36457597 2022-12-31 36457597 2021-12-31 36457597 2020-12-31 36457597 2024-12-31 36457597 2023-12-31 36457597 2024-01-01 fsa:ContributedCapitalMember 36457597 2024-01-01 fsa:ReserveForDevelopmentExpenditureMember 36457597 2024-01-01 fsa:ReserveForCurrentValueOfHedgingMember 36457597 2024-01-01 fsa:RetainedEarningsMember 36457597 2024-12-31 fsa:ContributedCapitalMember 36457597 2024-12-31 fsa:ReserveForDevelopmentExpenditureMember 36457597 2024-12-31 fsa:ReserveForCurrentValueOfHedgingMember 36457597 2024-12-31 fsa:RetainedEarningsMember 36457597 2024-01-01 36457597 2023-01-01 36457597 2024-01-01 fsa:CompletedDevelopmentProjectsMember 36457597 2024-01-01 fsa:AcquiredLicencesMember 36457597 2024-01-01 fsa:DevelopmentProjectsInProgressMember 36457597 2024-01-01 fsa:PrepaymentsForIntangibleAssetsMember 36457597 2024-12-31 fsa:CompletedDevelopmentProjectsMember 36457597 2024-12-31 fsa:AcquiredLicencesMember 36457597 2024-12-31 fsa:DevelopmentProjectsInProgressMember 36457597 2024-12-31 fsa:PrepaymentsForIntangibleAssetsMember 36457597 2024-01-01 fsa:FixturesFittingsToolsAndEquipmentMember 36457597 2024-01-01 fsa:LeaseholdImprovementsMember 36457597 2024-12-31 fsa:FixturesFittingsToolsAndEquipmentMember 36457597 2024-12-31 fsa:LeaseholdImprovementsMember 36457597 2024-01-01 fsa:InvestmentsInGroupEnterprisesMember 36457597 2023-01-01 fsa:InvestmentsInGroupEnterprisesMember 36457597 2024-12-31 fsa:InvestmentsInGroupEnterprisesMember 36457597 2023-12-31 fsa:InvestmentsInGroupEnterprisesMember 36457597 2024-01-01 fsa:DepositsLongtermInvestmentsAndReceivablesMember 36457597 2024-12-31 fsa:DepositsLongtermInvestmentsAndReceivablesMember 36457597 2024-12-31 fsa:OtherLongtermPayablesMember 36457597 2023-12-31 fsa:OtherLongtermPayablesMember 36457597 2024-12-31 fsa:OtherShorttermPayablesMember 36457597 2023-12-31 fsa:OtherShorttermPayablesMember 36457597 2024-01-01 2024-12-31 36457597 2024-01-01 2024-12-31 1 36457597 2024-01-01 2024-12-31 memberOfBoardIdentifier_executive_board_1 36457597 2024-01-01 2024-12-31 memberOfBoardIdentifier_executive_board_2 36457597 2024-01-01 2024-12-31 memberOfBoardIdentifier_board_of_director_1 36457597 2024-01-01 2024-12-31 memberOfBoardIdentifier_board_of_director_2 36457597 2024-01-01 2024-12-31 memberOfBoardIdentifier_board_of_director_3 36457597 2024-01-01 2024-12-31 memberOfBoardIdentifier_board_of_director_4 36457597 2024-01-01 2024-12-31 memberOfBoardIdentifier_board_of_director_5 36457597 2024-01-01 2024-12-31 2 36457597 2022-01-01 2022-12-31 36457597 2021-01-01 2021-12-31 36457597 2020-01-01 2020-12-31 36457597 2023-01-01 2023-12-31 36457597 2024-01-01 2024-12-31 fsa:ContributedCapitalMember 36457597 2024-01-01 2024-12-31 fsa:ReserveForDevelopmentExpenditureMember 36457597 2024-01-01 2024-12-31 fsa:ReserveForCurrentValueOfHedgingMember 36457597 2024-01-01 2024-12-31 fsa:RetainedEarningsMember 36457597 2024-01-01 2024-12-31 13 36457597 2023-01-01 2023-12-31 13 36457597 2024-01-01 2024-12-31 14 36457597 2023-01-01 2023-12-31 14 36457597 2024-01-01 2024-12-31 fsa:CompletedDevelopmentProjectsMember 36457597 2024-01-01 2024-12-31 fsa:AcquiredLicencesMember 36457597 2024-01-01 2024-12-31 fsa:DevelopmentProjectsInProgressMember 36457597 2024-01-01 2024-12-31 fsa:PrepaymentsForIntangibleAssetsMember 36457597 2024-01-01 2024-12-31 fsa:FixturesFittingsToolsAndEquipmentMember 36457597 2024-01-01 2024-12-31 fsa:LeaseholdImprovementsMember 36457597 2024-01-01 2024-12-31 fsa:InvestmentsInGroupEnterprisesMember 36457597 2023-01-01 2023-12-31 fsa:InvestmentsInGroupEnterprisesMember 36457597 2024-01-01 2024-12-31 fsa:DepositsLongtermInvestmentsAndReceivablesMember iso4217:DKK pure Årsrapport 33771231 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Strandvejen 44 2900 Hellerup 2024-01-01 2023-01-01 2024-12-31 2023-12-31 36457597 Soundboks ApS Esromgade 15, 1. 1. 2200 København N København 2014-12-05 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab 33771231 Strandvejen 44 2900 Hellerup Denmark 39 45 39 45 koebenhavn@pwc.dk 2025-06-30 Michael Winther Regnskabsklasse C, mellemstor virksomhed Revisionspåtegning The Executive Board and Board of Directors have today considered and adopted the Annual Report of Soundboks ApS for the financial year 1 January - 31 December 2024. 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 2024 of the Company and of the results of the Company operations and cash flows for 2024. 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. 