BDO Statsautoriseret revisionsaktieselskabDokken 8DK-6700 Esbjerg20222670Årsrapport2025-06-10Henrik MouInscale A/SFruebjergvej 32100 Copenhagen ØRevisionspåtegning333554162010-11-26Copenhagen2024-01-012024-12-312023-01-012023-12-31BDO Statsautoriseret revisionsaktieselskabDokken86700EsbjergCopenhagen2025-06-10Henrik MouPeter Vejlgaard ArbsChairmanBhajan KaurHenrik MouMark Barry PayneKonklusionGrundlag for konklusionEsbjerg2025-06-10BDO Statsautoriseret revisionsaktieselskab20222670Mikael GrosbølRevisionspåtegningState Authorised Public Accountantmne3370723413900019542900017404800014898700011658100013052100099370002607000173300026170006822000Operating profit/loss before depreciation and amortisation (EBITDA)Operating profit/loss before depreciation and amortisation (EBITDA)Operating profit/loss before depreciation and amortisation (EBITDA)Operating profit/loss before depreciation and amortisation (EBITDA)Operating profit/loss before depreciation and amortisation (EBITDA)-5135000-38380009790004084000-2391000-3167000-3768000-8087000-255400056995000554860005629300054320005380000909000356400082290009215000-648000-8204000-1038500010110006378000-3191000-755000-1529000-2347000-3998000-898300074.877.863.659.7751.1-1.8-2.2-20.610.28.19.59.71.6-0.5-59.1-69.7-257.1-93.9280335889275544275278686945252761539255581616066090018789898522492337323324145851881285721690936262379748250742268732330344618881911868567147796172096357122144960528170962-123457611996985342119289405513619654314369065837493338245067321726370-40220003030595-4886006206670-2106154100155942212413084230000052000002300000520000058294651519794639751483747752901696606504563316330621138251-867415-33144-4566682117139522992670-1400000-33144-3166682-33144-31666824942254488317749422544883177172467519402600053099225495953099225495971979217078396547324651381361212923715793657268200356137080376001212923715874033268200356137004206674439602825140000001170000014000000117000002647104293875836277179941316647104146387585642951552102238359742623759118762170961575965111005840856016349246319497930415471615471615471615471614000001400000140000014000001001856285157600200454115383360030874922502871129383301475177070131404913310930418683549512654579135957928167783315618830361592276449251909820199916836633585465236112812691626758819420267002026700202670020267000029767959273527370042691333808879-2002040-34827200067148816748025-29324251-2789631167395415292005673954152920057500000007500000000536720536721035391880260681035391880260681586937816365931158693781636593175614541725096550260137421844389535018411427171603262864928966601103628004001272620561400127403775884631359944107745296216229618958846313599441077452962162296189663358546523611281269162675881942026700-34827206748025-3314414806802026700-200204067148812026700273527373808879-27896311934542-9676862192405-2192405148068000-173215117321512026700297679594269133-29324251-33144-31666826906583749333876253-40220-2300000-520000011713952299267-2555816-1606609155432-2813897-31916754023325-516500470858430-1522828-41859764051537-755346-152897614270872826-73760-913905104023450470-9511606-175996-107140990500000023278502298541146581501841134207597554852-941213892290135957921177953109239711265457913595792671646351735797851863094755103092605332796622569365002368608407966160209721593382200435521320641419198185019969853421192894055136196543143234635020981952346350209819522002518411191071184114555265167819548545621614651477529016966065045633163306211713953699267000-14000000-14000000093454213199315-33144-3166682-967686-16365997-33144-3166682-33144-31666821035716021558452549592279783027603312636943215584553099254739832155850222070621558507694689431170049422541724675530992103571602549592279783276033126369435309925473983022207060769468904942254530992432161751091891135317418017553460176540204355929310936922742251810115151164195166915464410438978480508314300561093692121292370258727217133015117826074242231135121878229967233922426820025951262938758014498807376005104022595126264710491048740230000001140487401400000026471041225008825951267994134869707376000510402122987852595126362771273527379104874085195800384200155942200023000000297679591140487404206674414000000362771Other investments140000002300000Other investments140000002300000The tax asset is related to tax losses and is expected to be used within a few years.00Regnskabsklasse C, mellemstor virksomhedtrueToday the Board of Directors and Executive Board have discussed and approved the Annual Report of Inscale A/S for the financial year 1 January - 31 December 2024. The Annual Report is presented in accordance with the Danish Financial Statements Act. In our opinion the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of Group's and the Company's assets, liabilities and financial position at 31 December 2024 and of the results of Group's and the Company's operations and cash flows for the financial year 1 January - 31 December 2024. The Management Commentary includes in our opinion a fair presentation of the matters dealt with in the Commentary. We recommend the Annual Report be approved at the Annual General Meeting. To the Shareholder of Inscale A/S We have audited the Consolidated Financial Statements and the Parent Company Financial Statements of Inscale A/S for the financial year 1 January - 31 December 2024, which comprise income statement, Balance Sheet, statement of changes in equity, notes and a summary of significant accounting policies for both the