Årsrapport29442789Redmark, Godkendt RevisionspartnerselskabSommervej, 31C8210, Aarhus V2023-01-012023-12-312024-01-012024-12-3134476187RAINS ApSIb Spang Olsens Gade138200Aarhus NRedmark, Godkendt Revisionspartnerselskab29442789Henrik Sondrupstatsautoriseret revisormne31446Sommervej31C8210Aarhus VDanmark86133100aarhus@redmark.dk2025-07-04Daniel Brix HesselagerRegnskabsklasse C, stor virksomhedRevisionspåtegningCaseWare fra Revisorgruppen DanmarkkapitalejerneAarhus2025-07-04Aarhus N2025-07-04Grundlag for konklusionKonklusion7215448486277027055299554874781074909541648012269489985760583209349872822645812575766122285766872158770971770269431376665001200312891856869281692124071356613731300755721082693238585662671695982577184061664974510984781101894537090085131764590131764590475914017237100040599479652670810030890845519698632884270024959272619326134600681078099213386747960717816350018108032471594062110823863447647397239144543630616721894201011007314888796897595014686771346546665750264934654666575026493000000003116628418488815380385331776197449480974494801974415106326019744151062737646795583972845394899712457070894264977291708942649772912527674414437835242036881316459820515255100046057044160603782351871075956120122075473002512095951381358512351871075956120015435772976941571161896072727108271903743245711618960727272626296213512660283602528158646413739853603427287015716935612632660412130668510000152715716935612632660412130668510000152710126299097653377675906217991356011587533395445158204333706313379686243077840500466085612900069211890665536814902048245336115361293105012491786211877342423990625515414148342762618544594571806367140398593248498362995594853630193072681828696084523644582058984370046673024557390010800010800010800010800000730151641848881313081238822871313081238822871330069441375732631257054321333883751462457561415635501462457601415635507675886102720041860002600001317645901317645900006710102085234510272001736245993101022952851416855715510504595842839103186048527125243459145890063924548674599902347844230342809896300010667866257312231191823420112583116959154413542633156151482733964481599611794413542633156151482733964481599611796084523644582058984370046673024557393465466657502649295864802585313260525135-3724195212476628146113829135233551082369216350018108032471219396184613427423043931383319988956874575095527485195662992312167298-13479283930962105934287-41271464281121043562998165-141563885-1136690553000000035000000609713591037981113097135968798111-1169683988001154459457535794464276261854459457427626185445945797461427781947886384085552489336483828638104274512225349665659696103851411334290217324141082693238585662671695982577184061811571101031212522312125223121252231212522323802752380275238027523802759744948974494815115651490552108053910810622592104257161444830542781516938416938461768959719919744151974415136841401190074213684140119007425286856477617219293291729671721618565058436467955539489949772914977291142794331427943312167298121672987089426708942670894267089426206006434020600643408538830853883020515255108257116043037676256583844127146421791146-42075-4207584351215474916052697729818062772113168735910123382941712397289546057044235187101220754730839309610-20600643408257116000464361746436170085870800055023254643617004184888-10515710027544-2830290030890845519698000-2100073015164184888002631931269900000-67101000263193194091000154357729769415Rains USA INC.INC.USA10033414062206192Rains Shanghai Trading Co. Ltd.Ltd.China1003483149428021Rains Norway ASASNorway1003168907690292Rains International Ltd.Ltd.Great Britain1001674158600173Rains Germany GmbHGmbHGermany100786828284890Rains Sweden ABABSweden100293747101539Drip Dutch B.V.B.V.Netherlands10021862298069ISOG ApSApSDenmark100-1574760-633849RAINS Canada Sales INC.INC.Canada1001553673320915Kjer-Ca UGUGTyskland100-1057171-1057171Rains Italy S.R.L.S.R.L.Italien10012461250013RAINS Switzerland AGAGSchweiz10079067001080001080001080001080001080001080001080001080000041848880003116628418488800730151641848883882287246660388228724666092485253635627924852536356271313081238822871313081238822871375732638387644613338837583876446465466257502648153803853317760300000000300000000300000000300000000-9220981-3805831-9220981-38058311330069441375732631257054321333883750350000000350000000350000000350000001027200-476900260000-45100066486861504100392600071100076758861027200418600026000018167517217515667514887501402000140200258960821315705331268397101664974510984781-13523356-1082369216350018108032471011007314888796-30842752160149883527372-2247538074664056-30781560131764590Today, the Board of Directors and the Managing Director have approved the annual report of RAINS ApS for the financial year 1 January - 31 December 2024. 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 2024, 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 2024. 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. Steen BorgholmDaniel 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 2024, 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 2024, 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 2024 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. Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the consolidated financial statements and the parent company financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Statement on Management’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. 