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Befreiender Konzernabschluss zum Geschäftsjahr vom 01.01.2023 bis zum 31.12.2023

Norican Global A/S

Taastrup/Dänemark

Annual Report 2023

About Norican Group

We are a world-leading provider of technology for the production and treatment of metallic parts.

Norican consists of six leading international brands for parts production and treatment: DISA, ItalPresseGauss, Simpson, StrikoWestofen and Wheelabrator and our equipment-agnostic digital brand; Monitizer.

Together, we offer customers a broad spectrum of integrated solutions for demanding industrial processes, spanning green sand molding, die casting, sand preparation, melting, transport and dosing, as well as surface treatment.

Operating globally, we have locations in Europe, North America, IMEA and Asia.

We serve a wide range of industries, with foundries being the predominant customer group, through a global network of engineering experts, manufacturing capacity, aftermarket upgrades and local service support. As a single, strong, worldwide partner, Norican delivers production capacity to our customers. This means our customer commitment is to not only deliver outstanding machinery and process solutions, but also to ensure our customers' investments generate the best possible return for them.

Consolidated Financial Statements 31 December 2023

Together with Independent Auditor's Report

Company No. 36458755

Contents

Management report

CEO Review

Financial Highlights

CFO Review

Sustainability

Environment

Social

Governance

Financial statements

Directors' Statement

Auditor's Report

Consolidated Financial Statements

Parent Company Financial Statement

Definitions

CEO Review

Chief Executive's Review

Together with our customers and partners, 2023 has been a year where we have been able to bring about real, positive change - from offering technology that makes our customers more profitable and sustainable to creating insight and improvements through digitalization, and from introducing production technology to support the growth in aluminum to creating better workplaces for our customers' employees.

It has been a good year financially. Revenues were in line with last year, which was a combination of unfavorable exchange rates and softness in equipment sales, countered by good growth in aftermarket (spares and services) sales. Order intake during the year remained solid, giving a healthy backlog of orders going into 2024. From a regional perspective, we saw good growth in Europe and North America, whereas we experienced softness in Asia Pacific with China being the main reason. Profitability strengthened due to changes in the product mix, but also due to the strong efforts by the Norican team to continuously improve wherever we can. The result is that we have both strengthened our competitiveness and our bottom line, resulting in 2023 being the best year in the history of the company in terms of shareholder returns.

Meanwhile, our sustainability strategy hit a crucial milestone in July, when the Science-Based Target (SBTi) initiative officially validated our emission reduction targets, and we showed healthy progress on our EcoVadis CSR rating.

If I should pick one theme to describe the year, it would be "measurable impact". We have seen real evidence of the difference we are making, both in terms of financial and non-financial performance. We are a company that is indeed Shaping Industry. That's our heritage, and that's our ambition.

2023 is the best year in Norican's history for shareholder returns

New applications

Our technology brands have once more worked both individually and as a team to meet new market needs. For example, DISA, Simpson, StrikoWestofen and Wheelabrator joined forces to offer advanced solutions for the production of high-quality aluminum castings in green sand.

Green sand casting has been used for aluminum for decades. However, demand for light metal castings and for quality and increased efficiency is rising. DISA has invested heavily in its solutions for non-iron (aluminum, brass and bronze), ready to support this growing demand. For example, USbased Boose Quality Castings installed its second DISA MATCH molding line for aluminum casting production at its Pennsylvania foundry this year.

By combining energy-efficient and advanced melting, sand mixing, green sand molding, sand reclamation and shotblasting, Norican offers foundries the opportunity to produce high quality aluminum castings at sizeable volumes and at a very competitive cost. We believe our technologies will only become more popular as an alternative to more traditional and lower speed production methods.

Broader market focus

At Norican we have been reviewing our market approach and decided to invest even more in growth. Given changes in the industrial supply chain, we see the foundry industry proliferating geographically and we want to be sure we can service our customers irrespective of where they choose to produce. We will therefore increase sales activities in South-East Asia, Latin America, as well as in the Middle East and Africa.

New digital deployments

I'm particularly pleased to report that Monitizer is spearheading the adoption of Artificial Intelligence in our customers' industries.

2023 has been a commercial breakthrough for our Monitizer offering, especially in the foundry space. With the combination of more than a hundred years of industry experience and exciting new digital products, customers are increasingly ready to deploy Monitizer into their daily operations. We see foundries in all countries embrace the idea of deploying digital technology to cut costs, reduce emissions, improve maintenance, and minimize scrap. Particular customer interest has been in our IIoT platform Monitizer | DISCOVER, which creates the basis for the rapid adoption of many more new Al/ML tools - all related to enabling smarter, data-driven production.

To name a few customers getting digitized; US-based Grede decided to place their trust in Monitizer for their group-wide operational digital strategy, and early-adopter MAT Group will now both expand its number of sites with Monitizer, and implement Monitizer | PRESCRIBE, our machine-learning production optimization solution, at its UK facility. Many more customers are joining our digital platform and we are today blessed with installations in all major markets. The development is truly exciting.

New leadership

Wheelabrator is an iconic industrial brand with a century-long history of innovation. A tremendous amount of work has been done in recent years to consolidate the many innovations and technologies that exist under the Wheelabrator brand, collecting insights from a huge installed base and feeding them into the development of new solutions that give our customers the competitive edge they need to thrive in the 21st century.

Early in 2023, we strengthened the Wheelabrator leadership team with the appointment of Lars Priess as President of Wheelabrator Wheel. Lars and the team have, based on the work already done, increased the ambition level even further. From parts to digital, from service infrastructure to equipment innovation, Lars and the Wheelabrator team are laying the foundations for significant change. Stay tuned.

Less new sand

Simpson joined the Norican family in 2022. Throughout 2023, we have been busy integrating the business, leveraging our shared infrastructure, know-how and market position. Simpson's outstanding capabilities in sand technology are already making a difference to our customers, and we remain committed to both expanding the product offering to existing Simpson customers, as well as to broadening the customer base significantly, especially outside North America.

I am particularly excited about Simpson's pneumatic sand reclamation and its potential impact for our customers. Foundry sand is a scarce resource and foundries around the world are dealing with rising costs of procuring, but even more on disposing of used sand. Reclaiming and recycling sand has been common practice for many decades, but the need for minimizing sand use has increased dramatically. At the same time, sand reclamation has to be done costefficiently and sustainably.

Simpson has a technology-leading answer to this challenge and the team has perfected the technology during 2023. What sets it apart? The pneumatic reclamation process is both less costly and it has a radically lower carbon footprint than gas-powered alternatives.

The sand pneumatic reclamation process is less costly and has a significantly lower carbon footprint than gas-powered alternatives.

Expanding the Norican scope

The above example highlights a category of new developments by Norican, which have a doublepositive impact for our customers; better production economics and lower environmental impact due to less resource consumption and emissions. In terms of Norican's commitment to SBTi, this positive impact of avoided emissions by our customers' use of our technologies is not something Norican will get credit for today. This is so-called Scope 4 emissions, which SBTi rightly cautions against the potential misuse for greenwashing. SBTi points out that Scope 4 must not offset lack of progress in reducing Scope 1, 2 & 3 emissions - own emissions and emissions related to materials and services procured by Norican.

Norican remains committed to reducing our own emissions and to leaving the planet in a better condition than we inherited it. However, we hope SBTi and others will appreciate that the biggest single impact on emissions Norican can have is through supporting our customers with production technology, which makes them able to produce more with less. Norican will fail if we do not deliver on our Scope 1, 2 and 3 promises, but we will fail even more if we are not able to have our customers use better technology. Our commitment is to focus and deliver on both.

Gratitude

Norican showed resilience again in 2023. Even without topline growth, we have strengthened profitability and we have continued to invest significantly in new products and technology. Also, we have invested in our team and welcomed many new talented colleagues. Looking into 2024 and beyond, I remain optimistic. Norican has great customers, great technology, and great people.

I thank all our customers, our suppliers and financial stakeholders for their continued trust and support. This, we never take for granted.

A special thank you goes to the almost 2,000 Noricans for another year of hard work, great achievements, and good fun. With such guardians of the great technologies we have in Norican, I am sure the best is yet to come.

Financial Highlights

Financial Highlights Year ended 31 December

Definitions of financial highlights and ratios are provided on page 88

CFO Review

Chief Financial Officer's Report

Strong performance in 2023

Revenues decreased to €513,254k in 2023 from €518,564k in 2022, a decrease of €5,310k, or 1%.

Gross margin as % of revenue increased from 29.7% in 2022 to 34.7% in 2023 on a reported basis. Adjusting for non-underlying items, the underlying gross margin % increased from 30.2% to 34.7%, driven by our aftermarket business.

SG&A increased to €117,421k in 2023, compared to €106,861k in 2022, an increase of 10% on a reported basis. Changes in currency exchange rates decreased underlying SG&A by €2,049k in 2023. Excluding the currency translation effect, and non-underlying costs, SG&A increased €8,086k, or 8%, mainly reflecting higher salary inflation and the inclusion of a full year of Simpson in the Group's results, following the acquisition in September 2022. As a percentage of revenues, underlying SG&A was 21% compared to the prior year at 19%.

Amortisation of intangible assets decreased to €9,426k in 2023, compared to €9,967k in 2022, which relates to the amortisation of customer relationships, patents and capitalised development expense.

Underlying EBITDA, which represents underlying operating earnings excluding depreciation and amortisation, grew to €82,041k in 2023 from €67,458k in 2022, an increase of €14,583k, or 22%. Changes in currency exchange rates decreased EBITDA in 2023 by €1,884k, as compared to translation rates for 2022. The growth in EBITDA reflected the improvement in gross margins across the business.

Finance costs increased to €36,453k in 2023 from €30,920k in 2022, an increase of €5,533k, or 17.9%; costs related to the refinancing of the Group's debt and increase in related interest rate. Finance income decreased by 11%, or €678k, to €5,546k in 2023, compared to €6,224k in 2022, due to lower cash balances following refinancing.

Overall foreign exchange loss in 2023 is €648k, compared to a loss of €3,396k in 2022.

The Group incurred €12,062k of non-underlying costs in 2023, compared with €10,243k in 2022. 2023 non-underlying costs mainly consist of external consulting costs on strategic projects of €9,296k. In 2022, there was a provision of €3,873k for the restructuring of European manufacturing, and integrations costs relating to the acquisition of Simpson of €1,914k.

Income tax expense increased to €13,267k in 2023, from €9,233k in 2022. The underlying tax charge in 2023 of €12,856k relates to corporate income tax across the Group's entities.

Equipment order backlog as of 31 December 2023 was €197,581k, an increase of €39,254k, or 25%, The backlog is split 40% Wheelabrator, 35% DISA, 17% StrikoWestofen, 3% ItalPresseGauss and 5% Simpson.

Cash flow

Net cash from operating activities of €45,206k in 2023 (€23,480k in 2022) was predominately attributable to higher net income for the year, as adjusted for non-cash items; demand for working capital was at a lower rate than 2022 as levels of backlog normalized. Cash paid out in taxes of €10,856k in 2023 (2022 €8,661k).

