Solar

Annual Report (ESEF) • Feb 6, 2025

Solar A/S Annual report 2024 Solar A/S CVR no. 15 90 84 16 Driven by our purpose We improve construction, building operation and industry processes with a commitment to sustainability and productivity. For our customers. With our partners. For a better world. Driving the green transition As a driver of the green transition we are supporting our customers in achieving their CO 2 emission reduction targets through our Climate & energy products, which generate revenue exceeding DKK 1bn. Our CO 2 reduction targets are approved by the SBTi, and we operate and report in accordance with the CSRD. Empowering greater productivity We provide products, technical know-how, and qualified services to more than 49,000 customers, supported by valuable market knowledge and the expertise of 2,899 committed employees, driving greater productivity. Enhancing service through digitalisation With 65% of order lines made digitally, our digital engagement has become a key driver of customer satisfaction, raising our service offering to the next level and supporting our best in class digital customer journey. This is Solar We are a leading sourcing and services company. We combine excellent product sourcing, superior distribution, and value-adding services to support professionals and businesses in the electrical, heating & plumbing, and industrial sectors across five key European markets. Products Markets 75% 16% 9% % of revenue Segments Installation Industry Trade 55% 35% 10% % of revenue % of revenue Electrical Heating & Plumbing Climate & Energy Denmark The Netherlands Sweden Norway Poland Other 33% 23% 17% 15% 3% 9% Solar A/S Annual Report 2024 2 Management’s review Who we are Contents Highlights Letter from CEO 4 Performance highlights financial & key events 5 Performance highlights sustainability & key events 6 Why invest 7 Financial guidance 2025 8 Revised 2026 ambitions 9 Strategy and business Our strategy 11 Strategy execution 12 How we create value 13 Our business model 14 Risk management 16 Results Five-year summary 22 Guidance follow-up 2024 23 Financial performance 24 Segment performance 26 Corporate governance Governance framework 30 Board of Directors 35 Executive Board 37 Shareholder information 38 General information ESRS 2 General basis for preparation 41 ESRS 2 Creating value through sustainability 42 ESRS 2 Stakeholder engagement 43 ESRS 2 Double materiality assessment introduction 44 Environmental information Taxonomy alignment 56 ESRS E1 Climate change mitigation 61 ESRS E2 Pollution 69 ESRS E4 Biodiversity and ecosystems 70 ESRS E5 Ressource use and circular economy 72 Social information ESRS S1 Own workforce 76 ESRS S2 Workers in the value chain 81 Governance information ESRS G1 Business conduct 84 Appendix ESRS 2 Disclosure requirements and incorporation by reference 87 ESRS 2 Sustainability due dilligence statement 90 ESRS 2 Data points that derive from other EU legislation 91 Consolidated financial statements 96 Statement of comprehensive income 98 Balance sheet 99 Cash flow statement 100 Statement of changes in equity 101 Notes 104 Separate financial statements 147 Statement of comprehensive income 148 Balance sheet 149 Cash flow statement 150 Statement of changes in equity 151 Notes 154 Group companies overview 183 Statements and reports 185 Statements, not audited, part of Management review 192 Q4 2024 193 Additional ESG data points 206 Management review Sustainability statements Financial statements Additional reports Together with the Annual Report, the following publications constitute Solar’s reporting for the year 2024: Statutory report on corporate governance 2024 cf. § 107b of the Danish Financial Statements Act www.solar.eu/investor/ shareholders/ corporate-governance/ www.solar.eu/legal/ Statutory report on data ethics 2024 cf. § 99d of the Danish Financial Statements Act Solar A/S Annual Report 2024 3 Management’s review Managing volatility We believe that the green transition and financial performance are intrinsically linked. We recognise electrification as a mega trend and aim to harness its market demand. This will not only support our environmental goals but also help us to capitalise it and enhance our long-term financial resilience and growth potential. A year into our Solve strategy, we have launched several initiatives to drive progress and enhance future performance. These initiatives include securing the right resources for our Climate & Energy and Solution sales focus areas, investing in digitalisation to support a continued increase in the conversion rate for Concepts, and introducing Solar Industrial Solutions to the Norwegian, Swedish, and Dutch markets to support sales of high- capacity heat pumps. Additionally, we have formed new partnerships for Solar Polaris, enabling the construction of even larger solar parks (also see Strategy execution, page 12). Investing in digitalisation We have invested heavily in our main markets, implementing AutoStore in Solar Norge, Solar Nederland, and Solar Danmark, and are currently investing in Solar Jens Andersen CEO Sverige. Sweden is a strategic market for us, with investments laying the groundwork for major automation and digitalisation, significantly contributing to future growth. The Swedish warehouse will be operational in late 2026 and, thus, completes implementation of AutoStore in all our main markets. Due to the substantial investments in the Swedish market, the Board of Directors proposes a dividend payment of DKK 15.00 per share. Guidance and ambitions As our markets also appear challenging and unpredictable in 2025, we expect a revenue between DKK 12.3bn and 12.8bn and an EBITDA between DKK 530m and 600m. The market development prompts us to adapt our strategic ambition for EBITDA margin for 2026 to >5.0% down from >6%. However, we remain confident that we, over time, will strengthen the margin even further. From ambition to action We continue to witness how climate-related events, such as record heat, droughts, floods, and forest fires, impact the world. We recognise our responsibilities and have support among our stakeholders and in legislation to help drive decarbonisation in the sourcing and services sector. In 2024, we took important steps to deliver on this responsibility. With an emissions reduction of 50% compared to baseline year 2020, we continue as planned towards our mid-term target of reducing emissions for scope 1+2 by 65% in 2026. We have introduced several initiatives to further our journey towards net zero in scope 1+2 by 2030. These include In 2024, we navigated market challenges by adapting our business. We exceeded our EBITDA guidance and further reduced emissions. We believe that the green transition and financial performance are intrinsically linked. afforestation, replacement of traditional heat sources with heat pumps running on renewable energy, transitioning our vehicle fleet towards electric vehicles and reducing the use of plastic in relation to customer deliveries. Gratitude for dedication A challenging year has come to an end. Once again, I have been impressed by our employees and their ability to adapt and deliver quality services. They have performed beyond expectations even in times of uncertainty. I would like to extend my thanks and appreciation to them all. I would also like to thank our customers and suppliers for their support and cooperation in 2024. Solar A/S Annual Report 2024 4 Management’s review Highlights - Letter from the CEO Financial highlights 2024 Market recovery came slower and with less strength than we expected. Consequently, revenue was below expectations. Adjusted organic growth at group level amounted to -6.4% (-2.6%) for 2024. Group revenue amounted to DKK 12.2bn (DKK 13.0bn). EBITDA amounted to DKK 646m (DKK 871m) which was above our guidance. Non-recurring items supported EBITDA by net DKK 81m (DKK 30m). The Board of Directors will submit a proposal to the Annual General Meeting for an ordinary dividend payout of DKK 15.00 per share. The proposed dividend reflects our major investments in further automatisation and digitalisation of our business. Revenue (DKKbn) EBITDA (DKKm) Dividend per share (DKK) Swedish warehouse under construction Solar Industrial Solutions Polaris - first delivery to solar park Duiven sale completed Key events 12.2bn 646m 15 .0 0 8.5% 12.9% 6.7% -2.6% 5.3% -6.4% 13.9 Adjusted organic growth EBITDA margin% % 2022 13.0 2023 12.2 2024 1,175 2022 871 2023 646 2024 90 Ordinary DKK 45 Extraordinary DKK 45 2022 30 2023 15 2024 Embarked on the construction of the 44,000 sqm warehouse in Kumla, Sweden. The warehouse will be BREEAM certified to demonstrate our commitment to sustainable solutions. Finally, the sale of Örebro warehouse has been finalised for proceeds of DKK 61m with a gain of DKK 49m. Solar Industrial Solutions was launched in Denmark in mid-2023. By the end of 2024, the organisation had been fully established, covering every Solar market with its team of 30 employees, including sales representatives, technical specialists, and project managers. We successfully started delivering equipment to a 70MW solar park. We provided the screening, planning, products, and delivery services, while our partner built the solar park. The addition of a 7,600 sqm warehouse and 20,000 bins for the AutoStore system at the Alkmaar warehouse resulted in the Duiven warehouse becoming redundant. Consequently, the sale of our warehouse in Duiven was completed with the proceeds of DKK 75m released in January 2025. The gain from the sale amounted to DKK 39m. 5 Management’s review Solar A/S Annual Report 2024 Highlights - Performance highlights financial & key events Sustainability highlights 2024 Since our SBTi baseline year in 2020, we have reduced our CO 2 e emissions by 50% and our mid-term target is a 65% reduction in scope 1 and 2 emissions by 2026. Our official commitment to SBTi is a 42% reduction by 2030, which we have now superseded with our own target to reach net-zero/0 emissions for scope 1 and 2 by 2030. We engage with our suppliers to increase transparency in our value chain. We expect 82% of our spend to have undergone due diligence risk assessment by 2026. We are focused on diversifying our senior management team and have a target of 25% women in senior management by 2026. In 2024, we saw an increase from 15% to 21% compared to 2023. Scope 1 and 2 emissions Spend undergoing risk assessment Women in senior management 1 Key events 3,560tCO 2 e 80% 21% 5,920 2022 2022 20222023 2023 20232024 2024 2024 5,391 3,560 50% 68% 80% 17% 15% 21% Afforestation, Latvia We have initiated the afforestation at our property in Latvia. We have planted approximately 360,000 trees in 2024 and have an ambition of afforesting a total of 470 HA within the next three years. SBTi targets Based on a more accurate methodology, we have recalculated our scope 3 emissions. Our calculations show an increase in 2024 of 7% compared to our 2020 baseline. Our target of a total 25% reduction in category 1 and 11 by 2030 remains unchanged. Code of Conduct We met our 2024 target for 93% of our spend to be covered by our Supplier Code of Conduct, covering more than 90% of the strategic/preferred spend. By 2026, our target is 95% spend coverage at group level. Locally, we expect to reach the same level. Entry level of women In 2024, the entry level of women increased from 31% in 2023 to 34% in 2024. We are committed to promote gender diversity and to unbiased recruitment. It is our ambition that we shall reach 40% by 2026. 1) Calculated according to the Danish Financial Act § 99b Solar A/S Annual Report 2024 6 Management’s review Highlights - Performance highlights sustainability & key events Why invest Online order lines in 2024 Dividend paid in 2020-24 DKK billion Our efficient operating model yields strong cash flow, laying the foundations for a target payout ratio of at least 35% of profit after tax. During 2020-24 we distributed more than DKK 1.6bn to our shareholders equalling 89% of the total profit after tax in the same period. Our Climate & Energy products enhance energy efficiency and support a fully electrified system, driving significant reductions in energy consumption for our customers and the countries they operate in. We deliver internally green transition and aid our customers to deliver on global electrification trends. High payout ratio Since our founding in 1919, we have continuously transformed our business. Today, we are one of the most digitalized companies in the sector, with 65% of order lines or more than DKK 6bn in revenue made digital. Digital business Driving the green transition Climate & Energy target Share of revenue in 2026 20242020 1.6 bn Online 65% >10% 65% > 10% 0.20.1 0.3 0.7 0.3 Solar A/S Annual Report 2024 7 Management’s review Highlights EBITDA guidance of between DKK 530m and DKK 600m for 2025 Assumptions On a macroeconomic level, we expect to see a recovery in 2025. Although we expect to see improvement in all our markets, the timing and strength of the recovery are unpredictable. Revenue We expect all markets to post stagnant growth or experience positive trends in all countries in 2025, resulting in an anticipation of overall growth across all segments. Installation We expect to see growth in the new construction sector in 2025. The green transition is expected to deliver slightly better growth rates. We expect the installation market to show positive growth. Industry The guidance assumes stagnant sales to Marine/Offshore and Utility, whereas we expect all other sub-segments to show positive growth. Overall, we expect the industry market to show positive trends. Trade We expect positive growth in special sales in 2025, which is the Trade segment’s primary activity. Gross profit margin Throughout 2024, we saw a loss in gross profit margin in all main product categories. We expect this downward trend to taper off in 2025. Our outlook is for a slightly lower gross profit margin in 2025, mainly due to continued price pressure combined with lower price increases. Costs Contrary to what we initially expected, salary inflation continues to have an impact, in part, due to carry-over effects and, in part, due to collective labour agreements. We anticipate this trend to continue into 2025. We have implemented - and will continue to implement - mitigating measures, including cost containment, process improvements and staff reductions where necessary. Our 2025 guidance includes restructuring costs but below the 2024 level. Financial outlook 2025 Revenue guidance We expect revenue to range between DKK 12.3bn and 12.8bn, corresponding to organic growth of between approx. 1% and 5%. EBITDA guidance We expect EBITDA in the range of DKK 530-600m. Our 2025 guidance ranges between DKK 12.3bn and 12.8bn for revenue and between DKK 530m and 600m for EBITDA. The EBITDA guidance is negatively impacted by an expected lower gross prot margin combined with higher salary ination than normal. Solar A/S Annual Report 2024 8 Management’s review Highlights - Financial guidance 2025 Revised 2026 ambitions Due to recent market developments and our expectations for the remaining period, we have revised our ambitions. For our strategic focus area Climate & Energy, we expect slower growth, reducing our ambition for share of revenue to >10%, down from >15%. Due to a lower-than-expected effect in 2024, we have reduced our ambition for the strategic focus area Concept strength to >0.5 percentage points, down from >0.7 percentage points. Consequently, we are also lowering our financial ambition for EBITDA margin to >5.0% from >6.0%. 2026 is assumed to be characterised by: ● Average annual GDP growth of at least 1.5% ● Low cost and salary inflation ● Pick-up in industry and building activities ● Continued governmental support for the green transition. Financial ambitions Strategic focus areas Sustainability EBITDA margin Climate & energy Concept strength Solution sales Climate impact Sustainable supply chain Diversity and inclusion Gearing > 5.0 > 10% 65% > 95% > 25% > 0.5 > 20% 1.0-3.0x by 2026 Share of revenue Gross profit margin improvement Share of revenue Scope 1 & 2 emission: Reduction compared to base year 2020 Spend covered by Code of Conduct Women in senior management * Calculated according to the Danish Financial Statements Act §99b Percentage points Solar A/S Annual Report 2024 9 Management’s review Highlights Strategy and business Our strategy Strategy execution How we create value Our business model Risk management 11 12 13 14 16 10 Management’s review Solar A/S Annual Report 2024 Our strategy We improve construction, building operation and industry processes with a commitment to sustainability and productivity. For our customers. With our partners. For a better world. We maximise the growth potential in climate and energy solutions, such as heat pumps, solar panels, EV charging and ventilation. The newly established Solar Industrial Solutions offers combined solutions for both existing and new industry customers based on our product technology and know-how. We work to become carbon neutral in our own operation and to enable our customers to decarbonize in their part of the value chain. We create new opportunities in selected areas by leading with solution selling, specialist competence and a 360-degree view on the future needs of our customers’ business. We aim to increase the share of wallet with existing customers and open new doors to new customer groups. We foster a workplace and culture that promotes diversity and inclusion to attract, develop, and retain employees, while respecting human rights. Climate & energy Our purpose Climate impact Solution sales Diversity and inclusion Strategic focus areas Sustainability As a leading sourcing and services partner, we will use our strong core to combine products, services and specialist competence to deliver value- adding solutions solving business challenges sustainably. With Solve, it is our ambition to create additional value at an earlier stage of our customers’ decision-making process. SOLVE Powered by our Dedicated people, Digital leadership and Superior logistics Our concepts will drive overall profitability and enhance our position in the value chain. We aim to further develop value adding concept assortments powered by logistical services and specialist competences to increase the ease and effectiveness of our customers’ daily operations. We source energy efficient products complying to the latest standards, from suppliers characterized by respect for human rights, environment, and society. Concept strength Sustainable supply chain Solar A/S Annual Report 2024 Management’s review 11 Strategy and business - Solve 2026 Strategy execution To this aim, we have launched the following initiatives: ● Roll out of Solar Industrial Solutions to all of our markets, driving Industrial heat pump sales. ● Added more specialists to our Zero concept in preparation for including Thermonova in our product range for Sweden, Norway, and the Netherlands. ● We successfully started delivering equipment to a 70MW solar park. We provided the screening, planning, products, and delivery services while our partner built the facility. To this aim, we have launched the following initiatives: ● Aligned our product portfolio across markets, strengthening our sourcing abilities and refining knowledge. ● Increased conversion rates on our digital platforms by introducing more digital tools. ● Added product categories to our Concepts and driving sales in Marine & Offshore. To this aim, we have launched the following initiatives: ● Raised the competence level across markets, with Solar Danmark being the guiding star. ● Added specialist employees to our sub-categories, laying the foundation for our Tools, Fastening & Consumables organisation. ● Prepared the introduction of Solar Industrial Solutions for sale in Norway, Sweden, and the Netherlands. Climate & energy Solution sales Our target is to maximise the growth potential of Climate & energy solutions. Our objective is to increase overall profitability by increasing concept share. Our aim is to increase our business among new and existing customers with Solutions sales. Concept strength Share of revenue Gross profit margin improvementShare of revenue Target 2026Target 2026Target 2026Current Current Current 18%9% 0.0 > 20% > 0.5 > 10% Percentage points Percentage points Solar A/S Annual Report 2024 12 Management’s review Strategy and business How we create value Improving productivity for customers Increasing customer productivity by enabling our customers to run their businesses more efficiently. Developing our people Providing career opportunities in an engaging work environment based on our values of ‘glow’, ‘courage’ & ‘smartfun’. Driving sustainability for the planet Committed to achieving our ultimate targets of net-zero emissions / 0 emissions in scopes 1 & 2 and a 25% reduction in scope 3 emissions by 2030. Maximising our value for our shareholders We constantly optimise our business to increase the value of Solar for the benefit of our shareholders. Other stakeholders We actively support local projects, fostering community development and sustainability. Our commitment extends to having direct representation on boards and networks, ensuring our voice and values are well- represented. People Around 2,899 employees use market knowledge to develop new business areas and move our business forward. Technological know-how Our extensive know- ledge of products and technologies. Partnerships Our trusted partnerships with over +50,000 customers and suppliers. Financials Our strong financial platform enables continuing business development. Key ressources Value creationBusiness activities Excellent sourcing Qualified sales and services Superior distribution ● Efficient supply chain ● Consolidating customer sourcing ● Strategic suppliers ● Product availability ● Supporting the green transition ● Digital platform ● Solution sales ● Product documentation ● Customer education ● Day-to-day delivery ● On site delivery ● Fastbox – within the hour ● Automated warehouses We create value for our customers, employees, other stakeholders and the planet. Fastbox Solar A/S Annual Report 2024 13 Management’s review Strategy and business Accessibility and availability are the cornerstone for delivering customer satisfaction ESRS2 SBM-1 39 Our Solve strategy aims to further strengthen Solar’s position as a leading sourcing and services partner, providing comprehensive solutions that advance the green transition. We are committed to addressing the challenges our customers face, particularly in driving the green transition. Key strategic focus areas include: Maximising the growth potential of Climate & Energy, increasing profitability via Concept strength and a strong value proposition via Solution sales. See Our strategy, page 11 for a description of Climate & Energy, Concept strength and Solution sales. Delivering from a strong foundation Our 2,899 employees and their extensive knowledge of products and technologies, digitalisation, automatisation, and superior distribution is our greatest leverage. It supports our 49,000 customers, thereby creating trusted relationships that enable us to become stronger together. Our strong financial platform drives our continuous development and our investment in further digitalisation & automatisation. Sustainability is key Sustainability is the vital component that shapes our operational practices and the solutions and products we bring to market. Our sustainability focus covers: ● Reducing our carbon footprint: Measures have been initiatied to minimise environmental impact. Our climate reduction targets have been approved by the Science Based Targets initiative and are aligned with the Paris Agreement. ● Responsible sourcing: Ensuring materials and products are sourced responsibly. We require our suppliers to comply with the same ethical and social standards that we demand of ourselves and that are stated in our Code of Conduct. ● Promoting equality: Addressing societal inequalities and creating a transparent, respectful workplace. See Sustainability statements, page 76. We believe these factors are crucial for the successful execution of our Solve strategy, ensuring that we create additional value at an earlier stage of our customers’ decision-making process and actively promoting products and solutions that accelerate the green transition. This comprehensive approach ensures that Solar remains resilient, competitive, and aligned with global sustainability goals. Our business model ESRS 2 SBM-1 Strategy, business model and value chain We are committed to addressing the challenges faced by our industry and customers, particularly in driving the green transition. We empower our 2,899 employees and support over 49,000 customers with advanced technological know-how and strategic partnerships. Our ambition is to decarbonise our own operation, grow productivity and ensure a positive impact on both the environment and our stakeholders. Solar A/S Annual Report 2024 14 Management’s review Strategy and business How we do it ESRS2 SBM-1 40 Solar has a strong market position in five main markets. As a sourcing & services company, our focus is on maximising the value of our product mix, which means that we focus on our supply chains and the products they offer as well as the add-on services we provide to our customers. Creating value for our customers, shareholders, and the environment is a priority. Suppliers and products Our 3,500 suppliers deliver more than 93,879 unique electrical and heating & plumbing products on an annual basis. In 2024, Solar phased in 10,639 products and phased out 4,895 products. Revenue is divided as follows: electrical products (75%), heating and plumbing products (16%), and Climate & Energy (9%). Our suppliers aspire to produce high quality and sought-after products for our customer groups. Our add-on services include among others delivery services, logistic solutions, inventory management, technical support, education etc. Markets and customers Our sales are mainly distributed across Denmark (33%), Norway (15%), Sweden (17%), the Netherlands (23%) and Poland (3%). Our customers operate within the B2B segment, which can be divided further into three sub- segments: Installation, Industry and Trade. Revenue by segment is included in the Consolidated Financial Statements, note 2.2, page 109. The key to our success lies in fostering strong collaboration with suppliers and customers, thereby providing the right products and services to ensure an excellent experience. Employees Our 2,899 employees are based in Denmark (869), Sweden (520), Norway (389), the Netherlands (643), Poland (369) and others (109). We offer safe and secure working conditions, with fair pay that is in line with the market. See Our workforce, page 76. Segment information ESRS2 SBM-1 41 For a breakdown of segments see note 2.2 in the consolidated financial statements. Revenue from significant ESRS sectors is non-material to Solar. No significant ESRS sectors are material to Solar and no group of products/services or customer accounts for more than 10% of our revenue. See note 2.2. on page 109-110. From cradle to grave ESRS2 SBM-1 42 As a sourcing and services company, Solar’s key activities include responsible product sourcing, managing an efficient supply chain, a digital sales platform, sales, services and ensuring efficient order distribution. Our business is founded upon a strong resource foundation where the knowledge of our 2,899 employees about our customers, their planning expertise and their ability continuously enhance our sales opportunities. Our employees are based in offices, drive-ins and at our automated warehouse, where 80% of orders are packed using automated picking systems. Orders are then shipped out by lorry or electric vehicle. Our operation is targeted at a broad group of customers within the Installation, Industry and Trade segments. Our value creation Our key resources are deployed to support our surroundings – customers, employees, the planet, our shareholders, and meeting other stakeholders. Improving productivity Our business model supports our customers in their daily operations by ensuring their access to the right product assortment, prompt delivery and value-added services, such as installation guidance and product delivery on site – all targetted at improved productivity. Developing our people Our organisation takes pride in developing our people by providing career opportunities at every level, providing training, ensuring safe work condition and offering fair pay. Driving sustainability We are committed to achieving our ultimate targets of net-zero emissions / 0 emissions in scopes 1 & 2 and a 25% reduction in scope 3 emissions by 2030. Maximising our value for investors We strive to optimise our business to increase the value of our company for the benefit of our shareholders. We do this by maintaining a strict cost culture, sourcing the right assortment of products and boosting the digitalisation and automatisation of the company. Meeting other stakeholders We actively support local projects, fostering community development and sustainability. Our commitment extends to having direct representation on boards and networks, ensuring our voice and values are well-represented. See stakeholder engagement section, page 43. Our cost structure Our cost structure and revenue from our business segments can be seen in our consolidated financial statements, note 2.2, page 109. Impacts, risk and opportunities For impacts, risks and opportunities, see our double materiality assessment, page 44. Fastbox Solar A/S Annual Report 2024 15 Management’s review Strategy and business Three lines of defence Solar’s risk management is organised according to the three lines of defence model which demonstrates and structures roles, responsibilities for risks, decision-making and control to achieve effective governance. Board of Directors / Audit Committee Approve and accept risk policy including risk appetite and tolerance Executive Board Monitor the risk management framework and effectiveness First line of defence Third line of defence Business Management & Risk Owners Internal Audit Own risks and risk management activities Test, validate and assess efficiency in risk management processes and activities Second line of defence Group Risk Management & Risk Managers Establish policies and frameworks, facilitate risk identification and monitoring Solar’s risk management is based on Enterprise Risk Management (ERM) and the Board of Directors’ rules of procedure, which place the responsibility for risk management with the Executive Board. Risk management The Executive Board is responsible for ensuring that the necessary policies and procedures are in place, that efficient risk management systems have been established for all relevant areas and are improved continuously. The overall purpose of risk management is to support a robust business that is able to react quickly and flexibly when conditions change. Solar’s risk management encompasses the relevant entities in Denmark, Norway, Sweden, the Netherlands, Poland, and MAG45. The process supports local management teams by taking a structured approach towards risk management, with risk self-assessments anchored in an annual cycle. Data is consolidated at group level, and the findings are presented to the Board of Directors for approval. The individual risk owners are responsible for mitigating risks to a level within Solar’s risk appetite and tolerance. Throughout the year, Solar’s Group Risk Management and local risk managers actively monitor the progress of the mitigation to ensure that risks are at the acceptable level. Solar A/S Annual Report 2024 16 Management’s review Strategy and business Risk definition The focus of Solar’s risk management is to identify and assess operational risks and operational aspects of strategic risks throughout the Solar Group. Solar defines these risks as events or developments that could significantly reduce Solar’s ability to: 1. Meet profit expectations, 2. Execute the strategy, and/or 3. Maintain a licence to operate. Solar works with the concepts of gross risk (inherent risk) and net risk (residual risk). The gross risk effect is defined as the product of the impact and the probability of the risk materialising without any change to current risk mitigation. The net risk effect is defined as the risk level when considering current as well as planned mitigation activities with regard to both impact and probability. Risk appetite and tolerance Solar’s risk appetite and risk tolerance articulate the extent to which Solar is willing to accept risks in three overarching categories: Governance & Compliance, Strategy & Planning, and Operation & Infrastructure. Accordingly, the risk appetite outlines Solar’s strategic outlook towards risk and defines the degree to which Solar is risk-seeking or risk-avoiding, while the risk tolerance, as an indicative parameter, outlines the level of net risk that Solar is willing to accept for a given measure of reward. Risk appetite and risk tolerance are set by the Board of Directors and are reviewed annually. Solar Risk Map 2025 Risk appetite and tolerance per risk category High Impact Likelihood High Low F B C E D A A B C D E F Cyberattack IT interruption Product documentation Macroeconomic uncertainty Market and competition dynamics Central warehouse breakdown Solar’s top risks are mapped out in terms of likelihood and impact in the risk map. Low Medium High Risk seekingRisk tolerantRisk neutral Risk Appetite Risk Tolerance Risk Category Moderately risk averse Risk averse Governance and compliance Strategy and planning Operation and infrastructure Low Low-medium Low-medium Risk self-assessment Solar evaluates the effect of a risk based on the product of the probability of the risk materialising and the gross impact if the risk does materialise. In detail, the probability of the risk is defined as the expected frequency of the risk occuring, while the impact is divided into four dimensions: 1. Effect on earnings 2. Reputational damage 3. Compliance (licence to operate) 4. Business continuity Risk handling The purpose of identifying and then handling risk is to reduce it to an acceptable level, which is in line with risk appetite and tolerance. In Solar, we work with four different risk treatment strategies when handling risks. ● Avoid – seeks to eliminate uncertainty by changing circumstances. ● Transfer – seeks to transfer ownership of and/or liability for the risk to a third party. ● Accept – recognises net risks and monitors risk exposure. ● Mitigate – seeks to minimise risk exposure to below the acceptable threshold. To ensure an understanding of the philosophy and the risk management preferences, Solar provides structured criteria for risk attitude and a catalogue of mitigating activities. Solar A/S Annual Report 2024 17 Management’s review Strategy and business A B Cyberattack IT interruption Risk The risk has decreased. The risk is unchanged. Scenario Risk of IT breakdown and/or data breach due to a cyberattack. Risk of business interruption caused by unforeseen but inherent events that affect IT operation, such as power outage, network outage, or system failure. Impact Business interruptions in the form of compromised data, denial of service, intellectual property theft, and regulatory investigations are some of the consequences of various cyber incidents and would ultimately lead to financial losses and inability to run daily operation. The likelihood of the risk materialising is between low and medium, while the potential impact is assessed as slightly above medium. Solar makes every effort to strengthen its IT infrastructure, but it also depends on the robustness of many service providers. Potential IT may have a significant impact on earnings and reputation, depending on the nature and scale of the event. The likelihood of the risk materialising is between low and medium, while the potential impact is assessed as slightly above medium. Mitigation Preventive and corrective measures focus on strengthening cyber resilience. This includes 24-hour monitoring of the network for unusual behaviour, ensuring adequate solutions, or upgrading the existing ones. Advanced security analytics tools support the evaluation of the organisation’s security measures and the implementation of recommended actions. Penetration tests as well as disaster recovery tests are performed on a regular basis, which strengthens the reliability of the IT infrastructure in the case of a successful attack. Business continuity plans and scenario analyses are assessed routinely to identify potential areas for improvement. Additionally, Solar continues to maintain organisational awareness to reduce the likelihood of an unwanted event caused by the human factor. With the implementation of relevant frameworks, risk controls, and technology, both impact and likelihood of a potential successful cyberattack are reduced. To reinforce confidence in our cybersecurity strategies, Solar’s cyber resilience is subject to regular external evaluation. The IT area is continuously monitored and evaluated. Business-critical applications are mirrored at several data centres to safeguard IT operations so that the business can continue to run if one centre experiences downtime. A root cause analysis is carried out in case of any incident to ensure adequate mitigation, and to reduce the likelihood of a similar incident occurring again. Solar ensures that all service providers are certified and audited, which enhances confidence in the stability and quality of digital operations. Exposure to risk mitigation A list of the Group’s top risks for 2025 is similar to that from last year. In relation to risk A, “Cyberattack”, Solar has, over the past 7 years, highly prioritised cybersecurity and made significant investments in this area. As a result, the risk of potential cyberattacks has been significantly reduced. We continue to monitor developments and make the necessary investments to ensure ongoing protection. As circumstances continuously evolve, certain risk descriptions required minor adjustments to address emerging trends and natural risk developments. Risk D, previously headlined “Geopolitical and macroeconomic uncertainty”, is now limited to “Macroeconomic uncertainty”. Additionally, “Credit management” – risk E in the 2023 Annual Report – has been removed from the list of the Group’s top risks this year, although we continue to monitor the risk exposure. Emerging risks related to environmental, social and governance matters (ESG) have been included in interviews and local risk assessments. They were also thoroughly analysed in the double materiality assessment conducted during the year (see our Sustainability Statements, page 44). The consolidated risk score has not yet triggered immediate risk mitigation at the Group level, although the associated risks are monitored closely. With several risk factors increasing beyond Solar’s influence, it should be noted that mitigation measures are often ongoing, and with gradual results. Solar A/S Annual Report 2024 18 Management’s review Strategy and business Risk The risk has decreased. The risk has decreased. The risk is unchanged. Scenario Risk of a loss of business opportunities caused by the need to keep abreast of regulatory requirements and dynamic customer demand for product documentation (environmental, climate impact, country of origin, etc.). Risk of challenging business conditions or a change to industry trends caused by the effects of an economic downturn. Risk of new entrants and continued consolidation in the market giving rise to increased competition and/or price pressure with a negative impact on Solar’s business. Impact Inadequate product documentation can lead to a lack of product transparency, which may cause difficulties for customers to make informed choices about a product’s suitability. This can result in lost business opportunities as customers may decide to work with suppliers who can provide more comprehensive information. At the same time, processing the data required for documentation presents challenges in terms of data collection, organisation, analysis, and registration. The likelihood of such a risk materialising is assessed as medium, while the potential impact is assessed as between low and medium. Recent macroeconomic adversities as well as dynamic customer requirements may continue to impact markets, shift demand, and affect stock availability. In light of the upward trends in the market, the risk is not considered as significant as last year, although it is still among the top risks. The likelihood of the risk materialising is slightly above medium, while the potential impact is assessed as medium. The current commercial risk of strong new entrants or signicant acquisitions in the market combined with the potential slowdown in the green transition may result in reduced competitiveness, lost revenue, and decreased earnings. The likelihood of the risk materialising is assessed as slightly above medium, while the potential impact is assessed as medium. Mitigation To address current and future priorities in terms of legal and regulatory compliance, Solar continues to build internal competence and actively obtain the information required. Raising awareness of external requirements as regards certification, packaging, or end-of-life product handling, reinforces product data governance. The continuous development of our webshop across the Group aims to ensure better visibility and clarity of product information, such as EPD (Environmental Product Documentation). EcoVadis – a leading provider of due diligence supplier assessment – supports the company in sourcing responsible vendors, which increases the likelihood of adequate documentation. Solar draws up appropriate risk indicators and mitigation measures for specific parts of the business. These are monitored on a regular basis in anticipation of an event requiring a rapid response. Sudden imbalances between supply and demand have encouraged greater focus on selling the right products (i.e., climate & energy) or growing the concept share or solution sales to achieve the projected results. Solar seeks to engage in active and regular cross-border dialogue to share experience. A dedicated cross-functional team is in place to monitor potential new players’ strategies and/or recent market developments as well as to understand customers’ current and future buying criteria. Commercial market and sales organisations monitor this for early indicators, but also proactively engage with customers. Based on observations and feedback, Solar continues to invest in digital tools, reallocation of resources and value-adding services to adapt to new trends. C D E Product documentation Macroeconomic uncertainty Market and competition dynamics Solar A/S Annual Report 2024 19 Management’s review Strategy and business Risk The risk is unchanged. Scenario Risk of business interruption at central warehouses caused by unforeseen but inherent events, such as fire, power outage, flooding, and other natural or man-made hazards. Impact The potential interruption to central warehouse operations may have a significant impact on earnings and reputation, depending on the nature and scale of the event. The likelihood of the risk materialising is low, while the potential impact is assessed as slightly above medium. Mitigation A contingency plan is regularly updated and tested at all central warehouses. It clarifies roles and responsibilities and sets out the measures required from staff in case of possible force majeure events. Solar arranges for regular warehouse audits in order to verify the level of preventive and detective security measures to protect its facilities. Thanks to the automated storage and retrieval systems in Denmark, Norway and the Netherlands, the risk of a man-made hazard is limited. F Central warehouse breakdown Solar A/S Annual Report 2024 20 Management’s review Strategy and business Results Five-year summary Guidance follow-up 2024 Financial performance Segment performance 22 23 24 26 21 Management’s review Solar A/S Annual Report 2024 Five-year summary In all material aspects financial ratios are calculated in accordance with the Danish Finance Society’s “Recommendations & Financial Ratios”. Income statement (DKK million) 2024 2023 2022 2021 2020 Revenue 12,223 13,031 13,863 12,354 11,465 Earnings before interest, tax, depreciation and amortisation (EBITDA) 646 871 1,175 911 637 Earnings before interest, tax and amortisation (EBITA) 400 648 978 727 455 Earnings before interest and tax (EBIT) 278 558 909 672 248 Earnings before tax (EBT) 192 468 858 622 300 Net profit for the year 148 348 660 531 222 Balance sheet total 6,108 6,112 5,901 5,305 4,607 Total equity 1,874 1,982 1,931 1,952 1,696 Interest-bearing liabilities, net 1,232 1,157 1,074 -37 128 Cash flow from operating activities 538 855 16 783 813 Net investments in property, plant and equipment -101 -169 -167 -125 -25 Financial ratios (% unless otherwise stated) Organic growth adjusted for number of working days -6.4 -2.6 12.9 5.9 -2.0 Gross profit margin 20.6 22.5 23.4 22.4 21.0 EBITDA margin 5.3 6.7 8.5 7.4 5.6 EBITA margin 3.3 5.0 7.1 5.9 4.0 Effective tax rate 22.7 25.6 23.1 14.6 26.0 Net working capital (year-end NWC)/revenue 13.9 14.6 15.9 10.2 9.7 Gearing (net interest-bearing liabilities/EBITDA), no. of times 1.9 1.3 0.9 0.0 0.2 Return on equity (ROE) 8.0 18.0 34.0 29.1 13.5 Return on invested capital (ROIC) 8.3 13.2 25.5 24.6 13.8 Equity ratio 29.9 31.6 32.7 36.8 36.8 Share ratios (DKK unless otherwise stated) 2024 2023 2022 2021 2020 Earnings per share outstanding (EPS) 20.68 47.51 90.37 72.72 30.42 Ordinary dividend per share 15.00 30.00 45.00 45.00 28.00 Extraordinary dividend per share - - - 45.00 15.00 Total dividend in % of net profit for the year (payout ratio) 72.1 63.1 49.8 123.8 141.1 Employees Average number of employees (FTEs) 2,899 3,036 3,019 2,908 2,935 Solar A/S Annual Report 2024 22 Management’s review Results Guidance follow-up 2024 Sale of our central warehouse in Örebro, Sweden As announced in the 2023 Annual Report, we have embarked on the process of selling our two central warehouses in Sweden prior to the finalisation of the new logistics centre in Kumla. The sale of the central warehouse in Örebro was successfully concluded in Q4 2024. Cost initiatives Measures to reduce the impact of cost and salary inflation delivered more savings than were projected in our initial guidance. Revenue Due to the slower-than-expected recovery, we revised our revenue guidance downwards from the initial DKK 12,500m to DKK 12,300m in Q3. Growth rates for Installation, Industry and Trade did not meet expectations. Consequently, revenue was down by DKK 300m relative to our initial expectations. Gross profit margin Gross profit margin declined as our continued focus on concept sales did not result in the expected gross profit margin improvements combined with a general decline across all other main categories in 2024. Less than expectedStronger than expected As expected Improved delivery services We made a conscious decision to improve the quality and performance of our delivery services. This elevation of our delivery service level led to an increase in freight costs, but customer satisfaction increased. As expected, gross profit margin declined by approx. 0.3 percentage points due to our improved delivery services. Guidance follow-up 2024 Despite slower-than-expected recovery, EBITDA amounted to DKK 646m Initial October update Actual Revenue, DKKm 12,500 12,300 12,223 Organic growth,% -5.0 -6.0 -6.4 EBITDA, DKKm 600 600 646 EBITDA margin, % 4.8 4.9 5.3 Solar A/S Annual Report 2024 Management’s review 23 Results EBITDA amounted to DKK 646m Financial performance Revenue Our guidance for 2024 assumed that all segments would show negative growth, with recovery gaining ground by the end of the year. However, recovery was slower and less robust than expected. Consequently, revenue was below projections. As expected, 2024 saw a decline in growth, but with Q4 performing better than Q1-Q3. Q4’s organic growth of 3% was largely accounted for by Solar Polaris’ deliveries to a major solar park project. Adjusted organic growth at group level amounted to -6.4% (-2.6%) while revenue declined to DKK 12.2bn (DKK 13.0bn). Revenue from Climate & Energy, a strategic focus area, declined during the year under review and amounted to around DKK 1.1bn (DKK 1.3bn). Q4 posted an increase in residential sales, confirming the long-term potential of heat pumps. The Industry segment delivered adjusted organic growth of approximately -4%, with MAG45 showing positive adjusted organic growth of almost 6%. The Installation and Trade segments posted adjusted organic growth of approximately -8% and -6% respectively. Around 50% of the decline in the Installation segment can be accounted for by the fall in residential sales. Gross profit Gross profit margin declined as our continued focus on concept sales did not result in the expected gross profit 2024 was a year with difficult market conditions, which resulted in disappointing revenue of DKK 12.2bn. EBITDA of DKK 646m, however, was above our expectations. margin improvements combined with a general decline across all other main categories in 2024 - even though we received around DKK 20m in one-off supplier bonus in Q4. Moreover, improvements of our delivery service to our customers increased freight costs. Gross profit margin at group level amounted to 20.6% (22.5%). The decline in gross profit margin, adjusted for one-off supplier bonus in 2024 and one-off price effects in 2023, amounted to 1.8 percentage points. Most of this can be attributed to the decline in margin across all main product categories and, to a lesser extent, a negative mix effect. Other operating income Other operating income of DKK 88m is accounted for by non-recurring income that relates to the completion of the sale of our warehouse in Duiven and the sale of our warehouse in Örebro. An announcement of the sale of the two warehouses in Sweden, prior to the finalisation of our new logistics centre in Kumla, was made in the 2023 Annual Report. External operating costs and staff costs We initiated measures to mitigate the impact of cost inflation and the slowdown in the market. As a result, costs in 2024 include restructuring costs of approximately DKK 27m as average full-time equivalent (FTE) is down by 137 or 4.5% to 2,899. Despite salary inflation, external operating and staff costs declined by DKK 93m. Adjusted for restructuring costs, external operating and staff costs were unchanged at 15.7% (15.7%) of revenue. Gross profit margin % EBITDA DKKm Q1 88 2024 202 137 280 214 187 219 190 Q2 Q3 Q4 2023 Q1 20.7 2024 20.7 20.4 23.2 22.7 21.5 20.8 22.4 Q2 Q3 Q4 2023 (Data shown in brackets relate to the corresponding period in 2023) Solar A/S Annual Report 2024 24 Management’s review Results Loss on trade receivables As we conduct efficient credit management, including in the currently unpredictable market conditions, our loss on trade receivables decreased to DKK 14m (DKK 17m). EBITDA EBITDA of DKK 646m (DKK 871m) was above our expectations. When adjusted for non-recurring income and restructuring costs in 2024 and one-off price effects in 2023, the underlying EBITDA margin amounted to approx. 