BDO Statsautoriseret revisionsaktieselskabVestre Ringgade 28DK-8000 Aarhus C20222670Årsrapport2025-04-02Jesper RasmussenSKATEPRO ApSOmega 68382 HinnerupRevisionspåtegning288538662005-06-14Favrskov2024-01-012024-12-312023-01-012023-12-31BDO Statsautoriseret revisionsaktieselskabVestre Ringgade288000Aarhus CDanske BankKromann ReumertHinnerup2025-04-02Carsten SchmidtJakob Høy BiegelChairmanJesper RasmussenCarsten SchmidtKonklusionGrundlag for konklusionAarhus2025-04-02BDO Statsautoriseret revisionsaktieselskab20222670Klaus Tvede-JensenRevisionspåtegningState Authorised Public Accountantmne2330441980000175414000161313000-307530005909300074183000-5160000-2261000-155000-2817200045186000552250003629670004627950002174010009461400012271800097081000534000592500011050002696000597000Investment in property, plant and equipmentInvestment in property, plant and equipmentInvestment in property, plant and equipmentInvestment in property, plant and equipmentInvestment in property, plant and equipment05100000000Hereof investment in financial lease assetsHereof investment in financial lease assetsHereof investment in financial lease assetsHereof investment in financial lease assetsHereof investment in financial lease assets-534000-825000-1105000-2696000-59700038.528.626.126.544.70.2-11.3-25.941.176.1482178324244769346947044417995774008430543926072388294974332200221160192312529211601923125296017508-37909086001528-383495400159538150542500554033240482328325821137925813859619299357355246426-13008714239619-1300893591856-288705185049-2887272154570-10121663154570-10121663983383890598338389059833838905983383890544594405940369445944059403694471626161474471626161474906602655651649066026556516001889309163441525995302752934259953027529342599530275293444888394387349760447093483559493779109827701776481332473209271776481332473209281219198314430441121919831443044118984011626175136818984011626175136954486794493532528561243442171087076010959272108707601095927222247834173710215286136408828107227006500123507252334612350725233461986036620419925195443051946771727346683377973226176418297812124351502855492662116461852830488672200396202948976212211399642940316371250001250001250001250000018547851599891122770122770117597222410084453719842991498271653182721499847085938444639084708593844463902251055322296822510553222968169800422802324516980042280232452609214225209104260921422520910493080198468930801984684541631956653785454163195665378541374898103270801413748981032708019697819206409697819206405822121100264995822121100264992417022724397199241570642360162200138557715908752000000520000008991470815379744691015052152931462135331027210451231136431371209585247220039620294897621221139964294031637125000022241842991491545701574095356-34630012500012277117597844537191250001599891082721499159538-496895356015740-3463012500018547851227782716531154570-1012166321160192312529-507342323591856-2887051182186-3943867191125277601888282054-2628695-2035976-10510120-811676-10023117183955152393426-1104830-534321-824945170000153000-34096-6943187500453426-321400-22546288303840000000-111485910-61895903-91411520-72161456-51411520-64330575644433779732621529273466833779737692769234874726384926263361991837888556465189947389334651899473893355768069451355768069451340084305439260723882949743322002249787602497876003500000350000017577140175771450055403324048232832500554033240482328328439515315119614246303184977186872662750005058727037582113792581385961929935735579522100601200085049-288727285049-288727200159538150542154570-10121663-4968-10272205154570-10121663154570-1012166345249711048356298041359251050464642983384524971104835629804135925105046464298338956935526308724732506107195165451872090909512173223362898620147258365065146021839031225938463151117260614459440447162322083695693552630872473250610719516545187209090951217322336289862014725836506514602183903122593846315111726061445944044716232208360275293403409601875000259953002599530345242752934034096018750034524259953015998910159538017594290-953560-95356018893092599530The company's tax losses carried forward is recognized as a deferred tax asset, since this is expected to be used within the foreseeable future.4316526443165264Regnskabsklasse C, mellemstor virksomhedtrueToday the Board of Directors and Executive Board have discussed and approved the Annual Report of SKATEPRO ApS for the financial year 1 January - 31 December 2024. The Annual Report is presented in accordance with the Danish Financial Statements Act. In our opinion the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of Group's and the Company's assets, liabilities and financial position at 31 December 2024 and of the results of Group's and the Company's operations and cash flows for the financial year 1 January - 31 December 2024. The Management Commentary includes in our opinion a fair presentation of the matters dealt with in the Commentary. We recommend the Annual Report be approved at the Annual General Meeting. To the Shareholder of SKATEPRO ApS We have audited the Consolidated Financial Statements and the Parent Company Financial Statements of SKATEPRO ApS for the financial year 1 January - 31 December 2024, which comprise income statement, Balance Sheet, statement of changes in equity, notes and a summary of significant accounting policies for both the Group and the Parent Company, as well as consolidated statement of cash flows for the Group. The Consolidated Financial Statements and the Parent Company Financial Statements are prepared in accordance with the Danish Financial Statements Act. In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the assets, liabilities and financial position of the Group or the Company at 31 December 2024 and of the results of the Group and the Parent Company's operations as well as the consolidated cash flows of the Group for the financial year 1 January - 31 December 2024 in accordance with the Danish Financial Statements Act. Basis for Opinion Grundlag for konklusion We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the “Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements and the Parent Company Financial Statements” section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), together with the ethical requirements that are relevant to our audit of the financial statements in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Management's Responsibilities for the Consolidated Financial Statements and the Parent Company Financial Statements Management is responsible for the preparation of Consolidated Financial Statements and the Parent Company 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 Consolidated Financial Statements and the Parent Company Financial Statements that are free from material misstatement, whether due to fraud or error. In preparing the Consolidated Financial Statements and the Parent Company Financial Statements, Management is responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the Consolidated Financial Statements and the Parent Company Financial Statements unless Management either intends to liquidate the Group or the Company or to cease operations, or has no realistic alternative but to do so. Our objectives are to obtain reasonable assurance about whether the Consolidated Financial Statements and the Parent Company 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 Consolidated Financial Statements and the Parent Company Financial Statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the Consolidated Financial Statements and the Parent Company 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 Group's and the Parent Company's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the Consolidated Financial Statements and the Parent Company 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 Group's and the Parent Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Consolidated Financial Statements and the Parent Company 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 Group and the Parent Company to cease to continue as a going concern. Evaluate the overall presentation, structure and contents of the Consolidated Financial Statements and the Parent Company Financial Statements, including the disclosures, and whether the Consolidated Financial Statements and the Parent Company Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view. Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the Group Financial Statements and the Parent Company Financial Statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Statement on Management Commentary Management is responsible for Management Commentary. Our opinion on the Consolidated Financial Statements and the Parent Company Financial Statements does not cover Management Commentary, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Consolidated Financial Statements and the Parent Company Financial Statements, our responsibility is to read Management Commentary and, in doing so, consider whether Management Commentary is materially inconsistent with the Consolidated Financial Statements and the Parent Company Financial Statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether Management Commentary provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we conclude that Management Commentary is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of Management Commentary. The ratios stated in the list of key figures and ratios have been calculated as follows: Equity ratio: Equity (ex. minorities), at year-end x 100 Total assets, at year-end Return on equity: Profit/loss after tax x 100 Average equity Primary activities The primary activity consists of selling leisure equipment within action sport as well as related activities within B2B and B2C segments, mainly in Europe and North America. We are a significant player in the action sport market and want to provide a wide range of action sport products for both B2C and B2B. We buy products from vendors/brands and focus on sale, distribution, and excellent customer service. We primarily sell through our websites. We have more than 70 full-time employees. We are located in Søften, Denmark. We