perhaps more than any other industrial sector, paradigm shifts through green growth. On one side, a global rush for Minerals is underway, as all countries want to strengthen its mining industry to secure the lithium, nickel, copper and rare earth elements needed for a green future. Moreover, recent crises have shown the interest of states to secure their supply chain of all type of raw materials. These underlying trends will have a positive effect on investments in the sector in the years to come. On the other side, driven by private investments and incentives from public bodies, the construction and demolition material recycling sector is emerging as the major development path for the sector's historical players. Our sorting and washing equipment, recognized for its reliability and efficiency, is one of the key pieces of equipment for industrial processes in this sector. Recycling segment as the main development lever Private sector investment in the Recycling segment has increased at an annual rate of 16.4% over the last 5 years and this rate is expected to continue to grow in the future, particularly in Europe which has implemented an ambitious circular economy plan. It is precisely in Europe, where the heart of our sales network is located and where there are common laws and regulations in terms of recycling, that we are focusing our resources and energy to increase our sales in this sector. To this end, through the experience acquired by SKAKO Dartek, but also by the other companies of the group whose know-how in Minerals & Fasteners industry can also solve Recycling pain points, we continue to develop our own range of products that fulfil the following functions required by Recycling players: • Our equipment sorts recycled materials according to their size 1 , • Our equipment sorts recycled materials according to their density 1 , • Our equipment washes recycled materials 2 , • Our equipment distributes recycled materials in a smooth, uniform and controlled layer 3 . 1 Sorting is essential for the Recycling sector and all sorting techniques are used and complement each other in the industrial processes of this segment. 2 Washing is one of the key operations in the recycling of construction & demolition materials and our long experience in the Minerals industry positions the company as one of the European leaders in this field. 3 Most sorting systems (optical or magnetic for example) need to be fed correctly and SKAKO Vibration has developed a remarkable know-how in this field, in particular thanks to the challenges posed by our customers of the Fasteners sector. SKAKO logwasher, designed to special needs of C&D waste recycling STRATEGY & BUSINESS MODEL | Annual report 2023 Page 15 1.5 Why invest in SKAKO 1.5 WHY INVEST IN SKAKO SKAKO Group At SKAKO we aim to make our customers’ production flow as hassle-free, reliable, and sustainable as possible. We use our know-how to define the industry and develop visionary sustainable and technology-based solutions. Through this, we provide continued value to our partners and customers and increased value to our shareholders. The markets in which SKAKO is operating, are basically in constant growth. There has for decades been a growing demand for building materials as well as industrial machinery. There are currently no signs of long-term reduction of this growth. SKAKO is a leading supplier in the markets we operate in. Consequently, we have a brand promise where our customers expect products of high quality and a high level of sustainability. Further, our customers expect to meet highly qualified employees in all phases of product lifetime. With this business model, we have established a comprehensive installed fleet of SKAKO machinery all over the world and we support our customers with support, spares and retrofit, whenever needed. The SKAKO business model has proven to be sustainable, even under challenging business conditions. SKAKO was also impacted by the Covid-19, but succeeded in remaining profitable during the pandemic, and then managed to grow despite the war in Ukraine. With the continued growth in the existing markets and strong potential to expand the business into new market segments, we are convinced that the potential for future profitable growth is strong Capital structure SKAKO has a capital structure target of net debt to EBITDA of up to 2.5. After distribution of extraordinary dividends of DKK 122m SKAKO has a net debt to EBITDA of minus 0.6 (net cash positive) giving SKAKO ample capacity to pursue value creating M&A. It is our ambition to keep returning strong dividends to our shareholders in line with the ordinary dividends paid out in previous years. For our financial ambition for the SKAKO Group, please see section 1.6. The new SKAKO (Vibration) The new SKAKO runs a more focused business based on vibration technology and advanced conveyer solutions. This business is financially attractive because : SKAKO operates in 3 growing segments: • Recycling – with growth driven by macro societal trends and large investments in key European markets • Minerals/Mining – with growth driven by the need for a green transition • Fasteners for the automotive industry and the building industry • A continued growth is expected from the investments in EV production. • SKAKO is the market leader in Germany, which holds the largest customer base SKAKO has production facilities in Denmark, France and Spain servicing all 3 segments. • The Fasteners and Minerals segments are expected to grow around 5% p.a. while the Recycling segment is expected to double by end of 2028 with a backend loaded profile • SKAKO has a large installed base of equipment which creates a constant sale of spare part giving an attractive aftersales-share of 35% • SKAKO already has an organization in place in key markets • Operating profit margin of around 10%. | Annual report 2023 Page 16 1.6 FINANCIAL AMBITIONS Previous financial ambitions SKAKO Group before divestment 0,0% 1,0% 2,0% 3,0% 4,0% 5,0% 6,0% 7,0% 8,0% 9,0% 0 100 200 300 400 500 600 2020 2021 2022 2023 A-2024 A-2024 New EBIT% mDKK Revenue EBIT margin 1.6 Financial ambitions Previous financial ambitions already met in 2023 • Due to the positive development in SKAKO Group the financial ambitions were increased in August 2023. • These financial ambitions were already met with the financial result in 2023 which were one year a head of the ambitions. New financial ambitions for the continuing Vibration activities • Revenue is expected to grow around 50% over the period 2023 to 2028 with a backend loaded profile • Solid revenue growth of around 5% p.a. in Fasteners and Minerals segments • Revenue in Recycling is expected to double by end of 2028 with a backend loaded profile • An operating profit margin of around 10% New financial ambitions for the continuing Vibration activities 0,0% 2,0% 4,0% 6,0% 8,0% 10,0% 12,0% 0 50 100 150 200 250 300 350 400 2023 2024 2025 2026 2027 2028 EBIT% mDKK Revenue EBIT margin | Annual report 2023 Page 17 1.7 Financial review 1.7 FINANCIAL REVIEW DKK Thousands 2023 2022 Change Plant order revenue 170,302 162,211 5.0% Aftersales revenue 77,857 75,324 3.4% Total revenue 248,159 237,535 4.5% Production costs (173,425) (169,049) 2.6% Gross profit 74,734 68,486 9.1% Gross profit margin 30.1% 28.8% 1.3pp Distribution costs (26,010) (25,615) 1.5% Administrative expenses (24,126) (23,211) 3.9% Operating profit beforespecial items (EBIT) 24,599 19,659 25.1% Operating p rofit margin before special items (EBIT margin) 9.9% 8.3% 1.6pp Special items (1,934) (1,958) -1.2% Operating profit after special items (EBIT) 22,662 17,701 28.0% Profit for the year before discontinued activities 13,774 12,385 11.2% Profit for discontinued activities 67,463 12,689 431.7% Profit for the period 81,237 25,074 224.0% Order backlog beginning of period 72,550 122,382 -40.7% Order intake 237,551 255,900 -7.2% Revenue (248,159) 237,525 4.5% Order backlog end of period 61,942 70,700 -12.4% Divestment of Concrete activities The SKAKO Concrete activities were sold to Zefyr Invest IV as of December 29, 2023. Therefor the SKAKO Concrete activities are only included in the income statement as discontinued business. Comparison figures in the income statement for 2022 therefor only include SKAKO Vibration activities whereas prior years have not been restated. All numbers in balance sheet for 2022 are unchanged and includes also discontinued activities in accordance with IFRS5. Revenue After the improvement of market condition in 2022 following the Covid-19 pandemic market activities stabilised in 2023 and a normalisation of the supply chain situation was also seen. Revenue increased by 4.5% to DKK 248m compared to 2022 with an increase in plant sales of 5.0% and aftersales of 3.4%. Revenue growth was driven by a growth of 7.5% in Recycling and 12% in Fasteners whereas the Minerals decreased with 2.8%. Order intake and backlog Order intake was DKK 239m, a decrease of 7.2% compared to 2022 which was positively impacted by orders postponed due to the Covid-19 pandemic. Compared to previous years order intake in 2023 was at a high level. Order backlog declined by 12% to DKK 62m compared to DKK 71m at the end of 2022 which was positively impacted by postponed orders from the Covid-19 pandemic. Based on the order backlog profile, the entire order backlog is expected to be converted into revenue in 2024. In 2024 a strong order intake is expected in the Recycling segment and solid growth is also expected in the Minerals and Fasteners segments. | Annual report 2023 Page 18 1.7 Financial review 1.7 FINANCIAL REVIEW Gross profit and margin Gross profit increased by 9.1% to DKK 75m in 2023, compared to DKK 68m in 2022. The increase was driven by higher revenue and an increase in gross profit margin of 1.3pp to 30.1% due to higher margins on plant sales. Margins were positively impacted by the efficiency programme in SKAKO Vibration including tighter cost control, and a closer cooperation with suppliers. Capacity costs Capacity costs increased with 2.7%, lower than revenue growth of 4.5%. Distribution costs increased with 1.5% while administrative expenses increased with 3.9%. The relatively large increase in administrative expenses is due to costs related to being a listed company which can now only be allocated to the Vibration activities after the divestment of Concrete activities. Operating profit Operating profit before special items increased with 25% to DKK 24.6m driven by growth in gross profit and an increase in margin of 1.6pp to 9.9%. The strong growth in operating profit is a consequence of higher efficiency in production and a modest growth in capacity costs. The realized operating profit of DKK 24.6m is slightly above the latest guidance of DKK 20-24m communicated on November 30, 2023. Special items Special items consist of transaction costs for the terminated transaction process with Zefyr Invest in Spring 2023 and amount to DKK 1.9m. Transaction costs related to the divestment of the Concrete activities are included under discontinued activities. Net financial items Net financial items amounted to a cost of DKK 3.3m compared to DKK 2.2m in 2022 and consist mainly of interest income, interest expenses along with realized and unrealized foreign exchange losses. This increase is due to higher interest rates. Tax The income tax expense for the year amounted to DKK 5.6m (2022: DKK 3.1m), corresponding to an effective tax rate of 29% (2022: 20%). The effective tax rate was effected by correction of income tax in foreign countries. Profit for the year for continuing operations Profit for the year before tax increased by 25% to DKK 19.3m while profit for the year increased by 11% to DKK 13.8. Result of the discontinued operations Profit for the divestment of the Concrete activities amounts to DKK 67m including transaction costs. Result including discontinued operations The result including discontinued operations amounts to DKK 81m. Earnings per share Due to the strong result from continuing operations and the profit from the divestment of the Concrete activities earnings per share increased from DKK 8.1 in 2022 to DKK 26.3 in 2023. | Annual report 2023 Page 19 1.7 Financial review 1.7 FINANCIAL REVIEW Balance sheet As of 31 December 2023, the Group’s assets totalled DKK 342m compared to DKK 384m last year. The increase in assets is primarily due to the proceeds from the divestment of the Concrete activities which have not yet been distributed to shareholders. Non-current assets decreased by DKK 34m to DKK 55m, while current assets decreased with DKK 8m to DKK 287m due to the proceeds from the divestment of the Concrete activities. Net debt was cash positive with DKK 137m compared to a negative net debt of DKK 15m in 2022. The large improvement in net debt is mainly due to the proceeds from the divestment of the Concrete activities was distributed to shareholders end of February 2024. Net working capital was reduced from DKK 111m in 2022 to DKK 55m in 2023 primarily due to the divestment of the Concrete activities. Besides this net working capital for the Vibration activities were reduced significantly among others due to lower receivables. Return on invested capital In 2023, return on invested capital amounted to 91.5% compared to 16.9% in 2022 following the successful divestment of the Concrete activities. Cash flow development Cash flow from operating and investing activities were DKK 17m and DKK 162m respectively, both being impacted by the IFRS accounting principles regarding the divestment of the Concrete activities. Capital structure Net interest bearing debt / EBITDA improved significantly to negative 4.7 compared to 0.6 in 2022 due to the proceeds from the divestment of the Concrete activities which had not yet been distributed to shareholders at the end of 2023. After the distribution of extraordinary dividends of DKK 122m following the divestment of the Concrete activities net interest bearing debt / EBITDA amounts to negative 0.5. This is well below the gearing target of up to 2.5 and shows that SKAKO has strong financial capacity to pay out high dividends in the future and to pursue acquisitions according to our strategy. | Annual report 2023 Page 20 1.7 FINANCIAL REVIEW Equity The Group’s equity was DKK 215m on 31 December 2023 (DKK 146m on 31 December 2022) matching an equity ratio of 62.8% (37.5% on 31 December 2022). The increase in equity is mainly due to profit for the year of DKK 13.8m and the result of discontinued activities of DKK 67.5. Dividends Based on the results in 2023 and capital structure of SKAKO A/S as of 31 December 2023, the Board of Directors recommends a dividend distribution of DKK 5 per share (2022: DKK 5 per share) corresponding to 113% of profit for the year before discontinued activities and a total dividend distribution of DKK 15.4m. With a share price of DKK 103.0 as of 31 December 2022, this corresponds to a dividend yield of 4.9%. Ex-dividend date: 17 April 2024 Record date: 17 April 2024 Payment date: 23 April 2024 Interim dividends No interim dividends have been paid during the financial year 2023. In February 2024 an extraordinary dividend of DKK 39.3 per share was paid to shareholders following the divestment of the Concrete activities. The Parent company The result before interest and tax in the Parent company amounts to a profit of DKK 69.7m. The profit come from dividend DKK 75m from subsidiary whereas the costs primarily come from remuneration of the Board of Directors and costs for warrants and special items covering cost for the terminated divestment of SKAKO to Zefyr Spring 2023. Events after the balance sheet date There have been no events that materially affect the assessment of this Annual Report 2023 after the balance sheet date and up to today besides the extraordinary dividend. | Annual report 2023 Page 21 1.7 Financial review DKK Thousands Q42023 Q42022 Change Plant order revenue 39,721 38,070 4.3% Aftersales revenue 31,176 27,408 13.7% Total revenue 70,897 65,478 8.3% Production costs (50,024) (45,030) 11.1% Gross profit 20,873 20,448 2.1% Gross profit margin 29.4% 31.2% -1.8pp Distribution costs (6,813) (6,861) 0.0% Administrative expenses (6,434) (6,698) -4.0% Operating profit (EBIT) 7,548 6,581 14.7% Profit margin (EBIT margin) 10.6% 10.1% 0.5pp Profit for the period before discontinued activities 4,558 - NA Profit for discontinued activities 59,572 - NA Profit for the period 71,903 10,839 563.4% Order backlog beginning of period 72,107 84,500 -8.7% Order intake 60,732 57,178 6.2% Revenue 70,897 65,478 8.3% Order backlog end of period 61,942 70,700 -12.4% Quarterly figures are unaudited Consolidated Q4 – 2023 result for continued activities | Annual report 2023 Page 22 Guidance 2024 Based on the order backlog and expected strong revenue growth in Recycling and solid growth in revenue in Fasteners and Minerals the guidance for 2024 is a follows: • Revenue is expected to grow organic by 5-9% • Operating profit (EBIT) before special items is expected to be DKK 24-28m The guidance is based on a continued normalization of market conditions with no new material adverse events affecting the global economies. Due to the increased geopolitical tension and uncertainty regarding interest rate and inflation, this guidance is subject to a higher-than-normal degree of uncertainty. 