BDO Statsautoriseret revisionsaktieselskabRimmens Alle 89DK-9900 Frederikshavn20222670Årsrapport2022-06-17Brian ChristensenGRAINTEC A/SEnghavevej 407100 VejleRevisionspåtegning734222131984-04-30Vejle2021-01-012021-12-312020-01-012020-12-31BDO Statsautoriseret revisionsaktieselskabRimmens Alle899900FrederikshavnVejle2022-06-17Michael Gregers MortensenPer Schak AndreasenChairmanMorten NielsenSamuel Waldorph AndreasenTonny SkatkaKonklusionGrundlag for konklusionFrederikshavn2022-06-17BDO Statsautoriseret revisionsaktieselskab20222670Tommy AndersenRevisionspåtegningState Authorised Public Accountantmne246381410000-570000-5372000-302000683000-1185000264000-4565000-5202000103366000107725000155104000211930002030600023141000583000-2715700036588000-607000-1931000-32000599000-31261000358960000-95000-140000-1190005.123.9000-111.3-49.21.3-21-20.214912000235200001029700018435000258230003398000021299000276910001437000147300014060001413000-12348000-11933000-12408000-106690000066000-87600036700049300046200043200010400030300077000280000-12085000-11743000-11957000-11393000-2164000-2985000-2036000-2635000-9921000-8758000-9921000-8758000142500020390001383000197500011730009620001173000962000259800030010002556000293700024000000297500002400000029750000235000107000460009700024235000298570002404600029847000003887000409100000388700040910002683300032858000304890003687500006980000006980000063600009331000322700054650003920002067000371000195900000313200031110001511000000487200026260002530000206000011000001511000269000151100026900014646000143040001077100011010000254390001231500023528000106000006691800060175000647880005848500030000003000000300000030000009622000117510009622000117510001487000156800014870001568000-10003000-1753000-10003000-175300034360001439600034360001439600073200031360007320004652000129400020510009730001678000202600051870001705000633000007116000071160002642000267900026420002679000264200097950002642000979500071280004540007128000454000130000130000124430001299500012443000126650000560000008046000761800071270006328000960000116800095800011680003022400080020002933600073490005881400030797000570050002796400061456000405920005964700037759000669180006017500064788000584850003000000117510001568000-170000-17530000-9921000211000-211000-237500001597000-355000-31500067000067000-50000060100023000-452000300000096220001487000-670000-100030003000000117510001568000-170000-17530000-9921000211000-211000-237500001597000-355000-31500067000067000-50000060100023000-452000300000096220001487000-670000-10003000-9921000-875800014370001473000-2164000-2985000-62000-86000-2797000924000698000-5830001158000513200022098000-24964000-3700009653000-29847000-219000-209000-183000-95000429500003893000-304000-442000-4570000-727000-442000-118400013104000-313350001231500043650000254190001231500051712838234250003166400018901000253750001509000185300015090001853000266000463000266000463000623000062300002582300033980000212990002769100000450000980003670004930001200033400036700049300046200043200010400030300077000280000104000303000770002800009600001168000958000116800078200007740000-3906000-4153000-3768000-3803000-2164000-2985000-2036000-2635000000230000-9921000-8758000-9921000-89880006705000962000-24000080002110006689000117300046660000-18000061600005264000014250001173000643600096200002110006436000117300044610000592000050530000138300011730002526900013890000-570000183000323500027400022034000124100017696000017110000-77800001520700001321500012810000-570007370002740007630005600013241000100600024000000235000111520002526900074700032350001270002203400062000017696000017110000-7780000152070000132150006500007370001270007630005100013241000574000240000004600011152000169200016920002399000-500000660002300002195000388700000Regnskabsklasse C, mellemstor virksomhedtrueToday the Board of Directors and Executive Board have discussed and approved the Annual Report of GRAINTEC A/S for the financial year 1 January - 31 December 2021. The Annual Report is presented in accordance with the Danish Financial Statements Act. In our opinion the Consolidated Financial Statements and the Annual Financial Statements of the Company give a true and fair view of Group's and the Company's assets, liabilities and financial position at 31 December 2021 and of the results of Group's and the Company's operations and cash flows for the financial year 1 January - 31 December 2021. 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 Shareholders of GRAINTEC A/S We have audited the Consolidated Financial Statements and the Annual Financial Statements of the Company of GRAINTEC A/S for the financial year 1 January - 31 December 2021, 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 Annual Financial Statements of the Company are prepared in accordance with the Danish Financial Statements Act. In our opinion, the Consolidated Financial Statements and the Annual Financial Statements of the Company give a true and fair view of the assets, liabilities and financial position of the Group or the Company at 31 December 2021 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 2021 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 Annual Financial Statements of the Company” 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 Annual Financial Statements of the Company Management is responsible for the preparation of Consolidated Financial Statements and the Annual Financial Statements of the Company 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 Annual Financial Statements of the Company that are free from material misstatement, whether due to fraud or error. In preparing the Consolidated Financial Statements and the Annual Financial Statements of the Company, 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 Annual Financial Statements of the Company 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 Annual Financial Statements of the Company 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 Annual Financial Statements of the Company. 