2025-06-30 Copenhagen N Jesper Theil Thomsen Christoffer Nyvold Tue Mantoni Chairman Jacob Christian Nielsen Thygesen Vice chairman Christoffer Nyvold Jesper Theil Thomsen Christian Lindegaard Jepsen To the shareholder of Soundboks ApS Opinion In our opinion, the Financial Statements give a true and fair view of the financial position of the Company at 31 December 2024 and of the results of the Company´s operations and cash flows for the financial year 1 January - 31 December 2024 in accordance with the Danish Financial Statements Act. We have audited the Financial Statements of Soundboks ApS for the financial year 1 January - 31 December 2024, which comprise income statement, balance sheet, statement of changes in equity, cash flow statement 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 the preparation of financial statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, Management is responsible for assessing the Company´s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the Financial Statements unless Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company´s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the Financial Statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company´s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and contents of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 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. Hellerup 2025-06-30 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Ulrik Ræbild State Authorised Public Accountant mne33262 Oliver Svane State Authorised Public Accountant mne49837 27006000 49079000 29567000 -34365000 9431000 -2141000 -10114000 -3349000 -1891000 -33754000 5544000 -2737000 162260000 137514000 83001000 143000 465000 1259000 2160000 489000 17066000 34820000 14276000 -57978000 13110000 -2873000 -20410000 -18448000 -6717000 17881000 30750000 34940000 -60507000 25413000 25350000 91 60 50 -0.155 -0.107 -0.212 0.069 -0.026 0.094 0.292 0.105 0.253 0.172 -1.161 -0.675 -1.301 0.226 -0.336 Key activities The Company designs, develops and sells portable music systems for consumers as well as any related business. Development in the year The income statement of the Company for 2024 shows a loss of DKK 32,287,586, and at 31 December 2024 the balance sheet of the Company shows a positive equity of DKK 12,993,858. Management considers the result unsatisfactory. The result for the Company does not represent the activity of the combined Soundboks Group. The past year and follow-up on development expectations from last year Revenue declined 10% in 2024 related to the B2B channel where the largest retail partners reduced inventory levels despite stable sell-out vs. 2023. The D2C channel experienced positive revenue development. Demand for consumer electronic products remained at a low level in the Company’s core markets, reflecting the macroeconomic conditions. The 2024 EBITDA of DKK -5,8M is below the DKK 0-10M EBITDA expected for the year. The lower result can be attributed to the decrease in revenue where little to no growth was expected. Capital resources At 31 December 2024 the Company’s short term liabilities exceeds the Company’s current assets, since the financial result for 2024 caused the Company to breach the covenants on the loan facilities. The breach of covenants increased the Company’s short term liabilities with DKK 46.7 million. The covenant breach has been waived by the lender, why the DKK 46.7M is payable according to the original schedule from 2026 onwards. The capital resources were strengthened in June 2025 through a DKK 13.6 million group contribution from the parent company. Reference is made to note 1 in the Annual Report for further description of the Company’s capital resources. Management considers the capital resources available to the Company to be sufficient. Special risks - operating risks and financial risks The Company is only exposed to risks common for the industry. Foreign exchange risks Activities abroad cause net profit, cash flow and equity to be influenced by exchange rate developments and interest rate trends for a number of currencies. The company manages the cash flow related exchange rate risk through the use of financial instruments. Targets and expectations for the year ahead The Company expects consumer spending in its core markets will remain negatively affected by macro-economic conditions. The recent uncertainty related to global trade policies is likely to further affect consumer sentiment and -spending. Due to the uncertainty the Company expects unchanged or slightly declining revenue in 2025. EBITDA for the year is expected to improve to a level of 0-5M DKK. The expectations consider the additional costs the Company will face if US import tariffs remain at the levels announced by the US Administration in April 2025. The Company continues to monitor the development in order to decide on appropriate actions. Research and development During the year the Company has incurred considerable research and development costs relating primarily to expansion of the hardware product portfolio. The