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fsa:PropertyPlantAndEquipmentInProgressMember 18212099 2024-01-01 2024-12-31 fsa:InvestmentsInGroupEnterprisesMember 18212099 2023-01-01 2023-12-31 fsa:InvestmentsInGroupEnterprisesMember 18212099 2024-01-01 2024-12-31 1 fsa:SubsidiaryMember 18212099 2024-01-01 2024-12-31 cmn:ConsolidatedMember fsa:OtherReceivablesMember 18212099 2024-01-01 2024-12-31 fsa:OtherReceivablesMember iso4217:DKK pure Årsrapport 33771231 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Strandvejen 44 2900 Hellerup 2024-01-01 2023-01-01 2024-12-31 2023-12-31 18212099 estron a/s Industrivej 5 8653 Silkeborg Silkeborg 86848877 www.estron.dk info@estron.dk PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab 33771231 Herredsvej 32 7100 Vejle Denmark 79 21 27 00 Underskriv. revisors e-mail anvendes 2025-03-28 Kasper Sandø Jensen Regnskabsklasse C, mellemstor virksomhed Revisionspåtegning The Executive Board and Board of Directors have today considered and adopted the Annual Report of estron a/s for the financial year 1 January - 31 December 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 31 December 2024 of the Company and the Group and of the results of the Company and Group operations and of consolidated cash flows for 2024. 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. 2025-03-28 Them Peter Lyhne Uhrenholt CEO Anders Schnettler Kristensen Chairman Thomas Marstrand Vice chairman Allan Sørrig Dodt Sune Lilbæk Kasper Sandø Jensen To the shareholder of estron a/s 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 31 December 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 January - 31 December 2024 in accordance with the Danish Financial Statements Act. We have audited the Consolidated Financial Statements and the Parent Company Financial Statements of estron a/s for the financial year 1 January - 31 December 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. 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 Consolidated 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. 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. Trekantområdet 2025-03-28 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Henrik Forthoft Lind State Authorised Public Accountant mne34169 Henrik Skriver Lykke State Authorised Public Accountant mne15094 30338000 18623000 1776000 803000 -704000 -1055000 22877000 15374000 5000 74367000 67206000 66596000 5180000 1482000 17159000 8761000 6850000 47824000 35369000 27777000 412 339 232 0.575 0.278 0.408 0.277 0.027 0.74 0.817 0.643 0.526 0.417 0.638 0.285 0.55 0.487 0.0 Key activities The Group's main activity consists of design, development and production of wire solutions and connectors for the hearing aid industry as well as cables and sockets for the worldwide audio and security industries. Business model At the headquarter in Denmark all activities regarding sales, product development, purchasing and production planning are carried out with a close involvement of key employees in Vietnam. All corporate support activities like marketing, finance, quality and IT are placed in Denmark as well as a part of the production activities. All customer activities are managed from estron Denmark. The subsidiary, estron Vietnam, is operating as a standalone production facility delivering only to estron Denmark. Development in the year The income statement of the Group for 2024 shows a profit of DKK 36,273,964, and at 31 December 2024 the balance sheet of the Group shows a positive equity of DKK 60,357,303. The results and profit for the year are considered satisfactory and above expectations, which were in the range of MDKK 22-30. In 2024 the focus of the global supply chain has been relatively stable and the various markets of estron have developed positively. Despite this, the markets have been affected negatively by the generally high inflation in both North America as well as Europe starting in 2023 and carried forward into 2024. As a consequence, estron has had a focus on minimizing the cost of raw material as well as implementing production improvements to secure the customers a minimal impact from the inflation driven increase in cost. At the production site in Vietnam investments have continued in tools and production machinery. Due to the capacity expansion made in Vietnam in 2023 as well as investments in organization and processes, it has been possible to increase the number of employees by 227 to 536 end 2024. estron has continued an unchanged level of investments in product development, production facilities and machinery to support all customers with the needed production capacity. Targets and expectations for the year ahead In 2025, estron expects the revenue to grow compared to 2024, which is due to expansion of customer base as well as implementing new product into production. Demand for the Group's products and solutions is expected to grow steadily in the years to come. This applies to all the Group's segments/industries. As a consequence of the anticipated revenue growth, the profit in 2025 is expected to be in the range of MDKK 40-45. The result is especially exposed to changes in product mix as well as an increase in cost due to risk of high inflation. Special risks - operating risks and financial risks *Financial risks* Since most of the Group's revenue and