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% of share % of share Treasury sharessharessharescapitalcapitalTreasury shares as at 1 January4,723,160 1,098,495 0.5 0.5Share split 1:5 - 4,393,980 - -Purchases - 391,125 - 0.1Vested treasury shares (1,033,458) (1,160,440) (0.1) (0.1)Treasury shares as at 31 December 3,689,702 4,723,160 0.4 0.51.1\u2002Segment informationPower Solutions \u2013 Result for the period The segment contains sale of onshore and offshore wind power plants, wind turbines, development sites, etc.In 2022, revenue from the Power Solutions segment amounted to EUR 11,331m (2021: EUR 13,103m), a decrease of 13.5 percent compared to 2021. The decrease was mainly attribut-able to the Power Solutions segment challenged by transporta-tion and project execution delays impacting deliveries across most geographical areas including primarily offshore deliveries in the UK as well as lower onshore deliveries in Vietnam and USA. Furthermore, lack of deliveries in Russia following Vestas\u2019 decision to withdraw from the Russian market contributed to the negative development compared to 2021 with EUR 323m. Revenue re\ufb02ected a positive impact of EUR 333m from foreign exchange rate translation compared to 2021. EBIT before special items from the Power Solutions segment amounted to negative EUR 1,512m (2021: EUR 188m). Con-sequently, the EBIT margin before special items was negative 13.3 percent (2021: 1.4 percent). This decrease was primarily attributable to continued external cost in\ufb02ation and supply chain disruptions in the Power Solutions segment. Further-more, EBIT before special items was negatively impacted by an adjustment related to the V164/V174 offshore technology including impairment of assets on offshore turbines already installed as well as increased level of warranty provisions.Costs and impairment of assets amounting to EUR 269m have been recognised as special items following Russia\u2019s invasion of Ukraine and Vestas\u2019 decision to withdraw from the Russian market while all service and construction activities in Ukraine was temporarily stopped. Furthermore, costs of EUR 244m are re\ufb02ected in special items associated to changes in manufacturing footprint in China and India partially offset by reversal of impairment losses amounting to EUR 69m related to production facilities in Lauchhammer and Isle of Wight. For additional information, refer to note 1.6. Revenue and EBIT margin before special itemsmEUR - percent 12,66410,76610,3981002,33793310,2768,4651.43.17. 28.9(13.3)202220 21*202020192018\u2002Onshore\u2003\u2003 \u2002Offshore\u2003\u2003 \u2002EBIT margin before special items1 Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 7.2.Service \u2013 Result for the period The segment contains sale of service contracts, spare parts and related activities.In 2022, the Service business generated revenue of EUR 3,155m, a year-on-year growth rate of 27.0 percent. The revenue development in the Service business was driven by higher contract activity and transactional sales as well as in\ufb02ation levers in contracts. In addition, revenue re\ufb02ected a positive impact of EUR 102m from foreign exchange rate translation effects compared to 2021.In 2022, the EBIT margin was 21.4 percent (2021: 23.2 percent). The lower profitability is mainly related to certain projects in USA and Africa as well as increasing costs related to one-off cases in UK and Australia. Furthermore, the EBIT margin was negatively impacted by an impairment loss relating to V164/V174 offshore activity impacting the Service segment with EUR 12m. Revenue and EBIT margin before special itemsmEUR - percent 3,155 2,484 21.423.22,055 1,669 1,871 27. 625.225.8202220 21*202020192018\u2002Revenue\u2003\u2003 \u2002EBIT margin before special items1 Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 7.2.1.1\u2002Segment information \u2013 continuedThe measure of revenue is disclosed in accordance with how the segments are reported to the Vestas\u2019 chief operating decision makers. The reported revenue is in alignment with how the segments are internally committed for variable consideration under sales contracts. This is different to the external commitment of the segments.RevenuemEUR 2022 2021USA2,969 2,973United Kingdom 870 2,632Denmark 569 811Other countries 10,078 9,171 Total 14,486 15,587The revenue split is based on geographical supply point.Revenue specified by country shows all countries with a revenue of more than 10 percent of Vestas\u2019 total revenue as well as revenue in Denmark. United Kingdom is included in 2022 to enable comparison to the 2021 level.Intangible assets and property, plant and equipment mEUR 2022 2021Denmark3,521 3,639Other countries 1,296 1,514Total 4,817 5,153Intangible assets and property, plant and equipment are based on the physical location of the assets.With the exception of Denmark, no country has intangible assets and property, plant and equipment exceeding 10 percent of the group's total intangible assets and property, plant and equipment as at 31 December 2022.12022 2021mEURPower Solutions Service Not allocated Total Power Solutions Service Not allocated TotalRevenue11,331 3,155 - 14,486 13,103 2,484 - 15,587Total revenue 11,331 3,155 - 14,486 13,103 2,484 - 15,587Total costs (12,843) (2,480) (315) (15,638) (12,915) (1,907) (337) (15,159)Operating profit (EBIT) before special items (1,512) 675 (315) (1,152) 188 577 (337) 428Special items, refer to note 1.6 (444) - - (444) (139) - - (139)Operating profit (EBIT) (1,956) 675 (315) (1,596) 49 577 (337) 289Income/(loss) from investments in joint ventures and associates, refer to notes 3.5, 6.4- - 10 10 - - 36 36Financial income, refer to note 1.7 - - 52 52 - - 21 21Financial costs, refer to note 1.7 - - (162) (162) - - (122) (122)Profit before tax (1,696) 224Amortisation and depreciation included in total costs, refer to notes 3.1, 3.2(910) (132) (47) (1,089) (735) (111) (68) (914)Investments in joint ventures and associates, refer to note 3.5 646 6091 Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 7.2.\u2002Accounting policiesThe reportable segments are determined based on Vestas\u2019 management structures and the consequent reporting to the Chief Operating Decision Maker (CODM), which is defined as the Executive Management. Following the acquisition of MHI Vestas Offshore Wind A/S on 14 December 2020, a new offshore operating segment has been established. Vestas\u2019 reportable segment \u2018Power Solutions\u2019 includes respectively onshore and offshore operating segments. The onshore and offshore activities are combined in one reportable segment, as the nature of the businesses and the financial impact from the activities are similar in respect of product categories, production, distribution and customers. In addition, the long-term EBIT margins and investment requirements relative to revenue are expected at the same level.The total external revenue is derived from the two reportable segments and comprises sale of wind turbines and associated service activities, Power Solutions and Service respectively. Certain income and costs relating to Vestas functions, investing activities, tax, etc. are managed on Vestas level. These items are not included in the reportable segments, and therefore, presented as \u2018Not allocated\u2019.The measure of revenue, costs, and EBIT included in the segment reporting are the same as those used in the Consolidated Financial Statements. No segment information is provided to CODM on a regular basis for assets and liabilities and the measures below EBIT.Income and costs included in profit for the year are allocated to the extent that they can be directly or indirectly attributed to the segments on a reliable basis. Costs allocated as either directly or indirectly attributable comprise production costs, R&D costs, distribution costs, and administration costs.The income and costs allocated, including depreciation and amortisation, as indirectly attributable to the segments, are allocated by means of allocation keys determined on the basis of the utilisation of key resources in the segment.1.2\u2002Revenue\u2002 Key accounting estimates and judgements Estimate regarding recognition of contract elementsManagement performs significant accounting estimates in connection with determining the appropriate income recognition of contract elements. In certain situations, Supply-only projects contain elements that in nature are associated with a high degree of estimations regarding allocation of consideration under a contract to elements already delivered and elements to be delivered in the future. Management has assessed that the project specific margin is a fair estimate of a reasonable margin used to allocate consideration under a contract to the contract elements. Significant judgement is also involved in assessing whether project or service contracts contain multiple performance obligations which should be accounted for separately.Estimates of stage of completion Vestas applies the percentage-of-completion method in accounting for service contracts and certain wind power plants, in general projects with a high degree of customisation. The use of the percentage-of-completion method requires Management to determine the stage of completion by reference to the contract costs incurred for work performed to date in proportion to the estimated total contract costs (cost-to-cost method). This method is considered to best show the progression of the projects. Based on the estimated stage of completion, a respective portion of the consideration is recognised.Judgement regarding method for recognition of revenue from Supply-and-installation contractsManagement applies judgement when determining whether revenue from Supply-and-installations contracts shall be recognised at a point in time or over time. Management has determined that Supply-and-installation projects based on standard solutions have an alternative use. Consequently, revenue of such contract is recognised at the point in time when the turbine is fully operational and control is transferred to the customer. For certain projects, Vestas agrees to delivery of wind power plants based on non-standard solutions to the customer. Management assesses whether such non-standard solutions have an alternative use. The judgements made take into consideration technology used, or the degree of customization including remoteness of the wind power plant. Revenue from sale of non-standard solutions, which are judged to have no alternative use is recognised over time (percentage-of-completion method).Judgement regarding service contract modificationsManagement applies judgement when determining whether a service contract modification should be accounted for as a separate contract or as if it is part of the original contract. The judgements made take into consideration whether the scope is changed, if price changes re\ufb02ect stand-alone prices, whether a contract is won in a tender, if the modification is due to execution of a renewal option and other relevant facts and circumstances.Judgement regarding sale of onshore wind power plant under developmentIn 2021 management applied judgement in determining the revenue recognition of a share purchase agreement entered into with an associate to sell its shareholding in an onshore wind power plant under development. Consequently, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m were recognized. One of the judgments made was that management considered it highly probable that the customer\u2019s contingent option to put back the shares would either not materialise or not be exercised if materialised.In 2022, the approval from the authorities was delayed and the development plan is adjusted in alignment with the customer. Although the project value itself has not deteriorated, the delay increases the risk that the contingent put option materialises. Consequently, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m have been reversed in 2022.\u2002Accounting policiesRevenue is measured based on the consideration specified in a contract with a customer. Vestas recognises revenue when it transfers control over a product or service to a customer.Revenue recognition Revenue comprises sale of wind turbines and wind power plants, after-sales service, sale of spare parts and wind power plants under development. The following is a description of the principal activities from which Vestas generates its revenue.Supply-only projectsRevenue from the sale of individual wind turbines based on standard solutions is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Vestas recognises revenue at a point in time, when control is transferred to the customer, and the consideration agreed is expected to be received. Control is deemed to be transferred upon delivery of the components in accordance with the agreed delivery plan. Supply-and-installation projects (point in time)Revenue from sale of wind power plants based on standard solutions with alternative use is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Vestas recognises revenue when control of the fully operational turbine is transferred to the customer, and the consideration agreed is expected to be received. Control is generally deemed to be transferred at the point in time when the turbine is fully operational.Supply-and-installation projects (over time)Revenue from sale of wind power plants based on non-standard solutions to the customer, where there is no alter-native use for the wind power plant to be delivered and where we have an enforceable right to payment for the work completed is recognised over time using the percentage-of-completion method. Revenue excludes amounts collected on behalf of third parties. EPC / Turnkey projectsRevenue from contracts to deliver wind power plants with a high degree of customisation are recognised over time as the wind power plants are constructed based on the stage of completion of the individual contracts. Where the profit from a contract cannot be estimated reliably, revenue is only recognised equalling the cost incurred to the extent that it is probable that the costs will be recovered.Service sales Revenue from service sales, comprising services and mainte-nance agreements as well as extended warranties regarding wind turbines and wind power plants sold, are recognised over the term of the agreement as the services are provided. Separate spare parts sales are recognised at a point in time when control has been transferred to the customer, and pro-vided that consideration agreed is expected to be received.Service contract modificationsContract modifications treated as separate contracts are typically related to changes in scope, successful tender bids or renegotiated close to term expiry (signed). Contract modifications which are treated as part of the original contract, are typically related to renewals renegotiated far from term expiry (signed) or price changes agreed upon.Contract modifications treated as separate contracts are accounted for on a prospective basis. Contract modifications treated as part of the original contract and accounted for on a cumulative catch-up basis.Wind power plants under development Revenue from the sale of wind power plants under develop-ment is measured based on the consideration specified in a contract with a customer and recognised at a point in time when the control of the project is transferred to the customer.Transaction priceThe transaction price for sale of wind turbines and wind power plants normally includes a fixed consideration. The transaction price for service contracts includes a fixed consideration and often a variable consideration. The estimated amount of variable consideration will be included in the transaction price only to the extent that a significant reversal in revenue recognised is highly unlikely to occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price recognised as revenue is furthermore reduced by penalties and payment of liquidated damages related to project and service contracts.All wind turbine and wind power plant contracts include a standard warranty clause. For further details on warranty, refer to note 3.6.1.2\u2002Revenue \u2013 continuedOrder backlogThe order backlog re\ufb02ects the value of future deliveries and services. An order is included as order intake when firm and unconditional. The value of future contracts is measured at the end of the period. The order backlog comprises firm and unconditional orders from Power Solutions and Service, less deliveries made in Power Solutions and Service performance.\u2002DeliveriesDeliveries in MW re\ufb02ect the capacity of wind turbines delivered during the reporting period. The capacity is considered delivered, and is deducted from the wind turbine order backlog, when the related revenue is recognised. Sales from turnkey projects are deducted from the wind turbines backlog simultaneously as the customer has taken delivery of the wind turbines under the term of the contracts.Supply-only2.6Revenue EURbnRevenue recognitionRevenue is recognised at a point in time when control is transferred to the customer. Control is generally transferred upon delivery of the components in accordance with the agreed delivery plan.EPC / Turnkey projects0.9Revenue EURbnRevenue recognitionRevenue is recognised over time as the wind power plant is constructed based on the stage of completion of the individual contracts.Supply-and-installation7. 8Revenue EURbnRevenue recognitionRevenue is recognised over time for nonstandard solutions with no alter- native use as the turbine is installed based on the stage of completion of the individual contracts. Revenue is recognised at a point in time when control of the turbine is transferred to the customer. Control is transferred at a point in time when Vestas has proven a fully operational turbine.Service Sales from Service agreements are deducted from Service backlog simultaneously as revenue is recognised over the term of the agreement.Service3.2Revenue EURbnRevenue recognitionService contracts are normally recog- nised over time as the services are provided over the term of the agree- ment. Spare parts sales are recognised at a point in time when control has been transferred to the customer.1.2\u2002Revenue \u2013 continuedDisaggregation of revenueIn the following section, revenue is disaggregated by sale of projects and sale of service, by primary geographical market, major contract types and timing of revenue recognition.For the financial year 2022, supply-and-installation projects recognised over time (percentage-of-completion) constituted 37 percent of the total supply-and-installation revenue compared to 32 percent in 2021. The projects are mainly located in Brazil.Transaction price allocated to the remaining sales contractsThe following table includes revenue expected to be recognised in the future related to performance obligations that are unful-filled (or partially unfulfilled) at the end of the financial year.All considerations from contracts with customers are included in the amounts presented.Order backlog bnEUR 2022 2021Power Solutions, onshore16.4 15.4Power Solutions, offshore2.7 2.7Wind turbines total 19.1 18.11Service, onshore26.6 24.21Service, offshore3.8 3.61Service total30.4 27.81 The number disclosed in the 2021 annual report for the Service order backlog has been corrected from EUR 29.2bn to EUR 27.8m.Power Solutions Service TotalDisaggregation of revenuemEUR2022 2021 2022 2021 2022 2021Timing of revenue recognitionProducts and services transferred at a point in time7,519 9,161 653 412 8,172 9,573 Products and services transferred over time 3,812 3,942 2,502 2,072 6,314 6,014 Total 11,331 13,103 3,155 2,484 14,486 15,587Revenue from contract typesSupply-only2,590 2,814 - - 2,590 2,814 Supply-and-installation (at a point in time) 4,929 6,347 - - 4,929 6,347 Supply-and-installation (over time) 2,859 3,006 - - 2,859 3,006 Turnkey (EPC) 953 936 - - 953 936 Service - - 3,155 2,484 3,155 2,484 Total 11,331 13,103 3,155 2,484 14,486 15,587 Primary geographical marketsEMEA6,276 7,427 1,550 1,391 7,826 8,818Americas 3,783 3,967 1,328 840 5,111 4,807 Asia Pacific 1,272 1,709 277 253 1,549 1,962 Total 11,331 13,103 3,155 2,484 14,486 15,587 At the end of 2022, the average remaining duration in the service order backlog is approximately 11 years (2021: 10 years), with a range up to 35 years (2021: 36 years). For the Power Solutions segment, projects are normally to be delivered within 1 to 3 years (2021: 1 to 3 years).Power Solutions \u2013 order backlog At the end of the year, the total wind turbine order backlog amounted to 19,623 MW corresponding to EUR 19.1bn. Of this, 17,415 MW corresponding to EUR 16.4bn relates to onshore wind turbines. Compared to last year, the onshore order backlog increased by 13 percent. The offshore backlog amounted to 2,208 MW corresponding to EUR 2.7bn as at 31 December 2022, which is on par with 2021. Service \u2013 order backlogAt the end of 2022, Vestas had service agreements in the order backlog with expected contractual revenue of EUR 30.4bn, which is an increase of EUR 2.6bn compared to 2021.The service order backlog for 2021 is adjusted from EUR 29.2bn to EUR 27.8bn due to an error in the report generating the service backlog. The adjustment has no impact on the future service profitability.\u2002Accounting policiesOrder backlog in EUR re\ufb02ects the value of future deliveries and services under firm and unconditional orders and is measured as the expected revenue to be recognised in the future related to performance obligations that are unfulfilled or partially unfulfilled at the end of the period. The order backlog is forward-looking by nature and is a subset of Vestas' potential future revenue. Order backlog in MW re\ufb02ect the capacity of future turbine deliveries under firm and unconditional orders and is measured as the total capacity of turbines to be delivered under firm and unconditional orders less deliveries at the end of the period. The capacity of turbines delivered is included as deliveries when the related revenue is recognised.1.3\u2002Costs\u2002Accounting policiesProduction costs Production costs, including warranty costs, comprise the costs incurred to achieve revenue for the year. Costs consist of raw materials, consumables, direct labour costs, transportation costs and indirect costs such as salaries, rental and lease costs as well as depreciation of production facilities. Furthermore, provisions for loss-making construction contracts are included in production costs. Research and development costs Research and development costs primarily comprise employee costs, internal and external costs related to innovation and new technologies, as well as amortisation, depreciation and impairment losses on capitalised development costs. Distribution costs Distribution costs comprise costs incurred for the sale and distribution of products, etc. sold during the year. Also included are costs relating to employees and depreciation. Administration costs Administration costs comprise costs incurred during the year for management and administration of Vestas and includes costs for administrative staff, management, office premises, office costs, and depreciation.Research and development costs recognised in the income statement1mEUR 2022 2021R&D costs 514 444Capitalised development projects (414) (332)Amortisation and depreciation 357 277Total 457 3891 Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 7.2.1.4\u2002 Employee costs Staff costsmEUR 2022 2021Staff costs are specified as follows:Wages and salaries, etc.1,581 1,395Share-based payment, refer to note 1.5 7 13Pension schemes, defined contribution schemes 94 85Other social security costs 198 187Total 1,880 1,680Average number of employees 28,779 29,164Number of employees as at 31 December 28,438 29,427Board of Directors and Executive ManagementmEUR 2022 2021Staff costs attributable to:Board of DirectorsBoard remuneration1 1Total 1 1Executive ManagementWages and bonus7 7Share-based payment 2 6Total 9 13The Board of Directors and Executive Management are not covered by any pension schemes. In the event of change in control, members of the Executive Management do not receive any additional compensation. In 2022, share-based payment and wages to the registered members of the Executive Management amounted to EUR 3m (2021: EUR 5m).Key management personnel is defined as Executive Management.1.5\u2002Share based paymentRestricted performance share programme The purpose of the restricted performance shares is to ensure common goals for management, certain key employees, and shareholders. The number of shares available for grant may be adjusted in the event of changes in Vestas\u2019 capital structure. Further, in the event of a change of control, merger, winding-up or demerger of Vestas, an accelerated grant may extraordinarily take place. In the event of certain transfers of activities or changes in ownership interests within Vestas, adjustment, replacement of the programme and/or settlement in cash of the programme entirely may also take place.In April 2022, the Board of Directors of Vestas Wind Systems A/S (Board) launched a new restricted performance share programme. The performance share programme has been revised for the sake of simplification. The 2022 performance share programme will fully vest after a three-year performance period with all shares vesting at once, instead of the previous split vesting in two portions. The performance measurements are based on financial key performance indicators as well as Vestas\u2019 market share as defined by the Board.The terms and conditions governing the restricted performance share programmes are as follows: \u017c Only participants employed by Vestas at the time of announcement of the programme or later in the financial year are eligible for participation in the restricted performance share programme. \u017c The number of restricted performance shares available for distribution depends on Vestas\u2019 performance as per table below. \u017c Depending on the performance, the total number of shares to be granted will range between 0 percent and 150 percent of the target level and is determined by Vestas\u2019 performance in the financial year. \u017c A cap for value at vesting for CEO and CFO equal to 300 percent of base pay has been introducedIn 2022, the total number of shares issued amounts to 911,058 shares with a fair value of EUR 26m (out of which 329,998 shares with a fair value of EUR 9m were issued to the Executive Management). The fair value calculated is based on share price at measurement, close of Nasdaq Copenhagen on 6 April 2022, EUR 28. Employee elected members of the Board, had 0 restricted shares outstanding as at 31 December 2022 (2021: 0). Refer to note 1.4 for the total expense recognised in the Income statement for restricted performance shares (share-based payment) granted to Executive Management and other executives.\u2002Accounting policiesVestas operates a number of share-based compensation schemes (restricted share programmes) under which it awards Vestas shares to members of the Executive Management and certain key employees in Vestas Wind Systems A/S or its subsidiaries.The value of the services received in exchange for the issuance of shares is measured at the fair value of the shares. Restricted shares issued to employees are measured at fair value at the time of granting and are recognised in staff expenses in the income statement over the vesting period. The opposite entry is recognised directly in equity. On initial recognition of the restricted shares, the number of shares expected to vest is estimated. Subsequently, the estimate is revised so that the total expense recognised is based on the actual number of shares vested. The fair value of restricted shares is determined based on Vestas quoted share price at grant.Management\u2019s incentive programmes 2022 2021 2020 2019 2018 2017Year awarded:April 2022 April 2021 May 2020 May 2019 April 2018 May 20171 Performance year2022-2024 2021-2023 2020-2022 2019-2021 2018-2020 2017-2019Vesting conditions EPS, ROCE, EPS, ROCE, EPS, ROCE, EPS, ROCE, EPS, ROCE, EPS, ROCE, (KPIs):Market shareMarket shareMarket shareMarket shareMarket shareMarket shareVesting years: 2025 2024 2023/25 2022/2024 2021/2023 2020/20221 Performance years defined as Vestas\u2019 financial year.Executive OtherManagementexecutivesTotalNumber of restricted performance sharespcspcs pcsOutstanding as at 1 January 20221,021,888 2,587,229 3,609,117Adjusted(119,077) 436,143 317,066Awards issued 329,998 581,060 911,058Vested (212,234) (821,224) (1,033,458)Cancelled (331,286) (861,400) (1,192,686)Outstanding as at 31 December 2022 689,289 1,921,808 2,611,097Outstanding as at 1 January 2021 1,169,045 3,629,165 4,798,210Adjusted(135,247) (266,679) (401,926)Awards issued 280,870 502,877 783,747Vested (191,950) (967,240) (1,159,190)Cancelled (100,830) (310,894) (411,724)Outstanding as at 31 December 2021 1,021,888 2,587,229 3,609,117\u2190Adjusted include adjustments due to final calculation of entitlement based on performance in prior year and transfers between categories due to changes in management.Allocation of performance shares for the 2020, 2021 and 2022 performance programmes will be adjusted based on the level of target achievement in the measurement period.1.6\u2002Special itemsRussian invasion of UkraineFollowing Russia\u2019s invasion of Ukraine in February 2022, Vestas announced on 5 April 2022 that Vestas would withdraw from the Russian market. In order to facilitate the withdrawal from Russia, Vestas continues certain activities during a limited transition period where Vestas will dispose of its Russian assets, wind down operations and end existing contractual relationships. Furthermore, Vestas\u2019 activities in Ukraine have been put on hold.The costs related to the Russian invasion of Ukraine qualify as special items in accordance with Vestas\u2019 accounting policy. In 2022, special items of EUR 269m have been recognised including provisions of EUR 87m, write-down of inventories located in Russia and Ukraine of EUR 159m, impairment of tangible assets of EUR 9m, write-down of VAT receivables of EUR 4m, staff costs of EUR 5m and other expenses of EUR 5m, as directly related to the Russian invasion of Ukraine. Basis for recognition The provisions primarily relate to risks stemming from Vestas\u2019 cessation of activities in Russia, including claims brought against Vestas in and outside Russia. In the aggregate, the possible outcome ranges between EUR 0m and EUR 150m. Vestas has provisioned EUR 81m in order to address the assessed risk. The write-down of inventory relates to inventory located in Russia and Ukraine that is not expected to be sold. The impairment loss on tangible assets is primarily related to buildings and equipment located in Russia, which are written down to zero as the assets are not expected to be utilised or sold. The write-down of VAT receivables is related to VAT receivables that are deemed not recoverable. The staff costs are related to severance payments. Other expenses are primarily related to the closing of the factory in Russia.Adjusting manufacturing footprint Vestas continues to review the product portfolio and adapt the production capacity. As part of this development, Vestas adjusted its manufacturing footprint by ceasing production at certain factories in China and India.This adjustment of the manufacturing footprint qualifies as special items in accordance with Vestas\u2019 accounting policy. In 2022, special items of EUR 244m have been recognised including impairment of intangible assets of EUR 25m, impairment of tangible assets of EUR 89m, write-down of inventory of EUR 101m, staff costs of EUR 8m and other costs of EUR 21m.Furthermore, a reversal of previously recognised impairment losses on tangible assets of EUR 54m, staff costs of EUR 8m and other costs of EUR 7m was recognised in special items, primarily relating to the factory in Lauchhammer, Germany and the production facility on Isle of Wight, UK.Basis for recognition The impairment loss is primarily related to intangible assets, buildings and production equipment which are written down to fair value less expected cost to sell or value in use. The write-down of inventory relates to inventory which is not expected to be sold. The intangible assets, buildings and production equipment at the factories have been written down from EUR 155m to EUR 41m re\ufb02ecting the value that is expected from the disposal of the assets considering costs to sell. Inventory has been written down from EUR 101m to zero as the inventory is expected to be scrapped. Other costs are primarily related to a write-down of VAT and tax receivables that are deemed not recoverable, purchase commitments towards suppliers and cost of closing the factories.The reversal of previously recognised impairment losses was primarily due to the sale of the factory in Lauchhammer and revised expected use of the production facility on Isle of Wight.\u2002 Key accounting judgements Judgement regarding classification in the income statementThe use of special items entails management judgement in the separation from other items in the income statement. In connection with the use of special items, it is crucial that these are of a significant unusual and/or infrequently occurring nature that are not attributable to Vestas\u2019 normal operations, as such classification highlights to users of financial statements the items to which the least attention should be given when understanding current and future performance.Estimate regarding the valuation of assets and liabilities in Russia and UkraineMeasurement of the provisions related to the ceasing of activities in Russia and Ukraine as well as write-down of inventory located in Russia and Ukraine is associated with significant estimation uncertainty due to the current situation in Russia and Ukraine. The recognised cost re\ufb02ects management\u2019s best estimate based on the current expectations. \u2002Accounting policiesSpecial items comprise significant unusual and/or infrequently occurring items that are not attributable to Vestas\u2019 normal operations. Special items comprise income and costs related to significant organisational restructuring and significant adjustments to production capacity and the product programme. Special items mEUR 2022 2021Write-down of inventory(260) \u2013Provisions (87) \u2013Impairment loss on intangible and tangible assets (69) (68)Staff costs (5) (61)Other costs (23) (10)Special items (444) (139)1.7\u2002Financial itemsFinancial incomemEUR 2022 2021Interest income37 19Hedging instruments 2 -Other financial income 13 2Total 52 21Financial costsmEUR 2022 2021Interest costs51 39Interest on lease liabilities 12 13Foreign exchange losses 70 45Hedging instruments - 7Other financial costs 29 18Total 162 122\u2002Accounting policiesFinancial items comprise interest income and costs, realised and unrealised foreign exchange gains and losses, gains and losses related to derivatives used to hedge assets and liabilities and ineffective part of derivatives used to hedge future cash \ufb02ows.2.1\u2002Change in net working capitalmEUR 2022 2021NWC as at 1 January(1,049) (1,127)Change in inventories and contract costs 763 705Change in trade receivables (251) (7)Change in other receivables 116 124Change in contract assets / liabilities (585) (115)Change in trade payables 197 (678)Change in other liabilities (540) 49NWC as at 31 December (1,349) (1,049)The change in net working capital (NWC) includes non-cash adjustments and exchange rate adjustments with a total amount of EUR (492)m (2021: EUR 87m). Consequently, the cash \ufb02ow impact of change in NWC is EUR (192m) (2021: EUR 9m). Vestas is facilitating a supply chain financing program funded by credit institutions. Use of this programme by suppliers takes place in the ordinary course of business with the same payment terms offered to other suppliers and without credit enhancement. Supplier financing therefore fulfills the criteria as trade payables and has been presented in the balance sheet as ordinary trade payables with a total amount of EUR 696m (2021: EUR 637m).2.2\u2002InventoriesmEUR 2022 2021Inventories consumedInventories consumed for the year, which are included in production costs7,750 9,236Write-downs of inventoriesWrite-downs of inventories in the year283 8Utilised write-downs in the year(4) (3)Reversal of write-downs in 1the year (25) (11)1 The reversal of write-downs in the year are due to goods previously written down being used or sold at or above original cost.2022\u2002Service stock EUR 978m (15%)\u2002Finished goods EUR 4,487m (70%)Total \u2002 Raw materials and consumables EUR 666m (10%)EUR 6,373m\u2002 Work in progress EUR 242m (5%), hereof development projects of EUR 77m.2021\u2002Service stock EUR 877m (16%)\u2002Finished goods EUR 3,753m (66%)Total \u2002 Raw materials and consumables EUR 742m (13%)EUR 5,673m\u2002 Work in progress EUR 301m (5%), hereof development projects of EUR 31m.In 2022, write-down of inventories included EUR 159m relating to the Russian invasion of Ukraine and EUR 101m reating to adjustments to the manufacturing footprint. For further details, refer to note 1.6.\u2002 Key accounting estimatesEstimate of net realisable valueVestas estimates the net realisable value at the amount at which inventories are expected to be sold. Inventories are written down to net realisable value when the cost of inven-tories is estimated to be non-recoverable due to obsolescence, damage or declining selling prices. Estimates are used when accounting for or measuring inventory pro visions, and these estimates depend upon subjective and complex judgements about certain circumstances, taking into account \ufb02uctuations in prices, excess quantities, condition of the inventory, nature of the inventory, and the estimated variable costs necessary to make the sale. \u2002Accounting policiesInventories are measured at the lower of cost, using the weighted average method, and net realisable value (NRV).The cost of raw materials and service stock comprise purchase price of materials, consumables, duties, and transportation costs.The cost of work in progress and finished goods comprises the cost of raw materials, consumables, direct labour, and indirect production costs. Indirect production costs comprise materials and labour costs as well as maintenance and depreciation of the machinery, factory buildings, and equipment used in the manufacturing process together with costs of factory administration and management.The NRV of inventories is measured at sales price less costs of completion and selling costs. NRV is determined taking into account marketability, obsolescence, and development in the expected selling price.2.3\u2002Contract balances2022 2021Contract Contract Contract Contract mEURassetsliabilitiesassetsliabilities1 January1,227 6,180 775 5,613 Additions from business combinations - - - -Revenue recognised that was included in the contract liability balance at the beginning of the period - (3,283) - (3,202)Increases as a result of changes in the measure of progress and other adjustments 733 - 829 -Payments received, excluding amounts recognised as revenue during the period (prepayments) - 3,986 - 3,645Transfers from contract assets recognised at the beginning of the period to receivables (559) - (387) -Exchange rate adjustments (2) 54 10 12431 December 1,399 6,937 1,227 6,180Contract assets and liabilities comprise the following:Construction contracts in progress (turnkey)58 193 60 209 Service contracts 1,245 930 931 932Supply-only contracts - 744 - 848Supply-and-installation contracts point in time - 2,993 - 2,801Supply-and-installation over time 96 2,077 236 1,390Total 1,399 6,937 1,227 6,180\u2190The table provides information about development in contract assets and contract liabilities from contracts with customers, as well as a disaggregation of the contract balances on contract type.\u2002Accounting policiesContract assets/liabilities comprise agreements to deliver wind power plants based on non-standard solutions (supply-and-installation projects over time) and wind power plants with a high degree of customisation (turnkey projects), as well as service and maintenances agreements. Contract liabilities also comprise prepayments from customers for supply-only and supply-and-installation projects ordered but not yet delivered. Vestas receives payments from customers based on billing schedules established in the contracts. The scheduled payments from customers typically preceed the satisfaction of performance obligations under the contracts. Contract assets relate to Vestas\u2019 conditional right to consideration for Vestas\u2019 completed performance under the contract. Accounts receivable are recognised when the right to consideration becomes unconditional. Contract liability relates to payments received in advance of performance under the contract. Contract liabilities are recognised as revenue as (or when) Vestas performs under the contract.Contract assets/liabilities are measured at the selling price of the work performed based on the stage of completion less progress billing and expected losses.The stage of completion is measured as the proportion of the costs related to the contract incurred relative to the estimated total costs related to the contract. Where it is probable that total costs will exceed total revenues from a contract, the ex - pected loss is recognised immediately as a cost and a provision.The value of self-constructed components is recognised as contract assets/liabilities upon installation of the components to the specific wind power plant\u2019s construction site.If the selling price of the work performed exceeds progress billings and expected losses it is recognised as an asset. If interim billings and expected losses exceed the selling price it is recognised as a liability.Costs relating to sales work and the pursuing of contracts are recognised in the income statement as incurred. 2.4\u2002Contract costsmEUR 2022 2021Asset recognised from costs to fulfill a contract753 690Total 753 690Capitalised costs as a result of fulfilling sales contracts are recognised as part of production cost in the income statement when related revenues are recognised. In 2022, EUR 958m (2021: EUR 599m) was recognised as cost.\u2002Accounting policiesCosts incurred for supply-only and supply-and-installation projects in fulfilling the contracts with customers that are directly associated with the contract, comprising installation cost and transportation cost, are recognised as an asset (contract costs), if those costs are expected to be recoverable.2.5\u2002Other receivablesmEUR 2022 2021Prepayments157 151Supplier claims 71 1201VAT 582 465Derivative financial instruments366 387Other receivables264 216Total 1,440 1,339Specified as follows:0\u20131 year1,221 1,105> 1 year 219 234Total 1,440 1,3391 Includes loss provisions on VAT receivables of EUR 55m as at 31 December 2022 (2021: EUR 58m).\u2002 Key accounting estimates Estimate of allowance for doubtful VAT receivablesManagement makes allowance for doubtful VAT receivables in anticipation of estimated future receipt of payments. If certain circumstances result in lack of receipt of payments, an additional allowance could be required. When evaluating the adequacy of the allowance for doubtful VAT receivables, Management analyses the nature of the individual VAT receivables and takes into account any relevant historical information that is applicable to the specific circumstance.\u2002Accounting policiesOther receivables are measured at amortised cost or net realisable value equivalent to nominal value less allowances for doubtful receivables, whichever is lower. Prepayments recognised as assets comprise prepaid expenses and are measured at cost. Derivative financial instruments are measured at fair value.2.6\u2002Other liabilitiesmEUR 2022 2021Staff costs182 188Taxes and duties 365 267Derivative financial instruments364 386Other liabilities 497 113Total 1,408 954Specified as follows:0-1year1,349 809> 1 year 59 145Total 1,408 954As at 31 December 2022, other liabilities include payments received relating to sale of assets that do not meet the criteria for derecognition at the balance sheet date.\u2002Accounting policiesOther liabilities are measured at amortised cost. Derivative financial instruments are measured at fair value.Obligations relating to defined contribution plans, where Vestas continuously makes fixed pension contributions to independent pension funds, are recognised in the income statement in the period to which they relate. Any contributions outstanding are recognised in the balance sheet under other liabilities. 3.1\u2002Intangible assets2022 2021Completed OtherDevelopment Completed OtherDevelopment development intangibleprojects in development intangibleprojects in mEUR Goodwillprojects Softwareassetsprogress Total Goodwillprojects Softwareassetsprogress TotalCost as at 1 January1,611 2,561 366 560 376 5,474 1,377 2,327 535 562 317 5,118Impact on change in accounting policy - - - - - - - - (42) - (10) (52)Adjusted cost as at 1 January 1,611 2,561 366 560 376 5,474 1,377 2,327 493 562 307 5,066Exchange rate adjustments 7 - 1 1 1 10 9 1 2 1 1 14Additions - - 2 1 445 448 - - 3 2 355 360Adjustments from business combination - - - - - - 230 - - (5) - 225Disposal - - (6) - - (6) (5) - (186) - - (191)Transfers - 164 46 - (210) - - 233 54 - (287) -Transfer to assets held for sale (1) - - - - (1) - - - - - -Cost as at 31 December 1,617 2,725 409 562 612 5,925 1,611 2,561 366 560 376 5,474Amortisation and impairment losses as at 1 January 103 1,942 244 123 - 2,412 103 1,706 371 50 - 2,230Impact on change in accounting policy - - - - - - - - (17) - - (17)Adjusted amortisation and impairment losses as at 1 January 103 1,942 244 123 - 2,412 103 1,706 354 50 - 2,213Exchange rate adjustments - - - 1 - 1 - 1 2 1 - 4Amortisation for the year - 221 55 49 - 325 - 235 74 72 - 381Impairment losses for the year - 114 1 13 - 128 - - - - - -Disposal - - (6) - - (6) - - (186) - - (186)Amortisation and impairment losses as at 31 December 103 2,277 294 186 - 2,860 103 1,942 244 123 - 2,412Carrying amount as at 31 December 1,514 448 115 376 612 3,065 1,508 619 122 437 376 3,062Internally generated assets included above - 394 42 - 611 1,047 - 619 82 - 419 1,120Amortisation period 2-5 years 3-5 years 3-7 years 2\u20135 years 3\u20135 years 3\u20137 yearsAmortisation, intangible assets 20222021\u2002 Production costs EUR 56m (17%)\u2002 Production costs EUR 80m (21%)\u2002 Research and development costs EUR 232m (71%)\u2002 Research and development costs EUR 240m (63%)\u2002 Distribution costs EUR 3m (1%)\u2002 Distribution costs EUR 4m (1%)\u2002 Administration costs EUR 34m (11%)\u2002 Administration costs EUR 57m (15%)\u2002 Special items EUR 0m (0%)\u2002 Special items EUR 0m (0%)Impairment loss, intangible assets20222021\u2002 Production costs EUR 13m (10%)\u2002 Production costs EUR 0m (0%)\u2002 Research and development costs EUR 90m (70%)\u2002 Research and development costs EUR 0m (0%)\u2002Distribution costs EUR 0m (0%)\u2002Distribution costs EUR 0m (0%)\u2002 Administration costs EUR 0m (0%)\u2002 Administration costs EUR 0m (0%)\u2002Special items EUR 25m (20%)\u2002Special items EUR 0m (0%)3.1\u2002Intangible assets \u2013 continuedDevelopment projects and other intangible assetsVestas continually invests in the development of new technologies and, for this reason, development projects constitute a significant part of the total intangible assets. The continuous investments include a wide portfolio of development projects. Vestas does not have one individually significant development assets.Impairment relating to offshore activityIn 2022, Vestas recognised an impairment loss of EUR 177m relating to the V164/174 offshore activity, impacting the Power Solution segment by EUR 165m and the Service segment by 12m. Intangible assets, including technology, were written down by EUR 96m to EUR 439m and tangible assets were written down by EUR 81m to EUR 113m, re\ufb02ecting the recoverable amount of the assets. The recoverable amount is based on the discounted value of future expected cash \ufb02ows from the offshore activity. A discount rate before tax of 9.8% was used. The impairment was primarily due to revised assumptions on offshore order intake and project profitability. The test remains sensitive to changes in key assumptions, including order intake, project margins and service margins. A change in order intake will have a significant impact on the recoverable amount. A change of 1%-point in the assumed project margin will result in a EUR 15m change to the recoverable amount and a change of 1%-point in the service margin will result in a EUR 22m change to the recoverable amount.\u2002 Key accounting estimates Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOWAs part of the acquisition of MHI Vestas Offshore Wind (MVOW) in 2020, Vestas acquired intangible assets and tangible assets relating to the offshore activity. As at 31 December 2022, the acquired assets was tested for impairment. In performing the impairment test, the carrying amount of the assets is compared to the discounted value of expected future cash \ufb02ows from the offshore activity (value-in-use). The expected future cash \ufb02ows are based on key assumptions including order intake and project margins and service contract margins, which are by nature subject to significant uncertainty. \u2002Accounting policiesGoodwillGoodwill is initially recognised in the balance sheet as the difference between the fair value of net assets acquired and. consideration transferred. Subsequently, goodwill is measured at this value less accumulated impairment losses. Goodwill is not amortised.The carrying amount of goodwill has been allocated to Vestas\u2019 operating segments. Identification of operating segments is based on management structure and internal financial reporting. The carrying amount of goodwill is tested at least annually for impairment, together with the other non-current assets of the operating segment to which goodwill has been allocated. If the recoverable amount is lower than the carrying amount of the operating segment, goodwill is written down to its lower recoverable amount in the income statement.The recoverable amount is usually calculated as the net present value of expected future net cash \ufb02ows from the operating segments to which the goodwill has been allocated. Alternatively, the recoverable amount is calculated as fair value less costs to sell. Impairment losses on goodwill are recognised in the income statement, either in production costs, research and development costs, distribution costs or administration costs.Impairment losses on goodwill are not reversed.Development projectsProjects for the development and testing of new wind turbines are recognised as intangible assets when they are clearly defined, identifiable, and for which technical feasibility, suffi-cient resources and a potential future market or application in the enterprise can be demonstrated. In addition, it is the intention with these projects to manufacture, market or use the project for future commercial purposes. This applies if cost can be measured reliably and sufficient certainty exists that future earnings or the net selling price can cover production costs, distribution costs, and administration costs as well as research and development costs. At Vestas this is underpinned by a gate process, where these judgements are made at specific gates. Other development costs not qualifying for capitalization are recognised in the income statement as research and development costs.Capitalised development costs are measured at cost less accu mulated amortisation and impairment losses. Devel-opment costs comprise salaries, amortisation and other costs attributable to Vestas\u2019 development activities.Following completion of the development work, development projects are amortised on a straight-line basis over their estimated useful lives. The amortisation period is two to five years. The basis of amortisation is calculated net of any impairment losses. The carrying amount of development projects in progress is tested for impairment at least annually, and where the carrying amount exceeds the net present value of the future net cash \ufb02ows expected to be generated by the development project, the project is written down to its recoverable amount in the income statement. Finished development projects are tested for impairment if there is indication of impairment from the annual review. Patents and licences included in development projects are measured at cost less accumulated amortisation and impair-ment losses. Patents and licences are amortised over the patent period or term of agreement, the life of the development project or the estimated useful life, whichever is shorter. The basis of amortisation is calculated net of any impairment losses. SoftwareAcquired software licences and internally developed software is measured at cost less accumulated amortisation and impairment losses. Cost includes both direct internal and external costs. Software is amortised on a straight-line basis over three to five years. The basis of amortisation is calculated net of any impairment losses.Other intangible assetsCustomer relationship, order backlog, and trademarks with a finite useful life acquired from third parties, either separately or as part of the business combination, are capitalised at cost and amortised over their remaining useful lives. Other intangible assets that are not Customer relationship, order backlog, or trademarks are measured at cost less amortisation and impairment losses.3.2\u2002Property, plant and equipment2022 2021Other fixtures Property, Other fixtures Property, and fittings, plant and and fittings, plant and Land and Plant and tools and equipment in Right-of-use Land and Plant and tools and equipment in Right-of-use mEURbuildingsmachineryequipmentprogressassets Totalbuildingsmachineryequipmentprogressassets TotalCost as at 1 January1,135 1,104 1,778 136 808 4,961 1,166 1,096 1,530 169 581 4,542Exchange rate adjustments 8 8 14 1 (1) 30 57 40 47 (4) 12 152Additions 9 11 160 191 129 500 4 16 180 276 230 706Disposals (69) (150) (129) (3) (45) (396) (121) (146) (157) - (15) (439)Transfers 5 69 101 (175) - - 29 98 178 (305) - - Transfer to assets held for sale (65) (53) (19) - (7) (144) - - - - - -Cost as at 31 December 1,023 989 1,905 150 884 4,951 1,135 1,104 1,778 136 808 4,961Depreciation and impairment losses as at 1 January 625 781 1,179 - 285 2,870 568 760 1,049 - 143 2,520 Exchange rate adjustments 3 7 10 - 2 22 26 25 35 - 1 87Depreciation for the year 34 118 270 - 152 574 42 102 243 - 146 533 Impairment losses for the year 55 66 29 - 36 186 45 16 - - 7 68 Reversal of impairment (39) (8) - - (7) (54) - - - - - -Transfers - (1) 1 - - - - - - - - -Transfers to assets held for sale (37) (32) (12) - (4) (85) - - - - - -Reversal of depreciation of disposals in the year (23) (148) (125) - (18) (314) (56) (122) (148) - (12) (338)Depreciation and impairment losses as at 31 December 618 783 1,352 - 446 3,199 625 781 1,179 - 285 2,870 Carrying amount as at 31 December 405 206 553 150 438 1,752 510 323 599 136 523 2,091 Depreciation period 10\u201340 years 3\u201310 years 3\u20135 years 2\u201320 years 10\u201340 years 3\u201310 years 3\u20135 years 2\u201320 yearsDepreciation, property, plant and equipmentmEUR and percent20222021\u2002 Production costs EUR 369m (64%)\u2002 Production costs EUR 360m (68%)\u2002 Research and development costs EUR 34m (6%)\u2002 Research and development costs EUR 30m (6%)\u2002Distribution costs EUR 156m (27%)\u2002Distribution costs EUR 126m (23%)\u2002Administration costs EUR 15m (3%)\u2002Administration costs EUR 17m (3%)\u2002Special items EUR 0m (0%)\u2002Special items EUR 0m (0%)Impairment loss, property, plant and equipmentmEUR and percent20222021\u2002 Production costs EUR 61m (33%)\u2002 Production costs EUR 0m (0%)\u2002 Research and development costs EUR 4m (2%)\u2002 Research and development costs EUR 0m (0%)\u2002Distribution costs EUR 19m (10%)\u2002Distribution costs EUR 0m (0%)\u2002Administration costs EUR 3m (2%)\u2002Administration costs EUR 0m (0%)\u2002Special items EUR 99m (53%)\u2002Special items EUR 68m (100%)3.2\u2002Property, plant and equipment \u2013 continued\u2002Accounting policiesLand and buildings, plant and machinery as well as other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and impairment losses.Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is ready for use. In the case of construction of own assets, cost comprises direct and indirect costs for materials, components, sub-suppliers, and labour. Estimated costs for dismantling and disposing of the asset and for re-establishment are added to cost to the extent that they are recognised as a provision. Where individual components of an item of property, plant and equipment have different useful lives, the cost of the item is decomposed into separate components which are depreciated separately.Subsequent costs, e.g. in connection with the replacement of components of an item of property, plant and equipment, are recognised in the carrying amount of the asset in question when it is probable that the costs incurred will result in future economic benefits to Vestas. The carrying amount of the replaced components is derecognised in the balance sheet and recognised as costs in the income statement. All other costs incurred for ordinary repairs and maintenance are rec-ognised in the income statement as incurred.Installations capitalised as land and buildings which are related to leased assets are depreciated over the term of the related lease contract. Such lease contracts range with a lease term from 10 to 20 years.Depreciation is calculated on a straight-line basis over the expected useful lives of the assets, which are:Buildings (including installations) 10\u201340 yearsPlant and machinery 3\u201310 years Other fixtures and fittings, tools and equipment 3\u20135 yearsRight-of-use assets 2-20 yearsLand is not depreciated.The basis of depreciation is calculated taking into account the residual value of the asset less any impairment losses. The residual value is determined at the time of acquisition and is reassessed annually. Where the residual value exceeds the carrying amount of the asset, depreciation is discontinued.The depreciation periods are determined based on estimates of the expected useful lives and future residual value of the assets. The estimates are based on historical experience. A reassessment is made once a year to ascertain that the depreciation basis re\ufb02ects the expected life and future residual values of the assets.If the depreciation period or the residual value has changed, the effect on depreciation is recognised prospectively as a change in accounting estimate.Depreciation is recognised in the income statement as either production costs, research and development costs, distribution costs or administration costs to the extent that depreciation is not included in the cost of assets of own construction.The carrying amounts of non-current assets are reviewed on an annual basis to determine whether there is any indication of impairment. If so, the recoverable amount of the asset is calculated. The recoverable amount is the higher of the fair value of the asset less estimated costs to sell and value in use.Value in use is calculated as the net present value of expected future net cash \ufb02ows from the asset or a group of assets.An impairment loss is recognised where the carrying amount of an asset exceeds its recoverable amount.Impairment losses are reversed only to the extent of changes in the assumptions and estimates underlying the impairment calculation.Impairment losses are reversed only to the extent that the new carrying amount of the asset does not exceed the carrying amount of the asset after depreciation/amortisation had the asset not been impaired.Impairment relating to offshore activityIn 2022, Vestas recognised an impairment loss on tangible assets, including right-of-use assets, of EUR 81m relating to the V164/174 offshore activity. Refer to note 3.1 for further details.\u2002 Key accounting estimates Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOWRefer to note 3.1 for further details.3.3\u2002Leases2022 2021Right-of-use assetsmEURProperty Vehicles Equipment Vessels Total Property Vehicles Equipment Vessels TotalCarrying amount as at 1 January300 59 45 119 523 241 63 41 93 438Exchange rate adjustments (3) - - - (3) 11 - - - 11Depreciation charge for the year (77) (37) (19) (19) (152) (74) (37) (17) (18) (146)Impairment losses for the year (36) - - - (36) - - - - -Reversal of impairment 7 - - - 7 (7) - - - (7)Addition of right-of-use assets for the year 86 25 13 5 129 132 33 21 44 230Disposal of right-of-use assets for the year (27) - - - (27) (3) - - - (3)Transfers (5) 4 1 - - - - - - -Transfer to assets held for sale (3) - - - (3) - - - - -Carrying amount as at 31 December 242 51 40 105 438 300 59 45 119 523Vestas leases several assets including properties, vehicles, vessels and equipment. Rental contracts are typically made for fixed periods of one to 10 years but may have extension options. Lease terms are negotiated on an individual basis and contain different terms and conditions including payment terms, terminations rights, index-regulations, maintenance, deposits and guarantees etc.Some property leases contain variable payment terms that are linked to an index e.g. a consumer price index. Overall the variable payments constitute less than 1 percent of Vestas\u2019 entire lease payments.Total lease expenses recognised in the income statementmEUR 2022 2021Variable lease payments not included in the measurement of lease liabilities0 1Expenses relating to short-term leases and leases of low-value51 31Total leases recognised in the statement of cash \ufb02owsmEUR 2022 2021Short-term leases and leases of low value51 31Payment of lease liability including interest159 148Total cash out\ufb02ow for leases210 179Lease liabilities Lease liabilities are included in financial debts and amount to EUR 493m as at 31 December 2022 (2021: EUR 545m). Refer to note 4.1 for disclosure on contractual cash \ufb02ows. \u2002Accounting policiesVestas as LesseeVestas assesses whether a contract is or contains a lease at inception of the contract. Vestas recognises right-of-use assets and corresponding lease liabilities at the lease commencement date, except for short-term leases and leases of low value. For these leases, Vestas normally recognises the lease payments as an operating expense on a straight-line basis over the term of the lease. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liabilities adjusted for any lease payments made at or before the commencement date, plus any initial costs incurred.The right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses. The right-of-use assets are from the commencement date depreciated over the shorter period of lease term and useful life of the underlying asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use assets are periodically reduced by impairment losses, if any, and adjusted in accordance with lease liabilities. The lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, Vestas\u2019 incremental borrowing rate. Generally, Vestas uses its incremental borrowing rate taking into account the specific countries.Lease payments included in the measurement of the lease liabilities comprise the following: \u017c fixed payments; \u017c variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; \u017c the exercise price of a purchase option if Vestas is reasonably certain to exercise the options; and \u017c amounts expected to be payable under residual value guarantees.The lease liabilities are subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the estimate of the amount expected to be payable under a residual value guarantee, or if Vestas changes its assessment of whether it will exercise a purchase, extension or termination option.When the lease liabilities are remeasured in this way, a corre-sponding adjustment is made to the carrying amount of the right-of-use assets, or is recorded in profit or loss if the carrying amount of the right-of-use assets has been reduced to zero.3.4\u2002ImpairmentValuation of goodwillAs at 31 December 2022, Management performed the annual impairment test of goodwill. Based on the test, no impairment was identified (2021: No impairment). In the impairment tests, the carrying amount of the assets are compared to the discounted value of future expected cash \ufb02ows. The annual tests of goodwill were performed on three operating segments: Power Solutions Onshore, Power Solutions Offshore and Service, these being the lowest level of cash-generating units as defined by management.The main part of the carrying amount of goodwill in Vestas subject to impairment testing are related to several acquisitions specified as follows. \u017c The acquisition of NEG Micon A/S in 2004, included acquisition of goodwill of EUR 180m allocated to Vestas Power Solutions Onshore and EUR 35m allocated to the Service segment. \u017c The acquisition of UpWind Solutions, Inc. in 2015, included acquisition of goodwill of EUR 40m, which was allocated to the Service segment. \u017c The acquisition of Availon GmbH in 2016 included acquisition of goodwill of EUR 56m, which was allocated to the Service segment. \u017c The acquisition of Utopus Insights, Inc. in 2018 included acquisition of goodwill of EUR 70m, which was allocated to the Service segment. \u017c The acquisition of MHI Vestas Offshore Wind A/S in 2020 included acquisition of goodwill of EUR 1,126m. The goodwill arising from the acquisition was allocated with EUR 893m to Power Solutions Offshore and EUR 233m to the Service segment. Assumptions underpinning impairment test of goodwillBudgets and business plans for the next three years are based on Vestas\u2019 investments in progress and contracted invest-ments, and the risks relating to the key parameters have been assessed and incorporated in the expected future cash \ufb02ows underpinning the impairment test of goodwill. In addition, the budgets and business plans are based on management\u2019s ex-pectations of the current market conditions and future growth expectations. For the Power Solutions Onshore and Service, projections for 2026 and onwards are based on general market expectations and risks in the impairment test. The acquisition of MHI Vestas Offshore Wind A/S in 2020 was based on a business case related to the introduction of a new wind turbine platform. The expected cash in\ufb02ows from this new technology are not expected until after 2024. For this reason, the impairment test of Power Solutions Offshore include the same business case and an extended budget and forecast period including the years 2023 to 2029. Projections for year 2030 and onwards are based on general market expectations and risks in the impairment test. The terminal value in the projection period is determined taking into account general growth expectations for the segments in question. Long-term growth rate has been estimated at 2 percent.Power Solutions Onshore Order backlog of EUR 16.4bn as at 31 December 2022Expectations on changing market environment, including future market prices and high cost pressureExpectations on future orders received, among other things based on expected market share of the global market outlookExpectations on continuing develop-ments in mature and emerging marketsExpectations on support schemes in bothmature and emerging markets\u2191The above main information is used in determining revenue, EBIT, and capital expenditure.Power Solutions OffshoreOrder backlog of EUR 2.7bn as at 31 December 2022Expectations on changing market environment, including future market prices and high cost pressureExpectations on future orders received, among other things based on expected market share of the global market outlook including expectation of high growth in offshore market Expectations on continuing develop-ments in mature and emerging marketsExpectations on support schemes in bothmature and emerging markets ServiceService order backlog of EUR 30.4bn as at 31 December 2022Expectations on changing market environment, including future market prices and future development in cost reductionsExpectations on continued servicing of the existing installed base of wind turbines as well as future service contracts received, among other things based on expected market shareCapture full potential and accelerate profitable growth strategy from historically technology acquisitions and developmentsGrowth supported by market develop-ments and organic growth2022 2021Discount rate Growth rate in Carrying amount of Discount rate Growth rate in Carrying amount of before tax (%)terminal period (%)goodwill (mEUR)before tax (%)terminal period (%)goodwill (mEUR)Power Solutions Onshore10.6 2 178 9.5 2 180Power Solutions Offshore 10.2 2 894 9.8 2 893 Service 10.9 2 442 10.1 2 4353.5\u2002Investments in joint ventures and associatesAmounts in the balance sheetmEUR 2022 2021Investments in joint ventures42 25Investments in associates 604 584Carrying amount as at 31 December 646 609Amounts in the income statementmEUR 2022 2021Joint ventures(7) 18Associates 17 18Income/(loss) from investments in joint ventures and associates 10 36Joint ventures AssociatesInvestments in joint ventures and associatesmEUR2022 2021 2022 2021Cost as at 1 January91 53 585 52Additions 21 36 4 533Disposals - - - (1)Effect of exchange rate adjustment 10 2 (1) 1Cost as at 31 December 122 91 588 585Value adjustments as at 1 January (66) (34) (1) (14)Proceeds from sale of projects - - - -Dividends received (2) (50) (3) (10)Impairment losses - - (8) -Share of profit/(loss) (7) 18 17 18Share of other comprehensive income - - 14 3Effect of exchange rate adjustment (5) - (3) 2Value adjustments as at 31 December (80) (66) 16 (1)Carrying amount as at 31 December 42 25 604 584Place of % of Measurement Investment Name of entitybusinessownershipmethodtypeCopenhagen Infrastructure Partners Holding P/S Copenhagen, Denmark 25 Equity AssociateBlakilden F\u00e4bodberget Holding AB Solna, Sweden 40 Equity AssociateMaterial investmentsIn 2022, Vestas made no material investments in associates or joint ventures. In February 2021, Vestas acquired a 25 percent stake in Copenhagen Infrastructure Partners P/S\u2019 parent companies. The total consideration of EUR 500m included a EUR 180m upfront payment and a EUR 320m contingent consideration related to performance in the period 2023 to 2029. Refer to note 4.3 for further information on the fair value measurement of the contingent consideration. The associated companies listed above are material to Vestas and have share capital consisting solely of ordinary shares, which are held directly by Vestas.Income/(loss) from investments in joint ventures and associates presented in and after EBIT in 2023Vestas\u2019 Development business continues to grow and re\ufb02ects an increasingly financial and strategic importance. In 2023, we expect a significant increase in income from investments in joint ventures and associates related to development activ i ties. As a consequence, income/(loss) from investments in joint ventures and associates which are deemed to pertain to our core business activities will be included in EBIT before special items. The profit/(loss) from investments in joint ventures and associates will be presented below EBIT before special items when deemed outside Vestas' core business activities.\u2002Accounting policiesAssociates are entities over which Vestas has significant in\ufb02uence, but not control. A joint venture is an arrangement in which Vestas has joint control. Joint ventures and associates are accounted for using the equity method. Under the equity method, interests in joint ventures and associates are initially recognised at cost and adjusted thereafter to recognise Vestas\u2019 share of the post-acquisition profits or losses and movements in other comprehensive income. When Vestas\u2019 share of losses in a joint venture and associate equals or exceeds its interests in the joint ventures and associates (which includes any long-term interests that, in substance, form part of Vestas\u2019 net investment in the joint ventures and associates), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures and associates.Timing in revenue recognition may be different between Vestas and joint ventures and associates where Vestas recognises revenue when control of the wind turbines have been transferred to joint ventures and associates but joint ventures and associates do not recognise revenue until they have transferred the risk of the same wind turbines to the end customer. Such timing difference results in part of Vestas\u2019 profit from wind turbines delivered being eliminated in the net result from joint ventures and associates, until joint ventures and associates have recognised their revenue. This timing difference may vary between quarters and year end but will even out over time.Unrealised gains on transactions between Vestas and its joint ventures and associates are eliminated to the extent of Vestas\u2019 interest in the joint ventures and associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures and associates have been changed where necessary to ensure consistency with the policies adopted by Vestas.3.5\u2002Investments in joint ventures and associates \u2013 continuedSummarised financial information for joint ventures and associatesSet out below is the summarised financial information for Copenhagen Infrastructure Partners P/S and Blakliden F\u00e4bodberget Holding AB as of 31 December 2022, which are accounted for using the equity method. The information below re\ufb02ects the amounts presented in the financial statements of the entities (and not Vestas\u2019 share of those amounts) material to Vestas in 2022. The investment in Copenhagen Infrastructure Partners P/S include investment in companies related to and managed by Copenhagen Infra-structure Partners P/S and for this reason the financial amounts presented below include financial information from several consolidated and none consolidated entities related to Copenhagen Infrastructure Partners P/S.Other joint ventures and associates that are individually and aggregated immaterial to Vestas, have not been included in the summarised financial information.Associate, 25 percentAssociate, 40 percentCopenhagen Infrastructure Partners P/SBlakliden F\u00e4bodberget Holding ABSummarised balance sheetmEUR2022 2021 2022 2021CurrentCash and cash equivalents18 26 19 8Other current assets (excluding cash) 26 19 21 10Total current assets 44 45 40 18Other current liabilitiesTotal current liabilities(10) (14) (89) (91)Non-currentTotal non-current assets555 296 348 228Total non-current liabilities (16) (3) (289) (183)Net assets 573 324 10 (28)Associate, 25 percent Associate, 40 percentSummarised statement of Copenhagen Infrastructure Partners P/SBlakliden F\u00e4bodberget Holding ABcomprehensive incomemEUR2022 2021 2022 2021Revenue141 114 - -Depreciation and amortisation (4) (2) - -Interest cost 0 (1) (9) (3)Profit before tax 294 138 (13) (3)Post-tax profit from continuing operations294 138 (13) (3)Other comprehensive income - - 31 9Total comprehensive income 294 138 18 6Associate, 25 percentAssociate, 40 percentReconciliation of summarised Copenhagen Infrastructure Partners P/SBlakliden F\u00e4bodberget Holding ABfinancial informationmEUR2022 2021 2022 2021Opening net assets as at 1 January324 - (28) (34)Acquired net assets - 229 - -Distributions (45) (43) - -Contributions - - 20 -Profit/(loss) for the year 294 138 (13) (3)Other comprehensive income - - 31 9Closing net assets 573 324 10 (28)Interest in joint venture and associate (ownership of net assets)143 81 4 (11)Re-assessment of milestone payments, PPA adjustments, and other adjustments397 439 47 54Carrying value 540 520 51 433.6\u2002Provisions2022 2021ProvisionsWarranty Other Total Warranty Other Total mEURprovisionprovisionsprovisionsprovisionprovisionsprovisionsCarrying amount as at 1 January1,197 135 1,332 1,189 87 1,276Impact on change in accounting policy - 22 22 - - -Adjusted carrying amount as at 1 January 1,197 157 1,354 1,189 87 1,276Exchange rate adj. - - - - - -Addition during the year 926 196 1,122 748 70 818Utilised during the year (633) (59) (692) (852) (4) (856)Addition from business combination - - - 55 - 55Reclassification - - - 57 - 57Reversed during the year - (11) (11) - (18) (18)Carrying amount as at 31 December 1,490 283 1,773 1,197 135 1,332Non-current 765 179 944 655 31 686Current 725 104 829 542 104 646Carrying amount as at 31 December 1,490 283 1,773 1,197 135 1,332Warranty provision charged to the income statementmEUR 2022 2021Gross warranty provision926 748Supplier reclaims (11) (69)Net warranty provision 915 679\u2190The table shows movements in warranty provision and other provisions. Other provisions mainly relate to provisions for legal claims and loss making contracts.Product risksVestas invests significant resources in improving products and increasing their reliability to mitigate major warranty provisions. This work comprises design, production, installation, and continuous maintenance. The goal of these initiatives is to reduce Vestas\u2019 warranty costs, to secure customer returns, and increase the competitiveness of the products.