Untitled

Annual Report 2022

Annual Report

2022

Annual Report 2022

Dannevirkevej 6, 7000 Fredericia,

Reg. no. 37 87 50 58

Annual Report

January 1st – December 31st, 2022

Presented and adopted at the Annual General Meeting on 19

of April 2023.

Chairman of the Annual General Meeting:

Annual Report 2022

Table of Content

Management’s Statement of the Annual Report

Independent Auditor’s Report

Consolidated Financial Highlights

Company Information

Management Review

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

Parent Financial Statements

Notes to the Parent Financial Statements

Table of Content

Annual Report 2022

Management’s Statement of the Annual Report

Executive Board

Lars V. Drescher Morten Beider

CEO CFO

Board of Directors

Torben Svejgård Carsten Lind Pedersen

Chairman Board Member

Ole Sloth Nielsen Bo Holse

Board Member Board Member

Jytte Rosenmaj

Board Member

Management’s Statement

The Board of Directors and the Executive Board have today

considered and approved the annual report of Premium Pork

International A/S for the financial year 1 January to 31 December

2022.

The annual report is prepared in accordance with International

Financial Reporting Standards as adopted by the EU and Danish

disclosure requirements.

In our opinion, the consolidated financial statements and the parent

financial statements give a true and fair view of the Group’s and the

Parent’s financial position at 31.12.2022 and of the results of their

operations and cash flows for the financial year 2022.

In our opinion, the management commentary contains a fair review of

the development of the Group's and the Parent’s business and

financial matters, the results for the year and of the Parent’s financial

position and the financial position as a whole of the entities included

in the consolidated financial statements.

We recommend the annual report for adoption at the Annual General

Meeting.

Fredericia, 24

of February 2023

Annual Report 2022

Opinion

We have audited the consolidated financial statements and the

parent financial statements of Premium Pork International A/S for

the financial year 01.01.2022 - 31.12.2022, which comprise the

income statement, statement of comprehensive income, balance

sheet, statement of changes in equity, cash flow statement and

notes, including a summary of significant accounting policies, for

the Group as well as the Parent. The consolidated financial

statements and the parent financial statements are prepared in

accordance with International Financial Reporting Standards as

adopted by the EU and additional requirements of the Danish

Financial Statements Act.

In our opinion, the consolidated financial statements and the parent

financial statements give a true and fair view of the Group’s and the

Parent’s financial position at 31.12.2022, and of the results of their

operations and cash flows for the financial year 01.01.2022 -

31.12.2022 in accordance with International Financial Reporting

Standards as adopted by the EU and additional requirements of the

Danish Financial Statements Act.

Basis for opinion

We conducted our audit in accordance with International Standards

on Auditing (ISAs) and the additional requirements applicable in

Denmark. Our responsibilities under those standards and

requirements are further described in the Auditor’s responsibilities

for the audit of the consolidated financial statements and the

parent financial statements section of this auditor’s report. We are

independent of the Group in accordance with the International

Ethics Standards Board of Accountants' Code of Ethics for

Professional Accountants (IESBA Code) and the additional

requirements applicable in Denmark, and we have fulfilled our other

ethical responsibilities in accordance with these requirements. We

believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Statement on the management commentary

Management is responsible for the management commentary.

Our opinion on the consolidated financial statements and the

parent financial statements does not cover the management

commentary, and we do not express any form of assurance

conclusion thereon.

In connection with our audit of the consolidated financial

statements and the parent financial statements, our responsibility is

to read the management commentary and, in doing so, consider

whether the management commentary is materially inconsistent

with the consolidated financial statements and the parent financial

statements, or our knowledge obtained in the audit or other-wise

appears to be materially misstated.

Moreover, it is our responsibility to consider whether the

management commentary provides the information required under

the Danish Financial Statements Act.

Based on the work we have performed; we conclude that the

management commentary is in accordance with the consolidated

financial statements and the parent financial statements and has

been prepared in accordance with the requirements of the Danish

Financial Statements Act. We did not identify any material

misstatement of the management commentary.

Management’s responsibilities for the annual reports

Management is responsible for the preparation of consolidated

financial statements and parent financial statements that give a

true and fair view in accordance with International Financial

Reporting Standards as adopted by the EU and additional

requirements of the Danish Financial Statements Act, and for such

internal control as Management determines is necessary to enable

the preparation of consolidated financial statements and parent

financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the consolidated financial statements and the parent

financial statements, Management is responsible for assessing the

Group’s and the Parent’s ability to continue as a going concern, for

disclosing, as applicable, matters related to going concern, and for

using the going concern basis of accounting in preparing the

consolidated financial statements and the parent financial

statements unless Management either intends to liquidate the

Group or the Entity or to cease operations, or has no realistic

alternative but to do so.

Auditor’s responsibilities for the audit of the annual

report

Our objectives are to obtain reasonable assurance about whether

the consolidated financial statements and the parent financial

statements as a whole are free from material misstatement,

whether due to fraud or error, and to issue an auditor’s report that

includes our opinion. Reasonable assurance is a high level of

assurance but is not a guarantee that an audit conducted in

accordance with ISAs and the additional requirements applicable in

Denmark will always detect a material misstatement when it exists.

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.

Independent auditor’s report on the annual report

for the period 01.01.2022 - 31.12.2022

Auditor’s Review

Annual Report 2022

Independent auditor’s report on the annual report

for the period 01.01.2022 - 31.12.2022

Auditor’s responsibilities for the audit of the annual

report (continued)

As part of an audit conducted in accordance with ISAs and the

additional requirements applicable in Denmark, we exercise

professional judgement and maintain professional skepticism

throughout the audit. We also:

• Identify and assess the risks of material misstatement of the

consolidated financial statements and the parent financial

statements, whether due to fraud or error, design and perform

audit procedures responsive to those risks, and obtain audit

evidence that is sufficient and appropriate to provide a basis for

our opinion. The risk of not detecting a material misstatement

resulting from fraud is higher than for one resulting from error,

as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit

in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion

on the effectiveness of the Group’s and the Parent’s internal

control.

• Evaluate the appropriateness of accounting policies used and

the reasonableness of accounting estimates and related

disclosures made by Management.

• Conclude on the appropriateness of Management’s use of the

going concern basis of accounting in preparing the

consolidated financial statements and the parent financial

statements, and, based on the audit evidence obtained, whether

a material uncertainty exists related to events or conditions that

may cast significant doubt on the Group's and the Parent’s

ability to continue as a going concern.

If we conclude that a material uncertainty exists, we are required to

draw attention in our auditor’s report to the related disclosures in

the consolidated financial statements and the parent financial

statements or, if such disclosures are inadequate, to modify our

opinion. Our conclusions are based on the audit evidence obtained

up to the date of our auditor’s report. However, future events or

conditions may cause the Group and the Entity to cease to continue

as a going concern.

• Evaluate the overall presentation, structure and content of the

consolidated financial statements and the parent financial

statements, including the disclosures in the notes, and whether

the consolidated financial statements and the parent financial

statements represent the underlying transactions and events in

a manner that gives a true and fair view.

• Obtain sufficient appropriate audit evidence regarding the

financial information of the entities or business activities within

the Group to express an opinion on the consolidated financial

statements. We are responsible for the direction, supervision

and performance of the group audit. We remain solely

responsible for our audit opinion.

We communicate with those charged with governance regarding,

among other matters, the planned scope and timing of the audit

and significant audit findings, including any significant deficiencies

in internal control that we identify during our audit.

Aarhus, 24

of February 2023

Deloitte

Statsautoriseret Revisionspartnerselskab

Central Business Registration No. 33 96 35 56

Søren Marquart Alsen Abdul Wahab Ashraf

State-Authorised Public Accountant

MNE no.: mne40040

State-Authorised Public Accountant

MNE no.: mne46664

Auditor’s Review

Annual Report 2022

Consolidated Financial Highlights

Financial Highlights

Definitions of financial ratios:

Adjusted EBITDA EBITDA adjusted for price effect on fair value adjustment of biological assets and any special items

Gross margin Gross profit / Total Income x 100

Adjusted EBITDA margin Adjusted EBITDA / Total Income x 100

EBIT margin EBIT / Total Income x 100

Return on invested capital Net financials / Avg. net interest-bearing debt x 100

Return on equity Net Profit / Avg. equity x 100

Solvency ratio Equity / Total assets x 100

Current Ratio Current assets / current liabilities x 100

EUR '000

2022 2021 2020 2019 2018

Profit & Loss

Total income 52.216 47.929 66.673 91.591 63.857

EBITDA 9.367 2.364 1.547 29.168 10.614

3.944 3.474 14.412 20.989 13.672

Operating profit/loss (EBIT)

1.407 -6.559 -6.991 21.382 4.185

Net financials -2.309 -3.614 -3.650 -3.943 -2.740

Profit/loss for the period -829 -8.414 -8.912 14.724 1.111

Balance sheet:

Total assets 134.990 146.643 164.840 173.523 155.021

1.148 2.419 8.837 11.764 15.076

Equity 77.293 75.690 83.886 87.483 72.128

Invested capital 117.386 115.458 128.187 138.577 133.535

Net interest-bearing debt 44.096 42.117 52.621 60.021 57.707

Cash flow:

Cash flow from operating activities

-2.681 6.996 17.865 5.840 11.173

Cash flow from investing activities -1.296 1.356 -10.623 -7.662 -15.405

Cash flow from financing activities -8.209 -2.106 -5.309 2.073 4.191

Investment in property, plant and

equipment

Adjusted EBITDA (excl. fair value

adjust. bio assets and Special Items)

2022 2021 2020 2019 2018

Employees:

Average number of employees 333 446 498 471 445

Production Scope:

Harvested land

0 1.619 1.323 1.663

1.720

Total yield (all crops)

tons

9.321 3.573 8.377

6.159

Average number of sows

10.961 13.078 14.313 17.532 16.519

Number of pigs produced

324.354 396.841 427.887 568.385 511.111

Produced pigs per avg. sow

29,6 30,3 29,9 32,4 30,9

Ratios:

Gross margin

31,8% 18,1% 20,6% 43,6% 30,3%

Ajusted EBITDA margin 7,6% 7,2% 21,6% 22,9% 21,4%

EBIT margin

2,7% -13,7% -10,5% 23,3% 6,6%

Return on invested capital 1,2% -5,4% -5,3% 15,7% 3,2%

Return on equity

-1,1% -10,5% -11,4% 18,4% 1,6%

Solvency ratio

57,3% 51,6% 50,9% 50,4% 46,5%

Current Ratio

121% 117% 122% 166% 142%

Annual Report 2022

Company Information

Annual Report 2022

Development in the financial year and financial positions

Management Review

Up to 2021, the Group managed two business

areas in Romania: Pig production and Crop

production. The latter, representing approx. 5%

of the Groups turnover, was divested in 2021.