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 Annual Financial Statements of the Company, 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 Annual Financial Statements of the Company 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 Annual Financial Statements of the Company 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 Annual Financial Statements of the Company, including the disclosures, and whether the Consolidated Financial Statements and the Annual Financial Statements of the Company represent the underlying transactions and events in a manner that gives a true and fair view. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Statement on Management Commentary Management is responsible for Management Commentary. Our opinion on the Consolidated Financial Statements and the Annual Financial Statements of the Company 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 Annual Financial Statements of the Company, 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 Annual Financial Statements of the Company 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 Annual Financial Statements of the Company 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: Equity ratio: Equity (ex. minorities), at year-end x 100 Total assets, at year-end Return on equity: Profit/loss after tax x 100 Average equity Principal activities The Company's main activities are delivery of feed- and farming solutions to the global aquaculture industry. Activities are mainly spread across Europe and the Americas. Further information about the Company can be found on www.graintec.com or by contacting the main office in Denmark on +45 76 436 910 or e-mailing mail@graintec.com. Development in activities and financial and economic position The global corona pandemic (COVID-19) continued to affect both new investments and maintenance activities from our key customer segments throughout 2021. This led to low activity level in 2021 and a dissatisfactory result below expectations. Despite of the market challenges we continued investing into our new strategi platform and have continued the strategic development of our sea-based and land-based farming segments, investing capital and resources into developing new products and solutions that will provide a basis for growth in the coming years. By the end of 2021 we signed our first agreements in the land-based segment which will contribute to increased activity in this segment in 2022. The aqua culture industry is expected to return to more favorable conditions in 2022 with forecasted full recovery in 2023. The company’s activity level for 2022 is expected to increase considerably compared to 2021 and expectations for 2022 is a profit in the in the range of DKK 1,000 - 3,000 thousand. The Company works according to the principles of the ISO 9001:2008 standards. The Company develops and maintains internal processes and procedures across all departments to ensure consistent high quality and customer satisfaction. The liquidity position together with cash from signed orders are considered reasonable in order to meet the company’s obligation and liabilities. Profit/loss for the year compared to the expected development The income statement for 2021 shows a loss before tax of DKK 11,957 thousand against a loss of DKK 11,393 thousand last year, and the group's balance sheet at 31. December 2021 shows equity of DKK 3,436 thousand. 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 Due to the highly international activities as regards customers as well as vendors, the Company is exposed to exchange rate fluctuations. The Company invoices mainly in EUR, GBP and USD while purchases are in CLP, DKK, EUR, GBP, NOK and USD. In accordance with company procedures, all significant operational exchange exposures are hedged by forward exchange contracts at the time of project signing. EUR/DKK transferences are not considered an exchange risk. Risk of potential customer default is managed through down payments, cash flow management as well as bank guaranties. Future expectations The need for sustainable animal proteins to feed a growing global population will continue to grow in the next decades. Technological developments for better resource utilization is critical to support this demand. The Company expects to position itself as a leading technology and solutions provide in all of its three core business segments with a focus on driving competitive advantage through a strong focus on engineering and execution competences, continued technology development and operational synergies from being engage in a broad part of the aqua culture value chain. Group Share capital Reserve for revaluation Reserve for development costs Reserve for translation Retained earnings Total Equity at 1 January 2021 3,000 11,751 1,568 -170 -1,753 14,396 Proposed profit allocation, cf. note5 -9,921 -9,921 Other legal bindings Capitalized