\u2002 Key accounting estimates Provisions for warrantiesThe product warranties, which in the great majority of cases includes component defects and functional errors are usually granted for a two-year period from legal transfer of the wind turbine. In certain cases, a warranty of up to five years is provided. For the customer, the specific warranty period and the specific warranty terms are part of the basis of the individual contract.Warranty provisions include only standard warranty, whereas services purchased in addition to the standard warranty are included in the service contracts. In addition to the above, provisions are made for upgrades of wind turbines sold due to defects, etc. Such provisions will also include wind turbines sold in prior years, but where serial defects, etc. are identified later. Moreover, it should be emphasised that the complexity of some of the serial defects, etc. identified may lead to adjustments of previous estimates, upwards as well as downwards, in light of factual information about population size, costs of repair and the timing of such repairs.During 2022, net warranty provisions charged to the income statement amounted to EUR 915m (2021: EUR 679m), equivalent to 6.3 percent of revenue. The net amount consists of a gross warranty provision of EUR 926m less supplier claims of EUR 11m. The warranty provisions in 2022 included additional warranty provisions of EUR 124m due to increased repair costs caused by external cost in\ufb02ation, hereof EUR 93m related to offshore projects. Warranty consumption amounted to EUR 633m compared to EUR 852m in 2021.Management assesses the likely outcome of pending and future negotiations with sub-suppliers for compensation. Compensation from sub-suppliers may be recognised only when it is virtually certain that we will receive compensation from the sub-suppliers.\u2002Accounting policiesProvisions are recognised as a consequence of a past event when Vestas has a legal or constructive obligation and it is probable that there will be an out\ufb02ow of Vestas\u2019 financial resources to settle the obligation. Provisions are measured at management\u2019s best estimate of the costs required to settle the obligation. Discounting is applied where relevant.Vestas accrues for the estimated cost of the warranty upon recog-nition of the sale of the product. The costs are estimated based on actual historical costs incurred and on estimated future costs related to current sales, and are updated periodically. Actual warranty costs are charged against the provision for warranty.Restructuring costs are recognised as liabilities when a detailed, formal restructuring plan has been announced to those affected no later than the balance sheet date. A provision for loss-making contracts is made where the expected benefits to Vestas from the contract are lower than the unavoidable costs of meeting obligations under the contract. Loss making construction contracts in progress are, however, recognised in construction contracts in progress.Provision for legal disputes are recognised where a legal or constructive obligation has been incurred as a result of past events and it is possible that there will be an out\ufb02ow of resources that can be reliably estimated. In this case, Vestas arrives at an estimate on the basis of an evaluation of the most likely outcome. Disputes for which no reliable estimate can be made are disclosed as contingent liabilities, refer to note 6.4.4.1\u2002Financial risk managementVestas\u2019 policy for managing financial risks Financial risk management is an integrated part of Vestas\u2019 operating activities. Vestas is exposed to a number of financial risks through its international operations. Financial risks are monitored and managed centrally. The Treasury Policy outlines the overall objectives and policies for Vestas\u2019 financial risk management. The Treasury Policy is approved by the Board, and revised on a continuous basis to adapt to the changing financial risks and market situation. The Treasury Policy sets the limits for the various financial risks as well as Vestas\u2019 hedging policy. It is Vestas\u2019 policy only to use derivatives to hedge commercial exposures and not to enter into any speculative transactions.Capital structureThe Board and Executive Management regularly assess whether Vestas\u2019 capital structure is in the shareholders\u2019 best interest. The objective is to create the necessary \ufb02exibility and stability to implement strategic development work, while in the long-term achieving Vestas\u2019 financial ambitions and maintain our capital structure target of a net interest-bearing debt/ EBITDA ratio below 1x.Liquidity risks Vestas manages its liquidity risk in line with the Treasury Policy to ensure having sufficient financial resources to service its financial obligations. Financial resources are managed through a combination of cash and money market deposits, committed and uncommitted credit facilities, and highly rated marketable securities.In 2022, Vestas further strengthened its access to liquidity and long-term funding by establishing a EUR 3,000m EMTN programme. This programme is a versatile platform available for quick and \ufb02exible access to the corporate bond market from short maturities (1-yr) to very long maturities (15+-yr).Vestas\u2019 main credit facility, a EUR 2,000m committed revolving multi-currency credit facility with a group of leading banks is available for general corporate purposes, including guarantees issuance, carries a 6-year tenor with one one-year extension option. As at end of 2022, EUR 771m of this revolving credit facility was converted into ancillary bank guarantees issuance facilities leaving EUR 1,229m available for cash drawings. The revolving credit facility is subject to customary undertakings, a change of control clause resulting in repayment of the credit facility in the event of change in control and a financial covenant. The financial covenant has not been breached in 2022, and is not expected to be breached in 2023.Liquidity is managed and optimised centrally by using cash pools, in-house bank solutions, and ongoing diligent cash- and working capital management practices. As part of managing short term liquidity Vestas also has access to and make use of a number of uncommitted money market facilities (EUR 500m in total) granted by core relationship banks. The committed revolving credit facility combined with the uncommitted money market lines provide the necessary financial headroom for the Group. Further funding can be provided by the EMTN programme. On 15 March 2022, Vestas secured long-term funding by issuing two EUR 500m sustainability-linked bonds. The two bonds will mature in 2029 and 2034, respectively. The EMTN programme remaining capacity is EUR 2,000m. On July 17 2022, Vestas drew EUR 475m from a green loan facility granted by the European Investment Bank (EIB) to fund its research, development, and innovation (RDI) activities. The green loan facility carries a 10-year tenor.Financial risk How Vestas manages the riskLiquidity risk Availability of committed credit lines and borrowing facilitiesCredit risk Diversification of bank exposure, credit limits and guaranteesMarket risk, foreign exchange Currency forward contracts and currency swapsMarket risk, interest risk Fixed interest loansMarket risk, commodity price Fixed price agreements with suppliers and commodity contractsAvailable financial resourcesmEUR 2022 2021Liquidity positionFinancial investments95 216Cash and cash equivalents without disposal restrictions 2,352 2,394Cash and cash equivalents with disposal restrictions 26 26Cash and cash equivalents as at 31 December 2,378 2,420Credit facilitiesMain credit facility1,229 1,329Other credit facilities 80 80Total available financial resources 3,782 4,045\u2193The table shows Vestas\u2019 liquidity position and available credit facilities.\u2002Accounting policiesCash and cash equivalents included in Vestas\u2019 cash manage ment comprise cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.Cash and cash equivalents with disposal restrictions are included in day-to-day cash management and fulfills the criteria as cash and cash equivalents. Cash with disposal restrictions includes cash pledged to guarantee providers as security for guarantee obligations to obtain lower commission rates.4.1\u2002Financial risk management \u2013 continued2022 2021Contractual cash \ufb02owsCarrying amount Contractual cash \ufb02owsCarrying amount Maturity of financial assets and liabilitiesfinancial financial mEURinstrumentsinstruments0-1 year 1-2 years >2 years Total 0-1 year 1-2 years >2 years TotalTotal financial assets, non-current and current5,990 112 13 6,115 6,083 6,475 26 1 6,502 6,466Financial liabilities, non-current and currentLeasing liabilities142 104 371 617 493 144 110 354 608 545Other financial debts 175 26 1,658 1,859 1,613 571 0 0 571 571Total financial debts 317 130 2,029 2,476 2,106 715 110 354 1,179 1,116Foreign currency derivatives 305 37 6 348 348 254 119 4 377 377Commodity derivatives 14 2 - 16 16 9 - - 9 9Other liabilities 257 6 - 263 263 107 8 - 115 115Other liabilities and derivative financial instruments 576 45 6 627 627 370 127 4 501 501Trade payables 4,089 - - 4,089 4,089 4,286 - - 4,286 4,286Contingent consideration 115 32 181 328 321 3 115 213 331 320Financial guarantee contracts 46 - - 46 - 17 - - 17 -Total financial liabilities, non-current and current 5,143 207 2,216 7,566 7,143 5,391 352 571 6,314 6,2232022 2021Changes to financial liabilitiesLease Issued Credit Contingent Lease Issued Credit Contingent mEURliabilitiesbondsfacilitiesconsideration Totalliabilitiesbondsfacilitiesconsideration TotalBalances as at 1 January545 0 571 320 1,436 446 513 395 0 1,354Addition from business combination and investments in associates - - - - - - - - 320 320Loss of control of subsidiary - - - - - - - (26) - (26)Proceeds from borrowings - 990 766 - 1,756 - - 642 - 642Additional lease liabilities 102 - - - 102 230 - - - 230Payment of lease liabilities (147) - - - (147) (135) - - - (135)Disposal of right-of-use asset (1) - - - (1) (2) - - - (2)Payments of financial debt - - (713) - (713) - (513) (447) - (960)Unwinding of financial liabilities - 1 - 1 2 - - - - -Transfer to liabilities held for sale (4) - - - (4) - - - - -Exchange rate adjustments (2) - (2) - (4) 6 - 7 - 13Balances as at 31 December 493 991 622 321 2,427 545 0 571 320 1,4364.1\u2002Financial risk management \u2013 continuedCredit risks Credit risks are managed according to the Treasury Policy. Vestas is exposed to credit risks arising from cash and cash equivalents, including money market deposits and money market funds, investments in marketable securities, derivative financial instruments, and trade and other receivables. The Treasury Policy sets limits for the credit risk exposure. For financial institution counterparties, this is based on the counterparty\u2019s credit rating, for other counterparties, this is based on mitigating actions.As at 31 December 2022, Vestas considers the maximum credit risk related to financial institution counterparties to be EUR 2,473m (2021: EUR 3,136m), and the total credit risk is considered to be EUR 5,719m (2021: EUR 6,194m).Trade receivables and contract assetsTrade receivables are mainly with counterparties within the energy sector. The credit risk depends, among other things, on the development within this sector and the country in which the individual customer operates. Upon signing a contract for the delivery of wind turbines or wind power plants with a customer, a prepayment is received. The remaining consideration is usually invoiced and paid in instalments at different stages of the project. For service contracts, customers are usually invoiced in equal instalments over the duration of the service contract. Payment terms are typically one month from the invoice date. Contract assets are by nature not overdue. Vestas does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. Therefore, Vestas does not adjust any of the transaction prices for the time value of money.Trade receivables from customers are grouped based on loss patterns in assessing the expected credit losses. Contract assets are grouped with trade receivables as these relate to unbilled work in progress with same credit risk as trade receivables. The allowance for expected lifetime credit losses is determined using a provisional matrix based on past due dates, historical loss rates and current and forward-looking information, including geographical risk, the level of security obtained as well as individual assessment. The past due date analysis and expected credit loss allowance for trade receivables and contracts assets is set out in the following tables.As at 31 December 2022, Vestas\u2019 trade receivables and contract assets per geographical areas can be specified as follows: 59 percent in EMEA, 30 percent in America, and 11 percent in Asia Pacific (31 December 2021: 70 percent in EMEA, 18 percent in America and 12 percent in Asia Pacific). As at 31 December 2022, no single customer accounted for more than 10 percent of Vestas\u2019 total trade receivables (31 December 2021: 0). The commercial credit risk relating to the outstanding trade receivables balance as of 31 December 2022 was mitigated by EUR 535m (31 December 2021: EUR 552m) received as security, such as third party guarantees. Historically, Vestas has not incurred significant losses on trade receivables.Financial instruments and cash depositsGroup Treasury manages balances with financial institutions and the associated credit risk in accordance with Vestas\u2019 Treasury Policy assessing the individual counterparty\u2019s credit rating. 92 percent of Vestas\u2019 exposure towards financial institutions are with counterparties with a credit rating in the range of A to AAA. Vestas has entered into ISDA agreements with all financial institution counterparties used for trading derivative financial instruments under which Vestas has a right to set-off should certain credit events occur, which means that Vestas\u2019 actual credit risk is limited to the net assets per counterparty. Expected credit losses 2022 2021on trade receivables and contract assetsCarrying Expected Loss Carrying Expected Loss mEURamountloss rateallowanceamountloss rateallowanceNot overdue2,404 0.1% (2) 2,402 0.1% (2)Overdue 0-60 days 115 0.2% 0 186 0.1% 0Overdue 61-120 days 39 1.8% (1) 72 2.2% (2)Overdue 121-180 days 21 4.8% (1) 15 4.7% (1)Overdue 181-365 days 52 5.9% (3) 44 9.1% (4)Overdue more than 365 days48 33.9% (25) 39 41.4% (27)Total 2,679 (32) 2,758 (36)Write-down as at 1 January (36) (25)Reversal of write-downs 7 2 Write-downs realised 2 2 Write-downs in the year (5) (15)Write-down as at 31 December(32) (36)2022 2021Netting Netting Carrying agree ments agree ments Netting of financial assets amount not offset in Carrying not offset in and liabilitiesbalance the balance amount the balance mEURsheetsheet Net amountbalance sheetsheet Net amountForeign currency derivatives349 (197) 152 377 (188) 189Financial assets 349 (197) 152 377 (188) 189Foreign currency derivatives 364 (197) 167 377 (188) 189Financial liabilities 364 (197) 167 377 (188) 189\u2191The table details financial assets and liabilities which are subject to netting in case of certain credit events.4.1\u2002Financial risk management \u2013 continuedMarket risks Vestas is exposed to various market risks with the main risks being foreign currency risks, commodity price risks and interest rate risk. All market risks are managed in accordance with the Treasury Policy. Foreign currency risksVestas\u2019 international business activities involves local Vestas entities making transactions in currencies other than the entity's functional currency. Consequently, Vestas\u2019s income statement, balance sheet and cash \ufb02ows are exposed to \ufb02uctuations in foreign currencies. The foreign currency exposures arise primarily from purchases of materials and the sales of wind turbines and service agreements.Vestas objective is to reduce the impact from short-term \ufb02uctuations in foreign currencies on the income statement and to increase the predictability of the financial results. Foreign currency risks are reduced by purchasing and producing in local markets and by hedging the foreign currency exposures in according to the Treasury Policy.Vestas hedges foreign currency exposures related to its firm wind turbine order backlog. It is Vestas\u2019 aim to hedge between 80 percent and 100 percent of the consolidated exposure. For committed exposures with durations of 18 months or more, hedging is performed with shorter maturity. Furthermore, Vestas hedges foreign currency exposure relating to monetary balances. It is Vestas\u2019 aim to hedge between 90 percent and 100 percent of all exposures.Vestas distinguishes between entities in restricted and un-restricted countries, when determining the level of exposure to be hedged. Foreign currency risks related to long-term investments and it\u2019s service business are not hedged based on an overall risk, liquidity and cost perspective. Foreign currency exposures are primarily hedged through foreign currency forward contracts and foreign currency swaps. Vestas hedge strategy is to centralise foreign currency exposure in Vestas Wind Systems A/S through internal contracts and trade the net currency exposures in the market.The majority of Vestas\u2019s sales are in USD and EUR. The EUR exchange rate risk is regarded as low in Danish entities due to Denmark\u2019s fixed exchange rate policy towards EUR. EUR sales outside Europe are limited. Despite the significant sales in USD, Vestas\u2019 currency exposure in USD has decreased as a result of increased sourcing of materials and components in USD. Due to Vestas being by nature a project business, the risk exposures towards specific foreign currencies changes from one year to another, depending on the geographical areas in which Vestas has its activities.Commodity price risksCommodity price risks in Vestas mainly relate to \ufb02uctuations in raw materials which are used directly or indirectly in the production and delivery of wind turbines. The commodity price risk can be divided into a direct exposure and an indirect exposure. The direct exposure is related to purchase of the raw material. The indirect exposure is related to the purchase of components as well as transportation costs, primarily by sea, where the price is linked to the prices of commodities such as metals and bunker fuel. The risk is managed in accordance with the Treasury Policy, primarily by entering into fixed price agreements with suppliers, where possible, and by entering into commodity swaps.Interest rate risks Interest rate risk mainly relates to interest-bearing debt with \ufb02oating interest rates and cash and cash equivalents. As at 31 December 2022, cash and cash equivalents amounted to EUR 2,378m and interest-bearing debt with \ufb02oating interest rates amounted to EUR 475m. An increase in relevant interest rates of 1%-point would have increased profit before tax in 2022 by EUR 19m (2021: decreased by EUR 19m).2022 2021Effect on Effect on Effect on Effect on Sensitivity analysisprofit/ (loss) equity profit/ (loss) equity mEUR Changebefore tax before taxbefore tax before taxForeign currency riskUSD10% (49) 159 (20) 146AUD 10% 6 (81) 2 (51)BRL 10% 15 (59) 5 9GBP 10% (13) (88) 7 (58)TWD 10% (12) (107) (3) (32)CNY 10% (16) 72 (26) 122Commodity price risksMetals10% - 16 - 11Fuels 10% - 4 - -\u2191The sensitivity analysis shows the impact on net profit/(loss) before tax and other comprehensive income of a 10 percent increase in our most significant currencies towards the Euro as well as our most significant commodities. The analysis includes the impact from cash flow hedging instruments on equity before tax and excludes the impact from the hedged exposures such as future purchases or sales since these are not recognised in the balance sheet. If the hedged exposures were included the impact from hedge instruments would be offset in their entirety. The analysis is based on the assumption that all other variables remain constant.4.2\u2002Hedge accountingIn 2022, Vestas used derivative financial instruments to hedge foreign currency risk and commodity price risk. Foreign currency risks The risks relating to purchases and sales in foreign currencies as well as monetary balances denominated in foreign curren-cies are hedged using foreign currency forward contracts and foreign currency swaps. Currency forward contracts and currency swaps relating to highly probable forecasted sales and purchases are designated as cash \ufb02ow hedges. Currency forward contracts and currency swaps relating to recognised monetary balances are designated as fair value hedges.Some sales agreements contain foreign currency elements. In sales agreements where the sales currency is not closely related to the functional currency nor a commonly used currency in the country in which the sales takes place, the foreign currency element is treated as an embedded financial derivative. The embedded financial derivative is designated as a cash \ufb02ow hedge of forecasted purchases.As at 31 December 2022, the average exchange rates for cash \ufb02ow hedges in EUR contracts were AUD 0.6 (2021: 0.6), BRL 0.2 (2021: 0.2), CNY 0.1 (2021: 0.1), GBP 1.1 (2021: 1.1), TWD 0.03 (2021: 0.03) and USD 0.9 (2021: 0.8). The average exchange rates for fair value hedges in EUR contracts were USD 0.9 (2021: 0.9), CNY 0.1 (2021: 0.1) and GBP 1.2 (2021: 1.1). Commodity price riskThe commodity price risks relating to \ufb02uctuations in the prices of raw materials used directly or indirectly in the production is hedged using commodity forward contracts. Commodity forward contracts related to highly probable forecasted purchases are designated as cash \ufb02ow hedges.As at 31 December 2022, the average forward price in EUR per metric tonne for cash \ufb02ow hedges were for copper: 9,604 (2021: 6,990), coking coal: 332 (2021: 206), iron ore: 127 (2021: 129), aluminium: 2,506 (2021: none), bunker fuel: 697 (2021: none).2022 2021Contract Expected recognitionContract Expected recognitionMaturity of hedging instrumentsnotional notional mEURamount2023 2024 After 2024 2022 2023 After 2023amountCash \ufb02ow hedges Foreign currency risk (2,098) (512) (907) (679) 159 236 (65) (12)AUD (863) (449) (414) - (432) (319) (113) -BRL (1,100) (467) (633) - (448) (486) 38 -CNY 876 592 283 1 1,484 1,197 287 -GBP (746) (244) (159) (343) (239) (219) (20) -TWD (951) (298) (315) (338) (472) (190) (270) (12)USD 1,455 731 700 24 1.346 893 408 45Other (769) (377) (369) (23) (1,080) (640) (395) (45)Commodity 213 177 36 - 93 80 13 -Metals 171 136 35 93 80 13 -Fuels 42 41 1 - - - - -Fair value hedges 510 510 - - 379 362 11 6 USD 34 34 - - (329) (329) - - GBP 205 205 - - 23 6 11 6 CNY 367 367 - - 309 309 - - Other (96) (96) - - 376 376 - - Total (1,375) 175 (871) (679) 571 618 (41) (6)\u2190The table shows the contract notional amount and expected timing of recognition of hedging instruments as at 31 December 2022. Positive amounts reflect that Vestas on a net basis have contracts to purchase the respective foreign currencies or commodities, and negative amounts reflect that Vestas on a net basis have contracts to sell the respective foreign currencies or commodities.\u2002Accounting policiesDerivative financial instruments are initially measured at fair value at the trade date and subsequently remeasured at fair value at the reporting date. The fair value of derivative financial instruments are presented in other receivables or other liabilities.Changes in the effective portion of the fair value of cash \ufb02ow hedges are recognised in other comprehensive income. Upon realisation of the hedged item, gains or losses on the cash \ufb02ow hedges are transferred from the equity hedging reserve into the initial carrying amount of the hedged item. Changes in any ineffective portion of the fair value of cash \ufb02ow hedges are recognised in the income statement as financial items. Ineffectiveness is mainly resulting from differences in the timing of the cash \ufb02ows of the hedged items and the hedging instruments and resulting from changes to the forecasted amount of cash \ufb02ows of hedged items. Changes in the fair value of fair value hedges are recognised in the income statement as financial items.4.2\u2002Hedge accounting \u2013 continued2022 2021Carrying amount of Contract Carrying amountContract Carrying amounthedging instrumentsnotional notional mEURamountAsset Liabilities Asset LiabilitiesamountForeign currency riskCash \ufb02ow hedges(2,098) 321 311 159 365 361 Fair value hedges 510 24 30 379 12 16 Commodity price riskCash \ufb02ow hedges213 3 23 93 10 9Interest rate riskCash \ufb02ow hedges480 17 - 530 0 -Total (895) 365 364 1,161 387 386 Recognised in income statement990 41 30 909 12 16 Recognised in other comprehensive income(1,885) 324 334 252 375 370Total (895) 365 364 1,161 387 386 \u2191In the table the effect from hedging instruments on the balance sheet, profit and loss and other comprehensive income is shown.2022 2021Carrying amount of Change in fair Carrying amount of Change in fair Carrying amount of hedged itemsvalue used hedged itemsvalue used hedged itemsfor measuring for measuring mEURineffectivenessineffectivenessAsset Liabilities Asset LiabilitiesCurrency risk Forecast sales and purchases- - 185 - - 74Monetary balances 1,230 1,950 (6) 2,845 3,230 (5)Commodity risk Forecast sales and purchases- - (19) - - 2Total 1,230 1,950 160 2,845 3,230 71\u2190The carrying amounts of hedged items on the balance sheet are shown in the table.Cash \ufb02ow hedge reservemEUR 2022 2021Hedge reserve as at 1 January16 (21)Change in fair valueForeign currency hedges171 74Commodity price hedges (5) 2Amount reclassified to profit and lossForeign currency hedges recognised in revenue(46) 20Foreign currency hedges recognised in production costs (86) (14)Interest rate hedge recognised in financial items (2) -Amount transferred to non-financial itemsForeign currency hedges recognised as prepayment from customers4 0Foreign currency hedges recognised as inventory (49) (28)Commodity hedges recognised as inventory (14) (6)Tax effect 10 (11)Hedge reserve as at 31 December (1) 16\u2191The risk categories recognised in the cash flow hedge reserve is reconciled in the table below with items impacting other comprehensive income for the period.4.3\u2002Financial assets and liabilities2022 2021Total carrying Carrying Carrying Categories of financial instrumentsTotal carrying Carrying Carrying Categories of financial instrumentsamount in amount amount amount in amount amount the balance non-financial financial Fair value \u2013 hedging Fair value through Amortised the balance non-financial financial Fair value \u2013 hedging Fair value through Amortised mEURNotesheetinstrumentsinstrumentsinstrumentsprofit or losscostsheetinstrumentsinstrumentsinstrumentsprofit or losscostFinancial assets, non-current and currentOther investments88 - 88 - 62 26 81 - 81 - 58 23Financial investments 95 - 95 - 95 - 216 - 216 - 100 116Foreign currency derivatives 346 - 346 346 - - 377 - 377 377 - -Commodity derivatives 3 - 3 3 - - 10 - 10 10 - -Other derivatives 17 - 17 17 - - - - - - - -Other receivables 1,075 598 477 - - 477 952 348 604 - - 604Trade receivables 1,280 - 1,280 - - 1,280 1,531 - 1,531 - - 1,531Contract assets 2.3 1,399 - 1,399 - - 1,399 1,227 - 1,227 - - 1,227Cash and cash equivalents 2,378 - 2,378 - - 2,378 2,420 - 2,420 - - 2,420 Total financial assets, non-current and current 6,681 598 6,083 366 157 5,560 6,814 348 6,466 387 158 5,921Financial liabilities, non-current and currentFinancial debts2,106 - 2,106 - - 2,106 1,116 - 1,116 - - 1,116Foreign currency derivatives 348 - 348 348 - - 377 - 377 377 - -Commodity derivatives 16 - 16 16 - - 9 - 9 9 - -Other liabilities 1,044 781 263 - - 263 568 453 115 - - 115Trade payables 4,089 - 4,089 - - 4,089 4,286 - 4,286 - - 4,286Contingent consideration 321 - 321 - 321 - 320 - 320 - 320 -Total financial liabilities, non-current and current 7,924 781 7,143 364 321 6,458 6,676 453 6,223 386 320 5,517The fair value of financial assets and liabilities, measured at amortised cost, is not materially different from the carrying amount, except for instruments classified as financial debt. Financial investmentsFinancial investments consist of interest-bearing investments which do not meet the definition for cash and cash equivalents. On initial recognition financial investments are recognised in the balance sheet at fair value. Subsequently assets held within the business model hold to collect are re-measured at amortised cost and assets hold to sell are remeasured at fair value through profit or loss. Any changes in the fair values of financial investments remeasured at fair value are recognised in the income statement as financial items.Other investments and financial investmentsOther investments include investments in non-listed equity shares and rental deposits. The equity investments were irrevocably designated at fair value through profit and loss.Financial investments comprise short-term deposits and marketable securities managed on a fair value basis with a continuously observation of their performance.Financial debts At 31 December 2022, financial debts comprise green loan facility (EUR 475m), sustainability-linked bonds (EUR 991m), other credit facilities (EUR 147m) and lease liability (EUR 493m). As at 31 December 2022, the fair value of sustainability-linked bonds amounted to (EUR 859m). As at 31 December 2021, financial debts comprise a bilateral bridge facility (EUR 500m), other credit facilities (EUR 71m) and lease liability (EUR 545m).4.3\u2002Financial assets and liabilities \u2013 continuedFair value hierarchyFinancial instruments measured at fair value are categorised into the following levels of the fair value hierarchy:Level 1: Observable market prices for identical instruments.Level 2: Valuation techniques primarily based on observable prices or traded prices for comparable instruments.Level 3: Valuation techniques primarily based on unobservable prices.Other investments and Financial InvestmentsOther investments in non-listed equity shares are measured at fair value determined using generally accepted valuation techniques based on unobservable inputs, and are categorised as Level 3. Financial investments in marketable securities are measured at fair value based on market prices, and are categorised as Level 1.DerivativesForeign currency forward contracts, embedded derivatives and commodity forward contracts are measured at fair value using generally accepted valuation techniques based on observable market prices and forward market rates, and are categorised as Level 2.Renewable energy certificates Vestas has a commitment in the US to purchase Renewable Energy Certificates (RECs) during a 4 year period from 2028-31 based on production of MW in this period at a fixed price. It has been assessed that the contract qualifies as a financial instrument. The fair value measurement is based on level 3 input. As per 31 December 2022, the estimated maximum nominal commitment under the contract is EUR 19m (2021: EUR 18m for a 10 year commitment period). Market prices depend on which market the RECs are traded, ranging from an estimated average market price of 11.06 USD/MWh to 28.04 USD/MWh (2021: USD 6.1/MWh to USD 23.4/MWh), hence the contract would have had an estimated value in the range of EUR 2m to EUR 27m (2021: EUR (6)m to EUR 21m) as at 31 December 2022. Given the uncertainties underpinning the future market for selling RECs, Management has determined that the best evidence of fair value for the RECs is the transaction price. Consequently, the net fair value of the contract has been measured at EUR 0.Contingent considerationContingent consideration relating to Vestas\u2019 acquisition of a 25 percent stake in Copenhagen Infrastructure Partners P/S\u2019 parent companies in February 2021 is classified as financial debt and measured at fair value. As at 31 December 2022, the fair value amounted to EUR 321m based on expected total payments of EUR 331m in the period 2023 to 2026 discounted using a 1 percent normalised financing interest rate. The contingent consideration is categorised as Level 3.2022 2021Financial instruments Fair valueFair valuemeasured at fair valueCarrying Carrying mEUR Valuation techniqueamountTotal Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3amountOther investments Market prices/Discounted cash \ufb02ow62 62 - - 62 5858 - - 58Financial investments Market prices 95 95 95 - - 100 100 100 - -Renewable energy Forward pricingcertificates (RECs)- - - - - - - - - -Foreign currency Forward pricing and derivativesswap models346 346 - 346 - 377 377 - 377 -Commodity derivatives Forward pricing 3 3 - 3 - 10 10 - 10 -Interest rate swap Swap Model 17 17 - 17 - - - - - -Other receivables and derivative financial instruments 366366 - 366 - 387 387 - 387 -Financial assets 523 523 95 366 62 545 545 100 387 58Financial debts Market prices - - - - - - - - - -Foreign currency Forward pricing and derivativesswap models348 348 - 348 - 377 377 - 377 -Commodity derivatives Forward pricing 16 16 - 16 - 9 9 - 9 -Other liabilities and derivative financial instruments364 364 - 364 - 386 386 - 386 -Contingent consideration Discounted cash \ufb02ow 321 321 - - 321 320 320 - - 320Financial liabilities 685 685 - 364 321 706 706 - 386 3204.4\u2002Share capitalNumber of shares 2022 2021Number of shares as at 1 January1,009,867,260 201,973,452Share split 1:5 - 807,893,808Number of shares as at 31 December1,009,867,260 1,009,867,260Shares outstanding 1,006,177,558 1,005,144,100Treasury shares 3,689,702 4,723,160Number of shares as at 31 December1,009,867,260 1,009,867,260Vestas Wind Systems A/S has acquired treasury shares as follows:2022 2021Average share price, purchases (DKK)- 237Purchase amount (mEUR) - 12Treasury shares are acquired to cover issues of shares under Vestas\u2019 incentive programmes or as part of its capital structure strategy. The share capital has been fully paid.Net proposed cash distribution to shareholdersmEUR 2022 2021Dividend- 50Dividend excluding treasury shares.Movements in share capitalDuring 2018 there was a reduction of share capital by DKK 9,800,944 nominally by cancelling 9,800,944 shares from Vestas\u2019 holding of treasury shares. During 2019, there was a reduction of share capital by DKK 6,974,040 nominally by cancelling 6,794,040 shares from Vestas\u2019 holding of treasury shares. During 2020, there was a reduction of share capital by DKK 1,977,848 nominally by cancelling 1,977,848 shares from Vestas\u2019 holding of treasury shares. Vestas Wind Systems A/S has completed a capital increase of nominally DKK 5,049,337, representing 5,049,337 shares of nominally DKK 1 each. During 2021, a share split of Vestas\u2019 shares with a ratio 1:5 was carried out with effect as of 28 April 2021. Consequently, each share of nominally DKK 1.00 was split into five new shares of nominally DKK 0.20. Except for these six transactions, the share capital has not changed in the period 2018-2022. All shares rank equally.\u2002Accounting policiesTreasury sharesTreasury shares are deducted from the share capital upon cancellation at their nominal value of DKK 0.20 per share. Differences between this amount and the amount paid to acquire treasury shares are deducted directly in equity.DividendA proposed dividend is recognised as a liability at the time of adoption at the Annual General Meeting (declaration date). The proposed dividend for the year is included in retained earnings.4.5\u2002Earnings per share2022 2021Profit for the year (mEUR) \u2013 owners of Vestas Wind Systems A/S (1,572) 134Weighted average number of ordinary shares 1,009,867,260 1,009,867,260Weighted average number of treasury shares (3,689,702) (4,818,797)Weighted average number of ordinary shares outstanding 1,006,177,558 1,005,048,463Dilutive effect of restricted performance shares - 2,922,121Average number of shares outstanding including restricted performance shares 1,006,177,558 1,007,970,584Earnings per share, EPS (EUR) (1.56) 0.13Earnings per shares, diluted, EPS-D (EUR) (1.56) 0.135.1\u2002Income taxIncome tax for the yearmEUR 2022 2021Current tax on profit for the year134 (60)Deferred tax on profit for the year (317) 123Tax on profit for the year (183) 63Change in income tax rate - (2)Adjustments relating to previous years (net) 59 20Income tax for the year recognised in the income statement, expense/(income) (124) 81Deferred tax on other comprehensive income for the year (15) 11Tax recognised in other comprehensive income, expense/(income) (15) 11Deferred tax on equity transactions 1 9Tax recognised in equity 1 9Total income taxes for the year, expense/(income) (138) 101Computation of effective tax ratePercent 2022 2021Income tax rate in Denmark22 22Adjustment relating to previous years (net) (4) 9Deviation in foreign subsidiaries\u2019 tax rates compared to the Danish tax rate (net)(2) 3Income and expenses non-taxable (4) 7Change in write-down of deferred tax assets and tax provisions(5) (5)Income/loss from investments in joint ventures - 0Effective tax rate 7 36\u2002 Key accounting estimates Income taxes and uncertain tax positionThe Group continuously wants to be a compliant corporate tax citizen in collaboration with our operations and stakeholders and to support shareholder interest and our reputation. To ensure compliance, national and international tax laws as well as the OECD Guidelines are acknowledged and followed throughout the world.The Group is subject to income taxes around the world and therefore recognise that significant judgement is required in determining the worldwide accrual for income taxes, deferred income tax assets and liabilities and provision for uncertain tax positions.The global business implies that the Group may be subject to disputes on allocation of profits between different jurisdictions. Management judgement is applied to assess the expected outcome of such tax disputes which is provided for in provision for uncertain tax positions. Management believes that provisions made for uncertain tax positions not yet settled with local tax authorities at year end is adequate. However, the actual obligation may deviate and is dependent on the result of litigations and settlements with the relevant tax authorities.The provision for uncertain tax positions has been derived by applying probability weighted outcomes for all uncertainties with multiple potential outcomes and in scenarios where the outcome is determined by a single point it is determined by the most probable outcome.\u2002Accounting policiesTax for the year consists of current tax and deferred tax for the year including adjustments to previous years and changes in provision for uncertain tax positions. The tax attributable to the profit for the year is recognised in the income statement, whereas the tax attributable to equity transactions is recognised directly in equity. The tax expense relating to items recognised in other comprehensive income is recognised in other comprehensive incomeFollowing developments in ongoing tax disputes primarily related to transfer pricing cases, uncertain tax positions are assessed individually and are generally presented as part of non-current tax receivables or non-current tax payables. The uncertain tax positions that materialize and become certain or virtually certain are classified as current tax. Current tax liabilities and receivables are recognised in the balance sheet at the amounts calculated on the taxable income for the year adjusted for tax on taxable incomes for prior years and for taxes paid on account.5.1\u2002Income tax \u2013 continuedIncome tax assets and liabilitiesmEUR 2022 2021Income tax as at 1 January, net assets/(liabilities)(70) (95)Exchange rate adjustments 6 -Adjustment from business combination - (235)Income tax for the year (134) 60Adjustments relating to previous years (50) 5Settlements against VAT receivables 20 21Income tax paid in the year 144 174Income tax as at 31 December, net assets/(liabilities) (84) (70)Receivables specified as follows:0-1 year51 102> 1 year 100 229Income tax receivables 151 331Liabilities specified as follows:0-1 year(58) (75)> 1 year (177) (326)Income tax liabilities (235) (401)5.2\u2002Deferred taxNo provision is made for deferred tax regarding undistributed earnings in subsidiaries, as the Group controls the release of the obligation.Deferred tax recognised on tax losses is mainly in jurisdictions where there are no expiry limits. As at 31 December 2022, the value of recognised deferred tax assets amounted to EUR 497m (2021: EUR 378m), of which EUR 399m (2021: EUR 86m) relates to tax loss carry-forwards. Out of recognised tax loss carry forwards of EUR 399m (2021: EUR 86m) EUR 8m (2021: EUR 44m) are subject to expiry if not used within 5-10 years whereas the remaining EUR 391m (2021: EUR 42m) are not subject to any limitations. Following the Group transfer pricing policy these losses are expected to be utilised.Of the total deferred tax relating to tax loss carry-forwardswritten down, EUR 60m (2021: EUR 0m) relates to Denmark. The recognised loss carry-forward relating to Denmark amounts to EUR 1,727m (2021: EUR 0m).As many other multinational businesses, Vestas recognises the increased focus on the transfer pricing and the con sequent allocation of profits to the relevant countries. Even though the Vestas\u2019 subsidiaries pay corporate tax in the countries in which they operate, Vestas is still part of a number of tax audits on different locations. Some of these disputes concern significant amounts and uncertainties. Vestas believes that the provisions made for uncertain tax positions not yet settled with the local tax authorities is adequate. However, the actual obligation may differ and is subject to the result of the litigations and settlements with the relevant tax authorities.\u2002 Key accounting estimates Valuation of deferred tax assetsThe Group recognises deferred tax assets, including the tax value of tax loss carry-forwards, where Management assesses that the tax assets may be utilised in the foreseeable future for set-off against positive taxable income. The assessment is made on an annual basis and is based on the budgets and business plans for future years, including planned business initiatives. Key parameters are expected revenue and EBIT development considering expected allocation of future taxable income based on the transfer pricing policy in place. Due to the uncertainties relating to allocation of profits Management has limited the forecast period used to determine the utilisation to three years.Of the total tax loss carry-forwards, EUR 61m (2021: EUR 31m) is expected to be realised within 12 months, and EUR 416m (2021: EUR 65m) is expected to be realised later than 12 months after the balance sheet date.The assessment in 2022 resulted in an additional write-down of deferred tax assets by EUR 21m (2021 EUR 32m reversal of write-down) with the write down being primarily due to the fact that certain jurisdictions have more tax assets than what is expected to be utilised in the foreseeable future.The value of non-recognised tax assets totals EUR 122m (2021: EUR 101m), of which EUR 122m (2021: EUR 101m) relates to write-down of tax assets that are not expected to be utilised in the foreseeable future.5.2\u2002Deferred tax \u2013 continuedmEUR 2022 2021Deferred tax as at 1 January, net assets16 177Impact from change in accounting policy - 4Adjusted deferred tax as at 1 January, net assets 16 181Exchange rate adjustments 1 -Deferred tax on profit for the year 317 (123)Adjustment relating to previous years (9) (25)Changes in income tax rate - 2Deferred tax on equity transactions (1) (9)Addition related to acquisitions and equity adjustments - 1Tax on other comprehensive income 15 (11)Deferred tax as at 31 December, net assets 339 16Deferred tax assets specified as follows:Tax value of tax loss carry-forwards (net)477 86Intangible assets (328) (8)Property, plant and equipment (18) (32)Current assets 236 182Provisions 131 139Write-down of tax assets (122) (101)1Other121 112Deferred tax assets 497 378Deferred tax provisions specified as follows:Tax value of tax loss carry-forwards (net)- (13)Intangible assets 1 318Property, plant and equipment 43 50Current assets 89 71Provisions 13 (17)Other 12 (47)Deferred tax provisions 158 3621 Other mainly relates to deferred revenue and share-based payment and hedges.\u2002Accounting policiesDeferred tax is measured using the balance sheet liability method in respect of all temporary differences between the carrying amount and the tax base of assets and liabilities. Deferred tax is, however, not recognised in respect of temporary differences on initial recognition of goodwill and other items, apart from business acquisitions, where temporary differences have arisen at the time of acquisition without affecting the profit for the year or the taxable income. In cases where the computation of the tax base may be made according to different tax rules, deferred tax is measured on the basis of management\u2019s intended use of the asset and settlement of the liability, respectively.Deferred tax assets, including the tax base of tax loss carry-forwards, are recognised in other non-current assets at the value at which the asset is expected to be realised, either by elimination of tax on future earnings or by set-off against deferred tax liabilities within the same legal tax entity and jurisdiction.Deferred tax assets are reviewed on an annual basis and are only recognised when it is probable that they will be utilised in future periods.Adjustments are made to deferred tax to take account of the elimination of unrealised inter-company profits and losses.Deferred tax is measured on the basis of the tax rules and tax rates of the respective countries that will be effective when the deferred tax is expected to crystallise as current tax based on the legislation at the balance sheet date. Changes to deferred tax due to changes to tax rates are recognised in the income statement except for items recognised directly in equity.6.1\u2002Audit feesmEUR 2022 2021Audit:PricewaterhouseCoopers4 3Total audit 4 3Non-audit services: PricewaterhouseCoopersAssurance engagements0 0Tax assistance 1 1Other services 1 1Total non-audit services 2 2Total 6 5Vestas\u2019s policy is to follow the 70 percent fee cap restriction on non-audit services provided by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab, Denmark, the auditor of the parent company. PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab complies with the 70 percent fee cap restriction in 2022. Non-audit services provided by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab, Denmark, amounted to EUR 1m, relating to advisory services and tax compliance advices.6.2\u2002 Assets and liabilities held for sale On 9 August 2022, Vestas signed an agreement for the sale of the converters & controls business to KK Wind Solutions. The transaction is expected to close in the first quarter of 2023, subject to receipt of approvals from the relevant regulatory authorities and separation of the converters and controls business. Therefore, it has been classified as held for sale as at 31 December 2022.Assets held for sale includes property, plant and equipment of EUR 62m and inventory of EUR 111m. Liabilities held for sale include lease liabilities of EUR 1m and other liabilities of EUR 2m.The expected gain on the sale is approx. EUR 150m.6.3\u2002Related party transactionsmEUR 2022 2021Joint venturesRevenue for the period139 402Proceeds from investments in JV\u2019s 2 50Capital contribution 21 38Receivables as at 31 December 4 52Prepayments received balance as at 31 December 14 11Other receivables balance as at 31 December 1 6AssociatesRevenue for the period15 106Reversal of revenue (64) -Proceeds from investments in associates 11 10Capital contributions 9 3Payable capital contribution as at 31 December 36 47Receivables as at 31 December - 23Other liabilities as at 31 December 85 -Prepayments paid balance as at 31 December - 10Other assets balance at 31 December - 28\u2190Vestas has had the following material transaction with joint ventures and associates:Related parties are considered to be the Board of Directors (Board) and the Executive Management of Vestas Wind Systems A/S together with their immediate families. Related parties also include entities which are controlled or jointly controlled by the aforementioned individuals.Transactions with the Board and Executive ManagementTransactions with the Executive Management only consist of normal management remuneration, refer to note 1.4.With the exception of the board members elected by the employees, no members of the Board have been employed by Vestas in 2022. As disclosed in note 2.6, as at 31 December 2022, other liabilities include payments received relating to assets sold to associates that do not meet the criteria for derecognition at the balance sheet date. As disclosed in note 1.2, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m has been reversed in 2022 relating to a share purchase agreement entered into with an associate in 2021 for the sale of an onshore wind power plant under development. 6.4\u2002 Contingent assets, liabilities, and contractual obligationsGuarantees and indemnitiesVestas provides indemnities and guarantees to third parties on behalf of non-Vestas entities and joint ventures with a notional amount of EUR 46m (2021: EUR 17m). No guaran-tees have been utilised during 2022 or in previous years and none of the indemnities are expected at the balance sheet date to be utilised.Contingent liabilitiesVestas has entered into binding contracts concerning purchase of property, plant and equipment to be delivered in 2023 and future periods at a value of EUR 91m (2021: EUR 85m). Vestas has made commitments to invest in funds managed by Copenhagen Infrastructure Partners P/S. As at 31 December 2022, undrawn commitments amounted to EUR 182m.In March 2022, a number of lawsuits was filed against Vestas in relation to a framework agreement which Vestas contends has expired. Vestas believes the claims to be without merit and hence has made no provision in relation to the complaints. In the event that Vestas is not successful in its defence of these cases, there potentially could be a financial impact on Vestas.Vestas is also involved in a number of litigation proceedings. It is Management\u2019s assessment that these proceedings will not have a material effect on the financial position of the Group beyond what is already recognised in assets and liabilities as at 31 December 2022. Refer to note. 5.2 concerning contingent liabilities on transfer pricing.Contingent assetsVestas has made supplier claims for faulty deliveries. However, it is Management\u2019s opinion that settlement of these are not virtually certain, and therefore not recognised in the financial position of Vestas, except for supplier claims accounted for as other receivables, refer note 2.5.6.5\u2002 Non-cash transactions1mEUR 2022 2021Amortisation, impairment and depreciation for the year of intangible assets and property, plant and equipment1,088 982Share of (profit)/loss from investments in joint ventures and associates, incl. other relating transactions(11) (36)Write-down of inventory 260 8Warranty provisions in the year (net) 293 (104)Other provisions in the year 127 48Interest income (37) (19)Interest expenses 37 39Income tax for the year (146) 81Cost of share-based payments 7 13Gains from property, plant and equipment (8) 6Other adjustments for non-cash transactions incl. foreign currency adjustments 103 (20)Total 1,713 9981 Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 7.2.6.6\u2002Subsequent eventsFull stop of our activities in RussiaThe environment in and around Russia leaves Vestas with no viable options to continue to pursue orderly corporate liquidations and activity wind down. On 31 January 2023 Vestas therefore exited Russia by putting a full stop to all remaining corporate activities in Russia without delay, including terminating remaining employees and leaving stranded assets including cash idle.Vestas will from 31 January deconsolidate its Russian entities, Vestas Manufacturing RUS and Vestas RUS with a minor impact to special items in 2023. Other than the events disclosed above or recognised or disclosed elswhere in the consolidated financial statements, no events have occurred subsequent to 31 December 2022 which could have a significant impact on the consolidated financial statements.16.7\u2002Legal entitiesName and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%)Parent companySales and service unitsVestas Wind Technology India Pvt Limited, India 100Vestas Southern Africa Pty. Ltd., South Africa 80Vestas Wind Systems A/S, DenmarkVestas Americas A/S, Denmark100Vestas Japan Co. Ltd., Japan 100Vestas Ukraine LLC, Ukraine 100Vestas America Holding Inc., USA 100Vestas Wind Technology Pakistan (Private) Limited, Vestas Central Europe d.o.o. Beograd, Serbia 100Pakistan100Vestas - American Wind Technology Inc., USA 100Vestas Belgium NV, Belgium 100Vestas Wind Technology (Thailand) Ltd., Thailand 100Production unitsVestas - Canadian Wind Technology Inc., USA 100Vestas Georgia LLC, Georgia 100Vestas Wind Technology Vietnam LLC, Vietnam 100Vestas Nacelles America, Inc., USA100Vestas - Portland HQ LLC, USA 100Availon Holding GmbH, Germany 100Vestas Mongolia LLC, Mongolia 1002Vestas Blades America, Inc., USA 100Vestas Upwind Solutions Inc., USA 100Availon GmbH, Germany100Vestas Central Europe A/S, Denmark 100Vestas Manufacturing A/S, Denmark 100Availon Inc., USA 100Vestas Mediterranean A/S, Denmark 1002Vestas Deutschland GmbH, Germany1002Vestas Blades Deutschland GmbH, Germany100Steelhead Americas, LLC, USA 100Vestas Italia S.r.l., Italy 1002Vestas Services GmbH, Germany100WPT Nord GmbH, Germany 100Steelhead Wind 1 LLC, USA 100Vestas Hellas Wind Technology S.A., Greece 100Vestas Benelux B.V., The Netherlands 100Vestas Blades Italia S.r.l., Italy 100Steelhead Wind 2 LLC, USA 100Vestas E\u00f3lica S.A., Spain 100Vestas \u00d6sterreich GmbH, Austria 100Vestas Wind Technology (China) Co. Ltd., China 100Steelhead Wind 2a LLC, USA 100Vestas France SAS, France 100Vestas Czech Republic s.r.o., Czech Republic 100Vestas Manufacturing Spain S.L.U., Spain 100Vestas Asia Pacific A/S , Denmark 100Vestas WTG Mexico S.A. de C.V., Mexico 100Vestas Hungary Kft., Hungary 100Vestas Control Systems Spain S.L.U., Spain 100Vestas Asia Pacific Wind Technology Pte. Ltd., Singapore 100Vestas Mexicana del Viento S.A. de C.V., Mexico 100Vestas Bulgaria EOOD, Bulgaria 1002Vestas Nacelles Deutschland GmbH, Germany100Vestas - Australian Wind Technology Pty. Ltd., Australia 100Vestas do Brasil Energia Eolica Ltda., Brazil 100Vestas CEU Romania S.R.L, Romania 1003Vestas Manufacturing RUS OOO, Russia100Vestas Korea Wind Technology Ltd., South Korea 100Vestas Argentina S.A., Argentina 100Vestas Central Europe-Zagreb d.o.o, Croatia 100Vestas New Zealand Wind Technology Ltd., Vestas Chile Turbinas E\u00f3lica Limitada Santiago, Chile 100New Zealand100Vestas Slovakia spol S.r.o., Slovakia 100Vestas R\u00fczgar Enerjisi Sistemleri 3Vestas Taiwan Ltd., Taiwan 100Vestas RUS OOO, Russia100Sanayi Ve Ticaret Ltd. Sirketi, Turkey100Vestas Wind Technology (Beijing) Co. Ltd., China 100Vestas Eastern Africa Ltd., Kenya 100Vestas Turbinas E\u00f3licas de Uruguay S.A., Uruguay 1001 Companies of immaterial significance have been left out of the overview.2 Vestas Deutschland GmbH, Vestas Blades Deutschland GmbH, Vestas Nacelles Deutschland GmbH, Vestas Services GmbH and Availon GmbH, wholly owned subsidiaries of Vestas Wind Systems A/S, claiming not to prepare notes and management report to its financial statements pursuant to the relief provision of section 264 Abs. 3 HGB.3 The companies are in a liquidation process.16.7\u2002Legal entities \u2013 continuedName and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%)Vestas MED (Cyprus) Ltd., Cyprus 100UpWind Solutions Canada, Ltd., Canada 100Portugal Unipessoal Lda. Portugal 100Vestas Shared Service A/S, Denmark 100Vestas Nicaragua SA, Nicaragua 100Vestas Kazakhstan LLP, Kazakhstan 100Vestas Offshore Wind Poland Z.O.O, Poland 100Vestas Service Delivery Center - Szczecin sp Z.o.o., Poland100Vestas CV Limitada, The Republic of Cape Verde 100Vestas Overseas Panam\u00e1 S.A., Panama 100Vestas Offshore Wind Belgium NV, Belgium 100Vestas Cantabria Prototype SL, Spain 100Vestas Wind Systems Dominican Republic S.R.L., Vestas Portugal, LDA, Portugal 100Vestas Offshore Wind US inc., USA 100Dominican Republic100Vestas Senegal S.A.R.L.U, Senegal 100Vestas Offshore Wind Taiwan Ltd., Taiwan 100Vestas Peru S.A.C., Peru 100Vestas Wind Lanka (PVT) Ltd., Sri Lanka 100Vestas Offshore Wind Japan Ltd, Japan 100Vestas Middle East S.L.U., Spain 100Joint ventures Vestas Kompozit Kanat Sanayi Ve Ticaret Anonim Covento A/S, Denmark 100Vestas Costa Rica S.A., Costa Rica 100\u015eirketi \u015eirketi, Turkey100Emerging Markets Power (Holdings) Limited, Ireland50Vestas Moroc SARLAV, Casablanca, Morocco 100UpWind Holdings, LLC, USA 100Airpower Windfarms Private Ltd., India 50Vestas Jamaica Wind Technology Ltd., Jamaica 100Utopus Insights, Inc., USA 100AQN SRW2 Holdings, LLC, USA 21Other subsidiariesVestas Guatemala, Guatemala 100NEG Micon UK Ltd., United Kingdom 100Helena Wind Holdco, LLC, USA 20Vestas Wind Systems (China) Co. Ltd., China100Availon LDA Portugal, Portugal 100NEG Micon Australia Pty. Ltd., Australia 100Panorama Wind, LLC, USA 20Vestas Switzerland AG, Switzerland 100Availon Iberia S.L., Spain 100Vestas Honduras, S.A. De C.V., Honduras 100BSW US Holdings, LLC, USA 20Vestas Services Philippines Inc., Philippines 100Vestas Northern Europe A/S, Denmark 100Vestas Colombia S.A.S, Colombia 100Vestas India Holding A/S, Denmark 100Vestas - Celtic Wind Technology Ltd., United Kingdom 100Vestas Saudi Arabia Limited Co., Saudi Arabia 100Wind Power Invest A/S, Denmark 100Vestas Northern Europe AB, Sweden 100Vestas El Salvador, S.A. De C.V., El Salvador 100AssociatesVestas Technology (UK) Limited, United Kingdom 100Vestas Poland Sp.z.o.o., Poland 100Roaring Fork Wind, LLC, USA 100Blakliden F\u00e4bodberget Holding AB, Sweden40Vestas Technology R&D (Beijing) Co. Ltd., China 100Vestas Ireland Ltd., Ireland 100Vestas Offshore Wind Sweden AB, Sweden 100SoWiTec Group GmbH, Germany 25Vestas Technology R&D Chennai Pte. Ltd., India 100Vestas Norway AS, Norway 100Vestas Offshore Wind UK Ltd., United Kingdom 100Copenhagen Infrastructure Partners P/S, Denmark 25Vestas Development A/S, Denmark 100Vestas Finland Oy, Finland 100Vestas Offshore WInd Blades UK Ltd., United Kingdom 100Vestas Shared Service (Spain), S.L.U., Spain 100Vestas Mediterranean A/S Sucursal, Bolivia 100Vestas Offshore Wind France SAS, France 1001 Companies of immaterial significance have been left out of the overview.2 Vestas Deutschland GmbH, Vestas Blades Deutschland GmbH, Vestas Nacelles Deutschland GmbH, Vestas Services GmbH and Availon GmbH, wholly owned subsidiaries of Vestas Wind Systems A/S, claiming not to prepare notes and management report to its financial statements pursuant to the relief provision of section 264 Abs. 3 HGB.7.1\u2002General accounting policiesThe Annual Report of Vestas Wind Systems A/S comprises the consolidated financial statements of Vestas Wind Systems A/S and its subsidiaries and separate financial statements of the parent company, Vestas Wind Systems A/S.The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and the additional Danish disclosure requirements for listed companies, the Danish Statutory Order on Adoption of IFRS issued pursuant to the Danish Financial Statements Act. Basis of preparation The consolidated financial statements have been prepared under the historical cost method, except for the derivative financial instruments and marketable securities, which are measured at fair value and assets held for sale, which are measured at the lower of carrying amount and fair value less costs to sell. The consolidated financial statements are presented in million Euro. This note describes the general accounting policies. Other accounting policies are described in the separate notes to the consolidated financial statements. Materiality in the financial reporting For the preparation of the consolidated financial statements, Vestas discloses the information required according to IFRS, unless such information is deemed immaterial or irrelevant. A judgement is made of whether more detailed specifications are necessary in the presentation of Vestas\u2019 assets, liabilities, financial position, and results. All judgements are made with due consideration of legislation and the consolidated financial statements as a whole presenting a true and fair view. Consolidated financial statements The consolidated financial statements comprise Vestas Wind Systems A/S (the parent company) and the subsidiaries over which Vestas Wind Systems A/S exercises control. Vestas Wind Systems A/S and its subsidiaries together are referred to as the Group. Joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. Vestas has assessed the nature of its joint arrangements and determined them to be joint ventures. An overview of Vestas legal entities is provided on pages 121-122. The consolidated financial statements are prepared from the Financial statements of the parent company and subsidiaries by combining accounting items of a uniform nature, with subsequent elimination of intercompany income and expenses, shareholdings, intercompany balances and dividends as well as unrealised profits and losses on transactions between consolidated entities. The consolidated financial statements are based on financial statements prepared under the accounting policies of Vestas. Translation policies Functional currency and presentation currency Assets, liabilities and transactions of each of the reporting entities of Vestas are measured in the currency of the primary economic environment in which the entity operates (the functional currency). Transactions in currencies other than the functional currency are transactions in foreign currencies. The functional currency of the parent company is Danish kroner (DKK); however, due to Vestas\u2019 international relations, the consolidated financial statements are presented in Euro (EUR).Translation into presentation currency The balance sheet is translated into the presentation currency at the Euro rate at the balance sheet date. In the income statement the transaction date rates are based on average rates for the individual months to the extent that this does not materially distort the presentation of the underlying transactions. Translation of transactions and amounts Transactions in foreign currencies are initially translated into the functional currency at the exchange rates at the dates of transaction. Exchange adjustments arising due to differences between the transaction date rates and the rates at the dates of payment are recognised as financial income or financial costs in the income statement. Receivables, payables and other monetary items in foreign currencies not settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Exchange adjustments arising due to differences between the rates at the balance sheet date and the transaction date rates are recognised as financial income or financial costs in the income statement. Translation of Vestas entities On recognition in the consolidated financial statements of foreign entities with a functional currency that differs from the presentation currency of Vestas, income statements are translated at transaction date rates, and balance sheet items are translated at the exchange rates at the balance sheet date. The transaction date rates are based on average rates for the individual months to the extent that this does not materially distort the presentation of the underlying transaction. Exchange adjustments arising on the translation of the opening equity of foreign entities at exchange rates at the balance sheet date and on the translation of income statements from transaction date rates to exchange rates at the balance sheet date are recognised in other comprehensive income.Exchange adjustments of balances with foreign entities that are treated as part of the total net investment in the entity in question are recognised in other comprehensive income in the consolidated financial statements. On recognition in the consolidated financial statements of investments accounted for using the equity method with functional currencies that differ from the presentation currency of Vestas, the shares of results for the year are translated at average exchange rates. The shares of equity including goodwill are translated at the exchange rates at the balance sheet date. Exchange adjustments arising on the translation of the share of the opening equity of foreign investments accounted for using the equity method at exchange rates at the balance sheet date and on the translation of the share of results for the year from average exchange rates to exchange rates at the balance sheet date are recognised in other comprehensive income. On full or partial disposal of foreign entities, resulting in a loss of control or on repayment of balances treated as part of the net investment, the share of the accumulated exchange adjustments recognised in other comprehensive income, is recognised in the income statement at the same time as any profit or loss on the disposal. Assets and liabilities held for saleAssets (or disposal groups) are classified as held for sale if the carrying amount will be recovered principally through a sales transaction rather than through continuing use and when the assets are expected to be disposed of within 12 months. Liabilities of a disposal group that are directly related to assets held for sale are presented correspondingly. Assets and liabilities held for sale are presented separately on the balance sheet. Immediately before the initial classification as held for sale, the carrying amounts of the assets and liabilities are measured in accordance with their applicable accounting policy. Assets and liabilities held for sale are subsequently measured at the lower of their carrying amount and fair value less cost to sell. Non-current assets held for sale are not depreciated.7.1\u2002 General accounting policies \u2013 continuedEquity Translation reserve The translation reserve in the consolidated financial statements comprises exchange rate adjustments arising on the translation of the financial statements of foreign entities from their func-tional currencies into the presentation currency of Vestas (EUR). Upon full or part realisation of the net investment in foreign entities, exchange adjustments are recognised in the income statement.Cash \ufb02ow hedging reserve The cash \ufb02ow hedging reserve in the consolidated financial statements comprises gains and losses on fair value adjust-ments of forward exchange contracts concerning future trans-actions as well as hedging in connection with commodities. Cash flow statement The cash \ufb02ow statement shows Vestas\u2019 cash \ufb02ows for the year, broken down by operating, investing and financing activities, changes for the year in cash and cash equivalents as well as Vestas\u2019 cash and cash equivalents at the beginning and end of the year. Cash \ufb02ows relating to acquired entities are recognised from the date of acquisition. Cash \ufb02ows relating to entities disposed of are recognised until the date of disposal. Cash \ufb02ows from operating activities Cash \ufb02ows from operating activities are calculated as the net profit/loss for the year adjusted for non-cash operating items such as depreciation, amortisation and impairment losses, provisions, changes in working capital, interest received and paid and income tax paid. Working capital comprises current assets less short-term debt, which does not include current bank loans. Cash \ufb02ows from investing activities Cash \ufb02ows from investing activities comprise cash \ufb02ows from business acquisitions and disposals and from acquisitions and disposals of intangible assets, property, plant and equipment as well as other non-current assets. The cash \ufb02ow effect of business acquisitions and sales is shown separately. The establishment of leases is treated as non-cash transactions. Cash \ufb02ows from financing activities Cash \ufb02ows from financing activities comprise changes to the amount or composition of Vestas\u2019 share capital and related expenses as well as the raising of loans, repayment of interest-bearing debt, repayment of lease liabilities, acquisition and sale of treasury shares together with distribution of dividends to shareholders. ESEF RegulationThe ESEF Regulation sets out the following main requirements: (1) Issuers shall draw up and disclose their annual financial reports using the XHTML format; and (2) issuers that draw-up their primary consolidated financial statements in accordance with IFRS as endorsed by the EU shall block-tag the primary statements and notes in the consolidated financial statements using inline eXtensible Business Reporting Language (iXBRL).iXBRL tags shall comply with the ESEF taxonomy, which is included in the ESEF Regulation and developed based on the IFRS taxonomy published by the IFRS Foundation.As part of the tagging process, financial statement line items and notes are marked up to elements in the ESEF taxonomy. If a financial statement line item is not defined in the ESEF taxonomy, an extension to the taxonomy is created. Extensions have to be anchored to elements in the ESEF taxonomy, except for extensions which are subtotals.The Annual Report submitted to the Danish Financial Supervisory Authority (The Officially Appointed Mechanisms) consists of the XHTML document together with some technical files all included in a ZIP file named VWS-2022-12-31.zip.7.2\u2002 Change in accounting policiesNew accounting standards, amendments and interpretationsThe following accounting standards, amendments and interpretations have been implemented as at 1 January 2022: \u017c Property, Plant and Equipment: Proceeds before Intended Use \u2013 Amendments to IAS 16 \u017c Annual Improvements to IFRS Standards 2018-2020, and \u017c Reference to the Conceptual Framework \u2013 Amendments to IFRS 3The implementation has not had a significant impact on recognition, measurement or disclosures in the Annual Report 2022 and is not expected to have significant impact on the financial reporting for future periods. IAS 37, Cost of Fulfilling a ContractAs of 1 January 2022, Vestas adopted the amendment to IAS 37 relating to onerous contracts. The amendment specifies that an allocation of directly related production costs, such as depreciations of production plants, machinery and equipment, should be included in the cost of fulfilling a contract when applying IAS 37. Historically, Vestas\u2019 accounting policy has not included an allocation of such costs in the cost of fulfilling a contract. The application of the amendment resulted in the recognition of an increased provision for onerous contracts related to prior years of EUR 22m with a net impact of EUR 17m on retained earnings as at 1 January 2022. Vestas has applied the amendment using the cumulative effect method. Under this method, the comparative information is not restated.IAS 38, Configuration or customisation costs in a cloud computing arrangementIn April 2021, the International Financial Reporting Standards Interpretations Committee (IFRIC) issued a final agenda decision relating to configuration or customisation costs in a cloud computing arrangement. The decision discusses whether configuration or customisation expenditure relating to cloud computing arrangements is able to be recognised as an intangible asset and if not, over what time period the expenditure is expensed.Vestas\u2019 accounting policy has historically been to capitalise all costs related to cloud computing arrangements as intangible assets in the Balance sheet. The adoption of this agenda decision resulted in a reclassification of these intangible assets to either a prepaid asset in the balance sheet and/or recognition as an expense in the income statement, impacting both the current and/or prior periods presented.Vestas has restated comparative information in the financial statements to re\ufb02ect this change in accounting policy, and has adjusted opening balances in the balance sheet as at 1 January 2021.The impact of the change in accounting policy in the financial information of the Group at the beginning of the comparative period, during and at the end of the comparative period is disclosed below. Had the change in accounting policy not occurred, operating costs would have been EUR 42m lower and depreciations would have been EUR 7m higher.Adjustments to the balance sheet, 1 January 2021Assets Effect of mEUR Reportednew policy AdjustedCompleted development projects621 (1) 620Software 164 (17) 147Development projects in progress317 (17) 300Total intangible assets2,888 (35) 2,853Deferred tax 335 4 339Total other non-current assets1,003 4 1,007Total non-current assets5,913 (31) 5,882Total assets 18,160 (31) 18,129Liabilities mEURRetained earnings4,773 (31) 4,742Attributable to the owners of Vestas4,654 (31) 4,623Total equity 4,703 (31) 4,672Total equity and liabilities18,160 (31) 18,129Adjustments to the income statement, 1 January \u2013 31 December 2021Income statementEffect of mEUR Reportednew policy AdjustedProduction costs(14,027) (4) (14,031)Gross profit 1,560 (4) 1,556Research and development costs(364) (25) (389)Distribution costs (367) (4) (371)Administration costs (368) - (368)Operating profit (EBIT) before special items461 (33) 428Operating profit (EBIT) 322 (33) 289Profit before tax 257 (33) 224Income tax (81) 0 (81)Profit for the year 176 (33) 143Profit is attributable to:Owners of Vestas Wind Systems A/S167 (33) 134Earnings per share (EPS):Earnings per share (EUR)0.17 (0.04) 0.13Earnings per share (EUR), diluted0.17 (0.04) 0.137.2\u2002 Change in accounting policies \u2013 continuedAdjustments to the balance sheet, 31 December 2021Assets Effect of mEUR Reportednew policy AdjustedCompleted development projects619 (1) 618Software 140 (17) 123Development projects in progress426 (50) 376Total intangible assets3,130 (68) 3,062Deferred tax 374 4 378Total other non-current assets1,627 4 1,631Total non-current assets6,848 (64) 6,784Total assets 19,712 (64) 19,648Liabilities mEURRetained earnings4,699 (64) 4,635Attributable to the owners of Vestas4,748 (64) 4,684Total equity 4,761 (64) 4,697Total equity and liabilities19,712 (64) 19,648Adjustments to the statement of cash \ufb02ows, 1 January \u2013 31 December 2021Statement of cash \ufb02owsEffect of mEUR Reportednew policy AdjustedProfit for the year176 (33) 143Adjustments for non-cash transactions1,005 (7) 998Cash \ufb02ow from operating activities before change in net working capital987 (40) 947Cash \ufb02ow from operating activities996 (40) 956Purchase of intangible assets(400) 40 (360)Cash \ufb02ow from investing activities before acquisitions of subsidiaries, joint ventures, associates and financial investments(813) 40 (773)Cash \ufb02ow from investing activities(939) 40 (899)Adjustments to the statement of changes in equity, 1 January \u2013 31 December 2021Statement of changes in equityEffect of mEUR Totalnew policy TotalEquity as at 1 January4,703 (31) 4,672Profit for the year 176 (33) 143Total comprehensive income for the year373 (33) 340Equity as at 31 December4,761 (64) 4,697New standards and interpretations, not yet effectiveThe IASB has issued new or amended accounting standards and interpretations that have not yet become effective and have consequently not been implemented in the consolidated financial statements. Vestas will adopt the accounting standards and interpretations when they become mandatory. \u017c Effective from 1 January 2023, IFRS 17, Insurance Contracts will replace IFRS 4, Insurance Contracts. Vestas has assessed that the multibrand service contracts fall under the definition of insurance contracts as per IFRS 17. The share of multibrand service business is not significant. \u017c Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction. \u017c Amendments to IAS 1: Classification of liabilities a current or non-current \u017c Amendments to IAS 8: Definition of accounting estimatesBased on the current nature of the business and level of activities, none of these standards and interpretations are expected to have a material impact on the recognition and measurement in the consolidated financial statements.New standards and interpretations, not yet adopted by EUIASB has issued new or amended accounting standards and interpretations that have not yet become effective and have consequently not been implemented in the consolidated financial statements for 2022. Vestas will adopt the accounting standards and interpretations when they become mandatory.7.3\u2002Key accounting estimates and judgementsWhen preparing the consolidated financial statements of Vestas, Management makes several accounting estimates and assumptions which impact the recognition and measurement of Vestas\u2019 financial statements. The key accounting estimates and judgements, which may have a significant impact on the financial statements are listed below. The nature of accounting impact of key accounting estimates and judgements is described in the relevant notes.The impact of key accounting estimates and judgements is divided into three categories from low to high. The rating is based on a combined assessment of materiality, complexity, subjectivity and estimation uncertainty and indicates the impact on amounts recognised and carrying values of assets or liabilities.Climate-related risksVestas continuously monitors risks related to climate change and has considered them while preparing consolidated financial statements, where they may affect reported amounts materially. The group has performed an extended risk assessment in 2022 relating to assets in our manufacturing facilities that significantly contribute to property plant and equipment, presented in note 3.2.Further reference is made to \u2018climate risks\u2019 in the Risk Management section on page 51 for more details on this process.Estimate/ Impact of accounting Note Key accounting estimates and judgementsjudgementestimates and judgements1.2 Revenue Estimate regarding recognition of contract elements Estimate MediumEstimate of stage of completion Estimate HighJudgement regarding method for recognition of revenue from Supply-and-installation contracts Judgement MediumJudgement regarding service contract modifications Judgement LowJudgement regarding sale of onshore wind farm project Judgement Medium1.6 Special items Judgement regarding classification in the income statement Judgement LowEstimate regarding the valuation of assets and liabilities in Russia and Ukraine Estimate Medium2.2 Inventories Estimates of net realisable value Estimate Low2.5 Other receivables Estimates of allowance for doubtful VAT receivables Estimate Medium3.1 intangible assets Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOW Estimate Medium3.2 Tangible assets3.6 Provisions Estimates for warranty provisions Estimate High5.1 Income tax Estimates included in income tax assessment and uncertain tax position Estimate High5.2 Deferred tax Estimate of deferred tax assets valuation Estimate Medium\u2002 Key accounting estimates The key accounting estimates made are based on assumptions, that are supported by experience, historical trends and other factors that Management assesses to be reasonable, but that by nature are associated with inherent uncertainty and unpredictability.The estimates and underlying assumptions are reviewed on an ongoing basis. If necessary, changes are recognised in the period in which the estimate is revised. Management considers the key accounting estimates to be reasonable and appropriate based on currently available information.