investments are made to support future growth and to strengthen the Company’s market position in the coming years. External environment The Company focuses on raw materials and energy being optimally utilized, preventing pollution and recycling and minimizing waste where possible. In 2022, the Company completed the review of its environmental footprint and is using the learnings to identify further opportunities for improvement. Intellectual capital resources The Company has built strong capabilities in technical speaker system design, user experience optimization and brand development, which are considered competitive advantages. The Company continuously invests in developing these competencies, and processes and systems are in place to ensure knowledge is retained in the Company. In addition, the Company works with external specialists to contract subject matter expertise in certain functional areas. Uncertainty relating to recognition and measurement Deferred tax asset is recognised with DKK 9.9M in the balance sheet. The deferred tax asset was in 2024 written down by 5.9M based on updated expectations for future earnings. The valuation of the deferred tax asset is based on expected positive earnings within the next 5 years. The valuation hereof is thus affected by uncertainty. For more information on this, please refer to note 2. Unusual events The financial position of the Company at 31 December 2024 and the results of the activities and cash flows of the Company for the financial year 2024 are affected by settlement of a tax dispute concerning application of the tax treaties between the United States and Denmark on income taxes. The effect on the Company’s result is DKK -0,6M. Subsequent events The Company in June 2025 completed a 13.6 MDKK capital increase. No other events materially affecting the assessment of the Annual Report have occurred after the balance sheet date. 46142708 53839998 51933050 56156479 15572602 13261663 -21362944 -15578144 136474 0 1568749 78145 8135996 9869125 -27793717 -25369124 4493869 -5213927 -32287586 -20155197 -32287586 -20155197 9745453 13534734 0 0 22668562 16684557 5198391 6046408 781126 1395972 183448 198679 964574 1594651 0 200000 1350970 1132288 1350970 1332288 39927950 39192638 48084737 56903135 48084737 56903135 9370567 14074458 0 382360 3464008 862170 9939290 16613022 1435768 1002270 10977512 10975080 35187145 43909360 14393002 5788485 97664884 106600980 137592834 145793618 182489 182489 25282932 23571047 1880962 -757198 -14352525 19646946 12993858 42643284 2133233 54077349 2133233 54077349 22887145 149979 22743605 15011436 6359244 407537 70475749 33504033 122465743 49072985 124598976 103150334 137592834 145793618 182489 23571047 -757198 19646946 0 0 0 -32287586 0 0 -744096 0 0 0 3382256 0 0 1711885 0 -1711885 182489 25282932 1880962 -14352525 -32287586 -20155197 26452543 17844397 14945041 10447912 9109998 8137112 1568749 78145 -7088164 -4939892 3590583 3275365 1002268 1430964 4592851 4706329 -143184 -465283 -254682 -230793 36000 37250 -12492766 -15920285 -3654467 -3112220 -16509099 -19691331 0 -5402529 -8958005 -2600213 6741604 0 0 33000000 -2216401 24997258 -14132649 10012256 5638506 -4373750 -8494143 5638506 14393002 5788485 -22887145 -149979 -8494143 5638506 In 2024, the Company has realised a negative result of DKK 32.3 million and on 31 December 2024 the Company’s current assets amount DKK 97.7 million while the short-term debt amounts DKK 122.5 million. The financial result for 2024 caused the Company to breach the covenants on the loan facilities why all loans are classified as short-term in the balance sheet. The covenant breach has been waived by the lender, why DKK 46.7 million is payable according to the original schedule from 2026 onwards. In 2025, the Company has initiated several initiatives to improve its financial position and capital resources. Further to Company’s capital resources was strengthened in June 2025 through a DKK 13.6 million group contribution from the Parent Company. Based on this management has prepared a budget for 2025 showing sufficient liquidity throughout 2025, ensuring the Company will be able to settle its obligations as they fall due. Management considers the capital resources available to the Company to be sufficient why the Annual Report is prepared as going concern. When preparing an annual account, the management makes a series of accounting choices and estimates that form the basis for the recognition and measurement of the company's assets and liabilities as well as income and expenses. The estimates made are based on historical experience and other factors which management deems reasonable under the circumstances, but which are inherently uncertain or unpredictable. The forecasts may be incomplete or inaccurate, and unexpected events or circumstances may arise. Furthermore, the company is subject to risks and uncertainties which may lead to actual outcomes deviating from these estimates. This means that estimates can be subject to considerable uncertainty.