pick and pack from our own warehouse in Denmark as well as an additional warehouses outside Denmark. Our products are mainly manufactured in Asia and Europe. Unusual matters There have been no unusual circumstances. Development in activities and financial and economic position Profits for the year is better than expected. In all markets the demand for Action Sports products has stabilized throughout 2024 and the revenue increased. The EBIT went from -3,8 million DKK in 2023 to 6 million DKK in 2024. The combination of a higher activitity level, lower costs and a focus on the right price strategy in tough markets are the reasons for a positive result in 2024. Our equity went from DKK 84,4 million DKK to 84,7 million DKK as per 31 December 2024. Profit/loss for the year compared to the expected development The financial performance for 2024 exceeded initial expectations and showed a posivite improvement compared to previous forecasts. The expectations were a positive EBITDA around 8-12 million DKK. The EBITDA ended at 8 million DKK with a profit of 155 thousand DKK. The bank debt has been reduced with more than 60% throughout 2024. The activity level was higher than expected (more orders), so it leads to a positive deviation. Despite this progress, the result is still not entirely satisfactory, as there remain areas with potential for further improvement. Significant events after the end of the financial year No events have occurred after the balance sheet date to this date, which would influence the evaluation of this annual report. Financial risks Our risk management program seeks to identify, assess, and elude risks in order to minimize potential unfavorable effects on our financial performance. Operational risk: The operational risks are in general related to the development of the different markets. Currency risks: Many of our purchases are made in USD and there is a minor risk that currency rates change after placing the orders. We always take the current USD rate into consideration in our price calculations when the shipments arrive. Besides this, forward contracts are used to hedge specific currency positions, specifically as effective hedging of our future cash flow. We also have sales in USD that contribute to a USD income. As a result of Denmark's fixed exchange rate policy towards the euro, no exchange rate limits have been set for the euro. Our currency policy is a constantly monitoring of the different currencies and upon significant changes price adjustments will occur. All in all we consider the currency risks minor. Credit risks: The majority of our sales are made through prepayment, credit cards or similar payment upfront methods. In 2024 we had minor losses on customers with credit or credit card fraud. We always evaluate each fraud case and our algorithm to minimize the loss. Liquidity risks: Our liquidity management's objective is to provide sufficient cash and cash equivalents to enable us to meet our payment obligations. With the continuous reduction of debt and a cashflow and financing under control we foresee the liquidity risks as minor. Outlook With a positive result in 2024 the expectations for an even better result in 2025 have increased. Despite global uncertainties related to tariffs, conflicts, and other challenges, we expect to maintain the revenue at a 2024 level and increase earnings. We remain confident in our ability to adapt to changing market conditions and leverage opportunities for growth. We expect an EBITDA around 10-13 million DKK for the current financial year and a result of 5-7 million DKK before tax. The cashflow will also be positive in 2025 and the debt will be at a normal level. Nationality and Age We want to be an attractive company with and international work environment and the company language is English. We are currently 22 nationalities. We provide a relocation support setup including Skatepro apartments and communicate in English for everybody to feel included. We want to attract employees of all ages (junior and senior). Our average age is 29,8 years, and we have a split from 13 to 61 years. We cover all ages but also want to make sure to have a set of young people that match and understand our customers' demands. Group DKK Share capital Fair value reserve for hedge accounting Fair value reserve for currency translation of foreign entities Retained earnings Total Equity at 1 January 2024 125.000 0 22.241 84.299.149 84.446.390 Proposed profit allocation, see note 5 154.570 154.570 Change fair value reserves Value adjustments in the year 15.740 95.356 111.096 Tax on changes in equity -3.463 -3.463 Equity at 31 December 2024 125.000 12.277 117.597 84.453.719 84.708.593 Parent Company DKK Share capital Reserve for net revaluation under the equity method Fair value reserve for hedge accounting Retained earnings Total Equity at 1 January 2024 125.000 1.599.891 0 82.721.499 84.446.390 Proposed profit allocation, jf. note 5 159.538 -4.968 154.570 Other legal bindings Foreign exchange adjustments 