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RTX Annual Report 2017
3413_rns_2017-11-28_50ed9763-b4cc-43fd-8cbc-54c7e3d1999f.pdf
Annual Report
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ANNUAL REPORT 2016/17
NEW ERA OF WIRELESS
COMMUNICATION
CALLS FOR
STRATEGIC PRIORITIES
CVR NO.: 17 00 21 47
RTX
WIRELESS WISDOM
CONTENTS
RTX at a Glance
25 YEARS
RTX is a global company with almost 25 years of extensive experience and knowledge in design of advanced wireless short-range radio systems and products.
HERITAGE
Our heritage has provided us with a unique combination of software and hardware capabilities through which RTX manages projects for globally recognized customers, from conceptualization to finished products and modules.
NUMBER OF FTEs
FTEs
PRODUCTS
In RTX we develop, innovate and manufacture customized solutions, which make wireless communication effortless within large corporations or among people across the globe.
WIRELESS
Developing wireless products and solutions can be complex. At RTX we pride ourselves on making products that are complex on the inside but appear simple from the outside.
REVENUE
DKK million
MARKET
RTX is well positioned in the market with a great mix of customer financed development projects combined with internally financed development projects, where an ODM/OEM product or software is resold to several customers across the globe.
CUSTOMERS
We serve some of the world's leading brands with innovative and customized solutions.
YEAR-END RESULT
DKK million
SELECTED CUSTOMERS
- Microsoft
- plantronics.
- SENSHEISER
- SASSOON
- LG
- ShoreTel
- SAMSUNG
- Alcatel-Lucent
- ReSound
- QUALCOMM®
- UNIFY
- PHILIPS
- AGFE
- NEC
- dialog
RTX Annual Report 2016/17
CONTENTS
Table of Content
MANAGEMENT REVIEW
INTRO
- RTX at a glance 2
- Letter from Chairman & CEO 4
ACCOMPLISHMENTS & RESULTS 2016/17
- Main events 7
- 2016/2017 Performance 8
- Highlights from 2016/17 10
- Financial highlights for the group 11
- Outlook 2017/18 12
THE WAY WE DO BUSINESS
- Key achievements 14
- Business model 15
- Strategic priorities 16
- Enterprise 18
- Pro Audio 19
- Headsets 20
- Healthcare 21
- Social & Environmental Profile 22
- Risk Management 23
CORPORATE MANAGEMENT
- Share & Financial Management 27
- Corporate Governance 29
- Board of Directors 30
- Executive Management 31
STATEMENTS
- Management's Statement 32
- Independent Auditor's Report 33
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
- Income Statement 2016/17 37
- Statement of comprehensive income 2016/17 37
- Balance Sheet 30 September 2017 38
- Equity Statement for the Group 39
- Equity Statement for the Parent 39
- Cash Flow Statement 2016/17 40
- Notes 41
OTHER
- Technical terms and explanations 74
RTX Annual Report 2016/17
CONTENTS
PETER RØPKE
President & CEO
PETER THOSTRUP
Chairman of the Board
DEAR SHAREHOLDER
Another good year for RTX
2016/17 developed positively for RTX. The financial results, revenue and EBIT growth, were as expected at the beginning of the year. During the financial year, we continued the development of innovative wireless solutions in cooperation with existing as well as new customers, and we launched a new product range within wireless headsets for professional use.
RTX Annual Report 2016/17
CONTENTS
With revenue amounting to DKK 434 million and EBIT to DKK 72 million, RTX fulfilled the expectations for the year. In the financial year, we achieved a revenue increase of 10% and an EBIT increase of 10%, while achieving an EBITDA margin of 18%. During the year, RTX has increased investments in own developed products. We have thus developed our own professional headset product range for the growing business headset market, and we have developed our own wireless module for use within the growing ESport market. Despite the good progress, we also had challenges in the financial year, where we experienced problems with our subcontractors' ability to meet demands in the middle of the year. Therefore, a new supply chain function was established in RTX in order to ensure that we have a supplier set-up that can support our continued development.
The two business units have developed positively during the financial year, and we experience an increased demand for wireless solutions from both existing and new customers. Therefore, we have increased the number of employees in RTX's technical areas during the financial year, both in Denmark and in Hong Kong and China, and we now have 235 employees in RTX at the end of 2016/17 compared to 223 last year. Thus, we have employed a total of 12 new employees in 2016/17, of which 8 are in Denmark.
In 2016/17, Business Communications realized revenue of DKK 290 million equivalent to an increase of 8%. The growth was driven by increased sales of telephony equipment design for small and medium sized companies, where we saw a growth of 25% compared to last year.
In the financial year, Design Services realized revenue of DKK 144 million equivalent to a growth of 14%. The growth was driven by increased sales of complete wireless modules and products for our Design Services customers. From these customers we saw an increase of 50% compared to last year.
DIVIDEND AND SHAREHOLDER RELATED ACTIVITIES
In accordance with the authorizations given by the Annual General Meetings in 2016 and 2017, RTX has acquired 346,409 treasury shares in the financial year 2016/17 at a value of DKK 53.4 million. The purpose of the share buy-back programme is partly to adjust the company's capital structure and partly to cover future share-based remuneration (cf. announcements nos. 06/2016 and 07/2017). Based on the completed share buybacks, the Board of Directors will propose to the Annual General Meeting in January 2018 to reduce the share capital by an amount equal to a cancellation of 200,000 shares.
Based on the positive result in 2016/17, the strong capital structure of RTX and Management's expectations for the future, we propose to the Annual General Meeting in January 2018 a dividend of DKK 2.00 per share. RTX expects to finalize the share buy-back programme approved by the Annual General Meeting in 2017 with the acquisition of treasury shares up to DKK 19 million.
CHANGES IN MANAGEMENT
With reference to announcement no. 27/2017 Kristian Frederiksen joined RTX A/S on 1 August 2017 as new CFO. Kristian has 10 years of experience within financial management in Novo Nordisk and he holds a broad international experience from Europe and Asia, latest as Financial Director in Novo Nordisk, Netherlands. Kristian has a Master Degree in International Business.
EXPECTATIONS FOR 2017/18
In the latest year, RTX has worked on further developing our strategy. We will primarily develop our business within four areas.
-
Enterprise Communications, where we will supply product solutions to big, medium and small companies. RTX has already a strong position, which we expect to expand in the coming years.
-
Business headsets, which is a new product area for RTX. We expect to be able to take advantage of our current strong position in the professional Enterprise market to build this business.
- Professional audio, where we have developed wireless solutions for many world leading brands during many years. We expect to develop our position further in the coming years and expand our solution to even more applications.
- Healthcare, where we already today supply different wireless solutions for patient monitoring. Going forward we expect to be able to develop this business and offer solutions taking advantage of the opportunities within IoT (internet of things).
At the same time, we wish to ensure that RTX can maintain an EBITDA margin of minimum 16% for the benefit of the future development of RTX, the shareholders and employees.
As described in the section concerning risk management, RTX is relatively highly exposed to foreign currencies, as a considerable part of the revenue is settled in US dollars. Due to the uncertainty especially about the US dollar exchange rate against Danish kroner, we have seen the need to increase the guidance range compared to previous years. Based on this, Management expects revenue in the range of DKK 460-490 million, EBITDA in the range of DKK 72-87 million and EBIT in the range of DKK 58-73 million for the financial year 2017/18.
RTX is based on highly specialized knowledge and skills. Without the company's committed and qualified employees RTX would not be able to live up to its full potential. Our employees develop unique and value-adding solutions in cooperation with our customers in a market, where demands and technology constantly change. With the result delivered by RTX in 2016/17, our employees have yet again shown great professional skills and big commitment in the daily work.
PETER THOSTRUP
Chairman
PETER RØPKE
CEO
RTX Annual Report 2016/17
CONTENTS
Accomplishments & Results 2016/17
RTX Annual Report 2016/17
CONTENTS
Main events 2016/17
GAMING PLATFORM
In 2016/17 RTX finalized the development of a platform for wireless gaming connectivity. Our short-term focus has been to obtain Tier 1 customers, and during the year we managed to sign agreements with two major players within the field.
INNOVATIONS DRIVE INCREASE IN INTERCOM
In 2016/17, RTX capitalized on innovation activities involving an Advanced DECT Receiver (ADR), which outperforms competitive solutions in challenging radio environments such as big metal domes, concert arenas, football stadiums etc.
A Tier 1 customer launched a new system based on ADR, and the market feedback is extremely positive.
HEADSET
At the end of the financial year 2016/17, RTX introduced a series of products including wired and wireless headsets. These products are a natural extension and a supplement to the current product range targeted for ODM customers within Enterprise.
GROWTH IN VOIP SEGMENT
Based on advantages offered with VoIP and RTX's comprehensive insight and product portfolio for the OEM/ODM market, the segment experienced an impressive double digit growth in 2016/17.
NEW CFO 1 AUGUST 2017
With reference to announcement no. 27/2017 Kristian Frederiksen was appointed CFO in RTX A/S as per 1st August 2017. Kristian Frederiksen has a Master Degree in International Business from Aarhus School of Business, and comes from a position as Finance & Operations Director in Novo Nordisk Netherlands. He brings 10 years of financial management experience from Novo Nordisk across Europe and Asia. Prior to being Finance Director, Kristian held various positions within Corporate Finance in Novo Nordisk Headquarter in Copenhagen.
PRO-AUDIO MARKET PENETRATION
RTX has engaged with an increasing number of customers within the Pro-Audio segment. Engagements involve both microphone brands, instrument makers and new companies focused on providing new experiences when attending live concert events.
Technology drivers behind the design-wins are RTX's radio platforms within 1.9 GHz, 2.4 GHz and Digital UHF as well as RTX's Sheersound™ audio compression technology.
EXPANDED MODULE PORTFOLIO
During 2016/17, RTX has finalized the development of a new communication module for customized 1.9 GHz radio solutions. The first design-wins have been secured, and the first commercial products will reach the market early 2018.
RTX Annual Report 2016/17 | 7
CONTENTS
2016/17 Performance
RTX's financial performance is in line with the guidance provided in November 2016 with revenue in the high end of the range and EBITDA and EBIT in the middle of the range.
REVENUE DEVELOPMENT
In 2016/17, RTX delivered Group revenue of DKK 434 million corresponding to a growth of 10% compared to last year's revenue of DKK 396 million. Both business units contributed positively to the revenue growth, with Business Communications reaching DKK 290 million corresponding to a growth of DKK 21 million or 8% compared to last year. The growth in Business Communications originated solely from VoIP, growing by DKK 29 million, now being the largest segment within Business Communications with a total revenue of DKK 148 million.
Design Services reached a total revenue of DKK 144 million growing the business by DKK 18 million or 14% compared to last year. The revenue growth predominantly originated from customized wireless modules based on different audio codecs for various customer defined purposes contributing to a sales growth of DKK 18 million or 50% as compared to last year.
Most regions contributed positively to the revenue growth with Asia Pacific and Europe being the largest contributors. The growth was driven by additional demands from existing customers as well as new customers across the segments.
DEVELOPMENT IN COSTS
The cost of sales increased by 17% to DKK 195 million reflecting a gross margin of 55% compared to 58% last year. The gross margin was negatively impacted by an unfavorable product mix in both business units, while at the same time influenced by the supply chain disruptions experienced in Q2 of 2016/17. As a consequence of the increased activity level, capacity costs increased by 12% to DKK 179 million, predominantly driven by continued investments in R&D activities reflecting an increased number of employees. In addition, 2016/17 was the year where RTX decided to strengthen the focus in the supply chain and establish a global supply chain organization, preparing infrastructure for the future launch for own developed products.
VALUE OF OWN WORK TRANSFERRED TO ASSETS, DEPRECIATIONS & AMORTIZATION
RTX continued to invest in several different product ranges in both business units, which will complement the existing communication solutions. Accordingly, DKK 17 million was capitalized in 2016/17. RTX will continue the development and investments in own products in 2017/18. The Group's amortization and depreciations reached DKK 5 million in
REVENUE BY REGION
REVENUE BY SEGMENT
COST DEVELOPMENT
RTX Annual Report 2016/17
CONTENTS
2016/17 versus DKK 4 million last year, with depreciations accounting for DKK 4 million and amortizations DKK 1 million.
OPERATING PROFIT (EBIT)
Operating profit (EBIT) increased by 10%, or DKK 6 million, to DKK 72 million compared to DKK 66 million last year.
FINANCIAL ITEMS, TAX & NET PROFIT
Net financials resulted in a cost of DKK 1.9 million compared to an income of DKK 2.7 million last year. The changes are predominantly driven by the Group's securities portfolio.
Further, with the majority of RTX's customers based outside of Denmark, RTX is exposed towards exchange rate fluctuations, especially the US dollar and to a minor extent Euro and Hong Kong dollar. In line with our treasury policy, RTX does not hedge foreign exchange risks, and accordingly the financial results are influenced by the above-mentioned foreign exchange rate fluctuations. The result in 2016/17 reflects a loss of DKK 3.0 million on foreign exchange especially on US dollar versus Danish krone.
The effective tax rate for 2016/17 was 17.3%, reflecting a tax recognition of DKK 12.2 million compared to DKK 19 million last year. As a consequence, the expected liquidity effect of the tax payments amounts to around DKK 4.7 million.
With the above tax payments the total net profit amounted to DKK 58.2 million compared to a profit of DKK 49.5 million last year.
FREE CASH FLOW, FINANCING AND LIQUIDITY FOR CONTINUED OPERATIONS
Cash flow from operations amounted to DKK 46.7 million compared to last year's DKK 53.4 million. This reflects lower cash flows from operating activities driven by a higher activity level combined with a negative development in trade receivables due to the realized customer revenue mix. Further, the free cash flows were negatively impacted by a higher inventory level, but positively impacted by a higher net profit as compared to last year.
NET PROFIT
OPERATING PROFIT (EBIT) AND EBITDA-%
Cash Flow from Operations
- Exchange rate adjusted - further details refer to note 1.
RTX Annual Report 2016/17 | 9
CONTENTS
Highlights from 2016/17
2016/17 was another year of great performance for RTX, fulfilling the financial expectations as communicated at the beginning of the year.
DKKM 433.5
REVENUE
DKKM 72.3
EBIT
17.8%
EBITDA MARGIN
DKKM 58.2
PROFIT FOR THE YEAR
DKKM 46.7
CASH FLOW FROM OPERATIONS
235
FULL-TIME EMPLOYEES
80.2%
EQUITY RATIO
DKKM 71.0
CASH FLOW FOR SHAREHOLDER ACTIVITIES
DKK 6.7
EARNINGS PER SHARE (EPS) (DKK PER SHARE)
RTX Annual Report 2016/17
CONTENTS
Financial highlights for the Group
| Amounts in DKK million | 2016/17 | 2015/16 | 2014/15 | 2013/14 | 2012/13 |
|---|---|---|---|---|---|
| INCOME STATEMENT ITEMS | |||||
| Revenue | 433.5 | 395.6 | 349.5 | 288.3 | 241.5 |
| Gross Profit | 238.5 | 229.4 | 196.2 | 164.0 | 138.8 |
| Operating profit/loss (EBIT) | 72.3 | 65.8 | 52.3 | 37.0 | 14.4 |
| EBITDA | 77.2 | 70.0 | 59.0 | 45.6 | 22.1 |
| EBITDA % | 17.8% | 17.7% | 16.9% | 15.8% | 9.2% |
| Net financials | -1.9 | 2.7 | 0.7 | -1.0 | -1.6 |
| Profit/loss before tax | 70.4 | 68.5 | 53.0 | 35.9 | 12.8 |
| Profit/loss for the year | 58.2 | 49.5 | 48.9 | 55.5 | 32.6 |
| BALANCE SHEET ITEMS | |||||
| Cash and current asset investments | 151.3 | 202.5 | 136.9 | 108.8 | 70.8 |
| Total assets | 353.0 | 355.4 | 343.1 | 305.2 | 250.5 |
| Equity | 283.0 | 280.6 | 265.9 | 227.6 | 176.3 |
| Liabilities | 70.0 | 74.9 | 77.2 | 77.6 | 74.2 |
| OTHER KEY FIGURES | |||||
| Development cost financed by RTX before capitalization | 36.9 | 25.9 | 22.7 | 19.6 | 24.0 |
| Capitalized development cost | 17.4 | 1.0 | 2.7 | 0 | 1.2 |
| Depreciation, amortization and impairment | 4.9 | 4.2 | 6.7 | 8.6 | 7.7 |
| Cash flow from operations | 46.7 | 53.4 | 53.2 | 53.8 | 32.1 |
| Cash flow from investments | -37.0 | 24.4 | -46.5 | -4.7 | 14.6 |
| Investment in property, plant and equipment | 8.9 | 5.8 | 3.1 | 4.7 | 0.9 |
| Increase/decrease in cash and cash equivalents | -61.4 | 27.9 | -11.0 | 38.1 | 33.9 |
| Amounts in DKK million | 2016/17 | 2015/16 | 2014/15 | 2013/14 | 2012/13 |
| --- | --- | --- | --- | --- | --- |
| KEY RATIOS | |||||
| Growth in net turnover (percentage) | 9.6 | 13.2 | 21.2 | 19.4 | 26.3 |
| Profit margin (percentage) | 16.7 | 16.6 | 15.0 | 12.8 | 6.0 |
| Return on invested capital (percentage) continuing operations | 53.7 | 45.8 | 29.9 | 16.5 | 10.7 |
| Return on equity (percentage) continuing operations | 20.7 | 18.1 | 19.8 | 27.5 | 19.6 |
| Equity ratio | 80.2 | 78.9 | 77.5 | 74.6 | 70.4 |
| EMPLOYMENT | |||||
| Average number of full-time employees | 227 | 193 | 171 | 155 | 158 |
| Revenue per employee (DKK '000) | 1,910 | 2,050 | 2,044 | 1,860 | 1,528 |
| Operating profit per employee (DKK '000) | 318 | 341 | 306 | 239 | 91 |
| SHARES (NUMBER OF SHARES IN THOUSANDS) | |||||
| Average number of shares in distribution | 8,735 | 8,809 | 8,621 | 8,587 | 8,968 |
| Average number of diluted shares | 8,916 | 9,014 | 9,084 | 9,159 | 10,005 |
| SHARE DATA, DKK PER SHARE AT DKK 5 | |||||
| Profit/loss for the year (EPS), per share | 6.7 | 5.6 | 5.7 | 6.5 | 3.6 |
| Profit/loss for the year, diluted (DEPS), per share | 6.5 | 5.5 | 5.4 | 6.1 | 3.3 |
| Dividends, per share | 2.0 | 2.0 | 2.0 | 1.0 | 0.5 |
| Equity value, per share | 32.9 | 31.6 | 30.7 | 26.6 | 20.6 |
| Listed price, per share | 180.0 | 113.0 | 87.0 | 49.4 | 19.8 |
Note: The Group's financial year runs from 1 October to 30 September.
The accounting principles describe the calculations of the financial highlights.
RTX Annual Report 2016/17
CONTENTS
Outlook 2017/18
For 2017/18, a double digit revenue growth is expected driven by a robust product pipeline and solid customer relationships combined with a continued flow of new customers. The growth reflects expectations of a robust uptake and performance from especially the headset business for Call Centers & Offices (CC&O) as well as the Gaming Headset segments, combined with an acceleration of customer financed projects. The growth is expected to be counterbalanced by a lower Enterprise sales.
Combined with the continued investment in a broader product portfolio and technology platform, Management expects revenue between DKK 460-490 million, EBITDA
between DKK 72-87 million and Operating Profit (EBIT) between DKK 58-73 million, where especially EBIT should be seen in the light of an increased investment level supporting the newly defined strategic directions of RTX.
The above outlook is based on the expectations that especially the market sensitive macroeconomic elements across the globe will remain stable at the current level and conditions, and hereby not change the business environment for RTX, hereunder specifically the exchange rate related to the US dollar will remain at the current level versus the Danish kroner.
| RANGE OVERVIEW
- 2017/18 | | |
| --- | --- | --- |
| DKK million | LOW | HIGH |
| REVENUE | 460 | 490 |
| EBITDA | 72 | 87 |
| EBIT | 58 | 73 |
ANNUAL IMPACT ON OPERATING PROFIT OF A 5% INCREASE ON CURRENCY
Key currencies
| USD | 8.8 |
|---|---|
| EUR | 3.3 |
| HKD | -1.1 |
Financial Calendar 2017/18
Q1 2017/18 & General Assembly
Thursday, 25 January 2018
Q2 2017/18
Tuesday, 1 May 2018
Q3 2017/18
Tuesday, 28 August 2018
Q4 2017/18
Tuesday, 27 November 2018
DISCLAIMER
This Annual Report contains statements regarding expectations for the future development of RTX A/S, in particular the direction of future product development, future sales, operating profits and business expansion. Such statements are subject to risks and uncertainties as various factors, many of which are outside the control of RTX, may cause the actual development and results to differ materially from the expectations expressed directly or indirectly in this presentation. Factors that might affect such expectations include, among others, rapid technological changes and evolving markets, overall economic and business conditions, fluctuations in currencies, demand for RTX's services, competitive factors in the market and uncertainties concerning possible investments.