Group and the Parent Company, as well as consolidated statement of cash flows for the Group. The Consolidated Financial Statements and the Parent Company Financial Statements are prepared in accordance with the Danish Financial Statements Act. In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the assets, liabilities and financial position of the Group or the Company at 31 December 2024 and of the results of the Group and the Parent Company's operations as well as the consolidated cash flows of the Group for the financial year 1 January - 31 December 2024 in accordance with the Danish Financial Statements Act. Basis for Opinion Grundlag for konklusion 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 Consolidated Financial Statements and the Parent Company 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 (including International Independence Standards) (IESBA Code), together with the ethical requirements that are relevant to our audit of the financial statements in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Management's Responsibilities for the Consolidated Financial Statements and the Parent Company Financial Statements Management is responsible for the preparation of Consolidated Financial Statements and the 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 Consolidated Financial Statements and the Parent Company Financial Statements that are free from material misstatement, whether due to fraud or error. In preparing the Consolidated Financial Statements and the Parent Company 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 Consolidated Financial Statements and the Parent Company Financial Statements unless Management either intends to liquidate the Group or the Company or to cease operations, or has no realistic alternative but to do so. Our objectives are to obtain reasonable assurance about whether the Consolidated Financial Statements and the Parent Company 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 Consolidated Financial Statements and the Parent Company Financial Statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the Consolidated Financial Statements and the Parent Company 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 Consolidated Financial Statements and the Parent Company 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 Consolidated Financial Statements and the Parent Company 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 Consolidated Financial Statements and the Parent Company Financial Statements, including the disclosures, and whether the Consolidated Financial Statements and the Parent Company Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view. Plan and perform the group audit to obtain sufficient 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 Group Financial Statements and the Parent Company Financial Statements. We are responsible for the direction, supervision and review of the audit work performed for purposes 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. Statement on Management Commentary Management is responsible for Management Commentary. Our opinion on the Consolidated Financial Statements and the Parent Company Financial Statements does not cover Management Commentary, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Consolidated Financial Statements and the Parent Company Financial Statements, our responsibility is to read Management Commentary and, in doing so, consider whether Management Commentary is materially inconsistent with the Consolidated Financial Statements and the Parent Company 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 Commentary provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we conclude that Management Commentary 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 of Management Commentary. The ratios stated in the list of key figures and ratios have been calculated as follows: Gross margin: Gross profit x 100 Net revenue Operating margin: Operating profit/loss x 100 Net revenue Equity ratio: Equity, at year-end x 100 Total assets, at year-end Return on equity: Profit/loss after tax x 100 Average equity Principal activities INSCALE support domestic and international business clients’ strategy through providing dedicated software development teams and -resources. INSCALE always builds through a strategic partnership with our clients. All the teams work from one of our offshore development locations. INSCALE manages and advises on the remote software development process between the client and INSCALE’s offshore development location. In providing services to the client, the team works on application development and maintenance of the client’s core software solutions. In doing so, the team will be a strategic resource pool for clients’ on-going software development efforts. The collaboration and the partnership between INSCALE and the Client are a long-term relationship to give team members the best opportunity to acquire in depth knowledge of client’s business and software solutions, so INSCALE enables our clients to leverage on our engagement model for their business excellence. By adopting INSCALE’s approach to building dedicated software development teams, our clients can extend their reach beyond their location into a wider pool of offshore developers and close technology gaps within their existing software development resources. INSCALE is a player in the international market, where we all focus a huge need