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Annual report 2024 TCM Group A/S, Skautrupvej 16, 7500 Holstebro, Denmark, CVR No. 37291269
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Our overall purpose is to create a better home life for everyone. Regardless of family constellations, housing type and financial situation. We want to be a contributor to our customers' everyday happiness, and we do so by working together across teams and organisations, always with the customers in focus. We create better kitchen environments for the heart of your home Our purpose Tvis Køkken Frame, Keramik supermat TCM Group 2 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Svane Køkkenet ARC1 Notes Bronze Front page photo ESG Statements financial statements statements management review At a glance Letter to our shareholders .............................................................................................................. 05 About TCM Group ....................................................................................................................................... 06 Key figures and ratios ........................................................................................................................... 08 OUR BUSINESS MODEL ................................................................................................................................. 09 HOW WE CREATE VALUE ............................................................................................................................... 10 our business Strategy and financial outlook ...................................................................................................... 12 Danish design and Danish production ......................................................................................... 14 Risk management ....................................................................................................................................... 15 Performance Highlights Financial & non-financial highlights ........................................................................................... 19 Addressable market overview ......................................................................................................... 20 Business review ......................................................................................................................................... 21 Financial review ........................................................................................................................................ 22 esg ESG strategy and approach ............................................................................................................... 25 Double materiality assessment ....................................................................................................... 26 EnviroNment ................................................................................................................................................. 27 Social ............................................................................................................................................................... 31 governance governance .................................................................................................................................................. 36 Board of Directors .................................................................................................................................. 39 Executive Management ........................................................................................................................... 40 Shareholder information ................................................................................................................... 41 consolidated financial statements Consolidated income statement ..................................................................................................... 47 Statement of comprehensive income ............................................................................................ 47 Consolidated balance sheet as AT 31 December ..................................................................... 48 Consolidated statement of changes in shareholders’ equity ..................................... 49 Consolidated cash flow statement .............................................................................................. 50 notes to the consolidated financial statements ................................................................. 51 Definitions ..................................................................................................................................................... 75 Parent company Financial statements Statement of comprehensive income ............................................................................................ 77 Balance sheet as AT 31 December ..................................................................................................... 77 STATEMENT OF Changes in shareholders’ equity .................................................................... 78 Cash flow statement .............................................................................................................................. 79 Notes to the parent Company financial statements ........................................................... 79 Management Statement on the annual report ........................................................................ 85 Independent auditor’s reports ....................................................................................................... 85 TCM Group 3 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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At AUBO, we cater to clients who appreciate kitchens at a level beyond the ordinary. We build our kitchens with an insistent West Jutland thoroughness and an attention to detail, which means they will last in everyday use for generations to come. At A Glance Sense, Truffel Brown Letter to our shareholders ............................................................. 05 About TCM Group ...................................................................................... 06 Key figures and ratios .......................................................................... 08 OUR BUSINESS MODEL ................................................................................ 09 How we create value .............................................................................. 10 TCM Group 4 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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A year of challenges as well as new opportunities for TCM Group 2024 presented both challenges and new opportunities for TCM Group. Despite persistent headwinds in the Danish market for new housing projects, and in the Norwegian market as a whole, TCM Group is strongly positioned both now and for the future thanks to our increased focus on the consumer business (B2C*), our unwavering commitment to innovation and operational excellence, and our continued strategic investments. Navigating a dynamic market environment The macroeconomic environment in which TCM operates remained uncertain throughout 2024, although inflationary pressures eased and interest rates in Denmark were lowered. Activity in the Danish housing market increased compared with 2023, but remained below pre- pandemic levels. B2C demand showed signs of recovery, supported by improving consumer sentiment. However, the professional business- to-business (B2B) market segment, particularly sales to new housing projects, saw decreasing demand throughout the year. In Norway, which accounts for approximately 19% of our business, market conditions remained challenging, with very low activity in the project sector and few new private houses being built, while the B2C area remained relatively subdued. Against this backdrop, we delivered overall revenue growth of 11%, reaching revenue of DKK 1,204 million for the year. This reflects an underlying flat organic** sales development despite the significant downturn in the B2B project market. We reached an adjusted EBIT of Letter to our Shareholders DKK 90 million, up from DKK 56 million in 2023, corresponding to a margin of 7.5%, up from 5.1% in 2023. This improvement reflects disciplined cost management, prudent capacity adjustments and ongoing investments in our core business areas. Considering TCM's strengthened financial position, the Board of Directors will propose to the Annual General Meeting the distribution of an ordinary dividend of DKK 3 per share for 2024. This corresponds to a total distribution of DKK 31 million, representing 54% of the net profit for 2024 and within the company’s dividend policy. Strategic investments and innovations Our commitment to innovation in the kitchen business continued to drive progress. In 2024, TCM launched several new product ranges tailored to evolving consumer preferences. Notably, the Group introduced two new Svane Køkkenet designs, New Tradition and ARC1, with the latter redefining the application of ceramic materials in kitchen design. In alignment with our digitalisation strategy, we began developing a new ERP platform. This milestone project, set to go live in 2025, will streamline operations, improve partner collaboration and enhance customer experiences across all touchpoints. AUBO integration progress The integration of AUBO Production A/S, acquired in 2023, remained on track. In 2024, we realised significant synergies within sourcing and production, consolidating our leadership position in the Nordic market and creating a stronger foundation for future growth. Sustainability at the core Sustainability remains a cornerstone of our strategy. Within TCM, in 2024 we achieved a 2% reduction in scope 1 and 2 CO2 emissions compared with 2023, bringing our total reduction to over 53% compared with the 2021 baseline, significantly above the Science Based Targets Svane Køkkenet Notes Bronze TCM Group 5 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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About TCM Group TCM Group is Scandinavia’s third-largest kitchen manufacturer, with headquarters in Denmark and selling through approximately 220 points of sale across Scandinavia. The majority of our business is concentrated in Denmark, with Norway the primary export market. The product offering includes kitchens, bathroom furniture and storage solutions. Manufacturing is largely carried out in-house at four manufacturing sites located in Tvis and Aulum (in the western part of Denmark). TCM Group pursues a multi-brand strategy in which the main brand is Svane Køkkenet and the other brands are Tvis køkken, Nettoline, AUBO and private label. Combined, the brands cover the entire price spectrum. Products are mainly marketed through a network of franchise stores and independent kitchen retailers. Furthermore, TCM Group is a supplier to the 45% owned e-commerce kitchen business Celebert, which operates under the brands kitchn.dk, billigskabe. dk, Celebert and Just Wood. TCM Group is listed on Nasdaq Copenhagen. Revenue*, DKK 1,204 m 7. 5 % (1,084) Adjusted EBIT Margin* (5.1) Revenue* * B2C comprises sales where the stores contract directly with the private end-customers, B2B comprises sales where the stores contract with professional customers, e.g. house builders and project developers. ** Organic is exclusive of the impact of the acquistion of AUBO Production A/S. initiative (SBTi) goal of 42% by 2030 for small and medium-sized enterprises. In 2024, we also mapped our scope 3 emissions, establishing a baseline to ensure that we achieve our ambition of a 42% reduction by 2050, aligned with SBTi recommendations. As part of our commitment to transparency regarding the environmental impact of our products, we released third-party-approved environmental product declarations (EPDs) for the AUBO brand. This means all TCM Group brands are now covered by EPDs. Looking ahead As we enter 2025, we remain cautiously optimistic about the market outlook in general. While some inflationary pressures are easing and the central banks have begun to lower short-term interest rates, the full impact of interest rate adjustments on consumer confidence and the level of activity in the housing market remains uncertain. Nevertheless, we are confident that our strategic priorities, combined with an agile operational framework, will enable us to navigate these uncertainties effectively. Our financial outlook for 2025 reflects this cautious optimism, with anticipated revenue growth across our core markets in Denmark and Norway, driven by continued B2C recovery combined with a potential recovery in the B2B project market in the second half of the year. We expect to be able to convert the growth in sales into increased profitability through ongoing efficiency improvements and further integration synergies in AUBO. On the other hand, we expect continued input cost inflation, wages and logistics costs, which will put pressure on margins to the extent that we cannot pass on these increases through our sales prices. We expect to take full control of Celebert ApS by acquiring the remaining 55% stake in the company during the second half of 2025. Celebert ApS has delivered impressive revenue and earnings growth in the online market in recent years. By acquiring the remaining stake, we will gain full control of this important sales channel, enabling further sales and cost synergies. In 2024, Celebert ApS generated revenue of approximately DKK 150 million, with an EBIT margin of around 11%. For 2025, TCM expects full-year revenue in the range of DKK 1,250–1,400 million and adjusted EBIT of DKK 90–120 million. This assumes full ownership of Celebert ApS in the latter months of the year. Gratitude and commitment We would like to extend our sincere gratitude to our employees and franchise partners for their continued support throughout 2024. Their dedication and hard work are key to our progress and inspire us to keep working diligently to develop the business and to prioritise innovation, customer satisfaction and sustainability. Together, we create better kitchen environments for the heart of our customers’ homes. Our goal remains to be the first choice for kitchen solutions, delivering value to all stakeholders while maintaining our commitment to quality and excellence. Torben Paulin CEO Anders Skole-Sørensen Chair * AUBO Production A/S is included in the consolidated figures as of 3 July 2023. Norway 19% (14) Other countries 1% (1) Denmark 80% (85) TCM Group 6 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Denmark norway Sweden Iceland Faroe islands CELEBERT online sales Online sales in Denmark, Norway, Sweden and Germany About TCM Group Danish stores Norwegian store Icelandic store Danish stores Norwegian shop- in-shop stores Icelandic stores Faroese stores branded stores As of 31 December 2024 (comprising Svane Køkkenet, Tvis Køkken, AUBO and Nettoline) Points of sAle across Scandinavia 112 220 Danish stores Norwegian stores 29 9 Danish stores Norwegian stores Icelandic stores Faroese stores 27 21 1 1 24 Store openings 2024 Total store openings 3 4 Nettoline AUBO GErmany TCM Group 7 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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DKK’000 2024 2023* 2022 2021 2020 Income statement Revenue 1,203,783 1,084,126 1,111,030 1,073,490 993,392 Gross profit 255,406 215,800 228,615 248,241 268,191 Earnings before interest, tax, depreciation and amortisation (EBITDA) 125,895 77,367 114,864 155,365 156,058 Adjusted EBITDA 125,895 85,271 121,342 154,674 161,058 Earnings before interest, tax and amortisation (EBITA) 98,797 53,239 97,509 139,847 142,471 Operating profit before non-recurring items (Adjusted EBIT) 90,308 55,610 103,391 137,756 139,717 Operating profit (EBIT) 90,308 45,795 96,913 138,447 134,717 Financial items -26,598 -20,897 -8,809 -3,262 -3,997 Profit before tax 69,443 27,092 89,401 135,738 130,720 Net profit for the year 57,675 21,522 70,492 110,709 102,243 Balance sheet Total assets 1,206,544 1,200,873 970,227 907,321 929,451 Net working capital -14,336 -13,160 -47,630 -81,649 -116,978 Net interest-bearing debt (NIBD) 316,229 349,312 288,112 199,461 -42,873 Equity 589,484 529,653 420,629 419,691 574,373 Cash Flow Operating cash flow before acquisitions of operations 58,887 39,954 39,478 44,462 101,048 CapEx excl. acquisitions 20,983 21,621 22,696 29,168 30,993 Cash conversion, % 84.3 37.6 53.3 58.3 85.8 DKK’000 2024 2023* 2022 2021 2020 Growth ratios Revenue growth, % 11.0 -2,4 3.5 8.1 1.5 Gross profit growth, % 18.4 -5.6 -7.9 -7.4 -2.9 Adjusted EBIT growth, % 62.4 -46.2 -24.9 -1.4 -9.0 EBIT growth, % 97.2 -52.7 -30.0 2.8 -8.1 Net profit growth, % 168.0 -69.5 -36.3 8.3 -8.2 Margins Gross margin, % 21.2 19.9 20.6 23.1 27.0 Adjusted EBITDA margin, % 10.5 7.9 10.9 14.4 16.2 Adjusted EBIT margin, % 7.5 5.1 9.3 12.9 14.1 EBIT margin, % 7.5 4.2 8.7 12.9 13.6 Other ratios Solvency ratio, % 48.9 44.1 43.4 46.3 61.8 Leverage ratio 2.50 4.08 2.35 1.33 -0.23 NWC ratio, % -1.2 -1.5 -4.3 -7.6 -11.8 CapEx ratio excl. acquisitions, % 1.7 2.0 2.0 2.7 3.1 Share information Number of outstanding shares 10,440,587 10,438,638 9,067,294 9,174,073 10,000,000 Weighted average number of outstanding shares 10,440,012 9,767,408 9,074,847 9,584,933 10,000,000 Number of treasury shares 73,051 75,000 75,000 825,927 0 Earnings per share before dilution, DKK 5.52 2.20 7.77 11.55 10.22 Earnings per share after dilution, DKK 5.51 2.20 7.76 11.54 10.22 * AUBO Production A/S has been included in the consolidated figures as of 3 July 2023; see note 26. See note 1 Accounting policies for further information. See page 75 for definitions of key figures and ratios. Key figures and ratios TCM Group 8 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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CELEBERT online sales our business model TCM Group is Scandinavia’s third-largest kitchen manufacturer, with headquarters and four production sites in Denmark and selling through approximately 220 points of sale across Scandinavia, including 112 branded stores. Product development All products are Danish-designed, rooted in a proud tradition of good quality and good craftmanship. TCM Group has in-house architects and a research and development centre, and relies on strong partnerships with external partners, designers and subject matter experts. Sourcing Our focus is a local supply chain, and more than 90% of our direct materials are sourced in Europe. Production Manufacturing is largely carried out in-house at our four manufacturing sites located in Denmark. consumers We provide durable products that are built to last. It is our product strategy to ensure that the products that we offer contribute to a healthy indoor environment and can be upgraded and renewed to extend their life. We work with circular design principles to ensure that once our products can no longer be used in their current form, they can be recycled into new products. Customers / Sales We distribute most of our products to thousands of end-customers through a retail network comprising 220 points of sale across Scandinavia, including 112 branded stores. This network is owned and operated by independent retailers or large building material providers. Through close collaboration, we aim to deliver high- quality products and exceptional service to our end-customers. Our retail network is a key pillar of our business, and the retailers act as the face of our brand, providing personalised advice, hands-on demonstrations and tailored solutions to meet diverse customer needs. Their expertise enables us to build long-lasting relationships with customers, making it easier to understand and respond to market demands. Logistics We rely on local distributors to ensure focus on end-to-end deliveries to the end-customer. TCM development TCM operations retail network Consumers TCM development TCM operations retail network Consumers TCM Group 9 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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How we create value Kitchens Bathroom fixtures Utility room fixtures Sliding door cabinets Architect-designed kitchens Large assortment Made-to-order Customisation Very high flexibility Kitchens Bathroom fixtures Utility room fixtures Sliding door cabinets Large assortment Made-to-order Customisation Very high flexibility Kitchens Bathroom fixtures Utility room fixtures Sliding door cabinets Medium assortment Made-to-order Customisation Kitchens Bathroom fixtures Utility room fixtures Sliding door cabinets Kitchens Bathroom fixtures Utility room fixtures Sliding door cabinets Flat pack Fast delivery Flat pack Fast delivery Stock items Stock items What we do Special capabilities competences Celebert / Private label online / SHop-in-shopS TCM Group 10 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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A Tvis kitchen is a long-term choice of Danish quality for your home. We know this because we have been making kitchens for more than 70 years. Our Business Strategy and financial outlook ..................................................... 12 Danish design and danish production ........................................ 14 risk management ...................................................................................... 15 Plain, Fjordblå Duet TCM Group 11 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Strategy TCM Group’s overall strategy is to aim for double-digit annual growth rates in the short to mid term. This means we are aiming for growth in all brands, markets and channels. While investing in growth, our target is still to remain in the top tier of the kitchen industry with regard to profitability and cash flow. This will be achieved through efficiencies of scale, optimisation in our production and supply chain set-up, and investment in modern production technology. In addition to organic growth, the Group monitors the market for acquisition opportunities, primarily in Scandinavia, which resulted in the acquisition of AUBO Production A/S in 2023. The acquisition supported our growth strategy in Norway, and has substantially improved our footprint in the country without creating a conflict with our distribution of Svane Køkkenet and Nettoline. In 2024, we focused on integrating AUBO, delivering tangible synergies within sales, supply chain and administration. The integration journey will continue in the coming years. Group To extend the different positionings of our brands and be our customers’ first choice for the heart of their homes, we will continue to develop new, Strategy and financial outlook While investing in growth, our target is still to remain in the top tier of the kitchen industry with regard to profitability and cash flow. exciting and sustainable kitchen, bath and storage solutions, designs and functionalities. To support our growth ambitions in all brands and markets, we are continuing to invest in flexibility at our four factories, while also supporting our long-term growth ambitions. We will invest in further digitalising processes in our supply chain, administration and retail network, and thereby continuously improve and strengthen the entire value chain of our business. In all that we do, we are determined to act as responsibly as possible with regard to people, planet and products. Please see the separate ESG section for further elaboration of our strategic targets and initiatives. Tvis køkken MG50 Financial Outlook 2025 As we enter 2025, we remain cautiously optimistic about the market outlook in general. While some inflationary pressures are easing and the central banks have begun to lower short- term interest rates, the full impact of interest rate adjustments on consumer confidence and the level of activity in the housing market remains uncertain. Our financial outlook for 2025 reflects this cautious optimism, with anticipated revenue growth across our core markets in Denmark and Norway, driven by continued B2C recovery combined with a potential recovery in the B2B project market in the second half of the year. We expect to be able to convert the growth in sales into increased profitability through ongoing efficiency improvements and further integration synergies in AUBO. On the other hand, we expect continued input cost inflation, wages and logistics costs, which will put pressure on margins to the extent that we cannot pass on these increases through our sales prices. We expect to take full control of Celebert ApS by acquiring the remaining 55% stake in the company during the second half of 2025. Celebert ApS has delivered impressive revenue and earnings growth on the online market in recent years. By acquiring the remaining stake, we will gain full control of this important sales channel, enabling further sales and cost synergies. Celebert ApS generated revenue of approximately DKK 150 million in 2024, with an EBIT margin of around 11%. TCM Group estimates revenue for the financial year 2025 to be in the range DKK 1,250-1,400 million Adjusted EBIT* is estimated to be in the range DKK 90-120 million * EBIT excluding non-recurring items. Forward looking statements This annual report contains statements relating to the future, including statements regarding TCM Group’s future operating results, financial position, cash flows, business strategy and plans. The statements are based on Management’s reasonable expectations and forecasts at the time of publication of the report. Any such statements are subject to risks and uncertainties, and a number of different factors, many of which are beyond TCM Group’s control, could mean that actual performance and results differ significantly from the expectations expressed in the report. Such factors include, but are not limited to, general economic and commercial factors, including market and competitive matters, supplier issues and financial issues. CASE: Tvis Køkken Rebranding The rebranding of Tvis Køkken has been a success. "With respect for your home", combined with new product variants inspired by classic designs, a broad product range, real home imagery, and a redesigned logo and store design, has clarified the brand message, aligning with the trend towards authenticity and responsibility. As Denmark’s oldest kitchen brand, Tvis Køkken can credibly tell the story of timeless design and, with over 70 years of local production, document the enduring quality of its kitchens. This has set Tvis Køkken apart from other kitchen brands, and as a result Tvis Køkken has delivered double-digit sales growth two years in a row. TCM Group 12 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Celebert / Private label online / SHop-in-shopS Kitchens Bathroom fixtures Utility room fixtures Sliding door cabinets SVANE KØKKENET The Svane Køkkenet branded store network is fully established in Denmark, but there is still room to grow our market share within both the B2C and B2B segments. In recent years, we have focused on the B2B segment with the ambition to gain further market share as a contributor to growth in revenue and earnings. Furthermore, the B2B segment has a different cycle compared, for example, with the B2C segment, including a pipeline with a longer time horizon. In light of the expected downturn in B2B sales due to the macroeconomic situation, in the second half of 2023 we decided, in collaboration with our franchise partners, to increase our focus on B2C sales, supported by investment in showroom upgrades and training of sales staff. This shift in focus proved to be right, as we delivered double-digit growth in B2C sales in 2024. For Svane Køkkenet in Norway, the mid- to long-term target is to open another 8-12 stores, giving us a network of 15-20 stores. However, store openings have been put on hold since 2023 due to the economic slowdown, and two stores closed in 2024. We are in the process of revisiting the growth plans for Svane Køkkenet in Norway in preparation for the expected recovery of the kitchen market in the near future. Kitchens Bathroom fixtures Utility room fixtures Sliding door cabinets TVIS KØKKEN The Tvis Køkken brand has opened and relocated several stores in recent years, but there are still a few white spots in Denmark to be addressed. Market share and brand awareness are to be increased in line with the development of the store network. The rebranding and investments in the store network in recent years paid off in 2024, with Tvis delivering double- digit sales growth and B2C sales growing by more than 50%. Kitchens Bathroom fixtures Utility room fixtures Sliding door cabinets AUBO The AUBO brand is selling through single-brand stores in Denmark and in Norway in the form of dedicated shop-in-shops operated by leading building materials distributor Optimera. In Denmark, four stores opened in 2024. In Norway, the focus is on increasing same-store sales within both B2B and B2C, as only a few white spots remain. Kitchens Bathroom fixtures Utility room fixtures Sliding door cabinets NETTOLINE The Nettoline brand is selling through single-brand stores in Denmark and multi-brand stores in Norway. In both markets, there is room for additional stores, which will grow brand awareness and revenue. In 2024, we opened three Nettoline stores in Denmark. The cooperation with private-label clients will continue as in recent years. Kitchens Bathroom fixtures Utility room fixtures Sliding door cabinets E-COMMERCE The online activity with the brands kitchn.dk, billigskabe.dk, Celebert and Just Wood is expected to continue, giving us a greater share of the kitchen market in Denmark and Norway. Strategy TCM Group 13 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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CabinetsFronts Worktops Storage solutions, e.g. sliding doors Danish design and danish production production sites TCM Group’s production sites are located in Tvis and Aulum, with two factories in each town. number of employees* as of 31 December 2024 481 Production at own factories in denmark This ensures that we can offer customised kitchens with a wide selection of designs, colours and functions. Tvis, site 2 Tvis, site 1 Aulum, site 4 Aulum, site 3 recycled content in chipboards used in production Co2 intensity per produced unit* 8, 494tons2.11kg * Produced unit (no. of cabinets and metres of worktops) / scope 1 and 2. * Headcount. TCM Group 14 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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continuous process Identification Map or catalogue the risks Classify the risk types Evaluation Estimate the probability of occurrence Assess the risk impact Planning Risk management Respond and report risk management Management performs a yearly assessment of business risks. A follow-up process has been established with the purpose of describing and evaluating a variety of business risks within the Group and implementing procedures to ensure Risk management is an integral part of