Annual report
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ANNUAL AND SUSTAINABILITY REPORT 2025
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OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Annual and Sustainability Report 2025 Balco Group’s annual and sustainability report is published in both Swedish and English. The Swedish version is the original version. The Board of Directors’ Report includes pages: 30-36, 38-42, 48-62, 64-95, 98-101. The annual and consolidated financial statements for the 2025 financial year, which have been reviewed and audited by the auditor, are included on pages 30-36, 38-44 and 48-102. Other external review The auditor has reviewed the corporate governance report, pages 38-44, in accordance with FAR’s statement RevR 16 The auditor’s examination of the corporate gover- nance report. Introduction This is Balco Group ................................................3 The year in brief .....................................................4 CEO Comments ..................................................... 5 Reasons to invest ..................................................7 Administration Report Risk management ................................................31 Chairman’s statement ..........................................37 Corporate governance report .............................. 38 Internal control over financial reporting ...............42 Board of Directors and management ................... 43 Remuneration report ...........................................45 Strategy Market and trends ..................................................9 Group strategy..................................................... 11 Business model ...................................................12 Innovation and development ................................14 Maritime projects ................................................15 Acquisitions ........................................................16 Entrepreneurship ................................................17 Interview Stora Fasad Entreprenad...................... 18 Financial targets ................................................. 19 Operations Balco Group's operations .....................................20 Companies in Balco Group ...................................21 Renovation ..........................................................23 New build ............................................................ 24 Offering ...............................................................25 International presence ........................................ 27 Projects during the year....................................... 28 History ................................................................ 29 Other information Alternative performance measures ...................110 Reconciliation IFRS ........................................... 111 The share and shareholders ..............................112 Shareholder information ...................................114 Financial information Consolidated statement of comprehensive income ...64 Consolidated balance sheet .................................66 Consolidated statement of changes in equity ...... 68 Consolidated statement of cash flows ................ 69 Notes ................................................................. 70 Parent Company income statement ....................96 Parent Company balance sheet ........................... 96 Parent Company statement of changes in equity ......97 Parent Company statement of cash flows ...........97 Parent Company notes ........................................98 Auditor’s report .................................................103 Multi-year overview .......................................... 107 Key figures ....................................................... 108 VISION BUSINESS CONCEPT CORE V ALUES Balco Group aims to be the clear choice for balcony solutions and contribute to a better living environment. To create innovative, sustainable and attractive balcony and facade solutions with the customer at the centre, providing people with an improved quality of life. Pride, entrepreneurship, and quality. Sustainability Sustainability strategy .........................................49 Sustainability targets .......................................... 50 Materiality assessment ........................................51 Value chain ..........................................................52 Environmental responsibility ...............................53 The EU taxonomy ................................................ 55 Social responsibility ............................................ 59 Business conduct ................................................61 = Administration report
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MARKETS Balco Group operates in eight geo- graphical markets in Northern Europe. Production takes place in Sweden, Finland and Poland. OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 3 This is Balco Group Balco Group AB is a market-leading group in innovative and sustainable balcony solutions and facade renovation. Under eight brands, we help our customers create safer and more pleasant homes in eight markets in Northern Europe. Balco AB was founded in 1987 in Växjö and has since developed into a group with around 550 employees. The Group’s subsidiaries are often locally based and are spread across a large number of locations in the Nordic region and Northern Europe. Geographical proximity to customers is of great importance for the Group’s brands and at the same time creates good knowledge of the market. A majority of the subsidiaries within Balco Group specialise in balcony solutions and work primarily in the renovation segment, where Balco AB stands out as one of the largest companies in the Nordic region with patented, glazed balcony solutions that yield energy savings of up to 30 percent. The Group is also active in the new build segment with several successful product ranges. In con- nection with balcony projects in both seg- ments, Balco Group also offers, through its subsidiaries, complementary additional ser- vices such as facade renovation, installation of solar panels, air-to-air heat pumps, window replacements, roof insulation, and more. Through innovation, in-house production and a decentralised business model, Balco Group has, through its subsidiaries, succeeded in creating a competitive offering in the markets where the Group operates. By primarily rely- ing on in-house installation teams for balcony installations, the Group is able to control a larger share of the value chain, while also ensuring secure and efficient delivery and installation. A balcony investment or facade renovation is often a costly and complex project. Therefore, customer satisfaction is a natural starting point in all projects – from the first planning meeting to the final inspection. ABOUT BALCO GROUP NET SALES 2025 1,295 MILLION SEK ORDER INTAKE 2025 1,537 MILLION SEK OPERATING CASH FLOW 2025 100 MILLION SEK
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OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 4 THE YEAR IN BRIEF 2025 for Balco Group KEY FIGURESOVERVIEW MSEK 2025 2024 Net sales 1,295.1 1,417.9 Order intake 1,537.1 1,376.8 Order backlog 1,523.3 1,309.3 Adjusted operating profit (EBITA) 15.4 69.6 Adjusted operating margin (EBITA), % 1.2 4.9 Net profit for the period -35.0 4.6 Adjusted profit after tax -10.8 24.1 Operating cash flow 99.7 138.5 Earnings per share, SEK, before dilution -1.55 0.05 Earnings per share, SEK, after dilution -1.55 0.05 Adjusted earnings per share before and after dilution -0.5 0.89 ORDER INTAKE SEK MILLION ORDER BACKLOG SEK MILLION SALES PER SEGMENT % 0 500 1,000 1,500 2,000 Orderingång 20252024202320222021 0 500 1,000 1,500 2,000 Orderstock 20252024202320222021 Renovation New build Order intake increased by 11.6 percent to 1,537 (1,377) MSEK. A large part of the increase is attributable to the strong fourth quarter of 2025. The order backlog increased by 16.4% to 1,523 (1,309) MSEK. The increase is in line with the increase in order intake during the year. The renovation segment accounted for 76 percent of net sales in 2025. New build made up the remaining 24 percent. n At the beginning of 2025, Balco Group implemented extensive structural measures to adapt the cost base to the market situation. The measures included a produc- tion move and personnel reductions. The savings effect is expected to amount to 55 MSEK annually. n On 8 April, Balco Group acquired an additional 20 per- cent of the shares in Suomen ohutlevyasennus Oy. Balco Group now owns 80 percent of the shares in the company and has an option to purchase the remaining 20 percent. n In May, Balco AS, the Norwegian subsidiary within Balco Group, recorded its strongest quarter ever in terms of order intake. Balco AS secured three large orders with a total order value of 140 MNOK. One of the orders also inclu- des Balco Group's patented air-to-air heat pump solution, which is integrated into the balconies. n On 17 June, Balco Group re-entered the maritime segment through a strategically important order of ap- proximately 80 MSEK from the French shipyard Chantiers de l’Atlantique. The deal comprises balconies, railings and sliding doors and strengthens Balco's long-term presence within the segment. n On 31 October Michael Grindborn concluded his service as CFO. Viktor Arvidsson was subsequently recruited as the new CFO and IR Director and took office in February 2026. At the same time, Balco has established a new group-wide role, Director of Business Development & Head of IT, to which Andreas Lindberg has been appointed to drive strategic initiatives, digitalisation and the further development of the Group's offering. n In the fourth and second quarters, Balco Group achieved the highest levels of order intake for individual quarters in the Group's history. In the second quarter, or- der intake was 519 MSEK and in the fourth 521 MSEK. The order intake was driven by Swedish balcony companies, the Norwegian market and two major maritime orders. n On 18 December Balco Group signed the Group's largest order ever. The assignment relates to deliveries to three new cruise ships being built by the German shipyard Meyer Werft. The order value amounts to approximately 200 mil- lion SEK. The projects comprise a total of more than 2,000 balcony solutions and began with design work at the turn of the year. Work at the shipyard starts in 2027 and comple- tion is planned for 2029 for the first two ships and 2030 for the third ship. 76.0% 24.0%2025 was characterised by weak profitability in a continued challenging market climate. Despite some recovery in several markets, progress has been slow across the entire construction and re- novation sector. Against this background, Balco Group implemented extensive structural measures within the Group at the beginning of the year with a long-term perspective. These measures have improved cost levels while allowing the company to maintain the ability to seize growth opportuni- ties when the market strengthens. During the year, Balco Group also re-entered the maritime segment through two major orders, one of which was the largest single order in the company's history. The two orders strengthen our order book and mark an important step in re-establishing our presence within the segment.
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OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 5 Boost in order intake despite a continued challenging market 2025 was a year characterised by a rapidly changing world, with geopolitical developments as well as changed trade policy conditions. An unsettled world naturally leads to increased caution, which in turn dampens the willingness to invest and delays business decisions. This has been particularly evident in both the construction and consu- mer sectors, which continue to display a cautious stance despite a more favourable investment climate with falling interest rates and lower inflation. At the same time, we have seen initial signs of a nascent recovery in individual markets during the year. For Balco Group, 2025 has meant a continued focus on structural changes and capacity adjustments to strengthen our long-term competitiveness. At the same time, we have seen a positive development with increased order intake in several of our markets, together with a strategic re-entry into the maritime segment. Increased order intake despite a challenging start The Group’s net sales for 2025 decreased by 8.7 percent to 1,295 million SEK. Currency fluctuations had a negative impact on net sales of 4 percent, while completed acqui- sitions contributed positively by 2 percent. The lower net sales had a negative impact on our adjusted EBITA, which amounted to 15.4 million SEK, corresponding to a margin of 1.2 percent. This is not a result we are satisfied with. During the year, we have implemented extensive cost adjustments and worked purposefully with measures to strengthen profitability. However, these efforts have not been able to fully compensate for the lower net sales and a continued tough competitive situation in certain markets, which has led to increased price pressure. This has been particularly evident in our operations in Denmark and Finland. The result was also affected to some extent by a major variance in a project within our subsidiary TBO- Haglinds. The Group’s order intake increased during 2025 to over 1.5 billion SEK, which corresponds to an increase of 12 percent compared to 2024. A large part of the increase is a result of our re-entry into the maritime segment, where Balco Group has secured two major orders for deliveries to cruise ships during 2025. The first order was received during the second quarter from the French shipyard Chantiers de l’Atlantique and was an important milestone for Balco as it was our first order in the French market and also included the delivery of sliding doors, which is an expansion of Balco's maritime product offering. The second maritime order was received during the fourth quarter from the German shipyard Meyer Werft and is the largest single order in Balco's history, with an order value of approximately 200 million SEK. The order includes the delivery of balconies and sliding doors for a series of three cruise ships, with an option for an additional three ships. Our companies in the Swedish market also had a good order intake during the year, with an increase of 32 percent compared to 2024. In Germany, the order intake was slow during the beginning of the year, which can be partly att- ributed to the German election. However, the order intake Camilla Ekdahl President and CEO, Balco Group AB COMMENTS FROM THE CEO
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OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 6 was significantly better during the second half of the year and, looking at the full year, it increased by 12 percent compared to the previous year. Varied market development In Sweden, we are seeing an increased interest in the mar- ket, which is clearly evidenced by the higher order intake. In the Swedish market, we have several companies operating and they complement each other in terms of customer offerings. Some of them have a clear advantage and profile towards construction companies, while others are mostly focused on housing co-operatives. Worth mentioning is that our subsidiary RK Teknik, during the end of 2025 and the beginning of 2026, secured three major public housing procurements, with a total order value of approximately SEK 80 million. Our facade companies have also seen an in- creased activity on the Swedish market, especially during the second half of 2025. In Norway, there is a continued interest in our projects where Balco complements deliveries of extended and gla- zed balconies with other energy-saving measures such as air-to-air heat pumps and solar panels. During the second quarter of the year, we secured several major orders in the Norwegian market, despite inflation and interest rates re- maining significantly higher than in other Nordic countries. Denmark and Finland are currently our most challenging markets. In Denmark, this is because the majority of bal- cony projects involve installing balconies on buildings that did not previously have balconies. This involves a higher investment step than renovating an existing balcony. Ho- wever, there is also a great need for renovation in Denmark for older balconies and much discussion is being held regarding the safety of older balconies, but many property owners are still postponing their measures. Finland is experiencing weak economic development which, together with extensive construction of new properties during the early 2020s, has negatively affected housing construction and our new-build segment in the Finnish market. We also see a corresponding development for renovation projects in Finland. Households remain cautious about making major investments, while we see that savings have increased. However, we estimate that the renovation segment will see a certain increase during 2026, and we are continuing our efforts to strengthen the renovation operations in our Finnish balcony company Riikku Rakenteet. Together with our Finnish facade com- pany, we aim to transition from being a glazing company to becoming a balcony company that can also undertake projects including replacement of balcony slabs as well as facade work. At the same time, Riikku has good opportuni- ties to grow in markets outside Finland. As previously mentioned, we had positive order intake development in Germany last year. In Germany, we focus on large recurring customers in the renovation segment and modular house manufacturers in new build segment. In new build, there is a significant competitive situation, which means we are selective with the projects we under- take considering our profitability requirements. With the acquisition of Riikku, we have also gained access to a new range of glazing solutions that better suit certain custo- mer segments in Germany. During 2025, projects with an order value of approximately SEK 20 million were signed using this solution. We also see continued potential in the Netherlands and the UK. After a couple of successful projects in the Netherlands, we now have a number of showroom projects featuring virtually all our balcony solutions, which will be important selling points in future tenders. We see clear potential, especially for our lighter aluminium balconies, in both the renovation and new build segments. Furthermore, we are unique in the market with our Levitate balcony for new build projects. In the UK, our focus remains on new build. The mar- ket potential is very large, but it also requires adapted solutions and a good cost structure. To better meet market demands, Balco moved resources in design and develop- ment from Sweden to the local company during 2025. Streamlining and new initiatives In addition to individual strategic measures in each market, the Group has implemented structural changes during the year. The changes include a relocation of TBO-Haglinds’ production in Arboga to the Group's existing facilities in Växjö and Poland, a merger of Stora Fasad and Arutex into Stora Fasad Entreprenad, the integration of Riikku Sweden's operations into RK Teknik, the integration of the Finnish subsidiary Koti into Riikku Rakenteet, and signifi- cant staff reductions. The cost of the structural changes totals SEK 30 million and is estimated to yield annual savings of approximately SEK 55 million. A consistent theme for the changes has been business development in line with our long-term strategy. We have simultaneously strengthened the Group's management team through the recruitment of Andreas Lindberg, who has been Business Development Director for Balco Group since November. Andreas works with all companies within the Group and with a short-term focus on those markets and companies where we need to make the greatest chan- ges depending on market developments. In the long term, his mission is to help all our subsidiaries with continued bu- siness development in their respective markets, but also to find new business opportunities within both existing and new markets, which also includes acquisitions. Well prepared for increased interest in 2026 2025 was in many ways a challenging year for Balco Group with extensive structural changes and profitability that was far from our long-term goal. We did, however, see clear signs of some recovery in certain markets and seg- ments. We are confident that the recovery will continue gradually going forward, especially in the renovation seg- ment. The need for renovation has not disappeared during the years of lower activity, it has only been postponed. This supports cautious optimism, given the global situation and the challenges that remain. During 2026, we will continue to work on profitability- enhancing measures, with a continued focus on cost control alongside a strong emphasis on order intake. Profitability is of utmost importance for Balco Group and has significant impact on our capital structure, which has historically been strong and enabled investments in our subsidiaries as well as new acquisitions. We aim to reach that level again. With the structural changes implemented during 2025, a broad product portfolio, and the retention of key compe- tencies that enable us to execute complex projects, we are well prepared to meet increased demand in the market and a higher level of order intake. Växjö, March 2026 Camilla Ekdahl CEO, Balco Group AB n Order intake: Work on the order intake during 2025 yielded good results. Order intake remains the highest priority for both the Group and all subsidiaries, combined with product and service develop- ment to meet local needs. n Renovation in Finland: The focus area for 2025 was to adapt the organisation to a demanding market situation and increase the presence in the renovation segment, which continues to be a focus area for 2026. n Profitability: The structu- ral measures we implemented during 2025 are estimated to yield savings of approximately SEK 55 million annually. Work on profitability-improving measures continues during 2026, with a strong focus on sales. FOCUS AREAS COMMENTS FROM THE CEO
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OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 7 REASONS TO INVEST Five reasons to invest in Balco Group Balco Group has a comprehensive offering in balconies for both the renovation and new build segments. In addition, the Group, through its subsidiaries and subcontractors, also offers facade renovation services, support servi- ces and other additional services such as the installation of solar panels and heat pumps. The market for balcony and facade renovations in the Nordic region is estimated at approximately SEK 40 billion and is expected to increase by at least 5 percent annually as a result of a pent-up need for renovation and upcoming EU legisla- tion regarding the energy class of buildings. Full-scale offering Balco Group has a strong market position that is difficult to replicate through a broad patent portfolio, in-house production in three countries and its own installation capacity. Several subsidiaries also have the ability to manage turnkey projects. Taken together, this means the Group has full control over quality, costs and delivery precision, as well as creating high barriers to entry for competitors. Across Europe, Balco Group is one of a few players that can handle large and complex balcony pro- jects. This includes maritime projects where Balco Group is one of only two major players in Europe. Competitive advantage Balco Group is the market leader in Sweden and Norway and is among the major players in Den- mark. Through its broad and unique product offering combined with the Group’s collective expertise, Balco Group has succeeded in expanding into additional markets by meeting local preferences in each market. Today, the Group is also established in Germany, the UK and the Netherlands and at the same time has a strong position in Finland following the acqui- sitions of Riikku and Suomen Ohutlevyasennus in 2024. Growing internationally Innovation and development are continuous within the Group, and every year new paten- ted solutions are added in areas such as steel construction and industrial design for modular systems, energy optimisation and installation solutions. The Company's design work com- bines aesthetics and functionality with locally adapted solutions for different markets. Leading innovator A central part of Balco Group's offering is energy-efficient balcony solutions that can contribute to up to 30% lower energy con- sumption in the home, while also reducing the climate footprint, extending the lifespan of the balcony and creating a more pleasant living environment. The Company works continuously to lower its environmental impact in both pro- duction and product development by evaluating material choices, processes and new solutions. Its long-term sustainability work has resulted in Balco Group currently being among the top 10 percent of companies in the construction sector in terms of ESG risk. Strong ESG profile Offering page 25 Strategy page 11 International expansion page 27 Innovation page 14 Sustainability Report page 48
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Strategy and Operations BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 8 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY Market and trends ..............................................................9 Balco Group’s strategy .....................................................11 Business model ...............................................................12 Innovation and development ............................................14 Maritime projects ............................................................15 Acquisitions ....................................................................16 Entrepreneurship ............................................................17 Interview Stora Fasad Entreprenad.................................. 18 Financial targets ............................................................. 19 Balco Group's operations .................................................20 The companies within Balco Group ..................................21 Segment: Renovation ......................................................23 Segment: New build ........................................................ 24 Customer offering ...........................................................25 International expansion ...................................................27 Projects from the year .....................................................28 History ............................................................................ 29
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 9 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY MARKET AND TRENDS Balco Group's market Övriga Europa Övriga Norden Sverige NET SALES BY GEOGRAPHICAL MARKET SEK MILLION NET SALES BY CUSTOMER GROUP SEK MILLION BALCO GROUP NET SALES SEK MILLION 0 400 800 1,200 1,600 Net Sales 20252024202320222021 Sweden 586.8 Other Nordic countries 516.3 Rest of Europe 192.0 Housing cooperatives 784.8 Public housing sector 30.6 Private property owners 42.7 Construction companies 437.0 Bygg- och tillverkningsbolag Privata fastighetsägare Allmännyttan Bostadsrättsföreningar Balco Group is the market leader in the Nordic region and a growing player in Europe. A majority of the Group's turnover continues to come from the renovation segment, where housing co-operatives constitute the largest customer group. Fragmented market The market in northern Europe is characterised by a large number of smaller players in local markets. • Apart from Balco, there are only a few larger compa- nies that compete in multiple geographical markets. • Balco Group’s production capacity, quality assu- rance and combined offering within major renova- tion projects often represent a clear competitive advantage. Great need for renovation The macroeconomic situation is causing many pro- perty owners to postpone investment decisions. This leads to longer sales cycles and caution in early project phases. • The structural need for renovation remains intact and is expected to increase annually. • A large and ageing housing stock, increased re- quirements for energy efficiency and the need for improved living environments are driving the market forward. Changed customer behaviour A general trend in several markets is that decision- making processes are taking longer. Customers often request multiple quotes to put suppliers in competition. • Some customers in the construction industry always choose the cheapest option from subcontractors because they themselves have been subjected to competition to win the project. • Other customers prioritise experienced suppliers with good references and quality over costs. It is towards this customer group that Balco Group primarily works. Geographic characteristics Despite a weak construction sector in large parts of Europe, there is a varying need in Balco Group's markets. • Electricity is used extensively for heating in Norway, which makes energy-saving measures a decisive factor in renovation projects. • In Sweden, Finland and Norway, glazed balconies are popular, while city balconies are more common in Denmark. • In Germany, the UK and the rest of Europe, there is a great need for smart and cost-effective solutions for the new-build segment. 14.8% 45.3% 60.6% 2.4% 3.3% 33.8% 39.9%
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 10 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY MARKET AND TRENDS Sustainable housing THE RIGHT PRODUCT FOR THE RIGHT MARKET Market trends Balco Group's approach to the market Changing needs Changed processes Energy efficiency has become a high-priority issue for many property owners. Stricter EU requirements, increased operating costs and demands for reduced emis- sions are driving investments in measures that improve energy performance in existing buildings and properties. These projects often take a holistic approach and involve extensive renovation efforts. Housing co-operatives are demanding safer, more fun- ctional and more aesthetic living environments, especially in urban areas. Facade improvements, balconies and glazed balconies are all popular options that contribute to increased property value and improved living standards, while placing higher demands on logistics, project mana- gement and execution. Many property owners want to streamline their renovation processes and reduce costs and risks in complex projects. This increases demand for suppliers who can take overall responsibility, deliver on time and manage technology, construction and project execution within a single organi- sation. Balco Group's subsidiaries together have a wide and unique range of balcony and facade solutions as well as energy-improving installations that reduce energy consumption, enhance indoor climate and improve quality of life. The Group can act as a turnkey contractor and of- fers complete solutions covering planning, construction, installation and service. Balco Group adapts its balcony and glazing solutions to local building permit requirements, cultural environments and architectural guidelines. Through advanced project planning and close collaboration with municipalities and architects, the Group's subsidiaries can design aesthe- tically pleasing solutions for each project that integrate seamlessly into the urban or residential environment. Balco Group works actively, both in Sweden and abroad, to build long-term customer relationships. Through its subsidiaries, the Group has a local presence in many loca- tions, supported by the collective expertise of the entire organisation. This means that all subsidiaries can under- take complex projects and offer complete and seamless solutions together with their sister companies. Balco Group has strengthened its position in the UK over several years. The British Isles represent a large and pro- mising market, primarily within the new-build segment, with specific requirements for safety and performance. The market is a clear example of how strategic product development enables expansion. The image shows Levi- tate, a balcony specifically designed for the UK. New energy efficiency requirements Flexible and aesthetic solutions Efficiency and risk management Glazed balconies and complementary services Design and building permit expertise Local presence backed by a strong organisation
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 11 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY THE GROUP'S STRATEGY The housing of the future must be geared towards high urban density, resource efficiency, and quality of life. Taking economic, environmental and social value creation into account, Balco Group’s strategy is built on four pillars: a long-term business model, innovation, acquisitions and entrepreneurship. A business model for long- term value creation Innovation and development Selective and value-creating acquisitions Entrepreneurship and decentralisation A business strategy for the future 1 2 3 4 Balco Group aims to be the clear choice for balconies. An ageing housing stock in Europe is the basis for a growing demand for secure and innovative balcony solutions, and Balco Group offers one of the most comprehensive solutions on the market. The offering includes both stan- dardised solutions for new construction and customised solutions tailored to specific renovation needs. Over time, Balco Group has developed the Group's of- fering and today also offers its services as a full-service provider within facade renovation and other services. The strengthened offering meets the increasingly high demands of several customer groups. With customer security as a starting point, Balco Group offers world-class products, and combined with high competence and valua- ble experience, this lays the foundation for growth in new and existing markets. Many companies within Balco Group are manufacturing businesses with strong innovation capabilities. New pro- ducts strengthen and complement the Group’s offering, and the Group currently holds 77 patents across 31 patent families, with a further 11 under review – an increase of 8 patents compared with the previous year. These patents cover areas such as steel construction and industrial design and reflect continuous efforts to improve pro- ducts in terms of functionality, materials and installation processes. Balco Group holds a strong leadership position and develops products that often set the standard for the industry. Expertise in product development also constitutes an important part of the Group's contribution to a more sustainable society. For example, Balco AB's patented and glazed balconies provide documented energy savings of up to 30 percent. Two central elements of Balco Group’s business strategy are a broad offering and close proximity to the Group’s customers. Both parts are achieved partly organically through product development and expansion, and partly through acquisitions of well-managed companies that contribute new expertise, new products and access to new geographical markets. An example of the latter are the acquisitions of Riikku and Suomen Ohutlevyasennus during 2024. Through both acquisitions, Balco Group has placed itself in a market- leading position in Finland, while the expertise and produc- tion capabilities of both companies have been added to the Group. Balco Group also maintains continuous dialogues with candidates who are carefully evaluated to ensure strong synergies in the event of a potential acquisition. Balco Group cherishes entrepreneur-driven companies that have built up and continue to build their own brand. The management of each individual subsidiary has full responsibility for performance and development in order to ensure flexibility and customer focus in their respective markets. The decentralised model is fundamental for the Group companies when it comes to customer retention and acquisition. At the same time, Balco Group provides the right means to develop the operations. From a strategic perspective, Balco Group's task is to create synergies and support the subsidiaries with central functions such as finance, IT, HR, purchasing and sustainability to maximise the potential in each unit and enable each individual com- pany within the Group to focus on its strengths.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 12 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BUSINESS MODEL Balco Group's business model is closely linked to the Group's vision – to be the clear choice for balconies. The business model is based on three key components: customer security, the green transition and a unique offering. A business model for long-term value creation Today, Balco Group is one of Northern Europe’s safest and fastest suppliers of balconies in a growing market. Balcony renovation continues to form the core of the business, driven by a significant pent-up need for renovation. Each individual project depends on the customer, the site, and the property. Therefore, preferences, execution, and possibilities become decisive factors in successful projects. Balco Group always offers turnkey solutions. The Group has its own sales staff, project managers, its own production, and its own in-house installation teams, enabling projects to be delivered from start to finish. This is a major strategic advantage and represents all components of the business model. The Group's offer as a full-service provider also includes facade renovation services and assistance with budgeting, building permit applications, and other administratively demanding parts of the projects. The Group's objective is that the client should feel secure throughout the entire process that the work is progressing both quickly and smoothly and remains within the budget's framework. Over the past decade, Balco Group has, th- rough both innovation and acquisitions, broa- dened its customer offering. Development has largely revolved around the sustainable transition – offering solutions and products that reduce energy consumption in proper- ties. Cold winters and the war in Ukraine have led to volatile energy prices in recent years. This, combined with upcoming, stricter requi- rements for buildings' energy performance, means that achieving energy savings for customers remains an important component in the Group's business development. Part of the new expanded offering includes, for example, installations of solar cells and heat pumps. Balco Group's largest subsidiary, Balco AB, has here combined its balcony offering with the demand for energy savings and offers the installation of an air-to-air heat pump which is integrated with the company's glazed balcony solutions. It is a unique and patented solution that provides a double energy-saving effect and is entirely in line with the Group's business model to create unique opportunities for the properties of the future. UNIQUE OFFERING Customers' requests and needs vary but are ultimately governed by the condi- tions of each property. Balco Group's extensive experience and expertise in balcony solutions deliver results that align with both customer requirements and prevailing conditions. CUSTOMER PEACE OF MIND A balcony renovation represents a signi- ficant investment for our customers. As in all construction projects, challenges can arise along the way, which creates a need for trust. Balco Group is a reliable partner that takes responsibility for the entire process and provides proactive support, from building permit manage- ment to financing. SUSTAINABLE TRANSFORMATION 40 percent of energy consumption in Europe is currently used to heat buil- dings. Through Balco Group's turnkey offer, property owners can significantly reduce energy consumption through balcony glazing, insulation, replace- ment of windows and doors, and tradi- tional facade renovation. For example, a glazed balcony solution via Balco AB has a proven effect of up to 30 percent. 1
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 13 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BUSINESS MODEL When Balco Group’s project manager issues a final decision for a contract, a final inspection is carried out together with the client, who has the opportunity to offer input and request complementary services. Through the Group's well-developed service organisation, we ensure that the customer has a positive customer experience even after the project is completed, where we offer a five- to ten-year warranty on most products as well as access to spare parts after the end of the warranty period. Final inspection and guarantee Assembled products and associated components are delivered to the relevant property, where specialised fitters carry out the installation. Transport is optimised to ensure the lowest possible environmental impact and cost. By taking material choices and processes into account as early as the design phase, careful waste sorting is possible during installation, which contributes to a high recycling rate. Delivery and installation The Group's companies prioritise quality in all of their work, using specialised management systems including ISO 9001, ISO 14001, and ISO 3834-2. Manufacturing is based on strict requirements for a safe working environment and takes into account important sustainability considerations to minimise waste and energy consumption. We strive to maximise the degree of pre-fabrication to facilitate later project phases. Manufacturing Each balcony structure is unique, and through careful calculations, adaptations are made to fulfil both the customer’s requirements and the technical conditions. As early as the design phase, a material optimisation process is carried out to minimise material consumption and waste, as well as to ensure a structure with a long lifespan. Once all the infor- mation is in place, detailed two- and three-dimensional drawings are produced and production is prepared. Construction and design Early in the process, Balco Group appoints a project manager who assesses the building, the conditions for balcony installation and the feasibility of obtaining a building permit. Based on the customer’s requirements, the project manager prepares a proposal covering design, material selection, timeline and financial aspects of the intended solution. Balco Group also provides advice and material related to the financing plan for tenant-owned associations. Advisory, planning and visualisation How a turnkey solution from Balco Group works
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 14 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY INNOV ATION AND DEVELOPMENT How Balco Group creates products for the future 2 Innovation and development play a central role in Balco Group's strategy and are directly linked to the unique offering as part of the business model. The Group operates in several markets with distinct characteristics and varying demand, which drive ongoing product development. In some cases, new products originate from ideas on how specific processes can be streamlined, although customer demand is often the primary driver. As early as 2005, Balco AB established its own development department, which has cutting-edge exper- tise in steel construction, structural calcula- tions, industrial design, energy optimisation and programming. Similar capabilities are also found in other subsidiaries within the Group. Many of the ideas and products developed within the Group result in in-house patents. At present, the Group’s patent portfolio compri- ses 77 patents across 31 patent families, with a further 11 under review. Balco Group operates on several markets in Northern Europe where regulations and demand differ. This in turn places demands on sound knowledge, expertise and flexibility when new products are developed or existing products are adapted. The Group's product development therefore takes place at a rapid pace from idea to finished product via five overall phases. For smooth installations and cost efficiency, the Group optimises and standar- dises its products and processes wherever possible. At the same time, each individual project has unique challenges and opportuni- ties. Balco Group's success lies in the ability to quickly develop tailor-made solutions developed according to proven processes and today there are only a few companies in all of Europe with similar expertise regarding various project solutions. The in-house product development contributes at the same time to a more resource-efficient operation. During the product development process, environmental impact and opportunities for recycling among different design alternatives and materials are investigated. Material use is optimized carefully to mini- mize the amount of waste and scrap genera- ted during manufacturing. When the product is evaluated, an important component is the final product's environmental performance and lifespan. Overall, the product develop- ment process creates solutions that reduce the environmental impact, while the Group's customers are offered products with a long lifespan and a high degree of recycling. PRODUCT DEVELOPMENT IN FIVE PHASES Idea stage: All ideas first pass through the Balco Group product council. Development then begins with a requirements specifica- tion, pre-construction drawings and an assessment of the project's technical feasibility and potential for profitability. In cases where the product has a unique function, a patent application is also filed. Prototype stage: In this phase, a prototype is developed to enable further calculations and evaluations. In many cases, 3D printing is used to manufacture parts, while metal prototypes are produced by specialist toolmakers. Full-scale testing: A full-scale prototype is developed to test the construction's service life, safety and the need for specific compo- nents. At the test facility, the prototype is assembled in a realistic environment. The marketing department also begins at an early stage to develop relevant marketing material for the product. Preparation for production: The development department gua- rantees the product's marketability and production feasibility. An important step in the process is ensuring that the product is adap- table. Specifications and drawings are developed and distributed among designers and to the purchasing department. Production phase: By this stage, the product has typically already been sold as part of customer projects. The first version – the pilot series – is tested by all parties involved and installed at the customer’s site. Evaluations and any adjustments are then carried out for future editions.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 15 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY INNOV ATION AND DEVELOPMENT – MARITIME PROJECTS Balco Group back in the maritime segment after two major orders Balco Group made its first entry into the maritime market in 2016 when the Group delivered balcony systems to four cruise ships for the German shipyard Meyer Werft. In the final stages of production for the cruise series, the world was hit by the COVID-19 pandemic, which heavily af- fected the cruise industry and the tourism sector, and since then it has taken time for the market to recover. For 2025, the industry organisation CLIA estimates that the number of travellers was 37.7 million, which exceeds travel levels from before the pandemic, and there is confidence in the fu- ture and a continued increase in travel. For Balco Group, the strong recovery within the cruise industry is welcome news. In the European market, there are only a few players that can deliver balcony solutions at the right price, quality and to the extent required. Production places high demands on both design and execution, as the balconies are mounted on the exterior of ships and must combine aesthetic ap- peal with durability, given their exposure to vibrations from the sea and the vessel, as well as heat, cold and saltwater. Surface treatment and frequency analysis thus become important components in production that require speciali- sed expertise. An additional factor in these extensive productions is logistics. The ships are built step by step in sections that are welded together. There is no room to miss parts and components when the ships are assembled, and if a player misses their deadline, there is a high probability that the shipyards will look for other subcontractors for the next series. Production for the French Chantiers de l’Atlantique is Balco’s first project in the French market. Manufacturing will take place at Balco Group's facilities in Poland and also on site in Saint-Nazaire to ensure smooth delivery. The project includes specially designed, insulated sliding doors that will strengthen the Group's offering in the future as well. Assembly begins in 2026 with final delivery during the second quarter of 2028. Production for Meyer Werft will also take place in Po- land. In total, over 2,000 balconies will be delivered to the three ships. Design work began during the winter of 2025, and work at the shipyard starts during 2027 with a comple- tion date in 2029/2030. 2025 was a milestone for Balco Group in light of two major orders from the maritime segment. The orders relate to the production of balconies, railings and doors for a new cruise ship for the French shipyard Chantiers de l’Atlantique and for three new ships for the German shipyard Meyer Werft. The order values for the two orders are SEK 80 and 200 million respectively. The fact that major shipyards choose us is strong proof of our technical expertise and our ability to deliver in complex projects. Linus Ralling, Sales Manager Maritime and Country Manager Germany