RTX Annual Report 2016/17
CONTENTS
The way
we do business
RTX Annual Report 2016/17 | 13
CONTENTS
Key achievements 1993-2017
REVENUE
DKKM 100
RTX Annual Report 2016/17
CONTENTS
Business Model
Ever since the first ground-breaking digital wireless systems, RTX has supplied many unique products that combine radio frequency performance at a very high level with high quality audio reproduction with an intuitive interface.
Taking a customer centric approach, understanding market trends and acting as a professional partner are all integrated parts in how we do business in RTX. We believe that we provide the true value proposition and best results in close collaboration with our customers. Only together with our valued customers will we become successful.
Based on our highly specialized knowledge and unique software and hardware capabilities, we manage projects from the concept stage to finished product, through specification, design, development, test and verification in close collaboration with customers. Combined with an innovative mindset we have proven that we are able to provide highly specialized and customized solutions and hereby obtain a unique position in the market, where demands and technology constantly change.
With the comprehensive insight into the process from specification to finished product we ensure a smooth transition from the initial prototypes to volume production and thus supplier management, testing and quality control during the products' operational phase is a key competence of RTX. Having a solid process framework in place supports us in effectively managing our external partners and optimizing our supply chain based on ever evolving market trends and customer demands.
With the combination of a customer centric approach, solid growth, unique technological capabilities and processes we build a global organization with software and hardware competencies in Denmark supplemented with mechanical design, hardware development, procurement and supply chain management in Hong Kong and Asia. The set strategic direction combined with the demand of our stakeholders has throughout the years sharpened the structure of our organization supporting cost effective production combined with a fast response to market and customer demands in an ever changing industry.
STRATEGIC FOCUS AREAS AND SELECTED INITIATIVES
CUSTOMERS
Customer centric approach rooted in long-term partnerships with recognized global brands.
GROWTH
Solid progress based on a robust pipeline and strong customer relationships.
CAPABILITIES
With unique software and hardware capabilities we manage projects from the concept stage to finished product.
PROCESSES
Our process framework supports us in effectively managing our external partners.
ORGANIZATION
Global organization supporting cost effective and time efficient operation.
RTX Annual Report 2016/17
CONTENTS
Strategic priorities
RTX's expertise covers the full range of wireless solutions, from robust communication's connectivity to Wi-Fi, DECT, BLE and other ISM band for systems that monitor and control homes and companies.
In recent years, RTX has built up competencies in low energy versions of the wireless technologies Bluetooth and DECT, which, among other things, enable multi-year operation from standard batteries. We believe that RTX is ahead of general market developments and will continue to be the preferred supplier within the core service of engineering design among existing and new customers.
With an accelerated trend towards more wireless solutions and products, RTX defined a clear path for the future strategic objectives of the company. We believe that through a more focused effort of our research and development in innovative wireless solutions and products, we will provide the competitive edge, which our customers demand. We want to become the preferred supplier of effective and innovative wireless solutions and products which serve the strategic demands and goals of our customers.
With attention towards our core we believe that we will be able to optimize shareholder value and secure the future growth of RTX through the right positioning of the company. The strategic objectives and priorities are well defined and based on a solid technological foothold, a wide platform and product range as well as promising market trends.
Accordingly, we defined four strategic objectives, which will become the future backbone of RTX's innovative activities in the years to come.
Expand leadership in Enterprise
Enterprise Communications, where we will supply product solutions to large, medium and small companies. RTX has already a strong position, which we expect to expand in the coming years.
Establish presence within Headsets
Business Headsets, which is a new product area for RTX. We expect to be able to take advantage of our current strong position in the professional Enterprise market to build this business.
Secure unique position in Pro Audio
Professional Audio, where we have developed wireless solutions for many years. We expect to develop our position further in the coming years, and expand our solutions to even more applications.
Strengthen position within Healthcare
Healthcare, where we already today supply different wireless solutions for patient monitoring. Going forward we expect to be able to develop this business and offer solutions taking advantage of the opportunities within IoT (Internet of Things).
With our heritage, we believe that we possess the experience and capabilities supporting the essential platform and technological know-how to become successful within the defined strategic objectives. We believe that we through a more focused approach will be able to optimize our resources and maximize value and hereby deliver long-term sustainable positive impact to our stakeholders.
RTX Annual Report 2016/17
CONTENTS
PROAUDIO
PeeX System
RTX customer Powerchool Group Ltd. of the UK is in the midst of introducing a groundbreaking new concert concept giving the individual participants freedom of choice when it comes to volume and mix.
The solution utilizes RTX proprietary 5GHz radio technology based upon Qualcomm chipsets, combined with RTX digital signal processing skills which ensures the perfect sound and experience for the end-user. When the product is launching it will be announced also through RTX social media channels which can be subscribed to via www.rtx.dk.
RTX Annual Report 2016/17 | 17
18 | RTX Annual Report 2016/17
BUSINESS COMMUNICATIONS
Enterprise
In the Enterprise segment RTX develops and supplies professional wireless IP telephony for PBX systems that are used in communication systems for professional use. Ever since the first groundbreaking digital wireless systems, RTX has supplied many unique products that combine radio frequency performance at a very high level with high quality audio reproduction with an intuitive interface.
With focus on development, production and sale of professional telephony equipment, including wireless handsets, base stations and repeaters for PBX systems and VoIP solutions, the Enterprise segment has been the backbone of RTX for many years. The solutions are based on DECT, CAT-iq™, Bluetooth and Wi-Fi™ technologies and address the market for IP telephony. The overall IP telephony market is showing moderate growth driven by the switch from analogue-based telephony to IP-based solutions.
Products to the Enterprise segment are developed and sold on an OEM basis, primarily to several global suppliers of PBX products (telephony switchboards and systems) or as private label products for regional distributors.
There is an ongoing need in the commercial market for mobility solutions for voice and messaging. Despite the fact that the need for mobility in individual workplace environments is targeted at mobile phones or smart phones with PBX connectivity, we expect that there will be a large residual market for robust wireless handsets. Globally, this Enterprise market accounts for approximately 2.4 million handsets per year, with the handsets based on DECT, IP DECT or Wi-Fi. The market is broad and comprises verticals like healthcare, industry, mining, the service sector and retailing, which demand customer and vertical specific robust solutions. The trend is expected to be towards further customer and vertical specific solutions, conditions that Business Communications are targeting as an ODM supplier.
Enterprise has a competitive product portfolio and a multi-cell and a single-cell based VoIP system with several product variants for SME businesses. With a focus on continued development of new product platforms in close co-operation with existing and new customers we believe that we will be able to gain market shares, and further consolidate our market leading position as supplier of multi-cellular handsets to the onsite voice mobility solution market.
RTX has been operating within the Enterprise segment for several years and accordingly been building valuable customer relationships. Based on a successful collaboration and expansion of business, the key customers have managed to outperform the market and now accounts for a substantial portion of the Enterprise segment. Accordingly, the dependency of these clients business and further expansion is of critical importance to RTX. With the ambition of continued growth, RTX aims at expanding the customer portfolio and attract new customers in new markets.
RTX expands the wireless handset range for Alcatel-Lucent Enterprise.
Using the new products is a wireless "Ex" DECT handset, which is safe for use in environments that have been grown. For the retail market RTX is a simple van intercom DECT product and a single buffer customer satisfaction and faster response time in the shops. The product is already installed in the first CARREFOUR markets.
A new base with a handset provides the opportunity for installation of a home office/remote office and small devices using IP based telephony.
CONTENTS
DESIGN SERVICES
ProAudio
The ProAudio segment consists of 3 areas of business, namely Microphones & Stage equipment (Mics & Stage), Intercom Systems and Gaming Headset solutions.
A common theme among the sub segments are the requirements to ultra-reliable low latency wireless communication. This is a key expertise of RTX and an area we continue to develop through innovation, research and development.
The core IP portfolio was extended both within radio technology and digital signal processing. The key events in 2016/17 was the official launch of the Sheersound™ codec and the introduction of products in the markets with an advanced receiver technology that efficiently combats digital interference caused by reflections of the radio signal – similar to what caused shadowing on old analog TV images. The Sheersound™ codec is a special piece of software, which with literally no delay can compress and decompress high quality music and audio in general. The codec is being offered to RTX customers against a royalty fee.
Approximately 80% of the high-end professional microphone manufacturers were customers of RTX in 2016/17. The results obtained led to improved quality and features of products used during international events as well as local events.
In a similar way, key players on Intercom Systems are being served. Intercom systems can be systems that serve the challenging demands from crews handling events like the Olympic Games, where especially opening and closing ceremonies require very close coordination between light, audio, special effects and e.g. TV production crews.
During the year, RTX started production of custom modules for one of these key players, which over the coming years are expected to become a long-term revenue generator. RTX's involvement in intercom has been diversified by also serving systems used in restaurants as well as in security systems like door-phones or airplane push-back communication systems on the tarmac. The business within modules used in such systems have continuously been growing due to new product introductions.
The continued worldwide regulatory spectrum changes will support the growth especially within the sub-segment Mics & Stage, as these changes require older analog wireless solutions to be replaced by more spectrum efficient digital ones.
2016/17 was the year where RTX entered the Gaming Headset business area. Most quality gaming headsets today are wired, as E-Gamers have been unsatisfied with the performance of the available technology. Current solutions in the market generally suffered from latency issues (delayed audio), poor microphone audio, audio artifacts (clicks, pops, distortion) caused by unreliably wireless links, as well as inadequate use-time on the battery. The platform introduced by RTX circumvents these issues. The platform has thus been very well received in the market by renowned brand-owners. The gaming market is growing rapidly, but is relatively immature which will lead to some volatility. On top of this it is a consumer driven market, meaning product introduction schedules and business in general follow other guidelines than clean B2B, which introduces some uncertainty. RTX's current customer base is however a strong mix of both older and newer companies and customers, which have some stabilizing effect.
The professional audio industry is constantly sea under for robust wireless transmission links that can transfer high resolution audio signals at super low latency. Recent frequency regulation has driven professional systems towards digital modulation schemes and open OM bands, putting them in competition for so-grown, market widely used technologies and applications, such as Wi-Fi and Bluetooth™. With years of experience in ProAudio design, development and manufacturing, RTX has the expertise to deliver incredible sound quality in high-density RF environments, whether they are in the home, the studio or difficult radio environments with high inter-symbol interference.
RTX Annual Report 2016/17
CONTENTS
BUSINESS COMMUNICATIONS
Headsets
Building on our strong position as equipment supplier to the professional Enterprise market, RTX introduced a full range of business headsets in 2016/17. We expect to bring the new product range to the market in 2017/18.
With the global trend of a growing Call Centers & Office (CC&O) market, RTX took a strategic decision in 2016/17 to leverage this opportunity. The CC&O headset range consists of several different models from low-end to high-end to support our customers' demands. The models offer a lot of flexibility in features and design that allow our customers to optimize their needs.
With RTX's current customer base within Enterprise business, we have developed a highly efficient ODM model. We will utilize this model to enter the growing CC&O market.
During this financial year, we have presented this new product range to our existing customers at fairs and customer events. The overall reception from the market has been very positive where both the products and the business model were well received.
The product range includes high-end wireless business headsets with superior audio quality and dedicated user interface on the desktop base, a mid-range wireless business range optimized for professional use and low-end wired products offering good quality at efficient cost.
Drawing on many years of experience within wireless business communication and insight in wireless audio transmission, we are able to offer a high quality audio performance and deep integration to our customers' Enterprise communications solutions.
RTX has over the years developed a strong cooperation with the electronic manufacturers in China, and this will enable us to offer high quality products that can scale the business with our customers. We will start manufacturing the first products in the financial year 2017/18.
Backed by the solid interest from our customers and the good test results, we believe that the CC&O headset segment will become one of the growth engines of RTX in the coming years with an expected double digit million sales contribution in 2017/18.
HEADSET
HIGH-END PRODUCT
Best in class wireless business headset range with superior audio quality and dedicated user interface on the desktop base.
MID-END PRODUCT
A high quality wireless business headset range with high audio performance optimized for professional use.
LOW-END PRODUCT
A high quality wired business headset range with a lot variable options for the customer to choose from.
RTX Annual Report 2016/17
DESIGN SERVICES
Healthcare
Healthcare is composed of various sub activities, the biggest one being design and supply of wireless modules used for patient monitoring within professional healthcare like hospitals. These activities are supplemented by projects within assisted living like hearing aid accessories and IoT (Internet of Things) devices used e.g. in the pharmaceutical sector or as part of equipment/personnel tracking infrastructure.
The solutions provided build on RTX's core expertise within RF (Radio Frequency) and software protocol design, as many solutions require special medical frequency bands to be supported, while maintaining high spectral efficiency and ultra-reliably transmission. The IP has for a number of years been extended in various areas. As part of RTX's Authorized Design Center status with California based semiconductor giant Qualcomm, proprietary software running on Qualcomm silicon normally used for Wi-Fi, has been completed. Among others, this solution makes it possible to communicate with larger bandwidth and lower latency than current solutions, creating the possibility of achieving closed loop control systems for certain medication.
Further, RTX continues to develop advanced beacon technology. The beacon uses standard Bluetooth low energy (BTLE) technology, but combines it with RF beamforming in a similar way as modern radar technology works in aero planes, i.e. without any moving parts. The advanced beacon makes tracking much more reliable and capable of detecting for example in which direction a BTLE tag is moving.
2016/17 was a year signaling change, as a new R&D contract was signed with a key customer leading to an increased part of the value chain being an RTX delivery in the years to come. This is a cornerstone, which will ensure continued development and expected growth within the segment in the coming years. However, it should be remembered that the professional healthcare sector is a very conservative business with products living for minimum 10 years. This is an insurance of stable revenue, but it also makes introduction of new products a lengthy process.
Furthermore, as healthcare and industrial products often share many of their requirements, we expect growth also within this associated sector in the coming years, as our product portfolio matures and the current cooperation with cloud and machine intelligence providers solidifies.
It is expected that the demographic development and technological adaption will support continued growth from both existing and new customers through value chain expansion as well as new product introductions.
RTX Annual Report 2016/17
CONTENTS
THE AUSTRALIAN COLLEGE OF MEDICINE
WE SUPPORT
Social & Environmental Profile
In line with the societal developments and the growth of our company in the past years, RTX is committed to be a responsible business leader in a globalized world. The way we do it is defined by societal needs and our business priorities as well as our values and commitment to the ten principles of the UN Global Compact, which we believe constitutes a good foundation for focusing on responsible business practice.
With a value set taking its offset in the approach that, as a business, RTX influences and impacts people, environment and communities across the globe, we constantly strive for reducing any potential harm, while at the same time maximizing the benefits for our stakeholders. Hereby it becomes imperative for RTX and our employees that adherence to our stated values and responsible business conduct is crucial to maintain the continued support from our stakeholders while serving as the foundation for our license to operate.
As a company with a global reach and operation we are committed to meet our corporate responsibility to respect commonly accepted human rights throughout our operations and business relationship, as set out in the UN Guiding Principles on business and human rights. At the same time, we expect from our partners that they respect internationally recognized human rights as described in the UN Guiding Principles on Business and Human Rights and encourage them to work with all the Principles of the UN Global Compact.
Based on the defined principles RTX recognizes our responsibility. Accordingly, we developed our own Code of Conduct to support us in the adaption process of all principles among our suppliers, as well as an assessment tool to evaluate potential suppliers during due diligence processes when selecting new suppliers. We recognize and acknowledge that establishing the required processes outlined in the Code of
Conduct requires both time and resources, especially in the initial phases while it must be characterized as a continued improvement process. The Code of Conduct should therefore be understood as a tool for cooperation and dialogue with our supply chain partners about improving systems to manage adverse impacts on human rights including labour rights, the environment and anti-corruption and comply to the Principles of the UN Global Compact.
Developing and supplying complex products and modules without own production facilities makes sourcing of the right components and products a very important competency for RTX to master. The complete supply chain can be very complex from distant sub suppliers delivering raw PCBs, semiconductors, plastic and metal parts, cables, screws etc., all operated in a global context to our EMS partners for final assembly. During 2016/17, RTX has implemented some changes in our supply chain setup and in our selection of suppliers the Code of Conduct has been an instrumental assessment tool evaluating the new suppliers.
To ensure compliance RTX has an established whistleblower policy, which provides employees the possibility of reporting misconduct securely and confidentially. Executive Management encourages everyone to report serious and sensitive matters relating to any breach of the company's business ethics and/or relevant legislation. No matters were reported under the whistleblower policy during the financial year 2016/17.
RTX'S CSR FOCUS
HUMAN & EMPLOYEE'S RIGHTS
SOCIAL AND ANTI-CORRUPTION
ENVIRONMENT
FURTHER DETAILS
A full Communication on Progress (COP) can be downloaded from the company's website: https://www.rtx.dk/en/corporate/csr/#section1492.
RTX Annual Report 2016/17
CONTENTS
Risk Management
In RTX we strive to proactively manage and mitigate identified risks through a balanced risk framework safeguarding growth and protecting our people, assets and reputation.
Through an ongoing process RTX continuously evaluates the risk profile of the company based on external as well as internal elements, which potentially could impact the company. Through the defined risk profile we are prepared to implement appropriate actions when deemed relevant.
In RTX, we believe that through a detailed understanding and mapping of potential risks, we will enhance our ability to make better decisions, deliver on objectives and subsequently improve performance. At RTX, we define risks as "An occurrence caused by external or internal events which hinders us in meeting our objectives".
Executive Management is responsible for reviewing the overall risk exposure of RTX on an ongoing basis, while a mandatory review and evaluation of mitigating actions are discussed on a quarterly basis or more frequently when relevant.
Once the risks have been identified, assessed and mitigating actions defined, Executive Management evaluates the risk profile to ensure that appropriate plans are in place. The risk profile is evaluated on an ongoing basis and significant risks are escalated and reported to the Board of Directors when deemed relevant.
THE RISK MANAGEMENT PROCESS
The risk management process in RTX comprises of the following interlinked processes, risk identification, risk assessment and risk mitigation which is concluded and reviewed by Executive Management.
THE RISK MAP
Risks are assessed using a traditional two-dimensional Risk Grid – estimating the impact on operating profit (EBIT) and the estimated likelihood of the risk materializing.
RTX Annual Report 2016/17
CONTENTS
| A FINANCIAL RISK | B SUPPLY CHAIN DISRUPTION | C TECHNOLOGY DISRUPTION | |
|---|---|---|---|
| DESCRIPTION | Macro-economic uncertainty and adverse economic conditions may lead to disrupted sales, and low growth rate is expected to result in a reduced demand for projects from RTX's customers. | Most of the Group's production is handled by sub-suppliers, primarily in Asia. The Group depends on the sub-suppliers' ability to produce and supply the planned volume at the agreed time and at the agreed quality. | A significant part of RTX's business is based on a unique knowledge within advanced wireless radio systems. Therefore, technological change may affect future business opportunities for RTX. |
| Adverse economic conditions may result in reduced consumer demand, while major social or political changes may disrupt sales and operations. | |||
| In recent financial years, approximately 98% of the Group's revenue has originated from customers outside Denmark (2015/16: 95%). In most cases, invoices are in currencies other than Danish kroner, primarily US dollar at 86% and EUR at 13%. | |||
| POSSIBLE IMPACT | Political and economic instability may lead to adverse exchange rate fluctuations, insolvency of suppliers and/or customers and increased credit risk. | Significant fluctuations on sales and gross margin may arise if some sub-suppliers fail to supply at the agreed time and quality. | A revolution of the wireless communication and competence platform, which RTX has incorporated in our products and solutions today, may lead to lost business opportunities, short-term as well as long-term. |
| MITIGATION | As a consequence of its significant international activity, the Group's cash flows are influenced by changes in exchange rates and the Group's trading policy with customers and suppliers is, to the greatest possible extent, to continually adapt to match the currencies of its purchase and sales. With most of Cost of Sales being realized in US dollar (2016/17: 99%) the Group has, to some extent, reduced the exposure. | RTX has ongoing close and transparent contact with its sub-suppliers in order to plan and monitor supplies, quality assurance systems and production. To reduce dependency, RTX operates with more than one supplier where possible, while in other cases it is necessary to reduce the delivery uncertainty with a buffer storage. | With our close customer relations, RTX has a good impression of the customers' future product development plans. The close relations enable RTX to predict and react on an ongoing basis to changes in technologies requested by the customers. |
| If deemed appropriate, RTX may enter into transactions to hedge its commercial currency risks to reduce its currency exposure | RTX cooperates with major contract manufacturers with several factories, which means that production may be transferred from one factory to another in the event that one of the sites is temporarily out of operation. | Via innovation projects RTX develops the technological competencies that will enable RTX to offer a wider range of technological opportunities. This reduces the dependence on single technologies. Further, we believe that we are well represented with active participation in highly repetitioned branch organizations worldwide. | |
| An overview of the simulated exchange rate fluctuation impact on Operating Profit (EBIT) can be seen at page 12. | |||
| RISK RATING | High-High | High-Low | High-Low |
RTX Annual Report 2016/17
CONTENTS
| CUSTOMER DEPENDENCY | CYBER CRIME | IPR | |
|---|---|---|---|
| DESCRIPTION | One of the company's customers represents 23% of the revenue in 2016/17. This customer is a long-term partner, and RTX's products are an integrated part of their business. | To a large and increasing extent, RTX is dependent on reliable and secure IT systems. If RTX fails to protect our IT infrastructure and key systems against breakdown, hacking and virus, this may have a negative effect on RTX's knowledge base and reputation, and it may have a negative impact on the business. | Operating within a highly IPR protected industry, RTX's freedom of acting may from time to time be limited by patents from third parties. Further, RTX has applied for patents within selected key areas. |
| POSSIBLE IMPACT | It would have considerable impact on RTX's organizational setup as well as financial performance, if one our key customers suddenly face challenges in the market or decide to change supplier. | Breaches of IT security could have a severe impact on RTX's ability to maintain operations and hence on our financial performance. Further, the risk and theft of e.g. intellectual property rights or personal data, may as well result in financial losses and/or lost business opportunities or lack of ability to meet contractual obligations. | There may be a risk that RTX inadvertently infringes third party rights. Further, it cannot be guaranteed that RTX's practice for protecting the company's immaterial rights is sufficient, or that competitors will not develop similar technologies. |
| MITIGATION | Considerable resources have been invested in the technical integration, and a change of RTX would accordingly trigger substantial switching cost for the customers. | On an ongoing basis, RTX is working on reducing these risks via regular adjustments of technical security control and guidelines and policies for IT security. | The company's model for development projects includes a scanning of the project to clarify if there is a risk that RTX infringes or is limited by third party rights. It is also a formal point of our project model that the project is considered for relevant patents. |
| RTX continues to work for an expansion of the customer portfolio and attract new customers within new markets. The purpose is among others to make RTX less dependent on the financial situation in a single market segment. | In order to strengthen and secure that RTX has an adequate security level, the IT security infrastructure undergoes continued evaluation and optimization. | RTX has competencies within design, development and manufacturing of wireless solutions and combinations of the wireless technologies. The number of wireless technologies that RTX has competencies within is constantly expanded in order to avoid dependency on a single technology. | |
| RTX takes part in ETSI (European Telecommunications Standards Institute) as well as other technological forums. This ensures that RTX is updated on all issues of the standard. | |||
| RISK RATING | High-Low | Low-Low | Low-Low |
RTX Annual Report 2016/17 | 25
CONTENTS
Corporate Management
RTX Annual Report 2016/17
CONTENTS
Share & Financial Management
CAPITAL POSITION
As of 30 September 2017, RTX's share capital had a nominal value of DKK 45,714,190 comprising 9,142,838 shares at DKK 5. All shares carry the same rights and they are not divided into classes. The shareholders holding shares, which either carry at least 5% of the share capital's voting rights or whose nominal value amounts to at least 5% of the share capital are illustrated in the RTX Ownership figure below.