the management process at TCM Group. The objective is to limit uncertainties and risks with respect to the defined financial targets and strategic objectives for the Group. risk mitigation. This assessment is discussed and evaluated by the Board of Directors once a year. Besides this yearly assessment, the Board of Directors and the Executive Management have a continuous dialogue regarding significant risks with potential material impact on the Group. The risk management, including internal controls in the financial reporting process, is designed to effectively minimise the risk of errors and omissions in the financial reporting. The Executive Management is responsible for ensuring that risks are continuously identified, evaluated and mitigated in order to reduce the economic impact and/or likelihood of risks being realised. In the following pages, we describe the main identified business and financial risks as well as the related actions taken within the individual risk areas. AUBO Unik, Rose Sand TCM Group 15 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Risk area Description Management Market risks The Group is exposed to general macroeconomic trends and fluctuations. Specifically, developments in the Danish and Norwegian housing markets are an important factor for the Group’s revenue and financial position. The vast majority of the Group’s products are made to order, which, combined with a high degree of flexibility in the workforce, means that the Group can respond quickly to changes in market demand. Reputational risks The Group regards the Svane Køkkenet, Tvis Køkken, Nettoline and AUBO brands as some of its most valuable assets. The reputation of these brands plays a crucial role in their attractiveness and appeal to customers. Consequently, maintaining and enhancing the Group’s brand reputation is essential for sustaining and growing revenue and profitability. The Group monitors customer satisfaction at brand and store level, and takes appropriate action when the targeted levels are not met. This, combined with high standards for quality and delivery performance, is Management’s proactive means to protect the brand reputation. Brands, trademarks and relevant design rights are registered in the main markets in which the Group’s products are sold. Customer risks The Group is exposed to the risk of losing customers, for example due to financial difficulties or preference for other brands. The Group’s customer risks relate primarily to developments in sales at our 112 branded stores. The debtor risk related to the stores represents the main financial risk and is closely monitored to mitigate the risk of losses, primarily by requiring appropriate collateral for current trading balances. Raw material purchasing risks Access to sustainable sources of raw materials is essential. The Group relies on raw materials such as wood, steel, aluminium and plastics. Fluctuations in the cost of components (e.g. drawer systems, handles, hinges and basins) and goods for resale (e.g. appliances) are primarily driven by changes in raw material prices and the competitive landscape. Disruptions in the supply of raw materials and components can lead to delays in the production and delivery of finished goods, potentially resulting in increased costs, lost revenue and dissatisfied customers. The Group aims to maintain multiple suppliers for each raw material and component category to improve commercial terms and ensure reliable supplies. Measures such as efficiency improvements, revised product specifications and sales price adjustments help mitigate the impact of rising raw material and component costs. Production risks The Group is exposed to the risk of not being able to fulfil customer orders, for example due to fire, machine failure or lack of personnel. Fire prevention is a Management priority and is conducted in collaboration with our insurance company. Our maintenance department, in partnership with external experts, performs essential machine maintenance and repairs. In recent years, we have carried out extensive maintenance and upgrades on critical production lines, extending their useful life by several years. Additionally, we maintain a constructive relationship with our production employees, supported by multi- year collective wage negotiation agreements. CYBER Risks The Group relies on IT systems in its day-to-day operations. Disruptions or faults in critical production systems have a direct negative impact. Errors in the handling of financial systems can affect the company’s financial reporting. The Group has its own ERP system, which is regularly maintained and updated. IT security is a top priority, and we work with external experts to achieve a level of security appropriate for the Group. Risks related to pollution and occupational health The Group’s manufacturing activities at its four production sites expose employees to workplace hazards, and waste generated during production processes has the potential to harm the environment. Optimising occupational health conditions and preventing both internal and external contamination are key focus areas at TCM Group’s production sites. The Group has implemented a registration system for occupational accidents and near-miss incidents, emphasising the prevention of future occurrences. An occupational health organisation, comprising Management and employee representatives, has been established and operates effectively. The Group is insured against significant damage to property, plant and equipment, and maintains close dialogue with authorities and insurance providers to further enhance risk mitigation efforts related to fire, pollution and other hazards. Business Risks TCM Group 16 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Risk area Description Management Liquidity risks Liquidity risks pertain to the Group's ability to provide the necessary liquidity to secure a capital structure that supports long-term profitable growth. The Board of Directors continuously assesses whether the Group’s capital structure is in line with the interests of the Group and its stakeholders. The Group’s financial risks are managed centrally, as is the Group’s liquidity management, including cash requirement and placement of excess liquidity. It is Management’s assessment that the current capital structure provides the necessary flexibility to accelerate and support the Group’s future strategy. Credit risks Credit risks refer to potential losses arising from the Group’s customers or counterparties in financial contracts failing to meet their payment obligations. The Group’s customer base primarily consists of professional clients. Credit management and payment terms are carefully monitored for each customer segment. The Group extends credit to franchisees and dealers, its primary customers, who generally operate on short payment terms, thereby minimising overall exposure. Regular credit assessments are conducted for customers with recurring purchases. Additionally, the Group utilises bank guarantees, credit insurance and other forms of collateral tailored to different markets and customer categories. Currency risks Transaction exposure occurs when sales and costs are in different currencies. Exchange rate fluctuations may have an impact on the Group’s earnings and valuation of assets. The Group operates with a relatively low risk profile with regard to currency fluctuations. The Group does not purchase significant amounts of raw materials outside the eurozone. Invoicing of sales is charged in DKK and NOK. In terms of invoicing sales in NOK, the Group applies a hedging strategy to limit the impact of currency fluctuations for up to six months ahead. Interest rate risks The Group is exposed to the risk of increases in the interest rate, which may have an impact on the Group's earnings. The Group manages interest rate risks by applying a mix of bank loans and mortgage loans. It is Group policy to fully or partially hedge interest rate risks on loans if the risk is material. An interest rate increase of 1% will have a negative impact on the Group’s profit of around DKK 2.2 million. Financial Risks TCM Group 17 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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PERFORMANCE highlights Financial & non-financial highlights .......................................... 19 Addressable market overview ........................................................ 20 Business Review ........................................................................................ 21 Financial review ....................................................................................... 22 Sembra Scala TCM Group 18 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Financial & non-financial highlights Leverage Ratio (31 December) Co2 emission reductioN 2024 (scope 1 and 2) Committed to SBTI Revenue, DKK Adjusted EBIT, DKK NWC ratio (31 December) Financial Non-Financial AVERAGE NO. of EMPLOYEES 34% (34)Women 66% (66)Men Compared with baseline year (2021) 1,204m 2.50 460 90 m -1.2 % 53 % (1,084) (4.08) (445) (56) (-1.2) TCM Group 19 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Addressable market overview Residential construction continued to decline in 2024 Residential construction activity continued to decline in 2024 in both Denmark and Norway, with decreases of 3% and 7% respectively (see graph opposite). While this downturn negatively impacted kitchen sales, the annual declines were less severe than in 2023, which saw reductions of 12% in Denmark and 11% in Norway. Looking ahead, activity in both Denmark and Norway is expected to recover in 2025 with projected increases of 1-2% and 7-8% respectively. The decline in residential construction activity in Denmark and Norway during 2024 reflected broader economic adjustments and cost pressures. In Denmark, the slowdown followed a As a leading player in the Scandinavian kitchen industry, TCM Group is impacted by external market factors. In 2024, the kitchen industry faced significant headwinds from the declining level of residential construction activity in Denmark and Norway. Despite these headwinds, signs of stabilisation and expected growth in 2025, supported by the recovery in residential property sales, offer a promising outlook for the industry. period of high activity during the pandemic, with rising construction and wage costs. Similarly, Norway faced a contraction due to high interest rates and elevated construction costs, compounded by weak sales of new homes in 2023. Despite the 2024 downturn, both markets are expected to recover, with improving economic conditions stimulating demand for kitchens. Residential property sales are recovering The Danish housing market has been showing signs of recovery, culminating in a strong performance in 2024 with total property sales rising by around 10% (see graph opposite). After posting a modest increase in 2021 compared with 2020, the market declined sharply in 2022, then rebounded with growth of nearly 7% in 2023, indicating a steady upward trend. In 2024, the Danish housing market experienced a significant surge in transactions, with vacation homes and single-family homes leading the growth at 13% and 11% year-on-year, respectively. Apartment transactions also saw an increase, though at a more moderate 6%. The Norwegian housing market also showed signs of recovery in 2024, with year-on-year sales increasing by approximately 9% after declines in the two preceding years. The recovery in both markets is expected to stimulate kitchen demand, as new homeowners often renovate to personalise their new spaces. Svane Køkkenet Snedker Raw Deco, Rosa Source: Euroconstruct and internal analysis. Note: Residential construction activity includes both new residential builds and residential renovations. Source: Boligsiden and Eiendom Norge. Note: Residential property sales in Denmark and Norway do not include holiday homes. Residential construction activity 2020-2025F (index 2020) Residential property sales 2020-2024 (index 2020) 20222021 2023 2024E 2025F2020 100 90 110 80 70 120 Denmark Norway 20222021 2023 20242020 70 100 90 110 80 120 Denmark Norway TCM Group 20 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Meanwhile, the Group opened three Nettoline stores in Denmark during 2024, and AUBO expanded its retail network in Denmark by opening four additional stores. The slowdown in B2B sales, particularly project sales, was partially offset by strong growth in B2C sales. In the first half of the year, the company continued to benefit from the robust project sales pipeline built in recent years, allowing time to adjust production capacity to lower demand levels. The change in sales mix and the full-year effect of AUBO Production A/S lifted the gross margin from 19.9% in 2023 to 21.2%. In the second half of the year, production bottlenecks, caused by high demand for lacquered products, negatively impacted production costs and gross margin. These bottlenecks will be eliminated in 2025 through investment in a new lacquering facility at Factory 1 in Tvis. Adjusted EBIT ended the year at DKK 90.3 million, compared to DKK 55.6 million in 2023 and the most recent financial outlook of DKK 75–90 million. The initial financial outlook for 2024, as stated in the Annual Report 2023, was DKK 55–85 million. Innovation and product development Innovation and the development of new, attractively designed products aligned with the latest trends and consumer preferences remain central to TCM Group’s strategy. In 2024, TCM Group launched several new products, including New Tradition and ARC1 under the Svane Køkkenet brand. Workforce The average number of employees in 2024 was 460, compared to 445 in 2023. The workforce in production functions was adjusted during the year to align with fluctuating demand. As of 31 December 2024, the total number of employees was 481. Sustainability and ESG initiatives The focus on sustainability and ESG strategy continued in 2024. Key achievements included the mapping of scope 3 emissions to establish a baseline. In the coming years, we plan to collaborate with upstream and downstream partners to reduce emissions. Consistent with SBTi recommendations, our goal is to reduce scope 3 emissions by 42% by 2050. Scope 1 and 2 emissions were reduced by 2% in 2024 , despite an increase in activity in the generally energy-intensive lacquering department, as this was offset by energy efficiency measures in other areas. As part of our commitment to transparency regarding the environmental impact of our products, we released third-party-approved environmental product declarations (EPDs) for the AUBO brand. With this addition, all TCM Group brands are now covered by EPDs. TCM Group launched several new products, including New Tradition and ARC1 under the Svane Køkkenet brand. Svane Køkkenet New Tradition Business review Reported revenue increased by 11.0% in 2024 to DKK 1,204 million (2023: DKK 1,084 million). Organically, sales in the core business (excluding the impact of the acquisition of AUBO Production A/S) declined by 5.1% (revenue excluding third- party revenue). Revenue in Denmark increased from DKK 915 million in 2023 to DKK 969 million, corresponding to an increase of 5.9%. Organic like-for-like growth in Denmark was 1.4%. Revenue outside Denmark grew from DKK 169 million in 2023 to DKK 235 million, corresponding to an increase of 39.2%. This growth was driven by the full-year effect of the acquisition of AUBO Production A/S. However, sales in the existing TCM distribution in Norway declined by 9.5%. The number of branded stores increased to 112 during 2024. Reported revenue of DKK 1,204 million slightly exceeded the most recent financial outlook of DKK 1,150–1,200 million. The higher-than- expected revenue was attributed to stronger- than-anticipated demand in the Danish kitchen market in the latter half of Q4 2024. The initial revenue outlook for 2024, as stated in the Annual Report 2023, was DKK 1,000–1,150 million. Within Svane Køkkenet in Denmark, the focus was on strengthening the retail network through changes in ownership structures. In Norway, the stores in Aalesund and Kristiansand closed during the year due to the continued downturn in the Norwegian kitchen market. Two small Tvis Køkkenet stores in Norway also closed. TCM Group 21 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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1200 1000 800 600 400 200 0 1,111.0 993. 4 1,073.5 2020 2021 2022 2023 2024 1,084.1 1,203.8 160 140 120 100 80 40 60 20 0 55.6 139.7 137.8 103. 4 90.3 2020 2021 2022 2023 2024 Revenue Revenue in 2024 increased by 11.0% to DKK 1,203.8 million (DKK 1,084.1 million in 2023)*, with a slightly negative organic decrease of 0.5% (excluding the impact of the acquisition of AUBO Production A/S in July 2023). Revenue in the core business grew by 8.3%, with an organic decrease of 5.1%, primarily due to the downturn in the B2B project market. Revenue from the supply of third-party products (non- core business) increased by 20.0%, with organic growth of 14.2%. This was supported by growth in core B2C sales, which typically drive higher third-party sales, as well as increased third- party sales to e-commerce. Revenue in Denmark reached DKK 969.0 million (DKK 915.4 million), reflecting absolute growth of 5.9%. Organic like-for-like growth was 1.4%, despite the significant downturn in the project market. Revenue in Norway was up 43.0% at DKK 222.9 million (DKK 155.8 million), driven by the full-year effect of the AUBO Production A/S acquisition. However, Norway experienced a 10.0% organic decline in revenue, attributed to the closure of two Svane stores in the first half of 2024. Revenue from other countries totalled DKK 11.8 million, compared to DKK 12.8 million in 2023. Gross profit – gross margin 21.2% Gross profit in 2024 amounted to DKK 255.4 million (DKK 215.8 million), corresponding to a gross margin of 21.2% (19.9%). The improvement in gross margin was driven by the full-year effect of the inclusion of AUBO Production A/S, whose operating model provides a higher direct margin, though this is largely offset by higher operating expenses. Additionally, the gross margin benefited from a changed sales mix, with a higher share of generally higher-margin B2C sales. In the second half of 2024, production costs were negatively impacted as high demand for products such as lacquered items led to increased overtime production costs and greater reliance on external sourcing. Operating expenses – cost ratio 15.3% Operating expenses in 2024 totalled DKK 184.5 million (DKK 166.6 million). The DKK 17.8 million increase was primarily caused by the full-year effect of the acquisition of AUBO Production A/S. However, underlying operating expenses decreased, mainly due to lower realised losses and reduced provisions for potential losses on trade receivables, which amounted to DKK 2.3 million (DKK 14.8 million). Operating expenses accounted for 15.3% of revenue in 2024, compared to 15.4% in 2023. Adjustment of contingent payment obligation The contingent payment obligation related to the acquisition of AUBO Production A/S was adjusted in 2024 leading to an income of DKK 9.5 million (DKK 1.0 million). The remaining contingent payment obligation had been based on certain sales performance targets for the years 2024 to 2027. OTHER INCOME Other income amounted to DKK 9.5 million (DKK 5.4 million), and includes income from salary subsidies and reimbursements, as well as certain types of marketing subsidy. Adjusted EBITDA – margin 10.5% Adjusted EBITDA in 2024 was DKK 125.9 million (DKK 85.3 million), corresponding to an adjusted EBITDA margin of 10.5% (7.9%). The increase in adjusted EBITDA margin was driven by the higher gross margin and the increase in other income. Financial review Revenue (DKKm) Adjusted Ebit (DKKM) Reported revenue growth Adjusted EBIT margin * Figures in brackets refer to the corresponding period in 2023. 11.0 % 7. 5% TCM Group 22 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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0 -20 -40 -60 -80 -100 -120 -47.6 -13.2 -117.0 -81.6 -14.3 2020 2021 2022 2023 2024 Adjusted EBIT – margin 7 .5% Adjusted EBIT in 2024 was DKK 90.3 million (DKK 55.6 million), corresponding to an adjusted EBIT margin of 7.5% (5.1%). The increase in adjusted EBIT margin was driven by a higher gross margin and lower operating expenses ratio. Depreciation and amortisation amounted to DKK 35.6 million (DKK 29.7 million), with the increase being largely attributable to the full-year effect of the acquisition of AUBO Production A/S. Non-recurring items TCM Group presents non-recurring items separately to ensure comparability. Non- recurring items consist of income and expenses that are special and of a non-recurring nature. No non-recurring items were recorded in 2024. EBIT EBIT for the financial year 2024 was DKK 90.3 million (DKK 45.8 million). The increase in EBIT compared with 2023 was driven by the same factors impacting the development in adjusted EBIT, further supported by the absence of non- recurring items. Net profit Net profit for the financial year 2024 was DKK 57.7 million (DKK 21.5 million). Free cash flow excl. acquisitions of operations Free cash flow excl. acquisitions of operations in 2024 was DKK 58.9 million against DKK 40.0 million in 2023. Free cash flow was positively impacted by the higher operating profit, whereas the change in net working capital impacted the free cash flow negatively by DKK 0.4 million, compared to a positive impact of DKK 22.2 million in 2023. Cash conversion in 2024 was 84.3% (34.2%). Net working capital – NWC ratio -1.2% Net working capital (NWC) at the end of 2024 was DKK -14.3 million (DKK -13.2 million). The NWC ratio at the end of 2024 stood at -1.2% (-1.2%). Inventories decreased by 4% to DKK 89.1 million. Inventory levels had generally declined at all sites since the beginning of 2023, following the normalisation of the market supply situation. This process continued throughout 2024, although at a slower pace. Trade receivables and other receivables decreased by DKK 19.4 million to DKK 86.2 million, as the timing of customer payments at year-end was favourable for the Group. Other receivables as at 31 December 2024 exclude DKK 6.7 million related to subleases accounted for under IFRS 16 (DKK 8.5 million). These sublease receivables are not considered part of net working capital. Operating liabilities decreased by DKK 24.6 million to DKK 197.9 million, driven by lower trade payables at year-end, due to lower purchasing volumes in the fourth quarter of 2024. Additionally, the government’s inflation support package, which amounted to DKK 5 million as at 31 December 2023, was fully repaid during 2024, further reducing operating liabilities. Net interest-bearing debt – leverage ratio 2.50 Net interest-bearing debt totalled DKK 316.2 million at the end of 2024 (DKK 349.3 million), as the free cash flow was used for debt reduction. As a result of the higher adjusted EBITDA and reduced net interest-bearing debt, the leverage ratio decreased to 2.50 (4.08), remaining well within the covenants agreed upon in the financing agreements. Equity – solvency ratio 48.9% Equity at the end of 2024 amounted to DKK 589.5 million (DKK 529.7 million). Equity increased by DKK 59.8 million during 2024, largely equal to the net result for the year. The Board of Directors will propose to the Annual General Meeting to distribute an ordinary dividend of DKK 3 per share. Excluding treasury shares this corresponds to DKK 31 million. The solvency ratio was 48.9% at the end of 2024 (44.1%). Events after the balance sheet date No subsequent events have occurred that materially affect TCM Group’s financial position. The Board of Directors recommends to distribute an ordinary dividend of DKK 3 per share. Svane Køkkenet Infinity Sands NWC ratio (%) Leverage ratio -1.2 2.50 Net working capital (dkkm) non-recurring items Non-recurring items, DKKm 2024 2023 Transaction costs related to business combinations 0.0 2.8 Impairment of ERP project, AUBO Production A/S 0.0 1.9 Restructuring 0.0 5.1 Total 0.0 9.8 TCM Group 23 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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READERS' GUIDE NON-FINANCIAL DISCLOSURE REQUIREMENTS AS PER THE DANISH FINANCIAL STATEMENTs ACT* Topic Section 99A Business model ...............................................................................................9-10 Content of policies for sustainability, systems and due diligence processes results and KPIs: ESG strategy and approach .....................................................................25 Environment.........................................................................................27-30 Social .......................................................................................................31-34 Supplier management and anti-corruption .....................................38 Section 107D Target figures for the management body ............................................37, 43 Policy for promoting underrepresented gender and diversity at management level.........................................................31-33 Section 99D Data ethics.............................................................................................................38 ESG ESG strategy and Approach ............................................................................... 25 Double materiality ASSESsMENT ...................................................................... 26 Environment ................................................................................................................ 27 Social .............................................................................................................................. 31 Notes Gold Page Reference * Covers TCM Group and all its subsidiaries TCM Group 24 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Our ESG strategy sets the direction for embedding sustainability more deeply into every aspect of our business. Guided by the UN Sustainable Development Goals, the strategy builds on our core values and brands, integrating sustainability throughout our value chain – from raw materials to after-sales and service. Our ESG strategy outlines transformative targets to guide decisions and actions within four priority areas: • Sustainable Work • We Take Responsibility • New Ways Ahead • Together We Improve These priority areas represent where we believe our business activities can have the greatest impact on sustainable development. By adopting a systematic approach to sustainability, we aim to strengthen our relationships with key stakeholders, support business growth and continuously mitigate negative impacts through ongoing learning and improvement. TCM Group has been a signatory to the UN Global Compact for over a decade, adhering to its Ten Principles on human rights, labour, the environment and anti-corruption. TCM Group has used the Corporate Sustainability Reporting Directive (CSRD) and ESRS guidelines as preparation for when the Group expectedly falls within the scope of the CSRD in 2025. ESG strategy and Approach EnviroNment Social Governance Climate action New ways ahead Products & Resources A sustainable work life Governance Approach • Reduce carbon footprint of own production • Reduce carbon footprint of value chain following SBTi guidelines • Minimise production waste • New designs to be based on circular design principles • 100% certified timber • Minimise/optimise resources with focus on packaging material • A safe and secure work environment that enhances personal development • Flexibility to support a clear balance between work life and private life, and between individuals, teams and organisation • Diversity and social commitment • Promote and enable responsible business conduct • Conduct proper due diligence of suppliers and partners Focus • 42% reduction in scope 1, 2 and 3 emissions by 2050 • Reduction of waste in production • Circluar design principles in product development • 100% certified timber • TCM packaging to be recyclable • 0 accidents/1,000,000 working hours (LTIF) • Gender equality • 2% of employees employed as "flex workers" • All suppliers to have signed TCM Code of Conduct • Supplier risk management to include ESG scorecard reference / Guiding principles • §99a • EU Taxonomy • ESRS E1 Climate change • ESRS E5 Resource use and circular economy • §99a • ESRS S1 Own workforce • §99a, §99d, 8107d • ESRS G1 Business conduct GSE TCM Group 25 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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24 1 3 5 6 High / 5.0 High / 5.03.5 Financial materiality Impact materiality Double materiality assessment The DMA evaluates how environmental, social and governance (ESG) factors impact TCM’s financial performance (outside-in) and how TCM’s operations affect society and the environment (inside-out), aligning with CSRD and European Sustainability Reporting Standards (ESRS) guidelines. TCM Group's DMA aims to balance sustainability priorities with business objectives, and it is our goal to drive constant improvement and track progress as an integral part of our ESG management system. Our DMA applies to the entire TCM Group. Our process The management team and the ESG Steering Committee formed the Internal Working Group, which is informed by external sustainability consultants on an ongoing basis. 1. Longlist of ESG topics Initially, a longlist of sustainability topics was thoroughly assessed through desktop research, benchmark analysis, analysis of existing As a key element of our preparation to ensure compliance with the currently applicable EU Corporate Sustainability Reporting Directive (CSRD) in 2025, TCM Group has concluded our first double materiality assessment (DMA). documentation and surveys, combined with reviews in the Internal Working Group. 2. Stakeholder involvement Next, we gathered information and perspectives from key stakeholders. Through workshops, questionnaires and interviews, we engaged with a variety of stakeholders, including customers, employees, the Board of Directors, brands, investors, suppliers and subject matter experts. The stakeholder perspectives that we gathered provided us with insights that helped qualify the longlist of ESG topics with both positive and negative impacts as well as financial risks and opportunities. 3. Assessment of impact materiality and financial risks and opportunities Each topic was assessed as “actual” or “potential” and rated based on positive and negative impacts as well as financial risks and opportunities. All topics were rated according to scale, scope and irremediability, and, in the event of potential impacts, likelihood. Each dimension was rated from 1 to 5 and an average score then calculated for each topic. With regard to both sustainability impact and financial impact, TCM has defined 3.5 as the threshold for when a sustainability topic in our DMA becomes significant enough to influence the decisions of stakeholders or have a substantial impact on the company, the environment or society. Hence, topics with a score equal to or higher than 3.5 are defined as material. 