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 16 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY ACQUISITION STRATEGY A growing group with strengthened offerings 3 Acquisitions are an important part of Balco Group's growth strategy and today the Group consists of eight brands with unique customer offerings. The Group works based on a clear and structured process for successful integration and development of acquired companies. Balco Group is a long-term owner that under- stands that a successful acquisition takes time. Sometimes an acquisition can take several years from negotiation to full integra- tion into the Group, but this also increases the likelihood of a satisfactory outcome for both parties. Balco Group works to be an attractive alter- native for small and medium-sized companies within the Group’s niche. An important aspect of this is that acquired companies can conti- nue their operations under current manage- ment and brand. As an owner, the Group adds financial stability as well as resources and tools in sustainability work, digitalisation and business development that make it easier and more efficient to develop the business. Acquired companies, in turn, contribute unique expertise and capabilities to the Group, which enables a broad and unique of- fering in line with the Group’s business model. In a number of assignments annually, the group's subsidiaries collaborate to jointly execute larger projects, most often within the renovation segment. In these cases, Balco Group, as the owner, can provide expertise in resource management, logistics and project management. Thanks to these collaborations within the Group, smaller companies in local markets can also offer their customers more products and services and thus strengthen their posi- tion in their local area. A further aspect of Balco Group’s acquisition strategy, in addition to the synergy effects, is that it gives the Group access to new markets. During 2024, Balco Group acquired Riikku Group Oy and Suomen Ohutlevyasennus Oy, two market-leading companies in Finland in balcony glazing and railings for balconies and facade renovation respectively. The compa- nies have previously collaborated on projects and several initiatives to integrate the compa- nies into the larger Balco Group organisation are ongoing and include, among other things, cross-selling between the various geographi- cal markets. Acquisitions of this type are evaluated con- tinuously throughout the year. CRITERIA FOR GOOD ACQUISITION CANDIDATES n European balcony com- panies or companies whose ac- tivities can complement Balco Group's product offering. n Profitable, well-managed companies with a strong posi- tion in niche markets. n A corporate culture in line with Balco Group's sustainable business model. n Continued commitment from management and employ- ees at the acquired company.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 17 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY ENTREPRENEURSHIP Entrepreneurship builds a strong organisation 4 Balco Group values entrepreneurship highly. Within the sectors in which its subsidiaries operate, the brand is highly important and often serves as a mark of quality. As part of Balco Group’s strategy, each individual company is therefore encouraged to focus on its strengths and develop its business, while the Group supports the subsidiaries with central functions. Allowing companies within Balco Group continue to deve- lop under their own brands has historically been crucial to the Group’s growth. For each subsidiary, this gives management the free- dom to conduct operations in the manner that best suits their expertise and market, within the overall strategic framework developed together with group management. It facilitates decision-making, speeds up processes, and creates incentives to develop the offering and improve operations. A further advantage of the decentralised structure within Balco Group is that all companies bring their own reliable subcontractors and partners into the Group. These rela- tionships are encouraged to be maintained where benefi- cial from both a cost and quality perspective. Companies within the Group can also support one another through benchmarking and by facilitating new collaboration oppor- tunities. When recruiting personnel, it is also important that companies are allowed to maintain their brand and iden- tity. Each company shapes its own organisation based on the company's structure and operations. From a business perspective, customers in both the renovation and new build segments often choose to work with contractors they already know, which creates major competitive advantages and leads to high customer satisfaction. Over time, a decentralised business creates diversification in offerings and knowledge about how different projects can be implemented, as well as a great deal of responsibility when the business is run under its own brand. As a group, Balco Group takes responsibility for offering support and developing parts of the company that are not directly connected to the core business. For instance, the Group provides centralised functions such as finance, IT, HR, and procurement, and it drives Balco Group's joint sus- tainability efforts forward. Our companies' manufacturing facilities can produce for both their own company and for sister companies, depending on expertise, geographical location, and capacity utilisation. Collaboration between Group companies is encouraged by Balco Group. In many projects, there are significant synergies between the subsidiaries' offerings, which strengthen individual companies’ customer offerings. From a strategic point of view, decentralisation is also positive for the Group's diversification, risk management and resilience, as the Group's resources can be used where they create the most value. PROPRIETARY BRANDS AND PRODUCTS n Product development within the Group takes place internally within each individual company. Balco AB has an important leading role as the company cur- rently accounts for the majority of new products. n The objective of investments in product develop- ment is to strengthen the Group's offering through better, safer and more sustainable products. n Each individual company has an important role within the Group, and the specialised expertise and needs that exist locally often lead to new ideas that drive product development forward. n Although the individual group companies are responsible for their own product offerings, there are synergy effects between the subsidiaries' offerings. This structure is part of Balco Group's decentralised model and has proven to be successful by leading to a wide range of products and services.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 18 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY INTERVIEW STORA FASAD ENTREPRENAD Turnkey contracts are more interesting to us now Johan Bengtsson has a career spanning approximately 25 years within the Balco Group. He previously worked for many years as a project manager at Balco AB and has been the CEO of Stora Fasad for the past three years, which me- ans he has good knowledge of the entire Group's offering. “Cooperation within the Group works very well for us. It makes us faster and more competitive. It is about give and take; partly we often collaborate with Balco or TBO- Haglinds on projects, and partly we collaborate on sales. For example, we sometimes suggest to customers the possibility of building new balconies in connection with a renovation project. Then it is natural that we can contact TBO-Haglinds or Balco,” he says. Greater potential for turnkey contracts The hope with the merger is specifically an expanded collaboration that will provide the companies and their employees with new opportunities. “Turnkey contracts become more interesting to housing co-operatives and housing companies. We will also hire and develop certain branches such as concrete renovation and concrete sawing, which we believe is timely. People will largely continue to work with what they do today, but we have a couple of carpenters with vocational certifica- tes in the new organisation, and for them, it could mean more varied work, which they are positive about,” says Johan. The head office for Stora Fasad Entreprenad will be located in Arboga, in the premises that Arutex currently shares with TBO-Haglinds. The new organisation also maintains its presence in Västerås, which altogether crea- tes a strong local presence in the Mälardalen region. “Arutex has previously worked almost exclusively with TBO throughout Sweden, but now we also offer balcony installation for the entire Group, which provides a slightly wider geographical spread. The focus for the facade busi- ness is and has been in the Mälardalen region, but we have no problem undertaking assignments elsewhere, especi- ally now,” says Johan. Higher market interest The last few years have been tough for many companies in the construction industry, both in renovation and new build. The rapid interest rate hikes were a contributing factor, but since interest rates began to fall again, interest has returned. “2025 was a tough period for everyone in our region, but at the most recent trade fairs we attended, in Västerås and Uppsala, people queued for 20-30 minutes to talk to us about potential projects and get a sense of the price level. It wasn't like that last year. It feels like things are turning; even old projects that were put on hold have started to be picked up again,” says Johan. Next year, Sweden is also expected to legislate on EU requirements regarding the energy class of buildings, so- mething that has been relevant for several years and could mean extensive renovation projects around the country. “I hope that the market opens up and I believe that conservation renovation projects will increase, especially among housing co-operatives. That is to say, they want and need to modernise properties while at the same time preserving their character. This also coincides with the new energy class requirements and can involve windows, facades, insulation, attics, all of which we provide. 2026 might not be full speed ahead, but hopefully much better,” says Johan. In the autumn of 2025, the Balco Group companies Stora Fasad and Arutex merged to form Stora Fasad Entreprenad AB. The purpose of the merger is to create a stronger organisation with a broader offering. “Arutex feels like a good complement to us. We have known each other for a long time and we have long discussed having a few more strings to our bow, so it became natural to merge”, says Johan Bengtsson, CEO of Stora Fasad Entreprenad. “ One of Stora Fasad Entreprenad’s most recent projects was a facade renovation of Brf Kolarhagen’s properties in Västerås. Johan Bengtsson CEO, Stora Fasad Entreprenad AB
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 19 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY STRATEGIC GOALS Interest-bearing net debt (including lease liabilities) amounted to SEK 350 million at the end of 2025, which corresponds to 6 times adjusted EBITDA. Periodically, the key ratio may be significantly higher than the target as a result of acquisitions or a weaker market situation. Earnings per share decreased to SEK -1.55 (0.05). A lower profit margin, restructuring and acquisition costs, and increased finance costs have a negative impact on earnings per share. In 2025 net sales decreased by 9 percent to 1,295. 1 MSEK (1,417.9). Acquired growth was 2 percent, currency effect was -4 percent and organic growth was -7 percent. Balco Group aims to distribute 30–50 percent of its profit after tax, taking into account the needs of Balco Group’s long-term development and prevailing market conditions. The Board of Directors proposes that the An- nual General Meeting resolves that no dividend be paid for the 2025 financial year. Interest-bearing net debt is not to exceed 2.5 times EBITDA, other than temporarily. Earnings per share should grow by an average of 20% per year over a business cycle. Net sales should grow by an average of 10% per year over a business cycle. Capital structureProfitabilityGrowth Financial targets 0 300 600 900 1,200 1,500 1,800 Net sales 20252024202320222021 -20 -10 0 10 20 30 40 Growth Target 0 1 2 3 4 5 6 Earnings per share 20252024202320222021 -100 -75 -50 -25 0 25 50 75 100 Growth Target 0 50 100 150 200 250 300 350 400 Vinst per aktie 20252024202320222021 Interest-bearing net debt 0 1 2 3 4 5 6 7 8 Net debt/Adj. EBITDA Target DIVIDEND POLICY SUSTAINABILITY TARGETS In addition to financial targets, Balco Group also has a number of sustainability targets. Read more about each target on page 49.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 20 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY Balco Group's operations Balco Group creates spaces for living. The Group's operations include the design, delivery and installation of glazed and open balconies, facade renovation and additional services. The offering is based on the green transition and, in addition to contributing to an increased quality of life for residents, each product must also contribute to reducing the property's resource consumption. Facade renovated by Söderåsens Mur- & Kakel AB, Stora Fasad Entreprenad AB and Suomen Ohutlevyasennus Oy Glazed Eriksberg balconies installed by RK Teknik i Gusum AB French city balconies delivered by Balco Altaner A/S AluOne balconies designed by Balco AB Solar panels installed in consultation with Balco AB TwinView balconies with integrated heat pumps from Balco AB 2 3 4 5 1 2 3 Classic balconies from TBO-Haglinds AB and Riikku Oy6 4 Levitate, produced and installed by Balco AB5 7 8 7 6 1 8
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 21 INTRODUCTION GROUP OVERVIEW OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY Group overview BALCO AB CEO: Camilla Ekdahl l Employees: 243 l Founded: 1987 l Market: Northern Europe l Operations: Balco AB is a market-leading company in the balcony market that develops, manufactures, sells and is responsible for the installation of self-manufactured open and glazed balcony systems. Balco AB's balcony sys- tems are used for new construction, renovation, reconstruction and extension as well as conversion from open to glazed balcony. The broad customer base includes, among others, housing co-operatives, municipal housing companies, private property owners, architects, developers and shipping companies. The head office, with its own production unit, is located in Växjö, Småland, and sister companies are located in Norway, England, Germany, Poland and the Netherlands. Balco Group comprises eight companies with their own brands, as well as a number of additional subsidiaries, most of which are organised under Balco AB. Each company operates independently under its own management. RIIKKU OY CEO: Jani Backlund l Employees: 107 l Founded: 2005 l Market: Finland, Sweden, Germany l Operations: Balco Group acquired Riikku at the beginning of 2024. The acquisition is the largest in the Group's history and meant that Balco Group strengthened its position in Finland and the rest of the Nordic region. Riikku was founded in 2005 and is one of Finland's two largest providers of glazed balconies, but is also established in Sweden via dealers, and in Germany via Balco AB. The company works primarily with new build but also sells within the renovation segment. Riikku’s head office is located in Alavus, Finland, and the company has sales offices in several Finnish cities. Balco Group's and Balco AB's head office in Växjö.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 22 INTRODUCTION GROUP OVERVIEW OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY TBO-HAGLINDS AB CEO: Jonas Lundgren l Employees: 26 l Founded: 1996 (1970) l Market: Sweden l Operations: Haglinds Svets AB was founded in 1970 and manufactured forged structures for the industry during the 1970s and 80s. During the 1980s, TBO AB was developed at the same time, performing renovation and replace- ment of balconies on multi-dwelling buildings. The two companies collabora- ted more and more closely and merged in 1996. In December 2018, Balco Group acquired TBO-Haglinds AB. The balcony contracting side has grown over the years and the company is now a pure balcony supplier with customers across Sweden. In 2022, TBO-Haglinds AB acquired the installation company Arutex AB to develop and streamline TBO-Haglinds' installation offering. Arutex, in turn, was founded in 2011 with approximately 10 employees and its head office in Arboga. In 2025, Arutex was incorporated into Stora Fasad (see below) and the two companies today together form Stora Fasad Entreprenad AB. STORA FASAD ENTREPRENAD AB CEO: Johan Bengtsson l Employees: 27 l Founded: 1989/2025 l Market: Mälardalen l Operations: In 2025, Stora Fasad AB merged with Arutex AB to form Stora Fasad Entreprenad AB. The company offers balcony installation and facade work, such as bricklaying, plastering, window replacement, balcony and roof work, for both renovations and repairs as well as new construction and full- service provider projects. The company also offers related services, such as scaffolding work and scaffolding rentals. The head office is located in Arboga. SÖDERÅSENS MUR- & KAKEL AB CEO: Ola Gustavsson l Employees: 27 l Founded: 1997 l Market: Southern Sweden l Operations: Söderåsens Mur- & Kakel AB offers facade work such as maso- nry, plastering and insulation, for both renovation and new build. Customers include housing co-operatives, the public housing sector, private property owners and construction companies. The head office is located in Kågeröd in north-western Skåne and is run by the founders Ola Gustavsson and Emil Johansson. RK TEKNIK I GUSUM AB CEO: Johan Karlsson l Employees: 50 l Founded: 1982 l Market: Sweden l Operations: RK Teknik i Gusum AB initially manufactured balcony details, such as stud screws and concrete fastening products. In 1991, the business had developed to the extent that the company was now manufacturing com- plete balconies in combination with a wide range of special parts. RK Teknik continued to grow and in 2011, the business moved from a barn at Leckersbo Gård to a balcony factory of approximately 12,000 sq.m. in Gusum, Östergöt- land. Today, the company is one of Sweden's leading manufacturers of balco- nies. Since 2021, the company has been owned by Balco Group. SUOMEN OHUTLEVYASENNUS OY CEO: Mikko Jokinen l Employees: 25 l Founded: 1984 l Market: Finland l Operations: Suomen Ohutlevyasennus Oy was founded in 1984 and is a leading full-service provider with facade renovation as its area of expertise. The company is headquartered in Turku and works primarily in the renovation segment with large full-service projects, but also in new build. Suomen Ohut- levyasennus operates in the Finnish market where the customers primarily consist of housing co-operatives and construction companies. With 40 years of experience and a strong focus on project management and its own staff, the company has built up a strong brand. Balco Group acquired 60 percent of the shares in Suomen Ohutlevyasennus Oy during the first quarter of 2024, a further 20 percent during 2025 and has an option to acquire the remaining shares. BALCO ALTANER A/S CEO: Johan Söderling l Employees: 35 l Founded: 2006 l Market: Denmark l Operations: Kontech Altaner A/S was founded by Niels Jensen in the mid- 1990s. The focus then, as now, was on City balconies for the Danish market and primarily Copenhagen's city centre. Balco Group acquired the company in 2015 and they have operated under the name Balco Altaner A/S since 2020. The head office is located on Hammerholmen in Copenhagen and the main customer group is housing co-operatives and condominiums. Peter Ljung (Balco Group), Mikko Jokinen (Suomen Ohutlevyasennus), Andreas Lindberg (Balco Group) and Jukka Stam (Suomen Ohutlevyasennus) during a project visit to Finland. Balco Group's subsidiaries often participate in trade fairs where the compa- nies have a chance to showcase their products. Here, Balco Altaner is seen at a trade fair in Copenhagen.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 23 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY SEGMENTS Renovation is Balco Group’s primary segment with Sweden as its largest geographical market, followed by the rest of the Nordic region. The segment mainly comprises the replacement and expansion of existing balconies as well as the installation of new balconies and glazed balconies on multi-family dwellings. A driver within the segment is an ageing building stock, resulting in a pent-up need for renovation. Renovation Development during the year Trend 0 50 100 150 200 250 300 350 400 Nettoomsättning Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2024 2025 0 2 4 6 8 10 12 Rörelsemarginal % Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2024 2025 Net sales amounted to 986 MSEK (1,000). The segment accounted for 76 percent (71) of Balco Group's total net sales. Order intake decreased by 6 percent to 1,011 MSEK (1,074), corresponding to 66 percent (78) of total order intake. Adjusted operating profit (EBITA) amounted to 11 MSEK (56), corresponding to an adjusted operating margin of 1. 1 percent (5.6). There is an increase in activity in the renovation market, although the recovery is occurring at different rates between the geographical markets. Profitability remains under pressure as a result of lower volumes and high com- petition for projects in certain markets. During 2025, Balco Group implemented a savings programme which is expec- ted to contribute to improving profitability during 2026. NET SALES DEVELOPMENT MSEK ADJUSTED OPERATING MARGIN PERCENT
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 24 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY SEGMENTS Balco Group operates in the new build segment in most of its markets. Balco Group offers the full product range, which includes the installation of balconies in new build projects as well as balcony solutions for the maritime sector. The largest product area is open balcony solutions, characterised by fast delivery, easy installation and high quality. Within the segment, Balco Group is expanding selectively with a focus on profitability and low risk. New build Net sales decreased to 309 MSEK (418) during 2025. The segment accounted for 24 percent (29) of Balco Group’s total net sales. Order intake increased to 526 MSEK (303), corresponding to 34 percent (22) of the total order intake. Adjusted operating profit (EBITA) decreased to 5 MSEK (19), corresponding to an adjusted operating margin of 1.6 percent (4.5). The segment is primarily driven by the pace of new con- struction projects. During 2025, the market downturn has stabilised with some signs of recovery, but the Nordic mar- ket is expected to remain weak throughout 2026. Within the segment, the Group has a strong focus on Germany and the UK, but also on the maritime business with two large orders in France and Germany during 2025. Development during the year Trend 0 20 40 60 80 100 120 140 Nettoomsättning Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2024 2025 0 1 2 3 4 5 6 7 Rörelsemarginal % Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 2024 2025 NET SALES DEVELOPMENT MSEK ADJUSTED OPERATING MARGIN PERCENT
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 25 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY CUSTOMER OFFERING Balco Group's offering is a result of the Group's long-term vision and strategy to be the clear choice for balconies. A large part of product development revolves around specific and adaptable solutions for different markets, customers and types of properties. A decisive factor for many customers choosing Balco Group is the Group's ability to safely and securely deliver innovative and high-quality balcony and facade solutions. Although products have evolved over time, the Group's values: pride, entrepreneurship, and quality, have con- sistently guided its development. In the latest customer survey, over 95 percent of respondents stated that they would recommend Balco Group to others, and the Group continues to work actively to live up to each individual customer's specific requirements and expectations. Balco Group's offering is partly tailored to the customer, and partly to the market. The Group has four main customer groups: housing co-operatives, private property owners, the public housing sector, and construction companies. In Scandinavia, Balco AB mainly works through outreach sales to housing co-operatives. The company also annu- ally arranges over 100 mini-fairs in Sweden and Norway to showcase balconies and other products. For many of the other Group companies, enquiries are the main driver for new projects, but participation in real estate and housing association fairs is also an important sales channel. In public procurement, some sales also take place th- rough enquiries. In certain markets, such as the UK, sales are often made directly to construction consultants regar- ding new builds. These types of projects place different demands on Balco Group as an organisation, but ultimately it is about the basic principle of satisfying the customer's needs and wishes. With a wide product range of innovative glazed balconies, open balcony solutions, and city balco- nies, combined with in-house production, in-house instal- lation teams, and an efficient supply chain, Balco Group has a competitive offering that can be easily adapted and adjusted for each customer group and market. In the renovation segment, many customers have additio- nal needs for facade renovation and an interest in energy and cost savings. This creates scope for upselling and cross-selling, and an initial conversation about balco- nies therefore becomes a natural way to discuss further services. Balco Group has a project organisation with the exper- tise to execute turnkey projects. Thanks to a wide network with several subcontractors offering complementary ser- vices, Balco Group is able to perform facade renovation, solar panel installation, supplementary insulation, heat recovery, installation of air-to-air heat pumps and window replacements in connection with balcony projects. A growing part of the comprehensive offering is also service and after-market, where Balco Group is a cost- effective alternative for large associations or property owners. As part of all projects, the Group also offers assistance with building permit applications and decision- making documentation for general meetings. In Sweden, Balco AB also has a cooperation agreement with a Nordic bank which in turn offers up to 70 years' amortisation on a project, making an investment both environmentally and economically sustainable. Balco Group’s customer offering Levitate balconies at Randall’s Way in Leatherhead, UK. Glazed balconies on Ziegendorfer Chaussee in Parchim, Germany. Newly renovated facade in the Hepokulta residential area in Turku, Finland.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 26 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY CUSTOMER OFFERING Glazed balconies are a cost-effective solution that con- tributes to energy savings by reducing thermal bridging between indoor and outdoor environments. In renova- tion projects, the best results are achieved by replacing the balcony slab and installing glazing using one of Balco Group’s patented solutions. Glazing also reduces noise levels and lowers the risk of reinforcement corrosion, the- reby protecting the new concrete slab from frost damage. Overall, a glazed balcony creates a safer and more pleasant living environment, as well as having a positive impact on energy consumption and property value. Within the glazed balconies product category, Balco Group, via Balco AB, holds several patents for unique fun- ctions such as ventilation, drainage and an integrated heat pump solution. For properties where appropriate, Balco AB offers climate walls. A climate wall means that the entire facade is clad with glazed balconies. Another practical and aesthetically pleasing solution is glazed multi-level balco- nies, specially adapted for terraced houses. Several of Balco Group’s subsidiaries produce open balconies for both the renovation and new construction segments. The balconies are always custom-designed and range from adaptable, standardised products for new construction to uniquely designed city balconies. City balconies are specifically developed for inner-city environ- ments with high demands on design, which is common in older properties. Balco Altaner A/S operates on the market in central Copenhagen with this type of balcony, while RK Teknik i Gusum AB supplies the Swedish market. Balco AB has a wide range of prefabricated balcony solutions in its product portfolio. AluOne and AluTwo were primarily developed for the German market but are also sold in the British Isles and the Netherlands. Essentially, it is a flexible and cost-effective aluminium balcony, which is adaptable and can be installed safely in a wide variety of properties. Levitate is another prefabricated solution, specifically developed for the British new construction market with a very fast installation time. Glazed balconies Open balconies Service and aftersales is a growing product area primarily aimed at large housing co-operatives and property owners with glazed balconies. The offering includes, among other things, spare parts, warranty matters and other service on balconies. It is often a cost-effective alternative that ex- tends the life of the balconies, prevents wear and tear and ensures that the balconies function flawlessly while conti- nuing to contribute to the property value. A typical service assignment often begins with a member of the association discovering a problem. Balco Group then usually offers the entire association service at a favourable price. The service includes inspection of moving parts of the glazing system, a review of slide and fold functions, lubri- cation of mechanical parts and replacement of wear parts. The entire assignment is coordinated with the association to ensure it is carried out as quickly and smoothly as pos- sible, after which the Group follows up on the assignment with the housing co-operative's Board of Directors or with the property owner. Service and aftersales Balco Group offers complete facade solutions, full-ser- vice provider assignments and a number of other pro- ducts in the renovation segment. In Sweden, Stora Fasad Entreprenad AB and Söderåsens Mur & Kakel AB specialise in traditional services such as bricklaying, plastering, concrete cutting, renovations for ventilation and instal- lation of supplementary insulation. Since 2024, Suomen Ohutlevyasennus is also part of Balco Group, which acts as a full-service provider and operates in Turku and the sur- rounding area in the Finnish market. Within the product category, Balco AB also offers an integrated heat pump solution in connection with balcony projects. Other energy-saving supplementary products, such as the installation of solar cells and window repla- cements, are also included in the category. Several of the Group's companies also have a large selection of supp- lementary products, such as privacy screens, side and middle screens, glass corners, balcony doors and electric awnings. TBO-Haglinds AB has further specially manufac- tured products such as integrated lighting, roof heating and facade panels for interior cladding of balconies. Facades and other services 19%20% Included in the other three categories. of total group salesof total group sales 61% of total group sales
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 27 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY INTERNATIONAL PRESENCE At the end of 2025, Balco Group had operations in eight countries in Northern Europe: Sweden, Norway, Denmark, Finland, Germany, the Netherlands, the United Kingdom, and Ireland. During the year, the Group also received its first assignment in France through the order from the shipyard Chantiers de l’Atlantique. Balco Group's expansion in Northern Europe has been an important part of the company's growth for several years and will continue to play a significant role going forward. Control over in-house production, efficient supply chains throughout Northern Europe including the British Isles, and an offering adapted to each market, drive growth outside the core markets in the Nordics and facilitate continued expansion. An additional factor, where Balco Group has built up a wealth of knowledge over many years, are the differences in rules, regulations and procurement methods between countries. Players such as Balco Group, who try to enter new markets, are met with a high level of requirements where knowledge, capacity and local expertise are put to the test. Good customer relations and contacts are also crucial and here Balco Group's sales organisation has for many years built up relationships with property managers in markets such as Germany, the Netherlands and the UK. In Sweden and Norway Balco Group often works directly with housing co-operatives and construction companies with customised solutions. A vast majority of the projects are within the renovation segment, but several subsi- diaries also often work with new build. All projects are carefully planned according to conditions and budget and are carried out as quickly and smoothly as possible. In Denmark, and especially in Copenhagen where Balco Altaner A/S operates, renovation is also the largest seg- ment. In Copenhagen, open balcony solutions, so-called city balconies, are most common. City balconies are avai- lable both as standardised and customisable models or are developed entirely from scratch according to needs and wishes, which means that Balco Altaner A/S can undertake many types of assignments, regardless of the property. A significant difference between Scandinavia and mar- kets such as the UK is that work in the British Isles primarily relates to new construction and is carried out directly for construction companies. In this context, price, quality, delivery reliability and specific fire safety regulations are key decision factors. Successful projects usually lead to further collaborations and therefore good, long-term customer relationships are of great importance. For Balco Group, this combination of a high share of new construction and distinct market requirements has led to the develop- ment of tailored product and sales strategies, including proprietary solutions such as the Levitate balcony. In Germany and the Netherlands the Group carries out pro- jects in both new build and renovation. The German market is special as there are large property managers responsible for thousands of homes in several properties. These are often renovated in stages, and a small, well-executed initial project can lead to larger procurements in the future. In the German new build market, modular construction is a growing trend. The purpose of the technology is to reduce costs and build more properties in less time. For subcont- ractors such as Balco Group, this places higher demands on the design and construction phase. The balconies must fit directly, be quick to install and at the same time have customisable details, such as railings and brackets. Europe is an important market Greenpark, Berlin In the heart of Berlin, one of the region's largest new build projects is currently taking shape – Greenpark Berlin. Within the framework of this serial residential construction project, Balco AB's subsidiary Balco Balkonkonstruk- tionen GmbH is installing a total of 650 AluTwo balconies in collaboration with the general contractor Goldbeck. Installation is taking place in several stages and is expected to be completed during spring 2026. To date, the project has proceeded without any remarks from the ongoing inspection. Greenpark is a prime example of what projects can look like in the European markets, with high standards for products and execution.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 28 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY PROJECTS DURING THE YEAR Bjørgene 1 was one of Balco Group's largest projects in Norway during 2024 and 2025. The project was extensive and included large parts of the Group's total offering, including glazed balconies with integrated heat pumps – which together form a climate wall – as well as facade re- novation, insulation and the installation of solar panels on the new roof. The solar panels are estimated to be able to produce 220,000 kilowatt hours annually, which is more than sufficient to power the heat pumps in the property. The renovation of the balconies at Brf Kampementet 2 in Stockholm is a typical example of the trend in conservation renovation projects where the challenge lies in renovating the balconies and restoring them to their original appearance. The project was carried out by RK Teknik in Stockholm, which used fibre concrete balcony slabs, a type of concrete with small, evenly distributed fibres made of, for example, steel that increase strength, flexibility, and resistance while reducing the need for traditional reinforcement and enabling thinner slabs. In addition to the new slabs and balconies, RK Teknik manufactured new steel railings that match the originals. The housing association Kleine Koppeling is an example of the trans- formation trend within the real estate industry, where old office buildings are acquired, renovated and converted into multi-family dwellings. Balco Balkonsystemen B.V., which is Balco AB's Dutch subsi- diary, was contracted to deliver and install balconies for the project. In total, 33 specially designed balconies were installed with balustrades consisting of vertical aluminium rods, sturdy concrete slabs, pillars and high-tension rods. All balconies also feature built-in drainage with water run-off under the concrete slab—a smart function that extends the lifespan of the balconies. Bjørgene 1 Brf Kampementet 2 Kleine Koppeling, Hengelo Haugesund, Norway Stockholm, Sweden The Netherlands Construction start: April, 2025 Completion date: October, 2025 Number of balconies: 160 Company: RK Teknik Construction start: August, 2024 Date of completion: November, 2025 Number of balconies: 128 Company: Balco A/S Construction start: July, 2024 Date of completion: August, 2025 Number of balconies: 33 Company: Balco B.V. Modern balconies for modern homes
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 29 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP’S HISTORY 1988-1990 Expansion into Norway and Germany. Balco Group’s history 1987 Balco AB is founded by Swedish entrepreneur Lars Björk- man. 2001-2005 Balco AB enters new markets in the UK and Denmark. 2010 Geographical expansion continues with the Netherlands. 2013 Own manufacturing unit established in Poland. 2015 Acquisition of Kontech A/S, now Balco Altaner A/S, and expansion into Finland. 2017 Balco Group becomes listed on Nasdaq Stockholm. New 5,800-square-metre manufacturing unit in Poland. 2018 Acquisition of TBO-Haglinds AB. Net sales reach SEK 1 bil- lion. First maritime project delivered. 2020 New strategic direction with broader offerings and sustaina- bility focus. 2021 Acquisition of Stora Fasad AB and RK Teknik i Gusum AB. Balco Group implements several major sustainability initiatives. 2022 Acquisition of Söderåsens Mur- & Kakel AB and Arutex AB. The Group is awarded a low ESG risk rating by Sustainalytics. 2023 Acquisition of NMT Montageteknik i Norden AB. Balco Group receives its first order in Ireland. 2024 Acquisition of Riikku and Suomen Ohutlevyasennus. 2025 Balco Group receives the largest order in the company's his- tory. The order comprises more than 2,000 balconies for the German shipyard Meyer Werft. RECORD ORDER 2025 In 2025, the Group received its largest order ever from the German shipyard Meyer Werft. The images show balconies delivered to the vessel AIDAnova, which was completed in 2021.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 30 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY Risk management ............................................................31 Chairman’s statement ......................................................37 Corporate governance report .......................................... 38 Internal control of financial reporting .............................. 42 Board of Directors ...........................................................43 Management ................................................................... 44 Remuneration report .......................................................45 See page 2 for a full list of the Administration Report's contents. Administration report
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 31 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY RISK MANAGEMENT Exposure to and management of risks are a natural part of business operations. Focus is placed on identifying risks, preventing risks from arising and preparing action plans that make it possible to limit any damage that these risks may cause. Risks can be divided into industry and market-related risks, operational risks, financial risks, regulatory risks and sustainability- related risks. Risks may, even if mitigated, have a negative impact on operations. Risks and risk management Risks A risk is defined as the uncertainty as to whether an event will occur that may affect the company's ability to achieve established goals. Risks are a natural part of all operations and they must be managed effectively. Risk management aims to prevent, deter and limit the effects of risks affec- ting the business in a negative way. Balco Group conducts an annual aggregate risk assess- ment to identify and assess risks that threaten the Group's goal fulfilment. Balco Group defines a risk as a possible future event that threatens the organisation's ability to achieve its goals. The identified risks are assessed based on the following two criteria: – The probability of the risk occurring – Consequences for Balco Group if the risk were to occur Risk management Balco Group's management has identified potential events that could affect the company's operations. The events have been evaluated and reduced to a net list of the risks assessed as most relevant. The risks have been graded based on low, medium and high probability of the risk oc- curring and the subsequent consequence should the risk occur. In order to manage and counteract identified risks, a number of control activities (risk-mitigating measures) have been established. For each identified risk, there are activities to counte- ract, limit, control and manage the risk. An evaluation of the effectiveness of the control activities shall be performed annually. Balco Group has a group-wide monitoring process where the effectiveness of the controls is evaluated and reported to the CFO of Balco Group. The CFO is responsible for presenting the results of the evaluation to the Audit Committee and the Board of Directors. General risk areas Through its operations, the Group is exposed to various types of risks. The risks can be grouped into five different risk categories: – Industry and market-related risks – Operational risks – Financial risks – Regulatory risks – Sustainability risks
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 32 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY RISK MANAGEMENT Operational risks E F G H I J Supplier and subcontractor risks Unfavourable development of project operations New markets Disruptions Recruitment and retention of skills Product development and production capacity Financial risks K L M N Currency risk Financing and liquidity risks Interest rate risk Credit risk Regulatory risks O P Q R Intellectual property rights Political decisions with an impact on operations Disputes and legal proceedings Changed accounting rules PROBABILITY IMPACT HIGHLOW LOW HIGH HB C D E F G H I K L MN O P Q R S T U V X Y Sustainability-related risks S T U V X Y Serious global changes Changing political conditions locally Changing political conditions globally The company's climate impact Deteriorating work environment and health Suppliers' impact on the working environment and human rights A B C D Industry- and market-related risks Cyclical changes and other macroeconomic factors Serious global changes Changes in commodity prices Changes in the competitive landscape and pricing structure J RISK MAPPING Explanation: The matrix provides an overview of identified risk areas for Balco Group. The risks are placed in the matrix based on assessed probability and consequence. More information on each risk area is described on pages 33-36.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 33 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY RISK MANAGEMENT Risk Description Management Probability Impact Cyclical chan- ges and other macroecono- mic factors Balco Group's operations are affected by the ge- neral financial and political situation in the world, as well as by other serious changes in the world due to natural disasters, epidemics/pandemics, wars, migration, etc. Rising interest rates and high inflation have a negative impact as they affect the Group's customers. The company is mainly affected by events affecting the Nordic markets and other countries where the Group operates. A downturn in the economy, political changes and other serious changes in the world may create un- rest in the markets in which the company operates and thus affect demand for its products. The companies in Balco Group are active in the market for balcony solutions, which is a niche market within the construction market. Balco Group is mainly active in the renovation segment, which is driven more by the existing need to renovate rather than the more cyclical new build segment. Balco Group conducts project-based operations, handling a large number of projects of varying sizes across different markets each year. The dependence on a single customer is therefore small. Rising interest rates and increased inflation affect our customers' ability to obtain attractive credit terms. High High Raw material prices Balco Group’s profitability is affected by the development of raw material prices for alumi- nium, steel, glass and concrete. Changes in raw material prices can affect the results of individual projects. Balco Group secures material costs on an ongoing and annual basis to an extent based on future needs. The company’s project ope- rations mean that each project is an individual price negotiation. Long lead times and the fact that each project is unique mean that indexed price adjustments, to handle changing raw material prices, are included in most customer agreements. High Medium Competition and price pressure The competitive landscape varies between dif - ferent geographical markets and within different product segments. Balco Group’s main compe - titors consist of concrete renovators and other balcony suppliers. Increased competition may affect the business and results negatively. Balco Group competes primarily with concrete renovators who are not niche players in the balcony renovation market. Balco Group's lo- cal presence and business model, under which the Group supports customers throughout the entire process, mean that it largely contribu- tes to creating its own market. Balco Group has today a niche portfolio of products that are at the forefront in terms of innovation and technology, which creates a competitive advantage. High Medium Industry- and market-related risks Industry- and market-related risks refer to external factors, events, and changes in the markets in which Balco Group operates and which may affect the possibilities of achieving the company's set goals. These risks include, among others, changes in demand as a result of a weaker economy or other macroeconomic changes, a changed price situa- tion for raw materials that are central to Balco Group's production, as well as changed competition or price pressure. A B C D
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 34 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY RISK MANAGEMENT Operational risks Operational risks relate to the day-to-day operations and the ability to meet commitments to customers. Risks can often be managed through internal control activities such as preventive and/or monitoring controls. Examples of operational risks include Balco Group's ability to develop and sell innovative new products and solutions, the Group's ability to attract and re- tain qualified employees, and Balco Group's profitability being dependent on the performance of individual projects, i.e. the Group's ability to predict, calculate and deliver projects within the established financial calculations. Risk Description Management Probability Impact Suppliers and subcont- ractors Balco Group depends on its suppliers and subcontractors to produce, design and deliver a final product. The Group has most of its production in-house, and its products consist of components and raw materials from several different suppliers. Balco Group has identified its strategic suppliers and subcontractors and ensured that alternatives are available. Medium Medium Project operations Balco Group's profitability depends on the performance of individual projects. The calculations and plans produced at the start of projects, and regularly updated, form the basis for the timing of revenue and profit recognition. During the year, Balco Group has adapted and standardised the profit recognition model so that it is handled in the same way in all Group companies. The change has been imple- mented as it has been observed that deviations mainly occur during installation and at the end of the project. This change entails less risk of major project deviations. There is a clear process and procedure for how projects are costed and monitored. High Medium New markets Balco Group is exposed to the risk that project operations in new markets become too costly and resource-intensive. New markets involve other legal requirements, not least with regard to the working environment, building requirements and fire safety. Balco Group uses local expertise in new markets to ensure that local rules and requi - rements are met. Expansion in new markets will continue to take place through the acquisition of established local companies. Medium Medium Operational disruptions Balco Group's operations consist of many processes where an operational disruption such as fire, sabotage, machine failure or disruption in IT systems can have consequen - ces for the company's ability to fulfill its commitments to customers and thus negatively affect profitability. Balco Group has identified and secured IT infrastructure for existing production capa - city. An annual review of business-critical systems is performed. Medium Medium Recruitment For Balco Group, it is of great importance to be able to attract and retain qualified em- ployees and key personnel. The Group strives to be an attractive employer with a competitive offering both in terms of remuneration and benefits, but also by creating a culture that our employees want to develop in and be a part of. Balco Group is active in the market to attract personnel and conducts an active personnel policy. Low Medium Product development and production capacity Balco Group's earnings and competitiveness depend on its ability to develop and sell innovative new products and solutions. The company is investing significant resources in further developing its existing product portfolio. As the company's products are manu- factured in its own production units, Balco Group is dependent on having good foresight. To ensure future growth in a satisfactory manner, Balco Group needs to be 6 to 12 months ahead in its planning of production capacity. Balco Group conducts project operations, which means that the company has good foresight and visibility in terms of production and delivery needs. The company conti - nuously monitors all projects, deliveries and production orders. As the lead times within the company's projects are relatively long, it creates good visibility. Balco Group also owns land that allows for continued expansion. Low Low E F G H I J
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 35 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY RISK MANAGEMENT Risk Description Management Probability Impact Currency risks Balco Group is affected by currency risks which can be divided into transaction expo- sure and translation exposure. Transaction exposure arises when a sales or purchase price is stated in foreign currency. Balco Group is primarily exposed to changes in EUR, NOK, DKK, PLN and GBP relative to SEK. Translation exposure arises when the subsidiaries' balance sheets and income statements are translated from local cur- rency to SEK. Transaction exposure is managed primarily through natural hedges, which means that payments are made in the same currency as cash flows from receipts. Balco Group also manages risks through currency hedging in accordance with the finance policy. Medium Low Financing and liquidity risks There is a risk that the company's financing options could become more difficult or more costly. Even though the company's financial position is currently satisfactory, the compa - ny may need access to additional financing. Balco Group conducts project operations in which turnover, earnings and liquidity are affected by building permits and the phases and payment plans of the projects. The Group has good foresight in its projects, which provides relatively good visibility and enables planning. The company strives to have good liquidity, which is regulated by the company's finance policy with established liquidity targets. Medium Medium Interest rate risks Balco Group is exposed to interest rate fluc- tuations in its debt financing. The risk is managed through targets for future debt-to-equity ratios. Medium Medium Credit risks Balco Group’s credit risk is limited. Instances where credit risks may arise are in the event of insolvency or unwillingness to pay on the part of the company’s customers. Balco Group’s customers largely consist of housing co-operatives, property owners and construction companies. A review of the customers' finances is carried out before the start of a project to ensure the financial stability of the counterparty. In most cases, projects have a front-heavy payment plan which, in special cases, is supplemented with credit insurance. Medium Low Risk Description Management Probability Impact Intellectual property rights Balco Group invests significant re - sources in product development and in protecting the company’s innovations through patents. If Balco Group does not succeed in protecting and main- taining its intellectual property rights, there would be a risk that other players could copy the company’s products, which could have a negative impact on the business, turnover and earnings. A significant portion of Balco Group’s products and their functions are protected by patents. As products are developed, the company’s patents are renewed and strengthened. Low Low Political decisions, legislation and regulation Political decisions can affect demand for Balco Group’s products in both a positive and negative direction. Political decisions include changes in legislation, the application of existing laws and regulations, as well as future subsidies and taxation within housing and residential construction. Balco Group continuously follows and monitors discussions and chan - ges regarding political decisions, changed legislation and regulation. The company’s business model is established so that the process takes into account the laws and regulations specific to each respective market. Medium Medium Disputes and legal proceedings Balco Group may become involved in disputes and be subject to claims regarding contractual matters, delays, alleged defects, environmental issues, etc. Balco Group has, in all material respects, written agreements with its customers and its subcontractors. Any disagreements are resolved as far as is possible and commercially justifi - able by mutual agreement during the course of the project. Medium Low Changed accounting rules Balco Group is affected by accoun- ting rules that change and develop. The Company's accounting, financial reporting and internal control may in the future be affected by, and need to be adapted to, changed rules. Balco Group's employees are trained on an ongoing basis, keep themselves up to date and develop their skills regarding prevailing rules and news in the field. Cooperation takes place with the company's auditors. Low Low Financial risks The Group’s activities expose it to financial risks such as financing risk, liquidity risk, credit risk, interest rate risk and currency risk. The Group’s financial policy provides a framework of guidelines and rules, as well as risk mandates and limits. The CFO is responsible for managing the Group’s financial operations and risks in consultation with the CEO and the Board. The aim is to ensure cost-effective financing and to minimise negative effects on the Group’s results due to market changes. Regulatory risks Regulatory risks relate to the ability of the business to manage the impact of new legislation and regu- lation, as well as to manage unforeseen litigation or other legal or contractual uncertainties. O P Q R K L M N