4.6% (6.5%). EBITDA declined in all main markets in 2024. The results from the individual markets are shown on pages 109-110. Depreciation and write-down Depreciation and write-down on property, plant and equipment increased to DKK 246m (DKK 223m) mainly as the result of the depreciation of the warehouse extensions and automatisation measures in Solar Danmark and Solar Nederland. Amortisation and impairment of intangible assets Amortisation and impairment of intangible assets amounted to DKK 122m (DKK 90m). The-slower-than- anticipated growth in sales was the main factor behind the impairment loss on Thermonova of DKK 47m in 2024. However, we remain confident in the potential of high- capacity Thermonova heat pumps. There was an impairment loss on Højager Belysning of DKK 20m in 2023. Financials Net financials amounted to DKK -85m (DKK -90m). Fair value adjustments impacted net financials by DKK -1m (DKK -8m). Earnings before tax Earnings before tax were down to DKK 192m (DKK 468m). Income tax Income tax amounted to DKK -44m (DKK -120m). The posted income tax corresponds to an effective tax rate of 22.7% (25.6%). Net profit Net profit came to DKK 148m (DKK 348m). Cash flow Net working capital as an average of the previous four quarters declined to 15.0% (16.8%) of revenue. Net working capital at the end of 2024 amounted to 13.9% (14.6%). Cash flow from operating activities totalled DKK 538m (DKK 855m). We succeeded in reducing inventories, which resulted in a cash flow impact of DKK 113m (DKK 230m). Changes in receivables impacted cash flow by DKK -64m (DKK 182m) while changes in non-interest-bearing liabilities had a cash flow impact of DKK 96m (DKK -219m). Total cash flow from investing activities amounted to DKK -265m (DKK -405m). The new logistics centre in Kumla is under construction and impacted cash flow by DKK -112m. The sale of our warehouse in Örebro had a positive impact of DKK 61m. The acquisition of Thermonova impacted cash flow by DKK -10m (DKK -111m). All deferred payments relating to the acquisition have been paid. Cash flow from financing activities amounted to DKK -255m (DKK -175m). This was mainly affected by changes in current interest-bearing liabilities, by dividend distribution of DKK 219m (DKK 329m), and by the raising of non-current interest-bearing liabilities of DKK 100m (DKK 150m). As a result, total cash flow amounted to DKK 18m (DKK 275m). Net interest-bearing liabilities amounted to DKK 1,232m (DKK 1,157m). By the end of 2024, gearing was 1.9 (1.3) times EBITDA. Our gearing target was 1.5-3.0 times EBITDA. The Board of Directors evaluates the capital structure on an ongoing basis in relation to our target and capital requirements. At the end of 2024, Solar had undrawn credit facilities of DKK 1,028m (DKK 955m). Invested capital Solar Group’s invested capital totalled DKK 3,089m (DKK 3,120m). ROIC amounted to 8.3% (13.2%). Activities with a Solar equity interest of less than 50% and activities attributable to non-controlling interests are not included in the ROIC calculation. Invested capital includes operating assets and liabilities only. Solar A/S Annual Report 2024 25 Management’s review Results Installation Rental Special handling Inventory management EV Chargers Logistic handling Data and security Heating & plumbing Renewable energy Lighting Cable Electrical material Ventilation 2024 Segment revenue DKKm DKKm 2024 Segment profit Installation Installation Industry Industry Trade Trade 6,722 545 4,336 669 1,165 120 Services Products (Data shown in brackets relate to 2023) * Segment profit does not include non-allocated costs, which cover income and costs related to joint group functions and to costs which cannot be reliably allocated to the individual segment. Segment performance Today’s installers require more than just a product Our 20,000 plus installation customers range from sole installation contractors to large installation companies. Irrespective of their size, they value both our expertise and our extensive range, which covers electrical, heating & plumbing installations as well as climate & energy products. Installation revenue totalled DKK 6,722m (DKK 7,293m), which corresponds to overall adjusted organic growth of around -8.0% (-4.9%). Solar Polska posted positive growth while negative growth was seen in all other main markets. Segment profit amounted to DKK 545m (DKK 794m) which corresponds to a segment profit margin of 8.1% (10.9%). Detailed segment information is given on pages 109-110. Management’s review 26 Results Expertise and insights creates value for our industry customers Our 20,000 plus Industry customers cover the following sub-segments: OEM (Original Equipment Manufacturers), MRO (Maintenance, Repair & Operations), Infrastructure and Offshore & Marine. They all share one common factor in that they rely on our insight and ability to deliver the right products at the right time. Industry revenue amounted to DKK 4,336m (DKK 4,522m). This corresponds to overall adjusted organic growth of around -4.0% (2.0%). MAG45 posted solid growth, with growth also seen in Solar Norge. Other main markets posted negative growth. Segment profit amounted to DKK 669m (DKK 764m), which corresponds to a segment profit margin of 15.4% (16.9%). Detailed segment information is given on pages 109-110. Heating & plumbing Lighting Tools Cable Ventilation Renewable energy Data and security EV chargers Inventory management Special handling Logistic solutions Electrical material Services Products 2024 Segment revenue DKKm DKKm 2024 Segment profit Installation Installation Industry Industry Trade Trade 6,722 545 4,336 669 1,165 120 * Segment profit does not include non-allocated costs, which cover income and costs related to joint group functions and to costs which cannot be reliably allocated to the individual segment. Industry (Data shown in brackets relate to 2023) Segment performance Management’s review 27 Results HOTEL Dedicated local teams support Trade customers with specialised services Our 9,000 plus trade customers’ requirements and buying preferences differ from those of our Installation and Industry segments. Each of our segments comprises unique services. For Trade, these include storage solutions, logistics and shelf cleaning for DIY shops. Such services and solutions support our Trade customers in their daily business and allow them to focus on what they do best. We prioritise the ongoing development of our Trade services by engaging with our customers. Revenue from Trade amounted to DKK 1,165m (DKK 1,216m), which corresponds to overall adjusted organic growth of -6.3% (-4.6%). Organic growth was positively impacted by Solar Polaris’ deliveries to a major solar park project. Segment profit amounted to DKK 120m (DKK 153m), which corresponds to a segment profit margin of 10.3% (12.6%). Detailed segment information is given on pages 109-110. * Segment profit does not include non-allocated costs, which cover income and costs related to joint group functions and to costs which cannot be reliably allocated to the individual segment. Services Products 2024 Segment revenue DKKm DKKm 2024 Segment profit Installation Installation Industry Industry Trade Trade 6,722 545 4,336 669 1,165 120 Renewable energy Lighting Cable Office & canteen articles Heating and plumbing Special handling Inventory management Solar school Ventilation Logistics solutions Electricial material Data and security EV chargers Toilet & cleaning articles Tools Trade (Data shown in brackets relate to 2023) Segment performance Management’s review 28 Results Corporate governance Governance framework Board of Directors Executive management Shareholder information 30 35 37 38 29 Management’s review Solar A/S Annual Report 2024 The administrative, management and supervisory bodies Solar’s governance system consists of two tiers. The Board of Directors is tier one and the Executive Board is tier two. Together they are our administrative, management and supervisory bodies. Composition and diversity ESRS2 GOV-1 21 The Board of Directors comprises six members elected by the Annual General Meeting and three members elected by the employees. The nine members of the Board of Directors are the non-executive members of the administrative, management and supervisory bodies. All board members elected at the Annual General Meeting stand for election each year, whereas employee representatives are elected by the company’s employees for four-year terms. The Executive Board comprises the CEO and CFO, who are the two executive members of the administrative, management and supervisory bodies. The relevant experience of the nine members of the Board of Directors is described on page 35. The Board of Directors strives for equal gender representation while ensuring that it has a broad portfolio of skills and experience. Our aim is to ensure that women are not underrepresented. According to ERSR2 GOV-1, Solar has three (27.3%) female members and eight (72.7%) male members on the administrative, management and supervisory bodies, which corresponds to an average gender ratio of 0.38. Female board members constitute two of the six board members elected at the Annual General Meeting which, according to Danish law, is considered an even distribution. Peter Bang, Morten Chrone, Louise Knauer and Michael Troensegaard Andersen are independent board members pursuant to the definition in ESRS and corporate governance. Jesper Dalsgaard and Katrine Borum are affiliated to Fonden af 20. December, Solar’s majority shareholder, while the three employee-elected members have a contractual commitment to Solar. Independent board members count for 44.4% of the total board members and 66.7% of members are elected by the Annual General Meeting. Roles and responsibilities ESRS2 GOV-1 22 The Board of Directors and the Executive Board are jointly responsible for the overall and strategic management of the Solar Group. The Board of Directors has established three committees. The Nomination Committee includes a representative from Solar’s majority shareholder, Fonden af 20. December, and Corporate governance structure See Charters for: Nomination Committee Remuneration Committee Audit Committee External auditor Internal Audit Audit Committee (establ. 2007) Remuneration Committee (establ. 2017) Nomination Committee (establ. 2019) Shareholder/ general meeting Executive Board Board of Directors Solar A/S Annual Report 2024 30 Management’s review Corporate governance - Governance framework three members of the Board of Directors, including the Chair. Members of the Remuneration Committee and the Audit Committees are appointed by, and from among, the members of the Board of Directors. In 2024, the Board of Directors re-elected Peter Bang, Michael Troensegaard Andersen and Louise Knauer as members of the Audit Committee. Peter Bang chairs the Audit Committee. He and Michael Troensegaard Andersen have special accountancy qualifications. The Board of Directors re-elected Morten Chrone and Louise Knauer as members of the Remuneration Committee, together with the Chair of the Board of Directors Michael Troensegaard Andersen. Michael Troensegaard Andersen chairs the Remuneration Committee. The Board of Directors lays down the company’s strategy and decides on major investments and divestments, the capital base, key policies, control and audit matters, risk management, and significant operational issues. The duties of the Board of Directors are set out in the Rules of Procedure, which include the handling of sustainability and other non-financial matters. The Board of Directors monitors and approves sustainability reporting in accordance with CSRD and ESRS, the sustainability policies and targets, and the management of material impacts, risks and opportunities (IRO). The Audit Committee undertakes the preparatory work for the above-mentioned sustainability matters and recommends proposals to the Board of Directors. As regards sustainability matters, the Executive Board is responsible for the preparation of Solar’s sustainability reporting in accordance with CSRD and ESRS, proposals for sustainability targets, Solar’s sustainability policies, and the management of materiality of IRO. Solar’s risk management, sustainability processes, procedures and controls are organised according to the three lines of defence model which demonstrates and structures roles, responsibilities for managing IRO, decision-making and control to achieve effective governance, see section below on risk management and internal controls for sustainability reporting. Skills and Expertise ESRS2 GOV-1 23 To perform its management duties, the Board of Directors annually determines the expertise needed for the strategic management of Solar A/S. This also covers knowledge and experience of sustainability matters and the green transition. As a whole, the Board of Directors and the Executive Board possess in-depth knowledge of Solar’s markets, segments, products, value chain, strategy and business model and related IRO. In addition, Vice Chair of the Board of Directors Jesper Dalsgaard, CEO in Combineering Group and previously Managing Director of Environment & Health at Rambøll Group, has in-depth knowledge and experience of sustainability. Chair of the Board of Directors Michael Troensegaard Andersen, previously CEO of H+H, and Chair of the Audit Committee Peter Bang, previously CFO at Velux and currently CFO of Salling Group, possess a high level of knowledge and experience of sustainability from their current and previous positions. In addition, employee- elected board member Denise Goldby, Head of Sustainability, Solar Danmark, completed her Executive MBA focused on corporate governance and sustainability in 2024. On the Executive Board, CFO Michael H. Jeppesen is a State Authorised Public Accountant and qualified as a Sustainability Accountant in 2024. Board Board Audit Remuneration Board membermeetingsconferenceCommitteeCommitteeMichael Troensegaard Andersen 8 1 5 2Jesper Dalsgaard 8 1 - -Peter Bang 7 1 5 -Katrine Borum 8 1 - -Morten Chrone 8 1 - 2Denise Goldby 8 1 - -Louise Knauer 8 1 5 2Rune Jesper Nielsen 7 1 - -Michael Kærsgaard Ravn 8 1 - - Meeting attendance in 2024 Information provided to and sustainability matters addressed by our administrative, management and supervisory bodies ESRS2 GOV-2 26 In 2023-24, Solar prepared for CSRD and ESRS requirements, with the implementation of due diligence processes having double materiality assessment (DMA) and IRO as key elements. The objective of the due diligence process is to ensure that Solar identifies, assesses, and manages material sustainability IRO effectively. This process is integral to the governance framework and supports informed decision-making. Solar conducted a materiality assessment to identify and prioritise sustainability IRO. This involves engaging with stakeholders and considering both internal and external factors. A comprehensive risk assessment is performed to evaluate the likelihood and potential impact of identified risks. This includes both qualitative and quantitative analyses. As part of the preparation for CSRD reporting and the duties of the Board of Directors and the Executive Board, our external advisor, Nordic Sustainability, and Solar’s Head of Sustainability presented the methodology, process, progress and performance for CSRD, ESRS, DMA, IRO and targets at audit committee meetings, the Board of Directors’ conference and board meetings. Our DMA and IRO are included on page 44-46 and have all been presented and addressed by the Audit Committee and the Board of Directors. Sustainability matters and IRO are an integral part of Solar’s Solve strategy. When undertaking major investments or projects, assessment of impact, risk and opportunities is a standard part of the decision making process. From 2025, the annual cycle for the Board of Directors and for the Audit Committee will include addressing material sustainability matters at every ordinary meeting while the due diligence process will be evaluated annually to reflect changes in the operating environment, stakeholder expectations, and regulatory requirements. In 2024, eight board meetings and one conference for the Board of Directors were held. The Audit Committee held five meetings. The Sustainability Steering Committee, which monitors the progress of Solar’s sustainability targets, meets at least quarterly. See matrix on sustainability due dilligence statement in appendix page 90. Solar A/S Annual Report 2024 31 Management’s review Corporate governance Integration of sustainability-related performance in incentive schemes ESRS2 GOV-3 29 Members of the Executive Board are entitled to an annual remuneration in accordance with the remuneration policy, which may consist of the following fixed and variable remuneration components: ● a fixed remuneration ● employee benefits ● variable remuneration, including non-share-based incentives to optimise the Executive Board’s incentive in the short and/or long term ● share-based incentives to optimise the Executive Board’s incentive in the long term, and ● extraordinary incentives that can be both share-based and non-share-based. The remuneration policy was amended at the Annual General Meeting in 2024. ESG targets were included in variable remuneration, and long-term targets were introduced for share-based incentives by replacing restricted shares with performance share units. Under the current remuneration policy, the Board of Directors may allocate share-based incentives to the Executive Board, such as Solar A/S performance share units, where vesting is dependent on an assessment of the degree of achievement of the long-term targets. The objective of the allocation is to safeguard value creation and to achieve Solar’s long-term objectives. The value of share-based remuneration at the time of granting equals 50% of the annual fixed remuneration for each member. Allocation takes place annually following publication of the Annual Report. In 2024, the Board of Directors granted performance share units for 2024, in line with the remuneration policy for long-term incentives. Performance share units are granted for no consideration and provide the holder with the right and obligation to receive Solar B shares, dependent on the achievement of certain forward-looking performance targets proportionally based on Solution Sales, the EBITDA margin, and 7-15% based on CO 2 reduction within scope 1 and 2 targets on 65% reduction by 2026 compared to baseline 2020. The share of total variable expense for the year is 1.4% and share of total expensed for the year is 0.5%. Negotiations regarding changes to the Executive Board’s remuneration are conducted by the Remuneration Committee with a mandate from the Board of Directors. There are no incentive schemes for the members of the Board of Directors. Risk management and internal controls over sustainability reporting ESRS2 GOV-5 36 Solar’s risk management, sustainability processes, procedures and controls are organised according to the three lines of defence model which demonstrates and structures roles, responsibilities for managing IRO, decision-making and control to achieve effective governance. The first line of defence are those responsible for implementing the sustainability targets, policies, procedures and processes in their area. The second line of defence is the Sustainability Steering Committee established by the Executive Board. The Sustainability Steering Committee is chaired by CFO Michael H. Jeppesen and comprises four members of senior management and the Head of Sustainability. It is the Sustainability Steering Committee’s duty to advise the Executive Board on overall sustainability ambitions and direction, to facilitate IRO identification, to establish policies and framework, and monitor progress towards Solar’s sustainability targets. The Sustainability Steering Committee is obliged to meet at least quarterly. Three lines of defence Solar’s sustainability processes are organised according to the three lines of defence model which demonstrates and structures roles, responsibilities for handling risks, decision-making and control to achieve effective governance. Board of Directors / Audit Committee Approve sustainability statement, policies and targets Executive Board Monitor policies and performance First line of defence Second line of defence Third line of defence Topic owners Sustainability Steering Committee and Group Sustainability Internal Audit Responsible for implementing the sustainability actions in their area Establish policies and frameworks, facilitate IRO identification Test, validate and assess efficiency in the sustainability processes Solar A/S Annual Report 2024 32 Management’s review Corporate governance Unit 2024Executive members Headcount 2Non-executive members Headcount 9Female members of administrative, management and supervisory bodies % 27.3Board’s gender diversity ratio Times 0.38Independent board members % 44.4 Unit 2024Variable remuneration dependent on sustainability-related targets and (or) impacts % 7-15 ESRS2 GOV-1 Composition and diversity metrics ESRS2 GOV-Integration of sustainability-realted performance in incentive schemes metrics Accounting policies Executive members ESRS2 GOV-1 21a The executive members of the administrative, management and supervisory bodies are the members of The Executive Board in Solar A/S. Non-executive members ESRS2 GOV-1 21a The nine members of the Board of Directors are the non-executive members of the administrative, management and supervisory bodies. Gender diversity, administrative, management and supervisory bodies ESRS2 GOV-1 21d Gender diversity in administrative, management and supervisory bodies is expressed as a percentage and as an average ratio. The gender diversity in percentage is the total number of female members of the Board of Directors and the Executive Board to the total number of all members of the Board of Directors and the Executive Board. The gender diversity average ratio is calculated as total number of female members of the Board of Directors and the Executive Board to total number of male members of the Board of Directors and the Executive Board. Independent board member ESRS2 GOV-1 21e Board members that exercise independent judgment free from any external influence or conflicts of interest. Independence generally means the exercise of objective, unfettered judgement. When used as the measure by which to judge the appearance of independ- ence, or to categorise a non-executive member of the administrative, management and supervisory bodies or their committees as independent, it means the absence of an interest, position, association or relationship which, when judged from the perspective of a reasonable and informed third party, is likely to influence unduly or cause bias in decision-making. Percentage of independent board members ESRS2 GOV-1 21e As Solar has a two tiers governance system, the percentage of independent board members are the independent board members in the Board of Directors to the total number of members of the Board of Directors. Proportion of variable remuneration dependent on sustainability-related targets and (or) impacts. ESRS2 GOV-3 29d Proportion of variable remuneration dependent on sustainability-related targets and (or) impacts is the annual variable remuneration dependent on sustainability- related targets and (or) impacts for the Executive Board to the total annual variable remuneration for the Executive Board. The third line of defence is Solar’s Internal Audit team who test, validate and assess the efficiency of our sustainability processes. We have implemented internal control systems to identify and mitigate risks related to both financial and sustainability reporting. This includes setting targets, policies, manuals, procedures, and internal controls. We continuously monitor and optimise our financial and sustainability reporting processes and controls as needed. Each year, we conduct a risk assessment to identify potential material misstatements in financial and sustainability reporting, considering factors such as materiality, process complexity, and the likelihood of errors and omissions. In relation to our sustainability reporting, it is our plan in 2025 to evaluate processes in all material areas, reassessing existing controls, and identifying additional controls as necessary. Internal Audit continuously monitor and test these internal controls to ensure the efficiency of our sustainability processes. We have established consistent governance for both financial and sustainability reporting. The Audit Committee oversees our reporting processes, including reviewing risk assessments, internal controls, and their effectiveness. Our financial reports are audited by an independent audit firm elected at the annual general meeting, while our sustainability data undergoes limited assurance by the same auditor. Any observations from both Internal Audit and the external auditor’s reports and management letter are addressed through action plans with assigned responsibilities and deadlines, which we regularly review and follow up on. In addition, see page 44, double materiality assessment (DMA) for our DMA methodology and processes, including IRO assessment. Solar A/S Annual Report 2024 33 Management’s review Corporate governance Corporate governance The Danish Financial Statements Act 107b As a listed company, Solar must provide a statement on how the Corporate Governance recommendations issued by the Danish Committee on Corporate Governance are addressed. Solar complies with 39 of the 40 recommendations but deviates from recommendation 4.1.3. Recommendation on the variable part of remuneration. As Solar applies a simple model for the allocation of variable remuneration, the Board of Directors does not deem it relevant to assess the value of this under different scenarios. Evaluation During Q4 2024, the Chair initiated a board evaluation that included cooperation between the Board of Directors and the Executive Board, the Chair’s role, the work of the Board and Board Committees and an assessment of the Board capabilities relative to those that best support Solar’s strategy. All members of the Board of Directors participated in the evaluation and provided input via questionnaires, which formed the basis of an evaluation report. The 2024 evaluation was shared with the Nomination Committee and did not give rise to any additional measures. Statutory report www.solar.eu/legal/ Full description of corporate governance www.solar.eu/investor/ shareholders/corporate- governance/ See our: Solar A/S Annual Report 2024 34 Management’s review Corporate governance Board of Directors Michael Troensegaard Andersen Jesper Dalsgaard Jensen Peter Bang Katrine Borum Morten Chrone Born 1961 Joined 2021 Born 1968 Joined 2017 Born 1969 Joined 2018 Born 1981 Joined 2022 Born 1966 Joined 2019 Chair Vice Chair ● Master of Science in Mechanical Engineering from Denmark’s Technical University (1987) and a Graduate Diploma in Business Administration (Financial and Management Accounting) from Copenhagen Business School (1988). ● Chair of the Board of Directors of Shark Solutions A/S and BE Shark Holding ApS and member of the board of directors of HusCompagniet A/S. ● Possesses experience as CEO in listed companies and of strategic, structural and organizational transformation, sustainability and green transition, together with in-depth knowledge of the European Building and Building Material Industry. ● Remuneration 2024: DKK 855,000. ● Holds 2,174 Solar B shares of which 1,400 shares were acquired in 2024. ● CEO, Combineering Group A/S ● M.Sc. in Law and Business Administration 1993. ● Member of the board of directors of Fonden af 20. December, Mannaz A/S and other Danish and international companies in Combineering Group. ● Possesses executive management experience of companies managed by foundations and companies within the construction and the logistics industries, and has experience within strategy, business development, mergers & acquisitions together with in-depth knowledge and experience within sustainability, circular economy and the green transition. ● Remuneration 2024: DKK 450,000. ● Holds 1,550 Solar B shares. Did not trade Solar shares in 2024. ● CFO, Salling Group ● Cand.oecon. 1994 from Aarhus University, specialising in business economics and financing. ● Board Member Skagenfood A/S ● Managing Director, Netto Supermarkt GmbH ● Chair of the board of directors of Dansk Netto Deutschland ApS ● Experience within construction, climate/ energy, sustainability and green transition, digitalisation, organisational development, as well as finance and performance management. ● Remuneration 2024: DKK 495,000. ● Holds 1,200 Solar B shares. Did not trade Solar shares in 2024. ● Chief Physician and Head of Education at Nordsjællands Hospital. ● Cand.med., University of Copenhagen 2010, Orthopedic specialist, 2021. ● Board member and Head of Education in the Danish Orthopedic Society. ● Experience with managing many professions and developing an educational environment. ● Remuneration 2024: DKK 350,000. ● Holds 42,723 Solar B shares. Did not trade Solar shares in 2024. ● Group CEO, Unisport Saltex Oy. ● MBA 2001 and B.Eng. in Civil and Constructional Engineering 1994. ● Chair of the board of Unisport Scandinavia ApS and CEO of Mads ApS. ● Has held management positions within the construction industry/wholesale business in Denmark and abroad for the past 25 years and has significant knowledge of Solar’s core business and the markets we operate in. ● Remuneration 2024: DKK 380,000 ● Holds 712 Solar B shares. Did not trade Solar shares in 2024. Solar A/S Annual Report 2024 Management’s review 35 Corporate governance Board of Directors Denise Goldby Louise Knauer Rune Jesper Nielsen Michael Kærgaard Ravn Born 1987 Joined 2022 Born 1983 Joined 2017 Born 1971 Joined 2022 Born 1971 Joined 2022 Employee-elected member Employee-elected member Employee-elected member ● Head of Sustainability, Solar Danmark ● Executive MBA with focus on corporate governance and sustainability, CBS (2024). Graduate Diploma in Business Administration (Organisation and Management), CBS (2018). ● Experience in the operations of a sourcing and services company as previously Head of Solar’s Copenhagen and Amager customer centres. Knowledge and experience in the green transition, stakeholder engagement, and implementing innovative solutions to drive business growth and operational efficiency. ● Remuneration 2024: DKK 335,000. ● Holds 25 Solar B shares. Did not trade Solar shares in 2024. ● CED of Lady Invest ApS and It’s a club ApS. ● BSc in business administration and commercial law, 2006, and MSc in finance and strategic management, 2008. ● Member of the boards of directors of Rekom Group Holding ApS, Rekom Group A/S, CC Mist NEW Holding II ApS, CC Fly Holding II A/S, CC Globe Holding I ApS, CC Globe Holding II A/S, FERM LIV- ING ApS, NTG Nordic Transport Group A/S, Skako A/S and two subsidiaries hereof. ● Possesses experience as CEO and member of executive committees of listed and family-owned companies. Has experience within strategy, M&A, organisational development, and company turnarounds. In addition, expertise within tech, innovation, digitisation, data/AI/ML and cyber security. ● Remuneration 2024: DKK 417,500. ● Holds 381 Solar B shares. Did not trade Solar shares in 2024. ● Warehouse employee. ● Possesses experience within daily operation of a sourcing and services company and managing teams from being employed at Warehouse Vejen for many years. ● Remuneration 2024: DKK 320,000. ● Holds no Solar shares. Did not trade shares in 2024. ● Account Manager, Industry OEM. ● Possesses knowledge and experience of the industry segment and the operation of a sourcing and services company from being Account Manager, Industry OEM at Solar Danmark for many years. ● Remuneration 2024: DKK 335,000. ● Holds 123 Solar B shares. Did not trade Solar shares in 2024. Solar A/S Annual Report 2024 Management’s review 36 Corporate governance Executive Board Jens E. Andersen Michael H. Jeppesen Born 1968 Born 1966 CEO CFO ● Graduate Diploma in Business Administration (Financial and Management Accounting), MBA. ● Experience as CEO in International and Danish companies together with experience within strategy, leadership, and transformation of organisations. In-depth knowledge of the European Wholesale industry. ● Chair of the boards of directors of 7 Solar Group subsidiaries. ● Member of the boards of directors of VELTEK, DI Byggeri, and HF Christiansen Holding A/S and two subsidiaries hereof. ● Holds 10,664 Solar B shares. Did not trade Solar shares in 2024. ● Holds 6,654 restricted share units and 9,937 performance share units. 9,937 performance share units were granted in 2024. 285 restricted share units were granted and 4,795 were settled in 2024. ● Remuneration 2024: DKK 11.1m ● Master of science in Business Economics and Auditing (1990), State Authorised Public Accountant, E-MBA, certified sustainability accountant. ● Experience within strategy, financing, digitalization, mergers & acquisitions, and investor relations together with in-depth knowledge on reporting (IFRS/CSRD) for listed companies. ● Member of the boards of directors of all Solar Group subsidiaries. ● Member of the boards of directors of Aktieselskabet Sønder Omme Plantage. ● Holds 4,080 Solar B shares. Did not trade Solar shares in 2024. ● Holds 3,720 restricted share units and 5,639 performance share units. 5,639 performance share units were granted in 2024. 159 restricted share units were granted and 2,398 were settled in 2024. ● Remuneration 2024: DKK 6.7m. Solar A/S Annual Report 2024 Management’s review 37 Corporate governance Shareholder information In 2024, we had close to 13,000 shareholders. This is a testimony for our ability to include the private investors in our quarterly calls and investor visits. Dividends The Board of Directors proposes that the Annual General Meeting approves a dividend of DKK 15.00 per share for a total payout of DKK 110 million for the 2024 financial year. The proposed dividend corresponds to a payout ratio of 72%. The proposal is in line with the previously stated plan to have a payout ratio of at least 35% of profits after tax. If approved, the 2024 dividend will be disbursed on March 19, 2025, with March 14, 2025 as the last trading day with dividend. DKK million 2024 2023 2022 2021 2020Ordinary, dividend 219 329 329 204 102Extraordinary, dividend - - 329 110 -Total dividend 219 329 658 314 102Payout ratio in % 63 50 124 141 159 The Solar shareA share B shareShares 900,000 6,460,000Nominel value (DKK) 100 100Votes per share 10 11Treasury shares- 56,813Stock Exchange - Nasdaq Copenhagen Stock ExchangeTicker symbol Solar BShare price year-end (DKK) 299.50 299.50Market Cap year-end (DKK) 270 1,9351) See note 4.2, treasury shares Dividend payments The Solar share price development On 31 December 2024, the price of Solar’s B share was DKK 299.50, down from the 2023 starting price of DKK 465. Annual General Meeting Solar’s Annual General Meeting will be held on Friday 14 March 2025 at 11.00. www.solar.eu Shareholders according to section 55 of the Danish Companies Act Share Capital VotesFonden af 20. December, Vejen, Denmark 17.0% 60.5%Nordea Funds Ltd., Helsinki, Finland 10.4% 5.0% Shareholder with more than 5% of share or votes Investor relations policy We strive to maintain an open dialogue with investors and to provide them with accurate and adequate information for making reasoned investment decisions about Solar’s shares. We ensure all investors are given fair and equal access to information by publishing relevant information via Nasdaq Copenhagen. We participate in conferences, arrange roadshows and organise meetings with investors and financial analysts following the publication of quarterly and annual reports. Investor meetings and similar events cannot be held during our quiet periods, which start on 1 January, 1 April, 1 July and 1 October and end with the publication of a quarterly or annual report. Financial calendar 2025 Analysts Investor contact The following financial institutions cover the Solar share: ● Carnegie Bank ● SEB Dennis Callesen Investor Relations Director Tel.: +45 29 92 18 11 E-mail: deca@solar.dk Annual Report 2024 Annual General Meeting Quarterly Report Q1 2025 Quarterly Report Q2 2025 Quarterly Report Q3 2025 6 14 9 14 6 Feb Mar May Aug Nov The Board of Directors will submit the following items for approval by the Annual General Meeting: ● Payment of DKK 15.00 in return per share outstanding of DKK 100. ● Authority to potentially pass a resolution to distribute extraordinary dividends of up to DKK 50.00 per share. ● Authority to acquire treasury shares valued at up to 10% of share capital. ● Approval of Remuneration Report 2024. ● Approval of the Board of Directors’ remuneration of unchanged DKK 200,000 in 2025 and meeting attendance fees of DKK 15,000 for physical meetings and DKK 7,500 for digital meetings in 2025. A presentation of our Board of Directors can be found on pages 35-36. Shareholders can register for the Annual General Meeting at the investor portal accessible via: Solar A/S Annual Report 2024 Management’s review 38 Corporate governance Sustainability statements General information Environmental information Social information Governance information Appendix 40 55 75 83 86 Solar A/S Annual Report 2024 Sustainability statements 39 Solar A/S Annual Report 2024 General information ESRS 2 General basis for preparation ESRS 2 Creating value through sustainability ESRS 2 Stakeholder engagement ESRS 2 Double materiality assessment Outcome Approach Value chain Material sustainability-related impacts, risks and opportunities Methodology and process 41 42 43 44 Descriptor Sustainability statements 40 Solar A/S Annual Report 2024 Sustainability statements General basis for preparation Frameworks and data selection The sustainability statement is prepared with reference to the Corporate Sustainability Reporting Directive (hereafter CSRD) and the underlying European Sustainability Reporting Standards (hereafter ESRS) requirements. All the data points included in the E, S, and G sections have been assessed as material according to our double materiality assessment (DMA). Consolidation Our annual report is a consolidated report. The data in the sustainability statement covers the Solar Group and all our subsidiaries and has been prepared on the same consolidated basis as the Solar Group’s 2024 financial statements. Value chain The sustainability statement covers Solar’s upstream and downstream value chain activities. Please see page 47. Omitting information No options for omitting information regarding intellectual property, know-how, or the results of innovation, disclosure of impending developments, or matters in the course of negotiation have been used. Specific circumstances BP-2 Disclosures in relation to specific circumstances Measurement basis The accounting policies have been applied consistently in the financial year and for comparative figures. All greenhouse gas data points (GHG scope 1-3) are reported based on the Greenhouse Gas Protocol. Accounting estimates and judgements We use assessments and estimates for the reporting of some data points, e.g. our taxonomy KPIs and scope 3 emissions. We regularly reassess our use of estimates and judgements based on experience, the development of ESG reporting, and several other factors. Changes in estimates are recognised in the period in which the estimate in question is revised. Threshold for restatements For adjustments to financial numbers, we follow the financial statements. For adjustments to ESG data, we make a judgement as to whether we should restate numbers. We clearly indicate where we have restated data. External review All quantitative data points in the tables in sections E, S, G, has undergone limited assurance unless otherwise stated. BP-1 General basis for preparation of the sustainability statement Changes in the preparation For the 2024 reporting period, we have changed the structure of our sustainability disclosure to comply with the CSRD. The changes include: ● The inclusion of a sustainability statement in Solar’s annual report. ● An update of the preliminary double materiality assessment conducted in 2023 to also contain material impacts, risks, and opportunities across our value chain. ● New disclosures and metrics as required by the ESRS. How to read the Sustainability statement Our Sustainability statement addresses specific disclosure requirements from the ESRS and is organized into four main sections: General, Environment, Social, and Governance. Each chapter follows the structure of the ESRS requirements and includes direct references to the sections and paragraphs in the ESRS standard. In the first section, we take you through our general preparation for the sustainability report and value chain, our stakeholder engagement, and an introduction to our DMA and the outcome of this, including methodology and listed material matters. Our strategy, business model, and corporate governance disclosures from the cross-cutting standard ESRS 2 are placed in the Management review, as we believe this information is best understood in conjunction with the Management review and an overview of our activities. See Management review pages 11-15 and 30-37. Hereafter, we deep dive into the environmental information, including the EU taxonomy, climate change, pollution, biodiversity and ecosystems, and resource use and circular economy. The third section covers the social information, including our own workforce and workers in the value chain. Solar A/S Annual Report 2024 41 Sustainability statements Sustainability statements – General information Creating value through sustainability Sustainability is embedded in our Group strategy and business model (please see Management Review) and is considered a strategic enabler for how we operate as a business. We want to partner with our customers in the green transition and create value for both business and society. We have three strategic sustainability focus areas – climate impact, sustainable supply chain, and diversity, equity, and inclusion – each with underlying actions and targets. The three areas correspond to our material sustainability impacts, risks, and opportunities. They support our ambition to deliver climate and energy solutions, such as heat pumps and solar panels, thereby advancing the green transition in our industry and creating a resilient value chain that respects both planet and people. In the sustainability statement section, we set out the impacts, risks, and opportunities identified through our double materiality assessment. Information on policies, actions, targets, and ESG performance data can be seen under the relevant sections. Environment Social Governance Approach Approach Approach Priorities Priorities Priorities In alignment with the standards of the Science Based Target initiative, we aim to become carbon neutral in our own operation and to enable our customers to decarbonize in their part of the value chain. We foster a workplace and culture that promotes diversity, equity, and inclusion to attract, develop, and retain employees, while respecting human rights in a fast changing environment. We are committed to deliver on our sustainability goals and continue to work to integrate our sustainability Supplier Engagement Programme into our daily business. ● Net-zero in our own operations by 2030 ● 25% reduction in emissions from our supply chain by 2030 (scope 3) ● Deployment of renewable energy solutions by installing heat pumps and solar panels ● Conversion to an EV fleet by 2030 ● Transition to circular resource use ● Continuation of our afforestation projects ● Respect human rights and labour across the value chain ● Focus on recruiting and developing a diverse workforce ● Retention and development as well as focus on employee satisfaction ● Ensure a healthy and safe working environment ● 25% women in senior management by 2026 ● Enable our employees to perform according to responsible business conduct ● Conduct supplier risk management due diligence of 82% of our spend by 2026 ● Demand that 95% of our spend be covered by a signed Supplier Code of Conduct by 2026 ● Embed sustainability compliance in our business Read more ● EU Taxonomy, page 56-60 ● ESRS E1 Climate change, page 61-68 ● ESRS E2 Pollution, page 69 ● ESRS E4 Biodiversity and ecosystems, page 70-71 ● ESRS E5 Resource use and circular economy, page 72-74 Read more ● ESRS S1 Own workforce, page 76-80 ● ESRS S2 Workers in the value chain, page 81-82 Read more ● ESRS G1 Business conduct, page 84-85 Climate impact Diversity, equity, and inclusion Sustainable supply chain SBM-1 Strategy, business model, and value chain Solar A/S Annual Report 2024 42 Sustainability statements Sustainability statements – General information Stakeholder engagement Engaging with affected stakeholders helps us to understand their expectations and to respond accordingly. Regular dialogue with our employees - either directly or as a team - promotes open and credible communication. Guided by our Employee Code of Conduct and the UN Global Compact ten principles, we uphold open and trustworthy communication to help us understand our external stakeholders’ priorities and to respond accordingly. External stakeholders regularly engage with Solar’s employees, either directly or in a team setting. The insight gained from these regular engagements serve to ensure general due diligence and serve as a source of information for our double materiality assessment. We strive to ensure that the views and interests of affected stakeholders as regards sustainability are communicated to the Sustainability Steering Committee. T Stakeholder How we engage Purpose of engagement Outcome examplesEmployees ●Surveys and workplace assessments ●Contribution to an inclusive work culture ●Employee handbook and guidelines ●Personal development dialogues ●Open and honest dialogue across organisation levels ●Communication from management ●Dialogue and contact meetings with management ● ●Compliance with our Employee Code of ConductEmployee and management development ● ●Social gatheringsInclusion of employee perception and experience programmes ●Employee elected board members ● ●Employee retention ●Fair treatment and payInput on strategy and business modelCustomers ●Customer support and guidance ●Creation of customer loyalty ●Our assortment and documentation kept up to date ● ●Competence training at Solar School ●Delivery on our promisesDevelopment of new logistics services ● ●Partnership programmes ●To make our customers productive and successfulA ●daptation to market expectations ●Events and seminars ● ●To provide sustainable products and solutionsContribution to Solar's strategic direction ●To enable customers to run responsible business Improve market sharepractices with a reduced carbon footprintSuppliers ●Dialogue and guidance ●Compliance with our Supplier Code of Conduct ● ●Streamlining of supplier expectations ●Contract negotiations ●Risk assessment due dilligence ●Supplier improvement plans ●Supplier due dilligence ● ●Engagement with our Supplier Engagement ProgrammeGreater focus on compliance and documention ● ●Business development meetings ●Protection of labour and human rightsSupplier days and events ●To decarbonise our supplier chainSecurity of supplies ●Investors ●Investor calls and dialogue ●Understanding the sustainability agenda related to our ● ●ESG ratings and improvements ●Periodic investor updatesindustryF ●inancial and ESG disclosure and reports ● ●Capital market days ●Retain and attract investorsAdaptive response to investors ●Annual General Meeting ●Enhanced transparencyFair valuation ●Financial and ESG ratingsIndustry associations ● ●Knowledge sharing ●To enable the green transition of our industry ●Direct representation on boards and networks ●Input into strategic directions ●Industry alignment and developmentJoint initiatives and programmes ●Collaboration and representationo enable industry representatives to engage with policymakersCivic and non-profit ●Partnerships with NGOs ●Contribution to local initiatives ●Site specific initiatives e.g. afforestation programmesorganisations ● ●Collaboration and representation ●Decarbonisation programmes ●Direct representation on boards and networksLocal communities ●Dialogue with local authorities ●Collaboration and dialogue ●Support for local projects ●Participation and support in local initiativesHosting events at our premises SMB-2 - Interests and views of stakeholders Solar A/S Annual Report 2024 43 Sustainability statements Sustainability statements – General information Double materiality assessment introduction The purpose of the DMA is to assess the materiality of sustainability-related matters that may pose a potential significant risk or opportunity for Solar. The DMA has been instrumental in identifying the material topics where we are compliant and topics where optimisation and improvement are needed to secure overall compliance with the ESRS. As a key element in preparing for the Corporate Sustainability Reporting Directive (CSRD) and the underlying European Sustainability Reporting Standards (ESRS) requirements, a preliminary double materiality assessment was drawn up in 2023 with reference to the draft ESRS. Although the DMA has been slightly refined in 2024, it is still based on the approach and tools applied in 2023 and the following ESRS. The learnings captured in 2023 helped us to refine our methodology and processes in 2024. All data has been captured in our DMA and gap assessment tools where the effects have been quantified and supplemented by qualitative assessments. We are convinced that the outcome presented offers a fair picture of our impacts, risks, and opportunities, but we also acknowledge that the picture will probably change as we move forward. Consequently, we will conduct a review of the DMA and the gap analysis following our strategy periods, provided no major changes to our strategy and business model occur. SBM-3 Material impacts, risks, and opportunities and their interaction with strategy and business model Solar A/S Annual Report 2024 44 Sustainability statements Sustainability statements – General information DMA outcome We have identified our impacts on the environment and society (impact materiality) as well as the sustainability- related risks that we are exposed to (financial materiality) and their interaction with the strategy and business model. Seven out of the ten ESRS topical standards are material to Solar. 22 sustainability sub-topics have been identified and found material. The outcome is displayed per sub-topic and shows that the sub-topic E1 Energy is our most material sustainability topic. The environmental impacts and risks we have as regards E1 are closely linked to our sustainability focus areas Climate impact and Sustainability supply, focusing on longevity and end-of-life, as well as delivering according to scientific targets in our own operations. S1-1 sub-topics related to our own operation are topics with which we are familiar. Due to the nature of our business as a sourcing and services company, the suppliers and the products we source are reflected under the topics S2, E5, and G1. We focus on responsible sourcing and respect the labour and human rights of people in our value chain. We endeavour to minimise our impact on the environment to the extent possible. One entity specific topic has been identified: E1 Sales of products and solutions enhancing the shift to renewable energy (electricity). This is in line with our strategic focus area, Climate and energy. All activities and ESRS topics and entity specific topics have been screened as part of the DMA. The topical standards E3 Water and Marine Resources, S3 Affected Communities, and S4 Consumers and end-users have been omitted due to the nature of our business as a local sourcing and services company servicing the business-to-business market. Overall DMA approach ● All assessed impacts and financially material topics have been mapped to their relevant topical ESRS standard. ● In total, Solar reports on 22 sustainability topics, with material impacts, risks, and opportunities. ● Impacts, risks, and opportunities that are material have been assessed. ● Both sustainability-related risks and opportunities have been assessed. ● Impacts and risks have been assessed for our own operations (OO) and those of the value chain. ● Impacts have been identified as potential or actual. Most impacts assessed were actual. ● One entity topic in E1 has been identified as financially material. ● The impacts, risks, and opportunities are either impact-material (bottom right), financially material (top left) or double-material (top right). ● The identified material sustainability topics and impacts, risks, and opportunities form the basis of Solar’s CSRD reporting. ● The classification and numbering of the sub-topics are listed in chronological order. SBM-3 Material impacts, risks, and opportunities and their interaction with strategy and business model Solar A/S Annual Report 2024 45 Sustainability statements Sustainability statements – General information Material impacts, risks, and opportunities (IRO) SBM-3 Material impacts, risks, and opportunities and their interaction with strategy and business model Impact materiality Financial materiality Financially material Immaterial Double material Impact material All remaining sustainability topics Sustainability topics for which no impacts, risks, or opportunities have been identified Impacts, risks, and opportunities falling below the defined impact and financial materiality thresholds Environment E1: REPS Sales of renewable energy products and solutions (entity specific) E1: CCMI Climate change mitigation E1: ENGY Energy E2: POWA Pollution of water E2: POSO Pollution of soil E4: BICC Direct impact drivers of biodiversity loss, climate change E4: BILU Direct impact drivers of biodiversity loss, land-use E4: BIPO Direct impact drivers of biodiversity loss, pollution E4: IDES Impacts and dependencies on ecosystem services E5: REIN Resource inflows/use E5: REOU Resource outflows (products and services) E5: WAST Waste Social S1: WCHS Working conditions, health and safety S1: ETGE Equal treatment and opportunities, gender equality S2: WCWT Working conditions, working time S2: WCAW Working conditions, adequate wages S2: WCWB Working conditions, work-life balance S2: WCHS Working conditions, health and safety S2: ETGE Equal treatment and opportunities,gender equality S2: WRCL Other work-related rights, child labour S2: WRFL Other work-related rights, forced labour Governance G1: CBIC Corruption and bribery, incidents Seven out of the ten ESRS topical standards are material to Solar. 