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fsa:SubsidiaryMember 37402524 2023-10-01 2024-09-30 7 fsa:SubsidiaryMember 37402524 2023-10-01 2024-09-30 8 fsa:SubsidiaryMember 37402524 2023-10-01 2024-09-30 9 fsa:SubsidiaryMember iso4217:DKK pure Årsrapport 33771231 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Strandvejen 44 2900 Hellerup 2023-10-01 2022-10-01 2024-09-30 2023-09-30 37402524 Østermark Group ApS Nybovej 34 7500 Holstebro Holstebro 2016-01-27 Nordea Østergade 4-6 7400 Herning PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab 33771231 Platanvej 4 7400 Herning Denmark 96 60 25 00 herning@pwc.dk 2024-12-12 Jacob Kaiser Regnskabsklasse C, mellemstor virksomhed Revisionspåtegning The Executive Board has today considered and adopted the Annual Report of Østermark Group ApS for the financial year 1 October 2023 - 30 September 2024. The Annual Report is prepared in accordance with the Danish Financial Statements Act. In our opinion the Financial Statements and the Consolidated Financial Statements give a true and fair view of the financial position at 30 September 2024 of the Company and the Group and of the results of the Company and Group operations and of consolidated cash flows for 2023/24. In our opinion, Management's Review includes a true and fair account of the matters addressed in the Review. We recommend that the Annual Report be adopted at the Annual General Meeting. 2024-12-12 Bent Møller Henriksen John Henriksen Thomas Bak Claus Balleby Møldambjærg Henrik Vestergaard Nielsen To the shareholder of Østermark Group ApS Opinion In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the financial position of the Group and the Parent Company at 30 September 2024 and of the results of the Group’s and the Parent Company’s operations as well as of the consolidated cash flows for the financial year 1 October 2023 - 30 September 2024 in accordance with the Danish Financial Statements Act. We have audited the Consolidated Financial Statements and the Parent Company Financial Statements of Østermark Group ApS for the financial year 1 October 2023 - 30 September 2024, which comprise income statement, balance sheet, statement of changes in equity and notes, including a summary of significant accounting policies, for both the Group and the Parent Company, as well as consolidated statement of cash flows (”the Financial Statements”). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the ”Auditor’s responsibilities for the audit of the Financial Statements” section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Management is responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, Management is responsible for assessing the Group´s and the Parent Company´s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the Financial Statements unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so. Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the Financial Statements, 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 opinion. The risk of not detecting a material 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 internal control relevant to the 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 Group´s and the Parent Company´s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the Financial Statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group´s and the Parent Company´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 Financial Statements or, if such disclosures are inadequate, to modify our opinion. 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 the Group and the Parent Company to cease to continue as a going concern. Evaluate the overall presentation, structure and contents of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Management is responsible for Management’s Review. Our opinion on the Financial Statements does not cover Management’s Review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsibility is to read Management’s Review and, in doing so, consider whether Management’s Review is materially inconsistent with the Financial Statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether Management’s Review provides the information required under the Danish Financial Statements Act. Based on the work we have performed, in our view, Management’s Review is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement in Management’s Review. Herning 2024-12-12 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Kim Vorret State Authorised Public Accountant mne33256 Hans Jørgen Andersen State Authorised Public Accountant mne30211 73642000 62812000 24604000 21696000 -1432000 -25000 17408000 16532000 82631000 79405000 3415000 6678000 5459000 14107000 59022000 55974000 23472000 4663000 -8249000 -37508000 -14259000 39726000 964000 6881000 50 43 0.101 0.25 0.298 0.273 0.732 0.744 0.714 0.705 0.094 0.225 0.303 0.312 Key activities The Group’s primary activity is production of ultra-high-performance concrete (UHPC) and grouting and sealing of wind turbine foundations both for on- and offshore purposes. In addition, the Group carries out repair tasks on wind turbine foundations and other constructions, testing