BDO Statsautoriseret revisionsaktieselskabNørrebro 15DK-9800 Hjørring20222670Årsrapport2022-06-21Kim Bach JensenVersalift Denmark A/SSøndervang 39640 FarsøRevisionspåtegning123156001988-08-01Vesthimmerlands2021-01-012021-12-312020-01-012020-12-31BDO Statsautoriseret revisionsaktieselskabNørrebro159800HjørringFarsø2022-06-21Lance Morgan ReinhardKim Bach JensenCurt Stephen HowellChairmanDavid Lyn PostJay Tolar JeffreyKonklusionGrundlag for konklusionHjørring2022-06-21BDO Statsautoriseret revisionsaktieselskab20222670Klaus NielsenRevisionspåtegningState Authorised Public Accountantmne3617836417300000957430008437400070688000418640003331500030809000129630002753000Operating profit/loss before depreciation and amortisation (EBITDA)Operating profit/loss before depreciation and amortisation (EBITDA)Operating profit/loss before depreciation and amortisation (EBITDA)Operating profit/loss before depreciation and amortisation (EBITDA)Operating profit/loss before depreciation and amortisation (EBITDA)26678000129630002753000-300000-453000-1410000367180002690100026378000125090001343000Profit/loss for the year before taxProfit/loss for the year before taxProfit/loss for the year before taxProfit/loss for the year before taxProfit/loss for the year before tax201900009112000-2170000241833000182266000149573000614840004129300032180000-99420001322700022373000-475400095960001883100075470001982100023898000-3939000-8731000-4500000-4167000-122700026.324.926.3003632.325.422.721.528.42939.324.8-6.549425846241925144539935636331813945536938621729477450528145833921494565432555371-32943106678633-61973191813430380554215363293829758292174452070602818372073136361481300236011042821441077409138719009288159563709674996654191655489145616189948808415407858423217735702139284338043579113927468770006556501364575260643925327941395533742078159017240652518973613179264367184062690134736944961263961599479331607385479269825568668272390752082749329017979208274912678535247522926785352475229267853524752292678535247522920946951894264149372712135223377121902236526474698472331498115847350594042040401990410452974156516888183236137057570018168811126451001784711785380019953521304989131315091812691712857123174859755109391858950290352038173303009339120156276039893585629527124434431432182210401517709185197624131333572921086582948876929779916940760397517313250943373512373388746782213437420701139222899746345633307432137675324631567868641915260144441916231071242564149084577113374382186682674114002865888986414840581101895112375733044632422550001742884109892226433536000006000006000006000000014168787612280020892581930679108950124817110491072228927901914210955949582304181111338399823041816727511159918135800016300004198715370052934165342860086487146648604474774534449008604196938041969383346425033476850334642503347685033464250409125343346425040912534449275912362953344927591236295330779041077904117969731201978159636411481917715994461895493604784244931623613834856224489341642574446571755475644365674663869823848668133730231331128790187011155770815656803112692301213883380694936552190032281167835546172298056135849086304463242255000174288410989222643353600000-686881711049272390751623960000093711089501246000007612281930679-68687901914265565028362329158579-15857916239600000141687820892589371107222892272390752082749361618994880841-452084-26976694793316073854-8147600-6255011-2469899810081186-34430881-2090606760332723045004-1830722817430646-1622060-2195290-3938833-87313794849672802299-711221-10124370-6181205-82118500485000022500283-7762449-12600-136800-3238746323874613067732-8022353-5950717-7160771484058115556658888986414840581429600409200225000219200350003500035000350000275000275006455012006455012002371951671507707455262625801595533064953522263159675210828566076548043674769044313087013278451149556881595637096749966541916554891450015833640252606439253279412371977380532606439253279413955337420789966498600355981989825266668-48716770295-272000302000947933160738547926982556866800655650136457527239075208274932836232919462916342586916220605047929950640141875423693942678535342586916220605047929950640141875423693942678535100895762415021818362883-582-497-40310065931009182192305807744602011095587174143012028553881955641512785213627826-325-290-1340334554208056532255160167668890008921403718015304380209469533771214981158854452322829339172923517860445124171565711077227850933056715618971188580627331000143570081327244803325197050584019396911543574783684012971502148160221493727264746940420403720891785381854300673906321784717543600162390655650014262490181688117847100Regnskabsklasse C, stor virksomhedtrueToday the Board of Directors and Executive Board have discussed and approved the Annual Report of Versalift Denmark A/S for the financial year 1 January - 31 December 2021. The Annual Report is presented in accordance with the Danish Financial Statements Act. In our opinion the Consolidated Financial Statements and the Annual Financial Statements of the Company give a true and fair view of Group's and the Company's assets, liabilities and financial position at 31 December 2021 and of the results of Group's and the Company's operations and cash flows for the financial year 1 January - 31 December 2021. The Management Commentary includes in our opinion a fair