Årsrapport29442789Redmark, Godkendt RevisionspartnerselskabSommervej, 31C8210, Aarhus V2020-01-012020-12-312021-01-012021-12-3134476187RAINS ApSJens Olsens Vej 13,138200Aarhus NRedmark, Godkendt Revisionspartnerselskab29442789Henrik Sondrupstatsautoriseret revisormne31446Sommervej31C8210Aarhus VDanmark86133100aarhus@redmark.dk2022-06-28Daniel Brix HesselagerRegnskabsklasse C, mellemstor virksomhedRevisionspåtegningRevisorgruppen DanmarkkapitalejerneAarhus2022-06-28Aarhus N2022-06-28Grundlag for konklusionKonklusion120616729788580661012588157660326244720653328030013205931626255793622910841656494587833282154169666968418894166461166647525928003754217-604193800139468-70490053161446760130358384104830145524062563783313925946318071498687720649734053787071419710404864801560091310298662149556501024727256464060302392085646406030239208010000000280000002000000028464060239208256773322203256773322203709706032393446482715323934473538333561547673948835615478039630001203266010044060916089264398001283662310044060916089264398000060774769182123493942316317720960651536463349394231631778173541245467523684398167687842407392112456022673157994225954057809275364540366731579942259540578092753645403665383954431032015766881335299824001998659412072792404000040400005254914573552205532286475310944670904012458408439371066554476160268259392051489295497902302686843834215619205944951881725831167440041746188141085378262118569811335127881986927351209938480010800010800010800010800080777015526468808077701552646880280000002000000028000000200000001088850157275488010888501572754880053000053000001188188103120530001188188633129040329640516963847650060118217011821790437840472207297982366635269233253607053074575971976464430602813826504238272940002380958837255457697733110297196660704908896889024737565610297196660704908896889024737565621185698113351278819869273512099384856464060302392081943201615815858-3780080540935721159964659600129955074104859749313925947451401045244455183874779144365561265333610009047130121308961831644570006742155002406426016025307162708370-13144722-85997092000000010000000-60019-13721185-20060019-2372118522921792377919626868438230892424979023026868438497902302686843840637066302537572968932524473020199663516060751912250158844820869529431694577411943254472065332803001320593162625579310369604763783313925946318071498687637833139259463180714986875663835556035663835556032441802334006543065430309610298830256773256773410300641030064713012399627688160188099282863662863662855296752905171895816165677097060648271580396308039630803963016225458107403427512482649059258129858129823156642166496366181398430054252054173668765-262833-480563111239827488744120326609160892001175944453334002921263722610004097207117594400-6738708-69908300-3339259362003893686-604898700-3178947-6738708005040398567066400-118818-8103120051592166480976006077476918212Rains USA INC.INC.USA100-4841528543438Rains Shanghai Trade Co. Ltd.Ltd.Kina10029704991544708Rains Norway ASASNorge10019768641106207Rains International Ltd.Ltd.England100806365715697Rains Germany GmbHGmbHTyskland100172915211738Rains Sweden ABABSverige100150708139468Drip Dutch B.V.B.V.Nederlandene100-317688-317696ISOG ApSApSDanmark100125-4987531631771536463601602601602270837420003493942209606534939422096065108000108000108000108000108000108000108000108000526468805239831152646880523983112846406023920828464060239208010000000010000000010000000010000000-3339259361-333925936180777015526468808077701552646880200000000200000000200000000200000000280000002000000028000000200000002800000020000000280000002000000062291084165650-3035838-4104863783313925941560091310298662-25056259-2842114-23046528-77007404432270711083789Today, the Board of Directors and the Managing Director have approved the annual report of RAINS ApS for the financial year 1 January - 31 December 2021. The annual report has been prepared in accordance with the Danish Financial Statements Act. We consider the chosen accounting policy to be appropriate, and 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 2021, and of the results of the Group and the Company's operations as well as the consolidated cash flows for the financial year 1 January – 31 December 2021. Further, in our opinion, the Management's review gives a true and fair review of the matters discussed in the Management's review. We recommend that the annual report be approved at the Annual General Meeting. Jan Stig AndersenDaniel Brix HesselagerKenneth DavidsPhilip Lotko WormslevWe have audited the consolidated financial statements and the parent company financial statements of RAINS ApS for the financial year 1 January to 31 December 2021, which comprise income statement, balance sheet, statement of changes in equity, notes and a summary of significant accounting policies for both the Group the Parent Company, as well as consolidated statement of cash flows. The consolidated financial statements and the parent company financial statements are prepared under 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 2021, and of the results of the Group and the Company's operations as well as the consolidated cash flows for the financial year 1 January - 31 December 2021 in accordance with the Danish Financial Statements Act. 