21276308 2022-12-31 21276308 2021-12-31 21276308 2020-12-31 21276308 2024-12-31 21276308 2023-12-31 21276308 2024-01-01 fsa:ContributedCapitalMember 21276308 2024-01-01 fsa:ReserveForDevelopmentExpenditureMember 21276308 2024-01-01 fsa:RetainedEarningsMember 21276308 2024-12-31 fsa:ContributedCapitalMember 21276308 2024-12-31 fsa:ReserveForDevelopmentExpenditureMember 21276308 2024-12-31 fsa:RetainedEarningsMember 21276308 2024-01-01 fsa:CompletedDevelopmentProjectsMember 21276308 2024-01-01 fsa:AcquiredLicencesMember 21276308 2024-01-01 fsa:GoodwillMember 21276308 2024-01-01 fsa:DevelopmentProjectsInProgressMember 21276308 2024-12-31 fsa:CompletedDevelopmentProjectsMember 21276308 2024-12-31 fsa:AcquiredLicencesMember 21276308 2024-12-31 fsa:GoodwillMember 21276308 2024-12-31 fsa:DevelopmentProjectsInProgressMember 21276308 2024-01-01 fsa:LandAndBuildingsMember 21276308 2024-01-01 fsa:FixturesFittingsToolsAndEquipmentMember 21276308 2024-01-01 fsa:LeaseholdImprovementsMember 21276308 2024-12-31 fsa:LandAndBuildingsMember 21276308 2024-12-31 fsa:FixturesFittingsToolsAndEquipmentMember 21276308 2024-12-31 fsa:LeaseholdImprovementsMember 21276308 2024-01-01 fsa:DepositsLongtermInvestmentsAndReceivablesMember 21276308 2024-12-31 fsa:DepositsLongtermInvestmentsAndReceivablesMember 21276308 2024-12-31 fsa:LongtermLeaseCommitmentsMember 21276308 2023-12-31 fsa:LongtermLeaseCommitmentsMember 21276308 2024-01-01 2024-12-31 21276308 2024-01-01 2024-12-31 1 21276308 2024-01-01 2024-12-31 memberOfBoardIdentifier_executive_board_1 21276308 2024-01-01 2024-12-31 memberOfBoardIdentifier_board_of_director_1 21276308 2024-01-01 2024-12-31 memberOfBoardIdentifier_board_of_director_2 21276308 2024-01-01 2024-12-31 memberOfBoardIdentifier_board_of_director_3 21276308 2024-01-01 2024-12-31 2 21276308 2022-01-01 2022-12-31 21276308 2021-01-01 2021-12-31 21276308 2020-01-01 2020-12-31 21276308 2023-01-01 2023-12-31 21276308 2024-01-01 2024-12-31 fsa:ContributedCapitalMember 21276308 2024-01-01 2024-12-31 fsa:ReserveForDevelopmentExpenditureMember 21276308 2024-01-01 2024-12-31 fsa:RetainedEarningsMember 21276308 2024-01-01 2024-12-31 fsa:CompletedDevelopmentProjectsMember 21276308 2024-01-01 2024-12-31 fsa:AcquiredLicencesMember 21276308 2024-01-01 2024-12-31 fsa:GoodwillMember 21276308 2024-01-01 2024-12-31 fsa:DevelopmentProjectsInProgressMember 21276308 2024-01-01 2024-12-31 fsa:LandAndBuildingsMember 21276308 2024-01-01 2024-12-31 fsa:FixturesFittingsToolsAndEquipmentMember 21276308 2024-01-01 2024-12-31 fsa:LeaseholdImprovementsMember iso4217:DKK pure Årsrapport 33771231 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Strandvejen 44 2900 Hellerup 2024-01-01 2023-01-01 2024-12-31 2023-12-31 21276308 Keylane A/S Kigkurren 10 2300 Copenhagen København + 45 70 20 40 90 1998-05-01 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab 33771231 Strandvejen 44 2900 Hellerup Denmark 39 45 39 45 koebenhavn@pwc.dk 2025-07-11 Leonard Adryan de Looff Regnskabsklasse C, mellemstor virksomhed Revisionspåtegning The Executive Board and Board of Directors have today considered and adopted the Annual Report of Keylane A/S for the financial year 1 January - 31 December 2024. The Annual Report is prepared in accordance with the Danish Financial Statements Act. In our opinion the Financial Statements give a true and fair view of the financial position at 31 December 2024 of the Company and of the results of the Company operations for 2024. In our opinion, Management's Review includes a true and fair account of the matters addressed in the Review. We recommend that the Annual Report be adopted at the Annual General Meeting. 2025-07-11 Copenhagen Leonard Adryan de Looff CEO Tonny Rabjerg Chairman Leonard Adryan de Looff Koenraad Willem Wouter van Kooperen To the shareholder of Keylane A/S Opinion In our opinion, the Financial Statements give a true and fair view of the financial position of the Company at 31 December 2024 and of the results of the Company´s operations for the financial year 1 January - 31 December 2024 in accordance with the Danish Financial Statements Act. We have audited the Financial Statements of Keylane A/S for the financial year 1 January - 31 December 2024, which comprise income statement, balance sheet, statement of changes in equity and notes, including a summary of significant accounting policies (”the Financial Statements”). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the ”Auditor’s responsibilities for the audit of the Financial Statements” section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, Management is responsible for assessing the Company´s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the Financial Statements unless Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company´s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the Financial Statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company´s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and contents of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that gives a true and fair view. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Management is responsible for Management’s Review. Our opinion on the Financial Statements does not cover Management’s Review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsibility is to read Management’s Review and, in doing so, consider whether Management’s Review is materially inconsistent with the Financial Statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether Management’s Review provides the information required under the Danish Financial Statements Act. Based on the work we have performed, in our view, Management’s Review is in accordance with the Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement in Management’s Review. Hellerup 2025-07-11 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Niels Henrik B. Mikkelsen State Authorised Public Accountant mne16675 Martin Birch State Authorised Public Accountant mne42825 -56540000 -46868000 15634000 -1803000 331000 -104000 -52482000 -36745000 11421000 179699000 206279000 211448000 1333000 10087000 1660000 1270000 1039000 45043000 97525000 134270000 125 144 146 -0.046 -0.207 -0.315 -0.227 0.074 -0.019 -0.005 0.251 0.473 0.635 1.357 -2.099 -0.736 -0.317 0.089 Key activities Keylane A/S is part of Keylane Life & Pension – a leading European provider of stable, highly configurable, and customer-centric SaaS platforms for the life and pension sector in the Nordics and BeneluxThe key activities of Keylane A/S are listed below: ● Sales, delivery, and support of Keylane’s software solutions to the Nordic financial market with particular focus on life, pension, and banking. ● Development of key products in Keylane's software portfolio for distribution in all target markets of Keylane. Keylane Plexus The Plexus platform offers a comprehensive and standardized policy administration solution designed to effectively manage life and pension portfolios that include guaranteed benefits, market interest rates, and Unit Link. It boasts a resilient and sophisticated core engine built around event-driven architecture. This platform comprises various modules, such as complete money-flow management, company agreements, policy administration, streamlined processes with extensive automation, employee and customer portals, and seamless integration with bookkeeping and data warehousing systems. The Plexus platform is central to Keylane’s strategy, now serving eight active clients in the life and pension industry, most of whom are based in Denmark. In Q2 2025, Keylane furthermore signed a multi-year agreement with a leading player in the Nordic market. This marks a significant milestone in our Nordic expansion and demonstrates the growing trust in the Plexus platform’s ability to support complex pension schemes across markets. Implementation is already underway and expected to go live in the first half of 2027. Plexus currently generates 53% of its revenue from the Danish market, underlining its critical importance to Keylane’s Danish operations. Overall, Plexus now contributes more than 44% of Keylane Life & Pension’s revenue, making it the fastest-growing product in the portfolio. Keylane’s continued expansion in the Nordics and the Netherlands - driven by contract renewals and collaboration initiatives - reflects strong customer confidence in Keylane’s solutions, which will be further reinforced by a new Nordic customer in 2025. The Plexus development organization consists of colleagues in Denmark, in India (managed from Denmark) and in the Netherlands. The leadership team of Plexus consists primarily of Danish managers. Keylane Obex The Obex platform is a service-enabled financial planning solution that encompasses modules for tax calculations, wealth and budget planning, and pension and retirement planning. Its primary objective is to empower financial institutions to provide their customers with a comprehensive, 360-degree view of their financial landscape. The platform seamlessly integrates with on-premise systems while also facilitating connections to external online services through APIs. Currently, the solution is successfully deployed by key clients within the Danish market. Obex is market leader in its market in Denmark. The team is located in Denmark. Keylane is actively exploring to implement Obex in the Netherlands, starting with providing advisory tooling to life insurance providers. Organization Keylane A/S is a 100% subsidiary of Keylane Group BV, a company with head office in the Netherlands and subsidiaries in several countries within the EU. In August 2024 the UK-based asset manager Pollen Street Capital acquired all shares in Keylane Group B.V. (Keylane) from Waterland Private Equity. This strategic transaction is an important milestone in Keylane’s successful growth and innovation journey. Together with Keylane’s leading team, Pollen Street Capital aims to accelerate the group’s strong organic growth and pursue further accretive M&A, and to support the ongoing development of Keylane’s proprietary technologies. The Keylane Group BV provides software for Property and Casualty (P&C) insurers and Life and Pension (L&P) providers. The Group had a combined revenue in 2024 of 122 million euro (increase of 11% versus 2023) and Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) of 40,4 million (33% of revenue, 20% EBITDA increase versus 2023). Within the Keylane Group, the business line L&P consists of Keylane Life and Pension BV in the Netherlands and Keylane A/S in Denmark. The unaudited management accounts of the L&P business line show a combined revenue across Denmark and Netherlands of 69,8 million euro, a 13% increase versus 2023 (like for like, including Benefits Plaza, which has been moved from P&C to L&P). The EBITDA amounted to 15,3 million euro (22% of revenue), an increase of 39% versus 2023. The statutory Board of Directors of Keylane A/S consists of chairman Tonny Rabjerg (VP Plexus), Leon de Looff (CEO of the L&P business line) and Koen van Kooperen (CFO L&P). Development in the year In 2024, Keylane made significant investments in product development and team expansion across Denmark, the Netherlands, and India. More than 50% of Keylane’s 469 employees - especially those focused on Plexus - play a key role in driving technological and service-related progress. Keylane is also entering new markets in the Nordics and is in active discussions with several large Dutch insurers to introduce the Obex platform in the Netherlands. Keylane A/S is operated as a profit center for the Danish customers and a cost center for the Plexus platform. The IP of Plexus is owned by Keylane A/S and the majority of generic development and support activities are conducted and paid in Denmark. Based on this financial setup, the income statement of the Company for 2024 shows a loss of TDKK 4,600 and the expectation of breakeven was not yet reached due to more investments in product development however with the new customer in the Nordics all revenues and income will flow directly to Keylane A/S, and at 31 December 2024 the balance sheet of the Company shows a negative equity of TDKK -5.691. Capital resources Keylane A/S will continue to significantly invest in both the Plexus and the Obex solutions. Keylane A/S is not expected to generate sufficient cash flows from operations in 2025 to support these investments. The parent company, Keylane Group B.V., has therefore issued a letter of support confirming that the Keylane Group will support Keylane A/S financially in this respect. Please refer to note 1. Special risks - operating risks and financial risks Keylane has an extensive risk management function to ensure all risks are clear and properly managed and reported. All risks are reviewed monthly in a meeting between the central Head of risk and the business units. Keylane has defined a Keylane Control Framework with over 100 controls to meet regulatory and risk management policies. These are aligned with Danish regulatory and risk requirements and Dutch Central Bank regulations. Keylane is compliant with DORA and NIS2 regulations. The primary operating risks of Keylane A/S are associated with security related aspects. The Keylane Group has a ISAE3402 framework in place and is ISO27001 certified. Targets and expectations for the year ahead Keylane Life & Pension remains firmly committed to transforming the life and pension industry through technological innovation. With a strategic focus on SaaS, product development, resource allocation, cloud technology, and compliance - and now backed by Pollen Street Capital’s sector expertise and long-term investment approach - Keylane is well-positioned to respond to future demands and market dynamics, and to remain a valuable partner to its clients. In 2025 Keylane will support its Danish customers with functional enhancements in the product, regulatory compliance, adopting to changes in markets and products. Going forward the company expects to achieve break even, due to the further rollout of the Plexus platform at two Dutch customers, which will significantly increase the license revenue towards Keylane A/S. Research and development Keylane A/S continues to invest significantly in product development to support the industry's growing transition to SaaS based standard solutions that can be deployed and implemented quickly and cost effectively. In 2025, the efforts will be focused on the Plexus solution and rollout and expansion of the new Obex platform. A key area of Keylane’s investment strategy is the modernization of its cloud infrastructure. By leveraging advanced technologies such as Microsoft Azure, Keylane is strengthening scalability, security, and operational efficiency across its platforms. This shift is critical to Keylane’s ambition to maintain strong client relationships and a market-leading position. Nordea is the first client to run a fully configured and compliant Plexus solution in the Azure Cloud. The financial advisory platform Obex has already been operating in Azure for several years. Intellectual capital resources Keylane's future financial success is closely tied to the expertise and knowledge possessed by its