for software developers, as IT is fundamental for many businesses all over the world. INSCALE has a solution for this and believe that our footprint in the sector is powerful and has been consistent for many years and this will continue. Development in activities and financial and economic position INSCALE has experienced solid growth internationally in recent years. Many clients in 10 countries have experienced this long-term partnership with a great success. INSCALE experienced a 2% growth in revenue in 2024 and reached total revenues in 2024 of 280 MDKK. This revenue growth was slightly below the 5-10% outlook from the previous annual report. The positive result before tax of 1 MDKK was in line with expectations and with the outlook from the previous annual report. The result for the year is affected by some one-off cost items and the ongoing war in Ukraine has continued to impact our operations in that country. The profit before tax is also positively affected by adjustment of fair value on other investments. The Parent company HFUNK ApS has confirmed to support INSCALE A/S financially. Profit/loss for the year compared to the expected development The 2% growth in revenue was slightly lower than expectations. The result before tax for the year was in line with expectations. Significant events after the end of the financial year No events have occurred after the end of the financial year of material importance for the Company's financial position. Financial risk Currency risks As a consequence of activities abroad, the Group’s results, cash flows and equity are affected by the exchange rate and interest rate movements of a number of currencies – Malaysian ringgit, Macedonian Denar and Euro in particular. Credit risk The Company has good procedures for handling credit risks and historically the Company has had insubstantial loss on debtors. Future expectations We expect to continue with our revenue growth, with a growth rate in the range of +5% to 10% in 2025. A profit before tax between zero and +5 mio. DKK in 2025 is expected. Group DKK Share capital Fair value reserve for currency translation of foreign entities Retained earnings Total Equity at 1 January 2024 2,026,700 -3,482,720 6,748,025 5,292,005 Proposed profit allocation, see note 4 -33,144 -33,144 Change fair value reserves Value adjustments in the year 1,480,680 1,480,680 Equity at 31 December 2024 2,026,700 -2,002,040 6,714,881 6,739,541 Parent Company DKK Share capital Reserve for net revaluation under the equity method Reserve for development costs Retained earnings Total Equity at 1 January 2024 2,026,700 27,352,737 3,808,879 -27,896,311 5,292,005 Proposed profit allocation, jf. note 4 934,542 -967,686 -33,144 Other legal bindings Capitalized development costs 2,192,405 -2,192,405 0 Foreign exchange adjustments 1,480,680 1,480,680 Transfers Allowed equalization -1,732,151 1,732,151 0 Equity at 31 December 2024 2,026,700 29,767,959 4,269,133 -29,324,251 6,739,541 1 | Staff costs Average number of full time employees 671 646 3 5 Wages and salaries 173,579,785 186,309,475 5,103,092 6,053,327 Pensions 9,662,256 9,365,002 368,608 407,966 Social security costs 16,020,972 15,933,822 0 0 Other staff costs 435,521 320,641 41,919 81,850 199,698,534 211,928,940 5,513,619 6,543,143 Remuneration of Management and Board of Directors 2,346,350 2,098,195 2,346,350 2,098,195 2,346,350 2,098,195 2,346,350 2,098,195 2 | Other financial expenses Interest expenses to group enterprises 220,025 18,411 191,071 18,411 173.107 Other interest expenses 4,555,265 1,678,195 4,854,562 1,614,651 4,775,290 1,696,606 5,045,633 1,633,062 4 | Proposed distribution of profit Allocation to reserve for net revaluation under the equity method 0 0 934,542 13,199,315 514.100.04 Retained earnings -33,144 -3,166,682 -967,686 -16,365,997 -33,144 -3,166,682 -33,144 -3,166,682 5 | Intangible assets Group DKK Completed development projects Goodwill Development projects in progress and prepayments for intangible assets Cost at 1 January 2024 10,357,160 2,155,845 254,959 Additions 2,279,783 0 276,033 Cost at 31 December 2024 12,636,943 2,155,845 530,992 Amortisation at 1 January 2024 5,473,983 215,585 0 Amortisation for the year 2,220,706 215,585 0 Amortisation at 31 December 2024 7,694,689 431,170 0 Carrying amount at 31 December 2024 4,942,254 1,724,675 530,992 The groups development projects relate to the development and improvement of the Inscale ERP System. Development project assets are measured at net cost value, and is impairment tested on a yearly basis. Parent Company DKK Completed development projects Development projects in progress and prepayments for intangible assets Cost at 1 January 2024 10,357,160 254,959 Additions 2,279,783 276,033 Cost at 31 December 2024 12,636,943 530,992 Amortisation at 1 January 2024 5,473,983 0 Amortisation for the year 2,220,706 0 Amortisation at 31 December 2024 7,694,689 0 Carrying amount at 31 December 2024 4,942,254 530,992 Development projects relate to the development and improvement of the Inscale ERP System. Development project assets are measured at net cost value, and is impairment tested on a yearly basis. 