22 sustainability sub-topics have been identified and found material and are displayed in the DMA matrix. The classification and numbering of the sub-topics are listed in chronological order. E1 REPS E1 ENGY E1 CCMI E5 REOU E5 WAST E2 POWA E2 POSO E4 BICC E4 BILU E4 BIPO E4 IDES E5 REIN S1 WCHS S1 ETGE S2 WCWT S2 WCAW S2 ETGE S2 WCWB S2 WRCL S2 WCHS S2 WRFL G1 CBIC Solar A/S Annual Report 2024 46 Sustainability statements Sustainability statements – General information Fastbox Value chain SBM-3 Material impacts, risks, and opportunities and their interaction with strategy and business model Upstream Own operations Downstream Raw materials extraction (e.g. metals, plastics, etc.) Supply chain workers End-of-lifeRenewable energy Solar workplace and warehousing Distribution and logistic services Electrical, heating & plumbing, and industrial customers Employees Whistleblower Recycling of waste Manufacturing and assembly Transportation Energy resources (e.g. fossil fuels) We source our products from tier one suppliers who distribute the products to our warehouses. Identified material negative impacts on the environment and people are primarily driven by our upstream activities and are related to raw-material extraction and manufacturing. Geographically, impacts are largely concentrated outside Europe, while tier one is largely concentrated inside Europe. We source from tier one suppliers, stock, pack, and distribute products and support our customers’ day-to-day business by ensuring their access to products. Identified material negative impacts on the environment and people are primarily driven by our energy consumption and matters related to own workforce. Geographically, the negative impacts are concentrated in the markets in which we operate. Providing products and solutions that enhance the green transition gives us an opportunity to support our customers in their efforts to decarbonise. This is identified as a positive impact. Resource use and circularity are upcoming topics in our industry. Geographically, the negative and positive impacts are concentrated on the markets in which we operate. For an overview of our strategy and business model, see page 11-15 of the Management review. An overview of our cost structure can be found in the financial statement. Upstream Own operations Downstream Impacts and risks Products and services (e.g. renewable energy products) Solar A/S Annual Report 2024 47 Sustainability statements Sustainability statements – General information As a result of our double materiality assessment, several impacts, risks, and opportunities have been identified and assessed as material. As stated in the DMA matrix on page 46, seven out of the ten ESRS topical standards are material to Solar along with 22 sub-topics. Several sub-topics have been identified for each material topic. The adjacent tables show whether the impacts are positive or negative as well as whether they are related to our own operations (OO) or the value chain (VC). Impacts are actual impacts unless stated as potential. Brief descriptions of the material risks or opportunities are included in the table. Our scoring of risks and opportunities may include mitigation actions that are already part of our daily operations. Actions addressed as material impacts, risks, and opportunities (IROs) have not impacted our strategy and business model, and we do not foresee an impact during the strategy period 2024-2026. SBM-3 Material impacts, risks, and opportunities and their interaction with the strategy and business model Sustainability risks are prioritized like other risks, meaning both Enterprise Risk Management (ERM) and DMA tools are used. In general, focus is always directed towards the upper right corner in the risk matrix for all risks. All risks, including mitigating activities, are presented by the Executive Board to the Audit Committee/Board of Directors for approval. The Board of Directors approves the risk appetite and tolerance per risk category and the used methodology. It is the responsibility of the Executive Board to implement the decisions made by the Board of Directors. All risks follow a three-line defense model which structures roles, responsibilities for risks, structure roles, decision-making, and control to achieve effective governance. Quarterly reports are prepared for the Executive Board to ensure progress and in parallel, internal audit reports are sent directly to the Board of Directors on the progress. Information on how we respond to the effects of our impacts, risks, and opportunities is included in the topical sections. Material sustainability-related impacts, risks, and opportunities Solar A/S Annual Report 2024 48 Sustainability statements Sustainability statements – General information E1 Climate change Value chain Time Upstream Operations Downstream Short Medium Long impacthorizonTopic Description IRO description How we respondSales of renewable energy products Products and solutions advancing the Heat pumps and solar panels are some of the key technologies needed in the transition Through our strategic focus area, Climate and energy, we sell products and solutions and solutions (entity specific)green transition.to renewable energy.necessary to the widespread adoption of renewable energy as a key solution to mitigate climate change.Supporting the green transition Solar distributes and sells products necessary to the widespread adoption of renewable Via our product portfolio, we contribute to customers adopting products and solutions energy as a key solution to mitigate climate change.necessary to facilitate the renewable energy transition, hence creating a positive impact. Climate and energy is a strategic focus area with growth potential.Climate change mitigation GHG emission from the energy supply Supply chain emissions from extracting raw materials, manufacturing and We respond to this impact through our Supplier Engagement Programme, our own chain and downstream GHG emissions transportation from the products we bring to the market consuming energy in its use-climate reduction targets for scope 1, 2, and 3 and own controlled afforestation deriving from products consuming phase.projects. We actively work with our suppliers towards managing our value chain energy in its use phase. impacts.Energy Energy consumption deriving primarily Energy used in our own operations and energy including energy deriving from fossil We respond to this impact by having a climate mitigation plan and a target to be net-from the value chain but also from our fuels leading to GHG emissions.zero by 2030. Through our Supplier Engagement Programme, we ask our suppliers to own operationstart decarbonising their operations, implementing renewable energy and documenting progress that benefits the value chain.Risks related to potential lack of energy Risks of energy failure is decreased by continously increasing the share of self-Through our Supplier Engagement Programme, we ask our suppliers to start and potential regulatory risks and generated energy making up approx. 30% of our total electricity consumption in 2024. decarbonising their operations, implementing renewable energy and documenting environmental compliance.Customers continue to pay more attention to sustainability due to regulation and progress. We actively work with our suppliers towards managing our value chain market demands. Together with rising energy prices and/or heavy reliance on fossil impacts.fuels in our upstream value chain, Solar's financial performance and reputation might be impacted by not focusing on renewable energy. Positive impact Opportunity Negative impact Risk Time horizon: Short: 1 year, Medium: 2-5 years, Long: more than 6 years Solar A/S Annual Report 2024 49 Sustainability statements Sustainability statements – General information E4 Biodiversity and ecosystems Drivers of biodiversity loss: Material impacts related to biodiversity Although relatively small, carbon footprint in our own operations contributes to do some We actively work with our suppliers towards managing our value chain impacts and Climate changeand ecosystems change arising from harm of the environment. Many of the materials used in our supply chain are mined take appropriate actions via our Supplier Engagement Programme. Our Environment climate change. and subject to energy intensity , in the form of GHG, of manufacturing which may cause Policy guide us in our daily operation to minimise potetial negative impact to nature.signficant harm and impact biodiversity loss as a result of climate change.Drivers of biodiversity loss: Disruption of ecosystems and habitat Extractive activities can result in clearing large areas of land, the creation of open pits We actively work with our suppliers towards managing our value chain impacts and Land-use change, freshwater use, loss caused by extraction of metal and or mountain top removal, and disruption of local ecosystems, which may result in an take appropriate actions via our Supplier Engagement Programme.and sea-use changeminerals. indirect or direct impact on biodiversity loss, causing potentialdecrease in species and introduction of invasive species. Ecosystem/land that is converted could be restored, however it would take a significant amount of years until it would be restored back to its original state.Drivers of biodiversity loss: Biodiversity loss as a result of pollution Impacts resulting from suppliers’ direct effect on changes in nature, anthropogenic We actively work with our suppliers towards managing our value chain impacts and Pollution in areas where the value chain operates.assets, and nature's contributions to people and pollution, whether these be from take appropriate actions via our Supplier Engagement Programme.mechanical, chemical, noise, or light contributions. In case the event occurs, soil and water would be polluted close to the manufacturing sites. However, air pollution stemming from e.g. transportation by diesel/gas powered trucks would be present throughout all logistics routes.Impacts and dependencies Biodiversity-sensitive areas with Significant harm caused to ecosystem by upstream value chain activities located in We actively work with our suppliers towards managing our value chain impacts and on ecosystem servicesactivities negatively affecting the biodiversity sensitive areas may result in partial destruction of ecosystems. It can be take appropriate actions via our Supplier Engagement Programme.provision of ecosystem services. assumed that isolated or widespread ecosystem collapse due to biodiversity loss where Solar's value chain potentially operates. E2 Pollution Value chain Time Upstream Operations Downstream Short Medium Long impacthorizonTopic Description IRO description How we respondPollution of water Impacts resulting from pollution of water Excavating materials and minerals as well as in in the production phase can cause We respond to this impact through our Supplier Engagement Programme and our through indirect or direct contamination significant harm to ecosystems, particularly e.g. if hazardous wastewater is not treated Code of Conduct by encouraging our suppliers to implement a water management and leakage. properly and leaks into the natural environment.programme and report on wastewater. We actively work with our suppliers towards managing our value chain impacts.Pollution of soil Impacts resulting from soil pollution Many products in our supply chain contain metals and minerals excavated from mines Through our Supplier Engagement Programme we demand our suppliersat the site of or surrounding areas and leading to potential soil pollution at various stages of the mining.to sign our Code of Conduct and encourage them to minimise and/or eliminate any operations.sources of pollutants and document progress. We actively work with our suppliers towards managing our value chain impacts. Positive impact Opportunity Negative impact Risk Time horizon: Short: 1 year, Medium: 2-5 years, Long: more than 6 years Solar A/S Annual Report 2024 50 Sustainability statements Sustainability statements – General information E5 Resource use and circular economy Value chain Time Upstream Operations Downstream Short Medium Long impacthorizonTopic Description IRO description How we respondResourceUse of virgin resources. Although relatively small, we have a dependency on virgin resources in our packaging We encouraging our business partners to reuse and recycle through appropriate inflows/useand distribution materials. Moreover products in our supply chain are likely to be circularity levers.produced using virgin materials that are extracted from mines or natural areas. Extraction of these materials can pose significant environmental threats.Resource outflows Waste generation and end-of-life Electronic waste is one of the fastest growing global waste stream. The products We encourage our business partners to sort their waste. We are committed to (products and services)handling.we sell have various expected lifetime with many products still not designed with collective end-of-life programmes complying to EU directives inclusive WEEE standard circularity (durability, repair, reuse, dissasembly, recycling) in mind generating general (waste electrical and electronic equipment).waste and e-waste that potentially cause indirect or direct harm to nature.Waste Risks resulting from harmful or Waste in our operations and downstream is mainly consisting of packaging waste We sort our own waste and encourage our business partners to do the same. We are inadequate disposal of waste, in from inbound product supply. There is a slight risk of inadequate waste management committed to collective end-of-life programmes complying to EU directives inclusive accordance with laws in operational results from behavioral patterns at Solars premises or downstream, or from leakage WEEE standard (waste electrical and electronic equipment).regions.and/or inadequate waste management in Solars upstream value chain, in relation to product manufacturing. S1 Own workforce Working conditionsProviding an attractive and safe We have initiated several measures to increase safety at Solar. A set of cardinal rules, Through a continuous dialogue with our internal stakeholders we monitor and track Health and safetyworkplacelaying out core safety rules, a safety standard for visitors and a Health, safety and work work-related accidents. Our Health, safety and work environment policy is our guidance environment policy are all measures taken to prevent work incidents.to help secure a safe work environment.Equal treatment and Secure equal treatment and We commit to provide equal opportunities. We have an open and inclusive culture Our Employee Handbook, Code of Conduct and policies on diversity, equity and opportunities for allopportunitieswhere all employees have regulary development appraisals. inclusion and non-bias in recruitment is our foundation to secure a just and inclusive work environment. Positive impact Opportunity Negative impact Risk Time horizon: Short: 1 year, Medium: 2-5 years, Long: more than 6 years Solar A/S Annual Report 2024 51 Sustainability statements Sustainability statements – General information S2 Workers in the supply chain Value chain Time Upstream Operations Downstream Short Medium Long impacthorizonTopic Description IRO description How we respondWorking conditionsWorking time Excessive working hours. Excessive working hours for workers in the supply chain may cause physical and Through our Supplier Code of Conduct we ask our suppliers to take measures to mental health issues and their safety and work-life balance.secure a healthy work environment.Adequate wages Waste generation and A wage that provides for the satisfaction of the needs of the worker and his / her Through our Supplier Code of Conduct we ask our suppliers to respect national and end-of-life handling.family in the light of national economic and social conditions.international working condition regulations.Work-life balance Balance between Satisfactory state of equilibrium between an individual’s work and private life to Through our Supplier Code of Conduct we ask our suppliers to take measures to work and private life.secure time allocation between time spent at work and in private life beyond family secure a safe work environment.responsibilities.Health and safety Suppliers' commitment to secure health Healthy and safe work conditions involve both prevention of physical and mental harm Through our Supplier Code of Conduct we ask our suppliers to take measures to and safety.and the promotion of workers’ health by the undertaking.secure a safe work environment.Equal treatment and opportunities for allGender equality and equal pay Secure equal treatment and Workers’ access to equal opportunities, pay, and treatment, including freedom from Through our Supplier Engagement Programme we monitor and set a minimum for work of equal valueopportunities.discrimination.threshold score on labour and human rights.Other work-related rightsChild labour Deprive children of their childhood. Work that deprives children of their childhood, their potential, and their dignity, and that Through our Supplier Engagement Programme we monitor and set a minimum is harmful to physical and mental development. threshold score on labour and human rights.Forced labour Deprive workers from freely accepting All work or service which is extracted from any person under the threat of penalty and Through our Supplier Engagement Programme we monitor and set a minimum working conditions.for which the person has not offered himself or herself voluntarily.threshold score on labour and human rights. G1 Business Conduct Corruption and briberyIncidents Whistleblower protection through Corruption and bribery incidents may have significant risks for our business and cause Through our whistleblower portal, we take a proactive approach to mitigating risks and procedures and policiesreputational damage. Our protection of whistle-blowers encourages and enables all negative impacts throughout the value chain.stakeholders to speak up if they experience any irregularities or illegalities on the part of Solar. Positive impact Opportunity Negative impact Risk Time horizon: Short: 1 year, Medium: 2-5 years, Long: more than 6 years Solar A/S Annual Report 2024 52 Sustainability statements Sustainability statements – General information Methodology and process We developed the methodology with reference to the draft principles of the ESRS and available guidelines from 2023. Learnings and outcomes from the 2023 process have been instrumental in this year’s process to comply with the final guidelines of ESRS. Methodology Scope The ten ESRS topics were analysed and relevant documentation prepared in line with our strategy and business model. As regards to our own operations, we identified and assessed impacts on people and the environment as well as the potential risks to our business. As regards our value chain impacts and risk assessment, both upstream tier one suppliers and downstream activities were assessed. The value chain assessments were based on internal stakeholder interviews and knowledge and documentation collected. These were assessed and validated by the Executive Management. We considered both positive and negative impacts as well as actual and potential impacts in relation to sustainability matters and potential financial risks and opportunities. All activities and ESRS topics and entity specific topics have been screened as part of the DMA. The topical standards E3 Water and Marine Resources, S3 Affected Communities and S4 Consumers and end-users have been omitted due the nature of our business as a local sourcing and services company servicing the business-to-business market. Stakeholder engagement As required, a stakeholder engagement analysis was conducted with the purpose of analysing material impacts across the value chain. We engaged with stakeholders of Solar’s sustainability reporting and other affected stakeholders. In 2023, we identified four stakeholder groups and interviews were conducted among 18 external stakeholders and more than 25 employees. Given the nature of Solar’s business and the fact that we do not operate in high impact zones, only B2B customers and tier one suppliers were engaged. For future stakeholder engagement, we will consider engaging other tier suppliers and ‘silent’ stakeholders such as selected NGOs, industry associations, authorities, etc. This year, new stakeholders were not included. However, we have remained in continuous dialogue with our colleagues and have obtained an insight into the views and interests of our stakeholders across the value chain. Scoring As per the ESRS guidelines, we followed the predefined scoring parameters. Impacts Impact materiality is identified according to the following two scenarios: ● Actual: For each sustainability topic, actual impacts are identified based on primary data. ● Potential: For each sustainability topic, potential impacts are identified based on secondary data when no primary data is available. The impact materiality is scored based on four parameters. ● Scale ● Scope ● Irremediable character ● Likelihood (only applies to potential impact) To score and assess impact materiality, the score is from 0-3 and the materiality threshold is set at 3, which equates to approx. one-third of the maximum score (maximum possible score: 3 for severity x 3 for likelihood = 9). Financial risks and opportunities Financial materiality is identified according to whether: ● An impact is identified that could trigger a risk/ opportunity, or ● A dependency on natural, social, and human resources exists For financial materiality, Solar’s Enterprise Risk Management Board approved the methodology used to assess the magnitude of potential financial risks or opportunities. The score ranged between 0 and 5. Scoring of the IRO is assessed based on a three-step output: ● Value chain mapping ● See value chain process ● Gathering of primary and secondary data (where primary data is not available). All findings are collected in a DMA data tool, wherein the consolidated data is collected and uploaded. Thresholds Our Executive Management, in collaboration with our DMA core team, has set the materiality at 3. This means that impacts and risks scored at 3 or above are deemed material. If a sustainability matter is above the threshold, either as an impact or financial risk or opportunity for our own operation, supply chain or both (cross-cutting occurrence), it is included as a material topic in the DMA analysis. The reporting requirement in accordance with the ESRS will be different whatever sustainability topic is deemed material in either Solar’s own operation or value chain. Materiality governance Going forward, the Sustainability Steering Committee will have decision-making responsibilities and will ensure effective execution and coordination for the installation of IRO-1 - Description of the process to identify and assess material impacts, risks, and opportunities Solar A/S Annual Report 2024 53 Sustainability statements Sustainability statements – General information several working tracks designed to address specific targets and topics within the CSRD. Process We have defined four core process steps for conducting the DMA for both impact and financial materiality. Our starting point was the impact assessment (inside-out) of Solar’s impact on the environment and society. Secondly, we conducted a financial assessment (outside-in) of the sustainability-related risks to which we as a business are exposed. All data has been captured in our DMA tool where the effects have been quantified and supplemented with qualitative assessments. To prepare and conduct the DMA, a ‘Solar DMA core team’ was established, consisting of the Sustainability Director and three subject-matter experts. The assessment, scoring process, keys, structure, and the logic behind the assessment are aligned with the ESRS 2 requirements. The following steps have been conducted: 1. Scoping of impacts 2. Stakeholder engagement 3. Materiality scoring and findings 4. Management review and conclusion Process steps Impact materiality The mapping of our sustainability-related impacts builds on the approach from 2023 as well as recent documentation and knowledge. The following steps were conducted: 1. Scoping of impacts As preparation for the workshops and as part of the value chain process, a thorough desk research was conducted to guide us in pre-defining relevant sub and sub sub-topics. 2. Stakeholder engagement The internal stakeholders engaged were subject-matter experts from the business lines, group functions, and management - all with a broad insight into our business and our value chain. All stakeholders were invited to a collective workshop, where they were engaged via a digital dialogue tool. 3. Materiality scoring and findings Impact and scoring rationales from the workshops were documented and all input transferred to our DMA tool to calculate the degree of materiality. Results were discussed and evaluated between the management and the core team and selected workshop participants were consulted for validation. 4. Management review and conclusion The consolidated overview was presented and discussed between Executive Management and the DMA core team. The scoring and the respective materiality threshold generated a final list of material impacts. Process steps Financial materiality As part of the preparation for the financial materiality assessment, we also consulted the enterprise risk management section as well as recent documentation and the processes related to the subject. 1. Scoping of risks Results from the impact materiality assessment formed the basis for scoping the sustainability risks related to financial risks and opportunities. 2. Stakeholder engagement In line with ESRS, external stakeholder groups were selected from among users of Solar’s sustainability report and affected stakeholders. Customers and tier one suppliers were selected based on spend/revenue while investors were selected randomly. Prior to a one-to-one interview, all stakeholders received a pre-read to provide an understanding of the purpose of the interview. 3. Materiality scoring and findings Impact and scoring rationales from the interviews were documented and all input transferred to our DMA tool to calculate and assess the degree of materiality in relation to risks and opportunities. Results were discussed and evaluated between the management and the core team. 4. Management review and conclusion The consolidated overview was presented and discussed between Executive Management and the DMA core team. The scoring and the respective materiality threshold generated a final list of financial material risks and entity specific opportunities. Solar A/S Annual Report 2024 54 Sustainability statements Sustainability statements – General information Environmental information Taxonomy reporting ESRS E1 Climate change ESRS E2 Pollution ESRS E4 Biodiversity and ecosystems ESRS E5 Resource use and circular economy 56 61 69 70 72 Sustainability statements 55 Sustainability statements Solar A/S Annual Report 2024 EU taxonomy The EU taxonomy is the classification system identifying environmentally sustainable economic activities. The EU taxonomy framework (EU Taxonomy Regulation 2020/852) is part of the EU Green Deal and serves as a core enabler to deliver on the EU’s ambitious climate goals about carbon neutrality in 2050. The goal is to redirect investments towards sustainable projects. Our assessment below is in compliance with Regulation EU 2020/852 and the associated amendments to the annexes of the Disclosure Delegated Act as issued on 27 June 2023. Eligibility screening Solar performed a screening of the technical annexes of the Climate Delegated Act to identify any potentially eligible economic activities for the Revenue KPI and for the CapEx and OpEx KPIs. Identified areas, where there were any eligible economic activities in the reporting period, were subject to further assessment for alignment. Solar does not claim alignment for 2024, because there is not sufficient documentation within the relevant areas. For the calculation of the denominator of the Revenue, CapEx, and OpEx KPIs, we have extracted the figures directly from the ERP system and therefore ensure that the figures are only counted once in each KPI. For the allocation of the numerator for CapEx, we have first identified the relevant figures and then we have allocated the primary related economic activity in the Climate Delegated Act. In this way, we ensure that no CapEx is considered more than once. See EU taxonomy tables for the full overview on page 58-60. Solar activities Solar has reviewed all six taxonomy-eligible economic activities listed in the Climate Delegated Act. Based on the current interpretation of the eligible economic activities, we have concluded that sourcing of electrical and heating and plumbing equipment is not included in the list of eligible sectors. Consequently, our economic activities are not yet in scope for assessment. However, it is our understanding that sourcing of electrical and heating and plumbing equipment plays a pivotal role in climate change mitigations. By providing our customers with product documentation containing environmental data, it enables them to reduce their environmental strain and carbon footprint. We closely monitor the development. Thermonova, a 51% owned subsidiary, has eligible economic activities listed in the Climate Delegated Act with activities within manufacture of energy efficiency equipment for buildings (NACE 43.22) (activity code 3.5). Solar Polaris, a fully owned subsidiary, has eligible economic activities listed in the Climate Delegated Act with activities within installation, maintenance, and repair of renewable energy technologies (NACE 43.21) (activity code 7.6). Eligible OpEx activities Eligible OpEx include any of the following types of spend: Related to assets or processes that are associated with Taxonomy-eligible economic activities ● 7.3 Installation, maintenance, and repair of energy efficiency equipment ● 7.4 Installation, maintenance, and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) Eligible CapEx activities Eligible CapEx are investments related to the following EU taxonomy activities: ● 1.1 Afforestation, establishment of forest through planting, deliberate seeding or natural regeneration on and that, until then, was under a different land use or not used ● 7.3 Installation, maintenance, and repair of energy efficiency equipment ● 7.6 Installation, maintenance, and repair of renewable energy technologies Turnover The activity of Solar as a sourcing and services company within electrical and heating and plumbing equipment is not included in the list of eligible sectors. However, Solar owns two companies that are on the list of eligible sectors. ● Thermonova: Manufacture heat pumps and the products disclosed in activity 3.5 k 1 ● Solar Polaris: Design solar photovoltaic solutions disclosed in activity 7.6 The share of taxonomy-eligible economic activities in the two companies are not significant. For 2024, it amounts to DKK 191m. and represents 1.6% of Solar Group’s total turnover. Operating costs (OpEx) OpEx consists of direct non-capitalized costs that relate to research and development, building renovation, short-term lease, maintenance and repair and any other direct expenditures relating to the day-to-day servicing of PPE, right-of-use assets as well as intangible assets. The OpEx KPI is defined as Taxonomy eligible OpEx (numerator) divided by total OpEx (denominator). The denominator of the OpEx KPI is a subset of DIRECT non-capitalised costs relating to: ● Individual measures enabling Solar’s activities to become low-carbon or lead to greenhouse gas reductions as well as building renovation measures ● Maintenance and repair and other day-to-day costs relating to servicing property, plant, and equipment Solar has assessed that the numerator and denominator of the KPI related to the OpEx as disclosed in section 1.1.3.2 of annex 1 to the Disclosures Delegated Act cover the amount of non-capitalised costs related to: ● Activities or processes associated with taxonomy eligible economic activities is nil ● Research and development are nil ● Individual measures enabling Solar’s activities to become low-carbon or lead to greenhouse gas reductions, which is DKK 0m (2023: 5m), as well as building renovation measures (7.3, 7.4) ● Maintenance and repair and other day-to-day costs relating to servicing property, plant, and equipment amounting to DKK 34m (2023: 43m) The above DKK 34m is included in the denominator, but no spend related to the eligible activities has occurred for 2024 and consequently, the KPI related to OpEx is 0% (2023: 12%). Capital expenditure (CapEx) We included the numerator of the eligible CapEx investments in non-revenue generating activities described above. The denominator of the CapEx KPI includes total additions to intangibles and tangibles (notes 3.1, 3.2, 3.3 in the consolidated notes of the Annual Report 2024). See page 118-125. EU Taxonomy Reporting 1) Activity 3.5 k refers to activity 4.16, NACE 43.22. 1) Activity 3.5 k refers to activity 4.16, NACE 43.22. Solar A/S Annual Report 2024 56 Sustainability statements Sustainability statements - Environmental information - Taxonomy reporting CapEx consists of additions to tangible assets covering property, plant, and equipment (PPE) and intangible assets during the financial year. It includes additions to PPE (IAS 16), intangible assets (IAS 38) and right-of-use assets (IFRS 16). The CapEx KPI is defined as taxonomy-eligible CapEx (numerator) divided by total CapEx (denominator). When assessing the numerator of the KPI related to the CapEx as disclosed in section 1.1.2.2 of annex 1 to the Disclosures Delegated Act, we have assessed: ● The amount of CapEx that is referred to taxonomy aligned activities is nil ● The amount of CapEx related to become low-carbon or to lead to greenhouse gas reduction is DKK 10m (2023: 31m) (1.1, 7.3, 7.6) When assessing the denominator of the KPI related to the CapEx as disclosed in section 1.1.2.1 of annex 1 to the Disclosures Delegated Act, we have assessed that it covers: ● Additions during the year; intangible assets excluding goodwill as reported in note 3.1, page 118-120 in Annual Report 2024 ● Additions during the year; property, plant, and equipment in note 3.2, page 121-122 in Annual Report 2024 As regards leased assets, the new contracts, renewals, remeasurements and extensions are included as reported in note 3.3, page 123-125 in Annual Report 2024. In total, the above amounts to DKK 438m (2023: 497m). Consequently, the KPI related to CapEx can be calculated to 2% (2023: 6%). Nuclear energy related activities1 The undertaking carries out, funds or has expo-Nosures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear pro-cesses with minimal waste from the fuel cycle.2 The undertaking carries out, funds or has expo-Nosures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.3 The undertaking carries out, funds or has Noexposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen produc-tion from nuclear energy, as well as their safety upgrades.Fossil gas related activities4 The undertaking carries out, funds or has expo-Nosures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.5 The undertaking carries out, funds or has expo-Nosures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels.6 The undertaking carries out, funds or has expo-Nosures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels. Nuclear and fossil gas related activities Solar A/S Annual Report 2024 57 Sustainability statements Sustainability statements - Environmental information - Taxonomy reporting 2024Substantial contribution criteria DNSH criteria (‘Does Not Significantly Harm’)EU TaxonomyTaxonomy- aligned proportion Category Category Turnoverof turnover, (enabling (transitional 2023 activity or) activity) Economic activites (1)Code(s) (2)Absolute turnover (3)Proportion of turnover (4)Climate change mitigation (5)Climate change adaptation (6)Water and marine resources (7)Circular economy (8)Pollution (9)Biodiversity and ecosystems (10)Climate change mitigation (11)Climate change adaptation (12)Water and marine resources (13)Circular economy (14)Pollution (15)Biodiversity and ecosystems (16)Minimum safeguards (17)(18)(20)(21)Currency (DKKm)% % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E TA. Taxonomy eligible activitiesA.1 Environmentally sustainable activities (taxonomy – aligned)Turnover of environmentally sustainable activities (taxonomy aligned) (A.1) 0 0 0 0 0 0 0 0 N N N N N N N 0Of which enabling 0 0 0 0 0 0 0 0 N N N N N N N 0 EOf which transitional 0 0 0 N N N N N N N 0 TA.2 Taxonomy – eligible but not environmentally sustainable activities 0 0 N/EL N/EL N/EL N/EL N/EL N/EL 0(not taxonomy-aligned activities)Total (A.1+A.2) 0 0 0 0 0 0 0 0 0B. Taxonomy – non-eligible activitiesTurnover of taxonomy – non-eligible activities (B) 12,223 100Total (A+B) 12,223 100 Solar A/S Annual Report 2024 58 Sustainability statements Sustainability statements - Environmental information - Taxonomy reporting 2024Substantial contribution criteria DNSH criteria (‘Does Not Significantly Harm’)Taxonomy- aligned proportion Category Category OpExof OpEx, (enabling (transitional 2023 activity or) activity) Economic activites (1)Code(s) (2)Absolute OpEx (3)Proportion of OpEx (4)Climate change mitigation (5)Climate change adaptation (6)Water and marine resources (7)Circular economy (8)Pollution (9)Biodiversity and ecosystems (10)Climate change mitigation (11)Climate change adaptation (12)Water and marine resources (13)Circular economy (14)Pollution (15)Biodiversity and ecosystems (16)Minimum safeguards (17)(18)(20)(21)Currency (DKKm)% % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E TA. Taxonomy eligible activitiesA.1 Environmentally sustainable activities (taxonomy – aligned)OpEx of environmentally sustainable activities (taxonomy aligned) (A.1) 0 0 0 0 0 0 0 0 N N N N N N N 0Of which enabling 0 0 0 0 0 0 0 0 N N N N N N N 0 EOf which transitional 0 0 0 N N N N N N N 0 TA.2 Taxonomy – eligible but not environmentally sustainable activities (not taxonomy-aligned activities)7.3 Installation, maintenance, and repair of energy efficiency equipment CCA 7.3 0 0 N/EL EL N/EL N/EL N/EL N/EL 12OpEx of taxonomy-eligible not environmentally sustainable activities (not taxonomy-aligned activities) (A.2) 0 0 0 0 0 0 0 0 12OpEx of taxonomy eligible activities (A.1+A.2) 0 0 0 0 0 0 0 0 12B. Taxonomy-non-eligible activitiesOpEx of taxonomy-non-eligible activities (B) 34 100Total 34 100 Solar A/S Annual Report 2024 59 Sustainability statements Sustainability statements - Environmental information - Taxonomy reporting 2024Substantial contribution criteria DNSH criteria (‘Does Not Significantly Harm’)Taxonomy- aligned proportion Category Category CapExof CapEx, (enabling (transitional 2023 activity or) activity) Economic activites (1)Code(s) (2)Absolute CapEx (3)Proportion of CapEx (4)Climate change mitigation (5)Climate change adaptation (6)Water and marine resources (7)Circular economy (8)Pollution (9)Biodiversity and ecosystems (10)Climate change mitigation (11)Climate change adaptation (12)Water and marine resources (13)Circular economy (14)Pollution (15)Biodiversity and ecosystems (16)Minimum safeguards (17)(18)(20)(21)Currency (DKKm)% % % % % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E TA. Taxonomy eligible activitiesA.1 Environmentally sustainable activities (taxonomy – aligned) 0Capex of environmentally sustainable activities (taxonomy aligned) (A.1) 0 0 0 0 0 0 0 0 N N N N N N NOf which enabling 0 0 0 0 0 0 0 0 N N N N N N N 0 EOf which transitional 0 0 0 N N N N N N N 0 TA.2 Taxonomy – eligible but not environmentally sustainable activities (not taxonomy-aligned activities)1.1 Afforestation CCA 1.1 3 1 N/EL EL N/EL N/EL N/EL N/EL 57.3 Installation, maintenance, and repair of energy efficiency equipment CCA 7.3 1 0 N/EL EL N/EL N/EL N/EL N/EL 07.6 Installation, maintenance, and repair of renewable energy technologies CCA 7.6 6 1 N/EL EL N/EL N/EL N/EL N/EL 1CapEx of taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) (A.2) 10 2 0 100 0 0 0 0 6CapEx of taxonomy-eligible activities (A.1+A.2) 10 2 0 100 0 0 0 0 6B. Taxonomy – non-eligible activitiesCapEx of taxonomy-non-eligible activities (B) 428 98Total (A+B) 438 100 Solar A/S Annual Report 2024 60 Sustainability statements Sustainability statements - Environmental information - Taxonomy reporting E1-4 Targets related to climate change mitigation and adaptation Climate change Performance incentive schemes GOV-3 Integration of sustainability-related performance in incentive schemes The Remuneration Policy, which outlines the principles and guidelines for the Executive Board was amended at the Annual General Meeting in 2024. ESG targets were included in variable remuneration. Please see the Management review page 32. Transition plan E1-1 Transition plan for climate change mitigation We acknowledge the importance of reducing our climate footprint across the value chain. We follow a science-based approach in line with the Paris Agreement limiting global warming to 1.5°C. Our approach for our own operations includes a climate mitigation plan and a mid-term reduction target. We are proud to report a 50% reduction in CO 2 e emissions for scope 1 and scope 2 compared to our 2020 baseline. To address potential negative impacts in our value chain, we encourage our suppliers to source raw materials with a lower negative impact on the environment. We assist our customers in decarbonising their own operations and offer renewable energy products and solutions, further advancing the green transition. Decarbonisation levers Although less than 1% of our CO 2 e emissions derives from our own operations (scope 1 and 2), we continue to invest in renewable energy assets, such as high-capacity heat energy consumed in the use-phase of the products we sell. The category “Use of sold products” alone accounts for more than 90%. We are in the process of identifying and deploying several initiatives to reduce our supply chain emissions. Financial resources The operational and capital funding to execute our transmission plan is allocated annually. Please see page 56-60 in the section EU Taxonomy. Embedded in our strategy and business model Our transition plan is an integral part of our overall strategy and business model and is aligned with our sustainability focus areas and targets. It is financed through our annual business and financial planning process. As chair of the Sustainability Steering Committee, our CFO oversees the implementation of our ESG strategy, including the transition plan. The transition plan is approved by the Executive Board and the Board of Directors. Please see page 11-15 in the Management Review for further information. Science-based emissions targets We have committed ourselves to the Science Based Target initiative (SBTi), which also serves as our guiding star to improve our climate footprint. Through this, we have committed to a 42% reduction by 2030 in scope 1 and 2. However, our ambitious target for scope 1 and 2 is net-zero by 2030. This target is supported by a mid-term target in 2026 of 65% reduction in scope 1 and 2, and the overall target of decarbonising our value chain on a long term. pumps and solar panels at our own premises. We aim to phase out gas as a heating source and increase the share of self-generated energy. No further climate scenarios have been considered as we consider our current scenario and transition plan to be on track with the Paris Agreement. Our ambition is to use 100% renewable energy (electricity) by 2026, either procured or self-generated, and increase the share of self-generated electricity. In addition to tracking reductions in our own operations, we also use climate targets to shape other initiatives and investments. A key method for achieving our climate mitigation targets, for example, is our switch to renewable energy, including replacing gas boilers with heat pumps and shifting to a 100% EV fleet. Due to the nature of our business, over 99% of Solar’s total emissions derive from the value chain. Most of our emissions derive from the products we source, and the Transition plan towards 2030 for scope 1, 2, and 3 GHG emissions Reductions planned Reductions expected in own operationsin value chainTransition Renewable Phase out Change in tCO2eqto EVelectricityfossil fuelsproduct mix100% reduction in scope 1&225% reduction in scope 3Current GHG emissionsGHG emissionsBaselineScope 1-2 reduction Scope 3 reductionTarget year20202030 Solar A/S Annual Report 2024 61 Sustainability statements Sustainability statements - Environmental information - ESRS E1 Impact, risks, and opportunities SBM-3 – Material impacts, risks, and opportunities and their interaction with strategy and business model Through our double materiality assessment, three sub- topics have been identified, of which our entity-specific sub-topic presents a positive impact and an opportunity. ● Sales of renewable energy products and solutions (entity specific) ● Climate change mitigation ● Energy Risks related to the topics identified are all considered to be climate-related transition risks. We believe that our strategy and business model support our transition plan and our ambition to work with climate change to reduce our carbon emissions in line with our SBTi targets. The impact, risks, and opportunities (IROs) and how they interact with our strategy and business model are described in the section General information. Entity specific opportunity The sale of products and solutions that enhance the transition to renewable energy has been identified as an opportunity under the topic E1: Climate Change. This aligns with our strategic focus area on Climate and Energy (see Management review, page 11-12). Solar aims to contribute to the green transition by selling products such as heat pumps and removing gas and oil boilers from the market, thereby achieving avoided emissions. Policies related to this area are covered by existing policies presented in this report, and actions and targets are integrated into our strategic actions and targets. Data points related to this entity-specific topic are company- specific and outside CSRD requirements. The expected outcomes of this entity-specific opportunity include improved financial gains and an enhanced reputation for Solars as a company supporting the green transition, while also contributing to a better world. IRO process ESRS 2 IRO-1 – Description of the processes to identify and assess material climate-related impacts, risks, and opportunities The full process and methodology applied to identify climate-related impact, risks, and opportunities in relation to climate-related physical risks and climate-related transition risks, can be found in the section General information page 53-54. Climate change impacts are identified across Solar’s value chain. The main risks stem from energy consumption in the upstream supply chain and the energy supply connected to Solar’s assets and business model. These risks are reflected in the negative impacts identified and assessed as material in the DMA. No climate-related hazards have been identified. Given the nature of our business, our geographical presence, and our primarily European-based suppliers, we have not identified any significant physical risks. Additionally, we do not foresee any substantial transition risks that could affect our business model, financial performance, or reputation in the short and medium term. Sales of products and solutions for renewable energy have been identified as an opportunity in the transition to a low-carbon economy. Policies E1-2 Policies related to climate change mitigation and adaptation Solar’s Sustainability Policy and Environmental Policy define and communicate how we work with climate change mitigation and sustainability, including our commitment to reducing scope 1, 2, and 3 emissions by 2030 including our ambition of 100% renewable energy (electricity) and energy optimisation. By covering all emission scopes, the Sustainability Policy applies to the emissions from our own operations as well as from our upstream and downstream value chain. Our Sustainable Procurement Policy outlines our demands for our suppliers and requests them to disclose their emissions. We actively engage with our strategic/preferred suppliers via our Supplier Engagement Programme and through ongoing dialogue, meetings, and events. We request that our suppliers report to EcoVadis and sign our Supplier Code of Conduct. Decarbonisation and environmental protection are central to the relationship with our suppliers, and we encourage them to use renewable energy in their own operations. These goals are outlined in our Sustainable Procurement Policy and in our Supplier Code of Conduct. Both policies, which apply to all employees and suppliers, aim to minimise our impact on the environment. The policies are available on Solar’s employee intranet and on our website. Accountability lies with the Executive Board. Group Sustainability has overall responsibility for our policies and ensures that they remain aligned with legislation. The policies are reviewed annually. Actions E1-3 Actions and resources in relation to climate change policies We are addressing emissions through the following actions. Many actions have already been implemented, and more are in the pipeline. Primary decarbonisation levers, as well as achieved and expected GHG emission reductions, are detailed in our transition plan. We believe to be on track and have the necessary resources and financial support to continue working with our climate change mitigation plan. For more information on our financial resources (OpEx and CapEx), please see the EU Taxonomy section. Own operations We have initiated the following actions: We continue to take steps to reduce our CO 2 e emissions in scope 1 in line with our reduction targets by: ● Phasing out fossil fuel-based energy sources such as gas with renewable alternatives like heat pumps. ● Continuing to transition our fleet towards a 100% EV fleet by 2030. We continue to take steps to reduce our CO 2 e emissions in scope 2 in line with our reduction targets by: ● Switching to renewable electricity, either purchased or generated, by installing solar panels at our premises. In 2025, we will establish a solar panel field at our head office in Vejen, Denmark. Our target is 100% renewable energy (electricity) by 2026. ● Upgrade to energy-efficient lighting, such as LED, install sensors and building management systems. Construction of our warehouse in Sweden accords to Breeam Excellent. The new facilities will replace our two existing warehouses and are expected to be taken into use in 2026. This will have a positive impact on both scope 1 and 2. We have created emission reduction scenarios at company level to ensure that we reach our mid-term reduction target. We have trained employees in direct contact with suppliers in our Sustainability Policy and Supplier Code of Conduct. We have strengthened the Group Sustainability function with three local Sustainability Managers and a Sustainable Procurement Manager. Solar A/S Annual Report 2024 62 Sustainability statements Sustainability statements - Environmental information - ESRS E1 Supply chain Decarbonising the supply chain is a joint effort and to support our scope 3 reductions, we have initiated the following actions: ● We began the establishment of Solar Industrial Solutions, focusing on turnkey climate and energy solutions. By installing a heat pump, solar panels, and other energy- efficient products and solutions, our customers can decarbonise their own operation. ● Through our Code of Conduct, we require our suppliers to commit to renewable energy. We have met our 2024 target of 93% of our spend to be covered by our Supplier Code of Conduct. ● We follow our suppliers’ commitment to renewable energy via our risk assessment due diligence. By the end of 2024, 80% of our spend have undergone risk assessment. ● This year, we have begun performing on-site audits in collaboration with accredited third parties. A risk-based approach has been applied, reviewing risk by country, market, commodities, processes, and/or work areas. We are committed to our target of 100% renewable energy (electricity). This year, we increased the share of renewable energy to 88%. For sites owned by Solar, we reached 100%. As most of our sites are leased, it is challenging to convert all sites to renewable energy, but we will continue to make efforts in this regard. Over time, we aim to transition from procured renewable energy to self-generated renewable energy by installing solar panels at our premises. Renewable energy (electricity) Share of renewable energy (electricity) ● We will strive to provide the relevant environmental documentation containing relevant scope 1 and 2 data. ● We will continue to move away from spend-based CO 2 e emissions data in scope 3 towards actual data. This will provide us with more accurate calculations and increase transparency for our stakeholders and help our customers to adapt CO 2 e data into their own business activities. ● We will continue to seek out partnerships with key suppliers to incentivise low carbon products. Targets E1-4 Targets related to climate change mitigation and adaptation Due to the nature of our business, more than 99% of our emissions are indirect emissions from scope 3 activities. Scope 1 and 2 As of today, we have superseded the official commitment of 42% reduction in scope 1 and 2 and are on track to meet our mid-term target of 65% reduction by 2026 compared to baseline year 2020. Our own target is net-zero/0 emissions by 2030. The main levers to reduce emissions in scope 1 and 2 are phasing out gas as a heating source, phasing out fossil fuel cars, and shifting to renewable electricity. Scope 3 This year, we have recalculated our scope 3 emissions, including our 2020 baseline, using a new calculation methodology that provides us with more accurate results. We now have a clearer view on which efforts to prioritise. Our target of total 25% emission reductions in scope 3 by 2030 in category 1: Purchased products and services and category 11: Use of sold products remains unchanged, however. The increase in absolute figures is mainly linked to category 11 “Use of sold products”, with gas boilers being the main product group that releases carbon during its use phase. As such, it is classed as the main lever to reduce emissions in this category. 