Årsrapport 30700228 EY Godkendt Revisionspartnerselskab Dalgasgade 27, 3. sal 7400 Herning 2021-09-30 2022-12-31 42732257 AB Inventech Group ApS E Christensens Vej 76 7430 Ikast 2021-09-30 Hjemstedskommune Jyske Bank Sølvgade 24 7400 Herning EY Godkendt Revisionspartnerselskab 30700228 Dalgasgade 27, 3. sal 7400 Herning Danmark +45 73 23 30 00 2023-05-26 Knud Andersen Regnskabsklasse C, mellemstor virksomhed Revisionspåtegning Grundlag for konklusion Konklusion 2023-05-26 2023-05-26 CaseWare Working Papers Ikast Niels Kirkegaard CEO Knud Andersen Chairman Øjvind Hulgaard Jonas Frick Kent Keiward Pham Herning Niels J. Jørgensen Jesper Stier State Authorised Public Accountant mne8217 State Authorised Public Accountant mne42245 -19941000 Earnings before interest, taxes, depreciation and amortisation (EBITDA) Earnings before interest, taxes, depreciation and amortisation (EBITDA) Earnings before interest, taxes, depreciation and amortisation (EBITDA) Earnings before interest, taxes, depreciation and amortisation (EBITDA) Earnings before interest, taxes, depreciation and amortisation (EBITDA) -32863000 Profit before interest and tax (EBIT) Profit before interest and tax (EBIT) Profit before interest and tax (EBIT) Profit before interest and tax (EBIT) Profit before interest and tax (EBIT) -2844000 111984000 Fixed assets Fixed assets Fixed assets Fixed assets Fixed assets 51773000 Non-fixed assets Non-fixed assets Non-fixed assets Non-fixed assets Non-fixed assets 40000 Share capital Share capital Share capital Share capital Share capital 3085000 Provisions Provisions Provisions Provisions Provisions 42340000 Non-current liabilities other than provisions Non-current liabilities other than provisions Non-current liabilities other than provisions Non-current liabilities other than provisions Non-current liabilities other than provisions 35498000 Current liabilities other than provisions Current liabilities other than provisions Current liabilities other than provisions Current liabilities other than provisions Current liabilities other than provisions -23027000 Total cash flows Total cash flows Total cash flows Total cash flows Total cash flows -20.1 145.8 Current ratio Current ratio Current ratio Current ratio Current ratio 50.6 -76.2 28635000 -5538000 48576000 0 12923000 11622000 -32864000 -17160000 0 -12666000 2000 2000 2846000 2238000 -35708000 -32062000 -4142000 -496000 -31566000 -31566000 358000 0 620000 0 104597000 0 3699000 0 109274000 0 1230000 0 1480000 0 2710000 0 0 133663000 0 133663000 111984000 133663000 5706000 0 5706000 0 26270000 0 17664000 0 0 496000 1007000 0 1022000 0 45963000 496000 104000 8000 51773000 504000 163757000 134167000 40000 40000 82794000 82794000 82834000 82834000 968000 0 2117000 0 3085000 0 38151000 38151000 222000 0 3967000 0 42340000 38151000 5550000 5550000 3373000 10000 123000 0 13540000 0 4706000 20000 0 7602000 5281000 0 2925000 0 35498000 13182000 77838000 51333000 163757000 134167000 40000 0 -31566000 114360000 40000 82794000 40000 0 -31566000 114360000 40000 82794000 -31566000 12352000 6863000 -12351000 2000 2846000 5186000 -20381000 1744000 941000 157951000 749000 -161385000 50000000 114360000 5500000 121000 158739000 -23027000 0 19758000 -3269000 43575000 0 4220000 0 781000 0 48576000 0 85 0 250000 0 3297000 0 3547000 0 2000 2000 0 106000 2846000 2132000 -4142000 -496000 -4142000 -496000 0 2529000 0 2510000 0 0 116219000 0 0 174000 0 1571000 382000 0 0 -382000 382000 2703000 116219000 3699000 0 1831000 0 0 24000 252000 11622000 0 24000 2083000 11622000 0 358000 620000 104597000 3699000 4370000 4395000 0 941000 12000 265000 4358000 5071000 2559000 3403000 581000 444000 -12000 -256000 3128000 3591000 1230000 1480000 242000 0 157951000 157951000 -12666000 -11622000 133663000 Subsidiaries AB Inventech A/S A/S Ikast, Denmark 100 60872000 0 968000 43701000 5550000 38151000 0 222000 0 222000 0 3967000 0 3967000 0 43701000 5550000 38151000 0 -31566000 12923000 -9000 718000 -2000 -2846000 4000 -4146000 2415000 8754000 5682000 6206000 -41733000 -116218000 104000 3373000 Today, the Board of Directors and the Executive Board have discussed and approved the annual report of AB Inventech Group ApS for the financial year as of the establishment of the Company 30 September 2021 - 31 December 2022. The annual report is 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 financial position of the Group and the Company at 31 December 2022 and of the results of the Group's and the Company's operations and of the consolidated cash flows for the financial year as of the establishment of the Company 30 September 2021 - 31 December 2022. Further, in our opinion, the Management's review gives a fair review of the matters discussed in the Management's review. We recommend that the annual report be approved at the annual general meeting. To the shareholder of AB Inventech Group ApS We have audited the consolidated financial statements and the parent company financial statements of AB Inventech Group ApS for the financial year as of the establishment of the Company 30 September 2021 - 31 December 2022, which comprise income statement, balance sheet, statement of changes in equity and notes, including accounting policies, for the Group and the Parent Company, and a consolidated cash flow statement. 