56324400040093800027104800014357500012061700078858000677800006966700041889000-282700020000-33100002397000-135200050712000564640003023900035193300021185700013351300011923100010888500072755000108260005612700036100000-42891000-13145000-860000035855000-20060000-23721000-116970008800003789000229220003779000Pengestrømme i altPengestrømme i altPengestrømme i altPengestrømme i altPengestrømme i alt1321036925.72725.530.129.18.917.92440.3272430.933.951.454.524.144.144.562.238.8The key figures appearing from the survey have been calculated as follows: Gross margin ratio Gross profit x 100 / Revenue Return on equity investment Operating profit or loss (EBIT) x 100 / Average invested capital Invested capital Operational intangible and tangible assets and net working capital Solvency ratio Equity, closing balance x 100 / Total assets, closing balance Return on equity Net profit or loss for the year x 100 / Average equityUncertainties connected with recognition or measurement There are no significant uncertainties in the recognition and measurement of assets and liabilities other than conditions related to normal operating activity. 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 During 2024 Rains continued its development towards becoming a global lifestyle brand. The overall business grew 15 %, and the focus on North America resulted in another strong growth year of 22 % for the region. Serval comprehensive initiatives to increase capacity were executed doing 2024. A new IT infrastructure was finalized and made operational. The construction of a new HQ was finalized, and a new Warehouse Management System was implemented throughout the company’s logistic centers. As part of the expansion aspirations, new concept stores were opened in Dublin, Milano, Paris, Stockholm, New York, Den Haag og Vancouver as well as new brand shops with in key department stores across geographies. During 2024 existing product lines were upgraded and several new important product lines introduced. Building a platform for future growth remained a key focus. The organization was further strengthened. During 2024 the Group in average employed 181 people. The construction of the new Rains HQ in Aarhus was finalized, and brought into operation early November. Cash-flow from operations improved by 99m DKK and investments increased to 142m DKK, due the ongoing construction of the company’s new HQ, new IT system and expansion in the markets. The investments will secure the infrastructure for the future growth of the company. Despite the high investments and asset base in the company the Solvency ratio ended at 24%. This was a result of managing the net working capital and growing the Equity to 146.246 TDKK. Doing 2024 the Danish tax authorities has raised a claim against Rains based upon import tariffs for the biggest product category of the company. This has led to a significant cost increase going forward. The tax authorities have also claimed DKK 13,3m. in compensation for the previous year’s imports. Rains disagreed with the tax authority’s intervention and has appealed the claim. The revenue for the parent compagny for the year totals DKK 529.955 thousand against DKK 478.107 thousand last year. Income or loss from ordinary activities after tax totals DKK 34.655 thousand against DKK 57.503 thousand last year. Management considers the net profit or loss for the year satisfactory. The revenue for the group for the year totals DKK 721.545 thousand against DKK 627.703 thousand last year. Income or loss from ordinary activities after tax totals DKK 34.655thousand against DKK 57.503 thousand last year. Management considers the net profit or loss for the year satisfactory. Since 2023 there has been a good development in the revenue on group level, meaning a growth of 15 %. In the same period there has been great focus on developing the group for the future, meaning big investments in employees, IT infrastructure and headquarter. Therefor the cost has developed more relatively than the revenue during 2024 and is one of the reasons for a net profit below last year together with an ongoing customs case. The expected development The expectations for 2025 are to deliver continued growth across all regions and sales channels resulting in improved financial results. Events subsequent to the financial year There are no significant events other than conditions related to normal operating activity. Corporate social responsibility report pursuant to section 99 a of the Danish Financial Statements Act Business model and engagement Rains’ purpose is to develop, produce, market and sell lifestyle products under the RAINS brand. Our collections blend a conceptual-meets-functional design approach and a strong urban inspiration. Rains brings its neo-Scandinavian aesthetic, unisex collections, and consistently surprising curation to consumers across four continents; Europe, Asia, North America and Australia. Our sales channels can be divided into retail sales, wholesale and e-commerce sales. Within wholesale, we handle a large part of the sales ourselves from our headquarters in Denmark, US and China. We do, however, engage distributors and agents to some extent to conduct sales internationally. Within the Retail channel, our stores in Europe are generally operated by Rains Retail Partners. The stores in the US are operated by Rains from the US headquarter and the stores in Asia are operated by Rains from the headquarter in Shanghai, China or by distributors. All e-commerce sales stem from our own website, rains.com. The majority of our business activities are conducted within Europe and North America. In 2024, all RAINS products have been manufactured in China and through one Chinese supplier. We generally aim to limit the number of suppliers to maintain a close relationship. This is, in part, to be able to better ensure compliance with relevant legislation and international standards on environment, human rights and product safety. Rains aims to comply with the most stringent laws and regulations globally on environment, human rights and product safety. To ensure compliance with this throughout our value chain, we operate in accordance with Rains Code of Conduct which includes requirements on social responsibility issues, workers conditions, respect of human rights, and environmental impact. We continuously review Rains Code of Conduct and update it when relevant. All Rains suppliers and partners are expected to adhere to Rains Code of Conduct. We do not have incentive programs linked to sustainability issues on management level. Due to Omnibus, Rains is no longer in scope for CSRD-reporting. However, as a global retailer and manufacturer, we acknowledge that we have a responsibility to contribute positively to our people, the environment and the communities in which we work. Considering this, and the interests of our customers and partners, we plan to adhere to voluntary reporting standards for the financial year 2025. Environmental issues – including climate change Rains is mindful of the environmental impact of the fashion industry, as the fashion industry is responsible for around 10% of global carbon emissions annually (according to 2023 data by the United Nations Environment Programme (UNEP). Particularly fast fashion is a big culprit in the industry’s annual carbon emissions. For this reason, our designers focus on creating long-lasting and timeless products. The design process is aided with 3D sampling tools to avoid excess production of samples. We are also aware that the longer our products last, the smaller their environmental impact will be. Consequently, we have high standards for the materials used in our products and we continuously evaluate the performance of the materials. Also meaning that we continue working with designs and materials that perform well and discontinue the use of materials and designs that do not perform. To further extend the lifespan of our products, we advise our customers on how to properly take care of RAINS products just like we aim to establish a Care & Repair concept in 2025. We are also not blind to the fact that single use packaging has an adverse negative impact on our environment. Therefore, our e-commerce packaging is made to be reusable by incorporating stronger materials and zip locks. By doing this, the product bags can be reused by us when customers return RAINS items in them, and they can be repurposed by our customers. On company level, we focus on minimizing our energy consumption through measures such as automatic lighting, reducing food waste, solar cells and recycling cardboard boxes from our warehouses. Lastly, we have incorporated biodiversity measures on the surrounding site of Rains new HQ. We are still working on enhancing our own environmental awareness throughout the value chain and are expecting that the voluntary CSR reporting will aid in this goal. Social issues and employee issues It is Rains’ policy to continuously improve and work on the employees’ well-being by securing a safe and healthy work environment. Such policies are communicated to new employees through the onboarding process, just like updated policies are communicated and available to all employees via our internal website. Employees are hired without reference to gender, age, social conditions or the like, and solely based on personal and professional qualifications in relation to the relevant position. Our warehouses are organized and designed to improve the work environment and safety of the workers. Rains expects to continue focusing on the employee’s well-being in the work environment and continue to improve on this, when possible, based on our latest executed APV (work place assessment). Human rights Since our products are sourced from China, we are mindful of the high risks in relation to human rights violations. It is our policy not to enter into agreements with business partners whose views on human rights differ from internationally recognized principles on the observance of human rights. To mitigate these risks, we have drafted a Rains Code of Conduct that our business partners and suppliers are expected to adhere to. Rains Code of Conduct specifies our standpoints and requirements in relation to human rights and requirements for our business partners’ implementation of relevant policies and processes. It is required that all our business partners ensure that subcontractors are also compliant with Rains Code of Conduct. To ensure compliance with our Code of Conduct, audits are conducted yearly on all factory locations. Audits are conducted by the independent auditor Amfori BSCI and include monitoring on the following Human Rights subjects: • Social Management System •Workers Involvement and Protection • The Rights of Freedom of Association and Collective Bargaining •No Discrimination, Violence or Harassment •Fair Remuneration •Decent Working Hours •Occupational Health and Safety •No Child Labour •Special Protection for Young Workers •No Precarious Employment • No Bonded, Forced Labour or Human Trafficking Fighting corruption and bribery IIt is our policy to avoid all forms of bribery and corruption, including extortion. We are mindful of potential risks in relation to bribery and corruption, as our sourcing and production as well as some of our partners are located outside of the EU. To target potential risks in relation to corruption and bribery, our partners and suppliers are expected to adhere to the requirements of Rains Code of Conduct. In case potential partners/suppliers have different views on bribery and corruption than expressed in Rains Code of Conduct, it is the Management’s position that we will not enter into agreements with such partners/suppliers. We also always aim to build and evolve partnerships solely with trustworthy and professional partners. To ensure compliance with our Code of Conduct, audits are conducted yearly on all factory locations. Audits are conducted by the independent auditor Amfori BSCI and include monitoring of Ethical Business Behaviour. Report on the company’s policy on data ethics according to section 99 d of the Danish Financial Statements Act Data security is of high priority within Rains, and we have established policies for data security and data ethics. These policies are communicated and available to all our employees on our internal website. The following measures have been implemented to secure data within Rains: • Our network and servers are continuously monitored for irregularities as well as vulnerabilities and are continuously scanned for viruses and other malware. • Our staff receive information-related training on an ongoing basis and a number of technical controls have been implemented comprising both cloud- and physical solutions. We always observe the highest level of security for all our processes. • Internal guidelines and policies have been implemented to minimize the risk of violations of data privacy. All personal data must be handled in accordance with the requirements of the EU General Data Protection Regulation (GDPR), and, where relevant, applicable national data protection legislation with higher protection standards than GDPR. • Public data statement on our online shop (on subdomain level in relevant language) describing the purpose and scope of our data processing, along with information on data subjects rights. • All electronic units within Rains are handled according to the rules described for disposal of used electronics. Principles Rains processes data in accordance with the following principles: • Legality, fairness, and transparency: Data is processed in accordance with applicable laws and regulations. The processing must be fair to the persons whose data is collected, and there must be openness about the purpose of the data collection and how the data is processed. • Self-determination: People must maintain as much control as possible over their own data. • Progressiveness: The societal progress in the use of data can be achieved by using data ethical solutions. • Data: is a means of achieving a competitive advantage. Through efficient workflows and minimizing errors. • The human and the machine/robot: The human shall analyze, think freely, and solve tasks of high complexity. Meanwhile, the machine/robot shall solve monotonous, trivial tasks of low complexity, and must be controlled by humans. 1. Special items Special items include significant income and expenses of a special nature relative to the enterprise's ordinary operating activities, such as the cost of extensive structuring of processes and fundamental structural adjustments and any related gains on disposal and losses which, over time, have a significant impact. Special items also include other significant amounts of a nonrecurring nature. As mentioned in the management commentary, the net profit or loss for the year is affected by a customs case. Although the company does not agree with the authorities' assessment, provisions have been made for the case that primarily concerns previous years and therefore not to be considered to be part of operating activities. Special items for the year are specified below, indicating where they are recognised in the income statement. Group Parent 2024 2023 2024 2023 Expenses: Increased customs duty 13.176.459 0 13.176.459 0 13.176.459 0 13.176.459 0 Special items are recognised in the following items in the financial statements: Other operating expenses -13.176.459 0 -13.176.459 0 Profit of special items, net -13.176.459 0 -13.176.459 0 18. Provisions for deferred tax Provisions for deferred tax 1 January 2024 1.027.200 -476.900 260.000 -451.000 Regulation of the year 6.648.686 1.504.100 3.926.000 711.000 7.675.886 1.027.200 4.186.000 260.000 The following items are subject to deferred tax: Intangible assets 3.728.000 1.142.000 3.728.000 1.142.000 Property, plant, and equipment -402.000 -209.800 -402.000 -977.000 Current assets 4.349.886 95.000 860.000 95.000 7.675.886 1.027.200 4.186.000 260.000 21. Charges and security The Group - as collateral for mortgage loans, TDKK 105.000., security has been granted on land and buildings representing a carrying amount of TDKK .205.200 at 31 December 