18212099 2021-12-31 18212099 2020-12-31 18212099 2019-12-31 18212099 2023-12-31 18212099 2022-12-31 18212099 2023-01-01 fsa:ContributedCapitalMember 18212099 2023-01-01 fsa:ReserveForNetRevaluationAccordingToEquityMethodMember 18212099 2023-01-01 fsa:RetainedEarningsMember 18212099 2023-12-31 fsa:ContributedCapitalMember 18212099 2023-12-31 fsa:ReserveForNetRevaluationAccordingToEquityMethodMember 18212099 2023-12-31 fsa:RetainedEarningsMember 18212099 2023-01-01 fsa:AcquiredPatentsMember 18212099 2023-12-31 fsa:AcquiredPatentsMember 18212099 2023-01-01 fsa:PlantAndMachineryMember 18212099 2023-01-01 fsa:FixturesFittingsToolsAndEquipmentMember 18212099 2023-01-01 fsa:LeaseholdImprovementsMember 18212099 2023-01-01 fsa:PropertyPlantAndEquipmentInProgressMember 18212099 2023-12-31 fsa:PlantAndMachineryMember 18212099 2023-12-31 fsa:FixturesFittingsToolsAndEquipmentMember 18212099 2023-12-31 fsa:LeaseholdImprovementsMember 18212099 2023-12-31 fsa:PropertyPlantAndEquipmentInProgressMember 18212099 2023-01-01 fsa:InvestmentsInGroupEnterprisesMember 18212099 2022-01-01 fsa:InvestmentsInGroupEnterprisesMember 18212099 2023-12-31 fsa:InvestmentsInGroupEnterprisesMember 18212099 2022-12-31 fsa:InvestmentsInGroupEnterprisesMember 18212099 2023-12-31 1 fsa:SubsidiaryMember 18212099 2023-01-01 fsa:OtherReceivablesMember 18212099 2023-12-31 fsa:OtherReceivablesMember 18212099 2023-12-31 fsa:LongtermDebtToOtherCreditInstitutionsMember 18212099 2022-12-31 fsa:LongtermDebtToOtherCreditInstitutionsMember 18212099 2023-12-31 fsa:OtherLongtermPayablesMember 18212099 2022-12-31 fsa:OtherLongtermPayablesMember 18212099 2023-01-01 2023-12-31 18212099 2023-01-01 2023-12-31 1 18212099 2023-01-01 2023-12-31 memberOfBoardIdentifier_executive_board_1 18212099 2023-01-01 2023-12-31 memberOfBoardIdentifier_board_of_director_1 18212099 2023-01-01 2023-12-31 memberOfBoardIdentifier_board_of_director_2 18212099 2023-01-01 2023-12-31 memberOfBoardIdentifier_board_of_director_3 18212099 2023-01-01 2023-12-31 memberOfBoardIdentifier_board_of_director_4 18212099 2023-01-01 2023-12-31 memberOfBoardIdentifier_board_of_director_5 18212099 2023-01-01 2023-12-31 2 18212099 2021-01-01 2021-12-31 18212099 2020-01-01 2020-12-31 18212099 2019-01-01 2019-12-31 18212099 2022-01-01 2022-12-31 18212099 2023-01-01 2023-12-31 fsa:ProposedExtraordinaryDividendRecognisedInEquityMember 18212099 2022-01-01 2022-12-31 fsa:ProposedExtraordinaryDividendRecognisedInEquityMember 18212099 2023-01-01 2023-12-31 fsa:ReserveForNetRevaluationAccordingToEquityMethodMember 18212099 2022-01-01 2022-12-31 fsa:ReserveForNetRevaluationAccordingToEquityMethodMember 18212099 2023-01-01 2023-12-31 fsa:RetainedEarningsMember 18212099 2022-01-01 2022-12-31 fsa:RetainedEarningsMember 18212099 2023-01-01 2023-12-31 fsa:ContributedCapitalMember 18212099 2023-01-01 2023-12-31 fsa:ReserveForNetRevaluationAccordingToEquityMethodMember 18212099 2023-01-01 2023-12-31 fsa:RetainedEarningsMember 18212099 2023-01-01 2023-12-31 fsa:AcquiredPatentsMember 18212099 2023-01-01 2023-12-31 fsa:PlantAndMachineryMember 18212099 2023-01-01 2023-12-31 fsa:FixturesFittingsToolsAndEquipmentMember 18212099 2023-01-01 2023-12-31 fsa:LeaseholdImprovementsMember 18212099 2023-01-01 2023-12-31 fsa:PropertyPlantAndEquipmentInProgressMember 18212099 2023-01-01 2023-12-31 fsa:InvestmentsInGroupEnterprisesMember 18212099 2022-01-01 2022-12-31 fsa:InvestmentsInGroupEnterprisesMember 18212099 2023-01-01 2023-12-31 1 fsa:SubsidiaryMember 18212099 2023-01-01 2023-12-31 fsa:OtherReceivablesMember iso4217:DKK pure Årsrapport 33771231 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Strandvejen 44 2900 Hellerup 2023-01-01 2022-01-01 2023-12-31 2022-12-31 18212099 estron a/s Industrivej 5 8653 Them Silkeborg 86848877 www.estron.dk info@estron.dk Sydbank PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab 33771231 Herredsvej 32 7100 Vejle Denmark 79 21 27 00 Underskriv. revisors e-mail anvendes 2024-03-26 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 2023. The Annual Report is prepared in accordance with the Danish Financial Statements Act. In our opinion the Financial Statements give a true and fair view of the financial position at 31 December 2023 of the Company and of the results of the Company operations for 2023. 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. 2024-03-26 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 Financial Statements give a true and fair view of the financial position of the Company at 31 December 2023 and of the results of the Company´s operations for the financial year 1 January - 31 December 2023 in accordance with the Danish Financial Statements Act. We have audited the Financial Statements of estron a/s for the financial year 1 January - 31 December 2023, which comprise income statement, balance sheet, statement of changes in equity and notes, including a summary of significant accounting policies (”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 Company 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 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 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 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 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 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 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. 