Financial Highlights
Annual Report 2023
Annual Report 2023
Financial Highlights
Annual Report 2023
Dannevirkevej 6, 7000 Fredericia,
Reg. no. 26 08 85 77
Annual Report
January 1st – December 31st, 2023
Presented and adopted at the Annual General Meeting on 2
nd
of May 2024.
Chairman of the Annual General Meeting:
Bo Holse
2
Financial Highlights
Annual Report 2023
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
10
Consolidated Financial Statements
17
Notes to the Consolidated Financial Statements
21
Parent Financial Statements
36
Notes to the Parent Financial Statements
39
3
Table of Content
Financial Highlights
Annual Report 2023
Management’s Statement of the Annual Report
Executive Board
Morten Beider
CFO
Board of Directors
Torben Svejgård Carsten Lind Pedersen
Chairman Board Member
Ole Sloth Nielsen
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 2023.
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 31.12.2023 and of the results of their
operations and cash flows for the financial year 2023.
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, 5
th
of March 2024
Lars V. Dresc her
CEO
Bo Hol se
Board Member
Financial Highlights
Annual Report 2023
Independent auditor’s report on the annual report
for the period 01.01.2023 - 31.12.2023
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 01.01.2023 - 31.12.2023, 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 IFRS Accounting
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 31.12.2023, and
of the results of their operations and cash flows for the
financial year 01.01.2023 - 31.12.2023 in accordance with
IFRS Accounting 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 ethical requirements applicable in Denmark, and
we have fulfilled our other ethical responsibilities in
accordance
with these requirements and IESBA Code. 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
by relevant law and regulations.
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
information required by relevant law and regulations. We did
not identify any material misstatement of the management
commentary.
Management’s responsibilities for the consolidated
financial statements and the parent financial
statements
Management is responsible for the preparation of
consolidated financial statements and parent financial
statements that give a true and fair view in accordance with
IRFS Accounting Standards as adopted by the EU and
additional requirements of the Danish Financial Statements
Act, and for such internal control as Management determines
is necessary to enable the preparation of consolidated
financial statements and parent financial statements that are
free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements and the
parent financial statements, Management is responsible for
assessing the Group’s and the Parent’s ability to continue as
a going concern, for disclosing, as applicable, matters related
to going concern, and for using the going concern basis of
accounting in preparing the consolidated financial
statements and the parent financial statements unless
Management either intends to liquidate the Group or the
Entity or to cease operations, or has no realistic alternative
but to do so.
Auditor’s responsibilities for the audit of the
consolidated financial statements and the parent
financial statements
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements and the parent
financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee
that an audit conducted in accordance with ISAs and the
additional requirements applicable in Denmark will always
detect a material misstatement when it exists.
Financial Highlights
Annual Report 2023
Independent auditor’s report on the annual report
for the period 01.01.2023 - 31.12.2023
6
Auditor’s Review
Auditor’s responsibilities for the audit of the annual report
(continued)
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.
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.
Deloitte
Statsautoriseret Revisionspartnerselskab
Central Business Registration
No. 33 96 35 56
Søren Marquart Alsen
State-Authorised Public Accountant
MNE no.: mne40040
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, 5
th
of March 2024
Financial Highlights
Annual Report 2023
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
2023 2022 2021 2020 2019
Profit & Loss
Total income 67.020 52.216 47.865 66.574 91.591
EBITDA 18.381 9.351 2.236 1.449 28.866
16.985 3.928 3.345 14.314 20.687
Operating profit/loss (EBIT)
10.699 1.392 -6.720 -7.106 21.053
Net financials
-2.958 -2.009 -3.142 -3.228 -3.457
Profit/loss for the period 6.494 -596 -8.172 -8.673 14.844
Balance sheet:
Total assets
137.012 136.680 147.030 165.069 173.771
Investment in property, plant and equipm.
1.192 1.797 2.389 8.837 11.764
Equity 89.075 80.062 80.227 88.176 91.520
Invested capital 119.123 117.385 115.455 128.153 138.592
Net interest-bearing debt 33.043 42.388 39.613 48.541 56.302
Cash flow:
Cash flow from operating activities 13.813 -1.477 7.274 18.239 5.731
Cash flow from investing activities -4.452 -1.296 1.417 -10.623 -7.625
Cash flow from financing activities -10.298 -8.093 -2.182 -5.777 -326
Adjusted EBITDA (excl. fair value adjust.
bio assets and Special Items due to ASF)
Employees:
Average number of employees
292 333 446 498 471
Production Scope:
Harvested land
ha
0 0 1.619 1.323 1.663
Total yield (all crops)
tons
0 0 9.321 3.573 8.377
Average number of sows 12.919 10.961 13.078 14.313 17.532
Number of pigs produced 374.353 324.354 396.841 427.887 568.385
Produced pigs per avg. sow
29,0
29,6 30,3 29,9 32,4
Ratios:
Gross margin 37,9% 31,8% 17,9% 20,5% 43,5%
Ajusted EBITDA margin 25,3% 7,5% 7,0% 21,5% 22,6%
EBIT margin 16,0% 2,7% -14,0% -10,7% 23,0%
Return on invested capital 9,0% 1,2% -5,5% -5,3% 15,4%
7,9% -3,5% -4,6% 4,2% 9,6%
Return on equity 7,7% -0,7% -9,7% -9,7% 17,9%
Solvency ratio 65,0% 58,6% 54,6% 53,4% 52,7%
Current Ratio 147% 128% 120% 124% 167%
Booked value per share 6,98 6,27 6,28 6,91 7,17
Adjusted ROI (excl. fair value adjust. bio
assets)
Financial Highlights
Annual Report 2023
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
Kolding Åpark 2
DK - 6000 Kolding
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
Company Information
Financial Highlights
Annual Report 2023
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 2023
Development in the financial year and financial positions
Management Review
10
Market conditions improved and limited challenges with African
Swine Fever (ASF)
The year shows, without fair value adjustment, a profit before tax of approx. EUR 6.3m. And
shows with the positive fair value adjustment of herds of EUR 1.4m, a profit before tax of EUR
7.7m compared to EUR 0.6m loss in 2022.