Challenges caused by market conditions over-shadowed challenges with African Swine Fever

(ASF)

The year show, without fair value adjustment, a loss before tax of approx. EUR 7.1m. But show with the positive

fair value adjustment of herds of EUR 6.2m, a loss of EUR 0.9m compared to EUR 10.2m loss in 2021.

The consolidated total income, without fair value adjustment, was EUR 46.0m in 2022 (-4% compared to 2021).

With fair value adjustment total income is up EUR 4.3m (9%) from 2021.

Besides the positive impact on the herd valuation, higher pig prices have also a direct positive financial impact of

EUR 10.4m as the sales price increased 43% compared to last year (from 1.32 to 1.90 EUR per kg).

Unfortunately, the positive impact from pig prices is mostly used to offset higher feed prices having a significant

negative impact of EUR 6.3m as the feed prices increased by 35%. Adding increased costs of EUR 1.7m due to

price increases on energy, reduces the combined net-improvement in the overall profitability to EUR 2.4m.

On top of this, several farms are temporarily closed due to outbreaks of ASF in 2021. As a result, the production

capacity has only been utilized in average with approx. 55% in 2022 and the production volume in weight was

reduced by 29% compared to 2021.

The equity increased EUR 1.6m (+2%) compared to yearend 2021 as a combination of the limited loss and a

capital increase of EUR 2.0m. The equity is EUR 77.3m and the solvency ratio is 57%. Also, the Group’s liquidity

reserves are, as per 31/12 2022, at a satisfactory level, EUR 8.9 million.

Overall assessment

The result is not satisfactory as operations continue to be negatively influenced by the ASF outbreaks in 2021,

implications of the presence of ASF in general and the unsatisfactory price ratio between pigs and feed.

Four highlights impacting 2022:

• The very low price-ratio from 2021 continued – despite

average pork prices up 43%. The continuously high feed

prices kept the price-ratio of only 5.5. An improvement from

5.1 last year but still far from the long-term average of 6.5

to 7.0.

• Positive fair value adjustment of EUR 6.2m. The

increased sales prices had a positive influence on the herd

value end of the period on approx. EUR 6.2m.

• Covid and Ukraine War support of €2.2m. As a

compensation for the industry’s negative impact caused by

the pandemic and subsequential the Ukraine wars impact

on cereal prices, €2.2m was granted in total.

• Net losses of approx. EUR 4.7m due to ASF as several

farms were closed and Premium Porc farm returning to

production after the ASF outbreaks in 2021. The outbreaks

will continue to negatively impact the results well into 2023.

EUR '000

2022 2021 2022 2021 2022 2021

Total income 52.216 47.929 49.122 46.264 55 2.301

46.015 47.922 42.921 46.256 55 2.301

EBITDA 9.367 2.364 7.114 -2.148 39 4.441

3.944 3.474 1.691 -1.344 39 4.441

EBIT 1.407 -6.559 -845 -10.374 39 3.743

Profit before tax -902 -10.173 -3.186 -13.919 39 3.628

EBITDA excl. fair value adjust. biological

assets and excl. Special Items

Crop Production

Pig production

Consolidated total

Total income without fair value adjust.

biological assets

Annual Report 2022

High feed prices followed by record high pork prices

Management Review

Feed prices 35% up from the already high 2021 level

Average feed prices were 35% higher in 2022 compared to the average from last year. A high

price level was expected based on the price level for second half of 2021, but additional price

increases after the Ukrainian war started, added to the upward trend. The war was a key factor

in maintaining the prices on a high level also for new harvest contrary to our expectations

beginning of the year.

Cereal prices are currently at the highest level we have registered in the company’s history.

Until harvest 2020, feed prices were relatively stable for several years. This trend is certainly

changed. The average price of raw materials consumed in December 2022 is 60% higher as

compared to the same month in 2019.

We don’t expect a return to 2019 prices, but we do believe that the cereal prices peaked in

2022. We expect the price of raw materials to gradually decline during 2023 although still at a

high level compared to “old” price levels.

The price level gradually improves

Although the price ratio between pork and feed of 5.5 for 2022 is only slightly higher than the

record low realized last year, the higher price levels have a big positive impact. The improved

price level represents an increased profit before tax of EUR 4.2m in 2022 compared to the

same production with 2021 prices. But compared to a 5-year average of the prices prior 2021

we could have generated EUR 2.5m more in profit.

The fluctuations in commodity prices underline the industry's high exposure to the global price

ratio of meat and cereals.

Herd valuation increased by EUR 6.2m due to improved pig prices

The market prices of biological assets (the pig herd), have followed the fluctuations in the pork

prices. Consequently, the value of biological assets are increased by EUR 6.2m compared to

the equivalent, if prices of 31.12.2021 were to be used.

Pork prices 43% up compared to last year

The average prices for slaughter pigs improved from the very low level realized in 2021

and reached in second half a historical high level! Pork prices started 2022 at a very

low level but improved from mid-February. Prices have been struggling to consistently

keeping the upward trend, but our sales price was anyhow 60% up end of the year

compared to beginning of the year. We expect even higher prices during 2023.

The demand for pork remains under pressure as in 2021 but the significantly higher

costs have started a dramatic reduction in the European pig production adjusting the

supply downwards. The full impact of this reduction is yet to be realized supporting

higher prices in the coming period as supply continue to be reduced.

Costs exploding have changed the breakeven level and the average realized pig price is

not enough to generate the profitability it used to. The unsatisfactory price level is

even more visible on the weaner market with prices improving less than for slaughter

pigs although the trend was very positive end of the year.

2016 2017 2018 2019 2020 2021

2022

Pork Prices (carcass)

EUR/kg

1,38 1,66 1,42 1,63 1,52 1,32 1,90

Feed Prices

EUR/kg

0,20 0,21 0,22 0,23 0,24 0,26 0,35

Exchange ratio pork:feed 6,8 7,9 6,5 7,1 6,4 5,1 5,5

Note: The table show realized prices from the subsidiaries in Romania as an annual average after ASF related discounts.

Pork and feed prices in

Romania

Annual Report 2022

Production temporarily reduced due to ASF

Romania supports pig welfare

We have applied for and received grants to improve animal welfare in pig production, based on the Romanian support scheme. The grant we applied for in the year has been

recognized in total income of EUR 3.1m. This represents 95% of the total amount applied for. Payment is expected during 1

half of 2023.

In 2022 we have received payments of EUR 4.4m for animal welfare support, for which we applied for in 2021. This represents EUR 0.3m more than allocated by the end of

2021. In total, grants for improved animal welfare of EUR 3.4m are registered in 2022.

The subsidy amount is far from a net gain, as we could reduce the costs related to meeting the requirements for the subsidy in case it ceases to exist.

Management Review

Pig production reduced to less than 50% of full capacity

The overall production capacity, measured in number of sows, registered a 20% increase compared to YE 2021 as a result of the repopulation of Premium Porc farm during the

year. This increase indicate the production again is on an upward trend with 2022 representing a production low with 18% less pigs produced compered to 2021 and 43%

down compared to pre-ASF numbers in 2019. The decline is primarily caused by Olsuin farm being culled in September 2021 and secondly Premium Porc farm in process of

being repopulated after culling in January 2021. Both farms were culled due to ASF-outbreaks.

The production in kg is even more impacted due to also Venturelli farm (a wean-to-finish site) was culled in February 2022. As a result of the capacity missing in H1, we had to

sell more pigs as weaners instead of fattening them. The shift in the sales mix towards a bigger portion of the pigs being sold as weaner is furthermore driven by the

unsatisfactory price ratio as it supports reducing the sales weight.

Restart of Premium Porc farm is negatively affecting the overall productivity, measured in produced pigs/sow due to the herd being new and not back on full potential yet. This

farm is in the table below excluded from the calculation of produced pigs underlining that the other farms performed on a slightly better efficiency level as in 2021.

2019 2020 2021

2022

Diff. Y22

over Y21

Number of sows end of year heads 17.744 17.956 9.449 11.308 20%

Out of whichs sows to be culled heads 5.557 3.203 0 0

Weaned piglets per avg. sow heads 34,6 34,3 32,5 33,8 4%

Produced pigs per avg. sow *)

heads 32,4 30,6 30,3 31,7 5%

Sold slaughterpigs heads 441.030 423.981 291.477 199.332 -32%

Sold weaners (net) heads 102.871 -3.457 60.054 95.574 59%

Produced pigs total heads 568.385 427.887 396.841 324.354 -18%

Weight produced pigs **)

tons 53.936 51.689 36.954 26.289 -29%

Facts about the pig production

Notes: *) Produced pigs per sow for 2020 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.

Annual Report 2022

Business affected

by African Swine Fever (ASF) in Romania

Management Review

ASF – evolution and indirect losses

Since the beginning of June 2018, more than 5,700 outbreaks of African Swine Fever (ASF)

are registered at national level. The entire Romania has been considered affected since

2019 and continues to register a significant number of outbreaks.

The biosecurity in all our farms remains at a very high level, well exceeding industry

standards according to international experts. Nevertheless, we experience huge indirect

impact on our operations, due to the measures taken by the authorities in order to control

and eradicate the virus.

Surveillance/protection zones caused by ASF outbreaks in areas close to our farms

continued impacting our production flows negatively, due to restrictions on moving

animals in and out of the blocked farms. The zonings usually lasts from 4 weeks up to 14

weeks. 2022 was a remarkable quiet year with only a few zonings affecting us in Q1 and

none the rest of the year.

We work, in close collaboration with the authorities, towards lifting the zonings as soon as

procedures and disease control allow. We are often able to continue the production

unaffected in the blocked farms, if the zonings are lifted in 4-6 weeks, due to the measures

we have taken to adjust our production flow.

Direct losses caused by ASF outbreaks in our farms

Following the seven outbreaks in our farms in 2021 the production is significantly

downsized until the farms can be restarted again. Obviously, our goal is to avoid additional

outbreaks. Although 2022, as described in the Annual Report 2021, started with a new

outbreak in Venturelli in February we believe our upgraded biosecurity set-up will support our

efforts in avoiding additional outbreaks.

Venturelli farm is a wean-to-finish operation, and all 20,000 pigs were culled. The immediate

financial impact was small due to low profitability on short term and alternative production

capacities available in the Group. The compensation from the State for the culled herd at

market value is received.

All farms with outbreaks in 2021 are again ready for production after finalization of the

disinfection and reauthorization process. A few of the farms is back in operation but

decision to fully restart all farms awaits market prices to improve.

After deducting the compensations from the state, the net loss for the Group caused by the

ASF outbreaks in 2021 and 2022 amount for the year to approx. EUR 4.3m originating

primarily by the Premium Porc restart and secondly by the non covered costs originating

from the farms closed by the outbreaks in H2 2021.

Farms closed will continue to generate losses throughout 2023.

Total losses of EUR 4.7m in 2022 due to ASF

On top of the direct losses due to ASF outbreaks, the accumulated indirect losses we have

registered, caused by ASF in Romania, add up to approx. €0.4m in 2022 (€1.2m in 2021). The

indirect losses caused by the restrictions due to ASF outbreaks is not compensated by the

authorities. These indirect losses can be split in the following components:

1. Lower sale prices due to special handling of pigs from ASF areas and, in many cases,

thermal treatment of the pigs from restriction zones;

2. Lost production in finishers farms not being supplied with weaners due to

surveillance/protection zones;

3. Special items: Extra costs to compensate for disrupted production flows. This category

includes extra feed and a variety of additional costs for veterinarians, consultants etc.

We are determined and focused on our strategy to be the company who masters the art of

producing pigs in an ASF environment.

Evolution of new

outbreaks in Romania (per

week / from 2018 to 2022)

Annual Report 2022

Litigations for relocation of Negreni farm

Management Review

A group of citizens in Negreni village brought charges in 2016 claiming our farm

should be relocated. Their claim is based on a Government Order from 2014

stipulating that distances from farm operations to the neighboring houses should

be minimum 1,500m.

Our advisors, as well as the authorities that have assessed and validated our

production and building permits, agree that this Order was meant to cover future

constructions only and not farms and houses established decades before the

Order was issued. Despite this, we lost in two consecutive local court hearings in

2018 and we are demanded to relocate the farm. The Ministry issuing the Order

has in 2020 confirmed our understanding.

The case is contradicting in many ways with the legal framework covering our

production permits. The enforceability of the verdict is anyhow seen as practically

impossible as all production permits are valid, and the production can continue

despite the verdict.

Seventeen new, similar claims were received during the last two years. The new

claims are either from the same citizens as the original claims or from citizens

connected to the original claimants. All cases has been at least a first-tier trial

with a satisfactory result for us as the cases are dismissed. They are

subsequential appealed by the counterpart. Most of the appeals are won by us as

well and decisions are final. The remaining appeals is waiting for trial in the

coming months.

We are also investigating other options for dealing with this case.

We have no intentions for relocating the farm and continue disputing the ruling

and fight the new claims received. The management and our legal advisors have

initiated several actions for annulment and estimate that we have a strong case

for preventing the ruling being carried out. Based on this, we have chosen not to

make any provisions as we don’t expect to encounter any losses due to this case.

The case is described in detail in Note 2.

Annual Report 2022

Corporate Social Responsibility

Policy for the under-represented gender

Board of Directors:

The current gender balance in the board is: 1 woman and 4 men. The target regarding

diversity at Board of Directors level was that at least one of the board members should be of

the under-represented gender. According to regulations, the company are required to set a

target figure for the underrepresented gender on the board. We have a target number of min.

25% women on the board by the end of 2025.

The company's board members are elected by the shareholders at the Annual General

Meeting. Taking the specifics of the industry into account, it is unlikely that the proportion of

the under-represented gender in the board will increase further over the coming years. The

shareholders are aware of the company’s wishes to honor diversity and equal gender

representation and will be aware of this in the future constitutions of the Board, to the extent

the recruitment base supports this possibility.

Other management levels:

Due to the limited number of employees in Denmark, the company is not required to

establish a policy for other management levels. Nevertheless, through its internal policies

and practices, the group assures a fair selection process, open towards all genders as well

as personal circumstances, and the selection is performed strictly on criteria related to

expertise and reflection of company values.

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, Premium Pork 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.

Management Review

Statement of Data Ethics Policy

We adopted the Policy of Data Ethics in 2022. The policy establishes the overall guidelines

and principles for how data ethics is considered and reflects the Group´s commitment to

manage data responsibly based on principles of honesty, transparency, and accountability.

As a company, we primarily processes data relating to human resources, shareholders

interactions, customer and supplier contact. The group controls that data is collected for

explicit and legitimate purposes and processed legally and fairly, including that data

processing only comprises the data necessary to realize the purpose of the processing.

Any violation of the policy on data ethics or the Group’s internal procedures may be reported

by employees through the groups whistleblowing system. No reports were filed in 2022.

The policy on data ethics is approved by the board of directors annually and revised on an

ongoing basis.

Annual Report 2022

Anticipated development

Management Review

Pork prices expected to improve

Although at a slower pace, ASF continues to challenge the industry in EU as affected

countries continue to discover new cases besides new countries being added to the list. But

the market balance in EU is adjusted to the situation with the lack of export out of EU from

the affected countries. Unless ASF spreads to one of the big export countries we don’t

expect ASF to affect the market balance in 2023.

The demand in Europe for pork meat never fully recovered to the pre-Covid levels partial due

to the inflation impacting consumer behavior. But in Romania, the demand for locally

produced pork is stronger than ever due to a very low self supply.

Predicting the supply evolution seem to be on firmer grounds indicating that a lower demand

will be more than off-set by lower supplies. European pork producers, as well as their

colleagues across the globe, is negatively affected by the high production costs in general

and the high feed costs in particularly.

A significant drop in slaughtering in Europe has already in 2022 reduced the supply and this

trend continues. The latest herd counts in EU, document a significant reduction and

indicates further reductions of the production in 2023 as the impact of the reduced breeding

stock kicks in. All in all, we expect the average pig price for 2023 to exceed 2 EUR per kg.

… but feed prices remains high

We initially expected the grain prices to drop to a more “normal” level from harvest 2022 but

the Ukrainian war’s huge impact on the grain market tipped the balance and the prices for

the 2022 harvest exceeded 2021 prices! The current market prices indicates harvest prices

2023 at a lower level supporting why we expect similar average feed prices as realized in

2022.

The price level expected to improve during 2023

As we for 2023 expect higher pig prices and unchanged average feed prices compared to

2022, the price level is expected, gradually to improve.

Support program for animal welfare continue

A new program for improving animal welfare similar to the previous program is established

starting with 2023. Continuation of support to the industry is an important factor for

Romania to reestablish a reasonable degree of national self-supply.

ASF restrictions expected to continue disrupting our production flow

Despite the level of production flow disruptions caused by farms entering

protection/surveillance zones has been remarkable low in 2022, future incidents are

considered unavoidable. But hopefully at an even lower level than in 2022. In financial

planning, we include a reserve to cover the negative impact caused by such situations.

We do expect that ASF will be present in Romania for several years to come, but as both

backyard production and the wild boar population is naturally decreasing over time, further

accelerated by ASF, the risk is expected to gradually decrease within the following years.

Production temporarily downsized – focus on preparing to return in operation

The strategy is to gradually resume production and again become profitable. The production

in 2023, with already initiated expansions, is expected 25% up from 2022. The production in

2023 will still be approx. 30% lower than in 2019 (the most recent year without outbreaks)

without additional repopulation of farms initiated.

The actual decisions to repopulate will be based on updated assessments and improved

visibility of market and cash flow. The affected farms will, while closed, generate losses due

to fixed costs and depreciation. The closed farms will, until actual repopulation is decided,

represent a reserve production capacity to mitigate disruptions caused by ASF.

Investments strictly limited also for 2023

Considering the ASF situation, and the focus on having all farms back in production,

investments projects will only be implemented based on a high degree of necessity. Our

priority to protect our farms within the Group remains. This by introducing additional

biosecurity measures and strengthening the existing measures even more.

Profitability expected to return in 2023

As stated above, we believe pork prices will increase further in 2023 and the price ratio again

to reach a profitable level. But the temporarily downsized production have a severe negative

impact. Based on our price expectations, and a continuous calm ASF situation, we expect

the adjusted EBITDA (excluded for fair value adjustment of the herd) to reach EUR 9-11m.

Herd valuation is expected to have a positive although small positive impact in 2023.

We remain focused on our cash flow in 2023. The starting point is strong, and the cash base

is expected to remain on a satisfactory level throughout the year.

Annual Report 2022

Income Statement

Consolidated Financial Statements

Consolidated Income Statement Consolidated Statement of Comprehensive Income

EUR '000

2022 2021

Note

Revenue

40.360 43.248

Grants and other income

5.655 4.674

Value adjustment, biological assets

6.201 8

Total Income

52.216 47.929

Direct costs

-25.061 -26.147

Other external costs

-10.554 -13.107

Gross profit

16.602 8.676

Staff expenses

-6.456 -9.059

Special items

-778 -1.117

Other Income

0 3.864

Depreciation

-7.960 -8.923

Operating profit (EBIT)

1.407 -6.559

Financial income

75 24

Financial expenses

-2.385 -3.638

Profit before tax

-902 -10.173

Tax on profit for the year

73 1.759

Net profit for the year

-829 -8.414

Distribution of profit for the year:

Group Shareholders -829 -8.414

Distributed

-829 -8.414

EUR '000

2022 2021

Net profit for the year -829 -8.414

Exchange adjustments of foreign enterprises

-13

Fair value adjustment of hedging instruments

468

171

Tax on hedging instruments

-75

-27

0 0

Total comprehensive income

-448 -8.249

Group shareholders -448 -8.249

-448 -8.249

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

Annual Report 2022

Balance Sheet

Consolidated Financial Statements

Consolidated Statement of Financial Position

EUR '000

31/12 2022 31/12 2021

Equity and Liabilities

Note

Share Capital

710 690

Asset revaluation surplus 10.827 10.827

Retained earnings 65.757 64.173

77.293 75.690

Provision for deferred tax

-169 245

Credit institutions

20.309 24.113

Lease liabilities

1.012 1.922

Subordinated shareholder loan

2.500 3.500

Deferred income

1.981 2.258

Other non-current liabilities

12 49

Long-term liabilities

25.645 32.087

26.517 31.601

Trade payables 3.024 2.753

1.038 1.323

Other liabilities

1.472 3.188

Short-term liabilities

32.051 38.865

57.696 70.953

134.990 146.643

Total Equity and Liabilities

Equity

Total liabilities

Short term portion, credit institutions,

leasing and other non-current

Interest bearing payables to

shareholders

EUR '000

31/12 2022 31/12 2021

Assets

Note

Acquired rights

476 596

Intangible fixed assets in total

476 596

Land and buildings

68.926 72.106

Plant and machinery

14.839 17.070

Operating equipment

872 524

Right of use assets

2.601 3.717

Property, plant and equipment in progress

836 1.972

Property, plant and equipment

88.074 95.389

Non-current investments

82 78

Fixed asset investments

82 78

Biological assets, Breeding herd

7.461 4.926

Biological assets

7.461 4.926

96.093 100.988

Biological assets, Commercial herd

10.089 5.957

Inventories

9.898 6.994

Biological assets and inventories

19.987 12.951

Trade receivables

4.330 4.272

Other receivables

6.886 8.365

Prepayments

1.012 1.150

Receivables

12.227 13.787

Assets classified as held for sale

403 448

Cash and cash equivalents

6.280 18.468

38.897 45.654

134.990 146.643

Total non-current assets

Total current assets

Total Assets

Annual Report 2022

Consolidated Financial Statements

Consolidated Statement of Changes in Equity

EUR '000

Share Capital

Asset

revaluation

surplus

Cash flow

hedging

reserve

Reserve for

exchange

adjustment

Retained

earnings

Total Equity

690 10.827 0 0 72.369 83.886

0 0 -355 750 -395 0

690 10.827 -355 750 71.974 83.886

0 0 0 0 53 53

0 0 0 0 -8.414 -8.414

0 0 143 22 0 165

0 0 143 22 -8.361 -8.196

0 0 0 0 0 0

690 10.827 -212 772 63.613 75.690

20 0 0 0 1.980 2.000

0 0 0 0 52 52

0 0 0 0 -829 -829

0 0 393 -13 0 380

0 393 -13

-777 -397

0 0 0 0 0 0

Comprehensive income for the

year 2021

Comprehensive income for the

year 2022

Transfer other reserves to retained

earnings

Transfer other reserves to retained

earnings

Equity at January 1, 2021

Equity December 31, 2022

Share based payments

Net profit/loss for the year

Other comprehensive income

Net profit/loss for the year

Other comprehensive income

Equity December 31, 2021

Share based payments

Reclassified Equity at January 1,

2021

Reclassified (transfer from retained

earnings)

Increase share capital

710

10.827 182 758 64.817 77.293

Annual Report 2022

Consolidated Cash Flow Statement

Consolidated Financial Statements

EUR '000

2022 2021

Note

Operating profit/loss (EBIT) 1.407 -6.559

Adjustment for non-cash items:

8.103 8.801

52 53

-6.201 -8

Change in commercial herd

-73 5.524

-2.905 853

Change in receivables

1.214 7.692

Change in trade payables etc. -1.589 -6.492

Cash flow from operations before financial items

8 9.864

Financial income received

75 24

Financial expenses paid

-2.290 -2.416

Corporation taxes paid

-474 -475

Cash flow from operating activities

-2.681 6.996

-37 -517

1 0

-1.148 -2.419

14 238 1.354

-4 0

0 5

1 394

46 64

-392 2.474

Cash flow from investing activities

-1.296 1.356

Acquisitions of property, plant and

equipment

Sale of investments

Net disposal of assets held for sale

Acquisition of biological assets

Sale of intangible assets

Depreciations

Acquisition of intangible assets

Provisions

Change in inventories

Value adjust., biological assets

Sale of property, plant and equipment

Acquisition of investments

Investment subsidies received

EUR '000

2022 2021

Note

Proceeds from borrowings

515 7.725

Repayment of borrowings

-10.724 -9.831

Capital increase 2.000 0

Cash flow from financing activities

-8.209 -2.106

Change in cash and cash equivalents

-12.186 6.247

Cash and cash equivalents, start

year

18.468 12.324

Exchange adjustments, begining

cash

-2 -103

Cash and cash equivalents at December 31

6.280 18.468

2.643 327

Liquidity available at December 31

8.923 18.795

Un-utilised short term facilities

Annual Report 2022

Notes – Consolidated Financial Statements

Note 1: Summary of significant accounting policies and estimates

Fair value of biological assets

Biological assets are recognized when the Group controls the assets and it is

probable that future economic benefits associated with the asset will flow to the

Group and the cost for fair value of the asset can be measured reliably.

Biological assets are measured at fair value less selling costs.

Value adjustments of biological assets are recognized in profit or loss for the

period of which they relate.

Commercial herd:

Slaughter pigs (Finishers) above 50 kg are valued based on average sales prices

for November-December on the local market less costs for reaching desired sales

weight of approx. 107 kg. Finishers between 25-50 kg are valued as weaners with

additions for added weight.

The fair value of weaners is based on official Danish and German quotes plus a

mark-up to reflect the Romanian market conditions. The Danish and German

quotes are used as there isn’t an official quotation for the Romanian market. The

Group’s experience from historical sales as well as purchases is that prices on

the Romanian market are strongly correlated to the German and Danish

quotations plus a mark-up reflecting the lack of weaners for sale in Romania. The

mark-up is according to the Group’s recent weaner sales contracts.

The valuation of piglets is based on official Danish quotes.

Breeding herd:

Breeding herd (boars, sows and young females) are valued based on official

quotes, based on criteria such as genetics, costs and expected piglets.

Significant accounting estimates and assessments in the group

accounting policies

Revaluation of fair value of property, plant and equipment

The Group’s land, buildings, plant and machinery are revaluated at fair value.

Revaluation of property, plant and equipment is recognized in fair value using either a

market-based approach or a replacement cost approach. Results of the revaluation

based on the replacement cost approach were compared with a revaluation

performed using the income approach to check for impairment indicators of revalued

assets, if any.

The revaluation process is based on qualified independent appraisers done according

with International Valuation Standard 300. This standard considers as basis for

evaluation IAS36 and IFRS13. Valuation techniques are the market and replacement

cost approach. The replacement cost approach is only used in cases where there was

no possibility to use the market approach.

The valuation process are reviewed and approved by the Group’s Management and by

the Audit Committee every year. Results for measurement are reviewed and approved

whenever revaluations are performed.

In the subsidiaries, revaluations are performed every fifth year after a rotation

principle to ensure the carrying amounts do not differ materially from that which

would be determined using fair value at the end of the reporting period. This

procedure has been used for many years with only limited value adjustments

registered. This year none of the entities performed a valuation.

The total fair value of land, buildings, plant and machinery amounted to EUR 86.6

million at December 31st, 2022 (EUR 91.6 million at December 31st, 2021).

Annual Report 2022

Relocation of Negreni farm:

(Negreni neighbor cases)

Five citizens from Negreni village filed, in November 2016, a claim against Premium Porc

Negreni SRL with the objective of relocating the Negreni-farm as well as receiving

compensation for moral damages. Their claim is based on Government Order no.

119/2014 stipulating that distances from farm operations to the neighboring houses

should be minimum 1,500m. The Negreni farm, build in 1981, is currently located at few

hundred meters from the nearest houses, all of them being built after the farm.

In first court, in March 2018, the judge ruled that the farm should be relocated in order to

respect the mandatory distance provided by Order 119 and denied the claimants

compensation for moral damages. Premium Porc Negreni SRL appealed the ruling in

June 2018. In second court, in December 2018, the Mehedinti Tribunal rejected our

appeal and upheld the decision from the first court.

The Government’s objective, in 2014 when Order 119 was issued, was to prevent

construction of new farms within less than 1,500 m from private houses for the future.

And vice versa. This understanding of the Government’s Order also is confirmed by all

authorities and is reflected in the fact that all production and functioning permits are

regularly renewed despite the distance being less than 1,500 m.

To further substantiate our understanding of the Order we’ve in 2020 received a response

from the Ministry of Health confirming that our understanding is correct.

As a mean to re-open the lost case we filed in October 2018 a request for annulment of

Order No. 119/2014. The court dismissed our claim in 2019 which unfortunately was

upheld by High Court in 2022 definitely closing this option.

Fighting enforcement procedures is ongoing. Court hearings continues in 2022 so far

with a final decision in our favor resulting in an obligation for the main claimant to repay

us €40k in previously paid penalties. As per penalties, 4 of 5 of claims against

enforcement procedures have been upheld by the Court and initial penalties annulled.

The second round of enforcement procedures determined the Court to set lower

penalties.

We have since September 2019 up to now received, fourteen new similar claims from

other citizens with connections to the original claimants as well as three new claims

from one of the original claimant and his wife. Also, a new claim from the son of the

main claimant was received in November 2019, having as object, to meet the distance

between his house and the lagoons. All the new cases have been trialed and dismissed

(13 at second tier and definitive). We expect the remaining cases appealed by the

claimants to be settled in 2023 with a definitive win as well.