Net cash used in investing activities of €6,820k in 2023 consisted primarily of investment and capital expenditure of €6,867k. Capital expenditure included the acquisition of machinery and equipment of €1,427k, IT of €1,994k, other expenditure of €2,927k and intangible additions of €519k. Other expenditure includes €2,120k where construction is in progress.

Net cash used in investing activities of €20,710k in 2022 consisted primarily of investment and capital expenditure of €8,483k. Capital expenditure included the acquisition of machinery and equipment of €645k, IT of €1,278k, other expenditure of €3,565k and intangible additions of €2,995k. Other expenditure includes €2,987k where construction is in progress.

Net cash used in financing activities amounted to €111,121k in 2023 (2022: €27,332k). This is comprised primarily of repayment of bond debt of €340,000k, offset by new borrowings of €270,000k; €20,539k finance costs paid (2022: €19,667k) and €5,040k in payments on the Group's lease liabilities (2022: €6,856k).

Debt refinancing, liquidity and capital resources

Cash includes cash on hand and in banks and investments in money market instruments totalling €71,937k and €146,979k as of 31 December 2023 and 2022, respectively.

On 28 February 2023, the Group completed the refinancing of its debt. The €340m Senior Secured Notes, issued in 2017, were redeemed in full at par, plus accrued interest. New loans totalling €270m from a consortium of Nordic banks and investment funds, including a €45m shareholder loan, plus a new €60m revolving credit facility ("RCF") provided by certain members of the financing consortium, were put in place. The weighted average maturity of the term loans is greater than four years and the weighted average interest margin is under six per cent.

Our business has required and will continue to require liquidity, primarily to meet our debt service requirements, fund capital expenditures and fund growth of our working capital. Our principal sources of liquidity are accumulated cash generated from our operating activities and the Group's RCF. Following the refinancing, the Group has approximately €70m of cash at hand plus the RCF of €60m, of which only €18m is at present used for bank guarantees, leaving the company with ample available liquidity. Based on our current level of operations, we believe our cash flow from operations, available borrowings under the Group's RCF, and cash and cash equivalents will be adequate to meet our liquidity needs.

Risk factors and outlook for 2024

Subject to the risk factors below, 2024 revenue is anticipated to grow in the mid-single digits year-on-year, with underlying EBITDA margins remaining in the 15% to 16% range. We remain cautious about the outlook for 2024, mainly due to concerns around the potential for recessionary and inflationary pressures in many of our key markets. The pace at which the Chinese economy recovers to pre-covid levels may impact demand; however, there are tentative signs that inflation levels across all developed economies have started to moderate.

We started 2024 with an equipment backlog up 25% compared to the level we started 2023 with, which should provide revenue coverage in line with what has been required historically to deliver plan numbers.

Supply chain behaviour may be impacted by global events, such as those currently seen in the Red Sea, with both cost and lead times under pressure. This may impact the conversion of work in progress to finished goods and therefore, the results of operations, our financial condition and cash flows. Norican's main customers are ferrous metal foundries and light metal die casters. Our customers' main markets include automotive, industrial, construction and other sectors, and can be impacted by economic fluctuations; this presents a demand risk that is outside of our control, and which cannot be accurately predicted. Any sustained downturn of demand in our customers' main markets may have an adverse effect on our business, financial position and results of operations.

We thank all our people and partners around the world, as well as our shareholders, for being on this path with us.

Sustainability

Sustainability, in all its facets, is the biggest challenge of our time. Never has this been more important than in 2023, the hottest year on record. At Norican, we think beyond the immediate future. Our business is built on long-term commitments - to our people, our customers and the communities we live, work and operate in. We care about the future of industry. Investing in sustainability is investing in that future and preserving our planet not just for the next generation, but many after that.

Here, we report on our progress in 2023.

Our progress in numbers

^* The SBTi data for year 2023 is not ready at the time of this report being published, results will be published on our website once finalized.

Where we can make a difference

A global business with 2,000 people, 26,000 machines installed at customers worldwide, powering energy and resource-intensive processes, plus our own manufacturing facilities on three continents: our environmental footprint is significant, but so is our capacity to reduce it; our impact on the communities and industries we operate in is great, but so is our ability to shape them for the better. And lead industry into a more sustainable future.

Taking action, taking the lead

Our sustainability strategy reflects the different ways we can make a difference and our areas of influence. As an equipment and technology provider to industry, our direct impact and our own emissions are overshadowed by what's happening upstream and downstream from us. That is why making our own operations more sustainable is not enough. The pillars of our strategy are therefore: internal transformation, influence through leadership and change through innovation. This is how we do it:

Internal transformation

To aggressively drive the sustainable transformation of our operations, we put binding, evidence-based commitments at the heart of our efforts. Driven by dedicated central teams that support the regions in gathering data, prioritizing actions, applying policies and implementing initiatives.

Setting externally validated, published and tracked science-based emission reduction targets helps us to systematically work through an ambitious decarbonization roadmap, as well as holding us accountable.

A comprehensive ESG assessment framework, EcoVadis, ensures robust global governance for our environmental, social and ethical business practices. Creating clear, formal policies and codes of conduct, while embedding all aspects of sustainability in them, gives us a structure for progress and pushes us towards the highest, globally recognized standards of corporate governance.

In a dynamic and ever-evolving world, we recognize the significant impact that environmental and climate changes can have on our operations. These changes, whether driven by new legislation like the CSRD or evolving customer expectations, necessitate proactive risk mitigation strategies. We address these challenges by diligently monitoring regulatory developments, ensuring that we remain informed and adaptive. Engaging with key stakeholders is integral to our approach, as it provides valuable insights into emerging trends and expectations. In tandem with establishing science-based targets, this proactive stance enables us not only to meet regulatory requirements but also to foresee and proactively address potential challenges.

Influence through leadership

We actively engage customers and suppliers and encourage them to join us in committing to emissions reduction targets and improved sustainability practices. We use our influence in our customers' industries to educate and share learnings.

Leading is as much communicating as acting. It is part of our strategy to seek out opportunities to influence, educate and inform. Sustainability has therefore become an important part of all our communications, including everyday customer conversations.

Change through innovation

We are a family of industrial technology businesses who all have innovation in their DNA. Our biggest contribution to a more sustainable future will be the innovations in our customers' processes that help reduce emissions and make sustainable industry possible.

In the short-term, this will be technology that saves energy, reduces scrap, minimizes waste and enables circularity.

Avoided emissions, often called 'Scope 4', is an area where innovation can really deliver. Instead of reducing the emissions of a process, can they be avoided entirely by changing the process? Similarly, new technical processes that enable new, more sustainable products or materials will be needed to create tomorrow's world. Where these new products and processes involve metal, we will be there to shape and enable them.

Environment

Our environmental impact

As a technology and equipment provider to carbon-intensive industries around the world, we have the power to influence and shape those industries and help reduce their and our impact on the planet. As employers and citizens, we can make our world better every day. We take this role of influence seriously.

We are reducing our emissions

At the end of 2021, we committed to setting ambitious emissions reduction targets under the Science-Based Targets initiative (SBTi). In November 2022, ahead of our deadline and following significant work to understand our footprint and baseline, we submitted our targets for validation to the SBTi.

While our targets were being analyzed and validated by the SBTi, we commenced our first year of working towards those targets and systematically tackling our emissions. Our targets were officially confirmed by the SBTi in July 2023 and our methodology is aligned to SBTi guidelines, demonstrating our dedication to scientifically rigorous and credible emission reduction goals. Our targets are:

Our successes

The 2023 reduction in Scope 1 & 2 emissions was achieved by converting to 100% renewable energy at our Wheelabrator Technology Center in Metelen, Germany and ItalPresseGauss Technology Center in Brescia, Italy.

In 2023 we invested in phasing out natural gas for our industrial application in Waukesha, USA. The new technical solution will be ready at the beginning of 2024. In addition to this, we have made a third party agreement in India with a green energy company based in Karnadaka, India who will provide our Tumkur facility with energy in 2024.

Small changes, big impact

While phasing out natural gas/electrification and switching to renewable electricity are among our biggest wins for rapid emission reduction, behavior change and smaller initiatives also contribute to our longer-term reduction pathway.

Our new electric car policy states that all Norican company-owned vehicles purchased or leased after 1 December 2022 shall be electric vehicles (note this expressly excludes hybrid vehicles). For service vans, a designated transition period has been agreed to integrate electric vehicles while maintaining efficient customer service. We will review the status with the service teams during 2024 to ensure progress towards a full transition to electric vehicles. To further support the roll-out of electric vehicles, three new electric forklifts have replaced diesel powered ones at our Changzhou site in China. We are expanding our EV charging points, in 2023 we installed 19 chargers across our workshops in China, 16 at our facility in Metelen, Germany, 6 in Charleville, France and 2 in Pribram, Czech Republic. We will continue to roll these out across global locations throughout 2024.

We are engaging our people and partners

Engaging and influencing is an important pillar of our sustainability strategy. This applies both to our own organization and those within our sphere of influence (suppliers, partners, customers). In addition to our Scope 3 targets, under which we commit to engaging our suppliers and customers to join us on an SBTi pathway. We are also embedding sustainability criteria in our procurement and purchasing processes and building a culture with sustainability at its heart.

The main tools for driving sustainable procurement practice at Norican are:

A new Supplier Code of Conduct

to ensure our suppliers and contractors work to the same high standards as we do. The code requires them to operate in an environmentally responsible manner, to respect human rights and to refrain from using conflict materials.

This Code of Conduct defines all our principles and requirements for all suppliers of goods and services, for subcontractors and their subsidiaries. It also covers their supply chains and partners in the chain of supplying to Norican Group. It covers responsibility towards society, the environment and the people involved in the production of goods and/or provision of services.

Supplier sustainability assessments

of new suppliers; sustainability criteria forms part of every purchasing decision - to continuously improve and lift the quality of our suppliers in a sustainability context.

An upgraded Procurement Policy and preferred vendor program

to further incentivize our suppliers to get on board with the sustainability journey and our supplier code of conduct.

Training and engagement

We prepared a specific outreach and engagement program with our suppliers around science-based targets for roll-out in 2024. This reflects our Scope 3 targets under SBTi and aims to increase the percentage of businesses committed to science-based targets among our suppliers (working towards our 25% by 2027 goal).

Our strategy here is to focus on dialogues with small and medium sized (SME) supplier businesses (defined as those with less than 250 employees, turnover under €40m, assets below €20m). The rationale behind this decision is that big international companies will join SBTi regardless of our activities and our leverage is small, whereas SMEs are less likely to join of their own accord and our leverage is greater. All preparatory work for this program was completed in 2023. A first phase of supplier meetings is scheduled for Q1 2024, which will be followed by an initial evaluation. In China and India we held supplier days where we informed and engaged them on the topics of sustainability and SBTi.

Teams in the regions participated in engagement and training events with partners, customers and agents. For example, the APAC team presented to other local companies about our sustainability strategy at an event organized by the local government, and also delivered SBTi training to all of our agents in Southeast Asia. The North American team took part in an educational event series as a member of the Suppliers Partnership for the Environment, where they had opportunity to speak to automotive manufacturers and Tier 1 suppliers about decarbonizing their supply chain and reducing energy consumption.

We conducted sustainability training with our sales teams (focusing on how we can work as a sustainability partner for our customers) and have built 'interest in sustainability topics' into our CRM system to track traction among customers via sales enquiries.