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 36 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY RISK MANAGEMENT Risk Description Management Probability Impact Serious changes in the surrounding environment Serious changes in the surrounding environment in the form of natural disasters, epide - mics, pandemics, war and migration can lead to personal injury, business interruption and increased costs. The risk is managed by Balco Group following national guidelines and working with scenario planning to be able to adapt operations in the event of serious occurrences. The work aims to limit the impact on employees, operations and delivery capacity in the event of unforeseen disruptions. Medium High Changed political condi- tions locally Conditions for Balco Group's operations may change as a result of political decisions, which may affect results, legislation and the economic climate. The responsible manager in each country is responsible for identifying and managing the impact of new political decisions, including by establishing and maintaining contact with authorities and taking necessary measures to ensure regulatory compliance and stable operations. Medium High Changed political condi- tions globally Conditions for Balco Group's operations may change as a result of political decisions at a global level, which may affect results, legislation and the economic climate. The risk is managed through continuous external monitoring and analysis, where the Group follows developments and adapts its strategy and way of working as necessary to reduce the impact on results and operations. Medium Medium The company's climate impact The Group's climate impact contributes to the risk that Balco Group may be disqualified from future business and not be perceived as an attractive employer. Reduced climate impact is also important for the continued existence of future generations. Through the double materiality assessment and subsequent work, the Group monitors its impact and introduces necessary measures to reduce its carbon footprint. The climate issue is a priority within the company and is followed up regularly. Low Medium Deteriorated work envi- ronment and health Deteriorated work environment and health can affect the Group's employees due to a lack of systematic work environment management, which can lead to loss of expertise, business interruption and legal proceedings. Balco Group places great importance on systematic work environment management in both office and factory environments as well as at the Group's construction sites. The work includes continuous risk analyses, safety inspections and reporting of incidents and accidents, with the aim of ensuring a safe and secure work environment and retain- ing and attracting expertise. Low Medium Supplier operations with a negative impact on the work environment and human rights A negative impact from suppliers' operations can arise as a result of insufficient requi - rements and control within the Group's supply chain, which can damage Balco Group's reputation and cause supplier changes with delayed deliveries as a result. The risk is managed through regular spot checks, other requirements and a close dialogue with suppliers, where the Group actively works to influence the supply chain in a positive direction. Low Medium Sustainability-related risks Through its operations, Balco Group is exposed to a number of risks linked to sustainability. In essence, the risks relate to changes in the surrounding world and political decisions that may affect operations. The company's climate impact, the work environment at the facilities and the operations of suppliers can also have a negative impact on the Group's develop- ment. Risk management takes place systematically and in a controlled manner, primarily through compliance with current legislation and regulations with a clear division of responsibility, but also through special efforts and initiatives linked to specific areas such as the work environment. S T U V X Y
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 37 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY CHAIRMAN’S STATEMENT Tough but necessary measures when global uncertainty is high In last year’s Chairman’s Statement, I wrote that all in all, there were many indications that 2025 would be a signifi- cantly better year from an overall economic perspective. I was then referring to parameters such as inflation, interest rate cuts and future prospects, all of which affect Balco Group’s business. And indeed, we have seen a cautious recovery in the economy after a period of high inflation and high interest rates, which has also resulted in an increased order intake for Balco Group. At the same time, however, global uncertainty is affecting customers' confidence in the future and their willingness to invest. Few could have expected the development we experienced in 2025, with escalating wars, geopolitical nervousness and uncertainty regarding global trade driven by US tariff policy. These international factors create a complex global environ- ment with dampened prospects, and there has been a sharp decline in construction investment, with residential construction being hit the hardest. Many larger projects have been halted or postponed. It is in this context that the Board of Directors and management have worked to navi- gate, forecast and manage the business during the year. However, we are not satisfied with the results for 2025. Extensive work has been carried out on further cost savings and restructuring of the business, measures that initially entailed costs but were necessary from a long- term profitability perspective. Pricing models have also been reviewed. However, price adjustments only take effect once the corresponding order intake has been fully converted. This requires building permits, start notices and project completion, as revenue is recognised in the income statement on an ongoing basis during the imple- mentation period. Cash flow has been a priority focus area throughout 2025. With declining turnover, cash flow has been nega- tively impacted and, in addition, projects in the start-up phase require increased working capital. The Board has continuously evaluated the company's financial situation against market conditions, the existing order backlog and progress in projects. On three occasions during the year, the company has received a waiver meaning that the cove- nants have been adjusted to meet the financial situation. Overall, this has created room for manoeuvre until the turn of the half-year to improve both profitability and cash flow. Cash flow during the final quarter of the year was significantly strengthened and order intake was Balco's highest ever. The economic outlook for 2026/2027 points towards strong growth in the Nordic region, driven, among other factors, by stronger household finances, increased consumption, low inflation and stable interest rates. One final wish would be that the global situation would stabilise as well. Växjö, March 2026 Ingalill Berglund Chairman of the Board, Balco Group Ingalill Berglund Chairman of the Board, Balco Group AB
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 38 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY CORPORATE GOVERNANCE REPORT Corporate Governance Report Governance model Balco Group AB, corporate registration number 556821- 2319, is a Swedish public limited liability company listed on Nasdaq Stockholm. The company has its head office in Växjö. The corporate governance report is part of the company's administration report. Corporate governance in Balco Group, which can be divided into external and in- ternal steering instruments, follows Swedish law, Nasdaq Stockholm's Rule Book for Issuers, the Swedish Corporate Governance Code (the Code) and internal rules and regula- tions. External control instruments The external control instruments form the framework for corporate governance in Balco Group. The external instru- ments include the Swedish Companies Act, the Annual Accounts Act, Nasdaq Stockholm's Rule Book for Issuers and the Swedish Corporate Governance Code. For the 2025 financial year, Balco Group deviates from the Code on one point. Deviation from the Code, Rule 2:4 The Code stipulates that the Chairman of the Board or another Board member should not be the Chairman of the Nomination Committee. Board member Carl-Mikael Lindholm, representing Balco Group's largest shareholder, the Hamrin family, is also the Chairman of the Nomination Committee. Explanation By way of deviation from the Swedish Corporate Gover- nance Code, in Balco Group the largest owner in terms of voting rights has hitherto also held the chair of the nomination committee. Balco Group's strategic direc- tion and business management model are also based on strong commitment from the company's main owners. The Board's and the nomination committee's assessment is that the majority are independent in relation to the company and the company management, and that at least three of the members are also independent in relation to the company's major shareholders. Internal control instruments The internal control instruments include the articles of as- sociation adopted by the general meeting, internal instruc- tions and guidelines. Examples of internal instructions and guidelines are the Board of Directors' formal work plan, in- structions for the committees and the CEO's instructions. Furthermore, the Board of Directors has adopted a number of policies, including a finance policy and a sustainability policy, which provide guidance for how the internal work is to be governed and controlled. In addition, Balco Group's financial handbook regulates financial reporting within the Group. 1. Shareholders Balco Group AB has been listed on Nasdaq Stockholm since 6 October 2017. The number of outstanding shares Balco Group is a Swedish public limited liability company listed on Nasdaq Stockholm. Balco Group applies the Swedish Corporate Governance Code and hereby submits the 2025 corporate governance report. The auditor's examination has been conducted in accordance with FAR's statement RevU 16 The auditor's examination of the corporate governance report. at the end of 2025 amounted to 23,021,648 shares. All shares have equal voting rights and equal rights to the company's profit and capital. The quota value of the shares amounts to SEK 6.0002, which means that the registered share capital as of 31 December 2025 amounted to SEK 138,135,310. As of 31 December 2025, Balco Group had 4,665 sha- reholders. According to ownership data from Euroclear Sweden AB, the ten largest shareholders in Balco Group owned 64.7 percent of the votes and shares in the com- pany. Swedish shareholders accounted for 81.4 percent of the ownership. Balco Group's largest shareholder as of 31 December 2025 was the Hamrin family, whose holding consisted of a total of 6,062,027 shares, corresponding to 26.3 percent of the votes and capital. 2. General Meeting The general meeting is Balco Group's highest decision- making body. The Annual General Meeting (AGM) is held an- nually within six months of the end of the financial year. At the AGM, the income statement and balance sheet and the consolidated income statement and consolidated balance sheet are presented, and decisions are made regarding, among other things, the appropriation of the company's profit, the election of and fees for Board members and the auditor, and other matters which are the responsibility of the AGM under law. All shareholders who are entered in the share register and who have notified their attendance in time in accordance with the provisions of the notice have the right to participate in the general meeting and exercise their voting rights. A shareholder who wishes to have a specific matter addressed at the meeting must request this from the Board, at the address notified on the company's website, well in advance of the meeting. In ad- dition to the AGM, the Board may convene an Extraordinary General Meeting. Annual General Meeting 2026 Balco Group’s Annual General Meeting for 2026 will be held on 5 May 2026 at 15:00 at Kök 11, Honnörsgatan 15 in Växjö. Registration begins at 14:30. Shareholders who are registered in the share register maintained by Euroclear Sweden AB by 24 April 2026 and have notified their intention to participate in the mee- ting by 28 April at 16:00 are entitled to participate in the meeting. Important dates for the 2026 Annual General Meeting (AGM) are: 24 April – record date for the Annual General Meeting 28 April – final date for notification of attendance at the meeting 28 April – final date for postal voting 5 May – 14:30 admission to the meeting begins 5 May – 15:00 the Annual General Meeting begins Proposed resolutions for the 2026 Annual General Mee- ting The Board of Directors proposes that the Annual General Meeting resolves that no dividend shall be paid for the financial year. 3. Nomination Committee The Nomination Committee's task is to ensure that the members of Balco Group’s Board of Directors collectively possess the knowledge and experience relevant to contri- buting to Balco Group’s development in the best possible way over time. Based on the board evaluation conducted once a year, the requirements of the Code, Balco Group’s needs, and the views of other owners, the Nomination Committee reviews the board’s work. The Nomination Committee then submits a proposal to the Annual General Meeting regarding the number of board members, the composition of the board, and the remuneration for the board, including fees for committee work. The Nomination Committee shall also submit a proposal for the chairman of
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 39 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY CORPORATE GOVERNANCE REPORT the board and the chairman of the Annual General Meeting, respectively, as well as auditors and their remuneration. The Nomination Committee's proposals are presented in the notice to the Annual General Meeting, and a jus- tification for the Nomination Committee's proposals is published on Balco Group's website in connection with the issuance of the notice. In accordance with the rules of the Code, Balco Group adopted a nomination committee instruction at an ex- traordinary general meeting on 11 September 2017. This stipulates that the Nomination Committee shall consist of four members. The members are to be appointed by the company's four largest shareholders in terms of voting rights, according to the share register maintained by Eu- roclear as of 31 August the year before the Annual General Meeting, being convened by the chairman of the board and given the opportunity to appoint one member each. The member representing the largest shareholder in terms of voting rights is appointed chairman of the Nomination Com- mittee. The chairman of the board shall not be the chairman of the Nomination Committee. The members of the No- mination Committee for the 2026 Annual General Meeting were presented via a press release on 10 December 2025. The members of the Nomination Committee do not receive any remuneration for their work on the committee. 4. Board of Directors The Board of Directors is Balco Group’s second highest de- cision-making body after the general meeting. The Board of Directors is overall responsible for creating long-term value for shareholders and other stakeholders. Together with management, the Board of Directors is responsible for the overall strategy for the company and works to ensure that the company has sound risk management and internal control. Board members According to the Articles of Association, the Board of Directors of Balco Group shall consist of at least four members and at most eight members. The members of the Board of Directors shall provide expertise and expe- rience that benefit Balco Group's development. Currently, Balco Group's Board of Directors consists of six ordinary members, two women and four men. All six members were re-elected by the Annual General Meeting on 6 May 2025 for the period until the 2026 Annual General Meeting. Presi- dent and CEO Camilla Ekdahl and CFO Viktor Arvidsson are present at all board meetings. Viktor Arvidsson acts as secretary to the Board of Di- rectors. Other senior executives participate as presenters for specific issues. All board members are independent in relation to the company and its management. Four of the board members are also independent of the company's major shareholders. Balco Group thus meets the requi- rements of Nasdaq Stockholm and the Code regarding the independence of board members. For a summary and presentation of the board members, see page 43. Board diversity policy The Board of Directors of Balco Group shall as a whole have appropriate collective expertise, experience and back- ground for the business being conducted and to be able to identify and understand the risks that the business entails. The objective is for the board to consist of members of varying ages, represented by both men and women, with varied geographical and ethnic backgrounds who comple- ment each other in terms of experience, educational and professional background, who together contribute to inde- pendence and critical questioning within the board. Balco Group's Board of Directors has adopted a diversity policy which the nomination committee takes into account when preparing its proposal to the Annual General Meeting. The nomination committee also bases its work on the provi- sion in the Swedish Corporate Governance Code, point 4. 1, which deals with board diversity. Board work and evaluation of the Board The Board's responsibilities and duties are regulated by the Companies Act, Balco Group's articles of association RESOLUTIONS AT THE 2025 ANNUAL GENERAL MEETING INCLUDED MEMBERS OF THE NOMINATION COMMITTEE FOR THE 2026 ANNUAL GENERAL MEETING n that no dividend be paid for the 2024 financial year n that the members of the Board of Directors and the Managing Director be discharged from liability for the 2024 financial year n re-election of the Board members Ingalill Berglund (Chairman), Carl-Mikael Lindholm, Johannes Nyberg, Mikael Andersson, Vibecke Hverven and Thomas Widstrand n that the total annual fees paid to the Board of Direc- tors shall amount to 2,040,000 SEK n to elect KPMG AB as auditing company with Michael Johansson as the auditor in charge n authorisation for the Board of Directors to decide on the issue, with or without preferential rights for shareholders, to be paid in cash, by contribution in kind or by set-off, of shares or warrants or conver- tibles relating to such shares, involving an increase or potential increase in the company's share capital of a maximum of 20 (20) percent or a maximum of 4,604,328 shares n authorisation for the Board of Directors to decide on the acquisition of such a number of treasury shares that the company's holding at any given time does not exceed one-tenth of all shares in the company n authorisation for the Board of Directors to decide on the transfer of treasury shares n Carl-Mikael Lindholm, representing the Hamrin family (Chairman of the Nomination Committee) n Annica Nordin, representing Skandrenting AB n Magnus Sjöqvist, representing Swedbank Robur Fonder n Ingalill Berglund, Balco Group's Chairman of the Board n Lena Björkman, representing herself
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 40 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY CORPORATE GOVERNANCE REPORT Board remuneration and attendance 2025 Ingalill Berglund Mikael Andersson Vibecke Hverven Carl-Mikael Lindholm Johannes Nyberg Thomas Widstrand Board fees (AGM year) 560 000 225 000 225 000 225 000 225 000 225 000 Remuneration for committee work 65 000 55 000 55 000 35 000 110 000 35 000 Independent of the company and the company's management yes yes yes yes yes yes Independent of major shareholders yes yes yes no no yes Attendance at board meetings, 15 15 15 15 15 13 13 Attendance at audit committee meetings, 4 - 3 4 – 4 - Attendance at remuneration committee meetings, 1 1 - - 1 - 1 and the Board's rules of procedure, which are revised an- nually and adopted at the statutory Board meeting each year. The rules of procedure regulate, among other things, the Board's functions and the distribution of work between the Board members and the CEO. The Board also establis- hes instructions for the Board's committees and the CEO. The Board's duties are to continuously monitor the strategic direction, financial development, and the company’s methods, processes and control in order to maintain a well-functioning operation. The Board shall also participate in and contribute to a high quality of financial reporting and internal control, as well as evaluate the com- pany against established financial targets and established guidelines for senior executives. The Board's duties also include continuous evaluation of the company's CEO and participation in the annual audit conducted by KPMG AB with Michael Johansson as the auditor in charge. The Chairman of the Board, who is elected by the Annual Gene- ral Meeting, has a special responsibility for the leadership of the Board's work and for ensuring that the Board's work is well organised and conducted in an efficient manner. It is the Chairman of the Board, together with the company's CEO, who plans the Board meetings. The Board meets according to an annually established meeting schedule. In addition to these Board meetings, further Board meetings may be convened to handle speci- fic issues. In addition to Board meetings, the Chairman of the Board and the CEO maintain an ongoing dialogue con- cerning the management of the company. During 2025, the Board held fifteen meetings, eleven of which were held via web/telephone. The ordinary Board meetings usually deal with reports from the CEO and any committee meetings, as well as a review of results. In connection with the meetings in February, April, July and October, the Board reviewed the interim reports. The Chairman of the Board is responsible for ensuring that the Board members evaluate their work each year. The evaluation also includes the work of the Audit and Remuneration Committees, and covers the Board's work processes, the composition of the Board and the expertise within the Board. The work is presented to the Nomination Committee. Remuneration to the Board of Directors Fees and other remuneration to the board members are re- solved upon by the Annual General Meeting. At the meeting on May 6, 2025, it was resolved that fees shall be paid to the board members as follows: The fee for the Chair of the Board, Ingalill Berglund, shall amount to 560,000 SEK. For the five ordinary board mem- bers, the fee shall amount to 225,000 SEK each. The fee for work in the Audit Committee shall amount to 110,000 SEK for the Chair of the Audit Committee, Johan- nes Nyberg. The other members of the Audit Committee, Mikael Andersson and Vibecke Hverven, shall each receive 55,000 SEK. The fee for work in the Remuneration Committee shall amount to 65,000 SEK for the Chair of the Remuneration Committee, Ingalill Berglund. The other members of the Remuneration Committee, Carl-Mikael Lindholm and Tho- mas Widstrand, shall each receive 35,000 SEK. In total, the remuneration for board and committee work during 2025-2026 amounts to 2,040,000 SEK. 5. Audit Committee The main task of the Audit Committee is to support the Board of Directors in fulfilling its responsibilities in financi- al reporting including sustainability reporting, accounting, auditing, internal control, internal audit and risk manage- ment. The Audit Committee also has ongoing contact with Balco Group's auditors, reviews and monitors the manage- ment of market and credit risks and keeps itself informed on matters relating to the audit of the company's annual report and ongoing internal control. The committee is also responsible for reviewing and evaluating the auditor's im- partiality and independence. The Audit Committee works in accordance with instructions established by the Board of Directors. Members of the Audit Committee 2025-2026 • Ingalill Berglund (Chairman), replaced Johannes Nyberg on 3 March 2026. • Mikael Andersson (member) • Vibecke Hverven (member) Ingalill Berglund has the accounting expertise required by the Companies Act. All members of the committee are independent of the company and two of the commit- tee members are independent of Balco Group's largest shareholders. During 2025, the Audit Committee held four minuted meetings. Michael Johansson, the company's elected auditor, participated in two of these meetings. All committee meetings have been reported to the Board. 6. Remuneration committee The remuneration committee's main task is to submit proposals to the Board regarding remuneration to the CEO, remuneration principles and other terms of employment for the management, and to monitor and evaluate ongoing variable remuneration and long-term incentive programs. The remuneration committee works according to rules of procedure established by the Board. Members of the remuneration committee 2025-2026 • Ingalill Berglund (Chairman) • Carl-Mikael Lindholm (Board member) • Thomas Widstrand (Board member) All members of the committee are independent of the company and two of the members are independent of Balco Group's largest shareholders. During 2025, the Remuneration Committee held one meeting, which was reported to the Board of Directors. 7. Auditor The auditor shall examine Balco Group’s annual report and accounts as well as examine the management of the company. After each financial year, the auditor submits an auditor’s report and a consolidated auditor’s report to the Annual General Meeting. The external audit of the ac- counts of Balco Group and all subsidiaries subject to audit is performed in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Balco Group’s auditor is appointed by the Annual General Meeting following a proposal from the nomination committee.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 41 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY CORPORATE GOVERNANCE REPORT The 2025 Annual General Meeting decided for the period until the 2026 Annual General Meeting to elect KPMG AB as the company’s auditor, with Michael Johansson as the auditor in charge. Michael Johansson is an authorised public accountant and a member of FAR. KPMG AB can be responsible for the audit up to and including 2042 before a new firm must be elected according to current rules. Authorised public accountant Michael Johansson can be auditor in charge until the 2029 Annual General Meeting before he needs to rotate his assignment according to cur- rent regulations. Of the 2025 remuneration to the auditors, the following has been paid to the audit firm KPMG AB: Audit assignment SEK 2,842 thousand (2,967), Other statutory assignments SEK 180 thousand (180), Tax consulting SEK 178 thousand (199) and Other services SEK 85 thousand (56). 8. Management Since 1 January 2025, management in Balco Group has consisted of the President and CEO and four additional ma- nagers. In management, four members are men and one is a woman. The members of management have the following roles: Camilla Ekdahl, President and CEO Viktor Arvidsson, CFO & Head of IR Jesper Magnusson, HR Director & Head of Communications Andreas Lindberg, Director of Business Development & Head of IT Johan Fälth, COO and Sales & Marketing Director Balco AB Remuneration to management The following guidelines for remuneration to senior execu- tives were established at the Annual General Meeting on 6 May 2025: Senior executives refers to the CEO and the Group management, which consists of five people. The purpose of the guidelines is to ensure that Balco Group can attract, motivate and retain senior executives. The company shall offer a market-based and competi- tive total compensation. Remuneration to senior execu- tives may consist of fixed and variable salary, as well as pension benefits and other benefits. This also includes terms for termination and severance pay. To ensure that the total remuneration is market-based and competitive, it shall be reviewed annually. Consideration shall then be given to the position, the company's size, salary and the person's experience. In addition, the general meeting may, independently of these guidelines, decide on share-based remuneration among other things. Fixed salary The executives' fixed annual salary shall be competitive and based on the individual executive's competence, responsibility and performance. The fixed salary shall form the basis for the total remuneration. Variable cash remuneration In addition to the fixed annual salary, senior executives may receive variable cash remuneration. Such variable remuneration shall be based on predetermined and mea- surable criteria that may be financial or non-financial. The variable salary may be linked directly or indirectly to the achievement of the financial targets set by the company's Board of Directors, which include, among other things, the Group's EBIT (operating profit). The non-financial criteria may be linked to sustainability. The variable salary is nor- mally paid based on performance over twelve months (the calendar year) and the financial information most recently published by the company. The variable cash remuneration is thus linked to the company's business strategy, long- term interests and sustainability. The criteria shall be established, monitored and eva- luated annually by the Board of Directors. For each senior executive, the variable remuneration may not exceed 50 percent of the fixed annual salary. Variable remuneration shall form the basis for pension contributions in accordance with collective agreements or individual provisions. Other benefits and pension The Group offers other benefits to senior executives in accordance with local practice. Such other benefits may, for example, include a company car and occupational health care. For a limited period, company housing may also be offered where applicable. Other benefits shall be on market terms. Senior executives shall be entitled to pension benefits based on what is customary in the country where they are employed. Pension obligations shall be defined contribu- tion and secured through premium payments to insurance companies, except where the individual in question is covered by a defined benefit pension in accordance with applicable collective agreement provisions. For each se- nior executive, pensions may not exceed 30 percent of the fixed annual salary unless a higher contribution is required by an applicable collective pension plan. Regarding employment relationships governed by rules other than Swedish, appropriate adjustments may be made in respect of pension benefits and other benefits to comply with such mandatory rules or local practice, whereby the overall purpose of these guidelines shall be met. Notice period and severance pay Employment agreements entered into between the company and senior executives shall as a general rule apply until further notice. If the company terminates the employment of a senior executive, the notice period may not exceed twelve months. Severance pay shall only be paid in the event of termination by the company and shall not exceed an amount corresponding to the fixed annual salary during the notice period. In the event of termination by the senior executive, the notice period may not exceed six months and no severance pay shall be paid. Salary and employment conditions for employees In the preparation of the Board of Directors' proposal for these remuneration guidelines, the salary and employment conditions for employees of the company have been taken into account. In the evaluation of the reasonableness and limitations of these remuneration guidelines, the following has formed the remuneration committee’s and the Board’s decision-making: • information on the employees' total remuneration, • the components of the remuneration; and • the increase and growth rate of remuneration over time. Decision-making process to determine, review and im- plement the guidelines The Board has established a remuneration committee, whose tasks include preparing the Board’s decisions on proposals for these guidelines, remuneration principles and other terms of employment for executive manage- ment. The remuneration committee shall also monitor and evaluate programs for variable remuneration for executive management, both ongoing and those finished during the year, the application of the guidelines for remuneration to executive management as well as the current remunera- tion structures and remuneration levels in the company. The Board shall prepare proposals for new guidelines at least every four years and submit the proposal for decision at the general meeting. The guidelines shall apply until new guidelines have been adopted by the general meeting. Temporary derogation from the guidelines The Board of Directors shall have the right to tempora- rily derogate from these guidelines, in whole or in part, if there are specific reasons for doing so in an individual case and a derogation is necessary to satisfy the company's long-term interests and to meet expectations for sustaina- ble and responsible business, or to ensure the company's financial viability. In cases where the Board makes such a derogation, this shall be stated in the Board's remuneration report, which shall also state the reasons for the derogation and which parts of the guidelines have been derogated from. The duties of the Remuneration Committee include preparing the Board's decisions on remuneration matters, which includes decisions on any derogation from the guidelines.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 42 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY INTERNAL CONTROL Internal control of financial reporting Under the Swedish Companies Act and the Swedish Corporate Governance Code, the Board of Directors is ultimately responsible for ensuring that the company's organisation is designed in such a way that financial reporting, management and operations are monitored and controlled in a satisfactory manner. The report on internal control has been prepared in accordance with the Annual Accounts Act and the Code. The description is limited to internal control of financial reporting in accordance with the Swedish Corporate Governance Code, point 7.4. Balco Group's CFO is responsible for ensuring that the implementation and maintenance of formal routines re- garding internal control are carried out in accordance with the decisions made by the Board. Balco Group's finance department, under the leadership of the CFO, leads the Group's work on internal control of financial reporting. The work is continuously reconciled and followed up by the Board. For Balco Group, internal governance and con- trol is a process that is continuously integrated into the company’s business management. The internal control structure that was built up prior to the listing of Balco Group in 2017 is based on the fram- ework of the established COSO model, Committee of Spon- soring Organisations of the Treadway Commission. The components of the model are used to evaluate and work with an organisation's internal governance and control linked to objectives, reporting and compliance with laws and regulations. Control environment The control environment forms the basis for internal control of financial reporting. It is important that the company's decision-making paths, authority and respon- sibilities are clearly defined and communicated between different levels in the organisation. In order to create a framework for how the work is to be carried out, Balco Group has implemented a number of governing documents in the form of internal policies and guidelines. The Board of Directors of Balco Group has established a work process and formal work plan for its work and the work of the Board's committees. In addition, the Board has a num- ber of fundamental policies and guidelines, such as the Board's formal work plan, CEO instructions, finance policy, sustainability policy, insider policy and communication policy. Governing documents for accounting and financial reporting are areas that are particularly important for ensuring accurate and complete reporting and disclosure. Balco Group has a financial manual that aims to achieve internal governance and control over financial reporting. Alongside the financial manual, Balco Group has developed a reporting package for ongoing financial follow-up. Risk assessment Financial risk management is part of the ongoing work on financial reporting. Balco Group strives to continuously analyse the risks that may lead to errors in the financial re- porting. A process for how errors in the financial reporting are to be analysed and followed up on an annual basis has been established. Risks are managed, assessed and repor- ted within Balco Group's central group functions. Control activities Balco Group monitors the risks that the Board of Directors deems to be material for internal control. The Group's CFO is responsible for ensuring overall control over financial reporting. In addition to the central control with clear deci- sion-making processes and authorization procedures for major investments, profit analyses, and accounting, there is a structure through guidelines and role descriptions with mandate descriptions for how work is conducted and fol- lowed up in the organization. Guidelines and instructions aim to detect and prevent risks for errors in reporting. No internal audit has been performed in 2025. The Group has no internal audit function; instead, internal audit is handled through expanded controlling by the Group's controllers. Information and communication Governing documents in the form of policies, guidelines and manuals, where these relate to financial reporting, are communicated primarily in the Group's financial manual and via the company's intranet. Information is expanded and updated as necessary. Communication mainly takes place on an ongoing basis within the organisation, as the working group within the finance function is essentially concentrated in one location. Furthermore, regular closing meetings are held. Guidelines on how communication with internal and external parties should be carried out are described in Balco Group's communication policy. The purpose of the policy is to ensure that all information obligations are met in a correct and complete manner. Information to external stakeholders is provided on an ongoing basis on Balco Group's financial website. Internal communication takes place largely via the company's intranet, at staff meetings and via email. Internal commu- nication is important so that all employees feel a sense of belonging and involvement, and to ensure that everyone strives towards the same goals. Follow-up The Group's finance functions work according to common instructions and guidelines. The Board of Directors and the management of Balco Group receive monthly information on the Group's earnings, financial position and how the operations are developing. Based on the internal control work, the Board can select specific areas within which extra follow-up may be required. The objective of the internal control is to assess which risks are significant within Balco Group and should therefore be managed through continuous monitoring and control. Through a risk analysis, work can be concentrated on the areas that are most important for reducing the company's total risk exposure.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 43 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BOARD AND MANAGEMENT Born 1964 1955 1971 1963 1957 Education Higher economic specialisation course at Frans Schartau Business Institute. Master of Science in Chemical Engi- neering, LTH. Medical degree, Karolinska Institutet and specialist degree in general medicine and oncology. Master of Science in Engineering, Norwegian Institute of Technology. Master of Business Administration from the School of Business, Eco- nomics and Law at the University of Gothenburg. Other current assignments Board member of Axfast AB, Bonnier Fastigheter AB and Stenvalvet Fastig- hets AB. CEO Lövsta Stuteri AB. - Chairman of the Board of Hamhus AB and its subsidiaries. Board member of Herenco AB. Board member and head of administration at the Carl- Olof and Jenz Hamrin Foundation. Chairman of the Board of OsloMet – Oslo Metropolitan University and Over Easy Solar AS. Board member Cambi ASA, Brekke & Strand Akustikk AS, USBL, Prevent Systems AS, and JM Hansen AS. Chairman of the Board of HAKI Safety AB and Opima Holding AB. Board member of Troax Group AB, Arla Plast AB and Elcowire Group AB. Previous assignments and work experience CEO and CFO of Atrium Ljungberg AB. CFO of Skolfastigheter i Stockholm AB. CEO of Axfast AB. Board member of Veidekke ASA, Scandic Hotels, Kungsleden and Danviks Hospital. CEO and President PMC Group, President BU Trelleborg Waterproo- fing (Trelleborg AB), Division Manager Saint-Gobain Ecophon. Physician at Radiumhemmet at Karo- linska Hospital, Oncology department at Linköping University Hospital, On- cology department at Ryhov County Hospital and Head of Operations at Bankeryd Health Centre. Partner Considium Consulting Group AS. CEO OBOS Prosjekt AS, VP DNV GL Energy Advisory, Managing Direc- tor Sweco Norge AS and Department Manager Statkraft Gröner AS. Long career with the ESAB Group, Cardo Pump AB, Borås Wäfveri AB and former CEO and President of Troax Group AB. Personal and related parties' holdings 10,000 shares. - 6,077,027 of which 50,000 shares privately. 4,100 shares. 10,000 shares. Legal person Independent in relation to Balco Group and management, and the Group's major shareholders. Independent in relation to Balco Group and management, and the Group's major shareholders. Independent in relation to Balco Group and management but not to major shareholders in the company. Independent in relation to Balco Group and management, and Balco Group's major shareholders. Independent in relation to Balco Group and management, and Balco Group's major shareholders. Ingalill Berglund Thomas WidstrandCarl-Mikael Lindholm Vibecke HvervenMikael Andersson Chairperson of the Board since 2021, previously member since 2016 Chair of the Remuneration and Audit Committee. Board member since 2021 Member of the remuneration committee. Board member since 2018 Member of the remuneration committee. Board member since 2020 Member of the Audit Committee. Board member since 2019 Member of the Audit Committee. Board of Directors
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 44 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BOARD AND MANAGEMENT Born 1967 1975 1980 1986 1975 Education Master of Science in Engineering from Chalmers University of Tech- nology. Master of Science in Business and Economics from Linnaeus University. Master of Science in Business and Economics from Stockholm School of Economics. Bachelor of Social Science with a major in Human Resources and La- bour Relations, Linnaeus University in Växjö. Master of Science in Business and Economics from Linköping Univer- sity. Other current assignments Board member of Haglund Industri AB and Nibe AB. – – – - Previous assignments and professional experience COO Pelly Group AB, Operation manager/CEO Isaberg Rapid AB, Site Manager Rapid Granulator AB, Logis- tics Manager Thule Sweden AB. HR Manager at Tenneco Automotive Sverige AB, Linnaeus University and consultant at Adecco AB. CFO Elitfönster, CFO DS Smith Swe- den & Norway, VP Finance Swedish Match Lights Division, Finance Mana- ger Swedish Match Industries. Office Manager, Consultant Manager and Recruitment Manager at Adecco AB. CEO Wilo Nordic AB, Supply Chain Manager ProfilGruppen AB, CEO CTC Norge AS, Supply Chain Director Sapa Profiler AB, Sales Manager Sapa Thermal Management. Own and related parties' holdings 33,400 shares. 16,040 shares. - 15,000 shares. - Warrants 40,000 warrants. 10,000 warrants. - 10,000 warrants. - Johan Fälth Viktor Arvidsson Jesper Magnusson Andreas LindbergCamilla Ekdahl COO and Marketing and Sales Director Balco AB Employed since 2010. CFO and IR Director Employed since 2026. HR Director Employed since 2014. Head of Business Development and CIO Employed since 2025. President and CEO Employed since 2019. Group Management
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 45 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY REMUNERATION REPORT Remuneration report Introduction This report describes how the guidelines for remuneration to senior executives of Balco Group, adopted by the 2025 Annual General Meeting, were applied during 2025. The re- port also contains information on remuneration to the CEO and a summary of the company’s outstanding share and share-price-related incentive programs. The report has been prepared in accordance with the Swedish Companies Act and the Swedish Corporate Governance Board’s Rules on Remuneration of the Board and Executive Management and on Incentive Programmes. Further information on remuneration to senior execu- tives can be found in note 10 (Employee benefits expen- ses etc.) on pages 76-78. Information on the work of the remuneration committee during 2025 can be found in the corporate governance report on pages 38-41. Board fees are not covered by this report. Such fees are decided annually by the Annual General Meeting and reported in note 10. Development during 2025 The CEO summarises the company's overall results in his statement on pages 5–6. The company’s remuneration guidelines: scope, purpose and deviations A prerequisite for the successful implementation of the company's business strategy and the safeguarding of its long-term interests, including its sustainability, is that the company can recruit and retain qualified employees. This requires the company to be able to offer competitive remuneration. The company's remuneration guidelines enable senior executives to be offered a competitive total remuneration. According to the remuneration guidelines, remuneration to senior executives shall be on market terms and may consist of the following components: fixed cash salary, variable cash remuneration, pension bene- fits and other benefits. The variable cash remuneration shall be linked to financial or non-financial criteria. These may consist of individualised quantitative or qualitative targets. The criteria shall be designed to promote the company's business strategy and long-term interests, including its sustainability, for example by having a clear link to the business strategy or promoting the executive's long-term development. The guidelines are set out in note 10 on pages 76–78. During 2025, the company has followed the applicable remuneration guidelines adopted by the general meeting. No deviations from the guidelines have been made and no deviations have been made from the decision-making pro- cess that, according to the guidelines, is to be applied to determine remuneration. The auditor's statement on the company's compliance with the guidelines is available at: https://balcogroup.se/investerare/bolagsstyrning. No remuneration has been reclaimed. In addition to the remuneration covered by the remuneration guidelines, the company's Annual General Meetings have resolved on long-term share-related incentive programs. Share-based remuneration Outstanding share-related and share-price-related incentive programmes At the Annual General Meeting held on 14 May 2024, it was resolved to introduce a three-year incentive programme aimed at the company's senior executives and other key employees, totalling 32 employees. The incentive pro- gramme comprises a maximum of 230,000 warrants, each entitling its holder to subscribe for a maximum of the cor- responding number of shares. Balco Group's total cost for the incentive programme over its full term is expected to be approximately SEK 1.3 million. The programme involves a maximum dilution corresponding to approximately 1.0 percent of the company’s total number of shares. The senior executives of Balco Group have acquired 75,000 warrants with a total value of SEK 310,500. The purpose of the incentive programmes is to encou- rage broad share ownership among the company’s key em- ployees, facilitate recruitment, retain skilled and talented employees, increase the alignment of interests between the key employees and the company’s objectives, and increase motivation to achieve or exceed the company’s financial targets. In order to encourage participation in the programme, it was decided to subsidise participation in the form of a gross salary supplement. The level of salary supplement will correspond to a maximum of the participant's invested gross amount. The subsidy to the participants will be paid in connection with the exercise of the warrants and is subject to the condition that the participant at that time remains employed by the company or holds other equi- valent employment within Balco Group, and retains their warrants. The subsidy for each participant shall amount to a maximum of the premium paid for the participant's war- rants held at the time of payment. Application of performance criteria The performance criteria for the CEO's variable remunera- tion have been chosen to implement the company's stra- tegy and to encourage actions that are in the company's long-term interest. In selecting performance criteria, the strategic goals and short- and long-term business priori- ties for 2025 have been taken into account. The non-finan- cial performance criteria further contribute to alignment with sustainability and the company's values. Remuneration from other companies within the Balco Group During the previous financial year, the CEO did not receive remuneration from any other company within the Balco Group. Corporate governance in Balco Group aims to create value for shareholders through active risk control and a sound corporate culture. Since Balco Group's IPO in 2017, the ongoing work for well- functioning governance, control and follow-up has been a priority.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 46 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY REMUNERATION REPORT Balco Group AB - Total remuneration of the CEO in 2025 (SEK thousand)* Fixed remuneration Variable remuneration Name of the holder (position) Basic salary Other benefits** Annual Multi-year*** Extraordinary items Pension cost Total remuneration Proportion of fixed and variable remuneration**** Camilla Ekdahl, CEO 2025 3,121 224 224 80 0 979 4,628 93% / 7% Camilla Ekdahl, CEO 2024 2,999 228 215 696 0 984 5,122 82% / 18% * With the exception of Multi-year variable remuneration, the table shows remuneration attributable to the year 2025. Multi-year variable remuneration is reported to the extent that it has been subject to so-called vesting during 2025 and has been earned in that sense, in accordance with what is stated in column 10 of Table 2 and column 8 of Table 3 below (if applicable). This applies regardless of whether payment has, or has not, been made in the same year. ** Car benefit and housing benefit. *** Stay-on bonus linked to option programmes that expired in 2024. **** Pension costs (variable remuneration, column 7), which in their entirety relate to Basic salary and are defined-contribution, have been reported in full as fixed remuneration. Balco Group AB – Performance of the CEO during the reported financial year: variable cash remuneration* Name of the holder (position) Description of criteria related to the remuneration component Relative weighting of performance criteria a) Measured performance and b) actual award / remuneration outcome Camilla Ekdahl, CEO If EPS exceeds SEK 0.9 and on a linear basis up to SEK 2.8, a maximum of 30% of annual salary is paid. 60% a) -0.19 SEK b) 0 kSEK If organic order intake exceeds SEK 1,500 million and on a linear basis up to SEK 1,900 million, a maxi- mum of 15% of annual salary is paid. 30% a) 1,537 MSEK b) 43.6 kSEK If the Group's CO2 emissions according to Scope 1 and Scope 2 decrease by at least 35% compared with 2019 and the amount of recyclable waste exceeds 70%, a maximum of 2.5% of annual salary is paid. 2.5% a) -50.4% b) 0 kSEK If the accident frequency for 2025 decreases compared with the three-year average for 2022–2024 (which was 8.2). 5% a) 7.94 b) 77.8 kSEK If the ESG risk rating according to Sustainalytics is lower than 20, i.e. classified as a low-risk company. 2.5% a) 16.6 b) 38.9 kSEK * Refers to the parameters in force in 2024 and paid in 2025.