internal business are generated in foreign currencies, the Group is exposed to foreign exchange risks. The primary currencies used are EUR and USD which are well balanced. The Management have evaluated the risk to be low. *Special risks* In Management's opinion, the Group has not assumed any special risks, besides ordinary business risks and loss of key customers. *Market risk* The global trade patterns seems to be challenged, imposing uncertainty about trade agreements and derived development of inflation. In addition, with the war between Ukraine and Russia there are still significant uncertainties in 2025. Uncertainty relating to recognition and measurement There has been no uncertainty regarding recognition and measurement in the Annual Report. Unusual events The financial position at 31 December 2024 of the Group and the results of the activities and cash flows of the Group for the financial year for 2024 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. 87823498 57298209 62654764 39865703 38392303 35231908 20006563 23367666 2472318 3294142 1091533 1952533 0 619547 0 619547 46958877 18152612 41556668 13925957 0 0 4611690 3885386 2154151 4187207 1606895 3277849 2601459 4833187 2488721 4309160 46511569 17506632 45286532 16780032 10237605 3071984 9012568 2345384 36273964 14434648 36273964 14434648 30500000 7500000 -103185 -9835546 0 0 5877149 16770194 591110 1230413 591110 1230413 2703343 0 2703343 0 3294453 1230413 3294453 1230413 4925362 5709727 655313 1467973 0 0 0 0 37504 78430 0 12905 5935441 1985966 5935441 1985966 10898307 7774123 6590754 3466844 0 0 15823481 14759726 450575 432296 22500 22500 450575 432296 15845981 14782226 14643335 9436832 25731188 19479483 18999865 13967470 18999494 12443414 3487035 8079049 3487035 8079049 5738483 7293702 5738483 9153755 28225383 29340221 28225012 29676218 21959428 11493042 21959428 11493406 0 0 0 10623 1744448 655755 451258 24615 0 321471 0 321471 3171157 2088523 569041 462693 26875033 14558791 22979727 12312808 11855964 12041650 10297567 8188555 66956380 55940662 61502306 50177581 81599715 65377494 87233494 69657064 500000 500000 500000 500000 0 0 11181986 10136923 0 0 2108608 0 587565 0 0 0 59269738 52916399 46566709 42779476 60357303 53416399 60357303 53416399 546936 1176927 546936 1176927 546936 1176927 546936 1176927 1306286 1260492 1306286 1260492 1306286 1260492 1306286 1260492 842198 45465 842198 45465 6383800 3323182 6278529 3242309 2778217 43835 10054988 5719461 6559116 2930757 5772697 2930757 2825859 3180437 2074557 1865254 19389190 9523676 25022969 13803246 20695476 10784168 26329255 15063738 81599715 65377494 87233494 69657064 500000 0 52916399 0 0 -30500000 0 587565 579375 0 0 36273964 500000 587565 59269738 500000 10118231 0 42798168 0 0 0 -30500000 0 1166940 0 0 0 -103185 0 36377149 0 0 2108608 -2108608 500000 11181986 2108608 46566709 36273964 14434648 14324171 6289633 -8816835 1262291 41781300 21986572 2154151 4187207 -2601459 -4833187 41333992 21340592 -6917766 -741069 34416226 20599523 -2329975 -214343 -5330567 -975389 -18279 71507 -7678821 -1118225 796733 -12966535 2734382 -985284 45794 -99086 -30500000 -7500000 -26923091 -21550905 -185686 -2069607 12041650 14111257 11855964 12041650 11855964 12041650 11855964 12041650 No events materially affecting the assessment of the Annual Report have occurred after the balance sheet date. 35139383 31527764 16753643 19663522 2912570 3311856 2912570 3311856 340350 392288 340350 392288 38392303 35231908 20006563 23367666 563 336 27 33 Remuneration to the Executive Board has not been disclosed in accordance with section 98 B(3) of the Danish Financial Statements Act. 1410 0 1410 0 219898 177110 199303 174209 1932843 4010097 1406182 3103640 2154151 4187207 1606895 3277849 450000 436338 450000 436338 598361 524038 485623 501706 1553098 3872811 1553098 3371116 2601459 4833187 2488721 4309160 9419348 4050431 8194311 2930757 776304 -463887 776304 -70813 1126777 -514560 1126777 -514560 -1084824 0 -1084824 0 10237605 3071984 9012568 2345384 5188439 0 5188439 0 0 2330007 0 2330007 -373336 373336 -373336 373336 4815103 2703343 4815103 2703343 3958058 0 3958058 0 265935 0 265935 0 4223993 0 4223993 0 591110 2703343 591110 2703343 Development projects concern the development of new versions of the company's existing components for production. The projects are expected to be completed in 2025. The projects are progressing as planned using the resources that management has allocated for development. It is expected that the components will be sold to the company's existing customers. Prior to the initiation of the projects, the company has ensured that the projects meet the needs of the customers. 28793486 1188308 1985966 14967085 764640 1985966 1230676 0 3949475 0 0 3949475 134699 0 0 134699 0 0 29889463 1188308 5935441 14832386 764640 5935441 23083759 1109878 0 13499081 751735 0 2015041 40926 0 812691 12905 0 134699 0 0 134699 0 0 24964101 1150804 0 14177073 764640 0 4925362 37504 5935441 655313 0 5935441 4641495 4641495 4641495 4641495 10118231 21295796 1166940 -1342019 4611690 3885386 4714875 13407655 0 -313277 11181986 10118231 15823481 14759726 Vietnam Estron Company Ltd Ho Chi Minh City 100 432296 22500 18279 0 450575 22500 450575 22500 Investments in subsidiaries are specified as follows: Prepayments comprise prepaid expenses concerning rent, insurance premiums, subscriptions and interest. Deferred tax liabilities at 1 January 885456 1319343 855456 926269 Amounts recognised in the income statement for the year -338520 -463887 -308520 -70813 Deferred tax liabilities at 31 December 546936 855456 546936 855456 Recognised in the balance sheet as follows: Assets 0 321471 0 321471 Provisions -546936 -1176927 -546936 -1176927 546936 855456 546936 855456 0 0 0 0 1306286 1260492 1306286 1260492 1306286 1260492 1306286 1260492 2825859 3180437 2074557 1865254 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: Other payables -2154151 -4187207 2601459 4833187 2472318 3913689 10237605 3071984 14324171 6289633 1166940 -1342020 1114838 3822027 -12637713 -579186 2706040 -1980550 -8816835 1262291 Charges and security The following assets have been placed as security with bankers: Company charge provided as security for balance with a creditinstitution with a charge on ordinary claims relating to tradereceivables, inventories, intellectual property rights as well asoperating fixtures and equipment and machinery and equipment 1000000 1000000 1000000 1000000 Rental and lease obligations Lease obligations under operating leases. Total future lease payments: Within 1 year 47565 55156 47565 55156 Between 1 and 5 years 126963 15978 126963 15978 Total 174528 71134 174528 71134 The Parent Company has entered into tenancy agreements with a period of notice of up to 6 months. The obligation amounts to DKK 249,122 (2023: DKK 247.646 ) The Group has entered into tenancy agreements with a period of notice of up to 6 months. The obligation amounts to DKK 920.738 (2023: DKK 861.468 ) Other contingent liabilities The Danish 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 is disclosed in the Annual Report of Estron Investment A/S, which is the management company of the joint taxation purposes. Moreover, the Danish 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 Company's liability. Basis Controlling interest Estron Investment A/S Charlottenlund 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)(6) of the Danish Financial Statements Act. Consolidated Financial Statements The Company is included in the Group Annual Report of the Parent Company of the largest and smallest group: Name Place of registered office Estron Investment A/S Charlottenlund The Annual Report of estron a/s for 2024 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 2024 are presented in DKK. true Due to misclassified inventory in the parent entity last year the following reclassifications have been made to the 2023 comparative figures:Investment in subsidiaries credit TDKK 4.617.Inventory debit TDKK 5.794.Deferred tax credit TDKK 1.177. 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. Basis of consolidation The Consolidated Financial Statements comprise the Parent Company, estron a/s, 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. 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. 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 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 are recognised in the income statement at the amounts relating to the financial year. 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 the Parent Company. The tax effect of the joint taxation with the subsidiaries is allocated to enterprises showing profits or losses in proportion to their taxable incomes (full allocation with credit for tax losses). 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 7 year. Patents, licences and rights are measured at cost less accumulated amortisation and less any accumulated impairment losses or at a lower value in use.Costs relating to rights developed by the Company are recognised in the income statement as costs in the year of acquisition. Patents are amortised over the remaining patent period or a shorter useful life. The amortisation period is 7 years. Software licences are amortised over the period of the agreements, which is 7 years. 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. Interest expenses on loans contracted directly for financing the construction of property, plant and equipment are recognised in cost over the construction period. 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 3-5 years Leasehold improvements 4-5 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. If so, the asset is written down to its lower recoverable amount. 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 receivables (fixed assets). 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. Prepayments comprise prepaid expenses concerning rent, insurance premiums, subscriptions and interest. Dividend distribution proposed by Management for the year is disclosed as a seperate Dividend item. 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. Mortgage loans are measured at amortised cost, which for cash loans corresponds to the remaining loan. Amortised cost of debenture loans corresponds to the remaining loan calculated as the underlying cash value of the loan at the date of raising the loan adjusted for depreciation of the price adjustment of the loan made over the term of the loan at the date of raising the loan. Other debts are measured at amortised cost, substantially corresponding to nominal value. 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 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