The consolidated total income, without fair value adjustment, was EUR 65.6m in 2023 (+43%
compared to 2022). With fair value adjustment total income is up EUR 14.8m (28%) from 2022.
Besides the positive impact on the herd valuation, higher pig prices have also a direct positive
financial impact of EUR 12.7m as the sales price increased 29% compared to last year (from
1.90 to 2.46 EUR per kg).
Part of the positive impact from pig prices is offset by inflation and repopulation costs having
a negative impact of €3.7m. The combined impact left a net-improvement in the overall
profitability with EUR 9.0m.
On top of this, several farms have been temporarily closed due to outbreaks of ASF in the past.
As a result, the production capacity has only been utilized in average with approx. 65% in 2023.
The production volume in weight increased by 7% compared to 2022 but the total production
is still significantly below the pre-ASF level.
Non-operating farms had a negative impact of EUR 4.8m in 2023 compared to EUR 4.7m last
year when different compensations temporarily reduced the losses.
The equity increased 11% to EUR 89.1m compared to YE 2022 (EUR 80.1m) and the solvency
ratio is very solid, 65%. Also, the Group’s liquidity reserves are, as per 31/12 2023, at a
satisfactory level, EUR 13.8 million.
Overall assessment
The result is satisfactory. Although the overall results continue to be negatively influenced by
the ASF outbreaks in 2021 and beginning of 2022, the development is positive as all farms
were again restarted by YE 2023. The price ratio between pigs and feed has improved to a very
satisfactory level.
Four highlights:
• Very high pig prices continued –
average pork prices up 43%. We expect
strong prices also in 2024.
• Positive fair value adjustment of EUR
1.4m. The increased sales prices had a
positive influence on the herd value end
of the period of approx. EUR 1.4m.
• Net losses of approx. EUR 4.8m due to
ASF in previous years as several farms
were restarted.
• A new ASF outbreak in January 2024
doesn’t financially impact 2023 but will
temporarily disrupt the positive trend
towards full capacity.
EUR '000
2023 2022 2023 2022 2023 2022
Total income 67.020 52.217 66.315 49.122 705 3.095
65.624 46.015 64.920 42.921 705 3.095
EBITDA 18.381 9.351 18.512 10.137 -131 -786
16.985 3.928 17.116 4.714 -131 -786
EBIT 10.699 1.392 14.061 5.054 -3.362 -3.662
Profit before tax 7.741 -617 12.343 3.700 -4.602 -4.317
Consolidated total
Total income without fair value adjust.
biological assets
Other (incl. non-
operating)
Pig production
(operating)
EBITDA excl. fair value adjust. biological
assets and excl. Special Items
Financial Highlights
Annual Report 2023
Record high pork prices and feed prices losing momentum
Management Review
11
Pork prices 43% up compared to last year
The average prices for slaughter pigs continued the positive trend from 2nd half of 2022.
The prices exceeded the historical high from last year reaching an all-time high end of June
and maintained very satisfactory prices in 2
nd
half of 2023. Our sales price was 17% up end
of the year compared to beginning of the year.
The weaner market showed an even more positive development. We realized sales price
56% higher than period last year! The financial impact of this, is significant considering 38%
of our produced pigs were sold as weaners.
The positive trend is supply driven as the dramatic reduction of the European pig
production continues. The production in EU is reduced approx. 7% in 2023 compared to the
already reduced level in 2022. Although the demand for pork is slightly reduced, the
reduction in supplies are significantly bigger, shifting the overall market balance.
The impact of this reduction is not fully realized yet and even though a new market balance
most likely is being restored at a lower price level, we do see a low supply supporting high
prices for at least 2024.
Feed prices at the same high level as in 2022 – but the trend is down
Average feed prices were at the same level as the average from 2022 but with an opposite
trend. Feed prices was 12% higher in H1 2023 compared to the same period last year. This
increase was expected as it matches the record high cereal prices in second half of 2022.
But we realized significantly lower cereal prices from Q2 2023 for “old” harvest as well as
for 2023 harvest. The average feed price in H2 2023 was 11% lower compared to the same
period last year off setting the higher prices in H1.
Until harvest 2020, feed prices were relatively stable for several years. This trend is certainly
changed. Although decreased compared to 2022, the average price of raw materials
consumed in December 2023 is 31% 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 2024 although still at
a high level compared to “old” price levels.
The price level is now back to profitable levels
The price ratio between pork and feed of 7.0 for 2023 is significantly higher than realized
last year and especially compared to the record low in 2021. The improved price levels
represents an increased profit before tax of EUR 12.4m in 2023 compared to the same
production with 2022 prices. And compared to 2019 prices, where the price ratio was at the
same level, we would have generated approx. EUR 9m less in profit before tax.
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 1.4m 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 1.4m
compared to the equivalent, if prices of 31.12.2022 were to be used. The adjustment is in
line with international accounting principles, which are considered to provide a more
accurate description of the company’s activities and financial position.
1,00
1,25
1,50
1,75
2,00
2,25
2,50
2,75
Q1-2022 Q2-2022 Q3-2022 Q4-2022 Q1-2023 Q2-2023 Q3-2023 Q4-2023
EUR per kg carcass
Realized salesprices
(quarterly averages)
2016 2017 2018 2019 2020 2021 2022
2023
Pork Prices (carcass)
EUR/kg
1,38 1,66 1,42 1,63 1,52 1,32 1,90 2,46
Feed Prices
EUR/kg
0,20 0,21 0,22 0,23 0,24 0,26 0,35 0,35
Exchange ratio pork:feed 6,8 7,9 6,5 7,1 6,4 5,1 5,5 7,0
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
Financial Highlights
Annual Report 2023
Management Review
12
Pig production is increasing again as farms gradually are restarted
– although still reduced to 65-70% of full capacity
The overall production capacity, measured in number of sows, registered a 42%
increase compared to YE 2022 as a result of finalizing the repopulation of Premium
Porc farm and initiating the first steps of restarting Olsuin farm. Both farms were
culled in 2021 due to ASF-outbreaks. The additional sows is the main driver behind the
15% increase in number of pigs produced compared to last year.