development costs 211 -211 0 Revaluations in the year -2,375 1,597 -778 Transfers Depreciations -355 -315 670 0 Other adjustments 67 67 Change fair vlaue reserves Value adjustments in the year -500 -500 Tax on changes in equity 601 23 -452 172 Equity at 31 December 2021 3,000 9,622 1,487 -670 -10,003 3,436 Parent Company Share capital Reserve for revaluation Reserve for development costs Fair value reserve, currency translation of foreign entities Retained earnings Total Equity at 1 January 2021 3,000 11,751 1,568 -170 -1,753 14,396 Proposed profit allocation, cf. note 5 -9,921 -9,921 Other legal bindings Capitalized development costs 211 -211 0 Revaluations in the year -2,375 1,597 -778 Transfers Depreciations -355 -315 670 0 Other adjustments 67 67 Change fair vlaue reserves Value adjustments in the year -500 -500 Tax on changes in equity 601 23 -452 172 Equity at 31 December 2021 3,000 9,622 1,487 -670 -10,003 3,436 Staff costs 1 Average number of employees 51 71 28 38 Wages and salaries 23,425 31,664 18,901 25,375 Pensions 1,509 1,853 1,509 1,853 Social security costs 266 463 266 463 Other staff costs 623 0 623 0 25,823 33,980 21,299 27,691 Information on management remuneration is omitted in accordance with the exemption provision in the Danish Financial Statements Act, section 98 b, subsection. 3 No. 2. Other financial income 2 Group enterprises 0 0 450 98 172.110 Other interest income 367 493 12 334 367 493 462 432 Other financial expenses 3 Other interest expenses 104 303 77 280 104 303 77 280 Tax on profit/loss for the year 4 Calculated tax on taxable income of the year 960 1,168 958 1,168 Adjustment of tax in previous years 782 0 774 0 Adjustment of deferred tax -3,906 -4,153 -3,768 -3,803 -2,164 -2,985 -2,036 -2,635 Proposed distribution of profit 5 Allocation to other reserves 0 0 0 230 514.400.04 Retained earnings -9,921 -8,758 -9,921 -8,988 -9,921 -8,758 -9,921 -8,758 Intangible assets 6 Group Intangible fixed assets acquired Development projects in progress and prepayments Cost at 1 January 2021 6,705 962 Exchange adjustment at closing rate -24 0 Additions 8 211 Cost at 31 December 2021 6,689 1,173 Amortisation at 1 January 2021 4,666 0 Exchange adjustment at closing rate -18 0 Amortisation for the year 616 0 Amortisation at 31 December 2021 5,264 0 Carrying amount at 31 December 2021 1,425 1,173 The Company develops continuously products and manufacturing methods, and it capitalises costs which are considered to have af future, commercial potential. Parent Company Intangible fixed assets acquired Development projects in progress and prepayments Cost at 1 January 2021 6,436 962 Additions 0 211 Cost at 31 December 2021 6,436 1,173 Amortisation at 1 January 2021 4,461 0 Amortisation for the year 592 0 Amortisation at 31 December 2021 5,053 0 Carrying amount at 31 December 2021 1,383 1,173 Property, plant and equipment 7 Group Land and buildings Other plant, machinery tools and equipment Cost at 1 January 2021 25,269 1,389 Exchange adjustment 0 -57 Additions 0 183 Disposals -3,235 -274 Cost at 31 December 2021 22,034 1,241 Revaluation at 1 January 2021 17,696 0 Revaluation of assets sold -1,711 0 Revaluation of the year -778 0 Revaluation at 31 December 2021 15,207 0 Depreciation and impairment losses at 1 January 2021 13,215 1,281 Exchange adjustment 0 -57 Reversal of depreciation of assets disposed of -737 -274 Depreciation for the year 763 56 Depreciation and impairment losses at 31 December 2021 13,241 1,006 Carrying amount at 31 December 2021 24,000 235 Value of recognised assets, excluding revaluation under § 41 (1) 11,152 Parent Company Land and buildings Other plant, machinery tools and equipment Cost at 1 January 2021 25,269 747 Disposals -3,235 -127 Cost at 31 December 2021 22,034 620 Revaluation at 1 January 2021 17,696 0 Revaluation of assets sold -1,711 0 Revaluation of the year -778 0 Revaluation at 31 December 2021 15,207 0 Depreciation and impairment losses at 1 January 2021 13,215 650 Reversal of depreciation of assets disposed of -737 -127 Depreciation for the year 763 51 Depreciation and impairment losses at 31 December 2021 13,241 574 Carrying amount at 31 December 2021 24,000 46 Value of recognised assets, excluding revaluation under § 41 (1) 11,152 Financial non-current assets 8 Parent Company Investments in subsidiaries Cost at 1 January 2021 1,692 Cost at 31 December 2021 1,692 Revaluation at 1 January 2021 2,399 Exchange adjustment -500 Profit/loss for the year 66 Other adjustments 230 Revaluation at 31 December 2021 2,195 Carrying amount at 31 December 2021 3,887 Investments in subsidiaries Name Ownership Graintec Chile Ltda., 100 % Graintec China Ltd., 100 % Group Parent Company 2021 2020 2021 2020 DKK '000 DKK '000 DKK '000 DKK '000 Contract work in progress 9 Sales value of completed work 19,567 55,104 17,697 54,055 Progress invoicing/advances received -31,618 -66,032 -29,769 -64,761 Contract work in progress, net -12,051 -10,928 -12,072 -10,706 It is recognized as follows Contract work in progress (asset) 392 2,067 371 1,959 Contract work in progress (liability) -12,443 -12,995 -12,443 -12,665 -12,051 -10,928 -12,072 -10,706 Share capital Allocation of share capital: 10 A-shares, 2,700 unit in the denomination of 1,000 DKK 2,700 2,700 B-shares, 300 unit in the denomination of 1,000 DKK 300 300 3,000 3,000 Long-term liabilities 11 Group 31/12 2021 Repayment Debt outstanding 31/12 2020 total liabilities next year after 5 years total liabilities Debt to mortgage credit institution 0 0 0 7,116 531.100 531.100.01 Frozen holiday pay 2,642 0 0 2,679 535.900 535.900.01 2,642 0 0 9,795 Parent Company 31/12 2021 Repayment Debt outstanding 31/12 2020 total liabilities next year after 5 years total liabilities Debt to mortgage credit institution 0 0 0 7,116 531.100 531.100.01 Frozen holiday pay 2,642 0 0 2,679 535.900 535.900.01 2,642 0 0 9,795 Contingent liabilities Rent and lease liabilities include rent obligations totalling tDKK 5,109 in interminable rent agreements with remaining contract terms of 0-3 years. Furthermore, the Company has liabilities under operating leases for cars, totalling tDKK 373, with remaining contract terms of 0-3 years. 