2024. For bank debts, TDKK 18.432, the parent company has provided security in parent company assets representing a nominal value of TDKK 1.000. This security comprises the below assets, stating the book values: DKK in thousands Inventories 121.307 Trade receivables 67.591 Other fixtures and fittings, tools and equipment 23.519 Intangible assets 7.369 22. Contingencies Contingent liabilities Lease liabilities The Parent company has entered into leasing contracts with an total outstanding leasing payment TDKK 925. The Parent company has guarantee for subsidiaries' lease TDKK 1.419. The Group has entered into leasing contracts with an total outstanding leasing payment TDKK 2.344. The Parent company has entered lease (rent) agreements with an total outstanding lease payment TDKK 253.540. The Parent company has guarantee for subsidiaries' lease (rent) TDKK 4.951. The Group has entered lease (rent) agreements with an total outstanding lease payment TDKK 80.826. For rent commitments through the bank, the Parent company and the Group has provided a total bank guarantee TDKK 8.317. The parent company and the group has guaranteed of TDKK 135.000 (self - debtor surety). The subsidiary's bank accounts show a debt of TDKK 124.073 per 31 December 2024. The parent company has submitted a statement of support to the subsidiary so that operations for the coming year can be carried out. Joint taxation With H 12 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 jointly taxed enterprises' total known net liability to the Danish tax authorities emerges from the financial statements of the administration company. Any subsequent adjustments of corporate taxes or withholding tax, etc., may result in changes in the company's liabilities. 23. Related parties Controlling interest H 12 ApS, Krathusvej 3, 8240 Riskkov, 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 financial statements The company is included in the consolidated annual accounts of H 12 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 (large 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 income statement concurrently with its realisation, including the recognition of value adjustments of financial assets and liabilities. Likewise, all costs are recognised in the income statement, including depreciations amortisations, write-downs for impairment, provisions, and reversals due to changes in estimated amounts previously recognised in the income statement. Assets are recognised in the statement of financial position when it seems probable that future economic benefits will flow to the group and the value of the asset can be reliably measured. Liabilities are recognised in the statement of financial position when it is seems probable that future economic benefits will flow out of the group and the value of the liability can be reliably measured. Assets and liabilities are measured at cost at the initial recognition. Hereafter, assets and liabilities are measured as described below for each individual accounting item. Upon recognition and measurement, allowances are made for such predictable losses and risks which may arise prior to the presentation of the annual report and concern matters that exist on the reporting 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. Fixed assets acquired and paid for in foreign currency are measured at the exchange rate prevailing at the date of the transaction. Revenue 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. Revenue is measured at the fair value of the consideration promised exclusive of VAT and taxes and less any discounts relating directly to sales. Cost of sales Cost of sales comprises costs concerning purchase of raw materials and consumables less discounts and changes in inventories. Other external expenses Other external expenses comprise expenses incurred for distribution, sales, advertising, administration, premises, loss on receivables, and operational leasing costs. Depreciation, amortisation, and write-down for impairment Depreciation, amortisation, and write-down for impairment comprise depreciation, amortisation, and write-down for the year and profit and loss on the disposal of intangible and tangible 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, realised and unrealised capital gains and losses relating to 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 group enterprises After full elimination of intercompany profit or loss less amortised consolidated goodwill, the equity investment in the individual entities are recognised in the income statement of the parent as a proportional share of the entities' post-tax profit or loss. Tax on net profit or loss for the year Tax for the year comprises the current income tax for the year and changes in deferred tax and is recognised in the income statement with the share attributable to the net profit or loss for the year and directly in equity with the share attributable to entries directly in equity. The parent and the Danish group enterprises are subject to Danish rules on compulsory joint taxation of Danish group enterprises. The current Danish income tax is allocated among the jointly taxed companies proportional to their respective taxable income (full allocation with reimbursement of tax losses). Property, plant, and equipment Property, plant, and equipment are measured at cost less accrued depreciation and write-down for impairment. Land is not subject to depreciation. 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 and the residual value of the individual assets: Buildings Useful life 40 years Residual value 10-60% Other fixtures and fittings, tools and equipment Useful life 2-6 years Residual value 0 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 group enterprises Investments in group enterprises are recognised and measured by applying the equity method. The equity method is used as a method of consolidation. Investments in group enterprises 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 enterprises with a strong market position and a long-term earnings profile. In relation to material assets and liabilities recognised in group enterprises but are not represented in the parent, the following accounting policies have been applied. Property, plant, and equipment: Property in progress are measured and recognised as the total costs incurred. When the work has been completed, the total value is transferred to the relevant item under property, plant, and equipment and is amortised from the date of entry into service. Property is measured at cost plus revaluations and less accrued depreciation and write-down for impairment. Land is not subject to depreciation. Investments in group enterprises 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 group enterprises transferred to the reserve under equity for net revaluation according to the equity method. Dividends from group enterprises 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 group enterprises. 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. In order to meet expected losses, impairment takes place at the net realisable 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. Equity Reserve for net revaluation according to the equity method The reserve for net revaluation according to the equity method comprises net revaluation of equity investments in subsidiaries, associates and equity interests proportional to cost. The reserve may be eliminated in the event of losses, realisation of equity investments, or changes in the accounting estimates. The reserve cannot be recognised by a negative amount. Reserve for development costs The reserve for development costs comprises recognised development costs less related deferred tax liabilities. The reserve cannot be used as dividends or for covering losses. The reserve is reduced or dissolved if the recognised development costs are amortised or abandoned. This is done by direct transfer to the distributable reserves of the equity. Dividend 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 ”Tax receivables from group enterprises" or "Income tax payable to group enterprises" 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. The cash flow statement shows the cash flows of the group for the year, divided in cash flows deriving from operating activities, investment activities and financing activities, respectively, the changes in the liabilities, and group’ cash and cash equivalents at the beginning and the end of the year, respectively. A cash flow statement for the parent has not been prepared as the cash flows of the enterprise are included in the consolidated cash flow statement, cf. section 86, subsection 4, of the Danish Financial Statements Act. The effect on cash flows derived from the acquisition and sale of enterprises appears separately under cash flows from investment activities. In the statement of cash flows, cash flows derived from acquirees are recognised as of the date of acquisition, and cash flows derived from sold enterprises are recognised until the date of sale. Cash flows from operating activities Cash flows from operating activities are calculated as the group's share of the profit adjusted for non-cash operating items, changes in the working capital, and corporate income tax paid. Dividend income from equity investments are recognised under “Interest income and dividend received”. Cash flows from investment activities Cash flows from investment activities comprise payments in connection with the acquisition and sale of enterprises and activities as well as the acquisition and sale of intangible assets, property, plant, and equipment, and investments, respectively. Cash flows from financing activities Cash flows from financing activities include changes in the size or the composition of the group's share capital and costs attached to it, as well as raising loans, repayments of interest-bearing payables and payment of dividend to shareholders. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits and short-term financial instruments with a term of less than 3 months, which can easily be converted into cash and cash equivalents and are associated with an insignificant risk of value change. Intangible assets Development projects, patents, and licences Development costs and internally generated rights are recognised in the income statement as costs in the acquisition year. 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 7 years. Goodwill Acquired goodwill is measured at cost less accumulated amortisation. The depreciation period is determined based on an assessment that these are strategically acquired rights to markets with a strong market position and long-term earning potential. The amortisation period is set at 7 years. 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