presentation of the matters dealt with in the Commentary. We recommend the Annual Report be approved at the Annual General Meeting. To the Shareholders of Versalift Denmark A/S We have audited the Consolidated Financial Statements and the Annual Financial Statements of the Company of Versalift Denmark A/S for the financial year 1 January - 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 and the Parent Company, as well as consolidated statement of cash flows for the Group. The Consolidated Financial Statements and the Annual Financial Statements of the Company are prepared in accordance with the Danish Financial Statements Act. In our opinion, the Consolidated Financial Statements and the Annual Financial Statements of the Company give a true and fair view of the assets, liabilities and financial position of the Group or the Company at 31 December 2021 and of the results of the Group and the Parent Company's operations as well as the consolidated cash flows of the Group for the financial year 1 January - 31 December 2021 in accordance with the Danish Financial Statements Act. Basis for Opinion Grundlag for konklusion 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 Annual Financial Statements of the Company” 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 (including International Independence Standards) (IESBA Code), together with the ethical requirements that are relevant to our audit of the financial statements in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Management's Responsibilities for the Consolidated Financial Statements and the Annual Financial Statements of the Company Management is responsible for the preparation of Consolidated Financial Statements and the Annual Financial Statements of the Company 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 the Annual Financial Statements of the Company that are free from material misstatement, whether due to fraud or error. In preparing the Consolidated Financial Statements and the Annual Financial Statements of the Company, 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 Annual Financial Statements of the Company 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 Annual Financial Statements of the Company 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 the Annual Financial Statements of the Company. 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 Annual Financial Statements of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's and the Parent Company's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the Consolidated Financial Statements and the Annual Financial Statements of the Company and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's and the Parent Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Consolidated Financial Statements and the Annual Financial Statements of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and the Parent Company to cease to continue as a going concern. Evaluate the overall presentation, structure and contents of the Consolidated Financial Statements and the Annual Financial Statements of the Company, including the disclosures, and whether the Consolidated Financial Statements and the Annual Financial Statements of the Company 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 Commentary Management is responsible for Management Commentary. Our opinion on the Consolidated Financial Statements and the Annual Financial Statements of the Company does not cover Management Commentary, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Consolidated Financial Statements and the Annual Financial Statements of the Company, our responsibility is to read Management Commentary and, in doing so, consider whether Management Commentary is materially inconsistent with the Consolidated Financial Statements and the Annual Financial Statements of the Company or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether Management Commentary provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we conclude that Management Commentary is in accordance with the Consolidated Financial Statements and the Annual Financial Statements of the Company and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of Management Commentary. The comparative figures on revenue have not been disclosed for the years 2017-2018 with respect to a simple change in reporting class based on organic growth. The change in reporting class have not had any effect on the comparative figures. The ratios stated in the list of key figures and ratios have been calculated as follows: Gross margin: Gross profit x 100 Net revenue Equity ratio: Equity (ex. minorities), at year-end x 100 Total assets, at year-end Return on equity: Profit/loss after tax x 100 Average equity Principal activities The Group is engaged in the sale and service of lifts both in Denmark and abroad. Development in activities and financial and economic position The Group realized an increase in sales and gross profit in 2021, and profit before tax came in at DKK 36.8 million as against a profit of DKK 26.9 million for 2020. Profit/loss for the year compared to the expected development Management considers the profit for year very satisfactory and better than last year's expectations considering