BDO Statsautoriseret revisionsaktieselskabKystvejen 29DK-8000 Aarhus C20222670Årsrapport2023-03-27Erik Toft AndresenFROST A/SBavne Alle 328370 HadstenRevisionspåtegning266762742002-06-26Favrskov2022-01-012022-12-312021-01-012021-12-31BDO Statsautoriseret revisionsaktieselskabKystvejen298000Aarhus CDanske BankJægergårdsgade101B8000Aarhus CHadsten2023-03-27Hans Jørgen FrostErik Toft AndresenChairmanLene Bisgaard KristensenSebastian Nordentoft FrostHans Jørgen FrostFrederik FrostKonklusionGrundlag for konklusionAarhus2023-03-27BDO Statsautoriseret revisionsaktieselskab20222670BDO Statsautoriseret revisionsaktieselskab20222670Klaus Tvede-JensenMorten KristensenRevisionspåtegningState Authorised Public AccountantState Authorised Public Accountantmne23304mne477852284511723827885815026571513208436308657961385122215810769936005789898279120318951120425724539913862090166742192880019353454710982071131396725000001119031393600578989895460661159461109820711313967214072401882825140724018828254510005457208962621821954062676393970303406151373107644810764488106788722782110054654987458516963225111717092509424660272919472649177744384577789392403719313440130165051998844230774545966352942454570917998913475077223339465882378447981882500000500000232067514417083404005324493987500000111903133736072837626008253951389398253951389398064602701383360103523718541162202634023509692662374298263135309258792120910593204492120910599664765882378447981882500000144170824493987111903139360059546066500000-11190313-570380500000232067534040053500000171472095896308341593422562208173538111853173716168918815026571513202790122257831089316827912031895130154663336510-135447198037377816037781601895335475585237092014072402397282557231144732025420145572311851562339012239452128593209101446760545100089626470966510764484709665107644814417080-57038093600502320675070303401076448646027Regnskabsklasse BtruetrueToday the Board of Directors and Executive Board have discussed and approved the Annual Report of FROST A/S for the financial year 1 January - 31 December 2022. The Annual Report is presented in accordance with the Danish Financial Statements Act. In our opinion the Financial Statements give a true and fair view of the Company's assets, liabilities and financial position at 31 December 2022 and of the results of the Company's operations for the financial year 1 January - 31 December 2022. The Management Commentary includes in our opinion a fair presentation of the matters dealt with in the Commentary. We recommend the Annual Report be approved at the Annual General Meeting. To the Shareholder of FROST A/S We have audited the Financial Statements of FROST A/S for the financial year 1 January - 31 December 2022, which comprise income statement, Balance Sheet, statement of changes in equity, notes and a summary of significant accounting policies. The Financial Statements are prepared in accordance with the Danish Financial Statements Act. In our opinion, the Financial Statements give a true and fair view of the assets, liabilities and financial position of the Company at 31 December 2022 and of the results of the Company's operations for the financial year 1 January - 31 December 2022 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 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 (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 Financial Statements 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 judgment and maintain professional skepticism 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. Statement on Management Commentary Management is responsible for Management Commentary. Our opinion on the Financial Statements does not cover Management Commentary, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsibility is to read Management Commentary and, in doing so, consider whether Management Commentary 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 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 Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of Management Commentary. Principal activities The company's main activity consists in the development, production and sale of Danish designed products for the home. Development in activities and financial and economic position The profit for the year was DKK'000 10.982, which is considered to be satisfying. 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. Share capital Reserve for net revaluation under the equity method Retained earnings Proposed dividend Total Equity at 1 January 2022 500.000 1.441.708 24.493.987 11.190.313 37.626.008 Proposed profit allocation 936.005 9.546.066 500.000 10.982.071 Transactions with owners Dividend paid -11.190.313 -11.190.313 Other legal bindings Foreign exchange adjustments -57.038 -57.038 Equity at 31 December 2022 500.000 2.320.675 34.040.053 500.000 37.360.728 Staff costs 1 Average number of employees 17 14 Wages and salaries 7.209.589 6.308.341 Pensions 593.422 562.208 Social security costs 173.538 111.853 Other staff costs 173.716 168.918 8.150.265 7.151.320 Other financial income 2 Group enterprises 279.012 225.783 172.110 Other interest income 108 93.168 279.120 318.951 Intangible assets 4 Intangible fixed assets acquired Cost at 1 January 2022 3.778.160 Cost at 31 December 2022 3.778.160 Amortisation at 1 January 2022 1.895.335 Amortisation for the year 475.585 Amortisation at 31 December 2022 2.370.920 Carrying amount at 31 December 2022 1.407.240 Property, plant and equipment 5 Other plant, machinery tools and equipment Leasehold improvements Cost at 1 January 2022 2.397.282 557.231 Additions 144.732 0 Cost at 31 December 2022 2.542.014 557.231 Depreciation and impairment losses at 1 January 2022 1.851.562 339.012 Depreciation for the year 239.452 128.593 Depreciation and impairment losses at 31 December 2022 2.091.014 467.605 Carrying amount at 31 December 2022 451.000 89.626 Financial non-current assets 6 Equity investments in group enterprises Rent deposit and other receivables Cost at 1 January 2022 4.709.665 1.076.448 Cost at 31 December 2022 4.709.665 1.076.448 Revaluation at 1 January 2022 1.441.708 0 Exchange adjustment -57.038 0 Revaluation and impairment losses for the year 936.005 0 Revaluation at 31 December 2022 2.320.675 0 Carrying amount at 31 December 2022 7.030.340 1.076.448 Receivables from group enterprises 7 The company has submitted a declaration of resignation to the sister company's bank with DKK 6,479 thousand of the receivable from the sister company, which totals DKK 18,682 thousand.2022 2021 DKK DKK Receivables falling due after more than one year 8 Receivables from group enterprises 18.682.183 12.108.798 18.682.183 12.108.798Long-term liabilities 9 31/12 2022 Repayment Debt outstanding 31/12 2021 total liabilities next year after 5 years total liabilities Frozen holiday pay 0 0 646.027 646.027 535.900 535.900.01 0 0 646.027 646.027 Contingent liabilities The company has submitted a support letter for the subsidiary, Ejendomsselskabet Frost A/S. Operational leasing Fixed assets The company has entered into lease and leasing agreements with an average annual lease payment of DKK'000 441. The leasing contracts have a remaining term of 1-42 months with a total residual lease payment of DKK'000 1.119. Rent obligations The company has entered into rent obligations, which at the balance sheet date amount to DKK'000 13.581 in the non-cancellability period, which expires latest on March 31st 2030. Joint liabilities The Danish companies of the group is jointly and severally liable for tax on the group’s jointly taxed income and for certain possible withholding taxes such as dividend tax and royalty tax, and for the joint registration of VAT. Tax payable of the group’s jointly taxed income amounts to DKK‘000 2.662 at the Balance Sheet date. Charges and securities 11 The company has issued an unlimited joint and several surety bond to the sister company's balances with the bank, which amounts to DKK'000 6.441 on the balance sheet date. As security for bank debt of DKK'000 0, the company has pledged a corporate mortgage of a nominal amount of DKK 6.720 thousand with security in goodwill, operating equipment, finished goods, goods for resale and trade receivables with a booked amount December 31st 2022 on DKK'000 21.992. The Annual Report of FROST A/S for 2022 has been presented in accordance with the provisions of the Danish Financial Statements Act for enterprises in reporting class B and certain provisions applying to reporting class C. Regnskabsklasse B1 true true The Annual Report is prepared consistently with the accounting principles applied last year. 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. 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, including profit from sale of intangible and tangible fixed assets. 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 Company's employees. Repayments from public authorities are deducted from staff costs. Income from investments in subsidiaries The proportional share of the results of subsidiaries, stated according to the Parent Company’s accounting policies and with full elimination of unrealised intercompany profits/losses and deduction of amortisation of added value and goodwill resulting from purchase price allocation at the date of acquisition, is recognised in the Parent Company’s Income Statement. Financial income and expenses Financial income and expenses include interest income and expenses, realised and unrealised gains and losses arising from 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 Intangible fixed assets acquired is measured at cost less accumulated amortisation. Intangible fixed assets acquired is amortised on a straight-line basis over the expected useful life which is estimated to 3 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 Other plant, fixtures and equipment and leasehold improvements 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 Other plant, fixtures and equipment 3-5 years 0 % Leasehold improvements 3-5 years 0 % 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. Financial non-current assets Investments in subsidiaries are measured in the Parent Company Balance Sheet under the equity method, which is regarded as a method of measuring/consolidation. Investments in subsidiaries are measured in the Balance Sheet at the proportional share of the enterprises’ carrying equity value, calculated in accordance with the Parent Company’s accounting policies with deduction or addition of unrealised intercompany profits or losses and with addition 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. Net revaluation of investments in subsidiaries is transferred under equity to reserve for net revaluation under the equity value method to the extent that the carrying amount exceeds the acquisition value. 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 consumables is calculated at acquisition price with addition of transportation and similar costs. 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. Accruals, assets Accruals recognised as assets include costs incurred relating to the subsequent financial year. 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. 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