1.8 GUIDANCE 2024 - Continuing activities | Annual report 2023 Page 22 | Annual report 2023 Page 23 2.0 Financial performance DKK million 2023 2022 Change Plant order revenue 162.5 94.1 72.7% Aftersales revenue 106.0 110.6 -4.2% Total revenue 268.5 204.7 31.2% Gross profit 51.8 46.2 12.1% Gross profit margin 19.3% 22.5% -3.2pp Operating profit (EBIT) 16.9 11.2 50.9% Operating profit margin (EBIT margin) 6.3% 5.5% 0.8pp 2.0 FINANCIAL PERFORMANCE for discontinued Concrete activities Revenue and EBIT margin 2020 2021 Financial performance in 2023 Revenue in Concrete increased with 31% to DKK 269m driven by strong growth in plant sales of 72% while aftersales decreased by 4.2%. All key markets in the US, U.K., France and Germany contributed to this strong growth supported by continuous strategic initiatives on enhancing customer support and improving project execution. Gross profit increased with 12% to DKK 51.8 m driven by strong revenue growth while gross profit margin decrease by 3.2pp to 19.3%. The decrease in gross profit margin is due to change in mix between plant sales and aftersales. Operating profit increased with 51% to DKK 17m driven by a high revenue growth. Operating profit margin improved with 0.8pp as a consequence of the high revenue growth and lower growth in capacity costs. | Annual report 2023 Page 24 3. CORPORATE GOVERNANCE 3.1 COMPANY ANNOUNCEMENTS IN 2023 3.2 CORPORATE SOCIAL MANAGEMENT 3.3 RISK MANAGEMENT 3.4 CORPORATE GOVERNANCE AND REMUNERATION REPORT 3.5 EXECUTIVE MANAGEMENT 3.6 BOARD OF DIRECTORS 3.7 SHAREHOLDER INFORMATION | Annual report 2023 Page 24 | Annual report 2023 Page 25 3.1 Company announcements 2023 3.1 COMPANY ANNOUNCEMENTS 2023 Main company announcements in 2023 27 January 01 – SKAKO A//S has signed a non-binding letter of intent regarding divestment of all operating activities 22 February 02 – Discussions regarding the sale of all operating activities between SKAKO A/S and Zefyr have ended 9 March 03 – Announcement of full-year expectations for 2023 15 March 04 – Annual report 2022 28 March 05 – Notice about ordinary general meeting 19 April 06 – Course of general meeting on 19 April 2023 23 May 07 – Interim report for the first quarter of 2023 15 August 08 – Update on full-year expectations for 2023 23 August 09 – Interim report for the first two quarters of 2023 8 November 10 – Interim report for the first three quarters of 2023 30 November 11 – SKAKO sells the activities in SKAKO Concrete to Zefyr Invest IV A/S 21 December 12 – Financial calendar 2024 The company announcements are available on the company website: https://skako.com/about/investor-relations/#company_announcements | Annual report 2023 Page 26 3.2 Corporate social responsibility 3.2 CORPORATE SOCIAL RESPONSIBILITY Report on Corporate Social Responsibility, cf. Section 99a of the Danish Financial Statements Act SKAKO strives to operate its business in a responsible manner and wants to comply with the legislation in all the countries where operations are conducted. Furthermore, compliance with Human Rights and consideration for the environment are considerable focus areas for the Group. SKAKO’s work with corporate social responsibility is based on value creation and risk management. SKAKO has chosen to focus its work on social responsibility within five areas: Environment, human rights, working environment, anti-corruption, and equality. The policies below have been approved by the Board of Directors. For a description of SKAKOs business model please see section 1.4. Result for 2023 compared to goal for 2023 SKAKOs consumption of kWh contains both continued and discontinued activities. SKAKO realized 7.0% lower consumption of kWh in 2023 compared to the goal of 850,000 kWh. The was due to the full year effect of switching to LED lighting and heating via heat pumps in Denmark and solar collectors in France as well as general focus on optimization of consumption in production. Results & goals Goal for 2023 Result 2023 Result 2022 Result 2021 Result 2020 850,000 790,316 804,777 848,268 865,865 Policy SKAKO seeks to reduce its impact on the environment by reducing energy consumption year by year. The Group is a know-how and engineering company with production of key components. The production mainly consists of assembling and testing and does not include energy-demanding or polluting processes. All surface treatment processes are outsourced to sub-suppliers. A part of SKAKO’s supplier “Code of Conduct” addresses impact on the environment. See under Human rights for more information about the supplier “Code of Conduct”. Furthermore, SKAKO actively seeks to reduce its energy consumption by, for example, installing LED lighting in its facilities. We are also currently exploring the possibility of installing solar roof panels. Environment Actions SKAKO will reduce consumption of kWh year by year in its production sites. We expect, however, to see a small increase in consumed kWh in 2024 since we expect a growth in activity compared to 2024. KPI Consumed kWh in production sites. Goal for 2024 is 505,000 kWh containing only Vibration activities. The new SKAKO Group aims to lower the consumption of kWh year by year even though the business is expected to grow. Risks It is not possible to decrease energy consumption fast enough to due high growth in activities. | Annual report 2023 Page 27 3.2 Corporate social responsibility Working environment Policy Our employees are our most valuable asset and key to providing high-quality products and services to our customers. It is vital to SKAKO’s future success that SKAKO is a safe, motivating and developing place to work. Actions 1. The sick rate among employees is monitored and we follow up on employees with high absence. 2. SKAKO will produce an annual employee satisfaction survey to monitor the development in employee satisfaction. Processes are in place to ensure that low-scoring departments receive guidance on how to improve employee satisfaction. 3. Number of on-the-job accidents is measured. 4. All employees must have at least one yearly performance appraisal interview. KPIs 1. The average sick rate among employees. 2. An average employee satisfaction score of at least 3.5. 3. Number of on-the-job accidents. 4. Percentage of performance appraisal interviews each year. Results for 2023 compared to goals for 2023 1. SKAKO is revising its global setup for monitoring sick days. 2. In 2023 an employee survey was performed. 3. In 2023, SKAKO had 8 on-the-job accidents. Management does not find this satisfactory although it has been minor on-the-job accidents and will keep working on eliminating on-the-job accidents entirely. 4. In 2023, we did not meet our target for appraisal interviews. As this is a vital part of the employee well-being, we will keep pushing for this. Results & goals Goal for 2023 Result 2023 Result 2022 Result 2021 Result 2020 1 6.0 5.0 5.5 8.4 7.8 2 >3.5 3.8 4.1 N/A 3.8 3 0 8 10 5 7 4 100% 85% 85% 85% 90% Risks 1. The rate of illness increases due to an epidemic. 2. Internal information on corrective actions is not sufficient. 3. Unintentional violations of safety standards. 4. Performance appraisal interviews are not carried out on time due to business travels. *Measured as total number of sick days divided by the average number of employees in the year On a scale from 1 to 5, where 5 is the most positive score Goal for 2024 Result 2023 1 5.0 5.0 2 >3.5 4.0 3 0 4 4 90% 80% Continuing activities | Annual report 2023 Page 28 3.2 Corporate social responsibility Anti-corruption and bribery Policy SKAKO seeks to avoid corruption and bribery by creating a framework that secures that employees at SKAKO are able to abide to laws and regulations, and that there will never exist any doubt with regards to a SKAKO employee’s impartiality. Actions 1. SKAKO enforces a gift policy. 2. SKAKO has introduced an internal whistle blower scheme to give employees the opportunity to report on corruption, bribery and other matters while being anonymous. 3. SKAKO has developed an Employee “Code of Conduct” e-learning that describes the way SKAKO expects all its employees to act in accordance with laws and regulations. The employee “Code of Conduct” also describes usage of the whistle blower scheme. Every year all SKAKO employees must conduct the Employee “Code of Conduct” e-learning session. 4. Maintain whistle blower scheme to also be available for external parties. KPIs 2. No reported violations of anti-corruption laws and regulations, and SKAKO Employee Code of Conduct. 3. All employees to pass SKAKO’s Employee “Code of Conduct” e-learning. Results for 2023 compared to goals for 2023 1. SKAKO A/S has maintained its gift policy throughout 2023. 2. SKAKO A/S has received no reported violations of anti-corruption laws and regulations, and SKAKO Employee Code of Conduct in 2023. 3. 75% of SKAKO employees have passed the SKAKO Employee Code of Conduct e-learning. The main reason for the result not being 100% is new hires in late 2023 who did not complete the Code of Conduct session yet. 4. In 2023, SKAKO has maintained the whistle blower scheme to also be available to external parties. Furthermore, the whistle blower scheme is part of the SKAKO Employee Code of Conduct e-learning. Results & goals Risks 2. Employees lack knowledge of the whistle blower scheme. 3. Employee “Code of Conduct” e-learning is not prioritized. Goal for 2024 Result for 2023 Result for 2022 Result 2021 2 0 0 0 0 3 100% 75% 80% 95% | Annual report 2023 Page 29 3.2 Corporate social responsibility Human rights Policy To SKAKO, respect of human rights is about the company’s own employees’ conditions and securing that suppliers and sub-suppliers deliver services to the Group in a way that considers their employees’ rights including safety and health. Actions SKAKO has formulated a Supplier ”Code of Conduct” that specifies principles we expect our supplier to follow. This ensures that suppliers and their suppliers produce and deliver their services to the Group in a way that considers the environment and the employees’ rights. KPI The part of our main suppliers that have signed our supplier “Code of Conduct”. Result for 2023 compared to goal for 2023 SKAKO has not reached the goal of having all suppliers sign our code of conduct. This will be another target in 2024 and forward. Code of Conduct for SKAKO Group is currently being revised and will be launched in summer 2024. Results & goals Risks Lack of transparency in compliance with SKAKOs Supplier “Code of Conduct”. Goal 2024 Result for 2023 Goal for 2022 Result 2022 Result 2021 95% 90% 95% 95% 85% | Annual report 2023 Page 30 3.2 Corporate social responsibility Equality, cf. Section 99b of the Danish Financial Statements Act Policy At SKAKO A/S we believe that a diverse and tolerant organization makes the company stronger, increases the competitiveness and creates a good and innovative working environment. We want to develop and benefit from the total potential of all employees and that all employees can develop their full potential in balance between working life and private life. At present, SKAKO A/S has one female board member who entered the Board of Directors in April 2020 whereby SKAKO reached its goal of having at least one female board member by 2023. However, the Board of Directors is aware that this still represents an underrepresentation and wants to support and contribute to the part of female board members being increased. Considering SKAKO A/S’s business and the line of business within which SKAKO A/S is operating, the Board of Directors has set the specific goal that the part of women elected at the general meeting is to amount to at least 40% by 2027. In the view of the Board of Directors, this goal is an ambitious and realistic goal for a company within the lines of business in which SKAKO is operating as these lines of business traditionally do not have a large number of women neither in the board of directors nor at the other management levels. Within the last 12 months we succeeded in hiring one female manager who replaced a male manager. It is the plan of the Board of Directors to further increase the number of female managers in the years to come. Ultimately, SKAKO A/S’s shareholders elect the Board of Directors at the company’s general assembly and consequently also determine the gender composition of the Board of Directors. To the extent that the Board of Directors proposes new candidates for the Board of Directors, the Board of Directors will regard gender as one separate parameter in order to reach the determined goal. When candidates are proposed for SKAKO A/S’s Board of Directors, it is essential that the members represent professional competences relevant to SKAKO A/S. It is SKAKO’s goal to increase the part of women in the management group within a three-year period. SKAKO A/S will reach the goal by requiring candidates of both genders in the recruiting phase and by taking into account the underrepresented gender at succession planning. SKAKO works very intentionally on showing multiplicity in its marketing to signal that the company wants to reflect the society in its employee composition. Actions 1. SKAKO actively seeks to recruit new employees of all ethnicities and genders. 2. SKAKO seeks to have an improved gender distribution in employees and Management. 3. SKAKO seeks to have an improved gender distribution in the Board of Directors. There has been no change in the Board of Directors in 2023, and therefore the search of the market for relevant candidates of the underrepresented gender has not been relevant. KPIs 1. Share of the underrepresented gender among all employees. 2. Share of the underrepresented gender among all managers. 3. Share of the underrepresented gender in Management. 4. Share of the underrepresented gender in the Board of Directors. Results for 2023 compared to goals for 2023 1. In 2023, SKAKO is status quo, compared to 2022. However, the goal has not yet been realized. According to our policy this will be a continuous focus for SKAKO. 2. In 2023, SKAKO is status quo, compared to 2022. However, the goal has not yet been realized. According to our policy this will be a continuous focus for SKAKO. 3. In 2023, SKAKO is status quo, compared to 2022. Target has not been achieved, but will be part of the evaluation criteria for future recruitments to management 4. In 2023, the Board of Directors remained unchanged, with one female board member. Results & goals Risks • We will not reach our targets because SKAKO’s industry is historically a male- dominated industry with limited access to female candidates. Goal for 2024 Result 2023 Result 2022 Result 2021 Result 2020 Result 2019 1 20% women 17% women 17% women 17% women 17% women 14% women 2 20% women 6% women n/a n/a n/a n/a 3 20% women 0% women 17% women 17% women 17% women 13% women 4 20% women 20% women 20% women 20% women 20% women 0% women 2023 Board of Directors 5 Underrepresented gender % 20% Goal (target 2027) % 40% Other management, members 2 Underrepresented gender % 0% SKAKO A/S is below 50 employees and therefor there are no goal for other management. | Annual report 2023 Page 31 3.2 Corporate social responsibility Diversity, cf. Section 107d of the Danish Financial Statements Act Policy At SKAKO A/S we believe that a diverse and tolerant organization makes the company stronger, increases the competitiveness and creates a good and innovative working environment. We want to develop and benefit from the total potential of all employees and that all employees can develop their full potential in balance between working life and private life. Therefore, no discrimination based on gender, religion, ethnicity, sexual orientation, etc. is tolerated in SKAKO. When recruiting members to the SKAKO management team, we are convinced that diversity will add value to the company. To make sure all employees and management in SKAKO comply with SKAKOs policies of tolerance and inclusion, we have established an Employee “Code of Conduct” e-learning that describes the way SKAKO expects all its employees to act in accordance with our policies, and laws and regulations. Actions 1. SKAKO has developed an Employee “Code of Conduct” e-learning that describes the way SKAKO expects all its employees to act in accordance with laws and regulations. The employee “Code of Conduct” also describes usage of the whistle blower scheme. Every year all SKAKO employees must carry through the Employee “Code of Conduct” e-learning. The e-learning provides the management with insight on how to secure diversity in the organization and on management level. 2. Enhance the awareness in the SKAKO management team on the benefits of diversity. This could be in a workshop with this specific purpose KPIs 1. All employees to pass SKAKO’s Employee “Code of Conduct” e-learning. Results for 2023 compared to goals for 2023 1. 75% of SKAKO employees have passed the SKAKO Employee Code of Conduct e- learning. Risks 1. Employee “Code of Conduct” e-learning is not prioritized. Goal for 2024 Result 2023 Result 2022 Result 2021 Result 2020 1 100% 75% 80% 95% 90% Results & goals | Annual report 2023 Page 32 3.2 Data Ethics Data ethics (§99d ÅRL) Policy At SKAKO A/S we are acting with responsibility, when it comes to data ethics. This applies to all data, i.e. business intelligence data, employee information and supplier/ customer information. We have defined eight basic principles of working with data: Welfare: Data on society, democracy and social relations are treated with respect. Dignity: Treatment of data may not be used to harm an individual. Privacy: Any data treatment shall respect privacy and personal data shall be protected. It should always be considered what data are necessary and what are the sources of the data. Own rights: The individual should always have the right to obtain information on what data are stored and know for what purpose the data are intended. Equality: Treatment of data may not discriminate with regards to ethnicity, sexuality, sex, political opinions, religion, generical data, disability or other health related information. Justice: Treatment of data is performed with responsibility to local legislation. Data security: Treatment of data shall be sufficiently safe, robust and reliable. Data shall be stored and shared in way that unintended availability for unauthorized use is impossible. Responsibility: SKAKO is responsible for data collected, stored and distributed by SKAKO. Actions 1. Continuously communicate the basic principles of data ethics to SKAKO staff. 2. Implement annual review of data stored in CRM system. 