Demant

The overall responsibility for risk management lies with the Executive Leadership Team, but risk management activities are carried out throughout the organisation on a day-to-day basis.

Risk management is an integral part of the management of the Demant Group. Risks to which business areas, markets and operations are exposed are identified, monitored and mitigated at all management levels. Through frequent and transparent reporting, these measures ensure that key risks are escalated to the business area leadership, to functional boards, to the Executive Leadership Team, and if relevant, to the audit committee and ultimately the Board of Directors.

We have established a number of functional boards to ensure focus on governance, development and risk management in key areas globally, i.e. IT, Finance, HR, Sustainability and Legal & Compliance. The functional boards are responsible for risk management in their respective areas and for ensuring that policies, guidelines and processes are established to monitor risks and new legislation.

The audit committee oversees the risk management processes related to financial risks, including sufficient and efficient internal controls.

Risk management activities in the Demant Group include a variety of risk areas, many of which may impact the performance and reputation of the Group. The overall responsibility for risk management lies with the Executive Leadership Team, but risk management activities are carried out throughout the organisation on a day-to-day basis.

Risk management is an integral part of the management of the Demant Group. Risks to which business areas, markets and operations are exposed are identified, monitored and mitigated at all management levels. Through frequent and transparent reporting, these measures ensure that key risks are escalated to the business area leadership, to functional boards, to the Executive Leadership Team, and if relevant, to the audit committee and ultimately the Board of Directors.

We have established a number of functional boards to ensure focus on governance, development and risk management in key areas globally, i.e. IT, Finance, HR, Sustainability and Legal & Compliance. The functional boards are responsible for risk management in their respective areas and for ensuring that policies, guidelines and processes are established to monitor risks and new legislation.

The audit committee oversees the risk management processes related to financial risks, including sufficient and efficient internal controls.

Our Purpose and Strategy

Our PURPOSE is to create life-changing differences through hearing health

Our AMBITION is as the leading hearing healthcare company to improve as many lives as possible

Our PRIORITISATION is to support the entire journey to better hearing by focusing on personalised care and innovative solutions

Our Strategy

Leading hearing healthcare - In 2024, we communicated our Group strategy – leading hearing healthcare – reflecting our ambition as the leading hearing healthcare company to improve as many lives as possible. In doing so, we contribute to building a more sustainable world and enable more people the opportunity to enjoy life in full.

With our strategy, we are focused on creating value by growing our business at a rate exceeding the market growth rate, while improving our profitability through economies of scale and efficiency. Our strategy comprises three choices and three enablers:

Choices:

• Fuel innovation and core technology development: An important organic growth driver is to bring superior technological solutions to the market timely and in high quality. We are therefore firmly focused on investing in R&D in both Hearing Aids and Diagnostics, aiming to advance technology further in our R&D programme.

• Participate in consolidation of distribution and leverage commercial position: Another key growth driver is the acquisition and integration of hearing care clinics worldwide into our existing network as well as potential acquisitions within Diagnostics.

• Grow across geographies and channels and in adjacent business activities: To enable future growth, we focus strongly on growing sales in our existing markets and channels. We aim to gain market share among independents and drive profitable growth with strategic accounts and in export markets.

Enablers:

• Leverage scalability and increase business resilience: We need to leverage our size and ensure efficiency in everything we do to increase profitability across the Group.

• Continuously drive a culture of inclusion and engagement: Our employees are our most valuable resource, as they are critical to Demant's future success.

• Drive responsible and sustainable business practices: We are committed to adding value responsibly and sustainably.

Business Model and Operations

We operate a focused hearing healthcare company, consisting of three business areas: Hearing Aids, Hearing Care and Diagnostics.

Hearing Aids: The Hearing Aids business area engages in the development, manufacturing and wholesale of hearing aids, developing innovative and leading technological solutions that create life-changing hearing health.

• Serves customers in 130+ countries
• 900+ employees in Hearing Aids R&D
• External revenue in 2024: DKK 10,022 million

Hearing Care: The Hearing Care business area comprises the Audika Group, which is a global retail company that provides personalised hearing care to customers worldwide through several strong local brands.

• 4,000+ clinics worldwide
• Hearing care clinics in 25+ countries
• Revenue in 2024: DKK 9,932 million

Diagnostics: The Diagnostics business area consists of a group of international companies and is the global market leader in hearing and balance assessment solutions used by audiologists, ENT doctors and balance clinics worldwide.

• Facilitated screening of 200+ million people
• Holds a market leading position in relevant categories
• Revenue in 2024: DKK 2,465 million

Operating Model

Our operating model is designed to steer us in operating our three business areas – Hearing Aids, Hearing Care and Diagnostics – in a setup that is ensuring that we remain focused on excelling in each business area, while leveraging synergies across the Group through strong collaboration.

