Nederman: Nederman : Financial document (nederman annual and sustainability report 2024)

We shape the future for clean air The Clean Annual and Sustainability Air Company Report 2024 Contents OPERATIONS 4 Overview 4 Our business 12 Our sustainability agenda 38 Our divisions 52 DIRECTORS' REPORT 62 Review of business operations 62 Five-year overview 66 Risks and risk management 68 Corporate governance 70 Guidelines for executive remuneration 76 Board of Directors 78 Group management 79 FINANCIAL STATEMENTS 80 Consolidated financial statements 80 Notes to the financial statements 84 Sustainability indicators 116 Parent company's financial statement 132 Signatures 144 Auditor's report 145 OTHER 150 The Nederman share 150 Definitions 152 Articles of Association 153 Annual General Meeting 154 Dividend 154 Financial calendar 154 INFORMATION ON DATA IN THIS REPORT Figures in brackets refer to business activities in 2023 unless otherwise stated. The currency used throughout is Swedish krona (SEK). Millions of Swedish kronor is abbreviated to SEKm and thousands of Swedish kronor to SEKt. The information presented in the Annual Report concerning markets, competition and future growth are Nederman's assessments based primarily on material compiled internally within the group. Nederman's sustainability report for 2024 has been prepared in accordance with the GRI Standards, see GRI Content Index on page 50. The sustainability report, with the exception of the disclosures according to the EU Taxonomy regulation on pages 49 and 117-122, has been subject to a limited review by Ernst & Young. leading environmental technology company for clean air 80 years ago, Nederman was already a pioneer within working environments and clean air. Our determination to address the environmental challenges of industry through innovative solutions and cost-effective production has led to continuous expansion and a world-leading position in industrial air filtration. Today, expansion and value creation is achieved through digitalisation and servicification, and we are still at the forefront of development. This is how Nederman, as an environmental technology company and global leader, creates value and growth - for our customers, for our employees and for our owners. We protect people, planet and production. 4 OVERVIEW Strengthened positions and higher profitability In a market dominated by low business activity and growing geopolitical uncertainty, Nederman continued to advance its market positions, including in structurally growing industries throughout the world. Increased investments in operational efficiency and innovation strengthened competitiveness and supported higher profitability and a continued strong cash flow in 2024. 5,900 SEKm Net sales Low business activity and geopolitical uncertainty contributed to a decline in net sales of 4.7 percent to SEK 5,900m (6,188). The currency adjusted decline was 4.0 percent. 12.0 % Adjusted EBITA margin A better sales mix and increased production efficiency were the primary reasons for a strengthening of the adjusted EBITA margin to 12.0 percent (11.6) in 2024. 596 SEKm Cash flow Cash flow from operating activities was strengthened by 3.4 percent to SEK 596m (576), mainly driven by a continued successful reduction in working capital. 8000 7000 6000 5000 4000 3000 2000 1000 0 2020 2021 2022 2023 2024 Net sales Nederman's net sales in recent years increased significantly, driven by strong organic growth and a number of acquisitions. 1000 15 14 % 800 12 600 9 14 % 44 % 400 6 200 3 0 0 28 % 2020 2021 2022 2023 2024 Adjusted EBITA Net sales per division As a result of higher profitability in per- Three out of four divisions increased centage terms, the lower sales resulted their sales in 2024. Sales for Process in adjusted EBITA decreasing by only Technology declined in the wake of 1.0 percent in 2024 to SEK 707.6m (714.9). softer demand in the textiles sector. External sales Net sales, SEKm Adjusted EBITA, SEKm Extraction & Filtration Technology Adjusted EBITA margin, % Process Technology Duct & Filter Technology Monitoring & Control Technology OVERVIEW 5 Increasing focus on innovation Initiatives to strengthen out technology leadership continue. During the year, we increased our investments in product development, conducted several key launches, significantly strengthened and developed our own IoT team and completed our new innovation centre in Helsingborg. Investments in enhanced efficiency Investments in production and logistics have high priori- ty. The past year was no exception, as we moved in to new facilities in the US and Sweden, automated warehouses and continued upgrading the machine park with the aim of strengthening the range and margins. New, ambitious sustainability goals As a leading environmental technology company, it is a given that our business must be characterised by sustainability in all respects. In 2024, we further highlighted this by developing a stronger and revised sustainability plan with new, ambitious goals for our work on clean air, employees, climate and circularity. Continued growth in the service business Our industrial air filtration range meets customer requirements throughout the lifecycle. By providing more digital services and a stronger geographic presence, for example, we continued to increase our share in service and aftermar- ket, which made a positive contribution to profitability. Niche acquisition for organic growth Acquisitions are a key part of our strategy for profitable growth. The acquisitions of Canadian company Duroair and Danish company Olicem in 2024 yielded a minor direct contribution to sales, but strengthen our offering by providing us with the ability to grow more rapidly in new and existing industries. 