3. Secure that all customers and suppliers are confirming their consent with data stored in CRM. | Annual report 2023 Page 33 3.3 Risk management 3.3 RISK MANAGEMENT First and foremost, risk management activities in the SKAKO Group focus on financial risks to which the Company is fairly likely to be exposed. In connection with the preparation of the Group’s strategic, budgetary and annual plans, the Board of Directors considers the risks identified in these activities. Financial risks Financial risk management concentrates on identifying risks in respect of exchange rates, credit and liquidity with a view to protecting the Group against potential losses and ensuring that Management’s forecasts for the current year are only to a limited extent affected by changes or events in the surrounding world – be the changes in exchange rates or in interest rates. It is Group policy to exclusively hedge financial risks arising from our commercial activities and not to undertake any financial transactions of a speculative nature. Exchange rate risks With more than 90% of the Group’s sales being invoiced in DKK and EUR currencies, reported revenue is only limited affected by movements in the Group’s trading currencies. Credit risks The Group’s credit risks relate primarily to trade receivables. For large projects we have a signed Letter of Credit from the customer’s bank before we undertake any work. Our remaining customer base is fragmented so credit risks in general only lead to minor losses on individual customers. Overall, we therefore estimate that we have no major credit exposure on Group level. Liquidity risk The Group aims at having sufficient cash resources to be able to take appropriate steps in case of unforeseen fluctuations in cash outflows. We have access to suitable undrawn credit facilities, and the liquidity risk is therefore considered to be low. Financial reporting process and internal controls SKAKO has established and maintains an internal control setup that supports correct and timely reporting to Management and Market. The responsibility of maintaining sufficient and efficient internal control and risk management in connection with financial reporting lies with the Executive Board. The Board of Directors has assessed the Group’s existing control environment and concluded that it is adequate and that there is no need for setting up an internal audit function. Once every quarter we carry through a detailed planning and forecast process, and any deviations from the plans and budgets are carefully monitored. Furthermore, we perform weekly, monthly and quarterly reviews and assessments of all large projects. | Annual report 2023 Page 34 3.3 Risk management Safeguarding corporate assets Management continuously seeks to minimize any financial consequences of damage to corporate assets including any operating losses resulting from such damage. We have invested in security and surveillance systems to prevent damage and to minimize such damage, should it arise. Major risks, which cannot be adequately minimized, are identified by the Company’s Management, who will ensure that appropriate insurance policies are, on a continuous basis, established under the Group’s global insurance program administered by recognized and credit- rated insurance brokers and that such insurances are taken out with insurance companies with high credit ratings. The Group’s insurance program has deductible clauses in line with normal market terms. The Board of Directors reviews the Company’s insurance policies once a year including the coverage of identified risks and is briefed regularly on developments in identified risks. The purpose of this reporting is to keep the Board members fully updated and to facilitate corrective action to minimize any such risks. Declining market conditions Management continuously monitors market conditions and maintains close relations to significant customers in order to be able to make a timely response in light of changing circumstances. Monitoring of consequences regarding the Corona virus falls under this category, as well as geopolitical risks such as the current Ukraine war, inflation and increasing interest rates. Cyber security SKAKO maintains and enforces an IT safety policy to reduce risks from cyber crime. Furthermore, SKAKO has implemented an IT contingency plan based on recommendations from the Danish Data Protection Agency and other recommended authorities regarding cyber security. SKAKO’s head of IT operations oversees monitoring and enforcing of the IT contingency plan. Project execution The Company continuously executes projects across the world, and in some cases faces challenges in the execution. The Management continuously monitors project execution to identify possible risks as early as possible. Furthermore, projects are actively distributed among project managers to ensure that the most experienced managers execute the most complex projects. | Annual report 2023 Page 353.4 Corporate governance and remuneration report 3.4 CORPORATE GOVERNANCE AND REMUNERATION REPORT Recommendations on corporate governance As a listed company on 31 December 2023, SKAKO observes the ´Recommendations on Corporate Governance´ (issued in November 2017 and updated in December 2020) implemented by Nasdaq Copenhagen in its ´Rules for issuers of shares´. The ´Recommendations on Corporate Governance´ contain 40 recommendations and are based on the comply-or-explain principle, which makes it legitimate for a company to explain why it does not comply with them. SKAKO fully complies with 38 of the 40 recommendations, and partially complies with one, and therefore complies with the ´Recommendations on Corporate Governance´ in all material respects. A complete schematic presentation of the recommendations and how we comply, Statutory report on corporate governance, cf. section 107 b of the Danish Financial Statements Act, is available on our website under Investor Relations. https://skako.com/about/investor-relations/ (in the Master Data section) We find it relevant to highlight a number of aspects and supplementary information on corporate governance in the SKAKO Group in this chapter. Deviations from recommendations SKAKO has not established a nomination or a remuneration committee. Given the size of SKAKO, the Board of Directors finds it most suitable that the total Board of Directors takes care of the tasks. SKAKO has disclosed a tax policy and it has been approved by the Board of Directors and are available on our website under Investor Relations. Audit committee The Company’s Board of Directors has set up an audit committee. The Board of Directors appoints the chairman of the Audit Committee, who must be independent and who must not be Chairman of the Board of Directors. According to its charter, the Audit Committee, among other things, assists the Board of Directors in relation to internal accounting and financial control systems, the integrity of the company’s financial reports and engagements with external auditors. The audit committee also carries out ongoing assessments of the company’s financial and business risks. The audit committee has also a special focus on the divestment of Concrete activities. In 2023, the committee reviewed the main accounting principles, tax strategy and compliance and key risks, etc. In 2023, the Audit Committee held four meetings. Remuneration The Company has formulated remuneration policies for the Board of Directors and Executive Management. The policies were approved on the general assembly 28 April 2021. The policies are available on our website under Investor Relations. Furthermore, the Company has produced a remuneration report for the Board of Directors and Executive Management. The report is available on our website under Investor Relations. | Annual report 2023 Page 36 3.5 Executive management 3.5 EXECUTIVE MANAGEMENT Name Lionel Girieud Thomas Pedersen Born in 1971 1975 Title CEO Group CFO Member of the management since 2016 2022 Number of shares in SKAKO 5,166 0 Board positions – – | Annual report 2023 Page 37 3.6 Board of directors 3.6 BOARD OF DIRECTORS Name Jens Wittrup Willumsen Lars Tveen Title Chairman of the Board of Directors and member of the audit committee Considered as a non-independent Board member Deputy Chairman Considered as an independent Board member Born in 1960 1963 Board member since 2010 2017 SKAKO shares Jens Wittrup Willumsen owns 50% of the shares in Frederik2 Aps. Frederik2 Aps owns 800,000 shares in SKAKO. Further, Jens Wittrup Willumsen has a direct ownership of 19,876 shares in SKAKO. Managerial positions in other companies Chairman of the Board: Licensewatch A/S, COMIT A/S, Copenhagen Optimization ApS, Begravelse Danmark A/S, TMC Nordic , Year Xero Inc. Deputy Chairman: Billund Lufthavn A/S Board member: FDM Travel A/S, Charlotte Sparre A/S, Experimentarium A/S, Museum Kolding, SEC Datacom Group A/S, Cogo ApS Otherspositions: Colonial ApS, Director own holding company. Frederik2 ApS, Director own investment company 15,104 Chairman of the Board: BMC Ejendomme A/S, Project Zero-Fonden, BMC Videnshuset A/S, Alsik A/S, Alsik Estate A/S, Sønderborg Lufthavn A/S, GOTO Sønderborg A/S, Fonden GO TO Sønderborg, Torvehallerne Sønderborg ApS Board member: B&MC Holding, Nordborg A/S, Danfoss Historical Center A/S, BMC Invest A/S, MCH A/S, BMC Aviation A/S, Fonden Universe Science Park, B&MC Borgen A/S, BMC Holding II A/S, Komplementarselskabet CIE Ejendomsselskab ApS, CIE Ejendomsselskab P/S Others positions: CEO: Bitten og Mads Clausens Fond, B&MC Holding, Nordborg A/S, Danfoss Historical Center A/S, BMC Invest A/S, BMC Aviation A/S, B&MC Borgen A/S, BMC Holding II A/S Special competences Jens Wittrup Willumsen is educated Cand. Merc. from Copenhagen Business School and has had managing positions in Denmark and abroad. His competences include strategy, finance, financing, sales and marketing. Participation in board meetings Jens Wittrup Willumsen participated in all board and audit committee meetings in 2023. Lars Tveen is educated production engineer from Odense University in 1989 and has a bachelor in Commerce from University of Southern Denmark from 1993. Following his education Lars Tveen was appointed at Danfoss as Management Trainee. In April 2022, Lars Tveen was appointed CEO for the Bitten & Mads Clausens Foundation. Lars Tveen participated in all board meetings in 2023. | Annual report 2023 Page 38 3.6 Board of directors Name Carsten Krogsgaard Thomsen Sophie Louise Knauer Title Chairman of the Audit Committee Considered as an independent Board member Considered as an independent Board member Born in 1957 1983 Board member since 2017 2020 SKAKO shares 19,255 – Managerial positions in other companies Board member: NTG Nordic Transport Group A/S, ØU Capital A/S Board member: NTG Nordic Transport Group A/S, Solar A/S, Rekom Group A/S, Rekom Group Holding ApS, Ferm Living ApS, CC Globe Holding I ApS, CC Globe Holding II ApS, CC Fly Holding I ApS, CC Mist NEW Holding II ApS Other positions: Lady invest ApS and It’s a club ApS managing director and owner. Special competences Carsten Krogsgaard Thomsen is educated Cand. Polit. and has had a long career with primary focus on economics and finance. Through his career, Carsten Krogsgaard Thomsen has accumulated extensive experience within M&A, and compliance in listed companies. From 2014 to 2020 Carsten Krogsgaard Thomsen was CFO in NNIT and previously also held positions as EVP and CFO in Dong Energy A/S, EVP in DSB (Danish State Railways), finance and planning manager at Rigshospitalet (the Copenhagen University Hospital) and consultant in McKinsey & Company. Sophie Louise Knauer is educated HA JUR and Cand. Merc. in economy and strategic management from Copenhagen Business School. Her career includes top management in TDC, CEO for People Group A/S and senior consultant at McKinsey & Company. Sophie Louise Knauer has built strong competences within strategic management and digital transformation. Participation in board meetings Carsten Krogsgaard Thomsen participated in all board and audit committee meetings in 2023. Christian Herskind Jørgensen participated in all board meetings in 2023. Sophie Louise Knauer participated in all board meetings in 2023. Christian Herskind Jørgensen Considered as a non-independent Board member 1961 2009 Chairman of the Board: Fonden Amager Bakke, LABFLEX A/S, Taulov DryPort A/S, Skive Holding ApS, Associated Danish Ports A/S Board member: Nordsøenheden/Nordsøfonden, LM|Pihl A/S Others positions: Herskind Venture Capital ApS, Director own holding company, Ejendomsselskabet Helsingør/Århus, Director Frederik2 ApS, Director own holding company Christian Herskind Jørgensen is educated lawyer from University of Copenhagen and University of London and is also Brigadier. His competences include significant experience within sales, marketing, strategy, management, HR and legal matters. Christian Herskind Jørgensen owns 50% of the shares in Frederik2 Aps. Frederik2 Aps owns 800,000 shares in SKAKO. Further, Christian Herskind Jørgensen has a direct ownership of 109,000 shares in SKAKO. | Annual report 2023 Page 39 3.7 Shareholder information 3.7 SHAREHOLDER INFORMATION As of 31 December 2023, SKAKO’s nominal share capital was 31,064,180 DKK divided into 3,106,418 shares of 10 DKK each. All shares are fully paid, the same class and carry one vote each. The Board of Directors has been authorized by the annual general assembly to initiate a share buy-back programme for up to 10% of the share capital. The authorization was valid until 1 April 2027. SKAKO A/S is listed at NASDAQ OMX Copenhagen A/S under identification code DK0010231877. The share price as of 31 December 2023 was 103 corresponding to a market capitalization of DKK 320.0m. By the end of 2023 the company had 2,003 registered shareholders compared with 1,678 registered shareholders by the end of 2022. The registered shareholders own a total of 93.9% of the share capital compared to 94.1% by the end of 2022. Specification of movements in share capital Shareholders with more than 5% of the share Dividends Based on the results in 2023 and capital structure of SKAKO A/S as of 31 December 2023, the Board of Directors have February 26, 2024 approved an extraordinary dividend of DKK 39.3 per share which is more than the net proceeds from the transaction after transactions cost. Based on the results in 2023 and capital structure of SKAKO A/S as of 31 December 2023, the Board of Directors recommends a dividend distribution of DKK 5 per share corresponding to 113% of profit for the year exclusive the profit from discontinued activities and a total dividend distribution of DKK 15.4m. With a share price of DKK 103.0 as of 31 December 2023, this corresponds to a dividend yield of 4.9%. Ex dividend date: Record date: Payment date: 17 April 2024 24 April 2024 24 April 2024 Financial calendar 2023 DKK Thousands 2023 2022 2021 2020 2019 Share capital 31,064 31,064 31,064 31,064 31,064 at 01.01. Capital increase – – – – – Share capital 31,064 31,064 31,064 31,064 31,064 at 31.12. Frederik2 ApS, Copenhagen Danica Pension,Copenhagen Maj Invest Holding A/S, Copenhagen 25.75% 10.48% 9.98% Presentation of the annual report Together with HC Andersen Capital, SKAKO A/S will do an online presentation of the annual report for 2023 on Friday 15 March 2024 at 11.00 - 11.30 am. Registration for event: https://www.inderes.dk/videos/skako-presentation-of-fy-2023 Annual general meeting 2024 The annual general meeting will be held on Wednesday 17 April 2024 at 3 p.m. at the Company’s head office at Bygmestervej 2, 5600 Faaborg, Denmark. Investor Relations Investors, analysts and medias are welcome to contact Jens Wittrup Willumsen (Chairman of the Board of Directors) by phone +45 2347 5640 or by e-mail to [email protected] 14 March Annual report for 2023 17 April Ordinary general meeting 2024 22 May Interim report for the period 1 January - 31 March 2024 22 August Interim report for first half-year 2024 13 November Interim report for the period 1 January - 30 September 2024 | Annual report 2023 Page 40 4. FINANCIAL STATEMENTS 4.1 STATEMENT BY MANAGEMENT 4.2 INDEPENDENT AUDITOR’S REPORT 4.3 CONSOLIDATED FINANCIAL STATEMENT 4.4 CONSOLIDATED NOTES 4.5 PARENT COMPANY FINANCIAL STATEMENT 4.6 PARENT COMPANY NOTES | Annual report 2022 Page 40 | Annual report 2023 Page 41 4.1 Statement by Management Board of Directors Executive Board Thomas Pedersen Group CFO Jens Wittrup Willumsen Chairman Christian Herskind Jørgensen Carsten Krogsgaard Thomsen Lars Tveen Deputy Chairman 4.1 STATEMENT BY MANAGEMENT Today, we have discussed and approved the Annual Report 2023 of SKAKO A/S for the financial year 1 January to 31 December 2023. The annual report has been prepared and presented in accordance with IFRS accounting standards as adopted by the EU and further requirements in the Danish Financial Statement Act. In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the Group’s and the parent company’s assets, liabilities and financial position on 31 December 2023 and of the results of the Group’s and the parent company’s operations and cash flows for the financial year 1 January to 31 December 2023. Further, in our opinion the Management’s report includes a fair view of the development and performance of the Group’s and the parent company’s business and financial condition, the profit for the year and of the Group’s and the parent company’s financial position, together with a description of the principal risks and uncertainties that the Group and the parent company face. In our opinion, the annual report of SKAKO A/S for the financial year 1 January to 31 December 2023 with the file name 529900WNR3U8C847AW24-2023-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. We recommend the Annual Report for 2023 be approved at the Annual General Meeting. Faaborg, 14 March 2024 Sophie Louise Knauer Lionel Girieud Director | Annual report 2023 Page 42 4.2 Independent auditor’s report 4.2 INDEPENDENT AUDITOR’S REPORTS To the shareholders of SKAKO A/S Report on the audit of the Financial Statements Our opinion In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the Group’s and the Parent Company’s financial position at 31 December 2023 and of the results of the Group’s and the Parent Company’s operations and cash flows for the financial year 1 January to 31 December 2023 in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act. Our opinion is consistent with our Auditor’s Long-form Report to the Audit Committee and the Board of Directors. What we have audited The Consolidated Financial Statements and Parent Company Financial Statements of SKAKO A/S for the financial year 1 January to 31 December 2023 comprise income statement and statement of comprehensive income, balance sheet, cash flow statement, statement of changes in equity and notes, including material accounting policy information for the Group as well as for the Parent Company. Collectively referred to as the “Financial Statements”. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor’s responsibilities for the audit of the Financial Statements section of our repo rt. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark. We have also fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. To the best of our knowledge and belief, prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 were not provided. Appointment We were first appointed auditors of SKAKO A/S on 26 April 2012 for the financial year 2012. We have been reappointed annually by shareholder resolution for a total period of uninterrupted engagement of 12 years including the financial year 2023. We were reappointed following a tendering procedure at the General Meeting on 19 April 2022. | Annual report 2023 Page 43 4.2 Independent auditor’s report Revenue recognition from construction contracts Revenue from customer contracts is recognized over time. The proportion of revenue to be recognized in a particular period is calculated according to the percentage of completion of the project. This is measured by reference to the costs of performing the contract incurred up to the relevant balance sheet date as a percentage of the total estimated costs of performing the contract. Contract assets amounted to DKK 38 million (2022: DKK 64 million) net and contract liabilities amounted to DKK 3 million (2022: DKK 47 million) net. Recognition of the Group’s revenue involves a high degree of subjectivity in determining significant assumptions for the total estimated costs for the contracts. We focused on this area, as recognition of revenue involves judgements made by Management originating from percentage of completion and estimated cost to completion. Reference is made to note 1 and 17. We considered the appropriateness of the Group’s accounting policies for revenue recognition and assessed compliance with applicable accounting standards. We performed risk assessment procedures with the purpose of achieving an understanding of it-systems, procedures and relevant controls relating to revenue recognition from construction contracts. In respect of controls, we assessed whether these were designed and implemented effectively to address the risk of material misstatement. We performed substantive procedures over input data from contracts and costs allocated to projects. We assessed Management’s estimated cost to completion and contribution margin for construction contracts in order to evaluate the valuation of construction contracts and recognized revenue. We compared the estimated contribution margins to actual contribution margins for finished projects and to prior year’s estimates. We performed a retrospective analysis of Management’s ability to assess the cost to completion and expected contribution margin in prior years. We tested Management’s estimated percentage of completion by assessing subsequent development in costs allocated to the projects and Management’s updated estimates for cost to completion and contribution margin. Deferred tax assets At 31 December 2023, the Group has recognized deferred tax assets of DKK 10 million (2022: DKK 26 million). Management is required to exercise considerable judgement when determining the appropriate amount to capitalise in respect of deferred tax. We focused on this area as the amounts involved are significant and the valuation of tax assets is dependent on highly subjective assumptions on budgeted taxable income for the coming years. Reference is made to note 15. We evaluated Management’s method for estimating the deferred tax assets. In understanding and evaluating Management’s method and assumptions we performed a retrospective analysis of Management’s ability to budget the taxable income in prior years. Further, we examined the Group’s budgets and projections for the coming years including significant assumptions. We evaluated and challenged the adequacy of the significant assumptions determined by Management in developing the accounting estimate. 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 2023. 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. Key audit matter How our audit addressed the key audit matter | Annual report 2023 Page 44 4.2 Independent auditor’s report Discontinuing activity As of 29 December 2023, SKAKO divested its Concrete activities. This transaction has a significant influence on the consolidated financial statements. The result of discontinuing activities for 2023 amounted to a profit of DKK 67 million, which comprises profits during the year from the Concrete business, profits from the sale and taxes. The determination of the results and taxes arising from the sale is dependent on the closing balance sheets of the discontinuing entities and the final purchase price, which are not fully settled with the buyer yet. We focused on this area as the closing balance sheets and results of the discontinuing entities as well as the final purchase price are subject to estimation uncertainty and negotiation, which affects the final results. Further the presentation and disclosures of the deconsolidation is complex and non-routine and therefore poses a significant risk of material misstatements in the Consolidated Financial Statements. Reference is made to note 10. We have audited material assets and liabilities in the closing balance sheets of the discontinuing entities, including the split between continued and discontinued activities. We evaluated and challenged Management’s accounting estimates in the closing balance sheets, which affects the results of the discontinuing activities as well as the estimated purchase price. We audited the income statement of the discontinuing activities for the period until the divestment, which forms part of the accumulated results from discontinuing activities. Further, we audited Management’s determination of the preliminary purchase price including significant assumptions in the contract between SKAKO and the buyer of the discontinued activities. We assessed the appropriateness of the related presentation and disclosures from the deconsolidation provided in the Consolidated Financial Statements. Key audit matters | Annual report 2023 Page 45 Management is responsible for Management’s Review. Our opinion on the Financial Statements does not cover Management’s Review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsibility is to read Management’s Review and, in doing so, consider whether Management’s Review is materially inconsistent with the Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Moreover, we considered whether Management’s Review includes the disclosures required by the Danish Financial Statements Act. Based on the work we have performed, in our view, Management’s Review is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement in Management’s Review. Management’s responsibilities for the Financial Statements Management is responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, Management is responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so. Statement on Management’s Review | Annual report 2023 Page 45 | Annual report 2023 Page 46 4.2 Independent auditor’s report Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. As part of an audit in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Parent Company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. • Conclude on the appropriateness of Management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter. | Annual report 2023 Page 47 4.2 Independent auditor’s report 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 SKAKO A/S for the financial year 1 January to 31 December 2023 with the filename 529900WNR3U8C847AW24-2023-12-31-en.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the Consolidated Financial Statements including notes. Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility includes: • The preparing of the annual report in XHTML format; • The selection and application of appropriate iXBRL tags, including extensions to the ESEF taxonomy and the anchoring thereof to elements in the taxonomy, for all financial information required to be tagged using judgement where necessary; • Ensuring consistency between iXBRL tagged data and the Consolidated Financial Statements presented in human-readable format; and • For such internal control as Management determines necessary to enable the preparation of an annual report that is compliant with the ESEF Regulation. Our responsibility is to obtain reasonable assurance on whether the annual report is prepared, in all material respects, in compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our opinion. The nature, timing and extent of procedures selected depend on the auditor’s judgement, including the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The procedures include: • Testing whether the annual report is prepared in XHTML format; • Obtaining an understanding of the company’s iXBRL tagging process and of internal control over the tagging process; • Evaluating the completeness of the iXBRL tagging of the Consolidated Financial Statements including notes; • Evaluating the appropriateness of the company’s use of iXBRL elements selected from the ESEF taxonomy and the creation of extension elements where no suitable element in the ESEF taxonomy has been identified; • Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and • Reconciling the iXBRL tagged data with the audited Consolidated Financial Statements. In our opinion, the annual report of SKAKO A/S for the financial year 1 January to 31 December 2023 with the file name 529900WNR3U8C847AW24-2023-12-31- en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. Odense, 14 March 2024 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR no 3377 1231 Torben Jensen State Authorized Public Accountant mne18651 Mikael Johansen State Authorized Public Accountant mne23318 | Annual report 2023 Page 48 4.3 Consolidated financial statements DKK Thousands 2023 2022 Notes 1, 2 Revenue from contracts with customers 248,159 237,535 3, 4 Production costs (173,425) (169,049) Gross profit 74,734 68,486 4 Distribution costs (26,010) (25,615) 4, 5, 6 Administrative expenses (24,126) (23,211) Operating profit before special items (EBIT) 24,599 19,659 7 Special items (1,934) (1,958) Operating profit (EBIT) 22,662 17,701 8 Financial income 2,163 1,759 8 Financial expenses (5,493) (3,985) Profit before tax 19,332 15,474 9 Tax on profit for the year (5,558) (3,089) Profit for the year before discontinued activities 13,774 12,385 10 Result of discontinued activities after tax 67,463 12,689 Profit for the year 81,237 25,074 Profit for the year attributable to SKAKO A/S shareholders 81,237 25,074 11 Earnings per share (EPS), DKK 26.34 8.13 11 Diluted earnings per share (EPS), DKK 25.36 7.83 11 Earnings per share continuing activities (EPS), DKK 4.47 4.02 11 Diluted earnings per share continuing activities (EPS), DKK 4.32 3.87 Consolidated income statement 4.3 CONSOLIDATED FINANCIAL STATEMENTS | Annual report 2023 Page 49 4.3 Consolidated financial statements Consolidated statement of comprehensive income DKK Thousand 2023 2022 Notes Profit for the year 81,237 25,074 Other comprehensive income: Items that have been or may subsequently be reclassified to the income statement: Foreign currency translation, subsidiaries 2,661 533 Value adjustments of hedging instruments 49 - Other comprehensive income 2,710 533 Comprehensive income 83,947 25,607 | Annual report 2023 Page 50 4.3 Consolidated financial statements Consolidated balance sheet 31 December DKK Thousands 2023 2022 Notes Intangible assets 25,189 36,188 Intangible assets under development 1,615 4,237 12 Intangible assets 26,804 40,425 14 Leased assets 8,025 8,786 13 Land and buildings 4,173 5,821 13 Plant and machinery 1,168 1,238 13 Operating equipment, fixtures and fittings 1,673 2,458 13 Leasehold improvements 2,427 2,906 13 Tangible assets under construction 74 156 Tangible assets 17,540 21,365 Other receivables 765 1,234 15 Deferred tax assets 9,891 25,575 Other non-current assets 10,657 26,809 Total non -current assets 55,001 88,599 16 Inventories 26,182 72,740 21 Trade receivables 58,274 101,385 17, 21 Contract assets 38,203 63,876 Other receivables 7,706 9,270 Prepaid expenses 800 3,045 Cash 156,027 45,142 Current assets 287,192 295,458 Assets 342,193 384,057 | Annual report 2023 Page 51 4.3 Consolidated financial statements Consolidated balance sheet 31 December CONTINUED DKK Thousands 2023 2022 Notes Share capital 31,064 31,064 Foreign currency translation reserve 2,743 82 Hedging reserve - (49) Retained earnings 165,725 99,538 Proposed dividends 15,532 15,532 Equity 215,064 146,167 Other liabilities 2,299 7,562 19 Provisions 2,059 4,345 18 Loans and borrowings 4,106 9,150 14 Leasing 5,989 5,416 Non -current liabilities 14,454 26,473 19 Provisions 1,027 3,530 18 Loans and borrowings 2,270 9,828 18 Bank loans and credit facilities 3,278 38,119 14 Leasing 2,905 3,626 17 Contracts liabilities 3,310 46,829 Trade payables 64,665 81,200 Income tax 7,070 997 Other liabilities 28,151 27,288 Current liabilities 112,675 211,417 Liabilities 127,129 237,890 EQUITY AND LIABILITIES 342,193 384,057 | Annual report 2023 Page 52 4.3 Consolidated financial statements Consolidated cash flow statement DKK Thousnads 2023 2022 Notes Profit before tax including discontinued activities 104,391 24,230 20 Adjustments (67,073) 16,341 Changes in receivables, etc. 45,207 (25,890) Change in inventories (4,378) (9,367) Change in trade payables and other liabilities, etc. (61,364) 30,351 Cash flow from operating activities before financial items and tax 16,783 35,665 Interest received 2,163 916 Interest paid (5,493) (5,878) Taxes paid and received (1,294) (2,105) Cash flow from operating activities 12,159 28,850 12 Investment in intangible assets (561) (4,153) 13 Investment in tangible assets (10,600) (6,174) Disposals 24,094 1,690 Proceeds from sale of Concrete activities 148,916 - Cash flow from investing activities 161,849 (8,637) New borrowings 573 - Repayments (13,323) (2,072) Paid dividends (15,532) (12,335) Change in short -term bank facilities (34,841) 2,149 20 Cash flow from financing activities (63,123) (12,258) Change in cash and cash equivalents 110,885 7,955 Cash and cash equivalents 1 January 45,142 39,075 Foreign exchange adjustment, cash and cash equivalents - (1,888) Cash and cash equivalents 31 December 156,027 45,142 Breakdown of cash and cash equivalents at the end of the year: Cash 156,027 45,142 Cash and cash equivalents at the end of the year: 156,027 45,142 | Annual report 2023 Page 53 4.3 Consolidated financial statements Consolidated statement of changes in equity DKK Thousands Share capital Foreign currency translation reserve Hedging reserve Retained earnings Proposed dividends Equity Equity 1 January 2023 31,064 82 (49) 99,538 15,532 146,167 Paid dividends (15,532) (15,532) Comprehensive income in 2023: Profit for the year 65,705 15,532 81,237 Other comprehensive income: Foreign currency translation adjustments, subsidiaries 2,661 2,661 Value adjustments of hedging instruments 49 49 Other comprehensive income 2,661 49 2,710 Comprehensive income, year 2,661 49 65,705 15,532 83,947 Share -based payment, warrants 482 482 Equity 31 December 2023 31,064 2,743 0 165,725 15,532 215,064 | Annual report 2023 Page 54 4.3 Consolidated financial statements Consolidated statement of changes in equity DKK Thousands Share capital Foreign currency translation reserve Hedging reserve Retained earnings Proposed dividends Equity Equity 1 January 2022 31,064 (451) (49) 89,338 12,335 132,237 Distributed interim dividends (12,335) (12,335) Comprehensive income in 2022: - Profit for the year 9,542 15,532 25,074 Other comprehensive income: - Foreign currency translation adjustments, subsidiaries 533 533 Value adjustments of hedging instruments - Other comprehensive income - 533 - - - 533 Comprehensive income, year - 533 - 9,542 15,532 25,607 Share -based payment, warrants 658 - 658 Equity 31 December 2022 31,064 82 (49) 99,538 15,532 146,167 | Annual report 2023 Page 55 4.4 Consolidated notes 4.4 CONSOLIDATED NOTES 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. Note No. 1. 12. 15. 17. 19. Significant estimates and assessments: Notes to consolidated financial statements Revenue from contracts with customers . . . . . . . . . . . . . . . . . 56 Segment information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Production costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Share-based payment, warrants . . . . . . . . . . . . . . . . . . . . . . 65 Fee to parent company auditors appointed at annual general meeting 67 Special items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Net financial items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Tax on profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Discontinued activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Earnings per share (EPS) . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Leases – Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . 80 Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Contract assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . 86 Bank loans and credit facilities . . . . . . . . . . . . . . . . . . . . . . . 88 Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Adjustments, consolidated cash flow statement . . . . . . . . . . . . 92 Exchange rate, liquidity and credit risks . . . . . . . . . . . . . . . . . 93 Contractual liabilities, contingent liabilities and securities . . . . . . . 96 Related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Events after the balance sheet date . . . . . . . . . . . . . . . . . . . 96 Approval and publication . . . . . . . . . . . . . . . . . . . . . . . . . .96 Group accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Description Page Page Description Note No. Revenue from contracts with customers . . . . . . . . . . . . . . 56 Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Contract assets and liabilities . . . . . . . . . . . . . . . . . . . . . 