Financial Highlights
Annual Report 2022
Annual Report
2022
Financial Highlights
Annual Report 2022
Dannevirkevej 6, 7000 Fredericia,
Reg. no. 26 08 85 77
Annual Report
January 1st – December 31st, 2022
Presented and adopted at the Annual General Meeting on 19
th
of April 2023.
Chairman of the Annual General Meeting:
2
Financial Highlights
Annual Report 2022
Table of Content
Management’s Statement of the Annual Report
4
Independent Auditor’s Report
5
Consolidated Financial Highlights
7
Company Information
8
Management Review
11
Consolidated Financial Statements
18
Notes to the Consolidated Financial Statements
22
Parent Financial Statements
37
Notes to the Parent Financial Statements
40
3
Table of Content
Financial Highlights
Annual Report 2022
Management’s Statement of the Annual Report
Executive Board
Lars V. Drescher Morten Beider
CEO CFO
Board of Directors
Torben Svejgård Carsten Lind Pedersen
Chairman Board Member
Ole Sloth Nielsen Bo Holse
Board Member Board Member
Jytte Rosenmaj
Board Member
Management’s Statement
4
The Board of Directors and the Executive Board have today
considered and approved the annual report of DCH International A/S
for the financial year 1 January to 31 December 2022.
The annual report is prepared in accordance with International
Financial Reporting Standards as adopted by the EU and Danish
disclosure requirements.
In our opinion, the consolidated financial statements and the parent
financial statements give a true and fair view of the Group’s and the
Parent’s financial position at 31.12.2022 and of the results of their
operations and cash flows for the financial year 2022.
In our opinion, the management commentary contains a fair review of
the development of the Group's and the Parent’s business and
financial matters, the results for the year and of the Parent’s financial
position and the financial position as a whole of the entities included
in the consolidated financial statements.
We recommend the annual report for adoption at the Annual General
Meeting.
Fredericia, 24
th
of February 2023
Financial Highlights
Annual Report 2022
Independent auditor’s report on the annual report
for the period 01.01.2022 - 31.12.2022
Auditor’s Review
5
Opinion
We have audited the consolidated financial statements and
the parent financial statements of DCH International A/S for
the financial year 01.01.2022 - 31.12.2022, which comprise
the income statement, statement of comprehensive income,
balance sheet, statement of changes in equity, cash flow
statement and notes, including a summary of significant
accounting policies, for the Group as well as the Parent. The
consolidated financial statements and the parent financial
statements are prepared in accordance with International
Financial Reporting Standards as adopted by the EU and
additional requirements of the Danish Financial Statements
Act.
In our opinion, the consolidated financial statements and
the parent financial statements give a true and fair view of
the Group’s and the Parent’s financial position at
31.12.2022, and of the results of their operations and cash
flows for the financial year 01.01.2022 - 31.12.2022 in
accordance with International Financial Reporting Standards
as adopted by the EU and additional requirements of the
Danish Financial Statements Act.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (ISAs) and the additional
requirements applicable in Denmark. Our responsibilities
under those standards and requirements are further
described in the Auditor’s responsibilities for the audit of the
consolidated financial statements and the parent financial
statements section of this auditor’s report.
We are independent of the Group in accordance with the
International Ethics Standards Board of Accountants' Code
of Ethics for Professional Accountants (IESBA Code) and
the additional requirements applicable in Denmark, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Statement on the management commentary
Management is responsible for the management
commentary. Our opinion on the consolidated financial
statements and the parent financial statements does not
cover the management commentary, and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements and the parent financial statements, our
responsibility is to read the management commentary and,
in doing so, consider whether the management commentary
is materially inconsistent with the consolidated financial
statements and the parent financial statements, or our
knowledge obtained in the audit or other-wise appears to be
materially misstated.
Moreover, it is our responsibility to consider whether the
management commentary provides the information required
under the Danish Financial Statements Act.
Based on the work we have performed; we conclude that the
management commentary is in accordance with the
consolidated financial statements and the parent financial
statements and has been prepared in accordance with the
requirements of the Danish Financial Statements Act. We
did not identify any material misstatement of the
management commentary.
Management’s responsibilities for the annual reports
Management is responsible for the preparation of
consolidated financial statements and parent financial
statements that give a true and fair view in accordance with
International Financial Reporting Standards as adopted by
the EU and additional requirements of the Danish Financial
Statements Act, and for such internal control as
Management determines is necessary to enable the
preparation of consolidated financial statements and parent
financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements and the
parent financial statements, Management is responsible for
assessing the Group’s and the Parent’s ability to continue as
a going concern, for disclosing, as applicable, matters
related to going concern, and for using the going concern
basis of accounting in preparing the consolidated financial
statements and the parent financial statements unless
Management either intends to liquidate the Group or the
Entity or to cease operations, or has no realistic alternative
but to do so.
Auditor’s responsibilities for the audit of the annual
report
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements and the
parent financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not
a guarantee that an audit conducted in accordance with
ISAs and the additional requirements applicable in Denmark
will always detect a material misstatement when it exists.
Financial Highlights
Annual Report 2022
Independent auditor’s report on the annual report
for the period 01.01.2022 - 31.12.2022
Deloitte
Statsautoriseret Revisionspartnerselskab
Central Business Registration No. 33 96 35 56
Søren Marquart Alsen Abdul Wahab Ashraf
State-Authorised Public Accountant
MNE no.: mne40040
State-Authorised Public Accountant
MNE no.: mne46664
6
Auditor’s Review
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated
financial statements and these parent financial statements.
Auditor’s responsibilities for the audit of the annual
report (continued)
As part of an audit conducted in accordance with ISAs and
the additional requirements applicable in Denmark, we
exercise professional judgement and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of
the consolidated financial statements and the parent
financial statements, whether due to fraud or error,
design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the
Group’s and the Parent’s internal control.
• Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by Management.
• Conclude on the appropriateness of Management’s use
of the going concern basis of accounting in preparing the
consolidated financial statements and the parent
financial statements, and, based on the audit evidence
obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on
the Group's and the Parent’s ability to continue as a
going concern.
If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the
related disclosures in the consolidated financial statements
and the parent financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may
cause the Group and the Entity to cease to continue as a
going concern.
• Evaluate the overall presentation, structure and content
of the consolidated financial statements and the parent
financial statements, including the disclosures in the
notes, and whether the consolidated financial
statements and the parent financial statements
represent the underlying transactions and events in a
manner that gives a true and fair view.
• Obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business
activities within the Group to express an opinion on the
consolidated financial statements. We are responsible
for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we
identify during our audit.
Aarhus, 24
th
of February 2 023
Financial Highlights
Annual Report 2022
Consolidated Financial Highlights
Financial Highlights
7
Definitions of financial ratios:
Adjusted EBITDA EBITDA adjusted for price effect on fair value adjustment of biological assets and any special items
Gross margin Gross profit / Total Income x 100
Adjusted EBITDA margin Adjusted EBITDA / Total Income x 100
EBIT margin EBIT / Total Income x 100
Return on invested capital Net financials / Avg. net interest-bearing debt x 100
Return on equity Net Profit / Avg. equity x 100
Solvency ratio Equity / Total assets x 100
Current Ratio Current assets / current liabilities x 100
EUR '000
2022 2021 2020 2019 2018
Profit & Loss
Total income
52.216 47.865 66.574 91.591 63.857
EBITDA
9.351 2.236 1.449 28.866 10.305
3.928 3.345 14.314 20.687 13.363
Operating profit/loss (EBIT)
1.392 -6.720 -7.106 21.053 3.817
Net financials
-2.009 -3.142 -3.228 -3.457 -2.294
Profit/loss for the period
-596 -8.172 -8.673 14.844 1.172
Balance sheet:
Total assets
136.680 147.030 165.069 173.771 157.679
Investment in property,
plant and equipment
1.148 2.389 8.837 11.764 15.076
Equity 80.062 80.227 88.176 91.520 74.532
Invested capital 117.385 115.455 128.153 138.592 134.089
Net interest-bearing debt 42.388 39.613 48.541 56.302 56.011
Cash flow:
Cash flow from operating activities -1.477 7.274 18.239 5.731 11.467
Cash flow from investing activities -1.296 1.417 -10.623 -7.625 -14.908
Cash flow from financing activities -8.093 -2.182 -5.777 -326 5.820
2022 2021 2020 2019 2018
Employees:
Average number of employees
333 446 498 471 445
Production Scope:
Harvested land
ha
0 1.619 1.323 1.663 1.720
Total yield (all crops)
tons
0 9.321 3.573 8.377 6.159
Average number of sows 10.961 13.078 14.313 17.532 16.519
Number of pigs produced 324.354 396.841 427.887 568.385 511.111
Produced pigs per avg. sow
29,6
30,3 29,9 32,4 30,9
Ratios:
Gross margin 31,8% 17,9% 20,5% 43,5% 29,8%
Ajusted EBITDA margin 7,5% 7,0% 21,5% 22,6% 20,9%
EBIT margin 2,7% -14,0% -10,7% 23,0% 6,0%
Return on invested capital 1,2% -5,5% -5,3% 15,4% 2,9%
-3,5% -4,6% 4,2% 9,6% 5,2%
Return on equity -0,7% -9,7% -9,7% 17,9% 1,6%
Solvency ratio 58,6% 54,6% 53,4% 52,7% 47,3%
Current Ratio 128% 120% 124% 167% 136%
Booked value per share 6,27 6,28 6,91 7,17 5,93
Financial Highlights
Annual Report 2022
Company Information
Company Information
DCH International A/S
Address: Synergihuset
Dannevirkevej 6
DK-7000 Fredericia
Company Reg. no.: 26 08 85 77
Domicile: Fredericia
Telephone: +45 64812600
Telefax: +45 64812601
Web: www.dchi.dk
E-mail: mail@dchi.dk
Board of Directors Torben Svejgård (chairman)
Carsten Lind Pedersen
Ole Sloth Nielsen
Bo Holse
Jytte Rosenmaj
Executive Board Lars Vesten Drescher (CEO)
Morten Beider (CFO)
Auditor Deloitte
Statsautoriseret Revisionspartnerselskab
City Tower, Værkmestergade 2
DK - 8000 Aarhus C
Bank Nordea Danmark A/S
Kirkegade 3
DK - 8900 Randers
Lawyer Gorrissen Federspiel
Silkeborgvej 2
DK - 8000 Aarhus C
Subsidiaries Premium Pork International A/S
Premium Porc SRL
Consinterfin SRL
Degaro SRL
Premium Porc Feed SRL
Agro Investments Moldova SRL
Premium Porc Negreni SRL
Premium Vet Depot SRL
Olsuin SRL
Premium Porc Sibiu SRL
Premium Pork Commercial SRL
8
Financial Highlights
Annual Report 2022
Our business model
9
Company Information
About us
Main activity
As in previous years the main activity has been to operate pig production,
focusing on sales of finishers through subsidiaries in Romania.