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 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 2024-03-26 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Henrik Forthoft Lind State Authorised Public Accountant mne34169 Henrik Skriver Lykke State Authorised Public Accountant mne15094 32928000 25118000 40654000 9514000 2737000 9872000 7842000 -2282000 6599000 15374000 5000 14333000 70922000 68496000 49917000 1482000 15312000 5818000 7077000 9984000 35369000 27777000 41996000 32 32 31 0.203 0.223 0.134 0.04 0.198 0.78 0.595 0.499 0.406 0.841 0.285 0.55 0.487 0.0 0.683 estron strive to ensure gender diversification at all levels of the organisation as Management believes that the diversity provide the best working environment and thereby supports vision of estron. Amongst the top management of the Group 62% are female while the Board of Directors is 100% male. 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. Development in the year The income statement of the Company for 2023 shows a profit of DKK 14,434,648, and at 31 December 2023 the balance sheet of the Company shows a positive equity of DKK 53,416,399. Results for the year are considered satisfactory and in line with expectations. In 2023 the focus of the global supply chain and customers has shifted from securing high buffer stock to reduce working capital and thereby reduce inventory levels. This is opposite the trend in 2022, where estron supported strong build-up of customer inventory levels. The shift in customer focus has been expected and is the primary reason for the lower result. At the production site in Vietnam investments have continued which expanded the available capacity. As a consequence, all production from Mexico was transferred to Vietnam and the production site in Mexico were closed down. This transition and close-down of Mexico will improve the general cost structure going forward while having a one-off negative impact on the Group result in 2023. estron has continued an unchanged level of investments in product development, production facilities and machinery to support all customers with the needed production capacity. The shares of estron a/s were sold to the private equity fund Erhvervsinvest and the transaction were closed 3 February 2023. 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. Targets and expectations for the year ahead In 2024, estron a/s expects the revenue to grow compared to 2023, which is due to a general completion of customers adjustment of inventory levels and expansion of product portfolio as well as customer base. 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 2024 is expected to be in the range of DKK 22-30 million. Material assumptions and uncertainties The very high inflation rates in both USA and Europe have incurred a constant attention to cost focus. In addition, with the war between Ukraine and Russia there are still significant uncertainties in 2024. Employees The Group is pleased to note great employee satisfaction. In 2023 estron have managed to recruit several new employees securing the right organisation and skills. Attracting and retaining talented employees remain a top priority for the Group management. End of 2023 intensive recruitment activities were initiated in Vietnam to increase production capacity for expected growth. The onboarding program includes a comprehensive introduction program and training. Moreover, employees develop their knowledge through internal and external courses, network, and relevant external seminars. Environment and working environment estron's production constitutes a clean production process of small components. All estron's production units observe all existing environmental and working environment requirements, and the Company constantly works on protecting the surrounding environment as well as its employees. Further description of the corporate social responsibility is available on the Company’s website. 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 2023 of the Company and the results of the activities and cash flows of the Company for the financial year for 2023 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. 39865703 46214414 23367666 25961908 1952533 2368348 619547 0 13925957 17884158 3885386 9403623 3277849 2559697 4309160 3189528 16780032 26657950 2345384 3780816 14434648 22877134 7500000 10000000 -9835546 9366559 16770194 3510575 1230413 1286032 1230413 1286032 1467973 4628643 0 126769 12905 768508 1985966 601883 3466844 6125803 19377169 30554734 22500 97500 19399669 30652234 24096926 38064069 9974164 11882839 4753929 5019379 9153755 8409647 23881848 25311865 11493406 9686506 10623 0 24615 233701 321471 250658 462693 597314 12312808 10768179 8188555 6215612 44383211 42295656 68480137 80359725 500000 500000 10136923 21314488 42779476 26009282 53416399 47823770 0 9759000 1260492 1359572 1260492 11118572 45465 3253000 3242309 3700434 5719461 10726728 2930757 741069 1865254 2996152 13803246 21417383 15063738 32535955 68480137 80359725 500000 21314488 26009282 0 0 -7500000 0 -1342019 0 0 -9835546 24270194 500000 10136923 42779476 19663522 21919984 3311856 3068425 392288 447011 0 526488 23367666 25961908 2283003 1881952 33 36 436338 81569 501706 702956 3371116 2405003 OtherFinanceExpenses 4309160 3189528 2930757 4248723 -70813 -467907 -514560 0 2345384 3780816 5122806 214313 148680 5188439 3836744 269962 148680 3958026 1230413 17311679 149140 1565864 601884 73396 0 0 1408615 2417991 149140 801224 24533 14967084 0 764640 1985966 12683036 22371 797358 0 1477748 11466 193378 0 661673 33837 239001 0 13499111 0 751735 0 1467973 0 12905 1985966 4641495 4641495 4641495 4641495 25913239 16512006 -1342019 34674 3885386 9403623 13407655 0 -313277 -37064 14735674 25913239 19377169 30554734 Vietnam Estron Company Ltd Ho Chi Minh City 100 97500 75000 22500 22500 Investments in subsidiaries are specified as follows: Prepayments comprise prepaid expenses concerning rent, insurance premiums, subscriptions and interest. Deferred tax asset at 1 January 250658 -217249 Amounts recognised in the income statement for the year 70813 467907 Deferred tax asset at 31 December 321471 250658 0 0 0 9759000 0 9759000 45465 3253000 0 0 1260492 1359572 1260492 1359572 1865254 2996152 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: Credit institutions Other payables Charges and security The following assets have been placed as security with bankers: As security for balance with a credit institution, a company charge of DKK 1,000k has been provided with a charge on ordinary claims relating to trade receivables, inventories, intellectual property rights as well as operating fixtures and equipment and machinery and equipment. Rental and lease obligations Lease obligations under operating leases. Total future lease payments: Within 1 year 55156 55156 Between 1 and 5 years 15978 47890 Total 71134 103046 The Company has entered into tenancy agreements with a period of notice of up to 6 months. The obligation amounts to DKK 247.646 (2022: DKK 228.023) 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. 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 2023 has been prepared in accordance with the provisions of the Danish Financial Statements Act applying to medium-sized enterprises of reporting class C. The Financial Statements for 2023 are presented in DKK. With reference to section 110 of the Danish Financial Statements Act, no consolidated financial statements are prepared. 1 With reference to section 86(4) of the Danish Financial Statements Act and to the cash flow statement included in the consolidated financial statements of , the Company has not prepared a cash flow statement. 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. Leases in terms of which the Company 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 Company. 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. 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. Changes in the fair values of financial instruments that are designated and qualify as fair value hedges of a recognised asset or a recognised liability are recognised in the income statement as are any changes in the fair value of the hedged asset or the hedged liability related to the hedged risk. Changes in the fair values of derivative financial instruments that are designated and qualify as hedges of expected future transactions are recognised in the fair value reserve under equity as regards the effective portion of the hedge. The ineffective portion is recognised in the income statement. If the hedged transaction results in an asset or a liability, the amount deferred in equity is transferred from equity and recognised in the cost of the asset or the liability, respectively. If the hedged transaction results in an income or an expense, the amount deferred in equity is transferred from equity to the income statement in the period in which the hedged transaction is recognised. The amount is recognised in the same item as the hedged transaction. 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 Company. 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 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 Company, 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. The Company is jointly taxed with Estron Investment A/S. 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). Patenter og licenser måles til kostpris med fradrag af akkumulerede afskrivninger eller til genindvindingsværdien, hvor denne er lavere. Patenter afskrives over den resterende patentperiode, og licenser afskrives over aftaleperioden, dog maksimalt 7 år. Udviklingsomkostninger og omkostninger til internt oparbejdede rettigheder indregnes i resultatopgørelsen som omkostninger i anskaffelsesåret. Patent and licenses are measured at cost less accumulated amortisation and less any accumulated impairment loses or at a lower value in use. Patents are amortised over the remaining patent period, and licences are amortised over the license period; however not exceeding 7 years. Development costs and costs relating to rights developed by the Company are recognised in the income statement as costs in the year of acquisition. 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 3-5 years Other fixtures and fittings, tools and equipment 4 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 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. Prepayments comprise prepaid expenses concerning rent, insurance premiums, subscriptions and interest. Dividend distribution proposed by Management for the year is disclosed as a separate 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. Other debts are measured at amortised cost, substantially corresponding to nominal value. 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