How to read a Danish annual report

Where the annual report comes from

The rules sit in the Danish Financial Statements Act, årsregnskabsloven (see the act at retsinformation.dk), and reports are filed with the Danish Business Authority. Anyone can download the original report free of charge via the CVR register at datacvr.virk.dk — and Riskpilot shows the figures from up to the five most recent reports directly on the company profile.

As a main rule the report must be filed no later than six months after the end of the financial year — listed and state-owned companies have a shorter deadline. A significantly delayed annual report is a signal worth noting in itself.

The reporting classes: A, B, C and D

The act divides companies into four classes by type and size — the larger the company, the more the report must contain:

• Class A: personally owned businesses and similar, with no duty to file an annual report. That is why you rarely find accounts for sole proprietorships.
• Class B: small companies (most ApS companies, for example) below the act's size thresholds for balance sheet, net revenue and employees. May file a heavily simplified report — including an income statement that starts at gross profit.
• Class C: medium-sized and large companies. Must disclose net revenue, a management review and more notes.
• Class D: listed and state-owned public companies — the most extensive requirements.

Why small companies show no revenue

The vast majority of Danish companies report under class B, and class B companies may omit net revenue and instead open the income statement with gross profit (bruttofortjeneste) — roughly revenue minus cost of goods and certain external costs. A missing revenue figure is therefore entirely normal and not suspicious in itself.

The consequence is that revenue-based ratios such as the EBITDA margin cannot be computed for these companies — read more in Understand key financial ratios.

What to read first

If you have five minutes for an annual report, spend them like this:

• The auditor's report — qualifications, emphases of matter and going-concern doubt live here, and they matter more than any single number.
• Equity — its level and how it moved against last year.
• The result for the year — and whether it comes from operations or one-off items.
• Short-term debt against current assets — can the bills be paid?
• The notes — pledges, contingent liabilities and loans to management hide here.

See how the figures are presented in practice on a profile such as Risika A/S, and read about the typical red flags in Warning signs in company financials.