20302026202420232022 65% reduction 100% reduction 20212020 7,140 7,690 5,920 5,391 3,560 2,499 42% Baseline Science-based Targets 2030202420232022 25% reduction 20212020 3,205,348 No data available No data available 3,264,258 3,428,920 2,404,011 Baseline Science-based Targets Scope 1 and 2 GHG emissions 1 Scope 3 GHG emissions, category 1 and 11 2 tCO 2 e tCO 2 e 1) Our own target to become net-zero/0 emissions by 2030. 2) Category 1: Purchased products and services, Category 11: Use of sold products 2022 84% 2023 88% 2024 88% 2026 Target 100% Solar A/S Annual Report 2024 63 Sustainability statements Sustainability statements - Environmental information - ESRS E1 It is expected that the carbon intensity of the used energy in a product’s lifetime will decrease over time, thereby having a positive effect on scope 3 emissions. However, it is also a well-known Science Based Targets dilemma that when companies bring products with longer lifetimes to market, they may “pay” for that in their CO 2 e accounting, as when lifetimes increase, scope 3 emissions also increase (assuming everything else is constant). However, we will continue to develop ways of bringing energy-efficient and low carbon products with long lifetimes to market. Moreover, we are moving away from spend-based data to actual data, and we are in close contact with our suppliers to increase the share of product specific actual data. This, together with a new calculation methodology, will continuously improve our emissions data. SBTi We have notified SBTi that we have re-calculated our scope 3 and changed the base line. As the re-calculation does not affect our existing SBTi targets, no resubmission is required. To measure our annual progress in emissions reductions in all three scopes, we use the methodology guidelines from SBTi. To enhance transparency for our stakeholders, we provide emissions data upon request. Solar A/S Annual Report 2024 64 Sustainability statements Sustainability statements - Environmental information - ESRS E1 Unit 20241 Fuel consumption from coal and coal products MWh 02 Fuel consumption from crude oil and petroleum products MWh 03 Fuel consumption from natural gas MWh 2,8984 Fuel consumption from other fossil sources MWh 10,279Consumption of purchased or acquired electricity, heat, steam and cooling from fossil 5MWh 1,682sources6 Total fossil energy consumption (calculated as the sum of line 1 to 5) MWh 14,859Share of fossil sources in total energy consumption % 517 Consumption from nuclear sources MWh 0Share of consumption from nuclear sources in total energy consumption % 0Fuel consumption for renewable sources, including biomass (also comprising 8MWh 0industrial and municipal waste of biologic origin, biogas, renewable hydrogen, etc.)Consumption of purchased or acquired electricity, heat, steam and cooling from 9MWh 12,858renewable sources10 The consumption of self-generated non-fuel renewable energy MWh 1,53311 Total renewable energy consumption (calculated as the sum of lines 8 to 10) MWh 14,391Share of renewable sources in total energy consumption % 49Total energy consumption (calculated as sum of line 6 and 11) MWh 29,250 E1-5 – Energy consumption and mix Accounting policies Renewable electricity The total amount of renewable and non-renewable electricity purchased and generated at locations owned or leased by Solar as a percentage of total electricity consumption in MWh in the reporting year. Procured renewable energy (electricity) is documented through guarantees of origin (GO). Other fuels The total amount of fuel oil consumed in MWh. Emissions are calculated based on the actual used fuel oil in the reporting period. Yearly used fuel oil is multiplied by the emission factor communicated by DEFRA. Natural gas The total amount of natural gas consumed in MWh. Emissions are calculated based on the actual used gas in the reporting period. Yearly used gas is multiplied by the emission factor communicated by DEFRA. E1-5 – Energy consumption and mix Solar A/S Annual Report 2024 65 Sustainability statements Sustainability statements - Environmental information - ESRS E1 Overview by country 2024Data point Unit DK SE NO NL PL MAG45 Others1TotalFleet tCO2e 625 31 6 150 294 27 56 1,189Natural gas tCO2e 80 0 0 272 94 72 12 530Fuel oil tCO2e 14 0 0 0 12 0 0 26Total gross GHG emissions, scope 1 tCO2e 719 31 6 422 400 99 68 1,745Fleet tCO2e 38 34 4 54 0 0 1 131Electricity, market-based tCO2e 360 5 152 25 107 109 201 959District heating, market-based tCO2e 102 313 156 57 39 0 58 725Total gross GHG emissions scope 2, market-based tCO2e 500 352 312 136 146 109 260 1,815Electricy, location-based tCO2e 403 40 22 506 308 131 193 1,603District heating, location-based tCO2e 324 791 499 279 39 0 56 1,988Total gross GHG emissions scope 2, location-based tCO2e 765 865 525 839 347 131 250 3,722Total GHG emissions scope 1 and 2 tCO2e 1,219 383 318 558 546 208 328 3,560Total gross GHG emissions scope 3 tCO2e 201,075 75,894 63,933 3,084,698 17,907 42,555 13,553 3,499,615Total GHG emissions scope 1, 2 and 3 market-based tCO2e 202,294 76,277 64,251 3,085,256 18,453 42,763 13,881 3,503,175Total GHG emissions scope 1, 2 and 3, location-based tCO2e 202,559 76,790 64,464 3,085,959 18,654 42,785 13,871 3,505,082GHG emissions scope 3 calculated using primary data, share % 0.14% E1-6 – Gross scopes 1, 2, 3 and total GHG emissions Accounting policies Fleet GHG emissions from fleet cover GHG emissions from cars owned and leased by Solar. Emissions are calculated based on the actual used fuel in the reporting period for both diesel and petroleum cars. For December where Solar do not have the actual used fuel, the data is estimated based on data on total used fuel for a comparable month or as an average for the previous months of the years. Yearly used fuel is multiplied by the vehicle’s emission factor per liters as communicated by DEFRA (updated 2024). Electricity The total amount of electricity consumed in MWh. Emissions are calculated based on the actual used electricity in the reporting period. Yearly used electricity is multiplied by the emission factor communicated by DEFRA. Electricity is calculated for both a marked-based and location based. District heating The total amount of district heating consumed MWh. Emissions are calculated based on the actual used district heating in the reporting period. Yearly used district heating is multiplied by the emission factor communicated by DEFRA or where the actual emissions factors are available, this is used. District heating is calculated for both a marked-based and location based. In 2023 we only calculated the emissions for district heating based on the emissions factor communicated by DEFRA. E1-6 – Gross Scopes 1, 2, 3 and Total GHG emissions 1) Solar Polaris, Højager Belysning, Thermonova. Unit 2024 2023 ΔNet revenue DKKm 12,223 13,031 -808Net revenue used to calculate GHG emissions intensity DKKm 12,223 13,031 -808GHG emissions intensity, location-based (total GHG emissions per net revenue) tCO2e 286.761GHG emissions intensity, market-based (total GHG emissions per net revenue) tCO2e 286.605 Solar A/S Annual Report 2024 66 Sustainability statements Sustainability statements - Environmental information - ESRS E1 Retrospective Milestones and target years2020Δ 2023 vs Unit(base year) 2021 2022 2023 20242024 Target 20266Target 2030Scope 1 GHG emissions Net-zero4Scope 1 GHG emissions tCO2e 2,814 3,583 3,033 2,150 1,745 -19% 65% reduction Net-zeroScope 1 GHG emissions reduction % 127% 108% 76% 62%Scope 2 GHG emissions -Location-based GHG emissions tCO2e 4,326 4,107 3,491 3,876 3,722 -4%Location-based GHG emissions reduction % 95% 81% 90% 86% -4Market-based GHG emissions tCO2e 4,326 4,107 2,887 3,241 1,815 -44% 65% reduction Net-zeroMarket-based GHG emissions reduction % 95% 67% 75% 42% -Significant scope 3 GHG emissions -Total gross indirect (scope 3) GHG emissions tCO2e 3,275,651 3,309,423 3,499,615 6%2C1: Purchased products and services tCO2e 354,454 - - 325,148 312,588 -4% 25% reduction1C2: Capital goodstCO2e 0 - - 0 05C3: Fuel and energy-related activitiestCO2e 2,212 1,889 794 -58%1,3C4: Upstream transportation and distributiontCO2e 0 - - 0 01C5: Waste generated in operationstCO2e 0 - - 0 0C6: Business traveling tCO2e 1,658 - - 1,577 1,415 -10%C7: Employee commuting tCO2e 3,381 - - 3,498 3,659 5%1C8: Upstream leased assetstCO2e 0 - - 0 0C9: Downstream transportation tCO2e 59,148 - - 34,423 60,730 76%1C10: Processing of sold productstCO2e 0 - - 0 02C11: Use of sold products tCO2e 2,850,894 - - 2,939,110 3,116,332 6% 25% reductionC12: End-life-treatment of sold produts tCO2e 3,904 - - 3,778 4,097 8%1C13: Downstream leased assetstCO2e 0 - - 0 01C14: FranchisestCO2e 0 - - 0 01C15: InvestmentstCO2e 0 - - 0 0Total GHG emissionsTotal GHG emissions, location-based tCO2e 3,282,791 - - 3,315,449 3,505,082Total GHG emissions, market-based tCO2e 3,282,791 - - 3,314,814 3,503,175 E1-6 – Total GHG emissions disaggregated by scopes 1 and 2 and significant scope 3 Accounting policies Scope 1 Scope 1 emissions are reported in tonnes and the sum of all CO 2 equivalents in accordance with ESRS E1 requirements and the GHG protocol. The emissions are calculated based on the direct energy consumption for operations (natural gas, oil, diesel, petrol) and fuel from people transport (company owned/ leased cars). For all scope 1 data, December’s figures are estimated based on the total usage for a comparable month or as an average of the previous months of the year. Scope 2 Scope 2 GHG emissions are reported in tonnes of CO 2 equivalent in accordance with ESRS E1 requirements and the GHG protocol. Scope 2 emissions are reported as location and market-based in accordance with the GHG protocol. For all scope 2 data, December is estimated based on data on total used for a comparable month or as an average for the previous months of the years. Scope 3 Scope 3 emissions are reported in tonnes of CO 2 equivalent in accordance with ESRS E1 requirements and the GHG protocol. Scope 3 emissions are a combination of activity and spend based calculations and are calculated annually. Data are pulled from Solar’s ERP system and calculated annually. Where actual data is not available, data are calculated based on economic spend allocation and weight-based calculations method. This accounts for C1: Purchased products and services and C11: Use of sold products, as well as for the categories under ‘Other’; C3: Fuel- and energy-related activities, C4: Upstream transport is embedded in C1, C9: Downstream transport and distribution and C12: End-of-life treatment of sold products. The categories C5: Waste, C6: Business travel and C7: Employee commuting are 100% activity based. GHG intensity (scope 1 and 2) Calculated as total scope 1 and scope 2 (location- and market-based) emissions divided by total revenue. GHG intensity (scope 3) Calculated as total scope 3 divided by total revenue. E1-6 – Total GHG emissions disaggregated by scopes 1 and 2 and significant scope 3 Solar A/S Annual Report 2024 67 Sustainability statements Sustainability statements - Environmental information - ESRS E1 E1-6 – Total GHG emissions disaggregated by scopes 1 and 2 and significant scope 3 – continued 1) The following categories have been excluded from the calculation: C2: Capital goods, C10: Processing of sold products, C8/13: Leased assets, C14 Franchises, C15: Investments 2) Scope 3 target is 25% reduction in total in category 1: Purchased products and services and category 11: Use of sold products 3) C4: Upstream transportation is embedded in category C1: Purchased products and services 4) Our own target is net-zero/0 emissions by 2030. Our SBTi commitment in scope 1 and 2 is 42% reduction by 2030. 5) Not included in scope 1 and 2 6) Calculated from baseline 2020 Retrospective Milestones and target years2020Δ 2023 vs Unit(base year) 2021 2022 2023 20242024 Target 20266Target 2030GHG intensity Net-zeroGHG intensity value, scope 1 tCO2e 0.25 0.29 0.22 0.16 0.14 -GHG intensity value, scope 2 location-based tCO2e 0.38 0.33 0.25 0.30 0.30 -GHG intensity value, scope 2 market-based tCO2e 0.38 0.33 0.21 0.25 0.15 -GHG intensity value, scope 3 tCO2e 285.71 - - 253.97 286.31 -Total GHG intensity value, scope 1, 2 and 3 tCO2e 286.33 - - 254.43 286.76 -Total GHG emissions, scope 1, 2 and 3 reductions tCO2e - - 57,161 219,992 -Total GHG emissions, scope 1, 2 and 3 reductions % - - 2% 7% Solar A/S Annual Report 2024 68 Sustainability statements Sustainability statements - Environmental information - ESRS E1 Pollution IRO process ESRS 2 IRO-1 – Description of the processes to identify and assess material climate-related impacts, risks, and opportunities We have identified pollution of water and soil to have a negative impact in the upstream value chain and own operation. The full process and methodology applied to identifying pollution related material impact can be found in the section General information. We comply with national and internal regulations, and through our ISO 14001 process monitor, we screen for potential negative impacts. In case a severe incident occur, we will engage local authorities and affected communities. Policies E2-1 Policies related to pollution Solar’s Environmental Policy communicates our environmental performance. Solar undertakes all work related to the handling of pollution and is committed to complying with applicable laws and regulations. The policy states that we want to improve our processes to prevent pollution, but it does not contain any information on mitigating actions regarding water and soil - in case an incident occurs - to limit the negative impact on people and the environment. It does not address substituting and minimising use of substances of concern and phasing out substances of very high concern. The policy applies to all employees and is available on Solar’s intranet and website. No environmental issues or incidents were reported in 2024 or previous years. For our own operations, a future action plan will be grounded in our Environmental Management System (EMS). In our upstream value chain, we conduct monitoring through our risk assessment due diligence process. Please see section E1 Climate Change for information on climate and environmental mitigation in our own operation and across the value chain. Accountability for the implementation of the policy lies with the Executive Board and ultimately the CEO. Please see E1 Climate Change regarding how we work with climate and environmental mitigation in our own operations and across the value chain. Actions and resources E2-2 Actions and resources related to pollution Pollution can take place through indirect or direct water contamination and leakage, soil pollution in surrounding areas, operations in our upstream value chain, and in our own operation. We strive to enhance our environmental performance by implementing effective pollution mitigation and adaptation strategies to support creating a positive impact where it is possible. The actions apply to all operations within Solar and its upstream value chain. Due to our history of not have identified any incidents, water and soil pollution is considered low risk. In our own operation, pollution-related matters come under our Environmental Management System which is frequently audited by third party consultants. Incidents must be reported to a management team member and reported to the EMS team. For the upstream value chain, pollution is addressed in our Supplier Code of Conduct and our Sustainable Procurement Policy. Current and future actions: ● Through our daily operation, we track potential pollution incidents related to water and soil in own operations. ● We will continue to address water and soil pollution on the topic environment with our suppliers as part of our Supplier Engagement Programme where we monitor and track on several parameters include parameters within environment. ● In 2025, we will align our Environmental Policy to also cover water and soil pollution. ● In 2025, we will align our Environmental Management System framework according to the standards of ESRS E2. Targets E2-3 Targets related to pollution Due to the nature of our business and our history, no targets have been set. We will conduct an assessment to better understand the full scope of our pollution-related impacts, risks, and opportunities to identify potential future targets and resources required. Pollution related targets that are mandatory by law will be implemented during 2025. For this reporting year, we did not identify any incidents in our own operations, nor do we possess methodology and data on the amounts of pollutants or the changes over time. Pollution E2-4 Pollution of air, water, and soil At this time, we do not have data on emissions and pollutants related to the two negative impacts identified through our IRO analysis: water and soil. Anticipated financial effects E2-6 Anticipated financial effects from pollution-related impacts, risks, and opportunities No financial implications of pollution-related risks and opportunities have been identified. We will allocate potential additional resources/funds to the extend needed. Solar A/S Annual Report 2024 69 Sustainability statements Sustainability statements - Environmental information - ESRS E2 Biodiversity and ecosystems Transition plan E4-1 – Transition plan and consideration of biodiversity and ecosystems in strategy and business model Continuously assessing and enhancing the resilience of our business model and strategy to biodiversity and ecosystems-related risks is essential for long-term sustainability. We depend on diverse and healthy ecosystems to support climate change reductions. Due to our business model, we believe that we have integrated the necessary resilience to physical, transition and systemic risks within this topic both in our own operations and in the upstream value chain, and therefore have no separate transition plan. However, we acknowledge that the raw material extraction for manufacturing the products that we sell, as well as energy resources and transportation, may cause significant harm and negative impact on people and the environment. We engage with our suppliers through our Supplier Engagement Programme and by performing regular risk assessments, we understand their policies and practices on this subject. As we primarily operate with suppliers from European markets with legislative requirements, we believe that our current strategy and business model hold the necessary resilience to limit the negative impact within biodiversity and ecosystems. Hence we have not performed any further resilience analysis. We have engaged with relevant stakeholders from our own operations and upstream value chain to assess our impact on biodiversity in our own operation and in our upstream supply chain. As required by SBTi, our focus is primarily on reducing our emissions as much as possible by taking proactive actions across the value chain. However, we also want to give back to nature and have invested in two afforestation projects and expect to afforest approx. 470 hectares by the end of 2026. To ensure responsible forest operations, we will begin certifying our projects through a third-party certification system in the coming year. Please see the section General information page 50 for more detailed information related to the IROs identified. IRO process IRO-1 – Description of the processes to identify and assess material climate-related impacts, risks, and opportunities We have identified Drivers of biodiversity loss: Climate change, Drivers of biodiversity loss: Land-use change, freshwater use, and sea-use change, Drivers of biodiversity loss: Pollution, Impacts and dependencies on ecosystem services to have a negative impact primarily in the upstream value chain but also in our own operation. The full process and methodology applied to identifying biodiversity and ecosystem related material impact can be found in the section General information. All our sites are located in industrial zones, designated for industrial operations, and we have no records indicating proximity to biodiversity-sensitive areas. Hence we do not have any activities related to sites located in or near biodiversity-sensitive areas negatively affect these areas and thereby concluded that it is not necessary to implement biodiversity mitigation measures. We adhere to national and local regulations and procedures for the protection of biodiversity and ecosystems, which are supervised by authorities. Therefore, the material impact is considered to be limited. The full process and methodology applied to identify material impact, risks, and opportunities in relation to biodiversity and ecosystems can be found in the section General information. Policies E4-2 – Policies related to biodiversity and ecosystems We do not have a biodiversity and ecosystem policy relating to the material impacts and risks identified. Our related policies such as Environment Policy, Sustainability Policy, Sustainable Procurement Policy, and Environmental Policy define our commitment to biodiversity and ecosystems. Our Sustainable Procurement Policy address responsible sourcing throughout the value chain and protecting people and nature. Traceability in the form of country of origin is identified in the product documentation. We seek to inspire our suppliers by demanding them to sign our Supplier Code of Conduct which emphasizes the protection of people and the environment. Actions E4-3 – Actions and resources related to biodiversity and ecosystems In our own operation, biodiversity and eco-systems is anchored in our operations. Any incidents shall be reported to a management team member and reported to the EMS team. For the upstream value chain, pollution is addressed in our Supplier Code of Conduct under the chapter Environment, Pollution Prevention, and Resource Conservation as well as in our Sustainable Procurement Policy. Please see G1 Business Conduct on how we work with our suppliers to increase transparency, also covering environmental matters. On-going and future actions include: ● We will further align our policies towards the demands of the ESRS standards and other applicable international standards. ● We will continue to mitigate negative impacts and risks through our SBTi targets. ● We will continue the development of our afforestation projects and will make more details available in the coming reporting period. ● We will continue to monitor and follow up on our suppliers via our targets for risk assessment and signing of Supplier Code of Conduct. Solar A/S Annual Report 2024 70 Sustainability statements Sustainability statements - Environmental information - ESRS E4 Targets E4-4 – Targets related to biodiversity and ecosystems We have no direct targets in relation to biodiversity and ecosystems. For our own operations, we track and follow the progress of our afforestation projects. Signing our Supplier Code of Conduct, which contains several environmental elements, is an indirect target showing our suppliers commitment to this subject. Solar locations SBM-3 – Material impacts, risks, and opportunities and their interaction with strategy and business model Country CityCH NeuchatelCN JiangsuCZ BrnoDE NeusäßDK Vejen, Brøndby, Svenstrup, Århus, Odense SV, Aalborg, Åbyhøj, Torshavn, København NV, Rødby, Kastrup, Glostrup, Køge, Sønderborg, Vejle, Holstebro, Vedbæk, Nibe, HårlevFR PontarlierGB CheshireIT CeccanoNL Alkmaar, RG Duiven, Amsterdam, DV Apeldoorn, AB Assen, Capelle, Den Haag, Ede, Eindhoven, Heerlen, Hengelo, Meppel, Oosterhout, Schiedam, Utrecht, Zwolle, Heerenveen, AmersfoortNO Gardermoen, Haugesund, Trondheim, Aalesund, Bodø, Mo, Harstad, Tromsø, Kirkenes, Kristiansand S, Sogndal, Oslo, Skien, Drammen, Tønsberg, Hamar, Bergen, StavangerPL Lodz, Warszawa, Gdansk, Poznan, Bielsko_Biala, Pila, Zielona Gora, Torun, Bialystok, Gliwice, Siedlce, Zory, Wroclaw, Krakow, Szczecin, Tarnow, Walbrzych, LublinSE Göteborg, Värnamo, Växjö, Jönköping, Borås, Kista, Sköndal, Visby, Uppsala, Norrtälje, Norrköping, Örebro, Västerås, Avesta, Gävle, Sundsvall, Karlstad, Umeå, Hägersten, Helsingborg, Högsbo, Gällivare, Kalmar, Linköping, Malmö, Halmstad, Luleå, Nacka, Stockholm, Osby, Varberg, UddevallaUSA Madison, Portland Anticipated financial effects E4-6 – Anticipated financial effects from biodiversity and ecosystem-related risks and opportunities No financial implications from biodiversity and ecosystems risks and opportunities have been identified. We will allocate potential additional resources/funds to the extend needed. For further information, please see the Taxonomy section. Solar A/S Annual Report 2024 71 Sustainability statements Sustainability statements - Environmental information - ESRS E4 Resource use and circular economy IRO process IRO-1 – Description of the processes to identify and assess material resource use and circular economy-related impacts, risks, and opportunities As a sourcing and services company, we are reliant on a significant number of products manufactured from both critical raw materials and virgin materials, leaving a waste track behind. Our double materiality assessment identified three negative impacts on our workforce: resource inflows/ use (products and services), resource outflows (waste). We believe that circular economy practices will become increasingly important not just within our own production, but across our industry as well. We want to become part of the long-term solution. However, several challenges regarding reuse and waste sorting in our industry must be resolved to obtain a fully implemented circular economy culture. Most of our scope 3 emissions comes from the products we sell. We are reliant on significant amounts of critical raw materials used to manufacture the products we sell. By incorporating circularity practices across our value chain, we can reduce our carbon emissions while applying responsible waste management. Waste in our operations and value chain mainly consists of packaging waste from inbound product supply and outbound distribution. We comply with national and internal regulations and continuously evaluate our methods to improve waste sorting for optimised recycling, and we collect data on all relevant waste fractions. This is undertaken by Solar, with help from our waste management providers and through external audits. Policies E5-1 Policies related to resource use and circular economy Solar’s Environmental Policy covers areas, such as waste management and environmentally friendly packaging. As we are ISO 14001 certified, we are committed to ensuring that guidelines in relation to the management of waste as well as hazardous waste and materials are strictly followed. As outlined in our Supplier Code of Conduct, we also engage with our suppliers to ensure that “the use of natural resources, including water, fossil fuels, minerals, and virgin forest products are conserved by practices, such as modifying production, maintenance and facility processes, materials substitution, reuse, conservation, recycling, or other means.” Actions and resources E5-2 Actions and resources related to resource use and circular economy In our own operation, waste is anchored in our Operations department, which monitors our waste and recycling processes. Historically, and during the year under review, we focused on the following activities: ● We report monthly on all waste fractions relevant to Solar’s business model. ● We are currently running several pilot projects with the objective of recycling products used across our value chain. ● We strive to source 100% certified recycled cardboard packaging materials for use with our customers. ● We are constantly on the outlook for new processes and projects to create a positive impact on the resource and circular economy within our value chain. Targets E5-3 Targets related to resource use and circular economy In relation to resource inflows, specifically in relation to cardboard packaging, we have a target of 100% recycled cardboard but without any timeline. We do not have targets for waste management. However, we manage waste according to national standards and requirements and closely monitor any updates in this regard. We endeavour to manage waste in a manner so as not to harm the environment by continuously improving our waste management programmes in collaboration with our waste managers. We will work towards setting targets in 2025. Resource inflows E5-4 Resource inflows Companies that manufacture electrical equipment rely heavily on resources such as metals, which require mining. These pose significant environmental threats as they must be sourced from different parts of the world. Almost all resources used in our supply chain derive from the extraction of raw materials, including the energy resources and transport involved. Moreover, it is likely that the products in our supply chain have been produced from virgin materials extracted from mines or natural areas. Extraction of these materials can have a significant negative impact on people and the environment. Through our Supplier Engagement Programme, we have a dialogue with our suppliers to reuse and recycle through circularity levers. Although relatively small, we depend on virgin resources in our packaging and distribution materials in our own operation, such as paper, pulp, and natural gas/crude oil for plastics. Dependence on virgin resources can be reduced, for example, by switching to recycled packaging materials and optimising packing methods. However, it is not possible to reduce dependency completely at this stage. We engage with our business partners in the value chain on recycling and circularity. Solar A/S Annual Report 2024 72 Sustainability statements Sustainability statements - Environmental information - ESRS E5 Resource outflows E5-5 Resource outflows Due to the nature of our business, waste streams in Solar mainly consist of packaging waste (paper, cardboard, plastics, wood etc.) and electronic waste (minerals from batteries and other electronic devices as well as metal and plastics from cables etc.) that derive from damaged or returned products. We comply with the Waste Electrical and Electronic directive. Electronic waste is a significant waste stream in our industry. The products we sell have various expected lifetimes, with many products still not designed with circularity in mind (durability, repair, reuse, disassembly, and recycling). This generates general waste and e-waste that potentially causes indirect or direct harm to nature. Waste data is actual data collected and reported monthly by those responsible for collecting data. Accountability lies with Operations. Waste data is provided for most locations and subdivided according to material type, equivalent waste management type and weight. Solar A/S Annual Report 2024 73 Sustainability statements Sustainability statements - Environmental information - ESRS E5 E5-5 – Resource outflows - waste Unit 2024Total waste generated kg 3,961,694Total hazardous waste diverted from disposal kg 26,226Hazardous waste diverted from disposal due to preparation for reuse kg 0Hazardous waste diverted from disposal due to recycling kg 26,226Hazardous waste diverted from disposal due to other recovery operations kg 0Total non-hazardous waste diverted from disposal kg 3,020,955Non-hazardous waste diverted from disposal due to preparation for reuse kg 0Non-hazardous waste diverted from disposal due to recycling kg 2,911,297Non-hazardous waste diverted from disposal due to other recovery operations kg 109,658Total hazardous waste directed to disposal kg 6,505Hazardous waste directed to disposal by incineration kg 6,505Hazardous waste directed to disposal by landfilling kg 0Hazardous waste directed to disposal by other disposal operations kg 0Total non-hazardous waste directed to disposal kg 908,008Non-hazardous waste directed to disposal by incineration kg 881,067Non-hazardous waste directed to disposal by landfilling kg 26,941Non-hazardous waste directed to disposal by other disposal operations kg 0Total weight of non-recycled waste kg 914,513Total percentage of non-recycled waste % 23 E5-5 Resource use and circular economy Accounting policies Waste Waste treatment volumes per final treatment are reported in absolute tonnage (in kg) of waste collected from Solar’s locations. All data is third-party data. The first three quarters of 2024 consist of actual data, whereas for Q4, data is estimated based on the average actual data from the previous three quarters. For Solar Poland, data is estimated based on the actual data for the two major locations, where approx. 66% of all full time equivalents are based. E5-5 – Resource outflows - waste Solar A/S Annual Report 2024 74 Sustainability statements Sustainability statements - Environmental information - ESRS E5 Social information ESRS S1 Our workforce ESRS S2 Workers in the value chain 76 81 Descriptor Sustainability statements 75 Solar A/S Annual Report 2024 Sustainability statements Our workforce We have a fundamental respect for the value of human life and dignity and want to foster a culture of respect, equality, and inclusion. This means providing favourable employment conditions for our employees and respecting labour and human rights. Our double materiality assessment has identified two negative impacts on our workforce: working conditions and equal treatment and opportunities for all. Strategy SMB-2 Interests and views of stakeholders We listen to and incorporate our employees’ opinions and concerns through our daily interaction and channels of communication. We view human rights as essential principles that safeguard people’s dignity and ensure freedom and respect within our own operations. The insights gained from understanding our workforce’s interests, views, and rights are integrated into our strategy and business model, ensuring alignment with the rights of our entire workforce. No special impacts or dependencies have been identified. Please see Stakeholder Engagement page 43. Our approach and policies S1-1 Policies related to own workforce We will continue to focus on fostering a workplace and culture that promotes diversity, equity, and inclusion. We respect human rights and do not accept any form of discrimination or harassment. Human rights and labour Our Human Rights Policy covers the right to freedom of association, works councils, fair working conditions, trafficking, forced or compulsory labour, child labour and the elimination of discrimination in employment and occupation. The policy is in line with the UN Guiding Principles on Business and Human Rights and the International Labour Organisation’s (ILO) Declaration on Fundamental Principles and Rights at Work. It applies to Solar and constitutes the framework for how we work and look after employees. Our ethical requirements for our employees are set out in Solar’s Employee Code of Conduct. Should we identify adverse impacts that are directly linked to our operations, products, or services through our suppliers or other business partners, we call on the entity causing the adverse impact to cease, prevent or mitigate the impact, whether they are related to our own workforce, value chain workers, or affected communities. We are in constant dialogue with our works councils and employee representatives to ensure that the impact of labour and human rights in our own operations accords with our policies and regulations. Moreover our Supplier Code of Conduct is fully in line the with applicable ILO standards and address safety of workers, precautious work, human trafficking and forced or child labour. Health, safety, and well-being Physical and mental safety and well-being at the workplace are our top priorities, and we believe that they are fundamental drivers of a work-life balance. We foster a culture that promotes our employees’ health and safety and strive to prevent any accidents. We are also dedicated to safeguarding the labour conditions of our employees, such as sickness, work- related injuries, parental leave, and retirement. We have implemented a Health, Safety, and Work Environment Policy, which sets the standards for how we protect and ensure the well-being of our employees. We have also implemented a set of cardinal rules that address core safety rules. Both cover all our employees. Accountability for health and safety lies with our VP Operations in Sweden. Moreover, we also comply with ISO 9001 (quality management system) and 14001 (environmental management system) to maintain a robust management system. Additionally, we have a range of support systems, and offer our employees’ health insurance, including access to psychologists and other mental health professionals, and to crisis management. We have zero-tolerance towards harassment and have implemented our Sexual Harassment Policy. The purpose of this policy is to contribute to a work environment that is sound in terms of safety and health, where all employees in Solar thrive and feel safe. Accountability for well-being and the mitigation of negative impacts lies with Group HR. Diversity, equity, and inclusion Our ambition is to foster a diverse, equal, and inclusive culture and workplace. We respect human rights and do not accept any form of discrimination or harassment. Together with works councils and employee representatives, we focus on creating a diverse workforce and support for our managers. This also covers a commitment to equal pay and to ensuring equal pay for equal positions and competences when hiring or promoting employees. We are committed to diversity at senior management level and to continuing to raise the entry level of women among all employees. Our Recruitment Policy ensures an unbiased process when recruiting new employees. To support this, we have also introduced an Inclusion and Diversity Policy and the objective of this policy is to ensure that all employees in Solar are treated equally, irrespective of racial and ethnic origin, colour, sex, sexual orientation, gender identity, disability, age, religion, political opinion, national extraction or social origin, or other forms of discrimination covered by union regulation and national law. All policies cover all employees and have been implemented through the same procedures as other policies in Solar and any deviations from the policies are not allowed and will be reported back to either the Board of Directors or the Executive Board. Accountability lies with Group HR. The objective of the Inclusion and Diversity Policy is to ensure that all employees are treated equally and to help advance diversity and inclusion in general. Solar A/S Annual Report 2024 76 Sustainability statements Sustainability statements - Social information - ESRS S1 Engaging with our workforce S1-2 Processes for engaging with own workers and workers’ representatives about impacts Our approach Overall accountability for engagement lies with the Executive Board. We conduct engagement surveys to provide insight into our employees’ well-being, commitment, perception of influence, opportunities for development, work-life balance, collaboration with colleagues, and how Solar’s leaders are perceived. The survey runs every 2-3 years and the accountability lies within HR. In 2024, the survey also included questions on diversity, inclusion, and equality. The results from our employee engagement survey are presented to all managers who have employee responsibility for them to engage with their employees and take appropriate action. The results are published on Solar’s intranet. Group HR monitors and tracks the effectiveness of our managers’ engagement with their employees through our HR system (People Portal). The feedback from the survey and the open comments serves as a valuable basis for initiating dialogue and identifying actions to further improve our workplace. Our employees can also voice their opinions via the whistleblower portal, works councils, employee representatives, and employee performance appraisals. If employees and their families face a challenging situation, we encourage them to apply to our Solar Family grant programme for financial support. We engage with our employees daily and with employee representatives and works councils on a regular basis to ensure that we are operating in accordance with our policies and relevant regulations. Through a structured approach, elected employee representatives host various meetings, including the safety committee and report back to management. Moreover, we have three employee- elected members on our Board of Directors. Please see Stakeholder engagement on page 43 for further information. Remediation and channels for raising concerns S1-3 Processes to remediate negative impacts and channels for own workers to raise concerns Our approach and policies Our employees are encouraged to speak up if they experience any irregularities or illegalities on Solar’s part. Access to remediation, by which our employees can make their concerns and needs known, helps to ensure a just and fair workplace and protects our employees. It also underpins our ambition for a diverse, equal, and inclusive work culture. Employees with a grievance or complaint can report the incident via our whistleblower portal, which is accessible on Solar’s intranet or our websites. They can also seek support from their line manager or HR. Should these channels be unsuitable, all stakeholders - both internal and external – can also raise a complaint directly with the Executive Board. Our Internal Audit team tracks and monitors all issues raised through whatever means. We take proactive steps to ensure awareness of acceptable standards of behaviour by: Regularly running information campaigns on Solar’s intranet. Having all our employees sign our Code of Conduct and making it available on Solar’s intranet. Making our Employee Handbook available on Solar’s intranet. Please see our Whistleblower Policy encouraging our employees to report unethical practices or non-compliance without fear of retaliation and information about our whistleblower portal in section G1, Business Conduct. Actions S1-4 Taking action on material impacts on own workforce, and approaches to mitigating material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions Taking our starting point from two negative impacts identified in our double materiality assessment, we are particularly focused on the actions relating to the two areas set out below. By following our policies and through regular and structured engagement with our employees, we believe that our practices and actions contribute to creating a positive impact. Currently, we have no other actions planned other than those mentioned below. The effectiveness of our actions and initiatives is tracked through our employee engagement surveys, KPIs related to retention, employee turnover, sick leave, and number of accidents. Members of the senior management team are assigned the appropriate resources to manage material impact and are responsible for engaging with their teams. Any actions identified and what response is required to mitigate a potential negative impact are done in the respective management teams in collaboration with relevant employees and workers’ representatives. Health, safety, and well-being Actions We remain focused on health and safety and have introduced a Safety Flash tool to register serious incidents and accidents, analysing the root cause and setting out actions and solutions. The aim is to share learnings and avoid repetition. We frequently organise prevention and mitigating campaigns, such as emergency drills and safety training. We offer regular seminars on topics such as dynamic psychological safety and work satisfaction. The objective is to provide techniques that promote an inclusive and safe culture. To support a good work-life balance, we continue to offer our employees flexible working conditions and where possible giving them the opportunity to work remotely and on a part-time basis. We continue to conduct employee performance appraisals to identify any potential negative or positive impacts that affect our employees’ well-being. We run frequent employee engagement surveys with employee and management participation. This is a safe and anonymous channel, through which views and observations can be expressed. Diversity, equity, and inclusion Actions We will continue to increase the proportion of women at senior management level and increase the number of women in entry-level positions. We have several communities supporting diversity with the aim of guiding and giving feedback to management. We will continue to provide equal opportunities for all our employees. We maintain focus on diversity and inclusion as a driver in the execution of our strategy. We follow the requirements of the General Data Protection Regulation (GDPR) to manage any potential negative impact regarding data protection and privacy. We take full responsibility for the data we process. The purpose is to mitigate potential cyber-attacks by making our employees aware of common pitfalls. Demonstrating good security practice, we have embarked on the implementation of ISO 27001 (information security). Solar A/S Annual Report 2024 77 Sustainability statements Sustainability statements - Social information - ESRS S1 1) Calculated according to the Danish Financial Act § 99b. Unit Target 2024 20231Women in senior management% 25 21 15Entry level, all employees, women % 40 34 31 Targets by 2026 Targets S1-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities Targets for diversity is set and tracked by the Executive Board in collaboration with HR and the Danish Management Team who also engage with our employees and workforce representatives about this topic. It is communicated in our Annual Report and formerly in the Sustainability Report. We acknowledge that reaching our target may be challenging for several reasons. Due to our legacy and the fact that there traditionally have not been many women in our industry, the majority of our employees and managers are currently male. At the same time, we have a track record of long service among employees who have been with us for between 25 to 40 years. This poses a dilemma, seeing that although we have many highly skilled and committed employees who are greatly valued, we acknowledge that a more diverse workforce and management team would provide fresh input and new ways of working. We are committed to promoting gender diversity and have set a target of 25% women at senior management level and aim to raise women’s representation at entry level to 40% by 2026. The targets are tracked on an annual basis. To succeed, we conduct training in unbiased recruitment and have updated our recruitment processes and job advertisements. We have also implemented a Recruitment Policy. The targets have been set by the Executive Management. Solar A/S Annual Report 2024 78 Sustainability statements Sustainability statements - Social information - ESRS S1 Employees Unit 2024 2023 2024 2023Average AverageDenmark Headcount 926 - 930 -Sweden Headcount 583 - 583 -Norway Headcount 387 - 387 -The Netherlands Headcount 637 - 672 -Poland Headcount 369 - 377 -Others Headcount 107 - 110 -Total Headcount 3,009 - 3,059 -Total FTE 2,895 2,990 2,899 3,036 Characteristic of employees: contract type by gender Unit Men Women Others Not disclosed TotalTotal employees Headcount 2,107 902 0 0 3,009Permanent employees Headcount 1,985 845 0 0 2,830Temporary employees Headcount 84 39 0 0 123Non-guaranteed hours employees Headcount 38 18 0 0 56 Characteristic of employees: contract type by region Unit DK SE NO NL PL Others TotalTotal employees Headcount 926 583 387 637 369 107 3,009Permanent employees Headcount 888 553 380 570 340 99 2,830Temporary employees Headcount 15 2 3 67 28 8 123Non-guaranteed hours employees Headcount 23 28 4 0 1 0 56 Employee turnover Unit 2024Employee turnover Headcount 513Employee turnover rate % 17.8 Gender diversity Unit 2024Men Headcount 2,107Women Headcount 902Others Headcount 0Not reported Headcount 0Total employees Headcount 3,009 S1-6 – Characteristics of the undertaking’s employees Accounting policies Applied data on own workforce The applied data on own work force is based on extracts from our local payroll systems. Number of employees, headcount Number of employees, headcount, is the number of employees at the end of the reporting period measured as headcount. Average number of employees, headcount Average number of employees, headcount, is the number of employees across the reporting period measured as headcount. Gender categories Gender is categorised as male, female, or other. Other includes legally registered gender not recognised as male or female. Breakdown by country / geographical area Breakdown by country includes countries in which Solar has 50 or more employees representing at least 10% of our total number of employees. Full time equivalent FTEs are calculated based on the total number of compensable hours (days) in a work year to the number of hours (days) in a “norm” work year. Average number of employees, FTE Average number of employees is the number of employees across the reporting period measured as full time equivalent (FTE). Number of employees, FTE Number of employees is the number of employees at the end of the reporting period measured as full time equivalent (FTE). Employees and contract types Employees include permanent, temporary, and non-guaranteed hours employees. Non-guaranteed hours employees are employed by Solar without a guarantee of a minimum or fixed number of working hours. Solar has employees in more countries and use the definitions of contract type as per the national laws of the countries where the employees are based to calculate country- level data. The country-level data are then added up to calculate total numbers, disregarding differences in national legal definitions. Employee turnover The rate of employee turnover is calculated as the aggregate of the number of employees who left voluntarily or due to dismissal, retirement, or death in service during the reporting period to the average FTEs for the reporting period. S1-6 – Characteristics of the undertaking’s employees (see consolidated financial statements, note 2.3 Staff costs, page 111) Solar A/S Annual Report 2024 79 Sustainability statements Sustainability statements - Social information - ESRS S1 S1-9 – Diversity metrics Top management Top management includes management level 1 and 2 of the organisation. Level 1 is the executive board and managers at the same organisational level as the executive board. Level 2 includes managers with staff responsibility and reporting directly to level 1 management for the Solar Group and the parent company Solar A/S (ÅRL §99b) respectively. Gender distribution, top management The aggregate number of respectively female, male, and other employees in top management to the aggregate number of all employees in top management for the Solar Group and the parent company Solar A/S (ÅRL §99b) respectively. S1-14 – Health and safety metrics People covered by health and safety management system Number of headcounts in Solar’s own workforce who are covered by a health and safety management system based on legal requirements and (or) recognised standards or guidelines to total number of headcounts. Work-related accidents for own workforce Work-related accidents arise from exposure to