4. Review and approval The assessment process involved the Board of Directors, which also approved the process. Going forward, approval of the DMA will be the responsibility of the Audit Committee. Preliminary assessment of topics The topics represent risks as well as opportunities for TCM Group. The impact of fluctuating energy prices is an obvious risk, as well as the use of materials/items that are hard to replace with better alternatives. Working with machinery, etc. always entails a risk of work-related accidents. We see an opportunity in circularity, as we are already using materials with a high degree of recycled content. We also see an opportunity in continuing our work with diversity. There are no identified material sustainability-related risks besides those related to impacts. Important topics such as waste, corruption, bribery and protection of whistleblowers do not feature as material topics in TCM’s DMA due to the low likelihood of incidents occurring thanks to mitigating actions taken by TCM to address these topics. These topics are considered of ongoing importance by TCM and will be continuously monitored to ensure that the processes in place are working. Based on current knowledge and methodology, the topic of biodiversity and ecosystems is not considered material given our value chain, geographical presence and use of raw materials. The materiality of these topics will be re-evaluated each year. The outcome of the DMA conducted in 2023/24 is preliminary and will serve as the basis for preparation of ESRS-compliant reporting, if applicable, in 2025. Overview of material topics Overview of our material topics identified during our preliminary double materiality assessment 1 Climate impact 2 Health and safety 3 Diversity 4 Energy use and efficiency 5 Circularity 6 Corporate culture Watchlist Biodiversity and ecosystems TCM Group 26 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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2024 2023 18% 82% 0% 20% 80% 0% Heating Transport Electricity We take pride in the fact that all our products are designed and manufactured in Denmark. Good craftsmanship is at the core of our production, complemented by a focus on quality and a high degree of innovation. We recognise that operations carry the risk of negatively impacting the environment and are committed to continuously reducing our climate impact, minimising production waste and increasing our waste recycling rate. Emissions In 2023, TCM Group committed to the Science Based Targets initiative (SBTi). TCM has pledged to reduce its scope 1 and 2 emissions by 42% by 2030, using 2021 as the baseline year. By doing so, TCM is following a decarbonisation trajectory that limits the global temperature rise to 1.5°C above pre-industrial levels, aligning with the goals of the Paris Agreement. Furthermore, we have committed to monitoring and reducing our scope 3 emissions. In 2024, TCM Group mapped its scope 3 emissions using 2023 as the baseline year. Our focus has been on ensuring data validity. Going forward, we will continue to monitor these emissions and establish reduction targets to be approved by the SBTi. TCM’s scope 1 and 2 emissions account for only 1% of the company’s total greenhouse gas (GHG) emissions. These emissions primarily originate from manufacturing sites and from the company’s vehicle fleet, which includes cars and service vans. Despite representing a small share of total GHG emissions, TCM considers scope 1 and 2 emissions material because they result from operational activities that TCM can directly influence. Scope 1 and 2 Emissions TCM Group is committed to the Science Based Targets initative (SBTi) and to reducing our scope 1 and 2 emissions by 42%, compared with our 2021 baseline year, by 2030. In 2024, TCM reduced our scope 1 and 2 emissions by 53% compared with our baseline year. Distribution of CO2 emissions (scope 1 and 2) The shift in the distribution of TCM Group CO2 emissions in 2024 is a result of having added more electric vehicles to our car fleet. Total scope 1, 2 and 3 emissions Of TCM Group's total emissions, our value chain emissions (scope 3) account for 99%. Purchased goods and services (category 1) account for more than 85% of our total emissions. Category 1 emissions include emissions from direct raw materials, goods and services related to production as well as emissions related to third-party products such as white goods, worktops and mirrors. Emissions Actions planned for 2024 Actions undertaken in 2024 What next? Reduce scope 1 and 2 emissions Added more electric vehicles (EVs) to the car fleet. In 2024, 21% of the cars were EVs, compared to 6.9% in 2023. Non-fossil fleet of company cars by 2028. Map scope 3 emissions Defined baseline of scope 3 for 2023 and tracked progress. Improve data collection. Define reduction targets and projects for scope 3. Expand product portfolio covered by environmental product declarations (EPDs) Products in AUBO's product portfolio covered by EPDs. Expand product portfolio covered by EPDs. Environment 0 500 1000 1500 2000 2500 3000 TCM actual 2021-2024 2022 20302023 20242021 SBTi-approved target / recommended SBTi trajectory 42 % 5 3% Ton CO 2e 100% 80% 60% 40% 20% 0% /one.ss01.0 % Purchased goods and services (category 1) 85.9 % Upstream transportation and distribution (category 4) 8.1 % Other scope 3 categories 5.0 % Scope 1 & 2 Scope 3 E TCM Group 27 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Production of raw materials scope 3 scope 1 & 2 transport of raw materials Manufacture Sales Transport Use Waste and recycling Upstream activities Downstream activitiesTcm Group 86% (93,141 tonS) 4% (3,955 tons) 1.18% (1,281 tons) 0.08% (82 tons) 8% (8,713 tons) 99% /one.tf% Scope 1 and 2 emissions In 2024, TCM Group’s absolute scope 1 and 2 GHG market-based emissions decreased by 53% compared with 2021. Through transition to district heating and electric heat pumps, where possible in terms of infrastructure and economic feasibility, as well as having all electric consumption covered by renewable energy certificates from wind and solar power, TCM has already reached its target for scope 1 and 2. We will continue to phase natural gas out of our operations as this becomes possible in terms of infrastructure and economic feasibility. Going forward, our focus is on identifying further reductions potential, phasing out fossil-based energy and ensuring that emissions do not increase as a result of TCM's growth strategy. Electricity consumption In 2024, TCM’s electricity consumption increased by 3%. This increase resulted from the transition towards an electricity-based system as a means to reduce our direct emissions. All electricity consumption is covered by renewable electricity certificates. We continue to promote awareness of how daily habits and behaviour can impact energy efficiency at our production facilities. In 2025, we anticipate an increase in energy consumption due to investments aimed at expanding capacity for lacquering processes. Company cars TCM operates a fleet of company cars consisting of 28 passenger vehicles and commercial vans. To reduce our impact, we have updated our company car policy to ensure that we transition to electric cars as existing vehicles are replaced. Waste At TCM Group, we maintain a constant focus on limiting waste. At our manufacturing sites, all waste is sorted into material fractions, enabling us to ensure that waste is utilised with the highest possible resource value. Our wood fraction is returned to our chipboard supplier and, together with wood from Danish recycling centres, used for production of chipboards, which TCM Group then uses in the production of new kitchens. Wood of useable size finds new use as serving trays or is delivered to wood workshops at local schools. TCM Group will continue to prioritise waste management and reduction both internally and with suppliers, while actively engaging in external partnerships. Scope 3 emissions As part of our commitment to the Science Based Targets initiative (SBTi), TCM Group has mapped our scope 3 emissions with 2023 as the baseline year. Scope 3 emissions refer to sources that are not directly owned or controlled by TCM Group. TCM Group’s scope 3 emissions account for 99% of our total emissions. Our value chain and the production of raw materials used for products produced by TCM Group are predominately based in Europe, where more than 90% of production occurs. In 2024, our scope 3 emissions were 107,180 tons CO2e, which is 6.8% higher than our baseline year. The reason for this increase is the use of spend-based emission factors to define our scope 3 emissions where activity-based data has not been available. Due to higher purchasing costs, we observed higher emissions for the same, or even lower, volumes of purchased goods and services in 2024 compared with 2023. Additionally, investment in new processing equipment has directly contributed to an increase in our scope 3 emissions. TCM has included third-party products, such as white goods, in our emissions calculations, and these account for more than 45% of our category 1 emissions. Changes in product mix and an increase in third-party products have a direct impact on our scope 3 emissions. Going forward, we will work closely with our suppliers to reduce the reliance on spend-based emission factors, increase the use of activity- based factors and identify a catalogue of reduction opportunities. Reduction of our scope 3 emissions will to a large extent be dependent on our suppliers taking action on reducing their scope 1,2 and 3 emissions. TCM Group 28 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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unit 2024 2023 2022 2021 2020* CO2 Emissions CO2e, total scope 1 tCO2e 1,195 1,215 1,224 1,516 1,435 Vehicles tCO2e 222 237 227 225 210 Natural gas tCO2e 974 989 984 1,243 1,191 Others tCO2e 0 5 12 47 34 CO2, total scope 2 tCO2e 16 16 892 1,041 1,703 Electric power tCO2e 0 0 888 1,035 1,698 District heating tCO2e 16 16 4 6 5 CO2, total scope 1+2 tCO2e 1,212 1,231 2,116 2,557 3,138 CO2e intensity (revenue) ratio 1.0 1.0 1.5 1.9 3.1 CO2, total scope 3 tCO2e 107,181 99,826 - - - To follow up on progress towards emissions reduction targets, greenhouse gas emissions (expressed as carbon dioxide equivalent, CO2e) are reported annually. CO2e is categorised into three scopes according to the methodology of the Greenhouse Gas Protocol Corporate Standard (GHG Protocol). CO2 emissions are calculated with reference to GRI 305 Emissions. The tracking of CO2e emissions is aligned with UNGC principles 7, 8 and 9. TCM Group does not use carbon credits as a means to reduce CO2e emissions. Scope 1 – all direct emissions Scope 1 emissions are related to activities within TCM’s control. This includes transport using TCM’s vehicles (leased and owned cars) and direct emissions from TCM’s production. The CO2e emissions are based on the invoiced energy consumption per source. The CO2e factors applied are based on market statistics for petrol, diesel and LPG gas. The CO2e factors for natural gas are based on environmental declarations from the supplier. Scope 2 – indirect emissions Scope 2 emissions relate to indirect emissions caused by TCM’s energy purchases, i.e. electricity or heat. The CO2e emissions are based on the invoiced energy consumption per source. CO2e factors for district heating are based on environmental declarations from the supplier. Electricity (prior to 2023) is based on market environmental declarations. Scope 3 – other emissions Scope 3 emissions relate to sources that are not directly owned or controlled by TCM. These cover emissions from purchased goods and services (e.g. particleboards, edgeband, hinges, packaging and transport purchased from suppliers) as well as process waste from production sites, capital goods and emissions related to franchise stores. Our reported scope 3 inventory is based on the GHG Protocol, which is split into 15 subcategories (C1-C15): C1 - Purchased goods and services: Primary raw materials for products are calculated based on GHG emissions provided by subsuppliers. Other purchased goods and services are calculated as categorised spend data multiplied by relevant spend-category-specific emission factors. C2 - Capital goods: Categorised spend data multiplied by relevant spend-category-specific emission factors. C3 - Fuel- and energy-related activities: Calculated based on actual fuel consumption multiplied by relevant emission factors. C4 - Upstream transportation and distribution: Calculated based on A2 from TCM's verified environmental product declarations (MD-23121, MD-23122, MD-24065). C5 - Waste generated in operations: Calculated based on actual waste data multiplied by relevant emission factors. Environmental data CO2 emissions Accounting practices C6 - Business travel: Calculated based on milage allowances for employee travel in own cars and GHG emissions from plane travel provided by our travel agent. C7 - Employee commuting: Calculated based on estimates of distance travelled and travel type. Estimated based on an internal employee survey. C12 - End-of-life (EOL) treatment of sold products: Product use and EOL are based on TCM's verified environmental product declarations (MD-23121, MD-23122, MD-24065). C14 - Franchises: Calculated based on activity data from franchise stores multiplied by relevant emission factors. C15 - Investments: Calculated based on activity data from Celebert ApS - based on TCM's 55% ownership of Celebert ApS. Subcategories C8, C9, C10, C11 and C13 are not relevant for TCM Group. Uncertainties and estimates Where possible, activity-based data has been used as the basis for our scope 3 calculations. Where activity-based data has not been available, spend-based data has been used either on the basis of “Klimakompasset” or “Ecoinvent”. Products categorised as third-party products, such as white goods and mirrors, which are included in deliveries to customers, are accounted for as raw materials and transport. However, they are excluded from our scope 3 emissions calculations after delivery to the end- customer. This exclusion applies to the use of sold products and their end-of-life treatment, as these aspects are beyond our control and influence over their design and use. Employee commuting is based on an employee survey to define means of transportation and distance travelled as well as average number of working days per year per employee. It is assumed that the average per employee that applied in our baseline year is the same for the 2024 calendar year. * Excl. AUBO Production A/S. TCM Group 29 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Energy Resources In 2024 we increased our electricity consumption by 3% as a result of our ongoing transition away from fossil-based energy consumption. Electricity consumption / revenue has been updated to include AUBO Production consumption and revenue for 2022. Accounting practices Energy consumption is based on invoiced consumption. The renewable energy share from 2023 has been covered by renewable energy certificates from wind and solar power, which brings the renewable energy share to 100%. Waste TCM Group continuously seeks to increase productivity, reduce waste throughout the production processes, and work with waste management and suppliers to reduce waste and improve waste handling. During 2024, we continued our efforts to sort waste to retain the highest possible value of the materials. The increase in waste volume is due to an increase in activity and a change in the product mix. Accounting practices Waste volumes and disposal methods are weighted and reported by waste sorting and handling companies. Reference standard: GRI 306-5 Waste Renewable energy share before 2023 is based on standard energy market mix in Denmark (Environmental declaration 2021). Electricity consumption is calculated as: Electricity consumption [kWh] / net revenue [kDKK] Water TCM Group primarily uses water for sanitation and heating purposes, and we expect this to be relatively stable. Very limited amounts are used in production to support our lacquering processes, and any resulting wastewater is carefully separated and disposed of in the right manner. In 2024, water consumption decreased by 11% compared with the previous year. Accounting practices Water consumption covers all water purchased from external suppliers and is based on the invoiced volume. unit 2024 2023 2022 Energy Energy consumption MWh 6,621 6,483 7,850 Renewable electricity % 100 100 82 Electricity consumption / revenue Ratio 5.5 5.3 5.6 unit 2024 2023 2022* Resources Water consumption m3 6,138 6,881 5,900 Waste ton 4,237 4,165 4,410 Recycling % 91.7 94.2 90.3 Energy recovery % 6.5 4.1 9.6 Landfill % 0.0 0.0 0.0 Hazardous waste % 1.9 1.0 0.1 Environmental data * Excl. waste from AUBO Production A/S. TCM Group 30 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Gender equality TCM Group's target for representation of the underrepresented gender on the Board of Directors is to be in line with the Danish Business Authority’s definition of equal gender distribution. As of 31 December 2024 this target is achieved. Diversity Our aim is to ensure gender balance at all levels of our organisation, with the underrepresented gender making up at least 40%. Towards zero accidents Our safety vision is zero accidents. Number of accidents: zero accidents 2025 target Sick days and absence No. of sick days caused by work accidents Reported near-miss work accidents No. of reported near-miss work accidents at TCM Group TCM Group’s continued success relies on employing the best-qualified people, and we are committed to ensuring a safe and healthy working environment characterised by mutual trust and respect. We work actively to create sustainable work in accordance with the following principles: • A safe and secure working environment that also enhances personal development. • Flexibility to support a clear balance between work and private life, and between individuals, teams and organisation. • Diversity and social commitment. Human and labour rights Our commitment to the UN Global Compact, established over a decade ago, demonstrates our long-standing dedication to upholding human and labour rights. The primary risks we face in respect of non-compliance with the Global Compact’s principles include potential discrimination against employees and cases where specific conditions at our suppliers fail to meet the required standards. Our Employee Handbook and our Code of Conduct provide clear guidance to our employees and suppliers regarding human and labour rights. Our focus is on implementing effective mechanisms, systems and programmes to prevent violations and promote accountability. We adhere to Danish and international standards on human rights and comply with laws related to equality, offering fair and equitable employment and working conditions regardless of gender, ethnic origin, religion or other personal circumstances. Key instruments for identifying and addressing potential violations include our whistleblower hotline and internal controls, which allow employees and third parties to report concerns. Additionally, we conduct random supplier audits to ensure compliance with human and labour rights standards. For further details on our whistleblower hotline, please refer to page 38. Safe working environment At TCM Group, we are committed to providing the best possible working environment. Safety is our top priority, and we focus heavily on building and maintaining a strong safety culture to ensure the well-being of our employees. This involves minimising risks and creating the best conditions for a healthy and safe workplace. Work safety significantly impacts not only our employees but also their families, communities and the business as a whole. In 2024, we continued our efforts to secure safe working conditions with a strong focus on knowledge sharing across locations and a reinforced emphasis on behaviour and safety culture based on a zero-accidents vision. We monitor the occupational health and safety of our employees by collecting and analysing data on accidents, near-miss work accidents and sickness absence. In 2024, we had a total of 12 reported accidents. Seven of those accidents resulted in a total of 33 days of absence. The remaining five accidents did not result in any absence but in some cases required the affected employees to undertake less strenuous tasks during their recovery. We have observed that most accidents are behaviour-related, stemming from employees' eagerness to perform their tasks well but sometimes at the expense of adhering to 3.7%0.0003% Absence ratio related to sickness in 2024 Absence ratio related to work accidents in 2024 Social Social performance and progress 2023 20242022 20 8 12 7 22 12 34% 66%44% 56%33% 67% Women Men Management employeesBoard of directors with absence without absence S 2024 2023 2022 57 125 33 2024 2023 2022 1,232 937 1, 400 TCM Group 31 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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safety instructions. To address this, all employees have undergone training to strengthen their focus on safety and cultivate a safety-conscious culture. Our management team leads by example, conducting regular safety walks and organising "safe starts" after vacations. We use near-miss work accident reports to ensure continued awareness of incidents that could lead to an accident, to share learnings and as a means of taking preventive actions. The number of near-miss reports increased considerably in 2024, and we take this as an indication that our efforts are having a positive effect. Although we have not yet achieved our goal of zero accidents, we have successfully reduced the severity of accidents. We remain determined to eliminate work-related accidents entirely. Moving forward, we will intensify our focus on safety-related behaviours and reinforce the message that personal safety always takes precedence over everything else. Safety will continue to be a top priority in the coming year. Focus on ongoing learning We strive to continuously upskill our employees, enhancing their individual value and ensuring that their skills remain relevant both within and beyond TCM Group. We achieve this through on-the-job training and by developing personalised plans during annual reviews in collaboration with each employee. We believe that training is most effective when it is available at the time it is most relevant to the individual and can be immediately applied in practice. In addition to internal learning and development initiatives, our TCM Learning platform also supports the training of sales staff for our brands and kitchen installers. Tolerant workplace We take responsibility for training the next generation of qualified employees by providing opportunities to develop relevant skills and gain valuable work experience. Throughout the year, TCM Group supports many individuals who, for various reasons, need assistance with establishing themselves in the job market. We work consistently with apprentices across TCM Group, and in 2024 we had 12 apprentices within the organisation. We have become more focused on hiring individuals from diverse backgrounds to foster the benefits of diversity in our workplace. Additionally, we are committed to creating positions with reduced working hours wherever feasible, and we continue to collaborate closely with municipalities to offer citizens job clarification processes. As an example, we have been actively involved in creating the Aulum Mile (see case). A talented and diverse workforce At TCM Group, we firmly believe that a diverse and inclusive working environment benefits both our business and society as a whole. We recognise and value the differences among our employees, as diverse teams, including management groups, foster better and more innovative collaboration. This leads to improved decision-making and promotes inclusiveness and tolerance throughout our organisation. We are committed to being a responsible workplace that recruits, promotes and develops employees based on individual competences while supporting diversity. Our recruitment, contracting, promotions and dismissals are conducted without consideration for gender, age, nationality, sexual orientation, physical ability, disability, political opinion, ethnicity, family status and religious or other beliefs. We strive for equitable representation of men and women in managerial positions, and promote diversity and inclusion through our policy, which is available on the TCM Group website. We continuously work to ensure equal opportunities for every employee, regardless of gender. As part of this effort, we emphasise equal terms and actively identify candidates of different genders when hiring new managers. We also aim for a workforce that balances younger and more experienced employees. Our focus extends to achieving sensible gender diversity within the Board of Directors, Executive Management and other management levels. TCM Group aims for a gender composition across Management and the total workforce where the underrepresented gender constitutes at least 40%. Currently, our Executive Management consists of the CEO and the CFO, both of whom are male. However, at the second management level, the underrepresented gender comprises 44%, while in the overall management group it makes up 31%. This composition reflects traditional gender distributions in manufacturing companies, with a predominance of male forepersons in production and a slight predominance of female employees in administrative roles. In 2024, new competences were added to the second management level. Progress towards a more equal gender distribution at other management levels will occur gradually as the organisation develops and recruitment efforts continue. We are committed to meeting our target by 2028. CASE: COCUURA At TCM, we recognise that training and learning do not only occur in the workplace. Life events can also have a significant impact on the working environment. To support our employees holistically, TCM Group offers all employees membership of Cocuura. Cocuura is a digital platform designed to assist managers, teams, colleagues and employees' families by providing tools to navigate challenging and potentially life-changing dilemmas. CASE: The Aulum Mile With the ambition of securing jobs for young people who, for various reasons, are struggling to establish a foothold in their working lives, the Aulum Mile was created as a collaboration between numerous companies in Aulum and Youth Guidance Herning (Herning Municipality). The initiative aims to provide young people with the opportunity to test their work abilities while ensuring their well-being, security and proper support, facilitating their successful integration into the workplace. In 2024, TCM hosted six young people on work probation, several of whom are on track to secure permanent employment. TCM Group 32 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Social data Employees unit 2024 2023 2022 2021 2020 Diversity Number of employees, as of 31 December # 481 486 482 504 483 Blue-collar workers % 68 70 77 - - White-collar workers % 32 30 23 - - Flex jobs, etc. # 15 21 5 - - Trainees, interns and apprentices # 12 12 6 13 16 Employee turnover % 16.9 - - - - Gender diversity overall, female/male % 34 / 66 34 /66 36 / 64 32 /68 - Gender diversity, 1st-level management as per §99b % 0 (0 of 2) 0 (0 of 2) - - - Gender diversity, 2nd-level management as per §99b % 44 (4 of 9) 44 (4 of 9) - - - Gender diversity, other management levels, including 1st and 2nd levels % 28 (5 of 18) 31 (5 of 16) 28 (4 of 14) 21 (3 of 14) 26 (4 of 15) Pay gap between genders, white-collar Ratio m/f 1.18 1.28 1.18 - - Distribution of employees by age group, under 30 years old % 10 - - - - Distribution of employees by age group, 30-50 years old % 41 - - - - Distribution of employees by age group, over 50 years old % 49 - - - - The total number of employees, measured as headcount, decreased by 1% compared with the previous year. The decrease can be attributed to a decrease in market demands and restructuring of the organisation. Accounting practices FTEs and the shares of blue- and white-collar workers are calculated excluding temporary and short-term employment. The number of employees who are on flex-job contracts or similar and trainee contracts are counted at the end of the year. Gender diversity for all employees Gender diversity refers to the proportion of women in relation to the total number of headcounts. The measurement of gender diversity, both for all employees and for Management, is based on headcounts as of 31 December 2024 and all historical years, and encompasses both white-collar and blue-collar employees. Gender diversity in management The measurement provides insight into the representation of women in management positions within the organisation. The Executive Management comprises the CEO and the CFO, as they have a direct reporting line to the Board of Directors. The second management level comprises managers who report directly to the Executive Management. Other management levels comprise the overall management group at TCM, including the Executive Management and the second management level. Gender diversity is measured with reference to GRI 405 Diversity and Equal Opportunity, and includes all TCM Group employees. Our work with diversity aligns with UNGC principles 3, 4, 5 and 6. Gender pay ratio At TCM Group, it is our policy that equal jobs are rewarded with equal pay. Any difference in pay is solely based on qualifications and experience. The pay gap between genders is measured for white-collar employees minus the Executive Management. TCM Group 33 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Social data Occupational health and safety Accounting practices Sickness-related absence Sickness-related absence does not include absence due to sick children or maternity/ paternity leave. Accidents Sick days resulting from work-related accidents include all days (24 hours) during which an employee is absent due to such accidents. The absence ratio is calculated as the number of absent working hours divided by the total number of working hours. The lost-time injury frequency measures the number of work-related incidents with absence per million working hours. The accident severity ratio serves as an indication of the type of injuries that we experienced. The number of near-miss work accidents registered during the financial year is also tracked. This registration serves as a measure to prevent accidents. Employee engagement TCM Group measures employee engagement every two years through a voluntary engagement survey. The engagement score, based on a 5-point scale, is used to monitor employee engagement through several categories. The engagement participation percentage reflects the proportion of employees who completed the survey compared to the total number of employees. Although the survey is usually conducted every two years, it was postponed from 2023 to 2024 due to the acquisition of AUBO Production A/S in unit 2024 2023 2022 Occupational health and safety Absence ratio related to sickness % 3.7 3.2 4.4 Number of work accidents # 19 34 28 Sick days caused by work accidents # 33 57 937 Lost-time injury frequency (LTIF) 9.3 11.5 - Absence ratio related to work accidents % 0.0003 0.09 0.10 Near-miss work accident registrations # 1,400 1,232 937 Employee engagement score (5-point scale) 4.2 - - Engagement survey participation % 78 - - July 2023. The 2024 survey included all employees within TCM Group. Our work with occupational health and safety aligns with UNGC principles 3, 4, 5 and 6. TCM Group 34 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Nettoline kitchens are made for everyday life. Our kitchens are created for the user – not the other way around. Our kitchens are born out of the idea that functionality, design and price are not mutually exclusive. governance governance ................................................................................................. 