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 Consolidated Financial Statements and the Parent Company Financial Statements” section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (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 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 consolidated financial statements and parent company financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements and the parent company financial statements, Management is responsible for assessing the Group´s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the consolidated financial statements and the parent company financial statements unless Management either intends to liquidate the Group or the Company or to cease operations, or has no realistic alternative but to do so. Our objectives are to obtain reasonable assurance about whether the consolidated financial statements and the parent company financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements and parent company financial statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements and the parent company financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group´s and the Company’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the consolidated financial statements and the parent company financial statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group´s and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements and the parent company financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and contents of the consolidated financial statements and the parent company financial statements, including the disclosures, and whether the consolidated financial statements and the parent company financial statements represent the underlying transactions and events in a manner that gives a true and fair view. 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. Statement on Management’s Review Management is responsible for Management’s Review. Our opinion on the consolidated financial statements and the parent company 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 consolidated financial statements and the parent company financial statements, our responsibility is to read Management’s Review and, in doing so, consider whether Management’s Review is materially inconsistent with the consolidated financial statements and the parent company financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether Management’s Review provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we conclude that Management’s Review is in accordance with the financial statements and has been prepared in accordance with the requirements of the Danish Financial Statement Act. We did not identify any material misstatement of Management’s Review. 6372700050678000453080002656200026413000305770002398000-1352000-227000455000-133500020315000209550002245700011475700082285000591410008316000700100042040002311000338500052506000522240004131100035091000640400017421000-5695000-3167000-5789000-11852000-7312000-809000022922000377900017544000-40750003543000Pengestrømme i altPengestrømme i altPengestrømme i altPengestrømme i altPengestrømme i alt61573940.333.72737.462.8182.7192.3166.3245.7297.6LikviditetsgradLikviditetsgradLikviditetsgradLikviditetsgradLikviditetsgrad51.454.545.863.569.962.248.338.844.864The key figures appearing from the survey have been calculated as follows: Return on equity investment Results from primary activities (EBIT) x 100 / Average invested capital Invested capital Operational intangible and tangible fixed assets and net working capital Acid test ratio Current assets x 100 / Short-term liabilities Equity share Equity, closing balance x 100 / Assets in total, closing balance Return on equity Results for the year x 100 / Average equityThe principal activities of the group Rains is a Danish outerwear and lifestyle company originating from a modern reinterpretation of the classic rubber raincoat. Since its establishment in 2012, the company has thoughtfully widened its concept across product categories and fabric innovations to build a comprehensive offering of distinctly recognizable designs. With Scandinavian metropolises as the main scene of the brand, focusing on a young streetwear inspired approach to communication, Rains has achieved a high level of recognition and credibility, balancing commercial success and accessibility with strong integrity and brand equity. Through a multidisciplinary approach throughout its value-chain, Rains builds upon a balanced business model of a fully vertical supply chain and distribution channels. With own and operated specialized factories, internal sales subsidiaries, regional distribution centers, and strong retail and E-commerce performance, Rains maintains a high level of control and efficiency. Combined with a strong network of selected wholesale partners, Rains has steadily increased its value propositions achieving a unique position in the market. The company headquarters are located in Skejby, Aarhus, with regional headquarters in New York and Shanghai. By the end of 2021, the parent company was employing 60 fulltime employees, and the company’s 8 international subsidiaries employed 43 full-time employees. Unusual matters There have been no unusual circumstances that have affected the company's activity during the financial year. Development in activities and financial matters In 2021, Rains delivered an organic revenue growth of 45% compared to 2020. The revenue growth was reflected in an increase in the EBIT margin from 14,7% in 2020 to 18,0%. The result before tax increased 80% and represented DKK 72m versus DKK 40m in 2020. In 2021, Rains experienced growth across all markets with high sell-through performance. The key markets were UK, Germany, France, and Scandinavia. The share of export is more than 90%. The supply chain was affected by temporary delivery delays due to a 6-week lockdown of the company’s factories caused by Covid-19. Despite this situation, the factories quickly regained momentum and through proactive supply-chain management, delays were limited to the end of year. The management consider the financial performance satisfactory. Throughout the year, Rains experienced significant growth, driven mainly by its online sales and strong wholesale distribution. The traffic into physical retail resurged over the year, but the repercussions of Covid-19 limited the performance in segments of the wholesale distribution and own retail. As a natural consequence, retail expansion was limited to establishing two important stores in Hamburg, Germany, while further resources were allocated to optimizing the existing brand presence. In 2021, Rains has established its own sales subsidiary in the Netherlands and executed takeover of the distribution in France, Canada, and USA. The market integration is part of the company’s strategy of controlling the distribution to leverage the brand positioning and performance. Local facilities and showrooms were established during the year, including a master-showroom in connection to our Copenhagen flagship store. The company’s own E-commerce sales continued to deliver strong growth, by doubling revenue compared to 2020. Online sales accounted for 26% of the company revenue in 2021. The online presence continues to play a key role in the company and brand strategy, which is strongly reflected in sales and marketing activities. In 2021, Rains presented two seasonal digital show experiences, presenting new product categories, fabric innovations and designs in a highly aesthetic staging. The shows reflected a more international and self-confident brand profile indicating Rains’ future brand direction. The expected development Over the past years, Rains has made strategic investments designed to deliver growth in the long term. Rains has built a robust organization, created stronger and broader collections, and executed several key market integrations, positioning Rains for significant future growth. The 2025 strategy is designed to drive sustainable top- and bottom-line growth by leveraging our key assets: strong brand awareness, a global distribution network and innovative lifestyle collections. We see significant, untapped growth potential within our core business and core market. We will invest significantly in the North American region in the coming years. Rains expects more than 40% revenue growth in 2022. This is expected to be achieved through continued focus on product innovation, investment in further digitalization, opening of Rains retail stores and continued implementation of selective distribution. Events subsequent to the financial year There are no significant events other than conditions related to normal operating activity. 12. Deferred tax assets Deferred tax assets 1 January 2021 -53.000 -38.279 -53.000 -44.000 Deferred tax of the results for the year 457.000 -14.721 457.000 -9.000 404.000 -53.000 404.000 -53.000 The following items are subject to deferred tax: Intangible assets -20.000 -17.000 -20.000 -17.000 Property, plant, and equipment 71.000 -36.000 71.000 -36.000 Investments 356.000 0 356.000 0 Current assets -3.000 0 -3.000 0 404.000 -53.000 404.000 -53.000 15. Charges and security For bank debts, DKK 695.000, the parent company has provided security in parent company assets representing a nominal value of DKK 1.000.000. This security comprises the below assets, stating the book values: Inventories DKK 57.809.000 Receivable from sales and services DKK 57.669.000 Other fixtures and fittings, tools and equipment DKK 9.161.000 Intangible rights DKK 6.739.000 16. Contingencies Contingent liabilities The Parant company has entered into leasing contracts with an total outstanding leasing payment DKK 305.000. The Group has entered into leasing contracts with an total outstanding leasing payment DKK 1.049.000. The Parant company has entered lease (rent) agreements with an total outstanding lease payment DKK 25.473.000. The Parant company has guarantee for subsidiaries' lease (rent) DKK 19.961.000. The Group has entered lease (rent) agreements with an total outstanding lease payment DKK 45.434.000. Guarantee commitments and other contingent