hazards at work including when travelling for work-related purposes and engaged in work activities in the interest of the employer. When working from home, accidents directly related to the performance of work are included. Total hours worked by own workforce The total hours worked by people in own workforce is estimated based on normal hours of work, taking into account entitlements to periods of paid leave of absence from work i.e. paid vacations, paid sick leave, or public holidays. S1-9 – Diversity metrics S1-14 – Health and safety metrics S1-16 – Remuneration metrics S1-16 – Remuneration metrics Pay The ordinary basic or minimum wage or salary and any other remuneration, whether in cash or in kind, which the worker receives directly or indirectly (‘complementary or variable components’), in respect of his/her employment from his/her employer. ‘Pay level’ means gross annual pay and the corresponding gross hourly pay. ‘Median pay level’ means the pay of the employee that would have half of the employees earn more and half less than they do. Gender pay gap Based on data for all employees, the gender pay gap is the difference of average gross hourly pay levels between male and female employees, expressed as percentage of the average gross hourly pay level of male employees. Annual total remuneration ratio The annual total remuneration ratio is the annual total remuneration of highest paid individual (CEO) to the median annual total remuneration for all employees excluding the highest-paid individual (CEO). Annual total remuneration to own workforce Annual total remuneration to own workforce includes salary, bonus, stock awards, option awards, non-equity incentive plan compensation, change in pension value, and non-qualified deferred compensation earnings provided over the course of a year. Gender distribution, top management Unit 2024 2023Number of employees in top management (men/women) Headcount 11/3 11/2Gender distribution in top management (men/women) Headcount 11/3 11/2Gender distribution in top management (men/women) % 79/21 85/15 Age distribution, employees Unit 2024Under 30 years Headcount 373Between 30 and 50 years Headcount 1,482Over 50 years Headcount 1,154Total Headcount 3,009 Health and safety Unit 2024Employees covered by health and safety management system by legal requirements % 0Fatalities in own workforce as result of work-related injuries and work-related ill health Number 0Fatalities as result of work-related injuries and work-related ill health of other workers working on undertaking's sites Number 0Recordable work-related accidents Number 33Recordable work-related accidents, rate % 5.75Cases of recordable work-related ill health of employees Number 0Days lost to work-related injuries and fatalities from work-related accidents, work-related ill health and fatalities from ill health related to employees Number 417 Pay Unit 2024 2023Gender pay gap % 23.9 -Annual total remuneration ratio Times 22.8 25.4 Accounting policies Solar A/S Annual Report 2024 80 Sustainability statements Sustainability statements - Social information - ESRS S1 Workers in the value chain The nature of our business means that we rely on our business partners and suppliers across our value chain to supply us with products and transport. We expect our business partners to support the green transition, to adhere to the same ethical standards, and to respect international human and labour rights standards and national legislation. We have identified three sub-topics through our double materiality assessment: Working conditions, equal treatment and opportunities for all, and other work-related rights. Strategy SBM-2 Interests and views of stakeholders To support a just and green transition, we expect our business partners to operate their businesses and supply chains in compliance with national laws and international labor and human rights standards. The insights gained from understanding our value chain workers’ interests, views, and rights are used as input into our strategy and business model. We aim to support a just transition by demanding decent jobs in our value chain. This includes providing fair wages, secure employment, safe working conditions, and a work environment where workers can freely express their concerns and have their right to organize. Our commitment to human rights and labor rights is outlined in our Sustainable Procurement Policy and our Supplier Code of Conduct. No actual or potential impacts on value chain workers have been identified that would impact our strategy and business model. Please see Stakeholder Engagement page 43. Our approach The workforce across our value chain may be subject to excessive working hours, forced labour, non-regulated working conditions, and health and safety risks. Such work is defined by manual work, such as heavy lifting and the operation of machinery, driving vehicles, and working unsocial hours. Although we operate in low-risk markets, with more than 99% of our tier one suppliers based in Europe, we acknowledge that it is still crucial to ensure that we reduce the risk of negative impact on workers across our value chain. Solar has over 4,000 direct material suppliers, of which 2,500 are strategic/preferred suppliers. Data from 2024 shows that 98.5% of Solar’s spend is within the EU/EES/GB region and 91% is from countries where Solar is present. Policies S2-1 Policies related to value chain workers At Solar, we aim to ensure decent jobs in our industry and provide employees with adequate wages, decent working conditions, freedom of association, no child or forced labour, secure employment, health and safety, and a working environment where workers are free to express their views and concerns. Our commitment to uphold human and labour rights is outlined in our Human Rights Policy (with the objective to ensure the protection and respect of human rights within our own operations and in interactions with our stakeholders), Sustainable Procurement Policy, and Supplier Code of Conduct. Our Human Rights Policy explicitly states that trafficking and forced and child labour are not accepted under any circumstances. The policy is aligned with the UN Guiding Principles on Business and Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work. For more information on our policies and Code of Conduct and how they address human and labour rights impact in our own operations and value chain, see section S1 Own workforce and G1 Business conduct. As Solar operates in a low-risk market and based on our history, we regard it as a low risk that our direct suppliers (tier one) will breach labour and human rights. Engaging with value chain workers S2-2 Processes for engaging with value chain workers about impacts Similar to S1, Solar is required to disclose whether severe human rights issues and incidents connected to its upstream and downstream value chain have been reported (and if applicable, to disclose these). In our frequent dealings with our business partners and through the people with whom we are in direct contact, we engage indirectly with the workforce across our value chain, thereby gaining insight into general labour conditions. Through our Supplier Engagement Programme, we assess our supplier commitment to human rights and labour. Overall accountability for supplier engagement lies with our Senior Vice President Commercial Sourcing and Services. We perform risk assessments of our suppliers to prevent or mitigate negative impacts, and we monitor and follow up on the results in collaboration with a third-party risk assessment due diligence provider. The objective is to help our suppliers improve their sustainability measures. This may be through corrective actions or through traditional supplier relationship management. Solar can report that our assessed supplier base shows an overall average increase of 5.1% year on year, measured on four parameters: the environment, labour and human rights, ethics, and sustainable procurement. Our results are verified by a third-party specialist in supplier assessment and risk management due diligence. This year, we also conducted on-site audits in collaboration with a third-party provider. These audits are conducted for selected high-risk suppliers. In the event that a supplier fails to comply with the set thresholds defined in our Sustainable Procurement Policy, a corrective action plan will be initiated, and a reassessment will be conducted. Moreover, a training programme will be assigned to suppliers that score below our human rights and labour threshold. Should a supplier fail to comply with our policies and Supplier Code of Conduct, collaboration will ultimately be terminated. Signing our Supplier Code of Conduct is mandatory. Accountability for tracking the targets set and maintaining a dialogue with our suppliers lies with our Commercial Market and Sourcing department. Solar A/S Annual Report 2024 81 Sustainability statements Sustainability statements - Social information - ESRS S2 Remediation channels to raise concerns S2-3 Processes to remediate negative impacts and channels for value chain workers to raise concerns Due to the nature of our business and to Solar operating in a low-risk zone, we have not been made aware of any incidents that have caused or contributed to a negative impact. Employees and external stakeholders are encouraged to speak up if they experience any concerns, irregularities, or illegalities on Solar’s part or within the value chain. Our whistleblower portal is hosted by an external partner and is accessible from our website. It ensures that value chain stakeholders can anonymously report any breaches without risk of retaliation, which ensures confidential access to Solar’s Executive Board. We register all submitted cases, and all cases are presented to the Board of Directors and the Executive Board for resolution under the Whistleblower Policy. We are committed to engaging with the workforce across our value chain. Through our Supplier Engagement Programme and engagement with our suppliers, we will maintain focus on their own grievance mechanism for workers and stakeholders and Solar’s whistleblower portal. See more about our Whistleblower Policy and whistleblower portal in section G1 Business Conduct. Actions S2-4 Taking action on material impacts on value chain workers, and approaches to managing material risks and pursuing material opportunities related to value chain workers, and effectiveness of those actions By following our policies and Code of Conduct and through regular and structured engagement with our contact persons in the value chain, we monitor potential risks. Working conditions, equal treatment and opportunities, and child and forced labour are integrated into our supplier risk assessment due diligence. This also applies to the selection of new suppliers. In case an incident occurs, this will be handled and tracked via our Supplier Engagement Programme. We have no record of any material risks. ● We will continue to promote awareness of our grievance mechanism to the supply chain workforce. ● We will continue to provide our suppliers with the capacity to make a positive impact on human rights issues. ● We will continue to track and measure on our targets and our engagement and look at new ways of doing so. ● We will maintain collaboration with industry and trade organisations in the countries we operate in, aiming to influence a just and inclusive workforce throughout our value chain. We have no record of any severe human rights issues and incidents connected to upstream and downstream value chain. Members of Solars’ Senior Management Team are assigned the appropriate resources to manage and operationalise material impacts through daily management. Targets S2-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities Two entity specific targets have been set based on the outcome of the DMA. The targets help us gain a better understanding of how our suppliers operate and what to be aware of to contribute to a positive work-related human rights and labour impact for the supply chain workers. Targets by 2026Unit Target 2024 2023 2022Spend undergoing risk assessement % 82 80 68 50Spend covered by Supplier Code of Conduct % 95 93 91 85 Two targets have been set in 2024 and supports our Sustainable Procurement Policy. Please see section S2-4 for which actions are implemented. Targets are set and defined by the Executive Board in collaboration with Commercial Market and Sourcing Management, who is also operationally responsible. The targets are tracked quarterly using data from our contract system and risk assessment platform. The progress is overseen by the Executive Board. The targets help us better understand how our suppliers operate and what to be aware of to contribute to a positive work-related human rights and labor impact for supply chain workers. Two targets have been set for 2024, supporting our Sustainable Procurement Policy. Please see section S2-4 for details on the implemented actions. The targets are set and defined by the Executive Board in collaboration with Commercial Market and Sourcing Management, who are also operationally responsible. They are tracked quarterly using data from our contract system and risk assessment platform. Progress is overseen by the Executive Board. Supplier Code of Conduct In 2024, 93% of Solars total spend is covered by a signed Supplier Code of Conduct. Our target is 95% by 2026. Risk assessment due diligence 80% of Solars total spend was covered by our Supplier Code of Conduct in 2024. In absolute figures, more than 1,300 documents were signed, covering 93% of the strategic/ preferred supplier spend. By 2026, our target is 82% spend coverage at group level. We expect to reach the same level locally. Solar A/S Annual Report 2024 82 Sustainability statements Sustainability statements - Social information - ESRS S2 Governance information ESRS G1 Business conduct84 Descriptor Sustainability statements 83 Solar A/S Annual Report 2024 Sustainability statements Business Conduct IRO process IRO-1 – Description of the processes to identify and assess material impacts, risks and opportunities We have identified Confirmed incidents of corruption or bribery to have a negative impact in the value chain and our own operation. The full process and methodology applied to identifying confirmed incidents can be found in the section General information. Governance ESRS 2 GOV-1 – The role of the administrative, management and supervisory bodies For information about the role of the administrative, management and supervisory bodies see the Management review page 30-37. IRO process ESRS 2 IRO-1 – Description of the processes to identify and assess material climate-related impacts, risks, and opportunities We have identified Confirmed incidents of corruption or bribery to have a negative impact primarily in the value chain but also in our own operation. The full process and methodology applied to identifying confirmed incidents can be found in the section General information. Policies ESRS-2 MDR-P Our business conduct policies include the following: ● Whistleblower Policy: Encouraging stakeholder in the value chain and own operation to report unethical breaches and practices without fear of retaliation. ● Fraud Policy: Facilitating controls for detecting and preventing fraud in the value chain and own operation, while promoting consistent behavior through guidelines and assigned responsibilities. ● Data Ethics Policy: Outlining our data ethics principles and processing methods and ensuring that Solar is committed to protecting our data with the highest ethical standards. ● Tax Policy: Managing Solars tax efficiently, ensuring compliance with laws, and conducting all business activities ethically and socially responsibly. Accountability for the implementation of the policies lies with the Executive Board and ultimately the CEO. G1-4 – Confirmed incidents of corruption or bribery Actions Upon identifying a breach, an investigation is conducted to understand the scope and nature of the violation. Based on the findings, appropriate corrective actions are taken to prevent future breaches. Employees and external stakeholders are encouraged to speak up if they experience any irregularities or illegalities on Solar’s part. We take proactive steps to ensure awareness by providing internal information on our intranet and making our whistleblower portal available on our websites. We have also implemented a Whistleblower Policy to address grievances and complaints. Additionally, we have released several other policies related to good business conduct. Our whistleblower portal is hosted by an external partner and is accessible from our website. It ensures that employees and external stakeholders can anonymously report breaches without risk of retaliation and offers confidential access to the Executive Board. If necessary, we will collaborate with regulatory bodies during investigations. All actions are actions already implemented and ongoing. Unit 2024 2023Number of convictions for violation of anti-corruption and anti-bribery laws Number 0 0Amount of fines for violation of anti-corruption and anti-bribery laws Amount 0 0 Solar A/S Annual Report 2024 84 Sustainability statements Sustainability statements - Governance information - ESRS G1 85 Sustainability statements Solar A/S Annual Report 2024 Sustainability statements - Governance information - ESRS G1 Appendix ESRS 2 Disclosure requirements and incorporation by reference ESRS 2 Sustainability due dilligence statement ESRS 2 Data points that derive from other EU legislation 87 90 91 Descriptor Sustainability statements 86 Solar A/S Annual Report 2024 Sustainability statements Disclosure requirements and incorporation by reference Disclosure requirements IRO-2 Disclosure requirements in ESRS covered by the undertaking’s sustainability statement The following tables list the ESRS 2 disclosure requirements and the seven topical standards that are material to Solar. They also provide an overview of relevant data points below the DMA threshold or additional data points otherwise considered relevant. We have omitted the disclosure requirements in the topical standards E3, S3 and S4 due to the nature of our business. The tables can be used to navigate to information relating to a specific disclosure requirement in the sustainability statements such as: ● data disclosure requirements that are incorporated by reference to either the management review or financial statement in this annual report. ● the Remuneration Policy, aiming to align the interests of the Solar’s shareholders with those of the Board of Directors and the Executive Board, and Statutory Report on Corporate Governance published as separate documents. Where we do not yet have any information related to a specific disclosure requirement, no reference is made. Disclosure requirements Section Page BP-1 General basis for preparation of the sustainability statement Sustainability statement 41 BP-2 Disclosures in relation to specific circumstances Sustainability statement 41 Data points that derive from other EU legislation Sustainability statement 91-93 GOV-1 The role of the administrative, management and supervisory bodies Management review 30-37 GOV-2 Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies Management review 31 GOV-3 Integration of sustainability-related performance in incentive schemes Management review 32 GOV-4 Statement on sustainability due diligence Sustainability statement 90 GOV-5 Risk management and internal controls over sustainability reporting Management review 32-33 SBM-1 Strategy, business model and value chain (products, markets, customers) Management review Sustainability statement 11-15 47 SBM-1 Strategy, business model and value chain (headcount by country) Financial statement 79 SBM-1 Strategy, business model and value chain (breakdown of revenue) Financial statement 108-110 SBM-2 Interests and views of stakeholders Sustainability statement 43 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model Sustainability statement 44-48 IRO-1 Description of the process to identify and assess material impacts, risks and opportunities Sustainability statement 53-54 IRO-2 Disclosure requirements in ESRS covered by the undertaking’s sustainability statement Sustainability statement 87-89 Cross-cutting standards General disclosures Solar A/S Annual Report 2024 87 Sustainability statements Sustainability statements - Appendix - ESRS 2 Disclosure requirements Section PageE4-1 Transition plan and consideration of biodiversity and ecosystems in strategy Sustainability statement 70and business modelESRS 2, SBM-3 Material impacts, risks and opportunities and their interaction with strategy and Sustainability statement 50, business model70-71ESRS 2, IRO-1 Description of processes to identify and assess material biodiversity and Sustainability statement 70ecosystem-related impacts, risks and opportunitiesE4-2 Policies related to biodiversity and ecosystems Sustainability statement 70E4-3 Actions and resources related to biodiversity and ecosystems Sustainability statement 70E4-4 Targets related to biodiversity and ecosystems Sustainability statement 70E4-5 Impact metrics related to biodiversity and ecosystems change - -E4-6 Anticipated financial effects from biodiversity and ecosystem-related risks and - 71opportunities Disclosure requirements Section PageESRS 2, IRO-1 Description of the processes to identify and assess material resource use and Sustainability statement 53-54, circular economy-related impacts, risks and opportunities72E5-1 Policies related to resource use and circular economy Sustainability statement 72E5-2 Actions and resources related to resource use and circular economy Sustainability statement 72E5-3 Targets related to resource use and circular economy Sustainability statement 72E5-4 Resource inflows Sustainability statement 72E5-5 Resource outflows Sustainability statement 73E5-6 Anticipated financial effects from resource use and circular economy-related - -impacts, risks and opportunities Disclosure requirements Section PageESRS2, GOV-3 Integration of sustainability-related performance in incentive schemes Management review 32E1-1 Transition plan for climate change Sustainability statement 61-63ESRS 2, SBM-3 Material impacts, risks and opportunities and their interaction with strategy and Sustainability statement 49, business model61-63ESRS 2, IRO-1 Description of the processes to identify and assess material climate-related Sustainability statement 53-54impacts, risks and opportunitiesE1-2 Policies related to climate change mitigation and adaptation Sustainability statement 62E1-3 Actions and resources in relation to climate change policies Sustainability statement 62-63E1-4 Targets related to climate change mitigation and adaptation Sustainability statement 63-44E1-5 Energy consumption and mix Sustainability statement 65E1-6 Gross scopes 1, 2, 3 and total GHG emissions Sustainability statement 66E1-7 GHG removals and GHG mitigation projects financed through carbon credits - -E1-8 Internal carbon pricing - -E1-9 Anticipated financial effects from material physical and transition risks and - -potential climate-related opportunities Disclosure requirements Section PageESRS 2, IRO-1 Description of the processes to identify and assess material pollution-related Sustainability statement 53-54, impacts, risks and opportunities69E2-1 Policies related to pollution Sustainability statement 69E2-2 Actions and resources related to pollution Sustainability statement 69E2-3 Targets related to pollution Sustainability statement 69E2-4 Pollution of air, water and soil Sustainability statement 69E2-5 Substances of concern and substances of very high concern - -E2-6 Anticipated financial effects from pollution-related impacts, risks and - 69opportunities Environmental standards E1 Climate change E4 Biodiversity and ecosystems E5 Resource use and circular economy E2 Pollution Solar A/S Annual Report 2024 88 Sustainability statements Sustainability statements - Appendix - ESRS 2 Disclosure requirements Section PageESRS 2, SBM-2 Interests and views of stakeholders Sustainability statement 43, 76ESRS 2, SBM-3 Material impacts, risks and opportunities and their interaction with strategy and Sustainability statement 51, business model76-78S1-1 Policies related to own workforce Sustainability statement 76S1-2 Processes for engaging with own workers and workers’ representatives about Sustainability statement 76-77impactsS1-3 Processes to remediate negative impacts and channels for own workers to raise Sustainability statement 77concernsS1-4 Taking action on material impacts on own workforce, and approaches to mitigat-Sustainability statement 77ing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actionsS1-5 Targets related to managing material negative impacts, advancing positive Sustainability statement 78impacts, and managing material risks and opportunitiesS1-6 Characteristics of the undertaking’s employees Sustainability statement 79S1-7 Characteristics of non-employee workers in the undertaking’s own operation - -S1-8 Collective bargaining coverage and social dialogue - -S1-9 Diversity metrics Sustainability statement 80S1-10 Adequate wages -S1-11 Social protection - -S1-12 Persons with disabilities - -S1-13 Training and skills development metrics - -S1-14 Health and safety metrics - 80S1-15 Work-life balance metrics - -S1-16 Compensation metrics (pay gap and total compensation) Sustainability statement 80S1-17 Incidents, complaints and severe human rights impacts - - Disclosure requirements Section PageESRS 2, SBM-2 Interests and views of stakeholders Sustainability statement 43, 81ESRS 2, SBM-3 Material impacts, risks and opportunities and their interaction with strategy and Sustainability statement 52, business model81-82S2-1 Policies related to value chain workers Sustainability statement 81S2-2 Processes for engaging with value chain workers about impacts Sustainability statement 81S2-3 Processes to remediate negative impacts and channels for value chain workers Sustainability statement 82to raise concernsS2-4 Taking action on material impacts on value chain workers, and approaches to Sustainability statement 82managing material risks and pursuing material opportunities related to value chain workers, and effectiveness of those actionsS2-5 Targets related to managing material negative impacts, advancing positive Sustainability statement 82impacts, and managing material risks and opportunities Disclosure requirements Section PageESRS 2, GOV-1 The role of the administrative, supervisory and management bodies Management review 30-37ESRS 2, IRO-1 Description of the processes to identify and assess material impacts, risks and Sustainability statement 53-54opportunitiesG1-1 Corporate culture and business conduct policies and corporate culture - -G1-2 Management of relationships with suppliers - -G1-3 Prevention and detection of corruption and bribery - -G1-4 Confirmed incidents of corruption or bribery Sustainability statement 84-85G1-5 Political influence and lobbying activities - -G1-6 Payment practices - - Sustainability standards S1 Own workforce S2 Workers in the value chain G1 Business conduct Solar A/S Annual Report 2024 89 Sustainability statements Sustainability statements - Appendix - ESRS 2 Sustainability due dilligence statement Sections in the Core elements of due dilligencesustainability statement Pagea) Embedding due diligence in governance, strategy and business model Governance information 84-85b) Engaging with affected stakeholders in all key steps of the due diligence process General information 43 Social information76-77 84-85c) Identifying and assessing adverse impacts Social information 76-78, 81-82 Governance information84-85d) Taking actions to address those adverse impacts Social information 77, 82 Governance information84-85e) Tracking the effectiveness of these efforts and communicating to stakeholders Social information 77, 82 Governance information84-85 GOV-4 Statement on due diligence The table above outlines where in our Sustainability statement you can find information about our due diligence process, detailing how we implement the main aspects and steps of this process. Solar A/S Annual Report 2024 90 Sustainability statements Sustainability statements - Appendix - ESRS 2 Data points that derive from other EU legislation Benchmark Disclosure Pillar 3 regulation EU Climate requirements Data point SFDRreferencereferencelaw reference Section PageESRS2 GOV-1 21 (d) Board gender diversity Management review 33ESRS2 GOV-1 21 (e) Percentage of board members who are independent Management review 33ESRS2 GOV-4 30 Statement on due dilligence Sustainability statement 90ESRS2 SBM-1 40 (d) i Involvement of activities related to fossil fuel activities Not material -ESRS2 SBM-1 40 (d) ii Involvement in activities related to chemical production Not material -ESRS2 SBM-1 40 (d) iii Involvement in activities related to controversial weapons paragraph Not material -ESRS2 SBM-1 40 (d) iv Involvement in activities related to cultivation and production of tobacco Not material -ESRS E1-1 14 Transition plan to reach climate neutrality by 2050 Not material -ESRS E1-1 16 (g) Undertakings excluded from Paris-aligned benchmarks Not material -ESRS E1-4 34 GHG emission reduction targets Sustainability statement 67-68ESRS E1-5 38 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) Not material -ESRS E1-5 37 Energy consumption and mix Sustainability statement 65ESRS E1-5 40-43 Energy intensity associated with activities in high climate impact sectors paragraphs Not material -ESRS E1-6 44 Gross scope 1, 2, 3 and total GHG emissions paragraph Sustainability statement 66ESRS E1-6 53-55 Gross GHG emissions intensity Sustainability statement 66ESRS E1-7 56 GHG removals and carbon credits Not material -ESRS E1-9 66 Exposure of the benchmark portfolio to climate-related physical risks Not material -ESRS E1-9 66 a Disaggregation of monetary amounts by acute and chronic physical risk Not material -ESRS E1-9 66 c Location of significant assets at material physical risk Not material -ESRS E1-9 67 c Breakdown of the carrying value of its real estate assets by energy-efficiency classes Not material -ESRS E1-9 69 Degree of exposure of the portfolio to climate related opportunities Not material -ESRS E2-4 28 Amount of each pollutant listed in Annex II of the E-PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, Not material -water and soil IRO-2 Disclosure requirements in ESRS covered by the undertaking’s sustainability statement Solar A/S Annual Report 2024 91 Sustainability statements Sustainability statements - Appendix - ESRS 2 Benchmark Disclosure Pillar 3 regulation EU Climate requirements Data point SFDRreferencereferencelaw reference Section PageESRS E3-1 9 Water and marine resources Not material -ESRS E3-1 13 Dedicated policy Not material -ESRS E3-1 14 Sustainable oceans and seas Not material -ESRS E3-4 28 (c) Total water recycled and reused Not material -3ESRS E3-4 29 Total water consumption in m per net revenue on own operations Not material -ESRS 2- IRO 1 - E4 16 (a) i - Not material -ESRS 2- IRO 1 - E4 16 (b) - Not material -ESRS 2- IRO 1 - E4 16 (c) - Not material -ESRS E4-2 24 (b) Sustainable land/agriculture practices or policies Not material -ESRS E4-2 24 (c) Sustainable oceans/seas practices or policies Not material -ESRS E4-2 24 (d) Policies to address deforestation Not material -ESRS E5-5 37 (d) Non-recycled waste Sustainability statement 74ESRS E5-5 39 Hazardous waste and radioactive waste Sustainability statement 74ESRS 2- SBM3 - S1 14 (f) Risk of incidents of forced labour Not material -ESRS 2- SBM3 - S1 14 (g) Risk of incidents of child labour Not material -ESRS S1-1 20 Human rights policy commitments Sustainability statement 76ESRS S1-1 21 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8 Sustainability statement 76ESRS S1-1 22 Processes and measures for preventing trafficking of human beings Sustainability statement 76ESRS S1-1 23 Workplace accident prevention policy or management system Sustainability statement 76ESRS S1-3 32 (c) Grievance/complaints handling mechanisms Sustainability statement 77ESRS S1-14 88 (b) Number of fatalities Sustainability statement 80ESRS S1-14 88 (c) Number and rate of work-related accidents Sustainability statement 80ESRS S1-14 88 (e) Number of days lost to injuries, accidents, fatalities or illness Sustainability statement 80ESRS S1-16 97 (a) Unadjusted gender pay gap Sustainability statement 80ESRS S1-16 97 (b) Excessive CEO pay ratio Sustainability statement 80ESRS S1-17 103 (a) Incidents of discrimination Not material - Solar A/S Annual Report 2024 92 Sustainability statements Sustainability statements - Appendix - ESRS 2 Benchmark Disclosure Pillar 3 regulation EU Climate requirements Data point SFDRreferencereferencelaw reference Section PageESRS S1-17 104 (a) Non-respect of UNGPs on Business and Human Rights and OECD Not material -ESRS 2- SBM3 – S2 11 (b) Significant risk of child labour or forced labour in the value chain Sustainability statement 81ESRS S2-1 17 Human rights policy commitments Sustainability statement 81ESRS S2-1 18 Policies related to value chain workers Sustainability statement 81ESRS S2-1 19 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines Sustainability statement 81ESRS S2-1 19 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8 Sustainability statement 81ESRS S2-4 36 Human rights issues and incidents connected to its upstream and downstream value chain Sustainability statement 81ESRS S3-1 16 Human rights policy commitments Not material -ESRS S3-1 17 Non-respect of UNGPs on Business and Human Rights, ILO principles or/and OECD guidelines Not material -ESRS S3-4 36 Human rights issues and incidents Not material -ESRS S3-4 16 Policies related to consumers and end-users Not material -ESRS S4-1 17 Non-respect of UNGPs on Business and Human Rights and OECD guidelines Not material -ESRS S4-4 35 Human rights issues and incidents Not material -ESRS G1-1 10 (b) United Nations Convention against Corruption Not material -ESRS G1-1 10 (d) Protection of whistleblowers Not material -ESRS G1-4 24 (a) Fines for violation of anti-corruption and anti-bribery Sustainability statement 84ESRS G1-4 24 (b) Standards of anti-corruption and anti-bribery Sustainability statement 84 Solar A/S Annual Report 2024 93 Sustainability statements Sustainability statements - Appendix - ESRS 2 Financial statements Consolidated nancial statements Separate financial statements Group companies’ overview Statements and reports Statements, not audited, part of Management review 95 147 183 185 192 94 Financial statements Solar A/S Annual Report 2024 Consolidated financial statements 95 Financial statements Financial statements Solar A/S Annual Report 2024 Income statement (DKK million) 2024 2023 2022 2021 2020 Revenue 12,223 13,031 13,863 12,354 11,465 Earnings before interest, tax, depreciation and amortisation (EBITDA) 646 871 1,175 911 637 Earnings before interest, tax and amortisation (EBITA) 400 648 978 727 455 Earnings before interest and tax (EBIT) 278 558 909 672 248 Financials, net -85 -90 -50 -48 -40 Earnings before tax (EBT) 192 468 858 622 300 Net profit for the year 148 348 660 531 222 Cash flow (DKK million) 2024 2023 2022 2021 2020 Cash flow from operating activities 538 855 16 783 813 Cash flow from investing activities -265 -405 -259 -191 162 Cash flow from financing activities -255 -175 -82 -515 -627 Net investments in intangible assets -154 -102 -59 -58 -50 Net investments in property, plant and equipment -101 -169 -167 -125 -25 Acquisition and divestment of subsidiaries and operations, net -10 -133 -34 0 0 Balance sheet (DKK million) 2024 2023 2022 2021 2020 Non-current assets 1,900 1,893 1,564 1,415 1,339 Current assets 4,208 4,219 4,337 3,890 3,268 Balance sheet total 6,108 6,112 5,901 5,305 4,607 Total equity 1,874 1,982 1,931 1,952 1,696 Non-current liabilities 878 908 709 435 498 Current liabilities 3,356 3,222 3,261 2,918 2,413 Interest-bearing liabilities, net 1,232 1,157 1,074 -37 128 Invested capital 3,089 3,120 2,978 1,866 1,760 Net working capital, year-end 1,693 1,907 2,205 1,259 1,109 Net working capital, average 1,831 2,193 2,010 1,363 1,322 Financial ratios (% unless otherwise stated) 2024 2023 2022 2021 2020 Revenue growth -6.2 -6.0 12.2 7.8 -1.8 Organic growth -6.3 -3.3 12.9 6.4 -1.2 Organic growth adjusted for number of working days -6.4 -2.6 12.9 5.9 -2.0 Gross profit margin 20.6 22.5 23.4 22.4 21.0 EBITDA margin 5.3 6.7 8.5 7.4 5.6 EBITA margin 3.3 5.0 7.1 5.9 4.0 EBIT margin 2.3 4.3 6.6 5.4 2.2 Effective tax rate 22.7 25.6 23.1 14.6 26.0 Net working capital (year-end NWC)/revenue 13.9 14.6 15.9 10.2 9.7 Net working capital (average NWC)/revenue 15.0 16.8 14.5 11.0 11.5 Gearing (net interest-bearing liabilities/EBITDA), no. of times 1.9 1.3 0.9 0.0 0.2 Return on equity (ROE) 8.0 18.0 34.0 29.1 13.5 Return on invested capital (ROIC) 8.3 13.2 25.5 24.6 13.8 Enterprise value/earnings before interest, tax and amortisation (EV/EBITA) 8.4 7.0 5.7 7.8 5.8 Equity ratio 29.9 31.6 32.7 36.8 36.8 Summary for the Solar Group 2020-2024 Financial statements Solar A/S Annual Report 2024 Financial statements 96 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Summary for the Solar Group Share ratios (DKK unless otherwise stated) 2024 2023 2022 2021 2020 Earnings per share outstanding (EPS) 20.68 47.51 90.37 72.72 30.42 Intrinsic value per share outstanding 250.30 264.54 264.41 267.28 232.38 Cash flow from operating activities per share outstanding 73.67 117.07 2.19 107.23 111.40 Share price 299.27 465.71 622.62 795.05 353.70 Share price/intrinsic value 1.20 1.76 2.35 2.97 1.52 Ordinary dividend per share 15.00 30.00 45.00 45.00 28.00 Extraordinary dividend per share - - - 45.00 15.00 Total dividend in % of net profit for the year (payout ratio) 72.1 63.1 49.8 123.8 141.1 Price Earnings (P/E) 14.5 9.8 6.9 10.9 11.6 Employees 2024 2023 2022 2021 2020 Average number of employees (FTEs) 2,899 3,036 3,019 2,908 2,935 Definitions Organic growth Revenue growth adjusted for enterprises acquired and sold off and any exchange rate changes. No adjustments have been made for number of working days. Organic growth adjusted for number of working days Revenue growth adjusted for enterprises acquired and sold off and any exchange rate changes and number of working days. Net working capital Inventories and trade receivables less trade payables. Return on invested capital (ROIC) Return on invested capital calculated on the basis of EBIT exclusive impairment on goodwill less tax calculated using the effective tax rate adjusted for one-off effects, if any. In all material aspects financial ratios are calculated in accordance with the Danish Finance Society’s “Recommendations & Financial Ratios”. 2020-2024 – continued Financial statements Solar A/S Annual Report 2024 Financial statements 97 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Statement of comprehensive income Notes DKK million 2024 2023 2.1, 2.2 Revenue 12,223 13,031 Cost of sales -9,702 -10,101 Gross profit 2,521 2,930 Other operating income 88 0 5.4 External operating costs -369 -399 2.3 Staff costs -1,580 -1,643 2.4 Loss on trade receivables -14 -17 Earnings before interest, tax, depreciation and amortisation (EBITDA) 646 871 2.5 Depreciation and write-down on property, plant and equipment -246 -223 Earnings before interest, tax and amortisation (EBITA) 400 648 2.5 Amortisation and impairment of intangible assets -122 -90 Earnings before interest and tax (EBIT) 278 558 3.4 Share of net profit from associates -1 0 4.5 Financial income 63 65 4.6 Financial expenses -148 -155 Earnings before tax (EBT) 192 468 2.6 Income tax -44 -120 2.7 Net profit for the year 148 348 Attributable to: Shareholders of Solar A/S 151 347 Non-controlling interests -3 1 Net profit for the year 148 348 4.3 Earnings in DKK per share outstanding (EPS) for the year 20.68 47.51 4.3 Diluted earnings in DKK per share outstanding (EPS-D) for the year 20.60 47.34 DKK million 2024 2023 Net profit for the year 148 348 Other income and costs recognised: Items that can be reclassified to the income statement Foreign currency translation adjustments of foreign subsidiaries -36 -13 Fair value adjustments of hedging instruments before tax 0 -5 Tax on fair value adjustments of hedging instruments 0 1 Other income and costs recognised after tax -36 -17 Total comprehensive income for the year 112 331 Attributable to: Shareholders of Solar A/S 115 330 Non-controlling interests -3 1 Total comprehensive income for the year 112 331 Income statement Other comprehensive income Financial statements Solar A/S Annual Report 2024 Financial statements 98 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Balance sheet As at 31 December Notes DKK million 2024 2023 Assets 3.1 Intangible assets 381 348 3.2 Property, plant and equipment 1,070 1,066 3.3 Right-of-use assets 408 440 2.6 Deferred tax assets 11 7 3.4 Investments in associates 3 4 Other non-current assets 27 28 Non-current assets 1,900 1,893 3.5 Inventories 1,888 2,029 3.6 Trade receivables 1,657 1,648 Income tax receivable 20 25 3.7 Contract assets 4 0 Other receivables 107 17 Prepayments 73 59 Cash at bank and in hand 459 441 Current assets 4,208 4,219 Total assets 6,108 6,112 Notes DKK million 2024 2023 Equity and liabilities 4.1 Share capital 736 736 Reserves -234 -198 Retained earnings 1,216 1,175 Proposed dividends for the financial year 110 219 Equity attributable to shareholders of Solar A/S 1,828 1,932 Non-controlling interests 46 50 Total equity 1,874 1,982 4.4 Interest-bearing liabilities 425 434 3.3, 4.4 Lease liabilities 284 320 2.6 Provision for deferred tax 157 143 3.8 Other provisions 12 11 Non-current liabilities 878 908 4.4 Interest-bearing liabilities 841 714 3.3, 4.4 Lease liabilities 141 130 Trade payables 1,852 1,770 Income tax payable 8 54 3.7 Contract liabilities 35 0 3.9 Other payables 462 520 Prepayments 8 13 3.8 Other provisions 9 21 Current liabilities 3,356 3,222 Liabilities 4,234 4,130 Total equity and liabilities 6,108 6,112 Financial statements Solar A/S Annual Report 2024 Financial statements 99 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Cash flow statement Notes DKK million 2024 2023 Net profit for the year 148 348 2.5 Depreciation, write-down, amortisation and impairment 368 313 Changes to provisions and other adjustments -103 5 Share of net profit from associates 1 0 4.5, 4.6 Financials, net 85 90 Income tax 44 120 4.5 Financial income, received 33 30 4.6 Financial expenses, settled -114 -106 Income tax, settled -69 -138 Cash flow before working capital changes 393 662 Working capital changes Inventory changes 113 230 Receivables changes -64 182 Non-interest-bearing liabilities changes 96 -219 Cash flow from operating activities 538 855 Investing activities 3.1 Purchase of intangible assets -154 -102 Purchase of property, plant and equipment -162 -170 Disposal of property, plant and equipment 61 1 Acquisition of associates 0 -1 5.6 Acquisition of subsidiaries and activities -10 -133 Cash flow from investing activities -265 -405 Notes DKK million 2024 2023 Financing activities 4.4, 4.6 Repayment of non-current interest-bearing debt -9 -9 4.4 Raising of non-current interest-bearing liabilities 100 150 4.4 Change in current interest-bearing debt 11 149 3.3, 4.4 Instalment on lease liabilities -137 -136 Dividends paid to shareholders of Solar A/S -219 -329 Dividends paid to non-controlling interests -1 0 Cash flow from financing activities -255 -175 Total cash flow 18 275 Cash at bank and in hand at the beginning of the year 441 166 Cash at bank and in hand at the end of the year 459 441 Financial statements Solar A/S Annual Report 2024 Financial statements 100 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Statement of changes in equity 1) Reserves for hedging transactions and reserves for foreign currency translation adjustments are recognised in the balance sheet as a total amount under reserves. DKK million Share capital Reserves for hedging transactions 1 Reserves for foreign currency translation adjustments 1 Retained earnings Proposed dividends Equity attributable to Shareholders of Solar A/S Non-controlling interests Total equity 2024 Equity as at 1 January 736 -13 -185 1,175 219 1,932 50 1,982 Foreign currency translation adjustments of foreign subsidiaries -36 -36 -36 Fair value adjustments of hedging instruments before tax 0 0 0 Tax on fair value adjustments 0 0 0 Net income recognised in equity via other comprehensive income in the statement of comprehensive income 0 0 -36 0 0 -36 0 -36 Net profit for the year 41 110 151 -3 148 Comprehensive income 0 0 -36 41 110 115 -3 112 Distribution of dividends (DKK 30.00 per share) -219 -219 -219 Distribution of dividends non-controlling interests -1 -1 Transactions with the owners 0 0 0 0 -219 -219 -1 -220 Equity as at 31 December 736 -13 -221 1,216 110 1,828 46 1,874 Financial statements Solar A/S Annual Report 2024 Financial statements 101 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Statement of changes in equity – continued DKK million Share capital Reserves for hedging transactions 1 Reserves for foreign currency translation adjustments 1 Retained earnings Proposed dividends Equity attributable to Shareholders of Solar A/S Non-controlling interests Total equity 2023 Equity as at 1 January 736 -9 -172 1,047 329 1,931 0 1,931 Foreign currency translation adjustments of foreign subsidiaries -13 -13 -13 Fair value adjustments of hedging instruments before tax -5 -5 -5 Tax on fair value adjustments 1 1 1 Net income recognised in equity via other comprehensive income in the statement of comprehensive income 0 -4 -13 0 0 -17 0 -17 Net profit for the year 128 219 347 1 348 Comprehensive income 0 -4 -13 128 219 330 1 331 Distribution of dividends (DKK 45.00 per share) -329 -329 -329 Non-controlling interests on acquisition of subsidiary 0 49 49 Transactions with the owners 0 0 0 0 -329 -329 49 -280 Equity as at 31 December 736 -13 -185 1,175 219 1,932 50 1,982 1) Reserves for hedging transactions and reserves for foreign currency translation adjustments are recognised in the balance sheet as a total amount under reserves. Financial statements Solar A/S Annual Report 2024 Financial statements 102 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Section 1 Basis for preparation Solar A/S Annual Report 2024 Financial statements 103 Financial statements Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Section 1 – Basis for preparation 1.1 General accounting policies The consolidated financial statements of Solar A/S for 2024 are presented in accordance with the International Financial Reporting Standards (IFRSs) as approved by the EU and additional Danish disclosure requirements for annual reports of listed companies and the IFRS executive order issued in accordance with the Danish Financial Statements Act. The consolidated financial statements have been prepared using the historical cost formula with the exception of derivative financial instruments and investments in equity instruments, which are measured at fair value, as well as non-current assets and groups of assets held for sale, which are measured at the lowest value of the book value before changes in classification or fair value less sales costs. The accounting policies described below have been applied consistently in the financial year and to the comparative figures. Implementation of new financial reporting standards IASB has issued a number of amendments and improvements to existing standards which have become effective in the period. These changes have no impact on Solar’s accounting policies. Presentation currency The annual report is presented in Danish kroner rounded off to the nearest 1,000,000 Danish kroner. Danish kroner is the parent company’s functional currency. used as exchange rate prevailing on the date of the transaction when this does not result in a considerably different presentation. Exchange rate differences, from translation of these entities’ equity at the beginning of the year at the balance sheet date exchange rates and in connection with the translation of income statements from the exchange rate prevailing at the date of transaction to the balance sheet date exchange rates, are recognised directly in other comprehensive income as a separate reserve for foreign currency translation adjustments. When translating investments in associates with a functional currency other than Danish kroner in the consolidated financial statement, the group’s share of comprehensive income is translated at the average exchange rates and the share of equity, including goodwill, is translated at the exchange rate on the balance sheet date. The exchange rate difference resulting from the translation of the share of foreign associates’ equity at the beginning of the year at the exchange rate on the balance sheet date and the translation of the share of comprehensive income from the average exchange rates to the exchange rate prevailing on the balance sheet date is recognised in other comprehensive income and presented in a separate reserve for foreign currency translation adjustments under equity. The cumulative currency translation adjustment is recycled to the income statement upon disposal of the investment. Translation of foreign currency items A functional currency has been set for each reporting group entity. The functional currencies are the currencies used in the primary economic environments in which each individual reporting entity operates. Transactions in other currencies than the functional currency are considered transactions in foreign currencies. Transactions in foreign currency are translated at first recognition to the functional currency at the exchange rate prevailing at the date of the transaction. Differences between the exchange rate prevailing on the date of the transaction and the exchange rate on the payment date are recognised in the income statement as items under financial income and expenses. All monetary items in foreign currencies that have not been settled on the balance sheet date are translated into the functional currencies using the exchange rates on the balance sheet date. Any difference between the exchange rate prevailing on the date of the transaction and the balance sheet date exchange rate are recognised in the income statement as items under financial income and expenses. When recognising entities with different functional currencies than Danish kroner in the consolidated financial statements, the income statements are translated at the exchange rate prevailing on the date of the transaction and balance sheet items are translated at the balance sheet date exchange rates. The average rate of exchange for the individual months is Consolidated financial statements The consolidated financial statements include the financial statements of the parent company Solar A/S and subsidiaries in which Solar A/S has power over the investee, exposure to variable returns and the ability to use its power over the investee to affect the returns. The consolidated financial statements have been prepared as an aggregation of the parent company and the individual subsidiaries’ financial statements and in accordance with the group’s accounting policies. Intercompany revenue, other intercompany operating items, intercompany balances, profit and loss from transactions between the consolidated entities as well as internal equity investments are eliminated. Solar recognises non-controlling interests in an acquired entity either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. This decision is made on an acquisition-by-acquisition basis. The accounting items of subsidiaries are included in full in the consolidated financial statements. Non-controlling interests’ share in the results and equity of subsidiaries is included in the Group’s profit/loss and equity but an allocation is shown separately in the consolidated income statement statement of other comprehensive income, balance sheet and statement of changes in equity respectively. Solar A/S Annual Report 2024 Financial statements 104 Financial statements Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Entities over which the group has significant influence but not control over operational and financial decisions are classified as associates. Significant influence typically exists when the group directly or indirectly holds more than 20% of voting rights, but less than 50%. However, for each investment an individual assessment on the classification will be performed. The assessment will be based on our part of the voting rights and our representation on Board of Directors. If such an assessment concludes that we have insignificant influence then the investment is classified as other non-current assets. The group’s share of the associates’ earnings after tax and the elimination of the proportional share of internal profit/loss is recognised in the income statement. The group’s share of the associates’ other comprehensive income is recognised in other comprehensive