development in foreign exchange rates and cost levels on raw materials impacts. The increase in sales comes from both the Danish and French entity, which both have performed better than expected. Significant events after the end of the financial year No events have occurred after the end of the financial year of material importance for the Company's financial position. Future expectations The investments executed in France in prior years and Sweden in 2021 has improved our market position and is expected to continue going forward. Overall activities and sales are expected to increase for the group in 2022. As for prior years uncertain factors are related to development in foreign exchange rates and cost levels on raw materials. For 2022 supply chain management will also be key for the group's performance as performance to some extend is dependent on third party car supplies. Expectations are based on 2021 realized cost levels and foreign exchange rates. Corporate social responsibility (CSR) report The company is certified after the ISO standards 14001:2015 (Environmental) and 9001:2015 (Quality). The company has introduced policies containing internal guidelines, objectives, and strategies, which are executed to ensure a safe and healthy working environment. Environmental and climatic conditions are considered in the company's processes. The company execute its policies into action through the introduction of management systems and control systems as a follow-up to the work process. The Group regularly conducts an evaluation that systematically reviews the implementation of the policies. As a result of the work with social responsibility, the company has an expectation to keep the level of sickness absence at a low level and an expectation of continuing to keep the number of accidents at work at a low level as well. It is expected that in the future there will still be an improvement in these conditions, just as it is expected that the production processes will be less environmentally damaging. It is a dedicated goal to create a work environment where there is room for less resourceful employees, just as training of younger employees is a focus area. In this connection, there is a close collaboration with educational institutions regarding both education and continuing education of the staff. The company has not yet developed written policies for human rights, anti-corruption and bribery; but the need for this is continuously evaluated as it is a declared ambition to constantly appear and act as a socially responsible company. Target figures and policy for the underrepresented gender Regardless of the industry's history and a low female gender presence, the company is working to increase the number of female managers and has based on this from 2020, as the first year, set specific targets for the proportion of underrepresented gender in management composition of management in general. According to the Danish legislation, the company has a goal that at least one of the board members at the company is a woman by 2025. When it comes to hiring and recruiting for management positions, the goal is for there to be both male and female candidates, despite operating in a world dominated by men. The election of a woman being part of the company's board of directors presupposes the right qualifications and must otherwise harmonize with the need for the replacement of current board members.Data ethics report For now Versalift Denmark A/S has not identified the need for a data ethics policy. Data and technologies are not used, neither in business strategic context nor in day-to-day operations, which currently requires specific data ethical considerations. Overall decisions regarding data use and/or implementation of new technologies will be executed at management level to ensure that data ethics aspects are addressed and anchored throughout all business units. Management has focus on the potential need to adopt a policy on data ethics and will implement this, if the company's data use will change and require such at a later point.Group Share capital Fair value reserve, currency translation of foreign entities Retained earnings Total Equity at 1 January 2021 600.000 -6.868 81.711.049 82.304.181 Proposed profit allocation, cf. note 6 27.239.075 27.239.075 Change fair value reserves Value adjustments in the year 16.239 16.239 Equity at 31 December 2021 600.000 9.371 108.950.124 109.559.495 Parent Company Share capital Reserve for net revaluation under the equity method Reserve for development costs Fair value reserve, currency translation of foreign entities Retained earnings Total Equity at 1 January 2021 600.000 761.228 1.930.679 -6.868 79.019.142 82.304.181 Proposed profit allocation, cf. note 6 655.650 28.362.329 29.017.979 Other legal bindings Revaluations in the year 158.579 -158.579 0 Change fair value reserves Value adjustments in the year 16.239 16.239 Equity at 31 December 2021 600.000 1.416.878 2.089.258 9.371 107.222.892 111.338.399 Net revenue 1 Segment details (activities) Versalift sales and installation charge 444.470.094 366.214.129 352.582.344 265.102.139 Indsæt linje Other products and lifts 49.788.368 53.037.316 46.774.019 53.037.316 Indsæt linje 494.258.462 