**Deferred tax asset**Deferred tax asset is recognised with DKK 9.9 million in the balance sheet. The valuation of the deferred tax asset is based on expected positive earnings within the next 5 years. The valuation hereof is thus affected by uncertainty. The Company in June 2025 completed a 13.6 MDKK capital increase. No other events materially affecting the assessment of the Annual Report have occurred after the balance sheet date. 46538153 50342962 2961503 3031739 918329 1181301 1515065 1600477 51933050 56156479 2095277 1773106 77 85 Remuneration to the Executive Board has not been disclosed for comparative figures in accordance with section 98 B(3) of the Danish Financial Statements Act.**Share-based payment**The Group has invited key employees and members of the board of directors of the group companies to acquire shares in the Parent Company. The participants cannot freely dispose over the shares until the occurrence of an exit event.The Parent Company is furthermore the settling entity and the transaction is thus accounted for as an equity-settled programme. 28007 549339 8107989 8999093 0 320693 8135996 9869125 -1435768 -1002268 6673733 -4915572 0 490345 4493869 -5213927 744096 -213568 Total 5237965 -5427495 36927824 59650 16684557 19826625 2121517 0 9176621 4849095 3192616 0 -3192616 0 42241957 59650 22668562 24675720 23393090 59650 0 13780217 9103414 0 0 5697112 32496504 59650 0 19477329 9745453 0 22668562 5198391 Development projects relate to the development of new versions of the Company’s existing products and new products. The development was progressing according to plan through the use of the resources allocated by Management to the development. The products is expected to be sold in the present market to the Company’s existing customers. Prior to the initiation of the projects, the Company inquired of its customers as to the need for an updated product, which was well received. 4494601 654458 111184 32000 16856 0 4588929 686458 3098629 455779 724845 47231 15671 0 3807803 503010 781126 183448 200000 200000 200000 0 0 200000 0 200000 1132288 254682 36000 1350970 1350970 Prepayments comprise prepaid expenses regarding subsequent financial reporting years. Deferred tax asset at 1 January 16613022 11697450 Amounts recognised in the income statement for the year -5929637 4915572 Amounts recognised in equity for the year -744095 0 Deferred tax asset at 31 December 9939290 16613022 The recognised tax asset primarily comprises timing differences relating to intangible assets, property, plant and equipment and tax losses carried forward. In the years ahead, the Company expect to realise the recognised deferred tax asset; on that basis, the asset has been recognised at 31 December 2024. 0 5045951 2133233 49031398 2133233 54077349 70475749 33504033 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: Other payables Derivative financial instruments contracts in the form of forward exchange contracts have been concluded. At the balance sheet date, the fair value of derivative financial instruments amounts to: Assets 2411490 0 Liabilities 0 970766 Forward exchange contracts have been concluded to hedge future inventory in USD. At the balance sheet date, the fair value of the forward exchange contracts amounts to DKK 2.411.490. The forward exchange contracts have a term of 1 year. Value adjustment, equity Fair value at Forward exchange contracts 3382256 2411490 1568749 78145 8135996 9869125 15572602 13261663 136474 0 4493869 -5213927 26452543 17844397 -44701 5681 8818398 23057254 2481981 -5763750 -262406 5874826 3382256 -970766 14945041 10447912 Charges and security The following assets have been placed as security with bankers: As security for Danmark Eksport- og Investeringsfond the Company has pledged a floating charge amounting to DKK 45.600.000 secured in intangible- and tangible assets, inventory and receivables. As security for Danske Bank the Company has pledged a floating charge amounting to DKK 39.200.000 secured in intangible- and tangible assets, inventory and receivables. Rental and lease obligations Lease obligations under operating leases. Total future lease payments: Within 1 year 1004185 1147012 Total 1004185 1147012 Basis Controlling interest Soundboks Inc. Parent Company Transactions The Company has chosen only to disclose transactions which have not been made on an arm's length basis in accordance with section 98(c)(6) of the Danish Financial Statements Act. There have been no transactions with the Board of Directors, the