Årsrapport 30700228 EY Godkendt Revisionspartnerselskab Dirch Passers Allé 36 Postboks 250, 2000 Frederiksberg 2022-01-01 2022-12-31 2021-01-01 2021-12-31 29973334 Twoday A/S Gærtorvet 1 1799 København V 2006-10-20 Copenhagen 87344454 www.twoday.dk EY Godkendt Revisionspartnerselskab 30700228 Dirch Passers Allé 36 2000 Frederiksberg 2023-06-16 Carsten Boje Møller Regnskabsklasse C, stor virksomhed Revisionspåtegning Grundlag for konklusion Konklusion true 2023-06-16 2023-06-16 CaseWare Working Papers Copenhagen Lars E. Berthelsen Managing Director Carsten Boje Møller Chair Steffen Torp Vidar Evensen Petri Lillberg Copenhagen Søren Smedegaard Hvid Louise Greve State Authorised Public Accountant mne31450 State Authorised Public Accountant mne48485 334137000000 292492000000 235726000000 54000000 66000000 51870000000 43646000000 29458000000 Earnings before interest, taxes, depreciation and amortisation (EBITDA) Earnings before interest, taxes, depreciation and amortisation (EBITDA) Earnings before interest, taxes, depreciation and amortisation (EBITDA) Earnings before interest, taxes, depreciation and amortisation (EBITDA) Earnings before interest, taxes, depreciation and amortisation (EBITDA) 46901000000 41926000000 27555000000 0 0 -608000000 53000000 -180000000 38656000000 32736000000 21350000000 215277000000 157876000000 94359000000 4609000000 2185000000 3390000000 1103000000 596000000 67159000000 58503000000 43229000000 12.6 16.7 15.5 14.9 12.5 EBITDA-margin EBITDA-margin EBITDA-margin EBITDA-margin EBITDA-margin 27.2 0.1 25.1 33.2 27.3 129.3 157.9 163.8 168.1 189.1 Current ratio Current ratio Current ratio Current ratio Current ratio 17 29.7 31.2 37.1 45.8 88.9 0.1 61.5 64.4 43.1 170 156 128 429121000 396280000 500000 6602000 201151000 181003000 228470000 221879000 173996000 155408000 2131000 1627000 52343000 64844000 193000 28000 80000 340000 52456000 64532000 12942000 14191000 39514000 50341000 1554000 134000 1554000 134000 5309000 4249000 0 107000 5309000 4356000 6863000 4490000 117018000 114101000 2868000 831000 56894000 66373000 1223000 1028000 2494000 1804000 180497000 184137000 151000 7244000 180648000 191381000 187511000 195871000 4586000 4585000 27639000 8725000 0 45000000 32225000 58310000 41000 302000 0 1500000 41000 1802000 14942000 14771000 14942000 14771000 1008000 0 84368000 68998000 3641000 2292000 13187000 12492000 25253000 28776000 12846000 8430000 140303000 120988000 155245000 135759000 187511000 195871000 4584000 2574000 60000000 1000 1551000 5341000 45000000 0 -741000 0 0 60000000 4585000 8725000 45000000 1000 1400000 17514000 0 0 45000000 4586000 27639000 0 169214000 144590000 6757000 6090000 853000 2052000 -2828000 2676000 173996000 155408000 220 208 263000 109000 1868000 1518000 2131000 1627000 13187000 12489000 -245000 1702000 12942000 14191000 5665000 1683000 7348000 5531000 263000 5794000 1554000 19534000 2793000 35000 0 2926000 0 436000 0 22059000 2793000 15285000 2686000 6000 0 1761000 107000 302000 0 16750000 2793000 5309000 0 6708000 4523000 4503000 A 4503000 4502000000 83335 B 83000 83335000 4584335000 4584335000 4583335000 4583335000 1000000 0 1000000 0 4585335000 4584335000 4584335000 4583335000 302128000 -1517164000 42000 303000 342000 30000 -387000 -229000 302000 999000 -215000 -497000 14942000 0 14942000 14941728000 0 45000000 22000000 0 17514000 5341000 Today, the Board of Directors and the Executive Board have discussed and approved the annual report of Twoday A/S for the financial year 1 January - 31 December 2022. 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 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. Further, in our opinion, the Management's review gives a fair review of the development in the Company's operations and financial matters and the results of the Company's operations and financial position. We recommend that the annual report be approved at the annual general meeting. To the shareholder of Twoday A/S We have audited the financial statements of Twoday A/S for the financial year 1 January - 31 December 2022, which comprise income statement, balance sheet, statement of changes in equity and notes, including 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 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. 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence 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. 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 as to 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 the 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 note 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 the Management's review. Our opinion on the financial statements does not cover the 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 the Management's review and, in doing so, consider whether the 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 the Management's review provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we conclude that the Management's review is in accordance with the financial statements and has been prepared in accordance with the requirements of the Danish Financial Statement Act. We did not identify any material misstatement of the Management's review. For terms and definitions, please see the accounting policies. In twoday A/S, we work to digitise Denmark. We help both public and private companies to develop, modernise and maintain their IT solutions. twoday A/S serves both public and private customers ranging from micro customers on standardised SaaS products to central government customers with highly complex and customised solutions. We provide standard and customised solutions, software as a service and consultancy. Together with our customers, we create increased productivity and growth in the Danish