The target: all OEM orders received this year should contain information on the purchaser's interest in sustainability.

All this lays the foundations for the second part of our Scope 3 commitments, increasing the share of customers signed up to setting science-based emission reduction targets, but also supports our wider goals of driving the sustainable transformation of industry.

We are reducing waste

Reducing waste and recycling resources are not new to us at Norican. Building equipment and refining processes that deploy energy and resources in even more efficient ways is in our DNA. Today, we build on that cultural legacy, expanding the avoidance of waste to all parts of our organization and all our regions.

What we did

Our global focus on lean manufacturing continues and plays an important role in reducing waste in our manufacturing and assembly facilities. In addition to lean training programs across our regions (with a total of 355 people participating in online training sessions this year), 2023 saw the introduction of a specific incentive scheme for employees at different levels at our two manufacturing sites in China. The scheme offers weekly and monthly lean champion rewards as well as various additional opportunities for distinction.

The Norican and DISA HQ in Taastrup has further improved its food waste avoidance schemes at its canteen, with food waste weighed four times a day to better manage the flow of food and better time food preparation. Any remaining food waste is turned into biogas at a waste facility.

The StrikoWestofen HQ in Wiehl and the Wheelabrator Technology Center in Metelen both installed a water dispenser in 2023 and provided sustainable water bottles to all employees to cut down on disposable cups and bottles.

Coinciding with World Recycling Day, the IT team in Altrincham, UK, worked with a local company to responsibly dispose of and recycle electronic equipment, including monitors, keyboards, laptops, printers and PCs. More than 100 electronic items were recycled or responsibly disposed of.

Avoiding waste was also a key consideration when planning our first post-pandemic GIFA presence in Düsseldorf in June. From ensuring displays are reusable to incorporating recyclable materials, from taking along fewer pieces of equipment to ensuring sustainable giveaways have a life beyond the exhibition.

Sharing and consolidating infrastructure is another way of making better use of resources. In 2023, we merged some of our warehouses for a more efficient use of space. For example in North America Simpson moved its inventory into the LaGrange warehouse from Aurora and into Taastrup, Denmark from Euskirchen, Germany. The Simpson team also decreased its office footprint in Euskirchen by moving into a state-of-the-art business center nearby.

We are enabling sustainable industry

We are in a unique position to shape whole industrial processes for a more sustainable future. Whether that is making today's processes sustainable through decarbonization, recycling and even more precise use of resources, or enabling the manufacturing of new, more sustainable products. Product innovation is the most important long-term pillar of our sustainable strategy. It is less immediately measurable and often covers emissions or waste reduced not in our own organization but downstream from us at customers or end users, but it can make a huge difference to the overall environmental impact of industry.

What we did

In 2023, we saw a record number of customers deploy our Monitizer IIoT platform at a large scale, actively using it to track and reduce emissions. MAT group is one of many customers that is now helping us tell a compelling story about the combined benefits of digital technology in foundry settings. It's an important proof point for the simple fact that - with the right tools - sustainability and competitive advantage can go hand in hand. Monitizer is a cost-effective sustainability technology - a powerful tool in customer conversations around sustainability. In addition to better understanding the emission intensity of their process, Monitizer's powerful Al tools open the door to transformational scrap reduction, with positive knock-on effects on emission footprints across rework, remelting, recasting and transport.

Our own emission reduction roadmap flagged gas-powered thermal sand reclamation at our Waukesha foundry as a priority emission item to tackle. Which we will do in 2024. Luckily, we have just the solution in our own product portfolio. Simpson's pneumatic Pro-Claim sand reclamation technology is leading the way in low-emission reconditioning of foundry sand, ensuring foundries don't improve their sand recycling rate to the detriment of their emission reduction progress. Again, we have invested further in this product in 2023 and believe in its power to transform foundry emissions as well as performance. We will see for ourselves in 2024.

Lastly, StrikoWestofen's melting and dosing technology has made significant strides in making furnaces more energy-efficient. The team is now working on new, more sustainable melting technology that reduces aluminum foundries' dependency on natural gas. Today, furnaces can, for example, run on biogas as a first step. But we are investing in research & development to soon offer the furnace of the future.

Social

Our social impact

As both a local and global employer, and as technical leaders in our fields, we strive to strengthen the communities we're part of and offer rewarding, future-facing careers in industry. Our employees and their families are part of our Norican family. We invest in their skills and wellbeing, and in their place of work. We engage our technical and professional communities to drive progress in our industries and to raise the next generation of engineers.

We invest in future skills and education

Our relationships with academic and educational institutions build links into industrial practice for students and support the continued development of engineering talent around the world. Equally, our trade associations play a key role in driving our industries forward and we nurture those professional ecosystems as an important mechanism for shaping industry. We invest in all those relationships, through donations, scholarships, participation, and knowledge sharing. Here are some of the things we have done:

For the third year running - five "DISAMATIC scholarships" were awarded to outstanding B Tech students at the Indian Institute of Advanced Manufacturing Technology (IIAMT). The program was born out of a long-term partnership between Norican and the IIAMT, that also includes knowledge sharing and networking between our team in India and the faculty.

We continued Simpson's support of the Foundry Educational Foundation that goes all the way back to the FEF's inception in 1947. Championing the science of sand, we supplied equipment to FEF universities: A Hartley 2552-B1 Compactibility Controller and a 1F Mix- Muller for the University of Northern lowa; a range of sand testing equipment for Texas State University's onsite foundry. The equipment will enhance education and smooth their transition into the industry.

In North America we attended events and seminars of the American Foundry Society, the Ductile Iron Society, the FEF and FEF-associated universities. This included technical presentations on digital foundry sand control at Western Michigan University and at AFS Copper Alloys, as well as activities at numerous career fairs and Manufacturing Day celebrations.

The Monitizer team held a number of educational workshops worldwide on IIoT and digital tools in foundry contexts, both with customers and a wider audience, to further digital know-how in the industry. In France, Norican sponsored the French Foundry Technical Association's and AAEESFF's French Foundry ski competition, in support of the local foundry community.

The Norican team in APAC hosted an educational event for automotive supply chain partners and customers in Hefei, China, on next-generation technology for the production of large but lightweight automotive components.

We engage our local workforces and their families

We strive to build strong links into our local communities beyond professional and academic networks. Our people and their families are part of those communities and celebrating with them and sharing our world with their families is an important part of giving back and being present. Here are some of the things we have done:

StrikoWestofen held Spring Festival celebrations at the Technology Center in Wiehl, Germany, featuring outdoor activities like air hockey, table football and a bungee run, as well as barbecue food and a bar.

Wheelabrator held a family open day at its new Technology Center in Metelen, Germany, with employees' partners and children getting a look behind the scenes, peeks inside machines and have a go at steering the big robot arm.

Wheelabrator in France threw a summer party for employees and families at the Technology Center in Charleville.

Norican Changzhou in China held Chinese New Year celebrations, with the management handing out red luck parcels to employees.

The team in China served a special lunch with traditional food at its canteen for the traditional Dragon Boat Festival.

Norican in India marked International Women's Day with a range of local activities; in February, Norican India celebrated the outstanding employee teams and individual contributors in a glittering ceremony at the Tumkur factory.

We conducted our first global annual engagement survey, allowing employees to share feedback so we can identify what is important to them and ensure we offer a happy, thriving and inclusive working environment for all. A key take-away from the first survey was to improve visibility of the global leadership team and to ensure we better communicate our vision and strategic direction for the group to all employees. In response, we have rolled out regular updates and informal communications from the leadership team, as part of our internal communications program.

Our dedicated team stands at the core of our success, and in recognition of their importance, we have built on our existing global HR policy. As we progress through 2024, our focus remains on reinforcing and expanding this framework. Central to our strategy is talent retention, recognizing its pivotal role in our sustained success. We place significant emphasis on employee well-being, viewing it as a fundamental necessity for ensuring the happiness and productivity of our workforce. In the coming year, we are committed to furthering our efforts to enhance our employee brand. For instance, in Q1, the UK will introduce a new HR structure defined by a clear and transparent band framework. Additionally, our team in India has exciting plans, including hosting awards to celebrate local successes across all levels of teams. These initiatives underscore our dedication to fostering a supportive and rewarding work environment globally.

We keep our people and their worlds safe

Ensuring a strong safety culture as well as continuous monitoring and improvement of health and safety reporting is an essential part of looking after our employees. In 2022, we rolled out a new health and safety reporting system to identify risk on an ongoing basis and built on this throughout 2023.

Where we spot a particular risk, we remove it or address it through training, awareness days and refreshers. Our goal: zero work-related injuries. Avoiding physical injury is only one, albeit essential, part of keeping people safe and well. Protecting their work/life balance and ensuring we foster an environment free from discriminatory or inappropriate behavior are also key.

We are proud of our safety performance - measured by Lost Time Incident Rate - (LTIR) that has been continuously improving since 2017. The improvements are visible for each entity in the Group and have consistently outperformed Danish manufacturing sector. We use Danish safety performance reporting as benchmark because of its mature, comprehensive and reliability reporting scheme.

What we did

We addressed a number of risks identified either in health & safety reporting or through proactive assessment this year:

At our spare parts manufacturing facility Waukesha, we phased out silica-based grinding belts, following a trial of a new alternative. Extensive crystalline silica exposure has been linked to a variety of diseases.

At our manufacturing facility and warehouse in Pribram, Czech Republic, we recorded two accidents during manual cutting of rubber (with a knife), so we have decided to invest in a CNC machine that can laser-cut rubber elements. The machine is due to be installed in spring 2024.

At our manufacturing facility in Tumkur, India, we have rolled our behaviorbased safety (BBS) training and health talks for workers to improved safety awareness, reduce risks, and foster a positive organizational culture. Norican in India also ran an awareness training session for staff under the PoSH Act 2013 - legislation on the prevention of sexual harassment in the workplace.

We shared how to add global time zones in digital calendars to help colleagues better understand and be respectful of colleagues' work hours and, crucially, 'out of hours' time when contacting them and booking meetings.

We are building a diverse workforce

Diversity helps us think and act in high-performing teams that reflect our current and future customer audiences, as well as the world we live in. It ensures that, collectively, we have better ideas, make better decisions and understand all our customers, not just the ones that share our gender, age, background or ethnicity.

After reworking our global online recruitment pages to ensure we remain visible as an equal opportunities employer, we have been working towards our goal of increasing the representation of diversity in our workforce without compromising on competency or merit.

Our global senior management team is a diverse mix of 14 nationalities, with 25% of this team and one of our five executive team members being women. Despite not achieving our target to include a female member on our board by 2024, we remain unwavering in our commitment. When a position becomes available, we are dedicated to actively considering and prioritizing individuals from underrepresented genders. This commitment aims to foster diversity across all Norican teams without compromising the selection of the best candidate.

Under Danish legislation Norican Group A/S is exempt from setting a target for the underrepresented gender in top management. However, we will aim to increase the underrepresented gender in senior management positions in the coming years.

^* Norican Senior Team includes Norican Executive team, Global Leadership team, CFOs and global business leads.