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 47 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY REMUNERATION REPORT Balco Group AB – Changes in remuneration and the Group's results over the last five reported financial years Annual change (SEK, thousands) 2021 vs 2020 2022 vs 2021 2023 vs 2022 2024 vs 2023 2025 vs 2024 Outcome 2025 Total remuneration to the CEO -530 -11.0% 326 7.6% -595 -13.0% 1,123 28.1% -494 -10.7% 4,628 Group EBIT (operating profit) 2,612 2.3% -15,496 -13.1% -32,120 -31.3% -35,553 -50.5% -53,526 -153.7% -18,705 Average remuneration based on number of full-time equivalents employed* in the Group -2,112 -18.6% -623 -6.7% -407 -4.7% -175 -2.1% 66 13.3% - * Excluding members of group management. Balco Group AB - Share option program (Chief Executive Officer) Main conditions for share option programs Information for the reported financial year* Opening balance During the year Closing balance Name of executive Name of program Performance period Date of grant Date of vesting Expiry of lock-up period Exercise period Exercise price (SEK) Share options at the beginning of the year Granted share options Vested share options Share options subject to performance condi- tions Share options granted but not vested Share options subject to lock-up period Camilla Ekdahl, Chief Executive Officer 2022/2025 Sep 2022-Sep 2025 2022-09-01 2022-09-01 2025-09-30 20250901-20250930 79.40 25,000* 2024/2027 Sep 2024-Sep 2027 2024-09-25 2024-09-01 2027-09-24 20270826-20270924 47.80 40,000** -25,000 Total 65 000 -25,000 0 0 0 * In Share Option Program 2022/2025, the CEO was awarded 10,000 options in 2022 and an additional 15,000 options in 2023. ** In Share Option Program 2024/2027, the CEO was awarded 40,000 options in 2024. * The aggregate market value of the underlying shares at the time of award was SEK 1,357 thousand. The aggregate exercise price was SEK 1,985 thousand. The option premium paid was SEK 80 thousand. ** The aggregate market value of the underlying shares at the time of award was SEK 1,593 thousand. The aggregate exercise price was SEK 1,912 thousand. The option premium paid was SEK 166 thousand.
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48 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 Sustainability report Sustainability strategy .......................................................49 Sustainability targets ........................................................50 Materiality assessment ......................................................51 Balco Group’s value chain ...................................................52 Environmental responsibility .............................................53 The EU's taxonomy ............................................................55 Social responsibility ..........................................................59 Business conduct ..............................................................61
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49 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 SUSTAINABILITY STRATEGY Sustainability strategy linked to the business Balco Group's sustainability work and sustainability strategy are closely linked to the Group's business model – to create innovative, sustainable and attractive balcony and facade solutions through a customer-centric approach that contribute to increased quality of life and energy savings. A combination of innovation, long-term value creation and accountability are central parts of the sustainability strategy. A good example of how Balco Group’s sustainability stra- tegy works in practice is the Balco method. The Balco method was developed by Balco AB and means that old balconies are removed entirely or parti- ally – and replaced with a new concrete slab and patented glazing systems from Balco. The functional glass doors protect the concrete slab and existing windows, doors and walls. All work is carried out from the outside of the buil- ding and the new glazed balcony has an estimated lifespan of over 90 years. At the same time, the glazing helps to reduce energy consumption by up to 30 percent, increases the property value and creates a safer and more pleasant living environment. The example of the Balco method shows how Balco Group's sustainability strategy forms an integral part of the Group's overall strategy and permeates the entire value chain – from product development to production and installation. In terms of each strategic pillar (see page 11), sustaina- bility work is integrated in the following way: l A long-term business model: Balco Group's customer of- fering includes energy savings as an important component. l Innovation for sustainable development: All product development within the Group shall promote the green transition in social development. l Selective and value-creating acquisitions: Balco Group is an engaged owner that promotes good corporate gover- nance and good working conditions for all employees. The Group ensures that Group companies conduct their own sustainability work within environment, social responsibi- lity and governance, in line with common policies. l Entrepreneurship and decentralisation: The subsidia- ries conduct their own operations and develop their own brands but can utilise the Group's expertise and resources within IT, HR, purchasing and sustainability to reach com- mon goals. Balco Group operates in eight countries in Northern Eu- rope with manufacturing in Sweden, Finland and Poland. The decentralised structure, where the subsidiaries combine local market knowledge with the Group's shared resources, forms the basis for value creation and sustaina- bility work. The Group has long had a clear focus on sustainable development, with a strategy that is in line with the UN's Agenda 2030 and the Global Goals. Since 2019, the Group has been a member of the UN Global Compact, which ensures that operations are conducted in accordance with international principles for human rights, working conditions, environmental responsibility, and business ethics. Balco Group is also a member of the Sweden Green Building Council, an organisation that works with and for environmentally adapted solutions within the construc- tion and real estate sector. In 2023, the Group took further steps in its climate commitment by joining the Science Based Targets initiative (SBTi). The process of setting new science-based climate targets is ongoing, with an expec- ted presentation during 2026. During 2025, Balco Group has continued to develop its sustainability work with a focus on improving proces- ses, data quality, and implementation power. This work has included a gradual transition to a fully electrified vehicle fleet in line with the Group's car policy, as well as an increased focus on systemising and consolidating sustainability data. During the year, extensive work has been dedicated to refining data collection and follow-up in the Group's reporting structure, including the production of data for scope 3 emissions, in order to create a more reliable basis for future analysis and target management. Balco's Code of Conduct and Sustainability Policy continue to form the ethical and strategic foundations for decisions, investments, and stakeholder relations. As the Group combines incremental operational improvements with a long-term strategic direction, Balco is gradually strengthening its ability to deliver climate benefits, circularity, and social responsibility within its core opera- tions. SUSTAINABILITY INITIATIVES 2025 n Review of measurement methods, mana- gement and reporting of waste management. The work also includes improvement work for processes and routines with the aim of increa- sing the proportion of recyclable waste. n Continued development of the Group’s collection of sustainability data, with a focus on Scope 3. Measurements began in January 2026. n Preventive work to counteract work- place accidents. The work has been ongoing throughout the year and has focused on work methods, equipment and routines.
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50 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 SUSTAINABILITY TARGETS The accident frequency rate shall be zero. Total absence due to sickness shall amount to a maximum of 3.5 percent. 70 percent of all waste during the year shall be recyclable. Employee turnover shall not exceed 8 percent. The number of confirmed violations of the code of conduct must be zero. The Supplier Code of Conduct must be accepted by 100 percent of selec- ted suppliers. Reduce environmental impact re- garding both Scope 1 and Scope 2 by 35 percent per hour worked by 2025, compared with 2019. Balco Group must be a safe workplace where the health and well-being of em- ployees are prioritised. Balco Group's code of conduct must be followed by everyone within the organisation and by our suppliers. Balco Group aims to reduce unneces- sary waste of input goods and use recyclable materials. Balco Group aims to be a safe employer, retain competence within the organisation and recruit smartly. Balco Group’s sustainability goals are based on goals 5, 8, 9, and 12 of the UN’s Agenda 2030. Balco Group will reduce its environ- mental impact within Scope 1 and Scope 2 by 2025. Specific targetsSpecific sub-targets Specific sub-targets Specific sub-targetsSpecific sub-targets Safe workplace Code of ConductWaste management Staff turnoverEnvironmental impact The Group’s sustainability targets 0 500 1,000 1,500 2,000 2,500 3,000 Scope 1+2 per hour worked 20252024202320222021 Target -70 -60 -50 -40 -30 -20 -10 0 Reduction 0 4 8 12 16 Accident frequency 20252024202320222021 0 2 4 6 8 Sick leaveTarget 20252024202320222021 0 1,000 2,000 3,000 4,000 5,000 Waste, tonnes 20252024202320222021 0 20 40 60 80 100 Recyclable Target 0 5 10 15 20 Staff turnover, % Target 20252024202320222021 0 20 40 60 80 100 Acceptance ratio, % 20252024202320222021 0 20 40 60 80 100 Target
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51 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 MATERIALITY ASSESSMENT Materiality assessment and regulatory compliance During 2025, Balco Group has continued to work based on the structure established in connection with preparations for CSRD and reporting according to ESRS. The Group is no longer subject to the reporting requirement, but the ongoing work has contributed to strengthened internal governance and a broader mapping of sustainability-related impact and financial risks and opportunities, which forms the basis for the sustainability reporting. The double materiality assessment provides an overview of areas where the Group has a material impact, as well as areas where Balco Group has identified financial risks and opportunities linked to sustainability. As part of this process, the collection of scope 3 data has begun to provide a more comprehensive picture of emissions related to the value chain. The Group's impact, risks and opportunities are assessed to be concentrated in its own operations. Balco Group has relatively few activities upstream and downstream in the value chain since the larger group companies to a large extent produce as well as deli- ver and install their products themselves. Furthermore, the Group's impact areas, risks and opportunities within sustainability often have a long-time horizon based on extensive internal responsibility that the Group has conducted for several years with the aim of eliminating impact areas and risks where ef- fective solutions have been readily available. The double materiality assessment continu- es to be part of the Group's reporting routines and will also in the future serve as support in the work of identifying and following up on relevant sustainability issues. Balco Group continues to adapt processes and data col- lection in line with increased global demands for transparency, long-term perspective and accountability. The Group reviews its sustai- nability reporting routines annually and will continue to develop its reporting. At EU level, there is hope that sustainability reporting in Sweden and Europe in the future will become clearer and more transparent and highlight both positive and negative impacts. During 2026, Balco Group will continue its work to meet future regulatory requirements placed on the Group's sustainability reporting. Impact materiality Financial materiality 1 2 1 4 2 1 3 2 5 34 7 65 Explanation: Although Balco Group is not subject to the requirements of the CSRD, Balco Group has used the subcategories within the ESRS reporting standard's ten overarching areas for environment, social responsibility and governance as a starting point. For areas assessed as being doubly material, Balco Group has identified both impact and risks or opportunities. In areas that are only material from an impact perspective, the Group has identified a positive or negative impact, and in the categories that are material from a financial per- spective, Balco Group has identified a risk or opportunity linked to sustainability. DOUBLE MATERIALITY ASSESSMENT Pollution 4 5 Air pollution Substances of very high concern Resource use and circular economy Workers in the value chain Responsible business practices Own workforce 6 3 1 1 4 2 2 7 5 Resource inflows, including resource use Working conditions Corporate culture Working conditions Equal treatment and opportunities for all Corruption and bribery Equal treatment and opportunities for all Waste Other work-related rights 1 2 3 Climate change Climate change adaptation Climate change mitigation Energy
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52 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 V ALUE CHAIN Balco Group’s value chain Balco Group's value chain is characterised by a holistic perspective that encompasses the products' entire life cycles, from idea development and design to production, installation and subsequent service. Upstream includes the purchase of materials such as aluminium and glass, where the aluminium is 100 percent fossil-free and fully recyclable. Raw materials are impor- ted exclusively from Europe and the products are designed and produced in Sweden, Finland and Poland. In its own operations, Balco Group produces balconies and accessory products. The Group also carries out fa- cade renovation projects and other services related to the construction industry. Each product is designed with resource efficiency in mind. The products have a long service life and can also be dismantled into small components, which means that in many cases they can be reused essentially in their entirety. Downstream, value is created through the products' energy-efficient properties. Glazing can reduce energy consumption in buildings by up to 30 percent depending on geographical location, and the initial climate debt is repaid on average after approximately 25 years. In its role as a turnkey contractor, Balco Group also has the opportunity to further strengthen the performance of buildings th- rough active measures such as supplementary insulation, window replacement, installation of solar panels and heat pumps, which contributes to an improved energy class and increased long-term sustainability.
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53 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 Environmental sustainability as a strategic business factor Balco Group is a manufacturing group with a direct impact on its surroundings. The Group takes clear responsibility for reducing negative effects from both manufacturing and transport, while products are developed with the ambition of contributing to customers' energy savings. A central part of the Group's strategy is therefore to offer climate-smart solutions that generate measurable energy gains for customers while simultaneously being manufactured with as low a climate impact as possible. For the sustainability strategy to have full impact, con- sistent work is required in product development, process optimisation and management of internal routines. Balco Group works continuously to ensure that the choice of materials and the use of energy and water are characte- rised by resource efficiency. The objective is to minimise the Group's own negative impact from production, with the ambition of simultaneously reducing climate impact throughout the value chain through, for example, energy efficiency in existing buildings. Since joining the UN Global Compact in 2019, the Group has continued to work in line with its principles and Agenda 2030, with a particular focus on Global Goals 9 – Sustaina- ble industry, innovation and infrastructure, and Goal 12 – Responsible consumption and production. As a producer of balcony solutions, the Group has a direct responsibility for the environmental impact arising from material use, production, transport and installation, but also an indirect responsibility linked to customers' use of the products over time. Balco Group therefore strives to combine energy-efficient solutions with a growing life-cycle perspective where resource optimisation and circularity are given increasing importance from the deve- lopment phase to installation. A growing product category within the Group is service and aftermarket. This development marks a strategic step towards a more circular offering that ensures the lifes- pan of installed balcony solutions and that the products continue to deliver energy savings over time. The service offering includes more proactive work, with Balco aiming to be involved ahead of, for example, five-year inspections to ensure functionality and identify maintenance needs. Offering service early and preventing wear and tear crea- tes opportunities to reduce resource consumption, avoid extensive replacements and strengthen the potential for reuse in the long term. In parallel, the Group has intensified its work on mapping its environmental impact in the value chain, including through the collection of Scope 3 data. This is an important step following Balco Group's commitment to the Science Based Targets initiative (SBTi) in 2023, where the Group is now developing more comprehensive documentation to be able to formulate climate targets in line with science. The Scope 3 work provides the opportunity to analyse emissions linked to, for example, raw materials, the supply chain, transport and customer use, which is central to being able to priori- tise efforts throughout the entire product life cycle. Balco Group has developed a patented method where heat pumps are inte- grated into the facade as part of the Group's comprehensive solutions. The method is based on a centrally located system in the lower part of the building, which makes it possible to distribute heat to several floors. This reduces the need for individual units. In combination with Balco Group's glazing solutions, significant energy savings are crea- ted that contribute to lower operating costs, reduced climate impact, and a more aesthetically pleasing facade appearance. Efficient heating ENVIRONMENTAL RESPONSIBILITY
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54 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 ENVIRONMENTAL RESPONSIBILITY Reduced environmental impact Objective Measurement interval Measurement method 2025 2024 2023 Reduce environmental impact regarding Scope 1 and Scope 2 by 35% per hour worked by 2025* Quarterly Scope 1 Total emissions, tonnes CO2e 901 1,011 924 Grams CO2e/hour worked Difference compared to 2019 1,021 –32% 957 –36% 1,200 -20% Scope 2 Total emissions, tonnes CO2e 443 486 392 Grams CO2e/hour worked Difference compared to 2019 502 –68% 460 –71% 509 -68% * Relative to 2019 Since 2022, Balco Group has had a target to reduce its environmental impact by 35 percent per hour worked by 2025, with 2019 as the base year. The previous target was to reduce the Group's environmental impact by 20 percent by 2025 compared to 2019. Looking at the overall outcome for 2025, the Group's environmental impact according to both Scope 1 and Scope 2 has decreased by 52.3 percent per hour worked since 2019, which means that Balco Group's target has been met. During 2026, the Group will develop new targets that also include Scope 3. Waste management Target Measurement interval Key figures 2025 2024 2023 70 % of all waste during the year shall be recyclable Quarterly Waste, tonnes 2,387 2,395 2,382 Hazardous waste, tonnes 76 53 77 Recyclable* 71% 80% 76% * The proportion of waste that can be recycled/total amount of waste over the last 12 months In 2025, Balco Group changed its measurement method and simultaneously introduced stricter requirements for the subsidiaries regarding reporting on waste management, which has led to more extensive reporting, but a deterioration in the performance measure of the proportion of recyclable waste, although still above the target of 70 percent recyclable waste. In 2026, there is an increased focus on the recycling of materials on construction sites, with a particular focus on facade renovation projects, where the proportion of consumables and the amount of waste are generally higher. Recycling 2025 2024 2023 Recycled material, tonnes 1,693 1,919 1,809 Energy-recovered material, tonnes 529 380 405 Non-recycled material, tonnes 165 96 168 The changes in recycling are, as with waste management, due to higher reporting requirements for the subsidiaries. Water consumption 2025 2024 2023 Total water consumption, cubic metres 3,871 4,199* 3,665 Water consumption is in line with previous years. The decrease is attributable to the number of hours worked during the year. * Revised figure for 2024. Was previously 3,699. Energy consumption 2025 2024 2023 Electricity, MWh 3,115 3,485 2,662 Heating, MWh 1,802 1,959 1,612 Energy consumption during 2025 was in line with the previous year and decreased in absolute terms as a result of fewer hours worked. RISKS AND RISK MANAGEMENT Risks linked to the strategic sustainability area “Envi- ronmental responsibility” are presented in the section “Risks and risk management” on page 31.
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55 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 EU TAXONOMY The Group’s work with the EU taxonomy The EU Taxonomy Regulation EU 2020/852 is a classifica- tion system for sustainable economic activities in relation to the EU's six environmental objectives: 1. Climate change mitigation (CCM) 2. Climate change adaptation (CCA) 3. Sustainable use and protection of water and marine resources (WTR) 4. Transition to a circular economy (CEY) 5. Pollution prevention and control (PPC) 6. Protection and restoration of biodiversity and ecosys- tems (BIO) According to the Taxonomy Regulation, an activity is considered sustainable and taxonomy-aligned if it con- tributes substantially to at least one of the environmental objectives, while not causing significant harm to any of the other objectives and simultaneously fulfilling certain established minimum safeguards. Balco Group has worked with the EU Taxonomy for several years and has made its own internal assessments where rules have been unclear or interpretation has been uncertain. The disclosures for 2022–2024 are based on the then-current interpretation of the taxonomy's require- ments. During 2025, simplifications and updates from the EU have come into force, which entail clearer guidance for certain parts of the taxonomy, such as materiality limits and simplified reporting requirements. Balco Group will continue to follow developments and update its reporting in line with new regulatory guidance for increased market practice. Activities covered Balco Group has determined that the Group's economic activities covered by the taxonomy have the potential to contribute to the goal of Climate change mitigation (CCM). These activities are: • Renovation of existing buildings (CCM 7.2) when the Group renovates buildings through the installation of open balconies and facade renovation without additio- nal insulation. • Installation, maintenance and repair of energy effi- ciency equipment (CCM 7.3) when the Group installs gla- zed balconies during building renovations, which reduce the effect of thermal bridges and add an insulating shell. In addition, the Group carries out additional insulation of buildings in certain projects in connection with facade renovations. Taxonomy-aligned activities In order for an economic activity to be considered taxono- my-aligned and thus environmentally sustainable, it must make a significant contribution to at least one of the EU's six environmental objectives and not cause significant harm (DNSH) to any of the other objectives. In addition, it must be carried out in compliance with certain minimum safeguards regarding social and governance-related aspects of sustainability. Balco Group has identified a number of activities that meet the technical screening criteria for significant contribution to climate change mitigation. These activities consist of the installation of glazed balconies in connection with the renovation of buildings and facade renovation with additional insulation (CCM 7.3). For activities within the reno- vation of buildings (CCM 7.2) involving the installation of open balconies or facade renovation without additional insula- tion, the screening criteria for climate change mitigation are not met as they do not meet the requirement of 30 percent energy savings and are therefore not taxonomy-aligned. Do No Significant Harm (DNSH) Potentially taxonomy-aligned activities have been asses- sed based on DNSH (Do No Significant Harm) criteria. Climate change adaptation Physical risks are reviewed regularly as part of the Group's property management and insurance programs. In Balco Group's assessment of compliance with the DNSH criteri- on, local risk assessments have been carried out regarding relevant climate risks. Sustainable use and protection of water and marine resour- ces Regarding the water criterion, Balco Group has identified a limited number of activities with direct discharges of indu- strial wastewater or those affected by water risks, which have been assessed as relevant to the criterion. Transition to a circular economy Regarding the transition to a circular economy, the as- sessments carried out have identified several examples of implemented practices, where possible. This includes the application of the waste hierarchy and targets for reducing waste within manufacturing processes and product de- velopment as well as on construction sites where consi- deration has been given to product lifespan, recyclability, material selection and other strategies to contribute to the transition to a circular economy. Pollution prevention and control The criteria for pollution prevention and control refer to EU chemical legislation, including the REACH regulation and the associated candidate list of substances of very high concern. Balco Group complies with current EU rules regarding chemical content in materials and products and ensures that no prohibited or restricted substances are used in its own operations. The Group also considers risks linked to noise, dust and polluting emissions by including these aspects in the project-specific risk assessments car- ried out before each construction and renovation project. Protection and restoration of biodiversity and ecosystems Regarding the biodiversity criterion, Balco Group has evaluated the impact of its activities at individual produc- tion facilities regarding biodiversity as well as protected areas and species. Balco Group's activities are not judged to have a direct material impact. Minimum safeguards The criteria for minimum safeguards have been assessed at Group level. Balco Group ensures compliance through Group-wide policies, guidelines and routines in relevant areas. These include human rights and labour law, anti- corruption and anti-bribery, fair competition and respon- sible taxation. The Group has also confirmed that no part of the busi- ness is linked to the production of or trade in controversial weapons, such as anti-personnel mines, cluster munitions or chemical and biological weapons. Compliance in these areas is supported by internal follow-ups and regular checks within the framework of the Group's work on compliance and risk management. Balco Group thus assesses that the criteria for minimum safeguards are met. Nuclear energy-related and fossil gas-related activities Balco Group does not perform, finance or have exposure to research, development, facilities or similar regarding nu- clear energy-related activities as well as fossil gas-related activities.
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56 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 2025 Significant contribution criteria DNSH criteria (Do No Significant Harm) Economic activities Code(s) Absolute turnover Proportion of turn over Climate change- mitigation Climate change- adaptation Water and marine resources Circular economy Pol lution Biodiversity and eco- systems Climate change- mitigation Climate change adaptation Water and marine resources Circular economy Pol lution Biodiversity and eco- systems Mini mum- safe- guards Proportion of taxonomy-alig - ned (A.1) or taxo - nomy-eligible (A.2) turnover 2024 Proportion of taxonomy-alig - ned (A.1) or taxo - nomy-eligible (A.2) turnover 2023 Category (enabling acti - vity) Category (transitional activity) MSEK % % % % % % % Yes/no Yes/no Yes/no Yes/no Yes/no Yes/no Yes/no % % A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable (Taxonomy-aligned) activities Renovation - glazing and facades with insulation CCM 7.3 826.4 63.8% 63.8% - Yes Yes Yes 52.3% 60.5% Enabling Turnover of environmentally sustainable (Taxonomy-aligned) activities (A.1) 826.4 63.8% 63.8% 52.3% 60.5% A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Renovation – open, facades without insulation and others CCM 7.2 159.2 12.3% Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 159.2 12.3% 29.5% 29.1% Total (A.1+A.2) 985.6 76.1% 81.8% 89.6% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-non-eligible activities (B) 309.4 23.9% Total (A+B) 1295.1 100% Turnover Proportion of turnover from products or services associated with Taxonomy-aligned eco- nomic activities – information covers 2025. Qualitative information on turnover The reported absolute turnover includes revenue that is recognised as described in Note 3 (page 73) and revenue from Balco Group's construction contracts. Disclosures on tax- onomy-eligible turnover include revenue from the installation of glazed balconies during renovation of buildings and facade renovation with additional insulation (“7.3 Activities”). Activities that are taxonomy-eligible but not taxonomy-aligned include the renovation of buildings with the installation of open balconies or facade renovation without additional insulation (“7.2 Activities”). This is because they do not meet the 30% energy savings requirement. EU TAXONOMY
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57 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 CapEx Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – information covers 2025. 2025 Substantial contribution criteria DNSH criteria (Do No Significant Harm) Economic activities Code(s) Absolute CapEx Proportion of CapEx Climate change- mitigation Climate change- adaptation Water and marine resources Circular economy Pol lution Biodiversity and eco- systems Climate change- mitigation Climate change adaptation Water and marine resources Circular economy Pol lution Biodiversity and eco- systems Mini mum- safeguards Proportion of taxonomy-alig - ned (A.1) or taxo - nomy-eligible (A.2) CapEx 2024 Proportion of taxonomy-alig - ned (A.1) or taxo - nomy-eligible (A.2) CapEx 2023 Category (enabling acti - vity) Category (transitional activity) MSEK % % % % % % % Yes/no Yes/no Yes/no Yes/no Yes/no Yes/no Yes/no % % A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable (taxonomy-aligned) activities Installation, maintenance and repair of energy efficiency equipment CCM 7.3 24.3 67.8% 67.8% - Yes Yes Yes 70.6% 73.5% Transitional CapEx of environmentally sustainable (taxonomy- aligned) activities (A.1) 24.3 67.8% 67.8% 70.6% 73.5% A.2 Taxonomy-eligible activities but not environmentally sustainable (not taxonomy-aligned) Renovation of existing buildings CCM 7.2 6.7 18.6% CapEx of taxonomy-eligible activities but not environmentally sustainable (not taxonomy- aligned) (A.2) 6.7 18.6% 10.3% 9.7% Total (A.1+A.2) 30.9 86.4% 80.9% 83.2% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES CapEx of taxonomy-non-eligible activities (B) 4.9 13.6% Total (A+B) 35.8 100% Qualitative disclosure on CapEx Disclosures on the Taxonomy-eligible CapEx of 7.3 Activities include capital expenditure on product development and investments in property, plant and equipment, and new leases. For 7.2 Activities, the Taxonomy-eligible CapEx includes the same categories as for 7.3 Activities. Reported Taxonomy-aligned product development investments consist of product development projects directly related to Taxonomy-aligned products. For CapEx related to property, plant and equipment and new leases, the portion of the in- vestment related to the Taxonomy-aligned activities is recognised. A large proportion of CapEx benefits both Taxonomy-aligned and non-Taxonomy-aligned products when they are produced in the same facilities. For these types of investments, an allocation key is used based on the distribution of volumes per facility between Taxonomy-aligned and non-Taxonomy-aligned products. EU TAXONOMY
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58 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 EU TAXONOMY OpEx Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities – information covers 2025. 2025 Significant contribution criteria DNSH criteria (Do No Significant Harm) Economic activities Code(s) Absolute OpEx Share of OpEx Climate change- mitigation Climate change- adaptation Water and marine resources Circular economy Pol lution Biodiversity and eco- systems Climate change- mitigation Climate change adaptation Water and marine resources Circular economy Pol lution Biodiversity and eco- systems Mini mum- safe- guards Proportion of taxonomy-alig - ned (A.1) or taxo - nomy-eligible (A.2) OpEx, 2024 Proportion of taxonomy-alig - ned (A.1) or taxo - nomy-eligible (A.2) OpEx, 2023 Category (enabling activity) Category (transitional activity) MSEK % % % % % % % Yes/no Yes/no Yes/no Yes/no Yes/no Yes/no Yes/no % % A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable (taxonomy-aligned) activities Installation, maintenance and repair of energy efficiency equipment CCM 7.3 3.3 69.5% 69.5% - Yes Yes Yes 70.9% 69.4% Enabling OpEx of environmentally sustainable (taxonomy- aligned) activities (A.1) 3.3 69.5% 69.5% 70.9% 69.4% A.2 Taxonomy-eligible activities that are not environmentally sustainable (not taxonomy-aligned) Renovation of existing buildings CCM 7.2 0.9 18.1% OpEx of taxonomy-eligible activities that are not environmentally sustainable (not taxonomy- aligned) (A.2) 0.9 18.1% 18.2% 17.2% Total (A.1+A.2) 4.2 87.6% 89.1% 86.6% B. TAXONOMY-NON-ELIGIBLE ACTIVITIES OpEx of taxonomy-non-eligible activities (B) 0.6 12.4% Total (A+B) 4.8 100% Qualitative information on operating expenditure (OpEx) The majority of the OpEx disclosures reported under the Taxonomy include costs for the repair and maintenance of property, plant and equipment. For repair and maintenance costs that benefit both taxonomy-aligned and non- taxonomy-aligned activities, an allocation key based on the same principles as for capital expenditure (CapEx) is used. The proportion of such aligned operating expenditure is based on the proportion of aligned revenue during the year, reflecting the resources used by taxonomy-aligned production at the facilities.