36 Board of Directors ................................................................................. 39 Executive Management .......................................................................... 40 Shareholder information .................................................................. 41 TREND, SAND TCM Group 35 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Duties and responsibilities of the Board of Directors At TCM Group, management duties and responsibilities are divided between the company’s Board of Directors and the Executive Management. No one person is a member of both bodies, and no member of the Board of Directors has previously been a member of the Executive Management. TCM Group has laid down rules of procedure for the Board of Directors, which are reviewed annually. The Board of Directors holds nine ordinary meetings each year and convenes further meetings as needed. In the financial year 2024, 11 board meetings were held. The Executive Management is in charge of day- to-day management, while the Board of Directors supervises the work of the Executive Management and is responsible for overall management and strategic direction. In this regard, the Board of Directors considers the Group’s overall strategy every year to ensure continuous value creation. The requirements concerning the Executive Management’s timely, accurate and adequate reporting to the Board of Directors and the communication between these two corporate bodies are laid down in the Executive Management’s rules of procedure, which are reviewed annually and approved by the Board of Directors. Composition of the Board of Directors The Board of Directors currently consists of six members elected by the Annual General Meeting and elects a Chair and a Deputy Chair. The board members are professionally experienced businesspeople who have the diversity, international experience and skills considered relevant to TCM Group. All but one of the board members elected by the shareholders are regarded as independent. The Board of Directors determines once a year the qualifications, experience and skills that it must possess in order to best perform its tasks taking into account the Group’s current needs. The Board of Directors evaluates its work on an annual basis. All board members are up for election at each Annual General Meeting. Audit Committee The Board of Directors appoints an Audit Committee. The Chair of the Audit Committee is skilled in accounting and finance. The purpose of the Audit Committee is to monitor the financial reporting process, the company’s internal control and risk management systems, including ESG, and the collaboration with the independent auditor. The Audit Committee currently consists of three members – Anders Skole-Sørensen, Jan Amtoft and Erika Hummel – and is chaired by Erika Hummel. The Audit Committee held five meetings in the financial year 2024. Nomination Committee The Board of Directors appoints a Nomination Committee comprising at least two members of the Board of Directors, of whom at least one is also a member of the Remuneration Committee. The Chair of the Board of Directors is also the Chair of the Nomination Committee. The overall purpose of the Nomination Committee is to help the Board of Directors ensure that appropriate plans and processes are in place for the nomination of candidates for the Board of Directors and Executive Management. The Nomination Committee currently consists of three members – Anders Skole-Sørensen, Søren Mygind Eskildsen and Pernille Wendel Mehl – and is chaired by Anders Skole-Sørensen. The Nomination Committee held one meeting in the financial year 2024. Remuneration Committee The Board of Directors appoints a Remuneration Committee comprising at least two members of the Board of Directors. The purpose of the Remuneration Committee is to ensure that the Group maintains a Remuneration Policy for members of the Board of Directors and Executive Management as well as general guidelines for incentive pay for the Executive Management. The Remuneration Committee currently consists of three members – Anders Skole-Sørensen, Søren Mygind Eskildsen and Pernille Wendel Mehl – and is chaired by Anders Skole-Sørensen. The Remuneration Committee held one meeting in the financial year 2024. Remuneration of members of the Board of Directors and the Executive Management The Board of Directors has adopted a Remuneration Policy and general guidelines on incentive pay, which have been approved by the Annual General Meeting. The policy and guidelines are available at governance-en. tcmgroup.dk. The Remuneration Policy supports the goal of attracting, motivating and retaining qualified members of the Board of Directors and Executive Management. The remuneration is designed to align the interests of the Board of Directors, the Executive Management and the company’s shareholders, to support the achievement of TCM Group’s short-term and long-term strategic targets, and to stimulate value creation. Please see note 5 to the consolidated financial statements for a TCM Group is committed to exercising good corporate governance, and the Board of Directors therefore evaluates the Group’s management systems at least once a year to ensure that the structure is appropriate relative to the Group’s shareholders and other stakeholders. governance Governance Structure Management Team Shareholders and annual general meeting Executive Management Board of Directors Employees Nomination Committee Audit Committee Remuneration Committee G TCM Group 36 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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specification of the remuneration paid to the Board of Directors and Executive Management. Description of internal control and procedures in relation to the financial reporting process The Board of Directors and the Executive Management are ultimately responsible for the Group’s risk management and internal control in relation to its financial reporting, and approve the Group’s general policies in this regard. The Audit Committee assists the Board of Directors in overseeing the reporting process and the most important risks. The Executive Management is responsible for the effectiveness of the internal control and risk management, and for the implementation of such control aimed at mitigating the risks associated with the financial reporting. Management believes that the Group’s reporting and internal control systems enable it to be compliant with disclosure requirements applying to issuers whose shares are admitted to trading and official listing on Nasdaq Copenhagen. As part of the overall risk management, the Group has set up internal control systems that are deemed appropriate and sufficient in relation to the Group’s activities and operations. The internal control systems are evaluated on an ongoing basis. The Group’s internal control and procedures are planned and executed to ensure a reasonable level of comfort that the financial reporting is reliable and in compliance with internal policies, and gives a true and fair view of the Group’s financial performance, financial position and material risks. The procedures and control are furthermore planned with a view to supporting the quality and efficiency of the Group’s business processes and the safeguarding of the Group’s assets. The evaluation of the risks includes an assessment of the likelihood that an error will occur and whether the financial impact of such an error would be material. In addition to the above, the Group has developed internal control and procedures in relation to the financial reporting process aimed at enabling the Group to monitor its performance, operations, funding, risk and internal control. The Group continues to improve the internal control and procedures in relation to the financial reporting process and believes that the current control and procedures in place enable the Group to be compliant with the disclosure requirements applying to issuers of shares on Nasdaq Copenhagen. The internal control and procedures in relation to the financial reporting process include: • Weekly reports of incoming orders and gross and net revenue by month • Monthly reports, on a per store basis, of the Group’s sales to stores • Consolidated monthly reports summarising results for legal entities, including balance sheet and cash flow results compared to budgeted performance and the previous year’s performance, explanations of deviations and key performance indicators • A four-eye principle within the finance department to ensure the quality of accounting records • A standardised authorisation process for most of the invoices received. In addition, a detailed review of cost at account level is carried out in connection with the monthly reports. Organising ESG To ensure steady progress on our ambitions and targets, and to maintain and develop ESG as an integrated part of our way of doing business, TCM Group has an ESG Steering Committee that is organised around our strategic focus areas and with the involvement of the relevant stakeholders. The committee consists of the CEO, the CFO, the Head of Product Management and the Head of Supply Chain. It convenes every second month and addresses issues including sustainability risks and opportunities as well as recommendations for further improvements. The ESG Manager is responsible for strategy deployment as well as identifying and pursuing further strategic opportunities. Cross-functional teams from the line of business support the daily operations and ensure progress in each of the strategic focus areas. Oversight of ESG performance is among the responsibilities of the Audit Committee. Diversity Policy TCM Group has formulated a Diversity and Inclusion Policy. Our Policy is available on our website, tcmgroup.dk. Please see page 32 for more details of the policy. Gender Diversity on the Board of directors and among other executives In respect of members elected by the Annual General Meeting, TCM Group focuses on diversity, skills and experience. We aim for an equal gender composition that also reflects essential competences within TCM Group’s focus areas. To ensure that the Group’s Board of Directors is composed of the right profiles and skills, TCM Group has defined targets with regard to gender and independence. The Group wants a Board of Directors where both genders are represented. We believe this can create the basis for the best debates and add different perspectives and input on how we run and develop the business and approach challenges. For the Board of Directors elected by the Annual General Meeting, TCM Group aims for representation of the underrepresented gender in line with the Danish Business Authority’s definition of equal gender distribution. In 2024, the Board of Directors elected by the Annual General Meeting comprised two women and four men, giving TCM Group an equal gender distribution according to the Danish Business Authority’s definition. Incentive plan The long-term incentive (LTI) programme for TCM Group’s Executive Management includes ESG performance-related criteria accounting for up to 20% of the programme. Business conduct Our business conduct is governed by our Code of Conduct, which applies to every aspect of our operations and underpins every decision made daily at all levels across TCM Group. The Code of Conduct outlines our stance on, among other things, anti-corruption and bribery, human rights, fraud, relationships with business partners, suppliers, authorities and other stakeholders, and the social impacts of our activities throughout the value chain. Where detailed implementation is necessary, it is addressed through specific instructions and staff handbooks. Corporate governance recommendations Nasdaq Copenhagen has incorporated the recommendations of the Danish Committee on Corporate Governance in its Rules for Issuers of Shares. These recommendations are available on the website of the Committee on Corporate Governance, www.corporategovernance.dk. TCM Group complies with all these recommendations. The Group’s corporate governance statements are available on our website at investor-en.tcmgroup.dk/CorporateGovernance TCM Group 37 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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TCM Group's whistleblower system can be accessed here. Whistleblower system In 2024, there were no reported cases0 Supplier management Our responsible sourcing practices are focused on environmental, social and governance issues across our value chain. TCM Group is committed to respecting human rights as outlined in the United Nations Universal Declaration of Human Rights and the UN Global Compact. The backbone of our work with suppliers on ESG matters is our Code of Conduct, which is mandatory for all suppliers to TCM Group. These suppliers are primarily located in Europe, in most cases relatively close to our production sites in Tvis and Aulum, Denmark. In 2024, 92% of materials directly used in our production were made in Europe, of which 54% originated in Denmark or our neighbouring countries (Germany and Sweden). In 2024, we developed a framework to rate our suppliers on their fit with and contribution towards our ESG-related targets. This will be integrated into our supplier management and due diligence processes. Anti-corruption TCM Group is committed to compliance with anti-corruption rules and regulations, and recognises the risks of non-compliance, such as obtaining advantages through illegal means via our employees, suppliers, franchisees or dealers. At TCM Group, we maintain a zero-tolerance approach to corruption and bribery. Our policy is to fully comply with all applicable regulations and to actively promote anti-corruption practices in all our business relationships. Our Code of Conduct clearly outlines this zero- tolerance approach for employees, suppliers, franchisees and dealers. In addition to fostering firm values and a strong organisational culture, we conduct internal control and provide a whistleblower hotline to detect potential breaches. We are pleased to report that in 2024 there were no instances of policy violations related to anti- corruption. In 2025, we will continue our efforts to promote anti-corruption practices across all our business relationships. Whistleblower system TCM Group’s whistleblower system is available for internal and external reporting of any witnessed activities or reasonable suspicion of serious and reprehensible conditions or illegalities within the Group. All internal and external stakeholders can access the whistleblower system through an externally hosted website. The system is anonymous and all communication is encrypted, which means that TCM Group is not able to trace any specific whistleblower report back to the reporting individual. TCM Group has a non-retaliation policy regarding any concerns reported. The system is available in a number of local languages to ensure that anyone who may have concerns can report in their local language. The reporting platform has been promoted internally to make sure that employees at TCM Group know that there is an anonymous platform available. Tax residence TCM Group operates in Denmark and Norway, is listed on the Copenhagen Stock Exchange (Nasdaq OMX Copenhagen Small Cap) and pays taxes locally in Denmark and Norway. In 2024, TCM Group’s corporate tax amounted to DKK 13.4 million, 99.6% in Denmark and 0.4% in Norway. Our Tax Policy is available on our website, tcmgroup.dk. Data Protection Policy TCM Group collects data to facilitate delivery of products and services within kitchen, bathroom and storage, and to best service customers in the event of quality complaints or enquiries regarding information on specific orders. TCM Group primarily uses the collected data in connection with order processing, i.e. order DATA PROTECTION POLICY In connection with TCM Group’s delivery of products and services within kitchen, bathroom and storage, TCM Group collects relevant data. Our policy regarding data protection and confidentiality is available on our website, tcmgroup.dk. confirmation and delivery, and in any follow-up complaints or enquiries. Day-to-day processing and storage of data are operationalised and systematised via internal procedures and policies across TCM Group. The overall responsibility for decision-making, application and implementation of new technologies, and use of data, both personally identifiable and non- personally identifiable, is anchored in TCM Group's Executive Management. EU Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy The Corporate Sustainability Reporting Directive (2022/2464/EU), known as the CSRD, came into force on 15 January 2023. As TCM Group is a listed company with an average of fewer than 500 full- time employees, the company does not fall within the scope of the currently applicable CSRD until the financial year 2025. In 2024, TCM Group has been preparing to ensure compliance with the CSRD. Following our double materiality assessment, we conducted a gap analysis and focused on identifying key performance indicators (KPIs) that must be reported annually. Unless currently applicable regulations are changed, the financial year 2025 will mark our first year of reporting under CSRD requirements, with a strong emphasis on ongoing data collection, data quality and data control. Our goal is to drive continuous improvement and track progress as an integral part of our ESG management system. We are also preparing to undergo independent limited assurance to validate our efforts. Tvis køkken Forest TCM Group 38 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Board of Directors Chair of the Nomination Committee and of the Remuneration Committee, and member of the Audit Committee. Independent. Member since: 2017. Participated in 11 of 11 board meetings in 2024. Number of shares end 2024: 10,153 (2023: 10,153). Anders Skole-Sørensen holds an MSc in Economics from the University of Copenhagen. Other positions: Anders Skole-Sørensen is a member of the board of directors of F. Uhrenholt Holding A/S. Anders Skole-Sørensen Chair Danish nationality. Born in 1962. Member of the Nomination Committee and of the Remuneration Committee. Independent. Member since: 2018. Participated in 11 of 11 board meetings in 2024. Number of shares end 2024: 6,950 (2023: 6,950). Søren Mygind Eskildsen holds a Bachelor of Engineering and MBA from the University of Southern Denmark. Other positions: Søren Mygind Eskildsen is CEO of Louis Poulsen A/S. Søren Mygind Eskildsen is chair of the board of directors of Ege Carpets A/S and a member of the board of directors of Gabriel A/S. SØREN MYGIND ESKILDSEN Deputy Chair Danish nationality. Born in 1972. Chair of the Audit Committee Non-independent. Member since: 2023. Participated in 10 of 11 board meetings in 2024. Number of shares end 2024: 0 (2023: 0). Erika Hummel holds a BA in Economics and an MBA, both from the University of California, Los Angeles. Other positions: Erika Hummel is CEO of Sodulo Immobilien GmbH and chair of the board of directors of Hummel & Partner AG. Erika Hummel Board member Italian and German nationality. Born in 1961. Member of the Audit Committee. Independent. Member since: 2022. Participated in 11 of 11 board meetings in 2024. Number of shares end 2024: 1,550 (2023: 1,550). Jan Amtoft holds a Bachelor of Computer Science (Hons) from De Montfort University. Other positions: Jan Amtoft is CIO of Rockwool A/S. Independent. Member since: 2024. Participated in 7 of 7 possible board meetings in 2024. Number of shares end 2024: 0 (2023: 0). Björn Olsson Lissner holds an MSc in Technology from Lund University. Other positions: Björn Olsson Lissner is CEO of Aktiebolaget Gyllsjö Träindustri and a member of the boards of directors of Aktiebolaget Gyllsjö Träindustri and Industrispik Linan Aktiebolag. Jan Amtoft Björn Olsson Lissner Board member Danish nationality. Born in 1964. Board member Swedish nationality. Born in 1976. Member of the Nomination Committee and of the Remuneration Committee. Independent. Member since: 2023. Participated in 10 of 11 board meetings in 2024. Number of shares end 2024: 0 (2023: 0). Pernille Wendel Mehl holds a Grad. Dip. BSc in Business Administration (HDA) and a Master of Management Development (MMD), and has completed the CBS/Børsen Executive Board Programme. Other positions: Pernille Wendel Mehl is CEO of Copenhagen Zoo and a member of the boards of directors of Foreningen DGI Byen and Nine A/S. Pernille Wendel Mehl Board member Danish nationality. Born in 1972. TCM Group 39 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Executive Management Since March 2023. Number of shares end 2024: 5,426 (2023: 5,426). Prior to joining TCM Group, Thomas Hjannung worked at Faerch Group, ECCO Sko A/S and Bang & Olufsen A/S in various senior positions, including international assignments. Since March 2020. Number of shares end 2024: 57,825 (2023: 55,876). Prior to joining TCM Group, Torben Paulin was CEO of BoConcept, a leading Danish design and lifestyle brand with nearly 300 franchise stores in 60 countries. Other positions: Torben Paulin is a member of the board of directors of Zefyr Invest A/S. Torben Paulin Thomas Hjannung Chief Executive Officer Danish nationality. Born in 1965. Chief Financial Officer Danish nationality. Born in 1973. Svane køkkenet Snedker, RAW TCM Group 40 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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TCM Group share price development in 2024 TCM Group A/S is part of the Nasdaq OMX Copenhagen Small Cap index. In 2024, the share price increased from an opening value of DKK 45.5 to DKK 67.0 as of 31 December 2024, representing an increase of 47.3%. The average share price during 2024 was DKK 59.4. The nominal value of the company’s share capital as of 31 December 2024 was DKK 1.1 million divided into shares of DKK 0.1, equivalent to 10.5 million shares and 10.5 million votes. As of 31 December 2024, TCM Group A/S owns 73,051 treasury shares, corresponding to 0.7% of the share capital. Financial calendar The financial year covers the period 1 January – 31 December, and the following dates have been fixed for releases, etc. in the financial year 2025: NAme Business registration no. Domicile Notified shareholding* Paradigm Capital Value Fund B129149 Luxembourg, Luxembourg 15.8% Paradigm Capital Value LP 99-0375707 Delaware, USA 12.1% BI Asset Management Fondsmæglerselskab A/S 20896477 Copenhagen, Denmark 10.8% Arbejdsmarkedets Tillægspension 43405810 Hillerød, Denmark 10.3% Ownership As of 31 December 2024, members of the Board of Directors held 18,653 shares (31 December 2023: 46,456 shares) and members of the Executive Management held 63,251 shares (31 December 2023: 61,302 shares), totalling 81,904 shares (31 December 2023: 107,758 shares), equivalent to 0.8% of the share capital (31 December 2023: 1.0%). As of 31 December 2024, the following shareholders had notified shareholdings above 5% of the share capital (see below). Shareholder information 9 April 2025 Annual General Meeting 2025 21 May 2025 Interim Report Q1 2025 20 August 2025 Interim Report Q2 2025 25 November 2025 Interim Report Q3 2025 26 February 2026 Interim Report Q4 2025 and Annual Report 2025 9 April 2026 Annual General Meeting 2026 * According to latest shareholding notifications. TCM Group 41 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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The company’s investor relations website, investor.tcmgroup.dk, contains all official financial reports, investor presentations, the financial calendar, corporate governance documents and other material. Annual general meeting The Annual General Meeting will be held on Wednesday 9 April 2024 at 5 p.m. at Skautrupvej 22b, Tvis, 7500 Holstebro. Analyst coverage TCM Group is currently covered by four analysts: Aktieinfo, John Stihøj Carnegie, Alexander Borreskov Danske Bank, Poul Ernst Jessen SEB, Kristian Tornøe Johansen Contact For further information, please contact: CEO Torben Paulin +45 21210464 CFO Thomas Hjannung +45 25174233 Investor Relations: ir@tcmgroup.dk Dividend DISTRIBUTION During 2024, TCM Group did not distribute dividends. For the financial year 2024, the Board of Directors will propose an ordinary dividend of DKK 3 per share. Excluding treasury shares this corresponds to DKK 31 million. Dividend POLICY The Board of Directors has adopted a dividend policy targeting a payout ratio of 40-60% of the consolidated net profit for the year. The payment of dividends, including the amount and timing, Share information Exchange: Nasdaq Copenhagen Trading symbol: TCM018 Identification number/ISIN: DK0060915478 Number of shares: 10.5 million shares of DKK 0.1 each with one vote Share classes: 1 Sector: Kitchens, bathrooms and storage Segment: SMALL CAP will depend on several factors, such as future revenue, profits, general financial and business conditions, restrictions under financing agreements, and strategic initiatives such as M&A activities or significant investments decided upon by the Board of Directors. Additional considerations may include other factors deemed relevant by the Board of Directors, as well as applicable legal and regulatory requirements. There is no assurance that a dividend or share buyback will be proposed or declared in any given Nettoline TREND, SAND year, or that the company’s financial performance will enable adherence to the dividend policy or an increase in the payout ratio. The company’s ability to pay dividends or repurchase shares may be affected by various factors. Additionally, the dividend policy is subject to change at the discretion of the Board of Directors. As part of the current financing agreements with Nykredit, the Group has agreed to dividend restrictions linked to financial leverage. TCM Group 42 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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governance data Composition of the board of directors Risk and Regulation In TCM Group’s Diversity Policy, issued in 2022, we set targets with regard to the gender and independence of members of our Board of Directors. In 2024, the number of board members was reduced from seven to six. With two of the six members being women, we have 33.3% representation of the underrepresented gender. According to the definition of the Danish Business Authority, we have equal gender distribution. Five of the six members are independent, which is well above the target. During the year, there were 11 board meetings, with an attendance rate of 97%. At TCM Group, we have a zero-tolerance approach to corruption and bribery. Our policy is therefore to comply with all applicable regulations and to promote anti-corruption behaviour in all our business relationships. Our Code of Conduct sets out our zero-tolerance approach to corruption for employees, suppliers, franchisees and dealers. Whistleblower system TCM Group’s whistleblower system is available for internal and external reporting of any witnessed activities or reasonable suspicion of serious and reprehensible conditions or illegalities within the Group. All internal and external stakeholders can access the whistleblower system through an externally hosted website. The system is anonymous and all communication is encrypted, which means that TCM Group is not able to trace any specific whistleblower report back to the reporting individual. TCM Group has a non- retaliation policy regarding any concerns reported. No whistleblower cases were reported in 2024. Accounting practices Whistleblower reports and cases resolved relate to the number of whistleblower reports to TCM falling within the correct use of the whistleblower system. The work with the Code of Conduct and the whistleblower system relates to UNGC principle 10 – Anti-Corruption. unit 2024 2023 2022 2021 2020 Composition of the board of directors Members of the Board of Directors # 6 7 6 5 5 Board meetings # 11 15 12 11 8 Board meeting attendance % 97 98 100 100 98 Gender diversity, Board of Directors # % 2 of 6 33 3 of 7 43 1 of 6 17 1 of 5 20 1 of 5 20 Percentage of independent board members % 83 86 100 100 100 unit 2024 2023 2022 Risk and regulation Suppliers covered by Code of Conduct, signed % 82 82 100 Whistleblower reports # 0 0 0 Whistleblower cases resolved % 100 100 100 Accounting practices The number of board members is counted at the date of publication. The number of board meetings only includes actual meetings, not seminars, committee meetings, etc. The attendance rate is calculated as board meetings attended relative to board meetings held. Gender diversity is presented as the share of women. Independent board members is given as the percentage of the total board. TCM Group 43 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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governance data remuneration TCM Group’s Remuneration Policy is available on our website, tcmgroup.dk. The objective of the policy is to attract, motivate and retain qualified members of the Board of Directors and Executive Management, to ensure alignment between the interests of the Board of Directors and Executive Management and the interests of shareholders, and to contribute to the company’s business strategy, long-term interests and sustainability. TCM’s policy is that remuneration of the Board of Directors and Executive Management should be competitive and comparable to remuneration in Danish and international peer companies. The remuneration package for members of the Executive Management may consist of a fixed annual base salary, a pension, a short-term cash bonus, a long-term incentive scheme (cash- or share-based) and other benefits in the form of usual non-monetary benefits and reimbursement unit 2024 2023 2022 Remuneration Shares held by members of the Board of Directors # 18,653 46,456 40,625 Shares held by the Executive Management # 63,251 61,302 91,602 CEO total compensation relative to FTE average total compensation Ratio 12.4 9.4 8.4 of expenses. Each element of the remuneration has been weighted to ensure a continuous positive development of the TCM Group both in the short and long term, and the proportions of the various elements are described below. Accounting practices Shares held by the Board of Directors and the Executive Management are based on reported data. The CEO’s total compensation relative to average FTE total compensation is based on the average salary of an employee of TCM (excluding members of the Executive Management). TCM Group 44 Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Financial Statements consolidated financial statements .............................................. 