Governance

Our governance

Good governance is more than mere compliance with local laws. We hold ourselves to high standards and we want those high standards to apply in all our communities. Over the past two years, we have systematically codified these standards where they weren't codified before or have updated existing codes and policies. We used the EcoVadis framework to identify gaps and areas for improvement in our corporate governance.

Policies, certifications and processes

Certification

Company policies regarding environment and climate have been implemented at a site-specific level and include ISO 14001:2015 certification, which specifies the requirements for an environmental management system that can be used to enhance environmental performance based on mapping the environmental impact from the site-specific activities.

We also have:

Health and Safety

Our reporting system for accidents and near misses was reinforced in 2022 and has been running for a first full year in 2023. It has clear targets for recordable incidents and lost time and is audited regularly, by internal and external auditors. All our locations now report health and safety statistics monthly, and these are tracked against targets that actively encourage to record risks. The global health & safety team conducts monthly calls to plan training and awareness activity against reported risks and incidents to continuously make progress towards our non-financial KPI of ZERO incidents.

We strive towards zero safety incidents at all of our locations. We measure this with lost time incidents rate (LTIR) and recordable incidents rate (RIR). The target set for 2023 has been achieved and we will continue to monitor and set high expectations for 2024.

Code of Conduct

The Norican Code of Conduct has group level policies related to ethics and with respect to compliance with applicable laws in each jurisdiction. These policies apply to each subsidiary in Norican Group. Accordingly, each subsidiary shall comply with applicable laws, rules and regulations at a local level. If there is any conflict or ambiguity between local laws or regulations and our Code, then we must apply the higher standard.

We have reporting systems to ensure an efficient and diligent process in handling the reporting of possible violations. Norican's General Counsel is the responsible officer for such reporting procedures.

We have procedures in place for reporting and have a multilingual whistleblowing hotline 'Speak Up', which is provided by a third party, WhistleB, and is available 24 hours a day, 7 days a week, 365 days a year. It allows anyone to anonymously report any behavior which contravenes our Code of Conduct.

We ask colleagues to sign the Code of Conduct at their annual appraisal and as part of the onboarding process, however we do not see this as an annual event but it is embedded into our daily way of working.

Supplier Code of Conduct

We expect our suppliers and contractors to work with the high standards we do, and 89% of our 'A suppliers' signed the code in 2023. We also trained 100% of relevant employees on the importance of it. The Code of Conduct for Suppliers requires them to operate in an environmentally responsible manner, to respect human rights and to refrain from using conflict materials.

This Code of Conduct defines all our principles and requirements for all suppliers of goods and services, for subcontractors and their subsidiaries. It also covers their supply chains and partners in the chain of supplying to Norican Group. It covers responsibility towards society, the environment and the people involved in the production of goods and/or provision of services.

Our multilingual whistleblowing hotline is available 24 hours a day, 7 days a week, 365 days a year.

Sustainable Procurement Policy

Norican is committed to continue leading our industries into a sustainable future. With our global reach and several thousand active suppliers, sustainable procurement is a key lever in this, alongside ethics, labor, anti corruption and environment - together, these are the four pillars of the EcoVadis framework that we have subscribed to.

Sustainable procurement is not a one-time action or a program to satisfy short term financial objectives - it goes above and beyond, and is all about building a culture, a mindset, and expanding it to our suppliers as well as taking input from our external business partners.

To focus our purchasing and procurement practices towards sustainable continuous improvement, we have set out targets, both in the short- and longer-term. These metrics are re-evaluated on a regular basis to ensure our ambitions are followed through, and the necessary KPIs will be monitored to track success. Through a focused effort we have been able to lift the sustainable procurement score to the top 3% of all companies rated by Ecovadis in the industry.

This is not a one time exercise, but a continuous effort to build in the sustainability element all the way from the Procurement Policy through to an operational vendor relation level of adding sustainability as the 4th KPI in addition to quality, on time delivery and cost.

Modern Slavery / Human Rights

Our zero-tolerance approach to modern slavery, including forced labor, human trafficking, and child labor, is described in our Code of Conduct. We have identified potential risks within the business and have effective systems in place to ensure modern slavery or child labor is not taking place in our business or our supply chain. Our whistleblowing hotline is one way of reporting and upholding our zero-tolerance approach.

The compliance with these policies is monitored on an ongoing basis and tested through an annual reporting and certification procedure applicable to all subsidiaries. There have been no reports of breaches regarding modern slavery and human rights in 2023, we will continue to monitor closely but do not expect there to be any changes throughout 2024.

Anti-Bribery and Anti-Corruption

We want to compete fairly wherever we operate and do not tolerate bribery, kickbacks, fraud, money-laundering, or any other improper payment. We have a clear Anti- Bribery Policy and will comply with all applicable local anti-bribery and anti-corruption laws.

We have identified risks within Norican and our supply chain and are very clear that any violation of the Anti-Bribery Policy by any employee, manager, officer or director will result in sanctions which may include dismissal for cause and/or criminal and civil proceedings. The consequence of a violation of the policy by any third party, including consultants, suppliers and contractors doing any type of work for Norican, will be termination of any agency, representative, distributor or similar agreement and/or criminal and civil proceedings if appropriate. We are not aware of any breaches regarding corruption in 2023 and do not expect this to change throughout 2024 as we continue to include training in our onboarding process and Code of Conduct annual refresher.

Privacy policy, data ethics and personal data

We have a Privacy Policy in place that ensures the correct handling of personal data.

We do not process large amounts of personal data, so we do not have a dedicated data ethics policy.

Personal data is processed in accordance with the EU General Data Protection Regulation (GDPR) which is implemented globally. We have now also been awarded BCR (Binding Corporate Rules) approval, which means we have a clear code of conduct for applying GDPR standards globally and across territories.

If personal data is not related to the fulfilment of an agreement, nor required to comply with applicable laws, the relevant person's consent is obtained to hold their personal data until such a time that they request it be removed.

Norican does not actively buy customer marketing lists as we do not consider this an ethically sound business practice. Our database is regularly cleansed to ensure the data is accurate and complies with our Privacy Policy.

Norican does not sell personal data nor share personal data with third parties unless legally required or needed to fulfil an agreement with the person.

All personal data is protected by our IT security system, and the majority is physically located inside the EU. Outside the EU, data is located on Norican servers, unless legal or contractual requirements require data to be shared with authorities or other 3rd parties.

Directors' Statement

Statement by Board of Directors and Executive Board

The Board of Directors and the Executive Board have today considered and approved the Annual Report of Norican Global A/S and its subsidiaries for the period from 1 January 2023 to 31 December 2023.

The Annual Report is presented in accordance with IFRS Accounting Standards as adopted by the European Union ("EU") and the disclosure requirements applying to Danish companies.

In our opinion, the consolidated financial statements and the Parent Company's financial statements give a true and fair view of the Group's and the Parent Company's financial position at 31 December 2023 and the results of their operations and cash flows for the period from 1 January 2023 to 31 December 2023.

In our opinion, Management's Review includes a fair review of the development in the Group's and the Parent Company's business and financial matters, the results for the year and of the Parent's financial position and the financial position as a whole for the entities included in the consolidated financial statements, together with a description of the principal risks and uncertainties that the Group and the Parent Company face.

We recommend that the Annual Report be approved at the Annual General Meeting.

Independent Auditor's Report to the shareholders of Norican Global A/S

Opinion

We have audited the consolidated financial statements and the parent financial statements of for the financial year 1 January 2023 to 31 December 2023, which comprise the income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including material accounting policy information, for the Group as well as the Parent. The consolidated financial statements and the parent financial statements are prepared in accordance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act.

In our opinion, the consolidated financial statements and the parent financial statements give a true and fair view of the Group's and the Parent's financial position at 31 December 2023, and of the results of their operations and cash flows for the financial year 1 January 2023 to 31 December 2023 in accordance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the "Auditor's responsibilities for the audit of the consolidated financial statements and the parent financial statements" section of this auditor's report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Statement on the management commentary

Management is responsible for the management commentary.

Our opinion on the consolidated financial statements and the parent financial statements does not cover the management commentary, and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements and the parent financial statements, our responsibility is to read the management commentary and, in doing so, consider whether the management commentary is materially inconsistent with the consolidated financial statements and the parent financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

Moreover, it is our responsibility to consider whether the management commentary provides the information required by relevant law and regulations.

Based on the work we have performed, we conclude that the management commentary is in accordance with the consolidated financial statements and the parent financial statements and has been prepared in accordance with the information required by relevant law and regulations. We did not identify any material misstatement of the management commentary.

Management's responsibilities for the consolidated financial statements and the parent financial statements

Management is responsible for the preparation of consolidated financial statements and parent financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of consolidated financial statements and parent financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements and the parent financial statements, Management is responsible for assessing the Group's and the Parent's ability to continue as a going concern, for disclosing, as applicable, matters related to going concern, and for using the going concern basis of accounting in preparing the consolidated financial statements and the parent financial statements unless Management either intends to liquidate the Group or the Entity or to cease operations, or has no realistic alternative but to do so.

Auditor's responsibilities for the audit of the consolidated financial statements and the parent financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements and the parent financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements and these parent financial statements.

As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

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.

Financial Statements

Consolidated Financial Statements

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

1. Summary of material accounting policies

Norican Global was formed on 11 December 2014 by Altor Fund IV Holding AB. On 26 February 2015, Norican A/S, a wholly owned subsidiary of the Parent Company, acquired Norican Holdings ApS and its subsidiary companies through the purchase of the entire share capital of Norican Holdings ApS, also a Danish company, pursuant to an agreement dated 18 December 2014.

Basis of accounting

The Annual Report of Norican Global A/S ("Norican Global" or "Parent Company,") a Danish company, and its subsidiary companies (collectively, "Norican Group" or the "Group"), has been prepared in accordance with IFRS Accounting Standards ("IFRS"), as adopted by the EU, and additional Danish disclosure requirements applicable to reporting class C enterprises (large), including the statutory order on adoption of IFRS issued pursuant to the Danish Financial Statements Act.

The consolidated financial statements are presented in euros, as this is the major currency in which revenues and capital transactions are denominated.

Materiality in financial reporting

Management provides specific disclosures required by IFRS unless the information is not applicable or is considered immaterial to the decision making of the primary users of these financial statements.

The principal accounting policies adopted are set out below.

Effect of new accounting standards

Norican Group has adopted all new, amended or revised accounting standards and interpretations as published by the IASB and adopted by the EU effective for the accounting period beginning on 1 January 2023. Such implementation has not had a material impact on the Group's financial statements.

Effect of new accounting standards not yet in force

A number of new IFRS standards, amended standards and IFRIC interpretations, which are effective on or after 1 January 2024, have not been implemented. Based on a preliminary assessment it is estimated that these standards and interpretations will have no material impact on the consolidated financial statements.

Going concern

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Group have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Parent Company, its wholly owned subsidiaries and its majority owned Indian subsidiary. The consolidated financial statements are prepared on the basis of financial statements of all Group enterprises prepared under the Group's accounting policies by combining accounting items of a uniform nature. All intercompany income and expenses, unrealised intercompany profits and losses, balances and shareholdings have been eliminated in consolidation.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group.