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59 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 The people within Balco Group are the Group’s most important resource. Value creation occurs through the competence, commitment and accountability of the employees. Therefore, workplace conditions are a central part of the Group's sustainability work. A safe, secure and stimulating working environment is a high priority, both for the physical and psychosocial work environment, which is crucial for the well-being of the employees and for the Group's long-term success. Balco Group's social work is closely linked to the UN's Agenda 2030, with a particular focus on Goal 8 – Decent work and economic growth, and target 8.8, which empha- sizes the importance of protecting employees' rights and promoting a safe and healthy workplace. The Group has defined three long-term goals for the work environment: • Sickness absence below 3.5 percent of planned working hours • Employee turnover of no more than 8 percent • Zero vision for accidents. These goals are not only intended to protect employees, but also to ensure that Balco Group can retain and develop the right skills, while attracting new talent to the Group. Production and installation at workplaces involve a natu- rally high risk of accidents. Therefore, preventive safety work is prioritized and extensive. Balco works systema- tically with training, risk assessments, safety equipment and certifications for specific work tasks. Incidents are documented and carefully evaluated to identify causes and opportunities for improvement, enabling the Group to act proactively. Regular safety inspections in offices, in production and on projects ensure that risks are detected and addressed in time. Digital reporting systems have been implemented to support observations and preventive measures against workplace accidents, creating a clear structure for both management and employees to monitor and improve safety continuously. In 2025, the number of workplace accidents leading to sickness absence was 7 (12). Total sickness absence as a proportion of planned time was 3.2 percent (3.6). In parallel with the physical work environment, Balco Group focuses on the psychosocial work environment. Performance reviews and other forums provide opportuni- ties to discuss workload, the work environment, develop- ment opportunities and terms of employment. Flexibility is offered where possible through hybrid solutions, but the Group's strategy is for as much work as possible to be carried out on site to promote collaboration, culture and engagement. In 2025, Balco Group also offered all employees the benefit of an electric bicycle as part of the investment in health, sustainable travel and workplace satisfaction. This complements previous initiatives, such as the gym and wellness programmes at the head office and the production facility in Växjö. Equality and diversity are central values in the Group's work environment efforts. Employees, consultants, in- terns and job applicants must be treated equally, regard- less of gender, age, ethnicity, religion, disability, sexual orientation or gender identity. There is zero tolerance for discrimination and harassment, and the Group works actively to prevent, counteract and address any violations. The Group has clear guidelines against child labour, forced labour and other unauthorised influence, as well as a ban on the purchase of sexual services. Employees' right to form and join trade unions and to bargain collectively is fully respected. Any deviations from Balco Group's code of conduct can be reported anonymously via an external whistleblowing function managed by an independent law firm. These principles and guidelines are in line with the UN Global Compact's ten principles for human rights, labour law, the environment and anti-corruption. Through membership in the UN Global Compact, Balco Group's commitment is to promote respect for human rights and decent working conditions, counteract all forms of forced and child labour, ensure equality and diversity, and work actively against corruption and bribery. To ensure a stable and competent workforce, Balco Group works actively with personnel development and competency issues. From an employer perspective, it is important for the Group to retain the right skills while being an attractive choice among job seekers. Skill development and career opportunities for employees are therefore important components that create long-term commitment within the Group. At the same time, Balco Group believes that a certain degree of staff turnover is healthy in the longer term, as it creates dynamics and new opportunities for both employees and the organisation. Staff turnover for 2025 amounted to 7.3 percent (7.7). Responsibility for a safe and secure workplace WORK ENVIRONMENT INITIATIVES During 2025, Balco Group implemented a group-wide effort aimed at reducing incidents and workplace accidents. The work included, among other things, a review of procedures and processes, a review of equipment and tools, as well as certain training for preven- tive purposes. The initiatives were launched following the increase in workplace accidents during the previous year. This work will conti- nue during 2026. SOCIAL RESPONSIBILITY
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60 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 SOCIAL RESPONSIBILITY Equal leadership Objective Measurement interval 2025 2024 2023 The proportion of female managers shall be at least equal to the total proportion of female employees. Quarterly Gender distribution total employees Men 91% 92% 89% Women 9% 8% 11% Gender distribution among managers Men 82% 79% 79% Women 18% 21% 21% The proportion of female managers was 18 percent at the end of 2025, compared with the total proportion of women in the Group which was 9 percent. The objective that the proportion of female managers shall be at least equal to the total proportion of female employees has thus been achieved for 2025. Number of employees 2025 2024 2023 Total number of employees 544 640 490 Men 497 590 436 Women 47 50 54 A reduction in the number of employees occurred during the year due to restructuring and cost-reduction reasons. Safe, secure, and healthy workplace Target Measurement interval Measurement method 2025 2024 2023 Total sick leave not to exceed 3.5% Quarterly Absence time (as a proportion of planned time) 3.2% 3.6% 3.7% Staff turnover not to exceed 8% Quarterly Number of terminations (as a proportion of total employees) 7.3% 7.8% 9.9% Accident frequency to be zero Quarterly Number of workplace accidents (per 1 million hours worked) 7.9 11.4 5.1 The Group continued the positive trend in reduced sick leave and reduced staff turnover also during 2025. Furthermore, the accident frequency has decreased significantly as a result of a focus on preventive work and routines during the year. In 2025, the total number of workplace accidents was 7, which is a decrease of 5 from the previous year. Safety is always a priority for Balco Group, and especially in the type of business that the Group has. Additional initiatives focused on safety are ongoing. Number of employees per company 2025 2024 2023 Balco Group AB 3 3 2 Balco AB (including sales companies and NMT) 244 252 288 TBO-Haglinds AB 26 52 62 Balco Altaner A /S 35 56 53 Stora Fasad Entreprenad AB (including Arutex) 27 18 22 RK Teknik i Gusum AB (including Montagepar tner) 50 47 47 Söderåsens Mur- & Kakel AB 27 21 18 Riikku Group Oy 107 170 - Suomen Ohutlevyasennus Oy 25 21 -
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61 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 Business ethics lay the foundation for sustainability work Fair, lawful and economically sustainable business is a fundamental prerequisite for Balco Group to achieve its long-term business goals. The Group strives to integrate sustainability work into all parts of the operations and considers responsible conduct as a prerequisite for building trust among customers, employees, suppliers and other stakeholders. Balco Group conducts its operations in accordance with applicable laws, rules and regulations in all countries where the Group operates. The same requirements are placed on all partners and suppliers. Correct, ethical and transparent conduct is central to maintaining the Group's reputation in the market and ensuring long-term competi- tiveness. The Board of Directors has overall responsibility for sus- tainable business and makes decisions on strategic issues linked to sustainability. Operational responsibility rests with the CEO, who ensures that sustainability work is inte- grated into the business strategy and followed up within each business area. Since 2022, the Group's CFO has also had direct responsibility for sustainability governance and assists both the Board and management with follow-up, analysis and decision support documentation. Balco Group's sustainability governance is based on the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. The work is also based on the UN Agenda 2030, where several of the Global Goals serve as a guiding framework for the Group's sustainability targets. Sustainability work within Balco Group is conducted at both Group and subsidiary level. Group management is responsible for overall targets, policies and follow-up, while the subsidiaries are responsible for implementing measures locally in the operations, with the support of common tools and guidelines. To further improve sustainability work, Balco Group is a member of several forums, including the UN Global Com- pact and the Sweden Green Building Council. The Group is also certified as a Nasdaq ESG Transparency Partner, which further confirms Balco Group's commitment to in- creased openness, accountability and transparency in the management of environmental, social and governance- related issues. Code of Conduct Objective Measurement interval Measurement method 2025 2024 2023 100% of strategic suppliers shall have accepted Balco Group's Code of Conduct for suppliers Annually Strategic suppliers who have accepted Balco Group's Code of Conduct for suppliers 100% 100% 100% Number of reported and confirmed violations of the Code of Conduct shall be zero Annually Reported and confirmed violations of the Code of Conduct 0 0 0 As all the Group’s strategic suppliers have accepted the Code of Conduct, the 2025 target has been met. No whistle-blower reports regarding violations of the Code of Conduct were filed in 2025. BUSINESS CONDUCT
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62 INTRODUCTION OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGY BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 BUSINESS CONDUCT Sustainability management from office to production and construction site Balco Group's sustainability governance is based on a clear framework of Group-wide policy documents that cover all operations. The policy documents define responsibilities, guidelines and expectations for how the Group should conduct its operations in a responsible, transparent and sustainable manner. Great importance is placed on implementation, monitoring and training to ensure that the provisions are complied with in all companies. Balco Group's sustainability policy forms the foundation for its sustainability work and describes the business's most material sustainability issues, common values and distribution of responsibility. The policy serves as a guiding framework for strategic decisions, risk assessments and follow-up of the Group's sustainability goals. The Code of Conduct is aimed at all parts of the orga- nisation, from the Board of Directors and management to employees, suppliers and partners. It establishes Balco Group's core values, ethical principles and require- ments for lawful, fair and respectful conduct. The Code is updated annually under the leadership of the Group's HR Director, approved by the CEO and established by the Board of Directors. Violations are handled according to the procedures specified in the Code, and zero tolerance applies to all forms of deviation. Balco Group's whistleblower function, which was esta- blished in 2019, offers employees and partners a secure and anonymous channel for reporting suspected irregula- rities. Reports are received via the Group's website and are handled by an external law firm to ensure full confidentia- lity. During 2025, no violations have been reported. To ensure a responsible supply chain, Balco Group re- quires all suppliers and subcontractors to agree in writing to comply with the Group's Code of Conduct. During the year, the proportion of suppliers who accepted the Code amounted to 100 percent. As the business grows and new subsidiaries are added, several efforts have been made to strengthen the implementation of the Code and increase awareness of its content. All employees participate annually in a digital training course on sustainability and ethics. The training provides a basic understanding of the Group's sustainability strategy, goals and values and explains how these are translated into daily work. Through continuous skills development, a proactive sustainability commitment is encouraged, where new initiatives can emerge naturally within the business. The Group-wide sustainability team plays an important role in driving development forward and creating consen- sus between the companies. The Group works actively with exchange of experience, monitoring of goals and dissemi- nation of good examples. During the year, the subsidiaries have been given increased responsibility and have become more involved in the Group’s sustainability work, which strengthens both ownership and implementation power. Group management and the sustainability team regularly visit the subsidiaries to monitor progress and ensure that sustainability goals are integrated into both strategic and operational decisions. The subsidiaries are responsible for defining their own goals and activities in line with the Group’s overall strategy. Results are measured quarterly according to established indicators and reported continu- ously to Group management and the Board of Directors. CURRENT POLICIES Balco Group is governed by a number of central policies that are annually revised and established by the Board: • Insider policy • Communication policy • Sustainability policy • Finance policy • IT policy • Information security policy • Corporate governance policy • Code of conduct
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Financial information Group Consolidated income statement �����������������������������64 Balance sheet ���������������������������������������������������������66 Statement of changes in equity ������������������������������ 68 Cash flow statement �����������������������������������������������69 Notes ��������������������������������������������������������������������� 70 Parent company Income statement �������������������������������������������������� 96 Balance sheet ���������������������������������������������������������96 Statement of changes in equity ������������������������������ 97 Cash flow statement �����������������������������������������������97 Notes ��������������������������������������������������������������������� 98 Auditor’s report ���������������������������������������������������� 103 Multi-year overview and key figures ����������������������107 63 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION
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64 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION THE GROUP'S FINANCIAL STATEMENTS Amounts in thousands of SEK Note 2025 2024 Net sales 2, 3 1,295,071 1,417,917 Production and project costs 4, 5, 10, 11 -1,135,626 -1,169,952 Gross profit 159,445 247,965 Distribution costs 4, 5, 10, 11 -105,945 -120,874 Administrative expenses 4, 5, 7, 10, 11 -84,793 -95,946 Other operating income 5, 6 12,947 3,702 Other operating expenses 6 -359 -27 Operating profit 2 -18,705 34,821 Finance income 8 4,684 4,466 Finance costs 8 -33,455 -34,332 Financial items – net -28,771 -29,867 Profit before tax 2 -47,476 4,954 Income tax 9 12,459 -396 Profit for the year 2 -35,017 4,558 Net profit attributable to parent company shareholders -35,781 1,060 Net profit attributable to non-controlling interests 764 3,498 Profit for the year -35,017 4,558 Other comprehensive income Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations -14,714 6,406 Other comprehensive income for the year -14,714 6,406 Total comprehensive income for the year -49,731 10,964 Of which attributable to: Parent company shareholders -50,495 7,339 Non-controlling interests 764 3,625 Total comprehensive income for the year -49,731 10,964 Earnings per ordinary share, considering earnings attributable to parent company shareholders during the year (SEK per share) Basic earnings per share, SEK -1.55 0.05 Diluted earnings per share, SEK -1.55 0.05 Average number of ordinary shares before dilution, thousands 23,022 22,958 Average number of ordinary shares after dilution, thousands 23,022 22,958 Comments on the consolidated income statement Operations Balco Group offers customised and innovative balcony and facade solutions under its own brands to housing co-operatives, private property owners, the public housing sector and construction companies. Today, Balco Group is the market leader in the Nordic region and holds a strong challenger position in other Northern Eu- ropean markets. Since Balco Group was founded in 1987 in Växjö, Balco Group has evolved from being a local product-orientated supplier of balconies to a leading market-orientated supplier of glazed balcony solutions� The parent company operates directly and through Swedish and foreign subsidiaries� Balco Group has expanded in recent years, both in existing markets and by establishing itself in new countries, and now has sales offices in seven countries� The company has five wholly- owned production facilities in Sweden, Finland and Poland. Unique products, good delivery capacity and skilled employees are the heart of Balco Group� The company has made significant investments and has capacity for further growth� Balco Group offers a comprehensive range of products and solutions for the balcony market under its own brands with patented technical designs� The products are tailored to customers' specific needs and can be installed in both renovation and new build projects� Market Balco Group operates in the Northern European market for balcony solutions, with a strong focus on glazing, which is a niche market within the broader construction market� The balcony mar- ket primarily includes the renovation of existing balconies and the installation of new balconies on existing properties, but also the installation of balconies during the construction of new proper- ties. Balco Group's main markets consist of Sweden, Norway, Denmark and Finland� In addition to its main markets, Balco Group also operates in Germany, the UK and the Netherlands and has also conducted individual deals in Ireland, Iceland, Greenland, the Faroe Islands, Switzerland and Austria� The balcony market is divided into two market segments: renovation and new build, where the renovation segment accounts for 76 percent (71) of Balco Group's turnover. = Administration Report 0 50 100 150 200 250 300 350 400 450 Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1 2024 2025 2023 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 NET SALES, R12 SEK MILLION 0 5 10 15 20 25 30 35 40 45 Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1 2024 2025 2023 0 50 100 150 200 250 ADJUSTED OPERATING PROFIT (EBITA), R12 SEK MILLION Consolidated income statement
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65 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Environment, sustainability and social responsibility Balco Group does not conduct any activities requiring a permit under the Environmental Code (1998:808). However, an obligation to notify exists for part of the operations� The notification obliga- tion is based on powder coating, workshop area and the casting of concrete slabs� The notification obligation is thus solely attri- butable to the Group's production operations� Balco Group's environmental work is an integrated part of the company and permeates the entire business� Balco Group has implemented initiatives to minimise the company's environme- ntal impact and works consistently to reduce this� Balco Group considers itself to be at the forefront of the development of balconies that are both environmentally friendly and energy-effi- cient, with products that not only reduce energy consumption but are also manufactured from environmentally friendly materials � In addition, Balco Group manufactures all balconies in modules to minimise unnecessary transport � Balco Group is environmentally certified in accordance with ISO 14000 and quality certified in accordance with ISO 9000 and works actively to reduce waste and energy consumption through more efficient production in the company's production units and increased reuse of materials and production waste that cannot be reduced or avoided� Balco Group also trains and informs its employees about the environment, health and safety and involves them in the continuous improve- ment process� Balco Group's purchasing organisation strives for suppliers to live up to the company's code of conduct and take their environmental responsibility� Balco Group requires all suppliers to comply with the environmental laws and regulations applicable in the respective country� Sustainability issues are important to Balco Group � This is reflected, among other things, by Balco Group actively striving to produce safe and reliable products, offering a healthy working environment and acting ethically, both internally and through its business partners � Balco Group's sustainability work is also expressed through the company's Code of Conduct, in which the company's social, ethical and environmental rules are presen - ted. The code of conduct also includes rules on human rights, non-discrimination and the working environment � The content of the code of conduct is included as a presentation and discussion point during the induction that every new employee undergoes� Net sales and operating profit (EBIT) The Group Net sales decreased by 9 percent to 1,295 MSEK (1,418). Acquired growth was 2 percent, currency effect was -4 percent and organic growth was -7 percent. Net sales increased in the rest of Europe but decreased in Norway, Sweden, Denmark and Finland. Adjusted operating profit (EBITA) amounted to 15 MSEK (70), corresponding to an adjusted operating margin of 1.2 percent (4.9). Items affecting comparability of -31 MSEK (-25) were recog- nized this year, linked to restructuring of the organisation. Research and development Balco Group has a tradition of developing its own products and continuously invests in product development, which is one of Balco Group’s most important strategic advantages � The com- pany has a proven ability to develop new innovative and technical solutions� The product development department works constant- ly to improve existing products and to develop new products� The department is also involved in the development of customised balcony solutions and has the capacity to develop products for new segments where Balco Group sees great potential� Examples of new products that Balco Group has launched in recent years are Twin View, Alu-Two and Levitate. At the end of the financial year, Balco Group had seven full-time employees in the product development department and product development costs amounted to 1 percent (1) of the total operating costs. The company had 77 product patents (69) as of 31 December 2025. Depreciation and EBITDA Depreciation amounted to -46 MSEK (-50), of which -22 MSEK (-18) relates to depreciation linked to right-of-use assets (leasing) and -4 MSEK (-10) relates to depreciation and impairment of acquired intangible assets� Operating profit before depreciation and impairment, EBITDA, amounted to 27 MSEK (85), correspon- ding to an EBITDA margin of 2.1 percent (6.0). Adjusted for items affecting comparability, EBITDA amounted to 58 MSEK (110), cor- responding to an adjusted EBITDA margin of 4.5 percent (7.7). Financial costs Net financial items amounted to -29 MSEK (-30), of which -1.7 MSEK (-1.5) refers to interest expenses related to right-of-use assets (leasing) and -2 MSEK (-3) is unrealised foreign exchange losses. Interest expenses of -26 MSEK (-22) have increased due to increased borrowings� Tax, profit for the year and earnings per share Tax income amounted to 12 MSEK (0), which corresponded to an effective tax rate of 26.2 percent (8.0). Profit after tax amounted to -35 MSEK (5). Adjusted profit after tax amounted to -11 MSEK (24). Earnings per share amounted to -1.55 SEK (0.05). Adjusted earnings per share amounted to -0.50 SEK (0.89). Currency fluctuations Balco Group’s presentation currency is Swedish kronor (SEK), but the Group’s revenue and expenses are usually stated in the local currencies of the countries where Balco Group operates� As a result, Balco Group’s profit and financial position are exposed to exchange rate risks that affect the Group’s income statement and balance sheet� Currency exposure includes both transaction and translation exposure� Balco Group is primarily exposed to chan- ges in NOK, EUR, DKK, PLN and GBP in relation to SEK. Currency fluctuations have a minor impact on the company’s turnover and profitability as Balco Group reduces currency exposures in transactions� Seasonal variations Balco Group's sales and earnings are partially affected by the timing of order placement, seasonal variations and by the fact that the AGM/EGM season in tenant-owner associations normally falls in the second and fourth quarters. Furthermore, the Group is positively affected by months with many working days and a lack of holidays, and somewhat negatively by weather factors where winters with significant amounts of snow involve increased costs� The Group's strongest quarter is normally the second quarter� Appropriation of profits As stated above, the annual report and the consolidated financial statements have been approved by the Board of Directors and the CEO on the date indicated by our electronic signature� The con- solidated income statement, statement of other comprehensive income, and statement of financial position as well as the parent company's income statement and balance sheet are subject to adoption at the Annual General Meeting on 5 May 2026. At the disposal of the Annual General Meeting, SEK: Share premium reserve 450,786,517 Retained earnings 248,403,665 Profit for the year -32,831,645 Total 666,358,537 The Board of Directors proposes that the profits be appropriated as follows: To the shareholders in the form of a dividend 0 Profits to be carried forward 666,358,537 Total 666,358,537 THE GROUP'S FINANCIAL STATEMENTS
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66 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Consolidated balance sheet Amount in SEK thousand Note 31/12/2025 31/12/2024 ASSETS Non-current assets Intangible assets Goodwill 15 527,885 515,535 Brand 15 252,903 261,205 Other intangible assets 15 26,951 18,649 Total intangible assets 807,739 795,389 Property, plant and equipment Right-of-use assets 16 62,997 60,708 Land and buildings 17 150,506 161,216 Machinery and other technical facilities 17 37,932 43,319 Equipment, tools and installations 17 18,397 22,709 Assets under construction 17 1,747 2,405 Total property, plant and equipment 271,579 290,357 Other non-current receivables 489 1,320 Deferred tax assets 9 13,938 6,272 Total financial non-current assets 14,427 7,592 Total non-current assets 1,093,745 1,093,338 Current assets Raw materials and consumables 18 60,778 64,807 Accounts receivable 19 184,357 123,074 Contract assets 20 180,534 199,703 Current tax receivables 20,195 10,233 Other receivables 21 8,388 13,545 Prepaid expenses and accrued income 22 16,542 14,687 Liquid assets 23 158,066 103,061 Total current assets 628,861 529,110 TOTAL ASSETS 1,722,606 1,622,448 Amount in SEK thousand Note 31/12/2025 31/12/2024 EQUITY Equity attributable to the Parent Company's shareholders Share capital 138,135 138,135 Other contributed capital 450,787 450,800 Reserves 3,195 17,910 Retained earnings including profit/loss for the year 140,370 181,858 Total equity attributable to the Parent Company's shareholders 732,488 788,703 Non-controlling interests 3,652 4,241 Total equity 24 736,139 792,944 LIABILITIES Non-current liabilities Liabilities to credit institutions 27,28 475,035 362,916 Lease liabilities 27,28 43,823 46,271 Deferred tax liabilities 9 59,022 64,750 Other non-current liabilities 27, 28 11,644 34,685 Total non-current liabilities 589,525 508,621 Short-term liabilities Liabilities to credit institutions 27, 28 234 – Lease liabilities 27, 28 21,061 16,642 Accounts payable 28 157,570 145,657 Current tax liabilities 1,837 1,190 Other liabilities 25 43,062 42,725 Contract liabilities 20 103,076 38,039 Accrued expenses and deferred income 26 70,103 76,630 Total short-term liabilities 396,942 320,883 TOTAL EQUITY AND LIABILITIES 1,722,606 1,622,448 THE GROUP'S FINANCIAL STATEMENTS
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67 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Balance sheet and financial position Balco Group's total assets increased during 2025 by 6 percent to 1,723 MSEK (1,622). Balco Group's banking agreement with Danske Bank is valid until 31 March 2028. The agreement includes a sustainability- linked RCF (revolving credit facility) of 510 MSEK and an overdraft facility of 75 MSEK. Non-current assets The Group's non-current assets, consisting of intangible assets, property, plant and equipment and financial assets, amounted to SEK 1,094 million (1,093). The largest non-current asset item, 48 percent, consists of goodwill SEK 528 million (516). Investments Investments in intangible assets relate primarily to goodwill, trademarks and licences. Investments in property, plant and equipment consist of machinery, equipment and other technical facilities. The Group's total investments during 2025 amounted to SEK 49 million (96), of which SEK 4 million (7) were replacement investments, SEK 12 million (7) expansion investments and SEK 21 million (81) acquisitions of shares in subsidiaries. Current assets Trade receivables and contract assets are the single largest current asset items. Trade receivables increased by 50 percent to SEK 184 million (123) during the year, while contract assets decreased by 10 percent to SEK 181 million (200). Liquid assets amounted to SEK 158 million (103). THE GROUP'S FINANCIAL STATEMENTS
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68 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Consolidated statement of changes in equity Amount in SEK thousand Share capital Other con- tributed capital Reserves Retained ear- nings including profit for the year Equity Non-control- ling interests Total equity Opening balance as at 1 January 2024 131,461 406,339 11,631 196,706 746,137 1,816 747,953 Correction of errors from previous years -8,134 -8,134 -8,134 Updated opening balance 2024 131,461 406,339 11,631 188,572 738,003 1,816 739,819 Other comprehensive income Profit for the year 1,060 1,060 3,498 4,558 Translation differences 6,279 0 6,279 127 6,406 Total comprehensive income 6,279 1,060 7,339 3,625 10,964 Transactions/acquisitions/disposals in non-controlling interests -7,774 -7,774 -1,200 -8,974 Transactions with shareholders in their capacity as owners: New share issue 6,674 43,523 50,197 50,197 Payment for warrants 938 938 938 Total attributable to shareholders 6,674 44,461 0 0 51,135 0 51,135 Closing balance as at 31 December 2024 138,135 450,800 17,910 181,858 788,703 4,241 792,944 Opening balance as at 1 January 2025 138,135 450,800 17,910 181,858 788,703 4,241 792,944 Other comprehensive income Profit for the year -35,781 -35,781 764 -35,017 Translation differences -14,714 0 -14,714 -14,714 Total comprehensive income -14,714 -35,781 -50,495 764 -49,731 Transactions/acquisitions/divestments in non-controlling interests -5,707 -5,707 -1,354 -7,061 Transactions with shareholders in their capacity as owners: New share issue Cash from warrants -13 -13 -13 Total attributable to shareholders 0 -13 0 0 -13 0 -13 Closing balance as at 31 December 2025 138,135 450,787 3,196 140,370 732,488 3,651 736,139 Equity and liabilities As of 31 December 2025, equity amounted to 736 MSEK (793). Interest-bearing net debt including lease liabilities in relation to adjusted EBITDA proforma amounted to 6.0 times (2.5). Interest- bearing net debt, excluding lease liabilities, in relation to adjusted EBITDA proforma amounted to 7.9 times (2.4). Number of shares The share capital consists of 23,021,648 shares. The shares have a voting value of 1 vote/share. The quotient value amounts to 6.0002. All shares issued by Balco Group AB are fully paid. Balco Group has one class of shares and each share has the same voting value and carries the same right to a dividend� The issued shares are freely transferable without restrictions resulting from law or Balco Group's articles of association� Balco Group is not aware of any agreements between shareholders that may involve restric - tions on the right to transfer shares in the company� Trading and market capitalisation The Balco share is traded on the Nasdaq Stockholm Small Cap list. During 2025, a total of 7.4 million shares were traded at a value of 181 million SEK. The average daily turnover during 2025 amounted to 0.7 million SEK. Market capitalisation at the end of the year was 0.4 billion SEK. The share's performance during the year During 2025, the share decreased by 55 percent to close the year at a share price of 17.30 SEK. The year's highest closing price was recorded on 10 February at 44.05 SEK and the lowest price was 15.90 SEK on 3 December. 1 2 3 4 5 6 7 8 Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1 2024 2025 2023 INTEREST-BEARING NET DEBT / EBITDA*, R12 * = incl� leasing Note: Correction of error refers to incorrect project accounting – percentage-of-completion profit recognition of a few projects in 2023. The correction affects the following accounts: Contract assets SEK -10,244 thousand, Equity SEK -8,134 thousand, Deferred tax SEK -2,110 thousand, which has had a corresponding effect on the balance sheet as of 31-12-2024. THE GROUP'S FINANCIAL STATEMENTS
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69 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Cash flow from operating activities The Group’s cash flow from operating activities amounted to SEK 15 million (85), where the decrease is primarily due to the lower profit before financial items� Cash flow from change in working capital Working capital amounted to SEK 44 million (decreased by SEK 49 million). At the end of the year, net capital tied up in projects in progress decreased to SEK 77 million (172). Cash flow from investing activities Cash flow from investing activities amounted to SEK -49 million (-96), of which SEK -4 million (-7) pertained to replacement invest- ments, SEK -12 million (-7) to expansion investments and SEK -21 million (-81) to acquisitions of shares in subsidiaries. Cash flow from financing activities Cash flow from financing activities amounted to SEK 91 million (113), where the largest item relates to increased utilisation of the credit facility� Amounts in SEK, thousands Note 2025 2024 Cash flow from operating activities Operating profit (EBIT) -18,705 34,821 Adjustment for non-cash items: – Depreciation/amortisation 15,16, 17 46,094 50,122 – Other non-cash items -19,563 -17,569 Interest received 8 4,684 3,552 Interest paid 8 -30,072 -28,662 Income tax paid 9 -11,493 -6,073 Cash flow from operating activities before changes in working capital -29,054 36,192 Cash flow from changes in working capital Increase/decrease in inventories 2,820 4,196 Increase/decrease in current receivables -34,764 71,611 Increase/decrease in current liabilities 76,029 -26,716 Total change in working capital 44,085 49,092 Cash flow from operating activities 15,031 85,283 Cash flow from investing activities Purchase of property, plant and equipment 17 -4,212 -6,814 Purchase of intangible assets 15 -12,645 -6,277 Investments in subsidiaries, net cash effect 13, 14 -20,631 -80,820 Change in other non-current receivables/liabilities -11,623 -1,779 Cash flow from investing activities -49,111 -95,690 Cash flow from financing activities Proceeds from borrowings 27 113,587 132,849 Payment of lease liabilities 27 -22,364 -19,484 Proceeds from warrants issue -13 938 Dividends paid to non-controlling interests -360 -1,200 Cash flow from financing activities 90,849 113,104 Decrease/increase in liquid assets 23 56,769 102,697 Liquid assets at the beginning of the year 23 103,061 2,805 Exchange difference in liquid assets -1,764 -2,441 Liquid assets at the end of the year 23 158,066 103,061 0 50 100 150 200 250 300 Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1 2024 20252023 OPERATING CASH FLOW, R12 SEK MILLION 0 1 2 3 4 5 6 7 8 Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1 2024 2025 2023 INVESTMENTS (EXCLUDING ACQUISITIONS) SEK MILLION Consolidated statement of cash flows THE GROUP'S FINANCIAL STATEMENTS
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70 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION THE GROUP'S NOTES Notes to the Group Note 1: General information General information The parent company is a Swedish public limited liability company, listed on Nasdaq Stockholm, with its registered office in Växjö. The address of the head office is Älgvägen 4, 352 45, Växjö, Swe- den. The Group consists of the parent company Balco Group AB, corporate identity no. 556821-2319, and its subsidiaries. Balco Group offers customised and innovative balcony and facade solutions under its own brands to housing co-operatives, private property owners, the public housing sector and construction companies� Basis of preparation of the reports Overall accounting policies and new accounting rules are presen- ted below� Other accounting policies that Balco Group considers significant are presented in the respective note� The same policies are normally applied in both the parent company and the Group� Accounting policies have been applied consistently for all years presented, unless otherwise stated. The consolidated financial statements for Balco Group have been prepared in accordance with International Financial Reporting Standards (IFRS Accounting Standards) issued by the International Accounting Standards Board (IASB) and IFRIC inter- pretations as adopted by the EU� Furthermore, the Swedish Financial Reporting Board's recom - mendation RFR 1 Supplementary Accounting Rules for Groups has been applied� The consolidated financial statements have been prepared in accordance with the cost method, except for financial assets and liabilities (derivative instruments) measured at fair value through the income statement� In order to prepare the financial statements in accordance with IFRS and generally accepted Swedish accounting practice, assessments and assumptions must be made that affect the reported asset and liability items as well as income and expense items and other information provided� These assumptions and estimates are usually based on historical experience but also on other factors, including expectations of future events. For further information, see the information in the respective note. New standards, amendments and interpretations applied by the Group No changes to IFRS with application from 1 January 2025 have had any significant effect on the Group's accounting� Functional currency and reporting currency The various entities in the Group have the local currency as their functional currency, as the local currency has been defined as the currency used in the primary economic environment in which each respective entity mainly operates� In the consolidated financial statements, Swedish kronor (SEK) are used, which is the Parent Company's functional currency and the Group's reporting currency. All amounts are reported in thousands of kronor (SEK thousand) unless otherwise stated. Outlook for the coming financial year Balco Group is one of the few complete balcony suppliers on the market that provides customised and innovative balcony solu- tions as a full-service provider� Balco Group is market-leading in the Nordic region and has a strong challenger position in other markets where the Group operates� The market is fragmented and growing throughout Northern Europe � The value of the bal- cony market in the countries where Balco Group is represented is estimated at more than SEK 40 billion. Our assessment is that the trend of an incipient increase in ac- tivity in the renovation market is continuing, although recovery is occurring at different rates between the markets. Looking ahead to 2026, we maintain a cautiously optimistic assessment. At the same time, major global events that affect the general recovery in consumption may impact the willingness to invest� Significant changes during the reporting period Maritime projects In the fourth quarter, Balco Group signed its largest individual order ever, amounting to approximately 200 million SEK. The assignment covers the delivery of sliding doors and balconies for three new cruise ships being built by the German shipyard Meyer Werft� The fact that Meyer Werft has once again chosen Balco as a supplier for an extensive series of ships is a clear confirmation of Balco Group’s technical expertise and ability to deliver in com- plex projects. During the year, Balco has broadened its offering within the maritime segment, and the projects obtained during the year confirm that this initiative has yielded results�
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71 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Note 2: Segment reporting Renovation The renovation segment includes the replacement and extension of existing balconies, as well as the installation of new balconies on apartment buildings without balconies � The majority of Balco Group's net sales in the area consist of glazed balconies for hou- sing co-operatives� Net sales amounted to 986 MSEK (1,000). The segment ac- counted for 76 percent (71) of Balco Group’s total net sales. Order intake amounted to 1,011 (1,074), corresponding to 66 percent (78) of Balco Group’s total order intake. Operating profit (EBITA) amounted to -13 MSEK (48), correspon- ding to an operating margin of -1.3 percent (4.7). Items affecting comparability are included at 24 MSEK (8) related to restructuring costs. Adjusted operating profit (EBITA) was 11 MSEK (56) and the adjusted operating margin was 1.1 percent (5.6). New build The new build segment includes the installation of balconies in the construction of new apartment buildings and balcony solutions in maritime applications. In the new build segment, Balco offers its entire product range� Open balconies comprise the largest product area. Net sales amounted to 309 MSEK (418). The segment accounted for 24 percent (29) of Balco Group’s total sales. Order intake amounted to 526 (303), which corresponds to 34 percent (22) of Balco Group’s total order intake. Operating profit (EBITA) was -1 MSEK (8), corresponding to an operating margin of -0.3 percent (2.0). Items affecting com- parability are included at 6 MSEK (10) related to restructuring costs. Adjusted operating profit (EBITA) was 5 MSEK (19) and the adjusted operating margin was 1.6 percent (4.5). Accounting policies Operating segments are reported in a way that cor- responds to the internal reporting provided to the chief operating decision-maker� Finance costs, finance income and income tax are mainly managed at Group level and are not allocated to the segments� The Group does not monitor assets and liabilities by segment� THE GROUP'S NOTES
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72 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Segment reporting 2025 Renovation New build Group-wide Eliminations Total Net sales – External revenue 985,635 309,436 1,295,071 Net sales – Internal revenue 26,834 -26,834 0 Total net sales 985,635 309,436 26,834 -26,834 1,295,071 Operating profit (EBIT) -16,520 -1,055 -1,130 0 -18,705 Depreciation and amortisation included in EBIT 40,310 5,783 46,093 of which amortisation/depreciation of acquired intangible assets 3,307 208 3,515 Items affecting comparability 24,460 5,852 284 0 30,596 Adjusted operating profit (EBITA) 11,247 5,005 -846 0 15,406 Adjusted operating margin (%) 1.1 1.6 1.2 Operating profit (EBIT) -16,520 -1,055 -1,130 0 -18,705 Finance income 4,684 4,684 Finance costs -33,455 -33,455 Profit before tax -29,901 -47,476 Tax 12,459 Profit for the year -35,017 2024 Renovation New build Group-wide Eliminations Total Net sales – External revenue 1,000,184 417,733 1,417,917 Net sales – Internal revenue 23,668 -23,668 0 Total net sales 1,000,184 417,733 23,668 -23,668 1,417,917 Operating profit (EBIT) 41,688 4,188 -11,055 0 34,821 Depreciation and amortisation included in EBIT 38,178 11,944 50,122 of which amortisation/impairment of acquired intangible assets 5,832 4,226 10,058 Items affecting comparability 8,310 10,183 6,185 0 24,678 Adjusted operating profit (EBITA) 55,830 18,597 -4,870 0 69,557 Adjusted operating margin (%) 5.6 4.5 5.0 Operating profit (EBIT) 41,688 4,188 -11,055 0 34,821 Finance income 4,466 4,466 Finance costs -34,332 -34,332 Profit before tax -40,922 4,954 Tax -396 Profit for the year 4,558 0 50 100 150 200 250 300 350 400 Nyggnad Renovering Q4Q3Q2Q1Q4Q3Q2Q1 2024 2025 NybyggnationRenovering -2 -1 0 1 2 3 4 5 6 7 8 Nyggnad Q4Q3Q2Q1Q4Q3Q2Q1 2024 2025 NyggnadRenovering 0 50 100 150 200 250 300 350 400 Nyggnad Q4Q3Q2Q1Q4Q3Q2Q1 2024 2025 NybyggnadRenovering Sales per geographical market 2025 Net sales Share of total sales Sweden 586,764 45% Rest of the Nordic region 516,263 40% Rest of Europe 192,044 15% Net sales 1,295,071 100% 2024 Sweden 606,222 43% Rest of the Nordic region 659,171 46% Rest of Europe 152,524 11% Net sales 1,417,917 100% ORDER INTAKE BY SEGMENT SEK MILLION SALES GROWTH BY QUARTER MSEK OPERATING MARGIN PER QUARTER PERCENT Renovation New build Renovation New build Renovation New build THE GROUP'S NOTES