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 financial position of the Group and the Parent Company at 31 December 2022, and of the results of the Group's and Parent Company's operations as well as the consolidated cash flows for the financial year as of the establishment of the company 30 September 2021 - 31 December 2022 in accordance with the Danish Financial Statements Act. We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the "Auditor's responsibilities for the audit of the consolidated financial statements and the parent Company financial statements" (herinafter collectively referred to as "the financial statements") section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Management is responsible for the preparation of consolidated financial statements and 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 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 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 financial statements unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so. Our objectives are to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 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 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 financial statements, including the note disclosures, and whether the financial statements represent the underlying transactions and events in a manner that gives a true and fair view. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance 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. Management is responsible for the Management's review. Our opinion on the financial statements does not cover the Management's review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the Management's review and, in doing so, consider whether the Management's review is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether the Management's review provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we conclude that the Management's review is in accordance with the financial statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of the Management's review. The financial ratios stated under "Financial highlights" have been calculated as follows: Return on assets Profit/loss from operating activites x 100 Average assets Current ratio Current assets x 100 Current liabilities Equity ratio Equity, year-end x 100 Total equity and liabilities, year-end Return on equity Profit/loss after tax x 100 Average equity The group's main activities are to develop, design, produce, install and servicing special machines and industrial machines that streamline customers' production processes. The parent company's main activity is to own shares in subsidiaries. During the financial year, the Company carried out impairment tests on the recognised goodwill. The impairment test did not give rise to a write-down of the carrying values. Due to the market situation in the financial markets, several significant assumptions for the impairment test are associated with great uncertainty, including management's expectations for the company's budget for the coming years, growth rate during the terminal period and discount factor. If the assumptions used develop negatively, there may be a need to make write-downs in future financial years. If the discount factor is increased from the used 10.8% to 11.5%, this will result in a write-down requirement of DKK 2.4 million. The income statement for 2021/22 shows a loss of DKK 31,566 thousand, and the balance sheet at 31 December 2022 shows equity of DKK 82,834 thousand. During the financial year, a high capacity level of both work processes, employees and office facilities has been maintained based on an established growth strategy, despite the fact that the market in late 2021 and throughout 2022 has shown a great reluctance to initiate investments in new production capacities within the wind industry. The first financial year was realised with a significantly lower than expected return on capital investments and is considered unsatisfactory. AB Inventech continuously expands knowledge resources within the main activity. Management believes that these knowledge resources are essential to achieve the planned development of the company. Management estimates that the company is not affected by special risks in addition to ordinary business risks in the industry. AB Inventech A/S has established an Environmental and Working Environment Policy that is communicated internally in the organisation and externally where it is considered relevant, e.g. to customers. We will continuously work to achieve improvements within the environment and working environment. We are working towards a culture where zero accidents at work are considered a matter of course, and it is our goal to have a certifiable occupational health and safety management system according to ISO 45001 by the end of 2024 at the latest. In close collaboration with the owners, we are systematically working towards 100% EU taxonomy adjustment in our most important economic activity. In parallel, work is being done to reduce greenhouse gas emissions in accordance with the targets of the Paris Agreement in the three categories Scope 1, 2 and 3. In this connection, several energy-saving activities have been carried out with the involvement of employees, and investments have been made in a photovoltaic system, so that solar cell power will be able to make up approx. 