DEVELOPMENT IN THE SHARE CAPITAL AND TREASURY SHARES
RTX's holding of treasury shares amounted to 549,907 shares corresponding to 6.01% of issued shares at 1 October 2017. In January 2017, the Annual General Meeting authorized the Board of Directors to acquire treasury shares for up to DKK 60 million. The purchase of the share buy-back was partly an adjustment to the company's capital structure and partly to cover share-based remuneration programmes. The share buy-back was effectuated to purchase treasury shares and was undertaken according to the so-called Safe Harbour method, which protects listed companies' Board of Directors and Executive Managements against any violation of insider legislation in relation to share buybacks. During the year, RTX acquired 346,409 treasury shares. In accordance with company announcement no. 14/2017 dated 27 February 2017, the Extraordinary General Meeting on the same day decided to reduce the company's share capital by annulment of 290,000 treasury shares. On 4 April 2017, this capital reduction was effected. As per 30 September 2017 the holding amounted to 549,907 shares corresponding to a market value of DKK 99.0 million.
CAPITAL STRUCTURE & DIVIDEND
Based on the strategic outlook, RTX's Board of Directors and Executive Management are of the opinion that the current capital and share structure serves the strategic direction of the company and provides the needed flexibility to deliver on short term targets, while securing the long-term shareholder value creation. The Board of Directors wishes to return excess capital to investors to an extent that provides a balanced risk profile and secure sufficient funding to act on potential strategic investment opportunities and further accelerate the organic growth.
Based on the positive performance in 2016/17, the Board of Directors will propose a dividend of DKK 2.00 per share to be paid out in January 2018.
RTX OWNERSHIP
IN 2016/17 AND 2015/16
PRICE DEVELOPMENT AND MONTHLY TURNOVER OF RTX A/S SHARES
RTX SHARE DEVELOPMENT
FROM 1 OCTOBER 2016 TO 30 SEPTEMBER 2017
RTX Annual Report 2016/17
CONTENTS
SHARE PRICE DEVELOPMENT
The company's shares have been listed on Nasdaq Copenhagen A/S since June 2000 (ISIN DK0010267129). The closing price on 30 September 2017 was DKK 180.0 per share and the share price has thus risen by 59% compared to the closing price of DKK 113.0 per share on the same day last year. The market value of the company's shares at 30 September 2017 amounted to DKK 1,646 million compared to DKK 1,066 million at 30 September 2016. Further, the turnover of shares was increasing slightly over the period with peaks March and May.
INVESTOR RELATIONS
RTX conducts an open and active dialogue with current and potential investors, analysts and other stakeholders on the company's business development and financial position on a quarterly basis. The presentations focus around the latest financial results and key events from the previous quarter and is hosted by the market maker (ABG Sundal) in Copenhagen. It is possible during these presentations to ask questions directly to the Executive Management of RTX. Further, to ensure full transparency to Danish as well as foreign investors all company announcements are prepared and published in Danish as well as English.
Investor events 2017/18
Investor meeting, Q1
Monday, 29 January 2018
Small & Mid Cap Seminar
Wednesday 25 April 2018
Investor meeting, Q2
Friday, 4 May 2018
Investor meeting, Q3
Friday, 31 August 2018
Investor meeting, Annual Report
Friday, 30 November 2018
INSIDER RULES
Board of Directors, Executive Management and senior executives as well as their related parties are obliged to inform the company about their transactions with the Company's shares for the purpose of subsequent reporting to Nasdaq Copenhagen A/S. In its internal rules, the company has chosen to operate with an insider list comprising individuals who, through their relationship to the company, may possess internal and share price sensitive insight into the Group's situation. Individuals included on the insider list are only allowed to trade in the company's shares for a period of four weeks after publication of the company's interim and annual reports.
RTX Annual Report 2016/17
CONTENTS
Corporate Governance
The governance framework in RTX aims to anchor an active and accountable management of the Company. Through a constructive and active dialogue with all stakeholders, RTX strive to develop and maintain positive relationships. Accordingly, RTX seeks to manage and control business through a well-defined transparent organizational setup and governance model as well as through formulated policies within selected areas.
GOVERNANCE STRUCTURE
RTX's shareholders possess the authority over the company and may exercise their rights to make decisions at the Annual General Meetings. As mandatory items at the Annual General Meetings, shareholders review and approve the financial report of the year, elect the Board members as well as the Independent Auditor, based on the recommendations from the Board of Directors. Further, in case of any potential changes to the Articles of Association, the Annual General Meeting will act as the supreme authority body. RTX has a two-tier management structure in which the Board of Directors and Executive Management handle the management of the company. The Board of Directors consists of 8 persons of which 5 are elected at the Annual General Meeting, and in accordance with Danish Companies Act, 3 members are elected by the employees. The employee representatives are elected for a four-year term and hold the same rights as the members elected at the Annual General Meeting. The members elected at the Annual General Meeting are elected individually and for term of one year, with the option to be re-elected. Due to the size of the company, RTX has not established dedicated board committees, but decided to manage the Nomination, Compensation as well as the Audit Committee as an integrated part of the Board duties. Accordingly, the entire Board of Directors obtains full information and assess and monitor the processes and procedures related to these elements, while it is deemed appropriate to assure that
the competencies among the Board members are fully utilized. The Board of Directors appoints the Executive Management who is responsible for the daily management and operational matters of the company. Executive Management meets at least once a month to discuss progress on the outlined strategic direction, optimization of resource allocation, investment plans, financial performance and risks, implementation of key strategic projects, while at the same time monitoring compliance to relevant legislation and defined policies and procedures. At RTX, Corporate Governance is a part of our DNA, but at the same time a continuous process to improve the way we structure and do business. Over the years the focus towards Corporate Governance principles have increased, and accordingly we are proud to maintain a high level of compliance to the defined Danish principles.
Danish recommendation for Corporate Governance 2016/17
| Complies with recommendation | 43 |
|---|---|
| Partly complies with recommendation | 4 |
| Does not comply with recommendation | 0 |
RTX GOVERNANCE MODEL:
LEARN MORE
To see the full statutory report on Corporate Governance, c.f. Article 107b of the Danish Financial Statement Act, for the financial year 2016/17 is available at www.rtx.dk/investors/Corporate-Governance.
RTX Annual Report 2016/17
CONTENTS
Board of Directors and Executive Management
BOARD OF DIRECTORS
| | PETER THOSTRUP
Chairman | JESPER MAILIND
Deputy Chairman | CHRISTIAN ENGSTED
Board member | LARS CHRISTIAN TOFFT
Board member | JENS HANSEN
Board member |
| --- | --- | --- | --- | --- | --- |
| TITLE | Professional board member | CEO, LEO Foundation | Professional board member | Head of Sales and Commercial Management, Ericsson AB | Vice President, Strategic Technology, RTX A/S |
| EDUCATION | M.Sc. in Economics and Finance, 1987
MBA, 1986 | HGraduate Diploma in Business Administration, 1982
MBA, 1984 | B.Sc. in Industrial Eng., 1987
B.Sc. in Finance, 1992
IMD INSEAD, 2011 | M.Sc. in Business Administration and Business Law, 1990 | M.Sc. in Electrical Engineering, 1984 |
| DIRECTORSHIPS | Chairman of the Board of Directors of HEATEX AB. Vice Chairman of the Board of Directors of Linstol LLC. Member of the Board of Directors of Ressources ApS. | Member of the Board of Directors of Sonion A/S and Etac AB. | Chairman of the Board of Directors of Stibo A/S. Member of the Board of Directors of Louis Poulsen Holding AS. | Chairman of the Board of Directors of Ericsson Norway. Member of the Boards of Ericsson Denmark, Russia and Ukraine. | CEO of JH Venture ApS.
Chairman of the Board of Directors of Futarque A/S. |
| COMPETENCIES | In-depth knowledge of finance, corporate governance in listed companies, management experience from international technology and consumer firms. General and solid board experience. | General management including transition management from several industries comprising life science, technology and manufacturing. | International business development and sales combined with operating large scale operations with a focus on innovation, product development and brand building within a.o. the high-end technology industry. | Senior executive currently based at a global industry leader with in-depth knowledge of the technology and telecommunications industry primarily in the wireless domain. | In-depth knowledge of the RTX business model and technologies combined with a vast experience in product development. |
| ELECTED SINCE* | 2009 | 2009 and again in 2013 | 2017 | 2017 | 1994 and again in 2002 |
| CONSIDERED INDEPENDENT | Yes | No | Yes | Yes | No |
| NATIONALITY | Danish | Danish | Danish | Danish | Danish |
| YEAR OF BIRTH | 1960 | 1956 | 1963 | 1966 | 1958 |
| NO. OF RTX SHARES | 1,275 | 2,256 | - | - | 825,625 |
- Term of office expires January 2018
RTX Annual Report 2016/17
CONTENTS
BOARD MEMBERS ELECTED BY THE EMPLOYEES
EXECUTIVE MANAGEMENT
| | RUNE STRØM JENSEN
Board member | KURT HEICK RASMUSSEN
Board member | FLEMMING V. ANDERSEN
Board Member | PETER RØPKE | KRISTIAN FREDERIKSEN |
| --- | --- | --- | --- | --- | --- |
| TITLE | Software Team Lead, RTX A/S | Program Manager, RTX A/S | Program Manager, RTX A/S | President and CEO | CFO |
| EDUCATION | M.Sc. in Engineering, 2004 | B.Sc. in Engineering, 2000
Graduate Diploma in Business Administration, 2009 | M.Sc. in Electrical Engineering, 1999
Graduate Diploma in Business Administration, 2008 | M.Sc. Electrical, Electronics and Communications Engineering, 1992 | M.Sc. International Business 2007 |
| DIRECTORSHIPS | | | | Member of the Board of Directors of DEIF A/S and DHI. | |
| ELECTED/APPOINTED SINCE | 2011 | 2015 | 2015 | 2016 | 2017 |
| TERM OF OFFICE EXPIRES | 2019 | 2019 | 2019 | | |
| NATIONALITY | Danish | Danish | Danish | Danish | Danish |
| YEAR OF BIRTH | 1979 | 1974 | 1973 | 1966 | 1981 |
| NO. OF RTX SHARES | 1,500 | 500 | 2,000 | 8,895 | - |
| GRANTED RSU's | 1,000 | - | - | 15,608 | 5,000 |
| MATCHING SHARES | - | - | - | 13,343 | - |
RTX Annual Report 2016/17 | 31
三
CONTENTS
Management's Statement
The Board of Directors and the Executive Management have today considered and approved the annual report of RTX A/S for the financial year 1 October 2016 – 30 September 2017.
The annual report is prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies.
In our opinion, the consolidated financial statements and the parent financial statements give a true and fair view of the Group's and the Parent's financial position at 30 September 2017 and of the results of their operations and cash flows for the financial year 1 October 2016 – 30 September 2017.
In our opinion, the management commentary contains a fair review of the development of the Group's and the Parent's business and financial matters, the results for the year and of the Parent's financial position and the financial position as a whole of the entities included in the consolidated financial statements, together with a description of the most significant principal risks and elements of uncertainties facing the Group and the Parent.
We recommend the annual report to be approved at the Annual General Meeting.
Noerresundby, 28 November 2017
EXECUTIVE MANAGEMENT
PETER RØPKE
President and CEO
KRISTIAN FREDERIKSEN
CFO
BOARD OF DIRECTORS
PETER THOSTRUP
Chairman of the Board
JESPER MAILIND
Deputy Chairman
CHRISTIAN ENGSTED
LARS CHRISTIAN TOFFT
JENS HANSEN
RUNE STRØM JENSEN
Employee Representative
FLEMMING VENDBJERG ANDERSEN
Employee Representative
KURT HEICK RASMUSSEN
Employee Representative
RTX Annual Report 2016/17
CONTENTS
Independent Auditor's Report
TO THE SHAREHOLDERS OF RTX A/S
OPINION
We were first appointed auditors of RTX A/S on May 25 1993 for the financial year 1993/94. We have been re-appointed yearly on the annual general meeting for a total consecutive engagement period of 24 years up until the financial year 2016/17.
We have audited the consolidated financial statements and the parent financial statements of RTX A/S for the financial year 01.10.2016 - 30.09.2017, which comprise the income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including a summary of significant accounting policies, for the Group as well as for the Parent. The consolidated financial statements and the parent financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act.
In our opinion, the consolidated financial statements and the parent financial statements give a true and fair view of the Group's and the Parent's financial position at 30.09.2017, and of the results of their operations and cash flows for the financial year 01.10.2016 - 30.09.2017 in accordance with International Financial Reporting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act.
Our opinion is consistent with the audit book comments on the annual report 2016/17 to the Audit Committee and the Board of Directors.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor's responsibilities for the audit of the consolidated financial statements and the parent financial statements section of this auditor's report. We are independent of the Group in accordance with the International Ethics Standards Board of Accountants' Code of Ethics for Professional Accountants (IESBA Code) and the additional requirements applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We declare that, to the best of our knowledge and belief, no prohibited non-audit services within the meaning of Article 5(1) in Regulation (EU) No 537/2014 have been performed and that we remained independent of the audited entity in conducting the statutory audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements and the parent financial statements for the financial year 01.10.2016 - 30.09.2017. These matters were addressed in the context of our audit of the consolidated financial statements and the parent financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
VALUATION AND RECOGNITION OF CONTRACT DEVELOPMENT PROJECTS IN PROGRESS IN DESIGN SERVICES
Refer to Note 2 and 18 in the Group financial statements.
Work in progress at 30.09.2017 consists of several different contracts and the gross value of work in progress and the corresponding revenue recognised amounts to DKK'000 76,834 (30.09.2016: DKK'000 72,312). Net value of contract development projects in progress totals DKK '000 13,929 (30.09.2016: DKK'000 9,364)
Significant judgements is required by management in determining stage of completion and estimated profit on each project including assessment of estimated costs to complete for the project.
Contracts are signed on different terms that leads to judgement associated with determining stage of completion and estimated profit. Combined with the significance of revenue recognised and the balance to the financial statements as a whole the valuation and recognition of work in progress is considered to be a key audit matter.
HOW THE MATTER WAS ADDRESSED IN THE AUDIT
Based on our risk assessment we assessed the relevant internal processes for work in progress primarily relating to contract acceptance and terms, change orders, monitoring of project development, cost incurred and estimating costs to complete.
RTX Annual Report 2016/17
34 | RTX Annual Report 2016/17
CONTENTS
We obtained from management an overview of the Group's contracts in progress at 30.09.2017 as well as completed contracts during the year. Based on project risk and materiality we selected a sample of contracts where we obtained the underlying contracts including change orders, original budget and project reports including cost incurred and estimate of costs to complete.
For the selected contracts, we assessed and challenged Management's assumptions for determining stage of completion including estimated profit and cost to complete through interviews with project management and financial controllers as well as our understanding and assessment of the contract terms and final acceptance. Additionally, we discussed and assessed project performance, cost incurred and cost to complete. Furthermore, we performed retrospective reviews of completed contracts to assess the completeness and accuracy of Management's assumptions applied throughout the contract period.
We have no significant observations with respect to work in progress and corresponding revenue.
STATEMENT ON THE MANAGEMENT COMMENTARY
Management is responsible for the management commentary.
Our opinion on the consolidated financial statements and the parent financial statements does not cover the 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 parent financial statements, our responsibility is to read the management commentary and, in doing so, consider whether the management commentary is materially inconsistent with the consolidated financial statements and the parent financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
Moreover, it is our responsibility to consider whether the management commentary provides the information required under the Danish Financial Statements Act.
Based on the work we have performed, we conclude that the management commentary is in accordance with the consolidated financial statements and the parent financial statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of the management commentary.
MANAGEMENT'S RESPONSIBILITIES FOR THE CONSOLIDATED FINANCIAL STATEMENTS AND THE PARENT FINANCIAL STATEMENTS
Management is responsible for the preparation of consolidated financial statements and parent financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of consolidated financial statements and parent financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements and the parent financial statements, Management is responsible for assessing the Group's and the Parent's ability to continue as a going concern, for disclosing, as applicable, matters related to going concern, and for using the going concern basis of accounting in preparing the consolidated financial statements and the parent financial statements unless Management either intends to liquidate the Group or the Entity or to cease operations, or has no realistic alternative but to do so.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND THE PARENT FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements and the parent financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements and these parent financial statements.
CONTENTS
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 consolidated financial statements and the parent financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's and the Parent's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.