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 Thoraso Holding ApS, which serves as management Company for the joint taxation. Charges and securities 13 Land and buildings at a carrying amount of tDKK 24,000 at 31 December 2021 have been put up as security for debt to mortgage credit institutions, totalling tDKK 7,128. Guarantees for a total of tDKK 6,235 (2020: tDKK 10,868) have been provided as collateral for contracts and supplies. Related parties 14 The Company's related parties include: Controlling interest Thoraso Holding ApS, Skaarupgaard 59, 9870 Sindal, share ownership. 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. The Annual Report of GRAINTEC A/S for 2021 has been presented in accordance with the provisions of the Danish Financial Statements Act for enterprises in reporting class C, medium-size enterprises. 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 GRAINTEC A/S and the subsidiaries in which GRAINTEC 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 newly formed entities within the Group are recognised in the Consolidated Financial statements from the date of acquisition or the date of formation. Sold or wound-up entites are recognised in the Consolidated Income Statement to the date of sale. The comparative figures are not corrected for newly acquired, sold or wound-up entities. The date of acquisition is the date on which the Group gains actual control over the acquired entity. Acquired entities 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 acquired. Positive and negative differences between the acquisition cost and the carrying amounts of acquired and identified assets and liabilities are recognised in equity at the acquisition. The difference from acquired entities is DKK ('000). Transaction costs, incurred in connection with acquisition of businesses, are recognised in the income statement in the year when costs are incurred. Investments in subsidiary enterprises are set off by the proportional share of the subsidiaries’ fair value of net assets and liabilities at the acquisition date. 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 Net revenue from the sale of merchandise and finished goods is recognised in the Income Statement if supply and risk transfer to purchaser has taken place before the end of the year and if the income can be measured reliably and is expected to be received. Where products with a high degree of individual adjustment are delivered, recognition in net revenue is made as and when the production progresses, the net revenue being equal to the sales value of the work performed for the year (the production method). This method is applied when the total income and expenses regarding the contract and the degree of completion at the Balance Sheet date can be reliably assessed, and it is likely that the financial benefits will flow to the Company. When the result of contract work cannot be assessed reliably, revenue is only recognised corresponding to the related costs and only to the extent that it is likely that they will be recovered. Sale of services is generally recognised on the basis of a measurable degree of completion, using straight-line recognition of services delivered over time in a regular pattern. Where the degree of completion is not measurable or the sales value or the total costs of completion are uncertain, revenue is recognised by the amount that the enterprise as a maximum believes to have a right to claim and is expected to be received for services delivered at the Balance Sheet date. Net revenue is recognised exclusive of VAT and less duties and discounts related to the sale. Other operating income Other operating income includes items of a secondary nature in relation to the Group’s and the Company’s activities. In addition, profit from sale of intangible and tangible fixed assets as well as business interruption and conflict compensations are included. Compensations are recognised when the income is deemed to be realisable. 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. 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 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. Repayments from public authorities are deducted from staff costs. 