95.356 95.356 Change fair value reserves Value adjustments in the year 15.740 15.740 Tax on changes in equity -3.463 -3.463 Equity at 31 December 2024 125.000 1.854.785 12.277 82.716.531 84.708.593 1 | Staff costs Average number of full time employees 76 92 76 92 Wages and salaries 34.874.726 38.492.626 33.619.918 37.888.556 Pensions 4.651.899 4.738.933 4.651.899 4.738.933 Social security costs 557.680 694.513 557.680 694.513 40.084.305 43.926.072 38.829.497 43.322.002 Remuneration of Management and Board of Directors 2.497.876 0 2.497.876 0 Remuneration of Executive Board 0 350.000 0 350.000 Remuneration of Board of Directors 0 1.757.714 0 1.757.714 2.497.876 2.107.714 2.497.876 2.107.714 According to ÅRL§ 98b, section 3, no. 2 the remuneration of the executive management and the board of directors is presented collectively. 2 | Other financial income Other interest income 50.055 40.332 40.482 32.832 50.055 40.332 40.482 32.832 3 | Other financial expenses Interest expenses to group enterprises 843.951 531.511 961.424 630.318 173.107 Other interest expenses 4.977.186 8.726.627 5.000.505 8.727.037 5.821.137 9.258.138 5.961.929 9.357.355 5 | Proposed distribution of profit Allocation to reserve for net revaluation under the equity method 0 0 159.538 150.542 514.100.04 Retained earnings 154.570 -10.121.663 -4.968 -10.272.205 154.570 -10.121.663 154.570 -10.121.663 6 | Intangible assets Group DKK Acquired concessions, patents, licences, trademarks and similar rights Cost at 1 January 2024 452.497 Additions 110.483 Cost at 31 December 2024 562.980 Amortisation at 1 January 2024 413.592 Amortisation for the year 51.050 Amortisation at 31 December 2024 464.642 Carrying amount at 31 December 2024 98.338 Parent Company DKK Acquired concessions, patents, licences, trademarks and similar rights Cost at 1 January 2024 452.497 Additions 110.483 Cost at 31 December 2024 562.980 Amortisation at 1 January 2024 413.592 Amortisation for the year 51.050 Amortisation at 31 December 2024 464.642 Carrying amount at 31 December 2024 98.338 7 | Property, plant and equipment Group DKK Other plant, fixtures and equipment Leasehold improvements Cost at 1 January 2024 9.569.355 2.630.872 Additions 473.250 61.071 Disposals -951.654 -518.720 Cost at 31 December 2024 9.090.951 2.173.223 Depreciation and impairment losses at 1 January 2024 3.628.986 2.014.725 Reversal of depreciation of assets disposed of -836.506 -514.602 Depreciation for the year 1.839.031 225.938 Depreciation and impairment losses at 31 December 2024 4.631.511 1.726.061 Carrying amount at 31 December 2024 4.459.440 447.162 Finance lease assets 3.220.836 Parent Company DKK Other plant, fixtures and equipment Leasehold improvements Cost at 1 January 2024 9.569.355 2.630.872 Additions 473.250 61.071 Disposals -951.654 -518.720 Cost at 31 December 2024 9.090.951 2.173.223 Depreciation and impairment losses at 1 January 2024 3.628.986 2.014.725 Reversal of depreciation of assets disposed of -836.506 -514.602 Depreciation for the year 1.839.031 225.938 Depreciation and impairment losses at 31 December 2024 4.631.511 1.726.061 Carrying amount at 31 December 2024 4.459.440 447.162 Finance lease assets 3.220.836 8 | Financial non-current assets Group DKK Investments in subsidiaries Rent deposit and other receivables Cost at 1 January 2024 0 2.752.934 Additions 0 34.096 Disposals 0 -187.500 Cost at 31 December 2024 0 2.599.530 Carrying amount at 31 December 2024 0 2.599.530 Parent Company DKK Investments in subsidiaries Rent deposit and other receivables Cost at 1 January 2024 34.524 2.752.934 Additions 0 34.096 Disposals 0 -187.500 Cost at 31 December 2024 34.524 2.599.530 Revaluation at 1 January 2024 1.599.891 0 Profit/loss for the year 159.538 0 Revaluation at 31 December 2024 1.759.429 0 Exchange adjustment -95.356 0 Impairment losses and amortisation of goodwill at 31 December 2024 -95.356 0 Carrying amount at 31 December 2024 1.889.309 2.599.530 Investments in subsidiaries Name and residence Ownership Skatepro US Inc., USA 100 % 9 | Deferred tax assets The provision for deferred tax is related to differences between the carrying amount and tax value of securities, receivables, intangible and tangible fixed assets, including recognised finance lease contracts. Group Parent Company 2024 2023 2024 2023 DKK DKK DKK DKK Deferred tax assets is related to: Intangible assets 8.467 -2.764 8.467 -2.764 Property, plant and equipment -439.356 -882.488 -439.356 -882.488 Prepayments 0 -115.136 0 -115.136 Tax losses carried forward 10.596.528 11.048.066 10.596.528 11.048.066 Financial leasing 708.584 911.594 708.584 911.594 Deferred tax of the year, equity -3.463 0 -3.463 0 10.870.760 10.959.272 10.870.760 10.959.272 Group Parent Company 2024 2023 2024 2023 DKK DKK DKK DKK Deferred tax assets, beginning of year 10.959.272 8.072.000 10.959.272 8.072.000 450.600.01 Deferred tax of the year, income statement -85.049 2.887.272 -85.049 2.887.272 450.600.02 Deferred tax of the year, equity -3.463 0 -3.463 0 450.600.03 Deferred tax assets 31 December 2024 10.870.760 10.959.272 10.870.760 10.959.272 Recognized as follows: Deferred tax (assets) 10.870.760 10.959.272 10.870.760 10.959.272 10.870.760 10.959.272 10.870.760 10.959.272 The company's tax losses carried forward is recognized as a deferred tax asset, since this is expected to be used within the foreseeable future. 10 | Prepayments Prepayments recognized as receivables comprises prepaid expenses. 11 | Long-term liabilities Group 31/12 2024 Repayment Debt outstanding 31/12 2023 DKK total liabilities next year after 5 years total liabilities Lease liabilities 3.220.836 969.781 0 4.143.608 Payables to group enterprises 16.980.042 0 16.980.042 28.023.245 Debt to owners and Management 26.092.142 0 26.092.142 25.209.104 Deposits 93.080 0 93.080 198.468 46.386.100 969.781 43.165.264 57.574.425 Parent Company 31/12 2024 Repayment Debt outstanding 31/12 2023 DKK total liabilities next year after 5 years total liabilities Lease liabilities 3.220.836 969.781 0 4.143.608 Payables to group enterprises 16.980.042 0 16.980.042 28.023.245 Debt to owners and Management 26.092.142 0 26.092.142 25.209.104 Deposits 93.080 0 93.080 198.468 46.386.100 969.781 43.165.264 57.574.425 Group Parent Company 2024 2023 2024 2023 DKK DKK DKK DKK 12 | Other liabilities A-tax and labour market contribution 0 881.560 0 881.560 ATP and social security costs 139.293 67.784 139.293 67.784 Holiday allowance commitment 1.042.147 1.122.200 1.042.147 1.122.200 Payroll due 456.430 4.146.518 456.430 4.146.518 Holiday pay obligations 45.460 34.881 45.460 34.881 SH and options 47.843 15.349 47.843 15.349 Pensions payable 5.212 4.166 5.212 4.166 VAT 8.911.750 8.061.733 8.639.680 7.832.239 Other 1.729.546 848.116 1.729.546 848.116 12.377.681 15.182.307 12.105.611 14.952.813 Contingent liabilities Rent obligations: The Company has entered into rent commitments, which at the balance sheet date amount to DKK 58.027 thousand during the period of notice, which expires on June 30th 2033. Joint liabilities The Company is jointly and severally liable together with the Parent Company and the other group companies in the joint taxable group for tax on the group’s joint taxable income and for certain possible withholding taxes, such as dividend tax, etc. Tax payable on the Group’s joint taxable income is stated in the annual report of Bluemind Holding ApS, which serves as management Company for the joint taxation. 14 | Charges and securities A floating charge of a maximum of DKK 125.000 thousand secured on unsecured claims, inventories, operating equipment and intellectual property rights has been provided as security for the Group's bank commitments. The carrying amount of unsecured claims provided as security at 31.12.2024 is DKK 5,449 thousand. The carrying amount of inventories provided as security at 31.12.2024 is DKK 177,648 thousand. The carrying amount of operating equipment provided as security at 31.12.2024 is DKK 4,907 thousand. The carrying amount of intellectual property rights provided as security at 31.12.2024 is DKK 98 thousand. The Group has provided a payment gurantee as of 31.12.2024, for an amount of DKK 1.079 thousand. 15 | Related parties Related parties with controlling interest Bluemind Holding ApS owns 60% of the shares in the Entity, thus excersising contol. Bluemind Holding ApS is owned 100% of Jakob Høy Biegel, thus exercising control. Transactions with related parties The Company did not carry out any material transactions that were not concluded on market conditions. According to section 98c, subsection 7 of the Danish Financial Statements Act information is given only on transactions that were not performed on common market conditions. 16 | Consolidated Financial Statements The company is included in the consolidated financial statements of Bluemind Holding ApS, which is the highest level in the group. Requisitioning of the parent companys consolidated financial statements: Præstevangvej 45, Aarhus V, CVR-nr.: 43 77 12 21 The Annual Report of SKATEPRO ApS for 2024 has been presented in accordance with the provisions of the Danish medium-size Financial Statements Act for enterprises in reporting class C. Regnskabsklasse C, mellemstor virksomhed1 true The Annual Report is prepared consistently with the accounting principles applied last year. The Consolidated Financial Statements include the Parent Company SKATEPRO ApS and the subsidiaries in which SKATEPRO ApS directly or indirectly holds more than 50% of the voting rights or in any other way has a controlling influence. Enterprises in which the Group holds between 20% and 50% of the voting rights and exercises significant, but not controlling influence, are considered associates, see the Group structure. The Consolidated Financial Statements consolidate the Financial Statements of the Parent Company and the subsidiaries by combining uniform accounts items. Intercompany income and expenses, shareholdings, intercompany accounts and dividend, and realised and unrealised gains and losses arising from transactions between the consolidated enterprises are fully eliminated in the consolidation. Net revenue Net revenue from the sale of merchandise and finished goods is recognised in the Income Statement if supply and risk transfer to purchaser has taken place before the end of the year and if the income can be measured reliably and is expected to be received. Net revenue is recognised exclusive of VAT and less duties and discounts related to the sale. Cost of sales Cost of sales comprise costs incurred to achieve the net revenue for the year, measured at cost adjusted for inventory writedowns. Other operating income Other operating income includes items of a secondary nature in relation to the enterprises' principal activities, including profit from sale of intangible and tangible assets, operating loss and conflict compensations, as well as salary refunds. Compensations are recognised when the income is estimated to be realisable. Other external expenses Other external expenses include other production, sales, delivery and administrative costs, including costs of energy, marketing, premises, loss on bad debts, operating lease expenses, etc Payments related to operating lease expenses and other lease agreements are recognised in the Income Statement over the contract period. The Company’s total liability concerning operating and other lease agreements are stated under contingencies, etc. Staff costs Staff costs comprise wages and salaries, including holiday pay and pensions, and other costs of social security etc., for the Group and the Parent Company's employees. Income from investments in subsidiaries The Income Statement of the Parent Company recognises the proportional share of the results of subsidiaries determined according to the Parent Company’s accounting policies and after full elimination of intercompany profits/losses and deduction of amortisation of goodwill. resulting from purchase price allocation at the date of acquisition, is recognised in the Parent Company’s Income Statement. Profits from sale are recognized, if the economic rights related to the sold subsidiaries are transferred. However, not before the profit is realised or regarded as realisable. Moreover, realised losses besides impairments are recognised when they are demonstrated. Financial income and expenses Financial income and expenses include interest income and expenses, financial expenses of finance leases, realised and unrealised gains and losses arising from securities, debt and transactions in foreign currencies, as well as charges and allowances under the tax-on-account scheme, etc. Financial income and expenses are recognised by the amounts that relate to the financial year. Interest income and expenses are calculated on amortised cost prices. Tax The tax for the year, which consists of the current tax for the year and changes in deferred tax, is recognised in the Income Statement by the share that may be attributed to the profit for the year, and is recognised directly in equity by the share that may be attributed to entries directly to equity. Intangible fixed assets Patents and licences are measured at the lower of cost less accumulated amortisation and the recoverable amount. Patents are amortised over the remaining patent period and licences are amortised over the period of the agreement, however, no more than 8 years. Profit or loss from sale of intangible fixed assets is calculated at the difference between the sales price and the carrying amount at the time of the sale. Profit and loss are recognised in the Income Statement under other operating income or other operating expenses. Tangible fixed assets Land and buildings, production plant and machinery, other plant, fixtures and equipment are measured at cost less accumulated depreciation and impairment losses. The depreciation base is cost less estimated residual value after end of useful life. The cost includes the acquisition price and costs incurred directly in connection with the acquisition until the time when the asset is ready to be used. Straight-line depreciation is provided on the basis of an assessment of the expected useful lives of the assets and their residual value: Useful life Other plant, fixtures and equipment 3-10 years Leasehold improvements 3 years Estimated useful lives and residual values are reassessed annually. Profit or loss on sale of tangible fixed assets is stated as the difference between the sales price less selling costs and the carrying amount at the date of sale. Profit or loss is recognised in the Income Statement as other operating income or other operating expenses. Lease contracts Lease contracts relating to tangible fixed assets for which the Company bears all material risks and benefits attached to the ownership (finance lease, see IAS 17) are recognised as assets in the Balance Sheet. The assets are at the initial recognition measured at the lower of cost stated at fair value and the and present value of the future lease payments. The internal interest rate of the lease contract, or alternatively