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73 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Note 3: Revenue recognition Note 4: Costs by cost category Accounting policies Construction contracts The Group's revenue mainly relates to revenue from the exe- cution of construction contracts regarding the installation of balconies in connection with new build or renovation. Usually, the construction contracts constitute a performance obliga - tion as the parts of the assignment cannot be separated from each other but constitute a combined commitment within both new build and renovation� The construction contracts include a guarantee on work performed� Guarantees are not deemed to constitute a separate performance obligation in light of the fact that these are statutory guarantees issued according to industry practice of normally 5 years. Transaction price Customer contracts essentially relate to fixed-price agre - ements� The Group considers whether there may be other obligations that constitute separate performance obliga - tions and to which the transaction price should be allocated� Revenue from contracts with customers is measured at the contractual transaction price, reflecting the consideration that the Group expects to receive� Within the framework of the fixed-price agreements, the customer pays the contrac - tual transaction price at agreed payment dates (see the sec- tion Contract assets regarding the relationship between work performed and consideration received from the customer). The Group has no significant effects from variable considera - tion affecting the transaction amount� Timing of revenue recognition Revenue recognition occurs over time when there is no alternative use for the products, as the products are speci- fically adapted for the customer and the Group has a right to payment. When applying revenue recognition over time, the profit is recognized as the project is completed. Revenue is recognised only when the Group can reasonably measure the progress toward complete satisfaction of the performance obligation� When revenue and costs can be estimated reliably and it is probable that the contract will be profitable, revenue is recognised over the term of the contract based on the stage of completion� The stage of completion is determined as expenses incurred for work performed up to the end of the reporting period as a percentage of estimated total expenses for each contract� Expenses are recognised continuously for the activities included under the contract� When it is probable that total expenses will exceed total revenue, the expected loss is recognised immediately as an expense� When the outcome of a contract cannot be estimated reliably, revenue is recognised only to the extent of incurred expenses that are likely to be recovered from the customer� The Group acts as principal in all contracts given that the Group is responsible for fulfilling the commitment to the customer, determines the transaction price and retains control of the products until control has been transferred to the customer� Contract costs Some of the indirect project expenditures such as pre- project planning and sales commission, which the Group incurs, are treated as fulfilment costs and are capitalised and amortised over the duration of the projects� The Group applies the practical expedient of recognising incremental costs of obtaining a contract as an expense when incurred based on the expected amortisation period of the asset that the Group would otherwise have recognised being no more than one year� Costs for sales commissions are recognised in the Group’s income statement within production and project costs� Financing components The Group does not expect to have any contracts where the period between the transfer of the products to the customer and the payment by the customer exceeds one year� As a result, the Group does not adjust the transaction price for the effects of a significant financing component� Significant estimates and assessments The Group applies revenue recognition over time when accounting for construction contracts according to a model that is well-proven and has been applied by the Group over a long period� This model requires the Group to make estimates of the proportion of the total services to be performed that the services already performed as of the balance sheet date represent� Balco Group's revenue and profit are driven by the point in time when the costs actually incurred arise during the execution of the project. Remaining performance obligations are part of contracts that have an original expected duration of at most one year� In accordance with IAS 37, the entire expected loss for a project is recognised when the forecast indicates a negative project result� If the proportion between perfor- med services and total services to be performed were to deviate by 1 percent, the year's reported revenue would change by 13 MSEK (2024: 14 MSEK). Accounting policies Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the transaction date� Foreign exchange gains and los- ses resulting from the settlement of such transactions and from the translation of monetary assets and liabi- lities denominated in foreign currencies at the balance sheet date exchange rate are recognised in operating profit in the income statement� 2025 2024 Raw materials, consumables and sub- contracting services -799,351 -829,995 Employee benefits expenses (note 10) -379,973 -394,429 Depreciation, amortisation and impair- ment (note 15-17) -46,094 -50,122 Other costs -100,946 -112,225 Total costs for production, projects, sales and administration -1,326,363 -1,386,771 Exchange differences Exchange differences have been recognised in the income state- ment as follows: 2025 2024 Production and project costs -2,286 -1,061 Finance income 0 913 Finance costs -1,690 -3,369 Total exchange differences in the income statement -3,976 -3,517 The Group strives for balance in currency flows by matching sales and purchases in each currency where possible� THE GROUP'S NOTES
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74 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Note 5: Items affecting comparability Note 6: Other operating income and operating expenses Note 7: Remuneration of auditors Note 8: Financial income and financial expenses Accounting policies Items affecting comparability are particularly significant items that are reported separately due to their size or frequency, such as restructuring costs, impairment, divestments and acquisition costs. Restructuring costs are included within production and project costs, distri- bution costs and administrative expenses� Acquisition costs are reported as administrative expenses� 2025 2024 Production and project costs -23,676 -15,043 Selling expenses -3,153 -3,311 Administrative expenses -3,768 -6,324 Total items affecting comparability -30,597 -24,678 2025 2024 Other operating income Personnel-related 465 629 Change in contingent consideration 9,630 0 Gain on disposal of tangible assets 2,024 792 Other 829 2,281 Total other operating income 12,947 3,702 Other operating expenses Loss on disposal of tangible assets 0 0 Other -359 -27 Total other operating expenses -359 -27 For information on contingent consideration, please refer to note 28. 2025 2024 KPMG Audit engagement -2,842 -2,967 Audit activities other than the audit engagement -180 -180 Tax advisory services -178 -199 Other services -85 -56 Total -3,285 -3,402 Audit engagement: Alpha Revision AS -61 -67 Shawgibbs -136 -59 Kancelaria Biegłych Rewidentów “CDP” Sp� z o�o� -51 -48 Reilu Hallinto OY -10 -8 Total -258 -182 Total -3,543 -3,584 2025 2024 Finance income Interest income on bank balances 4 684 4 466 Finance income 4 684 4 466 Finance costs Interest expenses on liabilities to credit institutions -25 799 -22 054 Interest expenses regarding leasing -1 693 -1 454 Other finance costs -5 963 -10 824 Finance costs -33 455 -34 332 Total financial items - net -28 771 -29 867 THE GROUP'S NOTES
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75 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Income tax on the profit differs from the theoretical amount that would have resulted from using the weighted average tax rate for the results in the consolidated companies as follows: Tax on profit for the year 2025 2024 Current tax: Current tax on profit for the year -2,090 -10,218 Adjustments regarding previous years -86 -291 Total current tax -2,176 -10,509 Deferred tax: Origin and reversal of temporary dif- ferences 14,635 10,113 Total deferred tax 14,635 10,113 Income tax 12,459 -396 2025 2024 Profit before tax -47,476 4,954 Income tax calculated according to the applicable tax rate for the parent com- pany, 20.6% (2024: 20.6%) 9,780 -1,021 Tax effects of: – Foreign tax rates 5,937 -336 – Non-taxable revenue 551 186 – Non-deductible expenses -3,592 0 – Other -86 1,066 – Adjustments regarding previous years -132 -291 Tax expense 12,459 -396 Effective tax rate, % 26.2 8.0 Changes in deferred tax assets and deferred tax liabilities during the year, which have been recognised in the income statement, without taking into account offsets made within the same tax jurisdiction, are shown below: Deferred tax income and expenses 2025 2024 Deferred tax expense regarding temporary differences 5,141 4,691 Deferred tax income regarding temporary differences 9,494 5,423 Total deferred tax in the income statement 14,635 10,113 Deferred tax assets 2024 Tax loss carryfor- wards Leasing etc. Other Total Opening carrying amount 0 -52 346 294 Recognised in the income statement 4,369 73 982 5,423 Recognised via equity 24 531 0 555 Closing carrying amount 4,394 551 1,328 6,272 2025 Tax loss carryforwards Leasing etc. Other Total Opening carrying amount 4,394 551 1,328 6,273 Recognised in the income statement 9,183 226 84 9,494 Recognised via equity -1,830 2 0 -1,828 Closing carrying amount 11,747 779 1,412 13,938 Deferred tax liabilities 2024 Building Brand/Order backlog Untaxed reser- ves Other Total Opening carrying amount -7,511 -25,230 -3,146 -5,832 -41,719 Correction of errors from previous years 0 0 0 2,108 2,108 Updated opening carrying amount -7,511 -25,230 -3,146 -3,724 -39,611 Recognised in the income statement 372 1,656 1,529 1,134 4,691 Recognised via equity -1,549 -27,933 -172 -176 -29,830 Closing carrying amount -8,688 -51,507 -1,789 -2,766 -64,750 2025 Building Brand/Order backlog Untaxed reser- ves Other Total Opening carrying amount -8,688 -51,507 -1,789 -2,766 -64,750 Recognised in the income statement 372 347 1,065 3,357 5,141 Recognised via equity 0 0 0 588 588 Closing carrying amount -8,317 -51,160 -724 1,179 -59,022 Further information regarding the correction of errors from previous years can be found on page 68, Consolidated statement of changes in equity� Note 9: Income taxes Accounting policies Deferred tax Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax receiva- bles and current tax liabilities, the deferred tax assets and deferred tax liabilities relate to taxes levied by the same taxation authority and relate to either the same taxable entity or different taxable entities and there is an intention to settle the balances through net payments� THE GROUP'S NOTES
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76 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION 2025 2024 Salaries and other remuneration -284,668 -294,119 Social security contributions -62,401 -64,255 Pension costs – defined contribution plans -32,903 -36,055 Total -379,973 -394,429 2025 2024 Average number of employees with geo- graphical distribution by country Average number of em- ployees Of whom women Average number of em- ployees Of whom women Sweden 281 26 304 27 Norway 6 1 19 1 Denmark 35 3 56 4 United Kingdom 17 1 14 0 Netherlands 2 0 1 0 Poland 60 11 60 11 Finland 132 5 176 6 Germany 11 2 10 1 Total 544 47 640 50 2025 2024 Number on the balance sheet date Of whom women Number on the balance sheet date Of whom women Board members 22 3 24 3 Chief Executive Of- ficer 12 1 13 1 Total 34 4 37 4 Remuneration and other benefits 2025 Basic salary/ Board fees Social security contributions/ Special payroll tax Variable remuneration Other benefits Pension costs Total Ingalill Berglund, Chairman of the Board -620 -195 0 0 0 -815 Carl-Mikael Lindholm, Board member -258 -81 0 0 0 -338 Johannes Nyberg, Board member -333 -105 0 0 0 -437 Vibecke Hverven, Board member -278 -87 0 0 0 -365 Thomas Widstrand, Board member -258 -81 0 0 0 -338 Mikael Andersson, Board member -278 -87 0 0 0 -365 Camilla Ekdahl, Chief Executive Officer -3,121 -1,289 -305 -224 -979 -5,917 Other senior executives (5 people) -6,432 -2,654 -616 -464 -2,008 -12,175 Total -11,576 -4,578 -921 -688 -2,987 -20,750 Remuneration and other benefits 2024 Basic salary/ Board fees Social security contributions/ Special payroll tax Variable remuneration Other benefits Pension costs Total Ingalill Berglund, Chairman of the Board -600 -189 0 0 0 -789 Carl-Mikael Lindholm, Board member -248 -78 0 0 0 -325 Johannes Nyberg, Board member -320 -101 0 0 0 -421 Vibecke Hverven, Board member -268 -84 0 0 0 -352 Thomas Widstrand, Board member -248 -49 0 0 0 -297 Mikael Andersson, Board member -268 -53 0 0 0 -320 Camilla Ekdahl, Managing Director -2,999 -1,539 -911 -228 -984 -6,661 Other senior executives (3 persons) -4,977 -2,478 -1,734 -305 -1,134 -10,628 Total -9,926 -4,570 -2,645 -533 -2,118 -19,792 Note 10: Employees and costs Accounting policies Short-term employee benefits Short-term employee benefits are recognised as an expense and a liability when there is a legal or construc- tive obligation to pay a benefit� The cost is recognised as service is rendered by the employees� Pension obligations The Group has only defined-contribution pension plans; see note 11. A defined-contribution plan is a pension plan under which the Group pays fixed contributions into a separate legal entity� The Group has no legal or construc- tive obligation to pay further contributions if this legal entity does not hold sufficient assets to pay all employee benefits relating to employee service in the current or prior periods� For defined-contribution pension plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual, or voluntary basis� The Group has no further payment obligations once the contributions have been paid. Contributions to defined- contribution plans are recognised as an expense in profit or loss as they are earned by employees in the course of providing services to the enterprise over a period of time� Pre-paid expenses are recognised as an asset to the extent that the cash repayment or reduction in future payments can benefit the Group. See also note 11. THE GROUP'S NOTES
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77 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Terms and conditions for the CEO If the CEO is dismissed, a 12-month notice period applies. If, on the other hand, the CEO resigns, a 6-month notice period applies. The CEO is entitled to retain their fixed salary during the notice period� Other benefits are adjusted during the notice period based on needs and the duties assigned to the CEO, meaning, among other things, that all benefits cease if the CEO is released from work� If the CEO during the notice period obtains other em- ployment or otherwise has income from employment, business or own operations, deductions shall be made from the CEO's notice pay and severance pay for what the CEO then earns� The Company sets aside 30% of the gross salary and 25% of variable remuneration for a pension insurance according to the CEO's choice of insurance company� Outstanding pension obligation to the CEO exists in the form of a direct pension solution totaling SEK 3,032 thousand (2024: SEK 1,754 thousand). The Annual General Meeting resolves on the fol- lowing guidelines for remuneration to the company's senior executives Senior executives refer to the Managing Director and the Group management� These guidelines shall be applied to remuneration agreed upon, and changes made to already agreed remuneration, after the guidelines have been adopted by the Annual General Meeting. Remuneration resolved upon by the shareholders at a general meeting falls outside these guidelines. Thus, share- based incentive programs for senior executives or remunera- tion to Board members for Board work are not covered by these guidelines� The guidelines' contribution to the company's business stra - tegy, long-term interests and sustainability The Company is market-leading in the balcony industry and deve- lops, manufactures, sells and is responsible for the installation of self-manufactured open and glazed balcony systems within well- defined market areas. In short, the Company's business strategy aims to strengthen the Company's market-leading position as a supplier of high-quality balcony solutions which are tailored to the customer's specific needs and requirements � The Company's overall goal is to create increased value for shareholders through organic profit growth and acquisitions� The company views sustainability from both a commercial and an ethical perspective and strives to conduct credible and goal- oriented sustainability work with regard to the environment and society� The work with sustainability is an integrated part of the company's operations. Furthermore, the company's sustainabi - lity work is systematic and goal-oriented and is reported in the Group's annual and sustainability report � For more information on the company's business strategy, long-term interests and sustainability, please refer to the company's website, www.balcogroup.se. A successful implementation of the company's business stra - tegy and the safeguarding of its long-term interests, as well as meeting expectations for sustainable business, requires that the company can attract, motivate and retain senior executives. The objective of the company's remuneration is for it to be compe- titive and at the same time in line with shareholders' interests� The company's forms of remuneration shall together create a well-balanced remuneration that reflects individual competence, responsibility and performance, in both the short and long term, as well as the company's total performance� These guidelines enable senior executives to be offered market-based and compe- titive total remuneration� Incentive programs Warrant-based incentive programs for senior executives and additional key employees have been established in the company, which have been implemented on market terms, for the purpose of encouraging broad share ownership among the company's key employees, facilitating recruitment, retaining competent and ta - lented employees, increasing the alignment of interests between the key employees' and the company's objectives, and increasing motivation to achieve or exceed the company's financial targets� Thus, the warrant programs have a clear link to the company's business strategy, the safeguarding of the company's long-term interests, and meeting expectations for sustainable business. The executives or key employees covered by the programs may acquire warrants at market price� In order to encourage parti- cipation in the programs, it was decided to authorise the Board to subsidise the participants' participation in the program in the form of a gross salary supplement, corresponding to a maximum of the premium paid for each warrant, provided that the partici- pant at the time still remains in their employment in the company or other corresponding employment within the Balco Group, and holds their warrants� New subscription of shares through the exercise of warrants can take place after three years� Since share- and share price-related incentive programs are decided by the general meeting, they are not covered by these guidelines� Forms of remuneration The company shall offer market-based and competitive total compensation. Remuneration to senior executives may consist of fixed and variable salary, as well as pension benefits and other benefits� This also includes terms of notice and severance pay� To ensure that the total remuneration is market-based and com- petitive, it shall be reviewed annually. Consideration shall then be given to the position, the company's size, salary and the person's experience. In addition, the general meeting may, independently of these guidelines, decide on share-based remuneration, among other things� Fixed salary The senior executives' fixed annual salary shall be competitive and based on the individual executive's competence, responsibi- lity and performance � The fixed salary shall form the basis for the total remuneration� Variable cash remuneration In addition to fixed annual salary, the executives may receive variable cash remuneration� Such variable remuneration shall be based on predetermined and measurable criteria that may be financial or non-financial� The variable remuneration may be linked directly or indirectly to the achievement of the financial targets set by the company’s Board of Directors, which include the Group's EBIT (operating profit). The non-financial criteria may be linked to sustainability� The variable remuneration is normally paid based on performance over twelve months (the calendar year) and the financial information most recently published by the company� The variable cash remuneration is thus linked to the company's business strategy, long-term interests and sustaina - bility� The criteria shall be established, monitored and evaluated annually by the Board of Directors. For each senior executive, the variable remuneration may not exceed 50 percent of the fixed annual salary� Variable remuneration shall only form the basis for pension benefits if this follows from applicable collective agreement provisions� Other benefits and pension The Group offers other benefits to senior executives in accor- dance with local practice. Such other benefits may, for example, include a company car and occupational healthcare � For a limited period, company housing may also be offered where applicable. Other benefits shall be on market terms� Senior executives shall be entitled to pension benefits based on what is customary in the country where they are employed� Pension obligations shall be defined contribution and be secured through premium payments to insurance companies, unless the individual in question is covered by a defined benefit pension in accordance with applicable collective agreement provisions� For each senior executive, pensions may not exceed 30 percent of the fixed annual salary, unless a higher contribution base follows from an applicable collective agreement pension plan� With regard to employment relationships subject to rules other than Swedish, as far as pension benefits and other benefits are concerned, appropriate adjustments may be made to comply with such mandatory rules or local practice, whereby the overall purpose of these guidelines shall be met� Notice period and severance pay Employment agreements entered into between the company and senior executives shall as a general rule apply until further notice� If the company terminates the employment of a senior executive, the notice period may not exceed twelve months� Severance pay shall only be paid in the event of termination by the company and shall not exceed an amount corresponding to the fixed annual salary during the notice period� In the event of termination by the senior executive, the notice period may not exceed six months and severance pay shall not be paid� Salary and employment conditions for employees In the preparation of the Board of Directors' proposal for these remuneration guidelines, salary and employment conditions for employees of the company have been taken into account� In the evaluation of the reasonableness and limitations of the guide- lines, the following has formed the basis of the remuneration committee's and the Board of Directors' decision-making: information on the employees' total remuneration, the components of the remuneration; and the increase and rate of increase of remuneration over time� Decision-making process to determine, review and implement the guidelines The Board of Directors has established a remuneration com- mittee, whose tasks include preparing the Board of Directors' decision on proposals for these guidelines, remuneration prin- ciples and other employment conditions for senior executives� The remuneration committee shall also monitor and evaluate programs for variable remuneration for senior executives, both ongoing and those completed during the year, the application of THE GROUP'S NOTES
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78 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION guidelines for remuneration to senior executives as well as the current remuneration structures and remuneration levels in the company� The Board of Directors shall prepare proposals for new guide- lines at least every four years and submit the proposal for resolu- tion at the general meeting� The guidelines shall apply until new guidelines have been adopted by the general meeting� Temporary derogation from the guidelines The Board of Directors shall have the right to temporarily dero- gate from these guidelines, in whole or in part, if in an individual case there are special reasons for doing so and a derogation is necessary to serve the company's long-term interests and to meet expectations for a sustainable and responsible business, or to ensure the company's financial viability� In cases where the Board of Directors makes such a deroga- tion, this shall be stated in the Board's remuneration report, where the reasons for the derogation and which parts of the guidelines have been derogated from shall also be stated� The Remuneration Committee's duties include preparing the Board's decisions on remuneration matters, which includes decisions on any derogation from the guidelines� Long-term incentive programmes The Group has issued warrants to employees� The employees have paid the fair value of the warrants, and this warrant premium is recognised as other contributed capital� The programme has been classified as equity-settled as the holder can only receive shares upon redemption� Upon exercise of the warrants, the exercise price will be recognised in equity. At the Annual General Meeting held on 14 May 2024, it was resolved to introduce a three-year incentive programme aimed at the company's senior executives and other key employees, total- ling 32 employees. The incentive programme comprises a maxi- mum of 230,000 warrants, each entitling its holder to subscribe for a maximum of the corresponding number of shares� Balco Group's total cost for the incentive programme over its full term is expected to be approximately SEK 1.3 million. The programme involves a maximum dilution corresponding to approximately 1.0 percent of the company’s total number of shares. The senior executives of Balco Group have acquired 75,000 warrants with a total value of 310,500 SEK. The purpose of the incentive programmes is to encourage broad share ownership among the company’s key employees, facilitate recruitment, retain skilled and talented employees, increase the alignment of interests between the key employees and the company’s objectives, and increase motivation to achieve or exceed the company’s financial targets� In order to encourage participation in the programme, it was decided to subsidise participation in the form of a gross salary supplement� The level of salary supplement will correspond to a maximum of the participant's invested gross amount � The subsi- dy to the participants will be paid in connection with the exercise of the warrants and requires that the participant at that time still remains in their employment in the company or other correspon- ding employment within Balco Group, and holds their warrants. The subsidy for each participant shall amount to a maximum of an amount corresponding to the premium paid for the participant's warrants held at the time of the payment� Year Number of warrants Number of warrants exercised Number of warrants expired Total Exercise price Subscription period 2020/2023 400,000 0 400,000 0 99.20 2023-12-16–2024-01-15 2021/2024 200,000 0 200,000 0 107.70 2024-05-25–2024-06-24 2022/2025 220,000 0 220,000 0 79.40 2025-09-01–2025-09-30 2024/2027 230,000 0 0 230,000 47.80 2027-08-26–2027-09-24 1,050,000 0 820,000 230,000 THE GROUP'S NOTES
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79 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION The following amounts have been recognised in the income statement: 2025 2024 Recognition in the income statement regarding: Costs for defined contribution pension plans -28,653 -30,446 Income statement -28,653 -30,446 For white-collar employees in Sweden, the ITP 2 plan's defined- benefit pension obligations for retirement and family pen- sions are secured through insurance in Alecta� According to a statement from the Swedish Financial Reporting Board, UFR 10 Accounting for the ITP 2 pension plan, which is financed through insurance in Alecta, this is a multi-employer defined benefit plan. For the current and preceding financial years, the Group has not had access to information to be able to report its proportional share of the plan's obligations, plan assets and costs, which me- Related party transactions The Group’s key management personnel consist of the Board of Directors, the Managing Director and the Group management, both through their ownership in Balco Group and through their roles as senior executives� The circle of related parties also inclu- des the company's largest shareholder, the Hamrin family, which is represented on the Board of Directors by Carl-Mikael Lindholm, and Skandrenting, which is represented on the Board of Directors by Johannes Nyberg. Related party transactions take place on market terms� No related party transactions have taken place during 2025 or 2024. Accounting policies Termination benefits Termination benefits are paid when an employee's em- ployment is terminated by the Group before the normal retirement date or when an employee accepts voluntary redundancy in exchange for such benefits� The Group recognises termination benefits when it is demonstrably committed to terminating the employment of employees according to a detailed formal plan without possibility of withdrawal� In the case where the Group has made an offer to encourage voluntary redundancy, the termination benefits are calculated based on the number of employees expected to accept the offer� Benefits falling due more than 12 months after the end of the reporting period are discounted to present value� Note 11: Post-employment benefits Note 12: Related party transactions ans that it is not possible to report the plan as a defined benefit plan. The ITP 2 pension plan secured through insurance in Alecta is therefore reported as a defined contribution plan� The premium for the defined benefit retirement and family pension is individu- ally calculated and depends, among other things, on salary, pre- viously earned pension and expected remaining period of service� Expected costs for the next reporting period for ITP 2 insurance policies signed with Alecta amount to SEK 27,077 thousand (2024: SEK 28,772 thousand). The collective consolidation level is defined as the market value of Alecta’s assets as a percentage of insurance obligations calculated in accordance with Alecta’s actuarial methods and assumptions, which do not comply with IAS 19. The collective consolidation level is normally allowed to vary between 125 and 175 percent. If Alecta’s collective consolidation level falls below 125 percent or exceeds 155 percent, measures should be taken to create the conditions for the consolidation level to return to the normal range. In the event of low consolidation, one measure may be to increase the agreed price for new subscriptions and the expansion of existing benefits. In the event of high consolidation, one measure may be to introduce premium reductions� At the end of 2025, Alecta’s surplus in the form of the collective consolida- tion level amounted to 167 percent (2024: 162 percent). Premiums to Alecta are determined by assumptions about interest rates, longevity, operating costs and yield tax, and are calculated such that the payment of a constant premium until the time of retirement is sufficient for the entire target benefit, which is based on the insured person's current pensionable salary which is then expected to have been earned� There is no established regulatory framework for how any de- ficits that may arise should be handled, but in the first instance, losses are to be covered by Alecta's collective consolidation capital, and thus do not lead to increased costs through higher agreed premiums� There is also no regulatory framework for how any surplus or deficit should be distributed in the event of the termination of the plan or a company's withdrawal from the plan� In addition to the aforementioned pension plan, the Group only has defined contribution pension plans and endowment insurance� THE GROUP'S NOTES
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80 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Parent Company 2025-12-31 2024-12-31 Opening cost of acquisition 1,066,592 1,458,184 Acquisition 32,051 184,810 Disposal 0 -482 Impairment -17,424 -575,910 Revaluation of contingent considera- tion -9,568 -10 Closing carrying amount 1,071,651 1,066,592 2025-12-31 2024-12-31 Name Corporate iden- tity number Registered office Share of capital, % Number of shares Carrying amount Number of shares Carrying amount Nordiska Balco AB 556325-3847 Växjö 100 1,548,176 45,000 1,548,176 45,000 – Balco Spolka z o�o 5 961 747 062 Poland 100 Balco AB 556299-4482 Växjö 100 500 573,736 500 573,736 Balco AS 979 458 398 Norway 100 1,000 1,712 1,000 1,712 Balco Ltd 5,280,899 United Kingdom 100 1 0 1 0 Balco Balkonkonstruktionen GmbH HRB9039 Germany 100 - 1,354 - 1,354 Balco Balkonsystemen B.V 57,577,978 Netherlands 100 200 173 200 173 Balco Altaner AS 59,222,401 Denmark 100 500,000 14,484 500,000 20,563 Kronhjorten och Lodjuret Holding AB 559018-7489 Växjö 100 50,000 50 50,000 50 TBO-Haglinds AB 556363-9631 Arboga 100 1,000 86,556 1,000 93,556 Arutex AB 556814-1575 Arboga 100 500 4,407 Stora Fasad AB 556376-2185 Västerås 100 1,000 18,232 1,000 18,232 RK Teknik i Gusum AB 556414-3955 Gusum 100 1,000 71,234 1,000 71,234 – Fastigheter i Gusum AB 556857-5236 Gusum 100 – Montage Partner i Sverige AB 559112-2170 Gusum 100 Söderåsens Mur- och Kakel AB 556584-9725 Kågeröd 80 800 21,687 800 21,687 NMT Montageteknik i Norden AB 559056-8415 Sundsvall 100 2,000 34,484 2,000 34,484 Riikku Group OY 1994198-6 Finland 100 675 115,492 675 121,814 – Riikku Sverige AB 556769-3402 Järfälla 100 Suomen ohutlevyasennus OY 2448665-8 Finland 80 80 83,050 60 62,996 Total 2,106,932 1,071,651 2,106,412 1,066,592 Accounting policies Subsidiaries The acquisition method is used to account for the Group’s business combinations� The consideration for the acquisition of a subsidiary consists of the fair value of transferred assets, liabilities and the shares issued by the Group� The consideration also includes the fair value of any assets or liabilities resulting from a contingent consideration agreement� Note 13: Investments in Group companies THE GROUP'S NOTES
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81 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Acquisitions Balco Group's objective is for the company to grow primarily organically through its own strength, but acquisitions are also of interest in cases where the acquisitions contribute to strengthe- ning Balco Group's competitiveness or can accelerate the rate of establishment in a market� No acquisitions were carried out during 2025. Note 14: Acquisitions THE GROUP'S NOTES
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82 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Accounting policies Goodwill Goodwill arising on business combinations is initially measu- red at the amount by which the total purchase consideration, and the fair value of any non-controlling interests, exceeds the fair value of identifiable assets acquired and liabilities assumed� In order to test for impairment, goodwill acquired in a bu- siness combination is allocated to cash-generating units or groups of cash-generating units that are expected to benefit from synergies from the acquisition� Each unit or group of units to which goodwill has been allocated corresponds to the lowest level in the Group at which the goodwill item in ques- tion is monitored in internal control� The Group’s operations are divided into two different segments, Renovation and New build� Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate a possible decrease in value� The carrying amount of good- will is compared with the recoverable amount, which is the higher of value in use and fair value less costs of disposal� Any impairment is recognised immediately as an expense and is not reversed� Trademarks, Acquired order backlog, Patents and Licences Separately acquired trademarks, order backlogs, patents and licences are recognised at cost of acquisition less accumu- lated amortisation and any impairment� They are amortised on a straight-line basis over their estimated useful lives� Amortisation is based on the estimated useful lives set out below and corresponds to the estimated time they are expec- ted to generate cash flow� The Group’s trademarks have been assessed as having an indefinite useful life� The useful life is considered indefinite, as these are well-established trade - marks in the market� The Group intends to retain and develop these trademarks� The item is tested annually to identify any impairment and is recognised at cost of acquisition less any impairment; see also Impairment of non-financial non- current assets� Patents ��������������������������������������������������������������������������10 years Capitalised development expenses �������������������������������5 years Licences �������������������������������������������������������������������������4 years Order backlog��������������������������������������������������������������1-3 years Impairment of non-financial non-current assets Assets that have an indefinite useful life, goodwill and trade- marks, are not amortised but are tested annually for possible impairment� Assets that are amortised are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable� An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount � The recoverable amount is the higher of an asset’s fair value less costs of disposal costs and its value in use� For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separate identifiable cash flows (cash-generating units). Impairment testing of goodwill and trademarks is performed at the operating segment level� Note 15: Intangible assets Significant estimates and assessments Impairment testing of goodwill and trademarks The Group assesses annually whether there is an indica- tion of an impairment of goodwill and trademarks, in accordance with the accounting policy described above� The recoverable amounts of cash-generating units have been determined by calculating the value in use� Management assesses the business based on the company's segments, which correspond to the lowest level of cash-generating units. Renovation and New Build have been identified as the main segments� Goodwill and trademarks have been monitored by management at operating segment level since 2016. Below is a summary of goodwill, allocated by respective operating segment, and a summary of trademarks, allocated by respective operating segment� The recoverable amount of a cash-generating unit (CGU) has been determined based on value-in-use calculations� These calculations use estimated future pre-tax cash flows based on financial plans approved by management and covering a five-year period� Cash flows beyond the five-year period are extrapolated using esti- mated growth rates as indicated below� The growth rate does not exceed the long-term growth rate of the balcony market in which the CGU concerned operates� For signifi- cant assumptions used in the value-in-use calculations, see the table on page 83. Sensitivity analysis goodwill The recoverable amount exceeds the carrying amounts for goodwill by a significant margin� No reasonably possible changes in key assumptions would lead to an impairment loss� No impairment loss for goodwill and/or brands has been identified for any of the years� THE GROUP'S NOTES
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83 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Intangible assets 2024 Goodwill Brand Acquired order backlog Licences Capitalised development expenditure Work in progress Total Opening carrying amount 485,160 128,856 0 3,270 7,260 2,787 627,332 Acquisition 0 0 0 225 377 5,631 6,233 Increase through business combinations 33,378 130,187 7,634 0 8,803 0 180,002 Reclassification -3,090 0 0 53 3,873 -3,926 -3,090 Disposals -1,309 0 0 -102 0 0 -1,411 Exchange rate differences, cost of acquisition 703 2,171 123 123 44 0 3,164 Amortisation / impairment 0 -9 -7,121 -1,404 -2,608 0 -11,141 Depreciation through business combinations 0 0 0 0 -6,375 0 -6,375 Depreciation, disposals 693 0 0 102 0 0 796 Exchange rate difference depreciation 0 0 -34 -53 -33 0 -120 Closing carrying amount 515,535 261,205 603 2,215 11,340 4,492 795,389 As at 31 December 2024 Cost of acquisition 515,535 261,205 20,710 11,025 21,385 4,492 834,352 Accumulated depreciation 0 0 -20,107 -8,811 -10,045 0 -38,963 Carrying amount 515,535 261,205 603 2,215 11,340 4,492 795,389 2025 Goodwill Brand name Acquired order backlog Licences Capitalised development expenditure Work in progress Total Opening carrying amount 515,535 261,205 603 2,215 11,340 4,492 795,389 Acquisition 0 0 0 0 0 10,385 10,385 Increase through business combinations 14,643 0 2,300 269 1,084 0 18,296 Reclassification 0 0 0 102 1,787 -1,889 0 Disposals 0 0 0 0 0 0 0 Exchange rate differences, cost of acquisition -2,293 -8,303 -451 -182 -561 0 -11,790 Amortisation / impairment 0 0 -868 -1,139 -3,511 0 -5,519 Depreciation through business combinations 0 0 0 0 11 0 11 Depreciation, disposals 0 0 0 0 0 0 0 Exchange rate difference, depreciation 0 1 430 110 426 0 967 Closing carrying amount 527,885 252,903 2,013 1,374 10,576 12,989 807,739 As at 31 December 2025 Cost of acquisition 527,885 252,903 22,558 11,214 23,508 12,989 851,057 Accumulated depreciation 0 0 -20,546 -9,840 -12,932 0 -43,318 Carrying amount 527,885 252,903 2,013 1,374 10,576 12,989 807,739 Amortisation of intangible assets by function 2025 2024 Production and project costs -4,233 -9,752 Distribution costs -241 -266 Administrative expenses -1,046 -1,123 Total -5,519 -11,141 Goodwill 2024 Renovation New build Total Opening carrying amount 475,537 9,623 485,160 Exchange rate diffe- rence in cost 205 39 244 Acquisitions 22,726 7,405 30,131 Closing carrying amount 498,468 17,067 515,535 2025 Renovation New build Total Opening carrying amount 498,468 17,067 515,535 Exchange rate diffe- rence in cost -2,178 -115 -2,293 Acquisitions 12,977 1,666 14,643 Closing carrying amount 509,267 18,618 527,885 Intangible assets distributed by geo- graphical market 2025 2024 Sweden 620,735 611,609 Other Nordic countries 13,192 183,199 Other Europe 173,811 582 Total 807,738 795,389 Trademarks 2024 Renovation New build Total Opening carrying amount 115,435 13,421 128,856 Exchange rate diffe- rence cost 372 0 372 Acquisition 35,340 96,638 131,978 Closing carrying amount 151,147 110,059 261,206 2025 Renovation New build Total Opening carrying amount 151,147 110,059 261,206 Exchange rate diffe- rence cost -4,815 -3,488 -8,303 Acquisition 0 0 0 Closing carrying amount 146,332 106,571 252,903 2025 2024 Renovation New build Renovation New build EBITDA margin 8.10% 6.80% 8.70% 7.40% Annual growth rate 14.00% 17.80% 12.70% 8.60% Discount rate 11.26% 11.26% 10.83% 10.83% Long-term growth rate 2.00% 2.00% 3.00% 3.00% 1) Budgeted EBITDA margin 2) Average growth rate over the five-year forecast; based on historical outcome and management's assessment of market development. 3) Discount rate after tax is used in the present value calculation of estimated future cash flows. 4) Weighted average growth rate used for extrapolation of cash flows beyond the budget period. THE GROUP'S NOTES
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84 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Accounting policies The Group’s leases essentially relate to premises, plant and machinery, and vehicles and other equipment. Leases are recognised as right-of-use assets and a cor- responding debt on the day the leased asset is available for use by the Group� Each lease payment is divided between the re- payment of the lease liability and the finance cost� The finance cost is distributed over the lease term so that each accounting period is charged with an amount corresponding to a fixed interest rate for the debt recognised for the respective period� Right-of-use assets are depreciated on a straight-line basis over the shorter of the asset’s useful life and the length of the lease� Lease liabilities include the present value of the following lease payments: • Fixed fees • Variable lease payments that depend on an index • Amounts expected to be paid in respect of residual value guarantees • The exercise price for a purchase option if the Group is reasonably certain to exercise such an option� Lease payments are discounted using the lease's implicit inte- rest rate or the incremental borrowing rate if the implicit rate is not known� The incremental borrowing rate is the interest rate that the individual lessee would have to pay to borrow to buy an asset of similar value to the right-of-use asset in a simi- lar economic environment with similar terms and collateral� Right-of-use assets are measured at cost of acquisition and include: • The initial measurement of the lease liability� • Payments made at or before the date on which the leased asset is made available to the lessee� Lease payments attributable to short-term leases and leases for which the underlying asset is of low value are recognised as an expense on a straight-line basis over the lease term� Short-term leases are leases with a lease term of 12 months or less and primarily relate to scaffolding hire for installation at construction sites� These are recognised as production and project costs. Leases for which the underlying asset is of low value primarily relate to IT equipment and office machinery which are recognised as administrative expenses� Options to extend and terminate leases Options to extend and terminate leases are included in a num- ber of the Group's leases regarding buildings and equipment� The terms are used to maximise flexibility in the management of assets used in the Group's operations� The vast majority of the options providing the possibility of extending and termina- ting leases can only be exercised by the Group and not by the lessors� When determining the lease term, management considers all available information that provides an economic incentive to exercise an extension option, or not to exercise an option to terminate a lease� Extension options are only included in the lease term if it is reasonably certain that the lease will be extended (or not terminated). For leases relating to warehouses, machinery and equip- ment, the following factors are normally most material: • If the leases contain significant termination fees (or fees for not extending them), the Group normally assesses that it is reasonably certain that extension will occur (or that termination will not occur). • If the Group has leasehold improvements and expects the leasehold improvements to have a significant remaining value, it is usually reasonably certain that the leases will be extended (or not terminated). • Otherwise, the Group considers other factors, including the historical lease period, and the costs and business inter- ruptions required to replace the leased asset� The majority of extension options relating to the leasing of of- fice premises and vehicles have not been included in the lease liability because the Group can replace the assets without significant costs or business interruptions� The lease term is reassessed if an option is exercised (or not exercised) or if the Group is forced to exercise the option (or not exercise it). The assessment of whether it is reasonably certain is only reassessed if any significant event or change in circumstances occurs that affects this assessment and the change is within the control of the lessee� Note 16: Right-of-use assets THE GROUP'S NOTES