46 Financial statements of The Parent company ........................ 76 MG30 colour TCM Group 45Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Consolidated financial statements Consolidated income statement ..................................................... 47 Statement of comprehensive income ........................................... 47 Consolidated balance sheet as at 31 December ..................... 48 Consolidated statement of changes in shareholders’ equity ....................................................................... 49 Consolidated cash flow statement .............................................. 50 Notes to the consolidated financial statements ................. 51 Definitions .................................................................................................... 75 46 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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DKK’000 Note 2024 2023 Revenue 4 1,203,783 1,084,126 Cost of goods sold 5, 6, 8 (948,377) (868,326) Gross profit 255,406 215,800 Selling expenses 5, 6, 8 (101,429) (104,652) Administrative expenses 5, 6, 7, 8 (83,060) (61,948) Adjustment of contingent payment obligation 9,500 1,000 Other operating income 9,891 5,410 Operating profit before non-recurring items 90,308 55,610 Non-recurring items 9 0 (9,815) Operating profit 90,308 45,795 Share of profit in associates 5,733 2,194 Financial income 10 1,190 1,538 Financial expenses 10 (27,788) (22,435) Profit before tax 69,443 27,092 Tax for the year 11 (11,768) (5,570) Net profit for the year 57,675 21,522 Earnings per share (EPS) Earnings per share before dilution, DKK 21 5.52 2.20 Earnings per share after dilution, DKK 21 5.51 2.20 DKK’000 Note 2024 2023 Net profit for the year 57,675 21,522 Other comprehensive income Items that may be reclassified to the income statement when specific conditions are met: Change in market value of currency hedges 127 (1,221) Reclassification of currency hedges from equity to be recognised in: Revenue 1,220 1,174 Tax on value adjustments of currency hedges (296) 11 Tax related to prior years 0 36 Other comprehensive income for the year 1,051 0 Total comprehensive income for the year 58,726 21,522 Consolidated income statement statement of comprehensive income 47 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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DKK’000 Note 2024 2023 ASSETS Intangible assets 12 Goodwill 411,998 411,998 Brands 177,211 178,711 Customer contracts 40,375 45,125 Other intangible assets 7,591 2,823 Other intangible assets in progress 54,928 33,665 692,103 672,322 Property , plant and equipment 13 Buildings 111,729 114,677 Land and land improvements 15,623 14,248 Property, plant and equipment under construction and prepayments 10,656 6,130 Machinery and other technical equipment 53,345 53,984 Equipment, tools, fixtures and fittings 5,113 7,138 Right-of-use assets 14 39,494 41,458 235,960 237,635 Financial assets Investments in associates 15 49,793 47,994 Lease receivables 14 7,587 10,838 Other financial assets 16 8,256 11,024 65,636 69,856 Total non-current assets 993,699 979,813 Inventories Raw materials and consumables 49,431 47,818 Semi-finished products 27,341 34,885 Finished products 12,375 9,834 17 89,147 92,537 Current receivables Trade receivables 25 57,914 79,285 Lease receivables 14 6,714 8,488 Receivables from associates 1,923 3,219 Other receivables 15 26,372 23,065 Prepaid expenses and accrued income 18 1,676 1,180 94,599 115,237 Cash and cash equivalents 29,099 13,285 Total current assets 212,845 221,060 Total assets 1,206,544 1,200,873 Consolidated balance sheet as AT 31 December Consolidated balance sheet AS AT 31 December DKK’000 Note 2024 2023 SHAREHOLDERS’ EQUITY AND LIABILITIES Share capital 19, 21 1,051 1,051 Treasury shares 19 (7) (12,087) Value adjustments of cash flow hedges 20 99 (916) Retained earnings 557,019 541,605 Proposed dividend 22 31,322 0 Total shareholders’ equity 589,484 529,653 Deferred tax 23 66,629 68,032 Mortgage loans 3, 24 35,220 22,726 Bank loans 3, 24 193,607 145,346 Lease liabilities 3, 14 43,703 48,150 Other liabilities 3 43,000 52,500 Total non-current liabilities 382,159 336,755 Mortgage loans 3, 24 1,236 2,529 Bank loans 3, 24 21,759 92,982 Lease liabilities 3, 14 12,291 14,198 Trade payables 3 122,285 144,710 Current tax liabilities 1,408 1,665 Other liabilities 3 75,629 77,797 Deferred income 293 584 Total current liabilities 234,901 334,465 Total shareholders’ equity and liabilities 1,206,544 1,200,873 48 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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DKK’000 Share capital Share premium Treasury shares Value adjustments of cash flow hedges Retained earnings Proposed divideNd Total equity Opening balance, 1 January 2024 1,051 0 (12,087) (916) 541,605 0 529,653 Net profit for the year 0 0 0 0 26,353 31,322 57,675 Other comprehensive income for the year 0 0 0 1,051 0 0 1,051 Total comprehensive income for the year 0 0 0 1,051 26,353 31,322 58,726 Adjustment, cash flow hedges 0 0 0 (36) 36 0 0 Transfer 0 0 12,080 0 (12,080) 0 0 Share-based incentive programme 0 0 0 0 1,105 0 1,105 Transfer, exercised shares 0 0 0 0 0 0 0 Closing balance, 31 December 2024 1,051 0 (7) 99 557,019 31,322 589,484 Opening balance, 1 January 2023 914 0 (12,087) (916) 432,718 0 420,629 Net profit for the year 0 0 0 0 21,522 0 21,522 Other comprehensive income for the year 0 0 0 0 0 0 0 Total comprehensive income for the year 0 0 0 0 21,522 0 21,522 Share-based incentive programme 0 0 0 0 471 0 471 Share capital increase 137 88,645 0 0 0 0 88,782 Transfer 0 (88,645) 0 0 88,645 0 0 Cost related to share capital increase 0 0 0 0 (1,751) 0 (1,751) Closing balance, 31 December 2023 1,051 0 (12,087) (916) 541,605 0 529,653 Consolidated statement of changes in shareholders’ equity 49 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Consolidated cash flow statement DKK’000 Note 2024 2023 Operating activities Operating profit 90,308 45,795 Depreciation/amortisation 35,587 31,572 Other non-cash operating items (8,235) (33) Income tax paid (13,724) (18,275) Change in inventories 3,390 22,430 Change in operating receivables 19,446 25,723 Change in operating liabilities (23,285) (25,944) Cash flow from operating activities 103,487 81,268 Investing activities Investments in property, plant and equipment (20,983) (21,621) Investments in intangible assets (28,270) (21,813) Sale of property, plant and equipment 0 188 Investments in financial assets 153 1 Acquisition of entities (business combinations) 26 0 (100,791) Acquisition of entities (associates) 27 0 (153) Dividends from associates 4,500 2,250 Cash flow from investing activities (44,600) (141,939) Operating cash flow before acquisition of entities 58,887 40,273 Operating cash flow after acquisition of entities 58,887 (60,671) DKK’000 Note 2024 2023 Financing activities Interest paid (24,810) (21,750) Interest received 1,190 436 Proceeds from loans 28 36,757 149,625 Repayments of loans 28 (49,136) (131,319) Repayments of lease liabilities 14 (5,980) (4,835) Rights issue, net proceeds 0 77,031 Cash flow from financing activities (41,979) 69,188 Cash flow for the year 16,908 8,517 Cash and cash equivalents at the beginning of the year 13,285 4,392 Cash flow for the year 16,908 8,517 Exchange rate differences on cash and cash equivalents (1,094) 376 Cash and cash equivalents at year-end 29,099 13,285 Specification Cash and cash equivalents at year-end 29,099 13,285 29,099 13,285 50 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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1. Accounting policies ..............................................................................................................................................................................52 2. Significant accounting estimates and judgements ...................................................................................................................56 3. Financial risks ........................................................................................................................................................................................57 4. Revenue and segment information ................................................................................................................................................59 5. Staff costs ................................................................................................................................................................................................59 6. Average number of employees during the period...................................................................................................................... 61 7. Audit fees .................................................................................................................................................................................................61 8. Depreciation/amortisation and impairment by function .......................................................................................................61 9. Non-recurring items ...........................................................................................................................................................................62 10. Financial income and expenses .......................................................................................................................................................62 11. Corporation tax .....................................................................................................................................................................................63 12. Intangible assets ...................................................................................................................................................................................63 13. Property, plant and equipment ........................................................................................................................................................65 14. Leases .......................................................................................................................................................................................................65 15. Investments in associates ..................................................................................................................................................................67 16. Other financial assets ..........................................................................................................................................................................68 17. Inventories ..............................................................................................................................................................................................68 18. Prepaid expenses and accrued income ..........................................................................................................................................68 19. Share capital ...........................................................................................................................................................................................68 20. Value adjustments of currency hedges..........................................................................................................................................69 21. Earnings per share ...............................................................................................................................................................................69 22. Dividend ...................................................................................................................................................................................................69 23. Deferred tax ............................................................................................................................................................................................70 24. Bank loans and mortgage loans .......................................................................................................................................................70 25. Financial assets and liabilities .........................................................................................................................................................70 26. Acquisition of entities (business combinations).........................................................................................................................71 27. Acquisition of entities (associates) .................................................................................................................................................73 28. Changes in liabilities attributable to financing activities .......................................................................................................73 29. Pledged assets, contingent liabilities and commitments .......................................................................................................74 30. Related party transactions ................................................................................................................................................................74 31. Events after the balance sheet date ................................................................................................................................................74 32. Companies in TCM Group ..................................................................................................................................................................74 notes to the consolidated financial statements 51 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements Principles applied in the preparation of the consolidated financial statements The consolidated financial statements are presented in accordance with IFRS accounting standards as adopted by the EU and additional requirements of the Danish Financial Statements Act. The accounting policies are unchanged compared to last year. Implementation of new standards, amendments and interpretations TCM Group has assessed the effect of the new standards, amendments and interpretations. TCM Group has con- cluded that all standards, amendments and interpreta- tions effective for financial years beginning on or after 1 January 2024 are either not relevant to the Group or have no significant effect on the consolidated financial statements. Changes in classification Comparative figures in the income statement and bal- ance sheet have been restated to match this year’s clas- sification, which includes a change in the classification of certain income types from revenue to reduction in cost of goods sold by DKK 24.7 million and reduction in selling expenses by DKK 2.5 million. The adjustments to comparative figures has an effect on gross profit of 2.5 million, and no effect on net profit or equity. Reporting under the ESEF Regulation The Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regula- tion) requires listed companies in the EU to use a par- ticular electronic reporting format for their annual reports. More specifically, the annual report must be prepared in XHTML format with iXBRL tagging of the consolidated financial statements, including notes. 1. Accounting policies TCM Group’s iXBRL tagging follows the ESEF taxonomy disclosed in the annexes to the ESEF Regulation and developed based on the IFRS taxonomy published by the IFRS Foundation. The line items in the consolidated financial statements are XBRL-tagged to the elements of the ESEF taxonomy that are considered to match the content of those line items. For line items not considered to be covered by line items defined in the taxonomy, entity-specific exten- sions to the taxonomy have been incorporated. Except for subtotals, these extensions are anchored to standard elements of the ESEF taxonomy. In compliance with the requirements of the ESEF Regu- lation, the annual report approved by Management comprises a ZIP file, tcm-group-2024-12-31-en.zip, which includes an XHTML file that can be opened using standard web browsers, and a number of technical XBRL files enabling mechanical retrieval of the XBRL data incorporated. General principles Assets and liabilities are recognised at historic acquisi- tion cost, except for certain financial assets and liabili- ties and non-current assets held for sale. Financial assets and liabilities measured at fair value comprise derivative instruments. Non-current assets held for sale are recognised at the lower of the carrying amount and fair value, less selling expenses. The parent company’s functional currency is the Danish krone (DKK), which is also the presentation currency for the parent company and the Group. Accordingly, the consolidated financial statements are presented in DKK. All amounts are stated in DKK thousand, unless indi- cated otherwise. New IFRS standards that have not yet been applied A number of new or amended IFRS standards will come into effect in future financial years, but have not been applied in advance when preparing these consolidated financial statements. The Group has assessed these standards and interpreta- tions and concluded that they are not expected to have a material impact on the Group’s financial statements, except for IFRS 18: IFRS 18 Presentation and Disclosure in Financial State- ments: This introduces new requirements that will help to achieve comparability of the financial performance of similar entities and provide more relevant information and transparency. The main expected change is that operating profit will include foreign exchange gains/ losses and loss on monetary items. Classification, etc. Non-current assets essentially comprise amounts that are expected to be recovered more than 12 months after the balance sheet date. Current assets essentially com- prise amounts that are expected to be recovered within 12 months of the balance sheet date. Non-current liabil- ities comprise amounts that TCM Group has an uncon- ditional right to pay more than 12 months after the bal- ance sheet date. Other liabilities comprise current liabilities. Consolidation principles and business combinations Subsidiaries Subsidiaries are companies where TCM Group has con- trol. Control entails the direct or indirect right to shape a company’s financial or operational strategies in a bid to receive financial benefits. When assessing whether con- trol exists, potential voting shares that can be immedi- ately utilised or converted must be taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that the controlling interest arises and until the date on which the controlling interest ceases. If ownership is reduced to such an extent that the con- trolling interest is lost, any remaining holdings are rec- ognised at fair value and the change in value is recog- nised in the income statement. Transactions that are eliminated through consolidation Intra-group receivables and liabilities, income and expenses, and unrealised gains or losses that arise from transactions between Group companies are eliminated fully in the preparation of the consolidated financial statements. Business combinations Business combinations are recognised in accordance with the acquisition method. This means the acquired identifi- able assets and assumed liabilities and contingent liabili- ties are recognised at the fair value on the acquisition date. The consideration is measured at fair value of the consideration transferred to the former owner of the acquiree. Acquisition-related costs are recognised as non-recurring items in the income statement as incurred. Goodwill arising from business combinations is calcu- lated as the total of the consideration transferred, any non-controlling interests and the fair value of previ- ously held interests (for step acquisitions) less the fair value of the subsidiary’s identifiable assets and assumed liabilities. If the difference is negative, it is recognised directly in net profit for the year. Contingent consideration in acquisitions is measured at fair value on both the acquisition date and continuously thereafter, with changes in value recognised in the income statement. For acquisitions of subsidiaries involving non- controlling interests, the Group recognises net assets attributable to non-controlling interests at the fair value of all the net assets either excluding or including good- will. The principle is decided individually for each acquisition. When a business combination is achieved in stages, the Group’s previously held interests in the acquired entity 52 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 1. Accounting policies (continued) are remeasured to its acquisition-date fair value, and the resulting gain or loss, if any, is recognised in the income statement. When a controlling interest is achieved, changes in ownership are recognised as a reallocation of sharehold- ers’ equity between the parent company’s owners and non-controlling interests, without any remeasurement of the subsidiary’s net assets. Segment reporting An operating segment is a part of the Group that con- ducts business activities from which it earns revenue and incurs expenses and for which independent finan- cial information is available. Furthermore, the results of an operating segment are monitored by the company’s chief operating decision-maker to evaluate them and to allocate resources to the operating segment. TCM Group has only one operating segment, which is producing and selling kitchens, bathrooms and storage. Revenue recognition The Group sells kitchen products through a number of independent stores, DIY chains and other retailers. Rev- enue is recognised in the income statement when con- trol of the products has been transferred to the cus- tomer. Control is transferred when the products are delivered, which occurs when the Group has objective evidence that all criteria for transfer of risk have been satisfied. Revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. Products are often sold with retrospective volume discounts. Net revenue is recognised at the fair value of the consideration agreed, excluding VAT, duties and discounts in relation to the sale. Cost of goods sold Cost of goods sold includes the manufacturing costs incurred to achieve the revenue for the year. These con- sist of raw materials, direct labour costs, in- and out- bound transportation costs, and indirect costs related to manufacturing, such as salaries, energy and mainte- nance costs, as well as depreciation of production facili- ties and equipment. Non-recurring items Non-recurring items are applied in connection with the presentation of the profit or loss for the year to distin- guish income and expenses that are special and of a non-recurring nature from the consolidated operating profit for the year. Non-recurring items are assessed item by item and comprise restructuring costs, impair- ment charges in connection with e.g. material restruc- turing and other items relating to fundamental reorgan- isations as well as gains or losses on major disposals. Operating expenses (selling and administrative expenses) Operating expenses primarily comprise selling and administrative expenses. Selling expenses include staff costs, marketing costs, losses (incl. provisions for losses) on trade receivables, and other costs related to sales and marketing activities. Administrative expenses include staff costs and other costs related to administration. Share of profit/loss in associates The Group’s share of associates’ results after tax and elimination of the proportionate share of internal profit/ loss is recognised in the income statement. Financial income and expenses Financial income and expenses comprise interest income on bank balances and receivables, interest expense on loans, gain/loss on interest rate swaps as well as exchange rate differences on financial items. Interest income on receivables and interest expense on liabilities are calculated in accordance with the effective interest rate method. The effective interest rate is the interest rate that makes the present value of all future receipts and disbursements during the fixed-interest term equal to the carrying amount of the receivable or liability. The calculation includes all fees paid or received by contractual parties that are part of the effec- tive interest rate, i.e. transaction costs and surplus and deficit values. Tax Tax costs for the year comprise current tax and deferred tax. Income taxes are recognised in the income state- ment except when the underlying transaction is recog- nised in other comprehensive income or in sharehold- ers’ equity, in which case the associated tax effects are recognised directly in other comprehensive income or in shareholders’ equity. Current tax is tax that is to be paid or received regarding the current year, calculated using the tax rates set or set in principle on the balance sheet date. This item also includes adjustments to current tax attributable to pre- vious periods. Deferred tax is calculated according to the balance sheet method on all temporary differences arising between the carrying amount and tax base of assets and liabilities. The tax effect attributable to tax loss carryforwards that could be utilised against future profits is capitalised as a deferred tax asset. This applies to both accumulated loss carryforwards at the acquisition date and losses arising subsequently. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is recognised in the balance sheet as a non-current asset or liability. The income tax liability is recognised as a current receivable or current liability. If the actual outcome differs from the amounts initially recognised, the differences will affect current tax and deferred tax in the period in which these calculations are made. Intangible assets Goodwill comprises the amount by which the cost of the acquired entity exceeds the established fair value of identifiable net assets, as recognised in the acquisition analysis. In connection with the acquisition of entities, goodwill is allocated to cash-generating units and the fair value of each brand is measured. Since goodwill and the Svane Køkkenet brand have an indefinite useful life, they are not amortised. The indefinite useful life is justi- fied by the long life of the brand, as there is no intention of changing the brand set-up. Thus, it is not possible to determine a useful life. Instead, goodwill and the Svane Køkkenet brand are subject to impairment testing annu- ally or if an indication of impairment arises. The carry- ing amount comprises the cost less any accumulated impairment losses. A description of the method and assumptions applied when conducting impairment tests is found in note 12 Intangible assets. Other intangible assets with definite useful life, includ- ing the AUBO brand, are recognised at cost less accumu- lated amortisation and any impairment. This also includes capitalised costs for purchases and internal and external costs for the development of software for the Group’s IT operations, patents and licences. Amortisa- tion is calculated according to the straight-line method based on the estimated useful life of the asset (3-10 years). Property , plant and equipment Property, plant and equipment are recognised at cost with deductions for depreciation and any impairment. Cost includes expenses that can be directly attributed to the acquisition. Costs for repairs and maintenance are recognised as costs in the income statement in the period in which they arise. If an asset’s carrying amount exceeds its estimated recoverable amount, the asset is written down to the recoverable amount, and the write-down is recognised in the income statement. In the income statement, operating profit is reduced by straight-line depreciation, which is calculated on the original cost less estimated residual value after useful 53 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 1. Accounting policies (continued) life and is based on the estimated useful life of the assets as follows: Buildings 20-40 years Machinery and other technical equipment 3-10 years Equipment, tools, fixtures and fittings 2-8 years Land is not depreciated. Expected useful life and residual value are reviewed annually. Research and product development Costs for product development are expensed immedi- ately as and when they arise. Product development within the Group is mainly in the form of design development and is conducted continu- ously to adapt to current style trends. To a large extent, product development is based on the further develop- ment of existing materials and designs, which is why no portion of the costs for product development is recog- nised as an intangible asset. The Group does not carry out research and development in the true sense, or to any significant extent. Leases When entering into an agreement, the company assesses whether an agreement is a lease agreement or contains a lease element. A lease is an agreement that transfers the right to control the use of an identifiable asset for a period against payment. In assessing whether an agree- ment contains a lease item that has been transferred to the lessee, it is necessary to consider whether the lessee has the right, during the useful life, to obtain virtually all the economic benefits from the use of the identifiable asset and the right to decide on the use of the identifi- able asset. The company recognises a right of use (the asset) and a lease obligation at the start of the lease period. The right-of-use asset is measured at cost, which is cal- culated as the present value of the lease obligation plus any direct costs associated with entering into the lease, any costs for demolition and disposal of the asset at the end of the lease period that the lessee is obliged to pay, and prepaid lease payments. The right-of-use asset is depreciated on a straight-line basis over the shorter of the lease term and the useful life of the asset. If the lease agreement contains a pur- chase option that the company expects to exercise, the right-of-use asset is depreciated on a straight-line basis over the total expected useful life of the asset. The company’s vehicle leases include a service element in the payments to the lessor. This service is deducted from the lease payment when measuring the lease obli- gation. Where the company cannot reliably separate lease and non-lease items, it is considered a single lease payment. Short leases of less than 12 months and leases where the underlying asset has a low value are not recognised in the balance sheet. The lease obligation, which is recognised under lease liabilities, is measured at the present value of the remaining lease payments, discounted by the company’s incremental loan interest rate if the implicit interest rate is not stated in the lease agreement or cannot reason- ably be determined. The lease payment consists of fixed and variable lease payments that are regulated by index or interest rate, guaranteed residual values, the exercise of purchase options and the cost of cancelling the lease. The lease obligation is subsequently adjusted if: • The value of the index or interest rate on which the lease payments are based changes. • There is a change in the exercise of options to extend or shorten the lease period due to a material event or material change in circumstances that are within the control of the lessee. • The lease term is changed as a result of exercising an option to extend or shorten the lease term. • The estimate of a residual value guarantee is changed. • The contract is renegotiated or modified. Subsequent adjustment of the lease obligation is recog- nised as a correction to the right-of-use asset. However, if the right-of-use asset has a value of DKK 0, a negative reassessment of the right-of-use asset is recognised in the income statement. Lease period The company recognises the lease obligations on the basis of the future payments during the lease period. The lease period consists of the non-cancellable period and periods covered by extension and termination options. The company rents properties for production and for retail leases. Often leases do not have a fixed expiry date, but continue after the non-cancellable period until the lessee terminates the contract. When determining the lease term, the company therefore assesses whether it is reasonably certain of exercising or not exercising exten- sion options. Retail leases are in all cases subleased to franchisees on the same terms, for which reason the lease term is esti- mated to be the same period. The right-of-use asset is therefore recognised under Lease receivables in the bal- ance sheet. Incremental borrowing rate The company has chosen to subdivide its leases into the following categories: • Rental contracts for premises • Vehicles The borrowing rate is set on initial recognition. If the company considers there is a change in the residual value guarantee, termination or renewal options, the incremental borrowing rate is revised. For the company’s vehicles, the incremental borrowing rate is calculated based on the company’s borrowing rate. This interest rate takes into account credit assess- ments, collateral, leasing periods, etc. For rental contracts for premises, the possibility of using mortgage financing of real estate has been taken into account when calculating the incremental borrow- ing rate. Investments in associates Investments in associates are measured using the equity method, whereby the investments in the balance sheet are measured at the proportionate share of the compa- nies’ net asset value calculated in accordance with the Group’s accounting policy after elimination of the pro- portionate share of unrealised internal profit/loss and with addition of value added on acquisition, including goodwill. Investments in associates are tested for impairment if an indication of impairment arises. Inventories Inventories comprise finished and semi-finished prod- ucts and raw materials. Inventories are valued according to the first-in, first-out (FIFO) principle, at the lower of cost and net realisable value on the balance sheet date. The realisable value comprises the estimated sales price in the ongoing operations less selling expenses. Cost of finished and semi-finished products is measured at manufacturing cost including raw materials, direct labour, other direct expenses and production-related overheads based on normal production capacity. Intra-group profits on inventories are eliminated in the consolidated financial statements. Financial instruments Financial instruments recognised in the balance sheet include cash and cash equivalents, loans, trade receiv- ables and derivative instruments on the asset side. On the liability side, there are trade payables, loan liabilities and derivative instruments. 