Research and development: Innovation is an integral part of Demant's strategy, and we constantly strive for technological advancements in our R&D activities. Our main R&D sites are located in Denmark, Poland and Malaysia and we have smaller R&D sites in other countries.

Manufacturing and service: Demant has a strong manufacturing set-up with two main locations in Poland where we manufacture hearing aids and diagnostic equipment for global markets. We also have a site in Mexico, primarily for custom devices and servicing.

Sales and distribution: Demant serves customers in more than 130 countries globally. In over 30 countries, we sell our products directly through our own local sales organisations and hearing care clinics. The remaining markets are serviced by distributors.

Value Creation

Input:

• Employing 22,000+ people
• More than DKK 1.4 billion invested annually in R&D
• Growing portfolio of 3,500+ patents and designs as well as a portfolio of 1,400+ registered trademarks
• Global distribution network, comprising over 4,000 hearing care clinics, distribution of hearing aids to more than 130 markets and a comprehensive distribution set-up of diagnostic products, spanning around 100 countries
• Core expertise within audiology
• Strong brand value across our multi-brand set-up
• Strong relationships with component suppliers

Output:

• Diagnostic equipment that increases the quality of patient care
• High-quality hearing aid solutions
• Personal and individualised treatment offering the highest level of expertise in audiology

Outcome:

We create life-changing differences through hearing health by helping people overcome hearing loss and improving their lives supported by innovative solutions and hearing care.

• Customers: We deliver a user experience that exceeds expectations by providing life-changing hearing health through innovative, state-of-the-art products. This benefits both individuals and society, improving the lives of 11 million people in 2024.
• Employees: We are a great place to work with engaged employees who feel included and empowered to develop, grow and do what they do best. In 2024, our engagement score increased to 4.13 from 4.11 the year before.
• Investors: We deliver attractive financial returns and growth based on a resilient business model and a strategy that focuses on value-creating growth.

All information related to the ESRS disclosure requirements is provided with the corresponding ESRS reference throughout the report. You can find an overview of all the disclosure requirements included and their location in the report on pages 110-115.

Our sustainability reporting choices are guided by our double materiality assessment, detailed on page 57, where we outline the topics that have been identified as material. Information related to the impacts, risks and opportunities, policies, actions and progress towards our targets are included thereafter.

Key figures and financial ratios – year

¹ 2023-2020 numbers are restated due to methodological improvement.

Key figures and financial ratios – year

Gender diversity in leadership

2030 target: Increase gender balance in top-level management to 35/65% (women/men).

Generally, when I look at the diversity traits of our Group and our efforts to create a work environment built on care and respect for others, I believe we are in a good place. In 2024, we reached our 2025 target for increased gender balance in our global top management ahead of time, and our new target for this group is now 35% women and 65% men.

Half-year breakdown for 2024:

• H1 2024: 30/70% (women/men) top level management
• H2 2024: 31/69% (women/men) top level management
• H1 2024: 49/51% (women/men) all managers
• H2 2024: 50/50% (women/men) all managers

Business ethics are an integral part of conducting business in a global world with many stakeholders. We continuously expand and improve the Group's business ethics programme to reflect our all-important commitment to a high level of business ethics, including our Code of Conduct, a global whistleblower scheme as well as global policies and guidelines on business ethics.

Code of Conduct training to highly exposed employees: 76% in 2024.

2030 target: Code of conduct training to reach 100% of highly exposed employees.

Whistleblower reports: 87 reports in 2024, compared to 90 in 2023, 47 in 2022, and 48 in 2021.

Inclusion score: 4.27 on a scale of 1-5 in 2024, compared to 4.26 in 2023.

Engagement score: 4.13 on a scale of 1-5 in 2024, compared to 4.11 in 2023, 4.08 in 2022, 4.02 in 2021, and 3.93 in 2020.

Furthermore, our inclusion score reached 4.27 on a scale of 1-5, and in the coming years, we will keep focusing on diversity, equity and inclusion, the target being to take the employee experience of inclusion to be among the top-third of "best in class" by 2030.

Our employees are our most valuable resource, as they are critical to Demant's future success. Therefore, it is essential that we are a great company to work for. In driving this agenda, we firmly believe in a strong culture of inclusion and engagement. We want to ensure that everyone can contribute their strengths, regardless of their background.

Supplier engagement: We launched a new supplier engagement programme in 2024 to collect primary data and set targets for our suppliers to enhance their environmental performance.

Scope 3 emissions reduction: Demant aims to use less climate-intense transport modes to mitigate climate change. This target resulted in a 16% emissions reduction from transportation for Diagnostics in 2024.

Stability in sourcing and delivering high-quality manufactured goods on time is crucial for us to be able to fulfil the commitments we have made to our customers.

Strong relationships with component suppliers [are part of our input/resources].

Our targets are ambitious, not least the targets for our scope 3 emissions that relate to our value chain, so we depend on close collaboration with our suppliers to reach our goals.