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85 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Right-of-use assets 2024 Premises Plant and machinery Vehicles and other equipment Total Opening carrying amount 60,278 1,081 9,136 70,495 New contracts 1,272 299 4,151 5,722 Exchange rate differences, acquisition values 460 -5 190 645 Terminated contracts 4,992 -297 -1,933 2,761 Depreciation -12,039 -534 -5,833 -18,405 Exchange rate differences, depreciation -386 1 -124 -510 Closing carrying amount 54,577 544 5,587 60,708 2025 Premises Plant and machinery Vehicles and other equipment Total Opening carrying amount 54,577 544 5,587 60,708 New contracts 525 0 19,297 19,822 Exchange rate differences, acquisition values -1,246 -17 -242 -1,505 Terminated contracts 5,155 0 -260 4,895 Depreciation -12,133 -210 -9,826 -22,169 Exchange rate differences, depreciation 1,057 5 184 1,247 Closing carrying amount 47,934 322 14,741 62,997 Depreciation of right-of-use assets by function 2025 2024 Production and project costs -14,311 -11,911 Distribution costs -6,816 -6,057 Administrative expenses -1,042 -437 Total -22,169 -18,405 Right-of-use assets by geographical market 2025 2024 Sweden 57,279 55,382 Other Nordic countries 2,194 2,473 Rest of Europe 3,525 2,854 Total 62,997 60,708 Lease liabilities 2025-12-31 2024-12-31 Non-current 43,823 46,271 Current 21,061 16,642 Total 64,883 62,912 See Note 28: Financial instruments for further information on the maturity structure of lease liabilities� Cash flow from lease agreements 2025 2024 Interest expense on leases included in finance costs -1,693 -1,454 Expenses attributable to short-term leases -17,143 -18,785 Expenses attributable to non-short- term leases on low-value assets -654 -827 Total cash flow for lease agreements during the year was SEK 22,364 thousand (2024: SEK 20,155 thousand), of which SEK 20,740 thousand (2024: SEK 18,701 thousand) was operating cash flow and SEK 1,624 thousand (2024: SEK 1,454 thousand) was financial cash flow� THE GROUP'S NOTES
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86 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Depreciation of property, plant and equipment by function 2025 2024 Production and project costs -17,287 -18,712 Distribution costs -142 -620 Administrative expenses -1,267 -1,252 Total -18,696 -20,584 Property, plant and equipment by geographical market 2025-12-31 2024-12-31 Sweden 82,885 92,733 Other Nordic countries 69,072 74,181 Other Europe 56,624 62,734 Total 208,582 229,649 Note 17: Property, plant and equipment Accounting policies Each part of an item of property, plant and equipment with a cost of acquisition that is significant in relation to the asset's total cost of acquisition is depreciated separately� No depreciation is made on land or ongoing projects� Depreciation of other assets is calculated on a straight- line basis as follows: Buildings �����������������������������������������������������������10-25 years Land improvements ����������������������������������������������25 years Building fixtures ����������������������������������������������������10 years Plant and machinery �������������������������������������������5-10 years Equipment, tools and installations ��������������������������5 years Property, plant and equipment are recognised as an asset in the balance sheet when, based on available information, it is probable that the future economic be- nefits associated with the holding will flow to the Group/ company and the cost of acquisition of the asset can be measured reliably� Tangible assets are recognised at cost of acquisition less accumulated depreciation and any impairment� The cost of acquisition includes the purchase price and expenses directly attributable to the asset to bring it to the location and in the condition to be utilised in ac- cordance with the purpose of the acquisition� The carrying amount of an item of property, plant and equipment is derecognised from the balance sheet upon disposal or sale or when no future economic benefits are expected from its use� The gain or loss arising from the sale or disposal consists of the selling price and the asset's carrying amount less direct distribution costs � The result is recognised as other operating income/ expense� 2024 Land and buildings Plant and machinery Equipment, tools and fixtures Ongoing new installations Total Opening carrying amount 108,631 30,334 18,883 4,081 161,929 Acquisition 8,607 347 3,341 3,869 16,164 Increase through business acquisitions 56,312 28,104 24,416 0 108,832 Reclassifications 0 4,356 1,262 -5,618 0 Sales and disposals 0 -644 -2,281 0 -2,926 Exchange difference, cost of acquisition 3,457 1,422 936 73 5,888 Depreciation / impairment -5,208 -7,097 -8,279 0 -20,584 Depreciation, disposals 0 222 973 0 1,194 Depreciation, through business acquisitions -10,085 -12,748 -15,825 0 -38,658 Exchange difference, depreciation -499 -976 -717 0 -2,191 Closing carrying amount 161,216 43,319 22,709 2,405 229,649 As of 31 December 2024 Cost of acquisition 202,690 128,906 90,268 2,405 424,269 Accumulated depreciation -41,474 -85,587 -67,559 0 -194,620 Carrying amount 161,216 43,319 22,709 2,405 229,649 2025 Land and buildings Plant and machinery Equipment, tools and installations Construction in progress Total Opening carrying amount 161,216 43,319 22,709 2,405 229,649 Acquisition 45 510 1,657 4,579 6,792 Increase through business combinations 0 0 1,912 0 1,912 Reclassifications 0 2,584 735 -5,159 -1,840 Sales and disposals 0 -644 -14,009 0 -14,653 Exchange difference, cost of acquisition -6,814 -3,060 -2,307 -78 -12,260 Depreciation / impairment -5,141 -6,935 -6,621 0 -18,697 Depreciation, disposals 0 290 12,519 0 12,809 Depreciation, through business combinations 0 0 0 0 0 Exchange difference, depreciation 1,199 1,868 1,803 0 4,870 Closing carrying amount 150,506 37,932 18,397 1,747 208,582 As at 31 December 2025 Cost of acquisition 195,922 128,296 78,256 1,747 404,220 Accumulated depreciation -45,416 -90,363 -59,859 0 -195,638 Carrying amount 150,506 37,932 18,397 1,747 208,582 THE GROUP'S NOTES
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87 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Accounting policies Trade receivables generally fall due for payment within 30 days and all trade receivables have therefore been classified as current assets� Trade receivables are initially recognised at the transaction price� The Group holds the trade receivables for the purpose of collecting contractual cash flows and therefore measures them at subsequent reporting dates at amortised cost using the effective interest method� Provisions and reversals of reserves for doubtful debts are included in the item project and production costs in the income statement� Note 19: Trade receivables Significant estimates and assessments The loss allowance for financial assets is based on as- sumptions about the risk of default (e.g. due to financial difficulties of customers such as bankruptcy, or financial reorganisation) and expected loss levels. The Group makes its own judgements for assumptions and choice of inputs to the impairment calculation� These are based on historical data, known market conditions and forward- looking estimates at the end of each reporting period� Past-due trade receivables include trade receivables related to both current and completed projects� Delayed payments may be related to the implementation of the project, which means that past-due trade receiva- bles vary over time� The Group also works with credit insurance and various forms of collateral from clients, to reduce the risk in trade receivables� 2025-12-31 2024-12-31 Trade receivables 184,892 125,625 Less: allowance for doubtful debts -535 -2,551 Trade receivables – net 184,357 123,074 The ageing analysis of these trade receivables is presented below: 2025 -12-31 SEK thousand % Not past due 153,485 83% 1-30 days 13,304 7% 31-60 days 3,102 2% > 60 days 14,466 8% Total trade receivables 184,357 100% 2024 -12-31 SEK thousand % Not past due 82,168 67% 1-30 days 12,917 10% 31-60 days 5,160 4% > 60 days 22,828 19% Total trade receivables 123,074 100% Changes in the loss allowance for trade receivables are as follows: 2025-12-31 2024-12-31 Opening carrying amount -2,551 -2,596 Provision for doubtful receivables -150 -288 Receivables written off during the year as uncollectible 0 -202 Unused amounts reversed 2,166 535 Closing carrying amount -535 -2,551 Accounting policies Inventories are recognised at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. In so doing, the risk of obsoles- cence has been taken into account� Note 18: Inventories 2025-12-31 2024-12-31 Raw materials and consumables 60,778 64,807 Total 60,778 64,807 The item production and project costs includes expenses for inventories recognised as an expense amounting to 33,607 thou- sand SEK (2024: 36,311 thousand SEK). Other income statement items include expenses for inventories recognised as an expense amounting to 0 thousand SEK (2024: 0 thousand SEK). Inventories in the Group have been written down by 924 thousand SEK (2024: 779 thousand SEK) during the period. THE GROUP'S NOTES
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88 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Note 21: Other receivables 2025-12-31 2024-12-31 VAT recoverable 1,605 6,702 VAT deposits 275 485 Other 6,508 6,357 Total 8,388 13,545 Note 22: Prepaid expenses and accrued income 2025-12-31 2024-12-31 Prepaid invoices 12,124 12,220 Deposit for premises 3,220 419 Other 1,198 2,048 Total 16,542 14,687 Note 23: Cash and cash equivalents Cash and cash equivalents consist in their entirety of bank balances� The Group applies a cash pool solution primarily to manage va- riations in payment flows within the Group� The parent company is the sole contracting party to the bank� 2025-12-31 2024-12-31 Contract assets 180,534 199,703 Contract liabilities -103,076 -38,039 Net 77,457 161,664 Closing order backlog as of 31 December 2025 was 1,523 MSEK (2024: 1,309 MSEK). An average project duration from the time the customer has obtained a building permit is 3–12 months. The time until the customer obtains a building permit varies for each project� Amounts withheld by the customer amounted to SEK 0 thou- sand (2024: SEK 0 thousand). 2024 Accumulated assignment expenses Less invoiced amounts Fulfilment costs Net amount in the balance sheet for ongoing assignments Opening carrying amount 1,378,920 -1,248,818 -2,906 127,196 Correction of errors from previous years -10,244 0 0 -10,244 Updated opening carrying amount 1,368,676 -1,248,818 -2,906 116,952 Contracts added during the year 1,086,609 -1,057,189 20,713 50,133 Contracts completed during the year -719,764 728,133 -13,790 -5,421 Closing carrying amount 1,735,521 -1,577,874 4,017 161,664 2025 Accumulated assignment expenses Less invoiced amounts Fulfilment costs Net amount in the balance sheet for ongoing assignments Opening carrying amount 1,735,521 -1,577,874 4,017 161,664 Contracts added during the year 1,092,266 -1,138,074 21,652 -24,156 Contracts completed during the year -983,286 940,863 -17,628 -60,051 Closing carrying amount 1,844,501 -1,775,085 8,041 77,457 Further information regarding the correction of errors from previous years can be found on page 68, the Group's statement of changes in equity� Accounting policies In connection with construction contracts (see note Re- venue recognition), the Group incurs items in the balance sheet related to the status of the relationship between work performed and compensation received from the customer. In the balance sheet, the Group recognises the position for each contract net, as either an asset or a liability� A contract constitutes an asset when accrued revenue (after deduction for recognised losses) exceeds invoiced amounts and is recognised in the item Contract assets in the balance sheet� The Group recognises a liabi- lity when the opposite condition exists and is recognised in the item Contract liabilities in the balance sheet� Note 20: Contract assets and contract liabilities Significant estimates and assessments Trade receivables and contract assets The loss allowance for financial assets is based on assumptions about the risk of default (e.g. due to finan- cial difficulties of customers such as bankruptcy, or financial reorganisation) and expected loss levels. The Group makes its own judgements for assumptions and choice of inputs to the impairment calculation� These are based on historical data, known market conditions and forward-looking estimates at the end of each reporting period� Contract reserve The Group continually tests the value of reserves in relation to the estimated requirement� A provision is recognised based on historical statistics on deficient products and completed projects� The contract reserve is reported under "Contract assets"� THE GROUP'S NOTES
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89 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Note 24: Equity Accounting policies Earnings per share before dilution Earnings per share before dilution is calculated by dividing: • The profit/loss for the year attributable to the parent company's shareholders • by the weighted average number of ordinary shares outstanding during the period� Earnings per share after dilution For the calculation of earnings per share after dilu- tion, the amounts used in the calculation of earnings per share before dilution are adjusted by taking into account: • the weighted average number of additional ordinary shares that would have been outstanding upon conversion of all potential ordinary shares� Share capital Ordinary shares are classified as equity� Amounts in SEK 2025 2024 Basic earnings per share -1.55 0.05 Diluted earnings per share -1.55 0.05 Share capital At 31 December 2025, the number of shares in Balco amounted to 23,021,648. Balco has one class of shares and each share has the same voting value and entitlement to dividends� One share has a quota value of SEK 6.0002 and the share capital thus amounts to SEK 138,135,310. Note 25: Other liabilities 2025-12-31 2024-12-31 Personnel taxes 11,273 9,733 VAT liability 15,715 10,358 Other 16,073 22,635 Total 43,062 42,725 Note 26: Accrued expenses and deferred income 2025-12-31 2024-12-31 Personnel liabilities 59,231 63,819 Other 10,871 12,812 Total 70,103 76,630 THE GROUP'S NOTES
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90 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Note 27: Interest-bearing liabilities Accounting policies Borrowings Liabilities to credit institutions are initially recognised at fair value, net of transaction costs. Borrowings are subsequently measured at amortised cost, and any dif- ference between the amount received (net of transaction costs) and the repayment amount is recognised in the in- come statement over the loan period, using the effective interest method� Borrowings are derecognised from the balance sheet when the obligations have been settled, cancelled, or otherwise extinguished � The difference between the car- rying amount of a financial liability (or part of a financial liability) that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss� Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period� 2025-12-31 2024-12-31 Non-current Liabilities to credit institutions 475,035 362,916 Liabilities regarding lease liabilities 43,823 46,271 Total non-current borrowings 518,858 409,186 Current Liabilities to credit institutions 234 0 Liabilities regarding lease liabilities 21,061 16,642 Total current borrowings 21,295 16,642 Total borrowings 540,153 425,828 Borrowings from credit institutions Carrying amount 2025-12-31 Maturity date Danske Bank 475,035 2028-03-31 Total borrowings from credit institutions 475,035 Borrowings from credit institutions Carrying amount 2024-12-31 Maturity date Danske Bank 362,916 2026-10-12 Total borrowings from credit institutions 362,916 Liabilities to credit institutions The Group's borrowings are in SEK and consist of a revolving credit facility from Danske Bank for a total of SEK 510 million. The maturity date of the credit is 31 March 2028. The interest rate for the loans is set according to the applied margin with the impact of the development of the market interest rate with a three-month interest rate fixing period, in accordance with applicable bank agreements� The fair value of borrowings corresponds to its carrying amount, as the discounting effect is not material. Credits Overdraft facilities are available in Swedish kronor� Unutilised overdraft facilities amount to SEK 75,000 thousand (2024: SEK 75,000 thousand). Lease liabilities Lease liabilities are effectively secured, as the rights to the leased asset revert to the lessor in the event of default� Covenants In 2025, the Group met all its obligations under the current cove- nants to the bank. There are two covenants, which are measured and reported quarterly: • Interest coverage ratio (Adjusted EBITDA in relation to interest paid) • Net debt in relation to adjusted EBITDA In December, a waiver and an amendment to the existing credit agreement were obtained, whereby covenant levels were ad- justed until June 2026. Change in indebtedness Non-cash items 2025-01-01 Cash flow Acquisi- tions Accrued interest Currency effect Lease contracts 2025-12-31 Short-term liabilities to credit institutions 0 234 0 0 0 0 234 Non-current liabilities to credit institutions 362,916 111,638 482 0 0 0 475,035 Other non-current liabilities 34,685 -9,625 -14,644 0 1,229 0 11,644 Lease liabilities 62,912 -22,364 0 1,624 0 22,711 64,883 Total liabilities from financing activities 460,512 79,883 -14,162 1,624 1,229 22,711 551,797 Non-cash items 2024-01-01 Cash flow Acquisi- tions Accumulated interest Currency effect Lease contracts 2024-12-31 Short-term liabilities to credit institutions 0 0 0 0 0 0 0 Non-current liabilities to credit institutions 174,200 187,894 0 0 822 0 362,916 Other non-current liabilities 1,379 0 32,077 0 1,229 0 34,685 Lease liabilities 70,220 -20,155 0 1,454 0 11,393 62,912 Total liabilities from financing activities 245,799 167,739 32,077 1,454 2,051 11,393 460,512 THE GROUP'S NOTES
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91 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Accounting policies Classification The Group classifies its financial assets and liabilities in the fol- lowing categories: • Financial assets and liabilities measured at fair value through profit or loss, and • financial assets and liabilities measured at amortised cost The classification of investments in debt instruments depends on the Group's business model for managing financial assets and the contractual terms of the assets' cash flows� The Group reclassifies debt instruments only in cases where the Group's business model for the instruments changes� Recognition and derecognition Purchases and sales of financial assets are recognised on the trade date, the date on which the Group commits to purchase or sell the asset� Financial assets are removed from the balance sheet when the right to receive cash flows from the instrument has expired or has been transferred and the Group has transfer- red substantially all risks and rewards associated with owner- ship� Financial liabilities are removed from the statement of financial position when the obligations have been settled, cancelled or otherwise terminated� The difference between the carrying amount of a financial liability that has been extinguis - hed or transferred to another party and the consideration paid, including transferred non-cash assets or assumed liabilities, is recognised in the consolidated income statement� The Group also derecognises a financial liability when the contractual terms are modified and the cash flows from the mo- dified liability are substantially different. In that case, a new fi- nancial liability is recognised at fair value based on the modified terms� The gain or loss is calculated as the difference between the original contractual cash flows and the modified cash flows discounted at the original effective interest rate� Valuation Financial assets are initially measured at fair value plus, in cases where the asset is not recognised at fair value through profit or loss, transaction costs directly attributable to the acquisi- tion� Transaction costs directly attributable to financial assets recognised at fair value through profit or loss are expensed immediately in the income statement� Investments in debt instruments (trade receivables and other non-current receivables) Subsequent valuation depends on the Group's business model for managing the asset and the type of cash flows to which the asset gives rise� The Group classifies its investments in debt instruments as belonging to the amortised cost valuation category� • Amortised cost: Assets held for the purpose of collecting contractual cash flows, where these cash flows consist solely of principal and interest, are recognised at amortised cost. Interest income from such financial assets is recognised as finance income by applying the effective interest method� Gains and losses arising on derecognition from the balance sheet are recognised directly in the income statement within other gains and losses together with the exchange rate result� • Fair value through profit or loss: Assets that do not meet the criteria for recognition at amortised cost are measured at fair value through profit or loss� A gain or loss on a debt instru- ment that is recognised at fair value through profit or loss under the item production and project costs and that is not part of a hedging relationship is recognised net in the income statement in the period in which the gain or loss arises� Impairment of financial assets measured at amortised cost The Group assesses future expected credit losses related to investments in debt instruments measured at amortised cost based on forward-looking information � The Group applies the simplified approach for calculating expected credit losses� The approach means that the loss allowance for expected credit los- ses over the entire term of the claim is used as the starting point for trade receivables and contract assets� Offsetting of financial instruments Financial assets and liabilities are offset and reported at a net amount in the statement of financial position, only when there is a legal right to offset the reported amounts and an intention to settle them on a net basis or to simultaneously realise the asset and settle the liability� Trade payables Trade payables refer to obligations to pay for goods and services acquired from suppliers in operating activities� Trade payables are classified as short-term liabilities if they fall due within one year. If not, they are reported as non-current liabilities. Trade payables are reported at a nominal amount� The carrying amount for trade payables is assumed to correspond to their fair value, as this item is short-term in nature� Contingent consideration Financial liabilities are measured at fair value through profit or loss if they are a contingent consideration to which IFRS 3 app- lies, held for trading, or if they are initially identified as a liability at fair value through profit or loss� Note 28: Financial instruments THE GROUP'S NOTES
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92 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Financial instruments As at 31 December 2025 Less than 3 months Between 3 months and 1 year Between 1 and 2 years Between 2 and 5 years More than 5 years Borrowings (excl. lease liabilities) 7,039 21,118 56,314 482,039 0 Lease liabilities 5,213 15,638 10,663 21,675 13,609 Trade payables and other liabilities 157,570 0 0 0 0 Total 169,822 36,756 66,977 503,714 13,609 As at 31 December 2024 Less than 3 months Between 3 months and 1 year Between 1 and 2 years Between 2 and 5 years More than 5 years Borrowings (excl. lease liabilities) 4,129 12,386 33,030 375,851 0 Lease liabilities 4,032 12,096 8,609 20,655 20,414 Trade payables and other liabilities 145,657 0 0 0 0 Total 153,818 24,482 41,638 396,505 20,414 1) Matures 2028-03-31 2) Matures 2026-10-12 Capital accounting The Group assesses its capital on an EBITDA basis (adjusted ope- rating profit before depreciation and amortisation), with capital limited to external financing, net debt to EBITDA. This key figure is calculated as Group's external debt to EBITDA� External debt is defined as short-term and long-term borrowings less cash and cash equivalents and excluding liabilities relating to lease liabili- ties. Interest-bearing net debt is not to exceed 2.5 times EBITDA, other than temporarily� 2025-12-31 2024-12-31 Total borrowing 540 153 425 828 Of which liabilities to credit institutions 475 269 362 916 Of which lease liabilities 64 883 62 912 Less: cash and cash equivalents -158 066 -103 061 Less: lease liabilities -64 883 -62 912 External loan debt 317 203 259 855 Adjusted EBITDA 57 623 84 943 Lease amortisation -22 169 -18 405 EBITDA excluding leases 35 454 66 538 External loan debt/EBITDA 8.95 3.91 Contingent considerations In connection with acquisitions, Balco Group sometimes agrees on contingent consideration. In the balance sheet as at 31 De- cember 2025, contingent considerations amounting to 0 (0) MSEK are recognised� These are contingent on the acquired compa- nies achieving a certain level of earnings growth over time� The liability for contingent considerations recognized in the balance sheet reflects management's best estimate of the outcome� In the event that the companies perform better or worse than management's estimate, the difference will be reported in the income statement� 2025-12-31 2024-12-31 Opening carrying amount 0 7,800 Revaluation via the income statement 0 0 Paid contingent considerations 0 -7,790 Reversed via the income statement 0 -10 Closing carrying amount 0 0 This means that the fair value measurement is essentially based on unobservable inputs (Level 3 as defined in IFRS 13). Total outstanding considerations as at 31 December 2025 amount to 21 (32) MSEK, of which 0 (0) MSEK are contingent consi- derations. The debt for the considerations is in EUR. THE GROUP'S NOTES
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93 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Fair value measurement The table on the left shows financial instruments measured at fair value, based on the classification in the fair value hierarchy. The different levels are defined as follows: • Quoted prices (unadjusted) in active markets for identical as- sets or liabilities (level 1). • Other observable data for the asset or liability other than quoted prices included in level 1, either directly (i.e. as price quotations) or indirectly (i.e. derived from price quotations) (level 2). • Data for the asset or liability not based on observable market data (i.e. unobservable data) (level 3). There have been no transfers between level 1 and level 2 valuation models during any of the years� Level 1 financial instruments The fair value of financial instruments traded in an active market is based on quoted market prices at the balance sheet date� A market is regarded as active if quoted prices from an exchange, broker, industry group, pricing service, or regulatory agency are readily and regularly available and these prices represent actual and regularly occurring market transactions on an arm's length basis� The Group holds no financial instruments classified as Level 1. Level 2 financial instruments The fair value of financial instruments that are not traded in an active market (e.g. OTC derivatives) is determined using valua- tion techniques� Market information is used as much as possible where available, while company-specific information is used as little as possible� If all significant inputs required for the fair value measurement of an instrument are observable, the instrument is classified at level 2. Where one or more significant inputs are not based on obser- vable market information, the instrument concerned is classified at level 3. Specific valuation techniques used to measure financial instruments include: • Quoted market prices or broker quotes for similar instru- ments� • The fair value of interest rate swaps is calculated as the pre- sent value of estimated future cash flows based on observable yield curves� • The fair value of forward exchange contracts is determined using forward exchange rates at the reporting date, with the resulting value discounted to present value� • Other techniques, such as discounted cash flow calculations, are used to determine the fair value of the remaining financial instruments� Level 3 financial instruments The Group's liabilities for contingent considerations attributable to acquisitions are measured at fair value� These items are re- cognised at fair value in the balance sheet, with changes in value recognised in profit or loss� The following table shows the Group's assets and liabilities measured at fair value as at 31 December 2025 Level 1 Level 2 Level 3 Total Assets Financial assets measured at fair value through profit or loss 0 0 0 0 Total assets 0 0 0 0 Liabilities Financial liabilities measured at fair value through profit or loss 0 0 0 0 Other non-current liabilities 0 0 0 0 Total liabilities 0 0 0 0 The following table shows the Group's assets and liabilities measured at fair value as at 31 December 2024 Level 1 Level 2 Level 3 Total Assets Financial assets measured at fair value through profit or loss 0 0 0 0 Total assets 0 0 0 0 Liabilities Financial liabilities measured at fair value through profit or loss 0 0 0 0 Other non-current liabilities 0 0 0 0 Total liabilities 0 0 0 0 THE GROUP'S NOTES
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94 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Note 29: Financial risk management Financial risk factors Through its operations, the Group is exposed to a variety of finan- cial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk� The Group's overall risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial results� Risk management is handled by a central finance department according to policies established by the Board of Directors� The finance department identifies, evaluates and hedges financial risks in close cooperation with the Group's operating units� The Board of Directors establishes written policies for both overall risk management and for specific areas, such as currency risk, interest rate risk, credit risk, the use of derivative instruments and non-derivative financial instruments, and the investment of excess liquidity� Currency risk The Group operates internationally and is exposed to currency risks arising from various currency exposures, primarily with re - spect to Norwegian krone (NOK), Euro (EUR), Danish krone (DKK), British pound (GBP) and Polish zloty (PLN). Currency risk arises from future business transactions, recognised assets and liabilities and net investments in foreign operations� Currency risks arise when future business transac - tions or recognised assets or liabilities are expressed in a cur- rency that is not the entity's functional currency� If the Swedish krona had weakened/strengthened by 5 öre (5 percent) against the Norwegian krone with all other variables constant, profit for the year would have been SEK 509 thousand (2024: SEK 147 thousand) higher/lower, mainly as a result of gains/losses on the translation of trade receivables and trade payables in NOK, and financial assets and liabilities measured at fair value through profit or loss� If the Swedish krona had weakened/strengthened by 50 öre (5 percent) against the Euro, with all other variables constant, profit for the year would have been SEK 1,333 thousand (2024: SEK 4,856 thousand) higher/lower, mainly as a result of gains/losses on translation of trade receivables and trade payables in EUR, financial assets and liabilities measured at fair value through profit or loss� If the Swedish krona had weakened/strengthened by 5 öre (3 percent) against the Danish krone with all other variables held constant, profit for the year would have been SEK 209 thousand (2024: SEK 300 thousand) higher/lower, mainly as a result of gains/losses on the translation of trade receivables and trade payables in DKK, and financial assets and liabilities measured at fair value through profit or loss� Equity is affected to a correspon- ding extent� If the Swedish krona had weakened/strengthened by 50 öre (4 percent) against the British pound with all other variables held constant, profit for the year would have been SEK 203 thousand (2024: SEK 197 thousand) higher/lower, mainly as a result of gains/losses on the translation of trade receivables and trade payables in GBP, and financial assets and liabilities measured at fair value through profit or loss� Equity is affected to a correspon- ding extent� If the Swedish krona had weakened/strengthened by 10 öre (4 percent) against the Polish zloty with all other variables held con- stant, profit for the year would have been SEK 44 thousand (2024: SEK 477 thousand) higher/lower, mainly as a result of gains/los- ses on the translation of trade receivables and trade payables in PLN, and financial assets and liabilities measured at fair value th- rough profit or loss� Equity is affected to a corresponding extent� Interest rate risk related to cash flows and fair values The Group’s interest rate risk arises through long-term bor- rowings� Borrowings made at variable interest rates expose the Group to interest rate risk concerning cash flow, which is partially offset by cash and cash equivalents with variable interest rates� At the end of 2025, the Group’s borrowings consisted of credit facilities in Swedish kronor, which carry variable interest rates. If interest rates on borrowings as of 31 December 2025 had been 100 basis points (1 percentage point) higher/lower with all other variables constant, the profit for the year would have been SEK 3,327 thousand (2024: SEK 2,141 thousand) higher/ lower, mainly as an effect of higher/lower interest expenses for borrowings at variable interest rates� Equity is affected to a cor- responding degree� Credit risk The Group has established guidelines to ensure that sales are made to customers with an appropriate credit background� A credit risk assessment of the customer is performed before each project. The customer’s financial position, historical finances and other factors are taken into account� Credit risk is managed by each company in accordance with the Group’s credit instructions� Credit risk arises primarily from trade receivables and contract assets. Historically, the Group’s credit losses have been small. Payments are made according to a predetermined payment plan� The credit period generally amounts to 30 days. A policy is in place to credit-insure certain customer categories� Liquidity risk Cash flow forecasts are prepared by the Group's operating com- panies and aggregated by the finance department� The Group clo- sely monitors rolling forecasts for the liquidity reserve to ensure that it has sufficient cash to meet the needs of its operating ac- tivities while simultaneously maintaining sufficient headroom on committed unutilised credit facilities (note 27) so that the Group does not breach borrowing limits or covenants (where applicable) on any of the Group's borrowing facilities� The table in note 28 Financial Instruments analyses the Group's non-derivative financial liabilities and net-settled derivative in - struments that constitute financial liabilities, categorised by the time remaining on the balance sheet date until the contractual maturity date� Derivative instruments that constitute financial liabilities are included in the analysis if their contractual maturity dates are essential for understanding the timing of future cash flows. The amounts stated in the table are the contractual, undis- counted cash flows� Note 30: Pledged assets 2025-12-31 2024-12-31 For own and group companies' liabili- ties and provisions Assets with reservation of title 0 344 For own pension obligation 6,574 6,134 Other pledged assets 3,730 1,834 Total 10,304 8,312 Note 31: Contingent liabilities Surety commitments have been provided by the Group for leasing commitments in Balco Sp� z o�o� In connection with construc- tion projects, security is often provided in the form of guaran- tees from a bank, insurance institution or parent company for performance. For Balco Group AB, SEK 279 million (2024: SEK 163 million) refers to various guarantees for construction commit- ments entered into by subsidiaries and SEK 971 thousand (2024: SEK 1,003 thousand) relates to surplus values in endowment insurance� THE GROUP'S NOTES
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95 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Note 32: Events after the end of the reporting period According to a press release on 3 March 2026, Johannes Nyberg has announced that he will be leaving his position as a member of the Board of Directors of Balco Group. He has also served as chairman of Balco Group's audit committee� The decision is due to his position as CEO of Skandrenting, in combination with his other commitments� Since Johannes Nyberg has left the Board, Ingalill Berglund has been appointed as the new chairman of the audit committee� THE GROUP'S NOTES
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96 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION THE PARENT COMPANY'S FINANCIAL STATEMENTS Parent Company Income Statement Parent Company Balance Sheet Amounts in SEK thousand Note 2025 2024 Net sales 38 26,834 23,668 Production and project costs 0 0 Gross profit 26,834 23,668 Administrative expenses 10,11, 35, 37 -26,075 -21,376 Operating profit 760 2,292 Dividend/profit from group companies -15,987 264,165 Interest income and similar profit/loss items 34 15,517 11,745 Interest expenses and similar profit/loss items 34 -27,427 -28,936 Profit after financial items -27,136 249,267 Appropriations 39 -10,800 33,795 Profit before tax -37,936 283,062 Tax on profit for the year 36 5,105 -3,816 Profit for the year -32,832 279,245 In the parent company, there are no items reported as other comprehensive income, which is why total comprehensive income corresponds to the profit for the year� Amounts in SEK thousand Note 2025-12-31 2024-12-31 ASSETS Non-current assets Financial non-current assets Shares in group companies 13, 14 1,071,651 1,066,592 Deferred tax assets 4,313 777 Other long-term receivables 40 4,100 3,677 Total non-current assets 1,080,064 1,071,045 Current assets Receivables from group companies 234,155 177,488 Tax assets 12,137 5,903 Prepaid expenses and accrued income 41 2,526 2,412 Liquid assets 23 154,603 97,712 Total current assets 403,422 283,514 TOTAL ASSETS 1,483,485 1,354,559 Amount in SEK thousand Note 2025-12-31 2024-12-31 EQUITY Restricted equity Share capital 138,135 138,135 Total restricted equity 138,135 138,135 Non-restricted equity Share premium reserve 450,787 450,800 Retained earnings 248,404 -30,842 Profit for the year -32,832 279,245 Total non-restricted equity 666,359 699,203 Total equity 804,494 837,339 LIABILITIES Non-current liabilities Liabilities to credit institutions 44, 45 475,000 350,000 Other non-current liabilities 45 14,857 34,867 Total non-current liabilities 489,857 384,867 Current liabilities Trade payables 1,778 738 Liabilities to group companies 45 165,519 109,955 Other liabilities 42 11,043 11,897 Accrued expenses and deferred income 43 10,794 9,764 Total current liabilities 189,134 132,353 TOTAL EQUITY AND LIABILITIES 1,483,485 1,354,559
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97 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Parent Company Statement of Changes in Equity Amount in SEK thousand Share capital Share premium reserve Retained earnings incl. profit for the year Total equity Opening balance as at 1 January 2024 131,461 406,339 -30,842 506,959 Comprehensive income Total comprehensive income for the year 279,245 279,245 Total comprehensive income 248,404 786,204 Transactions with shareholders in their capacity as owners: New share issue 6,674 43,522 50,196 Proceeds from warrants 938 938 Total attributable to shareholders 6,674 44,461 0 51,135 Closing balance as at 31 December 2024 138,135 450,800 248,404 837,339 Opening balance as at 1 January 2025 138,135 450,800 248,404 837,339 Comprehensive income Total comprehensive income for the year -32,832 -32,832 Total comprehensive income 215,572 804,507 Transactions with shareholders in their capacity as owners: New share issue 0 0 0 Proceeds from warrants -13 -13 Total attributable to shareholders 0 -13 0 -13 Closing balance as at 31 December 2025 138,135 450,787 215,572 804,494 Amounts in SEK thousand Note 2025 2024 Cash flow from operating activities Operating profit 760 2,292 Adjustment for non-cash items Interest received 34 15,517 10,832 Interest paid 34 -30,601 -26,853 Other -1,440 503,156 Income tax paid 36 -4,665 -7,387 Cash flow from operating activities before changes in working capital -20,429 482,041 Changes in working capital Change in operating receivables -56,782 -87,190 Change in operating liabilities 52,373 -578,680 Cash flow from operating activities -24,838 -183,829 Investing activities Investments in subsidiaries -32,082 -184,318 Change in non-current receivables -423 -264 Cash flow from investing activities -32,505 -184,582 Financing activities Proceeds from borrowings 44 125,000 200,000 Change in other non-current liabilities -10,410 0 Proceeds from warrants issue -13 938 Dividends received 1,440 269,800 Cash flow from financing activities 116,017 470,738 Decrease/increase in cash and cash equivalents 58,674 102,328 Cash and cash equivalents at beginning of year 23 97,712 -3,446 Exchange difference in cash and cash equivalents -1,783 -1,170 Cash and cash equivalents at end of year 23 154,603 97,712 Parent company statement of cash flows THE PARENT COMPANY'S FINANCIAL STATEMENTS
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98 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION THE PARENT COMPANY'S NOTES Parent company notes General information The Parent Company is based in Växjö and operates directly and indirectly through 20 Swedish and foreign subsidiaries. The activities of the Parent Company are mainly focused on strategic development, financial management, corporate governance issues, Board work and banking relations. The Group's CEO, CFO, and HR Director are employed by the Parent Company. The Parent Company complies with the Swedish Annual Ac- counts Act (ÅRL) and the Swedish Corporate Reporting Board's recommendation RFR 2 Accounting for Legal Entities. RFR 2 requires the Parent Company to apply International Financial Reporting Standards (IFRS) as adopted by the EU in its financial reports, to the extent possible within the framework of the Swe- dish Annual Accounts Act and taking into account the relationship between accounting and taxation� The same accounting and valuation policies are applied in the Parent Company as in the Group, except in the cases indicated below� No changes to accounting policies have been applied during the financial year or the previous year regarding the Parent Company� Note 33: General accounting policies Format of financial statements The income statement and balance sheet follow the format pres- cribed in the Swedish Annual Accounts Act (ÅRL). The statement of changes in equity also follows the Group's format but must include the columns specified in ÅRL. Furthermore, there are differences in terminology compared with the consolidated fi- nancial statements, mainly regarding finance income and finance costs as well as equity� Financial instruments IFRS 9 is not applied in the parent company. The parent company instead applies the points specified in RFR 2 (IFRS 9 Financial in- struments, p. 3-10). Financial instruments are valued on the basis of cost of acquisition. In subsequent periods, financial assets acquired with the intention of being held short-term will be re- cognised in accordance with the lower of cost or market principle at the lower of cost of acquisition and market value� When calculating the net realisable value of receivables, the principles for impairment testing and loss allowance in IFRS 9 shall be applied� For a receivable recognised at amortised cost at group level, this means that the loss allowance recognised in the Group in accordance with IFRS 9 shall also be recognised in the parent company� Dividends Dividends to the parent company's shareholders are recognised as a liability in the consolidated financial statements in the period in which the dividend is approved by the parent company's share- holders and before payment to the shareholders� Note 34: Interest and similar income, and interest and similar expenses 2025 2024 Interest and similar income Interest income on bank deposits 15,517 11,745 15,517 11,745 Interest and similar expenses Interest expenses -26,843 -21,991 Other finance costs -583 -6,945 Interest and similar expenses -27,427 -28,936 Total -11,910 -17,190 Intra-group interest income recognised in the parent company amounts to SEK 11,791 thousand (2024:SEK 7,599 thousand). The corresponding interest expenses amount to SEK 1,489 thousand (2024: SEK 3,443 thousand).