54 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 1. Accounting policies (continued) Recognition in and derecognition from the balance sheet A financial asset or a financial liability is entered in the balance sheet when the company becomes a party in accordance with the contractual terms of the instru- ment. A receivable is recognised when the company has performed a service and a contractual payment obliga- tion arises for the counterparty, even if no invoice has been received. Trade receivables are recognised in the balance sheet when revenue is recognised and an invoice has been issued. A liability is recognised when the coun- terparty has performed a service and a contractual pay- ment obligation arises, even if an invoice has not been received. Accounts payable are recognised when a ser- vice or product has been received. A financial asset is derecognised from the balance sheet when the rights resulting from the agreement have been realised, expire or the company loses control over them. The same applies to a part of a financial asset. A finan- cial liability is derecognised from the balance sheet when the obligation resulting from the agreement has been realised or is extinguished in some other manner. The same applies to a part of a financial liability. A financial asset and a financial liability may only be offset against each other and recognised net in the bal- ance sheet if there is a legal right to offset the amounts and the intention is to settle the items in a net amount or to simultaneously sell the asset and settle the debt. The acquisition or divestment of financial assets is rec- ognised on the transaction date for on-demand transac- tions, which is the date when the company undertakes to acquire or sell the asset. Measurement Financial instruments that are not derivative instru- ments are initially recognised at cost corresponding to the instrument’s fair value plus transaction costs. Transaction costs for derivative instruments are imme- diately expensed. On initial recognition, a financial instrument is classified on the basis of the purpose underlying the acquisition of the instrument. This clas- sification determines how the financial instrument is measured after initial recognition, as described below. For the recognition of derivative instruments, refer to cash flow hedges below. Receivables and liabilities in foreign currencies Receivables and liabilities in foreign currencies are val- ued at the balance sheet date rate. Exchange rate fluctu- ations pertaining to operating receivables and liabilities are recognised in operating profit, while exchange rate fluctuations pertaining to financial receivables and lia- bilities are recognised in net financial items. Loans and trade receivables Loans and trade receivables comprise financial assets that are not derivative instruments, that have fixed or fixable payments and that are not listed on an active market. For TCM Group, this category includes non-current financial assets and trade receivables and other receivables recognised as current assets. These assets are valued at amortised cost. Amortised cost is determined based on the effective rate calculated on the acquisition date. Loans and trade receivables are recog- nised at the amounts that are expected to be received, i.e. less any provisions for decreases in value. Receiv- ables with short maturities are not discounted. Cash and cash equivalents Cash and cash equivalents are defined as cash and bank balances and short-term investments with maturities not exceeding three months from the acquisition date. Financial liabilities All transactions pertaining to financial liabilities are recognised on the settlement date. Liabilities (except for derivative instruments with negative values) are meas- ured at amortised cost. Financial liabilities related to contingent payment obli- gations are initially measured at fair value based on the estimated future performance of the acquired entity. These assumptions are then reviewed at each balance sheet date and the contingent payment obligation adjusted accordingly, with the adjustment being recog- nised in other income/other expenses. Cash flow hedges, interest rate risk Interest swaps can be used to hedge the uncertainty of highly probable forecast interest rate flows for borrow- ing at variable interest, whereby the company receives variable interest and pays fixed interest. Interest rate swaps are measured at fair value in the balance sheet. The interest coupon portion is recognised in the income statement on an ongoing basis as a portion of interest expense. Unrealised changes in the fair value of interest rate swaps are recognised in other comprehensive income and are included as a portion of the hedging reserve until the hedged item impacts net profit for the year and as long as the criteria for hedge accounting and effectiveness are fulfilled. The gain or loss attributable to the ineffective portion of unrealised changes in the value of interest rate swaps is recognised in the income statement. Derivative financial instruments On initial recognition in the balance sheet, derivative financial instruments are measured at cost and subse- quently at fair value. Derivative financial instruments are recognised under other receivables/other payables. Changes that comply with the requirements for hedging of the future cash flow of a recognised asset or liability are recognised in the statement of comprehensive income. Impairment The carrying amounts of the Group’s assets are tested annually for indications of impairment. IAS 36 is applied to the impairment testing of assets other than financial assets, if any, which are tested according to IFRS 9 Inventories and Deferred Tax Assets. Impairment testing of intangible assets and property, plant and equipment If there is an indication of impairment, the recoverable amount of the asset is tested in accordance with IAS 36 (see below). For goodwill and assets with indefinite life, e.g. certain brands, the recoverable amount is calculated annually. When testing for impairment, if it is not poss- ible to establish essentially independent cash flows for an individual asset, the assets must be grouped at the lowest level at which it is possible to identify essentially independent cash flows, known as cash-generating units (CGUs). Impairment losses are recognised when the carrying amount of an asset or a CGU exceeds the recoverable amount. Impairment losses are recognised in the income statement. Impairment losses related to assets attribut- able to a CGU are primarily allocated to goodwill. Subse- quently, other assets included in the CGU are impaired on a proportionate basis. The recoverable amount is the higher of fair value less selling expenses and value in use. When calculating the value in use, future cash flows are discounted using a discount factor that takes into account the risk-free interest rate and the risk associated with the specific asset or CGU. Impairment of financial assets Trade receivables are recognised initially at their trans- action price less allowance for expected credit losses over the lifetime of the receivable and are subsequently measured at amortised cost adjusted for changes in expected credit losses. The expected credit losses on trade receivables are estimated based on the level of unsecured balances past due. Receivables that the Group has no reasonable expecta- tion of recovering are written off in part or entirely. Allowances for expected credit losses and write-offs for trade receivables are recognised in the income state- ment and included in selling expenses. 55 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 1. Accounting policies (continued) 2. Significant accounting estimates and judgements Impairment reversal An impairment loss on assets that come under the scope of IAS 36 is reversed if there is an indication that the impairment is no longer pertinent and that there has been a change in the assumptions upon which the calcu- lation of the recoverable amount was based. However, an impairment loss on goodwill and brands with indefinite useful life is never reversed. A reversal is only performed to the extent that the carrying amount of the asset after the reversal does not exceed the carrying amount that would have been recognised, less depreciation where applicable, if no impairment had been posted. An impairment loss on loans and trade receivables rec- ognised at amortised cost is reversed if the previous rea- sons for the impairment loss no longer exist and full payment can be expected to be received from the customer. Contingent liabilities A contingent liability is disclosed when the company has a possible obligation deriving from an event the exist- ence of which will be confirmed only by one or more uncertain future events, or when there is an obligation that has not been recognised as a liability or provision because an outflow of resources is not likely to be required, or alternatively because it is not possible to estimate the amount concerned sufficiently reliably. Shareholders’ equity Dividends Dividends are recognised as a liability after the Annual General Meeting has approved the dividend. Treasury shares Treasury shares are primarily acquired to finance TCM Group’s share-based long-term incentive programme for Executive Management. Treasury shares are deducted from the share capital on cancellation at their nominal value of DKK 0.1 per share. Differences between this amount and the amount paid to acquire or received for disposing of treasury shares are deducted directly in retained earnings. Statement of cash flows The cash flow statement shows the cash flows from operating, investing and financing activities for the year, the year’s changes in cash and cash equivalents as well as cash and cash equivalents at the beginning and end of the year. The cash flow effect of acquisitions and disposals of entities is shown separately in cash flows from investing activities. Cash flows from acquired entities are recog- nised in the cash flow statement from the date of acqui- sition, and cash flows from entities disposed of are rec- ognised up until the date of disposal. Cash flows from operating activities are calculated according to the indirect method as operating profit adjusted for non-cash operating items, changes in working capital and corporation tax paid. Cash flows from investing activities comprise payments in connection with acquisitions and disposals of entities and activities and of intangible assets and property, plant and equipment, and other non-current assets as well as dividends received. Cash flows from financing activities comprise changes in the size or composition of the share capital and related costs as well as the raising of loans, repayment of interest-bearing debt, interest and payment of divi- dends to shareholders. Earnings per share The calculation of earnings per share is based on consol- idated net profit attributable to the parent company shareholders and on the weighted average number of shares outstanding during the year. When calculating earnings per share after dilution, the average number of shares outstanding is adjusted to take into account the dilutive effects of potential ordinary shares, including employee share options. The options are dilutive if the exercise price is lower than the share price. The greater the difference between the exercise price and the share price, the greater the dilution. For options, the exercise price is added to the value of future services. Employee benefits Long-term remuneration The Group operates schemes that reward employees for long service. The obligation is deemed insignificant and the Group therefore recognises the expense at the time of the employee’s anniversary. The Group has an equity-settled, share-based long- term incentive (LTI) programme for the Executive Man- agement, which is governed by the Remuneration Policy. The LTI is a share-based programme consisting of annual individual performance share unit (PSU) plans with rolling 3-year performance periods. The fair value of employee services rendered in return for the grant of shares is recognised as an expense and allocated over the vesting period. At the end of each reporting period, TCM Group revises its estimates of the number of shares expected to vest. TCM Group recognises the impact of the revision, if any, of the original estimates in the income statement and in a corresponding adjustment to equity over the remaining vesting period. Adjustments relating to prior years are included in the income state- ment in the year of adjustment. Short-term remuneration Short-term remuneration of employees is calculated without discounting and is recognised as a cost when the related services are rendered. A provision is recognised for the anticipated cost of bonus payments when the Group has a current legal or contractual obligation to make such payments, based on the services being ren- dered by the employees and the possibility of reliably estimating the obligation. Preparing the consolidated financial statements in accordance with IFRS requires Management to make assessments, estimates and assumptions that affect the application of accounting policies and the recognised amounts of assets, liabilities, income and expenses. The actual outcome may differ from these estimates and assessments. Estimates and assumptions are regularly reviewed. Changes to estimates are recognised in the period in which the change is made if the change affects only that period, or in the period in which the change is made and future periods if the change affects both cur- rent and future periods. Assessments made by Manage- ment in the application of IFRS that have a material impact on the consolidated financial statements and estimates made that may lead to significant adjustments in the consolidated financial statements in future finan- cial years are primarily the following: Impairment testing of goodwill and brands Goodwill and brands with indefinite useful life are rec- ognised at cost less any accumulated impairment. The Group performs annual impairment tests of goodwill and brands in accordance with the accounting policies. The assumptions and assessments made pertaining to expected cash flows and the discount rate in the form of weighted average cost of capital are described in note 12. Contingent payment obligations Financial liabilities related to contingent payment obli- gations are measured based on the estimated future performance of the acquired entity. When assessing the future performance Management takes into considera- tion factors including expected market and customer development, and current order backlog. As these esti- mates relate to future performance up to 3 years after the balance sheet date, they are subject to a high degree of uncertainty. 56 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 3. Financial risks Foreign exchange risk TCM Group has currency exposure and risks related to sales in NOK. In accordance with the Group’s foreign currency policy, forward contracts are used to mitigate such risks. Forward contracts are used to hedge 50-100% of the expected cash flows in NOK on a 6-month rolling basis. Based on the net position (trade receivables and bank deposits less trade payables) in NOK at the balance sheet date, a 10% change in the year-end rate would impact net profit and equity by DKK 4.5 million. Apart from NOK, revenue is only invoiced in DKK, and purchases are mainly in DKK or EUR. Due to the current fixed rate of the DKK vis-à-vis EUR, EUR cash flows related to purchases were not hedged during the year. Purchase-related cash flows in currencies other than DKK, EUR and NOK amounted to DKK 1.4 million (2023: DKK 1.5 million) and were not hedged during the year. Credit risk TCM Group’s customer base comprises professional customers. Credit management and payment terms are monitored for each customer group. Customers who make regular purchases are subject to continuous credit assessments. Credit insurance, bank guarantees and other collateral are utilised for the different markets and customer categories. Actual losses on trade receivables in 2024 amounted to DKK 4.3 million (2023: DKK 8.9 million), primarily related to bankruptcies of three stores in Denmark and Norway. Total expensed actual losses and the decrease in provi- sions amounted to DKK 2.3 million, equal to 0.2% of net revenue for the year. Financial exposure and Liquidity risk The Group maintains three credit facilities with Nykredit Bank: 1) DKK 220 million committed facility: This facility is set to expire in March 2026 and includes two 1-year exten- sion options available on similar terms. 2) DKK 130 million committed facility: Established in 2023 to support the acquisition of AUBO Production A/S, this facility also expires in 2026 and offers two 1-year extension options on similar terms. 3) DKK 50 million uncommitted facility: This 1-year facility will expire in March 2025. At 31 December 2024, the facilities comprised an unused amount of DKK 184 million with a further DKK 29 million in cash. Based on our scenarios for 2025, the current credit facilities provide sufficient headroom, and the forecast leverage will be within the covenants agreed in the credit facility agreements. The facility agreements with Nykredit Bank contained a leverage covenant of 4.5 until 31 December 2024 and 4.0 for the remaining financing period. No covenants have been breached during the period. Mortgage loans with a nominal amount of DKK 36 mil- lion (2023: DKK 25 million) are amortised over 20 years and expire in 2044. Interest-rate risk It is Group policy to hedge interest rate risk on loans when it is assessed that the debt is material. The Group manages interest rate risk by maintaining an appropri- ate mix of fixed- and floating-rate borrowings, and by using interest rate swaps. Age analysis, trade receivables 2024 DKK’000 2023 DKK’000 Trade receivables before impairment Non-due trade receivables 52,179 72,315 Past due trade receivables, 0-30 days 4,455 5,834 Past due trade receivables, 30-90 days 134 1,378 Past due trade receivables, >90 days 8,764 9,279 Trade receivables before impairment 65,532 88,806 Of which overdue 13,353 16,491 Overdue secured receivables 4,774 2,806 - Impaired 0 0 Total overdue secured receivables after impairment 4,774 2,806 Overdue unsecured receivables 8,579 13,685 - Impaired (7,618) (9,521) Total overdue unsecured receivables after impairment 961 4,164 Impairment loss recognised in the income statement during the period 4,314 8,869 Forward Exchange contracts 2024 DKK’000 2023 DKK’000 NOK Forward contracts, contract value 18,300 55,077 NOK Forward contracts, average forward rate 63.1 65.0 NOK Forward contracts, maturity – months 1-4 1-5 NOK Forward contracts, carrying amount (fair value) 127 (1,220) NOK Forward contracts, fair value adjustment 1,347 (47) 57 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 3. Financial risks (continued) Carrying amount of derivative financial instruments 2024 DKK’000 2023 DKK’000 Hedging – currency fluctuation (level 2) (127) 1,220 Contingent payment obligation, AUBO Production A/S (level 3) 8,000 17,500 7,873 18,720 The fair value of financial assets and financial liabilities measured at amortised cost is approximately equal to the carrying amount, because of the short maturity of the financial assets and the floating rate on the financial liabilities. MATurity structure, financial and operational liabilities – undiscounted cash flows DKK million Nominal amount, functional currency 0-6 months 6-12 months 1-5 years 5 years or later Total 2024 Bank loans 215.4 28.5 5.8 198.3 0.0 232.6 Mortgage loans 36.5 1.5 1.5 11.8 41.5 56.3 Lease liabilities 56.0 7.8 7.0 29.9 19.7 64.4 Trade payables 122.3 122.3 0 0.0 0.0 122.3 Other liabilities 118.6 68.8 8.2 50.4 0.0 127.4 Financial and operational liabilities at 31 December 2024 228.9 22.5 290.4 61.2 603.0 The majority shareholder of Celebert ApS has a put option for the 55% shareholding in Celebert ApS. Based on the lat- est internal financial reporting for Celebert ApS, the put option has a gross value int the range of DKK 65 to 80 million. Management estimates the fair market value of the put option to be equal to the gross value. DKK million Nominal amount, functional currency 0-6 months 6-12 months 1-5 years 5 years or later Total 2023 Bank loans 238.3 100.8 5.4 160.6 0.0 266.7 Mortgage loans 25.3 1.7 1.7 13.1 13.0 29.4 Lease liabilities 62.3 8.4 8.4 34.4 23.3 74.5 Trade payables 144.7 144.7 0.0 0.0 0.0 144.7 Other liabilities 130.3 71.3 7.4 60.1 0.0 138.8 Financial and operational liabilities at 31 December 2023 326.9 22.8 268.1 36.3 654.1 The interest rates on the Nykredit facilities are currently variable and the interest rates on the mortgage loans are currently fixed. For the Group’s floating-rate cash and cash equivalents and debt to banks, an increase in the interest rate level of 1% p.a. relative to the actual interest rates would have had a negative impact on net profit for the year and on equity at 31 December 2024 of DKK 2.2 million (2023: DKK 2.9 million). Assumptions for analysis of interest rate sensitivity The stated sensitivities are calculated based on the financial assets and liabilities recognised at 31 December 2024. No adjustments have been made for instalments, raising of loans, etc. during the year. The computed expected fluctuations are based on the current market situation and expectations for market developments in the interest rate level. Capital management The Board of Directors has adopted a dividend policy with a target payout ratio of 40-60% of consolidated net profit for the year, subject to the overall financial posi- tion and leverage. The Board of Directors will propose to the Annual Gen- eral Meeting to distribute an ordinary dividend of DKK 3 per share. Excluding treasury shares this corresponds to DKK 31 million. Fair value hierarchy of financial instruments measured at fair value in the balance sheet Interest rate swaps are valued using an income approach (discounted cash flow). Expected future cash flows are based on relevant observable swap rates and discounted using a discount rate that reflects the credit risk of the relevant counterparties (level 2). The classification of financial instruments measured at fair value is disaggregated in accordance with the fair value hierarchy: • Quoted prices in an active market for identical instruments (level 1) • Quoted prices in an active market for similar assets or liabilities, or other valuation methods where all significant inputs are based on observable market data (level 2) • Valuation methods where no significant input is based on observable market data (level 3) 58 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 4. Revenue and segment information The Group’s business activities are managed within a single operating segment, which is producing and selling kitchens, bathrooms and storage. The Group’s Management monitors the operating segment’s results to evaluate it and to allo- cate resources. DKK’000 Revenue from customers 2024 Intangible assets and property , plant and equipment 2024 Revenue from customers 2023 Intangible assets and property , plant and equipment 2023 Geographic areas Denmark 969,042 882,438 915,435 858,082 Norway 222,897 45,625 155,844 51,875 Other countries 11,844 0 12,847 0 1,203,783 928,063 1,084,126 909,957 DKK’000 2024 2023 Revenue by category Revenue, core business 895,463 827,124 Revenue, third party 308,320 257,002 1,203,783 1,084,126 Revenue consists of sale of goods and services. In 2024, two single customers, with revenue of DKK 186 million (2023: DKK 181 million) and DKK 134 million (2023: DKK 150 million) respectively, individually exceeded 10% of revenue. 5. Staff Costs Total costs for employee benefits DKK’000 2024 2023 Salaries and other remuneration 219,069 207,697 Social security costs 6,079 4,760 Pension costs – defined contribution plans 21,208 18,470 Other staff costs 258 270 Total employee costs 246,614 231,197 The average number of employees and the number of men and women among board members and Executive Management are described in note 6. Remuneration and other benefits DKK’000 Base salary/ Directors’ fees Variable remunera- tion, cash- based (STI) Variable remu- neration, share- based (LTI) Other benefits Pension costs Total Number of individuals 2024 Board of Directors 2,547 0 0 0 0 2,547 6 Executive Management 4,602 1,901 1,105 612 501 8,721 2 Total 7,149 1,901 1,105 612 501 11,268 8 2023 Board of Directors 2,625 0 0 0 0 2,625 7 Executive Management 4,561 1,000 425 398 447 6,831 2 Total 7,186 1,000 425 398 447 9,456 9 59 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Employees, including the Board of Directors and the Executive Management, have the opportunity to buy kitchens, bathrooms and storage solutions at a discounted price. Purchases are made indirectly through an independent store. The total value of the purchases made by the Board of Directors and the Executive Management was DKK 340 thousand (2023: DKK 25 thousand) during the year. The Remuneration Report for the Board of Directors and the Executive Management is available on TCM Group’s website. Board of Directors Remuneration of members of the Board of Directors is determined by resolutions passed at the Annual General Meeting. Executive Management The Executive Management, which in 2024 consisted of two individuals, received salaries and pension contributions during the financial year 2024 amounting to DKK 5.1 million (2023: DKK 5.0 million) plus variable remuneration and other benefits amounting to a total of DKK 8.7 million (2023: DKK 6.8 million). In addition to the base salary, the Executive Management has a short-term incentive (STI) programme and a long-term incentive (LTI) programme which are governed by the Remuneration Policy. The STI programme for 2024 is capped at up to 50% of the annual base salary and is based on annual KPIs. The bonus criteria for the STI programme are revenue, EBITDA and NWC ratio. The STI programme includes a threshold for the EBITDA target that, if not achieved, will result in no STI bonus being paid, regardless of performance on other KPIs. The LTI programme is granted exclusively to the Executive Management and consists of annual individual performance share unit plans with rolling 3-year performance periods for the periods 2022-2024, 2023-2025 and 2024-2026. When the LTI programme is granted to the participants, a maximum of up to 50% of the annual base salary is converted to a maximum number of performance share units based on the current share price, e.g. an average over a 3-month period. At the end of each performance period, the performance share units may be converted into shares in TCM Group, which will be granted free of charge. The performance measures for the LTI programme are all 3-year accumulative and com- prise absolute total shareholder return on the company’s share, EBITDA and carbon emissions reductions. The fair value of the LTI programme is estimated on an annual basis. 