The repopulation of Olsuin sow farm will have a positive impact on approx. 90,000 pigs
in 2024 which unfortunately barely off sets the negative impact of the outbreak in
Premium Porc farm in 2024 (see next page). Still, the total production is expected, also
in 2024, to add another 5-10% towards full capacity.
We have during 2023 also restarted the temporarily closed finisher farms and all farms,
except for one, was operating by end of 2023 although not all at full capacity yet. The
last farm is rented out until end of 2024.
The number of pigs produced is still 33% down compared to pre-ASF numbers in 2019.
But the production is on a clear upward trend with 2022 representing a production low
with 43% down compared to pre-ASF numbers in 2019.
The production in kg also shows a turning point and is 7% up compared to 2022.
Although the trend is similar, it is less strong compared to pigs produced, due to the
nature of the production cycle and the time required to restart finisher farms shifting
the sales mix back towards finishing more pigs instead of selling them as weaners.
Restart of farms have affected the overall productivity negatively, but different
challenges in production has furthermore negatively affected the production efficiency.
The overall efficiency is not satisfactory in 2023 and not reflecting the full potential.
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
3.9m. This represents 95% of the total amount applied
for. Payment is expected during 1st half of 2024.
In 2023 we have received payments of EUR 3.2m for
animal welfare support, for which we applied for in
2022. This represents EUR 0.1m more than allocated by
the end of 2022. In total, grants for improved animal
welfare of EUR 4.0m are registered in 2023.
The subsidy amount is not a net gain, as we could
reduce the costs related to meeting the requirements
for the subsidy in case it ceases to exist.
0
10.000
20.000
30.000
40.000
50.000
60.000
2019 2020 2021 2022 2023
Weight produced pigs (tons)
Realized production compared to potential if all capacities
would have been accessable
Production potentiale
without ASF
Our pig production is again increasing
2019 2020 2021 2022
2023
Diff. Y23
over Y22
Number of sows end of year heads 17.744 17.956 9.449 11.308 16.044 42%
Weaned piglets per avg. sow heads 34,6 34,3 32,5 33,8 32,7 -3%
Produced pigs per avg. sow *)
heads 32,4 30,6 30,3 31,7 29,0 -9%
Sold slaughterpigs heads 441.030 423.981 291.477 199.332 193.180 -3%
Sold weaners (net) heads 102.871 -3.457 60.054 95.574 142.400 49%
Produced pigs total heads 568.385 427.887 396.841 324.354 374.353 15%
Weight produced pigs **)
tons 53.936 51.689 36.954 26.289 28.002 7%
Notes: *) Produced pigs per sow for 2020 & 2023 are excluding restart of Olsuin and for 2022 excluding restart of Premium Porc. **) Weight of
pigs culled due to ASF included in 2020, 2021 and 2022.
Facts about the pig production
Financial Highlights
Annual Report 2023
Production less affected
by African Swine Fever (ASF) in Romania
Management Review
13
Evolution of new
outbreaks in Romania (per
week / from 2018 to 2023)
ASF – evolution and indirect losses
Since the beginning of June 2018, more than 6.400 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 to control the
virus.
Surveillance/protection zones caused by ASF outbreaks in areas close to our farms have
usually impacted our production flows negatively, due to restrictions on moving animals
in and out of the blocked farms. The zonings usually lasting 4-6 weeks but in severe cases
up to 14 weeks. But we avoided this in 2023 as no surveillance/protection zones caused
by ASF outbreaks in areas close to our farms were registered.
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.
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.
We haven’t registered indirect losses in 2023, as the year has been without zonings. The
accumulated indirect losses caused by ASF in Romania was approx. €0.4m in 2022.
Direct losses of EUR 4.8m caused by ASF outbreaks in our farms
Following the outbreaks in our farms in previous years, the production was significantly
downsized until the farms could be restarted again. Obviously, our goal is to avoid
additional outbreaks. We believe our biosecurity set-up is a powerful tool to prevent
potential outbreaks although not powerful enough to prevent outbreaks completely.
All farms with outbreaks in 2021 and 2022 was by YE 2022 ready for production after
finalization of the disinfection and reauthorization process. All of those farms is either
back in operation or in process of being restarted as described on the previous page.
Although avoiding outbreaks since February 2022, the negative financial impact is still
significant due to direct costs related to farms temporarily closed and business
interruption costs for farms in process of being reopened. The loss for the Group caused
by the ASF outbreaks in 2021 and 2022 amount for 2023 to approx. EUR 4.8m (EUR 4.3m
in 2022) due to the non covered costs originating from the farms on standby. The loss
including business interruption is estimated to more than doubling the loss.
Losses due to farms affected by ASF in the past will continue throughout 2024.
A new ASF outbreak after closing
A new outbreak in Premium Porc farm occurred end of January 2024. This farm had 3,000
sows with a capacity for finishing half of the piglets while the other half is transferred to
other farms in the Group. All 21,000 pigs are culled.
The value of the herd as well as the immediate costs will be compensated by the
Romanian State whereas the subsequent business interruption loss will have a negative
financial impact of approx. EUR 6m throughout 2024 and into 2025 when the farm again
is expected to be in full operation.
2023
749
2022
384
2021
1.534
2020
903
2019
1.729
2018
1.158
Total
6.457
Registered ASF outbreaks in
Romanian in domestic pigs
Financial Highlights
Annual Report 2023
Litigations for relocation of Negreni farm
Management Review
14
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 for trial with a
satisfactory result for us as the cases are dismissed. The base for new claims no
longer exists as the Government Order was changed in 2023 eliminating the
minimum distance.
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 2023
Sustainability and Corporate Social Responsibility
15
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. We have a target number of min. 25% women on the board by
the end of 2026.
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:
The company is required to establish a policy for diversity at other management levels.
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 2023.
The policy on data ethics is approved by the board of directors annually and revised on an
ongoing basis.
Total
members
Female
share
Target
Target
year
Board of Directors 5 20% 25% 2026
Other Management Levels 26 19% 33% 2028
Gender diversity, status 2023
Financial Highlights
Annual Report 2023
Anticipated development
16
Management Review
Pork prices expected to remain attractive for the foreseeable future
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 2024.