Business combinations

Newly acquired or newly established companies and activities are recognised in the consolidated financial statements from the date of acquisition or establishment. The date of acquisition is the date when control of the company or activity actually passes to the Group. Business combinations are accounted for using the acquisition method from the date of obtaining control, according to which the identifiable assets, liabilities and contingent liabilities of companies acquired are measured at fair value at the date of acquisition. Non-current assets held for sale are, however, measured at fair value less expected costs to sell.

The cost of a company or activity is the fair value of the consideration paid. If the final determination of the consideration is conditional on one or more future events these are recognised at their fair value as of the acquisition date. Any excess of the cost of an acquired company or activity over the fair value of the acquired assets, liabilities and contingent liabilities is recognised as goodwill and tested for impairment at least annually. Restructuring costs are only recognised in the take-over balance sheet if they represent a liability to the acquired company. The tax effect of revaluations is taken into account.

Costs that can be attributed directly to the transfer of ownership are recognised in the income statement when they are incurred. Adjustments to estimates of conditional consideration are generally recognised directly in the consolidated income statement.

If uncertainties regarding the measurement of acquired identifiable assets, liabilities, contingent liabilities or the consideration for the business combination exist at the acquisition date, initial recognition takes place on the basis of preliminary fair values. If identifiable assets, liabilities, contingent liabilities and the consideration for the business combination are subsequently determined to have had a materially different fair value at the acquisition date than first assumed, goodwill is adjusted up until 12 months after the acquisition date. The effect of material adjustments is recognised in the opening equity, and the comparative figures are restated accordingly. Goodwill is not adjusted subsequently except in the event of material errors.

Sold or liquidated entities are excluded from consolidation at the date of transfer of the control of the enterprise. The date of disposal is the date when control of the company actually passes to a third party. Gains or losses on disposal of entities are stated as the difference between the disposal amount and the carrying amount if net assets including goodwill at the date of disposal, accumulated foreign exchange adjustments recognised in other comprehensive income, and anticipated costs. The disposal amount is measured as the fair value of the consideration received.

Foreign currencies

A functional currency is determined for each Group entity. Items included in the financial statements of all Group undertakings are measured using that entity's function currency, which is the currency used in the primary financial environment in which the individual Group entity operates. The consolidated financial statements are presented in Euros, which is the parent company's functional and presentation currency.

Foreign currency transactions are translated into the functional currency using the rates of exchange prevailing at the dates of the transactions. In order to hedge its exposure to certain foreign exchange risks, the Group enters into forward contracts and/or currency swaps. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges. Property, plant and equipment, intangible assets and other non-monetary assets that have been purchased in foreign currencies and measured at historical cost are translated at the transaction date.

On consolidation, the assets and liabilities of all Group's undertakings are translated into the presentation currency (euros) at the exchange rates prevailing at the balance sheet date. Income and expense items are translated at the average exchange rates for the period.

Where loans are made between two subsidiaries with different functional currencies, currency translation differences arise in one or both subsidiaries. In accordance with IAS 21, currency translation differences for intercompany loans that are not considered part of the investment in subsidiaries are recognised in the consolidated statement of comprehensive income.

Revenue recognition

The Group provides equipment, parts, technology and services to customers by manufacturing equipment and parts and providing technology and services which enable our customers to mold, melt, cast, clean, strengthen or polish their metallic parts.

Revenue is recognised net of VAT and taxes collected on behalf of third parties, and net of discounts.

Revenue from product sales is generally recognised at a point in time, which is typically upon delivery of the products, provided there are no significant uncertainties regarding customer acceptance, persuasive evidence of an arrangement exists, the sales price is fixed and determinable, and it is probable that the sale is collectible. For arrangements that include multiple performance obligations, the Group allocates revenue to each performance obligation based on estimates of the price that would be charged to the customer for each promised product or service if it were sold on a standalone basis.

Service revenues are recognised in the period in which the services are performed.

Allowances for returns, discounts and uncollectable accounts are recorded when circumstances indicate there is a risk an account is uncollectable. Amounts billed to customers for shipping and handling are included in net sales and are recorded upon delivery of goods to customers. Costs of providing these services are included in cost of sales. Capital equipment sales generally require the customer to make advance cash payments as work progresses. Revenue associated with advance payments is generally recognised when the significant risk and rewards of ownership have passed to the customer, typically at delivery.

The Group does not have any material contracts where the period between the transfer of the promised products to the customer and payment by the customer exceeds one year. As a result, the Group does not adjust any of the transaction prices for the time value of money.

Cost of sales

Cost of sales are recognised as the associated revenue is recognised. Cost of sales include manufacturing costs, movements in provisions for inventories, inventory write-offs and impairment charges in relation to manufacturing assets.

Selling, general & administrative expenses

Selling, general & administrative expenses are recognised as incurred, and include staff costs, commission payments to external sales agents, doubtful debt allowance, other sales and marketing costs, and expenses for management and administration of the Group.

Finance income and costs

Interest receivable and payable on bank deposits and borrowings is credited or charged to finance income and finance costs as it falls due.

Debt issuance costs are included in the value of debt and are amortised using a method that approximates the effective interest rate method over the term of the underlying credit facility or loan. The amortisation of these costs is charged to finance costs.

Costs incurred in respect of exploratory refinancing activity that does not result in new debt being issued to the Group are expensed as incurred, and included in finance costs.

Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are included in finance income and finance costs, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

Government grants

Government grants are recognised in the consolidated income statement so as to match with the related expenses that they are intended to compensate. Where grants are received in advance of the related expenses, they are initially recognised in the consolidated statement of financial position under 'trade and other payables' as deferred income and released to net off against the related expenditure when incurred.

Non-underlying items

The Group has chosen to present the consolidated income statement incorporating the disclosure of underlying and non-underlying items separately. Non-underlying items have been defined as relating to costs which are not incurred in the normal course of business or, due to their size, nature and irregularity are not included in the assessment of financial performance in order to reflect management's view of the core trading performance of the Group.

Income taxes

Income taxes for the year comprise current and deferred tax, using rates enacted or substantively enacted at the balance sheet date.

Current tax is the expected tax payable on the taxable income for the year, any adjustments to tax payable in respect of previous years, and the change in deferred tax.

Tax for the year is recognised in the income statement as regards the amount that can be attributed to the net profit or loss for the year, in other comprehensive income as regards the amount that can be attributed to items in other comprehensive income, and in equity as regards the amount that can be attributed to items in equity.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Group operates and generates taxable income.

Current tax payables and receivables are recognised in the balance sheet, computed as tax calculated on the taxable income for the year adjusted for provisional tax paid.

Deferred tax is recognised on all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax basis. A valuation allowance is provided against deferred tax assets if realisation is not assured on a probable basis. The tax value of the assets is calculated based on the planned use of the individual assets.

Deferred tax is measured on the basis of the income tax rates and tax rules in force in the respective countries at the balance sheet date. Changes in deferred tax resulting from changed income tax rates or tax rules are recognised in profit or loss. Deferred tax assets, including the tax value of tax loss carry-forwards, are recognised in the balance sheet at the value at which the assets are expected to be realised, either through an offset against deferred tax liabilities or as net tax assets to be offset against future positive taxable income.

The Group's tax provision or benefit includes a provision for taxes currently payable or receivable plus the change in deferred taxes for the period. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its tax assets and liabilities on a net tax basis.

Goodwill and other intangible assets

Goodwill represents the excess of the cost of an acquisition over the fair value of identifiable net assets acquired in a business combination. Goodwill is initially recognised as an asset and is subsequently measured at cost less accumulated impairment losses. Goodwill is not amortised but tested for impairment annually, or on such other occasions that events or changes in circumstances indicate that it might be impaired. The carrying amount of goodwill is allocated to the Group's cash-generating units at the date of acquisition. Cash-generating units are determined based on the nature and materiality of the underlying business in the context of Norican's other businesses.

On disposal of a subsidiary, the amount attributable to unamortised goodwill that has not been subject to impairment is included in the determination of the gain or loss on disposal and recognised in the consolidated income statement.

Other intangible assets comprise of trademarks, capitalised development costs, customer relationships and patents. Costs for acquired assets represent the purchase price at acquisition. Intangible assets other than goodwill are valued at cost less accumulated amortisation and any impairment losses.

Property, plant and equipment

Property, plant and equipment are stated at cost if purchased, or fair value as of the acquisition date if obtained in an acquisition, less accumulated depreciation and any impairment loss. Depreciation on property and equipment is calculated on the straight-line method. The estimated useful lives of the assets are: Buildings and improvements: 20-50 years; Equipment and other assets: 3-10 years.

Additional costs, which extend the useful life of the property, plant and equipment, are capitalised and depreciated over the revised remaining useful life of the asset. Maintenance and repair costs are charged to expense as incurred. Upon the sale or retirement of an asset, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss is recognised. Residual value is determined at the time of acquisition using estimates of the asset value when fully depreciated.

All items of property, plant and equipment are tested for impairment when there are indications that the carrying value may not be recoverable. Any impairment losses are recognised immediately in operating profit.

Impairment of non-current assets

Non-current assets are tested for impairment in accordance with IAS 36 and are reviewed annually to determine whether events or changes in conditions indicate that the carrying amount of the asset may not be recoverable. If any such indication exists, the Group estimates the asset's recoverable amount as the higher of the asset's fair value, less selling costs and value-in-use, which is the present value of the cash flows expected from the asset's use and eventual disposal. If necessary, an impairment loss is recorded in the statement of operations to the extent that the carrying amount of the asset exceeds its recoverable amount.

Leasing

The Group implemented IFRS 16 effective 1 January 2019. IFRS 16 requires that all leases are reflected in the balance sheet of a lessee as a right-of-use asset and lease liability. The Group has applied the lease recognition exemptions for short-term lease contracts and low-value assets. Short-term leases are leases with a lease term of 12 months or less. Low-value leases are those where the underlying asset value, when new, is €10,000 or less and includes IT equipment and small items of office furniture.

Right-of-use assets are measured at cost, which is calculated as the total value of the lease liability comprising the following: (i) the amount of the initial measurement of lease liability; (ii) any lease payments made at or before the commencement date less any lease incentives received; (iii) any initial direct costs and, if applicable, and (iv) restoration costs.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the useful life of the asset. Payments associated with short-term leases and leases of low-value assets are recognised as an expense in the consolidated income statement as they are incurred.

Lease liabilities are measured at the total value of the following: (i) fixed lease payments, (ii) variable lease payments that are based on an index or a rate and, if applicable, (iii) amounts expected to be payable by the lessee under residual value guarantees, and (iv) the exercise price of a purchase option if it is reasonably expected to be exercised. Lease liabilities do not include any non-lease components that may be included in the related contracts.

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options are only included in the lease term if the lease is reasonably certain to be extended past the initial termination date.

Cash and cash equivalents

The Group considers all highly liquid instruments purchased with an initial maturity of three months or less to be cash equivalents. The carrying values of the Group's cash equivalents approximate their fair values.

Trade receivables

Trade receivables are initially recognised and measured at fair value and subsequently measured at amortised cost, less allowance for lifetime expected credit losses.

The Group applies the simplified approach to measure expected credit losses. Loss allowances for trade receivables are recognised at an amount equal to lifetime expected credit losses.

Loss rates are determined based on grouping of trade receivables sharing the same credit risk characteristics and days past due.