6 | Property, plant and equipment Group DKK Other plant, fixtures and equipment Leasehold improvements Cost at 1 January 2024 43,216,175 1,091,891 Exchange adjustment at closing rate 1,353,174 1,801 Additions 755,346 0 Disposals -1,765,402 0 Cost at 31 December 2024 43,559,293 1,093,692 Depreciation and impairment losses at 1 January 2024 27,422,518 1,011,515 Exchange adjustment 1,164,195 1,669 Reversal of depreciation of assets disposed of -1,546,441 0 Depreciation for the year 4,389,784 80,508 Depreciation and impairment losses at 31 December 2024 31,430,056 1,093,692 Carrying amount at 31 December 2024 12,129,237 0 Parent Company DKK Other plant, fixtures and equipment Cost at 1 January 2024 2,587,272 Additions 171,330 Disposals -151,178 Cost at 31 December 2024 2,607,424 Depreciation and impairment losses at 1 January 2024 2,231,135 Reversal of depreciation of assets disposed of -121,878 Depreciation for the year 229,967 Depreciation and impairment losses at 31 December 2024 2,339,224 Carrying amount at 31 December 2024 268,200 7 | Financial non-current assets Group DKK Other investments Rent deposit and other receivables Cost at 1 January 2024 2,595,126 2,938,758 Exchange adjustment at closing rate 0 144,988 Additions 0 73,760 Disposals 0 -510,402 Cost at 31 December 2024 2,595,126 2,647,104 Revaluation at 1 January 2024 9,104,874 0 Revaluation and impairment losses for the year 2,300,000 0 Revaluation at 31 December 2024 11,404,874 0 Carrying amount at 31 December 2024 14,000,000 2,647,104 Parent Company DKK Investments in subsidiaries Other investments Rent deposit and other receivables Cost at 1 January 2024 12,250,088 2,595,126 799,413 Additions 48,697 0 73,760 Disposals 0 0 -510,402 Cost at 31 December 2024 12,298,785 2,595,126 362,771 Revaluation at 1 January 2024 27,352,737 9,104,874 0 Exchange adjustment 851,958 0 0 Transferred 3,842 0 0 Profit/loss for the year 1,559,422 0 0 Revaluation and impairment losses for the year 0 2,300,000 0 Revaluation at 31 December 2024 29,767,959 11,404,874 0 Carrying amount at 31 December 2024 42,066,744 14,000,000 362,771 Investments in subsidiaries Name and domicil Ownership Inscale Asia SDN Bhd, Malaysia 100 % Inscale Facilitation SDN Bhd, Malaysia 100 % Inscale Portugal Ltd., Portugal 100 % Inscale QT Ukraine LLC, Ukraine 100 % Inscale Ukraine Ltd., Ukraine 100 % Inscale Macedonia DOOEL Skopje, Macedonia 100 % Inscale Fixate ApS, Denmark 100 % Inscale Poland, Poland 100 % The carrying amount of financial non-current assets includes securities measured at fair value by the following amounts: Group DKK Other investments Fair value at 31 December 2024 14,000,000 Value adjustment in the year recognised in the Income Statement 2,300,000 Parent Company DKK Other investments Fair value at 31 December 2024 14,000,000 Value adjustment in the year recognised in the Income Statement 2,300,000 The budget used in the DCF Valuation is based on financial performance in 2024 and financial information for Q1 2025. The number of periods is 5. The growth rate of free cashflow is 5% and the perpetual growth rate is 2%. NPV is calculated with a WACC of 12%. The enterprise value is adjusted for net debt of TDKK 200. 8 | Deferred tax assets Group Parent Company 2024 2023 2024 2023 DKK DKK DKK DKK Deferred tax assets is related to: Tax losses 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 Deferred tax assets, beginning of year 1,400,000 0 1,400,000 0 450.600.01 Deferred tax of the year, income statement 0 1,400,000 0 1,400,000 450.600.02 Deferred tax assets 31 December 2024 1,400,000 1,400,000 1,400,000 1,400,000 The tax asset is related to tax losses and is expected to be used within a few years. 9 | Prepayments Prepayments consist of insurance, subscription fees, etc. in respect of subsequent financial years. 10 | Share capital Allocation of Share capital: Class A - shares, 20,267 unit in the denomination of 100 DKK 2,026,700 2,026,700 2,026,700 2,026,700 11 | Other provisions Other provisons in 2024 relate to a provision for a dispute with the Tax Authorities in a foreign subsidary. Management has estimated the most likely result of the dispute, but the final settlement may be higher or lower. 12 | Long-term liabilities Group 31/12 2024 Repayment Debt outstanding 31/12 2023 DKK total liabilities next year after 5 years total liabilities Debt to mortgage credit institution 0 0 0 53,672 0 0 0 53,672 Parent Company 31/12 2024 Repayment Debt outstanding 31/12 2023 DKK total liabilities next year after 5 years total liabilities Debt to mortgage credit institution 0 0 0 53,672 0 0 0 53,672 13 | Deferred income Received rent reduction and other income for recognition in subsequent financial years. Contingent liabilities Group Parent Company 2024 2023 2024 2023 DKK DKK DKK DKK Lease liabilities: Total liabilities until maturity 14,695,795 15,545,074 0 0 14,695,795 15,545,074 0 0 Rental commitments: Total commitment until maturity 66,716 0 66,716 0 66,716 0 66,716 0 Joint liabilities The Company is jointly and severally liable together with the Parent Company and the other group companies in the joint taxable group for tax on the group’s joint taxable income and for certain possible withholding taxes, such as dividend tax, etc. Tax payable on the Group’s joint taxable income is stated in the annual report of HFUNK ApS, which serves as management Company for the joint taxation. 15 | Related parties The Company's related parties include: Controlling interest HFUNK ApS, Holte, Denmark (parent company) Henrik Mou, Fredsvej 7, 2840 Holte, Denmark (owns 100% of HFUNK ApS) Transactions with related parties The Company did not carry out any material transactions that were not concluded on market conditions. According to section 98c, subsection 7 of the Danish Financial Statements Act information is given only on transactions that were not performed on common market conditions. 