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 willingness to pay extra
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 low supplies for a
foreseeable future. The drop in slaughtering in Europe in 2022 continued in 2023 and have
reduced the supply significantly. The latest herd counts in EU, document a significant
reduction and indicate that the production in 2024 maximum will repeat the low 2023 level.
Although the pig price most likely have peaked, we expect only limited price reductions in
2024, and we expect the average pig price to remain above 2 EUR per kg.
Feed prices declining - but from a very high level
The grain prices dropped as expected to a more “normal” level from harvest 2023. In fact,
the prices have also after harvest continued the down trend supported by a strong harvest
worldwide! We have currently secured the cereals needed until harvest 2024 at prices 30%
below the 2022 record high level.
The price level is expected to stay at a profitable level throughout 2024
The price levels are expected to support profitability also in 2024 as we expect the pig prices
to remain relatively high and the feed prices to be further reduced compared to 2023. The
price ratio is expected for 2024, to exceed the long-term average level.
Support program for animal welfare continue
A new program for improving animal welfare like the previous program was 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.
Production temporarily downsized – focus on return to full operation
Although the new ASF outbreak in January 2024 is a major bump, the strategy still is to
resume full production as soon as reasonably possible. The production in 2024, despite the
outbreak in January, is expected 10% up from 2023. The production in 2024 will still be
approx. 30% lower than in 2019 (the most recent year without ASF outbreaks).
ASF restrictions expected to continue disrupting our production flow
Despite no disruption of production flows caused by farms entering protection/surveillance
zones in 2023, future incidents are considered unavoidable. In financial planning, we include
a small reserve to cover the negative impact caused by such situations.
It’s of a high importance for our industry that the ASF situation is being controlled.
Improvement can be seen in the manner that some local authorities manage the clearance
of ASF outbreaks, leading to gradually decreasing periods of animal movement restrictions.
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.
Investments focused on optimized production flows and reduced energy costs
Investments projects is prioritized considering the ASF situation, and the focus on having all
farms back in production. Our priority to protect our farms within the Group remains.
Besides this, selected projects, supported by investments grants, upgrading existing farms
and installing photo voltaic to cover part of our electricity consumption, is planned for 2024.
Profitability expected in 2024 despite ASF
As stated above, we believe pork prices will remain at a very satisfactory level throughout
2024 and the price ratio to continue close to the profitable 2023 level. But the temporarily
downsized production have a severe negative impact despite farms gradually being
restarted.
Based on our price expectations, and the recent ASF outbreak, we expect the adjusted
EBITDA (excluded for fair value adjustment of the herd) to reach EUR 12-16m, enough for an
adjusted EBT of EUR 1-4m. Herd valuation is expected to have a negative impact in 2024.
We remain focused on our cash flow in 2024. The starting point is strong, and the cash base
is expected to remain on a satisfactory level throughout the year supporting restarting the
remaining temporarily closed farms.
Financial Highlights
Annual Report 2023
Income Statement
Consolidated Financial Statements
Consolidated Income Statement Consolidated Statement of Comprehensive Income
17
EUR '000
2023 2022
Note
Revenue
3
61.631
40.360
Grants and other income
4
3.993
5.655
Value adjustment, biological assets
5
1.396
6.201
Total Income
67.020 52.217
Direct costs -28.038 -25.061
Other external costs -13.608 -10.570
Gross profit
25.374 16.586
Staff expenses
6
-6.993 -6.456
Special items
7
0 -778
Depreciation
8
-7.682 -7.960
Operating profit (EBIT)
10.699 1.392
Financial income
8
137 75
Financial expenses
9
-3.095 -2.084
Profit before tax
7.741 -617
Tax on profit for the year
10
-1.247 21
Net profit for the year
6.494 -596
Distribution of profit for the year:
Group Shareholders
6.494 -596
Distributed
6.494 -596
EUR '000
2023 2022
Net profit for the year 6.494 -596
Exchange adjustments of foreign enterprises
403 -15
Fair value adjustment of hedging instruments
-72 468
Tax on hedging instruments
12 -75
2.594 0
Tax on revaluation
-415 0
Total comprehensive income 9.014 -218
Group shareholders 9.014 -218
9.014 -218
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
Financial Highlights
Annual Report 2023
Balance Sheet
18
Consolidated Financial Statements
Consolidated Statement of Financial Position
EUR '000
31/12 2023 31/12 2022
Assets
Note
Acquired rights
11
351 476
Intangible fixed assets in total
351 476
Land and buildings
12
67.968 68.926
Plant and machinery
12
12.807 14.839
Operating equipment
12
591 872
Right-of-use assets
12
1.700 2.602
Property, plant and equipm. in progress
12
915 836
Property, plant and equipment
83.982 88.074
Non-current investments
14
86
82
Fixed asset investments
86 82
Biological assets, Breeding herd
13
10.513
7.461
Biological assets
10.513 7.461
94.931 96.093
Biological assets, Commercial herd
13
13.338
10.089
Inventories
15
8.379
9.898
Biological assets and inventories
21.717 19.987
Trade receivables
16
6.191 4.330
Other receivables
16
6.014 6.886
Prepayments 827 1.012
Receivables
13.032 12.227
Assets classified as held for sale
17
315 403
Cash and cash equivalents 7.017 7.970
42.081 40.587
137.012 136.680
Total current assets
Total Assets
Total non-current assets
EUR '000
31/12 2023 31/12 2022
Equity and Liabilities
Note
Share Capital
18
12.767 12.767
Asset revaluation surplus 11.253 9.706
Cash flow Hedging reserve 1.168 766
Reserve for exchange adjustments 121 181
Retained earnings
63.767 56.641
89.075 80.062
Provision for deferred tax
19
367 -221
Credit institutions
20
14.893 20.309
Lease liabilities
20
467 1.012
Deferred income
21
1.660 1.981
Other non-current liabilities
20
1.834 1.848
Long-term liabilities
19.222 24.929
20 22.866 27.190
Trade payables
3.716
3.024
Other liabilities
22
2.132
1.477
Short-term liabilities
28.714 31.690
47.936 56.619
137.012 136.680
Equity