income. When obtaining significant influence over an entity in which the group has previously held an interest accounted for as a financial asset, the fair value as of the date when the group obtained significant influence is deemed as cost under the equity method. Statement of comprehensive income Solar A/S presents the statement of comprehensive income in two statements. An income statement and a statement of comprehensive income that show the year’s results and income that forms part of other comprehensive income. Other comprehensive income includes exchange rate adjustments, accordance with the “Recommendations and Ratios” of the Danish Finance Society. Earnings per share (EPS) and diluted earnings per share (EPS-D) are determined in accordance with IAS 33. Reporting under the ESEF regulation The Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) has introduced a single electronic reporting format for the annual financial reports of issuers with securities listed on the EU-regulated markets. The combination of XHTML format and iXBRL tags enables the annual financial reports to be read by both humans and machines, thus enhancing accessibility, analysis and comparability of the information included in the annual financial reports. The Group’s iXBRL tags have been prepared in accordance with the ESEF taxonomy, which is included in the ESEF Regulation and has been developed based on the IFRS taxonomy published by the IFRS Foundation. The line items in the consolidated financial statements are tagged to elements in the ESEF taxonomy. For financial line items that are not directly defined in the ESEF taxonomy, an extension to the taxonomy has been created. Extensions are anchored to elements in the ESEF taxonomy, except for extensions that are subtotals. adjustments of investments in associates and hedging transactions. Cash flow statement The cash flow statement shows cash flow distributed on operating, investing and financing activities for the year, changes in cash and cash equivalents, and cash at bank and in hand at the beginning and end of the year. The effect of cash flow on the acquisition and divestment of entities is shown separately under cash flow from investing activities. Cash flow from acquired entities is recognised in the cash flow statement from the date of acquisition and cash flow from divested entities is recognised until the time of divestment. Cash flow from operating activities is determined using the indirect method as earnings before tax adjusted for non-cash operating items, changes in working capital, interest received and paid, and income tax paid. Cash flow from investing activities includes payments in connection with the acquisition and sale of intangibles, property, plant and equipment and investments, and acquisition and divestment of entities. Cash flow from financing activities includes acquisition and sale of treasury shares, dividends distribution, incurrence or repayment of non-current and current interest-bearing liabilities and instalment on lease liabilities. Cash at bank and in hand includes cash holdings and deposits with banks. Financial ratios In general, financial ratios are calculated in Notes and accounting policies to the consolidated financial statements are block tagged to elements in the ESEF taxonomy included in Annex II of the Regulatory Technical Standards (RTS). If more than one element in the ESEF taxonomy corresponds to a disclosure, then the information has several tags known as multi tagging. The annual report submitted to the Danish Financial Supervisory Authority (the Officially Appointed Mechanism) consists of the XHTML document together with the technical files, all of which are included in SOLA-2024-12-31-0-en.zip Key definitions XHTML (eXtensible HyperText Markup Language) is a text-based language used to structure and mark up content such as text, images and hyperlinks in documents that are displayed in a web browser. iXBRL tags (or Inline XBRL tags) are hidden metainformation embedded in the source code of an XHTML document that enables the conversion of XHTML-formatted information into a machine-readable XBRL data record using appropriate software. A financial reporting taxonomy is an electronic dictionary of business reporting elements used to report business data. A taxonomy element is an element defined in a taxonomy that is used for the machine-readable labelling of information in an XBRL data record. Solar A/S Annual Report 2024 Financial statements 105 Financial statements Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 1.2 Significant accounting estimates and assessments 1.3 Financial risks Description of accounting policies in notes Descriptions of accounting policies in the notes form part of the overall description of accounting policies. These descriptions are found in the following notes: Note 2.1 Revenue Note 2.2 Segment information Note 2.6 Income tax Note 2.7 Net profit for the year Note 3.1 Intangible assets Note 3.2 Property, plant and equipment Note 3.3 Leases Note 3.4 Associates Note 3.5 Inventories Note 3.6 Trade receivables Note 3.7 Contract balances Note 3.8 Other provisions Note 4.1 Share capital Note 4.4 Financial instruments Note 5.1 Share-based payment When preparing the annual report in accordance with generally applicable principles, management make estimates and assumptions that affect the reported assets and liabilities. Management base their estimates on historic experience and expectations for future events. Therefore, actual results may differ from these estimates. The following estimates and accompanying assessments are deemed material for the preparation of the financial statements: • Impairment test of goodwill and software • Inventory write-down • Write-down for loss on doubtful receivables • Deferred tax assets These estimates and assessments are described in the following notes: Note 2.6 Income tax Note 3.1 Intangible assets Note 3.5 Inventories Note 3.6 Trade receivables Results and equity are affected by a range of financial risks. All financial transactions are based on commercial activities, and no speculative transactions are made. Derivative financial instruments are solely used for hedging of financial risks. The financial risks are described in the following notes: Note 3.6 Trade receivables Note 4.4 Financial instruments For description of Solar’s other business related risks and our approach to risk management, see the management’s review on pages 16-20. Solar A/S Annual Report 2024 Financial statements 106 Financial statements Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Section 2 Income statement Financial statements Solar A/S Annual Report 2024 Financial statements 107 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 2.1 Revenue Section 2 – Income statement DKK million 2024 2023Sales of goods and services 12,076 13,031Revenue from construction contracts 147 0Total revenue 12,223 13,031 Accounting policies Revenue Revenue includes goods for resale recognised in the income statement if the transfer of control to the customer according to the agreed delivery terms takes place before the end of the year and if revenue can be determined reliably. Revenue is measured exclusive VAT and duties charged on behalf of a third party. All types of discounts allowed are recognised in revenue. Revenue from construction contracts are recognized over time based on the stage of completion of the individual contract at the balance sheet date (the percentage of completion method). If a sufficiently reliable estimation of the outcome of a construction contract cannot be made, revenue corresponding to the contract expenses incurred during the period will be included if these expenses are likely to be recovered. Cost of sales Cost of sales includes the year’s purchases and change in inventory of goods for resale. This includes shrinkage and any write-down resulting from obsolescence. Financial statements Solar A/S Annual Report 2024 Financial statements 108 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 2.2 Segment information Solar’s business segments are Installation, Industry and Trade and are based on the customers’ affiliation with the segments. Installation covers installation of electrical, and heating and plumbing products, while Industry covers industry, offshore and marine, and utility and infrastructure. Trade covers special sales and other small areas. The three main segments have been identified without aggregation of operating segments. Segment income and costs include any items that are directly attributable to the individual segment and any items that can be reliably allocated to the individual segment. Non-allocated costs refer to income and costs related to joint group functions. Assets and liabilities are not included in segment reporting. Revenue and costs in the amount of DKK 147m and DKK 129m, respectively, from construction contracts recognized over time are fully allocated to the Trade segment. DKK million Installation Industry Trade Total2024Revenue 6,722 4,336 1,165 12,223Cost of sales -5,466 -3,276 -960 -9,702Gross profit 1,256 1,060 205 2,521Direct costs -272 -159 -38 -469Earnings before indirect costs 984 901 167 2,052Indirect costs -439 -232 -47 -718Segment profit 545 669 120 1,334Non-allocated costs -688Earnings before interest, tax, depreciation and amortisation (EBITDA) 646Depreciation and amortisation -368Earnings before interest and tax (EBIT) 278Financials, net incl, share of net profit from associates and impairment on associates -86Earnings before tax (EBT) 192 Accounting policies The reporting on business segments follows the structure of Solar’s internal management reporting to chief operating decision makers, the group Executive Board. The group Executive Board uses business segmentation when allocating resources and following up on results. Furthermore, Solar presents the geographical distribution of revenue and non-current assets divided on Denmark, Sweden, Norway, the Netherlands, Poland, and Other markets. The geographical distribution is based on the business units operating in these geographical areas. MAG45 and Thermonova A/S are included in the operating segment Industry, while Højager Belysning and Solar Polaris are included in the operating segment Trade. Financial statements Solar A/S Annual Report 2024 Financial statements 109 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 2.2 Segment information – continued Geographical information Solar A/S primarily operates on the Danish, Swedish, Norwegian and Dutch markets. In the below table, Other markets covers the remaining markets, which can be seen in the companies overview available on page 183. The below allocation has been made based on the products’ place of sale. Revenue and costs in the amount of DKK 147m and DKK 129m, respectively, from construction contracts recognized over time are fully allocated to the Danish market. Adjusted organic EBITDA Non-current DKK million Revenuegrowth EBITDAmarginassets2024Denmark 4,071 -1.8 289 7.1 835Sweden 2,121 -12.0 123 5.8 291Norway 1,841 -6.4 72 3.9 203The Netherlands 2,740 -12.9 106 3.9 396Poland 417 -2.2 2 0.5 50Other markets 1,033 6.7 54 5.2 125Solar Group 12,223 -6.4 646 5.3 1,900 Adjusted organic EBITDA Non-current DKK million Revenuegrowth EBITDAmarginassets2023Denmark 4,138 -6.4 366 8.8 899Sweden 2,400 -2.8 155 6.5 214Norway 2,010 2.4 135 6.7 225The Netherlands 3,119 -4.5 156 5.0 421Poland 405 -8.9 9 2.2 48Other markets 959 15.2 50 5.2 86Solar Group 13,031 -2.6 871 6.7 1,893 DKK million Installation Industry Trade Total2023Revenue 7,293 4,522 1,216 13,031Cost of sales -5,764 -3,366 -971 -10,101Gross profit 1,529 1,156 245 2,930Direct costs -270 -157 -38 -465Earnings before indirect costs 1,259 999 207 2,465Indirect costs -465 -235 -54 -754Segment profit 794 764 153 1,711Non-allocated costs -840Earnings before interest, tax, depreciation and amortisation (EBITDA) 871Depreciation and amortisation -313Earnings before interest and tax (EBIT) 558Financials, net incl, share of net profit from associates and impairment on associates -90Earnings before tax (EBT) 468 Financial statements Solar A/S Annual Report 2024 Financial statements 110 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 2.3 Staff costs DKK million 2024 2023Salaries and wages etc. 1,292 1,351Pensions, defined contribution 118 115Costs related to social security 165 167Share-based payment 5 10Total 1,580 1,643 Average number of employees (FTEs) 2,899 3,036 Number of employees at year-end (FTEs) 2,895 2,990Remuneration of Board of DirectorsRemuneration of Board of Directors 4 4Remuneration of Executive BoardSalaries and wages etc. 17 23Share-based payment 1 3Total 18 26 Terms of notice for members of the Executive Board is 12 months. When stepping down, the members of the Executive Board are entitled to 12 (6) months’ remuneration. Financial statements Solar A/S Annual Report 2024 Financial statements 111 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 2.4 Loss on trade receivables 2.5 Depreciation, write-down, amortisation and impairment Relevant accounting policies are described in note 3.1, intangible assets, and note 3.2, property, plant and equipment, and note 3.3, Leases. DKK million 2024 2023Recognised losses 22 21Received on trade receivables previously written off -3 -119 20Change in write-down for bad and doubtful debts -5 -3Total 14 17 DKK million 2024 2023Buildings 38 30Plant, operating equipment, tools and equipment 56 51Leasehold improvements 8 6Tenancy, lease 105 99Cars, lease 27 26IT equipment, lease 10 9Technical equipment, lease 2 2Total depreciation and write-down on property, plant and equipment 246 223Customer-related assets 7 7Software 65 61Impairment on intangible assets 50 22Total amortisation and impairment of intangible assets 122 90 Relevant accounting policies are described in note 3.6, trade receivables. Financial statements Solar A/S Annual Report 2024 Financial statements 112 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 2.6 Income tax DKK million 2024 2023Current tax 31 110Deferred tax 10 10Tax on profit for the year 41 120Tax on taxable profit previous year 3 9Adjustment of deferred tax for previous years 0 -9Total 44 120Statement of effective tax rate:Danish income tax rate 22.0% 22.0%Tax base change for non-capitalised loss in subsidiaries -2.4% 0.0%Non-taxable/deductible items in parent company 0.8% 2.2%Non-taxable/deductible items and differing tax rates compared to Danish tax rate in foreign subsidiaries 0.7% 1.2%Tax for previous years 1.6% 0.2%Effective tax rate 22.7% 25.6%Income tax settledDenmark 24 36Sweden -2 23Norway 21 31The Netherlands 21 38Poland -2 5Other countries 7 5Total 69 138 Accounting policies Tax for the year is recognised with the share attributable to results for the year in the income statement and with the share attributable to other recognised income and costs in the statement of comprehensive income. Tax consists of current tax and changes to deferred tax. Current tax liabilities and current tax receivables are recognised in the balance sheet as calculated tax on the year’s taxable income, adjusted for tax on previous year’s taxable income and for tax paid on account. Solar Group has applied the mandatory temporary relief from deferred tax accounting for global minimum taxes introduced by Pillar Two. Due to transitional safe harbour, exposure to Pillar Two was also analysed in all jurisdictions of Solar Group and there is no material top-up tax exposure based on financial year 2024 data. Financial statements Solar A/S Annual Report 2024 Financial statements 113 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 2.6 Income tax – continued DKK million 2024 2023Provision for deferred tax1/1 136 124Foreign currency translation adjustments -1 0Acquired or divested enterprises 0 12Recognised in other comprehensive income 0 -1Ordinary tax recognised in income statement 10 1Other items 1 0Total 31/12 146 136Specified as follows:Deferred tax liabilities 157 143Deferred tax assets -11 -7Total deferred tax, net 146 136Further specified as follows:Expected use within 1 year -4 6Expected use after 1 year 150 130Total, net 146 136Not recognised in balance sheet:Deferred tax assets 32 29 Deferred tax assets not recognised in the balance sheet are the part of tax losses where it is not considered sufficiently certain that the tax losses can be realised within a short time frame. Non-recognised tax assets can in all material respects be attributed to tax losses in the Netherlands, where the non-recognised tax assets may be exercised with no maturity date. In addition, deferred tax assets not recognised in the balance sheet of Claessen ELGB NV (activity divested in 2018) and Solar Deutschland GmbH (activity divested in 2015) amounted to DKK 77m (DKK 79m) at the end of the period. Accounting policies Deferred tax is measured in accordance with the balance sheet liability method of all temporary differentials between accounting and tax-related amounts and provisions. Deferred tax is recognised at the local tax rate that any temporary differentials are expected to be realised at based on the adopted or expected adopted tax legislation on the balance sheet date. Deferred tax assets, including the tax value of tax loss allowed for carryforward, are measured at the value at which the asset is expected to be realised, either by elimination in tax of future earnings or by offsetting against deferred tax liabilities. Deferred tax assets are assessed annually and only recognised to the extent that it is probable that they will be utilised. Deferred tax is also recognised for the covering of the retaxation of losses in former foreign subsidiaries participating in joint taxation assessed as becoming current. Accounting estimates and assessments Deferred tax assets Deferred tax assets are not recognised if it is not deemed sufficiently safe that these can reduce future taxable income. In this connection, management assess expected future taxable income. Financial statements Solar A/S Annual Report 2024 Financial statements 114 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 2.6 Income tax – continued Foreign currency Acquired or Recognised in other Ordinary tax translation divested comprehensive recognised in DKK million 2023adjustmentsenterprisesincomeincome statement 2024Provision for deferred tax - continuedProperty, plant and equipment 64 0 0 0 9 73Inventories -4 0 0 0 -1 -5Receivables -2 0 0 0 -3 -51Other items78 0 0 0 5 83Total, net 136 0 0 0 10 146 1) Other items particularly cover intangible assets and loss balances in jointly taxed entities. Financial statements Solar A/S Annual Report 2024 Financial statements 115 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 2.7 Net profit for the year DKK million 2024 2023Proposed distribution of net profit for the year:Proposed dividends, parent 110 219Retained earnings 41 128Net profit for the year 151 3471Ordinary dividends in DKK per share of DKK 10015.00 30.00 1) Calculations are based on proposed dividends. Accounting policies Dividends Proposed dividends are recognised as a liability at the time of adoption of the general meeting. Financial statements Solar A/S Annual Report 2024 Financial statements 116 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Section 3 Invested capital Financial statements Solar A/S Annual Report 2024 Financial statements 117 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.1 Intangible assets Section 3 – Invested capital Customer-relatedDKK million Goodwillassets Software Total2024Cost 1/1 122 291 828 1,241Foreign currency translation adjustment 0 -3 1 -2Additions during the year 0 0 154 154Abandoned assets during the year 0 0 -323 -323Cost 31/12 122 288 660 1,070Amortisation 1/1 0 253 640 893Foreign currency translation adjustment 0 -3 0 -3Amortisation during the year 0 7 65 72Impairments during the year 47 0 3 50Amortisation of abandoned assets 0 0 -323 -323Amortisation and impairment 31/12 47 257 385 689Carrying amount 31/12 75 31 275 381Remaining amortisation period in number of years - 1-6 1-8 - Accounting policies Goodwill Goodwill is initially recognised in the balance sheet as the positive balance between the acquisition consideration of an enterprise on one side and the fair value of the assets, liabilities and contingent liabilities acquired on the other side. In cases of measurement uncertainty, the goodwill amount can be adjusted until 12 months after the date of the acquisition. Goodwill is not amortised but an impairment test is done annually. The first impairment test is done by the end of the year of acquisition. Subsequently, goodwill is measured at this value less accumulated impairment losses. On acquisition, goodwill is assigned to the cashgenerating units that form the basis of the impairment test subsequently. The determination of cashgenerating units follows the managerial structure and management control. Customer-related intangible assets Customer-related intangible assets acquired in connection with business combinations are measured at cost less accumulated amortisation and impairment loss. Customer-related intangible assets are amortised using the straight-line principle over the expected useful life. Typically, the amortisation period is 5-7 years. Software Software is measured at cost less accumulated amortisation and impairment. Cost includes both direct internal and external costs. Software is amortised using the straight-line principle over 4-8 years. The basis of amortisation is reduced by any impairment. Financial statements Solar A/S Annual Report 2024 Financial statements 118 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.1 Intangible assets – continued Customer-relatedDKK million Goodwillassets Software Total2023Cost 1/1 0 245 733 978Foreign currency translation adjustment 0 4 -1 3Acquired enterprises 122 42 0 164Additions during the year 0 0 102 102Abandoned assets during the year 0 0 -6 -6Cost 31/12 122 291 828 1,241Amortisation 1/1 0 222 583 805Foreign currency translation adjustment 0 4 0 4Amortisation during the year 0 7 61 68Impairments during the year 0 20 2 22Amortisation of abandoned assets 0 0 -6 -6Amortisation and impairment 31/12 0 253 640 893Carrying amount 31/12 122 38 188 348Remaining amortisation period in number of years - 1-7 1-8 - Accounting policies Impairment of intangible assets The carrying amount of intangible assets other than goodwill is assessed annually to determine whether there is any indication of impairment. When such an indication is present, the asset’s recoverable amount is calculated, which is the highest of the asset’s fair value less expected costs of disposal or value in use. Value in use is calculated as the present value of expected cash flow from the smallest cash-generating unit to which the asset belongs. Impairment loss is recognised when the carrying amount of an asset exceeds the asset’s recoverable amount. Impairment loss is recognised in the income statement. Impairment loss relating to goodwill is not reversed. Impairment on other intangible assets are reversed to the extent that changes have been made to the assumptions and estimates that led to the write-down. Accounting estimates and assessments Impairment test for goodwill In connection with the annual impairment test of goodwill, or when there is an indication of impairment, an estimate is made of how the parts of the business (cash-generating units), that goodwill is linked to, will be able to generate sufficient positive cash flow in future to support the value of goodwill and other net assets in the relevant part of the business. Due to the nature of the business, estimates must be made of expected cash flow for many years ahead which, naturally, results in a certain level of uncertainty. This uncertainty is reflected in the discount rate determined. The impairment test and the very sensitive related aspects are described in more detail in the comments section. Software Software is evaluated annually for indicators of a need for impairment. If a need to perform impairment is identified, an impairment test for the software is performed. The impairment test is made on the basis of different factors, including the software’s future application, the present value of the expected cost saving as well as interest and risks. Financial statements Solar A/S Annual Report 2024 Financial statements 119 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.1 Intangible assets – continued Goodwill, customer-related assets and other intangible assets Management has completed the impairment test of the carrying amount of goodwill. The impairment test was based on our SOLVE strategy, estimates and expectations as well as other assumptions approved by the Executive Board and the Board of Directors with the necessary adjustments under IAS 36. When performing an impairment test of cash generating units, the recoverable amount (value in use), determined as the discounted value of the expected future cash flow, is compared to the carrying amounts of the individual cash- generating units. Overall, impairment tests made are based on the budget for 2025 and strategy for 2024-2026 approved by the Executive Board and Board of Directors. A budget period of 6 years has been applied to ensure that the entire impact from the different initiatives is included. This reduces also the dependency of the terminal value and thereby also part of the volatility. When preparing budgets and expectations for the next 6 years, risks of the material parameters have been assessed and recognized in future expected cash flow. Management’s final assessment of the impairment tests made is based on an assessment of probable changes to the basic assumptions and that these will result in that the carrying amount of cash generating units is exceeding the recoverable amount. Thermonova A/S The carrying amount of goodwill of DKK 122m result from the acquisition of the Danish enterprise Thermonova A/S, which is considered a cash- generating unit for impairment test of goodwill. The impairment test is based on the expectations to the development in future cash flows for the three areas: Denmark, other countries where Solar operates and other international areas (mainly UK). The growth rate used in the impairment test is 87% for 2025 and 74% in 2026, since Thermonova A/S only is in the initial phase of establishing in other Solar countries and Thermonova International. The growth rate used in impairment tests for the years succeeding 2026 is decreasing to a range between 3.9% - 16.6%. The estimated gross margin percentage in 2025 is also expected to be in the same range for 2026- 2030. Terminal value after 6 years is determined while taking general expectations for growth into consideration. Expected growth is by considerations of realistic assumptions determined at 2%. Of the total value approx. 76% is based on the terminal value. The discount rate (WACC) used to calculate the recoverable amount is 9.5% to compensate for the risk. The development of Thermonova A/S is positive, but the uncertainties are higher than Solar A/S in general, as they are more premature which is the reason for the chosen discount rate. Despite the expected increase in EBITDA, this will result in the carrying amount of the cash generating units exceeding the recoverable amount. In the most likely scenario, the impairment tests completed shows indications of a need for write-down of the goodwill, amounting to DKK 47m out of the DKK 122m in total carrying amount of goodwill. The recovery amount of the cash generating units is DKK 124m for Solar’s share. If the WACC used is increased with 1 percentage point, this reduces Solar’s share of the recovery amount with additional DKK 14m, whereas a reduction with 1 percentage point in the WACC used will increase Solar’s share of the recovery amount with DKK 18m. Thermonova A/S is a part of the Industry segment. Solar A/S Annual Report 2024 Financial statements 120 Financial statements Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.2 Property, plant and equipment Plant, operating equipment, Land and tools and Leasehold Assets under DKK millionbuildingsequipmentimprovementsconstruction Total2024Cost 1/1 1,249 562 59 125 1,995Foreign currency translation adjustment -10 -7 -1 0 -18Additions during the year 91 66 13 128 298Disposals during the year -111 -15 0 -136 -262Cost 31/12 1,219 606 71 117 2,013Write-down and depreciation 1/1 527 365 37 0 929Foreign currency translation adjustments -4 -7 0 0 -11Depreciation during the year 38 56 8 0 102Write-down and depreciation of disposed assets -63 -14 0 0 -77Write-down and depreciation 31/12 498 400 45 0 943Carrying amount 31/12 721 206 26 117 1,070 Accounting policies Property, plant and equipment Land and buildings as well as other plant, operating equipment, and tools and equipment are measured at cost less accumulated depreciation and write-down. Cost includes the purchase price and costs directly attributable to the acquisition until the time when the asset is ready for use. Cost of a combined asset is disaggregated into separate components which are depreciated separately if the useful lives of the individual components differ. Subsequent expenditure, for example in connection with the replacement of components of property, plant or equipment, is recognised in the carrying amount of the relevant asset when it is probable that the incurrence will result in future economic benefits for the group.The replaced components cease to be recognised in the balance sheet and the carrying amount is transferred to the income statement. All other general repair and maintenance costs are recognised in the income statement when these are incurred. Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives which are: • Buildings 40 years • Technical installations 20 years • Plant, operating equipment, and tools and equipment 2-5 years There are a few differences from the mentioned depreciation periods in which useful life is estimated as shorter. Leasehold improvements are depreciated over the lease term, however, maximum 5 years. Land is not depreciated. Financial statements Solar A/S Annual Report 2024 Financial statements 121 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.2 Property, plant and equipment – continued Plant, operating equipment, Land and tools and Leasehold Assets under DKK millionbuildingsequipmentimprovementsconstruction Total2023Cost 1/1 1,208 561 57 7 1,833Foreign currency translation adjustment -5 -3 -1 0 -9Acquired enterprises 24 0 0 0 24Additions during the year 23 21 8 134 186Disposals during the year -1 -17 -5 -16 -39Cost 31/12 1,249 562 59 125 1,995Write-down and depreciation 1/1 501 333 36 0 870Foreign currency translation adjustments -3 -2 -1 0 -6Write-down and depreciation during the year 30 51 6 0 87Write-down and depreciation of abandoned assets -1 -17 -4 0 -22Write-down and depreciation 31/12 527 365 37 0 929Carrying amount 31/12 722 197 22 125 1,066 Accounting policies The basis of depreciation is determined in consideration of the asset’s residual value and reduced by any impairment. Residual value is determined at the time of acquisition and reassessed annually. If residual value exceeds the asset’s carrying amount, depreciation will cease. By changing the depreciation period or residual value, the effect of future depreciation is recognised as a change to accounting estimates. Impairment of property, plant and equipment The carrying amount of property, plant and equipment is assessed annually to determine whether there is any indication of impairment. When such an indication is present, the asset’s recoverable amount is calculated, which is the highest of the asset’s fair value less expected costs of disposal or value in use. Value in use is calculated as the present value of expected cash flow from the smallest cash flow-generating unit to which the asset belongs. Impairment loss is recognised when the carrying amount of an asset exceeds the asset’s recoverable amount. Impairment loss is recognised in the income statement. Write-down on property, plant and equipment is reversed to the extent that changes have been made to the assumptions and estimates that led to the write-down. Financial statements Solar A/S Annual Report 2024 Financial statements 122 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.3 Leases Right-of-use assetsIT Technical Other DKK million Tenancy Carsequipmentequipmentequipment Total2024Cost 1/1 620 120 50 10 0 800Foreign currency translation adjustment -14 0 0 0 0 -14Additions during the year 82 30 10 0 0 122Disposals during the year -38 -26 -14 -1 0 -79Cost 31/12 650 124 46 9 0 829Write-down and depreciation 1/1 264 66 25 5 0 360Foreign currency translation adjustments -5 0 0 0 0 -5Write-down and depreciation during the year 105 27 10 2 0 144Write-down and depreciation of abandoned assets -38 -25 -14 -1 0 -78Write-down and depreciation 31/12 326 68 21 6 0 421Carrying amount 31/12 324 56 25 3 0 408 Accounting policies Right-of-use assets Right-of-use assets are lease assets arising from a lease agreement. Lease assets are initially measured at cost consisting of the amount of the initial measurement of the lease liability with addition of lease payments made to the lessor at or before the commencement date less any lease incentives received. Five different types of leases have been identified: • Tenancy • Cars • IT equipment • Technical equipment • Other equipment The lease assets are depreciated on a straight-line basis over the lease term. The carrying amount of the right-of-use asset can be adjusted due to modifications to the lease agreement or in special cases reassessment of the lease term. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the income statement. Short-term leases are leases with a term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture of a value below DKK 37,000. Financial statements Solar A/S Annual Report 2024 Financial statements 123 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.3 Leases – continued ITTechnical Other DKK million Tenancy Carsequipmentequipmentequipment Total2023Cost 1/1 514 104 23 8 1 650Foreign currency translation adjustment -6 1 0 0 0 -5Additions during the year 140 31 27 3 0 201Disposals during the year -28 -16 0 -1 -1 -46Cost 31/12 620 120 50 10 0 800Write-down and depreciation 1/1 192 54 16 4 1 267Foreign currency translation adjustments 0 0 0 0 0 0Write-down and depreciation during the year 99 26 9 2 0 136Write-down and depreciation of abandoned assets -27 -14 0 -1 -1 -43Write-down and depreciation 31/12 264 66 25 5 0 360Carrying amount 31/12 356 54 25 5 0 440 Financial statements Solar A/S Annual Report 2024 Financial statements 124 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Short-term lease liabilities DKK million 2024 2023Maturity < 1 year 141 130Short-term lease liabilities 31/12 141 130 Long-term lease liabilities DKK million 2024 2023Maturity > 1 year < 5 years, undiscounted 288 312Maturity > 5 years, undiscounted 17 28Long-term lease liabilities 31/12, undiscounted 305 340Discounting on lease liabilities > 1 year < 5 years -19 -18Discounting on lease liabilities > 5 years -2 -2Long-term lease liabilities 31/12 284 320Amounts recognised in the income statementDepreciation of right-of-use assets 144 136Interest expense on lease liabilities 15 12Expense relating to short-term leases 2 3Expense relating to leases of low-value items 2 2Expense relating to variable lease payments not included in the measurement of lease liabilities 7 7Total 170 160Cash outflows for leasesInstalment on lease liabilities -137 -136Interest payments -15 -12Total cash outflows for leases -152 -148 3.3 Leases – continued Future cash outflows not recognised as lease liabilities in the balance sheet amount to DKK 4m (DKK 0m) regarding signed but not yet started lease contracts on rent of premises. Extension options regarding lease contracts on rent of premises, which are not recognised in the balance sheet amount to DKK 49m (DKK 43m). Accounting policies Lease liabilities Lease liabilities arise from a lease agreement. Lease liabilities are initially measured at the present value of the lease payments during the non-cancellable lease period with addition of periods covered by an option to extend the lease if exercise of the option is considered reasonably certain on inception of the lease. At initial recognition, each contract is assessed individually to assess the likelihood of exercising a potential extension option in the contract. The option to extend the contract period will be included in measuring the lease liability if it is reasonably certain that Solar will exercise the option. When calculating the net present value, a discount rate corresponding to Solar’s incremental borrowing rate has been used. The lease liability will be remeasured when changes occur due to modifications to the contract (extension, termination etc.), indexation or in special cases reassessment of the lease term. Financial statements Solar A/S Annual Report 2024 Financial statements 125 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.4 Investments in associates 1 Investments in associates, DKK million 2024 2023Cost 1/1 9 21Foreign currency translation adjustment 0 -1Additions during the year 0 1Disposals during the year 0 -12Cost 31/12 9 9Adjustments 1/1 -5 -17Foreign currency translation adjustment 0 0Profit from associates -1 0Disposals during the year 0 12Value adjustment 31/12 -6 -5Carrying amount 31/12 3 4 1) Associates include the following investments: • Monterra where Solar owns 30.0% • Zolw where Solar owns 35.0% • Edison Data AS in the course of formation where Solar owns 25.0% Accounting policies Investment in associates Investments in associates are accounted for by using the equity method of accounting, by which the investments are measured at the proportional share of the entities’ equity determined according to the group’s accounting policies reduced by the proportional share of unrealised gains on transaction between the group and the associates and increased by goodwill determined as of the date when the investment became an associate. Investments in associates are tested for impairment when there is an indication of impairment. Associates with a negative equity are accounted for at DKK 0. If the group has a legal or actual obligation to cover the negative balance of the associate, this obligation is recognised under liabilities. Financial statements Solar A/S Annual Report 2024 Financial statements 126 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.5 Inventories DKK million20242023End products 1,888 2,029Recognised write-down -9 9 Accounting policies Inventories are measured at cost according to the FIFO method or at net realisable value, if this is lower. Cost of inventories includes purchase price with addition of delivery costs. The net realisable value of inventories is determined as selling price less costs incurred to make the sale and is determined in consideration of marketability, obsolescence and development of expected selling price. Accounting estimates and assessments Write-down of inventories Write-down of inventories is made due to the obsolescence of products. Management specifically assess inventories, including the products’ turnover rate, current economic trends and product development when deciding whether the write-down is sufficient. Financial statements Solar A/S Annual Report 2024 Financial statements 127 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.6 Trade receivables 1 DKK million 2024 2023Maturity statement, trade receivablesNot due 1,506 1,481Past due for 1-30 day(s) 139 165Past due for 31-90 days 19 24Past due for 91+ days 21 111,685 1,681Write-down -28 -33Total 1,657 1,648Write-down based on:Age distribution 11 13Individual assessment 17 20Total 28 33Write-down 1/1 33 36Foreign currency translation adjustment 0 0Write-down for the year 10 17Losses realised during the year -11 -11Reversed for the year -4 -9Write-down 31/12 28 33 1) A factoring arrangement on non-recourse conditions is established with a few major customers. As a result trade receivables is reduced with approx. DKK 103m (DKK 113m). Accounting policies Trade receivables are measured at fair value at acquisition and at amortised cost subsequently. Based on an individual assessment of the loss risk, including a statistical based model, write-down to amortised cost less expected credit losses is made, if this is lower. Accounting estimates and assessments Write-down for meeting of loss on doubtful trade receivables The IFRS 9 simplified approach is applied to measure expected credit losses, which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past invoicing. As the vast majority of our group companies generally takes out insurance to hedge against loss to the extent possible, the write-down based on age distribution amounts to less than 0.7% (0.8%) of gross trade receivables. Individual assessment of write-down is performed by management specifically analysing trade receivables, including the customers’ credit rating and current economic trends to ensure that write-down is sufficient. Write-down based on individual assessment amounts to 1.0% (1.2%) of gross trade receivables. As the total write-down on trade receivables amounts to less than 1.7% (2%) of gross trade receivables, no maturity statement of the write-down is included. However, the majority of the provision relates to receivables overdue by more than 30 days (30 days). Financial risks Credit risk Solar is subject to credit risks in respect of trade receivables and cash at bank. No credit risk is deemed to exist in respect of cash as the counterparts are banks with good credit ratings. As a result of customer diversification, trade receivables are distributed so that there is no significant concentration of risk. Credit granting to customers is regarded as a natural and important element in Solar’s business operations. Solar conducts efficient credit management at all times. The vast majority of our group companies generally takes out insurance to hedge against loss to the extent possible. As a result, 64% (70%) of trade receivables is covered by insurance. Loss due to credit granting is considered a normal business risk and, therefore, will occur. Financial statements Solar A/S Annual Report 2024 Financial statements 128 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.7 Contract balances DKK million 2024 2023Contract Contract Contract Contract Significant changes in the contract balancesassetsliabilitiesassetsliabilitiesContract balances at 1/1 0 0 0 0Changes due to cash received, excluding amounts recognized as revenue during the period 0 0 0 0Increases as a result of changes in the measure of progress and deliveries 4 35 0 0Contract balances at 31/12 4 35 0 0 Accounting policies When the outcome of a construction contract can be reliably estimated, the construction contract is measured at the selling price of the work performed up until the balance sheet date (percentage of completion method) less the on account invoicing and write-down for expected credit losses. The selling price is measured on the basis of the stage of completion at the balance sheet date and the total expected revenue on the individual construction contract. The stage of completion of the individual project is usually calculated as the proportion of actually consumed resources compared to the total estimated consumption of resources. For individual projects where the consumption of resources cannot be used as a basis, the proportion of the finalised sub-activities compared to the total project is used. The individual ongoing construction contract is included in the balance sheet under contract assets or contract liabilities, depending on whether the net value is a receivable or a liability. Financial statements Solar A/S Annual Report 2024 Financial statements 129 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.8 Other provisions DKK million 2024 2023Non-currentOther provisions 12 11Total 31/12 12 11Specification, non-current1/1 11 9Reversed during the year -2 0Provisions of the year 3 2Total 31/12 12 11CurrentOther provisions 9 21Total 31/12 9 21Specification, current1/1 21 17Reversed during the year -21 -11Provisions of the year 9 15Total 31/12 9 21 Financial statements Solar A/S Annual Report 2024 Financial statements 130 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 3.9 Other payables DKK million 2024 2023Staff costs 205 260Taxes and charges 144 137Interest rate swaps 17 17Other payables 96 106Total 462 520 Relevant accounting policies for derivative financial instruments are described in note 4.4 Financial instruments. Financial statements Solar A/S Annual Report 2024 Financial statements 131 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Section 4 Capital structure and financing costs Financial statements Solar A/S Annual Report 2024 Financial statements 132 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 4.1 Share capital Section 4 – Capital structure and financing costs DKK million 2024 2023Share capital 1/1 736 736Change in share capital 0 0Share capital 31/12 736 736Share capital is fully paid in and divided into the following classes:A shares, 900,000 at DKK 100, 10 votes per share 90 90B shares, 6,460,000 at DKK 100, 1 vote per share 646 646Total 736 736 Number of shares Nominal value 2024 2023 2024 2023A shares outstanding 31/12 900,000 900,000 90 90B shares outstandingOutstanding 1/1 6,403,187 6,403,187 640 640Divestment of treasury shares 0 0 0 0B shares outstanding 31/12 6,403,187 6,403,187 640 640Total shares outstanding 31/12 7,303,187 7,303,187 730 730 Accounting policies Treasury shares Acquisition and disposal sums related to treasury shares are recognised directly in transactions with the owners. 4.2 Treasury sharesNominal value CostPercentage Treasury shares (B shares) Number of shares(DKK million)(DKK million)of share capital2024 2023 2024 2023 2024 2023 2024 2023Holding 1/1 56,813 56,813 6 6 22 22 0.7% 0.7%Divestment 0 0 0 0 0 0 0.0% 0.0%Holding 31/12 56,813 56,813 6 6 22 22 0.7% 0.7% All treasury shares are held by the parent company in order to cover the Executive Board’s incentive schemes. Financial statements Solar A/S Annual Report 2024 Financial statements 133 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 4.3 Earnings per share in DKK per share outstanding for the year 2024 2023Net profit for the year in DKK million 148 348Average number of shares 7,360,000 7,360,000Average number of treasury shares -56,813 -56,813Average number of shares outstanding 7,303,187 7,303,187Dilution effect of restricted share units 27,349 26,021Diluted number of shares outstanding 7,330,536 7,329,208Earnings per share in DKK per share outstanding for the year 20.68 47.51Diluted earnings per share in DKK per share outstanding for the year 20.60 47.34 Financial statements Solar A/S Annual Report 2024 Financial statements 134 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Fair value of Solar’s respective interest-bearing liabilities is seen as fair value measurement at level 2. Mortgage loans are valued based on underlying securities, while bank debt is calculated based on models for discounting to net present value. Non-observable market data is primarily made up of credit risks, which are seen as insignificant in Solar’s case. The fair value of Solar’s interest rate instrument is measured as fair value measurement at level 2, since fair value can be determined directly based on the actual forward rates and instalments on the balance sheet date. Outstanding interest rate swaps for hedging of floating-rate loans expire over the period until 2037 (2037). 4.4 Financial instruments Financial assets and financial liabilitiesDKK million Interest rate 2024 20231Debt to mortgage credit institutions Fixed187 1951Bank loans and overdrafts Fixed249 250Lease liabilities Calculated 425 450Bank loans and overdrafts Floating 830 702Interest-bearing liabilities 1,691 1,5972Trade payables1,852 1,770Other payables etc. 462 520Financial liabilities 4,005 3,887Cash at bank and in hand 459 441Trade receivables 1,657 1,648Other receivables 204 101Financial assets 2,320 2,190Total, financial balance sheet items, net 1,685 1,697 1) Interest swaps have been used to hedge floating-rate loans, converting these loans to fixed-rate loans. 2) Solar participates in supplier financing arrangement with a few suppliers. As a result trade payables are increased with approx. DKK 141m (DKK 140m). Accounting policies Financial liabilities Debt to bank and credit institutions is recognised initially at fair value that corresponds to the proceeds received net of transaction costs incurred. In subsequent periods, the financial liabilities are measured at amortised cost using the effective interest method, meaning that the difference between the proceeds and the nominal value is recognised in the income statement under financials for the term of the loan. For information on lease liabilities, see note 3.3. Fair value measurement The group uses the fair value concept for recognition of certain financial instruments and in connection with some disclosure requirements. Fair value is defined as the price that can be secured when selling an asset or that must be paid to transfer a liability in a standard transaction between market participants (exit price). Fair value is a marked-based and not enterprise-specific valuation. The enterprise uses the assumptions that market participants would use when pricing an asset or liability based on existing market conditions, including assumptions relating to risks. As far as possible, fair value measurement is based on market value in active markets (level 1) or alternatively on values derived from observable market information (level 2). If such observable information is not available or cannot be used without significant modifications, recognised valuation methods and fair estimates are used as the basis of fair values (level 3). Financial statements Solar A/S Annual Report 2024 Financial statements 135 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 4.4 Financial instruments – continued Reconciliation of development in interest-bearing debt to financing activities in the cash flow statement: DKK million 2024 2023Interest bearing liabilities 1/1 1,597 1,240Repayment of non-current interest-bearing debt -9 -9Raising of non-current interest-bearing liabilities 100 150Change in current interest-bearing debt 11 149Instalment on lease liabilities -137 -136Lease liability raised during the year, non-cash 122 195Foreign currency translation adjustment 7 8Interest bearing liabilities 31/12 1,691 1,597 Financial liabilities, maturity statement DKK million 2024 2023Maturity < 1 yearDebt to mortgage credit institutions 11 11Lease liabilities 141 130Bank loans and overdrafts 830 703Current interest-bearing liabilities 982 844Other financial liabilities 2,314 2,290Current financial liabilities 3,296 3,134Current financial assets 2,320 2,190Net current financial liabilities 976 944 Financial statements Solar A/S Annual Report 2024 Financial statements 136 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Financial liabilities, maturity statement – continued DKK million 2024 2023Maturity 1-5 year(s)Debt to mortgage credit institutions 47 45Bank loans and overdrafts 249 250Lease liabilities 268 294Total 564 589Maturity > 5 yearsDebt to mortgage credit institutions 129 139Lease liabilities 16 26Total 145 165Total non-current liabilities 709 754Maturity, until year 2042 2042 DKK million 2024 2023Interest-bearing liabilities and maturity statement for expected interest expense for the period< 1 year 32 311-5 year(s) 56 54> 5 years 35 42Total 123 127 The carrying amount of financial liabilities corresponds to fair value, see page 135. Of long-term bank loans and overdrafts DKK 150m is subject to covenants measured on gearing on a quarterly basis. There is no indication that covenants cannot be met for the next 12 months. Accounting policies Liquidity risks Solar has an objective of substantial self-financing to minimise dependence on lenders and thus gain greater freedom of action. Financing is primarily controlled centrally based on the individual subsidiary’s operating and investment cash requirements. Solar ensures that there are always sufficient and flexible cash reserves and diversification of maturities of both non-current and current credit facilities. 