The group manages all activities related to pig production, having all required
production divisions: reproduction and genetics, maternity and finisher barns.
As secondary activities, the group has its own feed production divisions as
well as manure management.
✓ Integrated pig production: breeding, reproduction, maternity, finishers
✓ The best Danish genetics and technology
✓ Internal logistics for animals and feed
✓ Own Feed Mills
✓ Management of natural fertilizer
Financial Highlights
Annual Report 2022
Corporate Structure
(As is from December 31
st
, 2022)
Premium Porc SRL
DCH
International
A/S
Premium Pork
International A/S
Premium Vet Depot
SRL
Premium Pork Commercial
SRL
Agro Investments Moldova
SRL
Premium Porc Negreni
SRL
Olsuin SRL
Note: All subsidiaries are 100% controlled and are all 100% owned directly or indirectly by DCH International A/S.
Premium Porc Sibiu
SRL
100%
100%
100%
25%
75%
53%
47%
100%
100%
100%
100%
100%
100%
10
Premium Porc Feed
SRL
Consinterfin SRL
Degaro SRL
Company Information
Financial Highlights
Annual Report 2022
Development in the financial year and financial positions
Management Review
11
Challenges caused by market conditions over-shadowed challenges with African
Swine Fever (ASF)
The year show, without fair value adjustment, a loss before tax of approx. EUR 6.8m. But show with the positive
fair value adjustment of herds of EUR 6.2m, a loss before tax of EUR 0.6m compared to EUR 9.9m loss in 2021.
The consolidated total income, without fair value adjustment, was EUR 46.0m in 2022 (-4% compared to 2021).
With fair value adjustment total income is up EUR 4.4m (9%) from 2021.
Besides the positive impact on the herd valuation, higher pig prices have also a direct positive financial impact of
EUR 10.4m as the sales price increased 43% compared to last year (from 1.32 to 1.90 EUR per kg).
Unfortunately, the positive impact from pig prices is mostly used to offset higher feed prices having a significant
negative impact of EUR 6.3m as the feed prices increased by 35%. Adding increased costs of EUR 1.7m due to
price increases on energy, reduces the combined net-improvement in the overall profitability to EUR 2.4m.
On top of this, several farms are temporarily closed due to outbreaks of ASF in 2021. As a result, the production
capacity has only been utilized in average with approx. 55% in 2022 and the production volume in weight was
reduced by 29% compared to 2021.
The equity decreased only EUR 0.2m (-0.2%) compared to yearend 2021 as a result of the limited loss. The equity
is EUR 80.1m and the solvency ratio is 59%. Also, the Group’s liquidity reserves are, as per 31/12 2022, at a
satisfactory level, EUR 10.6 million.
Overall assessment
The result is not satisfactory as operations continue to be negatively influenced by the ASF outbreaks in 2021,
implications of the presence of ASF in general and the unsatisfactory price ratio between pigs and feed.
Up to 2021, the Group managed two business
areas in Romania: Pig production and Crop
production. The latter, representing approx. 5% of
the Groups turnover, was divested in 2021.
Four highlights impacting 2022:
• The very low price-ratio from 2021 continued – despite
average pork prices up 43%. The continuously high feed
prices kept the price-ratio of only 5.5. An improvement from
5.1 last year but still far from the long-term average of 6.5
to 7.0.
• Positive fair value adjustment of EUR 6.2m. The
increased sales prices had a positive influence on the herd
value end of the period of approx. EUR 6.2m.
• Covid and Ukraine War support of €2.2m. As a
compensation for the industry’s negative impact caused by
the pandemic and subsequential the Ukraine wars impact
on cereal prices, €2.2m was granted in total.
• Net losses of approx. EUR 4.7m due to ASF as several
farms were closed and Premium Porc farm returning to
production after the ASF outbreaks in 2021. The outbreaks
will continue to negatively impact the results well into 2023.
EUR '000
2022 2021 2022 2021 2022 2021
Total income 52.216 47.865 49.122 46.264 55 2.301
46.015 47.858 42.921 46.256 55 2.301
EBITDA 9.351 2.236 7.114 -2.148 39 4.441
3.928 3.345 1.691 -1.344 39 4.441
EBIT 1.392 -6.720 -845 -10.374 39 3.743
Profit before tax -617 -9.862 -3.186 -13.919 39 3.628
Consolidated total
Total income without fair value adjust.
biological assets
Crop Production
Pig production
EBITDA excl. fair value adjust. biological
assets and excl. Special Items
Financial Highlights
Annual Report 2022
High feed prices followed by record high pork prices
Management Review
12
Pork prices 43% up compared to last year
The average prices for slaughter pigs improved from the very low level realized in
2021 and reached in second half a historical high level! Pork prices started 2022 at a
very low level but improved from mid-February. Prices have been struggling to
consistently keeping the upward trend, but our sales price was anyhow 60% up end of
the year compared to beginning of the year. We expect even higher prices during 2023.
The demand for pork remains under pressure as in 2021 but the significantly higher
costs have started a dramatic reduction in the European pig production adjusting the
supply downwards. The full impact of this reduction is yet to be realized supporting
higher prices in the coming period as supply continue to be reduced.
Costs exploding have changed the breakeven level and the average realized pig price
is not enough to generate the profitability it used to. The unsatisfactory price level is
even more visible on the weaner market with prices improving less than for slaughter
pigs although the trend was very positive end of the year.
2016 2017 2018 2019 2020 2021
2022
Pork Prices (carcass)
EUR/kg
1,38 1,66 1,42 1,63 1,52 1,32 1,90
Feed Prices
EUR/kg
0,20 0,21 0,22 0,23 0,24 0,26 0,35
Exchange ratio pork:feed 6,8 7,9 6,5 7,1 6,4 5,1 5,5
Note: The table show realized prices from the subsidiaries in Romania as an annual average after ASF related discounts.
Pork and feed prices in
Romania
Feed prices 35% up from the already high 2021 level
Average feed prices were 35% higher in 2022 compared to the average from last year. A high
price level was expected based on the price level for second half of 2021, but additional price
increases after the Ukrainian war started, added to the upward trend. The war was a key factor
in maintaining the prices on a high level also for new harvest contrary to our expectations
beginning of the year.
Cereal prices are currently at the highest level we have registered in the company’s history.
Until harvest 2020, feed prices were relatively stable for several years. This trend is certainly
changed. The average price of raw materials consumed in December 2022 is 60% higher as
compared to the same month in 2019.
We don’t expect a return to 2019 prices, but we do believe that the cereal prices peaked in
2022. We expect the price of raw materials to gradually decline during 2023 although still at a
high level compared to “old” price levels.
The price level gradually improves
Although the price ratio between pork and feed of 5.5 for 2022 is only slightly higher than the
record low realized last year, the higher price levels have a big positive impact. The improved
price levels represents an increased profit before tax of EUR 4.2m in 2022 compared to the
same production with 2021 prices. But compared to a 5-year average of the prices prior 2021
we could have generated EUR 2.5m more in profit.
The fluctuations in commodity prices underline the industry's high exposure to the global price
ratio of meat and cereals.
Herd valuation increased by EUR 6.2m due to improved pig prices
The market prices of biological assets (the pig herd), have followed the fluctuations in the pork
prices. Consequently, the value of biological assets are increased by EUR 6.2m compared to
the equivalent, if prices of 31.12.2021 were to be used.
Financial Highlights
Annual Report 2022
Production temporarily reduced due to ASF
Management Review
13
Pig production reduced to less than 50% of full capacity
The overall production capacity, measured in number of sows, registered a 20% increase compared to YE 2021 as a result of the repopulation of Premium Porc farm during the
year. This increase indicate the production again is on an upward trend with 2022 representing a production low with 18% less pigs produced compered to 2021 and 43%
down compared to pre-ASF numbers in 2019. The decline is primarily caused by Olsuin farm being culled in September 2021 and secondly Premium Porc farm in process of
being repopulated after culling in January 2021. Both farms were culled due to ASF-outbreaks.
The production in kg is even more impacted due to also Venturelli farm (a wean-to-finish site) was culled in February 2022. As a result of the capacity missing in H1, we had to
sell more pigs as weaners instead of fattening them. The shift in the sales mix towards a bigger portion of the pigs being sold as weaner is furthermore driven by the
unsatisfactory price ratio as it supports reducing the sales weight.
Restart of Premium Porc farm is negatively affecting the overall productivity, measured in produced pigs/sow due to the herd being new and not back on full potential yet. This
farm is in the table below excluded from the calculation of produced pigs underlining that the other farms performed on a slightly better efficiency level as in 2021.
Romania supports pig welfare
We have applied for and received grants to improve animal welfare in pig production, based on the Romanian support scheme. The grant we applied for in the year has been
recognized in total income of EUR 3.1m. This represents 95% of the total amount applied for. Payment is expected during 1
st
half of 2023.
In 2022 we have received payments of EUR 4.4m for animal welfare support, for which we applied for in 2021. This represents EUR 0.3m more than allocated by the end of 2021.
In total, grants for improved animal welfare of EUR 3.4m are registered in 2022.
The subsidy amount is far from a net gain, as we could reduce the costs related to meeting the requirements for the subsidy in case it ceases to exist.
Financial Highlights
Annual Report 2022
Business affected
by African Swine Fever (ASF) in Romania
Management Review
14
Evolution of new
outbreaks in Romania (per
week / from 2018 to 2022)
2022 374
2021 1534
2020 903
2019 1729
2018 1158
Total 5698
Registered ASF outbreaks in
Romanian backyard farms
ASF – evolution and indirect losses
Since the beginning of June 2018, more than 5,700 outbreaks of African Swine Fever
(ASF) are registered at national level. The entire Romania has been considered affected
since 2019 and continues to register a significant number of outbreaks.
The biosecurity in all our farms remains at a very high level, well exceeding industry
standards according to international experts. Nevertheless, we experience huge indirect
impact on our operations, due to the measures taken by the authorities in order to
control and eradicate the virus.
Surveillance/protection zones caused by ASF outbreaks in areas close to our farms
continued impacting our production flows negatively, due to restrictions on moving
animals in and out of the blocked farms. The zonings usually lasts from 4 weeks up to
14 weeks. 2022 was a remarkable quiet year with only a few zonings affecting us in Q1
and none the rest of the year.
We work, in close collaboration with the authorities, towards lifting the zonings as soon
as procedures and disease control allow. We are often able to continue the production
unaffected in the blocked farms, if the zonings are lifted in 4-6 weeks, due to the
measures we have taken to adjust our production flow.
Direct losses caused by ASF outbreaks in our farms
Following the seven outbreaks in our farms in 2021 the production is significantly
downsized until the farms can be restarted again. Obviously, our goal is to avoid additional
outbreaks. Although 2022, as described in the Annual Report 2021, started with a new
outbreak in Venturelli in February we believe our upgraded biosecurity set-up will support
our efforts in avoiding additional outbreaks.