the Company’s loan interest, is used as discounting factor when calculating the present value. Finance lease assets are hereafter treated as the Group’s and the Company’s other similar tangible fixed assets. The capitalised residual lease liability is recognised in the Balance Sheet as a liability and the interest portion of the lease payment is recognised in the Income Statement over the contract period. All other lease contracts are considered to be operating leases. Payments related to operating leases and other rental agreements are recognised in the Income Statement over the contract period. The Company's total liability relating to operating leases and rental agreements is disclosed as contingencies etc. Financial non-current assets Investments in subsidiaries are measured in the Parent Company Balance Sheet under the equity method, which is regarded as a method of measuring/consolidation. The combination method is applied when acquiring enterprises within the Group, where the combination is regarded as completed at the date of acquisition, and by using the carrying amounts of the assets and liabilities acquired. The difference between the acquisition cost and carrying amounts is recognised directly in equity. Net revaluation of investments in subsidiaries is transferred under equity to reserve for net revaluation under the equity value method to the extent that the carrying amount exceeds the acquisition value. Investments in subsidiaries with negative equity value are measured at DKK 0. Any receivables with these companies are written off, to the extent that the receivable is uncollectible from a specifically assessed indication of impairment. To the extent that the Parent Company has a legal or actual obligation to cover a negative balance which exceeds the receivable, the remainder is recognised under provisions for liabilities. Impairment of fixed assets The carrying amount of intangible fixed and tangible assets together with fixed assets, which are not measured at fair value,, are assessed annually for indications of impairment other than that reflected by amortisation and depreciation. In the event of impairment indications, an impairment test is made for each asset or group of assets, respectively. If the recoverable amount is lower than the carrying amount, the asset is written down to the recoverable amount. The recoverable amount is calculated at the higher of the capital value and the sales value less expected costs of a sale. The capital value is determined as the Company's share in the current value of the net cash flows which the subsidiary is expected to generate through its activities and from sale of assets after the end of their useful lives. A discount rate is used which reflects the risk-free market rate and the owners' minimum return on interest requirements for similar assets. The growth rate in the terminal period is determined in accordance with the standards within the industry. Inventories Inventories are measured at cost using the FIFO principle. If the net realisable amount is lower than cost, the inventories are written down to the lower amount. The cost of finished goods merchandise as well as consumables is calculated at acquisition price with addition of transportation and similar costs. The net realisable value of inventories is stated at the expected sales price less direct completion costs and costs incurred to execute the sale and is determined with due regard to marketability, obsolescence and development in expected sales price of the inventories. Receivables Receivables are measured at amortised cost which usually corresponds to nominal value. The value is written down to meet expected losses. Write-off is performed to provide for losses when an objective indication has been assessed to have incurred that a receivable or a portfolio of receivables are impaired. If there is an objective indication that an individual receivable is impaired, the write-off is performed at individual level. Receivables for which there are no objective indication of impairment at individual level are assessed at portfolio level for objective indication of impairment. The portfolios are primarily based on the debtors’ registered office and credit rating in accordance with the Company’s policy for credit risk management. The objective indicators, which are applied for portfolios, are determined based on the historical loss experiences. Write-off is determined as the difference between the carrying amount of receivables and the present value of the expected cash flows, including realisable value of any received collaterals. The effective interest rate is used as discount rate for the single receivable or portfolio. Accruals, assets Accruals recognised as assets include costs incurred relating to the subsequent financial year. Prepayments received from customers Prepayments received from customers comprise amounts received from customers prior to delivery of the goods agreed or completion of the service agreed. Cash and cash