16 | Going concern assumptions HFUNK ApS has issued a letter of comfort inter alia stating that it is in the interest of the parent company to ensure that the company meets its financial obligations at all times and that may be required to ensure that it maintains capital and liquidity levels to enable it at all times to meet its obligations in conformity with standards of prudence generally accepted for its field of business. This letter of comfort is valid until the 1th January 2026. Based on this, it is the Management's assessment that the Company can continue as going concern. 17 | Information on significant uncertainties at recognition and measurement The Group and parent companies other investments are measured at fair value. The fair value is based on the income approach under the IPEV guidelines, cf. the metion of this in the accounting policies. The WACC is based so it should reflect the market's current situation on equivalent companies. The fair value is also based on future budgets, which is associated with uncertainty. Furthermore, there is in the annual report recognised a deferred tax asset with a book value of 1,400 TDKK, which primarily relates to tax losses carried forward from previous years. It is the management's assessment that the value is present, as the deferred tax asset is expected to be used within the next 3-5 years. The assessment is based on management's positive expectations for the future and expectations that the company will have significant growth in the coming years. The company's ability to use the tax loss is based on expectations of future positive earnings and cash flow. Since budgets are inherently uncertain, there will be deviations, and the deviations can be significant in both a positive and negative direction. The management is of the opinion that the prerequisites for the recognition and measurement of the deferred tax asset at full value are present, but that as a result of the above circumstances, there is significant uncertainty in this regard. 18 | Consolidated Financial Statements Name and registered office of the Parent preparing consolidated financial statements for the largest group: HFUNK ApS, Copenhagen Name and registered office of the Parent preparing consolidated financial statements for the smallest group: HFUNK ApS, Copenhagen 19 | Special items The company has received DKK 2,089 thousand from the Maceondian goverment's fund to support IT development in Macedonia. The Annual Report of Inscale A/S for 2024 has been presented in accordance with the provisions of the Danish medium-size Financial Statements Act for enterprises in reporting class C . Regnskabsklasse C, mellemstor virksomhed1 true The Annual Report is prepared consistently with the accounting principles applied last year. The Consolidated Financial Statements include the Parent Company Inscale A/S and the subsidiaries in which Inscale A/S directly or indirectly holds more than 50% of the voting rights or in any other way has a controlling influence. Enterprises in which the Group holds between 20% and 50% of the voting rights and exercises significant, but not controlling influence, are considered associates, see the Group structure. The Consolidated Financial Statements consolidate the Financial Statements of the Parent Company and the subsidiaries by combining uniform accounts items. Intercompany income and expenses, shareholdings, intercompany accounts and dividend, and realised and unrealised gains and losses arising from transactions between the consolidated enterprises are fully eliminated in the consolidation. Newly acquired or established enterprises within the Group are recognised in the Consolidated Financial statements from the date of takeover or establishment. Sold or wound-up enterprises are recognised in the Consolidated Income Statement up to the time of handover. Comparative figures are not adjusted for newly acquired, sold or wound-up enterprises. The takeover date is the date on which the Group gains actual control over the acquired enterprise. Acquired enterprises within the Group are recognised in the Consolidated Financial Statements according to the combination method, the combination being regarded as completed at the date of acquisition, and by using the carrying amounts of the assets and liabilities taken over. Positive and negative differences between the acquisition value and the carrying amounts of taken over and identified assets and liabilities are recognised in equity upon acquisition. Transaction costs, incurred in connection with acquisition of businesses, are recognised in the income statement in the year when costs are incurred. Equity interests in subsidiaries are set off by the proportional share of the subsidiaries’ fair value of net assets and liabilities at the date of takeover. Investments in associates are measured in the Balance Sheet at the proportional share of the equity value of the enterprises, calculated under the accounting policies of the Parent Company and eliminating proportionally any unrealised intercompany gains and losses. The proportional share of the results of the associates is recognised in the Income Statement after elimination of the proportional share of internal gains and losses. Net revenue Revenue from the sale of services