Receivable balances are written off only when there is no prospect of any further collections, with the charge recognised in 'selling, general & administrative expenses'.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and the attributable portion of overhead costs based on normal operating capacity that have been incurred in bringing the inventories to their present location and condition. Cost is determined using the first-in, first-out ("FIFO") method, or a method that approximates the use of the FIFO method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Adjustment is made if necessary for any slowmoving, obsolete or defective inventory and recognised in cost of sales.

Financial instruments

Financial assets are classified according to their cash flow characteristics and the business model in which they are managed. The Group has categorised its financial assets to financial assets measured at amortised cost, or at fair value through other comprehensive income.

Borrowings

Borrowings are recognised at the time of debt being issued, including any utilisation of the revolving secured credit facility, at the fair value of the proceeds received less transaction costs paid. Debt issuance costs are included in the value of debt and are amortised using a method that approximates the effective interest rate method over the term of the underlying credit facility or loan.

Retirement benefit plans

For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with valuations carried out at each balance sheet date in accordance with IAS 19, 'Employee Benefits'. The present value of the Group's liabilities relating to future pension payment under defined benefit plans is measured on an actuarial basis once a year on the basis of the pensionable period of employment up to the time of the actuarial valuation. The calculation of present value is based on assumptions of future developments of salary, interest, inflation, mortality and disability rates and other factors. Actuarial gains and losses are recognised immediately in other comprehensive income as they are incurred and cannot subsequently be recycled through profit or loss.

The pension liability recognised in the balance sheet represents the present value of defined benefit obligations and is reduced by the fair value of plan assets and any net obligation is recognised in the balance sheet under non-current liabilities.

Pension expenses and administration fees are recognised in the income statement under 'selling, general and administrative costs', and pension finance costs are recognised in the income statement under 'finance costs'.

Payments to defined contribution plans are recognised in the income statement under 'selling, general and administrative costs' at the due date, and any contributions payable are recognised in the balance sheet under 'non-current liabilities'.

If benefit plan membership or benefits are significantly reduced by a restructuring, or an event or transaction that results in the Group's benefit obligations being settled, the effects are recorded in the statement of operations when the restructuring or settlement occurs.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event (occurring on or before the reporting date) that it is probable will result in an outflow of economic benefits that can be reasonably estimated.

The Group warrants its products against certain manufacturing and other defects. These product warranties are generally provided for a period of one year but may vary depending on the nature of the product, the geographic location of its sale and other factors. The accrued product warranty costs are based on historical experience of actual warranty claims as well as current information on repair costs. Where some or all of the expenditure required to settle a claim is expected to be reimbursed by another party, the reimbursement is recognised only when reimbursement is virtually certain. The amount to be reimbursed is recognised as a separate asset.

Equity

Other reserves within equity are comprised of:

Non-controlling interests

The interest of non-controlling shareholders is stated at the non-controlling shareholders' proportion of the respective entity's identifiable assets, liabilities and contingent liabilities.

On initial recognition, non-controlling interests are measured either at fair value (including the fair value of goodwill related to non-controlling interests in the acquiree) or as non-controlling interests' proportionate share of the acquiree's identifiable assets, liabilities and contingent liabilities measured at fair value (excluding the fair value of goodwill related to non-controlling interests' share of the acquiree). The measurement basis for non-controlling interests is selected for each individual transaction.

Cash flow statement

The consolidated cash flow statement is presented under the indirect method based on the operating profit for the year. The statement shows cash flows for the year, changes for the year in cash and cash equivalents, as well as the Group's cash and cash equivalents at the beginning and end of the year.

Cash flows from operating activities are calculated as the net profit / loss for the year adjusted for non-cash operating items, changes in working capital, and corporation tax paid.

Cash flows from investing activities comprise acquisitions and disposals of property, plant and equipment and fixed asset investments. Cost is measured inclusive of expenses necessary to make the acquisition and sales prices after deduction of transaction expenses.

Cash flows from financing activities comprise changes to the amount or composition of the Group's share capital, payment of dividend, financial income and financial expenses as well as borrowing and repayment of interest-bearing debt.

Cash and cash equivalents include securities with a maturity of less than 3 months.

Significant Accounting Judgements and Estimates

Use of judgements and estimates

Management of the Group has made a number of estimates and judgements related to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities in the preparation of these consolidated financial statements in conformity with IFRS. Actual results could differ from those estimates.

Post-employment benefits

The estimates used to measure the expense and liabilities related to the Group's defined benefit pension plans are reviewed annually by external actuaries. The measurement of the expense for a period and of the benefit obligation at the period end requires judgement with respect to the following matters, among others: probable long-term rate of increase in pensionable pay; probable average future service lives of employees; probable life expectancy of employees; mix of investments in funded pension plans in the period; expected future rate of return on the investments in the funded pension plans, and how that rate will compare with the market rates of return observed in past economic cycles. Estimates used to value the benefit obligation at 31 December are updated based on actual experience when appropriate. Variances are caused principally by external financial market movements in corporate bond yields used to benchmark the discount rate, and in asset prices that affected the actual return on assets. These factors are outside the Group's direct control, and it is reasonably possible that future variances could exceed past variances. See note 16.

Deferred tax assets

Tax losses are recognised as deferred tax assets when it becomes probable that they will be utilised in the future. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or in which tax losses can be utilised. In making this assessment, the Group considers the scheduled reversal of deferred tax liabilities and projected future taxable income.

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, as of 31 December 2023, the Group believes that it is more likely than not that the Group will realise the benefits of these deductible differences. The amount of the deferred tax asset considered realisable could be reduced in subsequent years if estimates of future taxable income during the carry forward period are reduced, or rulings by the tax authorities are unfavourable. Estimates are therefore subject to change due to both market and government related uncertainties, as well as the Group's own future decisions. See note 6.

Tax positions

The Group's policy is to comply fully with applicable tax regulations in all jurisdictions in which the Group's operations are subject to income taxes.

The Group's estimates of current income tax expense and liabilities are calculated on the assumption that all tax computations filed by the Group's subsidiaries will be subject to review or audit by the relevant tax authorities. Current income tax liabilities include the Group's best estimate of the tax that will ultimately be payable when the review or audits have been completed. Actual outcomes and settlements may differ from the estimates recorded in these consolidated financial statements. This may affect income tax expense, net income, and effective tax rates in future years' consolidated statement of operations. See note 6.

Goodwill impairment test

The assessment of whether goodwill is impaired requires a determination of the value-inuse of the cash-generating units to which the goodwill amounts have been allocated. The determination of the value in use requires estimates of the expected future cash flows of each cash-generating unit using a reasonable discount rate.

The impairment test of goodwill and the associated particularly sensitive factors and sensitivity analyses are described in note 7 to the consolidated financial statements.

Purchase price allocation in business combinations

In connection with the allocation of the purchase price in business combinations, calculations are made of fair value of acquired assets and liabilities. As this determination is based on expected future cash flows related to the assets and liabilities acquired, the realisation of such cash flows as anticipated is subject to an inherent uncertainty.

2. Revenue

Equipment revenues are predominantly related to the Group's core lines of business, but also include sales of capital equipment items from other businesses within the Group.

Aftermarket revenues comprise sales of spare parts and fees for servicing equipment.

3. Operating expenses

Expense items included in Operating profit are broken down by nature as follows:

During 2023, Government grants of €368k (2022: €612k) were received in respect of tax grants in China in 2023 and in 2022 furlough and other short-time working support schemes related to the COVID19 pandemic.

Fees for non-audit services mainly relate to other assurance services outside the scope of the audit.

4. Employees

5. Non-underlying items

To improve the understanding of the Group's financial performance the following items, which do not reflect the underlying performance, are classified as non-underlying items:

Restructuring costs

The Group recorded a charge to restructuring provision of €1,116k in 2023 (2022: €3,873k), primarily related to the consolidation of manufacturing operations and supply chain activity in Europe, and is mainly comprised of accrued severance costs.

Impairment of intangible assets

The impairment of €506k development cost relates to the reassessment of the commercial potential of a product in development.

External consulting

External consulting costs relate to fees paid to external consultants for work on transformational projects in both North America and Europe and vendor due diligence costs.

Integration costs

Integration costs in 2022 relate to the acquisition of Simpson Technologies and are primarily comprised of retention bonuses and costs to run the integration office.

Other severance costs

Other severance costs are severance payments made to senior managers who exited the business for reasons unrelated to restructuring.

6. Income Tax

The composition of income tax expense is as follows for the year ended 31 December:

Reconciliation of total tax

Income tax expense attributable to income before income taxes differed from the amounts computed by applying the Danish income tax rate of 22% for the year ended 31 December, are due to the following:

Current tax

Analysed in the consolidated statement of financial position, after offset of balances within countries, as:

Beginning in 2017, the Danish companies of the Group are participating in a Danish joint taxation arrangement in which Nortre Administration ApS, a related party, serves as the administration company. According to the joint taxation provisions of the Danish Corporation Tax Act, the Danish companies of the group are therefore liable for income taxes for the jointly taxed companies and also for obligations, if any, relating to the withholding of tax on interest, royalties and dividends for the jointly taxed companies. As a result of the joint taxation arrangement, the tax deductibility of interest incurred by Danish subsidiaries of the Group was reduced by €441k for the year ended 31 December 2023 and €441k for the year ended 31 December 2022.

Pillar II

The implementation of the Minimum Tax Act (Pillar II), as adopted by the Danish Parliament on 7 Dec 2023, will not, based on the current group structure, result in additional tax costs for Norican Group.

Deferred tax

Deferred taxes consist of the following at 31 December:

Analysed in the consolidated statement of financial position, after offset of balances within countries, as:

There were unrecognised deferred tax assets of €16m in 2023 (2022: €11m) relating to brought-forward losses in Italy for which the group considers there is insufficient likelihood of utilization. Danish, United Kingdom, Italian and Canadian loss carryovers do not expire.

7. Goodwill

The carrying value of goodwill arises from the acquisition of the legacy Norican business in 2014, the acquisition of the Aluminium business purchased in 2017, and the acquisition of Simpson in 2022.

Following the acquisition of Simpson, the Group consists of five cash-generating units. However, management monitors goodwill at the level of the business areas Legacy Norican, Aluminium, and Simpson. At 31 December 2023, the carrying value of goodwill in each of these areas was: Legacy Norican €172,237k (2022 €172,580k), Aluminium €24,335k (2022 €24,414k), Simpson €8,610k (2022: €8,952k).

Goodwill is tested for impairment at least annually at the level of these business areas. Value-in-use calculations are utilised to calculate the recoverable amounts. Value-in-use is calculated as the net present value of the projected, risk-adjusted, pre-tax cash flows of the CGU in which the goodwill is contained.

The discount rate applied comprises the Group's post-tax weighted average cost of capital adjusted to reflect the impact of the time value of money, tax effects and risks associated with the CGUs. The discount rate was 13.1% for the year ended 31 December 2023 and 12.6% for year ended December 2022. The increase in discount rate reflects the change in the Group's cost of borrowing following refinancing.