equivalents Cash and cash equivalents include cash in hand and bank deposits. Tax payable and deferred tax Current tax liabilities and receivable current tax are recognised in the Balance Sheet as the calculated tax on the taxable income for the year, adjusted for tax on the taxable income for previous years and taxes paid on account. The Company is subject to joint taxation with Danish Group companies. The current corporation tax is distributed among the joint taxable companies in proportion to their taxable income and with full allocation and refund related to tax losses. The joint taxable companies are included in the tax-on-account scheme. Joint taxation contributions receivable and payable are recognised in the Balance Sheet under current assets and liabilities, respectively. Deferred tax is measured on the temporary differences between the carrying amount and the tax value of assets and liabilities. Deferred tax assets, including the tax value of tax loss carryforwards, are measured at the amount at which the asset is expected to be used within a reasonable number of years, either by setoff against tax on future earnings or by setoff against deferred tax liabilities within the same legal tax entity. Deferred tax is measured on the basis of the tax rules and tax rates that under the legislation in force on the Balance Sheet date will be applicable when the deferred tax is expected to crystallise as current tax. Any changes in the deferred tax resulting from changes in tax rates, are recognised in the income statement, except from items recognised directly in equity. Liabilities Financial liabilities are recognised at the time of borrowing by the amount of proceeds received less transaction costs. In subsequent periods, the financial liabilities are measured at amortised cost equal to the capitalised value when using the effective interest, the difference between the proceeds and the nominal value being recognised in the Income Statement over the loan period. The amortised cost of current liabilities corresponds usually to the nominal value. The capitalised remaining lease liability on finance lease contracts is also recognised as financial liabilities. Foreign currency translation Transactions in foreign currencies are translated at the rate of exchange on the transaction date. Exchange differences arising between the rate on the transaction date and the rate on the payment date are recognised in the Income Statement as a financial income or expense. Receivables, payables and other monetary items in foreign currencies that are not settled on the Balance Sheet date are translated at the exchange rate on the Balance Sheet date. The difference between the exchange rate on the Balance Sheet date and the exchange rate at the date when the receivables or payables come into existence recognised in the Income Statement as financial income or expenses. Fixed assets acquired in foreign currencies are translated at the rate of exchange on the transaction date. At recognition of foreign subsidiaries that are not independent entities, but integrated entities, monetary items are translated at the exchange rate on the Balance Sheet date. Non-monetary items are translated at the rate at the date of acquisition or at the date of a subsequent revaluation or writedown of the asset. The items of the Income Statement are translated at the rate on the transaction date, items derived from non-monetary items being translated at the historic rates of the non-monetary item. Cash Flow Statement With reference to Section 86(4) of the Danish Financial Statements Act, the Company has not prepared a cash flow statement. A cash flow statement has been prepared for the Group. The cash flow statement shows the Group’s cash flows for the year for operating activities, investing activities and financing activities in the year, the change in cash and cash equivalents of the year and cash and cash equivalents at beginning and end of the year. Cash flows from operating activities: Cash flows from operating activities are computed as the results for the year adjusted for non-cash operating items, changes in net working capital and corporation tax paid. Cash flows from investing activities: Cash flows from investing activities include payments in connection with purchase and sale of intangible and tangible fixed asset and fixed asset investments. Cash flows from financing activities: Cash flows from financing activities include changes in the size or composition of share capital and related costs, and borrowings and repayment of interest-bearing debt and payment of dividend to shareholders. Cash and cash equivalents: Cash and cash equivalents include cash at bank and in hand and short-term securities, for which there is only negligible risk of changes in value, and which are readily negotiable for cash at bank and in hand. With reference to Section 86(4) of the Danish Financial Statements Act, the Company has not prepared a cash flow statement. 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