Cs Wind Offshore A/S

Ledelsesberetning

Whistleblower channelWe maintain a confidential, multilingual whistleblower system that allows employees and external parties to report concerns about violations of laws, our Code of Conduct, or other unethical behavior.The whistleblower channel also provides guidance for employees who may find themselves in anethical dilemma. The system is hosted by an external platform, ensuring confidentiality, aswell as anonymity if the whistleblower prefers.Anti-bribery and corruptionCS WIND Offshore has a special focus on facilitation payments and bribery as these have been identified as one important risk factor in the industry and in the countries where weoperate. Our overall risk assessment shows that corruption has a low probability due to the very strict policies and rigorous screening of suppliers both before and during an engagement.The biggest risks relate to new employees and their familiarity with internal policies and suppliers.Our online e-learning on anti-corruption targeting our office employees continues to be an important focus area. All employees undergo mandatory annual anti-corruption e-learning training as part of our compliance framework. This training includes real-world scenarios to enhance awareness and ensure employees are well-equipped to identify and address potential corruption risks that they may encounter in their daily work. The training is also integrated into our onboarding program together with the introduction to our Code of Conduct. Both e-learning training and onboarding program has been performed in 2024.We have a zero-tolerance policy on bribery and corruption which is clearly stated in our Code of Conduct for employees and our external Code of conduct for Business partners. It is based on a promise to uphold a deep ethical integrity regardless of which country we operate in and to combat any kind of corruption. The vision is deeply embedded within CS Wind Offshore and has led to areputation of high integrity, which we are proud of and work to maintain.In 2025, we will continue our focus on our internal training as well as the analysis of bribery and corruption risks in our organization and in our supply chain and our internal proceduresto prevent, detect and address possible bribery 2024 highlightsAfter its first year as part of the CS WIND Group, CS WIND Offshore is now able to present a financial turnaround. Previous years deficits have been converted to a positive financial result of 508 mDKK for the fiscal year 2024, significantly exceeding previous expectations.The turnaround has been made possible through a very satisfactory development in the execution of the ongoing projects. However, the execution of the projects has also required significant investments in facilities and equipment, resulting in increased financing needed. Despite challenging conditions, the company has managed to achieve a positive outcome of the years’ activities through significant efficiency and productivity improvements and management of execution risks related to ongoing projects. The achievement is the result of dedicated efforts from our highly competent and experienced workforce as well as through positive collaboration with both group companies, customers and suppliers.Financial developmentThe income statement for 1 January to 31 December 2024 shows:•A net profit of DKK 508 mDKK.•An equity on 31 December 2024, which amounts to DKK 316 mDKK.•A profit before financial income and expenses amounting to DKK 629 mDKK.•A financial performance showing a satisfactory profit after tax of DKK 508 mDKK. The result for the year is significantly better than the expectations at the beginning of the year.High activity level throughout the yearThe first year under CS WIND ownership was a year of change, transformation and subsequent significant improvements. A number of challenges were encountered, of both a financial and production-technical nature, but eventually all were successfully overcome. As part of the integration into CS WIND, CS WIND Offshore undertook a general clean-up across the business resulting in progress and gains.Across the product portfolio the company progressed a number of projects for offshore wind farms in the US, Poland and Germany. The activity level at all three production sites in Denmark, as well as at sub suppliers, continued to be high with employees working in a dedicated manner to ensure safe and timely delivery to clients.The previous challenges at the monopile production facility at Port of Odense were overcome, resulting in efficiency and productivity output increasing throughout the year. At the Port of Aalborg, the transition piece and offshore substation production progressed as well. Focusing on the core During 2024 a decision was made to narrow down the product portfolio, by focusing solely on transition pieces and monopiles for offshore wind and consequently eventually discontinuing the offshore substation business. Substation project orders already won are being finalized in full accordance with client contracts, but no further substation agreements have been entered into. Offshore substation production is very different from that of monopiles, and transition pieces and the discontinuation of the business area therefore represents a natural next step in terms of streamlining the business and not least in focusing on the core competences of the CS WIND group.OutlookDespite the general geopolitical situation worldwide and the challenges faced by the offshore wind market CS WIND Offshore remain optimistic about the future market opportunities. The company still sees continued political support to progress the energy transition and we remain confident on our market position and continued support from customers and suppliers. Furthermore, the support from the CS WIND group with the opportunity to leverage capabilities and synergies will enable CS WIND Offshore to deliver the growth which is forecasted for offshore wind in the years to come. As the company has streamlined the product portfolio, synergies across the group can be harvested and risks managed accordingly. For 2025 focus is on continuing the efforts to safely and timely deliver and finalize projects already under production as well as to start the work on the transition pieces for the Nordlicht 1 and 2 projects. For the fiscal year 2025, the company expects a positive net result in the range of 50-200 mDKK. Risk managementCommercial risksThe main commercial risks of the company are related to (a) the execution of current projects, (b) estimation and ensuring future profitable projects, and (c) adapting the capabilities and scale of operations to the changing demands in the market.To execute projects, CS WIND Offshore relies on the competences of employees and selected suppliers. CS WIND Offshore employs a highly skilled work force across a large range of disciplines such as project management, welding, production and material management, site logistics, planning, quality assurance and control, HSE, contract management, tender management, controlling, finance, HR and administration. This qualified work force is the cornerstone of successful project execution.CS WIND Offshores project managers master a variety of proven project management tools that are continuously developed and adapted to the specific project at hand. Project managers are supported throughout the execution of projects by specialists within legal, contract and financial management, quality, health and safety, planning etc.Physical production of very large structures may be impacted by adverse weather conditions. To mitigate such impact, CS WIND Offshore calculates with standard periods of adverse weather when planning projects and ensures flexibility in production facilities to quickly adapt to the impact of weather changes and other non-controllable factors.A strong cooperation with selected suppliers on the individual projects further ensures a successful project execution. Such cooperation improves competitiveness, enhances expanding capacity, and mitigates risks by having projects completed at independent sites, thereby reducing reliance on any single site. Significant suppliers are evaluated and monitored closely before and during the project so that potential issues – e.g. within quality, capacity, capability, or ESG – are dealt with prior to the project, and any issues that could arise during the project are mitigated in a timely manner. Furthermore, major suppliers are incentivized to avoid inadequate performance on their part via targeted contractual milestones, bonuses, penalties, and warranties. To this end, CS WIND Offshores project and contract managers work with standard sub-supplier contracts, which are updated when needed.Prior to contracting a potential project, the contract and calculations are reviewed in accordance with defined procedures for tendering. During the project execution phase, projects are reviewed frequently by project management and top management using standard project reporting templates. Such reviews focus on financial performance, project progress, execution issues, as well as actual and potential risks. These reviews are an integrated part of project execution and risk management.Securing a pipeline of potential new projects, winning new projects, and adapting capacity and capabilities to the future needs of the marketplace are of paramount importance to the longer-term profitable growth of CS WIND Offshore. Therefore, management regularly tracks and reviews developments in the potential project pipeline and, based on this, adapts the in-house and sourced capacities and capabilities to the project pipeline.In order to further ensure the continued competitiveness and strong market position, CS WIND Offshore closely monitors ongoing and potential developments in relevant technologies regarding end-products – for instance, in innovative offshore wind foundation as well as regarding fabrication, assembly and transportation processes. Financial risksCurrency risksThe Company’s sale abroad is primarily made in the currency of the customer, which is mainly EUR. The Company’s suppliers are paid in EUR and DKK, primarily, which means that fluctuations in other currencies will generally not affect the profit of the Company. The Company use natural hedges for its currency exposure considering projected future cash flows and projected future exchange rate movements. Currency transactions are not made for speculation purposes.Natural hedgeNatural hedges consist of the company receiving revenue in the same currency as they have expenses. This reduces their exchange risk exposure.Liquidity riskThe Group strives to obtain the highest degree of flexibility for the purpose of lending. The Group’s cash reserves consist of cash and cash equivalents of DKK 481 million on 31 December 2024.