4.4 Financial instruments – continued Financial statements Solar A/S Annual Report 2024 Financial statements 137 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Interest rate sensitivity DKK million 2024 2023Effect of a 1% interest rate increase at the end of the yearEffect on equity 3 3Of this, earnings impact is -3 -5Undrawn credit facilities 31/12 1,028 955 Financial liabilities, foreign currency risk exposure Current liabilities Non-current liabilitiesDKK million 2024 2023 2024 2023EUR 124 147 101 106DKK 705 564 324 328NOK 0 0 0 0PLN 12 3 0 0SEK 0 0 0 0Total 841 714 425 434Interest rate in % 3.7-7.0 4.3-6.9 3.9-5.6 4.3-5.6 The group’s enterprises have raised loans in their respective functional currencies, while the parent company has also raised loans in euro. Financial risks – continued Interest rate risk Solar monitors and adjusts interest-bearing liabilities on an ongoing basis. Loans are only raised in the functional currencies of the countries where Solar operates. Of total interest-bearing liabilities, Solar endeavours to ensure that a maximum of half is based on variable payment of interest determined in accordance with current money market rates. The remaining interest-bearing liabilities are fixed-rate. Solar Group has no significant non- current interest-bearing assets. As a result of Solar’s policies, a certain interest rate risk exists. Currency risk Solar is exposed to currency risks in the form of translation risks since a substantial proportion of activity derives from foreign subsidiaries which has other currencies than DKK as functional currency. The functional currencies applied in the group are euro, Danish kroner, Swedish kroner, Norwegian kroner and, to a lesser extent, Polish zloty, Swiss Franc, US dollar and British pound. Solar has a number of investments in foreign subsidiaries, where the translation of equity into Danish kroner depends on exchange rates. Investments in subsidiaries are not hedged as such investments are regarded as long-term and because hedging is seen as unlikely to create any long-term value. The individual subsidiaries are not significantly affected by exchange rate fluctuations since revenue and costs in subsidiaries are mainly in the same currencies. Effect from translation of foreign subsidiaries when the exchange rate increases by 10% (average for the year and at year end) Profit of the year EquityDKK million 2024 2023 2024 2023NOK 5.1 9.0 50.6 50.1SEK 8.0 10.8 51.2 48.0PLN 1.6 0.2 9.4 8.3Total 14.7 20.0 111.2 106.4 4.4 Financial instruments – continued Financial statements Solar A/S Annual Report 2024 Financial statements 138 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Hedging activities DKK million 2024 2023Outstanding interest swaps made for hedging floating-rate loansPrincipal amount 361 367Interest rate in % for outstanding interest swaps 4.5-5.6 4.5-5.6Fair value recognised as other payables under current liabilities -17 -17 Maturity for interest swaps follows the maturity for debt to mortgage credit institutions as stated on previous page. Amounts recognised in other comprehensive incomeAdjustment to fair value for the year -5 -10Realised during the year, recognised as financial income/expenses 5 5Total 0 -5 Accounting policies Derivatives Derivatives are only used to hedge financial risks in the form of interest rate and currency risks. Derivatives are recognised at fair value. Both realised and unrealised gains and losses are recognised in the income statement unless the derivatives are part of hedging of future transactions. Value adjustments of derivatives for hedging of future transactions are recognised directly in other comprehensive income. Any non-effective part of the financial instrument in question is recognised in the income statement. Derivatives are recognised under other receivables or other payables. 4.4 Financial instruments – continued Financial statements Solar A/S Annual Report 2024 Financial statements 139 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 4.5 Financial income 4.6 Financial expenses DKK million 2024 2023Interest income 31 26Foreign exchange gains 28 35Fair value adjustments, other financial investments 2 0Other financial income 2 4Total 63 65Financial income, received 33 30 DKK million 2024 2023Interest expenses 99 94Foreign exchange losses 31 41Fair value adjustments, other financial investments 3 8Interest on lease liabilities 15 12Total 148 155Financial expenses, settled 114 106 Financial statements Solar A/S Annual Report 2024 Financial statements 140 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Section 5 Other notes Financial statements Solar A/S Annual Report 2024 Financial statements 141 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 5.1 Share-based payment Section 5 – Other notes Restricted share units Executive Board Others TotalNo. of restricted share units at year-end 2024Outstanding at the beginning of 2024 23,212 24,789 48,001Granted in 2024 0 14,945 14,945Transferred on change to the Executive Board -6,089 6,089 0Adjustment due to dividend distribution 444 2,036 2,480Exercised -7,193 -11,775 -18,968Outstanding at year-end 2024 10,374 36,084 46,458No. of restricted share units at year-end 2023Outstanding at the beginning of 2023 22,361 18,457 40,818Granted in 2023 6,719 7,930 14,649Adjustment due to dividend distribution 1,719 1,818 3,537Exercised -7,587 -3,416 -11,003Outstanding at year-end 2023 23,212 24,789 48,001 DKK million 2024 2023Market value recognised under other liabilities 9 14 Accounting policies Restricted share units and performance share units are measured at fair value at the grant date and are recognised in the income statement under staff costs over the period when the final right to the restricted share units and performance share units is vested. The set-off to this is recognised under other payables, as the company has a past practice that allows employees to choose cash settlement. This liability is regularly adjusted to fair value and for the performance share units an estimated probability for succeeding in fulfilling the targets set is taken into consideration. The fair value of the granted restricted share units and performance share units is estimated using the market price of the company’s shares at balance sheet date. Financial statements Solar A/S Annual Report 2024 Financial statements 142 Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 5.1 Share-based payment – continued Specification of restricted share units Year of grantingNo. of shares 2024 2023 2022 2021Executive BoardGranted 0 6,719 5,353 6,595Transferred on change to the Executive Board 0 -1,899 -1,792 -2,398Adjustment due to dividend distribution 0 735 1,258 2,996Exercised 0 0 0 -7,193Total 0 5,555 4,819 0OthersGranted 14,945 7,930 5,757 6,442Transferred on change to the Executive Board 0 1,899 1,792 2,398Adjustment due to dividend distribution 1,181 1,065 1,515 2,935Exercised 0 0 0 -11,775Total 16,126 10,894 9,064 0Price at time of granting 381.88 629.95 722.46 456.39Vesting year 2027 2026 2025 2024 Performance share unitsExecutive No. of performance share units at year-end 2024BoardOutstanding at the beginning of 2024 0Granted in 2024 13,939Adjustment due to dividends distribution 1,097Exercised 0Outstanding at year-end 2024 15,0362024Price at time of granting 381.88Vesting year 2027 Solar A/S Annual Report 2024 Financial statements 143 Financial statements Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 5.2 Contingent liabilities and other financial liabilities DKK million 2024 2023CollateralAssets have been pledged as collateral for bank arrangements at a carrying amount of:Land and buildings 418 447Total 418 447Contracts for the construction of Logistics Centre, KumlaNet obligation 339 0 5.1 Share-based payment – continued In accordance with Solar’s remuneration policy and general guidelines for incentive-based remuneration, the Board of Directors decided to grant restricted shares to the Executive Board in 2023 and management team in 2024 and 2023. Restricted shares are granted for no consideration and provide the holder with a right and an obligation to receive B shares at a nominal value of DKK 100. The price at the time of granting is fixed at DKK 381.88 (629.95) based on the average price on Nasdaq Copenhagen the first 10 business days after publication of Annual Report 2023 (2022). The restricted shares vest three years after the time of granting, meaning that this grant of shares vests in 2027 (2026). At this point, the holder may exercise the restricted share granting. The number of granted restricted shares was adjusted by +2,480 (+3,537) shares in 2024 (2023) due to dividend distribution. Based on the amended remuneration policy, the Board of Directors approved a new long-term incentive program (LTIP) for the members of the Executive Board. The members of the Executive Board was granted a total of 15,036 performance shares (PSU) in 2024. The total market value of the grant was DKK 5.7m at the time of granting. The LTIP is forward-looking, and grants of PSUs are therefore not based on previous performance of Solar or the participant; instead vesting is dependent on the participant’s continued employment with Solar and for 75 % of the PSUs the achievement of certain forward-looking performance targets within (a) Solution Sales, (b) EBITDA margin and (c) CO 2 reduction.  The PSUs vest after the expiry of a three-year lock-up period and simultaneously be converted into B-shares in Solar, subject to the fulfilment of the performance targets.  If the performance targets are only partly achieved, the participants will receive a proportion of the B-shares. If specified minimum targets are not met the vesting can lapse. The number of performance restricted shares was adjusted by +1,097 shares in 2024 due to dividend distribution. General information on Solar’s incentive scheme is available on our website: https://www.solar.eu/ investor/policies. Solar A/S Annual Report 2024 Financial statements 144 Financial statements Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 5.4 Auditors’ fees DKK million 2024 2023DeloitteStatutory audit3 31Other assurance engagements1 1Total 4 4 1) Other assurance engagements mainly consist of ESG assurance in 2023 and 2024. 5.3 Related parties Group and parent Solar A/S are subject to control by Fonden af 20. December (registered as a commercial foundation in Denmark), which owns 17.0% of the shares and holds 60.5% of the voting rights. The remaining shares are owned by a widely combined group of shareholders. Other related parties include associates, the company’s Board of Directors and Executive Board. There have been no transactions in the financial year with members of the Board of Directors and Executive Board other than those which appear from note 2.3 and note 5.1. Solar invoices Fonden af 20. December for the performance of administrative services at DKK 55,000. Balances with Fonden af 20. December total 0 on balance sheet date. 5.5 New financial reporting standards IASB has issued two new standards: IFRS 18 Presentation and Disclosure in Financial Statements and IFRS 19 Subsidiaries without Public Accountability: Disclosures. IFRS 18 and IFRS 19 are effective from annual reporting periods beginning on or after 1 January 2027. IFRS 18 Presentation and Disclosure in Financial Statements replaces IAS 1. IFRS 18 entails changes in the presentation of primarily the income statement and disclosures on management-defined performance measures (MPMs) in the notes to the financial statements. Solar is currently assessing the impact on the presentation of the income statement and disclosures of management-defined performance measurement. IFRS 19 Solar does not expect that IFRS 19 or the amendments to existing standards will have impact on Solar’s accounting policies. Furthermore, IASB has issued amendments to existing standards (IAS 21, IFRS 7 and IFRS 9) that are effective from 1 January 2025 or 1 January 2026. Solar A/S Annual Report 2024 Financial statements 145 Financial statements Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review 5.6 Acquisitions of subsidiaries and activities 2023 On 7 December 2023, Solar A/S acquired 100% of the shares of Dunduru Plavas SIA in Latvia. The acquisition price is made up of a fixed amount of DKK 22m. The acquisition had an insignificant impact on Solar’s 2023 revenue and EBITDA. If the acquisition had occurred on 1 January 2023 the impact on Solar’s full year 2023 revenue and EBITDA would have been insignificant as well. Transaction costs related to the acquisition totalled DKK 1m. These have been recognised as part of external operating costs in the income statement. On 1 March 2023, Solar A/S acquired 42.5% of the shares of ThermoNova A/S, a Danish manufacturer of high-capacity heat pumps. The acquisition price is made up of a fixed amount of DKK 111m and a variable amount of DKK 10m. The variable amount is related to the required expansion of the production capacity. Simultaneous Solar A/S subscribed new issued shares for DKK 50m in ThermoNova A/S. In total Solar A/S owns 51% of the shares. The acquisition had an insignificant impact on Solar’s 2023 revenue and EBITDA. If the acquisition had occurred on 1 January 2023 the impact on Solar’s full year 2023 revenue and EBITDA would have been insignificant as well. Transaction costs related to the acquisition totalled DKK 5m. These have been recognised as part of external operating costs in the income statement. The fair value of the customer related assets is based on the multi-period excess earningsmethod (MEEM). The fair value has been calculated as the net present value (NPV) of the future net cash-flow derived from the sale to the customers minus a fair return on the assets used to generate the sale. An interest rate of 10% has been applied. The main factors leading to the recognition of goodwill are: • the presence of certain intangible assets, such as the assembled workforce and knowhow, which do not qualify for separate recognition • expected synergies within sale which result in Solar being prepared to pay a premium. The goodwill recognised is not deductible for tax purposes. For the non-controlling interests in ThermoNova A/S, the group decided to recognise the noncontrolling interests at its proportionate share of the acquired net identifiable assets. See page 104 for Solar’s accounting policies for business combinations. Fair value at the date of acquisition: DKK million ThermoNova A/S Dunduru Plavas SIACustomer-related intangible assets 42 -Property, plant and equipment 1 24 Inventories 19 3 Trade receivables 12 - Cash 53 1 Provision for deferred tax -9 -3 Other non-current liabilities, non-interest-bearing -1 - Current liabilities -16 -2 Net assets 101 23 Non-controlling interest of acquired new assets -49 - Acquired net assets 52 23 Goodwill 122 - Total consideration 174 23 Cash acquired -53 -1 Deferred consideration -10 - Acquisition price on net debt-free basis 111 22 Solar A/S Annual Report 2024 Financial statements 146 Financial statements Consolidated financial statements Summary for the Solar Group Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Separate financial statements 147 Financial statements Solar A/S Annual Report 2024 Financial statements Statement of comprehensive income Income statement Other comprehensive income Notes DKK million 2024 2023 2.1 Revenue 4,003 4,155 Cost of sales -3,108 -3,128 Gross profit 895 1,027 Other operating income 32 31 5.3 External operating costs -32 -58 2.2 Staff costs -573 -603 2.3 Loss on trade receivables -2 -6 Earnings before interest, tax, depreciation and amortisation (EBITDA) 320 391 2.4 Depreciation and write-down on property, plant and equipment -90 -81 Earnings before interest, tax and amortisation (EBITA) 230 310 2.4 Amortisation and impairment of intangible assets -68 -64 Earnings before interest and tax (EBIT) 162 246 Profit from subsidiaries 76 215 Share of net profit from associates 0 0 4.4 Financial income 36 42 4.5 Financial expenses -102 -105 Earnings before tax (EBT) 172 398 2.5 Income tax -21 -51 2.6 Net profit for the year 151 347 DKK million 2024 2023 Net profit for the year 151 347 Other income and costs recognised: Items that can be reclassified to the income statement Foreign currency translation adjustments of foreign subsidiaries -36 -13 Fair value adjustments of hedging instruments before tax, parent company 0 -5 Tax on fair value adjustments of hedging instruments, parent company 0 1 Other income and costs recognised after tax -36 -17 Total comprehensive income for the year 115 330 Financial statements Solar A/S Annual Report 2024 Financial statements 148 Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Group companies overview Statements and reports Statements, not audited, part of Management review Balance sheet As at 31 December Notes DKK million 2024 2023 Assets 3.1 Intangible assets 217 172 3.2 Property, plant and equipment 380 422 3.3 Right-of-use assets 100 110 3.4 Investments measured at equity value 2,226 2,168 3.4 Other non-current assets 22 24 Non-current assets 2,945 2,896 3.5 Inventories 636 623 3.6 Trade receivables 554 520 Receivables from subsidiaries 184 264 Income tax receivable 6 0 Other receivables 4 3 Prepayments 27 32 Cash at bank and in hand 343 330 Current assets 1,754 1,772 Total assets 4,699 4,668 Notes DKK million 2024 2023 Equity and liabilities 4.1 Share capital 736 736 Reserves -66 -66 Retained earnings 1,048 1,043 Proposed dividends for the financial year 110 219 Total equity 1,828 1,932 4.3 Interest-bearing liabilities 425 434 3.3, 4.3 Lease liabilities 70 80 2.5 Provision for deferred tax 89 79 Non-current liabilities 584 593 4.3 Interest-bearing liabilities 829 710 3.3, 4.3 Lease liabilities 33 32 Trade payables 701 651 Amounts owed to subsidiaries 562 522 Income tax payable 0 6 3.8 Other payables 157 210 Prepayments 0 9 3.7 Other provisions 5 3 Current liabilities 2,287 2,143 Liabilities 2,871 2,736 Total equity and liabilities 4,699 4,668 Financial statements Solar A/S Annual Report 2024 Financial statements 149 Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Group companies overview Statements and reports Statements, not audited, part of Management review Cash flow statement Notes DKK million 2024 2023 Net profit for the year 151 347 2.4 Depreciation, write-down and amortisation 158 145 Changes to provisions and other adjustments -8 6 Profit from subsidiaries -76 -215 4.4, 4.5 Financials, net 66 63 Income tax 21 51 4.4 Financial income, received 31 36 4.5 Financial expenses, settled -96 -90 Income tax, settled -24 -36 Cash flow before working capital changes 223 307 Working capital changes Inventory changes -13 202 Receivables changes -28 12 Non-interest-bearing liabilities changes 9 -151 Cash flow from operating activities 191 370 Notes DKK million 2024 2023 Investing activities 3.1 Purchase of intangible assets -113 -88 Purchase of property, plant and equipment -11 -17 Disposal of property, plant and equipment 0 1 Changes to loans to subsidaries 121 159 Dividends from subsidiaries 7 7 Acquistion of subsidiaries and activities -10 -164 Capital increase subsidiaries -26 0 Cash flow from investing activities -32 -102 Financing activities 4.3 Repayment of non-current interest-bearing debt -9 -9 Raising of non-current interest-bearing liabilities 100 150 Change in current interest-bearing liabilities 19 176 Instalment on lease liabilities -37 -36 Dividends paid to shareholders of Solar A/S -219 -329 Cash flow from financing activities -146 -48 Total cash flow 13 220 Cash at bank and in hand at the beginning of the year 330 110 Cash at bank and in hand at the end of the year 343 330 Financial statements Solar A/S Annual Report 2024 Financial statements 150 Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Group companies overview Statements and reports Statements, not audited, part of Management review Statement of changes in equity 1) Reserves for hedging transactions, reserves for foreign currency translation adjustments and reserves for development costs are recognised in the balance sheet as a total amount under reserves. DKK million Share capital Reserves for hedging transactions 1 Reserves for foreign currency translation adjustments 1 Reserves for development costs 1 Retained earnings Proposed dividends Total equity 2024 Equity as at 1 January 736 -13 -185 132 1,043 219 1,932 Foreign currency translation adjustments of foreign subsidiaries -36 -36 Fair value adjustments of hedging instruments before tax 0 0 Tax on fair value adjustments 0 0 Net income recognised in equity via other comprehensive income in the statement of comprehensive income 0 0 -36 0 0 0 -36 Net profit for the year 36 5 110 151 Comprehensive income 0 0 -36 36 5 110 115 Distribution of dividends (DKK 30.00 per share) -219 -219 Transactions with the owners 0 0 0 0 0 -219 -219 Equity as at 31 December 736 -13 -221 168 1,048 110 1,828 Financial statements Solar A/S Annual Report 2024 Financial statements 151 Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Group companies overview Statements and reports Statements, not audited, part of Management review Statement of changes in equity 1) Reserves for hedging transactions, reserves for foreign currency translation adjustments and reserves for development costs are recognised in the balance sheet as a total amount under reserves. DKK million Share capital Reserves for hedging transactions 1 Reserves for foreign currency translation adjustments 1 Reserves for development costs 1 Retained earnings Proposed dividends Total equity 2023 Equity as at 1 January 736 -9 -172 111 936 329 1,931 Foreign currency translation adjustments of foreign subsidiaries -13 -13 Fair value adjustments of hedging instruments before tax -5 -5 Tax on fair value adjustments 1 1 Net income recognised in equity via other comprehensive income in the statement of comprehensive income 0 -4 -13 0 0 0 -17 Net profit for the year 21 107 219 347 Comprehensive income 0 -4 -13 21 107 219 330 Distribution of dividends (DKK 45.00 per share) -329 -329 Transactions with the owners 0 0 0 0 0 -329 -329 Equity as at 31 December 736 -13 -185 132 1,043 219 1,932 Financial statements Solar A/S Annual Report 2024 Financial statements 152 Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Group companies overview Statements and reports Statements, not audited, part of Management review Section 1 Basis for preparation Solar A/S Annual Report 2024 Financial statements 153 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review Section 1 – Basis for preparation 1.1 General accounting policies 1.2 Significant accounting estimates and assessments The separate financial statements of the parent company for 2024 are presented in accordance with the International Financial Reporting Standards (IFRSs) as approved by the EU and additional Danish disclosure requirements for annual reports of listed companies and the IFRS executive order issued in accordance with the Danish Financial Statements Act. A general description of accounting policies can be found in the consolidated financial statements on pages 104-106 note 1.1, Accounting policies. Descriptions of accounting policies in notes Descriptions of accounting policies in the notes form part of the overall description of accounting policies. Parent-specific descriptions are found in the following notes: Note 2.5 Income tax Note 2.6 Net profit for the year Note 3.1 Intangible assets Note 3.2 Property, plant and equipment Note 3.3 Leases Note 3.4 Investments measured at equity value and other non-current assets Note 3.5 Inventories Note 3.6 Trade receivables Note 3.7 Other provisions Note 4.1 Share capital Note 4.3 Financial instruments Note 5.1 Contingent liabilities and other financial liabilities When preparing the annual report in accordance with generally applicable principles, management make estimates and assumptions that affect the reported assets and liabilities. Management base their estimates on historic experience and expectations for future events. Therefore, actual results may differ from these estimates. The following estimates and accompanying assessments are deemed material for the preparation of the financial statements: • Impairment test of software • Inventory write-down • Write-down for loss on doubtful receivables These estimates and assessments are described in the following notes: Note 3.1 Intangible assets Note 3.5 Inventories Note 3.6 Trade receivables Solar A/S Annual Report 2024 Financial statements 154 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review Section 2 Income statement Solar A/S Annual Report 2024 Financial statements 155 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review Section 2 – Income statement 2.1 Segment information DKK million Installation Industry Trade Total 2024 Revenue 2,121 1,325 557 4,003 Cost of sales -1,657 -975 -476 -3,108 Gross profit 464 350 81 895 Direct costs -97 -61 -22 -180 Earnings before indirect costs 367 289 59 715 Indirect costs -142 -46 -17 -205 Segment profit 225 243 42 510 Non-allocated costs -190 Earnings before interest, tax, depreciation and amortisation (EBITDA) 320 Depreciation and amortisation -158 Earnings before interest and tax (EBIT) 162 Financials, net incl. share of net profit from associates and impairment on associates and profit from subsidiaries 10 Earnings before tax (EBT) 172 DKK million Installation Industry Trade Total 2023 Revenue 2,171 1,443 541 4,155 Cost of sales -1,640 -1,028 -460 -3,128 Gross profit 531 415 81 1,027 Direct costs -101 -62 -19 -182 Earnings before indirect costs 430 353 62 845 Indirect costs -155 -51 -18 -224 Segment profit 275 302 44 621 Non-allocated costs -230 Earnings before interest, tax, depreciation and amortisation (EBITDA) 391 Depreciation and amortisation -145 Earnings before interest and tax (EBIT) 246 Financials, net incl. share of net profit from associates and impairment on associates and profit from subsidiaries 152 Earnings before tax (EBT) 398 Solar’s business segments are Installation, Industry and Trade and are based on the customers’ affiliation with the segments. Installation covers installation of electrical, and heating and plumbing products, while Industry covers industry, offshore and marine, and utility and infrastructure. Trade covers special sales and other small areas. The three main segments have been identified without aggregation of operating segments. Segment income and costs include any items that are directly attributable to the individual segment and any items that can be reliably allocated to the individual segment. Non-allocated costs refer to income and costs related to joint group functions. Assets and liabilities are not included in segment reporting. Solar A/S Annual Report 2024 Financial statements 156 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 2.3 Loss on trade receivables 2.4 Depreciation, write-down and amortisation DKK million 2024 2023 Buildings 22 16 Plant, operating equipment, tools and equipment 28 26 Leasehold improvements 2 2 Tenancy, lease 20 19 Cars, lease 8 9 IT equipment, lease 10 9 Total depreciation and write-down on property, plant and equipment 90 81 Customer-related assets 1 1 Software 64 61 Impairment of intangible assets 3 2 Total amortisation and impairment of intangible assets 68 64 DKK million 2024 2023 Recognised losses 6 4 Received on trade receivables previously written off 0 0 6 4 Change in write-down for bad and doubtful debts -4 2 Total 2 6 Relevant accounting policies are described in note 3.6 trade receivables. Relevant accounting policies are described in note 3.1, intangible assets, and note 3.2, property, plant and equipment and note 3.3, leases. 2.2 Staff costs DKK million 2024 2023 Salaries and wages etc. 512 538 Pensions, defined contribution 44 43 Costs related to social security 14 14 Share-based payment 3 8 Total 573 603 Average number of employees (FTEs) 812 861 Number of employees at year-end (FTEs) 820 834 Remuneration of Board of Directors Remuneration of Board of Directors 4 4 Remuneration of Executive Board Salaries and wages etc. 17 23 Share-based payment 1 3 Total 18 26 Terms of notice for members of the Executive Board is 12 months. When stepping down, the members of the Executive Board are entitled to 12 (6) months’ remuneration. Solar A/S Annual Report 2024 Financial statements 157 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 2.5 Income tax DKK million 2024 2023 Current tax 13 40 Deferred tax 10 11 Tax on profit or loss for the year 23 51 Tax on taxable profit previous year -2 9 Change in deferred tax previous year 0 -9 Total 21 51 Statement of effective tax rate: Danish income tax rate 22.0% 22.0% Profit/loss from subsidiaries -9.5% -11.9% Impairment on / gain from sale of / reversal of impairment on associates 0.1% 0.3% Non-taxable/deductible items in parent 0.7% 2.2% Tax regarding prevoius year -1.0% 0.2% Effective tax rate 12.3% 12.8% Accounting policies Tax for the year is recognised with the share attributable to results for the year in the income statement and with the share attributable to other recognised income and costs in the statement of comprehensive income. Tax consists of current tax and changes to deferred tax. Solar A/S Annual Report 2024 Financial statements 158 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 2.5 Income tax – continued DKK million 2024 2023 Deferred tax 1/1 79 78 Recognised in other comprehensive income 0 -1 Ordinary tax recognised in income statement 10 2 Deferred tax 31/12 89 79 Specified as follows: Deferred tax 89 79 Total deferred tax, net 89 79 Further specified as follows: Expected use after 1 year 89 79 Total, net 89 79 DKK million 2023 Recognised in other comprehensive income Ordinary tax recognised in income statement 2024 Property, plant and equipment 24 0 0 24 Provisions for loss on receivables -1 0 0 -1 Other items 1 56 0 10 66 Total, net 79 0 10 89 1) Other items particularly cover intangible assets and loss balances in jointly taxed entities. Specification by balance sheet items Accounting policies Current tax liabilities and current tax receivables are recognised in the balance sheet as calculated tax on the year’s taxable income, adjusted for tax on previous year’s taxable income and for tax paid on account. Deferred tax is measured in accordance with the balance sheet liability method of all temporary differentials between accounting and tax-related amounts and provisions. Deferred tax is recognised at the local tax rate that any temporary differentials are expected to be realised at based on the adopted or expected adopted tax legislation on the balance sheet date. Deferred tax assets, including the tax value of tax loss allowed for carryforward, are measured at the value at which the asset is expected to be realised, either by elimination in tax of future earnings or by offsetting against deferred tax liabilities. Deferred tax assets are assessed annually and only recognised to the extent that it is probable that they will be utilised. Deferred tax is also recognised for the covering of retaxation of losses in former foreign subsidiaries participating in joint taxation assessed as becoming current. Solar A/S Annual Report 2024 Financial statements 159 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 2.6 Net profit for the year 1) Calculations are based on proposed dividends. DKK million 2024 2023 Proposed distribution of net profit for the year: Proposed dividend 110 219 Reserves for development costs 36 21 Retained earnings 5 107 Net profit for the year 151 347 Ordinary dividend in DKK per share of DKK 100 1 15.00 30.00 Accounting policies Dividends Proposed dividends are recognised as a liability at the time of adoption of the general meeting. Solar A/S Annual Report 2024 Financial statements 160 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review Section 3 Invested capital Solar A/S Annual Report 2024 Financial statements 161 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review Section 3 – Invested capital 3.1 Intangible assets DKK million Customer-related assets Software Total 2024 Cost 1/1 5 783 788 Additions during the year 0 113 113 Disposals during the year 0 -323 -323 Cost 31/12 5 573 578 Amortisation and impairment 1/1 4 612 616 Amortisation during the year 1 64 65 Impairment during the year 0 3 3 Amortisation of abandoned assets 0 -323 -323 Amortisation and impairment 31/12 5 356 361 Carrying amount 31/12 0 217 217 Remaining amortisation period in number of years 1 1-8 - Accounting policies Customer-related intangible assets Customer-related intangible assets acquired in connection with business combinations are measured at cost less accumulated amortisation and impairment loss. Customer-related intangible assets are amortised using the straight-line principle over the expected useful life. Typically, the amortisation period is 5-7 years. Software Software is measured at cost less accumulated amortisation and impairment. Cost includes both direct internal and external costs. Software is amortised using the straight-line principle over 4-8 years. The basis of amortisation is reduced by any impairment. Solar A/S Annual Report 2024 Financial statements 162 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 3.1 Intangible assets – continued DKK million Customer-related assets Software Total 2023 Cost 1/1 5 701 706 Additions during the year 0 88 88 Disposals during the year 0 -6 -6 Cost 31/12 5 783 788 Amortisation and impairment 1/1 3 555 558 Amortisation during the year 1 61 62 Impairment during the year 0 2 2 Amortisation of abandoned assets 0 -6 -6 Amortisation and impairment 31/12 4 612 616 Carrying amount 31/12 1 171 172 Remaining amortisation period in number of years 2 1-8 - Accounting policies Impairment of intangible assets The carrying amount of intangible assets is assessed annually to determine whether there is any indication of impairment. When such an indication is present, the asset’s recoverable amount is calculated, which is the highest of the asset’s fair value less expected costs of disposal or value in use. Value in use is calculated as the present value of expected cash flow from the smallest cash-generating unit to which the asset belongs. Impairment loss is recognised when the carrying amount of an asset exceeds the asset’s recoverable amount. Impairment loss is recognised in the income statement. Impairment loss on intangible assets is reversed if changes have been made to the assumptions and estimates that led to the impairment loss. Accounting estimates and assessments Software Software is evaluated annually for indicators of a need for impairment. If a need to perform impairment is identified, an impairment test for the software is performed. The impairment test is made on the basis of different factors, including the software’s future application, the present value of the expected cost saving as well as interest and risks. Solar A/S Annual Report 2024 Financial statements 163 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 3.2 Property, plant and equipment DKK million Land and buildings Plant, operating equipment, tools and equipment Leasehold improvements Assets under construction Total 2024 Cost 1/1 486 250 14 6 756 Additions during the year 2 10 0 5 17 Disposals during the year 0 -8 0 -6 -14 Cost 31/12 488 252 14 5 759 Write-down and depreciation 1/1 218 106 10 0 334 Write-down and depreciation during the year 22 28 2 0 52 Write-down and depreciation of abandoned assets 0 -7 0 0 -7 Write-down and depreciation 31/12 240 127 12 0 379 Carrying amount 31/12 248 125 2 5 380 Accounting policies Property, plant and equipment Land and buildings as well as other plant, operating equipment, and tools and equipment are measured at cost less accumulated depreciation and write-down. Cost includes the purchase price and costs directly attributable to the acquisition until the time when the asset is ready for use. Cost of a combined asset is disaggregated into separate components which are depreciated separately if the useful lives of the individual components differ. Subsequent expenditure, for example in connection with the replacement of components of property, plant or equipment, is recognised in the carrying amount of the relevant asset when it is probable that the incurrence will result in future economic benefits for the group. The replaced components cease to be recognised in the balance sheet and the carrying amount is transferred to the income statement. All other general repair and maintenance costs are recognised in the income statement when these are incurred. Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives which are: • Buildings 40 years • Technical installations 20 years • Plant, operating equipment, and tools and equipment 2-5years There are a few differences from the mentioned depreciation periods in which useful life is estimated as shorter. Leasehold improvements are depreciated over the lease term, however, maximum 5 years. Land is not depreciated. Solar A/S Annual Report 2024 Financial statements 164 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 3.2 Property, plant and equipment – continued DKK million Land and buildings Plant, operating equipment, tools and equipment Leasehold improvements Assets under construction Total 2023 Cost 1/1 481 254 14 3 752 Additions during the year 6 8 0 3 17 Disposals during the year -1 -12 0 0 -13 Cost 31/12 486 250 14 6 756 Write-down and depreciation 1/1 203 91 8 0 302 Write-down and depreciation during the year 16 26 2 0 44 Write-down and depreciation of abandoned assets -1 -11 0 0 -12 Write-down and depreciation 31/12 218 106 10 0 334 Carrying amount 31/12 268 144 4 6 422 Accounting policies The basis of depreciation is determined in consideration of the asset’s residual value and reduced by any impairment. Residual value is determined at the time of acquisition and reassessed annually. If residual value exceeds the asset’s carrying amount, depreciation will cease. By changing the depreciation period or residual value, the effect of future depreciation is recognised as a change to accounting estimates. Impairment of property, plant and equipment The carrying amount of property, plant and equipment is assessed annually to determine whether there is any indication of impairment. When such an indication is present, the asset’s recoverable amount is calculated, which is the highest of the asset’s fair value less expected costs of disposal or value in use. Value in use is calculated as the present value of expected cash flow from the smallest cash-generating unit to which the asset belongs. Impairment loss is recognised when the carrying amount of an asset exceeds the asset’s recoverable amount. Impairment loss is recognised in the income statement. Write-down on property, plant and equipment is reversed to the extent that changes have been made to the assumptions and estimates that led to the write-down. Solar A/S Annual Report 2024 Financial statements 165 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 3.3 Leases Right-of-use assets DKK million Tenancy Cars IT equipment Total 2024 Cost 1/1 132 40 51 223 Additions during the year 9 10 10 29 Disposals during the year -6 -11 -14 -31 Cost 31/12 135 39 47 221 Write-down and depreciation 1/1 64 25 24 113 Write-down and depreciation during the year 20 8 10 38 Write-down and depreciation of abandoned assets -6 -10 -14 -30 Write-down and depreciation 31/12 78 23 20 121 Carrying amount 31/12 57 16 27 100 DKK million Tenancy Cars IT equipment Total 2023 Cost 1/1 98 34 24 156 Additions during the year 34 10 27 71 Disposals during the year 0 -4 0 -4 Cost 31/12 132 40 51 223 Write-down and depreciation 1/1 45 20 15 80 Write-down and depreciation during the year 19 9 9 37 Write-down and depreciation of abandoned assets 0 -4 0 -4 Write-down and depreciation 31/12 64 25 24 113 Carrying amount 31/12 68 15 27 110 Accounting policies Right-of-use assets Right-of-use assets are lease assets arising from a lease agreement. Lease assets are initially measured at cost consisting of the amount of the initial measurement of the lease liability with addition of lease payments made to the lessor at or before the commencement date less any lease incentives received. Three different types of leases have been identified: • Tenancy • Cars • IT equipment The lease assets are depreciated on a straight-line basis over the lease term. The carrying amount of the right-of-use asset can be adjusted due to modifications to the lease agreement or in special cases reassessment of the lease term. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the income statement. Short-term leases are leases with a term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture of a value below DKK 37,000. Solar A/S Annual Report 2024 Financial statements 166 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 3.3 Leases – continued Short-term lease liabilities DKK million 2024 2023 Maturity < 1 year 33 32 Short-term lease liabilities 31/12 33 32 Long-term lease liabilities DKK million 2024 2023 Maturity > 1 year < 5 years, undiscounted 73 78 Maturity > 5 years, undiscounted 1 7 Long-term lease liabilities 31/12, undiscounted 74 85 Discounting on lease liabilities > 1 year < 5 years -4 -5 Long-term lease liabilities 31/12 70 80 Amounts recognised in the Profit & Loss statement DKK million 2024 2023 Depreciation of Right-of-use assets 38 36 Interest expense on lease liabilities 4 2 Expense relating to variable lease payments not included in the measurement of lease liabilities 2 2 Total 44 40 Cash outflows for leases Instalment on lease liabilities -37 -36 Interest payments -4 -2 Total cash outflows for leases -41 -38 Accounting policies Lease liabilities Lease liabilities arise from a lease agreement. Lease liabilities are initially measured at the present value of the lease payments during the non-cancellable lease period with addition of periods covered by an option to extend the lease if exercise of the option is considered reasonably certain on inception of the lease. At initial recognition, each contract is assessed individually to assess the likelihood of exercising a potential extension option in the contract. The option to extend the contract period will be included in measuring the lease liability if it is reasonably certain that Solar will exercise the option. When calculating the net present value, a discount rate corresponding to Solar’s incremental borrowing rate has been used. The lease liability will be remeasured when changes occur due to modifications to the contract (extension, termination etc.), indexation or in special cases reassessment of the lease term. Solar A/S Annual Report 2024 Financial statements 167 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 3.4 Investments measured at equity value and other non-current assets DKK million Investment measured at equity value Investments in associates Other investments Other recievables Total 2024 Cost 1/1 2,765 5 60 17 2,847 Additions during the year 26 0 0 0 26 Disposals during the year 0 0 0 -1 -1 Cost 31/12 2,791 5 60 16 2,872 Value adjustment 1/1 -597 -5 -45 -8 -655 Foreign currency translation adjustments -36 0 0 0 -36 Dividends from subsidiaries -8 0 0 0 -8 Profit from subsidiaries 76 0 0 0 76 Fair value adjustment recognised under financial expenses 0 0 -3 0 -3 Fair value adjustment recognised under financial income 0 0 2 0 2 Value adjustment 31/12 -565 -5 -46 -8 -624 Carrying amount 31/12 2,226 0 14 8 2,248 Accounting policies Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the parent company’s share of the post-acquisition profits or losses of the subsidiary in profit or loss statement, and the parent company’s share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from subsidiaries are recognised as a reduction in the carrying amount of the investment. Unrealised gains on transactions between the parent company and its subsidiaries are eliminated to the extent of the parent company’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the parent company. The carrying amount of equity-accounted investments is tested for impairment. Other investments are measured at fair value. An amount of DKK 47m have been impaired relating to goodwill in the subsidiary Thermonova which is included in Profit from subsidiaries. Solar A/S Annual Report 2024 Financial statements 168 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 3.4 Investments measured at equity value and other non-current assets – continued DKK million Investment measured at equity value Investments in associates Other investments Other recievables Total 2023 Cost 1/1 2,591 16 60 15 2,682 Additions during the year 174 0 0 2 176 Transferred from Other receivables to other investments 0 0 0 0 0 Disposals during the year 0 -11 0 0 -11 Cost 31/12 2,765 5 60 17 2,847 Value adjustment 1/1 -791 -16 -37 -8 -852 Foreign currency translation adjustments -14 0 0 0 -14 Dividends from subsidiaries -7 0 0 0 -7 Profit from subsidiaries 215 0 0 0 215 Fair value adjustment recognised under financial expenses 0 0 -8 0 -8 Other adjustments 0 11 0 0 11 Value adjustment 31/12 -597 -5 -45 -8 -655 Carrying amount 31/12 2,168 0 15 9 2,192 At the acquisition of Thermonova as at 1 March 2023, DKK 122m was allocated to goodwill. Solar A/S Annual Report 2024 Financial statements 169 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 3.5 Inventories DKK million 2024 2023 End products 636 623 Recognised write-down -6 1 The main reasons for the recognised write-downs is an increase in write-down articles. Accounting policies Inventories are measured at cost according to the FIFO method or at net realisable value, if this is lower. Cost of inventories includes purchase price with addition of delivery costs. The net realisable value of inventories is determined as selling price less costs incurred to make the sale and is determined in consideration of marketability, obsolescence and development of expected selling price. Accounting estimates and assessments Write-down of inventories Write-down of inventories is made due to the obsolescence of products. Management specifically assess inventories, including the products’ turnover rate, current economic trends and product development when deciding whether the write-down is sufficient. Solar A/S Annual Report 2024 Financial statements 170 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 3.6 Trade receivables 1 DKK million 2024 2023 Maturity statement, trade receivables Not due 517 488 Past due for 1-30 day(s) 32 33 Past due for 31-90 days 6 6 Past due for 91+ days 4 3 559 530 Write-down -5 -10 Total 554 520 Write-down based on: Age distribution 2 3 Individual assessment 3 7 Total 5 10 Write-down 1/1 10 8 Write-down for the year 1 6 Losses realised during the year -3 -1 Reversed for the year -3 -3 Write-down 31/12 5 10 1) A factoring arrangement on non-recourse conditions is established with a few major customers. As a result trade receivables is reduced with approx. DKK 103m (DKK 93m). Accounting policies Trade receivables are measured at fair value at acquisition and at amortised cost subsequently. Based on an individual assessment of the loss risk, including a statistical based model, write-down to amortised cost less expected credit losses is made, if this is lower. Accounting estimates and assessments Write-down for meeting of loss on doubtful trade receivables The IFRS 9 simplified approach is applied to measure expected credit losses, which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the day past invoicing. As the vast majority of our group companies generally takes out insurance to hedge against loss to the extent possible, the write-down based on age distribution amounts to less than 0.4% (0.6%) of gross trade receivables. Individual assessment of write-down is performed by management specifically analysing trade receivables, including the customers’ credit rating and current economic trends to ensure that write-down is sufficient. Write-down based on individual assessment amounts to 0.5% (1.3%) of gross trade receivables. As the total write-down on trade receivables amounts to 0.9% (2%) of gross trade receivables, no maturity statement of the write-down is included. However, the majority of the provision relates to receivables overdue by more than 31 days (31days). We refer to the consolidated accounts, note 3.6, trade receivables, for information on credit risk. Solar A/S Annual Report 2024 Financial statements 171 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 3.7 Other provisions DKK million 2024 2023 Current Other provisions 5 3 Total 31/12 5 3 Specification, current 1/1 3 2 Reversed during the year -3 -2 Provisions of the year 5 3 Total 31/12 5 3 3.8 Other payables DKK million 2024 2023 Staff costs 80 109 Taxes and charges 21 30 Interest rate swaps 17 17 Other payables and amounts payable 39 54 Total 157 210 Accounting policies for hedging instruments are described in note 4.3 Financial instruments. Solar A/S Annual Report 2024 Financial statements 172 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review Section 4 Capital structure and financing costs Solar A/S Annual Report 2024 Financial statements 173 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 4.1 Share capital Section 4 – Capital structure and financing costs DKK million 2024 2023 Share capital 1/1 736 736 Change in share capital 0 0 Share capital 31/12 736 736 Share capital is fully paid in and divided into the following classes: A shares, 900,000 at DKK 100, 10 votes per share 90 90 B shares, 6,460,000 at DKK 100, 1 vote per share 646 646 Total 736 736 Number of shares Nominal value (DKK million) 2024 2023 2024 2023 A shares outstanding 31/12 900,000 900,000 90 90 B shares outstanding Outstanding 1/1 6,403,187 6,403,187 640 640 Divestment of treasury shares 0 0 0 0 B shares outstanding 31/12 6,403,187 6,403,187 640 640 Total shares outstanding 31/12 7,303,187 7,303,187 730 730 Solar A/S Annual Report 2024 Financial statements 174 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review Section 4 – Capital structure and financing costs 4.2 Treasury shares Treasury shares (B shares) Number of shares Nominal value (DKK million) Cost (DKK million) Percentage of share capital 2024 2023 2024 2023 2024 2023 2024 2023 Holding 1/1 56,813 56,813 6 6 22 22 0.7% 0.7% Divestment 0 0 0 0 0 0 0.0% 0.0% Holding 31/12 56,813 56,813 6 6 22 22 0.7% 0.7% All treasury shares are held by the parent company in order to cover the Executive Board’s incentive schemes. Accounting policies Treasury shares Acquisition and disposal sums related to treasury shares are recognised directly in transactions with the owners. Solar A/S Annual Report 2024 Financial statements 175 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 4.3 Financial instruments Financial assets and financial liabilities DKK million Interest rate 2024 2023 Debt to mortgage credit institutions Fixed 1 187 195 Bank loans and overdrafts Fixed 1 249 250 Lease liabilities Calculated 103 112 Bank loans and overdrafts Floating 818 699 Interest-bearing liabilities 1,357 1,256 Trade payables 2 701 651 Other payables 157 210 Financial liabilities 2,215 2,117 Cash at bank and in hand 343 330 Trade receivables 554 520 Other receivables 221 299 Financial assets 1,118 1,149 Total, financial balance sheet items, net 1,097 968 Fair value of Solar’s respective interest-bearing liabilities is seen as fair value measurement at level 2. Mortgage loans are valued based on underlying securities, while bank debt is calculated based on models for discounting to net present value. Non-observable market data is primarily made up of credit risks, which are seen as insignificant in Solar’s case. The fair value of Solar’s interest rate instrument is measured as fair value measurement at level 2, since fair value can be determined directly based on the actual forward rates and instalments on the balance sheet date. Outstanding interest rate swaps for hedging of floating-rate loans expire over the period until 2037 (2037). 1) Interest swaps have been used to hedge floating-rate loans, converting these loans to fixed-rate loans. 