\u2002Key accounting judgementsKey accounting judgments are made when applying certain accounting policies. Management considers the accounting judgements made are consistent and re\ufb02ect the most fair and true view of Vestas\u2019 financial position and results of the Group\u2019s operations.", "dimensions": { "concept": "ifrs-full:DisclosureOfNotesAndOtherExplanatoryInformationExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-18-2": { "value": "2022 2021 2022 2021Number of Number of % of share % of share Treasury sharessharessharescapitalcapitalTreasury shares as at 1 January4,723,160 1,098,495 0.5 0.5Share split 1:5 - 4,393,980 - -Purchases - 391,125 - 0.1Vested treasury shares (1,033,458) (1,160,440) (0.1) (0.1)Treasury shares as at 31 December 3,689,702 4,723,160 0.4 0.5Number of shares 2022 2021Number of shares as at 1 January1,009,867,260 201,973,452Share split 1:5 - 807,893,808Number of shares as at 31 December1,009,867,260 1,009,867,260Shares outstanding 1,006,177,558 1,005,144,100Treasury shares 3,689,702 4,723,160Number of shares as at 31 December1,009,867,260 1,009,867,260Vestas Wind Systems A/S has acquired treasury shares as follows:2022 2021Average share price, purchases (DKK)- 237Purchase amount (mEUR) - 12Treasury shares are acquired to cover issues of shares under Vestas\u2019 incentive programmes or as part of its capital structure strategy. The share capital has been fully paid.Net proposed cash distribution to shareholdersmEUR 2022 2021Dividend- 50Dividend excluding treasury shares.Movements in share capitalDuring 2018 there was a reduction of share capital by DKK 9,800,944 nominally by cancelling 9,800,944 shares from Vestas\u2019 holding of treasury shares. During 2019, there was a reduction of share capital by DKK 6,974,040 nominally by cancelling 6,794,040 shares from Vestas\u2019 holding of treasury shares. During 2020, there was a reduction of share capital by DKK 1,977,848 nominally by cancelling 1,977,848 shares from Vestas\u2019 holding of treasury shares. Vestas Wind Systems A/S has completed a capital increase of nominally DKK 5,049,337, representing 5,049,337 shares of nominally DKK 1 each. During 2021, a share split of Vestas\u2019 shares with a ratio 1:5 was carried out with effect as of 28 April 2021. Consequently, each share of nominally DKK 1.00 was split into five new shares of nominally DKK 0.20. Except for these six transactions, the share capital has not changed in the period 2018-2022. 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"scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "pp-value-19-2": { "value": "1.1\u2002Segment informationPower Solutions \u2013 Result for the period The segment contains sale of onshore and offshore wind power plants, wind turbines, development sites, etc.In 2022, revenue from the Power Solutions segment amounted to EUR 11,331m (2021: EUR 13,103m), a decrease of 13.5 percent compared to 2021. The decrease was mainly attribut-able to the Power Solutions segment challenged by transporta-tion and project execution delays impacting deliveries across most geographical areas including primarily offshore deliveries in the UK as well as lower onshore deliveries in Vietnam and USA. Furthermore, lack of deliveries in Russia following Vestas\u2019 decision to withdraw from the Russian market contributed to the negative development compared to 2021 with EUR 323m. Revenue re\ufb02ected a positive impact of EUR 333m from foreign exchange rate translation compared to 2021. EBIT before special items from the Power Solutions segment amounted to negative EUR 1,512m (2021: EUR 188m). Con-sequently, the EBIT margin before special items was negative 13.3 percent (2021: 1.4 percent). This decrease was primarily attributable to continued external cost in\ufb02ation and supply chain disruptions in the Power Solutions segment. Further-more, EBIT before special items was negatively impacted by an adjustment related to the V164/V174 offshore technology including impairment of assets on offshore turbines already installed as well as increased level of warranty provisions.Costs and impairment of assets amounting to EUR 269m have been recognised as special items following Russia\u2019s invasion of Ukraine and Vestas\u2019 decision to withdraw from the Russian market while all service and construction activities in Ukraine was temporarily stopped. Furthermore, costs of EUR 244m are re\ufb02ected in special items associated to changes in manufacturing footprint in China and India partially offset by reversal of impairment losses amounting to EUR 69m related to production facilities in Lauchhammer and Isle of Wight. For additional information, refer to note 1.6. Revenue and EBIT margin before special itemsmEUR - percent 12,66410,76610,3981002,33793310,2768,4651.43.17. 28.9(13.3)202220 21*202020192018\u2002Onshore\u2003\u2003 \u2002Offshore\u2003\u2003 \u2002EBIT margin before special items1 Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 7.2.Service \u2013 Result for the period The segment contains sale of service contracts, spare parts and related activities.In 2022, the Service business generated revenue of EUR 3,155m, a year-on-year growth rate of 27.0 percent. The revenue development in the Service business was driven by higher contract activity and transactional sales as well as in\ufb02ation levers in contracts. In addition, revenue re\ufb02ected a positive impact of EUR 102m from foreign exchange rate translation effects compared to 2021.In 2022, the EBIT margin was 21.4 percent (2021: 23.2 percent). The lower profitability is mainly related to certain projects in USA and Africa as well as increasing costs related to one-off cases in UK and Australia. Furthermore, the EBIT margin was negatively impacted by an impairment loss relating to V164/V174 offshore activity impacting the Service segment with EUR 12m. Revenue and EBIT margin before special itemsmEUR - percent 3,155 2,484 21.423.22,055 1,669 1,871 27. 625.225.8202220 21*202020192018\u2002Revenue\u2003\u2003 \u2002EBIT margin before special items1 Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 7.2.1.1\u2002Segment information \u2013 continuedThe measure of revenue is disclosed in accordance with how the segments are reported to the Vestas\u2019 chief operating decision makers. The reported revenue is in alignment with how the segments are internally committed for variable consideration under sales contracts. This is different to the external commitment of the segments.RevenuemEUR 2022 2021USA2,969 2,973United Kingdom 870 2,632Denmark 569 811Other countries 10,078 9,171 Total 14,486 15,587The revenue split is based on geographical supply point.Revenue specified by country shows all countries with a revenue of more than 10 percent of Vestas\u2019 total revenue as well as revenue in Denmark. United Kingdom is included in 2022 to enable comparison to the 2021 level.Intangible assets and property, plant and equipment mEUR 2022 2021Denmark3,521 3,639Other countries 1,296 1,514Total 4,817 5,153Intangible assets and property, plant and equipment are based on the physical location of the assets.With the exception of Denmark, no country has intangible assets and property, plant and equipment exceeding 10 percent of the group's total intangible assets and property, plant and equipment as at 31 December 2022.12022 2021mEURPower Solutions Service Not allocated Total Power Solutions Service Not allocated TotalRevenue11,331 3,155 - 14,486 13,103 2,484 - 15,587Total revenue 11,331 3,155 - 14,486 13,103 2,484 - 15,587Total costs (12,843) (2,480) (315) (15,638) (12,915) (1,907) (337) (15,159)Operating profit (EBIT) before special items (1,512) 675 (315) (1,152) 188 577 (337) 428Special items, refer to note 1.6 (444) - - (444) (139) - - (139)Operating profit (EBIT) (1,956) 675 (315) (1,596) 49 577 (337) 289Income/(loss) from investments in joint ventures and associates, refer to notes 3.5, 6.4- - 10 10 - - 36 36Financial income, refer to note 1.7 - - 52 52 - - 21 21Financial costs, refer to note 1.7 - - (162) (162) - - (122) (122)Profit before tax (1,696) 224Amortisation and depreciation included in total costs, refer to notes 3.1, 3.2(910) (132) (47) (1,089) (735) (111) (68) (914)Investments in joint ventures and associates, refer to note 3.5 646 6091 Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 7.2.\u2002Accounting policiesThe reportable segments are determined based on Vestas\u2019 management structures and the consequent reporting to the Chief Operating Decision Maker (CODM), which is defined as the Executive Management. Following the acquisition of MHI Vestas Offshore Wind A/S on 14 December 2020, a new offshore operating segment has been established. Vestas\u2019 reportable segment \u2018Power Solutions\u2019 includes respectively onshore and offshore operating segments. The onshore and offshore activities are combined in one reportable segment, as the nature of the businesses and the financial impact from the activities are similar in respect of product categories, production, distribution and customers. In addition, the long-term EBIT margins and investment requirements relative to revenue are expected at the same level.The total external revenue is derived from the two reportable segments and comprises sale of wind turbines and associated service activities, Power Solutions and Service respectively. Certain income and costs relating to Vestas functions, investing activities, tax, etc. are managed on Vestas level. These items are not included in the reportable segments, and therefore, presented as \u2018Not allocated\u2019.The measure of revenue, costs, and EBIT included in the segment reporting are the same as those used in the Consolidated Financial Statements. No segment information is provided to CODM on a regular basis for assets and liabilities and the measures below EBIT.Income and costs included in profit for the year are allocated to the extent that they can be directly or indirectly attributed to the segments on a reliable basis. Costs allocated as either directly or indirectly attributable comprise production costs, R&D costs, distribution costs, and administration costs.The income and costs allocated, including depreciation and amortisation, as indirectly attributable to the segments, are allocated by means of allocation keys determined on the basis of the utilisation of key resources in the segment.", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-28-3": { "value": "\u2002Accounting policiesThe reportable segments are determined based on Vestas\u2019 management structures and the consequent reporting to the Chief Operating Decision Maker (CODM), which is defined as the Executive Management. Following the acquisition of MHI Vestas Offshore Wind A/S on 14 December 2020, a new offshore operating segment has been established. Vestas\u2019 reportable segment \u2018Power Solutions\u2019 includes respectively onshore and offshore operating segments. The onshore and offshore activities are combined in one reportable segment, as the nature of the businesses and the financial impact from the activities are similar in respect of product categories, production, distribution and customers. In addition, the long-term EBIT margins and investment requirements relative to revenue are expected at the same level.The total external revenue is derived from the two reportable segments and comprises sale of wind turbines and associated service activities, Power Solutions and Service respectively. Certain income and costs relating to Vestas functions, investing activities, tax, etc. are managed on Vestas level. These items are not included in the reportable segments, and therefore, presented as \u2018Not allocated\u2019.The measure of revenue, costs, and EBIT included in the segment reporting are the same as those used in the Consolidated Financial Statements. No segment information is provided to CODM on a regular basis for assets and liabilities and the measures below EBIT.Income and costs included in profit for the year are allocated to the extent that they can be directly or indirectly attributed to the segments on a reliable basis. Costs allocated as either directly or indirectly attributable comprise production costs, R&D costs, distribution costs, and administration costs.The income and costs allocated, including depreciation and amortisation, as indirectly attributable to the segments, are allocated by means of allocation keys determined on the basis of the utilisation of key resources in the segment.\u2002Accounting policiesRevenue is measured based on the consideration specified in a contract with a customer. Vestas recognises revenue when it transfers control over a product or service to a customer.Revenue recognition Revenue comprises sale of wind turbines and wind power plants, after-sales service, sale of spare parts and wind power plants under development. The following is a description of the principal activities from which Vestas generates its revenue.Supply-only projectsRevenue from the sale of individual wind turbines based on standard solutions is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Vestas recognises revenue at a point in time, when control is transferred to the customer, and the consideration agreed is expected to be received. Control is deemed to be transferred upon delivery of the components in accordance with the agreed delivery plan. Supply-and-installation projects (point in time)Revenue from sale of wind power plants based on standard solutions with alternative use is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Vestas recognises revenue when control of the fully operational turbine is transferred to the customer, and the consideration agreed is expected to be received. Control is generally deemed to be transferred at the point in time when the turbine is fully operational.Supply-and-installation projects (over time)Revenue from sale of wind power plants based on non-standard solutions to the customer, where there is no alter-native use for the wind power plant to be delivered and where we have an enforceable right to payment for the work completed is recognised over time using the percentage-of-completion method. Revenue excludes amounts collected on behalf of third parties. EPC / Turnkey projectsRevenue from contracts to deliver wind power plants with a high degree of customisation are recognised over time as the wind power plants are constructed based on the stage of completion of the individual contracts. Where the profit from a contract cannot be estimated reliably, revenue is only recognised equalling the cost incurred to the extent that it is probable that the costs will be recovered.Service sales Revenue from service sales, comprising services and mainte-nance agreements as well as extended warranties regarding wind turbines and wind power plants sold, are recognised over the term of the agreement as the services are provided. Separate spare parts sales are recognised at a point in time when control has been transferred to the customer, and pro-vided that consideration agreed is expected to be received.Service contract modificationsContract modifications treated as separate contracts are typically related to changes in scope, successful tender bids or renegotiated close to term expiry (signed). Contract modifications which are treated as part of the original contract, are typically related to renewals renegotiated far from term expiry (signed) or price changes agreed upon.Contract modifications treated as separate contracts are accounted for on a prospective basis. Contract modifications treated as part of the original contract and accounted for on a cumulative catch-up basis.Wind power plants under development Revenue from the sale of wind power plants under develop-ment is measured based on the consideration specified in a contract with a customer and recognised at a point in time when the control of the project is transferred to the customer.Transaction priceThe transaction price for sale of wind turbines and wind power plants normally includes a fixed consideration. The transaction price for service contracts includes a fixed consideration and often a variable consideration. The estimated amount of variable consideration will be included in the transaction price only to the extent that a significant reversal in revenue recognised is highly unlikely to occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price recognised as revenue is furthermore reduced by penalties and payment of liquidated damages related to project and service contracts.All wind turbine and wind power plant contracts include a standard warranty clause. For further details on warranty, refer to note 3.6.Order backlogThe order backlog re\ufb02ects the value of future deliveries and services. An order is included as order intake when firm and unconditional. The value of future contracts is measured at the end of the period. The order backlog comprises firm and unconditional orders from Power Solutions and Service, less deliveries made in Power Solutions and Service performance.\u2002DeliveriesDeliveries in MW re\ufb02ect the capacity of wind turbines delivered during the reporting period. The capacity is considered delivered, and is deducted from the wind turbine order backlog, when the related revenue is recognised. Sales from turnkey projects are deducted from the wind turbines backlog simultaneously as the customer has taken delivery of the wind turbines under the term of the contracts.Supply-only2.6Revenue EURbnRevenue recognitionRevenue is recognised at a point in time when control is transferred to the customer. Control is generally transferred upon delivery of the components in accordance with the agreed delivery plan.EPC / Turnkey projects0.9Revenue EURbnRevenue recognitionRevenue is recognised over time as the wind power plant is constructed based on the stage of completion of the individual contracts.Supply-and-installation7. 8Revenue EURbnRevenue recognitionRevenue is recognised over time for nonstandard solutions with no alter- native use as the turbine is installed based on the stage of completion of the individual contracts. Revenue is recognised at a point in time when control of the turbine is transferred to the customer. Control is transferred at a point in time when Vestas has proven a fully operational turbine.Service Sales from Service agreements are deducted from Service backlog simultaneously as revenue is recognised over the term of the agreement.Service3.2Revenue EURbnRevenue recognitionService contracts are normally recog- nised over time as the services are provided over the term of the agree- ment. Spare parts sales are recognised at a point in time when control has been transferred to the customer.\u2002Accounting policiesOrder backlog in EUR re\ufb02ects the value of future deliveries and services under firm and unconditional orders and is measured as the expected revenue to be recognised in the future related to performance obligations that are unfulfilled or partially unfulfilled at the end of the period. The order backlog is forward-looking by nature and is a subset of Vestas' potential future revenue. Order backlog in MW re\ufb02ect the capacity of future turbine deliveries under firm and unconditional orders and is measured as the total capacity of turbines to be delivered under firm and unconditional orders less deliveries at the end of the period. The capacity of turbines delivered is included as deliveries when the related revenue is recognised.\u2002Accounting policiesProduction costs Production costs, including warranty costs, comprise the costs incurred to achieve revenue for the year. Costs consist of raw materials, consumables, direct labour costs, transportation costs and indirect costs such as salaries, rental and lease costs as well as depreciation of production facilities. Furthermore, provisions for loss-making construction contracts are included in production costs. Research and development costs Research and development costs primarily comprise employee costs, internal and external costs related to innovation and new technologies, as well as amortisation, depreciation and impairment losses on capitalised development costs. Distribution costs Distribution costs comprise costs incurred for the sale and distribution of products, etc. sold during the year. Also included are costs relating to employees and depreciation. Administration costs Administration costs comprise costs incurred during the year for management and administration of Vestas and includes costs for administrative staff, management, office premises, office costs, and depreciation.\u2002Accounting policiesVestas operates a number of share-based compensation schemes (restricted share programmes) under which it awards Vestas shares to members of the Executive Management and certain key employees in Vestas Wind Systems A/S or its subsidiaries.The value of the services received in exchange for the issuance of shares is measured at the fair value of the shares. Restricted shares issued to employees are measured at fair value at the time of granting and are recognised in staff expenses in the income statement over the vesting period. The opposite entry is recognised directly in equity. On initial recognition of the restricted shares, the number of shares expected to vest is estimated. Subsequently, the estimate is revised so that the total expense recognised is based on the actual number of shares vested. The fair value of restricted shares is determined based on Vestas quoted share price at grant.\u2002Accounting policiesSpecial items comprise significant unusual and/or infrequently occurring items that are not attributable to Vestas\u2019 normal operations. Special items comprise income and costs related to significant organisational restructuring and significant adjustments to production capacity and the product programme. \u2002Accounting policiesFinancial items comprise interest income and costs, realised and unrealised foreign exchange gains and losses, gains and losses related to derivatives used to hedge assets and liabilities and ineffective part of derivatives used to hedge future cash \ufb02ows.\u2002Accounting policiesInventories are measured at the lower of cost, using the weighted average method, and net realisable value (NRV).The cost of raw materials and service stock comprise purchase price of materials, consumables, duties, and transportation costs.The cost of work in progress and finished goods comprises the cost of raw materials, consumables, direct labour, and indirect production costs. Indirect production costs comprise materials and labour costs as well as maintenance and depreciation of the machinery, factory buildings, and equipment used in the manufacturing process together with costs of factory administration and management.The NRV of inventories is measured at sales price less costs of completion and selling costs. NRV is determined taking into account marketability, obsolescence, and development in the expected selling price.\u2002Accounting policiesContract assets/liabilities comprise agreements to deliver wind power plants based on non-standard solutions (supply-and-installation projects over time) and wind power plants with a high degree of customisation (turnkey projects), as well as service and maintenances agreements. Contract liabilities also comprise prepayments from customers for supply-only and supply-and-installation projects ordered but not yet delivered. Vestas receives payments from customers based on billing schedules established in the contracts. The scheduled payments from customers typically preceed the satisfaction of performance obligations under the contracts. Contract assets relate to Vestas\u2019 conditional right to consideration for Vestas\u2019 completed performance under the contract. Accounts receivable are recognised when the right to consideration becomes unconditional. Contract liability relates to payments received in advance of performance under the contract. Contract liabilities are recognised as revenue as (or when) Vestas performs under the contract.Contract assets/liabilities are measured at the selling price of the work performed based on the stage of completion less progress billing and expected losses.The stage of completion is measured as the proportion of the costs related to the contract incurred relative to the estimated total costs related to the contract. Where it is probable that total costs will exceed total revenues from a contract, the ex - pected loss is recognised immediately as a cost and a provision.The value of self-constructed components is recognised as contract assets/liabilities upon installation of the components to the specific wind power plant\u2019s construction site.If the selling price of the work performed exceeds progress billings and expected losses it is recognised as an asset. If interim billings and expected losses exceed the selling price it is recognised as a liability.Costs relating to sales work and the pursuing of contracts are recognised in the income statement as incurred. \u2002Accounting policiesCosts incurred for supply-only and supply-and-installation projects in fulfilling the contracts with customers that are directly associated with the contract, comprising installation cost and transportation cost, are recognised as an asset (contract costs), if those costs are expected to be recoverable.\u2002Accounting policiesOther receivables are measured at amortised cost or net realisable value equivalent to nominal value less allowances for doubtful receivables, whichever is lower. Prepayments recognised as assets comprise prepaid expenses and are measured at cost. Derivative financial instruments are measured at fair value.\u2002Accounting policiesOther liabilities are measured at amortised cost. Derivative financial instruments are measured at fair value.Obligations relating to defined contribution plans, where Vestas continuously makes fixed pension contributions to independent pension funds, are recognised in the income statement in the period to which they relate. Any contributions outstanding are recognised in the balance sheet under other liabilities. \u2002Accounting policiesGoodwillGoodwill is initially recognised in the balance sheet as the difference between the fair value of net assets acquired and. consideration transferred. Subsequently, goodwill is measured at this value less accumulated impairment losses. Goodwill is not amortised.The carrying amount of goodwill has been allocated to Vestas\u2019 operating segments. Identification of operating segments is based on management structure and internal financial reporting. The carrying amount of goodwill is tested at least annually for impairment, together with the other non-current assets of the operating segment to which goodwill has been allocated. If the recoverable amount is lower than the carrying amount of the operating segment, goodwill is written down to its lower recoverable amount in the income statement.The recoverable amount is usually calculated as the net present value of expected future net cash \ufb02ows from the operating segments to which the goodwill has been allocated. Alternatively, the recoverable amount is calculated as fair value less costs to sell. Impairment losses on goodwill are recognised in the income statement, either in production costs, research and development costs, distribution costs or administration costs.Impairment losses on goodwill are not reversed.Development projectsProjects for the development and testing of new wind turbines are recognised as intangible assets when they are clearly defined, identifiable, and for which technical feasibility, suffi-cient resources and a potential future market or application in the enterprise can be demonstrated. In addition, it is the intention with these projects to manufacture, market or use the project for future commercial purposes. This applies if cost can be measured reliably and sufficient certainty exists that future earnings or the net selling price can cover production costs, distribution costs, and administration costs as well as research and development costs. At Vestas this is underpinned by a gate process, where these judgements are made at specific gates. Other development costs not qualifying for capitalization are recognised in the income statement as research and development costs.Capitalised development costs are measured at cost less accu mulated amortisation and impairment losses. Devel-opment costs comprise salaries, amortisation and other costs attributable to Vestas\u2019 development activities.Following completion of the development work, development projects are amortised on a straight-line basis over their estimated useful lives. The amortisation period is two to five years. The basis of amortisation is calculated net of any impairment losses. The carrying amount of development projects in progress is tested for impairment at least annually, and where the carrying amount exceeds the net present value of the future net cash \ufb02ows expected to be generated by the development project, the project is written down to its recoverable amount in the income statement. Finished development projects are tested for impairment if there is indication of impairment from the annual review. Patents and licences included in development projects are measured at cost less accumulated amortisation and impair-ment losses. Patents and licences are amortised over the patent period or term of agreement, the life of the development project or the estimated useful life, whichever is shorter. The basis of amortisation is calculated net of any impairment losses. SoftwareAcquired software licences and internally developed software is measured at cost less accumulated amortisation and impairment losses. Cost includes both direct internal and external costs. Software is amortised on a straight-line basis over three to five years. The basis of amortisation is calculated net of any impairment losses.Other intangible assetsCustomer relationship, order backlog, and trademarks with a finite useful life acquired from third parties, either separately or as part of the business combination, are capitalised at cost and amortised over their remaining useful lives. Other intangible assets that are not Customer relationship, order backlog, or trademarks are measured at cost less amortisation and impairment losses.\u2002Accounting policiesLand and buildings, plant and machinery as well as other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and impairment losses.Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is ready for use. In the case of construction of own assets, cost comprises direct and indirect costs for materials, components, sub-suppliers, and labour. Estimated costs for dismantling and disposing of the asset and for re-establishment are added to cost to the extent that they are recognised as a provision. Where individual components of an item of property, plant and equipment have different useful lives, the cost of the item is decomposed into separate components which are depreciated separately.Subsequent costs, e.g. in connection with the replacement of components of an item of property, plant and equipment, are recognised in the carrying amount of the asset in question when it is probable that the costs incurred will result in future economic benefits to Vestas. The carrying amount of the replaced components is derecognised in the balance sheet and recognised as costs in the income statement. All other costs incurred for ordinary repairs and maintenance are rec-ognised in the income statement as incurred.Installations capitalised as land and buildings which are related to leased assets are depreciated over the term of the related lease contract. Such lease contracts range with a lease term from 10 to 20 years.Depreciation is calculated on a straight-line basis over the expected useful lives of the assets, which are:Buildings (including installations) 10\u201340 yearsPlant and machinery 3\u201310 years Other fixtures and fittings, tools and equipment 3\u20135 yearsRight-of-use assets 2-20 yearsLand is not depreciated.The basis of depreciation is calculated taking into account the residual value of the asset less any impairment losses. The residual value is determined at the time of acquisition and is reassessed annually. Where the residual value exceeds the carrying amount of the asset, depreciation is discontinued.The depreciation periods are determined based on estimates of the expected useful lives and future residual value of the assets. The estimates are based on historical experience. A reassessment is made once a year to ascertain that the depreciation basis re\ufb02ects the expected life and future residual values of the assets.If the depreciation period or the residual value has changed, the effect on depreciation is recognised prospectively as a change in accounting estimate.Depreciation is recognised in the income statement as either production costs, research and development costs, distribution costs or administration costs to the extent that depreciation is not included in the cost of assets of own construction.The carrying amounts of non-current assets are reviewed on an annual basis to determine whether there is any indication of impairment. If so, the recoverable amount of the asset is calculated. The recoverable amount is the higher of the fair value of the asset less estimated costs to sell and value in use.Value in use is calculated as the net present value of expected future net cash \ufb02ows from the asset or a group of assets.An impairment loss is recognised where the carrying amount of an asset exceeds its recoverable amount.Impairment losses are reversed only to the extent of changes in the assumptions and estimates underlying the impairment calculation.Impairment losses are reversed only to the extent that the new carrying amount of the asset does not exceed the carrying amount of the asset after depreciation/amortisation had the asset not been impaired.\u2002Accounting policiesVestas as LesseeVestas assesses whether a contract is or contains a lease at inception of the contract. Vestas recognises right-of-use assets and corresponding lease liabilities at the lease commencement date, except for short-term leases and leases of low value. For these leases, Vestas normally recognises the lease payments as an operating expense on a straight-line basis over the term of the lease. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liabilities adjusted for any lease payments made at or before the commencement date, plus any initial costs incurred.The right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses. The right-of-use assets are from the commencement date depreciated over the shorter period of lease term and useful life of the underlying asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use assets are periodically reduced by impairment losses, if any, and adjusted in accordance with lease liabilities. The lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, Vestas\u2019 incremental borrowing rate. Generally, Vestas uses its incremental borrowing rate taking into account the specific countries.Lease payments included in the measurement of the lease liabilities comprise the following: \u017c fixed payments; \u017c variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; \u017c the exercise price of a purchase option if Vestas is reasonably certain to exercise the options; and \u017c amounts expected to be payable under residual value guarantees.The lease liabilities are subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the estimate of the amount expected to be payable under a residual value guarantee, or if Vestas changes its assessment of whether it will exercise a purchase, extension or termination option.When the lease liabilities are remeasured in this way, a corre-sponding adjustment is made to the carrying amount of the right-of-use assets, or is recorded in profit or loss if the carrying amount of the right-of-use assets has been reduced to zero.\u2002Accounting policiesAssociates are entities over which Vestas has significant in\ufb02uence, but not control. A joint venture is an arrangement in which Vestas has joint control. Joint ventures and associates are accounted for using the equity method. Under the equity method, interests in joint ventures and associates are initially recognised at cost and adjusted thereafter to recognise Vestas\u2019 share of the post-acquisition profits or losses and movements in other comprehensive income. When Vestas\u2019 share of losses in a joint venture and associate equals or exceeds its interests in the joint ventures and associates (which includes any long-term interests that, in substance, form part of Vestas\u2019 net investment in the joint ventures and associates), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures and associates.Timing in revenue recognition may be different between Vestas and joint ventures and associates where Vestas recognises revenue when control of the wind turbines have been transferred to joint ventures and associates but joint ventures and associates do not recognise revenue until they have transferred the risk of the same wind turbines to the end customer. Such timing difference results in part of Vestas\u2019 profit from wind turbines delivered being eliminated in the net result from joint ventures and associates, until joint ventures and associates have recognised their revenue. This timing difference may vary between quarters and year end but will even out over time.Unrealised gains on transactions between Vestas and its joint ventures and associates are eliminated to the extent of Vestas\u2019 interest in the joint ventures and associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures and associates have been changed where necessary to ensure consistency with the policies adopted by Vestas.\u2002Accounting policiesProvisions are recognised as a consequence of a past event when Vestas has a legal or constructive obligation and it is probable that there will be an out\ufb02ow of Vestas\u2019 financial resources to settle the obligation. Provisions are measured at management\u2019s best estimate of the costs required to settle the obligation. Discounting is applied where relevant.Vestas accrues for the estimated cost of the warranty upon recog-nition of the sale of the product. The costs are estimated based on actual historical costs incurred and on estimated future costs related to current sales, and are updated periodically. Actual warranty costs are charged against the provision for warranty.Restructuring costs are recognised as liabilities when a detailed, formal restructuring plan has been announced to those affected no later than the balance sheet date. A provision for loss-making contracts is made where the expected benefits to Vestas from the contract are lower than the unavoidable costs of meeting obligations under the contract. Loss making construction contracts in progress are, however, recognised in construction contracts in progress.Provision for legal disputes are recognised where a legal or constructive obligation has been incurred as a result of past events and it is possible that there will be an out\ufb02ow of resources that can be reliably estimated. In this case, Vestas arrives at an estimate on the basis of an evaluation of the most likely outcome. Disputes for which no reliable estimate can be made are disclosed as contingent liabilities, refer to note 6.4.\u2002Accounting policiesCash and cash equivalents included in Vestas\u2019 cash manage ment comprise cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.Cash and cash equivalents with disposal restrictions are included in day-to-day cash management and fulfills the criteria as cash and cash equivalents. Cash with disposal restrictions includes cash pledged to guarantee providers as security for guarantee obligations to obtain lower commission rates.\u2002Accounting policiesDerivative financial instruments are initially measured at fair value at the trade date and subsequently remeasured at fair value at the reporting date. The fair value of derivative financial instruments are presented in other receivables or other liabilities.Changes in the effective portion of the fair value of cash \ufb02ow hedges are recognised in other comprehensive income. Upon realisation of the hedged item, gains or losses on the cash \ufb02ow hedges are transferred from the equity hedging reserve into the initial carrying amount of the hedged item. Changes in any ineffective portion of the fair value of cash \ufb02ow hedges are recognised in the income statement as financial items. Ineffectiveness is mainly resulting from differences in the timing of the cash \ufb02ows of the hedged items and the hedging instruments and resulting from changes to the forecasted amount of cash \ufb02ows of hedged items. Changes in the fair value of fair value hedges are recognised in the income statement as financial items.\u2002Accounting policiesTreasury sharesTreasury shares are deducted from the share capital upon cancellation at their nominal value of DKK 0.20 per share. Differences between this amount and the amount paid to acquire treasury shares are deducted directly in equity.DividendA proposed dividend is recognised as a liability at the time of adoption at the Annual General Meeting (declaration date). The proposed dividend for the year is included in retained earnings.\u2002Accounting policiesTax for the year consists of current tax and deferred tax for the year including adjustments to previous years and changes in provision for uncertain tax positions. The tax attributable to the profit for the year is recognised in the income statement, whereas the tax attributable to equity transactions is recognised directly in equity. The tax expense relating to items recognised in other comprehensive income is recognised in other comprehensive incomeFollowing developments in ongoing tax disputes primarily related to transfer pricing cases, uncertain tax positions are assessed individually and are generally presented as part of non-current tax receivables or non-current tax payables. The uncertain tax positions that materialize and become certain or virtually certain are classified as current tax. Current tax liabilities and receivables are recognised in the balance sheet at the amounts calculated on the taxable income for the year adjusted for tax on taxable incomes for prior years and for taxes paid on account.\u2002Accounting policiesDeferred tax is measured using the balance sheet liability method in respect of all temporary differences between the carrying amount and the tax base of assets and liabilities. Deferred tax is, however, not recognised in respect of temporary differences on initial recognition of goodwill and other items, apart from business acquisitions, where temporary differences have arisen at the time of acquisition without affecting the profit for the year or the taxable income. In cases where the computation of the tax base may be made according to different tax rules, deferred tax is measured on the basis of management\u2019s intended use of the asset and settlement of the liability, respectively.Deferred tax assets, including the tax base of tax loss carry-forwards, are recognised in other non-current assets at the value at which the asset is expected to be realised, either by elimination of tax on future earnings or by set-off against deferred tax liabilities within the same legal tax entity and jurisdiction.Deferred tax assets are reviewed on an annual basis and are only recognised when it is probable that they will be utilised in future periods.Adjustments are made to deferred tax to take account of the elimination of unrealised inter-company profits and losses.Deferred tax is measured on the basis of the tax rules and tax rates of the respective countries that will be effective when the deferred tax is expected to crystallise as current tax based on the legislation at the balance sheet date. Changes to deferred tax due to changes to tax rates are recognised in the income statement except for items recognised directly in equity.7.1\u2002General accounting policiesThe Annual Report of Vestas Wind Systems A/S comprises the consolidated financial statements of Vestas Wind Systems A/S and its subsidiaries and separate financial statements of the parent company, Vestas Wind Systems A/S.The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and the additional Danish disclosure requirements for listed companies, the Danish Statutory Order on Adoption of IFRS issued pursuant to the Danish Financial Statements Act. Basis of preparation The consolidated financial statements have been prepared under the historical cost method, except for the derivative financial instruments and marketable securities, which are measured at fair value and assets held for sale, which are measured at the lower of carrying amount and fair value less costs to sell. The consolidated financial statements are presented in million Euro. This note describes the general accounting policies. Other accounting policies are described in the separate notes to the consolidated financial statements. Materiality in the financial reporting For the preparation of the consolidated financial statements, Vestas discloses the information required according to IFRS, unless such information is deemed immaterial or irrelevant. A judgement is made of whether more detailed specifications are necessary in the presentation of Vestas\u2019 assets, liabilities, financial position, and results. All judgements are made with due consideration of legislation and the consolidated financial statements as a whole presenting a true and fair view. Consolidated financial statements The consolidated financial statements comprise Vestas Wind Systems A/S (the parent company) and the subsidiaries over which Vestas Wind Systems A/S exercises control. Vestas Wind Systems A/S and its subsidiaries together are referred to as the Group. Joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. Vestas has assessed the nature of its joint arrangements and determined them to be joint ventures. An overview of Vestas legal entities is provided on pages 121-122. The consolidated financial statements are prepared from the Financial statements of the parent company and subsidiaries by combining accounting items of a uniform nature, with subsequent elimination of intercompany income and expenses, shareholdings, intercompany balances and dividends as well as unrealised profits and losses on transactions between consolidated entities. The consolidated financial statements are based on financial statements prepared under the accounting policies of Vestas. Translation policies Functional currency and presentation currency Assets, liabilities and transactions of each of the reporting entities of Vestas are measured in the currency of the primary economic environment in which the entity operates (the functional currency). Transactions in currencies other than the functional currency are transactions in foreign currencies. The functional currency of the parent company is Danish kroner (DKK); however, due to Vestas\u2019 international relations, the consolidated financial statements are presented in Euro (EUR).Translation into presentation currency The balance sheet is translated into the presentation currency at the Euro rate at the balance sheet date. In the income statement the transaction date rates are based on average rates for the individual months to the extent that this does not materially distort the presentation of the underlying transactions. Translation of transactions and amounts Transactions in foreign currencies are initially translated into the functional currency at the exchange rates at the dates of transaction. Exchange adjustments arising due to differences between the transaction date rates and the rates at the dates of payment are recognised as financial income or financial costs in the income statement. Receivables, payables and other monetary items in foreign currencies not settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Exchange adjustments arising due to differences between the rates at the balance sheet date and the transaction date rates are recognised as financial income or financial costs in the income statement. Translation of Vestas entities On recognition in the consolidated financial statements of foreign entities with a functional currency that differs from the presentation currency of Vestas, income statements are translated at transaction date rates, and balance sheet items are translated at the exchange rates at the balance sheet date. The transaction date rates are based on average rates for the individual months to the extent that this does not materially distort the presentation of the underlying transaction. Exchange adjustments arising on the translation of the opening equity of foreign entities at exchange rates at the balance sheet date and on the translation of income statements from transaction date rates to exchange rates at the balance sheet date are recognised in other comprehensive income.Exchange adjustments of balances with foreign entities that are treated as part of the total net investment in the entity in question are recognised in other comprehensive income in the consolidated financial statements. On recognition in the consolidated financial statements of investments accounted for using the equity method with functional currencies that differ from the presentation currency of Vestas, the shares of results for the year are translated at average exchange rates. The shares of equity including goodwill are translated at the exchange rates at the balance sheet date. Exchange adjustments arising on the translation of the share of the opening equity of foreign investments accounted for using the equity method at exchange rates at the balance sheet date and on the translation of the share of results for the year from average exchange rates to exchange rates at the balance sheet date are recognised in other comprehensive income. On full or partial disposal of foreign entities, resulting in a loss of control or on repayment of balances treated as part of the net investment, the share of the accumulated exchange adjustments recognised in other comprehensive income, is recognised in the income statement at the same time as any profit or loss on the disposal. Assets and liabilities held for saleAssets (or disposal groups) are classified as held for sale if the carrying amount will be recovered principally through a sales transaction rather than through continuing use and when the assets are expected to be disposed of within 12 months. Liabilities of a disposal group that are directly related to assets held for sale are presented correspondingly. Assets and liabilities held for sale are presented separately on the balance sheet. Immediately before the initial classification as held for sale, the carrying amounts of the assets and liabilities are measured in accordance with their applicable accounting policy. Assets and liabilities held for sale are subsequently measured at the lower of their carrying amount and fair value less cost to sell. Non-current assets held for sale are not depreciated.7.1\u2002 General accounting policies \u2013 continuedEquity Translation reserve The translation reserve in the consolidated financial statements comprises exchange rate adjustments arising on the translation of the financial statements of foreign entities from their func-tional currencies into the presentation currency of Vestas (EUR). Upon full or part realisation of the net investment in foreign entities, exchange adjustments are recognised in the income statement.Cash \ufb02ow hedging reserve The cash \ufb02ow hedging reserve in the consolidated financial statements comprises gains and losses on fair value adjust-ments of forward exchange contracts concerning future trans-actions as well as hedging in connection with commodities. Cash flow statement The cash \ufb02ow statement shows Vestas\u2019 cash \ufb02ows for the year, broken down by operating, investing and financing activities, changes for the year in cash and cash equivalents as well as Vestas\u2019 cash and cash equivalents at the beginning and end of the year. Cash \ufb02ows relating to acquired entities are recognised from the date of acquisition. Cash \ufb02ows relating to entities disposed of are recognised until the date of disposal. Cash \ufb02ows from operating activities Cash \ufb02ows from operating activities are calculated as the net profit/loss for the year adjusted for non-cash operating items such as depreciation, amortisation and impairment losses, provisions, changes in working capital, interest received and paid and income tax paid. Working capital comprises current assets less short-term debt, which does not include current bank loans. Cash \ufb02ows from investing activities Cash \ufb02ows from investing activities comprise cash \ufb02ows from business acquisitions and disposals and from acquisitions and disposals of intangible assets, property, plant and equipment as well as other non-current assets. The cash \ufb02ow effect of business acquisitions and sales is shown separately. The establishment of leases is treated as non-cash transactions. Cash \ufb02ows from financing activities Cash \ufb02ows from financing activities comprise changes to the amount or composition of Vestas\u2019 share capital and related expenses as well as the raising of loans, repayment of interest-bearing debt, repayment of lease liabilities, acquisition and sale of treasury shares together with distribution of dividends to shareholders. ESEF RegulationThe ESEF Regulation sets out the following main requirements: (1) Issuers shall draw up and disclose their annual financial reports using the XHTML format; and (2) issuers that draw-up their primary consolidated financial statements in accordance with IFRS as endorsed by the EU shall block-tag the primary statements and notes in the consolidated financial statements using inline eXtensible Business Reporting Language (iXBRL).iXBRL tags shall comply with the ESEF taxonomy, which is included in the ESEF Regulation and developed based on the IFRS taxonomy published by the IFRS Foundation.As part of the tagging process, financial statement line items and notes are marked up to elements in the ESEF taxonomy. If a financial statement line item is not defined in the ESEF taxonomy, an extension to the taxonomy is created. Extensions have to be anchored to elements in the ESEF taxonomy, except for extensions which are subtotals.The Annual Report submitted to the Danish Financial Supervisory Authority (The Officially Appointed Mechanisms) consists of the XHTML document together with some technical files all included in a ZIP file named VWS-2022-12-31.zip.", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-28-4": { "value": "\u2002Accounting policiesThe reportable segments are determined based on Vestas\u2019 management structures and the consequent reporting to the Chief Operating Decision Maker (CODM), which is defined as the Executive Management. Following the acquisition of MHI Vestas Offshore Wind A/S on 14 December 2020, a new offshore operating segment has been established. Vestas\u2019 reportable segment \u2018Power Solutions\u2019 includes respectively onshore and offshore operating segments. The onshore and offshore activities are combined in one reportable segment, as the nature of the businesses and the financial impact from the activities are similar in respect of product categories, production, distribution and customers. In addition, the long-term EBIT margins and investment requirements relative to revenue are expected at the same level.The total external revenue is derived from the two reportable segments and comprises sale of wind turbines and associated service activities, Power Solutions and Service respectively. Certain income and costs relating to Vestas functions, investing activities, tax, etc. are managed on Vestas level. These items are not included in the reportable segments, and therefore, presented as \u2018Not allocated\u2019.The measure of revenue, costs, and EBIT included in the segment reporting are the same as those used in the Consolidated Financial Statements. No segment information is provided to CODM on a regular basis for assets and liabilities and the measures below EBIT.Income and costs included in profit for the year are allocated to the extent that they can be directly or indirectly attributed to the segments on a reliable basis. Costs allocated as either directly or indirectly attributable comprise production costs, R&D costs, distribution costs, and administration costs.The income and costs allocated, including depreciation and amortisation, as indirectly attributable to the segments, are allocated by means of allocation keys determined on the basis of the utilisation of key resources in the segment.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-31-2": { "value": "1.2\u2002Revenue\u2002 Key accounting estimates and judgements Estimate regarding recognition of contract elementsManagement performs significant accounting estimates in connection with determining the appropriate income recognition of contract elements. In certain situations, Supply-only projects contain elements that in nature are associated with a high degree of estimations regarding allocation of consideration under a contract to elements already delivered and elements to be delivered in the future. Management has assessed that the project specific margin is a fair estimate of a reasonable margin used to allocate consideration under a contract to the contract elements. Significant judgement is also involved in assessing whether project or service contracts contain multiple performance obligations which should be accounted for separately.Estimates of stage of completion Vestas applies the percentage-of-completion method in accounting for service contracts and certain wind power plants, in general projects with a high degree of customisation. The use of the percentage-of-completion method requires Management to determine the stage of completion by reference to the contract costs incurred for work performed to date in proportion to the estimated total contract costs (cost-to-cost method). This method is considered to best show the progression of the projects. Based on the estimated stage of completion, a respective portion of the consideration is recognised.Judgement regarding method for recognition of revenue from Supply-and-installation contractsManagement applies judgement when determining whether revenue from Supply-and-installations contracts shall be recognised at a point in time or over time. Management has determined that Supply-and-installation projects based on standard solutions have an alternative use. Consequently, revenue of such contract is recognised at the point in time when the turbine is fully operational and control is transferred to the customer. For certain projects, Vestas agrees to delivery of wind power plants based on non-standard solutions to the customer. Management assesses whether such non-standard solutions have an alternative use. The judgements made take into consideration technology used, or the degree of customization including remoteness of the wind power plant. Revenue from sale of non-standard solutions, which are judged to have no alternative use is recognised over time (percentage-of-completion method).Judgement regarding service contract modificationsManagement applies judgement when determining whether a service contract modification should be accounted for as a separate contract or as if it is part of the original contract. The judgements made take into consideration whether the scope is changed, if price changes re\ufb02ect stand-alone prices, whether a contract is won in a tender, if the modification is due to execution of a renewal option and other relevant facts and circumstances.Judgement regarding sale of onshore wind power plant under developmentIn 2021 management applied judgement in determining the revenue recognition of a share purchase agreement entered into with an associate to sell its shareholding in an onshore wind power plant under development. Consequently, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m were recognized. One of the judgments made was that management considered it highly probable that the customer\u2019s contingent option to put back the shares would either not materialise or not be exercised if materialised.In 2022, the approval from the authorities was delayed and the development plan is adjusted in alignment with the customer. Although the project value itself has not deteriorated, the delay increases the risk that the contingent put option materialises. Consequently, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m have been reversed in 2022.\u2002Accounting policiesRevenue is measured based on the consideration specified in a contract with a customer. Vestas recognises revenue when it transfers control over a product or service to a customer.Revenue recognition Revenue comprises sale of wind turbines and wind power plants, after-sales service, sale of spare parts and wind power plants under development. The following is a description of the principal activities from which Vestas generates its revenue.Supply-only projectsRevenue from the sale of individual wind turbines based on standard solutions is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Vestas recognises revenue at a point in time, when control is transferred to the customer, and the consideration agreed is expected to be received. Control is deemed to be transferred upon delivery of the components in accordance with the agreed delivery plan. Supply-and-installation projects (point in time)Revenue from sale of wind power plants based on standard solutions with alternative use is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Vestas recognises revenue when control of the fully operational turbine is transferred to the customer, and the consideration agreed is expected to be received. Control is generally deemed to be transferred at the point in time when the turbine is fully operational.Supply-and-installation projects (over time)Revenue from sale of wind power plants based on non-standard solutions to the customer, where there is no alter-native use for the wind power plant to be delivered and where we have an enforceable right to payment for the work completed is recognised over time using the percentage-of-completion method. Revenue excludes amounts collected on behalf of third parties. EPC / Turnkey projectsRevenue from contracts to deliver wind power plants with a high degree of customisation are recognised over time as the wind power plants are constructed based on the stage of completion of the individual contracts. Where the profit from a contract cannot be estimated reliably, revenue is only recognised equalling the cost incurred to the extent that it is probable that the costs will be recovered.Service sales Revenue from service sales, comprising services and mainte-nance agreements as well as extended warranties regarding wind turbines and wind power plants sold, are recognised over the term of the agreement as the services are provided. Separate spare parts sales are recognised at a point in time when control has been transferred to the customer, and pro-vided that consideration agreed is expected to be received.Service contract modificationsContract modifications treated as separate contracts are typically related to changes in scope, successful tender bids or renegotiated close to term expiry (signed). Contract modifications which are treated as part of the original contract, are typically related to renewals renegotiated far from term expiry (signed) or price changes agreed upon.Contract modifications treated as separate contracts are accounted for on a prospective basis. Contract modifications treated as part of the original contract and accounted for on a cumulative catch-up basis.Wind power plants under development Revenue from the sale of wind power plants under develop-ment is measured based on the consideration specified in a contract with a customer and recognised at a point in time when the control of the project is transferred to the customer.Transaction priceThe transaction price for sale of wind turbines and wind power plants normally includes a fixed consideration. The transaction price for service contracts includes a fixed consideration and often a variable consideration. The estimated amount of variable consideration will be included in the transaction price only to the extent that a significant reversal in revenue recognised is highly unlikely to occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price recognised as revenue is furthermore reduced by penalties and payment of liquidated damages related to project and service contracts.All wind turbine and wind power plant contracts include a standard warranty clause. For further details on warranty, refer to note 3.6.1.2\u2002Revenue \u2013 continuedOrder backlogThe order backlog re\ufb02ects the value of future deliveries and services. An order is included as order intake when firm and unconditional. The value of future contracts is measured at the end of the period. The order backlog comprises firm and unconditional orders from Power Solutions and Service, less deliveries made in Power Solutions and Service performance.\u2002DeliveriesDeliveries in MW re\ufb02ect the capacity of wind turbines delivered during the reporting period. The capacity is considered delivered, and is deducted from the wind turbine order backlog, when the related revenue is recognised. Sales from turnkey projects are deducted from the wind turbines backlog simultaneously as the customer has taken delivery of the wind turbines under the term of the contracts.Supply-only2.6Revenue EURbnRevenue recognitionRevenue is recognised at a point in time when control is transferred to the customer. Control is generally transferred upon delivery of the components in accordance with the agreed delivery plan.EPC / Turnkey projects0.9Revenue EURbnRevenue recognitionRevenue is recognised over time as the wind power plant is constructed based on the stage of completion of the individual contracts.Supply-and-installation7. 8Revenue EURbnRevenue recognitionRevenue is recognised over time for nonstandard solutions with no alter- native use as the turbine is installed based on the stage of completion of the individual contracts. Revenue is recognised at a point in time when control of the turbine is transferred to the customer. Control is transferred at a point in time when Vestas has proven a fully operational turbine.Service Sales from Service agreements are deducted from Service backlog simultaneously as revenue is recognised over the term of the agreement.Service3.2Revenue EURbnRevenue recognitionService contracts are normally recog- nised over time as the services are provided over the term of the agree- ment. Spare parts sales are recognised at a point in time when control has been transferred to the customer.1.2\u2002Revenue \u2013 continuedDisaggregation of revenueIn the following section, revenue is disaggregated by sale of projects and sale of service, by primary geographical market, major contract types and timing of revenue recognition.For the financial year 2022, supply-and-installation projects recognised over time (percentage-of-completion) constituted 37 percent of the total supply-and-installation revenue compared to 32 percent in 2021. The projects are mainly located in Brazil.Transaction price allocated to the remaining sales contractsThe following table includes revenue expected to be recognised in the future related to performance obligations that are unful-filled (or partially unfulfilled) at the end of the financial year.All considerations from contracts with customers are included in the amounts presented.Order backlog bnEUR 2022 2021Power Solutions, onshore16.4 15.4Power Solutions, offshore2.7 2.7Wind turbines total 19.1 18.11Service, onshore26.6 24.21Service, offshore3.8 3.61Service total30.4 27.81 The number disclosed in the 2021 annual report for the Service order backlog has been corrected from EUR 29.2bn to EUR 27.8m.Power Solutions Service TotalDisaggregation of revenuemEUR2022 2021 2022 2021 2022 2021Timing of revenue recognitionProducts and services transferred at a point in time7,519 9,161 653 412 8,172 9,573 Products and services transferred over time 3,812 3,942 2,502 2,072 6,314 6,014 Total 11,331 13,103 3,155 2,484 14,486 15,587Revenue from contract typesSupply-only2,590 2,814 - - 2,590 2,814 Supply-and-installation (at a point in time) 4,929 6,347 - - 4,929 6,347 Supply-and-installation (over time) 2,859 3,006 - - 2,859 3,006 Turnkey (EPC) 953 936 - - 953 936 Service - - 3,155 2,484 3,155 2,484 Total 11,331 13,103 3,155 2,484 14,486 15,587 Primary geographical marketsEMEA6,276 7,427 1,550 1,391 7,826 8,818Americas 3,783 3,967 1,328 840 5,111 4,807 Asia Pacific 1,272 1,709 277 253 1,549 1,962 Total 11,331 13,103 3,155 2,484 14,486 15,587 At the end of 2022, the average remaining duration in the service order backlog is approximately 11 years (2021: 10 years), with a range up to 35 years (2021: 36 years). For the Power Solutions segment, projects are normally to be delivered within 1 to 3 years (2021: 1 to 3 years).Power Solutions \u2013 order backlog At the end of the year, the total wind turbine order backlog amounted to 19,623 MW corresponding to EUR 19.1bn. Of this, 17,415 MW corresponding to EUR 16.4bn relates to onshore wind turbines. Compared to last year, the onshore order backlog increased by 13 percent. The offshore backlog amounted to 2,208 MW corresponding to EUR 2.7bn as at 31 December 2022, which is on par with 2021. Service \u2013 order backlogAt the end of 2022, Vestas had service agreements in the order backlog with expected contractual revenue of EUR 30.4bn, which is an increase of EUR 2.6bn compared to 2021.The service order backlog for 2021 is adjusted from EUR 29.2bn to EUR 27.8bn due to an error in the report generating the service backlog. The adjustment has no impact on the future service profitability.\u2002Accounting policiesOrder backlog in EUR re\ufb02ects the value of future deliveries and services under firm and unconditional orders and is measured as the expected revenue to be recognised in the future related to performance obligations that are unfulfilled or partially unfulfilled at the end of the period. The order backlog is forward-looking by nature and is a subset of Vestas' potential future revenue. Order backlog in MW re\ufb02ect the capacity of future turbine deliveries under firm and unconditional orders and is measured as the total capacity of turbines to be delivered under firm and unconditional orders less deliveries at the end of the period. The capacity of turbines delivered is included as deliveries when the related revenue is recognised.2.3\u2002Contract balances2022 2021Contract Contract Contract Contract mEURassetsliabilitiesassetsliabilities1 January1,227 6,180 775 5,613 Additions from business combinations - - - -Revenue recognised that was included in the contract liability balance at the beginning of the period - (3,283) - (3,202)Increases as a result of changes in the measure of progress and other adjustments 733 - 829 -Payments received, excluding amounts recognised as revenue during the period (prepayments) - 3,986 - 3,645Transfers from contract assets recognised at the beginning of the period to receivables (559) - (387) -Exchange rate adjustments (2) 54 10 12431 December 1,399 6,937 1,227 6,180Contract assets and liabilities comprise the following:Construction contracts in progress (turnkey)58 193 60 209 Service contracts 1,245 930 931 932Supply-only contracts - 744 - 848Supply-and-installation contracts point in time - 2,993 - 2,801Supply-and-installation over time 96 2,077 236 1,390Total 1,399 6,937 1,227 6,180\u2190The table provides information about development in contract assets and contract liabilities from contracts with customers, as well as a disaggregation of the contract balances on contract type.\u2002Accounting policiesContract assets/liabilities comprise agreements to deliver wind power plants based on non-standard solutions (supply-and-installation projects over time) and wind power plants with a high degree of customisation (turnkey projects), as well as service and maintenances agreements. Contract liabilities also comprise prepayments from customers for supply-only and supply-and-installation projects ordered but not yet delivered. Vestas receives payments from customers based on billing schedules established in the contracts. The scheduled payments from customers typically preceed the satisfaction of performance obligations under the contracts. Contract assets relate to Vestas\u2019 conditional right to consideration for Vestas\u2019 completed performance under the contract. Accounts receivable are recognised when the right to consideration becomes unconditional. Contract liability relates to payments received in advance of performance under the contract. Contract liabilities are recognised as revenue as (or when) Vestas performs under the contract.Contract assets/liabilities are measured at the selling price of the work performed based on the stage of completion less progress billing and expected losses.The stage of completion is measured as the proportion of the costs related to the contract incurred relative to the estimated total costs related to the contract. Where it is probable that total costs will exceed total revenues from a contract, the ex - pected loss is recognised immediately as a cost and a provision.The value of self-constructed components is recognised as contract assets/liabilities upon installation of the components to the specific wind power plant\u2019s construction site.If the selling price of the work performed exceeds progress billings and expected losses it is recognised as an asset. If interim billings and expected losses exceed the selling price it is recognised as a liability.Costs relating to sales work and the pursuing of contracts are recognised in the income statement as incurred. 2.4\u2002Contract costsmEUR 2022 2021Asset recognised from costs to fulfill a contract753 690Total 753 690Capitalised costs as a result of fulfilling sales contracts are recognised as part of production cost in the income statement when related revenues are recognised. In 2022, EUR 958m (2021: EUR 599m) was recognised as cost.