We are also investigating other options for dealing with this case.

The current ruling for relocation doesn’t cancel the production permits. According to our

legal advisors, since the ruling is to “move” the farm and not to close it, it will be difficult

or impossible for the claimants to stop our production in the farm. Relocation of the farm

is impossible to carry out in practice and calculation of the potential worst-case loss is

impossible to assess with a reasonable certainty. The potential worst-case loss caused

by the unlikely outcome that the farm will have to be closed and removed is substantial.

Based on the management and the company’s legal advisor’s opinion that the

relocation ruling never will be carried out, no provisions for relocation of the farm nor

other provisions are stated in the financial statements.

Notes – Consolidated Financial Statements

Note 2: Contingent liabilities

Annual Report 2022

Notes – Consolidated Financial Statements

Notes to the Income Statement

Note

EUR '000

2022 2021

Revenue

Business areas:

Pig production 39.520 41.883

Crop production 0 2.001

Other 840 697

40.360 44.580

Intra-group trade between the business areas 0 -1.332

40.360 43.248

Geography:

Romania 40.360 43.248

Grants and other income

Animal Welfare Payments 3.401 4.373

EU hectare support 55 300

Other grants 2.199 0

5.655 4.674

Value adjustment, biological assets

Value adjustments pigs 6.201 8

6.201 8

Staff expenses

Wages and salaries 6.325 8.362

Pension costs 4 9

Social contribution & other staff expenses 694 635

Wages closed farms (Special Items)

-619 0

6.405 9.006

Share based payments for management team 52 53

6.456 9.059

Remuneration to the Executive Board

474 496

Remuneration to the Board of Directors 82 74

Average number of employees 333 446

Note EUR '000

2022 2021

Special Items

Costs incurred in connection with ASF restriction zones:

Costs related to operation of blocked farms 3 256

Costs related to handling and authority requirements

15 49

Compensation for culled herd (revenues) -3.008 -12.066

Value culled herds 1.278 9.652

Costs related to culling, desinfection and quarantine 2.491 3.226

778 1.117

Revenue pig production 1.554 1.603

Direct costs -3 -256

Other external costs -1.710 -2.464

Staff expenses -619 0

-778 -1.117

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:

Net costs related to ASF outbreaks:

Annual Report 2022

Notes – Consolidated Financial Statements

Notes to Income Statement and Intangible Assets

Note EUR '000

2022 2021

Other Income

Gain on sale of crop activities 0 -3.864

0 -3.864

Depreciation

Intangible assets 155 173

Buildings 3.872 3.873

Plant and equipment 3.753 4.100

Vehicles and other machinery 600 822

Investment subsidy amortization -277 -167

Loss or gain on asset sales -143 123

7.960 8.923

Financial Income

Interest financial institutions 75 24

75 24

Financial Expenses

Interest bank debt 1.271 1.400

Calculated interest leasing commitments 84 105

Interest shareholders loans 176 234

Other financial expenses 758 678

Exchange rate adjustment 94 1.222

2.385 3.638

Note EUR '000

2022 2021

Income Taxes

Current tax -411 -3.243

Tax Comprehensive Income 0 0

Adjustment of deferred tax 338 1.484

-73 -1.759

Tax on profit for the year is specified as follows:

Calculated 16% tax on profit for the year before tax: -144 -1.628

Tax effect of:

-54 -610

Non-taxable income and expenses 125 479

-73 -1.759

Effective tax rate for the year 8% 17%

Intangible assets

Acquired rights

Cost at January 1 1.472 955

Additions for the year 37 517

Disposals for the year -3 0

Cost at December 31 1.507 1.472

Amortisation at January 1 877 703

Amortisation for the year 155 173

-2 0

Amortisation at December 31 1.031 877

Carrying amount at December 31

476 596

The Group has acquired and implemented several software systems used in daily operations.

The value of the acquired rights are based on costs for licenses and implementations of those

software systems.

Differences in tax rates in Denmark (22%) compared

with Romania

Reversed depreciation on disposal

Annual Report 2022

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 2021.

Notes – Consolidated Financial Statements

Notes to Financial Position

Tangible assets

EUR '000

Land and

buildings

Plant and

Machinery

Operating

equipment

Right of use

assets

Property,

plant and

equipment in

progress

Cost at January 1, 2021 81.891 44.730 6.791 0 3.008

Reclassification/transfer -312 -2.765 -3.917 6.994 0

Additions for the year 1.321 766 648 1.370 1.432

Disposals for the year -1.142 -398 -1.222 -1.412 -2.468

Cost at December 31, 2021 81.757 42.333 2.300 6.952 1.972

Apraisal at January 1, 2021 15.582 0 0 0 0

15.582 0 0 0 0

Amortisation at January 1, 2021 21.518 23.419 3.947 0 0

Reclassification/transfer -93 -894 -1.766 2.752 0

Amortisation for the year 3.811 3.045 585 1.353 0

Reversed depreciation on disposal -3 -308 -990 -871 0

Amortisation at December 31, 2021 25.234 25.263 1.776 3.235 0

72.106 17.070 524 3.717 1.972

Out of which land not depreciated 4.541

Right-of-use assets by category 502 1.220 1.995

Assets provided as security for debt 72.106 17.070 524

Carrying amount at December 31, 2021

Apraisal increases at December 31, 2021

Annual Report 2022

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.

The Group had end of 2022 no contractual

obligations related to Property, plant and

equipment in progress (2021: EUR 0.4m).

Notes – Consolidated Financial Statements

Notes to Financial Position

Tangible assets continued

EUR '000

Land and

buildings

Plant and

Machinery

Operating

equipment

Right of use

assets

Property,

plant and

equipment in

progress

Cost at January 1, 2022 81.757 42.333 2.300 6.952 1.972

Additions for the year 701 1.556 755 64 173

Disposals for the year -91 -13 -149 -1.467 -1.309

Cost at December 31, 2022 82.368 43.876 2.906 5.549 836

Apraisal at January 1, 2022 15.582 0 0 0

15.582 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

68.926 14.839 872 2.601 836

Out of which land not depreciated 4.459

Right-of-use assets by category 383 986 1.233

Assets provided as security for debt 68.926 14.839 872

If Land and buildings were measured using cost model, the carrying amounts would be:

Net carrying amount Land and Buildings without revaluations, 2021 56.524

Net carrying amount Land and Buildings without revaluations, 2022 53.344

Apraisal increases at December 31, 2022

Carrying amount at December 31, 2022

Annual Report 2022

Notes to Financial Position

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.

Notes – Consolidated Financial Statements

Biological assets

Commercial

herd

Breeding herd Total herd

Commercial and breeding herd

Carrying amount at January 1, 2021

11.317 7.558 18.874

Movements 2021:

Gains/losses f. fair value changes

165 -157 8

Additions from production 38.502 2.050 40.551

Additions from purchases 0 128 128

Disposals from sales -43.468 -5.210 -48.677

Transfers between groups -558 558 0

5.957 4.926 10.884

Year-end stock (heads) 115.732 14.555 130.287

Finishers, weaners & sows sold (heads)

478.818 7.893 486.711

Biological assets provided as security

5.957 4.926 10.884

Movements 2022:

Gains/losses f. fair value changes

4.059 2.142 6.201

Additions from production 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

10.089 7.460 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 7.460 17.550

Carrying amount December 31,

2022

Carrying amount December 31,

2021

Annual Report 2022

Notes – Consolidated Financial Statements

Notes to Financial Position

Note EUR '000

2022 2021

Non-current investments

Deposits / other financial assets

82 78

Cost at December 31 82 78

Inventories

Rawmaterials for feed 7.675 4.717

Other Consumables 1.454 1.597

Finished goods (feed a.o.) 770 680

Total inventories 9.898 6.994

Cost of sales recognized in profit or loss (feed) 25.061 26.147

Inventories provided as security 9.898 6.994

No write-down has been made on inventories.

Receiveables

Trade receiveables 4.887 4.981

Bad debt provision -557 -709

Trade receiveables, net 4.330 4.272

Receiveable from public grants

4.279 5.015

Other receiveables -239 3.545

Bad debt provision -163 -195

Other receiveables, net 6.886 8.365

Write down, beginning of year 905 1.192

Exchange adjustments 1 -20

Additions for the year 134 61

Disposals for the year -319 -329

Write-down at December 31

720 905

Note EUR '000

2022 2021

Assets held for sale

Land and buildings 403 448

Other liabilities 0 0

Cost at December 31 403 448

Share Capital

The share capital comprises the following share classes:

A-shares:

Number beginning 690.000 690.000

Capital increase 20.000 0

Number at December 31 710.000 690.000

Each share has a value of EUR 1. No shares carry any special rights.

Provision for deferred taxes

Provision at begining of year 245 2.418

338 1.484

Adjustment on equity -752 -3.657

Provision for deferred tax December 31 -169 245

Deferred tax relates to tangible assets.

Assets held for sale is related to a agricultural land development project spread out over

Galati County in Romania. The land has never been part of the Group's operation and a sale

will not impact future earnings neither the future development of the Group.

Adjustment for the year

recognized in profit or loss

Annual Report 2022

Notes to Consolidated Financial Statements

Notes – Consolidated Financial Statements

Interest bearing debt

EUR '000

Payable after

5 years

Payable

between 2

and 5 years

Payable within

1 year

Total

Debt at December 31, 2021

Credit institutions, non-current:

4.665 19.448 4.296 28.409

Leasing debt: 0 1.922 1.294 3.215

Other non-current debt: 0 49 286 334

Subordinated loan to shareholder: 0 3.500 0 3.500

Other payables to shareholder:

0 0 1.323 1.323

Credit institutions, current: 0 0 25.726 25.726

4.665 24.918 32.924 62.507

Debt at December 31, 2022

Credit institutions, non-current:

0 20.309 3.654 23.963

Leasing debt: 0 1.011 969 1.980

Other non-current debt: 0 12 56 68

Subordinated loan to shareholder: 0 2.500 0 2.500

Other payables to shareholder:

0 0 1.038 1.038

Credit institutions, current: 0 0 21.839 21.839

0 23.832 27.556 51.388

Cash flow from financing activities

EUR '000

1/1 2021 Cash flows

Foreign

exchange

movement

Fair value

changes

31/12 2021

Credit institutions, non-current:

34.083 -5.626 -48 0 28.409

Leasing debt: 3.794 -579 0 0 3.215

Other non-current debt: 634 -289 -10 0 334

Subordinated loans 3.500 0 0 0 3.500

Other payables to shareholder 1.256 67 0 0 1.323

Credit institutions, current: 21.677 4.123 -74 0 25.726

Total liabilities from fin. activities

64.945 -2.305 -132 0 62.507

Non-cash changes

Cash flow from financing activities

EUR '000

1/1 2022 Cash flows

Foreign

exchange

movement

Fair value

changes

31/12 2022

Credit institutions, non-current:

28.409 -4.398 -48 0 23.963

Leasing debt: 3.215 -1.236 0 0 1.980

Other non-current debt: 334 -266 0 0 68

Subordinated loans 3.500 -1.000 0 0 2.500

Other payables to shareholder 1.323 -284 0 0 1.038

Credit institutions, current: 25.726 -3.887 0 0 21.839

Total liabilities from fin. activities

62.507 -11.071 -48 0 51.388

Non-cash changes

Note EUR '000

2022 2021

Deferred Income

Investments subsidies beginning 2.258 2.031

New investment subsidies received 1 394

Amortization of investments subsidies -277 -167

1.981

2.258

Other liabilities

Employee related payables 482 244

Other payables 990 2.945

1.472

3.188

Deferred income primarily relates to grants for the construction of feedmills and

biosecurity barriers on farms in Romania. Grants are recognised as income

concurrently with the underlying fixed assets being depreciated.

Annual Report 2022

Market Risk

Note 25: Financial risks

Market risk

The Group's credit facilities are floating-rate credits, which exposes the Group to interest rate

fluctuations. According to Group policy, all financing of working capital and investments in fixed

assets are made on floating-rate terms. An interest hedging of approx. 15 % of the debt (EUR

7.5m) has been concluded via the same banks providing the underlying long-term facility. The

interest hedge fixes the interest to approx. 3.5% including margins for the next 2 years. The

positive market values of the interest hedge, EUR 0.2m, is included in Other liabilities (note 24).

Additional 7 % of the Group’s debt is with fixed interest rate.

Activities abroad, earnings, cash flows and equity are not materially affected by currency risks,

as the foreign activities are predominantly transacting in their functional currency (RON).

Similarly, the external financing is denominated in EUR, which is the functional currency of the

parent entity and the presentation currency for the Group, except for financing locally, which is in

the functional currency of the subsidiary. Hence, there is no currency risks related to external

financing either. Consequently, material currency risks for the Group are limited to translation

risks related to foreign subsidiaries.

The Group does not engage in speculative currency positions. Introduction of the EUR as

functional currency of the consolidated financial statements has contributed to reducing the

overall impact of exchange rates.

Exchange rate adjustments of investments in foreign subsidiaries being independent entities are

recognized in other comprehensive income. Exchange rate risks related to investments are

normally not hedged, as the company’s management is of the opinion that a current foreign

currency hedging would not be the optimal solution with a view to the overall risk and costs.

The Group is exposed to interest rate risks, as loans are primarily with variable interests except

for the smaller part with fixed interests described above. A reasonable possible change in

interest rates at 31.12.2022 would not have any material effect on income statement or equity.

The Group is highly exposed to global and EU development in sales prices of pork as well as raw

materials for feed (grain and protein). The most significant effect on the Group's earnings is

attributable to changes in the price of pig meat and price changes relating to pig feed, which

makes up 2/3 of the pig production costs. The Group observes these developments closely.

A change of the pig meat price of 10% will, on an isolated basis, affect profit for the year before

tax by approximately EUR 3.8 million (2021: approx. EUR 4.0 million). A 10% change in the feed

price will, on an isolated basis, affect profit for the year before tax by approximately EUR 2.5

million (2021: approx. EUR 2.6 million).

Notes – Consolidated Financial Statements

Loans with fixed

interest

Loans with

variable interest

Split of total outstanding interest bearing debt

EUR '000 2021

2022

Interest

binding

period in

months

Avg. effective

inters t

Loans with fixed interest

EUR

13.822 11.038 12-48 1-5%

RON

334 68 up to 24 0%

DKK

0 0

14.157

11.106

Loans with variable interest

EUR

43.856 37.763 1-6 2-3%

RON

4.494 2.500 1-6 2-3%

DKK

0 20 1 4%

48.350

40.282

Annual Report 2022

Other Financial Risks

Liquidity risk

The Group ensures adequate cash resources by entering into framework agreements in

respect of current overdraft facilities. Existing agreements subject to time limitation are

irrevocable on the part of the banks prior to maturity unless there is a breach of the terms of

the loans according to the loan agreements.

Maturity analysis for debt is stated in Note 22, to which reference is made. The maturity

analysis is disclosed according to category and class broken down on maturity period. All

amounts are excluding future interest payments.

Capital management

The objective of the Group's capital management is to ensure the Group's ability to continue

as a going concern in order to provide return on the shareholders' investments and establish

and maintain an optimal capital structure for the purpose of reducing the costs of borrowed

capital and maintain a basis for continued growth in the Group.

The Group's capital management is moreover partly controlled by loan agreements which

include specific requirements to the financial performance of the Group.

Total capital comprises equity and subordinate loan capital from the Parent company; as

shown in the consolidated balance sheet

Notes – Consolidated Financial Statements

Credit risk

The Group is exposed to credit risks on receivables. The Group positively wants to minimize

its credit risks, which mainly relates to sales transactions. Credit insurance is taken out in

advance on more than 90% of the normal sales of slaughter pigs. Due to changes in the sales

(thermal treatment and weaner sales) caused by ASF trade restrictions the credit exposure

was significantly increased in 2018 and has gradually improved since although not the pre-

ASF level. Credit insurance covers approx. 75% of the total receivable end of 2022 (2021:

85%). Outstanding receivables are followed-up upon on a current basis in accordance with

Group procedures.

The expected credit losses on trade receivables are estimated by reference to past default

experience of the debtor and an analysis of the debtor’s current financial position, adjusted

for factors that are specific to the debtors and an assessment of both the current as well as

the forecast direction of conditions at the reporting date. The Group writes off a trade

receivable when there is information indicating that the debtor is in severe financial difficulty

and there is no realistic prospect of recovery, e.g. when the debtor has been placed under

liquidation or has entered into bankruptcy proceedings, or when the trade receivables are

over two years past due, whichever occurs earlier.

There has been no change in the estimation techniques or significant assumptions made

during the current reporting period.

EUR '000

Due above

5 years

Due Between

2 and 5 years

Due within

1 year

Total Carrying

amount

Receivables at December 31, 2021

Trade receivables 0 0 4.272 4.272

Other receivables 0 0 8.365 8.365

Prepayments 0 651 499 1.150

0 651 13.136

13.787

Receivables at December 31, 2022

Trade receivables 0 0 4.330 4.330

Other receivables 0 0 6.886 6.886

Prepayments 0 460 552 1.012

0 460 11.767

12.227

Annual Report 2022

Notes to Consolidated Financial Statements

Note 27: Incentive program for group management

The entity’s parent DCH International A/S has granted warrants to members of the entity’s management,

that will allow them to purchase a number of shares in DCH International A/S at a price agreed in

advance.

A total of 2,904,000 warrants have been granted in 2019 & 2020, of which 2,357,800 warrants have vested

on December 31, 2022. Of the remaining 546,200 warrants, 422,200 is cancelled due to the participants

termination of employment and the rest will vest in installments up and until December 2023 if all the

participants in the program remain employed. The participants may exercise their warrants by purchasing

shares during a four-week period following the approval of the parent entity’s annual report in the years

2023 to 2027, after which the warrants will lapse without any further notice. The agreed exercise price

increases from 3.81 DKK per share in 2023 to 4.63 per share in 2027.

The fair value of each option is calculated using an option pricing model taking into account the exercise

price of the option, an estimate of the current price of the underlying shares, the life of the option and the

risk-free interest rate for the life of the option. As the Group is unlisted, and no market information for

comparable listed entities are currently available, the current price of the underlying shares is determined

based on the equity per share according to the annual report for 2019. Management believe that this is a

reasonable approximation of the current market price for the Group’s shares for the purpose of the

measurement of the warrants, due to the current market situation and the outbreak of ASF in Romania,

and the fact that all tangible assets and biological assets of the group are measured at fair value. In

determining the life of the option for the purpose of the measurement, it is assumed that the employees

will exercise the option as soon as possible.

The fair value of the warrants granted has been determined to be 0.47 DKK (0.06 EUR) per warrant. The

most significant inputs used in the measurement model are the following:

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

Related parties and ownership

Controlling Interest Base for influence

DCH International A/S, Dannevirkevej 6, 7000 Fredericia

Parent Company

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 EUR '000

2022 2021

Outstanding amount at Year-end: 2.500 3.500

Interest for the year amounts to: 80 182

Outstanding amount at Year-end: 1.038 1.323

Financial expenses for the year amounts to: 97 52

Salaries and other expenses amounts to: 0 12

0 -64

Remuneration of the Executive Board and the Board of Directors is specified in note 6.

DCH International A/S's shareholders are legal and natural persons, and no individual shareholder

exercises control of the Group's activities.

Intercompany transactions have been eliminated in accordance with the accounting policies. All

transactions have taken place on arm's length basis.

Other interest bearing debt and intercompany amounts from the

Parent Company:

The Group has leased equipment and received management and other

services from the Parent Company:

The Group has obtained a subordinate loan from the Parent Company:

The Group has provided services for the Parent Company:

Fees paid to auditors appointed by the General Assembly

Fees for statutory audits 99 92

Other Services 76 87

175

179

Audit fee are recognized as administrative costs

Post balance sheet events

There have been no significant post balance sheet events.

Annual Report 2022

Note 30: Accounting Policies

Classification

The consolidated financial statements have been prepared in

accordance with International Financial Reporting Standards (IFRS)

as adopted by the EU and additional Danish disclosure

requirements for annual reports.

Recognition and measurement

Assets are recognized in the balance sheet when it is probable as a

result of a prior event that future economic benefits will flow to the

Group, and the value of the assets can be measured reliably.

Liabilities are recognized in the balance sheet when the Group has a

legal or constructive obligation as a result of a prior event, and it is

probable that future economic benefits will flow out of the Group,

and the value of the liabilities can be measured reliably.

On initial recognition, assets and liabilities are measured at cost.

Measurement subsequent to initial recognition is affected as

described below for each financial statement item.

Anticipated risks and losses that arise before the time of

presentation of the annual report and that confirm or invalidate

affairs and conditions existing at the balance sheet date are

considered at recognition and measurement.

Income is recognized in the income statement when earned,

whereas costs are recognized by the amounts attributable to this

financial year.

Consolidated financial statement

The annual report include Premium Pork International A/S (Parent)

and the enterprises (group enterprises) that are controlled by the

Parent, see group chart on page 10. Control is achieved by the

Parent, either directly or indirectly, holding more than 50% of the

voting rights or in any other way possibly or actually exercising

controlling influence.

Basis of consolidation

The annual report is prepared on the basis of the financial

statements of Premium Pork International A/S and its subsidiaries.

The annual report is prepared by combining uniform items. On

consolidation, intra-group income and expenses, intra-group

accounts and dividends as well as profits and losses on

transactions between the consolidated enterprises are eliminated.

The financial statements used for consolidation have been

prepared applying the Group’s accounting policies.

Subsidiaries’ financial statement items are recognized in full in the

annual report.

Investments in subsidiaries are offset at the pro rata share of such

subsidiaries’ net assets at the takeover date, with net assets having

been calculated at fair value.

Business Combinations

Newly acquired or newly established enterprises are recognized in

the annual report from the time of acquiring or establishing such

enterprises. Divested or wound-up enterprises are recognized in the

consolidated income statement up to the time of their divestment

or winding-up.

The purchase method is applied at the acquisition of new

enterprises, under which identifiable assets and liabilities of these

enterprises are measured at fair value at the acquisition date. On

acquisition of enterprises, provisions are made for costs relating to

decided and published restructurings in the acquired enterprise.

Allowance is made for the tax effect of restatements.

Identifiable intangible assets are recognized separately from

goodwill if they are separable or arise from contractual or other

legal rights.

Any remaining positive differences between cost and the fair value

of assets, liabilities and contingent liabilities acquired are

recognized in intangible assets in the balance sheet as goodwill.

Goodwill is not amortized but is tested for impairment on an annual

basis. Enterprises acquired are recognized in the consolidated

financial statements as from the date of obtaining control, whereas

enterprises sold are recognized up until the date of surrender of

control. Intra-group acquisitions of subsidiaries are made under the

pooling of interest's method.

If any remaining difference between cost and the fair value of

assets, liabilities and contingent liabilities acquired are negative, the

amount is recognized immediately in profit or loss as a bargain

purchase gain.

Foreign currency translation

The items recognized in the financial statements of each of the

group enterprises are measured at the functional currency used in

the primary economic environment in which the individual

enterprise operates. The functional currencies of the group

enterprises are the following: Romanian Lei (RON) for the Romanian

subsidiary and EUR for the parent company in Denmark.

The consolidated financial statements are presented in EUR, which

are the functional currency of the parent company and the

presentation currency of the Group. On initial recognition,

transactions in foreign currencies are translated at the exchange

rates at the date of transaction. Exchange differences arising

between the transaction date rates and the rates at the date of

payment are recognized in the income statement as financial

income and expenses.

Receivables, payables and other monetary items denominated in

foreign currencies are translated at the exchange rates at the

balance sheet date. Any differences between the exchange rates at

the balance sheet date and the exchange rates at the date at which

the receivable or the payable arose or was recognized in the most

recent financial statements are recognized in the income statement

as financial income and expenses.

On consolidation, exchange differences arising from the translation

of any net investment in foreign entities and of borrowings and

other financial instruments designated as hedges of such

investments are recognized in other comprehensive income. When

a foreign operation is sold or any borrowings forming part of the net

investment are repaid, the associated exchange differences are

reclassified to profit or loss as part of the gain or loss on sale.

Balance sheet items including goodwill relating to consolidated

enterprises that do not have EURO as their functional currency are

translated into EUR based on the exchange rates at the balance

sheet date, whereas the income statements of these enterprises are

translated at average rates of exchange. Exchange adjustments

arising on the translation of the opening equity at the exchange

rates at the balance sheet date and net profit/loss for the year at

the exchange rates at the balance sheet are recognized in other

comprehensive income over equity under a separate reserve for

exchange adjustments.

The Group used the following exchange rates for the translation

into EUR on 31 December 2022:

RON: Income statement 2022: 1 EUR = 4.932 RON

(2021: 1 EUR = 4.920 RON)

DKK: Income statement 2022: 1 EUR = 7.4365 DKK

(2021: 1 EUR = 7.4365 DKK)

Derivative financial instruments

On initial recognition in the balance sheet, derivative financial

instruments are measured at cost and subsequently at fair value.

Derivative financial instruments are recognized under other

receivables or other payables, respectively.

Changes in the fair value of derivative financial instruments

classified as and complying with the requirements for hedging the

fair value of a recognized asset or a recognized liability are

recorded in the income statement together with changes in the

value of the hedged asset or the hedged liability.

Accounting Policies

Notes – Consolidated Financial Statements

Annual Report 2022

Changes in the fair value of derivative financial instruments

classified as and complying with the requirements for hedging

future transactions are recognized in other comprehensive income.

When the hedged transactions are realized, the accumulated

changes are recognized as part of cost of the relevant financial

statement items.

Changes in the fair value of derivative financial instruments applied

for hedging net investments in independent foreign subsidiaries are

classified in other comprehensive income.

Income statement

Revenue

Revenue from sale of products is recognized when the Group has

transferred control of products sold to the buyer and it is probable

that the Group will collect the consideration to which it is entitled

for transferring the products. Control of the products is transferred

at a point in time, typically on delivery. Revenue is recognized net of

VAT, duties and sales discounts and is measured at fair value of the

determined consideration.

Investment grants are taken to income as actual payment is made

when the conditions of payment of grants have been approved by

the authorities.

Fair value adjustment biological assets

Fair value adjustments of biological assets include the adjustments

of the company’s biological assets for the financial year measured

at fair value.

Costs of feed, energy and other production costs

Costs of 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 as well as plant and machinery

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

Notes – Consolidated Financial Statements

Annual Report 2022

Gains or losses on initial recognition of a biological asset measured

at fair value less estimated costs to sell, and subsequent changes

in the fair value less estimated costs to sell relating to the

biological asset, are recognized in the income statement in the item

“Gains/losses on changes in the fair value of biological assets” in

the period in which the gain or loss arises.

Biological assets are recognized as current or non-current

biological assets depending on the production cycle of the

biological asset concerned. Generally, biological assets relating to

slaughter pigs and cropping are recognized as current assets.

Breeding herds of gilts, sows and boars are recognized as non-

current assets.

Investments in subsidiaries

Investments in subsidiaries are recognized and measured under the

equity method. This means that investments are measured at the

pro rata share of the enterprises’ equity value plus or less

unamortized positive, or negative goodwill and plus or minus

unrealized intra-group profits and losses.

The Parent’s share of the enterprises' profits or losses after

elimination of unrealized intra-group profits and losses and minus

or plus amortization of positive or negative goodwill is recognized

in the income statement and the net revaluation reserve under the

equity.

Upon distribution of profit or loss, net revaluation of subsidiaries is

transferred from the reserve for net revaluation to retained earnings

under the equity method.

The purchase method is applied in the acquisition of investments in

subsidiaries; see above description under annual report.

Inventories

Inventories are measured at the lower of cost under the FIFO

method and net realizable value. The net realizable value of

inventories is calculated at the amount expected to be generated by

sale in the process of normal operation with deduction of costs to

sell and costs of completion. The net realizable value is determined

allowing for marketability, obsolescence and development in

expected sales sum.

The cost of goods for resale, raw materials and consumables

equals landed cost.

The cost of finished goods and work in progress comprises the

cost of raw materials, consumables and direct labor as well as

directly attributable labor and production costs. These costs also

comprise maintenance and depreciation of machinery, factory

buildings and equipment used in the manufacturing process as well

as costs of production management.

Agricultural produce is initially recognized at fair value at the point

of harvest less estimated costs to sell, and subsequently in

inventories up until the point when it is sold to a third party or is

used internally as feed. The fair value of agricultural produce at the

point of harvest is measured on the basis of the market prices on

the markets on which the agricultural produce is expected to be

sold or used as feed.

Receivables

Receivables are measured at amortized cost, usually equaling

nominal value less write-downs for bad debts.

Prepayments

Prepayments comprise incurred costs relating to subsequent

financial years. Prepayments are measured at cost.

Lease commitments

Lease payments, not recognized under IFRS 16, are recognized on a

straight-line basis in the profit and loss account over the term of the

lease.

Other financial liabilities

Other financial liabilities are measured at amortized cost, which

usually corresponds to nominal value.

Deferred income

Deferred income comprises income received for recognition in

subsequent financial years. Deferred income is measured at cost.

Cash

Cash comprises bank deposits.

Deferred tax

Deferred tax is recognized on all temporary differences between the

carrying amount and tax-based value of assets and liabilities, for

which the tax-based value of assets is calculated based on the

planned use of each asset.

Deferred tax assets, including the tax base of tax loss

carryforwards, are recognized in the balance sheet at their

estimated realizable value, either as a set-off against deferred tax

liabilities or as net tax assets.

Income tax receivable or payable

Current tax payable or receivable is recognized in the balance sheet,

stated as tax calculated on this year's taxable income, adjusted for

prepaid tax.