of grouting materials from new and existing manufacturers on the market as well as testing of materials and installations for the wind turbine industry. The Group operates worldwide with trained professionals and specialized equipment. Development in the year The income statement of the Group for 2023/24 shows a profit of DKK 5,141,870, and at 30 September 2024 the balance sheet of the Group shows a positive equity of DKK 51,986,295. The management considers the year's result to be satisfactory. The past year and follow-up on development expectations from last year The group produces and delivers UHPC on a continuing basis to wind foundations worldwide in high quality. The greatest focus for the year has been on grouting of onshore foundations, and secondly on sealing of previously grouted foundations. As expected, the demand for the service of the Group has been decreasing compared to the previous year, as conditions in the wind turbine market during the financial year have been restraining due to increased interest rates and prolonged project approvals. The Group works continuously with product development, as well as the expansion of competences to carry out grouting in almost all kinds of weather and to carry out repair tasks on both wind turbine foundations and other types of foundations in the offshore industry and the construction industry in general. As a result, the Group's management is always aware of the opportunities to improve and supplement the range of products, services and markets. Targets and expectations for the year ahead It is the management’s goal that the most important parameter for choosing the Group as partner must continue to be innovativeness, quality and presence. With on-time delivery, worldwide service and quality documentation on all tasks, the Group will continue to compete in these parameters. The market, however, is expected to continue to be restrained in 2024/25. Research and development The Group's management focuses on the development of the Group's products and business areas, just as operating procedures are constantly optimized. The Group develops new UHPC products with cutting-edge applications within the construction industry and manages to attract external funding for new products. No specific research is carried out. External environment The Group implements ongoing initiatives that intend to reduce the environmental impact, and the Group has correspondingly, an attention in relation to ensuring the right level of environmental ambition for energy consumption, etc. Intellectual capital resources The Group is a knowledge-based company and spends significant resources on training, developing skills and products and attracting employees. The Group considers it important to have employees who have the right skills and a high level of education and experience in relation to performing tasks with high quality requirements and at the same time to be able to recruit and retain high qualified employees. Branches abroad The Group has subsidiaries in Australia, USA, Spain and Ukraine. The Australian Group has had a stable development with activity and earnings in line with the previous financial year. The subsidiaries' operations in Europe have been significantly affected by political unrest in Russia and Ukraine, where all activities have been suspended. Liquidation of a Russian subsidiary was initiated in the previous financial year and finalized in 2023/24. Liquidation of the Ukrainian subsidiary has been initiated. The subsidiary in Spain has been without activity in the financial year. It requires a large effort to run subsidiaries and permanent offices abroad and the operation outside Denmark's borders is therefore continuously supported by both employees in the administration, operations and the Group's Danish management, as it is a prerequisite for a standardized and scalable operation. The Group prioritize local market adaption and therefore often use a combination of Danish and local labor force on foreign assignments. The presence of Danish supervisors contributes to ensuring that projects are performed with high quality and standardized methods regardless of where in the world the Group operates. It is the Group’s expectation that the activities of the subsidiaries will be on the same level in 2024/25. Unusual events The financial position at 30 September 2024 of the Group and the results of the activities and cash flows of the Group for the financial year for 2023/24 have not been affected by any unusual events. Subsequent events No events materially affecting the assessment of the Annual Report have occurred after the balance sheet date. 53627166 67498497 -58352 -27388 37698818 39324819 0 0 8538725 8673178 0 0 211726 298132 0 0 7177897 19202368 -58352 -27388 730872 0 5067975 12519695 102762 114159 338661 462402 673837 2024493 371099 307985 7337694 17292034 4977185 12646724 2195824 4216674 -17113 36054 5141870 13075360 4994298 12610670 10000000 15000000 10000000 15000000 0 0 -4932025 -2480303 147572 464691 0 0 -5005702 -2389331 -73677 90973 2916241 3329928 0 0 2392000 4186000 0 0 1558399 85410 0 0 6866640 