Executive Board, senior officers, significant shareholders, group enterprises or other related parties, except for intercompany transactions and normal management remuneration. The Annual Report of Soundboks ApS for 2024 has been prepared in accordance with the provisions of the Danish Financial Statements Act applying to medium-sized enterprises of reporting class C. The accounting policies applied remain unchanged from last year. The Financial Statements for 2024 are presented in DKK. true Revenues are recognised in the income statement as earned. Furthermore, value adjustments of financial assets and liabilities measured at fair value or amortised cost are recognised. Moreover, all expenses incurred to achieve the earnings for the year are recognised in the income statement, including depreciation, amortisation, impairment losses and provisions as well as reversals due to changed accounting estimates of amounts that have previously been recognised in the income statement. Assets are recognised in the balance sheet when it is probable that future economic benefits attributable to the asset will flow to the Company, and the value of the asset can be measured reliably. Liabilities are recognised in the balance sheet when it is probable that future economic benefits will flow out of the Company, and the value of the liability can be measured reliably. Assets and liabilities are initially measured at cost. Subsequently, assets and liabilities are measured as described for each item below. All leases are considered operating leases. Payments made under operating leases are recognised in the income statement on a straight-line basis over the lease term. Transactions in foreign currencies are translated at the exchange rates at the dates of transaction. Exchange differences arising due to differences between the transaction date rates and the rates at the dates of payment are recognised in financial income and expenses in the income statement. Where foreign exchange transactions are considered hedging of future cash flows, the value adjustments are recognised directly in equity. Receivables, payables and other monetary items in foreign currencies that have not been settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Any differences between the exchange rates at the balance sheet date and the 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. 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. Changes in the fair values of financial instruments that are designated and qualify as fair value hedges of a recognised asset or a recognised liability are recognised in the income statement as are any changes in the fair value of the hedged asset or the hedged liability related to the hedged risk. Changes in the fair values of derivative financial instruments that are designated and qualify as hedges of expected future transactions are recognised in 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. Revenue 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. 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 consumables comprise the raw materials and consumables consumed to achieve revenue for the year. Other external expenses comprise production costs and expenses for premises, sales and distribution as well as office expenses, etc. With reference to section 32 of the Danish Financial Statements Act, gross profit/loss is calculated as a summary of revenue, work on own account recognised in assets, other operating income, expenses for raw materials and consumables and other external expenses. Staff costs include wages and salaries including compensated absence and pensions as well as other social security contributions etc. made to the entity's employees. Amortisation, depreciation and impairment losses comprise amortisation, depreciation and impairment of intangible assets and property, plant and equipment. Other operating income and other operating expenses comprise items of a secondary nature to the main activities of the Company, including gains and losses on the sale of intangible assets and property, plant and equipment. Dividends from subsidiaries are recognised as income in the income statement when adopted at the General Meeting of the subsidiary. However, dividends relating to earnings in the subsidiary before it was acquired by the Parent Company are set off against the cost of the subsidiary. Financial income and expenses are recognised in the income statement at the amounts relating to the financial year. Tax for the year consists of current tax for the year and changes in deferred tax for the year. The tax attributable to the profit for the year is recognised in the income statement, whereas the tax attributable to equity transactions is recognised directly in equity. Costs of