5. Staff Costs (continued) Notes to the consolidated financial statements (continued) 2024 2023 Number of performance share units As at 1 January 65,766 27,170 Granted during the year 37,885 38,596 Exercised during the year (1,949) 0 Forfeited during the year (7,794) 0 As at 31 December 93,908 65,766 No performance share units expired during the periods covered by the above tables. 2024 2023 Performance Share Units outstanding at year-end have the following expiry dates: 31 March 2024 0 9,743 31 March 2025 17,427 17,427 31 March 2026 38,596 38,596 31 March 2027 37,885 0 Total 93,908 65,766 Weighted average remaining contractual life of performance share units outstanding at year-end 1.47 1.69 DKK’000 2024 Estimated exercise ratio 2023 Estimated exercise ratio Fair value at 31 December: Granted in 2021 0 n.a. 275 20% Granted in 2022 227 20% 312 28% Granted in 2023 1,230 82% 1,102 73% Granted in 2024 1,900 85% 0 n.a. Total 3,357 1,689 Fair value is estimated based on the expected exercise ratio for the maximum number of performance share units and the share price when the LTI programme was granted (share price in 2024: DKK 59). 60 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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6. Average number of employees during the period 2024 2023 Average number of employees 460 445 Board members 6 7 Of which women 2 3 Executive Management 2 2 Of which women 0 0 The Board of Directors consisted of six members at the date of approval of the consolidated financial statements. 7. Audit fees In addition to the statutory audit, PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab, the auditors appointed at the Annual General Meeting, provides other assurance engagements and other services to the Group. DKK’000 2024 2023 Specification by type of cost Statutory audit 1,199 1,448 Other assurance engagements 0 52 Tax and indirect tax advisory 32 181 Other services 128 663 1,359 2,344 The fee for non-audit services delivered by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab to the company amounted to DKK 0.1 million in 2024 and consisted of various accounting advisory services. In 2023, the fee for non-audit services delivered by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab to the company amounted to DKK 0.9 million and consisted of various services, including due diligence in connection with the AUBO Production A/S acquisition. 8. Depreciation/amortisation and impairment by function DKK’000 Depreciation/ amortiSation 2024 Impairment 2024 Depreciation/ amortiSation 2023 Impairment 2023 Cost of goods sold 23,131 0 18,772 0 Selling expenses 7,689 0 4,330 3,352 Administrative expenses 4,767 0 3,207 0 Non-recurring items 0 0 0 1,911 Total depreciation/amortisation and impairment 35,587 0 26,309 5,263 Notes to the consolidated financial statements (continued) 61 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 10. Financial income and expenses DKK’000 2024 2023 Financial income Interest income on financial assets measured at amortised cost 862 227 Interest income on discounted subleases 328 209 Foreign exchange gains 0 1,102 Total 1,190 1,538 Financial expenses Interest expense on liabilities measured at amortised cost 21,409 18,360 Interest expense on discounted lease liabilities 2,750 2,106 Foreign exchange losses 2,361 1,299 Other financial costs 1,268 670 Total 27,788 22,435 TCM Group presents non-recurring items separately to ensure comparability. Non-recurring items consist of income and expenses that are special and of a non-recurring nature. There were no non-recurring items in 2024. For 2023, non-recurring items consisted of transaction costs related to business combinations, restructuring costs related to organisational restructuring carried out during 2023 and impairment of an ERP project at AUBO Production A/S. 9. Non-recurring items DKK’000 2024 2023 Transaction costs related to business combinations 0 2,800 Impairment of ERP project, AUBO Production A/S 0 1,911 Restructuring 0 5,104 Total 0 9,815 The table below shows how the income statement (extract) would have been presented if no adjustment for non-recurring items had been made: DKK’000 2024 2023 Revenue 1,203,783 1,084,126 Cost of goods sold (948,377) (870,675) Gross profit 255,406 213,451 Selling expenses (101,429) (106,542) Administrative expenses (83,060) (67,523) Other operating income 19,391 6,410 Operating profit 90,308 45,796 62 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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12. Intangible assets DKK’000 Goodwill Brands Customer contracts Other intangible assets Other intangible assets in progress Opening cost at 1 January 2024 415,350 179,461 47,500 53,578 35,576 Investments for the period 0 0 0 0 28,270 Transfer 0 0 0 7,007 (7,007) Closing cost at 31 December 2024 415,350 179,461 47,500 60,585 56,839 Opening amortisation and impairment at 1 January 2024 3,352 750 2,375 50,755 1,911 Amortisation for the period 0 1,500 4,750 2,239 0 Impairment for the period 0 0 0 0 0 Closing amortisation and impairment at 31 December 2024 3,352 2,250 7,125 52,994 1,911 Closing carrying amount at 31 December 2024 411,998 177,211 40,375 7,591 54,928 11. Corporation tax DKK’000 Income statement Other comprehen- sive income Total comprehen- sive income Tax for the year can be specified as follows: Current tax 13,145 296 13,441 Change in deferred tax during the year (1,377) 0 (1,377) Total 11,768 296 12,064 Tax for the previous year can be specified as follows: Current tax 7,297 (47) 7,250 Change in deferred tax during the year (1,727) 0 (1,727) Total 5,570 (47) 5,523 Reconciliation of the effective tax rate for the period can be specified as follows: DKK’000 % 2024 % 2023 Tax rate 22.0 15,277 22.0 5,960 Non-taxable income (4.8) (3,351) (2.6) (703) Non-deductible expenses 0.2 144 3.0 808 Other (0.4) (302) (1.8) (495) Effective tax rate for the year 16.6 11,768 20.6 5,570 Non-taxable income primarily relates to income from adjustment of contingent payment obligations and result of associates. Non-deductible expenses primarily relate to transaction costs in connection with acquisitions. Notes to the consolidated financial statements (continued) 63 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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12. Intangible assets (continued) Notes to the consolidated financial statements (continued) Goodwill is tested annually for impairment by calculating the expected recoverable amount of the CGU. The recover- able amount is calculated as the expected cash flow discounted by a weighted average cost of capital (WACC) after tax for the CGU. The recoverable amount, calculated in conjunction with this, is compared with the carrying amount for the CGU. The starting point of the calculation is the estimated future cash flows based on the financial budget for the forthcoming fincial year. A forecast for the next four years is prepared based on this budget and expectations regarding market trends and sales mix in the years ahead, reflecting past experience. When estimating expected future cash flows, key assumptions include projected demand growth, increases in net sales, improvements in gross and operating margins, as well as requirements for working capital and CapEx. Various macroe- conomic indicators - such as data on residential property sales in the markets where the Group operates - are consid- ered to analyse the business environment, supported by both external and internal assessments. Based on these analy- ses, Management has applied a projected low- to mid-single-digit growth rate in net sales over the forecast period, driven by an anticipated positive development in residential property sales in 2025 and 2026, and an anticipated recov- ery in the B2B project market towards the end of 2025 / early 2026, as described in the Management Review. Gross and operating margins are expected to improve gradually during the forecast period, reflecting changes in the sales mix and the implementation of various strategic initiatives. These assumptions also account for the Group’s long- term strategic efforts, including differentiated branding, central sourcing, manufacturing optimisation and product development. To project cash flows beyond the initial 5-year period, a growth rate of 2% (2023: 2%) has been applied. The WACC is calculated based on the average debt-to-equity ratio of large companies in similar industries and the respective costs of debt and equity. The cost of shareholders’ equity is determined under the assumption that all investors require at least the same level of return as risk-free government bonds, supplemented by a risk premium reflecting the estimated risks associated with investments in CGUs. The required return on debt-financed capital is similarly calculated using the return on risk-free government bonds, with an added borrowing margin to account for estimated company-specific risk. A current tax rate of 22% is applied. In 2024, the Group’s weighted cost of capital before tax amounted to 11.4% (2023: 12.0%) and after tax to 9.25% (2023: 9.9%). The acquisition value of the Svane brand, DKK 172.0 million, is subject to an annual impairment test using the relief from royalty method. The recoverable amount is calculated using the expected cash flow based on the budget for the forthcom- ing financial year and a forecast for the next four years and a royalty on the expected brand revenue, discounted by a WACC after tax. The WACC is based on similar assumptions to the above. The recoverable amount is compared with the carrying amount. The acquisition value of the AUBO brand is amortised over the expected useful life, which has been set at 5 years. Apart from the impairment of goodwill related to Svane Alnabru AS in 2023, testing of goodwill and brand did not lead to any impairment in 2024 or 2023. In Management’s assessment, likely changes in the basic assumptions will not lead to the carrying amount exceeding the recoverable amount. DKK’000 Goodwill Brands Customer contracts Other intangible assets Other intangible assets in progress Opening cost at 1 January 2023 369,796 171,961 0 51,718 12,151 Acquisition of entities 45,554 7,500 47,500 428 3,044 Investments for the period 0 0 0 49 21,764 Transfer 0 0 0 1,383 (1,383) Closing cost at 31 December 2023 415,350 179,461 47,500 53,578 35,576 Opening amortisation and impairment at 1 January 2023 0 0 0 49,788 0 Amortisation for the period 0 750 2,375 967 0 Impairment for the period 3,352 0 0 0 1,911 Closing amortisation and impairment at 31 December 2023 3,352 750 2,375 50,755 1,911 Closing carrying amount at 31 December 2023 411,998 178,711 45,125 2,823 33,665 Impairment testing of goodwill and brand At the end of 2024, recognised goodwill amounted to DKK 412.0 million (2023: DKK 412.0 million) and recognised brand value amounted to DKK 172.2 million (2023: DKK 178.7 million). Goodwill is allocated to a cash-generating unit (CGU) when the unit is acquired. TCM Group currently has two CGUs: TCM Group from the acquisition of TCM Group in 2016 and AUBO from the acquisition of AUBO Production A/S in 2023. Both CGUs are part of the Group’s operating segment “Producing and selling kitchens, bathrooms and storage”. Acquired goodwill in 2023 related to the acquisition of AUBO Production A/S, DKK 42.2 million, and goodwill arising from the acquisition of Svane Alnabru AS, DKK 3.4 million. The historic financial performance of Svane Alnabru AS meant the goodwill identified upon acquisition was fully impaired as of the acquisition date and was recognised as part of selling expenses in 2023. 64 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 14. Leases Right-of-use assets DKK’000 Buildings Land and land improve- ments Property , plant and equipment under con- struction and prepayments Machinery and other technical equipment Equipment, tools, fixtures and fittings Opening cost at 1 January 2023 94,483 12,405 1,119 65,608 11,837 Acquisition of entities 30,811 1,777 0 11,499 2,811 Investments for the period 4,088 66 6,130 10,621 716 Transfer 0 0 (1,119) 1,119 0 Disposals for the period 0 0 0 0 (419) Closing cost at 31 December 2023 129,382 14,248 6,130 88,847 14,945 Opening depreciation and impairment at 1 January 2023 11,762 0 0 23,066 6,130 Disposals for the period 0 0 0 0 (335) Depreciation for the period 2,943 0 11,797 2,012 Closing depreciation and impairment at 31 December 2023 14,705 0 0 34,863 7,807 Closing carrying amount at 31 December 2023 114,677 14,248 6,130 53,984 7,138 No impairment was charged to property, plant and equipment in 2024 or 2023. DKK’000 Rental of premises Equipment, tools, fixtures and fittings Total Opening cost at 1 January 2024 50,272 9,584 59,856 Additions 2,048 2,807 4,855 Disposals for the period 0 (4,866) (4,866) Closing cost at 31 December 2024 52,320 7,525 59,845 Opening depreciation and impairment at 1 January 2024 12,756 5,642 18,398 Disposals for the period 0 (4,502) (4,502) Depreciation for the period 4,082 2,373 6,455 Closing depreciation and impairment at 31 December 2024 16,838 3,513 20,351 Closing carrying amount at 31 December 2024 35,482 4,012 39,494 DKK’000 Rental of premises Equipment, tools, fixtures and fittings Total Opening cost at 1 January 2023 41,430 8,367 51,221 Acquisition of entities 8,198 185 8,383 Additions 644 2,751 3,395 Disposals for the period 0 (1,719) (1,719) Closing cost at 31 December 2023 50,272 9,584 61,280 Opening depreciation and impairment at 1 January 2023 9,429 5,199 16,052 Disposals for the period 0 (1,719) (1,719) Depreciation for the period 3,327 2,162 5,489 Closing depreciation and impairment at 31 December 2023 12,756 5,642 19,822 Closing carrying amount at 31 December 2023 37,516 3,942 41,458 13. Property, plant and equipment DKK’000 Buildings Land and land improve- ments Property , plant and equipment under con- struction and prepayments Machinery and other technical equipment Equipment, tools, fixtures and fittings Opening cost at 1 January 2024 129,382 14,248 6,130 88,847 14,945 Investments for the period 684 1,375 10,656 7,875 394 Transfer 0 0 (6,130) 6,130 0 Disposals for the period 0 0 0 (45) (124) Closing cost at 31 December 2024 130,066 15,623 10,656 102,807 15,215 Opening depreciation and impairment at 1 January 2024 14,705 0 0 34,863 7,807 Disposals for the period 0 0 0 (45) (124) Depreciation for the period 3,632 0 0 14,644 2,419 Closing depreciation and impairment at 31 December 2024 18,337 0 0 49,462 10,102 Closing carrying amount at 31 December 2024 111,729 15,623 10,656 53,345 5,113 65 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 14. Leases (continued) Lease receivables Subleases are specified as follows: Lease liabilities 2024 2023 DKK’000 Book value Undiscounted value Book value Undiscounted value Falling due for payment within 1 year 6,715 7,029 8,488 8,727 Falling due for payment within 1-2 years 5,146 5,321 5,205 5,289 Falling due for payment within 2-3 years 1,539 1,626 5,257 5,289 Falling due for payment within 3-4 years 901 923 376 378 Falling due for payment within 4-5 years 0 0 0 0 Falling due for payment after 5 years 0 0 0 0 Total 14,301 14,899 19,326 19,683 Subleases falling due for payment after more than 1 year are presented as financial assets. Subleases falling due for payment within 1 year are presented as current receivables, but are not included in the calculation of net working capital. DKK’000 2024 2023 Opening balance, 1 January 62,347 60,786 Non-cash change Acquisition of entities 0 8,383 New lease liabilities 4,855 3,393 Terminated leases (204) 0 Subleases settled directly by the franchisee (5,025) (5,380) (374) 6,396 Financing cash flows Repayment of loans (5,980) (4,835) (5,980) (4,835) Closing balance, 31 December 55,993 62,347 In 2024, the total amount of cash flows related to lease liabilities was DKK -8.4 million (2023: DKK -6.7 million), of which the interest payments related to the recognised lease liabilities were DKK 2.4 million (2023: DKK 1.9 million) and repayments DKK 6.0 million (2023: DKK 4.8 million). 66 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 14. Leases (continued) DKK’000 2024 2023 Maturity of contractual cash flow 0-6 months 7,842 8,413 6-12 months 7,061 8,368 1-5 years 29,867 34,408 5 years or later 19,657 23,261 64,427 74,450 DKK’000 2024 2023 Amounts recognised in the income statement Cost of short-term leases 498 1,322 Variable leasing costs that are not included in leasing liabilities 161 138 659 1,460 TCM Group leases various assets such as production buildings, warehouses, office buildings, retail property buildings, company cars, etc. The portfolio of lease commitments for short-term leases at year-end is similar to the portfolio of short-term leases that have been expensed during the period. TCM Group has not entered into any significant leases, not yet commenced, to which it is committed. 15. Investments in associates DKK’000 2024 2023 Cost at start of year 61,270 61,178 Additions 567 153 Divestment 0 (61) Carrying amount at year-end 61,837 61,270 Value adjustments at start of year (13,276) (12,477) Impairment (567) (153) Dividend received (4,500) (2250) Share of profit/(loss) 6,299 1,543 Divestment 0 61 Value adjustments at year-end (12,044) (13,276) Carrying amount at year-end 49,793 47,994 The associate Celebert ApS sells kitchens, bathrooms and storage solutions online and has a balance sheet date of 31 December. At 31 December 2024, Celebert ApS posted a gross profit of DKK 44 million and a net profit of DKK 14 mil- lion. At 31 December 2024, assets in Celebert ApS amounted to DKK 41 million, of which DKK 16 million was current assets. At 31 December 2024, current liabilities amounted to DKK 7 million. At 31 December 2024, recognised goodwill related to associates amounted to DKK 45.7 million (2023: DKK 45.7 mil- lion). No impairment was charged to goodwill related to associates in 2024 or 2023. The associate Svane Alnabru AS operates the Svane Køkkenet Alnabru store in Oslo, Norway. At 31 December 2024, Svane Alnabru AS posted a gross profit of DKK 4.7 million and a net loss of DKK 2 million. At 31 December 2024, assets in Svane Alnabru AS amounted to DKK 5.7 million, of which DKK 3.1 million was current assets. At 31 December 2024, current liabilities amounted to DKK 7.7 million. The financial situation of Svane Alnabru at 31 December 2024 meant a committed but not yet exercised capital increase of DKK 0.6 million was fully impaired in 2024. 67 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 17. Inventories DKK’000 2024 2023 Raw materials and consumables 51,617 51,830 Semi-finished products 32,052 35,508 Finished products 12,832 10,334 Total write-down of inventories (7,354) (5,135) 89,147 92,537 Cost of goods sold recognised as an expense during the period was DKK 948.4 million (2023: DKK 868.3 million) and write-downs of inventories recognised as an expense during the period totalled DKK 2.2 million (2023: DKK 2.6 million). 16. Other financial assets DKK’000 2024 2023 Other financial assets Receivables falling due in 12 months or later 6,919 9,714 Deposits 1,337 1,310 Total 8,256 11,024 18. Prepaid expenses and accrued income DKK’000 2024 2023 Other prepaid expenses 1,676 1,180 Total 1,676 1,180 19. Share capital Share capital No. of registered shares No. of shares outstanding Nominal value At 1 January 2024 10,513,638 10,438,638 1,051,364 Performance shares 0 1,949 0 At 31 December 2024 10,513,638 10,440,587 1,051,364 At 1 January 2023 9,142,294 9,067,294 914,229 Rights issue 1,371,344 1,371,344 137,135 At 31 December 2023 10,513,638 10,438,638 1,051,364 The share capital amounted to nominal DKK 1,051,364. Each share has a nominal value of DKK 0.1. All of the registered shares are fully paid. All shares are ordinary shares of the same type. Treasury shares No. of shares NominAl value % of shares At 1 January 2024 75,000 7,500 0.7 Used to settle performance shares (1,949) (195) 0.0 At 31 December 2024 73,051 7,305 0.7 At 1 January 2023 75,000 7,500 0.8 At 31 December 2023 75,000 7,500 0.7 68 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 20. Value adjustments of currency hedges DKK’000 Value adjustment of cash flow hedges 2024 Total 2024 Value adjustment of cash flow hedges 2023 Total 2023 Opening balance (916) (916) (916) (916) Adjustment, cash flow hedges (36) (36) 0 0 Value adjustments of currency hedges before tax 1,347 1,347 (47) (47) Tax on value adjustments of currency hedges (296) (296) 11 11 Tax related to prior years 0 0 36 36 Closing balance 99 99 (916) (916) Hedging reserve The fair value adjustment of unrealised gains/losses on forward exchange contracts is adjusted in equity. The forward exchange contracts, which have been entered into with the company’s usual bank connection, cover periods of 0-12 months from the balance sheet date. 21. Earnings per share Earnings per share before dilution Earnings per share before dilution are calculated by dividing profit attributable to the shareholders by the weighted average number of outstanding ordinary shares during the period. 2024 2023 Profit attributable to shareholders (DKK'000) 57,675 21,522 Weighted average number of outstanding ordinary shares before dilution 10,440,012 9,767,408 Earnings per share before dilution (DKK) 5.52 2.20 Earnings per share after dilution To calculate earnings per share after dilution, the weighted average number of outstanding ordinary shares was adjusted for the dilution effect of all potential ordinary shares. These potential ordinary shares were attributable to the long-term incentive (LTI) programmes awarded to the Executive Management in 2022, 2023 and 2024, cf. note 5. If all the performance targets set for the first plan, PSU 2022-2024, 2023-2025 and 2024-2026, are achieved in full, the aggregate allocated maximum number of share units and, accordingly, shares to be awarded will be 93,908 shares (gross earning). 2024 2023 Weighted average number of outstanding ordinary shares 10,440,012 9,767,408 Management performance share scheme 35,319 14,578 Weighted average number of outstanding ordinary shares after dilution 10,475,331 9,781,986 Earnings per share after dilution 5.51 2.20 22. Dividend The Board of Directors will propose to the Annual General Meeting to distribute an ordinary dividend of DKK 3 per share. Excluding treasury shares this corresponds to DKK 31 million. 69 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 23. Deferred tax DKK’000 Deferred tax assets Deferred tax liabilities Net Opening balance, 1 January 2024 0 68,032 68,032 Adjustment related to prior years 0 (26) (26) Recognised in net profit for the year 0 (1,377) (1,377) Closing balance, 31 December 2024 0 66,629 66,629 Opening balance, 1 January 2023 0 53,393 53,393 Acquisition of entities 0 16,366 16,366 Recognised in net profit for the year 0 (1,727) (1,727) Closing balance, 31 December 2023 0 68,032 68,032 Change in deferred tax liabilities for the period: Deferred tax liabilities DKK’000 Temporary differences in intangible assets Temporary differences in property , plant and equipment Temporary differences in inventories Temporary differences in receivables Temporary differences in mortgage debt Total At 1 January 2024 50,635 18,335 504 (1,032) (410) 68,032 Adjustment related to prior years 0 0 0 0 (26) (26) Recognised in net profit for the year (1,096) (346) 367 (443) 141 (1,377) At 31 December 2024 49,539 17,989 871 (1,475) (295) 66,629 At 1 January 2023 39,406 14,467 595 (666) (409) 53,393 Acquisition of entities 12,639 3,352 132 262 (19) 16,366 Recognised in net profit for the year (1,410) 516 (223) (628) 18 (1,727) At 31 December 2023 50,635 18,335 504 (1,032) (410) 68,032 The corporation tax rate in Denmark for the year is 22.0%. There are no tax loss carryforwards. 25. Financial assets and liabilities 2024 DKK’000 Derivative hedging instruments measured at fair value Financial assets measured at amortised cost Financial liabilities measured at amortised cost Total carrYing amount Other long-term receivables 0 8,256 0 8,256 Trade receivables 0 57,914 0 57,914 Other receivables 127 26,245 0 26,372 Cash and cash equivalents 0 29,099 0 29,099 Total 127 121,514 0 121,641 Non-current interest-bearing liabilities 0 0 272,529 272,529 Current interest-bearing liabilities 0 0 35,285 35,285 Accounts payable 0 0 122,285 122,285 Other non-current liabilities 0 0 43,000 43,000 Other current liabilities 0 0 75,921 75,921 Total 0 0 549,020 549,020 24. Bank loans and mortgage loans DKK’000 2024 2023 Maturity structure Within 1 year 22,995 95,511 Between 1 and 5 years 199,078 156,442 Longer than 5 years 29,749 11,631 Total 251,822 263,584 Refer to note 3 for additional information regarding bank loans and mortgage loans. 70 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 25. Financial assets and liabilities (continued) 2023 DKK’000 Derivative hedging instruments measured at fair value Financial assets measured at amortised cost Financial liabilities measured at amortised cost Total carrying amount Other long-term receivables 0 11,024 0 11,024 Trade receivables 0 79,285 0 79,285 Other receivables 0 23,065 0 23,065 Cash and cash equivalents 0 13,285 0 13,285 Total 0 126,659 0 126,659 Non-current interest-bearing liabilities 0 0 216,222 216,222 Current interest-bearing liabilities 0 0 109,709 109,709 Accounts payable 0 0 144,710 144,710 Other non-current liabilities 0 0 52,500 52,500 Other current liabilities 1,220 0 77,161 78,381 Total 1,220 0 600,302 601,522 DKK’000 Purchase consideration Cash paid 105,142 Ordinary shares issued 10,000 Vendor note 35,000 Contingent consideration 18,500 Purchase price 168,642 The fair value of the 149,925 shares issued as part of the consideration of DKK 10.0 million paid for AUBO Production A/S was DKK 66.7 per share, based on the share value calculated as the volume-weighted average closing price on Nasdaq Copenhagen between 19 and 23 June 2023, both days included. Contingent consideration of a potential amount of DKK 60 million is linked to the company’s performance going for- ward. The fair value of the contingent consideration at acquisition was estimated at DKK 18.5 million. 26. Acquisition of ENTITIES (business combinations) 2024: Acquisition of entities There were no acquisitions in the year ending 31 December 2024. 2023: Acquisition of AUBO Production A/S On 3 July 2023, TCM Group acquired 100% of the share capital of AUBO Production A/S. The acquisition supports TCM Group’s strategy of strengthening TCM Group’s market position in the core markets and growing its presence in Norway. 71 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the consolidated financial statements (continued) 26. Acquisition of ENTITIES (business combinations) (continued) DKK’000 Fair value Acquired carrying amount Assets and liabilities included in the acquisition Cash and cash equivalents 4,351 4,351 Property, plant and equipment 55,370 46,987 Intangible assets 3,383 3,383 Intangible assets: customer contracts 47,500 0 Intangible assets: brand value 7,500 0 Financial assets 1,062 1,062 Inventories 34,865 34,265 Trade receivables and other receivables 65,164 65,164 Accounts payable and other operating liabilities (42,061) (42,061) Tax payable (9,101) (9,101) Debt to parent company (16,843) (16,843) Other interest-bearing liabilities (8,383) 0 Deferred taxes, net (16,367) (4,135) Net identifiable assets acquired 126,440 83,072 Goodwill 42,202 Net assets acquired 168,642 If the acquisition had occurred on 1 January 2023, consolidated pro-forma revenue and profit for the period ended 31 December 2023 would have been approximately DKK 260 million and DKK 6 million respectively. These amounts have been calculated using the subsidiary’s results and adjusting them for: • differences in the accounting policies of the Group and the subsidiary, and • the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had applied from 1 January 2023, together with the consequential tax effects. The fair value of trade receivables amounts to DKK 57.3 million. The gross contractual receivables amount to DKK 57.3 million, of which DKK 0.0 million is considered uncollectible. DKK’000 Purchase consideration - cash outflow Purchase consideration paid in cash 105,142 Cash and cash equivalents in acquired subsidiaries (4,351) Reduction in the Group’s cash and cash equivalents in conjunction with acquisition 100,791 Transaction costs for the acquisition amounted to DKK 2.8 million and are presented under non-recurring items. Of the transaction costs, DKK 2.8 million was recognised in Q2 2023. Goodwill is attributable to the workforce and the high profitability of the acquired business. It will not be deductible for tax purposes. Revenue attributable to AUBO Production A/S since the date of acquisition amounted to DKK 117.0 million, and net profit amounted to DKK 1.5 million. 72 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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27. Acquisition of entities (associates) Notes to the consolidated financial statements (continued) 2024: Acquisition of entities There were no acquisitions in the year ending 31 December 2024. 2023: Acquisition of Svane Alnabru AS On 3 July 2023, TCM Group acquired 100% of the shares in Svane Alnabru AS. The company operates the strategically important Svane Køkkenet Alnabru store in Oslo, Norway. The purchase price amounted to DKK 0.2 million. Goodwill of DKK 3.4 million identified upon acquisition was fully impaired as of the acquisition date because of the company’s historical financial performance. On 1 September 2023, TCM Group sold 40% of the shares in Svane Alnabru AS for an amount of DKK 0.9 million. 