7601338 0 0 16361306 20749804 0 0 3102555 1353099 0 0 514309 678877 0 0 19978170 22781780 0 0 0 0 47731976 52645896 573580 573580 0 0 573580 573580 47731976 52645896 27418390 30956698 47731976 52645896 6841086 9450792 0 0 29379206 23529161 0 0 457132 1651830 0 0 0 0 4215786 9240693 1688594 1668725 0 0 0 4069 0 4069 0 0 2800175 4477873 630840 535548 0 0 32155772 27389333 7015961 13722635 4586521 8966425 4590 31867 43583379 45806550 7020551 13754502 71001769 76763248 54752527 66400398 100000 100000 100000 100000 0 0 17389588 22303508 11733 -6372 0 0 51195910 56201612 33818055 33891732 51307643 56295240 51307643 56295240 678652 831080 0 0 51986295 57126320 51307643 56295240 2488122 3270719 0 0 145000 52999 0 0 2633122 3323718 0 0 493472 0 0 0 493472 0 0 0 3541023 972 0 0 2872318 2725440 20000 20000 359792 621800 0 0 0 0 1819723 6402231 1803827 3682927 1605161 3682927 30500 30500 0 0 7281420 9251571 0 0 15888880 16313210 3444884 10105158 16382352 16313210 3444884 10105158 71001769 76763248 54752527 66400398 100000 -6372 56201612 831080 0 18105 0 0 0 0 0 -300000 0 0 -10000000 0 0 0 4994298 147572 100000 11733 51195910 678652 100000 22303508 33891732 0 0 -10000000 0 18105 0 0 -4932025 9926323 100000 17389588 33818055 5141870 13075360 10197666 14076354 -4154082 3205429 11185454 30357143 102762 114159 -673837 -2024493 10614379 28446809 -4853452 -6150285 5760927 22296524 -1472990 -59470 -3414736 -6678146 0 -312399 282500 1898647 730872 0 -3874354 -5151368 0 -1024359 3540051 0 493472 0 -10300000 -15000000 -6266477 -16024359 -4379904 1120797 8966425 7845628 4586521 8966425 4586521 8966425 4586521 8966425 31848208 34110158 0 0 4378053 4590779 0 0 529481 623882 0 0 36755742 39324819 0 0 1951327 1987162 0 0 1951327 1987162 0 0 50 55 0 0 Including remuneration to the Executive Board: 0 0 335523 462148 86080 61337 3138 254 16682 52822 0 0 102762 114159 338661 462402 0 0 358099 271132 551662 1484766 13000 36853 122175 539727 0 0 673837 2024493 371099 307985 2978421 4513927 -17113 36054 -782597 -297253 0 0 2195824 4216674 -17113 36054 4136876 22940000 85410 0 0 1472989 4136876 22940000 1558399 806947 18754000 0 413688 1794000 0 1220635 20548000 0 2916241 2392000 1558399 52064070 2352274 822840 21299 23629 0 1364596 2050139 0 1069815 0 0 52380150 4426042 822840 31314267 999174 143963 11553 9949 0 5704466 314364 164568 1011442 0 0 36018844 1323487 308531 16361306 3102555 514309 30342388 30342388 30342388 30342388 22303508 24754485 7151275 15401069 10000000 15000000 18105 29326 1794000 1794000 -289300 -1087372 17389588 22303508 47731976 52645896 Østermark Grouting A/S Holstebro 100 Oestermark Grouting Australia Pty Ltd Australia 100 Oestermark Grouting Australia (QLD) Pty Ltd Australia 100 Oestermark Grouting RUS OOO (liquidated in 2023/24) Russia 100 Oestermark Grouting Ukraine LLC Ukraine 100 Oestermark Grouting US Inc. USA 100 Y-MatTec A/S Holstebro 90 Y-MatTec Iberia S.L. Spain 90 Grouting Maskiner ApS Holstebro 100 573580 573580 573580 Investments in subsidiaries are specified as follows: 6401397 8843946 0 0 439689 606846 0 0 6841086 9450792 0 0 Selling price of work in progress 22923706 32846140 0 0 Payments received on account -22826366 -31816110 0 0 Total 97340 1030030 0 0 Recognised in the balance sheet as follows: Contract work in progress recognised in assets 457132 1651830 0 0 Prepayments received recognised in debt -359792 -621800 0 0 Total 97340 1030030 0 0 Prepayments are made up of prepaid costs relating to insurance premiums, subscriptions, etc. Deferred tax liabilities at 1 October 3270719 3567972 0 0 Amounts recognised in the income statement for the year -782597 -297253 0 0 Deferred tax liabilities at 30 September 2488122 3270719 0 0 Other provisions 145000 52999 0 0 145000 52999 0 0 The provisions are expected to mature as follows: Within 1 year -145000 -52999 0 0 After 5 years 0 0 0 0 145000 52999 0 0 296083 0 0 0 197389 0 0 0 493472 0 0 0 0 0 0 0 Payments due within 1 year are recognised in short-term debt. Other debt is recognised in long-term debt. The debt falls due for payment as specified below: Deferred income Deferred income consists of payments received in respect of income in subsequent years. -102762 -114159 673837 2024493 8218516 7575726 -730872 0 2195824 4216674 10197666 14076354 -56877 373620 2609706 1955098 -4770508 2269014 92001 -499501 -2085281 -519182 -4154082 3205429 Rental and lease obligations Lease obligations under operating leases. Total future lease payments: Within 1 year 150000 124000 0 0 Between 1 and 5 years 51000 0 0 0 Total 201000 124000 0 0 The group has entered into a tenancy agreement with an annual rent of TDKK 2,365, which is noncancellable until 30 April 2033 and thereafter can be terminated with 6 months' notice. Guarantee obligations The parent company has provided self-debtor sureties for intra-group companies' balances with credit institutions up to a maximum of DKK 26 million. The parent company has provided self-debtor sureties for Østermark Ejendomme ApS' balances with credit institutions up to a maximum of DKK 1.5 million. The parent company has provided self-debtor sureties for Østermark Ejendomme ApS' balances with mortgage credit institutions . The remaining debt amounts to DKK 18.1 million on 30 September 2024. Other contingent liabilities The group companies are jointly and severally liable for tax on the jointly taxed incomes etc of the Group. The total amount of corporation tax payable by the Group amounts to DKK 1,605,161. Moreover, the group companies are jointly and severally liable for Danish withholding taxes by way of dividend tax, tax on royalty payments and tax on unearned income. Any subsequent adjustments of corporation taxes and withholding taxes may increase the Group’s liability. Basis Related parties Østermark Grouting A/S Subsidiary Grouting Maskiner ApS Subsidiary Y-MatTec A/S Subsidiary Y-MatTec Iberia S.L. Subsidiary Oestermark Grouting Australia Pty Ltd Subsidiary Oestermark Grouting Australia (QLD) Pty Ltd Subsidiary Oestermark Grouting Ukraine LLC Subsidiary Oestermark Grouting US Inc. Subsidiary Transactions The Company has chosen only to disclose transactions which have not been made on an arm's length basis in accordance with section 98(c)(7) of the Danish Financial Statements Act. There are no transactions to disclose. The Annual Report of Østermark Group ApS for 2023/24 has been prepared in accordance with the provisions of the Danish Financial Statements Act applying to medium-sized enterprises of reporting class C. The accounting policies applied remain unchanged from last year. The Consolidated Financial Statements and the Parent Company Financial Statements for 2023/24 are presented in DKK. true Revenues are recognised in the income statement as earned. Furthermore, value adjustments of financial assets and liabilities measured at fair value or amortised cost are recognised. Moreover, all expenses incurred to achieve the earnings for the year are recognised in the income statement, including depreciation, amortisation, impairment losses and provisions as well as reversals due to changed accounting estimates of amounts that have previously been recognised in the income statement. Assets are recognised in the balance sheet when it is probable that future economic benefits attributable to the asset will flow to the Company, and the value of the asset can be measured reliably. Liabilities are recognised in the balance sheet when it is probable that future economic benefits will flow out of the Company, and the value of the liability can be measured reliably. Assets and liabilities are initially measured at cost. Subsequently, assets and liabilities are measured as described for each item below. Certain financial assets and liabilities are measured at amortised cost, which involves the recognition of a constant effective interest rate over the maturity period. Amortised cost is calculated as original cost less any repayments and with addition/deduction of the cumulative amortisation of any difference between cost and the nominal amount. In this way, capital losses and gains are allocated over the maturity period. Recognition and measurement take into account predictable losses and risks occurring before the presentation of the Annual Report which confirm or invalidate affairs and conditions existing at the balance sheet date. Basis of consolidation The Consolidated Financial Statements comprise the Parent Company, Østermark Group ApS, and subsidiaries in which the Parent Company directly or indirectly holds more than 50% of the votes or in which the Parent Company, through share ownership or otherwise, exercises control. Enterprises in which the Group holds between 20% and 50% of the votes and exercises significant influence but not control are classified as associates. On consolidation, items of a uniform nature are combined. Elimination is made of intercompany income and expenses, shareholdings, dividends and accounts as well as of realised and unrealised profits and losses on transactions between the consolidated enterprises. The Parent Company's investments in the consolidated subsidiaries are set off against the Parent Company's share of the net asset value of subsidiaries stated at the time of consolidation. Minority interests Minority interests form part of the Group's total equity. Upon distribution of net profit, net profit is broken down on the share attributable to minority interests and the share attributable to the shareholders of the Parent Company. Minority interests are recognised on the basis of a remeasurement of acquired assets and liabilities to fair value at the time of acquistition of subsidiaries. Leases in terms of which the Group assumes substantially all the risks and rewards of ownership (finance leases) are recognised in the balance sheet at the lower of the fair value of the leased asset and the net present value of the lease payments computed by applying the interest rate implicit in the lease or an alternative borrowing rate as the discount rate. Assets acquired under finance leases are depreciated and written down for impairment under the same policy as determined for the other fixed assets of the Group. The remaining lease obligation is capitalised and recognised in the balance sheet under debt, and the interest