The discounted value of future net cash flows are compared with the carrying amounts of goodwill and other net assets in each cash-generating unit. Future cash flows are based on the Group's strategic plan incorporating five years from 2024 to 2028 which was approved by the Board and takes into account both past performance and expectations for future market development. A terminal growth rate was applied of 1.3% (2022: 1.3%), which was selected by taking prudent account of the Group's estimate of the long-term average growth rate, selling prices and profitability for the sectors and key markets in which the CGUs operate.

The conclusion of the analysis resulted in no impairment to goodwill during the year ended 31 December 2023 and year ended 31 December 2022.

The assumptions applied by Management are inherently subject to uncertainty and unpredictability. In the case of Legacy Norican and Simpson, reasonably probable changes will not lead to recognition of impairment losses, and therefore no sensitivity analysis has been disclosed for these business areas.

For Aluminium, the impairment test in 2023 has more limited headroom.

Sensitivity analysis has been performed, and shows:

8. Other intangible assets

At 31 December 2023 the carrying value of trademarks in each business area was: Legacy Norican €32,900k (2022 €33,032k), Aluminium €14,540k (2022 €14,540k), Simpson nil (2022: nil).

The impairment of €506k development cost relates to the reassessment of the commercial potential of a product in development.

9. Property, plant and equipment

10. Leases

Right of use assets

The following amounts relate to leased assets included in property, plant and equipment in note 9:

Lease liabilities

The following amounts relate to lease liabilities:

Scheduled lease commitment payments are as follows at 31 December:

11. Inventories

Inventories, net of provisions, consist of the following at 31 December:

Cost of goods sold represents the Group's cost of inventory and related production costs.

12. Trade and other receivables

The ageing of trade receivables measured from invoice date, is as follows:

The ageing of trade receivables measured from due date, is as follows:

The age profile of trade receivables is a result of how the contractual payment profile is structured in many equipment sales, in line with industry practice, where a minor final payment is not due until after final customer acceptance and commissioning. Typically, this occurs a number of months after initial installation. These payments are not overdue, the timing is in line with contractual terms.

The Group's contracts for delivery of equipment include milestone payments. At time of delivery, the Group has normally received prepayments of up to 40% of the total consideration, which naturally reduces the credit risk on the remaining amount outstanding. All customers, whether for new equipment or aftermarket business, are evaluated individually, normally by assessing the customer's credit rating provided by external credit rating agencies; if there are any doubts about the customer's solvency it is the Group's policy to obtain payment security, prior to entering into a binding sales agreement. In addition, the Group has historically not incurred any material losses from trade receivables.

Loss allowance for trade receivables is measured at an amount equal to lifetime expected credit losses, which are based on quantitative and qualitative information and analysis, based on the Group's historical experience, an informed credit assessment and forward-looking information.

The Group has no significant concentrations of credit risk, with exposure spread over a large number of counterparties and customers.

The movement in loss allowance for doubtful accounts is as follows:

13. Cash and cash equivalents

Cash includes cash on hand and in banks and investments in money market instruments totalling €71,937k and €146,979k at 31 December 2023 and 2022, respectively. The Group maintains cash deposits related to certain of its performance obligations for the manufacturing, delivery and installation of capital equipment sales. At 31 December 2023 and 2022, the amount of €912k and €944k were posted as cash bonds, respectively, and are included in cash and cash equivalents on the Group's balance sheet.

Adjustments for non-cash operating items:

14. Debts

Changes to interest-bearing debts are as follows:

Borrowings at amortised cost consist of the following at 31 December:

All of the outstanding borrowings are denominated in euros at 31 December 2023.

Fair values of all borrowings are identical to carrying values.

Scheduled repayments of the Group's borrowings are as follows at 31 December 2023:

Refinancing of the Group's debt

On 28 February 2023, the Group completed the refinancing of its debt. The €340m Senior Secured Notes, issued in 2017, were redeemed in full at par, plus accrued interest. New loans totalling €270m from a consortium of Nordic banks and investment funds, including a €45m shareholder loan, plus a new €60m revolving credit facility ("RCF") provided by certain members of the financing consortium, were put in place.

Bank loan

The weighted average maturity of the term loans is greater than four years and the weighted average interest margin is under six per cent. The interest rate is variable, based on EURIBOR and the margin; the margin may be increased or decreased based on the Group's leverage ratio and certain sustainability targets.

Investments in subsidiary companies, with a carrying value of €153,291k at 31 December 2023 and 2022, have been provided as security for these bank loans.

Covenants

The terms of the bank loans include financial covenants, leverage ratio and interest cover ratio, which the Group must demonstrate compliance with on a quarterly basis.

Shareholder loan

The shareholder loan is a deferred payment loan, under which all principal and interest payments are deferred until the maturity date of the loan, at which time the outstanding principal loan balance and all accrued interest is due and payable.

The maturity date is 31 December 2028.

The interest rate is fixed at 7% for the term of the loan.

There are no financial covenants and no assets of the Group are secured against the shareholder loan.

RCF

Cash availability within the new RCF is €60,000k and interest is variable based on the IBOR relevant to the currency of utilisation and the performance of the Group. There was no cash amount outstanding under the RCF as of 31 December 2023, nor under the previous Revolver as of 31 December 2022. Commercial guarantees have been issued at 31 December 2023 which reduced the availability of the Revolver by €18,268k (31 December 2022: €24,411k).

Finance income is comprised of:

Finance cost is comprised of:

Foreign exchange gains and losses are presented after offset of balances within countries.

15. Accrued liabilities and provisions

Accrued liabilities and provisions on the balance sheet include the following:

Due to the uncertain nature in the timing of utilisation of the warranty provision, it is not possible to estimate the amount of provision that will be utilised within the next year.

Restructuring

All of the remaining current balance of the restructuring provision is expected to be utilised within the next year.

16. Retirement benefit plans

Background

The Group and most of its subsidiaries offer retirement plans which cover the majority of employees in the Group. The Group's policy is to provide defined contribution (DC) orientated pension provision to its employees unless otherwise compelled by local regulation. As a result, many of these retirement plans are DC, where the Group contribution and resulting charge is fixed at a set level or is a set percentage of employees' pay.

However, the Group has multiple plans which are defined benefit (DB), where benefits are based on employees' length of service and linked to their salary. The major defined benefit plans are in Switzerland, the UK, the US, Germany and India, and have broadly similar risk profiles. They are largely legacy arrangements that are closed to new entrants and are funded through separate, fiduciary-administered assets. The cash funding of the plans, which may from time to time involve special Group payments, is designed, in consultation with independent qualified actuaries, to ensure that the assets are sufficient to meet future obligations as and when they fall due. The funding level is monitored rigorously by the Group and by local fiduciaries, who take into account the strength of the Group's covenant, local regulation, cash flows, and the solvency and maturity of the relevant pension scheme.

Approximately ninety per cent of the Group's total defined benefit obligations at 31 December 2023 are in schemes in Switzerland and the UK.

Pension costs

The costs associated with the Group's DB schemes are as follows:

The Group's estimate of employer contributions to be paid to defined benefit plans for the year ended 31 December 2024 is €1,937k. Actual payments could differ materially from this estimate if any new funding regulations or laws are enacted or due to changes in business and market conditions during 2024.

Accumulated actuarial (losses) / gains

Accumulated actuarial (losses) / gains included in the statement of comprehensive income are as follows:

Pension scheme obligations and assets

The following tables set out the significant components of the Group's pension plan benefit obligations, fair value of plan assets and funded status as at and for the years ended 31 December:

The net balance of pension assets and obligations is represented by:

Funding status of obligations:

The fair values of the assets of the Group's defined benefit pension plans are as follows at 31 December:

The plan assets do not include any assets used by the Group or any shares in the Group.

Actuarial assumptions

Principal actuarial assumptions, expressed as weighted averages and components of net periodic pension cost, are as follows at 31 December:

DISA Pension Scheme - Switzerland

Norican Group, through its Swiss subsidiary, participates in the Pensionskasse Georg Fischer and Durach-Stiftung (together, the "Georg Fischer Plan"), which are separate legal entities. The Georg Fischer Plan Foundation is responsible for the governance of the plan, and the governance board is composed of an equal number of representatives from the employers and employees chosen from all affiliated companies.

The Swiss defined benefit pension fund represents approximately 58% of the Group's defined benefit obligations at 31 December 2023.

The average duration of the defined benefit obligation at 31 December 2023 is 9.6 years (2022: 9.4 years)

The IAS 19 actuarial valuation of the pension fund was carried out by a qualified actuary as at 31 December 2023. The key assumptions from this actuarial valuation were as follows:

The resulting valuation of the Fund's liabilities on that basis was €62,762k (2022: €60,286k) compared to a market value of assets at 31 December 2023 of €73,013k (2022: €67,400k). The accrued benefit attributed to the Swiss pension is an asset of €10,251k, and €10,426k as of 31 December 2023 and 2022, respectively.

Sensitivity analysis: the table below gives a broad indication of the impact on aggregate scheme valuations for changes in the key assumptions:

Wheelabrator Group Pension Scheme - UK

Norican Group, through its UK subsidiary, operates a defined benefit scheme in the UK which is a final salary plan and provides benefits linked to salary at retirement or earlier date of leaving service. The Scheme closed to future accrual on 31 August 2016. Trustees have the primary responsibility for governance of the Scheme. Benefit payments are from Trusteeadministered funds and Scheme assets are held in trusts which are governed by UK regulation. Responsibility for governance of the Scheme, including setting contribution rates, lies jointly with the Company and Trustee Board. The Trustees are comprised of nominations from the Company and members in accordance with the Trust Deed and Rules.

The UK defined benefit pension fund represents approximately 33% of the Group's defined benefit obligations at 31 December 2023. The average duration of the defined benefit obligation at 31 December 2023 is 13 years (2022: 13 years)

The IAS 19 actuarial valuation of the pension fund was carried out by a qualified actuary as at 31 December 2023. The key assumptions from this actuarial valuation were as follows:

The resulting valuation of the Fund's liabilities on that basis was €36,331k (2022: €37,076k) compared to a market value of assets at 31 December 2023 of €34,023k (2022: €34,021k). The accrued benefit attributed to the UK pension is a liability of €2, 307 and €4,844k as of 31 December 2023 and 2022, respectively.

Sensitivity analysis: the table below gives a broad indication of the impact on aggregate scheme valuations for changes in the key assumptions:

17. Financial instruments and related disclosures

Financial risk management

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, interest rate risk and commodity price risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. The Group uses derivative financial instruments to hedge certain risk exposures. The Group's financial risk exposures have not changed significantly in 2023.

Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar, the Indian rupee and the Chinese renminbi. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities, and net investments in foreign operations. The Group's individual subsidiaries predominately transact their operational activities in their respective functional currencies. However, the global nature of the business leads to transactional risk at the balance sheet date. This arises because the amount of local currency received or paid for transactions denominated in a foreign currency varies due to changes in foreign exchange rates. Transactional committed risk for which the Group has a contractual obligation that is recorded on the balance sheet is primarily managed through the use of forward foreign exchange contracts.

The Group's loans, which make up substantially all of the outstanding debt balances at 31 December 2023, are denominated in euros; therefore, most of the Group's debt is not exposed to foreign currency risk. However, translation exposure arises from consolidation of foreign currency-denominated financial statements of the Group's subsidiaries. A 10% change in the currency translation rate between the U.S. dollar and the euro could positively or negatively affect revenue by approximately €10,677k, and the net income impact on equity is approximately €652k based on results for the year ended 31 December 2023.