2) Solar participates in supplier financing arrangement with a few suppliers. As a result trade payables are increased with approx. DKK 141m (DKK 140m). Accounting policies Financial liabilities Debt to bank and credit institutions is recognised initially at fair value that corresponds to the proceeds received net of transaction costs incurred. In subsequent periods, the financial liabilities are measured at amortised cost using the effective interest method, meaning that the difference between the proceeds and the nominal value is recognised in the income statement under financials for the term of the loan. For information on lease liabilities, see note 3.3. Fair value measurement The group uses the fair value concept for recognition of certain financial instruments and in connection with some disclosure requirements. Fair value is defined as the price that can be secured when selling an asset or that must be paid to transfer a liability in a standard transaction between market participants (exit price). Fair value is a market-based and not enterprise-specific valuation. The enterprise uses the assumptions that market participants would use when pricing an asset or liability based on existing market conditions, including assumptions relating to risks. As far as possible, fair value measurement is based on market value in active markets (level 1) or alternatively on values derived from observable market information (level 2). If such observable information is not available or cannot be used without significant modifications, recognised valuation methods and fair estimates are used as the basis of fair values (level 3). Solar A/S Annual Report 2024 Financial statements 176 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 4.3 Financial instruments – continued Financial liabilities, maturity statement DKK million 2024 2023 Current interest-bearing liabilities Maturity < 1 year Debt to mortgage credit institutions 11 11 Lease liabilities 32 31 Bank loans and overdrafts 818 699 Current interest-bearing liabilities 861 741 Other financial liabilities 858 861 Financial liabilities 1,719 1,602 Current financial assets 1,118 1,149 Net current financial liabilities 601 453 Maturity 1-5 year(s) Debt to mortgage credit institutions 47 45 Bank loans and overdrafts 249 250 Lease liabilities 70 74 Total 366 369 Maturity > 5 years Debt to mortgage credit institutions 129 139 Lease liabilities 1 7 Total 130 146 Total non-current liabilities 496 515 Maturity, until year 2042 2042 DKK million 2024 2023 Interest-bearing liabilities and maturity statement for expected interest expense for the period < 1 year 22 23 1-5 year(s) 41 41 > 5 years 33 40 Total 96 104 The carrying amount of financial liabilities corresponds to fair value. Of long-term bank loans and overdrafts DKK 150m is subject to covenants measured on gearing on a quarterly basis. There is no indication that covenants cannot be met for the next 12 months. Interest rate sensitivity DKK million 2024 2023 Effect of a 1% interest rate increase at the end of the year Effect on equity 2 3 Of this, earnings impact is -4 -5 Undrawn credit facilities 31/12 945 863 Financial liabilities, foreign currency risk exposure Distribution on currencies Current liabilities Non-current liabilities DKK million 2024 2023 2024 2023 EUR 124 147 101 106 DKK 705 563 324 328 SEK 0 0 0 0 Total 829 710 425 434 Interest rate in % 3.7-5.6 4.3-5.7 3.9-5.6 4.3-5.6 The parent company has raised loans in Danish kroner and euro. We refer to the consolidated accounts, note 4.4, Financial instruments ,for more information on liquidity risk, interest rate and currency risk management. Solar A/S Annual Report 2024 Financial statements 177 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 4.3 Financial instruments – continued Hedging activities DKK million 2024 2023 Outstanding interest swaps made for hedging floating-rate loans Principal amount 361 367 Interest rate in % for outstanding swaps 4.5-5.6 4.5-5.6 Fair value -17 -17 DKK million 2024 2023 Amounts recognised in other comprehensive income Adjustment to fair value for the year -5 -10 Realised during the year, recognised as financial income/expenses 5 5 Total 0 -5 Reconciliation of development in interest-bearing debt to financing activities in the cash flow statement DKK million 2024 2023 Interest-bearing liabilities 1/1 1,256 905 Repayment of non-current interest-bearing debt -9 -9 Raising of non-current interest-bearing liabilities 100 150 Change in current interest-bearing debt 19 176 Instalment on lease liabilities -37 -36 Lease liability raised during the year, non-cash 29 71 Foreign currency translation adjustment -1 -1 Interest-bearing liabilities 31/12 1,357 1,256 Maturity for interest swaps follows the maturity for debt to mortgage credit institutions as stated on previous page. Accounting policies Derivatives Derivatives are only used to hedge financial risks in the form of interest rate and currency risks. Derivatives are recognised at fair value. Both realised and unrealised gains and losses are recognised in the income statement unless the derivatives are part of hedging of future transactions. Value adjustments of derivatives for hedging of future transactions are recognised directly in other comprehensive income. Any non-effective part of the financial instrument in question is recognised in the income statement. Derivatives are recognised under other receivables or other payables. Solar A/S Annual Report 2024 Financial statements 178 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 4.4 Financial income 4.5 Financial expenses DKK million 2024 2023 Interest income 16 15 Foreign exchange gains 3 6 Fair value adjustments on investments 2 0 Other financial income 15 21 Total 36 42 Financial income, received 31 36 DKK million 2024 2023 Interest expenses 84 82 Foreign exchange losses 3 7 Interest on lease liabilities 4 2 Fair value adjustments, other financial investments 3 8 Other financial expenses 8 6 Total 102 105 Financial expenses, settled 96 90 Solar A/S Annual Report 2024 Financial statements 179 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review Section 5 Other notes Solar A/S Annual Report 2024 Financial statements 180 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 5.1 Contingent liabilities and other financial liabilities Section 5 – Other notes DKK million 2024 2023 Collateral Assets have been pledged as collateral for bank arrangements at a carrying amount of: Land and buildings 243 262 Total 243 262 Mortgaging and guarantees As security of subsidiaries' bank arrangements, guarantees have been issued for: Total 105 92 As security of subsidiaries' liabilites, guarantees have been issued for: Total 502 561 Solar A/S Annual Report 2024 Financial statements 181 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review 5.2 Related parties 5.3 Auditors’ fees DKK million 2024 2023 Deloitte Statutory audit 2 2 Other assurance engagements 1 1 1 Total 3 3 DKK million 2024 2023 Sale of services to subsidiaries 173 169 Sale of goods to subsidiaries 147 150 Interest income from subsidiaries 13 17 Interest expense from subsidiaries 6 6 On the balance sheet date, the usual product balances derived from these transactions exist. These appear from the parent company’s balance sheet. Solar also invoices Fonden af 20. December for the performance of administrative services at DKK 55,000 (DKK 55,000). Balances with Fonden af 20. December total 0 on balance sheet date. Group and parent Solar A/S are subject to control by Fonden af 20. December (registered as a commercial foundation in Denmark), which owns 17.0% of the shares and holds 60.5% of the voting rights. The remaining shares are owned by a widely combined group of shareholders. Other related parties include subsidiaries, associates, the company’s Board of Directors and Executive Board. There have been no transactions in the financial year with members of the Board of Directors and Executive Board other than those which appear from note 2.2. The parent company has had the following significant transactions with related parties: 1) Other assurance engagements mainly consist of ESG assurance in 2023 and 2024. Solar A/S Annual Report 2024 Financial statements 182 Financial statements Consolidated financial statements Separate financial statements Statement of comprehensive income Balance sheet Cash flow statement Statement of changes in equity Notes Section 1 – Basis for preparation Section 2 – Income statement Section 3 – Invested capital Section 4 – Capital structure and financing costs Section 5 – Other notes Group companies overview Statements and reports Statements, not audited, part of Management review Group companies overview 183 Financial statements Solar A/S Annual Report 2024 Financial statements Group companies overview Name Reg. no. Currency Share capital CountrySolar A/S 15908416 DKK 736,000,000 DKSolar Sverige AB 5562410406 SEK 100,000,000 SESolar Norge AS 980672891 NOK 70,000,000 NOSolar Nederland B.V. 09013687 € 67,000,500 NLEltechna B.V. 23066336 € 18,151 NLMAG45 Holding B.V. 17213145 € 28,544 NLMAG45 B.V. 17168649 € 18,000 NLMAG45 Sp.z.oo 277409 PLN 50,000 PLMAG45 GmbH 32297 € 25,000 DEMAG45 Ltd 311859 € 152 IEMAG45 (UK) Ltd 4092664 £ 301 UKMAG45 S.a.r.l. CHE-265.557.148 CHF 20,000 CHMAG45 INC 35-2568242 $ 1,457 USAMAG45 S.R.O 27697690 CZK 200,000 CZMAG45 Iss Co. Ltd 91320594693364287L $ 80,000 CNMAG45 Ltd 39740334 EUR 1 HKMAG45 Pte Ltd. 201709959H SG$ 100,000 SGMAG45 Kft 09-09-029346 HUF 3,000,000 HUMAG45 Srl 10053890967 € 20,000 ITMAG45 Sarl 919450692 € 100,000 FRSolar Polska Sp.z.oo 0000003924 PLN 65,050,000 PLP/F Solar Føroyar P/F 104 DKK 12,000,000 FOSD of 16 March GmbH HRB 516 NM € 51,400,000 DESD of 17 March Gesellschaft für Vermögensverwaltung mbH HRB 16642 KI € 25,000 DESD of 16 March Gesellschaft für Vermögensverwaltung mbH HRB 16638 KI € 2,556,500 DESD of 16 March Immobilienverwaltung GmbH HRB 16616 KI € 25,000 DE Name Reg. no. Currency Share capital CountrySolar Invest A/S 73316111 DKK 500,000 DKSolar Polaris A/S 38378171 DKK 5,000,000 DKHøjager Belysning A/S 74111416 DKK 1,450,500 DKLetskog SIA 40203326011 EUR 2,801 LVDunduru Plavas SIA 41503039257 EUR 426,800 LV Subsidiaries, where Solar’s equity interest is more than 50% Name Reg. no. Currency Share capital CountryThermonova A/S, 51.00% 38132369DKK 468,687 DK Companies, where Solar's equity interest is less than 50% Name Reg. no. Currency Share capital CountryAssociatesMonterra AB, 30.00% 559103-4847 SEK 50,000 SEZolw AS, 35.00% 925 003 328 NOK 48,000 NOEdison Data AS, 20.00% 928 651 150 NOK 1,800,000 NOOther financial investmentsLetsBuild Holding SA, 8.07% 0656.613.388 EUR 30,457,207 BEMinuba ApS, 19.98% 33259336 DKK 100,771 DKSiteHub ApS, 20.00% 41823194 DKK 50,000 DK Companies fully owned by Solar A/S Companies fully owned by Solar A/S – continued Companies, where Solar’s equity interest is less than 100% Solar A/S Annual Report 2024 Financial statements 184 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Statements and reports 185 Financial statements Financial statements Solar A/S Annual Report 2024 The Board of Directors and the Executive Board have today considered and approved the Annual Report of Solar A/S for the financial year 1 January – 31 December 2024. The Annual Report is prepared in accordance with IFRS Accounting Standards as adopted by the EU and disclosure requirements for listed companies in Denmark. In our opinion, the consolidated financial statements and the separate financial statements for the parent company give a true and fair view of the Group’s and the Parent’s financial position at 31. December 2024 as well as of the results of their operations and the Group’s cash flows for the year 1 January – 31 December 2024. In our opinion, the Management review is prepared in accordance with relevant laws and regulations and contains a fair review of the development of the Group’s and the Parent’s business and financial matters, the results for the year and of the Parent’s financial position and the financial position as a whole of the entities included in the consolidated financial statements, together with a description of the principal risks and uncertainties that the Group and the Parent face. The Sustainability Statement is prepared in accordance with the European Sustainability Reporting Standards (ESRS) as required by the Danish Financial Statements Act as well as article 8 in the EU Taxonomy regulation. Furthermore, in our opinion, the annual report of Solar A/S for the financial year 1 January – 31 December 2024, with the file name SOLA-2024-12-31-0-en.zip, is prepared, in all material respects, in accordance with the ESEF Regulation. We recommend the Annual Report for adoption at the Annual General Meeting. Vejen, 6 February 2025 EXECUTIVE BOARD Jens E. Andersen Michael H. Jeppesen CEO CFO BOARD OF DIRECTORS Michael Troensegaard Andersen Jesper Dalsgaard Peter Bang Chair Vice-chair Katrine Borum Morten Chrone Denise Goldby Louise Knauer Rune Jesper Nielsen Michael Kærgaard Ravn Statement by the Executive Board and the Board of Directors Solar A/S Annual Report 2024 Financial statements 186 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statement by the Executive Board and the Board of Directors Independent auditor’s report Independent auditor’s limited assurance report on Sustainability statement Statements, not audited, part of Management review Independent auditor’s report To the shareholders of Solar A/S Report on the consolidated financial statements and the separate financial statements Opinion We have audited the consolidated financial statements and the separate financial statements of for the financial year 01.01.2024 – 31.12.2024, which comprise the income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including material accounting policy information, for the Group as well as for the Parent. The consolidated financial statements and the separate financial statements are prepared in accordance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act. In our opinion, the consolidated financial statements and the separate financial statements give a true and fair view of the Group’s and the Parent’s financial position at 31.12.2024, and of the results of their operations and cash flows for the financial year 01.01.2024 – 31.12.2024 in accordance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act. Our opinion is consistent with our audit book comments issued to the Audit Committee and the Board of Directors. 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 statements and the separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Recognition of revenue Recognition of revenue is complex due to the volume of transactions and the variety of revenue streams within the different segments. We focused on this area due to the large number of transactions involved and because recognition of revenue involves accounting policy decisions and judgements made by Management, originating from different customer behavior, market conditions and customer agreements. Further, the number of transactions and extent of revenue streams require various IT setups to ensure correct revenue recognition, which are complex and involve an inherent risk to the revenue recognition process. Reference is made to note 2.1 in the consolidated financial statements. How the identified key audit matter was addressed in our audit We assessed and tested the design, implementation, and operating effectiveness of relevant internal controls, including test of relevant IT controls, for the different revenue streams primarily relating to 3-way-match of revenue and authorization for manual revenue journals. In addition, we sample tested revenue transactions, including manual revenue journals and customer bonuses throughout 2024 to underlying documentation. We have focused standards and requirements are further described in the “Auditor’s responsibilities for the audit of the consolidated financial statements and the separate financial statements” section of this auditor’s report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, we have not provided any prohibited non-audit services as referred to in Article 5(1) of Regulation (EU) No 537/2014. We were appointed auditors of for the first time on 19.03.2021 for the financial year 2021. We have been reappointed annually by decision of the general meeting for a total contiguous engagement period of 4 years up to and including the financial year 2024. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements and the separate financial statements for the financial year 01.01.2024 – 31.12.2024. These matters were addressed in the context of our audit of the consolidated financial our sample selection on transactions which were considered unusual by nature or were generated outside the normal billing and revenue recognition process. We also tested cut-off on revenue recognized around the balance sheet date and performed retrospective reviews of returned goods and sample test on credit notes to test the accuracy and completeness of revenue recognition for the year. Statement on the management commentary Management is responsible for Management’s Review. Our opinion on the Financial Statements does not cover Management’s Review, and we do not as part of the audit express any form of assurance conclusion thereon. In connection with our audit of the Financial 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. This does not include the requirements in paragraph 99a related to the sustainability statement covered by the separate auditor’s limited assurance report hereon. Solar A/S Annual Report 2024 Financial statements 187 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statement by the Executive Board and the Board of Directors Independent auditor’s report Independent auditor’s limited assurance report on Sustainability statement Statements, not audited, part of Management review Based on the work we have performed, in our view, Management’s Review is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act except for the requirements in paragraph 99a related to the sustainability statement, cf. above. We did not identify any material misstatement in Management’s Review. Management’s responsibilities for the consolidated financial statements and the separate financial statements Management is responsible for the preparation of consolidated financial statements and separate financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of consolidated financial statements and separate financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements and the separate financial statements, Management is responsible for assessing the Group’s and the Parent’s ability to continue as a going concern, for disclosing, as applicable, matters related to going concern, and for using the going concern basis of accounting in preparing the consolidated financial statements and the separate financial statements unless Management either intends to liquidate the Group 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’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 in preparing the consolidated financial statements and the separate financial statements, 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’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 consolidated financial statements and or the Entity or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the consolidated financial statements and the separate financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements and the separate 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 consolidated financial statements and these separate financial statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the consolidated financial statements and the separate financial the separate 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 and the Entity to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the consolidated financial statements and the separate financial statements, including the disclosures in the notes, and whether the consolidated financial statements and the separate financial statements represent the underlying transactions and events in a manner that gives a true and fair view. - Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the consolidated financial statements and the separate financial statements 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. Solar A/S Annual Report 2024 Financial statements 188 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statement by the Executive Board and the Board of Directors Independent auditor’s report Independent auditor’s limited assurance report on Sustainability statement Statements, not audited, part of Management review 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, safeguards put in place and measures taken to eliminate threats. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements and the separate 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 or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on compliance with the ESEF Regulation As part of our audit of the consolidated financial statements and the separate financial statements of we performed procedures to express an opinion on whether the annual report for the financial year 01.01.2024 – 31.12.2024, with the file name SOLA-2024-12-31-0-en.zip, is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 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. 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 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 In our opinion, the annual report of Solar A/S for the financial year 01.01.2024 – 31.12.2024, with the file name SOLA-2024-12-31-0-en.zip, is prepared, in all material respects, in compliance with the ESEF Regulation. Aarhus, 6 February 2025 Deloitte Statsautoriseret Revisionspartnerselskab Business Registration No 33963556 Henrik Vedel State Authorised Public Accountant Identification No (MNE) mne10052 Jakob Olesen State Authorised Public Accountant Identification No (MNE) mne34492 Solar A/S Annual Report 2024 Financial statements 189 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statement by the Executive Board and the Board of Directors Independent auditor’s report Independent auditor’s limited assurance report on Sustainability statement Statements, not audited, part of Management review Independent auditor’s limited assurance report on sustainability statement To the stakeholders of Solar A/S Limited assurance conclusion We have conducted a limited assurance engagement on the sustainability statement of Solar A/S (“Group”) included in the Management’s Review (the “sustainability statement”), pages 39 – 93, for the financial year 1 January – 31 December 2024. Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the sustainability statement is not prepared, in all material respects, in accordance with the Danish Financial Statements Act section 99 a, including: compliance with the European Sustainability Reporting Standards (ESRS), including that the process carried out by the management to identify the information reported in the sustainability statement (the “Process”) is in accordance with the description set out in the Methodology and process on pages 53 and 54 and compliance of the disclosures in section EU Taxonomy Reporting within the environmental section of the sustainability statement with Article 8 of EU Regulation 2020/852 (the “Taxonomy Regulation”). Basis for conclusion We conducted our limited assurance engagement in accordance with ISAE 3000 (Revised), Assurance engagements other than audits or reviews of historical financial information, and additional requirements applicable in Denmark. The procedures in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Our responsibilities under this standard are further described in the “Auditor’s responsibilities for the assurance engagement” section of our report. Our independence and quality management We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional 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. Deloitte Statsautoriseret Revisionspartnerselskab applies International Standard on Quality Management 1, ISQM1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Other matter The comparative information included in the Sustainability statement of the Group was not subject to an assurance engagement on sustainability information prepared in accordance with the Danish Financial Statements Act section 99 a. Our conclusion is not modified in respect of this matter. Inherent limitations in preparing the sustainability statement In reporting forward-looking information in accordance with ESRS, management is required to prepare the forward-looking information on the basis of disclosed assumptions about events that may occur in the future and possible future actions by the Group. Actual outcomes are likely to be different since anticipated events frequently do not occur as expected. Management’s responsibilities for the sustainability statement Management is responsible for designing and implementing a process to identify the information reported in the sustainability statement in accordance with the ESRS and for disclosing this Process in Methodology and process of the sustainability statement. This responsibility includes: understanding the context in which the Group’s activities and business relationships take place and developing an understanding of its affected stakeholders; the identification of the actual and potential impacts (both negative and positive) related to sustainability matters, as well as risks and opportunities that affect, or could reasonably be expected to affect, the Group’s financial position, financial performance, cash flows, access to finance or cost of capital over the short-, medium-, or long-term; the assessment of the materiality of the identified impacts, risks and opportunities related to sustainability matters by selecting and applying appropriate thresholds; and making assumptions that are reasonable in the circumstances. Management is further responsible for the preparation of the sustainability statement, in accordance with the Danish Financial Statements Act section 99a, including: compliance with the ESRS; preparing the disclosures in EU Taxonomy Reporting within the environmental section of the sustainability statement, in compliance with Article 8 of the Taxonomy Regulation; designing, implementing and maintaining such internal control that management determines is necessary to enable the preparation of the sustainability statement that is free from material misstatement, whether due to fraud or error; and Solar A/S Annual Report 2024 Financial statements 190 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statement by the Executive Board and the Board of Directors Independent auditor’s report Independent auditor’s limited assurance report on Sustainability statement Statements, not audited, part of Management review the selection and application of appropriate sustainability reporting methods and making assumptions and estimates that are reasonable in the circumstances. Auditor’s responsibilities for the assurance engagement Our objectives are to plan and perform the assurance engagement to obtain limited assurance about whether the sustainability statement is free from material misstatement, whether due to fraud or error, and to issue a limited assurance report that includes our conclusion. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence decisions of users taken on the basis of the sustainability statement as a whole. As part of a limited assurance engagement in accordance with ISAE 3000 (Revised) we exercise professional judgement and maintain professional scepticism throughout the engagement. Our responsibilities in respect of the Process include: Obtaining an understanding of the Process but not for the purpose of providing a conclusion on the effectiveness of the Process, including the outcome of the Process; Considering whether the information identified addresses the applicable disclosure requirements of the ESRS, and Designing and performing procedures to evaluate whether the Process is consistent with the Group’s description of its Process, as disclosed in the section Methodology and process on pages 53 and 54. Our other responsibilities in respect of the sustainability statement include: Identifying disclosures where material misstatements are likely to arise, whether due to fraud or error; and Designing and performing procedures responsive to disclosures in the sustainability statement where material misstatements are likely to arise. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Summary of the work performed A limited assurance engagement involves performing procedures to obtain evidence about the sustainability statement. The nature, timing and extent of procedures selected depend on professional judgement, including the identification of disclosures where material misstatements are likely to arise, whether due to fraud or error, in the sustainability statement. In conducting our limited assurance engagement, with respect to the Process, we: Obtained an understanding of the Process by performing inquiries to understand the sources of the information used by management; and reviewing the Group’s internal documentation of its Process; and Evaluated whether the evidence obtained from our procedures about the Process implemented by the Group’s was consistent with the description of the Process set out in section Double materiality assessment introduction on pages 44-52. In conducting our limited assurance engagement, with respect to the sustainability statement, we: Obtained an understanding of the Group’s reporting processes relevant to the preparation of its sustainability statement including the consolidation processes by obtaining an understanding of the Group’s control environment, processes and information systems relevant to the preparation of the Sustainability Statement but not evaluating the design of particular control activities, obtaining evidence about their implementation or testing their operating effectiveness; Evaluated whether material information identified by the Process is included in the sustainability statement; Evaluated whether the structure and the presentation of the sustainability statement are in accordance with the ESRS; Performed inquiries of relevant personnel and analytical procedures on selected information in the sustainability statement; Performed substantive assurance procedures on selected information in the sustainability statement; Evaluated methods, assumptions and data for developing material estimates and forward- looking information and how these methods were applied; Obtained an understanding of the process to identify taxonomy-eligible and taxonomy- aligned economic activities and the corresponding disclosures in the sustainability statement and management’s review Aarhus, 6 February 2025 Deloitte Statsautoriseret Revisionspartnerselskab CVR-nr. 33963556 Henrik Vedel State Authorised Public Accountant mne10052 Søren Marquart Alsen State Authorised Public Accountant mne40040 Solar A/S Annual Report 2024 Financial statements 191 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statement by the Executive Board and the Board of Directors Independent auditor’s report Independent auditor’s limited assurance report on Sustainability statement Statements, not audited, part of Management review Statements, not audited, part of Management review 192 Financial statements Solar A/S Annual Report 2024 Financial statements Q4 2024 Solar A/S Annual Report 2024 Financial statements 193 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Q1 Q2 Q3 Q4 Income statement (DKK million) 2024 2023 2024 2023 2024 2023 2024 2023 Revenue 3,030 3,656 3,100 3,250 2,860 2,965 3,233 3,160 Earnings before interest, tax, depreciation and amortisation (EBITDA) 88 280 137 214 202 187 219 190 Earnings before interest, tax and amortisation (EBITA) 26 226 77 159 143 132 154 131 Earnings before interest and tax (EBIT) 10 209 56 121 125 114 87 114 Financials, net -16 -20 -22 -20 -24 -21 -23 -29 Earnings before tax (EBT) -6 189 34 101 101 93 63 85 Net profit or loss for the quarter -6 145 25 77 78 71 51 55 Q1 Q2 Q3 Q4 Balance sheet (DKK million) 2024 2023 2024 2023 2024 2023 2024 2023 Non-current assets 1,877 1,756 1,880 1,761 1,879 1,809 1,900 1,893 Current assets 4,205 4,858 4,339 4,556 4,385 4,456 4,208 4,219 Balance sheet total 6,082 6,614 6,219 6,317 6,264 6,265 6,108 6,112 Total equity 1,726 1,759 1,770 1,810 1,831 1,910 1,874 1,982 Non-current liabilities 891 737 881 894 871 877 878 908 Current liabilities 3,465 4,118 3,568 3,613 3,562 3,478 3,356 3,222 Interest-bearing liabilities, net 1,450 1,530 1,334 1,558 1,646 1,480 1,232 1,157 Invested capital 3,157 3,263 3,085 3,342 3,460 3,366 3,089 3,120 Net working capital, end of period 1,876 2,347 1,720 2,265 2,036 2,253 1,693 1,907 Net working capital, average 2,075 2,149 1,939 2,251 1,885 2,268 1,831 2,193 Consolidated Quarterly figures Solar A/S Annual Report 2024 Financial statements 194 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Q1 Q2 Q3 Q4 Cash flows (DKK million) 2024 2023 2024 2023 2024 2023 2024 2023 Cash flow from operating activities 7 101 202 78 -196 190 525 486 Cash flow from investing activities -57 -162 -70 -54 -82 -102 -56 -87 Cash flow from financing activities -57 171 -85 -38 165 -109 -278 -199 Net investments in intangible assets -34 -20 -41 -25 -38 -26 -41 -31 Net investments in property, plant and equipment -23 -30 -19 -29 -44 -76 -15 -34 Acquisition and disposal of subsidiaries, net 0 -111 -10 0 0 0 0 -22 Q1 Q2 Q3 Q4 Financial ratios (% unless otherwise stated) 2024 2023 2024 2023 2024 2023 2024 2023 Revenue growth -17.1 5.6 -4.6 -5.8 -3.5 -9.2 2.3 -14.2 Organic growth -17.1 8.3 -5.0 -2.2 -3.8 -6.2 2.3 -12.5 Organic growth adjusted for number of working days -15.4 6.7 -7.8 -1.0 -5.3 -4.7 3.0 -11.1 Gross profit margin 20.7 23.2 20.4 22.7 20.7 21.5 20.8 22.4 EBITDA margin 2.9 7.7 4.4 6.6 7.1 6.3 6.8 6.0 EBITA margin 0.9 6.2 2.5 4.9 5.0 4.5 4.8 4.1 EBIT margin 0.3 5.7 1.8 3.7 4.4 3.8 2.7 3.6 Net working capital (NWC end of period)/revenue 15.1 16.7 14.0 16.3 16.8 16.6 13.9 14.6 Net working capital (NWC average)/revenue 16.7 15.3 15.8 16.2 15.5 16.7 15.0 16.8 Gearing (interest-bearing liabilities,net/EBITDA), no. of times 2.1 1.3 2.2 1.4 2.7 1.5 1.9 1.3 Return on equity (ROE) 10.9 35.0 8.6 32.7 8.8 25.5 8.4 18.3 Return on invested capital (ROIC) 8.5 23.2 6.6 20.5 6.8 16.9 8.3 13.2 Enterprise value/earnings before interest, tax and amortisation (EV/EBITA) 8.6 5.7 10.0 5.7 11.1 6.2 8.4 7.0 Equity ratio 27.6 25.9 27.7 27.9 28.5 29.7 29.9 31.6 Consolidated – continued Solar A/S Annual Report 2024 Financial statements 195 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Consolidated – continued Q1 Q2 Q3 Q4 Share ratios (DKK unless otherwise stated) 2024 2023 2024 2023 2024 2023 2024 2023 Earnings per share outstanding (EPS) -0.68 19.85 3.70 10.54 10.68 9.72 6.98 7.39 Intrinsic value per share outstanding 229.63 234.14 235.92 241.13 244.28 254.82 250.3 264.54 Share price 331.37 553.54 325.27 506.42 354.55 476.27 299.27 465.71 Share price/intrinsic value 1.44 2.36 1.38 2.10 1.45 1.87 1.20 1.76 Q1 Q2 Q3 Q4 Employees 2024 2023 2024 2023 2024 2023 2024 2023 Average number of employees (FTE's) 2,997 3,042 2,954 3,058 2,923 3,049 2,899 3,036 Definitions Organic growth Revenue growth adjusted for enterprises acquired and sold off and any exchange rate changes. No adjustments have been made for number of working days. Organic growth adjusted for number of working days Revenue growth adjusted for enterprises acquired and sold off and any exchange rate changes and number of working days. Net working capital Inventories and trade receivables less trade payables. ROIC Return on invested capital calculated on the basis of EBIT exclusive impairment on goodwill less tax calculated using the effective tax rate adjusted for one-off effects, if any. In all material aspects financial ratios are calculated in accordance with the Danish Finance Society's "Recommendations & Financial Ratios". Solar A/S Annual Report 2024 Financial statements 196 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Q4 EBITDA amounted to DKK 219m Financial review EBITDA increased to DKK 219m, positively affected by DKK 49m from the proceeds of the sale of our warehouse in Örebro. (Data shown in brackets relate to the corresponding period in 2023) Q4 2024 Revenue Our guidance for 2024 assumed that all segments would show negative growth, with recovery gaining ground by the end of the year. However, recovery was slower and was less robust than expected. Consequently, revenue was below expectations. Revenue amounted to DKK 3.2bn (DKK 3.2bn). Adjusted organic growth increased to 3.0% (-11.1%). When adjusted for Solar Polaris’ deliveries to a major solar park project, adjusted organic growth amounted to around 0%. Revenue from Climate & Energy, a strategic focus area, amounted to around DKK 423m (DKK 256m). Q4 posted an increase in residential sales, confirming the long-term potential of heat pumps. The Installation segment returned to positive adjusted organic growth of approx. 2%. Apart from Solar Sverige, all main markets saw positive growth. The Industry segment delivered adjusted organic growth of approx. -1%, with Solar Norge delivering double-digit positive growth. The Trade segment delivered adjusted organic growth of approx. 20%, positively affected by Solar Polaris’ deliveries to a major solar park project. When adjusted for Solar Polaris’ deliveries, organic growth amounted to approx. -7%. Gross profit margin % EBITDA DKKm Q1 88 2024 202 137 280 214 187 219 190 Q2 Q3 Q4 2023 Q1 20.7 2024 20.7 20.4 23.2 22.7 21.5 20.8 22.4 Q2 Q3 Q4 2023 It remains our assessment that we maintained our market share within the Installation and Industry segments in all material respects. Gross profit Gross profit margin declined as our continued focus on concept sales did not result in the expected gross profit margin improvements combined with a general decline across all other main categories in Q4 2024 - even though we received around DKK 20m in one-off supplier bonus in Q4. Moreover, improvements to our delivery service increased freight costs. Gross profit margin at group level amounted to 20.8% (22.4%). The decline in gross profit margin, adjusted for one-off supplier bonus in 2024 and one-off price effects in 2023, amounted to 2.5 percentage points. Other operating income Other operating income of DKK 49m is accounted for by non-recurring income from the sale of our warehouse in Örebro. An announcement of the sale of the two warehouses in Sweden, prior to the finalisation of our new logistics centre in Kumla, was made in the 2023 Annual Report. Solar A/S Annual Report 2024 Financial statements 197 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points External operating costs and staff costs We actively initiate measures to mitigate the impact of cost inflation and the expected slowdown in the market. These measures proved effective and in Q4 2024, external operating and staff costs declined by DKK 18m to 15.4% (16.3%) of revenue. EBITDA EBITDA of DKK 219m (DKK 190m) was above our expectations. Adjusted for non-recurring income in Q4 2024, the underlying EBITDA margin amounted to 4.6% (6.2%). The results from the individual markets are given on pages 204-205. Amortisation and impairment of intangible assets Amortisation and impairment of intangible assets amounted to DKK 67m (DKK 17m). The slower-than-anticipated growth in sales was the main factor behind the impairment loss on Thermonova of DKK 47m in 2024. However, we remain confident in the potential of high- capacity Thermonova heat pumps. Earnings before tax Earnings before tax amounted to DKK 63m (DKK 85m). Income tax Income tax amounted to DKK 12m (DKK 30m). Net profit Net profit amounted to DKK 51m (DKK 55m). Cash flows Net working capital as an average of the previous four quarters amounted to 15.0% (16.8%) of revenue. Net working capital at the end of 2024 decreased to 13.9% (14.6%). Cash flow from operating activities totalled DKK 525m (DKK 486m). We succeeded in reducing inventories, which resulted in a cash flow impact of DKK 47m (DKK 171m). Changes in receivables impacted cash flow by DKK 292m (DKK 298m). Changes in non-interest-bearing liabilities had a cash flow impact of DKK 42m (DKK -129m). Total cash flow from investing activities amounted to DKK -56m (DKK -87m). The sale of our warehouse in Örebro had a positive impact of DKK 61m. In 2023, DKK -22m related to the acquisition of additional land in Latvia. Cash flow from financing activities amounted to DKK -278m (DKK -199m) due to a change in current interest-bearing liabilities and the raising of non-current interest-bearing liabilities of DKK 100m. As a result, total cash flow amounted to DKK 191m (DKK 200m). Net interest-bearing liabilities amounted to DKK 1,232m (DKK 1,157m). By the end of 2024, gearing was 1.9 (1.3) times EBITDA. Our gearing target was 1.5-3.0 times EBITDA. The Board of Directors evaluates the capital structure on an ongoing basis in relation to our target and capital requirements. At the end of 2024, Solar had undrawn credit facilities of DKK 1,028m (DKK 955m). Invested capital Solar Group’s invested capital totalled DKK 3,089m (DKK 3,120m). ROIC amounted to 8.3% (13.2%). Activities with a Solar equity interest of less than 50% and activities attributable to non-controlling interests are not included in the ROIC calculation. Invested capital includes operating assets and liabilities only. Solar A/S Annual Report 2024 Financial statements 198 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Installation Our Installation segment covers the installation of electrical, heating and plumbing products. Installation revenue for Q4 amounted to DKK 1,793m (DKK 1,764m), which corresponds to overall adjusted organic growth of around 2% (-11%) related to the electrical as well as the heating and plumbing business. Solar Sverige saw negative growth while all other main markets posted positive growth. Segment profit amounted to DKK 154m (DKK 173m), which corresponds to a segment profit margin of 8.6% (9.8%). Trade Our Trade segment covers special sales and other niche areas. It also includes Solar Polaris and Højager Belysning. Revenue from Trade for Q4 amounted to DKK 372m (DKK 300m). This corresponds to overall adjusted organic growth of around 20% (-30%) which was positively affected by Solar Polaris’ deliveries to a major solar park project. When adjusted for Solar Polaris’ deliveries, organic growth amounted to approx. -7%. Segment profit amounted to DKK 36m (DKK 42m), which corresponds to a segment profit margin of 9.7% (14.0%). Industry This segment covers the industry, offshore and marine industries as well as utilities and infrastructure. Industry also includes MAG45 and Thermonova. Industry revenue for Q4 amounted to DKK 1,068m (DKK 1,096m). This corresponds to overall adjusted organic growth of around -1% (-4%). Solar Norge saw positive growth while other main markets posted negative growth. Segment profit amounted to DKK 173m (DKK 186m). This corresponds to a segment profit margin of 16.2% (17.0%). Installation Industry Trade 154 173 36 Installation Industry Trade 1,793 1,068 372 Q4 2024 Q4 2024 Installation Industry Trade 154 173 36 Installation Industry Trade 1,793 1,068 372 Q4 2024 Q4 2024 Revenue Segment profit Segment margin % DKK million 2024 2023 2024 2023 2024 2023 Installation 1,793 1,764 154 173 8.6 9.8 Industry 1,068 1,096 173 186 16.2 17.0 Trade 372 300 36 42 9.7 14.0 Solar Group 3,233 3,160 363 401 11.2 12.7 Segment revenue DKKm Segment profit DKKm Our segments Q4 2024 Segment profit includes items that are directly attributable to the individual segment and items that can be reliably allocated to the individual segment. Segment profit does not include non- allocated costs of DKK 144m (DKK 211m) in Q4, which cover income and costs related to joint group functions and to costs that cannot be reliably allocated to the individual segment. Detailed segment information is given on page 204. Solar A/S Annual Report 2024 Financial statements 199 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Income statement Other comprehensive income Q4 DKK million 2024 2023 Revenue 3,233 3,160 Cost of sales -2,562 -2,451 Gross profit 671 709 Other operating income and costs 49 -1 External operating costs -91 -101 Staff costs -407 -415 Loss on trade receivables -3 -2 Earnings before interest, tax, depreciation and amortisation (EBITDA) 219 190 Depreciation and write-down on property, plant and equipment -65 -59 Earnings before interest, tax and amortisation (EBITA) 154 131 Amortisation and impairment of intangible assets -67 -17 Earnings before interest and tax (EBIT) 87 114 Share of net profit from associates -1 0 Financial income 34 22 Financial expenses -57 -51 Earnings before tax (EBT) 63 85 Income tax -12 -30 Net profit for the period 51 55 Earnings in DKK per share outstanding (EPS) 10.13 7.39 Diluted earnings in DKK per share outstanding (EPS-D) 10.10 7.37 Attributable to: Shareholders of Solar A/S 51 54 Non-controlling interests 0 1 Net profit for the period 51 55 Q4 DKK million 2024 2023 Net profit for the period 51 55 Other income and costs recognised: Items that can be reclassified for the income statement Foreign currency translation adjustment of foreign subsidiaries -7 23 Fair value adjustment of hedging instruments before tax 0 -8 Tax on fair value adjustments of hedging instruments 0 2 Other income and costs recognised after tax -7 17 Total comprehensive income for the period 44 72 Attributable to: Shareholders of Solar A/S 44 71 Non-controlling interests 0 1 Total comprehensive income for the period 44 72 Statement of comprehensive income Financial statements Solar A/S Annual Report 2024 Financial statements 200 Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Consolidated 31.12 DKK million 2024 2023 Assets Intangible assets 381 348 Property, plant and equipment 1,070 1,066 Right-of-use assets 408 440 Deferred tax assets 11 7 Investments in associates 3 4 Other non-current assets 27 28 Non-current assets 1,900 1,893 Inventories 1,888 2,029 Trade receivables 1,657 1,648 Income tax receivable 20 25 Receivables from construction contracts 4 0 Other receivables 107 17 Prepayments 73 59 Cash at bank and in hand 459 441 Current assets 4,208 4,219 Total assets 6,108 6,112 31.12 DKK million 2024 2023 Equity and liabilities Share capital 736 736 Reserves -234 -198 Retained earnings 1,216 1,175 Proposed dividend for the financial year 110 219 Equity attributable to shareholders of Solar A/S 1,828 1,932 Non-controlling interests 46 50 Total equity 1,874 1,982 Interest-bearing liabilities 425 434 Lease liabilities 284 320 Provision for deferred tax 157 143 Other provisions 12 11 Non-current liabilities 878 908 Interest-bearing liabilities 841 714 Lease liabilities 141 130 Trade payables 1,852 1,770 Income tax payable 8 54 Payables from construction contracts 35 0 Other payables 462 520 Prepayments 8 13 Other provisions 9 21 Current liabilities 3,356 3,222 Liabilities 4,234 4,130 Total equity and liabilities 6,108 6,112 Balance sheet Financial statements Solar A/S Annual Report 2024 Financial statements 201 Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Consolidated Q4 DKK million 2024 2023 Net profit for the period from continuing operations 51 55 Depreciation, write-down and amortisation 132 76 Changes to provisions and other adjustments -53 8 Share of net profit from associates 1 0 Financials, net 23 29 Income tax 12 30 Financial income, received 16 15 Financial expenses, settled -39 -37 Income tax, settled 1 -30 Cash flow before working capital changes 144 146 Working capital changes Inventory changes 47 171 Receivables changes 292 298 Non-interest-bearing liabilities changes 42 -129 Cash flow from operating activities 525 486 Investing activities Purchase of intangible assets -41 -31 Purchase of property, plant and equipment -76 -34 Disposal of property, plant and equipment 61 0 Acquisition of subsidaries and activities 0 -22 Cash flow from investing activities -56 -87 Q4 DKK million 2024 2023 Financing activities Repayment of non-current, interest-bearing debt -2 -2 Raising of non-current interest-bearing liabilities 100 0 Change in current interest-bearing debt -341 -160 Instalment on lease liabilities -34 -37 Dividends paid to non-controlling interests -1 0 Cash flow from financing activities -278 -199 Total cash flow 191 200 Cash at bank and in hand at the beginning of period 268 241 Cash at bank and in hand at the end of period 459 441 Cash flow statement Financial statements Solar A/S Annual Report 2024 Financial statements 202 Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points As additional material activities started in Q4 2024 a new specification of revenue is included. Q4 DKK million 2024 2023 Sales of goods and services 3,139 3,160 Revenue from construction contracts 94 0 Total revenue 3,233 3,160 Revenue Financial statements Solar A/S Annual Report 2024 Financial statements 203 Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Income statement (DKK million) Installation Industry Trade Total Q4 2024 Revenue 1,793 1,068 372 3,233 Cost of sales -1,453 -794 -315 -2,562 Gross profit 340 274 57 671 Direct costs -72 -41 -10 -123 Earnings before indirect costs 268 233 47 548 Indirect costs -114 -60 -11 -185 Segment profit 154 173 36 363 Non-allocated costs -144 Earnings before interest, tax, depreciation and amortisation (EBITDA) 219 Depreciation and amortisation -132 Earnings before interst and tax (EBIT) 87 Financials, net including share of net profit from associates and impairment on associates -24 Earnings before tax (EBT) 63 Income statement (DKK million) Installation Industry Trade Total Q4 2023 Revenue 1,764 1,096 300 3,160 Cost of sales -1,406 -809 -236 -2,451 Gross profit 358 287 64 709 Direct costs -69 -44 -9 -122 Earnings before indirect costs 289 243 55 587 Indirect costs -116 -57 -13 -186 Segment profit 173 186 42 401 Non-allocated costs -211 Earnings before interest, tax, depreciation and amortisation (EBITDA) 190 Depreciation and amortisation -76 Earnings before interst and tax (EBIT) 114 Financials, net including share of net profit from associates and impairment on associates -29 Earnings before tax (EBT) 85 Solar’s business segments are Installation, Industry and Trade and are based on the customers’ affiliation with the segments. Installation covers installation of electrical, and heating and plumbing products, while Industry covers industry, offshore and marine, and utility and infrastructure.Trade covers other small areas. The three main segments have been identified without aggregation of operating segments. Segment income and costs include any items that are directly attributable to the individual segment and any items that can be reliably allocated to the individual segment. Non-allocated costs refer to income and costs related to joint group functions. Assets and liabilities are not included in segment reporting. Revenue and costs in the amount of DKK 94m and DKK 87m, respectively, from construction contracts recognized over time are fully allocated to the Trade segment. Segment information Financial statements Solar A/S Annual Report 2024 Financial statements 204 Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Segment information – continued Geographical information Solar A/S primarily operates on the Danish, Swedish, Norwegian and Dutch markets. In the below table, Other markets covers the remaining markets, which can be seen in the companies overview available on page 183. The below allocation has been made based on the products’ place of sale. Q4 DKK million Revenue Adjusted organic growth EBITDA EBITDA margin Non-current assets 2024 Denmark 1,087 8.2 91 8.4 835 Sweden 567 -3.6 67 11.8 291 Norway 487 7.3 22 4.5 203 The Netherlands 729 -1.9 29 4.0 396 Poland 113 7.9 1 0.9 50 Other markets 250 1.6 9 3.6 125 Solar Group 3,233 3.0 219 6.8 1,900 Q4 DKK million Revenue Adjusted organic growth EBITDA EBITDA margin Non-current assets 2023 Denmark 1,020 -9.2 97 9.5 899 Sweden 599 -9.6 35 5.8 214 Norway 464 -13.8 25 5.4 225 The Netherlands 732 -18.4 20 2.7 421 Poland 103 -5.6 2 1.9 48 Other markets 242 8.1 11 4.5 86 Solar Group 3,160 -11.1 190 6.0 1,893 Revenue and costs in the amount of DKK 94m and DKK 87m, respectively, from construction contracts recognized over time are fully allocated to the Danish market. Financial statements Solar A/S Annual Report 2024 Financial statements 205 Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Additional ESG data points Solar A/S Annual Report 2024 Financial statements 206 Financial statements Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Data point Unit 2024 2023 Renewable electricity, share Denmark % 85 87 Sweden % 98 98 Norway % 89 90 Netherlands % 97 97 Poland % 72 22 MAG45 % 46 35 Others 1 % 0 0 Water consumption Denmark m 3 5,097 5,205 Sweden m 3 6,844 6,931 Norway m 3 4,545 4,385 Netherlands m 3 3,060 3,380 Poland m 3 2,244 2,703 MAG45 m 3 2,310 2,433 Others 1 m 3 249 176 Supplier risk assessment, spend Denmark % 79 69 Sweden % 84 73 Norway % 75 72 Netherlands % 81 60 Poland % - - Others 1 % - - Data point Unit 2024 2023 Supplier Code of Conduct, signed Denmark % 94 91 Sweden % 97 96 Norway % 93 92 Netherlands % 90 86 Poland % - - Others 1 % - - 1) Solar Polaris, Højager Belysning, Thermonova 2) According to EcoVadis supplier assessment scheme. Additional ESG data points Supplier assessment improvements 2 2023 vs 2024 Whistleblower cases Unit 2024 2023 2022 Whistleblower cases, submitted number 3 1 2 Whistleblower cases, resolved number 3 1 2 Score Change in average score Overall +5.0 Environment +5.0 Labor & Human Rights +4.4 Ethics +4.7 Sustainable procurement +6.0 63.7 68.7 58.4 62.7 53.7 58.4 51.2 57.3 58.0 63.0 Financial statements Solar A/S Annual Report 2024 Financial statements 207 Consolidated financial statements Separate financial statements Group companies overview Statements and reports Statements, not audited, part of Management review Q4 2024 Additional ESG data points Solar A/S Industrivej Vest 43 DK 6600 Vejen Denmark Tel. +45 79 30 00 00 CVR no. 15908416 LEI 21380031XTLI9X5MTY92 www.solar.eu http://www.linkedin.com/company/solar-as ESEF data Name of reporting entity or other means of identification Solar A/S Domicile of entity Denmark Legal form of entity A/S Country of incorporation Denmark Address of entity's registered office Industrivej Vest 43, 6600 Vejen Principal place of business Europe Description of nature of entity's operations and principal business Sourcing and services company Name of parent entity Solar A/S Name of ultimate parent of group Fonden af 20. 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