25% of the consumption, in addition, an agreement has been made with the energy company that all other electricity must be green power. Our goal is to have a certifiable environmental management system according to ISO 14001 by the end of 2023 at the latest. Development activities are carried out continuously by the company in order to maintain the company's market position, which primarily concerns special machinery and applications within the wind turbine industry. Significant development activities are also planned for the coming financial year. After the financial year-end, but before the approval of the financial statement for 2022, an extraordinary dividend distribution of DKK 18.5 million was received. In addition, no events materially affecting the Group's and the Company's financial position have occurred subsequent to the financial year-end. Throughout the financial year, there has been a level of passivity in the wind turbine industry's capacity investments, which has resulted in the activity level for 2022 deviating significantly from last year's expectations. Management believes that the company has great growth potential and that the short-term retention costs in securing the level of activity will be more than offset by the future earnings opportunities that this higher capacity apparatus will be able to secure over a longer time horizon. At the beginning of 2023, there is a good order backlog and a large growth in inquiries and submitted offers, which gives management a reasonable belief in significant growth and positive operations for the financial year 2023. Management believes that the group has good prospects for a positive return on capital, which in the long term may exceed the annual costs for financing and depreciation of goodwill. At the beginning of 2023, there is an expectation that there will be a result close to zero in the financial year 2023. Management expects a EBITDA between DKK 6.0 and 8.0 million for 2023 for the group. and a loss before tax in the range of DKK 8.5 to 10.5 million. The annual report of AB Inventech Group ApS for 2021/22 has been prepared in accordance with the provisions in the Danish Financial Statements Act applying to medium-sized reporting class C entities. Reporting currency The financial statements are presented in Danish kroner (DKK'000). Control The consolidated financial statements comprise the Parent Company and subsidiaries controlled by the Parent Company. Control means a parent company’s power to direct a subsidiary’s financial and operating policy decisions. Besides the above power, the parent company should also be able to yield a return from its investment. In assessing if the parent company controls an entity, de facto control is taken into consideration as well. The existence of potential voting rights which may currently be exercised or converted into additional voting rights is considered when assessing if an entity can become empowered to direct another entity’s financial and operating decisions. Preparation of consolidated financial statements The consolidated financial statements are prepared as a consolidation of the parent company's and the individual subsidiaries' financial statements, which are prepared according to the group's accounting policies. On consolidation, intra-group income and expenses, shareholdings, intra-group balances and dividends, and realised and unrealised gains on intra-group transactions are eliminated. Unrealised gains on transactions with associates are eliminated in proportion to the group's interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains if they do not reflect impairment. In the consolidated financial statements, the accounting items of subsidiaries are recognised in full. Non-controlling interests' share of the profit/loss for the year and of the equity of subsidiaries which are not wholly-owned are included in the group's profit/loss and equity, respectively, but are disclosed separately. Acquisitions and disposals of non-controlling interests which are still controlled are recognised directly in equity as a transaction between shareholders. Investments in associates and joint ventures are recognised in the consolidated financial statements using the equity method. The group's activities in joint operations are recognised on a line-by-line basis. Recently acquired entities are recognised in the consolidated financial statements from the date of acquisition. Comparative figures are not restated to reflect newly acquired entities. The date of acquisition is the date when the group actually obtains control of the acquiree. The acquisition method is applied to the acquisition of new entities of which the group obtains control. The acquirees’ identifiable assets, liabilities and contingent liabilities are measured at fair value at the date of acquisition. Identifiable intangible assets are recognised if they are separable or arise from a contractual right. Deferred tax related to the revaluations is recognised. Positive differences (goodwill) between, on the one hand, the consideration for the acquiree, the value of non-controlling interests in the acquired entity and the fair value of any previously acquired equity investments and, on the other hand, the fair value of the assets, liabilities and contingent liabilities acquired are recognised as goodwill under “Intangible assets”. Goodwill is amortised on a straight-line basis in the income statement based on an individual assessment of the economic life of the asset. Negative differences (negative goodwill) are recognised in the income statement at the date of acquisition. Gains or losses from disposal of subsidiaries which result in loss of control are calculated as the difference between, on the one hand, the fair value of the selling price less selling expenses and, on the other hand, the carrying amount of net assets. On initial recognition, transactions denominated in foreign currencies are translated at the exchange rate at the transaction date. Foreign exchange differences arising between the exchange rates at the transaction date and the date of payment are recognised in the income statement as financial income or financial expenses. Receivables and payables and other monetary items denominated in foreign currencies are translated at the exchange rate at the balance sheet date. The difference between the exchange rates at the balance sheet date and the date at which the receivable or payable arose or was recognised in the most recent financial statements is recognised in the income statement as financial income or financial expenses. The Company has chosen IAS 11/IAS 18 as interpretation for revenue recognition. Income from the sale of goods for resale and finished goods, is recognised in revenue when the most significant rewards and risks have been transferred to the buyer and provided the income can be measured reliably and payment is expected to be received. The date of the transfer of the most significant rewards and risks is based on standardised terms of delivery based on Incoterms® 2020. Income from construction contracts involving a high degree of customisation is recognised as revenue by reference to the stage of completion. Accordingly, revenue corresponds to the market value of the contract work performed during the year (percentage-of-completion method). This method is used where the total income and expenses and the degree of completion of the contract can be measured reliably. Where income from a construction contract cannot be estimated reliably, contract revenue corresponding to the expenses incurred is recognised only in so far as it is probable that such expenses will be recoverable from the counterparty. Revenue is measured at the fair value of the agreed consideration excluding VAT and taxes charged on behalf of third parties. All discounts and rebates granted are recognised in revenue. The items revenue, cost of sales and external expenses have been aggregated into one item in the income statement called gross profit/loss in accordance with section 32 of the Danish Financial Statements Act. Other external expenses include the year's expenses relating to the Company's core activities, including expenses relating to distribution, sale, advertising, administration, premises, bad debts, payments under operating leases, etc. Staff costs include wages and salaries, including compensated absence and pension to the Company's employees, as well as other social security contributions, etc. The item is net of refunds from public authorities. The item comprises amortisation/depreciation of intangible assets and property, plant and equipment. The cost net of the expected residual value for completed development projects and acquired software is amortised over the expected useful life. Goodwill is amortised over the expected economic life of the asset, measured by reference to Management’s experience in the individual business segments. Goodwill is amortised on a straight-line basis over the amortisation period, which is 10 years. The basis of amortisation, which is calculated as cost less any residual value, is amortised on a straight line basis over the expected useful life. The expected useful lives of the assets are as follows: Completed development projects 5 years Acquired intangible assets 5 years Goodwill 10 years Where individual components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items, which are depreciated separately. The basis of depreciation, which is calculated as cost less any residual value, is depreciated on a straight line basis over the expected useful life. The expected useful lives of the assets are as follows: Plant and machinery 5 years Fixtures and fittings, other plant and equipment 3-5 years The income statement includes the proportional share of the underlying companies' profit or loss after elimination of internal profit/loss and after tax. In subsidiaries, the full elimination of internal profit and loss is carried out without regard to ownership shares., only proportional elimination of profit and loss is carried out, taking into account ownership shares. The proportionate share of the individual subsidiaries' profit/loss after tax after full elimination of internal gains/losses are recognised in the parent company's income statement. Financial income and expenses are recognised in the income statements at the amounts that concern the financial year. Net financials include interest income and expenses as well as allowances and surcharges under the advance-payment-of-tax scheme, etc. The parent company is covered by the Danish rules on mandatory joint taxation of the Group's Danish subsidiaries. Subsidiaries are included in the joint taxation arrangement from the date at which they are included in the consolidated financial statements and up to the date when they are no longer consolidated. The parent company acts as management company for the joint taxation arrangement and consequently settles all corporate income tax payments with the tax authorities. On payment of joint taxation contributions, the Danish corporate income tax charge is allocated between the jointly taxed entities in proportion to their taxable income. Entities with tax losses receive joint taxation contributions from entities that have been able to use the tax losses to reduce their own taxable income. Tax for the year, which comprises the current income tax charge, joint taxation contributions and deferred tax adjustments, including adjustments arising from changes in tax rates, is recognised in the income statement as regards the portion that relates to the profit/loss for the year and directly in equity as regards the portion that relates to entries directly in equity. Goodwill is amortised over the expected economic life of the asset, measured by reference to Management’s experience in the individual business segments. Goodwill is amortised on a straight-line basis over the amortisation period, which is 10 years. Other intangible assets include development projects and other acquired intangible rights, including software licences. Other intangible assets are measured at cost less accumulated amortisation and impairment losses. Development costs comprise expenses, salaries and amortisation directly or indirectly attributable to development activities. Development projects that are clearly defined and identifiable, where the technical feasibility, sufficient resources and a potential future market or development opportunities areidentifiable and where the Company intends to produce, market or use the project, are recognised as intangible assets provided that the cost can be measured reliably and that there is sufficient assurance that future earnings can cover production costs, selling costs and administrative expenses and development costs. Other development costs are recognised in the income statement as incurred. Development costs that are recognised in the balance sheet are measured at cost less accumulated amortisation and impairment losses. On completion of a development project, development costs are amortised on a straight-line basis over the estimated useful life. Property, plant and equipment Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes the acquisition price and costs directly related to the acquisition until the time at which the asset is ready for use. Gains or losses are calculated as the difference between the selling price less selling costs and the carrying amount at the date of disposal. Gains and losses from the disposal of property, plant and equipment are recognised in the income statement as other operating income or other operating expenses. The Company has chosen IAS 17 as interpretation for classification and recognition of leases. On initial recognition, leases for assets that transfer substantially all the risks and rewards incident to the ownership to the Company (finance leases) are measured in the balance sheet at the lower of fair value and the present value of the future lease payments. In calculating the net present value, the interest rate implicit in the lease or the incremental borrowing rate is used as the discount factor. Assets held under finance leases are subsequently accounted for in the same way as the Company's other assets. The capitalised residual lease liability is recognised in the balance sheet as a liability, and the interest element of the lease payment is recognised in the income statement over the term of the lease. Leases that do not transfer substantially all the risks and rewards incident to the ownership to the Company are classified as operating leases. Payments relating to operating leases and any other rent agreements are recognised in the income statement over the term of the lease. The Company's aggregate liabilities relating to operating leases and other rent agreements are disclosed under "Contingent liabilities". Equity investments in subsidiaries are measured according to the equity method. Equity investments in joint ventures are also measured according to the equity method in the consolidated financial statements. On initial recognition, equity investments in subsidiaries are measured at cost, i.e. plus transaction costs. The cost is allocated in accordance with the acquisition method; see the accounting policies regarding business combinations. The cost is adjusted by shares of profit/loss after tax calculated in accordance with the Group's accounting policies less or plus unrealised intra-group gains/losses. Identified increases in value and goodwill, if any, compared to the underlying entity's net asset value are amortised in accordance with the accounting policies for the assets and liabilities to which they can be attributed. Negative goodwill is recognised in the income statement. Dividend received is deduced from the carrying amount. Equity investments in subsidiaries measured at net asset value are subject to impairment test requirements if there is any indication of impairment. The carrying amount of intangible assets, property, plant and equipment and investments in subsidiaries and associates is assessed for impairment on an annual basis. Impairment tests are conducted on assets or groups of assets when there is evidence of impairment. The carrying amount of impaired assets is reduced to the higher of the net selling price and the value in use (recoverable amount). The recoverable amount is the higher of the net selling price of an asset and its value in use. The value in use is calculated as the present value of the expected net cash flows from the use of the asset or the group of assets and the expected net cash flows from the disposal of the asset or the group of assets after the end of the useful life. Previously recognised impairment losses are reversed when the reason for recognition no longer exists. Impairment losses on goodwill are not reversed. Inventories are measured at cost in accordance with the FIFO method. Where the net realisable value is lower than cost, inventories are written down to this lower value. The net realisable value of inventories is calculated as the sales amount less costs of completion and expenses required to effect the sale and is determined taking into account marketability, obsolescence and development in the expected selling price. The cost of raw materials and consumables comprises the cost of acquisition plus delivery costs. The Company has chosen IAS 39 as interpretation for impairment write-down of financial receivables. Receivables are measured at amortised cost. An impairment loss is recognised if there is objective evidence that a receivable or a group of receivables is impaired. If there is objective evidence that an individual receivable has been impaired, an impairment loss is recognised on an individual basis. Receivables in respect of which there is no objective evidence of individual impairment are tested for objective evidence of impairment on a portfolio basis. The portfolios are primarily based on the debtors' domicile and credit ratings in line with the Company's risk management policy. The objective evidence applied to portfolios is determined based on historical loss experience. Impairment losses are calculated as the difference between the carrying amount of the receivables and the present value of the expected cash flows, including the realisable value of any collateral received. The effective interest rate for the individual receivable or portfolio is used as discount rate. Service supplies and contract work in progress for third parties are measured at the market value of the work performed less progress billings. The market value is calculated based on the stage of completion at the balance sheet date and the total expected income from the relevant contract. The stage of completion is calculated based on the expenses incurred relative to the expected total expenses relating to the relevant contract. Where the outcome of contract work in progress cannot be estimated reliably, the market value is measured at the expenses incurred in so far as they are expected to be paid by the purchaser. Where the total expenses relating to the work in progress are expected to exceed the total market value, the expected loss is recognised as a loss-making agreement under "Provisions" and is expensed in the income statement. The value of work in progress less progress billings is classified as assets when the selling price exceeds progress billings and as liabilities when progress billings exceed the market value. Prepayments recognised under "Assets" comprise prepaid expenses regarding subsequent financial reporting years. Cash and cash equivalents include cash and bank deposits. Provisions comprise anticipated expenses relating to warranty commitments, onerous contracts, restructurings, etc. Provisions are recognised when the Company has a legal or constructive obligation at the balance sheet date as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Provisions are measured at net realisable value or at fair value if the obligation is expected to be settled far into the future. Warranty commitments include expenses for remedial action in respect of the contract work within the warranty period of 2 years. Provisions for warranty commitments are measured at net realisable value and recognised based on past experience. Current tax payables and receivables are recognised in the balance sheet as the estimated income tax charge for the year, adjusted for prior-year taxes and tax paid on account. Deferred tax is measured according to the liability method on all temporary differences between the carrying amount and the tax base of assets and liabilities. However, deferred tax is not recognised on temporary differences relating to goodwill which is not deductible for tax purposes and on office premises and other items where temporary differences, apart from business combinations, arise at the date of acquisition without affecting either profit/loss for the year or taxable income. Where alternative tax rules can be applied to determine the tax base, deferred tax is measured based on Management's intended use of the asset or settlement of the liability, respectively. Deferred tax is measured according to the tax rules and at the tax rates applicable at the balance sheet date when the deferred tax is expected to crystallise as current tax. Deferred tax assets are recognised at the expected value of their utilisation; either as a set-off against tax on future income or as a set-off against deferred tax liabilities in the same legal tax entity. Changes in deferred tax due to changes in the tax rate are recognised in the income statement. As management company for all the entities in the joint taxation arrangement, the parent company is liable for payment of the subsidiaries' income taxes vis à vis the tax authorities as the subsidiaries pay their joint taxation contributions. Joint taxation contributions payable or receivable are recognised in the balance sheet as income tax receivables or payables. Payables to credit institutions Mortgage debt is recognised on the raising of the loan at the proceeds received net of transaction costs incurred. On subsequent recognition, mortgage debt is measured at amortised cost, using the effective interest rate method. Borrowing costs, including capital losses, are recognised as financing costs in the income statement over the term of the loan. Other payables Other payables are measured at net realisable value. Lease liabilities Lease liabilities are measured at the net present value of the remaining lease payments including any guaranteed residual value based on the interest rate implicit in the lease. Deferred income Deferred income recognised as a liability comprises payments received concerning income in subsequent financial reporting years. The cash flow statement shows the Company's net cash flows broken down according to operating, investing and financing activities, the year's changes in cash and cash equivalents as well as the cash and cash equivalents at the beginning and the end of the year. Cash flows from operating activities are calculated as the profit/loss for the year adjusted for non cash operating items, changes in working capital and paid corporate income tax. Cash flows from investing activities comprise payments in connection with acquisitions and disposals of entities and activities and of intangible assets, property, plant and equipment and investments. Cash flows from financing activities comprise changes in the size or composition of the Company's share capital and related expenses as well as raising of loans, repayment of interest bearing debt and payment of dividends to shareholders. Cash and cash equivalents comprise cash, short term bank loans and short term securities which are readily convertible into cash and which are subject only to insignificant risks of changes in value. During the financial year, the Company carried out impairment tests on the recognised goodwill. The impairment test did not give rise to a write-down of the carrying values. Due to the market situation in the financial markets, several significant assumptions for the impairment test are associated with great uncertainty, including management's expectations for the company's budget for the coming years, growth rate during the terminal period and discount factor. If the assumptions used develop negatively, there may be a need to make write-downs in future financial years. If the discount factor is increased from the used 10.8% to 11.5%, this will result in a write-down requirement of DKK 2.4 million. No events have occurred after the balance sheet date to this date which would influence this annual report. The parent Company has no employees. Development projects in progress Development projects in progress include development and testing of facilities to improve the efficiency of production in the wind turbine industry. Costs primarily consist of internal costs in the form of direct wages and materials purchased. The new facility is expected to bring significant competitive advantages and increase the level of activity of the company from the end of 2023. Note 19 provides more details on security for loans, etc. as regards property, plant and equipment. Investments in group enterprises consists partly of recognized goodwill. Goodwill amounts to DKK 104,6 million. Prepayments include accrual of expenses relating to subsequent financial years. The parent's share capital has remained DKK 40 thousand since the establishment. Other provisions comprise provisions for warranty commitments, totalling DKK 1.274 and losses on work on progress, totalling DKK 843. Warranty provisions relate to expected warranty expenses in accordance with usual guarantee commitments applicable to the sale of goods. The obligation is expected to be settled over the warranty period, which is two years. The provision for deferred tax primarily relates to timing differences in respect of intangible assets and property, plant and equipment. Deferred income consist of public subsidies received for development projects in progress. The revenue is recognised in line with the depreciation of the project. Group Rent and lease liabilities include a rent obligation totalling DKK 15,635 thousand in interminable rent agreements with remaining contract terms of 7-8 years. Furthermore, the Company has liabilities under operating leases for equipment, totalling DKK 155 thousand, with remaining contract terms of 2-12 months. As management company, the Company is jointly taxed with other Danish group entities. The Company is jointly and severally with other jointly taxed group entities for payment of income taxes the income years 2022 and withholding taxes falling due for payment on or after 31th december 2022 in the group of jointly taxed entities. As security for the group's debt to mortgage credit institutions, the group has provided security or other collateral in its simple receivebles, inventory, operating equipment, etc. for a total amount of DKK 12,000 thousand. The total carrying amount of these assets on 31th december 2022 is DKK 53,600 thousand. As security for the groups debt to mortgage credit institutions, the parent company has provided security or other collateral in its shares of the subsidiary, for a total amount of DKK 53,600 thousand. The total carrying amount of the shares on 31th december 2022 is DKK 29,066 thousand. Parties exercising control Related party Domicile Basis for control ABI Industriudvikling ApS Ikast Participating interest ABI Invest Industriudvikling ApS Farum Participating interest Alder II AB Sverige Participating interest Related party transactions 2021/22 DKK'000 Group Group Contribution from parent company 4,400 Management fee 142 Parent Company Interest expenses -106 Payable to subsidiary -7,602 Information on the remuneration to management Information on the remuneration to Management appears from note 4, "Staff costs". Information about security for loans relating to group entities Information about security for loans relating to group entities appears from 19, "Collateral". 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