Interest rate risk

The Group is exposed to fluctuations in interest rates on its bank loans and RCF borrowings. The Group has interest rate hedges against 50% of the bank loans taken in February 2023 (€112.5m). The remaining bank loan balance is exposed to interest rate fluctuations.

A 1% change in interest rates could positively or negatively affect net interest cost by approximately €689k based on results for the year ended 31 December 2023.

While there are no outstanding borrowings under the RCF at 31 December 2023, to the extent the Group has future outstanding borrowings under the RCF, the amount outstanding would be exposed to interest rate fluctuations.

The shareholder loan has a fixed interest rate.

Credit risk

The exposure to credit risk is represented by the balance sheet values of cash deposits, receivables and positive market values of derivatives that are carried at the balance sheet date.

The Group's cash balance at 31 December 2023 amounts to €71,937k (2022: €146,979k). To mitigate this risk, the Group only enters deposits at banks with satisfactory credit ratings from one or more credit rating agencies. The maximum credit risk corresponds to the carrying amount.

Credit quality of customers is assessed taking into account the customer's financial position, past experience and other factors. Individual risk limits are set based on internal and external ratings. The utilisation of credit limits is regularly monitored. Although the Group monitors the credit ratings of its customers, changes in the financial position of its customers can adversely affect the Group's future collection of the receivables and the Group's cash flows.

Maturity of liabilities:

Commodity price risk

Commodity price fluctuations also affect aspects of the Group's business. Changes in commodity prices can affect the profitability of the Group's operations and its net cash flows.

The Group does not consider commodity price risk to be a significant financial statement risk, as most of the machine orders are completed within six months and the portion of commodity cost in the cost of finished goods inventory is not considered significant. For large orders, the Group mitigates exposure to commodity price risk by committing to raw materials purchases periodically throughout the year as sales occur. Inventory pricing is reviewed periodically to reduce the risk of commodity purchase price changes.

Liquidity risk

The Group's principal source of liquidity consists of cash and cash equivalents, cash generated from operations, and borrowings available under the RCF. See note 14.

Capital risk management

The Group's objectives in managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to reduce its cost of capital and to support longterm profitable growth.

Other risk

At 31 December 2023, €28,939k (2022: €33,353k) in commercial guarantees related to equipment orders were outstanding that are not reflected on the balance sheet but expose the Group to a potential, albeit minimal risk.

Classes of financial instruments

Besides cash and cash equivalents, trade and other receivables as well as long-term debt, trade payables and other payables, which are financial instruments measured at amortised cost, the Group has entered into currency swaps and interest rate swaps, which are cash flow hedges. The Group does not have financial instruments classified at fair value through profit and loss.

Derivatives that are designated and effective as hedging instruments carried at fair value:

The Group utilises forward currency swaps to hedge future transactions and cash flows. The Group is party to a variety of foreign currency forward contracts in the management of exchange rate exposures. The instruments purchased are primarily denominated in the currencies of the Group's principal markets and are designated and effective as hedging instruments carried at fair value. All forward contracts outstanding at 31 December 2023 mature within a period of one year.

€112.5m of the Group's bank loans are subject to fixed interest rates due to interest rate swaps, for which the contracts end on 28 February 2025. The instruments are designated and effective as hedging instruments carried at fair value.

The fair value of derivatives is determined based on observable market data using generally accepted methods (level 2 in the fair value hierarchy).

18. Litigation

Silicosis

Subsidiaries of the Group in the United States have been named in various cases involving alleged exposure to silica by employees of its customers. In accordance with the terms of the Silicosis Litigation Management and Indemnification Agreement (the "Indemnity"), Water Application & Systems Corp. (formerly known as United States Filter Corp.) is liable for all silicosis claims arising from equipment or product sales prior to 19 August 2003 for subsidiaries of WGH Holding Corp. ("WGH") at that date. With respect to claims against non- United States subsidiaries of WGH at that date, the Indemnity expired 19 August 2018. With respect to United States subsidiaries of WGH, the Indemnity is not limited in time. There are no claims at present for exposure related to non-United States subsidiaries for equipment sales subsequent to 19 August 2003.

Other claims

The Group has been named in litigation arising in the ordinary course of business. In the opinion of legal counsel and management, the Group has meritorious defences against such claims and is covered by insurance and has reserves to cover self-insured retentions for any material adverse outcome in most claims. For claims for which insurance coverage may not be available, the Group has established reserves deemed adequate to cover possible adverse outcomes and related fees. As a result, these cases are not expected to have a significant negative impact on future results of operations or the financial condition of the Group.

19. Equity

Share capital

The Parent Company has one class of ordinary shares, each with a par value of one Danish krone. Shares are entitled to one vote per share.

There are 11,579,604 shares issued and outstanding at 31 December 2023. Total shares held in treasury are 48,223 at 31 December 2023 (46,940 at 31 December 2022), the increase arising from the re-purchase of shares by the company from a former manager. Shares held in treasury also have a par value of one Danish krone each.

Other Reserves

Other reserves consist of the following:

Non-controlling interest

The Group's majority owned Indian subsidiary, DISA India Ltd. ("DIL"), is listed on the Bombay Stock Exchange. As a result, the Group recognises the non-controlling interest's share of the net asset value of DIL as a component of equity.

20. Common stock warrants

The Company has nil common stock warrants in issue at 31 Dec 2023. The Company had issued 1,175,790 (2022: 1,175,790) common stock warrants to management and directors of the Group. The warrants were issued at fair market value and therefore no compensation expense was recognised. The warrants gave the holder the right (without pre-emption right for the Company's existing shareholders) to subscribe for up to 1,175,790 (2022: 1,175,790) shares in the Company with a par value of one Danish Krone, by cash contribution at exercise. 57,384 stock warrants were exercised by management in December 2023, for which cash contribution was paid to the Company in January 2024. The Company's share capital was increased by 57,384 shares in January 2024. During the year ended 31 December 2023 nil warrants were issued to management, nil warrants were issued to management during year ended December 2022, respectively, at fair market value and therefore no compensation expense has been recognised. All warrants not exercised in December 2023 have expired.

21. Related parties

Key management personnel

The remuneration of the executive team is determined by the remuneration committee of the board of directors having regard to the performance of individuals and market trends.

Shareholders

Directors and management own common shares and common share warrants of the Company. As of 31 December 2023, Altor Fund IV Holding AB has controlling shareholding positions in the Parent Company. In addition, a €45m shareholder loan was made to the Company as part of the refinancing of the Group in February 2023. Costs for strategic advisory and management services of €60k were accrued to the benefit of Altor Fund IV Holding AB for each of the years ended 31 December 2023 and 2022. Fees paid to non-executive directors during the years ended 31 December 2023 and 2022 are €130k and €138k, respectively.

57,384 stock warrants were exercised by management in December 2023. All remaining stock warrants expired as at 31 December 2023, no stock warrants were issued during 2023. As at 31 December 2022, the company had issued 115,905 and 20,346 common stock warrants to the executive board and board of directors, respectively.

Joint taxation agreement

The Group participates in a Danish joint taxation arrangement in which Nortre Administration ApS serves as the administration company (see note 6). Nortre Administration ApS and Norican Group share common owners through the Group's controlling shareholder.

22. List of subsidiary companies

^* Ownership percentage corresponds to voting rights.

23. Post-balance sheet events

No events have occurred after the balance sheet date that will have a material effect on on the group's financial position.

Parent Company Financial Statements

Parent Company Income Statement

Parent Company Statement of Financial Position

Parent Company Statement of Cash Flows

Parent Company Notes to Financial Statements

A. Summary of significant accounting policies

The Parent Company's accounting policies remain unchanged from last year. Significant accounting policies are identical to those applied by the Group except for those mentioned below.

Basis of accounting

The Parent Company financial statements have been prepared in accordance with IFRS Accounting Standards. The Parent Company is classified as a reporting class B enterprise in accordance with the Danish Financial Statements Act.

Foreign currencies

Income statement items in foreign currencies are translated into euros at average rates for the relevant accounting periods. Monetary assets and liabilities are translated at exchange rates prevailing at the date of the company balance sheet. Exchange gains and losses on loans and on short-term foreign currency borrowings and deposits are included within 'Finance cost'. Exchange differences on all other foreign currency transactions are recognised in operating profit.

Investments in subsidiaries

Investments in subsidiaries, are stated at cost and reviewed for impairment if there are indications that the carrying value may not be recoverable.

Dividends

Dividends on investments in subsidiaries are recognised in the Parent Company's income statement in the financial year in which the dividend is declared.

B. Income tax

The Danish companies of the group are jointly and severally liable for the Danish group's joint taxable income.

Tax credit consists of the following:

Income tax credit attributable to loss before income taxes is computed by applying the Danish income tax rate of 22% for the years ended 31 December 2023 and 2022.

C. Investment in subsidiary companies

D. Shareholder loan

See note 14 of the Consolidated Financial Statements for details of this loan.

E. Shareholders' equity

Common shares

The Company is authorised to issue up to 12,992,604 common shares, each with a par value of one Danish krone. Shares are entitled to one vote per share. There are 11,579,604 shares issued and outstanding at 31 December 2023.

Further details on the Parent Company's equity and related party transactions are provided in notes 19, 20 and 21, to the Group's consolidated financial statements, respectively.

F. Audit fees

Services provided by the Company's Auditor

No fees were paid for non-audit services in 2023 and 2022.

Definitions

Definitions of Financial Highlights and Ratios

Disclaimer

This annual report includes "forward-looking statements" within the meaning of the securities laws of certain applicable jurisdictions. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this annual report, including, without limitation, those regarding our future financial position and results of operations, our strategy, plans, objectives, goals and targets, our liquidity, capital resources and capital expenditures, the general economic outlook and industry trends, litigation outcomes, future developments in the markets in which the Norican Group participates or is seeking to participate or anticipated regulatory changes in the markets in which we operate or intend to operate. In some cases, you can identify forward-looking statements by terminology such as "aim", "anticipate", "believe", "continue", "could", 'estimate", "expect", "forecast", "guidance", "intend", "may", "plan", "potential", "predict", "projected", "should" or "will" or the negative of such terms or other comparable terminology.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance and are based on numerous assumptions, and our actual results of operations, including our financial condition and liquidity and the development of the industries in which we operate, may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this annual report. You should not place undue reliance on these forward-looking statements.

In addition, even if our results of operations, including our financial condition and liquidity and the development of the industry in which we operate, are consistent with the forwardlooking statements contained in this annual report, those results or developments may not be indicative of results or developments in subsequent periods. We are subject to numerous risks that could affect our future performance and the markets in which we operate. In light of these risks, uncertainties and assumptions, the forward-looking events described in this annual report may not occur. New risks can emerge from time to time, and it is not possible for us to predict all such risks, nor can we assess the impact of all such risks on our business or the extent to which any risks, or combination of risks and other factors, may cause actual results to differ materially from those contained in any forward- looking statements. These forward-looking statements speak only as of the date on which the statements were made. We undertake no obligation to update or revise any forward-looking statements or risk factors, whether as a result of new information, future events or developments or otherwise. Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results.