is recognised in the income statement when delivery is made to the buyer. Revenue is recognised net of VAT, duties and sales discounts and is measured at fair value of the consideration fixed. Cost of sales Cost of sales comprise costs incurred to achieve the net revenue for the year, including direct and indirect costs of raw materials and consumables.Own work capitalised Own work capitalised comprises staff costs incurred in the financial year and recognised in cost for proprietary intangible assets.Other operating income Other operating income includes items of a secondary nature in relation to the enterprises' principal activities, including profit from sale of intangible and tangible assets, operating loss and conflict compensations, as well as salary refunds. Compensations are recognised when the income is estimated to be realisable. Other external expenses Other external expenses include other production, sales, delivery and administrative costs, including costs of energy, marketing, premises, loss on bad debts, lease expenses, etc Payments related to operating lease expenses and other lease agreements are recognised in the Income Statement over the contract period. The Company’s total liability concerning operating and other lease agreements are stated under contingencies, etc. Staff costs Staff costs comprise wages and salaries, including holiday pay and pensions, and other costs of social security etc., for the Group and the Parent Company's employees. Other operating expenses Other operating expenses include items of a secondary nature in relation to the Group’s and the Company’s activities. Losses from sale of intangible and tangible fixed assets are also included. Income from investments in subsidiaries The Income Statement of the Parent Company recognises the proportional share of the results of subsidiaries determined according to the Parent Company’s accounting policies and after full elimination of intercompany profits/losses and deduction of amortisation of goodwill. resulting from purchase price allocation at the date of acquisition, is recognised in the Parent Company’s Income Statement. Income from other fixed asset investments Income from other fixed asset investments comprise gains in the form of fair value adjustments on fixed asset investments which are not investments in group enterprises or associates. Financial income and expenses Financial income and expenses include interest income and expenses, financial expenses of finance leases, realised and unrealised gains and losses arising from securities, debt and transactions in foreign currencies, as well as charges and allowances under the tax-on-account scheme, etc. Financial income and expenses are recognised by the amounts that relate to the financial year. Interest income and expenses are calculated on amortised cost prices. Tax The tax for the year, which consists of the current tax for the year and changes in deferred tax, is recognised in the Income Statement by the share that may be attributed to the profit for the year, and is recognised directly in equity by the share that may be attributed to entries directly to equity. Intangible fixed assets Acquired goodwill is measured at cost less accumulated amortisation. Goodwill is amortised on a straight-line basis over the expected useful life which is estimated to 10 years. The period of amortisation is determined based on an assessment of the acquired Company’s position in the market and earnings profile, and the industry-specific conditions. Development projects comprise costs, including wages and salaries, and amortisation, which directly or indirectly can be related to the Company’s development activities and which fulfil the criteria for recognition in the Balance Sheet. The accounting item is measured at the lower of the capitalised costs less accumulated amortisation and recoverable amount. Capitalised development costs are amortised on a straight-line basis over the estimated useful life after completion of the development work. The amortisation period is normally 5 years. Intangible fixed assets are generally written down to the recoverable amount if this is lower than the carrying amount. Profit or loss from sale of intangible fixed assets is calculated at the difference between the sales price and the carrying amount at the time of the sale. Profit and loss are recognised in the Income Statement under other operating income or other operating expenses. Property, plant and equipment Other plant, fixtures and equipment are measured at cost less accumulated depreciation and impairment losses. The depreciation base is cost less estimated residual value after end of useful life. The cost includes the acquisition price and costs incurred directly in connection with the acquisition until the time when the asset is ready to be used. Straight-line depreciation is provided on the basis of an assessment of the expected useful lives of the assets: Useful life Other plant, fixtures and equipment 3-5 years Leasehold improvements 5-10 years Profit or loss on sale of tangible fixed assets is stated as the difference between the sales price less selling costs and the carrying amount at the date of sale. Profit or loss is recognised in the Income Statement as other operating income or other operating expenses. Lease contracts Lease contracts relating to tangible fixed assets The capitalised residual lease liability is recognised in the