liabilities: For rent commitments through the bank, the Parant company and the Group has provided a total bank guarantee DKK 11.524.000. The parent company and the group has guaranteed a subsidiary's bank credit of 90 t.US dollars. The subsidiary's bank accounts show deposits per. 31 December 2021, which is why the credit has not been used. Foreign Exchange Products: The Parant company has entered into Foreign Exchange Products totaling 850 t. Eur where the balance per. 31 December 2021 shows a loss of DKK 13,000. Joint taxation With Hesselager Holding ApS, company reg. no 34472785 as administration company, the company is subject to the Danish scheme of joint taxation and is proportionally liable for tax claims within the joint taxation scheme. The company is proportionally liable for any obligations to withhold tax on interest, royalties, and dividends of the jointly taxed companies. The liabilities amount to a maximum amount corresponding to the share of the company capital, which is owned directly or indirectly by the ultimate parent company. The joint taxation of the jointly taxed companies in the joint taxation appears in the management company's annual report. The liability relating to obligations in connection with withholding tax on dividends, interest, and royalties represents an estimated maximum of DKK 0. Any subsequent adjustments of corporate taxes or withholding tax, etc., may result in changes in the company's liabilities. 17. Related parties Controlling interest Hesselager Holding ApS, Krathusvej 3, 8240 Risskov. Majority shareholder Transactions The company in the RAINS ApS Group has during the financial year had transactions on market terms. Transactions with related parties have been made on market terms, whereby no further disclosure is made in accordance with section §98C of the Danish Financiel Statements Act. Consolidated annual accounts The company is included in the consolidated annual accounts of Hesselager Holding ApS, Krathusvej 3, 8240 Risskov. The annual report for RAINS ApS has been presented in accordance with the Danish Financial Statements Act regulations concerning reporting class C enterprises (medium sized enterprises). The accounting policies are unchanged from last year, and the annual report is presented in DKK. Recognition and measurement in general Income is recognised in the profit and loss account concurrently with its realisation, including the recognition of value adjustments of financial assets and liabilities. Likewise, all costs, these including depreciation, amortisation, writedown, provisions, and reversals which are due to changes in estimated amounts previously recognised in the profit and loss account are recognised in the profit and loss account. Assets are recognised in the balance sheet when the group is liable to achieve future, financial benefits and the value of the asset can be measured reliably. Liabilities are recognised in the balance sheet when the group is liable to lose future, financial benefits and the value of the liability can be measured reliably. At the first recognition, assets and liabilities are measured at cost. Later, assets and liabilities are measured as described below for each individual accounting item. At recognition and measurement, such predictable losses and risks are taken into consideration, which may appear before the annual report is presented, and which concerns matters existing on the balance sheet date. Foreign currency translation Transactions in foreign currency are translated by using the exchange rate prevailing at the date of the transaction. Differences in the rate of exchange arising between the rate at the date of transaction and the rate at the date of payment are recognised in the profit and loss account as an item under net financials. If currency positions are considered to hedge future cash flows, the value adjustments are recognised directly in equity in a fair value reserve. Receivables, payables, and other foreign currency monetary items are translated using the closing rate. The difference between the closing rate and the rate at the time of the occurrence or initial recognition in the latest financial statements of the receivable or payable is recognised in the income statement under financial income and expenses. Gross profit Gross profit comprises the revenue, changes in inventories of finished goods, and work in progress, work performed for own account and capitalised, other operating income, and external costs. Revenue is recognised in the income statement if delivery and passing of risk to the buyer have taken place before the end of the year and if the income can be determined reliably and inflow is anticipated. Recognition of revenue is exclusive of VAT and taxes and less any discounts relating directly to sales. Costs of sales includes costs for the purchase of raw materials and consumables less discounts and changes in inventories. Other external costs comprise costs for distribution, sales, advertisement, administration, premises, loss on debtors, and operational leasing costs. Depreciation, amortisation and writedown Depreciation, amortisation and writedown comprise depreciation, amortisation and writedown for the year and gains and losses on disposal of intangible and tangible fixed assets. Financial income and expenses Financial income and expenses are recognised in the income statement with the amounts concerning the financial year. Financial income and expenses comprise interest income and expenses, financial expenses from financial leasing, realised and unrealised capital gains and losses relating to securities, debt and transactions in foreign currency, amortisation of financial assets and liabilities as well as surcharges and reimbursements under the advance tax scheme, etc. Results from investments in subsidiaries After full elimination of intercompany profit or loss less amortised consolidated goodwill, the equity investment in the individual subsidiaries are recognised in the income statement of the parent as a proportional share of the subsidiaries' post-tax profit or loss. Tax of the results for the year The tax for the year comprises the current tax for the year and the changes in deferred tax, and it is recognised in the profit and loss account with the share referring to the results for the year and directly in the equity with the share referring to entries directly on the equity. The parent and the Danish group enterprises are subject to the Danish rules on compulsory joint taxation of the consolidated Danish enterprises. The current Danish corporate tax is allocated among the jointly taxed companies in proportion to their respective taxable income (full allocation with reimbursement of tax losses). Property, plant, and equipment Property is measured at cost plus revaluations and less accrued depreciation and writedown for impairment. Land is not subject to depreciation. The depreciable amount is cost plus revaluations at fair value less expected residual value after the end of the useful life of the asset. The amortisation period is fixed at the acquisition date and reassessed annually. If the residual value exceeds the carrying mount of the asset, depreciation is discontinued. Other property, plant, and equipment are measured at cost less accrued depreciation and writedown for impairment. The depreciable amount is cost less any expected residual value after the end of the useful life of the asset. The amortisation period and the residual value are determined at the acquisition date and reassessed annually. If the residual value exceeds the carrying amount, the depreciation is discontinued. If the amortisation period or the residual value is changed, the effect on amortisation will, in future, be recognised as a change in the accounting estimates. The cost comprises acquisition cost and costs directly associated with the acquisition until the time when the asset is ready for use. The cost of a total asset is divided into separate components. These components are depreciated separately, the useful lives of each individual components differing, and the individual component representing a material part of the total cost. Depreciation is done on a straight-line basis according to an assessment of the expected useful life: Other fixtures and fittings, tools and equipment Useful life 3-5 years Minor assets with an expected useful life of less than 1 year are recognised as costs in the income statement in the year of acquisition. Profit or loss derived from the disposal of property, land, and equipment is measured as the difference between the sales price less selling costs and the carrying amount at the date of disposal. Profit or loss is recognised in the income statement under depreciation. Investments in subsidiaries Investments in subsidiaries are recognised and measured by applying the equity method. The equity method is used as a method of consolidation. Investments in subsidiaries are recognised in the statement of financial position at the proportionate share of the enterprise's equity value. This value is calculated in accordance with the parent's accounting policies with deductions or additions of unrealised intercompany gains and losses as well as with additions or deductions of the remaining value of positive or negative goodwill calculated in accordance with the acquisition method. Negative goodwill is recognised in the income statement at the time of acquisition of the equity investment. If the negative goodwill relates to contingent liabilities acquired, negative goodwill is not recognised until the contingent liabilities have been settled or lapsed. Consolidated goodwill is amortised over its estimated useful life, which is determined on the basis of the management's experience with the individual business areas. Consolidated goodwill is amortised on a straight-line basis over the amortisation period, which represent 5-20 years. The depreciation period is determined on the basis of an assessment that these are strategically acquired enterpriseswith a strong market position and a long-term earnings profile. Investments in subsidiaries with a negative equity value are measured at DKK 0, and any accounts receivable from these enterprises are written down