society to the benefit of us all. Mission and target twoday A/S is part of the twoday Group, The company is a leading provider of business critical and customised IT solutions through a broad range of competences within consulting, solutions development, application management and software solutions. Twoday A/S provides IT solutions that are based on understanding the customer’s businesses, challenges and potential. The IT solutions cover strategy and process-optimisation, development and implementation of applications on a broad spectrum of platforms, integration and application management. The strength of the company is to create value through intelligent integration between systems and customer business processes. The Company has not experienced any uncertainties relating to recognition and measurement at the preparation of the financial statements for 2022. The company's Revenue is DKK 429.1 million. This is an increase of +8.3% compared to last year's Revenue of DKK 396.3 million. The company's normalised profit (pre exceptional and non-recurring costs) before amortisation and depreciation (EBITDA) is DKK 60.4 million. This is a growth of +0.5% compared to last year's normalised EBITDA of DKK 60.1 million. The normalised profit of the year is a surplus of DKK 46.6 million compared to last year's normalised profit of DKK 45.2 million, which is an increase of +3.2%. Both the EBITDA and profit of the year results are driven by the separation and transaction cost mentioned above. The results are in line with expectations and considered satisfactory. Expectations to 2023 The economic objectives for 2023 are: - Revenue growth of minimum 10% - EBITDA margin in the range of 15-17% Twoday A/S expects 2023 to be challenging from an economic point of view with the continued high inflationary pressure on salaries and supplier costs. Events in 2022 In June CVC Capital Partners signed an agreement to purchase the consulting centric companies from Visma. The transaction closed 30th September. twoday A/S was part of this transaction. From 30th of September twoday A/S is owned by twoday Holding ApS. As part of the transaction twoday A/S has registered separation and transaction costs of DKKm 6.0. These are considered exceptional and non-recurring. In 2022 twoday won a significant contract with the Danish Directorate of Working Environment and Safety. This contract is expected to contribute positively over the duration of the contract. The key for creating value for the customers is the personal development of the employees. Through competence development programs and continued education, the company assures that the employees continuously update their skills to fit the customers’ current and future demands. twoday A/S requires that the employees have a general knowledge of IT and the customers’ business processes, but also that they have the time to specialise in specific fields. The values of twoday are: - Drive - Heart - Adaptability Being an employee centric company twoday A/S continuously pursues the best working conditions for our employees. Business model Twoday A/S advises both public and private companies in developing, modernizing and maintaining their IT solutions, including cloud solutions. Twoday’s vision is to create a better tomorrow through technology. Our software gives people the opportunity to streamline processes and take advantage of vast amounts of data – offering a world of new opportunities for businesses and organisations. In twoday’s role as a leading international software company, we have the opportunity to positively impact the world and drive change towards more sustainable business practices in all of our operations and value chains. At Twoday, we work to strengthen the community of which we are a part of. Technology is the means. Growth and welfare is the goal. Human rights and anti-bribery & corruption policy In twoday A/S, we have an anti-corruption program with a policy and dedicated responsible personnel in the twoday companies. The policy gives practical guidance on how to act in relevant situations in addition to general information about anti-corruption and why it is important to us. An annual anti-corruption training is part of our anti-corruption program. For more information about our work against corruption and bribery, read twoday’s Anti-corruption policy . The main risk that twoday A/S faces regarding anticorruption is when interacting with suppliers, however, with the continuous training and policies set in place, we consider the risks in relation to anti-corruption to be low. twoday A/S does not tolerate any violations of human rights among our suppliers, partners, customers, and other stakeholders, and we are committed to conducting our business ethically and with integrity. We comply with all applicable employment legislation, including employee pay and working conditions in Denmark and we invest heavily in supporting the health and wellbeing of our staff. Based on the nature of our business as a professional software provider, we consider the risks of modern slavery and human trafficking in our value chain to be low. To reduce risks, we strive towards selecting reliable, well-known world class vendors. We also undertake due diligence when evaluating agreements with new suppliers, and we regularly review our existing suppliers. Actions and results: In 2022, twoday A/S did not experience any cases of corruption and all employees completed the annual anti-corruption and code of conduct training e-learning program. In the coming years, we expect to continue the annual anti-corruption and bribery training program as well as introduce a diligent vendor assessment policy. In 2022, twoday A/S has not experienced any human rights violations in connection to due diligence of new suppliers, or through review of existing suppliers. In the coming years, we expect to continue the due diligence and review procedures to keep potential risks at a minimum. Environmental and climatic conditions Politics: At Twoday A/S, we are in the process of defining a unified approach towards sustainability, including identifying the performance indicators that are most important for us to track. While we have mainly office-based operations and do not produce physical goods, protecting the environment and managing our own impacts are simply the right thing to do, as well as being a sound way to conduct business. The transition to a low-carbon, resource-efficient and circular economy, in line with the United Nations’ Sustainable Development Goals, is key to ensuring long-term competitiveness. An important step in our efforts to gain better insight into the environmental impacts of all parts of the organisation is to measure our carbon footprint. Risks: Twoday A/S’s most significant environmental and climate impact happens through air travel and heating & cooling of offices. We will, together with Twoday Group, look more into the impact of data centres in 2023. The learnings from the Covid-19 pandemic that significantly reduced business travel during 2020 and 2021, by conducting meetings online has proved to be an efficient way to both decrease wasted (travel) time and reduce carbon emissions. We will continue with this new way of conducting meetings online and hold the business travel to a minimum. Actions and results: Historically, sustainability initiatives have been implemented differently across twoday companies, markets and office locations. As a result of this, there are different levels of maturity when it comes to working with sustainability across the organisation. Currently, we are working on a new sustainability strategy with a more unified approach. As part of our strategy work, we are developing a new twoday-wide Sustainability Policy to complement our already existing policies. This group policy aims to set a foundation for improved transparency and governance on sustainability topics within twoday. Twoday A/S’ office in Carlsberg Byen is a sustainable building, this means using and introducing available resources consciously, minimising energy consumption and preserving the environment. The building is gold-certified in the DGNB system, which is based on the concept of holistic sustainability, placing equal emphasis on the environment, people and commercial viability. Almost all areas of the building, from the construction process itself to the materials used, space planning, energy concept, lighting and waste management, play a part in achieving the certification. The roofs have an important function: They protect against cloudbursts, save CO2 and give life to new residents such as birds and bees. The roof of the building has solar panels, and on days with clear skies, the building covers its own energy consumption. Twoday A/S has actively sought to reduce e-waste during 2022 by arranging collection of private e-waste from the employees with the aim of recycling the products in a substantial method.. Expectations for the work ahead: Going forward, Twoday A/S expects to intensify its efforts to reduce environmental and climate conditions through the use of the new Twoday-wide Sustainability Policy. As part of the separation process from Visma, Twoday A/S is now searching for new offices. Herein the company weighs the sustainability of the coming offices heavily and is a critical decision factor for choosing the new location. Social and employee relations Politics: It is the goal of Twoday A/S to have a good and safe working environment for all employees. The other policies regarding social conditions and employee relations are formulated in our personnel handbook. The wellbeing of our employees is one of our toppriorities. Through various measures for diversity and inclusion, we take steps we believe will lead to a more dynamic, happy, and innovative company. Risks: The most significant identified risk in relation to social and employee conditions is a poor working environment which can lead to stress and long term sickness. Actions and results: Twoday A/S has an initiative called a “safe and healthy working day”. We have a work environment group consisting of a safety manager and safety representative at our locations in Aarhus and in Copenhagen. The tasks conducted annually and during 2022 of our work environment groups are to observe and solve the safety and health challenges that may arise in the area that the group covers. This can be the physical and mental work environment, bullying and harassment as well as the indoor climate. In addition, the work environment group also prepares the company's APV (Workplace assessment). Consequently, the work environment group has been able to provide a healthier work environment with satisfied and happy employees throughout 2022, through actions related to better lighting and working conditions at our offices. Expectations for the work ahead: Joint focus on well-being, health, training and the mental well-being of our employees in Twoday A/S will be a continued focus going forward. Twoday A/S has hired Company Health, an authorized health consultancy company who ensures both physical and mental health in the workplace. Covid-19 Politics: Twoday A/S wants to ensure that the health of all employees is ensured in the best possible way. Risks: We do not expect COVID 19 to have an impact in 2023. Actions and results: During the financial year, measures have been taken on an ongoing basis to ensure that employees are protected as best as possible against infection with Covid-19. Among other things, various guidelines introduced during 2020, protective equipment has been made available and staff segregation and work from home have been introduced where possible. As a result, the number of infected employees has been kept to an absolute minimum. Account of the gender composition of Management The gender equality policy prescribes that the personnel composition on all managerial levels should reflect the overall gender composition in the company. Being an equal opportunity employer, the company wishes to promote values such as mutual respect, togetherness and diversity among the personnel. When recruiting, the company aims to ensure that both sexes are represented in the selection of candidates. The company wishes to promote an even gender balance in all job functions without engaging in positive discrimination. Thus, all new hires will happen on the basis of an overall assessment of how well a candidate's qualifications match job requirements. Twoday A/S has an overall gender composition of 80% men and 20%. The other management consists of 72% men and 28% women. The other managerial positions consist of people, who are team leads or above. The figures are based on full time employees. In addition, the gender composition in the board of directors consists of 4 men and 0 women. There is more we can do to improve gender balance in our company and in the technology industry as a whole. Our management team focuses on gender balance, which leads to more dynamic discussions and more robust decision-making. Some of our initiatives and activities include employer branding at technical universities represented by both male and female representatives from twoday A/S and various activities aiming at increasing the female representation in higher technical educational institutions such as our support of the SHE Community and Women in Tech. We will continue to work towards a more balanced gender ratio in the workplace in the years to come because we believe—and have experienced—that this contributes to a better working environment, greater creativity and adaptability, and better results in the long run. It is the goal to increase the number of females in the board, to at least 2 or 33% before the year 2025. In the current fiscal year, there were no relevant female candidates for the board. Hence, the goal has not yet been reached and will be the focus in the coming years. No significant event has occurred subsequent to the closing of the annual financial accounts. The annual report of Twoday A/S for 2022 has been prepared in accordance with the provisions in the Danish Financial Statements Act applying to large reporting class C entities. The accounting policies used in the preparation of the financial statements are consistent with those of last year. With reference to section 86(4) of the Danish Financial Statements Act, no cash flow statement for the parent company is prepared, as the parent company's cash flows are part of the consolidated cash flow statement. Reporting currency The financial statements are presented in Danish kroner (DKK'000). Intra-group business combinations The book value method is applied to business combinations such as acquisition and disposal of investments, mergers, demergers, contributions of assets and share conversions, etc. in which entities controlled by the parent company are involved, provided that the combination is considered completed at the time of acquisition without any restatement of comparative figures. Differences between the agreed consideration and the carrying amount of the acquiree are recognised directly in equity. On initial recognition, transactions denominated in foreign currencies are translated at the exchange rate at the transaction date. Foreign exchange differences arising between the exchange rates at the transaction date and the date of payment are recognised in the income statement as financial income or financial expenses. Receivables and payables and other monetary items denominated in foreign currencies are translated at the exchange rate at the balance sheet date. The difference between the exchange rates at the balance sheet date and the date at which the receivable or payable arose or was recognised in the most recent financial statements is recognised in the income statement as financial income or financial expenses. The Company has chosen IAS 11/IAS 18 as interpretation for revenue recognition. Income from the rendering of services is recognised as revenue as the services are rendered, implying that revenue corresponds to the market value of the services rendered in the year (production method). The entity have agreements regarding services on behalf of suppliers, where the entity is not taking on material risks related to the services. Income is recognized as work is performed and delivered from the supplier to the third parties, where the entity earns the right to commission. Revenue is recognized to net value of the commission. Revenue is recognized without VAT charged on behalf of the third parties. All discounts are recognized within the revenue Revenue is measured at the fair value of the agreed consideration excluding VAT and taxes charged on behalf of third parties. All discounts and rebates granted are recognised in revenue. Other operating income comprise items of a secondary nature relative to the Company's core activities, including gains on the sale of fixed assets. Other external expenses include the year's expenses relating to the Company's core activities, including expenses relating to distribution, sale, advertising, administration, premises, bad debts, payments under operating leases, etc. 