employees. Being a thriving company operating in a highly competitive market, Keylane consistently strives to attract toptier talent. This is essential for effectively executing implementation projects and sustaining investments in the quality and usability of its SaaS software. To this end, Keylane offers competitive salaries and proactively undertakes multiple initiatives aimed at enhancing employee satisfaction. The company regularly conducts a biannual employee engagement survey to gauge and improve employee contentment. Uncertainty relating to recognition and measurement Calculation of the carrying amount of certain assets and liabilities, essentially development projects, requires assessments, estimates and assumptions concerning future events. The estimates made are based on historical experiences and other factors that Management considers appropriate in the circumstances, but that by their very nature are uncertain and unpredictable. The assumptions may be incomplete or inaccurate, and unexpected events or circumstances may arise. Moreover, the enterprise is subject to risks and uncertainties that may result in actual results differing from these estimates. It may be necessary to change estimates made previously because of changes in the circumstances that formed the basis of the previous estimates or based on new knowledge or subsequent events. Unusual events The financial position at 31 December 2024 of the Company and the results of the activities and cash flows of the Company for the financial year for 2024 have not been affected by any unusual events. Subsequent events No events materially affecting the assessment of the Annual Report have occurred after the balance sheet date. 170734000 118652000 147063000 132813000 37497000 34693000 -13826000 -48854000 80000 19000 5932000 3525000 -19678000 -52360000 -15078000 -6226000 -4600000 -46134000 -4600000 -46134000 147714000 101114000 28653000 32746000 0 0 26300000 35569000 202667000 169429000 11115000 14044000 2766000 2686000 30000 44000 13911000 16774000 1923000 1923000 1923000 1923000 218501000 188126000 19473000 22330000 35413000 12098000 158000 0 21303000 6226000 1162000 993000 77509000 41647000 3132000 6755000 80641000 48402000 299142000 236528000 41166000 41166000 114092000 101912000 -160949000 -144169000 -5691000 -1091000 1912000 2386000 1912000 2386000 9720000 12546000 9720000 12546000 2839000 2648000 147000 3576000 4843000 6194000 0 197000 260326000 185506000 25046000 24566000 293201000 222687000 302921000 235233000 299142000 236528000 41166000 101912000 -144169000 0 0 -4600000 0 12180000 -12180000 41166000 114092000 -160949000 Keylane A/S will continue to significantly invest in both the Plexus and the Obex solutions. Keylane A/S is not expected to generate sufficient cash flows from operations in 2025 to support these investments. The parent company, Keylane Group B.V., has therefore issued a letter of support confirming that the parent company, if needed, will support Keylane A/S financially till at least 30 June 2026. No events materially affecting the assessment of the Annual Report have occurred after the balance sheet date. 130210000 118270000 10489000 8846000 1016000 947000 5348000 4750000 147063000 132813000 3380000 2959000 133 122 33359000 30558000 4160000 4169000 37497000 34693000 Gain and loss on disposal -22000 -34000 75000 0 5000 19000 80000 19000 4594000 2689000 1338000 836000 5932000 3525000 -15078000 -6226000 -15078000 -6226000 268241000 41158000 29961000 35569000 21715000 0 0 44881000 54151000 0 0 -54150000 344107000 41158000 29961000 26300000 167127000 8412000 29961000 0 29266000 4093000 0 0 196393000 12505000 29961000 0 147714000 28653000 0 26300000 Development projects in progress relates to the two main products, Plexus and Obex.Development projects are recognised based on time recordings.For each product management have a planned business case. The projects are progressing and it is expected that the projects will be sold to new and current customers. 28450000 13582000 674000 14000 1319000 0 0 37000 0 28464000 14864000 674000 14406000 10896000 630000 2943000 1203000 14000 0 -1000 0 17349000 12098000 644000 11115000 2766000 30000 1923000 1923000 1923000 Selling price of work in progress 0 -5464000 Payments received on account 0 5267000 Total 0 -197000 Recognised in the balance sheet as follows: Prepayments received recognised in debt 0 -197000 Total 0 -197000 Prepayments consist of prepaid expenses concerning rent, insurance premiums and subscriptions as well. Deferred tax asset at 1 January 6226000 0 Amounts recognised in the income statement for the year 15077000 6226000 Deferred tax asset at 31 December 21303000 6226000 The deferred tax asset amounts to DKK 21,303k and is related to the Danish entity. The deferred tax asset partially consists of timing differences between the tax value and accounting value of fixed asset investments and tax losses to carry forward.The deferred tax asset is recognised under the assumption that the profitability of Keylane A/S’s operations will be realized as expected. Other provisions comprise provisions on entered contracts and covers disputes. Provision restorage cost for buildings 765000 765000 Other provisions 1147000 1621000 1912000 2386000 The provisions are expected to mature as follows: Within 1 year -1147000 -1621000 Between 1 and 5 years -765000 -765000 After 5 years 0 0 1912000 2386000 0 0 9720000 12546000 9720000 12546000 2839000 2648000 Payments due within 1 year are recognised in short-term debt. Other debt is recognised in long-term debt. The debt falls due for payment as specified below: Lease obligations Charges and security Rental and lease obligations Lease obligations under operating leases. Total future lease payments: Within 1 year 2441000 0 Total 2441000 0 The following (additional) security has been granted for the purpose of financing by banks:- First ranking right of pledge on all shares in Keylane A/S;- First ranking pledge, charge and assignment (as applicable) on all assets of and Keylane A/S, including all business equipment, receivables, insurances, intellectual property rights and other assets. Assets held by Keylane A/S have been pledged to AlterDomus Trustees (UK) Ltd. as security agent of the lenders in the Senior Facilities Agreement – as concluded between Leto Group B.V., the lenders and the agent on 30 October, 2024 – for a total value of €8,000,000 by registration of a Floating Charge Mortgage with the Danish Register of Chattel Mortgages. In addition, Keylane A/S has granted a guarantee for the obligations of all obligors under the loan documents. Basis Controlling interest Keylane Group B.V. Majority shareholder Leto Topco B.V. Ultimate parent company Transactions Purchase of services from group companies: 47.398 TDKKRecharge of services (expense) from group companies: 81.469 TDKKInterest paid to group companies: 4.594 TDKKReceivables from group companies: 35.413 TDKKLoan payables to group companies: 77.713 TDKKPayables to group company: 182.613 TDKK Apart from the above, there have been no transactions with the Supervisory Board, the Executive Board, senior officers, significant shareholders, group enterprises or other related parties, except for intercompany transactions and normal management remuneration. Consolidated Financial Statements The Company is included in the Group Annual Report of the Parent Company of the largest and smallest group: Name Place of registered office Leto Topco B.V. (ultimate parent company) Varrolaan 603584 BW UtrechtThe Netherlands Keylane Group B.V. (immediate parent company) Varrolaan 603584 BW UtrechtThe Netherlands The Group Annual Report of Leto Topco B.V. and Keylane Group B.V. can be obtained at the above addresses. The Annual Report of Keylane A/S for 2024 has been prepared in accordance with the provisions of the Danish Financial Statements Act applying to medium-sized enterprises of reporting class C. The accounting policies applied remain unchanged from last year. The Financial Statements for 2024 are presented in TDKK. true With reference to section 86(4) of the Danish Financial Statements Act and to the cash flow statement included in the consolidated financial statements of Keylane Group B.V., the Company has not prepared a cash flow statement. Revenues are recognised in the income statement as earned. Furthermore, value adjustments of financial assets and liabilities measured at fair value or amortised cost are recognised. Moreover, all expenses incurred to achieve the earnings for the year are recognised in the income statement, including depreciation, amortisation, impairment losses and provisions as well as reversals due to changed accounting estimates of amounts that have previously been recognised in the income statement. Assets are recognised in the balance sheet when it is probable that future economic benefits attributable to the asset will flow to the Company, and the value of the asset can be measured reliably. Liabilities are recognised in the balance sheet when it is probable that future economic benefits will flow out of the Company, and the value of the liability can be measured reliably. Assets and liabilities are initially measured at cost. Subsequently, assets and liabilities are measured as described for each item below. Danish kroner is used as the presentation currency. All other currencies are regarded as foreign currencies. Transactions in foreign currencies are translated at the exchange rates at the dates of transaction. Exchange differences arising due to differences between the transaction date rates and the rates at the dates of payment are recognised in financial income and expenses in the income statement. Where foreign exchange transactions are considered hedging of future cash flows, the value adjustments are recognised directly in equity. Receivables, payables and other monetary items in foreign currencies that have not been settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Any differences between the exchange rates at the balance sheet date and the transaction date rates are recognised in financial income and expenses in the income statement; however, see the section on hedge accounting. Income statements of enterprises that are integrated entities are translated at transaction date rates or approximated average exchange rates; however, items derived from non-monetary balance sheet items are translated at the transaction date rates of the underlying assets or liabilities. Monetary balance sheet items are translated at the exchange rates at the balance sheet date, whereas non-monetary items are translated at transaction date rates. Exchange adjustments arising on the translation are recognised in financial income and expenses in the income statement. Contract work in progress (construction contracts) is recognised at the rate of completion, which means that revenue equals the selling price of the work completed for the year (percentage-of-completion method). This method is applied when total revenues and expenses in respect of the contract and the stage of completion at the balance sheet date can be measured reliably, and it is probable that the economic benefits, including payments, will flow to the Company. The stage of completion is determined on the basis of the ratio between the expenses incurred and the total expected expenses of the contract. Services are recognised at the rate of completion of the service to which the contract relates by using the percentage-of-completion method, which means that revenue equals the selling price of the service completed for the year. This method is applied when total revenues and expenses in respect of the service and the stage of completion at the balance sheet date can be measured reliably, and it is probable that the economic benefits, including payments, will flow to the Company. The stage of completion is determined on the basis of the ratio between the expenses incurred and the total expected expenses of the service. Revenue is measured at the consideration received and is recognised exclusive of VAT and net of discounts relating to sales. Other external expenses comprise indirect production costs and expenses for premises, sales as well as office expenses, etc. With reference to section 32 of the Danish Financial Statements Act, gross profit/loss is calculated as a summary of revenue, work on own account recognised in assets and other external expenses. Staff expenses comprise wages and salaries as well as payroll expenses. Amortisation, depreciation and impairment losses comprise amortisation, depreciation and impairment of intangible assets and property, plant and equipment. Financial income and expenses are recognised in the income statement at the amounts relating to the financial year. Tax for the year consists of current tax for the year and deferred tax for the year. The tax attributable to the profit for year is recognised in the income statement, whereas the tax attributable to equity transactions is recognised directly in equity. Any changes in deferred tax due to changes to tax rates are recognised in the income statement. Intellectual property rights etc. comprise development projects completed and in progress with related intellectual property rights, acquired intellectual property rights and prepayments for intangible assets. Development projects on clearly defined and identifiable products and processes, for which the technical rate of utilisation, adequate resources and a potential future market or development opportunity in the enterprise can be established, and where the intention is to manufacture, market or apply the product or process in question, are recognised as intangible assets. Other development costs are recognised as costs in the income statement as incurred. When recognising development projects as intangible assets, an amount equalling the costs incurred is taken to equity under Reserve for development costs that is reduced as the development projects are amortised and written down. The cost of development projects comprises costs such as salaries and amortisation that are directly and indirectly attributable to the development projects. Indirect production costs in the form of indirectly attributable staff costs and amortisation of intangible assets and depreciation of property, plant and equipment used in the development process are recognised in cost based on time spent on each project. Completed development projects are amortised on a straight-line basis using their estimated useful lives which are determined based on a specific assessment of each development project. For development projects, protected by intellectual property rights, the maximum period of amortisation is the remaining duration of the relevant rights. The amortisation periods used are 5-10 years. Intellectual property rights acquired are measured at cost less accumulated amortisation. Patents are amortised over their remaining duration, and licences are amortised over the term of the agreement, but over no more than 5 years. Intellectual property rights etc. are written down to the lower of recoverable amount and carrying amount. Licences are measured at the lower of cost less accumulated amortisation and recoverable amount. Licences are amortised over the licence period; however not exceeding 5 years. Goodwill is the positive difference between cost and value in use of assets and liabilities taken over as part of the acquisition. Goodwill is amortised straight-line over its estimated useful life which is fixed based on the experience gained by Management for each business area. Useful life is determined based on an assessment of whether the enterprises are strategically acquired enterprises with a strong market position and a long term earnings profile and whether the amount of goodwill includes intangible resources of a temporary nature that cannot be separated and recognised as separate assets. Useful lives are reassessed on an annual basis. The amortisation periods used are 10 years. Goodwill is written down to the lower of recoverable amount and carrying amount. Property, plant and equipment are measured at cost less accumulated depreciation and less any accumulated impairment losses. Cost comprises the cost of acquisition and expenses directly related to the acquisition up until the time when the asset is ready for use. Depreciation based on cost reduced by any residual value is calculated on a straight-line basis over the expected useful lives of the assets, which are: Land and buildings 5 years Other fixtures and fittings, tools and equipment 3-5 years Leasehold improvements 5 years The fixed assets’ residual values are determined at nil. Depreciation period and residual value are reassessed annually. The carrying amounts of intangible assets and property, plant and equipment and investments are reviewed on an annual basis to determine whether there is any indication of impairment other than that expressed by amortisation and depreciation. Other fixed asset investments consist of deposits and receivables from group enterprises. Fixed asset investments are measured at amortised cost. Receivables are measured in the balance sheet at the lower of amortised cost and net realisable value, which corresponds to nominal value less provisions for bad debts. Contract work in progress is measured at selling price of the work performed calculated on the basis of the stage of completion. The stage of completion is measured by the proportion that the contract expenses incurred to date bear to the estimated total contract expenses. Where it is probable that total contract expenses will exceed total revenues from a contract, the expected loss is recognised as an expense in the income statement. Where the selling price cannot be measured reliably, the selling price is measured at the lower of expenses incurred and net realisable value. Payments received on account are set off against the selling price. The individual contracts are classified as receivables when the net selling price is positive and as liabilities when the net selling price is negative. Expenses relating to sales work and the winning of contracts are recognised in the income statement as incurred. Prepayments comprise prepaid expenses concerning rent, insurance premiums and subscriptions. Provisions are recognised when - in consequence of an event occurred before or on the balance sheet date - the Company has a legal or constructive obligation and it is probable that economic benefits must be given up to settle the obligation. Other provisions include warranty obligations in respect of repair work within the warranty period of 1-5 years. Provisions are measured and recognised based on experience with guarantee work. Deferred tax is recognised in respect of all temporary differences between the carrying amount and the tax base of assets and liabilities. However, deferred tax is not recognised in respect of temporary differences concerning goodwill not deductible for tax purposes and other items - apart from business acquisitions - where temporary differences have arisen at the time of acquisition without affecting the profit for the year or the taxable income. Deferred tax is measured on the basis of the tax rules and tax rates that will be effective under the legislation at the balance sheet date when the deferred tax is expected to crystallise as current tax. In cases where the computation of the tax base may be made according to alternative tax rules, deferred tax is measured on the basis of the intended use of the asset and settlement of the liability, respectively. Current tax liabilities and receivables are recognised in the balance sheet as the expected taxable income for the year adjusted for tax on taxable incomes for prior years and tax paid on account. Extra payments and repayment under the on-account taxation scheme are recognised in the income statement in financial income and expenses. Debts are measured at amortised cost, substantially corresponding to nominal value Return on assets Profit/loss of primary operations x 100 / Total assets at year end Solvency ratio Equity at year end x 100 / Total assets at year end Return on equity Net profit for the year x 100 / Average equity