- Conclude on the appropriateness of Management's use of the going concern basis of accounting in preparing the consolidated financial statements and the parent financial statements, and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's and the Parent's ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements and the parent financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group and the Entity to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements and the parent financial statements, including the disclosures in the notes, and whether the consolidated financial statements and the parent financial statements 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.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements and the parent financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Copenhagen, 28 November 2017
DELOITTE
Statsautoriseret Revisionspartnerselskab
Business Registration No 33 96 35 56
Bill Haudal Pedersen
State-Authorised
Public Accountant
Peter Aslak Storgaard
State-Authorised
Public Accountant
RTX Annual Report 2016/17
CONTENTS
Financial Statements 2016/17
For the period 1 October 2016 to 30 September 2017
RTX Annual Report 2016/17
CONTENTS
Income Statement
| GROUP | PARENT | ||||
|---|---|---|---|---|---|
| Amounts in DKK '000 | Note | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Revenue | 3,4 | 433,503 | 395,555 | 433,458 | 395,428 |
| Value of work transferred to assets | 7 | 17,427 | 985 | 17,427 | 985 |
| Cost of sales | 5 | -195,046 | -166,155 | -192,484 | -164,121 |
| Other external expenses | 7,8 | -47,382 | -43,027 | -79,602 | -71,369 |
| Staff costs | 6,7 | -131,300 | -117,376 | -104,222 | -93,022 |
| Depreciation, amortization and impairment | 12,13 | -4,921 | -4,217 | -4,673 | -4,104 |
| Operating profit/loss (EBIT) | 72,281 | 65,765 | 69,904 | 63,797 | |
| Financial income | 9 | 1,492 | 3,308 | 1,492 | 8,030 |
| Financial expenses | 9 | -3,393 | -593 | -3,655 | -960 |
| Profit/loss before tax | 70,380 | 68,480 | 67,741 | 70,867 | |
| Tax on profit/loss | 10 | -12,178 | -18,980 | -11,656 | -18,434 |
| Profit/loss for the year | 58,202 | 49,500 | 56,085 | 52,433 | |
| Proposed distribution of profit/loss | |||||
| Retained earnings | 38,899 | 34,678 | |||
| Proposed dividend | 17,186 | 17,755 | |||
| 56,085 | 52,433 | ||||
| Earnings per share | |||||
| Earnings per share (DKK) | 11 | 6.7 | 5.6 | ||
| Earnings per share, diluted (DKK) | 11 | 6.5 | 5.5 | ||
| Distribution of profit/loss | |||||
| Shareholders of the parent | 58,202 | 49,500 | |||
| 58,202 | 49,500 |
Statement of Comprehensive Income
| GROUP | PARENT | |||||
|---|---|---|---|---|---|---|
| Amounts in DKK '000 | Note | 2016/17 | 2015/16 | 2016/17 | 2015/16 | |
| Profit/loss for the year | 58,202 | 49,500 | 56,085 | 52,433 | ||
| Items that can be reclassified subsequently to the income statement | ||||||
| Exchange rate adjustments of foreign subsidiaries | -1,663 | 59 | - | - | ||
| Fair value adjustment of short-term current asset investments | 134 | 422 | 134 | 422 | ||
| Other comprehensive income, net of tax | -1,529 | 481 | 134 | 422 | ||
| Comprehensive income for the year | 56,673 | 49,981 | 56,219 | 52,855 | ||
| Attributable to: | ||||||
| Shareholders of the parent | 56,673 | 49,981 | ||||
| 56,673 | 49,981 |
RTX Annual Report 2016/17 | 37
三
CONTENTS
Balance Sheet 30 September 2017
| GROUP | PARENT | ||||
|---|---|---|---|---|---|
| Amounts in DKK '000 | Note | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Own completed development projects | 12 | 671 | 1,567 | 671 | 1,567 |
| Own development projects in progress | 12 | 18,412 | 985 | 18,412 | 985 |
| Goodwill | 12 | 7,797 | 7,797 | - | - |
| Total intangible assets | 26,880 | 10,349 | 19,083 | 2,552 | |
| Plant and machinery | 13 | 7,720 | 4,736 | 7,720 | 4,736 |
| Other fixtures, tools and equipment | 13 | 3,086 | 1,843 | 2,590 | 1,153 |
| Leasehold improvements | 13 | 1,438 | 855 | 1,415 | 804 |
| Total tangible assets | 12,244 | 7,434 | 11,725 | 6,693 | |
| Investments in subsidiaries | 14 | - | - | 30,553 | 30,553 |
| Deposits | 15 | 7,696 | 7,723 | 7,125 | 7,125 |
| Deferred tax assets | 10 | 21,221 | 22,097 | 20,831 | 21,527 |
| Other long-term assets | 28,917 | 29,820 | 58,509 | 59,205 | |
| Total long-term assets | 68,041 | 47,603 | 89,317 | 68,450 | |
| Inventories | 16 | 24,147 | 20,632 | 24,147 | 20,632 |
| Trade receivables | 17 | 84,006 | 63,709 | 84,006 | 63,706 |
| Contract development projects in progress | 18 | 16,472 | 14,074 | 16,472 | 14,074 |
| Income taxes | 10 | 3,403 | - | 3,403 | - |
| Other receivables | 3,100 | 2,874 | 2,471 | 2,280 | |
| Accruals | 2,533 | 4,056 | 2,533 | 4,056 | |
| Receivables | 28 | 109,514 | 84,713 | 108,885 | 84,116 |
| Short-term current asset investments | 19 | 18,392 | 18,258 | 18,392 | 18,258 |
| Short-term current asset investments in the trading portfolio | 19 | 100,865 | 89,401 | 100,865 | 89,401 |
| Total short-term current asset investments | 19 | 119,257 | 107,659 | 119,257 | 107,659 |
| Cash at bank and in hand | 32,045 | 94,809 | 27,712 | 89,988 | |
| Total short-term assets | 284,963 | 307,813 | 280,001 | 302,395 | |
| Total assets | 353,004 | 355,416 | 369,318 | 370,845 | |
| GROUP | PARENT | ||||
| --- | --- | --- | --- | --- | --- |
| Amounts in DKK '000 | Note | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| EQUITY AND LIABILITIES | |||||
| Share capital | 20 | 45,714 | 47,164 | 45,714 | 47,164 |
| Share premium account | 270,723 | 288,598 | 270,723 | 288,598 | |
| Reserve related to development costs | - | - | 14,885 | 1,991 | |
| Retained earnings | -33,462 | -55,199 | -53,626 | -62,015 | |
| Equity | 282,975 | 280,563 | 277,696 | 275,738 | |
| Provisions | 22 | 258 | 261 | 258 | 261 |
| Long-term liabilities | 258 | 261 | 258 | 261 | |
| Prepayments received from customers | 581 | 801 | 581 | 801 | |
| Trade payables | 38,607 | 37,157 | 38,602 | 37,153 | |
| Contract development projects in progress | 18 | 2,543 | 4,710 | 2,543 | 4,710 |
| Payables to subsidiaries | 14 | - | - | 25,150 | 25,636 |
| Income taxes | 10 | 1,572 | 4,354 | 1,421 | 3,867 |
| Provisions | 22 | 1,282 | 3,476 | 1,282 | 3,476 |
| Other payables | 23 | 25,186 | 24,094 | 21,785 | 19,203 |
| Short-term liabilities | 69,771 | 74,592 | 91,364 | 94,846 | |
| Total liabilities | 70,029 | 74,853 | 91,622 | 95,107 | |
| Total equity and liabilities | 353,004 | 355,416 | 369,318 | 370,845 |
RTX Annual Report 2016/17
CONTENTS
Equity Statement
GROUP
| Amounts in DKK '000 | Share capital | Share premium | Retained earnings | Total |
|---|---|---|---|---|
| Equity at 30 September 2015 | 45,687 | 296,090 | -75,871 | 265,906 |
| Profit/loss for the year | - | - | 49,500 | 49,500 |
| Exchange rate adjustments of foreign subsidiaries | - | - | 59 | 59 |
| Fair value adjustment of short-term current asset investments | - | - | 422 | 422 |
| Other comprehensive income, net of tax | - | - | 481 | 481 |
| Comprehensive income for the year | - | - | 49,981 | 49,981 |
| Share-based remuneration | - | - | 3,757 | 3,757 |
| Exercise of warrants | 2,582 | 3,289 | - | 5,871 |
| Annulment of treasury shares | -1,105 | -10,781 | 11,876 | -10 |
| Paid dividend for 2014/15 | - | - | -17,207 | -17,207 |
| Acquisition of treasury shares | - | - | -27,735 | -27,735 |
| Other transactions | 1,477 | -7,492 | -29,309 | -35,324 |
| Equity at 30 September 2016 | 47,164 | 288,598 | -55,199 | 280,563 |
| Profit/loss for the year | - | - | 58,202 | 58,202 |
| Exchange rate adjustments of foreign subsidiaries | - | - | -1,663 | -1,663 |
| Fair value adjustment of short-term current asset investments | - | - | 134 | 134 |
| Other comprehensive income, net of tax | - | - | -1,529 | -1,529 |
| Comprehensive income for the year | - | - | 56,673 | 56,673 |
| Share-based remuneration | - | - | 3,891 | 3,891 |
| Deferred tax reg. related to share-based remuneration | - | - | 3,422 | 3,422 |
| Deferred tax reg. related to share-based remuneration last year | - | - | 5,974 | 5,974 |
| Current tax reg. related to share-based remuneration last year | - | - | 3,440 | 3,440 |
| Annulment of treasury shares | -1,450 | -17,875 | 19,313 | -12 |
| Paid dividend for 2015/16 | - | - | -17,557 | -17,557 |
| Acquisition of treasury shares | - | - | -53,419 | -53,419 |
| Other transactions | -1,450 | -17,875 | -34,936 | -54,261 |
| Equity at 30 September 2017 | 45,714 | 270,723 | -33,462 | 282,975 |
PARENT
| Amounts in DKK '000 | Share capital | Share premium | Reserve related to development costs | Retained earnings | Total |
|---|---|---|---|---|---|
| Equity at 30 September 2015 | 45,687 | 296,090 | 2,871 | -86,441 | 258,207 |
| Profit/loss for the year | - | - | - | 52,433 | 52,433 |
| Fair value adjustment of short-term current asset investments | - | - | - | 422 | 422 |
| Other comprehensive income, net of tax | - | - | - | 422 | 422 |
| Comprehensive income for the year | - | - | - | 52,855 | 52,855 |
| Share-based remuneration | - | - | - | 3,757 | 3,757 |
| Exercise of warrants | 2,582 | 3,289 | - | - | 5,871 |
| Annulment of treasury shares | -1,105 | -10,781 | - | 11,876 | -10 |
| Paid divided for 2014/15 | - | - | - | -17,207 | -17,207 |
| Acquisition of treasury shares | - | - | - | -27,735 | -27,735 |
| Development costs | - | - | -880 | 880 | - |
| Other transactions | 1,477 | -7,492 | -880 | -28,429 | -35,324 |
| Equity at 30 September 2016 | 47,164 | 288,598 | 1,991 | -62,015 | 275,738 |
| Profit/loss for the year | - | - | - | 56,085 | 56,085 |
| Fair value adjustment of short-term current asset investments | - | - | - | 134 | 134 |
| Other comprehensive income, net of tax | - | - | - | 134 | 134 |
| Comprehensive income for the year | - | - | - | 56,219 | 56,219 |
| Share-based remuneration | - | - | - | 3,891 | 3,891 |
| Deferred tax reg. related to share-based remuneration | - | - | - | 3,422 | 3,422 |
| Deferred tax reg. related to share-based remuneration last year | - | - | - | 5,974 | 5,974 |
| Current tax reg. related to share-based remuneration last year | - | - | - | 3,440 | 3,440 |
| Annulment of treasury shares | -1,450 | -17,875 | - | 19,313 | -12 |
| Paid divided for 2015/16 | - | - | - | -17,557 | -17,557 |
| Acquisition of treasury shares | - | - | - | -53,419 | -53,419 |
| Development costs | - | - | 12,894 | -12,894 | - |
| Other transactions | -1,450 | -17,875 | 12,894 | -47,830 | -54,261 |
| Equity at 30 September 2017 | 45,714 | 270,723 | 14,885 | -53,626 | 277,696 |
The share capital of DKK 45,714,190 consists of 9,142,838 shares of DKK 5. The Group holds 549,907 treasury shares at 30 September 2017 (555,341 shares at 30 September 2016). There are no shares with special rights.
RTX Annual Report 2016/17
CONTENTS
Cash Flow Statement
| Amounts in DKK '000 | Note | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
|---|---|---|---|---|---|
| Operating profit/loss (EBIT) | 72,281 | 65,765 | 69,904 | 63,797 | |
| Reversal of items with no effects on cash flow | |||||
| Depreciation, amortization and impairment | 4,921 | 4,217 | 4,673 | 4,104 | |
| Other items with no effects on cash flow | 25 | -731 | -3,617 | 955 | -3,114 |
| Change in working capital | |||||
| Change in inventories | -5,873 | 2,492 | -5,873 | 2,492 | |
| Change in receivables | -19,723 | -27,281 | -19,691 | -26,982 | |
| Change in trade payables, etc. | 155 | 13,176 | 1,158 | 7,826 | |
| Cash flow from operating activities | 51,030 | 54,752 | 51,126 | 48,123 | |
| Financial income received | 9 | 761 | 853 | 761 | 853 |
| Financial expenses paid | 9 | -434 | -421 | -803 | -867 |
| Income taxes paid | 10 | -4,700 | -1,814 | -3,973 | -1,975 |
| Cash flow from operations | 46,657 | 53,370 | 47,111 | 46,134 | |
| Investments in own development projects | -17,427 | -985 | -17,427 | -985 | |
| Acquisition of property, plant and equipment | -8,868 | -5,765 | -8,809 | -5,056 | |
| Deposits on leaseholds | -11 | -7,161 | - | -7,125 | |
| Refund of deposits on leaseholds | - | -1,531 | - | -1,531 | |
| Proceeds from the sale of building | - | 71,308 | - | 71,308 | |
| Acquisition and sale of short-term securities | -10,733 | -31,427 | -10,733 | -31,427 | |
| Proceeds from subsidiaries | - | - | - | 4,722 | |
| Cash flow from investments | -37,039 | 24,439 | -36,969 | 29,906 | |
| Amounts in DKK '000 | Note | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| --- | --- | --- | --- | --- | --- |
| Repayment of long-term liabilities | - | -10,863 | - | -10,863 | |
| Income from capital increase | - | 5,871 | - | 5,871 | |
| Acquisition of treasury shares | -53,419 | -27,735 | -53,419 | -27,735 | |
| Paid dividend | -17,557 | -17,207 | -17,557 | -17,207 | |
| Cash flow from financing activities | -70,976 | -49,934 | -70,976 | -49,934 | |
| Increase/decrease in cash and cash equivalents | -61,358 | 27,875 | -60,834 | 26,106 | |
| Exchange rate corrections on cash | -1,406 | 3,844 | -1,442 | 3,841 | |
| Cash and cash equivalents at 1 October, net | 94,809 | 63,090 | 89,988 | 60,041 | |
| Cash and cash equivalents at 30 September, net | 32,045 | 94,809 | 27,712 | 89,988 | |
| Cash and cash equivalents at 30 September, net are composed as follows: | |||||
| Cash at bank and in hand | 32,045 | 94,809 | 27,712 | 89,988 | |
| Bank debt | - | - | - | - | |
| Cash and cash equivalents at 30 September, net | 32,045 | 94,809 | 27,712 | 89,988 |
RTX Annual Report 2016/17
CONTENTS
Notes
RATIO DEFINITIONS AND CALCULATION FORMULAE
Earnings per Share (EPS) and Diluted Earnings per Share (DEPS) are calculated in accordance with IAS 33.
The other ratios have been calculated in accordance with "Recommendations & Financial Ratios 2015" issued by the Danish Society of Financial Analysts, unless otherwise indicated.
| Operating profit/loss 1) | Profit/loss before financial income and expenses |
|---|---|
| Growth in net turnover 1) 2) | (Net turnover in year n - net turnover in year n - 1) |
| * 100 / Net turnover in year n - 1 | |
| Profit margin 1) | Operating profit/loss * 100 / Net turnover |
| Return on invested capital (ROIC including goodwill) 1) | Operating profit/loss before amortization (EBITA) * 100 / Average invested capital including goodwill |
| Return on equity | Profit/loss from ordinary activities after tax and minority interests * 100 / Average equity |
| Equity ratio 2) | Equity at year-end * 100 / Total assets at year-end |
| Earnings per share (EPS) | Profit/loss from ordinary activities after tax and minority interests / Average number of shares in circulation each at a nominal value of DKK 5 |
| Diluted earnings per share (DEPS) | Profit/loss from ordinary activities after tax and minority interests / Average number of diluted shares each at a nominal value of DKK 5 |
| Cash flow from operations per share 1) 2) | Cash flow from operations / Average number of shares in circulation each at a nominal value of DKK 5 |
| Equity value per share 2) | Equity excluding minority interests at year-end / Number of shares in circulation at year-end |
| Dividends per share | Total dividends paid / Average number of issued shares each at a nominal value of DKK 5 |
1) Key ratios have been calculated on the basis of items comprising the Group's continuing operations.
2) Not defined by the Danish Association of Financial Analysts.
Computation of earnings per share and diluted earnings per share is specified in note 11.
1 CHANGES IN ACCOUNTING PRINCIPLES
RTX A/S is a Danish public limited company. The annual report of RTX for 2016/17, including both the consolidated financial statements and the Parent financial statements, is presented in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies, with reference to the disclosure requirements of listed companies from Nasdaq Copenhagen A/S and the Danish Executive Order on IFRS Adoption issued in accordance with the Danish Financial Statements Act.
The consolidated financial statements and the separate financial statements are presented in DKK, which is the presentation currency for the Group's activities and the functional currency for the Parent company.
The annual report is based on historical cost prices, except items where IFRS require measurement at fair value. The accounting policies are consistently used through the financial year and for the comparison amounts. Accounting policy is indicated in the notes where applied and the accounting policies in general are as described in note 30.
CASH FLOW STATEMENT
In the cash flow statement, exchange rate adjustments of cash and cash equivalents were previously presented as cash flows from operations, but are in the 2016/17 financial statements presented as a separate line under cash and cash equivalents. Comparative figures have been changed accordingly. The main summary page on page 11 has not been corrected in the 2012/13 - 2014/15 period.
EQUITY
The new Danish Financial Statements Act effective from 1 January 2016 requires an equity reserve corresponding to capitalized development costs. The effect at the beginning of the year is DKK 2.0 million, which is the carrying amount of development costs prior to 1 October 2016.
THE EFFECT OF NEW STANDARDS
IASB has published a number of new standards, amendments to existing standards and interpretations not yet in force, but which will be in force for the financial year 2017/18 or later. New or amended standards are expected to be implemented at the time of the validation date. The following standards are expected to have the most significant impact on the accounting policies in the future:
IASB published IFRS 9 concerning "Financial Instruments". The standard is valid for financial years commencing 1 January 2018 or later. Management does not expect the changed standard and its interpretation to have significant impact on RTX's annual report.
IASB published IFRS 15 concerning "Revenue from Contracts with Customers". The standard is valid for financial years commencing 1 January 2018 or later. Management does not expect the changed standard and its interpretation to have significant impact on RTX's annual report, but Management's analysis has not been completed at the balance sheet date.
RTX Annual Report 2016/17
42 | RTX Annual Report 2016/17
Notes
In January 2016, IASB published IFRS 16 concerning leasing. The standard is valid for financial years commencing 1 January 2019 or later, and it significantly changes the accounting principles for leasing contracts, which are currently registered as operational leasing contracts. The standard demands all leasing contracts irrespective of type - with a few exceptions - are included in leasing holder's balance sheet as an asset with a leasing obligation. At the same time leasing holder's income statement is affected, as the annual costs for leasing will consist of two elements - depreciation and interest costs - as opposed to today, where the annual costs for operational leasing are included as other external expenses. RTX has not completed analyzing the impact of the new standard, but it is expected to have some effect, as RTX in 2017 has operating leasing contracts with minimum leasing obligations at a value of approx. DKK 40.9 million corresponding to approx. 11.8% of the balance sheet total, which will potentially be included in the balance sheet in the future.
In preparing the consolidated and Parent Company's financial statements, Management makes various accounting assessments that form the basis of presentation, registration and measurement of the Parent Company and the Group's assets and liabilities. The most significant estimates and assessments are presented in note 2.
2 UNCERTAINTIES AND ESTIMATES
The Group's accounting policy described in note 30 requires that Management makes assessments and estimates and outlines the assumptions for the financial value of assets and liabilities that can not be concluded from other sources.
Several financial statement items cannot be measured with certainty but only be estimated. Such estimates comprise assessments made on the basis of the latest information available at the time of the financial reporting. The estimates and assumptions are currently evaluated. Changes to the accounting estimates are included in the financial period in which the changes take place, and in future financial periods in the event that the changes have effect both in the actual period and future financial periods.
MATERIAL ACCOUNTING ESTIMATES
In relation to the practical application of the accounting policies described, Management performs material accounting estimates and assessments which may have a significant impact on the annual report's assets and liabilities at the balance sheet date. Management bases its estimates on historical experiences as well as a number of assumptions which are assessed as being reasonable under the given circumstances. The result thereof forms the basis for the reported carrying amounts of assets and liabilities as well as the reported income and expenses which are not directly disclosed in other documentation. The actually realised results may deviate from these estimated recognized at the balance sheet date. The following accounting estimates are likely to be significant for the Group's and the Parent's financial report.
RECOVERABLE AMOUNT FOR GOODWILL
The determined impairment losses on goodwill values require an assessment of the capital values for the cash flow generating units on which the goodwill amounts are divided. An assessment of the capital values requires an estimation of the future cash flows in each cash flow generating unit as well as an estimation of a fair discount factor. The accounting value of goodwill as at 30 September 2017 is DKK 7.8 million. For a further description of the use of discount factors please refer to note 12.
DEFERRED TAX ASSETS
RTX recognises deferred tax assets if it is probable that sufficient taxable income exits in future to use the temporary differences between the tax values and the carrying amounts of assets and liabilities and unused tax loss carry-forwards. Management has made a three-year estimate over the future taxable income in the Group. This estimate is included in the assessment as to whether the deferred tax assets may be recognised at the balance sheet date. Management has considered it right to include tax assets equivalent to DKK 21.2 million as per 30 September 2017 (DKK 22.1 million as per 30 September 2016). There are no tax assets, that are not included in the balance sheet.
DEVELOPMENT PROJECTS
Development costs are capitalised when the technical and commercial project plans have been established. In those cases where RTX has signed a contract, where RTX (fully or partially) will finance the development cost in order to win the following supply agreement on non-exclusive terms, the development project is own-financed. Development costs are generally recognized as expenses in the income statement when incurred. In cases where it is likely that the development projects will be marketed in the form of new products in potential markets, and development projects are clearly defined, the development costs are recognized as an asset. The product's lifetime is estimated when activating the development costs Management assesses that the amortization period is usually three years. In the balance sheet the development projects amount to DKK 19.1 million as at 30 September 2017 (DKK 2.6 million as at 30 September 2016).