86 Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 | Annual report 2023 Page 56 4.4 Consolidated notes Accounting policy SKAKO develops, designs and sells high-end vibratory feeding, conveying, and screening equipment, used across the complete spectrum of material handling and processing. The main focus is on plant sales with a solid aftersales division. Administrative functions such as Finance, HR and IT are shared by the divisions. The administrative functions are based in the individual countries but supported by Group functions in Denmark. Shared costs are allocated to business segments based on assessment of usage. All intercompany transactions are made on market terms. Segment assets and liabilities comprise items directly attributable to a segment and items that can be allocated to a segment on a reasonable basis. Revenue is the fair value of consideration received or receivable from the sale of our plants and aftersales products or services and is the gross sales price less VAT and any price reductions in the form of discounts and rebates. Geographical information is based on the four regions that support the industries. Revenue is presented in the region in which delivery takes place. Segment income and costs include transactions between business areas. The transactions are eliminated in connection with the consolidation Revenue is recognized over time or at a point in time. Revenue is recognized over time when an asset on behalf of a customer is created with no alternative use and SKAKO has an enforceable right to payment for performance completed year to date, or the customer obtains control of a plant or product and thus has the ability to direct the use and obtain the benefit from the plant or product. Terms of payment are depending on conditions in the specific market. Plant sales orders are in general agreed with prepayment and payment milestones. Plant sales Plant sales are negotiated contracts to design and install concrete batching plants, and vibratory feeding, conveying and screening equipment for customers. Revenue will be recognized over time, as the above criteria are met, using “the percentage of completion method”. The proportion of revenue to be recognized in a particular period is calculated according to the percentage of completion of the project. For most contracts this is measured by reference to the costs of performing the contract incurred up to the relevant balance sheet date as a percentage of the total estimated costs of performing the contract. Reference to cost is assessed to be the most appropriate method as incurred hours and material costs are the value drivers for the projects. The sales value agreed in the contract is recognized over the contract period using above method. Contracts where the recognized revenue from the work performed exceeds progress billings are recognized in the balance sheet under assets Contracts for which progress billings exceed the revenue are recognized under liabilities. Prepayments from customers are recognized under liabilities. If it is likely that the total costs in relation to a construction contract will exceed the total revenue on a specific project, the expected loss is recognized immediately in the income statement in the current period. 1. Revenue from contracts with customers SKAKO Group activities during the financial year covers the two segment Concrete and Vibration. The SKAKO Concrete activities were divested to Zefyr Invest IV as of December 29, 2023 therefor the segment in the annual report covers only the remaining segment Vibration in 2022 and 2023. | Annual report 2023 Page 57 4.4 Consolidated notes Accounting policy CONTINUED Significant assessment by Management Assessments regarding contracts with customers is performed when determining if a contract for sale of a plant, spare parts or service, or a combination hereof, involves one or more performance obligations. Assessments regarding recognition method are made when determining if a contract for sale of a plant, spare parts or service is recognized as revenue over time or at a point in time. The assessments relate to whether we have an alternative use of the assets sold and if we have an enforceable right to payment throughout the contractual term. When assessing if an asset has no alternative use, we estimate the alternative use cost amount. We have limited historical data as we rarely redirect our assets. The estimate is based on the specifics of each contract. When assessing if we are entitled to payment throughout the contract term, an assessment is made based on the contract wording, legal entitlement and profit estimates. Significant estimates by Management Total expected costs related to plant sales are partly based on estimates as they include provisions for unforeseen cost deviations in future supplies of raw materials, subcontractor products and services plus construction and handing over. Provisions for warranties on work-in-progress for third parties are based on Management estimates for each project while taking contract obligations into account. 1. Revenue from contracts with customers CONTINUED SKAKO sell a range of spare parts and products as aftersales to the plant sales. Revenue is recognized when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and SKAKO has objective evidence that all criteria for acceptance have been fulfilled. Revenue from the service contracts is recognized in the period in which the services are provided based on amounts billable to a customer. Revenue is recognized based on usage of units, and price lists according to the contract. Aftersales, spare parts and products Aftersales services Order backlog The order backlog represents the value of outstanding performance obligations on effective contracts, where we will transfer control at a future point in time and the remaining performance obligations on contracts where we transfer control over time. | Annual report 2023 Page 58 4.4 Consolidated notes Revenue, DKK ThousandsVibration Group202320222023 2022Plant170,302162,211170,302 162,211- Over time165,323155,107165,323 155,107- Apoint in time4,9797,1044,979 7,104Aftersales77,85775,32477,857 75,324- Overtime--- -- Apoint in time77,85775,32477,857 75,324Totalrevenue248,159237,535248,159 237,535 Segregation of revenue Revenue,DKK Thousands 2023 2022Revenue recognizedthat was included in the contract liability balance at the beginning of the period:- Plantsales 3,700 2,129- Aftersales- -Totalrevenue recognized from contract liabilities 3,700 2,129 Segregation of revenue 1. Revenue from contracts with customers CONTINUED After eliminations | Annual report 2023 Page 59 4.4 Consolidated notes Africa Revenue: DKK 23,271k (2022: DKK 13,499k) Hereof revenue in Morocco: DKK 1,796k (2022: DKK 10,051k) North America Revenue: DKK 7,337k (2022: DKK 5,922k) Rest of the world Revenue: DKK 10,371k (2022: DKK 16,113k) Europe Revenue: DKK 207,180k (2022: DKK 202,001k) Hereof revenue in Denmark: DKK 22,719k (2022: DKK 24,045) Hereof revenue in France: DKK 55,145k (2022: DKK 55,826k) Hereof revenue in the UK: DKK 15,617k (2022: DKK 13,737k) Hereof revenue in Germany: DKK 30,868k (2022: DKK 22,562k) Hereof revenue in Spain: DKK 42,657k (2022: DKK 38,822k) Geographical revenue information 1. Revenue from contracts with customers CONTINUED Geographical non-current assets information North America DKK 0k (2022: DKK 706k) Europe DKK 45,959k (2022: DKK 85,660k) Hereof in Denmark: DKK 29,710k (2022: DKK 69,385k) Hereof in France: DKK 14,313k (2022: DKK 13,391k) Hereof in Spain: DKK 1,452k (2022: DKK 2,480k) Hereof in Other: DKK 484k (2022: DKK 404k) | Annual report 2023 Page 60 4.4 Consolidated notes Not distributed including2023VibrationEliminations Group totalparent companyMinerals99,18799,187Fasteners38,07738,077Recycling86,61986,619Other24,27724,277Internal--Totalrevenue248,159248,159Depreciations(4,511)(4,511)Operatingprofit (EBIT) before special items27,157(2,558) 24,599Orderbacklog, beginning72,55072,550Orderintake237,551237,551Orderbacklog, ending61,94261,942Segmentnon-current assets44,97410,027 55,001Segmentassets258,248154,449 (45,237) 367,460Segmentliabilities102,79775,211 (45,237) 132,771Investmentsin intangible and tangible asset11,16111,161Averagenumber of employees115115 2023 DKK Thousands 2. Segment information | Annual report 2023 Page 61 4.4 Consolidated notes Not distributed 2022VibrationEliminations Group totalincludingparent companyMinerals101,477101,477Fasteners32,87032,870Recycling79,60479,604Other19,27419,274Internal4,3104,310Totalrevenue237,535237,535Depreciations(5,170)(5,170)Operatingprofit before special items (EBIT)23,684(4,025) 19,659Orderbacklog, beginning54,21554,215Orderintake255,870255,870Orderbacklog, ending72,55072,550Segmentnon-current assets40,00740,007Segmentassets229,339229,339Segmentliabilities119,956119,956Investmentsin intangible and tangible asset4,5509,082Averagenumber of employees112112 2022 DKK Thousands 2. Segment information | Annual report 2023 Page 62 4.4 Consolidated notes 3. Production costs Accounting policy Production costs are costs incurred to generate revenue. Production costs consist of raw materials, consumables, production staff, research and development cost as well as maintenance of and depreciation, amortisation and impairment losses on property, plant and equipment and intangible assets used in the production process. Research costs are always recognized in the Income Statement in step with the incurrence of such costs. Development costs include all costs not satisfying the capitalization criteria, but incurred in connection with development, prototype construction and development of new business concepts. Direct and indirect research and development incentives in terms of tax incentives and other grants and subsidy schemes for research and development are recognized when there is reasonable certainty that the conditions for such grants are satisfied and that they will be awarded. Grants are offset against research and development costs. The measurement and classification of government grants related to research and development is based on Management’s assessment. The incentive schemes applied do not require positive taxable income and hence government grants received have been accounted for in accordance with IAS 20. DKKThousands 2023 2022Costof goods sold during the year 106,351 100,725Write-down of inventories for the year, net (139) (83)Research and development costs 45 66Production staff costs and other costs 67,168 68,341Totalproduction costs 173, 425 169,049 | Annual report 2023 Page 63 4.4 Consolidated notes 4. Staff costs Accounting policy Staff costs consist of direct wages and salaries, remuneration, pension, share-based payments, training, etc. DKKThousands 2023 2022Wages,salaries and other remuneration 53,242 53,445Contributionplans and other social security costs, etc. 10,912 9,999Share-based payment, warrants 482 658Otherstaff costs 2,929 76467,565 64,866Theamounts are included in the items:Productioncosts 36,352 35,222Distributioncosts 20,706 20,489Administrativecosts 10,507 9,15567,565 64,866 The average number of employees was 115 (2022: 112). Staff costs 2022 include the final regulation of the government compensation related to capacity cost of (DKK – 0.1m) | Annual report 2023 Page 64 4.4 Consolidated notes DKKThousands 2023 2022Boardof Directors and Audit Committee 1,652 1,715ExecutiveManagementWages,salaries and other remuneration 7,648 6,846Contributionplans and other social security costs, etc. 341 493Share-based payment, warrants 493 4398,482 7,778 Total remuneration for Executive Management and Board of Directors 10,134 9,493 Remuneration to Executive Management and Board of Directors The Executive Management have been granted warrants to subscribe for shares in the company, cf. note 5. The Executive Management contracts are based on normal conditions. The board of directors and audit committee fee includes DKK 252k to board member for extraordinary work during the transaction and divestment of SKAKO Concrete activities 4. Staff costs CONTINUED | Annual report 2023 Page 65 4.4 Consolidated notes 5. Share-based payment, warrants Accounting policy Plans classified as equity-settled warrants are measured at fair value at grant date and are recognized in the income statement as staff costs in the period in which the final entitlement to the warrants is attained (the vesting period), as well as an inflow directly in equity. In connection with initial recognition of warrants, an estimate is made of the number of warrants to which Group Executive Management and key staff are expected to become entitled. Subsequent adjustment is made for changes in the estimate of the number of warrant entitlements, so the total recognition is based on the actual number of warrant entitlements. The fair value of the warrants allocated is estimated by means of the Monte Carlo model. The calculation takes into account the terms and conditions under which the share warrants are allocated. In 2021, the Executive Management and other key employees in the Group have been granted warrants to purchase a total of 150,000 shares in the company at a set price (strike price). The share-based programme has vesting conditions under which Management must stay employed for three years to receive the remuneration. The following exercise period runs for two years. Granted Strike priceExercise(all)period startsWarrants granted 150,000 55,60 April 2024Executive management110,000- hereof forfeited(30,000)Total executive management 80,000Other employees40,000- Hereof forfeited(15,000)Total other employees 25,000Number of warrant entitlements 105,000 | Annual report 2023 Page 66 4.4 Consolidated notes The recognized fair value of warrants in the consolidated income statement amounts to DKK 482k (cost) (2022: 658k, cost). The calculation of the fair value of warrants at the time of allocation is based on the following assumptions: 5. Share-based payment, warrants CONTINUED * For the 2021 programme, the preceding 48 months have been used ** The expected future dividend at the time of granting 2021 warrants Granted Average price per share 55,6Annual hurdle rate 0%Strike price per share 55,6Expected volatility 33,5%Expected dividends** 4,1%Cost of equity 7,00%Number of shares allocated 150,000Fair value per warrant, DKK 16,90Total fair value, DKK thousands 2,535 22 March 2021 | Annual report 2023 Page 67 4.4 Consolidated notes 6. Fee to parent company auditors appointed at the annual general meeting In addition to the statutory audit, PwC, the Group auditors appointed at the Annual General Meeting, provides other assurance engagements and other consultancy services to the Group. A few Group enterprises are not audited by the Parent’s appointed auditors (PwC) or the auditors’ foreign affiliates. The fee for non-audit services delivered by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab to the Group amounts to DKK 0.5m (2022: DKK 0.4m) and consists of tax, VAT and accounting advisory. DKKThousands 2023 2022PwCStatutoryaudit 1,164 1,442Otherassurance engagements - 39Taxand indirect taxes consultancy 150 119Otherservices 333 2981,647 1,898Otheraudit firmsStatutoryaudit 224 290Otherassurance engagements 0 0Taxand indirect taxes consultancy 67 290Otherservices 347 177637 757 | Annual report 2023 Page 68 7. Special items Accounting policy Special items include significant expenses of a special nature that relates to the terminated transaction on divestment of SKAKO’s to divions SKAKO Concrete and SKAKO Vibration including all operating activities in SKAKO Group and that cannot be attributed directly to the Group’s ordinary operating activities. Special items include significant non-recurring items. Special items are shown separately from the Group’s ordinary operations as this gives a truer and fairer view of the Group’s operating profit. Special items consists of transaction costs for the terminated transaction process with Zefyr Invest and amounting to DKK 1,934m (2022: DKK 2,00m) 4.4 Consolidated notes | Annual report 2023 Page 69 4.4 Consolidated notes 8. Net financial items Accounting policy Net financial items mainly consist of interest income and interest expenses and also include interest on lease debt as well as realized and unrealized 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 attaching to the financial asset or financial liability in order for the present value to match the carrying amount of such asset or liability. DKKThousands 2023 2022Intereston cash and bank deposits 2,140 1,632Financialincome from financial assets not measured at fair value in the income statement 2,140 1,632Foreignexchange gains, net 23 127Financialincome 2,163 1,759Intereston bank debt (2,011) (1,071)Intereston lease debt (102) (80)Financial expenses on financial liabilities not measured at fair value in the income statement (2,113) (1,151)Foreignexchange losses, net (170) (670)Otherfinancial expenses (3,210) (2,164)Financialexpenses (5,493) (3,985)Netfinancial items (3,330) (2,226) | Annual report 2023 Page 70 4.4 Consolidated notes 9. Tax on profit for the year Accounting policy Tax for the year comprises current tax and changes in deferred tax and is recognized in the Income Statement with the share attributable to the profit for the year, and in the other comprehensive income with the share attributable to items recognized in other comprehensive income. Exchange rate adjustments of deferred tax are included as part of the year’s adjustments of deferred tax. Current tax comprises tax calculated on the basis of the expected taxable income for the year using the applicable tax rates for the financial year and any adjustments of taxes for previous years. DKKThousands 2023 2022Currenttax on the profit for the year (1,788) (3,590)Adjustmentof current tax, prior years (1,371) -Changein deferred tax (2,399) (114)Adjustmentof deferred tax, prior years - -Impacton changes in corporate tax rates - 615Taxfor the period, net income (5,558) (3,089)Taxusing the Danish corporate tax rates (1,036) (3,698)Effectof tax rates in foreign jurisdictions (675) 294Impactin changes in corporate tax rates - -Taxassets not capitalized - -Taxassets not previously capitalized (2,476) 631Permanent and temporary differences and other items (1,371) (316)(5,558) (3,089) | Annual report 2023 Page 71 4.4 Consolidated notes 10. Discontinued activity Accounting policy Discontinued activities are excluded from the result of continuing activities and presented separately as profit/loss from discontinued activities in the income statement. Compared figures are restated. Cashflow from discontinued activities is presented separately as net cash from discontinued activities in the cash flow statement and specified in this section. Compared figures are restated. Analysis of income from the discontinued activities 2023 2022Revenue268,446 204,699Cost(253,672) (195,943)Otheroperating income (gains from divestment after tax) 57,330 -Profit beforetax from discontinued activities 72,104 8,756Incometax (4,641) 3,933Profit after tax from discontinued activities 67,463 12,689 The SKAKO Concrete activities were sold to Zefyr Invest IV as of December 29, 2023. Cash flow statement for 2022 and 2023 includes the SKAKO Group covering both Concrete and Vibration activities. Net cash flow from the discontinued activities 2023 2022Cash flow from operating activities 14,933 (3,108)Cash flow from investing activities 133,983 (558)Cash flow from financing activities - 7,882Net cash flow from discontinued activities 148,916 4,216 | Annual report 2023 Page 72 4.4 Consolidated notes 11. Earnings per share (EPS) Accounting policy Earnings per share (EPS) and diluted earnings per share (EPS, diluted) are measured according to IAS 33. Non-diluted earnings per share are calculated as the profit for the year divided by the total average number of shares outstanding during the year (shares issued adjusted for treasury shares). Diluted earnings per share are calculated as the profit for the year divided by the average number of shares outstanding less share options in-the-money (shares issued adjusted for treasury shares). DKKThousands 2023 2022EarningsProfitfor the year 81,238 25,074Numberof shares, averageNumberof shares issued 3,106,418 3,106,418Adjustmentfor treasury share (22,567) (22,567)Averagenumber of shares 3,083,851 3,083,851Earningsper share (EPS) 26.34 8.13Earningsper share, diluted 25.36 7.83Earningsper share continuing activities (EPS), DKK 4.47 4.02Dilutedearnings per share continuing activities (EPS), DKK 4.32 3.87 As of 31 December 2023, SKAKO’s nominal share capital was 31,064,180 DKK divided into 3,106,418 shares of 10 DKK each. All shares are of the same class and carry one vote each. Treasury shares represent 0.73% of number of shares issued. | Annual report 2023 Page 73 4.4 Consolidated notes 12. Intangible assets assets Accounting policy Development projects for which the technical rate of utilization, sufficient resources and a potential future market or application in the Group can be demonstrated and which are intended to be manufactured, marketed or used are recognized as completed development projects. This requires that the cost can be determined, and it is sufficiently certain that the future earnings or the net selling price will cover production, sales and administrative costs plus the development costs. Other development costs are recognized in the income statement when the costs are incurred. Development costs consist of salaries and other costs that are directly attributable to development activities. Amortization of completed development projects is charged on a straight- line basis during their estimated useful life. Development projects are written down for impairment to recoverable amount, if lower. Development projects in progress are tested for impairment once a year. The amortization profile is systematically based on the expected useful life of the assets, taking into account the remaining agreement period and consumption (unit of production method) at the time of implementation. The basis of amortization is reduced by impairment, if any. Amortization takes place systematically over the estimated useful life of the assets which is as follows: • Development costs, 2-10 years • Software systems, 2-10 years • Other intangible assets, 3-5 years On initial recognition, goodwill is recognized and measured as the difference between the purchase price – 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 assets, liabilities and contingent liabilities. Please refer to Accounting policies in Note 26. 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 managerial structure as well as the internal financial management reporting. SKAKO goodwill relates to SKAKO Dartek and goodwill is monitored as in previous years. Impairment test of goodwill are based on calculated capital value of the single unit, based on five-year business plans as well as a calculated terminal value that compared with carrying amount of the tested assets. The main assumptions of the business plans of the individual CGUs are linked to SKAKO’s expected growth and earnings over a number of years, and the applied gross profit margins and costs are based on management's expectations. Intangible assets with a finite useful life are measured at cost less accumulated amortization and impairment losses. Goodwill is not amortized but is tested for impairment at least once a year. If the recoverable amount of a cash-generating unit is lower than the carrying amounts of property, plant and equipment and intangible assets including goodwill, attributable to the particular cash generating unit, the particular assets will be written down. | Annual report 2023 Page 74 4.4 Consolidated notes Significant estimate by Management Impairment testing is carried out annually on preparation of the annual report or on indication of impairment in which discounted values of future cash flows are compared with carrying amounts. The calculations use cash flow projections based on financial budgets approved by Management covering a five-year period. Cash flows beyond the five-year period are extrapolated using growth rates estimated by Management. Other intangibleIntangible assets DevelopmentGoodwillSoftware Totalassetsunder developmentprojectsCostat 1 January 2023 25,440 4,426 4,237 1,458 30,098 65,659Foreignexchange adjustments - - - - - -Investments- - 94 112 355 561Disposals(3,145) (4,426) (2,716) (98) (25,517) (35,902)Transferredbetween categories - - - -Costat 31 December 2023 22,295 - 1,615 1,472 4,936 30,318Amortisationand impairment - 2,868 - 469 21,897 25,2341January 2023Foreignexchange adjustment - - - - - -Disposals- (2,868) - (49) (19,523) (22,440)Amortisation- - - 154 566 720Amortisationand impairment - - - 574 2,940 3,51431December 2023Carryingamount 31 December 2023 22,295 - 1,615 898 1,996 26,804 DKK Thousands 12. Intangible assets CONTINUED | Annual report 2023 Page 75 4.4 Consolidated notes Other intangibleIntangible assets DevelopmentGoodwillSoftware Totalassetsunder developmentprojectsCostat 1 January 2022 25,440 4,426 3,112 1,458 28,671 63,107Foreignexchange adjustments - - - - - -Investments- - 2,726 - 1,427 4,153Disposals- - (1,201) - - (1,201)Transferredbetween categories - - (400) - - (400)Costat 31 December 2022 25,440 4,426 4,237 1,458 30,098 65,659Amortisationand impairment 1- 1,771 - 293 18,863 20,927January2022Foreignexchange adjustment - - - 9 - 9Disposals- - - - 605 605Amortisation- 1,097 - 167 2,429 3,693Amortisationand impairment 31- 2,868 - 469 21,897 25,234December2022Carryingamount 31 December 2022 25,440 1,558 4,237 989 8,201 40,425 DKK Thousands 12. Intangible assets CONTINUED | Annual report 2023 Page 76 4.4 Consolidated notes DKKThousands 2023 2022Depreciationis included in the items:Production costs 504 2,585Distributioncosts 180 923Administrativecosts 36 185720 3,693 Impairment test of goodwill: The carrying amount of goodwill related to Dartek, DKK 22,295. 12. Intangible assets CONTINUED Dartek Goodwill for Dartek have been tested for impairment on 31 December 2023 based on value in use. Net cash flows for the years 2024-2028 are determined on the basis of key assumptions and estimates based on growth and profit margin expectations in accordance with SKAKO's business plans. The discount rate used amounts to 10.0% before tax and estimates for future revenue growth (2022: 10.0% before tax). The uncertainties associated with these expectations are reflected in the cash flow. The valuation method is based on annual revenue growth of 2% in 2024 to 2028 as well as in the terminal period. The test did not result in any impairment of the carrying amounts related to the cash generating units Dartek. A sensitivity analysis has not been carried out, as negative changes in the fundamental assumption, which will result in impairment of goodwill, are considered unlikely to become a reality. | Annual report 2023 Page 77 4.4 Consolidated notes 13. Tangible assets Land and buildings, plant and machinery and other facilities, operating equipment and tools and equipment are measured at cost less accumulated depreciation and impairment losses. Depreciation is charged on a straight-line basis over the estimated useful life of the assets until they reach the estimated residual value. Estimated useful life is as follows: • Buildings, 10-40 years • Plant and machinery, 3-10 years • Operating equipment and other tools and equipment, 3-10 years • Leasehold improvements, 3-10 years • Land not depreciated Newly acquired assets are depreciated from the time they are available for use. Accounting policy | Annual report 2023 Page 78 4.4 Consolidated notes Tangible assetsPlant & Operating equipment, Leasehold Land & buildingsin course ofTotalmachineryfixtures and fittingsimprovementsconstructionCost1 January 2023 8,422 10,827 17,049 7,440 156 43,894Foreignexchange adjustments - (4) (9) - - (13)Investments1,942 260 819 557 - 3,578Disposals(4,176) (5,094) (8,147) (4,688) (81) (22,186)Transferred between categoriesCostat 31 December 2023 6,189 5,989 9,712 3,309 74 25,273Depreciationand impairment 2,601 9,589 14,591 4,534 - 31,3151January 2023Foreignexchange adjustments - (3) (9) - - (12)Disposals(867) (4,951) (6,965) (3,943) - (16,726)Depreciation282 186 422 292 - 1,182Depreciation and impairment 2,016 4,821 8,039 882 - 15,75831December 2023Carryingamount 31 December 2023 4,173 1,168 1,673 2,427 74 9,515 DKK Thousands 13. Tangible assets CONTINUED | Annual report 2023 Page 79 4.4 Consolidated notes Tangible assetsPlant & Operating equipment, Leasehold Land & buildingsin course ofTotalmachineryfixtures and fittingsimprovementsconstructionCost1 January 2022 8,147 12,558 17,130 5,930 97 43,862Foreignexchange adjustments 22 (24) - - - (2)Investments253 636 1,061 1,110 119 3,179Disposals- (2,083) (1,402) - (60) (3,545)Transferred between categories - (260) 260 400 - 400Cost31 December 2022 8,422 10,827 17,049 7,440 156 43,894Depreciationand impairment 1 January 2,315 11,505 14,071 4,300 - 32,1912022Foreignexchange adjustments - (46) - - - (46)Disposals- (2,083) 32 - - (2,051)Amortization286 213 488 234 - 1,221)Depreciationand impairment 31 2,601 9,589 14,591 4,534 - 31,315December2022Carryingamount 31 December 2022 5,821 1,238 2,458 2,906 156 12,579 DKK Thousands DKKThousands 2023 2022Depreciationis included in the items:Production costs 827 855Distributioncosts 296 305Administrativecosts 59 611,182 1,221 13. Tangible assets CONTINUED | Annual report 2023 Page 80 4.4 Consolidated notes 14. Leases – right-of-use assets Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • Fixed payments, less any lease incentives receivable. • Variable lease payment that are based on an index or a rate, initially measured using the index or rate as the commencement date. • Amounts expected to be payable by the Group under residual value guarantees. • The exercise price of a purchase option if the Group is reasonably certain to exercise that option. • Payments of penalties for terminating the lease if the lease term reflects the Group exercising that option. The lease payments are discounted using the interest rate for implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group., the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are measured at cost comprising the following: • The amount of the initial measurement of lease liability. • Any lease payments made at or before the commencement date less any lease incentives received. • Any initial direct cost and restoration cost. Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. While the Group revalues its land and buildings that are presented within property, plant and equipment, it has chosen not to do so for the right-of-use buildings held by the Group. Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leased with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture. Accounting policy | Annual report 2023 Page 81 4.4 Consolidated notes Leaseassets Rental of promises Equipment Company cars TotalCosts1 January 2023 10,561 682 9,490 20,733Additions4,404 342 2,276 7,022Disposals(5,653) (526) (4,267) (10,446)Reclassification- - - -Exchangerate adjustment - - - -Costs31 December 2023 9,312 498 7,499 17,309Depreciationand impairment loss 1 January 2023 4,544 475 6,928 11,947Depreciation1,271 15 1,323 2,609Depreciationreversed on disposals (1,436) (319) (3,517) (5,272)Exchangerate adjustment - - - -Depreciationand impairment loss 31 December 2023 4,379 171 4,734 9,284Carryingamount 31 December 2023 4,933 327 2,765 8,025 DKK Thousands Leaseassets Rental of promises Equipment Company cars TotalCosts1 January 2022 8,413 809 7,91417,136Additions- 52 1,6981,750Transferredbetween categories2,148 - 3892,537Disposals- (179) (511)(690)Exchangerate adjustment- - --Costs31 December 202210,561 682 9,490 20,7333,257 164 5,680 9,101Depreciationand impairment loss 1 January 2022Depreciation1,287 290 1,514 3,091Depreciationreversed on disposals - (179) (266) (445)Exchangerate adjustment - 200 - 200Depreciationand impairment loss 31 December 2022 4,544 475 6,928 11,947Carryingamount 31 December 2022 6,017 207 2,562 8,786 DKK Thousands 14. Leases – right-of-use assets CONTINUED | Annual report 2023 Page 82 4.4 Consolidated notes Leaseliabilities – DKK Thousands2023 2022Lease liabilities are recognized in the balance sheet as follows:Non-current liabilities 5,989 5,416Currentliabilities 2,905 3,626Totallease liabilities 8,894 9,042Recognizedin the profit and loss statement:Interest expensesrelated to lease liabilities 186 221Expenserelating to short-term leases (included in cost of goods sold and administrative expenses) 1,397 3,734Expenserelating to leases of low-value assets that are not shown above as short-term leases 7 7Expense relation to variable lease payments not included in lease liabilities - - Cashflow from leasing – DKK Thousands2023 2022Interests(186) (221)Liabilitiespayment (1,397) (3,736)Adjustmentsin total according to leases (1,583) (3,957) 14. Leases – right-of-use assets CONTINUED | Annual report 2023 Page 83 4.4 Consolidated notes 15. Deferred tax Deferred tax is calculated using the balance sheet liability method on temporary differences between the carrying amounts for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is calculated based on the applicable tax rates for the individual financial years. The effect of changes in the tax rates is stated in the income statement unless they are items previously entered in the statement of other comprehensive income. A deferred tax provision is made to cover re-taxation of losses in foreign enterprises if shares in the enterprises concerned are likely to be sold and to cover expected additional future tax liabilities related to financial year or previous years. No deferred tax liabilities regarding investments in subsidiaries are recognized if the shares are unlikely to be sold in the short term. The tax value of losses that are expected with adequate certainty to be available for utilization against future taxable income in the same legal tax unit and jurisdiction is included in the measurement of deferred tax. SKAKO A/S is jointly taxed with all Danish subsidiaries, SKAKO A/S being the administrator of the Danish joint taxation. All the Danish subsidiaries provide for the Danish tax based on the current rules with full distribution. Recognition of deferred tax assets and tax liabilities is made in the individual Danish enterprises based on the principles described above. The jointly taxed Danish enterprises are included in the Danish tax payable on account scheme. If companies in the Group have deferred tax liabilities, they are valued independently of the time when the tax, if any, becomes payable. Significant estimate by Management Deferred tax assets, including the tax value of tax losses allowed for carry forward, are recognized in the balance sheet at the estimated realisable 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 utilized. Deferred tax on temporary differences between the carrying amounts and the tax values of investments in subsidiaries is recognized unless the Parent is able to control the time of realization of such deferred tax, and it is probable that such deferred tax will not be realized as current tax in the foreseeable future. Deferred tax is recognized in respect of eliminations of intra-Group profits and losses. Accounting policy | Annual report 2023 Page 84 4.4 Consolidated notes DKKThousands 2023 2022Deferred tax recognized in the balance sheet:Deferredtax assets 9,891 25,575Deferredtax, net 31 December 9,891 25,575Deferredtax, net 1 January 25,575 21,057Foreigncurrency translation adjustments - -Changesin deferred tax (15,684) 4,516Deferredtax, net 31 December 9,891 25,575Deferredtax:Intangibleassets (989) (1,498)Property, plants and equipment 55 8,140Inventories1,055 388Provisions- 781Tax losses10,330 19,375Otheritems (560) (1,611)9,891 25,575Deferred tax assets not recognized:Intangibleassets - -Property, plants and equipment 205 205Inventories- -Otheritems 121 121Tax losses17,384 19,49817,710 19,824 Tax losses carried forward are not subject to time limitation. All recognized deferred tax assets are expected to be offset against positive taxable income within a five-year period. Recognition is based on current results and Management’s expectations for the future. The deferred tax assets are evaluated in each joint taxation in the SKAKO Group, consisting of joint taxations in respectively Denmark, France, Germany, Spain and the UK. Management has performed a sensitivity analysis on expectations for the future. This shows that a 10 % decrease compared to expectations will result in a decrease of DKK 1.0m in the recognized deferred tax assets. Because the deferred tax assets are evaluated in each joint taxation, the sensitivity cannot be applied on a linear basis. 15. Deferred tax CONTINUED | Annual report 2023 Page 85 4.4 Consolidated notes 16. Inventory Accounting policy Raw materials, work-in-progress and goods for resale are measured at cost according to the FIFO principle (according to which the most recently purchased items are considered to be in stock) or at their net realizable value, whichever is lower. Group-manufactured products and work in progress are measured at the value of direct cost, direct payroll costs, consumables and a proportionate share of indirect production costs (IPC), which are allocated on the basis of the normal capacity of the production facility. IPC include the proportionate share of capacity costs directly relating to Group-manufactured products and work in progress. Inventory– DKK Thousands 2023 2022Rawmaterials and consumables 3,854 17,684Work-in-progress 4,612 7,958Finishedgoods and goods for resale 17,717 47,098Inventories net of write-downs at 31 December 26,182 72,740Includedin Income Statement under production costs:Write-down of inventories for the year, net (139)692Costs of goods sold during the year106,351193,746 Write-downs for the year are shown net as breakdown into reversed write-downs, and new write-downs are not possible. | Annual report 2023 Page 86 4.4 Consolidated notes 17. Contract assets and liabilities Accounting policy Revenue is recognized based on the value of the work completed at the balance sheet date. The revenue corresponds to the sales value of the year’s completed work based on costs incurred as a percentage of the total estimated costs (percentage of completion method). The stage of completion for the individual project is calculated as the ratio between the cost incurred at the balance sheet date and the total estimated cost to complete the project. In some projects, where cost estimates cannot be used as a basis, the ratio between completed sub-activities and the total project is used instead. All direct and indirect costs that relate to the completion of the contract are included in the calculation. When invoicing on account exceeds the value of the work completed, the liability is recognized as a contract liability under short-term liabilities. If projects are expected to be loss-making, the loss is recognized immediately in the income statement. Costs not yet incurred are provided for as other provisions. Provisions are based on individual assessment of the estimated loss until the projects have been completed. Significant assessment by Management Total expected costs related to work-in-progress for third parties are partly based on estimates as they include provisions for unforeseen cost deviations in future supplies of raw materials, subcontractor products and services plus construction and handing over. Provisions for warranties on work-in-progress for third parties are based on Management estimates for each project while taking contract obligations into account. | Annual report 2023 Page 87 4.4 Consolidated notes DKKThousands 2023 2022Totalcosts incurred 82,276 145,419Valuationafter IFRS 9 (note 21) (139) (139)Profitrecognized as income, net 26,633 40,445Contractassets 108,770 185,725Contractliabilities (73,877) (168,678)Netcontract assets and liabilities 34,893 17,047Ofwhich contract assets are stated under assets 38,203 63,876andcontract liabilities (3,310) (46,829)Netcontract assets and liabilities 34,893 17,047 Contract assets and liabilities consist of all open projects on 31 December including cost and profit recognized in prior years. The majority of all contract assets and liabilities on 31 December are expected to be revenue recognized in 2024. 17. Contract assets and liabilities CONTINUED | Annual report 2023 Page 88 4.4 Consolidated notes 18. Bank loans and credit facilities Accounting policy Debt to credit institutions is recognized at the date of borrowing at the proceeds received less transaction costs. For subsequent periods, financial liabilities are measured at amortized cost for the difference between proceeds and the nominal value to be recognized as a financial expense over the term of the loan. Carrying More than 5Total2023 0-1 year 1-5 yearsWeighted averageyears amount effective interest rateCashand cash equivalents 156,027 - - 156,027 156,027 3.1%Assets156,027 156,027 156,027 3.1%Leasedebt (2,905) (5,989) - (8,895) (8,895) 3.4%Otherdebt (2,270) - - (2,269) (2,269) 0.0%Debtto credit institutions - (4,106) - (4,106) (4,106) 0.4%Shortterm bank facilities (3,278) - - (3,278) (3,278) 6.0%Liabilities(8,453) (10,095) - (18,548) (18,548) 3.4%Netdebt 147,574 (10,095) - 137,479 137,479 2.9% DKK Thousands | Annual report 2023 Page 89 4.4 Consolidated notes DKK Thousands Weighted average2022 0-1 year 1-5 years TotalMore than 5CarryingYears amount effective interest rateCashand cash equivalents 45,142 - - 45,142 45,142 0.0%Assets45,142 - - 45,142 45,142 0.0%Leasedebt (3,626) (5,416) - (9,042) (9,042) 2.4%Otherdebt (9,828) - - (9,828) (9,828) 0.0%Debtto credit institutions - (9,150) - (9,150) (9,150) 0.4%Shortterm bank facilities (38,119) - - (38,119) (38,119) 2.3%Liabilities(51,573) (14,566) - (66,139) (66,139) 1.1%Netdebt (6,431) (14,566) - (20,997) (20,997) 1.1% Based on the Group’s net debt at the end of the 2023 financial year, a rise of 1 percentage point in the general interest rate level will cause a decrease in consolidated annual earnings after tax and equity of approx. DKK 150k (DKK 270k in 2022). Cash management SKAKO is committed to maintaining a flexible capital structure. On 31 December 2023, SKAKO had undrawn committed credit facilities in the amount of DKK 168,797k (2022: DKK 61,274k). On 31 December 2023, SKAKO had ‘cash and cash equivalents’ and ‘bank overdraft’, net of DKK 152,749k (2022: DKK 7,023k). Capital management SKAKO monitors capital on the basis of the net debt relative to EBITDA. At the end of the year, the net debt to EBITDA ratio was equity ratio was negative -4.7 (2022: 0.5). SKAKO has a medium-term goal of a net debt to EBITDA ratio below 2.5. 18. Bank loans and credit facilities CONTINUED | Annual report 2023 Page 90 4.4 Consolidated notes 19. Provisions Accounting policy Provisions are recognized when the Group, due to an event occurring before or at the balance sheet date, has a legal or constructive obligation and it is probable that financial benefits must be waived to settle the obligation. Provisions are measured according to Management’s best estimate of the amount whereby the obligation is expected to be settled. Provisions for warranty claims are estimated on a project-by-project basis based on historically realized cost related to claims in the past. The provision covers estimated own costs of completion, subsequent warranty supplies and unsettled claims from customers or subcontractors. Provisions regarding disputes and lawsuits are based on Management’s assessment of the likely outcome settling the cases based on the information at hand at the balance sheet date. Significant assessment by Management Management assesses provisions and the likely outcome of pending and probable lawsuits, etc. on an on-going basis. The outcome depends on future events, which are uncertain by nature. In assessing the likely outcome of lawsuits, etc., Management bases its assessment on internal and external legal assistance and established precedents. Warranties and other provisions are measured on the basis of empirical information covering several years. Together with estimates by Management of future trends, this forms the basis for warranty provisions and other provisions. Long-term warranties and other provisions discounted to net present value takes place based on the future cash flow and discount rate expected by Management. | Annual report 2023 Page 91 4.4 Consolidated notes DKKThousands 2023Warranties Other provisions TotalProvisionsat 1 January 3,524 4,351 7,875Foreignexchange adjustments 0 (2) (2)Additions1,827 1,659 3,486Used(2,724) (4,349) (7,073)Reversals(1,200) - (1,200)Provisionsat 31 December 1,427 1,659 3,086Thematurity of provisions is specified asfollows:Current liabilities1,027 0 1,027Non-current liabilities 400 1,659 2,0591,427 1,659 3,086 DKKThousands 2022Warranties Other provisions TotalProvisionsat 1 January 3,027 4,142 7,169Foreignexchange adjustments 4 2 6Additions3,454 4,351 7,805Used(1,361) (4,144) (5,505)Reversals(1,600) - (1,600)Provisionsat 31 December 3,524 4,351 7,875Thematurity of provisions is specified as follows:Current liabilities2,214 1,316 3,530Non-current liabilities 1,310 3,035 4,3453,524 4,351 7,875 Provisions for warranty covers a 1-3-year warranty period. Other provisions relate to provisions for disputes, etc. and are essentially expected to be applied within the next five years. 19. Provisions CONTINUED | Annual report 2023 Page 92 4.4 Consolidated notes 20. Adjustments, consolidated cash flow statement DKKThousands 2023 2022Amortisationand depriciation 4,511 10,196Changein provisions (1,403) (84)Financialitems received and paid 3,330 4,637Other(73,511) 1,592(67,073) 16,341 DKKThousands 2023 2022Borrowings1 January 29,757 66,062Repayments(18,231) (4,507)Newborrowings 7,022 4,583Currencyadjustments - -Borrowings31 December 18,548 66,138 Adjustments Change in borrowings and short-term credit facilities | Annual report 2023 Page 93 4.4 Consolidated notes 21. Exchange rate, liquidity and credit risks Accounting policy To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets. The expected loss rates are based on the payment profiles of sales over a period of 36 months before 31 December 2023 and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. Trade receivables and contract assets are written down when there is no reasonable expectation of recovery. Indicatorsthat there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period of longer than 120 days past due. Impairment losses on trade receivables and contract assets are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written down are credited against the same line item. Risk management activities in the SKAKO Group mainly focus on financial risks to which the Company is fairly likely to be exposed. In connection with the preparation of the Group’s strategic, budgetary and annual plans, the Board of Directors considers the risks identified in these activities. Financial risks Financial risk management concentrates on identifying risks in respect of exchange rates, credit and liquidity with a view to protecting the Group against potential losses and ensuring that Management’s forecasts for the current year are only to a limited extent affected by changes or events in the surrounding world – be the changes in exchange rates or in interest rates. It is Group policy to exclusively hedge financial risks arising from our commercial activities and not to undertake any financial transactions of a speculative nature. Exchange rate risks With more than 90% of the Group’s sales being invoiced in foreign currencies, primarily EUR, reported revenue is affected by movements in the Group’s trading currencies. The Group does not hedge (systematic) currency risks with financial instruments but seeks to minimize such exchange rate risks by matching positive and negative cash flows in the main currencies as much as possible. The Group conducts ongoing conversion to DKK in connection with the purchase and sale of foreign currency and monitoring of currency exposure. | Annual report 2023 Page 94 4.4 Consolidated notes Below is a sensitivity analysis in respect of exchange rates, given a positive change of 5% in the currencies with the highest exposures. We do not consider a currency risk on EUR. The estimate has been provided on a non-hedged basis. Liquidity risk The Group aims at having sufficient cash resources to be able to take appropriate steps in case of unforeseen fluctuations in cash outflows. We have access to suitable undrawn credit facilities and the liquidity risk is therefore considered to be low. Credit risks The Group’s credit risks relate primarily to trade receivables and contract assets. For large projects we have a signed Letter of Credit from the customer’s bank before we undertake any work. Our remaining customer base is fragmented so credit risks in general only involve minor losses on individual customers. Overall, we therefore estimate that we have no major credit exposure on Group level. The maximum credit risk relating to receivables matches the carrying amount of such receivables. All trade receivables are considered to be paid within one year Trade receivables can be allocated as follows: The Group has two types of financial assets that are subject to the expected credit loss model: • Trade receivables from contracts with customers • Contract assets from plant sales 2023: Potential impact on 2022: Potential impact onDKK ThousandsNet position Change in currencyP/L and Equity P/L and equityEUR52,596 0% 0 0USD1,555 5% 78 624GBP11,968 5% 598 312MAD14,246 5% 712 1,626 DKKThousands2023 2022Europe53,193 64,164TheUSA 112 9,599Africa4,969 5,267Other- 22,35558,274 101,385 21. Exchange rate, liquidity and credit risks CONTINUED | Annual report 2023 Page 95 4.4 Consolidated notes While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial. The loss allowance as at 31 December 2022 and 31 December 2023 was determined as follows for both trade receivables and contract assets: 31 December 2023 – DKK Thousands The closing loss allowances for trade receivables and contract assets as at 31 December 2022 reconcile to the opening loss allowances as follows: Due 31-120Not Due Due 0-30 daysDue 121-365 Due more thanTotaldays days 1 yearExpectedloss rate 0.1% 0.4% 1.0% 1.9% 30.0%Grosscarrying amount – trade receivables 42,880 5,831 3,226 2,485 8,229 62,651Grosscarrying amount – contract assets 38,203 0 0 0 0 38,203Lossallowance 81 58 43 19 4,315 4,516 31 December 2022 – DKK Thousands Due 31-120 Due 121-365 Due more thanNot Due Due 0-30 daysTotaldays days 1 yearExpectedloss rate 0.1% 0.4 % 1.0% 1.9% 100.0%Grosscarrying amount – trade receivables 73,857 21,313 982 850 6,602 103,604Grosscarrying amount – contract assets 63,876 0 0 0 0 63,876Lossallowance 138 85 10 16 1,969 2,218 DKK ThousandsContract assets Trade receivables2023 2022 2023 20221January – calculated under IFRS 9 138 134 2,080 2,057Increase in loan loss allowance recognized in profit or loss during 139 138 4,377 2,080theyearReceivables written off during the year as uncollectible - - - -Unusedamount reversed (138) (134) (2,080) (2,057)At31 December 139 138 4,377 2,080 21. Exchange rate, liquidity and credit risks CONTINUED | Annual report 2023 Page 96 4.4 Consolidated notes The company’s financial institutions have provided bank guarantees for consignments and prepayments of a total of DKK 28.3m (2022: DKK 53.7m). Towards the company’s primary financial institution, a deposit of DKK 50m (2022: DKK 50m) has been provided with deposit in unsecured claims, stocks, tangible assets and intangible rights. There is a 12-month rent commitment related to a building in Denmark. The minimum rent liability amounts to DKK 2.1m (2022: DKK 3.1m). The Danish subsidiaries of the Group are liable for tax of the jointly taxed income, etc. of the Group. SKAKO A/S is the administrative company of the joint taxation. 22. Contractual liabilities, contingent liabilities and securities 25. Approval and publication At the Board meeting on 14 March 2024, our Board of Directors approved this Annual Report 2023 for publication. The report will be presented to the shareholders of SKAKO A/S at the annual general meeting on 17 April 2024. 24. Events after the balance sheet date SKAKO A/S have February 26, 2024 in OMX 1/2024 approved extraordinary dividend to shareholder of DKK 122m besides this there have been no events that materially affect the assessment of this Annual Report 2023 after the balance sheet date and up to today. 23. Related parties SKAKO A/S has no related parties with a controlling interest. Given its share of ownership, Frederik2 ApS are considered to have significant influence. The company’s related parties comprise the company’s Executive Management, Board of Directors and these persons’ related family members. Related parties also comprise companies in which the before-mentioned persons have controlling or common control. In addition, related parties comprise the subsidiaries cf. page 113 in which SKAKO A/S has controlling or significant influence. | Annual report 2023 Page 97 4.4 Consolidated notes The Group’s general accounting policies are described below. In addition to this, specific accounting policies are described in each of the individual notes to the consolidated financial statements. Definition of materiality IFRS contain extensive disclosure requirements. The Group discloses the information required according to IFRS unless such information is deemed immaterial. 26. Group accounting policies Generally The consolidated financial statements are presented in compliance with IFRS Accounting Standards (IFRS) as adopted by the EU and Danish disclosure requirements for annual reports published by reporting class D (listed) companies cf. the Danish executive order on IFRS issued in compliance with the Danish Financial Statements Act. The registered office of SKAKO A/S is in Faaborg, Denmark. The consolidated financial statements are presented in Danish kroner (DKK), which is the presentation currency for Group activities and the functional currency for the Parent. The consolidated financial statements are presented on the basis of historical cost except for share-based remuneration which are measured at their fair value. The financial statements for the Parent as well as the Parent’s accounting policies are presented from the consolidated financial statements and are shown on the last part of this Annual Report 2023. The accounting policies remain unchanged for the consolidated financial statements compared to 2022. Effect of new accounting standards not yet in force Revised and new standards and interpretations issued, but not yet effective or approved by the EU at the time of publication of this Annual Report 2023 have not been incorporated into this report. Effect of new accounting standards Amendments to IAS 1, IAS 8, IAS 12 and IFRS 17 have no impact on the Group’s accounting policies, due to immateriality to SKAKO. Changes in accounting policies and classification for 2023 No new standards are expected to be implemented in 2023. Administrative expenses Administrative expenses include administrative staff costs, office expenses as well as depreciation, amortisation and impairment losses on assets used for administrative purposes. Distribution costs Distribution costs include costs relating to training, sales, marketing, promotion materials, distribution, bad debts as well as depreciation, amortisation and impairment losses on assets used for distribution purposes. Income statement Income and costs are recognized on an accrual basis. The income statement is broken down by function, and all costs including depreciation, amortization and impairment losses are then charged to production, distribution and administration. Consolidation principles The consolidated financial statements are prepared on the basis of the financial statements for the Parent and its subsidiaries by aggregating uniform items. The financial statements included in the consolidated financial statements are prepared in accordance with the Group’s accounting policies. Intra-Group income, expenses, shareholdings, balances and dividends as well as unrealized intra- Group profits on inventories are eliminated. The accounting items of subsidiaries are recognized 100% in the consolidated financial statements. Consolidated financial statements The consolidated financial statements comprise SKAKO A/S (the Parent) and the enterprises in which the Parent can or actually does exercise control by either directly or indirectly holding more than 50% of the voting rights. Classification discontinued activities A discontinued operation is a component of the entity that has been disposed. The results of discontinued operations are presented separately in the statement of profit or loss. Comparatives in the statement of profit and loss for previous periods are restated to reflect the result of discontinued operations. | Annual report 2023 Page 98 4.4 Consolidated notes Prepaid expenses Prepaid expenses recognized under assets include costs relating to the subsequent financial years. Prepaid expenses are measured at cost. Cash flow from financing activities comprises cash flows from raising and repaying long-term debt, instalments on lease liabilities and bank overdraft. 26. Group accounting policies CONTINUED 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, investing and financing activities. Cash flow from operating activities includes inflows from the year’s operations adjusted for non-cash operating items, changes in working capital, financial income received and expenses paid, realized foreign currency translation gains and losses and income tax paid. Cash flow from investing activities includes the purchase, development, improvement or sale of intangible assets and property, plant and equipment. Cash flow from investing activities comprises cash flows from the purchase and sale of intangible, tangible and financial non-current assets. Treasury shares On the sales of treasury shares, the purchase price or selling price, respectively, is recognized directly in equity under other reserves (retained earnings). Equity Foreign currencytranslationreserve includes foreign currency translationadjustments on the translation of financial statements of foreign subsidiaries from their respective functionalcurrencies into Danish kroner. Foreign currency translationadjustments are recognized in the income statement on realizationof the net investment. Hedging reserves include fair value adjustments of derivatives satisfying the criteria for hedging of future transactions.The amounts are recognized in the income statement or the balance sheet in step with recognition of the hedged transactions. Cash and cash equivalents Cash and cash equivalents consist of bank deposits and certain overdrafts, and other liquid assets. Deferred income Deferred income includes income received relating to the subsequent financial year. Deferred income is measured at cost. Financial ratios Financial ratios are calculated as follows: • Gross profit margin = Gross profit x 100 / Revenue • Profit margin = EBIT x 100 / Revenue • Liquidity ratio = Total current assets x 100 / Total current liabilities • Equity ratio = Total equity x 100 / Total assets • Return on equity = Profit for the period x 100 / (Equity this year + equity prior year) / 2 • Financial leverage = Net interest-bearing debt x 100 / Equity • Net debt to EBITDA = Net debt / EBITDA (EBIT less depreciations) • NWC/Revenue = Net working capital x 100 / Revenue • Earnings per share = Profit for the period / Shares in free flow • Equity value per share = Equity / Total shares • Share price = Share price at end of period • Price-book ratio = Share price / Equity per share • Market capitalization = Total number of share x Share price • ROIC = NOPAT / (Invested capital this year + invested capital prior year) / 2 • NOPAT = Profit for the period +/- net financial income • Invested capital = Total assets - net cash and credits - deferred tax assets – non- interest-bearing current liabilities Estimates and judgements On the preparation of the consolidated financial statements, Management makes a number 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 recognized in the reporting period in which such changes are made. See list of significant estimates and assessments in chapter 4.4 | Annual report 2023 Page 99 4.5 Parent company financial statements 4.5 PARENT COMPANY FINANCIAL STATEMENTS Notes Revenue Other income 75,000 - 1,2 Administrative expenses (3,078) (4,025) Operating profit before special items (EBIT) 71,922 (4,025) 3 Special items (1,934) (1,650) Operating profit (EBIT) 69,988 (5,675) 4, 8 Financial income 1,915 1,051 4 Financial expenses (4,888) (1,889) Profit before tax 67,015 (6,513) 5 Tax on profit for the year 2,714 1,784 Profit for the year 69,730 (4,729) Parent company income statement 2023 2022 DKK Thousands 2023 2022 Notes Profit for the year 69,730 (4,729) Other comprehensive income - 0 Comprehensive income 69,730 (4,729) Parent company statement of comprehensive income DKK Thousands | Annual report 2023 Page 100 4.5 Parent company financial statements Notes Other intangible assets - - 6 Intangible assets - - Operating equipment, fixtures and fittings - - Leasehold improvements - - Tangible assets under construction - - 7 Tangible assets - - 8 Investments in subsidiaries 164,159 164,159 Other receivables - - 9 Deferred tax assets 1,928 1,020 Other non-current assets 166,087 165,179 Total non-current assets 166,087 165,179 Receivables from subsidiaries 164 232 Trade receivables - - Income tax 1,806 2,304 Other receivables 60 59 Prepaid expenses 230 231 Other investments - - Cash 126,246 488 Current assets 128,506 3,314 Assets 294,593 168,493 Parent company balance sheet - 31 December DKK Thousands 20222023 | Annual report 2023 Page 101 4.5 Parent company financial statements Notes Share capital 31,064 31,064 Retained earnings 128,014 73,222 Proposed dividends 15,532 15,532 Total equi ty 174,610 119,818 Debt to subsidiaries 117,073 37,803 Bank loans and credit facilities - 6,738 Trade payables 627 868 Other liabilities 2,283 3,266 Current liabilities 119,983 48,675 Liabilities 119,983 48,675 EQUITY AND LIABILITIES 294,593 168,493 Parent company balance sheet - 31 December DKK Thousands 20222023 | Annual report 2023 Page 102 4.5 Parent company financial statements Notes Profit before tax 67,015 (6,513) 10 Adjustments (74) 838 Changes in receivables, etc. - 68 Change in trade payables and other liabilities, etc. (1,225) 1,175 Cash flow from operating activities before financial items and tax 65,716 (4,432) Interest received (1,915) (1,051) Interest paid 4,888 1,889 Taxes paid and received - 1,784 Cash flow from operating activities 68,689 (1,810) Change in intra-Group balances 79,339 23,683 Change in short-term bank facilities (6,738) (29,232) Distributed dividends (15,532) (12,335) Cash flow from financing activities 57,069 (17,884) Change in cash and cash equivalents 125,758 (19,694) Cash and cash equivalents 1 January 488 20,182 Cash and cash equivalents 31 December 126,246 488 Breakdown of cash and cash equivalents at the end of the year: Cash 126,246 488 Other investments Cash and cash equivalents at the end of the year 126,246 488 Parent company cash flow statement DKK Thousands 2023 2022 | Annual report 2023 Page 103 4.5 Parent company financial statements DKK Thousands Share capital Retained earnings Proposed Dividends Equity Equity 1 January 2023 31,064 73,222 15,532 119,818 Paid dividends (15,532) (15,532) Comprehensive income in 2023: Profit for the year 54,198 15,532 69,730 Other comprehensive income 112 112 Comprehensive income, year 54,310 15,532 69,842 Share -based payment, share warrants 482 482 Equity 31 December 2023 31,064 128,014 15,532 174,610 Parent company statement of changes in equity DKK Thousands Share capital Retained earnings Proposed dividends Equity Equity 1 January 2022 31,064 92,825 12,335 136,224 Distributed interim dividends (12,335) (12,335) Comprehensive income in 2022: Loss for the year - (20,261) 15,532 (4,729) Other comprehensive income - - - - Comprehensive income, year - (20,261) 15,532 (4,729) Share -based payment, share warrants - 658 - 658 Equity 31 December 2022 31,064 73,222 15,532 119,818 | Annual report 2023 Page 104 4.6 Parent company notes 4.6 PARENT COMPANY NOTES DKK Thousands 2023 2022 PWC Statutory audit 376 576 Other assurance engagements - - Tax and indirect taxes consultancy 119 119 Other services 333 159 828 854 1. Staff costs Number of employees in 2023: 0 (2022: 0) For information regarding Executive Management and Board of Directors remuneration, including share-based warrant plans, please refer to note 4 and note 5 in the consolidated financial statements. 2.Fee to parent company auditors appointed at the Annual General Meeting The fee for non-audit services delivered by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab to the parent company amounts to DKK 0.5m (2022: DKK 0.1m) and consists of accounting and tax advisory. 3. Special items Special items consists of transaction costs for the terminated transaction process with Zefyr Invest and amounting to DKK 1,934m (2022: DKK 1,65m) | Annual report 2023 Page 105 4.6 Parent company notes DKK Thousands 2023 2022 Interest from subsidiaries - 631 Dividends received from subsidiaries - - Reversal of write-down of shares in subsidiaries - - Financial income from financial assets not measured at fair value in the income statement - 631 Other financial income 1,915 420 Financial income 1,915 1,051 Interest to subsidiaries (2,602) (626) Interest on bank debt (1,711) (668) Interest on lease debt - - Financial expenses on financial liabilities not measured at fair value in the income statement (4,313) (1,294) Other financial expenses (574) (595) Financial expenses (4,888) (1,889) Net financial items (2,973) (838) 4. Net financial income | Annual report 2023 Page 106 4.6 Parent company notes DKK Thousands 2023 2022 Current tax on the profit for the year 1,806 1,450 Adjustment of current tax, prior years - - Change in deferred tax 908 334 Adjustment of deferred tax, prior years - - Impact on changes in corporate tax rates - - Tax for the period 2,714 1,784 Danish corporate tax rates 1,806 1,433 Effect of tax rates in foreign jurisdictions - Impact in changes in corporate tax rates - Tax assets not capitalized 908 351 Permanent differences and other items - 2,714 1,784 5. Tax on profit for the year | Annual report 2023 Page 107 4.6 Parent company notes DKK Thousands 2023 2022 Software Software Cost 1 January 907 907 Investments - - Disposals - - Transferred between categories - - Cost 31 December 907 907 Amortization and impairment 1 January 907 907 Disposals - - Amortisation - - Amortization and impairment 31 December 907 907 Carrying amount 31 December - - 6. Intangible assets | Annual report 2023 Page 108 4.6 Parent company notes DKK Thousands Leasehold improvements Operating equipment, fixtures and fittings Total Cost 1 January 2023 341 2,168 2,509 Investments - - - Disposals - - - Transferred between categories - - - Cost 31 December 2023 341 2,168 2,509 Depreciation and impairment 1 January 2023 341 2,168 2,509 Transferred between categories - - - Disposals - - - Depreciation - - - Depreciation and impairment 31 December 2023 341 2,168 2,509 Carrying amount 31 December 2023 - - - 7. Tangible assets DKK Thousands Leasehold improvements Operating equipment, fixtures and fittings Total Cost 1 January 2022 341 2,168 2,509 Investments - - - Disposals - - - Transferred between categories - - - Cost 31 December 2022 341 2,168 2,509 Depreciation and impairment 1 January 2022 341 2,168 2,509 Transferred between categories - - - Disposals - - - Depreciation - - - Depreciation and impairment 31 December 2022 341 2,168 2,509 Carrying amount 31 December 2022 - - - | Annual report 2023 Page 109 4.6 Parent company notes DKK Thousands 2023 2022 Cost 1 January 260,534 260,534 Investments - - Disposals - - Cost 31 December 260,534 260,534 Write -down 1 January (96,375) (96,375) Reversal of write-down - - Write -down 31 December (96,375) (96,375) Carrying amount 31 December 164,159 164,159 8. Investments in subsidiaries Group companies are listed on page 113. | Annual report 2023 Page 110 4.6 Parent company notes DKK Thousands 2023 2022 Deferred tax recognized in the balance sheet: Deferred tax assets 1,928 1,020 Deferred tax liabilities - Deferred tax, net 31 December 1,928 1,020 Deferred tax, net 1 January 1,020 687 Changes in deferred tax 908 333 Deferred tax, net 31 December 1,928 1,020 Deferred tax assets: Tax losses 1,928 1,020 1,928 1,020 Deferred tax assets not recognized: Property, plants and equipment 205 205 Inventories - Other items 121 121 Tax losses 2,847 3,754 3,173 4,080 9. Deferred tax Tax losses carried forward are not subject to time limitation. | Annual report 2023 Page 111 4.6 Parent company notes DKK Thousands 2023 2022 Depreciations - - Financial items received and paid 2,973 838 Other (3,047) - (74) 838 10. Adjustments, cash flow statement Adjustments DKK Thousands 2023 2022 Borrowings 1. January 6,738 35,970 Repayments (6,738) (29,232) New borrowings - - Currency adjustments - - Borrowings 31. December - 6,738 Change in borrowings and short-term credit facilities 11. Contracts liabilities, contingent liabilities and securities Please refer to note 21 in the consolidated financial statements. As security for SKAKO Vibration Holding A/S’ and SKAKO Vibration A/S’ outstanding account in relation to its primary financial institution, the company has provided an unlimited, joint and several suretyships. Towards the company’s primary financial institution, a company deposit of DKK 50m (2022: DKK 50m) has been provided with deposit in unsecured claims, stocks, tangible assets and intangible rights. There is a 12-month rent commitment related to the building in Denmark. The minimum rent liability amounts to DKK 2.1m (2022: DKK 3.1m). The company is jointly taxed with all Danish subsidiaries. The company is jointly and severally liable with the other companies in the joint taxation for Danish corporate taxes and withholding taxes on dividend, interests and royalties within the joint taxation. | Annual report 2023 Page 112 4.6 Parent company notes 13. Events after the balance sheet date Please refer to note 24 in the consolidated financial statements. 14. Accounting policies The financial statements for 2023 of the parent company, SKAKO A/S has been prepared in accordance with IFRS Accounting Standards (IFRS) as adopted by the EU and Danish disclosure requirements for annual reports of listed companies under reporting class D. The financial statements have been prepared in accordance with the historical cost convention, as modified by the revaluation of derivative financial instruments at fair value. The accounting policies for the financial statements of the parent company are unchanged from the last financial year and are the same as for the consolidated financial statements with the following additions. Supplementary accounting policies for the parent company Investments in Subsidiaries Investments in subsidiaries are recognized at cost less impairment losses. Where the recoverable amount is lower than cost, investments are written down to this lower value. Dividends received from investments in subsidiaries and associates are recognized in the income statement in the financial year in which the dividends are declared. Intra-group transactions in the Parent Company Financial Statements Intra-group transactions are recognized in the parent company financial statements at the carrying amount. Accordingly, additions to or disposals of investments are recognized at the carrying amount, and any difference between the carrying amount of net assets and the consideration paid is recognized directly in equity. Comparative figures are not restated. Intercompany balances Intercompany balances which are expected to be settled as part of the normal operating cycle, or where an unconditional right to defer settlement. 12. Related parties Please refer to note 23 in the consolidated financial statements. In 2023, the Parent Company has sold services to subsidiaries for DKK 11,7m (2022: DKK 10.8m) and paid net interest expenses, cf. note 3. | Annual report 2023 Page 113 Subsidiaries Company name Country Interest SKAKO A/S Denmark Parent SKAKO Vibration Holding A/S Denmark 100% SKAKO GmbH Germany 100 % SKAKO Vibration A/S Denmark 100 % SKAKO Vibration Ltd. UK 100 % SKAKO Dartek S.L. Spain 100 % SKAKO Vibration S.A. France 100 % SKAKO Vibration Succursale Maroc Morocco 100 % Aktieselskabet af 01.04.2012 Denmark 100 % Bygmestervej 2 DK-5600 Faaborg Denmark Tel.: +45 63 11 38 60 [email protected] www.skako.com CVR No. 36440414 5.6 Parent company notes Annual reportAuditor's report on audited financial statementsParsePort XBRL Converter2023-01-012023-12-312022-01-012022-12-31529900WNR3U8C847AW24Reporting class DOpinionBasis for Opinion529900WNR3U8C847AW242023-01-012023-12-31cmn:ConsolidatedMember529900WNR3U8C847AW242023-01-012023-12-31529900WNR3U8C847AW242022-01-012022-12-31529900WNR3U8C847AW242023-12-31529900WNR3U8C847AW242022-12-31529900WNR3U8C847AW242021-12-31529900WNR3U8C847AW242022-12-31ifrs-full:IssuedCapitalMember529900WNR3U8C847AW242023-12-31ifrs-full:IssuedCapitalMember529900WNR3U8C847AW242022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900WNR3U8C847AW242023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900WNR3U8C847AW242023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900WNR3U8C847AW242022-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900WNR3U8C847AW242023-01-012023-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900WNR3U8C847AW242023-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900WNR3U8C847AW242022-12-31ifrs-full:RetainedEarningsMember529900WNR3U8C847AW242023-01-012023-12-31ifrs-full:RetainedEarningsMember529900WNR3U8C847AW242023-12-31ifrs-full:RetainedEarningsMember529900WNR3U8C847AW242022-12-31SKA:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersRecognisedInEquityMember529900WNR3U8C847AW242023-01-012023-12-31SKA:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersRecognisedInEquityMember529900WNR3U8C847AW242023-12-31SKA:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersRecognisedInEquityMember529900WNR3U8C847AW242021-12-31ifrs-full:IssuedCapitalMember529900WNR3U8C847AW242022-01-012022-12-31ifrs-full:IssuedCapitalMember529900WNR3U8C847AW242021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900WNR3U8C847AW242022-01-012022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900WNR3U8C847AW242021-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900WNR3U8C847AW242022-01-012022-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900WNR3U8C847AW242021-12-31ifrs-full:RetainedEarningsMember529900WNR3U8C847AW242022-01-012022-12-31ifrs-full:RetainedEarningsMember529900WNR3U8C847AW242021-12-31SKA:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersRecognisedInEquityMember529900WNR3U8C847AW242022-01-012022-12-31SKA:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersRecognisedInEquityMember529900WNR3U8C847AW242023-01-012023-12-31cmn:ConsolidatedMember1529900WNR3U8C847AW242023-01-012023-12-31cmn:ConsolidatedMember2529900WNR3U8C847AW242023-01-012023-12-31cmn:ConsolidatedMember1529900WNR3U8C847AW242023-01-012023-12-31cmn:ConsolidatedMember2529900WNR3U8C847AW242023-01-012023-12-31cmn:ConsolidatedMember3529900WNR3U8C847AW242023-01-012023-12-31cmn:ConsolidatedMember4529900WNR3U8C847AW242023-01-012023-12-31cmn:ConsolidatedMember5529900WNR3U8C847AW242023-01-012023-12-31cmn:ConsolidatedMember1529900WNR3U8C847AW242023-01-012023-12-31cmn:ConsolidatedMember2529900WNR3U8C847AW242022-01-012022-12-31cmn:ConsolidatedMemberiso4217:DKKiso4217:DKKxbrli:sharesxbrli:pure
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