to the extent that the account receivable is uncollectible. To the extent that the parent has a legal or constructive obligation to cover an negative balance that exceeds the account receivable, the remaining amount is recognised under provisions. To the extent the equity exceeds the cost, the net revaluation of equity investments in subsidiaries transferred to the reserve under equity for net revaluation according to the equity method. Dividends from subsidiaries expected to be adopted before the approval of this annual report are not subject to a limitation of the revaluation reserve. The reserve is adjusted by other equity movements in subsidiaries. Newly acquired or newly established companies are recognised in the financial statement as of the time of acquisition. Sold or liquidated companies are recognised until the date of disposal. On the acquisition of enterprises, the acquisition method, the uniting-of-interests method or the book value method is applied, cf. the above description under Business combinations. Deposits Deposits are measured at amortised cost and represent rent deposits, etc. Inventories Inventories are measured at cost according to the FIFO method. In cases when the net realisable value of the inventories is lower than the cost, the latter is written down for impairment to this lower value. Costs of goods for resale, raw materials, and consumables comprise acquisition costs plus delivery costs. Receivables Receivables are measured at amortised cost, which usually corresponds to nominal value. Prepayments Prepayments recognised under assets comprise incurred costs concerning the following financial year. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand. EquityDividend Dividend expected to be distributed for the year is recognised as a separate item under equity. Income tax and deferred tax Current tax liabilities and current tax receivable are recognised in the statement of financial position as calculated tax on the taxable income for the year, adjusted for tax of previous years' taxable income and for tax paid on account. The company is jointly taxed with consolidated Danish companies. The current corporate income tax is distributed between the jointly taxed companies in proportion to their taxable income and with full distribution with reimbursement as to tax losses. The jointly taxed companies are comprised by the Danish tax prepayment scheme. Joint taxation contributions payable and receivable are recognised in the statement of financial position as ”Income tax receivable” or “Income tax payable”. According to the rules of joint taxation, RAINS ApS is proportionally liable to pay the Danish tax authorities the total income tax, including withholding tax on interest, royalties, and dividends, arising from the jointly taxed group of companies. Deferred tax is measured on the basis of temporary differences in assets and liabilities with a focus on the statement of financial position. Deferred tax is measured at net realisable value. Adjustments take place in relation to deferred tax concerning elimination of unrealised intercompany gains and losses. Deferred tax is measured based on the tax rules and tax rates applying under the legislation prevailing in the respective countries on the reporting date when the deferred tax is expected to be released as current tax. Changes in deferred tax due to changed tax rates are recognised in the income statement, except for items included directly in the equity. Deferred tax assets, including the tax value of tax losses allowed for carryforward, are recognised at the value at which they are expected to be realisable, either by settlement against tax of future earnings or by set-off in deferred tax liabilities within the same legal tax unit. Any deferred net tax assets are measured at net realisable value. Provisions Provisions are measured at net realisable value or at fair value. If the fulfilment of a liability is expected to take place far in the future, the liability is measured at fair value. Liabilities other than provisions Other liabilities concerning payables to suppliers, group enterprises, and other payables are measured at amortised cost which usually corresponds to the nominal value. Intangible assets Development projects, patents, and licences Patents and licenses are measured at cost less accrued amortisation. Patents are amortised on a straightline basis over the remaining patent period and licenses are amortised over the contract period, however, for a maximum of 5 - 7 years. Goodwill Acquired goodwill is measured at cost with deduction of accumulated amortisation. Goodwill is amortised over the estimated useful life, which is determined on the basis of management’s experience in the individual business areas. Goodwill is amortised on a straightline basis over the amortisation period, which is set at between 7 years. The amortisation period is determined on the basis of an expected pay-back period, being the longer for strategical acquirees with a strong market position and an expected longterm earnings profile. 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