28. Changes in liabilities attributable to financing activities DKK’000 Mortgage loans Bank loans Total Opening balance, 1 January 2024 25,254 238,328 263,582 Non-cash change Amortisation of borrowing costs 88 530 618 Subtotal 88 530 618 Financing cash flows Proceeds from loans 36,757 0 36,757 Repayment of loans (25,643) (20,000) (45,643) Changes in cash pool 0 (3,493) (3,493) Subtotal 11,114 (23,493) (12,379) Closing balance, 31 December 2024 36,456 215,365 251,821 DKK’000 Mortgage loans Bank loans Total Opening balance, 1 January 2023 27,825 200,329 228,154 Non-cash change Amortisation of borrowing costs 9 270 279 Subtotal 9 270 279 Financing cash flows Proceeds from loans 0 149,625 149,625 Repayment of loans (2,580) 0 (2,580) Changes in cash pool 0 (111,896) (111,896) Subtotal (2,580) 37,729 35,149 Closing balance, 31 December 2023 25,254 238,328 263,582 73 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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30. Related party transactions Related parties with a controlling interest As at 31 December 2024, there were no related parties with a controlling interest in the company. Transactions between related parties During the financial period, the Group had the following transactions with related parties: See note 5 for information on remuneration of the Executive Management and the Board of Directors. The Group has had transactions with the associate Celebert ApS. Transactions related to sales amounted to DKK 45.6 million (2023: DKK 27.3 million) and transactions related to administration fees amounted to DKK 0.2 million (2023: DKK 0.2 million). The Group has had transactions with the associate Svane Alnabru AS. Transactions related to sales amounted to DKK 4.4 million (2023: DKK 2.2 million) and transactions related to property leases amounted to DKK 1.7 million (2023: DKK 0.7 million). There were no other transactions with related parties. Notes to the consolidated financial statements (continued) In respect of its commitment to Nykredit Bank, the Group has issued a pledge ban on the Group’s assets. In respect of its financing agreements with Nykredit Bank, the Group has provided a pledge over company assets of DKK 100 million (2023: 75 million) with charges over goodwill, property, plant and equipment (excluding land and buildings), inventories and trade receivables. The carrying amount of the pledged assets at 31 December 2024 was DKK 273.6 million (2023: DKK 304.3 million). As collateral for debt to the mortgage lender, DKK 36.5 million (2023: DKK 25.3 million), pledges have been provided over land and buildings with a carrying amount at 31 December 2024 of DKK 79.8 million (2023: DKK 81.5 million). Guarantees related to AB92 - provision of work and supplies within building and engineering – amounted to DKK 0.3 million (2023: DKK 1.0 million). The Group has contingent liabilities pertaining to subcontractor guarantees that arise in normal commercial opera- tions. No significant liabilities are expected to arise as a result of these contingent liabilities. Other bank guarantees amounted to DKK 0.3 million (2023: DKK 0.3 million). The Group has given a guarantee of maximum 12 months’ rent to a third party, corresponding to DKK 2.2 million (2023: DKK 2.2 million). As of the balance sheet date the Group has entered into non-cancellable agreements related to the future purchase of goods and services amounting to DKK 93 million. 29. Pledged assets, contingent liabilities and commitments 32. Companies in TCM Group Business registration no. Domicile Share of equity Parent company TCM Group A/S 37291269 Holstebro Subsidiaries TCM Operations A/S 75924712 Holstebro 100% AUBO Production A/S 28854846 Aulum 100% Associates Celebert ApS 27428959 Aalborg 45% Svane Alnabru AS 916636849 Oslo, Norway 60%* * Due to specific conditions in the agreement with the non-controlling shareholder, Svane Alnabru AS is considered an associate despite TCM Group A/S owning 60% of the company’s shares. 31. Events after the balance sheet date No subsequent events have occurred that materially affect TCM Group’s financial position. 74 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Definitions Key figures Key figures and financial ratios have been defined and calculated as stated below: The following key figures are not directly derived from the income statement or balance sheet and as such are defined as follows: Adjusted EBITDA: Operating profit before non-recurring items (Adjusted EBIT) plus depreciation and amortisation Adjusted EBIT: Operating profit before non-recurring items Net interest-bearing debt: Current and non-current interest-bearing loans and borrowings less interest-bearing receivables and cash and cash equivalents Net working capital: The sum of inventories, trade receivables, other receivables (excluding subleases) and prepayments less the sum of prepayments from customers, trade payables and other liabilities Ratios Ratio Calculation formula Gross margin Gross profit * 100 Revenue Adjusted EBITDA margin Adjusted EBITDA * 100 Revenue Adjusted EBIT margin Adjusted EBIT * 100 Revenue EBIT margin EBIT * 100 Revenue Solvency ratio Equity * 100 Balance sheet total Leverage ratio Net interest-bearing debt excluding tax liabilities 12 months’ adjusted EBITDA NWC ratio Net working capital1 * 100 12 months’ revenue CapEx ratio excl. acquisitions CapEx ratio excluding acquisitions is calculated as investments in property, plant and equipment (CapEx) divided by revenue. CapEx excludes investments in connection with acquisitions. Cash conversion ratio The cash conversion ratio is calculated as adjusted EBITDA less the change in net working capital1 and CapEx excluding acquisitions divided by adjusted EBITDA. The ratio is for the last 12 months. The definition and calculation formula for earnings per share before and after dilution can be found in note 21 to the consolidated financial statements. 1 Net working capital is adjusted to reflect assets and liabilities held for sale. 75 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Statement of comprehensive income ........................................... 77 Balance sheet as at 31 December ................................................... 77 Statement of changes in shareholders’ equity ................... 78 Cash flow statement ............................................................................ 79 Notes to the parent company financial statements ......... 79 parent company Financial statements 76 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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DKK’000 Note 2024 2023 Revenue 8,880 10,575 Gross profit 8,880 10,575 Administrative expenses 2, 3 (13,800) (14,407) Other operating income 9,500 1,000 Operating profit/(loss) before non-recurring items 4,580 (2,832) Non-recurring items 4 0 (2,800) Operating profit/(loss) 4,580 (5,632) Dividends from subsidiaries 6,500 50,000 Financial income 5 10,675 9,200 Financial expenses 5 (20,032) (16,554) Profit before tax 1,723 37,014 Tax for the year 6 3,142 2,448 Net profit for the year 4,865 39,463 Other comprehensive income Items that may be reclassified subsequently to the income statement Value adjustments of cash flow hedges before tax 0 0 Tax on value adjustments of cash flow hedges 0 0 Other comprehensive income for the year 0 0 Total comprehensive income 4,865 39,463 Statement of comprehensive income Balance sheet as AT 31 December DKK’000 Note 2024 2023 Assets Non-current assets Investments in subsidiaries 7 665,399 665,399 Financial non-current assets 665,399 665,399 Total non-current assets 665,399 665,399 Current assets Receivables from subsidiaries 135,304 159,823 Other receivables 0 138 Deferred tax assets 432 185 Prepaid expenses and accrued income 451 13 Total current assets 136,187 160,159 Cash and cash equivalents 0 0 Total current assets 136,187 160,159 Total assets 801,586 825,558 77 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Balance sheet as AT 31 December (continued) DKK’000 Note 2024 2023 Equity and liabilities Share capital 1,051 1,051 Treasury shares (7) (12,087) Retained earnings 504,559 541,991 Proposed dividend 31,322 0 Total equity 536,925 530,955 Bank loans 8 193,607 145,346 Other payables 43,000 52,500 Total non-current liabilities 236,607 197,846 Current liabilities Bank loans 8 21,759 92,982 Trade payables 1,431 1,044 Current tax liabilities 1,408 104 Other payables 3,456 2,627 Total current liabilities 28,054 96,757 Total liabilities 264,661 294,603 Total equity and liabilities 801,586 825,558 STATEMENT OF Changes in shareholders’ equity DKK’000 Share capital Treasury shares Retained earnings Proposed Dividend Total Opening balance, 1 January 2024 1,051 (12,087) 541,991 0 530,955 Net profit for the year 0 0 (26,457) 31,322 4,865 Total comprehensive income for the year 0 0 (26,457) 31,322 4,865 Transfer 0 12,080 (12.080) 0 0 Share-based incentive programme 0 0 1,105 0 1,105 Transfer, exercised share-based payment 0 0 0 0 0 Closing balance, 31 December 2024 1,051 (7) 504,559 31,322 536,925 Opening balance, 1 January 2023 914 (12,087) 415,164 0 403,991 Net profit for the year 0 0 39,463 0 39,463 Total comprehensive income for the year 0 0 39,463 0 39,463 Share-based incentive programme 0 0 471 0 471 Rights issue 137 0 88,644 0 88,781 Cost related to rights issue 0 0 (1,751) 0 (1,751) Closing balance, 31 December 2023 1,051 (12,087) 541,991 0 530,955 78 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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DKK’000 NOTE 2024 2023 Operating activities Operating profit/(loss) 4,580 (5,632) Other non-cash operating items (8,395) (527) Income tax paid (12,163) (10,656) Change in operating receivables 40,582 (37,171) Change in operating liabilities 1,216 1.455 Cash flow from operating activities 25,820 (52,533) Investments in subsidiaries 0 (105,143) Dividend received 6,500 50,000 Cash flow from investing activities 6,500 (55,143) Interest paid (19,913) (16,486) Interest received 10,675 9,200 Proceeds from and repayment of loans 8 (23,082) 37,931 Rights issue, net proceeds 0 77,031 Cash flow from financing activities (32,320) 107,676 Cash flow for the year 0 0 Cash and cash equivalents at the beginning of the year 0 0 Cash flow for the year 0 0 Cash and cash equivalents at year-end 0 0 Cash flow statement Notes to the parent COMPANY financial statements 1. Significant accounting estimates and judgements Determining the carrying amount of certain assets and liabilities requires an estimate of how future events will affect the value of those assets and liabilities at the balance sheet date. Estimates that are significant to the parent’s financial reporting are made, for instance, regarding valuation of investments in subsidiaries, which constitute a major share of the parent’s total assets. Investments in subsidiaries are tested for impairment if events or other circumstances indicate that the carrying amount is not recoverable. Measuring investments in subsidiaries requires significant estimates to be made based on various assumptions, including expected future cash flows, discount rate and terminal value growth rates. The sensi- tivity to changes in the assumptions applied may be collectively and individually significant. 79 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the parent COMPANY financial statements (continued) 2. STaff Costs DKK’000 2024 2023 Total costs for employee benefits Salaries and other remuneration 9,705 9,055 Social security costs 11 12 Pension costs – defined contribution plans 501 447 Total employee costs 10,217 9,514 Other employee benefits for the Executive Management, including company cars and telephones, are presented as administrative expenses. Remuneration and other benefits DKK’000 Base salary/ Directors' fees Variable re- muneration, cash-based (STI) Variable re- muneration, share-based (LTI) Other benefits Pension costs Total Number of individuals 2024 Board of Directors 2,547 0 0 0 0 2,547 6 Executive Management 4,602 1,901 1,105 612 501 8,721 2 Total 7,149 1,901 1,105 612 501 11,268 8 2023 Board of Directors 2,625 0 0 0 0 2,625 7 Executive Management 4,561 1,000 425 398 447 6,831 2 Total 7,186 1,000 425 398 447 9,456 9 Refer to note 5 to the consolidated financial statements for a description of the short-term incentive (STI) and long- term incentive (LTI) programmes. 3. Audit fee In addition to the statutory audit, PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab, the auditors appointed at the Annual General Meeting, provides other assurance engagements and other services to the Group. DKK’000 2024 2023 Specification by type of cost Statutory audit 492 788 Other assurance engagements 0 36 Tax and indirect tax advisory 32 157 Other services 128 659 652 1,640 The fee for non-audit services delivered by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab to the company amounted to DKK 0.1 million in 2024 and consisted of various accounting advisory services. In 2023, the fee for non-audit services delivered by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab to the company amounted to DKK 0.9 million and consisted of various services, including due diligence in connection with the AUBO Production A/S acquisition. 4. Non-recurring items DKK’000 2024 2023 Transaction costs related to business combinations 0 2,800 Restructuring 0 0 Total 0 2,800 The table below shows how the income statement (extract) would have been presented if no adjustment for non- recurring items had been made: DKK’000 2024 2023 Revenue 8,880 10,575 Gross profit 8,880 10,575 Administrative expenses (13,800) (17,207) Other operating income 9,500 1,000 Operating profit/(loss) 4,580 (5,632) TCM Group presents non-recurring items separately to ensure comparability. Non-recurring items consist of income and expenses that are special and of a non-recurring nature. There were no non-recurring items in 2024. Non- recurring items in 2023 consisted of transaction costs related to business combinations. 80 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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6. Corporation tax DKK’000 Income statement Other comprehen- sive income Total comprehen- sive income Tax for the year can be specified as follows: Current tax 2,895 0 2,895 Change in deferred tax during the year 247 0 247 Total 3,142 0 3,142 Tax for the previous year can be specified as follows: Current tax 2,329 0 2,329 Change in deferred tax during the year 119 0 119 Total 2,448 0 2,448 7. Investments in subsidiaries DKK’000 2024 2023 Investments in subsidiaries Cost at start of year 665,399 496,756 Acquisition during the year 0 168,643 Cost at end of year 665,399 665,399 Carrying amount at end of year 665,399 665,399 Investments in subsidiaries comprise: TCM Operations A/S, 100% AUBO Production A/S, 100% See note 26 to the consolidated financial statements for details of the acquisition of AUBO Production A/S in 2023. See note 32 to the consolidated financial statements for a list of all companies in TCM Group. The carrying amount of the parent’s investments in subsidiaries is tested for impairment if an indication of impairment exists. No indication of impairment has been identified. Notes to the parent COMPANY financial statements (continued) 5. Financial income and expenses DKK’000 2024 2023 Financial income Interest income from subsidiaries 10,675 9,200 Total 10,675 9,200 Financial expenses Interest expense on liabilities measured at amortised cost 19,913 16,486 Other financial costs 119 68 Total 20,032 16,554 Reconciliation of the effective tax rate for the year can be specified as follows: DKK’000 % 2024 % 2023 Tax rate 22.0 379 22.0 8,143 Non-taxable income (204.3) (3,520) (30.3) (11,220) Non-deductible expenses 1.2 21 0.0 0 Other (1.3) (22) 1.7 629 Effective tax rate for the year (182.4) (3,142) (6.6) (2,448) Non-taxable income relates primarily to adjustment of the contingent payment obligation and to dividends from subsidiaries. 6. Corporation tax (continued) 81 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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8. Changes in liabilities attributable to the financing activities DKK’000 Bank loans Total Opening balance, 1 January 2024 238,328 238,328 Non-cash change Amortisation of borrowing costs 119 119 Subtotal 119 119 Financing cash flows Repayment of loans (20,000) (20,000) Changes in cash pool (3,082) (3,082) Subtotal (23,082) (23,082) Closing balance, 31 December 2024 215,365 215,365 Opening balance, 1 January 2023 200,329 200,329 Non-cash change Amortisation of borrowing costs 68 68 Subtotal 68 68 Financing cash flows Proceeds from loans 149,625 149,625 Changes in cash pool (111,694) (111,694) Subtotal 37,931 37,931 Closing balance, 31 December 2023 238,328 238,328 9. Guarantees, contingent liabilities and collateral In respect of the Group’s commitment to Nykredit Bank, the company has issued a pledge ban on all assets. TCM Group A/S is the management company under the Danish joint taxation scheme. Under the Danish Corporation Tax Act regulations and with effect from the 2016 financial year, TCM Group A/S is therefore liable for any income taxes, etc. for the jointly taxed companies and for any obligations to withhold tax at source on interest, royalties and returns for the jointly taxed companies. 10. Related parties For a specification of related parties, refer to notes 30 and 32 to the consolidated financial statements. See note 5 to the consolidated financial statements for information on remuneration of the Executive Management and the Board of Directors. The management fees from subsidiaries in the financial year amounted to DKK 8.9 million (2023: DKK 10.6 million). Intra-group transactions are carried out on arm’s length principles. Aside from this, no transactions with the Executive Management, major shareholders or other related parties have taken place during the year. 11. Events after the balance sheet date No subsequent events have occurred that materially affect TCM Group’s financial position. Notes to the parent COMPANY financial statements (continued) 82 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Notes to the parent COMPANY financial statements (continued) 13. Financial risks Translation exposure The company does not have any subsidiaries in foreign countries, hence there is no translation exposure. Credit risk The company does not have any external activities. No material credit risk has been identified. The company has receivables from its subsidiaries as a result of inter- company financing. No significant risk has been identi- fied on these receivables. Financial exposure The Group maintains three credit facilities with Nykredit Bank: 1) DKK 220 million committed facility: This facility is set to expire in March 2026 and includes two 1-year exten- sion options available on similar terms. 2) DKK 130 million committed facility: Established in 2023 to support the acquisition of AUBO Production A/S, this facility also expires in 2026 and offers two 1-year extension options on similar terms. 3) DKK 50 million uncommitted facility: This 1-year facility will expire in March 2025. The facility agreements with Nykredit Bank contained a leverage covenant of 4.5 until 31 December 2024 and 4.0 for the remaining financing period. No covenants have been breached during the period. Interest rate risk It is Group policy to fully or partially hedge interest rate risks on loans when it is assessed that the debt is mate- rial. The Group manages interest rate risk by maintain- ing an appropriate mix of fixed- and floating-rate borrowings, and using interest rate swaps. The interest rates on the Nykredit facilities are currently variable. For the company’s floating-rate cash and cash equiva- lents and debt to banks, an increase in interest rate level of 1% p.a. relative to the actual interest rates would have had a negative impact on the profit for the year and on equity at 31 December 2024 of DKK 2.5 million (2023: DKK 2.7 million). Assumptions for analysis of interest rate sensitivity The stated sensitivities are calculated on the basis of the financial assets and liabilities recognised at 31 December 2024. No adjustments have been made for instalments, raising of loans, etc. during the course of the year. The computed expected fluctuations are based on the current market situation and expectations for market developments in interest rates. Capital management The Board of Directors has adopted a dividend policy with a target payout ratio of 40-60% of consolidated net profit for the year. The Board of Directors will propose to the Annual Gen- eral Meeting to distribute an ordinary dividend of DKK 3 per share. Excluding treasury shares this corresponds to DKK 31 million. Liquidity risks Liquidity is controlled centrally with the aim of using available liquidity efficiently, while keeping necessary reserves available. Available liquidity comprised DKK 204 million at 31 December 2024 (2023: DKK 234 million). 12. Accounting policies These parent financial statements have been prepared under the historical cost convention and presented in accordance with IFRS accounting standards as adopted by the EU and additional requirements of the Danish Financial Statements Act. Description of accounting policies applied The accounting policies applied by the parent differ from the accounting policies described for the consoli- dated financial statements (see note 1 to the consoli- dated financial statements) as follows: Dividend income Distribution of profits accumulated by subsidiaries is taken to income in the parent’s income statement in the financial year in which the dividend is received. If a divi- dend is distributed that exceeds the subsidiary’s com- prehensive income for the year, an impairment test is performed. Investments in subsidiaries Investments in subsidiaries are measured at cost in the parent financial statements. If an indication of impair- ment exists, an impairment test is performed as described in the accounting policies for the consolidated financial statements. If the carrying amount exceeds the recoverable amount, investments are written down to such lower amount. 83 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Management Statement on the annual report ....................... 85 Independent auditor’s reports ....................................................... 85 Statements TREND VARM GRÅ WOOD DESIGN 84Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements TCM Group Annual report 2024
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Management Statement on the annual report Report on the audit of the Financial Statements Our opinion In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the Group’s and the Parent Company’s financial position at 31 December 2024 and of the results of the Group’s and the Parent Company’s operations and cash flows for the financial year 1 January to 31 December 2024 in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act. Our opinion is consistent with our Auditor’s Long-form Report to the Audit Committee and the Board of Directors. What we have audited The Consolidated Financial Statements and Parent Company Financial Statements of TCM Group A/S for the financial year 1 January to 31 December 2024 comprise income statement and statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including material accounting policy information for the Group as well as for the Parent Company. Collectively referred to as the “Financial Statements”. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional require- ments applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor’s responsibilities for the audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Inter- national Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark. We have also fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. To the best of our knowledge and belief, prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 were not provided. Appointment We were first appointed auditors of TCM Group A/S on 5 April 2022 for the financial year 2022. We have been reap- pointed annually by shareholder resolution for a total period of uninterrupted engagement of 3 years including the financial year 2024. Independent auditor's reports To the shareholders of TCM Group A/SThe Board of Directors and the Executive Management have today considered and adopted the Annual Report for the financial year 1 January 2024 – 31 December 2024. The Consolidated Financial Statements and the Parent Company Financial Statements have been prepared in accordance with IFRS Accounting Standards as adopted by the EU and fur- ther requirements in the Danish Financial Statements Act. In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the Group’s and the Parent Company’s financial position at 31 December 2024 as well as of the results of their operations and the cash flows for the period 1 January 2024 – 31 December 2024. In our opinion, Management’s Review includes a true and fair account of the development in the operations and finan- cial circumstances of the Group and the Parent Company, of the results for the year, and of the financial position of the Group and the Parent Company as well as a description of the most significant risks and elements of uncertainty facing the Group and the Parent Company. In our opinion, the Annual Report of TCM Group A/S for the financial year 1 January to 31 December 2024 with the file name tcm-group-2024-12-31-en.zip has been prepared, in all material respects, in compliance with the ESEF Regula- tion. We recommend that the Annual Report be adopted at the Annual General Meeting. Holstebro, 26 February 2025 Executive Management Torben Paulin Thomas Hjannung Chief Executive Officer Chief Financial Officer Board of Directors Anders Tormod Skole-Sørensen Søren Mygind Eskildsen Pernille Wendel Mehl Chair Deputy Chair Jan Amtoft Erika Hummel Björn Johan Olsson Lissner 85 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Independent auditor’s reports (continued) Key audit matter How our audit addressed the key audit matter Impairment test of goodwill and brand At 31 December 2024 the Group’s intangible assets amount to DKK 692,103 thousand primarily related to goodwill of DKK 411,998 thousand and brand of DKK 177,211 thousand. Impairment tests related to goodwill and brand include significant judgement and estimation by Management, including determination of future growth rates for revenue, profit margins and investments in the budget and forecast periods, as well as royalty rate and discount rate. We focused on impairment tests related to goodwill and brand as impairment tests are complex and associated with subjectivity in the determination of significant assumptions and data used. We refer to note 12 in the consolidated financial statements. We considered the appropriateness of the accounting policies for assessing the recoverability of the carrying amount of goodwill and brand. Our audit procedures included assessment of the applied impairment model with focus on significant assumptions in determination of future cash flows, including growth rates for revenue, profit margins and investments in the budget and forecast periods, as well as royalty rate and discount rate used. We assessed sensitivity analysis performed by Management to evaluate the impact of reasonable changes in key assumptions. Further, we evaluated the accuracy in Management’s estimates by comparing the budget for 2024 with actual figures. We also assessed the appropriateness of the disclosures related to impairment tests. Based on the work we have performed, in our view, the Management Review is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement in the Management Review. Management’s responsibilities for the Financial Statements Management is responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU and fur- ther requirements in the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, Management is responsible for assessing the Group’s and the Parent Compa- ny’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Rea- sonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. As part of an audit in accordance with ISAs and the additional requirements applicable in Denmark, we exercise pro- fessional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Parent Company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. • Conclude on the appropriateness of Management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern. If we conclude Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements for 2024. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Statement on the Management Review Management is responsible for the Management Review. Our opinion on the Financial Statements does not cover the Management Review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsibility is to read the Management Review and, in doing so, consider whether the Management 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 the Management Review includes the disclosures required by the Danish Financial Statements Act. 86 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements
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Independent auditor’s reports (continued) that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view. • Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical require- ments regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter. Report on compliance with the ESEF Regulation As part of our audit of the Financial Statements we performed procedures to express an opinion on whether the annual report of TCM Group A/S for the financial year 1 January to 31 December 2024 with the filename tcm-group-2024-12- 31-en.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the Consolidated Financial Statements including notes. Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility includes: • The preparing of the annual report in XHTML format; • The selection and application of appropriate iXBRL tags, including extensions to the ESEF taxonomy and the anchoring thereof to elements in the taxonomy, for all financial information required to be tagged using judgement where necessary; • Ensuring consistency between iXBRL tagged data and the Consolidated Financial Statements presented in human- readable format; and • For such internal control as Management determines necessary to enable the preparation of an annual report that is compliant with the ESEF Regulation. Our responsibility is to obtain reasonable assurance on whether the annual report is prepared, in all material respects, in compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our opinion. The nature, timing and extent of procedures selected depend on the auditor’s judgement, including the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The procedures include: • Testing whether the annual report is prepared in XHTML format; • Obtaining an understanding of the company’s iXBRL tagging process and of internal control over the tagging process; • Evaluating the completeness of the iXBRL tagging of the Consolidated Financial Statements including notes; • Evaluating the appropriateness of the company’s use of iXBRL elements selected from the ESEF taxonomy and the creation of extension elements where no suitable element in the ESEF taxonomy has been identified; • Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and • Reconciling the iXBRL tagged data with the audited Consolidated Financial Statements. In our opinion, the annual report of TCM Group A/S for the financial year 1 January to 31 December 2024 with the file name tcm-group-2024-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. Aarhus, 26 February 2025 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR no 33 77 12 31 Claus Lindholm Jacobsen Claus Lyngsø Sørensen State Authorised Public Accountant State Authorised Public Accountant mne23328 mne34539 87 TCM Group Annual report 2024Performance Highlights ESG governanceOur businessAt A Glance StatementsFinancial statements