Short term portion; credit institutions,
leasing and other non-current
Total liabilities
Total Equity and Liabilities
Financial Highlights
Annual Report 2023
19
Consolidated Financial Statements
Consolidated Statement of Changes in Equity
EUR '000
Share Capital
Asset
revaluation
surplus
Reserve for
exchange
adjustment
Cash flow
hedging
reserve
Retained
earnings
Total Equity
12.767 13.474 781 -212 53.418 80.227
0 -3.134 0 0 3.134 0
12.767 10.340 781 -212 56.552 80.227
Share based payments 0 0 0 0 52 52
0 0 0 0 -596 -596
0 -634 0 0 634 0
0 0 -15 393 0 378
0 -634 -15 393 89 -166
12.767 9.706 766 181 56.641 80.062
Share based payments 0 0 0 0 -22 -22
0 0 0 0 6.494 6.494
0 -632 0 0 632 0
0 2.179 414 -61 11 2.542
0 1.547 414 -61 7.114 9.014
12.767
11.253 1.180 121 63.756 89.075
Comprehensive income for the year 2022
Equity December 31, 2022
Reclassified (depreciated revaluation
transferred to retained earnings)
Equity at January 1, 2022
Net profit/loss for the year
Other comprehensive income
Reclassified Equity at January 1, 2022
Net profit/loss for the year
Other comprehensive income
Comprehensive income for the year 2023
Equity December 31, 2023
Depreciation of revaluation reserve
Depreciation of revaluation reserve
Financial Highlights
Annual Report 2023
Consolidated Cash Flow Statement
20
Consolidated Financial Statements
EUR '000
2023 2022
Note
Operating profit/loss (EBIT) 10.699 1.392
Adjustment for non-cash items:
7.702 8.380
5 -1.396 -6.201
13
-1.501 -73
15
1.519 -2.905
Change in receivables
16
-864 1.588
1.042 -1.270
Cash flow from operations before financial items
17.201 911
Financial income received
8
137 75
Financial expenses paid
9
-2.851 -1.988
Corporation taxes paid
-674 -474
Cash flow from operating activities
13.813 -1.477
11
0 -37
11
2 1
12
-1.192 -1.148
12 59 238
14
-4 -4
21
0 1
17 88 46
13
-3.405 -392
Cash flow from investing activities
-4.452 -1.296
Net disposal of assets held for sale
Acquisition of biological assets
Investment subsidies received
Acquisitions of property, plant and
equipment
Sale of property, plant and
equipment
Acquisition of investments
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.
EUR '000
2023 2022
Note
20
212 2.351
20
-10.510 -10.444
Cash flow from financing activities
-10.298 -8.093
Change in cash and cash equivalents
-937 -10.867
Cash and cash equivalents, start year 7.970 18.838
Exchange adjustments, begining cash -17 -2
Cash and cash equivalents at December 31
7.017 7.969
6.827 2.643
Liquidity available at December 31
13.844 10.612
Un-utilised short term facilities
Proceeds from borrowings
Repayment of borrowings
Financial Highlights
Annual Report 2023
21
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. 110 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 83.0
million at December 31st, 2023 (EUR 86.6 million at December 31st, 2022).
Financial Highlights
Annual Report 2023
22
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. The Order was
changed in 2023 and the request of 1,500 m distance from nearest houses was removed.
Fighting enforcement procedures is ongoing and court hearings continued in 2023. As
per penalties, several claims against enforcement procedures have been upheld by the
Court and initial penalties annulled. We expected a breakthrough when the Court
decided, that since we as a company stopped the activities in Negreni farm obligations
according to original rulings were met and the enforcement claims were stopped. But
this ruling was appealed, and the decision reversed. However, we are in progress of
making new claims for fighting the enforcement procedures, this time based on
changing in legislation that was the main argument for the initial decision. Subsequently,
we are investigating other options to close the case.
One penalty claim is closed with a limited amount and another claim is dismissed. We
expect to close the rest of the claims in a satisfactory manner in 2024.
We have since September 2019 up to 2022 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
at second tier, making our wins definitive. The risk of receiving new claims copying the
original claim no longer exist considering the changes to the Government Order
eliminating the minimum distances.
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 2023
Notes – Consolidated Financial Statements
23
Notes to the Income Statement
Note EUR '000
2023 2022
6
Staff expenses
Wages and salaries 6.265 6.325
Social contribution & other staff expenses 751 698
Wages inactive farms (Special Items) 0 -619
7.015 6.405
Share based payments for management team
-22 52
6.993 6.456
Remuneration to the Executive Board 563 474
Remuneration to the Board of Directors 90 82
Average number of employees 292 333
7
Special Items
Costs related to operation of blocked farms 0 3
0 15
90% of expected compensation for culled herd
0 -3.008
Value culled herd 0 1.278
0 2.491
0 778
Costs incurred in connection with ASF
restrictions:
Net costs related to ASF outbreaks:
Costs related to handling and authority
requirements
Costs related to culling, disinfection and
quarantine
Note
EUR '000
2023 2022
3
Revenue
Business areas:
Pig production 60.927 39.520
Other 705 840
61.631 40.360
Intra-group trade between the business areas 0 0
61.631 40.360
Geography:
Romania
61.631
40.360
4
Grants and other income
Animal Welfare Payments 3.993 3.401
EU hectare support 0 55
Other grants 0 2.199
3.993 5.655
5
Value adjustment, biological assets
Value adjustments pigs
1.396
6.201
1.396 6.201
Revenue from sale of products is recognized when the Group has transferred control of
products sold to the buyer. Control of the products is transferred at a point in time,
typically on delivery. Revenue is recognized net of VAT, duties and sales discounts.
The Group primarily sells pigs for slaughterhouses. Revenue from the sales of pigs is
recognised when delivery has taken place.
Financial Highlights
Annual Report 2023
24
Notes – Consolidated Financial Statements
Notes to the Income Statement
Note EUR '000
2023 2022
10 Income Taxes Continued
1.239 -99
Tax effect of:
464 -37
Non-taxable income and expenses -456 115
1.247 -21
Effective tax rate for the year
16% 3%
11 Intangible assets
Acquired rights
Cost at January 1 1.506 1.472
Additions for the year 0 37
Disposals for the year -2 -3
Cost at December 31 1.504 1.506
Amortisation at January 1
1.031 877
Amortisation for the year 147 155
-25 -2
Amortisation at December 31
1.153 1.031
Carrying amount at December 31
351 476
Calculated 16% tax on profit for the year
before tax:
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.
Tax on profit for the year is specified as
follows:
Reversed depreciation on disposal
Differences in tax rates in Denmark (22%)
compared with Romania
Note EUR '000
2023 2022
7 Special Items - Continued
Revenue pig production 0 1.554
Direct costs 0 -3
Other external costs 0 -1.710
Staff expenses 0 -619
0 -778
8 Financial Income
Interest financial institutions
137 75
137 75
9 Financial Expenses
Interest bank debt 1.865 1.271
Calculated interest leasing commitments 77 84
Other financial expenses 885 633
Exchange rate adjustment 267 96
3.095 2.084
10 Income Taxes
Current tax 1.442 -411
Tax Comprehensive Income
-403 -75
Adjustment of deferred tax 208 465
1.247 -21
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 2023
25
Notes – Consolidated Financial Statements
Notes to Financial Position
12 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, 2022 81.757 42.333 2.300 6.952 1.972
Reclassification/transfer 275 0 0 0 0
Additions for the year 701 1.556 755 64 173
Disposals for the year -88 -13 -149 -1.467 -1.309
Cost at December 31, 2022 82.646 43.876 2.906 5.549 836
Revaluation at January 1, 2022 15.582 0 0 0 0
Revaluation disposal -3 0 0 0 0
Revaluation at Dec. 31, 2022 15.304 0 0 0 0
Amortisation at January 1, 2022 25.234 25.263 1.777 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 29.037 2.034 2.947 0
Carrying amount at Dec. 31, 2022 68.926 14.839 872 2.602 836
Out of which carrying amount on revaluations 11.555
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
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.
Financial Highlights
Annual Report 2023
26
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.
A valuation review has been performed in
2023 on the properties owned by
Premium Porc SRL and Consinterfin SRL.
The valuation reviews resulted in a total
financial revaluation of EUR 2.6m.
Notes to Financial Position
The Group had end of 2023 no contractual obligations related to Property, plant and equipment in progress (2022: EUR 0.0m).
12 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, 2023 82.646 43.876 2.906 5.549 836
Additions for the year 320 742 67 102 236
Disposals for the year -34 -4 -309 -1.468 -157
Cost at December 31, 2023 82.931 44.614 2.664 4.183 915
Revaluation at January 1, 2023 15.304 0 0 0 0
Revaluation increases 2.594 0 0 0 0
Revalaution at Dec. 31, 2023 17.897 0 0 0 0
Amortisation at January 1, 2023 29.024 29.037 2.034 2.947 0
Amortisation for the year 3.842 2.773 318 886 0
Reversed depreciation on disposal -5 -4 -280 -1.351 0
Amortisation at December 31, 2023 32.860 31.807 2.073 2.483 0
Carrying amount at Dec. 31, 2023 67.968 12.807 591 1.701 915
Out of which carrying amount on revaluations 13.396
Out of which land not depreciated 4.402
Right-of-use assets by category 322 948 430
Assets provided as security for debt 67.968 12.807 591 1.317
If Land and buildings were measured using cost model, the carrying amounts would be:
Net carrying amount Land and Buildings without revaluations, 2022 57.371
Net carrying amount Land and Buildings without revaluations, 2023 54.572
Financial Highlights
Annual Report 2023
Notes to Financial Position
27
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.
13 Biological assets
EUR '000
Commercial
herd
Breeding herd Total herd
Commercial and breeding herd
Carrying amount at January 1, 2022 5.957 4.927 10.884
Movements 2022:
4.059 2.142 6.201
39.733 566 40.299
Additions from purchases 0 242 242
Disposals from sales -38.998 -1.079 -40.077
Transfers between groups -662 662 0
Carrying amount at December 31, 2022 10.089 7.461 17.550
Year-end stock (heads) 121.180 14.637 135.817
Finishers, weaners & sows sold (heads) 294.906 4.194 299.100
Biological assets provided as security 10.089 7.461 17.550
Movements 2023:
Gains/losses f. fair value changes 1.748 -352 1.396
Additions from production 56.665 2.551 59.216
Additions from purchases 0 1.576 1.576
Disposals from sales -53.756 -2.130 -55.887
Transfers between groups -1.408 1.408 0
Carrying amount at December 31, 2023 13.338 10.513 23.851
Year-end stock (heads) 145.262 22.461 167.723
Finishers, weaners & sows sold (heads) 335.580 6.867 342.447
Biological assets provided as security 13.338 10.513 23.851
Gains/losses f. fair value changes
Additions from production
Financial Highlights
Annual Report 2023
28
Notes – Consolidated Financial Statements
Notes to Financial Position
Note EUR '000
2023 2022
14 Non-current investments
Deposits / other financial assets 86 82
Cost at December 31 86 82
15 Inventories
Rawmaterials for feed 5.413 7.675
Other Consumables 2.139 1.454
Finished goods (feed a.o.) 827 770
Total inventories 8.379 9.898
Cost of sales recognized in profit or loss (feed) 28.038 25.061
Inventories provided as security
8.379 9.898
No write-down has been made on inventories.
16 Receiveables
Trade receiveables 6.685 4.887
Bad debt provision -494 -557
Trade receiveables, net 6.191 4.330
Receiveable from public grants 3.943 4.279
Other receiveables 2.215 2.769
Bad debt provision -144 -163
Other receiveables, net 6.014 6.886
Write down, beginning of year
720 905
Exchange adjustments -4 1
Additions for the year 161 134
Disposals for the year -239 -319
Write-down at December 31 638 720
Note EUR '000
2023 2022
17 Assets held for sale
Land and buildings 315 403
Cost at December 31 315 403
18 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.
19 Provision for deferred taxes
-221 140
208 465
Adjustment on equity 380 -826
Provision for deferred tax December 31 367 -221
Deferred tax relates to tangible assets.
Adjustment for the year recognized in
profit or loss
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.
Financial Highlights
Annual Report 2023
29
Notes – Consolidated Financial Statements
Notes to Financial Position
Loans with fixed interest
Loans with variable
interest
20 Interest bearing debt
Cash flow from financing activities:
EUR '000
Payable after
5 ye ars
Payable
between 2
and 5 years
Payable within
1 ye ar
Total 1/1 2022 Cash flows
Fore ign
exchange
movement
Fair value
changes
31/12
2022
Debt at December 31, 2022
Credit institutions, non-current: 0 20.309 3.654 23.963
Credit institutions, non-current:
28.409 -4.398 -48 0 23.963
Leasing debt: 0 1.011 969 1.980 Leasing debt: 3.215 -1.235 0 0 1.980
Other non-current debt: 0 12 2.564 2.576 Other non-current debt: 1.101 1.475 0 0 2.576
Credit institutions, current: 0 0 21.839 21.839 Credit institutions, current: 25.726 -3.887 0 0 21.839
0 21.332 29.026 50.358 58.451 -8.045 -48 0 50.358
Debt at December 31, 2023
1/1 2023 Cash flows
Fore ign
exchange
movement
Fair value
changes
31/12
2023
Credit institutions, non-current: 0 14.893 5.416 20.309
Credit institutions, non-current:
23.963 -3.528 -126 0 20.309
Leasing debt: 0 467 638 1.105 Leasing debt: 1.980 -875 0 0 1.105
Other non-current debt: 0 1.834 680 2.514 Other non-current debt: 2.576 -56 -6 0 2.514
Credit institutions, current: 0 0 16.131 16.131 Credit institutions, current: 21.839 -5.702 -6 0 16.131
0 17.194 22.866 40.060
50.358 -10.160 -138 0 40.060
Split of total outstanding interest bearing debt
EUR '000 2022
2023
Interest
binding
period in
months
Avg. effective
inte rst
Loans with fixed interest
EUR
7.500 6.000 12 3-4%
RON
68 12 up to 24 0%
DKK
2.508 2.502 6,5/8,0%
10.076
8.514
Loans with variable interest
EUR
37.782 31.543 1-6 4-5%
RON
2.500 0 1-6 6-7%
DKK
0 3 1 5%
40.282
31.546
Non-cash changes
Financial Highlights
Annual Report 2023
30
Notes – Consolidated Financial Statements
Note 23: Financial risks – Continued
Market risk continued
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 31.12.2023 would not have any material effect. An increase
of 1% of the interest will, on an isolated basis, affect profit for the year before tax by
approximately EUR 0.3 million (2022: approx. EUR 0.4 million).
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 5.6 million (2022: approx. EUR 3.8 million). A 10%
change in the feed price will, on an isolated basis, affect profit for the year before tax by
approximately EUR 2.8 million (2022: approx. EUR 2.5 million).
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 20, 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.
Note 23: 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 6.0m) has been concluded via the same banks providing
the underlying long-term facility (note 20). The interest hedge fixes the interest to
approx. 3.5% including margins for the next year. The positive market values of the
interest hedge, EUR 0.2m, is included in Other liabilities (note 22). Additional 6 % 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.
Notes to Financial Position
Note EUR '000
2023 2022
21
Deferred Income
Investments subsidies beginning 1.981 2.258
New investment subsidies received 0 1
Amortization of investments subsidies -321 -277
1.660
1.981
22
Other liabilities
Employee related payables 492 482
Other payables 1.640 995
2.132
1.477
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 2023
Other Financial Risks
31
Notes – Consolidated Financial Statements
Note 23: Financial risks - Continued
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 95% of the normal sales of slaughter pigs. Due to changes in the
sales (weaner sales) caused by ASF trade restrictions the credit exposure was significantly
increased in 2018 and has gradually improved since although not to the pre-ASF level.
Credit insurance covers approx. 86% of the total receivable end of 2023 (2022: 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, 2022
Trade receivables 0 0 4.330 4.330
Other receivables 0 0 6.886 6.886
Prepayments 0 651 361 1.012
0 651 11.577
12.228
Receivables at December 31, 2023
Trade receivables 0 0 6.191 6.191
Other receivables 0 0 6.014 6.014
Prepayments 0 460 367 827
0 460 12.572
13.032
Financial Highlights
Annual Report 2023
Notes to Consolidated Financial Statements
32
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 24: 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 2,341,833 warrants
were vested on December 31, 2023. All of the remaining 562,167 warrants is cancelled due to
the participants termination of employment. 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:
25
Fees paid to auditors appointed by the General Assembly
Fees for statutory audits 103 101
Other Services 75 76
178
177
Audit fee are recognized as administrative costs
26 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
27
Post balance sheet events
There have been no significant post balance sheet events except for the ASF outbreak in January
2024 described in the management review.
No such transactions have been conducted in the financial year.
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.
Financial Highlights
Annual Report 2023
Accounting Policies
33
Notes – Consolidated Financial Statements
Note 28: 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 in note 35. 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 2023:
RON: Income statement 2023: 1 EUR = 4.951 RON
(2022: 1 EUR = 4.932 RON)
DKK: Income statement 2023: 1 EUR = 7.4502 DKK
(2022: 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 2023
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
34
Notes – Consolidated Financial Statements
Financial Highlights
Annual Report 2023
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
35
Notes – Consolidated Financial Statements
Financial Highlights
Annual Report 2023
36
Parent Income Statement Parent Statement of Comprehensive Income
Parent Financial Statements
2023 2022
Note
Revenue 29
0 0
Other external costs -24 -16
Gross profit
-24 -16
Staff Expenses
30
0 0
Depreciation
31
0 0
Operating profit (EBIT)
-24
-16
Income f. investments in subsidiaries
31
6.325 -829
Financial income
32
430 483
Financial expenses
33
-190 -182
Profit before tax
6.541
-544
Tax on profit for the year
34
-48 -52
Net profit for the year
6.494 -596
Distribution of profit for the year:
Group Shareholders
6.494 -596
Distributed
6.494 -596
EUR '000
EUR '000
2023 2022
Note
Net profit for the year 6.494 -596
Exchange adjustments of foreign enterprises 403 -15
Hedge accounting -61 393
Value adjustments in subsidiaries 2.179 0
Total comprehensive income 9.014 -218
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 2023
37
Parent Statement of Financial Position
Parent Financial Statements
EUR '000
31/12 2023 31/12 2022
Equity and liabilities
Note
Share capital
18
12.767 12.767
64.515 56.073
Retained earnings
11.793 11.222
Equity
89.075 80.062
Other non-current liabilities
36
1.832 1.836
Credit institutions
36
0 0
Long-term liabilities
1.832 1.836
36
671 672
Trade payables 0 0
Other payables
38
5 4
Short-term liabilities
677 677
Total liabilities
2.508 2.513
Total Equity and Liabilities
91.584
82.574
Short term portion, credit
institutions and other non-
current
Reserve for net revaluation
according to the equity method
EUR '000
31/12 2023 31/12 2022
Assets Note
Investments in subsidiaries
34
86.146 77.293
Loan to subsidiaries
35
2.500 2.500
Fixed asset investments
88.646 79.793
Non-current assets
88.646 79.793
Receiveables group companies
35
1.248 1.038
Other receiveables 0 0
Deferred tax assets 5 52
Receiveables
1.253 1.091
Cash and cash equivalents
1.685 1.690
Current assets
2.937 2.781
Total Assets
91.584 82.574
Financial Highlights
Annual Report 2023
Parent Statement of Changes in Equity
Parent Cash Flow Statement
38
Parent Financial Statements
EUR '000
2023 2022
Operating profit/loss (EBIT) -24 -16
Adjustment for non-cash items:
Depreciations
0 0
Change in receivables
-210 301
Change in trade and other payables
1 -7
Cash flow from operations before financial items -232 278
Financial income received
423 483
Financial expenses paid
-190 -182
Corporation taxes paid
0 0
Cash flow from operating activities
1 578
Sale of property, plant and equipment
0 0
Investments in subsidiaries
0
-2.000
Repayment of loans from subsidiaries
-1
1.000
Cash flow from investing activities
-1 -1.000
Proceeds from borrowings
0 1.836
Repayment of borrowings
-6 -94
Cash flow from financing activities
-6 1.741
Change in cash and cash equivalents
-6 1.320
Cash and cash equivalents, start year
1.690 370
Cash and cash equivalents at December 31
1.684 1.690
Un-utilised short term facilities 0
0
Liquidity available at December 31 1.684 1.690
EUR '000
Share Capital
Res erve for ne t
revaluation
according to the
equity me thod
Retained e arnings Total Equity
12.767 56.510 10.950 80.227
Share based payments 0 0 52 52
Net profit/loss for the year
0 -829 233 -596
Other comprehensive income
0 392 -13 379
12.767 56.073 11.222 80.062
Share based payments 0 0 -22 -22
Net profit/loss for the year 0 6.325 191 6.516
Other comprehensive income 0 2.117 403 2.520
12.767 64.515 11.793 89.075
Equity at December 31, 2023
Equity at January 1, 2022
Equity at December 31, 2022
Financial Highlights
Annual Report 2023
Notes – Parent
39
Notes to Parent Financial Statements
Note EUR '000
2023 2022
29 Fees paid to auditors appointed by the General Assembly
Fees for statutory audits
7 3
Other Services
0 0
7 3
Audit fee are recognized as other external costs.
30 Staff expenses
Wages and salaries 0 0
Share based payments
0 0
0 0
Average number of employees 0 0
31 Income from investments in subsidiaries
Premium Pork International A/S 6.325 -829
6.325 -829
32 Financial Income
Interest from financial institutions
36 0
Interest on loans to subsidiaries 387 482
Exchange rate adjustment 7 0
430 483
Reference is made to note 6 for infomation about remuneration to the Executive
Board and Board of Directors and to note 24 for incentive program for the group
management team.
Note EUR '000
2023 2022
33 Financial Expenses
Other financial expenses
190 181
Exchange rate adjustment
0 1
190 182
34 Income Taxes
Adjustment of deferred tax 48 52
48 52
35 Investment in subsidiaries
Cost beginning of year
21.060 19.060
Additions for the year
0 2.000
Cost end of period 21.060 21.060
Apraisal increases at beginning
56.233 56.630
Result for the period in subsidiaries 6.325 -829
Exchange adjustments in subsidiaries 432 -13
Share based paymemt -22 52
Appraisal of subsidiaries 2.179 0
Hedging in subsidiaries -61 393
Appraisal increases at end of period
65.086 56.233
Carrying amount at end of period
86.146 77.293
Ownership
interest in %
Premium Pork International A/S
100 86.146 77.293
86.146 77.293
The carrying amount of
investments in subdiaries i
specified as follows:
Financial Highlights
Annual Report 2023
(As is from December 31
st
, 2023)
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%
29%
71%
53%
47%
100%
100%
100%
100%
100%
100%
40
Premium Porc Feed
SRL
Consinterfin SRL
Degaro SRL
Company Information
Note 35 continued:
Corporate Structure
Financial Highlights
Annual Report 2023
41
Notes – Parent
Notes to Parent Financial Statements
Note 38: 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 39: Assets charged and securities
Letter of subordination has been issued to banks in respect of loans granted to
subsidiaries of EUR 2,500k.
Note 40: Guarantees and other contingent liabilities
The parent has made a corporate guarantee for subsidiaries debt to credit institutions.
The guarantee is limited to EUR 42.6m. The actual debt was EUR 37.4m end of year.
Note EUR '000
2023 2022
36
Loans and receiveables, subsidiaries
Total loan to subsidiaries subordinated 2.500
2.500
Total receivables from subsidiaries 1.248
1.038
Total loans and receiveables, subsidiaries
3.748 3.538
37 Interest bearing debt
EUR '000
Payable afte r 5
ye ars
Payable
be twee n 2 and
5 years
Payable within
1 year
Total
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
Debt at December 31, 2023
Other non-current debt: 0 1.832 671 2.502
Credit institutions, current: 0 0 0 0
0 1.832 671 2.502
Note 40: Guarantees and other contingent liabilities - continued
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.
41 Related parties and ownership
EUR '000
2023 2022
2.500 2.500
125 80
1.248 1.038
262 403
0 -64
0 0
Management services charged to the Company:
O. services or reinvoiced costs from the Company to subsidiaries:
Reference is made to note 26 (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:
Financial Highlights
Annual Report 2023
Annual Report 2023
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