6 OVERVIEW " Now we will elevate Nederman to the next level Sven Kristensson President and CEO OVERVIEW 7 During 2024, Nederman strengthened its position as global market leader in industrial air filtration through major investments in innovation, production and sustainability. With the inauguration of a new innovation centre in Helsingborg, new pioneering product launches and investments in production facilities throughout the world, we are driving the development of smart and energy-efficient solutions and continuing with undiminished energy to contribute to a future with cleaner air. Slightly more than a month ago, on 11 February, together with employees and invited guests, I opened our new, ultramodern facility in Helsingborg. Now we have a new head office, another new production and logistics facility, but, above all, we have taken the next step in the development of the core of our operations innovation. The new innovation centre and its accompanying test lab highlights our responsibility as global market leader. We are driving development, setting new standards and helping our customers to become more efficient, smarter and more sustain- able. The centre is the nave of our global initiative and comple- ments our 14 existing innovation hubs. In 2024, we launched several pioneering products, such as a new compact high-vac- uum unit that reduces energy consumption by up to 50 percent and the first analyser in the market that can measure up to four gases simultaneously. We also continue to reap the fruits of ear- lier strong launches, such as our fan system for textile factories, Nederman SAVE and our portable emissions analysers. Now we are taking our initiatives to the next level. and we are establishing new technology centres in Asian cities where key customers are located. The largest investments were made in the US, where we relocated RoboVent's operations to new and larger premises, and, in Thomasville, NC, we implemented a comprehensive investment programme focusing on auto- mation, among other aspects. We are an environmental technology company that should be able to help, for example, critical future industries to develop rapidly and sustainably, and that is why we must have the solutions that enable this. A good example is Nordfab Now, Duct & Filter Technology's new concept enabling the rapid and precise delivery of the ducting systems that are needed, for example, in the rapid construction of facilities for the manufacture of high-capacity batteries and semi-conductors in the US. We are now proceeding with similar concepts in other areas of the world, such as in Europe, where there is a large need for more battery plants and to continue growing in the green energy sector. During the year, Nederman strengthened its positions and is now delivering to a large number of critical and structurally growing industries worldwide. "The centre is the hub of our global initiative and complements our 14 existing innovation hubs" Faster and better At the same time, innovation is more than new products and solutions for implementation in customer production. It is a matter of innovative and creative thinking in all aspects of what we do, to simplify and enhance efficiency - for ourselves, but above all, for our customers. This philosophy is one of the factors behind our continued strong focus on upgrading and streamlining our own production and logistics. In addition to expanded and more efficient manufacturing and warehouse management in Hels- ingborg, we undertook activities in all regions during 2024. In Chi- na, we concluded our restructuring, thereby strengthening our capacity in a competitive market. We have implemented or commenced upgrades to manufacturing in Thailand and Australia, Growing importance of clean air Clean air is our business concept. Adjacent to our new innovation centre in Helsingborg, we have opened an experience centre to be able to show everyone who is interested, not only customers, how our solutions work and what they mean for the environment. Increasing numbers of customers are understanding the importance of clean industrial processes and this is a natural progression since, when correctly implemented, these can yield reduced energy costs, higher efficiency and improved health and safe- ty. In additi