\u2002Accounting policiesCosts incurred for supply-only and supply-and-installation projects in fulfilling the contracts with customers that are directly associated with the contract, comprising installation cost and transportation cost, are recognised as an asset (contract costs), if those costs are expected to be recoverable.", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-31-3": { "value": "1.2\u2002Revenue\u2002 Key accounting estimates and judgements Estimate regarding recognition of contract elementsManagement performs significant accounting estimates in connection with determining the appropriate income recognition of contract elements. In certain situations, Supply-only projects contain elements that in nature are associated with a high degree of estimations regarding allocation of consideration under a contract to elements already delivered and elements to be delivered in the future. Management has assessed that the project specific margin is a fair estimate of a reasonable margin used to allocate consideration under a contract to the contract elements. Significant judgement is also involved in assessing whether project or service contracts contain multiple performance obligations which should be accounted for separately.Estimates of stage of completion Vestas applies the percentage-of-completion method in accounting for service contracts and certain wind power plants, in general projects with a high degree of customisation. The use of the percentage-of-completion method requires Management to determine the stage of completion by reference to the contract costs incurred for work performed to date in proportion to the estimated total contract costs (cost-to-cost method). This method is considered to best show the progression of the projects. Based on the estimated stage of completion, a respective portion of the consideration is recognised.Judgement regarding method for recognition of revenue from Supply-and-installation contractsManagement applies judgement when determining whether revenue from Supply-and-installations contracts shall be recognised at a point in time or over time. Management has determined that Supply-and-installation projects based on standard solutions have an alternative use. Consequently, revenue of such contract is recognised at the point in time when the turbine is fully operational and control is transferred to the customer. For certain projects, Vestas agrees to delivery of wind power plants based on non-standard solutions to the customer. Management assesses whether such non-standard solutions have an alternative use. The judgements made take into consideration technology used, or the degree of customization including remoteness of the wind power plant. Revenue from sale of non-standard solutions, which are judged to have no alternative use is recognised over time (percentage-of-completion method).Judgement regarding service contract modificationsManagement applies judgement when determining whether a service contract modification should be accounted for as a separate contract or as if it is part of the original contract. The judgements made take into consideration whether the scope is changed, if price changes re\ufb02ect stand-alone prices, whether a contract is won in a tender, if the modification is due to execution of a renewal option and other relevant facts and circumstances.Judgement regarding sale of onshore wind power plant under developmentIn 2021 management applied judgement in determining the revenue recognition of a share purchase agreement entered into with an associate to sell its shareholding in an onshore wind power plant under development. Consequently, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m were recognized. One of the judgments made was that management considered it highly probable that the customer\u2019s contingent option to put back the shares would either not materialise or not be exercised if materialised.In 2022, the approval from the authorities was delayed and the development plan is adjusted in alignment with the customer. Although the project value itself has not deteriorated, the delay increases the risk that the contingent put option materialises. Consequently, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m have been reversed in 2022.\u2002Accounting policiesRevenue is measured based on the consideration specified in a contract with a customer. Vestas recognises revenue when it transfers control over a product or service to a customer.Revenue recognition Revenue comprises sale of wind turbines and wind power plants, after-sales service, sale of spare parts and wind power plants under development. The following is a description of the principal activities from which Vestas generates its revenue.Supply-only projectsRevenue from the sale of individual wind turbines based on standard solutions is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Vestas recognises revenue at a point in time, when control is transferred to the customer, and the consideration agreed is expected to be received. Control is deemed to be transferred upon delivery of the components in accordance with the agreed delivery plan. Supply-and-installation projects (point in time)Revenue from sale of wind power plants based on standard solutions with alternative use is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Vestas recognises revenue when control of the fully operational turbine is transferred to the customer, and the consideration agreed is expected to be received. Control is generally deemed to be transferred at the point in time when the turbine is fully operational.Supply-and-installation projects (over time)Revenue from sale of wind power plants based on non-standard solutions to the customer, where there is no alter-native use for the wind power plant to be delivered and where we have an enforceable right to payment for the work completed is recognised over time using the percentage-of-completion method. Revenue excludes amounts collected on behalf of third parties. EPC / Turnkey projectsRevenue from contracts to deliver wind power plants with a high degree of customisation are recognised over time as the wind power plants are constructed based on the stage of completion of the individual contracts. Where the profit from a contract cannot be estimated reliably, revenue is only recognised equalling the cost incurred to the extent that it is probable that the costs will be recovered.Service sales Revenue from service sales, comprising services and mainte-nance agreements as well as extended warranties regarding wind turbines and wind power plants sold, are recognised over the term of the agreement as the services are provided. Separate spare parts sales are recognised at a point in time when control has been transferred to the customer, and pro-vided that consideration agreed is expected to be received.Service contract modificationsContract modifications treated as separate contracts are typically related to changes in scope, successful tender bids or renegotiated close to term expiry (signed). Contract modifications which are treated as part of the original contract, are typically related to renewals renegotiated far from term expiry (signed) or price changes agreed upon.Contract modifications treated as separate contracts are accounted for on a prospective basis. Contract modifications treated as part of the original contract and accounted for on a cumulative catch-up basis.Wind power plants under development Revenue from the sale of wind power plants under develop-ment is measured based on the consideration specified in a contract with a customer and recognised at a point in time when the control of the project is transferred to the customer.Transaction priceThe transaction price for sale of wind turbines and wind power plants normally includes a fixed consideration. The transaction price for service contracts includes a fixed consideration and often a variable consideration. The estimated amount of variable consideration will be included in the transaction price only to the extent that a significant reversal in revenue recognised is highly unlikely to occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price recognised as revenue is furthermore reduced by penalties and payment of liquidated damages related to project and service contracts.All wind turbine and wind power plant contracts include a standard warranty clause. For further details on warranty, refer to note 3.6.1.2\u2002Revenue \u2013 continuedOrder backlogThe order backlog re\ufb02ects the value of future deliveries and services. An order is included as order intake when firm and unconditional. The value of future contracts is measured at the end of the period. The order backlog comprises firm and unconditional orders from Power Solutions and Service, less deliveries made in Power Solutions and Service performance.\u2002DeliveriesDeliveries in MW re\ufb02ect the capacity of wind turbines delivered during the reporting period. The capacity is considered delivered, and is deducted from the wind turbine order backlog, when the related revenue is recognised. Sales from turnkey projects are deducted from the wind turbines backlog simultaneously as the customer has taken delivery of the wind turbines under the term of the contracts.Supply-only2.6Revenue EURbnRevenue recognitionRevenue is recognised at a point in time when control is transferred to the customer. Control is generally transferred upon delivery of the components in accordance with the agreed delivery plan.EPC / Turnkey projects0.9Revenue EURbnRevenue recognitionRevenue is recognised over time as the wind power plant is constructed based on the stage of completion of the individual contracts.Supply-and-installation7. 8Revenue EURbnRevenue recognitionRevenue is recognised over time for nonstandard solutions with no alter- native use as the turbine is installed based on the stage of completion of the individual contracts. Revenue is recognised at a point in time when control of the turbine is transferred to the customer. Control is transferred at a point in time when Vestas has proven a fully operational turbine.Service Sales from Service agreements are deducted from Service backlog simultaneously as revenue is recognised over the term of the agreement.Service3.2Revenue EURbnRevenue recognitionService contracts are normally recog- nised over time as the services are provided over the term of the agree- ment. Spare parts sales are recognised at a point in time when control has been transferred to the customer.1.2\u2002Revenue \u2013 continuedDisaggregation of revenueIn the following section, revenue is disaggregated by sale of projects and sale of service, by primary geographical market, major contract types and timing of revenue recognition.For the financial year 2022, supply-and-installation projects recognised over time (percentage-of-completion) constituted 37 percent of the total supply-and-installation revenue compared to 32 percent in 2021. The projects are mainly located in Brazil.Transaction price allocated to the remaining sales contractsThe following table includes revenue expected to be recognised in the future related to performance obligations that are unful-filled (or partially unfulfilled) at the end of the financial year.All considerations from contracts with customers are included in the amounts presented.Order backlog bnEUR 2022 2021Power Solutions, onshore16.4 15.4Power Solutions, offshore2.7 2.7Wind turbines total 19.1 18.11Service, onshore26.6 24.21Service, offshore3.8 3.61Service total30.4 27.81 The number disclosed in the 2021 annual report for the Service order backlog has been corrected from EUR 29.2bn to EUR 27.8m.Power Solutions Service TotalDisaggregation of revenuemEUR2022 2021 2022 2021 2022 2021Timing of revenue recognitionProducts and services transferred at a point in time7,519 9,161 653 412 8,172 9,573 Products and services transferred over time 3,812 3,942 2,502 2,072 6,314 6,014 Total 11,331 13,103 3,155 2,484 14,486 15,587Revenue from contract typesSupply-only2,590 2,814 - - 2,590 2,814 Supply-and-installation (at a point in time) 4,929 6,347 - - 4,929 6,347 Supply-and-installation (over time) 2,859 3,006 - - 2,859 3,006 Turnkey (EPC) 953 936 - - 953 936 Service - - 3,155 2,484 3,155 2,484 Total 11,331 13,103 3,155 2,484 14,486 15,587 Primary geographical marketsEMEA6,276 7,427 1,550 1,391 7,826 8,818Americas 3,783 3,967 1,328 840 5,111 4,807 Asia Pacific 1,272 1,709 277 253 1,549 1,962 Total 11,331 13,103 3,155 2,484 14,486 15,587 At the end of 2022, the average remaining duration in the service order backlog is approximately 11 years (2021: 10 years), with a range up to 35 years (2021: 36 years). For the Power Solutions segment, projects are normally to be delivered within 1 to 3 years (2021: 1 to 3 years).Power Solutions \u2013 order backlog At the end of the year, the total wind turbine order backlog amounted to 19,623 MW corresponding to EUR 19.1bn. Of this, 17,415 MW corresponding to EUR 16.4bn relates to onshore wind turbines. Compared to last year, the onshore order backlog increased by 13 percent. The offshore backlog amounted to 2,208 MW corresponding to EUR 2.7bn as at 31 December 2022, which is on par with 2021. Service \u2013 order backlogAt the end of 2022, Vestas had service agreements in the order backlog with expected contractual revenue of EUR 30.4bn, which is an increase of EUR 2.6bn compared to 2021.The service order backlog for 2021 is adjusted from EUR 29.2bn to EUR 27.8bn due to an error in the report generating the service backlog. The adjustment has no impact on the future service profitability.\u2002Accounting policiesOrder backlog in EUR re\ufb02ects the value of future deliveries and services under firm and unconditional orders and is measured as the expected revenue to be recognised in the future related to performance obligations that are unfulfilled or partially unfulfilled at the end of the period. The order backlog is forward-looking by nature and is a subset of Vestas' potential future revenue. Order backlog in MW re\ufb02ect the capacity of future turbine deliveries under firm and unconditional orders and is measured as the total capacity of turbines to be delivered under firm and unconditional orders less deliveries at the end of the period. The capacity of turbines delivered is included as deliveries when the related revenue is recognised.2.3\u2002Contract balances2022 2021Contract Contract Contract Contract mEURassetsliabilitiesassetsliabilities1 January1,227 6,180 775 5,613 Additions from business combinations - - - -Revenue recognised that was included in the contract liability balance at the beginning of the period - (3,283) - (3,202)Increases as a result of changes in the measure of progress and other adjustments 733 - 829 -Payments received, excluding amounts recognised as revenue during the period (prepayments) - 3,986 - 3,645Transfers from contract assets recognised at the beginning of the period to receivables (559) - (387) -Exchange rate adjustments (2) 54 10 12431 December 1,399 6,937 1,227 6,180Contract assets and liabilities comprise the following:Construction contracts in progress (turnkey)58 193 60 209 Service contracts 1,245 930 931 932Supply-only contracts - 744 - 848Supply-and-installation contracts point in time - 2,993 - 2,801Supply-and-installation over time 96 2,077 236 1,390Total 1,399 6,937 1,227 6,180\u2190The table provides information about development in contract assets and contract liabilities from contracts with customers, as well as a disaggregation of the contract balances on contract type.\u2002Accounting policiesContract assets/liabilities comprise agreements to deliver wind power plants based on non-standard solutions (supply-and-installation projects over time) and wind power plants with a high degree of customisation (turnkey projects), as well as service and maintenances agreements. Contract liabilities also comprise prepayments from customers for supply-only and supply-and-installation projects ordered but not yet delivered. Vestas receives payments from customers based on billing schedules established in the contracts. The scheduled payments from customers typically preceed the satisfaction of performance obligations under the contracts. Contract assets relate to Vestas\u2019 conditional right to consideration for Vestas\u2019 completed performance under the contract. Accounts receivable are recognised when the right to consideration becomes unconditional. Contract liability relates to payments received in advance of performance under the contract. Contract liabilities are recognised as revenue as (or when) Vestas performs under the contract.Contract assets/liabilities are measured at the selling price of the work performed based on the stage of completion less progress billing and expected losses.The stage of completion is measured as the proportion of the costs related to the contract incurred relative to the estimated total costs related to the contract. Where it is probable that total costs will exceed total revenues from a contract, the ex - pected loss is recognised immediately as a cost and a provision.The value of self-constructed components is recognised as contract assets/liabilities upon installation of the components to the specific wind power plant\u2019s construction site.If the selling price of the work performed exceeds progress billings and expected losses it is recognised as an asset. If interim billings and expected losses exceed the selling price it is recognised as a liability.Costs relating to sales work and the pursuing of contracts are recognised in the income statement as incurred. 2.4\u2002Contract costsmEUR 2022 2021Asset recognised from costs to fulfill a contract753 690Total 753 690Capitalised costs as a result of fulfilling sales contracts are recognised as part of production cost in the income statement when related revenues are recognised. In 2022, EUR 958m (2021: EUR 599m) was recognised as cost.\u2002Accounting policiesCosts incurred for supply-only and supply-and-installation projects in fulfilling the contracts with customers that are directly associated with the contract, comprising installation cost and transportation cost, are recognised as an asset (contract costs), if those costs are expected to be recoverable.", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-32-4": { "value": "\u2002 Key accounting estimates and judgements Estimate regarding recognition of contract elementsManagement performs significant accounting estimates in connection with determining the appropriate income recognition of contract elements. In certain situations, Supply-only projects contain elements that in nature are associated with a high degree of estimations regarding allocation of consideration under a contract to elements already delivered and elements to be delivered in the future. Management has assessed that the project specific margin is a fair estimate of a reasonable margin used to allocate consideration under a contract to the contract elements. Significant judgement is also involved in assessing whether project or service contracts contain multiple performance obligations which should be accounted for separately.Estimates of stage of completion Vestas applies the percentage-of-completion method in accounting for service contracts and certain wind power plants, in general projects with a high degree of customisation. The use of the percentage-of-completion method requires Management to determine the stage of completion by reference to the contract costs incurred for work performed to date in proportion to the estimated total contract costs (cost-to-cost method). This method is considered to best show the progression of the projects. Based on the estimated stage of completion, a respective portion of the consideration is recognised.Judgement regarding method for recognition of revenue from Supply-and-installation contractsManagement applies judgement when determining whether revenue from Supply-and-installations contracts shall be recognised at a point in time or over time. Management has determined that Supply-and-installation projects based on standard solutions have an alternative use. Consequently, revenue of such contract is recognised at the point in time when the turbine is fully operational and control is transferred to the customer. For certain projects, Vestas agrees to delivery of wind power plants based on non-standard solutions to the customer. Management assesses whether such non-standard solutions have an alternative use. The judgements made take into consideration technology used, or the degree of customization including remoteness of the wind power plant. Revenue from sale of non-standard solutions, which are judged to have no alternative use is recognised over time (percentage-of-completion method).Judgement regarding service contract modificationsManagement applies judgement when determining whether a service contract modification should be accounted for as a separate contract or as if it is part of the original contract. The judgements made take into consideration whether the scope is changed, if price changes re\ufb02ect stand-alone prices, whether a contract is won in a tender, if the modification is due to execution of a renewal option and other relevant facts and circumstances.Judgement regarding sale of onshore wind power plant under developmentIn 2021 management applied judgement in determining the revenue recognition of a share purchase agreement entered into with an associate to sell its shareholding in an onshore wind power plant under development. Consequently, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m were recognized. One of the judgments made was that management considered it highly probable that the customer\u2019s contingent option to put back the shares would either not materialise or not be exercised if materialised.In 2022, the approval from the authorities was delayed and the development plan is adjusted in alignment with the customer. Although the project value itself has not deteriorated, the delay increases the risk that the contingent put option materialises. Consequently, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m have been reversed in 2022.\u2002 Key accounting judgements Judgement regarding classification in the income statementThe use of special items entails management judgement in the separation from other items in the income statement. In connection with the use of special items, it is crucial that these are of a significant unusual and/or infrequently occurring nature that are not attributable to Vestas\u2019 normal operations, as such classification highlights to users of financial statements the items to which the least attention should be given when understanding current and future performance.Estimate regarding the valuation of assets and liabilities in Russia and UkraineMeasurement of the provisions related to the ceasing of activities in Russia and Ukraine as well as write-down of inventory located in Russia and Ukraine is associated with significant estimation uncertainty due to the current situation in Russia and Ukraine. The recognised cost re\ufb02ects management\u2019s best estimate based on the current expectations. 2.2\u2002Inventories\u2002 Key accounting estimatesEstimate of net realisable valueVestas estimates the net realisable value at the amount at which inventories are expected to be sold. Inventories are written down to net realisable value when the cost of inven-tories is estimated to be non-recoverable due to obsolescence, damage or declining selling prices. Estimates are used when accounting for or measuring inventory pro visions, and these estimates depend upon subjective and complex judgements about certain circumstances, taking into account \ufb02uctuations in prices, excess quantities, condition of the inventory, nature of the inventory, and the estimated variable costs necessary to make the sale. \u2002 Key accounting estimates Estimate of allowance for doubtful VAT receivablesManagement makes allowance for doubtful VAT receivables in anticipation of estimated future receipt of payments. If certain circumstances result in lack of receipt of payments, an additional allowance could be required. When evaluating the adequacy of the allowance for doubtful VAT receivables, Management analyses the nature of the individual VAT receivables and takes into account any relevant historical information that is applicable to the specific circumstance.\u2002 Key accounting estimates Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOWAs part of the acquisition of MHI Vestas Offshore Wind (MVOW) in 2020, Vestas acquired intangible assets and tangible assets relating to the offshore activity. As at 31 December 2022, the acquired assets was tested for impairment. In performing the impairment test, the carrying amount of the assets is compared to the discounted value of expected future cash \ufb02ows from the offshore activity (value-in-use). The expected future cash \ufb02ows are based on key assumptions including order intake and project margins and service contract margins, which are by nature subject to significant uncertainty. \u2002 Key accounting estimates Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOWRefer to note 3.1 for further details.\u2002 Key accounting estimates Provisions for warrantiesThe product warranties, which in the great majority of cases includes component defects and functional errors are usually granted for a two-year period from legal transfer of the wind turbine. In certain cases, a warranty of up to five years is provided. For the customer, the specific warranty period and the specific warranty terms are part of the basis of the individual contract.Warranty provisions include only standard warranty, whereas services purchased in addition to the standard warranty are included in the service contracts. In addition to the above, provisions are made for upgrades of wind turbines sold due to defects, etc. Such provisions will also include wind turbines sold in prior years, but where serial defects, etc. are identified later. Moreover, it should be emphasised that the complexity of some of the serial defects, etc. identified may lead to adjustments of previous estimates, upwards as well as downwards, in light of factual information about population size, costs of repair and the timing of such repairs.During 2022, net warranty provisions charged to the income statement amounted to EUR 915m (2021: EUR 679m), equivalent to 6.3 percent of revenue. The net amount consists of a gross warranty provision of EUR 926m less supplier claims of EUR 11m. The warranty provisions in 2022 included additional warranty provisions of EUR 124m due to increased repair costs caused by external cost in\ufb02ation, hereof EUR 93m related to offshore projects. Warranty consumption amounted to EUR 633m compared to EUR 852m in 2021.Management assesses the likely outcome of pending and future negotiations with sub-suppliers for compensation. Compensation from sub-suppliers may be recognised only when it is virtually certain that we will receive compensation from the sub-suppliers.\u2002 Key accounting estimates Income taxes and uncertain tax positionThe Group continuously wants to be a compliant corporate tax citizen in collaboration with our operations and stakeholders and to support shareholder interest and our reputation. To ensure compliance, national and international tax laws as well as the OECD Guidelines are acknowledged and followed throughout the world.The Group is subject to income taxes around the world and therefore recognise that significant judgement is required in determining the worldwide accrual for income taxes, deferred income tax assets and liabilities and provision for uncertain tax positions.The global business implies that the Group may be subject to disputes on allocation of profits between different jurisdictions. Management judgement is applied to assess the expected outcome of such tax disputes which is provided for in provision for uncertain tax positions. Management believes that provisions made for uncertain tax positions not yet settled with local tax authorities at year end is adequate. However, the actual obligation may deviate and is dependent on the result of litigations and settlements with the relevant tax authorities.The provision for uncertain tax positions has been derived by applying probability weighted outcomes for all uncertainties with multiple potential outcomes and in scenarios where the outcome is determined by a single point it is determined by the most probable outcome.\u2002 Key accounting estimates Valuation of deferred tax assetsThe Group recognises deferred tax assets, including the tax value of tax loss carry-forwards, where Management assesses that the tax assets may be utilised in the foreseeable future for set-off against positive taxable income. The assessment is made on an annual basis and is based on the budgets and business plans for future years, including planned business initiatives. Key parameters are expected revenue and EBIT development considering expected allocation of future taxable income based on the transfer pricing policy in place. Due to the uncertainties relating to allocation of profits Management has limited the forecast period used to determine the utilisation to three years.Of the total tax loss carry-forwards, EUR 61m (2021: EUR 31m) is expected to be realised within 12 months, and EUR 416m (2021: EUR 65m) is expected to be realised later than 12 months after the balance sheet date.The assessment in 2022 resulted in an additional write-down of deferred tax assets by EUR 21m (2021 EUR 32m reversal of write-down) with the write down being primarily due to the fact that certain jurisdictions have more tax assets than what is expected to be utilised in the foreseeable future.The value of non-recognised tax assets totals EUR 122m (2021: EUR 101m), of which EUR 122m (2021: EUR 101m) relates to write-down of tax assets that are not expected to be utilised in the foreseeable future.7.3\u2002Key accounting estimates and judgementsWhen preparing the consolidated financial statements of Vestas, Management makes several accounting estimates and assumptions which impact the recognition and measurement of Vestas\u2019 financial statements. The key accounting estimates and judgements, which may have a significant impact on the financial statements are listed below. The nature of accounting impact of key accounting estimates and judgements is described in the relevant notes.The impact of key accounting estimates and judgements is divided into three categories from low to high. The rating is based on a combined assessment of materiality, complexity, subjectivity and estimation uncertainty and indicates the impact on amounts recognised and carrying values of assets or liabilities.Climate-related risksVestas continuously monitors risks related to climate change and has considered them while preparing consolidated financial statements, where they may affect reported amounts materially. The group has performed an extended risk assessment in 2022 relating to assets in our manufacturing facilities that significantly contribute to property plant and equipment, presented in note 3.2.Further reference is made to \u2018climate risks\u2019 in the Risk Management section on page 51 for more details on this process.Estimate/ Impact of accounting Note Key accounting estimates and judgementsjudgementestimates and judgements1.2 Revenue Estimate regarding recognition of contract elements Estimate MediumEstimate of stage of completion Estimate HighJudgement regarding method for recognition of revenue from Supply-and-installation contracts Judgement MediumJudgement regarding service contract modifications Judgement LowJudgement regarding sale of onshore wind farm project Judgement Medium1.6 Special items Judgement regarding classification in the income statement Judgement LowEstimate regarding the valuation of assets and liabilities in Russia and Ukraine Estimate Medium2.2 Inventories Estimates of net realisable value Estimate Low2.5 Other receivables Estimates of allowance for doubtful VAT receivables Estimate Medium3.1 intangible assets Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOW Estimate Medium3.2 Tangible assets3.6 Provisions Estimates for warranty provisions Estimate High5.1 Income tax Estimates included in income tax assessment and uncertain tax position Estimate High5.2 Deferred tax Estimate of deferred tax assets valuation Estimate Medium\u2002 Key accounting estimates The key accounting estimates made are based on assumptions, that are supported by experience, historical trends and other factors that Management assesses to be reasonable, but that by nature are associated with inherent uncertainty and unpredictability.The estimates and underlying assumptions are reviewed on an ongoing basis. If necessary, changes are recognised in the period in which the estimate is revised. Management considers the key accounting estimates to be reasonable and appropriate based on currently available information.\u2002Key accounting judgementsKey accounting judgments are made when applying certain accounting policies. Management considers the accounting judgements made are consistent and re\ufb02ect the most fair and true view of Vestas\u2019 financial position and results of the Group\u2019s operations.", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-34-5": { "value": "\u2002Accounting policiesRevenue is measured based on the consideration specified in a contract with a customer. Vestas recognises revenue when it transfers control over a product or service to a customer.Revenue recognition Revenue comprises sale of wind turbines and wind power plants, after-sales service, sale of spare parts and wind power plants under development. The following is a description of the principal activities from which Vestas generates its revenue.Supply-only projectsRevenue from the sale of individual wind turbines based on standard solutions is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Vestas recognises revenue at a point in time, when control is transferred to the customer, and the consideration agreed is expected to be received. Control is deemed to be transferred upon delivery of the components in accordance with the agreed delivery plan. Supply-and-installation projects (point in time)Revenue from sale of wind power plants based on standard solutions with alternative use is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Vestas recognises revenue when control of the fully operational turbine is transferred to the customer, and the consideration agreed is expected to be received. Control is generally deemed to be transferred at the point in time when the turbine is fully operational.Supply-and-installation projects (over time)Revenue from sale of wind power plants based on non-standard solutions to the customer, where there is no alter-native use for the wind power plant to be delivered and where we have an enforceable right to payment for the work completed is recognised over time using the percentage-of-completion method. Revenue excludes amounts collected on behalf of third parties. EPC / Turnkey projectsRevenue from contracts to deliver wind power plants with a high degree of customisation are recognised over time as the wind power plants are constructed based on the stage of completion of the individual contracts. Where the profit from a contract cannot be estimated reliably, revenue is only recognised equalling the cost incurred to the extent that it is probable that the costs will be recovered.Service sales Revenue from service sales, comprising services and mainte-nance agreements as well as extended warranties regarding wind turbines and wind power plants sold, are recognised over the term of the agreement as the services are provided. Separate spare parts sales are recognised at a point in time when control has been transferred to the customer, and pro-vided that consideration agreed is expected to be received.Service contract modificationsContract modifications treated as separate contracts are typically related to changes in scope, successful tender bids or renegotiated close to term expiry (signed). Contract modifications which are treated as part of the original contract, are typically related to renewals renegotiated far from term expiry (signed) or price changes agreed upon.Contract modifications treated as separate contracts are accounted for on a prospective basis. Contract modifications treated as part of the original contract and accounted for on a cumulative catch-up basis.Wind power plants under development Revenue from the sale of wind power plants under develop-ment is measured based on the consideration specified in a contract with a customer and recognised at a point in time when the control of the project is transferred to the customer.Transaction priceThe transaction price for sale of wind turbines and wind power plants normally includes a fixed consideration. The transaction price for service contracts includes a fixed consideration and often a variable consideration. The estimated amount of variable consideration will be included in the transaction price only to the extent that a significant reversal in revenue recognised is highly unlikely to occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price recognised as revenue is furthermore reduced by penalties and payment of liquidated damages related to project and service contracts.All wind turbine and wind power plant contracts include a standard warranty clause. For further details on warranty, refer to note 3.6.Order backlogThe order backlog re\ufb02ects the value of future deliveries and services. An order is included as order intake when firm and unconditional. The value of future contracts is measured at the end of the period. The order backlog comprises firm and unconditional orders from Power Solutions and Service, less deliveries made in Power Solutions and Service performance.\u2002DeliveriesDeliveries in MW re\ufb02ect the capacity of wind turbines delivered during the reporting period. The capacity is considered delivered, and is deducted from the wind turbine order backlog, when the related revenue is recognised. Sales from turnkey projects are deducted from the wind turbines backlog simultaneously as the customer has taken delivery of the wind turbines under the term of the contracts.Supply-only2.6Revenue EURbnRevenue recognitionRevenue is recognised at a point in time when control is transferred to the customer. Control is generally transferred upon delivery of the components in accordance with the agreed delivery plan.EPC / Turnkey projects0.9Revenue EURbnRevenue recognitionRevenue is recognised over time as the wind power plant is constructed based on the stage of completion of the individual contracts.Supply-and-installation7. 8Revenue EURbnRevenue recognitionRevenue is recognised over time for nonstandard solutions with no alter- native use as the turbine is installed based on the stage of completion of the individual contracts. Revenue is recognised at a point in time when control of the turbine is transferred to the customer. Control is transferred at a point in time when Vestas has proven a fully operational turbine.Service Sales from Service agreements are deducted from Service backlog simultaneously as revenue is recognised over the term of the agreement.Service3.2Revenue EURbnRevenue recognitionService contracts are normally recog- nised over time as the services are provided over the term of the agree- ment. Spare parts sales are recognised at a point in time when control has been transferred to the customer.\u2002Accounting policiesOrder backlog in EUR re\ufb02ects the value of future deliveries and services under firm and unconditional orders and is measured as the expected revenue to be recognised in the future related to performance obligations that are unfulfilled or partially unfulfilled at the end of the period. The order backlog is forward-looking by nature and is a subset of Vestas' potential future revenue. Order backlog in MW re\ufb02ect the capacity of future turbine deliveries under firm and unconditional orders and is measured as the total capacity of turbines to be delivered under firm and unconditional orders less deliveries at the end of the period. The capacity of turbines delivered is included as deliveries when the related revenue is recognised.\u2002Accounting policiesContract assets/liabilities comprise agreements to deliver wind power plants based on non-standard solutions (supply-and-installation projects over time) and wind power plants with a high degree of customisation (turnkey projects), as well as service and maintenances agreements. Contract liabilities also comprise prepayments from customers for supply-only and supply-and-installation projects ordered but not yet delivered. Vestas receives payments from customers based on billing schedules established in the contracts. The scheduled payments from customers typically preceed the satisfaction of performance obligations under the contracts. Contract assets relate to Vestas\u2019 conditional right to consideration for Vestas\u2019 completed performance under the contract. Accounts receivable are recognised when the right to consideration becomes unconditional. Contract liability relates to payments received in advance of performance under the contract. Contract liabilities are recognised as revenue as (or when) Vestas performs under the contract.Contract assets/liabilities are measured at the selling price of the work performed based on the stage of completion less progress billing and expected losses.The stage of completion is measured as the proportion of the costs related to the contract incurred relative to the estimated total costs related to the contract. Where it is probable that total costs will exceed total revenues from a contract, the ex - pected loss is recognised immediately as a cost and a provision.The value of self-constructed components is recognised as contract assets/liabilities upon installation of the components to the specific wind power plant\u2019s construction site.If the selling price of the work performed exceeds progress billings and expected losses it is recognised as an asset. If interim billings and expected losses exceed the selling price it is recognised as a liability.Costs relating to sales work and the pursuing of contracts are recognised in the income statement as incurred. \u2002Accounting policiesCosts incurred for supply-only and supply-and-installation projects in fulfilling the contracts with customers that are directly associated with the contract, comprising installation cost and transportation cost, are recognised as an asset (contract costs), if those costs are expected to be recoverable.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-53-2": { "value": "1.3\u2002Costs\u2002Accounting policiesProduction costs Production costs, including warranty costs, comprise the costs incurred to achieve revenue for the year. Costs consist of raw materials, consumables, direct labour costs, transportation costs and indirect costs such as salaries, rental and lease costs as well as depreciation of production facilities. Furthermore, provisions for loss-making construction contracts are included in production costs. Research and development costs Research and development costs primarily comprise employee costs, internal and external costs related to innovation and new technologies, as well as amortisation, depreciation and impairment losses on capitalised development costs. Distribution costs Distribution costs comprise costs incurred for the sale and distribution of products, etc. sold during the year. Also included are costs relating to employees and depreciation. Administration costs Administration costs comprise costs incurred during the year for management and administration of Vestas and includes costs for administrative staff, management, office premises, office costs, and depreciation.Research and development costs recognised in the income statement1mEUR 2022 2021R&D costs 514 444Capitalised development projects (414) (332)Amortisation and depreciation 357 277Total 457 3891 Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 7.2.1.4\u2002 Employee costs Staff costsmEUR 2022 2021Staff costs are specified as follows:Wages and salaries, etc.1,581 1,395Share-based payment, refer to note 1.5 7 13Pension schemes, defined contribution schemes 94 85Other social security costs 198 187Total 1,880 1,680Average number of employees 28,779 29,164Number of employees as at 31 December 28,438 29,427Board of Directors and Executive ManagementmEUR 2022 2021Staff costs attributable to:Board of DirectorsBoard remuneration1 1Total 1 1Executive ManagementWages and bonus7 7Share-based payment 2 6Total 9 13The Board of Directors and Executive Management are not covered by any pension schemes. In the event of change in control, members of the Executive Management do not receive any additional compensation. In 2022, share-based payment and wages to the registered members of the Executive Management amounted to EUR 3m (2021: EUR 5m).Key management personnel is defined as Executive Management.1.6\u2002Special itemsRussian invasion of UkraineFollowing Russia\u2019s invasion of Ukraine in February 2022, Vestas announced on 5 April 2022 that Vestas would withdraw from the Russian market. In order to facilitate the withdrawal from Russia, Vestas continues certain activities during a limited transition period where Vestas will dispose of its Russian assets, wind down operations and end existing contractual relationships. Furthermore, Vestas\u2019 activities in Ukraine have been put on hold.The costs related to the Russian invasion of Ukraine qualify as special items in accordance with Vestas\u2019 accounting policy. In 2022, special items of EUR 269m have been recognised including provisions of EUR 87m, write-down of inventories located in Russia and Ukraine of EUR 159m, impairment of tangible assets of EUR 9m, write-down of VAT receivables of EUR 4m, staff costs of EUR 5m and other expenses of EUR 5m, as directly related to the Russian invasion of Ukraine. Basis for recognition The provisions primarily relate to risks stemming from Vestas\u2019 cessation of activities in Russia, including claims brought against Vestas in and outside Russia. In the aggregate, the possible outcome ranges between EUR 0m and EUR 150m. Vestas has provisioned EUR 81m in order to address the assessed risk. The write-down of inventory relates to inventory located in Russia and Ukraine that is not expected to be sold. The impairment loss on tangible assets is primarily related to buildings and equipment located in Russia, which are written down to zero as the assets are not expected to be utilised or sold. The write-down of VAT receivables is related to VAT receivables that are deemed not recoverable. The staff costs are related to severance payments. Other expenses are primarily related to the closing of the factory in Russia.Adjusting manufacturing footprint Vestas continues to review the product portfolio and adapt the production capacity. As part of this development, Vestas adjusted its manufacturing footprint by ceasing production at certain factories in China and India.This adjustment of the manufacturing footprint qualifies as special items in accordance with Vestas\u2019 accounting policy. In 2022, special items of EUR 244m have been recognised including impairment of intangible assets of EUR 25m, impairment of tangible assets of EUR 89m, write-down of inventory of EUR 101m, staff costs of EUR 8m and other costs of EUR 21m.Furthermore, a reversal of previously recognised impairment losses on tangible assets of EUR 54m, staff costs of EUR 8m and other costs of EUR 7m was recognised in special items, primarily relating to the factory in Lauchhammer, Germany and the production facility on Isle of Wight, UK.Basis for recognition The impairment loss is primarily related to intangible assets, buildings and production equipment which are written down to fair value less expected cost to sell or value in use. The write-down of inventory relates to inventory which is not expected to be sold. The intangible assets, buildings and production equipment at the factories have been written down from EUR 155m to EUR 41m re\ufb02ecting the value that is expected from the disposal of the assets considering costs to sell. Inventory has been written down from EUR 101m to zero as the inventory is expected to be scrapped. Other costs are primarily related to a write-down of VAT and tax receivables that are deemed not recoverable, purchase commitments towards suppliers and cost of closing the factories.The reversal of previously recognised impairment losses was primarily due to the sale of the factory in Lauchhammer and revised expected use of the production facility on Isle of Wight.\u2002 Key accounting judgements Judgement regarding classification in the income statementThe use of special items entails management judgement in the separation from other items in the income statement. In connection with the use of special items, it is crucial that these are of a significant unusual and/or infrequently occurring nature that are not attributable to Vestas\u2019 normal operations, as such classification highlights to users of financial statements the items to which the least attention should be given when understanding current and future performance.Estimate regarding the valuation of assets and liabilities in Russia and UkraineMeasurement of the provisions related to the ceasing of activities in Russia and Ukraine as well as write-down of inventory located in Russia and Ukraine is associated with significant estimation uncertainty due to the current situation in Russia and Ukraine. The recognised cost re\ufb02ects management\u2019s best estimate based on the current expectations. \u2002Accounting policiesSpecial items comprise significant unusual and/or infrequently occurring items that are not attributable to Vestas\u2019 normal operations. Special items comprise income and costs related to significant organisational restructuring and significant adjustments to production capacity and the product programme. Special items mEUR 2022 2021Write-down of inventory(260) \u2013Provisions (87) \u2013Impairment loss on intangible and tangible assets (69) (68)Staff costs (5) (61)Other costs (23) (10)Special items (444) (139)Amortisation, intangible assets 20222021\u2002 Production costs EUR 56m (17%)\u2002 Production costs EUR 80m (21%)\u2002 Research and development costs EUR 232m (71%)\u2002 Research and development costs EUR 240m (63%)\u2002 Distribution costs EUR 3m (1%)\u2002 Distribution costs EUR 4m (1%)\u2002 Administration costs EUR 34m (11%)\u2002 Administration costs EUR 57m (15%)\u2002 Special items EUR 0m (0%)\u2002 Special items EUR 0m (0%)Impairment loss, intangible assets20222021\u2002 Production costs EUR 13m (10%)\u2002 Production costs EUR 0m (0%)\u2002 Research and development costs EUR 90m (70%)\u2002 Research and development costs EUR 0m (0%)\u2002Distribution costs EUR 0m (0%)\u2002Distribution costs EUR 0m (0%)\u2002 Administration costs EUR 0m (0%)\u2002 Administration costs EUR 0m (0%)\u2002Special items EUR 25m (20%)\u2002Special items EUR 0m (0%)\u2002 Key accounting estimates Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOWAs part of the acquisition of MHI Vestas Offshore Wind (MVOW) in 2020, Vestas acquired intangible assets and tangible assets relating to the offshore activity. As at 31 December 2022, the acquired assets was tested for impairment. In performing the impairment test, the carrying amount of the assets is compared to the discounted value of expected future cash \ufb02ows from the offshore activity (value-in-use). The expected future cash \ufb02ows are based on key assumptions including order intake and project margins and service contract margins, which are by nature subject to significant uncertainty. Depreciation, property, plant and equipmentmEUR and percent20222021\u2002 Production costs EUR 369m (64%)\u2002 Production costs EUR 360m (68%)\u2002 Research and development costs EUR 34m (6%)\u2002 Research and development costs EUR 30m (6%)\u2002Distribution costs EUR 156m (27%)\u2002Distribution costs EUR 126m (23%)\u2002Administration costs EUR 15m (3%)\u2002Administration costs EUR 17m (3%)\u2002Special items EUR 0m (0%)\u2002Special items EUR 0m (0%)Impairment loss, property, plant and equipmentmEUR and percent20222021\u2002 Production costs EUR 61m (33%)\u2002 Production costs EUR 0m (0%)\u2002 Research and development costs EUR 4m (2%)\u2002 Research and development costs EUR 0m (0%)\u2002Distribution costs EUR 19m (10%)\u2002Distribution costs EUR 0m (0%)\u2002Administration costs EUR 3m (2%)\u2002Administration costs EUR 0m (0%)\u2002Special items EUR 99m (53%)\u2002Special items EUR 68m (100%)\u2002Accounting policiesLand and buildings, plant and machinery as well as other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and impairment losses.Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is ready for use. In the case of construction of own assets, cost comprises direct and indirect costs for materials, components, sub-suppliers, and labour. Estimated costs for dismantling and disposing of the asset and for re-establishment are added to cost to the extent that they are recognised as a provision. Where individual components of an item of property, plant and equipment have different useful lives, the cost of the item is decomposed into separate components which are depreciated separately.Subsequent costs, e.g. in connection with the replacement of components of an item of property, plant and equipment, are recognised in the carrying amount of the asset in question when it is probable that the costs incurred will result in future economic benefits to Vestas. The carrying amount of the replaced components is derecognised in the balance sheet and recognised as costs in the income statement. All other costs incurred for ordinary repairs and maintenance are rec-ognised in the income statement as incurred.Installations capitalised as land and buildings which are related to leased assets are depreciated over the term of the related lease contract. Such lease contracts range with a lease term from 10 to 20 years.Depreciation is calculated on a straight-line basis over the expected useful lives of the assets, which are:Buildings (including installations) 10\u201340 yearsPlant and machinery 3\u201310 years Other fixtures and fittings, tools and equipment 3\u20135 yearsRight-of-use assets 2-20 yearsLand is not depreciated.The basis of depreciation is calculated taking into account the residual value of the asset less any impairment losses. The residual value is determined at the time of acquisition and is reassessed annually. Where the residual value exceeds the carrying amount of the asset, depreciation is discontinued.The depreciation periods are determined based on estimates of the expected useful lives and future residual value of the assets. The estimates are based on historical experience. A reassessment is made once a year to ascertain that the depreciation basis re\ufb02ects the expected life and future residual values of the assets.If the depreciation period or the residual value has changed, the effect on depreciation is recognised prospectively as a change in accounting estimate.Depreciation is recognised in the income statement as either production costs, research and development costs, distribution costs or administration costs to the extent that depreciation is not included in the cost of assets of own construction.The carrying amounts of non-current assets are reviewed on an annual basis to determine whether there is any indication of impairment. If so, the recoverable amount of the asset is calculated. The recoverable amount is the higher of the fair value of the asset less estimated costs to sell and value in use.Value in use is calculated as the net present value of expected future net cash \ufb02ows from the asset or a group of assets.An impairment loss is recognised where the carrying amount of an asset exceeds its recoverable amount.Impairment losses are reversed only to the extent of changes in the assumptions and estimates underlying the impairment calculation.Impairment losses are reversed only to the extent that the new carrying amount of the asset does not exceed the carrying amount of the asset after depreciation/amortisation had the asset not been impaired.Impairment relating to offshore activityIn 2022, Vestas recognised an impairment loss on tangible assets, including right-of-use assets, of EUR 81m relating to the V164/174 offshore activity. Refer to note 3.1 for further details.\u2002 Key accounting estimates Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOWRefer to note 3.1 for further details.Total lease expenses recognised in the income statementmEUR 2022 2021Variable lease payments not included in the measurement of lease liabilities0 1Expenses relating to short-term leases and leases of low-value51 31Adjustments to the income statement, 1 January \u2013 31 December 2021Income statementEffect of mEUR Reportednew policy AdjustedProduction costs(14,027) (4) (14,031)Gross profit 1,560 (4) 1,556Research and development costs(364) (25) (389)Distribution costs (367) (4) (371)Administration costs (368) - (368)Operating profit (EBIT) before special items461 (33) 428Operating profit (EBIT) 322 (33) 289Profit before tax 257 (33) 224Income tax (81) 0 (81)Profit for the year 176 (33) 143Profit is attributable to:Owners of Vestas Wind Systems A/S167 (33) 134Earnings per share (EPS):Earnings per share (EUR)0.17 (0.04) 0.13Earnings per share (EUR), diluted0.17 (0.04) 0.13", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-54-4": { "value": "\u2002Accounting policiesProduction costs Production costs, including warranty costs, comprise the costs incurred to achieve revenue for the year. Costs consist of raw materials, consumables, direct labour costs, transportation costs and indirect costs such as salaries, rental and lease costs as well as depreciation of production facilities. Furthermore, provisions for loss-making construction contracts are included in production costs. Research and development costs Research and development costs primarily comprise employee costs, internal and external costs related to innovation and new technologies, as well as amortisation, depreciation and impairment losses on capitalised development costs. Distribution costs Distribution costs comprise costs incurred for the sale and distribution of products, etc. sold during the year. Also included are costs relating to employees and depreciation. Administration costs Administration costs comprise costs incurred during the year for management and administration of Vestas and includes costs for administrative staff, management, office premises, office costs, and depreciation.Development projectsProjects for the development and testing of new wind turbines are recognised as intangible assets when they are clearly defined, identifiable, and for which technical feasibility, suffi-cient resources and a potential future market or application in the enterprise can be demonstrated. In addition, it is the intention with these projects to manufacture, market or use the project for future commercial purposes. This applies if cost can be measured reliably and sufficient certainty exists that future earnings or the net selling price can cover production costs, distribution costs, and administration costs as well as research and development costs. At Vestas this is underpinned by a gate process, where these judgements are made at specific gates. Other development costs not qualifying for capitalization are recognised in the income statement as research and development costs.Capitalised development costs are measured at cost less accu mulated amortisation and impairment losses. Devel-opment costs comprise salaries, amortisation and other costs attributable to Vestas\u2019 development activities.Following completion of the development work, development projects are amortised on a straight-line basis over their estimated useful lives. The amortisation period is two to five years. The basis of amortisation is calculated net of any impairment losses. The carrying amount of development projects in progress is tested for impairment at least annually, and where the carrying amount exceeds the net present value of the future net cash \ufb02ows expected to be generated by the development project, the project is written down to its recoverable amount in the income statement. Finished development projects are tested for impairment if there is indication of impairment from the annual review. Patents and licences included in development projects are measured at cost less accumulated amortisation and impair-ment losses. Patents and licences are amortised over the patent period or term of agreement, the life of the development project or the estimated useful life, whichever is shorter. The basis of amortisation is calculated net of any impairment losses. SoftwareAcquired software licences and internally developed software is measured at cost less accumulated amortisation and impairment losses. Cost includes both direct internal and external costs. Software is amortised on a straight-line basis over three to five years. The basis of amortisation is calculated net of any impairment losses.Other intangible assetsCustomer relationship, order backlog, and trademarks with a finite useful life acquired from third parties, either separately or as part of the business combination, are capitalised at cost and amortised over their remaining useful lives. Other intangible assets that are not Customer relationship, order backlog, or trademarks are measured at cost less amortisation and impairment losses.\u2002Accounting policiesLand and buildings, plant and machinery as well as other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and impairment losses.Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is ready for use. In the case of construction of own assets, cost comprises direct and indirect costs for materials, components, sub-suppliers, and labour. Estimated costs for dismantling and disposing of the asset and for re-establishment are added to cost to the extent that they are recognised as a provision. Where individual components of an item of property, plant and equipment have different useful lives, the cost of the item is decomposed into separate components which are depreciated separately.Subsequent costs, e.g. in connection with the replacement of components of an item of property, plant and equipment, are recognised in the carrying amount of the asset in question when it is probable that the costs incurred will result in future economic benefits to Vestas. The carrying amount of the replaced components is derecognised in the balance sheet and recognised as costs in the income statement. All other costs incurred for ordinary repairs and maintenance are rec-ognised in the income statement as incurred.Installations capitalised as land and buildings which are related to leased assets are depreciated over the term of the related lease contract. Such lease contracts range with a lease term from 10 to 20 years.Depreciation is calculated on a straight-line basis over the expected useful lives of the assets, which are:Buildings (including installations) 10\u201340 yearsPlant and machinery 3\u201310 years Other fixtures and fittings, tools and equipment 3\u20135 yearsRight-of-use assets 2-20 yearsLand is not depreciated.The basis of depreciation is calculated taking into account the residual value of the asset less any impairment losses. The residual value is determined at the time of acquisition and is reassessed annually. Where the residual value exceeds the carrying amount of the asset, depreciation is discontinued.The depreciation periods are determined based on estimates of the expected useful lives and future residual value of the assets. The estimates are based on historical experience. A reassessment is made once a year to ascertain that the depreciation basis re\ufb02ects the expected life and future residual values of the assets.If the depreciation period or the residual value has changed, the effect on depreciation is recognised prospectively as a change in accounting estimate.Depreciation is recognised in the income statement as either production costs, research and development costs, distribution costs or administration costs to the extent that depreciation is not included in the cost of assets of own construction.The carrying amounts of non-current assets are reviewed on an annual basis to determine whether there is any indication of impairment. If so, the recoverable amount of the asset is calculated. The recoverable amount is the higher of the fair value of the asset less estimated costs to sell and value in use.Value in use is calculated as the net present value of expected future net cash \ufb02ows from the asset or a group of assets.An impairment loss is recognised where the carrying amount of an asset exceeds its recoverable amount.Impairment losses are reversed only to the extent of changes in the assumptions and estimates underlying the impairment calculation.Impairment losses are reversed only to the extent that the new carrying amount of the asset does not exceed the carrying amount of the asset after depreciation/amortisation had the asset not been impaired.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-55-5": { "value": "Research and development costs Research and development costs primarily comprise employee costs, internal and external costs related to innovation and new technologies, as well as amortisation, depreciation and impairment losses on capitalised development costs. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-59-3": { "value": "1.4\u2002 Employee costs Staff costsmEUR 2022 2021Staff costs are specified as follows:Wages and salaries, etc.1,581 1,395Share-based payment, refer to note 1.5 7 13Pension schemes, defined contribution schemes 94 85Other social security costs 198 187Total 1,880 1,680Average number of employees 28,779 29,164Number of employees as at 31 December 28,438 29,427Board of Directors and Executive ManagementmEUR 2022 2021Staff costs attributable to:Board of DirectorsBoard remuneration1 1Total 1 1Executive ManagementWages and bonus7 7Share-based payment 2 6Total 9 13The Board of Directors and Executive Management are not covered by any pension schemes. In the event of change in control, members of the Executive Management do not receive any additional compensation. In 2022, share-based payment and wages to the registered members of the Executive Management amounted to EUR 3m (2021: EUR 5m).Key management personnel is defined as Executive Management.Management\u2019s incentive programmes 2022 2021 2020 2019 2018 2017Year awarded:April 2022 April 2021 May 2020 May 2019 April 2018 May 20171 Performance year2022-2024 2021-2023 2020-2022 2019-2021 2018-2020 2017-2019Vesting conditions EPS, ROCE, EPS, ROCE, EPS, ROCE, EPS, ROCE, EPS, ROCE, EPS, ROCE, (KPIs):Market shareMarket shareMarket shareMarket shareMarket shareMarket shareVesting years: 2025 2024 2023/25 2022/2024 2021/2023 2020/20221 Performance years defined as Vestas\u2019 financial year.Executive OtherManagementexecutivesTotalNumber of restricted performance sharespcspcs pcsOutstanding as at 1 January 20221,021,888 2,587,229 3,609,117Adjusted(119,077) 436,143 317,066Awards issued 329,998 581,060 911,058Vested (212,234) (821,224) (1,033,458)Cancelled (331,286) (861,400) (1,192,686)Outstanding as at 31 December 2022 689,289 1,921,808 2,611,097Outstanding as at 1 January 2021 1,169,045 3,629,165 4,798,210Adjusted(135,247) (266,679) (401,926)Awards issued 280,870 502,877 783,747Vested (191,950) (967,240) (1,159,190)Cancelled (100,830) (310,894) (411,724)Outstanding as at 31 December 2021 1,021,888 2,587,229 3,609,1176.3\u2002Related party transactionsmEUR 2022 2021Joint venturesRevenue for the period139 402Proceeds from investments in JV\u2019s 2 50Capital contribution 21 38Receivables as at 31 December 4 52Prepayments received balance as at 31 December 14 11Other receivables balance as at 31 December 1 6AssociatesRevenue for the period15 106Reversal of revenue (64) -Proceeds from investments in associates 11 10Capital contributions 9 3Payable capital contribution as at 31 December 36 47Receivables as at 31 December - 23Other liabilities as at 31 December 85 -Prepayments paid balance as at 31 December - 10Other assets balance at 31 December - 28\u2190Vestas has had the following material transaction with joint ventures and associates:Related parties are considered to be the Board of Directors (Board) and the Executive Management of Vestas Wind Systems A/S together with their immediate families. Related parties also include entities which are controlled or jointly controlled by the aforementioned individuals.Transactions with the Board and Executive ManagementTransactions with the Executive Management only consist of normal management remuneration, refer to note 1.4.With the exception of the board members elected by the employees, no members of the Board have been employed by Vestas in 2022. As disclosed in note 2.6, as at 31 December 2022, other liabilities include payments received relating to assets sold to associates that do not meet the criteria for derecognition at the balance sheet date. As disclosed in note 1.2, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m has been reversed in 2022 relating to a share purchase agreement entered into with an associate in 2021 for the sale of an onshore wind power plant under development. ", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-59-4": { "value": "1.4\u2002 Employee costs Staff costsmEUR 2022 2021Staff costs are specified as follows:Wages and salaries, etc.1,581 1,395Share-based payment, refer to note 1.5 7 13Pension schemes, defined contribution schemes 94 85Other social security costs 198 187Total 1,880 1,680Average number of employees 28,779 29,164Number of employees as at 31 December 28,438 29,427Board of Directors and Executive ManagementmEUR 2022 2021Staff costs attributable to:Board of DirectorsBoard remuneration1 1Total 1 1Executive ManagementWages and bonus7 7Share-based payment 2 6Total 9 13The Board of Directors and Executive Management are not covered by any pension schemes. In the event of change in control, members of the Executive Management do not receive any additional compensation. In 2022, share-based payment and wages to the registered members of the Executive Management amounted to EUR 3m (2021: EUR 5m).Key management personnel is defined as Executive Management.", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-61-6": { "value": "Board of Directors and Executive ManagementmEUR 2022 2021Staff costs attributable to:Board of DirectorsBoard remuneration1 1Total 1 1Executive ManagementWages and bonus7 7Share-based payment 2 6Total 9 13The Board of Directors and Executive Management are not covered by any pension schemes. In the event of change in control, members of the Executive Management do not receive any additional compensation. In 2022, share-based payment and wages to the registered members of the Executive Management amounted to EUR 3m (2021: EUR 5m).Key management personnel is defined as Executive Management.Management\u2019s incentive programmes 2022 2021 2020 2019 2018 2017Year awarded:April 2022 April 2021 May 2020 May 2019 April 2018 May 20171 Performance year2022-2024 2021-2023 2020-2022 2019-2021 2018-2020 2017-2019Vesting conditions EPS, ROCE, EPS, ROCE, EPS, ROCE, EPS, ROCE, EPS, ROCE, EPS, ROCE, (KPIs):Market shareMarket shareMarket shareMarket shareMarket shareMarket shareVesting years: 2025 2024 2023/25 2022/2024 2021/2023 2020/20221 Performance years defined as Vestas\u2019 financial year.Executive OtherManagementexecutivesTotalNumber of restricted performance sharespcspcs pcsOutstanding as at 1 January 20221,021,888 2,587,229 3,609,117Adjusted(119,077) 436,143 317,066Awards issued 329,998 581,060 911,058Vested (212,234) (821,224) (1,033,458)Cancelled (331,286) (861,400) (1,192,686)Outstanding as at 31 December 2022 689,289 1,921,808 2,611,097Outstanding as at 1 January 2021 1,169,045 3,629,165 4,798,210Adjusted(135,247) (266,679) (401,926)Awards issued 280,870 502,877 783,747Vested (191,950) (967,240) (1,159,190)Cancelled (100,830) (310,894) (411,724)Outstanding as at 31 December 2021 1,021,888 2,587,229 3,609,117Related parties are considered to be the Board of Directors (Board) and the Executive Management of Vestas Wind Systems A/S together with their immediate families. Related parties also include entities which are controlled or jointly controlled by the aforementioned individuals.Transactions with the Board and Executive ManagementTransactions with the Executive Management only consist of normal management remuneration, refer to note 1.4.With the exception of the board members elected by the employees, no members of the Board have been employed by Vestas in 2022. As disclosed in note 2.6, as at 31 December 2022, other liabilities include payments received relating to assets sold to associates that do not meet the criteria for derecognition at the balance sheet date. As disclosed in note 1.2, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m has been reversed in 2022 relating to a share purchase agreement entered into with an associate in 2021 for the sale of an onshore wind power plant under development. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-60-5": { "value": "Staff costsmEUR 2022 2021Staff costs are specified as follows:Wages and salaries, etc.1,581 1,395Share-based payment, refer to note 1.5 7 13Pension schemes, defined contribution schemes 94 85Other social security costs 198 187Total 1,880 1,680Average number of employees 28,779 29,164Number of employees as at 31 December 28,438 29,427Board of Directors and Executive ManagementmEUR 2022 2021Staff costs attributable to:Board of DirectorsBoard remuneration1 1Total 1 1Executive ManagementWages and bonus7 7Share-based payment 2 6Total 9 13", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-58-3": { "value": "Research and development costs recognised in the income statement1mEUR 2022 2021R&D costs 514 444Capitalised development projects (414) (332)Amortisation and depreciation 357 277Total 457 3891 Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 7.2.Adjustments to the income statement, 1 January \u2013 31 December 2021Income statementEffect of mEUR Reportednew policy AdjustedProduction costs(14,027) (4) (14,031)Gross profit 1,560 (4) 1,556Research and development costs(364) (25) (389)Distribution costs (367) (4) (371)Administration costs (368) - (368)Operating profit (EBIT) before special items461 (33) 428Operating profit (EBIT) 322 (33) 289Profit before tax 257 (33) 224Income tax (81) 0 (81)Profit for the year 176 (33) 143Profit is attributable to:Owners of Vestas Wind Systems A/S167 (33) 134Earnings per share (EPS):Earnings per share (EUR)0.17 (0.04) 0.13Earnings per share (EUR), diluted0.17 (0.04) 0.13", "dimensions": { "concept": "ifrs-full:DisclosureOfResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-64-2": { "value": "1.5\u2002Share based paymentRestricted performance share programme The purpose of the restricted performance shares is to ensure common goals for management, certain key employees, and shareholders. The number of shares available for grant may be adjusted in the event of changes in Vestas\u2019 capital structure. Further, in the event of a change of control, merger, winding-up or demerger of Vestas, an accelerated grant may extraordinarily take place. In the event of certain transfers of activities or changes in ownership interests within Vestas, adjustment, replacement of the programme and/or settlement in cash of the programme entirely may also take place.In April 2022, the Board of Directors of Vestas Wind Systems A/S (Board) launched a new restricted performance share programme. The performance share programme has been revised for the sake of simplification. The 2022 performance share programme will fully vest after a three-year performance period with all shares vesting at once, instead of the previous split vesting in two portions. The performance measurements are based on financial key performance indicators as well as Vestas\u2019 market share as defined by the Board.The terms and conditions governing the restricted performance share programmes are as follows: \u017c Only participants employed by Vestas at the time of announcement of the programme or later in the financial year are eligible for participation in the restricted performance share programme. \u017c The number of restricted performance shares available for distribution depends on Vestas\u2019 performance as per table below. \u017c Depending on the performance, the total number of shares to be granted will range between 0 percent and 150 percent of the target level and is determined by Vestas\u2019 performance in the financial year. \u017c A cap for value at vesting for CEO and CFO equal to 300 percent of base pay has been introducedIn 2022, the total number of shares issued amounts to 911,058 shares with a fair value of EUR 26m (out of which 329,998 shares with a fair value of EUR 9m were issued to the Executive Management). The fair value calculated is based on share price at measurement, close of Nasdaq Copenhagen on 6 April 2022, EUR 28. Employee elected members of the Board, had 0 restricted shares outstanding as at 31 December 2022 (2021: 0). Refer to note 1.4 for the total expense recognised in the Income statement for restricted performance shares (share-based payment) granted to Executive Management and other executives.\u2002Accounting policiesVestas operates a number of share-based compensation schemes (restricted share programmes) under which it awards Vestas shares to members of the Executive Management and certain key employees in Vestas Wind Systems A/S or its subsidiaries.The value of the services received in exchange for the issuance of shares is measured at the fair value of the shares. Restricted shares issued to employees are measured at fair value at the time of granting and are recognised in staff expenses in the income statement over the vesting period. The opposite entry is recognised directly in equity. On initial recognition of the restricted shares, the number of shares expected to vest is estimated. Subsequently, the estimate is revised so that the total expense recognised is based on the actual number of shares vested. The fair value of restricted shares is determined based on Vestas quoted share price at grant.Management\u2019s incentive programmes 2022 2021 2020 2019 2018 2017Year awarded:April 2022 April 2021 May 2020 May 2019 April 2018 May 20171 Performance year2022-2024 2021-2023 2020-2022 2019-2021 2018-2020 2017-2019Vesting conditions EPS, ROCE, EPS, ROCE, EPS, ROCE, EPS, ROCE, EPS, ROCE, EPS, ROCE, (KPIs):Market shareMarket shareMarket shareMarket shareMarket shareMarket shareVesting years: 2025 2024 2023/25 2022/2024 2021/2023 2020/20221 Performance years defined as Vestas\u2019 financial year.Executive OtherManagementexecutivesTotalNumber of restricted performance sharespcspcs pcsOutstanding as at 1 January 20221,021,888 2,587,229 3,609,117Adjusted(119,077) 436,143 317,066Awards issued 329,998 581,060 911,058Vested (212,234) (821,224) (1,033,458)Cancelled (331,286) (861,400) (1,192,686)Outstanding as at 31 December 2022 689,289 1,921,808 2,611,097Outstanding as at 1 January 2021 1,169,045 3,629,165 4,798,210Adjusted(135,247) (266,679) (401,926)Awards issued 280,870 502,877 783,747Vested (191,950) (967,240) (1,159,190)Cancelled (100,830) (310,894) (411,724)Outstanding as at 31 December 2021 1,021,888 2,587,229 3,609,117\u2190Adjusted include adjustments due to final calculation of entitlement based on performance in prior year and transfers between categories due to changes in management.Allocation of performance shares for the 2020, 2021 and 2022 performance programmes will be adjusted based on the level of target achievement in the measurement period.", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-67-4": { "value": "\u2002Accounting policiesVestas operates a number of share-based compensation schemes (restricted share programmes) under which it awards Vestas shares to members of the Executive Management and certain key employees in Vestas Wind Systems A/S or its subsidiaries.The value of the services received in exchange for the issuance of shares is measured at the fair value of the shares. Restricted shares issued to employees are measured at fair value at the time of granting and are recognised in staff expenses in the income statement over the vesting period. The opposite entry is recognised directly in equity. On initial recognition of the restricted shares, the number of shares expected to vest is estimated. Subsequently, the estimate is revised so that the total expense recognised is based on the actual number of shares vested. The fair value of restricted shares is determined based on Vestas quoted share price at grant.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-71-3": { "value": "1.6\u2002Special itemsRussian invasion of UkraineFollowing Russia\u2019s invasion of Ukraine in February 2022, Vestas announced on 5 April 2022 that Vestas would withdraw from the Russian market. In order to facilitate the withdrawal from Russia, Vestas continues certain activities during a limited transition period where Vestas will dispose of its Russian assets, wind down operations and end existing contractual relationships. Furthermore, Vestas\u2019 activities in Ukraine have been put on hold.The costs related to the Russian invasion of Ukraine qualify as special items in accordance with Vestas\u2019 accounting policy. In 2022, special items of EUR 269m have been recognised including provisions of EUR 87m, write-down of inventories located in Russia and Ukraine of EUR 159m, impairment of tangible assets of EUR 9m, write-down of VAT receivables of EUR 4m, staff costs of EUR 5m and other expenses of EUR 5m, as directly related to the Russian invasion of Ukraine. Basis for recognition The provisions primarily relate to risks stemming from Vestas\u2019 cessation of activities in Russia, including claims brought against Vestas in and outside Russia. In the aggregate, the possible outcome ranges between EUR 0m and EUR 150m. Vestas has provisioned EUR 81m in order to address the assessed risk. The write-down of inventory relates to inventory located in Russia and Ukraine that is not expected to be sold. The impairment loss on tangible assets is primarily related to buildings and equipment located in Russia, which are written down to zero as the assets are not expected to be utilised or sold. The write-down of VAT receivables is related to VAT receivables that are deemed not recoverable. The staff costs are related to severance payments. Other expenses are primarily related to the closing of the factory in Russia.Adjusting manufacturing footprint Vestas continues to review the product portfolio and adapt the production capacity. As part of this development, Vestas adjusted its manufacturing footprint by ceasing production at certain factories in China and India.This adjustment of the manufacturing footprint qualifies as special items in accordance with Vestas\u2019 accounting policy. In 2022, special items of EUR 244m have been recognised including impairment of intangible assets of EUR 25m, impairment of tangible assets of EUR 89m, write-down of inventory of EUR 101m, staff costs of EUR 8m and other costs of EUR 21m.Furthermore, a reversal of previously recognised impairment losses on tangible assets of EUR 54m, staff costs of EUR 8m and other costs of EUR 7m was recognised in special items, primarily relating to the factory in Lauchhammer, Germany and the production facility on Isle of Wight, UK.Basis for recognition The impairment loss is primarily related to intangible assets, buildings and production equipment which are written down to fair value less expected cost to sell or value in use. The write-down of inventory relates to inventory which is not expected to be sold. The intangible assets, buildings and production equipment at the factories have been written down from EUR 155m to EUR 41m re\ufb02ecting the value that is expected from the disposal of the assets considering costs to sell. Inventory has been written down from EUR 101m to zero as the inventory is expected to be scrapped. Other costs are primarily related to a write-down of VAT and tax receivables that are deemed not recoverable, purchase commitments towards suppliers and cost of closing the factories.The reversal of previously recognised impairment losses was primarily due to the sale of the factory in Lauchhammer and revised expected use of the production facility on Isle of Wight.\u2002 Key accounting judgements Judgement regarding classification in the income statementThe use of special items entails management judgement in the separation from other items in the income statement. In connection with the use of special items, it is crucial that these are of a significant unusual and/or infrequently occurring nature that are not attributable to Vestas\u2019 normal operations, as such classification highlights to users of financial statements the items to which the least attention should be given when understanding current and future performance.Estimate regarding the valuation of assets and liabilities in Russia and UkraineMeasurement of the provisions related to the ceasing of activities in Russia and Ukraine as well as write-down of inventory located in Russia and Ukraine is associated with significant estimation uncertainty due to the current situation in Russia and Ukraine. The recognised cost re\ufb02ects management\u2019s best estimate based on the current expectations. \u2002Accounting policiesSpecial items comprise significant unusual and/or infrequently occurring items that are not attributable to Vestas\u2019 normal operations. Special items comprise income and costs related to significant organisational restructuring and significant adjustments to production capacity and the product programme. Special items mEUR 2022 2021Write-down of inventory(260) \u2013Provisions (87) \u2013Impairment loss on intangible and tangible assets (69) (68)Staff costs (5) (61)Other costs (23) (10)Special items (444) (139)Impairment loss, intangible assets20222021\u2002 Production costs EUR 13m (10%)\u2002 Production costs EUR 0m (0%)\u2002 Research and development costs EUR 90m (70%)\u2002 Research and development costs EUR 0m (0%)\u2002Distribution costs EUR 0m (0%)\u2002Distribution costs EUR 0m (0%)\u2002 Administration costs EUR 0m (0%)\u2002 Administration costs EUR 0m (0%)\u2002Special items EUR 25m (20%)\u2002Special items EUR 0m (0%)\u2002 Key accounting estimates Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOWAs part of the acquisition of MHI Vestas Offshore Wind (MVOW) in 2020, Vestas acquired intangible assets and tangible assets relating to the offshore activity. As at 31 December 2022, the acquired assets was tested for impairment. In performing the impairment test, the carrying amount of the assets is compared to the discounted value of expected future cash \ufb02ows from the offshore activity (value-in-use). The expected future cash \ufb02ows are based on key assumptions including order intake and project margins and service contract margins, which are by nature subject to significant uncertainty. Impairment loss, property, plant and equipmentmEUR and percent20222021\u2002 Production costs EUR 61m (33%)\u2002 Production costs EUR 0m (0%)\u2002 Research and development costs EUR 4m (2%)\u2002 Research and development costs EUR 0m (0%)\u2002Distribution costs EUR 19m (10%)\u2002Distribution costs EUR 0m (0%)\u2002Administration costs EUR 3m (2%)\u2002Administration costs EUR 0m (0%)\u2002Special items EUR 99m (53%)\u2002Special items EUR 68m (100%)\u2002Accounting policiesLand and buildings, plant and machinery as well as other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and impairment losses.Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is ready for use. In the case of construction of own assets, cost comprises direct and indirect costs for materials, components, sub-suppliers, and labour. Estimated costs for dismantling and disposing of the asset and for re-establishment are added to cost to the extent that they are recognised as a provision. Where individual components of an item of property, plant and equipment have different useful lives, the cost of the item is decomposed into separate components which are depreciated separately.Subsequent costs, e.g. in connection with the replacement of components of an item of property, plant and equipment, are recognised in the carrying amount of the asset in question when it is probable that the costs incurred will result in future economic benefits to Vestas. The carrying amount of the replaced components is derecognised in the balance sheet and recognised as costs in the income statement. All other costs incurred for ordinary repairs and maintenance are rec-ognised in the income statement as incurred.Installations capitalised as land and buildings which are related to leased assets are depreciated over the term of the related lease contract. Such lease contracts range with a lease term from 10 to 20 years.Depreciation is calculated on a straight-line basis over the expected useful lives of the assets, which are:Buildings (including installations) 10\u201340 yearsPlant and machinery 3\u201310 years Other fixtures and fittings, tools and equipment 3\u20135 yearsRight-of-use assets 2-20 yearsLand is not depreciated.The basis of depreciation is calculated taking into account the residual value of the asset less any impairment losses. The residual value is determined at the time of acquisition and is reassessed annually. Where the residual value exceeds the carrying amount of the asset, depreciation is discontinued.The depreciation periods are determined based on estimates of the expected useful lives and future residual value of the assets. The estimates are based on historical experience. A reassessment is made once a year to ascertain that the depreciation basis re\ufb02ects the expected life and future residual values of the assets.If the depreciation period or the residual value has changed, the effect on depreciation is recognised prospectively as a change in accounting estimate.Depreciation is recognised in the income statement as either production costs, research and development costs, distribution costs or administration costs to the extent that depreciation is not included in the cost of assets of own construction.The carrying amounts of non-current assets are reviewed on an annual basis to determine whether there is any indication of impairment. If so, the recoverable amount of the asset is calculated. The recoverable amount is the higher of the fair value of the asset less estimated costs to sell and value in use.Value in use is calculated as the net present value of expected future net cash \ufb02ows from the asset or a group of assets.An impairment loss is recognised where the carrying amount of an asset exceeds its recoverable amount.Impairment losses are reversed only to the extent of changes in the assumptions and estimates underlying the impairment calculation.Impairment losses are reversed only to the extent that the new carrying amount of the asset does not exceed the carrying amount of the asset after depreciation/amortisation had the asset not been impaired.Impairment relating to offshore activityIn 2022, Vestas recognised an impairment loss on tangible assets, including right-of-use assets, of EUR 81m relating to the V164/174 offshore activity. Refer to note 3.1 for further details.\u2002 Key accounting estimates Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOWRefer to note 3.1 for further details.3.4\u2002ImpairmentValuation of goodwillAs at 31 December 2022, Management performed the annual impairment test of goodwill. Based on the test, no impairment was identified (2021: No impairment). In the impairment tests, the carrying amount of the assets are compared to the discounted value of future expected cash \ufb02ows. The annual tests of goodwill were performed on three operating segments: Power Solutions Onshore, Power Solutions Offshore and Service, these being the lowest level of cash-generating units as defined by management.The main part of the carrying amount of goodwill in Vestas subject to impairment testing are related to several acquisitions specified as follows. \u017c The acquisition of NEG Micon A/S in 2004, included acquisition of goodwill of EUR 180m allocated to Vestas Power Solutions Onshore and EUR 35m allocated to the Service segment. \u017c The acquisition of UpWind Solutions, Inc. in 2015, included acquisition of goodwill of EUR 40m, which was allocated to the Service segment. \u017c The acquisition of Availon GmbH in 2016 included acquisition of goodwill of EUR 56m, which was allocated to the Service segment. \u017c The acquisition of Utopus Insights, Inc. in 2018 included acquisition of goodwill of EUR 70m, which was allocated to the Service segment. \u017c The acquisition of MHI Vestas Offshore Wind A/S in 2020 included acquisition of goodwill of EUR 1,126m. The goodwill arising from the acquisition was allocated with EUR 893m to Power Solutions Offshore and EUR 233m to the Service segment. Assumptions underpinning impairment test of goodwillBudgets and business plans for the next three years are based on Vestas\u2019 investments in progress and contracted invest-ments, and the risks relating to the key parameters have been assessed and incorporated in the expected future cash \ufb02ows underpinning the impairment test of goodwill. In addition, the budgets and business plans are based on management\u2019s ex-pectations of the current market conditions and future growth expectations. For the Power Solutions Onshore and Service, projections for 2026 and onwards are based on general market expectations and risks in the impairment test. The acquisition of MHI Vestas Offshore Wind A/S in 2020 was based on a business case related to the introduction of a new wind turbine platform. The expected cash in\ufb02ows from this new technology are not expected until after 2024. For this reason, the impairment test of Power Solutions Offshore include the same business case and an extended budget and forecast period including the years 2023 to 2029. Projections for year 2030 and onwards are based on general market expectations and risks in the impairment test. The terminal value in the projection period is determined taking into account general growth expectations for the segments in question. Long-term growth rate has been estimated at 2 percent.Power Solutions Onshore Order backlog of EUR 16.4bn as at 31 December 2022Expectations on changing market environment, including future market prices and high cost pressureExpectations on future orders received, among other things based on expected market share of the global market outlookExpectations on continuing develop-ments in mature and emerging marketsExpectations on support schemes in bothmature and emerging markets\u2191The above main information is used in determining revenue, EBIT, and capital expenditure.Power Solutions OffshoreOrder backlog of EUR 2.7bn as at 31 December 2022Expectations on changing market environment, including future market prices and high cost pressureExpectations on future orders received, among other things based on expected market share of the global market outlook including expectation of high growth in offshore market Expectations on continuing develop-ments in mature and emerging marketsExpectations on support schemes in bothmature and emerging markets ServiceService order backlog of EUR 30.4bn as at 31 December 2022Expectations on changing market environment, including future market prices and future development in cost reductionsExpectations on continued servicing of the existing installed base of wind turbines as well as future service contracts received, among other things based on expected market shareCapture full potential and accelerate profitable growth strategy from historically technology acquisitions and developmentsGrowth supported by market develop-ments and organic growth2022 2021Discount rate Growth rate in Carrying amount of Discount rate Growth rate in Carrying amount of before tax (%)terminal period (%)goodwill (mEUR)before tax (%)terminal period (%)goodwill (mEUR)Power Solutions Onshore10.6 2 178 9.5 2 180Power Solutions Offshore 10.2 2 894 9.8 2 893 Service 10.9 2 442 10.1 2 435", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-71-4": { "value": "1.6\u2002Special itemsRussian invasion of UkraineFollowing Russia\u2019s invasion of Ukraine in February 2022, Vestas announced on 5 April 2022 that Vestas would withdraw from the Russian market. In order to facilitate the withdrawal from Russia, Vestas continues certain activities during a limited transition period where Vestas will dispose of its Russian assets, wind down operations and end existing contractual relationships. Furthermore, Vestas\u2019 activities in Ukraine have been put on hold.The costs related to the Russian invasion of Ukraine qualify as special items in accordance with Vestas\u2019 accounting policy. In 2022, special items of EUR 269m have been recognised including provisions of EUR 87m, write-down of inventories located in Russia and Ukraine of EUR 159m, impairment of tangible assets of EUR 9m, write-down of VAT receivables of EUR 4m, staff costs of EUR 5m and other expenses of EUR 5m, as directly related to the Russian invasion of Ukraine. Basis for recognition The provisions primarily relate to risks stemming from Vestas\u2019 cessation of activities in Russia, including claims brought against Vestas in and outside Russia. In the aggregate, the possible outcome ranges between EUR 0m and EUR 150m. Vestas has provisioned EUR 81m in order to address the assessed risk. The write-down of inventory relates to inventory located in Russia and Ukraine that is not expected to be sold. The impairment loss on tangible assets is primarily related to buildings and equipment located in Russia, which are written down to zero as the assets are not expected to be utilised or sold. The write-down of VAT receivables is related to VAT receivables that are deemed not recoverable. The staff costs are related to severance payments. Other expenses are primarily related to the closing of the factory in Russia.Adjusting manufacturing footprint Vestas continues to review the product portfolio and adapt the production capacity. As part of this development, Vestas adjusted its manufacturing footprint by ceasing production at certain factories in China and India.This adjustment of the manufacturing footprint qualifies as special items in accordance with Vestas\u2019 accounting policy. In 2022, special items of EUR 244m have been recognised including impairment of intangible assets of EUR 25m, impairment of tangible assets of EUR 89m, write-down of inventory of EUR 101m, staff costs of EUR 8m and other costs of EUR 21m.Furthermore, a reversal of previously recognised impairment losses on tangible assets of EUR 54m, staff costs of EUR 8m and other costs of EUR 7m was recognised in special items, primarily relating to the factory in Lauchhammer, Germany and the production facility on Isle of Wight, UK.Basis for recognition The impairment loss is primarily related to intangible assets, buildings and production equipment which are written down to fair value less expected cost to sell or value in use. The write-down of inventory relates to inventory which is not expected to be sold. The intangible assets, buildings and production equipment at the factories have been written down from EUR 155m to EUR 41m re\ufb02ecting the value that is expected from the disposal of the assets considering costs to sell. Inventory has been written down from EUR 101m to zero as the inventory is expected to be scrapped. Other costs are primarily related to a write-down of VAT and tax receivables that are deemed not recoverable, purchase commitments towards suppliers and cost of closing the factories.The reversal of previously recognised impairment losses was primarily due to the sale of the factory in Lauchhammer and revised expected use of the production facility on Isle of Wight.\u2002 Key accounting judgements Judgement regarding classification in the income statementThe use of special items entails management judgement in the separation from other items in the income statement. In connection with the use of special items, it is crucial that these are of a significant unusual and/or infrequently occurring nature that are not attributable to Vestas\u2019 normal operations, as such classification highlights to users of financial statements the items to which the least attention should be given when understanding current and future performance.Estimate regarding the valuation of assets and liabilities in Russia and UkraineMeasurement of the provisions related to the ceasing of activities in Russia and Ukraine as well as write-down of inventory located in Russia and Ukraine is associated with significant estimation uncertainty due to the current situation in Russia and Ukraine. The recognised cost re\ufb02ects management\u2019s best estimate based on the current expectations. \u2002Accounting policiesSpecial items comprise significant unusual and/or infrequently occurring items that are not attributable to Vestas\u2019 normal operations. Special items comprise income and costs related to significant organisational restructuring and significant adjustments to production capacity and the product programme. Special items mEUR 2022 2021Write-down of inventory(260) \u2013Provisions (87) \u2013Impairment loss on intangible and tangible assets (69) (68)Staff costs (5) (61)Other costs (23) (10)Special items (444) (139)", "dimensions": { "concept": "VES:DisclosureOfSpecialItems", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-75-6": { "value": "\u2002Accounting policiesSpecial items comprise significant unusual and/or infrequently occurring items that are not attributable to Vestas\u2019 normal operations. Special items comprise income and costs related to significant organisational restructuring and significant adjustments to production capacity and the product programme. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExceptionalItemsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-75-7": { "value": "\u2002Accounting policiesSpecial items comprise significant unusual and/or infrequently occurring items that are not attributable to Vestas\u2019 normal operations. Special items comprise income and costs related to significant organisational restructuring and significant adjustments to production capacity and the product programme. ", "dimensions": { "concept": "VES:DescriptionOfAccountingPolicyForSpecialItems", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-77-2": { "value": "1.7\u2002Financial itemsFinancial incomemEUR 2022 2021Interest income37 19Hedging instruments 2 -Other financial income 13 2Total 52 21Financial costsmEUR 2022 2021Interest costs51 39Interest on lease liabilities 12 13Foreign exchange losses 70 45Hedging instruments - 7Other financial costs 29 18Total 162 122\u2002Accounting policiesFinancial items comprise interest income and costs, realised and unrealised foreign exchange gains and losses, gains and losses related to derivatives used to hedge assets and liabilities and ineffective part of derivatives used to hedge future cash \ufb02ows.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-80-6": { "value": "\u2002Accounting policiesFinancial items comprise interest income and costs, realised and unrealised foreign exchange gains and losses, gains and losses related to derivatives used to hedge assets and liabilities and ineffective part of derivatives used to hedge future cash \ufb02ows.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-80-7": { "value": "\u2002Accounting policiesFinancial items comprise interest income and costs, realised and unrealised foreign exchange gains and losses, gains and losses related to derivatives used to hedge assets and liabilities and ineffective part of derivatives used to hedge future cash \ufb02ows.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceCostsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-78-3": { "value": "Financial incomemEUR 2022 2021Interest income37 19Hedging instruments 2 -Other financial income 13 2Total 52 21\u2002Accounting policiesFinancial items comprise interest income and costs, realised and unrealised foreign exchange gains and losses, gains and losses related to derivatives used to hedge assets and liabilities and ineffective part of derivatives used to hedge future cash \ufb02ows.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-79-3": { "value": "Financial costsmEUR 2022 2021Interest costs51 39Interest on lease liabilities 12 13Foreign exchange losses 70 45Hedging instruments - 7Other financial costs 29 18Total 162 122\u2002Accounting policiesFinancial items comprise interest income and costs, realised and unrealised foreign exchange gains and losses, gains and losses related to derivatives used to hedge assets and liabilities and ineffective part of derivatives used to hedge future cash \ufb02ows.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-81-2": { "value": "2.1\u2002Change in net working capitalmEUR 2022 2021NWC as at 1 January(1,049) (1,127)Change in inventories and contract costs 763 705Change in trade receivables (251) (7)Change in other receivables 116 124Change in contract assets / liabilities (585) (115)Change in trade payables 197 (678)Change in other liabilities (540) 49NWC as at 31 December (1,349) (1,049)The change in net working capital (NWC) includes non-cash adjustments and exchange rate adjustments with a total amount of EUR (492)m (2021: EUR 87m). Consequently, the cash \ufb02ow impact of change in NWC is EUR (192m) (2021: EUR 9m). Vestas is facilitating a supply chain financing program funded by credit institutions. Use of this programme by suppliers takes place in the ordinary course of business with the same payment terms offered to other suppliers and without credit enhancement. Supplier financing therefore fulfills the criteria as trade payables and has been presented in the balance sheet as ordinary trade payables with a total amount of EUR 696m (2021: EUR 637m).Total leases recognised in the statement of cash \ufb02owsmEUR 2022 2021Short-term leases and leases of low value51 31Payment of lease liability including interest159 148Total cash out\ufb02ow for leases210 1796.5\u2002 Non-cash transactions1mEUR 2022 2021Amortisation, impairment and depreciation for the year of intangible assets and property, plant and equipment1,088 982Share of (profit)/loss from investments in joint ventures and associates, incl. other relating transactions(11) (36)Write-down of inventory 260 8Warranty provisions in the year (net) 293 (104)Other provisions in the year 127 48Interest income (37) (19)Interest expenses 37 39Income tax for the year (146) 81Cost of share-based payments 7 13Gains from property, plant and equipment (8) 6Other adjustments for non-cash transactions incl. foreign currency adjustments 103 (20)Total 1,713 9981 Comparative figures for 2021 have been adjusted following the accounting policy change for configuration and customisation cost in cloud computing arrangements, refer to note 7.2.Cash flow statement The cash \ufb02ow statement shows Vestas\u2019 cash \ufb02ows for the year, broken down by operating, investing and financing activities, changes for the year in cash and cash equivalents as well as Vestas\u2019 cash and cash equivalents at the beginning and end of the year. Cash \ufb02ows relating to acquired entities are recognised from the date of acquisition. Cash \ufb02ows relating to entities disposed of are recognised until the date of disposal. Cash \ufb02ows from operating activities Cash \ufb02ows from operating activities are calculated as the net profit/loss for the year adjusted for non-cash operating items such as depreciation, amortisation and impairment losses, provisions, changes in working capital, interest received and paid and income tax paid. Working capital comprises current assets less short-term debt, which does not include current bank loans. Cash \ufb02ows from investing activities Cash \ufb02ows from investing activities comprise cash \ufb02ows from business acquisitions and disposals and from acquisitions and disposals of intangible assets, property, plant and equipment as well as other non-current assets. The cash \ufb02ow effect of business acquisitions and sales is shown separately. The establishment of leases is treated as non-cash transactions. Cash \ufb02ows from financing activities Cash \ufb02ows from financing activities comprise changes to the amount or composition of Vestas\u2019 share capital and related expenses as well as the raising of loans, repayment of interest-bearing debt, repayment of lease liabilities, acquisition and sale of treasury shares together with distribution of dividends to shareholders. Adjustments to the statement of cash \ufb02ows, 1 January \u2013 31 December 2021Statement of cash \ufb02owsEffect of mEUR Reportednew policy AdjustedProfit for the year176 (33) 143Adjustments for non-cash transactions1,005 (7) 998Cash \ufb02ow from operating activities before change in net working capital987 (40) 947Cash \ufb02ow from operating activities996 (40) 956Purchase of intangible assets(400) 40 (360)Cash \ufb02ow from investing activities before acquisitions of subsidiaries, joint ventures, associates and financial investments(813) 40 (773)Cash \ufb02ow from investing activities(939) 40 (899)", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-84-3": { "value": "2.2\u2002InventoriesmEUR 2022 2021Inventories consumedInventories consumed for the year, which are included in production costs7,750 9,236Write-downs of inventoriesWrite-downs of inventories in the year283 8Utilised write-downs in the year(4) (3)Reversal of write-downs in 1the year (25) (11)1 The reversal of write-downs in the year are due to goods previously written down being used or sold at or above original cost.2022\u2002Service stock EUR 978m (15%)\u2002Finished goods EUR 4,487m (70%)Total \u2002 Raw materials and consumables EUR 666m (10%)EUR 6,373m\u2002 Work in progress EUR 242m (5%), hereof development projects of EUR 77m.2021\u2002Service stock EUR 877m (16%)\u2002Finished goods EUR 3,753m (66%)Total \u2002 Raw materials and consumables EUR 742m (13%)EUR 5,673m\u2002 Work in progress EUR 301m (5%), hereof development projects of EUR 31m.In 2022, write-down of inventories included EUR 159m relating to the Russian invasion of Ukraine and EUR 101m reating to adjustments to the manufacturing footprint. For further details, refer to note 1.6.\u2002 Key accounting estimatesEstimate of net realisable valueVestas estimates the net realisable value at the amount at which inventories are expected to be sold. Inventories are written down to net realisable value when the cost of inven-tories is estimated to be non-recoverable due to obsolescence, damage or declining selling prices. Estimates are used when accounting for or measuring inventory pro visions, and these estimates depend upon subjective and complex judgements about certain circumstances, taking into account \ufb02uctuations in prices, excess quantities, condition of the inventory, nature of the inventory, and the estimated variable costs necessary to make the sale. \u2002Accounting policiesInventories are measured at the lower of cost, using the weighted average method, and net realisable value (NRV).The cost of raw materials and service stock comprise purchase price of materials, consumables, duties, and transportation costs.The cost of work in progress and finished goods comprises the cost of raw materials, consumables, direct labour, and indirect production costs. Indirect production costs comprise materials and labour costs as well as maintenance and depreciation of the machinery, factory buildings, and equipment used in the manufacturing process together with costs of factory administration and management.The NRV of inventories is measured at sales price less costs of completion and selling costs. NRV is determined taking into account marketability, obsolescence, and development in the expected selling price.", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-89-4": { "value": "\u2002Accounting policiesInventories are measured at the lower of cost, using the weighted average method, and net realisable value (NRV).The cost of raw materials and service stock comprise purchase price of materials, consumables, duties, and transportation costs.The cost of work in progress and finished goods comprises the cost of raw materials, consumables, direct labour, and indirect production costs. Indirect production costs comprise materials and labour costs as well as maintenance and depreciation of the machinery, factory buildings, and equipment used in the manufacturing process together with costs of factory administration and management.The NRV of inventories is measured at sales price less costs of completion and selling costs. NRV is determined taking into account marketability, obsolescence, and development in the expected selling price.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-96-4": { "value": "2.4\u2002Contract costsmEUR 2022 2021Asset recognised from costs to fulfill a contract753 690Total 753 690Capitalised costs as a result of fulfilling sales contracts are recognised as part of production cost in the income statement when related revenues are recognised. In 2022, EUR 958m (2021: EUR 599m) was recognised as cost.\u2002Accounting policiesCosts incurred for supply-only and supply-and-installation projects in fulfilling the contracts with customers that are directly associated with the contract, comprising installation cost and transportation cost, are recognised as an asset (contract costs), if those costs are expected to be recoverable.", "dimensions": { "concept": "ifrs-full:DisclosureOfAssetsRecognisedFromCostsToObtainOrFulfilContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-100-2": { "value": "2.5\u2002Other receivablesmEUR 2022 2021Prepayments157 151Supplier claims 71 1201VAT 582 465Derivative financial instruments366 387Other receivables264 216Total 1,440 1,339Specified as follows:0\u20131 year1,221 1,105> 1 year 219 234Total 1,440 1,3391 Includes loss provisions on VAT receivables of EUR 55m as at 31 December 2022 (2021: EUR 58m).\u2002 Key accounting estimates Estimate of allowance for doubtful VAT receivablesManagement makes allowance for doubtful VAT receivables in anticipation of estimated future receipt of payments. If certain circumstances result in lack of receipt of payments, an additional allowance could be required. When evaluating the adequacy of the allowance for doubtful VAT receivables, Management analyses the nature of the individual VAT receivables and takes into account any relevant historical information that is applicable to the specific circumstance.\u2002Accounting policiesOther receivables are measured at amortised cost or net realisable value equivalent to nominal value less allowances for doubtful receivables, whichever is lower. Prepayments recognised as assets comprise prepaid expenses and are measured at cost. Derivative financial instruments are measured at fair value.Expected credit losses 2022 2021on trade receivables and contract assetsCarrying Expected Loss Carrying Expected Loss mEURamountloss rateallowanceamountloss rateallowanceNot overdue2,404 0.1% (2) 2,402 0.1% (2)Overdue 0-60 days 115 0.2% 0 186 0.1% 0Overdue 61-120 days 39 1.8% (1) 72 2.2% (2)Overdue 121-180 days 21 4.8% (1) 15 4.7% (1)Overdue 181-365 days 52 5.9% (3) 44 9.1% (4)Overdue more than 365 days48 33.9% (25) 39 41.4% (27)Total 2,679 (32) 2,758 (36)Write-down as at 1 January (36) (25)Reversal of write-downs 7 2 Write-downs realised 2 2 Write-downs in the year (5) (15)Write-down as at 31 December(32) (36)", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-103-4": { "value": "\u2002Accounting policiesOther receivables are measured at amortised cost or net realisable value equivalent to nominal value less allowances for doubtful receivables, whichever is lower. Prepayments recognised as assets comprise prepaid expenses and are measured at cost. Derivative financial instruments are measured at fair value.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-104-2": { "value": "2.6\u2002Other liabilitiesmEUR 2022 2021Staff costs182 188Taxes and duties 365 267Derivative financial instruments364 386Other liabilities 497 113Total 1,408 954Specified as follows:0-1year1,349 809> 1 year 59 145Total 1,408 954As at 31 December 2022, other liabilities include payments received relating to sale of assets that do not meet the criteria for derecognition at the balance sheet date.\u2002Accounting policiesOther liabilities are measured at amortised cost. Derivative financial instruments are measured at fair value.Obligations relating to defined contribution plans, where Vestas continuously makes fixed pension contributions to independent pension funds, are recognised in the income statement in the period to which they relate. Any contributions outstanding are recognised in the balance sheet under other liabilities. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-107-4": { "value": "\u2002Accounting policiesOther liabilities are measured at amortised cost. Derivative financial instruments are measured at fair value.Obligations relating to defined contribution plans, where Vestas continuously makes fixed pension contributions to independent pension funds, are recognised in the income statement in the period to which they relate. Any contributions outstanding are recognised in the balance sheet under other liabilities. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-108-2": { "value": "3.1\u2002Intangible assets2022 2021Completed OtherDevelopment Completed OtherDevelopment development intangibleprojects in development intangibleprojects in mEUR Goodwillprojects Softwareassetsprogress Total Goodwillprojects Softwareassetsprogress TotalCost as at 1 January1,611 2,561 366 560 376 5,474 1,377 2,327 535 562 317 5,118Impact on change in accounting policy - - - - - - - - (42) - (10) (52)Adjusted cost as at 1 January 1,611 2,561 366 560 376 5,474 1,377 2,327 493 562 307 5,066Exchange rate adjustments 7 - 1 1 1 10 9 1 2 1 1 14Additions - - 2 1 445 448 - - 3 2 355 360Adjustments from business combination - - - - - - 230 - - (5) - 225Disposal - - (6) - - (6) (5) - (186) - - (191)Transfers - 164 46 - (210) - - 233 54 - (287) -Transfer to assets held for sale (1) - - - - (1) - - - - - -Cost as at 31 December 1,617 2,725 409 562 612 5,925 1,611 2,561 366 560 376 5,474Amortisation and impairment losses as at 1 January 103 1,942 244 123 - 2,412 103 1,706 371 50 - 2,230Impact on change in accounting policy - - - - - - - - (17) - - (17)Adjusted amortisation and impairment losses as at 1 January 103 1,942 244 123 - 2,412 103 1,706 354 50 - 2,213Exchange rate adjustments - - - 1 - 1 - 1 2 1 - 4Amortisation for the year - 221 55 49 - 325 - 235 74 72 - 381Impairment losses for the year - 114 1 13 - 128 - - - - - -Disposal - - (6) - - (6) - - (186) - - (186)Amortisation and impairment losses as at 31 December 103 2,277 294 186 - 2,860 103 1,942 244 123 - 2,412Carrying amount as at 31 December 1,514 448 115 376 612 3,065 1,508 619 122 437 376 3,062Internally generated assets included above - 394 42 - 611 1,047 - 619 82 - 419 1,120Amortisation period 2-5 years 3-5 years 3-7 years 2\u20135 years 3\u20135 years 3\u20137 yearsAmortisation, intangible assets 20222021\u2002 Production costs EUR 56m (17%)\u2002 Production costs EUR 80m (21%)\u2002 Research and development costs EUR 232m (71%)\u2002 Research and development costs EUR 240m (63%)\u2002 Distribution costs EUR 3m (1%)\u2002 Distribution costs EUR 4m (1%)\u2002 Administration costs EUR 34m (11%)\u2002 Administration costs EUR 57m (15%)\u2002 Special items EUR 0m (0%)\u2002 Special items EUR 0m (0%)Impairment loss, intangible assets20222021\u2002 Production costs EUR 13m (10%)\u2002 Production costs EUR 0m (0%)\u2002 Research and development costs EUR 90m (70%)\u2002 Research and development costs EUR 0m (0%)\u2002Distribution costs EUR 0m (0%)\u2002Distribution costs EUR 0m (0%)\u2002 Administration costs EUR 0m (0%)\u2002 Administration costs EUR 0m (0%)\u2002Special items EUR 25m (20%)\u2002Special items EUR 0m (0%)3.1\u2002Intangible assets \u2013 continuedDevelopment projects and other intangible assetsVestas continually invests in the development of new technologies and, for this reason, development projects constitute a significant part of the total intangible assets. The continuous investments include a wide portfolio of development projects. Vestas does not have one individually significant development assets.Impairment relating to offshore activityIn 2022, Vestas recognised an impairment loss of EUR 177m relating to the V164/174 offshore activity, impacting the Power Solution segment by EUR 165m and the Service segment by 12m. Intangible assets, including technology, were written down by EUR 96m to EUR 439m and tangible assets were written down by EUR 81m to EUR 113m, re\ufb02ecting the recoverable amount of the assets. The recoverable amount is based on the discounted value of future expected cash \ufb02ows from the offshore activity. A discount rate before tax of 9.8% was used. The impairment was primarily due to revised assumptions on offshore order intake and project profitability. The test remains sensitive to changes in key assumptions, including order intake, project margins and service margins. A change in order intake will have a significant impact on the recoverable amount. A change of 1%-point in the assumed project margin will result in a EUR 15m change to the recoverable amount and a change of 1%-point in the service margin will result in a EUR 22m change to the recoverable amount.\u2002 Key accounting estimates Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOWAs part of the acquisition of MHI Vestas Offshore Wind (MVOW) in 2020, Vestas acquired intangible assets and tangible assets relating to the offshore activity. As at 31 December 2022, the acquired assets was tested for impairment. In performing the impairment test, the carrying amount of the assets is compared to the discounted value of expected future cash \ufb02ows from the offshore activity (value-in-use). The expected future cash \ufb02ows are based on key assumptions including order intake and project margins and service contract margins, which are by nature subject to significant uncertainty. \u2002Accounting policiesGoodwillGoodwill is initially recognised in the balance sheet as the difference between the fair value of net assets acquired and. consideration transferred. Subsequently, goodwill is measured at this value less accumulated impairment losses. Goodwill is not amortised.The carrying amount of goodwill has been allocated to Vestas\u2019 operating segments. Identification of operating segments is based on management structure and internal financial reporting. The carrying amount of goodwill is tested at least annually for impairment, together with the other non-current assets of the operating segment to which goodwill has been allocated. If the recoverable amount is lower than the carrying amount of the operating segment, goodwill is written down to its lower recoverable amount in the income statement.The recoverable amount is usually calculated as the net present value of expected future net cash \ufb02ows from the operating segments to which the goodwill has been allocated. Alternatively, the recoverable amount is calculated as fair value less costs to sell. Impairment losses on goodwill are recognised in the income statement, either in production costs, research and development costs, distribution costs or administration costs.Impairment losses on goodwill are not reversed.Development projectsProjects for the development and testing of new wind turbines are recognised as intangible assets when they are clearly defined, identifiable, and for which technical feasibility, suffi-cient resources and a potential future market or application in the enterprise can be demonstrated. In addition, it is the intention with these projects to manufacture, market or use the project for future commercial purposes. This applies if cost can be measured reliably and sufficient certainty exists that future earnings or the net selling price can cover production costs, distribution costs, and administration costs as well as research and development costs. At Vestas this is underpinned by a gate process, where these judgements are made at specific gates. Other development costs not qualifying for capitalization are recognised in the income statement as research and development costs.Capitalised development costs are measured at cost less accu mulated amortisation and impairment losses. Devel-opment costs comprise salaries, amortisation and other costs attributable to Vestas\u2019 development activities.Following completion of the development work, development projects are amortised on a straight-line basis over their estimated useful lives. The amortisation period is two to five years. The basis of amortisation is calculated net of any impairment losses. The carrying amount of development projects in progress is tested for impairment at least annually, and where the carrying amount exceeds the net present value of the future net cash \ufb02ows expected to be generated by the development project, the project is written down to its recoverable amount in the income statement. Finished development projects are tested for impairment if there is indication of impairment from the annual review. Patents and licences included in development projects are measured at cost less accumulated amortisation and impair-ment losses. Patents and licences are amortised over the patent period or term of agreement, the life of the development project or the estimated useful life, whichever is shorter. The basis of amortisation is calculated net of any impairment losses. SoftwareAcquired software licences and internally developed software is measured at cost less accumulated amortisation and impairment losses. Cost includes both direct internal and external costs. Software is amortised on a straight-line basis over three to five years. The basis of amortisation is calculated net of any impairment losses.Other intangible assetsCustomer relationship, order backlog, and trademarks with a finite useful life acquired from third parties, either separately or as part of the business combination, are capitalised at cost and amortised over their remaining useful lives. Other intangible assets that are not Customer relationship, order backlog, or trademarks are measured at cost less amortisation and impairment losses.Valuation of goodwillAs at 31 December 2022, Management performed the annual impairment test of goodwill. Based on the test, no impairment was identified (2021: No impairment). In the impairment tests, the carrying amount of the assets are compared to the discounted value of future expected cash \ufb02ows. The annual tests of goodwill were performed on three operating segments: Power Solutions Onshore, Power Solutions Offshore and Service, these being the lowest level of cash-generating units as defined by management.The main part of the carrying amount of goodwill in Vestas subject to impairment testing are related to several acquisitions specified as follows. \u017c The acquisition of NEG Micon A/S in 2004, included acquisition of goodwill of EUR 180m allocated to Vestas Power Solutions Onshore and EUR 35m allocated to the Service segment. \u017c The acquisition of UpWind Solutions, Inc. in 2015, included acquisition of goodwill of EUR 40m, which was allocated to the Service segment. \u017c The acquisition of Availon GmbH in 2016 included acquisition of goodwill of EUR 56m, which was allocated to the Service segment. \u017c The acquisition of Utopus Insights, Inc. in 2018 included acquisition of goodwill of EUR 70m, which was allocated to the Service segment. \u017c The acquisition of MHI Vestas Offshore Wind A/S in 2020 included acquisition of goodwill of EUR 1,126m. The goodwill arising from the acquisition was allocated with EUR 893m to Power Solutions Offshore and EUR 233m to the Service segment. Assumptions underpinning impairment test of goodwillBudgets and business plans for the next three years are based on Vestas\u2019 investments in progress and contracted invest-ments, and the risks relating to the key parameters have been assessed and incorporated in the expected future cash \ufb02ows underpinning the impairment test of goodwill. In addition, the budgets and business plans are based on management\u2019s ex-pectations of the current market conditions and future growth expectations. For the Power Solutions Onshore and Service, projections for 2026 and onwards are based on general market expectations and risks in the impairment test. The acquisition of MHI Vestas Offshore Wind A/S in 2020 was based on a business case related to the introduction of a new wind turbine platform. The expected cash in\ufb02ows from this new technology are not expected until after 2024. For this reason, the impairment test of Power Solutions Offshore include the same business case and an extended budget and forecast period including the years 2023 to 2029. Projections for year 2030 and onwards are based on general market expectations and risks in the impairment test. The terminal value in the projection period is determined taking into account general growth expectations for the segments in question. Long-term growth rate has been estimated at 2 percent.Power Solutions Onshore Order backlog of EUR 16.4bn as at 31 December 2022Expectations on changing market environment, including future market prices and high cost pressureExpectations on future orders received, among other things based on expected market share of the global market outlookExpectations on continuing develop-ments in mature and emerging marketsExpectations on support schemes in bothmature and emerging markets\u2191The above main information is used in determining revenue, EBIT, and capital expenditure.Power Solutions OffshoreOrder backlog of EUR 2.7bn as at 31 December 2022Expectations on changing market environment, including future market prices and high cost pressureExpectations on future orders received, among other things based on expected market share of the global market outlook including expectation of high growth in offshore market Expectations on continuing develop-ments in mature and emerging marketsExpectations on support schemes in bothmature and emerging markets ServiceService order backlog of EUR 30.4bn as at 31 December 2022Expectations on changing market environment, including future market prices and future development in cost reductionsExpectations on continued servicing of the existing installed base of wind turbines as well as future service contracts received, among other things based on expected market shareCapture full potential and accelerate profitable growth strategy from historically technology acquisitions and developmentsGrowth supported by market develop-ments and organic growth2022 2021Discount rate Growth rate in Carrying amount of Discount rate Growth rate in Carrying amount of before tax (%)terminal period (%)goodwill (mEUR)before tax (%)terminal period (%)goodwill (mEUR)Power Solutions Onshore10.6 2 178 9.5 2 180Power Solutions Offshore 10.2 2 894 9.8 2 893 Service 10.9 2 442 10.1 2 435Adjustments to the balance sheet, 1 January 2021Assets Effect of mEUR Reportednew policy AdjustedCompleted development projects621 (1) 620Software 164 (17) 147Development projects in progress317 (17) 300Total intangible assets2,888 (35) 2,853Deferred tax 335 4 339Total other non-current assets1,003 4 1,007Total non-current assets5,913 (31) 5,882Total assets 18,160 (31) 18,129Adjustments to the balance sheet, 31 December 2021Assets Effect of mEUR Reportednew policy AdjustedCompleted development projects619 (1) 618Software 140 (17) 123Development projects in progress426 (50) 376Total intangible assets3,130 (68) 3,062Deferred tax 374 4 378Total other non-current assets1,627 4 1,631Total non-current assets6,848 (64) 6,784Total assets 19,712 (64) 19,648", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-108-3": { "value": "3.1\u2002Intangible assets2022 2021Completed OtherDevelopment Completed OtherDevelopment development intangibleprojects in development intangibleprojects in mEUR Goodwillprojects Softwareassetsprogress Total Goodwillprojects Softwareassetsprogress TotalCost as at 1 January1,611 2,561 366 560 376 5,474 1,377 2,327 535 562 317 5,118Impact on change in accounting policy - - - - - - - - (42) - (10) (52)Adjusted cost as at 1 January 1,611 2,561 366 560 376 5,474 1,377 2,327 493 562 307 5,066Exchange rate adjustments 7 - 1 1 1 10 9 1 2 1 1 14Additions - - 2 1 445 448 - - 3 2 355 360Adjustments from business combination - - - - - - 230 - - (5) - 225Disposal - - (6) - - (6) (5) - (186) - - (191)Transfers - 164 46 - (210) - - 233 54 - (287) -Transfer to assets held for sale (1) - - - - (1) - - - - - -Cost as at 31 December 1,617 2,725 409 562 612 5,925 1,611 2,561 366 560 376 5,474Amortisation and impairment losses as at 1 January 103 1,942 244 123 - 2,412 103 1,706 371 50 - 2,230Impact on change in accounting policy - - - - - - - - (17) - - (17)Adjusted amortisation and impairment losses as at 1 January 103 1,942 244 123 - 2,412 103 1,706 354 50 - 2,213Exchange rate adjustments - - - 1 - 1 - 1 2 1 - 4Amortisation for the year - 221 55 49 - 325 - 235 74 72 - 381Impairment losses for the year - 114 1 13 - 128 - - - - - -Disposal - - (6) - - (6) - - (186) - - (186)Amortisation and impairment losses as at 31 December 103 2,277 294 186 - 2,860 103 1,942 244 123 - 2,412Carrying amount as at 31 December 1,514 448 115 376 612 3,065 1,508 619 122 437 376 3,062Internally generated assets included above - 394 42 - 611 1,047 - 619 82 - 419 1,120Amortisation period 2-5 years 3-5 years 3-7 years 2\u20135 years 3\u20135 years 3\u20137 yearsAmortisation, intangible assets 20222021\u2002 Production costs EUR 56m (17%)\u2002 Production costs EUR 80m (21%)\u2002 Research and development costs EUR 232m (71%)\u2002 Research and development costs EUR 240m (63%)\u2002 Distribution costs EUR 3m (1%)\u2002 Distribution costs EUR 4m (1%)\u2002 Administration costs EUR 34m (11%)\u2002 Administration costs EUR 57m (15%)\u2002 Special items EUR 0m (0%)\u2002 Special items EUR 0m (0%)Impairment loss, intangible assets20222021\u2002 Production costs EUR 13m (10%)\u2002 Production costs EUR 0m (0%)\u2002 Research and development costs EUR 90m (70%)\u2002 Research and development costs EUR 0m (0%)\u2002Distribution costs EUR 0m (0%)\u2002Distribution costs EUR 0m (0%)\u2002 Administration costs EUR 0m (0%)\u2002 Administration costs EUR 0m (0%)\u2002Special items EUR 25m (20%)\u2002Special items EUR 0m (0%)3.1\u2002Intangible assets \u2013 continuedDevelopment projects and other intangible assetsVestas continually invests in the development of new technologies and, for this reason, development projects constitute a significant part of the total intangible assets. The continuous investments include a wide portfolio of development projects. Vestas does not have one individually significant development assets.Impairment relating to offshore activityIn 2022, Vestas recognised an impairment loss of EUR 177m relating to the V164/174 offshore activity, impacting the Power Solution segment by EUR 165m and the Service segment by 12m. Intangible assets, including technology, were written down by EUR 96m to EUR 439m and tangible assets were written down by EUR 81m to EUR 113m, re\ufb02ecting the recoverable amount of the assets. The recoverable amount is based on the discounted value of future expected cash \ufb02ows from the offshore activity. A discount rate before tax of 9.8% was used. The impairment was primarily due to revised assumptions on offshore order intake and project profitability. The test remains sensitive to changes in key assumptions, including order intake, project margins and service margins. A change in order intake will have a significant impact on the recoverable amount. A change of 1%-point in the assumed project margin will result in a EUR 15m change to the recoverable amount and a change of 1%-point in the service margin will result in a EUR 22m change to the recoverable amount.\u2002 Key accounting estimates Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOWAs part of the acquisition of MHI Vestas Offshore Wind (MVOW) in 2020, Vestas acquired intangible assets and tangible assets relating to the offshore activity. As at 31 December 2022, the acquired assets was tested for impairment. In performing the impairment test, the carrying amount of the assets is compared to the discounted value of expected future cash \ufb02ows from the offshore activity (value-in-use). The expected future cash \ufb02ows are based on key assumptions including order intake and project margins and service contract margins, which are by nature subject to significant uncertainty. Development projectsProjects for the development and testing of new wind turbines are recognised as intangible assets when they are clearly defined, identifiable, and for which technical feasibility, suffi-cient resources and a potential future market or application in the enterprise can be demonstrated. In addition, it is the intention with these projects to manufacture, market or use the project for future commercial purposes. This applies if cost can be measured reliably and sufficient certainty exists that future earnings or the net selling price can cover production costs, distribution costs, and administration costs as well as research and development costs. At Vestas this is underpinned by a gate process, where these judgements are made at specific gates. Other development costs not qualifying for capitalization are recognised in the income statement as research and development costs.Capitalised development costs are measured at cost less accu mulated amortisation and impairment losses. Devel-opment costs comprise salaries, amortisation and other costs attributable to Vestas\u2019 development activities.Following completion of the development work, development projects are amortised on a straight-line basis over their estimated useful lives. The amortisation period is two to five years. The basis of amortisation is calculated net of any impairment losses. The carrying amount of development projects in progress is tested for impairment at least annually, and where the carrying amount exceeds the net present value of the future net cash \ufb02ows expected to be generated by the development project, the project is written down to its recoverable amount in the income statement. Finished development projects are tested for impairment if there is indication of impairment from the annual review. Patents and licences included in development projects are measured at cost less accumulated amortisation and impair-ment losses. Patents and licences are amortised over the patent period or term of agreement, the life of the development project or the estimated useful life, whichever is shorter. The basis of amortisation is calculated net of any impairment losses. SoftwareAcquired software licences and internally developed software is measured at cost less accumulated amortisation and impairment losses. Cost includes both direct internal and external costs. Software is amortised on a straight-line basis over three to five years. The basis of amortisation is calculated net of any impairment losses.Other intangible assetsCustomer relationship, order backlog, and trademarks with a finite useful life acquired from third parties, either separately or as part of the business combination, are capitalised at cost and amortised over their remaining useful lives. Other intangible assets that are not Customer relationship, order backlog, or trademarks are measured at cost less amortisation and impairment losses.Adjustments to the balance sheet, 1 January 2021Assets Effect of mEUR Reportednew policy AdjustedCompleted development projects621 (1) 620Software 164 (17) 147Development projects in progress317 (17) 300Total intangible assets2,888 (35) 2,853Deferred tax 335 4 339Total other non-current assets1,003 4 1,007Total non-current assets5,913 (31) 5,882Total assets 18,160 (31) 18,129Adjustments to the balance sheet, 31 December 2021Assets Effect of mEUR Reportednew policy AdjustedCompleted development projects619 (1) 618Software 140 (17) 123Development projects in progress426 (50) 376Total intangible assets3,130 (68) 3,062Deferred tax 374 4 378Total other non-current assets1,627 4 1,631Total non-current assets6,848 (64) 6,784Total assets 19,712 (64) 19,648", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-108-4": { "value": "3.1\u2002Intangible assets2022 2021Completed OtherDevelopment Completed OtherDevelopment development intangibleprojects in development intangibleprojects in mEUR Goodwillprojects Softwareassetsprogress Total Goodwillprojects Softwareassetsprogress TotalCost as at 1 January1,611 2,561 366 560 376 5,474 1,377 2,327 535 562 317 5,118Impact on change in accounting policy - - - - - - - - (42) - (10) (52)Adjusted cost as at 1 January 1,611 2,561 366 560 376 5,474 1,377 2,327 493 562 307 5,066Exchange rate adjustments 7 - 1 1 1 10 9 1 2 1 1 14Additions - - 2 1 445 448 - - 3 2 355 360Adjustments from business combination - - - - - - 230 - - (5) - 225Disposal - - (6) - - (6) (5) - (186) - - (191)Transfers - 164 46 - (210) - - 233 54 - (287) -Transfer to assets held for sale (1) - - - - (1) - - - - - -Cost as at 31 December 1,617 2,725 409 562 612 5,925 1,611 2,561 366 560 376 5,474Amortisation and impairment losses as at 1 January 103 1,942 244 123 - 2,412 103 1,706 371 50 - 2,230Impact on change in accounting policy - - - - - - - - (17) - - (17)Adjusted amortisation and impairment losses as at 1 January 103 1,942 244 123 - 2,412 103 1,706 354 50 - 2,213Exchange rate adjustments - - - 1 - 1 - 1 2 1 - 4Amortisation for the year - 221 55 49 - 325 - 235 74 72 - 381Impairment losses for the year - 114 1 13 - 128 - - - - - -Disposal - - (6) - - (6) - - (186) - - (186)Amortisation and impairment losses as at 31 December 103 2,277 294 186 - 2,860 103 1,942 244 123 - 2,412Carrying amount as at 31 December 1,514 448 115 376 612 3,065 1,508 619 122 437 376 3,062Internally generated assets included above - 394 42 - 611 1,047 - 619 82 - 419 1,120Amortisation period 2-5 years 3-5 years 3-7 years 2\u20135 years 3\u20135 years 3\u20137 yearsImpairment loss, intangible assets20222021\u2002 Production costs EUR 13m (10%)\u2002 Production costs EUR 0m (0%)\u2002 Research and development costs EUR 90m (70%)\u2002 Research and development costs EUR 0m (0%)\u2002Distribution costs EUR 0m (0%)\u2002Distribution costs EUR 0m (0%)\u2002 Administration costs EUR 0m (0%)\u2002 Administration costs EUR 0m (0%)\u2002Special items EUR 25m (20%)\u2002Special items EUR 0m (0%)3.1\u2002Intangible assets \u2013 continued\u2002 Key accounting estimates Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOWAs part of the acquisition of MHI Vestas Offshore Wind (MVOW) in 2020, Vestas acquired intangible assets and tangible assets relating to the offshore activity. As at 31 December 2022, the acquired assets was tested for impairment. In performing the impairment test, the carrying amount of the assets is compared to the discounted value of expected future cash \ufb02ows from the offshore activity (value-in-use). The expected future cash \ufb02ows are based on key assumptions including order intake and project margins and service contract margins, which are by nature subject to significant uncertainty. \u2002Accounting policiesGoodwillGoodwill is initially recognised in the balance sheet as the difference between the fair value of net assets acquired and. consideration transferred. Subsequently, goodwill is measured at this value less accumulated impairment losses. Goodwill is not amortised.The carrying amount of goodwill has been allocated to Vestas\u2019 operating segments. Identification of operating segments is based on management structure and internal financial reporting. The carrying amount of goodwill is tested at least annually for impairment, together with the other non-current assets of the operating segment to which goodwill has been allocated. If the recoverable amount is lower than the carrying amount of the operating segment, goodwill is written down to its lower recoverable amount in the income statement.The recoverable amount is usually calculated as the net present value of expected future net cash \ufb02ows from the operating segments to which the goodwill has been allocated. Alternatively, the recoverable amount is calculated as fair value less costs to sell. Impairment losses on goodwill are recognised in the income statement, either in production costs, research and development costs, distribution costs or administration costs.Impairment losses on goodwill are not reversed.Valuation of goodwillAs at 31 December 2022, Management performed the annual impairment test of goodwill. Based on the test, no impairment was identified (2021: No impairment). In the impairment tests, the carrying amount of the assets are compared to the discounted value of future expected cash \ufb02ows. The annual tests of goodwill were performed on three operating segments: Power Solutions Onshore, Power Solutions Offshore and Service, these being the lowest level of cash-generating units as defined by management.The main part of the carrying amount of goodwill in Vestas subject to impairment testing are related to several acquisitions specified as follows. \u017c The acquisition of NEG Micon A/S in 2004, included acquisition of goodwill of EUR 180m allocated to Vestas Power Solutions Onshore and EUR 35m allocated to the Service segment. \u017c The acquisition of UpWind Solutions, Inc. in 2015, included acquisition of goodwill of EUR 40m, which was allocated to the Service segment. \u017c The acquisition of Availon GmbH in 2016 included acquisition of goodwill of EUR 56m, which was allocated to the Service segment. \u017c The acquisition of Utopus Insights, Inc. in 2018 included acquisition of goodwill of EUR 70m, which was allocated to the Service segment. \u017c The acquisition of MHI Vestas Offshore Wind A/S in 2020 included acquisition of goodwill of EUR 1,126m. The goodwill arising from the acquisition was allocated with EUR 893m to Power Solutions Offshore and EUR 233m to the Service segment. Assumptions underpinning impairment test of goodwillBudgets and business plans for the next three years are based on Vestas\u2019 investments in progress and contracted invest-ments, and the risks relating to the key parameters have been assessed and incorporated in the expected future cash \ufb02ows underpinning the impairment test of goodwill. In addition, the budgets and business plans are based on management\u2019s ex-pectations of the current market conditions and future growth expectations. For the Power Solutions Onshore and Service, projections for 2026 and onwards are based on general market expectations and risks in the impairment test. The acquisition of MHI Vestas Offshore Wind A/S in 2020 was based on a business case related to the introduction of a new wind turbine platform. The expected cash in\ufb02ows from this new technology are not expected until after 2024. For this reason, the impairment test of Power Solutions Offshore include the same business case and an extended budget and forecast period including the years 2023 to 2029. Projections for year 2030 and onwards are based on general market expectations and risks in the impairment test. The terminal value in the projection period is determined taking into account general growth expectations for the segments in question. Long-term growth rate has been estimated at 2 percent.Power Solutions Onshore Order backlog of EUR 16.4bn as at 31 December 2022Expectations on changing market environment, including future market prices and high cost pressureExpectations on future orders received, among other things based on expected market share of the global market outlookExpectations on continuing develop-ments in mature and emerging marketsExpectations on support schemes in bothmature and emerging markets\u2191The above main information is used in determining revenue, EBIT, and capital expenditure.Power Solutions OffshoreOrder backlog of EUR 2.7bn as at 31 December 2022Expectations on changing market environment, including future market prices and high cost pressureExpectations on future orders received, among other things based on expected market share of the global market outlook including expectation of high growth in offshore market Expectations on continuing develop-ments in mature and emerging marketsExpectations on support schemes in bothmature and emerging markets ServiceService order backlog of EUR 30.4bn as at 31 December 2022Expectations on changing market environment, including future market prices and future development in cost reductionsExpectations on continued servicing of the existing installed base of wind turbines as well as future service contracts received, among other things based on expected market shareCapture full potential and accelerate profitable growth strategy from historically technology acquisitions and developmentsGrowth supported by market develop-ments and organic growth2022 2021Discount rate Growth rate in Carrying amount of Discount rate Growth rate in Carrying amount of before tax (%)terminal period (%)goodwill (mEUR)before tax (%)terminal period (%)goodwill (mEUR)Power Solutions Onshore10.6 2 178 9.5 2 180Power Solutions Offshore 10.2 2 894 9.8 2 893 Service 10.9 2 442 10.1 2 435", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-110-5": { "value": "Amortisation, intangible assets 20222021\u2002 Production costs EUR 56m (17%)\u2002 Production costs EUR 80m (21%)\u2002 Research and development costs EUR 232m (71%)\u2002 Research and development costs EUR 240m (63%)\u2002 Distribution costs EUR 3m (1%)\u2002 Distribution costs EUR 4m (1%)\u2002 Administration costs EUR 34m (11%)\u2002 Administration costs EUR 57m (15%)\u2002 Special items EUR 0m (0%)\u2002 Special items EUR 0m (0%)Depreciation, property, plant and equipmentmEUR and percent20222021\u2002 Production costs EUR 369m (64%)\u2002 Production costs EUR 360m (68%)\u2002 Research and development costs EUR 34m (6%)\u2002 Research and development costs EUR 30m (6%)\u2002Distribution costs EUR 156m (27%)\u2002Distribution costs EUR 126m (23%)\u2002Administration costs EUR 15m (3%)\u2002Administration costs EUR 17m (3%)\u2002Special items EUR 0m (0%)\u2002Special items EUR 0m (0%)\u2002Accounting policiesLand and buildings, plant and machinery as well as other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and impairment losses.Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is ready for use. In the case of construction of own assets, cost comprises direct and indirect costs for materials, components, sub-suppliers, and labour. Estimated costs for dismantling and disposing of the asset and for re-establishment are added to cost to the extent that they are recognised as a provision. Where individual components of an item of property, plant and equipment have different useful lives, the cost of the item is decomposed into separate components which are depreciated separately.Subsequent costs, e.g. in connection with the replacement of components of an item of property, plant and equipment, are recognised in the carrying amount of the asset in question when it is probable that the costs incurred will result in future economic benefits to Vestas. The carrying amount of the replaced components is derecognised in the balance sheet and recognised as costs in the income statement. All other costs incurred for ordinary repairs and maintenance are rec-ognised in the income statement as incurred.Installations capitalised as land and buildings which are related to leased assets are depreciated over the term of the related lease contract. Such lease contracts range with a lease term from 10 to 20 years.Depreciation is calculated on a straight-line basis over the expected useful lives of the assets, which are:Buildings (including installations) 10\u201340 yearsPlant and machinery 3\u201310 years Other fixtures and fittings, tools and equipment 3\u20135 yearsRight-of-use assets 2-20 yearsLand is not depreciated.The basis of depreciation is calculated taking into account the residual value of the asset less any impairment losses. The residual value is determined at the time of acquisition and is reassessed annually. Where the residual value exceeds the carrying amount of the asset, depreciation is discontinued.The depreciation periods are determined based on estimates of the expected useful lives and future residual value of the assets. The estimates are based on historical experience. A reassessment is made once a year to ascertain that the depreciation basis re\ufb02ects the expected life and future residual values of the assets.If the depreciation period or the residual value has changed, the effect on depreciation is recognised prospectively as a change in accounting estimate.Depreciation is recognised in the income statement as either production costs, research and development costs, distribution costs or administration costs to the extent that depreciation is not included in the cost of assets of own construction.The carrying amounts of non-current assets are reviewed on an annual basis to determine whether there is any indication of impairment. If so, the recoverable amount of the asset is calculated. The recoverable amount is the higher of the fair value of the asset less estimated costs to sell and value in use.Value in use is calculated as the net present value of expected future net cash \ufb02ows from the asset or a group of assets.An impairment loss is recognised where the carrying amount of an asset exceeds its recoverable amount.Impairment losses are reversed only to the extent of changes in the assumptions and estimates underlying the impairment calculation.Impairment losses are reversed only to the extent that the new carrying amount of the asset does not exceed the carrying amount of the asset after depreciation/amortisation had the asset not been impaired.", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-110-6": { "value": "Amortisation, intangible assets 20222021\u2002 Production costs EUR 56m (17%)\u2002 Production costs EUR 80m (21%)\u2002 Research and development costs EUR 232m (71%)\u2002 Research and development costs EUR 240m (63%)\u2002 Distribution costs EUR 3m (1%)\u2002 Distribution costs EUR 4m (1%)\u2002 Administration costs EUR 34m (11%)\u2002 Administration costs EUR 57m (15%)\u2002 Special items EUR 0m (0%)\u2002 Special items EUR 0m (0%)Depreciation, property, plant and equipmentmEUR and percent20222021\u2002 Production costs EUR 369m (64%)\u2002 Production costs EUR 360m (68%)\u2002 Research and development costs EUR 34m (6%)\u2002 Research and development costs EUR 30m (6%)\u2002Distribution costs EUR 156m (27%)\u2002Distribution costs EUR 126m (23%)\u2002Administration costs EUR 15m (3%)\u2002Administration costs EUR 17m (3%)\u2002Special items EUR 0m (0%)\u2002Special items EUR 0m (0%)\u2002Accounting policiesLand and buildings, plant and machinery as well as other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and impairment losses.Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is ready for use. In the case of construction of own assets, cost comprises direct and indirect costs for materials, components, sub-suppliers, and labour. Estimated costs for dismantling and disposing of the asset and for re-establishment are added to cost to the extent that they are recognised as a provision. Where individual components of an item of property, plant and equipment have different useful lives, the cost of the item is decomposed into separate components which are depreciated separately.Subsequent costs, e.g. in connection with the replacement of components of an item of property, plant and equipment, are recognised in the carrying amount of the asset in question when it is probable that the costs incurred will result in future economic benefits to Vestas. The carrying amount of the replaced components is derecognised in the balance sheet and recognised as costs in the income statement. All other costs incurred for ordinary repairs and maintenance are rec-ognised in the income statement as incurred.Installations capitalised as land and buildings which are related to leased assets are depreciated over the term of the related lease contract. Such lease contracts range with a lease term from 10 to 20 years.Depreciation is calculated on a straight-line basis over the expected useful lives of the assets, which are:Buildings (including installations) 10\u201340 yearsPlant and machinery 3\u201310 years Other fixtures and fittings, tools and equipment 3\u20135 yearsRight-of-use assets 2-20 yearsLand is not depreciated.The basis of depreciation is calculated taking into account the residual value of the asset less any impairment losses. The residual value is determined at the time of acquisition and is reassessed annually. Where the residual value exceeds the carrying amount of the asset, depreciation is discontinued.The depreciation periods are determined based on estimates of the expected useful lives and future residual value of the assets. The estimates are based on historical experience. A reassessment is made once a year to ascertain that the depreciation basis re\ufb02ects the expected life and future residual values of the assets.If the depreciation period or the residual value has changed, the effect on depreciation is recognised prospectively as a change in accounting estimate.Depreciation is recognised in the income statement as either production costs, research and development costs, distribution costs or administration costs to the extent that depreciation is not included in the cost of assets of own construction.The carrying amounts of non-current assets are reviewed on an annual basis to determine whether there is any indication of impairment. If so, the recoverable amount of the asset is calculated. The recoverable amount is the higher of the fair value of the asset less estimated costs to sell and value in use.Value in use is calculated as the net present value of expected future net cash \ufb02ows from the asset or a group of assets.An impairment loss is recognised where the carrying amount of an asset exceeds its recoverable amount.Impairment losses are reversed only to the extent of changes in the assumptions and estimates underlying the impairment calculation.Impairment losses are reversed only to the extent that the new carrying amount of the asset does not exceed the carrying amount of the asset after depreciation/amortisation had the asset not been impaired.", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-115-5": { "value": "\u2002Accounting policiesGoodwillGoodwill is initially recognised in the balance sheet as the difference between the fair value of net assets acquired and. consideration transferred. Subsequently, goodwill is measured at this value less accumulated impairment losses. Goodwill is not amortised.The carrying amount of goodwill has been allocated to Vestas\u2019 operating segments. Identification of operating segments is based on management structure and internal financial reporting. The carrying amount of goodwill is tested at least annually for impairment, together with the other non-current assets of the operating segment to which goodwill has been allocated. If the recoverable amount is lower than the carrying amount of the operating segment, goodwill is written down to its lower recoverable amount in the income statement.The recoverable amount is usually calculated as the net present value of expected future net cash \ufb02ows from the operating segments to which the goodwill has been allocated. Alternatively, the recoverable amount is calculated as fair value less costs to sell. Impairment losses on goodwill are recognised in the income statement, either in production costs, research and development costs, distribution costs or administration costs.Impairment losses on goodwill are not reversed.Development projectsProjects for the development and testing of new wind turbines are recognised as intangible assets when they are clearly defined, identifiable, and for which technical feasibility, suffi-cient resources and a potential future market or application in the enterprise can be demonstrated. In addition, it is the intention with these projects to manufacture, market or use the project for future commercial purposes. This applies if cost can be measured reliably and sufficient certainty exists that future earnings or the net selling price can cover production costs, distribution costs, and administration costs as well as research and development costs. At Vestas this is underpinned by a gate process, where these judgements are made at specific gates. Other development costs not qualifying for capitalization are recognised in the income statement as research and development costs.Capitalised development costs are measured at cost less accu mulated amortisation and impairment losses. Devel-opment costs comprise salaries, amortisation and other costs attributable to Vestas\u2019 development activities.Following completion of the development work, development projects are amortised on a straight-line basis over their estimated useful lives. The amortisation period is two to five years. The basis of amortisation is calculated net of any impairment losses. The carrying amount of development projects in progress is tested for impairment at least annually, and where the carrying amount exceeds the net present value of the future net cash \ufb02ows expected to be generated by the development project, the project is written down to its recoverable amount in the income statement. Finished development projects are tested for impairment if there is indication of impairment from the annual review. Patents and licences included in development projects are measured at cost less accumulated amortisation and impair-ment losses. Patents and licences are amortised over the patent period or term of agreement, the life of the development project or the estimated useful life, whichever is shorter. The basis of amortisation is calculated net of any impairment losses. SoftwareAcquired software licences and internally developed software is measured at cost less accumulated amortisation and impairment losses. Cost includes both direct internal and external costs. Software is amortised on a straight-line basis over three to five years. The basis of amortisation is calculated net of any impairment losses.Other intangible assetsCustomer relationship, order backlog, and trademarks with a finite useful life acquired from third parties, either separately or as part of the business combination, are capitalised at cost and amortised over their remaining useful lives. Other intangible assets that are not Customer relationship, order backlog, or trademarks are measured at cost less amortisation and impairment losses.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-115-6": { "value": "\u2002Accounting policiesGoodwillGoodwill is initially recognised in the balance sheet as the difference between the fair value of net assets acquired and. consideration transferred. Subsequently, goodwill is measured at this value less accumulated impairment losses. Goodwill is not amortised.The carrying amount of goodwill has been allocated to Vestas\u2019 operating segments. Identification of operating segments is based on management structure and internal financial reporting. The carrying amount of goodwill is tested at least annually for impairment, together with the other non-current assets of the operating segment to which goodwill has been allocated. If the recoverable amount is lower than the carrying amount of the operating segment, goodwill is written down to its lower recoverable amount in the income statement.The recoverable amount is usually calculated as the net present value of expected future net cash \ufb02ows from the operating segments to which the goodwill has been allocated. Alternatively, the recoverable amount is calculated as fair value less costs to sell. Impairment losses on goodwill are recognised in the income statement, either in production costs, research and development costs, distribution costs or administration costs.Impairment losses on goodwill are not reversed.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-115-7": { "value": "\u2002Accounting policiesGoodwillGoodwill is initially recognised in the balance sheet as the difference between the fair value of net assets acquired and. consideration transferred. Subsequently, goodwill is measured at this value less accumulated impairment losses. Goodwill is not amortised.The carrying amount of goodwill has been allocated to Vestas\u2019 operating segments. Identification of operating segments is based on management structure and internal financial reporting. The carrying amount of goodwill is tested at least annually for impairment, together with the other non-current assets of the operating segment to which goodwill has been allocated. If the recoverable amount is lower than the carrying amount of the operating segment, goodwill is written down to its lower recoverable amount in the income statement.The recoverable amount is usually calculated as the net present value of expected future net cash \ufb02ows from the operating segments to which the goodwill has been allocated. Alternatively, the recoverable amount is calculated as fair value less costs to sell. Impairment losses on goodwill are recognised in the income statement, either in production costs, research and development costs, distribution costs or administration costs.Impairment losses on goodwill are not reversed.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-115-8": { "value": "\u2002Accounting policiesGoodwillGoodwill is initially recognised in the balance sheet as the difference between the fair value of net assets acquired and. consideration transferred. Subsequently, goodwill is measured at this value less accumulated impairment losses. Goodwill is not amortised.The carrying amount of goodwill has been allocated to Vestas\u2019 operating segments. Identification of operating segments is based on management structure and internal financial reporting. The carrying amount of goodwill is tested at least annually for impairment, together with the other non-current assets of the operating segment to which goodwill has been allocated. If the recoverable amount is lower than the carrying amount of the operating segment, goodwill is written down to its lower recoverable amount in the income statement.The recoverable amount is usually calculated as the net present value of expected future net cash \ufb02ows from the operating segments to which the goodwill has been allocated. Alternatively, the recoverable amount is calculated as fair value less costs to sell. Impairment losses on goodwill are recognised in the income statement, either in production costs, research and development costs, distribution costs or administration costs.Impairment losses on goodwill are not reversed.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-117-7": { "value": "Development projectsProjects for the development and testing of new wind turbines are recognised as intangible assets when they are clearly defined, identifiable, and for which technical feasibility, suffi-cient resources and a potential future market or application in the enterprise can be demonstrated. In addition, it is the intention with these projects to manufacture, market or use the project for future commercial purposes. This applies if cost can be measured reliably and sufficient certainty exists that future earnings or the net selling price can cover production costs, distribution costs, and administration costs as well as research and development costs. At Vestas this is underpinned by a gate process, where these judgements are made at specific gates. Other development costs not qualifying for capitalization are recognised in the income statement as research and development costs.Capitalised development costs are measured at cost less accu mulated amortisation and impairment losses. Devel-opment costs comprise salaries, amortisation and other costs attributable to Vestas\u2019 development activities.Following completion of the development work, development projects are amortised on a straight-line basis over their estimated useful lives. The amortisation period is two to five years. The basis of amortisation is calculated net of any impairment losses. The carrying amount of development projects in progress is tested for impairment at least annually, and where the carrying amount exceeds the net present value of the future net cash \ufb02ows expected to be generated by the development project, the project is written down to its recoverable amount in the income statement. Finished development projects are tested for impairment if there is indication of impairment from the annual review. Patents and licences included in development projects are measured at cost less accumulated amortisation and impair-ment losses. Patents and licences are amortised over the patent period or term of agreement, the life of the development project or the estimated useful life, whichever is shorter. The basis of amortisation is calculated net of any impairment losses. SoftwareAcquired software licences and internally developed software is measured at cost less accumulated amortisation and impairment losses. Cost includes both direct internal and external costs. Software is amortised on a straight-line basis over three to five years. The basis of amortisation is calculated net of any impairment losses.Other intangible assetsCustomer relationship, order backlog, and trademarks with a finite useful life acquired from third parties, either separately or as part of the business combination, are capitalised at cost and amortised over their remaining useful lives. Other intangible assets that are not Customer relationship, order backlog, or trademarks are measured at cost less amortisation and impairment losses.\u2002Accounting policiesLand and buildings, plant and machinery as well as other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and impairment losses.Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is ready for use. In the case of construction of own assets, cost comprises direct and indirect costs for materials, components, sub-suppliers, and labour. Estimated costs for dismantling and disposing of the asset and for re-establishment are added to cost to the extent that they are recognised as a provision. Where individual components of an item of property, plant and equipment have different useful lives, the cost of the item is decomposed into separate components which are depreciated separately.Subsequent costs, e.g. in connection with the replacement of components of an item of property, plant and equipment, are recognised in the carrying amount of the asset in question when it is probable that the costs incurred will result in future economic benefits to Vestas. The carrying amount of the replaced components is derecognised in the balance sheet and recognised as costs in the income statement. All other costs incurred for ordinary repairs and maintenance are rec-ognised in the income statement as incurred.Installations capitalised as land and buildings which are related to leased assets are depreciated over the term of the related lease contract. Such lease contracts range with a lease term from 10 to 20 years.Depreciation is calculated on a straight-line basis over the expected useful lives of the assets, which are:Buildings (including installations) 10\u201340 yearsPlant and machinery 3\u201310 years Other fixtures and fittings, tools and equipment 3\u20135 yearsRight-of-use assets 2-20 yearsLand is not depreciated.The basis of depreciation is calculated taking into account the residual value of the asset less any impairment losses. The residual value is determined at the time of acquisition and is reassessed annually. Where the residual value exceeds the carrying amount of the asset, depreciation is discontinued.The depreciation periods are determined based on estimates of the expected useful lives and future residual value of the assets. The estimates are based on historical experience. A reassessment is made once a year to ascertain that the depreciation basis re\ufb02ects the expected life and future residual values of the assets.If the depreciation period or the residual value has changed, the effect on depreciation is recognised prospectively as a change in accounting estimate.Depreciation is recognised in the income statement as either production costs, research and development costs, distribution costs or administration costs to the extent that depreciation is not included in the cost of assets of own construction.The carrying amounts of non-current assets are reviewed on an annual basis to determine whether there is any indication of impairment. If so, the recoverable amount of the asset is calculated. The recoverable amount is the higher of the fair value of the asset less estimated costs to sell and value in use.Value in use is calculated as the net present value of expected future net cash \ufb02ows from the asset or a group of assets.An impairment loss is recognised where the carrying amount of an asset exceeds its recoverable amount.Impairment losses are reversed only to the extent of changes in the assumptions and estimates underlying the impairment calculation.Impairment losses are reversed only to the extent that the new carrying amount of the asset does not exceed the carrying amount of the asset after depreciation/amortisation had the asset not been impaired.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-119-2": { "value": "3.2\u2002Property, plant and equipment2022 2021Other fixtures Property, Other fixtures Property, and fittings, plant and and fittings, plant and Land and Plant and tools and equipment in Right-of-use Land and Plant and tools and equipment in Right-of-use mEURbuildingsmachineryequipmentprogressassets Totalbuildingsmachineryequipmentprogressassets TotalCost as at 1 January1,135 1,104 1,778 136 808 4,961 1,166 1,096 1,530 169 581 4,542Exchange rate adjustments 8 8 14 1 (1) 30 57 40 47 (4) 12 152Additions 9 11 160 191 129 500 4 16 180 276 230 706Disposals (69) (150) (129) (3) (45) (396) (121) (146) (157) - (15) (439)Transfers 5 69 101 (175) - - 29 98 178 (305) - - Transfer to assets held for sale (65) (53) (19) - (7) (144) - - - - - -Cost as at 31 December 1,023 989 1,905 150 884 4,951 1,135 1,104 1,778 136 808 4,961Depreciation and impairment losses as at 1 January 625 781 1,179 - 285 2,870 568 760 1,049 - 143 2,520 Exchange rate adjustments 3 7 10 - 2 22 26 25 35 - 1 87Depreciation for the year 34 118 270 - 152 574 42 102 243 - 146 533 Impairment losses for the year 55 66 29 - 36 186 45 16 - - 7 68 Reversal of impairment (39) (8) - - (7) (54) - - - - - -Transfers - (1) 1 - - - - - - - - -Transfers to assets held for sale (37) (32) (12) - (4) (85) - - - - - -Reversal of depreciation of disposals in the year (23) (148) (125) - (18) (314) (56) (122) (148) - (12) (338)Depreciation and impairment losses as at 31 December 618 783 1,352 - 446 3,199 625 781 1,179 - 285 2,870 Carrying amount as at 31 December 405 206 553 150 438 1,752 510 323 599 136 523 2,091 Depreciation period 10\u201340 years 3\u201310 years 3\u20135 years 2\u201320 years 10\u201340 years 3\u201310 years 3\u20135 years 2\u201320 yearsDepreciation, property, plant and equipmentmEUR and percent20222021\u2002 Production costs EUR 369m (64%)\u2002 Production costs EUR 360m (68%)\u2002 Research and development costs EUR 34m (6%)\u2002 Research and development costs EUR 30m (6%)\u2002Distribution costs EUR 156m (27%)\u2002Distribution costs EUR 126m (23%)\u2002Administration costs EUR 15m (3%)\u2002Administration costs EUR 17m (3%)\u2002Special items EUR 0m (0%)\u2002Special items EUR 0m (0%)Impairment loss, property, plant and equipmentmEUR and percent20222021\u2002 Production costs EUR 61m (33%)\u2002 Production costs EUR 0m (0%)\u2002 Research and development costs EUR 4m (2%)\u2002 Research and development costs EUR 0m (0%)\u2002Distribution costs EUR 19m (10%)\u2002Distribution costs EUR 0m (0%)\u2002Administration costs EUR 3m (2%)\u2002Administration costs EUR 0m (0%)\u2002Special items EUR 99m (53%)\u2002Special items EUR 68m (100%)3.2\u2002Property, plant and equipment \u2013 continued\u2002Accounting policiesLand and buildings, plant and machinery as well as other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and impairment losses.Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is ready for use. In the case of construction of own assets, cost comprises direct and indirect costs for materials, components, sub-suppliers, and labour. Estimated costs for dismantling and disposing of the asset and for re-establishment are added to cost to the extent that they are recognised as a provision. Where individual components of an item of property, plant and equipment have different useful lives, the cost of the item is decomposed into separate components which are depreciated separately.Subsequent costs, e.g. in connection with the replacement of components of an item of property, plant and equipment, are recognised in the carrying amount of the asset in question when it is probable that the costs incurred will result in future economic benefits to Vestas. The carrying amount of the replaced components is derecognised in the balance sheet and recognised as costs in the income statement. All other costs incurred for ordinary repairs and maintenance are rec-ognised in the income statement as incurred.Installations capitalised as land and buildings which are related to leased assets are depreciated over the term of the related lease contract. Such lease contracts range with a lease term from 10 to 20 years.Depreciation is calculated on a straight-line basis over the expected useful lives of the assets, which are:Buildings (including installations) 10\u201340 yearsPlant and machinery 3\u201310 years Other fixtures and fittings, tools and equipment 3\u20135 yearsRight-of-use assets 2-20 yearsLand is not depreciated.The basis of depreciation is calculated taking into account the residual value of the asset less any impairment losses. The residual value is determined at the time of acquisition and is reassessed annually. Where the residual value exceeds the carrying amount of the asset, depreciation is discontinued.The depreciation periods are determined based on estimates of the expected useful lives and future residual value of the assets. The estimates are based on historical experience. A reassessment is made once a year to ascertain that the depreciation basis re\ufb02ects the expected life and future residual values of the assets.If the depreciation period or the residual value has changed, the effect on depreciation is recognised prospectively as a change in accounting estimate.Depreciation is recognised in the income statement as either production costs, research and development costs, distribution costs or administration costs to the extent that depreciation is not included in the cost of assets of own construction.The carrying amounts of non-current assets are reviewed on an annual basis to determine whether there is any indication of impairment. If so, the recoverable amount of the asset is calculated. The recoverable amount is the higher of the fair value of the asset less estimated costs to sell and value in use.Value in use is calculated as the net present value of expected future net cash \ufb02ows from the asset or a group of assets.An impairment loss is recognised where the carrying amount of an asset exceeds its recoverable amount.Impairment losses are reversed only to the extent of changes in the assumptions and estimates underlying the impairment calculation.Impairment losses are reversed only to the extent that the new carrying amount of the asset does not exceed the carrying amount of the asset after depreciation/amortisation had the asset not been impaired.Impairment relating to offshore activityIn 2022, Vestas recognised an impairment loss on tangible assets, including right-of-use assets, of EUR 81m relating to the V164/174 offshore activity. Refer to note 3.1 for further details.\u2002 Key accounting estimates Estimates of future cash \ufb02ows used for impairment test of acquired assets relating to MVOWRefer to note 3.1 for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-124-10": { "value": "\u2002Accounting policiesLand and buildings, plant and machinery as well as other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and impairment losses.Cost comprises the cost of acquisition and costs directly related to the acquisition up until the time when the asset is ready for use. In the case of construction of own assets, cost comprises direct and indirect costs for materials, components, sub-suppliers, and labour. Estimated costs for dismantling and disposing of the asset and for re-establishment are added to cost to the extent that they are recognised as a provision. Where individual components of an item of property, plant and equipment have different useful lives, the cost of the item is decomposed into separate components which are depreciated separately.Subsequent costs, e.g. in connection with the replacement of components of an item of property, plant and equipment, are recognised in the carrying amount of the asset in question when it is probable that the costs incurred will result in future economic benefits to Vestas. The carrying amount of the replaced components is derecognised in the balance sheet and recognised as costs in the income statement. All other costs incurred for ordinary repairs and maintenance are rec-ognised in the income statement as incurred.Installations capitalised as land and buildings which are related to leased assets are depreciated over the term of the related lease contract. Such lease contracts range with a lease term from 10 to 20 years.Depreciation is calculated on a straight-line basis over the expected useful lives of the assets, which are:Buildings (including installations) 10\u201340 yearsPlant and machinery 3\u201310 years Other fixtures and fittings, tools and equipment 3\u20135 yearsRight-of-use assets 2-20 yearsLand is not depreciated.The basis of depreciation is calculated taking into account the residual value of the asset less any impairment losses. The residual value is determined at the time of acquisition and is reassessed annually. Where the residual value exceeds the carrying amount of the asset, depreciation is discontinued.The depreciation periods are determined based on estimates of the expected useful lives and future residual value of the assets. The estimates are based on historical experience. A reassessment is made once a year to ascertain that the depreciation basis re\ufb02ects the expected life and future residual values of the assets.If the depreciation period or the residual value has changed, the effect on depreciation is recognised prospectively as a change in accounting estimate.Depreciation is recognised in the income statement as either production costs, research and development costs, distribution costs or administration costs to the extent that depreciation is not included in the cost of assets of own construction.The carrying amounts of non-current assets are reviewed on an annual basis to determine whether there is any indication of impairment. If so, the recoverable amount of the asset is calculated. The recoverable amount is the higher of the fair value of the asset less estimated costs to sell and value in use.Value in use is calculated as the net present value of expected future net cash \ufb02ows from the asset or a group of assets.An impairment loss is recognised where the carrying amount of an asset exceeds its recoverable amount.Impairment losses are reversed only to the extent of changes in the assumptions and estimates underlying the impairment calculation.Impairment losses are reversed only to the extent that the new carrying amount of the asset does not exceed the carrying amount of the asset after depreciation/amortisation had the asset not been impaired.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-129-2": { "value": "3.3\u2002Leases2022 2021Right-of-use assetsmEURProperty Vehicles Equipment Vessels Total Property Vehicles Equipment Vessels TotalCarrying amount as at 1 January300 59 45 119 523 241 63 41 93 438Exchange rate adjustments (3) - - - (3) 11 - - - 11Depreciation charge for the year (77) (37) (19) (19) (152) (74) (37) (17) (18) (146)Impairment losses for the year (36) - - - (36) - - - - -Reversal of impairment 7 - - - 7 (7) - - - (7)Addition of right-of-use assets for the year 86 25 13 5 129 132 33 21 44 230Disposal of right-of-use assets for the year (27) - - - (27) (3) - - - (3)Transfers (5) 4 1 - - - - - - -Transfer to assets held for sale (3) - - - (3) - - - - -Carrying amount as at 31 December 242 51 40 105 438 300 59 45 119 523Vestas leases several assets including properties, vehicles, vessels and equipment. Rental contracts are typically made for fixed periods of one to 10 years but may have extension options. Lease terms are negotiated on an individual basis and contain different terms and conditions including payment terms, terminations rights, index-regulations, maintenance, deposits and guarantees etc.Some property leases contain variable payment terms that are linked to an index e.g. a consumer price index. Overall the variable payments constitute less than 1 percent of Vestas\u2019 entire lease payments.Total lease expenses recognised in the income statementmEUR 2022 2021Variable lease payments not included in the measurement of lease liabilities0 1Expenses relating to short-term leases and leases of low-value51 31Total leases recognised in the statement of cash \ufb02owsmEUR 2022 2021Short-term leases and leases of low value51 31Payment of lease liability including interest159 148Total cash out\ufb02ow for leases210 179Lease liabilities Lease liabilities are included in financial debts and amount to EUR 493m as at 31 December 2022 (2021: EUR 545m). Refer to note 4.1 for disclosure on contractual cash \ufb02ows. \u2002Accounting policiesVestas as LesseeVestas assesses whether a contract is or contains a lease at inception of the contract. Vestas recognises right-of-use assets and corresponding lease liabilities at the lease commencement date, except for short-term leases and leases of low value. For these leases, Vestas normally recognises the lease payments as an operating expense on a straight-line basis over the term of the lease. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liabilities adjusted for any lease payments made at or before the commencement date, plus any initial costs incurred.The right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses. The right-of-use assets are from the commencement date depreciated over the shorter period of lease term and useful life of the underlying asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use assets are periodically reduced by impairment losses, if any, and adjusted in accordance with lease liabilities. The lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, Vestas\u2019 incremental borrowing rate. Generally, Vestas uses its incremental borrowing rate taking into account the specific countries.Lease payments included in the measurement of the lease liabilities comprise the following: \u017c fixed payments; \u017c variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; \u017c the exercise price of a purchase option if Vestas is reasonably certain to exercise the options; and \u017c amounts expected to be payable under residual value guarantees.The lease liabilities are subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the estimate of the amount expected to be payable under a residual value guarantee, or if Vestas changes its assessment of whether it will exercise a purchase, extension or termination option.When the lease liabilities are remeasured in this way, a corre-sponding adjustment is made to the carrying amount of the right-of-use assets, or is recorded in profit or loss if the carrying amount of the right-of-use assets has been reduced to zero.", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-135-4": { "value": "\u2002Accounting policiesVestas as LesseeVestas assesses whether a contract is or contains a lease at inception of the contract. Vestas recognises right-of-use assets and corresponding lease liabilities at the lease commencement date, except for short-term leases and leases of low value. For these leases, Vestas normally recognises the lease payments as an operating expense on a straight-line basis over the term of the lease. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liabilities adjusted for any lease payments made at or before the commencement date, plus any initial costs incurred.The right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses. The right-of-use assets are from the commencement date depreciated over the shorter period of lease term and useful life of the underlying asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use assets are periodically reduced by impairment losses, if any, and adjusted in accordance with lease liabilities. The lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, Vestas\u2019 incremental borrowing rate. Generally, Vestas uses its incremental borrowing rate taking into account the specific countries.Lease payments included in the measurement of the lease liabilities comprise the following: \u017c fixed payments; \u017c variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; \u017c the exercise price of a purchase option if Vestas is reasonably certain to exercise the options; and \u017c amounts expected to be payable under residual value guarantees.The lease liabilities are subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the estimate of the amount expected to be payable under a residual value guarantee, or if Vestas changes its assessment of whether it will exercise a purchase, extension or termination option.When the lease liabilities are remeasured in this way, a corre-sponding adjustment is made to the carrying amount of the right-of-use assets, or is recorded in profit or loss if the carrying amount of the right-of-use assets has been reduced to zero.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-146-2": { "value": "3.5\u2002Investments in joint ventures and associatesAmounts in the balance sheetmEUR 2022 2021Investments in joint ventures42 25Investments in associates 604 584Carrying amount as at 31 December 646 609Amounts in the income statementmEUR 2022 2021Joint ventures(7) 18Associates 17 18Income/(loss) from investments in joint ventures and associates 10 36Joint ventures AssociatesInvestments in joint ventures and associatesmEUR2022 2021 2022 2021Cost as at 1 January91 53 585 52Additions 21 36 4 533Disposals - - - (1)Effect of exchange rate adjustment 10 2 (1) 1Cost as at 31 December 122 91 588 585Value adjustments as at 1 January (66) (34) (1) (14)Proceeds from sale of projects - - - -Dividends received (2) (50) (3) (10)Impairment losses - - (8) -Share of profit/(loss) (7) 18 17 18Share of other comprehensive income - - 14 3Effect of exchange rate adjustment (5) - (3) 2Value adjustments as at 31 December (80) (66) 16 (1)Carrying amount as at 31 December 42 25 604 584Place of % of Measurement Investment Name of entitybusinessownershipmethodtypeCopenhagen Infrastructure Partners Holding P/S Copenhagen, Denmark 25 Equity AssociateBlakilden F\u00e4bodberget Holding AB Solna, Sweden 40 Equity AssociateMaterial investmentsIn 2022, Vestas made no material investments in associates or joint ventures. In February 2021, Vestas acquired a 25 percent stake in Copenhagen Infrastructure Partners P/S\u2019 parent companies. The total consideration of EUR 500m included a EUR 180m upfront payment and a EUR 320m contingent consideration related to performance in the period 2023 to 2029. Refer to note 4.3 for further information on the fair value measurement of the contingent consideration. The associated companies listed above are material to Vestas and have share capital consisting solely of ordinary shares, which are held directly by Vestas.Income/(loss) from investments in joint ventures and associates presented in and after EBIT in 2023Vestas\u2019 Development business continues to grow and re\ufb02ects an increasingly financial and strategic importance. In 2023, we expect a significant increase in income from investments in joint ventures and associates related to development activ i ties. As a consequence, income/(loss) from investments in joint ventures and associates which are deemed to pertain to our core business activities will be included in EBIT before special items. The profit/(loss) from investments in joint ventures and associates will be presented below EBIT before special items when deemed outside Vestas' core business activities.\u2002Accounting policiesAssociates are entities over which Vestas has significant in\ufb02uence, but not control. A joint venture is an arrangement in which Vestas has joint control. Joint ventures and associates are accounted for using the equity method. Under the equity method, interests in joint ventures and associates are initially recognised at cost and adjusted thereafter to recognise Vestas\u2019 share of the post-acquisition profits or losses and movements in other comprehensive income. When Vestas\u2019 share of losses in a joint venture and associate equals or exceeds its interests in the joint ventures and associates (which includes any long-term interests that, in substance, form part of Vestas\u2019 net investment in the joint ventures and associates), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures and associates.Timing in revenue recognition may be different between Vestas and joint ventures and associates where Vestas recognises revenue when control of the wind turbines have been transferred to joint ventures and associates but joint ventures and associates do not recognise revenue until they have transferred the risk of the same wind turbines to the end customer. Such timing difference results in part of Vestas\u2019 profit from wind turbines delivered being eliminated in the net result from joint ventures and associates, until joint ventures and associates have recognised their revenue. This timing difference may vary between quarters and year end but will even out over time.Unrealised gains on transactions between Vestas and its joint ventures and associates are eliminated to the extent of Vestas\u2019 interest in the joint ventures and associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures and associates have been changed where necessary to ensure consistency with the policies adopted by Vestas.3.5\u2002Investments in joint ventures and associates \u2013 continuedSummarised financial information for joint ventures and associatesSet out below is the summarised financial information for Copenhagen Infrastructure Partners P/S and Blakliden F\u00e4bodberget Holding AB as of 31 December 2022, which are accounted for using the equity method. The information below re\ufb02ects the amounts presented in the financial statements of the entities (and not Vestas\u2019 share of those amounts) material to Vestas in 2022. The investment in Copenhagen Infrastructure Partners P/S include investment in companies related to and managed by Copenhagen Infra-structure Partners P/S and for this reason the financial amounts presented below include financial information from several consolidated and none consolidated entities related to Copenhagen Infrastructure Partners P/S.Other joint ventures and associates that are individually and aggregated immaterial to Vestas, have not been included in the summarised financial information.Associate, 25 percentAssociate, 40 percentCopenhagen Infrastructure Partners P/SBlakliden F\u00e4bodberget Holding ABSummarised balance sheetmEUR2022 2021 2022 2021CurrentCash and cash equivalents18 26 19 8Other current assets (excluding cash) 26 19 21 10Total current assets 44 45 40 18Other current liabilitiesTotal current liabilities(10) (14) (89) (91)Non-currentTotal non-current assets555 296 348 228Total non-current liabilities (16) (3) (289) (183)Net assets 573 324 10 (28)Associate, 25 percent Associate, 40 percentSummarised statement of Copenhagen Infrastructure Partners P/SBlakliden F\u00e4bodberget Holding ABcomprehensive incomemEUR2022 2021 2022 2021Revenue141 114 - -Depreciation and amortisation (4) (2) - -Interest cost 0 (1) (9) (3)Profit before tax 294 138 (13) (3)Post-tax profit from continuing operations294 138 (13) (3)Other comprehensive income - - 31 9Total comprehensive income 294 138 18 6Associate, 25 percentAssociate, 40 percentReconciliation of summarised Copenhagen Infrastructure Partners P/SBlakliden F\u00e4bodberget Holding ABfinancial informationmEUR2022 2021 2022 2021Opening net assets as at 1 January324 - (28) (34)Acquired net assets - 229 - -Distributions (45) (43) - -Contributions - - 20 -Profit/(loss) for the year 294 138 (13) (3)Other comprehensive income - - 31 9Closing net assets 573 324 10 (28)Interest in joint venture and associate (ownership of net assets)143 81 4 (11)Re-assessment of milestone payments, PPA adjustments, and other adjustments397 439 47 54Carrying value 540 520 51 43mEUR 2022 2021Joint venturesRevenue for the period139 402Proceeds from investments in JV\u2019s 2 50Capital contribution 21 38Receivables as at 31 December 4 52Prepayments received balance as at 31 December 14 11Other receivables balance as at 31 December 1 6AssociatesRevenue for the period15 106Reversal of revenue (64) -Proceeds from investments in associates 11 10Capital contributions 9 3Payable capital contribution as at 31 December 36 47Receivables as at 31 December - 23Other liabilities as at 31 December 85 -Prepayments paid balance as at 31 December - 10Other assets balance at 31 December - 28Related parties are considered to be the Board of Directors (Board) and the Executive Management of Vestas Wind Systems A/S together with their immediate families. Related parties also include entities which are controlled or jointly controlled by the aforementioned individuals.Transactions with the Board and Executive ManagementTransactions with the Executive Management only consist of normal management remuneration, refer to note 1.4.With the exception of the board members elected by the employees, no members of the Board have been employed by Vestas in 2022. As disclosed in note 2.6, as at 31 December 2022, other liabilities include payments received relating to assets sold to associates that do not meet the criteria for derecognition at the balance sheet date. As disclosed in note 1.2, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m has been reversed in 2022 relating to a share purchase agreement entered into with an associate in 2021 for the sale of an onshore wind power plant under development. Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%)Parent companySales and service unitsVestas Wind Technology India Pvt Limited, India 100Vestas Southern Africa Pty. Ltd., South Africa 80Vestas Wind Systems A/S, DenmarkVestas Americas A/S, Denmark100Vestas Japan Co. Ltd., Japan 100Vestas Ukraine LLC, Ukraine 100Vestas America Holding Inc., USA 100Vestas Wind Technology Pakistan (Private) Limited, Vestas Central Europe d.o.o. Beograd, Serbia 100Pakistan100Vestas - American Wind Technology Inc., USA 100Vestas Belgium NV, Belgium 100Vestas Wind Technology (Thailand) Ltd., Thailand 100Production unitsVestas - Canadian Wind Technology Inc., USA 100Vestas Georgia LLC, Georgia 100Vestas Wind Technology Vietnam LLC, Vietnam 100Vestas Nacelles America, Inc., USA100Vestas - Portland HQ LLC, USA 100Availon Holding GmbH, Germany 100Vestas Mongolia LLC, Mongolia 1002Vestas Blades America, Inc., USA 100Vestas Upwind Solutions Inc., USA 100Availon GmbH, Germany100Vestas Central Europe A/S, Denmark 100Vestas Manufacturing A/S, Denmark 100Availon Inc., USA 100Vestas Mediterranean A/S, Denmark 1002Vestas Deutschland GmbH, Germany1002Vestas Blades Deutschland GmbH, Germany100Steelhead Americas, LLC, USA 100Vestas Italia S.r.l., Italy 1002Vestas Services GmbH, Germany100WPT Nord GmbH, Germany 100Steelhead Wind 1 LLC, USA 100Vestas Hellas Wind Technology S.A., Greece 100Vestas Benelux B.V., The Netherlands 100Vestas Blades Italia S.r.l., Italy 100Steelhead Wind 2 LLC, USA 100Vestas E\u00f3lica S.A., Spain 100Vestas \u00d6sterreich GmbH, Austria 100Vestas Wind Technology (China) Co. Ltd., China 100Steelhead Wind 2a LLC, USA 100Vestas France SAS, France 100Vestas Czech Republic s.r.o., Czech Republic 100Vestas Manufacturing Spain S.L.U., Spain 100Vestas Asia Pacific A/S , Denmark 100Vestas WTG Mexico S.A. de C.V., Mexico 100Vestas Hungary Kft., Hungary 100Vestas Control Systems Spain S.L.U., Spain 100Vestas Asia Pacific Wind Technology Pte. Ltd., Singapore 100Vestas Mexicana del Viento S.A. de C.V., Mexico 100Vestas Bulgaria EOOD, Bulgaria 1002Vestas Nacelles Deutschland GmbH, Germany100Vestas - Australian Wind Technology Pty. Ltd., Australia 100Vestas do Brasil Energia Eolica Ltda., Brazil 100Vestas CEU Romania S.R.L, Romania 1003Vestas Manufacturing RUS OOO, Russia100Vestas Korea Wind Technology Ltd., South Korea 100Vestas Argentina S.A., Argentina 100Vestas Central Europe-Zagreb d.o.o, Croatia 100Vestas New Zealand Wind Technology Ltd., Vestas Chile Turbinas E\u00f3lica Limitada Santiago, Chile 100New Zealand100Vestas Slovakia spol S.r.o., Slovakia 100Vestas R\u00fczgar Enerjisi Sistemleri 3Vestas Taiwan Ltd., Taiwan 100Vestas RUS OOO, Russia100Sanayi Ve Ticaret Ltd. Sirketi, Turkey100Vestas Wind Technology (Beijing) Co. Ltd., China 100Vestas Eastern Africa Ltd., Kenya 100Vestas Turbinas E\u00f3licas de Uruguay S.A., Uruguay 1001 Companies of immaterial significance have been left out of the overview.2 Vestas Deutschland GmbH, Vestas Blades Deutschland GmbH, Vestas Nacelles Deutschland GmbH, Vestas Services GmbH and Availon GmbH, wholly owned subsidiaries of Vestas Wind Systems A/S, claiming not to prepare notes and management report to its financial statements pursuant to the relief provision of section 264 Abs. 3 HGB.3 The companies are in a liquidation process.Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%)Vestas MED (Cyprus) Ltd., Cyprus 100UpWind Solutions Canada, Ltd., Canada 100Portugal Unipessoal Lda. Portugal 100Vestas Shared Service A/S, Denmark 100Vestas Nicaragua SA, Nicaragua 100Vestas Kazakhstan LLP, Kazakhstan 100Vestas Offshore Wind Poland Z.O.O, Poland 100Vestas Service Delivery Center - Szczecin sp Z.o.o., Poland100Vestas CV Limitada, The Republic of Cape Verde 100Vestas Overseas Panam\u00e1 S.A., Panama 100Vestas Offshore Wind Belgium NV, Belgium 100Vestas Cantabria Prototype SL, Spain 100Vestas Wind Systems Dominican Republic S.R.L., Vestas Portugal, LDA, Portugal 100Vestas Offshore Wind US inc., USA 100Dominican Republic100Vestas Senegal S.A.R.L.U, Senegal 100Vestas Offshore Wind Taiwan Ltd., Taiwan 100Vestas Peru S.A.C., Peru 100Vestas Wind Lanka (PVT) Ltd., Sri Lanka 100Vestas Offshore Wind Japan Ltd, Japan 100Vestas Middle East S.L.U., Spain 100Joint ventures Vestas Kompozit Kanat Sanayi Ve Ticaret Anonim Covento A/S, Denmark 100Vestas Costa Rica S.A., Costa Rica 100\u015eirketi \u015eirketi, Turkey100Emerging Markets Power (Holdings) Limited, Ireland50Vestas Moroc SARLAV, Casablanca, Morocco 100UpWind Holdings, LLC, USA 100Airpower Windfarms Private Ltd., India 50Vestas Jamaica Wind Technology Ltd., Jamaica 100Utopus Insights, Inc., USA 100AQN SRW2 Holdings, LLC, USA 21Other subsidiariesVestas Guatemala, Guatemala 100NEG Micon UK Ltd., United Kingdom 100Helena Wind Holdco, LLC, USA 20Vestas Wind Systems (China) Co. Ltd., China100Availon LDA Portugal, Portugal 100NEG Micon Australia Pty. Ltd., Australia 100Panorama Wind, LLC, USA 20Vestas Switzerland AG, Switzerland 100Availon Iberia S.L., Spain 100Vestas Honduras, S.A. De C.V., Honduras 100BSW US Holdings, LLC, USA 20Vestas Services Philippines Inc., Philippines 100Vestas Northern Europe A/S, Denmark 100Vestas Colombia S.A.S, Colombia 100Vestas India Holding A/S, Denmark 100Vestas - Celtic Wind Technology Ltd., United Kingdom 100Vestas Saudi Arabia Limited Co., Saudi Arabia 100Wind Power Invest A/S, Denmark 100Vestas Northern Europe AB, Sweden 100Vestas El Salvador, S.A. De C.V., El Salvador 100AssociatesVestas Technology (UK) Limited, United Kingdom 100Vestas Poland Sp.z.o.o., Poland 100Roaring Fork Wind, LLC, USA 100Blakliden F\u00e4bodberget Holding AB, Sweden40Vestas Technology R&D (Beijing) Co. Ltd., China 100Vestas Ireland Ltd., Ireland 100Vestas Offshore Wind Sweden AB, Sweden 100SoWiTec Group GmbH, Germany 25Vestas Technology R&D Chennai Pte. Ltd., India 100Vestas Norway AS, Norway 100Vestas Offshore Wind UK Ltd., United Kingdom 100Copenhagen Infrastructure Partners P/S, Denmark 25Vestas Development A/S, Denmark 100Vestas Finland Oy, Finland 100Vestas Offshore WInd Blades UK Ltd., United Kingdom 100Vestas Shared Service (Spain), S.L.U., Spain 100Vestas Mediterranean A/S Sucursal, Bolivia 100Vestas Offshore Wind France SAS, France 1001 Companies of immaterial significance have been left out of the overview.2 Vestas Deutschland GmbH, Vestas Blades Deutschland GmbH, Vestas Nacelles Deutschland GmbH, Vestas Services GmbH and Availon GmbH, wholly owned subsidiaries of Vestas Wind Systems A/S, claiming not to prepare notes and management report to its financial statements pursuant to the relief provision of section 264 Abs. 3 HGB.", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-146-3": { "value": "3.5\u2002Investments in joint ventures and associatesAmounts in the balance sheetmEUR 2022 2021Investments in joint ventures42 25Investments in associates 604 584Carrying amount as at 31 December 646 609Amounts in the income statementmEUR 2022 2021Joint ventures(7) 18Associates 17 18Income/(loss) from investments in joint ventures and associates 10 36Joint ventures AssociatesInvestments in joint ventures and associatesmEUR2022 2021 2022 2021Cost as at 1 January91 53 585 52Additions 21 36 4 533Disposals - - - (1)Effect of exchange rate adjustment 10 2 (1) 1Cost as at 31 December 122 91 588 585Value adjustments as at 1 January (66) (34) (1) (14)Proceeds from sale of projects - - - -Dividends received (2) (50) (3) (10)Impairment losses - - (8) -Share of profit/(loss) (7) 18 17 18Share of other comprehensive income - - 14 3Effect of exchange rate adjustment (5) - (3) 2Value adjustments as at 31 December (80) (66) 16 (1)Carrying amount as at 31 December 42 25 604 584Material investmentsIn 2022, Vestas made no material investments in associates or joint ventures. In February 2021, Vestas acquired a 25 percent stake in Copenhagen Infrastructure Partners P/S\u2019 parent companies. The total consideration of EUR 500m included a EUR 180m upfront payment and a EUR 320m contingent consideration related to performance in the period 2023 to 2029. Refer to note 4.3 for further information on the fair value measurement of the contingent consideration. The associated companies listed above are material to Vestas and have share capital consisting solely of ordinary shares, which are held directly by Vestas.Income/(loss) from investments in joint ventures and associates presented in and after EBIT in 2023Vestas\u2019 Development business continues to grow and re\ufb02ects an increasingly financial and strategic importance. In 2023, we expect a significant increase in income from investments in joint ventures and associates related to development activ i ties. As a consequence, income/(loss) from investments in joint ventures and associates which are deemed to pertain to our core business activities will be included in EBIT before special items. The profit/(loss) from investments in joint ventures and associates will be presented below EBIT before special items when deemed outside Vestas' core business activities.\u2002Accounting policiesAssociates are entities over which Vestas has significant in\ufb02uence, but not control. A joint venture is an arrangement in which Vestas has joint control. Joint ventures and associates are accounted for using the equity method. Under the equity method, interests in joint ventures and associates are initially recognised at cost and adjusted thereafter to recognise Vestas\u2019 share of the post-acquisition profits or losses and movements in other comprehensive income. When Vestas\u2019 share of losses in a joint venture and associate equals or exceeds its interests in the joint ventures and associates (which includes any long-term interests that, in substance, form part of Vestas\u2019 net investment in the joint ventures and associates), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures and associates.Timing in revenue recognition may be different between Vestas and joint ventures and associates where Vestas recognises revenue when control of the wind turbines have been transferred to joint ventures and associates but joint ventures and associates do not recognise revenue until they have transferred the risk of the same wind turbines to the end customer. Such timing difference results in part of Vestas\u2019 profit from wind turbines delivered being eliminated in the net result from joint ventures and associates, until joint ventures and associates have recognised their revenue. This timing difference may vary between quarters and year end but will even out over time.Unrealised gains on transactions between Vestas and its joint ventures and associates are eliminated to the extent of Vestas\u2019 interest in the joint ventures and associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures and associates have been changed where necessary to ensure consistency with the policies adopted by Vestas.3.5\u2002Investments in joint ventures and associates \u2013 continuedSummarised financial information for joint ventures and associatesSet out below is the summarised financial information for Copenhagen Infrastructure Partners P/S and Blakliden F\u00e4bodberget Holding AB as of 31 December 2022, which are accounted for using the equity method. The information below re\ufb02ects the amounts presented in the financial statements of the entities (and not Vestas\u2019 share of those amounts) material to Vestas in 2022. The investment in Copenhagen Infrastructure Partners P/S include investment in companies related to and managed by Copenhagen Infra-structure Partners P/S and for this reason the financial amounts presented below include financial information from several consolidated and none consolidated entities related to Copenhagen Infrastructure Partners P/S.Other joint ventures and associates that are individually and aggregated immaterial to Vestas, have not been included in the summarised financial information.mEUR 2022 2021Joint venturesRevenue for the period139 402Proceeds from investments in JV\u2019s 2 50Capital contribution 21 38Receivables as at 31 December 4 52Prepayments received balance as at 31 December 14 11Other receivables balance as at 31 December 1 6AssociatesRevenue for the period15 106Reversal of revenue (64) -Proceeds from investments in associates 11 10Capital contributions 9 3Payable capital contribution as at 31 December 36 47Receivables as at 31 December - 23Other liabilities as at 31 December 85 -Prepayments paid balance as at 31 December - 10Other assets balance at 31 December - 28Related parties are considered to be the Board of Directors (Board) and the Executive Management of Vestas Wind Systems A/S together with their immediate families. Related parties also include entities which are controlled or jointly controlled by the aforementioned individuals.Transactions with the Board and Executive ManagementTransactions with the Executive Management only consist of normal management remuneration, refer to note 1.4.With the exception of the board members elected by the employees, no members of the Board have been employed by Vestas in 2022. As disclosed in note 2.6, as at 31 December 2022, other liabilities include payments received relating to assets sold to associates that do not meet the criteria for derecognition at the balance sheet date. As disclosed in note 1.2, revenue in the amount of EUR 64m and related production costs in the amount of EUR 19m has been reversed in 2022 relating to a share purchase agreement entered into with an associate in 2021 for the sale of an onshore wind power plant under development. Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%)Parent companySales and service unitsVestas Wind Technology India Pvt Limited, India 100Vestas Southern Africa Pty. Ltd., South Africa 80Vestas Wind Systems A/S, DenmarkVestas Americas A/S, Denmark100Vestas Japan Co. Ltd., Japan 100Vestas Ukraine LLC, Ukraine 100Vestas America Holding Inc., USA 100Vestas Wind Technology Pakistan (Private) Limited, Vestas Central Europe d.o.o. Beograd, Serbia 100Pakistan100Vestas - American Wind Technology Inc., USA 100Vestas Belgium NV, Belgium 100Vestas Wind Technology (Thailand) Ltd., Thailand 100Production unitsVestas - Canadian Wind Technology Inc., USA 100Vestas Georgia LLC, Georgia 100Vestas Wind Technology Vietnam LLC, Vietnam 100Vestas Nacelles America, Inc., USA100Vestas - Portland HQ LLC, USA 100Availon Holding GmbH, Germany 100Vestas Mongolia LLC, Mongolia 1002Vestas Blades America, Inc., USA 100Vestas Upwind Solutions Inc., USA 100Availon GmbH, Germany100Vestas Central Europe A/S, Denmark 100Vestas Manufacturing A/S, Denmark 100Availon Inc., USA 100Vestas Mediterranean A/S, Denmark 1002Vestas Deutschland GmbH, Germany1002Vestas Blades Deutschland GmbH, Germany100Steelhead Americas, LLC, USA 100Vestas Italia S.r.l., Italy 1002Vestas Services GmbH, Germany100WPT Nord GmbH, Germany 100Steelhead Wind 1 LLC, USA 100Vestas Hellas Wind Technology S.A., Greece 100Vestas Benelux B.V., The Netherlands 100Vestas Blades Italia S.r.l., Italy 100Steelhead Wind 2 LLC, USA 100Vestas E\u00f3lica S.A., Spain 100Vestas \u00d6sterreich GmbH, Austria 100Vestas Wind Technology (China) Co. Ltd., China 100Steelhead Wind 2a LLC, USA 100Vestas France SAS, France 100Vestas Czech Republic s.r.o., Czech Republic 100Vestas Manufacturing Spain S.L.U., Spain 100Vestas Asia Pacific A/S , Denmark 100Vestas WTG Mexico S.A. de C.V., Mexico 100Vestas Hungary Kft., Hungary 100Vestas Control Systems Spain S.L.U., Spain 100Vestas Asia Pacific Wind Technology Pte. Ltd., Singapore 100Vestas Mexicana del Viento S.A. de C.V., Mexico 100Vestas Bulgaria EOOD, Bulgaria 1002Vestas Nacelles Deutschland GmbH, Germany100Vestas - Australian Wind Technology Pty. Ltd., Australia 100Vestas do Brasil Energia Eolica Ltda., Brazil 100Vestas CEU Romania S.R.L, Romania 1003Vestas Manufacturing RUS OOO, Russia100Vestas Korea Wind Technology Ltd., South Korea 100Vestas Argentina S.A., Argentina 100Vestas Central Europe-Zagreb d.o.o, Croatia 100Vestas New Zealand Wind Technology Ltd., Vestas Chile Turbinas E\u00f3lica Limitada Santiago, Chile 100New Zealand100Vestas Slovakia spol S.r.o., Slovakia 100Vestas R\u00fczgar Enerjisi Sistemleri 3Vestas Taiwan Ltd., Taiwan 100Vestas RUS OOO, Russia100Sanayi Ve Ticaret Ltd. Sirketi, Turkey100Vestas Wind Technology (Beijing) Co. Ltd., China 100Vestas Eastern Africa Ltd., Kenya 100Vestas Turbinas E\u00f3licas de Uruguay S.A., Uruguay 1001 Companies of immaterial significance have been left out of the overview.2 Vestas Deutschland GmbH, Vestas Blades Deutschland GmbH, Vestas Nacelles Deutschland GmbH, Vestas Services GmbH and Availon GmbH, wholly owned subsidiaries of Vestas Wind Systems A/S, claiming not to prepare notes and management report to its financial statements pursuant to the relief provision of section 264 Abs. 3 HGB.3 The companies are in a liquidation process.Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%)Vestas MED (Cyprus) Ltd., Cyprus 100UpWind Solutions Canada, Ltd., Canada 100Portugal Unipessoal Lda. Portugal 100Vestas Shared Service A/S, Denmark 100Vestas Nicaragua SA, Nicaragua 100Vestas Kazakhstan LLP, Kazakhstan 100Vestas Offshore Wind Poland Z.O.O, Poland 100Vestas Service Delivery Center - Szczecin sp Z.o.o., Poland100Vestas CV Limitada, The Republic of Cape Verde 100Vestas Overseas Panam\u00e1 S.A., Panama 100Vestas Offshore Wind Belgium NV, Belgium 100Vestas Cantabria Prototype SL, Spain 100Vestas Wind Systems Dominican Republic S.R.L., Vestas Portugal, LDA, Portugal 100Vestas Offshore Wind US inc., USA 100Dominican Republic100Vestas Senegal S.A.R.L.U, Senegal 100Vestas Offshore Wind Taiwan Ltd., Taiwan 100Vestas Peru S.A.C., Peru 100Vestas Wind Lanka (PVT) Ltd., Sri Lanka 100Vestas Offshore Wind Japan Ltd, Japan 100Vestas Middle East S.L.U., Spain 100Joint ventures Vestas Kompozit Kanat Sanayi Ve Ticaret Anonim Covento A/S, Denmark 100Vestas Costa Rica S.A., Costa Rica 100\u015eirketi \u015eirketi, Turkey100Emerging Markets Power (Holdings) Limited, Ireland50Vestas Moroc SARLAV, Casablanca, Morocco 100UpWind Holdings, LLC, USA 100Airpower Windfarms Private Ltd., India 50Vestas Jamaica Wind Technology Ltd., Jamaica 100Utopus Insights, Inc., USA 100AQN SRW2 Holdings, LLC, USA 21Other subsidiariesVestas Guatemala, Guatemala 100NEG Micon UK Ltd., United Kingdom 100Helena Wind Holdco, LLC, USA 20Vestas Wind Systems (China) Co. Ltd., China100Availon LDA Portugal, Portugal 100NEG Micon Australia Pty. Ltd., Australia 100Panorama Wind, LLC, USA 20Vestas Switzerland AG, Switzerland 100Availon Iberia S.L., Spain 100Vestas Honduras, S.A. De C.V., Honduras 100BSW US Holdings, LLC, USA 20Vestas Services Philippines Inc., Philippines 100Vestas Northern Europe A/S, Denmark 100Vestas Colombia S.A.S, Colombia 100Vestas India Holding A/S, Denmark 100Vestas - Celtic Wind Technology Ltd., United Kingdom 100Vestas Saudi Arabia Limited Co., Saudi Arabia 100Wind Power Invest A/S, Denmark 100Vestas Northern Europe AB, Sweden 100Vestas El Salvador, S.A. De C.V., El Salvador 100AssociatesVestas Technology (UK) Limited, United Kingdom 100Vestas Poland Sp.z.o.o., Poland 100Roaring Fork Wind, LLC, USA 100Blakliden F\u00e4bodberget Holding AB, Sweden40Vestas Technology R&D (Beijing) Co. Ltd., China 100Vestas Ireland Ltd., Ireland 100Vestas Offshore Wind Sweden AB, Sweden 100SoWiTec Group GmbH, Germany 25Vestas Technology R&D Chennai Pte. Ltd., India 100Vestas Norway AS, Norway 100Vestas Offshore Wind UK Ltd., United Kingdom 100Copenhagen Infrastructure Partners P/S, Denmark 25Vestas Development A/S, Denmark 100Vestas Finland Oy, Finland 100Vestas Offshore WInd Blades UK Ltd., United Kingdom 100Vestas Shared Service (Spain), S.L.U., Spain 100Vestas Mediterranean A/S Sucursal, Bolivia 100Vestas Offshore Wind France SAS, France 1001 Companies of immaterial significance have been left out of the overview.2 Vestas Deutschland GmbH, Vestas Blades Deutschland GmbH, Vestas Nacelles Deutschland GmbH, Vestas Services GmbH and Availon GmbH, wholly owned subsidiaries of Vestas Wind Systems A/S, claiming not to prepare notes and management report to its financial statements pursuant to the relief provision of section 264 Abs. 3 HGB.", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-146-4": { "value": "3.5\u2002Investments in joint ventures and associatesAmounts in the balance sheetmEUR 2022 2021Investments in joint ventures42 25Investments in associates 604 584Carrying amount as at 31 December 646 609Amounts in the income statementmEUR 2022 2021Joint ventures(7) 18Associates 17 18Income/(loss) from investments in joint ventures and associates 10 36Joint ventures AssociatesInvestments in joint ventures and associatesmEUR2022 2021 2022 2021Cost as at 1 January91 53 585 52Additions 21 36 4 533Disposals - - - (1)Effect of exchange rate adjustment 10 2 (1) 1Cost as at 31 December 122 91 588 585Value adjustments as at 1 January (66) (34) (1) (14)Proceeds from sale of projects - - - -Dividends received (2) (50) (3) (10)Impairment losses - - (8) -Share of profit/(loss) (7) 18 17 18Share of other comprehensive income - - 14 3Effect of exchange rate adjustment (5) - (3) 2Value adjustments as at 31 December (80) (66) 16 (1)Carrying amount as at 31 December 42 25 604 584Place of % of Measurement Investment Name of entitybusinessownershipmethodtypeCopenhagen Infrastructure Partners Holding P/S Copenhagen, Denmark 25 Equity AssociateBlakilden F\u00e4bodberget Holding AB Solna, Sweden 40 Equity AssociateMaterial investmentsIn 2022, Vestas made no material investments in associates or joint ventures. In February 2021, Vestas acquired a 25 percent stake in Copenhagen Infrastructure Partners P/S\u2019 parent companies. The total consideration of EUR 500m included a EUR 180m upfront payment and a EUR 320m contingent consideration related to performance in the period 2023 to 2029. Refer to note 4.3 for further information on the fair value measurement of the contingent consideration. The associated companies listed above are material to Vestas and have share capital consisting solely of ordinary shares, which are held directly by Vestas.Income/(loss) from investments in joint ventures and associates presented in and after EBIT in 2023Vestas\u2019 Development business continues to grow and re\ufb02ects an increasingly financial and strategic importance. In 2023, we expect a significant increase in income from investments in joint ventures and associates related to development activ i ties. As a consequence, income/(loss) from investments in joint ventures and associates which are deemed to pertain to our core business activities will be included in EBIT before special items. The profit/(loss) from investments in joint ventures and associates will be presented below EBIT before special items when deemed outside Vestas' core business activities.\u2002Accounting policiesAssociates are entities over which Vestas has significant in\ufb02uence, but not control. A joint venture is an arrangement in which Vestas has joint control. Joint ventures and associates are accounted for using the equity method. Under the equity method, interests in joint ventures and associates are initially recognised at cost and adjusted thereafter to recognise Vestas\u2019 share of the post-acquisition profits or losses and movements in other comprehensive income. When Vestas\u2019 share of losses in a joint venture and associate equals or exceeds its interests in the joint ventures and associates (which includes any long-term interests that, in substance, form part of Vestas\u2019 net investment in the joint ventures and associates), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures and associates.Timing in revenue recognition may be different between Vestas and joint ventures and associates where Vestas recognises revenue when control of the wind turbines have been transferred to joint ventures and associates but joint ventures and associates do not recognise revenue until they have transferred the risk of the same wind turbines to the end customer. Such timing difference results in part of Vestas\u2019 profit from wind turbines delivered being eliminated in the net result from joint ventures and associates, until joint ventures and associates have recognised their revenue. This timing difference may vary between quarters and year end but will even out over time.Unrealised gains on transactions between Vestas and its joint ventures and associates are eliminated to the extent of Vestas\u2019 interest in the joint ventures and associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures and associates have been changed where necessary to ensure consistency with the policies adopted by Vestas.3.5\u2002Investments in joint ventures and associates \u2013 continuedSummarised financial information for joint ventures and associatesSet out below is the summarised financial information for Copenhagen Infrastructure Partners P/S and Blakliden F\u00e4bodberget Holding AB as of 31 December 2022, which are accounted for using the equity method. The information below re\ufb02ects the amounts presented in the financial statements of the entities (and not Vestas\u2019 share of those amounts) material to Vestas in 2022. The investment in Copenhagen Infrastructure Partners P/S include investment in companies related to and managed by Copenhagen Infra-structure Partners P/S and for this reason the financial amounts presented below include financial information from several consolidated and none consolidated entities related to Copenhagen Infrastructure Partners P/S.Other joint ventures and associates that are individually and aggregated immaterial to Vestas, have not been included in the summarised financial information.Associate, 25 percentAssociate, 40 percentCopenhagen Infrastructure Partners P/SBlakliden F\u00e4bodberget Holding ABSummarised balance sheetmEUR2022 2021 2022 2021CurrentCash and cash equivalents18 26 19 8Other current assets (excluding cash) 26 19 21 10Total current assets 44 45 40 18Other current liabilitiesTotal current liabilities(10) (14) (89) (91)Non-currentTotal non-current assets555 296 348 228Total non-current liabilities (16) (3) (289) (183)Net assets 573 324 10 (28)Associate, 25 percent Associate, 40 percentSummarised statement of Copenhagen Infrastructure Partners P/SBlakliden F\u00e4bodberget Holding ABcomprehensive incomemEUR2022 2021 2022 2021Revenue141 114 - -Depreciation and amortisation (4) (2) - -Interest cost 0 (1) (9) (3)Profit before tax 294 138 (13) (3)Post-tax profit from continuing operations294 138 (13) (3)Other comprehensive income - - 31 9Total comprehensive income 294 138 18 6Associate, 25 percentAssociate, 40 percentReconciliation of summarised Copenhagen Infrastructure Partners P/SBlakliden F\u00e4bodberget Holding ABfinancial informationmEUR2022 2021 2022 2021Opening net assets as at 1 January324 - (28) (34)Acquired net assets - 229 - -Distributions (45) (43) - -Contributions - - 20 -Profit/(loss) for the year 294 138 (13) (3)Other comprehensive income - - 31 9Closing net assets 573 324 10 (28)Interest in joint venture and associate (ownership of net assets)143 81 4 (11)Re-assessment of milestone payments, PPA adjustments, and other adjustments397 439 47 54Carrying value 540 520 51 43", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-152-6": { "value": "\u2002Accounting policiesAssociates are entities over which Vestas has significant in\ufb02uence, but not control. A joint venture is an arrangement in which Vestas has joint control. Joint ventures and associates are accounted for using the equity method. Under the equity method, interests in joint ventures and associates are initially recognised at cost and adjusted thereafter to recognise Vestas\u2019 share of the post-acquisition profits or losses and movements in other comprehensive income. When Vestas\u2019 share of losses in a joint venture and associate equals or exceeds its interests in the joint ventures and associates (which includes any long-term interests that, in substance, form part of Vestas\u2019 net investment in the joint ventures and associates), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures and associates.Timing in revenue recognition may be different between Vestas and joint ventures and associates where Vestas recognises revenue when control of the wind turbines have been transferred to joint ventures and associates but joint ventures and associates do not recognise revenue until they have transferred the risk of the same wind turbines to the end customer. Such timing difference results in part of Vestas\u2019 profit from wind turbines delivered being eliminated in the net result from joint ventures and associates, until joint ventures and associates have recognised their revenue. This timing difference may vary between quarters and year end but will even out over time.Unrealised gains on transactions between Vestas and its joint ventures and associates are eliminated to the extent of Vestas\u2019 interest in the joint ventures and associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures and associates have been changed where necessary to ensure consistency with the policies adopted by Vestas.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-152-7": { "value": "\u2002Accounting policiesAssociates are entities over which Vestas has significant in\ufb02uence, but not control. A joint venture is an arrangement in which Vestas has joint control. Joint ventures and associates are accounted for using the equity method. Under the equity method, interests in joint ventures and associates are initially recognised at cost and adjusted thereafter to recognise Vestas\u2019 share of the post-acquisition profits or losses and movements in other comprehensive income. When Vestas\u2019 share of losses in a joint venture and associate equals or exceeds its interests in the joint ventures and associates (which includes any long-term interests that, in substance, form part of Vestas\u2019 net investment in the joint ventures and associates), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures and associates.Timing in revenue recognition may be different between Vestas and joint ventures and associates where Vestas recognises revenue when control of the wind turbines have been transferred to joint ventures and associates but joint ventures and associates do not recognise revenue until they have transferred the risk of the same wind turbines to the end customer. Such timing difference results in part of Vestas\u2019 profit from wind turbines delivered being eliminated in the net result from joint ventures and associates, until joint ventures and associates have recognised their revenue. This timing difference may vary between quarters and year end but will even out over time.Unrealised gains on transactions between Vestas and its joint ventures and associates are eliminated to the extent of Vestas\u2019 interest in the joint ventures and associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures and associates have been changed where necessary to ensure consistency with the policies adopted by Vestas.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-152-8": { "value": "\u2002Accounting policiesAssociates are entities over which Vestas has significant in\ufb02uence, but not control. A joint venture is an arrangement in which Vestas has joint control. Joint ventures and associates are accounted for using the equity method. Under the equity method, interests in joint ventures and associates are initially recognised at cost and adjusted thereafter to recognise Vestas\u2019 share of the post-acquisition profits or losses and movements in other comprehensive income. When Vestas\u2019 share of losses in a joint venture and associate equals or exceeds its interests in the joint ventures and associates (which includes any long-term interests that, in substance, form part of Vestas\u2019 net investment in the joint ventures and associates), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures and associates.Timing in revenue recognition may be different between Vestas and joint ventures and associates where Vestas recognises revenue when control of the wind turbines have been transferred to joint ventures and associates but joint ventures and associates do not recognise revenue until they have transferred the risk of the same wind turbines to the end customer. Such timing difference results in part of Vestas\u2019 profit from wind turbines delivered being eliminated in the net result from joint ventures and associates, until joint ventures and associates have recognised their revenue. This timing difference may vary between quarters and year end but will even out over time.Unrealised gains on transactions between Vestas and its joint ventures and associates are eliminated to the extent of Vestas\u2019 interest in the joint ventures and associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures and associates have been changed where necessary to ensure consistency with the policies adopted by Vestas.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-160-2": { "value": "3.6\u2002Provisions2022 2021ProvisionsWarranty Other Total Warranty Other Total mEURprovisionprovisionsprovisionsprovisionprovisionsprovisionsCarrying amount as at 1 January1,197 135 1,332 1,189 87 1,276Impact on change in accounting policy - 22 22 - - -Adjusted carrying amount as at 1 January 1,197 157 1,354 1,189 87 1,276Exchange rate adj. - - - - - -Addition during the year 926 196 1,122 748 70 818Utilised during the year (633) (59) (692) (852) (4) (856)Addition from business combination - - - 55 - 55Reclassification - - - 57 - 57Reversed during the year - (11) (11) - (18) (18)Carrying amount as at 31 December 1,490 283 1,773 1,197 135 1,332Non-current 765 179 944 655 31 686Current 725 104 829 542 104 646Carrying amount as at 31 December 1,490 283 1,773 1,197 135 1,332Warranty provision charged to the income statementmEUR 2022 2021Gross warranty provision926 748Supplier reclaims (11) (69)Net warranty provision 915 679\u2190The table shows movements in warranty provision and other provisions. Other provisions mainly relate to provisions for legal claims and loss making contracts.Product risksVestas invests significant resources in improving products and increasing their reliability to mitigate major warranty provisions. This work comprises design, production, installation, and continuous maintenance. The goal of these initiatives is to reduce Vestas\u2019 warranty costs, to secure customer returns, and increase the competitiveness of the products.\u2002 Key accounting estimates Provisions for warrantiesThe product warranties, which in the great majority of cases includes component defects and functional errors are usually granted for a two-year period from legal transfer of the wind turbine. In certain cases, a warranty of up to five years is provided. For the customer, the specific warranty period and the specific warranty terms are part of the basis of the individual contract.Warranty provisions include only standard warranty, whereas services purchased in addition to the standard warranty are included in the service contracts. In addition to the above, provisions are made for upgrades of wind turbines sold due to defects, etc. Such provisions will also include wind turbines sold in prior years, but where serial defects, etc. are identified later. Moreover, it should be emphasised that the complexity of some of the serial defects, etc. identified may lead to adjustments of previous estimates, upwards as well as downwards, in light of factual information about population size, costs of repair and the timing of such repairs.During 2022, net warranty provisions charged to the income statement amounted to EUR 915m (2021: EUR 679m), equivalent to 6.3 percent of revenue. The net amount consists of a gross warranty provision of EUR 926m less supplier claims of EUR 11m. The warranty provisions in 2022 included additional warranty provisions of EUR 124m due to increased repair costs caused by external cost in\ufb02ation, hereof EUR 93m related to offshore projects. Warranty consumption amounted to EUR 633m compared to EUR 852m in 2021.Management assesses the likely outcome of pending and future negotiations with sub-suppliers for compensation. Compensation from sub-suppliers may be recognised only when it is virtually certain that we will receive compensation from the sub-suppliers.\u2002Accounting policiesProvisions are recognised as a consequence of a past event when Vestas has a legal or constructive obligation and it is probable that there will be an out\ufb02ow of Vestas\u2019 financial resources to settle the obligation. Provisions are measured at management\u2019s best estimate of the costs required to settle the obligation. Discounting is applied where relevant.Vestas accrues for the estimated cost of the warranty upon recog-nition of the sale of the product. The costs are estimated based on actual historical costs incurred and on estimated future costs related to current sales, and are updated periodically. Actual warranty costs are charged against the provision for warranty.Restructuring costs are recognised as liabilities when a detailed, formal restructuring plan has been announced to those affected no later than the balance sheet date. A provision for loss-making contracts is made where the expected benefits to Vestas from the contract are lower than the unavoidable costs of meeting obligations under the contract. Loss making construction contracts in progress are, however, recognised in construction contracts in progress.Provision for legal disputes are recognised where a legal or constructive obligation has been incurred as a result of past events and it is possible that there will be an out\ufb02ow of resources that can be reliably estimated. In this case, Vestas arrives at an estimate on the basis of an evaluation of the most likely outcome. Disputes for which no reliable estimate can be made are disclosed as contingent liabilities, refer to note 6.4.", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-167-4": { "value": "\u2002Accounting policiesProvisions are recognised as a consequence of a past event when Vestas has a legal or constructive obligation and it is probable that there will be an out\ufb02ow of Vestas\u2019 financial resources to settle the obligation. Provisions are measured at management\u2019s best estimate of the costs required to settle the obligation. Discounting is applied where relevant.Vestas accrues for the estimated cost of the warranty upon recog-nition of the sale of the product. The costs are estimated based on actual historical costs incurred and on estimated future costs related to current sales, and are updated periodically. Actual warranty costs are charged against the provision for warranty.Restructuring costs are recognised as liabilities when a detailed, formal restructuring plan has been announced to those affected no later than the balance sheet date. A provision for loss-making contracts is made where the expected benefits to Vestas from the contract are lower than the unavoidable costs of meeting obligations under the contract. Loss making construction contracts in progress are, however, recognised in construction contracts in progress.Provision for legal disputes are recognised where a legal or constructive obligation has been incurred as a result of past events and it is possible that there will be an out\ufb02ow of resources that can be reliably estimated. In this case, Vestas arrives at an estimate on the basis of an evaluation of the most likely outcome. Disputes for which no reliable estimate can be made are disclosed as contingent liabilities, refer to note 6.4.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-171-3": { "value": "Capital structureThe Board and Executive Management regularly assess whether Vestas\u2019 capital structure is in the shareholders\u2019 best interest. The objective is to create the necessary \ufb02exibility and stability to implement strategic development work, while in the long-term achieving Vestas\u2019 financial ambitions and maintain our capital structure target of a net interest-bearing debt/ EBITDA ratio below 1x.", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-169-2": { "value": "4.1\u2002Financial risk managementVestas\u2019 policy for managing financial risks Financial risk management is an integrated part of Vestas\u2019 operating activities. Vestas is exposed to a number of financial risks through its international operations. Financial risks are monitored and managed centrally. The Treasury Policy outlines the overall objectives and policies for Vestas\u2019 financial risk management. The Treasury Policy is approved by the Board, and revised on a continuous basis to adapt to the changing financial risks and market situation. The Treasury Policy sets the limits for the various financial risks as well as Vestas\u2019 hedging policy. It is Vestas\u2019 policy only to use derivatives to hedge commercial exposures and not to enter into any speculative transactions.Capital structureThe Board and Executive Management regularly assess whether Vestas\u2019 capital structure is in the shareholders\u2019 best interest. The objective is to create the necessary \ufb02exibility and stability to implement strategic development work, while in the long-term achieving Vestas\u2019 financial ambitions and maintain our capital structure target of a net interest-bearing debt/ EBITDA ratio below 1x.Liquidity risks Vestas manages its liquidity risk in line with the Treasury Policy to ensure having sufficient financial resources to service its financial obligations. Financial resources are managed through a combination of cash and money market deposits, committed and uncommitted credit facilities, and highly rated marketable securities.In 2022, Vestas further strengthened its access to liquidity and long-term funding by establishing a EUR 3,000m EMTN programme. This programme is a versatile platform available for quick and \ufb02exible access to the corporate bond market from short maturities (1-yr) to very long maturities (15+-yr).Vestas\u2019 main credit facility, a EUR 2,000m committed revolving multi-currency credit facility with a group of leading banks is available for general corporate purposes, including guarantees issuance, carries a 6-year tenor with one one-year extension option. As at end of 2022, EUR 771m of this revolving credit facility was converted into ancillary bank guarantees issuance facilities leaving EUR 1,229m available for cash drawings. The revolving credit facility is subject to customary undertakings, a change of control clause resulting in repayment of the credit facility in the event of change in control and a financial covenant. The financial covenant has not been breached in 2022, and is not expected to be breached in 2023.Liquidity is managed and optimised centrally by using cash pools, in-house bank solutions, and ongoing diligent cash- and working capital management practices. As part of managing short term liquidity Vestas also has access to and make use of a number of uncommitted money market facilities (EUR 500m in total) granted by core relationship banks. The committed revolving credit facility combined with the uncommitted money market lines provide the necessary financial headroom for the Group. Further funding can be provided by the EMTN programme. On 15 March 2022, Vestas secured long-term funding by issuing two EUR 500m sustainability-linked bonds. The two bonds will mature in 2029 and 2034, respectively. The EMTN programme remaining capacity is EUR 2,000m. On July 17 2022, Vestas drew EUR 475m from a green loan facility granted by the European Investment Bank (EIB) to fund its research, development, and innovation (RDI) activities. The green loan facility carries a 10-year tenor.Financial risk How Vestas manages the riskLiquidity risk Availability of committed credit lines and borrowing facilitiesCredit risk Diversification of bank exposure, credit limits and guaranteesMarket risk, foreign exchange Currency forward contracts and currency swapsMarket risk, interest risk Fixed interest loansMarket risk, commodity price Fixed price agreements with suppliers and commodity contractsAvailable financial resourcesmEUR 2022 2021Liquidity positionFinancial investments95 216Cash and cash equivalents without disposal restrictions 2,352 2,394Cash and cash equivalents with disposal restrictions 26 26Cash and cash equivalents as at 31 December 2,378 2,420Credit facilitiesMain credit facility1,229 1,329Other credit facilities 80 80Total available financial resources 3,782 4,045\u2193The table shows Vestas\u2019 liquidity position and available credit facilities.\u2002Accounting policiesCash and cash equivalents included in Vestas\u2019 cash manage ment comprise cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.Cash and cash equivalents with disposal restrictions are included in day-to-day cash management and fulfills the criteria as cash and cash equivalents. Cash with disposal restrictions includes cash pledged to guarantee providers as security for guarantee obligations to obtain lower commission rates.4.1\u2002Financial risk management \u2013 continued2022 2021Contractual cash \ufb02owsCarrying amount Contractual cash \ufb02owsCarrying amount Maturity of financial assets and liabilitiesfinancial financial mEURinstrumentsinstruments0-1 year 1-2 years >2 years Total 0-1 year 1-2 years >2 years TotalTotal financial assets, non-current and current5,990 112 13 6,115 6,083 6,475 26 1 6,502 6,466Financial liabilities, non-current and currentLeasing liabilities142 104 371 617 493 144 110 354 608 545Other financial debts 175 26 1,658 1,859 1,613 571 0 0 571 571Total financial debts 317 130 2,029 2,476 2,106 715 110 354 1,179 1,116Foreign currency derivatives 305 37 6 348 348 254 119 4 377 377Commodity derivatives 14 2 - 16 16 9 - - 9 9Other liabilities 257 6 - 263 263 107 8 - 115 115Other liabilities and derivative financial instruments 576 45 6 627 627 370 127 4 501 501Trade payables 4,089 - - 4,089 4,089 4,286 - - 4,286 4,286Contingent consideration 115 32 181 328 321 3 115 213 331 320Financial guarantee contracts 46 - - 46 - 17 - - 17 -Total financial liabilities, non-current and current 5,143 207 2,216 7,566 7,143 5,391 352 571 6,314 6,2232022 2021Changes to financial liabilitiesLease Issued Credit Contingent Lease Issued Credit Contingent mEURliabilitiesbondsfacilitiesconsideration Totalliabilitiesbondsfacilitiesconsideration TotalBalances as at 1 January545 0 571 320 1,436 446 513 395 0 1,354Addition from business combination and investments in associates - - - - - - - - 320 320Loss of control of subsidiary - - - - - - - (26) - (26)Proceeds from borrowings - 990 766 - 1,756 - - 642 - 642Additional lease liabilities 102 - - - 102 230 - - - 230Payment of lease liabilities (147) - - - (147) (135) - - - (135)Disposal of right-of-use asset (1) - - - (1) (2) - - - (2)Payments of financial debt - - (713) - (713) - (513) (447) - (960)Unwinding of financial liabilities - 1 - 1 2 - - - - -Transfer to liabilities held for sale (4) - - - (4) - - - - -Exchange rate adjustments (2) - (2) - (4) 6 - 7 - 13Balances as at 31 December 493 991 622 321 2,427 545 0 571 320 1,4364.1\u2002Financial risk management \u2013 continuedCredit risks Credit risks are managed according to the Treasury Policy. Vestas is exposed to credit risks arising from cash and cash equivalents, including money market deposits and money market funds, investments in marketable securities, derivative financial instruments, and trade and other receivables. The Treasury Policy sets limits for the credit risk exposure. For financial institution counterparties, this is based on the counterparty\u2019s credit rating, for other counterparties, this is based on mitigating actions.As at 31 December 2022, Vestas considers the maximum credit risk related to financial institution counterparties to be EUR 2,473m (2021: EUR 3,136m), and the total credit risk is considered to be EUR 5,719m (2021: EUR 6,194m).Trade receivables and contract assetsTrade receivables are mainly with counterparties within the energy sector. The credit risk depends, among other things, on the development within this sector and the country in which the individual customer operates. Upon signing a contract for the delivery of wind turbines or wind power plants with a customer, a prepayment is received. The remaining consideration is usually invoiced and paid in instalments at different stages of the project. For service contracts, customers are usually invoiced in equal instalments over the duration of the service contract. Payment terms are typically one month from the invoice date. Contract assets are by nature not overdue. Vestas does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. Therefore, Vestas does not adjust any of the transaction prices for the time value of money.Trade receivables from customers are grouped based on loss patterns in assessing the expected credit losses. Contract assets are grouped with trade receivables as these relate to unbilled work in progress with same credit risk as trade receivables. The allowance for expected lifetime credit losses is determined using a provisional matrix based on past due dates, historical loss rates and current and forward-looking information, including geographical risk, the level of security obtained as well as individual assessment. The past due date analysis and expected credit loss allowance for trade receivables and contracts assets is set out in the following tables.As at 31 December 2022, Vestas\u2019 trade receivables and contract assets per geographical areas can be specified as follows: 59 percent in EMEA, 30 percent in America, and 11 percent in Asia Pacific (31 December 2021: 70 percent in EMEA, 18 percent in America and 12 percent in Asia Pacific). As at 31 December 2022, no single customer accounted for more than 10 percent of Vestas\u2019 total trade receivables (31 December 2021: 0). The commercial credit risk relating to the outstanding trade receivables balance as of 31 December 2022 was mitigated by EUR 535m (31 December 2021: EUR 552m) received as security, such as third party guarantees. Historically, Vestas has not incurred significant losses on trade receivables.Financial instruments and cash depositsGroup Treasury manages balances with financial institutions and the associated credit risk in accordance with Vestas\u2019 Treasury Policy assessing the individual counterparty\u2019s credit rating. 92 percent of Vestas\u2019 exposure towards financial institutions are with counterparties with a credit rating in the range of A to AAA. Vestas has entered into ISDA agreements with all financial institution counterparties used for trading derivative financial instruments under which Vestas has a right to set-off should certain credit events occur, which means that Vestas\u2019 actual credit risk is limited to the net assets per counterparty. Expected credit losses 2022 2021on trade receivables and contract assetsCarrying Expected Loss Carrying Expected Loss mEURamountloss rateallowanceamountloss rateallowanceNot overdue2,404 0.1% (2) 2,402 0.1% (2)Overdue 0-60 days 115 0.2% 0 186 0.1% 0Overdue 61-120 days 39 1.8% (1) 72 2.2% (2)Overdue 121-180 days 21 4.8% (1) 15 4.7% (1)Overdue 181-365 days 52 5.9% (3) 44 9.1% (4)Overdue more than 365 days48 33.9% (25) 39 41.4% (27)Total 2,679 (32) 2,758 (36)Write-down as at 1 January (36) (25)Reversal of write-downs 7 2 Write-downs realised 2 2 Write-downs in the year (5) (15)Write-down as at 31 December(32) (36)2022 2021Netting Netting Carrying agree ments agree ments Netting of financial assets amount not offset in Carrying not offset in and liabilitiesbalance the balance amount the balance mEURsheetsheet Net amountbalance sheetsheet Net amountForeign currency derivatives349 (197) 152 377 (188) 189Financial assets 349 (197) 152 377 (188) 189Foreign currency derivatives 364 (197) 167 377 (188) 189Financial liabilities 364 (197) 167 377 (188) 189\u2191The table details financial assets and liabilities which are subject to netting in case of certain credit events.4.1\u2002Financial risk management \u2013 continuedMarket risks Vestas is exposed to various market risks with the main risks being foreign currency risks, commodity price risks and interest rate risk. All market risks are managed in accordance with the Treasury Policy. Foreign currency risksVestas\u2019 international business activities involves local Vestas entities making transactions in currencies other than the entity's functional currency. Consequently, Vestas\u2019s income statement, balance sheet and cash \ufb02ows are exposed to \ufb02uctuations in foreign currencies. The foreign currency exposures arise primarily from purchases of materials and the sales of wind turbines and service agreements.Vestas objective is to reduce the impact from short-term \ufb02uctuations in foreign currencies on the income statement and to increase the predictability of the financial results. Foreign currency risks are reduced by purchasing and producing in local markets and by hedging the foreign currency exposures in according to the Treasury Policy.Vestas hedges foreign currency exposures related to its firm wind turbine order backlog. It is Vestas\u2019 aim to hedge between 80 percent and 100 percent of the consolidated exposure. For committed exposures with durations of 18 months or more, hedging is performed with shorter maturity. Furthermore, Vestas hedges foreign currency exposure relating to monetary balances. It is Vestas\u2019 aim to hedge between 90 percent and 100 percent of all exposures.Vestas distinguishes between entities in restricted and un-restricted countries, when determining the level of exposure to be hedged. Foreign currency risks related to long-term investments and it\u2019s service business are not hedged based on an overall risk, liquidity and cost perspective. Foreign currency exposures are primarily hedged through foreign currency forward contracts and foreign currency swaps. Vestas hedge strategy is to centralise foreign currency exposure in Vestas Wind Systems A/S through internal contracts and trade the net currency exposures in the market.The majority of Vestas\u2019s sales are in USD and EUR. The EUR exchange rate risk is regarded as low in Danish entities due to Denmark\u2019s fixed exchange rate policy towards EUR. EUR sales outside Europe are limited. Despite the significant sales in USD, Vestas\u2019 currency exposure in USD has decreased as a result of increased sourcing of materials and components in USD. Due to Vestas being by nature a project business, the risk exposures towards specific foreign currencies changes from one year to another, depending on the geographical areas in which Vestas has its activities.Commodity price risksCommodity price risks in Vestas mainly relate to \ufb02uctuations in raw materials which are used directly or indirectly in the production and delivery of wind turbines. The commodity price risk can be divided into a direct exposure and an indirect exposure. The direct exposure is related to purchase of the raw material. The indirect exposure is related to the purchase of components as well as transportation costs, primarily by sea, where the price is linked to the prices of commodities such as metals and bunker fuel. The risk is managed in accordance with the Treasury Policy, primarily by entering into fixed price agreements with suppliers, where possible, and by entering into commodity swaps.Interest rate risks Interest rate risk mainly relates to interest-bearing debt with \ufb02oating interest rates and cash and cash equivalents. As at 31 December 2022, cash and cash equivalents amounted to EUR 2,378m and interest-bearing debt with \ufb02oating interest rates amounted to EUR 475m. An increase in relevant interest rates of 1%-point would have increased profit before tax in 2022 by EUR 19m (2021: decreased by EUR 19m).2022 2021Effect on Effect on Effect on Effect on Sensitivity analysisprofit/ (loss) equity profit/ (loss) equity mEUR Changebefore tax before taxbefore tax before taxForeign currency riskUSD10% (49) 159 (20) 146AUD 10% 6 (81) 2 (51)BRL 10% 15 (59) 5 9GBP 10% (13) (88) 7 (58)TWD 10% (12) (107) (3) (32)CNY 10% (16) 72 (26) 122Commodity price risksMetals10% - 16 - 11Fuels 10% - 4 - -\u2191The sensitivity analysis shows the impact on net profit/(loss) before tax and other comprehensive income of a 10 percent increase in our most significant currencies towards the Euro as well as our most significant commodities. The analysis includes the impact from cash flow hedging instruments on equity before tax and excludes the impact from the hedged exposures such as future purchases or sales since these are not recognised in the balance sheet. If the hedged exposures were included the impact from hedge instruments would be offset in their entirety. The analysis is based on the assumption that all other variables remain constant.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-175-4": { "value": "Available financial resourcesmEUR 2022 2021Liquidity positionFinancial investments95 216Cash and cash equivalents without disposal restrictions 2,352 2,394Cash and cash equivalents with disposal restrictions 26 26Cash and cash equivalents as at 31 December 2,378 2,420Credit facilitiesMain credit facility1,229 1,329Other credit facilities 80 80Total available financial resources 3,782 4,045\u2193The table shows Vestas\u2019 liquidity position and available credit facilities.\u2002Accounting policiesCash and cash equivalents included in Vestas\u2019 cash manage ment comprise cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.Cash and cash equivalents with disposal restrictions are included in day-to-day cash management and fulfills the criteria as cash and cash equivalents. Cash with disposal restrictions includes cash pledged to guarantee providers as security for guarantee obligations to obtain lower commission rates.", "dimensions": { "concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-175-5": { "value": "Available financial resourcesmEUR 2022 2021Liquidity positionFinancial investments95 216Cash and cash equivalents without disposal restrictions 2,352 2,394Cash and cash equivalents with disposal restrictions 26 26Cash and cash equivalents as at 31 December 2,378 2,420Credit facilitiesMain credit facility1,229 1,329Other credit facilities 80 80Total available financial resources 3,782 4,045\u2193The table shows Vestas\u2019 liquidity position and available credit facilities.\u2002Accounting policiesCash and cash equivalents included in Vestas\u2019 cash manage ment comprise cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.Cash and cash equivalents with disposal restrictions are included in day-to-day cash management and fulfills the criteria as cash and cash equivalents. Cash with disposal restrictions includes cash pledged to guarantee providers as security for guarantee obligations to obtain lower commission rates.2022 2021Contractual cash \ufb02owsCarrying amount Contractual cash \ufb02owsCarrying amount Maturity of financial assets and liabilitiesfinancial financial mEURinstrumentsinstruments0-1 year 1-2 years >2 years Total 0-1 year 1-2 years >2 years TotalTotal financial assets, non-current and current5,990 112 13 6,115 6,083 6,475 26 1 6,502 6,466Financial liabilities, non-current and currentLeasing liabilities142 104 371 617 493 144 110 354 608 545Other financial debts 175 26 1,658 1,859 1,613 571 0 0 571 571Total financial debts 317 130 2,029 2,476 2,106 715 110 354 1,179 1,116Foreign currency derivatives 305 37 6 348 348 254 119 4 377 377Commodity derivatives 14 2 - 16 16 9 - - 9 9Other liabilities 257 6 - 263 263 107 8 - 115 115Other liabilities and derivative financial instruments 576 45 6 627 627 370 127 4 501 501Trade payables 4,089 - - 4,089 4,089 4,286 - - 4,286 4,286Contingent consideration 115 32 181 328 321 3 115 213 331 320Financial guarantee contracts 46 - - 46 - 17 - - 17 -Total financial liabilities, non-current and current 5,143 207 2,216 7,566 7,143 5,391 352 571 6,314 6,2232022 2021Changes to financial liabilitiesLease Issued Credit Contingent Lease Issued Credit Contingent mEURliabilitiesbondsfacilitiesconsideration Totalliabilitiesbondsfacilitiesconsideration TotalBalances as at 1 January545 0 571 320 1,436 446 513 395 0 1,354Addition from business combination and investments in associates - - - - - - - - 320 320Loss of control of subsidiary - - - - - - - (26) - (26)Proceeds from borrowings - 990 766 - 1,756 - - 642 - 642Additional lease liabilities 102 - - - 102 230 - - - 230Payment of lease liabilities (147) - - - (147) (135) - - - (135)Disposal of right-of-use asset (1) - - - (1) (2) - - - (2)Payments of financial debt - - (713) - (713) - (513) (447) - (960)Unwinding of financial liabilities - 1 - 1 2 - - - - -Transfer to liabilities held for sale (4) - - - (4) - - - - -Exchange rate adjustments (2) - (2) - (4) 6 - 7 - 13Balances as at 31 December 493 991 622 321 2,427 545 0 571 320 1,436Credit risks Credit risks are managed according to the Treasury Policy. Vestas is exposed to credit risks arising from cash and cash equivalents, including money market deposits and money market funds, investments in marketable securities, derivative financial instruments, and trade and other receivables. The Treasury Policy sets limits for the credit risk exposure. For financial institution counterparties, this is based on the counterparty\u2019s credit rating, for other counterparties, this is based on mitigating actions.As at 31 December 2022, Vestas considers the maximum credit risk related to financial institution counterparties to be EUR 2,473m (2021: EUR 3,136m), and the total credit risk is considered to be EUR 5,719m (2021: EUR 6,194m).Trade receivables and contract assetsTrade receivables are mainly with counterparties within the energy sector. The credit risk depends, among other things, on the development within this sector and the country in which the individual customer operates. Upon signing a contract for the delivery of wind turbines or wind power plants with a customer, a prepayment is received. The remaining consideration is usually invoiced and paid in instalments at different stages of the project. For service contracts, customers are usually invoiced in equal instalments over the duration of the service contract. Payment terms are typically one month from the invoice date. Contract assets are by nature not overdue. Vestas does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. Therefore, Vestas does not adjust any of the transaction prices for the time value of money.Trade receivables from customers are grouped based on loss patterns in assessing the expected credit losses. Contract assets are grouped with trade receivables as these relate to unbilled work in progress with same credit risk as trade receivables. The allowance for expected lifetime credit losses is determined using a provisional matrix based on past due dates, historical loss rates and current and forward-looking information, including geographical risk, the level of security obtained as well as individual assessment. The past due date analysis and expected credit loss allowance for trade receivables and contracts assets is set out in the following tables.As at 31 December 2022, Vestas\u2019 trade receivables and contract assets per geographical areas can be specified as follows: 59 percent in EMEA, 30 percent in America, and 11 percent in Asia Pacific (31 December 2021: 70 percent in EMEA, 18 percent in America and 12 percent in Asia Pacific). As at 31 December 2022, no single customer accounted for more than 10 percent of Vestas\u2019 total trade receivables (31 December 2021: 0). The commercial credit risk relating to the outstanding trade receivables balance as of 31 December 2022 was mitigated by EUR 535m (31 December 2021: EUR 552m) received as security, such as third party guarantees. Historically, Vestas has not incurred significant losses on trade receivables.Financial instruments and cash depositsGroup Treasury manages balances with financial institutions and the associated credit risk in accordance with Vestas\u2019 Treasury Policy assessing the individual counterparty\u2019s credit rating. 92 percent of Vestas\u2019 exposure towards financial institutions are with counterparties with a credit rating in the range of A to AAA. Vestas has entered into ISDA agreements with all financial institution counterparties used for trading derivative financial instruments under which Vestas has a right to set-off should certain credit events occur, which means that Vestas\u2019 actual credit risk is limited to the net assets per counterparty. 2022 2021Netting Netting Carrying agree ments agree ments Netting of financial assets amount not offset in Carrying not offset in and liabilitiesbalance the balance amount the balance mEURsheetsheet Net amountbalance sheetsheet Net amountForeign currency derivatives349 (197) 152 377 (188) 189Financial assets 349 (197) 152 377 (188) 189Foreign currency derivatives 364 (197) 167 377 (188) 189Financial liabilities 364 (197) 167 377 (188) 189\u2191The table details financial assets and liabilities which are subject to netting in case of certain credit events.Market risks Vestas is exposed to various market risks with the main risks being foreign currency risks, commodity price risks and interest rate risk. All market risks are managed in accordance with the Treasury Policy. Foreign currency risksVestas\u2019 international business activities involves local Vestas entities making transactions in currencies other than the entity's functional currency. Consequently, Vestas\u2019s income statement, balance sheet and cash \ufb02ows are exposed to \ufb02uctuations in foreign currencies. The foreign currency exposures arise primarily from purchases of materials and the sales of wind turbines and service agreements.Vestas objective is to reduce the impact from short-term \ufb02uctuations in foreign currencies on the income statement and to increase the predictability of the financial results. Foreign currency risks are reduced by purchasing and producing in local markets and by hedging the foreign currency exposures in according to the Treasury Policy.Vestas hedges foreign currency exposures related to its firm wind turbine order backlog. It is Vestas\u2019 aim to hedge between 80 percent and 100 percent of the consolidated exposure. For committed exposures with durations of 18 months or more, hedging is performed with shorter maturity. Furthermore, Vestas hedges foreign currency exposure relating to monetary balances. It is Vestas\u2019 aim to hedge between 90 percent and 100 percent of all exposures.Vestas distinguishes between entities in restricted and un-restricted countries, when determining the level of exposure to be hedged. Foreign currency risks related to long-term investments and it\u2019s service business are not hedged based on an overall risk, liquidity and cost perspective. Foreign currency exposures are primarily hedged through foreign currency forward contracts and foreign currency swaps. Vestas hedge strategy is to centralise foreign currency exposure in Vestas Wind Systems A/S through internal contracts and trade the net currency exposures in the market.The majority of Vestas\u2019s sales are in USD and EUR. The EUR exchange rate risk is regarded as low in Danish entities due to Denmark\u2019s fixed exchange rate policy towards EUR. EUR sales outside Europe are limited. Despite the significant sales in USD, Vestas\u2019 currency exposure in USD has decreased as a result of increased sourcing of materials and components in USD. Due to Vestas being by nature a project business, the risk exposures towards specific foreign currencies changes from one year to another, depending on the geographical areas in which Vestas has its activities.Commodity price risksCommodity price risks in Vestas mainly relate to \ufb02uctuations in raw materials which are used directly or indirectly in the production and delivery of wind turbines. The commodity price risk can be divided into a direct exposure and an indirect exposure. The direct exposure is related to purchase of the raw material. The indirect exposure is related to the purchase of components as well as transportation costs, primarily by sea, where the price is linked to the prices of commodities such as metals and bunker fuel. The risk is managed in accordance with the Treasury Policy, primarily by entering into fixed price agreements with suppliers, where possible, and by entering into commodity swaps.Interest rate risks Interest rate risk mainly relates to interest-bearing debt with \ufb02oating interest rates and cash and cash equivalents. As at 31 December 2022, cash and cash equivalents amounted to EUR 2,378m and interest-bearing debt with \ufb02oating interest rates amounted to EUR 475m. An increase in relevant interest rates of 1%-point would have increased profit before tax in 2022 by EUR 19m (2021: decreased by EUR 19m).2022 2021Effect on Effect on Effect on Effect on Sensitivity analysisprofit/ (loss) equity profit/ (loss) equity mEUR Changebefore tax before taxbefore tax before taxForeign currency riskUSD10% (49) 159 (20) 146AUD 10% 6 (81) 2 (51)BRL 10% 15 (59) 5 9GBP 10% (13) (88) 7 (58)TWD 10% (12) (107) (3) (32)CNY 10% (16) 72 (26) 122Commodity price risksMetals10% - 16 - 11Fuels 10% - 4 - -\u2191The sensitivity analysis shows the impact on net profit/(loss) before tax and other comprehensive income of a 10 percent increase in our most significant currencies towards the Euro as well as our most significant commodities. The analysis includes the impact from cash flow hedging instruments on equity before tax and excludes the impact from the hedged exposures such as future purchases or sales since these are not recognised in the balance sheet. If the hedged exposures were included the impact from hedge instruments would be offset in their entirety. The analysis is based on the assumption that all other variables remain constant.4.3\u2002Financial assets and liabilities2022 2021Total carrying Carrying Carrying Categories of financial instrumentsTotal carrying Carrying Carrying Categories of financial instrumentsamount in amount amount amount in amount amount the balance non-financial financial Fair value \u2013 hedging Fair value through Amortised the balance non-financial financial Fair value \u2013 hedging Fair value through Amortised mEURNotesheetinstrumentsinstrumentsinstrumentsprofit or losscostsheetinstrumentsinstrumentsinstrumentsprofit or losscostFinancial assets, non-current and currentOther investments88 - 88 - 62 26 81 - 81 - 58 23Financial investments 95 - 95 - 95 - 216 - 216 - 100 116Foreign currency derivatives 346 - 346 346 - - 377 - 377 377 - -Commodity derivatives 3 - 3 3 - - 10 - 10 10 - -Other derivatives 17 - 17 17 - - - - - - - -Other receivables 1,075 598 477 - - 477 952 348 604 - - 604Trade receivables 1,280 - 1,280 - - 1,280 1,531 - 1,531 - - 1,531Contract assets 2.3 1,399 - 1,399 - - 1,399 1,227 - 1,227 - - 1,227Cash and cash equivalents 2,378 - 2,378 - - 2,378 2,420 - 2,420 - - 2,420 Total financial assets, non-current and current 6,681 598 6,083 366 157 5,560 6,814 348 6,466 387 158 5,921Financial liabilities, non-current and currentFinancial debts2,106 - 2,106 - - 2,106 1,116 - 1,116 - - 1,116Foreign currency derivatives 348 - 348 348 - - 377 - 377 377 - -Commodity derivatives 16 - 16 16 - - 9 - 9 9 - -Other liabilities 1,044 781 263 - - 263 568 453 115 - - 115Trade payables 4,089 - 4,089 - - 4,089 4,286 - 4,286 - - 4,286Contingent consideration 321 - 321 - 321 - 320 - 320 - 320 -Total financial liabilities, non-current and current 7,924 781 7,143 364 321 6,458 6,676 453 6,223 386 320 5,517The fair value of financial assets and liabilities, measured at amortised cost, is not materially different from the carrying amount, except for instruments classified as financial debt. Financial investmentsFinancial investments consist of interest-bearing investments which do not meet the definition for cash and cash equivalents. On initial recognition financial investments are recognised in the balance sheet at fair value. Subsequently assets held within the business model hold to collect are re-measured at amortised cost and assets hold to sell are remeasured at fair value through profit or loss. Any changes in the fair values of financial investments remeasured at fair value are recognised in the income statement as financial items.Other investments and financial investmentsOther investments include investments in non-listed equity shares and rental deposits. The equity investments were irrevocably designated at fair value through profit and loss.Financial investments comprise short-term deposits and marketable securities managed on a fair value basis with a continuously observation of their performance.Financial debts At 31 December 2022, financial debts comprise green loan facility (EUR 475m), sustainability-linked bonds (EUR 991m), other credit facilities (EUR 147m) and lease liability (EUR 493m). As at 31 December 2022, the fair value of sustainability-linked bonds amounted to (EUR 859m). As at 31 December 2021, financial debts comprise a bilateral bridge facility (EUR 500m), other credit facilities (EUR 71m) and lease liability (EUR 545m).4.3\u2002Financial assets and liabilities \u2013 continuedFair value hierarchyFinancial instruments measured at fair value are categorised into the following levels of the fair value hierarchy:Level 1: Observable market prices for identical instruments.Level 2: Valuation techniques primarily based on observable prices or traded prices for comparable instruments.Level 3: Valuation techniques primarily based on unobservable prices.Other investments and Financial InvestmentsOther investments in non-listed equity shares are measured at fair value determined using generally accepted valuation techniques based on unobservable inputs, and are categorised as Level 3. Financial investments in marketable securities are measured at fair value based on market prices, and are categorised as Level 1.DerivativesForeign currency forward contracts, embedded derivatives and commodity forward contracts are measured at fair value using generally accepted valuation techniques based on observable market prices and forward market rates, and are categorised as Level 2.Renewable energy certificates Vestas has a commitment in the US to purchase Renewable Energy Certificates (RECs) during a 4 year period from 2028-31 based on production of MW in this period at a fixed price. It has been assessed that the contract qualifies as a financial instrument. The fair value measurement is based on level 3 input. As per 31 December 2022, the estimated maximum nominal commitment under the contract is EUR 19m (2021: EUR 18m for a 10 year commitment period). Market prices depend on which market the RECs are traded, ranging from an estimated average market price of 11.06 USD/MWh to 28.04 USD/MWh (2021: USD 6.1/MWh to USD 23.4/MWh), hence the contract would have had an estimated value in the range of EUR 2m to EUR 27m (2021: EUR (6)m to EUR 21m) as at 31 December 2022. Given the uncertainties underpinning the future market for selling RECs, Management has determined that the best evidence of fair value for the RECs is the transaction price. Consequently, the net fair value of the contract has been measured at EUR 0.Contingent considerationContingent consideration relating to Vestas\u2019 acquisition of a 25 percent stake in Copenhagen Infrastructure Partners P/S\u2019 parent companies in February 2021 is classified as financial debt and measured at fair value. As at 31 December 2022, the fair value amounted to EUR 321m based on expected total payments of EUR 331m in the period 2023 to 2026 discounted using a 1 percent normalised financing interest rate. The contingent consideration is categorised as Level 3.2022 2021Financial instruments Fair valueFair valuemeasured at fair valueCarrying Carrying mEUR Valuation techniqueamountTotal Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3amountOther investments Market prices/Discounted cash \ufb02ow62 62 - - 62 5858 - - 58Financial investments Market prices 95 95 95 - - 100 100 100 - -Renewable energy Forward pricingcertificates (RECs)- - - - - - - - - -Foreign currency Forward pricing and derivativesswap models346 346 - 346 - 377 377 - 377 -Commodity derivatives Forward pricing 3 3 - 3 - 10 10 - 10 -Interest rate swap Swap Model 17 17 - 17 - - - - - -Other receivables and derivative financial instruments 366366 - 366 - 387 387 - 387 -Financial assets 523 523 95 366 62 545 545 100 387 58Financial debts Market prices - - - - - - - - - -Foreign currency Forward pricing and derivativesswap models348 348 - 348 - 377 377 - 377 -Commodity derivatives Forward pricing 16 16 - 16 - 9 9 - 9 -Other liabilities and derivative financial instruments364 364 - 364 - 386 386 - 386 -Contingent consideration Discounted cash \ufb02ow 321 321 - - 321 320 320 - - 320Financial liabilities 685 685 - 364 321 706 706 - 386 320", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-177-6": { "value": "\u2002Accounting policiesCash and cash equivalents included in Vestas\u2019 cash manage ment comprise cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.Cash and cash equivalents with disposal restrictions are included in day-to-day cash management and fulfills the criteria as cash and cash equivalents. Cash with disposal restrictions includes cash pledged to guarantee providers as security for guarantee obligations to obtain lower commission rates.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-172-3": { "value": "Liquidity risks Vestas manages its liquidity risk in line with the Treasury Policy to ensure having sufficient financial resources to service its financial obligations. Financial resources are managed through a combination of cash and money market deposits, committed and uncommitted credit facilities, and highly rated marketable securities.In 2022, Vestas further strengthened its access to liquidity and long-term funding by establishing a EUR 3,000m EMTN programme. This programme is a versatile platform available for quick and \ufb02exible access to the corporate bond market from short maturities (1-yr) to very long maturities (15+-yr).Vestas\u2019 main credit facility, a EUR 2,000m committed revolving multi-currency credit facility with a group of leading banks is available for general corporate purposes, including guarantees issuance, carries a 6-year tenor with one one-year extension option. As at end of 2022, EUR 771m of this revolving credit facility was converted into ancillary bank guarantees issuance facilities leaving EUR 1,229m available for cash drawings. The revolving credit facility is subject to customary undertakings, a change of control clause resulting in repayment of the credit facility in the event of change in control and a financial covenant. The financial covenant has not been breached in 2022, and is not expected to be breached in 2023.Liquidity is managed and optimised centrally by using cash pools, in-house bank solutions, and ongoing diligent cash- and working capital management practices. As part of managing short term liquidity Vestas also has access to and make use of a number of uncommitted money market facilities (EUR 500m in total) granted by core relationship banks. The committed revolving credit facility combined with the uncommitted money market lines provide the necessary financial headroom for the Group. Further funding can be provided by the EMTN programme. On 15 March 2022, Vestas secured long-term funding by issuing two EUR 500m sustainability-linked bonds. The two bonds will mature in 2029 and 2034, respectively. The EMTN programme remaining capacity is EUR 2,000m. On July 17 2022, Vestas drew EUR 475m from a green loan facility granted by the European Investment Bank (EIB) to fund its research, development, and innovation (RDI) activities. The green loan facility carries a 10-year tenor.Financial risk How Vestas manages the riskLiquidity risk Availability of committed credit lines and borrowing facilitiesCredit risk Diversification of bank exposure, credit limits and guaranteesMarket risk, foreign exchange Currency forward contracts and currency swapsMarket risk, interest risk Fixed interest loansMarket risk, commodity price Fixed price agreements with suppliers and commodity contractsAvailable financial resourcesmEUR 2022 2021Liquidity positionFinancial investments95 216Cash and cash equivalents without disposal restrictions 2,352 2,394Cash and cash equivalents with disposal restrictions 26 26Cash and cash equivalents as at 31 December 2,378 2,420Credit facilitiesMain credit facility1,229 1,329Other credit facilities 80 80Total available financial resources 3,782 4,045\u2193The table shows Vestas\u2019 liquidity position and available credit facilities.2022 2021Contractual cash \ufb02owsCarrying amount Contractual cash \ufb02owsCarrying amount Maturity of financial assets and liabilitiesfinancial financial mEURinstrumentsinstruments0-1 year 1-2 years >2 years Total 0-1 year 1-2 years >2 years TotalTotal financial assets, non-current and current5,990 112 13 6,115 6,083 6,475 26 1 6,502 6,466Financial liabilities, non-current and currentLeasing liabilities142 104 371 617 493 144 110 354 608 545Other financial debts 175 26 1,658 1,859 1,613 571 0 0 571 571Total financial debts 317 130 2,029 2,476 2,106 715 110 354 1,179 1,116Foreign currency derivatives 305 37 6 348 348 254 119 4 377 377Commodity derivatives 14 2 - 16 16 9 - - 9 9Other liabilities 257 6 - 263 263 107 8 - 115 115Other liabilities and derivative financial instruments 576 45 6 627 627 370 127 4 501 501Trade payables 4,089 - - 4,089 4,089 4,286 - - 4,286 4,286Contingent consideration 115 32 181 328 321 3 115 213 331 320Financial guarantee contracts 46 - - 46 - 17 - - 17 -Total financial liabilities, non-current and current 5,143 207 2,216 7,566 7,143 5,391 352 571 6,314 6,2232022 2021Changes to financial liabilitiesLease Issued Credit Contingent Lease Issued Credit Contingent mEURliabilitiesbondsfacilitiesconsideration Totalliabilitiesbondsfacilitiesconsideration TotalBalances as at 1 January545 0 571 320 1,436 446 513 395 0 1,354Addition from business combination and investments in associates - - - - - - - - 320 320Loss of control of subsidiary - - - - - - - (26) - (26)Proceeds from borrowings - 990 766 - 1,756 - - 642 - 642Additional lease liabilities 102 - - - 102 230 - - - 230Payment of lease liabilities (147) - - - (147) (135) - - - (135)Disposal of right-of-use asset (1) - - - (1) (2) - - - (2)Payments of financial debt - - (713) - (713) - (513) (447) - (960)Unwinding of financial liabilities - 1 - 1 2 - - - - -Transfer to liabilities held for sale (4) - - - (4) - - - - -Exchange rate adjustments (2) - (2) - (4) 6 - 7 - 13Balances as at 31 December 493 991 622 321 2,427 545 0 571 320 1,436", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-182-4": { "value": "Credit risks Credit risks are managed according to the Treasury Policy. Vestas is exposed to credit risks arising from cash and cash equivalents, including money market deposits and money market funds, investments in marketable securities, derivative financial instruments, and trade and other receivables. The Treasury Policy sets limits for the credit risk exposure. For financial institution counterparties, this is based on the counterparty\u2019s credit rating, for other counterparties, this is based on mitigating actions.As at 31 December 2022, Vestas considers the maximum credit risk related to financial institution counterparties to be EUR 2,473m (2021: EUR 3,136m), and the total credit risk is considered to be EUR 5,719m (2021: EUR 6,194m).Trade receivables and contract assetsTrade receivables are mainly with counterparties within the energy sector. The credit risk depends, among other things, on the development within this sector and the country in which the individual customer operates. Upon signing a contract for the delivery of wind turbines or wind power plants with a customer, a prepayment is received. The remaining consideration is usually invoiced and paid in instalments at different stages of the project. For service contracts, customers are usually invoiced in equal instalments over the duration of the service contract. Payment terms are typically one month from the invoice date. Contract assets are by nature not overdue. Vestas does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. Therefore, Vestas does not adjust any of the transaction prices for the time value of money.Trade receivables from customers are grouped based on loss patterns in assessing the expected credit losses. Contract assets are grouped with trade receivables as these relate to unbilled work in progress with same credit risk as trade receivables. The allowance for expected lifetime credit losses is determined using a provisional matrix based on past due dates, historical loss rates and current and forward-looking information, including geographical risk, the level of security obtained as well as individual assessment. The past due date analysis and expected credit loss allowance for trade receivables and contracts assets is set out in the following tables.As at 31 December 2022, Vestas\u2019 trade receivables and contract assets per geographical areas can be specified as follows: 59 percent in EMEA, 30 percent in America, and 11 percent in Asia Pacific (31 December 2021: 70 percent in EMEA, 18 percent in America and 12 percent in Asia Pacific). As at 31 December 2022, no single customer accounted for more than 10 percent of Vestas\u2019 total trade receivables (31 December 2021: 0). The commercial credit risk relating to the outstanding trade receivables balance as of 31 December 2022 was mitigated by EUR 535m (31 December 2021: EUR 552m) received as security, such as third party guarantees. Historically, Vestas has not incurred significant losses on trade receivables.Financial instruments and cash depositsGroup Treasury manages balances with financial institutions and the associated credit risk in accordance with Vestas\u2019 Treasury Policy assessing the individual counterparty\u2019s credit rating. 92 percent of Vestas\u2019 exposure towards financial institutions are with counterparties with a credit rating in the range of A to AAA. Vestas has entered into ISDA agreements with all financial institution counterparties used for trading derivative financial instruments under which Vestas has a right to set-off should certain credit events occur, which means that Vestas\u2019 actual credit risk is limited to the net assets per counterparty. Expected credit losses 2022 2021on trade receivables and contract assetsCarrying Expected Loss Carrying Expected Loss mEURamountloss rateallowanceamountloss rateallowanceNot overdue2,404 0.1% (2) 2,402 0.1% (2)Overdue 0-60 days 115 0.2% 0 186 0.1% 0Overdue 61-120 days 39 1.8% (1) 72 2.2% (2)Overdue 121-180 days 21 4.8% (1) 15 4.7% (1)Overdue 181-365 days 52 5.9% (3) 44 9.1% (4)Overdue more than 365 days48 33.9% (25) 39 41.4% (27)Total 2,679 (32) 2,758 (36)Write-down as at 1 January (36) (25)Reversal of write-downs 7 2 Write-downs realised 2 2 Write-downs in the year (5) (15)Write-down as at 31 December(32) (36)2022 2021Netting Netting Carrying agree ments agree ments Netting of financial assets amount not offset in Carrying not offset in and liabilitiesbalance the balance amount the balance mEURsheetsheet Net amountbalance sheetsheet Net amountForeign currency derivatives349 (197) 152 377 (188) 189Financial assets 349 (197) 152 377 (188) 189Foreign currency derivatives 364 (197) 167 377 (188) 189Financial liabilities 364 (197) 167 377 (188) 189\u2191The table details financial assets and liabilities which are subject to netting in case of certain credit events.", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-184-5": { "value": "Expected credit losses 2022 2021on trade receivables and contract assetsCarrying Expected Loss Carrying Expected Loss mEURamountloss rateallowanceamountloss rateallowanceNot overdue2,404 0.1% (2) 2,402 0.1% (2)Overdue 0-60 days 115 0.2% 0 186 0.1% 0Overdue 61-120 days 39 1.8% (1) 72 2.2% (2)Overdue 121-180 days 21 4.8% (1) 15 4.7% (1)Overdue 181-365 days 52 5.9% (3) 44 9.1% (4)Overdue more than 365 days48 33.9% (25) 39 41.4% (27)Total 2,679 (32) 2,758 (36)Write-down as at 1 January (36) (25)Reversal of write-downs 7 2 Write-downs realised 2 2 Write-downs in the year (5) (15)Write-down as at 31 December(32) (36)", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-188-4": { "value": "Market risks Vestas is exposed to various market risks with the main risks being foreign currency risks, commodity price risks and interest rate risk. All market risks are managed in accordance with the Treasury Policy. Foreign currency risksVestas\u2019 international business activities involves local Vestas entities making transactions in currencies other than the entity's functional currency. Consequently, Vestas\u2019s income statement, balance sheet and cash \ufb02ows are exposed to \ufb02uctuations in foreign currencies. The foreign currency exposures arise primarily from purchases of materials and the sales of wind turbines and service agreements.Vestas objective is to reduce the impact from short-term \ufb02uctuations in foreign currencies on the income statement and to increase the predictability of the financial results. Foreign currency risks are reduced by purchasing and producing in local markets and by hedging the foreign currency exposures in according to the Treasury Policy.Vestas hedges foreign currency exposures related to its firm wind turbine order backlog. It is Vestas\u2019 aim to hedge between 80 percent and 100 percent of the consolidated exposure. For committed exposures with durations of 18 months or more, hedging is performed with shorter maturity. Furthermore, Vestas hedges foreign currency exposure relating to monetary balances. It is Vestas\u2019 aim to hedge between 90 percent and 100 percent of all exposures.Vestas distinguishes between entities in restricted and un-restricted countries, when determining the level of exposure to be hedged. Foreign currency risks related to long-term investments and it\u2019s service business are not hedged based on an overall risk, liquidity and cost perspective. Foreign currency exposures are primarily hedged through foreign currency forward contracts and foreign currency swaps. Vestas hedge strategy is to centralise foreign currency exposure in Vestas Wind Systems A/S through internal contracts and trade the net currency exposures in the market.The majority of Vestas\u2019s sales are in USD and EUR. The EUR exchange rate risk is regarded as low in Danish entities due to Denmark\u2019s fixed exchange rate policy towards EUR. EUR sales outside Europe are limited. Despite the significant sales in USD, Vestas\u2019 currency exposure in USD has decreased as a result of increased sourcing of materials and components in USD. Due to Vestas being by nature a project business, the risk exposures towards specific foreign currencies changes from one year to another, depending on the geographical areas in which Vestas has its activities.Commodity price risksCommodity price risks in Vestas mainly relate to \ufb02uctuations in raw materials which are used directly or indirectly in the production and delivery of wind turbines. The commodity price risk can be divided into a direct exposure and an indirect exposure. The direct exposure is related to purchase of the raw material. The indirect exposure is related to the purchase of components as well as transportation costs, primarily by sea, where the price is linked to the prices of commodities such as metals and bunker fuel. The risk is managed in accordance with the Treasury Policy, primarily by entering into fixed price agreements with suppliers, where possible, and by entering into commodity swaps.Interest rate risks Interest rate risk mainly relates to interest-bearing debt with \ufb02oating interest rates and cash and cash equivalents. As at 31 December 2022, cash and cash equivalents amounted to EUR 2,378m and interest-bearing debt with \ufb02oating interest rates amounted to EUR 475m. An increase in relevant interest rates of 1%-point would have increased profit before tax in 2022 by EUR 19m (2021: decreased by EUR 19m).2022 2021Effect on Effect on Effect on Effect on Sensitivity analysisprofit/ (loss) equity profit/ (loss) equity mEUR Changebefore tax before taxbefore tax before taxForeign currency riskUSD10% (49) 159 (20) 146AUD 10% 6 (81) 2 (51)BRL 10% 15 (59) 5 9GBP 10% (13) (88) 7 (58)TWD 10% (12) (107) (3) (32)CNY 10% (16) 72 (26) 122Commodity price risksMetals10% - 16 - 11Fuels 10% - 4 - -\u2191The sensitivity analysis shows the impact on net profit/(loss) before tax and other comprehensive income of a 10 percent increase in our most significant currencies towards the Euro as well as our most significant commodities. The analysis includes the impact from cash flow hedging instruments on equity before tax and excludes the impact from the hedged exposures such as future purchases or sales since these are not recognised in the balance sheet. If the hedged exposures were included the impact from hedge instruments would be offset in their entirety. The analysis is based on the assumption that all other variables remain constant.", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-190-5": { "value": "2022 2021Effect on Effect on Effect on Effect on Sensitivity analysisprofit/ (loss) equity profit/ (loss) equity mEUR Changebefore tax before taxbefore tax before taxForeign currency riskUSD10% (49) 159 (20) 146AUD 10% 6 (81) 2 (51)BRL 10% 15 (59) 5 9GBP 10% (13) (88) 7 (58)TWD 10% (12) (107) (3) (32)CNY 10% (16) 72 (26) 122Commodity price risksMetals10% - 16 - 11Fuels 10% - 4 - -", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-192-2": { "value": "4.2\u2002Hedge accountingIn 2022, Vestas used derivative financial instruments to hedge foreign currency risk and commodity price risk. Foreign currency risks The risks relating to purchases and sales in foreign currencies as well as monetary balances denominated in foreign curren-cies are hedged using foreign currency forward contracts and foreign currency swaps. Currency forward contracts and currency swaps relating to highly probable forecasted sales and purchases are designated as cash \ufb02ow hedges. Currency forward contracts and currency swaps relating to recognised monetary balances are designated as fair value hedges.Some sales agreements contain foreign currency elements. In sales agreements where the sales currency is not closely related to the functional currency nor a commonly used currency in the country in which the sales takes place, the foreign currency element is treated as an embedded financial derivative. The embedded financial derivative is designated as a cash \ufb02ow hedge of forecasted purchases.As at 31 December 2022, the average exchange rates for cash \ufb02ow hedges in EUR contracts were AUD 0.6 (2021: 0.6), BRL 0.2 (2021: 0.2), CNY 0.1 (2021: 0.1), GBP 1.1 (2021: 1.1), TWD 0.03 (2021: 0.03) and USD 0.9 (2021: 0.8). The average exchange rates for fair value hedges in EUR contracts were USD 0.9 (2021: 0.9), CNY 0.1 (2021: 0.1) and GBP 1.2 (2021: 1.1). Commodity price riskThe commodity price risks relating to \ufb02uctuations in the prices of raw materials used directly or indirectly in the production is hedged using commodity forward contracts. Commodity forward contracts related to highly probable forecasted purchases are designated as cash \ufb02ow hedges.As at 31 December 2022, the average forward price in EUR per metric tonne for cash \ufb02ow hedges were for copper: 9,604 (2021: 6,990), coking coal: 332 (2021: 206), iron ore: 127 (2021: 129), aluminium: 2,506 (2021: none), bunker fuel: 697 (2021: none).2022 2021Contract Expected recognitionContract Expected recognitionMaturity of hedging instrumentsnotional notional mEURamount2023 2024 After 2024 2022 2023 After 2023amountCash \ufb02ow hedges Foreign currency risk (2,098) (512) (907) (679) 159 236 (65) (12)AUD (863) (449) (414) - (432) (319) (113) -BRL (1,100) (467) (633) - (448) (486) 38 -CNY 876 592 283 1 1,484 1,197 287 -GBP (746) (244) (159) (343) (239) (219) (20) -TWD (951) (298) (315) (338) (472) (190) (270) (12)USD 1,455 731 700 24 1.346 893 408 45Other (769) (377) (369) (23) (1,080) (640) (395) (45)Commodity 213 177 36 - 93 80 13 -Metals 171 136 35 93 80 13 -Fuels 42 41 1 - - - - -Fair value hedges 510 510 - - 379 362 11 6 USD 34 34 - - (329) (329) - - GBP 205 205 - - 23 6 11 6 CNY 367 367 - - 309 309 - - Other (96) (96) - - 376 376 - - Total (1,375) 175 (871) (679) 571 618 (41) (6)\u2190The table shows the contract notional amount and expected timing of recognition of hedging instruments as at 31 December 2022. Positive amounts reflect that Vestas on a net basis have contracts to purchase the respective foreign currencies or commodities, and negative amounts reflect that Vestas on a net basis have contracts to sell the respective foreign currencies or commodities.\u2002Accounting policiesDerivative financial instruments are initially measured at fair value at the trade date and subsequently remeasured at fair value at the reporting date. The fair value of derivative financial instruments are presented in other receivables or other liabilities.Changes in the effective portion of the fair value of cash \ufb02ow hedges are recognised in other comprehensive income. Upon realisation of the hedged item, gains or losses on the cash \ufb02ow hedges are transferred from the equity hedging reserve into the initial carrying amount of the hedged item. Changes in any ineffective portion of the fair value of cash \ufb02ow hedges are recognised in the income statement as financial items. Ineffectiveness is mainly resulting from differences in the timing of the cash \ufb02ows of the hedged items and the hedging instruments and resulting from changes to the forecasted amount of cash \ufb02ows of hedged items. Changes in the fair value of fair value hedges are recognised in the income statement as financial items.4.2\u2002Hedge accounting \u2013 continued2022 2021Carrying amount of Contract Carrying amountContract Carrying amounthedging instrumentsnotional notional mEURamountAsset Liabilities Asset LiabilitiesamountForeign currency riskCash \ufb02ow hedges(2,098) 321 311 159 365 361 Fair value hedges 510 24 30 379 12 16 Commodity price riskCash \ufb02ow hedges213 3 23 93 10 9Interest rate riskCash \ufb02ow hedges480 17 - 530 0 -Total (895) 365 364 1,161 387 386 Recognised in income statement990 41 30 909 12 16 Recognised in other comprehensive income(1,885) 324 334 252 375 370Total (895) 365 364 1,161 387 386 \u2191In the table the effect from hedging instruments on the balance sheet, profit and loss and other comprehensive income is shown.2022 2021Carrying amount of Change in fair Carrying amount of Change in fair Carrying amount of hedged itemsvalue used hedged itemsvalue used hedged itemsfor measuring for measuring mEURineffectivenessineffectivenessAsset Liabilities Asset LiabilitiesCurrency risk Forecast sales and purchases- - 185 - - 74Monetary balances 1,230 1,950 (6) 2,845 3,230 (5)Commodity risk Forecast sales and purchases- - (19) - - 2Total 1,230 1,950 160 2,845 3,230 71\u2190The carrying amounts of hedged items on the balance sheet are shown in the table.Cash \ufb02ow hedge reservemEUR 2022 2021Hedge reserve as at 1 January16 (21)Change in fair valueForeign currency hedges171 74Commodity price hedges (5) 2Amount reclassified to profit and lossForeign currency hedges recognised in revenue(46) 20Foreign currency hedges recognised in production costs (86) (14)Interest rate hedge recognised in financial items (2) -Amount transferred to non-financial itemsForeign currency hedges recognised as prepayment from customers4 0Foreign currency hedges recognised as inventory (49) (28)Commodity hedges recognised as inventory (14) (6)Tax effect 10 (11)Hedge reserve as at 31 December (1) 16\u2191The risk categories recognised in the cash flow hedge reserve is reconciled in the table below with items impacting other comprehensive income for the period.", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-192-3": { "value": "4.2\u2002Hedge accountingIn 2022, Vestas used derivative financial instruments to hedge foreign currency risk and commodity price risk. Foreign currency risks The risks relating to purchases and sales in foreign currencies as well as monetary balances denominated in foreign curren-cies are hedged using foreign currency forward contracts and foreign currency swaps. Currency forward contracts and currency swaps relating to highly probable forecasted sales and purchases are designated as cash \ufb02ow hedges. Currency forward contracts and currency swaps relating to recognised monetary balances are designated as fair value hedges.Some sales agreements contain foreign currency elements. In sales agreements where the sales currency is not closely related to the functional currency nor a commonly used currency in the country in which the sales takes place, the foreign currency element is treated as an embedded financial derivative. The embedded financial derivative is designated as a cash \ufb02ow hedge of forecasted purchases.As at 31 December 2022, the average exchange rates for cash \ufb02ow hedges in EUR contracts were AUD 0.6 (2021: 0.6), BRL 0.2 (2021: 0.2), CNY 0.1 (2021: 0.1), GBP 1.1 (2021: 1.1), TWD 0.03 (2021: 0.03) and USD 0.9 (2021: 0.8). The average exchange rates for fair value hedges in EUR contracts were USD 0.9 (2021: 0.9), CNY 0.1 (2021: 0.1) and GBP 1.2 (2021: 1.1). Commodity price riskThe commodity price risks relating to \ufb02uctuations in the prices of raw materials used directly or indirectly in the production is hedged using commodity forward contracts. Commodity forward contracts related to highly probable forecasted purchases are designated as cash \ufb02ow hedges.As at 31 December 2022, the average forward price in EUR per metric tonne for cash \ufb02ow hedges were for copper: 9,604 (2021: 6,990), coking coal: 332 (2021: 206), iron ore: 127 (2021: 129), aluminium: 2,506 (2021: none), bunker fuel: 697 (2021: none).2022 2021Contract Expected recognitionContract Expected recognitionMaturity of hedging instrumentsnotional notional mEURamount2023 2024 After 2024 2022 2023 After 2023amountCash \ufb02ow hedges Foreign currency risk (2,098) (512) (907) (679) 159 236 (65) (12)AUD (863) (449) (414) - (432) (319) (113) -BRL (1,100) (467) (633) - (448) (486) 38 -CNY 876 592 283 1 1,484 1,197 287 -GBP (746) (244) (159) (343) (239) (219) (20) -TWD (951) (298) (315) (338) (472) (190) (270) (12)USD 1,455 731 700 24 1.346 893 408 45Other (769) (377) (369) (23) (1,080) (640) (395) (45)Commodity 213 177 36 - 93 80 13 -Metals 171 136 35 93 80 13 -Fuels 42 41 1 - - - - -Fair value hedges 510 510 - - 379 362 11 6 USD 34 34 - - (329) (329) - - GBP 205 205 - - 23 6 11 6 CNY 367 367 - - 309 309 - - Other (96) (96) - - 376 376 - - Total (1,375) 175 (871) (679) 571 618 (41) (6)\u2190The table shows the contract notional amount and expected timing of recognition of hedging instruments as at 31 December 2022. Positive amounts reflect that Vestas on a net basis have contracts to purchase the respective foreign currencies or commodities, and negative amounts reflect that Vestas on a net basis have contracts to sell the respective foreign currencies or commodities.\u2002Accounting policiesDerivative financial instruments are initially measured at fair value at the trade date and subsequently remeasured at fair value at the reporting date. The fair value of derivative financial instruments are presented in other receivables or other liabilities.Changes in the effective portion of the fair value of cash \ufb02ow hedges are recognised in other comprehensive income. Upon realisation of the hedged item, gains or losses on the cash \ufb02ow hedges are transferred from the equity hedging reserve into the initial carrying amount of the hedged item. Changes in any ineffective portion of the fair value of cash \ufb02ow hedges are recognised in the income statement as financial items. Ineffectiveness is mainly resulting from differences in the timing of the cash \ufb02ows of the hedged items and the hedging instruments and resulting from changes to the forecasted amount of cash \ufb02ows of hedged items. Changes in the fair value of fair value hedges are recognised in the income statement as financial items.", "dimensions": { "concept": "ifrs-full:DisclosureOfHedgeAccountingExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-199-5": { "value": "\u2002Accounting policiesDerivative financial instruments are initially measured at fair value at the trade date and subsequently remeasured at fair value at the reporting date. The fair value of derivative financial instruments are presented in other receivables or other liabilities.Changes in the effective portion of the fair value of cash \ufb02ow hedges are recognised in other comprehensive income. Upon realisation of the hedged item, gains or losses on the cash \ufb02ow hedges are transferred from the equity hedging reserve into the initial carrying amount of the hedged item. Changes in any ineffective portion of the fair value of cash \ufb02ow hedges are recognised in the income statement as financial items. Ineffectiveness is mainly resulting from differences in the timing of the cash \ufb02ows of the hedged items and the hedging instruments and resulting from changes to the forecasted amount of cash \ufb02ows of hedged items. Changes in the fair value of fair value hedges are recognised in the income statement as financial items.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-208-3": { "value": "2022 2021Total carrying Carrying Carrying Categories of financial instrumentsTotal carrying Carrying Carrying Categories of financial instrumentsamount in amount amount amount in amount amount the balance non-financial financial Fair value \u2013 hedging Fair value through Amortised the balance non-financial financial Fair value \u2013 hedging Fair value through Amortised mEURNotesheetinstrumentsinstrumentsinstrumentsprofit or losscostsheetinstrumentsinstrumentsinstrumentsprofit or losscostFinancial assets, non-current and currentOther investments88 - 88 - 62 26 81 - 81 - 58 23Financial investments 95 - 95 - 95 - 216 - 216 - 100 116Foreign currency derivatives 346 - 346 346 - - 377 - 377 377 - -Commodity derivatives 3 - 3 3 - - 10 - 10 10 - -Other derivatives 17 - 17 17 - - - - - - - -Other receivables 1,075 598 477 - - 477 952 348 604 - - 604Trade receivables 1,280 - 1,280 - - 1,280 1,531 - 1,531 - - 1,531Contract assets 2.3 1,399 - 1,399 - - 1,399 1,227 - 1,227 - - 1,227Cash and cash equivalents 2,378 - 2,378 - - 2,378 2,420 - 2,420 - - 2,420 Total financial assets, non-current and current 6,681 598 6,083 366 157 5,560 6,814 348 6,466 387 158 5,921Financial liabilities, non-current and currentFinancial debts2,106 - 2,106 - - 2,106 1,116 - 1,116 - - 1,116Foreign currency derivatives 348 - 348 348 - - 377 - 377 377 - -Commodity derivatives 16 - 16 16 - - 9 - 9 9 - -Other liabilities 1,044 781 263 - - 263 568 453 115 - - 115Trade payables 4,089 - 4,089 - - 4,089 4,286 - 4,286 - - 4,286Contingent consideration 321 - 321 - 321 - 320 - 320 - 320 -Total financial liabilities, non-current and current 7,924 781 7,143 364 321 6,458 6,676 453 6,223 386 320 5,5172022 2021Financial instruments Fair valueFair valuemeasured at fair valueCarrying Carrying mEUR Valuation techniqueamountTotal Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3amountOther investments Market prices/Discounted cash \ufb02ow62 62 - - 62 5858 - - 58Financial investments Market prices 95 95 95 - - 100 100 100 - -Renewable energy Forward pricingcertificates (RECs)- - - - - - - - - -Foreign currency Forward pricing and derivativesswap models346 346 - 346 - 377 377 - 377 -Commodity derivatives Forward pricing 3 3 - 3 - 10 10 - 10 -Interest rate swap Swap Model 17 17 - 17 - - - - - -Other receivables and derivative financial instruments 366366 - 366 - 387 387 - 387 -Financial assets 523 523 95 366 62 545 545 100 387 58Financial debts Market prices - - - - - - - - - -Foreign currency Forward pricing and derivativesswap models348 348 - 348 - 377 377 - 377 -Commodity derivatives Forward pricing 16 16 - 16 - 9 9 - 9 -Other liabilities and derivative financial instruments364 364 - 364 - 386 386 - 386 -Contingent consideration Discounted cash \ufb02ow 321 321 - - 321 320 320 - - 320Financial liabilities 685 685 - 364 321 706 706 - 386 320", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-208-4": { "value": "2022 2021Total carrying Carrying Carrying Categories of financial instrumentsTotal carrying Carrying Carrying Categories of financial instrumentsamount in amount amount amount in amount amount the balance non-financial financial Fair value \u2013 hedging Fair value through Amortised the balance non-financial financial Fair value \u2013 hedging Fair value through Amortised mEURNotesheetinstrumentsinstrumentsinstrumentsprofit or losscostsheetinstrumentsinstrumentsinstrumentsprofit or losscostFinancial assets, non-current and currentOther investments88 - 88 - 62 26 81 - 81 - 58 23Financial investments 95 - 95 - 95 - 216 - 216 - 100 116Foreign currency derivatives 346 - 346 346 - - 377 - 377 377 - -Commodity derivatives 3 - 3 3 - - 10 - 10 10 - -Other derivatives 17 - 17 17 - - - - - - - -Other receivables 1,075 598 477 - - 477 952 348 604 - - 604Trade receivables 1,280 - 1,280 - - 1,280 1,531 - 1,531 - - 1,531Contract assets 2.3 1,399 - 1,399 - - 1,399 1,227 - 1,227 - - 1,227Cash and cash equivalents 2,378 - 2,378 - - 2,378 2,420 - 2,420 - - 2,420 Total financial assets, non-current and current 6,681 598 6,083 366 157 5,560 6,814 348 6,466 387 158 5,921Financial liabilities, non-current and currentFinancial debts2,106 - 2,106 - - 2,106 1,116 - 1,116 - - 1,116Foreign currency derivatives 348 - 348 348 - - 377 - 377 377 - -Commodity derivatives 16 - 16 16 - - 9 - 9 9 - -Other liabilities 1,044 781 263 - - 263 568 453 115 - - 115Trade payables 4,089 - 4,089 - - 4,089 4,286 - 4,286 - - 4,286Contingent consideration 321 - 321 - 321 - 320 - 320 - 320 -Total financial liabilities, non-current and current 7,924 781 7,143 364 321 6,458 6,676 453 6,223 386 320 5,517", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-219-2": { "value": "4.4\u2002Share capitalNumber of shares 2022 2021Number of shares as at 1 January1,009,867,260 201,973,452Share split 1:5 - 807,893,808Number of shares as at 31 December1,009,867,260 1,009,867,260Shares outstanding 1,006,177,558 1,005,144,100Treasury shares 3,689,702 4,723,160Number of shares as at 31 December1,009,867,260 1,009,867,260Vestas Wind Systems A/S has acquired treasury shares as follows:2022 2021Average share price, purchases (DKK)- 237Purchase amount (mEUR) - 12Treasury shares are acquired to cover issues of shares under Vestas\u2019 incentive programmes or as part of its capital structure strategy. The share capital has been fully paid.Net proposed cash distribution to shareholdersmEUR 2022 2021Dividend- 50Dividend excluding treasury shares.Movements in share capitalDuring 2018 there was a reduction of share capital by DKK 9,800,944 nominally by cancelling 9,800,944 shares from Vestas\u2019 holding of treasury shares. During 2019, there was a reduction of share capital by DKK 6,974,040 nominally by cancelling 6,794,040 shares from Vestas\u2019 holding of treasury shares. During 2020, there was a reduction of share capital by DKK 1,977,848 nominally by cancelling 1,977,848 shares from Vestas\u2019 holding of treasury shares. Vestas Wind Systems A/S has completed a capital increase of nominally DKK 5,049,337, representing 5,049,337 shares of nominally DKK 1 each. During 2021, a share split of Vestas\u2019 shares with a ratio 1:5 was carried out with effect as of 28 April 2021. Consequently, each share of nominally DKK 1.00 was split into five new shares of nominally DKK 0.20. Except for these six transactions, the share capital has not changed in the period 2018-2022. All shares rank equally.\u2002Accounting policiesTreasury sharesTreasury shares are deducted from the share capital upon cancellation at their nominal value of DKK 0.20 per share. Differences between this amount and the amount paid to acquire treasury shares are deducted directly in equity.", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-222-4": { "value": "Net proposed cash distribution to shareholdersmEUR 2022 2021Dividend- 50Dividend excluding treasury shares.DividendA proposed dividend is recognised as a liability at the time of adoption at the Annual General Meeting (declaration date). The proposed dividend for the year is included in retained earnings.", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-226-2": { "value": "4.5\u2002Earnings per share2022 2021Profit for the year (mEUR) \u2013 owners of Vestas Wind Systems A/S (1,572) 134Weighted average number of ordinary shares 1,009,867,260 1,009,867,260Weighted average number of treasury shares (3,689,702) (4,818,797)Weighted average number of ordinary shares outstanding 1,006,177,558 1,005,048,463Dilutive effect of restricted performance shares - 2,922,121Average number of shares outstanding including restricted performance shares 1,006,177,558 1,007,970,584Earnings per share, EPS (EUR) (1.56) 0.13Earnings per shares, diluted, EPS-D (EUR) (1.56) 0.13Adjustments to the income statement, 1 January \u2013 31 December 2021Income statementEffect of mEUR Reportednew policy AdjustedProduction costs(14,027) (4) (14,031)Gross profit 1,560 (4) 1,556Research and development costs(364) (25) (389)Distribution costs (367) (4) (371)Administration costs (368) - (368)Operating profit (EBIT) before special items461 (33) 428Operating profit (EBIT) 322 (33) 289Profit before tax 257 (33) 224Income tax (81) 0 (81)Profit for the year 176 (33) 143Profit is attributable to:Owners of Vestas Wind Systems A/S167 (33) 134Earnings per share (EPS):Earnings per share (EUR)0.17 (0.04) 0.13Earnings per share (EUR), diluted0.17 (0.04) 0.13", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-224-4": { "value": "\u2002Accounting policiesTreasury sharesTreasury shares are deducted from the share capital upon cancellation at their nominal value of DKK 0.20 per share. Differences between this amount and the amount paid to acquire treasury shares are deducted directly in equity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-225-4": { "value": "DividendA proposed dividend is recognised as a liability at the time of adoption at the Annual General Meeting (declaration date). The proposed dividend for the year is included in retained earnings.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-229-3": { "value": "Income tax for the yearmEUR 2022 2021Current tax on profit for the year134 (60)Deferred tax on profit for the year (317) 123Tax on profit for the year (183) 63Change in income tax rate - (2)Adjustments relating to previous years (net) 59 20Income tax for the year recognised in the income statement, expense/(income) (124) 81Deferred tax on other comprehensive income for the year (15) 11Tax recognised in other comprehensive income, expense/(income) (15) 11Deferred tax on equity transactions 1 9Tax recognised in equity 1 9Total income taxes for the year, expense/(income) (138) 1015.2\u2002Deferred taxNo provision is made for deferred tax regarding undistributed earnings in subsidiaries, as the Group controls the release of the obligation.Deferred tax recognised on tax losses is mainly in jurisdictions where there are no expiry limits. As at 31 December 2022, the value of recognised deferred tax assets amounted to EUR 497m (2021: EUR 378m), of which EUR 399m (2021: EUR 86m) relates to tax loss carry-forwards. Out of recognised tax loss carry forwards of EUR 399m (2021: EUR 86m) EUR 8m (2021: EUR 44m) are subject to expiry if not used within 5-10 years whereas the remaining EUR 391m (2021: EUR 42m) are not subject to any limitations. Following the Group transfer pricing policy these losses are expected to be utilised.Of the total deferred tax relating to tax loss carry-forwardswritten down, EUR 60m (2021: EUR 0m) relates to Denmark. The recognised loss carry-forward relating to Denmark amounts to EUR 1,727m (2021: EUR 0m).As many other multinational businesses, Vestas recognises the increased focus on the transfer pricing and the con sequent allocation of profits to the relevant countries. Even though the Vestas\u2019 subsidiaries pay corporate tax in the countries in which they operate, Vestas is still part of a number of tax audits on different locations. Some of these disputes concern significant amounts and uncertainties. Vestas believes that the provisions made for uncertain tax positions not yet settled with the local tax authorities is adequate. However, the actual obligation may differ and is subject to the result of the litigations and settlements with the relevant tax authorities.\u2002 Key accounting estimates Valuation of deferred tax assetsThe Group recognises deferred tax assets, including the tax value of tax loss carry-forwards, where Management assesses that the tax assets may be utilised in the foreseeable future for set-off against positive taxable income. The assessment is made on an annual basis and is based on the budgets and business plans for future years, including planned business initiatives. Key parameters are expected revenue and EBIT development considering expected allocation of future taxable income based on the transfer pricing policy in place. Due to the uncertainties relating to allocation of profits Management has limited the forecast period used to determine the utilisation to three years.Of the total tax loss carry-forwards, EUR 61m (2021: EUR 31m) is expected to be realised within 12 months, and EUR 416m (2021: EUR 65m) is expected to be realised later than 12 months after the balance sheet date.The assessment in 2022 resulted in an additional write-down of deferred tax assets by EUR 21m (2021 EUR 32m reversal of write-down) with the write down being primarily due to the fact that certain jurisdictions have more tax assets than what is expected to be utilised in the foreseeable future.The value of non-recognised tax assets totals EUR 122m (2021: EUR 101m), of which EUR 122m (2021: EUR 101m) relates to write-down of tax assets that are not expected to be utilised in the foreseeable future.5.2\u2002Deferred tax \u2013 continuedmEUR 2022 2021Deferred tax as at 1 January, net assets16 177Impact from change in accounting policy - 4Adjusted deferred tax as at 1 January, net assets 16 181Exchange rate adjustments 1 -Deferred tax on profit for the year 317 (123)Adjustment relating to previous years (9) (25)Changes in income tax rate - 2Deferred tax on equity transactions (1) (9)Addition related to acquisitions and equity adjustments - 1Tax on other comprehensive income 15 (11)Deferred tax as at 31 December, net assets 339 16Deferred tax assets specified as follows:Tax value of tax loss carry-forwards (net)477 86Intangible assets (328) (8)Property, plant and equipment (18) (32)Current assets 236 182Provisions 131 139Write-down of tax assets (122) (101)1Other121 112Deferred tax assets 497 378Deferred tax provisions specified as follows:Tax value of tax loss carry-forwards (net)- (13)Intangible assets 1 318Property, plant and equipment 43 50Current assets 89 71Provisions 13 (17)Other 12 (47)Deferred tax provisions 158 3621 Other mainly relates to deferred revenue and share-based payment and hedges.\u2002Accounting policiesDeferred tax is measured using the balance sheet liability method in respect of all temporary differences between the carrying amount and the tax base of assets and liabilities. Deferred tax is, however, not recognised in respect of temporary differences on initial recognition of goodwill and other items, apart from business acquisitions, where temporary differences have arisen at the time of acquisition without affecting the profit for the year or the taxable income. In cases where the computation of the tax base may be made according to different tax rules, deferred tax is measured on the basis of management\u2019s intended use of the asset and settlement of the liability, respectively.Deferred tax assets, including the tax base of tax loss carry-forwards, are recognised in other non-current assets at the value at which the asset is expected to be realised, either by elimination of tax on future earnings or by set-off against deferred tax liabilities within the same legal tax entity and jurisdiction.Deferred tax assets are reviewed on an annual basis and are only recognised when it is probable that they will be utilised in future periods.Adjustments are made to deferred tax to take account of the elimination of unrealised inter-company profits and losses.Deferred tax is measured on the basis of the tax rules and tax rates of the respective countries that will be effective when the deferred tax is expected to crystallise as current tax based on the legislation at the balance sheet date. Changes to deferred tax due to changes to tax rates are recognised in the income statement except for items recognised directly in equity.Adjustments to the balance sheet, 1 January 2021Assets Effect of mEUR Reportednew policy AdjustedCompleted development projects621 (1) 620Software 164 (17) 147Development projects in progress317 (17) 300Total intangible assets2,888 (35) 2,853Deferred tax 335 4 339Total other non-current assets1,003 4 1,007Total non-current assets5,913 (31) 5,882Total assets 18,160 (31) 18,129Adjustments to the balance sheet, 31 December 2021Assets Effect of mEUR Reportednew policy AdjustedCompleted development projects619 (1) 618Software 140 (17) 123Development projects in progress426 (50) 376Total intangible assets3,130 (68) 3,062Deferred tax 374 4 378Total other non-current assets1,627 4 1,631Total non-current assets6,848 (64) 6,784Total assets 19,712 (64) 19,648", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-228-2": { "value": "5.1\u2002Income taxIncome tax for the yearmEUR 2022 2021Current tax on profit for the year134 (60)Deferred tax on profit for the year (317) 123Tax on profit for the year (183) 63Change in income tax rate - (2)Adjustments relating to previous years (net) 59 20Income tax for the year recognised in the income statement, expense/(income) (124) 81Deferred tax on other comprehensive income for the year (15) 11Tax recognised in other comprehensive income, expense/(income) (15) 11Deferred tax on equity transactions 1 9Tax recognised in equity 1 9Total income taxes for the year, expense/(income) (138) 101Computation of effective tax ratePercent 2022 2021Income tax rate in Denmark22 22Adjustment relating to previous years (net) (4) 9Deviation in foreign subsidiaries\u2019 tax rates compared to the Danish tax rate (net)(2) 3Income and expenses non-taxable (4) 7Change in write-down of deferred tax assets and tax provisions(5) (5)Income/loss from investments in joint ventures - 0Effective tax rate 7 36\u2002 Key accounting estimates Income taxes and uncertain tax positionThe Group continuously wants to be a compliant corporate tax citizen in collaboration with our operations and stakeholders and to support shareholder interest and our reputation. To ensure compliance, national and international tax laws as well as the OECD Guidelines are acknowledged and followed throughout the world.The Group is subject to income taxes around the world and therefore recognise that significant judgement is required in determining the worldwide accrual for income taxes, deferred income tax assets and liabilities and provision for uncertain tax positions.The global business implies that the Group may be subject to disputes on allocation of profits between different jurisdictions. Management judgement is applied to assess the expected outcome of such tax disputes which is provided for in provision for uncertain tax positions. Management believes that provisions made for uncertain tax positions not yet settled with local tax authorities at year end is adequate. However, the actual obligation may deviate and is dependent on the result of litigations and settlements with the relevant tax authorities.The provision for uncertain tax positions has been derived by applying probability weighted outcomes for all uncertainties with multiple potential outcomes and in scenarios where the outcome is determined by a single point it is determined by the most probable outcome.\u2002Accounting policiesTax for the year consists of current tax and deferred tax for the year including adjustments to previous years and changes in provision for uncertain tax positions. The tax attributable to the profit for the year is recognised in the income statement, whereas the tax attributable to equity transactions is recognised directly in equity. The tax expense relating to items recognised in other comprehensive income is recognised in other comprehensive incomeFollowing developments in ongoing tax disputes primarily related to transfer pricing cases, uncertain tax positions are assessed individually and are generally presented as part of non-current tax receivables or non-current tax payables. The uncertain tax positions that materialize and become certain or virtually certain are classified as current tax. Current tax liabilities and receivables are recognised in the balance sheet at the amounts calculated on the taxable income for the year adjusted for tax on taxable incomes for prior years and for taxes paid on account.5.1\u2002Income tax \u2013 continuedIncome tax assets and liabilitiesmEUR 2022 2021Income tax as at 1 January, net assets/(liabilities)(70) (95)Exchange rate adjustments 6 -Adjustment from business combination - (235)Income tax for the year (134) 60Adjustments relating to previous years (50) 5Settlements against VAT receivables 20 21Income tax paid in the year 144 174Income tax as at 31 December, net assets/(liabilities) (84) (70)Receivables specified as follows:0-1 year51 102> 1 year 100 229Income tax receivables 151 331Liabilities specified as follows:0-1 year(58) (75)> 1 year (177) (326)Income tax liabilities (235) (401)Adjustments to the income statement, 1 January \u2013 31 December 2021Income statementEffect of mEUR Reportednew policy AdjustedProduction costs(14,027) (4) (14,031)Gross profit 1,560 (4) 1,556Research and development costs(364) (25) (389)Distribution costs (367) (4) (371)Administration costs (368) - (368)Operating profit (EBIT) before special items461 (33) 428Operating profit (EBIT) 322 (33) 289Profit before tax 257 (33) 224Income tax (81) 0 (81)Profit for the year 176 (33) 143Profit is attributable to:Owners of Vestas Wind Systems A/S167 (33) 134Earnings per share (EPS):Earnings per share (EUR)0.17 (0.04) 0.13Earnings per share (EUR), diluted0.17 (0.04) 0.13", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-233-4": { "value": "\u2002Accounting policiesTax for the year consists of current tax and deferred tax for the year including adjustments to previous years and changes in provision for uncertain tax positions. The tax attributable to the profit for the year is recognised in the income statement, whereas the tax attributable to equity transactions is recognised directly in equity. The tax expense relating to items recognised in other comprehensive income is recognised in other comprehensive incomeFollowing developments in ongoing tax disputes primarily related to transfer pricing cases, uncertain tax positions are assessed individually and are generally presented as part of non-current tax receivables or non-current tax payables. The uncertain tax positions that materialize and become certain or virtually certain are classified as current tax. Current tax liabilities and receivables are recognised in the balance sheet at the amounts calculated on the taxable income for the year adjusted for tax on taxable incomes for prior years and for taxes paid on account.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-236-3": { "value": "Income tax assets and liabilitiesmEUR 2022 2021Income tax as at 1 January, net assets/(liabilities)(70) (95)Exchange rate adjustments 6 -Adjustment from business combination - (235)Income tax for the year (134) 60Adjustments relating to previous years (50) 5Settlements against VAT receivables 20 21Income tax paid in the year 144 174Income tax as at 31 December, net assets/(liabilities) (84) (70)Receivables specified as follows:0-1 year51 102> 1 year 100 229Income tax receivables 151 331Liabilities specified as follows:0-1 year(58) (75)> 1 year (177) (326)Income tax liabilities (235) (401)", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-242-4": { "value": "\u2002Accounting policiesDeferred tax is measured using the balance sheet liability method in respect of all temporary differences between the carrying amount and the tax base of assets and liabilities. Deferred tax is, however, not recognised in respect of temporary differences on initial recognition of goodwill and other items, apart from business acquisitions, where temporary differences have arisen at the time of acquisition without affecting the profit for the year or the taxable income. In cases where the computation of the tax base may be made according to different tax rules, deferred tax is measured on the basis of management\u2019s intended use of the asset and settlement of the liability, respectively.Deferred tax assets, including the tax base of tax loss carry-forwards, are recognised in other non-current assets at the value at which the asset is expected to be realised, either by elimination of tax on future earnings or by set-off against deferred tax liabilities within the same legal tax entity and jurisdiction.Deferred tax assets are reviewed on an annual basis and are only recognised when it is probable that they will be utilised in future periods.Adjustments are made to deferred tax to take account of the elimination of unrealised inter-company profits and losses.Deferred tax is measured on the basis of the tax rules and tax rates of the respective countries that will be effective when the deferred tax is expected to crystallise as current tax based on the legislation at the balance sheet date. Changes to deferred tax due to changes to tax rates are recognised in the income statement except for items recognised directly in equity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-243-2": { "value": "6.1\u2002Audit feesmEUR 2022 2021Audit:PricewaterhouseCoopers4 3Total audit 4 3Non-audit services: PricewaterhouseCoopersAssurance engagements0 0Tax assistance 1 1Other services 1 1Total non-audit services 2 2Total 6 5Vestas\u2019s policy is to follow the 70 percent fee cap restriction on non-audit services provided by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab, Denmark, the auditor of the parent company. PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab complies with the 70 percent fee cap restriction in 2022. Non-audit services provided by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab, Denmark, amounted to EUR 1m, relating to advisory services and tax compliance advices.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-246-2": { "value": "6.2\u2002 Assets and liabilities held for sale On 9 August 2022, Vestas signed an agreement for the sale of the converters & controls business to KK Wind Solutions. The transaction is expected to close in the first quarter of 2023, subject to receipt of approvals from the relevant regulatory authorities and separation of the converters and controls business. Therefore, it has been classified as held for sale as at 31 December 2022.Assets held for sale includes property, plant and equipment of EUR 62m and inventory of EUR 111m. Liabilities held for sale include lease liabilities of EUR 1m and other liabilities of EUR 2m.The expected gain on the sale is approx. EUR 150m.", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-256-3": { "value": "Contingent liabilitiesVestas has entered into binding contracts concerning purchase of property, plant and equipment to be delivered in 2023 and future periods at a value of EUR 91m (2021: EUR 85m). Vestas has made commitments to invest in funds managed by Copenhagen Infrastructure Partners P/S. As at 31 December 2022, undrawn commitments amounted to EUR 182m.In March 2022, a number of lawsuits was filed against Vestas in relation to a framework agreement which Vestas contends has expired. Vestas believes the claims to be without merit and hence has made no provision in relation to the complaints. In the event that Vestas is not successful in its defence of these cases, there potentially could be a financial impact on Vestas.Vestas is also involved in a number of litigation proceedings. It is Management\u2019s assessment that these proceedings will not have a material effect on the financial position of the Group beyond what is already recognised in assets and liabilities as at 31 December 2022. Refer to note. 5.2 concerning contingent liabilities on transfer pricing.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-256-4": { "value": "Contingent liabilitiesVestas has entered into binding contracts concerning purchase of property, plant and equipment to be delivered in 2023 and future periods at a value of EUR 91m (2021: EUR 85m). Vestas has made commitments to invest in funds managed by Copenhagen Infrastructure Partners P/S. As at 31 December 2022, undrawn commitments amounted to EUR 182m.In March 2022, a number of lawsuits was filed against Vestas in relation to a framework agreement which Vestas contends has expired. Vestas believes the claims to be without merit and hence has made no provision in relation to the complaints. In the event that Vestas is not successful in its defence of these cases, there potentially could be a financial impact on Vestas.Vestas is also involved in a number of litigation proceedings. It is Management\u2019s assessment that these proceedings will not have a material effect on the financial position of the Group beyond what is already recognised in assets and liabilities as at 31 December 2022. Refer to note. 5.2 concerning contingent liabilities on transfer pricing.", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-254-2": { "value": "6.4\u2002 Contingent assets, liabilities, and contractual obligationsGuarantees and indemnitiesVestas provides indemnities and guarantees to third parties on behalf of non-Vestas entities and joint ventures with a notional amount of EUR 46m (2021: EUR 17m). No guaran-tees have been utilised during 2022 or in previous years and none of the indemnities are expected at the balance sheet date to be utilised.Contingent liabilitiesVestas has entered into binding contracts concerning purchase of property, plant and equipment to be delivered in 2023 and future periods at a value of EUR 91m (2021: EUR 85m). Vestas has made commitments to invest in funds managed by Copenhagen Infrastructure Partners P/S. As at 31 December 2022, undrawn commitments amounted to EUR 182m.In March 2022, a number of lawsuits was filed against Vestas in relation to a framework agreement which Vestas contends has expired. Vestas believes the claims to be without merit and hence has made no provision in relation to the complaints. In the event that Vestas is not successful in its defence of these cases, there potentially could be a financial impact on Vestas.Vestas is also involved in a number of litigation proceedings. It is Management\u2019s assessment that these proceedings will not have a material effect on the financial position of the Group beyond what is already recognised in assets and liabilities as at 31 December 2022. Refer to note. 5.2 concerning contingent liabilities on transfer pricing.Contingent assetsVestas has made supplier claims for faulty deliveries. However, it is Management\u2019s opinion that settlement of these are not virtually certain, and therefore not recognised in the financial position of Vestas, except for supplier claims accounted for as other receivables, refer note 2.5.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-261-2": { "value": "6.6\u2002Subsequent eventsFull stop of our activities in RussiaThe environment in and around Russia leaves Vestas with no viable options to continue to pursue orderly corporate liquidations and activity wind down. On 31 January 2023 Vestas therefore exited Russia by putting a full stop to all remaining corporate activities in Russia without delay, including terminating remaining employees and leaving stranded assets including cash idle.Vestas will from 31 January deconsolidate its Russian entities, Vestas Manufacturing RUS and Vestas RUS with a minor impact to special items in 2023. Other than the events disclosed above or recognised or disclosed elswhere in the consolidated financial statements, no events have occurred subsequent to 31 December 2022 which could have a significant impact on the consolidated financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-265-5": { "value": "Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%)Parent companySales and service unitsVestas Wind Technology India Pvt Limited, India 100Vestas Southern Africa Pty. Ltd., South Africa 80Vestas Wind Systems A/S, DenmarkVestas Americas A/S, Denmark100Vestas Japan Co. Ltd., Japan 100Vestas Ukraine LLC, Ukraine 100Vestas America Holding Inc., USA 100Vestas Wind Technology Pakistan (Private) Limited, Vestas Central Europe d.o.o. Beograd, Serbia 100Pakistan100Vestas - American Wind Technology Inc., USA 100Vestas Belgium NV, Belgium 100Vestas Wind Technology (Thailand) Ltd., Thailand 100Production unitsVestas - Canadian Wind Technology Inc., USA 100Vestas Georgia LLC, Georgia 100Vestas Wind Technology Vietnam LLC, Vietnam 100Vestas Nacelles America, Inc., USA100Vestas - Portland HQ LLC, USA 100Availon Holding GmbH, Germany 100Vestas Mongolia LLC, Mongolia 1002Vestas Blades America, Inc., USA 100Vestas Upwind Solutions Inc., USA 100Availon GmbH, Germany100Vestas Central Europe A/S, Denmark 100Vestas Manufacturing A/S, Denmark 100Availon Inc., USA 100Vestas Mediterranean A/S, Denmark 1002Vestas Deutschland GmbH, Germany1002Vestas Blades Deutschland GmbH, Germany100Steelhead Americas, LLC, USA 100Vestas Italia S.r.l., Italy 1002Vestas Services GmbH, Germany100WPT Nord GmbH, Germany 100Steelhead Wind 1 LLC, USA 100Vestas Hellas Wind Technology S.A., Greece 100Vestas Benelux B.V., The Netherlands 100Vestas Blades Italia S.r.l., Italy 100Steelhead Wind 2 LLC, USA 100Vestas E\u00f3lica S.A., Spain 100Vestas \u00d6sterreich GmbH, Austria 100Vestas Wind Technology (China) Co. Ltd., China 100Steelhead Wind 2a LLC, USA 100Vestas France SAS, France 100Vestas Czech Republic s.r.o., Czech Republic 100Vestas Manufacturing Spain S.L.U., Spain 100Vestas Asia Pacific A/S , Denmark 100Vestas WTG Mexico S.A. de C.V., Mexico 100Vestas Hungary Kft., Hungary 100Vestas Control Systems Spain S.L.U., Spain 100Vestas Asia Pacific Wind Technology Pte. Ltd., Singapore 100Vestas Mexicana del Viento S.A. de C.V., Mexico 100Vestas Bulgaria EOOD, Bulgaria 1002Vestas Nacelles Deutschland GmbH, Germany100Vestas - Australian Wind Technology Pty. Ltd., Australia 100Vestas do Brasil Energia Eolica Ltda., Brazil 100Vestas CEU Romania S.R.L, Romania 1003Vestas Manufacturing RUS OOO, Russia100Vestas Korea Wind Technology Ltd., South Korea 100Vestas Argentina S.A., Argentina 100Vestas Central Europe-Zagreb d.o.o, Croatia 100Vestas New Zealand Wind Technology Ltd., Vestas Chile Turbinas E\u00f3lica Limitada Santiago, Chile 100New Zealand100Vestas Slovakia spol S.r.o., Slovakia 100Vestas R\u00fczgar Enerjisi Sistemleri 3Vestas Taiwan Ltd., Taiwan 100Vestas RUS OOO, Russia100Sanayi Ve Ticaret Ltd. Sirketi, Turkey100Vestas Wind Technology (Beijing) Co. Ltd., China 100Vestas Eastern Africa Ltd., Kenya 100Vestas Turbinas E\u00f3licas de Uruguay S.A., Uruguay 1001 Companies of immaterial significance have been left out of the overview.2 Vestas Deutschland GmbH, Vestas Blades Deutschland GmbH, Vestas Nacelles Deutschland GmbH, Vestas Services GmbH and Availon GmbH, wholly owned subsidiaries of Vestas Wind Systems A/S, claiming not to prepare notes and management report to its financial statements pursuant to the relief provision of section 264 Abs. 3 HGB.3 The companies are in a liquidation process.Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%)Vestas MED (Cyprus) Ltd., Cyprus 100UpWind Solutions Canada, Ltd., Canada 100Portugal Unipessoal Lda. Portugal 100Vestas Shared Service A/S, Denmark 100Vestas Nicaragua SA, Nicaragua 100Vestas Kazakhstan LLP, Kazakhstan 100Vestas Offshore Wind Poland Z.O.O, Poland 100Vestas Service Delivery Center - Szczecin sp Z.o.o., Poland100Vestas CV Limitada, The Republic of Cape Verde 100Vestas Overseas Panam\u00e1 S.A., Panama 100Vestas Offshore Wind Belgium NV, Belgium 100Vestas Cantabria Prototype SL, Spain 100Vestas Wind Systems Dominican Republic S.R.L., Vestas Portugal, LDA, Portugal 100Vestas Offshore Wind US inc., USA 100Dominican Republic100Vestas Senegal S.A.R.L.U, Senegal 100Vestas Offshore Wind Taiwan Ltd., Taiwan 100Vestas Peru S.A.C., Peru 100Vestas Wind Lanka (PVT) Ltd., Sri Lanka 100Vestas Offshore Wind Japan Ltd, Japan 100Vestas Middle East S.L.U., Spain 100Joint ventures Vestas Kompozit Kanat Sanayi Ve Ticaret Anonim Covento A/S, Denmark 100Vestas Costa Rica S.A., Costa Rica 100\u015eirketi \u015eirketi, Turkey100Emerging Markets Power (Holdings) Limited, Ireland50Vestas Moroc SARLAV, Casablanca, Morocco 100UpWind Holdings, LLC, USA 100Airpower Windfarms Private Ltd., India 50Vestas Jamaica Wind Technology Ltd., Jamaica 100Utopus Insights, Inc., USA 100AQN SRW2 Holdings, LLC, USA 21Other subsidiariesVestas Guatemala, Guatemala 100NEG Micon UK Ltd., United Kingdom 100Helena Wind Holdco, LLC, USA 20Vestas Wind Systems (China) Co. Ltd., China100Availon LDA Portugal, Portugal 100NEG Micon Australia Pty. Ltd., Australia 100Panorama Wind, LLC, USA 20Vestas Switzerland AG, Switzerland 100Availon Iberia S.L., Spain 100Vestas Honduras, S.A. De C.V., Honduras 100BSW US Holdings, LLC, USA 20Vestas Services Philippines Inc., Philippines 100Vestas Northern Europe A/S, Denmark 100Vestas Colombia S.A.S, Colombia 100Vestas India Holding A/S, Denmark 100Vestas - Celtic Wind Technology Ltd., United Kingdom 100Vestas Saudi Arabia Limited Co., Saudi Arabia 100Wind Power Invest A/S, Denmark 100Vestas Northern Europe AB, Sweden 100Vestas El Salvador, S.A. De C.V., El Salvador 100AssociatesVestas Technology (UK) Limited, United Kingdom 100Vestas Poland Sp.z.o.o., Poland 100Roaring Fork Wind, LLC, USA 100Blakliden F\u00e4bodberget Holding AB, Sweden40Vestas Technology R&D (Beijing) Co. Ltd., China 100Vestas Ireland Ltd., Ireland 100Vestas Offshore Wind Sweden AB, Sweden 100SoWiTec Group GmbH, Germany 25Vestas Technology R&D Chennai Pte. Ltd., India 100Vestas Norway AS, Norway 100Vestas Offshore Wind UK Ltd., United Kingdom 100Copenhagen Infrastructure Partners P/S, Denmark 25Vestas Development A/S, Denmark 100Vestas Finland Oy, Finland 100Vestas Offshore WInd Blades UK Ltd., United Kingdom 100Vestas Shared Service (Spain), S.L.U., Spain 100Vestas Mediterranean A/S Sucursal, Bolivia 100Vestas Offshore Wind France SAS, France 1001 Companies of immaterial significance have been left out of the overview.2 Vestas Deutschland GmbH, Vestas Blades Deutschland GmbH, Vestas Nacelles Deutschland GmbH, Vestas Services GmbH and Availon GmbH, wholly owned subsidiaries of Vestas Wind Systems A/S, claiming not to prepare notes and management report to its financial statements pursuant to the relief provision of section 264 Abs. 3 HGB.", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-264-2": { "value": "16.7\u2002Legal entitiesName and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%)Parent companySales and service unitsVestas Wind Technology India Pvt Limited, India 100Vestas Southern Africa Pty. Ltd., South Africa 80Vestas Wind Systems A/S, DenmarkVestas Americas A/S, Denmark100Vestas Japan Co. Ltd., Japan 100Vestas Ukraine LLC, Ukraine 100Vestas America Holding Inc., USA 100Vestas Wind Technology Pakistan (Private) Limited, Vestas Central Europe d.o.o. Beograd, Serbia 100Pakistan100Vestas - American Wind Technology Inc., USA 100Vestas Belgium NV, Belgium 100Vestas Wind Technology (Thailand) Ltd., Thailand 100Production unitsVestas - Canadian Wind Technology Inc., USA 100Vestas Georgia LLC, Georgia 100Vestas Wind Technology Vietnam LLC, Vietnam 100Vestas Nacelles America, Inc., USA100Vestas - Portland HQ LLC, USA 100Availon Holding GmbH, Germany 100Vestas Mongolia LLC, Mongolia 1002Vestas Blades America, Inc., USA 100Vestas Upwind Solutions Inc., USA 100Availon GmbH, Germany100Vestas Central Europe A/S, Denmark 100Vestas Manufacturing A/S, Denmark 100Availon Inc., USA 100Vestas Mediterranean A/S, Denmark 1002Vestas Deutschland GmbH, Germany1002Vestas Blades Deutschland GmbH, Germany100Steelhead Americas, LLC, USA 100Vestas Italia S.r.l., Italy 1002Vestas Services GmbH, Germany100WPT Nord GmbH, Germany 100Steelhead Wind 1 LLC, USA 100Vestas Hellas Wind Technology S.A., Greece 100Vestas Benelux B.V., The Netherlands 100Vestas Blades Italia S.r.l., Italy 100Steelhead Wind 2 LLC, USA 100Vestas E\u00f3lica S.A., Spain 100Vestas \u00d6sterreich GmbH, Austria 100Vestas Wind Technology (China) Co. Ltd., China 100Steelhead Wind 2a LLC, USA 100Vestas France SAS, France 100Vestas Czech Republic s.r.o., Czech Republic 100Vestas Manufacturing Spain S.L.U., Spain 100Vestas Asia Pacific A/S , Denmark 100Vestas WTG Mexico S.A. de C.V., Mexico 100Vestas Hungary Kft., Hungary 100Vestas Control Systems Spain S.L.U., Spain 100Vestas Asia Pacific Wind Technology Pte. Ltd., Singapore 100Vestas Mexicana del Viento S.A. de C.V., Mexico 100Vestas Bulgaria EOOD, Bulgaria 1002Vestas Nacelles Deutschland GmbH, Germany100Vestas - Australian Wind Technology Pty. Ltd., Australia 100Vestas do Brasil Energia Eolica Ltda., Brazil 100Vestas CEU Romania S.R.L, Romania 1003Vestas Manufacturing RUS OOO, Russia100Vestas Korea Wind Technology Ltd., South Korea 100Vestas Argentina S.A., Argentina 100Vestas Central Europe-Zagreb d.o.o, Croatia 100Vestas New Zealand Wind Technology Ltd., Vestas Chile Turbinas E\u00f3lica Limitada Santiago, Chile 100New Zealand100Vestas Slovakia spol S.r.o., Slovakia 100Vestas R\u00fczgar Enerjisi Sistemleri 3Vestas Taiwan Ltd., Taiwan 100Vestas RUS OOO, Russia100Sanayi Ve Ticaret Ltd. Sirketi, Turkey100Vestas Wind Technology (Beijing) Co. Ltd., China 100Vestas Eastern Africa Ltd., Kenya 100Vestas Turbinas E\u00f3licas de Uruguay S.A., Uruguay 1001 Companies of immaterial significance have been left out of the overview.2 Vestas Deutschland GmbH, Vestas Blades Deutschland GmbH, Vestas Nacelles Deutschland GmbH, Vestas Services GmbH and Availon GmbH, wholly owned subsidiaries of Vestas Wind Systems A/S, claiming not to prepare notes and management report to its financial statements pursuant to the relief provision of section 264 Abs. 3 HGB.3 The companies are in a liquidation process.16.7\u2002Legal entities \u2013 continuedName and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%) Name and country Ownership (%)Vestas MED (Cyprus) Ltd., Cyprus 100UpWind Solutions Canada, Ltd., Canada 100Portugal Unipessoal Lda. Portugal 100Vestas Shared Service A/S, Denmark 100Vestas Nicaragua SA, Nicaragua 100Vestas Kazakhstan LLP, Kazakhstan 100Vestas Offshore Wind Poland Z.O.O, Poland 100Vestas Service Delivery Center - Szczecin sp Z.o.o., Poland100Vestas CV Limitada, The Republic of Cape Verde 100Vestas Overseas Panam\u00e1 S.A., Panama 100Vestas Offshore Wind Belgium NV, Belgium 100Vestas Cantabria Prototype SL, Spain 100Vestas Wind Systems Dominican Republic S.R.L., Vestas Portugal, LDA, Portugal 100Vestas Offshore Wind US inc., USA 100Dominican Republic100Vestas Senegal S.A.R.L.U, Senegal 100Vestas Offshore Wind Taiwan Ltd., Taiwan 100Vestas Peru S.A.C., Peru 100Vestas Wind Lanka (PVT) Ltd., Sri Lanka 100Vestas Offshore Wind Japan Ltd, Japan 100Vestas Middle East S.L.U., Spain 100Joint ventures Vestas Kompozit Kanat Sanayi Ve Ticaret Anonim Covento A/S, Denmark 100Vestas Costa Rica S.A., Costa Rica 100\u015eirketi \u015eirketi, Turkey100Emerging Markets Power (Holdings) Limited, Ireland50Vestas Moroc SARLAV, Casablanca, Morocco 100UpWind Holdings, LLC, USA 100Airpower Windfarms Private Ltd., India 50Vestas Jamaica Wind Technology Ltd., Jamaica 100Utopus Insights, Inc., USA 100AQN SRW2 Holdings, LLC, USA 21Other subsidiariesVestas Guatemala, Guatemala 100NEG Micon UK Ltd., United Kingdom 100Helena Wind Holdco, LLC, USA 20Vestas Wind Systems (China) Co. Ltd., China100Availon LDA Portugal, Portugal 100NEG Micon Australia Pty. Ltd., Australia 100Panorama Wind, LLC, USA 20Vestas Switzerland AG, Switzerland 100Availon Iberia S.L., Spain 100Vestas Honduras, S.A. De C.V., Honduras 100BSW US Holdings, LLC, USA 20Vestas Services Philippines Inc., Philippines 100Vestas Northern Europe A/S, Denmark 100Vestas Colombia S.A.S, Colombia 100Vestas India Holding A/S, Denmark 100Vestas - Celtic Wind Technology Ltd., United Kingdom 100Vestas Saudi Arabia Limited Co., Saudi Arabia 100Wind Power Invest A/S, Denmark 100Vestas Northern Europe AB, Sweden 100Vestas El Salvador, S.A. De C.V., El Salvador 100AssociatesVestas Technology (UK) Limited, United Kingdom 100Vestas Poland Sp.z.o.o., Poland 100Roaring Fork Wind, LLC, USA 100Blakliden F\u00e4bodberget Holding AB, Sweden40Vestas Technology R&D (Beijing) Co. Ltd., China 100Vestas Ireland Ltd., Ireland 100Vestas Offshore Wind Sweden AB, Sweden 100SoWiTec Group GmbH, Germany 25Vestas Technology R&D Chennai Pte. Ltd., India 100Vestas Norway AS, Norway 100Vestas Offshore Wind UK Ltd., United Kingdom 100Copenhagen Infrastructure Partners P/S, Denmark 25Vestas Development A/S, Denmark 100Vestas Finland Oy, Finland 100Vestas Offshore WInd Blades UK Ltd., United Kingdom 100Vestas Shared Service (Spain), S.L.U., Spain 100Vestas Mediterranean A/S Sucursal, Bolivia 100Vestas Offshore Wind France SAS, France 1001 Companies of immaterial significance have been left out of the overview.2 Vestas Deutschland GmbH, Vestas Blades Deutschland GmbH, Vestas Nacelles Deutschland GmbH, Vestas Services GmbH and Availon GmbH, wholly owned subsidiaries of Vestas Wind Systems A/S, claiming not to prepare notes and management report to its financial statements pursuant to the relief provision of section 264 Abs. 3 HGB.", "dimensions": { "concept": "ifrs-full:DisclosureOfCompositionOfGroupExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-269-2": { "value": "The Annual Report of Vestas Wind Systems A/S comprises the consolidated financial statements of Vestas Wind Systems A/S and its subsidiaries and separate financial statements of the parent company, Vestas Wind Systems A/S.The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and the additional Danish disclosure requirements for listed companies, the Danish Statutory Order on Adoption of IFRS issued pursuant to the Danish Financial Statements Act. ", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-270-2": { "value": "Basis of preparation The consolidated financial statements have been prepared under the historical cost method, except for the derivative financial instruments and marketable securities, which are measured at fair value and assets held for sale, which are measured at the lower of carrying amount and fair value less costs to sell. The consolidated financial statements are presented in million Euro. This note describes the general accounting policies. Other accounting policies are described in the separate notes to the consolidated financial statements. Materiality in the financial reporting For the preparation of the consolidated financial statements, Vestas discloses the information required according to IFRS, unless such information is deemed immaterial or irrelevant. A judgement is made of whether more detailed specifications are necessary in the presentation of Vestas\u2019 assets, liabilities, financial position, and results. All judgements are made with due consideration of legislation and the consolidated financial statements as a whole presenting a true and fair view. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-272-2": { "value": "Consolidated financial statements The consolidated financial statements comprise Vestas Wind Systems A/S (the parent company) and the subsidiaries over which Vestas Wind Systems A/S exercises control. Vestas Wind Systems A/S and its subsidiaries together are referred to as the Group. Joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. Vestas has assessed the nature of its joint arrangements and determined them to be joint ventures. An overview of Vestas legal entities is provided on pages 121-122. The consolidated financial statements are prepared from the Financial statements of the parent company and subsidiaries by combining accounting items of a uniform nature, with subsequent elimination of intercompany income and expenses, shareholdings, intercompany balances and dividends as well as unrealised profits and losses on transactions between consolidated entities. The consolidated financial statements are based on financial statements prepared under the accounting policies of Vestas. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-273-5": { "value": "Translation policies Functional currency and presentation currency Assets, liabilities and transactions of each of the reporting entities of Vestas are measured in the currency of the primary economic environment in which the entity operates (the functional currency). Transactions in currencies other than the functional currency are transactions in foreign currencies. The functional currency of the parent company is Danish kroner (DKK); however, due to Vestas\u2019 international relations, the consolidated financial statements are presented in Euro (EUR).Translation into presentation currency The balance sheet is translated into the presentation currency at the Euro rate at the balance sheet date. In the income statement the transaction date rates are based on average rates for the individual months to the extent that this does not materially distort the presentation of the underlying transactions. Translation of transactions and amounts Transactions in foreign currencies are initially translated into the functional currency at the exchange rates at the dates of transaction. Exchange adjustments arising due to differences between the transaction date rates and the rates at the dates of payment are recognised as financial income or financial costs in the income statement. Receivables, payables and other monetary items in foreign currencies not settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Exchange adjustments arising due to differences between the rates at the balance sheet date and the transaction date rates are recognised as financial income or financial costs in the income statement. Translation of Vestas entities On recognition in the consolidated financial statements of foreign entities with a functional currency that differs from the presentation currency of Vestas, income statements are translated at transaction date rates, and balance sheet items are translated at the exchange rates at the balance sheet date. The transaction date rates are based on average rates for the individual months to the extent that this does not materially distort the presentation of the underlying transaction. Exchange adjustments arising on the translation of the opening equity of foreign entities at exchange rates at the balance sheet date and on the translation of income statements from transaction date rates to exchange rates at the balance sheet date are recognised in other comprehensive income.Exchange adjustments of balances with foreign entities that are treated as part of the total net investment in the entity in question are recognised in other comprehensive income in the consolidated financial statements. On recognition in the consolidated financial statements of investments accounted for using the equity method with functional currencies that differ from the presentation currency of Vestas, the shares of results for the year are translated at average exchange rates. The shares of equity including goodwill are translated at the exchange rates at the balance sheet date. Exchange adjustments arising on the translation of the share of the opening equity of foreign investments accounted for using the equity method at exchange rates at the balance sheet date and on the translation of the share of results for the year from average exchange rates to exchange rates at the balance sheet date are recognised in other comprehensive income. On full or partial disposal of foreign entities, resulting in a loss of control or on repayment of balances treated as part of the net investment, the share of the accumulated exchange adjustments recognised in other comprehensive income, is recognised in the income statement at the same time as any profit or loss on the disposal. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-273-6": { "value": "Translation policies Functional currency and presentation currency Assets, liabilities and transactions of each of the reporting entities of Vestas are measured in the currency of the primary economic environment in which the entity operates (the functional currency). Transactions in currencies other than the functional currency are transactions in foreign currencies. The functional currency of the parent company is Danish kroner (DKK); however, due to Vestas\u2019 international relations, the consolidated financial statements are presented in Euro (EUR).", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-276-2": { "value": "Assets and liabilities held for saleAssets (or disposal groups) are classified as held for sale if the carrying amount will be recovered principally through a sales transaction rather than through continuing use and when the assets are expected to be disposed of within 12 months. Liabilities of a disposal group that are directly related to assets held for sale are presented correspondingly. Assets and liabilities held for sale are presented separately on the balance sheet. Immediately before the initial classification as held for sale, the carrying amounts of the assets and liabilities are measured in accordance with their applicable accounting policy. Assets and liabilities held for sale are subsequently measured at the lower of their carrying amount and fair value less cost to sell. Non-current assets held for sale are not depreciated.", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-268-3": { "value": "7.1\u2002General accounting policiesThe Annual Report of Vestas Wind Systems A/S comprises the consolidated financial statements of Vestas Wind Systems A/S and its subsidiaries and separate financial statements of the parent company, Vestas Wind Systems A/S.The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and the additional Danish disclosure requirements for listed companies, the Danish Statutory Order on Adoption of IFRS issued pursuant to the Danish Financial Statements Act. Basis of preparation The consolidated financial statements have been prepared under the historical cost method, except for the derivative financial instruments and marketable securities, which are measured at fair value and assets held for sale, which are measured at the lower of carrying amount and fair value less costs to sell. The consolidated financial statements are presented in million Euro. This note describes the general accounting policies. Other accounting policies are described in the separate notes to the consolidated financial statements. Materiality in the financial reporting For the preparation of the consolidated financial statements, Vestas discloses the information required according to IFRS, unless such information is deemed immaterial or irrelevant. A judgement is made of whether more detailed specifications are necessary in the presentation of Vestas\u2019 assets, liabilities, financial position, and results. All judgements are made with due consideration of legislation and the consolidated financial statements as a whole presenting a true and fair view. Consolidated financial statements The consolidated financial statements comprise Vestas Wind Systems A/S (the parent company) and the subsidiaries over which Vestas Wind Systems A/S exercises control. Vestas Wind Systems A/S and its subsidiaries together are referred to as the Group. Joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. Vestas has assessed the nature of its joint arrangements and determined them to be joint ventures. An overview of Vestas legal entities is provided on pages 121-122. The consolidated financial statements are prepared from the Financial statements of the parent company and subsidiaries by combining accounting items of a uniform nature, with subsequent elimination of intercompany income and expenses, shareholdings, intercompany balances and dividends as well as unrealised profits and losses on transactions between consolidated entities. The consolidated financial statements are based on financial statements prepared under the accounting policies of Vestas. Translation policies Functional currency and presentation currency Assets, liabilities and transactions of each of the reporting entities of Vestas are measured in the currency of the primary economic environment in which the entity operates (the functional currency). Transactions in currencies other than the functional currency are transactions in foreign currencies. The functional currency of the parent company is Danish kroner (DKK); however, due to Vestas\u2019 international relations, the consolidated financial statements are presented in Euro (EUR).Translation into presentation currency The balance sheet is translated into the presentation currency at the Euro rate at the balance sheet date. In the income statement the transaction date rates are based on average rates for the individual months to the extent that this does not materially distort the presentation of the underlying transactions. Translation of transactions and amounts Transactions in foreign currencies are initially translated into the functional currency at the exchange rates at the dates of transaction. Exchange adjustments arising due to differences between the transaction date rates and the rates at the dates of payment are recognised as financial income or financial costs in the income statement. Receivables, payables and other monetary items in foreign currencies not settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Exchange adjustments arising due to differences between the rates at the balance sheet date and the transaction date rates are recognised as financial income or financial costs in the income statement. Translation of Vestas entities On recognition in the consolidated financial statements of foreign entities with a functional currency that differs from the presentation currency of Vestas, income statements are translated at transaction date rates, and balance sheet items are translated at the exchange rates at the balance sheet date. The transaction date rates are based on average rates for the individual months to the extent that this does not materially distort the presentation of the underlying transaction. Exchange adjustments arising on the translation of the opening equity of foreign entities at exchange rates at the balance sheet date and on the translation of income statements from transaction date rates to exchange rates at the balance sheet date are recognised in other comprehensive income.Exchange adjustments of balances with foreign entities that are treated as part of the total net investment in the entity in question are recognised in other comprehensive income in the consolidated financial statements. On recognition in the consolidated financial statements of investments accounted for using the equity method with functional currencies that differ from the presentation currency of Vestas, the shares of results for the year are translated at average exchange rates. The shares of equity including goodwill are translated at the exchange rates at the balance sheet date. Exchange adjustments arising on the translation of the share of the opening equity of foreign investments accounted for using the equity method at exchange rates at the balance sheet date and on the translation of the share of results for the year from average exchange rates to exchange rates at the balance sheet date are recognised in other comprehensive income. On full or partial disposal of foreign entities, resulting in a loss of control or on repayment of balances treated as part of the net investment, the share of the accumulated exchange adjustments recognised in other comprehensive income, is recognised in the income statement at the same time as any profit or loss on the disposal. Assets and liabilities held for saleAssets (or disposal groups) are classified as held for sale if the carrying amount will be recovered principally through a sales transaction rather than through continuing use and when the assets are expected to be disposed of within 12 months. Liabilities of a disposal group that are directly related to assets held for sale are presented correspondingly. Assets and liabilities held for sale are presented separately on the balance sheet. Immediately before the initial classification as held for sale, the carrying amounts of the assets and liabilities are measured in accordance with their applicable accounting policy. Assets and liabilities held for sale are subsequently measured at the lower of their carrying amount and fair value less cost to sell. Non-current assets held for sale are not depreciated.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-268-4": { "value": "7.1\u2002General accounting policiesThe Annual Report of Vestas Wind Systems A/S comprises the consolidated financial statements of Vestas Wind Systems A/S and its subsidiaries and separate financial statements of the parent company, Vestas Wind Systems A/S.The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and the additional Danish disclosure requirements for listed companies, the Danish Statutory Order on Adoption of IFRS issued pursuant to the Danish Financial Statements Act. Basis of preparation The consolidated financial statements have been prepared under the historical cost method, except for the derivative financial instruments and marketable securities, which are measured at fair value and assets held for sale, which are measured at the lower of carrying amount and fair value less costs to sell. The consolidated financial statements are presented in million Euro. This note describes the general accounting policies. Other accounting policies are described in the separate notes to the consolidated financial statements. Materiality in the financial reporting For the preparation of the consolidated financial statements, Vestas discloses the information required according to IFRS, unless such information is deemed immaterial or irrelevant. A judgement is made of whether more detailed specifications are necessary in the presentation of Vestas\u2019 assets, liabilities, financial position, and results. All judgements are made with due consideration of legislation and the consolidated financial statements as a whole presenting a true and fair view. Consolidated financial statements The consolidated financial statements comprise Vestas Wind Systems A/S (the parent company) and the subsidiaries over which Vestas Wind Systems A/S exercises control. Vestas Wind Systems A/S and its subsidiaries together are referred to as the Group. Joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. Vestas has assessed the nature of its joint arrangements and determined them to be joint ventures. An overview of Vestas legal entities is provided on pages 121-122. The consolidated financial statements are prepared from the Financial statements of the parent company and subsidiaries by combining accounting items of a uniform nature, with subsequent elimination of intercompany income and expenses, shareholdings, intercompany balances and dividends as well as unrealised profits and losses on transactions between consolidated entities. The consolidated financial statements are based on financial statements prepared under the accounting policies of Vestas. Translation policies Functional currency and presentation currency Assets, liabilities and transactions of each of the reporting entities of Vestas are measured in the currency of the primary economic environment in which the entity operates (the functional currency). Transactions in currencies other than the functional currency are transactions in foreign currencies. The functional currency of the parent company is Danish kroner (DKK); however, due to Vestas\u2019 international relations, the consolidated financial statements are presented in Euro (EUR).Translation into presentation currency The balance sheet is translated into the presentation currency at the Euro rate at the balance sheet date. In the income statement the transaction date rates are based on average rates for the individual months to the extent that this does not materially distort the presentation of the underlying transactions. Translation of transactions and amounts Transactions in foreign currencies are initially translated into the functional currency at the exchange rates at the dates of transaction. Exchange adjustments arising due to differences between the transaction date rates and the rates at the dates of payment are recognised as financial income or financial costs in the income statement. Receivables, payables and other monetary items in foreign currencies not settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Exchange adjustments arising due to differences between the rates at the balance sheet date and the transaction date rates are recognised as financial income or financial costs in the income statement. Translation of Vestas entities On recognition in the consolidated financial statements of foreign entities with a functional currency that differs from the presentation currency of Vestas, income statements are translated at transaction date rates, and balance sheet items are translated at the exchange rates at the balance sheet date. The transaction date rates are based on average rates for the individual months to the extent that this does not materially distort the presentation of the underlying transaction. Exchange adjustments arising on the translation of the opening equity of foreign entities at exchange rates at the balance sheet date and on the translation of income statements from transaction date rates to exchange rates at the balance sheet date are recognised in other comprehensive income.Exchange adjustments of balances with foreign entities that are treated as part of the total net investment in the entity in question are recognised in other comprehensive income in the consolidated financial statements. On recognition in the consolidated financial statements of investments accounted for using the equity method with functional currencies that differ from the presentation currency of Vestas, the shares of results for the year are translated at average exchange rates. The shares of equity including goodwill are translated at the exchange rates at the balance sheet date. Exchange adjustments arising on the translation of the share of the opening equity of foreign investments accounted for using the equity method at exchange rates at the balance sheet date and on the translation of the share of results for the year from average exchange rates to exchange rates at the balance sheet date are recognised in other comprehensive income. On full or partial disposal of foreign entities, resulting in a loss of control or on repayment of balances treated as part of the net investment, the share of the accumulated exchange adjustments recognised in other comprehensive income, is recognised in the income statement at the same time as any profit or loss on the disposal. Assets and liabilities held for saleAssets (or disposal groups) are classified as held for sale if the carrying amount will be recovered principally through a sales transaction rather than through continuing use and when the assets are expected to be disposed of within 12 months. Liabilities of a disposal group that are directly related to assets held for sale are presented correspondingly. Assets and liabilities held for sale are presented separately on the balance sheet. Immediately before the initial classification as held for sale, the carrying amounts of the assets and liabilities are measured in accordance with their applicable accounting policy. Assets and liabilities held for sale are subsequently measured at the lower of their carrying amount and fair value less cost to sell. Non-current assets held for sale are not depreciated.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-278-2": { "value": "Equity Translation reserve The translation reserve in the consolidated financial statements comprises exchange rate adjustments arising on the translation of the financial statements of foreign entities from their func-tional currencies into the presentation currency of Vestas (EUR). Upon full or part realisation of the net investment in foreign entities, exchange adjustments are recognised in the income statement.Cash \ufb02ow hedging reserve The cash \ufb02ow hedging reserve in the consolidated financial statements comprises gains and losses on fair value adjust-ments of forward exchange contracts concerning future trans-actions as well as hedging in connection with commodities. Liabilities mEURRetained earnings4,773 (31) 4,742Attributable to the owners of Vestas4,654 (31) 4,623Total equity 4,703 (31) 4,672Total equity and liabilities18,160 (31) 18,129Liabilities mEURRetained earnings4,699 (64) 4,635Attributable to the owners of Vestas4,748 (64) 4,684Total equity 4,761 (64) 4,697Total equity and liabilities19,712 (64) 19,648Adjustments to the statement of changes in equity, 1 January \u2013 31 December 2021Statement of changes in equityEffect of mEUR Totalnew policy TotalEquity as at 1 January4,703 (31) 4,672Profit for the year 176 (33) 143Total comprehensive income for the year373 (33) 340Equity as at 31 December4,761 (64) 4,697", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-279-4": { "value": "Cash flow statement The cash \ufb02ow statement shows Vestas\u2019 cash \ufb02ows for the year, broken down by operating, investing and financing activities, changes for the year in cash and cash equivalents as well as Vestas\u2019 cash and cash equivalents at the beginning and end of the year. Cash \ufb02ows relating to acquired entities are recognised from the date of acquisition. Cash \ufb02ows relating to entities disposed of are recognised until the date of disposal. Cash \ufb02ows from operating activities Cash \ufb02ows from operating activities are calculated as the net profit/loss for the year adjusted for non-cash operating items such as depreciation, amortisation and impairment losses, provisions, changes in working capital, interest received and paid and income tax paid. Working capital comprises current assets less short-term debt, which does not include current bank loans. Cash \ufb02ows from investing activities Cash \ufb02ows from investing activities comprise cash \ufb02ows from business acquisitions and disposals and from acquisitions and disposals of intangible assets, property, plant and equipment as well as other non-current assets. The cash \ufb02ow effect of business acquisitions and sales is shown separately. The establishment of leases is treated as non-cash transactions. Cash \ufb02ows from financing activities Cash \ufb02ows from financing activities comprise changes to the amount or composition of Vestas\u2019 share capital and related expenses as well as the raising of loans, repayment of interest-bearing debt, repayment of lease liabilities, acquisition and sale of treasury shares together with distribution of dividends to shareholders. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-281-2": { "value": "ESEF RegulationThe ESEF Regulation sets out the following main requirements: (1) Issuers shall draw up and disclose their annual financial reports using the XHTML format; and (2) issuers that draw-up their primary consolidated financial statements in accordance with IFRS as endorsed by the EU shall block-tag the primary statements and notes in the consolidated financial statements using inline eXtensible Business Reporting Language (iXBRL).iXBRL tags shall comply with the ESEF taxonomy, which is included in the ESEF Regulation and developed based on the IFRS taxonomy published by the IFRS Foundation.As part of the tagging process, financial statement line items and notes are marked up to elements in the ESEF taxonomy. If a financial statement line item is not defined in the ESEF taxonomy, an extension to the taxonomy is created. Extensions have to be anchored to elements in the ESEF taxonomy, except for extensions which are subtotals.The Annual Report submitted to the Danish Financial Supervisory Authority (The Officially Appointed Mechanisms) consists of the XHTML document together with some technical files all included in a ZIP file named VWS-2022-12-31.zip.", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-282-2": { "value": "7.2\u2002 Change in accounting policiesNew accounting standards, amendments and interpretationsThe following accounting standards, amendments and interpretations have been implemented as at 1 January 2022: \u017c Property, Plant and Equipment: Proceeds before Intended Use \u2013 Amendments to IAS 16 \u017c Annual Improvements to IFRS Standards 2018-2020, and \u017c Reference to the Conceptual Framework \u2013 Amendments to IFRS 3The implementation has not had a significant impact on recognition, measurement or disclosures in the Annual Report 2022 and is not expected to have significant impact on the financial reporting for future periods. IAS 37, Cost of Fulfilling a ContractAs of 1 January 2022, Vestas adopted the amendment to IAS 37 relating to onerous contracts. The amendment specifies that an allocation of directly related production costs, such as depreciations of production plants, machinery and equipment, should be included in the cost of fulfilling a contract when applying IAS 37. Historically, Vestas\u2019 accounting policy has not included an allocation of such costs in the cost of fulfilling a contract. The application of the amendment resulted in the recognition of an increased provision for onerous contracts related to prior years of EUR 22m with a net impact of EUR 17m on retained earnings as at 1 January 2022. Vestas has applied the amendment using the cumulative effect method. Under this method, the comparative information is not restated.IAS 38, Configuration or customisation costs in a cloud computing arrangementIn April 2021, the International Financial Reporting Standards Interpretations Committee (IFRIC) issued a final agenda decision relating to configuration or customisation costs in a cloud computing arrangement. The decision discusses whether configuration or customisation expenditure relating to cloud computing arrangements is able to be recognised as an intangible asset and if not, over what time period the expenditure is expensed.Vestas\u2019 accounting policy has historically been to capitalise all costs related to cloud computing arrangements as intangible assets in the Balance sheet. The adoption of this agenda decision resulted in a reclassification of these intangible assets to either a prepaid asset in the balance sheet and/or recognition as an expense in the income statement, impacting both the current and/or prior periods presented.Vestas has restated comparative information in the financial statements to re\ufb02ect this change in accounting policy, and has adjusted opening balances in the balance sheet as at 1 January 2021.The impact of the change in accounting policy in the financial information of the Group at the beginning of the comparative period, during and at the end of the comparative period is disclosed below. Had the change in accounting policy not occurred, operating costs would have been EUR 42m lower and depreciations would have been EUR 7m higher.Adjustments to the balance sheet, 1 January 2021Assets Effect of mEUR Reportednew policy AdjustedCompleted development projects621 (1) 620Software 164 (17) 147Development projects in progress317 (17) 300Total intangible assets2,888 (35) 2,853Deferred tax 335 4 339Total other non-current assets1,003 4 1,007Total non-current assets5,913 (31) 5,882Total assets 18,160 (31) 18,129Liabilities mEURRetained earnings4,773 (31) 4,742Attributable to the owners of Vestas4,654 (31) 4,623Total equity 4,703 (31) 4,672Total equity and liabilities18,160 (31) 18,129Adjustments to the income statement, 1 January \u2013 31 December 2021Income statementEffect of mEUR Reportednew policy AdjustedProduction costs(14,027) (4) (14,031)Gross profit 1,560 (4) 1,556Research and development costs(364) (25) (389)Distribution costs (367) (4) (371)Administration costs (368) - (368)Operating profit (EBIT) before special items461 (33) 428Operating profit (EBIT) 322 (33) 289Profit before tax 257 (33) 224Income tax (81) 0 (81)Profit for the year 176 (33) 143Profit is attributable to:Owners of Vestas Wind Systems A/S167 (33) 134Earnings per share (EPS):Earnings per share (EUR)0.17 (0.04) 0.13Earnings per share (EUR), diluted0.17 (0.04) 0.137.2\u2002 Change in accounting policies \u2013 continuedAdjustments to the balance sheet, 31 December 2021Assets Effect of mEUR Reportednew policy AdjustedCompleted development projects619 (1) 618Software 140 (17) 123Development projects in progress426 (50) 376Total intangible assets3,130 (68) 3,062Deferred tax 374 4 378Total other non-current assets1,627 4 1,631Total non-current assets6,848 (64) 6,784Total assets 19,712 (64) 19,648Liabilities mEURRetained earnings4,699 (64) 4,635Attributable to the owners of Vestas4,748 (64) 4,684Total equity 4,761 (64) 4,697Total equity and liabilities19,712 (64) 19,648Adjustments to the statement of cash \ufb02ows, 1 January \u2013 31 December 2021Statement of cash \ufb02owsEffect of mEUR Reportednew policy AdjustedProfit for the year176 (33) 143Adjustments for non-cash transactions1,005 (7) 998Cash \ufb02ow from operating activities before change in net working capital987 (40) 947Cash \ufb02ow from operating activities996 (40) 956Purchase of intangible assets(400) 40 (360)Cash \ufb02ow from investing activities before acquisitions of subsidiaries, joint ventures, associates and financial investments(813) 40 (773)Cash \ufb02ow from investing activities(939) 40 (899)Adjustments to the statement of changes in equity, 1 January \u2013 31 December 2021Statement of changes in equityEffect of mEUR Totalnew policy TotalEquity as at 1 January4,703 (31) 4,672Profit for the year 176 (33) 143Total comprehensive income for the year373 (33) 340Equity as at 31 December4,761 (64) 4,697New standards and interpretations, not yet effectiveThe IASB has issued new or amended accounting standards and interpretations that have not yet become effective and have consequently not been implemented in the consolidated financial statements. Vestas will adopt the accounting standards and interpretations when they become mandatory. \u017c Effective from 1 January 2023, IFRS 17, Insurance Contracts will replace IFRS 4, Insurance Contracts. Vestas has assessed that the multibrand service contracts fall under the definition of insurance contracts as per IFRS 17. The share of multibrand service business is not significant. \u017c Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction. \u017c Amendments to IAS 1: Classification of liabilities a current or non-current \u017c Amendments to IAS 8: Definition of accounting estimatesBased on the current nature of the business and level of activities, none of these standards and interpretations are expected to have a material impact on the recognition and measurement in the consolidated financial statements.New standards and interpretations, not yet adopted by EUIASB has issued new or amended accounting standards and interpretations that have not yet become effective and have consequently not been implemented in the consolidated financial statements for 2022. Vestas will adopt the accounting standards and interpretations when they become mandatory.", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-282-3": { "value": "7.2\u2002 Change in accounting policiesNew accounting standards, amendments and interpretationsThe following accounting standards, amendments and interpretations have been implemented as at 1 January 2022: \u017c Property, Plant and Equipment: Proceeds before Intended Use \u2013 Amendments to IAS 16 \u017c Annual Improvements to IFRS Standards 2018-2020, and \u017c Reference to the Conceptual Framework \u2013 Amendments to IFRS 3The implementation has not had a significant impact on recognition, measurement or disclosures in the Annual Report 2022 and is not expected to have significant impact on the financial reporting for future periods. IAS 37, Cost of Fulfilling a ContractAs of 1 January 2022, Vestas adopted the amendment to IAS 37 relating to onerous contracts. The amendment specifies that an allocation of directly related production costs, such as depreciations of production plants, machinery and equipment, should be included in the cost of fulfilling a contract when applying IAS 37. Historically, Vestas\u2019 accounting policy has not included an allocation of such costs in the cost of fulfilling a contract. The application of the amendment resulted in the recognition of an increased provision for onerous contracts related to prior years of EUR 22m with a net impact of EUR 17m on retained earnings as at 1 January 2022. Vestas has applied the amendment using the cumulative effect method. Under this method, the comparative information is not restated.IAS 38, Configuration or customisation costs in a cloud computing arrangementIn April 2021, the International Financial Reporting Standards Interpretations Committee (IFRIC) issued a final agenda decision relating to configuration or customisation costs in a cloud computing arrangement. The decision discusses whether configuration or customisation expenditure relating to cloud computing arrangements is able to be recognised as an intangible asset and if not, over what time period the expenditure is expensed.Vestas\u2019 accounting policy has historically been to capitalise all costs related to cloud computing arrangements as intangible assets in the Balance sheet. The adoption of this agenda decision resulted in a reclassification of these intangible assets to either a prepaid asset in the balance sheet and/or recognition as an expense in the income statement, impacting both the current and/or prior periods presented.Vestas has restated comparative information in the financial statements to re\ufb02ect this change in accounting policy, and has adjusted opening balances in the balance sheet as at 1 January 2021.The impact of the change in accounting policy in the financial information of the Group at the beginning of the comparative period, during and at the end of the comparative period is disclosed below. Had the change in accounting policy not occurred, operating costs would have been EUR 42m lower and depreciations would have been EUR 7m higher.Adjustments to the balance sheet, 1 January 2021Assets Effect of mEUR Reportednew policy AdjustedCompleted development projects621 (1) 620Software 164 (17) 147Development projects in progress317 (17) 300Total intangible assets2,888 (35) 2,853Deferred tax 335 4 339Total other non-current assets1,003 4 1,007Total non-current assets5,913 (31) 5,882Total assets 18,160 (31) 18,129Liabilities mEURRetained earnings4,773 (31) 4,742Attributable to the owners of Vestas4,654 (31) 4,623Total equity 4,703 (31) 4,672Total equity and liabilities18,160 (31) 18,129Adjustments to the income statement, 1 January \u2013 31 December 2021Income statementEffect of mEUR Reportednew policy AdjustedProduction costs(14,027) (4) (14,031)Gross profit 1,560 (4) 1,556Research and development costs(364) (25) (389)Distribution costs (367) (4) (371)Administration costs (368) - (368)Operating profit (EBIT) before special items461 (33) 428Operating profit (EBIT) 322 (33) 289Profit before tax 257 (33) 224Income tax (81) 0 (81)Profit for the year 176 (33) 143Profit is attributable to:Owners of Vestas Wind Systems A/S167 (33) 134Earnings per share (EPS):Earnings per share (EUR)0.17 (0.04) 0.13Earnings per share (EUR), diluted0.17 (0.04) 0.137.2\u2002 Change in accounting policies \u2013 continuedAdjustments to the balance sheet, 31 December 2021Assets Effect of mEUR Reportednew policy AdjustedCompleted development projects619 (1) 618Software 140 (17) 123Development projects in progress426 (50) 376Total intangible assets3,130 (68) 3,062Deferred tax 374 4 378Total other non-current assets1,627 4 1,631Total non-current assets6,848 (64) 6,784Total assets 19,712 (64) 19,648Liabilities mEURRetained earnings4,699 (64) 4,635Attributable to the owners of Vestas4,748 (64) 4,684Total equity 4,761 (64) 4,697Total equity and liabilities19,712 (64) 19,648Adjustments to the statement of cash \ufb02ows, 1 January \u2013 31 December 2021Statement of cash \ufb02owsEffect of mEUR Reportednew policy AdjustedProfit for the year176 (33) 143Adjustments for non-cash transactions1,005 (7) 998Cash \ufb02ow from operating activities before change in net working capital987 (40) 947Cash \ufb02ow from operating activities996 (40) 956Purchase of intangible assets(400) 40 (360)Cash \ufb02ow from investing activities before acquisitions of subsidiaries, joint ventures, associates and financial investments(813) 40 (773)Cash \ufb02ow from investing activities(939) 40 (899)Adjustments to the statement of changes in equity, 1 January \u2013 31 December 2021Statement of changes in equityEffect of mEUR Totalnew policy TotalEquity as at 1 January4,703 (31) 4,672Profit for the year 176 (33) 143Total comprehensive income for the year373 (33) 340Equity as at 31 December4,761 (64) 4,697New standards and interpretations, not yet effectiveThe IASB has issued new or amended accounting standards and interpretations that have not yet become effective and have consequently not been implemented in the consolidated financial statements. Vestas will adopt the accounting standards and interpretations when they become mandatory. \u017c Effective from 1 January 2023, IFRS 17, Insurance Contracts will replace IFRS 4, Insurance Contracts. Vestas has assessed that the multibrand service contracts fall under the definition of insurance contracts as per IFRS 17. The share of multibrand service business is not significant. \u017c Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction. \u017c Amendments to IAS 1: Classification of liabilities a current or non-current \u017c Amendments to IAS 8: Definition of accounting estimatesBased on the current nature of the business and level of activities, none of these standards and interpretations are expected to have a material impact on the recognition and measurement in the consolidated financial statements.New standards and interpretations, not yet adopted by EUIASB has issued new or amended accounting standards and interpretations that have not yet become effective and have consequently not been implemented in the consolidated financial statements for 2022. Vestas will adopt the accounting standards and interpretations when they become mandatory.", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "pp-value-287-8": { "value": "Adjustments to the income statement, 1 January \u2013 31 December 2021Income statementEffect of mEUR Reportednew policy AdjustedProduction costs(14,027) (4) (14,031)Gross profit 1,560 (4) 1,556Research and development costs(364) (25) (389)Distribution costs (367) (4) (371)Administration costs (368) - (368)Operating profit (EBIT) before special items461 (33) 428Operating profit (EBIT) 322 (33) 289Profit before tax 257 (33) 224Income tax (81) 0 (81)Profit for the year 176 (33) 143Profit is attributable to:Owners of Vestas Wind Systems A/S167 (33) 134Earnings per share (EPS):Earnings per share (EUR)0.17 (0.04) 0.13Earnings per share (EUR), diluted0.17 (0.04) 0.13", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f80107": { "value": "Vestas Wind Systems A/S", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f80262": { "value": "Vestas Wind Systems A/S", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "f83780": { "value": "Aarhus N", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:549300DYMC8BGZZC8844", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } } } }