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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 2025 of the Company and of the results of the Company operations for 2025. 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. Frederikshavn 2026-04-07 Kim Bengtsen Kristian Kaasing Larsen CEO CCO Søren Østergaard Sørensen Henrik Sørensen Kim Bengtsen Chairman To the shareholder of VMS Group 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 2025 and of the results of the Company’s operations for the financial year 1 January - 31 December 2025 in accordance with the Danish Financial Statements Act.We have audited the Financial Statements of VMS Group A/S for the financial year 1 January - 31 December 2025, 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 Financial 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.Plan and perform the audit to obtain sufficient appropriate audit evidence regarding the consolidated financial information of the entities or business units as a basis for forming an opinion on the Financial Statements. We are responsible for the direction, supervision and review of the audit work performed. 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. Aarhus C 2026-04-07 PricewaterhouseCoopersStatsautoriseret Revisionspartnerselskab 33771231 Henrik Kragh Thomas Bernth Jensen State Authorised Public Accountant State Authorised Public Accountant mne26783 mne47814 VMS Group A/S Nordhavnsvej 1 9900 Frederikshavn 27215629 Frederikshavn Jens Chr. Skous Vej 1 8000 Aarhus C Seen over a 5-year period, the development of the Company is described by the following financial highlights:EBITDA15,55930,96742,16923,4444,191EBIT11,02926,78038,56420,6211,220* Adjusted EBITDA: VMS Group A/S has incurred costs which are considered extraordinary or significantly outside VMS Group A/S's normal activities. Consequently, adjusted EBITDA is an expression of VMS Group A/S's normalised EBITDA from primary activities. 537814000 356400000 284650000 1771000 3368000 1659000 32438000 19580000 2536000 257364000 247113000 164670000 8127000 13943000 5086000 3646000 1762000 83895000 60725000 42359000 237 243 193 172 153 0.309 0.335 0.326 0.246 0.257 0.162 0.314 0.449 0.380 0.061 Key activitiesVMS Group A/S covers all aspects of service, such as repair and maintenance, spare parts delivery, sales of complete propulsion systems as well as engineering projects within the maritime industry, the offshore industry, power plants and wind industry.Development in the yearThe net profit for the year amounts to DKK 16 million. Revenue for the year amounts to DKK 548 million. In total the obtained results and the development in the year is considered less satisfactory by the management.The subsidiaries in Brazil and Namibia have continued their positive development and combined they have contributed with a net profit of DKK 13 million. Both companies have increased workforce during the year and have gained a stronger foothold in the local market.The subsidiaries in the USA remain in the start up phase and have in 2025 initiated the first projects in the American market. Activity is expected to increase in 2026.The market for servicing diesel engines in the maritime industry has in 2025 been affected by the after effects of COVID 19 as well as a shift in the market related to 5 and 10 year dockings. This had a negative impact on activity level in the second half of 2025.The HSEQ department has continued its development in 2025, with extra focus on ISO certification and CSRD.The past year and follow-up on development expectations from last yearThe net profit for the year has been realised below budgets and plans. This is due to continued after effects of COVID 19 as well as shifts in the market related to 5 and 10 year dockings. The net profit for 2025 of DKK 16 million is considered less satisfactory.The revenue is realised at DKK 548 million which is lower than expected for 2025 at DKK 600-650 million. In general, the Company has had lower activity than expected.Market risksThe Company uses several suppliers on significant raw materials, parts and components to mitigate the risk of being dependent of single suppliers. However, for some key components there is a high degree of supplier dependency mitigated by strong and close cooperation with these suppliers. The Company also operates strategic with safety stocks, to avoid shortages of components, due to the global backlog issues.The Company is not considered particularly price sensitive as it is basically possible to pass on price fluctuations in purchase prices and wages/salaries to customers, and competitors are subject to the same sensitivity.Foreign exchange risksMajority of trade is settled in DKK, EUR, USD.Management reviews the currency exposure frequently and significant transactions in USD is hedged. Both sales and purchase are to some extent done in USD. Hedging is carried out based on actual orders and only net exposure is hedged. Exposure in EUR is not considered being a risk compared to DKK.Only recognised banks are used for hedging currency exposure in USD for which reason the counterparty risk is low.Interest rate risksThe Company has interest-bearing debt; however, not to an extent that is considered to involve sensitivity to significant changes in the level of interest.Credit risksCredit risk is assessed customer by customer. The Company use credit evaluation on regular basis, to understand any potential trading risk. Prepayment is used frequently.Targets and expectations for the year aheadThe Company expects the activity level during 2026 will increase, and revenue is forecasted in the range of DKK 650-730 million.The Company expect that the Company´s profitability in 2026 will increase from this year, and the Company estimates net profit in the range of DKK 45-50 million.Significant events after the end of the financial yearNo events have occurred after the end of the financial year of material importance for the Company's financial position. Statement of corporate social responsibility, cf. section 99b of the Financial Statements ActThe Company acknowledges its social responsibility, which is described in policies and manuals, such as the Company’s Code of Conduct, covering environmental, social, human rights and anti-corruption matters.The Company has a whistleblower system and employees are encouraged to report any kind of breaches, including environmental, human rights and anti-corruption matters. Reports can be submitted anonymously.In 2025, the Company continued its calculations using the Climate Compass and compared these with the established baseline. The Climate Compass is used as a key tool for monitoring emissions and supporting the Company’s environmental and climate initiatives.The Company continues to use the Climate Compass as a key tool for turning policy into concrete actions.From management it is an ongoing process to follow up on the Company’s targets on corporate and social responsibility securing that targets are met.Business model:Please refer to description of key activities on page 7. The Company conducts its service jobs with a permanent and flexible staff. The Company and the staff have high quality standards, know-how and supply on-time delivery. To support this statement, the Company has several long-term customer relationships.Environment and climate:The Company considers Corporate social responsibility (CSR) and sustainability as one of the core points of the business. The Company’s CSR and sustainability agenda, objectives and targets are aligned with the UN Sustainable Development Goals (SDGs). The most relevant SDGs have been mapped to the business and objectives:SDG3 Good health and wellbeing.SDG9 Industry, innovation and infrastructure.SDG12 Responsible consumption and production.In 2025, the Company has continuously achieved satisfactory results within the environmental targets. Focus on reuse of waste materials from workshop activities has been a strong priority for management and continues to show positive trends.The Company has internal guidelines, objectives and strategies according to which the Company works to ensure a safe and healthy work environment and that environmental and climate matters are included in the Company’s processes.The Company’s environmental policy includes focus on reducing environmental impact, improving resource efficiency and reducing emissions.The most significant environmental and climate risks relate to:handling and disposal of waste materialsenergy consumption and related emissionscompliance with environmental legislationThese risks are managed through established procedures, monitoring, employee training and the Company’s certified management systems.The Company holds ISO 9001 (quality management), ISO 14001 (environmental management system) and ISO 45001 (occupational health and safety). The management systems support the Company’s work within environment, climate and work environment.The ISO 9001, 14001 and 45001 management systems are audited yearly both internally and externally by DNV.The Company will in the coming years increase focus within environment and climate and reduce emissions through continuous improvements and implementation of management systems and controls.Business Ethics and Compliance:Within VMS Group A/S a Code of Conduct has been established.The Code of Conduct is a general guideline on how to conduct business on a daily basis as a member of VMS Group A/S and includes principles on business ethics, human rights and anti-corruption.VMS Group A/S complies with the Code of Conduct and is doing business within this framework. Employees are required to undergo yearly training to ensure compliance in this respect, and all new employees must read and sign an agreement confirming that they will act according to the principles of the Code of Conduct.Anti-corruption:VMS Group A/S complies with all anti-corruption and anti-bribery laws wherever the Company conducts business. No employees or company representatives may make or promise to make, directly or indirectly, any payment or transfer of value to obtain or retain business.Anti-corruption and anti-bribery are a part of VMS Group A/S's Code of Conduct.The most significant risks relate to:interactions with customers and supplierspotential conflicts of interestThese risks are mitigated through internal controls, management attention and employee awareness.In 2025, the Company has not identified any incidents of corruption or bribery and has not received any reports through the whistleblower system related to such matters.Human rights and working conditions:The policy of human rights within VMS Group A/S is formalized in the Code of Conduct. The Company promotes a working culture that fosters mutual respect, openness and individual integrity and does not tolerate discrimination, forced labour, child labour or harassment.The most significant risks related to human rights are limited due to the Company’s primary operations in regulated markets. Potential risks relate to working conditions within the Company and its value chain.In 2025, the Company has not identified any breaches of human rights and has not received any reports through the whistleblower system related to human rights.The following principles apply:We promote a working culture that fosters mutual respect, openness and individual integrity.We respect local standards of occupational safety and health regulations.We base access to employment and promotion on personal skills, abilities and performance, not on gender, race or other discriminatory factors.We encourage employee/management communication.We do not use forced, compulsory or child labor.We do not tolerate workplace violence including threats, threatening behavior, harassment, intimidation and similar conduct.We protect employees’ personal data and privacy.There is focus by management on diversity, and this has been communicated to the organisation.Work is being done on increased supplier control to minimize risks.Social and employee matters (HSEQ):The Company continues to focus on employee satisfaction, as the ability to attract qualified labour is crucial for the Company’s competitiveness.A performance and development interview is carried out once a year for all employees.The Company’s occupational health and safety committee works to continuously improve collaboration across functions, departments and seniority.The most significant risks within social and employee matters relate to:workplace accidentsunsafe working conditionslack of safety awarenessThese risks are mitigated through procedures, training and continuous follow-up.A well-being test was conducted in 2025, and the outcome was positive and showed improvement.During the year, the HSEQ department has carried out a number of safety and environmental campaigns and followed up on previous initiatives.All employees are required to complete a “Remote Safety Onboarding” test once a year. Statement on data ethics, cf. section 99d of the Financial Statements ActData protection is very important data ethical matter for VMS Group A/S. The Company do not actively collect, analyse, and process market data as a part of its business processes, nor does the Company have any algorithms to analyse data. The Company does not consider this as significant for its business, and therefore has no policy for data ethics. Whenever the management consider it necessary a data ethics policy will be implemented. 548039000 625074000 8981000 5824000 297758000 367094000 45754000 47073000 213508000 216731000 197949000 185764000 4530000 4187000 11029000 26780000 9877000 9742000 838000 986000 3742000 2384000 18002000 35124000 1940000 5667000 16062000 29457000 14000 253000 374000 748000 388000 1001000 18394000 15194000 137000 364000 2730000 2744000 1250000 0 22511000 18302000 32887000 20487000 79000 79000 32966000 20566000 55865000 39869000 61943000 58712000 12001000 2048000 73944000 60760000 68342000 82818000 73292000 88088000 12334000 19742000 11020000 12786000 421000 0 5090000 1359000 170499000 204793000 7050000 3773000 251493000 269326000 307358000 309195000 500000 500000 21245000 10882000 73117000 92097000 94862000 103479000 4216000 5381000 4216000 5381000 4605000 4533000 10673000 10069000 15278000 14602000 32294000 20823000 870000 644000 12678000 11773000 42107000 47656000 19551000 6913000 20887000 12226000 7987000 0 0 13043000 28343000 57056000 28285000 15599000 193002000 185733000 208280000 200335000 307358000 309195000 500000 10882000 92097000 103479000 0 0 25000000 25000000 0 421000 0 421000 0 -100000 0 -100000 0 -165000 165000 0 0 9877000 6185000 16062000 500000 21245000 73117000 94862000 Geographical segmentsEurope381,560407,450Asia6,58711,328Africa100,691138,694America40,17544,255Other19,02623,347548,039625,074Business segmentsProject sales3,59789,378Aftermarket544,442535,696548,039625,074 166944000 158106000 21411000 19371000 3180000 2589000 6414000 5698000 197949000 185764000 Including remuneration to the Executive Board and Board of Directors: 4599000 5863000 162000 220000 4761000 6083000 237 243 838000 722000 0 264000 838000 986000 3179000 4692000 -1165000 909000 -74000 0 1,9405,601thus distributed:1,9405,601 1940000 5667000 0 -66000 25000000 0 9877000 9742000 -18815000 19715000 2556000 7416000 2556000 7416000 2303000 6668000 239000 374000 2542000 7042000 14000 374000 36981000 1739000 11293000 0 6517000 0 360000 1250000 881000 79000 0 0 42617000 1660000 11653000 1250000 21787000 1375000 8549000 0 3317000 226000 374000 0 881000 78000 0 0 24223000 1523000 8923000 0 18394000 137000 2730000 1250000 5277000 0 0 0 9605000 8571000 174000 1034000 945000 0 8834000 9605000 10882000 780000 165000 0 421000 361000 9877000 9741000 -100000 0 21245000 10882000 2808000 0 32887000 20487000 Investments in subsidiaries are specified as follows: Vestergaard Marine Service Do Brasil LTDA Brazil 1.00 Vestergaard Marine Service Namibia (Pty) Ltd. Namibia 1.00 Vestergaard Marine Service Louisiana, LLC United States of America 1.00 Gulf States Marine Services, LLC United States of America 1.00 VMS Marine Company LLC Saudi Arabia 1.00 79000 79000 79000 Selling price of work in progress106,478129,393Payments received on account-52,737-48,21853,74181,175Recognised in the balance sheet as follows:Contract work in progress recognised in assets73,29288,088Contract work in progress recognised in liabilities-19,551-6,91353,74181,175 Prepayments comprise prepaid expenses concerning rent, insurance premiums, subscriptions and interest. Deferred tax liabilities at 1 January5,3814,472Amounts recognised in the income statement for the year-1,165975Amounts recognised in equity for the year 0-66Deferred tax liabilities at 31 December4,2165,381 Payments due within 1 year are recognised in short-term debt. Other debt is recognised in long-term debt.The debt falls due for payment as specified below:Lease obligations5,4755,177Other payables39,01667,125 799000 1596000 3806000 2937000 4605000 4533000 870000 644000 9144000 9331000 1529000 738000 10673000 10069000 28343000 57056000 Deferred income consists of payments received in respect of income in subsequent years. Charges and securityThe following assets have been placed as security with bankers in connection with the company issuing an indemnity letter totaling nominal TDKK 50,000 (floating charge):Intangible assets3881,001Property, plant and equipment22,51118,302Inventories73,94460,760Trade receivables68,34282,818Contract work in progress53,74181,175Receivables from group enterprises15,14219,742 Rental and lease obligationsLease obligations under operating leases. Total future lease payments:Within 1 year6,3196,265Between 1 and 5 years17,5661,979After 5 years3,706027,5918,244Other contingent liabilitiesThe group companies are jointly and severally liable for tax on the jointly taxed incomes etc of the Group. The total amount of corporation tax payable is disclosed in the Annual Report of TopCap HOY ApS, which is the management company of the joint taxation purposes. Moreover, the group companies are jointly and severally liable for Danish withholding taxes by way of dividend tax, tax on royalty payments and tax on unearned income. Any subsequent adjustments of corporation taxes and withholding taxes may increase the Company's liability.The Company has entered into an agreement concerning payment guarantee of TDKK 769. Including to group enterprisesRental and lease obligations03,844TransactionsDuring the year, the Company had the following transactions with its current and previous Parent Companies and its subsidiaries:Revenue: TDKK 20.583 (2024: TDKK 13.738)Goods purchased: TDKK 52.913 (2024: TDKK 54.947)Rent, buildings: TDKK 3.166 (2024: TDKK 3.844)Management fee, received: TDKK 740 (2024: TDKK 582)Interest income: TDKK 838 (2024: TDKK 722) Consolidated Financial StatementsThe Company is included in the Group Annual Report of the Parent Company of the largest and smallest group:TopCap HOY ApS, CVR-no. 45 28 52 86Copenhagen, DenmarkHoyer VMS Group A/S, CVR-no. 44 92 08 24Hadsten, Denmark No events materially affecting the assessment of the Annual Report have occurred after the balance sheet date. The Annual Report of VMS Group A/S for 2025 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. Reclassifications have been made in the comparative figures. Reclassifications do not affect net profit and equity.The Financial Statements for 2025 are presented in TDKK. With reference to section 112 of the Danish Financial Statements Act and to the consolidated financial statements for 2025 of Hoyer VMS Group A/S, 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 Hoyer VMS Group A/S, the Company has not prepared a cash flow statement.Fee to auditors appointed at the general meetingWith reference to section 96(3) of the Danish Financial Statements Act and to the note to the Consolidated Financial Statements of Hoyer VMS Group A/S on the fee to the auditors appointed at the annual general meeting, the Group has omitted to prepare disclosure in the notes of fee to the auditor appointed by the general meeting. Recognition and measurementRevenues 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.Recognition and measurement take into account predictable losses and risks occurring before the presentation of the Annual Report which confirm or invalidate affairs and conditions existing at the balance sheet date. 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. Translation policiesTransactions 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 transaction date rates are recognised in financial income and expenses in the income statement; however, see the section on hedge accounting.Income statements of foreign subsidiaries and associates that are separate legal entities are translated at transaction date rates or approximated average exchange rates. Balance sheet items are translated at the exchange rates at the balance sheet date. Exchange adjustments arising on the translation of the opening equity and exchange adjustments arising from the translation of the income statements at the exchange rates at the balance sheet date are recognised directly in equity.Fixed assets acquired in foreign currencies are measured at the transaction date rates. 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. Hedge accountingChanges 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 the fair value reserve 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. Segment information on revenueInformation on business segments and geographical segments is based on the Company’s risks and returns and its internal financial reporting system. Business segments are regarded as the primary segments. RevenueRevenue from the sale of goods is recognised when the risks and rewards relating to the goods sold have been transferred to the purchaser, the revenue can be measured reliably and it is probable that the economic benefits relating to the sale will flow to the Company.Contract work in progress (construction contracts) is recognised at the rate of completion, which means that revenue equals the selling price of the work completed for the year (percentage-of-completion method). This method is applied when total revenues and expenses in respect of the contract and the stage of completion at the balance sheet date can be measured reliably, and it is probable that the economic benefits, including payments, will flow to the Company. The stage of completion is determined on the basis of the ratio between the expenses incurred and the total expected expenses of the contract.Services are recognised at the rate of completion of the service to which the contract relates by using the percentage-of-completion method, which means that revenue equals the selling price of the service completed for the year. This method is applied when total revenues and expenses in respect of the service and the stage of completion at the balance sheet date can be measured reliably, and it is probable that the economic benefits, including payments, will flow to the Company. The stage of completion is determined on the basis of the ratio between the expenses incurred and the total expected expenses of the service.Revenue is measured at the consideration received and is recognised exclusive of VAT and net of discounts relating to sales. Expenses for raw materials and consumablesExpenses for raw materials and consumables comprise the raw materials and consumables consumed to achieve revenue for the year. Other external expensesOther external expenses comprise indirect production costs and expenses for premises, sales as well as office expenses, etc. Staff expenses comprise wages and salaries as well as payroll expenses. Amortisation, depreciation and impairment lossesAmortisation, depreciation and impairment losses comprise amortisation, depreciation and impairment of intangible assets and property, plant and equipment. Other operating income and expensesOther 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. Income from investments in subsidiariesThe item “Income from investments in subsidiaries” in the income statement includes the proportionate share of the profit for the year. Financial income and expenses comprise interest, financial expenses in respect of finance leases, realised and unrealised exchange adjustments, price adjustment of securities, amortisation of mortgage loans as well as extra payments and repayment under the on-account taxation scheme. Tax on profit/loss for the yearTax for the year consists of current tax for the year and deferred tax for the year. The tax attributable to the profit for 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 TopCap HOY ApS. The tax effect of the joint taxation with the subsidiaries is allocated to enterprises showing profits or losses in proportion to their taxable incomes (full allocation with credit for tax losses). Intangible fixed assetsGoodwill acquired is measured at cost less accumulated amortisation. Goodwill is amortised on a straight-line basis over its useful life, which is assessed at 10 year. The period of amortisation is determined based on an assessment of the acquired Company’s position in the market and earnings profile, and the industry-specific conditions.Patents and licences are measured at the lower of cost less accumulated amortisation and recoverable amount. Patents are amortised over the remaining patent period, and licences are amortised over the licence period; however not exceeding 3-5 year. 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:Plant and machinery5-10 years Other fixtures and fittings, tools and equipment3-5 years Leasehold improvements10 years The fixed assets’ residual values are determined at nil.Depreciation period and residual value are reassessed annually. Impairment of fixed assetsThe carrying amounts of intangible assets and property, plant and equipment and investments 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 subsidiariesInvestments 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. Other fixed asset investments consist of deposits, which are measured at amortised cost. Provisions are made for expected bad debts. InventoriesInventories 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 and costs of completion. The net realisable value is determined allowing for marketability, obsolescence and development in expected selling price.The cost of raw materials and consumables equals landed cost. 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. Contract work in progressContract work in progress is measured at selling price of the work performed calculated on the basis of the stage of completion. The stage of completion is measured by the proportion that the contract expenses incurred to date bear to the estimated total contract expenses. Where it is probable that total contract expenses will exceed total revenues from a contract, the expected loss is recognised as an expense in the income statement.Where the selling price cannot be measured reliably, the selling price is measured at the lower of expenses incurred and net realisable value.Expenses relating to sales work and the winning of contracts are recognised in the income statement as incurred. PrepaymentsPrepayments comprise prepaid expenses concerning rent, insurance premiums, subscriptions and interest. DividendDividend distribution proposed by Management for the year is disclosed as a separate Dividend item. Deferred tax assets and liabilitiesDeferred 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, including the tax base of tax loss carry-forwards, 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 receivables and liabilitiesCurrent 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 are measured at amortised cost, substantially corresponding to nominal value. Deferred incomeDeferred income comprises payments received in respect of income in subsequent years. Financial HighlightsExplanation of financial ratiosSolvency ratioEquity at year end x 100 / Total assets at year endReturn on equityNet profit for the year x 100 / Average equity