Balance Sheet as a liability and the interest portion of the lease payment is recognised in the Income Statement over the contract period. All other lease contracts are considered to be operating leases. Payments related to operating leases and other rental agreements are recognised in the Income Statement over the contract period. The Company's total liability relating to operating leases and rental agreements is disclosed as contingencies etc. Financial non-current assets Investments in subsidiaries are measured in the Parent Company Balance Sheet under the equity method, which is regarded as a method of measuring/consolidation. Investments in subsidiaries are measured in the Balance Sheet at the proportional share of the enterprises’ carrying Equity value, calculated in accordance with the Parent Company’s accounting policies with deduction or addition of unrealised intercompany profits or losses, and with addition of remaining additional values and goodwill calculated according to the acquisition method. Negative goodwill is recognised in the Income Statement upon acquisition of the Equity interest. Where the negative goodwill is related to takeover of contingent liabilities, the negative goodwill is not recognised before the contingent liabilities are settled or cancelled. The combination method is applied when acquiring enterprises within the Group, where the combination is regarded as completed at the date of acquisition, and by using the carrying amounts of the assets and liabilities acquired. The difference between the acquisition cost and carrying amounts is recognised directly in equity. Net revaluation of investments in subsidiaries is transferred under equity to reserve for net revaluation under the equity value method to the extent that the carrying amount exceeds the acquisition value. Profit and loss at disposal of investments in subsidiaries are determined as the difference between the net selling price and the carrying amount of the disposed investment at the time of sale, including non-depreciated excess values and goodwill. Profit and loss are recognised in the Income Statement under income from investments. Investments in subsidiaries with negative equity value are measured at DKK 0. Any receivables with these companies are written off, to the extent that the receivable is uncollectible from a specifically assessed indication of impairment. To the extent that the Parent Company has a legal or actual obligation to cover a negative balance which exceeds the receivable, the remainder is recognised under provisions for liabilities. Other investments Other investments comprise unlisted equity investments measured at fair value. The measuring is based on fair value within the IFRS 13 fair value hierarchy level 3. The valuation technique used is the income approach under the IPEV guidelines. Fair value is calculated with unobservable inputs using the discounted cash flows valuation technique. Impairment of fixed assets The carrying amount of intangible fixed and property, plant and equipment together with fixed assets, which are not measured at fair value,, are assessed annually for indications of impairment other than that reflected by amortisation and depreciation. In the event of impairment indications, an impairment test is made for each asset or group of assets, respectively. If the recoverable amount is lower than the carrying amount, the asset is written down to the recoverable amount. The recoverable amount is calculated at the higher of the capital value and the sales value less expected costs of a sale. The capital value is determined as the Company's share in the current value of the net cash flows which the subsidiary is expected to generate through its activities and from sale of assets after the end of their useful lives. A discount rate is used which reflects the risk-free market rate and the owners' minimum return on interest requirements for similar assets. The growth rate in the terminal period is determined in accordance with the standards within the industry. Receivables Receivables are measured at amortised cost which usually corresponds to nominal value. The value is written down to meet expected losses. Write-off is performed to provide for losses when an objective indication has been assessed to have incurred that a receivable or a portfolio of receivables are impaired. If there is an objective indication that an individual receivable is impaired, the write-off is performed at individual level. Receivables for which there are no objective indication of impairment at individual level are assessed at portfolio level for objective indication of impairment. The portfolios are primarily based on the debtors’ registered office and credit rating in accordance with the Company’s policy for credit risk management. The objective indicators, which are applied for portfolios, are determined based on the historical loss experiences. Write-off is determined as the difference between the carrying amount of receivables and the present value of the expected cash flows, including realisable value of any received collaterals. The effective interest rate is used as discount rate for the single receivable or portfolio. Accruals, assets Accruals recognised as assets include costs incurred relating to the subsequent financial year. Other provisions for liabilities Other provisions comprise anticipated costs of ligitations. Other provisions are recognised