development projects comprise salaries, amortisation and other expenses directly or indirectly attributable to the Company’s development activities. Development projects that are clearly defined and identifiable and in respect of which technical feasibility, sufficient resources and a potential future market or development opportunity in the enterprise can be demonstrated, and where it is the intention to manufacture, market or use the project, are recognised as intangible assets. This applies if sufficient certainty exists that the value in use of future earnings can cover cost of sales, distribution and administrative expenses involved as well as the development costs. Development projects that do not meet the criteria for recognition in the balance sheet are recognised as expenses in the income statement as incurred. Capitalised development costs are measured at cost less accumulated amortisation and impairment losses or at a lower recoverable amount. An amount corresponding to the recognised development costs is allocated to the equity item 'Reserve for development costs'. The reserve comprises only development costs recognised in financial years beginning on or after 1 January 2016. The reserve is reduced by amortisation of and impairment losses on the development projects on a continuing basis. As of the date of completion, capitalised development costs are amortised on a straight-line basis over the period of the expected economic benefit from the development work. The amortisation period is 3 year. Licences and software are measured at cost less accumulated amortisation and less any accumulated impairment losses or at a lower value in use. Licenses are amortised over the licence period, however not exceeding 5 years. Software is amortised over the expected lifetime, however not exceeding 2 years. Property, plant and equipment are measured at cost less accumulated depreciation and less any accumulated impairment losses. Cost comprises the cost of acquisition and expenses directly related to the acquisition up until the time when the asset is ready for use. Depreciation based on cost reduced by any residual value is calculated on a straight-line basis over the expected useful lives of the assets, which are: Other fixtures and fittings, tools and equipment 3-5 years Leasehold improvements 5 years The fixed assets’ residual values are determined at nil. Depreciation period and residual value are reassessed annually. The carrying amounts of intangible assets and property, plant and equipment 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 subsidiaries are measured at cost. Where cost exceeds the recoverable amount, write-down is made to this lower value. Fixed asset investments consist of deposits. Inventories are measured at the lower of cost based on weighted average prices 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 goods for resale 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. Prepayments comprise prepaid expenses regarding subsequent financial reporting years. Deferred income tax is measured using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes on the basis of the intended use of the asset and settlement of the liability, respectively. Deferred tax assets, 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 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. Debts are measured at amortised cost, substantially corresponding to nominal value. The cash flow statement shows the Company´s cash flows for the year broken down by operating, investing and financing activities, changes for the year in cash and cash equivalents as well as the Company´s cash and cash equivalents at the beginning and end of the year. Cash flows from operating activities are calculated as the net profit/loss for the year adjusted for changes in working capital and non-cash operating items such as depreciation, amortisation and impairment losses, and provisions. Working capital comprises current assets less short-term debt excluding items included in cash and cash equivalents. Cash flows from investing activities comprise cash flows from acquisitions and disposals of intangible assets, property, plant and equipment as well as fixed asset investments. Cash flows from financing activities comprise cash flows from the raising and repayment of long-term debt as well as payments to and from shareholders. Cash and cash equivalents comprise ”Cash at bank and in hand” and ”Overdraft facilities”. The cash flow statement cannot be immediately derived from the published financial records. Return on assets Profit/loss of primary operations x 100 / Total assets at year end Solvency ratio Equity at year end x 100 / Total assets at year end Return on equity Net profit for the year x 100 / Average equity