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99 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Note 35: Leasing Accounting policies Where they exist, all lease agreements are recognised in accordance with the leasing regulations. Lease costs correspond to the payment made to the lessor� 2025 2024 Within one year 553 203 Later than one but within five years 103 119 Total 656 322 Future minimum lease payments under non-cancellable opera - ting leases, effective at the end of the reporting period, fall due for payment as follows: Costs for operating leases in the parent company during the financial year amounted to SEK 638 thousand (2024: SEK 204 thousand). Note 36: Income taxes Tax on profit for the year differs from the theoretical amount that would result from using the weighted average tax rate for the results of the parent company as follows: 2025 2024 Current tax: Current tax on profit for the year 1,673 -4,593 Adjustments in respect of previous years -104 – Total current tax 1,569 -4,593 Deferred tax: Origin and reversal of temporary differences 3,536 777 Total deferred tax 3,536 777 Income tax 5,105 -3,816 2025 2024 Profit before tax -37,936 283,055 Income tax calculated at the parent company's current tax rate, 20.6% (2024: 20.6%) 7,815 -58,311 Tax effects of: – Non-taxable income 311 173,219 – Non-deductible expenses -2,917 -119,501 - Adjustment relating to temporary differences 0 777 - Adjustments in respect of previous years -104 Tax expense 5,105 -3,816 Effective tax rate, % 13.5% 1.3% Note 37: Employee benefits 2025 2024 Salaries and other benefits -9,108 -6,936 Social security contributions -2,035 -2,994 Pension costs – defined contribution plans -3,509 -1,688 Total -14,652 -11,619 2025 2024 Number on the balance sheet date Of which women Number on the balance sheet date Of which women Board members 6 2 6 2 Chief Executive Officer 1 1 1 1 Total 7 3 7 3 2025 2024 Average number of employees with geo- graphical distribution per country Average number of em- ployees Of which women Average number of em- ployees Of which women Sweden 4 1 2 1 Total 4 1 2 1 Note 38: Transactions with related parties 2025 2024 Below are stated the year's purchases and sales to other companies within the Group Sales 26,834 23,668 Purchases 0 0 Total 26,834 23,668 Information regarding related companies can be found in note 12. THE PARENT COMPANY'S NOTES
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100 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Note 39: Appropriations Accounting policies Group contributions received and paid are recognised as an appropriation� 2025 2024 Group contributions received 15,000 33,795 Group contributions paid -25,800 – Total appropriations -10,800 33,795 Note 40: Other non-current receivables 2025-12-31 2024-12-31 Opening carrying amount 3,677 3,413 Additional endowment insurance 692 672 Disposals of other non-current recei- vables -269 -408 Closing carrying amount 4,100 3,677 Note 41: Prepaid expenses and accrued income 2025-12-31 2024-12-31 Prepaid invoices 2,079 1,864 Other 447 549 Total 2,526 2,412 Note 42: Other liabilities 2025-12-31 2024-12-31 Personnel taxes 292 270 Contingent consideration 10,548 11,199 VAT liability 204 427 Total 11,043 11,897 Note 43: Accrued expenses and deferred income 2025-12-31 2024-12-31 Personnel liabilities 3,138 4,484 Other 7,656 5,280 Total 10,794 9,764 Note 44: Interest-bearing liabilities 2025-12-31 2024-12-31 Non-current Liabilities to credit institutions 475,000 350,000 Total non-current borrowings 475,000 350,000 Current Liabilities to credit institutions 0 0 Total current borrowings 0 0 Total borrowings 475,000 350,000 Change in debt 2025-01-01 Cash flow 2025-12-31 Liabilities to credit insti- tutions 350,000 125,000 475,000 Total liabilities attributa- ble to financing activities 350,000 125,000 475,000 Change in debt 2024-01-01 Cash flow 2024-12-31 Liabilities to credit insti- tutions 150,000 200,000 350,000 Total liabilities attributa- ble to financing activities 150,000 200,000 350,000 No liabilities fall due later than 5 years from the balance sheet date� THE PARENT COMPANY'S NOTES
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101 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Note 45: Financial instruments As of 31 December 2025 Less than 3 months Between 3 months and 1 year Between 1 and 2 years Between 2 and 5 years More than 5 years Borrowings 7,039 21,118 56,314 482,039 0 Other non-current liabilities 0 0 0 0 0 Liabilities to group companies 165,519 0 0 0 0 Trade payables and other liabilities 1,778 0 0 0 0 Total 174,336 21,118 56,314 482,039 0 As of 31 December 2024 Less than 3 months Between 3 months and 1 year Between 1 and 2 years Between 2 and 5 years More than 5 years Borrowings 3,879 11,636 31,031 361,636 0 Other non-current liabilities 0 0 0 0 0 Liabilities to group companies 109,955 0 0 0 0 Trade payables and other liabilities 738 0 0 0 0 Total 114,571 11,636 31,031 361,636 0 1) Matures 2028-03-31 2) Matures 2026-10-12 Note 46: Pledged assets 2025-12-31 2024-12-31 For group companies' liabilities and provisions For own pension obligations 4,100 3,677 Other pledged assets 0 0 Total 4,100 3,677 THE PARENT COMPANY'S NOTES
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102 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Appropriation of profits The Board of Directors has established a dividend policy that means that 30-50 percent of the profit after tax shall be distributed. For the 2025 financial year, the Board of Directors proposes no dividend to the Annual General Meeting, in order to reduce the Group's indebtedness following the completed strategic acquisitions of Riikku Group Oy and Suomen ohutlevyasennus Oy� The annual report and consolidated financial statements have, as stated above, been approved by the Board of Direc- tors and the Chief Executive Officer on the date shown in our electronic signature� The Group's consolidated income statement and statement of other comprehensive income and statement of financial position and the parent company's income statement and balance sheet will be subject to approval at the Annual General Meeting on 5 May 2026. At the disposal of the Annual General Meeting, SEK: Share premium reserve 450,786,517 Retained earnings 248,403,665 Profit for the year -32,831,645 Total 666,358,537 The Board of Directors proposes that the profits be appropriated as follows: To the shareholders in the form of a dividend 0 Profits to be carried forward 666,358,537 Total 666,358,537 The Board of Directors and the CEO confirm that the consolidated financial statements and the annual report have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and generally ac - cepted accounting principles and give a true and fair view of the position and performance of the Group and the parent company, and that the administration report gives a true and fair view of the activities, position and performance of the Group and the parent company, and of the principal risks and uncertainties faced by the parent company and the compa- nies included in the Group� Växjö Signature according to the date indicated by our electronic signature� Ingalill Berglund Thomas Widstrand Carl-Mikael Lindholm Chairman Board member Board member Mikael Andersson Vibecke Hverven Camilla Ekdahl Board member Board member CEO Our auditor’s report was submitted on the date indicated by our electronic signature� KPMG AB Michael Johansson Authorised Public Accountant Auditor in charge Note 47: Appropriation of profits THE PARENT COMPANY'S NOTES
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103 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION AUDITOR’S REPORT Auditor’s report To the general meeting of the shareholders of Balco Group AB (publ), corp. id. 556821-2319 Report on the annual accounts and consolidated accounts Opinions We have audited the annual accounts and consolidated accounts of Balco Group AB (publ) for the year 2025, except for the corporate governance statement on pages 38-44 and the sustainability report on pages 48-62. The annual accounts and consolidated accounts of the company are included on pages 30-36, 38-44, 48-102 in this document. In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act, and present fairly, in all material respects, the financial position of the parent company as of 31 December 2025 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act� The consolida- ted accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material re- spects, the financial position of the group as of 31 Decem- ber 2025 and their financial performance and cash flow for the year then ended in accordance with IFRS Accounting Standards, as adopted by the EU, and the Annual Accounts Act� Our opinions do not cover the corporate governance statement on pages 38-44 and sustainability report on pages 48-62. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts� We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the statement of com- prehensive income and balance sheet for the group� Our opinions in this report on the the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company's audit committee in accordance with the Audit Regulation (537/2014) Article 11. Basis for Opinions We conducted our audit in accordance with Internatio- nal Standards on Auditing (ISA) and generally accepted auditing standards in Sweden� Our responsibilities under those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise ful- filled our ethical responsibilities in accordance with these requirements.This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5. 1 have been provided to the audited company or, where applicable, its parent company or its controlled companies within the EU� We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions� Key audit matters Key audit matters of the audit are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts and consolidated ac- counts of the current period� These matters were add- ressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters� Impairment of Goodwill See disclosure 15 and accounting principles on page 82 in the annual account and consolidated accounts for detailed information and description of the matter. Description of key audit matter In the consolidated balance sheet, goodwill as of 31 De- cember 2025 is reported as SEK 527.9 (515.5) million, which is 31% (32%) in relation to total assets. Goodwill and acquisition-related surplus values repre- sent the difference between the value of net assets and the consideration paid in an acquisition� Unlike other non-current assets, goodwill is not amor- tised but is tested annually for impairment or when there is an indication of impairment� Future events and new information may change these judgements and estimates, and it is therefore particularly important for management to continuously evaluate whether the value of goodwill can be justified in the light of new information and circumstan- ces� Impairment tests naturally contain a greater element of estimates and judgements by management, which is why we have considered this to be a key audit matter in our audit� Response in the audit In our audit, we paid particular attention to the group’s impairment testing of the asset item goodwill� We assessed whether the impairment test performed for goodwill was prepared in accordance with the prescri- bed discounted cash flow technique� We also performed procedures to evaluate management’s process for testing goodwill for impairment and examined how management identifies cash-genera- ting units. Furthermore, we evaluated the reasonableness of the assumptions made, performed sensitivity analyses for changed assumptions and evaluated the reasonable- ness of the applied discount rate� We assessed the circumstances presented in the dis- closures in the annual report and whether the information is sufficiently comprehensive to describe the company’s judgements� Revenue recognition over time See disclosure 2-3 and accounting principles on pages 71 and 73 in the annual account and consolidated accounts for detailed information and description of the matter. Description of key audit matter For 2025, the Group reports net sales of SEK 1,295. 1 (1,417.9) million, of which the majority of revenue is recognised over time in accordance with IFRS 15. This me- ans that the projects’ expected revenues are recognised continuously during the project period based on calcula- tions and the degree of completion� Revenue recognition over time means that manage- ment must make estimates and judgements regarding,
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104 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION among other things, the degree of completion and profit margin, and changes in these judgements mean that the result for the coming period can be affected� Given that there is a significant amount of judgement involved in the recognition of revenue and performance related to revenue recognised over time, we have determi- ned that this is a key audit matter� Response in the audit In our audit, we evaluated the process and internal con- trols for recognising revenue over time. In particular, we focused on the company’s procedures and judgements for measuring progress and completion rates� We randomly audited projects and followed up against costs, customer invoices and forecasts. For the sampled projects, we also evaluated the management’s assess- ment of the final profit margin, which is the basis for recognising revenue over time� We also examined management’s specific assessment of the need for provisions for selected onerous contracts� We also examined disclosures related to revenue recog- nition in the annual accounts� Other Information than the annual accounts and consolidated accounts This document also contains other information than the annual accounts and consolidated accounts and is found on pages 2-29, 37, 45-47 and 107-114. The other informa- tion comprises also of the remuneration report which we obtained prior to the date of this auditor’s report� The Board of Directors and the Managing Director are respon- sible for this other information� Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information� In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts� In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated� If we, based on the work performed concerning this in- formation, conclude that there is a material misstatement of this other information, we are required to report that fact� We have nothing to report in this regard� Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presenta- tion in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS Accounting Standards as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error. In preparing the annual accounts and consolidated ac- counts The Board of Directors and the Managing Director are responsible for the assessment of the company’s and the group's ability to continue as a going concern� They disclose, as applicable, matters related to going concern and using the going concern basis of accounting� The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intend to liquidate the company, to cease operations, or has no realistic alternative but to do so� The Audit Committee shall, without prejudice to the Board of Director’s responsibilities and tasks in general, among other things oversee the company’s financial reporting process� Auditor’s responsibility Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally ac- cepted auditing standards in Sweden 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 annual accounts and consoli- dated accounts� As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepti- cism throughout the audit� We also: • Identify and assess the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions� The risk of not detecting a mate- rial misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control� • Obtain an understanding of the company’s internal control relevant to our audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control� • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors and the Managing Director� • Conclude on the appropriateness of the Board of Directors’ and the Managing Director's, use of the going concern basis of accounting in preparing the annual accounts and consolidated accounts� We also draw a conclusion, based on the audit evidence obtained, as to whether any material uncertainty exists related to events or conditions that may cast significant doubt on the company’s and the group's ability to continue as a going concern� If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the annual accounts and consolidated accounts or, if such disclosures are inadequate, to modify our opinion about the annual accounts and consolidated accounts� Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company and a group to cease to continue as a going concern� • Evaluate the overall presentation, structure and con- tent of the annual accounts and consolidated accounts, including the disclosures, and whether the annual accounts and consolidated accounts represent the underlying transactions and events in a manner that achieves fair presentation� • Plan and perform the group audit to obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the consoli- dated accounts. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit� We remain solely respon- sible for our opinions We must inform the Board of Directors of, among other matters, the planned scope and timing of the audit. We must also inform of significant audit findings during our audit, including any significant deficiencies in internal con- trol that we identified� AUDITOR’S REPORT
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105 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION We must also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to commu- nicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, measures that have been taken to eliminate the threats or related safeguards� From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the annual accounts and conso- lidated accounts, including the most important assessed risks for material misstatement, and are therefore the key audit matters� We describe these matters in the auditor’s report unless law or regulation precludes disclosure about the matter� Report on other legal and regulatory requirements Auditor's audit of the administration and the proposed appropriations of profit or loss Opinions In addition to our audit of the annual accounts and con- solidated accounts, we have also audited the administra- tion of the Board of Directors and the Managing Director of Balco Group AB (publ) for the year 2025 and the proposed appropriations of the company's profit or loss� We recommend to the general meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year� Basis for opinions We conducted the audit in accordance with generally accepted auditing standards in Sweden� Our responsibi- lities under those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accor- dance with these requirements� We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions� Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the propo- sal for appropriations of the company’s profit or loss� At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the group's type of operations, size and risks place on the size of the parent company's and the group’s equity, consolidation require- ments, liquidity and position in general. The Board of Directors is responsible for the company’s organization and the administration of the company’s affairs� This includes among other things continuous assessment of the company’s and the group's financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company’s financial affairs otherwise are control- led in a reassuring manner� The Managing Director shall manage the ongoing admi- nistration according to the Board of Directors' guidelines and instructions and among other matters take measures that are necessary to fulfill the company's accounting in accordance with law and handle the management of as- sets in a reassuring manner� Auditor’s responsibility Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Direc- tors or the Managing Director in any material respect: • has undertaken any action or been guilty of any omis- sion which can give rise to liability to the company, or • in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association� Our objective concerning the audit of the proposed appropriations of the company’s profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act� Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to lia- bility to the company, or that the proposed appropriations of the company’s profit or loss are not in accordance with the Companies Act� As part of an audit in accordance with generally accep- ted auditing standards in Sweden, we exercise profes- sional judgment and maintain professional scepticism throughout the audit� The examination of the administra- tion and the proposed appropriations of the company’s profit or loss is based primarily on the audit of the ac- counts� Additional audit procedures performed are based on our professional judgment with starting point in risk and materiality� This means that we focus the examination on such actions, areas and relationships that are material for the operations and where deviations and violations would have particular importance for the company’s situation� We examine and test decisions undertaken, support for decisions, actions taken and other circumstances that are relevant to our opinion concerning discharge from liability� As a basis for our opinion on the Board of Directors’ pro- posed appropriations of the company’s profit or loss we examined whether the proposal is in accordance with the Companies Act� The auditor’s examination of the Esef report Opinion In addition to our audit of the annual accounts and conso- lidated accounts, we have also examined that the Board of Directors and the Managing Director have prepared the annual accounts and consolidated accounts in a format that enables uniform electronic reporting (the Esef report) pursuant to Chapter 16, Section 4(a) of the Swedish Secu- rities Market Act (2007:528) for Balco Group AB (publ) for year 2025. Our examination and our opinion relate only to the statu- tory requirements� In our opinion, the Esef report has been prepared in a format that, in all material respects, enables uniform electronic reporting� Basis for opinion We have performed the examination in accordance with FAR’s recommendation RevR 18 Examination of the Esef report� Our responsibility under this recommendation is described in more detail in the Auditors’ responsibility section. We are independent of Balco Group AB (publ) in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsi- bilities in accordance with these requirements� We believe that the evidence we have obtained is suf- ficient and appropriate to provide a basis for our opinion� AUDITOR’S REPORT
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106 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the Esef report in ac- cordance with the Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528), and for such internal control that the Board of Directors and the Managing Director determine is necessary to prepare the Esef report without material misstatements, whether due to fraud or error� Auditor’s responsibility Our responsibility is to obtain reasonable assurance whether the Esef report is in all material respects prepa- red in a format that meets the requirements of Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528), based on the procedures performed. RevR 18 requires us to plan and execute procedures to achieve reasonable assurance that the Esef report is prepared in a format that meets these requirements� Reasonable assurance is a high level of assurance, but it is not a guarantee that an engagement carried out according to RevR 18 and generally accepted auditing standards in Sweden will always detect a material missta- tement when it exists� Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Esef report� The audit firm applies International Standard on Quality Management 1, which requires the firm to design, im- plement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements� The examination involves obtaining evidence, through various procedures, that the Esef report has been prepa- red in a format that enables uniform electronic reporting of the annual accounts and consolidated accounts� The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material miss- tatement in the report, whether due to fraud or error. In carrying out this risk assessment, and in order to design procedures that are appropriate in the circumstances, the auditor considers those elements of internal control that are relevant to the preparation of the Esef report by the Board of Directors and the Managing Director, but not for the purpose of expressing an opinion on the effectiveness of those internal controls� The examination also includes an evaluation of the appropriateness and reasonableness of the assumptions made by the Board of Directors and the Managing Director� The procedures mainly include a validation that the Esef report has been prepared in a valid XHTML format and a reconciliation of the Esef report with the audited annual accounts and consolidated accounts� Furthermore, the procedures also include an assess- ment of whether the consolidated statement of financial performance, financial position, changes in equity, cash flow and disclosures in the Esef report have been marked with iXBRL in accordance with what follows from the Esef regulation� The auditor's examination of the corporate governance statement The Board of Directors is responsible for that the cor- porate governance statement on pages 38-44 has been prepared in accordance with the Annual Accounts Act� Our examination of the corporate governance state- ment is conducted in accordance with FAR´s standard RevR 16 The auditor´s examination of the corporate gover- nance statement� This means that our examination of the corporate governance statement is different and substan- tially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden� We believe that the examination has provided us with sufficient basis for our opinions� A corporate governance statement has been prepared� Disclosures in accordance with chapter 6 section 6 the se- cond paragraph points 2-6 of the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the other parts of the annual accounts and consolidated accounts and are in accordance with the Annual Accounts Act� The auditor's opinion regarding the statutory sustainability report The Board of Directors is responsible for the sustainability report on pages 48-62, and that it is prepared in accor- dance with the Annual Accounts Act in accordance with the older wording that applied before 1 July 2024. Our examination has been conducted in accordance with FAR´s standard RevR 12 The auditor's opinion regar- ding the statutory sustainability report� This means that our examination of the statutory sustainability report is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden� We believe that the examination has provided us with sufficient basis for our opinion� A statutory sustainability report has been prepared� KPMG AB, Box 456, 351 06, Växjö, was appointed auditor of Balco Group AB (publ) by the general meeting of the share- holders on the 6 May 2025. KPMG AB or auditors operating at KPMG AB have been the company's auditor since 2022. Växjö, on the date indicated by our electronic signature. KPMG AB Michael Johansson Authorised Public Accountant AUDITOR’S REPORT
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107 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION MULTI-YEAR OVERVIEW Multi-year overview MSEK 2025 2024 2023 2022 2021 Summary of the consolidated income statement Net sales 1,295.1 1,417.9 1,214.9 1,333.6 1,120.5 Gross profit 159.4 248.0 245.4 287.6 296.3 Operating profit before depreciation and amortisation (EBITDA) 27.4 84.9 114.7 144.5 155.6 Operating profit (EBIT) -18.7 34.8 70.4 102.5 118.0 Profit before tax -47.5 5.0 56.0 94.6 111.6 Profit for the year (attributable to parent company shareholders) -35.8 1.1 45.9 75.8 90.2 Summary of the consolidated balance sheet Assets Goodwill 527.9 515.5 485.2 457.8 448.0 Other non-current assets 565.9 577.8 374.9 377.3 301.8 Accounts receivable 184.4 123.1 138.0 174.8 153.5 Contract assets* 180.5 199.7 177.1 111.9 136.7 Other current assets 264.0 206.3 92.0 174.7 205.5 Total assets 1,722.6 1,622.5 1,267.2 1,296.6 1,245.6 Summary of equity and liabilities Equity* 736.1 793.1 748.0 731.0 692.0 Non-current liabilities* 589.5 508.6 268.5 194.3 254.9 Short-term liabilities 396.9 320.9 250.7 371.3 298.7 Total equity and liabilities 1,722.6 1,622.5 1,267.2 1,296.6 1,245.6 Summary of consolidated cash flow Cash flow from operating activities 15.0 85.3 -26.1 153.0 62.5 Cash flow from investing activities -49.1 -95.7 -52.9 -52.5 -102.1 Cash flow from financing activities 90.8 113.1 29.6 167.7 -57.5 Cash flow for the year 56.8 102.7 -49.4 -67.3 -97.1 MSEK 2025 2024 2023 2022 2021 Parent company Net sales 26.8 23.7 26.4 26.0 23.3 EBIT (operating profit) 0.8 2.3 1.7 1.8 2.8 Profit before tax -37.9 283.1 74.9 59.1 66.0 Total assets 1,483.5 1,354.6 1,557.4 903.8 947.3 Equity/assets ratio, % 54.2 61.8 32.6 52.3 49.5 * 2024 items affected by the correction of errors regarding incorrect project accounting – percentage-of-completion profit recognition of some projects in 2023.
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108 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Key figures MSEK (unless otherwise stated) 2025 2024 2023 2022 2021 Net sales 1,295.1 1,417.9 1,214.9 1,333.6 1,120.5 Order intake 1,537.1 1,376.8 977.0 1,108.6 1,558.3 Order backlog 1,523.3 1,309.3 1,073.6 1,274.7 1,557.0 Gross profit 159.4 248.0 245.4 287.6 296.3 Adjusted gross profit 183.1 262.5 252.9 292.6 296.3 EBITDA 27.4 84.9 114.7 144.5 155.6 Adjusted EBITDA 58.0 109.6 127.4 146.6 157.1 Operating profit (EBITA) -15.2 44.9 77.1 105.1 121.0 Adjusted operating profit (EBITA) 15.4 69.6 89.8 107.2 122.6 Operating profit (EBIT) -18.7 34.8 70.4 102.5 118.0 Adjusted operating profit (EBIT) 11.9 59.5 83.0 104.6 119.5 Performance measures Gross margin, % 12.3 17.5 20.2 21.6 26.4 Adjusted gross margin, % 14.1 18.5 20.8 21.9 26.4 EBITDA margin, % 2.1 6.0 9.4 10.8 13.9 Adjusted EBITDA margin, % 4.5 7.7 10.5 11.0 14.0 Operating margin (EBITA), % -1.2 3.2 6.4 7.9 10.8 Adjusted operating margin (EBITA), % 1.2 4.9 7.4 8.0 10.9 Operating margin (EBIT), % -1.4 2.5 5.8 7.7 10.5 Adjusted operating margin (EBIT), % 0.9 4.2 6.8 7.8 10.7 Operating cash flow 99.7 138.5 3.6 200.3 96.0 Cash flow conversion, % 171.9 126.3 2.8 136.6 61.1 Capital structure Capital employed, R12* 1,180.3 1,137.1 969.2 871.3 785.5 Capital employed excl. goodwill, R12* 654.3 622.9 483.9 420.7 343.9 Equity* 732.5 788.7 746.1 729.8 692.0 Interest-bearing net debt incl� lease liability 350.2 278.0 241.6 104.8 97.0 Interest-bearing net debt excl� lease liability 285.3 215.1 171.4 21.6 54.6 Interest-bearing net debt incl. leasing/Adjusted EBITDA (R12), times 6.0 2.5 1.9 0.7 0.6 Interest-bearing net debt excl. leasing/Adjusted EBITDA (R12), times 7.9 2.4 1.6 0.2 0.4 Key figures MSEK (unless otherwise stated) 2025 2024 2023 2022 2021 Return measures* Return on capital employed, % (R12) 1.0 5.7 8.6 12.0 15.2 Return on capital employed excl. goodwill, % (R12) 1.8 9.6 17.2 24.9 34.8 Return on equity, % (R12) -4.8 0.6 6.2 10.4 13.0 Equity/assets ratio, % 42.5 48.6 58.9 56.3 55.6 Other Full-time employees at the end of the period 513 621 490 536 467 Average number of shares before dilution, thousands 23,021.6 22,957.7 21,909.3 21,909.3 21,909.3 Average number of shares after dilution, thousands 23,021.6 22,957.7 21,909.3 22,106.3 22,059.3 Equity per share, SEK 31.80 34.40 34.06 33.31 30.74 Earnings per share, SEK, before dilution -1.55 0.05 2.09 3.46 4.12 Earnings per share, SEK, after dilution -1.55 0.05 2.09 3.46 4.12 Adjusted earnings per share, SEK, before and after dilution -0.50 0.89 2.55 3.92 4.17 For definition of alternative performance measures, see page 110. Quarterly overview 2025 2024 2023 MSEK Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net sales 315.9 331.1 276.8 371.3 326.4 374.0 331.0 386.5 325.7 346.4 253.3 289.5 Order intake 275.0 519.4 221.8 521.0 352.0 379.7 285.5 359.6 245.2 301.4 135.1 295.3 Order backlog 1,238.0 1,439.1 1,376.7 1,523.3 1,392.2 1,384.2 1,328.8 1,309.3 1,240.7 1,194.7 1,066.9 1,073.6 Adjusted operating profit (EBITA) -2.7 6.2 2.9 9.0 16.3 18.7 16.6 18.0 28.4 30.9 15.2 15.4 Adjusted operating margin (EBITA), % -0.9 1.9 1.1 2.4 5.0 5.0 5.0 4.7 8.7 8.9 6.0 5.3 * 2024 items affected by the correction of errors regarding incorrect project accounting – percentage-of-completion profit recognition of some projects in 2023. MULTI-YEAR OVERVIEW
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Other information Alternative performance measures �����������������������110 Reconciliation with IFRS ���������������������������������������111 The share and shareholders ����������������������������������112 Shareholder information ���������������������������������������114 BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 109 OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 110 OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION ALTERNATIVE PERFORMANCE MEASURES Alternative performance measures ALTERNATIVE PERFOR- MANCE MEASURE DEFINITION PURPOSE Return on equity Net profit for the period divided by average equity attri- butable to parent company shareholders� The average is calculated as the average of the opening balance and the closing balance for each period� This measure shows the return generated on shareholders' capital invested in the company� Return on capital employed Adjusted operating profit (EBIT) divided by average capital employed� The average is calculated as the average of the opening balance and the closing balance for each period� This measure shows the return generated on capital em- ployed and is used by Balco to monitor the profitability of operations as the measure relates to capital efficiency� Return on capital employed excluding goodwill Adjusted operating profit (EBIT) divided by average capital employed excluding goodwill� The average is calculated as the average of the opening balance and the closing balance for each period� Balco considers that return on capital employed excluding goodwill, together with return on capital employed, provides a comprehensive picture of Balco Group’s capital efficiency� Gross profit Net sales less production and project costs� Shows efficiency in Balco Group's operations and, together with EBIT, provides a comprehensive picture of current profit generation and the cost structure� Gross margin Gross profit as a percentage of net sales� The key ratio is used for analysis of efficiency and value creation� EBITDA Profit before interest, tax, depreciation and impairment. Balco considers EBITDA to be a useful measure for show- ing the profit generated in operating activities and a good measure of cash flow from operating activities� Interest-bearing net debt in relation to adjusted EBITDA Interest-bearing external net debt as a proportion of adjusted EBITDA� Balco Group considers this measure to be helpful in showing financial risk and that it is a useful measure for monitoring the company's debt level� Adjusted EBITDA EBITDA adjusted for items affecting comparability� For a reconciliation of Adjusted EBITDA against net profit for the period� Balco considers adjusted EBITDA to be a useful measure for showing the profit generated in operating activities adjusted for one-off items and primarily uses adjusted EBITDA when calculating the company's operating cash flow and cash generation� Adjusted EBITDA margin Adjusted EBITDA as a percentage of net sales� Balco considers the adjusted EBITDA margin to be a useful measure for showing the profit generated in operating activities� Adjusted operating margin (EBITA) Adjusted operating profit (EBITA) as a percentage of net sales� Balco considers the adjusted operating margin (EBITA) to be a useful measure for showing the profit generated in operating activities after adjustment for items of a non- recurring nature� Adjusted operating margin (EBIT) Adjusted operating profit (EBIT) as a percentage of net sales� Balco considers the adjusted operating margin (EBIT) to be a useful measure for showing the profit generated in operating activities after adjustment for items of a non- recurring nature� ALTERNATIVE PERFOR- MANCE MEASURE DEFINITION PURPOSE Adjusted operating profit (EBIT) Operating profit (EBIT) adjusted for items affecting com- parability� For a reconciliation of adjusted operating profit (EBIT) to the net profit for the period. Balco considers adjusted operating profit (EBIT) to be a useful measure for showing the profit generated in opera- ting activities and primarily uses the measure to calculate return on capital employed (see above). Adjusted operating profit (EBITA) Operating profit (EBITA) adjusted for items affecting comparability� For a reconciliation of adjusted operating profit (EBITA) to the net profit for the period. Balco considers adjusted operating profit (EBITA) to be a useful measure for showing the profit generated in opera- ting activities and primarily uses the measure to calculate return on capital employed (see above). Items affecting comparability Items affecting comparability are specific material items that are reported separately due to their size or frequen- cy, e.g. restructuring costs, impairment, divestments and acquisition costs� Balco considers that adjustment for items affecting comparability improves the possibility of comparison over time by excluding items with irregularity in frequency or size� This is to provide a more fair view of the underlying operating profit� Operating cash conversion Operating cash flow divided by adjusted EBITDA� Balco considers it a good measure for comparing cash flow with operating profit� Operating cash flow Adjusted EBITDA increased/decreased by changes in working capital and decreased by investments, excluding expansion investments� Balco uses operating cash flow to monitor the develop- ment of the operations� Organic growth Net sales excluding acquired growth for the current pe- riod divided by net sales during the corresponding period of the previous year� Organic growth excludes the effects of changes in the Group's structure, which enables a comparison of net sales over time� Interest-bearing net debt Total long- and short-term interest-bearing liabilities� For a reconciliation of net debt� Balco considers net debt to be a useful measure for show- ing the Group's total loan financing� Working capital Current assets, excluding liquid assets and current tax re- ceivables, decreased by non-interest-bearing short-term liabilities, excluding current tax liabilities. This measure shows how much working capital is tied up in the operations and can be seen in relation to net sales to understand how efficiently tied-up working capital is used� Operating margin (EBIT) Operating profit (EBIT) as a percentage of net sales. Balco considers that operating margin, together with sales growth and adjusted working capital, is a useful measure for monitoring value creation in the business� Operating margin (EBITA) Operating profit (EBITA) as a percentage of net sales. Balco considers that operating margin (EBITA), together with sales growth and adjusted working capital, is a useful measure for monitoring value creation in the business� Operating profit (EBIT) Profit before interest and tax� Balco considers that operating profit (EBIT) is a useful measure for showing the profit generated in operating activities� Operating profit (EBITA) Operating profit (EBIT), excluding depreciation and im- pairment of acquired intangible non-current assets� Acquisitions are an integral part of Balco Group's growth strategy� To better illustrate the development of the un- derlying operations, management has chosen to monitor EBITA, which is defined as operating profit before amorti- sation and impairment of acquired intangible assets� Equity/assets ratio Equity divided by total assets� Balco considers that the equity/assets ratio is a useful measure for the Company's long-term viability� Capital employed Equity increased by interest-bearing net debt� Capital employed is used by Balco as a measure of the Group’s overall capital efficiency� Capital employed excluding goodwill Capital employed minus goodwill� Capital employed excluding goodwill is used together with capital employed by Balco as a measure of the company's capital efficiency�
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 111 OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION RECONCILIATION WITH IFRS Reconciliation with financial reports according to IFRS Amounts in MSEK 2025 2024 Adjusted operating profit Operating profit (EBIT) -18.7 34.8 Items affecting comparability Acquisition costs 0.3 18.5 Restructuring costs 30.3 6.2 Adjusted operating profit (EBIT) 11.9 59.5 Operating profit (EBITA) Operating profit (EBIT) -18.7 34.8 Amortisation and impairment of acquired intangible assets 3.5 10.1 Operating profit (EBITA) -15.2 44.9 Adjusted operating profit (EBITA) Adjusted operating profit (EBIT) 11.9 59.5 Amortisation and impairment of acquired intangible assets 3.5 10.1 Adjusted operating profit (EBITA) 15.4 69.6 Adjusted profit after tax Profit after tax -35.0 4.6 Items affecting comparability after tax 24.2 19.5 Adjusted profit after tax -10.8 24.1 EBITDA Operating profit (EBIT) -18.7 34.8 Depreciation, amortisation and impairment 46.1 50.1 EBITDA 27.4 84.9 Amounts in MSEK 2025 2024 Adjusted EBITDA Adjusted operating profit (EBIT) 11.9 59.5 Depreciation, amortisation and impairment 46.1 50.1 Adjusted EBITDA 58.0 109.6 Investments, excl. expansion investments Purchase of intangible assets -12.6 -6.3 Purchase of property, plant and equipment -4.2 -6.8 of which expansion investments 12.3 6.9 Investments, excl. expansion investments -4.5 -6.2 Operating cash flow Adjusted EBITDA 58.0 109.6 Change in working capital 46.2 35.1 Investments, excl. expansion investments -4.5 -6.2 Operating cash flow 99.7 138.5 Net sales excluding acquisitions Net sales 1,295.1 1,417.9 Net sales acquired -24.6 -414.9 Net sales excluding acquisitions 1,270.5 1,003.0 Amounts in MSEK 2025 2024 Interest-bearing net debt incl. lease liabilities Non-current interest-bearing liabilities 518.9 409.2 Current interest-bearing liabilities 21.3 16.6 Liquid assets -190.0 -147.8 Interest-bearing net debt incl. lease liabilities 350.2 278.0 Adjusted EBITDA, (R12) 58.0 109.6 Interest-bearing net debt/EBITDA (R12), ratio 6.0 x 2.5 x Return on capital employed Equity 732.5 788.7 Interest-bearing net debt 350.2 278.0 Average capital employed 1,113.0 1,049.6 Adjusted operating profit (EBIT), (R12) 11.9 59.5 Return on capital employed, % 1.1 5.7 Equity/assets ratio Equity attributable to the parent company's shareholders 732.5 788.7 Total assets 1,722.6 1,622.5 Equity/assets ratio, % 42.5 48.6
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 112 OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Trading and market capitalisation The Balco Group share is traded on Nasdaq Stockholm's Small Cap list. During 2025, 7.4 mil- lion shares were traded at a total value of SEK 180.6 million� The average daily turnover during the year amounted to SEK 725,487. All trading in the share took place on Nasdaq Stockholm� Market capitalisation at the end of the year was SEK 0.4 billion. Share performance during the year During the year, the share price has traded within a range between SEK 15.90 and 44.05. The share ended the year at SEK 17.30, 55. 1 percent lower than the pre- vious year� The year’s highest price paid was recorded on 10 February at SEK 44.05 and the lowest price paid at SEK 15.90 on 3 December. Share capital As of the end of December 2025, the number of shares in Balco Group amounted to 23,021,648. Balco Group has one class of shares, and each share has the same voting value and entitlement to dividends� One share has a quota value of SEK 6.0002, and the share capital thus amounts to SEK 138,135,310. Ownership structure The number of shareholders in Balco Group at the end of the year was 4,665, a decrease of 224 owners during the year. Shareholdings in Sweden amounted to 83.6 percent. Of the total foreign shareholdings of 16.4 per- cent, shareholders in the United Kingdom accounted for 4.2 percent, owners in Luxembourg for 2.6 percent, owners in France for 2.4 percent, owners in Finland for 2.0 percent and owners in Denmark for 1.6 percent. Of the Swedish ownership of 83.6 percent, legal entities accounted for 66.5 percent and private individuals for 17. 1 percent. Balco Group's ten largest shareholders owned 64.7 percent of the company. Board members in Balco Group owned a total of 89,100 shares in Balco Group, while the company’s management owned 64,440 shares. In total, the Board’s and management’s holdings corresponded to 0.7 percent of the number of shares outstanding. The main owner is the Hamrin family with 26.3 percent ownership. MARKET CAPITALISATION 31/12 2025 398 MILLION SEK CLOSING PRICE 31/12 2025 17.30 SEK NUMBER OF SHAREHOLDERS 31/12 2025 4,665 The Stockholm Stock Exchange's broad index OMXSPI rose by 9.0 percent during 2025. Balco Group's share price performed poorly and ended the year with a decline of 55. 1% and a closing price of SEK 17.30. In our meetings with various market actors, we continue to emphasise Balco Group's unique position in the fragmented niche market for balcony solutions, our sustainability work at all levels and the positive sustainability effects of our products. The share and shareholders BALCO GROUP'S SHARE
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 113 OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Dividend and dividend policy Balco Group’s dividend policy stipulates that the company shall distribute 30–50 percent of the profit after tax, pro- vided that it does not jeopardise Balco Group's long-term development� The Board of Directors has proposed to the Annual General Meeting that no dividend be issued for the 2025 financial year. Share-related incentive programs At the Annual General Meeting of 14 May 2024, it was resol- ved to introduce a three-year incentive programme aimed at the company's senior executives and other key employ- ees, totalling 32 employees. The incentive programme comprises a maximum of 230,000 warrants, each entitling its holder to subscribe for a maximum of the correspon- ding number of shares� Balco Group's total cost for the incentive programme over its full term is expected to be approximately SEK 1.3 million. The programme involves a maximum dilution corresponding to approximately 1.0 per- cent of the company’s total number of shares� The senior executives of Balco Group have acquired 75,000 warrants with a total value of SEK 310,500. The purpose of the incentive programs is to encourage broad share ownership among the company’s key em- ployees, facilitate recruitment, retain skilled and talented employees, ensure that the interests of key employees and the company’s objectives are increasingly aligned, and increase motivation to achieve or exceed the company’s financial targets� In order to encourage participation in the programme, it was decided to subsidise participation in the form of a gross salary supplement� The level of salary supplement cannot exceed the gross amount invested by the partici- pant� The subsidy to a participant will be paid in connection with the exercise of their warrants, subject to the condi- tion that the participant at that time remains employed by the company or in a comparable position elsewhere within Balco Group, and remains in possession of their warrants. The subsidy for each participant shall amount to a maxi- mum of the premium paid for the participant's warrants held at the time of payment� Shareholder structure as of 31 December 2025 Number of shares Number of share- holders % of share- holders Number of shares % of shares 1-500 3,573 76.6% 416,690 1.8% 501-1000 407 8.7% 325,991 1.4% 1001-5000 492 10.5% 1,137,753 4.9% 5001-10000 82 1.8% 601,756 2.6% 10001-15000 27 0.6% 346,554 1.5% 15001-20000 18 0.4% 331,617 1.4% 20001- 66 1.4% 19,861,287 86.3% Total 4,665 100.0% 23,021,648 100.0% The ten largest shareholders as of 31 December 2025 Shareholder Number of shares % of shares The Hamrin family 6,062,027 26.33% Skandrenting AB 2,264,000 9.83% Swedbank Robur Fonder 1,946,942 8.46% AB Tuna Holding 1,201,876 5.22% DNB Bank ASA, SEK Lending 879,641 3.82% Avanza Pension 572,605 2.49% BFMC P/C BFCM Sweden Retail LT 537,000 2.33% eQ Asset Management 500,000 2.17% DZ Privatebank S.A: W8IMY 480,000 2.08% Aktia Bank ABP 459,940 2.00% Total 14,904,031 64.7% 10 20 30 40 50 decnovoctsepaugjuljunmayaprmarfebjan SEK/aktie Share performance during 2025 (SEK/Share) OMXSPI Balco Group BALCO GROUP'S SHARE
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 114 OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION BALCO GROUP'S SHARE Shareholder information Annual General Meeting Balco Group’s Annual General Meeting 2026 will be held on Tuesday 5 May 2026 at 15:00 at Kök 11, Honnörsgatan 15 in Växjö. Registration begins at 14:30. Notification of attendance Shareholders who wish to participate in the Annual Gene- ral Meeting must: • be listed as a shareholder in the share register maintai- ned by Euroclear Sweden AB ("Euroclear") on Friday 24 April 2026, and • notify the company of their intention to participate in the meeting in accordance with the instructions under the heading "Notification of physical participation or participation by proxy", or alternatively cast a postal vote in accordance with the instructions under the heading "Instructions for postal voting" no later than Tuesday 28 April 2026. Notification of physical participation or participation by proxy Shareholders who wish to participate in the Annual Gene- ral Meeting physically or by proxy must give notice of this no later than 28 April 2026 either: • via the website https://balcogroup�se/en/investors/ corporate-governance/general-meeting; • via telephone +46 73 472 00 90; or • by post: Balco Group AB, c/o Svenska Financial Hea- rings AB, Brunnsgatan 21 A, 3rd floor, 111 38 Stockholm The notification must state name/company name, personal or corporate identity number, address, daytime telephone number and, where applicable, the number of assistants (maximum two). If a shareholder intends to be represented by a proxy or a representative of a legal entity at the Annual General Meeting, such shareholder is requested to send authorisa- tion documents (power of attorney and/or certificate of registration) to the company at the above postal address in connection with the notification to the Annual Gene- ral Meeting� Proxy forms are available on the company's website, https://balcogroup.se/en/investors/corporate- governance/general-meeting Nominee-registered shares To be entitled to participate in the Annual General Mee- ting, shareholders whose shares are nominee-registered through a bank or other nominee must – in addition to giving notice of participation – temporarily re-register their shares in their own name so that the shareholder is registered in the share register kept by Euroclear as of the record date of 24 April 2026. Such registration may be temporary (so-called voting rights registration) and is requested from the nominee in accordance with the nominee's procedures at such time in advance as the no- minee determines. Voting rights registration requested by shareholders in time for the registration to be made by the nominee no later than Tuesday 28 April 2026 will be taken into account in the preparation of the share register� Nomination Committee The Nomination Committee's task is, on behalf of the shareholders, to submit proposals for the Chairman of the Meeting, the Board of Directors, the Chairman of the Board, the auditor, Board fees with a breakdown between the chairman and other members and remuneration for committee work, fees for the company's auditor and any changes to the instructions for the nomination committee� Ahead of the 2026 Annual General Meeting, the nomina- tion committee consists of Carl-Mikael Lindholm (Hamrin family), Annica Nordin (Skandrenting AB), Magnus Sjöqvist (Swedbank Robur Fonder) and Ingalill Berglund (Chairman of Balco Group). Carl-Mikael Lindholm is the chairman of the nomination committee� IR activities The aim of Balco Group’s IR work is to continuously inform the capital market about the Group’s operations and deve- lopment� Dialogue is maintained and ongoing information is provided through regular meetings with Swedish and international institutional investors and analysts� Presen- tations are held during conferences and meetings, always in connection with the publication of interim reports or year-end reports� Balco Group also has a continuous dialogue with non- institutional shareholders� Balco Group's website Balco Group's website (www.balcogroup.se) contains in- formation for the capital market and the company's other stakeholders� The website offers current and historical information about the group's operations, vision, purpose, business concept and strategy, corporate governance and sustainability work� Information regarding the performan- ce of the share over time is also available. Press releases, presentations and financial reports are published on the website� Analysts covering Balco Group Carnegie �����������������������������������������������������������Sofia Sörling Financial calendar 27 April �������������������������Interim report January-March 2026 5 May���������������������������������������Annual General Meeting 2026 14 July ���������������������������Interim report January-June 2026 26 October ����������� Interim report January-September 2026 8 February 2027 ����������������������������������Year-end report 2026
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OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Photo: Balco Group Illustrations: Pete Scott / Balco Group Production: Balco Group in collaboration with AVA Corporate Communications
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BALCO GROUP AB – ANNUAL AND SUSTAINABILITY REPORT 2025 116 BALCO GROUPS AKTIE OTHER INFORMATIONFINANCIAL INFORMATIONSUSTAINABILITYADMINISTRATION REPORTOPERATIONSSTRATEGYINTRODUCTION Balco Group AB Älgvägen 4 352 45 Växjö www.balcogroup.se Northern Europe's largest supplier of glazed and open balconies Balco Group is a leader in the balcony industry with a focus on offering innovative, patented and energy-efficient solutions for apartment buildings� The Group's customised products contribute to increasing the quality of life, safety and value of homes� Through a decentralised and efficient sales process, Balco Group has full control over the value chain – from production to delivery. Founded in 1987 in Växjö, the com- pany today has 513 employees and is the market leader in the Nordic region, with operations in several markets in Northern Europe