ESTIMATE OF RECOGNITION OF CONTRACTS
Customer contracts with customer financed development giving the customer full or partial exclusivity for the product are classified as development project with customer financing recognised currently in line with the finalisation for the project.
The stage of completion is basis for the current recognition of revenue in the Company's use of the production method for contracts, and it is determined by the relation between the Company's used ressources compared to latest total estimate of resources. The stages of completion are estimated on an ongoing basis by the responsible employees, and Management carefully follows the development and make adjustments of the estimates if necessary.
The revenue from ongoing work at others' expense amount to DKK 84.9 million in 2016/17 (DKK 91.2 million in 2015/16).
CONTENTS
Notes
3 SEGMENT INFORMATION
The management reporting to the Board of Directors of the parent company in RTX is based on the continued operations in the Group's segments Design Services and Business Communications. Design Services is an R&D design partner in wireless solutions and supplier of test systems. Business Communications is a supplier of advanced IP telephone solutions to the Enterprise and SME markets.
For a presentation of the events within the segments in the financial year and the development compared to 2015/16, please refer to the Management's report.
Segment information relating to business segments in the Group:
2016/17
| Amounts in DKK '000 | Business | |||
|---|---|---|---|---|
| Design Services | Communi-cations | Non-allocated | Group | |
| Revenue to external customers | 143,962 | 289,541 | - | 433,503 |
| Segment revenue | 143,962 | 289,541 | - | 433,503 |
| EBIT | 17,987 | 57,485 | -3,191 | 72,281 |
| EBITDA | 18,869 | 60,248 | -1,915 | 77,202 |
| Segment assets | 61,089 | 101,064 | 190,851 | 353,004 |
| Investment in fixed assets | 575 | 5,171 | 3,122 | 8,868 |
2015/16
| Amounts in DKK '000 | Business | |||
|---|---|---|---|---|
| Design Services | Communi-cations | Non-allocated | Group | |
| Revenue to external customers | 126,279 | 268,352 | 924 | 395,555 |
| Segment revenue | 126,279 | 268,352 | 924 | 395,555 |
| EBIT | 13,535 | 54,844 | -2,614 | 65,765 |
| EBITDA | 14,204 | 57,602 | -1,824 | 69,982 |
| Segment assets | 38,633 | 76,150 | 240,633 | 355,416 |
| Investment in fixed assets | 2,087 | 2,490 | 1,188 | 5,765 |
Investment in fixed assets include additions of intangible and tangible assets including additions from company mergers.
MANAGEMENT COMMENTS
In the financial year 2016/17, one customer represents revenue higher than 10% of the total revenue (two customers in 2015/16). This customer represents 23.3% (2015/16: 22.1%).
Revenue non-allocated is generated from rent of offices to leaseholders outside the Group. Expenses include non-allocated types of costs.
Transactions between segments are conducted at an arm's lenght basis.
RTX Annual Report 2016/17 | 43
三
CONTENTS
Notes
3 SEGMENT INFORMATION (CONTINUED)
The Group's revenue from external customers is specified below.
| Amounts in DKK '000 | GROUP | PARENT | ||
|---|---|---|---|---|
| 2016/17 | 2015/16 | 2016/17 | 2015/16 | |
| Denmark | 7,225 | 4,458 | 7,225 | 4,458 |
| France | 102,909 | 91,991 | 102,909 | 91,991 |
| Germany | 68,574 | 59,617 | 68,574 | 59,617 |
| Netherlands | 53,312 | 79,864 | 53,312 | 79,864 |
| Other Europe | 71,913 | 48,293 | 71,913 | 48,293 |
| Asia and Australia | 64,228 | 37,736 | 64,183 | 37,609 |
| USA | 58,091 | 66,823 | 58,091 | 66,823 |
| Other North and South America | 1,952 | 1,270 | 1,952 | 1,270 |
| Africa | 5,299 | 5,503 | 5,299 | 5,503 |
| Total | 433,503 | 395,555 | 433,458 | 395,428 |
MANAGEMENT COMMENTS
Revenue distributed to geographic area according to the customer's geographical location. As posted in the balance sheet, all significant assets in the Group is owned by the parent company in Denmark. All significant assets are thus located in Denmark.
The Group's revenue from external customers is divided into these categories:
| Amounts in DKK '000 | GROUP | PARENT | ||
|---|---|---|---|---|
| 2016/17 | 2015/16 | 2016/17 | 2015/16 | |
| Enterprise Communication | 289,541 | 268,352 | 289,496 | 268,225 |
| Pro-Audio | 124,271 | 105,179 | 124,271 | 105,179 |
| Healthcare | 19,691 | 21,100 | 19,691 | 21,100 |
| Headset | - | - | - | - |
| Other (leasehold revenue from external tenants | - | 924 | - | 924 |
| Total | 433,503 | 395,555 | 433,458 | 395.428 |
4 REVENUE
ACCOUNTING POLICIES
Net revenue from merchandise and finished products are recognised in the income statement when delivery and transfer of risk to the buyer has taken place.
Net revenue from services and ongoing development projects for others' expenses is recognized as the agreed services are delivered so that revenue corresponds to the fair value of the work performed during the year. Costs incurred and expensed when incurred.
Revenue is measured at fair value of the consideration received or receivable. The difference between fair value and nominal value of the consideration is recognized as financial income in the income statement by using the effective interest method.
Royalty is recognized as revenue on a straight-line basis in the period concerned. If the income depends on future events including the customers' sale of the products containing the technology developed by RTX, the royalty is recognized in the income statement after this event.
Revenue is calculated net of VAT, duties, etc. collected on behalf of a third party.
If the outcome of a development project in progress can not be predicted with reliability, revenue is recognized equivalent to the incurred project costs in the period to the extent that it is probable that these costs will be recovered.
Costs of sales work and of securing contracts as well as financing costs are recognized in the income statement when incurred.
If an arrangement contains multiple deliverables, these are divided into separate deliveries addressed individually to the extent that they have been separately quoted, that every delivery has been separately negotiated and the customer has had the opportunity to accept or reject a single supply and the fair value of each deliverable can be measured reliably.
RTX Annual Report 2016/17
CONTENTS
Notes
4 REVENUE (CONTINUED)
Revenue by type of income:
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Value of ongoing projects | 84,923 | 91,217 | 84,923 | 91,217 |
| Royalty | 3,886 | 6,731 | 3,886 | 6,731 |
| Sale of products, etc. | 342,968 | 295,179 | 342,923 | 295,052 |
| Rent and other services | 1,726 | 2,428 | 1,726 | 2,428 |
| Total | 433,503 | 395,555 | 433,458 | 395,428 |
MANAGEMENT COMMENTS
The Group is currently not using financial instruments for securing revenue.
5 COST OF SALES
ACCOUNTING POLICIES
Cost of sales etc. comprises raw materials, consumables, cost of sales, freight, customs and write-downs on inventories incurred to achieve revenue in the financial year.
Consumed resources related to development projects financed by a third party are expensed when consumed.
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Cost of sales | 194,097 | 164,573 | 192,910 | 163,518 |
| Write-down on inventories | -2,358 | 1,254 | -2,358 | 1,254 |
| Other unit costs | 3,307 | 328 | 1,932 | -651 |
| Total | 195,046 | 166,155 | 192,484 | 164,121 |
6 STAFF COST AND REMUNERATION
ACCOUNTING POLICIES
Staff costs comprise wages and salaries, share-based remuneration as well as social security costs, pension contributions etc. for the company's management and staff.
Staff costs also include wages and salaries etc. relating to development projects at own expense which do not meet the criteria for recognition in the balance sheet.
Share-based incentive schemes in the form of share options, warrants and restricted share rights, where the employees may only choose to buy and subscribe for shares in the Parent, at an agreed rate (equity-settled share-based payment scheme), the fair value of the rights is measured at the time of issue and are recognized in the income statement under staff costs for the period during which the employees achieve final right to the share options and warrants, respectively. The setoff entry is recognized directly in equity.
On initial recognition of the share options, restricted share rights and warrants an estimate is made regarding the number of rights for which the employees are expected to acquire final right. Subsequently, adjustments are made for changes to this estimate whereby final recognition of the cost corresponds to the actual number of acquired rights to share options and warrants.
The fair value of the share options, warrants and restricted share rights is computed by using the Black & Scholes model for valuation of European call options with the parameters shown below.
RTX Annual Report 2016/17 | 45
CONTENTS
Notes
6 STAFF COST AND REMUNERATION (CONTINUED)
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Remuneration of the Board of Directors | 1,725 | 1,775 | 1,725 | 1,775 |
| Wages and salaries | 117,574 | 104,961 | 91,714 | 81,644 |
| Defined contribution pension plans | 7,190 | 5,800 | 6,331 | 5,080 |
| Other social security costs, etc. | 1,473 | 1,252 | 1,114 | 935 |
| Public grants related to staff costs | -607 | -237 | -607 | -237 |
| Other staff costs | 54 | 68 | 54 | 68 |
| Staff costs before share-based remuneration | 127,409 | 113,619 | 100,331 | 89,265 |
| Share-based remuneration | 3,891 | 3,757 | 3,891 | 3,757 |
| Total | 131,300 | 117,376 | 104,222 | 93,022 |
| Number of full-time employees at 30 September | 235 | 223 | 150 | 143 |
| Average number of full-time employees | 227 | 193 | 144 | 124 |
Remuneration to the Board of Directors, the Executive Management and other key management employees:
GROUP
| Amounts in DKK '000 | 2016/17 | 2015/16 | ||||
|---|---|---|---|---|---|---|
| Board of Directors | Executive Management | Other management employees | Board of Directors | Executive Management | Other management employees | |
| Wages, salaries and fees | 1,725 | 3,859 | 3,093 | 1,775 | 2,030 | 2,877 |
| Bonus | - | 40 | 663 | - | 498 | 1,314 |
| Pensions | - | 69 | 110 | - | 63 | 102 |
| Severance pay | - | - | - | - | 4,906 | - |
| Total | 1,725 | 3,968 | 3,866 | 1,775 | 7,497 | 4,293 |
| Share-based payment | - | 555 | 1,328 | - | 550 | 1,149 |
| Total remuneration | 1,725 | 4,523 | 5,194 | 1,775 | 8,047 | 5,442 |
PARENT
| Amounts in DKK '000 | 2016/17 | 2015/16 | ||||
|---|---|---|---|---|---|---|
| Board of Directors | Executive Management | Other management employees | Board of Directors | Executive Management | Other management employees | |
| Wages, salaries and fees | 1,725 | 3,859 | 1,379 | 1,775 | 2,030 | 1,269 |
| Bonus | - | 40 | 561 | - | 498 | 510 |
| Pensions | - | 69 | 110 | - | 63 | 102 |
| Severance pay | - | - | - | - | 4,906 | - |
| Total | 1,725 | 3,968 | 2,050 | 1,775 | 7,497 | 1,881 |
| Share-based payment | - | 555 | 519 | - | 550 | 456 |
| Total remuneration | 1,725 | 4,523 | 2,569 | 1,775 | 8,047 | 2,337 |
RTX Annual Report 2016/17
CONTENTS
Notes
6 STAFF COST AND REMUNERATION (CONTINUED)
MANAGEMENT COMMENTS
On dismissal by the company the Executive Board shall be entitled to salary in the period of notice and severance pay totalling up to 18 months' salary, equivalent to DKK 3.7 million (DKK 3.4 million in 2015/16).
The remuneration for each member of the Board of Directors is as follows:
| Amounts in DKK '000 | 2016/17 | 2015/16 |
|---|---|---|
| Peter Thostrup, Chairman after the General Meeting, January 2014 | 500 | 500 |
| Jesper Mailind, Deputy Chairman after the General Meeting, January 2014 | 300 | 300 |
| Jens Hansen | 150 | 150 |
| Thomas Sieber | 75 | 225 |
| Katrin Calderon | 50 | 150 |
| Kurt Heick Rasmussen | 150 | 150 |
| Flemming Vendbjerg Andersen | 150 | 150 |
| Rune Strøm Jensen | 150 | 150 |
| Christian Engsted | 100 | - |
| Lars Christian Tofft | 100 | - |
| Total | 1,725 | 1,775 |
ACCOUNTING POLICIES
THE GROUP HAS ENTERED INTO DEFINED CONTRIBUTION PENSION
The Group finances defined contribution plans through regular payments to independent pension and insurance companies, which are responsible for the pension obligations. After payment of pension contributions to defined contribution plans, the Group has no further pension obligations to current or former employees with regard to future developments in interest rates, inflation, mortality, disability, etc. in respect of the amount eventually to be paid to the employee.
MANAGEMENT COMMENTS
RSU PROGRAM:
The Board of Directors at RTX has in 2014/15, 2015/16 and 2016/17 granted restricted share units (RSU) to management as well as key employees as part of the Company's long-term incentive program. The granted restricted share units are earned and matured over a three years period, and cannot be vested before the annual general meetings in January 2018, January 2019 and January 2020 respectively.
The grant is conditioned by defined targets for shareprice and EBITDA in achieved in the three years mature period. The RSU only vest if the employee is still employed in RTX A/S at the time for utilization. If the restrictions for the RSU's are fulfilled they are finally transferred at a price of DKK 0.
The grant is in accordance with the company's guidelines for remuneration. Besides the Executive Management and three managers, 27 key employees have been granted conditioned warrants in 2016/17 under the same terms as the terms for the Executive Management. The total number of RSU's is covered by the treasury shares of RTX A/S.
Market value of RSUs, conditions: RSUs granted in:
| 2014/15 | 2015/16 | 2016/17 | |
|---|---|---|---|
| Vesting period | 2014/15-2016/17 | 2015/16-2017/18 | 2016/17-2018/19 |
| Price per share | 64.5 | 96.85 | 117.4 |
| Volatility | 0.45 | 0.36 | 0.39 |
| Expected dividend | 1.80% | 2.20% | 1.70% |
| Risk-free interest rate | 0.25% | 0.20% | 0.00% |
| The expected maturity | 4 months | 16 months | 28 months |
| Market value (Black-Scholes) per RSU is calculated to | 40.84 | 71.21 | 64.07 |
RTX Annual Report 2016/17 | 47
三
CONTENTS
Notes
6 STAFF COST AND REMUNERATION (CONTINUED)
Number of RSUs in RTX A/S:
| Executive management | Other management | Other employees | Total | |
|---|---|---|---|---|
| Allocations in 2013/14 | 27,850 | 46,755 | - | 74,605 |
| Allocations in 2014/15 | 25,708 | 43,190 | 56,500 | 125,398 |
| Allocations in 2015/16 | 15,243 | 26,741 | 49,500 | 91,484 |
| Allocations in 2016/17 | 20,608 | 29,652 | 42,500 | 92,760 |
| Allocated as per 30 September 2017 | 89,409 | 146,338 | 148,500 | 384,247 |
| Regulations - ceased employments 2015/16 | -32,436 | - | - | -32,436 |
| Exploitation of RSU's 2016/17 | -15,088 | -46,755 | - | -61,843 |
| Regulations - ceased employments 2016/17 | -3,662 | -28,272 | -22,000 | -53,934 |
| Outstanding as per 30 September 2017 | 38,223 | 71,311 | 126,500 | 236,034 |
MANAGEMENT COMMENTS
MATCHING SHARES PROGRAM:
In relation to the employment of Peter Røpke as CEO, the Board of Directors of RTX has decided to him the opportunity to take part in a Matching Shares Programme. The Board of Directors offers this Matching Shares Programme in order to ensure focus on long-term value generation.
Under the Matching Shares Programme Peter Røpke is offered to acquire shares (investment shares) in RTX A/S at his own cost in the first open trading window after joining the company. After 3 years of ownership and maturity period the participants have the right to receive 1.5 shares in RTX A/S per invested share.
The fair value of the Matching Share Programme is at the grant date measured at DKK 1.5 million based on the share value at that date. The programme is considered an equity-settled share-based transaction.
Peter Røpke has acquired 8,895 shares in RTX and thereby fulfilled the conditions to a grant of 13,343 shares in RTX.
Number of Matching shares in RTX A/S:
Allocated to Peter Røpke 2015/16 13,343
Outstanding as per 30 September 2017 13,343
| Group | Parent | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Below amounts have been expensed concerning RSU programs | 3,443 | 3,663 | 3,443 | 3,663 |
| Matching shares program | 448 | 94 | 448 | 94 |
| Share-based remuneration posted as staff costs | 3,891 | 3,757 | 3,891 | 3,757 |
RTX Annual Report 2016/17
CONTENTS
Notes
7 DEVELOPMENT COSTS
| Amounts in DKK '000 | GROUP | PARENT | ||
|---|---|---|---|---|
| 2016/17 | 2015/16 | 2016/17 | 2015/16 | |
| Own development cost incurred before capitalisation | 36,877 | 25,859 | 36,877 | 25,859 |
| Value of work transferred to assets (capitalised) | -17,427 | -985 | -17,427 | -985 |
| Total amortization and impairment losses on development projects | 896 | 2,114 | 896 | 2,114 |
| Development cost recognised in the profit and loss account | 20,346 | 26,988 | 20,346 | 26,988 |
| Development costs are recognised as follows: | ||||
| Other external expenses | 4,729 | 1,584 | 4,729 | 1,584 |
| Staff costs | 32,148 | 24,275 | 32,148 | 24,275 |
| Value of work transferred to assets | -17,427 | -985 | -17,427 | -985 |
| Amortization and impairment losses on development projects | 896 | 2,114 | 896 | 2,114 |
| Total | 20,346 | 26,988 | 20,346 | 26,988 |
8 FEES TO AUDITORS ELECTED AT THE ANNUAL GENERAL MEETING
| Amounts in DKK '000 | GROUP | PARENT | ||
|---|---|---|---|---|
| 2016/17 | 2015/16 | 2016/17 | 2015/16 | |
| Total fees to Deloitte can be specified as follows: | ||||
| Statutory audit | 500 | 498 | 409 | 402 |
| Tax advisory services | 196 | 92 | 196 | 92 |
| Other services | 79 | 178 | 79 | 178 |
| Total | 775 | 768 | 684 | 672 |
9 FINANCIAL INCOME AND EXPENSES
ACCOUNTING POLICIES
These items comprise interest income and interest expenses, the interest portion of finance lease payments, foreign exchange gains and losses on liabilities and transactions in foreign currency, amortisation premium/allowance on financial assets and liabilities etc as well as tax surcharge and repayment under the Danish Tax Prepayment Scheme.
Interest income and interest expenses are accrued based on the principal sum and the effective interest rate. Dividends from investments in other securities and equity investments are recognised when the right to the dividends has been finally obtained.
| Amounts in DKK '000 | GROUP | PARENT | ||
|---|---|---|---|---|
| 2016/17 | 2015/16 | 2016/17 | 2015/16 | |
| Financial income | - | - | - | - |
| Interest income from financial assets available for sale | - | 853 | - | 853 |
| Interest income from banks etc. | - | - | - | - |
| Other interest income | - | - | - | - |
| Total interest income | - | 853 | - | 853 |
| Exchange rate gain (net) | - | - | - | - |
| Dividends from subsidiaries | - | - | - | 4,722 |
| Other financial income | 761 | - | 761 | - |
| Fair value of investments in trading portfolio | 731 | 2,455 | 731 | 2,455 |
| Total financial income | 1,492 | 3,308 | 1,492 | 8,030 |
| Financial expenses | ||||
| Interest costs from credit banks | 7 | 45 | 6 | 44 |
| Interest costs to subsidiaries | - | - | 390 | 461 |
| Total interest costs | 7 | 45 | 396 | 505 |
| Exchange rate loss (net) | 2,959 | 172 | 2,852 | 93 |
| Exchange rate loss on bonds in the trading portfolio | - | - | - | - |
| Other financial costs | 427 | 376 | 407 | 362 |
| Total financial expenses | 3,393 | 593 | 3,655 | 960 |
RTX Annual Report 2016/17 | 49
三
CONTENTS
Notes
10 INCOME TAXES
ACCOUNTING POLICIES
Tax for the year consisting of current tax for the year and changes in deferred tax, is recognized in the income statement by the portion attributable to the profit/loss for the year and classified directly as equity by the portion attributable to entries directly on equity.
The current tax payable or receivable is recognized in the balance sheet, stated as tax calculated on this year's taxable income, adjusted for prepaid tax. When calculating the current tax for the year, the tax rates in effect at the balance sheet date are used.
Deferred tax is recognized applying the liability method on all temporary differences between the carrying amount and taxbased value of assets and liabilities.
Deferred tax is calculated based on the planned use of each asset or the planned winding-up of each liability, respectively. Deferred tax is measured by using the tax rates and tax rules of the respective countries which are expected to apply when deferred tax is expected to be released as current tax.
Deferred tax assets, including the tax base of tax loss carry-forwards, are recognized in the balance sheet at their estimated realizable value, either as a set-off against deferred tax liabilities or as net tax assets for set-off in future positive taxable income. At each balance sheet date, it is reassessed whether sufficient taxable income is likely to occur in future for the deferred tax asset to be used.
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Tax on profit/loss for the year | ||||
| Current tax on profit/loss for the year | -1,943 | -4,295 | -1,565 | -3,837 |
| Change in deferred tax | -12,153 | -14,923 | -12,009 | -14,837 |
| Adjustment concerning previous years | ||||
| Current tax | - | 118 | - | 118 |
| Deferred tax | 1,918 | 120 | 1,918 | 122 |
| Total | -12,178 | -18,980 | -11,656 | -18,434 |
| Adjustment of the effective tax percentage | ||||
| Result before tax | 70,380 | 68,480 | 67,741 | 70,867 |
| Calculated tax at a tax percentage of 22.0% | -15,484 | -15,066 | -14,903 | -15,591 |
| Effect of change in tax percentage in Denmark | - | 262 | - | 262 |
| Effect of different tax percentages for foreign companies | 59 | -199 | - | - |
| Tax value of not tax-deductable costs/taxable income | 1,329 | -4,215 | 1,329 | -3,345 |
| Adjustment compared to previous years | 1,918 | 238 | 1,918 | 240 |
| -12,178 | -18,980 | -11,656 | -18,434 | |
| Effective tax percentage (%) | 17.3% | 27.7% | 17,2% | 26.0% |
RTX Annual Report 2016/17
CONTENTS
Notes
10 INCOME TAXES (CONTINUED)
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Tax paid/received during the year | 4,700 | 1,814 | 3,973 | 1,975 |
| Income taxes, net | ||||
| Income taxes on 1 October, net | -4,354 | -1,989 | -3,867 | -2,123 |
| Current tax on profit/loss for the year | -1,943 | -4,295 | -1,565 | -3,837 |
| Tax paid during the year | ||||
| Current year | 144 | -161 | 144 | - |
| Previous years, net | 4,556 | 1,975 | 3,829 | 1,975 |
| Adjustment of current tax on equity concerning previous years, net | 3,441 | 118 | 3,441 | 118 |
| Current tax of changes in equity | - | - | ||
| Exchange rate adjustments | -13 | -2 | - | - |
| Income taxes at 30 September, net | 1,831 | -4,354 | 1,982 | -3,867 |
| Which can be specified as follows: | ||||
| Income tax receivable | 3,403 | - | 3,403 | - |
| Income tax payable | -1,572 | -4,354 | -1,421 | -3,867 |
| Total | 1,831 | -4,354 | 1,982 | -3,867 |
| GROUP | PARENT | |||
| --- | --- | --- | --- | --- |
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Deferred Tax | ||||
| Deferred tax, net at 1 October | 22,097 | 36,900 | 21,527 | 36,245 |
| Adjustment of deferred tax concerning previous years | 1,918 | 119 | 1,918 | 119 |
| Foreign exchange adjustment | -37 | 1 | - | - |
| Change in deferred tax on profit/loss for the year, asset | -12,153 | -14,923 | -12,009 | -14,837 |
| Change in deferred tax on equity for the year | 3,422 | - | 3,422 | - |
| Change in deferred tax on equity last year | 5,974 | - | 5,974 | - |
| Deferred tax, net at 30 September | 21,221 | 22,097 | 20,832 | 21,527 |
| Specification of deferred tax: | ||||
| Intangible assets | 4,872 | 12,577 | 4,872 | 12,577 |
| Property, plant and equipment | 2,922 | 3,867 | 2,922 | 3,867 |
| Inventories | 834 | 980 | 834 | 980 |
| Receivables | 369 | - | 369 | - |
| Long-term liabilities | 418 | 1,050 | 29 | 480 |
| Tax loss carryforwards | 5,461 | 3,623 | 5,461 | 3,623 |
| Share-based remuneration | 6,345 | - | 6,345 | - |
| Total | 21,221 | 22,097 | 20,832 | 21,527 |
| Which can be specified as follows: | ||||
| Deferred tax assets | 21,221 | 22,097 | 20,832 | 21,527 |
| Total | 21,221 | 22,097 | 20,832 | 21,527 |
MANAGEMENT COMMENTS
Changes in previous years relates to share-based remuneration. A tax asset of DKK 15.8 million regarding incentive programs has been recognized this year as Management has assessed that the expected costs of utilization of shares are deductible. The accumulated asset consists of a tax receivable of DKK 3.4 million and a deferred tax asset of DKK 12.4 million. The P/L effect is DKK 2.9 million and the remaining amount of DKK 12.9 million is recognized in equity.
RTX Annual Report 2016/17 | 51
三
CONTENTS
Notes
11 EARNINGS PER SHARE
The calculation of earnings per share is based on the following:
| Amounts in DKK '000 | 2016/17 | 2015/16 |
|---|---|---|
| 1,000 shares | ||
| Average number of shares | 9,290 | 9,363 |
| Average number of treasury shares | -555 | -554 |
| Average number of shares in circulation | 8,735 | 8,809 |
| Average diluted effect on outstanding warrants | 181 | 205 |
| Average diluted number of shares | 8,916 | 9,014 |
| Profit/loss for the year in DKK '000 | 58,202 | 49,500 |
| Earnings per share (DKK) | 6.7 | 5.6 |
| Diluted earnings per share (DKK) | 6.5 | 5.5 |
12 INTANGIBLE ASSETS
| Amounts in DKK '000 | GROUP | PARENT | |||
|---|---|---|---|---|---|
| Own development projects | Acquired licence rights | Goodwill | Own development projects | Acquired licence rights | |
| Cost at 1 October 2015 | 11,575 | 3,598 | 8,269 | 11,575 | 3,598 |
| Internal additions | 985 | - | - | 985 | - |
| Cost at 30 September 2016 | 12,560 | 3,598 | 8,269 | 12,560 | 3,598 |
| Amortisation and impairment at 1 October 2015 | -7,894 | -3,598 | -472 | -7,894 | -3,598 |
| Amortisation for the year | -2,114 | - | - | -2,114 | - |
| Amortisation and impairment at 30 September 2016 | -10,008 | -3,598 | -472 | -10,008 | -3,598 |
| Carrying amount at 30 September 2016 | 2,552 | - | 7,797 | 2,552 | - |
| Cost at 1 October 2016 | 12,560 | 3,598 | 8,269 | 12,560 | 3,598 |
| Disposals | -8,890 | - | - | -8,890 | - |
| Internal additions | 17,427 | - | - | 17,427 | - |
| Cost at 30 September 2017 | 21,097 | 3,598 | 8,269 | 21,097 | 3,598 |
| Amortisation and impairment at 1 October 2016 | -10,008 | -3,598 | -472 | -10,008 | -3,598 |
| Amortisation for the year | -896 | - | - | -896 | - |
| Disposals | 8,890 | - | - | 8,890 | - |
| Amortisation and impairment at 30 September 2017 | -2,014 | -3,598 | -472 | -2,014 | -3,598 |
| Carrying amount at 30 September 2017 | 19,083 | - | 7,797 | 19,083 | - |
RTX Annual Report 2016/17
CONTENTS
Notes
12 INTANGIBLE ASSETS (CONTINUED)
ACCOUNTING POLICIES
GOODWILL
Goodwill arisen in relation to business combinations is distributed at the time of acquisition to the cash flow units which are expected to obtain financial advantages from the acquisition.
The carrying amount of goodwill is distributed as follows on the respective cash flow generating units:
| Amounts in DKK '000 | 2016/17 | 2015/16 |
|---|---|---|
| RTX Hong Kong, Ltd. | 7,797 | 7,797 |
Goodwill is as a minimum tested once a year for impairment and more frequently if there are indications of impairment.
The recoverable amount for the individual cash flow generating units to which the goodwill amounts have been distributed are stated based on computation of the units' present value of expected cash flows.
UNCERTAINTIES AND ESTIMATES
For calculating the value of the cash generating units, Management's latest budgets and strategy plans for the coming years are used and a terminal value is added. Management estimates that changes that are likely to happen to the assumptions will not cause the financial value of goodwill to exceed the recoverable amount. Major uncertainties in this connection are connected with the determination of the discount factors and growth rates as well as expected changes in sales prices and production costs in the budget periods.
The determined discount factors reflect market evaluations of the timing value of money, reflected in risk free interest and the specific risks connected to the individual cash flow generating unit. The pre tax discount factors used in the calculation is 13% (in 2015/16 13%). The used discount factor has not affected the conclusion of the depreciation test.
The determined growth rates are based on internal strategy plans and forecast for the coming 3 years. Growth in the terminal period is included at 0.0%. Estimated changes in selling prices and production costs are based on historical experiences as well as expectations for future changes in the market. The prognoses are based on a specific business evaluation of the expected sales prices and production costs. The changes in sales prices and costs are substantially equivalent to the ones used in the calculations 2015/16.
MANAGEMENT COMMENTS
OTHER INTANGIBLE ASSETS
Apart from goodwill, all intangible assets are regarded as having determinable useful lives over which the assets are amortised.
The assessment of the recoverable amount of own development projects in progress is based on net present value calculations for development projects. Net present value calculations are based on the expected cash flow from the assets in management approved budgets over expected lifetime of the projects, and a discount rate before tax at 13% (in 2015/16 13%).
Management estimates that the changes in the conditions are likely to be made and will not make the accounting value of the goodwill or development projects exceed the recoverable amount.
13 TANGIBLE ASSETS
ACCOUNTING POLICIES
Plant and equipment are measured at cost less accumulated depreciation and impairment losses. The basis of depreciation is cost less estimated residual value after the end of useful life.
Straight-line depreciation is made on the basis of the following estimated useful lives of the assets:
Plant and machinery 4 to 10 years
Other fixtures and fittings, tools and equipment, including IT equipment 3 to 7 years
Leasehold improvements Lease period
Depreciation methods, useful lives and residual amounts are reassessed annually. Plant and equipment are written down to the lower of recoverable amount and carrying amount.
RTX Annual Report 2016/17 | 53
三
CONTENTS
Notes
13 TANGIBLE ASSETS
GROUP
| Amounts in DKK '000 | Plant and machinery | Other fixtures, tools and equipment | Leasehold improvements |
|---|---|---|---|
| Cost at 1 October 2015 | 13,141 | 12,334 | 926 |
| Exchange rate adjustments | - | 4 | 2 |
| Additions | 3,837 | 1,034 | 894 |
| Disposals | - | -651 | - |
| Cost at 30 September 2016 | 16,978 | 12,721 | 1,822 |
| Depreciation and impairment at 1 October 2015 | -11,133 | -10,607 | -873 |
| Exchange rate adjustments | - | -4 | -2 |
| Depreciation for the year | -1,109 | -793 | -92 |
| Reversed depreciation on assets transferred to sale | - | 526 | - |
| Depreciation and impairment at 30 September 2016 | -12,242 | -10,878 | -967 |
| Carrying amount at 30 September 2016 | 4,736 | 1,843 | 855 |
GROUP
| Amounts in DKK '000 | Plant and machinery | Other fixtures, tools and equipment | Leasehold improvements |
|---|---|---|---|
| Cost at 1 October 2016 | 16,978 | 12,721 | 1,822 |
| Exchange rate adjustments | - | -3 | - |
| Additions | 5,328 | 2,842 | 698 |
| Cost at 30 September 2017 | 22,306 | 15,560 | 2,520 |
| Depreciation and impairment at 1 October 2016 | -12,242 | -10,878 | -967 |
| Exchange rate adjustments | - | -28 | -2 |
| Depreciation for the year | -2,344 | -1,568 | -113 |
| Depreciation and impairment at 30 September 2017 | -14,586 | -12,474 | -1,082 |
| Carrying amount at 30 September 2017 | 7,720 | 3,086 | 1,438 |
RTX Annual Report 2016/17
CONTENTS
Notes
13 TANGIBLE ASSETS (CONTINUED)
PARENT
| Amounts in DKK '000 | Plant and machinery | Other fixtures, tools and equipment | Leasehold improvements |
|---|---|---|---|
| Cost at 1 October 2015 | 12,600 | 11,113 | - |
| Additions | 3,836 | 350 | 870 |
| Disposals | - | -274 | - |
| Cost at 30 September 2016 | 16,436 | 11,189 | 870 |
| Depreciation and impairment at 1 October 2015 | -10,592 | -9,479 | - |
| Depreciation for the year | -1,108 | -706 | -66 |
| Reversed depreciation on assets transferred to sale | - | 149 | - |
| Depreciation and impairment at 30 September 2016 | -11,700 | -10,036 | -66 |
| Carrying amount at 30 September 2016 | 4,736 | 1,153 | 804 |
PARENT
| Amounts in DKK '000 | Plant and machinery | Other fixtures, tools and equipment | Leasehold improvements |
|---|---|---|---|
| Cost at 1 October 2016 | 16,436 | 11,189 | 870 |
| Additions | 5,328 | 2,783 | 698 |
| Disposals | - | - | - |
| Cost at 30 September 2017 | 21,764 | 13,972 | 1,568 |
| Depreciation and impairment at 1 October 2016 | -11,700 | -10,036 | -66 |
| Depreciation for the year | -2,344 | -1,346 | -87 |
| Depreciation and impairment at 30 September 2017 | -14,044 | -11,382 | -153 |
| Carrying amount at 30 September 2017 | 7,720 | 2,590 | 1,415 |
RTX Annual Report 2016/17 | 55
三
CONTENTS
Notes
14 INVESTMENTS IN SUBSIDIARIES
ACCOUNTING POLICIES
Investments in subsidiaries are measured at cost or a lower recoverable amount.
| Amounts in DKK '000 | 2016/17 | 2015/16 |
|---|---|---|
| Cost at 1 October 2016 | 30,553 | 30,553 |
| Cost at 30 September 2017 | 30,553 | 30,553 |
| Value adjustment at 1 October 2016 | - | - |
| Value adjustment at 30 September 2017 | - | - |
| Carrying amount at 30 September 2017 | 30,553 | 30,553 |
MANAGEMENT COMMENTS
Investments in subsidiaries comprise the following enterprises at 30 September 2017:
| Name and registered office | Nominal share capital | Ownership | Receivable from Parent DKK '000 | Equity DKK '000 | Profit for the year DKK '000 |
|---|---|---|---|---|---|
| RTX America, Inc., USA | T. USD 500 | 100% | 5,677 | 4,914 | 392 |
| RTX Hong Kong Ltd., Hong Kong | T.HKD 1,110 | 100% | 19,473 | 23,125 | 1,725 |
| Total | 25,150 | 28,039 | 2,117 | ||
| Which can be specified as follows: | |||||
| Payables to subsidiaries | 25,150 | ||||
| Total | 25,150 |
Subsidiaries' addresses and time for establishment:
RTX America Inc., Sacramento, California, USA, established in March 2004.
RTX Hong Kong Ltd., Hong Kong, purchased in January 2006.
15 OTHER LONG-TERM ASSETS
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Deposits | ||||
| Cost at 1 October 2016 | 7,723 | 560 | 7,125 | - |
| Exchange rate adjustments | -39 | 1 | - | - |
| Additions for the year | 12 | 7,162 | - | 7,125 |
| Cost at 30 September 2017 | 7,696 | 7,723 | 7,125 | 7,125 |
| Carrying amount at 30 September 2017 | 7,696 | 7,723 | 7,125 | 7,125 |
ACCOUNTING POLICIES
Deposits are measured at cost. Deposits are not depreciated.
16 INVENTORIES
ACCOUNTING POLICIES
Inventories are measured at the lower of cost using the FIFO method and net realisable value.
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Raw materials and consumables | 4,122 | 3,586 | 4,122 | 3,586 |
| Finished goods | 20,025 | 17,046 | 20,025 | 17,046 |
| Total inventories | 24,147 | 20,632 | 24,147 | 20,632 |
| Write-down of inventories | -2,358 | 1,254 | -2,358 | 1,254 |
RTX Annual Report 2016/17
CONTENTS
Notes
17 TRADE RECEIVABLES
ACCOUNTING POLICIES
Receivables comprise trade receivables, receivables from project contracts as well as other receivables. Receivables are financial assets with fixed or determinable payments which are not listed at an active market and which are not derivatives.
On initial recognition, receivables are measured at fair value and subsequently at amortised cost less write-down for bad debts. Writedown is made on an individual basis by using a writedown account.
Trade receivables are written down to net realisable value equal to the sum of future net payments expected to be generated by receivables. Claims in the Group have been written down to net realisable value based on an individual assessment.
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Receivables, gross | 85,681 | 63,709 | 85,681 | 63,706 |
| Write-down for expected losses 30 September | -1,675 | - | -1,675 | - |
| Carrying amount at 30 September | 84,006 | 63,709 | 84,006 | 63,706 |
| Write-down for the year | 1,675 | -211 | 1,675 | -211 |
| Trade receivables that have been written down are included in the income statement as other external expenses | ||||
| Provisions account at 1 October | - | 212 | - | 212 |
| Losses recorded for the year | - | -1 | - | -1 |
| Reversed provisions | - | -312 | - | -312 |
| Bad debt provisions for the year | 1,675 | 101 | 1,675 | 101 |
| Provisions account at 30 September | 1,675 | - | 1,675 | - |
UNCERTAINTIES AND ESTIMATES
The Group's credit risks related to trade receivables are assessed on an ongoing basis.
It is RTX's experience that sometimes the credit risk is relatively high, as a substantial part of the outstanding amounts often can be related to a relatively small number of partners and customers.
MANAGEMENT COMMENTS
For sales of products on credit RTX makes credit evaluations, credit insurance and bank guarantees to secure the debts. On the date of the balance sheet, a significant part of the company's outstanding debts from product sales is secured through credit insurance.
Bad debth provision for the year relates to receivables due between 90 and 120 days only.
Please refer to note 28 for a list of the outstanding debts sorted by maturity.
RTX Annual Report 2016/17 | 57
三
CONTENTS
Notes
18 CONTRACT DEVELOPMENT PROJECTS IN PROGRESS
ACCOUNTING POLICIES
Contract development projects are measured at selling price of the work performed at the balance sheet date (percentage-of-completion) less on account invoicing and write-down for bad debt.
The selling price is measured based on the stage of completion on the balance sheet date and the total estimated income from each development project. Usually, the stage of completion is estimated as the ratio between the realized and the total budgeted consumption of time and material.
If the outcome of a development project cannot be estimated reliably, the development project is measured at costs incurred to the extent these can be recovered.
When total project costs are likely to exceed total project income for a development project, the expected loss is immediately recognized as costs.
The individual development project in progress is recognised in the balance sheet under receivables or liabilities, depending on whether net value is a receivable or a liability.
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Market value of development projects in progress | 76,834 | 72,312 | 76,834 | 72,312 |
| Invoiced on account | -62,905 | -62,948 | -62,905 | -62,948 |
| Contract development projects in progress, net | 13,929 | 9,364 | 13,929 | 9,364 |
| which are recognised in the balance sheet as follows: | ||||
| Receivables | 16,472 | 14,074 | 16,472 | 14,074 |
| Short-term liabilities | -2,543 | -4,710 | -2,543 | -4,710 |
| Contract development projects in progress, net | 13,929 | 9,364 | 13,929 | 9,364 |
| Total value of orders, etc. | 99,186 | 98,925 | 99,186 | 98,925 |
| Market value hereof of performed work recognised as income | -76,834 | -72,312 | -76,834 | -72,312 |
| Market value of non-performed work | 22,352 | 26,613 | 22,352 | 26,613 |
| Market value of non-performed work at the balance sheet date in % of total volume of orders, etc. | 23% | 27% | 23% | 27% |
RTX Annual Report 2016/17
CONTENTS
Notes
19 SHORT-TERM CURRENT ASSET INVESTMENTS
ACCOUNTING POLICIES
According to the regulations in IAS 39 the Group's portfolio of current asset investments recognized under short-term assets and divided in trading portfolio and financial current assets available for sale.
CURRENT ASSETS AVAILABLE FOR SALE
Short-term current asset investments consist of listed Danish mortgage bonds and bonds issued by the Ship Credit Fund. Unrealised losses and gains are recognised in other comprehensive income. Upon sale of the assets, accumulated gains and losses recognised in equity are transferred to the income statement.
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Cost at 1 October | 17,886 | 34,385 | 17,886 | 34,385 |
| Value adjustment of disposals | - | -147 | - | -147 |
| Additions for the year | - | - | - | - |
| Disposals for the year | - | -16,352 | - | -16,352 |
| Cost at 30 September | 17,886 | 17,886 | 17,886 | 17,886 |
| Value adjustment at 1 October | 372 | -197 | 372 | -197 |
| Value adjustments for the year | 134 | 569 | 134 | 569 |
| Value adjustment at 30 September | 506 | 372 | 506 | 372 |
| Carrying amount at 30 September | 18,392 | 18,258 | 18,392 | 18,258 |
| GROUP | PARENT | |||
| --- | --- | --- | --- | --- |
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Short-term current asset investments consist of listed Danish bonds issued by the Ship Credit Fund with an: | ||||
| Average maturity of (years) | 2.3 | 3.3 | 2.3 | 3.3 |
| Average effective rate of interest of | 0.0% | 1.6% | 0.0% | 1.6% |
| Bonds terminate within the following periods from the balance sheet date: | ||||
| Less than one year | - | - | - | - |
| Between one and two years | - | - | - | - |
| Between two and three years | 18,392 | - | 18,392 | - |
| Between three and four years | - | 18,258 | - | 18,258 |
| Between four and five years | - | - | - | - |
| After five years | - | - | - | - |
| Total | 18,392 | 18,258 | 18,392 | 18,258 |
RTX Annual Report 2016/17 | 59
三
CONTENTS
Notes
19 SHORT-TERM CURRENT ASSET INVESTMENTS (CONTINUED)
ACCOUNTING POLICIES
SHORT-TERM CURRENT ASSETS IN THE TRADING PORTFOLIO
The Group's available funds are primarily invested in convertible bonds with a solid credit rating, either in DKK or as an investment in a monetary market. In the financial year, RTX has made an agreement with Danske Capital concerning an active investment management in relation to part of the Group's portfolio of securities. The portfolio is measured at fair value and unrealised losses and gains are currently recognised in the income statement.
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Cost at 1 October | 88,553 | 40,627 | 88,553 | 40,627 |
| Value adjustment of disposals | 90 | 610 | 90 | 610 |
| Additions for the year | 20,700 | 173,444 | 20,700 | 173,444 |
| Disposals for the year | -9,967 | -126,128 | -9,967 | -126,128 |
| Cost at 30 September | 99,376 | 88,553 | 99,376 | 88,553 |
| Value adjustment at 1 October | 848 | -997 | 848 | -997 |
| Value adjustments for the year | 641 | 1,845 | 641 | 1,845 |
| Value adjustment at 30 September | 1,489 | 848 | 1,489 | 848 |
| Carrying amount at 30 September | 100,865 | 89,401 | 100,865 | 89,401 |
| GROUP | PARENT | |||
| --- | --- | --- | --- | --- |
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Short-term current asset investments as a trading portfolio with an: | ||||
| Average maturity of (years) | 2.4 | 2.4 | 2.4 | 2.4 |
| Average effective rate of interest of | 1.0% | 0.9% | 1.0% | 0.9% |
| Bonds terminating within the following periods from the balance sheet date: | ||||
| Less than one year | - | - | - | - |
| Between one and two years | - | - | - | - |
| Between two and three years | 100,865 | 89,401 | 100,865 | 89,401 |
| Between three and four years | - | - | - | - |
| Between four and five years | - | - | - | - |
| After five years | - | - | - | - |
| Total | 100,865 | 89,401 | 100,865 | 89,401 |
RTX Annual Report 2016/17
CONTENTS
Notes
20 SHARE CAPITAL
The share capital of DKK 45,714,190 (2015/16: DKK 47,164,190) consists of 9,142,838 shares of DKK 5 (2015/16: 9,432,838).
The Group holds 549,907 treasury shares at 30 September 2017 (555,341 shares at 30 September 2016).
There are no shares with special rights.
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Development in share capital: | ||||
| Share capital at 1 October | 47,164 | 45,687 | ||
| Exercise of warrants | - | 2,582 | ||
| Annulment of treasury shares | -1,450 | -1,105 | ||
| Share capital at 30 September | 45,714 | 47,164 | ||
| Number of shares at DKK 5 at 30 September | 9,142,838 | 9,432,838 |
MANAGEMENT COMMENTS
As stated in announcements 14/2017 it was decided at the Extraordinary General Meeting on 27 February 2017 to reduce the Company's share capital by annulment of 290,000 treasury shares. On 4 April 2017 the capital reduction was executed.
In connection with the RSU programmes in previous financial years, RTX A/S has increased its capital three times in 2015/16. On 1 February 2016 by 361,000 shares cf. announcement no 8/2016, on 11 May 2016 by 96,000 shares cf. announcement no 32/2016 and on 26 August 2016 by 59,500 shares cf. announcement no 58/2016.
21 TREASURY SHARES
ACCOUNTING POLICIES
Acquisition and selling prices of treasury shares as well as dividends on these are recognized directly as equity under retained earnings.
| Amounts in DKK '000 | Parent | |||
|---|---|---|---|---|
| Nominal value | Number of shares at DKK 5 | % of share capital | Acquisition price | |
| Shareholding at 1 October | 2,777 | 555,341 | 6.1% | 43,781 |
| Purchase for the year | 1,732 | 346,409 | 3.8% | 53,420 |
| Disposal treasury shares | -309 | -61,843 | -0.7% | -4,724 |
| Annulment of treasury shares | -1,450 | -290,000 | -3.2% | -19,314 |
| Shareholding at 30 September | 2,750 | 549,907 | 6.0% | 73,163 |
| Market value of shareholding at 30 September, DKK '000 | 98,983 | |||
| Amounts in DKK '000 | Parent | |||
| --- | --- | --- | --- | --- |
| Nominal value | Number of shares at DKK 5 | % of share capital | Acquisition price | |
| Shareholding at 1 October | 2,372 | 474,375 | 5.0% | 27,922 |
| Purchase for the year | 1,510 | 301,966 | 3.2% | 27,735 |
| Annulment of treasury shares | -1,105 | -221,000 | -2.3% | -11,876 |
| Shareholding at 30 September | 2,777 | 555,341 | 5.9% | 43,781 |
| Market value of shareholding at 30 September, DKK '000 | 62,753 |
RTX Annual Report 2016/17 | 61
三
CONTENTS
Notes
22 PROVISIONS
ACCOUNTING POLICIES
Provisions are recognised when the Group has a legal or constructive obligation as a result of events in this or previous financial years, and repayment of the liability is likely to result in a drain on the Group's financial resources.
Provisions are measured as the best estimate of costs expected for the obligation to be settled on the balance sheet date. Provisions that are estimated to mature after more than one year after the balance sheet date are measured at their present value.
Guarantee commitments comprise commitments to remedy defects and deficiencies on goods sold within the guarantee period. The liabilities are based on historical experiences.
When total costs are likely to exceed total income from a contract development project, a provision is recognised equal to the total loss estimated to result from the relevant project.
Provisions on dismissed employees are recognised at the date of the dismissal to the employee and are measured as the amount of the salary paid to the employees without any demand for services in return.
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Provision for guarantee obligations | ||||
| Provisions at 1 October | 1,307 | 2,973 | 1,307 | 2,973 |
| Provisions made during the year | 583 | 626 | 583 | 626 |
| Employed during the year | -600 | -2,292 | -600 | -2,292 |
| Provisions at 30 September | 1,290 | 1,307 | 1,290 | 1,307 |
| Provisions for other liabilities | ||||
| Provisions at 1 October | 2,429 | 1,333 | 2,429 | 1,333 |
| Provisions made during the year | 100 | 4,045 | 100 | 4,045 |
| Employed during the year | -2,279 | -2,949 | -2,279 | -2,949 |
| Provisions at 30 September | 250 | 2,429 | 250 | 2,429 |
| Total provisions at 30 September | 1,540 | 3,736 | 1,540 | 3,736 |
| Provisions are recognised in the balance sheet as follows: | ||||
| Short-term liabilities (less than 1 year) | 1,282 | 3,476 | 1,282 | 3,476 |
| Long-term liabilities (between 1 and 2 years) | 258 | 261 | 258 | 261 |
| Total | 1,540 | 3,737 | 1,540 | 3,737 |
MANAGEMENT COMMENTS
The guarantee obligations concern products with up to two years' warranty.
UNCERTAINTIES AND ESTIMATES
The obligations are prepared based on previous years' experience.
The expenses are expected to be paid in the period 1 October 2017 - 30 September 2019.
Other obligations are primarily related to obligations for employees dismissed and disemployed, and are expected to be paid within the coming twelve months.
RTX Annual Report 2016/17
CONTENTS
Notes
23 OTHER PAYABLES
| Amounts in DKK '000 | GROUP | PARENT | ||
|---|---|---|---|---|
| 2016/17 | 2015/16 | 2016/17 | 2015/16 | |
| Wages and salaries, personal income taxes, social security costs, holiday pay, etc. | 8,584 | 10,801 | 6,538 | 7,177 |
| Holiday allowance, etc. | 11,981 | 10,648 | 11,784 | 10,573 |
| Other costs payable | 4,621 | 2,645 | 3,463 | 1,453 |
| Total | 25,186 | 24,094 | 21,785 | 19,203 |
UNCERTAINTIES AND ESTIMATES
Carrying amount of due items concerning wages and salaries, personal income taxes, social security costs, holiday pay etc. and other expenses due etc. equals the fair market value of the liabilities. The holiday pay obligations represent the Group's obligations to pay salary during holiday periods which the employees have earned the right to hold in subsequent financial years at the balance sheet date.
24 CONTINGENT LIABILITIES, COLLATERAL AND CONTRACTUAL OBLIGATIONS
ACCOUNTING POLICIES
CONTINGENT LIABILITIES
The Group has not incurred any guarantee commitments and has not undertaken any guarantee and supply obligations other than the obligations and guarantees relating to the services and products developed by the Group.
In 2016/17 RTX A/S has not provided payment guarantees etc. which was also the case in 2015/16.
CONTRACTUAL OBLIGATIONS
As part of the Group's business the usual customer and supplier agreements etc. have been concluded, letters of intent have been issued to cooperative partners, and moreover, agreements have been entered into on normal business terms.
OPERATING LEASE COMMITMENTS
Lease payments on operating leases are recognised on a straight-line basis in the income statement over the term of the lease.
For the years 2017-2025 operating leases have been concluded for lease of premises, cars and equipment, including IT equipment, etc.
The Group's rental obligations of the leasehold amount to DKK 40.9 million (DKK 47.5 million at 30 September 2016).
Rent and lease payments (minimum lease payments) relating to operating lease contracts, including rental obligations, fall due as follows:
| Amounts in DKK '000 | GROUP | PARENT | ||
|---|---|---|---|---|
| 2016/17 | 2015/16 | 2016/17 | 2015/16 | |
| Less than one year | 6,602 | 6,952 | 4,990 | 4,998 |
| Between one five years | 19,522 | 20,765 | 19,420 | 19,124 |
| More than five years | 15,438 | 20,188 | 15,438 | 20,188 |
| Total | 41,562 | 47,905 | 39,848 | 44,310 |
The Group's costs of rent/leasing amounted to DKK 5.7 million in 2016/17 and DKK 5.7 million in 2015/16. The amounts are recognised in the income statement. The increase in rent for the premises in Noerresundby take effect on January 2021 and will follow the development in the net price index.
RTX Annual Report 2016/17 | 63
CONTENTS
Notes
25 OTHER ITEMS WITH NO EFFECTS ON CASH FLOW
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Change in write-down to net realisable value of short-term assets | -2,425 | -6,805 | -739 | -6,302 |
| Change in provisions | -2,197 | -569 | -2,197 | -569 |
| Share-based remuneration | 3,891 | 3,757 | 3,891 | 3,757 |
| Total | -731 | -3,617 | 955 | -3,114 |
26 RELATED PARTIES
TRANSACTION BETWEEN RELATED PARTIES
Related parties with significant interest in RTX include the Company's Supervisory Board, Executive Board and managers as well as these persons' related nearest family members. In addition, related parties comprise Group enterprises. An overview of Group enterprises is disclosed in note 14.
BOARD OF DIRECTORS AND EXECUTIVE BOARD
Management's remuneration and share-based remuneration are stated in note 6. Four members of the Board of Directors (the employee representatives and Jens Hansen) are employed in RTX, and besides their board remuneration they receive a market salary equivalent to their position. In 2016/17 the amount totalled DKK 3.0 million (2015/16: DKK 2.9 million).
SUBSIDIARIES
In 2016/17 trade etc. between RTX A/S and related parties amounted to DKK 43.6 million (2015/16: DKK 38.4 million). There have been no transactions between the subsidiaries in 2016/17. Transactions with subsidiaries have concerned the following:
| Amounts in DKK '000 | 2016/17 | 2015/16 |
|---|---|---|
| Purchase of services | 43,575 | 38,399 |
| Received dividends | - | 4,721 |
| Interest costs for subsidiaries | 390 | 461 |
| Payables to subsidiaries | 25,150 | 25,636 |
| Receivables written down | - | - |
Transactions with subsidiaries are eliminated in the consolidated financial statements in accordance with the applied accounting policies.
In addition, intra-Group balances with subsidiaries comprise money lending as well as ordinary business balances regarding purchase and sale of goods and services.
During the year no transactions were performed between RTX and the Board of Directors, Executive Board, management, large shareholders or other related parties, apart from payment of normal management remuneration ref. note 6.
27 DIVIDEND
Dividends of DKK 17.2 million will be recommended (2015/16 DKK 17.8 million) equivalent to a dividend per share of DKK 2.00. (2015/16 DKK 2.00 per share). In January 2017 RTX paid dividends of DKK 17.6 million (January 2016 DKK 17.2 million), equivalent to a dividend per share of DKK 2.00 (2015/16 DKK 2.00 per share).
Dividends for the shareholders in RTX have no tax related consequences to RTX A/S.
RTX Annual Report 2016/17
CONTENTS
Notes
28 FINANCIAL RISKS AND FINANCIAL INSTRUMENTS
Categories of financial instruments
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Trade receivables | 84,006 | 63,709 | 84,006 | 63,706 |
| Other receivables | 9,036 | 6,930 | 8,407 | 6,336 |
| Cash at bank and in hand | 32,045 | 94,809 | 27,712 | 89,988 |
| Total loans and receivables | 125,087 | 165,448 | 120,125 | 160,030 |
| Short-term current asset investments | 18,392 | 18,258 | 18,392 | 18,258 |
| Financial assets available for sale | 18,392 | 18,258 | 18,392 | 18,258 |
| Short-term current asset investments | 100,865 | 89,401 | 100,865 | 89,401 |
| Financial assets available in the trading portfolio | 100,865 | 89,401 | 100,865 | 89,401 |
| Payables to subsidiaries | - | - | 25,150 | 25,636 |
| Mortgage debt related to assets held for sale | - | - | - | - |
| Employee bonds | - | - | - | - |
| Trade payables | 38,607 | 37,157 | 38,602 | 37,153 |
| Other payables | 25,186 | 24,094 | 21,785 | 19,203 |
| Financial liabilities measured at amortised cost | 63,793 | 61,251 | 85,537 | 81,992 |
The Group's financial management is directed towards management and reduction of financial risks which are a direct consequence of the Group's operations, investments and financing. The objective is that the Group's financial management will contribute to increasing the predictability of the financial performance, including reducing and delaying the impact of foreign exchange rate fluctuations on the income statement.
LIQUIDITY RISKS
The Group ensures sufficient cash resources by a combination of cash control, investment in short-term current asset investments and by the establishment of credit facilities.
Bank deposits, bank debt and most of the Group's mortgage debt carry a floating rate.
In order to reduce the risk on deposits, RTX only places deposits in banks with a high credit worthiness and investments in short-term bonds.
The maturity dates on the financial liabilities are specified in the notes for each of the liability categories. The Group's liquidity reserve is composed of cash holdings, short-term liabilities and unused credit facilities.
The liquidity reserve in the Group is composed as follows:
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Short-term current asset investments available for sale | 18,392 | 18,258 | 18,392 | 18,258 |
| Short-term current asset investments in the trading portfolio | 100,865 | 89,401 | 100,865 | 89,401 |
| Cash at bank and in hand | 32,045 | 94,809 | 27,712 | 89,988 |
| Unused credit facilities | - | - | - | - |
| Total | 151,302 | 202,468 | 146,969 | 197,647 |
RTX Annual Report 2016/17 | 65
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Notes
28 FINANCIAL RISKS AND FINANCIAL INSTRUMENTS (CONTINUED)
Specification of the maturity dates of the financial assets and liabilities divided in time intervals. The specified amounts represent the amounts due including interests etc.
| Amounts in DKK '000 | Within one year | Between one and five years | After five years | Total |
|---|---|---|---|---|
| Trade payables | 38,607 | - | - | 38,607 |
| Other payables | 25,186 | - | - | 25,186 |
| Total | 63,793 | - | - | 63,793 |
| Amounts in DKK '000 | Within one year | Between one and five years | After five years | Total |
| --- | --- | --- | --- | --- |
| Trade payables | 38,602 | - | - | 38,602 |
| Other payables | 21,785 | - | - | 21,785 |
| Total | 60,387 | - | - | 60,387 |
MANAGEMENT COMMENTS
CREDIT RISKS
The Group's primary credit risk is related to trade receivables. The Group's credit risks are assessed on an ongoing basis concerning the trade receivables. By experience, a relatively large credit risk may occur from time to time as a large part of receivables often relates to a relatively small number of counterparties and customers.
The level of risk related to the trade receivables is highly correlated with the financial status of the debtor. RTX uses credit ratings, credit insurance and bank guarantees to secure the outstanding amounts.
Trade receivables can be specified as follows:
| GROUP | PARENT | |||
|---|---|---|---|---|
| Amounts in DKK '000 | 2016/17 | 2015/16 | 2016/17 | 2015/16 |
| Amounts not due | 69,858 | 59,239 | 69,858 | 59,236 |
| Amounts due with up to 30 days | 9,895 | 3,901 | 9,895 | 3,901 |
| Due between 30 and 60 days | 1,866 | 569 | 1,866 | 569 |
| Due between 60 and 90 days | 106 | - | 106 | - |
| Due between 90 and 120 days | 2,281 | - | 2,281 | - |
| Due with more than 120 days | - | - | - | - |
| Total | 84,006 | 63,709 | 84,006 | 63,706 |
Approx. 35% (2015/16: 70%) of the company's receivables are secured by credit insurance on the balance sheet date. Provisions for loss on trade receivables are specified in note 17. A significant part of receivables more than 30 days overdue, which have not been written down, have been paid after the balance sheet date.
RTX Annual Report 2016/17
CONTENTS
Notes
28 FINANCIAL RISKS AND FINANCIAL INSTRUMENTS (CONTINUED)
MANAGEMENT COMMENTS
CURRENCY RISKS
The Group is exposed to exchange rate fluctuations as the individual Group enterprises make investment, conduct purchase and sales transactions and have receivables and payables in foreign currencies. The Group's revenue to customers outside Denmark has been more than 90% of total revenue over the past few years. Moreover, the majority of the Group's purchase of products etc. from sub-suppliers is paid in foreign currencies.
The Group can enter commercial hedging transactions, to the extent considered appropriate, to lower any currency exposure. The Group has not entered into commercial hedging transaction in 2016/17 or 2015/16.
Specification of the Group's risks in foreign currencies:
| GROUP | SENSITIVITY | ||||||
|---|---|---|---|---|---|---|---|
| Cash and current asset investments | Receivables | Liabilities | Net position | Expected change in currency exchange rate | Hypothetical effect on result of the year | Hypothetical effect on equity capital | |
| EUR | 675 | 5,552 | 243 | 5,984 | 1% | 60 | 60 |
| USD | 26,544 | 78,698 | 37,318 | 67,924 | 10% | 6,792 | 6,792 |
| Other | 833 | 3 | 665 | 171 | 5% | 9 | 9 |
| Total 30 September 2017 | 28,052 | 84,253 | 38,226 | 74,079 | |||
| EUR | 68,740 | 1,374 | 228 | 69,886 | 1% | 699 | 699 |
| USD | 23,350 | 8,184 | 31,456 | 78 | 10% | 8 | 8 |
| Other | 1,051 | 4 | 967 | 88 | 5% | 4 | 4 |
| Total 30 September 2016 | 93,141 | 9,562 | 32,651 | 70,052 |
UNCERTAINTIES AND ESTIMATES
The Group's major currency exposure relates to sale in EUR and USD.
Due to Denmark's fixed-rate policy for EUR, currency risks in relation to EUR are not hedged. During 2016/17, RTX has not hedged USD. A decline in the exchange rates will have an equivalent negative influence on the annual result and equity.
MANAGEMENT COMMENTS
INTEREST RATE RISKS
The Group is primarily exposed to interest rate risks through interest-bearing assets and liabilities. The overall objective of controlling the interest rate risk is to recude the negative impacts of interest rate fluctuations on earnings and the balance sheet.
Excess liquidity is primarily invested in short-term liquid bonds in DKK with a strong credit evaluation or in marketable deposits. The interest rate risks related to the investments are controlled via duration in relation to a pre-defined benchmark.
RTX Annual Report 2016/17
CONTENTS
Notes
28 FINANCIAL RISKS AND FINANCIAL INSTRUMENTS (CONTINUED)
Specification of maturity dates of the Group's financial assets and liabilities:
| Amounts in DKK '000 | Within one year | Between two and five years | After five years | Hereof carrying a fixed rate | Average maturity years |
|---|---|---|---|---|---|
| Short-term current assets investments available for sale | - | 18,392 | - | - | 2.3 |
| Short-term current assets investments in the trading portfolio | - | 100,865 | - | 62,902 | 2.4 |
| Bank deposits | 32,045 | - | - | - | 1.0 |
| Total at 30 September 2017 | 32,045 | 119,257 | - | 62,902 | |
| Short-term current assets investments available for sale | - | 18,258 | - | - | 3.3 |
| Short-term current assets investments in the trading portfolio | - | 89,401 | - | 63,475 | 2.4 |
| Bank deposits | 94,809 | - | - | - | 1.0 |
| Total at 30 September 2016 | 94,809 | 107,659 | - | 63,475 |
The Group's bank deposits are deposited in accounts on demand terms.
UNCERTAINTIES AND ESTIMATES
Fluctuations in the interest rate level affect the Group's bond portfolios, bank deposits, bank debt as well as mortgage debt. An increase in the interest rate level of 1% point per annum compared to the interest rate level at the balance sheet date would have had a negative effect in the range of DKK 2.3-2.6 million (30.09.2016: DKK 1.2-1.5 million) before tax on the Group's income statement and equity.
A decline in the interest rate level would have had a positive effect on the income statement and equity.
MANAGEMENT COMMENTS
CAPITAL STRUCTURE
The Group's capital structure is characterised by a considerable equity share. The business conditions for RTX A/S are characterised by a high degree of uncertainty, which requires a substantial equity, among other things to implement large and long-term development projects at the Group's own expense, for instance in connection with the set-up of technology platforms or by cultivating new business areas and markets.
The Group's equity share capital amounted to 80.2% at the end of the financial year 2016/17 compared to 78.9% in 2015/16.
MANAGEMENT COMMENTS
FINANCIAL GEARING
The Company's Board of Directors reviews the Group's capital structure in connection with the announcements of interim reports and annual reports. As part of these reviews, the Board of Directors reviews the Group's cost of capital and the risks related to the various types of capital.
RTX Annual Report 2016/17
CONTENTS
Notes
28 FINANCIAL RISKS AND FINANCIAL INSTRUMENTS (CONTINUED)
The financial gearing in the Group, calculated as the ratio of interest bearing net debt to equity, can be calculated at the balance sheet date as follows:
| Amounts in DKK '000 | 2016/17 | 2015/16 |
|---|---|---|
| Income tax payable | 1,572 | 4,354 |
| Income tax receivable | -3,403 | - |
| Short-term current asset investments available for sale | -18,392 | -18,258 |
| Short-term current asset investments in trading portfolio | -100,865 | -89,401 |
| Cash at bank and in hand | -32,045 | -94,809 |
| Interest-bearing net debt | -153,133 | -198,114 |
| Equity | 282,975 | 280,563 |
| Financial gearing | -0.54 | -0.71 |
BREACH OF LOAN AGREEMENT TERMS
The Group has not neglected or been in breach of loan agreements in the financial year or the comparative year.
MARKET VALUE HIERARCHY FOR FINANCIAL INSTRUMENTS
The below indicates the classification of the financial instruments divided in accordance with the market value hierarchy:
- Listed prices in an active market for the same type of instrument (level 1)
- Listed prices in an active market for similar assets or liabilities or other valuation methods, where all significant input is based on observable market data (level 2)
- Valuation methods, where any significant input is not based on observable market data (level 3)
| Amounts in DKK '000 | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Bonds listed on the stock exchange, available for sale | 18,392 | - | - | 18,392 |
| Bonds listed on the stock exchange, in the trading portfolio | 100,865 | - | - | 100,865 |
| Financial assets at fair value at 30 September 2017 | 119,257 | - | - | 119,257 |
| Bonds listed on the stock exchange, available for sale | 18,258 | - | - | 18,258 |
| Bonds listed on the stock exchange, in the trading portfolio | 89,401 | - | - | 89,401 |
| Financial assets at fair value at 30 September 2016 | 107,659 | - | - | 107,659 |
29 EVENTS AFTER THE BALANCE SHEET DATE
No material events with effect for the annual report have occurred after the balance sheet date.
RTX Annual Report 2016/17 | 69
图
CONTENTS
Notes
30 ACCOUNTING PRINCIPLES APPLIED
ACCOUNTING POLICIES
In addition to the description in Note 1, the accounting principles are as described below.
GROUP FINANCIAL STATEMENT
The consolidated financial statement include the parent company RTX A/S and the companies (subsidiaries) controlled by the parent. The parent company is considered to have control when it directly or indirectly holds more than 50% of the voting rights or otherwise controls or actually exercises control.
RTX A/S and the subsidiaries are in one called the group.
CONSOLIDATION PRINCIPLES
The consolidated financial statements are prepared on the basis of financial statements of RTX A/S and its subsidiaries. The accounts used for consolidation are prepared in accordance with the Group's accounting principles.
On consolidation, income and expenses, shareholdings, balances, dividends and gains and losses on transactions between the consolidated companies in the Group are eliminated.
In the consolidated accounts items of subsidiaries are included 100%. The proportionate share of minority interests of the result is included as part of the consolidated profit and as a separate component of the Group's equity.
ACQUISITIONS
Newly acquired subsidiaries are consolidated from the date of acquisition. The acquisition date is the date on which control of the subsidiary is effectively transferred. Sold or liquidated subsidiaries are recognized in income until the sale or liquidation. The date of sale is the date on which control of the subsidiary is effectively transferred to a third party. For acquisitions of subsidiaries in which the Group gains control of the acquired company, the acquisition method is applied, whereby the acquired identifiable assets, liabilities and contingent liabilities are measured at fair value.
The payment for a subsidiary consists of the fair value of the amount paid for the acquired company. Costs attributable to the acquisition are recognized directly as profit or loss as incurred.
Positive differences (goodwill) between, on the one hand, the amount for the acquired subsidiary, the value of minority interests in the acquired company and the fair value of any previously acquired shares, and on the other hand, the fair value of the acquired assets, liabilities and contingent liabilities recognized as intangible assets and tested at least annually for impairment. If the carrying amount of an asset exceeds its recoverable amount, it is written down to its recoverable amount.
FOREIGN CURRENCY
The Group and the Parent company use Danish kroner (DKK) as its presentation currency. The Parent's functional currency is Danish kroner (DKK).
Transactions in currencies other than corporate functional currency are calculated at the transaction date.
Monetary items in foreign currencies that have not been settled at the balance sheet date are translated at the closing rate. Exchange rate differences between the transaction date and the date of payment, the balance sheet date respectively, are recognized in the income statement as financial items.
On recognition in the consolidated financial statements of companies that report in a functional currency other than Danish kroner (DKK), income statements are translated at average exchange rates for the months. Balance sheet items are translated at the closing exchange rates. Goodwill is considered to belong to the acquired entity and translated at the closing rate at the balance sheet date.
Exchange rate differences between foreign companies' balance sheet items and income statement items are recognized in other comprehensive income. Similarly, exchange rate differences arising as a result of changes made directly in the foreign entity's equity are also recognized in other comprehensive income. Other foreign exchange rate gains and losses are recognized in the income statement under financial items.
INCOME STATEMENT
NET REVENUE
Net revenue from merchandise and finished products are recognized in the income statement when delivery and transfer of risk to the buyer has taken place.
Net revenue from services and ongoing development projects for others' expenses is recognized as the agreed services are delivered so that revenue corresponds to the fair value of the work performed during the year. Costs incurred and expensed when incurred.
RTX Annual Report 2016/17
CONTENTS
Notes
Revenue is measured at fair value of the consideration received or receivable. The difference between fair value and nominal value of the consideration is recognized as financial income in the income statement by using the effective interest method.
Royalty is recognized as revenue on a straight-line basis in the period concerned. If the income depends on future events including the customers' sale of the products containing the technology developed by RTX, the royalty is recognized in the income statement after this event. Rent income is also recognized on a straight-line basis over the period concerned.
Revenue is calculated net of VAT, duties, etc. collected on behalf of a third party. If the outcome of a development project in progress can not be predicted with reliability, revenue is recognized equivalent to the incurred project costs in the period to the extent that it is probable that these costs will be recovered.
Costs of sales work and of securing contracts as well as financing costs are recognized in the income statement when incurred.
If an arrangement contains multiple deliverables, these are divided into separate deliveries addressed individually to the extent that they have been separately quoted, that every delivery has been separately negotiated and the customer has had the opportunity to accept or reject a single supply and the fair value of each deliverable can be measured reliably.
COST OF SALES
Cost of sales etc. comprises raw materials, consumables, cost of sales, freight, customs and write-downs on investories incurred to achieve revenue in the financial year.
Consumed resources related to development projects financed by a third party are expensed when consumed.
OTHER EXTERNAL COSTS
Other external costs include costs for premises, marketing and sale, administration, loss of debtors, etc.
Other external costs also include external costs of development for own account that does not meet the criteria for capitalization. Furthermore, provisions for losses on development projects in progress are included.
DEVELOPMENT PROJECTS FOR OWN ACCOUNT
Development costs for own account are held in cases where a project is started without contracted with a third party customer financing of the development project.
Development costs are generally recognized as expenses in the income statement when incurred. In cases where it is likely that the development projects will be marketed in the form of new products in potential markets, and development projects are clearly defined, the development costs are recognized as an asset.
BALANCE SHEET
DEVELOPMENT PROJECTS IN PROGRESS AND COMPLETED ON OWN ACCOUNT
Development projects are recognized as intangible assets to the extent that it is likely that the product will generate future financial benefits for the Group, and the development costs associated with each asset can be measured reliably.
Development projects are measured initially at cost. The cost of development projects comprises costs directly attributable to the development projects.
Interest costs on loans for financing the production of qualifying development projects are included in the cost of development projects if they relate to the production period.
Completed development projects are amortized over the expected life-time. The amortization period is usually 3 years. For development projects protected by intellectual property rights, the maximum amortization period is the remaining term of the rights.
Ongoing development projects recognized in the balance sheet are not amortized but tested at least annually for impairment.
Reimbursements of development costs from customers, which is a partial financing of development projects that RTX has recognized as an intangible asset, are offset directly against the value of the intangible asset.
GOODWILL
Goodwill is recognized and measured initially as the difference between the cost of the acquisition and the fair value of the acquired assets, liabilities and contingent liabilities, ref. the description under Group financial statement.
On recognition of goodwill the amount is allocated to the Group's activities with separate cash generating units. The determination of cash-generating units follows the management structure and internal financial management and financial reporting in the Group.
RTX Annual Report 2016/17
72 | RTX Annual Report 2016/17
CONTENTS
Notes
Goodwill is not amortized, but is tested at least annually for impairment. If the carrying amount of an asset exceeds its recoverable amount, it is written down to its recoverable amount.
IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS AND CAPITAL SHARES IN SUBSIDIARIES
The carrying values of tangible and intangible assets with definite life-time, as well as the Parent's capital shares in subsidiaries, are reviewed at the balance sheet date to determine whether there are indications of impairment. If there are indications of impairment, the recoverable value is estimated in order to establish the need for any write-down and the extent thereof. For ongoing development projects and goodwill, the recoverable value is estimated annually, regardless of whether there are indications of impairment.
If the individual assets does not generate cash flows independently of other assets, the recoverable amount is estimated for the smallest cash-generating unit to which the asset belongs.
The recoverable amount is the higher of an asset's fair value less sales costs and capital value. By calculating the value, future cash flows are discounted to present value using a discount rate that reflects current market assessments of the time value of money and the risks specific for the associated assets, which are not regulated in the estimated future cash flows.
If the recoverable value is estimated to be less than the carrying amount, the recoverable amount is used. Impairment losses are recognized in the income statement.
On any subsequent reversal of impairments, the carrying value is increased to the adjusted estimate of the recoverable amount. However, this is not exceeded the carrying amount that the asset would have had in case of a non-impairment. Impairment of goodwill is not reversed.
INVENTORIES
Inventories are measured at cost using the FIFO method, or net realizable value if this is lower.
Cost of goods, raw materials and consumables include the purchase price plus delivery costs. The cost of finished goods and work in progress comprises the cost of raw materials and labor, and production as well as fixed and variable production overheads.
Variable indirect production costs include indirect materials and wages and are allocated based on preliminary calculations of the goods produced. Fixed indirect production costs comprise costs of maintenance and depreciation of production machinery, buildings and equipment as well as administration and management.
The net realizable value of inventories is calculated as the estimated selling price less costs of completion and necessary sales costs.
ACCRUED INCOME AND DEFERRED EXPENSES
Accrued income and deferred expenses recognized under assets include costs incurred relating to subsequent financial years. Accrued income and deferred expenses are measured at cost.
OTHER FINANCIAL LIABILITIES
Other financial liabilities, including bank loans, trade payables and payables to public authorities, etc., are initially measured at fair value, corresponding to the proceeds received net of any transaction costs. Liabilities are subsequently measured at amortized cost using the effective interest method, whereby the difference between the proceeds and the nominal value is recognized as financial costs over the term of the loan.
LONG-TERM ASSETS HELD FOR SALE
Long-term assets and groups of assets held for sale, are presented separately in the balance sheet as short-term assets. The obligations directly related to the assets are presented as current liabilities in the balance sheet. Long-term assets held for sale are not depreciated, but are written down to fair value less sales costs if this is lower than the carrying value.
CASH FLOW STATEMENT
The cash flow statement shows cash flows from operating, investing and financing activities as well as cash and cash equivalents at the beginning and end of the year.
The cash effect of acquisitions and divestments is shown separately under cash flows from investing activities.
Cash flows from operating activities using the indirect method and calculated as operating profit, are adjusted for non-cash operating items and changes in working capital, less net financial income and expenses and the financial corporation tax.
Cash flows from investing activities include payments in connection with acquisition and divestment of companies and financial assets as well as acquisition, development, improvement and sale of intangible and tangible assets.
Cash flows from financing activities comprise changes in the Parent's share capital and related costs as well as the raising and repayment of loans, repayment of interest-bearing debt, acquisition and disposal of treasury shares and payment of dividends.
Cash and cash equivalents comprise cash less any overdraft facilities that are an integral part of the Group's cash management.
CONTENTS
Notes
SEGMENT INFORMATION
RTX has two reportable segments: Design Services and Business Communications. The segments are described in detail in the management report.
RTX's reportable segments are determined based on the internal financial reporting to Group management. The segments are strategic business units that sell different products and services. Each business is operated relatively independently of the other and follow separate strategies.
Segment income and expenses and assets include items directly attributable to the segments. Unallocated items primarily include income and expenses and assets and liabilities associated with the Group's administrative functions.
RTX Annual Report 2016/17 | 73
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Technical terms and explanations
| Term | Explanation |
|---|---|
| Android | Android is a mobile operating system (OS) based on the Linux kernel and currently developed by Google. With a user interface based on direct manipulation, Android is designed primarily for touchscreen mobile devices such as smartphones and tablet computers. |
| Baseband | Baseband is a general term for part of the physical components of a wireless communication product. Typically, this would include the control circuitry (microprocessor), the power supply, amplifiers, etc. |
| Bluetooth™ | Bluetooth is a technology primarily intended as replacement for cables over short distances (typically 10-100 metres). Bluetooth is mainly used for mobile telephones, so the user can, for example, speak through a mobile telephone via a wireless Bluetooth headset, and it will be easy to exchange business cards between the two mobile telephones. Bluetooth can also be used for a number of other applications, such as wireless connection between a mobile telephone and a laptop or connection between an MP3 music player and a stereo headset. The two most widely distributed versions of Bluetooth (versions 1.1 and 1.2) have a maximum transfer speed of 723.2 kbit/s. Enhanced Data Rates (EDR) are introduced in Bluetooth version 2.0, and the data transfer speed in this version reaches a maximum of 3 Mbit/s. |
| CAT-iq™ | CAT-iq™ is an abbreviation of Cordless Advanced Technology – internet and quality. The CAT-iq™ standard supports new and existing consumer products within wireless communication. CAT-iq™ is based on the already existing DECT technology and connects broadband and telephony. |
| The cellular market | The cellular market is a term used to cover all mobile telephony technologies and consists mainly of mobile telephone customers and subscribers, manufacturers and operators. |
| DCT2.4 GHz / WDCT | DCT2.4 GHz (Digital Cordless Telecommunications) or WDCT (World Digital Cordless Telecommunication) is a licence-free technology that makes it possible to speak wirelessly via an ordinary telephone connection. Unlike DECT, DCT2.4 GHz can be used all over the world. DCT2.4 GHz has mainly been targeted to the North American market as the common DECT frequencies have not been allocated to DECT in this area until 2005 (see also US-DECT). |
| Term | Explanation |
| --- | --- |
| DECT | DECT (Digital Enhanced Cordless Telecommunications) is a technology that makes it possible to talk wirelessly via an ordinary telephone connection at a range of up to 300 metres. This was originally a European standard, developed by ETSI (European Telecommunications Standards Institute) but it has subsequently also been adopted in a number of non-European countries. Many predicted that DECT would die quickly after the introduction of Bluetooth and W-LAN at the end of the 90's, however, the truth is that today DECT is still a strong technology which is also used in other contexts than wireless telephones. |
| GSM | GSM (Global System for Mobile communication) is also defined as a second generation technology (2G). GSM is the predecessor of today's 3G and 4G (LTE) technologies, and is still an integral part of this. All these cellular technologies are currently used for everything from simple voice transmission (telephony) to data transfer by SMS (Short-Message Service), MMS (Multimedia Message Service), internet, facetime etc. |
| HD Voice | HD Voice stands for wideband voice, meaning sound quality with an increased band with compared to ordinary telephony audio. |
| Internet telephony | Internet telephony is in short telephony via the Internet and not via the conventional telephone connections. As opposed to conventional telephony where each connection occupies the entire connection, Internet telephony enables more users to share the same connection, just as lots of cars can use the same motorway. For instance this means that several households in an apartment block can use the same broadband connection and that each individual household can cancel their ordinary telephone subscription and use Internet telephony instead. Moreover, it is possible to be on the phone free of charge or very cheap via the Internet. |
| IP | Internet Protocol (IP) is a method or protocol for sending data over the Internet. IP networks are package linked networks where data is divided into packages of varying sizes. Voice can also be transferred via an IP network (Voice over IP) and an application using this is called IP Telephony. IP is also used as an abbreviation for ownership of intellectually generated properties, "Intellectual Property". Is also abbreviated as IPR, "Intellectual Property Rights". |
| M2M | The term Machine To Machine (M2M) stands for machines communicating with each other via a network (without human intervention). |
RTX Annual Report 2016/17
CONTENTS
Technical terms and explanations
| Term | Explanation |
|---|---|
| ODM | Original Design Manufacturer (ODM) is a business model involving the development of a product according to the customer's product requirement specification. In the typical ODM model, the ODM supplier designs, develops and manufactures the complete product. For instance, based on detailed product requirement specifications from a customer, RTX has designed a Wireless Telephone Line Extender, including the development and handling of the manufacturing of the product. |
| OEM | An Original Equipment Manufacturer (OEM) is a manufacturing company developing and manufacturing standardized products or modules, which are incorporated into end products using the reseller's brand name. There is a low degree of customisation of the OEM product compared to an ODM offering. The customer only performs a few alterations to the final product, usually only a brand name and packaging. |
| PBX | Once upon a time, telephone calls had to be connected manually by the switchboard operator. Such a system was known as a PBX, or Private Branch Exchange. These days, such connections are established automatically, and so the term Private Automatic Branch Exchange (PABX), i.e. an automated switchboard, is used. |
| Repeater | A repeater is a unit which transmits the data it receives. A repeater is primarily used to extend on the coverage area for a wireless technology (for instance, a DECT repeater can extend the DECT telephones' coverage area). |
| RF | Radio frequency or high frequency (HF) is a generic description of the radio waves applied for everything from TV and radio to wireless two-way communication (telephony, Walkie-Talkie, etc.) and radar. |
| Skype™ | Skype™ is a programme allowing telephone conversations via the Internet. Calls to other Skype™ users are free of charge as well as calls to ordinary telephone numbers and mobiles all over the world are at a low rate (via SkypeOut and SkypeIn). |
| DECT 6.0 / US DECT | US-DECT is the 1.9 GHz DECT band which is the American counterpart to the European DECT system. US-DECT is also called DECT 6.0. |
| VoIP | VoIP or "Voice over Internet Protocol" is a method or protocol employed to transfer speech via the Internet. |
| Wi-Fi | Wi-Fi is a standard for wireless transferring between computer and other units, i.e. wireless data net (for instance WLAN) based on IEEE802.11 specifications. A Wi-Fi approval assures that units from different manufacturers are able to communicate. |
Addresses
HEAD OFFICE
RTX A/S
Stroemmen 6
9400 Noerresundby
Denmark
Phone: +45 9632 2300
Fax: +45 9632 2310
VAT no: 17 00 21 47
www.rtx.dk
SUBSIDIARIES
RTX HONG KONG LTD.
8/F Corporation Square
8 Lam Lok Street
Kowloon Bay
Hong Kong
Phone: +852 2487 3718
Fax: +852 2480 6121
www.rtx.hk
RTX AMERICA, INC.
112 J Street, second floor
Sacramento
95814 California
USA
Phone: +1 (408) 441-8600
Fax: +1 (408) 441-8611
www.rtx.dk
RTX Annual Report 2016/17
RTX A/S
Stroemmen 6
9400 Noerresundby
Denmark
www.rtx.dk
RTX
WIRELESS WISDOM