Venturelli farm is a wean-to-finish operation, and all 20,000 pigs were culled. The
immediate financial impact was small due to low profitability on short term and alternative
production capacities available in the Group. The compensation from the State for the
culled herd at market value is received.
All farms with outbreaks in 2021 are again ready for production after finalization of the
disinfection and reauthorization process. A few of the farms is back in operation but
decision to fully restart all farms awaits market prices to improve.
After deducting the compensations from the state, the net loss for the Group caused by the
ASF outbreaks in 2021 and 2022 amount for the year to approx. EUR 4.3m originating
primarily by the Premium Porc restart and secondly by the non covered costs originating
from the farms closed by the outbreaks in H2 2021.
Farms closed will continue to generate losses throughout 2023.
Total losses of EUR 4.7m in 2022 due to ASF
On top of the direct losses due to ASF outbreaks, the accumulated indirect losses we have
registered, caused by ASF in Romania, add up to approx. €0.4m in 2022 (€1.2m in 2021).
The indirect losses caused by the restrictions due to ASF outbreaks is not compensated by
the authorities. These indirect losses can be split in the following components:
1. Lower sale prices due to special handling of pigs from ASF areas and, in many cases,
thermal treatment of the pigs from restriction zones;
2. Lost production in finishers farms not being supplied with weaners due to
surveillance/protection zones;
3. Special items: Extra costs to compensate for disrupted production flows. This category
includes extra feed and a variety of additional costs for veterinarians, consultants etc.
We are determined and focused on our strategy to be the company who masters the art of
producing pigs in an ASF environment.
Financial Highlights
Annual Report 2022
Litigations for relocation of Negreni farm
Management Review
15
A group of citizens in Negreni village brought charges in 2016 claiming our farm
should be relocated. Their claim is based on a Government Order from 2014
stipulating that distances from farm operations to the neighboring houses should
be minimum 1,500m.
Our advisors, as well as the authorities that have assessed and validated our
production and building permits, agree that this Order was meant to cover future
constructions only and not farms and houses established decades before the
Order was issued. Despite this, we lost in two consecutive local court hearings in
2018 and we are demanded to relocate the farm. The Ministry issuing the Order
has in 2020 confirmed our understanding.
The case is contradicting in many ways with the legal framework covering our
production permits. The enforceability of the verdict is anyhow seen as practically
impossible as all production permits are valid, and the production can continue
despite the verdict.
Seventeen new, similar claims were received during the last two years. The new
claims are either from the same citizens as the original claims or from citizens
connected to the original claimants. All cases has been at least a first-tier trial
with a satisfactory result for us as the cases are dismissed. They are
subsequential appealed by the counterpart. Most of the appeals are won by us as
well and decisions are final. The remaining appeals are waiting for trial in the
coming months.
We are also investigating other options for dealing with this case.
We have no intentions for relocating the farm and continue disputing the ruling
and fight the new claims received. The management and our legal advisors have
initiated several actions for annulment and estimate that we have a strong case
for preventing the ruling being carried out. Based on this, we have chosen not to
make any provisions as we don’t expect to encounter any losses due to this case.
The case is described in detail in Note 2.
Financial Highlights
Annual Report 2022
Corporate Social Responsibility
16
Management Review
We care - Responsibility and sustainability as our guiding principles
This statement has been prepared in accordance with the Financial Statement Act §99a,
§99b and §99d.
Our CSR strategy reflects the emphasis we, DCH International A/S, put on our operations
being responsible and sustainable, and is built upon the pillars of animal welfare,
environment, human and labor rights, local communities, corporate governance and anti-
corruption. Our CSR report is public and can be read in full at our company’s website:
www.premiumporc.com
We put much effort in reducing the environmental impact of manure from our production.
This by applying the manure as natural fertilizer in various ways and, at the same time,
exploring new means to use it. To prevent release of greenhouse gasses, and reduce odors
in general, the manure is stored in sealed lagoons.
Seeking to develop and support the local communities in which we operate, we have formed
sponsorships with local schools and hospitals in Romania. Here, we focus our initiatives on
the pillars of education, health, environment and local values.
We aim for the highest standard of animal welfare within our industry by complying to
established procedures for pig production as well as biosecurity. These procedures are
based on Danish practice, EU standards and further supplemented by the additional
measures required by the Romanian national program for animal welfare.
Our guiding principles of sustainability and responsibility is reflected in our continuous drive
to minimize the impact of our business, and by providing improvements today and for
generations to come.
Policy for the under-represented gender
Board of Directors:
The current gender balance in the board is: 1 woman and 4 men. The target regarding
diversity at Board of Directors level was that at least one of the board members should be of
the under-represented gender. According to regulations, the company are required to set a
target figure for the underrepresented gender on the board. We have a target number of min.
25% women on the board by the end of 2025.
The company's board members are elected by the shareholders at the Annual General
Meeting. Taking the specifics of the industry into account, it is unlikely that the proportion of
the under-represented gender in the board will increase further over the coming years. The
shareholders are aware of the company’s wishes to honor diversity and equal gender
representation and will be aware of this in the future constitutions of the Board, to the extent
the recruitment base supports this possibility.
Other management levels:
Due to the limited number of employees in Denmark, the company is not required to
establish a policy for other management levels. Nevertheless, through its internal policies
and practices, the group assures a fair selection process, open towards all genders as well
as personal circumstances, and the selection is performed strictly on criteria related to
expertise and reflection of company values.
Statement of Data Ethics Policy
We adopted the Policy of Data Ethics in 2022. The policy establishes the overall guidelines
and principles for how data ethics is considered and reflects the Group´s commitment to
manage data responsibly based on principles of honesty, transparency, and accountability.
As a company, we primarily processes data relating to human resources, shareholders
interactions, customer and supplier contact. The group controls that data is collected for
explicit and legitimate purposes and processed legally and fairly, including that data
processing only comprises the data necessary to realize the purpose of the processing.
Any violation of the policy on data ethics or the Group’s internal procedures may be reported
by employees through the groups whistleblowing system. No reports were filed in 2022.
The policy on data ethics is approved by the board of directors annually and revised on an
ongoing basis.
Financial Highlights
Annual Report 2022
Anticipated development
17
Management Review
Pork prices expected to improve
Although at a slower pace, ASF continues to challenge the industry in EU as affected
countries continue to discover new cases besides new countries being added to the list. But
the market balance in EU is adjusted to the situation with the lack of export out of EU from
the affected countries. Unless ASF spreads to one of the big export countries we don’t
expect ASF to affect the market balance in 2023.
The demand in Europe for pork meat never fully recovered to the pre-Covid levels partial due
to the inflation impacting consumer behavior. But in Romania, the demand for locally
produced pork is stronger than ever due to a very low self supply.
Predicting the supply evolution seem to be on firmer grounds indicating that a lower demand
will be more than off-set by lower supplies. European pork producers, as well as their
colleagues across the globe, is negatively affected by the high production costs in general
and the high feed costs in particularly.
A significant drop in slaughtering in Europe has already in 2022 reduced the supply and this
trend continues. The latest herd counts in EU, document a significant reduction and
indicates further reductions of the production in 2023 as the impact of the reduced breeding
stock kicks in. All in all, we expect the average pig price for 2023 to exceed 2 EUR per kg.
… but feed prices remains high
We initially expected the grain prices to drop to a more “normal” level from harvest 2022 but
the Ukrainian war’s huge impact on the grain market tipped the balance and the prices for
the 2022 harvest exceeded 2021 prices! The current market prices indicates harvest prices
2023 at a lower level supporting why we expect similar average feed prices as realized in
2022.
The price level is expected to improve during 2023
As we for 2023 expect higher pig prices and unchanged average feed prices compared to
2022, the price level is expected, gradually to improve.
Support program for animal welfare continue
A new program for improving animal welfare similar to the previous program is established
starting with 2023. Continuation of support to the industry is an important factor for
Romania to reestablish a reasonable degree of national self-supply.
ASF restrictions expected to continue disrupting our production flow
Despite the level of production flow disruptions caused by farms entering
protection/surveillance zones has been remarkable low in 2022, future incidents are
considered unavoidable. But hopefully at an even lower level than in 2022. In financial
planning, we include a reserve to cover the negative impact caused by such situations.
We do expect that ASF will be present in Romania for several years to come, but as both
backyard production and the wild boar population is naturally decreasing over time, further
accelerated by ASF, the risk is expected to gradually decrease within the following years.
Production temporarily downsized – focus on preparing to return in operation
The strategy is to gradually resume production and again become profitable. The production
in 2023, with already initiated expansions, is expected 25% up from 2022. The production in
2023 will still be approx. 30% lower than in 2019 (the most recent year without ASF
outbreaks) without additional repopulation of farms initiated.
The actual decisions to repopulate will be based on updated assessments and improved
visibility of market and cash flow. The affected farms will, while closed, generate losses due
to fixed costs and depreciation. The closed farms will, until actual repopulation is decided,
represent a reserve production capacity to mitigate disruptions caused by ASF.
Investments strictly limited also for 2023
Considering the ASF situation, and the focus on having all farms back in production,
investments projects will only be implemented based on a high degree of necessity. Our
priority to protect our farms within the Group remains. This by introducing additional
biosecurity measures and strengthening the existing measures even more.
Profitability expected to return in 2023
As stated above, we believe pork prices will increase further in 2023 and the price ratio again
to reach a profitable level. But the temporarily downsized production have a severe negative
impact. Based on our price expectations, and a continuous calm ASF situation, we expect
the adjusted EBITDA (excluded for fair value adjustment of the herd) to reach EUR 9-11m.
Herd valuation is expected to have a positive although small positive impact in 2023.
We remain focused on our cash flow in 2023. The starting point is strong, and the cash base
is expected to remain on a satisfactory level throughout the year.
Financial Highlights
Annual Report 2022
Income Statement
Consolidated Financial Statements
Consolidated Income Statement Consolidated Statement of Comprehensive Income
18
EUR '000
2022 2021
Net profit for the year -596 -8.172
Exchange adjustments of foreign enterprises
-15 27
Fair value adjustment of hedging instruments
468 171
Tax on hedging instruments
-75 -27
0 0
Total comprehensive income -217 -8.002
Group shareholders -217 -8.002
-217 -8.002
Items that may be reclassified subsequently
to profit or loss
Items that may not be reclassified
subsequently to profit or loss
Distribution of total comprehensive income
Revaluation of land, buildings, leasehold
improvements and plant and machinery
EUR '000
2022 2021
Note
Revenue
3
40.360
43.184
Grants and other income
4
5.655
4.674
Value adjustment, biological assets
5
6.201
8
Total Income
52.216 47.865
Direct costs -25.061 -26.147
Other external costs -10.570 -13.172
Gross profit
16.586 8.547
Staff expenses
6
-6.456 -9.059
Special items
7
-778 -1.117
Other Income
8
0 3.864
Depreciation
9
-7.960 -8.956
Operating profit (EBIT)
1.392 -6.720
Financial income
10
75 24
Financial expenses
11
-2.084 -3.166
Profit before tax
-617 -9.862
Tax on profit for the year
12
21 1.690
Net profit for the year
-596 -8.172
Distribution of profit for the year:
Group Shareholders
-596 -8.172
Distributed
-596 -8.172
Financial Highlights
Annual Report 2022
Balance Sheet
19
Consolidated Financial Statements
Consolidated Statement of Financial Position
EUR '000
31/12 2022 31/12 2021
Equity and Liabilities
Note
Share Capital
20
12.767
12.767
Asset revaluation surplus 13.474
13.474
Retained earnings 53.821
53.987
80.062 80.227
Provision for deferred tax
21
-221 140
Credit institutions
22
20.310 24.113
Lease liabilities
22
1.011 1.922
Deferred income
23
1.981 2.258
Other non-current liabilities
22
1.847 49
Long-term liabilities
24.928 28.482
22 27.190 32.367
Trade payables
3.024
2.756
Other liabilities
24
1.477
3.197
Short-term liabilities
31.691 38.320
56.619 66.803
136.680 147.030
Equity
Short term portion; credit
institutions, leasing and other non-
current
Total liabilities
Total Equity and Liabilities
EUR '000
31/12 2022 31/12 2021
Assets
Note
Acquired rights
13
476 596
Intangible fixed assets in total
476 596
Land and buildings
14
68.926 72.106
Plant and machinery
14
14.839 17.070
Operating equipment
14
872 524
Right-of-use assets
14
2.601 3.717
Property, plant and equipment in progress
14
836 1.972
Property, plant and equipment
88.074 95.389
Non-current investments
16
82
78
Fixed asset investments
82 78
Biological assets, Breeding herd
15
7.461
4.926
Biological assets
7.461 4.926
96.093 100.988
Biological assets, Commercial herd
15
10.089
5.957
Inventories
17
Biological assets and inventories
19.987 12.951
Trade receivables
18
4.330 4.272
Other receivables
18
6.886 8.382
Prepayments 1.012 1.150
Receivables
12.228 13.804
Assets classified as held for sale
19
403 448
Cash and cash equivalents 7.970 18.838
40.588 46.041
136.680 147.030
Total non-current assets
Total current assets
Total Assets
9.898
6.994
Financial Highlights
Annual Report 2022
20
Consolidated Financial Statements
Consolidated Statement of Changes in Equity
EUR '000
Share Capital
Asse t
revaluation
surplus
Re serve for
exchange
adjustment
Cash flow
hedging
reserve
Re tained
earnings
Total Equity
12.767 13.474 0 0 61.936 88.176
0 0 754 -355 -399 0
12.767 13.474 754 -355 61.537 88.176
Share based payments 0 0 0 0 53 53
0 0 0 0 -8.172 -8.172
0 0 27 143 0 170
0 0 27 143 -8.119 -7.949
0 0 0 0 0 0
12.767 13.474 781 -212 53.418 80.227
Share based payments 0 0 0 0 52 52
0 0 0 0 -596 -596
0 0 -15 393 0 379
0 0 -15 393 -544 -165
0 0 0 0 0 0
12.767
13.474 766 182 52.873 80.062
Equity December 31, 2022
Net profit/loss for the year
Other comprehensive income
Comprehensive income for the
year 2022
Transfer other reserves to retained
earnings
Equity at January 1, 2021
Net profit/loss for the year
Other comprehensive income
Reclassified Equity at January 1,
2021
Comprehensive income for the
year 2021
Transfer other reserves to retained
earnings
Equity December 31, 2021
Reclassified (transfer from retained
earnings)
Financial Highlights
Annual Report 2022
Consolidated Cash Flow Statement
21
Consolidated Financial Statements
EUR '000
2022 2021
Note
Operating profit/loss (EBIT) 1.392 -6.720
Adjustment for non-cash items:
8.380 9.029
5 -6.201 -8
15
-73 5.524
17
-2.905 853
Change in receivables
18
1.588 7.758
-1.270 -6.577
Cash flow from operations before financial items
911 9.859
Financial income received
10
75 24
Financial expenses paid
11
-1.988 -2.134
Corporation taxes paid
-474 -475
Cash flow from operating activities
-1.477 7.274
13
-37 -517
13
1 0
14
-1.148 -2.389
14 238 1.385
16
-4 0
23
1 394
19
46 64
15
-392 2.474
Cash flow from investing activities
-1.296 1.417
Depreciations
Acquisition of intangible assets
Sale of intangible assets
Value adjustment, biological
assets
Change in commercial herd
Change in inventories
Change in trade payables etc.
Acquisitions of property, plant
and equipment
Sale of property, plant and
equipment
Acquisition of investments
Net disposal of assets held for
sale
Acquisition of biological assets
Investment subsidies received
EUR '000
2022 2021
Note
22
2.351 7.725
22
-10.444 -9.907
Cash flow from financing activities
-8.093 -2.182
Change in cash and cash equivalents
-10.867 6.510
Cash and cash equivalents, start year 18.838 12.431
Exchange adjustments, begining cash -2 -103
Cash and cash equivalents at December 31
7.970 18.838
2.643 327
Liquidity available at December 31
10.612 19.165
Proceeds from borrowings
Repayment of borrowings
Un-utilised short term facilities
Financial Highlights
Annual Report 2022
22
Notes – Consolidated Financial Statements
Note 1: Summary of significant accounting policies and estimates
Fair value of biological assets
Biological assets are recognized when the Group controls the assets and it is
probable that future economic benefits associated with the asset will flow to the
Group and the cost for fair value of the asset can be measured reliably.
Biological assets are measured at fair value less selling costs.
Value adjustments of biological assets are recognized in profit or loss for the
period of which they relate.
Commercial herd:
Slaughter pigs (Finishers) above 50 kg are valued based on average sales prices
for November-December on the local market less costs for reaching desired sales
weight of approx. 107 kg. Finishers between 25-50 kg are valued as weaners with
additions for added weight.
The fair value of weaners is based on official Danish and German quotes plus a
mark-up to reflect the Romanian market conditions. The Danish and German
quotes are used as there isn’t an official quotation for the Romanian market. The
Group’s experience from historical sales as well as purchases is that prices on
the Romanian market are strongly correlated to the German and Danish
quotations plus a mark-up reflecting the lack of weaners for sale in Romania. The
mark-up is according to the Group’s recent weaner sales contracts.
The valuation of piglets is based on official Danish quotes.
Breeding herd:
Breeding herd (boars, sows and young females) are valued based on official
quotes, based on criteria such as genetics, costs and expected piglets.
Significant accounting estimates and assessments in the group
accounting policies
Revaluation of fair value of property, plant and equipment
The Group’s land, buildings, plant and machinery are revaluated at fair value.
Revaluation of property, plant and equipment is recognized in fair value using either a
market-based approach or a replacement cost approach. Results of the revaluation
based on the replacement cost approach were compared with a revaluation
performed using the income approach to check for impairment indicators of revalued
assets, if any.
The revaluation process is based on qualified independent appraisers done according
with International Valuation Standard 300. This standard considers as basis for
evaluation IAS36 and IFRS13. Valuation techniques are the market and replacement
cost approach. The replacement cost approach is only used in cases where there was
no possibility to use the market approach.
The valuation process are reviewed and approved by the Group’s Management and by
the Audit Committee every year. Results for measurement are reviewed and approved
whenever revaluations are performed.
In the subsidiaries, revaluations are performed every fifth year after a rotation
principle to ensure the carrying amounts do not differ materially from that which
would be determined using fair value at the end of the reporting period. This
procedure has been used for many years with only limited value adjustments
registered. This year none of the entities performed a valuation.
The total fair value of land, buildings, plant and machinery amounted to EUR 86.6
million at December 31st, 2022 (EUR 91.6 million at December 31st, 2021).
Financial Highlights
Annual Report 2022
23
Notes – Consolidated Financial Statements
Note 2: Contingent liabilities
Relocation of Negreni farm:
(Negreni neighbor cases)
Five citizens from Negreni village filed, in November 2016, a claim against Premium Porc
Negreni SRL with the objective of relocating the Negreni-farm as well as receiving
compensation for moral damages. Their claim is based on Government Order no.
119/2014 stipulating that distances from farm operations to the neighboring houses
should be minimum 1,500m. The Negreni farm, build in 1981, is currently located at few
hundred meters from the nearest houses, all of them being built after the farm.
In first court, in March 2018, the judge ruled that the farm should be relocated in order to
respect the mandatory distance provided by Order 119 and denied the claimants
compensation for moral damages. Premium Porc Negreni SRL appealed the ruling in
June 2018. In second court, in December 2018, the Mehedinti Tribunal rejected our
appeal and upheld the decision from the first court.
The Government’s objective, in 2014 when Order 119 was issued, was to prevent
construction of new farms within less than 1,500 m from private houses for the future.
And vice versa. This understanding of the Government’s Order also is confirmed by all
authorities and is reflected in the fact that all production and functioning permits are
regularly renewed despite the distance being less than 1,500 m.
To further substantiate our understanding of the Order we’ve in 2020 received a response
from the Ministry of Health confirming that our understanding is correct.
As a mean to re-open the lost case we filed in October 2018 a request for annulment of
Order No. 119/2014. The court dismissed our claim in 2019 which unfortunately was
upheld by High Court in 2022 definitely closing this option.
Fighting enforcement procedures is ongoing. Court hearings continues in 2022 so far
with a final decision in our favor resulting in an obligation for the main claimant to repay
us €40k in previously paid penalties. As per penalties, 4 of 5 of claims against
enforcement procedures have been upheld by the Court and initial penalties annulled.
The second round of enforcement procedures determined the Court to set lower
penalties.
We have since September 2019 up to now received, fourteen new similar claims from
other citizens with connections to the original claimants as well as three new claims
from one of the original claimant and his wife. Also, a new claim from the son of the
main claimant was received in November 2019, having as object, to meet the distance
between his house and the lagoons. All the new cases have been trialed and dismissed
(13 at second tier and definitive). We expect the remaining cases appealed by the
claimants to be settled in 2023 with a definitive win as well.
We are also investigating other options for dealing with this case.
The current ruling for relocation doesn’t cancel the production permits. According to our
legal advisors, since the ruling is to “move” the farm and not to close it, it will be difficult
or impossible for the claimants to stop our production in the farm. Relocation of the farm
is impossible to carry out in practice and calculation of the potential worst-case loss is
impossible to assess with a reasonable certainty. The potential worst-case loss caused
by the unlikely outcome that the farm will have to be closed and removed is substantial.
Based on the management and the company’s legal advisor’s opinion that the
relocation ruling never will be carried out, no provisions for relocation of the farm nor
other provisions are stated in the financial statements.
Financial Highlights
Annual Report 2022
Notes – Consolidated Financial Statements
24
Notes to the Income Statement
Note
EUR '000
2022 2021
3
Revenue
Business areas:
Pig production 39.520 41.883
Crop production 0 2.001
Other 840 633
40.360 44.517
Intra-group trade between the business areas 0 -1.332
40.360 43.184
Geography:
Romania
40.360
43.184
4
Grants and other income
Animal Welfare Payments 3.401 4.373
EU hectare support 55 300
Other grants 2.199 0
5.655 4.674
5
Value adjustment, biological assets
Value adjustments pigs
6.201
8
6.201 8
6
Staff expenses
Wages and salaries 6.325 8.362
Social contribution & other staff expenses 698 644
Wages closed farms (Special Items) -619 0
6.405 9.006
Share based payments for management team 52 53
6.456 9.059
Remuneration to the Executive Board 474 496
Remuneration to the Board of Directors 82 74
Average number of employees
333 446
Note EUR '000
2022 2021
7
Special Items
Costs incurred in connection with ASF restrictions:
Costs related to operation of blocked farms 3 256
15 49
90% of expected compensation for culled herd -3.008 -12.066
Value culled herd 1.278 9.652
2.491 3.226
778 1.117
Revenue pig production 1.554 1.603
Direct costs -3 -256
Other external costs -1.710 -2.464
Staff expenses -619 0
-778 -1.117
Net costs related to ASF outbreaks:
Costs related to handling and authority
requirements
Costs related to culling, disinfection and quarantine
Special Items are: 1) non recurrent costs related to restrictions imposed by the Authorities
when our farms is placed in different ASF zones and 2) costs caused by infection of ASF
leading to the herd being culled. We refer to the detailed decription in the management
review.
If the special items had been recognized in operating profit before special items, they
would have been included in the following items:
Financial Highlights
Annual Report 2022
25
Notes – Consolidated Financial Statements
Notes to Income Statement and Intangible Assets
Note EUR '000
2022 2021
8
Other Income
Gain on sale of crop activities
0 -3.864
0 -3.864
9
Depreciation
Intangible assets 155 173
Buildings 3.872 3.873
Plant and equipment 3.753 4.100
Vehicles and other machinery
600 831
Investment subsidy amortization -277 -167
Loss or gain on asset sales -143 147
7.960 8.956
10
Financial Income
Interest financial institutions
75 24
75 24
11
Financial Expenses
Interest bank debt 1.271 1.400
Calculated interest leasing commitments 84 105
Other financial expenses 633 437
Exchange rate adjustment 96 1.224
2.084 3.166
Note EUR '000
2022 2021
12
Income Taxes
Current tax -411 -3.243
Tax Comprehensive Income -75 -27
Adjustment of deferred tax 465 1.580
-21 -1.690
Tax on profit for the year is specified as follows:
Calculated 16% tax on profit for the year before tax: -99 -1.578
Tax effect of:
-37 -592
Non-taxable income and expenses
115 479
-21 -1.690
Effective tax rate for the year 3% 17%
13
Intangible assets
Acquired rights
Cost at January 1 1.472 955
Additions for the year 37 517
Disposals for the year -3 0
Cost at December 31 1.506 1.472
Amortisation at January 1 877 703
Amortisation for the year 155 173
-2 0
Amortisation at December 31 1.031 877
Carrying amount at December 31
476 596
The Group has acquired and implemented several software systems used in daily operations.
The value of the acquired rights are based on costs for licenses and implementations of those
software systems.
Differences in tax rates in Denmark (22%) compared
with Romania
Reversed depreciation on disposal
Financial Highlights
Annual Report 2022
26
Notes – Consolidated Financial Statements
Notes to Financial Position
14
Tangible assets
EUR '000
Land and
buildings
Plant and
Machinery
Operating
equipment
Right of use
assets
Property, plant
and equipment
in progress
Cost at January 1, 2021 81.891 44.730 6.943 0 3.008
Reclassification/transfer -312 -2.765 -4.069 7.146 0
Additions for the year 1.321 766 648 1.370 1.432
Disposals for the year -1.142 -398 -1.221 -1.564 -2.468
Cost at December 31, 2021 81.757 42.333 2.300 6.952 1.972
Apraisal at January 1, 2021 15.582 0 0 0 0
Apraisal increases 0 0 0 0 0
Apraisal increases at Dec. 31, 2021 15.582 0 0 0 0
Amortisation at January 1, 2021 21.518 23.419 4.061 0 0
Reclassification/transfer -93 -894 -1.879 2.865 0
Amortisation for the year 3.811 3.046 585 1.362 0
Reversed depreciation on disposal -3 -308 -990 -993 0
Amortisation at December 31, 2021 25.234 25.263 1.776 3.235 0
Carrying amount at Dec. 31, 2021 72.106 17.070 524 3.717 1.972
Out of which land not depreciated 4.541
Right-of-use assets by category 502 1.220 1.995
Assets provided as security for debt 72.106 17.070 524 2.903
Financial Highlights
Annual Report 2022
27
Notes – Consolidated Financial Statements
Revaluation of fair value of property,
plant and equipment
The Group’s land and buildings and
plant and machinery are revaluated at
fair value as described in note 1. The
revaluation process is based on
qualified independent appraisers, and
valuation techniques are the market
and replacement cost approach. The
replacement cost approach is only
used in cases where there was no
possibility to use the market approach.
Revaluations are in the subsidiaries
carried out in a rotation principle to
ensure the carrying amounts does not
differ materially from what would be
determined using fair value at the end
of the reporting period. No valuation
review has been performed in 2022.
Notes to Financial Position
14
Tangible assets continued
EUR '000
Land and
buildings
Plant and
Machinery
Operating
equipment
Right of use
assets
Property, plant
and equipment
in progress
Cost at January 1, 2022 81.757 42.333 2.300 6.952 1.972
Additions for the year 701 1.556 755 64 173
Disposals for the year -91 -13 -149 -1.467 -1.309
Cost at December 31, 2022 82.368 43.876 2.906 5.549 836
Apraisal at January 1, 2022 15.582 0 0 0 0
Apraisal increases 0 0 0 0 0
Apraisal increases at Dec. 31, 2022 15.582 0 0 0 0
Amortisation at January 1, 2022 25.234 25.263 1.776 3.235 0
Amortisation for the year 3.801 3.018 371 1.035 0
Reversed depreciation on disposal -11 757 -113 -1.323 0
Amortisation at December 31, 2022 29.024 29.038 2.034 2.947 0
Carrying amount at Dec. 31, 2022 68.926 14.839 872 2.601 836
Out of which land not depreciated 4.459
Right-of-use assets by category 383 986 1.233
Assets provided as security for debt 68.926 14.839 872 2.094
If Land and buildings were measured using cost model, the carrying amounts would be:
Net carrying amount Land and Buildings without revaluations, 2021 56.524
Net carrying amount Land and Buildings without revaluations, 2022 53.344
The Group had end of 2022 no contractual obligations related to Property, plant and equipment in progress (2021: EUR 0.4m).
Financial Highlights
Annual Report 2022
Notes to Financial Position
28
Notes – Consolidated Financial Statements
Gain on changes in fair value comprises changes as a consequence of biological growth
and price changes. Disposals from sales and transfer amounts are calculated using the
fair value per unit from previous period. Transfers between groups’ covers pigs
transferred to own breeding as young females.
Reference is made to note 1 for further details of fair value measurement of biological
assets.
All biological assets are measured at fair value. All of these fair values are placed at level
3 in the fair value hierarchy as significant estimates are applied – please refer to note 1.
The Groups financial department is responsible for performing the valuation of fair value
measurements including level 3 fair values of biological assets. Valuation model
includes market inputs from official prices and actual own sales prices on local market.
The valuation process and results for measurement are reviewed and approved by Group
Management and the Audit Committee at least once every year.
Financial Highlights
Annual Report 2022
29
Notes – Consolidated Financial Statements
Notes to Financial Position
Note EUR '000
2022 2021
16
Non-current investments
Deposits / other financial assets 82 78
Cost at December 31 82 78
17
Inventories
Rawmaterials for feed 7.675 4.717
Other Consumables 1.454 1.597
Finished goods (feed a.o.) 770 680
Total inventories 9.898 6.994
Cost of sales recognized in profit or loss (feed) 25.061 26.147
Inventories provided as security
9.898 6.994
No write-down has been made on inventories.
18
Receiveables
Trade receiveables 4.887 4.981
Bad debt provision -557 -709
Trade receiveables, net 4.330 4.272
Receiveable from public grants 4.279 5.015
Other receiveables -239 3.545
Bad debt provision -163 -195
Other receiveables, net 6.886 8.365
Write down, beginning of year
905 1.192
Exchange adjustments 1 -20
Additions for the year 134 61
Disposals for the year -319 -329
Write-down at December 31 720 905
Note EUR '000
2022 2021
19
Assets held for sale
Land and buildings 403 448
Other liabilities 0 0
Cost at December 31 403 448
20
Share Capital
The share capital comprises the following share classes:
A-shares:
Number beginning
number of shares
95.364.611 95.364.611
Capital increase
number of shares
0 0
Number at December 31 in DKK 95.364.611 95.364.611
Each share has a value of DKK 1. No shares carry any special rights.
21
Provision for deferred taxes
140 2.245
465 1.580
Adjustment on equity -826 -3.685
Provision for deferred tax December 31 -221 140
Deferred tax relates to tangible assets.
Provision at begining of year
Assets held for sale is related to a agricultural land development project spread out over
Galati County in Romania. The land has never been part of the Group's operation and a sale
will not impact future earnings neither the future development of the Group.
Adjustment for the year
recognized in profit or loss
Financial Highlights
Annual Report 2022
Notes to Consolidated Financial Statements
30
Notes – Consolidated Financial Statements
22
Interest bearing debt
EUR '000
Payable after
5 years
Payable
betwee n 2 and
5 years
Payable within
1 year
Total
Debt at December 31, 2021
Credit institutions, non-current:
4.665 19.448 4.296 28.409
Leasing debt: 0 1.922 1.294 3.215
Other non-current debt: 0 49 1.052 1.101
Credit institutions, current: 0 0 25.726 25.726
4.665 21.418 32.368 58.451
Debt at December 31, 2022
Credit institutions, non-current:
0 20.309 3.654 23.963
Leasing debt: 0 1.011 969 1.980
Other non-current debt: 0 1.847 729 2.576
Credit institutions, current: 0 0 21.839 21.839
0 23.167 27.190 50.358
Cash flow from financing activities
EUR '000
1/1 2021 Cas h flows
Fore i gn
exchange
movement
Fair value
change s
31/12 2021
Credit institutions, non-current:
34.083 -5.626 -48 0 28.409
Leasing debt: 3.812 -596 0 0 3.215
Other non-current debt: 1.400 -276 -23 0 1.101
Credit institutions, current: 21.677 4.123 -74 0 25.726
Total liabilities from fin. activities
60.972 -2.375 -145 0 58.451
EUR '000
1/1 2022 Cas h flows
Fore i gn
exchange
movement
Fair value
change s
31/12 2022
Credit institutions, non-current:
28.409 -4.446 0 0 23.963
Leasing debt: 3.215 -1.236 0 0 1.980
Other non-current debt: 1.101 1.475 0 0 2.576
Credit institutions, current: 25.726 -3.887 0 0 21.839
Total liabilities from fin. activities
58.451 -8.093 0 0 50.358
Non-cash changes
Note EUR '000
2022 2021
23
Deferred Income
Investments subsidies beginning 2.258 2.031
New investment subsidies received 1 394
Amortization of investments subsidies -277 -167
1.981
2.258
24
Other liabilities
Employee related payables 482 244
Other payables -1.496 -273
1.477
3.197
Deferred income primarily relates to grants for the construction of feedmills and
biosecurity barrieres on farms in Romania. Grants are recognised as income concurrently
with the underlying fixed assets being depreciated.
Financial Highlights
Annual Report 2022
Market Risk
31
Notes – Consolidated Financial Statements
Loans with fixed
interest
Loans with
variable interest
Note 25: Financial risks
Market risk
The Group's credit facilities are floating-rate credits, which exposes the Group to interest rate
fluctuations. According to Group policy, all financing of working capital and investments in fixed
assets are made on floating-rate terms. An interest hedging of approx. 15 % of the debt (EUR
7.5m) has been concluded via the same banks providing the underlying long-term facility. The
interest hedge fixes the interest to approx. 3.5% including margins for the next 2 years. The
positive market values of the interest hedge, EUR 0.2m, is included in Other liabilities (note 24).
Additional 5 % of the Group’s debt is with fixed interest rate.
Activities abroad, earnings, cash flows and equity are not materially affected by currency risks,
as the foreign activities are predominantly transacting in their functional currency (RON).
Similarly, the external financing is denominated in EUR, which is the functional currency of the
parent entity and the presentation currency for the Group, except for financing locally, which is in
the functional currency of the subsidiary. Hence, there is no currency risks related to external
financing either. Consequently, material currency risks for the Group are limited to translation
risks related to foreign subsidiaries.
The Group does not engage in speculative currency positions. Introduction of the EUR as
functional currency of the consolidated financial statements has contributed to reducing the
overall impact of exchange rates.
Exchange rate adjustments of investments in foreign subsidiaries being independent entities are
recognized in other comprehensive income. Exchange rate risks related to investments are
normally not hedged, as the company’s management is of the opinion that a current foreign
currency hedging would not be the optimal solution with a view to the overall risk and costs.
The Group is exposed to interest rate risks, as loans are primarily with variable interests except
for the smaller part with fixed interests described above. A reasonable possible change in
interest rates at 31.12.2022 would not have any material effect on income statement or equity.
The Group is highly exposed to global and EU development in sales prices of pork as well as raw
materials for feed (grain and protein). The most significant effect on the Group's earnings is
attributable to changes in the price of pig meat and price changes relating to pig feed, which
makes up 2/3 of the pig production costs. The Group observes these developments closely.
A change of the pig meat price of 10% will, on an isolated basis, affect profit for the year before
tax by approximately EUR 3.8 million (2021: approx. EUR 4.0 million). A 10% change in the feed
price will, on an isolated basis, affect profit for the year before tax by approximately EUR 2.5
million (2021: approx. EUR 2.6 million).
Split of total outstanding interest bearing debt
EUR '000 2021
2022
Interest
binding period
in months
Avg. effective
interst
Loans with fixed interest
EUR
9.000 7.500 12-48 3-4%
RON
1.101 68 up to 36 0%
DKK
766 2.508 6,5/8,0%
10.867
10.076
Loans with variable interest
EUR
43.090 39.742 1-6 2-3%
RON
4.494 520 1-6 2-3%
DKK
0 20 1 4%
47.584
40.282
Financial Highlights
Annual Report 2022
Other Financial Risks
32
Notes – Consolidated Financial Statements
Liquidity risk
The Group ensures adequate cash resources by entering into framework agreements in
respect of current overdraft facilities. Existing agreements subject to time limitation are
irrevocable on the part of the banks prior to maturity unless there is a breach of the terms of
the loans according to the loan agreements.
Maturity analysis for debt is stated in Note 22, to which reference is made. The maturity
analysis is disclosed according to category and class broken down on maturity period. All
amounts are excluding future interest payments.
Capital management
The objective of the Group's capital management is to ensure the Group's ability to continue
as a going concern in order to provide return on the shareholders' investments and establish
and maintain an optimal capital structure for the purpose of reducing the costs of borrowed
capital and maintain a basis for continued growth in the Group.
The Group's capital management is moreover partly controlled by loan agreements which
include specific requirements to the financial performance of the Group.
Total capital comprises equity and subordinate loan capital from the Parent company; as
shown in the consolidated balance sheet
Credit risk
The Group is exposed to credit risks on receivables. The Group positively wants to minimize
its credit risks, which mainly relates to sales transactions. Credit insurance is taken out in
advance on more than 90% of the normal sales of slaughter pigs. Due to changes in the sales
(thermal treatment and weaner sales) caused by ASF trade restrictions the credit exposure
was significantly increased in 2018 and has gradually improved since although not the pre-
ASF level. Credit insurance covers approx. 75% of the total receivable end of 2022 (2021:
85%). Outstanding receivables are followed-up upon on a current basis in accordance with
Group procedures.
The expected credit losses on trade receivables are estimated by reference to past default
experience of the debtor and an analysis of the debtor’s current financial position, adjusted
for factors that are specific to the debtors and an assessment of both the current as well as
the forecast direction of conditions at the reporting date. The Group writes off a trade
receivable when there is information indicating that the debtor is in severe financial difficulty
and there is no realistic prospect of recovery, e.g. when the debtor has been placed under
liquidation or has entered into bankruptcy proceedings, or when the trade receivables are
over two years past due, whichever occurs earlier.
There has been no change in the estimation techniques or significant assumptions made
during the current reporting period.
.
EUR '000
Due above
5 years
Due Between
2 and 5 years
Due within
1 year
Total Carrying
amount
Receivables at December 31, 2021
Trade receivables 0 0 4.272 4.272
Other receivables 0 0 8.382 8.382
Prepayments 0 651 499 1.150
0 651 13.153
13.804
Receivables at December 31, 2022
Trade receivables 0 0 4.330 4.330
Other receivables 0 0 6.886 6.886
Prepayments 0 460 552 1.012
0 460 11.768
12.228
Financial Highlights
Annual Report 2022
Notes to Consolidated Financial Statements
33
Notes – Consolidated Financial Statements
Volatility 25%
Exercise price (in the parent) 4.63 DKK
Risk free interest rate (pro anno) 0.0%
Life of the warrants 84 months
Note 26: Incentive program for group management
The company has granted warrants to members of the entity’s management, that will allow them to
purchase a number of shares in DCH International A/S at a price agreed in advance.
A total of 2,904,000 warrants have been granted in 2019 & 2020, of which 2,357,800 warrants have vested
on December 31, 2022. Of the remaining 546,200 warrants, 422,200 is cancelled due to the participants
termination of employment and the rest will vest in installments up and until December 2023 if all the
participants in the program remain employed. The participants may exercise their warrants by purchasing
shares during a four-week period following the approval of the parent entity’s annual report in the years
2023 to 2027, after which the warrants will lapse without any further notice. The agreed exercise price
increases from 3.81 DKK per share in 2023 to 4.63 per share in 2027.
The fair value of each option is calculated using an option pricing model taking into account the exercise
price of the option, an estimate of the current price of the underlying shares, the life of the option and the
risk-free interest rate for the life of the option. As the Group is unlisted, and no market information for
comparable listed entities are currently available, the current price of the underlying shares is determined
based on the equity per share according to the annual report for 2019. Management believe that this is a
reasonable approximation of the current market price for the Group’s shares for the purpose of the
measurement of the warrants, due to the current market situation and the outbreak of ASF in Romania,
and the fact that all tangible assets and biological assets of the group are measured at fair value. In
determining the life of the option for the purpose of the measurement, it is assumed that the employees
will exercise the option as soon as possible.
The fair value of the warrants granted has been determined to be 0.47 DKK (0.06 EUR) per warrant. The
most significant inputs used in the measurement model are the following:
27
Related parties and ownership
FMB Holding A/S, Søvejen 33, 8752 Østbirk
Stenagergaard Invest ApS, Tellerupvej 15, 5591 Gelsted
Helge Maagaard, Ulfsundvej 25, Nees, 7660 Bækmarksbro
Tofthøj Agro A/S, Tofthøjvej 41, 7321 Gadbjerg
Other related parties
Lars V. Drescher CEO
Morten Beider CFO
Torben Svejgaard Chairman of the Board of Directors
Carsten Lind Pedersen Member of the Board of Directors
Ole Sloth Nielsen Member of the Board of Directors
Jytte Rosenmaj Member of the Board of Directors
Bo Holse Member of the Board of Directors
Transactions
28
Fees paid to auditors appointed by the General Assembly
Fees for statutory audits 101 93
Other Services 76 87
177
180
Audit fee are recognized as administrative costs
29
Post balance sheet events
There have been no significant post balance sheet events.
DCH International A/S's shareholders are legal and natural persons, and no individual
shareholder exercises control of the Group's activities. The following shareholders are
registered as holding more than 5% of the voting share capital or minimum 5% of the share
capital:
Only related party transactions not conducted on an arm's lenght basis are disclosed in the
annual report.
No such transactions have been conducted in the financial year.
Financial Highlights
Annual Report 2022
Accounting Policies
34
Notes – Consolidated Financial Statements
Note 30: Accounting Policies
Classification
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the EU and additional Danish disclosure
requirements for annual reports.
Recognition and measurement
Assets are recognized in the balance sheet when it is probable as a
result of a prior event that future economic benefits will flow to the
Group, and the value of the assets can be measured reliably.
Liabilities are recognized in the balance sheet when the Group has a
legal or constructive obligation as a result of a prior event, and it is
probable that future economic benefits will flow out of the Group,
and the value of the liabilities can be measured reliably.
On initial recognition, assets and liabilities are measured at cost.
Measurement subsequent to initial recognition is affected as
described below for each financial statement item.
Anticipated risks and losses that arise before the time of
presentation of the annual report and that confirm or invalidate
affairs and conditions existing at the balance sheet date are
considered at recognition and measurement.
Income is recognized in the income statement when earned,
whereas costs are recognized by the amounts attributable to this
financial year.
Consolidated financial statement
The annual report include DCH International A/S (Parent) and the
enterprises (group enterprises) that are controlled by the Parent,
see group chart on page 10. Control is achieved by the Parent,
either directly or indirectly, holding more than 50% of the voting
rights or in any other way possibly or actually exercising controlling
influence.
Basis of consolidation
The annual report is prepared on the basis of the financial
statements of DCH International A/S and its subsidiaries. The
annual report is prepared by combining uniform items. On
consolidation, intra-group income and expenses, intra-group
accounts and dividends as well as profits and losses on
transactions between the consolidated enterprises are eliminated.
The financial statements used for consolidation have been
prepared applying the Group’s accounting policies.
Subsidiaries’ financial statement items are recognized in full in the
annual report.
Investments in subsidiaries are offset at the pro rata share of such
subsidiaries’ net assets at the takeover date, with net assets having
been calculated at fair value.
Business Combinations
Newly acquired or newly established enterprises are recognized in
the annual report from the time of acquiring or establishing such
enterprises. Divested or wound-up enterprises are recognized in the
consolidated income statement up to the time of their divestment
or winding-up.
The purchase method is applied at the acquisition of new
enterprises, under which identifiable assets and liabilities of these
enterprises are measured at fair value at the acquisition date. On
acquisition of enterprises, provisions are made for costs relating to
decided and published restructurings in the acquired enterprise.
Allowance is made for the tax effect of restatements.
Identifiable intangible assets are recognized separately from
goodwill if they are separable or arise from contractual or other
legal rights.
Any remaining positive differences between cost and the fair value
of assets, liabilities and contingent liabilities acquired are
recognized in intangible assets in the balance sheet as goodwill.
Goodwill is not amortized but is tested for impairment on an annual
basis. Enterprises acquired are recognized in the consolidated
financial statements as from the date of obtaining control, whereas
enterprises sold are recognized up until the date of surrender of
control. Intra-group acquisitions of subsidiaries are made under the
pooling of interest's method.
If any remaining difference between cost and the fair value of
assets, liabilities and contingent liabilities acquired are negative, the
amount is recognized immediately in profit or loss as a bargain
purchase gain.
Foreign currency translation
The items recognized in the financial statements of each of the
group enterprises are measured at the functional currency used in
the primary economic environment in which the individual
enterprise operates. The functional currencies of the group
enterprises are the following: Romanian Lei (RON) for the Romanian
subsidiary and EUR for the parent company in Denmark.
The consolidated financial statements are presented in EUR, which
are the functional currency of the parent company and the
presentation currency of the Group. On initial recognition,
transactions in foreign currencies are translated at the exchange
rates at the date of transaction. Exchange differences arising
between the transaction date rates and the rates at the date of
payment are recognized in the income statement as financial
income and expenses.
Receivables, payables and other monetary items denominated in
foreign currencies are translated at the exchange rates at the
balance sheet date. Any differences between the exchange rates at
the balance sheet date and the exchange rates at the date at which
the receivable or the payable arose or was recognized in the most
recent financial statements are recognized in the income statement
as financial income and expenses.
On consolidation, exchange differences arising from the translation
of any net investment in foreign entities and of borrowings and
other financial instruments designated as hedges of such
investments are recognized in other comprehensive income. When
a foreign operation is sold or any borrowings forming part of the net
investment are repaid, the associated exchange differences are
reclassified to profit or loss as part of the gain or loss on sale.
Balance sheet items including goodwill relating to consolidated
enterprises that do not have EURO as their functional currency are
translated into EUR based on the exchange rates at the balance
sheet date, whereas the income statements of these enterprises are
translated at average rates of exchange. Exchange adjustments
arising on the translation of the opening equity at the exchange
rates at the balance sheet date and net profit/loss for the year at
the exchange rates at the balance sheet are recognized in other
comprehensive income over equity under a separate reserve for
exchange adjustments.
The Group used the following exchange rates for the translation
into EUR on 31 December 2022:
RON: Income statement 2022: 1 EUR = 4.932 RON
(2021: 1 EUR = 4.920 RON)
DKK: Income statement 2022: 1 EUR = 7.4365 DKK
(2021: 1 EUR = 7.4365 DKK)
Derivative financial instruments
On initial recognition in the balance sheet, derivative financial
instruments are measured at cost and subsequently at fair value.
Derivative financial instruments are recognized under other
receivables or other payables, respectively.
Changes in the fair value of derivative financial instruments
classified as and complying with the requirements for hedging the
fair value of a recognized asset or a recognized liability are
recorded in the income statement together with changes in the
value of the hedged asset or the hedged liability.
Financial Highlights
Annual Report 2022
Changes in the fair value of derivative financial instruments
classified as and complying with the requirements for hedging
future transactions are recognized in other comprehensive income.
When the hedged transactions are realized, the accumulated
changes are recognized as part of cost of the relevant financial
statement items.
Changes in the fair value of derivative financial instruments applied
for hedging net investments in independent foreign subsidiaries are
classified in other comprehensive income.
Income statement
Revenue
Revenue from sale of products is recognized when the Group has
transferred control of products sold to the buyer and it is probable
that the Group will collect the consideration to which it is entitled
for transferring the products. Control of the products is transferred
at a point in time, typically on delivery. Revenue is recognized net of
VAT, duties and sales discounts and is measured at fair value of the
determined consideration.
Investment grants are taken to income as actual payment is made
when the conditions of payment of grants have been approved by
the authorities.
Fair value adjustment biological assets
Fair value adjustments of biological assets include the adjustments
of the company’s biological assets for the financial year measured
at fair value.
Costs of plant breeding, feed, energy and other
production costs
Costs of plant breeding, feed, energy and other production costs
include the consumption of raw materials and consumables used to
achieve net revenue.
Other external expenses
Other external expenses comprise expenses for distribution, sale,
administration, premises, bad debts, etc.
Staff costs
Staff costs comprise salaries and wages, social
security costs, pension contributions, etc. for the Company’s staff.
Amortization, depreciation and impairment losses
Amortization, depreciation and impairment losses relating to
intangible and tangible assets comprise amortization, depreciation
and impairment losses for the financial year, calculated on the
basis of the residual values and useful lives of the individual assets
and impairment testing as well as gains and losses from the sale of
intangible assets as well as property, plant and equipment.
Financial income and expenses
These items comprise interest income and interest expenses, the
interest portion of finance lease payments, payables and
transactions in foreign currencies, mortgage amortization
premium/allowance on mortgage debt, etc. as well as tax surcharge
and repayment under the Danish Tax Prepayment Scheme.
Tax
Tax for the year, which consists of current tax for the year and
changes in deferred tax, is recognized in the income statement by
the portion attributable to the profit/loss for the year and
recognized directly in equity by the portion attributable to entries
directly in equity. Current Danish income tax is allocated among the
jointly taxed entities proportionally to their taxable income (full
allocation with a refund concerning tax losses).
Balance Sheet
Intangible assets
Acquired intellectual property is amortized over the term of the
agreement, but over no more than 5 years. Intellectual property
rights etc. are written down to the lower of recoverable amount and
carrying amount.
Property, plant and equipment
Other fixtures and fittings, tools and equipment and property plant
and equipment in progress are measured at cost less accumulated
depreciation. Cost comprises the cost of acquisition and expenses
directly related to the acquisition and costs for set-up. In case of
assets of own construction, cost comprises directly attributable
costs of labor, materials, components and sub-suppliers.
The categories land and buildings are measured at fair value less
accumulated depreciation on buildings and impairment losses
recognized at the date of revaluation. Valuations are performed
with sufficient frequency to ensure that the carrying amount of a
revalued asset does not differ materially from its fair value.
A revaluation surplus is recorded in other comprehensive income
and credited to the asset revaluation surplus in equity. However, to
the extent that it reverses a revaluation deficit of the same asset
previously recognized in profit or loss, the increase is recognized in
profit and loss. A revaluation deficit is recognized in the income
statement, except to the extent that it offsets an existing surplus on
the same asset recognized in the asset revaluation reserve.
An annual transfer from the asset revaluation reserve to retained
earnings is made for the difference between depreciation based on
the revalued carrying amount of the asset and depreciation based
on the asset's original cost. Upon disposal, any revaluation reserve
relating to the particular asset being sold is recognized in retained
earnings without passing the income statement. Financial expenses
directly attributable to purchases, construction or production of a
qualifying asset are included as part of the cost of the asset. A
qualifying asset is an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale. The Group
uses the local, effective rate of interest on credit for construction
and overdraft facilities for the calculation of expenses for
capitalization.
Depreciation of a non-current asset is commenced when it is put
into use. Depreciation based on cost reduced by any residual value
is calculated on a straight-line basis over the expected useful lives
of the assets, which are:
Production buildings 25-40 years
Production plant and machinery 7-15 years
Operating fixtures, tools and vehicles 3-7 years
Land is not depreciated
The carrying amount of property, plant and equipment is reviewed
on an annual basis to determine whether there is any indication of
impairment other than that expressed by fair-value or depreciation.
If so, an impairment test is carried out to determine whether the
recoverable amount is lower than the carrying amount and the
asset is written down to its lower recoverable amount.
Biological assets
Agricultural activity is defined as an activity in which biological
transformation of biological assets for sale into agricultural
produce or another biological asset takes place. Agricultural
produce is defined as a harvested product of the Group’s biological
assets, and a biological asset is defined as living animals or crops.
The Group has assessed that its biological assets consists of
breeding herds of gilts, sows and boars, commercial heard of
slaughter pigs and unharvested crops.
On initial recognition and at subsequent reporting dates, biological
assets are measured at fair value less estimated costs to sell
unless fair value cannot be reliably measured on initial recognition.
Accounting Policies
35
Notes – Consolidated Financial Statements
Financial Highlights
Annual Report 2022
Gains or losses on initial recognition of a biological asset measured
at fair value less estimated costs to sell, and subsequent changes
in the fair value less estimated costs to sell relating to the
biological asset, are recognized in the income statement in the item
“Gains/losses on changes in the fair value of biological assets” in
the period in which the gain or loss arises.
Biological assets are recognized as current or non-current
biological assets depending on the production cycle of the
biological asset concerned. Generally, biological assets relating to
slaughter pigs and cropping are recognized as current assets.
Breeding herds of gilts, sows and boars are recognized as non-
current assets.
Investments in subsidiaries
Investments in subsidiaries are recognized and measured under the
equity method. This means that investments are measured at the
pro rata share of the enterprises’ equity value plus or less
unamortized positive, or negative goodwill and plus or minus
unrealized intra-group profits and losses.
The Parent’s share of the enterprises' profits or losses after
elimination of unrealized intra-group profits and losses and minus
or plus amortization of positive or negative goodwill is recognized
in the income statement and the net revaluation reserve under the
equity.
Upon distribution of profit or loss, net revaluation of subsidiaries is
transferred from the reserve for net revaluation to retained earnings
under the equity method.
The purchase method is applied in the acquisition of investments in
subsidiaries; see above description under annual report.
Inventories
Inventories are measured at the lower of cost under the FIFO
method and net realizable value. The net realizable value of
inventories is calculated at the amount expected to be generated by
sale in the process of normal operation with deduction of costs to
sell and costs of completion. The net realizable value is determined
allowing for marketability, obsolescence and development in
expected sales sum.
The cost of goods for resale, raw materials and consumables
equals landed cost.
The cost of finished goods and work in progress comprises the
cost of raw materials, consumables and direct labor as well as
directly attributable labor and production costs. These costs also
comprise maintenance and depreciation of machinery, factory
buildings and equipment used in the manufacturing process as well
as costs of production management.
Agricultural produce is initially recognized at fair value at the point
of harvest less estimated costs to sell, and subsequently in
inventories up until the point when it is sold to a third party or is
used internally as feed. The fair value of agricultural produce at the
point of harvest is measured on the basis of the market prices on
the markets on which the agricultural produce is expected to be
sold or used as feed.
Receivables
Receivables are measured at amortized cost, usually equaling
nominal value less write-downs for bad debts.
Prepayments
Prepayments comprise incurred costs relating to subsequent
financial years. Prepayments are measured at cost.
Lease commitments
Lease payments, not recognized under IFRS 16, are recognized on a
straight-line basis in the profit and loss account over the term of the
lease.
Other financial liabilities
Other financial liabilities are measured at amortized cost, which
usually corresponds to nominal value.
Deferred income
Deferred income comprises income received for recognition in
subsequent financial years. Deferred income is measured at cost.
Cash
Cash comprises bank deposits.
Deferred tax
Deferred tax is recognized on all temporary differences between the
carrying amount and tax-based value of assets and liabilities, for
which the tax-based value of assets is calculated based on the
planned use of each asset.
Deferred tax assets, including the tax base of tax loss
carryforwards, are recognized in the balance sheet at their
estimated realizable value, either as a set-off against deferred tax
liabilities or as net tax assets.
Income tax receivable or payable
Current tax payable or receivable is recognized in the balance sheet,
stated as tax calculated on this year's taxable income, adjusted for
prepaid tax.
Cash flow statement
The consolidated cash flow statement and the parent cash flow
statement are presented using the indirect method and shows cash
flows from operating, investing and financing activities as well as
the cash and cash equivalents at the beginning and end of the
financial year.
Cash flows from the acquisition and divestment of enterprises are
shown separately under cash flows from investing activities.
Cash flows from acquired enterprises are recognized in the cash
flow statement from the time of their acquisition, and cash flows
from divested enterprises are recognized up to the time of
divestment.
Cash flows from operating activities are calculated as operating
profit/loss adjusted for non-cash operating items, working capital
changes, financial income and expenses and income taxes paid.
Cash flows from investing activities comprise payments made in
connection with the acquisition and divestment of enterprises,
activities and fixed asset investments as well as acquisition,
development, improvement and sale, etc. of intangible assets and
property, plant and equipment.
Cash flows from financing activities comprise changes in the size
or composition of the Parent’s share capital and related costs as
well as the raising of loans, inception of finance leases, instalments
on interest-bearing debt, purchase of treasury shares, and payment
of dividend.
Cash and cash equivalents comprise cash less short-term bank
debt.
Accounting Policies
36
Notes – Consolidated Financial Statements
Financial Highlights
Annual Report 2022
37
Parent Income Statement Parent Statement of Comprehensive Income
Parent Financial Statements
2022 2021
Note
Revenue 31
0 12
Other external costs -16 -141
Gross profit
-16 -129
Staff Expenses
33
0 0
Depreciation
34
0 -32
Operating profit (EBIT)
-16
-161
Income f. investments in subsidiaries
35
-829 -8.414
Financial income
36
483 525
Financial expenses
37
-182 -54
Profit before tax
-544
-8.103
Tax on profit for the year
38
-52 -68
Net profit for the year
-596 -8.172
Distribution of profit for the year:
Group Shareholders
-596 -8.172
Distributed
-596 -8.172
EUR '000
EUR '000
2022 2021
Note
Net profit for the year -596 -8.172
Exchange adjustments of foreign enterprises -15 27
Hedge accounting 393 143
Value adjustments in subsidiaries 0 0
Total comprehensive income -218 -8.001
Items that may be reclassified subsequently to
profit or loss
Items that may not be reclassified subsequently to
profit or loss
Financial Highlights
Annual Report 2022
38
Parent Statement of Financial Position
Parent Financial Statements
EUR '000
31/12 2022 31/12 2021
Assets Note
Investments in subsidiaries
40
77.293 75.690
Loan to subsidiaries
41
2.500 3.500
Fixed asset investments
79.793 79.191
Non-current assets
79.793 79.191
Receiveables group companies
41
1.038 1.323
Other receiveables 0 17
Deferred tax assets 52 105
Receiveables
1.091 1.444
Cash and cash equivalents
1.690 370
Current assets
2.781 1.815
Total Assets
82.574 81.005
EUR '000
31/12 2022 31/12 2021
Equity and liabilities
Note
Share capital
20
12.767 12.767
56.073 56.510
Retained earnings
11.221 10.949
Equity
80.062 80.227
Other non-current liabilities
42
0 0
Credit institutions
42
0 0
Long-term liabilities
0 0
42
2.508 766
Trade payables 0 4
Other payables
44
4 8
Short-term liabilities
2.513 778
Total liabilities
2.513 778
Total Equity and Liabilities
82.574
81.005
Short term portion, credit institutions and
other non-current
Reserve for net revaluation according to
the equity method
Financial Highlights
Annual Report 2022
Parent Statement of Changes in Equity
Parent Cash Flow Statement
39
Parent Financial Statements
EUR '000
Share C apital
Rese rve f or ne t
revaluation
according to the
equity method
Retained e arnings Total Equity
12.767 64.759 10.650 88.176
Share based payments 0 0 53 53
Net profit/loss for the year
0 -8.414 242 -8.172
Other comprehensive income
0 165 5 170
12.767 56.510 10.950 80.227
0 0 0 0
0 0 0 0
Share based payments 0 0 52 52
Net profit/loss for the year 0 -829 232 -596
Other comprehensive income 0 392 -13 379
12.767 56.073 11.221 80.062
Equity at January 1, 2021
Equity at December 31, 2021
Purchase own shares
Capital increase
Equity at December 31, 2022
EUR '000
2022 2021
Operating profit/loss (EBIT) -16 -161
Adjustment for non-cash items:
Depreciations
0 9
Change in receivables
301 0
Change in trade and other payables
-7 -71
Cash flow from operations before financial items 278 -224
Financial income received
483 525
Financial expenses paid
-182 -52
Corporation taxes paid
0 0
Cash flow from operating activities
578 249
Sale of property, plant and equipment
0 31
Investments in subsidiaries
-2.000
0
Repayment of loans from subsidiaries
1.000
0
Cash flow from investing activities
-1.000 31
Proceeds from borrowings
1.836 0
Repayment of borrowings
-94 -17
Cash flow from financing activities
1.741 -17
Change in cash and cash equivalents
1.320 263
Cash and cash equivalents, start year
370 107
Cash and cash equivalents at December 31
1.690 370
Un-utilised short term facilities 0
0
Liquidity available at December 31 1.690 370
Financial Highlights
Annual Report 2022
Notes – Parent
40
Notes to Parent Financial Statements
Note EUR '000
2022 2021
31
Revenue
Rental of equipment 0 12
0 12
32
Fees paid to auditors appointed by the General Assembly
Fees for statutory audits
3 1
Other Services
0 0
3 1
Audit fee are recognized as other external costs.
33
Staff expenses
Wages and salaries 0 0
Share based payments
0 0
0 0
Average number of employees
0 0
34
Depreciation
Plant and machinery 0 9
Loss or gain on asset sales 0 24
0 33
Reference is made to note 6 for infomation about remuneration to the Executive Board
and Board of Directors and to note 26 for incentive program for the group management
team.
Note EUR '000
2022 2021
35
Income from investments in subsidiaries
Premium Pork International A/S -829 -8.414
-829 -8.414
36
Financial Income
Interest on loans to subsidiaries 482 525
483 525
37
Financial Expenses
Interest bank debt
0 2
Other financial expenses
181 50
Exchange rate adjustment
1 2
182 54
38
Income Taxes
Adjustment of deferred tax 52 68
52 68
Financial Highlights
Annual Report 2022
41
Notes – Parent
Notes to Parent Financial Statements
Note EUR '000
2022 2021
40
Investment in subsidiaries
Cost beginning of year
19.060 19.060
Additions for the year
2.000 0
Cost end of period 21.060 19.060
Apraisal increases at beginning
56.630 64.826
Result for the period in subsidiaries -829 -8.414
Exchange adjustments in subsidiaries -13 22
Share based paymemt 52 53
Appraisal of subsidiaries 0 0
Hedging in subsidiaries 393 143
Appraisal increases at end of period
56.233 56.630
Carrying amount at end of period
77.293 75.690
Ownership
interest in %
Premium Pork International A/S
100 77.293 75.690
77.293 75.690
41
Loans and receiveables, subsidiaries
Total loan to subsidiaries subordinated
2.500 3.500
Total receivables from subsidiaries
1.038 1.323
Total loans and receiveables, subsidiaries
3.538 4.823
The carrying amount of
investments in subdiaries i
specified as follows:
42
Interest bearing debt
EUR '000
Payable after 5
years
Payable
betwee n 2 and
5 years
Payable wi thin
1 year
Total
Debt at December 31, 2021
Other non-current debt: 0 0 766 766
Credit institutions, current: 0 0 0 0
0 0 766 766
Debt at December 31, 2022
Other non-current debt: 0 1.836 672 2.508
Credit institutions, current: 0 0 0 0
0 1.836 672 2.508
Note 43: Financial risks
Reference is made to the description of financial risks for the Group in the Notes to the
Consolidated Financial Statements. The Parent Company is not considered to be subject
to any special financial risks other than those disclosed in the Notes to the Consolidated
Financial Statements.
Note 44: Assets charged and securities
Letter of subordination has been issued to banks in respect of loans granted to
subsidiaries of EUR 2,500k.
Note 45: Guarantees and other contingent liabilities
The parent has made a corporate guarantee for subsidiaries debt to credit institutions.
The guarantee is limited to EUR 46.9m. The actual debt was EUR 46.7m end of year.
The Entity serves as an administration company in a Danish joint taxation arrangement.
According to the joint taxation provisions of the Danish Corporation Tax Act, the Entity is
therefore liable from the financial year 2016 for income taxes etc. for the jointly taxed
entities and from July 14, 2016, also for obligations, if any, relating to the withholding of
tax on interest, royalties and dividends for the jointly taxed entities. The total net liability
to the Danish Tax Administration appears from the financial statements.
Financial Highlights
Annual Report 2022
42
Notes – Parent
Notes to Parent Financial Statements
46
Related parties and ownership
EUR '000
2022 2021
2.500 3.500
80 182
1.038 1.323
403 343
0 -64
0 12
Management services charged to the Company:
O. services or reinvoiced costs from the Company
to subsidiaries:
Reference is made to note 27 (Note to the Consolidated Financial Statements) for details of
the Groups transactions with the Parent Company.
Interest for the year amounts to:
Other interest bearing debt and intercompany
amounts from the Company:
Outstanding amount at Year-end:
Financial expenses for the year amounts to:
The subsidiaries have provided management
services to the Company and the Company
provided other services to the subsidiaries:
Transactions between the
company and the subsidiaries:
The subsidiaries have obtained subordinate
loans from the Company:
Outstanding amount at Year-end:
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