Årsrapport 33771231 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Strandvejen 44 2900 Hellerup 2021-10-01 2020-10-01 2022-12-31 2021-09-30 15214236 Audo A/S Århusgade 130, 1 2150 Nordhavn 1991-07-01 Copenhagen 48406100 www.audocph.com PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab 33771231 Strandvejen 44 2900 Hellerup Danmark 2023-06-28 Kristoffer Mejborn Regnskabsklasse C, stor virksomhed Revisionspåtegning The Executive Board and Board of Directors have today considered and adopted the Annual Report of Audo A/S for the financial year 1 October 2021 - 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 at 31 December 2022 of the Company and of the results of the Company operations for 2021/22. In our opinion, Management's Review includes a true and fair account of the matters addressed in the Review. We recommend that the Annual Report be adopted at the Annual General Meeting. Nordhavn 2023-06-28 Søren Mygind Eskildsen CEO Daniel Lalonde Chairman Søren Mygind Eskildsen Alberto Michele Maria Toni To the Shareholders of Audo A/S Opinion In our opinion, the Financial Statements give a true and fair view of the financial position of the Company at 31 December 2022 and of the results of the Company’s operations for the financial year 1 October 2021 - 31 December 2022 in accordance with the Danish Financial Statements Act. We have audited the Financial Statements of Audo A/S for the financial year 1 October 2021 - 31 December 2022, which comprise income statement, balance sheet, statement of changes in equity and notes, including a summary of significant accounting policies (”the Financial Statements”). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the ”Auditor’s responsibilities for the audit of the Financial Statements” section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Management is responsible for Management’s Review. Our opinion on the Financial Statements does not cover Management’s Review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsibility is to read Management’s Review and, in doing so, consider whether Management’s Review is materially inconsistent with the Financial Statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether Management’s Review provides the information required under the Danish Financials Statements Act. Based on the work we have performed, in our view, Management’s Review is in accordance with the Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement in Management’s Review. Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, Management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the Financial Statements unless Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the Financial Statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and contents of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Hellerup 2023-06-28 Hellerup 2023-06-28 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Søren Alexander statsautoriseret revisor mne42824 Frederik Tvedeskov Jantzen statsautoriseret revisor mne47815 Seen over a five-year period, the development of the Company is described by the following financial highlights: 123763000 232126000 166361000 29056000 76482000 42310000 5162000 -2313000 1216000 -8849000 1236000 -5087000 3033000 -27049000 167035000 142411000 140451000 26682000 47442000 49454000 -10647000 -5852000 -3139000 -2272000 -4578000 50 55 58 28.6 36.8 23.5 32.9 25.4 6.2 16.3 -6.8 6.6 -17 10.7 26.8 -5.1 10.7 -20.2 35.8 32.9 16 33.3 35.2 33.9 79.5 -13.7 6.3 -53 48556000 51929000 -621000 33512000 -20488000 Profit/loss before depreciation (EBITDA) Profit/loss before depreciation (EBITDA) Profit/loss before depreciation (EBITDA) Profit/loss before depreciation (EBITDA) Profit/loss before depreciation (EBITDA) Key activities Audo A/S’ (formerly known as Menu A/S) is a Copenhagen-based company that was founded in 1978. The main activity is design, development and sale of high-quality designer furniture, lighting, and home accessories developed together with reputable designers around the world. Among others, the company holds all rights to a unique product portfolio created by Danish designers Mogens Lassen and Flemming Lassen, as well as Ib Kofod-Larsen. With an iconic portfolio of historic designs, along with diversified contemporary products, the company serves a broad customer base, including the younger generation. The products are sold to the end user through retailers and wholesalers in more than 60 countries. Audo has a strong presence in the Northern European and the US design market. Development in the year The company changed its fiscal year in 2022 from to 1/10 - 30/9 to 1/1 - 31/12 with a conversion period from 1/10 2021 - 31/12 2022, therefore, the reporting period covers 15 months while the comparative figures cover a 12 month period. The income statement of the Company for 2021/2022 shows a profit of DKK 26,488,324, and at 31 December 2022 the balance sheet of the Company shows equity of DKK 102,997,093. 2021-2022 was characterized by challenging macroeconomic conditions following the outbreak of war in Ukraine, interest rate hikes, and the continued impact of the Covid-19 public health emergency in some countries, particularly China. The result has been adversely impacted by continuous challenges in the global supply chain, an adverse economic development including a steep increase in inflation. Audo A/S achieved an operating profit (EBIT) of DKK 30.9m for the accounting period compared to an operating profit (EBIT) of DKK 43.3m for 12 months in 2020/2021. Given the global situation, the management considers the result as satisfactory. Changes in the Group structure affecting Audo A/S Sale of Audo A/S’ Parent company to Design Holding S.p.A. During May 2022, the private equity fund Polaris sold its majority stake in the Designers Company group, of which Audo A/S is a subsidiary, with the buyer being Design Holding S.p.A. Design Holding is an international group active in the global market for high-end design, based on a European cultural heritage and global presence characterised by multi-faceted distribution and diversified product categories. Design Holding has built a portfolio of iconic products designed by legendary designers such as Achille and Pier Giacomo Castiglioni, Tobia Scarpa, Luigi Caccia Dominioni, Poul Henningsen, Arne Jacobsen, Antonio Citterio, Gaetano Pesce, Phillippe Starck, Piero Lissoni, Konstantin Grcic, Jasper Morrison, Patricia Urquiola, Michael Anastassiades and many more. Driven by the purpose “We design for a beautiful life,” the Group designs for the planet, people and culture. The Group encompasses Flos, B&B Italia, Louis Poulsen, Maxalto, Arclinea, Azucena, FENDI Casa, Audo, by Lassen, and Lumens. The Group’s global footprint gives it a unique platform and the Group is committed to using this to spread design consciousness, to inspire future talent and to share the belief that beauty can, and should always be, sustainable. Design Holding was established in 2018 and is jointly owned by the two investment companies, Investindustrial and The Carlyle Group, with an ambition to create global growth, including through acquisitions. In December 2021 the holding company Audo A/S has acquired the Danish company Brdr. Petersens Polstermøbelfabrik ApS (Brdr P.) in December 2021. Subsequently Brdr P. was merged with Audo A/S, with Audo A/S as the continuing company. The merger was effectuated with retroactive effect as per the beginning of the year. Acquisition, mergers and sale During the year several structural changes have been made that affected Audo A/S. The previously acquired sister company By Lassen ApS was merged into Audo A/S with Audo A/S as the continuing entity. Furthermore, sister company SpaceCo A/S was also emerged into Audo A/S; again, with Audo A/S being the continuing entity. These mergers were effectuated with retroactive effect as per 1/10/2021. Finally, to further streamline the group structure ownership of Menu North America was transferred to the holding company; Designers Company A/S during the year. Economic development and inflation As is the case for the entire market, supply and logistics continued to be a major challenge with increasing prices for mainly cost of goods and transportation. Furthermore, a general increase in the price level of goods and services increased operating costs for the company. The company has as a consequence increased prices where possible and overcome the aforementioned challenges. Expanding the brand During the past year, Audo’s portfolio of high-quality designer furniture, lighting and home accessories has continued to draw attention from the international press as Audo A/S has garnered international attention from editors across the world. Followers on our many different social media platforms as well as traffic to our own webshop has shown strong increase during the year. The Audo, as the hybrid international space it is, has continued to draw attention as a unique place to be seen and tried. Integration in Design Holding Immediately after the takeover of the group by Design Holding S.p.A. the integration of the group in Design Holding S.p.A. was started and the integration activities in Design Holding S.p.A. and its subsidiaries Louis Poulsen, FLOS (Italy), B&B Italia (Italy), Fendi Casa (Italy) and Ydesign (US) continue to be ongoing to secure growth for the group. Cooperation in the Group is taking place in many areas such as digital transformation, go-to-market strategies, international opportunities, production and procurement just to mention some. Operational platform Further digitalization has also been one of the top-priorities during the year. Everything from improving the layout of the website towards a new digital sales tool to the opening of own web shop in most of the European countries. Outlook Despite uncertainties in the general economy and higher inflation levels that slow down the market for high end designer’s furniture we expect satisfactorily growth in operating profit compared to the past year. Market risk The company’s products are primarily positioned in the high-end markets. The economic development in the professional and private consumer markets may affect the financial results. Foreign exchange risks Due to sales activities in foreign markets, cash flow and equity might be influenced by changes in interest levels and exchange rates for several currencies. It is company policy to cover commercial exchange risks. Hedging is primarily used to cover open foreign exchange positions related to trading activities in foreign currencies, in the next twelve months based on the budget. The company does not use speculative hedging. Credit risks The company’s credit risks relate to trade receivables included in the balance sheet. The company has no vital risks related to a single customer or business partner. The company’s credit risk policy involves assessing creditworthiness of all major customers and business partners. This is done on a regular basis. Capital structure and Ownership Audo A/S’ share capital is not divided into classes and all shares are owned by Designers Company A/S, who’s ultimate parent company is Designers Holding S.p.A. Management regularly assesses whether the company has an adequate capital structure, the Board of Directors continuously assesses that the company's capital structure is consistent with the company’s and its stakeholders’ interests. The overall objective is to ensure a capital structure that supports a profitable long-term growth. Management believes that the current capital structure provides sufficient flexibility to address the future strategy of the Group. Intellectual capital resources The employees are the Group’s most important resource, with main emphasis on design and product development. The company has an experienced and highly competent staff working throughout the value chain. The company will continue to implement measures to attract and retain highly skilled staff with expertise within our areas of operations to ensure future growth. Great demand is placed on the employees' hard and soft skills and their ability to engage in a logistically demanding process. The Danish labor market has been highly competitive in 2021, and there is a general increase in demand for talent within most areas, which is expected to continue. To ensure high product quality and competitiveness the company continuously to optimizes processes and procedures. This demands a high level of competence, and the company therefore continuously invests in competency development. Research and development Audo A/S continuously invests in developing, updating, and improving its product portfolio. Costs related to development of products are expensed in the income statement or accounted for as an asset following the accounting policies. The company’s work with ESG, pursuant to the Danish Financial Statements Act section 99a For a description of key activities, please see section about Key activities above. Policies Audo A/S became both ISO 14001- and 9001 certified back in July 2021, defining our next major step towards our vision of becoming an even stronger sustainable interior supplier. Our commitment is based on the internationally agreed core principles for sustainable development; human rights (including labor rights), environment (including climate), and anti-corruption. The principles are listed by the UN Global Compact and made operational through the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises (OECD). We comply with regulations wherever we operate. Distinct from this, our commitment means that the company continuously identifies, prevents, or mitigates our risks of adverse impacts in relation to the core principles. We will communicate how we manage such impacts. We will seek to make a difference for sustainability, where it makes most sense for us. Our employees are key partners in helping us respect international principles for sustainable development. We expect all team members at Audo A/S to assist us in honoring our commitment in their daily work. We have embedded our CSR commitment in the daily work of both our employees and management through training, communication, and ongoing assessments. We always appreciate good ideas for how to prevent, mitigate or improve our impacts on sustainable development. Risk assessment Audo A/S works with social responsibility for the four main areas, Environment/climate, Employee conditions, Human rights and Anti-corruption. For each of the main areas Audo has identified the company’s risks. - Environment/climate, issues related to production and transportation of furniture’s and other products leads to risk for Co2 emission. - Employee conditions include risks identified such as work accidents or stress related diseases. - Human rights, where there is a risk of breach in the of code of conduct in the supply chain. - Anti-Corruption, the risks associated with Anti-Corruption are evaluated to be less likely, however the impact of corruption can affect the business significantly. Business Code of Conduct We expect all our business relationships to meet the globally agreed minimum standard for responsible business conduct as expressed in this commitment. Business relationships shall implement the UNGPs/OECD, i.e., manage risks of causing or contributing to adverse impacts in relation to human rights, the environment, and anticorruption, and address actual impacts, share their results – and ask the same from their relationships. Management of severe impacts shall be communicated promptly. As an important part of Audo’s business conduct, all our major business relations have received our Code of Conduct for Responsible Business Conduct. Self-assessment Audo A/S continuously, and minimum once a year, conducts a self-assessment according the Global ESG standards. We continue to ask major business relations to be transparent and guide on progress on the same topics, according to our Code of Conduct. Corporate governance The Board of Directors and the Executive Board constantly strive to ensure that appropriate and sufficient control systems are in place managed by a robust management team structure. The Board of Directors and the Executive Board have several duties being defined in, amongst others, the Companies Act, the Danish Financial Statements Act, the Articles of Association, and good practice for companies of the same size and with the same international scope as Designer Company. On this basis, an ongoing series of internal procedures are developed and maintained to ensure active, reliable, and profitable management of the company. Employment Audo’s policy for employment is based on Design Holdings code of ethics and comprises of “Discrimination and Harassment” and “Health & Safety”. It is the policy to secure a workplace where all contribute actively to maintain a working environment where the employees can growth both personal and professional. As a part of the employment conditions, all employees have access to a company paid healthcare plan. In 2022 we have completed the annual employee climate survey with a score of 3.8 out of 5. Further we have conducted a safety course for all employees. For 2023 we will continue the work with the agreed actions from the climate survey and enforce a safe working environment. Environment/climate, Human rights, Anti-Corruption Audo has previously not been included in the legal requirements related to §99a. In 2022 Audo has begun the work to formalize policies within the tree areas. In 2023 we will continue the work to formalize policies within and implement them in the business. Statutory report on the underrepresented gender Audo A/S has 102 employees. Approximately 46% are female as per the end of the year. The company is committed to our membership of Global Compact and reported on our Sustainable business conduct during Q2 2021. Among our chosen relevant KPIs we report on diversity within the company. From advertising to recruiting we are committed to provide a safe and healthy work environment that is free of unlawful discrimination including harassment that is based on any legally protected characteristics, including, but not limited to, race, color, gender, sexual orientation, national origin, citizen status, disability, veteran status, height, weight, and religion. Audo A/S conducted its first international employee satisfaction survey in august 2021. It showed a very positive result. With approx. 46% (last year 52%) share of women employed, we have the best possibility to ensure a good balance in the leading positions in the future growth and development of the company. At year end 2022 the Board of Directors consists of 3 persons, all males. The Board of Directors have set the objective to have at least one female member before 2024. In 2022 it has not been possible to attract a qualified candidate to the Board of Directors. On a managerial level women make up 44% which is a 13% increase compared to last year. Statement of policy for data ethics in accordance with Section 99 d of the Annual Accounts Act Audo has not issued a policy for data ethics. It has been assessed that we are in compliance with rules related to GDPR and further that we follow the policy for data ethics as described in the Code of Ethics issued by the parent company of Audo A/S. For 2023 management has decided to issue data ethic policy. Events after the balance sheet date In January 2023 CEO Danny Espersen was replaced in the Board of Directors and Executive Management with Søren Eskildsen. No other material event has occurred after the balance sheet date to this date, which may materially affect the assessment of the Company’s financial position. 500833061 265493633 0 192000 275481829 138039155 82236366 30053379 143114866 97593099 94559335 45664009 17678799 8677552 30876732 43251538 0 -1552332 10327421 2232062 5165388 2992677 36038765 40938591 9590441 9306445 26448324 31632146 7229998 6380222 939385 687055 19126275 21829750 1446257 1184758 28741915 30081785 18670716 8815166 6609403 0 243954 0 25524073 8815166 0 0 2619293 1165812 2619293 1165812 56885281 40062763 6553475 0 209989 0 76341615 55845236 0 858537 83105079 56703773 41063397 26975425 88265959 27495728 2431841 152390 4446457 2163382 136207654 56786925 11254007 7572172 230566740 121062870 287452021 161125633 2504000 2501000 2504000 2501000 5640604 4976573 94852489 9461455 0 36000000 102997093 52939028 4413900 4888635 0 55358 4413900 4943993 0 31052891 1881243 0 87570105 0 2600878 7566813 92052226 38619704 78710 6666671 470334 0 43750816 36114624 18581278 0 46799 5165562 8584105 0 8344976 11742697 8131784 4933354 87988802 64622908 180041028 103242612 287452021 161125633 2501000 4976573 9461455 36000000 0 0 5000000 0 0 -42000000 3000 58037 3593497 6000000 -158174 0 605994 50472589 0 0 26448324 0 0 34798 2504000 5640604 94852489 0 Geographical segments Americas 101,365,898 39,968,297 Asia Pacific 33,846,643 19,622,836 Europe, The Middle East and Africa 365,620,520 205,902,500 500,833,061 265,493,633 Business segments Furniture 304,039,017 134,249,108 Home accessories 116,056,985 67,459,226 Lighting 76,262,728 61,496,148 Other 4,474,331 2,289,151 500,833,061 265,493,633 85988793 42462192 5072814 1965495 878868 489333 2618860 746989 94559335 45664009 4793755 3636140 486263 637500 5280018 4273640 109 51 7698982 5470508 9979817 3207044 17678799 8677552 7108819 1482400 115815 91549 3102787 658113 3535360 98842 1134041 1999742 495987 894093 5165388 2992677 8759000 5259474 831441 4046971 9590441 9306445 -34798 -93912 12625366 852247 42264209 3022489 113022 104080 251649 1672000 4076927 427292 917410 0 16815315 1383619 43433268 4694489 6245144 165192 20434458 1837731 38615 36053 0 1128600 3301558 242989 3872535 281901 9585317 444234 24306993 3248232 7229998 939385 19126275 1446257 Audo development activities are mainly related to Design and development of new products as well as development of tools for the actual production. The value of the recognized development projects is compared with expected earnings from the products. 23556944 0 0 18586562 9163609 952312 8324401 658530 1664436 -397214 0 -601298 1506303 265193 -1771496 51576996 10087332 243954 14741778 0 0 9953686 2088321 0 8590209 1389608 0 -379393 0 0 32906280 3477929 0 18670716 6609403 243954 1096380 1096380 -1096380 0 0 1096380 6874963 -5100343 -6874963 0 0 -42288 0 1297012 0 -3029344 0 -6874963 0 5778583 1165812 282190 1171291 2619293 Prepayments consist of prepaid expenses concerning rent, insurance premiums, subscriptions ect. 0 5000000 0 36000000 26448324 -9367854 Provision for deferred tax at 1 October 4,888,635 841,664 Amounts recognised in the income statement for the year 831,441 4,046,971 Amounts recognised in equity for the year (residual) -1,306,176 0 Provision for deferred tax at 31 December 4,413,900 4,888,635 Other provisions 0 55,358 0 55,358 0 31052891 0 6666667 0 37719558 87570105 0 87570105 0 2600878 7566813 2600878 7566813 Derivative financial instruments contracts in the form of forward exchange contracts have been concluded. At the balance sheet date, the fair value of derivative financial instruments amounts to: 31/12 2022 DKK 30/09 2021 DKK Assets 0 87,296 Liabilities 70,878 0 Prepayments received from customers comprises payments received in respect of income in subsequent years. Rental and lease obligations Lease obligations under operating leases. Total future lease payments: Within 1 year 450,363 957,102 Between 1 and 5 years 12,971 984,327 463,334 1,941,429 Lease obligations, period of non-terminability for all lease obligations 33,860,774 2,900,438 Other contingent liabilities The Group's enterprises are jointly and severally liable for the Group's jointly taxed income etc. The total corporation tax payable for the period 1 October 2021 - 23 May 2022 is stated in the Annual Report of Designers Company A/S, which acts as management company in the jointly taxed Group for the respective period. The total corporation tax payable for the period 24 May 2022 - 31 December 2022 is stated in the Annual Report of Luminous Designs Investments ApS, which acts as management company in the jointly taxed Group for the respective period. Moreover, the respective Groups' Danish enterprises are jointly and severally liable for Danish withholding tax such as tax ondividend, royalty and interest. Any subsequent adjustments to the corporation tax or withholding tax may result in changes to the Company's liability. Name and registered office of the Parent preparing consolidated financial statements for the largest group: Design Holding SpA, Via Manzoni 38 – 20121 Milan (MI), Italy Name and registered office of the Parent preparing consolidated financial statements for the smallest group: International Design Group S.p.A, Via Manzoni 38 – 20121 Milan (MI), Italy Annual Reports can be requested by contacting the company) 581100 148000 606034 53139 402122 136181 179515 0 The Annual Report of Audo A/S for 2021/22 has been prepared in accordance with the provisions of the Danish Financial Statements Act applying to large enterprises of reporting class C . The accounting policies applied remain unchanged from last year. The company has changed its fiscal year from 1/10 - 30/9 to 1/1 - 31/12 with a conversion period from 1/10 2021 - 31/12 2022. The Income statement thus comprises a 9 month period and the comparative figures a 12 month period. The Financial Statements for 2021/2022 are presented in DKK. With reference to section 112 of the Danish Financial Statements Act and to the consolidated financial statements of International Design Group S.p.A og Design Holding S.p.A, the Company has not prepared consolidated financial statements. With reference to section 86(4) of the Danish Financial Statements Act and to the cash flow statement included in the consolidated financial statements of International Design Group S.p.A og Design Holding S.p.A, the Company has not prepared a cash flow statement. Revenues are recognised in the income statement as earned. Furthermore, value adjustments of financial assets and liabilities measured at fair value or amortised cost are recognised. Moreover, all expenses incurred to achieve the earnings for the year are recognised in the income statement, including depreciation, amortisation, impairment losses and provisions as well as reversals due to changed accounting estimates of amounts that have previously been recognised in the income statement. Assets are recognised in the balance sheet when it is probable that future economic benefits attributable to the asset will flow to the Company, and the value of the asset can be measured reliably. Liabilities are recognised in the balance sheet when it is probable that future economic benefits will flow out of the Company, and the value of the liability can be measured reliably. Assets and liabilities are initially measured at cost. Subsequently, assets and liabilities are measured as described for each item below. Business combinations Book value method Intragroup business combinations are accounted for under the book value method. Under this method, the two enterprises are combined at carrying amounts, and no differences are identified. Any consideration which exceeds the carrying amount of the acquired enterprise is recognised directly in equity. The book value method is applied at the beginning of the financial year, and comparative figures have not been restated. Leases in terms of which the Company assumes substantially all the risks and rewards of ownership (finance leases) are recognised in the balance sheet at the lower of the fair value of the leased asset and the net present value of the lease payments computed by applying the interest rate implicit in the lease or an alternative borrowing rate as the discount rate. Assets acquired under finance leases are depreciated and written down for impairment under the same policy as determined for the other fixed assets of the Company. The remaining lease obligation is capitalised and recognised in the balance sheet under debt, and the interest element on the lease payments is charged over the lease term to the income statement. All other leases are considered operating leases. Payments made under operating leases are recognised in the income statement on a straight-line basis over the lease term. Transactions in foreign currencies are translated at the exchange rates at the dates of transaction. Exchange differences arising due to differences between the transaction date rates and the rates at the dates of payment are recognised in financial income and expenses in the income statement. Where foreign exchange transactions are considered hedging of future cash flows, the value adjustments are recognised directly in equity. Receivables, payables and other monetary items in foreign currencies that have not been settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Any differences between the exchange rates at the balance sheet date and the rates at the time when the receivable or the debt arose are recognised in financial income and expenses in the income statement. Derivative financial instruments are initially recognised in the balance sheet at cost and are subsequently remeasured at their fair values. Positive and negative fair values of derivative financial instruments are classified as ”Other receivables” and ”Other payables”, respectively. Changes in the fair values of derivative financial instruments are recognised in the income statement unless the derivative financial instrument is designated and qualify as hedge accounting, see below. Changes in the fair values of financial instruments that are designated and qualify as fair value hedges of a recognised asset or a recognised liability are recognised in the income statement as are any changes in the fair value of the hedged asset or the hedged liability related to the hedged risk. Changes in the fair values of derivative financial instruments that are designated and qualify as hedges of expected future transactions are recognised in retained earnings under equity as regards the effective portion of the hedge. The ineffective portion is recognised in the income statement. If the hedged transaction results in an asset or a liability, the amount deferred in equity is transferred from equity and recognised in the cost of the asset or the liability, respectively. If the hedged transaction results in an income or an expense, the amount deferred in equity is transferred from equity to the income statement in the period in which the hedged transaction is recognised. The amount is recognised in the same item as the hedged transaction. Changes in the fair values of financial instruments that are designated and qualify as hedges of net investments in independent foreign subsidiaries or associates are recognised directly in equity as regards the effective portion of the hedge, whereas the ineffective portion is recognised in the income statement. Information on business segments and geographical segments based on the Companys risks and returns and its internal financial reporting system. Business segments are regarded as the primary segments. Cost of sales comprise the raw materials and consumables consumed to achieve revenue for the year. Other external expenses comprise indirect production costs and expenses for premises, sales and distribution as well as office expenses, etc. Other external expenses also include research and development costs that do not qualify for capitalisation. Staff expenses comprise wages and salaries as well as payroll expenses. Amortisation, depreciation and impairment losses comprise amortisation, depreciation and impairment of intangible assets and property, plant and equipment. Goodwill is amortised over the expected economic life, measured by reference to an assessment of, among others factors, the nature and market position of thed business, the stability of the industry and the dependence on key staff. The amortisation period runs for 10 years. Intangible assests are amortised on a straight-line basis over the expected useful life of the individual assets. Property, plant and equipment are depreciated on a straight-line basis to the residual value, based on the cost. Gains or losses on the sale of fixed assets are recognised in the income statement under 'Amortisation/depreciation'. Other operating income and other operating expenses comprise items of a secondary nature to the main activities of the Company, including gains and losses on the sale of intangible assets and property, plant and equipment. The item “Income from investments in subsidiaries” in the income statement includes the proportionate share of the profit for the year. Financial income and expenses are recognised in the income statement at the amounts relating to the financial year. Tax for the year consists of current tax for the year and changes in deferred tax for the year. The tax attributable to the profit for the year is recognised in the income statement, whereas the tax attributable to equity transactions is recognised directly in equity. The Company is jointly taxed with parent and all Danish group enterprises. The tax effect of the joint taxation is allocated to enterprises in proportion to their taxable incomes. Goodwill is amortised on a straight-line basis over the estimated useful life of 15-20 years. determined on the basis of Management’s experience with the individual business areas. Goodwill can be referred to withdrawal of agency agreements in several countries where the company handles the sale and management of the customers. Goodwill is amortized over a period of 15-20 years, due to costumer databases and relationships which has been adopted by the Company from the agent. Costs of development projects comprise salaries, amortisation and other expenses directly or indirectly attributable to the Company’s development activities. Development projects that are clearly defined and identifiable and in respect of which technical feasibility, sufficient resources and a potential future market or development opportunity in the enterprise can be demonstrated, and where it is the intention to manufacture, market or use the project, are recognised as intangible assets. This applies if sufficient certainty exists that the value in use of future earnings can cover cost of sales, distribution and administrative expenses involved as well as the development costs. Development projects that do not meet the criteria for recognition in the balance sheet are recognised as expenses in the income statement as incurred. Capitalised development costs are measured at cost less accumulated amortisation and impairment losses or at a lower recoverable amount. An amount corresponding to the recognised development costs is allocated to the equity item “Reserve for development costs”. The reserve comprises only development costs recognised in financial years beginning on or after 1 January 2016. The reserve is reduced by amortisation of and impairment losses on the development projects on a continuing basis. As of the date of completion, capitalised development costs are amortised on a straight-line basis over the period of the expected economic benefit from the development work. The amortisation period is 3-5 years. Patents and licences are measured at cost less accumulated amortisation and less any accumulated impairment losses or at a lower value in use. Patents are amortised over the remaining patent period or a shorter useful life. The amortisation period is years. Software licences are amortised over the period of the agreement, which is 10 years. Property, plant and equipment are measured at cost less accumulated depreciation and less any accumulated impairment losses. Cost comprises the cost of acquisition and expenses directly related to the acquisition up until the time when the asset is ready for use. Depreciation based on cost reduced by any residual value is calculated on a straight-line basis over the expected useful lives of the assets, which are: Other fixtures and fittings, tools and equipment 3-15 years Leasehold improvements 5 - 20 years The fixed assets’ residual values are determined at nil. Depreciation period and residual value are reassessed annually. The carrying amounts of intangible assets and property, plant and equipment are reviewed on an annual basis to determine whether there is any indication of impairment other than that expressed by amortisation and depreciation. If so, the asset is written down to its lower recoverable amount. Investments in subsidiaries are recognised and measured under the equity method. The item“Investments in subsidiaries” in the balance sheet include the proportionate ownership share of the net asset value of the enterprises calculated on the basis of the fair values of identifiable net assets at the time of acquisition with deduction or addition of unrealised intercompany profits or losses and with addition of the remaining value of any increases in value and goodwill calculated at the time of acquisition of the enterprises. The total net revaluation of investments in subsidiaries is transferred upon distribution of profit to “Reserve for net revaluation under the equity method“ under equity. The reserve is reduced by dividend distributed to the Parent Company and adjusted for other equity movements in the subsidiaries. Subsidiaries with a negative net asset value are recognised at DKK 0. Any legal or constructive obligation of the Parent Company to cover the negative balance of the enterprise is recognised in provisions. Common control transactions Common control transactions are accounted for under the book value method. Under this method, an enterprise is transferred at carrying amount, and no differences are identified. Any consideration which exceeds the carrying amount of the transferred enterprise is recognised directly in equity. The book value method is applied at the date of the aquisition, and comparative figures have not been restated. Other fixed asset investments consist of deposits. Inventories are measured at the lower of cost under the FIFO method and net realisable value. The net realisable value of inventories is calculated at the amount expected to be generated by sale of the inventories in the process of normal operations with deduction of selling expenses. The net realisable value is determined allowing for marketability, obsolescence and development in expected selling price. The cost of goods for resale, raw materials and consumables equals landed cost. The cost of finished goods and work in progress comprises the cost of raw materials, consumables and direct labour with addition of indirect production costs. Indirect production costs comprise the cost of indirect materials and labour as well as maintenance and depreciation of the machinery, factory buildings and equipment used in the manufacturing process as well as costs of factory administration and management. Receivables are measured in the balance sheet at the lower of amortised cost and net realisable value, which corresponds to nominal value less provisions for bad debts. Prepayments comprise prepaid expenses concerning rent, insurance premiums, subscriptions and interest. Dividend distribution proposed by Management for the year is disclosed as a separate equity item. Provisions are recognised when - in consequence of an event occurred before or on the balance sheet date - the Company has a legal or constructive obligation and it is probable that economic benefits must be given up to settle the obligation. Other provisions include expected warranty obligations. Provisions are measured and recognised based on experience with repairs and returns. Deferred income tax is measured using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes on the basis of the intended use of the asset and settlement of the liability, respectively. Deferred tax assets are measured at the value at which the asset is expected to be realised, either by elimination in tax on future earnings or by set-off against deferred tax liabilities within the same legal tax entity. Deferred tax is measured on the basis of the tax rules and tax rates that will be effective under the legislation at the balance sheet date when the deferred tax is expected to crystallise as current tax. Any changes in deferred tax due to changes to tax rates are recognised in the income statement or in equity if the deferred tax relates to items recognised in equity. Current tax liabilities and receivables are recognised in the balance sheet as the expected taxable income for the year adjusted for tax on taxable incomes for prior years and tax paid on account. Extra payments and repayment under the on-account taxation scheme are recognised in the income statement in financial income and expenses. Loans, such as loans from credit institutions, are recognised initially at the proceeds received net of transaction expenses incurred. Subsequently, the loans are measured at amortised cost; the difference between the proceeds and the nominal value is recognised as an interest expense in the income statement over the loan period. Other debts and other payables are measured at amortised cost, substantially corresponding to nominal value. Prepayments recieved from customers comprises payments received in respect of income in subsequent years. 15214236 2021-10-01 e:ContributedCapitalMember 15214236 2021-10-01 2022-12-31 e:ContributedCapitalMember 15214236 2022-12-31 e:ContributedCapitalMember 15214236 2021-10-01 e:RetainedEarningsMember 15214236 2021-10-01 2022-12-31 e:RetainedEarningsMember 15214236 2022-12-31 e:RetainedEarningsMember 15214236 2021-10-01 e:ProposedDividendRecognisedInEquityMember 15214236 2021-10-01 2022-12-31 e:ProposedDividendRecognisedInEquityMember 15214236 2022-12-31 e:ProposedDividendRecognisedInEquityMember 15214236 2022-12-31 e:LongtermDebtToOtherCreditInstitutionsMember 15214236 2022-12-31 e:LongtermPayablesToGroupEnterprisesMember 15214236 2022-12-31 e:OtherLongtermPayablesMember 15214236 2021-10-01 2022-12-31 15214236 2021-10-01 2022-12-31 1 15214236 2021-10-01 2022-12-31 2 15214236 2021-10-01 2022-12-31 3 15214236 2021-10-01 2022-12-31 1 15214236 2021-10-01 2022-12-31 2 15214236 2021-10-01 2022-12-31 1 15214236 2021-10-01 2022-12-31 e:ProposedDividendRecognisedInEquityMember 15214236 2020-10-01 2021-09-30 e:ProposedDividendRecognisedInEquityMember 15214236 2021-10-01 2022-12-31 e:RetainedEarningsMember 15214236 2020-10-01 2021-09-30 e:RetainedEarningsMember 15214236 2021-09-30 15214236 2022-12-31 15214236 2021-09-30 e:LongtermDebtToOtherCreditInstitutionsMember 15214236 2021-09-30 e:LongtermPayablesToGroupEnterprisesMember 15214236 2021-09-30 e:OtherLongtermPayablesMember 15214236 2020-10-01 2021-09-30 15214236 2021-10-01 2022-12-31 d:TwoYearsAgoMember 15214236 2022-12-31 d:TwoYearsAgoMember 15214236 2021-10-01 2022-12-31 d:ThreeYearsAgoMember 15214236 2022-12-31 d:ThreeYearsAgoMember 15214236 2021-10-01 2022-12-31 d:FourYearsAgoMember 15214236 2022-12-31 d:FourYearsAgoMember 15214236 2021-10-01 2022-12-31 e:ProposedExtraordinaryDividendRecognisedInEquityMember 15214236 2020-10-01 2021-09-30 e:ProposedExtraordinaryDividendRecognisedInEquityMember 15214236 2021-10-01 e:InvestmentsInGroupEnterprisesMember 15214236 2020-10-01 e:InvestmentsInGroupEnterprisesMember 15214236 2021-10-01 2022-12-31 e:InvestmentsInGroupEnterprisesMember 15214236 2020-10-01 2021-09-30 e:InvestmentsInGroupEnterprisesMember 15214236 2022-12-31 e:InvestmentsInGroupEnterprisesMember 15214236 2021-09-30 e:InvestmentsInGroupEnterprisesMember 15214236 2021-10-01 2022-12-31 e:ManagementMember 15214236 2020-10-01 2021-09-30 e:ManagementMember 15214236 2021-10-01 2022-12-31 e:BoardOfDirectorsMember 15214236 2020-10-01 2021-09-30 e:BoardOfDirectorsMember 15214236 2021-10-01 e:CompletedDevelopmentProjectsMember 15214236 2021-10-01 e:GoodwillMember 15214236 2021-10-01 2022-12-31 e:GoodwillMember 15214236 2022-12-31 e:GoodwillMember 15214236 2021-10-01 2022-12-31 e:CompletedDevelopmentProjectsMember 15214236 2022-12-31 e:CompletedDevelopmentProjectsMember 15214236 2021-10-01 e:AcquiredTrademarksMember 15214236 2021-10-01 2022-12-31 e:AcquiredTrademarksMember 15214236 2022-12-31 e:AcquiredTrademarksMember 15214236 2021-10-01 e:AcquiredOtherSimilarRightsMember 15214236 2021-10-01 2022-12-31 e:AcquiredOtherSimilarRightsMember 15214236 2022-12-31 e:AcquiredOtherSimilarRightsMember 15214236 2021-10-01 e:FixturesFittingsToolsAndEquipmentMember 15214236 2021-10-01 2022-12-31 e:FixturesFittingsToolsAndEquipmentMember 15214236 2022-12-31 e:FixturesFittingsToolsAndEquipmentMember 15214236 2021-10-01 e:LeaseholdImprovementsMember 15214236 2021-10-01 2022-12-31 e:LeaseholdImprovementsMember 15214236 2022-12-31 e:LeaseholdImprovementsMember 15214236 2021-10-01 e:PropertyPlantAndEquipmentInProgressMember 15214236 2021-10-01 2022-12-31 e:PropertyPlantAndEquipmentInProgressMember 15214236 2022-12-31 e:PropertyPlantAndEquipmentInProgressMember 15214236 2021-10-01 2022-12-31 2 15214236 2021-10-01 2022-12-31 2 d:PreviousYearMember 15214236 2021-10-01 2022-12-31 2 d:TwoYearsAgoMember 15214236 2021-10-01 2022-12-31 2 d:ThreeYearsAgoMember 15214236 2021-10-01 2022-12-31 2 d:FourYearsAgoMember 15214236 2021-10-01 e:DepositsLongtermInvestmentsAndReceivablesMember 15214236 2021-10-01 2022-12-31 e:DepositsLongtermInvestmentsAndReceivablesMember 15214236 2022-12-31 e:DepositsLongtermInvestmentsAndReceivablesMember 15214236 2020-10-01 2021-09-30 1 15214236 2021-10-01 e:ReserveForDevelopmentExpenditureMember 15214236 2021-10-01 2022-12-31 e:ReserveForDevelopmentExpenditureMember 15214236 2022-12-31 e:ReserveForDevelopmentExpenditureMember iso4217:DKK xbrli:pure Audo has not issued a policy for data ethics. It has been assessed that we are in compliance with rules related to GDPR and further that we follow the policy for data ethics as described in the Code of Ethics issued by the parent company of Audo A/S. For 2023 management has decided to issue data ethic policy. Audo has previously not been included in the legal requirements related to §99a. In 2022 Audo has begun the work to formalize policies within the tree areas. In 2023 we will continue the work to formalize policies within and implement them in the business. Audo A/S has 102 employees. Approximately 46% are female as per the end of the year. The company is committed to our membership of Global Compact and reported on our Sustainable business conduct during Q2 2021. Among our chosen relevant KPIs we report on diversity within the company. From advertising to recruiting we are committed to provide a safe and healthy work environment that is free of unlawful discrimination including harassment that is based on any legally protected characteristics, including, but not limited to, race, color, gender, sexual orientation, national origin, citizen status, disability, veteran status, height, weight, and religion. Audo A/S conducted its first international employee satisfaction survey in august 2021. It showed a very positive result. With approx. 46% (last year 52%) share of women employed, we have the best possibility to ensure a good balance in the leading positions in the future growth and development of the company. At year end 2022 the Board of Directors consists of 3 persons, all males. The Board of Directors have set the objective to have at least one female member before 2024. In 2022 it has not been possible to attract a qualified candidate to the Board of Directors. On a managerial level women make up 44% which is a 13% increase compared to last year.