Cash flow statement

The consolidated cash flow statement and the parent cash flow

statement are presented using the indirect method and shows cash

flows from operating, investing and financing activities as well as

the cash and cash equivalents at the beginning and end of the

financial year.

Cash flows from the acquisition and divestment of enterprises are

shown separately under cash flows from investing activities.

Cash flows from acquired enterprises are recognized in the cash

flow statement from the time of their acquisition, and cash flows

from divested enterprises are recognized up to the time of

divestment.

Cash flows from operating activities are calculated as operating

profit/loss adjusted for non-cash operating items, working capital

changes, financial income and expenses and income taxes paid.

Cash flows from investing activities comprise payments made in

connection with the acquisition and divestment of enterprises,

activities and fixed asset investments as well as acquisition,

development, improvement and sale, etc. of intangible assets and

property, plant and equipment.

Cash flows from financing activities comprise changes in the size

or composition of the Parent’s share capital and related costs as

well as the raising of loans, inception of finance leases, instalments

on interest-bearing debt, purchase of treasury shares, and payment

of dividend.

Cash and cash equivalents comprise cash less short-term bank

debt.

Accounting Policies

Notes – Consolidated Financial Statements

Annual Report 2022

Parent Income Statement Parent Statement of Comprehensive Income

Parent Financial Statements

2022 2021

Note

Revenue

1.258 1.405

Other external costs -523 -671

Gross profit

735 734

Staff Expenses

-847 -718

Depreciation 0 0

Operating profit (EBIT)

-113 16

-657 -8.378

Financial income

135 200

Financial expenses

-228 -247

Profit before tax

-863 -8.409

Tax on profit for the year

34 -5

Net profit for the year

-829 -8.414

Distribution of profit for the year:

Group Shareholders -829 -8.414

Distributed -829 -8.414

EUR '000

Income from investments in

subsidiaries

EUR '000

2022 2021

Note

Net profit for the year -829 -8.414

Exchange adjustments of foreign enterprises -13 22

Hedge accounting 393 143

Value adjustments in subsidiaries 0 0

Total comprehensive income

-448 -8.249

Items that may be reclassified subsequently to

profit or loss

Items that may not be reclassified subsequently

to profit or loss

Annual Report 2022

Parent Statement of Financial Position

Parent Financial Statements

EUR '000

31/12 2022 31/12 2021

Assets Note

Investments in subsidiaries

77.726

78.002

Loan to subsidiaries

2.500 1.500

Other non-current investments 7

Fixed asset investments

80.234 79.510

Non-current assets

80.234 79.510

Receiveables group companies

482 558

Other receiveables

38 11

Deferred tax assets

51 17

Receiveables

570 586

Cash and cash equivalents

287

280

Current assets

857 865

Total Assets 81.091 80.375

EUR '000

31/12 2022 31/12 2021

Equity and liabilities

Note

Share capital

710 690

29.836 30.099

Retained earnings 46.748

44.901

Equity

77.293 75.690

Subordinate loan capital

2.500 3.500

Long-term liabilities

2.500 3.500

Credit institutions

20 30

Trade payables

85 81

Interest bearing payables to group companies

1.038 1.005

Other payables

155 71

Short-term liabilities

1.297 1.185

Total liabilities

3.797 4.685

Total Equity and Liabilities 81.091 80.375

Reserve for net revaluation

according to the equity method

Annual Report 2022

Parent Statement of Changes in Equity Parent Cash Flow Statement

Parent Financial Statements

EUR '000

2022 2021

Operating profit/loss (EBIT) -113 16

Adjustment for non-cash items:

Provisions

52 53

Change in receivables

50 245

Change in trade and other payables

88 -264

Change in interest bearing payables group

33 42

Cash flow from operations before financial items 111 93

Financial income received

135 200

Financial expenses paid

-228 -247

Corporation taxes paid

0 0

Cash flow from operating activities

18 45

Intangible assets in progress 0

306

Investments in subsidiaries 0

-2.021

Issuence of loans to subsidiaries

-1.000 0

Repayment of loans from subsidiaries

0 2.000

Cash flow from investing activities

-1.000 286

Proceeds from borrowings 0 0

Repayment of borrowings -1.010 -60

Capital increase 2.000 0

Cash flow from financing activities

990 -60

Change in cash and cash equivalents

8 272

Cash and cash equivalents, start year 280 8

Cash and cash equivalents at December 31 288 280

Un-utilised short term facilities 55 327

Liquidity available at December 31 342 607

EUR '000

Share C apital

Re se rve f or net

re valuation

according to the

equity method

Re tained e arnings Total Equity

690 38.312 44.884 83.886

0 0 53

Net profit/loss for the year

0 -8.378 -36

-8.414

Other comprehensive income

0 165 0

165

690 30.099 44.901 75.690

20 1.980 2.000

0 0 52 52

Net profit/loss for the year 0 -657 -172 -829

Other comprehensive income 0 393 -13 380

710 29.836 46.748 77.293

Equity at January 1, 2021

Equity at December 31, 2021

Equity at December 31, 2022

Share based payments

Increase share capital

Annual Report 2022

Notes – Parent

Notes to Parent Financial Statements

Note EUR '000

2022 2021

Revenue

Management services

830 863

Secondment

177 126

Other

250 417

1.258 1.405

Fees paid to auditors appointed by the General Assembly

Fees for statutory audits

34 26

Other Services

13 13

48 38

Audit fee are recognized as administrative costs

Staff expenses

Wages and salaries 795 666

Share based payments 52 53

847 718

Average number of employees

4 4

Reference is made to note 6 for infomation about remuneration to the Executive Board

and Board of Directors and to note 27 for incentive program for the group management

team.

Note EUR '000

2022 2021

Income from investments in subsidiaries

Premium Porc SRL 829 -27

Consinterfin SRL, owned partly by Premium Porc Feed SRL

742 -1.388

Agro Investments Moldova SRL

94 3.045

Premium Porc Negreni SRL -694 -1.549

Premium Porc Feed SRL -13 -134

Degaro SRL, owned partly by Premium Porc Feed SRL 590 -2.148

Olsuin SRL, owned partly by Premium Porc Feed SRL -447 -2.388

Premium Porc Sibiu SRL, owned partly by PP Feed SRL -1.697 -3.644

Premium Vet Depot SRL 26 39

Premium Pork Commercial SRL -87 -184

-657 -8.378

35 Financial Income

Interest on loans to subsidiaries 134 200

135 200

36 Financial Expenses

Interest bank debt 2 5

Interest on loans from shareholders 220 235

Exchange rate adjustment 5 6

228 247

37 Income Taxes

Adjustment of deferred tax -34

-34 5

Annual Report 2022

Notes – Parent

Notes to Parent Financial Statements

Note EUR '000

2022 2021

Loans and receiveables, subsidiaries

Subordinated loan to Premium Porc Feed SRL 900 900

Subordinated loan to Premium Porc Sibui SRL 600 600

Total loan to subsidiaries subordinated

1.500 1.500

Total receivables from subsidiaries

481 558

Total loans and receiveables, subsidiaries

1.981 2.058

Subordinate Loan Capital

Payable after 5 years

500 1.500

Payable between 2 and 5 years

2.000 2.000

Long term debt

2.500 3.500

Short term debt

2.500 3.500

The subordinated loan carries an interest on approx. 6% p.a.

Other liabilities

Employee related payables

124 47

Other payables

32 23

155 71

Note EUR '000

2022 2021

Investment in subsidiaries

Cost beginning of year

47.921 45.901

Additions for the year

0 2.021

Cost end of period 47.921 47.921

Apraisal increases at beginning

30.081 38.294

Result for the period in subsidiaries

-657

-8.378

Exchange adjustments in subsidiaries

-13

Appraisal of subsidiaries

Hedging in subsidiaries

393

143

Appraisal increases at end of period

29.805

30.081

Carrying amount at end of period

77.726 78.002

Ownership

interest in %

Premium Porc SRL 100

12.470 11.651

Consinterfin SRL 100

2.482 1.736

Agro Investments Moldova SRL 100

7.749 7.492

Premium Porc Negreni SRL 100

7.639 8.405

Premium Porc Feed SRL 100

23.577 23.509

Degaro SRL 100

22.150 21.706

Olsuin SRL 100

4.196 4.502

Premium Porc Sibiu SRL 100

-1.891 -411

Premium Vet Depot SRL 100

317 290

Premium Pork Commercial SRL 100

-965 -878

77.726 78.003

All subsidiaries are registered in Romania.

The carrying amount of investments

in subdiaries specified as follows:

Annual Report 2022

Notes – Parent

Notes to Parent Financial Statements

Note 42: 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 43: Assets charged and securities

Letter of subordination has been issued to banks in respect of loans granted to

subsidiaries of EUR 2,500k.

Note 44: Guarantees and other contingent liabilities

The parent has made a corporate guarantee for subsidiaries debt to credit institutions.

The guarantee is limited to EUR 46.7m. The actual debt was EUR 46.7m end of year.

The Entity guarantee for the Parent Company’s debt to Nordea Denmark if any. The actual

debt was EUR 0 end of year.

The Entity participates in a Danish joint taxation arrangement in which DCH International

A/S serves as the administration company. 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 for obligations, if any, relating to the

withholding of tax on interest, royalties and dividends for the jointly taxed entities. The

total known net liability of the jointly taxed entities under the joint taxation arrangement is

evident from the administration company’s financial statements.

Related parties and ownership

EUR '000

2022 2021

1.500 1.500

80 182

481 558

54 18

1.008 925

250 417

Reference is made to note 26 (Note to the Consolidated Financial Statements) for details of

the Groups transactions with the Parent Company.

O. services or reinvoiced costs from the Company

to subsidiaries:

Management and secondment services amounts to:

Outstanding amount at Year-end:

Financial expenses for the year amounts to:

The subsidiaries have obtained subordinate

loans from the Company:

Other interest bearing debt and intercompany

amounts from the Company:

The subsidiaries have received management and

secondment services as long as other services

from the Company:

Transactions between the

company and the subsidiaries:

Outstanding amount at Year-end:

Interest for the year amounts to: