21276308 2021-12-31 21276308 2020-12-31 21276308 2019-12-31 21276308 2023-12-31 21276308 2022-12-31 21276308 2023-01-01 fsa:ContributedCapitalMember 21276308 2023-01-01 fsa:ReserveForDevelopmentExpenditureMember 21276308 2023-01-01 fsa:RetainedEarningsMember 21276308 2023-12-31 fsa:ContributedCapitalMember 21276308 2023-12-31 fsa:ReserveForDevelopmentExpenditureMember 21276308 2023-12-31 fsa:RetainedEarningsMember 21276308 2023-01-01 fsa:CompletedDevelopmentProjectsMember 21276308 2023-01-01 fsa:AcquiredLicencesMember 21276308 2023-01-01 fsa:GoodwillMember 21276308 2023-01-01 fsa:DevelopmentProjectsInProgressMember 21276308 2023-12-31 fsa:CompletedDevelopmentProjectsMember 21276308 2023-12-31 fsa:AcquiredLicencesMember 21276308 2023-12-31 fsa:GoodwillMember 21276308 2023-12-31 fsa:DevelopmentProjectsInProgressMember 21276308 2023-01-01 fsa:LandAndBuildingsMember 21276308 2023-01-01 fsa:FixturesFittingsToolsAndEquipmentMember 21276308 2023-01-01 fsa:LeaseholdImprovementsMember 21276308 2023-12-31 fsa:LandAndBuildingsMember 21276308 2023-12-31 fsa:FixturesFittingsToolsAndEquipmentMember 21276308 2023-12-31 fsa:LeaseholdImprovementsMember 21276308 2023-01-01 fsa:DepositsLongtermInvestmentsAndReceivablesMember 21276308 2023-12-31 fsa:DepositsLongtermInvestmentsAndReceivablesMember 21276308 2023-12-31 fsa:LongtermLeaseCommitmentsMember 21276308 2022-12-31 fsa:LongtermLeaseCommitmentsMember 21276308 2023-12-31 fsa:LongtermPayablesToGroupEnterprisesMember 21276308 2022-12-31 fsa:LongtermPayablesToGroupEnterprisesMember 21276308 2023-12-31 fsa:ShorttermPayablesToGroupEnterprisesMember 21276308 2022-12-31 fsa:ShorttermPayablesToGroupEnterprisesMember 21276308 2023-01-01 2023-12-31 21276308 2023-01-01 2023-12-31 1 21276308 2023-01-01 2023-12-31 memberOfBoardIdentifier_executive_board_1 21276308 2023-01-01 2023-12-31 memberOfBoardIdentifier_board_of_director_1 21276308 2023-01-01 2023-12-31 memberOfBoardIdentifier_board_of_director_2 21276308 2023-01-01 2023-12-31 memberOfBoardIdentifier_board_of_director_3 21276308 2023-01-01 2023-12-31 2 21276308 2021-01-01 2021-12-31 21276308 2020-01-01 2020-12-31 21276308 2019-01-01 2019-12-31 21276308 2022-01-01 2022-12-31 21276308 2023-01-01 2023-12-31 fsa:ContributedCapitalMember 21276308 2023-01-01 2023-12-31 fsa:ReserveForDevelopmentExpenditureMember 21276308 2023-01-01 2023-12-31 fsa:RetainedEarningsMember 21276308 2023-01-01 2023-12-31 fsa:ManagementMember 21276308 2022-01-01 2022-12-31 fsa:ManagementMember 21276308 2023-01-01 2023-12-31 fsa:CompletedDevelopmentProjectsMember 21276308 2023-01-01 2023-12-31 fsa:AcquiredLicencesMember 21276308 2023-01-01 2023-12-31 fsa:GoodwillMember 21276308 2023-01-01 2023-12-31 fsa:DevelopmentProjectsInProgressMember 21276308 2023-01-01 2023-12-31 fsa:LandAndBuildingsMember 21276308 2023-01-01 2023-12-31 fsa:FixturesFittingsToolsAndEquipmentMember 21276308 2023-01-01 2023-12-31 fsa:LeaseholdImprovementsMember iso4217:DKK pure Årsrapport 33771231 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Strandvejen 44 2900 Hellerup 2023-01-01 2022-01-01 2023-12-31 2022-12-31 21276308 Keylane A/S Kigkurren 10 2300 Copenhagen + 45 70 20 40 90 1998-05-01 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab 33771231 Strandvejen 44 2900 Hellerup Denmark 39 45 39 45 koebenhavn@pwc.dk 2024-06-28 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 2023. 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 2023 of the Company and of the results of the Company operations for 2023. 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. 2024-06-28 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 2023 and of the results of the Company´s operations for the financial year 1 January - 31 December 2023 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 2023, 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 2024-06-28 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Niels Henrik B. Mikkelsen State Authorised Public Accountant mne16675 Martin Birch State Authorised Public Accountant mne42825 -46868000 15634000 28717000 331000 -104000 768000 -36745000 11421000 22416000 206279000 211448000 186252000 10087000 1660000 1270000 1039000 -1496000 97525000 134270000 123282000 144 146 142 -0.207 -0.315 -0.227 0.074 0.154 -0.005 0.251 0.473 0.635 0.662 -2.099 -0.736 -0.317 0.089 0.2 Key activitiesThe 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 A/S offers the following standard solutions in the Nordic market that empower the customers to launch a digital platform both with and without legacy migration.Keylane PlexusThe 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.Currently, the solution is successfully deployed by prominent clients within the Danish and Dutch markets, and additional implementations are currently underway. The company intends to expand Plexus to other countries beyond Denmark and Netherlands.The majority of SaaS revenue of Plexus is currently generated in Denmark by its 5 Danish customers. In the Netherlands Plexus is live at 2 customers and being implemented at a third major customer. 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 ObexThe 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, and ongoing implementations are underway.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.OrganizationKeylane 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.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 2023 of 110 million euro (increase of 20% versus 2022) and Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) of 32.5 million (29% of revenue, 58% EBITDA increase versus 2022). The Dutch activities for the P&C and L&P market were managed separately but legally still combined in Keylane BV, the Dutch subsidiary of Keylane Group. To further focus each business line on their own markets, the activities were legally separated in 2023. Keylane Life and Pension BV was established per July 1, 2023, as a legal demerger of the L&P activities out of Keylane BV. The P&C activities and some shared services remained in Keylane BV. The graph below depicts this new situation.Within the Keylane Group, the business line L&P now 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 56 million euro, a 22% increase versus 2022. The EBITDA amounted to 9.4 million euro (17% of revenue), an increase of more than 100% versus 2022.Group structure as of July 1, 2023Former CEO for L&P, Christoffel van Riet, decided that it was time for a career change and left Keylane and stepped down from his managerial positions in Keylane A/S as per 1 January 2023. His role was taken over by Leon de Looff. 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).The Board of the L&P business line consists of Leon de Looff (CEO L&P), Koen van Kooperen (CFO L&P), Tonny Rabjerg (VP Plexus), Grace Peerkhan (HR director) and Mirella Daurer (Legal Counsel).The past year and follow-up on development expectations from last yearEarly 2022 Keylane A/S experienced attrition in the Plexus team. In the remainder of 2022 and during 2023 this trend has turned and the company experienced very low attrition rates and high employee engagement scores.The negative result over 2023 of 48.8 MDKK exceeded the expectation of 40 MDKK, due to additional hiring for development of the Plexus platform for the Dutch market.Development in the year Activities in 2023 have been focused on further migrations of Obex customers to the new platform and on further developing and rolling out the Plexus platform in Denmark and the Netherlands.Keylane had set up an Offshore center in India with a partner CoMakeIT, now part of Xebia. In 2023 this team has been strongly expanded, with over 70 FTE at the end of 2023. The overall size of the Plexus organization has doubled in 2023.The Plexus development organization has been re-organized in 2023, to better manage the increased size of the team and the full integration of Danish, Dutch and India resources in each of the teams of the Plexus organization.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 2023 shows a loss of TDKK 46,134, and at 31 December 2023 the balance sheet of the Company shows a negative equity of TDKK 1,091.Capital resourcesKeylane 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 2024 to support these investments. The parent company, Keylane Topholding B.V., has therefore issued a letter of support confirming that the Keylane Topholding will support Keylane A/S financially in this respect.Please refer to note 1.Special risks - operating risks and financial risksKeylane 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 also preparing for the upcoming DORA regulations, which will come into effect by early 2025.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 aheadIn 2024 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 2 Dutch customers, which will significantly increase the license revenue towards Keylane A/S.Research and developmentKeylane 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 2024, the efforts will be focused on the Plexus solution and rollout and expansion of the new Obex platform.Intellectual capital resourcesKeylane'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 top-tier 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 measurementCalculation 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 eventsThe financial position at 31 December 2023 of the Company and the results of the activities and cash flows of the Company for the financial year for 2023 have not been affected by any unusual events.Subsequent eventsNo events materially affecting the assessment of the Annual Report have occurred after the balance sheet date. 118652000 102326000 132813000 124267000 34693000 34599000 -48854000 -56540000 19000 482000 3525000 2285000 -52360000 -58343000 -6226000 -5861000 -46134000 -52482000 -46134000 -52482000 101114000 93373000 32746000 36855000 0 2210000 35569000 7818000 169429000 140256000 14044000 8410000 2686000 2400000 44000 74000 16774000 10884000 1923000 1923000 1923000 1923000 188126000 153063000 22330000 13768000 0 458000 12098000 386000 6226000 0 993000 257000 41647000 14869000 6755000 11767000 48402000 26636000 236528000 179699000 41166000 41166000 101912000 73982000 -144169000 -70105000 -1091000 45043000 2386000 4691000 2386000 4691000 12546000 6422000 0 52930000 12546000 59352000 2648000 3014000 3576000 3589000 6194000 4447000 197000 385000 185506000 36812000 24566000 22366000 222687000 70613000 235233000 129965000 236528000 179699000 41166000 73982000 -70105000 0 0 -46134000 0 27930000 -27930000 41166000 101912000 -144169000 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 2024 to support these investments. The parent company, Keylane Topholding 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 31 December 2024. No events materially affecting the assessment of the Annual Report have occurred after the balance sheet date. 118270000 110703000 8846000 8272000 947000 995000 4750000 4297000 132813000 124267000 2959000 1808000 2959000 1808000 122 125 Including remuneration to the Executive Board: 30558000 30760000 4169000 4048000 34693000 34599000 Gain and loss on disposal -34000 -209000 0 409000 19000 73000 19000 482000 2689000 1508000 836000 777000 OtherFinanceExpenses 3525000 2285000 -6226000 -5861000 -6226000 -5861000 236259000 41158000 29961000 7818000 0 0 0 59733000 31982000 0 0 -31982000 268241000 41158000 29961000 35569000 142886000 4303000 27751000 0 24241000 4109000 2210000 0 167127000 8412000 29961000 0 101114000 32746000 0 35569000 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. 19760000 12574000 674000 8690000 1398000 0 0 390000 0 28450000 13582000 674000 11350000 10174000 600000 3056000 1083000 30000 0 361000 0 14406000 10896000 630000 14044000 2686000 44000 1923000 1923000 1923000 Selling price of work in progress -5464000 6340000 Payments received on account 5267000 -6267000 Total -197000 73000 Recognised in the balance sheet as follows: Contract work in progress recognised in assets 0 458000 Prepayments received recognised in debt -197000 -385000 Total -197000 73000 Prepayments consist of prepaid expenses concerning rent, insurance premiums and subscriptions as well. Deferred tax asset at 1 January 0 -5861000 Amounts recognised in the income statement for the year 6226000 5861000 Deferred tax asset at 31 December 6226000 0 Other provisions comprise provisions on entered contracts and covers disputes. Provision restorage cost for buildings 765000 765000 Other provisions 1621000 3926000 2386000 4691000 The provisions are expected to mature as follows: Within 1 year -1621000 -3853000 Between 1 and 5 years -765000 -765000 After 5 years 0 -73000 2386000 4691000 0 0 12546000 6422000 12546000 6422000 2648000 3014000 0 0 0 52930000 0 52930000 185506000 36812000 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 Payables to group enterprises **Charges and security**The following securities have been provided for the purpose of financing by banks:- First lien on (action) rights agreement for the sale of all shares in Keylane Group B.V., Keylane B.V. and underlying group companies. - First lien on all business equipment, inventories, receivables, insurance, intellectual property rights and other assets of Keylane B.V. and all the underlying subsidiaries. Each debtor has a joint liability agreement issued for the entire facility, consisting of loans and the overdraft. Assets held by Keylane A/S have been pledged to ING Bank as security agent of the lenders in the Facilities Agreement for a total value of €8,000,000 by registration as a Floating Charge Mortgage with the Danish Register of Chattel Mortgages. Basis Controlling interest Keylane Group B.V., Varrolaan 60, 3584 BW Utrecht, The Netherlands Majority shareholder Keylane Topholding B.V. (ultimate parent company) Transactions The Company has chosen only to disclose transactions which have not been made on an arm's length basis in accordance with section 98(c)(7) of the Danish Financial Statements Act. Transactions with related parties are in the financial year carried out on arm's length basis. Consolidated Financial Statements The Company is included in the Group Annual Report for the following companies: Name Place of registered office Keylane Topholding 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 Keylane Topholding B.V. and Keylane Group B.V. can be obtained at the above addresses. The Annual Report of Keylane A/S for 2023 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 2023 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 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. 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. 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. Fixed assets acquired in foreign currencies are measured at the transaction date rates. 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 and distribution as well as office expenses, etc. With reference to section 32 of the Danish Financial Statements Act, gross profit/loss is calculated as a summary of revenue, work on own account recognised in assets 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 changes in deferred tax for the year. The tax attributable to the profit for the year is recognised in the income statement, whereas the tax attributable to equity transactions is recognised directly in equity. 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 are reviewed on an annual basis to determine whether there is any indication of impairment other than that expressed by amortisation and depreciation. If so, the asset is written down to its lower recoverable amount. 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 income tax is measured using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes on the basis of the intended use of the asset and settlement of the liability, respectively. Deferred tax assets are measured at the value at which the asset is expected to be realised, either by elimination in tax on future earnings or by set-off against deferred tax liabilities within the same legal tax entity. 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 ordinary 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