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. The item is net of refunds made by public authorities. The item comprises amortisation/depreciation of intangible assets and property, plant and equipment. The basis of amortisation/depreciation, which is calculated as cost less any residual value, is amortised/depreciated on a straight line basis over the expected useful life. The expected useful lives of the assets are as follows: Software 3-5 years Fixtures and fittings, other plant and equipment 3-5 years Leasehold improvements 3-10 years Financial income and expenses are recognised in the income statement at the amounts that relate to the financial reporting period. The items comprise interest income and expenses, e.g. exchange gains and losses and amortisation of financial assets and liabilities. Tax for the year includes current tax on the year's expected taxable income and the year's deferred tax adjustments. The portion of the tax for the year that relates to the profit/loss for the year is recognised in the income statement, whereas the portion that relates to transactions taken to equity is recognised in equity. The entity and its Danish group entities are taxed on a joint basis. The Danish income tax charge is allocated between profit-making and loss-making Danish entities in proportion to their taxable income (full allocation method). Jointly taxed companies entitled to a tax refund are, as a minimum, reimbursed by the management company according to the current rates applicable to interest allowances, and jointly taxed companies having paid too little tax pay, as a maximum, a surcharge according to the current rates applicable to interest surcharges to the management company. Other intangible assets include acquired intangible rights, including software licences and distribution rights. Other intangible assets are measured at cost less accumulated amortisation and impairment losses. Property, plant and equipment Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes the acquisition price and costs directly related to the acquisition until the time at which the asset is ready for use. Leases that do not transfer substantially all the risks and rewards incident to the ownership to the Company are classified as operating leases. Payments relating to operating leases and any other rent agreements are recognised in the income statement over the term of the lease. The Company's aggregate liabilities relating to operating leases and other rent agreements are disclosed under "Contingent liabilities". Intangible assets, property, plant and equipment are subject to an annual test for indications of impairment other than the decrease in value reflected by depreciation or amortisation. Impairment tests are conducted in respect of individual assets or groups of assets generating separate cash flows when there is indications of impairment. The assets are written down to the higher of the value in use and net realisable value (recoverable amount) of the asset or group of assets if this is lower than the carrying amount. As for group of assets, impairment losses are first recognised in respect of goodwill and thereafter proportionately in respect of the other assets. Impairment tests are conducted on assets or groups of assets when there is evidence of impairment. The carrying amount of impaired assets is reduced to the higher of the net selling price and the value in use (recoverable amount). The recoverable amount is the higher of the net selling price of an asset and its value in use. The value in use is calculated as the present value of the expected net cash flows from the use of the asset or the group of assets and the expected net cash flows from the disposal of the asset or the group of assets after the end of the useful life. Previously recognised impairment losses are reversed when the reason for recognition no longer exists. Impairment losses on goodwill are not reversed. Receivables are measured at amortised cost. The Company has chosen IAS 39 as interpretation for impairment of financial receivables. An impairment loss is recognised if there is objective evidence that a receivable or a group of receivables is impaired. If there is objective evidence that an individual receivable has been impaired, an impairment loss is recognised on an individual basis. Write-downs are calculated as the difference between the carrying amount of the receivables and the present value of the expected cash flows, including the realisable value of any collateral received. Ongoing service supplies and work in progress for third parties are measured at the market value of the work performed less advances received. The market value is calculated on the basis of the percentage of completion at the balance sheet date and the total expected income from the relevant contract. The percentage of completion is made up based on costs incurred relative to the expected, total expenses on each individual work in progress. Where the outcome of contract work in progress cannot be made up reliably, the market value is measured at the costs incurred in so far as they are expected to be paid by the purchaser. Where the total expenses relating to the work in progress are expected to exceed the total market value, the expected loss is recognised as a loss-making agreement under "Provisions" and is expensed in the income statement. The value of each contract in progress less prepayments is classified as assets when the market value exceeds prepayments and as liabilities when prepayments exceed the market value. Prepayments recognised under "Assets" comprise prepaid expenses regarding subsequent financial reporting years. Cash and cash equivalents comprise cash which is subject to an insignificant risk of changes in value. Given the nature of the Group's cash pool arrangement, cash pool balances are not considered cash, but are recognised under "Receivables from group entities". Proposed dividends Dividend proposed for the year is recognised as a liability once adopted at the annual general meeting (declaration date). Dividends expected to be distributed for the financial year are presented as a separate item under "Equity". Dividend proposed for the year is recognised as a liability once adopted at the annual general meeting (declaration date). Dividends expected to be distributed for the financial year are presented as a separate item under "Equity". Provisions comprise expected expenses relating to guarantee commitments, losses on work in progress, restructurings, etc. Provisions are recognised when the company has a legal or constructive obigation as a result of a past event at the balance sheet date and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Provisions are measured at net realisable value or at fair value if the obligation is expected to be settled far into the future. Current tax payables and receivables are recognised in the balance sheet as the estimated income tax charge for the year, adjusted for prior-year taxes and tax paid on account. Deferred tax is measured according to the liability method on all temporary differences between the carrying amount and the tax base of assets and liabilities. However, deferred tax is not recognised on temporary differences relating to goodwill which is not deductible for tax purposes and on office premises and other items where temporary differences, apart from business combinations, arise at the date of acquisition without affecting either profit/loss for the year or taxable income. Where alternative tax rules can be applied to determine the tax base, deferred tax is measured based on Management's intended use of the asset or settlement of the liability, respectively. Deferred tax is measured according to the tax rules and at the tax rates applicable at the balance sheet date when the deferred tax is expected to crystallise as current tax. Deferred tax assets are recognised at the expected value of their utilisation; either as a set-off against tax on future income or as a set-off against deferred tax liabilities in the same legal tax entity. Changes in deferred tax due to changes in the tax rate are recognised in the income statement. Other payables Other payables are measured at net realisable value. Deferred income Deferred income recognised as a liability comprises payments received concerning income in subsequent financial reporting years. The allocation of revenue to activities and geographical markets is disclosed where these activities and markets differ significantly in the organisation of sales of goods and services. The financial ratios stated under "Financial highlights" have been calculated as follows: Operating profit/loss Profit/loss before financial items adjusted for other operating income and other operating expenses EBITDA-margin Earnings before interest, taxes and amortisations (EBITDA) x 100 Revenue Return on assets Profit/loss from operating activites x 100 Average assets Current ratio Current assets x 100 Current liabilities Equity ratio Equity, year-end x 100 Total equity and liabilities, year-end Return on equity Profit/loss after tax x 100 Average equity No events which could effect the Companys financial position have occured after the balance sheet date. By reference to section 98b(3), (ii), of the Danish Financial Statements Act, remuneration to Management is not disclosed. The Company is jointly taxed with its parent, Twoday Holding Denmark ApS, which acts as management company, and is jointly and severally with other jointly taxed group entities for payment of income taxes as well as withholding taxes on interest, royalties and dividends falling due for payment. Rent and lease liabilities vis-à-vis the parent company and its other subsidiaries: DKK'000 2022 2021 Rent and lease liabilities 0 16,741,443 Other rent and lease liabilities: Rent and lease liabilities 26,116,449 10,304,625 The Twoday Group has a cash pool agreement, under which the parent company, Twoday Holding Denmark ApS, is the holder of the agreement, while other group companies are sub-account holders. The bank can settle drafts and deposits with each other, so the net amount constitutes a balance between the bank and Twoday Holding Denmark ApS. For twoday A/S's intercompany balances, DKK 52.35 million are included in the joint cash pool agreement. Parties exercising control Related party Domicile Basis for control CVC Capital Partners VIII (A) LP Jersey, United Kingdom Ultimate owner Twoday Holding Denmark ApS Copenhagen, Denmark Capital owner, 100% Information about consolidated financial statements Parent Domicile Requisitioning of the parent company's consolidated financial statements CVC Capital Partners VIII (A) LP Jersey, United Kingdom www.cvc.com Twoday Holding Denmark ApS Copenhagen, Denmark www.cvr.dk Related party transactions Other related parties The parent company Twoday Holding Denmark ApS and its affiliated are the only related parties of twoday A/S. The company solely discloses transactions that have not been carried out on arm's length basis, cf. section 98c(7) of the Danish Financial Statements Act. All transactions have been carried out on arm's length basis. Ownership The following shareholders are registered in the Company's register of shareholders as holding minimum 5% of the votes or minimum 5% of the share capital: Name Domicile Twoday Holding Denmark ApS Copenhagen, Denmark Audit fees are not disclosed with reference to section 96(3) of the Danish Financial Statements Act. 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