419.251.445 399.356.363 318.139.455 The company does not consider segments based on geography. Return and risk is consistent at such detailed level. Group Parent Company 2021 2020 2021 2020 DKK DKK DKK DKK Fee to statutory auditor 2 Total fees: BDO 324.550 282.900 324.550 282.900 Auditors of foreign subsidiaries 204.600 190.000 0 0 529.150 472.900 324.550 282.900 Detail fees: Statutory audit 429.600 409.200 225.000 219.200 Assurance engagements 35.000 35.000 35.000 35.000 Tax consultancy 0 27.500 0 27.500 Other services 64.550 1.200 64.550 1.200 529.150 472.900 324.550 282.900 Staff costs 3 Average number of employees 237 195 167 150 Wages and salaries 77.074.552 62.625.801 59.553.306 49.535.222 Pensions 6.315.967 5.210.828 5.660.765 4.804.367 Social security costs 4.769.044 3.130.870 1.327.845 1.149.556 88.159.563 70.967.499 66.541.916 55.489.145 Executive remuneration is not disclosed, cf. ÅRL § 98b, paragraph 3. Other financial income 4 Group enterprises 0 0 158.336 4.025 172.110 Other interest income 2.606.439 2.532.794 1.237.197 738.053 2.606.439 2.532.794 1.395.533 742.078 Tax on profit/loss for the year 5 Calculated tax on taxable income of the year 9.966.498 6.003.559 8.198.982 5.266.668 Adjustment of deferred tax -487.167 70.295 -272.000 302.000 9.479.331 6.073.854 7.926.982 5.568.668 Proposed distribution of profit 6 Allocation to reserve for net revaluation under the equity method 0 0 655.650 1.364.575 514.100.04 Retained earnings 27.239.075 20.827.493 28.362.329 19.462.916 27.239.075 20.827.493 29.017.979 20.827.491 Intangible assets 7 Group Development projects completed Cost at 1 January 2021 3.425.869 Additions 1.622.060 Cost at 31 December 2021 5.047.929 Amortisation at 1 January 2021 950.640 Amortisation for the year 1.418.754 Amortisation at 31 December 2021 2.369.394 Carrying amount at 31 December 2021 2.678.535 Development projects include development and testing of new lift variants. In 2021, management assessed the valuation of the development projects. It is estimated that the recoverable amount in the form af value in use exceeds the carrying amount. Parent Company Development projects completed Cost at 1 January 2021 3.425.869 Additions 1.622.060 Cost at 31 December 2021 5.047.929 Amortisation at 1 January 2021 950.640 Amortisation for the year 1.418.754 Amortisation at 31 December 2021 2.369.394 Carrying amount at 31 December 2021 2.678.535 Development projects include development and testing of new lift variants. In 2021, management assessed the valuation of the development projects. It is estimated that the recoverable amount in the form af value in use exceeds the carrying amount. Property, plant and equipment 8 Group Production plant and machinery Other plant, machinery tools and equipment Leasehold improvements Cost at 1 January 2021 10.089.576 24.150.218 18.362.883 Exchange adjustment -582 -497 -403 Additions 1.006.593 1.009.182 1.923.058 Disposals 0 -7.744.602 0 Cost at 31 December 2021 11.095.587 17.414.301 20.285.538 Depreciation and impairment losses at 1 January 2021 8.195.564 15.127.852 13.627.826 Exchange adjustment -325 -290 -134 Reversal of depreciation of assets disposed of 0 -3.345.542 0 Depreciation for the year 805.653 2.255.160 1.676.688 Depreciation and impairment losses at 31 December 2021 9.000.892 14.037.180 15.304.380 Carrying amount at 31 December 2021 2.094.695 3.377.121 4.981.158 Parent Company Production plant and machinery Other plant, machinery tools and equipment Leasehold improvements Cost at 1 January 2021 8.544.523 22.829.339 17.292.351 Additions 786.044 512.417 1.565.711 Disposals 0 -7.722.785 0 Cost at 31 December 2021 9.330.567 15.618.971 18.858.062 Depreciation and impairment losses at 1 January 2021 7.331.000 14.357.008 13.272.448 Reversal of depreciation of assets disposed of 0 -3.325.197 0 Depreciation for the year 505.840 1.939.691 1.543.574 Depreciation and impairment losses at 31 December 2021 7.836.840 12.971.502 14.816.022 Carrying amount at 31 December 2021 1.493.727 2.647.469 4.042.040 Financial non-current assets 9 Parent Company Equity investments in group enterprises Receivables from Group companies Cost at 1 January 2021 372.089 178.538 Additions 18.543 0 Disposals 0 -67 Cost at 31 December 2021 390.632 178.471 Revaluation at 1 January 2021 754.360 0 Exchange adjustment 16.239 0 Profit/loss for the year 655.650 0 Revaluation at 31 December 2021 1.426.249 0 Carrying amount at 31 December 2021 1.816.881 178.471 Investments in subsidiaries Name and domicil Ownership Versalift France S.A.S, Morlaás, France 100 % Versalift Sweden AB, Falkenberg, Sweden 100 % Prepayments 10 Prepayments consists of prepaid expenses and other payments. 2021 2020 DKK DKK Share capital Allocation of share capital: 11 A-shares, 600 unit in the denomination of 1.000 DKK 600.000 600.000 600.000 600.000 Provision for deferred tax 12 Deferred tax is provided for on inventories and intangible assets and property, plant and equipment. Group Parent Company 2021 2020 2021 2020 DKK DKK DKK DKK Deferred tax, beginning of year 1.159.918 1.089.623 1.630.000 1.328.000 450.600.01 522.100.01 Deferred tax of the year, income statement -487.167 70.295 -272.000 302.000 450.600.02 522.100.02 Provision for deferred tax 31 December 2021 672.751 1.159.918 1.358.000 1.630.000 Other provisions 13 0-1 år 4.198.715 3.700.529 3.416.534 2.860.086 Other provisions consist of warrenties. Long-term liabilities 14 Group 31/12 2021 Repayment Debt outstanding 31/12 2020 total liabilities next year after 5 years total liabilities Bank loan 0 0 0 1.205.226 533.100 533.100.01 Lease liabilities 0 0 0 4.975.979 533.200 533.200.01 Payables to group enterprises 33.464.250 0 0 33.476.850 535.400 535.400.01 Other liabilities 0 0 0 3.238.746 535.900 535.900.01 33.464.250 0 0 42.896.801 Parent Company 31/12 2021 Repayment Debt outstanding 31/12 2020 total liabilities next year after 5 years total liabilities Bank loan 0 0 0 1.205.226 533.100 533.100.01 Lease liabilities 0 0 0 4.975.979 533.200 533.200.01 Payables to group enterprises 33.464.250 0 0 33.476.850 535.400 535.400.01 Other liabilities 0 0 0 3.238.746 535.900 535.900.01 33.464.250 0 0 42.896.801 Contingent liabilities Group Parent Company 2021 2020 2021 2020 DKK DKK DKK DKK Liabilities under rental or lease agreements until maturity in total 8.538.508 10.007.697 5.241.123 6.762.444 8.538.508 10.007.697 5.241.123 6.762.444 Charges and securities 16 Group: The group has provided a collateral of DKK ('000) 1.170. A company charge of DKK ('000) 15.000 secured on pledged assets have been registered as collateral for the group's bank debt. Parent company: The Parent Company has provided a collateral of DKK ('000) 1.170. A company charge of ('000) 15.000 secured on pledged assets have been registered as collateral for the parent company's bank debt. Related parties 17 The Company's related parties include: Controlling interest H.I.G. Time Manufacturing Holdings, LP, New York, USA, is listed in the Company's register of shareholders as holding enough of the share capital to hold controlling interest. H.I.G. Time Manufacturing Holdings, LP, New York, USA, is listed in the Company's register of shareholders as holding enough of the share capital to hold controlling interest. Transactions with related parties The Group's trading and agreements with related parties serve a commercial purpose only and were carried out at arm's length. The Parent Conpany's trading and agreements with related parties serve a commercial purpose onyl and were carried out at arm's length. Consolidated Financial Statements 18 The group is a sub group and is included in the consolidated finansial statements of H.I.G. Time Manufacturing Holdings, LP, New York, USA. The consolidated financial statements in question can be requested by contacting the parent company. The Annual Report of Versalift Denmark A/S for 2021 has been presented in accordance with the provisions of the Danish Financial Statements Act for enterprises in reporting class C, large-size enterprises. Regnskabsklasse C, stor virksomhed1 true The Annual Report is prepared consistently with the accounting principles applied last year. The Consolidated Financial Statements include the Parent Company Versalift Denmark A/S and the subsidiaries in which Versalift Denmark A/S directly or indirectly holds more than 50% of the voting rights or in any other way has a controlling influence. Enterprises in which the Group holds between 20% and 50% of the voting rights and exercises significant, but not controlling influence, are considered associates, see the Group structure. The Consolidated Financial Statements consolidate the Financial Statements of the Parent Company and the subsidiaries by combining uniform accounts items. Intercompany income and expenses, shareholdings, intercompany accounts and dividend, and realised and unrealised gains and losses arising from transactions between the consolidated enterprises are fully eliminated in the consolidation. Newly acquired or established enterprises are recognised in the Consolidated Financial Statements from the date of acquisition. Sold or wound up enterprises are recognised in the Consolidated Income Statement up to the date of disposal. Comparative figures are not adjusted for newly acquired, sold or wound up enterprises. The date of acquisition is the date at which the Group gains actual control over the acquired enterprises. Acquired enterprises are recognised in the Consolidated Financial Statements under the acquisition method, reassessing all identified assets and liabilities to fair value at the acquisition date. The fair value is calculated based on acquisitions made in an active market, alternatively calculated using generally accepted valuation methods. Deferred tax on the taken over reassessments is recognised with the exception of goodwill. At calculation of the fair value of investment properties, a discounted cash flow model is applied based on discounted cash flow of future earnings. Operating equipment is recognised at fair value based on an assessor’s opinion, using an overall assessment of the production equipment. Positive differences (goodwill) between the acquisition value and fair value of acquired and identified assets and liabilities are recognised in intangible fixed assets as goodwill and amortised systematically in the Income Statement under an individual assessment of the useful life. Negative differences are recognised in the Income Statement at the date of acquisition. The difference from acquired enterprises is DKK (‘000) 0. Transaction costs, incurred in connection with acquisition of enterprises, are recognised in the Income Statement in the year in which the costs are incurred. Investments in subsidiary enterprises are set off by the proportional share of the subsidiaries’ fair value of net assets and liabilities at the acquisition date. Investments in associates are measured in the Balance Sheet at the proportional share of the equity value of the enterprises, calculated under the accounting policies of the Parent Company and eliminating proportionally any unrealised intercompany gains and losses. The proportional share of the results of the associates is recognised in the Income Statement after elimination of the proportional share of internal gains and losses. Net revenue Net revenue from the sale of manufactured goods is recognised in the Income Statement if supply and risk transfer to purchaser has taken place before the end of the year and if the income can be measured reliably and is expected to be received. Net revenue is recognised exclusive of VAT and less duties and discounts related to the sale. Other operating income Other operating income includes items of a secondary nature in relation to the enterprises' principal activities, including profit from sale of intangible and tangible assets, operating loss and conflict compensations, as well as salary refunds. Compensations are recognised when the income is estimated to be realisable. Cost of sales Cost of sales comprise costs incurred to achieve the net revenue for the year, including direct and indirect costs of raw materials and consumables. Other external expenses Other external expenses include other production, sales, delivery and administrative costs, including costs of energy, marketing, premises, loss on bad debts, operating lease expenses, etc Payments related to operating lease expenses and other lease agreements are recognised in the Income Statement over the contract period. The Company’s total liability concerning operating and other lease agreements are stated under contingencies, etc. Staff costs Staff costs comprise wages and salaries, including holiday pay and pensions, and other costs of social security etc., for the Group and the Parent Company's employees. Income from investments in subsidiaries The proportional share of the results of subsidiaries, stated according to the Parent Company’s accounting policies and with full elimination of unrealised intercompany profits/losses and deduction of amortisation of added value and goodwill resulting from purchase price allocation at the date of acquisition, is recognised in the Parent Company’s Income Statement. In connection with transfers, potential profits are recognised when the economic rights related to the sold equity interests are transferred, however, at the earliest when the profit has been realised or is regarded as realisable. Moreover, realised losses other than impairments are included where identified. Financial income and expenses Financial income and expenses include interest income and expenses, financial expenses of finance leases, realised and unrealised gains and losses arising from securities, debt and transactions in foreign currencies, as well as charges and allowances under the tax-on-account scheme, etc. Financial income and expenses are recognised by the amounts that relate to the financial year. Interest income and expenses are calculated on amortised cost prices. Tax The tax for the year, which consists of the current tax for the year and changes in deferred tax, is recognised in the Income Statement by the share that may be attributed to the profit for the year, and is recognised directly in equity by the share that may be attributed to entries directly to equity. Intangible fixed assets Acquired goodwill is measured at cost less accumulated amortisation. Goodwill is amortised on a straight-line basis over the expected useful life which is estimated to 5 years. The period of amortisation is determined based on an assessment of the acquired company’s position in the market and earnings profile, and the industry-specific conditions. Patents and licences are measured at the lower of cost less accumulated amortisation and the recoverable amount. Patents are amortised over the remaining patent period and licences are amortised over the period of the agreement, however, no more than 8 years. Development projects comprise costs, including wages and salaries, and amortisation, which directly or indirectly can be related to the Company’s development activities and which fulfil the criteria for recognition in the Balance Sheet. The accounting item is measured at the lower of the capitalised costs less accumulated amortisation and recoverable amount. Capitalised development costs are amortised on a straight-line basis over the estimated useful life after completion of the development work. The amortisation period is normally 5 years. Intangible fixed assets are generally written down to the recoverable amount if this is lower than the carrying amount. Profit or loss from sale of intangible fixed assets is calculated at the difference between the sales price and the carrying amount at the time of the sale. Profit and loss are recognised in the Income Statement under other operating income or other operating expenses. Tangible fixed assets Production plant and machinery, other plant, fixtures and equipment, leasehold improvements are measured at cost less accumulated depreciation and impairment losses. The depreciation base is cost less estimated residual value after end of useful life. The cost includes the acquisition price and costs incurred directly in connection with the acquisition until the time when the asset is ready to be used. Straight-line depreciation is provided on the basis of an assessment of the expected useful lives of the assets and their residual value: Useful lifeResidual value Production plant and machinery 5 years 0 % Other plant, fixtures and equipment 3-8 years 0 % Leasehold improvements 5 years 0 % Profit or loss on sale of tangible fixed assets is stated as the difference between the sales price less selling costs and the carrying amount at the date of sale. Profit or loss is recognised in the Income Statement as other operating income or other operating expenses. Lease contracts Lease contracts relating to tangible fixed assets for which the Company bears all material risks and benefits attached to the ownership (finance lease, see IAS 17) are recognised as assets in the Balance Sheet. The assets are at the initial recognition measured at the lower of cost stated at fair value and the and present value of the future lease payments. The internal interest rate of the lease contract, or alternatively the Company’s loan interest, is used as discounting factor when calculating the present value. Finance lease assets are hereafter treated as the Group’s and the Company’s other similar tangible fixed assets. for which the Company bears all material risks and benefits attached to the ownership (finance lease, see IAS 17) are recognised as assets in the Balance Sheet. The assets are at the initial recognition measured at the lower of cost stated at fair value and the and present value of the future lease payments. The internal interest rate of the lease contract, or alternatively the Company’s loan interest, is used as discounting factor when calculating the present value. Finance lease assets are hereafter treated as the Group’s and the Company’s other similar tangible fixed assets. The capitalised residual lease liability is recognised in the Balance Sheet as a liability and the interest portion of the lease payment is recognised in the Income Statement over the contract period. Fixed asset investments Investments in Equity interests in are measured in the Parent Company Balance Sheet under the equity method, which is regarded as a method of measuring/consolidation. Equity investments in are measured in the Balance Sheet at the proportional share of the enterprises’ carrying equity value, calculated in accordance with the Parent Company’s accounting policies with deduction or addition of unrealised intercompany profits or losses and with addition or deduction of the residual value of positive or negative goodwill calculated according to the acquisition method. Negative goodwill is recognised in the Income Statement when the equity interest is acquired. Where the negative goodwill is related to acquired contingent liabilities, the negative goodwill will be recognised as income when the contingent liabilities have been settled or cease. Acquired enterprises are subject to the acquisition method, reassessing all identified assets and liabilities to fair value at the acquisition date. The fair value is calculated based on acquisitions made in an active market, alternatively calculated using generally accepted valuation models. Consolidated goodwill is amortised over the expected useful life, which is determined on the basis of Management’s experience within the individual lines of business. Consolidated goodwill is amortised on a straightline basis over the amortisation period, which is X years. The amortisation period is determined on the basis of an assessment of the acquired entity’s market position and earnings profile, and the industryspecific condition. Net revaluation of equity interests in subsidiaries is transferred under equity to reserve for net revaluation under the equity value method to the extent that the carrying amount exceeds the acquisition value. Subsidiaries with a negative carrying equity value are measured to DKK 0 and any amounts due from these enterprises are written down to the extent that it is deemed to be irrecoverable. If the carrying negative equity value exceeds receivables, the residual amount is recognised under provision for liabilities to the extent that the Company has a legal or actual liability to cover the subsidiary's subsidiaries deficit. Impairment of fixed assets The carrying amount of intangible fixed and tangible assets together with fixed assets, which are not measured at fair value,, are assessed annually for indications of impairment other than that reflected by amortisation and depreciation. In the event of impairment indications, an impairment test is made for each asset or group of assets, respectively. If the recoverable amount is lower than the