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 Other intangible assets include development projects and other acquired intagible rights, including software licenses, distribution rights and development project. Other intangible assets are measured at cost less accumulated amortisation and impairment losses. Development costs comprise expenses, salaries and amortisation directly or indirectly attributable to development activities. Development projects that are clearly defined and identifiable, where the technical feasibility, sufficient resources and a potential future market or development opportunities are identifiable and where the Company intends to produce, market or use the project, are recognised as intangible assets provided that the cost can be measured reliably and that there is sufficient assurance that future earnings can cover production costs, selling costs and administrative expenses and development costs. Other development costs are recognised in the income statement as incurred. Development costs that are recognised in the balance sheet are measured at cost less accumulated amortisation and impairment losses. On completion of a development project, development costs are amortised on a straight-line basis over the estimated useful life which is 5 years. 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. Tangible fixed assets Land and buildings, production plant and machinery, 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 and their residual value: Useful lifeResidual value Buildings 55-60 years 0% Other plant, fixtures and equipment 3-5 years 0% Installations 15 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. Land and buildings are revalued at fair value. Revaluations and reversel herof, less deferred tax, are taken directly to equity. The fair value ins calculated on the basis of an external assessment, which is based on similar liabilities. Fixed asset investments Investments in Equity interests in subsidiaries are measured in the Parent Company Balance Sheet under the equity method, which is regarded as a method of measuring/consolidation. Equity 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 or deduction of the residual value of positive or negative goodwill calculated according to the acquisition method. Negative goodwill is recognised in the Income Statement when the equity interest is acquired. Where the negative goodwill is related to acquired contingent liabilities, the negative goodwill will be recognised as income when the contingent liabilities have been settled or cease. 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. Net revaluation of equity interests 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. Subsidiaries with a negative carrying equity value are measured to DKK 0 and any amounts due from these enterprises are written down to the extent that it is deemed to be irrecoverable. If the carrying negative equity value exceeds receivables, the residual amount is recognised under provision for liabilities to the extent that the Company has a legal or actual liability to cover the subsidiaries deficit. Impairment of fixed assets The carrying amount of intangible fixed and tangible assets 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. Inventories Inventories are measured at cost using the FIFO-principle. If the net realisable amount is lower than cost, the inventories are written down to the lower amount. The cost of finished goods and work in progress includes the cost of raw materials, consumables, direct payroll cost and other direct and other indirect production costs include indirect materials and payroll and maintenance and depreciation of the machines, factory buildings and equipment used in the production process, the cost of factory administration and management and capitalised development costs relating to the products. The net realisable value of inventories is stated at the expected sales price less direct completion costs and costs incurred to execute the sale and is determined with due regard to marketability, obsolescence and development in expected sales price of the inventories. Receivables Receivables are measured at amortised cost which usually corresponds to nominal value. The value is written down to meet expected losses. Contract work in progress Work in progress on contract is measured at the sales value of the work performed. The sales value is measured on the basis of the degree of completion on the Balance Sheet date and the total anticipated revenue related to the specific piece of work in progress. Accruals, assets Accruals recognised as assets include costs incurred relating to the subsequent financial year. Other provisions for liabilities Other provisions for liabilities include the expected cost of warranty commitments, loss on work in progress, restructurings etc. and deferred tax. Warranty commitments include liabilities for improvement of work within the warranty period of 1 to 5 years. The provision for liabilities is measured and recognised on the basis of experience with warranty work. When it is likely that the total costs will exceed the total income on the contract work in progress, a provision is made for the total loss that is anticipated on the contract. 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. CASH FLOW STATEMENT With reference to Section 86(4) of the Danish Financial Statements Act, the Company has not prepared a cash flow statement. A cash flow statement has been prepared for the Group. 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. Cash and cash equivalents: Cash and cash equivalents include bank overdraft and cash in hand. With reference to Section 86(4) of the Danish Financial Statements Act, the Company has not prepared a cash flow statement. A cash flow statement has been prepared for the Group. 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