Thermax Denmark Aps

Management's review

Key activities Thermax Denmark ApS is a wholly owned subsidiary of Thermax Netherlands B.V., which in turn is wholly owned by Thermax Ltd., an Indian publicly listed company. The ultimate holding company of Thermax Ltd. is RDA Holdings Private Limited, Pune, India.The main activity of the company is owning shares in the fully-owned subsidiaries Danstoker A/S, Boilerworks A/S and Ejendomsanpartssselskabet Industrivej Nord 13 (estate company). All operational activities take place within these respective subsidiaries.Danstoker A/S is the parent company of Danstoker Poland Sp. Z o.o.The primary activities within Thermax as under the label of Danstoker. The Danstoker Group designs, produces and sells boilers and relevant equipment to the energy market, including rebuilding and servicing of boilers. The product range of the Danstoker Group is continuously adapted to the 4 energy categories:1. Solid fuel market, mainly based biofuels2. Combined heat and power market3. Exhaust gas market4. Oil/gas marketThe activity of “Ejendomsanpartsselskabet Industrivej Nord 13” is to own and lease estate. The service activities in Boilerworks were sold at 1st November 2020. Only few projects need to be finally closed. Development in the year Danstoker A/S is highly impacted by the decision in Europe to move away from dependency of Russian gas and at the same time also the high focus on moving away from fossil fuels towards a more environmentally friendly energy production.Our production in both Herning and Ostrowiec has been running throughout the year on full capacity. It has been difficult to find skilled welders all over Europe. The reason is that all Ukraine welders previously working abroad is back in Ukraine to take part in the war. This has resulted in issues with on time delivery.Order intake has been on a as high level as last year. There is a high demand for biomass fired plants to substitute gas fired plants. Order intake on biomass plants is up with more than 50% compared to before start of the war in Ukraine. Present backlog is almost on same extraordinary high level as last year’s highest in history for Danstoker. We have orders as far out as end 2025. Danstoker has been able to maintain its position as the absolute market-leader within medium-sized biofuel boilers in Scandinavia. 65% of the turnover is within this segment.Within the shrinking market of oil and gas-fired boilers, Danstoker has maintained its position in the primary markets, and with the setup in Poland we are in the process of developing a stronger position in the eastern part of Europe. 14% of the turnover is within this segment.The waste heat recovery boiler market consists primarily of stainless-steel economizers and is 5% of turnover.The market segments for electrical boilers are expected to increase significantly over the coming years. For now, it represents 4% of turnover. The market for Service of boilers has maintained its level of 12% of turnover. Danstoker has started up within the waste incineration market and has delivered the first two big units to two different places in Norway burning municipal solid waste. Compared to last year the revenue has increased with 36% especially due to the positive development within the biomass segment. The achieved results of the primary operation are above expectations. Also, the Polish facility have had higher activity than last year and are up with 9%. Profit for the year before tax amount DKK 26,155 thousand and after-tax amounts to DKK 22,944 thousand. Tax on profit for the year is positive impacted by change of accounting estimate as deferred taxes in Poland is activated with 1.386 kPLN.The total number of employees by end of financial year is 115 in Denmark and 121 in Poland. Targets and expectations for the year ahead The overall volume of orders of the Danstoker Group at the end of the financial year is very satisfactory.It is the aim of the Danstoker Group to create 2 profitable, strong sales and production companies in Danstoker A/S and Danstoker Poland Sp. z o.o., all as an attractive workplace with competent employees, based on competitive products sold to professional co-operation partners and customers in selected markets where such products are supplied in the quality and at the time and price agreed.It is also the Group’s aim to achieve optimal utilization of the production facilities.It is not yet known to what extent the war in Ukraine will continue to impact the company. For now, we see very good order booking in the biomass segment as there is a high focus to move away from gas fired plants, even that the gas prices have come down again. However, Danstoker Group will continue to monitor the situation to ensure the Company remains flexible in its ability to respond to changing circumstances.Besides the above mentioned the Management of the Group is of the opinion that it is not faced with special long-term risks, neither in terms of its markets, nor otherwise.The growing, necessary, political focus on CO2 on a global scale will in the long term contribute to making our CO2-neutral products within biofuels and electrical boilers even more relevant and will contribute to securing the Danstoker Group’s continued positive development.With all the initiatives taken the profit before tax for the financial year 2024/25 is expected to be around 20 mDKK. External environment Danstoker A/S is devoted to environmental issues and is constantly striving to reduce the environmental impact resulting from the operations of the Company. The Company has no outstanding issues with the environmental authorities in complying with environmental permits and other environmental regulations. Danstoker A/S holds a ISO 14001 certificate. Danstoker A/S has decided for the coming years to focus on 4 of United Nations Sustainable Development Goals: "7 Affordable and clean energy", "9 Industry, Innovation and infrastructure", "12 Responsible consumption and production" and "13 Climate action". In the coming period the Company will have special attention to reduce the consumption of energy during manufacturing, optimizing the design to reduce material use and better waste management to recycle more material. Furthermore, a project is running with the local university with focus on mental health in Danstoker.In relation to Code of Conduct Danstoker has decided to lean towards UN Global Compact’s ten principles for responsible business conduct. Subsequent events The Management is of the opinion that from the balance sheet date until today, no events have occurred which could alter the assessment of the annual report substantially.