carrying amount, the asset is written down to the recoverable amount. The recoverable amount is the higher of the capital value and the selling price less the expected costs of a sale. The capital value is stated at the present value of the expected net cash flows from a continued use of the asset or group of assets and the expected proceeds from sale of the asset or group of assets after the end of its useful life. Inventories Inventories are measured at cost and if the net realisable amount is lower than cost, the inventories are written down to the lower amount. Cost is determined by the average cost method on raw materials and consumables and determined by the FIFO cost method on work in progress and finished goods. The cost of merchandise as well as raw materials and consumables is calculated at acquisition price with addition of transportation and similar costs. The cost of finished goods and work in progress includes the cost of raw materials, consumables, direct payroll cost and other direct and other indirect production costs include indirect materials and payroll and maintenance and depreciation of the machines, factory buildings and equipment used in the production process, the cost of factory administration and management and capitalised development costs relating to the products. The net realisable value of inventories is stated at the expected sales price less direct completion costs and costs incurred to execute the sale and is determined with due regard to marketability, obsolescence and development in expected sales price of the inventories. Receivables Receivables are measured at amortised cost which usually corresponds to nominal value. The value is written down to meet expected losses. Accruals, assets Accruals recognised as assets include costs incurred relating to the subsequent financial year. Other provisions for liabilities Other provisions for liabilities include the expected cost of warranty commitments, loss on work in progress, restructurings etc. and deferred tax. Warranty commitments include liabilities for improvement of work within the warranty period of 1 to 5 years. The provision for liabilities is measured and recognised on the basis of experience with warranty work. When it is likely that the total costs will exceed the total income on the contract work in progress, a provision is made for the total loss that is anticipated on the contract. Tax payable and deferred tax Current tax liabilities and receivable current tax are recognised in the Balance Sheet as the calculated tax on the taxable income for the year, adjusted for tax on the taxable income for previous years and taxes paid on account. Deferred tax is measured on the temporary differences between the carrying amount and the tax value of assets and liabilities. Deferred tax assets, including the tax value of tax loss carryforwards, are measured at the amount at which the asset is expected to be used within a reasonable number of years, either by setoff against tax on future earnings or by setoff 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 under the legislation in force on the Balance Sheet date will be applicable when the deferred tax is expected to crystallise as current tax. Any changes in the deferred tax resulting from changes in tax rates, are recognised in the income statement, except from items recognised directly in equity. Liabilities Financial liabilities are recognised at the time of borrowing by the amount of proceeds received less transaction costs. In subsequent periods, the financial liabilities are measured at amortised cost equal to the capitalised value when using the effective interest, the difference between the proceeds and the nominal value being recognised in the Income Statement over the loan period. The amortised cost of current liabilities corresponds usually to the nominal value. CASH FLOW STATEMENT With reference to Section 86(4) of the Danish Financial Statements Act, the company has not prepared a cash flow statement. A cash flow statement has been prepared for the Group. The cash flow statement shows the Company’s cash flows for the year for operating activities, investing activities and financing activities in the year, the change in cash and cash equivalents of the year and cash and cash equivalents at beginning and end of the year. Cash flows from operating activities: Cash flows from operating activities are computed as the results for the year adjusted for non-cash operating items, changes in net working capital and corporation tax paid. Cash flows from investing activities: Cash flows from investing activities include payments in connection with purchase and sale of intangible and tangible fixed asset and fixed asset investments. Cash flows from financing activities: Cash flows from financing activities include changes in the size or composition of share capital and related costs, and borrowings and repayment of interest-bearing debt and payment of dividend to shareholders. Cash and cash equivalents: Cash and cash equivalents include cash in hand. With reference to Section 86(4) of the Danish Financial Statements Act, the company has not prepared a cash flow statement. 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