and measured as the best estimate of the expenses required to settle the liabilities at the balance sheet date. Provisions that are estimated to mature more than one year after the balance sheet date are measured at their discounted value. Tax payable and deferred tax Current tax liabilities and receivable current tax are recognised in the Balance Sheet as the calculated tax on the taxable income for the year, adjusted for tax on the taxable income for previous years and taxes paid on account. The Company is subject to joint taxation with Danish Group companies. The current corporation tax is distributed among the joint taxable companies in proportion to their taxable income and with full allocation and refund related to tax losses. The joint taxable companies are included in the tax-on-account scheme. Joint taxation contributions receivable and payable are recognised in the Balance Sheet under current assets and liabilities, respectively. Deferred tax is measured on the temporary differences between the carrying amount and the tax value of assets and liabilities. Deferred tax assets, including the tax value of tax loss carryforwards, are measured at the amount at which the asset is expected to be used within a reasonable number of years, either by setoff against tax on future earnings or by setoff against deferred tax liabilities within the same legal tax entity. Deferred tax is measured on the basis of the tax rules and tax rates that under the legislation in force on the Balance Sheet date will be applicable when the deferred tax is expected to crystallise as current tax. Any changes in the deferred tax resulting from changes in tax rates, are recognised in the income statement, except from items recognised directly in equity. Liabilities Financial liabilities are recognised at the time of borrowing by the amount of proceeds received less transaction costs. In subsequent periods, the financial liabilities are measured at amortised cost equal to the capitalised value when using the effective interest, the difference between the proceeds and the nominal value being recognised in the Income Statement over the loan period. The amortised cost of current liabilities corresponds usually to the nominal value. Accruals, liabilities Accruals recognised as liabilities include payments received regarding income in subsequent years. Foreign currency translation Transactions in foreign currencies are translated at the rate of exchange on the transaction date. Exchange differences arising between the rate on the transaction date and the rate on the payment date are recognised in the Income Statement as a financial income or expense. Receivables, payables and other monetary items in foreign currencies that are not settled on the Balance Sheet date are translated at the exchange rate on the Balance Sheet date. The difference between the exchange rate on the Balance Sheet date and the exchange rate at the date when the receivables or payables come into existence recognised in the Income Statement as financial income or expenses. Fixed assets acquired in foreign currencies are translated at the rate of exchange on the transaction date. The Income Statements of foreign subsidiaries and associates fulfilling the concitions for being independent entities are translated at an average exchange rate for the month and the Balance Sheet items are translated at the rate of exchange on the Balance Sheet date. Exchange differences arising from translation of the equity of foreign subsidiaries at the beginning of the year to the rates of the Balance Sheet date and from translation of Income Statements from average rate to the rates of the Balance Sheet date are recognised directly in the equity. Exchange adjustment of intercompany accounts with foreign subsidiaries that are deemed to be an addition to or deduction from the equity of independent subsidiaries are recognised directly in the equity. Exchange rate differences recognised in Equity are accumulated in a fair value reserve for currency translation of foreign entities and are transferred to the Income Statement when object of the currency translation is realised or ends. An exception is exchange rate differences arising from translation of Equity interests, which are recognised at Equity value, where the whole value adjustment, including exchange rate differences, are included in the reserve for net valuation according to the Equity value method. Cash Flow Statement The cash flow statement shows the Company’s cash flows for the year for operating activities, investing activities and financing activities in the year, the change in cash and cash equivalents of the year and cash and cash equivalents at beginning and end of the year. Cash flows from operating activities: Cash flows from operating activities are computed as the results for the year adjusted for non-cash operating items, changes in net working capital and corporation tax paid. Cash flows from investing activities: Cash flows from investing activities include payments in connection with purchase and sale of intangible and tangible fixed asset and fixed asset investments. Cash flows from financing activities: Cash flows from financing activities include changes in the size or composition of share capital and related costs, and borrowings and repayment of interest-bearing debt and payment of dividend to shareholders. 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