element on the lease payments is charged over the lease term to the income statement. All other leases are considered operating leases. Payments made under operating leases are recognised in the income statement on a straight-line basis over the lease term. Danish kroner is used as the presentation currency. All other currencies are regarded as foreign currencies. Transactions in foreign currencies are translated at the exchange rates at the dates of transaction. Exchange differences arising due to differences between the transaction date rates and the rates at the dates of payment are recognised in financial income and expenses in the income statement. Where foreign exchange transactions are considered hedging of future cash flows, the value adjustments are recognised directly in equity. Receivables, payables and other monetary items in foreign currencies that have not been settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Any differences between the exchange rates at the balance sheet date and the transaction date rates are recognised in financial income and expenses in the income statement; however, see the section on hedge accounting. Income statements of foreign subsidiaries and associates that are separate legal entities are translated at transaction date rates or approximated average exchange rates. Balance sheet items are translated at the exchange rates at the balance sheet date. Exchange adjustments arising on the translation of the opening equity and exchange adjustments arising from the translation of the income statements at the exchange rates at the balance sheet date are recognised directly in equity. Income statements of enterprises that are integrated entities are translated at transaction date rates or approximated average exchange rates; however, items derived from non-monetary balance sheet items are translated at the transaction date rates of the underlying assets or liabilities. Monetary balance sheet items are translated at the exchange rates at the balance sheet date, whereas non-monetary items are translated at transaction date rates. Exchange adjustments arising on the translation are recognised in financial income and expenses in the income statement. Revenue from the sale of goods is recognised when the risks and rewards relating to the goods sold have been transferred to the purchaser, the revenue can be measured reliably and it is probable that the economic benefits relating to the sale will flow to the Group. Contract work in progress (construction contracts) is recognised at the rate of completion, which means that revenue equals the selling price of the work completed for the year (percentage-of-completion method). This method is applied when total revenues and expenses in respect of the contract and the stage of completion at the balance sheet date can be measured reliably, and it is probable that the economic benefits, including payments, will flow to the Group. The stage of completion is determined on the basis of the ratio between the expenses incurred and the total expected expenses of the contract. Revenue is measured at the consideration received and is recognised exclusive of VAT and net of discounts relating to sales. Expenses for raw materials and consumables comprise the raw materials and consumables consumed to achieve the consolidated revenue for the year. Other external expenses comprise indirect production costs and expenses for premises, sales as well as office expenses, etc. With reference to section 32 of the Danish Financial Statements Act, gross profit/loss is calculated as a summary of revenue, other operating income, expenses for raw materials and consumables, production wages and other external expenses. Staff costs include wages and salaries including compensated absence and pensions as well as other social security contributions etc. made to the entity's employees. Amortisation, depreciation and impairment losses comprise amortisation, depreciation and impairment of intangible assets and property, plant and equipment. Other operating income and other operating expenses comprise items of a secondary nature to the main activities of the Group, including gains and losses on the sale of intangible assets and property, plant and equipment. The item “Income from investments in subsidiaries” in the income statement includes the proportionate share of the profit for the year. Financial income and expenses comprise interest, financial expenses in respect of finance leases, realised and unrealised exchange adjustments, price adjustment of securities, amortisation of mortgage loans as well as extra payments and repayment under the on-account taxation scheme. Tax for the year consists of current tax for the year and deferred tax for the year. The tax attributable to the profit for year is recognised in the income statement, whereas the tax attributable to equity transactions is recognised directly in equity. Any changes in deferred tax due to changes to tax rates are recognised in the income statement. The Company is jointly taxed with koncernens danske dattervirksomhede. The tax effect of the joint taxation with the subsidiaries is allocated to Danish enterprises showing profits or losses in proportion to their taxable incomes (full allocation with credit for tax losses). Goodwill is amortised on a straight-line basis over the estimated useful life of 10 years, determined on the basis of Management’s experience with the individual business areas. Costs of development projects comprise salaries, amortisation and other expenses directly or indirectly attributable to the Company’s development activities. Development projects that are clearly defined and identifiable and in respect of which technical feasibility, sufficient resources and a potential future market or development opportunity in the enterprise can be demonstrated, and where it is the intention to manufacture, market or use the project, are recognised as intangible assets. This applies if sufficient certainty exists that the value in use of future earnings can cover cost of sales, distribution and administrative expenses involved as well as the development costs. Development projects that do not meet the criteria for recognition in the balance sheet are recognised as expenses in the income statement as incurred. Capitalised development costs are measured at cost less accumulated amortisation and impairment losses or at a lower recoverable amount. An amount corresponding to the recognised development costs is allocated to the equity item 'Reserve for development costs'. The reserve comprises only development costs recognised in financial years beginning on or after 1 January 2016. The reserve is reduced by amortisation of and impairment losses on the development projects on a continuing basis. As of the date of completion, capitalised development costs are amortised on a straight-line basis over the period of the expected economic benefit from the development work. The amortisation period is 10 year. Property, plant and equipment are measured at cost less accumulated depreciation and less any accumulated impairment losses. Cost comprises the cost of acquisition and expenses directly related to the acquisition up until the time when the asset is ready for use. Depreciation based on cost reduced by any residual value is calculated on a straight-line basis over the expected useful lives of the assets, which are: Plant and machinery 2 - 8 years Other fixtures and fittings, tools and equipment 5 years Leasehold improvements 5 years The fixed assets’ residual values are determined at nil. Depreciation period and residual value are reassessed annually. The carrying amounts of intangible assets and property, plant and equipment and investments are reviewed on an annual basis to determine whether there is any indication of impairment other than that expressed by amortisation and depreciation. The recoverable amount of the asset is calculated as the higher of net selling price and value in use. Where a recoverable amount cannot be determined for the individual asset, the assets are assessed in the smallest group of assets for which a reliable recoverable amount can be determined based on a total assessment. Goodwill, head office buildings and other assets for which a separate value in use cannot be determined as the asset does not on an individual basis generate future cash flows are reviewed for impairment together with the group of assets to which they are attributable. Investments in subsidiaries are recognised and measured under the equity method. The item “Investments in subsidiaries” in the balance sheet include the proportionate ownership share of the net asset value of the enterprises calculated on the basis of the fair values of identifiable net assets at the time of acquisition with deduction or addition of unrealised intercompany profits or losses and with addition of the remaining value of any increases in value and goodwill calculated at the time of acquisition of the enterprises. The total net revaluation of investments in subsidiaries is transferred upon distribution of profit to “Reserve for net revaluation under the equity method“ under equity. The reserve is reduced by dividend distributed to the Parent Company and adjusted for other equity movements in the subsidiaries. Subsidiaries with a negative net asset value are recognised at DKK 0. Any legal or constructive obligation of the Parent Company to cover the negative balance of the enterprise is recognised in provisions. Other fixed asset investments consist of deposits. Inventories are measured at the lower of cost under the FIFO method and net realisable value. The net realisable value of inventories is calculated at the amount expected to be generated by sale of the inventories in the process of normal operations with deduction of selling expenses and costs of completion. The net realisable value is determined allowing for marketability, obsolescence and development in expected selling price. The cost of goods for resale, raw materials and consumables equals landed cost. The cost of finished goods and work in progress comprises the cost of raw materials, consumables and direct labour. Receivables are measured in the balance sheet at the lower of amortised cost and net realisable value, which corresponds to nominal value less provisions for bad debts. Contract work in progress is measured at selling price of the work performed calculated on the basis of the stage of completion. The stage of completion is measured by the proportion that the contract expenses incurred to date bear to the estimated total contract expenses. Where it is probable that total contract expenses will exceed total revenues from a contract, the expected loss is recognised as an expense in the income statement. Where the selling price cannot be measured reliably, the selling price is measured at the lower of expenses incurred and net realisable value. Payments received on account are set off against the selling price. The individual contracts are classified as receivables when the net selling price is positive and as liabilities when the net selling price is negative. Expenses relating to sales work and the winning of contracts are recognised in the income statement as incurred. Prepayments comprise prepaid expenses concerning rent, insurance premiums, subscriptions and interest. Provisions are recognised when - in consequence of an event occurred before or on the balance sheet date - the Group has a legal or constructive obligation and it is probable that economic benefits must be given up to settle the obligation. Other provisions include warranty obligations in respect of repair work within the warranty period of 1-5 years. Provisions are measured and recognised based on experience with guarantee work. Deferred tax is recognised in respect of all temporary differences between the carrying amount and the tax base of assets and liabilities. However, deferred tax is not recognised in respect of temporary differences concerning goodwill not deductible for tax purposes and other items - apart from business acquisitions - where temporary differences have arisen at the time of acquisition without affecting the profit for the year or the taxable income. Deferred tax is measured on the basis of the tax rules and tax rates that will be effective under the legislation at the balance sheet date when the deferred tax is expected to crystallise as current tax. In cases where the computation of the tax base may be made according to alternative tax rules, deferred tax is measured on the basis of the intended use of the asset and settlement of the liability, respectively. Deferred tax assets, including the tax base of tax loss carry-forwards, are measured at the value at which the asset is expected to be realised, either by elimination in tax on future earnings or by set-off against deferred tax liabilities. Deferred tax assets and liabilities are offset within the same legal tax entity. Current tax receivables and liabilities are recognised in the balance sheet at the amount calculated on the basis of the expected taxable income for the year adjusted for tax on taxable incomes for prior years. Tax receivables and liabilities are offset if there is a legally enforceable right of set-off and an intention to settle on a net basis or simultaneously. Loans, such as loans from credit institutions, are recognised initially at the proceeds received net of transaction expenses incurred. Subsequently, the loans are measured at amortised cost; the difference between the proceeds and the nominal value is recognised as an interest expense in the income statement over the loan period. Other debts are measured at amortised cost, substantially corresponding to nominal value. Deferred income comprises payments received in respect of income in subsequent years. With reference to section 86(4) of the Danish Financial Statements Act, the Parent Company has not prepared a cash flow statement for the Company itself but has only prepared a cash flow statement for the Group. The cash flow statement shows the Group’s cash flows for the year broken down by operating, investing and financing activities, changes for the year in cash and cash equivalents as well as the Group’s cash and cash equivalents at the beginning and end of the year. Cash flows from operating activities are calculated as the net profit/loss for the year adjusted for changes in working capital and non-cash operating items such as depreciation, amortisation and impairment losses, and provisions. Working capital comprises current assets less short-term debt excluding items included in cash and cash equivalents. Cash flows from investing activities comprise cash flows from acquisitions and disposals of intangible assets, property, plant and equipment as well as fixed asset investments. Cash flows from financing activities comprise cash flows from the raising and repayment of long-term debt as well as payments to and from shareholders. Cash and cash equivalents comprise ”Cash at bank and in hand”. The cash flow statement cannot be immediately derived from the published financial records. Return on assets Profit/loss of ordinary primary operations x 100 / Total assets at year end Solvency ratio Equity at year end x 100 / Total assets at year end Return on equity Net profit for the year x 100 / Average equity